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Takeaway: HBI sandbag comes out -- but watch inflation. JCP taking up prices. China’s JD frontrunning Alibaba deal. TGT SHLD and Canada. AMZN Levis


AMZN - Earnings Call: Thursday 1/30, 5:00pm



Takeaway: Strong quarter for Hanesbrands with higher guidance that was entirely driven by Maidenform -- an acquisition that we're stated for a while that management is completely sandbagging on synergies. On the core business, trends were positive in October and November, but were inconsistent in January. Management cited weather as the primary factor. One factor that caught us by surprise was CEO Rich Noll's comment about inflation. We've never heard him say anything that's other than overwhelmingly positive about inflation -- in that it drives up their prices, and helps retailers make money. But this time he said that inflation was partially offset by product costs. That's still a positive trend. But let's keep a close eye on costs here. If they catch up to the price increases to retailers -- which is possible, then it turns into a margin-draining event.

What's New Today in Retail (1/30) - chart3 1 30

*adjusted for debt repayment expenses in Q412 and Maidenform acquisition charges in Q413

JCP - JCP hikes prices for bigger discounts later


  • "JCPenney...is quietly jacking up prices on everything from jeans to kitchen appliances, a risky move designed to make room for steeper, more eye-catching discounts this year, sources told The Post."
  • "Chief Executive Mike Ullman...hatched the stealthy strategy this month with especially lofty markups in the jewelry department, sources said."

What's New Today in Retail (1/30) - chart1 1 30

Takeaway: The first step was getting things into the store that people actually want. Step two is raising prices to allow for discounting to protect Gross Margin. This all makes sense, actually. But the obvious risk is that sticker shock keeps some customers away. We're going to give Ullman the benefit of the doubt that he's managing this appropriately (even though we'd rather have someone else be managing it).


TGT - Target Sets Nine Canadian Openings in 2014


  • "Target Corp. intends to add nine stores to its 124-unit fleet in Canada this year, the majority of them in Ontario."
  • "Target, which acquired the rights to acquire up to 220 Zellers store leases from Hudson’s Bay in 2011, said it will open five stores in Ontario and single units in the provinces of Quebec, Manitoba, Alberta and British Columbia."

Takeaway: Why?

JD - JD.com files for IPO of up to $1.5 billion


  • "JD.com, China's second-largest e-commerce site, said on Thursday it plans to raise up to $1.5 billion in an initial public offering of American depositary shares."
  • "JD.com, which competes with Alibaba Group Holding Ltd, listed BofA Merrill Lynch and UBS Securities LLC as lead underwriters to its offering, in a filing with the U.S. Securities and Exchange Commission."
  • "Alibaba, which controls nearly 80 percent of China's internet shopping market, has been planning to list its shares but has struggled to reach an agreement with Hong Kong regulators over its proposed IPO, expected to be worth around $15 billion."

What's New Today in Retail (1/30) - chart2 1 30

Takeaway: JD is totally riding the coattails of big brother Alibaba. If there was ever a time to raise capital for JD, this is it. If they did it after the Alibaba deal, then they'd be competing in the marketplace against it's top business competitor -- and it would probably lose. But in anticipation of the Alibaba transaction, people will probably gobble this one up. Let's hope they don't get too greedy with valuation.


LS&C - Levi's Entering Men's Underwear Category


  • "Levi Strauss & Co. is getting ready to hit the men’s underwear category. The company confirmed that, beginning in fall 2014, it will begin to market men’s underwear and hosiery through two licensing agreements, one for the Americas region with Mad Projects Industries, a New York-based firm, and the other, for European markets, with Dobotex, the long-time Puma licensee of which Puma acquired full control in 2011."

AMZN - Amazon to Offer Kindle Checkout System to Physical Retailers


  • "Amazon.com Inc. plans to offer brick-and-mortar retailers a checkout system that uses Kindle tablets as soon as this summer, people briefed on the company's plans said."
  • "In one scenario, the Seattle company would give merchants Kindle tablets and credit-card readers, the people said. Amazon also might offer retailers other services, such as website development and data analysis, the people said."
  • "Because many of the largest physical retailers have extensive, complicated checkout systems that may be difficult or costly to give up, Amazon is likely to focus on smaller retailers."

SCC - Sears Canada Sets 624 Job Cuts


  • "Sears Canada will shed another 624 jobs in an elimination of middle-level managers in its full-line stores."
  • "The cuts, which follow the elimination earlier this month of 1,583 jobs due to reductions in its logistics operations and the outsourcing to IBM of positions in its customer contact centers, will result in an average decrease of five associates per store across its network of full-line stores in Canada."