R3: REQUIRED RETAIL READING
September 8, 2010
From mixed martial arts brand acquisitions to NFL licenses and the opening of the new Ralph Lauren men’s store in the NYC, there’s certainly a masculine bias to this morning’s happenings...
- A survey by BIGresearch and the NRF suggests that the implementation of a federal VAT would reduce spending by 64% of consumers. Specific areas in which respondents would cut back included: eating out (83%), clothing and accessories (80%), food/groceries (74%), entertainment (72%) and travel (72%). Only 10% of those surveyed were in favor of a VAT to reduce the deficit while 80% are in favor of reduced government spending as a means to handle the deficit.
- Online private-sale retailer Gilt.com appears to be in the midst of a PR storm. It turns out that a handful of customers were charged more than advertised prices during the company’s end of season women’s sale. Originally the company fluffed off the issue, but an article in WWD on the subject is sure to rectify the situation much more quickly than originally planned. Keep in mind that in some states it is illegal to charge more than advertised prices, even if it’s a mistake.
- First it was Canada, now it’s Brooklyn. After a flurry of recently announced store opening plans focused north of the border, we’re now seeing Brooklyn attracting national chain stores. This time word has it that Aeropostale will be opening a new store Downtown. Recall that Apple has long been rumored to be opening a store in the borough as well.
- E-mail remains by far the most popular mobile internet activity, taking up 41.6% of a users time according to Nielsen. Portal usage comes in second, representing 11.6% of time spent, while social networking continues to grow and represents about 10.6% of usage time. All in despite reports to the contrary, e-mail remains by far the most popular mobile internet activity.
OUR TAKE ON OVERNIGHT NEWS
Authentic Brands Group Acquires Tapout and Silver Star Casting - Authentic Brands Group, LLC, has acquired Tapout and Silver Star Casting Company (Silver Star), two of the biggest names in the mixed martial arts (MMA) industry. The buys mark the first major acquisitions for Authentic Brands Group, a buyout group formed by Leonard Green & Partners and Knights Bridge Capital and led by James Salter. <sportsonesource.com>
Hedgeye Retail’s Take: MMA continues its meteoric rise into the sports arena limelight – this time with a noteworthy endorsement of sorts from Wall Street. Atypical in almost every way, from a CEO named “Punkass,” to the trajectory of its revenues from ~$16mm in 2006 to ~$200mm in revenues last year, Tapout is a certainly a crown jewel of sorts in MMA.
Saucony Appoints Chris Lindner as SVP, Chief Marketing Officer - Saucony, Inc. appointed Chris Lindner to the newly created role of senior vice president/chief marketing officer. Prior to his new role at Saucony, Lindner was vice president of global marketing at Converse Inc., a subsidiary of Nike, Inc., where he oversaw all marketing execution throughout North America as well as the brand's global regions. <sportsonesource.com>
Hedgeye Retail’s Take: Chris Linder is one of the good guys. Loss for Converse, but good for PSS. Collective Brands continues to fuel the fastest growing brand in its portfolio. With the company focused on growing the brand in Europe, expect Linder’s experience to contribute heavily there. It’s a shame that no one cares about this part of PSS’ portfolio.
Airwalk Goes Old School - Aiming to meet demand for products from its archives, Airwalk relaunched its website last month with e-commerce. The new site features classic products, as well as signature shoes from Airwalk athletes. “Eighty percent of visitors to our site wanted to buy product,” said Tiffany Fraser, Airwalk’s e-commerce manager. “Our product methodology is to offer old-school styles, nothing that you would see anywhere else. You won’t find it anywhere in the U.S.” The site debuted with a focus on its classic Desert Boot, Prototype 540, and Prototype 600 styles. About 300 pairs of each will be available to consumers, and two to four major launches, with apparel pairings, will roll out each year. <wwd.com/footwear-news>
Hedgeye Retail’s Take: Going retro is hardly new, but this is consistent with Collective Brands commitment to growing its branded portfolio - we’ll need to see much more from PSS in 2H.
Retail Space Availability to Drop in 2011 - Space available for lease at U.S. local retail centers will decline next year for the first time since 2005 as consumer spending rises, according to commercial broker CB Richard Ellis Group Inc. The availability rate, which refers to space being actively marketed and ready for tenant construction in a year, will fall to 12.8% for neighborhood and community shopping centers at the end of 2011 from a peak of 13.2% in the second half of this year. National chains that rent space from Kimco Realty Corp., the biggest U.S. owner of community shopping centers, have “selectively resumed their expansion strategies,” David Henry, the company’s chief executive officer, said on a July 28 conference call. The availability rate at community and neighborhood shopping centers was 13.1% in the second quarter, up from 12.2% in the same period a year earlier. The rate probably will fall to 12.1% at the end of 2012. Rents may not rise at neighborhood and community retail centers before 2012. <bloomberg.com>
Hedgeye Retail’s Take: This may be a minor sequential improvement but the real impetus for improving vacancy rates will be both a sustained pick up in square footage growth coupled by further rent relief. Capacity remains in check as new developments still show little signs of picking up. For now it’s a waiting game to see which comes first, rent or growth.
NFL to Revamp Apparel Licenses - The National Football League is exploring opening up its apparel licenses to other manufacturers. The rights are currently held by Reebok in a deal that ends at the close of next season. According to a report in Sports Business Journal, categories such as on-field, youth, headwear and performance will be broken out into their own distinct categories that would be available to new licensees. <sportsonesource.com>
Hedgeye Retail’s Take: We can debate all day whether this strategy makes sense, but let’s face a fact… the NFL is doing what all high profile licensees do – they are beginning to negotiate through the press. Their ultimate goal is likely to keep Adibok, but at a higher ticket.
RL Introduces the Converted Rhinelander Mansion as the Home Base of Men's Wear - Today, the designer will take the wraps off the Rhinelander Mansion, which has been converted to a men’s-only retail emporium. Women’s wear has been relocated and will share a newly constructed 40,000-square-foot home across the street, to be completed next month. Although Polo Ralph Lauren Corp. has embraced digital platforms for selling and marketing product, it also continues to raise the bar for the in-store experience. <wwd.com/retail-news>
Hedgeye Retail’s Take: The highly anticipated men’s store is here. With men’s typically relegated to basement or back room locations, this store is guaranteed to offer a new experience. While highly unlikely to surpass the productivity of the women’s store across the street, it’s worth noting that this store has been under construction (and behind plan) and will finally have revenue associated with what has been a liability.
BOOT Opens New Manufacturing Facility - LaCrosse Footwear Inc. has opened a new manufacturing facility in its home city of Portland, Ore., to produce the Danner brand. Located in an industrial building about one mile from the company’s headquarters, the factory contains roughly 59,000 square feet, representing twice the footage of the firm’s previous factory there. According to LaCrosse CEO Joseph Schneider, the facility will be able to better meet the growing worldwide demand from its customers in the work, military, law enforcement, outdoor recreation, hunting and Japanese markets. <wwd.com/footwear-news>
Hedgeye Retail’s Take: New capacity is not typically worthy of a callout, but this is notable due to the fact that we are talking about a new/expanded DOMESTIC footwear manufacturing facility when ~98% of footwear is still produced overseas. LaCrosse Footwear, however, only outsources ~60% of its production overseas.
Gucci to Offer $750,000 Speedboat With Italian Yacht-Builder Riva in 2011 - Gucci, the Italian luxury brand owned by Paris-based PPR SA, said it will introduce made-to- order speedboats next year, with prices starting from 590,000 euros ($750,000). The vessels will be produced in partnership with yacht- builder Riva to help mark Gucci’s 90th anniversary in 2011, the Florence, Italy-based fashion company said today in a statement. <bloomberg.com>
Hedgeye Retail’s Take: I had to check the date on this piece twice as it sounds like something we’d have seen back in 2007. While consistent with a luxury lifestyle, involvement in yachting is rarely a positive from a financial perspective.