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Takeaway: Athletic sales still in good shape. AMZN takes up free-shipping minimum – risky bet. UA mgmt shuffle. MW buying Allen Edmonds = slam dunk.

EVENTS TO WATCH OVER THE NEXT 24 HOURS

SKX - Earnings Call: Wednesday 10/23 4:30 pm

CRI - Earnings Call: Thursday 10/24 8:30 am

UA - Earnings Call: Thursday 10/24 8:30 am

ECONOMIC DATA

 

Takeaway: While not the gangbusters rebound we saw last week, we're looking at a still-respectable 4.2% growth rate in top line for the athletic footwear space last week. This syncs with the rebound we saw in the ICSC numbers yesterday. Still the Nike, Jordan and UnderArmour show.

What's New Today in Retail (10/23) - chart1 10 23

What's New Today in Retail (10/23) - chart2 10 23

What's New Today in Retail (10/23) - chart3 10 23

What's New Today in Retail (10/23) - chart4 10 23

What's New Today in Retail (10/23) - chart5 10 23

COMPANY NEWS

MW - Men's Wearhouse Interested in Allen Edmonds

(http://online.wsj.com/news/articles/SB10001424052702303448104579151892364648738?mod=Business_newsreel_2)

  • "…[MW] is pursuing a possible purchase of dress-shoe maker Allen Edmonds Corp., according to people familiar with the matter…"
  • "It is unclear who else, if anyone, may be bidding for closely held Allen Edmonds, which could fetch a price in the low hundreds of millions of dollars, according to the people. A deal for the company, with Men's Wearhouse or someone else, could be reached next month, one of the people said."

Takeaway: This is absolutely perfectly in line with MW's push to elevate itself to become a house of higher-end men's brands. It also should add important context to why it thwarted JOSB's effort to acquire it -- simply put, MW thinks that it's worth more as a stand-alone company.

AMZN, EBAY - Amazon Raises Free-Shipping Minimum to $35; eBay to Expand Same-Day Delivery

(http://online.wsj.com/news/articles/SB10001424052702303672404579152054283012952?mod=ITP_marketplace_0)

  • "EBay...ramped up its rivalry with Amazon.com...over same-day delivery with an acquisition and plans to reach 25 markets by next year. Meanwhile, Amazon raised the minimum order size required for most U.S. customers to qualify for free shipping."
  • "Amazon's increase in the minimum purchase for free delivery seemed tied to an effort to push users to sign up for Amazon Prime, which offers two-day delivery for $79 a year. It raised the minimum to $35, from $25; Amazon said it was the first such change in over a decade. An Amazon spokesman declined additional comment."
  • "Even at $35, Amazon's threshold for free shipping is lower than several important rivals. Wal-Mart last week announced free shipping on online orders of $50 or more. Previously Wal-Mart had offered free shipping on select items or for individual promotions."
  • "Target...offers free shipping for orders of any size placed on Target.com that are paid for using the retailers store-branded credit or debit card. Otherwise, shoppers need to spend $50 on eligible items for free shipping."
  • "…Barnes & Noble...offers free shipping to customers who spend $25 or more. A spokesman declined to comment."

Takeaway: This is a bold move by AMZN -- one that needs to pay off. Simply put, AMZN needs to meaningfully boost its Prime customer base to offset the risk of being less competitive from a shipping perspective. Keep in mind that it's not just the fee associated with Prime, but rather Prime customers have an extremely high purchase rate because of 1) the ease of shopping via '1-click', and 2) the perception that shipping is free.

UA - Under Armour Names Kip Fulks President of Product and Henry Stafford President of North America 

(http://www.sportsonesource.com/news/article_home.asp?Prod=1&section=1&id=48438)

  • "Kip Fulks has added president of product to his current responsibilities as chief operating officer, while Henry Stafford is now serving as president of North America."
  • "Further enhancing its senior executive team, Under Armour also announced the addition of Susie McCabe as senior vice president, global retail and Jason LaRose as senior vice president, global e-commerce."
  • "McCabe's extensive management experience includes over 16 years with Ralph Lauren Corporation... In her new role,  McCabe will be responsible for Under Armour's brand house and factory house stores across the US and for the company's global retail strategy."
  • "LaRose joins Under Armour from Express, where he served as senior vice president of e-commerce….LaRose will oversee the global standard for all online consumer experiences and will be responsible for driving web business and strategies to further connect with the brand's core consumer."

Takeaway: Interesting how soon this comes so soon after Nike's realignment. Nonetheless, Fulks has proved to be competent on many levels -- though we hope he's not being spread thin as COO and President of Product. Each of them is a full time job.

NKE - Nike unveils hyper elite basketball crew socks

(http://www.fibre2fashion.com/news/garment-company-news/newsdetails.aspx?news_id=154353)

  • "Featuring specialized cushioning that responds to on-court movements, the Nike Hyper Elite Basketball Crew Socks deliver excellent impact protection. Dri-FIT fabric wicks sweat away and moves it to the fabric surface helping to keep feet dry and maintain a snug fit during play."

What's New Today in Retail (10/23) - chart6 10 23

Takeaway: Seemingly a rounding error -- but keep in mind that Nike used to sell plain white socks that topped out at around $10 per pair. Now they're selling them at $20 and higher.

WMT, GPS - Wal-Mart, Gap Press for Safety in Bangladesh

(http://online.wsj.com/news/articles/SB10001424052702304402104579151942188514188?mod=WSJ_business_whatsNews)

  • "A group representing two dozen North American retailers including [WMT] and [GPS] released a list of more than 620 factories that they use in Bangladesh, a move geared toward making its supply chain more transparent and improving working conditions in the South Asian country's garment industry."
  • "Those factories employ about 1.1 million workers, or about a quarter of the country's garment workers, according to the Alliance for Bangladesh Worker Safety, the retail group."
  • "Ellen Tauscher, a former California congresswoman who chairs the group's board of directors, said the group wants to send a message to Bangladesh factories that they won't get business from the U.S. if they 'remain in the shadows and don't adhere to the kinds of standards that are going to create a safe workplace.'"

Takeaway: Don't shoot the messenger here, but the reality is that this is mostly PR posturing for both GPS and WMT. The reality is that when push comes to shove, they won't foot the bill for the changes that they demand. They want safer conditions, but they want the factory to pay for it. If the factory owners don't write the check, then workers will continue to function in extremely unsafe facilities.

INDUSTRY NEWS


Deloitte predicts bright holiday shopping season for retailers

(http://www.retailingtoday.com/article/deloitte-predicts-bright-holiday-shopping-season-retailers)

  • "Deloitte's 28th annual survey of holiday spending intentions and trends indicates shoppers surveyed plan to spend an average of $421 on holiday gifts this year, up from $386 last year. They also expect to buy an average of 12.9 gifts, ending a five-year decline in the number of gifts they plan to purchase."
  • "Nearly half (47%) of consumers plan to purchase items online, followed by 44% at discount/value stores. More than three-quarters (76%) of consumers cite convenience as a reason for shopping online, followed by price (63%)."

Takeaway: Maybe this survey has been directionally accurate in the past, but a 9% boost in per capita spending? Not gonna happen.