Worlds biggest clothing retailer ZARA reported profits of 3.44 billion euros ($3.88 billion)

Investors fret about Zara-owner’s slowing sales growth.

The world’s biggest clothing retailer reported profits of 3.44 billion euros ($3.88 billion) on sales of 26.15 billion euros.

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Zara owner Inditex reported a 2 percent rise in full-year profit on March 13 as it launched Zara online into 106 new markets in November and benefited from favourable comparisons to unseasonably cold weather last year.

The world’s biggest clothing retailer reported profits of 3.44 billion euros ($3.88 billion) on sales of 26.15 billion euros, slightly lower than analysts’ expectations.

Unlike many in the troubled apparel sector, Inditex has been able to avoid heavy discounting thanks to its tightly controlled inventory and its ability to get looks on sale in a few weeks allowing it to respond to fast-changing trends.

Online sales grew by 27 percent in 2018, reaching 3.2 billion euros, or 12 percent of sales. Inditex estimated total like-for-like sales growth of between 4 to 6 percent for this financial year.

Sales in shops and online at constant exchange rates rose 7 percent in the first week of the new financial year, from Feb 1 to March 9.

Cash rich Inditex said the total dividend for the financial year would be 0.88 euros per share, an increase of 17 percent.

Source: Reuters on MoneyControl

– TFM News

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VW to launch electric models; profit margin slips to 3.8 percent last year

The profit margin at its core VW brand slipped to 3.8 percent last year, down from 4.2 percent, as higher investments into electric cars and challenges getting combustion-engined vehicles certified ate into profits, VW said.

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WOLFSBURG, Germany, March 12 (Reuters) – Volkswagen on Tuesday said it will launch 70 new electric models by 2028, accelerating its rollout of zero-emission cars as earnings revealed the operating margin at its core brand had taken a hit from new emissions tests.

The profit margin at its core VW brand slipped to 3.8 percent last year, down from 4.2 percent, as higher investments into electric cars and challenges getting combustion-engined vehicles certified ate into profits, VW said.

Volkswagen released full earnings on Tuesday after pre-releasing earnings in February, when it said its 2018 group operating profit came in at 13.92 billion euros ($15.8 billion), 0.7 percent higher than the prior year and below 14.53 billion euros forecast in a poll.

Source: Reuters

– TFM News

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Walmart Inc posted estimate-beating jump in holiday quarter sales

Walmart holiday-quarter sales jump, says consumers still spending

U.S. retailer Walmart Inc on Tuesday reported an estimate-beating jump in holiday quarter comparable sales, which grew for the 18th consecutive quarter.

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(Reuters) – Walmart Inc posted its strongest holiday quarter in at least a decade on Tuesday, boosted by higher grocery and e-commerce sales, and said it saw no signs of weakness in U.S. consumer spending despite recent signs of a slowdown.

Shares of the world’s largest retailer rose more than 3 percent on Tuesday in a broadly flat market, putting them up 7 percent so far this year.

Walmart and rival Target Corp’s unexpectedly strong growth in holiday sales reflected the health of the U.S. consumer as spending remained robust due to a strong labor market and cheaper gasoline prices.

“We still feel pretty good about the consumer. We haven’t seen much of a change,” Walmart Chief Financial Officer Brett Biggs told Reuters. “The data we are seeing still looks pretty healthy. Gas prices are down year over year, which helps.”

Investors and Wall Street analysts have been expecting U.S. spending to slow this year, against a backdrop of rising debt, trade tariffs and economic uncertainty. Walmart’s results settled nerves, but some doubts remain.

“There are definitely some storm clouds on the horizon,” said Charles Sizemore, founder of Sizemore Capital Management LLC, which owns Walmart shares. “A big example would be delinquent loans in the auto sector which are rising. The consumer may be on hard times and in 2008 that was the prelude to the global economic slowdown.

“U.S. retail sales recorded their steepest drop in more than nine years in December, the government reported last week, as receipts fell across the board, suggesting a sharp slowdown in economic activity at the end of 2018.

However, overall sales for the 2018 U.S. holiday shopping season hit a six-year high as shoppers were encouraged by early discounts, according to a Mastercard report in late December.

Walmart sales at U.S. stores open at least a year rose 4.2 percent, excluding fuel, in the fourth quarter ended Jan. 31. The gain exceeded analysts’ expectations of 2.96 percent, according to IBES data from Refinitiv.

Sales were boosted by federal officials distributing food stamp aid early during the partial government shutdown. The demise of retailer Toys R Us also helped Walmart gain toy market share, the company said.

Adjusted earnings per share increased to US$1.41 per share, beating expectations of US$1.33 per share, according to Refinitiv. But the retailer’s gross margins declined for the seventh consecutive quarter due to higher transportation costs and e-commerce investments.

Online Sales Jump:

Online sales jumped 43 percent in the quarter, in line with the previous quarter’s rise, helped by the expansion of Walmart’s online grocery pickup and delivery services and a broader assortment on its website.

But the company reiterated that it expected e-commerce losses to increase this year due to ongoing investments. Chief Executive Officer Doug McMillon said on a conference call the company was focused on getting return customer visits and strengthening product assortment.

The company has expanded a program that allows customers to order groceries online and pick them up at its U.S. stores, a move the retailer said helped expand market share in the category. It said it will have the service at 3,100 stores by next January. At the end of the fourth quarter it was offered at more than 2,100 stores.

Walmart will offer grocery deliveries to about 800 more stores by the end of the year, bringing the total to 1,600 stores.

Grocery sales currently make up 56 percent of total revenue for the retailer. Amazon.com Inc is trying to crack the food category, especially since it bought organic supermarket chain Whole Foods.

Walmart is partnering with third-party couriers and working with so-called gig, or freelance, drivers, who are cheaper than full-time employees, to push down costs, Reuters recently reported.

Google-backed Deliv, a Walmart delivery partner in Miami and San Jose, ended its relationship with the retailer, Reuters reported last week.

The U.S. retailer, which overtook Apple Inc to become the third largest e-commerce retailer last year, is likely to capture a 4.6 percent share of the U.S. e-commerce market, behind eBay Inc and Amazon, according to research firm eMarketer.

Walmart repeated its forecast that fiscal year 2020 earnings per share would decline in the low single digits in percentage terms, compared with last year. Excluding the acquisition of Indian e-commerce firm Flipkart, it sees an increase in the low- to mid-single-digits.

McMillon said the company was disappointed in India’s revised e-commerce regulations, which ban companies from selling products via firms in which they have an equity interest and also bar them from making deals with sellers to sell exclusively on their platforms.

He said the Indian government didn’t consult with Walmart and other U.S. companies before it changed the rules. “We hope for a collaborative regulatory process going forward, which results in a level playing field,” he said.

Walmart expects fiscal year 2020 comparable sales growth of 2.5 percent to 3 percent, excluding fuel and online sales growth of 35 percent.

Total revenue increased 1.9 percent to US$138.8 billion, beating analysts’ estimates of US$138.65 billion. Walmart has recorded 18 quarters, or over four straight years of U.S. comparable sales growth, unmatched by any other retailer.

(Reporting by Nandita Bose in Washington; Editing by Jeffrey Benkoe and Bill Rigby)

Source: Reuters

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Barclays income boost cheers investors, makes Brexit provision

Barclays reported profit of 3.5 billion pounds ($4.56 billion) for 2018

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LONDON (Reuters) – Barclays reported a lower than forecast attributable profit of 3.5 billion pounds ($4.56 billion) for 2018, as it set aside cash to cushion against Brexit losses and its trading business weathered a difficult fourth quarter.

Barclays did show signs of progress in its under-pressure investment bank, where profit for the full year increased 15 percent to 2.6 billion pounds as its equities trading unit saw income rise 25 percent.

Barclays Chief Executive Jes Staley is locked in a high-profile tussle over the bank’s strategy with activist investor Edward Bramson, who believes the lender should ditch a costly plan to grow its investment bank and focus on other less risky parts of its business.

Bramson on Feb. 5 sought to ratchet up pressure on the bank by tabling a resolution that would see him win a board seat, a bid which investors said was unlikely to succeed but which has sharpened focus on the performance of the investment bank.

The results gave ammunition to both sides in the debate. Staley could point to the investment bank’s return on tangible equity – a key measure of profitability – rising from 2 percent to 7 percent in 2018, close to the overall target of 9 percent for the group in 2019.

The bank’s fixed income, currencies and commodities trading business weathered the volatile markets of the fourth quarter better than its Wall Street rivals with revenue down 6 percent compared with double digit falls at Goldman Sachs, Citi and JPMorgan.

For critics of the investment banking-led strategy, however, there were signs that other parts of the lender are suffering as profits fell 3 percent in the Barclays UK division.

The bank also saw a 20 percent decrease in corporate lending income, which it attributed to resources being deployed to higher-returning business elsewhere.

BREXIT DOWNSIDE

Barclays’ 150 million pound Brexit provision followed similar moves by HSBC and Royal Bank of Scotland in recent days.

Barclays said the provision reflected the lesser of two downside economic scenarios, in which growth would slow to 0.3 percent and the country’s unemployment rise to 5.7 percent.

Barclays paid a dividend of 6.5 pence per share and signaled intentions to return more capital via dividend increases and buybacks when it was practical to do so.

The bank however reported its core capital ratio fell to 13.2 percent from 13.3 percent a year ago, a dip which is likely to renew a debate over its ability to return more capital to shareholders at a time when rivals Lloyds Banking Group and RBS are ramping up payouts.

Staley’s total pay package for 2018 fell to 3.36 million pounds, down from 3.87 million pounds the previous year. He was the lowest paid among the four biggest British bank bosses.

Including conduct and litigation charges, the bank’s profit of 1.4 billion pounds against a 1.9 billion pounds loss in 2017.

Barclays’ International division, which houses its investment bank, reported a profit before tax of 3.9 billion pounds, in line with analysts’ expectations of 3.95 billion pounds.

Source: Reuters

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