TheChek News Flow

Asian stock markets were mostly higher Monday after global investors shrugged off the latest U.S. government shutdown.

Nikkei +0.03% Hang Seng +0.32% CSI +0.79% Shanghai +0.06% Shenzen +0.92%

Eur$ 1.2225 CNH 6.4118 CNY 6.4122 JPY 110.86 GBP 1.3867 CHF 0.9623 RUB 56.7228 WTI$ 63.38 +0.11%

S&P -0.12% EuroStoxx Dax FTSE SMI

- YNAP IM : Richemont Launches Tender for Yoox-Net-A-Porter at EU38/Share

Weekly Performance

Dow +1.94% S&P +1,54% Nasdaq +1.73% Russell Canada +0.28% Mexico +1.14% Brazil +2.36% Nikkei +0.65% Hang Seng +2.68% CSI +1.43% Shanghai +0.38% Shenzen -1.41% EuroStoxx +1.01% FTS -0.62% CAC+0.17% Dax +1.43% Ibex +0.16% MIB +1.36% SMI -0.39%

US stocks extended their climb, powering through 26K on the Dow and 2,800 on the S&P for the very first time. Trading resumed following the MLK break with a key reversal in US equity indices which spawned some hope for the bears, but as has been seen so often markets sprang back to new all-time highs within 24 hours. Economic data faded into the background while corporate headlines came into focus. Earnings season picked up in intensity while preannouncements dotted the landscape. Though it is early in the year, it has become increasingly clear that analysts have more work to do to reconcile their estimates for corporation earnings impacted by the tax reform package passed late last year. For their part, firms continued to release details on how they intend to put the expected tax windfalls to work for both investors and employees. By Friday, even the real threat of a US government shutdown did little to dent the momentum. For the week the S&P500 gained 0.9%, while the DJIA and Nasdaq each added 1%.

Macro :

- *U.S. GOVERNMENT PARTIAL SHUTDOWN STARTS AMID FUNDING LAPSE

- Economy Minister Says Swiss Tax Rate Still Attractive: SamW

- Spain Raised to A- From BBB+ By Fitch; Outlook Stable

- Greece Raised to B From B- by S&P

Keep an eye on :

- AES US : ValueAct’s Ubben Owns 1.53m Shares in AES

- AIR FP : Airbus Cash Flow to Rise From A320, A350 Production, JDD Says

- BMY US : Bristol-Myers: Median OS Not Yet Reached in Opdivo/Yervoy Study

- CELG US : Celgene Says Results From Abraxane Regimen Study ’Encouraging’

- CLLN LN : PE Investors Are Said to Be Eyeing Carillion Assets: FT

- CON GY : Continental CFO Sees Potential EU4b-EU5b M&A Volume: Euro am S.

- CSGN SW : Credit Suisse, UBS Are Said to Increase Bonus Pool, SaW Reports

- DIA SM : LetterOne Increases DIA Stake to 25%, Plans no Takeover Bid

- DIS US : CNN Says Jeff Zucker Loves His Job, Has No Interest to Run ESPN

- DIS US : Disney Says ‘Last Jedi’ Becomes No. 9 Global Release of All-Time

- DXNS LN : Dixons Carphone Names Alex Baldock Group CEO

- EDF FP : Dalmore Capital Mulls Stake in EDF’s Sizewell: Sunday Telegraph

- ENGI FP : Engie Board to Keep CEO, Chairman Roles Separate, Le Maire Says

- FEVR LN : Rumor could be a target for Unilever

- GEN DC : Genmab Says FDA Grants Priority Review for Daratumumab

- GKN LN : GKN Sees Driveline Sales to Increase to GBP500m by 2022

- GLEN LN : Bunge Soars on Report ADM Is Said to Have Made Takeover Approach

- IWG LN : Brookfield, Onex Get More Time to Bid for Office Provider IWG

- MC FP : LVMH Names Hedi Slimane as Creative Director of Celine brand

- MN IM : Reworld Media May Consider Bidding for Mondadori France: Sole

- RMG LN : Royal Mail Offered to Draft New Pension Regulations: FT

- SANM US : *SANMINA DROPS 17% POST-MKT AFTER 1Q PRELIM. RESULTS MISS ESTS.

- SIE GY : Siemens Employee Shareholders Won’t Back CEO Kaeser at AGM: WamS

- SIK SW : Sika CEO Says Ready to Make Offer for Burkard Family Stake: FuW

- 9984 JP : Softbank aims to create a global ride hailing alliance after recent acquisition of 15% Uber stake - Nikkei - Partnerships may emerge with rivals like China's Didi Chuxing, Singapore's Grab, and India's Ola.

- UBSN SW : Credit Suisse, UBS Are Said to Increase Bonus Pool, SaW Reports

- VIV FP : Vivendi appeal against telecoms regulatory ruling regarding Mediaset postponed until 4 July

- WYN US : Airbnb Said to Drop Bid for Wyndham’s European Ops: Sunday Times

Amazon Go allows customers to grab items and just walk out without stopping to pay.

Amazon’s store of the future has been five years in the making. But the unveiling is just about here.

Amazon Go, the company’s first brick-and-mortar convenience store, will open to the public on Monday on the ground floor of Amazon’s new headquarters on Seventh Avenue in Seattle. Though the unveiling will take place about a year later than the company originally planned, it will still be met with great intrigue because of the store’s unique technology that Amazon believes can make checkout lines a thing of the past.

On the surface, the store, which resembles what a 7-Eleven might look like if it got a high-end makeover, was laid out in part like a Pret a Manger sandwich shop, dreamt up by the same tech powerhouse that had previously made one-click buying and two-day shipping the industry norm.

Upon entering, shoppers are greeted by a selection of salads, sandwiches and beverages, as well as ready-to-eat meals for breakfasts, lunches and dinners. Amazon Go also carries small selections of beer and wine, as well as produce, meat and even Amazon’s own meal kits. Following Amazon’s acquisition of Whole Foods, one section is also set aside for chips, cookies and nuts, all from the grocer’s 365 Everyday Value brand.

But the store’s real reason for being is to test what could be a breakthrough Amazon hypothesis: that by adding even more convenience to the convenience store model — with the help of a healthy dose of technology — Amazon might be able to carve out a loyal customer base outside of its website and inside a physical store where the vast majority of food and grocery shopping still occurs.

To that end, Amazon Go is outfitted with a cocktail of modern technology that enables shoppers to simply grab items off of shelves and automatically get charged the right amount without stopping to pay upon exit. No lines, no waiting.

While that means no cashiers are necessary, there are still people working at the store. On a recent visit, a greeter stood by the entrance, an ID checker was stationed near the booze, and at least six workers were visible inside the kitchen that passersby can view from the street.

The idea was first incubated inside of Amazon five years ago with a question: “What can we do to improve on convenience?” according to Dilip Kumar, the Amazon Go technology chief who once served as CEO Jeff Bezos’ technical adviser for nearly two years.

“What we always came back to was people don’t like waiting in line,” he added.

On a recent visit to the store, Amazon handed me a phone to test out the Amazon Go technology using a demo account. Shoppers need to download an Amazon Go app to their smartphone, and scan it at a high-tech turnstile upon entering the store.

After that, customers shop like they normally would, except for one crucial exception: when they’ve selected everything they want to purchase, they simply leave the store with the items and don’t stop to pay. If the store’s technology works as it should, their Amazon account is automatically charged for the right stuff they took as soon as they exit.

How? The store is outfitted with cameras and shelf sensors to help Amazon’s computer vision system work some magic. The technologies, in turn, connect you and the phone you scanned at the entrance with the items you grabbed off of shelves and carried out the door. On rare occasions, a human is needed to confirm that the technology got it right.

On my visit to the store last week, the technology charged me correctly after I entered, grabbed a sparkling beverage, and exited — all in less than one minute.

The real tests, however, will come during normal shopping days when, say, the store gets crowded, or an item is removed from one shelf and placed on another, or two people who have similar appearances are shopping in close proximity to each other.

Such instances led to a delay in the store’s public opening, multiple news outlets previously reported and Recode since confirmed. When Amazon first announced the store’s existence in December 2016, it said it would open first to Amazon employees and then to the general public in “early” 2017. Instead, the public launch is just happening now — around a year later than planned.

In a recent interview inside the store, Kumar, the vice president of technology for Amazon Go as well as the company’s 13 Amazon Books stores, would not concede that technology problems caused the long delay.

“We [originally] felt that we needed to open it up to the public early enough in order to get the traffic that we needed,” he said. “Traffic is necessary to train our algorithms to be able to learn things about the assortment, customer behavior.”

“But we were overwhelmed with the amount of Amazon response that we’ve had,” he added, “so there was no need for us to rush this...we were able to learn what we needed to learn from the Amazon Beta program.”

Whatever the excuse, no one will remember the delay if the store becomes a hit. While waiting on line for a few minutes might not sound like an annoyance, the hope is that once customers experience the faster option of Amazon Go, their expectations of a convenience store visit will change.

Looking ahead, you can bet that Amazon didn’t spend five years building this technology to only use it in one store. Kumar was candid when he said that would like to open up more Amazon Go stores, but is focused on this one for the time being.

What about rolling out the technology to Whole Foods or Amazon Books locations, as many have speculated the company would do?

“There are no plans to...introduce this technology in any of the other physical settings that we have.”

Of course, you shouldn’t think about a new Amazon technology platform without considering the possibility that Amazon may eventually make it available to other businesses for a healthy fee. Amazon created Amazon Web Services, but turned out to simply be its first customer. The Amazon Echo pushed Alexa into the mainstream, but in some ways is just Alexa’s first customer, too, as the internet analyst Ben Thompson has noted.

Five years from now, will we look back and realize that Amazon Go was simply the first customer of Amazon’s “Just Walk Out Technology”? That’s to ask: Will Amazon end up licensing the system to other retailers or will they have to build their own?

“It’s too early to speculate on that,” Kumar said flatly.

“For now,” he added, “we’re just focused on this store.”

Washington could be trading more growth now for the risk of more pain down the road

Sportswear brand hopes to close gap on rivals but concedes it has much to do

Björn Gulden describes Puma as “the fastest sports brand in the world”. Yet when it comes to his company’s performance, the chief executive stresses one thing above all else: patience.

The smaller rival to Germany’s other sportswear giant Adidas is in the midst of a revival. After years of lacklustre sales growth and plunging profits, sales in the first nine months of 2017 jumped 16 per cent, while its operating margin almost doubled to just below 7 per cent. The shares are up almost a third over a year, twice as much as Adidas.

But Mr Gulden, a former Norwegian professional footballer, acknowledges: “Our turnaround is a long journey, and it is far from over.”

The recovery is entering a new phase as current majority shareholder, French luxury group Kering, sells down its Puma stake. The owner of Gucci this month announced that it will lower its holding from 86.3 per cent to 16 per cent.

A decade after becoming Puma’s majority shareholder, it plans to hand over 70 per cent of Puma stock to its investors. The non-cash transaction worth €3.5bn at current prices would turn Kering’s controlling investor, France’s billionaire Pinault family, into Puma’s biggest single shareholder. Its Artémis holding company will have a 29 per cent stake and says it sees itself as a “long-term strategic shareholder of Puma”. The sportswear maker’s free float would almost quadruple to 55 per cent.

A day after the announcement, Puma shares tumbled. Analysts say the fall was driven by fading hopes of a takeover premium, as speculation about a sale to a strategic buyer or private equity had inflated the stock, rather than any concern over the change of ownership.

Björn Gulden describes Puma as “the fastest sports brand in the world”. Yet when it comes to his company’s performance, the chief executive stresses one thing above all else: patience.

The smaller rival to Germany’s other sportswear giant Adidas is in the midst of a revival. After years of lacklustre sales growth and plunging profits, sales in the first nine months of 2017 jumped 16 per cent, while its operating margin almost doubled to just below 7 per cent. The shares are up almost a third over a year, twice as much as Adidas.

But Mr Gulden, a former Norwegian professional footballer, acknowledges: “Our turnaround is a long journey, and it is far from over.”

The recovery is entering a new phase as current majority shareholder, French luxury group Kering, sells down its Puma stake. The owner of Gucci this month announced that it will lower its holding from 86.3 per cent to 16 per cent.

A decade after becoming Puma’s majority shareholder, it plans to hand over 70 per cent of Puma stock to its investors. The non-cash transaction worth €3.5bn at current prices would turn Kering’s controlling investor, France’s billionaire Pinault family, into Puma’s biggest single shareholder. Its Artémis holding company will have a 29 per cent stake and says it sees itself as a “long-term strategic shareholder of Puma”. The sportswear maker’s free float would almost quadruple to 55 per cent.

A day after the announcement, Puma shares tumbled. Analysts say the fall was driven by fading hopes of a takeover premium, as speculation about a sale to a strategic buyer or private equity had inflated the stock, rather than any concern over the change of ownership.

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“Kering’s exit opens a window of opportunity” for outside investors, says Jörg Philipp Frey, an analyst with Warburg Research. “The turnaround of Puma is now visible and in full swing.”

Mr Frey adds that the higher free float should tempt external investors. Others say Puma’s valuation seems rich. The stock is trading at close to 28 times forecast earnings, compared with Adidas’s multiple of about 22 times, according to S&P Global Market Intelligence.

The brand was founded in 1948, after brothers Adolf and Rudolf Dassler, who owned a shoe factory, fell out and set up alone. Adolf launched Adidas, while Rudolf created Puma. To this day, both companies are located in Herzogenaurach, a sleepy Bavarian town of 24,000 inhabitants just outside Nuremberg.

Over the past decade, Puma has fallen further behind its rival. Sales at Adidas are more than five times larger than Puma’s €4bn, compared with 4.3 times in 2007. Analysts expect the gap to widen over the next three years; according to S&P Global Market Intelligence consensus forecasts they predict average annual sales growth of 9.6 per cent at Adidas, compared with 8.7 per cent at Puma. The world’s largest sportswear maker Nike, with annual sales of $34.7bn, is not only seven times larger, it also cranks out an operating margin twice as big as Puma’s.

While Puma’s operating profit margin has improved, it is still no match to the 9.3 per cent that analysts forecast for Adidas. Mr Gulden acknowledges without hesitation: “Our financial ratios are still unimpressive. We have a lot of room for improvement.”

He adds: “Well-managed companies in our sector earn operating margins between 8 and 12 per cent. This is a level of profitability Puma should also be able to achieve.”

Mr Gulden says the change in ownership will bring no disruption to operations. “For Puma and its employees, Kering’s decision is by far the best possible outcome,” he says. The cost synergies Kering envisaged when buying into Puma a decade ago never materialised, he adds.

Under Mr Gulden’s leadership, the gap between Puma and its majority owner’s other business has grown, as the former Adidas manager steered the group away from fashion back to its roots in sports, investing heavily in product innovation and marketing.

In 2014 it became the kit supplier of the English Premier League football club Arsenal. A year later the company, which had sponsored Jamaican sprinter Usain Bolt, launched a new generation of running shoes that use foam technology, which it says “maximises energy return”. Earlier than its larger rivals, Puma started to focus on female customers, signing Barbadian pop singer Rihanna as creative director for its women’s collection and this month launching a marketing push featuring actress Selena Gomez.

“Thanks to new products, Puma managed to win back retailers and consumers,” says Commerzbank analyst Andreas Riemann.

Mr Gulden, who raised his 2017 guidance three times last year, says Puma could have grown even faster, “but there is only so much growth a company can digest at a time”, adding that delivering high-quality products on time is a challenge.

The Puma chief refuses to specify how long investors will have to wait before seeing the level of returns that its domestic rival achieves.

However, he says one missing link is Puma’s lack of presence in big US sports such as football, baseball and basketball. “As a global sports brand, we need to be there,” says Mr Gulden. So far, the group has lacked the financial strength for such an investment but as the turnround is gaining pace, “it is logical that the point where we can make the move is coming closer”.