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Takeaway: Nice ULTA comp. BWS calls foul on weather. AMZN/EBAY traffic trending higher. TGT ignored breach warning. WMT made in USA. Adi Schools NKE


ULTA - 4Q Earnings

Overall, not a bad quarter for ULTA -- all things considered. Came in at $1.09 vs $1.07 and comped 9.2% vs expectations of 6.7%. Q1 guidance is a little light at $0.70-$0.75 vs the Street at $0.80, but that's likely the company being conservative given guidance for a 5% comp. Square footage growth remains unchanged from the guide-down at the end of last quarter. The only real negative we can identify is that inventory/sales is solidly negative -- for the 8th quarter in a row. That's simply not a characteristic of a great retailer. 

Retail Callouts (3/14): ULTA, BWS, AMZN, EBAY, TGT, WMT, NKE/Adi - chart1 3 14

BWS - 4Q Earnings


Brown Shoe beat the quarter, but we'd hardly call it a good print. The company earned $0.14 vs the Street at $0.10, but revenue missed by $22mm, or 3.5%. Famous Footwear comped -1.8%, which it attributed to store closures due to the bad weather. We'll definitely give 'em that one -- but will expect to see a marked increase in 1Q. Running was especially challenging for BWS in the quarter -- again, due to the weather. Boot sales were strong, but could not pick up all the slack. Inventories for the quarter were +8.3% on a 3% sales decline. Not very bullish for 1Q gross margins.

Retail Callouts (3/14): ULTA, BWS, AMZN, EBAY, TGT, WMT, NKE/Adi - chart4 3 14

AMZN, EBAY - February 2014 ChannelAdvisor Same Store Sales (SSS) for eBay, Amazon, Search and CSE


  • "Today we are releasing February 2014 SSS data for eBay, Amazon,Google Search and Google Shopping/PLA.  Overall the marketplaces we track here (eBay and Amazon) had nice bumps in February as the unusually bad winter weather snow storms cleared around most of the US and deliveries were back to standard delivery times."
  • "Amazon - Amazon's February came in at 23.0% compared to January’s 14.0%, a substantial m/m increase we believe due to the improvement in weather conditions."
  • "eBay -  eBay's February came in at 15.0% up from January’s 12.7%. We have eBay details further down in the report that show what is going on with this marketplace."

Retail Callouts (3/14): ULTA, BWS, AMZN, EBAY, TGT, WMT, NKE/Adi - chart2 3 14


Takeaway: Really nice sequential pickup at AMZN from a weak-ish January. But you can't ignore eBay, which is posting a steady, measured, multi-month comp recovery.

TGT - Target Didn't Follow Up After Hackers Tripped Its Security System


  • "Target Corp.'s computer-security team was alerted when hackers broke into the retailer's systems during the holiday shopping season, but decided the warning didn't need a follow-up."
  • "In its statement Thursday, Target said 'a small amount' of the hackers' activity was logged and flagged to its security team after the hackers entered its network. The company said after evaluating the warning, 'the team determined that it did not warrant immediate follow-up.'"

Takeaway: Class Action Lawyers must be drooling over this admission.

WMT - Wal-Mart Sold on Made in USA


  • "Wal-Mart Stores Inc... in January 2013 committed to sourcing $50 billion worth of goods in the U.S. in the 10th year of a decade-long initiative. On Thursday, Wal-Mart revealed that the cumulative spending over the decade will total $250 billion. Bill Simon, chief executive officer of Wal-Mart U.S…"

Takeaway: In year 10, WMT will likely source about $600bn worth of product  -- at cost. $50 bn is good -- any dedication to creating jobs in America is good. But if WMT wants to push the envelope, it could probably do more. Of course, it also wants to maintain the integrity of its price leadership, which becomes a challenge when you rely on US labor -- at least, without destroying margins.

ADDYY - Adidas Launches Climachill Apparel With Cooling Technology


  • "Adidas has launched Climachill, an active cooling apparel technology that provides an instant chilling sensation to help athletes perform in warm conditions. The line incorporates fabric woven with titanium and 3-D aluminium cooling spheres. The technology lowers athletes’  body temperature so they can train harder and run longer."
  • "Climachill pieces, which retail from $40 to $60, include running, training and tennis T-shirts, tanks and shorts. The line is being sold on adidas.com and at select retailers nationwide."

Retail Callouts (3/14): ULTA, BWS, AMZN, EBAY, TGT, WMT, NKE/Adi - chart3 3 14

Takeaway: Not exactly the best winter to be launching something called Climachill. But to Adidas' credit, it does a very good job of launching a new technology and then explaining to consumers what the technical merits are. This might seem obvious, but it's an area where Nike has struggled for the better part of 30-years. (Note that the tags on Nike product hanging on the rack are identical whether it is a thermal jacket, or bathing suit for a 6-year old). Nike might have the better product, but it could learn a thing or two from Adidas.




GOOG - Report: Google Eyes First U.S. Retail Location Near NYC Apple Store


  • "Google plans to open its first retail location in the United States in New York City's SoHo neighborhood, situated just around the corner from an Apple store, a new report suggests."
  • "According to Crain's New York, Google will open an 8,000-square-foot retail location at 131 Greene St. If the reports are true, the store would also be across the street from eyewear company Warby Parker, which at one point was rumored to be helping design frames for Google Glass."
  • "This isn't Google's first foray into brick-and-mortar retail. The company has physical Android stores called 'Androidland' in Australia, Indonesia and India to showcase its products. Meanwhile, Chromezone, a shop within a branch of Currys and PC World in London, became the first official retailer to sell Google's Chromebook laptop at a retail store. However, it has yet to invest heavily in storefronts."

ARO - Aeropostale Enters Into Commitment Letter With Affiliates of Sycamore Partners for Strategic Partnership and $150 Million Financing


  • "Aeropostale, Inc. today announced that it has signed a commitment letter with Sycamore Partners and its affiliates for a strategic partnership and $150 million in senior secured credit facilities. The senior secured credit facilities will consist of a five-year $100 million term loan facility and a ten-year $50 million term loan facility that includes a sourcing arrangement with MGF Sourcing, an affiliate of Sycamore Partners."
  • "Under the terms of the commitment letter, Aeropostale will also issue convertible preferred stock to Sycamore Partners.  The convertible preferred stock gives Sycamore Partners the right to acquire up to 5% of the Company's common stock at an exercise price of $7.25, the closing price of the Company's common stock on March 12, 2014.  Combined with Sycamore Partners' current ownership of Aeropostale's outstanding common stock, Sycamore Partners' ownership on an as-converted basis would increase to approximately 12.3% of the Company's outstanding common stock."
  • "The new strategic sourcing partnership with MGF Sourcing significantly diversifies Aeropostale's apparel production, and all of the Company's sourcing orders will continue to be awarded through a competitive bidding process.  The sourcing partnership will result in Aeropostale's commitment to complete minimum merchandise purchases each year for ten years.  As the Company fulfills its minimum purchase requirements under the sourcing partnership, all amortization payments of the associated facility will be fully rebated."