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Takeaway: RH Black Book. Athletic Apparel crushing it. JCP VFC GPS ADDDY HBC BURL SPD




RH Black Book - Monday 10/14

We’ll have a deep dive on the RH thesis as to how we get to $8.00 in EPS vs $1.50 today. In addition, we’ll have the results of our home furnishings consumer survey, which is an exhaustive product that will outline consumer sentiment towards RH, but also WSM, BBBY, PIR and other home retailers.




Athletic Apparel (Sportscan)

Takeaway: Industry trends remain robust, with sales up 7%. The catch is that units were down last week, with all the top line gains coming from ASP. This is extremely similar to what we’re seeing with footwear.  As for the brands, it continues to be the Nike and Under Armour show – as both are growing 3-4x the industry (ironically, Nike is winning – off a much larger base).

What’s New Today in Retail (10/3) - chart1 10 3

What’s New Today in Retail (10/3) - chart2 10 3

What’s New Today in Retail (10/3) - chart3 10 3

What’s New Today in Retail (10/3) - chart4 10 3


NRF Forecasts Marginal Sales Gains This Holiday Season


  • "NRF expects sales in the months of November and December to marginally increase 3.9 percent to $602.1 billion, over 2012’s actual 3.5 percent holiday season sales growth. The forecast is higher than the 10-year average holiday sales growth of 3.3 percent."
  • "Shop.org today released its 2013 online holiday sales forecast, expecting sales in November and December to grow between 13-15 percent over last holiday season to as much as $97 billion."
  • "The U.S. Department of Commerce announced that final Q4 2012 (October – December) e-commerce sales increased 15.5 percent."
  • "According to NRF, retailers are expected to hire between 720,000 and 780,000 seasonal workers this holiday season, in line with the actual 720,500 they hired in 2012, which was a 13 percent year-over-year increase from 2011."

Takeaway: In average economic climates, the NRF’s forecast is accurate within 100bp. But when there are dramatic fluctuations in consumer sentiment (ie ’08 and ’09) they’re off between 50%-100%.  In other words, we don’t trust these forecasts as far as we can throw ‘em.



JCP - Fitch Downgrades J.C. Penney Over Cash Burn


  • "Fitch Ratings on Wednesday downgraded its credit rating on J.C. Penney Co...pointing to the greater-than-expected cash burn this year at the struggling retailer."
  • "The ratings firm lowered its rating for J.C. Penney to triple-C from B-minus, saying it now projects the company to burn through $2.8 billion to $3 billion in cash this year, up by $1 billion from its May projection."
  • "Additionally, Fitch expects the retailer to require even more additional external funding next year, despite liquidity injections this year."
  • "After this year, Fitch said, J.C. Penney will need to generate a minimum of $750 million to $875 million in earnings before interest, taxes, depreciation and amortization to fund ongoing spending of $400 million to $500 million and cash interest expenses of $360 million to $375 million. That would mean a return to sales of $13.4 billion to $13.6 billion, or about 14% to 16% above current levels projected for 2013, the ratings firm said."

 Takeaway: One of the more backwards-looking calls we’ve seen of late.

GNC - GNC Holdings, Inc. acquires Discount Supplements (UK)


  • "[GNC]...today announced it has acquired A1 Sports Limited (d/b/a Discount Supplements), the leading multi-brand sports nutrition e-commerce retailer in the United Kingdom. The acquisition was funded with cash on hand. Terms of the deal were not disclosed."
  • "Following the acquisition, GNC.com, LuckyVitamin.com and discount-supplements.co.uk will continue to operate as separate businesses, each with its own product offerings and target customers."
  • "Discount Supplements - founded in 2004 – is expected to grow to approximately £20 million in revenue in 2013, and generate positive EBITDA margin.  GNC expects the acquisition to be earnings neutral in 2013, as the EBITDA contribution is offset by deal costs and amortization of intangibles."

PVH, GIII - PVH to Sell G.H. Bass Assets to G-III for $50 Million


  • "…[PVH] said it will sell nearly all of shoe brand G.H. Bass & Co. assets to clothing maker peer [GIII] for about $50 million in cash, unloading a brand it has owned since 1987."
  • "The move to sell G.H. Bass, which has had a soft retail performance in recent quarters, comes as PVH said it wants to focus on so-called lifestyle apparel businesses, which includes Calvin Klein and Tommy Hilfiger. The sale price is less than the amount PVH paid when it acquired G.H. Bass in 1987--the company spent $79 million to buy the brand from a division of Unilever…"
  • "PVH, meanwhile, expects the deal to also be a drag on adjusted earnings, and also expects to book a pretax loss of about $20 million in connection to the asset sale. PVH plans to use proceeds received from the deal to make additional debt prepayments."

 Takeaway: Good move by PVH. Investors don’t want it to own a) a shoe brand, or b) Bass. It has enough growth ahead of it with Calvin and Tommy – brands that the consumer actually care about.

Neiman Marcus - Even Neiman Marcus to offer free shipping


  • "Neiman Marcus Group is looking to revitalize its ecommerce before the holiday season’s fervor begins by offering permanent free shipping and returns year-round for all domestic purchases made through neimanmarcus.com and bergdorfgoodman.com as well as at retail locations."

Takeaway: A disturbing trend that ultimately most retailers will likely bow to.

GPS - Simon Kneen Leaving Banana Republic


  • "Simon Kneen, executive vice president of design and creative director of Banana Republic, is leaving the company, effective Dec. 31. Kneen’s departure was announced on Tuesday by Gap Inc. on the Banana Republic portion of the corporate Web site."
  • "Kneen, who has been in his current role since January 2008, will remain with the Banana Republic design team through the end of the year to help manage the transition. Julie Rosen, a 19-year veteran of Gap Inc., will continue in her role as evp of Banana Republic North America, leading merchandising and inventory management."

 Takeaway: Not good, but not a complete disaster. Let’s face it, Banana wasn’t exactly knocking the cover off the ball.

VFC - Lucy Installation Lights Up Boston


  • "The VF Corp.-owned brand is relatively unknown in the increasingly crowded activewear segment compared with competitors like Lululemon and Nike, but a new president and marketing initiative aim to supercharge consumer awareness efforts."
  • "Laurie Etheridge, former senior vice president of women’s merchandising and design at Levi’s, is now at the helm at Lucy, which today will launch the Light Forest, a light installation along the DCR’s Charles River Esplanade in Boston that runs for 10 days."

What’s New Today in Retail (10/3) - chart5 10 3

ADS - Reebok Signs 76ers Draft Pick 


  • "Reebok has signed Nerlens Noel, a rookie on the Philadelphia 76ers and the number six draft pick in the recent NBA contract, to an endorsement deal."
  • "Noel joins the Orlando Magic's Jameer Nelson, the Sacramento Kings' Isaiah Thomas, and the Brooklyn Nets' Jason Terry as a Reebok basketball endorser. The signing comes as Reebok's top player, Washington Wizards point guard John Wall, in January 2013 signed a new long-term endorsement deal with Adidas, which also owns Reebok."

HBC - Lord & Taylor Revamps Men's Department


  • "Lord & Taylor has turned its attention to men’s wear. The department store has doubled the square footage devoted to men’s at its New York flagship this fall, adding a second floor of selling space. The expansion, which brings men’s to 100,000 square feet, is designed to capitalize on the growing importance of the sector and has thrust the store firmly into the contemporary market."

BURL - Burlington IPO Bows With Strong Demand


  • "Shares of Burlington Stores Inc. shot up 47.1 percent to $25.01 in the retailer’s first day of trading as a public firm on Wednesday after the shares were priced at $17 the night before. Shares hit an intraday trading high of $25.62."



  • "Appleby Trust...announces that it has agreed to sell approximately 3.9 million shares of Sports Direct International plc to Goldman Sachs International."