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1 August 21, 2015 DEBORAH WEINSWIG, EXECUTIVE DIRECTOR–HEAD OF GLOBAL RETAIL & TECHNOLOGY [email protected] US: 917.655.6790 HK: 852.6119.1779 CHN: 86.186.1420.3016 Copyright © 2015 The Fung Group. All rights reserved. Weekly Insights DEBORAH WEINSWIG Executive Director, Head of Global Retail & Technology Fung Business Intelligence Centre [email protected] New York: 646.839.7017 August 21, 2015 Earlier this month, Amazon signed a 10year lease on a former Tesco warehouse near London, fueling speculation that it is set to launch its AmazonFresh grocery operation in the UK TV shopping network QVC is buying flashsales etailer Zulily for $2.4 billion, paying a 49% premium to its preannouncement price Southeast Asia’s leading transportation app, GrabTaxi, has raised $400 million in a round led by China’s sovereign wealth fund Several US fastfood chains are opening new outlets in Brazil, receiving favorable leases while peers are consolidating

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Page 1: DEBORAH WEINSWIG deborahweinswig@fung1937.com New … · !4 august 21, 2015 deborah(weinswig,(executive(director–head(of(global(retail(&(technology(deborahweinswig@fung1937.com((us:(917.655.6790((hk:(852.6119.1779((chn

       

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August 21, 2015

DEBORAH  WEINSWIG,  EXECUTIVE  DIRECTOR–HEAD  OF  GLOBAL  RETAIL  &  TECHNOLOGY  [email protected]    US:  917.655.6790    HK:  852.6119.1779    CHN:  86.186.1420.3016  Copyright  ©  2015  The  Fung  Group.  All  rights  reserved.  

                                             

 

 

 

 

   

 

   

Weekly Insights D E B O R A H W E I N S W I G

E x e c u t i v e D i r e c t o r , H e a d o f G l o b a l R e t a i l & T e c h n o l o g y F u n g B u s i n e s s I n t e l l i g e n c e C e n t r e

d e b o r a h w e i n s w i g @ f u n g 1 9 3 7 . c o m N e w Y o r k : 6 4 6 . 8 3 9 . 7 0 1 7

August 21, 2015

Earlier  this  month,  Amazon  signed  a  10-­‐year  lease  on  a  former  Tesco  warehouse  near  London,  fueling  speculation  that  it  is  set  to  launch  its  AmazonFresh  grocery  operation  in  the  UK

TV  shopping  network  QVC  is  buying  flash-­‐sales  e-­‐tailer  Zulily  for  $2.4  billion,  paying  a  49%  premium  to  its  pre-­‐announcement  price

Southeast  Asia’s  leading  transportation  app,  GrabTaxi,  has  raised  $400  million  in  a  round  led  by  China’s  sovereign  wealth  fund

Several  US  fast-­‐food  chains  are  opening  new  outlets  in  Brazil,  receiving  favorable  leases  while  peers  are  consolidating

   

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August 21, 2015

DEBORAH  WEINSWIG,  EXECUTIVE  DIRECTOR–HEAD  OF  GLOBAL  RETAIL  &  TECHNOLOGY  [email protected]    US:  917.655.6790    HK:  852.6119.1779    CHN:  86.186.1420.3016  Copyright  ©  2015  The  Fung  Group.  All  rights  reserved.  

 

FROM  THE  DESK  OF  DEBORAH  WEINSWIG  

AmazonFresh  Set  For  UK  Shores?  We   could  write   about   Amazon   on   this   page   every  week,   such   is   the   constant   stream   of   news   and  innovation   coming   from   the   company.   We   usually   show   some   restraint,   but   we   will   turn   to   the  company  this  week  to  look  at  the  prospects  for  its  reported  extension  of  AmazonFresh  grocery  service  into  the  UK  market—a  grocery  market  that  is  already  in  a  state  of  turmoil.  

Earlier   this   month,   Amazon   signed   a   10-­‐year   lease   on   a   former   Tesco   warehouse   in   Surrey,   near  London.  The  deal  for  the  305,000  sq.  ft.  warehouse  fueled  speculation  that  Amazon  was  set  to  launch  its  grocery  operation  in  Britain.  It  is  not  the  first  time  a  European  launch  has  been  rumored.  In  2014,  there  was  expectation  of  a  German  launch  for  AmazonFresh,  but  that  did  not  transpire.  

If   AmazonFresh   does   launch   in   the  UK,   it   will   be   entering   the   most  mature   and   competitive   online  grocery   market   in   the   West.  Internet  sales  accounted  for  around  6%   of   UK   grocery   spend   in   2014,  according  to  Kantar  Worldpanel.  In  proportional   terms,   that   is   not  much—but   it   is  6%  of  a   large  total  market.   And,   of   course,   it   is   a  channel   that   is   growing   fast:   in  June   2015,   UK   food   retailers’  Internet   sales   grew   13%   year   over  year,   according   to   the   UK’s   Office  for  National  Statistics.  

So  far,  this  has  been  a  channel  dominated  by  store-­‐based  retailers.  Ocado  is  the  only  British  grocery  Internet   pure   play   of   note,   but   it   trails   Tesco,   Asda   and   Sainsbury’s   in   online  market   share,   Kantar  Worldpanel  says.    

So  it  is  the  big  grocery  players  who  stand  to  lose  out  if  Amazon  enters  the  market.  If  it  does,  we  can  be  sure  it  will  offer  a  proposition  designed  to  delight  customers  and  infuriate  rivals.  And  it  is  evident  that  turning  a  profit  is  not  Amazon’s  first  priority,  so  the  company  is  likely  to  subsidize  its  grocery  operation  in  a  bid  to  gain  share.  

The  biggest  UK  grocers  are  already  facing  upheavals,  primarily  due  to  international  invaders:  the  rapid  growth  of  German  discounters  Aldi  and  Lidl  has  hit  the  big  British  grocers  hard,  and  forced  them  into  a  price  war  to  compete  for  frugal  shoppers.  Food-­‐price  deflation  and  falling  sector  sales  have  been  the  results  of  this  fierce  competition.  

Aldi   and   Lidl   have  wrought   havoc   in   the   UK  with   a   combined  market   share   of   less   than   10%.   This  shows  how  smaller  players  can  disrupt  major,  established  players,  especially   in  a  market  as  volume-­‐sensitive  as  grocery.  

The  UK  grocery  retailers,  already  in  the  middle  of  major  upheavals,  will  undoubtedly  be  watching  any  Amazon  venture  keenly,  and  they  will  be  right  to  do  so.    

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August 21, 2015

DEBORAH  WEINSWIG,  EXECUTIVE  DIRECTOR–HEAD  OF  GLOBAL  RETAIL  &  TECHNOLOGY  [email protected]    US:  917.655.6790    HK:  852.6119.1779    CHN:  86.186.1420.3016  Copyright  ©  2015  The  Fung  Group.  All  rights  reserved.  

 

 

             

 

             

Walmart  2Q  Comps  Figure  1.  Walmart  Comparable  Sales  Growth:  2Q  2015  

         Source:  Walmart  

 • A  solid  quarter  for  Walmart  in  the  US  and  strong  performance  in  some  international  markets  

were  partially  offset  by  weakness  in  Brazil,  China  and  the  UK.  

• Walmart   said   the   economic   environment   proved   challenging   in   Brazil,   but   that   it   had  outperformed  the  market;  sales  were  impacted  by  a  tough  comparison  due  to  the  occurrence  of  the  World  Cup  soccer  tournament  last  year.  

• In   China,  Walmart   noted  headwinds   from   slower   economic   growth  and   said   it   continued   to  outperform  the  market,  gaining  share  in  hypermarkets  and  maintaining  share  in  the  modern  trade  channel.  

• In  the  UK,  Walmart’s  Asda  subsidiary  had  a  very  weak  quarter,  with  total  sales  down  4.1%  in  the   context   of   grocery   price   wars.   The   company   said   comp   declines   had   been   driven   by  declining  traffic,  especially  in  fresh  food  categories.  Asda’s  CEO  Andy  Clarke  predicted  that  this  quarterly  slump  was  the  “nadir”  for  Asda.  

1.5%   1.3%  

5.4%  

3.9%  

(1.0)%   (1.4)%  

(5.2)%  Walmart  US   Sam's  Club  US  

(Excl.  Fuel)  Mexico   Canada   Brazil   China   UK  

FBIC  HAPPENINGS  &  WEINSWIG’S  WATCH  ING  

CHART  OF  THE  WEEK  

 

STAT  OF  THE  WEEK  

 

• FBIC’s  New  York  Team  visited  the  Long   Island-­‐based  factory  of  handbag  maker  GiGi  New  York  this  week  

• Liberty   Interactive   this  week   said   it  would  acquire   flash-­‐sales   site  Zulily   in   a   cash-­‐and-­‐stock   deal   worth   $2.4   billion.   Liberty   offered  $18.75   per   share—a   combination   of   $9.375   in   cash   and   0.3098  newly   issued   shares   of   Liberty   stock—which   represented   a  premium  of  around  49%  on  Zulily’s  Friday  close.  

• Liberty  Interactive  owns  home-­‐shopping  brand  QVC.  

$2.4  Bil.  Source:  Reuters  

 

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August 21, 2015

DEBORAH  WEINSWIG,  EXECUTIVE  DIRECTOR–HEAD  OF  GLOBAL  RETAIL  &  TECHNOLOGY  [email protected]    US:  917.655.6790    HK:  852.6119.1779    CHN:  86.186.1420.3016  Copyright  ©  2015  The  Fung  Group.  All  rights  reserved.  

US  RETAIL  EARNINGS  

Company  

    Revenues  ($  Mil.)   Change   Gross  Margin  (%)   Change   Net  Income  ($  Mil.)  Change  

YoY   Store  Fleet  EOP  

Period   2015     2014     (%)   2015     2014     (BP)   2015     2014     (%)   2015     2014    

Estée  Lauder   4Q  ended  July  30    2,524      2,725      (7.4)   80.7   80.4   26   154     258      (40.5)   N/A   N/A  

Walmart   2Q  ended  July  31    120,229      120,125      0.1     25.1   25.1   3   3,475     3,923      (11.4)   11,532     11,053    

Lowe's   2Q  ended  August  31    17,348      16,599      4.5     34.5   34.6   (7)   1,126     1,039      8.4     1,846     1,837    

Nordstrom   2Q  ended  August  1    3,701      3,392      9.1     37.1   37.2   (8)   211     183      15.3     304     271    

JCPenney   2Q  ended  August  1    2,875      2,799      2.7     37.0   36.0   103   (138)   (172)    (19.8)   1,020     1,060    

The  Home  Depot   2Q  ended  August  2    24,829      23,811      4.3     33.7   33.6   6   2,234     2,050      9.0     2,270     2,264    

TJX  Companies   2Q  ended  August  1    7,364      6,917      6.5     29.1   28.6   48   549     518      6.1     3,461     3,256    

Target   2Q  ended  August  1    17,427      16,957      2.8     30.9   30.4   48   753     234      221.8     1,799     1,795    

Sears   2Q  ended  August  1    6,211      8,013      (22.5)   23.1   21.7   136   208     (581)    N/A     1,702     2,302    

L  Brands   2Q  ended  August  1    2,765      2,675      3.4     40.3   39.1   122   203     188      8.0     2,976     2,942    

American  Eagle   2Q  ended  August  1    797      711      12.1     35.8   66.5   (3077)   33     6      450.0     1,057     1,057    

Gap   2Q  ended  August  1    3,898      3,981      (2.1)   37.4   39.4   (201)   219     332      (34.0)   3,749     3,751    

Ross  Stores   2Q  ended  August  1    2,968      2,730      8.7     28.6   28.8   (19)   259     240      7.8     1,424     1,338    Source:  Company  reports  

US  RETAIL  HEADLINES  Target  Elevates  Mulligan  to  COO  and  Hires  New  CFO  (August  17)  Women’s  Wear  Daily  

• John  Mulligan,   current  CFO  of  Target,  will  move   to  a  new   role  as  Executive  Vice  President  and  COO,  effective  September  1.  Mulligan  has  been  the  CFO  of  Target  since  2012.  

• The  company  hired  Cathy  Smith  as  its  new  CFO.  Smith  was  previously  CFO  of  Express  Scripts  and  served  in  various  roles  at  Walmart  International  and  GameStop.  

QVC  to  Aquire  Zulily  for  $2.4  Billion  (August  17)  The  Wall  Street  Journal  

• Television   shopping   network   QVC   is   buying   flash-­‐sales   e-­‐tailer   Zulily   for   $2.4   billion.   This  price   is   equivalent   to   a   49%   premium   to   Zulily’s   $12.57   closing   price   prior   to   the  announcement.   The   offered   price   is   lower   than   the   $22   per   share   price   that   was   offered  when  Zulily  went  public.  

• Zulily  will   continue   to  be   run  by   its   current  management.  QVC  President  and  CEO  Michael  George  mentioned  that  the  goal  of  this  acquisition  was  to  accelerate  growth.  

Kohl’s  Debuts  Exclusive  LC  Lauren  Conrad  Runway  Collection  (August  17)  Company  press  release  

• Kohl’s   announced   that   it   will   reveal   the   LC   Lauren   Conrad   Runway   Collection   during   a  runway  show  on  Wednesday,  September  9.  Customers  will  be  able  to  view  the  collection  via  a  shoppable  livestream  on  LCRunway.com.  

• The   chic,   vintage-­‐inspired   collection   includes   apparel,   shoes,   handbags,   jewelry   and  sunglasses   for  $12   to  $200.   The   collection  will   be  available  during  a   limited   time  at  Kohl’s  stores  and  on  Kohls.com.  

Amazon  Expected  to  Launch  New  Click-­‐and-­‐Collect  “Flex  Service”  (August  18)  Retail  Week  

• Tech  blog  GeekWire  discovered  a  “confidential”  new  Amazon  facility  that  will  likely  be  used  to  launch  Prime  Now  one-­‐hour  delivery  in  the  Seattle  area,  in  addition  to  a  completely  new  service  called  “Amazon  Flex.”  

• Signs   inside   the   facility   indicate   Amazon   Flex   will   likely   allow   customers   to   pick   up   items  themselves  from  the  Prime  Now  center.  

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August 21, 2015

DEBORAH  WEINSWIG,  EXECUTIVE  DIRECTOR–HEAD  OF  GLOBAL  RETAIL  &  TECHNOLOGY  [email protected]    US:  917.655.6790    HK:  852.6119.1779    CHN:  86.186.1420.3016  Copyright  ©  2015  The  Fung  Group.  All  rights  reserved.  

 

Abercrombie  &  Fitch  Restructures  Management  (August  18)  Company  press  release  

• Abercrombie  &  Fitch  announced  a  new  leadership  team  on  August  18.  The  company  tapped  into  talent  pools  from  a  wide  range  of  companies,  including  Club  Monaco,  Jack  Spade,  PVH  and  Carter’s.  

• The  company  created  six  new  positions,  part  of  a  strategy  to  organize  executives  by  brand,  rather   than   by   product.   All   but   one   of   the   new   positions   will   be   filled   by   recently   hired  outsiders;   they   include  Kurt  Hoffman,  General  Manager   for   the  men’s  division   (who   joined  from  Club  Monaco  in  March);  Amy  Sveda,  General  Manager  for  the  kids’  division  (who  joined  from   Carter’s   in  May);   and   Kristina   Szasz,   Head   of   Design   for   the   women’s   division   (who  joined  from  PVH  in  September  2014).  

ASIA  HEADLINES  BuzzFeed  Expands  Further  into  Asia  with  Yahoo  Japan  (August  18)  TNW  News  

• BuzzFeed   announced   that   it   is   partnering   with   Yahoo   Japan   to   bring   localized,   shareable  content  to  readers  in  Japan.  

• With   its   other   international   launches   (Brazil,   the   UK,   France,   Australia,   India,   Germany,  Mexico  and  Canada),  BuzzFeed  has  maintained  complete  ownership  of   its  operations.  This  deal,   however,   will   be   a   joint   venture   with   Yahoo   Japan   that   will   harness   the   latter’s  expertise  in  localizing  content.  

 LG  Display  to  Focus  Investment  on  OLED  in  Next-­‐Generation  Push  (August  17)  Channel  NewsAsia  

• South   Korea’s   LG   Display   said   it   would   focus   investment   on   organic   light-­‐emitting   diode  (OLED)   displays,   as   it   expects   the   technology   to   steer   clear   of   price   wars   and   help   the  company  stay  ahead  of  the  competition.  

• LG  Display  and  sister  firm  LG  Electronics  have  been  the  biggest  proponents  of  OLED,  which  boasts   improved   color   rendition   and   lower   power   consumption.   LG   Display   hopes   early  investment  in  OLED  will  help  it  dominate  when  the  technology  becomes  mainstream.    

European  Social  Media  App  Plag**  Wants  to  Gain  1  Million  Users  in  Southeast  Asia  (August  17)  e27.co  

• Launched  in  November  2014,  60%  of  Plag**  users  come  from  Europe,  where  the  app  claims  it   signed  up  100,000  users  within   its   first   six  weeks.  The  Lithuanian  startup  debuted   in   the  Asian  market  in  Japan,  where  10%  of  its  users  currently  reside.  The  company  plans  to  further  expand  to  Southeast  Asia  and  targets  1  million  users  in  the  region  within  the  next  year.  

• Laura  Kornelija,  Marketing  and  Business  Development  Manager  of  Plag**,  says,  “We  are  offering  the  chance  to  interact  directly  with  absolutely  anyone  in  the  world  by  eliminating  ‘following’  or  friend  lists.”    

Singapore-­‐Based  Startup  iCandy  Will  Go  IPO;  Expects  to  Raise  US$2.58  Million  (August  17)  e27.co  

• Singapore-­‐based   mobile   games   studio   iCandy   Interactive   announced   that   it   received  Australian  Securities  &  Investments  Commission  approval  for  an  IPO  on  the  Australian  Stock  Exchange  at  the  end  of  September.  

• iCandy   is   looking   to   raise   up   to   A$3.5   million   (US$2.6   million),   or   A$4.5   million   (US$3.3  million)   if   oversubscription   is   factored   in,   over   a   market   capitalization   of   A$45   million  (US$33.1  million).  

   

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August 21, 2015

DEBORAH  WEINSWIG,  EXECUTIVE  DIRECTOR–HEAD  OF  GLOBAL  RETAIL  &  TECHNOLOGY  [email protected]    US:  917.655.6790    HK:  852.6119.1779    CHN:  86.186.1420.3016  Copyright  ©  2015  The  Fung  Group.  All  rights  reserved.  

 Singapore’s  Infinium  Robotics  in  Talks  with  NASA  to  Build  Drone  Software  (August  14)  e27.co  

• Infinium  Robotics  has  been  anticipating  a  proliferation  of  drones,  and  Google  and  Amazon  have  been  looking  to  employ  drones  to  deliver  goods  to  customers.  

• In  preparation   for   the   flourishing  of  drones,  NASA’s  Ames  Research  Center  and   the  Silicon  Valley  Chapter  of  the  Association  for  Unmanned  Vehicle  Systems   International  co-­‐hosted  a  conference  in  the  US  last  month.  Infinium  Robotics  CEO  Junyang  Woon  was  invited  to  speak  on  one  of  the  panels,  which  was  also  attended  by  Google  and  Amazon  executives.  

 GrabTaxi  Raises  US$400  Million,  Led  by  China’s  Sovereign  Wealth  Fund  (August  14)  TechinAsia  

• Southeast  Asia’s  leading  transportation  app,  GrabTaxi,  has  raised  US$400  million  in  a  funding  round  led  by  China  Investment  Corp.,  China’s  sovereign  wealth  fund,  according  to  The  Wall  Street  Journal.  

• GrabTaxi  has  been  aggressively  poaching  Uber  drivers  for  its  own  platform.  Its  app,  though,  is  widely  considered  to  be  inferior  to  Uber’s  app.    

LeTV  Announces  Three  New  Smart  Bikes,  and  It’s  Taking  Them  Global  (August  14)  TechinAsia  

• In   Beijing   last  week,   Chinese   company   LeTV   revealed   its   new   smart   bike,   which   comes   in  three  different  models.  

• The  bikes’  smart  features  include  standard  ones  such  as  route  mapping,  speed  tracking  and  light  signals  as  well  as  more  unique  ones  such  as  fingerprint  identification,  a  smart  lock  and  a  push-­‐to-­‐talk  two-­‐way  radio  that  lets  riders  communicate  with  other  riders  nearby.  

   EUROPEAN  RETAIL  EARNINGS  

Company  

    Revenues  ($  Mil.)   Change  in  $  

Change  in  Reporting  Currency   Gross  Margin  (%)   Change   Net  Income  ($  Mil.)   Change  YoY   Store  Fleet  EOP  

Period   2015     2014     (%)       2015     2014     (BP)   2015     2014     (%)   2015     2014    Ahold  N.V.   1H  to  June  30,  2015   22,314   23,636   (5.6)   15.9   27.1   26.6   45.9   453.5   538.8   (15.8)   3,221   3,121  

Source:  Company  reports  

EUROPEAN  RETAIL  HEADLINES  UK  Retail  Footfall  Growth  Highest  in  11  Years  (August  12)  Ipsos-­‐RetailPerformance.com  

• UK  retailers  saw  a  3.7%  rise  in  footfall  in  July,  according  to  the  Retail  Traffic  Index  compiled  by  global  consultancy  Ipsos  Retail  Performance.  This  was  the  highest  year-­‐over-­‐year  rate  in  any  month  in  11  years.  

• The  index  is  derived  from  the  number  of  shoppers  entering  over  4,000  nonfood  retail  stores  in   the  UK.  The   first  week  of   July  began  strongly,  with   footfall  at   its  highest  point   since   the  final  week  of  2014;  the  upward  trend  continued  through  the  month,  making  the  last  week  of  July  the  busiest  of  the  year  so  far.  

   

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August 21, 2015

DEBORAH  WEINSWIG,  EXECUTIVE  DIRECTOR–HEAD  OF  GLOBAL  RETAIL  &  TECHNOLOGY  [email protected]    US:  917.655.6790    HK:  852.6119.1779    CHN:  86.186.1420.3016  Copyright  ©  2015  The  Fung  Group.  All  rights  reserved.  

 Sainsbury’s  Clothing  Brand  Becomes  Available  Nationwide  with  Online  Launch    (August  13)  TheRetailBulletin.com  

• Sainsbury’s  unveiled  a  new  website  for  its  Tu  clothing  brand  that  allows  customers  to  shop  for  the  clothes  online.  Over  400  Sainsbury’s  stores  already  sell  a  selection  of  Tu  clothing,  but  only  about  160  stores  stock  the  full  range.  Tu  was  launched  10  years  ago,  and  its  sales  have  grown  to  £800  million  (US$1,250  million).  

• The  new  online  shop  offers  womenswear,  menswear  and  childrenswear  that  can  be  bought  for  next  day  delivery,  standard  delivery  or  click-­‐and-­‐collect.  Shoppers  who  choose  the  click-­‐and-­‐collect  option  will  be  able  to  pick  up  purchased  goods  from  about  710  stores,  including  112  convenience  stores.    

Supermarket  Chain  Wm  Morrison  in  Talks  to  Sell  Its  High-­‐Street  C-­‐Stores  (August  17)  Retail-­‐Week.com  

• Wm  Morrison   is  close  to  selling  M  Local,   its  convenience  store  division,  to   investment  firm  Greybull.  About  150  of  the  M  Local  stores,  which  generate  more  than  £300  million  (US$469  million)  in  sales,  are  likely  to  be  sold  to  the  investor.  

• Greybull’s  bid  was  preferred  over   that  of   rival   investor  Alteri,  which  had  shown   interest   in  buying  BHS  earlier  this  year.  Greybull  is  expected  to  complete  the  takeover  process  with  the  support   of   an   experienced   industry   team,   and   to   supply   sizeable   working   capital   to   the  division.    

British  Supermarket  Chain  Asda  Hits  Lowest  Quarterly  Sales  (August  18)  Reuters.com  

• Asda  nose-­‐dived  to  its  worst  quarterly  sales  performance  in  the  16  years  it  has  been  owned  by  US  retail  giant  Walmart.  Comparable  sales  declined  by  4.7%  in  the  11  weeks  ending  June  30,  after  a  fall  of  3.9%  in  the  previous  quarter.  

• Asda,  along  with  rivals  Sainsbury’s  and  Tesco,  is  in  the  midst  of  a  price  war  that  began  when  hard   discounters   Aldi   and   Lidl   lowered   their   prices.   Asda   CEO   Andy   Clarke   remarked   that  although  Asda’s  focus  is  on  price,  it  will  highlight  other  factors,  such  as  quality  and  service,  to  its  customers.    

Austin  Reed  Announces  Plans  to  Dispose  of  Regent  Street  Flagship  Store  (August  19)  Retail-­‐News.net  

• British  fashion  retailer  Austin  Reed  announced  plans  to  close  its  Regent  Street  flagship  store,  following  the  closure  of  31  stores  earlier  this  year.  The  sale  is  estimated  to  bring  in  over  £20  million  (US$31  million).  

• It   is   rumored  that  Mango,  which  occupies  the  neighboring  premises,  has  shown   interest   in  the  property  and  that  Uniqlo  may  be  interested  as  well.  Austin  Reed  has  been  burdened  with  financial   debt   and   reached   a   voluntary   agreement  with   its   landlords   in   January   to   sell   the  property.  

LATAM  HEADLINES  Chile’s  GDP  Expands  1.9%  in  the  Second  Quarter  (August  18)  The  Wall  Street  Journal  

• Chile’s  economy  expanded  by  1.9%  year  over  year   in   the  second  quarter,   largely   thanks  to  strength  in  services  and  construction.  

• Domestic  demand  increased  by  2%  in  the  quarter,  driven  by  consumer  spending.  • Moody’s  Investors  Service  predicted  2016  growth  of  near  the  median  of  its  peers,  along  with  

a  low  debt  burden  and  the  strongest  fiscal  positions  of  any  sovereign  issuer  globally.    

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August 21, 2015

DEBORAH  WEINSWIG,  EXECUTIVE  DIRECTOR–HEAD  OF  GLOBAL  RETAIL  &  TECHNOLOGY  [email protected]    US:  917.655.6790    HK:  852.6119.1779    CHN:  86.186.1420.3016  Copyright  ©  2015  The  Fung  Group.  All  rights  reserved.  

Lindt  to  Open  Six  Brazilian  Stores  by  the  End  of  the  Year  (August  18)  Bloomberg  

• Lindt  &  Sprüngli,  the  world’s  largest  maker  of  premium  chocolate,  plans  to  open  six  stores  in  Brazil  in  advance  of  the  2016  Olympics.  

• The  chocolate  maker  has  already  opened  nine  shops  in  Brazil  this  year,  including  two  in  Rio  de  Janeiro.  

• Lindt  has  also  already  opened  20  shops   this  year   in  Switzerland,   the  US,  Canada,  Germany  and  Australia,  and  it  plans  to  open  another  20–30  new  stores  per  year.    

There  Is  Still  Hope  for  Colombia’s  Economy  (August  18)  Bloomberg  

• Colombia’s  prospects  look  the  brightest  of  the  Latin  American  countries,  which  are  suffering  from  declining  commodity  prices,  slowing  growth  and  broadening  corruption  scandals.  

• Colombia   led   the   region   in   terms   of   GDP   growth   in   2014,   with   4.6%   growth,   which   is  expected  to  slow  to  3.2%  this  year.  

• The   yields   on   the   country’s   debt   remain   stable,   however,   suggesting   that   the   currency  situation  is  likely  to  stabilize,  that  exports  should  recover  and  that  economic  growth  should  pick  up  again.    

Several  Latin  American  Countries  Struggling  Against  Inflation  (August  16)  The  Wall  Street  Journal  

• Inflation   in   Latin   America   this   year   is   expected   to   run   at   three   times   the   average   rate   for  emerging  markets,  according  to  Barclays’  estimates.  

• Brazil’s  inflation  rate  is  running  at  9.6%,  Uruguay’s  is  at  8.5%  and  Argentina’s  is  expected  to  exceed  30%.  

• After   Venezuela’s   inflation   rate   hit   68%   last   December,   the   country   stopped   publishing  official  estimates,  and  markets  are  pricing  in  a  98%  chance  that  the  country  will  default  on  its  sovereign  debt  in  the  next  five  years,  according  to  Barclays.    

US  Fast-­‐Food  Chains  See  Opportunities  in  Brazil  (August  14)  The  Wall  Street  Journal  

• Chains   including   Subway,   Domino’s   Pizza,   Dunkin’   Donuts,   Johnny   Rockets,   McDonald’s,  Outback  and  Sbarro  are  opening  new  outlets  in  Brazil.  

• The   chains   are   benefiting   from   Brazil’s   economic   weakness,   and   they   are   signing   up   new  franchisees,  negotiating  favorable  leases  and  expanding  while  peers  are  consolidating.  

• Despite  Brazil’s  status  as  one  of  the  largest  beef  producers,  restaurant  chain  Outback  is  the  number-­‐one  foreign  chain  visited  by  Brazilians,  and  the  company  plans  to  add  another  dozen  outlets  to  its  64  existing  restaurants  in  Brazil.  

   

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August 21, 2015

DEBORAH  WEINSWIG,  EXECUTIVE  DIRECTOR–HEAD  OF  GLOBAL  RETAIL  &  TECHNOLOGY  [email protected]    US:  917.655.6790    HK:  852.6119.1779    CHN:  86.186.1420.3016  Copyright  ©  2015  The  Fung  Group.  All  rights  reserved.  

 

     

EARNINGS  CALENDAR         Sales  (Mil.)     EPS    

Company  

Earnings  Release  Period   Date  

Consensus  TY   LY  Actual  

 

Consensus  TY   LY  Actual   Currency  

ANN   2Q  16   Aug.  21   658   649    

0.69   0.70   USD  

Children’s  Place  Inc.   2Q  16   Aug.  25   381   385    

(0.33)   (0.37)   USD  

Convenience  Retail  Asia   1H  15     Aug.  25   N/A   779    

N/A   0.07   HKD  

Abercrombie  &  Fitch   2Q  16   Aug.  26   813   891    

(0.04)   0.16   USD  

PVH  Corp.   2Q  16   Aug.  26   1,824   1,977    

1.29   1.96   USD  

Guess?     2Q  16   Aug.  26   538   609    

0.15   0.29   USD  

Etam  Developpement     1H  15          Aug.  27   N/A   598    

N/A   1.54   EUR  

Aeropostale  Inc.   2Q  16    Aug.  27   338          396    

(0.56)   (0.50)   USD  

Trinity  Ltd   1H  15    Aug.  27   1,082   1,260    

N/A   0.05   HKD  

Dollar  General  Corp   2Q  16    Aug.  27   5,134   4,724    

0.94   0.83   USD  

Alimentation  Couche-­‐Tard   1Q  16   Sep.  1   9,004   9,189    

0.46   0.47   USD  

Five  Below     2Q  16   Sep.  2   185   153    

0.13   0.15   USD  

G-­‐III  Apparel  Group   2Q  16   Sep.  3   470   424    

0.20   0.14   USD  

Vince   2Q  16   Sep.  3   87   89    

0.23   0.27   USD  

Quiksilver     3Q  15   Sep.  4   342   396    

(0.18)   (0.59)   USD  

Men’s  Wearhouse   2Q  16   Sep.  8   947   803    

1.05   0.96   USD  Wm  Morrison  Supermarkets   1H  16   Sep.  10        8,190   8,496  

 0.04   0.06   GBP  

Next  PLC   1H  16   Sep.  10   1,897   1,850    

N/A   1.73   GBP  

Hudson’s  Bay   2Q  16   Sep.  10   2,005   1,769    

(0.17)            (0.16)   CAD  

Kroger   2Q  16   Sep.  11   25,511   25,310    

0.40   0.36   USD  

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August 21, 2015

DEBORAH  WEINSWIG,  EXECUTIVE  DIRECTOR–HEAD  OF  GLOBAL  RETAIL  &  TECHNOLOGY  [email protected]    US:  917.655.6790    HK:  852.6119.1779    CHN:  86.186.1420.3016  Copyright  ©  2015  The  Fung  Group.  All  rights  reserved.  

 

EVENT  CALENDAR        

Event   Location   Date(s)  FBIC  Presentation  

CIO  Retail  Summit   Scottsdale,  AZ   August  23–25    

NACDS  Total  Store  Expo   Denver,  CO   August  24   DW  

Brains  of  the  Iron  Dome  Missile  Defense  System  by  mPrest   New  York,  NY   August  26    

Iconic  Evening  with  Dan  Rose  &  Oren  Zeev   San  Francisco,  CA`   August  25    

ICSC  Florida  Conference   Orlando,  FL   Aug.  30–Sept.  1    AmCham  2015  China  Conference:  Managing  the    “New  Normal”   Hong  Kong   September  1    

15th  anniversary  Dignity  U  Wear  –  Brooks  Brothers   Jacksonville,  FL   September  2    

International  Retail  Design   Miami,  FL   September  3-­‐5    

World  Retail  Congress   Rome,  Italy   September  8–10    

BAML  Gaming  and  Lodging  Conference     New  York,  NY   September  9    

22nd  Annual  Global  Retailing  Conference   New  York,  NY   September  9–10   DW,  JH,  JW  

Connected  Health  Summit   San  Diego,  CA   September  9–10    

International  Drone  Conference   Las  Vegas,  NV   September  9–11    

NRF  Retail  Leaders  Dinner   Dallas,  TX   September  10    

MOBX  2015   Berlin,  Germany   September  11    

Demandware:  Retail  Connect   Shanghai   September  15    

RetailWeek  Tech  &  EComm  Conference   London,  England   September  15–16    

The  Retail  Conference  2015   London,  England   September  16    

Under  Armour  Investor  Day   Baltimore,  MD   September  16    

Luxury  Summit  –  Holiday  Focus  2015   New  York,  NY   September  16    

WWD  Digital  Forum       New  York,  NY   September  16–17    

24th  Annual  Goldman  Sachs  Communacopia  Conference   New  York,  NY   September  16–18    

BAML  Global  Consumer  &  Retail  Conference   London,  England   September  16–18    

ICSC  Western  Division  Conference   San  Diego,  CA   September  16–18    

Fashion  4WRD   Boston,  MA   September  17    

Ecommerce  Paris   Paris,  France   September  21-­‐23    

Disrupt  SF  2015   San  Francisco,  CA   September  21-­‐23    

Hermes  Retail  Week  Supply  Chain  Awards   London,  England   September  24    

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August 21, 2015

DEBORAH  WEINSWIG,  EXECUTIVE  DIRECTOR–HEAD  OF  GLOBAL  RETAIL  &  TECHNOLOGY  [email protected]    US:  917.655.6790    HK:  852.6119.1779    CHN:  86.186.1420.3016  Copyright  ©  2015  The  Fung  Group.  All  rights  reserved.  

 Deborah  Weinswig,  CPA  Executive  Director—Head  of  Global  Retail  &  Technology  Fung  Business  Intelligence  Centre  New  York:  917.655.6790    Hong  Kong:  +852  6119  1779  [email protected]    Filippo  Battaini  [email protected]  

Sunny  Chan,  CFA  [email protected]  

Marie  Driscoll,  CFA  [email protected]  

John  Harmon,  CFA  [email protected]  

Aragorn  Ho  [email protected]  

John  Mercer  [email protected]  

Shoshana  Pollack  [email protected]    

Kiril  Popov  [email protected]  

Jing  Wang    [email protected]  

Steven  Winnick  [email protected]  

   HONG  KONG:  10th  Floor,  LiFung  Tower  888  Cheung  Sha  Wan  Road,  Kowloon  Hong  Kong  Tel:  852  2300  2470    NEW  YORK:  1359  Broadway,  9th  Floor  New  York,  NY  10018  Tel:  646  839  7017    LONDON:  242-­‐246  Marylebone  Road  London,  NW1  6JQ  United  Kingdom  Tel:    44  (0)20  7616  8988    FBICGROUP.COM