Retail Callouts (4/22): NKE, WMT, SKX

Takeaway: ICSC - no lift from Easter. NKE talks about sourcing. WMT UK testing grocery lockers. SKX and Meb serve us a helping of crow.




  • SKX - Earnings Call: Tuesday 4/22, 4:30pm



  • UA - Earnings Call: Thursday 4/24, 8:30am
  • CAB - Earnings Call: Thursday 4/24, 11:00am
  • DECK - Earnings Call: Thursday 4/24, 4:30pm
  • HBI - Earnings Call: Thursday 4/24, 4:30pm
  • AMZN - Earnings Call: Thursday 4/24, 5:00pm



  • VFC- Earnings Call: Friday 4/25, 8:30am




ICSC - Chain Store Sales Index


No lift from the Easter shift with numbers flat YY. If we look at the trailing 4 week average, numbers were down 40bps against easy compares. With no excuses left in the chamber, it's shaping up to be a tough earnings season for a whole host of retailers.


Retail Callouts (4/22): NKE, WMT, SKX - chart1 4 22




NKE - Inside Nike's Struggle to Balance Cost and Worker Safety in Bangladesh



  • "Over the years, Nike's use of overseas manufacturers has periodically sullied its image, and its campaign to eliminate such problems hasn't been easy. It has plowed money into helping factories and sacrificed sales at key moments when standards were breached. It has largely eliminated problems such as factory-worker deaths and the use of certain hazardous chemicals."
  • Nike ended its relationship with Lyric after its pending production orders were filled last July. It decided it would stick with four other factories in modern buildings in Bangladesh's export-processing zones…'Did we pass up on margin because of that?' Ms. Jones says. 'Absolutely.'"


Retail Callouts (4/22): NKE, WMT, SKX - chart3 4 22


Takeaway: Today is the 1yr anniversary of the Rana Plaza collapse, so much of today's news flow was focused on sourcing. NKE is in an interesting spot - it more than just about every other company has taken serious heat over its sourcing practices. The company used its WSJ soap box to highlight its new ethical approach to sourcing - placing standards ahead of margins. We're all for human rights, but we must put on our analyst hats and realize that input costs are increasing as a result. A trend that we expect will continue.


WMT - Walmart’s English experiment



  • "It is the first Asda supermarket to allow customers to pick up their shopping from temperature-controlled lockers. After submitting their order online, shoppers collect their goods from the bright-turquoise storage units, which are unlocked when they enter their order number or scan a 'QR' code sent out after payment. Inside the lockers, their goods are divided into three zones: chilled on top, frozen on the bottom and ambient in the middle."
  • "Walmart is watching the Pudsey 'click and collect' experiment to see whether it could be a useful innovation for its vast grocery operations in the US, which are today overwhelmingly reliant on customers driving out to stores and picking goods off the shelves themselves."


Takeaway: We give WMT credit - this sounds like it could work. Click and collect is a better alternative to delivery from an expense stand point, and it makes sense in an urban setting where lockers could be located in central, high traffic, locations.  Exacerbates the traffic issue by locating lockers offsite, but a good defense against pure play e-commerce competition.


SKX - Skechers Rises After Keflezighi Wins Boston Marathon



  • "Skechers USA Inc. gained traction in New York trading today after Meb Keflezighi, the American runner who endorses its shoes, triumphed at the Boston Marathon."
  • "Skechers signed Keflezighi to an endorsement deal in 2011, about two years after he’d won the New York Marathon. The company, which was founded in 1992 and known mostly for its skateboard shoes and boots, introduced the GOrun line later in 2011, with Keflezighi as its main pitchman. Skechers and Keflezighi extended their agreement in November. Higgins declined to comment on the financial details of the deal."


Retail Callouts (4/22): NKE, WMT, SKX - chart2 4 22


Takeaway: Great win for SKX yesterday in Boston. Meb served us a big helping of crow - we were skeptical that one could even finish a marathon in a pair of Skechers, let alone win.







  • "NIKE, Inc. today announced that Michelle A. Peluso has been appointed to the Company’s Board of Directors. Peluso, 42, is Chief Executive Officer of Gilt…"
  • "Peluso served on the Gilt board of directors until her appointment as Chief Executive Officer last year. Prior to joining Gilt, she served as Global Consumer Chief Marketing and Internet Officer of Citigroup Inc. from 2009 to 2013; and from 2002 to 2009, she held senior management positions at LP, being appointed Chief Operating Officer in 2003, and President and Chief Executive Officer in 2004."


Fears over ‘feelgood factor’ as Easter shoppers stay at home



  • "The average number of shoppers on Good Friday measured by what is known in the industry as 'footfall' by the Springboard monitoring company, was down 7.6 per cent on Good Friday and 8.7 per cent on Saturday."
  • "A strong pick-up yesterday was not expected to offset the poor performance of the first two days, Springboard said. "


BEBE - bebe stores, inc. Reports Preliminary Third Quarter Fiscal Year 2014 Net Sales and Loss per Share



  • "bebe stores, inc. today announced that based on its preliminary financial results, the Company is updating its net loss per share guidance for the fiscal third quarter ended April 5, 2014. The Company expects to report actual fiscal third quarter 2014 results on May 8, 2014."
  • "Comparable store sales for the quarter ended April 5, 2014 decreased approximately 5.7%. Net sales were approximately $93 million, a decrease of 17.2% from $113 million reported for the third quarter a year ago. The sales decrease was due partially to one less retail week in January in the current fiscal year coupled with the closure of 19 unproductive stores since the prior year third fiscal quarter."
  • "Merchandise margins for the third quarter increased by approximately 50 basis points as compared to fiscal third quarter last year but were below previous expectations due to the increased level of promotions in response to the challenging retail environment. The gross margin rate is expected to be below that of the prior year due to deleveraging of sales. As a result of these factors, net loss per share for the quarter is now expected to be in the $0.29 to $0.32 range. This assumes estimated non-cash impairment charges for bebe, 2b and outlet stores of up to $0.04 per share."


Alec Richards


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