• It's Coming...

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Takeaway: Retail growth slowing at measured pace. KATE’s stock is under pressure, but nobody sent e-commerce biz the memo – it’s on fire. eBay’s 180.

ECONOMIC DATA

Takeaway: Slight deceleration to +3.6% yy vs. +4.1% last week. But as always, we'll always look at the underlying trend -- evidenced by the 2 and 3-year run rate -- which is a much better gauge of the real directional health of the retail climate. Is it collapsing? Absolutely not. But we remain in a measured multi-week downtrend, suggesting that the peak has probably past.  

Retail Callouts (9/30): Retail Sales Trends, KATE/COH/KORS, EBAY - 9 30 chart1

Retail Callouts (9/30): Retail Sales Trends, KATE/COH/KORS, EBAY - 9 30 chart2

COMPANY HIGHLIGHTS


KATE's stock can't seem to catch a bid. But nobody sent that memo to the company's online business. Its trends are eclipsing those of Kors and Coach.

Retail Callouts (9/30): Retail Sales Trends, KATE/COH/KORS, EBAY - 9 30 chart3

Retail Callouts (9/30): Retail Sales Trends, KATE/COH/KORS, EBAY - 9 30 chart 4

EBAY - eBay & PayPal to Become Independent Companies in 2015

(http://www.ebayinc.com/in_the_news/story/ebay-paypal-become-independent-companies-2015)

  • "eBay Inc.  today said its Board of Directors, following a strategic review of the company’s growth strategies and structure, has approved a plan to separate the company’s eBay and PayPal businesses into independent publicly traded companies in 2015, subject to customary conditions. Creating two standalone businesses best positions eBay and PayPal to capitalize on their respective growth opportunities in the rapidly changing global commerce and payments landscape, and is the best path for creating sustainable shareholder value, the company said."

Takeaway: Game, Set and Match: Icahn. Seriously, what happened to EBAY's "PayPal + eBay Better Together" PR blitz?  Talk about a 180 for CEO John Donahoe and the Board. Check out this Fortune article from just seven months ago. The following quote is a good one, but the whole article is a good read -- showing just how quickly executives at even the largest companies can change their mind (or have it changed for them).

Donohoe on Spinning off PayPal:  "Everyone’s like, you have to spin off PayPal. Everyone wants PayPal. We have PayPal! We have what everyone wants! Now, I believe this is the best way to grow PayPal. And part of my challenge and part of what I will be spending time on is getting this message out clearly."

(http://fortune.com/2014/03/10/ebays-john-donahoe-talks-icahn-conflicts-and-100-stock-price-someday/)

OTHER NEWS

WMT - Instagram CEO and Co-Founder Kevin Systrom Joins Walmart’s Board of Directors

(http://news.walmart.com/news-archive/2014/09/29/instagram-ceo-and-co-founder-kevin-systrom-joins-walmarts-board-of-directors)

  • "Wal-Mart Stores, Inc. announced that its Board of Directors has appointed Kevin Systrom, an entrepreneur, software engineer and co-founder of photo-sharing service Instagram, as a new member of the company’s Board, effective Sept. 26. Systrom became the 15th member of the Board and will also serve as a member of the company’s Technology and eCommerce Committee and its Compensation, Nominating and Governance Committee."

JCP - J.C. Penney's Rating Outlook Now Stable

(http://www.wwd.com/fashion-news/fashion-scoops/penneys-rating-outlook-now-stable-7958725?module=Retail-latest)

  • "Moody’s Investors Service has raised the rating outlook for J.C. Penney Co. Inc. to stable from negative."
  • "The ratings agency said the change in outlook was due to the “successful completion of $400 million senior unsecured notes” to fund the partial tendor offers for Penney’s notes due between 2015 to 2017."

FDO - Family Dollar to match competitor ads

(http://www.chainstoreage.com/article/family-dollar-match-competitor-ads)

  • "Family Dollar Stores Inc. launches its “Ad Match Promise” program on Sept. 30. When presented with a local competitor’s printed advertisement, Family Dollar stores will match the competitor’s price."

AAP - American Apparel Names Scott Brubaker Interim CEO

(http://www.wwd.com/business-news/human-resources/american-apparel-names-brubaker-interim-ceo-7955672?module=hp-topstories)

  • "The embattled American Apparel Inc. named Alvarez & Marsal executive Scott Brubaker interim chief executive officer Monday."
  • "Brubaker takes over from former chief financial officer John Luttrell, who stepped up after founder Dov Charney was sidelined amid allegations of misconduct."

OR - APPOINTMENT TO THE EXECUTIVE COMMITTEE OF L’ORÉAL

(http://www.loreal.com/press-releases/appointment-to-the-executive-committee-of-loreal.aspx?mediaType=cp)

  • "Barbara LAVERNOS is appointed Executive Vice-President Operations (sourcing, production, supply chain) and member of L’Oréal’s Executive Committee as of November 1st, succeeding Jean-Philippe BLANPAIN."
  • "A graduate of l’École des Hautes Etudes d’Ingénieur, Barbara LAVERNOS, aged 46, joined L’Oréal in 1991 as a buyer at the Aulnay factory, before becoming Head of Purchasing at the Ormes factory for make-up and perfume."

India to See First Juicy Couture Stores in 2015

(http://www.wwd.com/retail-news/specialty-stores/india-to-see-first-juicy-couture-stores-in-2015-7957983?module=Retail-latest)

  • "The first Juicy Couture stores in India are expected to open in fall 2015."
  • "That’s according to Darshan Mehta, president and chief executive officer of Reliance Brands Ltd."
  • "Reliance, a key distributor in India for the premium-to-luxury fashion categories, will open the stores under a newly inked licensing agreement with Authentic Brands Group, which owns the intellectual property assets of Juicy."

ANF - Report: Judge rejects Abercrombie CEO pay settlement

(http://www.chainstoreage.com/article/report-judge-rejects-abercrombie-ceo-pay-settlement)

  • "A federal judge has reportedly rejected an Aug. 29 settlement of a lawsuit over the pay received by co-CEO Michael Jeffries. According to Reuters, U.S. District Judge James Graham in Columbus, Ohio, said shareholders belonging to the City of Plantation, Florida Police Officers' Employees' Retirement System, who challenged the $140 million in pay and additional travel expenses Jeffries has received since 2007, give up too much in the settlement."