Retail news from around the globe
Amazon ruled liable for third-party products
A US federal appeals court has ruled against Amazon, holding that the online giant can be held responsible for products from third-party vendors that are sold through its website.
The ruling from the 3rd US Circuit Court of Appeals in Philadelphia reverses numerous other court decisions, including two federal appeals courts, and could expose Amazon to lawsuits from customers who buy defective merchandise.
Amazon earned about US$11 billion ($15.7 billion) in revenue from services it provided to third-party sellers for the quarter ended in March. About half of the items sold on Amazon are from third-party companies, database firm Statista told Reuters.
In the US, liability for defective products is generally governed by state law. This decision is based on the laws of Pennsylvania, and is based on a lawsuit in which a customer in that state sued Amazon over an apparently defective retractable dog leash, which recoiled and struck her in the face, blinding her in one eye.
JD Sports defies retail gloom
JD Sports, Britain’s biggest sportswear retailer, has again outpaced its rivals, predicting that its full-year profit would meet expectations on strong sales from new stores and growing demand for gym wear by trendy young people.
The owner of Footpatrol and Cloggs runs more than 2400 stores that sell brands including Nike, Puma and Adidas. For the full year, it has tipped an annual headline pretax profit at least equal to the current consensus market expectations of £404.3 million ($723.5 million).
The company has targeted millennials and Generation Z consumers who are driving the trend for athleisure, where gym clothes have become acceptable at work, school and on social occasions.
It has also invested heavily in international expansion, opening 29 new stores in the period to June 29, mainly in Europe, Asia-Pacific and Australia.
E-commerce foray hurts Walmart
Supermarket giant Walmart’s effort to compete with Amazon by ramping up its e-commerce business through acquisition and investment is dragging down its profitability and creating tensions at the top.
The e-commerce division, which is headed by Marc Lore who came to the company via its Jet purchase last year, is set to record a roughly US$1 billion loss in revenue on sales of between US$21 billion and US$22 billion, according to a Vox report, which has been widely cited in US media.
Vox reports that the losses and the thrust into digital are creating tensions in Walmart’s senior management. Greg Foran, who runs the US bricks-and-mortar stores, is reported to want the retailer to focus on its winning low-prices strategy, rather than spending on digital expansion.
Walmart expects the e-commerce losses to increase for the time being.
Sainsbury’s sales fall again
As Sainsbury’s sales fell for a third straight quarter, the UK supermarket warned investors against expecting an upturn any time soon with Brexit looming. Like-for-like sales, excluding fuel, fell 1.6 per cent in the 16 weeks to June 29.
As demand for clothes and general merchandise has cooled, Sainsbury’s is cutting prices on daily essentials while investing in stores, technology and online services to meet the challenges of a fast-changing industry, where customers are shopping more frequently, demanding more convenience, buying more online and also flocking to discount stores.
Analysts’ profit forecasts for fiscal 2020 stand at £632 million ($1.13 billion), just below the £635 million made in 2018-19.
Tesco CEO fears post-Brexit tariffs
Leaving the European Union without a deal at the end of October would be more difficult than the original March deadline, Tesco CEO Dave Lewis says, particularly if tariffs are introduced.
Lewis told his company’s annual general meeting in June that sourcing fresh food would also be a major issue as Tesco imports about 50 per cent of the fresh food it sells.
“Empty shelves … depends on what ‘no deal’ means,” he said. “If there’s a problem at the border – if there’s a problem with tariffs – then there could be interruption. However if as part of no deal there is no tariff, there is no problem – we could be absolutely fine.”
Retailers, manufacturers and pharmaceutical groups built up stocks of goods and parts in the run-up to Britain’s original March 29 deadline to leave the bloc. But Lewis said that in October there would be much less storage capacity because retailers would already be stockpiling for Christmas.
Steinhoff seeks millions from former executives
Steinhoff International has started legal proceedings in the Cape Town High Court against former chief executive Markus Jooste and ex-finance chief Ben La Grange to recover certain salary and bonus payments they got prior to 2017.
The company is seeking 870 million rand ($88 million) from Jooste and 272 million ($27.6 million) rand from La Grange.
The South African retailer’s CEO, Louis du Preez, declared to South Africa’s parliament in March that Jooste and la Grange, along with six other people, were involved in inflating Steinhoff profits and asset values over several years, forcing the firm to restate years of financials and creating potentially years of financial and reputational damage for the company.