RH - To see our note RH - Why NSP is NOT and Issue CLICK HERE
Keep An Eye On 2H Wages (KSS, JCP, M, etc…)
BBBY: Bed, Bath & Beyond Guiding 2015 Increase in Compensation
Takeaway: The weak comp and revenue guide were not a shocker – as concern over top line trends is what caused us to pull the name off our long bench in January. But the bigger call out for us is that BBBY is jumping on the bandwagon of higher wages. That’s WMT, TGT, TJX, MCD, and now BBBY. Right now this is an issue that nobody cares about. And why should they when we’ve got an environment that’s good enough for the likes of weaklings like KSS, JCP, BELK and BONT to comp in the mid-single digits. But, this is the time of year when demand for employees is at its lowest. Come late summer as retailers start to prep for back-to-school and then again for holiday, we think companies like KSS, JCP, M, will be in for a rude awakening if the risk management process doesn't start now.
Our analysis shows that KSS is at most risk with the highest potential impact to EPS, and the lowest compensation rate according to glassdoor.
PIR - 4Q14 Earnings
Takeaway: We continue to see a stark bifurcation in the home furnishings space between the established order (PIR, ETH, BBBY, and to some extent WSM) and RH. We never agreed with the compare between PIR and RH and that extrapolation seems to be a thing of the past. But we think it's important to draw a distinction between a retailer with 1074 units selling middle of the pack decorative items and RH who operates in around 70 markets and is doing to the home furnishings space what Ralph Lauren did to apparel in the 80's.
That being said, expectations were extremely low following the guidance snafu and the ouster of the company's CFO in February. E-comm popped from 4% of sales LY to 11% in the most recent quarter and margins took a beating as a result -- down 200bps. Some of that is due to investment, but we have to think that shipping is a big headwind facing this company, even though PIR doesn't currently offer free shipping no matter how much the consumer spends. The margin implications are even worse as they try to compete for market share online with Amazon (generally Free Shipping) and Wayfair ($49 threshold). That's a good case study for other retailers in the space who are attempting to grow this channel. Particularly HIBB, who is one of the only retailers left in retail without an e-commerce presence.
WBA - 2Q15 Earnings
KORS - Michael Kors launches Canadian e-commerce website
BRIEF-Interparfums and Coach sign global license agreement
WMT - Walmart wage hikes under way in many states
NKE, ICON - Fila and Iconix Settle With Converse
LVMH - Louis Vuitton Opens New Miami Store
Authentic Brands Group Introduces Mini Marilyn
Hudson’s Bay Shareholders Set Secondary Offer