R3: Big Move in China Retail



August 31, 2010


With Li Ning making a clear statement that's entering apparel and Kappa accelerating both store growth and acquisition cadence, this is a major sign that Chinese competition is one of the top three issues in footwear and apparel. 




Li Ning Sponsors USA Diving Team - Li Ning Company Limited has officially added the USA Diving Team to its evolving lineup of global talent, further expanding its presence on the main stage of the Olympics as USA Diving Team’s official apparel sponsor through 2012. <sportsonesource.com>

Hedgeye Retail’s Take: Following the ultimate ‘coming out’ party at the 2008 Beijing Olympics when the company sponsored teams from China, Spain, and Sweden, we expect several more of these announcements by the time the 2012 London games get underway. In addition to the company's first U.S. sponsorship, this is a major indication of the brands intentions of becoming an apparel brand as well (you don't need shoes to swim). Speedo - are you paying attention? 


Chinese Sportswear Brand Kappa Expanding, Looking to Buy European and US Brands - China Dongxiang Group Co., owner of rights to the Kappa sportswear brand in China, forecast second- half sales growth of more than 20% as its store network expands outside major cities such as Shanghai and Beijing. The company plans to open more than 300 stores in China in the six months through December, mostly in so-called third- and fourth- tier cities. China Dongxiang is in talks to acquire sportswear brands in Europe and the U.S. that are suitable for the consumer market in China.  <bloomberg.com>

Hedgeye Retail’s Take: A relative upstart founded in 2007, here’s another Chinese footwear company that should be on everyone’s ‘watch list’ – particularly one with such an aggressive store growth forecast.





India Ministries to Chalk Out Cotton Export Quotas - India’s Commerce Ministry and the Agriculture as well as Textile Ministry will be held to discuss quotas on exports of cotton, with an emphasis on local farmers’ interests. The Commerce Ministry has recently removed all restrictions on exports of cotton as well as cotton yarn beginning from the coming October. <fashionnetasia.com>

Hedgeye Retail’s Take: As the #2 global cotton producer of 23.5mm bales annually, all eyes will be on the outcome of the meetings held Wednesday September 1st with cotton up another ~10% here in August.  


Sports Authority Extends Agreement with GSI Commerce - Sports Authority reached an agreement with GSI Commerce that extends and expands the relationship between the two companies. As part of the new arrangement, Sports Authority will buy and own all merchandise sold through its Web store, and will become the seller of record for its e-commerce business in the first half of 2011. <sportsonesource.com>

Hedgeye Retail’s Take: With the relationship proven between the two companies, TSA is now taking over control of its e-commerce business much like DKS did last year – the end result, modestly more risk (inventory primarily), but higher margins as well. This all plays into the narrative of TSA going public.


Adidas Extends MLS Deal - Adidas and Major League Soccer (MLS) announced an extension to their partnership agreement aimed at "further elevating soccer in the United States and developing opportunities for young players." The partnership extends Adidas' position as the official athletic sponsor and product supplier for the MLS through 2018. <sportsonesource.com>

Hedgeye Retail’s Take: another example of the strategic difference between how Adi approaches endorsements compared to just about everyone else (i.e. Nike, Puma, UA, etc.) by being more geared towards investing in leagues and events.


Hugo Boss Plans Global Retail Expansion - Premium menswear label Hugo Boss is set to open up to 250 stores by 2015, with a focus on ramping up its expansion in China. <drapersonline.com>

Hedgeye Retail’s Take: With approximately 330 owned retail stores globally, this is notable shift for the brand known primarily as a wholesale brand domestically.


Target Beefs Up an Online Ad Tool - Target Corp. has unveiled the MyTargetWeekly tool that allows customers to view the retailer’s specials online, pick out products and set up deal alerts tied to specific items. With MyTargetWeekly, customers can see the top 10 deals or view specials in different ways such as by category, brand, popularity or price. They can also pick specific products to put on a weekly list or access online or through mobile devices. In addition, MyTargetWeekly displays the number of days for which the specials on the customer’s weekly list are available. <internetretailer.com>

Hedgeye Retail’s Take: Catering to the consumer who’s now conditioned to shop discounts and in seek of ‘value’ is a sharp move. It won’t be long before competitors follow suit.


Macy’s Teams With Greg Norman For Golf Lifestyle Collection - The retailer has teamed with golfer Greg Norman to launch a co-branded golf lifestyle collection under its Tasso Elba private label beginning in January. The performance-based, golf-inspired men’s sportswear line will include shirts, shorts, pants, outerwear, belts, socks and hats. The core product will be carried in all stores, and the top doors will carry the entire Greg Norman for Tasso Elba collection in an extension of the Tasso Elba shops. In an undetermined number of stores in strong golf markets, the collection will stand alone and be merchandised with other golf brands. Retail prices will range from $30 to $120. <wwd.com/retail-news>

Hedgeye Retail’s Take: Like we need another gold brand. We’d argue that further consolidation is needed in the industry before growing branded product, however as a retailer if you’re going to partner up, The Shark is still one of the most recognizable brands in the business.








































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