Breakingviews

One thing Tesco doesn’t stock is pricing power

April 13, 2016

Same-store sales and operating profit are rising, but prices on the UK grocer’s shelves keep falling. It’s a problem for rivals too. Tesco used to be dominant in a concentrated market; now it’s just plain big. Consumers’ gain will be investors’ loss for the foreseeable future.

Cox: Dan Loeb helps one Abenomics arrow hit target

By Rob Cox
April 7, 2016

Forget the Bank of Japan’s negative interest rate blunder, or the government’s muddled fiscal policies. Prime Minister Shinzo Abe’s corporate-governance reforms hold the most promise. The pushy investor’s fight with the operator of Seven-Eleven convenience stores offers a useful glimpse.

British retailers need more age-appropriate attire

March 24, 2016

Next’s same-store revenue is falling and inventory is taking a week longer to clear than a year ago. Yet it plans to grow its selling space by 8 pct. Other retailers too are expanding even when shrinking looks smarter. The maths of such strategies can quickly turn unattractive.

Sainsbury can open its wallet wider for Argos

March 15, 2016

The UK grocer’s like-for-like sales have turned positive, but prices are still falling. A proposed 1.4 bln pound merger with rival Home Retail is a decent coping strategy, if Sainsbury can beat rival bidder Steinhoff. A boost of 10 pct would still just about make financial sense.

Burberry bid would be an extravagance

March 8, 2016

The trench-coat maker is the subject of takeover speculation but a deal, which could cost 8 bln pounds, doesn’t stack up. Its stock isn’t particularly cheap and costs are already lean. With the luxury sector deteriorating, it’s not clear a new owner could halt slowing sales.

HNA’s $6 bln Ingram bid has weird Chinese logic

February 18, 2016

There’s no clear rationale for the conglomerate to buy a U.S. electronics distributor and leave its management and business untouched. But like other recent outbound Chinese deals, the acquisition gives HNA diversification, political capital, and a hedge against the sliding yuan.

Cox: Scope out the bank in U.S. retail camouflage

By Rob Cox
February 16, 2016

The business model of Cabela’s, which is up for sale, resembles a $3.2 bln chain of taxidermy museums issuing unsecured debt to assault-rifle buyers. Most of the profit at the “World’s Foremost Outfitter” comes from a loan book ballooning in ways that should give suitors pause.

Apple may be in for model-cycle purgatory

January 27, 2016

The $550 bln tech giant’s top line nearly flatlined as demand for its smartphones stalled in the last quarter of 2015. Sales are set to slide in the current period. A $216 bln cash hoard and a low valuation should offer solace, but investors could fixate on the next new iPhones.

Tesco recovery starts with some gorilla tactics

January 14, 2016

The UK retailer’s sales have bounced back to growth. The reason is that Tesco is cutting costs sharply, shoring up its dominant market share. It’s an essential part of a retail turnaround, but doesn’t immediately help the bigger goal of generating cash to reduce its indebtedness.

When UK retailers fight, shareholders lose

January 13, 2016

Sainsbury, like rival Morrison, says sales are improving after years of declines. What’s really happening is that grocers scrabble for revenue at the expense of profit, while the whole market stays flat. The other signs investors care about are going in the wrong direction.