Hedgeye - Retail Callouts (5/6): KATE, M, TJX, JWN, CROX

EVENTS TO WATCH

COMPANY HIGHLIGHTS

KATE - To see our full note KATE - We Feel Good About the Print CLICK HERE

M - New Growth Strategy, Macy's Backstage

(http://phx.corporate-ir.net/phoenix.zhtml?c=84477&p=irol-newsArticle&ID=2043988)

Takeaway: For starters what does it say about the department store industry when the operator who is considered best in class starts exploring alternative avenues to find growth. Blue Mercury, International, and now Macy's Backstage is actually happening. Add to that the fact that M took two top executives away from store centric functions to focus on e-comm and business development. We won't argue that that Macy's bench isn't deep, it is. We think the shift in focus from top talent in the C-suite is telling. If Terry and Karen are staring at the same long term charts we are, the decisions make more sense.

As far as the Backstage concept is concerned. The company is just dipping its toe in the water to test the efficacy of the model. And M chose to stack up the 4 Backstage test concepts against 3 of the best operators in this space (TJ Maxx, Marshalls and JWN Rack), while leveraging the company’s existing brand awareness. The average driving distance to a TJ location - 2.1mi, Marshalls - 0.4mi with two locations in the same strip centers, JWN Rack - 4.0mi, and Macy's - 2.1mi.