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Takeaway: COH Analyst Day takeaway. SKX sues AdiBok for violating patent. NKE adds EBAY CEO to board.


COH - Analyst Day Takeaway

Takeaway: Coach is a name we’ve been short more often than not. I’ve been debating whether the bear case is too widely accepted. Apparently not. As they guided  2015 NA comps down in the 20s during yesterday's analyst day. The brand is being completely repositioned, and anyone buying today will need to wait 3-5 years to see if it’s working.  Only question in my mind is that it has a 3.85% dividend yield. Balance sheet has no debt, and there’s a 70% gross margin to backstop the dividend. Being cheap isn’t enough for me to want to buy a dead brand. It had a 3.5% yield a week ago – that seemed cheap too.

SKX - Skechers Sues Reebok for Patent Breach


  • "Skechers USA Inc. has filed a lawsuit against Reebok International for selling footwear that infringes on its GoWalk product line."
  • "Skechers is claiming that Reebok is selling the copycat products under the name 'Reebok Walk Ahead RS.' Reebok’s U.S. head of media relations could not be immediately reached for comment."

Retail Callouts (6/20): COH, SKX, NKE - Chart 1 6 20 14

Takeaway: Yea, the shoes look pretty similar, and who knows SKX may actually win this one. I mean they both look like glorified water shoes. But seriously? Talk about the pot calling the kettle black.

NKE, EBAY - John Donahoe Named to Nike Inc.'s Board


  • "John Donahoe, EBay Inc.'s president and chief executive officer, was named to Nike Inc.'s board Thursday."
  • "'John’s executive management experience in digital commerce, technology, strategic planning, and marketing for a global brand makes him an excellent addition to our board,' said Philip Knight, Nike co-founder and chairman."

Takeaway: Dot.com sales accounted for about 2% of NKE's sales in 2013, or about 12% of total DTC sales. E-commerce will never play a huge part in the NKE sales algorithm because of the 80/20 split between wholesale and retail, but this is an area where the company needs to improve. Bringing in Donahoe should help.



FDO - Icahn Letter to Family Dollar CEO Howard Levine


  • "Although we appreciated the cordial nature of our discussion at last night’s dinner, it was apparent that we have a strong difference of opinion as to the future of our company."
  • Family Dollar has consistently underperformed its peers on most, if not all, operating metrics (same store sales, total revenue growth, sales per store, sales per square foot, operating margins, capital structure efficiency, etc.) and faces growing competition. In addition, the company’s shares have underperformed not only the shares of its peers but also the S&P 500 index over the last 1-year and 3-year periods.
  • "But perhaps more importantly, we believe that for a number of reasons we discussed last night it is imperative that Family Dollar be put up for sale immediately."

GIL - Gildan Activewear Announces Agreement to Acquire Marketer and Manufacturer of

Branded Sheer Hosiery, Legwear and Shapewear


  • "Gildan Activewear Inc. today announced that it has signed a definitive agreement to acquire substantially all of the assets of Doris Inc. (Doris), a marketer and manufacturer of branded sheer hosiery, legwear and shapewear products to retailers in Canada and the United States. The initial purchase price is approximately CDN $110 million (U.S. $101.4 million), with possible additional contingent payments of up to CDN $10 million (U.S. $9.2 million), which are based on the achievement of targets for growth in sales revenues. The purchase consideration will be paid in cash and will be financed out of Gildan’s bank credit facility. "
  • "Revenues of Doris for the year ended March 31, 2014 amounted to approximately CDN $95 million (U.S. $87.6 million), and adjusted EBITDA for the same period amounted to approximately CDN $14 million (U.S. $12.9 million), so that the acquisition is expected to be immediately accretive to Gildan’s earnings in fiscal 2015."

ANF - Report: Abercrombie installing in-store mobile charging stations


  • "Abercrombie & Fitch is reportedly rolling out charging stations for mobile phones and tablets in its stores. According to TheStreet, there are currently two Abercrombie & Fitch stores with mobile charging stations installed, and the retailer plans to roll out the stations at several more Abercrombie and Hollister stores by the end of the year."
  • "Abercrombie is also providing lockers so customers can leave their mobile devices to charge without worrying about them being stolen."