• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here


    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.


March 17, 2010
The apparel sector is coming off of the largest boom in import cost reductions we’ve seen in a decade.  As we approach the back half of 2010, better than expected demand at retail so far this Spring along with a growing trend in the pulling forward of orders suggests we may be heading for cost pressures that will come earlier and greater than expected.  
The apparel sector is coming off of the largest boom in import cost reductions we’ve seen in a decade. Anecdotally, companies are beginning to temper opportunities for further cost of goods savings, especially as we approach the back half of 2010. Factor in better than expected demand at retail so far this Spring along with a growing trend in the pulling forward of orders, and it appears we may be heading for cost pressures that will come earlier and greater than expected. Topline acceleration against tougher compares in the back half of the year is less likely, but will be necessary if the sector is able to absorb rising costs without taking a hit to margins. Never say never, but the likelihood of exceeding peak, peak margins is looking slim.
R3: Never Say Never, but... - 1
R3: Never Say Never, but... - 2
R3: Never Say Never, but... - 3
Eric Levine

  • In one of the more creative experiential marketing efforts we’ve seen in a while, IKEA installed some of its sofas in four Paris metro stations. Given that most subway stations are designed with theft and vandalism in mind, we wonder what the state of these IKEA couches will be in just a few days. 
  • Both LL Bean and Land’s End have launched premium lines, both with a more fashion forward bend. The LL Bean signature line is designed by the folks behind boutique preppy brand Rogues Gallery, with a focus on trimmer silhouettes and a younger consumer. The Land’s End CANVAS line evokes the brand’s heritage as classic American. In our view, it looks like J Crew, but is priced more aggressively. 
  • Is the peak in premium denim finally approaching? Perhaps, especially if you want to use pop-culture as a measure. The documentarian behind the hit fashion movie “Unzipped”, just released a four part series online called “Dirty Denim”. The mini-series takes a look into the growth of the California premium denim market, its origins, and the challenges embedded in the industry. The videos reside on Sundance’s Full Frontal Fashion website… 

BrandOrders.com Targets Retailers - First consumers, then business people in general and now there are a slew of new fashion industry-specific Web sites springing up that combine marketplaces with social media. Consumers, designers and retailers have embraced e-commerce, Facebook and Twitter, yet most in the industry are still using outdated tools to perform their jobs. For example, buyers still generally rely on pencil and paper to write orders. BrandOrders.com, created by retail and fashion executives, is a wholesale online community for brands and stores to increase buying efficiencies, with a social media component as well. The site is targeting high-end labels and retailers, with Barneys New York and Showroom Seven participating in the test phase. BrandOrders will go live in the spring, with 75 brands from Prêt à Porter, a trade show in Paris, and its New York show, The Train/The Box. Lilla P, Pure Amici, Real Truth, Lauren Balgiore and Tiia Vanhatapio are among the site’s apparel vendors, while Lockhart, Jennifer Elizabeth, Abas, Pono and Lexi Lu represent accessories and jewelry resources, said Lincoln Brown, BrandOrders’ chairman. Brown, a venture capitalist whose Next Generation Ventures invests in fledgling firms, is funding BrandOrders.com. BrandOrders founder and chief executive officer Chris Guerra got the idea for the site after accompanying his mother to trade shows and buying trips for Bamboo Clothiers, the stores he and his parents own in South Florida. “When we got home, I watched mom piece together orders with carbon paper all over the place,” said Guerra. “She wrote orders and faxed them in. This [site] eases some of the pain of the wholesale buying process.” <wwd.com
MLB partners with Victoria's Secret to take swing at female fans - Women make up nearly half of Major League Baseball's fans. MLB is partnering with Victoria's Secret's PINK brand to take aim at young women during the 2010 season with a new fashion line featuring the logos of 11 clubs, including the New York Yankees, Boston Red Sox, St. Louis Cardinals, Chicago Cubs, Minnesota Twins and Los Angeles Angels. The VS PINK brand caters to college-age women with bras, lingerie and sleepwear. The baseball-themed line of crystallized hats, jerseys, T-shirts, hoodies, sweatpants, tanks, shorts and fleeces will roll out in more than 100 Victoria's Secret stores in 11 markets Tuesday. It will also be sold online at VictoriasSecret.com. The youthful gear will feature sayings such as "I Only Kiss Angels Fans" and "Love Love Love Twins." Prices will range from $19.99 for caps to $58 for fleeces. Some MLB ballplayers will appear alongside Victoria's Secret models as they tout the line in the 11 markets. Women account for more than 40% of fans at major league games, MLB executive vice president Tim Brosnan says. He's hoping fashion models will wear the gear at the annual Victoria's Secret fashion show. "After we do the 11 teams, there will then be demand for all 30," he says. <usatoday.com>
Karl Lagerfeld Brand to Remain With Apax - Karl Lagerfeld soon may be courting new suitors. Karl Lagerfeld SAS, a wholly owned subsidiary of Tommy Hilfiger Group since 2005, is not part of Phillips-Van Heusen’s $3 billion acquisition of Hilfiger’s company. Lagerfeld’s business will be retained by Apax Partners, the private equity firm that owned Hilfiger, according to Christian Stahl, partner in Apax. “We didn’t sell it along with the business,” Stahl said. “We’re going to take it out at the closing and put it into a separate company that we’ll continue to own. We believe it’s one of the best designer brands in the world, and we will put new management in place.” Stahl said a new management team hasn’t been appointed. “It’s not commercially the best brand in the world, but in terms of appeal and recognition, I think it’s a great brand. We’re going to focus on it and develop it,” he said. Asked if Apax will try to eventually sell the business, Stahl replied: “Every company we own is for sale.”  <wwd.com>
Pay Central Issue as Polo Trial Begins - Polo Ralph Lauren Corp.’s attorney vigorously rebutted charges the company should have paid California employees for time spent waiting for routine antitheft security checks at the end of their workdays as a class-action lawsuit trial began Tuesday in U.S. District Court here. Instances of unpaid overtime and miscalculation of commissions are also being alleged in the lawsuit, which is seeking $17 million in back wages and penalties. The case involves 6,700 people employed at Polo full-line and outlet stores in the state between May 2002 and January 2009. In opening arguments, Polo’s attorney William Goines told the six-person jury that claims of waits up to 15 minutes for security checks are exaggerated, and those involving unpaid overtime and commissions are incorrect. He also questioned the validity of conclusions drawn from a survey undertaken on behalf of the plaintiffs, as well as the survey size — only 300 of 1,600 questionnaires were completed. <wwd.com>
Inflation vs. Deflation: As Economy Improves, Price Pressures Grow - If the economic recovery stays on track, the fashion world just might have to adjust to something it hasn’t seen in almost two decades: inflation. The upward swing in prices would mark a stark turnaround from the steady slide in costs that has been the industry norm as retailers and suppliers found ever-less-expensive sources of supply. But with wage pressures rising in China, raw materials prices climbing and demand beginning to recover worldwide from both consumers and manufacturers, there is a growing sense deflationary pressures could be easing and its opposite might begin to take hold. Retail executives, at least, see that as a hopeful sign. “Deflation for the last decade-plus has not been particularly helpful for retailers,” said Myron E. “Mike” Ullman 3rd, chairman and chief executive officer of J.C. Penney Co. Inc. and a board member of the Federal Reserve Bank of Dallas. “A little bit of inflation wouldn’t be a bad thing for retailers as businesses, but obviously, too much inflation isn’t good.” Ullman noted asset values also go up with prices, providing a bit of a silver lining. With the economy still finding its footing, prices are generally expected to hold steady this year. “With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time,” the Federal Reserve Board said Tuesday. <wwd.com