Retail Callouts (12/15): Retail Idea List, Primark, KSS, Gilt

Takeaway: Hedgeye Retail Idea List. Keep an eye on Primark. KSS open 170 hours straight. HBC's Gilt deal not transformative.

Hedgeye Retail Idea List

Retail Callouts (12/15): Retail Idea List, Primark, KSS, Gilt - 12 15 2015 chart1

Primark - Can Cool Clothes Get Any Cheaper Than This?

Link: CLICK HERE

Here's one of the better articles we've read about Primark. There's not a whole lot of info in this article that we don't already know. But if you are interested, long or short, in any company that has anything to do with designing, marketing, manufacturing or retailing apparel, footwear and accessories in the US (or globally, for that matter), you pretty much have to read this. How can you NOT keep a constant eye on what will likely prove to be the most deflationary force in softline retail in the next economic cycle?

KSS - To open for 170 Straight Hours up from 100 hours last year

(http://phx.corporate-ir.net/phoenix.zhtml?c=60706&p=irol-newsArticle&ID=2122581)

Our take: We still don't get why KSS keeps its doors open 24hrs a day leading up to the Christmas holiday. For a company that openly admits that it has a problem a) getting people through the turnstiles, b) selling items in categories that people actually want to buy, and c) keeping e-comm from cannibalizing in-store sales, it doesn't seem to make a whole lot of sense to stay open for 170 hours straight. This is the 3rd year now that KSS has kept the doors open all night, starting on the 20th in 2013, 19th in 2014, and the 17th in 2015. Plus it added a whole host of Door Buster deals on the 19th, as if retail needed another dose of Black Fridayesque deals. Allowing a person to shop at 3am (and paying store labor 3x wages for shift differential) is simply not a value driving strategy.

Gilt, HBC - In Proposed Sale to Saks Fifth Avenue Owner, Gilt Groupe’s Value Is Slashed

(http://www.wsj.com/articles/hudsons-bay-near-deal-to-buy-online-retailer-gilt-groupe-for-250-million-1450131724)

Our take: HBC taking a page out of the JWN playbook with this proposed acquisition of Gilt Groupe. One thing that has become abundantly clear is that the flash sale model isn't scalable when it can only offer 25 units of a specific product. Maybe the combination of Off 5th inventory will help to alleviate that issue, but there is also the secular trend away from Flash Sales to consider. But at 0.4x ev/sales, it seems like HBC should be able to get some value out of the name brand. But this would by no means be a transformative deal that would launch HBC's on-line platform into the 21st Century.

TUES - Tuesday Morning Corporation Announces The Appointment Of Steven R. Becker As CEO

(http://ir.tuesdaymorning.com/releasedetail.cfm?ReleaseID=946840)

MW - Moody’s revised its ratings outlook for Men’s Wearhouse to negative from stable.

(http://wwd.com/retail-news/specialty-stores/mens-wearhouse-moodys-10297086/)

Ayr to Spin Off From Bonobos

(http://wwd.com/retail-news/direct-internet-catalogue/ayr-bonobos-spinoff-andy-dunn-10297102/)

No surprise, Mobile traffic up this Holiday season.

Retail Callouts (12/15): Retail Idea List, Primark, KSS, Gilt - 12 15 2015 chart2

Toys ‘R’ Us - New Strategy 'Full and Chunky'. Sounds like a great margin strategy.

(http://www.wsj.com/articles/toys-r-us-plays-with-a-fresh-strategy-1450141526)

UPS, FDX, AMZN - Holiday Online Orders Taking Longer

(http://www.wsj.com/articles/holiday-online-orders-taking-longer-study-says-1450102912)

VFC - The North Face uses artificial intelligence to engage with customers

(http://www.retailingtoday.com/article/north-face-uses-artificial-intelligence-engage-customers)

Neiman Marcus hit by department store slump

(http://www.retailingtoday.com/article/neiman-marcus-hit-department-store-slump)