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Costco December 2018 sales up 7.8% YOY; Constellation Brands cuts FY'19 guidance

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Costco December 2018 sales up 7.8% YOY; Constellation Brands cuts FY'19 guidance

TOP NEWS

* Costco Wholesale Corp. net sales in December 2018 increased by 7.8% to $15.42 billion from $14.30 billion in December 2017. For the five-week period ended Jan. 6, comparable sales of the warehouse club operator grew 6.1% year over year, while e-commerce comparable sales were up 13.6%. Costco's U.S. division recorded a 7.5% growth in comparable sales, Canada division's comparable sales rose 2%, while other international markets grew 2.8%.

* Constellation Brands Inc. shares fell 12.4% on Jan. 9 after it reported earnings for its fiscal third quarter of 2019 that beat analysts' expectations, but slashed its full-year fiscal 2019 guidance including additional interest expense from financing the investment in Canadian cannabis producer Canopy Growth. It now expects reported basis EPS of $12.95 to $13.05 and EPS on a comparable basis of $9.20 to $9.30. The company previously expected reported EPS between $14.10 and $14.25 and comparable EPS between $9.60 and $9.75. For the third quarter, net sales rose 9% to $1.97 billion, up from $1.80 billion in the same quarter of 2017.

FOOD RETAIL & DISTRIBUTION

* Swedish grocery chain ICA Gruppen AB (publ) reported a 2.3% year over year sales increase in December as the company's store sales came in at 11.2 billion Swedish kronor. According to the release, the company's sales for the fiscal year 2018 amounted to 118.3 billion Swedish kronor, marking a 3.5% rise compared to a year-ago period. ICA Gruppen's number of stores, as of Dec. 31, 2018, amounted to 1,277, the release said.

* Tesco PLC reported fiscal third-quarter sales fell 0.5% year over year as challenging conditions in Central Europe and Asia offset a robust performance in the U.K. supermarket retailer's domestic business. Tesco attributed the 1.9% year-over-year growth in like-for-like sales in the U.K. and the Republic of Ireland to the relaunch of thousands of its own-brand products. For the six weeks to Jan. 5, encompassing the Christmas and New Year holidays, like-for-like sales increased 1.5%.

* Japanese retailer Seven & i Holdings Co. Ltd. reported that profit for the first nine months of fiscal 2019 rose on strong sales at its overseas convenience stores. For the nine months ended Nov. 30, 2018, net income attributable to the owners of the parent climbed 4.7% to ¥156.27 billion from ¥149.26 billion in the year-ago period. Diluted EPS came in at ¥176.53, up from ¥168.62 a year prior. Revenue during the period grew 13.2% year over year to ¥5.072 trillion from ¥4.480 trillion, largely driven by Seven & i's overseas convenience store operations.

PACKAGED FOODS

* The U.S. Food and Drug Administration has stopped routine food safety inspections of seafood, fruits, vegetables and many other foods at high risk of contamination because of the federal government's shutdown, The New York Times reported, citing the agency's commissioner, Scott Gottlieb. The agency runs the checks on about 160 domestic manufacturing and food processing plants each week, as nearly one-third of these are at a high risk of causing food-borne diseases. Gottlieb added that he was taking steps to resume the safety inspections amid the shutdown, the report added.

* The Kraft Heinz Co. said it is now making natural cheese — including shredded cheese, natural slices, blocks and snacking cheese — with milk from cows raised without the artificial growth hormone rbST, which is given to cows to help increase milk production. The company made this move after finding that over half of its customers prefer the product without added hormones.

* Oreo and Cadbury owner Mondelez International Inc. is suing its insurance company, Zurich, which refused to pay out a $100 million claim for damage caused by the NotPetya cyberattack, the Financial Times reported. In court papers filed in Illinois, the food retailer claimed it had been hit twice by NotPetya, with 1,700 of its servers and 24,000 laptops rendered "permanently dysfunctional." Mondelez described Zurich's refusal as "unprecedented." Both companies declined to comment on the case.

TOBACCO & SMOKING PRODUCTS

* U.S. tobacco giant Altria Group Inc. said in an SEC filing that its Altria Group Distribution Co. CEO and president, Craig Johnson, will retire March 1, and Ivan Feldman, its vice president and controller, also intends to retire from the group effective April 30.

RESTAURANTS

* French food caterer Sodexo SA said its revenues hit €5.67 billion in the three months to Nov. 30, 2018, up 2.6% compared to the same period a year ago. The company maintained its growth outlook of between 2% and 3%, as the revenue growth in the quarter was in line with expectations due to stable growth in Europe and solid growth in North America. Sodexo also said Sarosh Mistry will become region chair of North America, effective March 1, replacing Lorna Donatone, who will retire from the position.

INDUSTRY NEWS

* India's sugar exports are expected to miss its 5 million-ton target, amid a strengthening rupee and falling global prices, which make shipments unappealing despite a government push for overseas sales, Reuters reported, citing industry officials. Sugar, according to a dealer, is being sold at about 29,200 Indian rupees per ton in India, while exporters are getting less than 19,000 rupees a ton. The country is likely to export 2.5 million to 3.5 million tons of sugar in the 2018-19 marketing year that started Oct. 1, 2018, the report added, citing five dealers and three industry officials.

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The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, the Hang Seng increased 0.22% to 26,521.43, while the Nikkei 225 fell 1.29% to 20,163.80.

In Europe, around midday, the FTSE 100 fell 0.11% to 6,899.04 and the Euronext 100 was down 0.54% to 930.56.

On the macro front

The EIA natural gas report, Fed balance sheet and Jobless Claims consensus is due out today.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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