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 November 30, 2009


The setup for this week is not great, even if you’re not Dubai or Tiger. The group has performed well, and the delta with news flow should be incrementally negative. Still emerging opportunity with footwear that could last at least throughout 2010. How long apparel can hang on is measured in weeks not quarters.

Happy Cyber Monday!  By the end of today, 100 million people are expected to shop online taking advantage of deals across almost every ecommerce site.  For comparison, roughly 195 million people actually shopped online or in a physical store over the Thursday to Sunday period following Thanksgiving. Unfortunately for Tiger Woods, that’s probably about the same number of people (in the US) who are being barraged with ‘news’ of his incident on Thanksgiving.  C’mon…is this for real? Dubai is melting down financially and the media is talking about whether Tiger’s Dubai golf course will finish according to plan? Two people pinged me over the weekend asking if I thought Nike would alter its financial support if any of the allegations are true. No disrespect to those that asked me – but that’s simply ridiculous. I will never speculate on or justify the personal behavior of another human (especially without knowing all the facts), but since his famous putt-off at age 2 vs. Bob Hope on the Mike Douglas Show in 1978, he has been untouchable. Now, perhaps we will actually realize that the guy is human. And unless something transpired to alter his golf DNA, he will remain one of the fiercest competitors in sports.

The setup for retail this week is not great. We’re largely through earnings, with a  few stragglers this week. But then we have Sales day on Thursday, which will naturally be focused on buying patterns around Black Friday. Even in a good economy this commentary does not live up to the hype given the dissipating importance of this period as it relates to share of holiday spending. And let’s let the facts speak for themselves, on a 3-day, 1 week, 3-week and 3-month basis – retail has held its own with this market. In addition, weather remains unfavorable for cold-weather apparel – which is likely to come out as well. Remember that early season  cold weather apparel (fleece, shells, jackets and coats) were 3x better than any of the past 5-years. Recent trends add credence to the view that these sales were simply pulled forward at full price. This does not set up for a big negative earnings event in 4Q, but it does limit the upside we’ve been seeing over the past 3 quarters.

Names to play: UA, PSS, FL, RL, DECK, BBBY, and NKE (after the quarter).

Names to avoid: ROST, TRLG, JCP, COLM, DKS, VSI (after the print), and TJX.


  • Timberland entered a licensing & distribution deal with Reliance Brands in India. Though economics are not clear, this is good at face value for TBL. The company probably should not ignore over a billion Indian consumers – especially given how dang hot the brand is in China. But we’d caution that there are major cultural, climate and utility differences between a brand entering the boot market in each of these countries. China is a slam-dunk, but we’re definitely not sold on India.
  • With all the talk about the warm weather and its impact on sales of seasonal apparel, we’d like to point out one of the more extreme weather facts from the month.  For the first time in 46 years, the state of Minnesota had its first snow-free November, with temperatures hovering 8-14 degrees above average throughout most of the month.
  • In one of the more unique promotions we’ve seen in the apparel industry in a while, outerwear brand Weatherproof has launched a “Coats for Clunkers” campaign.  The effort is aimed at driving donations of used coats for New York Cares.  In return for donating a used coat at Penn Station on December 14-16, customers will receive a $100 credit for use towards the purchase of a  new coat on coatsforclunkers.com.  The company also hopes to build national awareness of the NY program in hope that other brands will join in the “Clunkers” effort.


NRF: Holiday Shopping Kicks Off with More Spending Less - As the closely-watched Black Friday weekend wound down, a National Retail Federation survey conducted over the weekend confirms the expected: more people spent less. According to NRF’s Black Friday shopping survey, conducted by BIGresearch, 195 million shoppers visited stores and websites over Black Friday weekend*, up from 172 million last year. However, the average spending over the weekend dropped to $343.31 per person from $372.57 a year ago. Total spending reached an estimated $41.2 billion. Shoppers’ destination of choice over the past weekend seemed to be department stores, with nearly half (49.4%) of holiday shoppers visiting at least one, a 12.9% increase from last year. Discount retailers took an uncharacteristic back seat, with 43.2% of holiday shoppers heading to discount stores over the weekend and another 7.8% heading to outlet stores.** Shoppers also visited electronics stores (29.0%), clothing stores (22.9%), and grocery stores (19.6%). As millions of shoppers gear up for Cyber Monday, one-fourth of Americans shopping over the weekend (28.5%) were shopping online. <sportsonesource.com>

Borders begins 'closing down' Sales while interested buyers circle - Borders has commenced ‘closing down’ Sales in all its stores as interested parties circle the business. The bookseller, which collapsed into administration on Thursday, launched the Sales in all 45 stores on Saturday, putting pressure on its rivals in the crucial Christmas trading period. A spokesman for the administrator MCR said Borders had been planning a sale for last weekend for some time. He described them as “stock clearance sales” as oppose to closing down sales, and added that MCR was conducting a “parallel strategy” - selling off stock while trying to find a buyer for the business as a going concern. He said MCR had received “lots of interest in the Borders and Books etc brand”. MCR joint administrator Phil Duffy said: “We are conducting closing down sales while we continue to seek a purchaser for all or some of the company’s stores.” The Sale will be a blow to rivals including Waterstone’s, WHSmith, Tesco, Asda and Amazon. <retail-week.com>

Armani, Cavalli Go Online to Boost Holiday Sales - Italian fashion houses including Giorgio Armani SpA and Valentino Fashion Group SpA, which have traditionally spurned the Internet, are testing Web stores this holiday season in a quest for new sources of revenue. The worst recession since World War II and Italian acceptance of Internet buying -- even for big-ticket items -- is sparking greater use of Web shops in the luxury-goods industry. Designer Roberto Cavalli and shoemaker Salvatore Ferragamo SpA have both opened e-stores in the past five weeks. “I expect a significant boom in online luxury sales during the Christmas period,” said Alessandro Perego, a professor in charge of research on e-commerce at Milan Politecnico’s School of Management. “In the past year the number of Web sites has increased substantially. I expect growth rates in 2010 to match or beat this year’s.”  <bloomberg.com>

Mitchells Take Control of Wilkes Bashford - It’s a done deal — the Mitchells are the new owners of Wilkes Bashford. A bankruptcy court in San Francisco on Wednesday approved the sale of the San Francisco-based luxury specialty store to Ed Mitchell West LLC for $4.6 million in cash. “The judge approved everything,” said Bob Mitchell, co-president of the $100 million Connecticut-based retailer that owns Mitchells in Westport, Conn., Richards in Greenwich, Conn., and Marshs in Huntington, N.Y. “There were no other bids and the creditors all supported the plan.” The acquisition gives the Mitchells a beachhead on the West Coast, where they can be players in the luxury men’s wear sector in the San Francisco Bay area. The Mitchells have purchased the inventory, trademark and fixtures of the business, not its liabilities.  <wwd.com>

Dunay Jewels Get Auction Approval - Henry Dunay Designs Inc., one of fine jewelry’s venerable names, is going to auction. The company, founded by its namesake more than 50 years ago, won court approval on Wednesday to auction Dunay’s jewelry inventory at the U.S. Bankruptcy Court in Manhattan. Henry Dunay sold his pieces, which start at about $4,000 and reach as much as $500,000, to Bergdorf Goodman, Neiman Marcus and independent retailers around the world. The auction is set for Dec. 16. The firm filed for Chapter 11 bankruptcy protection in June, a symbol of how hard the recession had hurt the sector.  <wwd.com>

UK: Textile job losses slowed down - UK's textile job losses has been slowed down although the country's economy will experience a slow recovery, said a survey conducted by Clifton Asset Management. The survey, of more than 1,000 businesses, revealed that 28% of firms have cut jobs over the past six months, down from 34% in the last survey. However, most of the small businesses believe that the worst of the recession maybe over but it will take another year or more to recover. <fashionnetasia.com>

Christmas Shopping 2010 - Discounts, scarcity and luxury - A survey carried out in London and reported on CNN on November 25th indicated that 40% of retailers intended to offer discounts for the 2009 Christmas season compared to 90% in the comparable period in 2008. With nothing being certain for this Christmas sales period due to rising unemployment and volatile retail sales and consumer confidence indices in both Europe and the US, other measures are being taken at retail level to limit the discount blood-letting which has badly wounded the retail luxury market this year. <fashionnetasia.com>

Zac Posen to Design for Target - Zac Posen, who has dressed stars such as Kate Winslet, Gwyneth Paltrow and Jennifer Lopez, will be the next limited edition designer of Target’s Go International series. Posen’s Go International collection will be available at most Target stores nationwide and online at Target.com from April 25 through May 30. Go International, which focuses on young or emerging designers, has, since 2007, featured Erin Fetherston, Jovovich-Hawk, Rogan, Richard Chai, Jonathan Saunders, Thakoon and Tracy Feith. Next month, Target will introduce Rodarte, the collection designed by sisters Kate and Laura Mulleavy. Target did not disclose prices for Posen’s collection, but previous Go collections have been in the $14.99 to $149.99 range. Posen’s own collection is priced from $900 to $12,000, with custom pieces fetching upward of $20,000. <wwd.com>

JA Apparel Names CFO - Tom DeCarlo has been promoted to senior vice president and chief financial officer of JA Apparel. DeCarlo, who has been with JA since 2004, most recently as vice president of finance and controller, had been serving as the head of financial operations since the previous cfo, Eric Spiel, left the company earlier this year. In July, DeCarlo was also given oversight of the company’s human resource operations. As cfo, DeCarlo, who has more than 20 years of experience in retail, wholesale, manufacturing and consumer product industries, will oversee all financial functions of the privately held company. He reports to Staff. <wwd.com>

EU Study Warns of China's Manufacturing Overcapacity - China is producing too much, especially in large sectors like steel and concrete, and its manufacturing overcapacity damages domestic and global economies, according to a new study from the European Union Chamber of Commerce in China. Overcapacity “is a strangely understudied and seldom-examined phenomenon, and one whose influence is even more widely felt in the aftermath of the economic crisis,” the EU Chamber said in its report released Thursday. The global financial crisis highlighted China’s overcapacity problem, which was mopped up to a large extent in previous years by high demand from the U.S. and Europe. With that demand greatly diminished in the wake of the downturn and savings rates beginning to rise, China’s overproduction across a variety of sectors is now more apparent, the report said. “The economic crisis has throttled demand for exports from China at a time when even more investment, spurred by the Chinese government’s massive stimulus package, is being pumped by some local decision makers into building new plants and adding unnecessary capacity,” the report said.  <wwd.com>