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HedgeyeRetail (1/14) | NKE App Exclusives, Holiday Comps

Takeaway: Nike using SNKRS app for exclusive shoe offerings. Holiday comps slow 250bps from 2014.

NKE - Nike's newest release, the Nike Air Pressure 'OG', will be available exclusively via the Nike SNKRS app at $300

 

Between Brand Jordan and Nike, NKE Inc. has 10 releases on the radar for this weekend. But, the most exclusive and highest priced item can only be found on the Nike SNKR app. This is relatively new for Nike, which sold its first shoe exclusively on the Nike SNKR app on 10/31/15. This marks number 2. It makes sense that Nike would slowly test and build the exclusive sneaker release on its own platform. Which is why we see the majority of releases in conjunction with partners. But over time, as Nike builds its ecomm business from $1.2bn to $10bn by 2020, expect to see more exclusive Nike only releases. We have already seen this in the running category where Nike holds its best merch/colorways for its own stores and website. The kicker here over the near term is that everything a consumer could buy at FL, FINL, DKS, HIBB etc. is also featured prominently on nike.com.

HedgeyeRetail (1/14)  |  NKE App Exclusives, Holiday Comps - 1 14 2016 chart1

(http://solecollector.com/news/release-roundup-the-sneakers-you-need-to-check-out-this-weekend-1-14-2016/)

 

Holiday Sales Comps Down 250bps From 2014

 

Of the 27 retailers/concepts that have reported Holiday sales comps to date 15 have reported a sequential deceleration in the 1yr trend at an average of 7.3%, with 11 posting accelerations at an average rate of 3.3%. On a 2yr basis its more mixed with 1 being flat, 12 posting sequential improvement, and 13 posting a sequential deceleration. In total the average comp for the group is 0.3% down from 2.8% in 2014.

 

As we look forward to 2016, the Street’s numbers are banking on a recovery in growth and margin starting in 1Q. In other words, it’s chalking up this ‘thing’ retailers are feeling now as exactly what management teams want us all to believe – while they cross their fingers, hope and pray that the economy is not really slowing.  YTD, the XRT has marginally underperformed the broader market by 100bps. But, it’s trading at 16x earnings, and has short interest that is disproportionately low for an economy that is #LateCycle. We’re net sellers of Retail.

HedgeyeRetail (1/14)  |  NKE App Exclusives, Holiday Comps - 1 14 2016 chart2E

HedgeyeRetail (1/14)  |  NKE App Exclusives, Holiday Comps - 1 14 2016 chart3

 

ETSY, AMZN - Amazon and Etsy Gain in Search Exposure, eBay Tumbles

(http://www.ecommercebytes.com/cab/abn/y16/m01/i14/s01)

HedgeyeRetail (1/14)  |  NKE App Exclusives, Holiday Comps - 1 14 2016 chart5

 

NKE - Kevin Hart Reveals His Nike Signature Shoe on the Tonight Show, to be released in April

Note: Kevin Hart has 24.7mm twitter followers, Kanye West has 17.1mm

(http://footwearnews.com/2016/focus/athletic-outdoor/kevin-hart-nike-sneakers-jimmy-fallon-183853/)

 

W - Wayfair.com Launches One-Stop Flooring Shop

(http://investor.wayfair.com/investor-relations/press-releases/press-releases-details/2016/Wayfaircom-Launches-One-Stop-Flooring-Shop/default.aspx)

 

NKE - Group of Nike Factory Workers Caught Stealing Thousand of Shoes  in Vietnam

(http://solecollector.com/news/nike-factory-workers-steal-sneakers/)

 

DKS - Dick’s is partnering with predictive analytics solutions provider First Insight to get insight into merchandise

(http://www.retailingtoday.com/article/dicks-obtains-early-insight-merchandise)

 

GPRO - After a disappointing holiday season, GoPro announces that it will cut 7% of its workforce

(http://www.wsj.com/articles/gopro-plans-jobs-cuts-provides-weak-sales-outlook-1452720993)

 

AMZN - Amazon is opening an AWS region in Montreal, Québec, Canada in the coming year

(https://aws.amazon.com/blogs/aws/in-the-works-aws-region-in-canada/)

 

NKE, AdiBok - After turning down a pay increase and extension from Adidas, John Wall could be joining Nike and Team LeBron 

(http://solecollector.com/news/john-wall-wearing-nike-lebron-sneakers/)

 

Following Ed Crenshaw's retirement announcement on Wednesday, Publix announces that current company President will become president and CEO

(http://www.retailingtoday.com/article/publix-super-markets-ceo-stepping-down)

 

VSI - David Edwab, the Vitamin Shoppe's lead director since April 2011, has stepped down

(http://www.retailingtoday.com/article/vitamin-shoppe-overhauls-board-directors)

 

Sheetz investing more than $15mm to raise employee wages between 5-10% without cutting hours

(http://www.chainstoreage.com/article/chain-increase-employee-wages--without-cutting-hours)


Why Old Wall's Credibility Is Crashing Faster Than The Russell 2000

Takeaway: The Russell 2000 is down -22% since its all-time bubble high in July. Wall Street Consensus credibility is down considerably more.

Why Old Wall's Credibility Is Crashing Faster Than The Russell 2000 - RussHELL cartoon 01.13.2016

 

REALITY CHECK: Old Wall perma-bulls flat-out missed the crash in the Russell 2000. We didn't. We warned you about this precarious setup back in July. 

 

Why Old Wall's Credibility Is Crashing Faster Than The Russell 2000 - rut index

 

"Isn’t it ironic, but not surprising, that the “U.S. is the best house in a bad hood” thesis has crashed too," Hedgeye CEO Keith McCullough wrote in a note to subscribers this morning. "The Russell 2000 is now down -22% (crash mode) from its July 2015 #Bubble high as U.S. domestic growth expectations move toward a #Recession."

 

You won't hear most people on Old Wall talking about the DAX this morning. Probably because that's crashing too.

 

 

Here's McCullough on the evolving Old Wall storytelling on Europe:

 

"Right back into crash mode goes the over-owned “this time is different” in Europe theme. The DAX is down -2% this morning and down -21.1% since the April 2015 top. ECB President Mario Draghi is going to have to defend this with Down Euro = Up Dollar = #Deflation."

 

As for us (and our subscribers) we'll stick with our repeatable risk management process. If you're interested in joining us click here to learn more. 


7 Key Economic Talking Points For Serious Contenders at Tonight's #GOPDebate

Takeaway: Obama argues anyone saying the US economy is in decline is "peddling fiction." We take the other side of that trade. Truth is on our side.

7 Key Economic Talking Points For Serious Contenders at Tonight's #GOPDebate - z fbn gop debate

 

In his final State of the Union address, President Barack Obama told the nation that anyone "claiming that America's economy is in decline is peddling fiction."

 

Huh?

 

We're not in the business of "peddling fiction" here at Hedgeye. On the contrary. Our non-consensus macro team's granular 73-page slide deck released earlier this month shines the spotlight of truth on the current economic reality and outlines our current U.S. Recession call.

 

Let's be clear. Obama's rosy economic picture is false. This isn't a partisan, Republican or Democrat perspective, it's simply an honest appraisal of what's going on out there right now.

 

On a related note, GOP contenders have plenty of "non-fiction" to refute Obama's clams at tonight's Fox Business GOP Debate. Here are some key talking points any serious contender should consider ahead of the debate courtesy of our outspoken, reality-based CEO Keith McCullough.

 

point #1

point #2

point #3

point #4 

point #5

point #6

point #7

Fiction? More like reality...


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The Macro Show Replay | January 14, 2015

 


LNKD | Closing Long Position

Takeaway: Our tracker is flagging a deteriorating selling environment. Light 2016 guidance now more likely, and macro could become a growing concern.

KEY POINTS

  1. TRACKER DETERIORATING: Our LNKD JOLTS tracker declined sequentially into the second month of 4Q15, which is expected given seasonality in LNKD's selling environment.  But as we mentioned in our last note, we're keying in on magnitude, which has gotten worse than seasonality alone would suggest.  As a reminder, our LNKD Talent Solutions TAM analysis suggests that the bulk of that TAM is in the upsell opportunity (ARPA) vs. new account volume (see note below for detail).  
  2. GUIDANCE TO DISSAPOINT? We already had reservations about staying long into LNKD's 2016 guidance release since this mgmt team is notoriously conservative with guidance.  We suspect it's even less likely now that mgmt guides to street expectations if our tracker is correctly flagging a deteriorating selling environment.  Further, Fx pressure is continuing early in 2016, which we expect to be top of mind for this mgmt team since Fx was LNKD's largest source of pressure last year, and the primary source of its guidance cut.
  3. CLOSING LONG POSITION: Our original thesis on LNKD was that it can't be played as a sleepy long.  First, we have to be mindful of ever-rising consenus estimates and a mgmt team that doesn't want to box itself into them.  Second, we're late cycle, and we don't want to be there for the eventual turn.  Our macro team is now calling for a potential recession as early as 2Q16, which LNKD will not be immune to since its Talent Solution TAM is tethered to macro (see note below).  We still view LNKD as one of the better run companies in our space, but when we put good company up against bad macro, macro wins. 

 

See the note below for supporting detail/analysis on our LNKD.  Let us know if you would like to disucss.  

 

Hesham Shaaban, CFA


@HedgeyeInternet 

 

 

LNKD | Closing Long Position - LNKD   ARPA vs. Tracker 4Q15 2

 

LNKD: New Best Idea (Long)
07/14/15 08:00 AM EDT
[click here]


CHART OF THE DAY: Got Risk? We've Never Seen A Credit Cycle Like This

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more.

 

"... As you can see in the Chart of The Day, the volatility of levered investments is starting to move up and into the right of this 3-factor SPREAD RISK chart:

 

  1. High Yield Spread (over 10yr Treasury) = y-axis
  2. Bond Market Volatility (MOVE Index) = x-axis
  3. Total Corporate Credit Outstanding = Bubble Size

 

History shows that once High Yield Spreads have widened meaningfully off the cycle-lows (as they have for the last 7 months), they do not tighten again in the same economic cycle."

 

CHART OF THE DAY: Got Risk? We've Never Seen A Credit Cycle Like This - pg 43 macro deck HY spreads


Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.

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