What's New Today in Retail (11/25)

Takeaway: Great CEO move by WMT. WWW’s McCarthy refocuses Merrell. JCP purposefully irreverent in dispute with Kmart. ANF fire in Paris. JNY SHLD LTD

EVENTS TO WATCH OVER THE NEXT 24 HOURS

 

CHS - Earnings Call: Tuesday 11/26 8:30 am

DSW - Earnings Call: Tuesday 11/26 8:30 am

TIF - Earnings Call: Tuesday 11/26 8:30 am

BWS - Earnings Call: Tuesday 11/26 9:00 am

 

COMPANY NEWS

 

WMT - Doug McMillon Elected New Chief Executive Officer of Wal-Mart Stores, Inc.

(https://www.streetaccount.com/pressrelease.aspx?ticker=WMT&intraday_id=1401599)

 

  • "Wal-Mart Stores, Inc. today announced that its board of directors elected company veteran Doug McMillon, 47, to succeed Mike Duke, 63, as president and chief executive officer, effective February 1, 2014. McMillon was also elected to the company's board of directors, effective immediately."
  • "Duke will continue serving as chairman of the executive committee of the board and, in the tradition of his predecessors, stay on as an advisor to McMillon for one year. The company plans to make an announcement on McMillon's successor as CEO of Walmart International by the end of the fiscal year."

 

Takeaway: McMillon's profile has been growing inside WMT, so this is not a complete shock. But we definitely are surprised by the timing. All that said, the idea of having a 47-year old CEO with heavy International experience is extremely appetizing to us. Let's face it, there's no more unit growth in the US, and WMT can't comp consistently better than 1%. The guy can't exactly do any damage to the US business, and Int'l will have a bigger profile. This is a win-win.

 

JCP - J.C. Penney Will Be Replaced by Allegion in S&P 500 After Drop

(http://www.bloomberg.com/news/2013-11-22/j-c-penney-will-be-replaced-by-allegion-in-s-p-500-after-drop.html)

 

  • "J.C. Penney Co...will be replaced in the Standard & Poor’s 500 Index by Allegion Plc., S&P said in a statement today."
  • "The S&P 500 change will take place after the close of trading on Nov. 29…"
  • "J.C. Penney will bump Aeropostale Inc. from the S&P MidCap 400 Index, and Aeropostale will displace Corinthian Colleges Inc. from the S&P SmallCap 600."

 

Takeaway: Not a surprise for two reasons…1) JCP can't be in the S&P with its current market cap for too much longer, and 2) The stock dropped like a stone headed into this announcement. Someone had the information.

 

JNY - Sycamore in talks to buy Jones Group for less than $16/shr-sources

(http://www.reuters.com/article/2013/11/22/jonesgroup-sycamore-idUSL2N0J71XS20131122)

 

  • "Private equity firm Sycamore Partners LLC is in advanced talks to acquire apparel retailer Jones Group Inc and is working toward a deal in the next few weeks, according to sources familiar with the process."
  • "Sycamore is discussing a price of less than $16 per share - or roughly $1.3 billion based on shares outstanding - and is in the process of lining up financing for the deal, two people said on Friday."

 

Takeaway: Looking back as far as 10-years, JNY has managed its M&A pricing through the press. Whenever it sold an asset, there was always a lot of noise around how many bidders there were, and what they were willing to pay.  It seemed as if WWD was their banker, and not Morgan Stanley. This one is no exception. The press talked about 3 bidders at a price North of $16, and now we're down to 1 bidder at a price South of $16. We won't miss JNY after it goes private.

 

WWW - Merrell's Gene McCarthy Spells Out His Plans

(http://www.wwd.com/footwear-news/business/merrells-gene-mccarthy-spells-out-his-plans-7289942?module=Footwear%20News-Business-second)

 

  • "The company has to return to something very simple: hiking and trail, outdoor and performance. So my message internally and externally will be this 'Out.Perform' message. It can be a tagline, but it needs to be more of a mantra. Everything we do needs to be tethered to the idea of outdoors and performance. We want to keep these legacy items, like the Jungle Moc or the Moab, but we want to keep them in their rightful place. I don’t want to lead with them."
  • "I need to integrate apparel and footwear. And that, to me, [means] I don’t want to be a footwear, apparel and accessories brand. I just want to be a brand. Apparel needs to have a visual place with footwear [in our stores] because you need to create mindshare with apparel before you can get market share."

 

What's New Today in Retail (11/25) - chart3 11 25

 

Takeaway: So nice to hear that McCarthy is not going to lead with a dinosaur like the Jungle Moc. We wish it would go away, but the reality is that it's a great comfort shoe for people that don't care how they look and are too lazy to tie their shoes.

 

JCP, SHLD - JC Penney Gets Sassy With Kmart Over 'Jingle Bells' Ad

(http://mashable.com/2013/11/21/jc-penney-kmart-twitter/?utm_medium=feed&utm_source=rss)

 

What's New Today in Retail (11/25) - chart1 11 25

What's New Today in Retail (11/25) - chart2 11 25

 

Takeaway: This exchange speaks for itself. JCP remains irreverent in its marketing (which is a good thing).

 

WMT, AMZN - Wal-Mart Lowers Free Shipping Minimum to Compete with Amazon

(http://www.fierceretail.com/story/walmart-lowers-free-shipping-minimum-compete-amazon/2013-11-22)

 

  • "Effective today, Walmart has lowered its free shipping minimum price on Walmart.com from $50 to $35 just in time for the holiday season. The new price makes Walmart's online shipping minimum exactly the same amount as Amazon's."

 

Takeaway: The key consideration is not a war between AMZN and WMT, but rather the precedent that WMT is setting for every other retailer than competes with either of the two goliaths. 

 

LTD - L Brands, Inc. (Formerly Known As Limited Brands, Inc.) Announces New Stock Ticker Symbol

(http://www.prnewswire.com/news-releases/l-brands-inc-formerly-known-as-limited-brands-inc-announces-new-stock-ticker-symbol-233061131.html)

 

  • " L Brands, Inc. announces today that in relation to the March 2013 announcement in which the company changed its name from Limited Brands, Inc. to L Brands, Inc., the company will change its NYSE stock ticker symbol from LTD to LB, effective Dec. 2, 2013."

 

SHLD, SCC - Eddie Lampert considers sale of Sears Canada

(http://nypost.com/2013/11/24/sears-ceo-considering-sale-of-company/)

 

  • "Lampert is interviewing multiple banks including Goldman Sachs about conducting a prospective process, according to sources close to the situation. Spokesmen for Sears and Goldman declined to comment."

 

Takeaway: This is a no-brainer. SHLD has nearly 4,000 stores, and can't turn a profit. They need to monetize anything that's not nailed down.

 

Moncler - Moncler Gets Green Light for IPO

(http://www.wwd.com/business-news/financial/moncler-gets-green-light-for-ipo-7289174?module=hp-markets)

 

  • "Moncler SpA on Friday received the green light from the Italian Stock Exchange to proceed with its public listing."
  • "The Italian luxury brand still needs to wait for approval from Consob, Italy’s equivalent of the Securities and Exchange Commission, which is expected next week, before it kicks off its two-week road show."
  • "Sources indicate that the IPO is expected to take place in mid-December and that the company will float around 30 percent of its total shares. Industry sources said Moncler’s IPO could value the company at around 2 or 2.4 billion euros, or $2.68 to $3.22 billion at current exchange."

 

ANF - Fire Ravages Abercrombie Flagship in Paris

(http://www.wwd.com/retail-news/retail-features/fire-ravages-abercrombie-flagship-in-paris-7290525?module=hp-topstories)

 

  • "A fire has ravaged the Abercrombie & Fitch Co. flagship on Avenue des Champs-Elysées in Paris, and the store will require a full refit before it can reopen, according to a spokesman for the Paris fire brigade."
  • "The blaze broke out in a clothing display section on the second floor of the four-story unit shortly before 7 a.m. on Sunday and destroyed 1,075 square feet of retail space, said Lieutenant colonel Frédéric Grosjean."

 

INDUSTRY NEWS

 

U.S., Bangladesh to Sign Accord

(http://www.wwd.com/business-news/government-trade/us-bangladesh-to-sign-accord-monday-7289166?module=hp-topstories)

 

  • "The U.S. and Bangladesh are set to sign a Trade and Investment Cooperation Forum Agreement on Monday that is said to provide an important mechanism for the two countries to discuss bilateral trade and investment issues, as well as be a forum to pursue cooperative activities."
  • "In July, the U.S. and Bangladesh agreed to a Bangladesh Action Plan, along with a statement by the U.S. on 'Labor Rights and Factory Safety in Bangladesh.' The USTR said at the time that the implementation of the actions outlined in the plan could provide a basis for the President to consider reinstatement of the Generalized System of Preferences trade benefits for Bangladesh that were suspended in June, which went into effect in September. Apparel and textiles were not covered by GSP, which included imports such as tobacco, sports equipment, porcelain china and plastic products."