Kraft Heinz’s new CEO inherits challenges left behind by cost-cutting

That strategy at Kraft Heinz — the company 3G formed when it teamed up with Warren Buffett’s Berkshire Hathaway in a $49 billion deal — didn’t work. Kraft Heinz hasn’t done a major transaction since the 2015 merger. While Kraft Heinz later got the contract back, its net sales of salted snacks that year fell 28 percent, according to FactSet. Despite a stronghold in dairy, Kraft Heinz was slow to invest in trends like artisanal cheese, say analysts. He was referring to the breakfast brand Kraft He


That strategy at Kraft Heinz — the company 3G formed when it teamed up with Warren Buffett’s Berkshire Hathaway in a $49 billion deal — didn’t work. Kraft Heinz hasn’t done a major transaction since the 2015 merger. While Kraft Heinz later got the contract back, its net sales of salted snacks that year fell 28 percent, according to FactSet. Despite a stronghold in dairy, Kraft Heinz was slow to invest in trends like artisanal cheese, say analysts. He was referring to the breakfast brand Kraft He
Kraft Heinz’s new CEO inherits challenges left behind by cost-cutting Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-23  Authors: lauren hirsch, olivia michael
Keywords: news, cnbc, companies, inbev, company, kraft, ceo, private, heinz, heinzs, inherits, challenges, patricio, retailers, marketing, 3g, brands, left, costcutting


Kraft Heinz's new CEO inherits challenges left behind by cost-cutting

Brazilian private equity firm 3G Capital built its reputation by scooping up iconic consumer brands, aggressively cutting costs and using those savings to fund acquisitions.

That strategy at Kraft Heinz — the company 3G formed when it teamed up with Warren Buffett’s Berkshire Hathaway in a $49 billion deal — didn’t work. Kraft Heinz hasn’t done a major transaction since the 2015 merger. Its share price is less than half what it was when the deal was announced. Last quarter, the company slashed its dividend by 36 percent and wrote down two of its biggest brands, Kraft and Oscar Mayer, by $15 billion. It also disclosed an investigation by the Securities and Exchange Commission into its accounting and procurement practices.

Now, it needs to rebuild a company that was once emblematic of powerful marketing and iconic brands. The executive they’re putting in charge of those efforts is Miguel Patricio, a 52-year-old native of Portugal, who was named CEO on Monday, effective July 1.

Unlike outgoing CEO Bernardo Hees, a partner at 3G Capital, Patricio has no direct affiliation with the private equity firm. Hees spent his early years running a Brazilian railroad company; Patricio has spent decades in the marketing industry, including two decades at Anheuser-Busch InBev, part of which he spent as chief marketing officer. AB InBev is affiliated with 3G Capital but not owned by the private equity firm.

During his run at AB InBev, Patricio oversaw brands including Budweiser and Stella Artois, boosting sales growth excluding impact from mergers and acquisitions by high single digits. The brands accounted for nearly a third of overall such growth in 2018. In his final year as chief marketing officer, AB InBev was the most awarded brand owner at the Cannes Lions awards for advertising and creative communications.

Still, Hees’ departure raises questions of what went wrong at Kraft Heinz and how Patricio can fix it.

Part of Kraft Heinz’s struggles are due to a failed 2017 bid for Unilever, which threw an unexpected wrench into its M&A strategy. Others are a result of consumers shunning older, bigger food brands for healthier eating. It has also been hurt by the pressure retailers are facing as they react to their own competitive threats.

But many of the issues boil down to how the company was run in recent years. Industry insiders and experts said 3G failed to invest enough in its brands, allowed relationships with retailers to deteriorate and lost crucial employees with in-depth knowledge of the food industry.

Kraft Heinz extracted roughly $1.7 billion in savings over two years. The company helped support those savings by slashing research and development and tightening marketing dollars, analysts say. It also cut 2,500 jobs — roughly 5 percent of its workforce — within a month of the merger. Then, three months later, it slashed another 2,600 jobs.

Partially because of the culture that 3G instilled, none of the business unit heads in place when Kraft and Heinz merged are in the same role, and many have left.

Kraft Heinz clamped down on paying retailers for in-store promotions and shelf space, believing its status as the third largest U.S. food company gave it more bargaining power. In 2017, it lost a vital contract for its Planters peanuts business with Walmart’s Sam’s Club amid a spat over pricing pressure, according to people familiar with the matter. While Kraft Heinz later got the contract back, its net sales of salted snacks that year fell 28 percent, according to FactSet. (A Sam’s Club spokeswoman declined to comment on negotiations with a specific supplier).

“We may have made a mistake in terms of trying to push hard against certain … retailers and finding out that we weren’t as strong as we thought,” Buffett said on CNBC earlier this year.

The company also shifted its focus from pumping out scores of new products that often fall flat for Big Food brands to taking limited “big bets” on new products. It redid its Oscar Mayer facilities at a rapid-fire rate but was plagued with operational issues, analysts said.

Despite a stronghold in dairy, Kraft Heinz was slow to invest in trends like artisanal cheese, say analysts. Meanwhile, companies like artisanal meat brand Columbus Craft Meats tried to capitalize on consumer perception of Kraft Heinz meats as being old and processed, launching a marketing campaign with the hashtag “nobaloney,” a person familiar with Columbus’s strategy said.

“When Heinz acquired Kraft, there was a hope that with a foreign background they would be able to inject some new ideas into the portfolio, but in hindsight the efforts weren’t broad or aggressive enough,” said Wells Fargo analyst John Baumgartner.

“They did have some small successes, like Just Crack an Egg, pulling out artificial ingredients, but overall, the efforts just weren’t impactful enough in aggregate.” He was referring to the breakfast brand Kraft Heinz launched in 2018 that allows consumers to make an egg scramble in under two minutes.

The strategy’s shortcomings were evident in the results of some key brands, which ceded ground to competitors.

For example, Oscar Mayer’s share of the lunch-meat industry fell from 34 percent to 30.5 percent from 2015 to 2018, according to Nielsen data. Rival Hillshire, owned by Tyson Foods, saw its share jump from 7 percent to 9 percent in that period, while private label lunch meat grew from 15 percent to 18 percent.

Buffett and executives at 3G have acknowledged they made mistakes. Appointing Patricio as CEO is taking that acknowledgement one step further.

“My profile will bring a much more consumer-centric [vision],” Patricio told CNBC in an interview Monday. He also stressed that he would focus on improving Kraft Heinz’s speed, sales growth and brand building.


Company: cnbc, Activity: cnbc, Date: 2019-04-23  Authors: lauren hirsch, olivia michael
Keywords: news, cnbc, companies, inbev, company, kraft, ceo, private, heinz, heinzs, inherits, challenges, patricio, retailers, marketing, 3g, brands, left, costcutting


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Kraft Heinz weighs sale of Ore-Ida frozen potato business

Tater Tot maker Ore-Ida is the latest brand Kraft Heinz is considering shedding as it scrambles to pay down debt and restructure its business following a disastrous quarterly report. Kraft Heinz has hired investment bank Evercore Partners to prepare a potential sale of its Ore-Ida brand, people familiar with the situation told CNBC. As shoppers have focused on fresh food, frozen food had developed a reputation as off-trend, but companies like Conagra and Green Giant owner B&G Foods eventually re


Tater Tot maker Ore-Ida is the latest brand Kraft Heinz is considering shedding as it scrambles to pay down debt and restructure its business following a disastrous quarterly report. Kraft Heinz has hired investment bank Evercore Partners to prepare a potential sale of its Ore-Ida brand, people familiar with the situation told CNBC. As shoppers have focused on fresh food, frozen food had developed a reputation as off-trend, but companies like Conagra and Green Giant owner B&G Foods eventually re
Kraft Heinz weighs sale of Ore-Ida frozen potato business Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-23  Authors: lauren hirsch, daniel acker, bloomberg, getty images
Keywords: news, cnbc, companies, sale, potential, giant, billion, kraft, weighs, heinz, pay, business, frozen, brand, brands, oreida, potato, food


Kraft Heinz weighs sale of Ore-Ida frozen potato business

Tater Tot maker Ore-Ida is the latest brand Kraft Heinz is considering shedding as it scrambles to pay down debt and restructure its business following a disastrous quarterly report.

Kraft Heinz has hired investment bank Evercore Partners to prepare a potential sale of its Ore-Ida brand, people familiar with the situation told CNBC. The brand could fetch roughly $1.5 billion to $2 billion, the people said, cautioning the process is still early and valuation is subject to buyer enthusiasm.

While Kraft Heinz’s focus is on the frozen potato maker, it would also consider a sale of its entire frozen food business, which includes brands like Smart Ones and Devour, should there be significant buyer interest, the people said.

Likely buyers could include Conagra, frozen potato company Lamb Weston, as well as private equity firms, said the people.

The people requested anonymity because the information is confidential. A spokesperson for Kraft Heinz declined to comment.

The potential divestitures come as Kraft Heinz is in the midst of its most significant executive shakeup since its formation. On Monday, the consumer giant announced that CEO Bernardo Hees will step down on June 30.

Hees, 49, will be replaced by Miguel Patricio, who worked for two decades at beer giant Anheuser-Busch InBev, including as chief marketing officer from 2012 through last year.

The incoming CEO said his focus will be on improving Kraft Heinz’s speed, organic growth, brand building and making the company more consumer focused. He would not comment on potential mergers or divestitures.

But outgoing CEO Hees had said the company is weighing divestitures to pay down debt. Kraft Heinz needs to slim its portfolio in order to bring leverage down to three times EBITDA, rather than the four times at which analysts say it is currently pegged. Analysts note it has $3 billion of debt coming due in 2020, which may have to be refinanced.

Top priority for Kraft Heinz is getting rid of brands it believes are particularly vulnerable to the private label goods now being pushed by retailers. While consumers may be willing to pay a bit more for products for which they have strong brand affinity, like Heinz ketchup, the same cannot be said for other products, like frozen potatoes.

As a whole, the frozen food industry has undergone a transformation in the past several years. As shoppers have focused on fresh food, frozen food had developed a reputation as off-trend, but companies like Conagra and Green Giant owner B&G Foods eventually realized they could revitalize frozen food brands. They have focused on ease of use and the nutritional benefits of freezing fresh food. Kraft Heinz has had its own success with Devour frozen meals and sandwiches.

Maxwell House coffeeand Breakstone’s cottage cheese and sour cream are among the other brands that Kraft Heinz is evaluating, CNBC has reported.

Kraft Heinz shares were up less than 1 percent in after-hours trading. The stock, which has a market value of more than $40 billion, has fallen 42% over the past year.


Company: cnbc, Activity: cnbc, Date: 2019-04-23  Authors: lauren hirsch, daniel acker, bloomberg, getty images
Keywords: news, cnbc, companies, sale, potential, giant, billion, kraft, weighs, heinz, pay, business, frozen, brand, brands, oreida, potato, food


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Kraft Heinz’s CEO is the latest victim of Big Food’s exodus of leaders

Kraft Heinz’s Bernardo Hees is the latest CEO to announce his exit from a food company, as the industry goes through unprecedented turnover and challenges. When Morrison left last May, she capped a streak of 15 CEO departures since the beginning of 2016. The longest-tenured food company CEO is Joe Sanderson, the third-generation leader of poultry company Sanderson Farms. Irwin Simon, the founder and chief of Hain Celestial Group, had been the second-longest tenured CEO when he left in June. That


Kraft Heinz’s Bernardo Hees is the latest CEO to announce his exit from a food company, as the industry goes through unprecedented turnover and challenges. When Morrison left last May, she capped a streak of 15 CEO departures since the beginning of 2016. The longest-tenured food company CEO is Joe Sanderson, the third-generation leader of poultry company Sanderson Farms. Irwin Simon, the founder and chief of Hain Celestial Group, had been the second-longest tenured CEO when he left in June. That
Kraft Heinz’s CEO is the latest victim of Big Food’s exodus of leaders Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-22  Authors: lauren hirsch, david a grogan
Keywords: news, cnbc, companies, latest, foods, big, shift, exodus, store, food, heinzs, sanderson, kraft, company, left, growth, ceo, morrison, leaders, victim, simon


Kraft Heinz's CEO is the latest victim of Big Food’s exodus of leaders

Kraft Heinz’s Bernardo Hees is the latest CEO to announce his exit from a food company, as the industry goes through unprecedented turnover and challenges.

The parade of departures includes Kellogg’s John Bryant, Mondelez International’s Irene Rosenfeld and Campbell Soup’s Denise Morrison. When Morrison left last May, she capped a streak of 15 CEO departures since the beginning of 2016.

The longest-tenured food company CEO is Joe Sanderson, the third-generation leader of poultry company Sanderson Farms.

Irwin Simon, the founder and chief of Hain Celestial Group, had been the second-longest tenured CEO when he left in June. Simon, who held the top job at the natural foods company since 1993, stepped down as the company came under activist pressure.

Now, Sean Connolly, Conagra’s CEO, holds that title. He joined the company in 2015.

The CEO merry-go-round underscores the challenges iconic food brands are facing. These grocery store staples are struggling to create growth in the face of upstart rivals, rapidly changing consumer trends and their own slower-paced cultures. If they want to buy growth, there are limited and expensive options.

These executives are also victims of their predecessors’ successes. The scale that once gave CEOs power at the grocery store and yielded cost savings now makes it harder to casually shift away from legacy businesses. Campbell could cut down on soup production and Kellogg its cereal business, but both would still have the fixed costs associated with these businesses.

It is, therefore, a challenge for a CEO to gather support from a company to shift its focus from namesake moneymakers to bet on growth. That’s even in the face of packaged food company sales slowing last year to 1.2%, according to Euromonitor.


Company: cnbc, Activity: cnbc, Date: 2019-04-22  Authors: lauren hirsch, david a grogan
Keywords: news, cnbc, companies, latest, foods, big, shift, exodus, store, food, heinzs, sanderson, kraft, company, left, growth, ceo, morrison, leaders, victim, simon


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Adidas may have underestimated Tiger, this private equity firm may win

A few years ago, Adidas was struggling to find much interest in its TaylorMade golf clubs. After Tiger Woods’ historic Masters win on Sunday, it may want them back. At the time TaylorMade signed its deal with Woods, his comeback was very much in doubt. The golf champion used TaylorMade golf clubs for his victory match. Pre-sale special edition replica TaylorMade Tiger Woods irons are now available for $2,000, a roughly 40 percent markup from standard irons.


A few years ago, Adidas was struggling to find much interest in its TaylorMade golf clubs. After Tiger Woods’ historic Masters win on Sunday, it may want them back. At the time TaylorMade signed its deal with Woods, his comeback was very much in doubt. The golf champion used TaylorMade golf clubs for his victory match. Pre-sale special edition replica TaylorMade Tiger Woods irons are now available for $2,000, a roughly 40 percent markup from standard irons.
Adidas may have underestimated Tiger, this private equity firm may win Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-15  Authors: lauren hirsch, david cannon, getty images sport, getty images
Keywords: news, cnbc, companies, sale, taylormade, golf, woods, adidas, tiger, win, equipment, underestimated, signed, firm, brand, equity, private


Adidas may have underestimated Tiger, this private equity firm may win

A few years ago, Adidas was struggling to find much interest in its TaylorMade golf clubs. After Tiger Woods’ historic Masters win on Sunday, it may want them back.

The sportswear giant put the unit up for sale in 2016 to focus on its shoes and clothing, as the golf industry was under pressure.

Woods had lost his luster and and millenials were seeking pastimes that were less time-intensive and more accessible. The pain was felt from equipment makers to retailers like Golfsmith, which that year filed for bankruptcy.

It took Adidas about a year to find a buyer. In the interim, multiple private equity firms passed, balking at the brand’s finances and expressing broader concerns about golf.

It finally found a buyer in May 2017: Private equity firm KPS Capital Partners, which bought the brand, along with Adams Golf and Ashworth, for $425 million.

The sale was a negative drag on Adidas’ earnings and a far cry from the $1.4 billion it paid in 1997 to buy TaylorMade’s then owner, French equipment maker Salomon S.A.

Adidas may have dumped the brand too soon. It announced the sale several months after TaylorMade had signed a deal with Woods, for an undisclosed amount.

The partnership between Woods and TaylorMade came as Nike — the brand long most associated with Woods —shuttered its own golf equipment division after facing similar industry pressure.

At the time TaylorMade signed its deal with Woods, his comeback was very much in doubt. But on Sunday, that doubt was eradicated.

Woods made his historic comeback at the 2019 Masters golf tournament, marking his 15th major win and unleashing an immediate surge in renewed Tiger interest. The golf champion used TaylorMade golf clubs for his victory match.

Pre-sale special edition replica TaylorMade Tiger Woods irons are now available for $2,000, a roughly 40 percent markup from standard irons.

KPS — which funded its purchase of TaylorMade half in cash and half in secured notes and contingent considerations —also has other investments that include engineering equipment company, International Equipment Solutions, and running gear company, DexKo Global.

TaylorMade declined to comment, while KPS and Adidas did not immediately respond to CNBC’s request for comment after work hours.


Company: cnbc, Activity: cnbc, Date: 2019-04-15  Authors: lauren hirsch, david cannon, getty images sport, getty images
Keywords: news, cnbc, companies, sale, taylormade, golf, woods, adidas, tiger, win, equipment, underestimated, signed, firm, brand, equity, private


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Campbell nears deal to sell Bolthouse Farms to its former executive

Campbell Soup is nearing a deal to sell Bolthouse Farms to its former CEO for roughly half of what it paid for the carrot and juice company seven years ago, a person familiar tells CNBC. The soup company is in advanced talks to sell Bolthouse Farms to an investor group led by former CEO, Jeffrey Dunn, for roughly $500 million, the person said. Campbell paid $1.55 billion for Bolthouse Farms in 2012, when the brand had more than $100 million in earnings before interest, taxes, depreciation and am


Campbell Soup is nearing a deal to sell Bolthouse Farms to its former CEO for roughly half of what it paid for the carrot and juice company seven years ago, a person familiar tells CNBC. The soup company is in advanced talks to sell Bolthouse Farms to an investor group led by former CEO, Jeffrey Dunn, for roughly $500 million, the person said. Campbell paid $1.55 billion for Bolthouse Farms in 2012, when the brand had more than $100 million in earnings before interest, taxes, depreciation and am
Campbell nears deal to sell Bolthouse Farms to its former executive Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-11  Authors: lauren hirsch, andrew harrer, bloomberg, getty images
Keywords: news, cnbc, companies, farms, soup, earlier, food, person, executive, nears, business, million, bolthouse, campbell, company, sell, deal, fresh


Campbell nears deal to sell Bolthouse Farms to its former executive

Campbell Soup is nearing a deal to sell Bolthouse Farms to its former CEO for roughly half of what it paid for the carrot and juice company seven years ago, a person familiar tells CNBC.

The soup company is in advanced talks to sell Bolthouse Farms to an investor group led by former CEO, Jeffrey Dunn, for roughly $500 million, the person said. The deal is pending board approval, which could come as soon as this week, the person added.

Campbell paid $1.55 billion for Bolthouse Farms in 2012, when the brand had more than $100 million in earnings before interest, taxes, depreciation and amortization. It is now losing money, CNBC has reported.

Should the deal be consummated, it would mark the end to a strategy heralded by former CEO Denise Morrison. Morrison, who resigned abruptly last year, had pushed the soup company to take cash flow from its profitable but slowing soup business and invest it into more on-trend areas of the grocery store like fresh food.

The fresh food industry, though, proved to be a poor fit for Campbell. The industry requires expertise in agriculture that Campbell lacked. It is difficult as a public company to manage a fresh food business, which is subject to the whims of the weather, contrary to the predictability public investors demand. An ill-timed California drought further exacerbated Campbell’s challenges with Bolthouse.

Campbell earlier this year sold its Garden Fresh Gourmet salsa business to an affiliate of hummus and dip company Fountain of Health USA for an undisclosed amount. It bought the brand for $231 million in 2015.

Campbell is selling its fresh food business, along with its international snack brands, to help pay down debt. The company more than tripled its debt load to help finance its $6.1 billion acquisition of snack business Snyder’s-Lance earlier this year.

The Wall Street Journal first reported earlier Thursday the advanced talks. The person requested anonymity because the information is confidential. A spokesperson for Campbell said the company does not comment on rumor or speculation. Dunn didn’t immediately respond to a request for comment.

WATCH: How Campbell Soup fell off its perch


Company: cnbc, Activity: cnbc, Date: 2019-04-11  Authors: lauren hirsch, andrew harrer, bloomberg, getty images
Keywords: news, cnbc, companies, farms, soup, earlier, food, person, executive, nears, business, million, bolthouse, campbell, company, sell, deal, fresh


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Mondelez efforts to buy Arnott’s cookie brands are in doubt as talks with Campbell stalemate

Mondelez and Campbell’s Soup are locked in a stalemate over the sale of the soup company’s Arnott’s cookie brands, people familiar with the matter tell CNBC. The Oreo-owner submitted a final offer a few weeks ago for Campbell’s international business, including Arnott’s, that was below Campbell’s roughly $3-billion price expectation, the people said. There still remains multiple buyers for Arnott’s, including a consortium backed by private equity firm KKR, one of the people said. It may be force


Mondelez and Campbell’s Soup are locked in a stalemate over the sale of the soup company’s Arnott’s cookie brands, people familiar with the matter tell CNBC. The Oreo-owner submitted a final offer a few weeks ago for Campbell’s international business, including Arnott’s, that was below Campbell’s roughly $3-billion price expectation, the people said. There still remains multiple buyers for Arnott’s, including a consortium backed by private equity firm KKR, one of the people said. It may be force
Mondelez efforts to buy Arnott’s cookie brands are in doubt as talks with Campbell stalemate Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-06  Authors: lauren hirsch, jeff greenberg, universal images group, getty images
Keywords: news, cnbc, companies, efforts, campbells, arnotts, buy, price, mondelez, buyers, stalemate, talks, campbell, brands, sale, company, doubt, soup, cookie, business


Mondelez efforts to buy Arnott's cookie brands are in doubt as talks with Campbell stalemate

Mondelez and Campbell’s Soup are locked in a stalemate over the sale of the soup company’s Arnott’s cookie brands, people familiar with the matter tell CNBC.

The Oreo-owner submitted a final offer a few weeks ago for Campbell’s international business, including Arnott’s, that was below Campbell’s roughly $3-billion price expectation, the people said. The two are currently at an impasse.

It is common for there to be last minute negotiations over price in deal talks, the people cautioned, and it is therefore possible Mondelez and Campbell find a resolution.

There still remains multiple buyers for Arnott’s, including a consortium backed by private equity firm KKR, one of the people said. It could not be immediately determined what price these other buyers offered, but private equity firms typically pay less for acquisitions than corporate buyers that can take advantage of synergies.

The stalemate puts Campbell in a potentially precarious position. It may be forced to decide between selling its Arnott’s business below its desired price, or abandoning the sale process altogether. Campbell put the unit and its fresh food brands up for sale last year, to help pay down debt left in the wake its $6.2-billion purchase of pretzel and chip company Snyder’s-Lance. As part of those efforts, it has also been selling its Bolthouse Farms business. That deal has likewise not yet reached a conclusion.

The impasse also throws into question an argument put forward by activist fund Third Point, which previously stated the company is better off split than together. Campbell in November reached a truce with the fund that included board turnover, after Third Point ran a campaign that lambasted the soup company for a string of quarterly misses.

In December, Campbell named new CEO Mark Clouse, who spent 20 years at Mondelez and its predecessor Kraft Foods.


Company: cnbc, Activity: cnbc, Date: 2019-04-06  Authors: lauren hirsch, jeff greenberg, universal images group, getty images
Keywords: news, cnbc, companies, efforts, campbells, arnotts, buy, price, mondelez, buyers, stalemate, talks, campbell, brands, sale, company, doubt, soup, cookie, business


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Hit by rent hike at New York flagship, Barneys New York gets lifeline with $50 million in credit

Luxury retailer Barneys New York just got a lifeline. Barneys has been backed by Perry Capital, the fund run by Richard Perry and Ronald Burkle, since 2012. Chinese shoppers are expected to comprise 46 percent of the global luxury market by 2025, according to consulting firm Bain. By 2025, online shopping will make up a quarter of the luxury market, up from 10 percent today, according to Bain. Ralph Lauren closed its Fifth Avenue store in 2017, while Hudson’s Bay Company’s Lord & Taylor closed i


Luxury retailer Barneys New York just got a lifeline. Barneys has been backed by Perry Capital, the fund run by Richard Perry and Ronald Burkle, since 2012. Chinese shoppers are expected to comprise 46 percent of the global luxury market by 2025, according to consulting firm Bain. By 2025, online shopping will make up a quarter of the luxury market, up from 10 percent today, according to Bain. Ralph Lauren closed its Fifth Avenue store in 2017, while Hudson’s Bay Company’s Lord & Taylor closed i
Hit by rent hike at New York flagship, Barneys New York gets lifeline with $50 million in credit Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-04  Authors: lauren hirsch, jin lee, bloomberg, getty images
Keywords: news, cnbc, companies, hike, york, rent, luxury, gets, credit, flagship, avenue, capital, hit, barneys, store, wells, market, million, retailer, perry, lifeline


Hit by rent hike at New York flagship, Barneys New York gets lifeline with $50 million in credit

Luxury retailer Barneys New York just got a lifeline.

The retailer has extended the term of its credit line by $50 million, giving it money for growth, as well as needed liquidity to weather industry challenges and a rent hike at its famed New York flagship, people familiar with the talks told CNBC.

Rent at Barneys’ flagship on Madison Avenue jumped from roughly $16 million to approximately $30 million in January, nearly wiping out its earnings before interest, tax, depreciation and amortization, the people said. Barneys unsuccessfully tried to halt the rent hike. The company says it still has positive EBITDA and projects positive EBITDA for the year and beyond.

The retailer has roughly $850 million in sales, a person familiar said.

Despite reports earlier this week that Barneys is looking to downsize its Madison Avenue store, the company has no such plans, a spokesperson for Barneys said.

The financing, which comes as an extension of the company’s current credit agreement with Wells Fargo adds in new lender, TPG Sixth Street Partners. TSSP, which was established as a strategic partnership with private equity firm TPG Capital, is a long-term oriented fund with private and public companies as clients.

A Barney’s spokesperson said in a statement, “Barneys New York has a long-standing business relationship with Wells Fargo. Our most recent agreement is an extension of our current credit agreement that we have had in place with Wells Fargo since 2012. The additional capital will support our business growth plans with new store openings and renovations, innovative in-store and digital experiences, and international growth initiatives.”

The company recently announced it will begin to sell high-end cannabis items in its stores.

Barneys has been backed by Perry Capital, the fund run by Richard Perry and Ronald Burkle, since 2012. That deal, structured as a debt-for-equity swap, helped the tony retailer prevent bankruptcy. But turmoil continued to rattle the retailer as Perry closed his fund four years later, citing industry and market headwinds.

Perry Capital has since largely existed as a “zombie fund,” in which it has owned Barneys but has not put more money into it. After its deal with Wells Fargo and TSSP, Perry Capital will continue to own the retailer, the people said.

Barneys, like many of its peers, is struggling to combat the rise of online shopping and brands that are looking to sell directly to their shoppers rather than go through a third-party stores.

Adding pressure to luxury goods brands, including Coach-owner Tapestry and jeweler Tiffany, is the slowdown they’ve seen as Chinese tourist spending in the U.S. tapers. Chinese shoppers are expected to comprise 46 percent of the global luxury market by 2025, according to consulting firm Bain. This ties the fortunes of the luxury market closely to the economic swings of the Chinese economy.

Online luxury sales, meantime, continue to grow, as premium websites like Farfetch have developed services and technology that can replicate online the high-end shopping experience for which brands like Chanel are known. Shares of London-based Farfetch, which listed on the New York Stock Exchange last year, are up 47 percent this year, giving it a market capitalization of $8 billion.

By 2025, online shopping will make up a quarter of the luxury market, up from 10 percent today, according to Bain.

With that backdrop, the Manhattan luxury retail landscape continues to evolve, as retailers can no longer afford to use the city’s expensive midtown property as a marketing tool. Ralph Lauren closed its Fifth Avenue store in 2017, while Hudson’s Bay Company’s Lord & Taylor closed its Fifth Avenue flagship in January.

Outside of midtown, new openings continue. Saks Fifth Avenue opened a women’s store in Battery Park’s Brookfield Place in 2016, before shuttering roughly two years later. A men’s store is still open. In March, premium shopping area Hudson Yards opened on the far West Side, with high-end Neiman Marcus as its anchor. The same month, the retailer reached a deal with its lenders to extend the maturities of $2.5 billion of its nearly $5 billion debt load.

Barneys dates to 1923, when Barney Pressman opened a men’s discount clothing store on Seventh Avenue and 17th Street. In the 1960s, Barney’s son, Fred, helped transition from a discount store to a luxury retailer. Barneys soon made its imprint on New York luxury fashion, building on its foothold in menswear and introducing designers like Giorgio Armani.

Barneys has more than 10 namesake stores, in New York, California, Chicago, Massachusetts, Las Vegas, Seattle and Pennsylvania. It also has a number of Barneys Warehouse outlet stores and Fred’s restaurants.

In 2017, it named its former chief operating officer, Daniella Vitale, as CEO.

The people requested anonymity because the information is confidential. Wells Fargo and TSSP declined to comment. Perry Capital wasn’t available to comment.


Company: cnbc, Activity: cnbc, Date: 2019-04-04  Authors: lauren hirsch, jin lee, bloomberg, getty images
Keywords: news, cnbc, companies, hike, york, rent, luxury, gets, credit, flagship, avenue, capital, hit, barneys, store, wells, market, million, retailer, perry, lifeline


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Whole Foods will slash prices on hundreds of items starting Wednesday

Whole Foods will slash its prices on hundreds of products, with a focus on produce, such as greens, tomatoes and tropical fruits. Whole Foods will continue to build on its special offers for Prime members, as well as efforts to promote sales online. The grocer is doubling the number of exclusive deals for Prime members, it said on Monday. In April, Amazon will offer Whole Foods customers $10 off a $20 purchase when they try Prime online. New members can try Prime free for 30 days.


Whole Foods will slash its prices on hundreds of products, with a focus on produce, such as greens, tomatoes and tropical fruits. Whole Foods will continue to build on its special offers for Prime members, as well as efforts to promote sales online. The grocer is doubling the number of exclusive deals for Prime members, it said on Monday. In April, Amazon will offer Whole Foods customers $10 off a $20 purchase when they try Prime online. New members can try Prime free for 30 days.
Whole Foods will slash prices on hundreds of items starting Wednesday Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-04-01  Authors: lauren hirsch, patrick t fallon, bloomberg, getty images
Keywords: news, cnbc, companies, items, prime, customers, amazon, twohour, starting, members, prices, foods, hundreds, price, free, slash, try


Whole Foods will slash prices on hundreds of items starting Wednesday

Prime’s ranks surpassed more than 100 million people last year. In addition to free two-day shipping and weekly Whole Foods deals, Amazon’s $119-a-year membership service offers streaming of music and movies and free two-hour delivery in certain ZIP codes.

Prime members now qualify for two-hour delivery at Whole Foods, they can use Alexa to add groceries to their Prime Now cart with their voice and arrange for grocery pick-up within 30 minutes at some locations.

The price cuts planned for Wednesday, however, extend beyond Amazon prime customers. Whole Foods will slash its prices on hundreds of products, with a focus on produce, such as greens, tomatoes and tropical fruits. Customers will save an average of 20 percent on the new reduced-price items.

“Whole Foods Market continues to maintain the high quality standards that we’ve championed for nearly 40 years and, with Amazon, we will lower more prices in the future, building on the positive momentum from previous price investments,” CEO John Mackey said in a statement.

Whole Foods will continue to build on its special offers for Prime members, as well as efforts to promote sales online. The grocer is doubling the number of exclusive deals for Prime members, it said on Monday.

The company also hasn’t given up on trying to recruit more Prime members. In April, Amazon will offer Whole Foods customers $10 off a $20 purchase when they try Prime online. New members can try Prime free for 30 days.

Read the press release below:


Company: cnbc, Activity: cnbc, Date: 2019-04-01  Authors: lauren hirsch, patrick t fallon, bloomberg, getty images
Keywords: news, cnbc, companies, items, prime, customers, amazon, twohour, starting, members, prices, foods, hundreds, price, free, slash, try


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Kellogg nears deal to sell Keebler and Famous Amos business to Nutella owner Ferrero

Ferrero beat out lead contender Hostess Brands for the Kellogg cookie assets, the people said. The owner of Twinkies and Ho-Hos had been looking to acquire the Keebler business through a “Reverse Morris Trust.” Kellogg announced the sale of its cookie brands last year, along with Murray and Mother’s cookies and Stretch Island fruit snacks. Over the past two years, its built up that foothold, buying Ferrara Candy Company for $1 billion and Nestle’s U.S. candy business for $2.8 billion. Its U.S. s


Ferrero beat out lead contender Hostess Brands for the Kellogg cookie assets, the people said. The owner of Twinkies and Ho-Hos had been looking to acquire the Keebler business through a “Reverse Morris Trust.” Kellogg announced the sale of its cookie brands last year, along with Murray and Mother’s cookies and Stretch Island fruit snacks. Over the past two years, its built up that foothold, buying Ferrara Candy Company for $1 billion and Nestle’s U.S. candy business for $2.8 billion. Its U.S. s
Kellogg nears deal to sell Keebler and Famous Amos business to Nutella owner Ferrero Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-03-31  Authors: lauren hirsch, daniel acker, bloomberg, getty images
Keywords: news, cnbc, companies, sell, brands, billion, ferrero, nutella, keebler, nears, kellogg, cookie, company, famous, business, candy, owner, deal


Kellogg nears deal to sell Keebler and Famous Amos business to Nutella owner Ferrero

Kellogg is nearing a deal to sell its Keebler, Famous Amos and fruit snacks businesses to Nutella-owner Ferrero for between $1 billion and $1.5 billion, people familiar with the situation tell CNBC.

An announcement could come as soon as Monday, the people said, requesting anonymity because the information is confidential.

Ferrero beat out lead contender Hostess Brands for the Kellogg cookie assets, the people said. The owner of Twinkies and Ho-Hos had been looking to acquire the Keebler business through a “Reverse Morris Trust.” The Reverse Morris Trust or RMT is an unusual deal structure that allows for a tax-efficient combination of two similarly sized companies.

Kellogg announced the sale of its cookie brands last year, along with Murray and Mother’s cookies and Stretch Island fruit snacks.

The deal is the latest in a string of acquisitions for Ferrero. The company, founded in Italy as a family business in 1946, first entered the U.S. market in 1969 with its Tic Tac mints. Over the past two years, its built up that foothold, buying Ferrara Candy Company for $1 billion and Nestle’s U.S. candy business for $2.8 billion. Its array of brands now include Buttterfinger, SweeTARTS and Crunch.

Its U.S. strategy has been to buy brands that, like Nestle’s candy business and Kellogg’s cookie business, have been neglected within broader food companies’ portfolios. It plans is to pour its resources into reinvesting and modernizing those brands. Already, it has rolled out a “better Butterfinger” with larger peanuts, more cocoa and milk and no hydrogenated oils.

Kellogg, meantime, is paring back its portfolio to focus on brands it can revive,like Pringles, Cheez-Its and Rice Krispies Treats. Shares of Kellogg, which has a market capitalization of $19.72 billion, are down nearly 11 percent over the past year.

“We need to make strategic choices about our business and these brands have had difficulty competing for resources and investments within our portfolio,” Kellogg CEO Steve Cahillane said in a statement when announcing the planned divestitures.

The Corn Flakes-owner acquired Keebler in 2001 for $4.4 billion. At the time, part of its draw was the cookie brand’s “direct-store delivery” platform, through which employees place the company’s own products in stores, rather than ship from warehouses. So-called DSD gives a food company more control over ensuring proper display in grocery and convenience stores. But as in-store sales of products like cookies have fallen, it is less economical. Kellogg has since dropped DSD distribution.

Kellogg and Ferrero did not immediately respond to requests for comment.


Company: cnbc, Activity: cnbc, Date: 2019-03-31  Authors: lauren hirsch, daniel acker, bloomberg, getty images
Keywords: news, cnbc, companies, sell, brands, billion, ferrero, nutella, keebler, nears, kellogg, cookie, company, famous, business, candy, owner, deal


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Bed Bath & Beyond lays off nearly 150 of its 65,000 employees

Bed Bath & Beyond laid off nearly 150 of its 65,000 employees this week, as more shoppers shift their spending online, a person familiar with the situation told CNBC. As part of this week’s reductions, a little less than 50 employees at its namesake Bed Bath & Beyond stores were laid off, the person said. Bed Bath acquired the discount home goods and decor chain in 2003. The investors lambasted Bed Bath for being slow to pivot to online shopping and allowing its costs to drift higher in recent y


Bed Bath & Beyond laid off nearly 150 of its 65,000 employees this week, as more shoppers shift their spending online, a person familiar with the situation told CNBC. As part of this week’s reductions, a little less than 50 employees at its namesake Bed Bath & Beyond stores were laid off, the person said. Bed Bath acquired the discount home goods and decor chain in 2003. The investors lambasted Bed Bath for being slow to pivot to online shopping and allowing its costs to drift higher in recent y
Bed Bath & Beyond lays off nearly 150 of its 65,000 employees Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2019-03-28  Authors: lauren hirsch, andrew harrer, bloomberg, getty images
Keywords: news, cnbc, companies, 150, person, online, weeks, lays, store, bed, companys, bath, 65000, employees, investors, layoffs, nearly


Bed Bath & Beyond lays off nearly 150 of its 65,000 employees

Bed Bath & Beyond laid off nearly 150 of its 65,000 employees this week, as more shoppers shift their spending online, a person familiar with the situation told CNBC.

The retailer, which has had seven consecutive quarters of declining same-store sales, has slowed down the pace of newer store openings and said it is evaluating existing leases. Meantime, it is investing in its online capabilities to help fend off stronger e-commerce rivals like Amazon.

“We were able to reassign many of those impacted by this realignment to other available store and corporate roles, but ultimately we had to reduce our headcount,” a spokesperson for Bed Bath said in a statement. “This decision was a difficult but necessary step, and we are committed to treating all associates across the organization fairly and with respect.”

As part of this week’s reductions, a little less than 50 employees at its namesake Bed Bath & Beyond stores were laid off, the person said. Those employees were largely in the field support team that helps staff its stores. Other employees were reassigned to new positions as the company streamlines the roles and responsibilities of its store managers and support team.

A round of layoffs also hit the company’s Christmas Tree Shops. Bed Bath acquired the discount home goods and decor chain in 2003. Fewer than 100 of its department and store managers were let go, the person said.

The layoffs come days after a trio of investors, Legion Partners Asset Management, Macellum Advisors GP and Ancora Advisors, on Tuesday confirmed their stake in the retailer and demanded a full turnover in the company’s board. The investors lambasted Bed Bath for being slow to pivot to online shopping and allowing its costs to drift higher in recent years.

This week’s layoffs at Bed Bath were planned before the investors’ letter and are part of its ongoing turnaround, the person said.

In a memo to employees Tuesday, which was obtained by CNBC, Bed Bath CEO Steven Temares highlighted the company’s planned and completed initiatives to usher in a turnaround. They include re-platforming the websites, focusing on data-driven personalized marketing, improved merchandise and a new, more efficient operating structure in its buying group.

The person requested anonymity because the information is confidential.


Company: cnbc, Activity: cnbc, Date: 2019-03-28  Authors: lauren hirsch, andrew harrer, bloomberg, getty images
Keywords: news, cnbc, companies, 150, person, online, weeks, lays, store, bed, companys, bath, 65000, employees, investors, layoffs, nearly


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