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Takeaway: McGough on the road - Richards pinch-hitting...WSM strong rev #'s bullish for RH, AMZN announces prime $ increase, Alibaba recruiting

EVENTS TO WATCH

THURSDAY

  • ARO - Earnings Call: Thursday 3/13, 4:15pm
  • ZUMZ - Earnings Call: Thursday 3/13, 5:00pm
  • ULTA - Earnings Call: Thursday 3/13, 5:00pm

FRIDAY

  • ANN - Earnings Call: Friday 3/14, 8:30am
  • BWS - Earnings Call: Friday 3/14, 9:00am
  • BKE - Earnings Call: Friday 3/14, 10:00am
  • HIBB - Earnings Call: Friday 3/14, 10:00am

COMPANY NEWS

WSM - 4Q13 Earnings

Takeaway: 10.4% comp was driven by a big beat from DTC, with considerable strength coming from the furniture concepts. This is the first meaningful beat we've seen this quarter and it was possible for two reasons; 1) e-commerce penetration offset weather induced traffic declines and 2) furniture sales are more immune to inconsistent traffic patterns than impulse categories. Great read through for our favorite name, RH, who also leans heavily on the direct channel.


Retail Callouts (3/12): RH, WSM, AMZN - chart1 3 13

AMZN - Amazon Prime and Amazon Student Prime Membership Fee Changes

(http://www.amazon.com/gp/help/customer/display.html?ascsubtag=bmTVAqqiEeOhW9pxbuniXwcv01_kac.3_0_0_0&nodeId=201482600)

  • "For the first time since it was introduced nine years ago, the price of Prime is going up. Existing Prime members will pay $99 per year on their annual renewal date and Amazon Student members will pay $49."
  • "The Prime Fresh membership fee will remain unchanged at $299."

Takeaway: Step 1 for AMZN was to get users hooked on its Prime service, now it's trying to take price. That being said, 9 years is a long time to hold price steady and one could argue that AMZN should have done this a long time ago. Prime is a sticky enough service that the $20 price hike won't chase many away.

 Alibaba - Alibaba Ramping Up Efforts to Sell U.S. Brands in China

(http://blogs.wsj.com/digits/2014/03/11/alibaba-ramping-up-efforts-to-sell-u-s-brands-in-china/)

  • "Chinese e-commerce giant Alibaba Group is ramping up efforts to bring U.S. brands to consumers in its home country. Alibaba...says it will offer U.S. companies several ways to get their merchandise to China, including through its Alipay payments subsidiary and sophisticated shipping methods. It is also getting closer to launching a new U.S. online marketplace called 11Main.com for small- and medium-sized brands and manufacturers."
  • "ChannelAdvisor...has partnered with Alibaba to help U.S. companies sell into mainland China using its software. Its clients will be able to more easily list, sell and deliver items on Alibaba’s Tmall.com site. U.S. e-commerce companies have struggled to gain a foothold in China, in part because of Alibaba’s headstart with Tmall and its eBay-like site Taobao."

Takeaway: A number of US companies already use Tmall as a platform in China. NKE, Addy, New Balance, etc. with many more to come. Alibaba takes a lot of the guess work out the equation allowing brands to set up localized brand shops that Chinese consumers can identify with. Definitely a good starting point for brands who have struggled to gain a foothold in the Chinese marketplace.

OTHER NEWS

What's Selling: Running

(http://www.wwd.com/footwear-news/retail/whats-selling-running-7587138)

MAINE RUNNING CO., Portland, Maine 

  • Brooks Adrenaline GTS
  • Asics GT-2000
  • Saucony Guide 7

Top trend: “Definitely the more cushioned options for us are getting a lot of attention,” said Ben Webber, assistant GM. “People are asking about shoes that have a lower offset but with more cushioning. It’s crazy how the pendulum swings.”

 SALT LAKE RUNNING CO., Draper, Utah

  • Altra Superior and Olympus (tie)
  • Hoka One One Stinson Trail 
  • Adidas Supernova Glide Boost

Top trend: “Trail shoes are working with all the trails opening back up,” said manager David Buckle. 

 FITRIGHT NW, Portland, Ore. 

  • Brooks Adrenaline GTS
  • Saucony Guide 7 and Ride 6 (tie)
  • Asics GT-2000 

Top trend: “Color is still a big push. People really enjoyed when color started to show up on the wall. It rains here a lot and when it’s colder, people want [nice] things to look at,” said co-owner Robb Finegan. “White is trending with a lot of the vendors, but we got a big shock this spring with people wanting more color and not the white mesh.”

DDS - Moody's Lifts Dillard's Rating

(http://www.wwd.com/business-news/financial/moodys-lifts-dillards-rating-7587468)

  • Moody’s Investors Service Wednesday upgraded Dillard’s Inc.’s corporate family rating one notch to 'Ba1'…"
  • "Moody’s also raised the...retailer’s probably of default rating one notch to 'Ba1' and its senior unsecured notes a tick to 'Ba2'…"
  • "In assigning the ratings, Margaret Taylor, vice president and senior credit officer at Moody’s, noted the retailer’s 'ability to maintain its operating margin above 5.5 percent [of sales] despite gross margin erosion in the fourth quarter.'"

TGT - Target Apologizes for Photoshop Gaffe

(http://www.wwd.com/media-news/fashion-memopad/off-target-7587760)

  • "...Target apparently ran Photoshopped images of overly skinny teens wearing bathing suits on its Web site. The images received sharp criticism from national media and there was anger throughout the blogosphere as the photos went viral."
  • "Target was apologetic on the matter. 'In response to your query about the swimsuit image on target.com, this was an unfortunate error on our part and we apologize. We have removed the image from our Web site,' a company spokesman said. Asked how the mistake occurred, 'It was the result of a photo editing error on our part.'”

BEBE - Bebe Entering Eyewear Market

(http://www.wwd.com/accessories-news/eyewear/bebe-entering-eyewear-market-7584901)

  • "Bebe is entering the eyewear market with a new collection of sunglasses for spring."
  • "The range, which includes a variety of styles done in mixed metal and plastic, retails for $68 to $88 and will be sold in-store and online."