Retail Callouts (4/30): KORS, COH, GNC, FL, TGT, AMZN

Takeaway: Debate on Men’s Accessories Rages On. GNC 1Q15 - Not Much To Like Here.

EVENTS TO WATCH

Retail Callouts (4/30): KORS, COH, GNC, FL, TGT, AMZN - 4 30 chart2

 

 

COMPANY HIGHLIGHTS

  

The Debate on Men’s Accessories Rages On

(http://wwd.com/menswear-news/fashion/mens-accessories-sales-10119138/)

 

Takeaway: The men's accessory market has grown by a 15% CAGR over the past 2-years with the bag market up $900mm in just two years, a 35% CAGR.  That's big time growth in a segment that is just a fraction of the women's market internationally. But, when we juxtapose the big growth with the sales targets coming from brands like COH and KORS in particular, the math just doesn't add up. Each brand has a $1bil sales target on the table. With KORS saying the market would support 500 men's standalone stores. That seems aggressive. Of course, the onus is on the brands to drive a new consumption pattern, and create a market where one does not currently exist.

If we look at the two brands in isolation, KORS seems like it has more of a right to target male customers. Its share of voice and acceptance in categories like watches and ready to wear broaden the appeal and offer multiple entry points. It's not fair to say that COH's $700mm in Men's sales is all 'murses', but that says something about the company's global brand perception.

Is men's an opportunity, absolutely,  especially if it continues to put up the type of top line growth we've seen over the past two years. But, 80/20 rule, women's will still continue to move the needle.

 

GNC - Not Much To Like Here

 

Takeaway: Optically, not a great quarter from GNC. Comps were down 4.1%, a  deceleration on the 2yr trend line at the same time the FDA ratched up the heat on supplement suppliers. That's not just a Wall Street thing either, as the investigation made its media rounds in early February. GNC has since been cleared, but no doubt some damage was done. Franchise margins were down over 250bps again in the quarter as Private Label continues to lose volume share to 3rd party wholesale. We have little conviction in the stability of either the top line or margin improvement story over the trend/trade duration.

Retail Callouts (4/30): KORS, COH, GNC, FL, TGT, AMZN - 4 30 chart1

 

 

OTHER NEWS

 

FL - Foot Locker flagship staying at Herald Square

(http://nypost.com/2015/04/28/foot-locker-flagship-staying-at-herald-square/)

 

TGT - Target board picks Ecolab CEO Doug Baker for leadership post

(http://www.bizjournals.com/twincities/news/2015/04/29/target-doug-baker-lead-independent-director.html)

 

TGT - Report: Target tests targeted video tool

(http://www.chainstoreage.com/article/report-target-tests-targeted-video-tool)

 

LULU - Lululemon Athletica Inc facing calls for board reform, transparency from shareholders

(http://business.financialpost.com/news/retail-marketing/lululemon-athletica-inc-facing-calls-for-board-reform-transparency-from-shareholders)

 

AMZN - Alibaba Secretly Invested In Amazon Challenger Jet.com

(http://www.forbes.com/sites/ryanmac/2015/04/29/alibaba-set-to-invest-in-amazon-challenger-jet-com/)

 

AMZN - Amazon experiments with ad opportunities on Kindle

http://www.thedrum.com/news/2015/04/29/amazon-experiments-ad-opportunities-kindle>

 

KATE - Anna Kendrick Is Mistaken for Lily Tomlin's Meditation Teacher in Kate Spade's New Ad

(http://www.adweek.com/news/technology/anna-kendrick-mistaken-lily-tomlins-meditation-teacher-kate-spades-new-ad-164355)

 

EBAY - PayPal Brings Its Instant Checkout Service “One Touch” Across The Web

(http://techcrunch.com/2015/04/28/paypal-brings-its-instant-checkout-service-one-touch-to-the-web/#.jbiheq:Fq09)

 

PLCE - The Children’s Place and Activists Likely Headed for a Proxy Fight

(http://wwd.com/business-news/financial/childrens-place-activistinvestor-proxy-fight-10119480/)

 

U.S. Ports See Costly Delays as Cargo Ships,Volumes Grow

(http://www.wsj.com/articles/u-s-ports-see-costly-delays-as-cargo-ships-volumes-grow-1430340113)

 

Apple Watch: Faulty Taptic Engine Slows Rollout

(http://www.wsj.com/articles/apple-watch-faulty-taptic-engine-slows-roll-out-1430339460)

 

NRF supports ‘patent troll’ legislation

(http://www.chainstoreage.com/article/nrf-supports-%E2%80%98patent-troll%E2%80%99-legislation)


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