Retail Callouts (6/23): HE Retail Ideas List, LULU, ASOS, NKE, JCP, WMT

Takeaway: LULU: Wilson making noise at the board level - 3 ways to win, 1 to lose.

HEDGEYE RETAIL IDEAS LIST

 

Retail Callouts (6/23): HE Retail Ideas List, LULU, ASOS, NKE, JCP, WMT - ideas

 

EVENTS TO WATCH

 

Wednesday (6/23)

  • BBBY - Earnings Call: 5:00pm

 

Thursday (6/24)

  • NKE - Earnings Call: 5:00pm

 

Friday (6/25)

  • FINL - Earnings Call: 8:30am

 

COMPANY NEWS

 

LULU - Lululemon Founder Fights for Company Control

(http://online.wsj.com/articles/lululemon-founder-fights-for-company-control-1403459190)

 

  • "Lululemon Athletica founder Dennis 'Chip' Wilson is working with bankers at Goldman Sachs as he weighs options for shaking up the company's board and gaining more influence over the yoga gear maker's operations, people familiar with the situation said."
  • "The founder could launch a proxy fight to win additional board seats or partner with a private-equity firm in a buyout, another person familiar with the matter said. Alternatively, he could sell his stake, this person said. So far, Mr. Wilson hasn't made any decisions on further steps, said a different person familiar with his thinking who wouldn't elaborate on what is under consideration."
  • "Lululemon's board has sought advice from bankers in response, another one of the people said. The board hasn't been asked to act on a specific proposal from Mr. Wilson, and nobody has approached the board about possibly buying the company, the person said."

 

Takeaway: We added LULU to our Best Ideas list immediately following the company's latest disappointing quarter. Our rationale is NOT because this is a great company executing on a great growth plan.  Quite the opposite…it is that it is an outstanding brand that should see change to help it realize its true underlying growth potential.  With Wilson making noise at the Board level, we see three ways to win, and one way to lose. 1) Chip wins the board (at least it stops all the infighting -- win), 2) Chip wins the board and appoints himself CEO (that's the one thing that will cause us to pull the plug on this idea faster than you can say 'Down Dog'), 3) Chip orchestrates a buyout (shareholders win), or 4) Chip sells his stock (shareholders win BIG). We'll be hosting a conference call later this week to review our call. 

 

OTHER NEWS

 

ASOS - Retailer Asos Resumes Taking Orders After Warehouse Fire

(http://online.wsj.com/articles/retailer-asos-resumes-taking-orders-after-warehouse-fire-1403501268)

 

  • "British online fashion retailer Asos PLC started taking orders again early Monday after a fire at its main warehouse in northern England destroyed about of fifth of the stock at the site."
  • "The fire broke out late Friday at the distribution center in Barnsley where Asos said it held around 70% of its £159 million ($270 million) in inventory. Based on those figures for the end of May, the fire destroyed around £22 million in Asos products."
  • "Asos said it had taken down its website after the fire late Friday night ripped through four floors of the company's warehouse."

 

NKE - Trout becomes second MLB star with Nike shoe deal

(http://msn.foxsports.com/west/story/mike-trout-shoe-deal-makes-history-062014)

 

  • "Mike Trout... became the first MLB player since Ken Griffey Jr. to have his own signature Nike shoes."
  • The kicks are going for $140...the line also includes gear like batting gloves, wristbands and hats."
  • "Check out the new Nike Lunar Vapor Trouts below, in stores on July 12…"

 

Retail Callouts (6/23): HE Retail Ideas List, LULU, ASOS, NKE, JCP, WMT - chart2 6 23

 

JCP - JCPenney Announces Closing of $2.35 Billion Credit Facility

(http://ir.jcpenney.com/phoenix.zhtml?c=70528&p=irol-newsCompanyArticle&ID=1941736&highlight=)

 

  • "J. C. Penney Company, Inc. announced today that it has closed its new $2.35 billion asset-based senior secured credit facility, comprised of a $1.850 billion revolving line of credit and a $500 million term loan. The new facility replaces a $1.850 billion credit facility that was scheduled to mature in April 2016 and provides better pricing terms than the previous facility."
  • "Ed Record, Chief Financial Officer of JCPenney, said, 'We proactively pursued this new facility to extend the maturity several years and further enhance our liquidity position, particularly during periods of peak working capital needs.  We are pleased with the improved pricing terms of this facility as well as the support and confidence from our banking partners.'"

 

WMT - Wal-Mart Canada Names Dirk Van den Berghe

(http://www.wwd.com/retail-news/people/wal-mart-canada-names-dirk-van-den-berghe-7747839)

 

  • "Wal-Mart Canada...on Friday named Dirk Van den Berghe president and chief executive officer. Van den Berghe will begin on Aug. 1, reporting to Shelley Broader, who was recently promoted to president and ceo of Wal-Mart Stores Inc.’s EMEA region, which comprises the retailer’s operations in Europe, the Middle East, Africa and Canada."

 

NKE - NIKE, INC. NAMES REENIE BENZIGER VICE PRESIDENT OF GLOBAL APPAREL

(http://nikeinc.com/news/nike-inc-names-reenie-benziger-vice-president-of-global-apparel)

 

  • "NIKE, Inc. today announced the appointment of Reenie Benziger as Vice President of Nike's global apparel business. Benziger will be responsible for the creation and production of all Nike apparel product globally.
  • Benziger moves from her current role as VP/GM of Global Young Athletes…"
  • "Carl Grebert, a 17-year Nike veteran, replaces Benziger as VP/GM of Global Young Athletes...Grebert most recently served as VP/GM of Nike Japan."

 

CA - Carrefour to Buy Dia France

(http://www.wwd.com/business-news/mergers-acquisitions/carrefour-to-buy-dia-france-7752536)

 

  • "French retailer Carrefour SA has agreed to acquire Dia France, the French discount store chain operated by Distribuidora Internacional de Alimentación SA of Spain, three years after opting to spin them off."
  • "...Carrefour would acquire the more than 800 stores for an enterprise value of 600 million euros, or $816 million at current exchange. Carrefour said stores total about 5.9 million square feet and generate sales of 2.3 billion euros, or $3.05 billion, in 2013."
  • "Carrefour spun off the stores in 2011 as part of a larger plan to sell numerous assets following a drop in operating profits in its home market."