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January 29, 2009

January 2010 for most retailers is likely to be one of the least meaningful months in a while. With lean inventories going into and coming out of the holiday, a substantial year over year reduction in clearance activity (down 30-40% for most), and what appears to be a swift clean transition to Spring, there is little to glean from the biggest transition month of the year. Furthermore, many companies have updated earnings outlooks with the reporting of December sales.





January 2010 for most retailers is likely to be one of the least meaningful months in a while. With lean inventories going into and coming out of the holiday, a substantial year over year reduction in clearance activity (down 30-40% for most), and what appears to be a swift clean transition to Spring, there is little to glean from the biggest transition month of the year. Furthermore, many companies have updated earnings outlooks with the reporting of December sales.


Important or not, the trends over the past few weeks are still worth monitoring. Athletic apparel remains a relative outperformer, while it appears that athletic footwear may have slowed a bit. As highlighted last week, we expect pressure to continue near-term in footwear with the most challenging comps versus last over the next few weeks. Department stores are holding up slightly better post Christmas, most likely as a result of more clearance activity than we’ve seen vs. other channels. Overall, January likely represents a deceleration from December. There is not much to worry about given this slowdown however, except that it represents a pause in the positive trajectory that has been built since the Summer (see the ICSC chart below). We’re moving on, searching for early reads on Spring and marginal improvements in customer traffic. Inventories will still be managed tightly over the next few months, but whether the consumer shops more frequently is still unknown. Unfortunately, January is not likely to hold the answers…


R3: The Pause and Wait - 1


R3: The Pause and Wait - 2





  • Despite an image that is largely based on the original compression product, Under Armour’s CEO noted that the company now sells more “loose” product than anything else. The company continues to believe there are opportunities to expand across a wide range of fits-compression, fitted, semi-fitted, and loose.
  • American Apparel continues to push the envelope with its provocative marketing. The company is conducting an open casting call for the new “face” of the company’s expanding intimates and briefs lines. However, the term “face” must be examined closely. The search is actually looking for the “Best Bottom in the World”! Anyone interested is invited to submit their photos in online…
  • Stay tuned for the Fall launch of Columbia Sportswear’s latest technological innovation, Omni-Heat. The “warmth” technology will span over 100 products ranging from footwear to outerwear. The technology aims to “reflect” body heat, while eliminating the bulk of more traditional insulation. Management believes the technology may be a “game changer” and likened the launch to the time when Nike first introduced visible “air”. If true, this could be the beginning of a major turnaround…





A new technology that enables selling on Facebook is Off The Wall - Online marketing firm Resource Interactive has unveiled technology, dubbed Off The Wall, that lets retailers create a small but complete e-commerce experience on Facebook users’ “walls,” part of the pages on the social network. “The vast majority of activity on Facebook happens on users’ walls; they want to stay in the stream of things,” says Dan Shust, director of emerging media at Resource Interactive, which also builds Facebook pages for retailers. “If you have hot information, the best way to communicate on the social network is through the wall.” The firm tested the product in the days before Christmas with multichannel retailer The Limited. The merchant posted a scarf on its Facebook page, which has more than 20,000 fans, and offered 30% off and free shipping. Fans saw the promotion pop up in their news stream and could share it with their Facebook friends. The scarf sold out in a matter of days, the firm reports. Retailers can use the software to post a single product on Facebook fans’ walls. A Facebook user clicks on the image, which expands within the wall. Then the image displays information similar to that found on an e-commerce product page, such as product description and price, and offers options for selecting size and color. The user makes his selections, then clicks on a button to enter his shipping and payment information. He then clicks on a Buy button to complete the transaction.  <internetretailer.com>


Lauder, P&G to Flex Marketing Muscle - Leading firms the Estée Lauder Cos. Inc. and Procter & Gamble Co. told analysts Thursday they will accelerate advertising spending in the second half of the year. Both companies were emboldened by stronger-than-expected second-quarter earnings. Lauder’s profit for the quarter ended Dec. 31 surged 62.2 percent to $256.2 million, or $1.28 a diluted share, from $158 million, or 80 cents, a year ago, beating analysts’ revised earnings expectations of $1.21 a share. Sales gained 10.8 percent to $2.26 billion from $2.04 billion, or 6 percent in local currency, beating Wall Street’s $2.24 billion consensus. P&G’s profits for the quarter ended Dec. 31 fell 6.9 percent to $4.66 billion, or $1.49 a diluted share, from $5 billion, or $1.58, a year ago, while sales rose 6.4 percent to $21.03 billion from $19.76 billion. Profits came in better than the $1.43 Wall Street expected, though sales were somewhat below the $21.07 billion anticipated. Lauder will spend $150 million to $175 million more than in the same year-ago period on marketing expenses, which include advertising, in-store merchandising and product sampling, said president and chief executive officer Fabrizio Freda.  <wwd.com>


Versace Restructuring Plan Approved - Gian Giacomo Ferraris, chief executive officer of Gianni Versace SPA, said Thursday his extensive restructuring plan has been unanimously approved by the family, the shareholders, the banks and the unions. Ferraris also unveiled the launch of a new women’s diffusion line called Versace Collection for fall, which is forecast to achieve sales of more than 8 million euros, or $11 million, in the first season. The reorganization charted by Ferraris in October is aimed at returning the company to profitability in 2011 and includes cutting 350 jobs, or 25 percent of Versace’s worldwide workforce. The layoffs, which are primarily supported by government funds, begin in March and will be staggered through June. “The plan is based on a 360-degree reorganization and drastic internal measures but it guarantees Versace’s future and independence,” Ferraris contended during an interview at the company’s Via Gesù headquarters. The executive reiterated his priority to reverse last year’s operating loss of 30 million euros, or $41.8 million. He also confirmed 2010 sales will mirror last year’s revenues of 273 million euros, or $381 million.  <wwd.com>


SKECHERS Donates $100,000 and Product to Haiti Earthquake Relief Efforts - SKECHERS USA, Inc., a global leader in the lifestyle footwear industry, today announced that the Company is donating $100,000 to Haiti earthquake relief efforts as well as 5,000 pairs of shoes to the people of Haiti. SKECHERS employees also are raising funds for various charities operating on relief efforts for victims of the tragic earthquake in Haiti. Specifically, SKECHERS donated $50,000 each to Doctors without Borders and Save the Children -- two charities deeply involved in delivering aid to the devastated nation. And the Company has also delivered 5,000 pairs of shoes to Soles 4 Souls, a charity that distributes new and lightly worn footwear to those who need it most.  <tradingmarkets.com>


China Stresses Domestic Consumption at Davos - DAVOS, Switzerland — China will focus on boosting domestic demand to drive economic growth, Li Keqiang, vice premier of the powerful state council, said Thursday. “China’s domestic market has huge potential,” Li told business and political leaders at the annual World Economic Forum here. “We will strive to expand domestic demand, especially consumer demand.” Growing domestic demand has played “a critical role” in the quick economic rebound of the world’s biggest and most dynamic emerging market, he said. Total sales of consumer goods rose 15.5 percent last year, Li said, noting domestic demand helped make up for fewer exports and helped the economy to grow 8.7 percent. The International Monetary Fund this week estimated China’s economy would expand 10 percent this year. Turning to trade, the vice premier said imports totaled $1 trillion last year, making China the world’s second largest importer after the U.S. <wwd.com>


British Retailers Complain Of Poor January Sales Due To Winter, Higher VAT - London, England, United Kingdom (AHN) - High-street retailers in the United Kingdom have complained of weak sales for the first month of 2010. They attributed the poor January sales to the winter and higher value added tax. The CBI's latest Distributive Trades Survey showed that 36 percent of retailers reported lower sales, while 28 percent logged bigger volume of sales for January 2010. The negative 8 percent balance between higher and lower sales volume was higher that the CBI's forecast in December that the balance would only be minus 2 percent. CBI is U.K's top business lobbying group. UK's harsh weather prevented consumers from going out and doing some shopping at a time when stores are offering hefty New Year discounts. For those who braved the cold climate, the bigger deterrent was the larger VAT, which went up to 17.5 percent beginning Jan. 1. Affected by the higher VAT were stores that carry big-ticket items like furniture and electronic goods. According to CBI Chairman Andy Clarke, the least affected by these two factors are groceries and shoe stores, but as a whole the retail was negatively affected. <allheadlinenews.com>


Haitian Industry Coming Back Slowly - Apparel manufacturers in Haiti are rushing to get operating again in the face of significant challenges for workers and supply chains. The apparel industry in Haiti was a mainstay of the country’s economy, accounting for two-thirds of exports and nearly 10 percent of gross domestic product. As the country struggles to recover from the devastating Jan. 12 earthquake, the garment sector will be an important tool in helping it get back on its feet. Most factories operating in and around Port-au-Prince escaped the earthquake and its aftershocks with little damage, said Georges Sassine, president of the Association of Industries of Haiti, which represents the country’s manufacturers. He predicts apparel production will be fully back online by the end of February. However, the industry faces some daunting hurdles, including getting safety certifications for all factory buildings, even those without visible damage, so production can begin in earnest. Starting Thursday, engineers from the U.S. and France began visiting factories with Haiti’s Minister of Public Works to start the certification process, Sassine said. Prior to the quake, 28 apparel and textile companies operated in Haiti. They employed 28,000 workers at last count, Sassine said. In one of the largest tragedies caused by the earthquake, the Palm Apparel factory, which manufactured T-shirts for companies such as Gildan Activewear Inc., collapsed, killing an estimated 500 workers.  <wwd.com>


Americans Agree: Quality Jobs Remain Hard to Find - As the Obama administration and Congress shift their focus to the economy and jobs after the State of the Union, Gallup polling suggests they need to consider quality as well as quantity. One in 10 Americans (9%) believe now is a "good time" to find a "quality job" -- a situation that has persisted over the past year, and a huge deterioration in job-market conditions from January 2007, when nearly half of Americans (48%) expressed optimism about finding a quality job.

R3: The Pause and Wait - G2

While Americans disagree about many things -- and rarely reflect an overwhelming consensus about anything concerning the economy -- their views about the lack of quality jobs are a clear exception; the total lack of optimism about the prospects of finding a quality job in January 2010 is consistent across ages, incomes, genders, and regions of the country.

R3: The Pause and Wait - G1