WHAT GIVES WITH FOOTWEAR?
October 16, 2009
TODAY’S CALL OUT
Retail sales numbers are trending better, as is the ICSC Weekly retail sales number, and both SportscanINFO and NPD apparel numbers. Then why are NPD footwear trends looking lousy? This is puzzling – especially given the incremental strength we’ve seen in the family footwear channel as well as with retailers like DSW.
We weight these factors by mix of business for the major footwear/apparel retailers to ‘lead indicate’ comps – which has proven to be directionally accurate. As one might expect, recent trends bode better for those with greater apparel exposure – such as Dick’s, Sports Authority, and Hibbett. Foot Locker and Finish Line, on the other hand, are not quite as safe given overwhelming dependence on footwear. Inventory levels in that channels are vitally important t o track right now, and that’s now on our front burner.
LEVINE’S LOW DOWN
Some Notable Call Outs
- While the grocery “bulls” await inflation, SWY painted a slightly different picture in the near-term. Early 4Q trends include a slight improvement in dairy deflation offset by an unexpected pick up in the meat category. Produce is showing some signs that deflation is easing as well. Management also described the “core” or dry grocery categories as being neither inflationary or deflationary. With all the uncertainty surrounding deflation/inflation, SWY elected not to provide sales guidance for the remainder of the year.
- In an effort to compete with local businesses, Amazon launched same-day delivery in seven major cities. It’s hard to believe the good old days of Urban Fetch, Webvan, and Kozmo. The company will utilize pre-existing shipping facilities located near urban centers to fulfill orders that will then be delivered by a third party. The service is being offered at premium pricing, $6 for Prime members and $15 for regular customers. Depending on the size of the order, it might make sense to stick with your local bricks and mortar.
- For those interested in history, and in particular the history of the garment industry in the U.S, HBO is premiering a documentary on the subject this Monday night. As someone whose family is involved in the rag trade, I’ll for sure be tuning in to Schmatta: Rags to Riches to Rags. It’s hard to believe that in the mid-60’s, 95% of American clothing was made in the U.S. Today it is less than 5%.
-Amazon launches same-day delivery in seven cities - In what some analysts see as an attempt to compete head on with bricks-and-mortar retailers, Amazon.com Inc. today announced a new shipping option that offers same-day delivery on items ranging from gourmet foods to electronics to hardware in seven major cities. The service is now available in New York, Philadelphia, Seattle, Boston, Washington, DC, Baltimore and Las Vegas, and Amazon plans to extend it to Chicago, Indianapolis and Phoenix in the coming months. Consumers enrolled in Amazon Prime, Amazon’s shipping membership program, pay $5.99 for same day delivery. For other customers, shipping rates vary by product and range in price from $14.49 to $18.99. In the same announcement, Amazon also said it will expand its Saturday Delivery options to allow items ordered before the cut-off time on Thursday using two-day shipping to be delivered on Saturday instead of Monday. <internetretailer.com>
-Carrefour to Pull Out of Russia - Carrefour, the world’s second-largest retailer behind Wal-Mart Stores Inc., reported a third consecutive drop in quarterly sales and said it’s pulling out of the Russian market after less than a year. In the third quarter to Sept. 30, sales declined 2.9 percent to 24 billion euros, or $34.32 billion at average exchange rates for the period, as a strong business in Latin America helped offset difficult markets in Western Europe. The company also revealed plans to sell its operations in Russia, where it has opened two hypermarkets in Moscow and Krasnodar since 2008, citing a lack of growth prospects and acquisition targets in that market. Recent press reports also had speculated the company was facing pressures from its largest investor, Blue Capital Group, to pull out of China and Brazil, but these were denied by Carrefour last week. <wwd.com>
-Wal-Mart Launches New Women`s Plus-Size Clothing Collection; Aids Disaster Relief in India - JMS Just My Size launched a new clothing collection at a fashion show in New York today and announced an agreement that makes JMS the dedicated plus-size apparel brand at Wal-mart. JMS will have a dramatically expanded presence in more than 3,500 Wal-mart stores across the U.S. focusing on trend-right styles at a value, with all items priced below $22. Instead of just a few key pieces, plus-size shoppers will consistently be able to find a full collection of clothing in sizes 16-28. New collections will arrive every month. In other news, The Wal-Mart Foundation announced today a donation of $125,000 in disaster relief for people impacted by recent flooding in southern India. This donation to CARE will assist in implementing immediate relief activities for approximately 25,000 flood survivors in the areas of Karnataka and Andhra Pradesh. <reuters.com> , <indiaretailing.com>
-NRF Reports E-tailing Still Growing - While retail reels, e-tail is doing even better than expected, according to a report due out today from the National Retail Federation. Of 164 merchants surveyed, most grew in both revenues and profits during 2008. “If you go back to 2008, we did experience double-digit growth in 2008 and we were profitable,” said Denise Incandela, president of Saks Direct, whose experience paralleled the findings in the report. Web divisions grew in revenue by an average of 18 percent. The majority of respondents, 87 percent, were profitable. Of those who were, 57 percent said they were more profitable in 2008 than the year before.“There’s a lot of organic growth in the online business still,” said Incandela. “Prior to the recession, we were growing 30 to 50 percent a year, so it doesn’t surprise me that we would fare better and recover more quickly.” <wwd.com>
-Payless Expands Shoe Giveaway to Latin America - Payless ShoeSource, announced the launch again this year of its Payless Gives Shoes 4 Kids program aimed at delivering more than $1.2 million worth of free children's shoes to families in need this holiday season. In addition, the retailer said it is expanding this year's program internationally across the Western Hemisphere in countries where the majority of its more than 4,500 stores are located. Payless will give more than 77,000 gift coupons redeemable through Feb. 28, 2010, toward a new pair of kids' shoes at any of its stores located in the United States, Canada, Puerto Rico and in 10 Latin American countries including the Dominican Republic, Trinidad & Tobago, Ecuador, Costa Rica, Guatemala, El Salvador, Panama, Honduras, Nicaragua and Colombia. <sportsonesource.com>
-Gap Eyes Growth Online, Overseas - Consumer apathy and product misfires aside, Gap Inc. says it is past the down and dirty turnaround work, has built the foundation to recapture lost shoppers and sees online and overseas expansions as top growth priorities. And in a sign of confidence in its revamped product, Gap brand will return to TV advertising for the November-December holiday period after a two-year absence. These and other initiatives, including store prototypes and entering China next year with company-owned units, were outlined during a three-hour meeting with analysts Thursday. <wwd.com>
-eBay to lay off up to five dozen employees - EBay plans to lay off about 60 employees as part of an internal restructuring plan first announced in a Sept. 21 post on its eBay Ink blog. The blog posting described the overhaul, but did not mention the layoffs. The majority of the job cuts will come from the company’s product and technology areas, a company spokesman says. <internetretailer.com>
-Crocs Amends Credit Facillity - Crocs Inc. said that on October 14, it amended its bank line with PNC Bank. The amendment decreases Crocs' minimum tangible net worth requirement from $266 million to $205 million, measured at the end of each fiscal quarter, commencing with the fiscal quarter ending December 31, 2009. <sportsonesource.com>
-Superfeet Bolsters Sales Force - Superfeet Worldwide Inc. has hired four experienced sales reps in October to keep pace with their continued growth across the U.S. It also named Doug Geddes as national sales manager of Superfeet Canada. In the U.S., Trevor Patterson joins Superfeet as a Sales Representative in the Northwest with 9 years of experience with Burton Snowboards. Patterson has relocated to Seattle to cover the NW urban market and lend his sales and marketing knowledge to continue building the current Superfeet sales team in Washington, Idaho, Oregon and Montana. Meanwhile, Superfeet Canada Inc., a subsidiary of Superfeet Worldwide Inc., announced that the appointment of Doug Geddes as Canadian National Sales Manager. Geddes has over 18 years of experience managing a company sales and marketing team as well as owning his own independent sales agency. <sportsonesource.com>
-Quelle Sale Decision Nears - A decision is nearing regarding both the sale of the insolvent Arcandor Group’s catalogue and mail-order division Primondo, and the fate of its challenged Quelle catalogue business, Arcandor said Thursday. Klaus Hubert Görg, insolvency administrator for Quelle, said the fate of the bankrupt catalogue house would be decided by the end of the month. <wwd.com>
-Barneys Unveils Scottsdale Flagship - Barneys New York unveiled its ninth flagship Thursday with the opening of a store here that mixes ultracool and whimsical design and display with touches of the Southwest desert. Barneys joins competitors Neiman Marcus and Nordstrom at the high-end mall, in downtown Scottsdale, while Saks Fifth Avenue is under 10 miles away in Phoenix. The state’s booming population and tourism industry would seem to make Barneys a natural fit despite Scottsdale’s laid-back, outdoor lifestyle. <wwd.com>
INSIDER TRANSACTION ACTIVITY:
- Alan Cohen, Chairman of the Board, sold 35,000 shares ($385k).
- Donald Courtney, EVP, sold 16,000 shares ($60k) after exercising the right to buy 16,000 options.
GIII: Deborah Gaertner, President-Women’s Sales, sold 5,000 shares ($90,000).
HOTT: Elizabeth McLaughlin, CEO, sold 205,000 shares ($1.025mm) after exercising the right to buy 205,000 options.
TJX: Erne Herrman, SEVP-Group President, sold 10,000 shares ($160k) after exercising the right to buy 10,000 options.
URBN: Harry Cherken Jr., Director, sold 10,000 shares ($300k) after exercising the right to buy 10,000 options.
- Sandra Tillet, EVP-Store Operations, sold 20,000 shares ($350k).
- Jennifer Salopek, Director sold 4,500 shares ($79k).
- Howard Levine, CEO, sold 22,000 shares ($616k) after exercising the right to buy 52,000 options.
- James Kelly, President & COO, sold 13,000 shares ($364k) after exercising the right to buy 39,000 options.
- Barry Sullivan, EVP, sold 2,000 shares ($56k) after exercising the right to buy 5,000 options.
- Kenneth Smith, CFO, sold 1,000 shares ($28k) after exercising the right to buy 3,000 options.
- Charles Sowers, SVP, sold 1,000 shares ($28k) after exercising the right to buy 4,000 options.
- Dorlisa Flur, EVP, sold 2,000 shares ($56k) after exercising the right to buy 6,000 options.
- James Snyder, SVP, sold 88 shares ($2k) after exercising the right to buy 300 options.
- Bryan Venberg, SVP-HR, sold 850 shares ($23k) after exercising the right to buy 3,000 options.
- Charles Gibson, EVP, sold 3,000 shares ($84k) after exercising the right to buy 9,000 options.