Required Retail Reading: Footwear Industry Sales Trends/Data Update

RETAIL FIRST LOOK

December 16, 2009

 

 

TODAY’S CALL OUT

 

Synching industry sales trends/data from NPD and SportScan with the same-store sales of individual companies is part of our process at Research Edge.  And since this is part of our process, it can also be a part of yours.  If you are interested in seeing company specific data in the footwear and sports apparel space, please contact us so that we can set you up with weekly or monthly customized reports on the companies you care about.

 

 

Yesterday we received a key data point that shakes, but does not break our bullish outlook on the family footwear space.  Sales sequentially fell from an impressive 17.7% growth rate in September to 7.4% in October to -0.7% in November.  While November’s data is negative, it doesn’t change our fundamental view.  Here’s why:

 

  • The November compare for Shoe Chains is the most difficult monthly compare in Q4 (November ‘08: +1.5%, December ‘08: +0.2%, January ‘09: -4.7%)
  • The month of November accounts for only 31% of the quarter while December accounts for 45%.
  • The data does not include fashion footwear, which is where the majority of the boot category rests.  And with the return of cold weather, we can’t ignore boots as they become an more meaningful percentage of 4Q sales.  Recall that most retailers are reporting this is one of the best boot seasons in the past several years.  We estimate boots as a category represent about 20% of the 4Q business.  While some individual retailers are seeing boot sales increase upwards of 50%, we estimate that the overall industry is growing somewhere around 20%.  If we factor in a low to mid single digit lift from boots on top of the baseline trends, November shakes out in the +3% to +4% range which is a sequential slow down, but still better than indicated.       

 

Required Retail Reading: Footwear Industry Sales Trends/Data Update - FL 12 16 09 Fig1 

 

Required Retail Reading: Footwear Industry Sales Trends/Data Update - image png

 

Company impact:

 

Required Retail Reading: Footwear Industry Sales Trends/Data Update - FL 12 16 09 Fig3

 

  • SCVL faces the greatest potential risk according to the math.
  • PSS, DSW, and SCVL face easier compares in Q4 than they did in Q3.  BWS face a more difficult Q4 compare down 1.5% vs. -6.7% in Q3.
  • Shoe chains haven’t underperformed athletic specialty stores since February 2009.  The outperformance of athletic specialty has been fueled by the toning/fitness category.

 

Required Retail Reading: Footwear Industry Sales Trends/Data Update - 4

 

 

LEVINE’S LOW DOWN

  • Despite the belief that ecommerce is potentially a thorn in the side of traditional bricks and mortar retailing, there are some interesting trends developing for those with a bricks and clicks strategy. Both Wal-Mart and Best Buy are seeing a substantial portion of their online customers opting for in-store pick-up rather than delivery to one’s home. Wal-Mart is suggesting 40% of its consumers are picking up in-store while Best Buy is tracking at 30%. Even more surprising is that these statistics were provided during the current holiday season, a time in which free or almost-free shipping is standard.
  • In the first sign that gift cards are back after a challenging holiday season last year, Best Buy reported that it’s seeing strong trends in the category. Sales of gift cards were up 40% y/y heading into Black Friday and increased over 100% during Friday and Saturday of the Black Friday weekend. Historically, consumers at BBY spend on average 2x the face value of their gift card when redeemed.
  • Celebrity gossip sites are all over the latest photo shoot for the next Candies marketing campaign featuring Britney Spears. Word has it that famed-photographer Annie Leibovitz conducted the shoot for Kohl’s in Los Angeles last week. While the Candies ad campaigns have historically been centered on the spokeswoman, this is sure to gain added attention given Leibovitz’s stature behind the camera.

 

MORNING NEWS 

 

G-III Apparel plans public share offering - G-III Apparel Group Ltd. said Tuesday it plans to sell common stock in a public offering to fund general operating costs and possible acquisitions. The company, based in New York, did not say how many shares it would sell or how much they would cost. Piper Jaffray & Co. is the bookrunning manager. Lazard Capital Markets is co-lead manager of the offering while Brean Murray, Carret & Co. and KeyBanc Capital Markets are co-managers. G-III Apparel shares fell $1.05, or 5 percent, to $20.20 in after-hours trading Tuesday, as investors worried about the stock possibly becoming more diluted. <businessweek.com>

 

Dave McTague Named Cole Haan CEO - Cole Haan has named Dave McTague as its new chief executive officer, effective Jan. 4, succeeding James Seuss, who has decided to leave the company. Seuss, who held the ceo post since May 2006, could not be reached for comment, but it is understood he has another job, which could not be learned at press time. McTague will report to Eunan McLaughlin, president of Nike Inc. Affiliates, which owns and operates the accessories firm. Prior to his most recent role as executive vice president of partnered brands for Liz Claiborne Inc., which he left on Dec. 4, McTague served as president of Converse Apparel from 2005 to 2007. Nike owns Converse as well. <wwd.com>

 

Collective Brands Promotes John Smith - Collective Brands Inc. has appointed John Smith to SVP and GM of retail for its Performance and Lifestyle Group. Smith joined the company in 2005 and will now report to Stride Rite Children’s Group’s new president, Sharon John. The former SVP of store development and procurement will now lead all retail efforts for the Performance and Lifestyle Group, creating a new strategy in partnership with the Stride Rite Children’s Group. “Applying John’s extensive retail knowledge and strategic thinking directly to the Performance and Lifestyle Group operation will enable us to take our retail businesses in this important and growing unit of our company to the next level,” Matt Rubel, CEO of Collective Brands, said in a statement.  “This move ... shows our commitment to the PLG retail business — a critical initiative for Collective Brands’ hybrid business model.” In his new position, Smith proposes to expand the 360-store Stride Rite chain. <wwd.com>

 

Abercrombie & Fitch Creates Stir in Tokyo - Hundreds of shoppers hit Ginza Tuesday morning to be the first to enter Abercrombie & Fitch’s new flagship here. By the 11 a.m. opening, an estimated 1,000 people had lined up to get into the American brand’s first store in Japan. The first customer in line, Hiroaki Kato of nearby Kanagawa, arrived at 9 a.m. on Monday to stake out his spot. “All I’ve had is a single cup of coffee,” he said. Models dressed in jeans, T-shirts, checked flannel shirts and wool jackets greeted customers as they entered the store. Inside, more models, many barely dressed, roamed the shop floor in front of a massive wall mural. The first 500 customers in line were given long, narrow posters displaying a male model’s bare back, the same image that was blown up on the sides of an advertising truck that made its rounds through the area.  <wwd.com>

 

Iconix Brand Group Said to Be Breaking Off Talks to Buy Playboy - Iconix Brand Group Inc. is breaking off talks to buy Playboy Enterprises Inc. after determining it would be too complicated to separate the Playboy brand from the company’s other assets, said two people familiar with the matter.

Iconix, the owner of London Fog and Danskin, was interested in licensing the brand and had wanted to divest, shut down or find partners for Playboy units, said the people, who declined to be identified because the talks were private. The situation is still fluid and may be resolved soon, another person said.

Tara Levy, a spokeswoman for Iconix, and Martha Lindeman, a spokeswoman for Chicago-based Playboy, couldn’t be reached to comment outside of regular business hours yesterday.  <bloomberg.com>

 

Cabela's Amends Credit Facility - Cabela's Inc. successfully completed the second amendment to its Second Amended and Restated Credit Agreement. The amendment allows the company to contribute up to $225 million of capital to World's Foremost Bank, the company's wholly-owned bank subsidiary, in calendar year 2010 plus up to $25 million of capital in any fiscal year. The company's ability to make the $225 million capital contribution in 2010 is contingent on changes in accounting rules and regulatory guidelines. The company paid a fee of 50 basis points of the revolving commitment amount to the lending banks to facilitate the amendment. For accounting purposes this fee will be amortized over the remaining term of the credit facility, which expires June 30, 2012. The applicable margin associated with borrowings outstanding under the agreement was unchanged. <sportsonesource.com>

 

European Optical Titan to Acquire FGX International - FGX International Holdings Limitied, which makes Foster Grant, Gargoyles, Ironman, Champion and Body Glove sunglasses, has signed a definitive agreement to merge with a subsidiary of Essilor International of Charenton-le-Pont, France. Under the terms of the merger agreement, which was unanimously approved by the boards of directors of both companies, FGX International shareholders will receive $19.75 per share in cash upon completion of the merger, for an aggregate value of approximately $565 million, including the assumption of FGX debt of approximately $100 million. FGXI was trading at $17.91 Wednesday morning before markets opened. If completed, FGX International will become a wholly owned subsidiary of Essilor. <sportsonesource.com>

 

Esprit Plots Growth, Seeks Revival in U.S. - The brand, which has had a European and Asian focus for the last five years, is trying to make an impact with larger, architecturally significant stores and an edgy new advertising and image campaign. A three-level, 15,000-square-foot Esprit flagship is set to open at 21-25 West 34th Street here in March. It will be Esprit’s largest store in North America and second largest worldwide. When it bows, the flagship will be Esprit’s fifth unit in Manhattan. Existing stores are in the Flatiron District, Fifth Avenue, SoHo and Columbus Circle. The new flagship will offer men’s casual, men’s collection, women’s casual, women’s collection, women’s EDC and men’s and women’s accessories.  <wwd.com>

 

Henri Bendel Launches New Concept in California - Henri Bendel opened a pair of concept stores last month in Southern California that focus exclusively on Bendel-branded merchandise, including jewelry and accessories, beauty products and an assortment of edibles. A 2,400-square-foot boutique launched at South Coast Plaza in Costa Mesa, Calif., followed by a 2,000-square-foot store at Beverly Center mall in Los Angeles. The Limited Brands Inc.-owned luxury chain has sharpened its focus on its most profitable areas, while getting out of apparel — a companywide shift. The parent company sold off majority stakes in The Limited and Express chains in 2007. <wwd.com>

 

Jones Apparel Group, Inc. Names Stacy Lastrina Chief Marketing Officer - Jones Apparel Group, Inc. (NYSE: JNY) ("Jones") today announced that Stacy Lastrina has been promoted to the position of Chief Marketing Officer. Ms. Lastrina, who previously served as Executive Vice President of Marketing and Creative Services, will continue to report to Wesley R. Card, President and Chief Executive Officer, Jones Apparel Group. Ms. Lastrina has 19 years of experience with Jones Apparel Group, having joined Nine West Group in 1991 as Director of Marketing. Jones acquired Nine West Group in 1999.  <prnewswire.com>

 

The North Face Sues The South Butt - The North Face has filed a patent infringement suit against a teenager marketing fleeces, T-shirts and shorts under the brand name "The South Butt." In its lawsuit, TNF alleges James Winkelmann Jr., Williams Pharmacy and The South Butt LLC infringed on its patent with their parody product. Winklemann, 18, created The South Butt two years ago and began selling them through Williams Pharmacy, which owns four drug stores in the St. Louis area. The brand features fleeces, T-shirts and other apparel adorned with a square white on red logo that is very similar to TNF's iconic logo. The South Butt uses the tagline "Never Stop Relaxing" in a parody of TNF's "Never Stop Exploring."  <sportsonesource.com>

 

Lorpen Expands US Sales Force by 35% - Lorpen, known for its performance socks for outdoor and wintersport enthusiasts,  announced it has greatly expanded its U.S. sales force to keep up with the company’s solid growth in 2009. Lorpen has partnered with the following agencies and independent sales reps that specialize in the outdoor and wintersports industries: Great Pacific Sales will cover the Calif., Nev., Ariz. territory; Will Mason and Deno Dudunake will cover the New England territory; Continental Divide Sports will cover the Utah, Colo., Wyo., N.M. territory; Joe File will cover the Ohio, Ind., Ill., Ky., Mich. territory; Kent Fried will cover the Md., Del., DC, NY, Penn. territory; and Outdoor Marketing Alliance will cover 16 states in the Southeast and Midwest territories. <sportsonesource.com>

 

CFOs Say Customer Outreach Not Hurt by Marketing Cuts - Retail finance executives cut where and what they could in 2009, including marketing budgets, but the flexibility of their marketing partners and emphasis on productivity allowed them to maintain or even increase their advertising outreach. This was among the key findings in a survey of chief financial officers from 26 specialty and department store retailers in the U.S. and Canada conducted by Karabus Management Inc., the Toronto-based retail advisory subsidiary of PricewaterhouseCoopers LLP. The 26 stores participating in the second-annual cfo survey ranged in volume from $140 million to $9 billion, with 46 percent public and the remainder private. Forty percent of the cfo’s surveyed said they’d moved away from traditional broad-based advertising and toward more targeted promotions geared to existing customers, and half indicated that, because of savings offered by their media and marketing partners, they were able to cut back on marketing expenditures without materially affecting their customer outreach efforts. <wwd.com>

 

U.S.-Made Apparel Prices Rise - Wholesale prices for U.S.-made apparel rose 0.2 percent in November compared with October, and increased 0.3 percent versus a year earlier, the Labor Department said Tuesday in its Producer Price Index. Women’s apparel prices advanced 0.2 percent in month-to-month and year-to-year comparisons. Men’s apparel prices were flat in November compared with the previous month, but gained 0.8 percent from a year ago. Prices for all U.S.-made goods and services increased 1.8 percent in November, driven primarily by a temporary spike in the cost of fuel.  “There is nothing in this report that points to incipient or sustained pressure on broad prices in the economy,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight.  <wwd.com>

 

European Retailers Upbeat About Christmas - Shoppers across Europe are loosening their purse strings for the Christmas season, according to retailers, who are upbeat about sales so far. European economies continue to struggle — especially in such key markets as the U.K. and Germany — resulting in trends around the Continent that are similar: While shoppers are more than happy to spend, many are trading down, sticking to their budgets and investing in classic, enduring pieces rather than trendy ones. There’s some discounting going on, although not as rampant as in the U.S., and stores such as Printemps in Paris, Selfridges in London and Düsseldorf’s Eickhoff Königsallee are entertaining shoppers with impromptu pantomime performances, Russian dancers, and tempting them with cinnamon cookies and Champagne.  <wwd.com>


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