Consumer Products and Services

German discounters open new front in trolley wars

27 May 2016

Lidl is investing 6.5 billion euros to soup up its stores, half of that outside Germany; peer Aldi is upgrading too. That will advance their attack on the middle market. If they can do it without raising prices, big rivals like UK grocers Tesco and Sainsbury will be in trouble.

New M&S boss fashions disappointing revamp

25 May 2016

Turnaround plans unveiled by new chief Steve Rowe have one big wrinkle. His makeover for the UK retailer involves short-term pain but may not solve its main problems - fierce competition for customers and a muddled offering. Bolder thinking is needed in such a tough sector.

Richemont accepts new tempo for luxury watches

20 May 2016

The Cartier owner faces a drawn-out downturn in demand. April sales fell 15 percent, even compared to a terrible 2015. The Swiss group can cut costs, but the bigger problem is that luxury watch demand is less resilient than it once seemed.

Burberry’s cloth-cutting looks too tame

18 May 2016

The British brand plans to rip out 100 million pounds of costs after a 10 percent drop in full-year pre-tax profit. But despite speculation, there was no move to lighten the load on lead designer and Chief Executive Christopher Bailey. That may be a missed opportunity.

Tesco boss spies a possible bargain

13 May 2016

Dave Lewis is opting to take 75 pct of his bonus in shares. That aligns his 4.6 mln pound pay package better with shareholders, whose stock slumped last year. Since Tesco sales are now turning round, his timing may be shrewd. The group stocks a lot of things, but not hair shirts.

Alibaba’s strong core comes with shaky periphery

5 May 2016

The Chinese e-commerce group’s revenue soared 39 pct year on year, faster than volumes of stuff sold on its sites. Alibaba also disclosed losses on its fintech, services and logistics affiliates. Those trends can co-exist, so long as online shopping growth stays sturdy. 

British store wars get simpler but no less fierce

4 May 2016

Sainsbury is disclosing fees suppliers pay to get their goods on shelves – equivalent to half its operating profit. Such complex agreements are falling out of favour with frustrated shoppers. Ditching them should help increase sales but won’t do much to end an ongoing price war.

Next models three unflattering UK trends

4 May 2016

The fashion chain lowered its sales outlook for the third time in five months and cut profit guidance. Life will only get harder. New players like Sainsbury’s are selling clothes, foreign rivals are better judges of what shoppers want, and consumers may be nearing “peak stuff”. 

Gucci misses opportunity in "hell handbag" spat

29 Apr 2016

The Italian label wants Hong Kongers to stop burning paper versions of its $3,000 handbags at relatives’ graves. While it has a point, legally speaking, Gucci’s ire is misplaced. Wanting to spend the afterlife with a Gucci handbag is the ultimate pledge of brand loyalty.

Private equity gets loco with pricy Spanish IPOs

29 Apr 2016

Telepizza’s dismal IPO debut joins a list of recent duds sold on the market by buyout barons. Investors in other IPOs like Parques Reunidos are getting more cautious. By pushing for high prices, buyout barons may be shooting themselves in the foot.

Too many cooks spoil UK restaurants’ broth

29 Apr 2016

Shares of the Restaurant Group, owner of the Chiquito chain, dropped a fifth after it warned of slower sales, hit by lower footfall in shopping malls. The sector is also gorging on overexpansion. New stores are opening at twice the speed of consumer spending on eating out. 

Losing bidder is indirect winner in Darty bid

27 Apr 2016

Furniture retailer Conforama has pulled out of a frenzied bidding war for the European electrical store. Their prudent approach that doesn’t count synergies made the price too high. Rival Fnac’s final bid is 70 pct above its original offer - but still looks like a good deal.

What’s the difference between Adidas and Nike?

27 Apr 2016

Around 30 billion euros. That’s how much more the German sportswear maker might be worth if it could match its U.S. rival’s operating margins. First-quarter earnings were strong and Adidas is getting more profitable. But incoming CEO Kasper Rorsted is starting from a low base.

Luxury groups should focus their FOMO on Iran

25 Apr 2016

With $32.6 bln of frozen offshore cash to be repatriated post-sanctions and GDP to grow 6 pct next year, Tehran can be a magnet for high-end consumption. A lack of infrastructure and political volatility are reasons to hesitate. Offsetting that is the risk of missing out.

Darty’s spiraling price tag can still go higher

21 Apr 2016

Fnac has upped its offer for the electrical goods retailer to 779 mln pounds, and added cash. Its bid is now higher than rival Conforama’s latest one, although the South Africans can probably offer more. But, after finding additional synergies, so now can Fnac.

Ericsson’s Nokia-Alcatel fear rings in new changes

21 Apr 2016

The $30 bln Swedish mobile equipment maker is tinkering with its restructuring after a bad first-quarter miss. Ericsson promises no new savings, just higher costs for reorganisation this year. It looks desperate, but may help Ericsson square up to the newly merged Nokia-Alcatel.

L’Oreal valuation applies too much gloss

19 Apr 2016

The French cosmetics group reported a 4.2 percent rise in like-for-like sales in the first quarter, in a tough environment for consumer goods. But thin coverage in emerging markets relative to peers, and less exciting growth, suggests the overall picture is less pretty.

One thing Tesco doesn’t stock is pricing power

13 Apr 2016

Same-store sales and operating profit are rising, but prices on the UK grocer’s shelves keep falling. It’s a problem for rivals too. Tesco used to be dominant in a concentrated market; now it’s just plain big. Consumers’ gain will be investors’ loss for the foreseeable future.

Sharp take-under oddly denotes Japanese success

30 Mar 2016

Foxconn has clinched control of the ailing Japanese display maker for a reduced $3.5 bln. Fixing Sharp will be a tough task for the Taiwanese giant led by Terry Gou. But this historic, if somewhat ugly and complicated deal, is Exhibit A that Japan Inc is capable of reform. 

Sherwin-Williams deal tinted trustbuster yellow

20 Mar 2016

The U.S. paint maker is buying rival Valspar for $11.3 bln. A healthy premium exceeds the value of expected cost savings, raising doubts about the financial logic. And Sherwin’s avowed confidence of passing regulatory muster is colored by terms that may give shareholders pause.