Increased costs bite US retailers despite higher holiday sales

Increased costs bite US retailers despite higher holiday sales
Several US retailers reported small or moderate increases in comparable store sales during the critical November-December period. (AFP)
Updated 11 January 2019

Increased costs bite US retailers despite higher holiday sales

Increased costs bite US retailers despite higher holiday sales
  • Mastercard SpendingPulse in December estimated holiday sales growth of around 5.1 percent to more than $850 billion, the strongest jump in the last six years
  • The 2018 holiday shopping season was a strong one — just not for retailers

NEW YORK: Holiday shopping reports released Thursday underscored anew the challenges US retailers face in the Amazon era — even if consumers are willing to open their wallets to spend.
The updates were a mixed bag overall, with several retailers reporting small or moderate increases in comparable store sales during the critical November-December period.
But a report from Macy’s aroused the most angst on Wall Street, after the chain slashed its profit forecast even as it signaled a modest increase in sales.
Shares in Macy’s plunged almost 20 percent, while nearly every major retailer was pulled down as well.
That included companies like Target that reported higher holiday sales and confirmed — but did not raise — profit forecasts.
The results were an ugly finale to a holiday shopping season that opened with high expectations owing to robust consumer confidence amid a strong employment market, relatively low gasoline prices and a boost from tax cuts.
Mastercard SpendingPulse in December estimated holiday sales growth of around 5.1 percent to more than $850 billion, the strongest jump in the last six years.
By that estimate, the 2018 holiday shopping season was a strong one — just not for retailers.
“It was a good season. Consumers had more money to spend. They spent it,” said retail industry consultant Dana Telsey.
“But the cost of doing business is getting higher.”
Traditional brick-and-mortar retailers have invested in heavily beefing up their online platforms and offering incentives to lure buyers, such as free shipping during the peak holiday season.
At the same time, these companies also have spent heavily to improve the in-store experience, hiring consultants to help beautify the surroundings and in many cases employing more workers during the peak festive season.
The latest results suggested retailers still have not found a winning recipe for the transition to the e-commerce era.
“We know expenses are always a problem as more and more stuff moves online because people simply will not pay for you shipping it to them,” said retail industry consultant Jan Rogers Kniffen.
“They want it to be the same price in the store in my door. That’s just the way it is.”
Experts say the retail industry is still undergoing an existential shakeout.
Companies like Macy’s, JC Penney and Gap have shuttered stores in recent years, while Toys “R” Us went out of business — a fate that could soon befall iconic American retailer Sears.
Macy’s shares tumbled 18.7 percent after it reported an increase of 1.1 percent in comparable sales, but lowered its annual earnings forecast to a range of $3.95 to $4.00 a share from $4.10 to $4.30.
Sales were dented by a fire in a distribution center in West Virginia and a pre-Christmas “earn and redeem” promotional event that was unsuccessful, Macy’s said.
“The holiday season began strong,” Macy’s Chief Executive Jeff Gennette said, “but weakened in the mid-December period and did not return to expected patterns until the week of Christmas.”
Target said comparable sales grew 5.7 percent over the holiday, while Kohl’s put sales growth at 1.2 percent. L Brands, the parent of Victoria’s Secret, reported flat comparable sales for the five weeks ending January 5.
Bookseller Barnes & Noble estimated sales growth at 1.3 percent over the two-month period, adding that its earnings guidance “may be reduced by as much as 10 percent” due to increased advertising and promotional costs.
Analysts said the declines were exacerbated by expectations that earnings growth will be tough in 2019 after a strong 2018 following the US tax cut enacted in late 2017.


EXPLAINER: Risks underlie tumbling Chinese company shares

EXPLAINER: Risks underlie tumbling Chinese company shares
Updated 29 July 2021

EXPLAINER: Risks underlie tumbling Chinese company shares

EXPLAINER: Risks underlie tumbling Chinese company shares
  • Tumble follows Beijing’s launch anti-monopoly and data security enforcement actions
  • Communist Party leaders worry industry leaders can abuse their dominance to keep out competitors

BEIJING: Foreign shareholders in China’s tech companies are learning what its entrepreneurs have long known: The ruling Communist Party’s decisions about what is good for the economy can hurt your business.
The stock prices of Internet giants Tencent and Alibaba and ride-hailing service Didi tumbled after President Xi Jinping’s government launched anti-monopoly and data security enforcement actions against them.
Also this week, share prices of Chinese education companies fell after news reports that for-profit activity might be banned in core school subjects.
The crackdown on some of China’s biggest private sector success stories prompted warnings about a “war on capitalism.” But regulators say the opposite is true. They say they are protecting the public, smaller companies, the financial system and competition.
“The crackdowns are positive because they are good for Chinese SMEs,” or the small and medium-size private enterprises that are the bulk of the private sector, Michael Every of Rabobank said in a report.

Why is the Communist party doing this?
The ruling party declared anti-monopoly enforcement a priority this year, especially for tech companies that dominate e-commerce, social media and entertainment and are expanding into finance, medical services and other areas.
Party leaders worry Tencent Holding Ltd., Alibaba Group and other industry leaders can abuse their dominance to keep out competitors, raise prices or force suppliers to grant them favorable terms, hurting rivals.
The ruling party worries about the mountains of information about customers gathered by e-commerce, ride-hailing, social media and other companies.
Party leaders also have social goals including shielding children from harmful material online and promoting access to education.

Why are share prices tumbling?
The stock market turbulence reflects the gulf between the certainty craved by financial markets and the secrecy used by the ruling party as a tool to control China’s tumultuous private sector.
Chinese leaders warned in December a crackdown was coming but said nothing about what activity might be targeted. That shook confidence in Chinese stocks traded in New York, Hong Kong or London.
More competition usually leads to lower prices, better service and more economic growth. But for individual companies, shareholders worry competition squeezes profit margins and requires more spending on product development, marketing and other activity.
Investors also worry the crackdown is a signal Xi’s government wants to control the companies more tightly, possibly limiting their growth potential.

Which companies have been targeted?
Targets include the biggest companies in their global industries.
Alibaba Group, the biggest e-commerce platform by sales volume, was fined a record 18.3 billion yuan ($2.8 billion) in April for tactics that included prohibiting vendors that wanted to sell on Alibaba from dealing with its competitors.
Last week, Alibaba was among companies fined for allowing sexually suggestive stickers and other improper content to be circulated to children. Others that were punished include video site Kuaishou, microblog platform Sina Weibo and e-commerce service company Xiaohongshu.
Tencent Holding Ltd., a games and social media provider best known abroad as operator of the messaging app WeChat, is one of the world’s 10 most valuable companies, with a stock market capitalization of $680 billion.
On Saturday, Tencent was ordered to stop requiring music suppliers to give exclusive access to copyrights. The market regulator said that with 80 percent of “exclusive music library resources,” Tencent had the power to improperly suppress competition.
Tencent promised in a statement to “conscientiously abide by the decision.” That reflects the meekness of even the biggest companies before regulators with the power to shut them down.

What is the party’s relationship with business?
Chinese leaders promise to support entrepreneurs who generate new jobs and wealth but are determined to keep them under control.
The ruling party sometimes lets e-commerce or other promising industries grow for years with little regulation before stepping in to impose rules and stamp out features that don’t suit it.
In the most famous example, Alibaba founder Jack Ma in 2004 launched online payments system Alipay despite the lack of any regulations authorizing electronic payments. Ma, one of China’s most successful risk-takers, built a financial giant with hundreds of millions of users and expanded into online banking and other services.
That evolved into Ant Group, which was on the verge of a multibillion-dollar stock market debut in November when regulators ordered that suspended and told Ant to improve its protections against financial risk.

What about customer information?
Dozens of companies have been fined and ordered to tighten security for customer information or to collect less.
Ride-hailing service Didi Global Inc., whose shares debuted in New York on June 30, was ordered days later to stop signing up new customers while it overhauled data safety. The country’s Internet regulator said officials would review its company-wide “network security.”
Beijing sees customer data as an economic asset but also a strategic and political weakness if companies or foreign governments can gain insights about the public that the ruling party doesn’t know.
Regulators also worry companies might collect too much financial and other personal information about customers that might be stolen.
Then-President Donald Trump expressed similar concern last year when he ordered Chinese-owned short video service TikTok to sell its US arm. Trump’s successor, President Joe Biden, hasn’t said what he will do about TikTok.

How are share prices affected?
Didi’s share price has fallen 25 percent since its New York stock market debut June 30, wiping about $20 billion off its total value.
Tencent shares in Hong Kong are down 25 percent from a month earlier. Alibaba’s New York-traded stock is off 19 percent while online retailer JD.com Inc. is down 17 percent. Internet search giant Baidu Inc. has declined 22 percent in US trading.

 

 


UAE is an innovator in the management of food waste, experts say

UAE is an innovator in the management of food waste, experts say
Updated 29 July 2021

UAE is an innovator in the management of food waste, experts say

UAE is an innovator in the management of food waste, experts say
  • Average person in the UAE wastes 197kg of food a year, at a total annual cost to the country of $3.5 billion, said CEO of Sharjah Entrepreneurship Center
  • In 2015, 16,900 tons of food imported by Dubai was rejected and sent to landfill; in 2020 the total was just half a ton, according to food-trade expert said

LONDON: The UAE is embracing innovative new approaches to the challenges of sustainable food production and the management of food waste, according to experts.

Food security and waste have been important global issues for some time. But the concerns have taken on a renewed urgency in the past year because of the COVID-19 pandemic, as a result of which global food-supply chains have been disrupted and crop yields have suffered, said Lord Udny-Lister, co-chairman of the UAE-UK Business Council.

He was speaking during a webinar hosted by the council to discuss ways to manage food and food waste across the supply chain and prevent the global food industry from damaging the environment.

“Technology and innovation will undoubtedly be the solution to addressing the food-waste challenge, as well as boosting food security so that nearly 1 billion people who currently go very hungry have a more reliable supply of food in the future,” he said.

Najla Al-Midfa, CEO of the Sharjah Entrepreneurship Center, said: “In the MENA (Middle East and North Africa) region, reports show that we waste up to 250 kilograms of food a year per capita. And when it comes to the UAE, food waste sets us back an average of $3.5 billion every year, with an average person wasting about 197 kilograms of food per year,” she said

The UAE Food Bank, which was launched in 2017 to provide food to those in need and eliminate food waste, works with local authorities and local and international charities to create a comprehensive ecosystem to efficiently store, package and distribute excess fresh food discarded by hotels, restaurants and supermarkets.

“The UAE’s hospitality sector, which contributes more than 30 percent of all food waste, is stepping up its efforts, with the key players in the industry taking up the UAE Food Waste Pledge to fight food waste in their kitchens,” Al-Midfa said.

The Sharjah Entrepreneurship Center is also partnering with Etihad Airways on a pilot program to introduce in-flight meal trays that use smart technology to collect data on how much food passengers waste when they fly.

“Recording food preferences helps the airline industry reduce food waste, an issue that costs the industry about $3.9 billion every year,” Al-Midfa added.

Lord Benyon, parliamentary under-secretary of state at the UK’s Department for Environment, Food and Rural Affairs, said there is the potential for a great amount of synergy between UAE and the UK in the global food industry, and that authorities in Britain aim to reduce food waste by 20 percent by 2025.

Trade between the countries was worth more than £15 billion ($20.9 billion) last year, £3 billion less than 2019 as a result of disruption caused by the pandemic.

Essam Sharaf Al-Hashimi, the head of Dubai Municipality’s Food Trade Control Section, said the city is completely dependent on imported food, with almost 8 million tons shipped in each year.

In 2015, almost 16,900 tons of imported food was rejected and ended up in landfill. By 2016, this had been reduced to 13,586 tons, and by 2020 to a little over half a ton.

Claire Hughes, director of products and innovation at British supermarket chain Sainsbury’s, said UK authorities have set a target to reduce carbon emissions to net zero by 2040, while also reducing water use, increasing recycling, and reducing food waste by 50 percent by 2030.

She said Sainsbury’s is working on developing electronic price labels on shelves and a digital system that will automatically reduce prices on food items close to their expiration dates, something that currently has to be done manually.

Martin Wickham, a food and drink investment specialist at the UK Department of International Trade, said 1.3 billion tons of food is wasted worldwide each year, which costs the global economy about $1 trillion.

However, food waste contains numerous chemicals that have a wide range of potential commercial applications, he added, and there are many small startup businesses making real inroads in this area.

He predicted that we will see the development of a very different environment for the consumption, production and transport of food and the ways in which we deal with its waste.

Khalid Al-Huraimal, the CEO of Emirati environmental-management company Bee’ah, said up to 38 percent of food is wasted in the UAE, and this figure rises to 60 percent during Ramadan.

“Today we have achieved a diversion rate away from landfill of 76 percent, which is the highest in the Middle East, and once our waste-to-energy plant is commissioned later this year, we will be close to hitting zero waste going to landfill,” he said.

He added that one of the UN’s sustainability goals is to reduce food waste by 50 percent by 2030, and the UAE is committed to achieving that target. Bee’ah has also launched programs to educate communities on the importance of segregating waste. The company is also planning to implement its strategies in Saudi Arabia and Egypt.

Al-Huraimal said the pandemic has made people more aware of the challenges relating to sustainability and climate change.

Ignacio Ramirez, the managing director of Winnow, a company that helps businesses reduce food waste, said wasted food is three times worse for the environment than single-use plastics in terms of carbon emissions but the issue is considered taboo.

He said Winnow helps its clients save $42 million a year in food waste, equivalent to 36 million meals, and about 10 percent of that is in the UAE.

Sean Dennis, the CEO of UAE-based online marketplace Seafood Souq, said almost half of all caught seafood is wasted in developing countries and about 25 percent in developed countries.

“It’s probably the most highly valuable highly perishable item that’s traded globally that we consume,” and one of the most important sources of income and health he said.


Saudi delivery startup raises $2.4m to expand outside KSA

Ahmad Ramahi (left), founder and CEO of WeDeliver, and co-founder Nasser Al-Maawi. (Supplied)
Ahmad Ramahi (left), founder and CEO of WeDeliver, and co-founder Nasser Al-Maawi. (Supplied)
Updated 29 July 2021

Saudi delivery startup raises $2.4m to expand outside KSA

Ahmad Ramahi (left), founder and CEO of WeDeliver, and co-founder Nasser Al-Maawi. (Supplied)
  • The startup uses artificial intelligence and a mobile application to partner companies

JEDDAH: WeDeliver, a parcel delivery startup headquartered in Riyadh, has secured SR9 million ($2.4 million) as part of its first pre-seed investment round, it was announced on Wednesday.

The startup uses artificial intelligence and a mobile application to partner companies that have parcels to be delivered with a network of freelance drivers close by.

The company launched its operations in the Kingdom in April last year, just weeks after the pandemic took hold. Starting first in Riyadh, it has since expanded to Jeddah and the Eastern Province.

Ahmad Ramahi, co-founder and CEO of WeDeliver, said in a press statement: “WeDeliver is a MENA startup with a global vision, driven by an experienced team. We have ambitious plans to enrich our growth in the Saudi market and look forward to expanding to new regional markets.

“We believe that our asset-light collaborative model will disrupt intra-city logistics, enabling faster, more efficient, low-cost delivery for businesses and online sellers,” he added. Nasser Al-Maawi, another cofounder of the startup, said that WeDeliver has seen “strong results” and reported “300 percent growth in the second quarter of this year.”

According to a recent industry report, Saudi startups raised more than a quarter of a billion dollars in venture capital (VC) funding during the first half of 2021.

A total of $1.228 billion was raised by startups in the Middle East and North Africa (MENA) in the first six months of the year, a rise of 63 percent year on year and 12 percent more than was raised during the whole of 2020, according to figures from the MENA H1 2021 Venture Investment Report, published by Dubai-based research platform Magnitt.

According to the report, the top three countries in the MENA region for startup funding were the UAE, Egypt and Saudi Arabia, accounting for 71 percent of total investment. The UAE was the dominant market, making up 26 percent of total funding, followed by Egypt with 24 percent and Saudi Arabia with 21 percent, for a total of $257.88 million.

“It’s also important to note that within this top three ranking, Egypt was the only geography to observe a deal count increase year on year, while Saudi Arabia has almost closed the deal count gap with UAE from 44 deals in 2020 to just an 11-deal difference in H1 2021,” the report said. The food and beverage sector was the most popular among VCs in terms of dollars invested, while the fintech sector generated the most deals.

According to this year’s Global Entrepreneurship Monitor report, total entrepreneurial activity in Saudi Arabia increased in 2020 by 24 percent compared to 2019. It also showed that more than 90 percent of adults saw entrepreneurship as a favorable career choice, while a third of Saudis surveyed said that they were keen on launching a business within the next three years.


MasterCard launches support for cryptocurrency startups

MasterCard launches support for cryptocurrency startups
Updated 29 July 2021

MasterCard launches support for cryptocurrency startups

MasterCard launches support for cryptocurrency startups
  • XRP, a cryptocurrency that Ripple uses in its payments network, rose 15.48 percent on Wednesday

RIYADH: Bitcoin traded higher on Wednesday, rising by 3.95 percent to $39,808.10 at 4:21 p.m. Riyadh time. Ether, the world’s second most-traded cryptocurrency, was down 0.29 percent to $2,291.10, according to data from CoinDesk.

XRP, a cryptocurrency that Ripple uses in its payments network, rose 15.48 percent on Wednesday, trading at $0.74, its highest level since June 21. This represents a daily gain of 13 percent, after the company said it is targeting the $1.8 billion Filipino Remittance Corridor. Ripple announced that Japanese money transfer provider SBI Remit and Philippine mobile payment service Coins.ph have teamed up to move remittance payments from Japan to the Philippines, CoinDesk reported.

Earlier this week, US Sen. Elizabeth Warren wrote to Treasury Secretary Janet Yellen outlining several concerns about the risks posed by cryptocurrencies. Warren asked Yellen to act urgently and adopt appropriate policies to address her concerns.

She claimed that the longer the US waits to introduce the appropriate regulatory regime for these assets, the more likely they will become so entangled in the financial system, potentially creating serious consequences if this market comes under pressure. 

The senator from Massachusetts said: “I have become increasingly concerned about the dangers cryptocurrencies pose to investors, consumers, and the environment in the absence of sufficient regulation in the US,” according to Bitcoin News.

MasterCard on Tuesday announced a new global program dedicated to supporting fast-growing digital assets, blockchain and cryptocurrency companies. Seven startups have signed up for the Start Path program. With Mastercard, the startups will expand and accelerate innovation around digital asset technology and make it safer and easier for people and organizations to buy, spend and hold cryptocurrency and digital assets, Bitcoin News reported.


ExxonMobil, Sabic US petrochemical complex to operate end of 2021

ExxonMobil, Sabic US petrochemical complex to operate end of 2021
Updated 28 July 2021

ExxonMobil, Sabic US petrochemical complex to operate end of 2021

ExxonMobil, Sabic US petrochemical complex to operate end of 2021
  • The project, located near Corpus Christi, Texas, is expected to begin ahead of schedule, likely in the fourth quarter of 2021

RIYADH: A petrochemical complex on the US coast being built Saudi Basic Industries Corporation (SABIC) and ExxonMobil is expected to be operational by the end of 2021, the US energy company said.

The complex — which is being developed by Gulf Coast Growth Ventures (GCGV), a joint-owned company by the Saudi and US companies — has reached mechanical completion of a monoethylene glycol unit and two polyethylene units, ExxonMobil said.

“Gulf Coast Growth Ventures is a key development of our plan to serve growing demand for our high value performance products,” said Karen McKee, ExxonMobil President. 

The project, located near Corpus Christi, Texas, is expected to begin ahead of schedule, likely in the fourth quarter of 2021.

“Not only are we ahead of schedule, but we have executed this project with the highest commitment and emphasis on safety with nearly 18 million safe person-hours worked, all while acting on the promises we made to the community when we started this journey four years ago,” said Abdulrahman Al-Fageeh, SABIC’s executive vice president of petrochemicals. 

GCGV will produce 1,100 kilotons of monoethylene glycol and 1,300 kilotons of polyethylene per year upon completion.

“The benefits of this strategic joint venture will not only accrue to SABIC but also to Saudi Aramco, which bought the company from the Public Investment Fund to create a Saudi synergy in local petrochemical production,” independent economist and former professor of finance and economics at King Fahd University of Petroleum and Minerals Dr. Mohamed Ramady told Arab news.

Once in full production, the new venture will add a welcome stream of additional revenue to SABIC’s profitability and its market value. It is expected to reinforce the Kingdom’s diversification into high-value hydrocarbon products through high-performance plastics, adding to SABIC’s portfolio of agri-nutrients and metals, he said.

“This new strategic joint venture cements the ongoing relationship that SABIC has built over the years with international partners as part of its plans to service its key overseas markets with high quality petrochemical downstream products,” he added.

The project created more than 600 permanent jobs with average salaries of $90,000 per year and an additional 6,000 high-paying jobs were created during construction.

The project is expected to be delivered under budget and at approximately 25 percent less than the average cost of similar projects along the US Gulf Coast.