>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:

  • OGI -4.3%

M&A news:

  • CIR -22% (Crane Co. (CR) says will not extend its offer to acquire CIRCOR)

Other news:

  • ETON -15.7% (provides update on EM-100 program; partner receives Complete Response Letter from FDA)
  • TEVA -4.8% (Presidential candidate Joe Biden proposes a public option for health insurance for anyone who wants it and will give power to Medicare to negotiate drug prices
  • EXEL -2.4% (announced that two original cohorts are being expanded and four new cohorts are being added to the protocol for COSMIC-021 in combination with atezolizumab in patients with locally advanced or metastatic solid tumors)
  • BA -1.1% (737 Max 8 jets could be grounded until next year)

Analyst comments:

  • CPE -12.5% (downgraded to Hold from Buy at Jefferies)
  • IP -3% (downgraded to Underweight from Sector Weight at KeyBanc Capital Markets)
  • WRK -2.8% (downgraded to Underweight from Sector Weight at KeyBanc Capital Markets)
  • PKG -2.1% (downgraded to Underweight from Sector Weight at KeyBanc Capital Markets)
  • SPR -2.1% (downgraded to Neutral from Outperform at Credit Suisse)
  • LB -2% (downgraded to Neutral from Buy at Citigroup)
  • GE -0.9% (downgraded to Neutral from Buy at UBS)
  • PH -0.9% (downgraded to Sector Weight from Overweight at KeyBanc Capital Markets)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:

  • N/A.

M&A news:

  • CRZO +9.1% (to be acquired by Callon Petroleum (CPE) in all-stock transaction valued at $3.2 bln, or ~$13.12/share)

Select metals/mining stocks trading higher:

  • MT +2%, RIO +1.3%, RGLD +0.9%, HMY +0.8%, AU +0.7%, AG +0.6%

Other news:

  • GLPG +16.1% (Galapagos NV and Gilead Sciences (GILD) enter into 10-year global research and development collaboration -- Gilead to make $3.95 bln upfront payment and $1.1 bln equity investment at €140.59 per share)
  • NTGN +15.7% (announces top-line results from Phase 1b clinical trial evaluating NEO-PV-01 in combination with OPDIVO in patients with advanced or metastatic melanoma, smoking-associated non-small cell lung cancer and bladder cancer)
  • GSK +1.5% (announces positive headline results in Phase 3 PRIMA study of ZEJULA for patients with ovarian cancer in the first line maintenance setting)
  • INFY +1.3% (continued strength)

Analyst comments:

  • CROX +4.6% (upgraded to Overweight from Neutral at Piper Jaffray)
  • EAT +2.1% (upgraded to Overweight from Neutral at JP Morgan)
  • WORK +1.2% (initiated with an Overweight at Barclays)
  • DE +1.1% (upgraded to Buy from Neutral at BofA/Merrill)
  • ENLC +1% (upgraded to Buy from Hold at Jefferies)

>>> US Early premarket gappers

Early premarket gappers

Gapping up:

  • GLPG +15.3%, CROX +4.2%, CMCSA +2.1%, LPSN +2.1%, SYMC +1.9%, RIO +1.8%, HMY +1.7%, MOMO +1.7%, EAT +1.4%, GSK +1.4%, INFY +1.3%, AG +1.3%, YNDX +1.3%, DB +1.3%, MT +1.3%, DE +1%, SNN +1%, RGLD +0.9%, BUD +0.9%, AU +0.8%, TSLA +0.7%

Gapping down:

  • CIR -16.1%, TEVA -6.1%, WRK -2.8%, PKG -2.4%, BT -1.9%, IP -1.8%, TIF -1.5%, BA -1.5%, GE -1.4%, A -1.2%, RBS -0.9%, AWK -0.8%, FB -0.7%, BCS -0.6%

Bus of Fash. : Can Foot Locker Be Cool?

Can Foot Locker Be Cool?
How one of the world’s biggest athletic footwear retailers stumbled through the sneaker boom, but plans to catch up with the market.

NEW YORK, United States — A new golden age of sneakers has arrived, but Foot Locker, of the world’s biggest athletic footwear multi-brand retailers, has largely missed out on the boom. Its sales have slowed, its operating margin declined and its stock is down, even as Nike, Adidas and other brands its sells reap the windfall.
The problem is not just the 45-year-old Foot Locker’s stodgy image as a mall anchor, but also its old school approach to being a middleman in a market where limited hype releases bring a halo effect to every brand and retailer associated with them. Today's customers, particularly in the US, care more about trends and aesthetics than athletic performance when buying sneakers — making cultural relevance a key factor.
Foot Locker has a plan to join the cool kids. The retailer has quietly set up an in-house incubator, Greenhouse, that will produce limited-edition products in collaboration with influential designers and brands. It’s a model that has become popular in recent years among brands looking to change their narrative. Moncler’s Genius programme is the gold standard, with similar initiatives underway at Tod’s and Calvin Klein, among others.
The main difference is that Foot Locker is primarily a retailer: its nearly $8 billion in annual sales primarily come from a few key brands, namely Nike, Adidas and Puma. Each has its own identity and distribution strategy. To succeed, Foot Locker needs to develop its own personality and get involved in creating sneakers, rather than just selling them, said NPD’s Senior Analyst Matt Powell.

A project with VFiles and Fila will be the first to come out of Foot Locker's new incubator Greenhouse | Source: Courtesy
Led by Mel Peralta, formerly the lifestyle marketing manager at Timberland, Greenhouse’s three-person team will establish partnerships with a wide range of emerging and established brands, artists and designers. Members of the first class of collaborators include Los Angeles streetwear brands Rhude and Diet Starts Monday, designers Dao-Yi Chow of Public School and Nicole McLaughlin of Reebok, as well as brands more familiar to Foot Locker customers like Starter and New Balance. Other projects will match emerging designers with an industry mentor, the first of which will be Treis Hill of ALife, the 20-year-old New York streetwear brand.
Products that come out of these partnerships — apparel, footwear, art and more, for men and women — will be available to purchase only on the Greenhouse mobile app, with the potential to be extended into Foot Locker stores in the future. The incubator will release one project at a time, with availability windows ranging from minutes to weeks, officially starting with a VFiles and Fila collaboration in September. Among the upcoming projects is a sustainability focused collection from Dao-Yi, called O-1, planned for December.

The hope is that Greenhouse will remove some of the barriers preventing Foot Locker from hopping on board with the latest sneaker trends, namely the company’s enormous size. The chain has typically needed designers and brands to create products that can be sold across 3,200 stores in 27 countries, which meant sticking closely to mainstream tastes.
Greenhouse is “creating a space for emerging brands and emerging ideas that also didn’t have the pressure of massive scaleable units behind it,” Peralta said.
Cultural relevance, not revenue, is the main goal, said Berger. Some projects won’t result in products for sale; Greenhouse plans to partner with visual artists and sell their work without taking a commission, as well as other types of artists and musicians whose songs will be featured on the app.
“The pressure of what you would expect to come from us and the formality and the public company‚ it comes with a stigma,” said Jed Berger, Foot Locker’s chief marketing officer. “We have brand diversity, product diversity, banner diversity, customer diversity, global diversity. The missing piece was being a little bit closer to the culture.”
Berger, who spoke about Greenhouse for the first time in-depth with BoF, first announced the project at a Foot Locker investor presentation in March. At the meeting, executives explained their strategy shift following a disappointing 2017, when revenue was flat and comparable sales dipped by 3.1 percent, even as Nike, Adidas and others saw sales boom.
Foot Locker was forced to abandon plans to grow revenue to $10 billion, in favour of a strategy built around digital sales, expansion in China, reformatted stores and localisation that aims for more modest growth.
“We didn’t have the inherent engagement that you need with the customer to truly create a relationship, not a transaction,” said Chairman and Chief Executive Officer Richard Johnson at the March investor presentation. “The lessons were painful.”
Foot Locker’s challenges are far from unique. Many retailers are saddled with bloated store networks ill-suited to a time when fewer people shop in malls. Meanwhile, sneaker culture flourished online, where Foot Locker is less of a factor (the company doesn’t break out e-commerce sales, but non-store sales represented 15.4 percent of total sales in the first quarter). Major brands are driving more customers to their own sales channels, saving the most desirable sneaker releases for custom apps or online stores. Nike, which represented 67 percent of Foot Locker’s offerings in 2017, has been particularly aggressive about favouring direct sales, and also began selling on Amazon that year.

Greenhouse will give Foot Locker a way to shift its power dynamic with brands, said retail analyst Gabriella Santaniello, who said the retailer has largely been beholden to the brands it carries and what those brands decide to release at its stores.
“It’s a way for them to drive [sought after products] instead of just being subject to it,” she said. Other multi-brand retailers who have had success driving their own collaborations include Urban Outfitters and Zumiez, which sells apparel for fans of action sports like skateboarding.
At the end of the day, Footlocker is still highly dependent on malls, which NPD’s Powell describes as its greatest vulnerability. In 2018, about 80 percent of its stores were in malls, a number the company hopes to reduce to 70 percent by 2023.
Last year, Foot Locker changed its mission statement to focus on celebrating youth culture. It closed 100 stores and renovated others while developing a new brick-and-mortar model it plans to roll out over the next three years. It’s investing more in its mobile and web platforms, point of sale systems, data capabilities and increasing the speed of its supply chain. It launched a more modern loyalty program.
It also started carrying more exclusive product from its major brands. A recent example includes Nike "Home & Away” collections launched in December and available only through Foot Locker. The products were exclusive to each city where they launched — Houston, Atlanta, Miami, and several others — giving the chain retailer a local relevance. The challenge is to now scale these kinds of projects.
“We used to be product pickers. What we are today are demand creators because we now have the ability [through data] to understand the consumer,” said Foot Locker’s Head of North America, Stephen (Jake) Jacobs, at the investor presentation.
Foot Locker also made a series of investments in some of the companies taking its market share, including $100 million to sneaker reseller Goat, $12.5 million to children’s subscription clothing business Rockets of Awesome and $25 million to women’s high-end activewear e-commerce site Carbon38. Other targets included Portland’s footwear design academy Pensole and children’s shoe brand Super Heroic.
The changes started to pay off in 2018 when comparable sales increased by 2.7 percent. In the most recent quarter ending May 4, total sales increased 2.6 percent to $2.08 billion and gross margin improved by 30 basis points to 33.2 percent. But analysts were disappointed because it came short of their projections, and the company lowered its expectations for the whole year. Inventory also increased in the quarter, up 1.7 percent from the same period last year.
The transformation is still underway, and at the investor day, Johnson emphasised the priority on becoming a more agile organisation in order to be better prepared to react to the needs of its consumers.
The company is hoping Greenhouse, which doesn’t have the pressure to become a major revenue driver, will be a catalyst for that agility internally, in addition to a consumer-facing initiative.
While operating independently, Greenhouse’s team will “step in from time to time and work with our group to show them … how an idea might help their business today,” said Berger.
“We’ve just wanted people who … could really look to contributing to what the company could be in the future,” said Berger.

(Bus. Of Fashion) Chanel Hires Its First Diversity Chief

Chanel Hires Its First Diversity Chief
The French fashion house joins other major luxury brands in beefing up the resources devoted to fostering more diverse and inclusive environments. The new position comes after a year of high-profile, racially charged scandals involving brands like Gucci, Dolce & Gabbana and Prada.

LONDON, United Kingdom — At the world’s biggest fashion companies, this season’s hottest commodity is a chief diversity officer.
Chanel has just hired its first global head of diversity & inclusion, while brands including Gucci and Burberry PLC are also filling similar roles.
Fiona Pargeter joined Chanel this month from Swiss bank UBS where she was head of diversity & inclusion for Europe, the Middle East and Africa, according to her LinkedIn profile. Chanel said its diversity and inclusion efforts had previously been led within its People & Organization function, but it’s created the new role to lend momentum to its existing efforts. Pargeter’s appointment is “a sign of our commitment and its importance to the House,” the company said. She will report to the company’s people and communication leader.
The move comes as the fashion industry is grappling with a backlash, fuelled by social media-powered activism, that is increasingly calling out brands on actions deemed to be culturally or socially inappropriate.
Perhaps the most high profile was Dolce & Gabbana, which was frozen out of Chinaafter running an ill-conceived video campaign featuring a model struggling to eat pizza with chopsticks.
In February, Gucci came under fire for selling an $890 black sweater that resembled blackface imagery. Burberry was criticised for sending a model down the runway with a noose-like accessory around her neck, and Prada SpA had to pull a $550 monkey figurine after it was called out for referencing racist caricatures.
The companies have apologised for the incidents and established new diversity initiatives, highlighting the importance of such efforts at a time of mounting consumer scrutiny.
Chanel has not been without its share of missteps. For its Spring/Summer 2015 show the company created a faux protest, parading models down the runway carrying feminist placards, sparking debate over whether the brand was appropriating feminism to sell designer handbags.
The company’s late, legendary creative director, Karl Lagerfeld, also generated his share of outrage. In 2017, he evoked the Holocaust to criticise German Chancellor Angela Merkel for opening the country’s borders to migrants. As a photographer, he shot Claudia Schiffer in a portfolio of images that featured the model sporting an Afro wig and darkened skin. He criticised women he considered “too fat,” and was dismissive of the harassment concerns that led to the #MeToo movement.
But the storied luxury house, which employs more than 25,000 people globally, is making efforts to change with the times. While still privately owned, it’s becoming more open, publishing its financial results for the first time last year. The figures confirmed the company’s position as a luxury powerhouse. Chanel generated $11.1 billion in global sales in 2018 and an operating profit of nearly $3 billion.

The company also took the opportunity to highlight its commitment to fostering a culture of diversity and inclusion in its 2018 “Report to Society.” It said it was in the process of incorporating the principles into its recruitment process, setting management priorities around the issue and conducting regular compliance committee reviews.
“Enhancing inclusion and diversity is also an ongoing opportunity for Chanel,” the company said in the report. “We will continue to focus on new programs to demonstrate our appreciation for all aspects of diversity, including diversity of thought, and to further promote a more inclusive and diverse culture.

(Bus. Of Fashion) Barneys New York Explores Options That Include Bankruptcy

Barneys New York Explores Options That Include Bankruptcy
It's weighing other possible solutions as it struggles with high rents and changing consumer tastes.

NEW YORK, United States — US luxury department store operator Barneys New York Inc is exploring options that include a bankruptcy filing, as it struggles with high rents and changing consumer tastes, people familiar with the matter said on Saturday.

The nearly 100-year-old retailer, known for its high-end designer collection, is working with law firm Kirkland & Ellis LLP to prepare for a potential bankruptcy filing that could come in the coming weeks, one of the sources said.

Barneys has not yet made a final decision on whether or not to seek bankruptcy protection, and is weighing other possible solutions for addressing high rents that are straining its business, the sources cautioned. Filing for bankruptcy would be one option to deal with expensive leases, the sources said.

The retailer's flagship department store on Madison Avenue in Manhattan has weighed on its finances, one of the sources said. The sources asked not be identified because the deliberations are confidential.

"At Barneys New York, our customers remain our top priority and we are committed to providing them the excellent services, products, and experiences they have come to expect," the company said in a statement.

"We continue to work closely with all of our business partners to achieve the goals we’ve set together and maximise value. To that end, our board and management are actively evaluating opportunities to strengthen our balance sheet and ensure the sustainable, long-term growth and success of our business," the company added.

Should it file for bankruptcy, Barneys would be one of the most high-profile victims of the downturn in retail, and underscore how even luxury department stores are not immune from fierce competition with e-commerce firms such as Amazon.com Inc .

Sears Holdings Inc, Toys "R" Us Inc and Gymboree Group Inc have also filed for bankruptcy in roughly the past year.

In addition to its upscale department stores, Barneys operates BarneysWarehouse outlets, as well as Freds restaurants. In all, Barneys has 28 locations, according to its website. Its most prominent locations include Beverly Hills, California; Chicago; Seattle; Boston; San Francisco; and Las Vegas.

Barneys made its name in the 1930s by placing women dressed in barrels outside beer halls in New York City, where they would hand out matchbooks advertising the store, according to the retailer's website.

The store, now known for exclusive apparel made by designers such as Burberry Group Plc , began as a destination for middle-class families. It transitioned to luxury fashion in the 1960s.

(NYT) The $50 Dress That Conquered Britain A polka-dot Zara dress has become the

The $50 Dress That Conquered Britain
A polka-dot Zara dress has become the viral fashion item of the British summer, without conspicuous help from royals, social media influencers or celebrities.

The polka dot dress by the fast fashion giant Zara, with a price tag of $50, that has become a social-media phenomenon in Britain.CreditZara
The polka dot dress by the fast fashion giant Zara, with a price tag of $50, that has become a social-media phenomenon in Britain.CreditCreditZara

LONDON — The most viral fashion item of the summer thus far is not Janties (denim panties, obviously), or the bucket hat, or the “big mood socks” being worn at festivals across the Western Hemisphere. Rather, it appears to be a simple black and white viscose printed polka dot dress by the fast fashion giant Zara, with a price tag of 39 pounds and 99 pence, or $50.
It’s become so ubiquitous in Britain, it is known simply as “The Dress.”
Indeed, “The Dress” has become so wildly popular over the last three months that it recently spawned its own Instagram tribute account, @hot4thespot. Set up by the stylist Faye Oakenfull, the account offers its almost 5,000 followers the opportunity to submit photos of dress sightings on the subway, on sidewalk crossings, at supermarkets, and in church (among other places) across Britain. But entries have started to come in from all over the world.
“ ‘The Dress’ and I originally met on a set back in Easter when both the art director and makeup artist came in wearing it. I posted it on my Instagram story as an ‘awkward fashion moment,’ ” Ms. Oakenfull said this week, adding that she doesn’t own the dress herself.
“It then started to escalate, with many people sending me their own sightings. After a few weeks it seemed to be so popular on my stories that I decided to start a new account to keep on top of the content.”

While the oldest wearer to be featured was 80 (that one is also the most popular post to date, with 780 likes), Ms. Oakenfull said @hot4thespot had revealed there was a particular “type” of fashion consumer for whom the dress held particular appeal.
“I can be pretty certain where she’ll be hanging out at weekends,” Ms. Oakenfull said of the demographic. “She loves a bottomless brunch, food markets, day festivals, tennis, baby showers (sometimes hers), hen dos, polo, work parties, weddings, rooftop bars and poolside prosecco. Most of all, she just really loves food shopping in Marks & Spencer.”
Cultural trends rooted in mass consumption — and with a tinge, thus, of unoriginality and predictability — have become popular subjects on social media in recent years, picking up the slightly catty nickname “basic.” @hot4thespot errs firmly on the side of lighthearted, as opposed to unkind, commentary.
However, the project has attracted critics, including the stylist Sophie Benson, who called out @hot4thespot and other similar social media accounts created in the wake of viral fashion trends, for snapping and sharing images of women going about their daily lives without their consent.
“Women have enough to worry about when they’re in public; catcalling, up-skirting, being followed, being harassed, being grabbed or touched. They don’t need the added anxiety of wondering whether someone might be photographing them with the intent of sharing it with thousands of people,” Ms. Benson wrote in a column for Metro, a free British newspaper, earlier this week.

That said, the risk of being gently and publicly teased for being part of an enormous fan base that stretches across ages, races and sizes has done little to quell the popularity of the frock. According to Laura Antonia Jordan, the fashion news and features director at Grazia magazine, it is the high numbers of real women — rather than celebrities, royals, or influencers — who love the spotty dress that have given this particular phenomenon added cultural credence.
“That dress is democratic fashion in action,” Ms. Jordan said. “Not everyone wants yet more florals or to strip off for the summer, and that light and floaty dress — with its loose sleeves, nipped waist and ankle length ruffled hem — will suit most women. The fact that it is versatile, affordable, and readily available given there is a Zara store near most people in Britain, has fueled the fad.”
So has the clear movement, in the wake of #MeToo, away from body-con and baring skin toward modesty. After a period of dominance for dystopian, aggressive streetwear in women’s wear, led by designers such as Demna Gvasalia, a shift toward romance — couched in comfort and practicality — has started to emerge, and is encapsulated in pieces like the spotted Zara dress.
The virality of this latest garment and others that have come before it, as well as the online discourse built around it, is also a clear example of the power of social networks, and the fact that in an increasingly digital age, many customers want to see their favorite brands or purchases on display on people just like them, affirming their buying decisions and reassuring them they are part of the crowd.
“Viral fashion is sometimes less to do with the style or aesthetic and more to do with the catalyst or instigator,” said Sarah Owen, a senior editor at the trend forecasting company WGSN.
Zara declined to comment on the success of the spotty $50 dress this week. However, the previously sold-out item appears to be available online across multiple geographical markets, in every size from extra small to extra extra large. Which suggests either that the retailer, known for a flexible production model that allows it to capitalize on growing style trends or unexpectedly popular items faster than its competitors, is expecting a further wave of spotty-dress buyers — or that the fad may have reached its apogee. In which case, get ready for the next.

Bus. Of Fashion : Burberry Staked Its Future on Riccardo Tisci's Designs. We'll

Burberry Staked Its Future on Riccardo Tisci's Designs. We'll Soon Learn if That Was a Smart Move.
This week, everyone will be talking about Burberry's quarterly results, Amazon Prime Day and ComplexCon. Read our BoF Professional Cheat Sheet.

THE CHEAT SHEET
Burberry's Results Will Finally Reflect Tisci's Impact

Burberry Autumn/Winter 2019 | Source: InDigital.Tv
  • Burberry releases first-quarter results on July 16
  • Last quarter, the brand’s revenue fell short of expectations as sales in Asia grew at a sluggish pace
  • Analysts see sales rising faster as more of Riccardo Tisci’s designs hit stores
In May, Burberry Chief Executive Marco Gobbetti said it was too early to gauge the impact of Riccardo Tisci’s designs on the bottom line, as his first collection had only just begun to trickle into stores. He won’t have that excuse this week, with JP Morgan estimating 35 percent of products for sale last quarter reflect Tisci’s work, up from 15 percent in the previous quarter. Tisci’s designs have received a decent, if not quite rapturous, reception on the runway, while the revamped monogram is meant to elevate the brand. Burberry has also improved its record on sustainability, including a recent pledge to go carbon neutral by 2022 by 2022),since it was revealed a year ago the brand was burning unsold goods. JP Morgan predicts same-store sales will grow 3 percent in the most recent quarter, compared with 1 percent in the previous period. However, Asia may still be a sore point; perceptions of Burberry have declined sharply in China, a recent Bernstein survey found.
The Bottom Line: One area to watch closely in this week's results is leather goods, a perennial weak spot for Burberry that the brand is eager to fix.