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Takeaway: More JCP drama. ESL seeing redemptions? JWN tops shopper poll. LeBron spanks NKE. GPS shines with a scant 2% comp. SHLD selling Land’s End.

EVENTS TO WATCH

 

Hedgeye Black Friday Consumer Survey: Focus on JCP.  We'll be conducting Round 2 of our JCP/Department Store consumer survey on Monday December 9th at 1pm.  If you are interested in our results, please email , or .

 

COMPANY NEWS

J.C. Penney Slides for Second Day as Bass Says Sold Stake

(http://www.bloomberg.com/news/2013-12-05/j-c-penney-slides-for-second-day-as-bass-says-sold-stake.html)

Takeaway: It's more than just a stock sale… 1) Bass, 2) SEC Inquiry, 3) Board backing Ullman 'until turnaround is done'. We delve into all of them. See our note "JCP: Fundamentals vs Newsflow vs The Stock"

ULTA - Q3 Earnings

 

What's New Today in Retail (12/6) - chart2 12 6

 

Takeaway: The amazing thing is that the quarter wasn't a complete disaster, and the SIGMA trajectory is better than bad. But when a hyper-momentum stock that everyone is afraid to short misses a quarter….watch out below. We turned bearish on this name in early Oct and shorted it at $124.56 while we continued our deep dive research on the name. One rule of thumb that we've picked up over the past 20 years is that the first miss is rarely the last.

SHLD - Sears Holdings Corporation Announces Filing Of Registration Statement For Spin-Off Of Lands' End Business

(http://searsholdings.mediaroom.com/index.php?s=16310&item=137257)

  • "Sears Holdings Corporation announced that, in connection with its previously announced consideration of a separation of its Lands' End business, Lands' End, Inc. filed today a registration statement on Form 10 with the Securities and Exchange Commission. Sears Holdings intends to spin off its Lands' End business through the pro rata distribution of all of the shares of common stock of Lands' End, Inc...The spin-off is subject to the approval of the Board of Directors of Sears Holdings and the satisfaction of certain other conditions."

Takeaway: Land's End is a good brand, but one that SHLD should never have acquired in the first place. It was targeted to spearhead the 'softer side of Sears' initiative. But needless to say, it failed.

SHLD - Lampert Sees Fund Investors Check Out

(http://online.wsj.com/news/articles/SB10001424052702304096104579240320972834520)

  • "Edward S. Lampert, struggling to stem heavy losses at Sears Holdings Corp., is facing an exodus of money from his hedge fund. Mr. Lampert's hedge fund is returning billions to clients of Goldman Sachs Group Inc. who had invested with ESL Investments Inc. in 2007, according to people with knowledge of the matter. Under that deal, Goldman's clients, such as corporate pension plans, put roughly $3.5 billion with Mr. Lampert, and they have asked for it back."
  • "The investors are receiving part of their funds in stock rather than all-cash, a redemption technique Mr. Lampert has used before."

Takeaway: This one speaks for itself. Let's hope Mr Lampert is not forced to sell any of his core positions -- SHLD, AN, and GPS.

NKE - LeBron Can't Let His Old Shoes Go

(http://online.wsj.com/news/articles/SB10001424052702303722104579240491917394108?mod=WSJ_business_LeadStoryRotator)

  • "In the 18 games played since the season opened, the four-time league MVP has worn the 11s for only two full games, spending most of his time on court wearing last year's LeBron X model."
  • "Mr. James's manager, Maverick Carter, said it isn't that the star doesn't like the latest edition of his shoes. Instead, he has been making tweaks to the shoe and expects to return to wearing the 11s full time in a matter of weeks, Mr. Carter said."

Takeaway: Nike doesn't get spanked by its athletes too often. This one is a rarity. That said, you can bet that the LeBron 11 will set new sales records.

GPS - Gap Inc. Reports November Sales

(http://www.gapinc.com/content/gapinc/html/media/pressrelease/2013/med_pr_GPS_Sales_November12513.html)

  • "Gap Inc. today reported that November 2013 net sales increased 8 percent compared with last year. Net sales for the four-week period ended November 30, 2013 were $1.63 billion compared with net sales of $1.52 billion for the four-week period ended November 24, 2012."
  • "Gap Inc.’s comparable sales for November 2013 were up 2 percent versus a 3 percent increase for November 2012. Due to the 53rd week in fiscal year 2012, comparable sales for November 2013 are compared to the four-week period ended December 1, 2012."

 

November Comparable Sales Results

  • Gap Global: positive 2 percent versus positive 4 percent last year
  • Banana Republic Global: negative 1 percent versus positive 3 percent last year
  • Old Navy Global: positive 3 percent versus positive 1 percent last year

Takeaway: Sadly, a mere 2% comp out of GPS actually puts it in the top quartile of retailers for the month of November.

JWN, KSS, DSW, DKS, M, JCP - Study: Nordstrom is consumers’ favorite fashion retailer

(http://www.chainstoreage.com/article/study-nordstrom-consumers%E2%80%99-favorite-fashion-retailer)

  • "Nordstrom is North America’s overall favorite fashion retailer for the second consecutive time, according to a new study of more than 6,800 consumers conducted by Market Force Information (Market Force), a provider of customer intelligence solutions."
  • "Kohl’s is the most visited for casual clothing, business attire and children’s clothing, while Dick’s Sporting Goods won out for sports apparel and DSW for footwear."
  • "When Market Force asked consumers to name their overall favorite retailer, Nordstrom ranked No. 1, earning significantly more votes than all of the other chains. Kohl’s ranked second, Macy’s was third, J.C. Penney was fourth and T.J.Maxx was fifth."

Takeaway: Not a shocker about JWN, with the exception of Bloomies, no one can really touch it.  What would be interesting to know is the difference between people that said JWN is their favorite place to shop vs those that said it is the place where they actually spend money (ie can afford to shop). No surprise that JCP remains in the toilet. At $100/square foot, it's running half the rate of its relevant peer group.

CFR - Cartier Exhibition Opens in Paris

(http://www.wwd.com/eye/lifestyle/cartier-exhibition-opens-in-paris-7297743?module=hp-accessories)

  • "Kate Middleton’s wedding tiara and Grace Kelly’s engagement ring are among the star pieces of an exhibition on Cartier opening in Paris today."
  • "Billed as the most extensive show to date dedicated to the French jeweler, famed for its panther-themed jewelry and Tank watches, 'Cartier — Style and History' is set to run at the Grand Palais until Feb. 16. It showcases more than 600 items ranging from fine jewelry and watches to decorative objects, many reflecting the influence of exotic locations like China and India. Most are drawn from Cartier’s extensive archives, but about 100 items are on loan from private collections."