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Why We (Really) Like Short LuluLemon | $LULU

He may wear Lululemon’s clothes, but Hedgeye Retail analyst Alec Richards is recommending investors short the stock. He gives a granular look into why shares of LuluLemon (LULU) have considerable downside from here.


Mr. Rosengren, What Are You Thinking?

Takeaway: The Fed hatches (yet) another headscatcher.

Mr. Rosengren, What Are You Thinking? - z cbb

well Now you know

 

This is what your portfolio will look like if the Fed hikes (again) into a slowdown.

 

Boston Fed head Eric Rosengren's "time to hike" comments must be part of a new Federal Reserve policy initiative to be anti-data-dependent. In the face of very obvious U.S. #GrowthSlowing data, he just ramped the Fed Funds Futures on a SEP hike from 20% to 34%

 

 

That's why stocks and bonds are down. That's also giving you an immediate-term TRADE oversold signal in most things I like.

 

I'll leave you with the chart below. Wasn't this Janet Yellen's favorite indicator once upon a time?

 

Mr. Rosengren, What Are You Thinking? - z lmci


Rolex | Short the Rich

Takeaway: Rolex is evolving. We’re not so sure it should.

Editor's Note: This is a recent research note written by our Retail team. Email sales@hedgeye.com for more information.

 

Rolex | Short the Rich - z ro ro

 

We always pick up on anecdotes of private brands, as do most retail analysts. But here’s our take on an interesting one as it relates to Rolex (private) that we think serves as a good brand study.

 

Rolex is evolving. We’re not so sure it should.

 

  1. We’re seeing a number of developments with the brand. Specifically, the styling is very updated, but starting to look very much unlike the traditional Rolex that is the mainstay for a $20,000 anniversary gift that is ultimately passed down through generations. 
  2. We’re not suggesting that Rolex is coming out with a ‘me too’ iWatch, but simply that a brand like this with such an amazing cache has to be careful about changing it up too quickly. Check out the images below. The first image looks more like a Tag-Heuer 1990s knockoff than a Rolex. 
  3. Oh any by the way, distribution is evolving too. These things are selling in the secondary market in flash sales on sites like ‘Touch of Modern’ (which is admittedly a wicked site for men who have cash to burn and like toys – like a desk Jellyfish aquarium or a tactical Damascus Blade knifes handcrafted in Brazil). 
  4. Brand evolutions are not all created equal. For example – Kohl’s and Nordstrom have failed to allocate capital in a manner that allowed them to evolve. Now they’re as close to perma shorts as you can find in retail – barring a big capital infusion to dig out of the hole. That in itself is a negative stock event. 
  5. But then on the high end, there’s validity to not changing up a design. The best parallel to Rolex, we think, is the BMW 3-series. Check out a 3.25i from 2006. Then check out a 3.25xi from 2016. The styling is remarkably similar to the extent that non-owners probably cant tell the difference from a distance, which boosts aftermarket value. The same goes for a car like the Lexus RH300/450. Slight evolution, but no sudden movements. If it ain’t broke, don’t fix it. 
  6. Maybe this is why the late-model Rolex designs are selling for a 50-70% discount in the secondary market. 

 

Short the rich.

 

The best play here is Tiffany – though that call goes far beyond this Brand Study (it’s only the 446th ranked keyword on Tiffany.com). Sales should still slow, as its traditional customer gradually shifts away from the brand, sales per square foot weakens, and margins compress as the inability to sell successfully online while maintaining brand cache plagues the long-term story. Numbers remain too high.

 

Rolex | Short the Rich - 2 ro


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PREMIUM INSIGHT

REPLAY: About Everything with Neil Howe and Tom Tobin | Medicaid for the Middle Class?

REPLAY: About Everything with Neil Howe and Tom Tobin  | Medicaid for the Middle Class? - z dome

Join Demography Sector Head Neil Howe and Healthcare Sector Head Tom Tobin as they discuss the latest About Everything edition Healthcare for the Middle Class? 


CHART OF THE DAY: #ACATaper Likely = #NFPTaper

Editor's Note: Below is an excerpt and chart from today's Early Look written by Hedgeye U.S. Macro Analyst Christian Drake. Click here to learn more.

 

ACA has proven effective as a jobs and consumption stimulus program.  It served to augment employment growth over the last two years and has helped support headline payroll gains in the face of ex-healthcare softening in 2016. 

 

However, as the #ACATaper theme plays out and the benefit decays, the support to NFP will similarly diminish. 

 

CHART OF THE DAY: #ACATaper Likely = #NFPTaper - cd 1


Cartoon of the Day: Identity Crisis

Cartoon of the Day: Identity Crisis - Fed Hawk Dove cartoon 09.08.2016

 

The Fed pivoted from hawkish in December...

to dovish in March... 

to hawkish in May...

to dovish in June...

and back to hawkish in August.

 

5 policy pivots in just 7 months.

 


Early Look

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