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The majority of retail companies have announced ’09 capex cuts – at an avg of 25%. Most need that, if not more. But it’s time for those with the right (and liquidity) to exist to go for the jugular.

Are any of us surprised that 80% of retail-related companies that recently announced earnings noted a meaningful cur to capex in CY09? I’m really mixed on this. On one hand, cash is king, and in ‘The New Reality’ that we’re facing today there are a lot of companies that simply have not earned the right to grow. In fact, they need to shrink – if not go away. They could, and should pull back on any plans to grow and try to protect their existence as much as possible. But there are other companies that are in the driver’s seat. They have strong brands, strong liquidity, adequate pre-existing investment base, and the consumer genuinely wants them to succeed. I’m talking Under Armour, Ralph Lauren, Coach, Lululemon, Abercrombie, Nike and a few others. These are companies that should be stepping up investment spending, and putting the competitors out of business.

Keep in mind that there are different types of capex. This is a time to think strategically and blaze new trails in The New Reality. Why shouldn’t these power brands by e-tailers to build an internet fulfillment operation to double their consumer-direct platform? Why not flex muscle to secure assets – both on and off balance sheet – at a time when the weak simply need to stand by and watch? I’ve got a dozen ideas swirling around in my head. The strat planning teams at the big firms better be a couple steps ahead. If not, they are missing on the opportunity of a lifetime and are probably justifying the troughy multiples they currently garner.

COMMENTS ON CAPEX, BUT NO QUANTIFICATION.
PSS: “We expect our 2009 capital spending will be notably lower than the approximately $130 million that we anticipate spending this year.”

GES: “Regarding store expansion we currently have 17 deals that are committed in North America and three in Europe. We plan to carefully evaluate any future store opportunities for next year by currently estimate that our store growth will be significantly slower than this year. Consistent with this we estimate that capital expenditures will be below this year's levels as well.”

ARO: “As you know we typically provide CapEx projections on our fourth quarter call. And that's the call where we'll break out the new store openings by concept as well as renovation, so right now we just wanted to communicate to the Street and investors that we are contemplating a reduction in our overall planned capital expenditures at this point.”

RL: “We have a re-evaluated projects planned for fiscal 2010 and expect to communicate our capital earnings outlook for fiscal 2010 on a future call.”

JNY: Cutting back cap ex but did not give a number.

No Comment List: TBL, ANF, FINL, FL