FL | Black Book Ahead of the Print
Wednesday, @ 1PM ET
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Hedgeye Retail Idea List - Moving LULU up on the short side.
We're moving LULU up a few notches on the core short idea list. The stock is working for the year-to-date, but fundamentally, we still think that this is a very good brand housed within a bad company. Management is shooting to get back to a mid-50s gross margin, which is admirable. But the company has to invest in talent, distribution, branding, and e-commerce capability -- all which will A) take margins down, B) subsequently repair the top line (in 2+ years), and then, and only then will we even think about paying for a 'margin improvement story' here -- especially with UnderArmour and Nike committing incremental capital to women's fitness. We still think there is a meaningful management shake-up this year at LULU.
W - Wayfair adding office space, + 1,400 employees.
Various news sources have reported 3 new office building for Wayfair (2 in Maine, 1 in Texas) over the past couple of days equaling an addition of 1400 employees. That equates to an increase of 43% from current levels. Just another example of the company investing in the infrastructure to recognize a $90bn TAM that we think is overstated by as much as 50%.
NKE - Nike officially opens doors for Jordan Brand store located in the Central District of Hong Kong, complete with wall of all-gold Air Jordans
Fast-growing Kit and Ace seeks top executives after CEO let go
Toys "R" Us - Toys "R" Us trying to replace $1.6 billion in junk-rated bonds coming due through 2018
Sperry named official footwear of SoftBank Team Japan for 35th America’s Cup
MarineMax annoucned 1.25mm share repurchase program -- will replace April 2015 1mm share program, of which 772,716 shares had been repurchased
American Apparel head of manufacturing Martin Bailey resigns after 15 years