Each week, we provide a PDF of 5 articles of interest to investors focus on the retail/consumer space. Enjoy.

Starbucks Enters India With Tata’s Help Click to Open PDF
Following the government’s decision to reverse its ruling allowing 51% foreign ownership of supermarkets and department stores, many foreign companies and investors soured on India. But, now the government in India is allowing 100% foreign investment in “single-brand retail.” This will likely open the door to more of these types of announcements from SBUX.

Here’s a couple of funny tidbits. Coca-Cola Co. was banned in India until the mid-1990s for refusing to divulge its secret recipe. Also, there was a protest 15 years ago as Indian farmers and politicians protested what they viewed as a threat to India’s rich culinary culture. Clearly, Americans could care less about that sort of threat by KFC.
Posted: Monday, January 30, 2012
Source: WSJ

Apple Hires Dixons Chief to Run Retail Stores Click to Open PDF
A missed opportunity for BBY to replace current CEO Brian Dunn.
Posted: Tuesday, January 31, 2012
Source: WSJ

Store Brands Step Up Their Game, and Prices Click to Open PDF
Consumers are developing loyalty to store brands for reasons besides price. In some cases, consumer even pay more for store brands. This represents a real change versus 5-10 years ago.
Posted: Tuesday, January 31, 2012
Source: WSJ

Questions Surrounding Avon Increase Click to Open PDF
Apparently, a CFO’s loose lips at a management access dinner got him fired for a possible Regulation FD violation.
Posted: Wednesday, February 01, 2012
Source: WWD

Retailers Posted Solid January Sales Click to Open PDF
Interestingly, the monthly WWD article headline said the exact opposite (“January Sales Miss Mark”). In our view, against an easy weather comparison, sales in January 2012 were weak.
Posted: Friday, February 03, 2012
Source: WSJ

Each week, we provide a PDF of 5 articles of interest to investors focus on the retail/consumer space. Enjoy.

How the U.S. Lost Out on iPhone Work Click to Open PDF
The conventional wisdom is that the only reason products are sourced from overseas is cost. This article suggests that it’s much more than cost alone. It’s the flexibility and access to mid-level labor that manufacturers overseas enjoy that we are unable at present to replicate here.
Posted: Saturday, January 21, 2012
Source: New York Times

Talbots Shares Soar as Buyers Circle Firm Click to Open PDF
Yes, the clowns that pretended to be a capable management team have left the building (or, at least are in the process of departing). But, Sycamore clearly has a greater motivation for making this deal happen… they own 51% of Mast Global Fashions.
Posted: Monday, January 23, 2012
Source: WWD

The Year in E-Tail: Lessons Learned and Looking Ahead Click to Open PDF
Nice overview of e-commerce and the dramatic rise of late of m-commerce.
Posted: Wednesday, January 25, 2012
Source: WWD

J.C. Penney Chief Thinks Different Click to Open PDF
Historically, 72% of JCP’s product has been sold at 50% off or more. Yikes! Also, it’ll be interesting to see if Mr. Johnson’s idea of a “Town Square” works. Our guess is that it will not. Others that have tried to get folks to “hang out” in a mid-level retail environment (think Paul Pressler and The Gap in mid-2000’s) have failed.
Posted: Thursday, January 26, 2012
Source: WSJ

Penney CEO Says Profit Won’t Suffer Click to Open PDF
Historically, JCP management had a dismal track record when guiding go-forward EPS. Today, with the many strategic undertakings that will transform the store over the next few years, incoming CEO Ron Johnson professes that FY 2012 EPS will be much greater than today’s consensus expectations. Good luck with that.
Posted: Friday, January 27, 2012
Source: WSJ

Mickey Drexler Blasts Malls Click to Open PDF
Mr. Drexler suggests that the holiday 2011 season was “one of the most discounted ever” and that last season was marked by “enormous apparel deflation.” In addition, he wondered “what the optimism is about” after sitting through a Financo-organized panel that gave no hint of the travails of retailers.

Mall owners, that were criticized by Mr. Drexler for lacking innovation, suggested that the spread between high-performance malls and low-performance malls is widening.
Posted: Tuesday, January 17, 2012
Source: WWD

Sears Shares Spike 9.5% on Talk of Going Private Click to Open PDF
While SHLD management has a transparency issue, the recent factoring concerns were largely blown out of proportion. Why? Factoring is a much bigger issue with apparel vendors and SHLD is primarily a hardlines retailer
Posted: Wednesday, January 18, 2012
Source: WWD

Old Navy President Resigns Click to Open PDF
3.5 years of leading Old Navy while sales materially underperformed its peer group. The press release talks about his involvement in the “creation of the successful Supermodelquins marketing campaign.” That campaign was reasonably successful and may have been Mr. Wyatt’s only success story during his tenure. We’re still scratching our head as to why the company ended that campaign in the first place.
Posted: Thursday, January 19, 2012
Source: WSJ

Target Said to be Looking at New Pricing Strategy Click to Open PDF
If anyone needed further evidence that TGT’s RedCard and PFresh remodels were an abysmal failure versus the company’s original expectations… read this article. This new “pricing strategy” has an air of desperation about it.

On a related note, have you seen the changes that are taking place in JCP stores today? Many store associates believe that the “elimination of promotional signage” may be a recipe for disaster. Not a good sign for the beginning of Mr. Johnson’s tenure.
Posted: Friday, January 20, 2012
Source: AP

Ikea Profit Rises on Continued Growth Click to Open PDF
Sales growth at home furnishings retailer Ikea came at a cost. The chain cut its prices by -2.6% despite higher raw material costs and GPM% fell -190 Bps versus the prior year.
Posted: Friday, January 20, 2012
Source: WSJ

Food Inflation at Home May Have Peaked, USDA’s Glauber Says Click to Open PDF
Farmers are expected to reap a record corn crop in 2012. After an almost +6% rise (“food at home”) in 2011, many are expecting a more “normal” gain of +3% to +4% in 2012.
Posted: Wednesday, January 04, 2012
Source: Bloomberg

For Malls, Occupancy Firms Up Click to Open PDF
The third quarter of 2011 marked an 11-year high for mall vacancy rates (9.4% in malls in the Top 80 U.S. markets). This number edged lower in Q4 2011 to 9.2%. But, that was the fourth quarter. Many more retailers are exiting stores as we enter 2012. Our bet is that the rate begins to creep higher again in Q1 2012.
Posted: Monday, January 09, 2012
Source: WSJ

Nordstrom Lowers Price of Rewards Click to Open PDF
How will this impact GPM%. One of many concerns for investors in JWN at the moment.
Posted: Tuesday, January 09, 2012
Source: WSJ

David Yurman Taps Glen Senk as CEO Click to Open PDF
One of the more surprising executive moves in years.
Posted: Thursday, January 12, 2012
Source: WSJ

Sears Seeks to Calm Nerves Click to Open PDF
Perception is much more important than reality for a struggling retailer. SHLD management needs to fully understand this or the company will flirt with Chapter 11.
Posted: Friday, January 13, 2012
Source: WSJ

Sears Hires Ex-Brookstone Chief to Lead Merchandising Click to Open PDF
What a weak hire. Is this the best that they could do? At least JCP hired someone with some gravitas/buzz.
Posted: Tuesday, January 03, 2012
Source: WSJ

Target Preparing New Strategy for Designer Tie-Ins Click to Open PDF
TGT was one of the first to take advantage of designer tie-ins, but they’ve since been replicated elsewhere.
Posted: Wednesday, January 04, 2012
Source: WWD

Macy’s, Shopko and Dollar General to Open Stores Click to Open PDF
What’s interesting this year is that DG and FDO are both beginning to open stores in California.
Posted: Wednesday, January 04, 2012
Source: WWD

December Sales Sparkle, Margins Pressured Click to Open PDF
Make no mistake, this was a record setting day. We don’t believe that we’ve ever seen the magnitude of this week’s lower EPS guidance revisions in our time following the retail industry. It’s going to be an ugly 2012.
Posted: Thursday, January 05, 2012
Source: WWD

Retail Sales Show Slack Click to Open PDF
We’re still perplexed as to why folks are excited about the numbers today at M. The company did not even raise its EPS expectations above the consensus forecast. Keep an eye on JWN and any other apparel retailer that has yet to discuss merchandise margin trends/results in the Q4 2011 period.
Posted: Friday, January 06, 2012
Source: WSJ