The Country Is Under Attack

crocs.JPGAs those of you who read the increasingly relevant A2 this morning already know, economists are now losing more sleep over subprime than terrorism. Yes, they believe that the threat posed to the United States by mortgage defaults and heavy debt loads is bigger than that of us being attacked by Canada, which I’ve long suspected is up to no good around the VT/CA border, even though they feign innocence when you ask them what they’re doing there and claim to just be trying to make it to UVM to score pot. This just goes to show you that economists are out to lunch, and wouldn’t know what the biggest threat to the country was if it bit them on the ass. Since we apparently have to do everything around here, let us step up to the plate and bite those economists’ asses: the biggest threat to the United States isn’t terrorism or subprime—it’s the fact that Crocs, the maker of those hideous, hideous eyesores (which, coincidentally, are favored by terrorists and subprime mortgage holders alike), is up 3 percent, on the news that the company will now expand its reign of terror into clothing lines for men and children. If you love America, go short Crocs now. Otherwise, the terrorists win, and you will probably have testify at Osama’s war-crimes trial.
Sidebar to the econs: when you were coming up with subprime as threat numero uno, did you stop and think, “Is this something that can somehow be blamed on Saddam Hussein?” Since we know you weren’t aware that Sadd’s brother Ahmed ran the Sacramento office of Countrywide, which was responsible for 33% of new loan generation, we’re going to go with “No.” Amateurs.
Crocs Shares Rise on Clothing Plan [CNBC]
Defaults Bigger Threat for U.S. Economy than Terrorism [CNBC]

The Reality Gap

mind the gap.jpg Faced with a case of recurring ad-failure amidst tanking same-store sales, Gap is taking the crazy cool notion of shunning TV in a revolutionary new print-only campaign.
The Laird & Partners campaign is revolutionary because it features relatively obscure personalities wearing Gap clothing. Personalities as obscure as John Mayer, Lucy Liu, Forest Whitaker and Selma Blair. We’re confused. So the new print-only Gap ads will have really famous people wearing Gap clothing. Sounds like a revolution to me, or the most common clothing ad there is. Yes, people get paid big money to come up with these ideas.
One of these men, Trey Laird, president of the ad firm that bears his name, comments that the people in the new Gap ads “are not the most expected choices, they’re not in Us Weekly every week.” Rather, they are in Us Weekly every other week. It seems like Gap is spending more time marketing the fact that its new ads are edgy than its actual clothing, as we look for clues as to why the chain’s sales stink.
The ad wizards mulled it over and realized that maybe they do have a tired, generic concept. That’s why the pictures will be in black and white and shot by Annie Leibovitz, best known lately for making Queen Elizabeth II look like she was in the Matrix. Sprinkle in a few people who aren’t as famous as the dude dating Jessica Simpson, like the director of “An Inconvenient Truth,” and you get your revolution… or a dressed up offshoot of 90% of clothing ads.
Gap Tries a Somewhat Old-Fashioned Campaign [New York Times]

Dubai wielding Istithmars against US

BarneysNP.jpg Finally, angry consumers are given a reason why the designer burqas sold out so quickly at the last Barneys sale (yes, the D & G spring line is maim-resistant, primarily because it’s acid-washed already). After months of negotiation, the Jones Apparel Group is close to inking a deal that would sell Barneys to the Dubai government-backed PE firm Istithmar. Jones CEO Peter Boneparth was integral in the purchase of Barneys three years ago for $400mm, but was criticized for the move at the time, with several insiders saying the deal was like paying full retail for a Prada dress.
The sale is partly in response to struggles in Jones Apparel Group’s moderately priced apparel brands and flagging shoe business through the Nine West chain.
Istithmar, taking advantage of oil prices and weakness in the dollar, continues to gobble American assets that now include discount retailer Loehmann’s, the NY branch of the Mandarin Oriental and a couple of note to self: non-targets NYC buildings (230 Park and 450 Lexington).

The Sony Blu-ray BDP-S300 player, already flying off the shelves at the speed of irrelevance, is now $100 cheaper, representing one of the fastest price declines in the consumer electronics industry, the Wall Street Journal reports. Whereas the old price of $599 certainly Blu, it’s unclear whether consumers will exactly jump on the less costly device, as it still isn’t as cheap as the equally un-purchased Toshiba HD DVD players which retail for less than $300. The media disc format wars are still in limbo, with Playstation 3 not yet tilting the balance in Sony Blu-ray’s favor, although Hollywood insiders claim that Blu-ray has the most support thus far.
Sony Lowers Price Of New Blu-ray Player [Wall Street Journal]

Large Gap between expectations and retailer’s earnings

Did you avoid rushing off to Gap last month to buy a pair of boyfriend trousers because you filled your (March) Easter basket with them or because it was chilly? That’s what Gap is scrambling to say after releasing April numbers well below expectations today. Same-store sales fell dramatically (16%) and total revenue took a 11% nose-dive from the same period last year. Old Navy experienced the most performance fleece anxiety, with same-store sales dropping 20%. Profit margins shrank, due in large part to large spring clearance sales.
A parody of the boyfriend trouser ad:

Gap’s margins narrow as sales tumble [MarketWatch]