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.

Friday, August 9, 2013

Store Intel: JC Penney (JCP) and Gap (GPS) Update

First off we would like to thank those who attended our conference call yesterday morning. We are planning to have many more calls as we move through the balance of 2013. With the all important B-T-S season followed up with  the onset of Holiday we will do our best to keep our followers up to date.


JC Penney (JCP) - We are working on this fast moving story. The credit community seems to be tightening their view of JCP and its credit worthiness. As of today an additional 2 factoring agencies according to our own independent research have added an additional percentage point or more that they charge to the vendor community in order to approve any orders to JCP. We know this is a change in their position since last week. This is not a good sign. Secondly, it is tax free weekend in Texas this weekend which will be VERY import gauge of the progress JCP is making in with respect to top line sales for the BTS period. The question we ask is Ackman's reaction to pressing for a new CEO  reaction to the sales trend he sees at JCP the last two weeks. We certainly don't have any insight s of yet but yet, it is a question that is top of mind.


Gap (GPS) - We spoke yesterday morning about the potential top line sales miss by GPS. In fact we were correct but the stock is getting unjustly punished today. The bottom line EPS improvement is validation that GPS is best in class. We are disappointed that the investment community today is punishing the name. If their reaction is to the top line miss then investors are missing the point. July is a very insignificant month with respect to both volume and most important, GPS is ending the season clean and ready to start the BTS season. Their top line sales compared to 2012, which was a double digit increase ,was near impossible to beat considering the current retail climate and the shifting of events from July2013  into June2013.We think is being overlooked. We will do an in depth review of the product at both Old Navy and Gap next week so that you can better understand our perspective. Again this name receives an 8 out of 10 . GET INTO THE GAP!!!!!!!!!!!


Thursday, August 8, 2013

Quick View: The Gap, Ross Stores, and The TJX Companies

As mentioned on the call, below are charts and analysis for The Gap, Ross Stores, and The TJX Companies.

We would welcome your thoughts on this type of analysis in hopes of making these charts an addition to our StoreIntel insights..






Thursday, August 1, 2013

Store Intel: JCP and the Credit Crunch


Yesterdays news of CIT credit decision was not surprising in retrospect,only the timing of the announcement caught us all off guard. As the story was unfolding  it seems that the decision was one based on forward thinking. We would have to assume the results for the first six months  and more importantly, the last few months since Ron Johnson's departure were very disappointing. Our interpretation of CIT's decision is they might be willing to extend credit on future orders but only with a significant up charge on their normal financing  charges would they be willing to extend credit . We remember a very similar situation with Sears Holding where the CIT's of the world were asking for an additional percentage point or two in order to extend credit on orders placed by Sears due to their fragile financial condition. Our interpretation of CIT's decision's two fold. CIT might be over leveraged in JCP orders and feel based on their meetings this week with JCP management that CIT is unwilling to  work under their normal credit terms for JCP orders going forward. Thea second thought might be JCP operationally is in severe financial stress.  One of our sources felt that JCP, while they still has significant assets which will allow them to receive credit, do not have the funds to sustain their current trend of severe negative top line sales. One of our sources questioned whether JCP could continue to operate beyond the end of 2013. We at Retailsails, believe this school of thought to be the most likely scenario. For an investor what does this mean. A successful back to school season is critical to JCP survival. If their top line sales continue to hemorrhage from today through the middle of September, we anticipate that other credit agencies that are currently supporting JCP could potentially pull their line of credit for JCP. Ron Johnson's decisions are still have a tremendous negative effect of JCP. After ignoring their core customer for many months, they are not returning to shop JCP as hoped. Recapturing their customers is not an easy task. Their are too many choices. Our independent research has uncovered that the search for a new CEO to replace Myron Ullman has hit many roadblocks. We have heard JCP has approached 2 or more of their top choices and been turned down by all of these candidates. That is not a good sign. We have to remember that JCP before hiring Ron Johnson was not in great shape. Negative top line sales trends, lack of innovation and, let us not forget an Internet business that was trending negatively while the rest of the retailing community was showing double digit increases in Internet sales every month. We would have to think that JCP is hoping to get back to the "good old days" of bad business  with the return of Myron Ullman and his team. This decision by CIT yesterday would indicate that JCP has a long way to go just to " stop the bleeding". Our opinion on JCP is not in a good place and rate this company a 2 out of 10 until we see how they fare during back to school season.