TOP NEWS
* U.K. department store chain House of Fraser Group Ltd announced the closure of 31 stores with the loss of 6,000 jobs as it seeks to restructure its business in order to secure a capital investment from an Asian company. The closures represent more than half of House of Fraser's portfolio of 59 stores and include its London flagship store on Oxford Street, a prime destination for shoppers, especially tourists. House of Fraser, which traces its roots to 1849, said in a statement May 2 that it had reached an agreement to sell a 51% stake in the company to C.banner International Holdings Ltd., a Hong Kong-listed investment holding company whose retail assets include toy store Hamleys.
* Costco Wholesale Corp. reported net sales of $11.02 billion in May, up 14.1% from $9.66 billion a year ago, as comparable sales across the membership warehouse retailer's global operations grew 11.7%. For the four-week period ended June 3, comparable sales in Costco's Canadian unit recorded the highest growth at 13.0%, while the U.S. saw an 11.7% increase in comparable sales and other international markets were up 9.4%. Meanwhile, e-commerce comparable sales soared 34.4% year over year.
MULTILINE RETAIL
* Poundworld Retail Ltd faces imminent administration as its private equity owner, TPG Capital Management LP, has yet to find a buyer for the discount chain before its rent payment deadline June 24, The Guardian reported. Buy-out specialists Flacks Group and Alteri Investors recently were reported to have been fighting for control over Poundworld, which initially considered closing 100 stores as part of an insolvency plan that would also allow the retailer to reduce leases.
* Target Corp. launched a new home brand called Made By Design that features over 750 items, including bedding, bath accessories, storage solutions, kitchen tools and furniture that range from $1 to $260. Made By Design is the newest home brand introduced by the Minneapolis-based general merchandise retailer, following Opalhouse in February and three new brands — Heyday, Wild Fable and Original Use — rolled out in June. Made By Design will be available in all Target stores and on Target.com beginning June 23.
* Private equity firm Core Equity Holdings has terminated talks to buy Dutch retail chain HEMA B.V. for about €1 billion, Dutch newspaper De Telegraaf reported, citing sources close to the negotiations. According to the report, Core Equity, based in Brussels, aborted the deal due to the terms of Hema's agreement to share profits from online sales with franchise holders. The agreement meant that Core Equity would be unable to execute its e-commerce strategy, the newspaper said.
E-COMMERCE
* Amazon.com Inc. will create 2,500 permanent jobs in the U.K. in 2018, reflecting the e-commerce giant's growing investments in British research and development, increasing customer demand, and continued expansion of its products and services. The company, which expects to raise its U.K. employee headcount to 27,500 by 2018-end, is hiring for vacancies in its head office and fashion photography studio in London, its development centers in Cambridge, Edinburgh and London, and its customer service center in Edinburgh.
FOOD AND STAPLES RETAILING
* CVS Health Corp. announced that CFO David Denton will leave the drug retailer after CVS completes its $69 billion acquisition of health insurer Aetna Inc., which is expected in the second half of 2018, subject to regulatory approval. Denton will be succeeded by Shawn Guertin, Aetna's CFO, executive vice president and chief enterprise risk officer, who also will be named executive vice president of the pharmacy healthcare services provider. After the deal closes, Karen Lynch also will become a CVS executive vice president and remain in her role as Aetna's President, while Aetna Chairman and CEO Mark Bertolini will join the CVS board.
HYPERMARKETS AND SUPERCENTERS
* Walmart Inc. settled a lawsuit filed by a transgender woman who alleged that the company wrongfully terminated her employment for complaining about harassment and discrimination while working at one of the retailer's Sam's Club warehouse outlets, Reuters reported. The terms of the settlement were not disclosed. Although the Arkansas-based company and Charlene Bost, the plaintiff who filed the lawsuit Dec. 27 in a North Carolina U.S. District Court, agreed to dismiss the case, Walmart reportedly did not admit to any wrongdoing.
* Wal-Mart de México SAB de CV's consolidated sales in May grew 8.9% year over year to 49.84 billion Mexican pesos from 45.76 billion pesos in the prior-year period, according to a June 6 release. The Mexican unit of Walmart Inc. reported that total sales in the country increased 8.6% year over year to 40.54 billion pesos from 37.32 billion pesos in the prior-year period, and comparable store sales rose 7.2%. In Central America, Walmex posted a 10.2% year-over-year increase in total sales to 9.30 billion pesos from 8.44 billion pesos in May 2017, while comparable store sales in the region increased 2.3% in constant currency terms.
HOUSEHOLD DURABLES AND SPECIALTY RETAIL
* PetSmart Inc. hired investment firm Houlihan Lokey Inc. as the struggling pet specialty retailer looks to cut down its $8 billion debt burden, Reuters reported, citing people familiar with the matter. Although PetSmart's debt will not mature until 2022, sources told the news outlet that the company, owned by private equity firm BC Partners, sees its bonds' decline in value as an opportunity to slash its debt pile.
* Five Below Inc. lifted its fiscal 2018 outlook after reporting first-quarter earnings that exceeded expectations. For the thirteen weeks ended May 5, the specialty retailer posted adjusted diluted EPS of 35 cents, more than twice the 15 cents in the year-ago quarter and ahead of the S&P Capital IQ mean consensus normalized EPS of 33 cents. Five Below now expects diluted income per common share for full year 2018 to come in between $2.42 to $2.48 from a prior guidance of $2.36 to $2.42 and affirmed its previously announced plan to open 125 stores in 2018.
* Steinhoff International Holdings NV received creditor support for the restructuring of Steinhoff Europe AG and Steinhoff Finance Holding GmbH, two holding firms integral to the South African parent's European and U.S. operations. The creditors agreed to provide the two companies support measures until June 30 to help them stabilize their financial positions. They also agreed to subordinate approximately €154 million of their contractual rights, as well as interest payments accruing to the creditors in June, against both Steinhoff Europe and Steinhoff Finance Holding.
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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 0.81% to 31,512.63, while the Nikkei 225 rose 0.87% to 22,823.26.
In Europe, around midday, the FTSE 100 fell 0.09% to 7,705.22, and the Euronext 100 rose 0.18% to 1,061.99.
On the macro front
The jobless claims report, the quarterly services survey, the EIA natural gas report, the consumer credit report, the Fed balance sheet and the money supply report are due out today.
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