L Brands Inc. ($LB), the parent of Victoria's Secret and Bath & Body Works, continues to report poor numbers. Don't sleep on the e-commerce lingerie upstarts that are taking a share of its pie. Of course, none of this mattered to the stock which saw an uptick this week despite poor same store sales.
Michael Kors Holdings Limited ($KORS) reported HORRIBLE numbers this past week: an absolute trainwreck. Quickly here: revenue down 11.2%, same stores sales down 14.1%, wholesale net sales down 22.8%, and a quarterly net loss of $26.8mm, a ($203mm) swing from the same quarter last year. Feel free to pencil in 100-125 KORS stores into the chart below which, in a sign of the fast moving destruction of retail, is already outdated (Also, all of these closures are shining through in the retail job numbers). Express Inc. ($EXPR) also reported profit and revenue misses and saw its stock plummet. Meanwhile, L Brands ($LB) reported a 7% comp sales decrease and total sales down 5%; it closed 6 stores (but still has 3074!). By brand, Victoria's Secret -14%, Bath & Body Works +6%, and L Brands - 7%. The beauty narrative is sticky. As is the discount stores: Dollar General ($DG) reported solid numbers. And as is yoga, apparently, as Lululemon ($LULU) surprised to the upside though it, too, is closing some stores. All things housing related were supposed to be ringfenced from Amazon but, well, maybe not: Restoration Hardware ($RH) took a beating on earnings. It claims to be taking the heat now to protect itself from Amazon later. We'll see.
- Busted Startups. Here, Beepi. Despite $150mm of VC and a last raise at a $564 valuation, the used-car marketplace is selling for parts, with Sherwood Partners acting as assignee. With auto-lending for new cars at subprime levels, this capitulation isn't all-too surprising.
- Busted Startups II. Some argue that part of the failing brick-and-mortar narrative relates to delivery services like Birchbox. Maybe not. Trunk Club sold to Nordstrom and has languished and now JackThreads looks like it's worth JackSh*t.
- Clean Energy. Challenges. But progress with storage.
- Disruption. The fall of Blackberry.
- Distressed Investing. In malls. These guys have cajones.
- Greece. Remember the bailout controversies that sent the markets into a tizzy a few years back? Yeah, they're back. Europe looks staged for a lot of volatility in coming months with elections looming in France and Germany. This could create some real interesting investment opportunities. Of course, that's what people said of Brexit, too.
- Power. Maybe. Maybe not. This week the denials poured down from Toshiba re: Westinghouse. Meanwhile, FirstEnergy drops some bombs in its investor presentation.
- Restaurants. Five chains that look like dogsh*t in 2017.
- Retail. Apparently President Trump's promises to make America great again did not take into account all of the vitriol that would be unleashed towards his brands and resulting domino effect: case and point, Perfumania, which was teetering BEFORE folks wanted to wash themselves of the Trump stank. Speaking of mall-based stench, L Brands' Victoria's Secret ain't looking so hot these days as forward guidance looked bleak. And Amazon announced the release of its discount bras. Cue Jaws theme song.
- Retail II. People have been talking about Toys R' Us for years and in '16 they took steps to deal with the over-levered balance sheet. The company continues to cut costs on the ops side too. Meanwhile, other companies like J.Crew are engaging in Intellectual Property machinations to stave off the inevitable and raise financing - the legality of which remains an open question.
- Retail III - Department Stores. AlixPartners makes a cameo appearance in this interesting summary of the state of department stores. Choice stat: "As recently as 1999, department stores had total sales of $230 billion. Last year they came in at $155.5 billion, according to Census data." Accordingly, JC Penney is closing 140 stores (and probably still has 300 too many) and Sears is continuing to cut costs with 130 HQ firings. On point, Macy's reported numbers this past week. And so did Walmart - and the market initially responded in a way that is a smack to Warren Buffett (see last week's newsletter). Meanwhile TJX Cos. (TJ Maxx, Home Goods, Marshalls) showed that brick-and-mortar still has some legs (as did Nordstrom).
- Fast Forward: Ocean Rig acknowledged that it's effed and the stock took a dive: a possible bankruptcy is on the horizon. And Cumulus Media had a setback in its efforts to restructure.
- Rewind I: Sporting goods - analysts are starting to notice the massive bloodbath and, accordingly, downgraded Dick's Sporting Goods.
- Rewind II: Let's hope that Sycamore Partners' purchase of The Limited fares better than Versa Capital Management's investment in Eastern Outfitters. $26.8mm price tag. Meanwhile, Wet Seal is available.
- Chart of the Week:
- Tweet of the Week: