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Takeaway: Retail sales reaccelerate when it matters. BBY crushes – but when does earnings quality matter again? WMT investing to avoid becoming TGT.


Wednesday (8/27)

CHS - Earnings Call: 8:30am

TIF - Earnings Call: 8:30am

BWS - Earnings Call: 9:00am

GES - Earnings Call: 4:30pm

WSM - Earnings Call: 5:00pm

Thursday (8/28)

ANF - Earnings Call: 8:30am

DG - Earnings Call: 10:00am


Takeaway:  Retail trends remain strong as the retailers are solidly into one of the most important seasonal spending ramps of the year for Consumers. We expected a pop in the numbers this week due to easy compares from last year, but even the 2-year run rate accelerated on the margin. Even if the underlying strength ebbs, the comparisons look favorable through October.

Retail Callouts (8/26): BBY, WMT, AMZN, Retail Sales Trends - 8 26 chart1

Retail Callouts (8/26): BBY, WMT, AMZN, Retail Sales Trends - 8 26 chart2


DSW - 2Q14 Earnings

Retail Callouts (8/26): BBY, WMT, AMZN, Retail Sales Trends - chart3 8 26

BBY - 2Q15 Earnings

Another name that annihilated earnings, but with really bad earnings quality. BBY earned $0.44, crushing the Street's $0.31 estimate. But did so by way of comping -2.7% -- 50bp below the Street's forecast.  Gross margins missed as well, but the company made it all up, and then some, on SG&A. Inventories also took a turn for the worse. On top of all that, BBY is stepping up investment levels to stem the weakness it is seeing in traffic in its stores. Does not sounds like a model we're comfortable we're investing in.  We understand that there's more at play here than the basic P&L and balance sheet -- as the stock has outperformed the S&P by a factor of six since January 2013, and 2.5x for 2014 to-date. But increased investment on weaker gross margins and eroding working capital turns just looks bearish from where we sit. 

Retail Callouts (8/26): BBY, WMT, AMZN, Retail Sales Trends - 8 26 chart 4

WMT, TGT - For Smarter Security, a Smarter Walmart MasterCard


  • "If you have a Walmart MasterCard, you can enjoy even greater security through a new chip-enabled card coming to your mailbox in the next few weeks."
  • "Walmart is among the first retailers to implement chip technology as a more secure payment means for cardholders. Sam’s Club also introduced a chip-enabled MasterCard in June, and both cards prompt customers not to swipe – but to insert and briefly leave the card in the payment terminal, so the card’s embedded chip can be accessed."
  • "Another new aspect of the Walmart co-branded MasterCard is savings. Cardholders will enjoy $5 back on every $500 they spend. They’ll also save 5 cents per gallon of gas at participating Walmart gas stations and 15 cents during Walmart’s 'Great Gas Rollback' promotion that’s running now through Sept. 8."

Takeaway: Not a single dollar WalMart spends on data security is wasted. A data breach at WMT would be a massive blow -- and would probably be the best thing that could happen to Target.  Of course, one could argue that if there are data integrity issues at a company whose reach is as great as WMT's, then it could have a far-reaching impact on consumers' willingness to share any information whatsoever with any retailer.


AMZN - Amazon.com to Acquire Twitch


  • "Amazon.com, Inc. announced that it has reached an agreement to acquire Twitch Interactive, Inc., the leading live video platform for gamers. In July, more than 55 million unique visitors viewed more than 15 billion minutes of content on Twitch produced by more than 1 million broadcasters, including individual gamers, pro players, publishers, developers, media outlets, conventions and stadium-filling esports organizations."

LUZ - Luxottica Group Board to Discuss Management Structure


  • "Luxottica Group SpA is to hold a board meeting on Sept. 1 to discuss its management structure and Guerra’s position, followed by a conference call for analysts and investors. While not commenting on the rumors last week, the giant Italian eyewear manufacturer said that president Leonardo Del Vecchio and Guerra 'had for some time been discussing future strategies and managerial assets of the group.'"

LVMH - LVMH Said Eyeing Proenza Schouler Stake


  • "According to market sources, LVMH Moët Hennessy Louis Vuitton has held talks about acquiring a stake in the New York-based fashion house. It’s understood discussions involve the 40 percent stake of Proenza Schouler that Andrew Rosen, John Howard and other investors jointly acquired in 2011 from Valentino Fashion Group."

One Stop stores to launch beacon service


  • "Customers at Tesco-owned convenience stores will soon find their smartphones offering them bespoke discounts, in the first UK-wide rollout of Apple’s beacon technology."
  • "A national British commercial campaign using the US technology group’s in-store beacon system will be launched next week by magazine group IPC Media in 740 One Stop stores. Thousands of other outlets are expected to be involved over the next year."

Hudson's Bay Company Announces Appointment of John Caplice to Senior Vice President, Treasury and Investor Relations


  • "Hudson's Bay Company announced today the appointment of John Caplice to the position of Senior Vice President, Treasury and Investor Relations, effective September 2nd, 2014. Lucas Evans has been appointed Senior Vice President, Corporate Development, HBC, reporting to the Office of the Chairman."

Onestop to Run E-commerce for Juicy Couture's Web Site


  • "Authentic Brands Group has outsourced its Juicy Couture digital e-commerce platform to Onestop Internet."
  • "Onestop, backed by venture capital firms Bessemer Venture Partners and Fung Capital USA, works with 45 brands."

EXPR - Express launches mobile promotion with GQ


  • "Express Inc. will be using Rich Media Messaging technology from Iris Mobile to drive the fashion retailer’s seasonal “Back-to-Business” sweepstakes campaign with GQ Magazine. A combination of both a participant-based sweepstakes and a voting-based contest, this campaign will award one emerging startup entrepreneur with a grant from Express based on public votes."