April 22, 2019 Consensus

The Weekly Consensus – April 22, 2019 (Volume 11, Number 16)

The Big Story
Lyfting the Veil on African E-commerce
Marshall Schleifman

Last month on March 28th, a week after denim stalwart Levi Strauss & Co. completed its initial public offering to return to the stock market after going private in 1985, ridesharing giant Lyft priced its IPO at $72 per share, the top of a revised range that was first quoted as $62 to $68.  On its first day of trading, Lyft’s stock popped as much as 23% before settling up 9% for the day, giving this former unicorn a market capitalization of $22.2 billion.  Lyft’s successful IPO provided an “all clear” signal to market observers, especially the venture capitalists who control other scaled-but-not-yet-profitable tech leaders, that public investors are ready for and receptive to these companies.  In the three weeks since Lyft’s IPO, technology-enabled businesses such as Zoom Video Communications and Pinterest have gone public.  Expected on the horizon are Slack, Postmates, Airbnb, Palantir, Uber and others.

While Lyft, Pinterest, Uber and Airbnb may be considered Consumer Tech, the technology IPO during the current wave that falls squarely in Consumer & Retail is Jumia Technologies.  On April 12th, Jumia’s first day of trading on the New York Stock Exchange, its stock shot up 75%.  Last week on April 18th, its fifth day as a public company, Jumia stock (ADRs, technically) closed up 142% from its IPO with a market capitalization of $2.7 billion.  So, have you heard of Jumia?

Headquartered in Berlin, Germany, Jumia calls itself the “leading pan-African e-commerce platform”.  Many others have tagged it the “Amazon of Africa”.  Africa’s population is twice that of North America in an area approximately 25 percent larger.  While of course the economies are not nearly as robust nor the infrastructure nearly as developed, Africa’s e-commerce marketplace opportunity is massive.  According to Jumia’s prospectus, the 14 countries in which it operates today account for 72% of Africa’s GDP.  Similar to leading U.S., European, and Asian e-commerce platforms, Jumia is vertically integrated by combining its marketplace with payment services (JumiaPay), internal logistical services (Jumia Logistics) and other services such as restaurant food delivery and travel booking.

Like other technology startups generally and e-commerce marketplaces in particular (for example, Amazon famously through much of its history), Jumia has not yet converted its customer, market share and revenue momentum into profits and cash flow.  While 2018 sales grew 40 percent to $150 million on Gross Merchandise Value of $950 million through 4 million active customers, EBITDA margin was over negative-100%.

It will be interesting to follow Jumia’s progress in terms of execution, financial performance and competition.  One factor in its favor is its biggest shareholder, MTN Group Ltd., is Africa’s largest mobile-phone service provider.  In emerging markets like Africa, smartphones and broadband are even more important to people’s lives than they are in places like the U.S.  To tackle the issue of vague addresses in many African cities, Jumia has built a network of leased warehouses, pick up and drop off locations and brought in a contingent of delivery partners to ensure reliable service.

It is indisputable that e-commerce will continue increasing its share of consumer transactions, especially in Africa.  With so much at stake, competition among e-commerce platforms is intensifying worldwide.  As Jumia’s profile rises among consumers and investors, it would seem likely to attract attention from the likes of Amazon (Jumia competes with Amazon’s Souq.com in certain markets), Jet, Alibaba, JD.com, Flipkart, Rakuten and others.

Jumia’s closest comparable as an e-commerce platform for emerging markets may be MercadoLibre, the “largest online commerce ecosystem in Latin America” present in 18 countries.  As a point of reference, MercadoLibre priced its IPO in 2007 at $18 per share; it closed last week at $492 – up 2,633%!  Time will tell whether Jumia lives up to the high praise of being “Africa’s Amazon”, or if it’s too far ahead of its time and economic realities in Africa force it into the dustbin of history.


Headlines of the Week

Sequential To Sell Martha Stewart, Emeril Lagasse Brands To Marquee

In what it describes as a financially motivated transaction, Sequential Brands Group has signed a definitive agreement to sell the rights to the Martha Stewart and Emeril Lagasse brands and related intellectual property assets to Marquee Brands LLC for approximately $175 million, with an earnout opportunity of up to an additional $40 million. Sequential said it expects the transaction to close in the second quarter. Other Sequential brands include Jessica Simpson, William Rast, Ellen Tracy, Avia, DVS and And1. In a separate statement, Marquee, owned by Neuberger Berman managed investor funds, said that the Martha and Emeril acquisition will give it a footing in new industry segments. Another result is the hiring of Carolyn D’Angelo by Marquee. She had been president of the Sequential home division.

Pinterest has second-biggest US IPO debut

Pinterest Inc. rose as much as 32% in its trading debut after raising $1.4 billion in the second-biggest U.S. initial public offering of the year. The listing is second in the U.S. this year only to Lyft Inc.’s $2.34 billion offering in March. Pinterest’s strong showing, along with an even stronger first-day performance by Zoom Video Communications Inc. on Thursday, signals continuing investor thirst for new stocks amid a surge of unicorns—startups valued at $1 billion or more—coming to market. Pinterest sold 75 million shares Wednesday for $19 each, after marketing them for $15 to $17. At the offer price, the IPO valued the San Francisco-based company at about $12.8 billion.



Apparel & Footwear

E-Land to sell K-Swiss to Chinese company per industry sources

South Korea’s retail firm E-Land World is set to sell its subsidiary K-Swiss to a Chinese sports brand six years after it purchased the US company, industry sources said on April 10. E-Land World is scheduled to sign a stock purchase agreement with Xtep this month for about 300 billion won ($262 million), the sources said. A spokesperson declined to confirm the deal with XTep but said that the company has been in talks with many potential buyers since early this year. The Korean retailer bought 100 percent stake in US footwear maker K-Swiss for $170 million in 2013. At the time it was making losses due to aggressive business expansion. After purchasing the US shoemaker, E-Land carried out a restructuring of the company and closed down loss-making stores, turning it around in the first year after the buyout.

Everlane Jumps Into the $20 Billion US Sneaker Market

Everlane, the clothing start-up that touts sustainable clothes and supply chain transparency, is starting its own sneaker label. Called Tread, the brand aims to be better for the planet than the rest of the sneaker industry. The new kick comes with a sole largely free of unrecycled plastic, and leather made at a factory the company says has less environmental impact than your typical shoe manufacturer. Everlane pledges that its shoes, which took two years to design, will be completely carbon neutral. “There’s a set of customers that want a great sneaker, but don’t necessarily fit in,” says Michael Preysman, the company’s co-founder and chief executive. “The problem with sneaker culture is there’s a lot of waste, and it’s disposable.”

Fast Fashion Is Destroying the Planet. Olivia Wilde and ThredUp Want to Give Clothing a Second Life

Fast fashion is big business but—as it has been reported many, many, times before—it’s killing the planet. That’s why, ThredUp, a fashion resale site, is asking you to reconsider your purchasing habits, opting for secondhand clothing over new items to stop contributing to textile waste. Ahead of Earth Day, ThredUp has unveiled a new capsule collection, “Choose Used,” created in partnership with actress and director Olivia Wilde’s Conscious Commerce. The collection is made up of 4,000 unique secondhand items with eight original designs. “As a culture, we’re buying more and discarding clothes faster than ever before, depleting natural resources and clogging landfills,” said Jenna Bray, head of brand at ThredUp. Per Bray, the partnership with Wilde came about because both ThredUp and Wilde’s Conscious Commerce “share a deep concern about the fashion waste crisis, and a love of vintage and used clothing.”

Denim in a comeback, with off-price, specialty stores driving growth

Retailers take note: Women in the U.S. are making more room in their closets for jeans. A total of 364 million pairs of women’s jeans were purchased in the U.S. in the 12 months that ended in February 2019, with more than half bought on sale, according to The NPD Group. The nearly 22 million unit increase compared to the prior year was the primary source of growth for jeans category overall. Women’s jeans are becoming increasingly planned purchases as well as the primary reason for shopping, and the off-price and specialty store channels have seen the most activity. Off-price unit and dollar sales are both up almost 30% in the 12 months ending February 2019 – now representing 17% of unit sales and driving the majority of women’s jeans growth. The specialty store channel, which includes such retailers as American Eagle, H&M, and TopShop, accounts for over a third of women’s jeans annual sales and experienced unit growth of 6% compared to the previous 12 months.


Athletic & Sporting Goods

Converse Reenters Basketball Market

Converse’s reentry into the performance basketball market started with its initial debut in the space. In 1917. More than 100 years ago, the Massachusetts-based brand offered up the Non-Skid sneaker, one of the first shoes specifically designed for the sport of basketball. That shoe then turned into one of the most — if not the most — iconic sneakers in the last century as Converse salesman and coach Chuck Taylor ran basketball camps around the country and quickly turned what became known as the All Star into the leading basketball sneaker. It was that history that led Converse, owned by Nike, to recreate the Non-Skid with a modern performance ethos, using materials and insights from Nike’s many years in the space to give Converse its first new sneaker in over a decade, the Converse All Star Pro BB. The All Star Pro BB will come to everyone when Converse releases the performance basketball sneaker in May.


Synergy Capital Makes Investment in Fitness Holdings Northeast

Fitness Holdings Northeast, LLC, a leading franchisee group in the Crunch Fitness network in the Northeast region, announced that Synergy Capital Investments, LLC, a diversified private equity firm based in Atlanta, Ga., has completed a growth-oriented investment in the Company.  Headquartered in Greenwich, Conn., FHNE’s mission is to launch a network of Crunch gyms across the northeastern United States. The Company currently operates 18 locations in the New York, Pennsylvania, New Jersey, and Massachusetts area, and is set to open four more locations in 2019.

Cosmetics & Pharmacy

L’Oreal sales steam ahead at steady pace in first quarter

Maybelline maker L’Oreal posted higher-than-expected first-quarter sales, powered by growth in the division that makes luxury cosmetics and strong demand in Asian countries like China and India. The French firm said revenues rose 11.4 percent to 7.6 billion euros (£6.56 billion), up 7.7 percent on a like-for-like basis, that strips out the effect of currency swings and acquisitions. That beat the 6.6 percent comparable sales growth forecast in an Infront Data poll of analysts for Reuters, and matched the pace of growth notched up in the last three months of 2018. L’Oreal CEO Jean-Paul Agon said in a statement that the economic environment was “volatile, uncertain and contrasted” but that the group was encouraged by its start to the year. It maintained its goal of outperforming the broader beauty market.

Walgreens partners with Narvar on package pickup, returns

Narvar and Walgreens are teaming up to offer package pickup and returns at more than 8,000 Walgreens stores with FedEx OnSite services. The partnership is the first offering in Narvar Concierge’s offerings for physical commerce, the companies said. Through the partnership, retailers that use Narvar can offer consumers the option to pick up orders or drop off returns at any location in the Narvar Concierge network. The network also will include certain Nordstrom stores. The partnership with Narvar adds to Walgreen’s recent efforts to team up with other companies to help transform its retail business. Walgreens noted that its retail locations are within five miles of more than 75% of the U.S. population, the companies said.


Discounters & Department Stores

Walmart partners with Kidbox for subscription service

Walmart on April 16th announced a partnership with children apparel curation retailer Kidbox featuring apparel from 120 kids’ brands, including BCBG, Butter Super Soft, C&C California and Puma. The Walmart Kidbox stylebox includes four to five garments, including sweaters, denim, dresses and T-shirts, in sizes 0 to 14 for girls and 0 to 16 for boys, for $48, about 50% off the suggested retail price, according to a press release. Customers can order a box and schedule delivery on demand or sign-up for automatic shipments of up to six boxes a year. Kids or their caregivers fill out the style quiz on the Walmart Kidbox landing page, and Kidbox stylists use that, plus the season and the climate of the child’s home, to select the items. For every Walmart Kidbox stylebox purchased, Kidbox will clothe a child in need through its partnership with Delivering Good, the companies said.

Debenhams CEO Bucher quits after lenders take control

Debenhams said on April 18th its chief executive Sergio Bucher had decided to step down, nine days after the ailing British department store group’s lenders took control.  The group’s non-executive chairman Terry Duddy will assume the role of interim executive chairman until a permanent replacement is found, the company said. Bucher, a former Amazon executive who joined Debenhams in October 2016, said that with new financing facilities in place it was time to move on. Administrators were appointed to the group, which had been hit by a sharp slowdown in sales, high rents and ballooning debt on April 9.

Aldi and Kohl’s set to benefit from combo stores, report says

A partnership between Aldi and Kohl’s could drive increased traffic to both stores, according to a recent survey. The first location in the tie-up, under which Aldi builds separate stores next to right-sized Kohl’s locations, opened earlier this year in Waukesha, Wisconsin. The retailers have said they could open as many as ten of these combo stores. Adding Aldi locations next door is part of Kohl’s mission to diversify its retail space this year with a focus on health and wellness. With 1,100 stores nationwide, it’s partnered with Planet Fitness to open 10 fitness centers next to Kohl’s stores and with WW (formerly Weight Watchers) to open an in-store WW Studio in Chicago. Customers can also now return Amazon purchases at select Kohl’s locations — a move that has boosted foot traffic in stores.  Adding a discount supermarket chain like Aldi fits right within this strategic plan, offering shoppers a place to pick up healthy snacks and meal ingredients after finishing their shopping at Kohl’s.

Neiman Marcus takes minority stake in resale site Fashionphile

Neiman Marcus Group on April 17th announced it has agreed to acquire a minority stake in Fashionphile, an e-retailer selling pre-owned “ultra-luxury” handbags and accessories, for an undisclosed amount. Customers can bring items to select Neiman Marcus stores to get a quote from Fashionphile, and can use any payments they receive in trade to shop at Neiman Marcus, according to a press release from the companies that was emailed to Retail Dive. Pre-owned merchandise will continue to be sold exclusively through Fashionphile.com. Neiman Marcus may be wrestling with over $4 billion in debt, but this investment may be better than the department store even realizes. In its announcement, the company cites resale site Thredup’s report that the pre-owned market is “projected to grow to $23 billion by 2023” — but that’s old news. Thredup’s more recent report found that the segment has already eclipsed that, reaching $24 billion today, and on pace to reach $51 billion by 2023.



Emerging Consumer Companies

Bev, the canned Rosé brand targeting millennial women, raises $7 million

Bev, the woman-run canned rosé startup based in Los Angeles, raised a $7 million investment round. The round was led by Founders Fund, the San Francisco-based venture capital firm founded by billionaire Peter Thiel, and included private investors such as The Chainsmokers and Facebook’s vice president of social good. The funds will be used to expand the product line and points of distribution, which to date has been primarily online and in Southern California.

Bombas launches t-shirts, expands to basics

Bombas, the brand that began in 2013 and grew entirely around socks, has launched $36 t-shirts for men and women. The move extends the brand beyond socks to become the go-to source for comfortable basics.



Grocery & Restaurants

Smart & Final agrees to $1.12 billion buyout

After buzz earlier this year about a possible sale, Smart & Final Stores Inc. has agreed to be acquired by private equity firm Apollo Global Management LLC in a deal valued at $1.12 billion. The companies said late Tuesday that, under the agreement, Apollo plans to buy Smart & Final for $6.50 in cash per share of outstanding common stock, a 25% premium over the Commerce, Calif.-based retailer’s closing share price since reporting fiscal 2018 earnings on March 13. Smart & Final is majority-owned by private equity firm Ares Management, which holds a roughly 58% stake in the company. Ares acquired its majority stake in Smart & Final from Apollo in November 2012 for $975 million. About two years later, the retailer completed an initial public offering at $12 per share. Funds managed by affiliates of Apollo had owned Smart & Final from 2007 through the sale of the ownership stake to Ares.

Alexander’s calls $186 million buyout offer ‘too unattractive’

Alexander’s Holdings Inc. has rejected a $186 million buyout offer made earlier this week, stating the proposal by investor Ancora Advisors LLC is “is simply too unattractive to entertain.” The response comes only a few days after Ohio-based Ancora laid out a proposal to purchase the outstanding shares of the company’s common stock for $11.75 a share in a cash deal. In its offer letter, the company said taking J. Alexander’s private would be the “best path forward” for the brand, which operates 46 restaurants in 16 states including J. Alexander’s, Redlands Grill, Stoney River Steakhouse and Grill, Overland Park Grill and Lyndhurst Grill.


Dig Inn receives $15M investment from Danny Meyer firm

New York City-based fast-casual chain Dig Inn has received a $15 million investment from Enlightened Hospitality Investments, the investment arm of Danny Meyer’s Union Square Hospitality Group. The firm is the majority investor in a $20 million round of fundraising. As part of the deal, Meyer, Union Square Hospitality Group’s CEO, will take a seat on the executive board of the 26-unit, vegetable-forward chain and will act as an adviser to the cafeteria-style concept. Dig Inn plans to use the funding to further expand the Dig Inn brand with 10 new locations  in the New York City and Boston area in 2019, and plans to venture outside of those markets for the first time with an undisclosed number of new locations in 2020.

Papa Murphy’s and MTY Food Group Announce Merger

Vancouver, Wash.-based pizza chain Papa Murphy’s Holdings Inc announced a merger with Canadian franchisor MTY Food Group Inc. on Thursday. MTY Food Group Inc. is a North American franchisor specializing in multi-concept brands including TCBY Frozen Yogurt, Cold Stone Creamery, and Planet Smoothie. Under the agreement, MTY will acquire all issued and outstanding shares of Papa Murphy’s common stock for cash consideration of $6.45 USD per share, a transaction valued at $190 million USD (C$253.2 million), including Papa Murphy’s Holdings Inc outstanding net debt.


Home & Road

Lampert tries to block Sears Hometown liquidation

Edward Lampert’s hedge fund replaced two of seven directors of Sears Hometown & Outlet Stores, aiming to block what it termed an “immediate liquidation” of most of the former unit of Sears Holdings. Lampert’s ESL Investments and affiliates own 58 percent of the money-losing Sears Hometown, and his Transform Holdco, which controls Sears Holdings, wants to buy the rest. Following an SEC filing today, ESL said it amended Sears Hometown’s bylaws “to ensure that the reconstituted board has time to adequately consider the effects of such a decision and listen to stockholders’ views.” “ESL was compelled to take these actions after it was unable to reach a reasonable agreement with a special committee of the company’s board to reconsider the liquidation of the Hometown business, a step we believe would diminish the company’s overall value and leave the residual company at risk,” ESL said in a statement.

A buyer for Robert Allen Duralee?

Robert Allen Duralee Group, which declared Chapter 11 bankruptcy in February, appears to have a buyer. A Notice of Designation of Stalking Horse Bidder filed by Robert Allen Duralee debtors in the New York Eastern District of the U.S. Bankruptcy Court indicates that RADG Holdings LLC — a separate entity from Robert Allen Duralee Group — will acquire the company’s assets for $19 million by month’s end barring a higher offer from another bidder. That overbid, which is due April 25, must be at least $19.7 million.


Jewelry & Luxury

With Clean Origin, Three Industry Veterans Bet On Lab-Grown Diamonds Sold Online As The Future Of Jewelry

Clean Origin is what happens when three deeply-embedded jewelry industry executives put their heads together to create a business aimed at the future of the jewelry market—Millennials and GenZ customers. Clean Origin sells the jewelry Millennials and GenZs want–lab-grown diamonds—the way they want to buy them—online—and at lower prices—more bling for the buck. Clean Origin is the brainchild of Alexander Weindling, third-generation diamond merchant and former global managing director for Georg Jensen; Ryan Bonifacino, former chief marketing officer and digital vice president of Alex and Ani, one of the fastest-growing jewelry brands in the U.S.; and Terry Burman, who served as CEO for Signet Jewelers.

State Department Warns of Coming Jewelry Industry Crackdown

U.S. State Department officials delivered a blunt message to industry groups and companies at a meeting in New York City: Jewelry businesses must know and declare where all their materials originate from or they will be subject to new regulations.

“[The government] wants to know where every part of a piece is sourced,” said one attendee, who spoke on condition of anonymity. “Not just the diamond or gem, but the gold, everything.”

Tiffany Is Training Africans to Cut Diamonds Sourced From Region

Tiffany & Co. has been expanding its workforce in sub-Saharan Africa — a region of almost one billion people where the jewelry giant doesn’t have a single store. More than a quarter of the New York-based company’s 1,500 global diamond cutters and polishers are now based in Africa, Chief Executive Officer Alessandro Bogliolo said in an interview in Cape Town. Tiffany has factories in Botswana and Mauritius with staff subject to “intensive training” over two years, he said, making it the only western luxury brand that doesn’t outsource production of its African stones.

Signet Begins Layoffs After Falling Short of Buyout Target

Signet Jewelers Ltd. will begin layoffs after not enough employees opted into its “voluntary transition program,” the company confirmed Wednesday. The company declined to disclose the number of employees that who will be laid off, but said all departing employees, whether voluntary or involuntary, are expected to leave the company on April 26. The buyout program was announced in February, giving employees the option to exit in exchange for a severance package and assistance in finding a new job, though not direct job placement.


Office & Leisure

Blackstone explores selling Vegas’s Cosmopolitan

Blackstone is exploring a potential sale of the Cosmopolitan hotel and casino. If Blackstone Group puts the Las Vegas hotel and casino up for sale, it would be the first major operating casino on the Strip to come to market in more than 10 years, the Wall Street Journal reports, citing people familiar with the matter. Deutsche Bank and PJT Partners have been hired to explore alternatives for the property, including a sale, they said. Potential buyers include Wynn Resorts and MGM Resorts International and possibly Asian firms like Genting Group or U.S. regional casino companies. A sale could fetch $4B or more if it goes to another casino operator, according to some real estate and casino executives.

Getting in the game: Massachusetts makes pitch for Hasbro HQ

Massachusetts is making a pitch to be the new home of the Hasbro toy company. The move would mean a loss of 1,500 jobs in Rhode Island. Hasbro has been looking to move its headquarters in Pawtucket in order to modernize their office setting. While the company has not given up on Providence as a possible location, the Massachusetts Office of Business Development wants to begin talks with Hasbro. A spokeswoman for the company said Hasbro is evaluating several options for contemporizing their corporate headquarters, including a site near their current headquarters. Gov. Gina Raimondo’s commerce secretary has made it clear they will make an aggressive push to keep Hasbro in Rhode Island.

Venture Capital Is Putting Its Money in Astrology

As an Aquarius, David Birnbaum is naturally skeptical of astrology. But as an investor, he has zero doubts about the business potential of the $2.1 billion “mystical services market.” It’s an area that he has been trying, unsuccessfully, to invest in for nearly two decades. Mr. Birnbaum researched lots of astrology start-ups in the Web 1.0 era but concluded then that they were not good investments. This year he finally backed one: Sanctuary, an app that can be described as “Uber for astrological readings.” Mr. Birnbaum’s decision to back a horoscope company through Five Four Ventures, the incubator he runs, “gets a lot of grins” from people in the finance world, he said. But they get it. Astrology is having a cultural moment, and for investors, that translates to dollar signs.

Samsonite Bags Barbie Luggage Deal

Samsonite has inked a deal with Mattel to bring a line of Barbie-inspired suitcases, trolleys and bags to Europe. The luggage brand’s agreement will see it develop the series as part of the American Tourister collection. Mattel agreed to license Barbie iconography for production and marketing as part of the Samsonite Europe NV deal. Barbie fans across Europe can get their hands on the limited-edition Barbie gear beginning this May. Barbie’s deal with Samsonite is the latest in a slew of partnerships established in recent months. This year marks the doll’s 60th anniversary, and to celebrate, Mattel has already inked deals with companies including Puma and National Geographic.

Technology & Internet

Amazon is reportedly planning to close its Chinese ecommerce store

Amazon.com Inc. is preparing to close a Chinese online store that caters to mainland consumers, according to people familiar with the matter. Pulling out of Chinese ecommerce represents a significant setback for the company and CEO Jeff Bezos, known for his willingness to weather losses to achieve long-term gains. Amazon has struggled to win customers from Alibaba Group Holding Ltd and JD.com Inc. even after investing in warehouses, data centers and acquiring online book seller Joyo in 2004.


Google looks to turn Google Maps into a major moneymaker

Google became the world’s most profitable internet company on the back of search advertising. Now, it’s turning another popular web service into a major cash machine. Google Maps is an indispensable part of life for more than 1 billion people, who use it to commute, explore new cities or find a hot new restaurant. The service has been mostly free, and free from ads, since it launched 14 years ago. Interviews with Google executives and customers show this is changing as the internet giant increases the ways advertisers can reach Maps users, while raising prices for some businesses that use the underlying technology.


Finance & Economy

U.S. trade deficit hits eight-month low on weak Chinese imports

The U.S. trade deficit fell to an eight-month low in February as imports from China plunged, temporarily providing a boost to President Donald Trump’s “America First” agenda and economic growth in the first quarter.  The surprise second straight monthly narrowing in the trade gap reported by the Commerce Department was also driven by soaring aircraft exports, which are likely to reverse after Boeing halted deliveries of its troubled 737 MAX aircraft. MAX planes have been grounded indefinitely following two deadly crashes.  Economists warned the trade deficit would remain elevated regardless of whether the United States and China struck a trade deal that was to the White House’s liking because of Americans’ insatiable appetite for cheaper imports.

Consumer Spending Rebounded in March, Raising Expectations for Growth

Retail sales in the U.S. bounced back in March after a stretch of weak spending, another sign that first-quarter growth was stronger than expected. The fresh data Thursday, on the heels of stronger-than-anticipated U.S. exports and economic growth in China, pushed up estimates for gross domestic product in the first part of the year and expectations for a second-quarter boost. Retail sales had dropped in February, after a jump in January that hadn’t fully offset a sharp decline in December. In March, by contrast, the gauge of spending at restaurants, bricks-and-mortar establishments, and online stores increased a seasonally adjusted 1.6% from a month earlier to $514.1 billion, the Commerce Department said. This was the largest monthly gain since September 2017. Economists surveyed by The Wall Street Journal expected a smaller 1.0% jump in sales.

U.S. Jobless Claims Hit Fresh 50-Year Low

The number of Americans filing applications for new unemployment benefits fell last week to a fresh 50-year low. Initial jobless claims, a proxy for layoffs across the U.S., decreased by 5,000 to a seasonally adjusted 192,000 in the week ended April 13, the Labor Department said Thursday. Economists surveyed by The Wall Street Journal had expected 205,000 new claims last week. The latest data marks the lowest level since September 1969. The labor market and population were much smaller then. The four-week moving average of claims, a more stable measure, fell by 6,000 to 201,250 last week. That marked the lowest level since November 1969. More broadly, claims data shows that in a tight labor market employers are reluctant to dismiss workers. The unemployment rate last month was a low 3.8%.