Retail Callouts (7/7): HBI, GIL, AAPL, PETM, WMT, APP

Takeaway: Hedgeye Retail Ideas List. US cotton yield forecasts look healthy-good news for HBI & GIL. AAPL builds smartwatch team as LG & Samsung debut

HEDGEYE RETAIL IDEAS LIST

 

Retail Callouts (7/7): HBI, GIL, AAPL, PETM, WMT, APP - chart1 7 7 2014

 

EVENTS TO WATCH

 

Tuesday (7/8)

  • TCS - Earnings Call: 4:30pm

 

Thursday (7/10)

  • FDO - Earnings Call: 10:00am

 

Friday (7/11)

  • PSMT - Earnings Call: 12:00pm

 

COMPANY NEWS

 

HBI, GIL - Cotton Boom Goes Bust as Rain-Soaked Texas Crop Sets Glut

(http://www.bloomberg.com/news/2014-07-03/cotton-boom-goes-bust-as-rain-soaked-texas-crop-sets-glut.html)

 

  • "Two months ago, a drought threatened output in the U.S., the world’s largest exporter, and stockpiles were heading for a two-decade low. Then came the rains in Texas, the top grower, sparking a planting surge that the government said will send inventories to a six-year high before the 2015 harvest."
  • "The 'stunning' weather reversal may boost U.S. output by 32 percent, Plexus Cotton Ltd. said in a report. Prices that in March were the highest in 25 months are now down more than any commodity this year."

 

Takeaway: Cotton is down almost 20% from its YTD highs. Increased yield forecasts from the US coupled with China's decision to release some its cotton reserves, which accounts for nearly 60% of global stocks, means that the supply side of the pricing equation looks relatively healthy. Material cost deflation should help offset the labor cost headwinds facing names like HBI and GIL.

 

AAPL - Apple poaches another luxury executive as iWatch nears

(http://www.reuters.com/article/2014/07/04/us-apple-tagheuer-idUSKBN0F91NA20140704)

 

  • "Apple has poached a senior executive from Swiss luxury watch brand Tag Heuer, which could be to help it with the launch of its iWatch expected this autumn."
  • "Tag Heuer, part of luxury goods group LVMH, said on Friday its vice president for sales, Patrick Pruniaux, who had been with the brand for seven years, was leaving on Monday to join Apple. It did not say what his new job would be."

 

Takeaway: Interesting that Samsung and LG are both releasing smart watches today. And AAPL hired someone from Tag. I'll probably buy one. But it's so surprising to me that everyone is giving the smart watch a free pass at being a success. The biggest hurdle these companies face is that people under 18 simply do not wear watches. 

 

OTHER NEWS

 

PETM - PetSmart Issues Statement Regarding JANA Partners Schedule 13D Filing

(http://phx.corporate-ir.net/phoenix.zhtml?c=196265&p=irol-newsArticle&ID=1944885&highlight=)

 

  • "PetSmart welcomes open communications with its shareholders and values constructive input toward the goal of enhancing shareholder value. Our Board and management team are committed to creating value for all PetSmart shareholders, and we will continue to take actions to accomplish this goal and position the Company for growth and success."

 

APP - American Apparel in Talks to Raise New Financing

(http://online.wsj.com/articles/american-apparel-in-talks-to-raise-finances-from-standard-general-1404674792?cb=logged0.2128356599714607)

 

  • "American Apparel Inc. is in talks to raise new financing from hedge fund Standard General that would allow the company to pay off a loan that came due after it ousted founder Dov Charney, people familiar with the matter said."
  • "As part of the talks, the two sides also have reached an agreement in principle to replace all of the company's board—except for its two co-chairmen—with directors who have more industry experience, though no formal agreement has been signed, people familiar with the situation said."
  • "Still unclear is what role Mr. Charney will play at the company going forward. His fate depends on the outcome of a continuing investigation into his conduct, people familiar with the situation said."

 

WMT - Asda restructuring to cut 1,360 jobs

(http://www.bbc.com/news/business-28149288)

 

  • "Asda has announced a shake-up of its management structure, which is likely to result in 1,360 redundancies."
  • "The retailer, which has 578 stores across the country, says 1,360 people are expected to take redundancy, as staff choose to leave or do not meet the overall selection criteria for the new roles."
  • "Asda currently employs over 170,000 people across the UK."

 

Bonobos - Online retailer Bonobos raises $55 million in funding to open more stores

(http://www.chainstoreage.com/article/online-retailer-bonobos-raises-55-million-funding-open-more-stores)

 

  • "Online menswear brand Bonobos has raised a total of $55 million in venture capital funding, bringing the brand's total funding to $128 million. The company plans to use a large part of the latest investment to quadruple its physical store count, growing from 10 locations to 40 nationwide by 2016"

Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more