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R3: REQUIRED RETAIL READING

April 12, 2010

‘Traffic’ has referred largely to consumers walking into stores. But now the bigger ‘traffic’ metric to watch is the container traffic coming into the US. We just saw the biggest sequential uptick in 15+ years.

TODAY’S CALL OUT

After last month’s sales report, it’s going to be tough to find any retailer say ‘we’re planning conservatively for summer/fall.’  In fact well before the sales numbers were known, we started to see a sequential uptick in container traffic into Long Beach, the best proxy for retail goods coming in from Asia. This past month, however, we saw TEUs (twenty-foot-equivalent units) grow at a yy rate not seen since early 2005, with a sequential 3-month acceleration the strongest in over 15-years. The point here is that the goods are coming…the consumer needs to be there waiting.

R3: Does Traffic Breed Traffic? - traffic chart shipping

LEVINE’S LOW DOWN 

  • Score one for fast fashion retailer, Forever 21. With value and price consciousness still very much on the mind of teen consumers, the company is promoting its “prom collection”. The dress offering includes 44 styles ranging from $13.50 to $42.80. Given that a prom dress is likely to be worn only once, we suspect these price points will make prom 2010 a “throwaway” for those a dress at Forever 21.
  • After hinting that the company was exploring the opening of bridal boutique, it has been confirmed that J Crew will open its first freestanding store focused on the bride this summer. The new store is slated to open on 66th St and Madison Avenue in New York in late May or early June. Interestingly, the store will be set amongst some pricey competition. Donna Karan, Oscar de la Renta, and Vera Wang are all located within 10 blocks of the new store.
  • Add Mintbox to the growing list of online “flash sale” operators. However, the latest entry into limited time, discounted fashion sales is aiming to bridge the gap between the on and offline worlds. Shoppers will receive loyalty rewards for their purchases, which in turn can be used towards gaining access to in-store VIP events, fashion shows, and exclusive preview sales. The site aims to build better relationships between retailers, designers, and consumers beyond simply selling goods off-price.

HEDGEYE CALENDAR

R3: Does Traffic Breed Traffic? - Calendar 

MORNING NEWS 

Health Care Reform & Retail - Health care reform is translating to more spending for companies of all sizes. How much more won’t be clear for some time and this kind of general muddiness should continue as officials decide how to apply the new laws, reforms phase in and insurance providers and individuals choose their paths. The plan will dramatically boost benefits for some and costs for others. But the net effect of the sweeping changes is the province of future historians — despite the highly politicized debate in Washington. Most companies would have to start to provide health insurance for employees’ dependants up to the age of 26 and for dependants who are under 19 and have preexisting medical conditions. By 2014 all legal U.S. residents will be required to have health insurance or pay a tax penalty. Under the employer mandate, retailers with more than 50 full-time employees who don’t offer insurance to their full-time workers will face a $2,000 penalty per full-time employee after the first 30 such workers. <wwd.com/business-news>

Indian garment exports from India to the US, Europe and Japan are likely to pick up in the coming months ahead due to the gradual recovery of their retail markets, according to the Confederation of Indian Textile Industries. "Indian and Bangladeshi garment exporters have started getting better prices now in the US. There are signs of improvement even in the retail market of the EU, all of which indicates that garment exports are slated to improve in the coming months," said Confederation of Indian Textile Industries General Secretary D K Nair.

The Apparel Export Promotion Council also expects the April export figures to show improvement, even though the industry went through a rough time with outbound shipments dropping 10.16% to $7.92 billion in April-January period of fiscal 2009-10 over the last one. However, the strength of the Indian currency is a cause of concern for exporters.  <fashionnetasia.com>

 R3: Does Traffic Breed Traffic? - Apparel Imports Table

Hong Kong's Luxury Markets Boom as Rich Mainlanders Snap Up Watches, Flats - Ju Wei, the owner of an advertising company in China’s north-western Gansu province, makes an 1,800 kilometer (1,100 miles) trek to Hong Kong at least six times a year to go shopping. <bloomberg.com/news>

Home Retail Advances to Four-Month High on Report Wal-Mart's Asda May Bid - Home Retail Group Plc rose to a four-month high in London trading after the Mail on Sunday reported that Wal-Mart Stores Inc.’s Asda may be interested in making an offer for the U.K. company. <bloomberg.com/news>

MasterCard Is Set to Launch an Online Shopping Mall - MasterCard plans to launch Monday the MasterCard MarketPlace, an online mall with more than 28,000 merchants. The payment card network is collaborating on the project with Next Jump, an Internet company that specializes in personalized shopping. <internetretailer.com>

Costco vs. Omega, Big Implications for Industry - The Supreme Court is expected to meet on Friday to decide whether to hear a case brought by Costco Wholesale Corp. against Omega SA challenging whether Omega can use copyright law to control the distribution and resale of watches made lawfully abroad and imported into the U.S. The case has significant implications for off-price retailers and discounters that often purchase imported goods from middlemen and distributors at cheaper prices, rather than purchasing directly from a manufacturer or its authorized U.S. distributor, and then sell them in the U.S. below the brand’s official price. Online auction sites such as eBay also could be impacted by the case. <wwd.com/business-news>

Wisco Badgers Drop Nike - The University of Wisconsin-Madison said today it has ended its licensing agreement with Nike Inc. as a result of issues the school has with how the shoe company handled problems with contract factories in Honduras. The school alleged that Nike has failed to adequately address problems resulting from the closure of two Honduran factories in January 2009. The licensing relationship between the school and Nike generated $49,000 in royalties last year. The university has a code of conduct that governs the activities of companies under contract. <wwd.com/business-news>

Gossip, Glitz, P&G, and Progressive - Procter & Gamble’s Gain detergent and Progressive Insurance have signed on for Starlicious, an online game show that plays on America’s fascination with celebrities. The show, now running on the News Corp.-owned celebrity gossip site, DailyFill.com, tests contestants’ knowledge of celebrity trivia with two press-the-button, answer-it-first rounds, followed by a 30-second “speed round” before advancing to the final prize. Those who are not content with merely watching Starlicious—which enters episode five of its first season this week—can also compete with other online viewers for a chance to appear on the show. (The criteria involves notching the top score in its “Celebrity Trivia Challenge.”) <brandweek.com>

A Look at Rock & Tone and Truebalance by New Balance - New Balance Athletic Shoe Inc. last week launched its first toning collection, Rock & Tone, and in July, the company will bow another toning franchise called Truebalance. Wendy Yang, GM of wellness at New Balance, said the firm’s background in walking and comfort will be an advantage as it enters the category. “Comfort is in everything we do. It’s that first feel. You want your foot to feel as good at the end of the day as it does at the beginning,” she said. <wwd.com/footwear-news>

R3: Does Traffic Breed Traffic? - new balance image 

K-Swiss California Music Month - Move to the music with California Music Month, presented by K-Swiss Inc. The Westlake Village, Calif.-based company is honoring its home state with a series of online programs and a five-part video series, out this month. The brand explores some of the area’s best music, including classics from the 1960s to present day hits, featuring artists such as The Beach Boys, Guns N’ Roses, The Red Hot Chili Peppers and Green Day. The release comes simultaneously with the launch of the Vintage California sneaker. To access the tunes, visit Kswiss.com or Rhino.com, where the site will host an Album of the Week interactive feature. <wwd.com/footwear-news

R3: Does Traffic Breed Traffic? - K Swiss Image

Card Activation Technologies Sues Apparel Retailers - Card Activation Technologies Inc., which holds a patent on debit card-related technology and has a reputation for litigiousness, again has filed an infringement lawsuit against several apparel retailers. Macy’s Inc., J.C. Penney Co. Inc., Nordstrom Inc., Guess Inc. and the Fashion Bug and Lane Bryant divisions of Charming Shoppes Inc. were among 10 defendants the company accused of violating its patent in a suit filed in U.S. District Court in Kansas City, Mo., in February. Card Activation Technologies alleged the retailers have processed debit and gift cards in ways that infringe on a patent it received in 2000. <wwd.com/business-news>

Christine Su and Elizabeth Yoon  met while working at the Adidas USA headquarters in Portland, Ore. Their new line, Su-Yoon, has a little extra style: “What we are ultimately trying to do is create a holistic collection where fashion fuses and submerges with sportswear athleticism, and where clean and classic styles are refined with slightly provocative athletic details,” Yoon said. Launching for fall ’10, the line of pumps, wedge booties and flat over-the-knee boots takes an athletic look at women’s shoes. The $250-to-$600 styles are made on custom-built lasts (Su’s family owns factories in China, which gave the self-financed startup a head start in product creation) and incorporate flex-built midsoles, EVA heel inserts and cupsole constructions to offer sneaker comfort. <wwd.com/footwear-news

Puma to Sponsor Top Sailing Event Again - Puma Ocean Racing, which finished second overall in the 2008-09 Volvo Ocean Race, has confirmed its entry for the next edition of the event. Puma will also be the official supplier of footwear, clothing, and accessories to the Volvo Ocean Race <sportsonesource.com>

R3: Does Traffic Breed Traffic? - PUMA image