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Takeaway: Hedgeye Retail Ideas List. Alibaba cleans up counterfeits-interesting dot.com oppty for brands in China. Puma doubling down on soccer.

HEDGEYE RETAIL IDEAS LIST

Retail Callouts (8/11): RL, NKE, ADI, PUMA, WMT - Chart1 8 11 2014

EVENTS TO WATCH

Tuesday (8/5)

  • KATE - Earnings Call: 10:00am
  • FOSL - Earnings Call: 4:30pm

Wednesday (8/6)

  • M - Earnings Call: 10:30am

Thursday (8/7)

  • WMT - Earnings Call: 7:00am
  • KSS - Earnings Call: 8:30am
  • JCP - Earnings Call: 4:30pm
  • JWN - Earnings Call 4:45pm

COMPANY NEWS

RL, NKE, ADI - Alibaba Cleans Up 'Gray Market' for Some Prestigious Brands

(http://online.wsj.com/articles/alibaba-cleans-up-gray-market-for-some-prestigious-brands-1407699693?mod=europe_home&cb=logged0.9719164434354752)

  • "Chinese e-commerce company Alibaba Group Holding Ltd. is rolling out a powerful new incentive to attract luxury brands: removing some listings from its online shopping sites."
  • "Like many premium brands, Burberry PLC had been fretting about a flood of discount Burberry products—some of them fakes—on Alibaba's two big marketplaces, which accounted for 80% of China's estimated $300 billion in online shopping last year. Burberry hadn't authorized any of those vendors to sell its goods."
  • "Alibaba would do its best to get those products off its sites if Burberry opened its own shop on Alibaba's online mall, Burberry was told, according to people familiar with the talks. Burberry opened a store on Alibaba's Tmall in April."

Retail Callouts (8/11): RL, NKE, ADI, PUMA, WMT - chart2 8 11

 

Takeaway: As a brand you can’t argue with Alibaba's reach. It dominates the Chinese online marketplace, but for many counterfeit and brand integrity concerns were a non-starter. Then BRBY opened a banner on T-Mall in April and in a span of two months the number of 3rd party outlets offering Burberry branded products fell from 56 to just 1 - essentially eliminating the counterfeit threat in the process. Whatever you want to call it, forced coercion or cooperation it's clear that the platform offers some compelling advantages for brands who choose to partner with Alibaba. NKE, Adi, and GPS have already taken the leap, and we think it's an interesting opportunity for many more (particularly RL).

 

KER, Puma - Puma CEO confirms consideration for entry at BVB

(http://www.wiwo.de/unternehmen/handel/sportartikelhersteller-puma-chef-bestaetigt-ueberlegung-fuer-einstieg-beim-bvb/10309372.html)

  • "Puma CEO Bjørn Gulden has confirmed in an interview with business week for the first time that the sporting goods manufacturer is considering a shareholding in the listed Bundesliga club Borussia Dortmund."
  • "Here, the Puma CEO expects that BVB will continue to sell more jerseys outside of Germany abroad through its expansion of marketing."

Takeaway: Some of the article admittedly may be lost in (Google) translation - it's in German after all. Despite spending 3 months living in the country, I never got past learning how to order a beer. What we could glean from the interview with Puma's CEO, Bjorn Gulden, is that the other brand from Herzogenaurach plans to double down its core sports business, i.e. Soccer. The global soccer marketplace has evolved into a two horse race between Nike and Adi with UA nipping at their heels. We understand why the sport is such a particular point of emphasis following the World Cup, but Puma's timing couldn’t be worse. Following Adi's 70mm pound per year deal with ManU, it's clear for Puma that a renewed emphasis on Futbol won't be cheap.

OTHER NEWS

WMT - Chinese Regulators Investigate Wal-Mart Store

(http://www.wwd.com/retail-news/mass-off-price/chinese-regulators-investigate-wal-mart-store-7834468?module=hp-wirestories)

  • "Chinese regulators are investigating a Wal-Mart store in the southern city of Shenzhen for food safety violations, the official Xinhua news service reported, based on videos it said were taken by a Wal-Mart employee at one branch."
  • "The U.S. retail giant told Reuters that it had launched its own investigation in response to the video and found no evidence to support its claims, nor had multiple visits by authorities uncovered any wrongdoing."

WSM, RH - Williams-Sonoma and Pottery Barn to Exit Toronto's 100 Bloor Street West

(http://www.retail-insider.com/retail-insider/2014/8/100bloor)

  • "Early next year, Williams-Sonoma and Pottery Barn will exit Toronto's 100 Bloor Street West. As a result, about 37,000 square feet of new retail space will become available in the heart of Canada's 'Mink Mile'. 100 Bloor's landlord substantially raised its rents, according to sources."
  • "Williams-Sonoma, Pottery Barn, and Pottery Barn Kids have occupied spaces at 100 Bloor Street West since 2001."

GPS - Would You Tweet for These Flip-Flops? Old Navy, Nike, Westin Hotels dole out freebies for social chatter

(http://www.adweek.com/news/advertising-branding/would-you-tweet-these-flip-flops-159382)

  • "Old Navy on Sunday wrapped up its second rollout of Twitter-enabled vending machines in Japan that dispense free flip-flops in exchange for sending a tweet from a kiosk. Earlier this summer, the retailer used 28 machines in New York, Los Angeles and San Francisco leading up to a summer sale."

 

AMZN - Amazon Halts Some Disney Movie Preorders

(http://online.wsj.com/articles/amazon-halts-some-disney-movie-preorders-1407654416?mod=WSJ_hp_LEFTWhatsNewsCollection)

 

  • "Amazon.com Inc. has halted preorders for some DVDs and Blu-ray discs from media giant Walt Disney Co., including popular titles such as "Captain America: The Winter Soldier," in an apparent contract dispute."
  • "The online retailer is restricting customers' ability to preorder physical copies of the films, promising to notify them when they become available. It is a tactic Amazon has used several times this year, including with Time Warner Inc.'s Warner Bros. studio, before reaching a resolution earlier this year, as well as a continuing spat with Hachette Book Group."