• Reality Check: Why The "Millennial Boom" Won’t Save The U.S. Economy

    World-renowned demographer Neil Howe explains why Wall Street’s optimists should prepare for a “grim” U.S. economic outlook. Read the report free.


October 6, 2010

Amazon continues on its path to build a scalable and profitable apparel business with the addition of BuyVIP.  Private sale e-commerce players apparently remain in demand, despite the belief that access to high quality fashion goods remains limited by tight supply. 


- The student-led movement known as Teens Turning Green staged a protest at Abercombie and Fitch in San Francisco. The group, which aims to educate and advocate socially responsible choices for other kids, schools and communities targeted ANF in effort to stop the “toxic” spraying of the company’s fragrance within its stores. No word on the effectiveness of the effort, which also calls for CEO Jeffries to cease the fragrance spraying within 30 days.


- On-jersey sponsorships are likely to be heading to the U.S soon, with the NBA expected to be the first major American sports league to sell valuable advertising real estate on team uniforms. As it stands now, the top 20 teams in the English Premier Soccer League are generating $155 million annually from their sponsored jerseys. The NBA development league and WNBA currently allow for jersey sponsors, which is why some believe the NBA may be quick to embrace the incremental revenue opportunity. Clearly Adi/Reebok would be in favor of yet another reason for fans to purchase licensed apparel.


- Google is providing a new interface for viewing TV programs, movies and web sites on the same living room screen. E-retailers Amazon and Netflix are among the early partners that will provide access to movies and TV shows through Google TV.


- With inventories up +13% in the 3Q on +12% sales growth and the first increase after 4-years of consecutive declines, management at Wolverine World Wide admitted they are now in a position of chasing demand. A 55% increase in backlog reflecting a shift towards earlier ordering, particularly compared to last year when orders came in significantly later, as well as a an increase in advertising spend ahead of the holiday season suggests we’ll be seeing a lot of WWW’s brands this holiday.



Amazon Acquires BuyVIP, Enters High-End Retail For First Time - Amazon, the parent of Zappos, recently acquired BuyVIP, a members-only retail club serving Europe, according to the Wall Street Journal. The company reportedly paid $96.5 mm for the business. BuyVIP has more than 7.5 mm members in Spain, Italy, Germany, Austria, Poland, the Netherlands, and Portugal, sells high-end clothing at discounts of up to 70%, according to its website. In 2009, BuyVIP had sales of approximately $96 mm, according to published reports. This year, the company is projecting revenue of more than $179 mm. The acquisition represents Amazon's first step into the high-end retail space. <sportsonesource.com>

Hedgeye Retail’s Take:  Another step towards building a more meaningful (and profitable) presence in the apparel space.  The purchase also leaves Gilt as one of the few private sale operators that has yet to change ownership hands.

Prada Said to Study Hong Kong IPO in First Half of Next Year - Prada SpA, the Italian owner of the eponymous fashion label, is studying an initial public offering in Hong Kong for the first half of 2011, according to three people familiar with the situation. <bloomberg.com>

Hedgeye Retail’s Take:  Nothing new here except that an IPO would finally put an end to the multi-year speculation surrounding an offering.

Chinese Kidswear Manufacturer IPO, Get It Why Its Hot - Chinese’s leading domestic kidswear manufacturers Boshiwa International has debuted in Hong Kong and saw its share surge 40.96% on its first day of trading. <fashionnetasia.com>

Hedgeye Retail’s Take:  Growth shouldn’t be a problem for this garment maker, with 360 million children under age 16 in China and growing by 20 million each year. 

Club Monaco Dipping Into E-Commerce - Club Monaco is getting its feet wet in the world of e-commerce, with plans to dive in head first later this year. In what will be the first time the brand has ever been available online, the retailer has partnered with Shopbop for its e-commerce launch, and a capsule collection for fall and holiday will make its debut on shopbop.com Oct. 13. With 63 stores in North America and more than 100 points of distribution worldwide, Club Monaco’s decision to collaborate with Shopbop was a strategic one, as the two share the same demographic and psychographic. The 30-piece collection ranges in price from $24 for wool thigh-high socks to $1,100 for a shearling coat. In a concerted effort to beef up its selection of “sharp-priced items that a girl can potentially wear to the office,” offerings also include tailored trousers that start at $119 and a camel-colored, men’s wear-inspired blazer that retails for $239. With a continued focus on the digital sphere, Club Monaco is co-hosting a viral tweet-up with Shopbop to promote the collection at its 57th Street store in Manhattan the evening before the launch. <wwd.com/retail-news>

Hedgeye Retail’s Take:  Given that Club Monaco remains almost an afterthought for RL, we’re not surprised to see e-commerce launched with a partner rather than built entirely from the ground up.  Nonetheless, we add the brand to the list of companies finally transacting online.

Neiman Marcus Unveils Christmas Book, Offers Lower Priced Items - Neiman Marcus on Tuesday unveiled the 84th edition of a holiday season ritual, the retailer’s Christmas Book, offering requisite fantasy gifts such as a $1.5mm swimming pool floor by glass sculptor Dale Chihuly, as well as a $15 candlewick trimmer. For the second consecutive year, almost half the items are priced at less than $250, said Gerald Barnes, president of Neiman Marcus Direct. In an acknowledgment of tough economic times, there are 63 gifts for $100 or less, including Tweezerman red crystal tweezers, Ugg men’s slippers and a pair of Waterford crystal Champagne flutes. <wwd.com/retail-news>

Hedgeye Retail’s Take: The shift towards lower price points are a reality, but one has to question the value proposition of some of these options…red crystal tweezers? C’mon man! Price AND value are key to the consumer in today’s market – retailers offering one without the other are likely to see customers look elsewhere.        

U.K. Clothing Retailers Hold Prices With Cotton at 15-Year High - Charles Tyrwhitt, the U.K. clothing maker known for dressing bankers and executives, will absorb the highest cotton prices in 15 years to keep the cost of its least- expensive shirts at 29.95 pounds ($47).  <bloomberg.com>

Hedgeye Retail’s Take: Similar to what we expect out of most retailers, Tyrwhitt is not absorbing it all. Instead, the company will increase prices in higher end suits and shoes where spend is arguably more discretionary – or at least less noticeable. Most domestic retailers have yet to show their cards regarding pricing as we head into the holiday season and as costs are starting to weigh on the P&L, however, we expect to hear a similar tone in the coming months.

Louis Vuitton Blames Price Increase on Leather - Due to increases in raw material prices, Louis Vuitton has raised prices for monogram handbags and other leather goods considered classics by up to 9% in the euro zone. <fashionnetasia.com>

Hedgeye Retail’s Take: While cotton isn’t the only commodity up significantly on the year, it should be considerably easier to pass along raw material increases to the consumer given the price points of luxury handbags and their targeted demographic.

Predictions See a Weak Holiday Season Due to Highly Promotional Activity - A sleepy September rounded out an uninspiring back-to-school season, as shoppers held off on purchases until the last minute — and laid the groundwork for a highly promotional holiday. Analysts and other experts preparing for Thursday’s reports on September same-store sales from major retailers believe the heavy-handed promotional cadence established this year during b-t-s will carry into holiday. This would appear to make it virtually certain that the robust gains of the first half, achieved against anemic prior-year results, won’t carry into the second six months of 2010 in regards to sales, margins — or profits. The NRF projected a 2.3% gain in total sales, while the ICSC forecast a 3% - 3.5% increase in comps and a 2.5% rise in general merchandise, apparel, furniture and other categories sales.  <wwd.com/business-news>

Hedgeye Retail’s Take: Concerns over year end consumer demand persist as does the expectation for enhanced promotional activity. Coupled with cost inflation hitting the P&L, margins are sure to be the most variable line in models in Q4.