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Takeaway: Is ASOS ready to be bought by EBAY or AMZN? It’s logical, and getting cheap. TIF needs GM strength to continue.


Wednesday (8/27)

GES - Earnings Call: 4:30pm

WSM - Earnings Call: 5:00pm

Thursday (8/28)

ANF - Earnings Call: 8:30am

DG - Earnings Call: 10:00am


ASOS, AMZN, EBAY - ASOS shares are back in fashion amid US bid rumours - but boss could still offload stock to fund divorce


  • "Shares of online fashion emporium ASOS, which has clothed Prime Minister’s wife Samantha Cameron and superstar singer Rihanna, were suddenly in vogue again as takeover rumours swept sparsely populated dealing rooms."
  • "Interested buyers are believed to be eBay, the US multinational e-commerce group, and Amazon, despite yesterday announcing the completion of its £585million purchase of game streaming site Twitch. Both giants want to expand further into clothing."

Takeaway: We're fans of the ASOS business model, but the reality is that it is probably not going to exist as a stand-alone company in another two years. The company has lost 2/3 of its market value since it presented to a packed room of 300 people at ICR in January. That's $6.5bn in shareholder value that has evaporated year-to-date. It especially makes sense for EBAY to step in here, particularly given that we're seeing AAPL get more aggressive with payment services (and therefore threatening PayPal -- EBAY's crown jewel). But the reality is that 38% of ASOS stock is owned by insiders. Chances are they have a very long 'valuation memory', meaning that there's no way they'd sell here -- unless they have to. Either way, ASOS is starting to look interesting to us.

TIF - 2Q14 Earnings

Takeaway: Good earnings algorithm overall -- Rev up 7%, Gross Profit up 12%, EBIT up 18% EPS up 15%.  Inventories were on the high side and grew faster than sales for the first time in six quarters, but the absolute level is nothing we'd consider unmanageable.  All that said, there was meaningful sequential decelerations on almost every line item. Management prepped the Street for this 13 weeks ago, but it doesn't mean those trends will reverse. The big savior this quarter was gross margin, which was up 247bp on a mere 3% sales comp. TIF will need that to continue, because it's about to go against a 255bp improvement that it had in 3Q of last year.

Retail Callouts (8/27): ASOS, EBAY, AMZN, TIF, M, GPS, HD - 8 27 chart1


M - Macy's Offers Digital Wallet Option


  • "Macy’s Inc. on Tuesday offered its customers a digital wallet option to store and manage Macy’s offers as well as payment options online. Users first need to fill out a profile, and once the individual is signed into that profile, the person can then choose My Wallet on the navigation menu. Users who register their Macy’s credit card will see Star Passes promotions automatically added to the wallet. Users can add up to 10 credit card options."
  • "Users who shop in-store have to swipe their Macy’s credit card at checkout to see a list of save offers. My Wallet can also be used on the retailer’s website via a mobile device’s web browser."

GPS - Gap to Create 1,200 Jobs in New York


  • "Gap Inc.’s distribution center in Fishkill, N.Y., will have a capital investment of $96 million, creating 1,200 jobs by June 2019, and expanding the current 2.3 million square foot facility."
  • "Empire State Development is providing Gap Inc. with $12 million in performance based Excelsior Jobs Tax Credits, tied to job creation and investment commitments."

JWN - Nordstrom Wants You to Shop on Instagram


  • "How do businesses turn Instagram 'likes' into sales dollars? That’s the multimillion-dollar question in a retail industry struggling to find the sweet spot between e-commerce and old-fashioned stores."
  • "Nordstrom’s answer: Build a sort of fake Instagram. In a platform that launches this morning, the department store has created a site called Like2Buy that looks like the social network and acts like the social network but links photos directly to product pages on its Web store and stores the photos that users 'like.'"

RSH - RadioShack Said to Discuss Rescue Deal With Shareholder


  • "RadioShack Corp. is talking with shareholder Standard General LP about getting a rescue financing package that could help the retailer stave off a bankruptcy filing, two people with knowledge of the matter said."
  • "Standard General, a hedge fund that’s also orchestrating a lifeline for American Apparel Inc., is seeking to bolster RadioShack’s cash by issuing debt or equity, said the people, who asked not to be identified because the discussions are private. The firm also is working with RadioShack’s management to craft a plan that would avoid Chapter 11, the people said."

HD - Home Depot, Yardi partner on digital payment


  • "Customers of real estate management software provider Yardi can now have access to thousands of The Home Depot products either in store or online with a click of a button via the online procurement system offered with Yardi Procure to Pay, a fully automated end-to-end procurement and invoice processing platform. The Yardi Procure to Pay system enables The Home Depot purchase orders and invoices to flow through an automated, customized online approval workflow, giving property owners and managers insight into all purchases and ensuring complete purchasing compliance."