R3: Japan, Hermes, GOOG, New Balance

 

R3: REQUIRED RETAIL READING

April 1, 2011

 

 

 

 

RESEARCH ANECDOTES

  • In speaking to the impact of rising cotton prices, American Apparel management expects an industry-wide price increase to take effect July 5th to help mitigate pressure at wholesale. With Gildan having just announced price increases of 8% - 12.5% on core products mid-March and several more price adjustments expected in the industry before year-end, we suspect American Apparel isn’t likely to wait until July to take prices up.
  • Following the likes of its competitors, New Balance is launching a site today where consumers can customize the brand’s classic 574s. With various color and embroidery options available, customer customization is soon going to become an expectation versus the exception.
  • According to Babycenter’s 2011 Mobile Mom Report, moms with smartphones spend 6.1 hours/day on average with the mobile Web compared to 4.1 hours/day on the PC-based Web. More importantly, 46% of moms surveyed claim to have taken an action due to a mobile ad – further evidence that retailers may want to consider increasing mobile ad spend which currently accounts for 0.5% of retailer’s budget on average.

OUR TAKE ON OVERNIGHT NEWS

 

Japanese Retailers Down Double-Digits in March - Uniqlo, Isetan Mitsukoshi and Takashimaya reported Friday double-digit drops in March sales, providing the latest indications of how much Japanese consumers are holding back in the immediate aftermath of the earthquake and tsunami disaster. Uniqlo’s corporate parent Fast Retailing said that same-store sales at the fast-fashion chain slid 10.5 percent last month. The comp figures refer exclusively to Uniqlo’s Japan operations. Isetan Mitsukoshi said preliminary March sales at its nine Isetan stores dropped 28.4 percent and those at its 14 Mitsukoshi stores fell 22.8 percent. Similarly, Takashimaya said sales at its 14 stores in Japan slid 17.3 percent in March. J.Front Retailing, which operates 21 Daimaru and Matsuzakaya department stores, said March sales dropped 9.6 percent. Matsuzakaya branches in the Tokyo neighborhoods of Ueno and Ginza saw their sales drop 29.6 percent and 28.9 percent respectively. <WWD>

Hedgeye Retail’s Take: Uniqlo is actually fairing surprisingly well given the circumstances and the fact that 2/3 of the month’s sales were post quake.

 

Hermes in Discussions to Sell 45% Stake in Jean-Paul Gaultier - Hermes International (RMS) SCA, the French maker of Birkin and Kelly bags, is in talks to sell its stake in the Jean-Paul Gaultier fashion house less than a year after the designer relinquished his role at the luxury-goods maker. Hermes received “an expression of interest from potential buyers” of the 45 percent holding, the Paris-based company said today in a statement, without elaborating. PPR SA is one candidate that may study the sale of the stake, French daily Les Echos said today, without citing anyone. Gaultier stepped down last year as the artistic director of Hermes’s women’s ready-to-wear unit after seven years in the role and was replaced by Christophe Lemaire. The designer has had a relationship with Hermes since 1999, when the company bought a 35 percent stake in his fashion house for $23 million. The stake was later raised. <Bloomberg>

Hedgeye Retail’s Take: Following the death of former Hermes’ Chairman Jean-Louis Dumas who recruited Gaultier last summer, the designer’s relationship with the firm has been tenuous. First he lost his position and now the brand is looking to sell its stake in the fashion house completely.

 

Google Updates its Site Search Tool for e-retailersGoogle Inc. this week updated its site search tool, giving retailers the ability to show consumers local product inventories and  more flexibility in setting online promotions. With the launch of Google Commerce Search 3.0, the search engine also says it will test a product recommendation feature that retailers can install on their e-commerce sites. This release builds on the last update to Commerce Search, released in June, and includes a tool similar to Google’s Instant Search. Google introduced that feature to its search in September, enabling consumers to see search results on the page as they type search queries. The Commerce Search update enables shoppers using a retailer’s site search feature to see more product information with every keystroke.  <InternetRetailer>

Hedgeye Retail’s Take: Another tool from the dominant search provider. Innovation will remain key to Google’s ability to maintain its steady 65% share of the search market.

 

New Balance Signs Kevin Youkilis - Boston-based New Balance announced Wednesday it has signed hometown third baseman Kevin Youkilis to a multi-year endorsement deal. New Balance will be the Red Sox player’s official on-field footwear brand, as well as provide shoes and apparel outside of the game. This season, Youkilis will wear a special makeup of the New Balance 1103 baseball spike. The athletic company also will sponsor Youkilis’ charity, Youk’s Kids, which supports existing community-based children's charities and medical research programs in New England. And New Balance will support a new Athletes for Heroes program, providing financial support for children who have lost a parent or have a parent who has been severely injured in military service.<WWD>

Hedgeye Retail’s Take: Great fit for the Boston-based brand, which up to now hasn’t allocated any money towards athletic endorsements. Do we expect a flurry of new signings – no, but the move reminds consumers NB is still in the game.

 

Magazines Eye E-Tailing - Vogue and Elle have long influenced what clothes and handbags image-conscious consumers buy. Now, in a bid to reverse flagging sales and stay relevant, fashion magazines may sell the products they feature in their articles. As Apple Inc. iPad and other mobile devices change the way people stay informed and shop, e-commerce is creeping onto editorial agendas. Fashion magazines that have gone as far as to add links on their websites to online vendors such as Yoox SpA, may integrate the reading and buying experience, a move that would transform the likes of Vogue and Elle from just trendsetters into virtual shopkeepers. “Gone are the days when consumers want to flip through the back of a magazine to find an index,” said Shannon Edwards, European director of online shopping portal ShopStyle. Combining retail and editorial “is natural from an economic standpoint and natural from a consumer standpoint.”  <Bloomberg>

Hedgeye Retail’s Take: The only surprise here is that it’s taken this long.

 

 

 


Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more