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Takeaway: DKS tells what we already know. Killer new AMZN app-think Shazam for retail products. Retailers whine about too much NKE product. WWW JCP


CVS - Earnings Call: Tuesday 2/11, 8:30am



DKS - DICK'S Sporting Goods Announces Better Than Expected Fourth Quarter Same Store Sales; Increases Fourth Quarter and Full Year 2013 Earnings Guidance


  • "The Company now expects consolidated earnings per diluted share of approximately $1.10 to 1.11 for the fourth quarter of 2013, compared to guidance of $1.04 to 1.07 provided on November 19, 2013. For the fourth quarter of 2012, consolidated earnings per diluted share were $1.03."
  • "Consolidated same store sales, adjusted for the shifted calendar, due to the 53rd week in fiscal 2012, increased approximately 7%, or approximately 6% on an unshifted basis, in the fourth quarter of 2013. The same store sales results compare to guidance provided on November 19, 2013 for a 3 to 4% increase, or a 2 to 3% increase on an unshifted basis."
  • "The improved outlook is due to better than anticipated fourth quarter same store sales and merchandise margin, partially offset by higher incentive compensation. The fourth quarter earnings guidance includes approximately $0.01 per diluted share benefit attributable to share repurchases in the fourth quarter of 2013 totaling $150 million."

Takeaway: One word…weather. Not many retailers and brands actually felt a positive impact from the extreme weather over the past two months. UnderArmour was one -- and DKS traded up in sympathy by up to 7% on that report. In the end, while this is good news for Dick's, it was largely expected.   

AMZN - Point Your iPhone at Something You Like, and Amazon’s New App Buys It


  • "Today, Amazon is announcing a new feature inside its mobile shopping app that lets you scan items in your home using your smartphone’s camera and quickly order all of your packaged goods online. The new feature, called Flow, will be available inside Amazon’s shopping app for iOS. It’s iPhone-only for now, and the company isn’t saying when it will arrive on other smartphone platforms, or on the Kindle Fire."
  • "Instead of taking a photo of an item or scanning a barcode, Flow recognizes items via their shape, size, color, box text, and general appearance. Hold your iPhone up to a row of items on your shelf or counter, and within seconds of “seeing” it with the iPhone’s camera, every recognizable item is placed in queue that can be added to your Amazon cart."

Retail Callouts (2/10): DKS, AMZN, NKE, WWW, JCP, - chart2 2 10

Takeaway: Seriously, whether you're a fan of Amazon or not, you can help but admit that they are technologically leaps and bounds above anyone else out there. All the innovations that they cook up might not stick, but we want a company we invest in to be innovating in every way imaginable. No one does it better than AMZN. And as it relates to this innovation…#nobrainer.

WWW - Buzz: Hush Puppies, SeaVees & More


  • "St. Louis-based Elan Polo has inked a licensing agreement with Rockford, Mich.-based Wolverine World Wide Inc. for a fall line of men’s and women’s slippers under its Hush Puppies label. Grandoe Corp. most recently held the license, with last delivery for fall ’13."
  • "The new collection will include ballet flats and smoking slippers for women, as well as moccasins and booties for men...Set to deliver in August, the line will retail for $40 to $70. Distribution is targeted to department stores, e-tailers and independents."

Retail Callouts (2/10): DKS, AMZN, NKE, WWW, JCP, - chart3 2 10

Source: Wolverine Worldwide

Takeaway: WWW is one of our favorite names -- but the reality is that this is a non-event. Hush Puppies definitely matters, as it is in the top quartile of EBIT contributors out of all of WWW's brands. Furthermore, if it were a new license maybe there'd be something for us to sink our teeth into. But a replacement license for a category like slippers? It'll be accretive, but probably nothing to write home about. 



  • "JCPenney announced today that it has entered into a new partnership to develop the vacant land around its Plano, Texas home office in the Legacy Business Park.  The new partnership will be managed by Team Legacy, a venture of the Karahan Companies, Columbus Realty, and KDC."
  • "The new project, Legacy West, consists of 240 acres at the southwest corner of the Dallas North Tollway and State Highway 121, and is considered a prime office and mixed-use development site in the heart of Legacy Business Park, one of the premier business parks in the country.  Legacy West will be a natural extension of Legacy Town Center, a mixed-use development presently located only on the east side of Dallas North Tollway."

Takeaway: As long as it is not costing JCP any capital, which it isn't, we're generally OK with it. If the development gives JCP a call option on monetizing assets (that are not restricted by way of the Goldman agreement) then it's an added plus.

BEBE - Exclusive: Bebe stores hires adviser for potential sale - sources


  • "Contemporary women's retailer Bebe Stores Inc is exploring a potential sale and is reaching out to private equity firms, according to people familiar with the matter on Friday."
  • "The Brisbane, California-based company...has hired Guggenheim Securities to help with the process, the people said, asking not be identified because the matter is not public."

Takeaway: Speaking of 'not public', we'd argue that BEBE should never have come public. After all, it's trading today at the same level it was during the summer it went public 16 years ago. Not exactly our definition of value-creation.

SKX - EXCLUSIVE-At hip Skechers, activist wants shakeup of stodgy board


  • "Footwear maker Skechers USA Inc...all-male board of directors is insular and needs a 'complete and immediate overhaul' to avoid potential missteps, according to shareholder CtW Investment Group."
  • "In a letter to the board of California-based Skechers on Wednesday, CtW said the company's nine-member board 'suffers from lengthy tenures and a lack of gender diversity' and that some directors may have conflicts of interest that raise questions about their independence."
  • "'The CtW Investment Group urges a complete and immediate overhaul of Skechers U.S.A., Inc's board of directors in light of several serious governance risks,' it said, calling for changes ahead of its annual meeting later this spring."

Takeaway: We're not going to get into the gender debate here, but we agree fully that the SKX Board is the poster child for a 'good ol boys club'. Not a surprise then that SKX's value creation is only a hair better than BEBE's.

NKE - Got Sneaker Release Overload?


  • "Limited-edition kicks create huge hype and bring shoppers in the door, but retailers are asking themselves whether the crowded sneaker release calendar might be too much of a good thing."
  • "Take this month: With the NBA All-Star Game, Black History Month, Valentine’s Day and the Chinese Year of the Horse all getting the special makeup treatment from brands — on top of the regular releases — there are dozens of launches in the works."
  • “'There are too many shoes and there are too many stories,' added Lester Wasserman, owner of sneaker shop West NYC in Manhattan. 'The more special shoes there are, the less special they each become.'” 
  • "It...means that strong product that doesn’t have the limited tag gets overlooked, to the detriment of the brands’ core lines."
  • “'Right now, we have a full-court press offense on the customer, with more shoes than they can shake a stick at,' he said. 'I just don’t see how that’s ultimately a sustainable model, at the current rate.'”

Retail Callouts (2/10): DKS, AMZN, NKE, WWW, JCP, - chart1 2 10


Takeaway: Note from HedgeyeRetail….Retailers, stop whining. You have a multitude of brands that are churning out better product than you have seen in your lifetime. Find a way to merchandise it, assort it, and sell it. Seriously, would you rather not have any product to sell?

GoPro - GoPro Files for IPO Confidentially


  • "GoPro Inc., a maker of wearable cameras that have fed a flood of YouTube videos, is laying the groundwork to go public. The San Mateo, Calif., company said Friday it had submitted a confidential filing for an initial public offering with the Securities and Exchange Commission."
  • "GoPro and its bankers are expected to begin pitching the deal to investors in the first half of this year, people familiar with the company's plans said. The deal will seek to raise roughly $400 million, though the final amount has yet to be decided, they said."
  • "The deal's pricing also is in flux, but the company will aim for a stock-market valuation well above the $2.3 billion it was pegged at in a 2012 fundraising round, these people said."

Takeaway: Cool technology, but not sure how defendable it is. The company is probably getting the right advice to strike while the iron is hot before patents expire and every other (better capitalized) electronics brand on the planet is producing knock offs. Seems kind of Skull Candy-ish to us.


Marc Jacobs - The New Marc by Marc (by Katie and Luella)


  • "Marc Jacobs, the man as well as the company, is living in a post-Louis Vuitton world. It’s a pre-IPO world, if all goes according to plan for Jacobs and his business partner, Robert Duffy."
  • "The first means to that end is revamping Marc by Marc Jacobs, the revenue engine of the brand. According to Duffy, Marc by Marc Jacobs accounts for 70 percent of the entire business, which stood at $750 million in net sales last year and is on track to hit the billion-dollar mark 'soon,' said Duffy."
  • “'In the big picture of this new Marc Jacobs company, Marc by Marc Jacobs probably plays the biggest role,' said Duffy earlier this week. 'It’s the most profitable part of our business. The sky’s the limit. We’re really going to pull out all the stops for Marc by Marc Jacobs, which we haven’t in the past.' By Duffy’s own admission, he and Jacobs had “dropped the ball” when it came to the contemporary line, losing market share to the stiff competition in a category they once owned."

Takeaway: A Marc Jacobs IPO wouldn't be in the same league as Michael Kors, and probably not Tory Burch. But it would definitely be a legitimate deal that would attract our attention.