Wednesday, December 11, 2013

Today's Retail News Reel

Here's what we're paying attention to in today's news:

Store Intel: Consumer Taking a Break in Holiday Shopping

We observed over the weekend a true lull in both traffic and pace of business in the stores we visited through last evening. With a shortened holiday shopping calendar we are very concerned about the next phase of promotions which will begin this coming weekend. The compressed shopping period traditionally places enormous pressure on all retailers but with the start to this years Christmas season the promotional level has become even more treacherous. Enough said . We all knew this was an inevitable outcome. Here are some thoughts :

Aeropostle (ARO): The launch of Bethany Mota seems to have created an increase in foot traffic this past weekend. We received positive feedback from the multiple locations we had visited . The unfortunate reality is most stores commented that business had been disappointing the last 5 days. In summary, a successful launch, definitely improved traffic, the customer is responding to Bethany but overall it has not seemed to improve top line sales at a significant level as of today.

Gap (GPS): a name that Retailsails has been a fan of since December 2012. Surprisingly we found Gap to be one of the more promotional stores in the mall. In fact Gap was running a more promotional event than Old Navy as of yesterday. Gap was promoting up to 50% off during the weekend and yesterday keep up the promotional pressure by running a promo for up to 40% off. Old Navy was running a promo over which is continuing thru today at up to 40% off "cozy comfort" and today ramped up the promotional cadence by going to up to 50% off for the same category. We believe this is a promotional strategy in response to concern for top line sales. In our opinion they are attempting to promote heavy now before the rest of their competitors get more aggressive with promotions as we move through this weekend. In summary we are concerned the margins, like all other retailers are worse than expected and with the current lull in both traffic and top line sales we are concerned.

Thursday, December 5, 2013

Black Friday: The Strategy has to Change

We are in the midst of a change in mindset for the Black Friday and Holiday selling period. As we review the transcripts from many of the earnings call this week by retailers such as ARO,FRA,ANF the message is no different--promotions this season will be more aggressive than anticipated. While shopping the malls over Black Friday, we spoke with an unnamed CEO from a leading Missy Specialty Retailer, and asked how can a store be profitable during Black Friday weekend. We mentioned the obvious of extra payroll, opening on Thanksgiving day ,and the promotional cadence which now run at a minimum of 50% off must provide an enormous hurdle to make the weekend profitable. His answer "we offset all the costs by planning and purchasing for this weekend a year in advance!". In a day of fast fashion which each and every retailer claims to be their goal, this strategy runs counter to that logic. Black Friday has little if any organic growth remaining. Those in the know are projecting low single digit growth for the Holiday period. Business tends to go into a lull until next weekend when we start to have less than 10 days until Christmas. Those retailers , particularly in the teen space, who piled in product from years past best selling styles, in our opinion are in great danger of top line and margin pressure.

Today's Retail News Reel

Here's what we're paying attention to in today's news:

Wednesday, December 4, 2013

Store Intel: Recap of Black Friday and a First Look at Holiday Trend

Here are some bullet points to focus on as we begin the Holiday push:
  • If you had the chance to listen to our conference call yesterday we reiterated our belief in a strong start to Holiday at JCP. Sure enough JCP announced a double digit increase(+10%)for the month of November. While we are confident the positive comp trend will continue, we are concerned with the warnings on margins and promotions we are hearing from many retailers. This mornings announcement by EXPR is one prime example, while on the discount front ROST, was another callout that cannot be ignored
  • We are also very positive on GPS for the month of November when they announce their numbers tomorrow.
  • Knowing that the next 12 days are extremely important to assessing our Holiday winners and losers we urge you to be mndful of the enormous inventory levels that are in stores. Most if not every retailer will not be delivering any new floor sets so we will be tracking these levels very closely
  • According to our shoppers in the south it seems as though the month of November was a challenging. Florida, in particular, we heard was slow. Keep this in mind for retilers with a high penetration of stores in that area. Top of mind would be CHS.

Monday, December 2, 2013

Conference Call: December 3, 2013 at 9:15AM EST

Dear Loyal Followers of Retailsails,

As we work through this busy and unpredictable holiday period, we would like to invite you to our first of 4 conference calls tomorrow morning at 9:15 AM. We were actively shopping many of the stores in various locations this weekend and would like to share our thoughts and observations. We see the Holiday selling period divided into 4 parts with each part being a very important pieces to analyzing the 2013 Holiday season. We will discuss many of the important names in the apparel space and look forward to your participation.

Date: December 3, 2013 at 9:15AM EST
Dial-in number: 1 (513) 386-0000
Access code: 279919#

Tuesday, November 26, 2013

RetailSails Real Estate Performance Digest is Here!!

We are pleased to announce the release of our RetailSails Real Estate Performance Digest. The report will cover over 180 names in various sectors of the current retail space. Listed below are a few of the sectors we will cover.
  • Apparel Stores including Department, Specialty and Off Price Retailers
  • Auto Parts Retailers
  • Electronic Retailers
  • Discount Stores
  • Variety Stores
  • Grocery Retailers
  • Sporting Goods Retailers
Our digest will be available in conjunction with the unveiling of our new and vastly improved website. Our newly created database will allow RetailSails to deliver you a quarterly updated digest in an effort to provide you with the most current and compelling data . Access to the web based digest will be offered as a subscription model at annual fee of $1200. We are offering $100 discount to those who order the digest prior to its release which is scheduled for January 7, 2014. This will be the first of many new products and research tools that we will be producing this coming year, via our new website. We wish you and your families a very Happy Holiday!

Buy RetailSails Real Estate Performance Digest

Today's Retail News Reel

Here's what we're paying attention to in today's news:

Monday, November 18, 2013

Conference Call: November 19, 2013 at 9:15AM EST

Dear Loyal Followers of Retailsails,

We would like to invite you to our conference call

Date: November 19, 2013 at 9:15AM EST
Dial-in number: 1 (513) 386-0000
Access code: 279919#

We will be previewing a cross section of retailer's in the teen space, off price channel and department store channels. Join us and share your thoughts on this subject as we move through a busy earnings season. In order to assist you in preparation of the call, we will be focusing on the following names.
  • American Eagle (AEO)
  • Abercrombie & Fitch (ANF)
  • Aeropostale (ARO)
  • Ascena Retail (ASNA)
  • Chico's (CHS)
  • Gap (GPS)
  • JC Penny (JCP)
  • New York Company (NWY)
  • Ross Stores (ROST)
  • Stage Stores (SSI)
  • TJX Corp (TJX)
We will be conducting frequent updates as we move through the Holiday 2013 time period.

Today's Retail News Reel

Here's what we're paying attention to in today's news:

Thursday, September 26, 2013

Store Intel: J.C. Penney (JCP) Food for Thought


Enough said about their liquidity issues here are some thoughts we would like to share:
  • Q3 we can now surmise is not close to their expectations
  • Cooler weather pattern has provided a temporary lift to their current business--the same can most likely be said for all retailers the past 10-14 days
  • 2012 Q4 was a negative 32%---doubt it could be worse and so does JCP
  • Applaud their efforts to secure financing ahead of the all important Q4---this will allow them to focus on driving sales
  • The internet business is low hanging fruit and ripe for significant improvement--another fine move by previous management to ignore this section of their business
  • Be mindful this company is in a start-up mode except with enormous debt and rebuilding  ahead. Patience is needed as we look at this story
  • Worse case scenario they close 100 or more stores during 2014. No harm at all and a position we would applaud.
  • Ullman is an experienced  retail veteran who will make this work

Today's Retail News Reel


Here's what we're paying attention to in today's news:

    Tuesday, September 24, 2013

    Store Intel: Mall Walk

    We conclude our 4th mall walk in the month of September yesterday evening and would like to share our thoughts. The entire month September sales pattern seems to be very choppy and uneven with the teen stores (Abercrombie, American Eagle, and Aeropostle) showing the greatest volatility. The change in weather has provided a boost in business but as always, we are concerned it might be short lived.


    Gap Store (GPS) - Once again we see the Gap and Old Navy as leaders for the month of September. We had noted earlier last week that the Gap stores seems to be a bit more aggressive in their promotional cadence for the month. Last weekend Gap was promoting at 30% off the entire store. This was a more aggressive promotion compared to the same time last year when they promoted the entire store at 25%. The question is whether this is an offensive or defensive measure. In our opinion we see this as an offensive position. We feel that for the remainder of the year the consumer is going to chase the more promotional opportunities. Now that the back to school period has passed we don't see any significant event driven opportunity until mid November. A more aggressive posture early on will insure less hard markdowns as we move through the season. The continual updates of new product(GQ setup of new merchandise occurred last night) provides fresh product and allows the Gap to always look current. Our channel checks at this time feel comfortable that both the Gap and Old Navy should be beating 2012 numbers for the month of September.

    American Eagle (AEO) - Earlier in the month we were quite excited about the flow of new product that occurred after labor day. Well that excitement was short lived. It seems that the flurry of traffic that immediately followed the receipt of new product, although relatively small, provided a significant improvement in both traffic and conversion. Our most recent visit last night was disappointing. Unlike their competitors, last weekend which was a Friends and Family event, did not provide the expected lift. In addition, we noticed some new product on the flow that did not come close to the prior receipts earlier in the month. We are disappointed in the lack of trend right product being delivered to the girls floor. We feel that AEO is more promotional than LY as are their competitors but have concerns that the product as of yesterday will be problematic.

    Abercrombie (ANF) -The most surprising change amongst the teen retailers. The product looks quite fresh and much more on trend than at any time throughout the ENTIRE spring season. In particular, our channel checks at multiple locations commented on the surprising improvement in business within the last week. We are starting to believe that the business is starting to make a turn around. Previously ANF was our most disappointing retailer in this space but we are seeing a reason to believe that a change is currently taking place, This is a name we will watch very closely as the stock has been severely beaten down since mid June.

    Monday, September 9, 2013

    Store Intel: Mall Musings

    American Eagle Outfitters (AEO) - as we had indicated during our conference call from last week, we have taken note of the significant change in traffic at the various locations we observed in the Northeast. With the additional delivery of non denim bottoms and novelty sweaters and tops, we are paying close attention to AEO. During the last call, Mary Boland commented, " Our third quarter trends remain challenging. We've experienced weak store traffic across North America and a continuation of a highly competitive and promotional retail landscape. With this in mind and an assumption that sales remain under pressure, we expect third quarter EPS to be in the range of $0.14 to $0.16 compared to EPS of $0.41 last year. This is based on a comp decline in the mid- to high single-digits and continued margin pressure due to increased markdowns." Our research indicates that both traffic, conversion and sales have improved significantly. We are anxious to see the new "filler" of product due in around September 20th. While it is early in the Q3, we have raised our awareness of this name and see a potential upside opportunity in American Eagle.

    Gap Stores (GPS) - a major hurdle has been achieved with a modest positive +1 comp for the month of August 2013. In comparison to the negative news and slowing traffic patterns at most mall based retailers, this is a major victory for the GAP. With OLD NAVY posting a +1% comp increase on top a +12% in 2012, we are very encouraged as we head into the early stages of Q3. We are very impressed with product assortments and mall traffic since the beginning of September. The product direction has been quite consistent and we are impressed. In particular, while many of their competitors are seeing a severe downturn in the denim bottoms category, OLD NAVY in particular is still producing positive sales trends in this category at the stores we visited. The "ROCK STAR" label is continuing to drive this category. We are very impressed with the GAP and feel very strong about the brand.


    Aeropostle (ARO) - we are disappointed in the lack of improved foot traffic since the start of Q3. With all of the significant improvements in product offerings (which we applauded) our research indicates that business has not improved relative to both American Eagle and Abercrombie. We are very concerned even with the downward guidance provided by management and feel the current business might be performing below their revised guidance.

    Friday, August 30, 2013

    Conference Call: September 4, 2013 at 10:00AM EST

    Dear Loyal Followers of Retailsails,

    We would like to invite you to our conference call

    Subject : WHERE DO WE GO FROM HERE!
    Date: September 4,2013 at 10:00AM EDT
    Dial-in number: 1 (513) 386-0000
    Access code: 279919#

    We will review some of the highlights from the 2013 Q2 results as well as an update on the back to school selling period. The names that we will focus on will be:
    • American Eagle (AEO)
    • Abercrombie & Fitch (ANF)
    • Aeropostale (ARO)
    • Ascena Retail (ASNA)
    • Chico's (CHS)
    • Gap (GPS)
    • JC Penny (JCP)
    • Macy's (M)
    • Kohls (KSS)
    • TJX Companies (TJX)
    • Ross Stores (ROST)
    • Urban Outfitters (URBN)
    We look forward to your participation. Enjoy the Holiday weekend!

    Monday, August 19, 2013

    Store Intel: URBN Update

    Urban Outfitters (URBN): With earnings due out this afternoon we wanted to reiterate our position from our last commentary on August 14th. We don't see any noticeable improvement in the pace of business last weekend. The only call out is that we feel the women's business at both Urban Outfitters and Anthropology are a bit challenging. Although we did not notice any additional markdown this weekend, the promotion on all denim at $39 has been less than expected. Possible scenario's as a result of the current business conditions might be unplanned promotions. On a long term basis we like this name a lot but unfortunately, they are not immune from the softer than expected business we are hearing from those retailers' which have reported Q2 results.

    Tuesday, August 13, 2013

    Back-to-School: WHAT THE CONSUMER MAY NOT KNOW!

    We completed another mall walk this past weekend and are VERY concerned about the latest traffic and sales patterns. Our mall walk was focused in the Northeast and our perspective is focused on only those stores and locations we were able to observe.


    Urban Outfitters (URBN)On June 11,2013 URBN commented on the strong pace of business they were experiencing in Q2. Since that time our independent research leads us to warn about a significant slowdown at both Urban Outfitters and Anthropologie . We see  the most significant downturn occurring in the second half of July through this past weekend. Wefeel Urban is having trouble comping even to last year for the  back half  of July and August to date. We did not see any additional markdowns on the selling floors nor have we heard of any additional unplanned events taken place to date. We are watching this name very closely.

    Aeropostale (ARO)On August 8,2013 ARO warned of both slower traffic and sales than anticipated for the month of July. Our mall walk indicates this trend has not changed in the last week. In fact we are taking the position that ARO will be the first among all the teen retailers(ANF and AEO) to take unplanned markdowns in order to stimulate traffic and sales. We have noticed that with an additional flow of newer product due in the stores towards the end of this week, we feel additional unplanned markdowns are on the way. This is our opinion alone but based on a very slow start to B-T-S and at most 32 days remaining in the BTS cycle we are not convinced that ARO in particular can achieve their reduced guidance.

    Abercrombie & Fitch (ANF)To date the only teen retailer to not update guidance based on July and month to date traffic and sales trends. We strongly feel that ANF is not immune to the softness that both AEO and ARO have expressed in the last 14 days. Consensus seems to feel negative LSD sales are to be expected on top of a negative LDD sales in Q2 of 2012. As we indicated in early July, we felt the product at both Hollister and adult ANF is uninspired, The proportional of outerwear was a liability in our opinion and though the denim sale event is providing positive traffic, we question the effect it has to other categories in ANF's assortments. We have had trouble getting ahead of this name in the past but don't see how ANF can be immune to disappointing sales and traffic at the other teen retailers.

    Gap (GPS)we noticed they extended the friends and family event one additional day this week. This is not an actionable event ,we just want our followers to be aware.