RETAIL SECTOR - E-BUSINESS

Catalog, Web Sales Jump 16% for Q2 at J. Crew
J. Crew Group Inc., New York, said yesterday that consolidated revenues for the 13 weeks ended July 31 increased 13 percent to $188 million from $167 million during the comparable year-ago period.
Comparable store sales rose 12 percent during the second quarter. In the direct segment, Internet and catalog sales jumped 16 percent to $44 million, with both channels posting growth.
For the 26 weeks ended July 31, consolidated revenues totaled $334 million compared to $329 million last year, an increase of 2 percent. Direct sales for the first half, however, dropped 14 percent to $80 million.
Source; J, Crew Group Inc., September 2004

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GERMANY - E-BUSINESS

Online spending to pass euro 11 bn in 2004
In the first half of 2004, German consumers spent more than euro 5.3bn online. According to an extrapolation by GfK Panel Services Consumer Research sales exceeding euro 11bn are forecast for the year as a whole. Internet sales have continued to increase in the country. The number of internet users rose by around 6m last year to 38.1m and the frequency of online purchases by internet users is also up. Compared with the first six months of 2003, retail via the internet to sell textiles, electronic products and durables was up by over 60%.
Source; GfK, September 2004

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BEVERAGE SECTOR - BUSINESS

Coke CEO vows to improve culture after profits tumble
Coca-Cola's top executive said Wednesday the world's largest beverage maker needs to work harder, better execute its business strategy and improve its culture as he warned that third-quarter per-share income will drop at least 24 percent from a year ago.

Chief executive Neville Isdell said in a speech to employees that a lack of personal accountability and internal politics, among other issues, have hurt the Atlanta-based company.
"We need to systematically remove the barriers that impede our progress," Isdell said. "In my opinion, these include a lack of accountability, personal accountability, the hindrance of internal politics, an aversion to risk and an underinvestment in developing the capability necessary to succeed."

The comments came hours after Coke temporarily shelved its policy of not giving quarterly earnings guidance and announced its unfavorable outlook, which would fall short of expectations. The company's stock fell on the news.
"Today, we are not growing the way we should be," Isdell said in a conference call with investors and reporters.
Coke, citing poor weather in Europe and problems executing its business strategy in North America, said its reported net earnings for the July-September period will be in the range of 35 cents to 38 cents. At 38 cents, that would be a 24 percent earnings per share decline from the 50 cents Coke reported in the same period in 2003.

Excluding charges, Coca-Cola said it now forecasts third-quarter earnings in the range of 46 cents to 48 cents per share. Analysts surveyed by Thomson First Call were looking for Coca-Cola Co. to post third-quarter earnings of 54 cents per share, excluding one-time items.
For the second half of the year, the company now expects to earn in the range of 88 cents to 92 cents. Coke releases its third-quarter and year-to-date earnings on Oct. 21.
"I am not satisfied," said Isdell, who was named CEO in May, replacing Doug Daft. "I understand these results to be the symptom and not the problem, and we will set about what is needed to move our business forward and improve our long-term performance."

Coke shares fell $1.71, or 4 percent, to close at $41.16 Wednesday on the New York Stock Exchange. Coke stocks had risen steadily from since last year ago to a high of $53.50 in April before dipping in July and hovering around $40. Rival PepsiCo Inc.'s stock has fallen since a high of $55.71 in June, but less dramatically than Coke stocks. The New York-based beverage company's shares have hovered around $50 since mid-July.

Coca-Cola blamed unfavorable volume trends in the North America bottle and can business, as well as changing marketplace dynamics in Germany and unfavorable weather in northern Europe for its reduced forecast. In particular, a German requirement placing a deposit charge on returnable bottles has negatively affected the company's outlook.
The company forecasts a 1 percent to 2 percent increase in worldwide unit case volume for the full year. Volume growth for the third quarter will be flat to 1 percent.

In North America, Coke also has seen some challenges with sales of its new mid-calorie cola, C2, Isdell said. While the company has had success in sales of its 20-ounce version, it has underperformed with its eight-pack can version, Isdell said. Abroad, C2's performance has been good in Japan.
Source; Associated Press, September 2004
Write; by Harry R. Weber

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DRUG, COSMETICS - CORPORATE AFFAIRS

P&G sticks to earnings forecast
Procter & Gamble Co. on Thursday stuck to its previous first quarter earnings guidance of 72 cents per share, or roughly $2 billion, a increase of 14 percent from a year earlier.
The updated forecast matches the consensus estimate of Wall Street analysts, according to Thomson First Call.

The announcement marks the second quarterly update in a row where the Tide manufacturer did not boost its guidance - a move appreciated by many economical analysts.

P&G also said it expects total sales to grow by a percentage in the low double digits, including 2 to 3 percent benefit from favorable currency exchange rates and another 4 to 5 percent from acquisitions and divestitures, mostly the $5 billion-plus purchase of German hair care company Wella AG.
Analysts have called for the company's top line to grow 12 percent on top of its $12.2 billion in sales from the fall quarter last year.
The Cincinnati-based consumer products giant said it expects organic sales growth - excluding impact from acquisitions, divestitures and foreign exchange - to grow in the range of 4 to 6 percent for the September quarter.

Organic volume growth is expected in the high-single digit range.
The company said new product introductions and upgrades in fabric and home care, baby care and beauty care have helped add to strong performance in the quarter last year with the launch of hit non-prescription heartburn drug Prilosec OTC.

Comment
In recent years, the company had gotten itself into a cycle of under promising at the start of a quarter and then raising guidance in its mid-quarter update. I believe that cycle is now over and applaud the change.
P&G shares dipped 64 cents or 1 percent to $56.09 at the end of trading on the New York Stock Exchange Thursday.
The company is slated to report quarterly results late next month.
Source; LuisB, September.2004

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RETAIL - MARKETING

7-Eleven introduces pre-paid cards
As the leading convenience store in Taiwan, 7-Eleven is planning to promote pre-paid cards among its consumers as a means to boost customers' loyalty. It has been reported that 7-Eleven has installed around 300 units of the machines for using the pre-paid cards in its branch stores and should be launched as soon as the end of October. The pre-paid cards will bring new business opportunities to the 7-Eleven. To develop the pre-paid cards by itself, 7-Eleven acquired 50% of the financial service company founded by Cosmos Bank, which earlier had been merged with Chinatrust Commercial Bank. The financial service company will team up with the Bank of Taiwan, International Commercial Bank of China (ICBC) and E.Sun Bank for founding a settlement bank to take charge of all the transactions coming from the use of the 7-Eleven pre-paid cards.
Source; LuisB, September.2004

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RETAIL - KOREA MARKET

Carrefour Plans Massive Investment in Korea
The headquarters of France-based multinational large discount store Carrefour Korea on Thursday announced that it will launch a massive investment in Korea by designating Korea as its ``priority investment site.''
The headquarters in France notified is Korean managers that it has designated Korea as its priority investment site. From next year, it will invest more than 250 billion won each year in order to open its stores in every Korean city of more than 300,000 people.
Every year, among the 30 countries worldwide that have its stores, Carrefour chooses one that has great growth potential and invests more in it than other places by designating it as "a priority investment site". China has been also chosen as a "priority investment site.''
Currently, Carrefour has 27 stores in Korea. Since 2006, it will newly open five or more each year. In the long term, it will expand the number of stores in Seoul from seven to 25 and will continue to launch aggressive investments and open other new stores.
It is true that the headquarters in France has been a bit hesitant about launching a new investment in Korea due to nuclear issues, complicated regulations, and sluggish consumption. However, since consumer sentiment hit rock bottom recently, it is expected to go up again. Carrefour seems to have decided that Korea has high growth potential.
Since its launch in the Korean market in 1996, Carrefour is one of the biggest multinational companies doing business in Korea, which has invested 1.6 trillion won up to now. Last year, it recorded 1.44 trillion won in total sales and is the fourth biggest large discount store in Korea after E-Mart, Home Plus and Lotte Mart.
Source; Carrefour
Write; LuisB, September.2004

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DRUG SECTOR - USA MARKET

Sara Lee’s Barely There Launches Tagfree Bras
Sara Lee Corp has launched a tagless bra range under its Barely There brand, responding, it says, to women’s calls to remove itchy, unsightly bra tags.
The first-ever tagfree Comfortable Curves collection features six different styles with size, fabric content and washing instructions printed directly on the inside of the back of the bra.
Sara Lee also produces tag-free underwear for men, women, and children under the Hanes brand.
“When Hanes launched the Tagless T-shirt for men last year, it only made sense to offer ultimate comfort for the apparel item worn closet to a woman's skin,” said Michele Termotto, Barely There brand manager.
“Women said they want a tagfree bra; now it's a reality.”
Priced at less than $30 and offered in a wide range of sizes, the Barely There Tagfree Comfortable Curves collection will be sold at better department stores nationwide.
Source; Sara Lee, September.2004

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FOCUS

LUXURY FASHION SECTOR - CHINA MARKET

LVMH finds rising market for luxury goods in China
A steady appetite for luxury goods by China's growing middle class may eventually propel the country ahead of Japan as the third-largest retail market for LVMH Moët Hennessy Louis Vuitton, the company's chief executive said Wednesday.

"China is a market that is growing rapidly, although it is still small in terms of sales per square meter," the LVMH chief, Bernard Arnault, said at a meeting in Paris with analysts and journalists. "But if growth continues at the present rate, there is every like lihood that China will overtake Japan within a generation."

Japan represented about 15 percent of group sales worldwide in the six months ended June 30, behind Europe at 36 percent and the United States, at 27 percent.

Japan is the luxury conglomerate's largest market for fashion and leather goods like Louis Vuitton and Fendi handbags, representing 32 percent of that division's E2 billion, or $2.45 billion, in sales during the first half.

Arnault said that mainland China was already the company's fourth-largest retail market, although he declined to provide sales figures. Combined with Hong Kong, the two markets are already the third-largest, he said, surpassing Japan.

Mainland tourists have flooded into Hong Kong since China's government lifted restrictions on individual travel to the city. More than five million Chinese tourists visited Hong Kong - a city of 6.8 million - in the first half of this year, according to Hong Kong's tourist board.

Arnault said LVMH's flagship store in Hong Kong's Central district was one of the main attractions for Chinese tourists visiting the city. He added that while Japanese tourists had long been LVMH's main customers in the countries that border China, today these shoppers are increasingly Chinese.

Arnault's remarks came as the company, whose stable of brands includes Christian Dior fashions, Veuve Clicquot Champagne and TAG Heuer watches, reported a 49 percent jump in profit to E396 million in the first half on sales of E5.7 billion. The company attributed the gains to a resurgence in tourism.
Source; International Herald Tribune, September 2004
Write: by Nicola Clark IHT

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