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Takeaway: Some material changes in our Position Monitor – both sides. GIL, DLTR, TPR, RH, ADS, HBI, KSS, TGT, FL, OXM, FIVE, DOL, BBBY, VFC, PLCE, W

GIL: Just a buck below 52-week high, and modeling gets messy by quarter in 2019. But Biolsi spent time with management at the screenprining tradeshow in LA this weekend and he likes what he heard. Higher conviction in this as #1 top Long Best Idea.

DLTR: You could argue that this is rangebound between $90-$100 until proxy filing in May. Though our sense is that we’ll see Starboard settle for a smaller number of Board seats before then due to management comitting to play well in the sand box as it relates to finding a solution for FDO and breaking the buck. DLTR | IT'S ALL ABOUT THE BUCK: LINK

TPR: Moving ahead of RH as #3 on Best Ideas Long list. The reality is that this is one of the few companies in retail that should actually accelerate revenue and EBIT in 2019. We’re ahead of consensus and are staying there despite China risks.

RH: TIF’s comments about negative wealth effect hurting Americas business over the past two months since equity market selloff is notable. RH has favorable housing tailwinds in that context, but it’s a datapoint I don’t like. Moving down a notch on Best Ideas list – still believe EPS is beatable.

ADS-DE: Moved to bottom of Best Ideas Long list. I like this name a lot, but stock has rallied back and I don’t have outsized upside in the model until 2H of this year.  

HBI – Getting the rally we thought we might see when we did our deck a couple weeks back, time to start pressing this one.  HBI | It’s Still Shortable. Numbers are Wrong LINK

KSS/TGT: Very little detail out of these two on the make-up of 4Q since they didn’t “miss”.  Inventories could be a problem given what JWN and M indicated.  Both names have far more downside to the model this year than upside.

FL: The consensus view is that FL has the wind at its back right now due to strength in Nike’s US wholesale business. If FL does not put up at least a 5% comp this quarter, it is big confirmation of share loss to the brands’ DTC. I’m going to be patient here, but definitely more bearish on strength. A 5% comp for a secular share loser isn’t as easy as Nike might lead you to think.

OXM: Incrementally bearish. Not sure if Oxford can avoid the promotions and inventory issues being signaled by the likes of M and JWN. Spring orders likely down…trying to gauge how much.   Very few ways to win long-side here.

FIVE: Taking this higher on the Short Bench. Rallied back to about 10% from the all time highs, yet if Starboard gets its way at DLTR a massive new competitor enters the space. That matters at 23x EBITDA.

DOL: I’m tempted to move this name up the long bench, but the reality is that the next datapoint out of DOL is likely to be a 2019 guide-down.  I like this name long term, but #patience. The guide concerns me.

BBBY: Moving back to short bench. Got a little pop after guiding to a flat 2019 while the consensus was looking for an 18% decline – but now we’re again at a point where expectations embedded in the stock might be too high.

VFC: Moving lower on Long Bench after Friday’s outsized pop. The EPS upside was predictable. The sustainability of beating expectations in the face of slowing growth before an ill-timed spin of the denim business is not. Stock not cheap.

PLCE:  Moving higher on Long Bench. Gymboree liquidation is happening. Reserves already taken. Trading at sub-6x EBITDA.

TJX/ROST: Move above ULTA on Long Bench. We’re in Retail Quad 4 – too much inventory with no bargaining power given down margins. This is an off-price retailer’s product flow dream – only question being whether it shows up in comp or is packed away for next year. Either way bullish – it’s all about duration. I’m still net bearish on BURL.

GOLF: Moving this one meaningfully higher on Short Bench. McLean at PGA show this week in FL. Company has innovation/market share (and upcoming earnings) issues.

W: Big rip for W back to above 100.  Moving this one to top of Short Bench. Strong candidate for Best Idea Short and Black Book.

LULU: Move it near bottom of Long Bench.  Stock has ripped with good holiday results.  Compares are getting super hard, can this really work as a long when revenue slows and the company likely contemplates accelerating investing? Multiples don’t expand when cash flow gets squeezed.

Retail | Position Monitor Changes - Pos Monitor 1 22 2019