• 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.


August 24, 2010

Lots of international headlines this morning, with the most eye-opening one coming from China.  For the first time, we’re including a news item that highlights how Chinese wage growth is fueling increased demand for the local consumption of footwear. 


- In a move that may have been a surprise to Kimora Lee Simmons herself, but not to anyone actually trying to make money in the rag trade, Kellwood apparently forced the model turned mogul out of the company’s Baby Phat division. Recall that Kellwood (now owned by Sun Capital) went on a buying spree a few years back and bought both Phat Farm and Baby Phat. Perhaps this had more to do with urbanwear becoming passé than anything else.


- Despite the appearance that this year is less promotional than last, consumers shopping for back to school are more influenced by bargains and coupons. 17% of families with kids in K-12 are influenced by bargains and coupons vs. 14.7% last year. E-commerce has also become a bigger part of back to school with 16% of K-12 families finishing their purchases online vs. 12.2% last year.


- According to a Colliers white paper on Big Box real estate, there is currently 300 million square feet of vacant Big Box space which represents 34% of all retail vacancies. Approximately 120 million square feet has been vacated since January 2008. Most markets are seeing sales prices for such assets down about 40% from peak levels seen in 2006/2007.

R3: China, India, Italy, Oh My - 1


American Apparel In Danger of Delisting - American Apparel received a letter from the NYSE AMEX that the retailer was in danger of being delisted because of the late filing of its second-quarter results. American Apparel said it filed a plan of compliance on June 1 and that it plans to provide supplemental information to the exchange to update how it intends to regain compliance by no later than Nov. 15. The company said the delay for the timely filing of its second-quarter results was due to a change in its accounting firm. <wwd.com/business-news>

Hedgeye Retail’s Take:  We’re still waiting for the clearance sales to kick in.  So far not many signs that this ship is sinking from a customer viewpoint.  Stay tuned… 

Fashion's Night Out Coming Up in September - While all the hubbub so far has been about Fashion’s Night Out in New York on Sept. 10, the event is a global one, stretching from Los Angeles to Tokyo, London to Sydney. And unlike last September, when each city held its event on the same evening, this year Fashion’s Night Out takes place on different nights. Paris will have a huge showing with around 60 stores participating on Sept. 7.  <wwd.com/retail-news>

Hedgeye Retail’s Take:  For anyone paying attention, this event has become a big deal from a PR and marketing standpoint.  Tickets are being sold to individual shows and it appears that no expenses are being spared to fuel the Hollywood-like spectacle. 

July’s Sporting Goods-related Sales Surge - July’s total retail sales edged up 0.4% from the prior month and 6.9% above last year’s numbers, according to advance reports issued by the U.S. Census Bureau. <sportsonesource.com>

Hedgeye Retail’s Take:  A lagging data point but one that reflects a pickup in equipment/hardline sales given sequential deceleration according to our weekly trend data as well anecdotes coming out of earnings.

Li-Ning Signs Evan Turner to Endorsement Deal - Li-Ning signed Evan Turner, the No. 2 pick in this year's NBA Draft, to a multi-year endorsement deal. Turner however will be showcasing his own Li-Ning Sports signature footwear and apparel product line, available globally, beginning in the second year of this agreement. Turner will also play a major role in Li-Ning's global marketing plans beginning immediately.  <sportsonesource.com>

Hedgeye Retail’s Take:  Another aggressive move from the Chinese competition coming on the heals of the Kevin Garnett and Baron Davis deals.  Already, Chinese brands have more     endorsement deals in hoops than UA.


China's Wage Increases Spur Shoe Sales For Belle - Belle International Holdings Ltd., China’s largest retailer of women’s shoes, said first-half profit grew 37% as rising wages encouraged consumers to spend more on footwear. Sales rose 20%. The owner of shoe brands Staccato and Joy & Peace, which also distributes sportswear for Nike Inc. and Adidas AG in China, increased promotions, added stores and focused more on footwear to woo customers. China’s retail sales rose 18.2% in the six months ended June and wages in China’s urban areas rose 13% in the first quarter from a year earlier. Same- store sales, which strip out the effects of newly opened stores, rose 18%. <bloomberg.com>

Hedgeye Retail’s Take:  It’s not often we hear about the positive impact of rising wages in China.  In this case, the demand side of the consumption equation appears to be seeing a boost from recent wage growth.  Good news for those with meaningful businesses in China.

Tiger Woods Not Selling Anymore? - Tiger Woods fans have put up with the philandering, the text messages and the domestic spats. Now comes what may be the hardest thing of all to tolerate: Losing. Woods has played through the year without a single tournament win, putting him at 83rd on the PGA Tour’s money list. As his performance slumps, so have sales of his apparel line through Nike Inc., according to retailers Golfsmith International Holdings Inc., Roger Dunn Golf Shops and Golf Discount Superstore. Golf apparel sales overall are on the rise, signaling consumers are returning to the course, just not to Woods. Nike gets about 10% of its golf sales from the Woods brand, whose shirts, jackets and pants are among the most expensive clothing the sportswear maker sells.  <bloomberg.com>

Hedgeye Retail’s Take:   Is this a surprise?  Yes Tiger is back on the course but his brand has definitely been out of focus since the scandal broke.  Leave it to Nike to figure out a way over time to reinvigorate Tiger’s sales.  We’re pretty sure they have experience with this.  Remember Kobe had a scandal as well?

Global Online Population to Grow 42% Between 2009 and 2014 - The global online population will grow to 2.32 billion by 2014, up 42% from 1.63 billion in 2009, according to projections from Forrester Research Inc.  The Middle East and Africa will grow the fastest during that time, an increase of 78%, but still account for the fewest total number of Internet users, 241 million. For e-commerce purposes, the report says areas that are set to have the most growth include Southern, Central and Eastern Europe, and such countries as Poland, Ukraine, Russia and Turkey. In the Asia Pacific, online spending by Chinese consumers  will outpace India. Brazil will continue to lead e-commerce spending in Latin America. Forrester Research projects the online population in the U.S. and Canada will grow 3% each year through 2014, but will comprise just 13% of the overall online population by 2014, down from 16% in 2009. The European online population will grow approximately 20% between 2010 and 2014 and account for 22% of the online population. <internetretailer.com>

Hedgeye Retail’s Take:  Yet another reason why e-commerce should continue to see outsized growth.  We’re also beginning to see retailers venture into numerous countries via e-commerce without any commensurate physical presence.  Gap is now in 50+ countries via gap.com.

New Report Says Consumers Shopping Earlier This Year for BTS - Consumers are getting more of their back-to-school and college shopping done earlier this year, according to a new National Retail Federation survey sponsored by BIGresearch. The survey found that the average family has completed 43.2% of its school shopping, up from 41.6% a year ago. Similarly, families of college students have completed 43.1% of their shopping, up from 41.0% the previous year. The trade group based its results on surveys of 8,201 consumers conducted between Aug. 3 and Aug. 10. Although the average family is nearly halfway done with its school shopping, a sizable number of families, 26.8%, have yet to start their shopping.  <internetretailer.com>

Hedgeye Retail’s Take:  The earlier the better from a retailer’s standpoint.  Better for sell throughs and margins.

India Announces New Stimulus Measures to Help Garment and Leather Industries - India has announced new stimulus measures worth US$225 mm to help garment, leather and handicraft exporters to weather through the economic downturn as the export growth slowed tremendously in July due to the Western markets have been further weakened. The government has also extended tax breaks for exporters, subsidised loans, help for upgrading machinery equipment and other concessions in India's annual trade policy. <fashionnetasia.com>

Hedgeye Retail’s Take:  Another reason to see production moving out of inflationary China and into alternative, lower cost sourcing regions.

 Italy Shoe Production Sees First Growth Since 2008 - According to the latest figure released by Italian national statistical institute (ISTAT), the country’s production of footwear saw an 1.5% growth in June 2010, the very first growth since the slump of demand in December 2008.  <fashionnetasia.com>

Hedgeye Retail’s Take:  A slight victory for higher quality and luxury footwear as it appears the bottoming process has turned up slightly.  Still a long way to go before Italian footwear gets back to pre-2008 demand levels.