Consumer Products and Services

LVMH could use a bit more transparency

25 Jan 2024

The $375 bln luxury group had a decent 2023, but shares are flagging after a decade-long surge. Boss Bernard Arnault hasn’t had to fret about being in investors’ good books. One way to cheer them now is to make it possible to see how well key brands like Louis Vuitton are doing.

IBM boom suggests a lack of pattern recognition

25 Jan 2024

AI is thriving, says CEO Arvind Krishna. Investors responded by giving IBM shares their best day in 23 years. Yet the tech firm’s reported numbers are pedestrian. Until the benefits show up in top-line growth, IBM’s promise remains – in AI-speak – a hallucination.

Shein’s China and ESG risk puts IPO on iffy ground

25 Jan 2024

The fast-fashion giant is preparing a New York stock market listing. In this Viewsroom podcast, Breakingviews columnists explain how US investors might be wary of links to Beijing, and how its hard-to-recycle $5 tops and sweaters could be vulnerable to future regulation.

P&G cleans up by getting its hands dirty

23 Jan 2024

The $366 bln consumer goods company raised prices just enough to exact pain onto consumers without sacrificing overall sales. It isn’t feeling the effects of inflation either, which helped gross margins. That enabled P&G to reinvest in brands, creating a sweet spot.

Shein’s waste factor is its ultimate IPO risk

19 Jan 2024

The China-linked retailer’s lean production model helps it keep inventory low. Yet its polyester garments are carbon-intensive and hard to recycle. Regulators’ growing unease about textile pollution, and the cost of addressing the mess, may require giving up clients or margins.

Capital Calls: Richemont revival

18 Jan 2024

Concise views on global finance: Shares in the $72 bln owner of Cartier rallied 9% after its quarterly results beat expectations, but concerns over the luxury sector persist.

CVC’s German perfume float may fail the smell test

15 Jan 2024

The buyout fund wants to list beauty retailer Douglas in Frankfurt, valuing its equity at roughly 7 bln euros. It’s time for CVC to offload an asset it’s held since 2015. But high debt and slower online sales than peers are reasons for investors to turn up their noses.

Burberry’s weakness could entice luxury shopper

12 Jan 2024

After a profit warning, the $6 bln UK fashion group is worth 45% less than it was a year ago. Potential buyers will have noticed. While private equity firms may struggle to make decent returns in a slow market, sector leader LVMH could find the situation more tempting.

HPE’s Juniper deal magnifies power of competition

10 Jan 2024

Buying the networking-gear maker for $14 bln is designed to cash in on AI growth. Despite riding the internet boom, however, Juniper has generated less than half the return of the S&P 500 Index since its IPO 24 years ago. It’s a timely lesson on how robust rivalries erode profit.

China’s challenges come dressed in sportswear

5 Jan 2024

Li Ning, which sells athletic goods and leisure wear, was the worst-performing Hong Kong blue chip in 2023. A real-estate play bombed while cost-conscious shoppers are switching back to cheap local brands and foreign rivals like Nike. The retailer reflects its country’s woes.

Microsoft will finally make its mark in mobile

29 Dec 2023

The software giant has famously tripped itself up in smartphones for years, but boss Satya Nadella is primed to play catchup. His Activision and OpenAI deals pave the way with ‘Candy Crush’, Xbox and ChatGPT. Bruising app wars at Apple and Google may exact a high price, however.

Capital Calls: Entain/gambling M&A

13 Dec 2023

Concise views on global finance: The CEO of the $5 bln UK-listed betting group has stepped down, making it more vulnerable to a takeover.

Midea will test China Inc’s welcome overseas

7 Dec 2023

The world’s largest home appliance company plans to use proceeds from a Hong Kong listing to buy global brands. It follows the $48 bln firm’s 2017 purchase of Germany’s Kuka. Outbound M&A has shrunk but a weak Chinese economy provides a growing incentive to pursue deals abroad.

Richemont digital strategy goes back to square one

29 Nov 2023

The Swiss group’s sale of its YNAP online platform is in doubt due to troubles at US-listed buyer Farfetch. Extracting itself from the deal, though potentially messy, looks the best option for the Cartier owner. Yet that still leaves Chairman Johann Rupert with an old problem.

Branding’s corporate titans face moment of truth

22 Nov 2023

Sales volumes at consumer goods giants are falling for the first time this century. Branded goods sell well when quality is tangibly higher and price premiums slim. With neither now the case, the valuation of $296 bln Nestlé, and rivals, may shrink in line with its KitKats.

Bayer drug fail is symptom of growing breakup pain

20 Nov 2023

Shares in the 33 bln euro group fell 20% after it aborted a late-stage trial. Given drugs regularly fail, that’s excessive. Instead, investors’ main concern could be that a grim pharma outlook and litigation risk in Bayer's seeds unit mean a planned split may release less value.

Capital Calls: Gap earnings

17 Nov 2023

Concise views on global finance: Investors rewarded improvements at the apparel company's Old Navy brand by sending shares up over 30%. Yet overall third-quarter results remain muted. It’s a promising sign for new boss Richard Dickson, even if the bar was low to begin with.

Payments sector comedown creates opening for M&A

17 Nov 2023

The once-hot industry has slumped amid rising competition and a possible regulatory clampdown. For online specialists like $34 bln Adyen, the solution is to boost their customer offerings by buying startups. Older players like Nexi and Worldline, meanwhile, are ripe for mergers.

Capital Calls: Walmart, HelloFresh

16 Nov 2023

Concise views on global finance: Although the US retailer lost nearly 8% of its market value after it indicated that price increases are starting to ease, it should be able to navigate the challenge; the 2.7 billion euro meal-delivery company has become a tasty buyout target.

Capital Calls: Goodyear, Target

15 Nov 2023

Concise views on global finance: By offloading assets, the 125-year-old tire maker is succumbing to a similar overhaul as many other iconic US industrial centenarians; the $60 bln retailer has finally taken aim at what it can control – keeping watch over inventory and costs.