Financial News - Retail TouchPoints - Retail TouchPoints Tue, 18 Jun 2019 19:02:12 -0400 RTP en-gb Depop Raises $62 Million To Fight Counterfeiting, Expand Globally Depop Raises $62 Million To Fight Counterfeiting, Expand Globally

Depop, a UK-based peer-to-peer social shopping app, has raised $62 million in Series C funding. The most recent financing round was led by General Atlantic, with investments from Balderton Capital, Creandum, Octopus Ventures, TempoCap and Sebastian Siemiatkowski, founder and CEO of Klarna, the Swedish payments company.

Targeted at Millennials and members of Generation Z, the mobile fashion marketplace intends to use the funding to grow its London-based engineering and data teams and implement more recommendation and image detection algorithms, specifically to speed up the rate of removing counterfeit or illicit items. Additionally, Depop will allocate this funding to expand internationally, specifically in the U.S.

CEO Maria Raga said the U.S. is becoming the eight-year-old startup’s largest market, with five million current users and a projected 15 million in three years.

Despite the rise of peer-to-peer selling platforms like Poshmark and Vinted and social platforms like Instagram and Pinterest increasing their e-Commerce presence over the past few years, Depop has seen 100% year-over-year revenue growth and brought in gross merchandise value (GMV) of more than $500 million since its launch. Depop takes in 10% cut of the GMV sold, working out to total revenues being about $50 million for the period.

This financing announcement was made before Depop launched its first two-day retail experience in New York City, which was open to the public on June 8-9, with shops, panels, workshops and performances.

]]> (Brianna Ruback) Financial News Wed, 12 Jun 2019 16:48:07 -0400
Zyper Raises $6.5 Million In Series A Funding Zyper Raises $6.5 Million In Series A Funding

Zyper, a peer-to-peer marketing software platform, has raised $6.5 million in Series A Funding, bringing its total funding to $8.5 million. The most recent financing round was led by Talis Capital, with contributions from Forerunner Ventures and Y Combinator.

Founded by entrepreneur Amber Atherton in 2017, Zyper will be allocating these funds to the opening of the company’s headquarters in San Francisco, the expansion of its engineering and sales teams and the development of its predictive analytics engine and recommendation system algorithms.

The Zyper platform uses natural language processing and computer vision designed to pinpoint the top 1% of a brand’s most loyal customers. These shoppers can serve as brand advocates, providing user-generated content (UGC) to stimulate conversation about the products and services they are using.

The platform is designed to improve the quality, scalability and efficiency of community marketing by allowing brands to track and manage their fans automatically using advanced machine-learning models.

Zyper has worked with retailers such as Banana Republic, Coty, Nestlé and Topshop to help them build loyal communities.

]]> (Brianna Ruback) Financial News Thu, 06 Jun 2019 17:36:58 -0400
GameStop Comp Sales Decline 10.3% In Q1 2019; New CEO Reviewing Business GameStop Comp Sales Decline 10.3% In Q1 2019; New CEO Reviewing Business

GameStop reported a year-over-year total sales decline of 13.3% and a comparable sales decrease of 10.3% in Q1. The weakness was driven by a 20.3% drop in pre-owned sales alongside a 35% dip in new hardware sales and a 4.3% decrease in new software sales, which were somewhat offset by a 10.5% increase in collectibles sales.

The sales decline follows a disappointing 2018 holiday season when sales dropped 5% compared to the previous year. Additionally, the struggling retailer had been seeking a buyer but abandoned its plans in January, though it successfully sold its Spring Mobile division for $700 million in November 2018.

However, GameStop has continued realigning its leadership structure following the appointment of George Sherman as CEO, who said in a statement that he “has been undertaking a thorough review of the business.” The retailer appointed James Bell as EVP and CFO in late May and hired retail veterans for two new positions: Chris Homeister as EVP and Chief Merchandising Officer and Frank Hamlin as EVP and Chief Customer Officer.

Homeister, who previously worked as President and CEO of The Tile Shop and held leadership roles at Best Buy will be responsible for the company’s overall merchandise operations and strategy. Hamlin, who has been Chief Marketing Officer at both GameStop and Tailored Brands, will drive customer-centric initiatives in areas including marketing, loyalty and the omnichannel business.

]]> (Bryan Wassel) Financial News Thu, 06 Jun 2019 11:14:44 -0400
Revolve Launches IPO, Anticipates A $1.2 Billion Valuation Revolve Launches IPO, Anticipates A $1.2 Billion Valuation

Revolve, an online fashion retailer, is launching an initial public offering (IPO) on the New York Stock Exchange (NYSE), with plans to offer 11.8 million shares to raise as much as $211.7 million. The IPO price is currently estimated to be between $16 and $18 per share on the NYSE under the ticker “RVLV.”

The IPO is expected to begin trading during the week of June 3. Under these terms, Revolve would be valued at $1.2 billion.

The fashion retailer saw major growth in 2018, generating:

  • $498.7 million in sales, up from $399.6 million the previous year;
  • $30.6 million in net income for the year, well ahead of $5 million generated in 2017; and
  • 9.4 million unique visitors per month in 2018, compared to 7.3 million unique visitors per month in 2017.

Additionally, the company has an average order value of $279 and roughly 79% of sales are delivered at full price, according to an SEC filing.

Founded in 2003 by Michael Karanikolas and Michael Mente, the fashion retailer caters to Millennials and Generation Z with more than 20 fashion lines and partnerships with more than 500 third-party brands. Revolve gained popularity through hosting #RevolveFestival, a popular event for celebrities and influencers held during the annual Coachella Valley Music and Arts Festival. Overall, the company has built a network of more than 3,500 influencers to bolster its social presence.

Revolve also operates a luxury apparel site, Forward, as well as the recently launched Superdown, a low-cost apparel retailer for Gen Z shoppers.

Revolve will use the money raised in the IPO to buy back $40.8 million worth of stock from the private equity firm TSG Consumer Partners, which invested $15 million in the company in 2012. The remainder of the funds will go toward strengthening the brand and expanding international operations.

Although the company has no specific planned uses for the proceeds, it said they could be used to acquire or invest in additional brands or businesses.

]]> (Glenn Taylor) Financial News Wed, 29 May 2019 16:48:54 -0400
Installment Payment Provider Raises $20.7 Million In Funding Round Installment Payment Provider Raises $20.7 Million In Funding Round

Splitit Payments, an Australia-based global monthly installment payments solution, has raised $30 million AUD ($20.7 million USD) in a funding round. The company is hoping to raise up to an additional $10 million AUD ($6.9 million USD) by offering 12.5 million shares to certain eligible shareholders in a share purchase plan.

Proceeds from the fundraising round will be used to increase capacity to meet the current excess demand for Splitit products. This will accelerate the solution provider’s market penetration and new product development, helping the company expand at a faster rate than anticipated during its January IPO.

Splitit currently works with hundreds of merchants in 27 countries to offer shoppers interest- and fee-free installment payments. Alternative payment systems are popular among younger shoppers, who are less likely to have access to credit cards than older consumers.

]]> (Bryan Wassel) Financial News Tue, 28 May 2019 16:32:03 -0400
As Department Stores Struggle To Drive Sales, TJX, Walmart And Target Soar As Department Stores Struggle To Drive Sales, TJX, Walmart And Target Soar

The great Q1 results from Walmart and Target indicate that these top players have been doing everything they can to keep up with both Amazon and the shopper’s needs — and that it’s working. But in the same week, the results from major department stores Kohl’s, JCPenney and Nordstrom illustrate that their efforts to adapt are not yet resonating with consumers. Additionally, TJX continues to cut into these department stores’ profits, indicating how hard it is to compete with the value offered by lower prices.

Q1 delivered unfortunate earnings reports for Kohl’s, JCPenney and Nordstrom:

  • Kohl’s saw same-store sales decline 3.4%, the first drop in the category in seven quarters, with disappointing performances in seasonal goods and home categories. The retailer trimmed its full-year guidancerange, from $5.80 to $6.15 per share down to $5.15 to $5.45 per share;
  • Nordstrom saw same-store sales dip 3.5%, income plummet from $87 million last year to $37 million in Q1 2019, and the retailer cut its full-year guidance range from $3.65 to $3.90 per share down to $3.25 to $3.65 per share; and
  • JCPenney saw the worst same-store sales dip of the three at 5.5%, and a startling net loss of $154 million, nearly doubling its losses from the same period last year.

TJX arguably has been one of the biggest beneficiaries of the problems plaguing the major department stores, seeing net sales rise 7% to $9.3 billion and same-store sales increase 5% across all its banners. And unlike its department store rivals, TJX raised its full-year guidance, from a range of $2.41 to $2.43 earnings per share to $2.56 to $2.61 per share.

The difference between TJX and the major department stores aligns with the “survival of the fittest” and the “disappearing middle” themes that retail continues to embody. Moody’s Investors Service, which rates companies based on financial stability, indicated that its “downgrades” of retailers have continued to outpace “upgrades,” with the ratio of downgrades to upgrades deteriorating from nearly three to one in Q4 2018 to seven to one in Q1 2019.

“While we expect downgrades to continue to outnumber upgrades for 2019 as highly leveraged issuers with weak growth prospects continue to fall, we expect the upgrade to downgrade ratio to improve as larger companies with stronger balances sheets and healthy cash flows continue to improve their credit profile by winning market share,” said Mickey Chadha, VP and Sr. Credit Officer at Moody’s in commentary provided to Retail TouchPoints.

‘Sea Of Sameness’ Plagues Department Stores

Even at Macy’s, which generated its sixth straight quarter of comparable store sales increases at 0.7% (versus an expected 0.3%), total sales only increased 0.7%, to $5.5 billion. While Macy’s outperformed its disappointing holiday season, the retailer’s discount Backstage locations played a key role in propping up sales.

“Macy's shares were up on their recent earnings report because they managed a minuscule sales increase,” wrote Steve Dennis, industry consultant and President of SageBerry Consulting, in a post on Forbes. “But let's please remember that anything less than about 3% growth is a loss of relative market share. Unless these retailers start posting much greater gains in sales and profits, an investor might do well on a short-term trade, but none of these retailers will ever get back to a position of being remarkable in both the customer and the investors’ mind.”

Dennis pointed out that Macy’s, Kohl’s and JCPenney are trapped in a “sea of sameness” that epitomizes most department store offerings today, warning all brands in this area that “better isn’t the same as good.”

“The notion that some combination of store closings, cost reductions and strategic alliances — or that sprinkling an ‘experience’ or two throughout an otherwise unremarkable store — will lead to materially improved market share and profitability is not only wishful thinking, it is abject nonsense,” Dennis wrote.

It’s not as if these retailers aren’t making sincere efforts to improve their experiences, but more that their best efforts still may not be enough to overcome their underlying issues. For example, Kohl’s revealed it would accept Amazon returns in all of its stores starting in July, a strategy that appeared to drive more traffic and revenue in pilot markets. Kohl’s then entered into an exclusive deal with Fanatics to broaden its online fan gear assortment, beginning in fall 2019.

And Nordstrom is continuing to test new stores to attract modern shoppers, with the latest of its merchandise-free Local stores being launched in Manhattan, ahead of building its first women’s store in the city later this year.

Potential Tariffs Scare Department Stores, But TJX Puts Positive Spin On Them

While the Q1 results hang over the heads of these department stores, there are also causes for future concern. With the White House expected to place 25% tariffs on roughly $300 billion of goods from China, including apparel and footwear, representatives at each department store shared concerns about the potential effects of these taxes on their business — something Target shrugged off entirely.

TJX, on the other hand, almost appears to welcome the tariffs. While CEO Ernie Herrman indicated the retailer has included a “very small impact” from the tariffs in its full-year guidance, he noted: “Historically, disruptions in the marketplace have created off-price buying opportunities for us. Further, because of our great values, if retail prices overall increase that may create an opportunity for us to attract new customers. Above all, we will always maintain a value gap versus other retailers.”

]]> (Glenn Taylor) Financial News Fri, 24 May 2019 09:04:41 -0400
Alibaba Generates 51% Revenue Growth in 2018, Brushes Aside Trade War Concerns Alibaba Generates 51% Revenue Growth in 2018, Brushes Aside Trade War Concerns

One quarter after posting its slowest growth rate in three years (albeit still at a healthy 41% clip), Alibaba shot back up with a 51% sales increase for both its Q4 and total fiscal year. Total revenue for the quarter was $13.9 billion, while annual revenue reached $56.2 billion.

Alibaba’s retail and marketplace operations, labeled “core commerce,” saw Q4 revenue jump 54% year-over-year, while cloud revenue skyrocketed 76% to $1.2 billion. The company’s growth strategy strongly parallels Amazon’s turn to profitability with Amazon Web Services (AWS).

The company forecasts fiscal 2020 revenue growth to slow back down to 33%. But that won’t be because of any pending uncertainty from the U.S.-China trade war and the looming tariffs, according to Joseph Tsai, Executive Vice Chairman of Alibaba.

"The trade negotiations will lead to China opening its markets to more foreign businesses in order to satisfy the massively growing demands of domestic consumers," Tsai said during an earnings call. "We're not concerned about slowing China exports affecting GDP growth, because the Chinese economy is shifting from an export economy to a domestic consumption economy. Job expansion is continuing in China." 

The Chinese e-Commerce giant has continued to develop its New Retail initiative, enabling on-demand delivery from 2,100+ Starbucks cafes across 35 cities in China as of April 2019. Additionally, Alibaba has expanded its grocery retail chain Freshippo to 135 self-operated stores that have continued to see robust same-store sales growth, according to the company. Alibaba has integrated the technology used in Freshippo within 470 Sun Art stores, enabling them to place orders through the Taobao app and secure delivery through the on-demand delivery platform.

Alibaba’s Chinese marketplaces Tmall and Taobao saw gross merchandise volume (GMV) rise by 19%, with annual active users up 18% to 654 million. More than 70% of that increase was from “Tier 3” or lower cities: less developed urban areas with several million residents.

The company’s go-forward strategy is to focus on these cities. The combined 500 million residents of such cities are projected to triple their overall spending to roughly $7 trillion over the next 10 years, representing a major opportunity for Alibaba, said Tsai.

Alibaba still dominates China’s e-Commerce market, accounting for approximately 66% of GMV sold in 2018, estimated Bernstein analyst David Dai. was a distant runner up with only 19%.

]]> (Glenn Taylor) News Briefs Thu, 16 May 2019 16:03:43 -0400
Walmart Q1 Revenue Jumps But Grocery, Supply Chain Investments Weaken Profits Walmart Q1 Revenue Jumps But Grocery, Supply Chain Investments Weaken Profits

Walmart had its best Q1 comparable store sales growth in nine years, achieving 3.4% growth with total revenue climbing 1% to $123.9 billion. E-Commerce sales continued to rise, boosted by a mid-single digit expansion in online grocery offerings and strong sales in home goods and fashion accessories, which were up 37% in the U.S. during Q1. Walmart now targets U.S. e-Commerce sales growth of 35% for the full fiscal year.

Market penetration of private label grocery offerings increased by 156 basis points, or 1.56% in total, demonstrating the retailer’s continued emphasis on producing and supplying its own food. For example, Walmart is creating its own new Angus beef supply chain that will bring premium meats to nearly 500 stores by early next year.

Walmart stocked more merchandise across the board; inventories increased 5.9% in Q1: The retailer accelerated buying in some categories and bulked up product quantities in its e-Commerce fulfillment centers as it works to deliver online orders more quickly.

The quarter has been an eventful one for Walmart: the retailer is rolling out next-day delivery on 220,000 products only a few weeks after Amazon revealed its one-day delivery investments. The retail giant also introduced Walmart Voice Order via Google Assistant, which will add items directly to shoppers’ mobile Walmart Grocery cart. Additionally, Walmart is significantly expanding its pet health care network, aiming to have 100 veterinary clinics open in its stores within the next 12 months and launching an online pet pharmacy.

These significant investments both in-store and online, as well the increase in lower margin online sales, continue to put profits under pressure. Walmart’s Q1 operating income fell 4.1% to $4.9 billion, in part because its $16 billion purchase of Indian e-Commerce giant Flipkart last year is weighing on profits, as expected. However, operating income in the U.S. did grow 5.5%, beating expectations.Adjusted earnings per share slipped 0.9% to $1.13, still ahead of the $1.02 share that had been projected.

Walmart’s wholesale unit Sam’s Club saw Q1 comparable sales growth of 0.3%, but that number increases to 3.0% when excluding tobacco, which the company stopped selling last year. E-Commerce sales at Sam’s Club grew 28% during the quarter.

Tariffs Remain Concerning, But Growing Grocery Business May Limit Impact

Perhaps the biggest concern for Walmart going forward will be tariffs, which could impact apparel and footwear sales. Walmart faces higher potential product prices after the Trump administration’s move last week to increase tariffs to 25% from 10% on approximately $200 billion of goods imported from China. With threats of further tariffs on all Chinese imports, executives have said they are working to bring in some imports earlier than previously planned ahead of rising tariffs.

The company sources approximately two-thirds of its goods domestically, largely because of its massive and growing food business. The food business may limit the impact of the tariffs, according to Charlie O’Shea, VP and Lead Retail Analyst at Moody’s: “We also believe Walmart has the wherewithal both financially and via its vendor relationships to minimize the impact on both itself and its shopping base,” O’Shea said in commentary provided to Retail TouchPoints.

The remaining one-third of Walmart’s merchandise comes from overseas, including from China.

“As we have said before, our goal is to be the low-price leader,” Walmart CFO Brett Biggs said in an earnings call. “We want to manage margins with customers and shareholders in mind. We have mitigation strategies that have been in place for months. But increased tariffs will increase prices for customers.”

]]> (Glenn Taylor) News Briefs Thu, 16 May 2019 12:26:53 -0400
Chewy Files For IPO Chewy Files For IPO

E-Commerce pet food retailer Chewy has filed for an IPO and will be listed on the New York Stock Exchange under the ticker symbol “CHWY.” The number of shares to be offered and the price range for the proposed offering have not yet been determined.

Chewy reported $3.5 billion in sales during fiscal 2018, up from $2.1 billion in fiscal 2017, according to CNBC. The retailer reported a net loss of $268 million in fiscal 2018, down from a net loss of $338 million the previous year. The retailer’s valuation is estimated to be between $4.15 billion and $4.75 billion, according to S&P Global Ratings.

PetSmart acquired Chewy in 2017 for approximately $3.35 billion. PetSmart will remain majority owner of Chewy following the IPO, and the retailer will use the proceeds for working capital and general corporate purposes.

]]> (Bryan Wassel) Financial News Tue, 30 Apr 2019 15:55:04 -0400
Amazon Outperforms Q1 Earnings Expectations With Record $3.6 Billion Net Income Amazon Outperforms Q1 Earnings Expectations With Record $3.6 Billion Net Income

Amazon heavily outperformed Q1 earnings expectations, reporting earnings of $7.09 per share — well ahead of the $4.72 per share predicted by Refinitiv. Profitability continues to be a bigger priority for the e-Commerce giant; its net income reached a record $3.6 billion, while its operating income of $4.4 billion represented a record 7.4% margin.

The wider margins come from growth in businesses like Amazon Web Services (AWS), advertising and third-party seller services, where profits are bigger but total sales tend to be smaller. The often reliable AWS cloud service continued its solid growth, with a 41% sales increase to $7.7 billion, although that was lower than last year’s 49% growth rate.AWS revenue represented 13% of total sales at Amazon, up from 10% in Q4 2018. AWS and competitor Microsoft Azure are in the last stages of competing for a $10 billion Department of Defense cloud contract. The winner will be announced by July 2019 at the earliest.

“On the non-AWS side, sales are slowing, with physical stores (i.e. Whole Foods) essentially flat, and we note the reduced growth is largely generated by third-party sales,” said Charlie O’Shea, VP and Lead Retail Analyst at Moody’s in commentary provided to Retail TouchPoints. “However, the real story on the retail side is margin expansion, which is up around 360 basis points to almost 6.4%, and is likely driven in large part by the rapidly-growing and higher-margin advertising business.”

Amazon’s advertising business continues to be the largest segment driving its “other” category. While the category has grown at least 60% in each of the past five quarters, growth during this quarter slowed to 36%.

As of February 2019, Amazon was expected to represent 8.8% of net digital ad revenue share in the U.S. It still trails behind Google, which is expected to have 37.2% share this year, and Facebook, with an expected 22.1%, according to eMarketer.

Overall net sales were right in line with Wall Street analyst estimates, with the company’s Q1 revenue increasing 17% to $59.7 billion, compared with $51 billion last year.

There’s one notable expectation Amazon was unable to reach. The company’s operating profit guidance for Q2 came in the range of $2.6 billion and $3.6 billion, far below the $4.2 billion Wall Street estimate, indicating heavier investments going forward.

“Amazon is expanding programs left and right, many of which have wide-reaching geographic implications (meaning expensive) and I would not be a bit surprised to see some reinvesting here to support these new initiatives,” said Jon Reily, VP, Global Commerce Strategy Lead at Publicis Sapient in commentary provided to Retail TouchPoints. “Also, Amazon Music Unlimited was launched almost silently on Monday, and while it’s ad-supported it cannot be cheap for the e-Commerce giant. In addition, Amazon's moves in grocery and the expansion of its AWS services in APAC already have been big moves for the giant this year.”

]]> (Glenn Taylor) News Briefs Thu, 25 Apr 2019 17:55:19 -0400