Consumer Products and Services

Copier companies spit out an M&A original

31 Jan 2018

Fujifilm is taking control of $8 bln Xerox, whose storied brand became a verb. The premium being paid hinges on some financial engineering of a 56-year-old joint venture. It’s an odd deal, but one that should deliver savings without straining the Japanese company's balance sheet.

Ericsson merits a dysfunctionality discount

31 Jan 2018

The Swedish telecoms-kit maker reported an operating loss for the fifth consecutive quarter and sales fell 10 percent in 2017. Boss Borje Ekholm promises an improvement this year but the core mobile market is shrinking. A valuation premium to Nordic peer Nokia is hard to justify.

H&M’s unfashionable stock demands total revamp

31 Jan 2018

The retailer’s operating profit fell by a third in the fourth quarter and operating margin has more than halved in a decade. Its valuation has fallen toward that of dowdier peers. Stopping the rot will at the least require an aggressive online strategy and more store closures.

Consoles power up Nintendo like nothing else

31 Jan 2018

A near four-fold leap in quarterly operating profit to $1.1 bln accentuates the popularity of the recently launched Switch. Some lean years fed angst about apps and IP. Like the iPhone's significance to Apple, though, what really matters to Nintendo is getting the device right.

Samsung stock split is an illusory value boost

31 Jan 2018

A plan to split its stock 50-fold, unveiled alongside detailed results, helped push the tech giant’s shares up sharply. That is puzzling: this won’t do much except entice a few more small investors. Issues like shareholder returns and corporate restructuring matter far more.

Bull market lets activists see virtue in passivity

26 Jan 2018

Bill Ackman, who lost his fight with ADP, has taken a stake in Nike but isn’t pushing for change. Dan Loeb sat back as Honeywell’s new boss ignored his advice and beat his targets anyway. Even pushy hedge funds can be tempted to simply ride the waves when a rally lifts all boats.

Newell reaches limit of its brand rollup model

25 Jan 2018

Shares in the maker of Rubbermaid goods and Sharpie pens plunged 20 pct, wiping $3 bln off its value, after it said it would offload nearly a quarter of its businesses, some bought only recently. A tighter focus is overdue, but struggling retailers could make the cleanup harder.

Uber plan highlights SoftBank’s addiction to debt

25 Jan 2018

The Japanese group might raise funds by borrowing against its shares in the U.S. ride-hailing app, or in British chip designer ARM, a report says. That’s plausible: SoftBank prefers maximum financial firepower. Extra layers of leverage will introduce fresh complexity and risk.

P&G’s razor burn calls for radical salve

23 Jan 2018

The Pampers-to-Gillette maker’s sales grew 3 pct in the second quarter. But that’s in spite of continued attrition in its grooming division. P&G is selling more blades but making less money. As activist Nelson Peltz joins the board, P&G’s razors look increasingly disposable.

Richemont reversal is unflattering but necessary

22 Jan 2018

The Cartier owner is paying 2.8 billion euros to purchase online luxury retailer Yoox Net-A-Porter, in which it already has a stake. That is a relatively rich price to buy back a business it used to own. The reversal in strategy is embarrassing but probably for the best.

Nike supplier risks own goal with $1.4 bln buyout

22 Jan 2018

Pou Chen, the world’s biggest shoemaker, is bidding for full control of Hong Kong-listed sportswear retailer Pou Sheng. Rising pressure from e-commerce makes this risky for the buyer. With a fair price on offer, outside investors should let the Taiwanese group get on with it.

Nestlé fashions a more activist-friendly board

19 Jan 2018

The CEOs of Zara-owner Inditex and Adidas are among the Swiss giant’s proposed new heavyweight non-executives. Their e-commerce expertise will help steer efforts to sell more directly to consumers. They also pre-empt any move by activist Dan Loeb to install his own candidates.

Amex is a rare real victim of U.S. tax cuts

18 Jan 2018

The $86 bln charge-card group took a big hit from December’s tax revamp. Unlike at other financial firms, its capital ratios fell below acceptable levels. Suspending buybacks to rebuild the cushion makes sense, but it will delay the benefits of the new low-tax regime.

Amazon HQ2 choices disappointingly undisruptive

18 Jan 2018

The e-commerce giant has cut the field for its second headquarters to 20 prime locations including Dallas, Atlanta and New York. Hundreds of cities hoped Amazon would think outside the box, but a desire for talent and a welcoming environment led it to the usual hot spots.

Carrefour’s bad news will come in threes

17 Jan 2018

Europe’s biggest retailer issued a second profit warning in five months on weaker sales. New CEO Alexandre Bompard will unveil his turnaround plan next week. With a need to ramp up online investment and cut back on hypermarket stores, notably in France, greater pain is to come.

Unilever’s $47 bln Indian arm is real beauty spot

17 Jan 2018

India is set to become the consumer giant’s largest market by sales. Hindustan Unilever dominates sales of soap and is well positioned to fight off rivals. A multiple of almost 50 times forward earnings – more than twice its parent’s valuation – reflects that promise.

Sugar-for-supplements swap will test Nestlé boss

16 Jan 2018

The KitKat maker is selling its U.S. candy arm to Ferrero for a sweet $2.8 bln to invest in products with better growth than junk food. But high valuations for alternatives like vitamin pills limit CEO Mark Schneider’s opportunities to make Nestlé a clean-living champion.

Uniqlo owner has too much cash insulation

12 Jan 2018

Earnings from Fast Retailing underline the turnaround at the Japanese retailer, especially overseas. All those puffer jackets and sweaters have generated a $7 bln-plus cash pile. If Fast does not share more of that with shareholders, troublemakers could show up.

Fujifilm has chance to ink a solid deal with Xerox

11 Jan 2018

A full takeover by the $19 bln Japanese company of its U.S. partner would be gutsy, especially given Fujifilm’s already shaky grasp on overseas outposts. Still, with activist Carl Icahn heaping pressure on the American printer and copier maker, a smaller deal could make sense.

Sainsbury’s is proxy for UK retail’s split fate

10 Jan 2018

The Argos-owner’s food business had a better Christmas than its clothing and general merchandise. UK consumers, stung by high inflation, are spending less on non-essential items, but still need to eat. That means grocers are better able to pass on rising prices to customers.