Retail Callouts (6/9): Ideas List, WMT, FDO, FOSL, JWN, KORS, KATE, AEO

Takeaway: Updated Hedgeye Retail Ideas list. WMT curious shopper data disclosure. FOSL - Tory Burch watch line to debut in Fall

HEDGEYE RETAIL IDEAS LIST

*Deleted RL and WSM from Short Bench and added both to Long Bench.
 

Retail Callouts (6/9): Ideas List, WMT, FDO, FOSL, JWN, KORS, KATE, AEO - ideas

 

EVENTS TO WATCH

 

TUESDAY (6/10)

  • FRAN - Earnings Call: 8:30am
  • ULTA - Earnings Call: 5:00pm

 

WEDNESDAY (6/11)

  • RH - Earnings Call: 5:00pm

 

THURSDAY (6/12)

  • LULU - Earnings Call: 9:00am

 

COMPANY NEWS

 

WMT - Shopper Data Stats

 

Retail Callouts (6/9): Ideas List, WMT, FDO, FOSL, JWN, KORS, KATE, AEO - chart2 6 9

 

Takeaway:  This is one of the strangest tweets we've ever seen from a company.  We're not sure how WMT thinks customers will react to it touting how much information it has on their shopping behavior.  From where we sit, it makes a lot more sense for WMT to simply pipe down and use the information to optimize the pricing part of equation around the type of product it has in its stores. It's presumably doing that already -- which we'd arguably makes this a bearish statement by the company. It has 30 petabytes of shopping information, and still can't comp. McMillon shouldn't have signed his name to this tweet.

 

FDO - Carl Icahn discloses 9.4% stake in Family Dollar

(http://www.marketwatch.com/story/carl-icahn-discloses-94-stake-in-family-dollar-2014-06-06-181032016?siteid=yhoof2)

 

  • "Carl Icahn reported a 9.4% stake in Family Dollar Stores Inc., calling the stock undervalued and saying he plans to agitate for changes."
  • "Icahn said he plans to seek discussions with the retailer’s management to discuss 'strategies to enhance shareholder value,' potentially including the 'exploration of strategic alternatives.' The billionaire investor made the statement in a filing Friday with the Securities and Exchange Commission."
  • "Icahn said he and his affiliates 'may also determine to seek shareholder board representation if appropriate.'"

 

Takeaway: Interesting move here. From where we sit, FDO clearly has a sub-par real estate portfolio when compared to it's arch-rival, Dollar General. After shifting incrementally to consumables to drive traffic, now it's resorting to less desirable items like tobacco. We've looked at FDO so many times, and never did we ever walk away thinking that it is a long -- except in a situation where you want a levered bet on the low-end US consumer (something we have not wanted in a while). The point here is that FDO strikes us as one of those companies where an activist can't be the catalyst for meaningful change inside the company. If anything, it'd be that Icahn looks to get this company sold.

 

FOSL, JWN - Tory Burch Extends Brand Into Watches

(http://www.wwd.com/accessories-news/watches/burch-extends-brand-into-watches-7718995)

 

  • "Tory Burch has teamed with Fossil Group to launch her first watch collection, due out in October.
  • Burch and Fossil first inked the deal in February 2013, and over the past 15 months have worked together to shape the debut collection. The final selection features nine models done in multiple colorways, and will be unveiled to press on Wednesday."
  • "The... collection ranges in price from $350 to $695. The price point places Burch higher than watches by Kors (which retail from $140 to $550) and Marc by Marc Jacobs (priced from $150 to $350)."
  • "The initial collection will be available exclusively at Nordstrom, as well as at Tory Burch stores and on toryburch.com."

 

Takeaway: Logical next category for Tory Burch following in the footsteps of KORS and KATE who have looked to watches, jewelry, and accessories to support the next leg of growth. Not a direct competitor to the two aforementioned names given Burch's much higher price points, but definitely competition on the fringe. FOSL keeps winning these licenses given its high-quality, low-cost status in the industry, which has helped offset the secular slowdown in the watch category.

 

OTHER NEWS

 

AEO - American Eagle to open UK stores

(http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/10884773/American-Eagle-to-open-UK-stores.html)

 

  • "The fashion chain is in talks to open a store at Westfield’s Stratford City shopping centre, as well as at its west London centre and Bluewater in Kent."
  • "The company has filed documents at Companies House to create a UK subsidiary called American Eagle Outfitters UK Limited, paving the way for it to open stores."
  • "A total of 31 international retailers opened stores in London for the first time last year, including US fashion retailer J Crew and luxury brand Tom Ford.  This means that 57pc of international brands – almost three in five – have a presence in London."

 

CWTR - Sycamore Acquires Coldwater Creek IP Assets

(http://www.wwd.com/business-news/mergers-acquisitions/sycamore-acquires-coldwater-creek-ip-assets-7718993)

 

  • "Private equity firm Sycamore Partners has acquired the intellectual property assets of bankrupt women’s specialty retailer Coldwater Creek."
  • "The purchase, which included customer lists, was through a Sycamore affiliate, CWC Direct LLC, last month at a bankruptcy court auction in Delaware. A Delaware bankruptcy court has already approved the acquisition."
  • "A source familiar with Sycamore’s plans said the financial firm intends to reestablish the business in the future. The entity would operate as a separate company under Sycamore’s growing portfolio that now includes Talbots, Hot Topic and the former Jones Group brands."