• 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: WMT gas stations. Jordan finally runs. Fast Retailing dumps JCrew. Gap taps Philippines. 60% of consumers blame TGT. DECK brand store = fail



  • GES - Earnings Call: Wednesday 3/19, 4:30pm
  • TLYS - Earnings Call: Wednesday 3/19, 4:30pm


  • WTSL - Earnings Call: Thursday 3/20, 5:00pm
  • NKE - Earnings Call: Thursday 3/20, 5:00pm


  • TIF - Earnings Call: Friday 3/21, 8:30am


 Jcrew, 9983 - Merger Talks Between J. Crew, Fast Retailing Break Down


  • "Merger discussions between apparel chain J. Crew Group Inc. and Japan's Fast Retailing Co. have broken down, people familiar with the matter said…Fast Retailing..walked away from discussions with J. Crew management and the company's private-equity owners soon after The Wall Street Journal and others reported on the talks in late February, the people said."
  • "While it isn't clear exactly why the talks broke down, some of the people said the fact that they became public played a role. The end to the discussions could prove temporary, and both companies could renew them down the road, the people added."

Takeaway: Kinda funny how the day this story broke several weeks back, everyone assumed it was baked. Even we assumed it would go through. After all, it makes sense. Fast Retailing has been looking to buy a US concept for the better part of three years. Just because talks broke down with Drexler & Co, it doesn’t mean that Fast is done. Quite the opposite, in fact. We’d expect them to accelerate their search. There are plenty of options – at prices below the $5bn price tag rumored for JCrew. We have some ideas. Let us know if you care to discuss.

NKE - First Look At The Jordan Flight Runner


  • "...the Jordan Flight Runner is the Jordan Brand's first-ever running specific model. The innovative runner aims to take comfort and performance to the next level with a Dynamic Fit lacing system and Zoom Air cushioning.
  • "The Jordan Flight Runner is set to officially release May 1st, and will retail for $110."

Retail Callouts (3/19): NKE, WMT, GPS, FOSL, JCREW, TGT, DECK, AdiBok - morningnote chart1 3 19

Takeaway: This might seem odd to some people, but it actually makes perfect sense. Jordan broke out of being just a Basketball brand a decade ago. The NBA is joined by the NFL, MLB, PGA and Lacrosse, among other sports, as places where you can find athletes wearing Jordans. Then why should the brand sidestep the most popular silhouette in the US? (yes, that’s running).  We’re not sure if they’re geared for fashion or to actually run in, but there are two things we know…1) they’re long overdue and 2) they’ll sell. Good move by Nike here.




  • "Fossil Group, Inc. announced today they are working together with Google supporting the extension of Android into wearables with Android Wear. As part of the launch, Google also announced the release of a Developer Preview of Android Wear, helping them build rich wearable experiences for their existing Android apps."

Takeaway: Good move by FOSL here. It is the undisputed king of the mass-market watch. But it faces a bit of a hurdle – from a secular standpoint. Odds are that 90% of the people reading this are wearing a watch. Now go and poll a group of kids under the age of 18 – across all income and demographic groups – and come up with a ‘watch ratio’ for that group. It certainly won’t be over 50%, and our sense is that it’ll struggle to get above 25%. Kids simply don’t wear watches anymore. Their watch is their phone. Fossil is smart to team up with Google and anyone else out there that can maximize its relevance with a younger consumer.   


GPS - Gap Inc. Opens First-Ever Franchise-Operated Old Navy Stores


  • "Gap Inc. announced today its plans to open five franchise-operated Old Navy stores in the Philippines in 2014...The first two Old Navy stores will open in Manila in March and there are plans to open three more stores in the second half of the year for a total of five Old Navy stores in 2014."
  • "Old Navy is partnering with Stores Specialists, Inc. to open the stores, which already operates Gap brand and Banana Republic stores in the Philippines."

Takeaway: We don’t like Gap for a number of reasons. But this move is fine by us. Makes sense to go into a new market like the Philippines with a partner. And Old Navy, with its low price points, is ideally suited for a poor country like the Philippines, which has a GDP less than half the size of Wal-Mart’s annual revenue base.

ADDYY - Herbert Hainer Takes New Role at Soccer Club 


  • "Herbert Hainer, Adidas' CEO, will become the new president and business chairman of German soccer club Bayern Munich, after the resignation of Uli Hoeness."
  • "In a subsequent conference call, the FC Bayern München AG supervisory board resolved the following: Herbert Hainer (59), Adidas AG CEO and previously deputy chairman of the FC Bayern München AG supervisory board, is appointed chairman of the supervisory board, effective immediately and until further notice. This decision was unanimously approved by the supervisory board."

Takeaway: Seriously Herbert? Let’s face some facts…you’re not exactly knocking the cover off the ball in your day job. Adidas needs more of your time, not less. You already endorse Bayern Munich, so what are the added benefits of being the President of the Club?  This is reminiscent of when Mike Ullman became Chair of the Dallas Federal Reserve and joined the Board of the NRF. Keep your eyes on the prize boys…

WMT - Wal-Mart Tests Convenience Store Prototype


  • "The Bentonville retail giant is having a grand opening of its 'Walmart To Go' store on March 19. The store is at 1300 S. Walton Blvd., less than a mile from the corporate headquarters."
  • "The store is approximately 2,500 SF, a small fraction of the size of the company’s small-format Neighborhood Market grocery stores. The store will sell gasoline as well as items usually associated with convenience stores."
  • “’It’s a convenience store test concept,’ Barnett said. ‘We’re not planning any more across the country.’”

Retail Callouts (3/19): NKE, WMT, GPS, FOSL, JCREW, TGT, DECK, AdiBok - chart4 morningnote 3 19

Takeaway: It’s so easy to knock Wal-Mart – that’s what happens when you get as big as it is. But the truth is that we give it credit for trying out new concepts. We wish we could say the same for other mature retailers, who seem so comfortable in their no-growth mediocrity. Our sense is that WMT sets up a few more of these concepts with one purpose in mind – to collect data about the kind of products people buy in these formats. Aside from testing new products in a very small concentrated space, it can use any insight gathered to add to its massive database that fuels merchandising decisions at its 4,000+ large format stores.


TGT - Survey: 60% of consumers blame retailers in breaches


  • "Six-in-10 (60%) of those who knew about any data breaches at notable retailers, such as Target and Neiman Marcus, hold the merchant responsible for preventing future incidents of a data breach. The '2014 Consumer Reaction to Financial Data Breaches Study' of more than 2,000 adult U.S. consumers from Feedzai and Harris Interactive also found that 43% think nothing is more aggravating than getting credit/debit card data stolen."
  • "Among U.S. adults who are aware of any data breaches, 60% believe merchants are responsible for preventing future incidents, while 13% believe responsibility falls on banks. Only 5% of these adults feel it is the consumer’s responsibility…"

Takeaway: We’re surprised to see that only 60% of consumers blame the retailer. Don’t get us wrong, 60% is a massive number – especially given that the survey was not confined to people that were actually harmed or in any way affected by the breach. But 40% of Americans giving retailers a free pass as it relates to blame for the risk is much greater than we thought.

DECK - Deckers Bows First Brand Showcase Store


  • "Deckers' first 'brand showcase' store, located at the firm's headquarters in Goleta, Calif., opened to the public today. The 8,000-sq.-ft. location will serve as a testing ground for new product and technology, in addition to offering regular collections from Deckers labels including Ugg Australia, Teva, Sanuk, Tsubo, Ahnu, Mozo and Hoka One One."
  • "The flagship also will allow shoppers to customize product in-store via iPad, with free shipping or in-store pick-up options."

Retail Callouts (3/19): NKE, WMT, GPS, FOSL, JCREW, TGT, DECK, AdiBok - chart3 morningnote 3 19


Takeaway: We’re so surprised when we see companies open these ‘brand showcase’ stores. The reality is that the consumer could care less that the company Decker’s exists. They might love one of the brands, like UGG. But just because Decker’s owns a bunch of brands that help it diversify seasonally does not mean that the consumer wants to see them all. We’d rather see separate retail stores for each concept in the appropriate location to best target each consumer.


Turnstyle to Bring Retail Underground at Columbus Circle


  • "The project, planned for the subway station concourse at 59th Street-Columbus Circle, envisions a 30,000-square-foot underground shopping mall populated by beauty, fashion, accessories and food shops. There’s space for 30 shops, which will be divided into three categories: grab ’n’ go, retail stores and marketplace."

Retail Callouts (3/19): NKE, WMT, GPS, FOSL, JCREW, TGT, DECK, AdiBok - chart2 morningnote 3 19



APP - American Apparel Misses SEC Filing Deadline


  • "American Apparel Inc. has missed the filing deadline for its annual report with the Securities and Exchange Commission as it struggles to fund its operations and pay interest on its debt."
  • "The company notified the SEC Tuesday that it had missed the Monday deadline...for its annual report...because it was focusing on putting together a plan to regain compliance with the listing standards of the NYSE MKT exchange. The exchange notified American Apparel that it needed to file a plan to regain compliance by Friday and make progress toward meeting the plan by April 15."