• Badge

    A Decade of Revolution Declare Your Research Independence

Takeaway: Retail sales lackluster for the week. SHLD closes Canadian stores, while TGT opens. Sharp slowdown in UK retail. Classic quote from JCP.


WMT - Investor Meeting (Sao Paulo): Tuesday 10/29

JNY - Earnings Call: Wednesday 10/30 8:30 am

TGT - Financial Community Meeting: Wednesday 10/30 1:00 pm


ICSC - Chain Store Sales Index


Takeaway: After a flash of brilliance last week, retail sales numbers per ICSC (survey of 80 retailers) dipped below the growth rate seen in the prior two years. While we're still not in the holiday spending frenzy, these numbers are getting increasingly important as each week passes. The retail industry better see them pick up in very short order, otherwise the holiday shopping season will start out as highly promotional.

What's New Today in Retail (10/29) - chart1 10 29

What's New Today in Retail (10/29) - chart2 10 29

UK retailers suffer sharp slowdown in sales, says CBI


  • "Retailers suffered a sharp slowdown in sales this month, according to an industry survey that has cast doubt on the pace of the wider UK economic recovery. After a strong run of growth, sales ground to a halt at the start of October and came in well below City forecasts, the CBI business group said."
  • "The main sales balance in its monthly survey came in at +2, down sharply from +34 recorded in September and much lower than +33 forecast by economists in a Reuters poll. The balance, which is the difference between the percentage of retailers reporting an increase and those reporting a decrease in sales, was the weakest since June and breaks a three-month run of strong sales growth."


Takeaway: While CBI has had mixed accuracy in the past. Such a strong directional move can't be ignored. Where there's smoke, there's fire.



JCP - Penney again says sales trends are improving


  • "J.C. Penney Co Inc told investors for the third time in less than five weeks that sales trends are improving and reaffirmed its forecast calling for positive comparable-store sales results coming out of the third quarter."
  • "'I told lenders it would be one thing if we had two things wrong and they couldn't be fixed. We have 30 things wrong and they can all be fixed,' Ullman said on Monday morning."

Takeaway: We're no fan of Ullman. But his quote is classic. He's absolutely right. There's nothing JCP has on its plate that cannot be fixed.

TGT - Target Set to Complete Canadian Store Openings for 2013


  • "...Target is pleased to announce the opening dates for 33 additional Canadian store locations spanning across nine provinces, including its first stores in New Brunswick, Prince Edward Island and Newfoundland. Thirty-one store locations are scheduled to open on November 13, and the remaining two locations will open on November 22, completing Target's Canadian store openings for 2013. Additional stores opening beyond 2013 will be announced at a later date."

Takeaway: Sears closes more Canadian stores on the same day Target announces it's opening 33 stores. Go figure.

KORS - Michael Kors to join S&P 500, replaces NYSE owner


  • "Michael Kors Holdings Ltd.  will join the S&P 500 after the close of trade Friday, S&P Dow Jones Indices said late Monday. The jewelry retailer will replace stock-exchange operator NYSE Euronext, which is being acquired by IntercontinentalExchange Inc.in a deal expected to be completed on or about that date, the index publisher said."

Takeaway: Completely appropriate move. If Coach is in the S&P, KORS definitely should be.

SHLD - Sears Holdings Provides Update On Actions To Transform Business And Third Quarter Performance


  • "Today, we...are announcing a number of actions intended to improve our financial flexibility and accelerate our transformation into a leading Integrated Retailer that fosters relationships with members through our Shop Your Way platform. We also are providing an update on our third quarter operating performance."
  • "First, Sears Canada announced today the sale of five store leases to Cadillac Fairview Corporation Limited for total consideration of $400 million Canadian.  The transaction is expected to close in the next ten business days."
  • "Second...we will continue to evaluate our stores in the context of our Integrated Retail strategy. ...we will review each location, including leased locations that are set to expire, and decide whether or not to renew such leases. We expect to improve our financial performance by removing unprofitable locations, and redeploying the capital tied up in those locations…"
  • "Third...We are evaluating separating both our Lands' End business and Sears Auto Center ('SAC') business.  We believe separating the management of these two businesses from Sears Holdings would allow them to pursue their own strategic opportunities, optimize their capital structures, attract talent, and allocate capital in a more focused manner while bringing our business unit structure to life outside of the Sears Holdings portfolio."
  • "Finally, Sears Holdings announced an update regarding its operating performance for the third quarter ending November 2, 2013.  Comparable store sales for the twelve-week period ended October 26, 2013 declined 3.7%, with a decline of 4.8% for Sears Domestic stores and 2.6% for Kmart stores."

Takeaway: The monetization of Canadian stores, and the exploration of a sale of Land's End and Auto are all massive moves for SHLD. And they're probably the right ones. The only problem with selling such assets, is that the ones that are worth something to someone else are also the ones that are worth keeping.

MW - Men's Wearhouse Outlines Stand-alone Strategy


  • "On Monday, the specialty store retailer released a 39-page investor update that detailed the reasons why 'Men’s Wearhouse’s stand-alone value proposition is superior to Jos. A. Bank’s proposal.'" 
  • "The company reiterated that position Monday, saying its sales of $2.5 billion are more than double those of Jos. A. Bank’s, and it is in a position 'to deliver outsized growth' as an independent business."
  • "It is projecting total comparable-store sales growth of 4 to 5 percent in the core Men’s Wearhouse division, driven by an increasing penetration of its newly acquired and higher-margin Joseph Abboud brand. The retailer also plans to add 100 new Men’s Wearhouse stores to its stable, and anticipates 'sales growth and margin improvement as a result of new and upscale proprietary brand initiatives' such as the introduction of higher-priced Joseph Abboud rental tuxedos, and the opportunity to build the Joseph Abboud brand to a $300 million to $400 million business."

Takeaway: The reality is that MW is probably right. It is evolving itself into a house of high-end brands (recent purchase of Joseph Aboud, and rumors that it is looking to buy Allen Edmonds).  In effect, it is transforming itself into a place where Men actually want to shop. Go figure. It's rare in retail to find a concept that successfully migrates UP the food chain. MW appears to be doing it. That's why JOSB wants it -- and it's trying to buy it on the cheap. Good luck with that...

TGT, RSH, M - Retailers take print ads digital to entice you to shop — at their stores


  • "Starting Monday, you can find online weekly print ads for retailers such as Target Corp.,RadioShack Corp. and Macy’s Inc. not just on their respective websites, but also via a one-stop shop app and website called Retale, which will feature up to 25 major retailers’ weekly circulars by Black Friday."
  • "The digital version will include such features as a web video to provide additional details about a product."
  • "About 290 billion print circulars reportedly are distributed each year."

LVMH - LVMH’s DFS Group Plans To Open First Europe Shop in 2016


  • "DFS Group, an operator of duty-free shops controlled by LVMH...said it plans to open its first stores in Europe to cater to Chinese consumers who travel more frequently to the region."
  • "The company plans to add 'a few' outlets in Europe in 2016 and is looking at prime destinations for Chinese tourists, such as France, Italy and Switzerland, Chief Operating Officer Michael Schriver said. DFS, which gets more than half of its global sales from Chinese shoppers, currently has no outlets in Europe."

Takeaway: Smart. Upwards of 30% of shopping in Western Europe is driven by Chinese tourists. Don't ignore them.


China and Vietnam Remain Clear U.S. Apparel Leaders So Far This Year


  • "Apparel imports from Vietnam have totaled $5.3 billion year-to-date, and have grown 4 times faster than those from China so far this year on a dollar basis, though the total volume is less than one-third the size of China’s."
  • "U.S. apparel imports from China totaled $3.4 billion in August, bringing the year-to-date total to $19 billion. Year-to-date units (on a square meter equivalent basis) rose 5.9%, driving the cost per unit down by a higher-than-average 2.8%."
  • "Total apparel imports have grown 3.8% on a dollar basis through August compared to the same period last year, according to the most recent data published by the US Department of Commerce’s Office of Textiles and Apparel (OTEXA). Total unit volume, measured on a square meter equivalent basis, has increased 5.8% in the year-to-date period, driving the average cost per SME down by almost 2%."

What's New Today in Retail (10/29) - chart3 10 29

What's New Today in Retail (10/29) - chart4 10 29

Altagamma Study Points to Slowdown in Luxury


  • "The luxury goods sector is expected to log only a 2 percent gain in 2013 revenues to 217 billion euros, or $299.5 billion at current exchange, hurt by second- and third-quarter results that are 'close to stagnation' and by currency headwinds, according to the most recent study by Bain & Co. and Fondazione Altagamma, the Italian luxury goods association, presented on Monday morning... "
  • "Upturning a recent trend in the past few years, the Americas grew faster than Mainland China, showing a 4 percent gain, compared with the latter’s 2.5 percent increase. This reflects the increasing number of Chinese tourists visiting cities such as Las Vegas and Los Angeles. A number of stores that opened in secondary U.S. cities also helped drive the growth. In 2013, the Americas are expected to post sales of 69 billion euros, or $95.2 billion, in 2013."

Retailers adds 15,200 jobs in September – NRF


  • "The National Retail Federation calculated retail industry job gains at 15,200 in September, and 289,000 jobs year-over-year, a 2.4 percent increase over the same month last year and 2.0 percent higher than total private sector jobs over the past year."