EVENTS TO WATCH OVER THE NEXT 24 HOURS
WMT - Analyst Meeting: Tuesday 10/15 8:45 am
WWW - Investor Day: Tuesday 10/15 9:00 am
Hedgeye Retail Events
RH Black Book - Wednesday 10/16 11:00 am
COMPANY NEWS
FNP - Kate Spade
Takeaway: Over the weekend, Kate Space got major exposure on Amazon, and also had promotions on eBay. AMZN maybe we understand…but eBay? Not exactly the place to be for an aspirational luxury brand. We're not thrilled with this development.
WWW - Blake Krueger Sounds Off on WWW's Q3 Hits
- "'The acquisition has turned out better financially — from a team standpoint and from an integration standpoint — than I could have predicted,' the president, chairman and CEO of Wolverine World Wide Inc. told Footwear News in a phone interview.
- "Overall, Sperry Top-Sider proved to be a big winner, posting double-digit increases for the 16th consecutive quarter. Krueger said that while the brand’s U.S. growth could slow, international opportunities — including a recent agreement with E-Land Group to distribute both Sperry and Keds in China — will fuel expansion. 'There’s a lot of runway in front of us yet,' the CEO said. 'It’s an opportunity that will sustain itself and grow every year.'"
- "Addressing overall industry challenges, Krueger admitted the retail climate could weigh on the company in the fourth quarter, but he affirmed that Wolverine is prepped."
Takeaway: Despite his positive stance, he's still sandbagging on accretion. Analyst meeting in NYC tomorrow.
VFC - Vans to Relaunch Juniors as Young Contemporary Brand
- "As VF sets an ambitious goal for Vans to reach $2.9 billion in sales within the next four years — a 70 percent spike from the $1.7 billion in sales it expects to make this year — the unit is relaunching its juniors apparel division as a young contemporary brand for next spring."
- "Under the leadership of a new vice president of apparel, Vicki Redding, and an influx of new women’s designers and merchandisers, Vans is moving past its previous 14-year-old customer to an older crowd between the ages of 16 and 24."
- "Vans still has a way to go with its women’s business, as well as apparel overall. Clothing made up 20 percent of Vans’ business last year. Of that share, women’s claimed only 20 percent. Bailey said the target is to double the apparel business by 2017."
Takeaway: VFC is sticking behind its lofty goals for Vans. Not sure we love the idea of a juniors line to fuel the growth. But in the end, it can probably run a $200-$300mm juniors line at a respectable margin.
TIF, UHR - Tiffany Looking at Swatch Alternatives
- Tiffany, in a filing with the Securities and Exchange Commission, said it had 'received numerous communications' indicating that Swatch views their watch agreement as 'terminated as of October 1, 2013.'”
- "Accordingly, the luxe jeweler said it is 'proceeding on that basis with plans to design, produce, market and distribute Tiffany & Co. brand watches through alternative arrangements.'”
- "The two companies formed a 20-year strategic alliance in 2007 that created a new Swiss-based firm to produce, design and market luxury watches under the Tiffany name."
Takeaway: If this is not a kick in the gut to Tiffany, I don't know what is. It's used to being the prom queen. But it just got dumped.
TUMI - Tumi Signs Outerwear License
- "The premium brand, best known for its travel, business and lifestyle accessories, has signed a licensing deal with David Peyser Sportswear Inc. to design, develop and distribute Tumi outerwear for men and women."
- "...the collection, which will launch for fall 2014...will range from $295 to $695."
- "Tumi will open a 6,000-square-foot showroom to showcase the outerwear at 463 Seventh Avenue. It is scheduled to open by the end of the year, when the first pieces from the collection will be launched."
Takeaway: Seriously??? Are they going to make apparel out of the same kevlar-like material that they use to make those bullet-proof briefcases?
SPLS - Staples launches new price match policy
(http://www.retailingtoday.com/article/staples-launches-new-price-match-policy)
- "Starting Nov. 3, the retailer will match prices on items sold and shipped by Amazon.com or any retailer that sells products in retail stores and online under the same brand."
Takeaway: While this is partially necessary to drive volume, we don't see how in the world it could be margin accretive.
DKS - Dick’s grand-opens three new stores
(http://www.chainstoreage.com/article/dick%E2%80%99s-grand-opens-three-new-stores)
- "Dick’s Sporting Goods grand-opened three new stores on Friday, bringing the total store count to 541 in the U.S."
- "The chain opened a store in Redding, Wash., at the Redding Hilltop Center, its 30th store in the state of Washington. A new opening in Victorville, Calif., at The Mall of Victor Valley, marks the 31st Dick’s store in California. And in Kansas, at the Midstate Plaza in Salina, Dick’s opened its eighth store in the state."
Takeaway: The last thing that DKS should be doing is adding more stores. It should be figuring out why it can't comp.
JOSB , MW - Jos. A. Bank keeps Men's Wearhouse door open
(http://www.thedeal.com/content/consumer-retail/jos-a-bank-keeps-mens-wearhouse-door-open.php)
- "Despite Men's Wearhouse Inc.'s rejection of a $2.3 billion unsolicited bid, Jos. A. Bank Clothiers Inc. and its private equity partner Golden Gate Capital will continue to seek a friendly, negotiated agreement, according to a source familiar with the situation."
- "The source would not rule out a scenario of Jos. A. Bank sweetening its offer to entice the target to the negotiating table, but added that Jos. A. Bank and Golden Gate are not interested in bidding against themselves."
SCC - Sears to hold first-ever Canadian Thanksgiving Black Friday sale
(http://www.retailingtoday.com/article/sears-hold-first-ever-canadian-thanksgiving-black-friday-sale)
- "Sears Canada is getting ready to introduce the first-ever Black Friday sale in Canada to accompany Canadian Thanksgiving in October."
- "'Our customers already participate in our Black Friday sale in November so we wanted to give them one that, in a similar style to the U.S., would accompany our own Thanksgiving Holiday,' said Doug Campbell, president and CEO, Sears Canada. 'With the variety of sales being offered in stores and online they can pick up new home essentials or even get a head start on their Holiday shopping.'"
GOOG - Google Is Going to Include Your Face in Its New Ads
(http://www.businessweek.com/articles/2013-10-11/google-plans-to-include-users-faces-in-ads)
- "On Friday the company said it would begin including recommendations that Google+ users make in advertisements. The new policy kicks in on Nov. 11."
- "Here’s how it works: You use Google+ to rate some product or service. It turns out the company behind that product wants to advertise on Google. When the company purchases an ad, your friends will see a version that includes your photo along with what you said about the product."
INDUSTRY NEWS
Accenture study forecasts 11% hike in US holiday spending
(http://www.fibre2fashion.com/news/apparel-news/newsdetails.aspx?news_id=153863)
- "U.S. consumers intend to spend an average of $646 on gifts this holiday season, which would represent an 11 percent increase over the $582 they planned to spend, on average, in 2012, according to Accenture’s annual holiday shopping survey."
- "The Accenture Holiday Shopping Survey found that one in five consumers (20 percent) plans to spend more on gifts this year, compared to 14 percent who planned to increase their holiday spending in 2012. They also are more likely to overspend their holiday budget this year (46 percent, compared to 34 percent in 2012)."
Takeaway: One in five consumers intend to spend more this year, but they forecast an 11% rise in total spending (which would be one of the biggest holiday's on record)??? There's some flawed logic here. We'd love to know who funded the survey.
Bangladeshi Garment Executive Held Captive by Workers
- The managing director of a Bangladeshi apparel company where 112 employees died in a November factory fire was held captive by workers for 12 hours over the weekend in a pay dispute.
- "Police said workers demanding salaries and severance payments locked Delwar Hossain of Tuba Group in his office for much of the day Saturday. Mr. Hossain was later released, police said. But workers on Sunday were still holding his brother-in-law as well as a Tuba factory manager, according to police."
- "Workers said Tuba, a garment manufacturer that owns 12 Bangladeshi clothing factories, had closed one of its factories Friday without notifying them or providing back pay and severance. With the Muslim Eid al-Adha festival just two days away, they said they couldn't afford to go home empty-handed."
Takeaway: And who says labor costs are not going up.
Automated Ad Buying Surges Online
- "Automated ad buying, in which marketers use computerized systems to target users based on consumer data and Web-browsing histories, is expected to increase 56% this year in the U.S. to $7.4 billion, according to a study scheduled for release Monday by Magna Global, the research and ad-buying arm of Interpublic Group of Cos."
- "Such 'programmatic buying' would represent about 53% of the $14 billion U.S. market for display-related ad businesses, the company said."
- "About $3.9 billion of the expected automated ad spending this year, Magna said, will be through real-time bidding, in which advertisers, through machines, automatically bid for inventory that meets their ad specifications within milliseconds of it becoming available."