R3: GIII, M, HLYS, LVMH, and SocialSmack

R3: REQUIRED RETAIL READING

September 17, 2010

 

The real-time feedback loop continues to grow for consumer brands as social media sites such as SocialSmack solicit instant feedback on a brand’s worthiness.  There’s no hiding anymore if your product or customer service isn’t up to par. 

 

RESEARCH ANECDOTES

 

- Keep an eye on a new social media site called SocialSmack. The site is partially an information network, a consumer review site, and part game.  The goal is to allow users to give “props” or “drops” to specific brands as well as connect them to other SocialSmackers.  Yet another reason for companies to focus on their customer now that they are about to have a real-time report card.

 

- The combination of two old-school off-pricers is  finally a reality with the opening of Fb Sy on the Upper West Side in Manhattan.  Yes, that is the horrible new name for the Filene’s Basement/Syms combo.  Within the store, Syms remains the brand of choice for men’s while everything else is marketed under Filene’s Basement.  Seems like management is torn between choosing sides on this one.

 

- Several changes among fashion brands took place this year in Interbrand’s annual ranking of the top 100 global brands.  Louis Vuitton remains the highest ranked fashion brand on the list, logging in at number 16 overall.  H&M (#21), Nike (#25), Gucci (#44), and Zara (#48) were all in the top 50.  Other ranked brands included Adidas, Hermès, Gap, Armani and Burberry.  Dropping off the global 100 were Ralph Lauren, Prada, and Puma. 

 

 

OUR TAKE ON OVERNIGHT NEWS 

 

GIII and The Camuto Group Form JV to Open and Operate Footwear and Accessories Outlet Stores - The goal is to open units in the first half of next year. Privately held Camuto Group, founded in 2001, will supply merchandise, and G-III will provide the infrastructure for the new concept. Brands in Camuto’s portfolio include Vince Camuto, Jessica Simpson, BCBG Max Azria, BCBGeneration, Kensiegirl, Lucky Brand and Arturo Chiang, among others. G-III is a publicly held manufacturer of outerwear and women’s sportswear and also operates retail outlet stores under the Wilsons Leather nameplate. <wwd.com/business-news>

Hedgeye Retail’s Take: Interesting combo here given that GIII is providing infrastructure for a footwear business in which it really has little expertise.  Perhaps this is really more of a play on leveraging Wilson’s retail infrastructure given Wilson’s is not one of the bright spots in the GIII portfolio.

 

Heelys Rolling into China - Heelys Inc. announced on Wednesday it had hired Tokyo-based Japan-Asia Strategies and its owner, Thomas Seymour, to build the footwear firm's business in Asia. According to the company, Seymour will work closely with Heelys VP of international John O’Neil to evaluate market opportunities for the brand. <wwd.com/footwear-news>

Hedgeye Retail’s Take:  When all else fails, head to China.  We can just see the company presentations now highlighting the number of children’s feet in just Shanghai alone. 

 

Jimmy Choo To Reopen Retail Locations - After extensive renovations to bring its stores in line with its global design concept, Jimmy Choo has reopened three locations. The stores — at South Coast Plaza in Costa Mesa, Calif.; The Mall at Short Hills in Short Hills, N.J.; and Highland Park Village in Dallas — each feature design elements of a 1940s boutique and showcase the full range of Jimmy Choo shoes, handbags, small leather goods and sunglasses. CEO Joshua Schulman noted that the stores needed to be updated to fully reflect the broader product range that the company now offers.  <wwd.com/footwear-news>

Hedgeye Retail’s Take:  Good timing as the company is rumored to be for sale.  The stores will be key to transforming the brand beyond shoes into a “lifestyle” brand. 

 

Macy’s Prepares For More Online Growth - The retailer will expand a Tennessee fulfillment center to support its growing online sales. Macy’s says web sales for the first half of 2010 increased 31%.  <internetretailer.com>

Hedgeye Retail’s Take:  No surprise here as this allows M to further expand is SKU count online as well as offer improved service.  E-com remains one the single biggest capital uses across the broadline space.

 

Lord & Taylor to Expand For First Time in A Decade - Sources said the retailer is seeking a second location in Westchester County, N.Y., largely based on the success of its Scarsdale branch in Westchester. That unit is the chain’s best-performing branch store. It is said to generate between $90 million and $100 million in annual sales, ranking second in volume behind L&T’s Fifth Avenue flagship. The retail chain owns the 180,000-square-foot Scarsdale location, both land and building. However, a source noted it can not be expanded. The last time L&T opened a store was in 2000. <wwd.com/business-news>

Hedgeye Retail’s Take:  Something is clearly working for the private equity parents to invest in L&T’s first store in 10 years!  Or, a growth story makes for an easier sale/IPO.  Either way, clearly L&T is finding its niche again and exploiting it in the market where it likely has the highest brand awareness and customer loyalty.

 

LVMH's Hublot Plans to Double Asian Stores on China Luxury Boom - Hublot , the Swiss watch brand that timed the World Cup, plans to more than double store numbers in Asia, driven by Chief Executive Officer Jean-Claude Biver ’s conviction that China offers at least 30 years of growth.  <bloomberg.com>

Hedgeye Retail’s Take:  Heely’s and Hublot’s in the same day. Now that’s a combo. 

 

Eve May Raise $445 Million Selling Shares to Finance China Menswear Shops - Eve Enterprise Group , the Chinese luxury menswear chain, plans to raise about 3 billion yuan ($446 million) selling shares to fund store openings as rising incomes fuel demand for tailored clothing. <bloomberg.com>

Hedgeye Retail’s Take:  Recall that Chinese consumption is not just fueling demand for Western Brands.  Local incumbents are turning up the competitive heat and are well capitalized.  Eve might just put a damper in Men’s Wearhouse’s  China plans.

  

More Studies Showing Retail Hiring Increases for Holiday - Retailers are more optimistic about revenue growth and are even planning to hire additional workers this holiday season as they recover from the prudence that’s dominated their thinking since the market disruptions of 2008. Those are the key takeaways from two studies, one from CIT Group Inc., surveying middle-market retailers, suppliers, and manufacturers; and the other from management consultancy Hay Group Inc. exploring the seasonal hiring intentions and sales and promotional expectations of 20 major retailers, including JCP and ANF. According to the CIT study, 68% of retailers expect to hire more workers this holiday season than they did for holiday 2009. And while 72% said they expect to discount more this year than a year ago. In the Hay Group study, 83% of the retailers said they plan to hire more or the same number of workers for the season, with 61% hiring about the same and 22% employing anywhere from 5 to 15% more to meet their holiday needs. <wwd.com/business-news>

Hedgeye Retail’s Take:   While the promotional activity expectations are hardly surprising, we are a bit surprised to see that hiring will be up across most retail chains.  Perhaps this is more a result of understaffing last year than a true bullishness surrounding this 4Q.  Additionally, we would expect e-commerce to remain robust which in theory should also allow for more conservative staffing for those with multi-channel operations.

 

BFC: Fashion Worth 20 bn Pounds to UK Economy - The direct value of the fashion industry to the British economy is nearly 21 billion pounds according to a study released on the eve of London Fashion Week. The "Value of the UK Fashion Industry" report, commissioned by the British Fashion Council (BFC), defines the industry and analyses the economic value of Britain's fashion industry for the first time, the BFC said in a statement with the report's release. It said that fashion's wider contribution to the economy in influencing spending in other industries, ranging from IT to tourism, was calculated as more than 16 billion pounds. "This means that, including direct, indirect, induced and 'spill over' effects, the fashion industry's total contribution to the UK economy is estimated to stand at more than 37 billion pounds," the report said. <uk.reuters.com>

Hedgeye Retail’s Take:   Translation:  The UK is giving NYC a run for is money as a key fashion center and this is likely to continue.

 

EU Leaders Agree to Give Pakistan Increased Market Access - European Union leaders agreed on Thursday to give Pakistan increased market access through a “time-limited” reduction in tariffs on key product categories as part of a support package to help the country recover from the summer’s devastating floods. The pending agreement would involve suspending tariffs on about a dozen major textile and apparel products from Pakistan worth about 231mm euros, or $300mm, annually. Key Pakistani textile exports, including cotton yarn and fabrics, are among the products being examined, EU diplomats said. EU leaders also agreed Thursday to seek to make Pakistan eligible for GSP Plus trade status by 2014. <wwd.com/business-news>

Hedgeye Retail’s Take:  Despite the tariff reductions, it will still take some time before commodity and textile production re-accelerates from the post-flood devastation. 

 

India: Textiles Ministry to Revive TUF Scheme in 3 Months - India’s textiles ministry has decided to reintroduce the Technology Upgradation Fund (TUF) scheme, under which the government will subsidize a portion of interest on loans, exchange rate fluctuations and capital equipment on a case-to-case basis, in the next two to three months. <fashionnetasia.com>

Hedgeye Retail’s Take:  Government subsidized technology upgrades are just another step in India becoming an even bigger player in the textiles industry as it looks to offer a viable alternative to Chinese production.

 

 


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