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DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
KeyTakeaways
1) Storeclosureandbankruptcyannouncements:BCBGwillbeclosingallofitsstoresasithasfiledforbankruptcyprotection.LucyActivewearwillalsocloseitsentirestorenetworkasithasmergedwiththeNorthFacebrand.JCPenneywillbeclosing13%–14%ofitsstores,whileCrocswillbeclosing29%ofitsstores.
2) Storeopeningannouncements:Lidlannouncedplanstoopen100storeswithinayearandDick’sSportingGoodsplanstoopenfivemorestores.RossStoresisontrackwithitsplantoopen90storesin2017.
3) Managementchanges:Tenmajorretailersthatwetrackhaveannouncedmanagementchanges,includingAdidas,ALDO,Barneys,CalvinKlein,Céline,Crocs,LouisVuitton,Next,Tiffany&Co.andToryBurch.
4) Othermajorannouncements:SkipHopHoldings,BlueNileandWetSealhavebeenacquiredbyinstitutionalinvestors.Hudson’sBayCo.failedtoreachanagreementtoacquireMacy’s.Otherannouncementsinclude:KateSpadeisputtingitselfupforsale,NeimanMarcusisrestructuringitsdebtandFinishLineInc.hassoldoffJackRabbittoafund.
Deep Dive:
US Retail—Store Closure and
Management Change Tracker
Deborah Weinswig
Managing Director,
Fung Global Retail & Technology
US: 917.655.6790
HK: 852.6119.1779
CN: 86.186.1420.3016
2
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
TableofContents
ExecutiveSummary...........................................................................................................2SummaryofMajorAnnouncements...........................................................................................2
StoreClosings..................................................................................................................11JCPenney..................................................................................................................................11LucyActivewear.......................................................................................................................12BCBG........................................................................................................................................12GordmansStoresInc................................................................................................................12CrocsInc...................................................................................................................................13
StoreOpenings................................................................................................................13RossStores...............................................................................................................................13Lidl...........................................................................................................................................13Dick’sSportingGoods...............................................................................................................14
ManagementChanges.....................................................................................................15Adidas......................................................................................................................................15ALDOGroupInc........................................................................................................................15Barneys....................................................................................................................................16CalvinKlein..............................................................................................................................16Céline.......................................................................................................................................17CrocsInc...................................................................................................................................17LouisVuitton............................................................................................................................18Next.........................................................................................................................................18Tiffany&Co.............................................................................................................................19ToryBurch................................................................................................................................19
OtherMajorAnnouncements..........................................................................................20DebtRestructuring...................................................................................................................20
NeimanMarcus...............................................................................................................20SaleofBrand............................................................................................................................20
FinishLine........................................................................................................................20Acquisitions.............................................................................................................................20
Macy’s.............................................................................................................................20WetSeal..........................................................................................................................20SkipHopHoldings............................................................................................................21BlueNile..........................................................................................................................21
PotentialSale...........................................................................................................................21KateSpade&Co..............................................................................................................21
3
DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
ExecutiveSummaryThisisthesecondreportoftheStoreClosureandManagementChangeTrackerseries.Wetrackmajorannouncementsfromretailers,suchasstoreclosures,openings,managementchangesandM&A,aswebelievethiswillprovideinsightsintotheoverallhealthoftheretailindustry.Inthisreport,wetrackannouncementsthatoccurredbetweenFebruary17andMarch10.
SummaryofMajorAnnouncements
• Storeclosures:LucyActivewearwillcloseitsentirestorenetworkon 2017.ThebrandwillbemergedintoNorthFace.Inasubsequent announcementtoitsintentiontoclosestores,madeknownin January,JCPenneystatedthatitwillclose130-140stores,or13%–14%ofitsstorefleet,inthenextfewmonths.BCBGwillcloseallofits 200storesasitpreparestofileforbankruptcy.GordmansStoreshas filedforChapter11bankruptcyprotectionandwillcloseallofits101 stores.Crocswillbeclosing160stores,or29%ofallstoresbytheend of2018.
• Bankruptcies:BCBGandGordmansStoreshavefiledforbankruptcy.
• Storeopenings:USdiscounterRossStoreswillopen90newstoresin 2017,with28alreadyopenedyear-to-date2017.Germandiscounter LidlisexecutingitsUSexpansionstrategyandplanstoopen100 storesontheEastCoastinoneyear.Dick’sSportingGoodswillopen storesinthreestates.
• Managementchanges:Tenmoremajorretailershaveannounced managementchangessinceFebruary10,includingAdidas,ALDO, Barneys,CalvinKlein,Céline,Crocs,LouisVuitton,Next,Tiffanyand ToryBurch.
• Othermajorannouncements:Threemajorretailers—SkipHop Holdings,BlueNile,andWetSeal—haveannouncedthattheyhave beenacquired.FinishLinehassoldoffJackRabbit,oneofitsbrands with65stores.SkipHopHoldingshasagreedtoacashofferof$140 millionbyCarter’sInc.KateSpadehasputitselfupforsale.BlueNile hasagreedtoaprivatizationsaleof$500milliontoaninvestorgroup madeupofBainCapitalPrivateEquity,BowStreetandAdama Partners.WetSealhasbeenacquiredbyglobaladvisoryfirmGordon Brothersfor$3million.Hudson’sBayCo.’sbidforMacy’swas unsuccessful.
4 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
Figure1:StoreClosureAnnouncements
AnnouncementDate Segment Retailer
NumberofStoreClosings
%ofTotalStoreBase Status
ReasonsforStoreClosure Long-TermPlan
UseofFreed-UpCapital FinancialImpact
Mar13,2017
DepartmentStores
GordmansStoresInc.
101 100% Gordmansisfilingforbankruptcy.
Sluggishmalltrafficandshiftofshopperstoonline.
NA NA EnteredintoagreementwithTigerCapitalandGreatAmericanGroupforaliquidationsale.
Mar1,2017 Footwear CrocsInc. 160 29% Tobecompletedbytheendof2018
Struggledwithrecentsalesperformanceduetotheshiftincustomers’tastesanddwindlingstoretraffic.
Improveoperatingefficiencybyfocusingonprofitablestores.
NA Managementexpectssalestobeupinthemid-single-digitsover2017and2018,primarilydrivenbytheclosingofunproductivestores.
Feb24,2017
DepartmentStores
JCPenney 130-140 13%–14% Tobecompletedinthenextfewmonths
Storesidentifiedforclosureeitherrequiresignificantcapitaltoachievethecompany’snewbrandstandardorareminimallycashflowpositivewithbelowaveragecomparablesalesperformance.
Alignthecompany’sbrick-and-mortarpresencewithitsomnichannelnetworkandoptimizeitsnationalretailoperations.
Reallocatecapitaltoinvestinlocationsandinitiativesthatofferthegreatestrevenuepotential.
Annualcostsavingsestimatedataround$200million.Expecttorecordapre-taxchargeof$225millionin1H17duetoleaseterminationobligationexpenses,non-cashassetimpairmentsandtransitioncosts.
Feb24,2017
WomenSportswear
LucyActivewear
44 100% Tobecompletedbyend-2017orearly2018
Intensecompetitionintheathleticwearsectorhasputhugepressureonthebrand’sperformance.
LucywillmergewiththeNorthFacebrand.BothbrandsareownedbyVFCorporation.Mostofthe44storeswillremainopen,atleastthroughthefallof2017.
NA NA
5 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
AnnouncementDate Segment Retailer
NumberofStoreClosings
%ofTotalStoreBase Status
ReasonsforStoreClosure Long-TermPlan
UseofFreed-UpCapital FinancialImpact
March1,2017
Apparel BCBG 120 100% Hasfiledforbankruptcy
BCBGhasstruggledtoadapttotheshifttodigitalcommerce.Itishavingdifficultiesinmeetingitsdebtandrentobligation.Theretailstorebusinesshasdeclinedby20%overthepastthreeyears.
NA Receiveda$45milliondebtors-in-possessioncommitmenttoensurenormaloperation.
Currentlyworkingwithfinancialandlegaltoenactbankruptcyproceedings.
Source:Companyreports/Bloomberg/FungGlobalRetail&Technology
Figure2:StoreOpeningAnnouncements
DateAnnounced Segment Retailer Reason
StoreOpenings Status
Mar6,2017 Discounter RossStores Thenewstoreopeningsaimtofurtherstrengthentheretailer’spresenceintheMidwest,whereapproximatelyone-thirdofthestoresarelocated.NewstoreswillalsobeopenedinlargermarketsincludingCalifornia,FloridaandTexas.
90 23RossDressforLessand5dd’sDISCOUNTSopeningshavebeencompleted.Theremainingstoreswillbeopenedwithin2017,withaplannedtotalopeningof70RossDressforLessand20dd’sDISCOUNTSstores.
Feb21,2017 Discounter Lidl LidlisexecutingitsexpansionstrategyintotheUSmarket.AllstoresarelocatedontheEastCoast.
100 In-progress;expectedtobecompletedinoneyear.
Feb21,2017
Sportinggoods
Dick’sSportingGoods
Toexpandintonewcities. 5 TobecompletedbythesecondweekofMarch.
Source:Companyreports/FungGlobalRetail&Technology
6 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
Figure3:ManagementChangeAnnouncementsDateAnnounced In/Out Company Name Title Profile Reason StatusMar7,2017 + Adidas Harm
OhlmeyerChiefFinancialOfficer
Ohlmeyer,49,startedhiscareerwithAdidasin1998andgainedextensiveexperienceintheareasofFinanceandSales.Since2011,hehasledthecompany’sglobale-commercebusiness,mostrecentlyasSVPDigitalBrandCommerce.From2014to2016,OhlmeyerheldadditionalresponsibilityasSVPSalesStrategyandExcellence.E-commercesalesincreasedfrom€50millionto€1billionduringhistenure.
StalkerdecidednottoextendhisroleasCFObeyondtheendofhiscurrentcontract.ThemovealsocoincideswiththechangeofCEOlatelastyear.
EffectiveMay12
Mar7,2017 – Adidas RobinJ.Stalker
ChiefFinancialOfficer
StalkerhasservedasCFOofAdidasfor16years,alongsideformerCEOHerbertHainer,whowasreplacedbyKasparRorstedlastOctober.Underthetutelageoftheduo,Adidas’salesmorethantripled,earningsincreasedmorethanfivefoldandthevalueofthecompanyrosefrom€3billiontomorethan€30billion.
Mar3,2017 + ALDOGroupInc.
DavidBensadoun
ChiefExecutiveOfficer
Bensadounjoinedthecompanyin1995asaprojectmanagerandrosethroughtherankstohismostrecentroleasPresidentofALDOGroupNorthAmerica(AGNA).
Themoveispartofaseniormanagementchange. EffectiveApril3Mar3,2017 – ALDOGroup
Inc.PatrikFrisk ChiefExecutive
OfficerFriskhasservedastheCEOofAldosince2014andwaspraisedforhis“incrediblevisionandwithagreatsensitivitytothecompany’sstronganddiverseculture,”asquotedfromtheCompany’spressrelease.
7 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
DateAnnounced In/Out Company Name Title Profile Reason StatusFeb21,2017
– Barneys DennisFreedman
ExecutiveVicePresidentandCreativeDirector
Freedmanspearheadedanumberofcreativeinitiativesincludingthe2014“Brothers,Sisters,Sons&Daughters”campaignwithBruceWeberthatspotlighted17transgendermenandwomen,aswellascollaborationswithLadyGaga,JayZ,BazLuhrmann,MiucciaPradaandJohnGalliano.Freedmanalsoforgedpartnershipsforthewindowdisplayswithinfluentialartists,includingTheRoyLichtensteinFoundation,AlexKatz,RobPruittandNickCave.
Freedmanplanstopursuenewopportunities,accordingtoaninternalmemo.
Inthenearterm,FreedmanwillserveasthecuratorofaBarneysNewYorkprojecttoberevealedinMay.
Feb27,2017
+ CalvinKlein LuellaBartley HeadofGlobalDesignforCalvinKleinJeans
Bartleywastheco-founderandco-designerofHillierBartley,aluxuryready-to-wearandaccessoriescompany.Shealsohadashortstintasheadofwomen’sRTWdesignatMarcbyMarcJacobs,priortowhichsheownedherownnamesakeline,Luellaformorethan10years.
Noreasonspecified. Effectiveimmediately
Feb24,2017
+ Céline SéverineMerle
ChiefExecutiveOfficer
Merle,whoworkedunderBerlutiChairmanAntoineArnault,isaveteranofLVMH,havingworkedatitsflagshipVuittonbrandasitsgeneralmangerforFranceandwomen’swearmerchandisingdirector.ShestartedherLVMHcareeratKenzo,movingontoitsParisdepartmentstoreLeBonMarché,firstasdirectorofimageandlaterascommercialdirector.SheiscurrentlytheexecutivevicepresidentatBerluti.
AdvancementintoavacantpostafterMarcoGobbetti,thenCEOofCeline,leftforBurberryinJanuary.
EffectiveApril1
8 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
DateAnnounced In/Out Company Name Title Profile Reason StatusMar1,2017 + CrocsInc. AndrewRees ChiefExecutive
OfficerHeservedasthePresidentofCrocssince2014.HepreviouslyworkedatL.E.KConsultingandReebokInternationalpriortojoiningCrocs. Managementshuffleto
reinvigoratethecompany’sperformance
EffectiveJune1Mar1,2017 – CrocsInc. GreggRibatt ChiefExecutive
OfficerHeservedastheCEOofStrideRiteGroupandCOOofStuartWeitzmanHoldingspriortojoiningCrocsasCEO.
Feb24,2017
+ LouisVuitton LanessaElrod PresidentoftheAmericasZone
ElrodjoinedVuittonin2010asdirectorofmarketingforleathergoods,risingthroughtherankstobecomevicepresidentofmerchandisingforLouisVuittonAmericasandthenseniorvicepresidentofVuitton’sretailnetworkinAmerica.
Executiveshuffletofillvacantposts. EffectiveApril1Feb24,
2017– LouisVuitton Anthony
LedruPresidentoftheAmericasZone
LedruspenttwoyearshelmingtheAmericas,havingjoinedVuittonfromTiffany&Co.HisrésuméincludesstintsatHarryWinstonInternationalandCartier.
Feb24,2017
+ LouisVuitton AnthonyLedru
ExecutiveVicePresident,CommercialActivities
LedruspenttwoyearshelmingtheAmericas,havingjoinedVuittonfromTiffany&Co.HisrésuméincludesstintsatHarryWinstonInternationalandCartier.
Feb14,2017
– Next JohnBarton Chairman BartonjoinedtheBoardofNextin2002.HewasappointedDeputyChairmanin2004andChairmanin2006.
Bartonis72andthemanagementchangeispartofhisretirementplan.
Bartonwillretireon1August2017.RoneyservesasDeputyChairmanandChairmanDesignatewitheffectfrom14February2017,untilhesucceedsBarton’srole.
Feb14,2017
+ Next MichaelRoney
Chairman RoneywastheCEOofBunzlplc,aFTSE100listeddistributionandoutsourcingbusiness,from2005untilhisretirementinApril2016.HeiscurrentlyChairmanofGraftonGroupplcandanon-executivedirectorofBrown-FormanCorporation.Roneywasalsoformerlyanon-executivedirectorofJohnsonMattheyPlc
9 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
DateAnnounced In/Out Company Name Title Profile Reason Status
Feb22,2017
+ Tiffany FrancescoTrapani
IndependentDirectorontheBoard
TrapaniwastheformerCEOofBulgari.HeandJANAPartners,anactivistfund,togetherown5.1%ofTiffany.
TiffanyreachedadealwithactivistinvestorJANAPartnerstoappointthreeindependentdirectorstoitsboardandoverseethesearchforanewCEO.
Trapani,FarahandLilliewilljointheBoardnolaterthanMarch6,2017.
Feb22,2017
+ Tiffany RogerFarah IndependentDirectorontheBoard
FarahwastheCo-CEOatToryBurch.
Feb22,2017
+ Tiffany JamesLillie IndependentDirectorontheBoard
LilliewastheformerCEOatJardenCorporation
Feb23,2017
– ToryBurch RogerFarah Co-CEO Farah,whojoinedToryBurchin2014,istheformerViceChairmanofRalphLaurenCorp.HeisoftencreditedwithtransformingLaurenintoaglobalpowerhouse.
Noreasonspecified.ThechangewillbeeffectiveMarch1,2017.
Feb23,2017
+ ToryBurch RogerFarah ExecutiveDirector(Advisoryrole)
Source:Companyreports/WWD/Bloomberg/FungGlobalRetail&Technology
10 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
Figure4:OtherMajorAnnouncements
DateAnnounced Segment Retailer
AnnouncementNature SummaryofEvent Status
Mar3,2017 DepartmentStore
NeimanMarcus DebtRestructuring
NeimanMarcushashiredinvestmentbankLazardLtdtorestructureitsdebtobligation,withtheaimofexploringwaystobolsterthebalancesheetasitseeksrelieffrom$4.9billionindebt.Sourcessaidthecompanyisinnoimmediateriskofbankruptcy.
In-progress
Mar3,2017 DepartmentStore
Macy’s Acquisition TalksbetweenMacy’sandHudson’sBayCo.havefailed,asbothpartieswereunabletoarriveatamutualsellingprice.Macy’sisseekingapotentialbuyer,whileHudson’sBayCo.isfocusingonitsacquisitionstrategy.
Unsuccessful
Mar3,2017 Apparel WetSeal Acquisition TheintellectualpropertyofthecompanyhasbeenacquiredbythebrandsdivisionofglobaladvisoryfirmGordonBrothersfor$3million.RamezToubassy,PresidentofGordonBrothers’branddivision,saidWetSealwill,fornow,existinthee-ecommercechannelandinwholesalevialicensing.
Completed
Feb24,2017 Footwear FinishLine Saleofbrand FinishLineInc.hascompletedthesaleofitsJackRabbitdivisiontoaffiliatesofCriticalPointCapitalLLCfornopayment.ThebuyeracquiredalltheJackRabbitassets,inventory,leaseholdinterests,customaryliabilities,intellectualpropertyandtheJackRabbittrademark,including65stores.Thesellerhasalsoagreedtopay$8.3milliontothebuyerforthepurposeofsettlingliabilitiescreatedbythesale.
Completed
Feb23,2017 ChildrenAccessories
SkipHopHoldings Acquisition Carter’sInc.hasacquiredSkipHopHoldingsfromFiremanCapitalPartnersfor$140millionincash.Carter’sisababies’andyoungchildren’sapparelbrand,whileSkipHopproduceschildren’saccessories,suchasdiaperbags,backpacksandtravelaccessories.
Completed
Feb17,2017 SpecialtyRetailers
BlueNile Acquisition BlueNilehasbeenprivatizedandacquiredforapproximately$500millionbyaninvestorgroupmadeupofBainCapitalPrivateEquity,BowStreetandAdamaPartners.
Completed
Feb16,2017 LuxuryGoods KateSpade&Co. PotentialSale KateSpadeisexploringtheoptionofasale,whichisoneofthestrategicalternativestoboostvalueforthecompany’sshareholders.AsofFebruary16,CoachandMichaelKorsareamongthebuyersthathaveenteredthesecondroundofthesaleprocess.
In-progress
Source:Companyreports/WWD/Bloomberg/FungGlobalRetail&Technology
11 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
StoreClosings
JCPenney
InasubsequentannouncementafteritsCEOMarvinEllisoncommentedinearlyJanuaryaboutthecompany’sintentiontoclosestores,JCPenneystatedthatitwillclose130–140stores,or13%–14%ofitsstorefleet,inthenextfewmonths.Theexactnumbersareyettobeconfirmed,accordingtoEllison.
• Reasonforstoreclosings:Aresourceallocationdecisionduetointensifyingcompetitionfrome-commerce.Thestoresidentifiedforclosureeitherrequiresignificantcapitaltoachievethecompany’snewbrandstandardorarebarelycashflowpositivewithbelowaveragecomparablesalesperformance.
• Numberofstorestobeshut:ItisestimatedJCPenneywillclose130–140,or13%–14%ofitsstores,inthenexttwofewmonths,accordingtothecompanyannouncement.
• Capitaldeployment:Thecompanyisredirectingcapitalresourcestoinvestinlocationsande-commerceinitiativesthatofferthegreatestrevenuepotential.JCPenneyaimstoalignitsbrick-and-mortarpresencewithitsomnichannelnetworkandoptimizeitsretailoperations.
Figure5.JCPenneyStoreCount
*Assume140storeswillbeclosedSource:Companyreports/Cowen&Co/FungGlobalRetail&Technology
1,108 1,106 1,112 1,114 1,104 1,062 1,021881
0
200
400
600
800
1,000
1,200
2010 2011 2012 2013 2014 2015 2016 2017*
Num
bero
fStores
12 DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technology
[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
LucyActivewear
LucyActivewearwillcloseall44existingstores,accordingtoareportbyKGW,alocalPortlandTVstation,onFebruary24,2017.Thestoresareexpectedtobeclosedbytheendof2017orearly2018.LucyisownedbyVFCorporation.
• Reasonforstoreclosings:Thedecisiontoclosestoreswasdrivenbytoughercompetitionamongwomen’sactivewearcompaniessuchasAthletaandLululemon,accordingtoLucyspokesperson.
• Long-termplan:LucywillbemergedintotheNorthFacebrand,whichisalsoownedbyVFCorporation.Mostofthe44storeswillremainopen,atleastthroughthefallof2017.
• Capitaldeployment:NodecisionhasbeenmadeastotheallocationofLucy’sassetsafterthemergerwithNorthFace.
BCBG
BCBGofficiallyfiledforbankruptcyonMarch1andwillcloseallofitsretail120storesaspartoftherestructuringplan,accordingtoReuters.BCBGhadpreviouslyannouncedonJanuary18itsintentiontoclosestores.
• Reasonforbankruptcy:Thecompanyhasbeenstrugglingtoadapttotheshifttodigitalcommerce.Itishavingdifficultiesinmeetingitsdebtandrentobligation.Theretailstorebusinesshasdeclinedby20%overthepastthreeyears.
• Long-termplan:BCBGhasfiledforbankruptcyandiscurrentlyworkingwithitsfinancialandlegaladvisors.Ithasreceiveda$45millioncommitmentofdebtor-in-possessionasitsworkingcapitaltoensurenormaloperationsunderthechapter11bankruptcyproceeding.
GordmansStoresInc.
Gordmansisfilingforbankruptcy,accordingtoanofficial companyannouncement.
• Reasonforbankruptcy:Thecompanyisfacingachallengingbusinessenvironmentwithsluggishmalltrafficandshoppers’shifttoonlineshopping.
• Numberofstorestobeshut:Allofthecompany’s101storeswilllikelybeclosed.
• Bankruptcysale:GordmansannouncedthatithasenteredintoanagreementwithTigerCapitalGroup,LLCandGreatAmericanGroup,LLCforthesaleinliquidationoftheinventoryandotherassetsofGordmans'retailstoresanddistributioncenters,subjecttocourtapprovalorabetteroffer.
13 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
CrocsInc.
CrocsInc.announcedonMar7,2017thatitwillclose160stores,or29%ofitsstorefleet,bytheendof2018.
• Reasonforstoreclosings:Thecompanyhasstruggledwithsalesperformanceamidashiftincustomers’taste.Thedwindlingofstoretrafficalsohashadanegativeimpact.
• Numberofstorestobeshut:160stores,or29%ofitstotalstorefleet,willbeclosedbytheendof2018.
• Capitaldeployment:Thecompanywillfocusonimprovingtheoperatingefficiency.Managementexpectssalestobeupinthemid-single-digitsover2017and2018,primarilydrivenbytheclosingofunproductivestores.
StoreOpeningsRossStores
RossStoresannouncedonMarch6,2017thatithasalreadyopened28storessincethestartof2017.Thisispartofitspreviouslyannouncedplantoopenupto90newstoresbytheendof2017.
• Reasonforstoreopenings:Thenewstoreopeningsareexpectedtofurtherstrengthentheretailer’spresenceintheMidwest,whereapproximatelyone-thirdofthestoresarelocated.NewstoreswillalsobeopenedinlargermarketsincludingCalifornia,FloridaandTexas.
• Status:Sofar,23RossDressforLessand5dd’sDISCOUNTSstoreshavebeenopened.Theremainingstoreswillbeopenedwithin2017,withaplannedtotalopeningof70RossDressforLessand20dd’sDISCOUNTSstores.
Lidl
LidlannouncedonFebruary21,2017,thatitwillopen100storesontheEastCoast.
• Reasonforstoreopenings:Lidl’sstoreopeningsannouncementispartofitsplannedexpansionintotheUSmarket.
• Status:Thenewstoreopeningsareontracktobecompletedwithinayear.AsnotedfromtheLidlprototypestore,thesenewstoresintheUSwillbearound35%largerthantheirbiggerstoresinEurope,ataround21,000squarefeet,tocaterfortheneedsoftheUSmarket.
• Financialimpact:Salescouldexceed$2billionbytheendofitssecondyearofoperationintheUS,accordingtoKantarRetail.
14 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
Figure6.LidlStoreCount
Source:KantarRetailAnalysis
Dick’sSportingGoods
Dick’sSportingGoodsannouncedonFebruary21,2017,thatitwillbeopeningfivenewstoresinthethreedifferentstates.
• Reasonforstoreopenings:Thenewstoreswillallowthecompanytohaveagreaterexposuretoconsumers.
• Status:AllopeningswillbecompletedbythesecondweekofMarch.
20
120
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330
430
530
630
0
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500
600
700
2017E 2018E 2019E 2020E 2021E 2022E 2023E
15 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
ManagementChangesAdidas
AdidasannouncedonMarch7,2017,thatHarmOhlmeyerwillreplaceRobinJ.StalkerasthenewCFO.ThechangewilltakeeffectonMay12.
• Reasonforappointment:StalkerdecidednottoextendhisroleasCFObeyondtheendofhiscurrentcontract.ThemovealsocoincideswiththechangeofCEOlatelastyear.
• ProfileofincomingCFO:OhlmeyerstartedhiscareerwithAdidasin1998andgainedextensiveexperienceintheareasoffinanceandsales.Since2011,hehasledthecompany’sglobale-commercebusiness,mostrecentlyasSVPDigitalBrandCommerce.From2014to2016,heheldadditionalresponsibilitiesasSVPSalesStrategyandExcellence.E-commercesalesincreasedfrom€50millionto€1billionduringhistenure.
• ProfileofoutgoingCFO:StalkerhasservedasCFOofAdidasfor16years,alongsideformerCEOHerbertHainer,whowasreplacedbyKasparRorstedinOctober2016.Duringhistenure,Adidas’salesmorethantripled,earningsincreasedmorethanfivefoldandthevalueofthecompanyrosefrom€3billiontomorethan€30billion.
• Strategicchangesaccompanyingthemanagementchange:None.OhlmeyerisexpectedtoassistthenewCEOinexecutingtheUSexpansionstrategyanddigitalization,whichwassetoutasafive-yeargoalbyformerCEOHerbertHainer.
ALDOGroupInc.
ALDOannouncedonMarch3,2017,thatDavidBensadounwillreplacePatrikFriskasthenewCEO.
• Reasonforappointment:ThemoveisseenaspartofaseniormanagementchangeandwilltakeeffectonApril3.
• ProfileofincomingCEO:Bensadounjoinedthecompanyin1995asaprojectmanagerandrosethroughtherankstohismostrecentroleasPresidentofALDOGroupNorthAmerica(AGNA).
• ProfileofoutgoingCEO:FriskhasservedastheCEOofAldosince2014andwaspraisedforhis“incrediblevisionandhavingagreatsensitivitytothecompany’sstronganddiverseculture,”accordingtothecompany’spressrelease.
• Strategicchangesaccompanyingthemanagementchange:Noneisexpected.
16 DeborahWeinswig,ManagingDirector,FungGlobalRetail&Technology
[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
Barneys
BarneysannouncedonFebruary21,2017,thatDennisFreedman,ExecutiveVicePresidentandCreativeDirector,hasofficiallylefthispostinthecompany.
• Reasonfordeparture:Freedmanlefttopursuenewopportunities,accordingtoaninternalmemofromBarneys.
• Replacementplan:ThereplacementforCreativeDirectorhasyettobeannounced.Freedman,inthenearterm,willcontinuetoserveasthecuratorforaBarneysNewYorkprojecttoberevealedinMay.
• ProfileofoutgoingCreativeDirector:Freedmanspearheadedanumberofcreativeinitiatives,includingthe2014“Brothers,Sisters,Sons&Daughters”campaignwithBruceWeberthatspotlighted17transgendermenandwomen,aswellascollaborationswithLadyGaga,JayZ,BazLuhrmann,MiucciaPradaandJohnGalliano.FreedmanalsoforgedpartnershipsforthewindowdisplayswithinfluentialartistsincludingTheRoyLichtensteinFoundation,AlexKatz,RobPruittandNickCave.Freedmanalsooversawthedesignofthecompany’sdowntownflagshipstore,whichopenedinChelsea,NewYorkinFebruary2016.
• Strategicchangesaccompanyingthemanagementchange:Unknown.TheCreativeDirectorisoftenthemostinfluentialindividualoveracompany’sproductoffering.WewillawaitfurtherannouncementsregardingtheappointmentofanewCreativeDirectorforBarneysinordertogaugetheimpactofsuchamanagementchange.
CalvinKlein
CalvinKleinannouncedonFebruary27,2017theappointmentofLuellaBartleyasHeadofGlobalDesignCalvinKleinJeans.
• Reasonforappointment:TheappointmentwasmadetofillthevacantpostleftbythedepartureofKevinCarrigan,whowasresponsibleforCalvinKleinJeansbeforejoiningRalphLaureninAugust2016.
• ProfileofincomingHeadofGlobalDesignCalvinKleinJeans:Bartleywastheco-founderandco-designerofHillierBartley,aluxuryready-to-wearandaccessoriescompany.Shealsohadashortstintasheadofwomen’sRTWdesignatMarcbyMarcJacobs,priortowhichsheownedherownnamesakeline,Luellaformorethan10years.
• Strategicchangesaccompanyingthemanagementchange:None.BartleywilloverseedesignofallCalvinKleinJeansproductsgloballytoachieveonecohesivevisionforthebrand,whichisinlinewiththebrand’sbusinessstrategy.
17 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
Céline
CélineannouncedonFebruary24,2017,theappointmentofSéverineMerleasCEO,effectiveApril1.
• Reasonforappointment:Merle’sappointmenttoCEOisamovetofillthevacantpostleftbyMarcoGobbetti,wholeftforBurberryinJanuary2017.
• ProfileofincomingCEO:Merle,whoworkedunderBerlutiChairmanAntoineArnault,hasworkedattheflagshipVuittonbrandasitsgeneralmangerforFranceandwomen’swearmerchandisingdirector.ShestartedherLVMHcareeratKenzo,movingontoitsParisdepartmentstoreLeBonMarché,firstasdirectorofimageandlaterascommercialdirector.SheiscurrentlytheexecutivevicepresidentatBerluti.
• Strategicchangesaccompanyingthemanagementchange:AccordingtoaninterviewbetweenWDDandPierre-YvesRoussel,CEOofLVMHGroup,incomingCEOMerlewillapplyherstrongretailandproductexpertisetoastrongretailfoundation.SheistospearheadthelaunchofCéline’se-commercesiteattheendof2017,asmanagementrecognizesthepotentialintheonlinemarketplace.
CrocsInc.
CrocsInc.announcedonMarch3,2017,thatAndrewReeswillreplaceGreggRibattasCEO.
• Reasonforappointment:Themanagementshuffleisaimedatreinvigoratingthecompany.ThechangewillbeeffectiveonJune1.
• ProfileofincomingCEO:ReeshasservedasthePresidentofCrocssince2014.HepreviouslyworkedatL.E.KConsultingandReebokInternationalpriortojoiningCrocs.
• ProfileofoutgoingCEO:RibattservedastheCEOofStrideRiteGroupandCOOofStuartWeitzmanHoldingspriortojoiningCrocsasCEO.
• Strategicchangesaccompanyingthemanagementchange:Tobedetermined.ItshouldbenotedthatCrocsInc.alsomadestoreclosureannouncementstogetherwiththeaboveexecutivechange.Thecompanyisexpectedtocontinueitsstrategyofcostcuttingandconsolidationfortheimmediatefuture.
18 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
LouisVuitton
LouisVuittonannouncedonFebruary24,2017,thatLanessaElrodwillbeappointedthePresidentoftheAmericasRegion,replacingAnthonyLedru,whowillbecometheExecutiveVicePresident,CommercialActivities.AllchangesareeffectiveApril1.
• Reasonformanagementchange:Themanagementshuffleaimstofillvacantposts.
• Profileofnewmanagement:ElrodjoinedVuittonin2010asdirectorofmarketingforleathergoods,risingthroughtherankstobecomevicepresidentofmerchandisingforLouisVuittonAmericasandthenseniorvicepresidentofVuitton’sretailnetworkinAmerica.ShealsohadpreviousexperienceatSaksFifthAvenueandBergdorfGoodman.
LedruhasspenttwoyearshelmingtheAmericas,havingjoinedVuittonfromTiffany&Co.HisrésuméincludesstintsatHarryWinstonInternationalandCartier.
• Strategicchangesaccompanyingthemanagementchange:Tobeconfirmed.
Next
NextannouncedonFebruary14,2017,thatMichaelRoneyissettoreplaceJohnBartonastheChairman.
• Reasonforappointment:BartonwillretireonAugust1,2017.Roney’sappointmentispartofBarton’sretirementplan.RoneywillserveasDeputyChairmanandChairmanDesignatewitheffectfromFebruary14,2017,untilhesucceedsBarton’sroleinAugust2017.
• ProfileofincomingChairman:Roney,age62,hasextensivebusinessexperience.HewasChiefExecutiveofBunzlplc,aFTSE100listeddistributionandoutsourcingbusiness,from2005untilhisretirementinApril2016.HeiscurrentlyChairmanofGraftonGroupplcandanon-executivedirectorofBrown-FormanCorporation.Hewasalsoformerlyanon-executivedirectorofJohnsonMattheyPlc.
• ProfileofoutgoingChairman:BartonbecameamemberoftheBoardofNextin2002.HewasappointedDeputyChairmanin2004andChairmanin2006.
• Strategicchangesaccompanyingthemanagementchange:Tobeconfirmed.
19 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
Tiffany&Co.
TiffanyhasannouncedtheadditionofthreeIndependentDirectorstotheBoardonFebruary22,2017.FrancescoTrapani,RogerFarahandJamesLilliewilljointheBoardnolaterthanMarch6,2017.
• Reasonformanagementchange:TiffanyhasreachedadealwithactivistinvestorJANAPartnersandTrapani,whichtheytogetherowns5.1%ofthecompany,toappointthreeindependentdirectorstoitsBoardandtooverseethesearchforanewCEOafteradifficultperiodforthecompany,whichresultedinthedepartureofCEOFredericCumenalinearlyFebruary.
• Profileofnewmanagement:TrapaniwastheformerCEOofBulgari.HeandJANAPartners,anactivistfund,togetherown5.1%ofTiffany.Farahwastheco-CEOatretailerToryBurch.JamesLilliewastheformerCEOatJardenCorporation.
• Strategicchangesaccompanyingthemanagementchange:Tobedetermined.CumenalwasnotabletoprovideTiffany’sBoardofDirectorsasatisfactoryfinancialreturn.TheactiveparticipationofJANAPartnerssignalsthatmorechangesmightbeimminentwithintheseniorhierarchyofthecompanyasshareholdersseekamanagementteamthatcanleadasuccessfulturnaround.
ToryBurch
ToryBurchannouncedthatRogerFarahwillceasetoserveastheCo-CEO,andwillassumeanadvisoryroleasanExecutiveDirector.ThechangewillbeeffectiveMarch1,2017.
• Reasonformanagementchange:Noreasonwasspecified.
• ProfileofoutgoingCo-CEO:Farah,whojoinedBurchin2014,istheformerViceChairmanofRalphLaurenCorp.HeisoftencreditedwithtransformingLaurenintoaglobalpowerhouse.
• Strategicchangesaccompanyingthemanagementchange:None.NomajorstrategicchangesareexpectedasToryBurchremainstheCEO,withRogerstayinginthecompany,althoughinanadvisoryrole.
20 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
OtherMajorAnnouncementsDebtRestructuringNeimanMarcus
NeimanMarcushashiredinvestmentbankLazardLtdtorestructureitsdebtobligationtobolsterthebalancesheetasitseeksrelieffrom$4.9billionindebt.ThecompanyisfacingheadwindsthataresharedbyotherUSretailers.Lowerenergypriceshavenegativelyimpactedthecompany,asmanyofitsaffluentshoppersinTexashavecurbedtheirspending.Muchofthecompany’sdebtloadstemsfromits$6billionleveragedbuyoutin2013,whenitscurrentowners,AresManagementLPandCanadaPensionPlanInvestmentBoard(CPPIB),acquireditfromotherprivateequityfirms.SourcessaidNeimanMarcusisinnoimmediateriskofbankruptcy.
SaleofBrandFinishLine
FinishLineInc.completedthesaleofitsJackRabbitdivisiontoaffiliatesofCriticalPointCapitalLLCfornopayment.ThebuyeracquiredallJackRabbitassets,inventory,leaseholdinterests,customaryliabilities,intellectualpropertyandtheJackRabbittrademark,including65stores.Thesellerhasalsoagreedtopay$8.3milliontothebuyerforthepurposeofsettlingliabilitiescreatedbythesale.TheaimofthesaleistohelpFinishLineunloadleasesfortheJackRabbitstores.Thistransactionmarksthe$40millionconsolidationofmom-and-poprunningshoesretailersthatbegansixyearsago.Theriseoffashion-focusedathleisureitemshadanegativeimpactonperformance-orientedshoessoldbyFinishLine.
AcquisitionsMacy’s
TalksbetweenMacy’sandHudson’sBayCo.havefailed,asbothpartieswereunabletoarriveatamutualsellingprice.Macy’sisseekingapotentialbuyer,whileHudson’sBayCo.isfocusingonitsacquisitionstrategy.
WetSeal
Pursuanttoitsbankruptcyfiling,whichwewroteaboutinourfirstreport,WetSeal’sintellectualpropertyassetshavenowbeenacquiredbythebrandsdivisionofglobaladvisoryfirmGordonBrothersfor$3million.RamezToubassy,PresidentofGordonBrothers’branddivision,saidWetSealwill,fornow,existinthee-ecommercechannelandinwholesalevialicensing.Hedidnotruleoutthepossibilityofoperating
21 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
stand-aloneWetSealstoresinthefuture,andbelievesthereisabusinessopportunityinbothdepartmentstoresandthemasschannel.
SkipHopHoldings
Carter’sInc.hasacquiredSkipHopHoldingsfromFiremanCapitalPartnersfor$140millionincash.Carter’sisababiesandyoungchildren’sapparelbrand,whileSkipHopproduceschildren’saccessories,suchasdiaperbags,backpacksandtravelaccessories.TheacquisitionofSkipHopisexpectedtobeaccretivetoCarter’sfiscal2017adjustedearningspershare,excludingtheimpactofnon-recurringtransactionorintegration-relatedexpenses.
BlueNile
BlueNilehasofficiallybeenacquiredandgoneprivateforapproximately$500millionbyaninvestorgroupmadeupofBainCapitalPrivateEquity,BowStreetandAdamaPartners.BlueNileisaSeattle-basedonlinespecialtyretaileroffinejewelry.
PotentialSaleKateSpade&Co.
KateSpadeisexploringtheoptionofasale,whichisoneofthestrategicalternativestoboostvalueforthecompany’sshareholders.AsofFebruary16,CoachandMichaelKorsareamongthebuyersthathaveenteredthesecondroundofbidding.
22 DeborahWeinswig,ManagingDirector,FungGlobalRetail&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2017TheFungGroup.Allrightsreserved.
March15,2017
DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:[email protected]
MatthewLeeResearchAssistant
HongKong:8thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223004406London:242-246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NewYork:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017FungGlobalRetailTech.com