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Best Buy reaffirms FY'20 outlook; Bath & Body Works drive earnings at L Brands


* Best Buy Co. Inc. reaffirmed its outlook for fiscal 2020 as it reported first-quarter earnings that grew double digits year over year and came in above analysts' estimates. For the quarter ended May 4, the computer and electronics retailer posted non-GAAP diluted EPS of $1.02, up 24% from 82 cents in the year-ago period and higher than the S&P Global Market Intelligence consensus normalized EPS estimate of 87 cents. On a GAAP basis, diluted EPS rose 36% year over year to 98 cents. Revenue for the quarter increased to $9.14 billion, compared with $9.11 billion in the same quarter in 2019. The Richfield, Minn.-based company also reiterated its full-year guidance of non-GAAP diluted EPS in the range of $5.45 to $5.65 and enterprise revenue between $42.9 billion and $43.9 billion.

* Shares in L Brands Inc. jumped nearly 11% in after-market trading on May 22 after the apparel retailer reported first-quarter earnings that beat analyst expectations, driven by record results at its Bath & Body Works business. For the three months ended May 4, the company posted EPS of 14 cents, down from 17 cents in the year prior but higher than the S&P Global Marker Intelligence consensus estimate for GAAP EPS to be breakeven. Net sales for the quarter was $2.63 billion, slightly flat from a year ago. The retailer now expects to deliver full-year 2019 EPS in the range of $2.30 to $2.60, compared with the previous guidance of $2.20 to $2.60.


* Italian apparel retailer Prada SpA said it will not use animal fur in its products, beginning with its spring/summer 2020 women's collection, but will continue to offer existing stock until it is sold out.

* A U.S. federal court in New York has indicted controversial lawyer Michael Avenatti over his alleged extortion attempt against Nike Inc. In March, Avenatti was arrested and charged when he allegedly attempted to extort more than $20 million from the Oregon-based athletic-wear giant in order to keep him from exposing damning information about the company. Nike did not immediately respond to a request for comment from S&P Global Market Intelligence.

* Sir Philip Green's Arcadia Group Ltd. initiated seven company voluntary arrangements, an insolvency process in the U.K., along with a restructuring plan to bring the business back to growth. As part of the proposals, the company has identified 23 of its 566 stores in the U.K. and Ireland for closure, putting 520 jobs at risk, and 194 stores that will be negotiated for rent reductions and revised lease terms. Also under the plan, which is subject to creditor approval during Arcadia's June 5 meeting, the retailing company is closing all of its 11 Topshop Topman stores in the U.S. Lady Tina Green, wife of owner Sir Philip Green, will invest £50 million to support Arcadia's turnaround plans, on top of the £50 million funding she provided in March. "Following constructive discussions with all key stakeholders, we believe that a CVA is the best course of action," Arcadia CEO Ian Grabiner said in a statement.


* Luxembourg-based general merchandise retailer B&M European Value Retail SA announced that it plans to open 50 new stores in fiscal 2020 as it posted full-year 2019 earnings that matched analysts' expectations. For the year ended March 30, the retailer posted adjusted diluted EPS of 19.7 pence, up 10.7% year over year from 17.8 pence and in line with the S&P Global Market Intelligence consensus normalized EPS estimate. Revenue reached £3.49 billion from £2.98 billion in the year prior.


* Japanese e-commerce and internet company Rakuten Inc. agreed to acquire additional shares of Japanese restaurant bookings company Gurunavi Inc. as part of a new agreement to strengthen their business alliance. The deal is an expansion of the two companies' alliance agreement that they entered into in July 2018. Rakuten acquired 4,677,600 Gurunavi shares, representing 9.6% of the company, as part of the transaction. Under the latest transaction, Rakuten will purchase 2,339,700 additional Gurunavi shares, or 4.8% of the company's outstanding shares, from Gurunavi Chairman Hisao Taki in an off-market negotiated transaction, making it the largest major shareholder in Gurunavi, effective May 31. The companies did not disclose the financial details of the transaction.

* Walmart Inc.-owned Indian e-commerce company Flipkart Online Services Pvt. Ltd. is looking to open brick-and-mortar grocery stores in the country, The Times of India reported, citing sources. The potential move follows the launch of Flipkart's fifth online grocery store, Supermart, in Mumbai. Supermart already has a presence in Bangalore, Chennai, Hyderabad and Delhi. The newspaper said Flipkart will likely take advantage of the relaxed law on food retail business, where foreign direct investments of up to 100% are allowed. The newspaper said a Flipkart India spokesperson did not respond to requests for comment.

* International Ltd. reported strong results for the first quarter of 2019, with both earnings and revenue growing double digits year over year. For the quarter ended March 31, the Chinese e-commerce company's net revenue reached 8.16 billion Chinese yuan, up 21% from 6.73 billion yuan in 2018. Net income attributable to shareholders of the parent also grew 21% year over year to 1.75 billion, above the S&P Global Market Intelligence estimate for net income excluding exceptions of 1.05 billion yuan. For the second quarter, the company expects net revenue growth of about 16% to 21% year over year.


* Brazilian beauty products company Natura Cosméticos SA has agreed to buy cosmetics company Avon Products Inc. in an all-share deal, confirming previous reports about a potential deal between the two. Natura has created a new Brazilian holding company, Natura Holding SA, as part of the transaction. Natura shareholders will have a 76% stake in the combined entity, while Avon shareholders will own 24%. The deal, expected to be closed in early 2020, values London-based Avon at an enterprise value of $3.7 billion, while the combined entity would be valued at about $11 billion.


* Moody's upgraded Rent-A-Center Inc.'s ratings, including its corporate family rating to B1 from B2, citing the U.S. furniture and electronics rent-to-own company's successful implementation of its strategic turnaround plan and focus on debt reduction. Rent-A-Center's speculative grade liquidity rating remains unchanged at SGL-3, while the company's outlook was revised to stable from developing. Moody's said it expects the company to be able to successfully refinance its capital structure from further operating improvement, earnings growth, low net debt levels and further debt reduction plans. Moody's said Rent-A-Center's rating is constrained by several factors. These are the need to extend its debt maturity profile, moderate business risk associated with the rent-to-own industry, and the potential impact from government legislation or litigation that may happen from time to time.

* Steinhoff International Holdings NV said it agreed with a group of shareholders who petitioned inquiry into the company to postpone the hearing before the Enterprise Chamber of the Amsterdam Court of Appeal, scheduled May 23, to a later date.


* S&P Global Ratings downgraded Thomas Cook Group PLC's issuer credit rating to CCC+ from B-, citing the company's weak trading, material cash outflows and high leverage. The negative outlook reflects the agency's view that market conditions will continue to impact the travel company's earnings, resulting in higher volatility in cash flows and liquidity over the next six to 12 months.


* Activist investor ValueAct Capital Management LP is urging U.K.'s Merlin Entertainments PLC to consider taking itself private after the company's share price declined 2.7% since it went public in 2013. In a letter to Chairman John Sunderland, the hedge fund, which owns 9.3% of the leisure facilities operator, said Merlin "has struggled as a public company," adding that a public-to-private transaction "could deliver value in the mid-£4GBP/share for shareholders" or a premium of about 30%. In response, Merlin said it will continue to have constructive discussions with ValueAct, adding that its board regularly considers all options to increase shareholder value. "The board ... has concluded that it remains in the best interests of all its shareholders to continue to pursue its current strategy to create a high growth, high return, family entertainment company," Merlin also said.

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The day ahead

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

In Asia, Hang Seng fell 1.58% to 27,267.13, while the Nikkei 225 was down 0.62% to 21,151.14.

In Europe, around midday, the FTSE 100 was down 1.35% to 7,235.19, and the Euronext 100 decreased 1.45% to 1,033.16.

On the macro front

The jobless claims report, the PMI composite FLASH index, the new home sales report, the EIA natural gas report, the Kansas City Fed Manufacturing index, the Fed balance sheet and the money supply 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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