SKX: Inching Closer to a New DC

In an 8K released last night, SKX made the long awaited announcement that they have finally secured land to develop their new distribution center.  While much of the attention on the stock has shifted towards the success of its Shape-Ups shoes, supply-chain inefficiencies and its related drag on profitability has seemingly faded into the background of late.


With land secured, the company can now move forward in developing its new DC, which management has maintained will be accretive day 1. One thing to keep in mind here is that while this is indeed a positive from a longer-term sustainability perspective, the company will incur duplicative costs near-term. Once the new DC becomes operational, however, the costs eliminated and efficiencies gained from the transition will be a material positive (see notes below for details). The question now appears to be one of duration and whether the tailwind from Shape-Ups sales will persist as the company spends to build its business. If sales from Shape-Ups start to fade as SKX undergoes this transition later in the year or early in 2011, the upward trajectory in SKX’s margins could come to a end – abruptly.


Here are a few highlights from the 8K filing along with notes on the topic from our meeting with management a few months ago:

  • “The purpose of the JV is to acquire and to develop real property consisting of approximately 110 acres situated in Moreno Valley, California (the "Property"), and to construct approximately 1,820,000 square feet of buildings…” 
    • HE: at this size, capacity will be ~30% larger than the 5 building capacity currently in place.
  • “The Company, through Skechers RB, LLC, will make an initial cash capital contribution of $30 million
    • HE: This is within (below) the range of $35-$40mm mgmt expected to spend in add’n to what they’ve already spent on equipment for development –
  • “In the event that either the construction loan is not finalized or construction does not begin by June 1, 2010, the JV is null and void and the parties are entitled to receive return of their initial capital contributions in the form contributed.
    • HE: Management mentioned only 3-weeks ago out at ICR that they expect to break ground in March –
  • The base rent shall be $933,894.44 per month during the Lease.

Notes from recent meetings with management:


DC Transition Update:

  • Latest timing expected to be 3Q of F10 or 1Q of F11
  • Already spent $40mm in equipment (currently sitting in storage)
  • Will have to spend another $35-$40 in 2H F10 towards installation of equip, software, & programming (CapEx)
  • Will be located in southern California
  • Will be accretive day 1
    • Due to the savings from consolidating 5 buildings to 1 = $5-$7mm in transportation savings
    • Massive reduction in head count ~900 @ $50k/head = ~$45mm in payroll savings
      • 1 employees currently in 5 buildings
    • New equipment will be able to move 60-70mm pair of shoes /yr
    • ~$75-$80mm to depreciate over a 12-year period = incremental $6-$7mm in D&A
    • Currently have 1.4mm sq ft. in capacity in 5 buildings currently could hold 13-14mm pair
    • 30 containers a day delivered with 6k pair each

The Week Ahead

The Economic Data calendar for the week of the 8th of February through the 12th is full of critical releases and events.  Attached below is a snapshot of some (though far from all) of the headline numbers that we will be focused on.


The Week Ahead - zz1

The Week Ahead - zz2






"The fourth quarter was a tough one for us, and we're disappointed.  While the first half of the year was solid, the continuing deterioration of the economy resulted in less visitation and lower play per customer. We started to feel the economic downturn in late summer and we increased our marketing efforts. As a result, we maintained or increased market share in many of our larger markets, but our margins declined."

- John Giovenco, Pinnacle Entertainment's interim chief executive officer


Highlights from the Release

  • "As we enter 2010, we are focused on our commitment to increasing shareholder value. We're concentrating on operating efficiency and, in particular, effective marketing. We're evaluating our underperforming and non-strategic assets; reducing corporate overhead costs; taking a disciplined approach to capital spending; and developing Sugarcane Bay and Baton Rouge in Louisiana."
  • "To achieve these goals, we redesigned both our Sugarcane Bay and Baton Rouge projects, resulting in a reduction of more than $100 million in Sugarcane Bay's cash construction costs; restructured corporate and property marketing to result in a significant net reduction in headcount; subsequent to year-end decided to put our Atlantic City assets up for sale; listed the company airplane for sale; hired two highly experienced general managers for Boomtown New Orleans and Lumiere Place; moved to consolidate our three Las Vegas offices into one; reduced corporate overhead; and plan to institute a new compensation program that rewards executives for increasing long-term cash flow and EBITDA. We believe these actions will improve operating results."
  • "Separately, the board has engaged the international recruiting firm Heidrick & Struggles to help conduct the search for a new executive to succeed Pinnacle's former chief executive officer... The search is well underway, and we will announce a resolution at the appropriate time."
  • "Banc of America Securities LLC and J.P. Morgan Securities, Inc. have been selected as Joint Lead Arrangers for this new credit facility, which has a maturity date of March 31, 2014. Commitments from banking institutions toward the new credit facility have been received in the amount of $375 million. The Company expects that the new credit facility will close in the next few business days."
  • Property specific commentary:
    • "L'Auberge du Lac's market share improved to 52.6% in the period from 50.2% in the prior-year period. While the overall regional economy was softer in the 2009 fourth quarter compared to the 2008 period, unemployment statistics remain more favorable in this region than the nation as a whole."
    • "Market share at Lumiere Place climbed from 17.1% in the 2008 fourth quarter to 20.5% in the 2009 period."
    • "Boomtown New Orleans was affected by market softness as reduced Katrina relief efforts and related spending, reduced construction activity, reduced discretionary income, and weaker economic conditions have dampened operating results throughout the region. As such, marketing efforts by the competition have increased dramatically. The Property's increased marketing programs did not produce intended results"
    • "These results reflect the opening of expanded and enhanced casinos at two competing facilities, as well as softer general economic conditions. As a result of competitive pressures in the market, 2009 fourth quarter results at Belterra reflect increased marketing spend to compete against the augmented competition."
    • "We were able to maintain market share; however, revenues in the Bossier City/Shreveport market were down 13% for the fourth quarter of 2009 compared to the prior-year period."
    • "Boomtown Reno has been affected by significant competition from northern California Native American casinos, as well as weak economic conditions in both the region and northern California. Employee headcount as of December 31, 2009 has decreased 11% from December 31, 2008. The Company has targeted additional areas at Boomtown Reno to further reduce costs in 2010."
    • "Revenues have decreased due to a recent decline in the value of the Argentine peso, as well as weakness in the Argentine economy. The decrease in Adjusted EBITDA reflects the currency decline and inflation of certain costs, principally payroll costs."


  • Other properties start to feel the pressure of the recession at the end of the 3rd quarter and in response they increased marketing. So they had a double hit to earnings, lower revenues and higher marketing
  • Attacking costs at the corporate and property level, continuing to reduce headcount throughout the company
  • Recently the board separated the roles of Chairman and CEO.  The committee is currently interviewing CEO candidates


  • How much costs can they take out of corporate and property level expenses?
    • More of a question on can marketing become more efficient.  So costs will get reduced as a function of increasing efficiency (marketing is the largest cost opportunity)
  • Pricing on bank facility will be at L + 400 bps based on current leverage levels, may close today or Monday. No LIBOR floor (now its 23bps).  Intention is to close the facility at $375MM in size. Covenants in new deal will be more "accomodative" to their current operating plans
  • Spent $75MM on cash capex in 4Q09, $57MM was River City. $9MM on Sugarcane & Baton, rest was maintenance
  • 2009 cash spend $213MM, $157 on RC, $15MM Sugarcane Bay & Baton Rouge
  • Belterra: What happened there? What are they doing to improve things, given that the competitive environment isn't going to change?
    • Had increased competition with several boats (Lawrenceburg) in the area and increased marketing costs in response - to a level that they shouldn't have
    • It all comes down to spending marketing dollars in an effective way, have been focused on implementing those processes over the last two months and will see some results
  • How to think about cannibalization from River City on Lumiere Place?
    • View those two properties as a singular portfolio.  Don't worry about the cannibalization, but rather how much they can do as a whole.
  • AC: hope to sell it as soon as a reasonable bid comes in. They just put it up for sale
  • CEO search has been narrowed to a smaller group of people including some internal people
  • Why move forward in Baton Rouge, given how under pressure that market has been?
    • Feel like they have a locational and product advantage
    • Economic pressures are likely to be short term in nature and by the time they open there should be a different environment
  • The R/C will not entirely complete their financing needs, but it is a large part of it. Still need some capital which they will get to on an opportunistic basis
    • Sugarcane is not quite fully financed at this point either (self imposed liquidity needs)
  • Impact of low hold on L'Auberge? $1.5MM
  • River City opening will not impact corporate overhead
  • New CEO will be more of an operating than a development guy/or gal
  • Total capex spend for 2010: $35-40MM of maintenance, completion of RC + Sugarcane & Baton Rouge and some smaller projects
  • Are they going to move the corporate office closer to their operations? No, they already have leases in place, and would need to relocate everyone
  • Why haven't they hired investment bankers to pursue strategic opportunities
    • Think they can do a better job operating their assets and thereby grow their share price
  • Free play in Indiana?
    • Monitoring it, but no idea of the chances
    • Tables games at Betteroff would have a negative impact on them
  • Have until March 31 to submit a construction contract for Baton Rouge and have no intentions to extend that deadline
  • Bossier City, what to they attribute their success to in that market?
    • Have good efficient marketing
  • Try to keep the Sr. Secured leverage low
  •  No more room on the Sugarcane budget

Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.46%
  • SHORT SIGNALS 78.35%

Unemployment: Better Than Feared

With the volatility index (VIX) and NYSE volumes +21% and +41%, respectively (yesterday), the fear factor associated with the unknown was real. Now we all know what we didn’t know. The US unemployment rate dropped, sequentially, by 30 basis points (month-over-month) to 9.7%.


The reality is that both, relative to freak-out expectations, and on an absolute basis, this morning’s US unemployment report was better than feared. That, however, doesn’t mean the stock market has to go up.


My US Strategy partner, Howard Penney, and I made a call earlier this week that whether this report was better or worse than expectations, that the US Dollar was going to go up and the US stock market was going to go down. Some people quibbled with the math behind our conclusion, but that’s ok – that’s what makes a market. Today, on a better than feared unemployment report, the Buck Breakout continues and stocks remain weak.


A lot of people are used to seeing better than feared economic reports support higher stock prices. To some extent, its Pavlovian. The US economy is not in a “great depression”, even though those who short sold last year’s generational stock market squeeze are rightly depressed.


Everything that really matters in our macro model happens on the margin. Relative to bombed out expectations, the last 6-9 months of economic data has been much better. Now, relative to complacently high expectations, the next 3 months of data might just keep coming in as just that – complacently high.


Better than anything that resembles a required “emergency level of zero percent” Federal Funds rate, will continue to pressure Bernanke to see the data for what it is. This, relative to expectations, is the real reason why stocks are deflating. As the Fed prepares to remove the “extended and exceptional” language from their currently politicized monetary policy, the Buck Breakout will continue to manifest to the upside, discounting the same.


It’s somewhat unnatural for the manic on CNBC to understand this concept; but better than feared economic news can be bad for stocks, indeed. The US stock market’s REFLATION trades that we were riding last year (based on a Burning Buck) are completely unwinding as real-time risk managers come to grips with the reality that ZERO is not a perpetual monetary policy – not with GDP up +5.7% y/y, CPI +2.7% y/y, and the unemployment rate rolling over at least.



Keith R. McCullough
Chief Executive Officer


Unemployment: Better Than Feared - unemploy



What Is It That You Do?

Keith and I were discussing the Economic Club of Washington this morning.  At a certain point we both looked at each other and said, “What is it that they do?”.  Neither of us really had an answer.  So being the useful analyst that I am, I went to this great research tool called Google and looked up its website.  I thought the Membership Guidelines were most interesting:


“Economic Club membership is limited in number and includes CEOs of local corporations, managing partners in leading law and accounting firms, executives of top consulting, technology, and research organizations, and national heads of associations and other entities in healthcare, insurance, culture and education and other businesses and professions.”


Ok, got it. It’s an old boys club of group thinkers.  But still, what is it that they do?


Further, in the Membership Guidelines some clarity on the Club is given:


“Members convene five times a year for a luncheon or dinner at which they can bring a limited number of guests at a reasonable fee.  Events are held at the city’s leading hotels.  By tradition, one dinner each year is black tie.”


That certainly provides a bit more clarity.  The old boys club of group thinkers also get dressed up and goes to nice hotels.  Well, that is something I suppose.  But still, what is it that they do? 


The About Us section gives us a little more direction for this question.  It states that the Club has two primary purposes:


“First, it offers a forum in which prominent business and government leaders can express their views on important economic issues of the day and how those issues affect the region, the Nation, and the world.  Second, and equally important, it generates and promotes a greater sense of community among business leaders, government officials, and members of the diplomatic corps.”


Roger. The fancy pants old boy group thinkers get together and pontificate in front of each other.  Ultimately, of course, what this type of activity leads to is additional behavioral economic tendencies.  The two that come to mind are herding, when individuals act together without planned direction, and status quo bias, which occurs when people tend to not change an established behavior unless the incentive to change is compelling.


So, it seems, the Economic Club of Washington, or the Club as they call, does do something.  It provides case studies in behavioral economics.  If we can recognize that early, that is not a bad thing.


The danger of course is that when someone like David Rubenstein (“Ruby”), the Co-Founder of the Carlyle Group and the President of the Economic Club of Washington, makes public statements that other individuals may invest in based on his Perceived Wisdom.  As a case in point, his recent statement on emerging markets from Davos in late January:


“Emerging markets are the most attractive places to invest and rebounding more rapidly.”


Sadly, Ruby top ticked that one.  As we wrote this morning in the Early Look:


“Per my friends at Bloomberg, "emerging market equity funds lost $1.6B in weekly withdrawals" so far this week. That's the biggest weekly outflow in 2 years.”


We now know what the Club does and we also understand their output. The Club produces contrary indicators. 


Ruby, any good asset allocation ideas that we can take the other side of?



Daryl G. Jones
Managing Director

R3: A Sobering Perspective on Japan


February 5, 2009


In light of yesterday’s post-holiday gift card promotional euphoria, which was a key driver to ANF’s first positive comp in almost 2 years, we wanted to share a sobering perspective on the company’s recent entry into Japan. Before US-centric analysts get carried away with the “huge potential” for Abercrombie across the globe, it’s at the very least worth considering the cultural challenges that exist from Milan to Ginza. 





In light of yesterday’s post-holiday gift card promotional euphoria, which was a key driver to ANF’s first positive comp in almost 2 years, we wanted to share a sobering perspective on the company’s recent entry into Japan. ANF is currently in the midst of a major shift towards international growth and a strategy which is heavily dependent on high profile, high cost flagship locations. With the bulk of the business still stateside and struggling, it’s really not that surprising that both management and bullish investors are increasingly positioning the international growth story with tremendous potential.


Practically speaking, a heavy reliance on flagships in cities like London, Tokyo, and Milan makes it much more difficult to see what’s going on first hand for equity analysts. Especially those with limited travel budgets and little time for such exotic “channel checks”. Thankfully, the world is smaller these days with the Internet, and the feedback loop in the fashion world is about as instantaneous as a free stock quote on Google. With that said, take a look at the following key points pulled from a recent article about ANF’s early challenges Japan, written by W. David Marx for The Business of Fashion.


  • The initial opening of the 11 story Ginza store was met with the usual fanfare- long lines and plenty of excited first-time shoppers. Rumors suggest opening day sales were $550,000. That’s the positive.
  • Japan is in the midst of a low-price fashion boom, led by the success of UNIQLO, H&M, Forever 21, and cheap domestic labels. Against this backdrop, ANF came to market with a pricing strategy that offers the same US goods at nearly 2x US prices. We know that ANF is “aspirational”, but this might be taking the brand to a more “luxury” level.
  • A poll of first-day A&F shoppers in Nikkei’s Marketing Journal showed that 61.7 percent of people found the prices “a bit high” while 18.3 percent declared them “too high.” Less than one-fifth of consumers thought the prices were on target.
  • Unlike other multinational brands that have traditionally partnered with locals to adapt marketing and communication strategies to the Japanese consumer, ANF is taking a 100% American approach. In fact, the store and brand image is virtually identical to what we see on 5th Avenue in New York. The author makes the following points about how this approach clashes with the Japanese culture:
    • The staff is handpicked to be almost entirely “American”, with virtually no employees appearing to be authentically Japanese. Customers are greeted and approached in English, a language that natives are not normally expected to use while shopping in their homeland.
    • The boisterous store environment which includes loud music, singing, and dancing by staffers flies in the face of the principles of Japanese politeness.
    • Bare chested male models floating around the store is both out place with Japanese fashion culture and is off-putting to the Japanese customer.
    • Believe it or not, the Japanese culture is “perfume adverse”. This certainly doesn’t match up well with the in-store aroma that gets constantly pumped with cologne as it is throughout the entire chain.
    • A&F logos are prevalent across the merchandise offering. Interestingly, this positioning comes at time when the Japanese fashion culture is less interested in logos and more interested in subtle branding.


To be fair this is just one author’s opinion, and a fairly negative one at that. Nonetheless, the ANF strategy is extremely Americanized and differentiated as a result. Before US-centric analysts get carried away with the “huge potential” for Abercrombie across the globe, it’s at the very least worth considering the cultural challenges that exist from Milan to Ginza. For the full article take a look at the link here:


R3: A Sobering Perspective on Japan - ANF Japan 2 10 


-Eric Levine




  • The timing of the Super Bowl this year negatively impacted January sales and will benefit February sales. COST and BJ both noted that the impact from the calendar shift is about 100-200bps. We suspect that while the impact may not be as great across the board for all retailers, any company with a high concentration of consumables in their mix will likely see a benefit in February as well. In addition, all retailers of electronics noted the impact of the shift on TV sales.
  • Nordstrom indicated that traffic in its full-line stores, as measured by the number of transactions, increased for the fifth month in a row. The average ticket was flat compared to the same period last year.
  • Timberland pointed out that transportation costs as well as input costs are expected to increase by the middle of the year. In fact, the CFO said, “We are already facing transportation cost increases now versus where we were last year. As the capacity has been constrained they are driving prices up on container shipments.”
  • Footwear sales were consistently cited as a standout during the month of January, with the category leading sales increases for ROST, JWN (women’s), and KSS.
  • Most people are probably unaware of the “Bag War” taking place at Wal-Mart. Beginning late last year, WMT indicated it was looking to consolidate brands in the food bag category. As a result, Ziploc, Glad, and Hefty began to invest heavily in store tests and advertising to save their business with the retail giant. Well now the results are in, and it appears that Ziploc will be the sole remaining national brand alongside WMT’s own private label, Great Value. Importantly, this is likely just the beginning of further consolidation amongst SKU’s at WMT and other discounters, especially in commodity categories.


MORNING NEWS  (and Hedgeye Retail’s 2 Cents)


Claiborne Sued by Licensee Over Penney's Deal - A Liz Claiborne Inc. outerwear licensee has filed a $100 million breach of contract lawsuit over the company’s exclusive deal with J.C. Penney Co. Inc. The Levy Group Inc., which has held the license for Liz Claiborne rainwear since 1997, filed the complaint in New York State Supreme Court in Manhattan on Jan. 21. In October, Liz Claiborne announced that Penney’s would have exclusive rights to sell its namesake brand starting for the fall. The Levy Group alleged in the lawsuit that the deal will “destroy” the business it has spent more than 10 years developing by taking the brand out of better retailers and ultimately tarnishing the reputation of the trademark. “Even a robust business with J.C. Penney will not replace The Levy Group’s current volume, as sales at J.C. Penney stores are a fraction of those at the network of multiple ‘better zone’ department stores that The Levy Group has cultivated,” according to the complaint. “The Levy Group’s right to sell merchandise to ‘better zone’ department stores is meaningless unless Liz Claiborne protects the reputation and prestige of the marks and maintains the ‘better zone’ standard.” <>

Hedgeye’s 2 Cents: I won’t comment on the merit of the lawsuit without having seen the original contract, but this is yet another reason why running a model of licensing another company’s content is simply bad. (You listening, Warnaco?).


Men's Wearhouse Names Chief Marketing Officer - Diane Ridgway-Cross has joined Men’s Wearhouse as senior vice president and chief marketing officer, a new position. A 17-year veteran of the retail and consumer products industries, Ridgway-Cross was most recently with Mullen Advertising, where she directed new business growth and was the managing partner of Frank About Women, a marketing-to-women communications company. She also has worked for The TJX Cos. Inc., DSW Shoes, Hasbro, Kimberly-Clark and Nestlé USA. <>

Hedgeye’s 2 Cents: No strong opinion here on this hire. But ‘Men’s Wearhouse’ hiring the managing partner of ‘Frank About Women’ is initially a head scratcher. All that said, check out the site ( If she can translate the approach to a different gender, then this might actually be a decent move for Men’s Wearhouse after all.


SKECHERS Named Company of the Year by Footwear Plus Magazine - SKECHERS USA, Inc. (NYSE: SKX), a global leader in lifestyle footwear, today announced that it has been named 2009 Company of the Year by Footwear Plus, a leading footwear trade publication. This Plus Award for Design Excellence marks the fourth time in five years that SKECHERS has claimed the top prize. “It is a great honor to be named Company of the Year by our industry for the second consecutive year,” began Michael Greenberg, president of SKECHERS. “Considering the strong brands also nominated – including Nike – and the challenging economy of 2009, we are particularly proud of this award. We believe it is a testament to the strength of our brand, our determination to deliver fresh, innovative product, and the hard work of the entire SKECHERS team.” “For the second straight year, SKECHERS has taken home the Plus Award in the prestigious ‘Company of the Year’ category,” stated Greg Dutter, Editorial Director of Footwear Plus magazine. “Amid a difficult retail climate, SKECHERS adapted and thrived, turning in record-setting third quarter sales and has projections for a record fourth quarter as well. The Company continues to deliver on-target and affordable fashions across a wide range of footwear segments. Collectively, SKECHERS hits on America’s sweet spot when it comes to its everyday footwear needs.” <>

Hedgeye’s 2 Cents: Is this serious??? A company that has never had an original design in its history winning a design award?


China Protests EU Tariffs - China filed a complaint against European Union shoe tariffs at the World Trade Organization as Beijing continued its legal assault on what it says is unfair Western protectionism. Europe has grown increasingly concerned about China's balance of trade and what some critics view as its artificially weak currency. China, which joined the W.T.O. in 2001, filed its first unfair trade case against the European Union in July 2009, also involving antidumping duties. The latest move appeared intended to increase pressure on the European Union, which had itself been sharply divided over extending the shoe tariffs. In a statement issued by its mission in Geneva, where the WTO is based, the Chinese government said Europe's actions "violated various obligations under the W.T.O., and consequently caused damage to the legitimate rights and interests of Chinese exporters."  It added that China "had repeatedly consulted" with the European Union but said that its concerns "had not been properly addressed or settled." In an eight-page legal complaint, the Chinese government requested consultations on both the original 2006 decision to impose the shoe duties and last year's move to extend them. The EU and the U.S. have sought to stem the flow of Chinese imports with special duties. In the EU case, China is taking on one of the most important tariff increases ever levied, which has taken a bite out of its expansive shoe industry. The 16.5% tariffs are antidumping duties, meant to punish goods that are sold below cost and hurt the sales of domestic producers. The EU duties were inaugurated in 2006 and extended for 15 months in December 2009. At the same time, shoe imports from Vietnam were hit with a 10% tariff. <>

Hedgeye’s 2 Cents: This smells really bad. The China vs the West trade war covertly builds… at the same time its appetite for accepting dollars for locally manufactured goods is waning, and Asian nations are gearing up for increased local consumption in a post-free trade agreement environment.


Beyoncé's House of Deréon Accused of Breach of Contract - Beyoncé Knowles’ House of Deréon clothing line has been named in a breach of contract lawsuit filed by a Hong Kong manufacturer. In a complaint filed in U.S. District Court in Manhattan Monday, lingerie and women’s apparel maker Vier International Ltd. said New York apparel firm Donna Loren LLC and Brooklyn shipping firm HJM International were “conspirators who induced the shipment of goods to the United States with the intent to convert them or pay less than the agreed upon contract price.” Vier alleged that “defendants Beyond Productions LLC and The House of Deréon were parties to the breach and conspiracy providing purchase orders and specifications of manufactured goods.”  <>

Hedgeye’s 2 Cents: Kanye West should take the fall here.


FTC Warns 78 Companies to Scrutinize Bamboo Labeling - Seventy-eight companies nationwide have received Federal Trade Commission letters warning that they may be breaking the law by selling clothing and other textile products that are labeled and advertised as “bamboo,” but actually are made of manufactured rayon fiber. The letters, which the agency’s staff sent last week, make the retailers aware of the FTC’s concerns about possible mislabeling of rayon products as “bamboo,” so the companies can take corrective steps to avoid Commission action. In the letter, the FTC tells the companies they should review the labeling and advertising for the textile products they are selling and remove or correct any misleading bamboo references. The more commonly known retailers to receive the letter include:, Barney’s New York, Bed Bath & Beyond, BJ’s Wholesale Club, Bloomingdale’s, Costco Wholesale, Garnet Hill, Gold Toe, Hanes, Isotoner, JC Penney, Jockey, Kmart, Kohl’s, Land’s End, Macy’s, Maidenform, Nordstrom,, QVC, REI, Saks Fifth Avenue, Sears, Shop NBC, Spiegel, Sports Authority, Target, The Gap, The Great Indoors, Tommy Bahama, Toys R’ Us, Wal-Mart, and  <>

Hedgeye’s 2 Cents: This highlights an often overlooked issue as it relates to components in shoes. False labeling is one thing…but the componentry is another. For example, certain types of shoes have to have a certain percent of certain fabric or materials in them to the point where shoe companies will sometimes pad the liner or insole with them to avoid trade duties.