TOP NEWS
* Wesfarmers Ltd.'s earnings for full-year fiscal 2018 took a hit from its failed venture into the U.K. retail market, with profit plummeting 58.3% year over year. For the fiscal year ended June 30, net profit attributable to members of the parent dropped to A$1.20 billion from A$2.87 billion in fiscal 2017, and also fell below the S&P Global Market Intelligence consensus estimate of A$1.33 billion. Wesfarmers attributed the profit slide to an A$1.41 billion loss from discontinued operations, which reflects results and significant items for the Bunnings U.K. and Ireland unit that comprised operations of Homebase, as well as for the Australian Curragh coal mine.
* Wesfarmers said Guy Russo will retire as CEO of its department stores division, which includes the Target and Kmart chains in Australia, and also from his role as managing director of Target. Ian Bailey will replace Russo as head of the company's department stores division, effective Nov. 1, in addition to his role as managing director of Kmart.
* Sears Holdings Corp. CEO Eddie Lampert, through his investment vehicle ESL Investments Inc., has submitted a nonbinding proposal to acquire the department store chain's Kenmore and Sears Home Improvement Products Inc., or SHIP, units. The firm said it is prepared to enter into definitive agreements as early as Aug. 24. Through his hedge fund, Lampert issued a letter to Sears' special committee, proposing to acquire Kenmore for $400 million and SHIP for $70 million. ESL Investments is also considering acquiring the Parts Direct business of the Sears Home Services division but said it is prioritizing the transactions involving Kenmore and SHIP.
TEXTILES, APPAREL AND LUXURY GOODS
* A special committee of Perry Ellis International Inc.'s board terminated talks with Randa Accessories Leather Goods LLC, which made a revised unsolicited bid to acquire the apparel maker in early August after Perry Ellis' largest licensor was unwilling to consent to the arrangement. Randa had offered to increase its bid again if Perry Ellis founder George Feldenkreis and his son Oscar Feldenkreis, the current CEO, help the leather goods-maker obtain the consent of the licensor for the deal. "Failing this support, we see no viable path to a transaction between Randa and [Perry Ellis]," Randa CEO Jeffrey Spiegel said in a letter that Perry Ellis cited in the statement.
* Tapestry Inc. is looking to drive growth across its three brands — Coach, Kate Spade and Stuart Weitzman — by focusing on Chinese consumers, the company's executives said in an analyst call. "Across all of our brands, we are focused on maximizing the opportunities with Chinese consumers both locally and globally," Tapestry CEO Victor Luis, said on a call after releasing fiscal fourth-quarter earnings that beat analyst expectations.
* Tiffany & Co. plans to revamp its 10-story flagship store in Manhattan, N.Y., starting in the spring of 2019 and expects to complete the project in the fourth quarter of 2021. The jewelry company will temporarily expand its retail space to the adjacent street in order to minimize disruption during the renovation. The retailer expects the investment to increase its capital expenditures as a percentage of global net sales by 1% to 2% each year for three fiscal years beginning Feb. 1, 2019.
* ANTA Sports Products Ltd. reported that revenue for the first half of 2018 grew 44.1% year over year to 10.5 billion Chinese yuan, marking the footwear-maker's fifth consecutive year with double-digit growth and its "highest for the last couple of years." For the six months ended June 30, ANTA Sports posted basic EPS of 72.44 Chinese fen, a 29.4% increase from the year-ago period, driven by "a year of explosion" at sports brand Fila, which initiated the company's multibrand growth in China.
E-COMMERCE
* Alibaba Group Holding Ltd. agreed to host Ford Motor Co.'s Autonomics cloud-based platform for connected cars in China. Under the agreement, Alibaba Cloud will run Ford-owned Autonomic's Transportation Mobility Cloud, an open platform that enables communication between cars and city infrastructure.
* Supermarket operator The Kroger Co. will make its first move overseas by selling its products on Alibaba's Tmall Global platform in China, an Alibaba spokesperson told S&P Global Market Intelligence. "We are pleased to work with Kroger to bring their Kroger Simple Truth products to the Chinese market through our Tmall Global platform to meet Chinese consumers' growing demand for high-quality, organic food products," the spokesperson said. Kroger did not immediately respond to S&P Global Market Intelligence's request for comment.
FOOD AND STAPLES RETAILING
* Seven & i Holdings Co. Ltd. reported that total sales of Seven-Eleven Japan grew 4.4% year over year in July. Same-store sales increased 1.6% from the same month a year earlier as the 0.4% decline in customer numbers was offset by the 2% increase in average spending per customer. Meanwhile, the retailer's overseas unit, 7-Eleven Inc., saw a 35.5% growth in net sales in July. The number of stores went up to 20,437 in July from 20,392 in June.
HYPERMARKETS AND SUPERCENTERS
* Walmart Inc. said it partnered with U.S. talk show host and comedian Ellen DeGeneres to launch a women's fashion line called EV1 that will be sold online and in the retailer's stores. The denim-focused brand will feature about 60 items ranging from clothing and accessories to footwear, all priced at $30 or less. The new collection will be available online from Sept. 10, with new items launching seasonally.
HOUSEHOLD DURABLES AND SPECIALTY RETAIL
* Activist investor Starboard Value LP has halved its stake in Newell Brands Inc. to about 8.8 million shares from 18.5 million shares in the consumer products-maker as of April 11, according to regulatory filings. The development comes about four months after the parties agreed to end the proxy battle, following the decision of billionaire Carl Icahn to reduce his voting bloc to three of the 12 Newell board seats after the May 15 annual shareholder meeting.
* The Trump administration's tariffs on imported lumber and appliances are driving up cost pressures for Home Depot Inc. as executives said the overall impact on the home improvement chain could be managed. "I would say at this point that the tariff environment is manageable. And given our sales and our size and scale, it's even that much more manageable," Home Depot Chairman, CEO and President Craig Menear said on the company's second-quarter earnings call. Home Depot is not passing all of the tariff-related price increases on to consumers, the executive added.
* U.K. home improvement chain Homebase said it expects to shut down at least 42 stores, putting about 1,500 jobs at risk, as part of a company voluntary arrangement, or CVA, proposal. The move confirms earlier reports that the chain's new parent, private equity firm Hilco Capital LP, plans to launch a CVA for the retailer through restructuring adviser Alvarez & Marsal. Homebase said it is seeking approval from creditors on a proposed plan to cut its costs in the U.K. and Ireland at the scheduled vote on the CVA on Aug. 31. Hilco acquired Homebase from Wesfarmers Ltd. in May for £1.
* CK Hutchison Holdings Ltd. subsidiary A.S. Watson Retail (HK) Ltd. partnered with L'Oréal SA to launch a concept store in China called Colorlab by Watsons in a bid to reach younger shoppers. The "experience-based" store has a virtual makeup service that allows shoppers to mix and match some looks with in-store makeup artists who can offer advice to customers. Over 30% of the products will be from the L'Oréal Paris and Maybelline brands, while the rest of the items on display will be from Watsons' own makeup line and other cosmetics brands.
The day ahead
Early morning futures indicators pointed to a lower opening for the U.S. market.
In Asia, the Hang Seng was down 1.55% to 27,323.59, and the Nikkei 225 fell 0.68% to 22,204.22.
In Europe, around midday, the FTSE 100 was down 0.87% to 7,544.43, and the Euronext 100 slipped 0.58% to 1,055.11.
On the macro front
The MBA mortgage applications report, the retail sales report, the Empire State Manufacturing Survey, the productivity and costs report, the industrial production report, the Atlanta Fed Business Inflation Expectations report, the business inventories report, the housing market index, the EIA petroleum status report and the treasury international capital report 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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