Retail Callouts (9/19): NKE, KSS, WMT, LULU, HD, COST

Takeaway: Big year for The Morals Clause in endorsements. KSS hiring 12% more temps than WMT this holiday. Interesting new LULU product launch.


NKE - Nike, Target Pull Adrian Peterson NFL Merchandise



  • "As the National Football League continues to regroup in the wake of the domestic violence controversy, a few key sponsors have somewhat distanced themselves from the league."
  • "Nike suspended its endorsement deal with Minnesota Vikings star Adrian Peterson, who is facing child-abuse charges, and Target has pulled Peterson merchandise from its stores and Web site."


Takeaway: This year is definitely setting a record for the number of athlete endorsements being pulled due to violation of the 'Morals Clause'. This is the Brand's 'get of jail free' card. Sometimes, like with Tiger Woods or Kobe Bryant, the brands will simply renegotiate the deals and make payout based on winning percentage, on-field performance, or dollars associated with a specific product line. The industry has come a long way since 1994 when Nike not only stuck by Tonya Harding after her boyfriend bashed Nancy Kerrigan's kneecaps, but it also paid all of her legal bills.


KSS, WMT - Kohl’s Department Stores to Hire More than 67,000 Associates This Holiday Season



  • "Kohl’s Department Stores announced it anticipates hiring more than 67,000 associates nationwide this holiday season to support seasonal business in stores and growth on"
  • "'By adding these associates, Kohl’s will continue to deliver an enjoyable and convenient shopping experience to all our valued customers, whether they choose to shop in store or online at this holiday season.'"
  • "Kohl’s anticipates hiring an average of 50 associates per store to provide customers with excellent customer service throughout the holiday season at its 1,163 stores in 49 states. In addition, the company anticipates hiring approximately 9,300 seasonal positions at distribution centers across the country and approximately 670 seasonal credit operations positions."

Walmart to up holiday hiring by nearly 10%


  • "Walmart on Thursday said it plans to hire 60,000 temporary workers for the holiday season, an increase of nearly 10% from last year."
  • "The discounter also said that current workers who want more hours during the holidays will receive priority."


Takeaway: Make no mistake about it, 67,000 is a big number. It implies that hiring plans for the season are up 34% from the 50,000 associates the company announced that would hire around the same time last year. But, based on company commentary the increase is closer to 15% as hiring exceeded expectations last year. The last time KSS had a similar increase in hiring was 2012. Sales were up 2.6% (after adjusting for 14th week) and gross margin was down almost 300bps.  Also, tough to ignore that KSS is hiring 12% more workers than WMT, despite having one sixth WMT's square footage.


LULU - New Product Spotlight

Something tells us that this new LULU bodysuit won't exactly end up being the new staple in Yoga studios.

Retail Callouts (9/19): NKE, KSS, WMT, LULU, HD, COST - 9 19 chart1





COST - Costco to stop accepting American Express cards in Canada, switches to Capital One and Mastercard



  • "Capital One Financial Corp. will replace American Express Co. as the issuer for Costco Wholesale Corp.’s credit cards in Canada. The Capital One Platinum MasterCard will serve as both a credit card and a Costco membership card. MasterCard Canada has also entered into an agreement with Costco to open credit card acceptance to all MasterCard cardholders."


WMT - Wal-Mart Mexico Unit Probed on Complaints of Cockfight



  • "Wal-Mart de Mexico SAB, the country’s biggest retailer, is being probed by local officials after shoppers complained that a store hosted a cockfight to promote a soda company."
  • "Fines of as much as 96,000 pesos ($7,240) could be levied if Walmex is found responsible, said Jose Luis Hernandez, commercial director of the city of Boca del Rio, where betting on fighting roosters is illegal. A Walmex spokesman, Antonio Ocaranza, said the roosters weren’t armed with blades, no betting took place at the store and no birds were harmed."


HD - Home Depot Says Data Hack Affected 56 Million Payment Cards



  • "Home Depot Inc. said a data breach between April and September put about 56 million payment cards at risk, signaling that the hacker attack was bigger than the one that struck Target Corp. last year."

Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

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7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

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Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

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GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

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Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

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Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

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Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

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People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

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UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

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Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

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Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

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An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

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