R3: JNY, Groupon, GPS, Puma, TOY and Luxury

OUR TAKE ON OVERNIGHT NEWS

 

Jones Group one of bidders for Jimmy Choo- report - Clothing maker Jones Group Inc  is one of three potential buyers for upscale shoe and handbag maker Jimmy Choo, Dow Jones reported, citing people familiar with the matter.A spokeswoman for Jones Group, whose brands include Nine West and Jones New York, declined to comment on the report. Jones Chief Executive Wesley Card told Reuters in February that his company was looking to buy brands that would help extend Jones' reach, particularly into overseas markets. "Acquisitions are an important part of our growth strategy," Card said at the time. Last year, Jones bought high-end shoemaker Stuart Weitzman.Bahrain-based Investcorp INVB.BH and German luxury company Labelux Group have made a joint offer for Jimmy Choo, while U.S. private equity firm TPG is also in the process, according to the Dow Jones report <Reuters>

Hedgeye Retail’s Take: Let me get this straight…JNY potentially competing against middle-eastern oil money and deep-pocketed German Lux group for iconic brand Jimmy Choo. JNY does not have the wallet for this. It hasn’t even paid off Stuart Weitzman deal in full yet (deferred purchase price and ownership structure).  The fact that JNY is aggressively going after more deals speaks to the state of its base business. If not for strength in its Jessica Simpson line (sustainable???), JNY would be pre-announcing – again.

 

Groupon gets hyper-local - Groupon has acquired Pelago, creator of location-based check-in service Whrrl. The deal is the latest sign that the daily deal space is converging with geolocation, making it possible for businesses to present offers to consumers based on where they are. The move comes a little more than a month after LivingSocial, Groupon’s primary rival, began testing a mobile app feature that lets consumers search for deals within a half-mile radius of their current locations. In announcing the acquisition, Groupon CEO Andrew Mason praised Whrrl’s platform, which allows users to share recommendations for activities and places to go. When others heed that advice the recommender earns “influence points.” Brands and merchants can encourage consumers to visit the promoted bricks-and-mortar locations by offering contests and prizes to people who check in at those locations. <InternetRetailer>

Hedgeye Retail’s Take: There’s no way Groupon could afford to go on a roadshow looking for a $20bn valuation with the competitive gap narrowing. This move was pure defense – but it will probably work.

 

Michael Kors, Valiram Group Team Up - As part of its plan to expand in Southeast Asia, Michael Kors Inc. has partnered with the Valiram Group to bolster business and open stores in Malaysia and Singapore. The first freestanding Michael Kors store in Malaysia is scheduled to bow in August in the Pavilion Kuala Lumpur. The 3,500-square-foot boutique will showcase ready-to-wear, handbags, small leather goods, footwear, eyewear, watches and fragrances from Michael Kors, Kors Michael Kors and Michael Michael Kors. The debut of the company’s first Singapore boutique is also slated for August. It will be housed in Scotts Square, a luxury shopping center opening later this year in the city’s busy downtown shopping district not far from the Grand Hyatt and Marriott hotels. <WWD>

Hedgeye Retail’s Take: Great example of how easily scalable great brands are into new geographies, and how the brands (content) are ultimately more valuable than the retailers (distribution). One has limited growth, the other is blue sky.

 

 “Luxury triangle" of brands to be landed in Shanghai - The 3,000-sqm Austen Branded Goods City is scheduled to open this year in the Gubei New Area, Shanghai, setting the site up as the city's new shop window on major European branded goods.  The 30-plus brands moving into the mall in Gubei New Area are all showing luxury goods of top quality, including Weill, one of France's oldest fashion brands, Lauren Vidal, a designer label on sale in Paris' Lafayette department store, and Italian brand Tricot Chic is also well-known, for its bright colours and feminine styling. Austen City is not expected to adopt a business model characterised by exclusive buy-outs or distribution. Rather, it will be directly involved in shop design, production, marketing and after-sales services of the brands on offer. Constituting a second leg of the triangle is 180-year-old Takashimaya, one of the largest department store chains in Japan. The group's first store in China is to be in Gubei, on a business area of 40,000 sqm. <FashionNetAsia>

Hedgeye Retail’s Take: Ditto on the Michael Kors comment. When you’ve got the content, you’ve got the growth. Period.

 

Gap Streamlines its International Operations - Now that Gap Inc. is out to conquer the global business-to-consumer e-commerce market and other retail venues, the chain retailer is rolling all of its international operations into a single unit and putting one executive in charge. Gap, No. 23 in the Internet Retailer Top 500 Guide, is consolidating all of its foreign e-commerce and store programs in Europe and China under a new unit to be headed by Gap Europe and strategic alliances president Stephen Sunnucks. Gap’s streamlined international operation will include 530 stores across 30 countries. Gap in the past two years also has launched e-commerce operations for shoppers  in Austria, Estonia, Belgium, China, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovakia Slovenia Belgium, Spain, Sweden, the United Kingdom, and elsewhere. <InternetRetailer>

Hedgeye Retail’s Take: This makes perfect sense. While the investment community at large is focused on Gap’s inability to comp – especially in the US – the International chess board is being set, and GPS is accelerating stock repo in the interim. Don’t bet against this one.

 

Nordstrom eyeing Hudson Yard - Nordstrom Inc. is eyeing the massive Hudson Yards project under development on the far west side of Manhattan where it could open its first full-line store in the city. After years of combing Manhattan for a site and considering a number of alternatives, the Seattle-based department store chain is “looking at the potential of Hudson Yards,” said a source. “They’re in discussions with Related Cos.,” developer of Hudson Yards, a 26-acre commercial and residential project to be built over the rail yards near the Hudson River located between 30th and 33rd Streets and 10th Avenue and the West Side Highway.  “It’s fair to say they’re interested and considering it, but nowhere close to any kind of deal or commitment,” the source added.  Nordstrom is also considering other sites in Manhattan, but Hudson Yards seems like its best bet given the enormity of the project and its ability to provide Nordstrom’s space requirements of at least 180,000 to 200,000 square feet, a parcel extremely difficult to find in Manhattan, particularly in an area dense with upscale shoppers. <WWD>

Hedgeye Retail’s Take: Huge potential win, and huge potential waste of capital.

 

Puma Opens Eco-Friendly Concept - As Europe’s activewear giants race to clean up their act on the sustainability front, Puma on Wednesday inaugurated its revamped Boulevard de Sébastopol flagship, combining high-tech interactive features with eco-friendly materials for merchandising and decor. Materials included energy-efficient lighting and FSC-certified sustainable wood, while clothes hangers are made from cornstarch.

The store’s new look is urban and colorful, however, with exposed concrete walls, video screens, loud comic-inspired wallpaper, puma cat-shaped coat pegs in the changing rooms and clusters of green and red poufs. Old-school metal sports-room lockers used as merchandising units come decorated with sports trophies. Local artist collective 9eme Concept collaborated on the store’s design.  A red joypad wall on the first floor carries 32 iPads loaded with interactive content for customers to play with, such as Puma’s new iPad and iPhone Life Scoreboard application, where users can vote on a flow of open questions pitting two subjects — such as Mac versus PC — against one another, and then check the scores. <WWD>

Hedgeye Retail’s Take: Very interesting idea, and great way to stay fresh with a younger audience.

 

Toys ‘R’ Us Expanding e-Commerce  - One way Toys ‘R’ Us Inc. is supporting its burgeoning e-commerce program is by opening its first dedicated distribution center for fulfilling Internet orders. This July, Toys ‘R’ Us, No. 37 in the Internet Retailer Top 500 Guide, will open a new 300,000-square-foot distribution center near Reno, NV. The center, which will eventually employ about 120 workers and another 230 part-time workers during the peak holiday season, will fulfill orders for Toysrus.com and Babiesrus.com. “As more consumers enjoy the simplicity and ease of online shopping, Toys ‘R’ Us continues to invest in e-commerce enhancements to advance customer service and satisfaction across all shopping channels,” says CEO Larry Storch. “We believe the facility will play an important role in further accelerating our company's online business growth and order fulfillment.” <InternetRetailer>

Hedgeye Retail’s Take:  It seems odd that such a seasonal business would require a fully allocated DC that would add to cost structure year-round. This puts pressure on the company to knock their e-commerce strategy out of the park.

 

Underwear Sales Heat Up in Men's Retail - Forget simple white briefs: Men’s underwear has discovered fashion and technology. The sector has been growing rapidly on the back of those two trends, which is part of the overall boom the men’s wear market has seen across all categories following the depths of the recession. A plethora of bold colorblocking and oversize logos and advances in high-tech temperature-regulating applications that keep the wearer cool and comfortable are expected to continue to propel sales this fall. In the three months ending February 2011, the men’s underwear market generated sales of $1.24 billion, up 13 percent from the three months ending February 2010. In the 12 months ending February 2011, men’s underwear sales generated $3.9 billion, up 8.6 percent from the same year-ago period, according to The NPD Group.  <WWD>

Hedgeye Retail’s Take: Great for Warnaco (CK Underwear), and opportunity for Hanesbrands (which competes at the lower end of this market).

 

Shoemakers Urged to Avoid Competition Over Low Prices - Low-priced shoe exports to the EU may cause further trade penalties, warned the Local Shoemaking Association after the recent removal of EU shoe anti-dumping duties.  More shoe orders from the EU were received after the removal of duties which resulted in a drop in export prices. However, industry experts indicate worries over a new round of competition over prices, stressing that this might result in new penalties to be imposed on shoe exports. <FashionNetAsia>

Hedgeye Retail’s Take: Be careful what you wish for.


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