HEDGEYE RETAIL IDEA LIST
GPS - Gap Inc. to Close Smallest Brand, Piperlime
Takeaway: Not a big deal for the consolidated GPS - at $151mm in revs it's less than a percentage point of the consolidate revenue base. The company started the brand in 2006 and probably shifted its focus away from the whole e-comm thing to focus on Intermix and Athleta which the company acquired in 2013 and 2009 respectively. That helps explain the growth trend which fell off from +60% in 2012 to 7% in '14. It makes us wonder what the prospects are for other e-comm only operators functioning primarily in the wholesale model. Gap probably has a weaker stomach when it comes to dilution from its smallest brand. But, it does reinforce the disconnect between content owners and peddlers in the online channel. Our math suggests that Piperlime is probably losing about $50mm annually for GPS. That's about $0.06-$0.07 after tax, or about 2% dilution to earnings. So all in, this is a slight positive.
Adibok, NKE - Forget Soccer—Adidas Challenges Nike to a Foot Race
Takeaway: The product and marketing event surrounding the release jibes with the company's commentary from July of '14 which called for a step up in marketing spend. The company took over a building on Wall Street with a host of athletes on Friday to promote the newest iteration of the Boost line which will retail for $180. Two thoughts on the kicks and the release. 1) Adi's athlete roster is telling. Yohan Blake, David Villa, and Sammy Watkins were on hand for the release of the 'Best Running Shoe Ever'. We'd call that the B maybe even the C team. 2) In what world does Adi think it can command $180 for a pair of runners? We think that's a tough value proposition to communicate to consumers. Excluding iD's, Nike only has 3 models above that price point in its entire running line and it's earned that strata. Adi is still far behind on the innovation side.
NKE - Nike sued over Michael Jordan logo
Takeaway: This case revolves around use of a photographer's photo of Michael Jordan dunking, and its use in creating what we now know as the 'Jumpman' logo for Brand Jordan ($3.3bn in retail sales). While parts of the article are convincing as it relates to the merit of a case, we have a hard time seeing how any court could side with the plaintiff. It's like sitting on a $1m lotto ticket that expired in 1987 and then suing for the sum plus interest. Some kind of statute of limitations has to kick in here.
PVH - PVH Restructuring Underwear, Dress Furnishings
AAPL - J. Crew CEO to leave Apple board
AAPL - Inroads Made by Apple Pay Propel ‘Mobile Wallet’ Idea
KORS - Full World of Kors to Open in Ginza
M - Macy’s will expand CA fulfillment center to meet omnichannel demand
MIK - Michaels stock offering priced at $23 per share
Sir Philip Green in Talks to Sell BHS