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Adidas expects supply chain issues in 2019; Inditex FY'18 EPS misses estimates


* Adidas AG swung to a profit in the fourth quarter of 2018 but warned that growth in 2019 would be restrained by supply-chain problems that would prevent it from meeting demand. As a result, the maker of athletic and sports lifestyle products said the impact on full-year growth was expected to be between 1 and 2 percentage points. The company, based in Herzogenaurach, Germany, projected net income in 2019 to increase to between €1.88 billion and €1.95 billion, an increase of between 10% and 14% from 2018. For 2018, net income attributable to Adidas shareholders, which includes income from continuing operations and losses from discontinued operations, jumped to €1.70 billion from €1.17 billion in 2017, surpassing the S&P Global Market Intelligence consensus GAAP net income estimate of 1.69 billion.

* Industria de Diseño Textil SA, owner of the Zara clothing brand, reported a slight increase in EPS for fiscal 2018 boosted by higher sales across all regions and online, and said it estimates like-for-like sales growth of 4%-6% in fiscal 2019. For the 12 months ended Jan. 31, EPS was €1.11 compared to €1.08 in the previous fiscal year. The Spanish company was projected to report EPS of €1.12 according to analyst consensus estimates compiled by S&P Global Market Intelligence. In early trading on the Madrid Stock Exchange, Inditex shares were down 5.8% at €24.74.


* Salvatore Ferragamo SpA's board will propose to distribute an annual dividend of 34 euro cents per share payable March 22, versus 38 euro cents in the previous year, after the company posted net profit below analysts' expectations for fiscal 2018. For the year ended Dec. 31, 2018, the luxury retailer reported that net profit fell 25.5% to €88.4 million from €118.6 million in 2017. The S&P Global Market Intelligence consensus GAAP net income estimate for the year was €104.7 million. Total revenue declined 3.3% year over year, or 1.7% at constant exchange rates, to €1.34 billion from €1.39 billion as revenue slid across all of the company's distribution channels.

* Essilor International is opposed to Luxottica Group SpA CEO Francesco Milleri becoming the chief executive of the Italian-French merged entity, EssilorLuxottica SA, the Financial Times reported. In November 2018, Leonardo Del Vecchio, founder and executive chairman of the Italian eyewear company, was reported to have proposed Milleri to become CEO of EssilorLuxottica. The French lens-maker, however, thinks Milleri does not have the required experience to lead the combined company, the newspaper reported, citing people close to Essilor. A spokesperson from Del Vecchio's holding company, Delfin Sarl told the news agency that its chairman's previous comments "shouldn't be interpreted as his desire" to appoint Milleri to head EssilorLuxottica. Essilor declined to comment and Luxottica did not respond to an email request for comment.


* Nestlé SA selected a number of private equity firms and consumer goods companies to join the second auction round for its skin health business, a deal that could fetch up to $10 billion, Bloomberg News reported, citing people familiar with the matter. French cosmetics giant L'Oréal SA and fast-moving consumer goods giant Unilever NV reportedly made it to the next round of bidding, alongside a consortium that includes Advent International Corp., Cinven Ltd. and GIC Pte. Ltd., as well as KKR & Co. and EQT Partners AB. Sources reportedly said no final decisions have been made and the companies invited to the next bidding round may decide against participating. Bloomberg said representatives for Nestlé, L'Oréal, Unilever and the private equity firms declined to comment, while a representative for Singapore's sovereign wealth fund, GIC, could not immediately be reached for comment.


* Rite Aid Corp. said CEO John Standley is among a number of C-suite executives who are stepping down as part of an organizational shakeup to improve operations and reduce costs. The U.S. drugstore chain said it will cut about 400 full-time corporate positions as part of the restructuring. COO Kermit Crawford is also leaving and will be replaced by Rite Aid Stores COO Bryan Everett, while CFO Darren Karst will be replaced by Chief Accounting Officer and Treasurer Matt Schroeder. Rite Aid Chairman Bruce Bodaken said that the leadership and organizational changes "more closely aligning the structure and leadership" of the company with its present scale.

* Wm Morrison Supermarkets PLC proposed an ordinary dividend of 6.60 pence and a special dividend of 6 pence for full-year 2018/19 after reporting that profit before tax and exceptionals for the year increased 8.6% to £406 million. The dividend announcements increase the company's total full-year dividend 24.9% to 12.60 pence from 10.09 pence a year ago. For the year ended Feb. 3, the British grocer posted EPS before exceptionals of 13.17 pence, up 8% from 12.19 pence in fiscal 2017/18 and in line with the S&P Global Market Intelligence consensus normalized EPS estimate. Revenue rose 2.7% year over year to £17.7 billion, or 4.7% on a 52-week basis.


* Wal-Mart de México SAB de CV said it expects capital expenditure of 20 billion Mexican pesos in 2019, up 12% from the previous year. The Walmart Inc. unit said it will use approximately 35% of the allotted investment to improve existing stores, about 31% to build new locations, 20% to reinforce logistics, an estimated 13% on e-commerce and technology, and about 1% to strengthen its infrastructure for perishables.


* Bed Bath & Beyond Inc. launched its first private-label furniture and decor brand, Bee & Willow Home. The collection features items ranging from dining tables and sofas to quilts and throw pillows as well as kitchen accessories. Bee & Willow Home, which is available both in-store and online, is the first of Bed Bath & Beyond's six exclusive whole home collection launches.

* The U.K.'s Financial Conduct Authority imposed a fine of £29.1 million to The Carphone Warehouse Ltd. for failing to train its sales consultants "adequately," leading to the misselling of its mobile phone insurance and technical support product called Geek Squad. The FCA said sales consultants recommended the product "to customers who already had cover, for example through their home insurance or bank accounts." Employees were not trained on how to assess if Geek Squad was suitable for consumers, exposing buyers to the risk of paying for insurance they did not need. Carphone Warehouse operates as a joint venture between Dixons Carphone PLC and Best Buy Europe Distributions Ltd.

* Dick's Sporting Goods Inc. will remove its hunt category, which includes guns, ammunition and other hunting gear, from about 125 additional outlets in 2019, following positive same-store sales in 10 locations where the specialty store operator initially pulled out the segment. CEO Edward Stack told analysts in a call to discuss fourth-quarter 2018 earnings that the Pennsylvania-based retailer will replace hunting with merchandise categories after a similar move in underperforming stores drove strong quarter-on-quarter margin rate improvement. The company also said it will replace merchandise from Reebok with a new sportswear brand that it will launch in time for the back-to-school period.

The day ahead

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

In Asia, the Hang Seng was down 0.39% to 28,807.45. The Nikkei 225 fell 0.99% to 21,290.24.

In Europe around midday, the FTSE 100 was up 0.05% to 7,154.95 and the Euronext 100 was 0.24% higher at 1,023.73.

On the macro front

The durable goods orders, PPI-FD, construction spending, e-commerce retail sales and EIA petroleum status reports 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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