Retail Callouts (3/31): KSS, WMT, TGT, AMZN, Chain Store Sales

Takeaway: KSS health and fitness announcement. WMT Canada removes free shipping. Weekly chain store sales mild as comps get tougher.

COMPANY HIGHLIGHTS

 

To see our note Retail – Our 2015 Quarterly Playbook please CLICK HERE

 

KSS - Kohl’s Delivers New Active and Wellness Solutions to Families Nationwide

(http://phx.corporate-ir.net/phoenix.zhtml?c=60706&p=irol-newsArticle&ID=2030859)

 

Takeaway: KSS put out a fancy press release this morning outlining its new health and fitness initiatives. Most of which the company has been talking about for some time. But, let's keep the new launches in perspective. KSS, like most retailers, adds new brands to its arsenal every year, and it cycles out the unproductive ones. The brands associated with this year's fitness flavor -- Nike, Adidas, Asics -- are much more likely traffic drivers, but they are also brands KSS has carried for years. Yes, the floor allocations will probably march higher as KSS tries to catch up to the competition in its athletic/sportswear offering. But, we think it's important to remember that a) these national brands come in at a lower gross margin, and b) as e-comm becomes a bigger part of the puzzle the need to compete on price and or shipping $ becomes even more important.

 

WMT, TGT, AMZN - Wal-Mart Canada to drop unlimited free shipping as competition eases

(http://www.theglobeandmail.com/report-on-business/wal-mart-canada-set-to-drop-free-shipping-as-competition-eases/article23686662/)

 

Takeaway: 1) This is genius. WMT moved to free shipping in 2013 to compete with the TGT openings in Canada. Now as Target is set to close its final doors in Canada, WMT hikes rates back up because it can. It's what everyone fears (I guess 'everyone' here would refer to regulators) AMZN will do in the US.  2) This is an interesting case study for US retail where the gamesmanship online is just heating up. AMZN has forever set the pace for the industry when it comes to shipping hurdles, but TGT made a market share place by dropping it's free shipping from $50 to $25 earlier this year. We expect more retailers to use this an offensive weapon, forcing the rest of the industry into free shipping and returns all day every day. The interim move to Free Shipping should be felt by the retailers in 2H15.

 

 

WEEKLY RETAIL SALES (ICSC -- 80 General Merchandise Stores)

 

Takeaway: Today we're looking at about 3% growth -- on top of a very easy (sub 1%) week last year.  The important takeaway is that as March comes to a close, sales comps for the rest of the year get very difficult.  Heading into 2Q, growth normalizes – this should be the most ‘normal’ of all the quarters through the year. If you want to see what a company like KSS, M or RL is really capable of, this should be it (we can’t wait). It should also be a quarter where reported earnings growth decelerates by at least 500bp to the high single digits.

Retail Callouts (3/31): KSS, WMT, TGT, AMZN, Chain Store Sales - 3 31 chart2

 

 

OTHER NEWS

 

ICON - Iconix CFO Resignation

(http://www.sec.gov/Archives/edgar/data/857737/000119312515112037/d898611d8k.htm)

 

KER - Puma and FIGC Sign New Deal

(http://wwd.com/business-news/marketing-promotion/puma-figc-sign-new-deal-10104860/)

 

WMT - Wal-Mart Hits Back in Converse Case

(http://wwd.com/business-news/legal/wal-mart-hits-back-in-converse-case-10104330/)

 

GPS - Banana Republic Unveils New-Look Flagship

(http://wwd.com/retail-news/specialty-stores/banana-republic-unveils-new-look-flagship-10102865/)

 

 

 

 


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more