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U.S. store sales down slightly for Thanksgiving and Black Friday


CHICAGO Sales at U.S. brick-and-mortar stores on Thanksgiving Day and Black Friday were down slightly from last year, but the performance was still seen as strong in a holiday shopping season where discounts spread well beyond the weekend and many shoppers moved to the web.

Online sales were up by double digits, according to data released on Saturday.

Data from analytics firm RetailNext showed overall sales for both days fell 1.5 percent on flat customer traffic, while average spending per shopper dropped 1.4 percent.

Preliminary data from ShopperTrak showed sales at stores totaled about $12.1 billion on Thursday and Friday. The company said it is an “estimated decrease from last year” but did not give the percentage decline due to an internal change in the way it calculates data. Last year, it reported sales of $12.29 billion for the same period.

ShopperTrak will release its final sales numbers on Tuesday. It stuck by its forecast of a 2.4 percent increase for November and December sales.

The data highlights the waning importance of Black Friday, which until a few years ago kicked off the holiday shopping season, as more retailers start discounting earlier in the month and open their doors on Thanksgiving Day.

Both firms said that despite the fall in sales over the two days, the performance must be interpreted as a good one for retail stores because sales held up amid rising competition from online shopping and were better than expected due to pent-up consumer demand and lower gas prices.

Last year Black Friday and Thanksgiving sales were disappointing, forcing retailers to double down on discounts which led to a last-minute shopping frenzy.

“It’s still a good performance for the weekend, given the growth that is being witnessed online as well,” ShopperTrak founder Bill Martin said.

ShopperTrak said Thanksgiving and Black Friday generated $1.8 billion and $10.4 billion in sales respectively. Martin said early promotions in November were a bigger factor hurting Black Friday than store openings on Thanksgiving evening.

Customer traffic remained flat on Thanksgiving Day from a year earlier while traffic fell 1.8 percent on Black Friday, RetailNext said. Their estimate last year showed overall traffic for both days fell 14 percent.

“The numbers are down but it’s still a better sales trend during the two days than we have seen for physical retail through the year and especially after a very difficult summer and October,” Shelley Kohan, vice president of retail consulting at RetailNext, said.

Electronics and toys, which were better promotions did well, both firms said. Apparel sales struggled despite better promotions, Kohan said.

ONLINE SALES STRONG

Separate data underscored the ongoing shift of shopping to online retailers.

Online Thanksgiving and Black Friday sales tracked by Adobe Digital Index were $4.47 billion, up 18 percent from a year earlier and higher than its expectation of $4.35 billion. Adobe tracked 80 percent of all online transactions from the top 100 U.S. retailers.

Brick-and-mortar retailers who have online operations offered better web deals during Thanksgiving and Black Friday and saw higher sales than online only retailers, said Tamara Gaffney, principal research analyst at Adobe Digital Index.

She said discounting levels online averaged 26 and 24 percent on both days respectively, and remained similar to last year’s levels.

(Reporting by Nandita Bose in Chicago; Editing by Nick Zieminski)

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Holiday shopping unlikely to cheer many investors


SAN FRANCISCO The holiday shopping rush that kicked off on Friday is unlikely to bring much cheer to investors looking for a revival in retail stocks.

After months of uninspiring sales growth and recent disappointments from Macy’s (M.N) and Nordstrom (JWN.N), shareholders of apparel sellers have had little to be thankful for and face a challenging holiday season.

Those stocks have reflected a shift by consumers away from discretionary items like designer-label clothes and cosmetics toward smartphones, televisions, home goods and travel, as well as an ongoing migration to online spending.

Early indications suggested this year’s holiday season was off to a slow start. Crowds were thin at U.S. stores and shopping malls in the early hours of Black Friday and on Thanksgiving evening, as shoppers responded to early holiday discounts with caution.

Macy’s stock has plummeted 39 percent this year while Nordstrom is down 22 percent and Tiffany Co (TIF.N) is 23 percent lower – all far worse than the benchmark SP 500 index’s 1-percent gain.

On the other hand, Home Depot (HD.N) has surged 29 percent in 2015 and discount store Dollar Tree (DLTR.O) is up 6 percent.

The SP 500 retail index .SPXRT has risen 27 percent this year, with much of that gain driven by its largest component, Amazon.com (AMZN.O), which continues to undercut brick-and-mortar rivals and has seen its stock more than double this year.

Earnings expectations vary for the holiday shopping quarter; Lowe’s (LOW.N) on average is expected to grow its earnings by 29 percent from a year ago while videogame store GameStop (GME.N) is seen growing earnings by 9 percent, according to Thomson Reuters data.

Gap Inc (GPS.N), which warned this month about weak sales and a strong dollar, is seen posting a 24 percent drop in fourth-quarter earnings.

“You really have to bifurcate between the largely apparel retailers and hard-goods retailers,” said Anthony Chukumba, an analyst at BBT Capital Markets.

His top picks include discount retailer Big Lots (BIG.N) as well as Best Buy (BBY.N), which specializes in the electronic goods consumers are buying these days and also has a compelling valuation at 12 times expected earnings. By comparison, Nordstrom trades around 17 times earnings and Target (TGT.N) has a price-earnings ratio of 15.

Polls going into holiday season have been mixed: A Reuters/Ipsos survey found more people planned to cut holiday spending than to boost it, while Gallup reported Americans plan to spend an average of $830 each on gifts this season, up from $720 a year ago at this time.

U.S. retail sales edged up a meager 0.1 percent last month after staying unchanged in both September and August, according to the Commerce Department.

FBR technology analyst Daniel Ives and his team planned to visit at least 25 Best Buys and other big-box stores over the weekend in New York and other major cities to gauge consumer appetite for Microsoft’s (MSFT.O) Xbox One game console and Apple’s (AAPL.O) smartwatch, launched in April.

“It’s not quantitative, but it gives you anecdotal data points that become part of the mosaic of your thesis about whether to be bullish or bearish on trends, names and products,” Ives said.

Since 2008, early sales estimates following Black Friday and Cyber Monday have had little or no bearing on retail stock performance for the holiday quarter, according to a report by LPL financial.

The short-term performance of stocks in the week after Thanksgiving has also been similarly inconsistent.

For the past three years, Wal-Mart Stores (WMT.N) has lost as much as 3.9 percent or gained as much as 2.6 percent in the week following Black Friday, according to Thomson Reuters data.

By comparison, the SP 500 has been flat to up 0.5 percent in the week following Black Friday for the past three years.

Amazon.com’s (AMZN.O) stock performance in the week following Thanksgiving has been even more erratic. It lost 8 percent last year, lost 2 percent in 2013 and jumped 5 percent in 2012.

(Editing by Bernadette Baum)

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Black Friday crowds thin in subdued start to U.S. holiday shopping


CHICAGO/PITTSBURGH America’s annual Black Friday shopping extravaganza was short on fireworks this year as U.S. retailers’ discounts on electronics, clothing and other holiday gifts failed to draw big crowds to stores and shopping malls.

Major retail stocks including Best Buy and Wal-Mart closed lower while Target, picked out by one analyst for its promotion strategy, saw its shares tick up.

Bargain hunters found relatively little competition compared with previous years. Some had already shopped Thursday evening, reflecting a new normal of U.S. holiday shopping, where stores open up with deals on Thanksgiving itself, rather than waiting until Black Friday.

Retailers “have taken the sense of urgency out for consumers by spreading their promotions throughout the year and what we are seeing is a result of that,” said Jeff Simpson, director of the retail practice at Deloitte. Traffic in stores was light on Friday, while Thursday missed his expectations, he said.

As much as 20 percent of holiday shopping is expected to be done over the Thanksgiving weekend this year, analysts said. But the four days are not considered a strong indicator for the entire season. A slow start last year led to deeper promotions and a shopping rush in the final ten days of December.

Steve Bratspies, chief merchandising officer, Wal-Mart Stores Inc (WMT.N), told Reuters he was not surprised that a store would see thinner crowds on Friday after it kicked off Black Friday deals on Thursday night.

Suntrust Robinson Humphrey analysts were more blunt, calling Thursday a “bust”. “Members of our team who went to the malls first had no problem finding parking or navigating stores,” he wrote in a note.

The Macy’s store at Water Tower Place mall on a rainy Chicago morning saw thin crowds in the early hours of Friday. Later in the morning, more than 1,000 protesters clogged Chicago’s Magnificent Mile shopping corridor.

Nia Darrell, a 23-year-old student, was shopping for coats and handbags at the store with two friends.

“I shopped online yesterday and picked up most of what I wanted,” she said.” I’m out because Black Friday is more like a tradition, but the discounts are similar even online this year.”

While Black Friday may be losing some appeal in the United States, British shoppers have taken to the concept enthusiastically, with reports of large crowds at big stores and malls in the UK.

Shares of Target Corp (TGT.N) gained 0.4 percent, but J.C. Penney (JCP.N) wad down 0.7 percent, and Macy’s and Best Buy lost about 1 percent. Wal-Mart dipped 0.6 percent, while Amazon.com Inc (AMZN.O) was down 0.3 percent.

A broad retail index .DJUSGT was down 0.15 percent in abbreviated trading.

Traffic was better at some retailers. Analysts at Cowen Co said Target stood out with its “innovative promotions,” and teen retailer American Eagle Outfitters Inc (AEO.N) saw more traffic due to store-wide discounts of 40 percent.

ONLINE SALES RISE

Shoppers in the United States spent $822 million online between midnight and 11 am ET, a 15-percent increase from 2014 but lower than the expected growth of 19 percent, according to the Adobe Digital Index, which tracked 180 million visits to over 4,500 U.S. retail sites. On Thanksgiving Day, online sales rose 22 percent from midnight to 5 pm ET.

Many stores around the country were full on Thanksgiving evening. Media showed brawling shoppers at a packed Kentucky mall Thursday, forcing a police officer to break up the fight.

Wal-Mart worker group ‘Our Wal-Mart’ said 1,400 workers planned to fast and protest around the country for better wages, but there was no indication that would hurt sales.

Early Black Friday discounts included $700 off a 60-inch Samsung television at Best Buy (BBY.N) for $799.99, 20 percent off a $75 purchase at Target, and a Kindle for $49.99 on Amazon.com.

The National Retail Federation is expecting holiday sales to rise 3.7 percent, slower than last year’s 4.1 percent growth rate, due to stagnant wages and sluggish job growth.

Jorgette Clark, 27, said her budget would probably be lower this year because her husband works in the energy industry.

“I feel like we scaled back this year. Our husbands work in the oil fields… It’s probably a smaller Christmas this year.”

(Additional reporting by Kylie Gumpert in New York, Writing by Nandita Bose in Chicago; Editing by Nick Zieminski)

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Murdoch: Tribune papers likely to be sold, LA Times split off


Rupert Murdoch, co-chairman of Wall Street Journal publisher News Corp (NWSA.O), on Friday said he had “strong word” that the Tribune Publishing Co’s (TPUB.N) newspaper group will be bought by a Wall Street firm, while the Los Angeles Times will be split off and purchased by local investors including philanthropist Eli Broad.

Murdoch, who is also co-chairman of 21st Century Fox (FOX.A), the entertainment and broadcast group, made his comments on Twitter.

In September Tribune’s board said the Los Angeles Times and San Diego Union-Tribune were “a cornerstone of our company’s portfolio and a key component to our success in the future.”

Murdoch did not say on his verified Twitter account which firm would acquire the newspaper group or the timing of any deal. Murdoch tweeted that he did not bid and had no interest.

A Los Angeles Times representative referred questions to a Tribune Co spokesman, who could not immediately be reached for comment.

A spokeswoman for Broad, who has previously expressed an interest in the Los Angeles Times, declined to comment.

The Tribune Co in September reduced its financial guidance for the year, which it attributed to challenges in Southern California. It replaced the Los Angeles Times publisher around the same time.

Other newspapers published by the Tribune Co include the Baltimore Sun, Hartford Courant, SunSentinel and Orlando Sentinel.

Tribune shares closed at $9.29 on Friday, down nearly 25 percent from $12.24 on Aug. 31.

(Reporting by Dan Levine in San Francisco; Editing by Leslie Adler)

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Wall St ends flat; Disney, retailers dip on sales worries


U.S. stock indexes ended little changed in light trading on Friday, with consumer stocks falling as investors fretted over early reports on the U.S. holiday shopping season and Disney’s subscriber losses weighed on the market.

U.S. stock markets closed three hours earlier following the Thanksgiving holiday on Thursday, with many traders taking the day off.

Trading volume was modest, with 2.79 billion shares changing hands on U.S. exchanges, compared with the 7 billion average for the previous seven sessions.

“We’re going to get today over with and hit the ground running next week,” said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.

Battle expects a busy start to next week as investors prepare for a Dec. 4 non-farm payrolls report that may bring volatility ahead of a widely expected decision by the U.S. Federal Reserve to raise interest rates at its mid-December meeting.

The Dow Jones industrial average .DJI fell 14.9 points, or 0.08 percent, to 17,798.49, the SP 500 .SPX gained 1.24 points, or 0.06 percent, to 2,090.11 and the Nasdaq Composite .IXIC added 11.38 points, or 0.22 percent, to 5,127.53.

Seven out of 10 major SP sectors rose slightly. The energy index .SPNY fell 0.7 percent as oil prices fell. Media and retailer stocks led the consumer discretionary sector’s .SPLRCD 0.4 percent decline.

Crowds were thin at U.S. stores and shopping malls in the early hours of Black Friday and on Thanksgiving evening as shoppers responded to early holiday discounts with caution and as bad weather hurt the turnout.

The top retail percentage decliner was Urban Outfitters (URBN.O) with a 2.7 percent drop, followed by a 2.5 percent drop for Gap Inc (GPS.N). Signet Jewelers (SIG.N), fell 1.7 percent, as did Men’s Wearhouse (MW.N). DSW Inc (DSW.N), Tiffany Co (TIF.N) and Best Buy Co (BBY.N) all fell more than 1 percent.

Big retailers Wal-Mart (WMT.N), J.C. Penney (JCP.N) and online retail giant Amazon.com (AMZN.O) fell less than 1 percent while the Dow Jones U.S. General Retailers index .DJUSGT fell 0.15 percent.

Thanksgiving kicks off the crucial November and December shopping season, during which retailers make between 20 percent and 40 percent of annual sales.

“We believe Thanksgiving shopping was a bust,” analysts at Suntrust Robinson Humphrey said in a research note. “Members of our team who went to the malls first had no problem finding parking or navigating stores.”

Performance Trust’s Battle, however, called Black Friday anecdotes “noise.”

“What matters most is the season as a whole and not just one day when some of that business is being done online,” he said.

Walt Disney (DIS.N), the biggest drag on the Dow and the SP, fell 2.9 percent after it said late on Wednesday its ESPN sports network lost 3 million subscribers in 2015.

Advancing issues outnumbered declining ones on the NYSE by 1,829 to 1,154, for a 1.58-to-1 ratio on the upside; on the Nasdaq, 1,698 issues rose and 983 fell for a 1.73-to-1 ratio favoring advancers.

The SP 500 posted 16 new 52-week highs and 3 new lows; the Nasdaq recorded 82 new highs and 33 new lows.

(Additional reporting by Tanya Agrawal; Editing by Nick Zieminski and Bernadette Baum)

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EU wants to give national privacy regulators more clout in new U.S. data pact


BRUSSELS The European Union wants to enhance the power of the bloc’s national privacy regulators in policing a planned new EU-U.S. data pact after the previous one was struck down by a top EU court on concerns about mass U.S. surveillance.

Brussels and Washington are locked in negotiations to forge a new framework enabling data transfers from Europe to the United States, which are otherwise subject to cumbersome and lengthy legal processes under EU data protection law.

The previous pact, known as Safe Harbour and used by over 4,000 U.S. and European companies, was declared invalid by the European Court of Justice in October because U.S. national security needs trumped the privacy of Europeans’ data.

To address the court’s concerns, particularly that Europeans do not have legal channels to challenge misuse of their data, the Commission is looking for ways to involve European privacy watchdogs more deeply, according to three people familiar with the matter.

The U.S. Federal Trade Commission (FTC) was responsible for monitoring companies’ compliance with the Safe Harbour privacy principles, although it does not deal with complaints from individuals.

A bigger role for European watchdogs would allow citizens to complain directly to their national authorities, the sources said.

A similar mechanism existed in the old Safe Harbour framework for human resources data which are often sensitive.

U.S. companies handling Europeans’ human resources data had to commit to cooperating with European data protection authorities in case of complaint.

“That’s one issue to play around with,” said one of the people on condition of anonymity.

However, there is no agreement yet and differences remain over how the European regulators would cooperate with the FTC to avoid giving the EU extraterritorial powers.

The European Commission and the U.S. Mission to the EU declined comment.

The Safe Harbour system allowed companies to self-certify that they complied with EU privacy law when transferring EU citizens’ personal data to countries deemed to have insufficient safeguards, which include the United States.

Both U.S. and EU companies shuffle personal data across the Atlantic on a daily basis, whether employee data for multinationals or user data collected by internet companies for use in the billion-dollar online advertising market.

But the system came under strain in 2013 after former U.S. National Security Agency contractor Edward Snow den leaked details of U.S. government spying programs.

Brussels has committed to wrapping up the talks by the end of January but is looking for further guarantees from Washington that U.S. authorities will not access Europeans’ data on a wholesale basis, something that has drawn out the negotiations.

(Editing by Adrian Croft; julia.fioretti@thomsonreuters.com)

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Exclusive: Lazard works with Sanofi on $12.7 billion animal health unit deal


LONDON/NEW YORK/FRANKFURT Investment bank Lazard is working with Sanofi’s management to prepare a sale or listing of its Merial animal health unit, aiming to land the leading advisory job for the deal, which could value the business at up 12 billion euros ($12.7 billion), sources familiar with the matter said.

Lazard is expected to win the role for the so-called dual-track process having helped Sanofi’s management in the ongoing review, the sources said, speaking on condition of anonymity.

If successful, the deal will play a pivotal role in getting France’s most valuable company back on track and delivering on its five-year strategic plan, after the business was hit by lagging diabetes sales and boardroom rows.

Sanofi and Lazard declined to comment.

Lazard has a close relationship with Sanofi Chairman Serge Weinberg who has often recommended the investment bank on deals carried out by his private equity firm Weinberg Capital Partners, another source said.

Sanofi’s new boss Olivier Brandicourt, 59, took the helm of the drugmaker in April and on Nov. 6 unveiled plans to cut costs by 1.5 billion euros by 2018 while seeking bolt-on acquisitions to continue growing its product offering.

But he also hinted at possible disposals, namely Merial and the company’s European generic drugs business.

The company said on Nov. 6 these two units provide “limited synergies” and all options would be considered including retention.

Led by Carsten Hellmann, Merial provides veterinary products such as antiparasitics and vaccines and is present in more than 150 countries.

The unit, which employs around 6,500 people, expects to exceed 2.4 billion euros in sales this year.

Sanofi could favor an initial public offering (IPO) for Merial as any takeover attempts by industry rivals would face antitrust challenges, a banker familiar with the matter said.

Merial competes head to head with Pfizer’s former animal health business Zoetis (ZTS.N), which Brandicourt helped to list on the New York Stock Exchange in a previous job at Pfizer (PFE.N) in 2013.

Zoetis, with a market capitalization of $23.4 billion, trades at a multiple of enterprise value to forecast earnings before interest, taxes, depreciation and amortization (EBITDA) of 16.2, according to Thomson Reuters data.

Sanofi could also pursue an outright sale of its European generics business, worth up to 3 billion euros. But any process would only start in the second half of 2016 due to the lengthy legal work needed to disentangle the European business from its global operations, the sources said.

Sanofi’s global generics unit had overall sales of 1.8 billion euros in 2014. In Western Europe generics sales grew 5.6 percent to 135 million euros in the third quarter.

($1 = 0.9434 euros)

(Additional reporting by Anjuli Davies in London, Matthias Blamont and Matthieu Protard in Parisl; editing by Susan Thomas)

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Class action suit against Barclays alleges forex rigging losses


A New York-based investment adviser filed a class action lawsuit against Barclays Plc on Friday alleging that rigged foreign exchange trading practices at the bank caused “significant damages” to its trading partners.

The suit by Axiom Investment Advisors LLC, filed in a Manhattan federal court, follows a pact on Nov 18 in which Barclays agreed to pay New York State’s financial regulator an additional $150 million to settle allegations stemming from allegations about the bank’s forex practices.

A Barclays spokesman declined to comment.

Barclays, in some instances, used a feature called “Last Look” on its forex trading platform to automatically reject client orders that would be unprofitable for Barclays because of price swings in milliseconds-long hold periods the bank imposed after trades were placed, the New York Department of Financial Services (NYDFS) has said.

The lawsuit could unleash another round of legal headaches for Barclay’s involving its forex practices. Barclay’s settlement with NYDFS last week followed another penalty by the regulator in May, bringing total penalties by NYDFS against the bank for forex-related conduct to $635 million.

Axiom and other firms, who are counterparties in Barclays’ foreign exchange trading, were “unfairly deceived” because of Barclays’ “Last Look” feature, while Barclays was “unjustly enriched” at Axiom’s expense, Axiom said in its suit.

When Axiom placed orders to trade a certain volume of currency, it ultimately did not receive the contract price that Barclays had agreed on, but often a worse price that was more favorable to Barclays, Axiom said.

Some of Axiom’s allegations mirror those in the recent NYDFS settlement. For example, some senior Barclays employees told traders and technology staff not to let the sales team know about the “Last Look” feature.

“If you get inquiries just obfuscate and stonewall,” a Barclays head of automated forex trading wrote in 2011, according to the settlement document, a remark that also appeared in Axiom’s complaint.

Barclays revised its “Last Look” feature last year, after NYDFS started the forex investigation, to reject trades that were unprofitable to both the bank and customers, the NYDFS has said.

(Reporting by Suzanne Barlyn; Additional reporting by Jonathan Stempel; Editing by Andrew Hay)

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Musk’s Tesla faces German battle over battery-powered homes


FRANKFURT If Elon Musk’s vision of millions of households producing all their own power becomes a reality, it will probably happen first in Germany. But he will face a battle for market share against local firms with years of experience in renewable energy.

The South African-born entrepreneur’s company Tesla, best known for its electric cars, sparked global interest in the idea of self-powered homes in April, when it said it would start selling lithium-ion batteries for households next year.

The batteries, called Powerwalls, connect to solar panels on the roof of a house and aim to store enough power during the day to drive kettles and washing machines at night, raising the prospect that households one day will be able to rely fully on clean energy and become independent of the power grid.

There are big challenges.

The technology does not yet allow most users to disconnect from the grid – the German solar industry association BSW estimates batteries currently raise solar power self-sufficiency to at least 60 percent.

Then there is the price. Buying and installing solar panels and batteries costs around 10,000 euros ($10,600) or more.

But the technology is improving, and costs falling, and some analysts think Germany – with more solar panels than anywhere in the world and sky-high power prices – could become the industry’s first mass-market.

“The business model of power batteries is becoming increasingly attractive,” said Norbert Schwieters, global utilities leader at consultants PwC, noting market estimates that sales in Germany could reach half a million within a decade, up from around 25,000 now.

“LIFESTYLE GADGET”

If the market does take off, Musk will have a fight on his hands against German companies with established retail networks and years of experience managing solar equipment.

While acknowledging Musk’s slick marketing – Powerwalls are made at his “Gigafactory” in the Nevada Desert – some of these rivals think he has created a buzz around home power storage batteries that will ultimately work in their favor.

“Tesla has made sure that they’re seen as a lifestyle gadget,” said Volker Wachenfeld, in charge of hybrid energy and storage solutions at SMA Solar.

SMA Solar is one of a number of German companies with ambitions in the market, including Sonnenbatterie, SENEC.IES and Varta. Daimler Accumotive is also due to launch a product, while Solarwatt, owned by major BMW shareholder Stefan Quandt, says it is ready to join the fray.

Sonnenbatterie, whose backers include Germany’s E-Capital and Czech firm Inven Capital, has already sold around 8,500 batteries in Europe, mostly in Germany, but its ambitions go further.

“The biggest challenge of our generation is the move to renewable and inexpensive energy supply,” said its 32-year-old managing director, Philipp Schroeder. “I started this vision and now want to take it to global success.”

Schroeder knows Tesla well – he worked there until earlier this year, leading its German and Austrian operations with a brief to roll out a network of charging points for Tesla cars in Germany. He jumped ship for his old employer Sonnenbatterie just as Tesla was gearing up for its European home-battery push.

Tesla, which has made Germany one of its three launch markets for Powerwalls, is ready for a fight, however. It has struck partnerships with German companies Beegy and LichtBlick in order to benefit from local expertise.

“Tesla is working with leading German and international solar PV (photovoltaic) distributors and installers to offer complete solar PV solutions including PV panels, a solar PV inverter, and installation,” it said.

IS THE PRICE RIGHT?

With the second-highest retail power costs in Europe, partly the result of the government’s break-neck push into renewables, Germany’s economy stands to gain massively if it can take a chunk of its back-up grid capacity offline.

Germany boasts about 39 gigawatts (GW) of installed solar capacity, bringing its total capacity to nearly 200 GW, more than twice the level it theoretically needs.

Vast amounts of costly back-up power are required to kick in when the sun doesn’t shine. If homes, offices and factories can store their solar power, many of the country’s power stations can be scrapped and transmission systems do not have to be extended at billions of euros of cost.

Incentives for solar power producers to feed surplus supplies into the national grid are set to end in 2021, providing a reason for them to store more power themselves.

“First it was technology aficionados, today it is a broad number of home owners,” Herbert Schein, CEO of Varta Microbattery, said of the growing interest in power batteries.

Schein estimates sales at Varta’s energy storage unit have doubled this year. “In the future we will add small companies and farmers,” he said.

Battery systems of various suppliers may differ, but costs overall have fallen and lithium-ion battery packs are the norm, having pushed aside lead batteries.

With a slim, curved appearance and made to be wall-mounted, Tesla’s Powerwall is designed to appeal to style-conscious consumers who agree with co-founder and CEO Musk’s statement that traditional batteries “suck”.

The batteries offered by most German providers can be placed in basements, common in German homes, and take up no more space than a small refrigerator. Smaller batteries can be wall-mounted too.

The batteries start selling at about 1,000 euros per kilowatt peak (kWp) – the level at which experts say the technology makes economic sense for buyers – with an average four-person household usually needing a 5 kWp system.

Tesla says the 7 kWp Powerwall will cost 3,615 euros wholesale, including value added tax.

Sonnenbatterie this week announced a 3,599 euro small battery – a discounted price available if the buyer joins the company’s SonnenCommunity scheme. It offers a full home solar power and storage system at 9,000-13,000 euros.

($1 = 0.9448 euros)

(Editing by Tom Pfeiffer and Mark Potter)

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