DECK - No near-term turnaround, but cutting store anchor
We never really understood the DECK store opening strategy. Now the company is hiring a 3rd party to close 15% of its current portfolio.
If you look at the store opening cadence since 2006 when the company had just 2 stores and fast forward to where we are today at 142 doors, and what that's subsequently done for returns as capex as a % of sales went from 1% as UGG relied on its wholesale distro to 5% at the height of the sq. ft. investment, it tells a pretty compelling negative story.
The question now is, as costs roll off and the company abandons its store strategy, will we see margins re-inflate and asset turns re-accelerate as the fixed asset base consolidates. The top line has been underwhelming for 3 straight quarters and doesn’t give us confidence in the immediacy of a turnaround, especially in an economy that is #latecycle.
We wouldn't touch this with a 10 foot pole on the long side today, with inventories up 26% on 1% sales growth. But it’s a name over the course of 6-9 months that might be worth taking a look at as working capital gets cleaned up, and assets are rationalized.
BBBY - This Bed Bath promo email is hilarious.
BBBY sent out this promo email yesterday, and it featured a bag of pretzels. That's it, a bag of pretzels. It's comical to think that a $2 discount on a bag of Pretzel Crisps can drive foot traffic. 'In Store Only'!
JCP - JCPenney pursues sale of home office campus
DKS - Sports Authority to Take Steps Toward a Bankruptcy Filing
MAT - Mattel interested in possible merger -- has requested financial information about Mayborn, owner of prominent baby product manufacturer Tommee Tippee
Big-box home décor retailer At Home has added four more locations averaging almost 100,000 sq. ft. each to its growing store portfolio
JCP - JCPenney announced that it is pursuing sale of Home Office campus in TX in effort to reduce outstanding debt
Kate Hudson's fashion athletic brand Fabletics opening 2,000 sq.ft. store in Mall of America
Report says successful malls in India are changing strategy by reducing the size of anchor stores from ~70,000 sw. ft. to ~25,000 sq. ft. to bring in more international brands