R3: In Defense of Thy Customer

R3: REQUIRED RETAIL READING

April 26, 2010

 

 

TODAY’S CALL OUT

 

In a rare move on Friday, VF Corp took an equity stake in one of its UK retail partners, Blacks Leisure. While the stake itself amounts to 5% of Black’s shares outstanding or approximately a $2 million position, the move is more interesting from a strategic viewpoint than a monetary one. After all, Blacks is the largest outdoor retailer in the UK and likely one of The North Face’s largest UK customers. In fact, if you scan the Blacks’ corporate website you’ll notice frequent references to the brand.

 

Without going into the long history of Blacks and its troubles over the past couple of years (the company is the midst of a major turnaround, closing doors, in need of capital, and has previously rejected a takeover from rival Sports Direct which owns 28.5%), the move is clearly aimed at keeping this 300+ door retailer alive. Importantly, the 5% acquired from exercising of warrants strategically fends off Sports Direct from attempting another takeover attempt. Yes there is a soap opera-like dynamic underpinning the UK sporting goods and outdoor marketplace, but one thing is sure. VF Corp has picked sides here and is willing to spend what amounts to little more than a rounding error for the $9+ billion apparel manufacturer to keep its business and brand presence alive in the UK. And, as with any soap opera, this story may still yet have more twists and turns on the horizon.

 

Eric Levine

Director

 

 

LEVINE’S LOW DOWN 

 

- In an effort to cater to the female NFL fan with a bit of fashion, Victoria’s Secret Pink will be rolling out a licensed apparel initiative for the upcoming season. The studded jerseys were showcased on Victoria’s Secret models over the weekend at the 75th NFL draft.

 

 - Expect some buzz from Louis Vuitton’s June marketing campaign, which comes to market just before the World Cup. The print ad photographed by Annie Leibovitz includes soccer legends Zinedine Zidane, Diego Maradona, and Pele all playing foosball in a Madrid Café.

 

- Aside from being one of the most important digital marketing platforms to emerge in years, Facebook is about to become a viable ecommerce enabler as well. Through an application called ShopFans, brands and retailers will easily be able to set up shop to take advantage of the social network. Users will be able to promote sales, new products, and likes/dislikes to their friend lists, all contributing to a new era in “viral” commerce.

 

 

HEDGEYE CALENDAR

 

R3: In Defense of Thy Customer - Calendar

 

 

MORNING NEWS 

 

Affluent Young Shoppers Aid Luxury Market - Affluent young shoppers helped limit the damage to the luxury sector last year and set it on a course for recovery earlier than other parts of the economy. According to recent transaction data from American Express Business Insights, global luxury spending in 2009 showed signs of a rebound, and even growth. Despite a 20% decline in U.S. luxury spending last year, consumer purchases during 2H 09 increased almost 10%. Following up on that rebound, they spiked just over 20% in February and March of this year. This stabilization in luxury spending is part of a global trend, in which emerging economies such as India and Brazil have bounced back vigorously. Luxury spending in Japan and Australia was up 5% in 2009, and jumped 18% in February and March. In the European Union, which declined 15% last year, it increased 14% in February and March, according to American Express data. <wwd.com/business-news>

 

Crocs Back Makes Moves - With a new marketing campaign, two flagship stores opening next month and a fresh assortment of product, Crocs Inc. President and CEO John McCarvel is optimistic about 2010. “We have a great line of product and we have a really good vision for where the brand is going,” said McCarvel. “With great product, coupled with an edgy, fun and a little bit different ad campaign, you get a reaction. What we’ve seen so far has been very positive. We’ve been happy with [the response].”  <wwd.com/footwear-news>

 

R3: In Defense of Thy Customer - Crocs image

 

Bill Ackman Selling Stake in Sears Canada - William Ackman’s Pershing Square Capital Management will sell its stake in Sears Canada Inc. to Sears Holdings Corp. for almost $560 mm. The companies said Friday that Pershing Square had agreed to off-load all its roughly 18.7 mm shares of Sears Canada common stock, representing about 17.3% of shares outstanding, for 30 Canadian dollars a share. The sale, expected to close on Tuesday, boosts Sears Holdings’ stake in its Canadian unit to 90.4%. <wwd.com/business-news>

 

European Footwear Looking For Late Spring Sales - After a slow start, European shops are looking for spring sales to pick up as temperatures rise. Many retailers polled last week said that while the economic situation is still causing concern, they expect this season to be better than last, and that renewed interest in lower heel heights is helping to drive sales. Overall, sales at the retailers are up, but customers have waited for the weather to improve before shopping for new styles. In Paris, the delayed start to spring also has had an impact in an already difficult climate.  The winter was cold and the economic situation was not good and there are fewer people traveling. In Germany, which has had one of Europe’s strongest economies of late, retailers said sales have been brisk so far this season, despite the weather. <wwd.com/footwear-news>

 

Whirlpool Corp Boosts Annual Forecast - Whirlpool Corp., the world’s largest appliance maker, said it will earn $8 to $8.50 a share in 2010, higher than its earlier estimate of $6.50 to $7 a share. Analysts surveyed by Bloomberg had estimated profit of $6.83 on average. <bloomberg.com/news/retail>

 

VFC's Reef Introduces Coastal Cruisers - Reef is introducing Coastal Cruisers for spring ’11. The lightweight slip-ons can be worn with or without laces and have a soft EVA sockliner with built-in arch support. The footbed is a textured, pebbled EVA known as the “Wax Texture Cushion.” Coastal Cruisers retail from $50 to $55 and will hit shelves in January. Additionally, Reef is teaming up with Acai Roots, a company that manufactures Acai berry goods from the Brazilian Amazon, to create a sandal collection called the Ah-sy-ee. The shoes will be embellished with the seeds of the Acai berries and feature vibrant tropical hues, metallics and animal prints, as well as elements such as buckles, coins and wood. <wwd.com/footwear-news>

 

Nine West Inks Deal with Joss Stone - Nine West Vintage America is getting a little help from across the pond. The label has signed Grammy Award-winning, British R&B singer Joss Stone to produce a fall ’10 capsule collection. Stone will collaborate with Nine West Creative Director Fred Allard on the project, with proceeds benefiting Soles4Souls. Shoes in the line will retail for $70 to $120, according to Stacy Lastrina, chief marketing officer for Nine West’s parent company, Jones Apparel Group Inc. <wwd.com/footwear-news>

 

TSA Investing in Real Estate for Future Store Expansion Push - The Sports Authority promoted Lon Novatt to senior vice president real estate, effective immediately. In this role, Novatt will continue to oversee all activities related to the company's real estate initiatives. <sportsonesource.com>

 

PLCE Building Management Team - The Children’s Place is building up its senior team to fuel new strategies being orchestrated by president and chief executive officer Jane Elfers, who took the reins in January. Next month, Natalie Levy joins the chain as senior vice president of merchandising. She was Ann Taylor’s senior vice president and general merchandise manager, and before that held the same title at Lord & Taylor, overseeing proprietary brands for women’s sportswear, accessories, men’s and children’s.  Dina Sweeney, a 26-year veteran of The Children’s Place, has become senior vice president of outlets, a new position. Barrie Scardina has been named senior vice president of planning and allocation, and was previously Liz Claiborne’s vice president of retail operations. Last month, Larry McClure was named senior vice president of human resources. <wwd.com/retail-news>

 

UK Clothing Company Jack Wills Comes to the US - Jack Wills, the 11-year-old British clothing label whose laid-back designs play on the raffish style of British college students, is set to plant its flag in the U.S. Today, the label, which does men’s, women’s and homeware collections, opens its first American store in a former speakeasy on Martha’s Vineyard, while next month a unit will open in a former hardware store on Nantucket, followed by a boutique on Newbury Street in Boston in July. <wwd.com/retail-news>

 

Retail Industry Pleased with 34th St. Pedestrian Only Plan - The retail industry generally applauded plans by the Bloomberg administration to turn part of 34th Street into a pedestrian-only area and change the flow of traffic on the reainder. Under the 34th Street plan, cars would be banned between Fifth and Sixth Avenues, although two-way bus service would operate on one side of the street. The plan calls for general traffic traveling in one direction — west of Sixth Avenue toward the Hudson River and east of Fifth Avenue toward the East River. <wwd.com/retail-news>

 

PE Firm Triton Bids on German Department Store Karstadt - Private equity investment firm Triton put in a bid for the German Karstadt department group as the deadline for bidders neared its end on Friday. It is the only offer received for the 120-door retail unit of the insolvent department store, catalogue and travel group Arcandor. Karstadt is comprised of 86 department stores, 26 sports stores and eight bargain centers employing 25,000. <wwd.com/business-news>

 

Lane Bryant Makes More News with its Risqué Ad - Lane Bryant may have been trying to get Americans to redefine female beauty, but the brand got into an ugly war of words with two networks to make its case. By week’s end the retailer rang up millions of dollars of free exposure for an ad that had yet to even air as Fox’s The O’Reilly Factor, CNN’s Showbiz Tonight, NBC’s Today show, The Huffington Post and the Drudge Report, among other places, covered the story. In portraying itself as a defender of larger women, the brand also got to redefine itself as a purveyor of dowdy apparel to one whose image revolved around a voluptuous woman in a red bra. The controversy kicked off after Lane Bryant claimed Fox and ABC resisted efforts by the plus-size clothing company to place the Zimmerman-created ad, promoting the company’s Cacique line, on American Idol and Dancing With the Stars. The Columbus, Ohio, company accused the two networks of a bias against larger women since those nets requested editing of the spots and wouldn’t give Lane Bryant the TV placement time it wanted. <brandweek.com>

 

Best Buy’s y/y Traffic Rose 108% in March - Best Buy attracted 15.43 million visitors to its web site in March, a 108% increase from the same month a year earlier, Nielsen Online reports. <internetretailer.com>

 


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