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Takeaway: UA lands biggest endorsement deal in years. Anticipatory Shipping? Seriously AMZN? Big IP win for COH. VFC talks labor costs (rising).


COH - Earnings Call: Wednesday 1/22, 8:30 am



UA, ADDY - Under Armour and Notre Dame Fighting Irish Join Forces


  • "The University of Notre Dame and Under Armour today announced their new partnership at a press conference on the school’s Indiana campus...As part of the 10-year agreement, Under Armour will exclusively design and supply the footwear, apparel and equipment for training and game-day uniforms for each of the university’s men’s and women’s varsity athletics teams."
  • "In addition to outfitting Fighting Irish athletic teams, the brand plans to integrate the university into its wide-ranging story-telling efforts, including global marketing campaigns, social media initiatives, in-store promotions and grassroots activations."
  • "This new affiliation further expands Under Armour’s leadership in providing proven performance benefits to college athletes on all playing fields. Notre Dame is the brand’s thirteenth Division 1 all-school partnership."

What's New Today in Retail (1/21) - chart2 1 21

Takeaway: This is perhaps the biggest win for UA since it landed Lindsey Vonn. Notre Dame has been perennial Adidas school -- it's top US franchise outside of the NY Yankees. But one of two things happened here, UA seriously paid up to steal the deal away from AdiBok, or b) Adi is in serious cost-cutting mode and is walking away from high ticket deals that might not be brand-accretive. We think it was a little of both. What's interesting at face value is the Nike did not come out on top. But Notre Dame is the biggest Anti-Nike school out there.

WMT - Wal-Mart sets up new company in India


  • "...Wal-Mart has registered a new company in India as it prepares to enter the country’s lucrative multi-brand retail market with a new partner."
  • "The retailer has registered a new company called Wal-Mart India Pvt. Ltd. in the country, according to the data available with the ministry of corporate affairs. According to the information, the new entity was registered on 15 January 2014."

Takeaway: Walmart is going to give India another go. It was clear that international was the #1 priority after the promotion of Doug McMillon to CEO in late November. India remains an untapped market, but Walmart is now competing with the likes of Carrefour, Tesco, etc. who have stated their intentions to enter the Indian market since the termination of Walmart's Bharti partnership in early October.

AMZN - Amazon Wants to Ship Your Package Before You Buy It


  • "The Seattle retailer in December gained a patent for what it calls 'anticipatory shipping,' a method to start delivering packages even before customers click 'buy.'"
  • "The technique could cut delivery time and discourage consumers from visiting physical stores. In the patent document, Amazon says delays between ordering and receiving purchases 'may dissuade customers from buying items from online merchants.'"
  • "So Amazon says it may box and ship products it expects customers in a specific area will want – based on previous orders and other factors — but haven’t yet ordered. According to the patent, the packages could wait at the shippers’ hubs or on trucks until an order arrives."

What's New Today in Retail (1/21) - chart1 1 21

Takeaway: This sounds like a redux of those CD clubs of the 80s and 90s that send you music before you ask for it. First drones - now 'anticipatory shipping'. Amazon is doing everything in its power to further its competitive advantage -- regardless of how outrageous these initiatives might seem. This sounds and looks like a logistical and inventory management nightmare to us, but if anyone can execute it effectively it would be Amazon. You've got to wonder how the shippers will be able to handle this type of uncertainty. After all, UPS already missed its latest quarter because Amazon jammed it with packages.

MW, JOSB - Men's Wearhouse Responds to Jos. A. Bank Announcement


  • " The Men's Wearhouse today issued the following statement in response to the announcement by Jos. A. Bank Clothiers, Inc. that its Board of Directors has rejected Men's Wearhouse's all-cash $57.50 per share offer."
  • "Given that the Jos. A. Bank Board has publicly acknowledged the compelling strategic logic of this transaction, we think Jos. A. Bank shareholders should question why their Board is refusing to negotiate with us to reach an agreement that will deliver to them significant value.  Accordingly, we call on the independent directors of Jos. A. Bank to promptly form a Special Committee that will objectively evaluate our offer and sit down with us to begin discussions."
    "At Jos. A. Bank's 2014 Annual Meeting, both of Jos. A. Bank's non-independent directors, Robert N. Wildrick, Chairman of the Board, and R. Neal Black, President and Chief Executive Officer, are standing for re-election. Jos. A. Bank shareholders can send a powerful message to their Board of Directors by voting to replace Messrs. Wildrick and Black with the independent candidates that Men's Wearhouse is nominating for election at the upcoming Annual Meeting."

Takeaway: MW has an extremely valid point. JOSB publicly touted the validity of the combined entity. But now it has a problem when it's the one being acquired? Sounds like either a) JOSB was not genuine in its initial comments, or b) the Board and Management of JOSB are trying to protect their jobs.

VFC - 5 Questions for The North Face's Brian Moore


  • "Years ago, when labor costs were really low, you could put a lot of parts and pieces [on a shoe] and stitch them all down, because stitching was essentially free. Now you have to limit yourself to only one or two layers and weld it more than sew it, trying to find ways to make it that don’t require a lot of [expensive] handwork."
  • "Does this mean the industry-wide search for less-expensive labor is a thing of the past? BM: I really do believe — and I could be wrong — that those days [with a] market that will give us an unlimited sourcing base are essentially over. I don’t think there is another China after China. We no longer have anywhere else to go to make product cheaper."

Takeaway: Two points of particular interest. 1) Labor costs are rising, and 2) the only way to curb rising input costs is through design process innovations. This is a trend we've been watching for the past few months. Particular call out for NKE whose FlyKnit may be the least labor intensive product on the market right now.

COH - Coach Gets $5.5M in Fakes Case Settlement


  • "...Coach Inc. scored a $5.5 million win last month by settling with the owner of a well-known Fort Lauderdale, Fla., flea market that was selling fake Coach goods."
  • "Coach’s Axilrod hopes its Swap Shop news will help to set a precedent. Since launching Operation Turnlatch, a national anticounterfeiting program, Coach has filed more than 700 lawsuits, and Axilrod added, 'I’m happy to say we haven’t lost a single one…'"

Takeaway: Stopping counterfeiters has been a point of emphasis for a number of brands recently, but COH takes it to a whole new level with 700+ lawsuits. The interesting thing with this case is that COH may actually get paid since the suit involves a legitimate business entity operating in the US. Many brands could learn a thing or two about defending its IP by watching COH. We still wouldn't touch the stock.

SP, DEB - Sportswear tycoon Mike Ashley smashes tank into Debenhams with plan to sell his sportswear


  • "Sportswear tycoon Mike Ashley will meet Debenhams boss Michael Sharp as early as this week over a plan to flood the department store with the billionaire’s clothing."
  • "The talks come after Ashley’s Sports Direct piled into Debenhams shares last week with trades that one source described as ‘parking a tank’ on Debenhams’ lawn."
  • "Ashley, main shareholder of Sports Direct, and his chief executive Dave Forsey plan to use the stake and Ashley’s ownership of the Slazenger and Donnay brands to push for a major role to supply an enlarged Debenhams sportswear department."

Takeaway: Ashley is one dangerous dude. You don't want him buying up your stock and then requesting a meeting to 'ask' you to carry his product.  Trust us…he'll win, you'll lose.

LVMH - Appointments at the helm of LVMH Watches & Jewelry Division


  • "Having successfully led the integration of Bulgari within LVMH, Francesco Trapani has decided to relinquish his operational duties as head of Watches and Jewelry division from 1st March 2014. He becomes an adviser to the Chairman, on matters relating to the Group’s jewelry operations, and remains a Director on the Board of LVMH."
  • "The Group’s jewelry Maisons (Bulgari, Chaumet, Fred and De Beers) will now report to Toni Belloni, LVMH Group Managing Director. Jean-Claude Biver, currently President of Hublot, will also take responsibility for the other watch brands TAG Heuer and Zenith."