EVENTS TO WATCH
- BONT - BofA Consumer & Retail Conference: Wednesday 3/12, 9:40am
- DKS - BofA Consumer & Retail Conference: Wednesday 3/12, 10:30am
- JWN - BofA Consumer & Retail Conference: Wednesday 3/12, 10:30am
- PETM - BofA Consumer & Retail Conference: Wednesday 3/12, 1:30pm
- WSM - Earnings Call: Wednesday 3/12, 5:00pm
ICSC - Chain Store Sales Index
Last week's sequential growth in sales (which obviously varies with the calendar) actually ticked above the growth rate in each of the past two years. That's a rarity. The year/year growth rate went above 2% for only the second time this year. Ordinarily, we would not ring the victory bell for such a scant improvement in sales, but this year is the exception to almost every rule.
UK Sales Hit By Weather Too: February storms hit high-street sales
- "The monthly health of spending survey conducted by the British Retail Consortium and the consulting firm KPMG found that like-for-like sales adjusted for increases in floorspace were 1% lower in February than a year earlier."
- "Online sales rose strongly as the wet weather kept consumers at home and were 14.3% higher last month than in February 2013. The two best performing categories of in-store sales – home accessories, and flooring and furniture – reflected the recovery in the housing market."
- "A separate report from Ipsos Retail Performance found that shopper footfall was down across the country last month, with the biggest declines seen in the south-west and Wales, regions particularly hard hit by the weather. The sample of more than 4,000 non-food stores across the UK reported a decline in footfall of 5.3% against February 2013 and a month-on-month fall of 12.2%."
Takeaway: The most interesting point to us is the categories that were most resilient -- Home, Flooring and Furniture. Yes, it might be the housing market, but we think it is more a function of the categories. Simply put, if people need home accessories, weather won't stop them. If someone needs to buy a new bed, they might delay it for a week -- maybe. But they'll definitely still buy it. So many other retail categories are made up of impulse purchases. There's hardly anything impulsive about home furnishings. That's one of the many factors that gives us confidence in the near term trajectory at Restoration Hardware.
URBN - 4Q14 Earnings
The URBN print might not have been ugly (tho wasn't pretty) but the biggest callout for us was its inventory position. The company's inventory/sales spread was the worst it's been in seven quarters. Of course, they say that they're comfortable with the age and condition of the inventory. But we have NEVER ever seen a negative swing in a company's SIGMA trajectory (quadrant 3: Inventories up, margins down) without seeing a future hit to margins.
DKS - 4Q13 Earnings
Weather was definitely a boon for the top line in the quarter. The company had guided for a (1%) - (2%) comp on an unshifted basis and ended up posting a 6.3%. We won’t take anything away from them - they delivered in an environment where nearly every other retailer failed. But, we seriously question the company's 3-4% comp guidance for '14.
NKE - Manchester United seal world-record £600million Nike sponsorship deal
- "Manchester United are set to announce a world-record kit deal worth more than £600million."
- "The faltering Premier League champions will make a major statement that proves they are still the biggest name in world football by renewing an arrangement with shirt manufacturers Nike."
- "It will bank United more than £60million-a-year over the course of a decade-long agreement."
- "That is almost double the current best kit manufacturing deal, which sees Real Madrid earn £31million from their arrangement with adidas. United currently have a deal with Nike worth £23.5million-a-season - less than Real, Arsenal, Barcelona and Liverpool."
Takeaway: We rarely rail on Nike for how much it spends on endorsement deals. The reality is that the company has proven to be a good steward of capital over time, with sponsorships as well as general corporate capex. But taking ManU from £23.5mm per year to nearly 3x at £60mm?? That borders on egregious -- actually, it crosses the border. Paying £23.5 when the team was dominant, to paying £60mm when it struggles to beat Man City makes no sense to us. Let's hope Nike has something up it's sleeve on this one. Because it looks like it just got robbed.
HMB - H&M Debuts First Wedding Dress And It Costs Less Than $100
- "The mass retailer will be selling its first wedding gown for just $99...both in stores and online later this month, according to a rep for the brand."
- "This will be the first H&M wedding dress sold in a regular collection, although a wedding gown did appear in the Viktor & Rolf one-time collection back in 2006."
Takeaway: This company is so good. While they'll hardly threaten Vera Wang's business, the reality is that there are a lot of women who will buy a wedding dress at H&M in a heartbeat. Aside from the fact that H&M has built up so much credibility as a fashion leader, not everyone has the resources or the willingness to spend $1,211 on a wedding gown (that was the average price spent last year).
SPWH - Outdoor goods retailer Sportsman's Warehouse files for a $201 million IPO
- "Sportsman's Warehouse Holdings, an outdoor sporting goods retailer with 47 locations across the US, filed on Friday with the SEC to raise up to $201 million in an initial public offering. The Midvale, UT-based company, which was founded in 1986 and booked $656 million in sales for the 12 months ended November 2, 2013, plans to list on the NASDAQ under the symbol SPWH. Sportsman's Warehouse Holdings initially filed confidentially on December 11, 2013."
Takeaway: Not sure who is advising this company strategically, but sounds to us like yet another retailer that falls in the 'should not be public' basket.
SHLD, APP - Sears, Kmart, American Apparel Among Least Engaged Brands
- "Kmart finished third from the bottom and Sears sixth from the bottom in this year’s distillation of the lowest-ranked brands. The bottom 10 also included American Apparel Inc. in the seventh slot and Coty Cosmetics at number eight."
- "Blackberry finished lowest among the 555 brands studied by Brand Keys with a ranking of 52 percent, meaning respondents rated it as satisfying just more than half of the attributes consumers look for in an ideal brand in its category."
- A total of 32,000 consumers between the ages of 18 and 65 were polled for the 2014 index, with 70 percent of them questioned by phone, 25 percent in face-to-face interviews and 5 percent online.
Takeaway: This is a really interesting study. We can't speak for the methodology, but 32,000 consumers is a tough sample to screw up. If there's any single takeaway it's that K-Mart, Sears, and American Apparel all showed up -- and JC Penney did not.
BONT - The Bon-Ton Stores, Inc. Announces Brendan L. Hoffman's Term as President and Chief Executive Officer Will End in 2015
- "The Bon-Ton Stores, Inc. today announced that Brendan L. Hoffman, President and Chief Executive Officer, has notified the Company's Board of Directors that he will not renew his employment agreement with the Company at its expiration on February 7, 2015. Therefore, Mr. Hoffman's term as President and Chief Executive Officer will end, and he will also resign as a director of the Company, onFebruary 7, 2015."