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In preparation for LVS FQ4 2013 earnings release tomorrow, we’ve put together the recent pertinent forward looking company commentary.




  • We are targeting the late 2015 opening of our latest Integrated Resort



  • We're obviously happy with our win per unit at the margin driver there is the mass table business



  • We're still running 60%-plus margins in the premium mass segment.
  • As you know we're at $4.5 million a day. Our goal is to get to $5 million a day. 
  • So we're buying more rooms from the hotel and that may have an adverse effect, a point or two on the margins.



  • Raised our recurring dividend for the 2014 calendar year to $2 per share, an increase of 42.9% compared to the $1.40 recurring dividend we will have paid this year.
  • With $1.65 billion remaining under the term's stock repurchase authorization and in the future we expect to repurchase at least $75 million of stock per month.


  • For the first time we're getting strong results out of the premium mass segment.

[video] McCullough: My Risk Signals on $AAPL

Holy Ugly, Batman!

Takeaway: If this is the best Adidas can come up with (while it loses market share and sponsorships to Nike and Under Armour) then they're in trouble.

Adidas - Rick Owens & Adidas partner on innovative women’s footwear 

  • "For Spring/Summer 2014, designer Rick Owens and Adidas collaborate to create an innovative women’s footwear silhouette which debuted at the Rick Owens Spring/Summer 2014 Women’s collection presentation during Paris Fashion Week."
  • "Subtle yet instantly iconic, the trainers display only the slightest hint of branding: a barely perceptible three-stripe perforation along the side."

Holy Ugly, Batman! - shoe2


Takeaway from Hedgeye Retail Analyst Brian McGough: We are the first to admit that when we think shoes are ugly, it probably means that they are going to be commercially relevant.  But get a load of these beauties which retail for $700. They are anything but 'subtle yet instantly iconic.'


This a small scale partnership between designer Rick Owens and Adidas and probably only made the headlines because they were featured in a Paris Fashion Week show. But if this is the best that Adidas can come up with, while it loses market share and sponsorships to Under Armour and Nike, then they are in for more trouble.

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Early Look

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Takeaway: Short the slots.

“Slot machines are a dying business,” says veteran Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan.


“They were insanely profitable for decades, but they’re dinosaurs now. Nobody plays them except for baby boomers.”


Jordan’s been pounding his investment thesis hard since October. He says this development poses an enormous problem for regional gamers and slot companies and has been advising subscribers to short vulnerable stocks in the space.


What’s happened since then?


Since he released his black book advising shorting International Game Technology (IGT) in the fall, shares of IGT have dropped 20%.


Meanwhile, Penn National Gaming (PENN) and Pinnacle Entertainment (PNK) have both plummeted around 20% since Jordan went on record on January 3rd then again on HedgeyeTV on January 9 advising subscribers to short the stocks.


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Tough Spot: SP500 Levels, Refreshed

Takeaway: I’ll go with low gross and tight net, for now.



That breakdown through our immediate-term TRADE line of 1837 mattered last week. So did the VIX breaking out above our TREND line of 14.91. Now we’re in a tough spot. While 1779 TREND support is holding, the signal is registering TRADE support below that at 1769.


Lots of levels – but here are the ones that matter to me most:


  1. Immediate-term TRADE resistance = 1819
  2. Intermediate-term TREND support = 1779
  3. Immediate-term TRADE support = 1769


In other words, the first shots across the bow are direct hits (SPX is TRADE bearish and signaling both lower-highs and lower-lows within its immediate-term risk range). If the TREND breaks, there is no long-term TAIL support to 1678.


So I’ll go with low gross and tight net, for now.



Keith R. McCullough
Chief Executive Officer


Tough Spot: SP500 Levels, Refreshed - SPX

What's New Today in Retail (1/28)

Takeaway: Finally, a good week for sales. ANF bests JCP in Corp Governance?? Is the US the new China? IKEA notes furniture rebound in US. NKE AdiBok



ICSC - Chain Store Sales Index


Takeaway: Nice uptick both sequentially and versus last year. Retail needed this after a horrific start to the year.


What's New Today in Retail (1/28) - chart1 1 28

What's New Today in Retail (1/28) - chart2 1 28




JCP - JCPenney Amends Stockholder Rights Plan to Protect Tax Benefits



  • "J. C. Penney Company, Inc. today announced that its Board of Directors has acted to protect the Company's valuable net operating loss carryforwards ('NOLs') by amending and extending the Company's existing stockholder rights plan."
  • "The amendments to the Company's rights plan include extending the plan's expiration date from August 20, 2014 to January 26, 2017, and lowering the beneficial ownership threshold for a person or group to become an 'acquiring person' under the plan from 10% to 4.9%."


Takeaway: We like the move to protect NOLs given the high intrinsic value that JCP has built up in averted tax liabilities by way of losing so much money. But we don't like the fact that the company took down the 'acquiring person' hurdle by over 50% -- 4.9% is simply too low, especially for a company whose market cap is struggling to stay above $2bn. JCP needs to make it easier for investors to deploy capital -- not more cumbersome.


ANF - Abercrombie & Fitch Implements Significant Corporate Governance Enhancements: Separation of Chairman and CEO Roles, Addition of Three Independent Directors, and Elimination of Shareholder Rights Plan



  • "Abercrombie & Fitch Co. today announced that it has appointed Arthur C. Martinez, Terry Burman, and Charles R. Perrin to the Abercrombie & Fitch Board of Directors, effective immediately, and that it has separated the roles of Chairman of the Board and Chief Executive Officer. Mr. Martinez has been appointed Non-Executive Chairman."
  • "With the addition of Messrs. Martinez, Burman and Perrin, the Abercrombie & Fitch Board will expand to 12 members, all of whom are annually elected. As part of its commitment to being a leader in corporate governance practices, the Company also announced that its Board of Directors has determined to terminate the Company's Shareholder Rights Plan.  Additional information will be available in a Form 8-K to be filed today with the Securities and Exchange Commission." 
  • "Michael S. Jeffries, who has served as Chairman of the Board since 1996, will continue to serve as a Director and as the Company's Chief Executive Officer."


Takeaway: Do our eyes deceive us, or is ANF actually one-upping JCP on the Corporate Governance front. As it relates to ANF, however, Jeffries remaining in his current role is akin to Chip Wilson staying on for way too long at LULU. The guy's gotta go.


IKEA - Ikea Group Profit Rises as Household Consumption Strengthens



  • "Ikea Group, the world’s biggest furniture retailer, said household consumption is recovering in several markets as it reported a gain in annual profit.
  • "Net income for the 12 months ended Aug. 31 increased 3.1 percent to 3.3 billion euros ($4.5 billion…"
  • “'Household consumption has strengthened in several markets,' Chief Executive Officer Peter Agnefjaell said in a separate statement. 'It’s too early to say the difficult economic situation is over but there are positive signs.'”
  • "Important markets such as the U.S. are recovering, and Ikea sees signs of a general recovery in Europe and an improvement in several southern European countries, said Agnefjael…"


Takeaway: We'd like to say that this is bullish for RH, our favorite idea, but the reality is that the customers are polar opposite. Think Ford vs. Mercedes.


DECK - Establishes New Omni-Channel President, President of Brands and Group President - Fashion & Lifestyle Brands



  • "Deckers Outdoor Corporation...today announced three new senior management positions, reflecting the growth and diversification of the Company's global business."
  • Dave Powers, currently President, Global Direct-to-Consumer (DTC), has been promoted to President of Omni-Channel, reporting to the CEO.  In addition to continuing to oversee Deckers' domestic DTC operations, he will also oversee all wholesale, distributor, retail and E-Commerce channels in Deckers' international regions."  
  • "...the Company has also initiated an executive search for a President of Brands.  Reporting to the CEO, the position will entail oversight of Deckers' multi-brand portfolio, including working directly with each of the Company's brand presidents…"
  • The Company also announced the promotion of Constance X. Rishwain, President, UGG Australia to the additional role of Group President – Fashion & Lifestyle Brands."


Takeaway: We liked Mickey Drexler's comment at ICR when he said "I have no idea what Omni-Channel means. The customer either shops in a store, or they shop online, they don't shop in an Omni-Channel."  Our sense is that the Omni-Channel title will cease to exist in five years once retail acclimates into a 'new normal'.


NKE - Nike reorganizes SPARQ Training, eliminates some jobs



  • "Nike SPARQ Training, used nationwide to quantify high school athletes' performance, has been reorganized and some jobs have been cut, Nike said Monday morning."
  • "'We have made the decision to realign and integrate Nike SPARQ training more closely with our Men's and Women's Training categories to more effectively leverage our resources and support our category offense,' spokeswoman Mary Remuzzi said in a written statement. 'We expect SPARQ to continue to be the definitive assessment rating for athleticism in high school and a tool to help athletes perform at their best. A small number of positions will be eliminated as part of this transition.'"


Takeaway: Not surprising. Nike may have been the first major brand to develop a training/rating program for athletes. But so many others have followed suit. UnderArmour, Adidas, Reebok, and half a dozen privately-funded initiatives. It makes sense that Nike would not want to compete in a space which is actually a cost-center.  Rather, they're making it a more commercial business.


ADS - Rick Owens & Adidas partner on innovative women’s footwear



  • "For Spring/Summer 2014, designer Rick Owens and adidas collaborate to create an innovative women’s footwear silhouette which debuted at the Rick Owens Spring/Summer 2014 Women’s collection presentation during Paris Fashion Week."
  • "Subtle yet instantly iconic, the trainers display only the slightest hint of branding: a barely perceptible three-stripe perforation along the side."


What's New Today in Retail (1/28) - chart3 1 28


Takeaway: We're the first to admit that when we think shoes are ugly, it probably means that they're going to be commercially relevant.  But these beauties, which retail for $700, are anything but 'subtle yet instantly iconic.' This a small scale partnership and probably only made the headlines because they were featured in a Paris Fashion Week show, but if this is the best that Adidas can come up with while it loses marketshare and sponsorships to UA and NKE they are in for more trouble.


HBC -  Saks Sets First Two Canada Openings



  • "HBC will carve out about 150,000 square feet of its 750,000-square-foot downtown Toronto Hudson’s Bay flagship to open its first Saks store in Canada in fall 2015. In spring 2016, Saks will open a second Canadian unit, a 130,000-square-foot store at Sherway Gardens, also in Toronto."


Takeaway: Being acquired by Hudson Bay is that best thing that ever happened to Saks. The fact that Doug Scovanner is serving as CFO is a plus.




China Seeks Low-Cost Production



  • "In a perverse kind of irony, it appears that the United States may be evolving into a low-cost country, wooing China-based manufacturers to set up shop here — at least in the textile and yarn industries — which the US lost to Asia and the Far East in the 70s and 80s."
  • "With energy costs lower than in China, and non-union labor costs low enough to be offset by the ability to ship yarn to manufacturers in Central America where finished garments can be sent back to the US duty free, the total cost for yarn production is now less in the US than in China. A kilogram of yarn spun in the US in 2003 cost $2.86 vs. $2.76 in China.  By 2010, the US cost was $3.45 per kilogram vs. $4.13 in China."
  • "As China literally pushes its economy to make this conversion, it is simultaneously ramping up the standard of living, and along with it, higher wages. Thus, its once lowest-cost manufacturing base is eroding and losing share to other lower-cost countries.  However, to offset these losses in certain industries, Chinese companies are either acquiring or building new manufacturing plants in the lower- cost countries, as well as acquiring existing companies around the world to fuel its rising consumer economy."


Takeaway: This one is definitely thought-provoking.






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