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What’s New Today in Retail (9/24)

Takeaway: Not a good start for Retail Sales data. Holiday hiring plans are both anemic and backward-looking. Also...JNY GIL ANF URBN LVMH PIR TGT

ECONOMIC DATA


Not a good week for Retail Sales data so far, as the ICSC yy % change clocked in at +1.6%, matching the lowest reading since May. We traditionally see a strong sequential uptick in week 38, but someone forgot to tell the consumer. Let’s see if the chilly start to Fall helps next week’s data.

What’s New Today in Retail (9/24) - 2222222222222222

What’s New Today in Retail (9/24) - 333333333333333333

 

 

COMPANY NEWS

 

WMT, TGT, KSS - U.S. Retailers’ Holiday Hiring Seen Falling 6.9%

(http://www.bloomberg.com/news/2013-09-23/u-s-retailers-holiday-hiring-seen-falling-6-9-.html)

 

  • "Holiday hiring by U.S. retailers may fall about 6.9 percent this year as shaky consumer confidence and more efficient store practices reduce demand for seasonal workers, according to Challenger, Gray & Christmas Inc."
  • "Retailers will hire about 700,000 temporary staff this year, down from 751,800 last year, the Chicago-based employment consulting firm said today in a statement. Last year’s hiring was a 12-year high and up 14 percent from 2011, the firm said."
  • "Wal-Mart said today that it would boost holiday hiring to 55,000, a 10 percent increase from last year’s 50,000 seasonal hires. The company also will move 35,000 workers to full-time status from part-time and another 35,000 to part-time from temporary."
  • "[TGT] said in a post on its website last week last week it would take on about 70,000 workers, 20 percent fewer than a year earlier."
  • "[KSS] said last week that it plans to hire about 53,000 workers for the holiday season. That number will include 6,400 seasonal positions at distribution centers and about 40 workers per store…"

 

Takeaway: We find it interesting that employment will be down this holiday, despite the fact that the retailers will be going up against very easy sales compares from a poor 2012 holiday. Seems very backward-looking.

 

JNY - Kravis pushing to buy Jones Group

(http://nypost.com/2013/09/23/kravis-pushing-to-buy-jones-group/)

 

  • "...KKR  is pushing, along with a partner to cut a deal as soon as this week to buy Jones Group...The Post has learned."
  • "'The goal is to have it wrapped up before the deadline' for second-round bids, according to a source close to the process, noting that the deadline is this week….KKR covets Jones’s fast-growing footwear brands, including Kurt Geiger and Brian Atwood, according to insiders briefed on the auction. Sycamore is circling Jones’s aging women’s-apparel brands, including Anne Klein, Gloria Vanderbilt and l.e.i., sources said."

 

GIL - Gildan Announces Planned Major Investment in Further New U.S. Vertical Yarn-Spinning Facilities

(https://www.streetaccount.com/pressrelease.aspx?ticker=GIL.CN&intraday_id=1363729)

 

  • "Gildan Activewear...announced today that it is evaluating potential sites in the Southern U.S. for the construction of two additional yarn-spinning facilities, to support its projected sales growth and further reinforce its position as a global low-cost manufacturer."
  • "The Company currently expects to invest in excess of U.S. $200 million during fiscal 2014 and 2015 for the construction and ramp up of these new facilities. This investment will be made in addition to the investments announced on November 29, 2012 for a new ring-spun yarn manufacturing facility in Salisbury, N.C., and the refurbishment and modernization of the Company's open-end facilities in Clarkton, N.C. and Cedartown, GA."

 

Takeaway: Surprising that GIL would look to build in the US. Perhaps it is tapped in Honduras and the Dominican Republic.

 

ANF - Abercrombie & Fitch pays out $71,000 to settle lawsuits over hijabs

(http://www.theguardian.com/world/2013/sep/23/abercrombie-fitch-lawsuits-hijabs-head-scarves)

 

  • "The clothing retailer Abercrombie & Fitch has agreed to make religious accommodations and allow workers to wear head scarves as part of a settlement of discrimination lawsuits filed in California, lawyers announced Monday."
  • "In court papers filed on Friday, Abercrombie agreed to pay the women a combined $71,000 and unspecified attorney fees. Additionally, it has established an appeals process for workers who believe they were denied religious accommodations."

 

Takeaway: ANF continues its streak as being one of the worst equal opportunity employers on the planet.

 

KER - Puma Renews Contract with Usain Bolt

(http://www.sportsonesource.com/news/article_home.asp?Prod=1&section=8&id=48089)

 

  • "Puma has signed a renewed endorsement contract with the World's Fastest Man, Usain Bolt. Having partnered with the Jamaican World and Olympic Champion since he was sixteen years old, this new deal will see Puma work with Usain through and beyond the 2016 Olympic Games in Rio."

 

Takeaway: This is the biggest ‘no-brainer’ renewal in the sports marketing business. KER’s worst day will be if Nike wakes up and decides it wants Bolt in its stable of athletes. It looks like that won’t be an issue for another 3-years.

 

 

URBN - Urban Outfitters' New App Strategy: Be Cool

(http://www.businessweek.com/articles/2013-09-24/urban-outfitters-new-app-strategy-be-cool)

 

  • "The company’s latest effort to strike the right balance is its new rewards program and the social networking-style app that goes with it."
  • "The app asks users to upload a photo, customize the display background, and fill in a few personal details. Then it syncs with users’ social networks and distributes reward points when users mentioning the brand on Twitter or Instagram. It also gives credit to those who respond to in-app promotions such as a prompt to buy a vinyl record (a major part of Urban Outfitters’ inventory). The rewards give users a range of perks, including advance warning on sales and early access to popular merchandise and concert tickets."
  • "While only Web orders over $50 are shipped for free, every product purchased via the app will be delivered gratis."
  • "Urban Outfitters will also be able to recognize when shoppers are inside a store, though the company is still trying to decide how aggressively it will ping users with location-based offers and information."

 

TGT - Target launches 'baby experience program' in select Chicago stores

(http://www.retailcustomerexperience.com/article/219783/Target-launches-baby-experience-program-in-select-Chicago-stores)

 

  • "Target announced this week the launch of an enhanced baby experience program in 10 existing Chicago-area stores."
  • "The test program aims to create a more compelling shopping experience — with an emphasis on in-store service — through a redesigned layout, the service of Baby Advisors and interactive digital content and expert advice in partnership with the parenting resource BabyCenter, the announcement said."

 

SPCHA - Sport Chalet Hires Bank to Scout Strategic Partners 

(http://www.sportsonesource.com/news/article_home.asp?Prod=1&section=9&id=48087)

 

  • "Sport Chalet, Inc. engaged Capello Capital Corp. to scout strategic partners who can help the California-based sporting goods retailer accelerate its strategic plan, which includes rolling out a new store format, growing online sales and beefing up its data analytics."

 

LVMH - City of Light Casts Shadow on Sephora's Late Hours

(http://online.wsj.com/article/SB10001424052702303983904579093212255489586.html?mod=ITP_marketplace_0)

 

  • "…LVMH...said Monday that it would fight for the right to continue keeping its flagship Sephora perfume and cosmetics store open late at night, after a Paris appeals court ruled that it must close at 9 p.m."
  • "The appeals court said the chain breached work-time regulations by hosting customers until midnight on weekdays and 1 a.m. on weekends at its store on the famous Paris avenue. Under the ruling, the store will be obliged to begin closing its doors earlier within 10 days, Sephora said."
  • "Advocates of more-limited hours argue that allowing employees to work late or on Sundays can hurt the country's social fabric, preventing families from spending time together…Recently unions have been filing complaints against retailers for staying open late on the avenue or elsewhere in the city. The union cited grocery store Monoprix as well as Apple…"

 

LVMH - Louis Vuitton Taps Accessories Designer Darren Spaziani

(http://www.wwd.com/accessories-news/leather-goods/louis-vuitton-taps-accessories-designer-darren-spaziani-7181023?module=hp-topstories)

 

  • "The luxury giant has tapped accessories designer Darren Spaziani to spearhead new lines of 'very high-end' leather goods to complement existing collections…"
  • Spaziani, who worked at Vuitton from 2004 to 2006, was most recently director of accessories design at Proenza Schouler...He has also been design director of accessories at Balenciaga in Paris and a design consultant for Diane von Furstenberg and Tory Burch in New York. He is to start on Oct. 1…"

 

Nicole Miller - Nicole Miller Eyed by Suitors

(http://www.wwd.com/business-news/mergers-acquisitions/nicole-miller-eyed-by-suitors-7181069?module=hp-topstories)

 

  • " Bud Konheim, chief executive officer of Nicole Miller , has...engaged Mary Ann Domuracki, managing director at investment bank Financo, and is directing would-be investors toward her."
  • "'We have been bombarded here with guys trying to buy the business...It’s escalated because it’s obviously very hot."
  • Nicole Miller runs an e-commerce site, its own doors and "has myriad wholesale accounts, including a 600-door engagement with J.C. Penney Co. Inc. — has $450 million to $500 million in retail sales…"

 

PIR - Pier I Imports names former J.C. Penney exec as executive VP of marketing

(http://www.chainstoreage.com/article/pier-i-imports-names-former-jc-penney-exec-executive-vp-marketing)

 

  • "Pier 1 Imports has named Eric Hunter as executive VP of marketing, responsible for the company’s brand image and integrated marketing efforts. He most recently served as senior VP of marketing and acting chief marketing officer for J.C. Penney Co…"

 

VRA - EVP Global Operations resigns from position

(http://www.sec.gov/Archives/edgar/data/1495320/000119312513374711/d602094d8k.htm)

 

  • Vera Bradley's EVP - Global Operations has resigned from his position at the company to become the CEO at Shindigz. He will be with the company until 10/21/2013.

 

 

GIII - Jeanette Nostra resigns as President of G-III Apparel Group

 

  • "Jeanette Nostra resigned her position as President of G-III Apparel Group...Ms. Nostra will remain employed by the Company, supporting the building of the Company’s international business and global product development for the Company’s Vilebrequin business. In addition, on September 19, 2013, the Board of Directors of the Company... appointed Morris Goldfarb, the Chairman and Chief Executive Officer of the Company, as the President of the Company, and elected Ms. Nostra to serve as a member of the Board effective as of September 19, 2013."

 

INDUSTRY NEWS

  

Bangladesh Garment Protests Enter Fourth Day

(http://www.bloomberg.com/news/2013-09-23/two-hundred-bangladesh-factories-shut-on-labor-unrest.html)

 

  • "Bangladesh labor protests entered a fourth day after overnight negotiations failed to end a dispute over low wages as garment factory owners reopened plants that supply companies including Wal-Mart…"
  • "Shipping Minister Shajahan Khan met last night with factory owners and labor leaders in an effort to end demonstrations that forced about 400 of the country’s 5,000 garment factories to close yesterday."
  • "[H&M]... joined the IndustriALL Global Union in backing the workers’ pursuit of increased compensation. 'We strongly support the workers demand for higher wages,' H&M spokeswoman Andrea Roos said by e-mail. 'Bangladesh is an important sourcing market for H&M and we have on various occasions and also together with other clothing companies, urged the government to raise minimum wages in the textile industry and to revise wages annually.'"
  • "IndustriALL supports the workers’ 'justified demands,' Jyrki Raina, IndustriALL’s general secretary, said in an e-mail."

 

China Said to Lift "Great Firewall" in Shanghai

(http://www.wwd.com/media-news/fashion-memopad/chin-said-to-lift-great-firewall-in-shanghai-7181486?module=hp-topstories)

 

  • China is set to lift its "Great Firewall" and allow Internet users within Shanghai's new Free-trade Zone to access foreign websites and social media services such as Facebook and Twitter, according to a report in the South China Morning Times."
  • "Shanghai's proposed Free-Trade Zone – which is expected to launch on September 29 – will encompass almost 30-square-kilometers in the city's industrialized east. Strongly backed by new Premier Li Keqiang, the zone will create a Hong Kong-like area within Mainland China for more liberal trade, subject to less financial and business regulation than the rest of the country."

 

 NPD: Year-To-Date Apparel Sales Up 3.6%

(http://www.wwd.com/retail-news/trends-analysis/npd-year-to-date-apparel-sales-up-36-7181455?module=hp-topstories)

 

  • Here's a release from NPD about apparel sales YTD through July. It's dated, but the relative change by category is interesting nonetheless.
  • What’s New Today in Retail (9/24) - 4444444444444

Buy the Dip! Not.

Client Talking Points

DAX

We've said it before here at Hedgeye, and we'll say it again: Respect is earned, not allocated. Over in Germany, Angela Merkel doesn’t have a bunch of Fed heads running around like chickens with their heads cut off making conflicting speeches to manic media people now does she? The DAX “correction” looked nothing like that in the S&P 500. Both DAX, the FTSE and Nikkei are all looking better now than S&P 500. Why not buy them instead?

OIL

With the two greatest threats to Americans at the pump (Syria and Ben Bernanke) finally out of the headline news this morning, Brent is snapping my long-term TAIL risk line of $108.57. That is new. It's also a very good thing on the margin. We need it.

UST 10YR

Mr. Bernanke thinks that down rates is a good thing. Neither I nor the stock market agree. Falling rates is a leading indicator for #GrowthSlowing, and so is a Yield Spread (10-year minus 2-year) that just compressed to +236 basis points wide from 250 (bearish for the Financials yesterday – good for slow growth Utilities) #sad

Asset Allocation

CASH 47% US EQUITIES 18%
INTL EQUITIES 20% COMMODITIES 0%
FIXED INCOME 0% INTL CURRENCIES 15%

Top Long Ideas

Company Ticker Sector Duration
WWW

WWW is one of the best managed and most consistent companies in retail. We’re rarely fans of acquisitions, but the recent addition of Sperry, Saucony, Keds and Stride Rite (known as PLG) gives WWW a multi-year platform from which to grow. We think that the prevailing bearish view is very backward looking and leaves out a big piece of the WWW story, which is that integration of these brands into the WWW portfolio will allow the former PLG group to achieve what it could not under its former owner (most notably – international growth, and leverage a more diverse selling infrastructure in the US). Furthermore it will grow without needing to add the capital we’d otherwise expect as a stand-alone company – especially given WWW’s consolidation from four divisions into three -- which improves asset turns and financial returns.

HCA

Health Care sector head Tom Tobin has identified a number of tailwinds in the near and longer term that act as tailwinds to the hospital industry, and HCA in particular. This includes: Utilization, Maternity Trends as well as Pent-Up Demand and Acuity. The demographic shift towards more health care – driven by a gradually improving economy, improving employment trends, and accelerating new household formation and births – is a meaningful Macro factor and likely to lead to improving revenue and volume trends moving forward.  Near-term market mayhem should not hamper this  trend, even if it means slightly higher borrowing costs for hospitals down the road.

TROW

Financials sector senior analyst Jonathan Casteleyn continues to carry T. Rowe Price as his highest-conviction long call, based on the long-range reallocation out of bonds with investors continuing to move into stocks.  T Rowe is one of the fastest growing equity asset managers and has consistently had the best performing stock funds over the past ten years.

Three for the Road

TWEET OF THE DAY

When God created earth, he was thinking Bill Dudley would set gravity's rules @federalreserve

@KeithMcCullough

QUOTE OF THE DAY

“You should never wink at a girl in the dark. Our communications policy is a little off–we should work harder to refine it.”  - Dallas Fed President Richard Fisher

STAT OF THE DAY

This week alone, 13 companies are set to begin trading on the Nasdaq and NYSE -- which would be the busiest week for initial public offerings since November 2007. If all those companies make it to the market, that will bring this year's IPO total to 153. At least 200 companies are now expected to debut this year, according to Renaissance Capital. That would be the most since 2007.


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September 24, 2013

September 24, 2013 - dtr

 

BULLISH TRENDS

September 24, 2013 - 10yr

September 24, 2013 - spx

September 24, 2013 - dax

September 24, 2013 - nik

September 24, 2013 - euro

September 24, 2013 - natgas 

 

BEARISH TRENDS

September 24, 2013 - VIX

September 24, 2013 - dxy

September 24, 2013 - yen

September 24, 2013 - oil
September 24, 2013 - gold

September 24, 2013 - copper


THE HEDGEYE DAILY OUTLOOK

TODAY’S S&P 500 SET-UP – September 24, 2013


As we look at today's setup for the S&P 500, the range is 49 points or 1.22% downside to 1681 and 1.65% upside to 1730.           

                                                                                                                    

SECTOR PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 1

 

THE HEDGEYE DAILY OUTLOOK - 2

 

EQUITY SENTIMENT:

 

THE HEDGEYE DAILY OUTLOOK - 10

 

CREDIT/ECONOMIC MARKET LOOK:

  • YIELD CURVE: 2.36 from 2.37
  • VIX  closed at 14.31 1 day percent change of 9.07%

MACRO DATA POINTS (Bloomberg Estimates):

  • 7:45am: ICSC weekly sales
  • 8:55am: Johnson/Redbook weekly sales
  • 9am: S&P/CS Home Price Ix 20 City M/m, July, est. 0.8%
  • 9am: S&P/CS Y/y, July, est. 12.4% (prior 12.07%)
  • 9am: S&P/CS Home Price Index, July, est. 162.69 (pr 159.54)
  • 9am: FHFA House Price Index M/m, July, est 0.8% (prior 0.7%)
  • 9:30am: Fed’s Pianalto speaks in Chicago
  • 10am: Richmond Fed Manuf Index, Sept., est. 11 (prior 14)
  • 10am: Conference Board Consumer Conf Index, Sept., est. 80
  • 11am: Fed to purchase $1.25b-$1.75b in 2036-2043 sector
  • 11:30am: U.S. to sell 4W bills
  • 1pm: U.S. to sell $33b 2Y notes
  • 1pm: Fed’s George speaks in Chicago
  • 4:30pm: API weekly oil inventories

GOVERNMENT:

    • Obama to speak at UN 9:30am, Clinton Global Initiative 4pm
    • Insurance industry executives discuss Medicare funding, expansion of Medicaid, Oct. 1 debut of insurance markets at conf. sponsored by AHIP, 9am
    • U.S. Postal Service’s board of governors begin 2-day closed meeting to discuss increasing prices
    • Obama enlists Bill Clinton in campaigning for health-care law

WHAT TO WATCH:

  • Chrysler files for IPO as Fiat seeks deal to merge cos.
  • Financing for Blackberry bid by Fairfax questioned
  • Dell said to work w/AlixPartners on post-LBO turnaround
  • KKR, Sycamore may bid on Jones Group as soon as this week: NYP
  • South Korea fails to choose winner in $7.7b fighter deal
  • JPMorgan Chase said to be sued over Libor w/12 other banks
  • Telefonica reaches deal to increase stake in Telecom Italia
  • NYSE said to plan rule change for voiding U.S. options orders
  • Riverstone seeks up to $1.5b in IPO for energy investment
  • Danone’s Dumex to release bribery probe results this month
  • Anadarko says it didn’t cause spill-related investor losses
  • Airlines face carbon-reduction verdict on $708b industry
  • Microsoft adopts plan to retain executives during CEO change
  • Wal-Mart gender-bias suit class claims dismissed by U.S. judge
  • Monte Paschi seen boosting cost-cut goals to meet EU demands
  • Sony film marketing chief Weinstock said to exit role
  • Spain’s Val said to hire Jefferies to find buyer for Ono stake
  • German Sept. business confidence missed ests.

EARNINGS:

    • AAR (AIR) 4pm, $0.45
    • Ascena Retail Group (ASNA) 4:02pm, $0.21
    • CarMax (KMX) 7:35am, $0.57
    • Carnival (CCL) 9:15am, $1.29
    • Copart (CPRT) Aft-mkt, $0.40 - Preview
    • KB Home (KBH) 8:30am, $0.21 - Preview
    • Lennar (LEN) 6am, $0.45 - Preview
    • Neogen (NEOG) 8:45am, $0.32

COMMODITY/GROWTH EXPECTATION (HEADLINES FROM BLOOMBERG)

  • Indonesia Vows to Stick With Tin Trade Policy as Prices Jump
  • Palm-Oil Stockpiles Expanding Add to Record Supply: Commodities
  • Copper Drops for Third Day on Concern About U.S. Budget Clash
  • WTI Crude Drops to Six-Week Low as Global Supply Concern Eases
  • Soybeans Advance From One-Month Low as U.S. Shipments Increase
  • Gold Falls in London as Investors Weigh Fed, Physical Demand
  • China Grabs First-Ever Global Steel Majority: Chart of the Day
  • China to Double Gas Use in Five Years to 2015 in Pollution Drive
  • Beef Imports by China Seen Surging While U.S. Remains Locked Out
  • Rubber Drops Most in Two Months as Crude Oil Prices Fall
  • Crude Stockpiles Fall to 18-Month Low in Survey: Energy Markets
  • Shippers Poised to Return to Profit as Cargoes Grow 10%: Freight
  • Arabica Seen Declining 9% by End of October: Technical Analysis
  • Rebar Falls as Li Says China Has Chosen Steady Monetary Policy

THE HEDGEYE DAILY OUTLOOK - 5

 

CURRENCIES

 

THE HEDGEYE DAILY OUTLOOK - 6

 

GLOBAL PERFORMANCE

 

THE HEDGEYE DAILY OUTLOOK - 3

 

THE HEDGEYE DAILY OUTLOOK - 4

 

EUROPEAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 7

 

ASIAN MARKETS

 

THE HEDGEYE DAILY OUTLOOK - 8

 

MIDDLE EAST

 

THE HEDGEYE DAILY OUTLOOK - 9

 

 

The Hedgeye Macro Team

 

 

 

 

 

 

 

 

 

 

 

 



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