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BETTER, WORSE & PERVERSE

Today’s Initial Claims figure registered at 570K, down 10K from last week’s revised level but still higher than the four week moving average by almost 4k.

 

The rising trajectory of Claims figures since July has fueled increasing discussion of the “jobless recovery” thesis that many bears have been promoting.  We are not entirely opposed to this thinking: while unemployment and sentiment have improved sequentially as we had expected over the first half, we now believe that there is as high a probability that both will begin to deteriorate as there is of a continued improvement from here and, on the margin, this is both new and negative.

 

Note that from our view, the perverse mechanics of dollar degradation make it possible that converging negative factors like this can actually be a positive catalyst for US equities if they drive the dollar lower and foreign buyers take advantage of the discount.

 

Andrew Barber

Director

 

BETTER, WORSE & PERVERSE - a1

 


Bullish German Data Points

A survey of German consumer confidence by Gfk indicated improving sentiment in its September reading. Sentiment increased to 3.7 from a revised 3.4 in August; economic expectations jumped to 8.8 from 1.8; and an index of consumers’ propensity to spend rose to 31.1 from 25.1.  This comes on the heels of yesterday’s announcement from the Ifo institute that its German business climate index increased to 90.5 from 87.4 in July, the fifth consecutive monthly sequential improvement.

 

These surveys suggest increased expectations for continuing recovery, which should translate into increased consumer spending in the near term. Retail Sales data continue to show a mixed picture however, with a separate survey from Markit Economics reported today that its German retail sales index, adjusted for seasonal swings, eased to 49.5 from 49.8 in July, the smallest rate of decline in over a year, yet under the 50 mark signaling contraction.

 

One consumer spending factor that is crystal clear is the impact of the cash-for-clunkers program on household expenditure. The Federal Statistical Office reported that Germans spent some EUR 36 Billion on purchases of motor vehicles in the first half of 2009, which represented a 23% increase compared to the same period a year ago. These purchases helped contribute to a rise of 0.1% in total household expenditure, which would have equated to a -1% decline in total consumption expenditure without the program.

 

Other German fundamentals continue to signal sequential improvement. On Monday EuroStat reported that German industrial production rose 4.6% in June month-over-month (+3.1% in Eurozone), after it rose 4.2% in May. We hold that Germany’s recent CPI and PPI figures represent a healthy short term deflationary environment. Today the National Statistical Office reported that August CPI is expected to remain unchanged (0.0%) on an annual basis, from -0.5% in July Y/Y. On the month comparison CPI rose 0.2%, due mostly to a rise in fuel prices, while food prices fell between 0.9% - 1.7% on the previous month.

 

It’s our expectation that this price environment in Germany will hold for the next couple of months and, as such, that the purchasing power associated with a strong Euro/ imported deflation (July import prices were down 12.6% Y/Y or -0.9 M/M) will be a net benefit in the near term for the consumer,  so long as the country can maintain a trade surplus.  In the intermediate (TREND) to longer term (TAIL) horizon, a weak Euro will be essential for any significant improvement in exports. The latest GDP report showed that German exports decline only -1.7% from the previous quarter, while imports fell -5.6%, yielding a trade surplus that contributed a significant +1.6% of price adjusted GDP growth. 

 

Despite these positive readings we remain cautious as the stimulus benefit associated with the cash-for-clunkers program winds down into year-end and as short-time worker contracts expire. Short term contracts have greatly contributed to stability in the unemployment rate, and both sentiment and spending could falter as unemployment rises. For now these concerns are only shadows on the horizon, as German sentiment appears strong following the +0.3% Q2 GDP number. 

 

We’ll continue to monitor Germany—especially with elections approaching in a month—and the impact of Europe’s larger economies on the periphery. We sold our position in Germany (EWG) for a tactical TRADE last week. Look for us to buy Germany back on a down move.

 

Matthew Hedrick

Analyst

 

Bullish German Data Points - a1

 


SBUX – THE PREMISE OF THE WSJ ARTICLE IS MISGUIDED

According to the WSJ, with SBUX trading at 23x consensus 2010 estimates, ”the company's stock price suggests that Starbucks will naturally start expanding again as consumers regain confidence.”

 

Naturally there are some things that I agree with in the article and some that I don’t, but nothing is new (the “people won’t drink pricey coffee” thesis is definitely not a new argument).

 

First, SBUX is much better off controlling the store assets than to sell off selected stores to improve margins.  Each store sold would be dilutive to EBITDA and not create shareholder value.  Very few restaurant companies have been able to sell stores and create value.  YUM did it successfully because its stores were severely underperforming, and therefore, the company benefited by getting them off the books.  I don’t believe this is this case for SBUX.

 

Second, SBUX does NOT need to start expanding again.  In fact that would be a mistake.  SBUX, unlike most companies, has the ability to grow globally, but the company would be better served to maintain its more recent disciplined level of capital spending.  Overtime, the company’s ability to grow globally will come to light.  Right now, the company is in the early stages of becoming better not bigger.  The opportunity for the company to generate more profits from its existing store base is massive.  That being said, it will ultimately need to get more customers in the door, which means the company needs to generate positive same-store sales.  The company’s national advertising campaign and new value combo offerings should help with this but increased consumer confidence and lower unemployment is needed for a real turnaround in sales growth (as is the case for most restaurant companies).

 

Third, I have to dispute the idea that “the mainstay cafe business [is] in doubt.”  This seems to suggest that the business is going away, which is just not the case.  Yes, SBUX’s earnings growth has slowed, but the company achieved double digit operating margins in the most recent quarter with same-stores sales down 5%.  Additionally, the company generated over $500 million dollars in free cash flow in the last 12 months.  The company will definitely benefit from an improved economic environment and positive same-store sales growth, but in the meantime, this company has improved its business model and is not going away.


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.28%
  • SHORT SIGNALS 78.51%

THE MACAU METRO MONITOR

GAMBLING “WHALE” SAYS US$110M CASINO DEBTS ARE REALLY LOANS scmp.com

Terence Watanabe, a Japanese-American gambler who lost more than US$110m in Las Vegas casinos is asking that a Las Vegas court dismiss charges against him that he defaulted on gambling debts.  He is accused of writing thirty-eight bad checks to pay debts of US$14.7m. His legal team offers two reasons why the charges should be thrown out. 

First, they allege that he was plied with alcohol and prescription drugs by the casinos while he was gambling.  Disciplinary action can be taken against casinos that allow visibly intoxicated people to gamble or supply them with alcohol.  Secondly, and more importantly for the gaming industry and how courts handle gaming debt cases, his lawyers contend that the terms of the credit agreement he signed with Harrah’s allowed him at least 60 days to repay markers – terms which made them more akin to loans and therefore he should have more leeway in paying them.  The Clark County district court has scheduled a hearing today to consider the motions filed by Mr. Watanabe.

 

EIGHTEEN HOTELS UNDER CONSTRUCTION IN MACAU IN 2ND QUARTER macaunews.com.mo

Eighteen hotel projects were under construction in Macau at the end of the second quarter, one more than at the end of the previous quarter, according to data released by the Lands, Public Works and Transport Bureau.  The projects will add 22,800 guest rooms to the local hospitality industry.  Another twenty-four hotel project applications were being processed by the bureau.

 

MACAU PLANS EVENTS INVESTMENT citmagazine.com

Macau is investing £3.3m boost meetings after its event market grew in 2008.  The Macau Government Tourist Office has launched the Strategic MICE Market Stimulation Programme to offer a range of packages and incentives for meeting organisers and event planners that book events by 31 December.  In 2008, corporate meetings bookings grew by 12% and trade shows and exhibitions grew by 54%.


Ball Underwater

“Do not dwell in the past, do not dream of the future, concentrate the mind on the present moment.”

-Buddha

 

Last week, when addressing the selloff in China, Andrew Barber wrote a fantastic Early Look titled, “The Present” – and no matter where you go this morning, here we are. Don’t get excited. Don’t freak out. Take a deep breath and a sip of your coffee. It's time to grind with the newly issued facts on your screens.

 

One of our top performing clients is a swimmer. While there is no secret that I have a confirmation bias for athletes, that certainly doesn’t mean everyone on my Research Edge Team had to have been a good one. Barber is one of our best players - ask him how fast he can run 100 meters!

 

My point here is a simple one. And it’s one that my client made to me last night. She just finished swimming a mile and wrote, “it settles my mind.” Simple is as simple does. Rinse and repeat. She is a testimony to that discipline – her track record ranks her at the very top of all Mutual Fund Growth and Income Funds. No, super duper momentum Fund of Funds dude, not last month - over the cycle of the last 5 years, when plenty an emotional PM was set out to sea.

 

From the Top, to the Bottom, and Back Again. We’re looking to learn from those who have successfully swam both with and against the current of consensus. Up or down, side to side. Being a successful investor in The New Reality requires a settled mind that does “not dwell in the past” or “dream of the future.”

 

Dreaming of becoming a billionaire or waking up with that on your mind doesn’t register with me as good pre-game prep. So, let’s do up our chin straps and get ready to settle our minds into the dirty stuff. Ranges, deltas and spreads – risk management style. This next part of this market’s move is going to be all about the grind.

 

The SP500 hasn’t budged this week. On a closing basis, over the course of the last 3-days, it has traded in a 0.30% range. It’s a grind. So settle your mind, and deal with it.

 

When we grind like this, we’re setting up for a big move. You don’t need to be a swimmer to get the analogy that I like to use with my team – the grind is the time where we’re holding a Ball Underwater.

 

The question here is which Pain Trade is going to explode out of this grind? The answer, as you’ll probably guess, lies with one global macro factor – the US Dollar.

 

Dollar up = everything priced in dollars down. Dollar down = everything priced in dollars up. If you don’t like getting dirty, get wet – and rinse and repeat this inverse correlation until you are soaking with alpha.

 

While the SP500 was dead flat yesterday, the componentry of the US market was very much anchoring on this dominant inverse correlation. Consider the following 3-factor setup of closing prices:

 

  1. US Dollar Index up +0.35% to $78.60
  2. US Financials (XLF) down -0.27% to $14.58
  3. US Consumer Discretionary (XLY) up +0.57% to $36.55

 

If Dollar down gets the Bankers, Debtors, and Politicians paid. Dollar up gets the American Consumers and Creditors paid. Yesterday gave us a sneak preview of what a Dollar rally scenario could look like.

 

This will sound counterintuitive to the legions of hedge funds that remain short the Pain Trade (short the US Consumer), not because of the math – more so because anything that doesn’t rhyme with what gets them paid is sometimes hard to reconcile. Trust me, I have tried shorting these consumer stocks for the last 3 months – I understand pain.

 

As bearish as I have been for the last 9 months on the US Dollar is as bullish a breakout it can have if that’s the Ball Underwater that we are going to have to deal with. In the last 3 weeks our call on the US Dollar has definitely morphed into consensus (Buffett, PIMCO, etc…). Consensus groupthink can be a scary place.

 

Not surprisingly, of the four SP500 Sectors in our Sector Views Risk Management product that were down yesterday, the aforementioned Financials (XLF) were one of them, and so were Basic Materials (XLB). These are two of the highest beta sectors in the market. Both are REFLATION sectors. So, AFTER, the most expedited short squeeze in US stock market history, we’re now forced to deal with a scenario that is potentially much different than the lay-up we have had for the past 6 months.

 

Bernanke now has his job security. On the margin, that means he doesn’t have to pander as much. Less political pandering = less US Dollars for sale. Why? When reported inflation accelerates in Q4 (it will), he will start to move to where the bond market is already headed – HIGHER THAN ZERO on the Fed Funds rate.

 

Rates up = Dollar up = REFLATION trades down. Most will probably agree with me on that. I have the immediate term TRADE breakout line for the US Dollar 8 cents (and 8 seconds) away from breaking out. That line is $78.62. That’s The Present. That’s your Ball Underwater.

 

I have immediate term TRADE resistance for the SP500 at 1041, and immediate term downside support at 1009.

 

Best of luck out there today,

KM

 

 

LONG ETFS

 

EWH – iShares Hong KongThe current lower volatility in the Hang Seng (versus the Shanghai composite) creates a more tolerable trading range in the intermediate term and a greater degree of tactical confidence.  

 

EWZ – iShares BrazilPresident Lula da Silva is the most economically effective of the populist Latin American leaders; on his watch policy makers have kept inflation at bay with a high rate policy and serviced debt –leading to an investment grade credit rating. Brazil has managed its interest rate to promote stimulus. Brazil is a major producer of commodities. We believe the country’s profile matches up well with our reflation call. 

 

QQQQ – PowerShares NASDAQ 100We bought Qs on 8/10 and 8/17 to be long the US market. The index includes companies with better balance sheets that don’t need as much financial leverage.  

 

CYB – WisdomTree Dreyfus Chinese Yuan The Yuan is a managed floating currency that trades inside a 0.5% band around the official PBOC mark versus a FX basket. Not quite pegged, not truly floating; the speculative interest in the Yuan/USD forward market has increased dramatically in recent years. We trade the ETN CYB to take exposure to this managed currency in a managed economy hoping to manage our risk as the stimulus led recovery in China dominates global trade.

 

TIP– iShares TIPS The iShares etf, TIP, which is 90% invested in the inflation protected sector of the US Treasury Market currently offers a compelling yield. We believe that future inflation expectations are currently mispriced and that TIPS are a efficient way to own yield on an inflation protected basis, especially in the context of our re-flation thesis. 

 

GLD – SPDR Gold - Buying back the GLD that we sold higher earlier in June on 6/30. In an equity market that is losing its bullish momentum, we expect the masses to rotate back to Gold.  We also think the glittery metal will benefit in the intermediate term as inflation concerns accelerate into Q4. 

 

 

SHORT ETFS

 

LQD – iShares Corporate Bonds – Corporate bonds have had a huge move off their 2008 lows and we expect with the eventual rising of interest rates that bonds will give some of that move back. Shorting ahead of Q4 cost of capital heightening as access to capital tightens.

 

XLP – SPDR Consumer Staples – We shorted XLP on a bounce on 6/21. One way that investors chase a bearish USD is buying international FX leverage in global consumer staples. Shorting green.

 

DIA  – Diamonds Trust- We shorted the financial geared Dow on 7/10, 8/3, and 8/21. 

 

EWJ – iShares Japan –We’re short the Japanese equity market via EWJ on 5/20. We view Japan as something of a Ponzi Economy -with a population maintaining very high savings rate whose nest eggs allow the government to borrow at ultra low interest levels in order to execute stimulus programs designed to encourage people to save less. This cycle of internal public debt accumulation (now hovering at close to 200% of GDP) is anchored to a vicious demographic curve that leaves the Japanese economy in the long-term position of a man treading water with a bowling ball in his hands.

 

SHY – iShares 1-3 Year Treasury Bonds – If you pull up a three year chart of 2-Year Treasuries you'll see the massive macro Trend of interest rates starting to move in the opposite direction. We call this chart the "Queen Mary" and its new-found positive slope means that America's cost of capital will start to go up, implying that access to capital will tighten. Yields are going to continue to make higher-highs and higher lows until consensus gets realistic.


RETAIL FIRST LOOK: MORE EARNINGS HIGHLIGHTS

RETAIL FIRST LOOK: MORE EARNINGS HIGHLIGHTS

 AUGUST 27, 2009

 

Another day of upside with results largely better than expected.

 

TODAY’S CALL OUT

 

  • It’s hard to believe the conservatism that WSM management is trying to convey when they produce $0.14 of upside in a quarter when the Street is forecasting a loss of $0.09. The bullish conference call included commentary that Q3 results are running ahead of plans and guidance, merchandising changes at Pottery Barn are beginning to take hold, and cost containment remains the key to upside leverage as sales accelerate. With all these positive data points, why is the outlook for 4Q unchanged? It seems that management is concerned about the holiday being promotional as a result of weaker competitors looking to either boost sales or actually liquidate. Even if this holds true, the benefits of competitive liquidation far outweigh any near-term sales impact. With WSM’s lean cost structure, each incremental sale (i.e. market share gain) will ultimately drop to the bottom line at a profitable rate. Now, if sales growth actually turns positive, there will be very few believable reasons to remain conservative on the company’s outlook.

 

  • In one of the most eye opening examples of how the consumer prefers to shop on promotion, Brown Shoe provided some interesting commentary on its “BOGO” (buy one, get one) strategy at Famous Footwear. It appears that after eliminating its BOGO program in favor of single pair promotions early in 2Q, the consumer rejected the new strategy and sales tailed off. As a result of the negative trends, the company reinstated the BOGO, following exactly what the consumer wanted. Sales picked up immediately. Unfortunately, BOGO’s carry lower gross margins which ended up negatively impacting the quarter. Management’s comment that, “Unfortunately, right now BOGO is a way of life” suggests that promotional activity and margin pressure are likely to persist until overall underlying demand improves.

 

  • Running shoes are the leading category within Famous Footwear’s athletic offering. This now the third major retailer to confirm that the running category is one of the few bright spots in what is otherwise a volatile environment for footwear.

 

  • In an effort to drive traffic and build brand awareness, DSW is returning to TV with an advertising campaign this September. While it is unclear so far if TV has had any impact on sales (the last spot aired in May), management is still committed to incremental marketing spend over the back half of the year.

 

  • While many retailers have articulated success in renegotiating lower rents or renewals, New York and Company highlighted a benefit of the current vacancy trend. During its second quarter, NWY signed short-term or temporary leases in an effort to test outlet locations. These leases provide the highest levels of flexibility given their minimal commitment and capital requirements. We have seen pop-up stores and vacant store fronts used for sample sales in major cities, but this may be a sign of things to come if vacancies continue to remain high. The market for temporary real estate is especially interesting as we near the holiday season- a time when both landlords and retailers aim to maximize both sales volumes and profits.

 

  • With a strict adherence to the $1 price point, Dollar Tree is sometime faced with having to drop a product from its offering due to price increases or inflation. However, with improved sourcing costs and increased capacity in China (~40% of DLTR’s imports) the company is now able to bring products back that were dropped from the mix over the past couple of years. Additionally, cost savings allow the company to offer more “value” to the consumer, either in the form of higher quality or increased pack size. Given that there is a finite amount of pennies in a $1 price-point strategy, the trend in China could be particularly beneficial to companies like DLTR and NDN.

 

  • As Charming Shoppes management continues to execute a major turnaround of all three of its brands, it has been upfront about plans to close unprofitable and cash-flow dragging locations. As an update to the original plan which called for 100 closures in 2009, the company is now expecting to close 145 units for the year. With 2,258 total stores, there is likely room for further cuts.

 

  • On the Guess, Inc. 2Q call, management discussed their views on what is motivating their U.S. consumer to shop. If you guessed good prices and some type of promotion, then you probably don’t need to read any further.  According to GES, customers are shopping for compelling values around events and spending less time in malls during non-event periods.  In response to this very obvious discovery, GES has made adjustments to its promotional calendar to benefit from those “events” that drive traffic to the mall. This sounds like basic planning to me around key holiday and seasonal transition times, something that most retailers figure out a year in advance. Despite these efforts to boost sales trends stateside, the business remains strong across the globe.

 

  • As most multi-channel retailers are substantially reducing catalog circulation in favor of more cost effective marketing and ecommerce distribution, Coldwater Creek is set to ramp up. With increased confidence in its merchandising changes, the company is planning a 40% increase in catalog circulation in 3Q. While the delta in mailings is large by any measure, it is worth noting that last year circulation was cut in the same period. Regardless, this may be one of the few retailers that is not seeing huge potential from a shift to online marketing and a move away from the costly catalog business.

 

 

MORNING NEWS 

 

-Hot categories of 2009 - Men’s underwear is need-based, typically on an 18-to-24-month cycle and the consumer is out there spending on necessity. Fleecewear was a standout, it was a category that did reasonably well for teen retailers (hoodies have been a key category for firms like New York-based Aéropostale). Intimate apparel is an industry bellwether to see how women are feeling, and it reflects how much desire they have to buy. Denim has been a top performer for retailers such as True Religion Inc., Chico’s FAS Inc. and Buckle. Gap Inc. is introducing an overhaul of its denim offering this month.  <wwd.com/business-news>

 

-Consumer spending is down with a few exceptions - The NPD Group has released its latest report detailing spending in apparel product categories from January through June. Spending has been need based — but consumers are still spending. Bright spots included number-one-ranked male underwear, and fleecewear at number two. Both showed sales gains from the same period last year. Although the tops category ranked first in overall spending, it decreased 7.6%compared with the same period a year ago. The results for 1H 2009: Male Underwear + 4.9%, Fleecewear + 2.1%, Outerwear - 0.9%, Intimate Apparel - 3.3%, Sleepwear - 4.2%, Hosiery - 6.4%, Tops - 7.6%, Bottoms - 7.8%, Swimwear - 9%, Tailored Clothing - 11.4%. <wwd.com/business-news>

 

-The American waistline may be expanding, but plus-size shoppers are tightening their belts - People just aren't buying plus-size clothing at the rate they used to. Apparel in general — being a discretionary purchase — is suffering because of the economy, but plus-size has been particularly hard hit. According to the NPD Group, a market research company, the overall women's apparel business is down about 5% and plus-size is down almost 10% from the 12 months ending in May 2009 compared to the same time the year before. It's hard to account for the dip at a time when more than half of American women are estimated to wear plus-sizes, generally considered size 14 and up, but analysts have some theories. Some retailers don't want to lure overweight customers and send out the "wrong" image, experts said, and the customers themselves may feel put off by many stores. Some retailers, including Old Navy, Banana Republic and Ann Taylor, have taken their plus-size collections out of stores and are selling only online — which some experts say plus-size shoppers prefer. Others, including H&M, have dropped out of the plus-size market. And there's also the uncomfortable connection between obesity and lower incomes, which might help explain the dip. A study of nationally representative data on American workers by two professors at Stanford University found that obese workers at the same level of job experience, education and gender earned less than their thinner colleagues. <google.com/hostednews>

 

-A new luxury e-commerce site is launching here as online sales gain momentum in Japan - Glamour-sales.com, a new invitation-only Web site, goes live today with an inaugural sales event dedicated to Longchamp. Owned and managed by a group of French nationals, the Web site will sell lifestyle products ranging from Prada eyewear to packages at luxury hotels and cars from Peugeot. Initially the site will be limited to Japanese users, but the company plans to launch Glamour-sales in both China and South Korea next year.  During each brand-specific 48-hour sale, the site will feature a brief film to showcase the products and encapsulate the brand’s essence. For example, Japanese model Hinano Yoshikawa is featured in the Longchamp film, a live-action fashion shoot of her posing sensually with the French company’s handbags. The site will also feature information about each brand’s history, an online catalogue and blogs, which members can use to interact with one another. <wwd.com/retail-news>

 

-Consumer spending was hardly affected by last year’s reduction in VAT, a survey has revealed - Consultants PricewaterhouseCoopers said 88% of the 2,000 consumers surveyed said the cut from 17.5% to 15% did not encourage them to spend more on either goods or services. Respondents said the Government’s £12 billion VAT cut from last November’s pre-budget report was insignificant compared to other economic factors, adding that economic uncertainty and salary cuts influenced their spending more. Only 8% of those surveyed said they spent more because of the cut, while 5% were unaware that there had even been one. The cut in VAT is expected to be reversed on 1 January.  <retail-week.com>

 

-Williams-Sonoma’s online sales declined 21% in the second quarter - Home furnishings retailer Williams-Sonoma reported second quarter e-commerce sales of $210 million, a 21% decrease compared with $265 million in Q2 of 2008. The web accounted for 31% of sales in Q2 2009 vs. 32% in Q2 2008. <internetretailer.com>

 

-Apparel merchants logged the best response time in July - Apparel and accessories merchants continued their run, delivering the best response time to shoppers with a high broadband connection for the third month in a row, says Gomez. <internetretailer.com>

 

-Nike INC. brought out some of its brightest tennis stars on Wednesday to preview their U.S. Open attire and raise money for local youth charities - The company assembled a regulation-size tennis court right on Broadway, just below 23rd Street, and allowed hundreds of local youths to watch Serena Williams, Rafael Nadal, Roger Federer and John McEnroe in some light, on-court action. Four kids got a chance to receive coaching from the champions and play to win donations for their organizations.  Williams, Nadal and Federer donned the daytime ensembles they plan to wear in the U.S. Open, which starts Aug. 31. <wwd.com/menswear-news>

 

-A new fashion trend for denim - After a period of immaculately clean superskinny fits dominating the jeanswear market, the big news for spring is the straight-leg distressed look — coupled with extreme ripped denim, soft whiskering and splattered paint-aged effects. <wwd.com/menswear-news>

 

-Sportswear emerges successful at a men's show in Dallas - A continued slide in tailored clothing sales prompted retailers at the Men’s Show Dallas Collective to focus on sportswear epitomized by colorfully striped shirts, bright polos, shorts and denim. Buyers said business overall remains challenging as they slashed budgets 20 to 50%, figuring they can always obtain goods if sales pick up. “It’s much more dressed down,” Bryson observed. Men rarely wear suits, coats or sport jackets, and the only time attorneys wear a suit is in court. "We are looking for new and exciting ways to keep it lively.” Bryson cited colorful striped shirts by Thomas Dean and Polo Ralph Lauren knit tops in solid colors, from basic blue and red to greens, orange and pink paired with shorts in neutral hues. The customer is “price-point driven,” said Luke Abney, co-owner of The Rogue Ltd. men’s shop and Forty Four Fifty women’s boutique in Jackson, Miss. <wwd.com/menswear-news>

 

-Levi Strauss & Co. has named Kodak veteran Jaime Cohen Szulc global chief marketing officer, a new position at the company - Szulc (pictured), who was most recently CMO of Eastman Kodak's consumer digital group, will report to Levi's CEO John Anderson. Szulc joined Kodak in 1998 as the marketing head for Latin America, later moving on to become general manager of the Americas region. Before that, he held marketing posts at Procter & Gamble Brazil and SC Johnson Latin America. Levi's current creative agency of record is Wieden + Kennedy, Portland, Ore. The company's current ad campaign features artistic, Americana-soaked visions of the young target audience with the theme, "Go forth." Independent Wieden launched that campaign shortly after its hire by Levi's last December. The brand typically spends $80 million in annual domestic measured media, per Nielsen. Omnicom Group's OMD was tapped in a separate review for media chores last October.  <brandweek.com>

 

-Arcandor Fires Most Employees of Its Holding Company Amid Insolvency - Arcandor AG, the insolvent German retailer, has fired most of the employees at its main holding company, while the administrator restructures its department store and mail-order businesses. <bloomberg.com>

 

-Esprit Shares Plunge as Krogner Warns Clothes Profits May Continue to Drop - Esprit Holdings Ltd., the biggest Hong Kong-traded clothing retailer, may take until next year to return to profit growth after reporting its first earnings drop in more than a decade. Its shares fell the most in 10 months.  <bloomberg.com>

 

-Italian Consumer Confidence Reaches 2 1/2-Year High on Easing Inflation - Consumer confidence in Italy rose to its highest in 2 1/2 years in August on signs that household spending is benefiting from falling prices, signaling the economy is recovering from its worst recession in six decades. <bloomberg.com>

 

-New regions are emerging as cost competitive in China for low- tech products - Fujian and Zhejiang are now key sourcing centers for apparel, with Zhejiang, for example, accounting for 20% of China's baby and children's wear exports -- an amount equal to Guangdong Province. As manufacturing for a range of products moves to other regions in China, Private Sourcing Events are an ideal platform for buyers to discover new suppliers who can meet their requirements.  Sourcing & Audit Manager of Otto International Shanghai, Vincent Sung, said: "We are already familiar with many of the big name manufacturers in China. However, we cannot afford to overlook new suppliers, who are competitive in terms of pricing and quality and who are willing to work even harder to partner with us. "Private Sourcing Events connect us with new suppliers whom we know can meet our high standards before we even meet them." <prnewswire.com>

 

 

INSIDER TRANSACTION ACTIVITY:

  

GPS: Robert Fisher, Director, sold 414,00shs ($8.3mm) less than 5% of total common holdings pursuant to 10b5-1 plan.

 

FOSL: Tom Karsotis, Chairman, sold 147,718shs ($3.7mm) less than 5% of total common holdings.

 

DKS: Lawrence Schorr, Director, sold 35,000shs ($793k) nearly 50% of total common holdings.

 

FL: Ken Hicks, CEO, was awarded 500,000shs via stock options as part of corporate incentive plan.

 

ANF:

  • Michael Jeffries, Chairman & CEO, sold 4,090shs ($131k) upon exercising the option to buy 12,800shs a fraction of total common holdings.
  • Charles Kessler, EVP-Merchandising, sold 3,834 ($123k) less than 5% of total common holdings.

 

TJX:

  • David Brandon, Director, sold 7,000shs ($256k) representing the remainder of his common stock holdings.
  • John O’Brien, Director, sold 20,000shs ($732k) upon exercising the option to buy 20,000shs less than 50% of total common holdings.

the macro show

what smart investors watch to win

Hosted by Hedgeye CEO Keith McCullough at 9:00am ET, this special online broadcast offers smart investors and traders of all stripes the sharpest insights and clearest market analysis available on Wall Street.

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