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Retail Callouts (2/20): JWN, Ports, ANN, VFC, BBY

Takeaway: Removing JWN from our long bench with the company guiding flat earnings in 2015 and the stock at 20x P/E.

COMPANY HIGHLIGHTS

 

JWN - 4Q14 Earnings: Removing From Long Bench

 

Takeaway: We added JWN to our long bench on 10/16 following our Department Store Black Book. There are a lot of things to like about the name: e-commerce proficiency, brand portfolio, and square footage growth. But, we couldn’t get comfortable with the fact that it was operating in a space that has grown at a -2% CAGR over the past 20 years and needs to see 93mm square feet not just close, but exit the industry all together over the next 5 years. Since that time, the stock is up about 11%, in-line with the S&P. Now the company is guiding the mid-point of the earnings range to flat on 8% revenue growth. Either the company is sandbagging or this name is uninvestable trading up here at 20x next year's earnings. We're removing it from the long bench.

Retail Callouts (2/20): JWN, Ports, ANN, VFC, BBY - 2 20 chart1

Retail Callouts (2/20): JWN, Ports, ANN, VFC, BBY - 2 20 chart2

 

 

OTHER NEWS

 

Report: West Coast ports running at 50%-60% of capacity; retailers stockpile inventory

(http://www.chainstoreage.com/article/report-west-coast-ports-running-50-60-capacity-retailers-stockpile-inventory)

 

ANN - Ann Taylor Parent Said to Be Working With JPMorgan on Sale

(http://www.wwd.com/retail-news/designer-luxury/ann-taylor-parent-said-to-be-working-with-jpmorgan-on-sale-8209436?module=Business-latest)

 

VFC - VF Settles ITC Laser Denim Case

(http://www.wwd.com/business-news/government-trade/vf-settles-itc-laser-denim-case-8205968?module=Business-latest)

 

KORS - Report: Michael Kors joins Snapchat

(http://www.chainstoreage.com/article/report-michael-kors-joins-snapchat)

 

BBY - Best Buy adds Curbside app service in Bay Area stores

(http://www.chainstoreage.com/article/best-buy-adds-curbside-app-service-bay-area-stores)

 

H2O Plus Names Joy Chen CEO

(http://www.wwd.com/beauty-industry-news/people/h2o-plus-names-joy-chen-ceo-8205148?module=Business-latest)


Keith's Macro Notebook 2/20: Nikkei | Greece | Euro

 

Hedgeye Director of Research Daryl Jones shares the top three things in Keith's macro notebook this morning.


Keith's Daily Trading Ranges, Unlocked

This is a complimentary look at Daily Trading Ranges - our proprietary buy and sell levels on major markets, commodities and currencies sent to subscribers every weekday morning by CEO Keith McCullough. It was originally published February 20, 2015 at 08:36. Click here to learn more and subscribe.

Keith's Daily Trading Ranges, Unlocked - Slide1

BULLISH TRENDS

Keith's Daily Trading Ranges, Unlocked - Slide2

Keith's Daily Trading Ranges, Unlocked - Slide3

Keith's Daily Trading Ranges, Unlocked - Slide4

Keith's Daily Trading Ranges, Unlocked - Slide5

Keith's Daily Trading Ranges, Unlocked - Slide6

 

BEARISH TRENDS

Keith's Daily Trading Ranges, Unlocked - Slide7

Keith's Daily Trading Ranges, Unlocked - Slide8

Keith's Daily Trading Ranges, Unlocked - Slide9

Keith's Daily Trading Ranges, Unlocked - Slide10

Keith's Daily Trading Ranges, Unlocked - Slide11
Keith's Daily Trading Ranges, Unlocked - Slide12

Keith's Daily Trading Ranges, Unlocked - Slide13

 


Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.64%
  • SHORT SIGNALS 78.57%

The Nikkei, Greece and The Euro

Client Talking Points

NIKKEI

The Japanese Nikkei-225 is at roughly 15 year highs, up about 2.3% for the week. Bank of Japan Governor Haruhiko Kuroda came out and reiterated his call on the 2% inflation target, the reality is that it will be very difficult for the Japanese to hit this inflation target. They will need to implement more dovish policy. Kuroda however, believes he has lots of options. We will have to wait and see what kind of impact his actions have on the real economy. 

 

GREECE

It is a relatively slow day in Global Macro but Greece is causing a lot of controversy. Eurozone Finance Ministers are meeting today in Brussels to discuss the Greek bailout; Greece has requested to have its loan agreements extended another 6 months. Some newspapers are reporting that Greece may exit the Eurozone, but the reality is that nobody seems to have a clear indication of what will really happen.

EURO

The Euro seems to be driven by the chaos surrounding Greece. It is down about 50 basis points today, down 650 basis year-to-date vs. the USD and down 1,752 basis point in the last year. That is a staggering move for a currency (despite PMIs coming in better than expected). 

Asset Allocation

CASH 40% US EQUITIES 9%
INTL EQUITIES 8% COMMODITIES 0%
FIXED INCOME 31% INTL CURRENCIES 12%

Top Long Ideas

Company Ticker Sector Duration
EDV

You want to own the Vanguard Extended Duration Treasury (EDV) in this current yield-chasing, growth slowing environment. The trend in domestic growth continues to signal growth slowing, and the counter-TREND moves we’ve seen over the last few weeks (@Hedgeye TREND is our view on a 3-Month or more duration) remain something to fade until we can see more follow-through that growth is trending more positively (second-derivative positive).

TLT

Low-volatility Long Bonds (TLT) have plenty of room to run. Late-Cycle Economic Indicators are still deteriorating on a TRENDING Basis (Manufacturing, CapEX, inflation) while consumption driven numbers have improved. Inflation readings for January are #SLOWING. We saw deceleration in CPI year-over-year at +0.8% vs. +1.3% prior and month-over-month at -0.4% vs. -0.3% prior. Growth is still #SLOWING with Real GDP growth decelerating at -20 basis points to +2.5% year-over-year for Q4 2014.The GDP deflator decelerated -40 basis points to +1.2% year-over-year.

Three for the Road

TWEET OF THE DAY

Real Conversations: How @Firefly_Space Founder Tom Markusic Is Changing the New Space Paradigm https://www.youtube.com/watch?v=0QmYH0IQdy8&feature=youtu.be&t=1s… w/ @KeithMcCullough

@Hedgeye

QUOTE OF THE DAY

The man who does not read has no advantage over the man who cannot read.

-Mark Twain

STAT OF THE DAY

3.3 million people in 2013 earned at or below the federal minimum wage, according to the Bureau of Labor Statistics. 


EVENT: YELP SHORT Update Call (TODAY)

Takeaway: Join us TODAY at 1:00pm EST for our YELP Short Best Ideas update call. Dialing Instructions below

We will be hosting an update call to our SHORT thesis on YELP.  In short, YELP's business model is broken; we're already seeing signs of deterioration, which will get progressively worse beginning 2015.

    

Join us on TODAY at 1:00pm EST as we update our bearish thesis, and why we see an additional 25%+ downside from here.

 

 

KEY TOPICS WILL INCLUDE  

  • Extreme Attrition Rate: majority of customers are churning off annually.
  • Insufficient TAM: YP.com is not the low-hanging fruit, it's a pipe dream.
  • Model Breaking Down: YELP’s reported metrics flagging concerning trends.
  • 2015/2016 Consensus Estimates Unattainable: Barring another ill-advised acquisition.  

 

CALL DETAILS

  • US Toll Free:
  • US Toll:
  • Conference number: 39017467
  • Materials: CLICK HERE (will go live ~1 hour before the call) 

 

 

Hesham Shaaban, CFA

@HedgeyeInternet



February 20, 2015

February 20, 2015 - Slide1

 

BULLISH TRENDS

February 20, 2015 - Slide2

February 20, 2015 - Slide3

February 20, 2015 - Slide4

February 20, 2015 - Slide5

February 20, 2015 - Slide6

 

BEARISH TRENDS

February 20, 2015 - Slide7

February 20, 2015 - Slide8

February 20, 2015 - Slide9

February 20, 2015 - Slide10

February 20, 2015 - Slide11
February 20, 2015 - Slide12

February 20, 2015 - Slide13

 


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