Consumer Products and Services

China setbacks spoil Australia’s dairy strategy

5 Sep 2017

Aussie farmers have tried to milk China’s growing hunger for infant formula. Rising incomes and the end of the one-child policy made the $19 bln market seem appetising. As often happens in the People’s Republic, intense competition and tough local rules have soured the outlook.

Europe’s consumer giants are overindulging on ads

1 Sep 2017

Companies like Nestlé and Danone spend twice as much on marketing than U.S. peers relative to sales. They defend such profligacy by pointing to superior revenue growth. True, sales are better, but not by much. With activists circling, plump ad budgets are ripe for cuts.

Carrefour’s ills demand Tesco-like revamp and more

31 Aug 2017

The French supermarket said full-year operating profit could fall 12 percent, partly due to stiff competition at home. The grocer’s new CEO faces even more challenges than Tesco’s Dave Lewis did three years ago. Domestic market share is shrinking and its online offering is weak.

British banks edge closer to painful PPI clarity

29 Aug 2017

The UK watchdog is encouraging consumers to claim for mis-sold loan insurance by Aug. 2019. If it works, the 36 bln pounds big banks have set aside so far may not be enough. A firm deadline could make the final bill larger but is a necessary step in fixing finance’s reputation.

An Estee Lauder auction would get juices flowing

25 Aug 2017

Unilever is weighing a bid for the $39 bln makeup firm, says a report with a whiff of summer silliness. It might have its reasons to ponder a deal. But P&G and L'Oreal wouldn't let it go uncontested. With Lauder stock already pricy, the appeal may be more cosmetic than real.

Consumer giants’ disclosure is near sell-by date

25 Aug 2017

Firms that make food and personal-care products are pouring money into startups and young brands. Unilever, the most acquisitive, has made 15 such deals since 2014. Yet they don’t give investors enough information to judge their dealmaking nous. It could be their loss.

Samsonite luggage could travel more

24 Aug 2017

The world's largest luggage-maker reported flat earnings in the first half, as it digests a big acquisition. Alone among fashion stocks, Samsonite offers a unique pure play on travel. But for all its globe-trotting image, it looks over-dependent on American demand.

WPP underestimates pinch from corporate austerity

23 Aug 2017

The ad group cut its 2017 net sales guidance, blaming lower spending by consumer-goods giants which make up about a third of revenue. Boss Martin Sorrell reckons this will reverse. The danger is that zero-based budgeting and shareholder activism make frugality the new normal.

McDonald’s ain’t loving the local Indian recipe

22 Aug 2017

The U.S. burger chain is taking the nuclear option, shutting 169 stores as a spat with a partner boils over. It's one reason McDonald's has fallen behind rivals in a huge potential market. Partnerships are always vulnerable but India's byzantine legal system raises the stakes.

P&G’s best defense shouldn’t be a takeover offense

18 Aug 2017

As the consumer giant faces a proxy fight with activist Nelson Peltz, one idea doing the rounds is to consider an acquisition. The trick is to find a target as alluring as Gillette once was. The more obvious candidates - Colgate, Clorox and Kimberly-Clark - don't really stack up.

Unilever can butter up price for margarine unit

18 Aug 2017

Private equity consortiums are reported to be circling the Anglo-Dutch giant’s spreads business. A bidding war and the rich price paid for Reckitt’s food brands may help Unilever pocket more money. But unappetising returns await any buyer who pays more than 7 billion pounds.

Danone can stomach new activist investor

15 Aug 2017

Hedge fund Corvex’s reported stake in the yoghurt maker may be small, but it puts pressure on management to meet its new margin target. Danone was once shielded from a Pepsi bid by the French state. If new investors bring good ideas and discipline, such defences won’t be needed.

Unilever puts a high price on control

10 Aug 2017

The Marmite maker is paying up to 450 mln euros to buy back preference shares worth less than a third of that price. The premium reflects the securities’ outsize voting rights. Buying them out helps clean up Unilever’s complex share structure – and boost its takeover defence.

Toshiba’s market reprieve could be fleeting

10 Aug 2017

The troubled Japanese group has finally filed audited accounts. Yet it could still be delisted if Tokyo’s stock exchange faults its internal controls, or if it cannot sell a memory unit in time. That would be painful for small investors, though bigger funds might stick around.

Avon makes for a beautiful M&A case study

3 Aug 2017

Let's dedicate a plaque in the Blockheaded Business Decisions Hall of Fame to the door-to-door cosmetics seller. Five years ago, Avon's board rejected a $10.7 bln offer from Coty and recruited Sheri McCoy to be CEO. She now departs after presiding over a near-90 pct wipeout.

Next’s classic model is key to a better look

3 Aug 2017

Sales at the fashion chain returned to growth in the second quarter, helped by better online sales. Next’s direct-sales catalogue gave it a head start over rivals when it comes to selling on the web. It also provides a potential hedge against fewer shoppers in its stores.

Losing its chauffeur is least of AA’s worries

2 Aug 2017

The UK roadside repair group fired boss Bob Mackenzie for gross misconduct and said full-year performance will be worse than expected. AA’s turnaround has disappointed and it remains saddled with debt. The only positive is that it will now be less dependent on one key executive.

P&G shines a light on its board of entrenchment

1 Aug 2017

The $230 bln consumer giant says becoming a director is "not an entitlement" but the result of a very rigorous process. Maybe, but the board looks like a corporate country club of current or former CEOs. Adding Nelson Peltz as a voice for the investor class is still a good idea.

Sony is turning from financial wimp into superhero

1 Aug 2017

Strong quarterly results underline a long turnaround. This will be a boom year for gaming and image sensors, while handset and TV-making have been pruned. Even Sony Pictures, co-producer of the new Spider-Man, is perking up. Shame this hero still looks like a corporate mutant.

Nestlé is behind in consumer goods bake-off

27 Jul 2017

In a slow sales environment, global food giants need a new growth recipe. Danone and Unilever are both buying higher-growth companies and using fashionable cost cutting philosophies to improve profitability. Bigger rival Nestlé is trying too, but less convincingly.