Calm before the ?
October 14, 2009
As we approach earnings next week, the flow in retail is quiet. That’s not a bad thing by any means… Here are some notables over the past 24 hrs.
- I can’t ignore yesterday’s front page NY Times article highlighting Disney’s plans to re-enter the world of retailing. After growing the original Disney Store chain to 600 stores, ultimately losing about $100 million per year, selling the chain to Children’s Place, and finally buying it back after contractual obligations were not met, Disney is looking to resurrect its own retail business. The article goes on to suggest each store will require $1 million in capital investment in order to create a fresh, modern, and innovative “theme park” environment within the stores. The influence of Steve Jobs is also noted, as he sits on Disney’s board and happens to run a company that operates highly successful retail stores. I’m not convinced the Apple connection will make this attempt at retailing any more successful than in the past.
- NPD released its annual holiday survey on consumers’ holiday spending intentions. Notable callouts include a 4% increase in the amount of respondents who plan to spend less (30% of total) while those planning to spend about the same as last year dropped by the same amount (59% of total). Electronics categories showed a sharp 20% increase in the 18 to 24 year old demographic saying electronics are “the gift to purchase”. Value, special sales, and convenience are top factors in determining motivation behind purchasing decisions for Holiday ’09.
- Just one day after Kanye West’s apparel line, Pastelle, was revealed online it appears that it will never actually make its way into production. Perhaps the MTV music award debacle and subsequent cancellation of his upcoming tour were leading indicators for what was shaping up to be a challenging launch for his first apparel line. Recall, Kanye interned with Gucci which was likely what gave him the confidence to to become a designer as well as a hip-hop artist.
- A sad exchange on CNBC this morning… Byron Wein (who his co-host Joe Kernen, in poor form, is referring to as Byron-asaurus), Guest Host on CNBC Squawk Box, with Ron Gettelfinger, President of the UAW:
Q: [Do you think we’ll get to a point where the US automakers start to regain share?]
A: [We have a lot of great product out there – all we need to do is get more people in the showroom and we’ll be ok.]
I understand the political nature of the ‘production guys’ blaming it on the ‘marketing guys’…but this is the same kind of behavior and mentality that got the US Auto industry into its current hole.
MORNING NEWS
-Retailers Discovering Heavy Traffic From Facebook - Facebook quickly has become the top social site for retailers since the company revamped for business two years ago. Putting up a brand page that users can “fan” is free, and companies can interact with fans through a variety of means, including news feeds, widgets, targeted ads, giveaways and contests, event RSVPs and comments. Facebook estimates that, for every 10,000 fans a brand has, it will reach 1.5 million people. That’s because every Facebook user has an average of about 150 friends, and news, comments, games and other Facebook events are automatically distributed across groups of friends. <wwd.com>
-Brands Scan Consumers' Brains - Brain scanning is being used to help predict how shoppers will respond to products and shopping environments. And firms ranging from teen retailer Abercrombie & Fitch Co. to The Walt Disney Co. want to encourage the impulse to purchase, partly by stimulating the senses through smells, sound and light. The pressures of the recession and reduced consumer spending are spurring more companies to turn to techniques such as sensory marketing and neuromarketing, which measures the brain’s responses to common experiences, like touching a soft, new piece of clothing or shopping for a luxury handbag. The testing and use of neuromarketing has roughly doubled this year, compared with 2008, among the world’s 100 biggest brands, said consultant Martin Lindstrom, the author of “Buyology: Truth and Lies About Why We Buy” (Doubleday, 2008). <wwd.com>
-CIT CEO Peek Leaving Firm - Amid rumblings that CIT Group Inc. is struggling to get bondholder support for its proposed debt swap, the lender said Tuesday that chairman and chief executive officer Jeffrey M. Peek will resign at yearend. News of the transition came Tuesday morning, not long after reports circulated that CIT, a major lender to small and midsize businesses, might have to consider a pre-negotiated bankruptcy as its proposed debt swap faced ongoing resistance. <wwd.com>
-Burberry Sees Profit Estimates Rising as Sales Gain - Burberry Group Plc, the largest U.K. luxury goods maker, expects analysts to raise full-year earnings estimates after reporting a 4.6% gain in second-quarter sales and saying licensing revenue will drop less than forecast. Chief Financial Officer Stacey Cartwright said pretax profit estimates are likely to rise to the “upper end” of a 160 million-pound ($255 million) to 190 million-pound range. New outlets in the Asia and Americas region added to sales, which were also helped by sterling’s weakness against the dollar and euro. Burberry gets more than half its sales outside the U.K. <bloomberg.com>
-Tarlazzi in Bankruptcy - Angelo Tarlazzi is the latest fashion house here to file for the equivalent of Chapter 11 bankruptcy protection. Private equity fund Xaap Finance, which took a 67 percent stake in Tarlazzi last year with plans to accelerate growth, recently put the brakes on financing. Bruno Degeorges, chief executive officer at Tarlazzi, said the company is in talks with a potential new investor looking to inject 3 million to 5 million euros, or $4.4 million to $7.3 million at current exchange rates. <wwd.com>
-Unilever’s Polman Eyes M&A, Emerging Market Growth - Unilever, the world’s second-largest consumer-goods company, sees more opportunity for acquisitions as the pace of consolidation in the industry increases, Chief Executive Officer Paul Polman said. “Times are good right now” for acquirers, Polman, who became CEO in January, said on the sidelines of a conference in London today. “There are good brands out there. We’ll see even more consolidation than before,” he said, adding that Unilever is “always looking” at takeover opportunities. Polman last month broke Unilever’s nine-year streak of avoiding major acquisitions by offering to buy Sara Lee Corp.’s personal-care and European detergent unit for 1.28 billion euros ($1.9 billion) in cash. With Sara Lee, London- and Rotterdam- based Unilever has “sharpened its value equation” with a range of cheaper products, Polman said today. <bloomberg.com>
-Prada Workers in Temporary Lay off - Prada SpA has signed an agreement with Italian union CGIL to put 250 employees in “Cassa Integrazione,” or on temporary work suspensions via special public funds. The affected workers, who will take a rotation leave of between four to six weeks, are employed in one of Prada’s largest production plants for accessories in Levanella a Montevarchi in Tuscany. Alessandro Mugnai, secretary of Filtea, the fashion arm of CGIL, one of Italy’s leading unions, explained the move is a way to make up for a cyclical and in-between-seasons decline in production, coupled with a general slump in consumer demand because of the recession. <wwd.com>
-Benetton closes down sheep skin tannery which recently opened in Trelew - After investing some US$15 million in the southern Argentina town of Trelew to open a sheep skin tannery, the Italian Benetton Group slammed on the brakes and halted the project. The tannery had a capacity to process 60,000 sheep skins per month and an operating area of 15,000 square meters. It was fully equipped with new machinery imported from Italy but now there are only 10 operatives working there storing raw skins. <fashionnetasia.com>
-Giorgio Armani Touted for Senate Post - Santo Versace, chairman of the Versace company and member of the Italian Parliament with Silvio Berlusconi's People of Freedom party, has sent a letter to the president of the Italian republic, Giorgio Napolitano, asking him to consider appointing Giorgio Armani as a senator for life. The Senate’s website said the distinction is granted “for outstanding merits” in social, scientific, artistic or literary fields. <wwd.com>
-Hollister to Open on Fifth Avenue - The division of Abercrombie & Fitch Co. launched its first Manhattan store in July in SoHo. And now, Abercrombie & Fitch is preparing to open a second Hollister location at 668 Fifth Avenue, between 52nd and 53rd Streets in the former Hickey Freeman space. Crown Acquisitions Inc., which coowns the building, said the Hollister unit will be in a two-level, 15,500-square-foot space, which will open next year. In May, Abercrombie & Fitch said it would open a smaller Abercrombie children’s store in Hickey Freeman’s former location. <wwd.com>
-Puma Supports Maasai Wilderness Conservation Trust - Puma announced their support of the Maasai Wilderness Conservation Trust (MWCT), a non-profit organization based in Kenya that supports the preservation of biodiversity within the Maasai tribal lands of East Africa by promoting conservation, education and health services within the Maasai community. As part of the partnership, PUMA will be one of the official sponsors of the Maasai Marathon, a group of thirty runners lead by three Maasai warriors, Parashi Ntanin, Samson Parashina and Martin Sunte, and actor/conservationist Edward Norton, who will run in the ING New York City Marathon on Sunday, November 1st for the MWCT. <sportsonesource.com>
INSIDER TRANSACTION ACTIVITY:
M:
- Terry Lundgren, Chairman, President & CEO, exercised 300,000 options for net proceeds of $5.78mm.
- Karen Hoguet, CFO, exercised 11,500 options for net proceeds of $225k.
SWY: Kenneth Shachmut, SVP, exercised 50,000 options for net proceeds of $1mm.
PERY: Joseph Lacher, Director, exercised 15,000 options for net proceeds of $255k.
WTSLA: Edmond Thomas, President & CEO, exercised 75,000 options for net proceeds of $276k.
KR: Mary Van Oflen, Vice President & Controller, exercised 4,500 options for net proceeds of $99k.
CTR:
- Timothy Greer, EVP-Director of Stores, exercised 6,000 options for net proceeds of $134k.
- John Howe, EVP-CFO, exercised 2,5000 options for net proceeds of $55k.
- Stuart Uselton, SVP-Tresury, Tax, & Credit, exercised 1,500 options for net proceeds of $34k.
NFLX: Neil Hunt, CPO, exercised 4,000 options for net proceeds of $188k.
