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August 25, 2010

With signs pointing towards another challenging holiday season for retailers expect creativity, content, and positioning to prevail. 


- In less than a year, Barnes & Noble’s market share in digital books has eclipsed that of the company’s physical bookselling share which currently stands at 17%. Management believes online book sales for the industry will top $500 million this year.


- According to Nielsen, kids under the age of 18 text 90 times as much as those over 65. Not surprising to some, but eye opening when you consider those under 18 send 2,800 texts each month! Some quick math suggests that’s about 100 texts per day.


- Keep an eye on the progress of “visual search” following Google’s acquisition of Like.com. The company’s technology allows consumers to comparison shop based on a image. So if you find a pair of jeans online and then hit the visual search button, the results will pop up based on finding items similar to the original pair of jeans. So much for search engine optimization based on keywords.


Outlook on Holiday is Cautious at Best - While still early to predict holiday sales with any degree of certainty, several retailers and analysts contacted said single-digit gains in the 2 to 4% range would be attainable, slightly better than last year, when retailers on average were up 2.1%. People are nervous and retailers are already pretty aggressive promotions happening, particularly in jeans. One thing is certain: This holiday will be no less promotional than last year, although it is unlikely to approach the 70% panic markdowns seen in the dismal days of 2008. Retailers say their goal is to plan them better, although in the end, the level of promotions will depend on consumer demand in the run-up to Christmas. The list of concerns is long and includes: Hot items in hard and soft goods don’t seem to be materializing, consumers are saving more than spending, most retailers for b-t-s seem to be dragging though some department store executives said early fall fashion is doing well, there are no signs of significant economic recovery soon, with job creation and the housing market remaining weak, credit is still hard to get, recent government data show consumers are saving 6.4% of their aftertax income, which is three times the rate of savings seen in 2007. <wwd.com/retail-news>

Hedgeye Retail’s Take: With lackluster BTS results to date and housing figures that caught many consumers by surprise, expect retailers to start getting more aggressive in order to counter signs of potential consumer retrenchment as we head into the holidays.

Random House Gets Ebook Rights From Wylie Agency - The publisher says it will again do business with the agency, which it severed ties with in July after Odyssey Editions signed an exclusive deal with Amazon to sell electronic versions of 20 classic books, 13 of which were Random House titles. The Random House titles will now be available at other ebook sellers, as well. The article does not indicate that the agreement has resolved the more fundamental question of who owns the rights to publish ebooks for works published at a time when publishing contracts did not specify who owns those rights. <nytimes.com>

Hedgeye Retail’s Take: The proliferation of the e-book astounds me. 2-years ago it was unheard of to the masses. Now I can't even count the number of e-readers. And that's coming from a guy who owns a kindle. 


Overstock Launches a Private-Sale Site - Eziba.com offers limited quantities of home goods for a set time period, typically between 48 and 72 hours. Eziba is Overstock’s first private-sale site. The company will market the site to existing customers. <internetretailer.com>

Hedgeye Retail’s Take: With less exclusive brands relative to similar models al la Gilt Groupe and RueLaLa, price will be the key driver to ‘lower luxury’ concepts such as this. Perversely, exposing the masses to this model is likely to also drive traffic to the original players as consumers adjust buying patterns.


PSUN Partners with Modern Amusement Brand - Pacific Sunwear of California Inc. hitched its merchandising fortunes to Mossimo Giannulli’s Modern Amusement brand. PacSun will hold exclusive rights as licensee to Modern Amusement for apparel, accessories and footwear through 2013, with an option to renew through 2020. The Anaheim, Calif.-based specialty store will work in tandem with Modern Amusement’s parent company, Dirty Bird Productions Inc., to develop additional licensing and distribution opportunities, the parties said, and will share in royalties generated by the association. They also will share approval rights for such arrangements. <wwd.com/business-news>

Hedgeye Retail’s Take: A step up for PSUN in terms of content with upside in channels that have given little thought to carrying the brand prior to the its partnership with Mossimo’s Modern Amusement brand typically carried in higher end department stores.

West 49 Shareholders Approve Billabong Take Over - West 49 shareholders voted almost unanimously in favor of Billabong's $99-million takeover bid for the Canadian clothing retailer. West 49 said 99.9% of its shareholders were in favor of the sale to Australia's Billabong International. <sportsonesource.com>

Hedgeye Retail’s Take: As expected – but it’s worth noting that while West 49 is Canadian-based, it will significantly add to Billabong’s footprint with 300+ stores globally with approximately half mall-based.

SKX Wraps Up 20 City Tour - Skechers USA Inc. on Thursday wrapped up a 20 city tour in New York City's Times Square. Denise Austin, America's favorite fitness expert, hosted the festivities in Times Square. <sportsonesource.com>

Hedgeye Retail’s Take: Between the new television ad campaign and multi-city tour, Skechers is putting its marketing muscle behind the new SRR resistance runner for men. As trend data begins to track sales of the product, we’ll see just how successful the effort and interest will be.

FL Opens 2nd RUN by Foot Locker - Foot Locker Inc. has opened its second RUN by Foot Locker store in Menlo Park Mall in Edison, NJ. The first RUN by Foot Locker opened in February on 14th Street in New York City.  <sportsonesource.com>

Hedgeye Retail’s Take: With the first RUN store having opened over 6-months ago, don’t expect it to take as long before we see RUN stores #3, #4 & #5 as FL rolls out this initiative as part of its store optimization strategy.

Puma Keeps Usain Bolt Through 2013 - Puma’s love affair with Jamaican track-and-field star Usain Bolt continues. The three-time gold medal winner renewed his contract with the athletic company Tuesday. It will now continue through the end of 2013. Although terms were not disclosed, Puma did say Bolt will receive more than any track-and-field athlete has earned.  Bolt, 24, has been with Puma since he was 16. As part of the new deal, the runner will appear in ad campaigns, including the company’s London 2012 Olympic program, expected to launch in 2011. And he will continue to collaborate on such product lines as the Bolt Collection of footwear, apparel and accessories. <wwd.com/footwear-news>

Hedgeye Retail’s Take: Pay day! After taking a firm hold of the world’s fastest man title in 2008 at the Beijing Olympics, Bolt has quickly become synonymous with running and a key element in Puma’s resurgence.

Facebook Usage Still Rising in Europe, But Growth Slows in UK - The Facebook juggernaut rolls on in Europe, but the first sign of declining growth rates has appeared. In particular, the site’s meteoric expansion in the UK is tailing off. The social network gained more than 2.2 million active UK users in May 2010, according to Inside Facebook—an 8.9% rise that took total UK user numbers to 27.1 million on June 1. Growth was higher in the UK than anywhere else in Western Europe. By midsummer a different pattern was emerging. In France, user numbers continued to climb, reaching 19.4 million on August 1, according to data from Inside Facebook. In the UK, by contrast, the tally of active users fell in June, and rose only 1.8% in July. <emarketer.com>

Hedgeye Retail’s Take: At 44% penetration in the UK let’s be real, growth is going to show signs of slowing at some point. I’m more interested in two other figures, the countries with the highest growth rates. With India up +9.4% and Brazil +12.1% and penetration of only 1% and 3% respectively…looks like plenty of runway for growth from this seat.

R3: FL, OSTK, PSUN, SKX, Puma - 1