After Hours Summary: STZ -2.9% on earnings and it will divest some wine brands; X -11.7% lower on Reuters report that Trump pours cold water on merger; PSMT +1.4% a bit higher on earnings
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: PSMT +1.4%, MEG +0.2%
Companies trading higher in after hours in reaction to news: ACT +5.9% (to join S&P SmallCap 600), TE +3% (stock offering by selling shareholders), VCTR +1.9% (reports March AUM), HRZN +1.7% (provides a Q1 portfolio update), MSGE +1.2% (names new CFO), IVZ +0.9% (reports March AUM), ET +0.9% (signs deal with MidOcean Energy to develop LNG export facility), COST +0.4% (reports March same sotre comps), LMND +0.3% (discloses technical issue that likely led to data exposure), WMT +0.1% (summarizes investment meeting)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: STZ -2.9% (also to divest primarily mainstream wine brands and related vineyards and facilities; undergoing a review of its organizational structuring; also announces $4 bln share buyback authorization)
Companies trading lower in after hours in reaction to news: LUCD -19.4% (stock offering), X -11.7% (Trump says he does not want to see it owned by Japan, according to Reuters), DEA -2.6% (reduces dividend; approves 1-for-2.5 reverse split; reaffirms FY25 core FFO guidance), NMAX -2.1% (court ruled that co defamed Dominion, according to Reuters), ST -2% (experienced a ransomware incident), VOYA -1.9% (provides update on Q1 alternative investment income), AB -1.1% (reports March AUM), MVST -0.6% (names new CFO), BWXT -0.1% (joint venture awarded $2.6 bln DoE contract)
Prada poised to seal Versace deal after Trump’s tariffs spur $200mn discount
Italian fashion group set to announce cut price $1.38bn tie-up with Capri-owned house as soon as Thursday
Italian fashion group Prada is closing in on the purchase of Versace after negotiating a discount of more than $200mn, due to the impact of US President Donald Trump’s trade war.
Prada and Capri Holdings, Versace’s owner, are set to announce a deal worth about $1.38bn as soon as Thursday, according to people with direct knowledge of the talks. These people added that the transaction price, which had been expected to be agreed at about $1.6bn, was renegotiated downwards in recent days following the market turmoil and pressures that US tariffs were expected to place on Versace’s business.
The people cautioned that the timing of the deal’s announcement could slip and small price adjustments could still be made. Capri chief executive John Idol is in Milan to finalise the details with the Prada family, according to one of the people. Prada and Capri both declined to comment.
Capri’s share price has fallen by more than a third since Trump announced sweeping tariffs on global trading partners last week, crashing markets and reducing the group’s total market value to $1.5bn.
Capri, which also owns Jimmy Choo and Michael Kors, and the Prada Group have been locked in exclusive negotiations for more than a month. Capri’s initial asking price of €3bn and the future of Versace’s creative director, Donatella Versace, were two of the main sticking points in the negotiations, according to people close to the talks.
Last month, Donatella Versace stepped down after 30 years at the creative helm of her namesake label and was replaced by Dario Vitale, the design director of Miu Miu, one of the Prada Group’s brands.
The move was seen as a sign that the two groups were edging closer to an agreement. However, recent market turmoil and Capri’s share-price plunge threatened to derail the deal, said two people close to the talks.
A cut-price deal will mean Capri takes an even steeper haircut on Versace, which it bought in 2018 from the Versace family at an enterprise value of €1.83bn.
Versace’s brand equity has suffered from Capri’s decision to license many of its products to third parties, including Luxottica and Euroitalia. Versace’s sales fell by almost 11 per cent in its most recent quarter and the brand currently operates at a loss.
Prada’s high brow aesthetic and Versace’s more maximalist brand are seen as potentially complementary, but some industry insiders see Versace’s relaunch as a complex task.
Vitale, who enjoyed success at Miu Miu alongside founder Miuccia Prada, will be tasked with reviving the label by making it more appealing to a new generation of luxury consumers.
New York-based Capri has been looking to sell Versace for some time. The plan accelerated last year when a US court blocked a proposed $8.5bn merger with rival Tapestry, which owns Coach and other affordable luxury brands, over competition concerns. It has also been entertaining interest from potential buyers of luxury shoe brand Jimmy Choo, according to people familiar with the situation, which it bought for $1.35bn in 2017.
Capri has faced challenges to both its revenues and profitability as brands across its portfolio struggle amid a global luxury slowdown, which has hit the aspirational segment its brands target particularly hard. Michael Kors — which accounts for about 70 per cent of group revenues — has been performing poorly. A deal would allow Capri to refocus on turning the brand around while cutting its debt.
Prada Deal for Versace at Risk of Collapsing With Market in Turmoil
Pending deal talks offer latest example of Trump trade war wreaking havoc on markets
Prada’s 1913 -1.19%decrease; red down pointing triangle talks to acquire Versace from fashion conglomerate Capri Holdings CPRI -1.56%decrease; red down pointing triangle are at risk of collapsing at the eleventh hour with financial markets in historic turmoil, according to people familiar with the matter.
Prada has a tentative deal to acquire Versace from Capri for roughly $1.4 billion, which could be announced as soon as Thursday morning. But Versace’s namesake family still have yet to sign off on the agreement, the people added.
As of Wednesday morning, the likelihood of a deal was still 50-50, one of the people said.
The market swings and the uncertain impact of tariffs, which have slammed into luxury retail, are complicating the two sides’ coming to a final pact.
The uncertain deal talks offer the latest example of how President Trump’s escalating trade war is wrecking havoc across Wall Street and forcing companies to rethink big decisions. The retail industry in particular has been hit hard.
Shares of Prada, which is based in Milan but listed in Hong Kong, fell 1.2% on Wednesday and are down more than 15% over the last five trading days. Capri shares fell less than 1% Wednesday morning, with the stock down more than 40% year to date.
Goldman’s anatomy of a bear market
News you can use
Futures indicate that the US stock market could suffer another iffy day when trading resumes, putting it perilously close to bear market territory.
Goldman Sachs’ chief global equity strategist Peter Oppenheimer has therefore updated his bear market anatomy report, and made it public for Alphaville readers here.
After all, as Oppenheimer points out, not all bear markets are created equal, and its nature “has some bearing on the triggers, timing and speed of the recovery”.
Here you can see a full list of every US bear market going back to the early 1800s, how long they lasted, how deep they were and how long it took for stocks to fully recover (higher-res here):
As you can see, Oppenheimer sorts bear markets into three main categories: structural, cyclical and event-driven.
He reckons that we are now on the cusp of a classic event-driven one — triggered by the new American tariff regime — but warns that it “could easily morph into a cyclical bear market given growing recession risk”.
This matters most for how long it might prove to be. The damage tends to be roughly equal, but event-driven ones tend to be brief (and therefore perfect for dip-buying investors) while cyclical bear markets on average last two years, and it take about five years to fully recover the lost ground.
Volkswagen overcomes China EV slump by doubling European sales
Jump for German carmaker’s market share comes as former leader Tesla lags behind
Germany’s Volkswagen on Wednesday said its electric vehicle deliveries in Europe in this year’s first quarter were more than double the same period last year, offsetting a sustained sales slump in China.
The company also increased its first-quarter deliveries of EVs in the US by 51 per cent compared with January to March 2024, to 19,900.
Sales of EVs have increased across Europe during the first three months of the year as carmakers have rolled out new models in anticipation of forthcoming tougher emissions rules from the EU.
The growth in Europe also comes at the same time as a sharp slump in sales in Europe for Tesla, the US-based manufacturer led by US President Donald Trump’s ally Elon Musk, previously the EV market leader in the region.
The rises in Europe and the US took the EV share of VW’s vehicle sales in the quarter up to 10 per cent, from 6 per cent in the same quarter last year, despite a 37 per cent fall in sales of the vehicle type in China. EVs accounted for 158,100 of the group’s sales in Europe, 17 per cent of the total.
Marco Schubert, a VW senior director of sales, said: “Gains in North and South America as well as in Europe have more than compensated for the expected decline in China.”
VW and other legacy brands such as France’s Renault have increased their market share at Tesla’s expense. According to Schmidt Automotive Research, the US brand’s share of Europe’s car market in the first three months was only 1.7 per cent, down from 2.7 per cent in the first quarter of 2024 and half its 3.4 per cent peak.
VW’s Europe region includes countries across continental Europe and the UK, not just the 27-member EU.
Analysts have said Tesla is suffering both from an ageing product portfolio and a consumer backlash against Musk’s prominent political role, including his interventions in German politics in favour of the far-right Alternative for Germany party.
VW’s first-quarter figures were similar to those of luxury-car maker Porsche, controlled by Volkswagen, which reported first-quarter deliveries on Tuesday. It also reported a surge in US deliveries ahead of the imposition of 25 per cent tariffs on most car imports to the US that began on April 3.
Porsche reported a pronounced increase in demand for its electric Macan, whose retail price starts at $75,000. One person at the company attributed the increase to a “Musk effect . . . former Tesla drivers going to Porsche”.
The higher US sales for VW and Porsche increase both companies’ dependence on the US market at the same time that raised tariffs make imported vehicles less competitive in that market.
Both the EU and UK have changed rules about vehicle emissions to support the car industry in light of its vulnerability to the trade war started by Trump. The EU has watered down emissions standards for vehicles, while the UK has reduced the fines facing carmakers that fail to hit EV sales targets.
EV demand has also been bolstered by industry incentives, such as the decision earlier this week by both Ford and VW to offer consumers free home electric chargers, or free power for certain distances.
Ford’s UK managing director, Lisa Brankin, told the Financial Times there was clear demand for electric vehicles.
But she added: “[The consumer incentives] are what’s needed to help drive momentum in the market.”
Also on Wednesday, South Korea’s Kia lowered its target for global annual EV sales by 2030 by 21 per cent, to 1.3mn vehicles, amid the geopolitical uncertainty.
Tariffs are coming for my . . . nuclear warheads?
Imports boom
In the scramble to figure out how exactly “Liberation Day” is going to upend global trade, nuclear errors may occur.
Economists at the Federal Reserve Bank of Richmond released a great chart (covered in mainFT) identifying the sectors that will be most impacted by Trump’s sweeping trade levies.
The first four — leather goods, apparel, furniture, and textile product mills — made a lot of sense. These industries all import heavily from the countries facing the steepest tariffs, like Vietnam, China and Cambodia.
But the fifth item prompted a bit more head-scratching. And when the Richmond Fed kindly provided the underlying data for the chart, they also supplied a clarification for the ages.
PS: we had a typo in one of the industries, instead of “Nuclear Warheads” it should have been “Support Activities for agriculture and forestry.”
You might be wondering how “nuclear warheads” ended up in place of “support activities for agriculture and forestry.” And if you’re developing conspiracy theories about the cover-up of nuke inflation, we’re afraid we must let you down: it seems it really was a typo.
The North American Industry Classification System (NAICS) code for “support activities for agriculture and forestry” is 115. The Product Service Code (PSC) code for “nuclear warheads and warhead sections” is 1115.
As fat-finger errors involving nuclear warheads go, it’s probably one of the better ones.
Feeling a little more relaxed, FT Alphaville started asking the obvious question: what on earth are “support activities for agriculture and forestry”?
Well, according to the Bureau of Labor Statistics, “Industries in the Support Activities for Agriculture and Forestry subsector provide support services that are an essential part of agricultural and forestry production.”
So that’s that all cleared up.
The chart on the Richmond Fed’s website has now been “updated to accurately reflect the proper industries” and the original work has been lost to history. Here’s the disarmed version:
