R3: UA, NFL, Fila, JJB, and Bedbugs

R3: REQUIRED RETAIL READING

September 28, 2010

A fair amount of activity in the athletic space this morning, led by a strong initial day of trading by Fila.  Keep an eye on Fleet Feet Sports and the proliferation of the NFL into the women’s apparel market.

RESEARCH ANECDOTES

- Expect TLC’s bridal show spin-off, “Big Bliss” to be filled with advertising from retailers looking to capitalize on the plus size demographic.  The six episode spin-off of “Say Yes to the Dress” will chronicle plus-sized brides searching for the perfect gown at Kleinfeld’s in Manhattan.

 

- Topshop continues its expansion with the announcement of the company’s second stateside location, this time in Chicago.  The British retailer is also seeking locations in additional metro areas including Las Vegas, San Francisco, Miami, LA, and NYC.

 

- Back to school was a key driver of an acceleration in web traffic to retail-related websites.  Sites seeing major increases included: Target (+6.2%), Staples (+22.8%), JC Penney (+24.8%), Kohls (+23.8%), Macy’s (+13%), Zappos (+30.3%) and Gap (+19.6%). 

 

- Keep an eye on website Sourcemap.com.  The site aims to increase transparency in supply chains, allowing consumers to know where items come from and what exactly they are made of.  With genuine concern from shoppers regarding sustainability and social responsibility, transparency is becoming a much bigger factor in the consumer’s decision making and purchasing process. 

 

- In a sign that Tommy Hilfiger is accelerating its new ‘Tommy’ concept – a new line that will be a departure from preppy basics, its Bleeker Street location is under renovation and already sporting new signage. Certainly more aggressive than initial plans to soft launch the brand in Canada, the new concepts location should give Tommy and PVH a quick read on demand as it opens in time for the holiday season.

 

- In an attempt to kickoff its new Sport Performance collection in world record fashion, Jockey rallied more than 100 players for a game of dodgeball in Chicago wearing nothing but skivvies. We hope the line is more successful than the company’s guerilla marketing attempt since it fell far short of its goal of more than 1,200 participants.

 

- Macy’s Inc. is touting Elvis Christmas tree ornaments in Tennessee and Blackhawks decorations in Illinois ahead of the holidays, tailoring goods for local markets to squeeze more out of its biggest shopping season. The company is hoping its “My Macy’s” will add as much as 3% to the chain’s holiday sales at stores.

 

- The 65th session of the United Nation's General Assembly has plagued many retailers since its open last Tuesday, driving down traffic for most stores as local shoppers couldn't access the area due to street closures and chose to steer clear of the chaos.

OUR TAKE ON OVERNIGHT NEWS 

 

Fleet Feet Sports to Acquire Phidippides Encino - Specialty Retail Development Company (SRDC), Inc., a multi-store Fleet Feet Sports franchise affiliated with Fleet Feet Sports Inc., announced the purchase of Phidippides Encino, a top running shop in Los Angeles. Change of possession will take place on Nov. 1. Phidippides Encino has served the Southern California running community for 30 years and is one of the pioneering, premier specialty stores in the United States.  <sportsonesource.com>

Hedgeye Retail’s Take: Without knowing the terms of the deal it’s difficult to speculate on its financial merits, but adding nearly 20 additional running specialty locations to its base of 90 makes Fleet Feet an increasingly more relevant player amongst athletic footwear retailers nationwide.

Fila Korea IPO Set for September 28th - Fila Korea Ltd., which in March 2007 purchased the Fila brand from Sports Brands International Ltd., will complete the initial public offering of its shares on the Korean Stock Exchange (KRX) on Tuesday, September 28th. Proceeds will be used to pay down debt. <sportsonesource.com>

Hedgeye Retail’s Take: After posting a 26% increase in sales in the 1H of 2010, shares doubled on its debut on the Kospi. With its re-entry into the basketball category back in April, the brand moves up in relevance on our radars in athletic footwear as it pursues further share gains.

NFL Launches Women-Specific Campaign - The National Football League is launching a $10 million TV campaign on Monday aimed at reaching women football fans. The effort also includes the launch of the new www.nfl.com/women microsite and is being done in concert with existing partners such J.C. Penney, Kohl's and Dick's Sporting Goods as well as new ones such as Victoria's Secret and Destination Maternity. <sportsonesource.com>

Hedgeye Retail’s Take: According to Scarborough research data on NFL demographics, only 37% of women are considered loyal fans and only 31% avid fans compared to 63% and 69% of men respectively. While a fraction of male audience, the increased spend makes sense given that women’s apparel represents the league’s fastest growing business.

Under Armour Signs Ravens' Anquan Boldin - Under Armour signed Baltimore Ravens wide receiver Anquan Boldin to an endorsement deal. The eight-year veteran is a three-time Pro Bowler and was the 2003 NFL Offensive Rookie of the Year.  <sportsonesource.com>

Hedgeye Retail’s Take: Just a week after signing Dallas receiver Austin Miles, Boldin is cut from the same cloth – known by fans as a physical receiver. The company is clearly becoming more visible with endorsements of professional athletes in addition to its historical stance of supporting collegiate teams – a trend that’s more costly on the margin.

Hundreds Queue as Bangkok Mall Opens Four Months After Deadly Riots, Fire - Hundreds of shoppers lined up to count down the reopening of Thailand’s Central World shopping mall today, more than four months after anti-government protesters torched it during deadly riots in Bangkok.  <bloomberg.com>

Hedgeye Retail’s Take:  Nothing like a shopping mall to symbolize some level of a return to normalcy in Bangkok.

UK Sporting Goods Retailer JJB Sports Increases Promotions to Drive Sales - JJB Sports Plc , the U.K.’s third- largest sporting goods retailer, fell the most in more than 14 months in London trading after the company added promotions following “more volatile” sales since August.  <bloomberg.com>

Hedgeye Retail’s Take:  This trend, while consistent with some back to school activity here in the U.S., runs counter to the full priced selling we are seeing across the athletic space.  Recall that JJB has been struggling for years, as has the entire UK sporting goods sector.

Sales and Site Traffic Jump For E-retailers - Revenue for online merchants has increased 23% so far this year, with web site traffic up 46%, according to a survey of 70 retailers. The findings could foreshadow a successful holiday shopping season. MarketLive Inc. ran a survey of its 70 retail clients finding consumers created 55.9% more shopping carts, and the number of orders grew 32.4%. Conversion rate dropped three-tenths of one percent. Company officials attribute the drop in conversion rate to the nearly 45% increase in traffic to the e-commerce sites.  <internetretailer.com>

Hedgeye Retail’s Take:  Nothing new here except the consumer continues to show interest in convenience and sharp pricing via the web.  Investments in .com infrastructure from traditional retailers have also enhanced the user experience, which in turn is helping to drive growth. 

Obama On Trade - The Obama administration is walking a fine line as it looks to strengthen its trade credentials. The administration is balancing a goal of doubling exports in five years to $3.14 trillion and moving forward with free trade initiatives against stepped-up enforcement of existing trade agreements. It is also reviewing the U.S. relationship with trade partners. It’s been 20 months since President Obama took office, following a long campaign leaning toward protectionism, and his trade agenda has evolved into a bifurcated strategy — emphasizing enforcement by bringing cases against illegal trade practices to the World Trade Organization, and moving slowly on free trade agreements negotiated by the Bush administration that it felt were not strong enough in areas such as labor rights on the one hand, and opening markets for U.S. exports on the other. The centerpiece of the President’s trade agenda so far has been the National Export Initiative, which aims to double exports in five years. <wwd.com/business-news>

Hedgeye Retail’s Take:  While this focus on exports will certainly be a help to the economy, we don’t expect to see any apparel or footwear production moving back onshore. 

More Bedbug Problems For NYC Retailers, Macy's Herald Square Flagship is this Week's Victim - New York’s bedbug problem is spreading to more retailers. Macy’s Inc. is the latest to encounter the parasites. Both Macy’s Herald Square flagship and Bloomingdale’s 59th Street flagship have reported bedbug sightings. Bloomingdale’s last week cited bedbugs but never closed and said it quickly took care of the problem. On Friday, the store distributed a memo to employees as they entered the 59th Street flagship. Other retailers recently citing bedbugs were Niketown on 57th Street, Abercrombie & Fitch in the South Street Seaport, Hollister on Houston Street and Broadway and Victoria’s Secret on Lexington Avenue and 58th Street. They were all temporarily closed and reopened after debugging. <wwd.com/retail-news>

Hedgeye Retail’s Take:  With bedbugs now discovered almost everywhere, the epidemic now shifts to retailers that actually sell solutions.  BBBY, TGT, and WMT all appear to be positioned with sprays and other extermination products.  With that said, we’re not expecting any same stores sales boost as a result of the miniscule pests.