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June  06, 2011






  • In a move that is likely to impact deal supply for daily-deal service providers like Groupon, Amazon announced Friday that it is launching AmazonLocal. The #1 e-retailer is leveraging its investment in LivingSocial to help source deals in local markets. The reality is that it won’t be long before retailers realize that AMZN is in the daily-deal game and is likely to be perceived as more attractive by most given the size of the online retailers’ audience at 120million customers compared to Groupon’s 83million.
  • In a move consistent with RL’s efforts to reintroduce and reinvigorate its denim business with the launch of Denim & Supply, the company is converting its men’s and women’s collection stores on Bleecker Street in NYC to an RRL branded store. While the line is slated to be distributed primarily in premium department stores, with denim at the heart of the RRL concept, we might get a glimpse of the new line here when it launches this Fall.
  • Add TGT to the list of retailers shifting their sourcing base away from china. According to a recent briefing, a company Managing Director highlighted that TGT has recently set up a procurement division to look into more cost effective options in Bangladesh and India. While not the first company to look into these countries, it could be one of the largest.



Amazon Nears Tax Deal with South Carolina - South Carolina legislators, reversing an earlier decision by the state House of Representatives, have approved a deal with Amazon.com Inc. that grants the world’s largest online retailer a 5-year exemption from collecting sales tax on purchases by South Carolina residents. As part of the deal, Amazon has agreed to bring about 2,000 jobs to the state and invest at least $125 million in its planned distribution facilities by the end of 2013, according to a spokeswoman for the South Carolina Department of Revenue. The House this week voted 90-14 to approve the deal, following amendments to the agreement worked out by both the House and Senate. The matter is now before Gov. Nikki Healey, a Republican, who has said she personally opposes granting Amazon and other retailers special exceptions to sales tax collection but that she wouldn’t block the Legislature’s action so as not to break Amazon’s original agreement with the state. <InternetRetailer>

Hedgeye Retail’s Take: A 5-year amnesty from having to collect online sales tax in exchange for local employment guarantees can be viewed as a victory in AMZN’s ongoing battle with states over this issue. It’s still just a matter of time until AMZN will have to ultimately comply, but having to face that reality in five years instead of potentially less than one is considerably more favorable for the leading online retailer if this passes, which appears likely.


Wal-Mart Greets Holders With More Buybacks - Wal-Mart Stores Inc. sought to reassure investors Friday that its shares remain a compelling value despite two straight years of slumping U.S. sales by disclosing a new $15 billion share buyback plan. With Wal-Mart's shares stuck in a rut, the discount retailer has been returning more of its excess cash to shareholders by buying back shares. Last year, it acquired $13 billion of its shares. The purchases can increase per share profit by reducing total shares outstanding, a strategy employed by numerous retailers since the recession and generally embraced by analysts. Wal-Mart's annual meeting, hosted by actor Will Smith, above, drew 16,000 to Favetteville, Ark., on Friday.Beyond that, Wal-Mart divulged little new about how it is trying to right its wayward U.S. business during its annual shareholder meeting here. Before 16,000 investors and employees who packed the University of Arkansas basketball arena at the crack of dawn Friday, Wal-Mart executives accentuated the positive, touting the company's expanding international operations and resurgent Sam's Club warehouse club business. <WallstreetJournal>

Hedgeye Retail’s Take: No surprises here. The $15Bn repurchase authorization is the third of that size in as many years. With the company struggling to find catalysts to drive shares higher near-term, it is likely to remain focused on share repo and dividends to create value for shareholders.


Tommy Hilfiger Group Signs Deal With Marc Fisher Footwear - The Tommy Hilfiger Group has inked an exclusive licensing deal with Marc Fisher Footwear to produce the brand’s men’s and women’s shoes in the U.S. and Canada. “Marc Fisher Footwear has expertise in design and sourcing,” said Annie Marino, executive vice president of licensing at Tommy Hilfiger, which introduced footwear as a category in 1995 and has produced all shoes in-house since 2009. “In working with them, we are looking forward to furthering the development of our footwear business.” The first collections, which will be introduced at the August Fashion Footwear Association of New York trade show and roll out for spring, will include full ranges of men’s and women’s offerings with retail prices starting at $29 (every shoe is priced at less than $100). For women, styles include flip-flops, sneakers, sandals, pumps, wedges, boat shoes and ballerina flats. The women’s collection will be expanded into boots for the following season. For men, the assortment includes flip-flops, slip-on dress shoes and brogues, sneakers, boat shoes and lightweight boots. <WWD>

Hedgeye Retail’s Take: The PVH/M relationship gets another step closer with the line exclusively available only at Macy’s. A quick look at Hilfiger’s whopping 15 style footwear offering for women after nearly 20-years since launching the category and it becomes abundantly clear the brand is in need of some outside help to grow the category. The new line will also target a new customer altogether with ASPs as high as $300 and less than 30% priced below $100 currently.


Eurazeo Acquires 45 Percent Stake in Moncler - Moncler SpA has decided to pull the plug on its IPO. The hot Italian outerwear brand said it signed an agreement with Paris-based investment fund Eurazeo to sell a 45 percent stake for 418 million euros, or $611.5 million at current exchange rates, and postpone a listing on the Milan Stock Exchange, which had been planned to take place by the end of June. The transaction values the company at 1.2 billion euros, or $1.76 billion, representing a multiple of 12 times EBITDA last year. In a statement, Moncler said it believed the sale to Eurazeo was "the best way to pursue the growth of the group and enhance the value of its brands to enter the bourse in the future."  <WWD>

Hedgeye Retail’s Take: Buying the brand at 12x EBITDA after Carlyle  doubled its stakes in less than three years comes is not when PE firms typically step in as reflected by the fact that Eurazeo is said to be the only financial firm to hold discussions of a non-IPO alternative with the brand. While Eurazeo’s portfolio consists primarily of tech and business service related brands, the commonality here appears to be several businesses with large store footprints. This competency will prove useful given Moncler’s growth aspirations and where Eurazeo could add its value as it targets China and the U.S. near-term.


Strong Brands Win at Register - Labels with a strong brand message continue to draw consumers to the cash register. According to the 2011 Fashion Brand Index by Brand Keys Inc., 29 percent of U.S. apparel buyers gravitated toward brands with a distinct point of view when deciding what to buy. These include Ralph Lauren, Armani, Calvin Klein and Brooks Brothers, among others. “With every fashion option, from black T-shirts to the latest couture, brand meaning is increasingly a larger factor in the buying decision,” said Amy Shea, executive vice president of global brand development for the New York-based brand and customer loyalty research firm. “This fits with what we are seeing, not only in fashion, but across all the product/service categories we track. Those brands that actually stand for something are being sought out by consumers…when it comes time to decide which brand to buy.”  Seven years ago, fewer than 3 percent of apparel purchases felt fashion brands and logos were important, but that number jumped to 14 percent in 2009 and doubled, to 28 percent in 2010. This year, it has inched up to 29 percent. <WWD>

Hedgeye Retail’s Take: Contributing to this trend is the fact that many higher quality brands have stressed that they’d rather have to take up price than lower quality – something we’re starting to see from the more marginal players/brands in the market due to higher product costs.