H&M sees second-quarter loss as pandemic slams sales in March


STOCKHOLM (Reuters) – H&M (HMb.ST), the world’s second-biggest clothing retailer, said on Friday it expected a loss in the second quarter after reporting a 46% plunge in March sales as the coronavirus pandemic took a toll on the retail sector.

FILE PHOTO: The H&M clothing store is seen in Times Square in Manhattan, New York, U.S., November 15, 2019. REUTERS/Mike Segar

The virus outbreak that began in China late last year has spread around the world, prompting governments to close businesses and order hundreds of millions of people to stay at home to try to slow the contagion..

The pandemic has forced H&M to temporarily close most of its stores, flag big layoffs and scrap its annual dividend for the first time since its 1974 listing. In the past month alone, H&M’s shares have plunged 40%.

“With the dramatic decline in the market we have to make many difficult decisions and take forceful action,” newly appointed Chief Executive Helena Helmersson said in a statement.

“With each day that we are having to keep stores closed, the situation is becoming increasingly demanding.”

The retailer, which had more than 125,000 employees by late last year, has already said it was in talks to reduce working hours for tens of thousands of its staff and was reviewing the need for redundancies.

H&M said on Friday it had prepared a number of sources of financing to strengthen its liquidity buffer which it expected to be finalised in the second quarter.

OUT OTHER SIDE

Analysts at Jefferies said it was sensible to expand credit facilities “given narrower liquidity buffers relative to peers, as we entered an elongated period of demand weakness/absence”.

In results that still bore little mark of the virus outbreak, H&M’s fiscal first-quarter pretax profit more than doubled to 2.50 billion crowns ($247.6 million) from a year-ago 1.04 billion. Six analysts polled between March 17 and March 26 had on average expected a rise to 1.47 billion crowns, according to Refinitiv data.

With an unprecedented fall in sales and a dismal second quarter already priced in, H&M shares were up 6% by 0828 GMT, buoyed by the forecast-beating earnings for the quarter through February and its plans to slash costs.

“We think the debate on H&M will be between investors looking at how ugly it can get short term and investors thinking about who could come out the other side relatively stronger,” RBC analyst Richard Chamberlain said in a note.

“H&M should be one of those, albeit Inditex looks better placed for now given its flexible business model and stronger balance sheet,” he said.

H&M’s biggest rival, Zara owner Inditex (ITX.MC), has flagged big temporary layoffs, booked a provision against the outbreak’s impact on inventory, and postponed its dividend.

Reporting by Anna Ringstrom; additional reporting by Johannes Hellstrom, editing by Niklas Pollard and Emelia Sithole-Matarise



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China says to ease car buying curbs to boost sales By Reuters


© Reuters.

BEIJING (Reuters) – China’s commerce ministry will relax or remove restrictions on car purchases in some regions to help sales of new vehicles, while accelerating plans to boost the scrapping of old ones.

Wang Bin, the deputy head of the ministry’s consumption promotion division, said the ministry will continue to help “realize the consumption potential” in the world’s largest auto market, during a weekly briefing held online on Thursday.

China’s auto industry suffered a 79% drop in sales in February and expects a fall of around 10% in the first half of this year.

While the coronavirus outbreak has been mostly contained at home, Liu Changyu, another senior commerce ministry official, said, its spread overseas will inevitably impact China’s auto trade and its supply chain.

The ministry will therefore guide Chinese automakers to expand orders from overseas suppliers, stock up on inventory and make alternative plans, Liu said.

 

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U.S. pending home sales rise 2.4% in February By Reuters


© Reuters.

WASHINGTON (Reuters) – Contracts to buy previously owned homes rose for the second straight month in February, the National Association of Realtors said on Monday.

The NAR’s pending home sales index increased to a reading of 111.5, up 2.4% from the prior month. January’s index was revised slightly to 108.9 from 108.8.

Economists polled by Reuters had forecast pending home sales falling 1.0% last month.

Pending home contracts generally are seen as a forward-looking indicator of the health of the housing market because they become sales one to two months later.

But Lawrence Yun, NAR’s chief economist, noted that the data did not capture the significant fallout from the coronavirus pandemic, which is likely to derail the housing market as layoffs surge and the economy falters.

U.S. existing home sales surged to a 13-year high in February, data earlier this month showed.

Compared to one year ago, pending sales were up 9.4% in February.

 

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Japan February factory output seen cooling, retail sales down for fifth month as virus hit deepens: Reuters poll By Reuters


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© Reuters. A man wearing a protective face mask stands at the Shinagawa station in Tokyo

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TOKYO (Reuters) – Japan’s factory output likely slowed in February and retail sales dropped for a fifth straight month, a Reuters poll showed on Friday, as the coronavirus outbreak took an increasing toll on businesses and consumers.

Japan has recorded 2,113 cases of the virus and 57 deaths so far as the disease races across the world, prompting the Bank of Japan to expand stimulus while the government works to nail down a support package that sources say will total at least $137 billion.

While the stimulus likely won’t prevent the world’s third-largest economy from sliding into recession, analysts say it could keep businesses afloat until global demand begins to recover.

Industrial output is expected to have inched up 0.1% in February from the previous month, the poll of 15 analysts showed, after a revised 1.0% gain in January.

“Domestic production activities probably didn’t go as planned due to supply chain disruptions triggered by the coronavirus outbreak,” said Takeshi Minami, chief economist at Norinchukin Research Institute.

“We expect factory output will fall 5% in March from the previous month and 2.0% in April on worries that declines in global demand will last longer due to the virus impact.”

Next week’s data also include retail sales, which are expected to fall 1.2% fall in February from a year earlier, following a 0.4% slip in January.

“Retail sales for March will likely drop further not only in the service industry but also consumptions on other goods as the government called for people to refrain from going out to prevent the spread of the coronavirus,” said Kenta Maruyama, economist at Mitsubishi UFJ Research and Consulting.

The trade ministry will publish both factory output and retail sales at 8:50 a.m. Japan time on Tuesday, March 31 (2350 GMT Monday).

Analysts also expected the unemployment rate to remain unchanged at 2.4% in February while the jobs-to-applicants ratio would dip to 1.47, slightly down from 1.49 in January.

The sharp slump in domestic and export demand has raised fears that the jobless rate could rise, analysts said.

The jobs figures will be announced at 8:30 a.m. on Tuesday.

Japan’s economy shrank an annualized 7.1% in the fourth quarter and the spread of coronavirus raises fears for another contraction in the current quarter.

Japan’s government offered its bleakest assessment on the economy in nearly seven years, saying conditions in March were “severe” as the coronavirus pandemic shut down factories and cooled consumption. [nL4N2BI2LA ]

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



UK retail sales stagnate in February, before virus hit By Reuters


© Reuters. The spread of the coronavirus disease (COVID-19) in London

LONDON (Reuters) – British retail sales stagnated last month in their weakest performance in nearly seven years, official data showed on Thursday, even before what shops expect to be the biggest fall in sales for over a decade due to coronavirus-imposed shutdowns.

Sales volumes were flat in February compared with the same month in 2019 after growth of 0.9% in January, the Office for National Statistics said.

This was the first time sales have not grown since March 2013, when Britain was hit by the heaviest snowfall in 30 years, and below economists’ forecasts in a Reuters poll for annual growth to hold broadly steady at 0.8%.

The outlook for retailers appears bleak, especially outside the food sector which has seen a temporary surge in demand as Britons stockpiled supplies in case they are trapped at home by illness or growing restrictions on movement.

On Monday the government ordered all non-essential stores to close to the public, though supermarkets remain open and some online retail is continuing for now.

“People should brace for a eye-watering fall in retail sales in the region of 30% month-on-month in April,” said Thomas Pugh, economist at consultancy Capital Economics.

“Retail sales may be flat in March as exceptionally strong food sales offset weakness elsewhere,” he added.

The Confederation of British Industry reported on Wednesday that retailers expected the biggest fall in sales since April 2009 next month, according to a survey the CBI conducted before the latest shutdowns.

The ONS said that in February alone, sales dropped by 0.3% after a 1.1% jump in January, due to unusually bad weather and flooding in parts of Britain.

“A small number of retailers also said that the impact of the coronavirus had affected sales of goods shipped from China,” she added,” ONS statistician Rhian Murphy said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



U.S. new home sales fall in February, January revised up sharply By Reuters


© Reuters. FILE PHOTO: Construction workers build a single family home in San Diego, California

By Lucia Mutikani

WASHINGTON (Reuters) – Sales of new U.S. single-family homes fell in February after surging in the prior month, and could decline further because of the coronavirus pandemic which is boosting unemployment and severely disrupting economic activity.

The Commerce Department said on Tuesday new home sales dropped 4.4% to a seasonally adjusted annual rate of 765,000 units last month. January’s sales pace was revised sharply higher to 800,000 units, which was the highest level since May 2007, from the previously reported 764,000 units.

Economists polled by Reuters had forecast new home sales, which account for more than 10% of housing market sales, declining 2.0% to a pace of 750,000 units in February.

“We expect new home sales to fall more sharply in March and decline nearly 10% in the second quarter,” said Gregory Daco, chief U.S. economist at Oxford Economics in New York. “Low mortgage rates and pent-up demand will be supportive of housing when a recovery is underway, but severe job losses and damage to household confidence may make a quick bounceback difficult.”

New home sales are drawn from permits and tend to be volatile on a month-to-month basis because of a small sample. Sales jumped 14.3% from a year ago.

The coronavirus has brought much of the United States to a halt as state and local governments enforce “social distancing” policies aimed at containing the highly contagious virus, virtually closing all restaurants, bars, cinemas and theaters.

The government reported last week that the number of Americans filing claims for unemployment benefits jumped 70,000, the most since 2012 to a two-and-a-half year high of 281,000 during the week ended March 14. Economists are predicting claims will accelerate to a record 1.5 million or more when last week’s data is published on Thursday.

The Federal Reserve on Monday rolled out an extraordinary new array of programs aimed at blunting the “severe disruptions” to the economy caused by the coronavirus outbreak, backstopping an unprecedented range of credit for households, small businesses and employers. The U.S. Congress was on Tuesday close to reaching a deal on a $2 trillion stimulus for the economy.

Last month, new home sales fell 7.3% in the Midwest and tumbled 17.2% in the West. They soared 38.9% in the Northeast and rose 1.0% in the South, which accounts for the bulk of transactions.

The housing market has regained its footing as mortgage rates have declined after hitting a soft patch beginning in the first quarter of 2018 through the second quarter of 2019.

Reports last week showed existing home sales hit a 13-year high in February. Single-family homebuilding, which accounts for the largest share of the housing market, increased in February to the highest level since June 2007.

Completions of single-family housing last month were the highest since December 2007, and the inventory of homes under construction rose to levels last seen in December 2006.

That could help to ease a shortage of homes that has constrained sales. The median new house price increased 7.8% to $320,000 in February from a year ago.

Sales last month were concentrated in the $200,000-$749,000 price range. New homes priced below $200,000, the most sought after, accounted for 11% of sales.

There were 319,000 new homes on the market in February, down from 322,000 in January. At February’s sales pace it would take 5.0 months to clear the supply of houses on the market, up from 4.8 months in January.



SoftBank plans $41 billion of asset sales to expand buyback and cut debt


TOKYO (Reuters) – SoftBank Group Corp (9984.T) plans to raise as much as $41 billion to buy back shares and reduce debt in an unprecedented move to restore investor confidence as a financial market rout pummels its shares and its portfolio companies.

The Japanese tech conglomerate’s plans come as it contends with a growing financial squeeze on the company and its $100 billion Vision Fund, which has recorded two consecutive quarters of losses after its tech bets fell short, compounded by the coronavirus pandemic’s impact on the global economy.

Its shares jumped 19% for their biggest daily gain in nearly 12 years after the pledge to sell or monetize up to 4.5 trillion yen ($41 billion) of assets to buy back 2 trillion yen of its shares in addition to a buyback of up to 500 billion yen announced earlier this month.

The buyback tops the $20 billion of purchases sought by activist investor Elliott Management, which has put pressure on SoftBank to improve shareholder returns, and will retire 45% of the group’s shares.

The asset sale will be executed over the next four quarters.

“This will allow us to strengthen our balance sheet while significantly reducing debt,” Chief Executive Masayoshi Son said in a company statement without specifying what will be sold.

SoftBank’s share price has been hammered by investor scepticism over the outlook for Son’s bets on start-ups such as WeWork and Uber (UBER.N).

Its plans to fund the initial 500 billion yen buyback with debt was received negatively by analysts and investors who were concerned by Son’s willingness to leverage the company.

Beyond the share buyback, proceeds will be used for repaying debt, buying back bonds and boosting cash reserves, reflecting Son’s “firm and unwavering confidence” in the business, the company said in the statement.

ASSET SALES

Given the current market fragility, SoftBank may look to monetize its stakes in the merged Sprint (S.N) and T-Mobile US (TMUS.O) or Chinese e-commerce giant Alibaba (BABA.N), said Redex Holdings analyst Kirk Boodry.

Son previously offloaded part of the stake in Alibaba, of which SoftBank owns 25%, in a complicated transaction ahead of the 2016 purchase of chip designer Arm.

Monday’s announcement comes after SoftBank’s conglomerate discount – the difference between its market capitalization and the value of its assets – yawned to a record 73% last week.

“That’s a wake-up call that investors are really worried,” Boodry said, overriding Son’s previous reticence to slim the portfolio.

High on the list of pressing problems is a fight brewing over a major soured bet on co-working start-up WeWork, with SoftBank considering pulling out of a $3 billion bid to buy additional shares.

REDUCED OPTIONS

SoftBank’s financing options are becoming increasingly constrained, however, as domestic banks hit internal limits for lending to the highly leveraged group.

Last month it pledged almost a third of its stake in domestic telecoms company SoftBank Corp (9434.T) to raise up to $4.5 billion from 16 financial institutions.

The telecoms business is viewed by analysts as another candidate for asset sales. [L4N2BG1PX])

The cost of insuring SoftBank against default SFTB5YJPAC=MG, which spiked to at least five-year highs last week, fell on the news.

FILE PHOTO: The logo of SoftBank Group Corp is displayed at SoftBank World 2017 conference in Tokyo, Japan, July 20, 2017. REUTERS/Issei Kato/File Photo

The group’s shares closed almost 19% up on Monday but remain down 33% this year.

($1 = 110.3900 yen)

Reporting by Sam Nussey; Editing by Muralikumar Anantharaman and David Goodman



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U.S. existing home sales surge to 13-year high in February By Reuters



WASHINGTON (Reuters) – U.S. home sales surged to a 13-year high in February, but the housing market recovery is likely to be derailed by the coronavirus pandemic, which has unleashed a wave of layoffs and left the economy teetering on the brink of a recession.

The National Association of Realtors said on Friday existing home sales jumped 6.5% to a seasonally adjusted annual rate of 5.77 million units last month, the highest level since February 2007. The data reflected contracts signed in January and early February, before the highly contagious virus swept through the country, severely disrupting economic activity.

Economists polled by Reuters had forecast existing home sales would rise 0.7% to a rate of 5.50 million units in February.

Existing home sales, which make up about 90% of U.S. home sales, accelerated 7.2% on a year-on-year basis in February.

The report was released a day after data showed the number of Americans filing claims for unemployment benefits surged to a 2-1/2-year high last week amid layoffs in the entertainment, leisure and hospitality, and transportation industries.

Economists are expecting a recession by the second quarter, though some believe a downturn is already underway. The housing market has regained its footing as mortgage rates have declined after hitting a soft patch beginning in the first quarter of 2018 through the second quarter of 2019.

Home sales last month rose in the Midwest, the populous South and the West, which is the most expensive region. They, however, fell in the Northeast.

There were 1.47 million previously owned homes on the market in February, down 9.8% from a year ago. The median existing house price increased 8.0% from a year ago to $270,100 in February.

At February’s sales pace, it would take 3.1 months to exhaust the current inventory, down from 3.6 months a year ago. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Gap sees 2020 profit above estimates, flags $100 mln virus hit to sales


(Reuters) – Gap Inc (GPS.N) leaned on its turnaround plan to forecast 2020 profit above market expectations on Thursday, but flagged a $100 million sales hit in Asia and Europe from the coronavirus, which has also started impacting its home market.

People pass by the GAP clothing retail store in Manhattan, New York, U.S., August 15, 2016. REUTERS/Eduardo Munoz

The disruptions due to the health crisis is the latest headache for newly named Chief Executive Officer Sonia Syngal as she tries to revive demand for its apparels in a competitive retail market marked by slowing traffic in malls.

Separately, Gap named Old Navy’s finance chief Katrina O’Connell as its next chief financial officer, who will take charge along with Syngal later this month.

“With the U.S. cases that are just emerging, we started to see some impact on traffic here,” outgoing Chief Financial Officer Teri List-Stoll, told analysts in a conference call.

Several retailers have warned of a sales hit as a clamp down put in place to slow the spread of the virus sharply reduced shopping in China and the United States. China is Gap’s most impacted region and makes up for 3% of its total sales.

To revive slowing sales in the United States, Gap has been focusing on its Old Navy brand that offer affordable styles for the entire family and has partnered with apparel resale platform thredUp to bring in more environment-conscious and millennial customers.

Its Old Navy label helped the company limit a fall in comparable sales to just 1% in the fourth quarter, compared with the expectations of a 3.58% decline.

“They (Old Navy) have refocused on the customer. They looked at the trends and they just interpreted the trends very well for the consumer… It seems like that is starting to work,” said Gabriella Santaniello, founder of retail consulting firm A Line Partners.

On an adjusted basis, Gap earned 58 cents per share, 17 cents above expectations.

However, it reported a net loss of $184 million compared with a profit of $276 million, due to an impairment charge related to the closure of its flagship store in New York.

Excluding the hit from the outbreak, Gap forecast earnings of between $1.80 per share and $1.92 per share for fiscal 2020. Analysts had forecast $1.68 per share, according to IBES data from Refinitiv.

Reporting by Nivedita Balu in Bengaluru; Editing by Arun Koyyur



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China’s February auto sales plunge 79%, biggest monthly drop ever By Reuters



BEIJING (Reuters) – Auto sales in China plunged 79% in February, marking their biggest ever monthly decline, with demand pummeled by the coronavirus outbreak.

Sales in the world’s biggest auto market tumbled to 310,000 vehicles from the same month a year earlier, falling for a 20th straight month, the China Association of Automobile Manufacturers (CAAM) said.

“China’s auto sales for February returned levels not seen since 2005,” said Chen Shihua, a senior association official.

Sales of new energy vehicles, which include battery-electric cars, contracted for an eighth month in a row.

A CAAM official told Reuters last month that sales are likely to drop by more than 10% in the first half of this year. If the outbreak is effectively contained in China before April, the decline could be around 5% for the whole year, he added.

In Hubei province where the outbreak began and which is a major car manufacturing hub responsible for nearly 10% of China’s output, Dongfeng Motor Group Co Ltd (HK:) and its partners Honda Motor (T:), Renault SA (PA:) and Peugeot SA (PA:) have all said they are delaying the restart of production.

Tesla’s (O:) production and delivery plans in Shanghai, have also been disrupted.

However, after authorities in Wuhan on Wednesday lifted restrictions on a limited number of key industries in the city and allowed some people to return to work, Honda resumed limited output at a car plant in the city.

Nissan Motor (T:) has also said it plans to partially resume production in Xiangyang, another city in Hubei, as well as its plant in Zhengzhou, Henan.

Industry-wide auto sales fell 8.2% last year, pressured by new emission standards in a shrinking economy and trade tensions with the United States.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.