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Sears braces for liquidation; Starboard urges Dollar Tree to sell Family Dollar

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Sears braces for liquidation; Starboard urges Dollar Tree to sell Family Dollar

TOP NEWS

* Sears Holdings Corp. is taking steps to prepare for a possible wind-down after Chairman Eddie Lampert's $4.4 billion bid to keep the bankrupt department store chain running failed to meet bankers' conditions, Bloomberg News reported, citing people with knowledge of the matter. CNBC earlier reported that advisers raised concerns about Lampert's bid — such as its inability to cover fees and vendor payments — and the approximately $1.8 billion in the form of forgoing debt to ESL offered by Lampert. Perry Dean Schwartz, one of seven members of the retailer's senior management team, resigned from Sears, effective Jan. 4, to pursue other business opportunities, as the company considers options to keep itself afloat.

* Starboard Value LP is urging Dollar Tree Inc. to explore strategic alternatives, including a sale, for its Family Dollar Stores Inc., following the chain's "meaningful underperformance" since the $9 billion acquisition closed in July 2015. The hedge fund has built an approximately 1.7% stake in Dollar Tree, making it one of the company's largest shareholders, according to a letter sent by Starboard to Dollar Tree president and CEO Gary Philbin. The firm is also calling for the retailer to initiate a "wide-scale market test of a multi-price point strategy at Dollar Tree bannered stores" to create value for its shareholders. In response, Dollar Tree said its board and management "remain focused on delivering long-term value to all shareholders." The general merchandiser added that its board and committee "will evaluate" Starboard's nominees if the activist investor proceeds with its nominations.

TEXTILES, APPAREL AND LUXURY GOODS

* California-based apparel retailer Charlotte Russe Inc., owned by private equity firm Advent International Corp., hired Guggenheim Securities to explore options, such as a possible sale of the business or bankruptcy, The Wall Street Journal reported. The struggling retailer is looking to sign a deal, such as potential partnerships or a sale to another retailer, that will allow Charlotte Russe to increase its size and scale to avoid a Chapter 11 filing.

* Italian apparel retailer Valentino appointed Gianfranco Ditadi as president and CEO of its North American operations, Women's Wear Daily reported, citing market sources. Ditadi will join the company at the end of February and replace Sandra Jovicic, who left in September 2018, the sources reportedly said.

E-COMMERCE

* Naspers Ltd.-owned OLX Group said it purchased Indian online job search portal Aasaanjobs Pvt. Ltd. for an undisclosed amount, The Times of India reported, citing a company statement.

* Retail giant Alibaba Group Holding Ltd. has taken action against sellers that send shipments to India marked as "gifts" to avoid tax, The Times of India reported. The move comes more than a week after the Indian government imposed a ban on such items and said it will address the issue in the draft e-commerce policy taking effect Feb. 1. "AliExpress has strict measures in place to take action against items that contain descriptions that encourage tax avoidance. Any infringing sellers found on the platform face penalties including store closure," an Alibaba spokesperson told the publication.

FOOD AND STAPLES RETAILING

* Rite Aid Corp. is considering a reverse stock split to boost its share price after the NYSE warned the drug store chain of potential delisting following its noncompliance to the bourse's share price requirement. The exchange's trading rules require a listed company to maintain a share price of at least $1 per share for a consecutive 30 trading-day period. Rite Aid has six months to prop its share price to above $1.

* McColl's Retail Group PLC appointed Robbie Bell its CFO, effective Jan. 17, succeeding Simon Fuller, who will leave the company Feb. 22 after a handover period. Bell will join the British convenience chain from Applegreen PLC-owned Welcome Break Ltd., where he is CEO.

* Switzerland-based Zur Rose Group AG completed its purchase of the e-commerce activities of online pharmacy medpex, which includes Comventure GmbH, Visionrunner GmbH and medpex wholesale GmbH in Germany, as well as Apotheke esando BV in the Netherlands.

HYPERMARKETS AND SUPERCENTERS

* Wm Morrison Supermarkets PLC is reducing the price of more than 900 "store cupboard favorites" by an average 20% off items in a bid to maintain its market share, The Guardian reported. "Morrisons is unlikely to be the last one to cut some specially chosen prices," an Aldi Einkauf GmbH & Co. oHG spokesman said, adding that the German chain is still "cheaper to shop in" compared with its British rival. The move comes days before the release of retail trading updates that will likely show Aldi and Lidl Stiftung & Co. KG dominating the Christmas week sales and grabbing a majority of the market.

HOUSEHOLD DURABLES AND SPECIALTY RETAIL

* GameStop Corp.'s share price jumped 12% on Jan. 4 following reports that the company is looking to restructure its business, CNBC reported. Sycamore Partners Management LP and Apollo Global Management LLC may bid for the company, and a deal could be announced by mid-February, according to The Wall Street Journal, citing people familiar with the matter. Both Apollo and Sycamore Partners did not respond to the newspaper's request for a comment on the deal.

HOTELS, RESORTS AND CRUISE LINES

* Marriott International Inc. said the number of guests whose personal information was accessed in a data breach of the Starwood reservations system is less than the 500 million previously estimated. The hotelier added that the number of guests whose passport numbers and payment-card numbers were exposed is a "relatively small percentage" of the total records involved. Marriott said it believes the highest number of guest records accessed was 383 million, and about 5.3 million unencrypted passport numbers and 8.6 million encrypted payment-card numbers were involved.

* Philippine's Parañaque court ordered the arrest of Japanese gaming tycoon Kazuo Okada following three criminal complaints filed Dec. 28, 2018, ABS-CBN News reported. Okada, former CEO of Tiger Resorts Leisure and Entertainment Inc., allegedly received $3.1 million in compensation from Tiger Resorts' board. The court also indicted Takahiro Usui, Tiger Resort's director, COO and president, who reportedly facilitated the payment to Okada. "These cases are only intended to destroy my reputation in the business community and discredit all the hard work I have put into the establishment," Okada said in a statement sent by his lawyers to the Manila Standard.

The day ahead

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

In Asia, the Hang Seng was up 0.82% to 25,835.70. The Nikkei 225 rose 2.44% to 20,038.97.

In Europe as of midday, the FTSE 100 fell 0.63% to 6,794.27, and the Euronext 100 retreated 0.48% to 916.89.

On the macro front

The Institute for Supply Management's non-manufacturing index, the TD Ameritrade Investor Movement Index and the factory orders 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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