What's New Today In Retail (12/23)

Takeaway: TGT has a long way to go to reassure customers. JOSB gives MW a taste of its own medicine. NKE plays defense w US soccer. 'Anti-AMZN' 42%

COMPANY NEWS

 

TGT - Target Says Few Fraud Reports From Card Data Breach

(http://online.wsj.com/news/articles/SB10001424052702304773104579270591741798968?mod=WSJ_business_whatsNews)

 

"Target Corp. said on Friday it has received 'very few' reports of credit-card fraud after the discount retailer suffered a massive data breach that compromised 40 million credit and debit card accounts over a 20-day period."

"The Minneapolis-based company is rushing to reassure customers and keep them shopping in the final days of the big holiday-shopping season. On Friday, it said it would offer buyers 10% off at its U.S. stores this weekend. Target also will extend free credit-monitoring services to those affected by the breach, and will be contacting those customers directly."

 

Takeaway: Seriously, Target. Whether or not there have been fraud reports is irrelevant. It doesn't change the fact that you exposed your customers to criminals not once. Not twice, but 40 million times. Saying 'only a few fraud reports' is akin to lowering a child off a boat into shark infested waters and saying 'she only got bit a few times'.

 

TIF - Award Issued in Arbitration Between The Swatch Group Ltd. and Tiffany & Co.

(http://files.shareholder.com/downloads/TIF/2809946001x7492918xS98246-13-217/98246/98246-13-217.pdf)

 

"As previously disclosed by Tiffany & Co. in filings with the United States Securities and Exchange Commission, certain claims and counterclaims had been pending between and among The Swatch Group Ltd. and its wholly-owned subsidiary Tiffany Watch Co…"

"In respect of certain breaches of the Tiffany Parties under the Agreements, Tiffany is to pay the Swatch Parties CHF 402.7 million (or approximately USD $449.5 million), plus interest thereon from June 30, 2012 to the date of payment at the statutory compound interest rate for damages under applicable Dutch law (which rate is currently three percent)."

"Tiffany & Co. intends to fund any amounts to be paid by the Tiffany Parties from immediately available cash on hand and funds available under its existing debt facilities. The management of Tiffany & Co. believes that the charges associated with this award will reduce earnings per diluted share for the fiscal year ended January 31, 2014 by $2.30 - $2.35 relative to the guidance issued on November 26, 2013 of $3.65 - $3.75."

 

Takeaway: We're surprised not by the judgment, but by the fact that TIF noted so quickly how it intends to pay. These things are usually stretched out a lot longer than this. I guess accrued interest on $450mm is a powerful motivator.

 

JCP - Blake Shelton Performs for J.C. Penney

(http://www.wwd.com/eye/people/blake-shelton-performs-for-jc-penney-7323066)

 

"The country singer and 'The Voice' judge made an unexpected appearance in Greeley Square, across from the J.C. Penney Manhattan store, in his role as the company’s JCP Cares ambassador."

 

Takeaway: Nice win for JCP…but to have a real impact on the company's numbers they need U2 and the Stones to tour all 1,100 JCP stores…twice.

 

JOSB - Jos. A. Bank Rejects Men's Wearhouse Acquisition Proposal; Will Continue to Review Strategic Acquisition Opportunities

(http://phx.corporate-ir.net/phoenix.zhtml?c=113815&p=irol-newsArticle&ID=1886725&highlight=)

 

"Jos. A. Bank Clothiers, Inc.  today responded to the non-binding acquisition proposal it received on November 26, 2013, from The Men's Wearhouse, Inc. The Company said that after thorough consideration by its Board of Directors, with the assistance of its financial and legal advisors, it has unanimously rejected the proposal made by Men's Wearhouse."

"The Company's Board of Directors concluded that the price proposed by Men's Wearhouse significantly undervalued the Company and its near and long-term potential and was not in the best interest of the Company's shareholders."

"Further, as the Company has said previously, it is reviewing all alternatives regarding potential strategic acquisition opportunities that would enable the Company to drive significant value for shareholders."

 

Takeaway: This is a kick in the teeth to MW. MW was good enough for JOSB to buy, but apparently not good enough to be the buyer.

 

NKE - Nike to sponsor US Soccer for nine more years

(http://www.fibre2fashion.com/news/garment-company-news/newsdetails.aspx?news_id=157556)

 

"Nike and the U.S. Soccer Federation have announced a renewal of their partnership, that will see [Nike] design and create the kits for men and women’s United States teams at every level for nine more years."

"Nike and U.S. Soccer, currently celebrating its centennial, have been partners since 1995."

 

Takeaway: This is purely defensive. Do you really think that US Soccer is a revenue driver for Nike? No. It makes money off its sponsorship of teams like Brazil -- not the US. But could you imagine Nike's shame if Adidas came along and endorsed the US? That would be almost as big a slap in the face as if Nike pulled the Germany endorsement away from Adidas (something it has repeatedly tried to do).

 

MIK - Michaels Reorganizes IPO Plans

(http://blogs.wsj.com/privateequity/2013/12/20/michaels-stores-withdraws-ipo-cites-reorganization/)

 

"Michaels Stores Inc. has reorganized its plans for its public trading debut. The arts-and-crafts retailer initially withdrew its delayed initial public offering on Friday, citing its July reorganization, which created an indirect parent holding company called The Michaels Companies Inc., as the reason for the withdrawal."

"Michaels Companies, meanwhile, filed for an IPO of up to $500 million in common stock. The timing, number of shares to be sold and the price range for the proposed offering haven’t yet been determined."

 

Takeaway: At face value, an IPO of Michael's Stores might not seem too sexy, but keep in mind that this stock was a rocket when it was public during the last cycle -- and that's before rumors swirled around about it going private.
 

JOEZ - Hudson Clothing's Jeans Dodges EU Tariff

(http://apparel.edgl.com/news/Hudson-Clothing-s-Jeans-Dodges-EU-Tariff90196)

 

"Los Angeles-based Hudson Clothing LLC yesterday received a ruling from the UK's customs and tax department exempting its women's blue jeans from a 200 percent EU tariff increase imposed last spring."

"According to attorney Elise Shibles of Sandler, Travis & Rosenberg, PA, who represented Hudson in the matter, the retaliatory EU tariff that raised the tax on U.S.-made women's denim trousers from 12 percent to 38 percent should not have been applied to Hudson's jeans. Shibles crafted a legal argument asserting that the blue jeans in question fall under a tariff provision not covered by the increased tax."

 

WMT, COST, BBY, JCP - Albany-based anti-Amazon hitting revenue targets

(http://nypost.com/2013/12/22/albany-based-anti-amazon-hitting-revenue-targets/)

 

"CommerceHub, a tech company owned by billionaire John Malone’s Liberty Media, has watched growth skyrocket in recent seasons as it fuels online sales nationwide for chains like Walmart, Costco, Best Buy and JCPenney."

"The service, which allows retailers to beef up their picks online without buying inventory or operating costly warehouses, was a big hit industrywide during the Thanksgiving weekend. It adds merchandise to client websites while making sure a network of third-party suppliers can deliver it posthaste."

"Sales of CommerceHub’s 'virtual inventory' — the name Poore uses for third-party goods that his firm sources for retail clients — surged 42 percent to $1 billion from Thanksgiving through cyber-Monday."

"Year to date, online sales processed through CommerceHub are up 31 percent to $7 billion, he says, or about double the rate of online sales growth across the US generally."

"What’s more, Poore predicted that virtual inventory fulfilled by third-party suppliers will account for more than 90 percent of all online goods within the next five years, up from about a third today."

 

INDUSTRY NEWS

 

Outlook Unchanged After 'Super Saturday'

(http://www.wwd.com/retail-news/trends-analysis/outlook-unchanged-after-super-saturday-7323676?module=hp-topstories)

 

“'As big as Super Saturday was, it’s still a lousy season,' said Craig Johnson, president of Customer Growth Partners. He estimated Super Saturday could exceed Black Friday — for the past 10 years the largest volume day of the year — by a $1 billion to $2 billion. 'Super Saturday could be the number-one day of the year,' agreed ShopperTrak founder Bill Martin. He added that the last Friday to Monday stretch might prove to be 'the largest spending period of the year, bigger than Black Friday weekend.'”

 

Rampant Returns Plague E-Retailers

(http://online.wsj.com/news/articles/SB10001424052702304773104579270260683155216?mod=ITP_marketplace_0&cb=logged0.27198440092615783)

 

"Behind the uptick in e-commerce is a little known secret: As much as a third of all Internet sales gets returned, according to retail consultancy Kurt Salmon. And the tide of goods flowing back to retailers is rising. Shipper United Parcel Service Inc. expects returns to jump 15% this season from last year, making them a significant and growing cost for retailers."

"The stakes get even higher during the holidays, when return volume peaks. So this year, chains are digging through past transactions to weed out chronic returners, train shoppers to make better decisions or stem buyer's remorse."