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Companies returning cash to shareholders can win the favor of current and potential investors.
Morgan Stanley Chief Investment Officer of Global Fixed Income Michael Kushman joins The Final Round to discuss the best areas to invest in the current monetary policy environment.
“Our strategy is to become a trusted consumer brand and not just an airline,” Bastian said in an interview.
(Bloomberg) -- Walk into this luxury boutique on Manhattan’s Upper East Side and you’ll find the kind of fashion that’s de rigueur for the 1%. There are $8,000 Oscar de la Renta jackets and Hermes alligator handbags priced to move at $30,000.To drop off your used clothing, though, you’ll have to go upstairs.Climb the curved staircase of The RealReal’s new outpost on Madison Avenue and you enter a different world—one that’s more neighborhood bank than plutocratic playpen. A clerk presides over a waiting room lined with cubicles, each with magnification equipment that allows for close inspection of the nicest secondhand goods you could imagine.Once an online-only vintage clothing retailer, RealReal has gone brick-and-mortar, opening three stores and 11 consignment-only locations across the country. At its full-service venues, including another shop in New York and one in Los Angeles, the company seeks to both buy and sell dresses, jackets and necklaces that have been sitting dormant in some very wealthy closets.Sound like a niche market? Don’t be so sure: The company raked in $207 million in total revenue last year and is preparing to go public this week. Though consignment and used clothing shops have occupied storefronts for decades, their role in society has changed over time. Once the haunts of only the working poor, they later attracted those sartorial obsessives who enjoy the thrill of a treasure hunt. More recently, young entrepreneurs looking to turn Salvation Army discards into Instagram-chic have stalked their aisles, capitalizing on the chance for a huge markup.Now, predictably, the well-funded startups have arrived. And Wall Street has followed with them. Used clothing, footwear and accessories represent a $10 billion market in the U.S., according to data from market research firm IBISWorld. Interest from young, sustainability conscious shoppers has been a boon for the industry, which the firm forecasts will grow around 1.6% a year through 2024. All this has made old clothing a magnet for investment. Venture capital has poured in, with more than $1.1 billion dropped into used-clothing operations over the past several years, according to data compiled by Bloomberg. This included more than $350 million in funding for RealReal and about $130 million for domestic competitor ThredUp. French startup Vestiaire Collective raised $45 million in June to fuel international growth, bringing its total funds to almost $200 million. RealReal, meanwhile, is looking to raise $270 million in its initial public offering.The physical locations opened by RealReal, ThredUp and Rebag are 21st century versions of the traditional vintage clothing shop. They’ve been integrated into a broader, preexisting e-commerce model—serving as a home base for companies to collect items people no longer want.“I think that we are seeing a shift to this, as compared to people maybe looking on EBay,” says Sucharita Kodali, an analyst at Forrester Research. “It’s a format that some people who like the treasure hunt will explore.”So why the tony location for this new RealReal outpost? When it comes to luxury resale, the bottleneck is usually on the supply side: It’s hard to get the well-heeled in the door, says Charles Gorra, chief executive officer of rival Rebag. New stores, he said, must be in places with “existing luxury ecosystems.” With this in mind, Gorra says his company is looking at Chicago and some cities in Texas as potential new locations. “We’ve had an easier time getting supply with brick-and-mortar—people have brought suitcases into the stores, full of multiple designer bags,” he explained. “Walk a block, and in just a matter of a few minutes you can get access to hundreds or even thousands of dollars,” he said. “Suddenly, the process is much more accessible for most luxury owners.”A spokesperson for RealReal declined to comment on the store’s strategy, citing a quiet period before its initial public offering, but the company’s executives revealed some of their game plan in a securities filing earlier this month—echoing Gorra’s plan to open stores where the rich live.ThredUp’s physical store strategy is a bit different, as it focuses on less pricey items. It currently has four locations in the San Francisco Bay Area and plans to cluster new stores in one metropolitan region at a time. Unlike other digital-native companies that seek high visibility in major cities, ThredUp is looking for easily reached venues where commuter and car access make them “part of consumers’ everyday routine,” says CEO James Reinhart.E-commerce has had a famously hard time cracking open the clothing industry. Some 85% of apparel is still bought in stores, so brands that sell only online miss a huge opportunity to engage with customers. Simultaneously, the cost of online advertising has grown every year, while brick-and-mortar rent has gone down. Store ownership has thus become more attractive, Reinhart says.Online resellers also have an advantage when opening physical locations—they have piles of data on shoppers, as well as their favorite brands—all easily sorted by zip code, which helps them choose what to display in each store.RealReal’s downtown New York store, where it shows off its largest collection of items, is two stories of upscale bags, watches, jewelry and garments for both men and women. It also happens to be down the block from What Goes Around Comes Around’s original store, which opened in 1993. The celebrity hotspot has an appointment-only archive with some of the highest-end vintage clothing items anywhere.Both hope to score the best rare finds in the neighborhood.To contact the authors of this story: Olivia Rockeman in New York at email@example.comKim Bhasin in New York at firstname.lastname@example.orgTo contact the editor responsible for this story: David Rovella at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Boutique airline La Compagnie has successfully taken on heavyweights like Delta and Air France with its affordable business-class service between New York and Paris.
(Bloomberg Opinion) -- In a poor, underbanked country, there wouldn’t be anything unusual about imposing a $6.40–a-month penalty on depositors unable to keep at least $640 in their savings accounts. That’s just how financial exclusion works.But in rich Hong Kong, a city that gives banks more than $26 billion in annual earnings, it took a fintech revolution to make HSBC Holdings Plc drop its minimum-balance charge for 3 million customers — a fee it had levied for 18 years.Scrapping charges that annoy retail customers will buy the lender some protection against the city's eight virtual banks, which are preparing to go online and looking to build their deposit bases from zero. The challengers are expected to pay higher interest; they’re also unlikely to impose minimum-balance penalties. Now that HSBC, the market leader, has made its move, other bricks-and-mortar lenders may have to follow suit.While my colleague Nisha Gopalan and I remain skeptical about the impact of branchless, internet-only banks, the city’s established lenders like HSBC, BOC Hong Kong (Holdings) Ltd., Standard Chartered Plc and Hang Seng Bank Ltd. have another problem that can’t be papered over by tweaking fees: timing.After years of struggling in the post-financial crisis world of quantitative easing and cheap cash, Hong Kong banks have made out like bandits since the Federal Reserve started raising rates in late 2015. Outsize gains in net interest margin helped them outperform most global banks. Even at present, Hibor, the local interbank lending benchmark, is more than twice as high as banks’ cost of funding, which stays in check because cheap deposits are always slower to reset than loans.It may, however, prove to be a short-lived boom. With the Fed’s rate-increase cycle threatening to reverse, Hong Kong banks’ profitability is likely to come under pressure. Digital rivals, with deep-pocketed sponsors, are showing up just when weaker interest rates could shave 4% to 8% from earnings estimates of the city’s top deposit-taking institutions next year, according to Morgan Stanley. Profit expectations for 2021 have to be pruned by 6% to 13%, the investment bank’s analysts note. Oddly enough, it's the tech disrupters that could end up saving the very banks whose profit pools – among the world's biggest – they're aiming to capture.Five years ago, Hong Kong’s regulator had no room for Alibaba Group Holding Ltd.’s dual-class shares because holders’ voting rights would be unequal. Now, not only do the city’s investors want the company to return with a secondary listing, but its banks are also praying for a successful Alibaba share sale, which could raise as much as $20 billion. That might help lift sentiment, which has dimmed as China’s economy slows and trade tensions between Beijing and Washington fester.In Hong Kong, the IPO market and bank profitability are joined by the common thread of liquidity. Large share sales tend to soak up cash from the banking system, albeit briefly, pushing up Hibor even without a lift from U.S. Libor.That’s good for banks. Even then, Hong Kong lenders’ best season probably won’t last long after the June quarter ends. It could be some time before the Fed turns hawkish again. Meanwhile, the worst that can happen is its super-dovish stance drives Libor too low. A middling scenario would be one in which lenders nip a fee here, tuck a charge there to protect deposits from an assault by their virtual rivals, while a revived IPO market keeps Hibor — and banks’ interest margins — from crashing. If the city’s biggest share sale since 2010 can’t do the trick, then perhaps nothing will.To contact the author of this story: Andy Mukherjee at firstname.lastname@example.orgTo contact the editor responsible for this story: Rachel Rosenthal at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Figuring out the best airline stocks to buy and watch can be difficult in a sector clogged with abbreviations and easily-tweaked investors.
The Dow Jones Industrial Average ended down Wednesday after Treasury Secretary Steven Mnuchin said the U.S. and China were "about 90% of the way" to reaching a trade agreement, while President Trump said he wants to make a trade deal with Beijing, but is happy where things are now. rose after the chipmaker's fiscal third-quarter earnings and revenue beat Wall Street forecasts and the company said it expects a solid rebound in memory demand later this year. Micron Technology is Real Money's Stock of the Day.
During Wednesday's edition of “Trading Nation,” Bill Baruch of Blue Line Futures said General Mills, Inc. (NYSE: GIS ) is going through some hurdles but it's not indicative of the entire sector. “You ...
Dennis Muilenburg acknowledged at least some MAX-related removals in an interview with Axios at the Aspen Ideas Festival.
Technology shares led the S&P 500 and the Nasdaq higher on Wednesday after remarks by Treasury Secretary Steven Mnuchin rekindled hopes for a de-escalation of U.S.-China trade tensions and brought buyers back from the sidelines. All three major U.S. stock indexes were up, though off session highs.
The Chicago-based carrier has begun struggling in recent weeks to get planes to the arrival gate within 14 minutes of their scheduled arrival time.
Driving General Mills price action is the company's most recent quarterly results. Before the open on Wednesday, the company reported fourth-quarter earnings of 83 cents per share. Sales of $4.2 billion grew 7% year-over-year, but missed estimates by $80 million.
Net sales rose overall, but they fell in North America, excluding revenue from recent acquisitions such as the food company’s 2018 purchase of the Blue Buffalo pet-food brand. General Mills stock (ticker: GIS) had gained 38% in 2019 through Tuesday’s close. The company’s fiscal third-quarter earnings report in March was better than anticipated, though (WFC)’s John Baumgartner said at the time that was partly because Wall Street didn’t expect a strong result.
(Bloomberg Opinion) -- Reporters and editors at mainstream media outlets should be on their best behavior these days, after years of accusations of “fake news.” But there’s a type of misleading reporting that many are finding hard to avoid: the creation of phony health scares, usually mixed up with manners and morals.Last week, the Washington Post fell into the trap with a claim that looking down at smartphones was causing young people’s skulls to sprout “horns.” Other news outlets followed.Those who read beyond the headline discovered that the alleged horns were just tiny “bone spurs” around the base of the skull. The researchers speculated that they have something to do with reading off a phone screen because they were more common in young people than in those of middle age. The researchers played down the observation that the spurs were also common in those over 60.While smartphone reading has become ubiquitous, it’s a relatively new phenomenon, and young people are seen as more likely to do it to excess. And so smartphones have generated great unease and headlines warning that they cause depression, increase the risk of suicide and make people fat. The Atlantic ran a cover story about how they may have “destroyed a generation.”The insides of people’s heads are one thing, but the notion of adding horns to the outside is bound to go viral. The Post story contained a quote from a researcher at Yale who pointed out, quite reasonably, that the study on which the story was based did not include any information about cell phone use at all, so assuming a connection between the observed bone spurs and phone use is only a guess. But as often happens, the reporter treated this as a bit of token skepticism rather than a reason to rethink the whole story.The paper was initially thrust in the spotlight by the BBC, where it was included as part of a story on how modern life was changing the human skeleton. Though that story presented the finding more as a curiosity than a health scare, it tied the phenomenon of spurs at the base of the skull to supporting the weight of the head in an unusual position during less-than-productive behavior: “As we lean forwards to pore over famous dogs on social media, our necks must strain,” it read.As a person who has a smartphone and is also a lifelong reader of books, I can attest that the reading posture would be the same for a more intellectually ambitious young person reading “Jane Eyre” on a tablet or an old-fashioned paperback. There’s no way the news media would try to scare people away from reading books.Which gets us back to those manners and morals. Perhaps news reporters and editors feel that excessive smartphone use is a bad and annoying habit, and so they don’t closely scrutinize a sensational claim about phone use.A few outlets, such as the New York Times, followed with a skeptical take. Quartz pointed out that one of the researchers of the original study had a potential conflict of interest, because he is a chiropractor who sold “posture pillows.” Still, the more important problem is the fact that the whole smartphone claim was backed by no evidence.This spring, at a meeting at the Columbia School of Journalism, reporters were urged to more aggressively scare people about human-induced climate change. Fake news? Not at all, because there is ample evidence that it’s happening, and that it’s likely to get a lot worse. Fair and balanced reporting on the climate should be really scary. But the efforts of the environmental journalists are being undermined by the health journalists. The “horns” story just made it harder for readers to take any scary headline seriously.To contact the author of this story: Faye Flam at firstname.lastname@example.orgTo contact the editor responsible for this story: Philip Gray at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Faye Flam is a Bloomberg Opinion columnist. She has written for the Economist, the New York Times, the Washington Post, Psychology Today, Science and other publications. She has a degree in geophysics from the California Institute of Technology.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Arthur J. Gallagher's (AJG) intended acquisition of a minority stake in Renomia a.s. is in tandem with its strategy to expand internationally.
General Mills, Target, Apple, Southwest Airlines and Netflix are the companies to watch.