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Takeaway: Flat BTS forecasts, as chain store comps remain difficult. Kering luxury read-throughs to NA and Japan.

ICSC - Chain Store Sales

The ICSC trend line is a bit noisy but what is clear is, we've seen a deceleration in the 1yr number from the mid to high 3's to the low to mid 2's since we exited May. We don't see that reaccelerating anytime soon as comps remain elevated and BTS forecasts from 3 sources now (see below) are less than optimistic.

Retail Callouts (7/28): BTS Outlook = Weak | KER Luxury Read-throughs - 7 28 chart1

Retail Callouts (7/28): BTS Outlook = Weak | KER Luxury Read-throughs - 7 28 chart2

Deloitte & Brand Keys Back To School Forecasts - Looking For Flat Growth YY



Another bleak outlook for BTS this time from Deloitte and Brand Keys. While not as sour as the NRF forecast which called for a 5.8% decrease in spending per family, the flat number published by the two sources mentioned above are not overly optimistic. If we look at the ICSC numbers, comps remain difficult throughout BTS and that synchs with what we are seeing from these initial reads. We'll be interested to see what inventories look like headed out of 2Q in the face of this. Especially after inventories built across the industry headed out of the first quarter. That tells us that if the retailers put up a decent comp, it's likely going to come at the expense of gross margin. 

Retail Callouts (7/28): BTS Outlook = Weak | KER Luxury Read-throughs - 7 28 chart3

KER - Luxury Read Throughs

Comparable growth in NA Luxury retail segment was up 9% -- a 600bps acceleration from 1Q and ~700bps on the 2yr trend line. On the call management noted that tourist traffic remained pressured, but the underlying demand looked strong as evidenced by the acceleration in comparable growth. Japan put up a +27% against negative comps following the sales tax hike in 2Q14, that’s up from -4% in 1Q which is right in line with the number KATE printed in 1Q15. While not the exact same consumer segment as KATE, KORS, and COH -- the sales trends reported by KER's Luxury Segment look much healthier than the broader market sentiment would otherwise suggest.


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Retail Callouts (7/28): BTS Outlook = Weak | KER Luxury Read-throughs - 7 28 chart4

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