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Takeaway: KSS/Industry read throughs on Comps & Margins. MW 4Q-Remains on Long Bench. WMT wage ripple effects. China factory strike. FEB Retail Sales.


Retail Callouts (3/12): KSS, BONT, MW, NKE, VFC, WMT, TJX, DG, Retail Sales - 3 9 chart2



Takeaway: BONT isn't a name we talk about a lot, but we took a few interesting tidbits away from the company's press release this morning.

1) Comps -- the company posted a 4.3% number (+5.3% through Nov/Dec and -1.4% in January). That's the best comp number this company has posted in 8.5 yrs. Yea since 2006. Could it be that this company has found its mojo. It's possible, but this is a bottom tier regional department store chain operating in a category that's grown sales at a -2% CAGR over the past 20yrs. If poor quality retailers like BONT (we could list about 10 more concepts) are putting up record numbers we think that's very solid proof that the +3.7% KSS comp number is more telling of the retail environment in 4Q than the 'Greatness Agenda'.

2) Margins - The company took a 130bps whack on the chin because of the 'highly promotional' retail environment and distribution related e-comm expenses in the quarter. E-comm sales grew 25% for the year to $167mm (6% of sales). That's a big headwind for such a small piece of the business. BONT currently has no free shipping threshold in place, meaning that consumers must pay shipping for each order. But we should note that the company is currently running a free shipping at $25 spend promotion. Companies do this all the time, but as retailers move to protect market share online (the only real growth driver in the industry) we think the one-offs become standard moving the threshold towards $0.

Retail Callouts (3/12): KSS, BONT, MW, NKE, VFC, WMT, TJX, DG, Retail Sales - 3 12 chart3

MW - 4Q14 Earnings

Takeaway: All in a very good quarter for MW. Comps looked strong across the portfolio in the quarter which was enough for 1% beat on the top line, though we should note that on a 2yr basis all concepts were flat to down sequentially. Margins looked good and the 66% sales growth leveraged into a 92% increase in adjusted EPS. Run rate synergies ended the year at $35mm with $50-$55mm guide for 2015. We think management is sandbagging on the $100mm it's thrown out to the street. MW remains on our long bench while we vet the bigger investment thesis.

Retail Callouts (3/12): KSS, BONT, MW, NKE, VFC, WMT, TJX, DG, Retail Sales - 3 12 chart1

WMT, TJX - At Home comfortable with wage increase


Takeaway: At Home operates 83 stores centered mostly in the Mid West and South. Think a bigger version of Pier 1 or maybe an Ashley Furniture. If you want to see what the WMT wage increase ripple effect looks like across the industry look no further than At Home. The company is raising hourly wages for full time workers to a $10 minimum and $9 for part-timers. It's not a concept that one would think would have to compete with WMT for employees, but sure enough here it is. WMT employs about 1.4mm people in the US. That's about 16.5% of the workforce in the Food & Beverage, Health/Personal Care, Clothing, and General Merchandise categories. Or, put another way…the company swings a big stick.

NKE, VFC - Chinese Labor Strike: 5,000 Workers Strike At Factory Making Shoes For Nike, Timberland, Kenneth Cole; Police Dogs Deployed


Takeaway: This does not impact high-profile 'Launch' footwear for Nike, as it dual and triple-sources those products in different countries to diversify against risks such as this -- which seem to come along every 2-3 years. But truth be told, the plant would need to be closed down permanently to be a  shock to Nike's financial model -- and it'd only be a temporary one at that.


Takeaway: This confirms what we've seen from company's monthly sales numbers in Feb and the ICSC trend line. Sales decelerated on both a 1yr and 2yr basis to the lowest rates we seen in 12-13 months.

Retail Callouts (3/12): KSS, BONT, MW, NKE, VFC, WMT, TJX, DG, Retail Sales - 3 12 chart4



Retail Callouts (3/12): KSS, BONT, MW, NKE, VFC, WMT, TJX, DG, Retail Sales - 3 12 chart5

PETM - BC Partners Completes Acquisition of PetSmart, Inc, Appoints Michael J. Massey as its President and Chief Executive Officer


TJX - TJX, Bluestar Eye Jones New York


APP - Robert Mintz Exits American Apparel


PLCE - Barington Capital, Macellum Advisors Urge Changes at Children’s Place


WMT - Women-owned logo arrives on Walmart shelves


GME - GameStop expands gift card trade-in program


UA - Under Armour opens digital center in Austin, Texas


In the Works: Four new retail concepts