Consumer Products and Services

Luxury watch deal builds on Hong Kong shell pile

1 Mar 2017

Luxury watch retailer Hengdeli wants to sell its prized China business to its chairman and leave stakeholders Swatch and LVMH with a gutted listed entity. Proliferating empty shells is a real problem in Hong Kong. Better to force a buyout, or block such sales.

Viewsroom: We need to talk about Uber

23 Feb 2017

A former employee accused the ride-hailing company of sexual harassment and gender discrimination. It’s not only bad form but yet another roadblock for money-losing Uber. Plus, where do Kraft Heinz and its owner 3G go after their failed $143 billion bid for Unilever?

Unilever may be tempted by artificial sweeteners

22 Feb 2017

After escaping Kraft Heinz's $143 billion bid, the Marmite maker said it will focus on boosting shareholder return. The assumption is that it does so organically, or via small deals. But a big move, like buying Colgate, could get the share price up - if Unilever could stomach the execution risk.

Warren Buffett’s elephant chase gains urgency

21 Feb 2017

The decision by Kraft Heinz to abandon Unilever leaves both companies with some soul-searching to do. Berkshire Hathaway, which would have backed the $143 bln takeover, is left to reconsider how to deploy $85 bln of cash, its biggest stockpile ever. Bolt-on deals only go so far.

Kraft Heinz has to settle for marinating Unilever

19 Feb 2017

The ketchup-and-cheese giant withdrew a $143 bln bid for its Anglo-Dutch rival after an inopportune leak put British politicians' knickers in a twist. But the idea of pairing 3G's ruthless cost management with Unilever's bent for innovation is embedded in shareholders' brains.

Kraft Heinz may have to pass hat to buy Unilever

17 Feb 2017

The wily acquirers at 3G found a soft target in the Anglo-Dutch group. Even with generous assumptions about lifting Unilever's margins, the $143 bln deal would push debt above five times EBITDA. Kraft's owners, including Warren Buffett, will need to pitch in to sweeten the bid.

Nelson Peltz picks good time to scrub P&G

15 Feb 2017

The $230 bln Tide-to-Crest conglomerate was improving steadily even before the pushy investor came calling. While Gillette faces bigger threats, Peltz's proposals for P&G are a mystery for now. Either way, consumer stocks are well positioned for a tougher economic environment.

Heineken’s taste for volatile growth faces a test

15 Feb 2017

The Dutch brewer reassured investors by promising to further improve operating margins in 2017. Its confidence owes much to a foothold in rapidly growing beer markets. But increased economic risks and competition in countries like Mexico and Vietnam threaten its optimistic glow.

Body Shop buyout risks being far from fragrant

13 Feb 2017

L’Oreal is mulling a sale of the UK cosmetic chain. Higher margins at L’Occitane imply a buyout firm with retail nous could squeeze out more profit. But the chain’s fading appeal means its new owner would be just as likely to take a bath – and not a nicely scented one.

China will make or break Reckitt’s $17 bln deal

10 Feb 2017

The cleaning products-to-condoms group is paying $90 a share in cash for baby formula-maker Mead Johnson. Cost savings only cover about half the $3.8 billion premium. Whether it can make up the balance will depend largely on boosting sales in the People's Republic.

Yum China’s soggy pizza is a turnoff for investors

8 Feb 2017

The group behind KFC in China turned in a decent debut set of earnings as a public company. But same-store sales were flat, undershooting rivals McDonald's and Starbucks, due to weakness at Pizza Hut. Yum China needs to serve up better growth to win a higher valuation.

Amazon’s cloud gains are its silver lining

2 Feb 2017

The $400 bln online retailer's net income nearly quadrupled in 2016, from a low base. Its web-services division powered onward. But Amazon may spend more than analysts thought in the first quarter, which dinged the volatile stock. CEO Jeff Bezos still prefers growth to profit.

Metro AG could be winner in Tesco’s wholesale deal

27 Jan 2017

The German retailer plans to split and form a retail-wholesale group not dissimilar to the British supermarket's 3.7 bln pound acquisition of Booker. If the market's view on Tesco's tie-up is any guide, Metro can argue its own investors aren't giving it full credit.

Carrefour’s contrarian strategy fails to stack up

19 Jan 2017

Revenue in the grocer's French hypermarkets fell 1.2 percent in Q4 - the fifth consecutive quarter of negative like-for-like sales. Carrefour is more wedded to troubled big-box retail than European peers. Proceeds from an IPO of its property arm would be best spent elsewhere.

Cox: Quest begins for immaculate M&A conception

17 Jan 2017

Dealmakers, many of them gathering in Davos this week, will be on the hunt for mergers that can keep the boom rolling while satisfying President-elect Donald Trump's obsession with jobs. That means synergies are out and "transformation" is in. Shareholders may pay the price.

UK retailers offer belated gift for economic bulls

11 Jan 2017

Sainsbury's and Morrisons both beat sales expectations over Christmas. Such numbers are closely watched because some general retailers make up to 45 pct of annual sales over the period. Consumer sentiment is as important as the amount spent. The signs so far remain encouraging.

Uber’s $70 bln value accrues mainly to customers

22 Dec 2016

Exiting cutthroat China should help, yet the ride-share giant may still lose $2.8 bln in EBITDA this year. Competition is tough even in U.S. cities like New York. Economics suggests Uber is valuable to its passengers. Turning a profit for investors, though, is a different story.

Russian retailer finds tolerable M&A escape hatch

14 Dec 2016

The majority owner of consumer electronics group M.video is selling out to billionaire Mikhail Gutseriev. Given the buyer has scope to drive synergies with similar assets, the 17 pct premium looks slim. Weak Russian growth and online competition make it more palatable.

New Hertz CEO faces tough drive out of ditch

14 Dec 2016

Kathryn Marinello has a great résumé. The problem is that she's the $2 bln rental-car outfit's third boss in two years, and activist investor Carl Icahn looms in the back seat. Earnings just took a hit, leverage is high, and the sharing economy is undermining Hertz's model.

Kering shows up luxury’s diversity problem

14 Dec 2016

Unlike peers, Gucci's owner now has a relatively progressive new global parental leave policy. Women also make up two-thirds of Kering's board. Beyond that, the sector is a relative underperformer on diversity - even though at some labels women drive 80 pct of sales.