R3: TSA, HD, Kobe, and China F/X



-Call it a sign of the times and a huge opportunity for the action sports industry. Skateboarding is slowly making its way into gym classes across the country. A standardized skateboard P.E. program developed by a company called Skate Pass has now been approved by 500 schools in 31 states and countries including Canada, Germany, Singapore, and the Dominican Republic. It is estimated that 1 million kids now have the opportunity to take “skate” as part of their phys ed requirements.


-The fashionista Twitterati are all over the Prada’s Spring/Summer ’11 line which brought back bright pinks, day-glo orange, and other neon hues. If this is the beginning of a trend, then Express is the place to go for mainstream prices on 80’s styled goods. Or, better yet dig into your closet and pull out your favorite neon wares that are now coming up on age 30.


-Keep an eye on mall traffic and the practice of banning unaccompanied minors from malls. It turns out that the trend of banning unaccompanied teens from the mall is gaining some steam and it has having a positive impact on traffic. Apparently, kids appear to be dragging their parents to the mall to comply with the rules, which in turn is likely leading to additional purchases by mom and dad. It’s unclear if the traffic/sales trend will continue, however the practice of turning away mall rats appears here to stay. 66 malls currently ban unaccompanied minors, up from 37 just 3 years ago.




Sports Authority Taps Team Detroit - Team Detroit has landed creative and media duties on Sports Authority after a review, the brand has confirmed. Team Detroit managing director Brad Audet said he was "delighted to partner with Sports Authority to help them become the number-one retailer in sporting goods."  <brandweek.com>

Hedgeye Retail’s Take:  Gearing up for an IPO with a fresh creative effort.  Smart move.


Home Depot and MRM Split Up After Just 9 Months Because HD Won't Pay Up - MRM, a direct and digital marketing unit, has split with Home Depot, just nine months after landing digital and customer relationship management duties for the retailer, according to an internal MRM e-mail. Sources attributed the split to Home Depot requesting work beyond the original scope without paying additional compensation. In the e-mail, MRM New York managing director Corey Mitchell wrote that "for reasons based on a fair exchange of services and a mutual inability to arrive at realistic expectations, we are choosing to walk away from our relationship with The Home Depot completely."  <brandweek.com>

Hedgeye Retail’s Take:  Without being privy to the intricacies of the arrangement, there’s not much to say here.  Despite this snafu, we expect the digital platform at HD to continue to grow in relevance both from a sales and marketing standpoint.


Kobe Bryant Repeats as Top-Selling Jersey in China - During the 2009-10 season, reigning two-time NBA champion Kobe Bryant had the top-selling NBA jersey in China for the fourth consecutive season. <sportsonesource.com>

Hedgeye Retail’s Take:  We wonder if Starbury and Iverson and can unseat Kobe this year with their moves to actually play in China?  Yes, that’s a joke. 


U.K. Online Shopping Will Slow `Significantly,' Verdict Says - U.K. online shopping will grow at a “significantly” slower pace as the Internet becomes more common among the population and government spending cuts weigh on shoppers, according to Verdict Research. Average annual growth will be 12% between 2009 and 2014, compared with 35% in the previous decade, the market researcher said. Online sales rose to 20 billion pounds ($31 billion) in 2009, or 7% of total retail spending. <bloomberg.com>

Hedgeye Retail’s Take:  While this survey appears to be taking the path of conventional wisdom, it’s important to note that many of Europe and the UK’s most relevant retailers are just entering the world of e-commerce now.  As such, we’d expect growth rates to remain robust, much like we see here stateside over the near to intermediate term.


Forrester Study on American M-Commerce - 5% of U.S. adults who own mobile phones have used their phones to research products before making purchases. 2% of those consumers have purchased merchandise via their phones, according to a new study from Forrester Research Inc. This translates into millions of consumers engaging in mobile commerce, which experts believe will continue to grow as more consumers purchase smartphones, a key driver of m-commerce. The market has shown over recent years that the more smartphones that land in consumers’ purses, hands and pockets—and their number is growing dramatically—the greater the use of the mobile web. <internetretailer.com>

Hedgeye Retail’s Take:  With only 25% penetration of smartphones, there is still substantial runway ahead for m-commerce growth.  Over the intermediate term, product research is likely to remain the key use of the device until a better shopping interface evolves on a tiny screen.


Tourism Spending Grew Faster than GDP in Q2 - Real spending on travel and tourism rebounded much fast than the overall economy in the second quarter as travel and lodging prices continued climbing, the U.S. Department of Commerce reported. Spending on all tourism goods and services, including passenger air transportation and traveler accommodations,  increased at an annual rate of 3.0% in the second quarter, following an increase of 5.0% (revised) in the first quarter. By comparison, real gross domestic product (GDP) increased 1.6% (second estimate) in the second quarter after increasing 3.7% in the first quarter. Travel and tourism prices increased 2.7% and 4.1% respectively during the two quarters. <sportsonesource.com>

Hedgeye Retail’s Take:   While improved, we’re still not seeing retailers with tourism-centric locations driving disproportionately positive results as we have seen at times over the past couple of years. 


US-China Currency Battle - President Obama has put China’s currency policies front and center. Obama and Chinese Premier Wen Jiabao had their longest and most “intensive” discussion about the issue on the sidelines of the United Nations General Assembly meeting in New York on Thursday, the White House said, as tensions between the two nations escalated on the eve of a vote in the U.S. Congress on a punitive bill targeting China’s currency. The leaders’ bilateral meeting came after a week of tough talk that prompted concerns in the business community about a new trade fight over China’s allegedly undervalued currency. Critics say the yuan is undervalued by as much as 40 percent, putting U.S. products at a competitive disadvantage to China’s cheaper exports.  <wwd.com/business-news>

Hedgeye Retail’s Take:  The battle here is ongoing, but the qwest to find companies with a macro process and an ability to manage/mitigate currency risk is becoming increasingly more relevant.  Nike and Li & Fung remain companies well positioned relative to the ever changing China/US/ROW currency battle.

Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

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7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

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Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

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GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

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Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

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Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

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Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

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People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

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UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

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Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

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Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

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An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

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