Consumer Products and Services

Fresh flames rise from Sealy’s ever-burning bed

17 Feb 2015

Uppity investor H Partners, alleging serial underperformance and stale private equity directors, wants Tempur Sealy’s CEO fired and a seat on the board. The company and the mattress industry have a torturous financial history. It probably means where there’s smoke, there’s fire.

Costco customers look like winners in Amex scrum

13 Feb 2015

Severing an exclusive deal with the U.S. warehouse retailer has swiped some $8 bln from the card company’s shareholders. Gains at MasterCard and Visa offset only part of that. True to form, Costco shoppers will reap the remaining benefits – at least according to Mr. Market.

Low-growth consumer stocks are pushing the limit

2 Feb 2015

Yield-starved investors are chasing reliable dividend payers. Beside near zero-yield sovereign bonds, 3 pct from stocks such as Procter & Gamble, Diageo and Unilever is easy to like. But there’s little growth in their emerging or developed markets. The stocks look expensive. 

Detroit’s Vegas bet signals wider industry shift

5 Jan 2015

A record 10 carmakers are at the Consumer Electronics Show as gadgetry from connectivity to self-driving shifts into high gear. Regular car shindigs like Detroit’s are bigger. But the stakes in Vegas are higher as tech giants like Google threaten to upend the automotive future.

Uber takes patent office for ride on surge pricing

23 Dec 2014

The taxi app’s claim to own the idea of upping charges in peak hours is a stretch. Like the company’s other dubious IP filings, though, this one can slow rivals, at least temporarily. That may buoy investors anticipating an IPO, but the tactic risks fueling costly patent wars.

Buffett’s $4.7 bln Duracell deal a double positive

13 Nov 2014

Berkshire Hathaway is trading its Procter & Gamble stake for the consumer stalwart’s battery unit. Swapping a reliable staple for a declining business looks odd. But it’s tax-efficient and P&G’s injecting $1.8 bln of cash. Even with that, the seller’s getting a decent price.

Consumer groups miss China’s reform boost

5 Sep 2014

Stocks in sectors targeted for reform, like telecoms, are up as much as 23 percent this year. Consumer staples are down 12 percent. Makers of everyday goods may have less room for obvious restructuring. Yet if reforms succeed in making China richer, they should benefit.

Walgreen encounters uncommon inversion boundary

6 Aug 2014

The drugstore chain will keep flying the U.S. flag even after buying the rest of Swiss-based Alliance Boots for $15 bln. A backlash against corporate emigration may have affected Walgreen’s decision, but harder numbers probably mattered more. Expect more tax arbitrage deals.

P&G boss A.G. Lafley fixing everything but growth

1 Aug 2014

He’s ditching 100 flagging brands after already cutting costs, selling its pet food unit and hiking the dividend. Lafley’s making the $209 bln consumer giant leaner and more focused. But his moves since coming out of retirement have yet to do much to address P&G’s weak sales.

Reckitt pharma spinoff looks like a cold turkey

28 Jul 2014

The UK group is kicking its Suboxone habit. It plans to demerge its prescription drugs unit whose lead product is a heroin substitute. Reckitt is open to a trade sale and that might be more remunerative, but revenue and profit declines mean valuations could be thin either way.  

Captain of industry makes sense for U.S. military

30 Jun 2014

Dysfunction at the agency for veterans has become a major blight for Obama. Enlisting a former CEO of P&G to run it answers criticism of the president’s track record with business. It just isn’t clear that Bob McDonald was the best choice from the corporate talent pool.

Wary Chinese shoppers pressure consumer earnings

28 May 2014

Chinese consumption is flagging. That’s bad for supermarket operator China Resources Enterprise, whose profits fell even as revenue rose. Noodle-maker Tingyi and paper group Vinda spent more to reach thrifty customers. The trend calls high sector earnings multiples into doubt.

Retail bricks battle for clicks appreciation

20 May 2014

Williams-Sonoma is a prime example of a common oddity. The cookware-to-furniture merchant generates nearly half its sales over the web with Amazon-like growth and more profitability. Yet investors pay 10 times as much for the e-commerce king’s earnings. That logic has its limits.

Whole Foods could use a double shot of Starbucks

7 May 2014

The organic superstore hopes to triple its stores despite signs the health-food market is saturating. The coffee chain’s crisis six years ago showed the benefits of running existing shops more effectively over opening new ones across the street from each other.

Energizer split leaves biggest problem intact

30 Apr 2014

The struggling $7 bln batteries-to-tampons group plans to separate into household and personal care companies. That may improve focus, but it’s hard to see how it addresses Energizer’s main challenge: mustering more resources to take on industry gorilla Procter & Gamble.

China’s big pork IPO could be fat or lean

10 Apr 2014

Pig processor WH Group is hoping to raise as much as $7.1 billion in Hong Kong. But the range is huge: the maximum share price is 41 percent above the minimum. It suggests the group’s private equity backers, its 29 banks, and public investors may struggle to agree on a valuation.

P&G avoids a dog’s breakfast in pet-food sale

9 Apr 2014

The toothpaste-to-batteries giant is sending the bulk of its Iams, Eukanuba and Natura brands to Mars for $2.9 bln. Annoyingly, another buyer is still needed for the European arm. But at least this exit doesn’t rely on the tortured P&G mechanics that derailed its last big deal.

P&G’s dividend can withstand the upheaval

7 Apr 2014

The $220 bln consumer goods giant jacked up its shareholder payout by 7 pct, keeping a 58-year streak alive. Market expectations will have influenced P&G’s board. Even so, despite weak growth, a CEO change and an activist investor, there’s still plenty of cash to go around.

Li Ka-shing de-risks with $6 bln Temasek sale

21 Mar 2014

The Hong Kong tycoon has ditched plans to list his retail division by selling 25 pct to the Singaporean investor. The deal crystallizes a decent valuation for Li without the execution risk of an IPO. For Temasek, it’s a bold bet on both consumer growth and private investments.

Safeway shopping cart comes up short at checkout

7 Mar 2014

In the Cerberus-led takeover, new equity and debt, cash, a stock distribution, future sales and even a tax break in theory get to $40 a share, or $9.4 bln. But investors marked Safeway shares down. Goes to show getting to knockout prices is tough for private equity these days.