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September 3, 2010

Nothing like a hurricane to take the “wind” out of a retailer’s sales.  Expect those with weakness in September to blame Earl come next sales day. 


- Quicksilver noted that trends picked up meaningfully towards of the end of August and into early September following a weaker performance in June and July. Sales improvement coincides with the timing of back-to-school. Interestingly, similar trends are being observed in non-U.S. markets as well.


- As Dockers tries to reinvent the brand it has collaborated with NY based designer Steven Alan on a co-branded, higher end line. The products will be made available at Barney’s New York and at Steven Alan’s namesake boutiques, with pants priced at $128 to $148. More importantly expect a PR blitz to make its way through the fashion community. How this translates into sales of $40 khakis at Kohl’s is still unclear, but the effort is certainly noted.


- In one of the more rare transitions of a children’s product into the adult world, Silly Bandz may be destined for a second life. It turns out that the rubber bracelets (which come in a million shapes and colors) are now being used on the dating scene in Manhattan as a sign of flirtation. In other words, men and women are exchanging these rubber bracelets at bars as part of the dating process. Talk about a way to kill a brand (and a product).


US Apparel Companies Turn Up the Heat on Bangladesh - U.S. retailers and apparel companies are taking a proactive stance against reports of police and government repression of garment workers and arrests of union activists in Bangladesh. The American Apparel & Footwear Association sent a letter to Bangladesh’s ambassador to the U.S., Akramul Qader, on Wednesday, expressing its concerns about the reports. The Bangladesh government moved to increase the country’s minimum wage in the garment industry in July, following months of widespread violent protests by workers and their union, but the protests have continued amidst widespread reports of worker repression and intimidation and union arrests. <wwd.com/business-news>

Hedgeye Retail’s Take:  The bottom line on rising prices out of this region and potential supply-chain disruptions in the interim are still unchanged.  It’s highly unlikely (while politically correct) that the AAFA puts this major political issue to rest for the Bangladeshis.

Hurricane Earl Causes Difficulties for Retailers - U.S. retailers in Hurricane Earl’s projected path were already feeling the effects of the storm before the first drop of rain or gust of wind. Retailers from the Carolinas to Massachusetts are missing out on sales this weekend especially because its the last big weekend of back-to-school. Stores noticed the first drop-off in sales on Wednesday, when recreational parks in the area were closed and travelers began to leave town.  <wwd.com/footwear-news>

Hedgeye Retail’s Take:  Take note come September sales day when retailers cite Earl as a reason for weaker sales.  As of now, this storm will likely have minimal impact on retailing as it is expected to move offshore quite quickly and is not anticipated to hover over any major metro areas.  Yes, the final summer weekend in Cape Cod, Nantucket, and Martha’s Vineyard could be impacted.  Not good for Murray’s.

Steve Madden Looks To Capitalize on Betsey Johnson's Credit Issues - Betsey Johnson’s credit headache could prove to be Steve Madden’s designer brand opportunity. In papers filed with the Securities and Exchange Commission late Thursday, Steven Madden Ltd. said it had taken over a $48.8 mm loan to Johnson’s firm, Betsey Johnson LLC, that is currently in default. If Johnson can’t repay the loan by Aug. 20, 2012, Madden would end up owning the brand — and could even seize the personal assets of Johnson and her chief executive officer, Chantal Bacon. There are 66 Betsey Johnson boutiques and plans call for the chain to expand to 100 stores by 2012, according to the designer’s Web site. Madden already holds a license for handbags, small leather goods, belts and umbrellas under the Betsey Johnson and Betseyville trademarks. <wwd.com/business-news>

Hedgeye Retail’s Take:  Looks like a fairly smart move as the company continues to acquire beyond the core shoe biz.  Both a real estate and brand play, this may ultimately prove to be a savvy investment.

More on Jimmy Choo Possible IPO - Jimmy Choo isn’t for sale at the moment, but that isn’t preventing investment banks from sniffing around. Industry sources said banks eager to drum up new business have been approaching the footwear and accessories firm, which this year is expected to post revenues of 150 million pounds, or $231 million, at current exchange. TowerBrook principals narrowed down the list and asked only Goldman Sachs and Morgan Stanley to prepare pitches with a view to becoming strategic advisers on future options for the company. <wwd.com/business-news>

Hedgeye Retail’s Take:  With momentum in the higher-end luxury retail segment hitting a pause recently, we wonder how quickly Goldman and Morgan can prepare their pitches.  If a roadshow does materialize, be prepared for a lesson in how Choo can morph into a “lifestyle” brand as well as a global retailer.


Timberland Steps Up Marketing on Green Products - The Timberland Company is escalating its green marketing activities with the launch of its biggest and most environmentally-focused marketing campaign yet -- Nature Needs Heroes. Launching globally over the next several weeks, the campaign showcases Timberland's Earthkeepers collection. Made with materials like recycled rubber and recycled PET (one and a half plastic bottles are used in each pair of Earthkeepers boots), Earthkeepers product is one of the company's leading and fastest growing product collections. <sportsonesource.com>

Hedgeye Retail’s Take:  While the overall business may still be under pressure, the company’s efforts in the area of sustainability and the environment clearly add credibility and authenticity to the brand.  Consumers are beginning to embrace social responsibility in a meaningful way and Timberland has been an early adopter of such efforts.

Under Armour Focuses on Women - Under Armour is determined to strike a chord with female athletes—many of whom have been buying the brand, but aren’t that emotionally attached to it. The company has kicked off a campaign that includes a Facebook page dedicated to women’s performance apparel. The target demographic is a female consumer who “trains in Under Armour, but doesn’t really know about the brand other than [that] it’s her boyfriend’s brand," said Adrienne Lofton, senior marketing director of Under Armour’s women’s business. The campaign, which is part the brand’s “Protect This House. I Will” campaign, includes a star-studded lineup of athletes. There is Lindsey Vonn, an Olympic gold medalist downhill skier; soccer sensation Lauren Cheney; and track and field runner Monica Hargrove. One 60-second spot (now on YouTube) takes viewers through the grueling, day-to-day training these female athletes go through to be on top of their game. Vonn lifts weights and balances herself atop a yoga ball, for instance, while Cheney collides with a player in the soccer field. <brandweek.com>

Hedgeye Retail’s Take:  Recall that UA hired a separate agency and team of marketing and merchandising execs to focus exclusively on the female consumer.  It appears that the early byproducts of these efforts are now beginning to trickle out.  Women’s continues to be a huge, untapped opportunity for the brand.


First Kidswear Store Signals UK Retail Assault By Guess - US denim brand and retailer Guess is to open standalone stores for its kidswear range and Guess by Marciano sub-brand as it gears up for rapid retail expansion in the UK. <drapersonline.com>

Hedgeye Retail’s Take:  Similar to the US, kids retail appears to be the concept du-jour.  Unfortunately, higher price points will put a lid on ultimate kids expansion, unless of course the concept is planning to take prices lower. 

Social Networking Doubles Among Boomers and Seniors - Social media usage has nearly reached saturation among younger adults, and its highest growth rates are now coming from internet users ages 65 and up, who have doubled their usage of social networking sites in the past year. The mass appeal is causing ad dollars to flow, but could it cost sites like Facebook their cool factor? <emarketer.com>

Hedgeye Retail’s Take:  While this is certainly noteworthy, we wonder if the adoption curve for social networking in the 65+ category is any different from other youth-perceived tech products.  Either way, the broader the audience online, the less relevant TV and Radio become.

R3: Earl, Cotton, TBL, Choo, UA, and GES - 1

Visa and MasterCard Show Increased Transaction Activity in E-Commerce - More than 12% of Visa's global transaction volume comes from the web, and because its growing faster than other channels Visa has stepped up their focus.  That sharper focus is evident by a series of moves in 2010 from both Visa and its main rival, MasterCard Worldwide, which does not break out its e-commerce volume. Here's what they've done this year:

— In March, Visa announced plans for an online social shopping service and electronic wallet called Rightcliq.

— MasterCard soon afterward unveiled MasterCard Marketplace, featuring discount offers from online retailers.

— Later that month, MasterCard created a new research and development unit called MasterCard Labs to speed new payment products to market. Its first initiative, announced in May and called Open APIs, is designed to make it easier for mobile and web developers to integrate MasterCard payments into their applications.

— Visa in April announced it was paying $2 billion for CyberSource Corp., a major provider of fraud prevention and payment processing services to online retailers.

— MasterCard last month announced plans to pay $520 million for U.K.-based payment processor DataCash Group plc, calling it a move to strengthen its position in e-commerce.

What all this will mean for web and mobile retailers is still coming into focus, as these initiatives are so new. But experts agree that the Visa/CyberSource combination could bring valuable new services to retailers and that MasterCard's Open APIs puts it in the thick of fast-changing developments in mobile payments.  <internetretailer.com>

Hedgeye Retail’s Take:  Fishing where the fish are.  The real innovation here however, will come when the traditional credit card is no longer needed to transact online or from a mobile device.  One click payment (like Paypal) and wireless payments seem closer to a widespread reality than ever before.  However, security and privacy concerns remain a key factor in holding back mass adoption.