Download - Weekly Insights by Fung Global Retail Tech June 17 …...can be displayed on the retailer’s website, in advertisements, in email or in stores. Findmine was selected as the winner

1

June 17, 2016

DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

+5.4%CHARTOFTHEWEEK

STATOFTHEWEEK

STATOFTHEWEEK

D E B O R A H W E I N S W I G M A N A G I N G D I R E C T O R

F U N G G L O B A L R E T A I L & T E C H N O L O G Y 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

U S : 6 4 6 . 8 3 9 . 7 0 1 7 H K : 8 5 2 . 6 1 1 9 . 1 7 7 9

C H N : 8 6 . 1 8 6 . 1 4 2 0 . 3 0 1 6

JUNE 17, 2016 • In New York this week, the Fung Global Retail & Technologyteam hosted an event called Breakfast with the Disruptors:Women-Led Beauty & Fashion Startups, which attracted astanding-room-onlycrowdofmorethan150.Theeventfeaturedpresentationsfromsevenwomen-ledstartupsthatcompetedfora$2,500prize.

• In a survey of more than 1,000 US consumers, 72% ofrespondentssaidtheyprefertousealaptopordesktoptoshoponline.Only28%saidtheyprefertouseatabletorsmartphone.In addition, 42% said they have never used a tablet to shoponline, while 32% said they have never used a smartphone toshoponline.

• Germany’s Metro Group is trialing robots from StarshipTechnologies to carry shoppers’ purchases through a store inDüsseldorf, so that customers can focus on “hands-free”shopping. These autonomous robots are also being tested todeliveronlinepurchasestocustomers.

• On June 10, messaging app Line kicked off its IPO, which isscheduled for July 14 and looks to raise $917 million with aninitialsharepriceof$26.21.TheJapanesecompanyplanstoduallistontheTokyoandNewYorkStockExchanges.Linehas218.4million active users, but added only 13 million new monthlyactiveuserslastyear.

$26.2Bil.

• SoftwaregiantMicrosoftannouncedonJune13thatithasagreedtoacquireprofessionalnetworkLinkedInfor$26.2billioninanall-cashtransactionthatvaluesLinkedIn’ssharesat$196each.

• JeffWeinerwillcontinueasCEOofLinkedIn,andwillreporttoSatyaNadella,theCEOofMicrosoft.

• Thedealisexpectedtobecompletedthiscalendaryear,subjecttoapprovalbyLinkedIn’sshareholdersandbyregulators.

Source:S&PCapitalIQ

Ocado’sSharePriceDeclinestoLowestPointinThreeYears

June14,2016217.7p

0

100

200

300

400

500

600

700

June2013 June2014 June2015 June2016

Pence

Source:Microsoft

2

June 17, 2016


FROMTHEDESKOFDEBORAHWEINSWIG

InNewYorkthisweek,theFungGlobalRetail&TechnologyteamhostedaneventcalledBreakfastwiththeDisruptors:Women-LedBeauty&FashionStartups,whichattractedastanding-room-onlycrowdofmorethan150womenandmen.TheeventwasheldatArnoRistorante,awell-knownfashionindustrymeetingplacelocatedintheGarmentDistrict.

The event featured presentations from sevenwomen-led startups that competed for a$2,500 prize offered by event co-sponsorHookLogic, which provides a performancemarketing platform for brands to reach in-marketshoppers,drivetraffic toproductsandattribute resulting sales. The competitionwasjudged by executives from The FragranceFoundation,ElizabethArden,andMacy’s.

Thesevenparticipatingstartupswere:

en.JOYYE isasocialshoppingcommunity inwhich jewelry loverscanenjoydiscoveringandshopping for socially curated jewelry trendsaround theworld. Sitevisitorscanexplore thecommunity, discover new trends, follow their friends and save their finds, aswell as helpothersinneedwhenpurchasingfeaturedproducts.

Findmine runs a retailer’s product catalog and merchandiser’s looks through proprietaryalgorithmsandthenhighlightstheretailer’sgoodsinaperfectoutfitforeachshopper,whichcanbedisplayedontheretailer’swebsite,inadvertisements,inemailorinstores.Findminewasselectedasthewinnerofthe$2,500prize.

FourMine,whose founders have 35 years of experience in the jewelry industry, offers abetterwayforconsumerstoshopforengagementringsandjewelryonline.Customerscanselectseveraldesignsonthesiteandthenreceivereplicasofthoseitems(madefromnon-preciousmaterials)toevaluateathomebeforetheymaketheirpurchasechoice.

LookBookerisaservicethatischangingthewayusersbookhairandbeautyappointments.Itprovidesuserswitha trustedmarketplace throughwhich tosearch, selectand instantlyconfirmbeautyappointments,24hoursaday,fromanywebormobiledevice.

The Ritualist allows customers to book in-home, professional skincaretreatmentsthatrangefromminifacialstoadvancedproceduressuchas

microdermabrasion.Ahighlyqualifiednetworkoflicensedestheticiansprovidestheservices.

SUPA (formerly SoftSpot) offers a unique plug-and-play sensor system for clothing that monitorsbiometric and environmental data and automatically connects with the Internet of Things.Manufacturerscaneasilyintegratethesensorsintoclothingintheformofazipper.

TravelBeautyoffersahyper-curatedcollectionofthebestbeautyproductsfromaroundtheglobe, in the context of a luxury shopping experience featuring a personal shoppingconcierge,phoneproductconsultationandricheditorialcontent.

Wewerethrilledtohostthesewomen-ledstartupsatourBreakfastwiththeDisruptorseventthisweek,andwelookforwardtohostingfutureeventsinNewYorkandothercities.

Source:FungGlobalRetail&Technology

3

June 17, 2016


USRETAILEARNINGS

Source:Companyreports

USRETAIL&TECHHEADLINESStudy:OnlineShoppersStillPreferTraditionalPlatformsoverMobile(June13)RetailingToday

• Inasurveyofmorethan1,000USconsumers,72%ofrespondentssaidtheyprefertousealaptopordesktoptoshoponline.Only28%saidtheyprefertouseatabletorsmartphone.Inaddition,42%saidtheyhaveneverusedatablettoshoponline,while32%saidtheyhaveneverusedasmartphonetoshoponline.

• Retailers,however,musttakeintoaccountthatfrequentonlineshoppersare46%morelikelytopreferusingatabletorsmartphonetoadesktoporlaptopwhenshoppingonline.Populare-commercesitefeaturesincludeproductimagezoom(citedby71%ofrespondents)andsitesearch(63%),whileproductrecommendations(29%)andfeaturedproductlistings(24%)aretheleastusedfeatures.

OnlineShoppersWantDeliveryFaster,Cheaper,SurveyShows(June13)TheWallStreetJournal

• Customersexpecttowaitanaverageof4.8daysfordelivery,downfrom5.5daysin2012,accordingtoasurveybysupplychainconsultingfirmAlixPartners.Ofthe1,000USconsumerssurveyed,morethanhalfsaidtheyhaveneverusedsame-dayshipping,butagrowingnumbersayfreeshippinghas“greatly”impactedtheirpurchasingdecisions.

• Overhalfoftheshopperspolledsaidtheybrowseproductsonlinebasedonavailableshippingmethods.Theresultsofthesurveyunderlinetheroleofshippingine-commerce.Retailersareexperiencingpressureastheycopewiththehighcostofdeliveringgoodstohomesinatimelymanner.

Fashion’sFraughtRelationshipwith3DPrinting(June13)Glossy

• 3Dprintingallowsbusinessestopersonalizeproducts,withalmostnoproductwasteandnoinventory.Whileitisfastertomake10,000ofaproductatonce,3Dprintingallowsforcost-effectivecustomizedproductionandminimizestheriskinvolvedwithpredictinginventorydemandmonths,ifnotyears,inadvance.

• 3Dprintingalsoreducestheneedforreturns,helpingtheenvironmentbyeliminatingemissionsfromshippingproductsbackandforth.However,theimpactof3Dprintingonotherareasofsustainabilityremainstobeseen.

AppleWantstoUseAItoKeepGoogleoffYouriPhone(June15)Bloomberg

• AttheAppleWorldwideDeveloperConferencethisweek,thecompanyunveilednewartificialintelligence(AI)capabilitiesthatithopeswillprotectitssoftwareandservicesbusinessesfromincursionsbyGoogle.

Company

Revenues($Mil.) ChangeYoY GrossMargin(%) Change

NetIncome($Mil.) ChangeYoY StoreFleetEOP

Period 2016 2015 (%) 2016 2015 (BP) 2016 2015 (%) 2016 2015

Kroger Q42016. 26,165 25,207 3.8 22.8 22.5 37 559 518 7.9 3,885 3,733

RightAid Q12017 8,184 6,648 23.1 23.1 28.0 (483) (5) 19 (124.4) 4,560 4,566

WEINSWIG’SWATCHING

ThisweekinNewYork,theUSFungGlobalRetail&TechnologyteamhostedaneventcalledBreakfastwiththeDisruptors:Women-LedBeauty&FashionStartups.

4

June 17, 2016


• TheseupdatesfromApple—whichincludeanexpansionofSiri,automatedemojicreationoniMessageandimagerecognitionforuseinorganizingphotos—seemtobeinresponsetoGoogle’sownAIofferings,whichincludeaplanneddigitalassistant,amobilekeyboardandapicture-organizingapp.

EUROPERETAILEARNINGS

Company

Revenues(USDMil.)

ChangeinUSD(%)

ChangeinReportingCurrency

(%)Gross

Margin(%)Change(bps)

NetIncome(USDMil.)

YoY%Change

StoreFleetEOP

Period 2016 2015

2016 2015

2016 2015

2016 2015GlobalBrandsGroupHoldingLimited*

FYEMar.31,2016

4,118

3,454

19.2 19.2 33.5 32.3

117 25.2 104.2

(75.8) N/A N/A

GrupoInditex

1QEApr.30,2016

5,458

4,806

13.6 11.5 58.1 59.4

(129) 619.8 572.4

8.3

7,085

6,746

H&M2QEMay31,2016 5,695 5,393 5.6 2.2 N/A N/A N/A N/A N/A N/A

4,077

3,639

Poundland**FYEMar.27,2016

2,001

1,804

10.9 18.7

37.0

37.1

(13)

2.4

45.9

(94.8)

896

588

*GlobalBrandsGroup'sreportingperiodincludesoneadditionalquarterduetochangeinthegroup'sfinancialyeartoMarch31,thereforethe15-monthreportingperiodisnotdirectlycomparabletotheGroup’spreviousannualresultscoveringthe12-monthperiodended31December2014.

**Poundlandacquired99pStoresinthefiscalyear,andconverteditsstorestothePoundlandbanner.

Source:CompanyReports

EUROPERETAILHEADLINESAsdaCEOtoStepDown,BeSucceededbyHeadofWalmartChina(June13)Companypressrelease• AndyClarke,PresidentandCEOofBritishgrocerAsda,willresignfromhispositionandbe

replacedbytheheadofWalmart’sChinaunit,SeanClarke,accordingtoanAsdapressrelease.AndyClarkewillcontinuewiththebusinessuntiltheendofJuly2016,afterwhichhewillserveasanadvisorfortherestoftheyear.

• SeanClarkeservedinasimilarroleatWalmartChina,andwillassumehispositionasPresidentandCEOofAsdaonJuly11intheUK.

NorgesGruppenTrialingOnlineGroceryShop(June13)Retailanalysis.igd.com• NorwegiangrocerygroupNorgesGruppenissettolaunchanonlinegrocerytrialthisweek,as

partofitsMenyretailchain.Some5,000customersinOsloandAkershuswillbeinvitedtotryouttheservice.

• ThemovetoofferonlineshoppingisafirstforanestablishedNorwegianbrick-and-mortarchain,asgrocerye-commerceinthecountryhasmainlybeendrivenbypureplayssuchasKolonial.noandMarked.no.

TescoAgreestoSaleofKipaandGiraffe(June10)Companypressrelease• BritishgrocerTescohasagreedtosellits95.5%controllingstakeinKipa,itssupermarketchainin

Turkey,todomesticsupermarketchainMigros.Afterthecompaniesreceivethenecessaryregulatoryapprovals,thetransactionisexpectedtobringinabout£30million(US$42million)forTesco.

• TescoalsoannouncedthatithasagreedtosellitsGirafferestaurantchaintoBoparanRestaurants,agroupthatoperatesseveralfoodmanufacturingcompaniesandrestaurantchains.TescoboughtGiraffeinMarch2013.

5

June 17, 2016


MetroGroupTrialingRobotsforIn-StoreAssistanceandDelivery(June9)Retailanalysis.igd.com• Germany’sMetroGroupistrialingrobotsfromStarshipTechnologiestocarryshoppers’

purchasesthroughastoreinDüsseldorf,sothatcustomerscanfocuson“hands-free”shopping.Theseautonomousrobotsarealsobeingtrialedtodeliveronlinepurchasestocustomers.

• Starship’srobotsoperatesimilarlytoself-drivingcarsandcancarrygroceriesweighingupto15kilos(~33lbs).ThetechcompanyhasbeentestingtheserobotsinLondon’sGreenwichboroughinordertounderstandhoweffectivelytheycannavigatethroughcrowdedstreetsandurbanareas.

Sainsbury’sSalesRiseinFirstQuarter,butCompsFall(June8)CompanyPressRelease• Sainsbury’s,Britain’ssecond-biggestgroceryretailer,reporteda0.3%increaseinretailsales,but

a0.8%decreaseincomps,excludingfuel,inthefirstquarterendedJune4,2016.Includingfuel,totalretailsalesfellby0.1%andcompsfellby1.0%.

• Thecompanynotedthatclothingsalesgrewbynearly5%andgeneralmerchandisesalesgrewbymorethan5%duringtheperiod.Itaddedthat,althoughcomparablesalesacrossallchannelsgrew,asdidsalesvolumes,challengingmarketconditionsandfoodpricedeflationwillimpactsalesandpricingfortheforeseeablefuture.

ASIATECHHEADLINESJapan’sMessagingAppLineConfirmsIPOtoRaiseUS$917Million(June10)TechinAsia• MessagingappLinekickedoffitsIPOonJune10.TheIPOisscheduledforJuly14andlooksto

raiseUS$917millionwithaninitialsharepriceofUS$26.21.TheJapanesecompanyplanstoduallistontheTokyoandNewYorkStockExchanges.Withapproximately175millionsharesoutstandingand35millionsharestobenewlyissued,Line’spublicmarketcapitalizationisestimatedtobeUS$5.5billion.

• Linehas218.4millionactiveusers,butitsgrowthhasbeenslowingrecently.Itaddedonly13millionnewmonthlyactiveuserslastyear,whileWhatsAppandFacebookMessengeraddedhundredsofmillions.

ChinaLifetoInvestUS$605MillioninDidiChuxing(June13)TechinAsia• Chineseride-hailingappDidiChuxingreceivedaUS$605millioninvestmentfromChinaLife,the

nation’sbiggestinsurancecompany.ItisthebiggestinvestmentthatthecompanyhasreceivedsinceAppleinvestedUS$1billioninitlastmonth.

• ChinaLifewillinvestUS$300millioninequityandUS$305millionaslong-termdebt.ChinaLifeisalsoaninvestorinUber.

CarMarketplaceCarrotoAccelerateThroughSoutheastAsiawithUS$5.3MillionSeriesA(June13)TechinAsia• SingaporeancarmarketplaceCarrohasraisedUS$5.3millioninaseriesAroundledbyIndonesia-

basedVenturraCapital.OtherinvestorsincludeSingtelInnov8,GoldenGateVentures,AlphaJWCVentures,SkystarCapital,GMOVenturePartnersandZebraGlobalCapitalManagement.

• ThestartupwillusethefundingformarketexpansiontobringCarrotoover350millionpeopleinSingapore,Indonesia,MalaysiaandThailandbytheendof2016.

P2PMobilePaymentAppTappRaisesUS$9MilliontoTapintotheCashEconomyinSoutheastAsia(June13)TechCrunch.com• Finland-basedmobilepaymentappTappCommercehasraisedUS$9milliontoexpandits

operationsinSoutheastAsiaforuserswithoutabankaccountorcreditcard.Tappwillstrengthen

6

June 17, 2016


itsoperationsinIndonesiaandexpandintothePhilippines,ThailandandVietnambytheendof2016.

• Thecompanywillalsofocusonconsumeracquisitionandcontinuetobuildplatformservicesthatrewardparticipationandcreatestickinessforendusers.

LATAMRETAILHEADLINESBrazilRetailSalesClimbinAprilasConsumerConfidenceRises(June14)Bloomberg

• Brazil’sretailsalesroseinlinewithanalysts’expectationsinAprilasconsumerconfidencerebounded.Thiswasinlinewitheconomists’forecasts,whichsaythatBrazilmayemergefromrecessionfasterthaninitiallyestimated.

• Salesroseby0.5%inApril,followinga0.9%dropinMarch.Consumerconfidenceisshowingsignsofimprovementasannualinflationslows,andforecastscontinuetoshowhopeforgrowth.

ForeignInvestmentinLatinAmericaCouldFallupto8%in2016(June15)Reuters

• TheUnitedNations’LatinAmericanarmsaidthatforeigndirectinvestmentcoulddropasmuchas8%in2016,followingadropin2015of9.1%,whichwasthelowestlevelsince2010.Thefallininvestmentislargelyduetoadecreaseinnaturalresourceinvestmentandtheregionaleconomicslowdown.

• ThoughforeigndirectinvestmentfellinBrazil,whichisstrugglingwitheconomicrecession,andinChileandColombia,duetolowdemandforminerals,MexicoandArgentinasawinvestmentincreasesof18%and130%,respectively,in2015.

E-CommerceGrowthSlowsinLatinAmerica(June15)InternetRetailer

• OnlinesalesgrowthinLatinAmericaisslowingduetotheBrazilianrecession,thoughBrazilianretailersarestillfindingwaystogrowonlinedespitemacroeconomicchallenges.Overall,websalesinLatinAmericagrewby15.4%in2015,comparedto22.1%in2014.

• InBrazil,overallretailsalesfellby4.0%in2015,bute-commercesalesstillincreasedby15.3%.Consumersareturningtothewebtosearchforbetterpricesandawiderassortmentofproducts.

UberOffersHelicopterstoEscapeSãoPauloGridlock(June13)Reuters

• UberisofferingcommuterstheoptiontoflyabovethetrafficjamsinSãoPaulo,startingatUS$20.Usingtheapp,commuterscanhailon-demandhelicopterridesbetweenairports,hotelsandconventioncenters.

• UberispartneringwithAirbusGrouptooffertheaffordablechopperrides,cuttingthecommutetimebetweenhotelsandairportsbyuptothreehours.

FloridaBanktoOfferCreditCardsforTravelerstoCuba(June15)Bloomberg

• StonegateBank,amid-capbankbasedinFlorida,isthefirstUSfinancialinstitutiontooffertravelerscreditcardsforuseinCuba.ThebankwillofferaMasterCardforuseduringtraveltotheisland.

• StonegatewasalsothefirstbanktoofferdebitcardsforuseinCuba,whichitdidbackin2011,leadingthewayforUS-Cubarelationsintermsoffinancialservices.

7

June 17, 2016


EARNINGSCALENDAR

E=estimated

Company

EarningsReleasePeriod Date

Sales(Mil.) EPS

CurrencyConsensusTY LYActual ConsensusTY LYActual

Prada(1913.HK) 1Q17 Jun20(E) 781 828 0.02 0.02 EUR

H&M(HM-B.ST) 2Q16 Jun22 48,495 45,867 3.61 3.90 SEK

FinishLine(FINL) 1Q17 Jun24 451 443 0.23 0.30 USD

Nike(NKE) 4Q16 Jun28 8,296 7,779 0.48 0.49 USD

WalgreensBootsAlliance(WBA) 3Q16 Jul6 29,717 28,795 1.13 1.29 USD

SimonPropertyGroup(SPG) 2Q16 Jul7 1,347 1,349 2.62 2.63 USD

FastRetailing(9983.JP) 3Q16 Jul8(E) 423 398 180 271 JPYAlimentationCouche-Tard(ATD-B.TO) 4Q16 Jul14(E) 8,297 7,286 0.39 0.26 USDSuperGroup(SGP.L) FY16 Jul14 581 487 0.69 0.60 GBPSuperGroup(SGP.L) FY16 Jul14 583 487 0.69 0.60 GBP

Apple(AAPL) 3Q16 Jul19(E) 42,140 49,605 1.40 1.85 USD

eBay(EBAY) 2Q16 Jul20(E) 2,172 4,379 0.42 0.59 USD

Amazon(AMZN) 2Q16 Jul21(E) 29,573 23,185 2.47 0.19 USD

Macerich(MAC) 2Q16 Jul21(E) 255 323 0.98 0.89 USD

Skechers(SKX) 2Q16 Jul21(E) 894 801 0.53 0.52 USD

UnderArmour(UA) 2Q16 Jul21(E) 1,000 784 0.04 0.03 USD

Unilever(ULVR.L) 1H16 Jul21 26,671 26,991 0.94 0.91 EUR

Loblaw(L.TO) 2Q16 Jul22(E) 10,817 10,535 0.94 0.50 CAD

VFCorp.(VFC) 2Q16 Jul22 2,528 2,514 0.34 0.40 USD

Baidu(BIDU) 2Q16 Jul25(E) 18,962 16,575 9.29 1.02 CNY

Kimberly-Clark(KMB) 2Q16 Jul25 4,567 4,643 1.47 1.40 USD

LuxotticaGroup(LUX) 1H16 Jul25 4,852 4,753 1.16 0.82 EUR

Alphabet(GOOGL) 2Q16 Jul28 16,848 17,727 8.05 4.99 USD

8

June 17, 2016


EVENTCALENDAR

Event Location Date(s)

FungGlobalPresenting/Attending

ArtBaselShow Basel,Switzerland Jun16–19 FutureStores Seattle,WA Jun20–23 FMIConnect Chicago,IL Jun20–23 Velocity SantaClara,CA Jun20–23 TechweekChicago Chicago,IL Jun20–26 LondonTechWeek London,UK Jun20–26 FutureLeaders@Connect Chicago,IL Jun21–23 HKIoTConference2016 HongKong Jun21 √InternationalGameTechnologyAnalystDay Rome,Italy Jun21–22 CEWeekNewYork NewYork,NY Jun21–23 √eTailEurope London,UK Jun21–23 20thAnnualConsumerTechnologyCEOSummit TelAviv,Israel Jun21–24 RetailExecutiveSummit Laguna,CA Jun22–24 2016CreativeStorageConference CulverCity,CA Jun23 ParisMen’sFashionWeek Paris,France Jun22-26 WIREDMoney London,UK Jun23 EsriBusinessSummit SanDiego,CA Jun25–28 ProductInnovationApparel NewYork,NY Jun27–28 √Consumer360 LasVegas,NV Jun27–29 DigidayRetailSummit Nashville,TN Jun27–29 BrazilianRetailWeek SãoPaulo,Brazil Jun27–30 TheRetailConference2016 Nottingham,UK Jun28 MobileWorldCongressShanghai Shanghai,China Jun29–Jul1

PerformanceMarketingInsights:EuropeAmsterdam,Netherlands Jul4–5

ICSCEuropeanRetailPropertySchool Prague,CzechRepublic Jul4–6 BrazilianRetailFair PortoAlegre,Brazil Jul6–8 AppPromotionSummit London,UK Jul7 FortuneBrainstormTech Aspen,CO Jul11–13 WearableTechnologiesConference SanFrancisco,CA Jul12–13 InnovationEnterpriseDigitalPublishingInnovationSummit NewYork,NY Jul13–14 RILAOmnichannelLeadersCouncil NewYork,NY Jul13–14 √ICSCMichiganIdeaExchangeandP3RetailProgram Novi,MI Jul14

9

June 17, 2016


DeborahWeinswig,CPAFungBusinessIntelligenceCentreNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comAmandaByrneMarketingAssociate

RachaelDimitResearchAssociate

JohnHarmon,CFASeniorAnalyst

AragornHoResearchAssociate

JohnMercerSeniorAnalyst

KirilPopovSeniorAnalyst

StevenWinnickResearchAssociate

HONGKONG:10thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223002470NEWYORK:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017LONDON:242–246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988FBICGROUP.COM