Closing Stock Market SummaryThe S&P 500 increased 0.2% on Thursday, closing at another record high and touching the 3500 level for the first time in the process. The Dow Jones Industrial Average (+0.6%) and Russell 2000 (+0.3%) performed slightly better, while the Nasdaq Composite declined 0.3% after setting an all-time high earlier in the session.
Financial stocks were among today's biggest winners, benefiting from some curve-steepening activity after Fed Chair Powell outlined a shift towards an average inflation target. Under the new framework, the Fed would allow PCE inflation to moderately run beyond 2.0% over time to make up for years when it ran below 2.0%.
From a sector perspective, the S&P 500 financials sector finished atop the standings with a 1.7% gain, followed by real estate (+1.4%), health care (+0.8%), and consumer staples (+0.6%). The communication services (-1.3%), consumer discretionary (-0.7%), and materials (-0.2%) sectors were the lone holdouts.
Other positive factors today included reports that Microsoft (MSFT 226.58, +5.43, +2.5%) and Walmart (WMT 136.63, +5.93, +4.5%) are teaming up to possibly acquire TikTok US, and Abbott Labs (ABT 111.29, +8.10, +7.9%) receiving emergency use authorization from the FDA for its $5.00, 15-minute COVID-19 antigen test.
Mega-cap growth stocks had a relatively weak outing today after an incredibly strong performance yesterday. Microsoft was an exception, of course, and so was Tesla (TSLA 2238.75, +85.58, +4.0%).
As an aside, Senate Majority Leader McConnell (R-KY) reportedly said stimulus talks remained at a stalemate, which may have been a contributing factor in the market's brief dip into negative territory around 1:00 p.m. ET. The market, however, swiftly rebounded into positive territory.
Recapping the moves in the Treasury market, the 2-yr yield finished flat at 0.16%, while the 10-yr yield increased six basis points to 0.75% as investors sold longer-dated bonds following Fed Chair Powell's speech. The U.S. Dollar Index was little changed at 93.03. WTI crude futures declined 0.8%, or $0.36, to $43.03/bbl.
Reviewing Thursday's economic data:
- Initial jobless claims for the week ending August 22 were roughly in-line with expectations, decreasing by 98,000 to 1.006 million (consensus 1.000 million). Continuing claims for the week ending August 15 decreased by 223,000 to 14.535 million.
- The key takeaway from the report is that the labor market, while recovering, is still fractured in a big way that is not conducive for strong and sustained economic growth.
- The second estimate for Q2 GDP showed output decreased at an annualized rate of 31.7% (consensus -32.9%) versus the advance estimate of -32.9%. The GDP price index was down 2.0% (consensus -1.8%) versus the advance estimate of -1.8%.
- The key takeaway from the report is that the upward revision doesn't change the fact that the COVID crisis triggered the biggest downturn for the U.S. economy on record.
Looking ahead, investors will receive the Personal Income and Spending report for July, the final Univ. of Michigan Index of Consumer Sentiment for August, and Wholesale Inventories for July on Friday.
- Nasdaq Composite +29.6% YTD
- S&P 500 +7.9% YTD
- Dow Jones Industrial Average -0.2% YTD
- Russell 2000 -6.2% YTD
Delivery Hero/InstaShop: meal deal
German company buying Dubai-based ecommerce site for $360m
Food delivery companies have shown gargantuan appetites for M&A. Think Takeaway.com, which has rolled up America’s GrubHub and Just Eat of the UK. China’s Meituan Dianping, the sector giant, has been more adventurous, moving into bike sharing and farm distribution. Now Germany’s Delivery Hero is buying InstaShop, a Dubai-based ecommerce site, for $360m.
Instashop is an asset-lite store that takes commissions from grocers and other merchants on its app. That, unusually in the world of food delivery, makes it profitable — although probably not by much. It is also growing rapidly, with gross merchandise value (GMV) — the total paid by buyers for goods bought over the app — up 330 per cent at an annualised $300m in the second quarter. Assuming a take rate similar to Uber Eats implies net revenues of $30m.
Delivery Hero is thus buying growth. The multiple looks ridiculously heady based on a few million dollars of ebitda, but at just over one times gross merchandise value it compares favourably with peers trading on around 4-5 times.
Delivery Hero itself trades at under four times and is heavily loss making, to the tune of 28 cents in every euro at the ebitda level in the first half. It too is all about growth, including from M&A. That makes sense. Online delivery is a game of scale and branching out, both geographically and into different products such as groceries and flowers. It is how China’s superapps flourished and the reason why the model is now being aped by the likes of Uber.
Still, some caution is merited. For one, GMV is a slippery metric. For another, the youthful Delivery Hero — which has just been promoted to the DAX 30 — has rather a lot on its plate. That includes a $4bn tilt at Woowa Brothers, which runs popular South Korean food delivery app Baemin. The deal awaits regulatory clearance. This is a cut-throat business with often punitive customer acquisition costs. Tempting as the acquisitions look, the risk of indigestion looms large.
Wix Could Light Up Again With Payments
The website builder has more payments and e-commerce tools rolling out. That could fire up more gains for an already super-hot stock.
Wix.com WIX -1.27% helps small businesses get online, and it’s also increasingly helping them with payments. That puts it right in Wall Street’s happy place.
Investors are crazy right now for digital payments. But they are also still coming to grips with what exactly is a payments company. There are the established payments giants, like Visa or PayPal Holdings. PYPL +0.38% But there are also companies that offer services so closely tied into payments—like a business’s mobile app, or sending out invoices—that they become payments gatekeepers. Often these gatekeepers now collect transaction fees themselves.
Tel Aviv-based Wix is perhaps best known for website building, with some 180 million registered users globally, many of them very small businesses. Typically it isn’t grouped with other payments or e-commerce companies. But its future may have more in common with Shopify or Square than it does with, say, GoDaddy.
Wix shares are already up 44% over the last three months, on the strength of record user growth of 9.3 million in the second quarter and an increase in the share of users buying multiyear subscriptions. And yet it might still have more room to run. It trades at about 18 times trailing sales. Shopify, which helps companies build virtual stores and handles payments, is now around 60 times. Newly-listed BigCommerce, as well as Bill.com and Coupa Software, which are embedding payments in business spending, are all at over 40 times. Wix’s year-over-year revenue growth of 27% in the second quarter is slower than Shopify’s 97%, but its gross margins are also higher.
Wix this year rolled out a new e-commerce subscription offering, including things like shipping tools. This will compete with Shopify’s cheapest tier in the realm of small businesses, especially those rapidly trying to adapt to the pandemic. Plus, only last year did Wix begin to move customers onto its own payment platform and generate revenue from transaction fees. Eight out of 10 users setting up payments for the first time are choosing Wix Payments, according to the company. Wix is also putting its gross margin to work by nearly doubling its marketing spend in the second quarter.
Wix isn’t a cheap stock. But the market is now willing to give immediate credit to some companies for years’ worth of e-commerce and payments growth. Wix doesn’t yet break out its payments revenue. But it likely wouldn’t take much more than one splashy quarter to reignite the flame.
Germany aims to raise up to €6bn in first green bond sale
Issuance of 10-year debt is expected to eventually establish new sector benchmark
Germany is expected to sell its first ever green government bond next week, in a deal investors predict will boost the market for debt linked to spending on environmental projects.
The German finance ministry told investors on a call on Thursday that it planned to raise up to €6bn from the sale of a new 10-year bond, according to two people on the call. The syndication is the start of a programme that aims to raise up to €12bn this year and would eventually lead to the country issuing two, five and 30-year green debt.
The proceeds are earmarked for green projects, with the government identifying €12.7bn of eligible expenditure in its 2019 federal budget, ranging from the construction of new railways and bike lanes to research into renewable energy. Angela Merkel, the German chancellor, has repeatedly stressed that spending on climate protection should play a central role in Europe’s recovery from the coronavirus pandemic.
Germany is not the first country to issue green bonds, a class of debt that has mushroomed in recent years amid a clamour for assets linked to environmental, social and governance aims — so-called ESG investing. Assets in funds with “sustainable” goals have swelled to above $1tn globally, more than doubling in the past three years, according to Morningstar. France sold its first sovereign green bond in early 2017, which was followed by a slew of other issuances from European countries including the Netherlands, Ireland and Poland.
Germany’s green bond sale could be the most significant development yet for the sector, despite Berlin’s late arrival to the market. The country’s debt is considered the safest in the eurozone, and serves as a risk-free benchmark for bonds across the bloc. Sales of German bonds will establish a reference point for pricing green debt across a curve of maturities, which could encourage more governments and companies to enter the market, according to fund managers.
“Until now you don’t have a true risk-free asset in the green bond space,” said David Zahn, head of European fixed income at Franklin Templeton. “Most countries in this space have issued one or two bonds, but nobody has a curve. Building a full curve will help corporate green bond issuers by acting as a reference.”
Alexander Schubert, senior portfolio manager at Union Investment, said the move was “very important, because it has a signal effect”: it should encourage other issuers, be they corporations and governments, to issue green and sustainability bonds.
Next week’s issue is likely to draw strong interest from investors, he added. “You will see a great appetite for these bonds.”
Germany’s green bonds will be “twinned” with a conventional security of the same maturity and coupon. Once the bonds have been sold, investors will be able to swap their green bonds for the conventional equivalent at any time, a structure designed to allay fears that smaller, less liquid green securities would trade at a lower price.
The ministry will seek to ensure the price of the green twin is always at least that of the conventional bond, by purchasing green bonds if it falls below that level.
The bond lined up for next week is expected to price at
Salt Mobile considering filing a suit against Sunrise over $7.4bn Liberty deal
Xavier Niel’s mobile telecoms group argues that sale is in breach of exclusivity arrangement
Salt Mobile, the Swiss telecoms company owned by French billionaire Xavier Niel, is considering whether to sue its rival Sunrise after it claimed that a $7.4bn deal for John Malone’s Liberty Global to acquire that company would be in breach of an exclusivity agreement.
Salt has appointed US law firm Quinn Emanuel Urquhart & Sullivan, which has filed proceedings in the US to obtain “any relevant information” related to the transaction, it said on Thursday.
Both it and Sunrise had signed an exclusive bilateral agreement in May to co-invest in fibre networks in Switzerland to better compete with Swisscom and Liberty Global’s Swiss cable unit UPC.
However Sunrise agreed to sell itself to Liberty Global earlier this month. Salt said in a statement on Thursday that the takeover “infringes on contractual rights” as part of their fibre deal.
André Krause, chief executive of Sunrise, told the Financial Times that he believed Salt did not have any grounds to sue as the exclusivity deal excluded a public tender offer. He added that Sunrise had not solicited the offer from Liberty Global.
“We cannot see why we have breached that agreement,” he said.
Liberty Global declined to immediately comment.
It is the latest twist in the saga of Swiss telecoms consolidation after a previous deal that would have seen Sunrise acquire Liberty Global’s UPC was scuppered by its own shareholders.
Why Aren’t More Chinese Department Stores Going Bankrupt?
While consolidation continues in China’s department store sector, the pandemic hasn’t dramatically hastened store closures and bankruptcies the way it has in the US. What’s their secret?
SHANGHAI, China — It’s been a tough year for retailers of all kinds, but the pandemic’s acceleration of existing trends has hit the department store sector particularly hard.
In the US, store closures and an accelerated shift to spending online have already pushed Neiman Marcus, J.C. Penney and Lord & Taylor into bankruptcy. Meanwhile, in China, a report released last month which collected financial data from 103 domestic department store operators paints a decidedly rosier picture for the segment here. But there’s more to it than meets the eye.
The joint report by Fung Business Intelligence Group (FBIC) and the China Commerce Association for General Merchandise (CCAGM) showed that, unsurprisingly, the growth of China’s department store sector slowed down over the survey period from the end of November 2019 to the end of May 2020 (which includes the worst of China’s coronavirus outbreak). Somewhat more surprisingly, corporate gross and net profit margins and customer unit prices had all increased, compared to a year earlier.
The sector’s long-term outlook remains “positive,” according to the authors of the report. Citing double-digit growth recorded by some department stores in the second quarter of 2020, they concluded that “the pandemic has compelled [Chinese] department stores to pursue more rigorous transformation and seize upcoming opportunities in a post-pandemic world. Department store players from abroad may have something to learn from their mainland Chinese counterparts.”
The rebound appears so definitive, in fact, that Cushman & Wakefield’s head of retail for East China, Jenny Wei, now describes the department store sector as “fundamentally recovered.”
“The business has come back to more than 90 percent of what it was before the pandemic… but future performance will depend on whether they can continue to follow the changing market,” she said.
Hong Kong-based Lane Crawford Joyce Group, which operates Lane Crawford department stores on the mainland in Beijing, Shanghai and Chengdu, says between May and August, it has seen both overall sales and “exceptional purchases” (transactions in excess of one million yuan, or $145,000) rise compared to the same period last year.
Though Andrew Keith, Lane Crawford’s president, said the recovery has been good, it hasn’t been uniform, with some stores recovering more strongly than others.
“Shanghai is particularly strong [and] we’re seeing great growth in our fashion and home and lifestyle businesses, and in beauty online,” Keith said. “Many of our customers have told us they’re making up for the fact that they can’t travel by shopping at home.”
While anecdotal reports such as these seem positive, the full picture is a little more complicated. China’s two-speed recovery, which has seen wealthy consumers emerge virtually unscathed by the economic fallout of the Covid-19 pandemic, certainly favours luxury department stores, such as Lane Crawford, which cater to them. For more large-scale Chinese department stores across the country with a greater assortment of products and price points, however, serious challenges are approaching — or have already arrived.
The Struggle is Real
Dig a little deeper into CCAGM’s 2019 data and a more mixed picture emerges of growth in the department store sector.
Around 80 percent of the operators surveyed by CCAGM are actually engaged in multiple retail formats, including not only department stores but a mix of shopping malls, convenience stores, supermarkets, outlets and e-commerce businesses. The diversified format mix of their portfolios is what helped push the collective figure for Chinese department store operator revenue growth to 2.8 percent in 2019. However, when broken down by segment, the department store businesses of all operators surveyed grew only 1 percent last year.
The truth is that department stores in China face many of the same challenges as their counterparts in the West. They are the vestiges of an old era of retail, one in which people didn’t have the option of shopping online or the lure of newly-constructed shopping malls with an even greater assortment and places to park cars and things to do — including restaurants, cinemas, gyms and kids’ entertainment.
“Departments stores [in China]… were already drastically declining over the past five years. Covid-19 helped accelerate the phenomenon,” explained Zino Helmlinger, head of detail for CBRE Eastern China.
Though there haven't been mass closures or bankruptcies of department stores in China since the pandemic, there have been a few, notably the Paris Spring Department store in Shanghai, which closed its Hongkou branch, as well as Parkson Group, one of the longest-running foreign operators in China, deciding not to renew the lease on its second property in Kunming, the capital of China’s southwest Yunnan Province.
In fact, according to JLL data, among the 28 Chinese retail markets it tracks, approximately 597,000 square-metres of department store space has quietly closed each year since 2016, a trend tipped to continue into the foreseeable future.
A Unique Ecosystem That Helps and Hinders
One reason that even more department stores haven’t gone under is that department stores are a much more recent phenomenon in China than in the West. Another is that the sector’s origins and continued operations in China are closely intertwined with government money.
Though there are examples of privately-owned department store operators, as well as international players (first Japanese and Korean players, but more recently also western entrants like French chain Galeries Lafayette), the vast majority of department stores in China are either state-owned or partially state-owned enterprises. To a certain extent, this creates a dynamic whereby provincial and central governments are motivated to prop up their own business interests — especially now when all levels of government are tasked with shoring up China’s economy with domestic spending.
For instance, in recent months, local governments have released a slew of measures to stimulate spending in their own cities and provinces. Shanghai’s municipal government, for example, introduced a two-month shopping festival on May 5 and, as a result, Shanghai New World Daimaru Department Store and Shanghai First Yaohan Department Store reported monthly sales rebounds of 45 percent and 18 percent, respectively, for the month of May.
Almost all provinces have state-owned retail operations that run the department stores in their respective major cities, usually in plum downtown locations. This makes them particularly important for luxury brands looking to target consumers outside top tier cities. Apart from fast fashion giants like Zara and Uniqlo, very few international fashion brands are independently expanding into China’s third tier cities, of which there are around 70, each with a population in the many millions. The rest rely on retail partners like department stores for distribution.
Though e-commerce is increasingly helping brands from Coach to Cartier reach more deeply into China’s lower tier cities — urban markets that are growing more quickly than the market overall — online sales last year still only accounted for 10 percent of sales of luxury.
For wealthy residents in Huzhou, Hohhot, Handan or Huai’an, third tier cities where there has not yet been an influx of luxury shopping mall options, their local department stores remain trusted go-to places to buy high-quality branded goods, making them important channels to nurture.
The fragmented nature of China’s department store sector means global brands need to work harder to do this. Rather than a few strong national department store names, the majority are regional or provincial players, dominating their local markets (although there are exceptions like Shanghai-headquartered Bailian Group which has a retail footprint across the country, as does Shenzhen’s Rainbow).
In fact, according to data published by CCAGM, many of the most profitable department store operators in China hail from the regions. Nanjing Xinbai tops the list, followed by Maoye Commercial (from Chengdu), while Hubei’s Ewushang, Chongqing Department Stores, Shenzhen’s Rainbow and Liaoning’s Dashang Group all join Shanghai heavy-hitters Bailian and Yongan Groups, along with Beijing’s Wangfujing in the top ten.
Make no mistake, the state finance that backs many of China’s department store operators is a help, but it can also be a hindrance, with privately-owned enterprises — for example Alibaba-backed Intime Department Store chain — showing a greater level of adaptability in recent years.
“It’s a systemic issue. [State-owned department stores] have the ability to [change] but the system restrains them from making these changes [quickly]. The burden of their long history [of doing business in a traditional way] is quite heavy,” Cushman & Wakefield’s Wei explained.
In spite of the challenges, there remains a sense of optimism here that department stores can still transform into "new retail" (to use local parlance) players that meet the needs of modern-day consumers. Many of the biggest players have already made moves to do just that as the sector declined over the past five years.
How Chinese Department Stores are Adapting
China’s first-tier cities were both the first to receive an influx of new shopping malls, and the first to realise the need to reimagine their traditional department stores.
In 2017, Bailian Group chairman Ye Yongming signed a co-operation agreement between China’s largest retailer by sales revenue and tech giant Alibaba to utilise technology to deliver enhanced customer service. It then set about transforming some of its department stores into shopping malls, undertaking large-scale renovations on others and introducing its own multi-brand store, The Balancing, which allowed it to diversify and differentiate its brand mix to incorporate names like Jil Sander, Brunello Cucinelli, and local independent labels like Shushu/Tong.
SKP Beijing, with general manager Luo Zhiwei at the helm, has also introduced its own distinct multi-brand offering, SKP Select, as part of the process it began in 2013 to remake itself from a shopping mall into a department store (albeit the opposite approach to the dominant trend).
Key to SKP Beijing’s success (last year it was named the world’s second-most productive department stores after Harrods in a report by GlobalData and Sybarite) is its focus on experience — cutting-edge art installations are a major draw — as well as its targeted curation and exclusivity of brands and product offerings.
The hybridisation of shopping malls, department stores and e-commerce operations that is currently taking place in China is just a taste of how the sector will continue to develop moving forward, according to James Macdonald, head of Savills China Research.
“The definitions and distinctions between different platforms are becoming blurred, with operators having to spread themselves over multiple channels,” he said
These changes are not yet being felt as much in tier three cities, where there is less retail competition, but a reckoning will eventually come there too.
Boundless Digitalisation at Breakneck Speed
Partnering with domestic tech giants has provided a pathway to accelerated omnichannel adaption and success for groups like Bailian.
Another example is Intime, which was taken private by Alibaba in 2017. The former’s Miaojie app not only promises two-hour delivery for local consumers, it also tracks stock on shelves and in storage in real time, allowing merchants to adjust supply and pricing swiftly.
According to Intime Chief Executive Chen Xiaodong, this e-commerce arm, combined with the integration of thousands of Intime sales people as livestreamers, helped its sales in May recover to the same levels seen last year, even as footfall remained 30 percent lower.
Intime was joined by other department store chains, Wangfujing, Rainbow, New World and Golden Eagle in embracing livestreaming, with each launching their own channels this year to interact with consumers and promote sales. What’s more, a full 70 percent of department stores surveyed for the FBIC and CCAGM report are now selling via official WeChat accounts, demonstrating that Alibaba isn’t the only tech player contributing to the transformation of the sector.
The seamless integration of technology, rapid transformation of physical layouts and bold experiments around experience are three obvious factors helping to keep Chinese department stores out of bankruptcy — alongside their links to state finance — but there is something else that sets them apart.
If there is a single lesson peers elsewhere could learn from China, it is this: being able to delight consumers is still an essential mission for department stores but only if it is matched by a shopping journey that is extraordinarily convenient, flexible and entirely customer-centric.
Gapping down
In reaction to earnings/guidance:
- RAVN -7.9% (also suspends dividend), SMTC -6.2%, BILI -5.7%, WSM -5%, GEF -4.9%, DLTR -4.5%, COTY -4.4%, PLAB -4.1%, LCI -4%, DOOO -1.9%, BURL -1.7%
Other news:
- LI -6% (profit taking from late-session move on Wed)
- ODT -5.1% (stock offering)
- DKNG -4% (following NBA playoff games postponed)
- AEYE -2.1% (priced an underwritten public offering of 411,513 shares of its common stock, at a purchase price to the public of $17.75/share)
- BWA -2.1% (SEC announces settled charges)
Analyst comments:
- TXRH -1.6% (downgraded to Equal-Weight from Overweight at Stephens)
- GBX -0.5% (downgraded to Sector Weight from Overweight at KeyBanc Capital Markets)
- LULU -0.5% (downgraded to Neutral from Outperform at Exane BNP Paribas)
Gapping up
In reaction to earnings/guidance:
- TITN +13.5%, BOX +8.9%, ANF +8.7%, NTAP +7.5%, FLWS +5.9%, SAFM +4.1%, CM +3%, MESO +2.6%, LANC +2.1%, DG +1.5%, TIF +1.4%, ESTC +1.1%, FRO +1.1%
M&A news:
- BMCH +13.4% (Builders Firstsource (BLDR) and BMC Stock Holdings (BMCH) to merge); BLDR +1.1%
Other news:
- CLVS +16.1% (receives FDA approval for FoundationOne Liquid CDx to serve as Rubraca (rucaparib) companion)
- ABT +9% (receives FDA Emergency Use Authorization for 15-minute COVID-19 Antigen test)
- PSTI +7.3% (FDA cleared the company's EAP for the use of its PLX-PAD cells to treat Acute Respiratory Distress Syndrome caused by COVID-19 outside of the company's ongoing Phase II COVID-19 study in the U.S)
- GPRE +4% (granted motion to be dismis from lawsuit)
- RDHL +2.4% (announced that its U.S. Phase 2 study with opaganib (Yeliva, ABC294640) in patients hospitalized with severe COVID-19 pneumonia, has successfully passed the first scheduled independent Safety Monitoring Committee review)
- AMC +1.7% (to reopen additional 170 theatres)
- CCL +1.2% (extends pause in cruise operations in Australia and New Zealand)
- IGT +1% (expands PlaySports offering)
- BCO +1% (enters accelerated share repurchase agreement to buy $50 mln of the company's common stock)
Analyst comments:
- MGY +3.8% (upgraded to Overweight from Equal Weight at Barclays)
- ARCB +3.4% (initiated with a Buy at Goldman)
- APA +1.7% (upgraded to Outperform from In-line at Evercore ISI)
- SQ +1.4% (initiated with a Buy at Mizuho)
- EV +1.2% (upgraded to Overweight from Neutral at JP Morgan)
Early premarket gappers
- Gapping up:
- CLVS +20.2%, TITN +13.5%, NTAP +10.2%, BOX +9.1%, BMCH +8.6%, ABT +7.1%, GPRE +4%, ESTC +3.1%, MESO +2.6%, DG +2%, FRO +1.6%, AMC +1.3%, IGT +1.2%, FLWS +1.2%, CCL +1%, BCO +1%, BLDR +0.8%, TIF +0.7%
- Gapping down:
- RAVN -7.9%, LI -7.1%, BILI -5.6%, SMTC -5.3%, DKNG -4.9%, GEF -4.9%, ODT -4.4%, WSM -4.4%, LCI -4%, COTY -3.6%, AEYE -2.3%, BWA -2.1%, SPLK -2%, DOOO -1.9%, BURL -1.2%, ROL -0.8%, SIX -0.5%, PLAB -0.5%
Coty reports Q4 (Jun) results, misses on revs
- Reports Q4 (Jun) loss of $0.46 per share, may not be comparable to the S&P Capital IQ Consensus of ($0.09); revenues fell 62.8% year/year to $560.4 mln vs the $1.37 bln S&P Capital IQ Consensus.
- Commentary on outlook - "To address our financial performance, the team has set rigorous objectives for FY21, targeting adjusted operating income profitability in Q1 and for the full year, and constant like-for-like net debt -- excluding proceeds from the Wella divestiture - supported by aggressive cost reductions and a simplified infrastructure and organization. We remain on track to deliver over 1/3 of the savings from our $600M fixed cost reduction program by the end of this year."