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Tiffany’s Shares Go Turbo After LMVH Increases Bid

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Tiffany News

French luxury goods conglomerate LVMH Moet Hennessy (OTC:MC) gained access to the books of Tiffany & Co. (NYSE:TIF) after it raised its offer to $16 billion, according to Reuters. Consequently, Tiffany’s shares jumped yet again, this time 3.4% late Wednesday. Last time, the company approached with an offer of $120 per-share takeover bid valuing the company at $14.5 billion, which the company appeared to have rejected but now the stake is up at $130 per share and seems to have increased the odds of a possible deal. The fact that Tiffany allowed LVMH to take a closer look at its financials sure sounds like it.

The two companies

Tiffany is valued at about $15.8bn including $350m in net debt, whereas LVMH which is owned by Europe’s richest man, Bernard Arnault has a strong portfolio including brands such as Louis Vuitton, Dior and Sephora. LVMH approached the company last month with a letter proposing an all-cash takeover bid of 120 per share whereas the new, higher bid marks a premium of about 30 per cent to Tiffany’s stock price before the news even surfaced. This takeover would surely be the largest by Mr. Arnault who has been at the front of the consolidation in the luxury goods industry for four decades. And if it would come true, it would allow LVMH to widen its mark in the US where it has a weaker presence as well as intensify its push into the so-called ‘hard-luxury’ segment which it began in 2011 with the $5.2bn acquisition of Italian jeweller Bulgari. And according to Bain consulting, jewellery was one of the fastest-growing categories in the personal luxury goods sector last year.

Tiffany’s has been facing some challenges

Tiffany’s is getting new workforce as former Barneys New York Chief Executive Daniella Vitale joins the company a month after the department stole was sold in bankruptcy. Ms. Vitale is taking a new position of executive vice president and chief brand officer. Her expertise will be valuable as Tiffany’s does its best to find new ways to sell to a new generation that is motivated by self-gifting than special gift-giving occasions, i.e. engagements.

Tiffany’s is not immune to those headwinds that struck Barneys and its challenges come from lower tourist spending, a strong US dollar and the China-US trade war. But Tiffany has over 300 stores around the world, with quite a presence in China. But despite its high brand recognition and “Breakfast at Tiffany’s” memorabilia, the legendary jeweller is struggling to modernise its brand identity to appeal to the younger generations that don’t quite seem to believe that ‘diamonds are a girl’s best friend’.
While last year Tiffany’s had record net sales, global net sales decreased 3 percent to $2.1 billion during the first half of the current year. But Tiffany’s excels when it comes to its digital profile due to omni-channel excellence, consumer engagement and associate mobility. Its customer service shines with both white gloves and digital-savvy store associates who are fully equipped to personalize the shopping experience for each buyer.

With Tiffany’s under its umbrella7, LVMH would gain a superpower against its Swiss competitor Richemont (OTC: CFRUY) who owns Cartier among others, is a leader in the hard-luxury segment of watches and jewellery. If this deal goes through, it would surely question Richemont’s dominance. Especially since their profits dropped 61 per cent for the first half of its reporting year as consequence of the Hong Kong protests and extensive digital investments that damaged its bottom line.

Then there’s French Kering SA (OTC:PPRUY) who, among others, owns Saint Laurent and Gucci who exceeded estimates despite Hong Kong turmoil and even defied US weaknesses, causing Kering’s sales to rise 14.2% in the latest quarter. But LVMH is already King Kong comparing to its competitors. Let’s just look at last year’s numbers: €46.8 billion for LVMH in 2018, €14 billion for Richemont’s most recent fiscal year and €13.7 billion for Kering also for its most recent year. So, the size of LVMH’s portfolio says it all and Tiffany’s might just be the spark it needs to complete the enchantment.

Outlook

Despite failing marriage rates, Tiffany’s CEO Alessandro Bogliolo firmly believes that love is still a hot business and that the company is well-equipped to cater to millennials. Even studies showing that millennials are ditching diamonds is not taking the smile away from Tiffany’s CEO who proudly states that Tiffany’s diamond ring is even present on every phone’s emojis. But are emojis enough to sell those diamonds is a different question. But the silver lining is that Tiffany’s signature blue that is more valuable than all those diamonds combined and LVMH knows that. And Tiffany’s can gain a lot from LHMV’s global reach and strength. So, after LVMH has already shown its parenting skills with Bulgari, there’s no reason to think this couldn’t be a perfect match made in luxury heaven!

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

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BenzingaEditorial

US Airlines Shaking Up Their Infrastructure

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Airlines News

Jet Blue Appoints Two Vice Presidents, United Airlines Announces CEO and American Airlines Introduce a Passport Scan Feature

Jet Blue (NASDAQ:JBLU) is once again the subject of a possible merger speculation and by no other than Delta Air Lines (NYSE:DAL) who invested quite a lot in earning a reputation for its smooth public relations strategy. This intrigue came out as both companies dropped out of an upcoming Buckingham Research conference next week. But the speculation has resulted in Jet Blue’s shares trading up 2.8% on December 4. The U.S.-based airline just also announced its new company’s vice president for labor relations as well as the vice president for enterprise information security. But a lot more is happening in that blue sky and to those airlines flying in that sky to be exact.

Performance – is Jet Blue an easy takeover mark?

The US-based company belonging to the services and airlines sector has a market cap of $5.52 billion. Its stock has risen 0.7 percent one month since its last earnings report in October. But it is underperforming the S&P 500 but let’s look a bit deeper for a clearer “blue” image. When excluding 4 cents from non-recurring items, the company’s latest earnings per share came in at 59 cents per share, managing to exceed Zach’s consensus estimates. But more importantly, quarterly earnings jumped 37.2 percent year-to-year due to low fuel costs. Average fuel cost per gallon and including fuel taxes decreased 11% year over year. And passenger revenues improved 3.3 percent year-over-year and they ultimately, accounted for 96.1% of the top line so it’s safe to say, they make the revenues. But despite the fact that even other revenues were up 21.6 percent, both revenue per available seat mile and passenger revenue per available seat mile dipped. Capacity, also measured per seat mile, and traffic measured in revenue passenger miles, also expanded. And total operating costs shrined 4.7 percent year over year despite increasing costs of an expanding workforce. The quarter ended with cash and cash equivalents amounting to $695 million which is more than $474 million from the end of 2018. Total debt decreased slightly from 2018’s $1, 670 million to $1,636 million. For the fourth quarter, the company is well on track to achieve its 2020 EPS target in the range of $2.5-$3. Meanwhile, Norwegian Air just appointed Jet Blue’s Marty St. George as its interim Chief Commercial Officer as part of a significant management ‘reshuffle’ in an effort to achieve profitability in the coming years so clearly Jet Blue has something worth tapping into. Its latest quarter did show a positive trend, but can it keep it up is the question.

Competitors

According to many analysts and industry experts, tough times are ahead for all US airlines. And all airlines in general, as even The Emirates Group predicted difficulties for its subsidiary airline whose net profit slumped 86% in the first half due to both higher fuel prices but also low-cost competitors, as revealed on November 20th. Operating costs of the largest airline in the Middle East increased 13 percent compared to last year with fuel expenses rising 42 percent mostly due to higher prices.

But United is doing more than ok

Meanwhile, United Airlines Holdings (NASDAQ:UAL) sealed its succession plan on Friday. Its next CEO will be its President Scott Kirby, an industry veteran who along with current CEO, Oscar Munoz, orchestrated the impressive turnaround for the company. Profits have grown and performance has improved, so all Kirby has to do is keep it up. The company’s shares have already 87% since Kirby became president of United, after leaving American Airlines Group Inc (NASDAQ:AAL) who just introduced passport chip scanning feature to its to the app on Wednesday. Using the technology behind cashless payment system like Apple’s (NASDAQ:AAPL) Apple Pay, it first airline to use near field communication (NFC) technology to securely transmit passport information. Although passport will still need to be shown when boarding, passengers will surely be grateful for the time-saving effect gained by eliminating the need of an American agent opening and scanning the passport at the airport.

Outlook

Everyone is clearly reshaping their management to ensure that the captain of the boat is brave and equipped to handle the complexity of such a mature and challenging market. With the two new appointments, Jet Blue has shown that it supports the vision of its crew members being its greatest differentiator and that its greatest focus is safety and security. But is this enough to differentiate the “Jet Blue experience”? Its latest earnings revealed positive trend, but the question is can Jet Blue persevere in this direction? Especially considering the competitive pressures from its peers and unfavorable winds ahead.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

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BenzingaEditorial

Johnson and Johnson Emerging Out of a Dark Place

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It seems that Johnson and Johnson (NYSE:JNJ) has finally started shaking off those heavy legal headwinds. Accusations of tainted baby powder was just the latest chapter in its long book of controversy. Although the complicated legal process can drag on for years, its stock has posted a 6% return in the first 11 months of 2019. Dow’s return was 22% return but the result highlights the company’s resiliency in the face of heavy negative sentiment and severe legal headwinds. And after it announced extensive tests showed no trace of asbestos that FDA claimed to find in October, its stock rose 1% on Wednesday.

No asbestos after all!

On December 3, as part of Johnson and Johnson’s latest effort to prove the safety of its products, more tests showed that the baby powder was free of asbestos. Therefore, the company concluded that the most probable cause of FDA’s report that led to a nationwide recall of 33,000 products in October was due to either a contaminated sample, analyst error or both. This was the first time the company recalled its famous baby powder for possible contamination with this known carcinogen, and also the first time US regulators announced such a finding in this product. But, this was only the latest blow as the company is facing more than 15,000 lawsuits that also target its opioids, medical devices and the antipsychotic Risperdal. Just in September, they were forced to pay $572 million after being found guilty of deceptive marketing relating to its opioid drugs. They even needed to pay $8 billion in damages to a consumer due to not warning that use of Risperdal could cause male breast growth. And let’s not forget patent concerns as it already lost US patent exclusivity to Remicade which was its once top-selling drug and its last US patent for Stelara which generated 6% of total revenue last year is about to expire in 2023. And there are many lawsuits on this front as well.

Position

This is the world’s largest healthcare company. But the question is: is it eroding? While its brand has remained strong through it all, it is dropping in popularity and consequently, value, due to all this reputational damage.

Bayer (OTC:BAYRY) is also facing its legal battle but at least it managed to buy more time. The company reached an agreement to postpone lawsuits over the alleged cancer-causing effects of its glyphosate-based weed killers, giving more time for talks seeking a settlement.
The Cincinnati-based maker of consumer goods, Procter& Gamble (NYSE:PG) decided to commercialize the research on packaging for liquid products through an Innventure portfolio company called AeroFlexx. Their revolutionary package solution is at least 50% less plastic, enhances the consumer experience and reduces shipping costs as it’s easier to move along the supply chain. Overall, it has great odds of boosting P&G’s revenue.

Unilever (NYSE:UL) just hired its new CMO, 13 months after it got its new CEO. The CMO title went to Conny Braams, a not-so-well-known operational hero that use to run its middle-Europe segment. By not going for a ‘brand-building’ name, the company has put a clear emphasis on wanting to build its complex operational effectiveness. Like others, it is being squeezed by discount retailers and venture capitalists who offer both cheap products and premium innovations and these are not easy to compete with. And let’s not forget Colgate Palmolive (NYSE:CL) which is generating significantly more profit after accounting for expenses comparing to its market peers, yet it is a somewhat riskier investment.
due to not investing in short-term assets in an optimal way. So, a somewhat mixed picture showing both strengths and weaknesses. As of the whole sector.

Outlook

The bottom line is that despite the reputational damage due to an endless flow of legal proceedings, the stock is not showing any signs of technical damage. This surely raises the odds of breaking out in the coming months as the company continues to stabilize as all that legal dust settles. Investors have a reason to worry considering all those eroding factors. But considering the weight of those headwinds, it has always found a way to pull through whereas other companies facing similar challenges have seen their stock plunge. One thing is for sure: the more than 130-years old healthcare conglomerate deserves a medal for stock resiliency, or to be more precise, for its successful diversification across healthcare.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

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BenzingaEditorial

3M Stock Buzz Despite the Harmful Trade War

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Industrial conglomerate which brought the world Post-It-Notes, 3M (NYSE:MMM) is suffering due to consequences of the trade war between US and China. Besides scotch-tapes, the company also has a drug delivery business and makes pretty much everything, automotive adhesives and touchscreen displays included. And it is also known to regularly buy and sell businesses as part of its strategy. And according to Bloomberg, the newest sale that the company is exploring is of its drug delivery unit. Consequently, shares rose about 4% to $171.01 during the morning trade on Friday.

Divestiture strategy

The St. Paul, Minnesota-based company had its biggest-ever deal by buying a bandage maker this year for $4.4 billion. Last year, it sold a communications business for about $900 million. Its CEO, Mike Roman, spoke on Thursday and although he did not name a business segment in particular, he clearly emphasized that if there is a better ‘natural’ owner out there, the company’s management will divert that asset as part of its strategy to create value for shareholders. What would be strange, however, is that the company would consider selling part of its very bright segment, healthcare. In its latest quarter, total sales of this segment rose 4.7 percent.

Headwinds

On October 24th, third quarter revenue fell below analyst estimates as sales amounted to $8.0 billion, which is a year-on-year drop of 2 percent. The company has cut its full-year profit forecast as many other US corporations who are suffering from the consequences of the intensifying trade war. Its organic local currency sales declined 1.3 percent. But its acquisitions, net of divestitures, increased sales by 0.6 percent.
Due to its diversified business model, this conglomerate belongs to two sectors, the industrial goods and diversified machinery. But, the landscape of both industries is filled with fierce competitors. And its market capitalization of $94.99 billion is not enough to make it invincible. There’s General Electric (NYSE:GE) with historical ties to no other than Thomas Edison, Danaher Corporation (NYSE:DHR) but also many others. And 3M’s transportation and electronics segment sales fell 4.4 percent in the latest quarter. Meanwhile, despite not generating as much profit after accounting for expenses as its peers nor doing such a good job of managing its assets, GE’s stock rose 2.87 percent on Friday, December 6th. Although Wall Street has somewhat mixed reviews, it is overall also a stock with reasonable ROI potential.

Outlook

Back in the good old days, this was the one company that didn’t have a “Pepsi to its Coca Cola”. By all means, it defied being pigeonholed. But a lot has changed since it was founded in 1902 and after its many innovations that became parts of our everyday lives. Until 2016, it managed to outperformed the market for three consecutive years. But, it is not immune to a weakening macroeconomy that now remains a challenge. And 3M needs to continue improving its operational effectiveness, managing costs, reducing inventory levels but moreover, it needs new innovations to generate strong growth and premium returns.

This article is contributed by IAMNewswire.com. It was written by an independently verified journalist and is not a press release. It should not be construed as investment advice.

Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com

Contributors – IAM Newswire accepts pitches. If you’re interested in becoming an IAM journalist contact: contributors@iamnewswire.com

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