EVENTS TO WATCH
ECONOMIC DATA
ICSC (International Council of Shopping Centers -- Sales index of 80 general merchandise retailers)
Takeaway: Very slight sequential bump to +2.1% vs +1.8% last week. Not enough to reverse the downtrend we've been seeing for the past month. What's interesting is that last year, we saw disposable personal income growth go negative in November and December. That suggests to us that we should be seeing a pop in sales growth as we head into the final stretch of the year. Guess not.
COMPANY HIGHLIGHTS
KATE - How New Balance Became Fashion's No-Risk Source for Sneaker Cred
(http://www.businessweek.com/articles/2014-11-10/why-new-balance-makes-shoes-for-kate-spade-and-jcrew)
- "Last week the company told analysts that New Balance is stitching up a special line of its WX711 and the coming WX811 in Spade’s 'signature bright colors and graphic prints.' The shoes will start selling in February for $95 at both Kate Spade and New Balance stores.
Takeaway: At first blush, this wasn't exactly what we had in mind when it came to the Saturday-New Balance partnership. Very little branding from what we can see outside of the text towards the heel of the shoe plus some funky pattern on the midsole = a black New Balance shoe with Zebra stripes. But the reality for KATE is that this partnership has zero downside. They're using the Saturday banner, which has zero relevance to the consumer. They can't damage what does not exist in the event that this initiative goes South. We're a lot more interested to see how the West Elm partnership goes for KATE.
M - Macy's Set to Unveil Visual Search App
- "(Macy's) today will unveil a new app that allows customers to snap photos of outfits they like, upload them and have the same or similar items identified from its existing inventory and made available for immediate purchase."
Takeaway: Smart move by Macy's here. We'd be shocked if it directly generates even a hundredth of a point in comp. But it is a way for Macy's to collect information regarding consumers likes/dislikes that will help the company merchandise the store better. We still think Macy's is a short here. But we recognize and admire what it's doing as industry forces pressure earnings and cash flow.
TGT- Target opening at 6pm Thanksgiving, Announces Black Friday Deals
Takeaway: Target is opening 2 hours earlier -- again -- are giving 10% off gift cards on November 28th, and that's on top of offering free shipping on every single item (no matter how low priced) on Target online. Could Target win back traffic in Cornell's first holiday at Target? Sure. But we seriously question what kind of Gross Margins TGT will put up over the next two quarters.
KSS: A Play On Words
(http://phx.corporate-ir.net/phoenix.zhtml?c=60706&p=irol-newsArticle&ID=1987953)
Takeaway: Hey, give KSS a little credit here. At least the company is being consistent with consumers and investors alike. At the company's analyst meeting on 10/29, the company mentioned the word 'Frozen' 10 times throughout the day. In fact, we ran our own word cloud from the KSS Analyst Day transcript looking for traditional Wall Street words like revenue, margin, and profit as well as some of the 'head scratcher' words we heard during the 7+ hour meeting ie. Love, Frozen, and Greatness Agenda. This is the result. Not a surprise that the word 'Love' = 27x ('Love will drive our business'), and 'Greatness Agenda' 18x. The word 'Profit', which we think is a pretty important one, was mentioned only 10x, 'Earnings' only 2x, and 'Revenue' only 1x.
BABA- Alibaba Singles' Day Sales Top $5.9 Billion
- "Alibaba Group Holding Ltd. turned an obscure Chinese holiday into the country's biggest shopping event. Now it's aiming to take the success of Singles' Day global by tapping foreign brands, including Calvin Klein and Blue Nile Inc."
- "Those companies, along with Costco Wholesale Corp., Origins Natural Resources Inc. and American Eagle Outfitters Inc., are participating in Tuesday's event for the first time. Alibaba said it sold more than 36.2 billion renminbi, or $5.9 billion, of merchandise within 14 hours of the promotion kicking off, eclipsing last year's record."
Takeaway: To put this number in perspective, US Consumers spent $1.25bn on Cyber Monday last year on ALL online sites. Alibaba alone clocked in 4.7x that amount on Singles' Day. BABA did $1bn of volume in the first 18 minutes, and $2bn in the first hour alone.
ZQK - Quiksilver Reaches Agreement to Sell Surfdome to SurfStitch Group
(http://ir.quiksilver.com/phoenix.zhtml?c=110264&p=irol-newsArticle&ID=1988231)
- "Quiksilver expects to receive net proceeds of approximately (US)$16 million for its equity interest, loans and other amounts due from Surfdome. The all-cash transaction, which is subject to SurfStitch reaching agreement to purchase the minority interest in Surfdome, is expected to close before the end of the current calendar year."
Takeaway: No brainer for ZQK on this one. The balance sheet needs every nickel it can find. Though the company did not release precise economics, we think that the income from Surfdome was well below $1mm annually. $16mm in proceeds makes a lot of sense from where we sit.
OTHER NEWS
India to Ban Import of Animal Tested Cosmetics
- "In a historic move for the beauty industry in India a ban on the import of cosmetics tested on animals will go into effect Thursday."
RSH- RadioShack Resorts to Thanksgiving Openings to Boost Sales
- "More than 3,000 of RadioShack’s stores will be open on Nov. 27 from 8 a.m. to midnight"
