FROM THE DESK OF DEBORAH WEINSWIG

• Gap Inc.’s comparable sales for the second quarter of 2015 were down 2%, compared to a flat performance a year ago. The company stated that the negative impact of foreign currency fluctuations, West Coast port delays and the implementation of strategic actions affected its performance.
• Old Navy Global is the only brand that showed positive growth in the second quarter, growing by 3%. However, its growth decelerated from the second quarter of 2014, when the brand showed 4% growth. Gap Inc. indicated that Old Navy’s success in anticipating fashion trends, responding to consumer demand and delivering aspirational clothing was behind the positive performance.
• Gap Global and Banana Republic Global showed negative comparable sales growth, of 6% and 4%, respectively. Gap Inc. said the poor performance was due to revival efforts, the resizing of North American stores and the implementation of new product operating models.

US RETAIL EARNINGS

Source: Company reports

US RETAIL HEADLINES

• The nation’s largest family-owned department store, Belk, will be sold to New York private equity firm Sycamore Partners for $3 billion, including debt. The offer of $68 a share is a discount to the closing price of $78 a share on Friday, August 21. Sycamore Partners owns several well-known apparel brands, including Aéropostale, Hot Topic, Nine West and Torrid.
• The midrange-to-upscale Belk operates 299 locations in 16 states and owns about a quarter of its locations. Sales were up 1.8%, to $4.11 billion, last year. Tim Belk will continue as CEO of the 127-year-old company, and he said that the company’s priority is to grow its omnichannel and digital capacities.

• Irish low-price fast-fashion chain Primark will make its US debut September 10 in Boston. Seven locations were attained through a deal with Sears Holdings, enabling Primark to gain a space within Sears stores. Primark CEO Paul Marchant said, “Speed of reaction is very important to us,” and that “each store will receive new deliveries every day.” That means that 10% of the store’s inventory will change every week.
• Primark’s collection is entirely private label with the exception of a small amount of beauty products. The company prides itself on great service and a shopping environment that exceeds what consumers expect from a low-price retailer. Primark primarily targets shoppers under the age of 35 and can compete with major companies such as H&M, Old Navy and Forever 21 and with off-pricers such as T.J. Maxx and Nordstrom Rack.

• Janet Schalk has been named Chief Information Officer of the Hudson’s Bay Company. She was previously EVP and CIO for Kohl’s and EVP and head of global IT for Target.
• Schalk will be responsible for leading the IT strategy while continuing to drive the company’s common system, business architecture and analytics. Hudson’s Bay CEO Jerry Storch said, “Customer engagement across all channels will be critical in advancing HBC’s IT systems and supporting the company’s growth.”

• Rite Aid has completed its acquisition of 12 in-store pharmacies from A&P. Rite Aid is buying inventory and pharmacy records for $2.3 million and $5.7 million, respectively.
• As part of the deal, Rite Aid will alert customers that their prescription information is being moved. A&P filed chapter 11 on July 19 and plans to shop the rest of its 150 locations.

• Target is rolling out a new artisan-style café concept, called Freshii, that serves healthier options. Instead of hot dogs and nachos, a wider array of items will be offered, including artisan-style pizza, pressed juices and fresh salads with ingredients such as kale. This rollout is the first major change to Target’s food strategy since the company hired former Safeway executive Anne Dament in April. Currently, about 40% of Target customers visit the café while shopping.
• CEO Brian Cornell has made food and wellness a bigger priority for Target, and he plans to increase its offering of natural and organic food products and local brands. Food accounts for 20% of Target’s business, so better options could help boost sales if customers choose to both eat and shop when they visit stores. Competition for customers who want fresh and local foods has increased. For example, CVS has begun stocking its food aisles with more organic products and options that have no artificial ingredients.

• The introduction of the PoloTech smartshirt coincides with the inaugural collection of an athletic-focused Polo Sport brand. The company says that PoloTech blends modern style with real-time biometric technology, defining the brand as a combination of technology, fitness and style.
• The smartshirt incorporates sensory receivers with a dynamic fitness application. The silver fibers woven directly into the fabric report the wearer’s heart rate; breathing depth and recovery; intensity of movement; energy output; stress levels; steps taken; and calories burned. The app, available for the Apple iPod and iPhone, receives the data and generates more than 10,000 possible customized exercises. Ralph Lauren partnered with OMSignal to launch the shirt, which will be available on August 27.

ASIA HEADLINES

• Ehang, the maker of Ghost drones, announced that it had raised US$42 million in a series B round of funding. The round was led by GP Capital and included investment from GGV Capital, ZhenFund, Lebox Capital, OFC and PreAngel.
• Ehang’s Ghost is a camera drone controlled by a mobile app. It is sold globally through the company’s website and other channels for US$600 to US$800 depending on added options (GoPro camera not included).

• It is a near certainty that Apple’s iPhone 6 and iPhone 6 Plus models will arrive in September.
• In advance of the products’ launch, Apple CEO Tim Cook said that “growth in iPhone activations has actually accelerated [in China] over the past few weeks, and we have had the best performance of the year for the App Store in China during the last two weeks.”

• CITIC plans to invest US$100 million in Uber in China, but stated that if Uber does not take its China subsidiary to IPO by 2020, the investment must be returned, with 8% compounded interest, in either Uber Global shares or cash.
• The latest investment from the second-tier, state-owned Chinese bank shows the willingness of state backers to invest in ride-sharing technology. Earlier this month, Chinese sovereign wealth fund China Investment Corporation injected an unknown amount into Uber’s largest competitor in China, Didi Kuaidi.

 This Startup Is Solving the Worst Thing About the End of Your Holiday, Pesky Foreign Currency

• TravelersBox is an Israeli startup that makes kiosks where travelers can deposit their leftover foreign currency and transform it into gift cards from brands such as Starbucks, H&M, Skype, PayPal, iTunes, Google Play, Gap and others.
• A screen confirms the amount of currency a traveler inserts into the box, and guides the user through the available options to redeem the cash. After a user indicates his or her preference, the screen asks for an email address or mobile phone number. TravelersBox then emails or sends an SMS to the user with a web link that redirects the user to brand-specific requirements.

• Netflix will enter Japan alongside SoftBank, which confirmed the partnership and revealed its strategy for introducing Netflix to the Japanese masses.
• SoftBank indicated that it might co-produce future content with Netflix. A compelling show featuring A-list Japanese talent could make the Netflix service a must-have for Japanese viewers.

• Freee, an accounting software as a service startup led by Daisuke Sasaki, confirmed a series C round of funding worth JPY 3.5 billion (US$28.7 million). Recruit Holdings, Japan Co-Invest and a previous investor, Silicon Valley–based DCM, participated.
• The company is positioning itself as a one-stop shop for administrative needs. It provides services for handling salaries, tax filings and company establishment. In October, it will expand its offerings to encompass administrative work related to My Number, Japan’s newly approved national system for tracking Social Security and taxes.

• US Ambassador to India Richard Verma announced that up to US$2 million in grants will be made available to each clean energy project selected for the PACEsetter Fund, a joint fund established by the governments of India and the US to promote the commercialization of off-grid, clean-energy solutions.
• Japan’s SoftBank, India’s Bharti and Taiwan’s Foxconn have also formed a fund, named SBG Cleantech. It will back cleantech startups as well as bid for solar plant tenders under the National Solar Mission program and state-specific solar programs.

• In order to increase its presence in China, Coursera has partnered with a number of Chinese companies and universities in the promotion of translations and distribution.
• Coursera CEO Rick Levin was previously the President of Yale University, where he served the longest tenure in the school’s history. Levin met two Chinese presidents (Jiang Zemin and Hu Jintao), has an honorary appointment at Fudan University and was elected to the board of the National Committee on United States-China Relations.

EUROPEAN RETAIL EARNINGS

Source: Company reports

EUROPEAN RETAIL HEADLINES

• Groupe Ludendo has reportedly received a bid from Gulf Greetings, owner of The Toy Store, to acquire Hamleys, one of the oldest toy stores in the world. Despite having bought a 27,000 square foot property on London’s Oxford Street last year, Gulf Greetings is keen on acquiring the Hamleys name. It announced in September that it is looking at “key locations” across the UK, as it plans to expand its presence in the region over the next three years.
• Groupe Ludendo is also in talks with Sanpower Group, a Chinese conglomerate that is interested in acquiring Hamleys. News of Sanpower’s plans to purchase Hamleys first emerged in June. Sanpower previously acquired a controlling stake valued at £480 million (US$817 million) in British retailer House of Fraser.

• Bruce Dickinson, Chairman of Aeris Aviation, has set up shop in Harrods and is slated to sell Eclipse 550 jets there. The six-seater aircraft will sell for around £2.2 million (US$3.75 million). The pop-up store will run through August at Harrods. Buyers can have their jets customized with the Harrods brand name and will also receive a $50,000 store card.
• Dickinson is the founder of Cardiff Aviation, which is reportedly developing a national carrier for the East African nation of Djibouti. The singer also plans to establish an airline called VVB, which will operate from Cardiff.

• Year-over-year trade volume estimates in the UK increased by 4.2% in July 2015. The retail industry, excluding auto fuel, grew by 0.1% month over month. Clothing retail increased by 3.7% year over year in July, but decreased by 1.6% month over month. Grocery retail volume decreased by 1% compared to a year ago.
• According to the Office for National Statistics, online sales increased by 13% in July, compared to the same period last year. E-commerce sales in the textile, clothing and footwear category increased by 9.5%, while online sales of household goods grew by 22.3%.

• Danish market leader Coop Danmark announced the launch of Lille Irma, a new neighborhood format. The first store will be in Østerbrogade and the retailer intends to open 15–20 more stores over the next two years in Copenhagen.
• The new stores have been designed in consultation with shoppers, who were invited to workshops to discuss their ideas of an ideal local store. The chain will stock fresh and organic produce, a large assortment of freshly baked bread and pastries, and a wider spectrum of products to enable shoppers to buy everyday essentials. Shoppers will also have weekly coffee sessions with store managers, who will provide free coffee and samples of new products.

• Retail Acquisitions, the new owner of BHS, is looking to raise a large amount of funding just months after it acquired the department store chain from billionaire retailer Sir Philip Green. The investment vehicle that acquired BHS has been in talks with several prospective providers of additional debt facilities, including a hedge fund.
• The new management is seeking to secure up to £70 million (US$119 million) by September, as it will incur big rent bills starting then. Sources close to the chain confirmed that it was “business as usual” at the company and that seeking new funds did not signal that it was in financial turmoil.

• German supermarket Edeka has combined click-and-collect with meal solutions as it launches a new pickup service for groceries at the Munich airport. Edeka has partnered with Emmasbox, which specializes in click-and-collect solutions, for this new option.
• Customers can view meal packages from a tablet and select from seven choices. After making a reservation, customers pay and collect their meals at the terminal. The retailer said that this service will be tested for four months and, depending on its success, expanded to other suitable locations.

• Carrefour announced that it is in negotiations with real estate group Altarea Cogedim to acquire its e-commerce business, Rue du Commerce. Carrefour stated that Rue du Commerce has more than 5 million unique visitors a month and is a major player in the French nonfood e-commerce market.
• Altarea Cogedim said in a separate statement that Rue du Commerce needed to collaborate with a major retailer in order to reach a significant size so as to combat intense competition. Altarea added that the acquisition is due to be completed in early 2016. The deal amount, however, was not disclosed.

• In its stores in Scotland, Lidl is testing a new “smarter shopping” card that offers shoppers various money-saving discounts and promotions. The retailer has distributed 4 million cards via mail, newspapers and its stores.
• The promotion began with £5 (US$8.50) off for every £25 (US$43) spent by cardholders in stores. Lidl stated that the offer will last a fortnight, and will be changed on a weekly basis thereafter. The offers will be advertised in stores and online. A spokeswoman for Lidl said that customers do not need to accumulate points, that they can redeem offers instantly and that there is no limit on the number of times an offer can be redeemed.

LATAM HEADLINES

• In 2015, Walmart plans to open four or five stores in Brazil with a discount format, under the banner “Hyper Every Day.”
• The company defines this as a soft-discount format that promises more attractive prices. During the past two years, Walmart did not open any stores in Brazil, and instead focused on reducing costs and integrating acquisitions.

• Perry Ellis has licensed its men’s, women’s and children’s skate and surf sportswear to Tiendas por Departamento Ripley in Peru.
• These items are covered under the Gotcha brand, which Ripley currently carries in its 27 stores throughout Peru. The brand intends to expand further domestically, as well as into Chile and Colombia.

• Starbucks announced that Baristas Del Caribe, a family-owned Puerto Rican group of companies, has acquired exclusive rights to operate Starbucks stores in Puerto Rico.
• Starbucks opened its first store in San Juan in 2002 and today has 19 stores across the island.
• Upon completion of the transaction, Baristas Del Caribe will assume full operating control of Starbucks stores in Puerto Rico. The group also plans to develop new establishments over time.

• Fast-casual pizza chain PizzaRev has signed a franchise agreement with Grupo Galería to bring its PizzaRev restaurants to Mexico.
• According to the agreement, Grupo Galería will open 20 restaurants in Mexico City and in the states of Mexico, Nuevo León and Coahuila.
• Grupo Galería is the largest franchisee of Carl’s Jr. in Mexico, and it opened the first international store for Buffalo Wild Wings (PizzaRev’s parent company) outside Canada.

• Online retail sales in Brazil are likely to be lower year over year in the third quarter of 2015, according to the E-bit survey, Brazil’s longest-running e-commerce survey.
• Based on July and August figures, online sales are likely to drop, which would be a first in the 15-year history of the survey.
• Still, year-end promotions and higher prices should result in 15% higher e-commerce sales this year, amounting to BRL 41.2 billion (US$11.8 billion). At the beginning of the year, E-bit estimated that yearly growth would be 20%.