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14
Aug-18
Tuesday

US jeans moves

7
The Wall Street Journal reported that VF Corporation, the owner of Lee and Wrangler jeans, plans to spin off its denim business in a bid to sharpen its focus on faster-growing outerwear and active-wear brands. VF said Monday that it wants to create the yet-unnamed company through a tax-free spinoff to its shareholders. The newly formed company will hold the VF’s jeans business, which includes Wrangler, Lee, Rustler and Rock & Republic, and its 80 VF outlets. These businesses generate about $2.5 billion in annual revenue. The company acquired Lee, its first denim brand, in 1969. It added Wrangler, Rustler, and JanSport to its portfolio through its purchase of Blue Bell Holding Co. in 1986.  
13
Aug-18
Monday

How high will Afterpay soar?

18
The AFR reported on the wide philosophical divide about "buy now, pay later" leader Afterpay's real market value and future prospects. Afterpay has more than doubled its market capitalistion to over $3 billion is just six weeks, with shares closing last Friday at $14.57 (a 100 times forward earnings and at 50 times based on fiscal 2020 earnings forecasts). Here's were the bulls and bears differ. The bulls believe that Afterpay should be valued as a payments platform company, with the scale that comes from taking a clip of the ticket on an expanding volume of transactions. Conversely, the bears see the business as a consumer finance company, needing capital for growth and battling credit risk issues, arguing that a high proportion of Afterpay's customers could not, or should not, get a loan elsewhere. Given its recent expansion into the US market and a growing millennial customer base, we don't see the markets cooling on Afterpay any time soon.

Pump and dump cryptocurrency schemes

20
The Wall Street Journal reported that traders are talking up cryptocurrencies and then dumping them, costing other investors millions. According to the article, dozens of trading groups are manipulating the price of cryptocurrencies on some of the largest online exchanges, generating at least $825 million in trading activity over the past six months—and hundreds of millions in losses for those caught on the wrong side. A review of trading data for the year to date identified 175 "pump and dump" schemes involving 121 different digital coins. These kinds of schemes are amongst the oldest types of market fraud: Traders talk up the price of an asset before dumping it for a profit and leaving fooled investors with shrunken shares. We are not the only ones who have issued repetitive warnings about the dangers related to betting money on the inevitable cryptocurrency bubble.
11
Aug-18
Saturday

UK retail icon saved from administration

6

The BBC reported that fashion chain Sports Direct has agreed to buy the House of Fraser department store chain for £90 million, after Chinese firm C.banner pulled out of a rescue deal earlier this month. The acquisition was announced just hours after the 169-year-old chain went into administration when talks with its creditors failed to reach an agreement. Sports Direct owner and retail mogul, Mike Ashley, said his plan was to turn the 59-store chain into the "Harrods of the High Street". A senior retail analyst at GlobalData, said: "To give House of Fraser the best chance of survival, Sports Direct and its owner Mike Ashley must make drastic changes to both its product proposition and store environment to entice shoppers back." It will be interesting to see how this rescue mission plays out.

Homebase in the UK to close 80 stores

11
Inside Retail reported that UK-based hardware retailer Homebase is set to close approximately 80 of its stores. The retailer says that the move will affect up to 1,000 employees, though other sources put the number of displaced employees at closer to 2,000. The struggling chain is expected to file a company voluntary arrangement. Hilco Capital purchased the chain from Wesfarmers for a nominal sum earlier this year after what Wesfarmers managing director Rob Scott called a “disappointing” investment. Wesfarmers said the deal would record a loss of between $350 to $406 million after purchasing the business just two years ago, but that it would remain eligible for 20% of equity that arises should Hilco sell Homebase in the future.
10
Aug-18
Friday

New York votes to limit rideshares

8
The Hustle reported that New York City Council has voted to cap the number of rideshare vehicles in operation, making it the first major city to impose limits on such services. The timing couldn't be worse for Uber and Lyft, the NYC decision calls into question how well they will be able to grow if other cities follow with similar restrictions, dealing both companies a major pre-IPO blow.

Aldi US expansion

28
Reuters reported that German-owned discount supermarket Aldi is rolling out scores of new products in the US, in an aggressive push to expand in the country even as rivals are struggling in a drawn-out price war. Traditional grocers such as Walmart and Target have been slashing prices to win back the shoppers they've lost to Amazon.com and other online retailers. Surging commodities and transportation costs are also forcing companies that supply retailers with packaged goods to raise prices. Aldi, whose products are 90% private label, is far less exposed to these rising costs, which enables the grocer to pursue a plan to expand its US chain from 1,600 stores in mid-2007 to 2,500 by the end of 2022.
9
Aug-18
Thursday

Paper straws in hot demand

18
Australia isn't the only country navigating the anti-plastic movement. The Hustle reported that the US's only paper straw manufacturer, Aardvark, just got acquired by a larger holding. Within the last year, cities like San Francisco, Seattle, Fort Myers, Florida, and Vancouver (in Canada), have all ended the use of plastic straws. And, beyond cities, companies including Starbucks, American Airlines, Disney, and others have also announced their breakup from plastic straws. So, it goes without saying that Aardvark is struggling to keep up with demand. From a commercial perspective, forget Silicon Valley. Since being founded in 2007, the company has achieved double year-over-year growth.

Ford fits workers with mechanical exoskeletons

21
The Hustle reported that Ford has ordered 75 strength-enhancing mechanical exoskeletons from Ekso Bionics after a successful pilot. Ford tested the suits not to increase the lifting capacity of its employees, but rather to help prevent injuries. The results: after a yearlong trial, the Ekso suits helped reduce workplace injuries by 83%. Ekso has at least 35 competitors in the exo-suit industry, but for now, the company has the edge with both Ford's patronage and a 28% spike in its share price.    

Shallow analysis, dubious conclusions

27
The AFR commented on a report released by Nielsen, which stated that “shoppers are spending $51 billion a year on promoted sales.”  Then, Nielson asserted that this caused retailers to lose $11 billion “on pointless discounting” as the customers would have made the purchases regardless.  We were amazed by the level of oversimplification in this ‘analysis’.  We expect more from an organisation such as Nielsen.
8
Aug-18
Wednesday

Millennial's domain keeps flourishing

11
The AFR reported on ZipPay's results. The ‘buy now, pay later’ business processed A$500 million of sales last year (about a quarter of its direct competitor, Afterpay).  We were able to distil some interesting numbers from the published figures. Zip’s revenue of around A$40 million tells us that fees charged to retailers (on average) are around 10%, once bad debts are factored in at about 2.6% of receivables.  The business has been growing substantially and currently has over 700,000 customers and over 10,000 participating retailers. Millennials clearly love it and it puts the traditional credit card business under pressure.