What’s New Today in Retail (10/2)
EVENTS TO WATCH OVER THE NEXT 24 HOURS
MFB – Extraordinary Shareholder Meeting: Thursday 10/3
Weekly Footwear Data
Another weak showing for athletic footwear sales, with trends remaining flattish for the year. Units are weak, while they're offset by a 4% increase in ASP. The saving grace is that this week is traditionally one of the weakest from a seasonal perspective. We'd be a lot more concerned to be looking at these trends a month from now.
RH - Interesting Discussion In Conference Webcast
CEO Gary Freidman explains the companies sourcing advantages:
"Here you can see an example that we've used, where these are the exact same chairs. They're colored slightly differently, just so they don't look exactly the same. But this chair was being sold at $500 to $600 in the independent boutiques. We're able to bring this chair to market at $199: exact same wood, exact same fabrication. You go, how do we do that? Well, what we've done is we've eliminated the middleman."
"So, you've had a market that's controlled at the high end that has worked through domestic importers, okay. Somebody buying the chair, for example for $125 in Asia, importing that chair at 20 to maybe 200 chairs at a time, marking that chair up to $250, selling it to a local retailer, who is marketing it up to $500 to $600, and you say, what have we done? Well, one, we went to that supplier and didn't buy the chair for $125; we're buying the chair for significantly less, one because of our volume. Two, because we've got the opportunity to enable that vendor to source raw materials better, whether it's sourcing the wood or in this case this chair is covered with Belgian linen. We happen to be the biggest importers of Belgian linen in the world. Okay. So instead of that vendor buying Belgian linen at his price, he is now buying it at our price. Instead of $15 a yard, it might be $9 a yard. So we got multiple opportunities to kind of create a value that's unseen before in this marketplace and this is a real example. In this case, both these retailers have recently discontinued selling this chair. But that chair was probably carried in hundreds of small retailers."
"Yeah, I mean when you say you can't get it here, almost all of our assortments in the high 90s is kind of proprietary goods. But you will have people that might have something similar. In that case, that chair, we came into the market after that chair was in the market. And then we bought that chair that was in the market. We completely disrupted the market. Now it's hard to find anybody that has that chair. One of our competitors Williams-Sonoma Home just introduced that chair at I think $420, I don't why, but we believe our compelling value will keep people out of the market as far as trying to knock us off at least at that quality level. But today, the vast majority of our products in the 90s isn't available anywhere else."
Trivia Question of the Day
“What’s the significance of today’s data (10/2) in the world of retail?”
Answer: It marks the day in 1996 that Lance Armstrong learned that he had cancer. Upon his recovery and subsequent Tour de France victories, Nike commercialized it into a product line of mostly black and yellow product called 10/2. It grew up into a several hundred million dollar business.
Trivia question number 2. “How big is the line today?” Zero
UA - NBA Standout Stephen Curry Joins Under Armour Basketball Roster
"Under Armour announced the addition of NBA point guard Stephen Curry to their roster of world-class athletes. As part of the multi-year partnership, Curry will be wearing the new UA Micro G Anatomix Spawn basketball shoes and featured in upcoming marketing campaigns via digital, social, print, in-store and out-of-home."
"Curry joins an Under Armour athlete roster that includes Michael Phelps, Tom Brady, Cam Newton, Bryce Harper, Jordan Spieth, Lindsey Vonn and NBA players Brandon Jennings, Raymond Felton, Greivis Vasquez and Kemba Walker."
Takeaway: With basketball players, the first question to ask is ‘why did Nike pass on him’. That said, this synch with UA’s strategy to secure ‘B’ players that wear UA shoes while competing against Nike players.
LULU - Lululemon’s sheer yoga pants lawsuit gets lead plaintiff
"A Louisiana pension fund will lead U.S. litigation accusing Lululemon Athletica Inc. of fraudulently hiding defects that caused yoga pants to become nearly sheer, and concealing talks that led to the surprise departure of its chief executive."
"U.S. District Judge Katherine Forrest in Manhattan on Tuesday said the Louisiana Sheriffs’ Pension & Relief Fund, which owned about $1.3 million of Lululemon stock, will handle the litigation on behalf of shareholders."
"The Baton Rouge-based fund plans to seek class-action status for shareholders between March 21, when full-year results were announced, and June 10. It said it lost $116,000 on transactions in that period. The fund’s law firm is Bernstein Litowitz Berger & Grossmann, a shareholder class-action specialist."
Takeaway: Proving a moronic business blunder is one thing. Proving malice and/or violation of Securities law is another.
LVMH - WWD NEWS ALERT: Jacobs Exits Vuitton To Focus On IPO
- "Marc Jacobs is leaving Louis Vuitton as plans take shape for an eventual public offering for the Marc Jacobs brand."
- "LVMH chairman and ceo Bernard Arnault, together with Jacobs and his long-time business partner Robert Duffy, confirmed the developments to WWD…"
- "The offering should occur within the next three years."
Takeaway: Stating the obvious here, but not good for LVMH. Jacobs is looking at KORS, Kate Spade, the likely IPO of Tory Burch, and the success of Ralph Lauren – and with some likely coaching from his bankers – it makes perfect sense that he’s focused on better monetizing his name.
FL, LVHM, BONT, HMB, GPS - LVMH, Richemont Among World's Best E-tailers
- "The scores for the table were created by Web site management company Sitemorse using automated software that read and reviewed the first 125 pages of each retailer’s site, placing them in a ranked table based on user experience (UX), governance, risk and compliance (GRC), and search capability (SEO)."
- "C&A Europe was the highest-ranking fashion company, in second position. Swedish food retailer ICA was the top performer. The German Tengelmann Group, which owns fashion retailer KiK, in 9th place; Nordstrom was 11th, followed by Associated British Foods, which owns Primark, at 13th place; Foot Locker and the Bon-Ton stores also appeared in the top 20 retailers’ Web sites."
- "Further down the list, at number 38, was Richemont, Marks & Spencer at 54th position, Inditex was 63rd, [LVMH] was 67th, [H&M] was 121st, The Gap was 157th, Arcadia — owner of Topshop— was 173rd, while Macy’s was 191st."
Takeaway: We’re not verifying this study, bc it seems so ‘off’ logically. LVMH makes sense. HMB – perhaps. But BONT? FL? GPS? We don’t see it.
ICON - Macklemore & Ryan Lewis Taking Buffalo Brand Viral
- "Iconix Brand Group Inc., which sought to give Buffalo David Bitton an international boost when it acquired a 51 percent stake in the company eight months ago, is now looking to give the brand a viral lift."
- "Iconix has engaged hip-hop duo Macklemore & Ryan Lewis as the first of its participants in its 'Blank Check Series,' which will endow artists in various media to produce media content on behalf of the brand."
Takeaway: Not sure if these guys have staying power --- but their status in the hip-hop realm today is untouchable.
9983 - Uniqlo Expands Footprint in U.S.
- "Uniqlo is multiplying in the San Francisco Bay Area.After opening a flagship on Powell Street in San Francisco a year ago, the Japanese retailer is adding four stores in the region by November. The new Northern California stores are in Hillsdale Shopping Center in San Mateo, Stonestown Galleria Mall in San Francisco, Westfield Valley Fair Mall in Santa Clara and the mixed-use development Bay Street Emeryville in Emeryville."
- "The San Francisco and New York areas are hubs of retail activity for Uniqlo in the U.S., where it will end up with a total of 17 stores this fall."
- "Next year, Meyer [COO of Uniqlo US] has forecast that Uniqlo will add 20 or more stores in the U.S."
- "In the U.S., Uniqlo is just getting off the ground and has registered operating losses."
Takeaway: Watch out for these guys. The parent is comfortable growing while losing money, and the product is inexpensive relative to the quality and fashion quotient. Also, its cost of capital is close to zero.
BURL - Burlington Prices IPO Shares
- "Burlington Stores has priced its shares at $17 each as it prepares to go public on Wednesday."
- "So far 13.3 million shares are set to begin trading Wednesday morning on the New York Stock Exchange under the symbol 'BURL.'"
SPLS - Staples Acquires Runa to Transform Shopping Experience Through Personalization
- "[SPLS]...announced today it has completed the acquisition of Runa, a software company based in San Mateo, Calif. that helps online retailers increase sales by personalizing the shopping experience. Terms and conditions of the acquisition were not disclosed."
Takeaway: Makes sense. Anyone in this space needs to differentiate as much as possible to gain share.
JCP - Former J.C. Penney Outlet Stores to Close; 1,400 Jobs Lost
- "The new owner of J.C. Penney's former outlet store business said Tuesday that it will close all 15 locations amid a steep drop in sales."
- "The outlet stores, which are in 14 states, were purchased in October 2011 by SB Acquisitions from J.C. Penney and rebranded JC's 5 Star Outlet."
- "Before the acquisition by SB Acquisitions, Penney had designated them for closure."
KER - Saint Laurent Severs Ties With Colette
- "According to sources, Yves Saint Laurent is taking legal action against several makers of T-shirts bearing the 'Ain’t Laurent Without Yves' slogan."
- "The French fashion house also has severed a 15-year business relationship with Paris retailer Colette for having carried them."
- "Sarah Andelman, Colette’s creative director...said Slimane and YSL have retaliated by canceling her spring and resort orders totaling 101,191 euros at wholesale, or $136,690 at current exchange."
- "The 'Ain’t Laurent' T-shirt, retailing for about 42 euros, or $56.75, winks to Slimane’s decision last year to change the name of YSL collections and stores to Saint Laurent."
JOEZ - Joe's Hudson Jeans Buy Said Completed
- "Joe’s Jeans Inc.’s acquisition of fellow premium denim brand Hudson Jeans for $97.6 million has been consummated."
- "Joe’s acquired all the assets of Hudson Clothing Holdings Inc. for a combination of cash and $24.1 million in convertible notes from Peter Kim and Fireman Capital Partners. Kim will continue with Hudson as its chief executive officer and join the board of Joe’s."
Bangladesh apparel makers count the cost of unrest
- "The fallout from last week's violent protests in Bangladesh's key apparel industrial belts could lead to financial losses of around BDT6.0bn (US$77m) for apparel makers…"
- "Garment exporters say the losses were incurred as a result of production disruption and vandalism during the six days of unrest, which began on 21 September."
- "An official from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told just-style that nearly 3,000 ready-made garment (RMG) units were caught up in the clashes - with 65 factories damaged and arson attacks launched on 25."
- "'the overall cost of production in the apparel sector has increased by 12-13% due to the recent trouble, general strikes and political uncertainty over the upcoming general election,' Atiqul Islam, president of the BGMEA, told just-style yesterday…"
India’s apparel exports to touch US$ 17bn in FY’14: AEPC
- "The garment industry of India is expected to achieve the target of US$ 17 billion in exports for the current fiscal year as the outbound shipments of apparel have already touched US$ 5 billion during the first four months of 2013-14, according to the Apparel Export Promotion Council (AEPC)."
- "Mr. Sakthivel [President of the AEPC] said that the growth in apparel exports is attributed to the recovery of the US economy, which is the country’s second largest export destination, in addition to the increasing demands from emerging markets such as Latin America and Africa, he added."
- "During April to July 2013-14, apparel exports have increased by 13 percent year-on-year to US$ 5 billion, he added."