EVENTS TO WATCH
THURSDAY (5/22)
- ARO - Earnings Call, 4:15pm
- ROST - Earnings Call, 4:15pm
- GPS - Earnings Call, 5:00pm
FRIDAY (5/23)
- FL - Earnings Call, 9:00am
COMPANY NEWS
WSM - 1Q14 Earnings
Takeaway: Hard to ignore a 10% comp. The key takeaway from the print, in our opinion, is the strength of WSM's DTC channel. For the first time in the company's history, DTC accounted for over 50% of net revenues and more importantly 80% of EBIT.
We go back and forth on how to handle WSM. We continue to believe that RH will continue to consolidate market share as it reinvents its real estate portfolio and introduces new product offerings to both its category lineup and bigger boxes. The truth is that neither name commands a significant share in the highly fragmented home furnishings market. Still a lot of white space for both to expand before we get concerned about competition.
ADDYY - Adidas sees boost to sales from World Cup
(http://www.reuters.com//article/2014/05/22/adidas-soccer-idUSL6N0O82QM20140522)
- "German sportswear company Adidas has given a more precise sales growth target for 2014, amounting to a rise of up to 8 percent, as it gets a lift from the soccer World Cup that starts in Brazil next month."
- "'This year we will add 1-1.2 billion euros ($1.4-1.6 billion) to operational revenue, with the World Cup playing an important role,' Chief Executive Herbert Hainer told journalists at a briefing in Munich in remarks released for publication on Thursday."
- "That increase represents a rise of 7-8 percent from the 14.492 billion euros of sales Adidas recorded in 2013. Previously, Adidas had guided for a 'high single-digit' increase in currency-neutral sales in 2014."
- "'Football is the DNA of our company. We want to clearly show that we are number one in football,' Hainer said, adding Adidas expected to sell significantly more balls than at the last World Cup in South Africa four years ago and about as many shirts."
- "Hainer acknowledged, however, that Adidas faced a 'head-to-head' race with Nike in the business for football boots, including in Germany, predicting Adidas would sell 2 million pairs of special boots designed for the World Cup."
- "Adidas is investing a 'double-digit million sum' in advertising associated with the World Cup with a particular focus on social media, he said, with plans for a media room in Brazil to deliver and filter content from its sponsored teams and players."
Takeaway: Pretty damning admission by Hainer. Adi is 'head-to-head' with NKE in the football boots arms race? We would have guessed as much, but NKE is just starting to gain traction in the soccer market. Add UA to the mix and it’s a pretty bleak outlook for Adi. When soccer balls and t-shirts are the key pillar of growth for a footwear company - we get concerned.
SKX - Skechers’ Home Run
- "Skechers’ Relaxed Fit men’s line is adding former baseball player Pete Rose to its family. Rose will appear in ads this fall for the footwear line. He joins other sports figures including Joe Montana, Mark Cuban and Joe Namath, who have all appeared in the Relaxed Fit marketing."
Takeaway: This officially ends SKX's string of Hall of Fame ex. Athlete endorses.
OTHER NEWS
WMT - Report: Wal-Mart to expand Sunnyvale e-commerce operation
(http://www.chainstoreage.com/article/report-wal-mart-expand-sunnyvale-e-commerce-operation)
- "Wal-Mart is reportedly planning to substantially expand its e-commerce operation based in Sunnyvale, California. According to the Oakland Tribune, Wal-Mart intends to add hundreds of staffers to its global e-commerce unit there, bringing the total number of e-commerce employees to about 1,000."
- "In addition, Wal-Mart will lease a 107,000-sq.-ft. space in Sunnyvale to help house its e-commerce operations. Currently, the retailer employs about 550 e-commerce employees in Sunnyvale at an existing facility it will maintain."
JCP - J. C. Penney Company, Inc. Grants Previously Disclosed Equity Inducement Award to Edward Record
(http://ir.jcpenney.com/phoenix.zhtml?c=70528&p=irol-newsCompanyArticle&ID=1933365&highlight=)
- "...J. C. Penney Company, Inc. announced that on May 20, 2014, an equity inducement award of 223,964 restricted stock units (RSUs) was granted to Edward Record, the Company's Executive Vice President and Chief Financial Officer, in connection with the commencement of his employment."
- "The RSUs will vest in thirds on the first, second and third anniversaries, respectively, of the grant date, provided Mr. Record remains continuously employed with the Company through those dates. The award fully vests if Mr. Record is terminated for any reason other than cause, and if his employment terminates in certain cases within two years following a change of control at the Company."
BrandZ's Most Valuable Global Brands Unveiled
- "...global research agency Millward Brown...unveiled its 2014 BrandZ Top 100 Most Valuable Global Brands Wednesday."
- "The ninth release of the study measures consumer brand perception along with financial data to calculate brand value."
- "Among this year’s top 10 apparel brands, Nike was named the most valuable, stealing the top spot from Zara by increasing 55 percent to a brand value of $24.6 billion. The strongest rise, however, came from Uniqlo, which rose by 58 percent to $7.3 billion, moving up two notches to take the number-four spot. The only decliner in the top 10 was U.S. yoga brand Lululemon, down 13 percent to ninth place and a valuation of $3.3 billion."
Alec Richards
Analyst
