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Home Depot ups FY'18 EPS outlook; Perry Ellis nears decision on competing bids

TOP NEWS

* Home improvement retailer Home Depot Inc. raised its guidance for fiscal-year earnings as it delivered second-quarter results that beat expectations aided by a rebound from a slow start to the spring selling season. The Atlanta-based company said in a statement that it expected diluted earnings per share for the year ending Jan. 31, 2019, to increase 29.2% year over year to $9.42, up from its previous estimate of $9.31. Home Depot said sales for the year are expected to grow 7% versus 5.3% a year ago. Fiscal year 2018 comprises 53 weeks, compared with 52 weeks in 2017. For the fiscal second quarter ended July 29, Home Depot's diluted EPS jumped 35.6% to $3.05 from $2.25 in the comparable period ended July 30, 2017, above the S&P Global Market Intelligence consensus normalized EPS estimate of $2.85.

* Perry Ellis International Inc. may decide as early as on Aug. 14 between Randa Accessories Leather Goods LLC's revised unsolicited takeover offer of $28.90 per share or the proposed $430 million deal by George Feldenkreis, the company's founder, Women's Wear Daily reported. At least one of Perry Ellis' inbound licensees reportedly chose to stay with the apparel maker when asked about shifting company control to Randa. The clothing company's inbound licensees include Nike Inc., Callaway Golf Co. and PGA Tour, the report said, although it was not immediately clear which of the brands have given a response to Perry Ellis. Most licensing agreements include a clause that allows licensees to terminate a contract if the licensor passes ownership, the report added, citing financial sources and industry experts.

TEXTILES, APPAREL AND LUXURY GOODS

* Luxury and lifestyle brands group Tapestry Inc. reported fiscal fourth-quarter earnings that beat expectations due to outperformance in North America and growth in profit margins. The owner of the Coach and Kate Spade brands reported that diluted EPS in the three months ended June 30, 2018, rose to 60 cents from 50 cents in the comparable period ended July 1, 2017. A mean consensus of analysts' estimate had forecast normalized EPS of 57 cents, according to S&P Global Market Intelligence. Gross margin increased to 67.6% from 66.5%. Tapestry forecast fiscal 2019 diluted EPS of $2.70 to $2.80 compared with $2.63 in fiscal 2018.

* H & M Hennes & Mauritz AB unveiled a new e-commerce site and mobile application for customers in the U.S. in a bid to create a seamless shopping experience online and in the apparel maker's physical stores. Both platforms have features such as Visual Search, which allows shoppers to search items using images, as well as Scan & Find, where people can scan price tags of in-store products to find them on the website. They also offer a payment service via PayPal, free returns to stores, live chat customer support, new shipping options, Rate and Review for online purchases and an updated gallery called #HMxME. H&M's mobile and e-commerce platforms will also feature a find in store option that will allow customers to locate an item in a store near them.

* V.F. Corp. intends to continue to pursue mergers and acquisitions to develop its portfolio of brands, Chairman and CEO Steve Rendle said in a conference call following an announcement that the company plans to spin off its jeans brands, Lee and Wrangler. V.F., whose portfolio includes The North Face and Vans, would "look at brands that align with our financial and strategic objectives," added Rendle, who did not identify potential targets. In a presentation that accompanied the conference call, V.F. outlined its total shareholder return target at 14% to 16% versus 8% to 10% for the yet-to-be-named new spinoff, which will comprise the jeans brands plus the company's outlet businesses.

* Michael Kors Holdings Ltd. unveiled a revamped Access Runway smartwatch collection, which uses Google LLC's Wear OS software, expanding the label's collaboration with the tech giant, Women's Wear Daily reported, citing Michael Kors chairman and CEO John Idol. The touchscreen watches feature the voice-activated Google Assistant, GPS and heart-rate tracking and provide near-field communication, which allows users to secure mobile payments through Google Pay in the U.S. and Alipay in China.

MULTILINE RETAIL

* Sports Direct intends to keep 80% of House of Fraser Group Ltd.'s 59 department stores open, Liam Rowley, Sports Direct's head of strategic investments, told Bloomberg TV. The sports clothing retailer is set to acquire House of Fraser for £90 million in cash, a deal that prompted the U.K.'s Pensions Regulator to check if the department store operator had attempted to avoid its pension scheme obligations.

E-COMMERCE

* Christian Louboutin SA, known for its signature red-lacquered soles, launched a pop-up store on JD.com Inc.'s luxury e-commerce platform Toplife, marking the high-end stiletto manufacturer's debut in an online platform in China. JD.com will provide Louboutin with a range of services, including the company's white-glove delivery service, JD Luxury Express, as well as marketing, logistics and customer service support.

* Travel services provider Expedia Group Inc. bought the remaining 25% equity interest in AAE Travel Pte. Ltd. it does not already own from joint venture partner AirAsia Group Bhd. for a cash consideration of $60 million. Expedia will continue operating AirAsiaGo.com, a platform that features AirAsia flights and hotel packages as well as Expedia lodging content.

HOUSEHOLD AND PERSONAL PRODUCTS

* Unilever PLC has chosen JD.com to serve as its logistics provider in China, as the global consumer goods giant looks to extend its reach to more remote parts of the country. JD.com said in a blog post that Unilever will use the Chinese e-commerce giant's in-house logistics network to move goods between warehouses for distribution to physical retailers around the country. Unilever, which offers brands including Lipton, Vaseline and Lux, has previously used local logistics companies to handle distribution in China, where its products are primarily sold through offline channels. The partnership is in line with JD.com's "retail as a service" strategy, under which the Chinese company provides its technology and infrastructure to third-party businesses.

FOOD AND STAPLES RETAILING

* Seven & i Holdings Co. Ltd. subsidiary 7-Eleven Australia acquired a majority stake in the alcohol delivery startup Tipple as part of its investment strategy in last-mile delivery and technological capabilities. Tipple is a platform that delivers alcohol to customers in 30 minutes by partnering with local independent bottle shops. Financial details of the transaction were not disclosed.

* X5 Retail Group NV reported strong revenue growth for the second fiscal year of 2018 despite facing headwinds from food inflation. For the three months ended in June, X5 reported that net profit went down 16% year over year to 8.69 billion Russian rubles from 10.43 billion rubles in the year-ago period. Meanwhile, revenue increased 19.3% year over year to 382.56 billion rubles from 320.80 billion rubles in 2017, below the S&P Global Market Intelligence consensus estimate of 406.46 billion rubles.

HYPERMARKETS AND SUPERCENTERS

* Epoca International Inc. received $5 million in short-term special project funding from financial services firm Tiger Capital Group, allowing the sole license holder of Walmart Inc.'s Tasty houseware line to increase production in response to strong sales. Tiger Capital's executive managing director, Bob DeAngelis, said the financing also comes ahead of a special Tasty fourth quarter promotion, which is expected to be well-received by customers. Epoca was introduced to Tiger as part of a long-term strategic relationship between the investment firm and Epoca's senior lender, a regional bank in the Southeast.

INDUSTRY NEWS

* The National Retail Federation lifted its retail sales forecast for 2018 to a minimum increase of 4.5% year over year from its previous expected range of between 3.8% to 4.4%, due to the tax reform and other positive economic inputs. However, NRF President and CEO Matthew Shay pointed out that "uncertainty surrounding the trade war," coupled with higher inflation partially from increased oil prices, may lower consumer and business confidence in the second half of the year. Retail sales for first-half 2018 grew 4.8% year over year and were up 4.4% year over year in the most recent three-month moving average, according to the NRF.

* China retail sales reached 3.073 trillion yuan in July, an increase of 8.8% year over year, according to the National Bureau of Statistics. In the country's urban areas, retail sales grew 8.6% on the year to 2.639 trillion yuan, while in rural areas they jumped 10.1% to 434.5 billion yuan. For the first seven months of the year combined, China's retail sales totaled 21.075 trillion yuan, up 9.3% year over year.

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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 dropped 0.66% to 27,752.93, while the Nikkei 225 gained 2.28% to 22,356.08.

In Europe, around midday, the FTSE 100 gained 0.02% to 7,643.69, and the Euronext 100 rose 0.43% to 1,065.51.

On the macro front

The import and export prices report and the Redbook Index for retail sales are due out today. The National Federation of Independent Business' index of small business optimism increased to 107.9 in July from 107.2 in June.

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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