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OC: Removing Owens Corning from Investing Ideas

Takeaway: We are removing OC from Investing Ideas.

Please note that we are removing Owens Corning (OC) from Investing Ideas today. 

 

According to Hedgeye CEO Keith McCullough: 

 

"We want to get through earnings season here before I come back to this one. Northeast weather was obviously a problem. We can always add names like this (and PENN) back to Investing Ideas from a better price level."

 

OC: Removing Owens Corning from Investing Ideas - owens corning ecotouch insulation diy frustrations large 9


McCullough: Trade the Market Using Math, Not Magic

Hedgeye CEO Keith McCullough talks about making moves in this volatile environment. After buying U.S. equities following the FOMC decision yesterday, it might be time to sell some (according to our math, not our crystal ball).


A Novel Idea For The Oversaturated ‘Two And Twenty’ Hedge Fund Community

 

In the Q&A portion of today's Macro Show, Hedgeye CEO Keith McCullough discusses hedge fund positioning in $SPY and proposes a new ‘two and twenty’ for underperforming consensus hedge funds.


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March 19, 2015

Hedgeye CEO Keith McCullough breaks down the current Real-Time Alerts positions and answers viewer questions.

 


Keith's Macro Notebook 3/19: USD | Oil | UST 10YR

Hedgeye CEO Keith McCullough shares the top three things in his macro notebook this morning.


Retail Callouts (3/19): TGT, KSS, WMT, WSM, RH, GES, JCP

Takeaway: TGT raising minimum wage, 20% of industry now at $9/hr, others (KSS, JCP, etc.) have to follow. The only chart that matters on WSM/RH.

EVENTS TO WATCH

Retail Callouts (3/19): TGT, KSS, WMT, WSM, RH, GES, JCP - 3 17 chart2

 

 

COMPANY HIGHLIGHTS

 

TGT- Target to lift minimum wage to $9 an hour, matching rivals

(http://www.reuters.com/article/2015/03/18/us-target-wages-idUSKBN0ME2Q020150318)

 

Takeaway: The average workforce in the retail trade during 2014 was 15.4mm workers according to the BLS. If we take that a step further and look at only those employees who work in stores who sell categories where TGT and WMT compete (the Food & Beverage, Health/Personal Care, Clothing, and General Merchandise sectors) we get to 8.5mm employees. That means that between the two retailers about 20% of the employees in that space will now be making a minimum of $9/hour (WMT employs 1.4mm people in the US, TGT just north of 300k). If retailers like KSS and JCP don't think that the changes enacted by two of the top three retailers in the US will have an effect, then they are flat out in denial.

Here is how we are doing the math on the cost per employee based on what WMT disclosed during its 4Q call. The total number of employees it affects equals 500,000 which translates to a $0.20 EPS hit. Gross that up and it comes to $934mm, just shy of the $1bil McMillon called out in the press release. Per employee cost of $1,869.

If we then extrapolate that to the respective US workforces we get to a $0.50 hit to TGT and a $0.62 hit to KSS. At $1000 per employee the math works out to $0.30 and $0.33 for TGT and KSS respectively. That's a big pill to swallow for a group of zero square footage growth retailers with few levers to pull in order to offset inflated workforce cost pressures.

 Retail Callouts (3/19): TGT, KSS, WMT, WSM, RH, GES, JCP - 3 19 chart5

 

 

WSM, RH - For our full note WSM/RH - The Only Chart That Matters CLICK HERE


Retail Callouts (3/19): TGT, KSS, WMT, WSM, RH, GES, JCP - WSM RH comp 2

Retail Callouts (3/19): TGT, KSS, WMT, WSM, RH, GES, JCP - 3 19 chart3

 

 

OTHER NEWS

 

GES - 4Q15 Earnings

Retail Callouts (3/19): TGT, KSS, WMT, WSM, RH, GES, JCP - 3 19 chart4

 

JCP - Kent B. Foster to Retire from JCPenney Board of Directors

(http://ir.jcpenney.com/phoenix.zhtml?c=70528&p=irol-newsCompanyArticle&ID=2026834)

 

TGT - Target's Data Breach Settlement Could Pay Victims $10,000 Each

(http://gizmodo.com/targets-data-breach-settlement-could-pay-victims-10-00-1692327242)

 

TGT - Target unveils one-year return policy for exclusive brands

(http://www.chainstoreage.com/article/target-unveils-one-year-return-policy-exclusive-brands)

 

JCP - J.C. Penney Promotes John Tighe and Siiri Dougherty

(http://wwd.com/retail-news/human-resources/j-c-penney-promotes-john-tighe-and-siiri-dougherty-10098959/)

 

J. Crew Sets Out for ‘Women’s Fix’

(http://wwd.com/retail-news/specialty-stores/j-crew-sets-out-for-womens-fix-10098849/)

 

KER - Roberto Vedovotto Joins Kering Executive Committee

(http://wwd.com/business-news/human-resources/roberto-vedovotto-kering-executive-committee-10098977/)


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