After a record August where gaming revenues recorded an all time high of MOP11.2bn, analyst are already starting to speculation that September will bring a 40% y-o-y increase revenues given the easy comparison since September 2008 was when the visa restrictions kicked in. However, DM does note that the past week saw a dramatic drop-off in business at the ferry terminals as the summer holidays came to an end and school season began. The Gongbei border crossing, however, remained busy and started to see an increase in traffic after lunch today as visitors began arriving for the weekend.



DM speculates on the use of proceeds of the $600MM pre-IPO bonds LVS just issued. DM wonders why LVS just didn’t wait a few more months for the IPO proceeds and what it will do with the $600MM in the meantime.  Restarting construction on sites 5 & 6 seems like a good possibility.


DM calls into question The Hong Kong Economic Journal’s claims that Wynn Macau will launch an IPO on September 25 and be traded on the HK stock exchange by October 8 as well as the $1BN size of the offering.  DM believes that given the timing a roadshow requires that an IPO in November is more likely, however, that WYNN will come before LVS is a certainty.

Wynn’s IPO application will be reviewed on Sept 10th and depending on the outcome a prospectus should come shortly thereafter.  While not questioning the desire to decouple the Macau from the sluggish fundamentals clouding Las Vegas, DM does raise the question of what the IPO proceeds will be used for.  Wynn doesn’t have any covenant issues, the Wynn Cotai project still seems a long way off, and its not really Steve’s style to buy other people’s projects, so perhaps Steve has another project in mind.



Macau Daily Post quoted the Portuguese-language Journal Tribune as saying that Wynn Macau leads the Venetian as the city’s single biggest revenue generator and provides a Top 10 ranking for the first seven months of the year, in MOP:

1. Wynn Macau – 9.64 billion on 380 tables, 1,166 slots
2. Venetian Macao – 8.88 billion (no kidding) on 585 tables, 2,478 slots
3. Lisboa Casino (old one) – 5.6 billion on 203 tables, 384 slots
4. MGM Grand Macau – 5.48 billion on 404 tables, 887 slots
5. Altira – 5.19 billion on 252 tables, 111 slots
6. Sands Macao – 5.14 billion on 414 tables, 1,406 slots
7. Grand Lisboa (new) – 4.83 billion on 289 tables, 723 slots
8. StarWorld – 4.65 billion on 243 tables, 283 slots
9. Jimei (former Oriental) – 1.3 billion
10. City of Dreams (opened June 1) – 1.21 billion



It looks like Turbojet is making a comeback after Venetian’s CotaiJet took a bite out of their business. Despite the ticket prices for TurboJet going at a significant premium to CotaiJet at the Hong Kong ferry terminal, however more traffic is still coming through the peninsula ferry terminal than the temporary ferry terminal at Pac On, on Taipa. 

Despite the more comfortable ferries that CotaiJet offers and superior customer service, the walk from the temporary Pac On to the dock at the immigration hall is still one mile, which is no fun in the summer heat.  Docking at Taipa can also add another 10 minutes which passengers in a rush may find annoying despite elimination of the need to take bus from the peninsula to get to Cotai. 

Unfortunately for the Cotai properties, it doesn’t look like the permanent Pac On terminal will be ready anytime soon. DM is hopeful that the permanent opening will follow closely behind the opening of Sites 5 & 6 and Galaxy Cotai in 2011, otherwise they fear that the Macau infrastructure will see a transportation strain.



It appears that Galaxy’s Cotai project is back on the front-burner again and the opening date can be as soon as end of 2010 or early 2011 at the latest.  The increase visitation and apparent easing of visa restrictions is a driver of the timing acceleration.



Viva airline announced this week that it is doubling its capacity to and from Narita international airport to four flights a week, which should increase the number of Japanese visitors coming to Macau since the direct flight will take half the amount of time as coming from Hong Kong when factoring the ferry trip. Japan was the only source market in East Asia to grow visitation y-o-y in the 1H09.

A Friday in September

The best way to appreciate your job is to imagine yourself without one.

-Oscar Wilde


It’s the first Friday in September and it’s all about jobs.  I have been reading over the past week how bad September is for stocks, thinking that Fridays were the worst.  Between 1999 and 2008 only 41% of Fridays were down market days – I was expecting at least 60% were down days.  In fact, for the entire month, 5 out of the last 9 years, September was a down month, but remember one  year includes 9/11 and then there was last year.  I know this is a small sample size relative to history, but I believe recent history is more relevant.  So what is all the fuss?  September is just another month! 


Who knows what this Friday in September will bring, but Research Edge’s Chief Strategist, Keith McCullough, has been recently making the call that he has shifted to expect a worse than expected unemployment report.  Ironically, this could end up being US Dollar bearish, but bullish for stocks!  For the core Research Edge client base that relationship has been part of our vocabulary since the beginning of the year.


Where I sit as a sector analyst the trends in the labor market hold the key to the future of my group.  If consensus is right and payrolls decline by another 230,000 jobs, that would bring total jobs lost since the recession began in December 2007 to 6.9 million - the biggest decline in any post-World War II economic slump. 


I’m keenly aware that a decline of 230,000 is far better than the 700,000 pace we saw in January, but many people are still losing their jobs and many others are concerned that they may be next.  This has me sitting on the sidelines.  The consumer is not dead, and therefore, it has not been easy to be short the consumer.  Yesterday was testament to that point as the Consumer Discretionary index (XLY) outperformed the S&P 500 on better than expected retail sales. 


Despite yesterday’s sequential improvement in sales trends, I contend that a prolonged weakness in the job market is bad for business and could be one factor that suggests the S&P 500’s 55% move since the March low is a head fake.  This can best be seen in a story in the WSJ today where the rising joblessness is now taking increasing toll credit-worthy borrowers.


While as a fundamental analyst I’m concerned about the consumer, the epicenter of any real weakness in the market is going to come from Washington, D.C. 


This brings me to another important THEME from the Research Edge MACRO team - INFATION ROTATION.  While this theme has generated some great banter between the Research Edge Macro team and its client base, we seem to be winning the war of important data points.  I guess it is just a coincidence that GOLD has gained 4.6% so far this month and seen the biggest three-day rally since March.  The media speculates that “a weak dollar will boost demand for precious metals as an alternative investment.”  Yesterday, the Dollar index was flat on the day and gold hit a high of $999.50.


As inflation expectations continue to climb, interest rates have to go up.  As rates head higher, the dollar will stop “burning.”  When the dollar stops burning, stocks stop going up!


If you have made it this far in reading today’s Early Look you realize that Keith is taking a well deserved day off to play golf with his father.  While getting up at 4am to write the Early Look is a challenge for sure, I’m thankful to have a job!


Function in disaster; finish in style



Howard Penney





VXX – iPath VIXWe bought volatility on its lows on 9/3 ahead of the employment report today.  


XLU – SPDR UtilitiesWe bought some low beta dividend yield on its lows on 9/2. Utilities traded down 1% and they should act ok during stagflation fears. 


XLV – SPDR Healthcare We’re finally getting the correction we’ve been calling for in Healthcare. It’s a good one to buy into. Our Healthcare sector head Tom Tobin remains bullish on fading the “public plan” at a price.


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.   


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.






DIA  – Diamonds TrustWe shorted the Dow on 9/3.  In the US, we want to be long the Nasdaq (liquidity) and short the Dow (financial leverage).


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.


EWJ – iShares Japan While a sweeping victory for the Democratic Party of Japan has ended over 50 years of rule by the LDP bringing some hope to voters; the new leadership  appears, if anything, to have a less developed recovery plan than their predecessors. 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.




 AUGUST 4, 2009




Note: Zach Brown takes the conch from McGough this fine morning.


I don’t want to dwell on Axl Rose this morning given the severe lack of relevance to retail (other than when he popped Tommy Hilfiger at a NY club in May ’06). But his quote from Sweet Child ‘O Mine rings very true today. “Where do we go now?”. The only way to answer that is with a process.


One of the cornerstones of our analytical process is our SIGMA (Sales Inventory Gross Margin Analysis). There’s no shortage of people we’ve confused by the imposing visual in the chart below. But once you take the time to understand it, you see that it is not only a strong financial analytics tool, but also a way to monitor the behavioral changes in how a management team (or group of them) trades one line of the P&L or balance sheet against another in the face of changes in the Macro environment.


Here is a quick overview of how to read the chart: the vertical axis illustrates the difference between sales growth and inventory growth, while the horizontal axis represents the year to year change in the operating margin.  We then plot the past 8 quarters of data to track the trend in where a company has been. The punchline is that companies should always strive to be headed to the upper right hand quadrant (sales outpace inventories and margins up). The background to the SIGMA chart has the year to year changes in the gross margin and the SG&A margin along with a line representing capex as a percent of sales on a trailing twelve month trend. This allows us to track what kind of margin and cash flow compares we’re looking at on a quarter-to-quarter basis.


Do you want to know why Retail has outperformed the S&P so meaningfully since the March 9th lows? Check out the swing in the SIGMA trajectory from 4Q08 to 2Q09.


We have a SIGMA book with 107 companies, which helps our team (and our exclusive Retail vertical) focus on which companies are interesting and at what time do these companies of interest become actionable.  Let us know if you’re interested. I’ll be around all day ().


The second image below has the location of where each of the 107 companies ended up on the SIGMA chart after reporting Q2 results (* except for those that will report in the next 2 weeks).  The sequential improvement from Q1 to Q2 is impressive: at the end of Q4 63% of the companies were in the danger zone, Q1 had 44%, and Q2 had 37%. 


The big question is, as the Guns N’ Roses singer Axl Rose so eloquently asks, ”Where do we go now?”  I think the answer is up.  Looking at the background in the SIGMA, the gross margin and SG&A margin compares look very easy in the back half of the year.  Our call for some time has been that we will see growth again in the back half of the year, especially in the 4th quarter.  I think we will see the yellow SIGMA line make two meaningful steps upwards to the right and finish 2009 in the sweet spot. Brian has commented recently how the market is discounting much of this, with a 39% improvement in the consensus NTM EPS growth rate over just the last 3 months. As such, we like to stick with the big earnings outliers, M&A targets, or names that will do well in a stagflationary environment (cap, liquidity, solid balance sheet, and growth).


Another factor that is so important to us in this market is sentiment. Chart 3 shows the sell side sentiment on the x-axis, the buy side’s on the y-axis, and the insider transaction movement next to each company’s ticker.  The chart captures the outliers with those hated in the upper left and those loved in the bottom right. 

  • There are some meaningful outliers where the consensus bears better be right on earnings, or we’re set to see squeezy the shark show his gnarly-looking teeth and bite the shorts. Good examples there are UA, OSTK, SHLD, DSW and PSS.
  • On the flip side we’ve got KR, CVS, NKE, COH, TJX and SPLS. Yes, some quality in there. But with short interest so uniformly low, and sell-side sentiment so positive, we need some big beats to keep these names afloat.

So keep your head in the game, and your eyes on the prize as we make some progress in 2H towards the sweet spot of the SIGMA.  And call us if you want detail on specific companies. 










Some Notable Call Outs

  • According to several news sources, LIZ has hired turnaround firm Alvarez & Marsal to assist in collections and inventories. While the firm is known for prepping companies for bankruptcy, a managing director at the firm was quoted saying that they were helping LIZ to improve working capital not to prepare for a bankruptcy filing. There are those who could interpret this as a sign of desperation, we absolutely do not believe this to be the case. This “all hands on deck” approach and input from a leading turnaround firm should help accelerate LIZ’s key cost initiatives and could even result in a few introductions to potential buyers should the company decide to sell brands.


  • On the company’s quarterly conference call, ZQK highlighted recent softening in their footwear business relative to apparel. As it turns out, major footwear retailers are delaying the shipment of product that is typically taken in Q4 in an effort to keep inventory levels clean. One look at the family footwear SIGMA (see yesterday’s First Look Call Out) and it is evident which retailer might be concerned about inventory levels. Interestingly, BWS mentioned DC as one of their key growth drivers on their call last week.


  • As noted by several retailers this week, women's dresses continue to be one of the few bright spots in apparel. It is also one of only two categories in which G-III is investing in growth (sportswear is the other) given the sizeable opportunity the company sees over the long term. G-III’s current portfolio includes labels such as Calvin Klein, Jessica Howard, and the new Jessica Simpson line that is slated for a holiday release.





-Vietnam footwear exports expected to decline - Vietnam is estimated to see its footwear exports reaching $5.3 billion in 2010 despite the current drop due to the global economic downturn, according to the General Statistics Office. The sector is down 11% in first eight months of this year. In August alone, footwear exports are estimated to be down 3.31% sequentially to July and 10.71% compared to the same period last year. The Leather and Footwear Association (Lefaso) forecast that this year's export turnover of leather and footwear products would be 10% lower than the full-year target of $5.1 billion. Meanwhile, the EU's term-end check on the anti-dumping suit against Vietnam's leather cap shoes and the European Commission's decision to exclude Vietnamese leather shoe exports to the EU from the list of products eligible for the Generalized System of Preferences (GSP) from January 2009 have undermined the competitiveness of Vietnamese footwear products. <>


-Pakistan's announced a ‘Mark-up Rate Support’ order for textile manufactures - Pakistan's Ministry of Textiles has announced a ‘Mark-up Rate Support’ order for textile manufactures that will be admissible to the extent of 2.5% or the difference in mark- up rate between floating rate loan and Long Term Financing Facility rate, whichever is lower. This order will be effective from September 1, 2009 and Mark-up support can be taken on outstanding running balances of principal amount of floating rate long terms loans availed by the textiles industry and disbursed up to August 31, 2009, to finance import and purchase of textile machinery. <>


-Back-to-school failed to get consumers back into stores in August - Retailers reporting comparable-store sales on Thursday in many cases registered smaller declines last month than in July, and a few more were able to put up gains as state tax holidays moved to the more recent month. With Labor Day, and the opening of many schools, later this year than last and consumers shopping closer to need than ever, there was also the expectation that some b-t-s business would move into September. Even without the calendar shifts, this month is expected to pose a lesser challenge for stores as their results will be weighed against the full-blown arrival of the credit crisis a year ago. Weaker comparisons also are expected to buoy year-on-year results as retailers move, somewhat tentatively, into the third quarter and on to the fourth. While higher-priced stores again took a drubbing, August’s winners included off-price retailers and others offering hefty value propositions to attract consumers. <>


-Sheepskin footwear company acquires slipper brand - Lamo Sheepskin Inc., of Chino, Calif., known for its sheepskin footwear has acquired slipper brand Oomphies from Spain-based Menorca 1820 Inc. Oomphies is best known for its classic leather mules in pastel and metallic colors. While the brand has had limited distribution more recently, it has maintained a following among more mature customers through its presence with online retailers. According to Lamo CEO Joseph Li, because there remains a loyal customer base, Lamo will continue to produce both vintage styles such as the Granda mule and Laurie open-toe wedge while introducing looks to appeal to a younger consumer base. While the shoes have been produced in Spain, Lamo will manufacture the new line in Asia with its first collection scheduled to hit stores later this month. Set to retail at $50 to $60, distribution will be focused on department and specialty stores, independents and e-tailers. <>


-Toys "R" Us acquires KB Toys - Toys "R" Us continues to reinforce its status as "The World's Greatest Kids' Brand" with the acquisition of the KB Toys brand which includes its URL,, its trademarks and other intellectual property rights. Over the past few months, Toys "R" Us has secured its place as a dominant force in the toy world, most notably through the acquisitions of FAO Schwarz and While too early to tell what role KB Toys will play in its growing portfolio of brands over the long term, it will provide the retailer with the buying power and distribution channel diversity it needs as it heads into the fourth quarter. At present, visitors to will be invited to shop, where they will find exclusive savings and daily deals offered by the chain's other e-commerce sites. <>


-Burberry May Speed U.S. Growth Amid Deals on NYC, Indiana Space, CFO Says - Burberry Group Plc, Britain’s largest luxury-goods company, may accelerate plans to open U.S. stores as premium shop space becomes available at cheaper prices, Chief Financial Officer Stacey Cartwright said. <>


-LVMH-Richemont Merger Would Be `Master Stroke,' Bernstein Analyst Says - A merger between LVMH Moet Hennessy Louis Vuitton SA and Cie. Financiere Richemont SA, the two biggest luxury-goods makers, would be a “strategic master stroke,” according to Sanford C. Bernstein analyst Luca Solca.  <>


-Bulgari is restructuring its U.S. executive team - Veronica McMahon Trenk has been appointed managing director of Bulgari in the U.S. Trenk was formerly managing director of the Roman jewelry house’s fragrance and skin care division in the U.S. She takes on the added responsibilities of François Kress, former managing director of Bulgari’s jewelry, watch and accessories division, who exited the firm nearly a month ago. Last month, WWD reported rumblings in Bulgari’s U.S. business with the closing of boutiques in three key markets: Palm Beach, Fla.; Aspen, Colo., and New York’s Madison Avenue. The jeweler revealed plans to open stores in San Francisco, Las Vegas and Dallas this year. Bulgari has 15 company-owned boutiques in the U.S., including stores in Atlanta, Honolulu and a 13,590-square-foot flagship on Fifth Avenue in New York. <>


-Everywhere you turn these days, Puma is there - The athletic brand landed valuable airtime (again) last month, when its sponsored running star Usain Bolt raced across the track in Berlin and into thousands of news headlines. Then, Puma deepened its commitment to the motor sports market by signing a deal with Microsoft for prime branding placement in the upcoming “Forza Motorsport 3” racing game, set for release on Oct. 27. In addition to a spot in the game, Puma will also host Forza preview nights at its concept stores, release a Forza limited-edition shoe and post exclusive content about the game on And further exposure will come through its sponsored driver, Natacha Gachnang, who was chosen by Xbox to be the face of Forza in its pan-European PR tour. Puma, based in Herzogenaurach, Germany, already outfits Gachnang in her FIA Formula Two races and will now provide apparel and accessories to the driver — and all Microsoft staffers — during trade events and conferences promoting the video game. <>


-J.C. Penney joins a small group of retailers blazing the mobile apps trail - J.C. Penney has become No. 30 on a list of retailers that have created a downloadable mobile application for smartphones. It has launched JCPenney Weekly Deals, a mobile app for Apple’s iPhone and iPod Touch. <>


-Lee Jeans unveils a retooled e-commerce site - Lee Jeans has taken the wraps off a redesigned site that features custom fitting tools and streamlined navigation. The newly retooled web site includes a revamped Fit Finder, which allows shoppers to find a pair of jeans that fit as if they were custom. <>


-Fragrance line overshot projections by 25% - In its first week on counter, Tom Ford Grey Vetiver overshot its sales projections by 25 percent, according to industry sources. The fragrance, the designer’s third specifically concocted for men, bowed on Aug. 27 in Bloomingdale’s. It will roll out to specialty stores, including Saks Fifth Avenue, Neiman Marcus and Nordstrom later this month, and internationally starting in November. “The fragrance has started off quite well, and we’re confident it will be one of our top launches this fall,” said a spokeswoman for Bloomingdale’s. According to industry sources, Grey Vetiver will outstrip combined sales of Tom Ford for Men and Tom Ford Extreme and generate first-year global retail sales of $15 million to $25 million. <>


-Foot Locker is ready for its online TV close-up - The New York-based retailer will launch an ad-supported Internet television channel, created in partnership with Gen2Media Corp, on its Website this fall. FootLockerOnlineTV will showcase custom video and digital advertising targeted to the company’s specific demographic. Bob Stephan, director of partner marketing at, said in a statement, “We expect that the diverse and flexible ad serving opportunities ... will be an exciting opportunity for potential advertisers who my be interested in messaging our large and loyal following of athletic footwear and apparel enthusiasts.”  <> today is launching SHOP THE LOOKS - Just in time for New York Fashion Week, today is launching SHOP THE LOOKS, a custom e-commerce initiative that taps into the audience's existing passion for the latest runway trends. Users can now shop from more than 30 trends or "looks," which have been curated in collaboration with the editors of  SHOP THE LOOKS draws on the power and scale of the fashion shows on, 1 billion page views annually, as a purchase funnel for what's in stores now. Each runway slide will be tagged to correspond with one of the trends available in the SHOP THE LOOKS section, such as metallic, boho, or red carpet. In those sections, users can choose among dozens of currently available items that fit each trend. This represents the first time the user can use photos from the runway as inspiration for what to buy in stores now. Once in the SHOP THE LOOKS section users can also browse by seven main categories: clothing, bags, shoes, jewelry, beauty, accessories and sale. <>

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 80.46%
  • SHORT SIGNALS 78.35%

Risk Management Update: SP500 Levels, Refreshed...

My inbox started to get peppered around noon when Larry Kudlow apparently started talking about the Prices Paid side of Tuesday’s ISM report. Heck, 2-days late and about $40/oz in the price of gold discounting stagflation later, we have to salute the man for noticing. CNBC calls that segment the “Call of The Wild.” I couldn’t make that up if I tried.


I used to have wild monkeys and sharks hanging out on these charts. Now is no time for that. The monkey chase to higher-highs is over, so is Squeezy The Shark’s chomping on the consensus Depressionista community. We’re nestling right back into a manageable trading range here.


I have a major immediate term TRADE line of resistance forming at 1005 (dotted red line in the chart below), and immediate term TRADE support down at 987.


After being bullish on employment in recent months, I have shifted to looking for a worse than expected unemployment report tomorrow. That, perversely, could end up being US Dollar bearish. What’s bad for the buck can be good for stocks. On the other hand, anything can happen when we’re dealing with a report that the manic media monkeys can swing from the chandeliers on.


I continue to take down my invested exposure.


Keith R. McCullough
Chief Executive Officer


Risk Management Update: SP500 Levels, Refreshed...  - a1


SSS Initial Take

Not surprisingly another month of mixed results, with the split between upside/downside vs. expectations at 14 to 11 respectively.  Notable upside came from the “cap” (generally the larger, more relevant names making up the retail landscape).  



  • The divergence between KSS positive performance and JCP’s negative 7.9% result continues to highlight 1) how KSS’ off-mall real estate strategy is inherently helping its traffic performance while JCP remains more of a hostage to the mall and sluggish traffic, and 2) how KSS’ offensive strategy in taking market-share from now liquidated Mervyn’s can help contribute to overall momentum.  Keep in mind that KSS’  will actually open 37 former Mervyn’s location later this month, which will accelerate profitable market share gains in the Southwest region.


  • COST reported a better same store sales result but importantly highlighted a second month in a row of improving non-food comps.  Hardlines performed slightly better than softlines, with key positive results coming from sporting goods, toys, seasonal, hardware, and domestics.  Overall, non-food categories posted slightly negative same store sales and marked the second month in a row of a sequential improvement.


  • With AEO and ARO both reporting slightly better than expected results, ANF continues to stand out the sole teen-retailer where momentum is not improving.  Despite reducing prices in attempt to be more competitive, same store sales consistently remain amongst the worst in all of retail.  While I noted earlier in the week that inventories at a local store were so thin there were bare shelves, I’m beginning to wonder if now the problem isn’t just price perception.


  • GPS reported better than expected results driven by strength at Old Navy and a sequential improvement at Gap stores.  Even with years of negative comp compares, it appears that marketing and merchandising efforts are beginning to take hold.  Old Navy’s back to school marketing campaign was a key driver of the division’s +4% result for the month.  Gap’s re-launched denim was also well received, especially in the women’s category. 


SSS Initial Take - 1 year SSS 9 09


SSS Initial Take - 2 year SSS 9 09

Apparel Outperforming Footwear on the Margin

With the exception of UA and Jordan, footwear sales are not keeping track with the stronger numbers we are seeing in apparel. The charts enclosed tell all. The good news is that ASPs remain strong. But with rising inventories in the athletic channel, price point strength might be short lived. For the first time in a while, we prefer the family footwear channel.


Apparel Outperforming Footwear on the Margin - Sporting Goods Table


Apparel Outperforming Footwear on the Margin - Footwear Table


Apparel Outperforming Footwear on the Margin - Sporting Goods Chart


Apparel Outperforming Footwear on the Margin - ASP BTS


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