ICSC - Chain Store Sales Index
Takeaway: Retail can't get out of its own way. Sales are down sequentially, and are showing an abysmal year/year growth trajectory. Clearly, the malaise that started in the last week of December has not ended.
COH - COH Q214 Earnings
Takeaway: Coach was one of our top shorts, and we knew numbers had to come down. But admittedly, we didn't pinpoint this EPS print as the event. There were so many callouts in this quarter we almost don't know where to begin. a) sales down 3%, b) inventories up 12%, c) gross margins down 300bp, d) EPS miss by 5%, e) take down margin guidance -- finally -- to 26-27%. It still needs to come down, e) take down sales guidance as well -- which is interesting in that it's logical to think that they need to pick either margin, or top line. Either they're being conservative (not) or there's a bigger problem at hand (likely). The lack of leadership is still concerning. But not as concerning as its trajectory in the SIGMA chart below.
WWW - Fall Preview: Merrell
- "For fall ’14, the brand brings low-profile and responsive constructions to light hiking and trail running styles; mapped insulation and two lug densities for grip to winter hikers; and lugged outsoles with hiking-boot inspired details for more casual products. Priced from $100 to $200, the line will begin to deliver in July to outdoor shops, footwear independents and online accounts"
Takeaway: Nice shift for Merrell away from it's traditional styles. What's even more encouraging for us is that new President Gene McCarthy likely had minimal impact on these styles. He simply has not been there long enough. We'd look for a stronger 'McCarthy presence' in the product in the Spring.
AMZN - Amazon to Start Collecting NC Sales Tax Next Month
- "Amazon has struck a deal to start collecting sales tax Feb. 1 from its customers in North Carolina, according to the News & Observer newspaper of Raleigh."
- "North Carolina assesses a state sales tax of 4.75 percent, but the state’s residents generally pay 6.25 to 7.5 percent due to additional city and county sales taxes. Amazon had already agreed to start collecting sales taxes in South Carolina starting in 2016. The online retailer has now reached such agreements with 19 states, often after agreeing to invest millions of dollars and hire thousands of workers to build and run distribution centers that provide same-day delivery within a certain radius."
Takeaway: Amazon continues to build out its network of distribution centers. Currently, Amazon is only required to collect sales tax from customers in states in which it has a 'physical presence'. So with each new agreement to pay sales tax it means a new DC for AMZN - we have to think there is a trade-off between the states and AMZN, on one hand the states can begin collecting sales tax and on the other AMZN is more than likely receiving tax incentives for creating new jobs.
AMZN - Andre Leon Talley, Zappos to Relaunch Couture Site
- "Zappos.com will debut its redesigned Couture.Zappos.com site today with artistic and editorial direction from former Vogue editor André Leon Talley."
- "The company tapped Talley as artistic director of the digital platform as part of its continued expansion into the luxury market."
Takeaway: Zappos seems to be having early success in entering the luxury market. We were shocked at the quality of the brands sold on the site.
M - Macy’s opens Super Bowl shop in Herald Square flagship
- "In anticipation of Super Bowl XLVIII, Macy’s has opened an exclusive NFL Shop at Super Bowl on the fourth floor of its flagship Herald Square in New York City. Macy’s will keep the 36,000-sq.-ft. space open through Tuesday, Feb. 4."
Takeaway: Macy's must be thanking the NFL for sending them 0 East Coast teams to the Super Bowl in New York. We don't even think an uptick in Richard Sherman jersey sales can offset that absence. Nonetheless, we give Macy's credit for attempting to capitalize on the big event being held in the NY Area.
JWN - Nordstrom to open online fulfillment center
- "Nordstrom plans to open its third fulfillment center at Conewago Industrial Park in Elizabethtown, Pa., in summer 2015."
- "The new facility joins the company's existing fulfillment centers in Cedar Rapids, Iowa, and San Bernardino, Calif."
Takeaway: JWN gets e-commerce and executes better than anyone in the business. This is another piece of their growth strategy and will be used to support the company's 3 sites: Nordstrom's, Nordstrom's Rack, and Hautelook.
PartyCity -Party City files for IPO of up to $500 mln
- "Party City Holdco Inc...filed with U.S. regulators to raise up to $500 million in an initial public offering of common stock."
- "...Party City has 40,000 retail outlets worldwide, which include its own stores, independent party supply stores and grocery retailers."
- "The company, whose biggest markets include UK, France, Germany and Australia apart from North America, reported a net loss of $51.7 million and revenue of $1.33 billion for the nine months ended Sept. 30."
Takeaway: We didn't realize that Party City had a presence outside the US. Little known fact, one of the higher profile executives in the company is the CPO -- or Chief Party Officer. It's that person's job to ensure that there are always parties being thrown for one reason or another.
DOTS - Dots Joins Clothing Retailers Filing for Bankruptcy
- "Dots LLC, the 400-store clothing chain for young women, filed for bankruptcy protection, blaming prior management, the economy and leases that cost too much."
- "The company, founded 27 years ago outside Cleveland, has arranged to borrow $36 million to keep operating as it reorganizes under court protection and implements a new merchandising strategy, according to an e-mailed statement."
Takeaway: Another regional apparel discounter bites the dust. We wish it the best with its $36mm loan, but our sense is that it will simply prolong the inevitable. Our bet is that DOTS is done. Few and far between are the regional department store chains that have earned the right to exist.