08/06/17 01:29 PM EDT

HedgeyeRetail #grinding

Brian McGough

Jeremy McLean

Takeaway: Our process is to vet 300+ names in the retail supply chain - real time - to find BIG ideas. 45 tickers this week in our morning grind

Our process is to vet 300+ names in the global retail supply chain -- real time -- to find BIG ideas. 45 tickers this week in our morning grind.

HBI, UAA, JWN, W, NKE, DDS, GIL, BGFV, MIK, PRTY, LB, VSTO, CAB, DKS, COH, GGP, FDX, ETSY, TOD, NWL, MAC, PUMA , SPG, KKR, KSS, HBC, DLA, ADS, AYR, VRA, DBA, TPG, UPS, TGT, WMT, AMZN, TCO, ANF, ELY, KORS, Gymboree, Warby, Blue Nile, Eloquii, Fabletics

Hedgeye RetailDirect subscribers that see our note every morning already most of this. If you haven’t…then her you go.

Monday

1. You know when you wake up, see a headline re one of you positions and you have one of those ‘oh crap, this sucks…’ moments? Let’s dive into everything that could lead to one of those after tomorrow’s print – and what HBI’s accountants (and PWC) could do to push it – while staying on the ‘legal side of questionable’.

2. Two big questions for me on tomorrow’s UA(A) print…1) direction of revenue growth – if decelerates then does not deserve a 42x multiple. 2) If accelerates anything less than 1,000bp, it still does not deserve a 42x pe. I still think Plank is a winner, which is why he’ll lever up to do what’s right with the business and tap capital markets closer to $10. #3 on Best Idea short list behind HBI and KSS.

3. JWN appears to be looking to take on more debt to get this deal done. I don’t blame Apollo (active – just did RH deal), KKR, Leonard Greene, etc…for showing interest. The JWN family is grossly underinvested in this business. If/when management fails (either ups capital spend to win else proves to be a melting ice cube on top line) then p/e firms will own JWN on the cheap.

"The minute that you are not learning, I believe that you're dead." - Jack Nicholson

Make it a great one…

1. You know when you wake up, see a headline re one of you positions and you have one of those ‘oh crap, this sucks…’ moments? Let’s risk-manage everything that could lead to one of those after tomorrow’s print – and what HBI’s accountants (and PWC) could do to push it – while staying on the legal side of questionable.

I think this is ultimately a $5 stock, with the revenue and cash flow miss to support it. It’s the result of a decade’s worth of bad behavior fueled by misaligned incentives at the time of the IPO to get (very upset) management paid in light of sticking it with $2.4bn in debt from/by from Sara Lee.
[Note, I was at Morgan then when we did the deal – well before current IR knew they’d have their current jobs. That’s not a dig. It’s a #fact]. But this is a BIG call for Hedgeye…and we risk-manage pretty much everything.
This cash flow miss – what should be a BIG one – is fueled entirely by deleveraging revenue miss(es) – both units and pricing – rising costs, deferred investments, weaker pricing (thanks in part to GIL), rising costs, eroding rate of special charges that are partially funding margins, and the inability to leverage interest expense (and 4.3x leverage) due to a series of (ultimately) dilutive acquisitions.
Basically, it starts with top line miss, and deleverages everything thereafter.
With nearly every ‘this company will implode’ call, as we know, the quarters leading up to the implosion include irrational cost cuts, channel stuffing, aggressive terms, and whatever a company (and Price Waterhouse Coopers) could do to push the needle on accounting – while staying on the legal side of questionable.
In that vein, the note below risk-manages the factors that could make Tuesday evening on the uncomfortable side if you’re big-time short this name…

HBI | Here’s what blows up short side: LINK

2. Two big questions for me on this UA(A) print…1) direction of revenue growth – if decelerates then does not deserve a 42x multiple. 2)If accelerates anything less than 1,000bp, it still does not deserve a 42x pe. I still think Plank is a winner, which is why he’ll lever up to do what’s right with the business and tap capital markets closer to $10.

3. JWN looking to take on more debt to get this deal done. I don’t blame Apollo (active – just did RH deal), KKR, Leonard Greene, etc…for showing interest. The JWN family is grossly underinvested in this business. If/when management fails (either ups capital spend or proves to be a melting ice cube on top line) then p/e firms will own JWN on the cheap.

Our Model

Bull Model

Tuesday

1. UA(A). This is the most defensive restructuring program I’ve seen in Athletic since Reebok in 2003. Plank just set the company up for another one – or a good old fashioned ‘top line melt.’ #3 on Best Idea short behind only HBI and KSS (UA is the only non-bagel).

2. Two concerning insider sales…Wayfair (one of our top Shorts), and Nike (#2 long behind COH). The latter concerns me. I still think rev is accelerating and EPS estimates are too low. But when Sprunk sells $15mm in 5 months, you gotta pay attention.

3. What’s this…”get all activist on dinosaur department store dirt” week? DDS and HBC Not much of a market for a portfolio of anchor tenant real estate…not when the space was defendable. Then why today? #fail.

"Do what you can, with what you have, where you are" - Theodore Roosevelt

Make it a great one…

Here’s the problem with this UA print…the restructuring program is far too defensive for an otherwise aggressive company like UnderArmour.

It’s about severance, cost cuts, lease terminations and writing off inventory (did this company actually just charge off inventory? I need color there from CFO).
I’d get bullish if Plank invested the $130mm in building an organization that could and create product in a way new consumers actually want it. That’s not enough $$$ -- probably needs $400mmm – but it’d be a huge step in the right direction.
Instead UA just set itself up for another restructuring – or its top line turning into a melting ice cube. I hate picking a ‘magic multiple’ for a stock. So I won’t.
But there is nothing about the trajectory – and ultimate ending point – for this business that warrants a 40x multiple.
I said it before and will say it again, UA will need to tap capital markets closer to $10.
Maybe this is the problem with an organization in transition that has such a ‘win win win’ culture – in that it will never admit defeat until the game is over.

Nike

COO Eric Sprunk sold $6.5M worth of stock late last week.
He also sold about $3mm worth on June 30^th and sold $5.7mm worth in late March.
Each have the last 2 years he had an instance of a large stock sale (~$5mm+), but so far this year he has sold about 2x that we saw in 2016.
Generally his sales are via options exercises, this event was not.
Sprunk knows how to sell stock. Usually NKE insider sales don’t concern me. This one does.

Wayfair

COO Savarese sold $3.2mm in stock last week via 10b5-1.
Wayfair insider sales are nothing new, filings hit seemingly every week, but this filing was very different.
Historically the cadence of sales have been small blocks of shares being sold upon vesting of RSUs.
Last week’s sales were not part of vesting, and carried a value over 2x the total value of stock Savarese sold last year when he unloaded ~$1.3m.

DDS tried this twice already. Activists think it can get done?
p/e/ would otherwise pull a jwn or even RH-appollo, and have call option on owning it. Macy’s failed – won’t work w DDS and NBC.

Wednesday

1. HBI not being deceptive. It simply believes in its own business planning process, which ranks somewhere between Kohl’s and Jared.

2. A question from yesterday from a colleague. “Hey B…will you Long UA if Plank gets fired?” My answer “if plank fires himself the stock goes up 20%. Then I short more. New CEO will have to borrow up to $500mm to fix this co. AND rebase margins to 3. THEN I'd buy it.

3. Delta Apparel’s business that competes with GIL looks bullish top line. So-so margins. Remember that GIL is using $500mm in EBIT in this business to attack HBI’s $900mm – regardless of margin.

4. This BGFV blow up is yet another data point that tells me that maybe I should listen to that screaming voice on my shoulder saying ‘mcgough, you idiot, how in the world can you be Long DKS. This company has to comp. Has to. And nobody else is. NSP improving and NKE driving incremental comp by 200bp, UA on ropes… But this worries the heck out of me.

5. The Sprunk stock sale at Nike is probably a precursor to him losing a political battle to become next CEO. That switch likely happens in FY18 – 2 years tops. And Parker WON’T leave without a big revenue acceleration.

6. Simon Property Group (largest mall operator in US) was spot on w the comment from Taubman last week that travel markets have bottomed and are showing signs of recovery. That’s bullish for pretty much everyone pseudo-lux and higher. COH, RH, TIF, etc…

7. This PRTY beat is a plus, but I still like it short side. The reality is that the HUGE margin run in vertical sourcing is near an end. Management is good here, but unit growth not there, comp is slowing (though guidance is for accel) and margin oppty is limited. It’s cheapish, and a survivor like MIK. But numbers high.

8. According to the research think tank known as the NY Post, boobs have apparently become a ‘thing’ again. That’d be bullish for LB. I don’t buy it for a minute. I mean, I would…but I don’t.

"Anyone who has never made a mistake, has never tried anything new." – Einstein

Make it a great one…

1. HBI not being deceptive. It simply believes in its own business planning process, which ranks somewhere between Kohl’s and Jared.

HBI no thesis changer in the qtr – though organic sales missed and yet HBI guiding to big acceleration that it will likely miss.
One of the key factors here – and I’ve said it before – is that management is almost certainly not lying.
It simply believes in its own business planning process, which ranks somewhere between Kohl’s and Jared.
It’s ‘confidence’ has close to zero relationship with earnings revisions (actually inverse at times).

HBI | Confidently Confident in its Confidence: LINK

Delta Apparel sales increased 4% with basics up 9.6%. Operating profit margins contracted 20bps in basics.
Activewear sales grew 11% driven by single digit sales growth in the Delta Catalog (screenprint) business.
Delta owns the Salt Life (fishing brand) which had sales growth of 48% in ecommerce, but it was offset by weakness in the big box retail sporting goods channel. Dick’s has a small assortment, Hibbett’s has less, Big Five does not carry.

Latest data points on athletic:

BGFV comps slowed from 7.9% in 1Q to 0.8% in 2Q. - June as we experienced weakness in certain outdoor product categories related to firearms, camping and water sports, and also began to cycle some of the benefit from the competitor store closures that occurred last year. Currently comping slightly down for the third quarter-to-date.
UA, NKE saw slowing growth in NA, Adidas accelerating.
Academy layoffs
Amer said sell through in most of US wholesale market was strong, but sales into the channel were still down due to customer bankruptcies and lower door count.
Puma sales grew 15.4% in Q1 and 16% in Q2. Double digits in all regions, driven by footwear.
Delta Apparel sales grew 4%. Basics saw a 9.6% increase YY. Activewear up 11% driven by single digit sales growth in catalog business.

5. The Sprunk stock sale at Nike is probably a precursor to him losing a political battle to become next CEO. That switch likely happens in FY18 – 2 years topps. And Parker WON’T leave without a big revenue acceleration.

Eric started 30 years ago in accounting and has worked in every pillar of Nike.
I worked with him when I was at Nike 15 years ago. Trust me, he ‘gets it’.
The real call here is that Eric is being passed over for CEO role. Trevor is king of the political chess game. And Trevor has no sense as to financials (my opinion). He’s a brand guy.
Parker will be out in a year. Two years tops. AND he WON’T leave on a punk revenue year.
He literally told me this when he and I were playing guitar in his office back in the day. The same guitar that that Eric Clapton gave to him…one that EC inherited from Jimi Hendrix. Parker has a lot of ‘stuff’. Google it. It’s nuts…
I like NKE #long side – big. I worry more about a Sprunk replacement than I do his stock sale.

Tenant bankruptcies from Rue 21, Payless, BCBG, and Bebe had a 100bps impact on occupancy during the quarter. Gymboree’s real estate is being renegotiated now.
The rent spread increased 12.9% as new tenants continue to pay more than exiting tenants. Tenant allowances have not changed in recent quarters.
Average base rent increased 3.3% to $52.10. Reported retailers sales psf for its malls increased 1.8% to $770.
Apparel retailers are now down to the low 40% range of space and continue to decrease. Restaurants, new retail concepts, and ecommerce stores have been replacing apparel retailers.
“Pure play” ecommerce retailers have opened 280 stores in the US (includes UNTUCKit, Warby, Bonobos, Blue Nile, Eloquii, and Fabletics).
The softer dollar stabilized some malls in tourist markets.

http://nypost.com/2017/08/01/boobs-are-back-in-a-big-way/

Source: NY Post

Thursday

1. This is why I’m long GIL. Not a huge thesis validator today…but GIL cares less about printwear (≈ 70% share and 1.9% growth) and is going hard on branded (12% share growing at 8.1 %). That competes w HBI, which was -2.5%. GM was surprisingly strong – which and increased ‘spreading(?)’ between HBI. HBI Best Idea Short. GIL #Long.

2. Sorry (but not really) for the HBI-bashing. But the 10Q released last night pokes ore holes in HBI’s comments on conf call. Finished goods inventory increased to 83.3% of total? Highest EVER (‘ever’ is a long time, as we say). That’s margin Bearish.

3. Gun/ammo big long in 4Q? BGFV, VSTO, CAB and even DKS suggesting the answer might be yes. The razor blade/razor model or hardware vs ammo is meaningful.

4. Been getting more interest on COH long – tho far from a consensus call w nums too low. I’m incrementally of the view that VRA will be bought. And can make a case for bottoming in base business. Still doing the research there…

5. The big Retail takeaway from the GGP release is the implied widening lease spreads (tenants NOT paying less), shift toward mixed use (laser tag?), underperformance in apparel. Lease termination income relatively low -- below Taubman (and likely Simon).

6. LB = No. Sentiment might be bottoming, but it might not matter until expectations are rightsized.

“I bet I could throw this football over them mountains. We could’a won State.” – Uncle Rico

Make it a great one…

1. This is why I’m long GIL. Not a huge thesis validator today…but GIL cares less about printwear (≈ 70% share and 1.9% growth) and is going hard on branded (12% share growing at 8.1 %). That competes w HBI, which was -2.5%. GM was surprisingly strong – which and increased ‘spreading(?)’ between HBI. HBI Best Idea Short. GIL #Long.

Charges

$10.5mm of charges were related to Hanes Europe(DB Apparel) this Q, that’s 13 straight quarters of charges.
Perhaps that’s not surprising given the company signaled that it will be don’t with charges on last year’s acquisitions by the end of 2019.
Cumulative charges for DBA have totaled $313mm, that’s about 50% of the revenue base in year 1 under Hanes

Acquisition

Final total acquisition benefit in 2Q17 was $223, about $23mm higher than guided. Keep that in mind when modeling 3Q where the company has guided ~$10mm in acquired revenue.

GTM

GTM is noted several times as a growth driver, particularly within the Activewear segment.
Seems significant for one of the “very small tuck-in acquisitions”… “that will have really a minimal contribution in terms of revenue” as described by management on 3Q16 conference call.
GTM was bought acquired without a press release.

Inventory Mix

Breakdown of the 0.3% decline in inventory includes raw materials down 7.1%, work in process down 3%, and finished goods up 0.6%.
New high for finished goods at 83.3% of inventory.

3. Gun/ammo big long in 4Q? BGFV, VSTO, CAB and even DKS suggesting the answer might be yes. The razor blade/razor model or hardware vs ammo is meaningful.

Half of CAB’s 9.7 comp decline was firearms. Ditto for BGFV.
But ammo is the biggie – it’s like a razor blade/razor model.
People drew down ammo (average # rounds is 1,000 per caliber x avg multi-caliber of 3x per owner). We only have another quarter of this.
Whether you are ‘pro-NRA’ or not, the stocks might be big in 4Q. DKS firearms = 5-6% or sales.

GGP hardly knocked the cover off the ball w same store NOI growth of 1.3%, BUT…

Lease spreads were up 10% while the lease spread for new contracts was up 18%, showing the new tenants aren’t paying less.
TTM weighted tenant sales psf increased 1.7% to $705.
Tenant sales excluding anchors increased 0.8% and excluding apparel increased 3.1%.
For A malls, weighted sales psf increased 2.5% to $785 and excluding apparel increased 4.7%.
Traffic was up 1.4% in class A properties YTD. B+ properties continue to be positive. B is flat.
GGP evolve tenant base (already in progress) to include more non-traditional retail uses.
- 75% of properties already have some form of mixed use.
- GGP’s overall exposure to apparel is still 50%, but apparel only represents 25% of new leases and for A malls apparel is in the low 40% range.
- GGP has or is in the process of opening
  - 58 movie theaters,
  - 36 entertainment concepts,
  - 14 fitness centers
  - 12 grocery stores in its malls.
  - To put bankruptcies in perspective, GGP had 1.8M sf of bankruptcies with 1.4M sf of that released.
  - GGP thinks bankruptcies will have a $25M impact on same store NOI this year (no change from prior). That equates to $45-50M for six months downtime on approximately 1M sq. feet.
  - Management does not expect the early lease termination fees in 2017 to exceed the $20M the company received in 2016.
  - Sears rents at an average of $7 psf compared to the market rate of $30 psf.

6. LB = No. Sentiment might be bottoming, but it might not matter until expectations are rightsized.

Comp miss…. -7% vs -5.2%.
5^th miss out of 7 months this year.

Friday

I think you’ve seen that my ‘three things I care about has morphed into ‘everything I care about – w analysis – for everything that happened in the retail supply chain over 24 hrs.’ This might be an ‘in-box clogger’, but if I were a Consumer PM, this is what I’d want my analyst team to give me every morning. Without fail.

1. Big read from this week’s REIT earnings to the Retailers. Definite value being transferred from Retail to REIT. That’s a fact, at least this quarter.

2. Two category read-through over the past 24 hrs as it relates to DKS (the long that keeps me awake at night more than my daugher’s 7-week old puppy).

3. Color on GIL share gain…+250bps yy – and share still 2.5x below HBI and Fruit. Setting up for HBI revenue miss in 2H.

4. Interesting product launch from Puma. That said, I like CEOs that But I kinda like CEOs that a) have accurate data and b) know how to do math. That’s not the case here.

5. Tods cold shower turning into a warm bath – there’s my weak metaphor for things getting better on the margin.

6. ETSY – I’ve liked this name. Not long, but always with a long bias. But the story is not getting better – worse, actually, despite rev beat. The profit algorithm is eroding. Dragoneer and TPG have been circling (8% of stock combined)…but I’d be surprised if anyone would buy now. Likely cage rattling.

7. Someone is paying for the UPS/Fedex surcharges – and these are on top of the standard annual rate card increase. You and I are not paying for it. FDX not paying for it. AMZN = No. WMT = No. Anyone at the TGT level or below = Yes.

“The mere fact you have obstacles to overcome is in your favor.” Robert Collier

Have a killer weekend…

1. Big read from this week’s REIT earnings to the Retailers. Definite value being transferred from Retail to REIT. That’s a fact, at least this quarter.

I read through Biolsi’s callouts on Macerich conf call (check bottom of this email). My Q to him was “yo…given these trends and the read from GGP, SPG, and TCO, is it fair to say that Mall REITs are turning on the margin? Notable relative to horrific expectations.” His answer…

From a REIT analyst perspective, then yes, prob better. You’ve prob been allocating capital to office and apartment REITs – while underweight Malls. .
Not quite bullish – by a long shot – for the retailers.
Part of the reason REITs are doing better is bc of better economics from retailers that are on the ropes.
Leases are hard to cancel and the landlords get the termination fees.
The malls are finding more replacements than most people think – espec in the better malls. Even in bankruptcies only about half the stores closing.
The new tenants are primarily things we haven’t looked at – except Primark (but that’s Seritage) - gyms, theaters, restaurants, new ecommerce companies w box space, and big box fast fashion retailers.
Take an ANF for example. From ANF perspective—so bad. From a landlord perspective ANF has to pay the leases it signed and there are new brands to take its place.

2. Two category read-through over the past 24 hrs as it relates to DKS (the long that keeps me awake at night more than my daughter’s 7-week old puppy).

Newell said its Fishing business continued to be negatively impacted in Q2 by a broad inventory destocking across specialty and mass retailers.
Callaway reported 24% sales growth in Q2 (deal impact included, but core still good). Woods sales were up 64% in 2Q, as ELY had the hot product this spring with Big Bertha Epic driver, definitely driving share gain but overall bullish for golf equipment category in 2Q.
DKS

Golf ~15% of sales,

Fishing ~3% of sales)

3. Color on GIL share gain…+250bps yy – and share still 2.5x below HBI and Fruit. Setting up for HBI revenue miss in 2H.

GIL noted its unit share in men’s underwear is up to 11.7% as of 2Q, up 270bps yy. The company isn’t lying about these numbers. This company is extremely transparent with its business (bc management is proud of – and paid on – progress.
The rate of share gain therefore held steady vs 1Q – but don’t let that fool you, it was still up 250bps yy.
I wouldn’t be surprised to see that accelerate in 2H as Gildan underwear shifts into ‘the valley’ (higher velocity with 2x the packages on the wall) in all US Walmarts and competes more aggressively with Hanes/Fruit of the Loom.

4. Interesting product launch from Puma. That said, I like CEOs that But I kinda like CEOs that a) have accurate data and b) know how to do math. That’s not the case here.

My team caught a comment from Puma’s CEO in an article…

He said “Every American has four pairs of running shoes, the German about 0.8.” ie still plenty of room for Puma with its positioning in the US.

He’s wrong. Even if I give him a pass on translation between ‘running shoes’ vs ‘sneakers’ – every American has 1.4x of sneakers. 5.2x of shoes in total. If he’s planning his growth around this – he’s making a mistake.

Granted even if Puma captured an incremental 50bps of the market it’d be golden.
But I kinda like CEOs that a) have accurate data and b) know how to do math.

In that vein, I saw this and was so tempted to say – “ugh Puma (and Rihanna – it’s her shoe), are you serious w this thing?” But the reality is that nobody, and I mean nobody, that is reading this (or writing it) is the target audience. This’ll be a win for Puma – I’d put money on it.

5. Tods cold shower turning into a warm bath) – there’s a weak metaphor for things getting better on the margin.

Tod’s reported constant currency sales growth of -3.2% in the first half of 2017.
“The Americas declined 19.7% and represented 8.4% of sales in the 1H 2017. The market remains weak and retail is still suffering from lower traffic in the stores and wholesale is affected by the difficulties faced by major department stores.”
That said, with 2Q sales down only 1.4%, things appear to be getting better on the margin.
More of a Tiffany customer than a Coach/Kors customer.

ETSY does not seem to be growing fast enough for a still small/young(founded ’05) ecommerce company.
The company highlighted in its earnings presentation that it has just 2% share of online spend in its relevant categories and geographies, yet its growing at half the rate with the company that has the #1 online share position.

Callouts…

ETSY printed essentially an in-line quarter, with revenue beating by 0.5% and adj EBITDA beating by 2%.
GMS (Gross Merchandise Sales) decelerated to +11.7% from +14.2% last Q.
EBITDA margin was down 400bps yy, with GM% down 100bps and accelerating SG&A.
Mobile visits continue to grow faster than desktop and representing 65% of visits and 51% of GMS.
ETSY GMS is growing in the low teens while AMZN GMV is growing around 30%, ETSY added ~17mm in revenue this quarter, while AMZN added the equivalent of 17 ETSYs in rev this quarter.

FedEx announced its holiday surcharge strategy, its slightly different than UPS.
FedEx = holiday surcharge for all oversized, unauthorized or shipments that require additional handling.
While UPS will use a peak charge on high volume weeks in November and December.
All-in you’re looking at probably 25-100bps of incremental margin pressure on ecom transactions depending on the retailer basket and carrier.
For Amazon, gross shipping costs were 11.9% of sales in 2016, and 12.9% of sales in 4Q.

FedEx Charges:

The surcharge will be effective from Nov. 20^th - Dec. 24^th 2017.
Additional Handling: +$3/package
Oversized Goods: +$25/package
Unauthorized shipments: +$300/package

UPS Charges:

Increasing ground shipping around Black Friday and Christmas week.
Increase for Air/3 Day Select is about 1$. (base for ground is about $7, for air/select it’s about $25.)
All in this is a 3-4% increase in shipping costs for the given periods.

8. MAC callouts (Biolsi)

Macerich still seeing strong release spreads. It raised lease termination fee income and bad debt guidance for 2017, but continues to think 2016 closures will be worse. Management thinks large format apparel retailers will continue to take share from smaller apparel retailers.

Mall tenant annual sales psf increased 3.2% to $646.
Release spread increased 18.5%.
Occupancy decreased 0.6%.
FFO decreased to $.98 from $1.02.
Lease termination fees were $9.1M vs. $5.9M last year. YTD the fees total $12M. Management now revised fee income to $17M compared to $21M in 2016.
Bad debt guidance was taken up to $6.5M from $5M.
Average rent for leases signed in the trailing 12 months is $58.08 psf from $56.93. The average term for leases signed is 5.9 years vs. 5.2 years last year.
Bankruptcies: There are 12 tenant bankruptcies affecting 146 stores with 551,000 square feet. Management forecasts 65 stores with 228,000 square feet will close this year.
In 2011 apparel represented 40.2% of non-anchor space. At the end of 2016 apparel represented 37.8%. Due to fast fashion retailers apparel stores below 10,000 square feet in size fell by 12% over the five year time period.
Restaurants increased space by 7%, theaters grew by 17%, and home furnishings grew by 14%. Management’s conclusion is that smaller, weaker apparel retailers are making way for dominant global brand retailers.
Demand is coming from food and experiential retailers, but the real source of demand will be vertically integrated digitally born brands.

HedgeyeRetail #grinding

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