Walmart's e-commerce biz is reportedly racking up $1 billion in losses and that's only one problem it has - CNBC

Marc Lore, head of Walmart's U.S. e-commerce business, and Doug McMillon, CEO of Walmart.

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Walmart's attempt to catch up with Amazon comes at a huge cost — and it's stirring up hard feelings within the company.

While Walmart has been making investments — like buying Jet.com for $3.3 billion — to try to compete with Jeff Bezos' behemoth, it's been a drag on the big-box business' profitability. So much so that Walmart is now projecting losses of over $1 billion for its U.S. e-commerce division, helmed by Marc Lore, this year, on sales of between $21 billion and $22 billion, according to a report by Vox, citing discussions with multiple sources familiar with those financials.

Walmart didn't immediately respond to CNBC's request for comment on this story.

Frustration has been growing within Walmart as these losses on Lore's team mount, the report said. And now the company is reportedly pressuring Lore's team to sell off some of the digitally native brands it's acquired in an attempt to amass more inventory and gain the expertise of younger, e-commerce leaders. Citing discussions with people familiar, Vox said Walmart has discussed in recent months selling menswear brand Bonobos and women's clothing retailer Modcloth.

Walmart will reportedly likely sell ModCloth this year, for less than its purchase price. It reportedly still plans to hang onto Bonobos.

Vox reported Bonobos, Modcloth and plus-sized fashion brand Eloquii — which it bought last year — are still unprofitable.

And the report said Walmart won't make any more acquisitions of digitally native brands for at least the next year, citing three sources, "barring an incredible acquisition opportunity that is just too good to pass up." Instead, it said the retailer will lean more into incubating its own brands, like it did in creating mattress brand Allswell.

Walmart had previously said it anticipated losses stemming from its e-commerce operations would increase in 2019.

The company also recently announced a major overhaul at Jet, taking steps to more fully integrate the e-commerce platform into its own business. As part of the changes, Jet president Simon Belsham is expected to leave the company in August, with that role dissolving entirely.

Meanwhile, tensions have reportedly been rising between Lore and the CEO of Walmart U.S., Greg Foran, who runs the retailer's bricks-and-mortar stores.

Foran would like for Walmart to put more resources toward cutting prices of items, not building digital brands, Vox reported. The report said Foran is also increasingly frustrated that Lore is getting credit for growing Walmart's online grocery business, which is really more reliant on stores.

This all calls into question just how much longer Lore will be at Walmart.

The e-commerce chief told CNBC in February 2018 he was "absolutely not" leaving the company and that things were "just getting started." That was after rumors started to swirl that he was considering departing. When Lore joined Walmart from the Jet acquisition, he agreed to stay on for five years, through the fall of 2021.

Walmart shares were down less than 1% Wednesday morning. The stock has rallied 19.4% this year, while Amazon shares are up 29%.

Read the full piece from Vox here.

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2019-07-03 14:12:59Z
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Walmart's e-commerce biz is reportedly racking up $1 billion in losses and that's only one problem it has - CNBC

Marc Lore, head of Walmart's U.S. e-commerce business, and Doug McMillon, CEO of Walmart.

Getty Images

Walmart's attempt to catch up with Amazon comes at a huge cost — and it's stirring up hard feelings within the company.

While Walmart has been making investments — like buying Jet.com for $3.3 billion — to try to compete with Jeff Bezos' behemoth, it's been a drag on the big-box business' profitability. So much so that Walmart is now projecting losses of over $1 billion for its U.S. e-commerce division, helmed by Marc Lore, this year, on sales of between $21 billion and $22 billion, according to a report by Vox, citing discussions with multiple sources familiar with those financials.

Walmart didn't immediately respond to CNBC's request for comment on this story.

Frustration has been growing within Walmart as these losses on Lore's team mount, the report said. And now the company is reportedly pressuring Lore's team to sell off some of the digitally native brands it's acquired in an attempt to amass more inventory and gain the expertise of younger, e-commerce leaders. Citing discussions with people familiar, Vox said Walmart has discussed in recent months selling menswear brand Bonobos and women's clothing retailer Modcloth.

Walmart will reportedly likely sell ModCloth this year, for less than its purchase price. It reportedly still plans to hang onto Bonobos.

Vox reported Bonobos, Modcloth and plus-sized fashion brand Eloquii — which it bought last year — are still unprofitable.

And the report said Walmart won't make any more acquisitions of digitally native brands for at least the next year, citing three sources, "barring an incredible acquisition opportunity that is just too good to pass up." Instead, it said the retailer will lean more into incubating its own brands, like it did in creating mattress brand Allswell.

Walmart had previously said it anticipated losses stemming from its e-commerce operations would increase in 2019.

The company also recently announced a major overhaul at Jet, taking steps to more fully integrate the e-commerce platform into its own business. As part of the changes, Jet president Simon Belsham is expected to leave the company in August, with that role dissolving entirely.

Meanwhile, tensions have reportedly been rising between Lore and the CEO of Walmart U.S., Greg Foran, who runs the retailer's bricks-and-mortar stores.

Foran would like for Walmart to put more resources toward cutting prices of items, not building digital brands, Vox reported. The report said Foran is also increasingly frustrated that Lore is getting credit for growing Walmart's online grocery business, which is really more reliant on stores.

This all calls into question just how much longer Lore will be at Walmart.

The e-commerce chief told CNBC in February 2018 he was "absolutely not" leaving the company and that things were "just getting started." That was after rumors started to swirl that he was considering departing. When Lore joined Walmart from the Jet acquisition, he agreed to stay on for five years, through the fall of 2021.

Walmart shares were down less than 1% Wednesday morning. The stock has rallied 19.4% this year, while Amazon shares are up 29%.

Read the full piece from Vox here.

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https://www.cnbc.com/2019/07/03/walmarts-e-commerce-business-on-track-to-lose-over-1-billion.html

2019-07-03 13:44:44Z
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HP, Dell, Microsoft, and Amazon look to move some hardware production out of China - The Verge

HP, Dell, Microsoft, and Amazon are the latest companies to consider moving some of their hardware production out of China in light of the ongoing trade war with the US. Nikkei reports that HP and Dell are both looking to move up to 30 percent of their laptop production out of the country, Microsoft may move some Xbox production, and Amazon could move some production of its Kindles and Echo speakers. Acer and Asustek are also exploring production outside of China, according to the report.

The potential moves are all in response to a trade war that has seen the US put a 25 percent tariff on $200 billion worth of goods. While the technology industry has largely remained unscathed, new tariffs could soon extend the fees to laptops, smartphones, and game consoles, adding significant costs that could result in higher prices for consumers and slimmer margins for manufacturers.

These four companies aren’t the only large tech names looking to shift their manufacturing. Nikkei previously reported that Apple is looking at moving up to 30 percent of its hardware production out of China, The Wall Street Journal said that Nintendo might move some Switch production, and Bloomberg said that Google has moved some production of Nest products. Most companies are still looking to keep hardware production in Southeast Asia, with manufacturing moving to a number of countries.

Hardware production has long been centered on China where production costs are cheaper, components of the tech supply chain are concentrated, and manufacturers have increasingly specialized in making cutting-edge tech. That’s been the status quo for two decades, but the tariff situation is quickly showing how tenuous the situation is, with the ongoing trade dispute potentially driving up costs across the industry and companies having no easy way out.

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2019-07-03 13:06:33Z
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Job creation has another rough month in June as private payrolls rise by just 102,000 - CNBC

Tara Skipper, talent acquisition partner talks to persecutive job applicants at the USC booth during the Veterans Employment Fair held at the Carson Civic Center in Carson on Wednesday, June 26, 2019.

Brittany Murray | Getty Images

Job creation looks to have had another rough month in June, with private companies adding just 102,000 new positions, according to a report Wednesday from ADP and Moody's Analytics.

That missed even the meager 135,000 estimate from economists surveyed by Dow Jones and comes off the weak May growth of just 41,000. The May number was revised up from an initially reported 27,000.

The disappointment sets the stage for another possible letdown from the more widely watched nonfarm payrolls report from the Labor Department, which will be released Friday and is expected to show growth of 165,000 after May's lackluster 75,000.

"The economy's growth rate is significantly slowing, and I think the risks are rising that it's going to stall out," Mark Zandi, chief economist at Moody's Analytics, told CNBC. "I think the economy is on the razor's edge, and this number is consistent with that view."

Economic data overall has been wobbly lately as economists see growth slowing in 2019 and a possible recession ahead in 2020.

"The job market continues to throttle back," Zandi said in a statement. "Job growth has slowed sharply in recent months, as businesses have turned more cautious in their hiring. Small businesses are the most nervous, especially in the construction sector and at bricks-and-mortar retailers."

Small companies take a hit

Indeed, companies with fewer than 50,000 employees saw another setback in June, with payrolls falling by 23,000 after a decline of 52,000 the previous month. Businesses with fewer than 20 employees were particularly hard-hit, subtracting 37,000 jobs.

On the upside, job creation was fairly strong among bigger businesses. Companies with 50 to 499 employees posted growth of 60,000, while large businesses added 65,000.

At the industry level, goods producers on net lost 15,000 jobs. Construction fell by 18,000 while natural resources and mining lost 4,000. Manufacturing added 7,000.

Service-related industries provided all the job growth, adding 117,000 positions. Education and health services led the way with 55,000 and professional and business services contributed 32,000 to the total. Trade, transportation and utilities added 23,000 though leisure and hospitality rose by just 3,000 after adding 16,000 in May. Franchises grew by 13,500.

"While large businesses continue to do well, small businesses are struggling as they compete with the ongoing tight labor market," added Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. "The goods producing sector continues to show weakness. Among services, leisure and hospitality's weakness could be a reflection of consumer confidence."

The Conference Board's measure of consumer sentiment in June fell to its lowest level in nearly two years as worries intensify over tariffs and expectations dim for job growth.

Despite the slowdown in hiring, there remain 1.6 million more jobs than workers counted among the unemployed, a record high. The tight labor market has produced only a modest boost in wages, however.

As worries over the economy grow, markets are expecting a policy response from the Federal Reserve. Wall Street expects the central bank to cut interest rates at its meeting later this month, though Fed officials remain mostly noncommittal.

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2019-07-03 12:15:45Z
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Canopy Growth Corporation Co-CEO Bruce Linton to step down - Yahoo Finance

Canadian cannabis company Canopy Growth Corporation (CGC, WEED.TO) unexpectedly announced Wednesday that Bruce Linton would be stepping down as co-chief executive officer and board member of the firm.

Mark Zekulin, currently president and co-chief executive officer, will remain on as CEO of Canopy, the world’s largest publicly traded cannabis company by market capitalization. Zekulin will work with the board of directors to identify a new leader for the company in a search that will include both internal and external candidates, Canopy said in the statement.

Rade Kovacevic, current head of Canadian operations and recreational strategy, will fill the role as president. Each of the executive changes are effective immediately.

"The Board decided today, and I agreed, my turn is over. Mark has been my partner since this Company began and has played an integral role in Canopy's success,” Linton said in a statement. “While change is never easy, I have full confidence in the team at Canopy – from Mark and Rade's leadership to the full suite of leadership – as we progress through this transition and into the future."

Shares of Canopy fell 7% to $37.24 each as of 7:49 a.m. ET on the New York Stock Exchange.

Linton, a co-founder of Canopy, had been a leader at the company since its inception in 2013, when it was first known as Tweed Marijuana. Canopy became the first publicly traded cannabis company in North America in April 2014.

In 2018, Canopy received a $4 billion investment from Corona-owner Constellation Brands (STZ), giving the beverage-maker an about 40% stake in the company. Constellation Brands’ CEO Bill Newlands and CFO David Klein serve as members of Canopy’s board of directors.

“We fully support the decision made by Canopy Growth’s Board of Directors to appoint Mark Zekulin as the company’s sole CEO,” a spokesperson from Constellation Brands said in a statement to Yahoo Finance. “The future of Canopy Growth remains very bright and we look forward to the company’s continued success for many years to come.”

For the fiscal year ending in March, Canopy posted net revenue of $226.3 million, while its adjusted EBITDA amounted to an annual loss of $257.0 million.

This post is breaking. Check back for updates.

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2019-07-03 11:22:00Z
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UK services sector stagnates in June - BBC News

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It looks as though Britain's economy shrank in the second quarter with news that the services economy barely grew in June against a backdrop of worries over Brexit.

Carefully watched data from IHS Markit/CIPS, who survey purchasing managers, say their index fell to 50.2 in June, below the 51 that had been expected, which would have seen growth remain flat.

Equivalent surveys for manufacturing and construction published earlier this week showed that those sectors contracted in June, meaning Britain's economy overall probably shrank by 0.1% in the second quarter, according to IHS/CIPS.

"The latest downturn has followed a gradual deterioration in demand over the past year as Brexit-related uncertainty has increasingly exacerbated the impact of a broader global economic slowdown," Chris Williamson, chief business economist at IHS Markit, said.

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2019-07-03 11:15:20Z
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Christine Lagarde appointment risks making the ECB weaker - Financial News

Mario Draghi’s move to shape eurozone monetary policy beyond his retirement date — at least through 2020 — may prove to be the best decision he ever made as European Central Bank president.

His nominated successor, current International Monetary Fund managing director Christine Lagarde, would come to the job without any central banking experience, and by most accounts devoid of the character that allowed Draghi to utter his famous promise in 2012 to do “whatever it takes” to keep the monetary union together.

If in the next weeks European leaders confirm their choice to give Lagarde one of the world’s most important monetary policy jobs, they will increase fears that the eurozone will not be able to withstand the next serious financial shock, with the ECB crippled by the transformation of its ruling body into a bickering and ineffective mini-parliament.

The first reason is that the ECB would be headed by two personalities hailing from politics, without proper experience in central banking or a serious academic background: Lagarde is a former minister under French conservative presidents Jacques Chirac and Nicolas Sarkozy, and ECB vice-president Luis de Guindos is an ex-conservative Spanish finance minister.

READ The exhausted ECB dove insists it can still fly

Lagarde, 63, is a lawyer by training, and served as a lacklustre finance minister under Sarkozy. She was later convicted of dereliction of duty by France’s highest court of justice for having overseen a misuse of public funds while serving in that post. That did not prevent her from being renewed in 2016 to the IMF post that Sarkozy had lobbied for and helped her get in 2011.

Although some European leaders salute her political acumen and capacity to muster compromises from diverging governments in difficult situations, Lagarde has never seemed interested by the fierce economic arguments that split governments throughout the eurozone crisis. She has no discernible firm views on economic or monetary policy, save for sticking to the consensus of the moment. At the IMF she has proved a good bureaucratic operator, and an articulate defender of the policies conceived by the international organisation’s staff.

That is precisely the problem she presents as ECB president-nominee. Draghi knew where he was going and did not hesitate to venture way beyond the consensus that his central banker colleagues had agreed on or discussed. He led the way. Lagarde’s tenure is more likely to be one where the ECB bureaucracy will lead, and the president follows after checking what other eurozone central bankers stand for.

READ Central banks must guard their fragile independence

More worryingly, Lagarde’s lack of convictions will weigh on the deliberations of the ECB’s governing council, the ruling body made up of the 19 national central bank governors and the six members of its executive board. The risk is that, instead of being dominated by a president deft at steering the debate their way, it will be turned into a deliberative assembly incapable of making the kind of swift decisions needed in times of crisis.

Markets will have some reasons to fear the appointment of an inexperienced ECB president just as the eurozone is heading towards a troubled economic future. Inflation expectations are at their lowest in years; the region’s economy could be hit by trade wars and the slowdown of emerging markets; and European governments are either reluctant or incapable of moving toward the type of fiscal stimulus Draghi has been advocating for months. Meanwhile, European leaders have all but given up on any pretence of reforming the eurozone, or strengthening their still-fragile banking union.

In choosing a consensus candidate who is unlikely to ruffle any feathers, European governments have at least made sure their influence will increase on the ECB’s policies. This is worrying for the central bank’s ultimate independence. But in the short term this should be an indication to markets that, beyond the next year or so, the ECB may no longer be the strong reliable institution they have learnt to respect.

To contact the author of this story with feedback or news, email Pierre Briançon

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2019-07-03 09:52:50Z
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