Hedgeye Retail: Our Heavyweight Candidates for Newly Vacant Kohl’s CEO | $KSS

Takeaway: There are now three potential top jobs open at mega-US retailers.

Hedgeye Retail: Our Heavyweight Candidates for Newly Vacant Kohl’s CEO | $KSS - kss


Kohl's CEO Planning Management Shuffle

• "Mr. Mansell is planning a management shuffle, according to a person familiar with the matter. And he is also scouting for a new chief merchant who would be a candidate to ultimately succeed him, people familiar with the matter said."


• "The CEO is seeking to boost growth when the retail industry is struggling with budget-conscious shoppers who are increasingly turning to the Internet for everyday purchases."


• "Kohl's board is looking for Mr. Mansell, 61 years old, to demonstrate progress on those fronts at a board meeting Wednesday, the day before Kohl's reports first-quarter earnings. At that session, he is expected to describe plans for a broader management reorganization, said a person familiar with the situation."


• "In April, Kohl's lost its chief merchandising officer, Donald Brennan, who joined the company in 2001 and was promoted to chief merchant in 2010 but had received a weak performance grade, according to regulatory filings. Mr. Mansell has been personally sounding out candidates for the chief merchant's job with an eye to having them eventually succeed him as CEO, several people familiar with the situation said."


• "Mr. Mansell has reached out to Brendan Hoffman, who earlier this year said he plans to leave his post as CEO of Bon-Ton Stores Inc. when his contract expires in February, these people said. Mr. Hoffman is unlikely to take the job since it wouldn't immediately place him in a CEO role, one of the people said."

Takeaway From Hedgeye’s Brian McGough:

This tells us that there's now three potential top jobs open at mega-US retailers: Target, JC Penney, and Kohl's. The pool of candidates is not huge, but there are some heavyweights. There's Roger Farah, who has only two weeks left at Ralph Lauren, Bill McComb, who is currently on vacation after turning the dog that was Liz Claiborne into the hyper-growth Kate Spade. And there’s Vanessa Castagna, who was the underappreciated architect of the Eckerd-era turnaround at JC Penney over a decade ago. Let's also not forget Glenn Murphy from Gap. The fact of the matter is that he is a far better CEO than a company like Gap probably deserves. He's done a great job fixing the company, and at age 51 -- has a much bigger and better job left in him.


*Watch Brian McGough on HedgeyeTV explain one key point in his bearish thesis on Kohl’s.


*     *     *     *     *     *


Editor's Note: This is a complimentary research excerpt from Hedgeye Retail Sector Head Brian McGough. Follow McGough on Twitter @HedgeyeRetail

Subscribe to Hedgeye.

Howard Penney Has Done It Again, Ladies and Gentleman | $BLMN

Takeaway: Smart investors pay close attention to Howard Penney.

Hedgeye Restaurants sector head Howard Penney is simply on fire. Last week we highlighted his great call on Bloomin’ Brands (BLMN). And guess what? The stock has continued to fall – it’s now down -20% since he added it as a Best Ideas SHORT on November 27, 2013 at $26.71/share. Since this time, 2014 EPS estimates have been revised down from $1.33 to $1.22 and the share price has acted accordingly.


Howard Penney Has Done It Again, Ladies and Gentleman | $BLMN - 9


Howard also discussed BLMN as one of his favorite short ideas on HedgeyeTV back in April.



What have we learned here? Pay close attention to Howard Penney.

Subscribe to Hedgeye.

Cartoon of the Day: Grocery Store Robbery

Takeaway: Americans say food prices are getting out of hand.

Cartoon of the Day: Grocery Store Robbery - Food Prices 5.14.2014


Attention Students...

Get The Macro Show and the Early Look now for only $29.95/month – a savings of 57% – with the Hedgeye Student Discount! In addition to those daily macro insights, you'll receive exclusive content tailor-made to augment what you learn in the classroom. Must be a current college or university student to qualify.

VIDEO | Keith's Macro Notebook 5/14: UST 10YR COMMODITIES EUROPE

Video | McCullough on Fox: You Have To Consider Front Running the Fed

Hedgeye CEO Keith McCullough talks markets on Fox Business' Opening Bell with host Sandra Smith, filling in for Maria Bartiromo.


BLMN: Closing Best Idea Short

We added Bloomin’ Brands (BLMN) to our Best Ideas list on 11/27/2013 at $26.71/share.  Since this time, 2014 EPS estimates have been revised down from $1.33 to $1.22 and the share price has acted accordingly (down ~20%).  With this note we are removing Short BLMN from our Best Ideas list.


In our view, Bloomin’ still has issues but we feel our short thesis is largely played out.  At 8.02x EV/EBITDA (NTM) and 16.66 P/EPS (NTM), Bloomin’ screens rather attractively relative to other casual dining companies.  With that being said, we continue to believe casual companies in general are quite expensive.


Considering an attractive relative valuation and reset expectations, we believe the short setup is no longer favorable from a risk/reward perspective.  Decelerating two-year same-store-sales trends and stagnant margins continue to give us cause for concern, but staying short at these levels is no longer compelling. 


Despite our move to the sidelines, we continue to believe 2015 estimates for 19% EPS growth on 7% revenue growth are too aggressive.


Research Recap:

New Best Idea: Short Bloomin’ Brands (11/27/2013)

BLMN: A Bloomin’ Mess (01/13/2014)

BLMN: Beat & Guide Down (02/25/2014)

BLMN: Still Bearish (05/09/2014)


BLMN: Closing Best Idea Short - 1


Howard Penney

Managing Director


Fred Masotta


the macro show

what smart investors watch to win

Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.