J Crew’s sales have fallen for four straight years and the privately-held company is $1.7 billion in debt. But the retailer’s Madewell brand has been a growth machine.
On Thursday, J Crew said it’s exploring spinning off the brand as separate public company. An IPO for Madwell could come as early as the back half of 2019.
Madewell, which was introduced in 2006 as a women’s denim brand, has more than doubled its sales over the past four years to $529 million. Madewell’s total sales grew 26% last year, while J Crew’s sales fell 3.7%.
The brand has also launched a men’s line and recently named its first CEO. Madewell runs close to 130 stores in the United States.
J Crew could use the funds generated from a Madewell IPO to help pay down its debt.
“We believe a potential IPO of Madewell, which had another record year of performance in 2018, could unlock significant value,” said Michael Nicholson, J Crew’s interim CEO. J Crew has been without a permanent chief executive since November.
If Madewell goes public, it would be the third major retail brand spinoff in recent years.
VF Corp (VFC) announced plans last year to split its Wrangler and Lee jeans’ brands into a separate public company. Gap (GPS) is planning an IPO for Old Navy next year.
Wall Street finished virtually unchanged on Thursday.
The Dow fell 15 points, while the S&P 500 closed up 0.11 points. The Nasdaq dipped 0.2%.
Health care stocks, however, stumbled. UnitedHealth (UNH) fell 4%, making it the biggest loser on the Dow and the S&P 500. Anthem (ANTH), Centene (CNC) and HCA Healthcare (HCA) also dropped
Weight Watchers (WW), now known as WW, tumbled 10% after JPMorgan published a bearish research report warning of a drop in subscribers.
Bed Bath & Beyond (BBBY) slumped 9% following its first annual loss in the retailer’s nearly 27 years as a public company.
Yeti (YETI), which makes coolers and insulated mugs, is having a big day. The stock is up 4% today after a bullish analyst report, our Paul R. La Monica points out:
Shares are up more than 100% for the year:
Google’s vice president and diversity chief Danielle Brown announced Thursday she’s departing the company less than two years after she was hired.
Brown will join online payments startup called Gusto. Previously, she worked at Intel for nearly 8 years.
Her departure, announced in a tweet and LinkedIn post, comes one week after Google release its latest diversity report. It revealed an improved retention of female, Black and Latinx employees. It also showed its proportion of women leadership hires decreased – an area it said it will prioritize in 2019.
Brown’s tenure coincided with a tumultuous time for the company’s workforce, including a recent staged walkout over how Google handled severance packages for executives accused of sexual harassment.
Amazon (AMZN) CEO Jeff Bezos released his annual letter to shareholders and had some choice words for his competitors – without actually naming them.
Bezos wrote that rivals should match his company’s $15 per hour minimum wage.
Dan Bartlett, Walmart’s executive vice president of corporate affairs, took notice of Bezos’ demand and responded on Twitter:
Walmart’s (WMT) entry level pay at its stores is $11 per hour, but has recently changed its bonus program so workers can earn extra cash.
US stocks reversed course and headed south in early afternoon trading.
Markets were led lower by weakness in health care stocks. Cigna (CI), Centene (CNC) and UnitedHealth (UNH) all fell by 2%.
US oil prices dropped 1.6% to around $63.50 a barrel, cooling off from a recent hot streak. Oil came under pressure after OPEC sources told Reuters that the cartel could raise output if shrinking Venezuela and Iranian supply keeps prices rallying.
Weight Watchers (WTW), now known as WW, tumbled 12% after JPMorgan slashed its price target to $12 due to concerns about shrinking subscribers.
Bed Bath and Beyond (BBBY) shares are down 9% Thursday after the retailer reported its earnings after the bell yesterday.
The company posted a loss $132.7 million for the fiscal year. This is Bed, Bath and Beyond’s first annual loss in the nearly 27 years it has been public.
Bed Bath and Beyond is also under pressure from activist investors. The company is reviewing its corporate governance structure and nominating a new lead director to its board.
Billionaire investor Carl Icahn’s wish of getting Caesars Entertainment (CZR) to put itself up for sale is reportedly coming closer to reality.
The New York Post reports that the resort company “plans to announce within days” that it’s for sale. A potential suitor includes Tilman Fertitta, the billionaire owner of the Houston Rockets, a restaurateur and owner of Golden Nugget Casino.
Icahn has slowly been increasing his stake in Caesars and has revamped its board. He’s previously said he thinks a sale is the “best path forward.”
Caesars shares are up nearly 3% in early trading. The stock is up 37% for the year.
US stocks opened marginally higher on Thursday, as investors were gearing up for the first quarter earnings season to get under way.
In individual stocks, Bed Bath & Beyond (BBBY), which reported results after Wednesday’s market close, was down nearly 11% in early trading.
Elsewhere, ride-sharing app Lyft (LYFT) will remain in focus, as investors are awaiting the S-1 filing of its competitor Uber.
Earlier, US jobless claims dropped below 200,000 for the first time in more than 49 years, stressing the robustness of the US labor market in the face of global economic growth worries.
Oprah Winfrey’s magic touch is no longer helping Weight Watchers. Shares of the company, now known as WW (WTW), plummeted 10% in early trading Thursday after J.P. Morgan analyst Christina Brathwaite cut her price target from $14 a share to $12. That’s more than 35% below the stock’s current price.
Brathwaite noted in a report that daily active users – as tracked by analytics company SimliarWeb – for the Weight Watchers web site plunged in the first quarter. As such, Brathwaite now thinks WW subscribers fell 18% to about 2.5 million this year, a drop “which would put significant pressure” on the company’s sales.
WW recently launched a new “It Works” ad campaign that features Oprah, who owns 8% of the company. Brathwaite said this could help recruit new members. But she is still worried about falling profits and what that may mean for the company’s sizable debt load.
The stock has lost more than half its value so far in 2019.
US jobless claims dropped to their lowest level since October 1969 last week, the Labor Department reported. Only 196,000 people filed for unemployment benefits in the week ended April 6. The four-week average was 207,000.
The data stressed the strength of the US labor market in the face of worries about economic slowdown.
US stock futures were mostly unchanged Thursday, pointing at a flat to slightly higher open. The dollar, measured by the ICE US Dollar Index, was up 0.2% at 97.108.
In other economic data, the producer price index for March rose 0.6% on the month and 2.2% year-over-year, beating expectations.
Rite Aid’s (RAD) board has approved a reverse stock split at a ratio of 1-for-20 to keep the struggling company from being delisted on the New York Stock Exchange.
The split was approved at a March 21 meeting and stock will begin trading on a split-adjusted bases on the NYSE on April 22.
The stock is down 10%, hitting a ten-year low.
Tesla (TSLA) and its partner Panasonic (PCRFY) have reportedly halted their plans to build the world’s largest electronic vehicle battery plant.
The stoppage is because of financial problems, according to the Nikkei Asian Review.
Panasonic is one of the world’s biggest producers for the batteries that power Tesla’s green fleet. “These companies are shifting their strategy reflects the EV industry’s thin profits,” Nikkei said.
The report has sent Tesla’s shares down more than 4% in premarket trading.
Uber is expected to file paperwork as soon as Thursday in what is likely to be one of the biggest public offerings ever for a technology company.
The IPO caps off Uber’s rapid and very public effort to overhaul its internal culture and move past a long list of scandals that upended the company.
Uber is still facing problems: The company lost $1.8 billion in 2018, an unprecedented sum for a company about to go public.
Lyft (LYFT), its chief US rival, gained market share amid Uber’s stumbles.
But Lyft shares dropped almost 11% on Wednesday following media reports about the Uber IPO and are now trading more than 16% below their IPO price.
Investors are about to learn a lot more about Disney’s (DIS) new streaming product.
The entertainment giant is expected to show off its Disney+ streaming service during its investors day on Thursday.
It’s Disney’s answer to the challenge posed by Netflix (NFLX) as well as tech giants like Amazon (AMZN) and Google (GOOGL).
Buying Fox (FOX) will help Disney meet the threat. The deal strengthened what was already the entertainment industry’s most enviable array of brands, with Fox’s National Geographic among the announced Disney+ elements.
The European Union has granted Britain a six-month delay to Brexit with an option to leave earlier if the UK parliament can agree an exit deal.
The British pound was flat on Thursday, as the news of the delay did not come as a major surprise.
Businesses and investors will be relieved that the United Kingdom has, for now, avoided crashing out of the European Union without a deal. But the delay will prolong the uncertainty that has already damaged the UK economy.
🇺🇸 US stock futures are slightly up.
🇪🇺European markets opened mixed.
🌏Asia had a downbeat trading session.
Wednesday’s US close: The Dow Jones industrial average closed flat. The S&P 500 added 0.4% and the Nasdaq gained 0.7%. Markets largely shrugged off minutes from last month’s Federal Reserve meeting.
