Download - Deep Dive: US Retail—Store Closure and … Barneys, Calvin Klein, Céline, Crocs, Louis Vuitton, Next, Tiffany & Co. and Tory Burch. 4) Other major announcements: Skip Hop Holdings,

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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

[email protected]

US: 917.655.6790

HK: 852.6119.1779

CN: 86.186.1420.3016

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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

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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


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


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.


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


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


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


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


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.


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.


March15,2017

Figure6.LidlStoreCount

Source:KantarRetailAnalysis

Dick’sSportingGoods

Dick’sSportingGoodsannouncedonFebruary21,2017,thatitwillbeopeningfivenewstoresinthethreedifferentstates.

• Reasonforstoreopenings:Thenewstoreswillallowthecompanytohaveagreaterexposuretoconsumers.

• Status:AllopeningswillbecompletedbythesecondweekofMarch.

20

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2017E 2018E 2019E 2020E 2021E 2022E 2023E


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.


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.


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.


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.


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


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.


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