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Lampert raises Sears takeover bid; Target holiday comparable sales rise 5.7% YOY

TOP NEWS

* Sears Holdings Corp. Chairman Eddie Lampert boosted his takeover bid for the department store chain to $5 billion from $4.4 billion, a move that could potentially save the company from going into liquidation, Reuters reported, citing people familiar with the matter. In the revised bid, Lampert, through an affiliate of his hedge fund, ESL Investments Inc., reportedly agreed to cover $300 million of tax and merchandise expenses that Sears has incurred since filing for bankruptcy protection. Meanwhile, about 68,000 of the company's employees are demanding a hardship fund as the department store chain inches closer to liquidation, according to another Reuters report, citing involved labor organizations. The move echoes the steps taken by Toys R Us Inc. workers when the toy retailer went bankrupt. A Sears spokesman reportedly declined to comment.

* Target Corp. posted a 5.7% year-over-year increase in comparable sales for the combined November/December 2018 period, driven by strong store traffic and an increase of 29% in comparable digital sales. The general merchandise retailer continues to expect full-year adjusted EPS of between $5.30 and $5.50, as well as GAAP EPS of $5.41 to $5.61. The company also announced that CFO Cathy Smith will retire from her role once Target names a successor, after which she will move to an advisory position until May 2020.

TEXTILES, APPAREL AND LUXURY GOODS

* Japan's Fast Retailing Co. Ltd. reported a 6.4% year-over-year drop in fiscal first-quarter profit amid sluggish domestic sales for its flagship apparel brand Uniqlo. For the three months ended Nov. 30, 2018, profit attributable to the owners of the parent fell to ¥73.48 billion from ¥78.54 billion in the year-ago period. The figure missed the S&P Global Market Intelligence consensus GAAP net income estimate of ¥77.11 billion, with three analysts reporting. Meanwhile, the company reaffirmed its outlook for the fiscal year ending Aug. 31, expecting 6.6% growth in attributable profit to ¥165.0 billion and an 8% increase in revenue to ¥2.30 trillion.

* The European Commission opened an in-depth investigation to assess whether the tax treatment of Nike Inc. in the Netherlands is in line with EU state aid rules. In a statement, the commission said two Netherlands-based Nike group companies obtained licenses to use intellectual property rights in return for tax-deductible royalty payments. It said it is concerned that the royalty payments may have "unduly reduced" Nike’s taxable base in the Netherlands since 2006. Nike did not immediately respond to an emailed request for comment.

* U.K. apparel retailer Hardy Amies PLC has gone into administration for the second time after being rescued in 2008, BBC reported. The company, which operates a store on London's Savile Row, reportedly appointed Menzies administrators to seek buyers for its operations and intellectual property.

MULTILINE RETAIL

* Marks and Spencer Group PLC reported group sales for third quarter 2018-19 of £3.04 billion, down 3.9% year over year in constant currency terms, as international sales for the 13 weeks ended Dec. 29, 2018, dropped 15.1% year over year to £262 million. However, the British chain's CEO, Steve Rowe, said the company is "on track" with its transformation plan despite "difficult market conditions."

* Debenhams PLC lenders hired FTI Consulting Inc. to advise on the U.K chain's restructuring plans, Sky News reported. Debenhams, which reportedly has more than £500 million in total borrowings due 2020, intends to close up to 50 stores over three to five years in order to cut costs. The move puts over 4,000 jobs at risk, and the department store operator is expected to consider company voluntary arrangements among its options, the report added.

E-COMMERCE

* While participating in the 2019 Consumer Electronics Show and showcasing Alexa, Amazon.com Inc. was also holding private meetings with third-party sellers in order to talk about its new support service called Marketplace Growth, CNBC reported. As part of the service, which would cost between $30,000 to $60,000 annually, Amazon sellers are assigned a dedicated account manager who will provide, among other things, coaching, training and personalized services to help increase sales on the site. The service is only available to vendors selling in the U.S. marketplace, and to participate, sellers must have an active professional selling account in good standing with Amazon.

* Amazon founder, chairman, president and CEO Jeff Bezos announced on Twitter that he and his wife decided to divorce after pursuing a trial separation. As of Nov. 28, 2018, Bezos owned 16.12%, or $130.59 billion, of Amazon stock, according to S&P Global Market Intelligence data.

FOOD AND STAPLES RETAILING

* 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. The company also maintained its outlook for the full fiscal year ending Feb. 28, which forecasts attributable net income of ¥210.0 billion and EPS of ¥237.40.

* Tesco PLC reported fiscal third-quarter sales fell 0.5% year over year as challenging conditions in Central Europe and Asia to offset a robust performance in the U.K. supermarket retailer's domestic business. In a trading update, Britain's largest supermarket operator said it was confident in its outlook for the full year. In the U.K. and the Republic of Ireland, by far the company's biggest markets, sales in the 13-week period ended Nov. 24, 2018, rose 0.6% year over year on a comparable basis at actual exchange rates. Tesco's shares traded up 4.8 pence, or 2.3%, at 216.6 pence in early-morning trading in London.

* The U.S. government's partial shutdown may delay the court approval process for CVS Health Corp.'s acquisition of Aetna Inc., Reuters reported, citing a Department of Justice court filing. The justice department reportedly said its antitrust division, due to lapse in funding, is unable to process the public comments on the deal's consent decree.

HYPERMARKETS AND SUPERCENTERS

* Costco Wholesale Corp. net sales in December 2018 increased 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%.

HOUSEHOLD DURABLES AND SPECIALTY RETAIL

* Bed Bath & Beyond Inc. shares jumped over 20% in after-hours trading after announcing that the retailer of bed linens and bath items is ahead of its financial plan to slow down the company's profit and earnings decline. For third quarter 2018, Bed Bath & Beyond posted diluted EPS of 18 cents, down from 44 cents in the year-ago period but above the S&P Global Market Intelligence consensus EPS estimate of 17 cents.

* Fnac Darty SA reported a sales loss of about €45 million due to so-called yellow vest protests, a populist political movement that is said to advocate for economic justice. Nevertheless, Fnac Darty said its integration is being finalized according to plan, and it still expects to achieve its goal of €130 million in synergies at the end of fiscal 2018.

* Taiwanese company Perfect Corp., known for its YouCam beauty applications, partnered with Ulta Beauty Inc. and Cosmopolitan magazine to roll out its Beauty 3.0 artificial intelligence and augmented reality solutions. "Our partnership with YouCam will give us insight about how augmented reality experiences can complement the services we offer in Ulta Beauty stores," said Prama Bhatt, senior vice president of Ulta Beauty's digital and e-commerce arm. Beauty 3.0 uses AI technology to recommend products to customers and lets them virtually try out different hair colors.

INDUSTRY NEWS

* Total retail sales for December 2018 in the U.K. remained flat as like-for-like sales declined 0.7%, according to data from the British Retail Consortium. The study noted that only the food sector performed positively during the month as heavily discounted pricing was not enough to encourage shoppers. BRC CEO Helen Dickinson said this is the first time in 28 months that retail sales growth stalled, marking the country's worst December sales performance in a decade and posing a rough start to 2019.

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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, the Fed balance sheet and the jobless claims consensus are 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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