Headlines of the Week

Walmart to sell majority stake in Asda for $8.8 billion

Walmart plans to sell majority ownership in Asda Group Ltd., its United Kingdom grocery subsidiary, to EG Group founders the Issa brothers and U.K. private-equity firm TDR Capital in a deal valued at £6.8 billion ($8.79 billion). Bentonville, Ark.-based Walmart said Friday that it will retain an equity stake in Asda, with an ongoing commercial relationship and a seat on the supermarket chain’s board. Asda will continue to be headquartered in Leeds, England, and led by current CEO Roger Burnley, who serve on Asda’s board with representatives named by the Issa brothers, TDR Capital and Walmart. The deal comes nearly a year-and-a-half after U.K. regulators, citing antitrust issues, rejected an agreement by Walmart to sell Asda to rival J Sainsbury plc for £7.3 billion ($9.4 billion). The Issa brothers serve as co-CEOs of Blackburn, England-based EG Group, a convenience retailer with more than 6,000 grocery and merchandise, foodservice and fuel locations across North America, Europe and Australia. The company, part-owned by TDR Capital, entered the U.S. market in April 2018 with the $2.15 billion acquisition of The Kroger Co.’s convenience retail business, which totaled 762 stores.

What to expect during Amazon Prime Day 2020

Amazon.com Inc.’s Prime Day, its annual sales event typically held in the summer, will span over two days this fall on Oct. 13-14, the retail giant announced. Like last year, Prime Day deals will run for 48 hours. Prime Day will be held in 19 countries this year, including first-time participants Turkey and Brazil. Prime Day, which features deals on many products on Amazon.com, began in 2015 as a celebration of Amazon’s 20th year in business. It turned into a summer sales holiday designed to generate additional business for Amazon—and the retailer’s marketplace sellers—before the holiday shopping season. This year, Amazon postponed the sales event from its usual July time slot because of the coronavirus pandemic. Prime Day is also a vehicle for Amazon to sign more shoppers up for its Prime membership, a $119 per-year loyalty program that offers such perks as free one- or two-day shipping, digital photo storage and video streaming. The Prime Day deals are only available to Prime members. There are more than 150 million Prime subscribers, Amazon said in January.

 

 

Apparel & Footwear

Why American Eagle is the last mall brand standing

When COVID-19 arrived in the United States, the fashion industry took a major hit. In April, clothing sales fell by 79%, the largest drop on record. By the end of the year, revenues are expected to drop by a third, equal to $640 billion in losses. And yet, in the midst of this bleak landscape, there’s a bright spot: American Eagle Outfitters, the four-decades-old teen retailer that owns American Eagle and Aerie. At a time when many retailers are hemorrhaging money and closing stores, Aerie saw a 32% rise in revenue and is on track to open 70 new stores this year. The company also launched two new brands during the pandemic, Offline and Unsubscribed. How did AEO become one of the last successful mall brands in America? The answer seems to be the company’s single-minded commitment to its target customer: Gen Z, the oldest of whom are now in their midtwenties.

Sycamore Partners Bids for Ann Taylor, Loft in Bankruptcy

Sycamore Partners LLC made a preliminary bid to buy assets of bankrupt Ascena Retail Group Inc. including the Ann Taylor brand, according to people familiar with the matter. The private equity firm is offering to buy the Ann Taylor, Loft and Lane Bryant labels from Ascena, said the people, who asked not to be identified because the bid isn’t public. The offer is non-binding, and negotiations will continue before a final bid is submitted in court, the people said. After a string of acquisitions starting in 2009, Mahwah, N.J.-based Ascena was struggling with dated brands and declining revenue even before the coronavirus froze much consumer spending. Bloomberg first reported in July that New York-based Sycamore was interested in the assets. Ascena last week said that FullBeauty Brands had won a court auction to buy Ascena’s plus-size Catherines chain for $40.8 million.

Poshmark plans IPO

Poshmark is preparing for an IPO on the back of retail’s social commerce and resale trends. The company has been in expansion mode in recent years, moving into the home category in June of last year, and just this April, the company rolled out a new Posh Stories feature, which lets users make and share shoppable content for their item listings, as social commerce grows. By Poshmark’s own measure, 58% of consumers are willing to purchase through social media rather than a company’s website, and 75% would purchase items directly from an individual online. Meanwhile, a lengthy list of other platforms, including Verishop, Pinterest, Snapchat, Instagram, Google, Shnap and TikTok, are experimenting with similar features. As a result, brands and retailers like Sephora, Estee Lauder, Secret and Macy’s have been working to take advantage of the trend by creating shoppable content for various platforms.

H&M to close 250 stores next year

With about a quarter of its leases up for renegotiation or exit annually, H&M on Thursday said it plans a net decrease in its brick-and-mortar footprint next year of about 250 stores, according to a company press release. The fast-fashion apparel retailer also said that third quarter net sales fell 16% to 50.9 billion Swedish krona ($5.7 billion), as the pandemic kept hundreds of stores shut throughout the quarter. The company swung back to black from the previous quarter, with adjusted profit of SEK 2.37 billion. Gross profit reached SEK 24.9 billion and gross margin reached 48.9%. Last year, H&M had already begun to pull back from its previous plan to expand its global footprint and instead pivot to strengthen its digital operations. Even so, its brick-and-mortar strategy for next year represents a significant departure for the fast-fashion retailer. In June, for example, the company said it would close 170 stores this year, but with openings that’s just a net 40-store decrease. The retailer had for years insisted that its physical locations were its core strength, and as a result is somewhat late to its digital revamp.

Desert boot maker Clarks picks LionRock for exclusive talks

British shoe retailer Clarks has picked Hong Kong-based investment firm LionRock Capital for exclusive talks to buy a controlling stake in the 195-year-old business, a source familiar with the matter told Reuters. LionRock has reached the final stage of a sale process aimed at injecting much-needed cash into Clarks in return for a majority stake in the struggling Somerset-based firm, which is still about 84% owned by the Clark family. Best known for its desert boots made of calf suede leather, Clarks was founded in 1825 by Quaker siblings Cyrus and James who moved from making rugs out of sheepskin to footwear by using the off cuts to produce slippers. The deal under discussion is worth between 100 million and 150 million pounds ($129-$194 million) and will see the Clark family keep a minority stake, the source, speaking on condition of anonymity, added. A spokesman for Clarks said that as part of the company’s long-term strategy its board of directors was reviewing options to best position the business for future long-term growth. Clarks, led by former Geox boss Giorgio Presca, announced 900 job cuts in May as part of its turnaround plan dubbed “Made to Last.”

 

Athletic & Sporting Goods

Vista Outdoor to buy bankrupt gunmaker Remington’s ammunition business

Vista Outdoor Inc said it would buy some parts of U.S. gunmaker Remington Outdoor Co Inc’s ammunition and accessories businesses for about $81 million. Remington in July filed for Chapter 11 bankruptcy protection for the second time in two years as it faced financial troubles partly because some retailers placed restrictions on gun sales after school shootings in the United States. Vista will also acquire Remington’s ammunition manufacturing facility in Lonoke, Arkansas and related intellectual property, including the Remington brand and trademarks.

 

Academy Sports Tests Investor Appetite for Retail

Academy Sports and Outdoors Inc. priced its initial public offering below its expected range, highlighting the challenge the sporting-goods chain faces in winning over investors when much of the retail sector is ailing.  Academy has fared relatively well during a pandemic that has led to a wave of bankruptcies and permanent closures of thousands of stores. Academy said sales jumped in the first half of the year as shoppers flocked to its 259 U.S. stores for firearms and other outdoor gear.  KKR, which acquired the chain in 2011, is taking it public in a surging initial-public-offering market. U.S. listings are raising money at a pace that could push this year’s tally above the tech-boom years of 1999 and 2000.

 

Sierra Bullets to Acquire Assets of Barnes Bullets

Clarus Corporation’s subsidiary Sierra Bullets, L.L.C., the Bulletsmiths®, a dedicated manufacturer of one of the highest-quality, most accurate bullets in the world, was selected to acquire certain assets relating to the Barnes Bullets brand of specialty hunting bullets in a chapter 11 bankruptcy auction process conducted by Remington Outdoor Company, Inc. and certain of its subsidiaries.  Founded in 1932 and headquartered in Mona, Utah, Barnes is an industry-leader in manufacturing environmentally sound, lead-free bullets.  Sierra is expected to acquire Barnes for $30.5 million in cash, pursuant to an asset purchase agreement. For the trailing twelve months ended June 30, 2020, Barnes Bullets reported $21.8 million in sales. The acquisition is anticipated to be immediately accretive to Clarus’ earnings.

Cosmetics & Pharmacy

The Hut Group Acquires Perricone MD for $60 Million

Hot off an IPO, The Hut Group has purchased the Perricone MD brand for $60 million in cash. The transaction was far less than the $200 million number floated last December when reports emerged that Lion Capital was exploring a sale. Founded in 1997 by dermatologist Dr. Nicholas Perricone, Perricone MD is a science-led topical skincare brand. The brand has approximately 100 product patents and is committed to no-animal testing, clean ingredients, and gluten-free formulations. His Perricone MD line also contains a range of supplements that have garnered a cult following over the years. The Hut Group (THG) was founded in 2004 by Chief Executive Matthew Moulding and CFO John Gallemore, retails more than 8,000 brands, and operates more than 160 localized websites across 35 languages and 42 currencies. THG has become one of Europe’s largest online retailers of premium beauty brands.

Revlon Launches Another Exchange Offer

Revlon Inc. has launched an exchange offer for $345 million in debt that matures in 2021. This is Revlon’s second attempt at an exchange offer for the debt. A July offer expired earlier in September after only 5.1 percent of noteholders agreed to it, Revlon said in a statement. A spokesman for Revlon said, “This new exchange offer incorporates feedback from discussions with many of our key constituents and provides our noteholders with more attractive terms compared to our prior offer, while still supporting the goal of allowing Revlon to continue investing in our business and in our strategic growth priorities. As a company, we remain committed to taking the right actions to protect our liquidity, managing through the COVID-19 pandemic and ensuring that we have debt maturity runway to allow us to continue executing our turnaround strategy.” The new deal gives noteholders two options — one for cash, and one with a mixed cash-debt consideration. The exchange offer expires Oct. 27. If it doesn’t go through, other debt would become due Nov. 16, putting the company in a tough position, sources said.

Brüush Closes Oversubscribed $6.5 Million Series A Round

Canadian direct-to-consumer oral care brand Brüush closed a heavily oversubscribed Series A round. Launched in 2019, Brüush was founded by Chief Executive Officer Aneil Manhas, a former investment banker turned entrepreneur, and Chairman Drew Green, one of Canada’s leading technology entrepreneurs. Brüush sells premium electric toothbrushes to consumers in North America, and with a direct-to-consumer, subscription-based business model, the company is able to offer a product at a fraction of the cost of traditional retail, while providing an easy brush head refill plan ensuring consumers are able to easily maintain a higher level of oral health. “Put simply, Brüush doesn’t sacrifice on quality, looks good on your bathroom counter and doesn’t break the bank relative to comparable electric toothbrushes due to our direct-to-consumer model,” said Aneil Manhas, founder and Chief Executive Officer.

China’s Perfect Diary Closed Funding at a $4 Billion Valuation

China’s Perfect Diary brand has closed a new round of fundraising that brings the brand’s valuation to $4 billion. Founded in 2017 by entrepreneur Huang Jinfeng’s Yatsen e-commerce firm, Perfect Diary is often referred to as “the Glossier of China.” The brand built its initial audience via China’s social commerce platform Xiao Hong Shu, also known as Red, and WeChat, targeting millennials and Gen Z with accessible price points. The brand opened its first physical retail store in Shenzhen in January 2019 followed by 40 stores in 20 Chinese cities by year-end, with plans of opening 600 stores mostly located in second- and third-tier cities by 2022. Perfect Diary has completed the round for an undisclosed amount of capital.  Investors include Warburg Pincus, Carlyle Group, and Loyal Valley Capital, Chinese media outlet IPOzaozhidao reported on Monday, citing people close to the deal.

 

Discounters & Department Stores

Target is throwing its own sale party on Amazon’s Prime Day

One day after Amazon announced its Prime Day event for October 13-14, Target unveiled its own sales event for the same period. The retailer framed the sale event as the beginning of its holiday shopping season. “Target Deal Days” have historically been Target’s answer to Prime Day, which in years past took place in July. The retailer also announced in a press release that there would be “Black Friday pricing” throughout November as well as an extended price match guarantee. This year, Target said there would be close to 1 million more deals than in 2019.

Walmart to revamp 1K stores with digital in mind

Walmart plans to roll out a new concept to 200 of its Supercenters this year and to 1,000 stores in all by the end of its next fiscal year, according to a company post. Included in the remodels is new signage meant to encourage customers to download and use the Walmart app in stores and help them navigate through the store. Modeled off airports, Walmart is also trying to use design to help customers navigate stores and direct them to dedicated category sections such as electronics and toys. The remodels also include self-checkout kiosks and contactless payment systems and select stores will have Scan & Go self-directed checkout.

Neiman Marcus emerges from Chapter 11 bankruptcy

Neiman Marcus has emerged from the Chapter 11 bankruptcy process, the luxury retailer announced Sept 25th. Neiman Marcus’ announcement comes a couple of weeks after it released its plan to exit Chapter 11. The company is eliminating more than $4 billion of existing debt and more than $200 million of interest expenses with no near-term maturities. “While the unprecedented business disruption caused by COVID-19 has presented many challenges, it has also given us the opportunity to reimagine our platform and improve our business,” said Geoffroy van Raemdonck, CEO of Neiman Marcus Group, in a prepared statement. “We emerge from Chapter 11 as a stronger, more innovative retailer, brand partner, and employer.”

Walmart plans online sale that parallels Prime Day

Walmart is planning an online sale event with from Oct. 11-15, which includes the days Amazon recently announced for Prime Day (Oct 13-14). A Walmart spokesperson said in an email that the sale will feature “Black Friday-like savings on thousands of items,” including electronics, toys, fashion, beauty products and others. The retailer will offer free two-day or next-day shipping on some eligible items with orders over $35, with store pickup available as well on some items.

 

 

Emerging Consumer Companies

Bloomscape raises $15 million from General Catalyst

Bloomscape, the Detroit-based company that delivers live plants to customers’ homes, has raised $15 million. The investment was led by General Catalyst, with participation from existing investors Revolution Ventures and Ludlow Ventures, and brings total funding to $24 million. The company also announced the acquisition of plant care app Vera, which provides tips and content, troubleshooting, watering reminders and more, for an undisclosed amount. Bloomscape was founded in 2017 by Justin Mast, who comes from a family with five generations of horticulturalists.

LARQ, hydration brand, raises $10 million

LARQ, a San Francisco-based health and wellness hydration brand that provides access to clean water through sustainable products that lower dependency on single-use plastic, announced today a round closure of $10 million in Series A funding. The investment was led by Seventure, with participation from DCM. The company sold more than 75,000 units in 2019, surpassing $1 million in monthly revenue bookings in Q4 2019, and anticipating a doubling of its business in 2020. It is now stocked by 88 retailers, and is available on shelves in 16 countries.

 

Allbirds raises $100 million Series E

Allbirds, the San Francisco-based sustainable footwear and apparel brand, announced a $100 million Series E funding round. The investment was led by Franklin Templeton, with participation from T. Rowe Price, Baillie Gifford, TDM Growth Partners and Rockefeller Capital Management. The company plans to use the capital to launch in new product categories, and fund the expansion of its brick-and-mortar stores and its international business. The retailer currently has 21 stores globally. The funding brings the total capital raised since the company’s launch in March 2016 to $200 million.

 

Grocery & Restaurants

Eurazeo takes stake in Dewey’s Bakery

Global investment firm Eurazeo has completed a $25 million minority investment in Dewey’s Bakery, a Winston-Salem, NC-based cookie and cracker manufacturer. Eurazeo Brands, the division of Eurazeo focused on differentiated consumer brands with global growth potential, is investing alongside Scott A. Livengood, chairman and majority owner of Dewey’s, and Michael P. Senackerib, incoming chief executive officer. Founded in 1930, Dewey’s Bakery produces soft baked cookies, crisp cookie thins and savory crackers. The company offers custom-branded products for the largest food retailers in the United States and is an emerging national brand in natural, specialty and mainline grocery channels. The company also operates several retail bakeries in the Winston-Salem area with longstanding roots in the local community. Eurazeo Brands said it plans to help Dewey’s accelerate and enhance its marketing activities and manufacturing capabilities in order to grow both its branded product business and support its longstanding private label division.

Utz Brands to enter filled pretzel business with acquisition

Utz Quality Foods, LLC, a business unit of Utz Brands, Inc., has entered into an agreement with Conagra Brands, Inc., Chicago, to acquire certain assets of H.K. Anderson, a brand of peanut butter filled pretzels. The purchase price is less than $10 million, according to the company. The acquisition includes intellectual property specific to the H.K. Anderson brand and does not include employees, facilities or equipment. The transaction is expected to close in November, subject to customary closing conditions.

Home & Road

Bed Bath & Beyond’s same-store sales increase leads to improved Q2

Bed Bath & Beyond reported its first same-store sales gain in years fueled by surging e-commerce sales. The home furnishings retailer’s net income increased to $217.9 million, or $1.75 per share, from a loss of $138.8 million, or $1.12 per share, a year ago. Excluding one-time items, the company earned $0.50 cents per share, beating analysts’ expectations for a loss of $0.23. Net sales fell approximately 1% to $2.69 billion, better than expected. Bed Bath & Beyond attributed the decrease partially due to the divestiture of One Kings Lane. Digital sales soared 88% while net sales from stores declined approximately 18% compared to the year-ago period. Same-store sales increased by approximately 6%, the company’s first comp growth since its fiscal 2016 fourth quarter. Sales benefited from significantly strong comp growth in digital channels of approximately 89%, partially offset by an approximately 12% decline in comparable-store sales.

Natuzzi Q2 sales off by a third

Italian leather upholstery major Natuzzi felt the full impact of the COVID-19 pandemic in the second quarter, reporting consolidated net sales of €61.6 million, a 33.1% drop compared with the same period last year. Natuzzi lost €9.1 million for the three months ended June 30. The company had lost €10.5 million in 2019’s second quarter. Second-quarter 2020 core business net sales for upholstery, accessories and home furnishings of €59.7 million were down 32.5% compared to the prior year, attributable to a 56.6% decrease in private-label sales and a 26.7% decrease in the Natuzzi-branded sales. Other sales were €1.9 million. The 26.7% decrease in Natuzzi branded revenues resulted from a 27.4% decrease in the Americas, a 34.8% decrease in the Europe/Middle East/Africa/India region and a 4.8% decrease in the Asia-Pacific region.

Regal Ware finalizes coffee brand acquisition

Regal Ware has finalized its acquisition of the Espro brand of coffee products, which it first acquired in April 2018. Bruce Constantine, who founded Espro and held the role of president since the acquisition, will leave the company. Dave Lenz, chief operating officer for Regal Ware, will serve as interim Espro president while the company conducts an executive search. “I am extremely proud of where we’ve taken the Espro brand since joining the Regal Ware family,” said Constantine. “We have launched three new products, building upon the two products that put us on the map in the premium coffee and tea space. The groundwork for a world-class brand has been laid. Now, it’s time for someone whose passion is growing the business to take it to the next level.”

Bassett Furniture reports 16.3% drop in Q3 sales

Bassett Furniture reported a 16.3% drop in consolidated sales during the third quarter ended Aug. 29, an impact that reflected double-digit sales declines across its retail and wholesale segments largely resulting from supply chain disruptions caused by the COVID-19 pandemic. Consolidated sales totaled $91.6 million, compared with $109.4 million in the third quarter of 2019. Meanwhile, net income was flat at $2.178 million, or 22 cents per diluted share compared with $2.157 million, or 21 cents per diluted share in the same period of 2019. “The 2020 roller coaster churned on in our June-August quarter,” said Rob Spilman, chairman and CEO. “In short, business has boomed since the Memorial Day holiday at the end of May. Wholesale orders increased by 117% on a sequential basis compared with the May quarter, and we ended the quarter with a $37.4 million wholesale backlog, 223% more than our backlog of August 2019. “Once again, we have very little insight into the sustainability of the ‘stay at home’ trend and the positive effect it has on the fortunes of Bassett and on our industry in general,” he continued.

Jewelry & Luxury

War of words escalates as LVMH countersues Tiffany to nix their deal

LVMH on Monday filed a countersuit against Tiffany in Delaware Chancery Court, calling the American jeweler’s arguments “spurious” and “completely unfounded.” Tiffany has already been in that court since Sept. 9 fighting LVMH’s attempted withdrawal from their $16.2 billion merger agreement. The Parisian luxury house said that a “material adverse effect” has occurred without a pandemic carve-out; that Tiffany mismanaged its business in violation of their agreement; that a letter from the French government “makes it impossible” to close the deal before its “outside date;” and that LVMH has met its own obligations.

Watches of Switzerland Acquires Analog Shift, Vintage E-tailer

Watches of Switzerland U.S. has acquired Analog Shift, an e-tailer that specializes in pre-owned and vintage timepieces. The purchase turns Analog Shift into the in-house supplier of pre-owned and vintage watches for Watches of Switzerland, which also plans to expand its trade-in program. London-based Watches of Switzerland owns around 20 stores in the United States, including the Mayors chain. It went public last year.

Luxury brands bank on raring China market

Fervent shoppers have flocked again to the streets of Shanghai, where luxury stores like Prada and Louis Vuitton are counting on Chinese customers to open up their purses, after the global health crisis has sent most of the world’s luxury spending into a tailspin. China is the only major economy still expected to grow this year. That’s spurring big brands to go all-in and boost the number of new stores, embrace e-commerce and live fashion shows to attract Chinese customers like 27-year-old Xing Ying.

De Beers’ Market Share Falls in 2019, Hides a Surprise

After a year of pains, and ahead of one of the most complicated years since World War II, De Beers’ market share sank in 2019. Not only De Beers, but ALROSA, Rio Tinto, and Petra all lost market share. In 2019, De Beers’ rough diamond sales totaled $4.04 billion. Based on the latest Kimberley Process (KP) figures, global diamond production totaled $13.57 billion in 2019. This brought De Beers’ market share to 29.5% in 2019. A deep 21.3% year-over-year plunge from 37.4% in 2018. Despite its lost market share, De Beers is still the world’s largest diamond mining company. Its interests span from mining to retail, including activities in diamond science research, lab-grown, toolmaking, grading, and more.

 

Office & Leisure

Barbie could be queen of the holiday season with analysts upbeat about Mattel and Hasbro

One familiar face may show up at many holiday celebrations this year: Barbie. The iconic Mattel Inc. doll is poised to be a “winner” among dolls, according to JPMorgan analysts, who recently went to a number of Walmart Inc. and Target Corp. locations in the Northeast. “We saw a big presence of Barbie in all locations we visited with separate pallet displays of Barbie Dream House ($179 price point at Walmart and slightly higher at Target),” JPMorgan said. Barbie is getting a boost from her Netflix Inc. movie “Barbie Princess Adventure,” which was the number eight most watched movie on the streaming platform for the week after its Sept. 1 launch, analysts note. “We expect Barbie’s momentum to continue (if not accelerate) as Mattel expects to launch more newness around the holiday with higher price point play sets, Barbie family, and more,” the JPMorgan note said.

Halloween shops seeing little demand for costumes: ‘I’ve never been this worried’

This was supposed to be the biggest Halloween of Lorenzo Caltagirone’s career. For the first time in 95 years, it would fall on both a full moon and a Saturday — an equation that normally would mean big profits for his Virginia costume shop. Instead, sales are down 80 percent and he is running low on cash. “I’ve never been this worried before,” said Caltagirone, who opened his Virginia store in 2007, just before the last recession and says his store is barely hanging on. “After all these years of business, this Halloween could actually be the one that puts me out.” Costume shops, party stores and seasonal pop-ups that rely on Halloween for the bulk of their profits say they’re bracing for a steep drop-off in sales that could tip them into insolvency.

Powell’s Books has had enough of Amazon

Emily Powell, proprietor of Powell’s Books in Portland, Oregon, founded by her grandfather and previously helmed by her father, celebrated Independent Bookstore Day this summer by pulling the plug on a major source of sales — Amazon’s marketplace. It’s going to pinch, she said in an interview by video conference call. In addition to its four brick-and-mortar locations, the retailer runs its own website, where it sells both new and used titles and merchandise like games — all, until recently, available through its Amazon portal as well — and enjoys a loyal following in Oregon and beyond. Like all independent bookstores, however, even large ones like itself, it’s dwarfed by Amazon, which last year rang up $160.4 billion in product sales. Powell’s began doing business via the internet even before Amazon launched. At first, selling used inventory through the fledgling Amazon marketplace seemed like an innovation and a smart addition. Two decades on, however, even after finding success and expanding the assortment sold through the marketplace, the drawbacks weighed on the indie store.

William Hill Faces Breakup After Accepting Caesars Bid

William Hill Plc has chosen to sell itself to a rival rather than private equity, yet the 2.9 billion pound ($3.7 billion) deal could still end up in a breakup of the U.K. gambling company. Caesars Entertainment Inc.’s takeover bid was accepted by William Hill’s board, according to a statement Wednesday, strengthening its position to expand in the lucrative business of online gaming in the U.S. If its bid is successful, Caesars said its focus would be on London-based William Hill’s American assets and it would “seek suitable partners or owners” for the other businesses, such as the U.K. The British company has been focused on its U.S. operations after the Supreme Court legalized sports betting in 2018, while its older markets have suffered from tighter regulation. Wednesday’s statement looks to have shut out a rival bid from buyout firm Apollo Global Management Inc. From William Hill’s perspective, a deal with Caesars may have been all but inevitable: the companies already operate a joint venture in the U.S., and Caesars said Monday it could terminate aspects of it if Apollo’s approach prevailed.

Technology & Internet

Nearly a third of 2020 US holiday sales will occur online, Salesforce forecasts

Online holiday sales in the U.S. will surge 34% year over year for the 2020 season, nearly tripling the 12% growth registered in the prior year, according to new projections from software provider Salesforce.com Inc. The pandemic-induced spike in ecommerce this year will carry into the holidays, and with total sales through all channels expected to remain flat, digital will make up 30% of seasonal spending, the company predicts. For the November-December period, digital revenue is anticipated to hit a record $221 billion while total holiday sales will reach $730 billion, Salesforce says. It took 20 years for online penetration to reach about 15%, and in just over the course of this year, that will “skyrocket” up to 30% by the holidays.

 

J2 Global Agrees To Buy RetailMeNot For About $420M

Web information and services firm J2 Global, Inc. said on Tuesday (Sept. 29) that it has entered into a deal to buy RetailMeNot from marketing solutions firm Vericast for about $420 million, according to an announcement. RetailMeNot aims to help consumers save money by offering online and brick-and-mortar coupon codes, a RetailMeNot Deal Finder™ browser extension and cashback deals, according to the announcement. PCMag, Mashable and IGN are among the names in J2 Global’s portfolio of brands. J2 Global says it reaches more than 230 million individuals monthly across its brands.

 

Finance & Economy

U.S. economy plunges 31.4% in the second quarter but a big rebound is expected

The U.S. economy plunged at a record rate in the spring but is poised to swing to a record increase in the quarter that just ended.  The Commerce Department reported that the gross domestic product, the economy’s total output of goods and services, fell at a rate of 31.4% in the April-June quarter, only slightly changed from the 31.7% drop estimated one month ago.  The new report, the government’s last look at the second quarter, showed a decline that was almost four times larger than the previous record-holder, a fall of 10% in the first quarter of 1958 when Dwight Eisenhower was president.  Economists believe the economy will expand at an annual rate of 30% in the current quarter as businesses have re-opened and millions of people have gone back to work.

Jobless claims edge lower to 837,000 as slow recovery continues

First-time claims for unemployment insurance totaled 837,000 last week, the Labor Department said as the jobs market continues its plodding recovery from the coronavirus pandemic.  Economists surveyed by Dow Jones had been expecting 850,000. The weekly total represented a decline of 36,000 from the previous week’s upwardly revised 870,000, according to seasonally adjusted numbers.  This was the fifth consecutive week that claims were under 1 million after staying there for five months following the Covid-19-related economic shutdown in mid-March. However, the total is still well above anything the U.S. has seen since before the crisis.

Consumers draw from their cushions aggressively in September

We’ve written several times in recent weeks about the resilience of the U.S. consumer.  And now we know where that resilience comes from — savings.  The latest data on personal income and spending showed that incomes fell, consumption rose but at a slower rate, while the savings rate fell sharply.  The household savings rate stood at 14.1% in August, down 3.6% from July and well below the April high of 33.6%. Pre-crisis, however, the household savings rate was closer to 7%.  And so as we look back at better-than-feared consumer spending and confidence during the last few weeks, it is now clear what underwrites this data — consumers are drawing down the financial cushions they built up during the spring.

Americans feel better about the economy now than at any point during the pandemic

Six months into the pandemic, Americans are beginning to feel much better about the economic recovery. Consumer confidence soared to its highest level since Covid-19 swept across the country, The Conference Board reported.  In spite of rising infections, stalled negotiations for another stimulus package on Capitol Hill and a slowing jobs recovery, Americans are increasingly optimistic about the short-term business outlook, the job market, and their financial prospects.  Some two-thirds of the US economy rely on consumer spending, so how people feel about this recovery is an important piece of the puzzle as the country tries to get back to normal.