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Investors show appetite for specialist retailers

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Investors show appetite for specialist retailers

A more positive news story appeared last week amid the seemingly interminable flow of negativity enveloping the retail industry. An S&P Global Market Intelligence analysis found a sharp uptick in U.S. retail IPOs in the first half of 2019 — a twofold increase by volume and almost a threefold jump by value year over year.

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Source: Associated Press

It must be noted that these companies are modest in size and as is the sample pool. The 10 IPOs generated gross proceeds of $3.10 billion, less than half the amount Uber Technologies Inc. raised from its listing in May.

But the data indicates a commonality in the type of retail offerings gaining traction with investors: specialism. It is the tie that binds many of the 2019 retail IPOs. Chewy Inc., the largest of the group, is one of the few online-only pet supplies operators, and it has struck on a happy confluence of a shift in consumer spending trends and industry structures. Another, The RealReal Inc., has carved out a niche in reselling luxury goods that have been individually verified as genuine. Revolve Group Inc., whose share price has almost doubled since its listing, targets millennials with a technology-enabled fashion offering that prefers social media influencers over traditional advertising.

Department stores may be shuttering by the day, but the IPOs of 2019 show that investors are still willing to back retailers with a differentiated offering.

Chart of the week

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Automotive

Renault says no talks taking place with FCA after aborted merger proposal

The French automaker says it is now fully focused on helping Nissan "get back on track" after its alliance partner's profits fell 95% in the most recent quarter.

June sales decline in major auto markets

Sales continued to weaken in major auto markets as the U.S., Europe, China and Japan reported year-over-year sales declines for June.

California reaches deal with 4 major automakers to curb vehicle emissions

A new agreement between California and four major automakers — Ford, Honda, Volkswagen and BMW — undercuts the Trump administration's efforts to weaken Obama-era greenhouse gas standards for cars and light-duty trucks.

China consolidation, tech investments to drive automotive M&A, experts say

An analysis of automotive M&A data shows that smaller transactions are becoming commonplace and Chinese companies are playing an increasingly significant role in deal-making.

Tesla chief technology officer/co-founder moving to advisory role

On an earnings call following disappointing second-quarter results, Musk said Tesla "wouldn't exist" had he not met departing CTO Jeffrey Straubel.

Retail

Retail IPOs raise more than $3B in H1'19

Chart Watch: A total of 10 retail companies went public during the period, seven of which are internet and direct marketing retailers.

Amazon expects 1-day delivery costs to grow in H2

The company said the cost of the program was above its $800 million estimate for the second quarter.

Colgate-Palmolive's Filorga buy a bet on an aging world, CEO says

The French skin care label's business in China was another factor that made the deal attractive, President and CEO Noel Wallace said July 26.

E-commerce penetration reaching tipping point in Europe, SEGRO CEO says

Markets such as Germany, France and Italy will soon see the same changes to their retail and retail property markets that the U.K. has experienced in recent years, David Sleath said during a first-half earnings call.

Food, Beverage & Tobacco

McDonald's rolling out drive-thru menu personalization tech in US, Australia

The fast-food giant is quickly putting its April acquisition of restaurant technology company Dynamic Yield to work, executives said July 26.

Dining out in June: Summer food service sales growth slows YOY

Consumers boosted spending again at U.S. bars and restaurants in June, though gains are slow compared to near-double digit growth a year prior.

FDA calls Curaleaf CBD products 'unapproved' drugs in warning letter

The company, which supplies CBD products to pharmacy chain CVS, is violating federal law with claims that its lotions, vape pens and other products treat diseases, the agency said July 23.

Diageo hopes to continue strong gin growth with emerging markets splash

CEO Ivan Menezes sees opportunities in "places like South Africa, Mexico, Australia, Brazil, more places in Latin America."

Starbucks boosts rewards membership, expands delivery in China during Q3

The global coffee chain is facing fierce competition in China from startup Luckin Coffee.