Retail Callouts (8/8): LULU, URBN, HIBB, TGT, AMZN, WMT

Takeaway: This Chip/Advent deal is money for LULU. URBN buying Lorna Jane makes sense from where we sit. HIBB goes from cult stock to show-me story.

COMPANY HIGHLIGHTS

LULU - lululemon athletica inc., lululemon founder chip wilson and advent international announce stock sale and support agreements

(http://investor.lululemon.com/releasedetail.cfm?ReleaseID=865209)

Takeaway: This is right in line with our thesis on LULU. With this announcement, we're taking LULU up a notch in our Best Ideas List to be #2 behind RH.  For our thoughts on the deal and its implications for the company and the stock, see the note we published last night. LULU: Chip Away (Link)

 

URBN, FL, LULU - Urban Outfitters Said Eyeing Lorna Jane

(http://www.wwd.com/retail-news/financial/urban-outfitters-said-eyeing-lorna-jane-7832110?module=Retail-latest)

  • "Urban Outfitters Inc. is contemplating a more active future with Australia-based activewear retailer Lorna Jane."
  • "The Philadelphia-based retailer — which has been actively looking for deals — is taking part in the Credit Suisse-run auction for the chain, according to two financial sources."
  • "The auction is said to be in the 'late second round' with the price tag near $500 million. Foot Locker Inc. is also said to be vying for the retailer, which was founded by creative director and former fitness instructor Lorna Jane Clarkson in 1990."

Takeaway: URBN introduced its own active wear line (Without Walls) in April with limited distribution. Because everyone else was doing it - even Whole Foods. As with FL we can't justify $90 yoga pants on URBN shelves. But for URBN, the logic makes sense. It's a multi-brand concept with its namesake brand struggling. They'll fix it, but the best way to divert people's attention is to buy something else. Lorna has the added bonus of International exposure, and a call option on bringing the brand to the US. If anyone can do that right, it's URBN management. We're not advocating doing a deal to get out of a bind, but that does not mean it won't happen.  

 

HIBB - Hibbett Provides Business Update and Adjusts Full Year Guidance

(http://phx.corporate-ir.net/phoenix.zhtml?c=78137&p=irol-newsArticle&ID=1956752&highlight=)

  • "Net sales for the 13-week period ended August 2, 2014 are expected to increase 4.2% to $194.0 million compared with$186.2 million for the 13-week period ended August 3, 2013. Comparable store sales are expected to increase 0.1% for the second quarter."
  • "The Company anticipates that earnings per diluted share will be in the range of $2.63 to $2.73 for the 52 weeks ending January 31, 2015, with comparable store sales increasing in the low single-digit range for the year. This compares to previous guidance of earnings per diluted share in the range of $2.78 to $2.98, and comparable store sales increasing in the low-to-mid single-digit range."

Takeaway: Before this miss, the stock had already underperformed the market by 30% YTD. Its problems were already fairly well-telegraphed. This company has never been afraid to miss a quarter, nor has it been a stranger to blowing away numbers. But this stock traded down after nine of the past ten earnings prints. And now this? Mickey Newsome stepped away just in time. It has to get a lot cheaper for us to even consider getting involved here.

 

OTHER NEWS

 

TGT - Target to sponsor ASP’s Maui Women’s Pro surfing contest

(http://www.fibre2fashion.com/news/garment-company-news/newsdetails.aspx?news_id=166656)

  • "Target Corp. along with the Association of Surfing Professionals (ASP), announced that the retailer will be the title sponsor of this season’s Maui Women’s Pro, November 22 through December 6, 2014 in Honolua Bay, Maui."

GPS - GAP INC. REPORTS JULY AND SECOND QUARTER SALES RESULTS

(http://www.gapinc.com/content/attachments/gapinc/Press-Releases/Gapinc_July14_SPR_FINAL.pdf)

  • "Gap Inc. comparable sales for July 2014 were up 2 percent versus a 1 percent increase last year." 

GPS - Introducing ‘The New Look of Banana Republic’

(http://www.gapinc.com/content/gapinc/html/media/pressrelease/2014/med_pr_BR_Fall14_Campaign.html)

  • "Starting today, Banana Republic is revealing a new look, anchored in the fresh styling point of view of the brand’s new Creative Director and EVP of Design, Marissa Webb. Fall signals a significant shift across the entire brand, from the product and styling of the collection, to the debut of the global marketing campaign, 'The New Look of Banana Republic.'"

Adibok - Adidas to Cut Jobs, Boost Marketing Spend

(http://www.wwd.com/business-news/financial/adidas-h1-net-slips-27-7829872?module=hp-topstories)

  • "Adidas is taking action following a weaker-than-expected first half of the year. "
  • "The Herzogenaurach, Germany-based sporting goods firm on Thursday revealed a restructuring of its ailing golf business, which will include job cuts. The group will also resort to bigger marketing spending for the remainder of the year and 2015, which will see 'the biggest campaign so far for the Adidas brand,' according to Herbert Hainer, the group’s chief executive officer."

BKS, AMZN - Barnes & Noble, Google partner on same-day book delivery

(http://www.chainstoreage.com/article/barnes-noble-google-partner-same-day-book-delivery?ad=news)

  • "Barnes & Noble Inc. and Google Inc. are reportedly teaming up on a pilot of same-day delivery of book orders from local Barnes & Noble stores in several U.S. cities. According to the New York Times, customers in Manhattan, West Los Angeles, and the San Francisco Bay area can have online book orders fulfilled from nearby Barnes & Noble locations via the Google Shopping service."
  • "The service is free for Google Shopping members and $4.99 per order for other consumers."

AMZN, WMT - Report: Twitter may be considering e-commerce

(http://www.chainstoreage.com/article/report-twitter-may-be-considering-e-commerce?ad=news)

  • "Twitter is reportedly making moves that indicate it is considering launching e-commerce services. According to The Next Web, users of the Twitter Android app are reporting a dormant “Payment & Shipping” option appearing in the settings menu."

ANN - ANN INC. Updates Outlook For Second Quarter 2014

(http://investor.anninc.com/phoenix.zhtml?c=78167&p=irol-newsArticle&ID=1956477&highlight=)

  • "Total Company net sales for the fiscal second quarter of 2014 are now expected to be $648 million, reflecting a comparable sales decline of 2.3."
  • "At the Ann Taylor brand, total comparable sales increased 0.7%, reflecting an increase of 2.0% at Ann Taylor partially offset by a decline of 1.9% in the Ann Taylor Factory channel."
  • "Kay Krill, President and Chief Executive Officer, said, 'Despite positive performance through mid-June, the remainder of the second quarter proved more challenging, with soft traffic across the industry and a highly promotional environment. While we delivered a positive comp for the quarter at Ann Taylor, we were disappointed in our performance at LOFT, which experienced continued softness in basic knit tops that represent a meaningful component of LOFT's summer assortment.'"