• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here


    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Takeaway: URBN bold FW launch. RSH not closing enough stores. Top Shop = Big Idea. AdiBok, Iverson not MJ. UA/Adi drop gloves. UK prices down, rev up.


GIL - Earnings Call: Wednesday 2/5 5:00pm


UK shop prices fall for ninth consecutive month


  • "Prices in Britain's shops fell at the fastest rate in more than seven years in January as retailers resorted to aggressive discounting on clothing, furniture and electrical goods…"
  • "Shop price deflation accelerated to 1% last month from 0.8% in December according to the British Retail Consortium/Nielsen shop price index…"
  • "It was the ninth consecutive month of falling prices and the sharpest deflation rate on record since the series began in December 2006."

Takeaway: Interesting to see that prices are down at a time when retail sales are finally showing signs of life, and retailers and brands that operate in the UK are almost uniformly reporting positive business trends.



URBN - Free People Unleashes Footwear


  • "Free People will unveil its in-house footwear line to the wholesale market this week."
  • "Retailing for $168 to $428, the leather booties, boots, mules, flats and heels in neutral colors reflect the rustic-meets-boho vibe of Free People's clothing line."
  • "In addition to wholesale, Free People will offer the in-house label in its own 90 boutiques across the country, as well as on its e-commerce site. The label already has started testing styles via e-commerce, and Meehan said the response has been positive."

RETAIL CALLOUTS (2/5): URBN, RSH, ADIBOK, UA, WMT, +MORE...   - chart1 2 5

Takeaway: Not sure if these are the coolest things ever, or the ugliest things ever. But it's a bold statement by Free People -- and we'll take a bold statement (even if it fails) over a safe bet any day.

RSH - RadioShack to Close About 500 Stores Within Months


  • "According to people familiar with the matter, RadioShack is planning to close around 500 locations in the coming months. It isn't clear which of RadioShack's roughly 4,300 stores will be closed and when exactly the closings will begin."

Takeaway: They forgot to mention this in that 1980s redux Super Bowl ad that drove the stock up 8%. The reality is that this is probably the right move. We'd rather see 1,000 modern stores that sell 'must have' products, than 4,300 old, antiquated stores with grumpy employees trying to sell batteries, extension cords, and circuit board components. 

ADDYY, UA - Adidas Sues Under Armour Over Patents


  • "Adidas AG sued rival Under Armour Inc. on Tuesday, alleging it infringed on 10 Adidas patents used in the German company's fitness tracking system called miCoach."
  • "The complaint alleges that MapMyFitness and other products from Under Armour resemble Adidas's own products too closely. The German company claims Under Armour willfully infringed on its patents and seeks a jury trial. The patents cover functions like real-time workout data transmission and automated route mapping."
  • "Adidas also charges that Under Armour's director of innovation and research—formerly Adidas's senior innovation engineering manager—had direct knowledge of Adidas's patents. Adidas declined to name the person."

Takeaway: While we can't comment on any direct patent infringement or what the innovation head knew, or shared, we can say that there are a couple dozen applications and systems out there to track fitness levels according to various metrics. So few brands in that space have truly original thoughts and products anymore. We're not saying there's not a lot of cool and commercial stuff out there. But simply that so much of it mimics technology that's already being used by others. Unless there's blatant copying of specific Adi patents (which we'd think UA's risk management would have avoided like the plague), we'll be very surprised if AdiBok comes out ahead on this one. 

ADDYY - Reebok Launches New Marketing Campaign 


  • "Reebok launched its new, fully-integrated marketing campaign – 'Live With Fire', continuing the...brand's mission to change how people perceive and experience fitness."
  • "The 2013 'Live With Fire' campaign celebrates people whose lives have been transformed through their active lifestyle and in doing so unifies the brand's marketing of its fitness and lifestyle business. In addition to featuring Reebok's core pillars of Training and Running, the campaign reinforces Reebok's commitment to women's fitness through the introduction of its Dance and Yoga collections, as well as a renewed focus on Walking."

 RETAIL CALLOUTS (2/5): URBN, RSH, ADIBOK, UA, WMT, +MORE...   - chart2 2 5

Takeaway: Is Reebok still seriously parading around Allen Iverson as a brand spokesperson? The guy hasn't played in four years (three years if you count that year he played in Turkey -- we don't think that counts as it relates to relevance to the US consumer). It's clear that AdiBok is trying to immortalize the guy in the same way that Nike grew Michael Jordan's brand and persona long after he stopped playing. As much as we're surprised that the Jordan Brand still remains so relevant after all these years, the reality is that Iverson wasn't Jordan on the court, off the court, and his relevance in the mind of urban consumers never approached MJ levels.

Top Shop - Topshop Signs Lease for Fifth Ave. Flagship


  • "Topshop…[is planning] a 40,000-square-foot flagship at the corner of Fifth Avenue and 49th Street."
  • "The new store, currently occupied by Lacoste and adjacent to Rockefeller Center, will be the second-largest Topshop unit after Oxford Circus in London, which measures 90,000 square feet."
  • In addition to the uptown store, Topshop will open four new units across the U.S., in San Diego, Houston, Atlanta and Washington, over the next 12 months. All, with the exception of D.C., will also have Topman spaces. Topshop owner Sir Philip Green will be investing $40 million to $50 million in building and fitting out all the new stores."
  • "In an interview here, Green said the long-awaited uptown opening in Manhattan is part of a continued push into the U.S. market, where he aims to generate $1 billion dollars in revenue from the Topshop and Topman brands."

Takeaway: This is the story most likely to go unnoticed by US investors, but one that is likely to emerge as one of the biggest US retail ideas over the next two years.  Contrary to what the name suggests, this retailer sells a lot more than just tops. It has a full assortment including tops, denim, coats, shoes/boots, belts, handbags, jewelry, and more. It's not that assortment that is so threatening to US brands, but rather the price. Jeans for $70. Purses for $30. Boots for under $100, and Jewelry for less money than it costs to buy a  cheeseburger near the new 5th Ave flagship. The prices aren't quite as low as H&M, but the quality is definitely higher.

WMT - Wal-Mart sets C$500 million Canada expansion, rival shares fall


  • "Wal-Mart Stores Inc will invest about C$500 million ($452.35 million) this year to expand in Canada…"
  • "Wal-Mart's investments for the coming fiscal year, which are slightly higher than the C$450 million it earmarked last January for expansion in Canada, include more than C$376 million for store projects, C$91 million for distribution networks to expand fresh food capability and C$31 million for e-commerce."
  • "[Walmart] said it planned to complete 35 supercenter projects in Canada by January 31, 2015, adding one million square feet of retail space…"

Takeaway: On one hand, this is a drop in the bucket for WMT. This is a company that will spend nearly $14 bn in capex this year. But on the flip side, at least it shows WMT's commitment to growing in a market that others, like Sears, are leaving.

Asics - Asics Results Up on Weaker Yen, Running Boom


  • "Management lifted its guidance for operating profit for the full year to 25.5 billion yen, or $252 million, from 24.5 billion yen, or $242 million, at current exchange rates."
  • "Asics reported a 19.6 percent rise in net income for the nine months ended Dec. 31 to 15 billion yen, or $148 million. Total revenues for the period rose 25.1 percent to 238.3 billion yen, or $2.3 billion."
  • "By area, sales in the Asia-Pacific region showed the most gains, growing 74.1 percent currency-neutral. The Americas rose 37.1 percent, Europe gained 36.4 percent and the domestic Japanese market advanced 4.2 percent."


Senate Passes Farm Bill


  • "The massive legislation provides billions of dollars in funding to broadly implement farm safety-net policies and conservation and food stamp programs over five years."
  • "The measure establishes the Pima Agriculture Cotton Trust Fund, which would run through 2018 and provide $16 million in funding annually. It essentially restores the Cotton Trust Fund, which expired in 2009 and suspended duties on imported cotton shirt fabric, and provided grants to cotton shirt manufacturers and yarn spinners in the U.S. It was created to offset an inverted tariff — the U.S. duty on imported finished cotton shirts was lower than the tariff on cotton shirt fabrics, which impacted the competitiveness of U.S.-based cotton shirt makers."
  • "It remains to be seen whether the legislation will resolve a long-standing cotton subsidy dispute with Brazil and bring U.S. cotton programs into line with World Trade Organization requirements but lawmakers said it should, by eliminating direct payments of about $580 million a year to cotton farmers, ending countercyclical payments and modifying the export guarantee program."