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Takeaway: KORS inks new eyewear deal with LUX. NKE & ADDY factory shutdown. BBY retail chief retires after 1yr on the job.

EVENTS TO WATCH

WEDNESDAY

  • GPS - Investor Meeting: Wednesday 4/16, 1:00 pm

 

THURSDAY

  • LULU - Analyst Day: Thursday 4/17, 12:00 pm

COMPANY NEWS

KORS, LUX - MICHAEL KORS ANNOUNCES EYEWEAR LICENSE WITH LUXOTTICA

(http://phx.corporate-ir.net/phoenix.zhtml?c=235654&p=irol-newsArticle&ID=1918813&highlight=)

  • "Michael Kors Holdings Limited and Luxottica Group  announced today that they have signed a new and exclusive eyewear license agreement for the Michael Kors Collection and MICHAEL Michael Kors eyewear. The first collection produced with Luxottica will launch in January 2015."
  • "The partnership with Luxottica...will last 10 years. It will allow Michael Kors...to continue the global expansion of the brand’s eyewear business. Luxottica will produce eyewear for both the Michael Kors Collection and MICHAEL Michael Kors lines, beginning with Spring 2015. The brand’s two luxury eyewear collections will be carried around the world in Michael Kors stores, department stores, select travel retail locations, independent optical locations and Luxottica’s retail stores."

Takeaway: The deal with LUX partners KORS with the dominant player in the eyewear segment and will give the company a much more prominent place inside Luxottica's retail network. Nice upgrade here for KORS with the Marchon deal set to expire.

NKE, ADDYY - China Shoe Plant Strike Disrupts Output at Nike, Adidas Supplier

(http://www.bloomberg.com/news/2014-04-15/nike-shoemaker-yue-yuen-says-over-1-000-china-workers-on-strike.html)

  • "Workers at Nike Inc. and Adidas AG shoe supplier Yue Yuen Industrial Holdings Ltd. in Dongguan, China struck for a third day seeking a 30 percent pay increase and better benefits, disrupting output."
  • "The number of striking workers increased today, a spokesman for Hong Kong-based Yue Yuen said, without estimating the number of strikers or affect on production. He asked not to be identified because of company policy. New York-based China Labor Watch estimated strikers at 30,000."
  • "Adidas is 'closely monitoring the situation' at the factory, Katja Schreiber, spokeswoman for the company, said by e-mail today."
  • "Nike 'is concerned by the events' and is monitoring production and the dialog between factory management and workers, Greg Rossiter, a spokesman for the Beaverton, Oregon-based sporting goods company, said in an e-mail."

Takeaway: Regardless of the outcome here, its clear that input costs, both material and labor, are headed higher. With Gross Margin turning from a tailwind to a headwind and an incremental $400mm in SG&A we're looking at 9% decline in EPS with the top line growing at 10%. If NKE can't grow EPS at a Nike-esque 20% rate when futures are six months into a DD growth rate, then when will it happen?

OTHER NEWS

 

BBY - Best Buy's top U.S. store executive departs

(http://www.startribune.com/business/255243381.html)

  • "Seven months after getting a new title, Best Buy Inc.’s president of U.S. retail stores retired and is being succeeded by the retailer’s chief human resources officer."
  • "Shawn Score, a 29-year veteran of the Richfield-based company, was put in charge of its 1,400 U.S. stores in January 2013. He was named president of the unit, the biggest in the company, last October. Best Buy on Monday confirmed the departure of Score, 48, but declined further comment."
  • "Shari Ballard, the human resources chief, will take on Score’s duties. ­Ballard, a 21-year employee, will retain the human resources job, which she got last August after leading Best Buy’s approximately 450-store international unit. She previously was executive vice president of retail channel management. Best Buy said Ballard is a permanent replacement for Score, rather than an interim choice."

 

GPS - Gap Inc. Announces Marissa Webb as Creative Director and Executive Vice President of Design for Banana Republic

(http://www.gapinc.com/content/gapinc/html/media/pressrelease/2014/med_pr_MarissaWebb_CreativeDirector_BananaRepublic.html)

  • "Gap Inc. today announced that Banana Republic has named Marissa Webb as Creative Director and Executive Vice President of Design, effective April 28. She will be responsible for guiding the brand’s overall creative direction, as well as leading global product design for Banana Republic Women’s, Men’s, and Accessories.  Marissa will report to Global President of Banana Republic, Jack Calhoun."
  • "...Marissa Webb is most recently known for her eponymous upper contemporary label. Prior to branching out on her own during 2011, she spent time at Polo, Club Monaco and over a decade at J. Crew Group Inc., where she served in various design roles, including Head of Womenswear and Accessories Design.  Webb will retain her role as President and Creative Director at Marissa Webb, in addition to her newly appointed role at Banana Republic. Webb’s first collection for Banana Republic is expected in the summer of 2015."

 

ANN, DXL, DEST - Private equity and retailers court each other

(http://www.thedeal.com/content/consumer-retail/private-equity-and-retailers-court-each-other.php)

  • "One of the easier deals, at least on paper, likely to get done this year is a leveraged buyout of Ann Taylor parent Ann Inc., according to industry sources. Leading the line of potential buyers would be San Francisco's Golden Gate Capital, which already took a 9.5% stake in the women's apparel retailer in March. Ann is already working with a financial adviser, a source said."
  • "Two other retailers available for tie-ups with private equity are Destination Maternity Corp. and Destination XL Group Inc., according to industry sources. Those sources said the retailers are often on bankers' lists and have been circulated as potential acquisition targets over the past few years. Either could be targeted…"

ADDYY - Adidas Links With Mary Katrantzou

(http://www.wwd.com/markets-news/intimates-activewear/adidas-links-with-mary-katrantzou-7645297)

  • "Come November, London-based designer Mary Katrantzou will collaborate with Adidas Originals on a long-term partnership that will consist of a women’s-focused apparel and footwear line."
  • "The designer follows in the footsteps of names like Yohji Yamamoto, Raf Simons and Rick Owens, among others, and will be the first women’s-focused collaboration line since Stella McCartney’s."