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David Rosenberg said that earnings are “rolling over” and economic data indicates that the economy is very close to recession.
Royal Caribbean's (RCL) second-quarter 2019 results are likely to be driven by higher passenger ticket as well as onboard and other revenues.
Amazon's (AMZN) strengthening Prime enabled services and benefits, and expanding AWS services portfolio are likely to drive second-quarter 2019 results.
(Bloomberg Opinion) -- Kroger Co., the giant but aging supermarket chain, has unleashed a flurry of initiatives to ensure it won’t get thumped in a post-Amazon-buying-Whole-Foods world: It is revamping locations, bought a meal-kit company, and sold off its convenience-store business. Its biggest gamble, though, is a partnership with British online grocer Ocado Group Plc. The two plan to build as many as 20 automated grocery warehouses in the U.S. to help Kroger turbocharge its e-commerce operation.Grocery has proven a uniquely tough business to bring into the online era. Orders often have dozens of items – some frozen, some cold, some room temperature – and much of the inventory is perishable. That simply makes for a different challenge than the one Amazon.com Inc. has successfully tackled by getting a single laptop computer or phone charger on your doorstep in one day.Ocado has focused specifically on digital grocery shopping for its entire corporate life, and it shows. At its newest online grocery fulfillment center outside London, 1,000 robots zoom around a grid at a speed of four meters (13 feet) per second, extending a gripper to pick up and transport bins of groceries. The system strips out labor costs and enables human workers to pack about 600 items per hour. Every aspect of the fulfillment process is designed for the unique quirks of grocery, including systems that cue workers about what items in a given order they should put in a single grocery bag. (This ensures, for example, that something heavy doesn’t plop onto a dozen eggs.) Ocado estimates its system saves one hour of labor for every 50-item order – no small thing in a segment of retail with notoriously thin profit margins.There is a real benefit to specializing in solving the grocery conundrum, as Ocado has done. The company’s sales increased 12% last year to 1.6 billion pounds ($2 billion), according to its annual report, and its active customer count increased 11 percent from the previous year. So I’m confident that Ocado will improve Kroger’s game and equip it with advantages in the battle for U.S. market share. Ocado’s system will enable it to fill orders especially quickly and has a high level of accuracy – both important contributors to customer satisfaction. Down the road, it’s not hard to envision even more labor costs getting stripped out of Ocado’s system, enhancing the model’s profitability. But timing is everything in the fast-changing online grocery world. And right now, Amazon and Walmart Inc. are leading the pack.Neither Amazon nor Walmart has a system with the exact sort of wizardry of Ocado’s; even so, each is exploring its own ways of using automation to help with profitability and customer experience. Walmart is testing driverless cars for grocery delivery, and Amazon recently showed off some new warehouse robots of its own. It will take Kroger up to five years to build out the fleet of Ocado warehouses it has committed to building. I worry that won’t be fast enough to vault it past Walmart and Amazon in the race for online grocery supremacy – no matter how advanced and efficient Ocado’s system is.Take, for example, the specialized delivery vehicles Ocado has developed. They can be loaded with racks of grocery-filled bins designed to fit practically every inch of available cabin space and they have a separate compartment for cold items. A routing algorithm helps ensure they are loaded in an order conducive to a driver’s delivery path and that those routes are optimized for efficiency. This sounds way more efficient than some of the solutions Walmart and Amazon use these days, where a DoorDash or Amazon Flex contractor-courier loads up the trunk of his sedan with groceries. But that efficiency gain is only useful if Kroger can get the density of orders to make it count.Investors have already punished Kroger this year for disappointing on comparable sales growth and its annual profit forecast. It’s hard to assess how much this project might further test their patience, especially because the companies haven’t offered specifics on how they will share the costs of establishing and maintaining these facilities. But we know it won’t be cheap: Kroger has said it is investing $55 million to build the first of the Ocado-powered fulfillment centers.It might help if Kroger talked up other ways the warehouses could potentially support its business later, such as one day sending replenishment stock to nearby stores. And the new warehouses, in some cases, will be positioned to potentially expand Kroger’s addressable market. One of the first facilities Kroger committed to building is in central Florida, a market that Bloomberg Intelligence analyst Jennifer Bartashus points out is one where regional heavyweight Publix Super Markets Inc. is beloved and ubiquitous and Kroger doesn’t have much presence. Kroger sees opportunity to crack this market with a compelling online offering.Overall, Kroger is better off for having partnered with Ocado. But I suspect it will turn out this arrangement doesn’t completely jolt the broader U.S. grocery industry the way it could have if it had been forged three or five years ago, before the competition had fully awakened to the e-commerce opportunity. Better late than never. To contact the author of this story: Sarah Halzack at email@example.comTo contact the editor responsible for this story: Beth Williams at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Sarah Halzack is a Bloomberg Opinion columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- It was a fundraising like no other: Goldman Sachs teaming up with two obscure brokerages on an unusual deal. Add to that controversial financier Lars Windhorst, acting as one of the architects behind the scenes.Investors snapped up the $1.2 billion in bonds that, in turn, channeled proceeds to a cluster of airlines linked to Etihad Airways. Within months, bankers handling the sale were crisscrossing the Atlantic, collecting awards for their creativity.Two years later, the deal went bust.A group of creditors is now resorting to unconventional tactics to recoup losses. They’ve hired a private intelligence firm. The mission: Dig out details into how the deal came together, including the roles played by Windhorst, the airline and the fundraising group, according to people with knowledge of the situation.The brewing fight places another unwelcome spotlight on Goldman Sachs Group Inc.’s willingness to raise large pools of capital in unorthodox or risky deals. It also threatens to drag the Wall Street giant into another blowup over its ties to Windhorst, whose web of business dealings has drawn fresh scrutiny in recent weeks.“There were a lot of strange characteristics,” Roger King, an analyst at research firm CreditSights, said of the bonds Goldman helped sell. “It was a bizarrely complicated deal. A hairy deal no matter who brought it.”One question at the center of the airline fundraising in 2015 and 2016 is why Goldman agreed to fill the breach as another big bank, HSBC Holdings Plc, dropped out, according to the people with knowledge of the matter. Such a large financing probably couldn’t be completed without the help of a global bank.Creditors including investment managers BlueBay Asset Management and Gramercy Funds Management have enlisted the private investigators to help them push for maximum recoveries from the busted bonds, the people said. Representatives for the two funds declined to comment or identify whom they’ve enlisted.Their effort contrasts with the typical reason that investors hire corporate spies. Usually, bondholders hire intelligence companies in less-developed countries to track down assets or follow the cash trail, said Robert Southey, founder of Southey Capital, a London-based broker. It’s relatively rare to get private investigators to look into deals that involve one of the world’s largest investment banks and a major airline group. One significant bondholder has already grown uncomfortable with the tactics, according to a person with knowledge of the situation.Spokesmen for Windhorst and Goldman Sachs declined to comment for this story. A spokesman for Etihad said the airline doesn’t comment on “rumors or speculation.” Desperate TimesEtihad faced a big problem in 2015. To expand from being a regional carrier into a global player, the company had bought stakes in several smaller airlines around the world. But some—like Air Berlin—kept bleeding cash. Windhorst, once the German airline’s largest shareholder, was looking to shore up its finances. Yet Air Berlin would have to pay dearly to tap global debt markets on its own.Etihad’s executives and Windhorst sketched out a rough plan, with Anoa, a small brokerage, tasked to work out the details, the people said. Special-purpose vehicles linked to Etihad, called EA Partners, would sell bonds. The EA Partners vehicles would then slice up the proceeds and offer loans of various sizes to the fleet of smaller carriers. Members of the airline group would make periodic payments to EA Partners, which would distribute interest to bondholders. Anoa was an affiliated company of Windhorst’s investment arm. The financier had been tapping into his connections to drum up business for Anoa with dreams of establishing it as a widely known boutique. The aspirations wouldn’t pan out, and Anoa would eventually shut down. But in a sign of how close Windhorst was to the firm, its former chief executive officer is now CEO of Windhorst’s own investment vehicle.HSBC OutWhile Anoa was key to designing the transaction, it lacked the fundraising firepower of a global bank. HSBC was earmarked to lead the deal alongside Anoa and ADS Securities, an Abu Dhabi-based boutique. But shortly before the sale was to proceed, the British bank was suddenly out.Anoa’s participation was among reasons that HSBC grew hesitant, but Etihad executives also fretted about whether the bank was committed enough to carrying out the complex transaction, according to three people familiar with the situation. Representatives for HSBC and ADS declined to comment.Goldman Sachs stepped in.First, the Etihad deal had to be cleared through a number of internal committees at Goldman because of the transaction’s structuring oddities and the involvement of a sovereign entity, Abu Dhabi, the ultimate parent of Etihad, one of the people said. Windhorst’s involvement was another potential issue.A high school dropout, he was once hailed as one of Germany’s most talented entrepreneurs before bankruptcies and lawsuits. But in the summer of 2015 his reputation was on the mend, and bankers were showing renewed interest in handling his business.Though he didn’t have a formal role in the offering, Windhorst was involved in designing the transaction and was present on at least one occasion when Etihad’s then-leader presented the deal to investors in London, a person with knowledge of the matter said.Yet it’s unclear whether that was known to Goldman’s compliance executives. The firm’s internal watchdogs were wary of business ties with the financier. In September 2015—when the first Etihad bonds were sold—Goldman’s compliance officers resisted proposals by the bank’s executives to take Windhorst on as a trading client because of concerns about his troubled past, according to communications seen by Bloomberg.Grounded PlansEA Partners issued a first set of junk-rated bonds totaling $700 million in September 2015. In April 2016, senior Etihad executives and then-Goldman banker Nader AlSalim were feted on stage with an industry award for the innovative structuring at a plush beachfront hotel in Miami.Two months later, the financing team raised another $500 million, bringing the total to $1.2 billion. Offering documents show that 93.5% of the proceeds went to the airline group. In a typical sale, the rest goes to fees and expenses.Not long after, the deal began to go awry. Airlines in the partnership—Air Berlin, Alitalia and Jet Airways—succumbed to financial woes. As they worked their way through insolvency proceedings, the EA Partners bonds cratered. Meanwhile, Etihad changed its strategy, no longer supporting the affiliate carriers before embarking on a management overhaul.The bond documents themselves didn’t explicitly guarantee support from Etihad. One banker who was involved in marketing the deal said there was always an implicit understanding that Etihad would provide support if needed, and that’s how the debt was described to investors.An investor group left holding the bag has hired law firms and financial advisers to help maximize recoveries—the standard practice when things go south on debt investments. The hiring of a corporate intelligence firm is much less common, especially one that scrutinizes financial firms involved, and not just the borrower.Goldman’s ties with Windhorst were documented in a lawsuit last year by a former executive, Chris Rollins. He accused the bank of scapegoating him to insulate itself from questionable transactions carried out with a financier who isn’t identified in court records. That person was Windhorst, based on the descriptions in court documents and interviews.Goldman is disputing Rollins’ claims. And recently, it won a bid to push the case into arbitration, a move that would effectively keep a lid on more details of the firm’s interactions with Windhorst.“Whether in public or private, the evidence shows that top execs allowed these very large, risky deals to happen,” said Seth Redniss, a lawyer for Rollins.\--With assistance from Archana Narayanan and Dan Reichl.To contact the authors of this story: Sridhar Natarajan in New York at email@example.comLuca Casiraghi in London at firstname.lastname@example.orgLayan Odeh in Dubai at email@example.comTo contact the editor responsible for this story: Michael J Moore at firstname.lastname@example.org, David ScheerAlan GoldsteinFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Investing.com – Wall Street rose on Monday on the hope that technology earnings this week come in strong and top analysts' expectations.
Investing.com - The European Central Bank’s policy meeting will be front and center this week as investors wait to see what action central bank head Mario Draghi may take to support the euro area economy.
(Bloomberg) -- Medallia Inc. ended its first day as a public company with one of the year’s 10 best trading debuts after its $325.5 million initial public offering.Shares of the enterprise software provider, which rose as much as 88% Friday, closed up 76% to $37.05. That gave it the eighth-best first-day performance out of 105 IPOs in the U.S. this year, according to data compiled by Bloomberg.The company and some of its investors sold 15.5 million shares on Thursday for $21 each after marketing 14.5 million of them for $16 to $18. The listing values the company at about $4.5 billion, based on the additional stock sold and the number of shares outstanding, as listed in regulatory filings.Beyond Meat Inc. had the year’s best U.S. trading debut after its $276 million IPO in May. The meat-substitute producer soared 163% on first day and is now up 581% from its offer price, also the best in the U.S. this year.Medallia Chief Executive Officer Leslie Stretch said he was pleased with the company’s debut, as well as its progress toward profitability.“We need to invest in sales and marketing -- go to market -- and we’re doing that aggressively,” Stretch said in an interview. “We’re going to continue with our trajectory.”The San Francisco-based company’s net loss for the quarter ending April 30 was $2.6 million on revenue of $94 million, it said in the filings. That compared with a net loss of $28 million on revenue of $71 million for the same period last year.The offering was led by Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. The shares are trading on the New York Stock Exchange under the symbol MDLA.(Updates with closing share price in second paragraph)To contact the reporter on this story: Michael Hytha in San Francisco at email@example.comTo contact the editors responsible for this story: Liana Baker at firstname.lastname@example.org, Michael Hytha, Matthew MonksFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Walmart Inc. is conducting its second U.S. restructuring in as many months to better integrate its money-losing online business with its 4,700 physical stores.The world’s largest retailer will merge the logistics and finance teams for its e-commerce unit and stores, according to an internal memo obtained by Bloomberg News. The company’s merchandising operation, which makes critical decisions on what products to carry, when to carry them and at what price, will maintain separate teams “to enable focus and speed,” Chief Executive Officer Doug McMillon said in the memo.Walmart’s digital business is inextricably tied to its stores, evidenced by its fast-growing grocery pickup service, where online orders are picked in its aisles, then trotted out to customers in the parking lot. Responsibility for that web grocery business falls under U.S. CEO Greg Foran rather than e-commerce chief Marc Lore.The decision to keep merchandising separate -- for now at least -- illustrates the primacy of Walmart’s in-store merchants, who for decades have wielded vast power inside Walmart’s sprawling corporate bureaucracy. It also shows the increasing complexity of managing an online business that sells about 75 million products, many from small third-party sellers, and now promises next-day delivery in many states to battle rival Amazon.com Inc.Separately, Walmart is expanding the role of Chief Customer Officer Janey Whiteside, who joined the company in 2018 after many years at American Express Co. She’ll now be responsible for running the team’s financial services, product returns and Walmart’s burgeoning advertising business -- ancillary units that are growing in importance as they generate incremental revenue and profit.Renewed PressureWalmart is facing renewed pressure to produce earnings at its online unit as it tries to keep traditional rivals like Target Corp. at bay and simultaneously chip away at the lead built up by Amazon. Underscoring the challenge, the Seattle-based e-commerce giant just wrapped up its Prime Day promotional event earlier this week, with sales surpassing those on Black Friday and Cyber Monday combined. Walmart’s mission is complicated by the recent loss of its e-commerce chief revenue officer in the U.S., Scott Hilton, who had been a long-time lieutenant of Lore.Another of Lore’s deputies, Nate Faust, who had been running the supply chain for Walmart.com, will move to a new, undefined role, the memo said. Faust was one of the founders of Jet.com, which Walmart acquired in 2016 and has now been fully integrated into the larger company amid declining traffic and revenue.The newly combined logistics division will be led by Greg Smith, who currently runs that unit for the U.S. stores, while U.S. stores finance chief Michael Dastugue will take charge of the integrated team there. Ashley Buchanan, who currently runs merchandising at Walmart’s warehouse subsidiary Sam’s Club, will assume the new role of chief merchandising officer for U.S. e-commerce, but will remain in Bentonville, Arkansas, instead of moving to the unit’s California headquarters.Walmart’s U.S. online business has grown, becoming a viable second fiddle to Amazon after the division’s revenue expanded 40% last year. But the business continues to be in the red, with losses expected this year of about $1.7 billion, up from $1.4 billion last year, according to Morgan Stanley estimates.To contact the reporter on this story: Matthew Boyle in New York at email@example.comTo contact the editors responsible for this story: Anne Riley Moffat at firstname.lastname@example.org, Jonathan Roeder, Mark SchoifetFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Oyo Hotels and Homes founder Ritesh Agarwal will invest $2 billion to triple his stake in the SoftBank-backed Indian lodgings startup he established in his teens.Agarwal will buy shares from existing investors Lightspeed Venture Partners and Sequoia India, which will remain backers of the startup, the company said in a statement. The deal will value Oyo at about $10 billion and raise Agarwal’s slice of the company to 30% from about 10% now, people familiar with the matter said, asking not to be identified discussing a private transaction. The entrepreneur won support from banks and other financial partners for his deal, Oyo said.That valuation makes Oyo one of India’s most valuable startups, ranking after One97 Communications, the parent of digital payments pioneer Paytm. E-commerce giant Flipkart Online Services Pvt was acquired by Walmart Inc. last year in a $16 billion deal. Oyo, which provides accommodation to travelers from India and China to the U.K. and U.S., grew revenue more than four times in June from a year earlier. It now has a million rooms under its brand, of which more than 200,000 are in India.Agarwal founded the startup in his teens after dropping out of college and roaming India on a shoestring budget. The wild, erratic standards at hotels and guest houses he encountered inspired him to start the online service, and the brand now aims to provide travelers a consistent experience.Oyo mainly signs on hotel owners and then helps them upgrade everything from bathroom fittings to furniture and bedding, and then provides them standardized supplies like sheets and toiletries, and support to train their staff.It employs hundreds of people in the field who evaluate properties on some 200 factors, from the quality of mattresses and linens to water temperature. To get a listing, along with a bright red Oyo sign to hang street-side as a seal of housekeeping approval, most hoteliers must agree to a makeover that typically takes about a month. Oyo then gets a cut of roughly 25% of every booking. Rooms usually run between $25 and $85.“It is a very exciting time for Oyo right now as we make great living spaces come alive across all corners of the world from Texas to Tokyo,” Agarwal, who is also chief executive officer, said in the statement.He will carry out the transaction, which requires shareholder and regulatory approval, through an entity called RA Hospitality Holdings (Cayman), Oyo said.“We remain committed to supporting this world-class management team,” Mohit Bhatnagar, managing director of Sequoia Capital India Advisors, said in the statement.(Updates with valuation and stake from the first paragraph.)To contact the reporter on this story: Saritha Rai in Bangalore at email@example.comTo contact the editors responsible for this story: Edwin Chan at firstname.lastname@example.org, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.