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Takeaway: NKE - revenue engine white hot, could GM hit 50%. FINL - basketball miss is sign of bigger trend. SKX refutes POS data



NKE - 1Q15 Earnings


Takeaway: Revenue engine revving hotter than people expect, and it will last far longer as well. But whether GM% could approach 50% is key = $8 EPS.

Link to full note: NKE - COULD GROSS MARGIN HIT 50%?

Retail Callouts (9/26): NKE, FINL, SKX, SHLD, GME - 9 26 chart2


FINL - 2Q15 Earnings


Takeaway: For FINL to call-out Basketball as the reason for the comp miss in the quarter is notable for two reasons. 1) FINL is much more tied to the running segment than FL, and 2) Basketball as a category continues to be white hot. Clearly there is more going on here than management cares to comment on. We think that comes at the brand level. NKE last night printed dot.com revenues up 70% and DTC up 30%. UA and Adi followed suit in earlier reports - with dot.com revenues up 38% and 59% respectively. While brands may claim that this growth doesn't cannibalize business from wholesale partners…we find it hard to believe that argument. We don't think this is specific to FINL either as it is one of the key reasons we added FL to our Short Bench in mid-August.

Retail Callouts (9/26): NKE, FINL, SKX, SHLD, GME - 9 26 chart1


SKX - SKECHERS Comments on State of Business Following Buckingham Research Group Report


  • "We respect the SportScan data released every Wednesday on the footwear business, but when not looked at in its entirety or analyzed over periods of time, and understanding that some key accounts—including Amazon, Zappos, Kohl’s and Finish Line/Macy’s, are not currently reporting and are projected based on the balance of the sector, the data can be misinterpreted or skewed,' began David Weinberg, SKECHERS COO and CFO."

Takeaway: It's not often that you see a company issue a press release mid-quarter to refute research. But, we have to agree with management's conclusions. The fact is that POS data is becoming less and less relevant, dare we say accurate, as company's expand distribution through fully owned DTC channels and pure play e-commerce sites in the US. Those are black boxes that the NPD and SportScan's of the world can't access. Add international to the mix and you have a data set that is far less representative of the global landscape than it was 5 years ago.




SHLD - More problems for Eddie Lampert's empire: Sears Canada CEO quits


  • "On Tuesday, Sears Canada said its CEO, Doug Campbell, was quitting after only a year on the job: bad timing given its parent company is trying to sell off the Canadian unit to raise urgently needed cash. Earlier this week, the New York Post reported that the auction for Sears Canada, in which Sears has a 51% stake, had stalled."


SHLD - Sears Investor Fairholme Says Unit Steps Back From Loan


  • "Sears Holdings Corp. shareholder Fairholme Funds Inc. said its affiliate St. Joe Co. backed away from providing as much as $100 million in financing to the retailer after a second lender materialized."

L’Oréal Acquires Sayuki Custom Cosmetics


  • "L’Oréal has added to its cache of West Coast beauty brands by acquiring Laguna Hills, Calif.-based Sayuki Custom Cosmetics."
  • "A spokesman for L’Oréal confirmed the acquisition Thursday, but did not provide further comment or disclose the terms of the deal. Industry sources estimate the company paid $150 million for Sayuki, which joins a growing list of West Coast pick-ups for L’Oréal that include NYX Cosmetics, Clarisonic, Urban Decay and Baxter of California."

GME - GameStop gears up for the holidays


  • "GameStop plans to hire approximately 25,000 employees nationwide as the company prepares for the upcoming holiday shopping season — nearly double the number of people it hired last year."

WTSL - The Wet Seal taps new chief digital officer


  • "The Wet Seal is welcoming back Jon Kubo, this time as EVP and chief digital officer, a newly created position. Kubo will oversee e-commerce, digital marketing and the information technology organization to integrate digital consumer experiences across all business touch points."