General

General

Groupon's turnover ten times larger in one year

Internet deals site Groupon has announced mixed second-quarter results today: alongside a huge growth of turnover, net losses grew as well – the cost of the formidable worldwide expansion.

Turnover grew over 900% in one year

The group's turnover peaked at 878 million dollar (617 million euro), which is more than ten times as much as in the second quarter of 2010 (87.3 million dollar or 61.3 million euro). This result is also a staggering 36% up from the first quarter of 2011, when turnover was 'only' 645 million dollars (453 million euro). 

 

The number of subscribers also grew – although not as exponentially – and reached 115.7 million at the end of June, almost 40% more than the 83.1 million in March. 23 million subscribers also bought at least one item in the web shop, accumulating 32.5 million deals throughout the quarter. 

Growth creates losses

In order to handle this explosive growth, Groupon has hired more than 1000 people in the last three months, lifting their administrative expenses from 126 to 193 million euro. This led to a net loss growth of 72 million – almost three times as much as in the second quarter of last year, even though the company lowered its marketing costs by 19% compared to the first quarter.

 

While Groupon has been criticised for their commercial practices (it has been claimed that Groupon claims 50% of each transaction – Groupon's own figures suggest their average stake is 19 euro), there is still no need to worry for CEO Andrew Mason as almost 50,000 companies are still on the waiting list. Consumer loyalty is also still on the up, with the average user buying four deals this quarter – compared to 3.8 from January to March and up from only three in 2010's Q2. 

 

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Shortlist World Retail Awards announced

On 27 September the yearly Oracle World Retail Awards will be announced in Berlin's Deutsches Historisches Museum. The jury has just announced the shortlist of the eight categories, each including six names.

 

Many important names feature the list(s), sometimes even twice. Grupo Pão de Açúcar, recently the target of a struggle between French giants Casino and Carrefour, is nominated for Responsible Retailer of the Year and Emerging Market Retailer of the Year. In the first category, it will have to deal with Marks & Spencer, also nominated for Multichannel Etailer of the Year. Carrefour and Disney Store will have to compete twice, in the categories Store Design of the Year and Format Innovation. 

 

The Award ceremony is part of the World Retail Congress, which takes place between 25 and 28 September in Berlin's InterContinental Hotel.

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Unilever announces excellent results

Unilever has announced excellent growth figures for this year's second quarter: the British-Dutch concern saw its underlying sales grow 7.1% (for the first half year 5.7%). In the first six months of this year, Unilever's profits grew even 9%.

Excellent results for all divisions

Savoury, Dressings & Spreads was the fastest growing category (+7.9%), before Ice cream & Beverages (7.6%), Home care (7.4%) and Personal care (5.8%). Due to  a more modest first quarter, the results for the first six months of 2011 were a little lower, with +5.0% for Savoury, Dressings and Spreads as slowest grower and +6.7% for Home Care as fastest grower. For the former, the slower growth can be explained by a zero-growth in volume. 

 

In total, 2.2 of the 5.7% underlying sales growth was caused by volume growth, 3.5 by price growth. China and India saw a double digit growth and also Egypt, South Africa and Russia performed well. The combined area of Asia, Africa and Central and Eastern Europe grew 9%, well balanced between volume and price growth. The latter was not the case for the Americas, where volume growth was almost zero – while price growth was 5%. In Western Europe, both growths were slower, with 0.2% and 1.1% respectively.

Virtually no influence of higher costs

Unilever's total turnover over the first six months of 2011 grew 4.1% to 22.8 billion euro, while net profits grew 9% to 2.4 billion. Operating margins went down 0.2%, far lower than what analysts had expected: the influence of expensive raw materials was almost completely compensated by higher prices and lower costs – especially in advertising. 

 

“We are making encouraging progress in the transformation of Unilever to a sustainable growth company”, said CEO Paul Polman. “In a tough and volatile environment we have again delivered strong growth. Volumes were robust and in line with the market, despite having taken price increases. This shows the strength of our brands and innovations.”

 

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eBay/PayPal boom in mobile sales

Each month, eBay sells three or four Ferraris... by smartphone. A striking example of the growing importance of mobile shopping. The site expects a 4 billion dollar turnover from mobile purchases – almost 3 billion euro – for this year. 

Huge boom for mobile channels eBay and PayPal

The eBay app generated a mobile turnover of 1.38 billion euro in 2010, 175% more than the year before – with a similar evolution expected for 2011. To achieve this progress again, eBay plans to develop elaborate apps for every existing mobile platform, including – of course – Android and iPad. 

 

PayPal, a popular online payment system and eBay's daughter company, also counts on a mobile future. With 8% of their 100 million users already using their smartphone to pay, PayPal expects its turnover to boom to 3 billion dollar (2 billion euro) this year. 

"Consumers expect a seamless experience”

Chairman John Donahoe explains the changing retail world the company is adapting to: “Technology-driven innovation is changing how consumers shop and pay. And these changes are blending online and offline into a new global commerce landscape. In this new retail world, consumers expect a seamless experience across multiple channels, whether it's a physical store, a mobile phone, a laptop or any Internet-connected device. In this new world, physical stores will become just another point of access and location alone is no longer a sufficient competitive advantage.”

 

The most expensive item purchased through the eBay iPhone app was not a Ferrari... but a second hand Mercedes SLR McLaren at $240,000 (€166,500).

 

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James McCann, ex-Carrefour, new Ahold CCO

Barely two months after his dismissal from Carrefour France, James McCann has been appointed Chief Commercial & Development Officer at Dutch distribution group Ahold. He will take office on 1 September as “acting member” of the board of directors, until his official appointment at the General meeting of stockholders on 17 April 2012.

 

Bridge between Europe and USA

Ahold boasts about McCann's arrival, saying he has “an impressive background of working in leading roles for a number of international retailers in various countries”. Dick Boer, CEO at Ahold, also praised “his experience in developing businesses in different markets, and his knowledge in e-commerce, building customer relationships and strengthening loyalty. Both will help us accelerate our initiatives in these key growth areas for our business.” McCann's primary task in this newly created office will be to build a bridge between Ahold Europe and Ahold USA.

 

Positive surprise for analysts

The news is a big surprise, as Ahold never expressed any intention to add a new role to its board of directors. For most analysts, it was a positive surprise that will boost Ahold's stock exchange quotations. ABN Amro's Robert Jan Vos explains: “This appointment is a sign that Ahold is seriously looking to expand itself through acquisitions. The group specifically stated McCann will play an important role in the expansion towards new markets, which indicates that this strategy is a priority measure for them”. 

 

Impressive resume... with one stain

Briton James McCann, born in 1969, started his career at Shell in 1992, before moving to Mars. In 1999, he moved to Sainsbury’s and three years later already to Tesco, where he was responsible for Poland, Malaysia and Hungary. Last year, he was executive director for Carrefour France until he was let go last May, due to disappointing results: the only stain on an impeccable resume. 

 

 

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Carrefour's Brazilian takeover on hold

The Brazilian retail soap about the 'marriage' between Carrefour Brazil and Pão de Açúcar is probably nearing its conclusion, as the Brazilian state withdraws its financial backing for the merger. This is a consequence of Carrefour's arch-rival – and Pão de Açúcar's owner – Casino's decision to officially oppose to the merger.

 

Controversial merger plans

Carrefour's 10 billion euro takeover plans have always been very controversial, as its rival Casino currently owns a majority of Grupo Pão de Açúcar's shares. Casino had saved the Brazilian company from bankruptcy in 1997 and has invested over two billion euro in GPA. Nevertheless, the merger with Carrefour was supported in Brazil's highest ranks, including the president, who called the merger “a good thing for Brazil” and who promised to invest 1.7 billion euro in the construction through state development bank BNDES.

 

The notion that a state bank would invest such a large amount of money in the project of one of Brazil's richest citizens (and the nature of that project: selling the biggest Brazilian retailer to foreigners) was highly controversial. Added to these ethical concerns were legal problems: the plan would violate the shareholder agreement between GPA and Casino, resulting in – so far – two requests for arbitration against the former. BNDES also will face prosecution, as an enquiry has been initiated to check whether the merger would have been proper use of public money.

 

Merger suspended... for now?

When Casino's board of directors unanimously decided to oppose the merger, BNDES announced it was cancelling the deal. Casino is majority shareholder of Pão de Açúcar's owners Wilkes, and this decision caused co-owner Abilio Diniz to suspend the merger plans. But as every soap needs a cliffhanger, he added that he still believes that the merger is very valuable to shareholders and that this decision may well be re-evaluated in the future.

 

As the shareholder agreement with Casino forces Diniz to relinquish his presidency of Pão de Açúcar next year, many analysts believe that the flirt with Carrefour was the last attempt of Diniz to hold on to his holding. RetailDetail earlier pointed towards another key person for whom this merger is a matter of pride: Pierre Bouchut, general director at Casino until his dismissal in 2005 and now CFO at Carrefour. Both of them however now seem to be aiming for a lost cause.

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Biggest Russian retailer, X5, grows 41%

Kopejka

X5 Retail Group, Russia's largest retail holding, witnessed a 41% increase in sales in the second semester of 2011, owing to an increase in Russian consumer demand and the takeover of food discounter Kopeyka. 

 

2.8 billion euro sales

X5's sales grew from 79.8 billion ruble to 112 billion (2 to 2.8 billion euro), but CEO Andrei Gusev was not totally satisfied as the growth was slower than in the first quarter – and is expected to be slower still in the third. X5 Retail Group expects the growth to rise again in the fourth quarter of 2011.

Beating Wal-Mart in the chase

Part of the huge growth also comes from the integration of Kopeyka in X5, after the Russians outmanoeuvred American giant Wal-Mart to buy the food discounter for 35 billion ruble (880 million euro). Wal-Mart had been looking for an entry in the Russian market for some time and not acquiring Kopeyka was a setback for the world's number one retailer, who is still expected to enter the Russian market through a merger or a takeover within the next three years. 

Almost 3400 stores

The rapidly growing X5 group was formed in 2006 by a merger of soft discounter Pyaterochka and supermarket chain Perekrestok and was expanded in 2008 with hypermarkets Karusel and again in 2010 with Kopeyka. Currently, the group has 2263 soft Pyaterochka soft discount stores, 647 former Kopeyka stores, 307 Perekrestok supermarkets, 82 convenience stors, 68 Karusel hypermarkets, 19 Paterson supermarkets and 2 Pyaterochka Maxis. The 3388 stores received over 1.2 billion European Russians and Ukranians during 2010.

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