Retail Callouts (7/23): TGT, DKS, KSS, APP

Takeaway: Target Canada asking for vendor support...another sign that Canada isn't working. DKS parting ways with 400+ PGA pros.



Wednesday (7/23)

  • HBI - Earnings Call: 4:30pm
  • SKX - Earnings Call: 4:30pm


Thursday (7/24)

  • CRI - Earnings Call: 8:30am
  • UA - Earnings Call: 8:30pm
  • DECK - Earnings Call: 4:30pm
  • AMZN - Earnings Call: 5:00pm




TGT - Target Canada asks suppliers for cost break to share in its struggles



  • "Target Canada is pushing its suppliers to give it a 2-per-cent cost break to help the U.S. discounter turn around its struggling Canadian operations and win an increasingly tough retail battle."
  • "In a recent letter to its suppliers, obtained by The Globe and Mail, Target Corp. said it is setting up the Target Canada Business Development Fund (BDF) by collecting 'an incremental 2 per cent accrual against receipts at cost' from its vendors, starting in March of 2015."


Takeaway: Yet another sign that TGT Canada simply is not working.  While it's not unusual for a retailer to ask for vendor support, this sounds broad-based, which is notable. Some vendors will simply say 'No', because they can (Coke and P&G). Others will end up paying 5% instead of the requested 2%. While this is bad for TGT, it sounds like the right move. To make any more significant changes (i.e. closing stores) would be a severe mistake without a new CEO.  We still think that there's an inverse correlation between how low earnings will go over the near-term and intermediate-term and how high quality the new CEO is. A great CEO (which TGT can afford) will invest the billions of dollars needed to take this company back to its former glory when it was one of the most respected retailers in the country. Now, after seven years of strategic missteps, it sits in the middle of the worst possible competitive set -- WMT, dollar stores, department stores, grocery stores, and Amazon. 


A weak CEO will simply prolong the pain by not making the (costly) changes needed. 


In the end, we don't think you can win with TGT. Either a bad CEO sustains a path of mediocrity. Or a great CEO takes down earnings over a 2-3 year time period by a buck or more in hopes of a payout in years 4-5. 


DKS - Dick's Lays Off More Than 400 PGA Golf Instructors



  • "Dick's Sporting Goods Inc. is cutting hundreds of jobs in its golf division as fewer Americans hit the links."
  • "A spokeswoman for the PGA of America said more than 400 of its members who were employed as golf instructors at Dick's were notified Tuesday that they would be laid off. The organization, which counts more than 28,000 members overall, said it would offer career counseling and employment services to its affected members."


Takeaway:  Big move by DKS here. Yes, the golf business is underperforming, but this change in strategy eliminates what DKS has touted as a huge competitive advantage over its competition in a category that represents a little less than 20% of its consolidated revenue. Saving a penny or two in EPS can't possibly be worth the reputational spanking that it is no longer an authentic golf store. Truth be told, no real golfer shops at Dicks anyway. But the average Joe Golfer likes thinking (right or wrong) that it's a place Pro Golfers respect. 




KSS - Disney & Kohl’s to unveil ‘D-Signed’ fashion brand



  • "Disney Consumer Products and Kohl’s announced they’re bringing the newest iteration of the tween lifestyle brand 'D-Signed' exclusively to Kohl’s. Offering a 'mix & match' assortment of apparel that gives girls the opportunity to create their own styles, the 'D-Signed' brand continues to be inspired by the fun fashions featured on Disney Channel shows. The hit tween brand will launch with the popular 'Girl Meets World' collection and is available at Kohl’s stores nationwide and online at this summer."


APP - Moves at American Apparel



  • "American Apparel Inc. is expected to name five new directors to its board in the next day or so, according to a source familiar with the situation. Once the company makes the appropriate regulatory filing, it will take 10 days for the board to be officially reconstituted and begin weighing the fate of former chief executive officer Dov Charney, which could be determined in mid-August."


FTC Reaches Settlement in Made in USA Labeling Case



  • "The Federal Trade Commission said Tuesday it has reached a settlement with Made in USA Brand LLC, which the commission charged deceived consumers by allowing brands to purchase a seal claiming their products were made in the U.S., without independently verifying the claim or disclosing that companies had certified themselves."
  • "The FTC said in a complaint that Made in USA Brand LLC charged brands and companies $250 to $2,000 for a one-year license to use the Made in USA certification mark, but 'had no procedures in place to determine whether marketers complied with the FTC’s Made in USA standard.'"


WAG - Walgreens rolls out Balance Rewards program



  • "Walgreens announced the new Balance Rewards for healthy choices initiatives, which is aimed at helping participants modify behavior risk factors associated with the nation's most pressing public health issues. The initiative marks the first community pharmacy program that includes training based on the methodology of psychologist Dr. B.J. Fogg."

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