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Takeaway: We still see DKS LBO as a no go, NYPost agrees. GPS gets less "Creative". Jones NY Closing Stores. SIGMA Summary.

COMPANY HIGHLIGHTS

DKS - Dick’s Sporting Goods not for sale after all

(http://nypost.com/2015/01/30/dicks-sporting-goods-not-for-sale-after-all/)

Takeaway:  The NY Post says DKS is not being sold. So naturally it must be true. We never thought that an LBO made any sense, and therefore maintained our short on DKS in the face of the rumors. 

If we were Ed Stack (DKS CEO) we'd sell now if it were at all possible. The reality is that the margin structure of this business is in a secular decline. We get to a negative IRR at the current price, and we suspect that any private equity firm worth its salt is getting to similar values.

To be clear, our model assumes…

  1. DKS tops out at 900 stores by 2018, below management's 1,100 goal
  2. 2% comp store sales growth as e-commerce offsets negative store traffic.
  3. Gross Margins fall by 50bp annually as e-commerce dilutes profitability, and aggregate sales growth is not strong enough for DKS to leverage occupancy costs.
  4. EBIT margins fall from 8% today to 5% in 2018.

GPS - New Gap Brand President Restructures Marketing, Creative Director Role Eliminated

(http://www.gapinc.com/content/gapinc/html/media/pressrelease/2015/med_pr_gapbrand_12915.html)

Takeaway:  This is obviously part of a much bigger brand and marketing restructuring, but it can't be a great sign that 'Creative Director' role is being eliminated by a brand that needs to be increasingly creative to fend off faster, more relevant, and more profitable competition.

Jones New York to close stores, end wholesale business

(http://www.philly.com/philly/wires/ap/business/20150129_ap_a89ebf615ab5473492a463c1271d0f26.html)

Takeaway:  We wonder if Sycamore was planning on this when they took JNY private? The deal to sell Stuart Weitzman to Coach came very soon after the buyout. Sycamore is acting fast to sell what they can, and shutter the perennial dogs.

KATE - Strong Q4, Remains a Best Idea Long

Takeaway: For our full note, KATE – Watch What They Do, Not What They Say, from yesterday morning CLICK HERE

SIGMA Summary:

 

COH

Retail Callouts (1/30): DKS, GPS, Jones NY, KATE, Week's SIGMAs, WSM, SKX - 1 30 chart1

AMZN

Retail Callouts (1/30): DKS, GPS, Jones NY, KATE, Week's SIGMAs, WSM, SKX - 1 30 chart2

HBI

Retail Callouts (1/30): DKS, GPS, Jones NY, KATE, Week's SIGMAs, WSM, SKX - 1 30 chart3

ETH

Retail Callouts (1/30): DKS, GPS, Jones NY, KATE, Week's SIGMAs, WSM, SKX - 1 30 chart5

H&M

Retail Callouts (1/30): DKS, GPS, Jones NY, KATE, Week's SIGMAs, WSM, SKX - 1 30 chart6

ELY

Retail Callouts (1/30): DKS, GPS, Jones NY, KATE, Week's SIGMAs, WSM, SKX - 1 30 chart7

OTHER NEWS

WSM - Williams-Sonoma, Inc. Announces Election of Sabrina Simmons to Board of Directors

(http://www.williams-sonomainc.com/files/press-releases/Press-Release-re-Sabrina-Simmons-Appt.pdf)

SKX - Pete Rose Enters a Hall, Just Not THE Hall, in Skechers' Super Bowl Commercial

(http://www.adweek.com/adfreak/pete-rose-enters-hall-just-not-hall-skechers-super-bowl-commercial-162645)

J.CREW - J.CREW LOSES 2ND MAJOR EXEC IN 3 WEEKS

(http://fashionista.com/2015/01/james-scully-leaving-jcrew-for-avon)

NKE - Feds, NFL Grab $19.5M in Sports Fakes

(http://www.wwd.com/business-news/government-trade/feds-nfl-grab-105m-in-sports-fakes-8155175?module=Business-latest)

SHLD - Sears cuts 115 jobs in effort to reduce expenses

(http://www.chicagotribune.com/business/ct-sears-layoffs-0129-biz--20150128-story.html)

ROST - Ross Stores Announces Departure Of Doug Baker, President, dd's DISCOUNTS

(http://phx.corporate-ir.net/phoenix.zhtml?c=64847&p=irol-newsArticle&ID=2011429)

SHOO - STEVE MADDEN ANNOUNCES ACQUISITION OF BLONDO

(http://phx.corporate-ir.net/phoenix.zhtml?c=113367&p=irol-newsArticle&ID=2011242)

EBAY - Michael Kliger to Exit eBay Enterprises

(http://www.wwd.com/business-news/human-resources/michael-kliger-to-exit-ebay-enterprises-8154964?module=Business-latest)

FDO - Report: Family Dollar CEO to sell up to 2 million shares

(http://www.chainstoreage.com/article/report-family-dollar-ceo-sell-2-million-shares)