EVENTS TO WATCH OVER THE NEXT 24 HOURS
Hedgeye RH Black Book: Tomorrow, Wednesday Oct 16th at 11am.
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- Conference Code: 779954#
- Materials: CLICK HERE
Please email for further details.
WWW: Analyst Meeting today in NYC. Webcast: http://phx.corporate-ir.net/phoenix.zhtml?c=88408&p=irol-irhome
ICSC - Chain Store Sales Index
Takeaway: Chain store sales remain anemic according to this morning's ICSC reading -- with the second lowest growth rate for the year to date.
WMT - Walmart shelves in Springhill, Mansfield, cleared in EBT glitch
- "Shelves in Walmart stores in Springhill and Mansfield, LA were reportedly cleared Saturday night, when the stores allowed purchases on EBT cards even though they were not showing limits."
- "[Police Chief Will] Lynd explained the cards weren't showing limits and they called corporate Walmart, whose spokesman said to let the people use the cards anyway."
- "Lynd says at 9 p.m., when the cards came back online and it was announced over the loud speaker, people just left their carts full of food in the aisles and left."
- "It all happened at the end of a day in which the EBT system went down in several states, including Louisiana. Xerox, a vendor for the EBT system, experienced a power outage while conducting a routine backup test in one of the company's locations. While the system was back up Saturday night, it appears that it was not functioning entirely properly in some areas."
- Asked whether Walmart would be taking the loss on any food purchased on the cards that did not show limits, or on the perishable food left behind in carts, [Wal-Mart spokesman] Whaling would only say that 'we monitored transactions during the outage.'"
Takeaway: This is, without a doubt, the strangest in-store blow-up I've ever seen. Ever is a long time. Not sure whose reputation it's worse for -- WMT or Xerox. Probably Xerox (WMT is used to bad press).
BRBY, AAPL - Apple Hires Burberry CEO as Retail Chief
- "[AAPL] tapped Angela Ahrendts, currently chief executive of British luxury retailer…[BRBY]...to head up its retail efforts…"
- "Apple said Ms. Ahrendts, 53 years old, would join Apple next year in the newly created position of senior vice president of retail and online stores. She will become a member of the executive team and report directly to Apple Chief Executive Tim Cook."
- The appointment fills a big gap in Apple's retail operations, stemming from the 2011 departure of Ron Johnson, who vacated the role of senior vice president for retail to join...[JCP]. His replacement, John Browett, left the company last year."
Takeaway: It's amazing that Ahrendts went from such humble beginnings at the former Liz Claiborne (FNP), then landed a dream job at Burberry, only to end up in the best job in all of retail.
WWW - Keds Debuts Retail Shop
- "Keds…recently opened its first freestanding store, a 150-sq.-ft. shop at a mall in Natick, Mass."
- "The idea was to launch in a kiosk-designated area, known for high foot traffic. The spot features signage to tell the brand story, including Taylor Swift marketing materials, and showcases 45 different SKUs with a focus on Keds’ fashion push. Some featured styles are from the Taylor Swift and Kate Spade collaborations."
Takeaway: Our view remains that Keds will go from being a $100mm brand today, to $400mm over 4-years. Most growth will be outside the US. WWW will hit on this today at its NYC analyst meeting (though its growth goals will be below ours).
AMZN - Soap Opera: Amazon Moves In With P&G
- "Each day, P&G loads products onto pallets and passes them over to Amazon inside a small, fenced-off area. Amazon employees then package, label and ship the items directly to the people who ordered them."
- "The e-commerce giant is quietly setting up shop inside the warehouses of a number of important suppliers as it works to open up the next big frontier for Internet sales: everyday products like toilet paper, diapers and shampoo."
- "Amazon instead is going out to its suppliers with a program it calls Vendor Flex. By piggybacking on their warehouses and distribution networks, Amazon is able to reduce its own costs of moving and storing goods, better compete on price with Wal-Mart and club stores like Costco Wholesale Corp., and cut the time it takes to get items to doorsteps."
- "Household staples have traditionally been considered too bulky or cheap to justify the cost of shipping. Americans currently buy just 2% of such goods online, retail analysts estimate. Yet even that sliver of business was worth $16 billion in 2012, according to Nielsen Holdings NV, and the research firm believes online sales will grow by 25% a year to $32 billion in 2015."
Takeaway: This is a very big idea. So good for AMZN, and so bad for your local supermarket.
RH - Restoration Hardware launches Holiday sourcebook…and yes you can have them delivered
Takeaway: We're hosting a call tomorrow to discuss our thesis on RH, and how we get to $8+ in earnings power. We'll also address key issues we explored in our consumer survey, one of which is consumers' attitude towards the Sourcebook. We were surprised by what we uncovered. Dial in tomorrow at 11am EDT.
HMB - H&M Sales Fall 2% in September
- "Hennes & Mauritz AB said same-store sales fell 2 percent in September after rising 4 percent in August.
- Sales in local currencies climbed 7 percent, a decrease over August, when they gained 14 percent, the Swedish high-street retailer said."
- "In September 2012, H&M had reported a 6 percent rise in same-store sales and a 15 percent increase in local currencies."
- "The store count stood at 3,006 doors on Sept. 30, compared with 2,669 stores at the same time last year."
Takeaway: H&M is the most globally-diversified apparel retailer. Germany accounts for about 20% of sales, the US, UK and France each account for about 8%, and then a dozen other countries account for 5% or less. It's a great barometer for the global retail economy.
ADS - Lacoste to Outfit Team France in Sochi
- "The Lacoste crocodile logo will make his way onto Team France’s outfits at the Olympic and Paralympic Games in Sochi, Russia, in February. The Lacoste brand replaces Adidas as the official outfitter for the French Olympic team."
Takeaway: It's odd that Adidas lost France to Lacoste given the sheer differential in the size of each brand's endorsement wallet. There's no way Lacoste could outbid Adibok, which tells us that Adi simply walked away.
Moncler - Moncler Sets IPO by End of Year
- "After months of speculation and a shelved initial public offering in 2011, Moncler SpA on Monday filed documents to list on the Italian Stock Exchange."
- "The IPO is expected to take place by the end of the year and sources say the company will float between 25 and 30 percent of its total shares. Industry sources said Moncler’s IPO could value the company at around 2 billion euros, or $2.7 billion at current exchange."
RMS - Hermès Opens New Milan Flagship
- "After 26 years on Via Sant’Andrea, Hermès has changed its Milanese address, moving its flagship to Via Montenapoleone."
- "On Monday, the French luxury company unveiled its new boutique covering 6,459 square feet, almost double the space of the former unit."
WMT - Supreme Court to Hear Wal-Mart ERISA Case
- The Supreme Court is set to hear oral arguments Tuesday in a case involving a former Wal-Mart Stores Inc. employee whose long-term disability benefits claim was denied by the retailer’s insurance provider.
- " The Supreme Court granted writ of certiorari in April to a petition filed by Julie Heimeshoff, a former senior public relations manager for the retailer, against Hartford Life & Accident Insurance Co. and Wal-Mart."
- "Heimeshoff, who worked for Wal-Mart from 1985 to 2005, applied for long-term disability benefits under Wal-Mart’s ERISA plan administered by Hartford in August 2005 after she fell ill with what she said was fibromyalgia, chronic pain and other conditions. But Hartford denied her claim that December and again on a subsequent appeal in 2007, arguing its own rheumatologist consultant determined that Heimeshoff was 'able to perform the activities of her sedentary occupation,' according to court documents."
Takeaway: Another example of how WMT can't win. Either it ponies up and pays a claim that may or may not be valid -- setting a dangerous financial precedent -- or it goes to court and gets bad press over not paying a disabled worker (even if not disabled, that will be the perception).
DECK - Deckers Wins Design Lawsuit
- "Deckers Outdoor Corp. has emerged as the winner of a lawsuit filed by Intermedium Shoes B.V."
- "The suit originated in The Hague District Court and referenced a design patent for the Ugg Australia Bailey Button boot."
- "The court decision ordered Intermedium to 'cease and desist the knock-off product.' And in addition, Intermedium will send a letter to all customers who purchased the product to explain that the infringement was a design right belonging to Deckers."
Takeaway: Deckers has not had many challenges to it's Intellectual Property. This one is a particularly big win.
CHS - Chico’s FAS enters Canada with White House Black Market
- "Chico's FAS is expanding outside of the United States, opening a White House Black Market store at Yorkdale Shopping Centre, Toronto on Oct. 24. The women's apparel retailer will open its second Canadian location at Square One, Mississauga on Oct. 29, followed by Upper Canada Mall, Newmarket on November 12."
Recasting the Retail Store in Today's Omnichannel World
- "Despite a host of new shopping options, talk of the demise of brick and mortar is premature. Retail stores remain at the heart of the customer relationship and play a main role in fulfilling multi-channel demand."
- "...our online study of 3,200 U.S. and UK consumers shows that stores remain at the heart of retailers' relationships with consumers, even in today's "omnichannel" world where online and mobile sales appear to rule.1 The evidence is clear: Consumers value the retail store experience on multiple levels and continue to make the vast majority of their purchases in stores. And, importantly, the value of stores extends well beyond brick-and-mortar to help increase volume and revenue across all channels."