GPS - Gap goes seamless with inventory management
We're intrigued anytime we see GPS make moves as it relates to inventory management. GPS is perceived to be so lean in its inventories, but one could argue that it's not. The chart below shows that it is on the higher end of Specialty Retailing peers, but nearly half the levels of the department stores. As it relates to trend, the dept store group has largely been trending higher, while the Specialty group has had inventories trending lower. GPS, on the flipside, has been pegged right at 65 days. Did it find a bottom at the start of the Glenn Murphy days? Or does it have room to operate closer to the Specialty group? Our sense is that it has found a bottom. This company has not grown sales in a decade, and has found every way imaginable to grow margins and free up cash to repo stock. If initiatives like the one discussed in this article bear any fruit, we're talking a day, maybe two -- max.
TGT - Target’s struggle to sell stores exposes Canada’s weak retail leasing market
This may be simplifying a very complex set of transactions and minimizing current real estate market conditions, but the fact that TGT can't find buyers for over 50% of its stores speaks volumes for the quality of properties TGT acquired when it bought the Zellers leases back in 2011. That's under the bridge at this point.
When the company announced it's exit from Canada, management guided to $500 to $600mm in cash charges associated with the move. That doesn’t appear to be headed higher because of the weak demand for its real estate, but as Target Propco is the largest creditor with a $1.9bil claim -- it's possible that the cash expected to be recovered comes in a bit light.
AMZN - Amazon planning drive-through grocery stores
The concept of 'drive through grocery stores' might be a head scratcher for many. But keep in mind that the company already operates a grocery delivery service called Amazon Fresh, as well as a service called Amazon Locker, where consumers could pick up online orders in a centralized location (see below). Though there have been rumors that Amazon would allow people to browse physical stores, the company is likely -- at least initially -- to offer this as a pure drive-thru/pick-up service. But like everything else AMZN does, this will evolve. When you're growing sales annually by $15bn -- the size of Whole Foods -- you pretty much have a free pass to try anything -- profitable or not.
BBY - Apple Watch to Be Sold at Best Buy
So soon? We'd have thunk that the launch into mass channels like Best Buy wouldn't come so soon after the April 24th launch of the watch. We view this as bullish for companies like FOSL, who the Smart Watch trend was perceived to have in its line of sight.
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Morrisons buyers demanded one-off payments from suppliers