Retail Ideas | Quick Incremental Thoughts

Takeaway: A quick overview of our incremental thinking on our top ideas, long and short. RH, KATE, PIR, NKE, RL, KORS, FL, HIBB, KSS, TIF, W, TGT

Retail Ideas | Quick Incremental Thoughts  - Retail IDeas



RH: TAIL = $11 EPS and $300 stock. TRADE looks strong with Chicago opening this week, then Modern, Teen, and 175k add sq ft by Jan. This model is primed.


KATE: We think the downward spiral in sentiment is over. People are looking to own KATE again. Business is outstanding. $1.10 in EPS next yr makes this name cheap now.


PIR: One of best value stocks we can find. Capex cut, working cap improving, now 500bp of margin to recapture, which then drives top line. $2-3 down/$10-13 up.


NKE: This qtr was its best in history. But there’s likely more to come. We’ll outline puts and takes in our Nike Black Book Monday, October 12th.


RL: RL moved up to our Long list. We don’t think it will ever go below $100 again. If/when management gets the org plan right, the stock is over $200. With the stock at $108, that’s a big deal.


KORS: Does not have the momentum that KATE does, and never will (again). But evolving into more of a RL model. That’s a long transition. But at 9x EPS, we’ll assume that risk.


WWW: Under review.



FL: The fact that people took NKE’s results as a positive for FL is mind boggling. It’s the exact opposite. NKE DTC grew by $358mm. FINL inventories up 11% on 3% sales growth. NKE up 20% at KSS. FL has no room for error. We’re been waiting for the time on FL. We think it’s now.


HIBB: After all its problems, numbers are STILL too high. Oversaturated in core market, marginalized (by DKS/Academy) in new markets. No arm. Peak margins. Nothing but downside.


KSS: Richards and I debated pulling the plug given that this short has worked. But if our ‘credit cannibalization’ thesis is right, then estimates and the stock are going much lower.


TIF: If you don’t like the US macro setup, which we don’t, then TIF is your poster child short. It blew up twice this year – there’ll be a third.  ’16 estimates are still high by $0.25-$0.50.


W: While there’s the potential for this rapid grower to print a profit by way of lower SG&A – and send the bears running for cover…the fact is our research suggests a single channel model in this space is destined to fail.


TGT: WMT is down 30% TYD and is at 13x EPS. TGT outperformed by 40% and is at 16x earnings. We’re concerned about how WMT will ultimately drive profits this holiday to offset labor costs – which won’t make TGT’s life easy. TGT also anniversarying a solid 4Q ly. Not a juicy short here, but we’ll hang onto it.

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more

REPLAY: Review of $EXAS Earnings Call (A Hedgeye Best Idea Long)

Our Healthcare Team made a monster call to be long EXAS - hear their updated thoughts.

read more

Capital Brief: 5 Things to Watch Right Now In Washington

Here's a quick look at some key issues investors should keep an eye on from Hedgeye's JT Taylor and our team of Washington Policy analysts in D.C.

read more

Premium insight

[UNLOCKED] Today's Daily Trading Ranges

“If I could only have one thing of the many things we have it would be my daily ranges." Hedgeye CEO Keith McCullough said recently.

read more

We'll Say It Again: Leave Your Politics Out of Your Portfolio

If your politics dictates your portfolio positioning, the Democrats and #NeverTrump crowd out there have had a hell of a week.

read more

Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

read more