Consumer Products and Services

America Inc. may want to revise China growth plans

22 June 2018

Trade tensions might hit the U.S. stock market from another angle. A Communist Party tabloid just published an op-ed warning Beijing could target DJIA constituents such as Apple and Boeing. The scope of retaliation is limited by economics, but big expansion could be curbed.

Chanel lifts lid on impressive treasure chest

21 June 2018

The private luxury brand opened its books for the first time to reveal larger-than-expected sales of $9.6 billion and a plush 28 percent operating margin. The display nixes fears the Parisian label is flagging. Claims it is not preparing for an IPO or sale are less convincing.

BJ’s goes for refreshingly no-frills IPO

19 June 2018

The discount wholesaler’s private equity owners are aiming for a $2.1 bln valuation. BJ’s resembles pile-'em-high retailer Costco, but priced much more like the more modestly rated Walmart. The lack of a racy growth story or strategic gamble makes it a rarity – in a good way.

Debenhams dips into its emergency stock

19 June 2018

The UK department store is cutting investment and may sell assets, as pressure from online retailers and onerous leases erode its profit. That may help avoid breaching debt covenants, but its competitiveness will suffer. A more radical restructuring is getting harder to avoid.

Xiaomi resets shrill IPO tone

19 June 2018

The Chinese handset maker will delay a mainland listing instead of doing this simultaneously with a Hong Kong flotation. The valuation target also may have fallen to as low as $55 bln. It’s a bad start to a series of market debuts from a new wave of tech giants.

Carrefour tin ear puts fat cats in Macron’s sights

18 June 2018

The supermarket’s ex-boss forwent part of a 13 mln euro payoff after pressure from the French government. It shows that the ex-banker President Emmanuel Macron is no slave to laissez-faire economics. His move to liberalise firing rules makes corporate excess a legitimate target.

Hermes loses niche status in fashion and finance

15 June 2018

The fashion group is joining rivals LVMH and Kering in France’s CAC 40 index. The Hermes family must get used to hoi polloi like ETFs and hedge funds crowding into its stock, and tougher disclosure norms. For companies, like luxury handbags, there’s a cost to going mainstream.

Judges supplement U.S. defences on China trade

15 June 2018

The Supreme Court said courts shouldn’t take foreign governments’ claims about their own laws at face value. The underlying case, over vitamin price-fixing, rumbles on. This decision attacks an inconsistency Beijing has exploited in arguing firms are just following orders.

Ralph Lauren’s growth track runs through China

12 June 2018

The clothier aims to boost revenue by $1 bln by 2023. The 16 percent target seems bold given the label’s recent woes and upheaval in the retail sector. But the quintessential American brand’s provincialism may be its saving grace. It has room to expand in the People’s Republic.

Valuing Xiaomi

12 June 2018

The Chinese smartphone maker is heading toward one of the biggest IPOs in years. A $75 bln valuation is being reported as a possibility. Run the growth, profitability and earnings multiple numbers to see how such a lofty figure might be achieved.

Chinese deal offers DRC miners a rare sign of hope

12 June 2018

State-backed CITIC has poured $560 mln into Robert Friedland’s Ivanhoe Mines. That is an unusual endorsement of the Democratic Republic of Congo, following a punitive new mining code. The move suggests a compromise is still likely, which would benefit Glencore and Randgold too.

Only a bold call dials up $75 bln Xiaomi valuation

12 June 2018

The Chinese company would have to deliver another year of soaring handset sales and double revenue from internet services. Superior profit margins and premium multiples also must be assumed, a Breakingviews calculator shows. Anything less and the IPO will have the wrong number.

China’s $50 bln bid for market calm might backfire

11 June 2018

New funds will guarantee demand for a string of big tech listings. They will also lock up backers' money for three long years, to dampen a frothy market. There could be unintended results: thinly traded stocks that are more volatile and fund investors who regret being trapped.

Ant’s $14 bln haul epitomises private excess

8 June 2018

The Chinese fintech group’s eye-popping funding round cements a $150 bln valuation. Ant raised nearly as much as Facebook and GM did in their IPOs, even as tech valuations cool and regulatory risks loom over Jack Ma’s firm. As insiders pile in, public investors may get squeezed.

Morrisons can pilfer from larger rivals’ trolley

7 June 2018

The merger of J Sainsbury and Walmart-owned Asda leaves the UK grocer in a distant third place. Boss David Potts could counterbid, but drumming up similar synergies looks tough. Better to lobby against the deal, and grab market share and the best shop locations if it goes ahead.

Smurfit Kappa loses a suitor, may gain an activist

6 June 2018

The Irish paper group irritated shareholders by stonewalling a 9 billion euro offer from International Paper. And it trades at a discount to rivals. Hitting ambitious targets would help close the gap, but an impatient investor could push for a breakup.

Hotpot IPO may offer a tasty dip

6 June 2018

One of China’s top hotpot chains is eyeing a $700 mln debut in Hong Kong. It has dealt adeptly with hygiene scandals and is a splash with local consumers, growing blisteringly fast. A push to take its Sichuan cuisine to smaller cities is also something promising for investors to munch on.

China’s bond market faces buyer crisis

5 June 2018

A crackdown on off-balance sheet wheezes is likely to sap banks' appetite for bonds. They are by far the biggest buyers, so their retreat will hurt prices. Yield-hungry entrants might appreciate higher returns, but the coming liquidity drain could destabilise a rickety market.

Walmart throws its BRICs into one basket

4 June 2018

The retailer is taking a $4.5 bln hit to sell most of its Brazil unit to private-equity firm Advent. As with its China - and UK - retreat, Walmart will at least get some benefit if fortunes improve. But it leaves CEO Doug McMillon’s shop even more dependent on India’s Flipkart.

DS Smith’s repackaging could have further to go

4 June 2018

The UK paper group is buying Spain’s Europac for 1.9 billion euros. As online shopping boosts demand for box materials, more European tie-ups are likely. One could be an International Paper deal for DS Smith, if the former’s bid for Smurfit Kappa finds the wastepaper basket.