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Costco to open 1st store in China; Walmart may file for Flipkart IPO in 4 years


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Costco to open 1st store in China; Walmart may file for Flipkart IPO in 4 years


* U.S. retail giant Costco Wholesale Corp. is gearing up to open its first Chinese brick-and-mortar store in Shanghai, in a move to expand beyond its online presence in the country. Costco entered into an investment agreement with state-owned Shanghai Pudong Kangqiao (Group) to establish the headquarters of its Chinese business in Kangqiao, an area of suburban Shanghai, Kangqiao Industrial Area Business Services Platform said in a statement. Shenzhen-based real estate company Galaxy Holding Group also confirmed to S&P Global Market Intelligence that it is opening a membership warehouse store with Costco in Shanghai's Minhang district in the spring of 2019 but declined to give any other details.

* Walmart Inc. may take Flipkart Online Services Pvt. Ltd. public in as early as four years of the closing of its planned deal after agreeing to acquire a 77% stake the in Indian online retailer for about $16 billion. Following the fourth anniversary of the deal closing, minority shareholders holding 60% of Flipkart's shares, acting together, may require the company to launch an IPO at a valuation no less than the amount paid by the Bentonville, Ark.-based retailer. Also as part of the agreement, Walmart or any of its affiliates may request Flipkart to issue additional ordinary shares with an aggregate purchase price of up to $3 billion after the deal closes and on or before the closing's first anniversary.


* Fast Retailing Co. Ltd.'s clothing chain Uniqlo will open its largest store in Southeast Asia, spanning 4,100 square meters, during the fall-winter season of 2018. Uniqlo Manila will be built in Glorietta Complex's Glorietta 5 mall in Makati, Philippines.

* U.K.-based fashion search engine Lyst is expected to raise between £50 million and £100 million in a funding round to be led by luxury goods giant LVMH Moët Hennessy Louis Vuitton SE, Sky News reported, citing sources. The investment of LVMH, which recently launched a Paris-based program to back international startups, may indicate an interest to buy the British online retailer in the future.


* Mothercare PLC is finalizing a restructuring and refinancing plan, which would include access to capital through committed debt facilities and underwritten equity issuance that would stabilize the company's financial condition, the troubled chain said in an exchange filing. The statement comes in response to a report from The Telegraph that the British department store operator plans to seek funds from major investors through an equity share placing. Mothercare also is expected to announce plans of entering a so-called company voluntary agreement, an insolvency procedure that could see the struggling apparel retailer negotiating rents while closing stores, resulting to hundreds of job losses, the report added.


* YOOX Net-A-Porter Group SpA is open to partnerships with Chinese firms as the online fashion retailer aims to strengthen its footprint in the world's fastest-growing luxury market, the Financial Times reported, citing founder and CEO Federico Marchetti. The report comes as Swiss luxury group Compagnie Financière Richemont SA secured a 94.99% stake in YNAP, which according to the Times, planned to grow organically in China. Meanwhile, the Italian company appointed former Sephora Global COO Olivier Schaeffer as its new COO.


* Japanese cosmetics company Shiseido Co. Ltd. reported that attributable net income for first-quarter 2018 grew 106.2% year over year to ¥28.87 billion from ¥14 billion in the year-ago quarter, beating the S&P Capital IQ consensus estimate of ¥19.05 billion. Net EPS came in at ¥72.26, compared with ¥35.05 in the same period a year ago and above S&P Capital IQ's GAAP EPS consensus estimate of ¥43.17, driven by the positive turnaround in consumer spending underpinned by employment improvement and income gains. For the fiscal year ending Dec. 31, Shiseido still expects net income attributable to owners of the parent to increase 137.4% year over year to ¥54 billion, or net EPS of ¥135.15.


* Japanese giant SoftBank Group Corp. is in talks with U.S retail behemoth Walmart Inc. to sell its stake in Flipkart Online Services Pvt. Ltd., The Times of India reported, quoting sources close to the negotiations. A deal may be reached in the next few days, according to the report. Currently, SoftBank is Flipkart's largest shareholder, holding a 22.3% stake.


* Carpetright PLC obtained £15 million in unsecured loan from its largest shareholder, Meditor European Master Fund Ltd., that it will use for operating capital, ahead of its plan to raise about £60 million through an equity capital raising. The British floor covering retailer previously borrowed £12.5 million from Meditor, which now owns a 29.99% stake in Carpetright.

* Consumer electronics retailer Gamestop Corp. said that CEO Michael Mauler left the company after more than three months in the position, citing "personal reasons" for the departure. Daniel DeMatteo, GameStop's co-founder and executive chairman, will take on the additional role of CEO, a position he previously held, while the company's board searches for Mauler's successor.

* Private equity group TPG Capital BD LLC is exploring a sale of U.K.-based discount chain Poundworld Retail Ltd. and has put plans for a restructuring of the retailer on hold, Sky News reported, citing a person familiar with the matter. The move comes after TPG received interest from several potential buyers for the retailer, which is struggling in a difficult retail environment, according to the report. TPG, which purchased a majority stake in Poundworld in 2015, reportedly has hired Deloitte to find a buyer for Poundworld by the end of May.

* Sharp Corp. President and CEO Jeng-wu Tai plans to remain at his role through the year ending March 2020 as he prepares a successor to take over his position, the Nikkei Asian Review reported, citing Tai's message to workers. However, senior executives at the Hon Hai Precision Industry Co. Ltd. consumer electronics unit still deem Tai as "irreplaceable" as he played a major role in the restructuring of the company as well as in securing Sharp's sales partnerships.


* American retail groups warned the Trump administration that its proposed additional 25% tariffs on $50 billion of U.S. imports from China would drive down demand for U.S.-made products and lead to higher costs for American consumers and producers. The National Retail Federation and more than 100 local retail groups said in their letter to the Office of the U.S. Trade Representative, or USTR, that the proposed tariffs would particularly harm farmers, who they said cannot easily find new buyers for their products. The interagency Section 301 Committee, which includes the USTR, will hold a public hearing on the proposed tariffs at the U.S. International Trade Commission on May 15.

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The day ahead

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

In Asia, the Hang Seng was up 1.35% to 31,541.08. The Nikkei 225 rose 0.47% to 22,865.86.

In Europe, as of midday, the FTSE 100 was down 0.20% to 7,709.21 and the Euronext 100 was down 0.13% to 1,069.30.

On the macro front

No notable reports due out today.

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