Retail Callouts (6/26): BBBY RH WSM PIR WMT HBI LULU

EVENTS TO WATCH

 

Thursday (6/24)

NKE - Earnings Call: 5:00pm

 

Friday (6/25)

FINL - Earnings Call: 8:30am

 

COMPANY NEWS

 

BBBY - 1Q14 Earnings

Newsflash…BBBY misses yet again. What's interesting to think of is the bifurcation in results of some of the major home furnishings companies over the past month. RH comped 18% and WSM 10% -- both of these companies beat materially, and sell roughly half of their product online (the greatest percentage in all of retail sans AMZN). BBBY and PIR both missed and guided down. They both generate less than 10% in sales online. Go figure.

 Retail Callouts (6/26): BBBY RH WSM PIR WMT HBI LULU - Chart 1 6 26 2014

 

HBI - HanesBrands to Acquire DBApparel, the Leading Intimate Apparel and Underwear Company in Europe, to Leverage Its Innovate-to-Elevate Strategy and Global Supply Chain

(http://phx.corporate-ir.net/phoenix.zhtml?c=200600&p=irol-newsArticle&ID=1942479&highlight=)

 

"DBA is a leading marketer of intimate apparel, hosiery and underwear in Europe, new geography for Hanes. The all-cash transaction would be accretive to adjusted earnings per share in the first 12 months after closing, including an estimated $0.25 of adjusted EPS excluding actions in 2015. With the realization of full benefits in three to four years, the acquisition would add, on an annual basis, more than $875 million in net sales, approximately $125 million in adjusted operating profit excluding actions, and approximately $1.00 in adjusted EPS excluding actions."

"Hanes’ transaction offer values DBA at €400 million on an enterprise basis (approximately $550 million at current exchange rates), or approximately 7½ times EBITDA. Hanes intends to fund the acquisition with cash on hand and third-party borrowings. The post-synergy multiple is expected to be less than 4 times EBITDA. The acquisition could close as soon as the third quarter 2014."

 

Takeaway: The company is two months away from anniversarying its acquisition of Maidenform -- which in itself has been a home run -- and it's already doing another deal. We can beat the company up for obfuscating weakness in the core business by doing deals…but that's really irrelevant. The fact is that this is a great deal for HBI, it gets the international exposure it needs, and it got it done at 7.5x EBITDA -- before synergies. This should be accretive almost immediately, regardless of what the company guides. This stock is headed higher.

 

Fast Retailing - Uniqlo Eyeing India for Manufacturing

(http://www.wwd.com/business-news/government-trade/uniqlo-eyeing-india-for-manufacturing-7761517?module=Men%27s-Retail/Business-third)

 

"Fast Retailing Co. Ltd.’s Uniqlo brand is considering sourcing garments in India, according to a statement from the Indian government."

"Fast Retailing chairman, president and chief executive officer Tadashi Yanai met with Indian Prime Minister Shri Narendra Modi on Wednesday, the Indian government said in a brief statement on its Web site. “[Uniqlo] aims to source garments from India,” the government said."

 

Takeaway: Fast Retailing is still the leading candidate to buy Lululemon.

 

WMT - Walmart wins China labour dispute

(http://www.ft.com/intl/cms/s/0/ea334934-fd0e-11e3-bc93-00144feab7de.html?siteedition=intl#axzz35k5CTU9x)

 

"A Chinese arbitration panel has dismissed a landmark suit brought against Walmart by a chapter of the country’s official trade union, ending a three-month dispute that galvanised labour activists across China."

"The panel dismissed worker demands for additional compensation after the world’s largest retailer closed their store in Changde, Hunan province, in March as part of a broader restructuring of its China operations."

 

Takeaway: This might be Walmart's biggest international victory -- ever.

 

ADS - Adidas's World Cup, So Far: Record Sales and One Ugly Bite

(http://www.businessweek.com/articles/2014-06-25/adidass-world-cup-so-far-record-sales-and-one-ugly-bite)

 

"Herbert Hainer, chief executive officer of Adidas Group, held a press conference in Germany on Tuesday to brag about the company’s sales, so far, from its sponsorship of the 2014 World Cup. Adidas, he said, would “definitely achieve” its goal of selling $2.7 billion in soccer gear this year. He went on, in a not-so-subtle jab at rival Nike, to proclaim the company’s “outstanding position as the clear No. 1 in football globally.”

"On the other side of the Atlantic, at the Estadio das Dunas in Natal, Brazil, Uruguayan striker Luis Suarez was about to create a marketing headache for the brand. During the 79th minute of the must-win match for Uruguay, Suarez apparently bit Italy’s Giorgio Chiellini on the shoulder. To make matters worse for Adidas, many of the company’s World Cup promotions depict Suarez with his mouth wide open."

 

Takeaway: This was a defensive press conference. Hainer's stock is hitting a new 52-week low. Adidas is great at defensive PR. Not so good at playing offense.

 

OTHER NEWS

 

LULU - Survey: L.L. Bean tops in online customer service for May

(http://www.chainstoreage.com/article/survey-ll-bean-tops-online-customer-service-may)

 

"L.L. Bean had the overall best customer service performance in May, the second time the retailer has topped the list in the past three months."

"Looking at all companies included in Stella Benchmarks, the following companies were best overall performers within the five service areas measured:"

• Phone: Bodybuilding.com & Lululemon (tied)

• Email: Lululemon

• Chat: Bodybuilding.com

• Shipping: Hautelook

• Returns/Refunds: Mr Porter

 

EBAY, NKE - RETAILWIRE DISCUSSION: EBAY'S CEO TALKS ABOUT THE 'COMMERCE REVOLUTION'

(http://www.retail-insider.com/retail-insider/2014/6/retailwire-discussion1)

 

"EBay CEO John Donahoe took to the stage at this month's 10th annual Internet Retailer Conference & Exhibition in Chicago to discuss what he calls the "commerce revolution"."

"The term applies to the many ways consumers shop for products today, including going into a store to buy a product, browsing retail sites during work hours, making a purchase from a tablet while watching television at home, etc."

"For too long, Mr. Donahoe said, retailers have seen various shopping behaviors through their own eyes — in channel terms — rather than seeing it from the consumer's vantage point. "Consumers," he said, "just want to shop.""

 

BKS - Barnes & Noble Agrees to Spin Off Nook Unit as Sales Decline

(http://www.bloomberg.com/news/2014-06-25/barnes-noble-approves-nook-e-reader-spinoff-as-sales-decline.html)

 

"Barnes & Noble Inc. (BKS), facing declining sales at both its bookstore chain and Nook electronic-reader business, plans to split them into separately traded companies to improve performance."

"The spinoff will be completed by the first quarter of next year, New York-based Barnes & Noble said today in a statement."

 

Stalemate Over Garment Factory Safety in Bangladesh

(http://www.nytimes.com/2014/06/26/business/international/stalemate-over-garment-factory-safety-in-bangladesh.html?ref=business&_r=1)

 

"Eight times now, the European-dominated Accord on Fire and Building Safety in Bangladesh — a group of more than 150 retailers and brands — has forced the temporary closing of garment factories after its inspectors found dangerous conditions."

"But from the time the inspections began, tensions have been growing between the Accord and the Bangladeshi apparel industry, resulting in an impasse over a recent attempt to shutter what the Accord considers an unsafe factory building that houses Florence Fashions. And this time, as on several previous occasions, the Bangladeshi government has aligned with a garment manufacturer opposed to having its factory closed, even temporarily."

 

EBAY - EBay names IBM exec to lead enterprise business

http://www.marketwatch.com/story/ebay-names-ibm-exec-to-lead-enterprise-business-2014-06-24

 

"EBay Inc. said Tuesday that it hired former International Business Machines Corp. executive Craig Hayman to lead its enterprise business."

"Mr. Hayman spent 15 years at IBM IBM -0.10%   , helping oversee the technology giant’s industry cloud solutions and other businesses, eBay EBAY +0.08%    said in a news release. He also spearheaded deals to buy more than a dozen companies while building a partner network, the company said."

"“A longtime customer of IBM, eBay Enterprise’s fulfillment centers, drop-ship and Ship-from-Store capabilities are unique in helping retailers better serve their customers,” Mr. Hayman said in a release. “I am honored to be part of the team and join this purpose driven company, which is enabling commerce on a global scale.”"

 

Hickey Freeman Revamps N.Y. Store

(http://www.wwd.com/menswear-news/retail-business/hickey-freeman-revamps-ny-store-7763886?module=hp-retail)

 

"“It’s a celebration of American artisanship.”That’s the way Doug Williams, chief executive officer of W Diamond Group, described the revamped and reenergized Hickey Freeman store whose long-awaited renovation was completed late Sunday night."

"“We started this process in 2011, then with the HMX bankruptcy, it was put on hold. But as soon as W Diamond acquired the assets, we started back up again,” he said."

 


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