The bigger they are, the harder they fall. And Inditex (-8.47%), the world's biggest garment creator just fell flat on their face as the retailer revealed it's first loss as a company since investors started trading their shares at the turn of the Millennium.
🔒 After Lockdown, comes shutdown... Retailers across the globe are shutting down just as we come out of lockdown. 24 hours after Debenhams closed 3 more U.K. stores in the wake of the pandemic, Zara-owner, Inditex shared results that illustrated the damage done to the high street dwelling retailers...
High Street Pain...Net sales landed at €3.3 billion compared to the €5.9 billion in the same period on 2019.
Online took the edge off things... Online sales grew strongly at +50% in the same period, while in April, they gained 95%. With 90% of outlets, stores shut in April, the ramping up of eCommerce came in way short of patching up the gaping holes in the retailing juggernauts financials. With cash pouring in the wrong direction for the first time in decades, there are some green shoots for the fashionista...
💡 Come what May... A 51% drop in sales in May was followed by early suggestions that June is “only” down 34% – and just 16% in markets where stores are open for business. New normal... may look pretty normal. Analysts and Inditex themselves, are talking a big game when it comes to an immediate return to shops. Suggestions that Zara's main Asian hot-spots (China & South Korea) are returning to pre corona levels.
And that investors at the ready... The stock rose just over 1%. While coronavirus has burned a $2.5bn hole in the pocket of Inditex, the clothes maker could be best placed to respond to a resetting fashion industry...
En Trend... The Massimo Dutti owner is able to deliver the newest trends to customers as soon as stores reopen.Speed Merchant... The Spanish retailer can turn new looks around in the space of 5-6 weeks while competitors often take twice as long. Zara have had a sweet spot on the high street for a long time in fast fashion. They have dominated a space amongst tired, uninvested brands with bland stock and brought energy and life with fast-moving stock and affordable tailoring.
Faster fashion rewards...Inditex, and more specifically Zara, has had a sweet and unique spot on the high street when it comes to the fast fashion market. They've been dominant alongside stale and lethargic competitors. Moving stock and newlines at break-neck pace has seen them enter a plethora of demographics. That isn’t to say that Zara's strategy is set for life. Customer service is often derided but and more crucially, they have fuelled fast fashion. There is a social and economic shift towards sustainability, something Zara will struggle to tune into overnight.
After months of courting the regrettably named, Grubhub, Uber - more specifically UberEats - left the option of a merger at the doorstep... paving the way for newly formed JustEat Takeaway (-15.85%) swooped in to form one of the world's largest online meal-delivery platforms overnight. In tying up the deal and uniting three of the worst names in the food & beverage industry, the $7.3bn deal accelerates the industry shift towards greater consolidation that most analysts have been spinning for years...
🚚 Cross-border Delivery... US-operating Grubhub is teaming up with the recently-merged Europhile, Just Eat takeaway.com. Prompt plenty of questions from investors.
🧑👨🧑 Threes a powerful crowd: British scooter champ, Just Eat, only hooked up with Dutch rival takeaway.com last year in their own $7.6B deal — now, the merged foodie is gobbling up Grubhub and in the process serving up 70M from around the world.
A deal you can trust... US-based Grubhub had its UberEats tie-up stalled as US regulators raised antitrust concerns stateside. With Just Eat keeping its interests firmly on European soil, no one in Congress is likely to bat an eye-lid at this match-up. For Uber, it could just be 'the one that got away'.
Not what they had in mind... Just Eat takeaway.com (we hope) may have just been pausing on a new name, with the Grubhub acquisition in the pipeline. Three name changes would hardly build a brand. While some analysts have been speculating on industry consolidation, this was not the deal running through traders' telegram. The expectation has always been to see food-delivery players come together to take control of pricing and stop the losing spiral of zero margins as companies compete on price for market share. Well, for lock-downers living the food-delivery lifestyle, low prices will be sticking around for a little while longer.
Whenever Scotts Miracle-Gro lands on the radar these days, it has been all about their cannabis surge. The Ohio-based garden-growing juggernaut went through more than just a phase...
2015... buys General Hydroponics and Vermicrop Organics to move into the marijuana marketDeep into the weeds......
In 2018, Scotts snapped up Sunlight Supply Inc., a hydroponics supplier, for $450 million in cash and stock. Sniff a theme? Hydroponics. Don't know what that is? Probably a good thing. Hydroponics is a method of growing plants without soil, by using mineral nutrient solutions mixed in with water. Hint: It is very popular with weed-growers and that stuff is getting more legal by the day.
🧠 Intelligent addiction... Overall, the garden-growing giant, snapped up more than 30 different companies (of all shapes and sizes), that would move the company into the Cannabis-game overnight. And without the risk of actually growing the stuff themselves. But right now, it is back to basics for the miracle-maker. As DIY revamps and face-lifts grip nations in lockdown, those touch-ups have prompted garden care sales at the pesticide giant to show fresh growth.
🌿 Less growing, more sowing... Shares in Scotts Miracle-gro are now up 82% since the pandemic prompted drastic government action across Europe and America...
Nitrate Nations...Plant fuel and lawn seed sales have grown 38% in May alone as gardeners throw fertilizer at the problem.
Banking on a permanent passion... Scotts have raised their US sales forecast gains from 7% to 16% for 2020. alone.
Scotts shift into becoming a hydroponics-focused market leader has been driving growth and appetite for all things Scotts. Scotts hydroponic division, better known as Hawthorne, saw sales nearly double last year and are expected to deliver similar growth this year. With the business staple flying and the growth-game gaining, investors are loving the Scotts investment case.
