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Nike to launch pilot program with Amazon; results top estimates

Nike Inc (NKE.N), the world’s largest footwear maker, said on Thursday it would launch a pilot program with Inc (AMZN.O) to sell a limited product assortment on its website.

Shares of the Dow component, which also reported quarterly profit and sales that topped estimates, were up 8.2 percent at $57.54 in trading after the bell.

Nike’s comments confirmed an earlier report, which said the footwear maker was seeking to directly sell its products on Amazon, rather than through third-party and unlicensed dealers.

“We’re looking for ways to improve the Nike consumer experience on Amazon by elevating the way the brand is presented and increasing the quality of product storytelling,” Nike Chief Executive Mark Parker said on a post-earnings call.

Nike’s revenue could increase by $300 million to $500 million in the United States, or 1 percent in global sales, if the pilot turns into a more meaningful partnership, Goldman Sachs analyst Lindsay Drucker Mann said in a client note.

Beaverton, Oregon-based Nike, which saw greater demand for its core brands including Jordan, and in sportswear and running categories, said its selling, general and administrative expenses fell 4 percent to $2.7 billion in the fourth quarter ended May 31.

In the face of intense competition in North America, Nike has been focusing on its new and core brands such as ZoomX, Air VaporMax and Nike React. The company earlier in June said it would cut 2 percent of its global workforce and trim a quarter of its shoe styles as it looks to become nimbler.

While Nike’s North America sales were flat, sales in Western Europe, its second-biggest market, were up 4 percent in the fourth quarter.

Sales in Greater China jumped 11 percent, the company said.

In China, Nike has revamped stores and increased online efforts with Alibaba Group Holding Ltd’s (BABA.N) Tmall in a bid to reinvigorate demand in the world’s No. 2 economy.

Revenue rose 5.3 percent to $8.68 billion, beating analysts’ average estimate of $8.63 billion, according to Thomson Reuters I/B/E/S.

Excluding certain items Nike earned 60 cents per share, well ahead of analysts’ average estimate of 50 cents.

(Reporting by Gayathree Ganesan in Bengaluru; Editing by Martina D’Couto)

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MetLife board approves Brighthouse spinoff, sets effective date

MetLife Inc (MET.N) on Thursday came a step closer to spinning off its U.S. retail life insurance and annuity business after the company’s board of directors approved the plan, it said on Thursday.

The board set July 19 as the effective date for the spinoff of Brighthouse Financial Inc, with shares to be distributed on Aug. 4, subject to approval by the U.S. Securities and Exchange Commission, the company said.

MetLife common shareholders will receive one share of Brighthouse Financial common stock for every 11 shares of MetLife common stock they own as of the close of business on July 19, assuming SEC approval, MetLife said.

The SEC’s approval will be the last hurdle for MetLife to complete the Brighthouse spinoff. On Wednesday, Delaware insurance regulators approved Brighthouse’s request to acquire key MetLife businesses operating in Delaware and do business in the state under the Brighthouse name.

Brighthouse Life Insurance Company, domiciled in Delaware, will have more than 2 million policies and annuity contracts in force and more than $220 billion in assets, the Delaware insurance regulator said on Thursday.

(Reporting by Suzanne Barlyn in New York; Editing by Richard Chang and Matthew Lewis)

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Billionaire investor Icahn backs off demand for AIG breakup: source

Billionaire investor Carl Icahn is backing off his demand to break up insurance giant American International Group Inc (AIG.N), following the company’s sale of assets and hiring of a new chief executive officer, a person familiar with the matter said.

Icahn, AIG’s third-largest investor, wants the insurer’s new CEO Brian Duperreault to have an opportunity to boost AIG’s return on equity, the person said. Icahn had a 4.95 percent stake, or 45.6 million shares, as of March 31.

Icahn was not immediately available to comment.

AIG named Duperreault, 70, CEO in May, selecting a protégé of former CEO Hank Greenberg and an industry veteran known for his turnaround expertise.

AIG has been the target of activist investors led by Icahn, who disclosed his stake in 2015 and called for breaking up the company to make it more successful.

Former CEO Peter Hancock responded by launching a two-year turnaround plan last year, which included the goal of returning $25 billion of capital to investors by year-end.

AIG, the largest U.S. underwriter of commercial property and casualty policies, has returned $18.1 billion to shareholders through buybacks since announcing the plan.

Hancock said on March 9 that he would depart once the board found a replacement, citing a lack of confidence among directors and investors.

Duperreault told reporters on Wednesday that AIG would likely slow the pace of share buybacks and instead spend on acquisitions.

“The likelihood we can continue the pace of share buybacks is low because there are other things I can use the money on,” Duperreault said.

(Reporting by Suzanne Barlyn in New York; Additional reporting by Michael Flaherty; Editing by Phil Berlowitz)

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Walgreens scraps Rite Aid merger, will instead buy half its stores

Drugstore chain Walgreens Boots Alliance Inc (WBA.O) scrapped its deal to buy Rite Aid Corp (RAD.N) after failing to win antitrust approval, but said it would instead buy nearly half of the smaller rival’s U.S. stores for $5.18 billion.

The new deal makes it easier for the companies to gain regulatory approval as it avoids weakening competition in some markets and leaves Rite Aid as a viable player, said Neil Saunders, managing director of market research firm GlobalData Retail.

“Walgreens and Rite Aid have taken a pragmatic approach,” said Saunders.

Walgreens on Thursday also ended a related deal to sell as many as 1,200 Rite Aid stores to Fred’s Inc (FRED.O), sending Fred’s shares down 17 percent in mid-morning trade.

Rite Aid’s shares plunged 25 percent to $2.93, while Walgreens shares were up slightly at $77.33.

Walgreens, the biggest drugstore chain, had said in October 2015 that it would buy No. 3 Rite Aid for $9.5 billion. They decided to end the deal after the Federal Trade Commission said it would not give the deal antitrust approval, Walgreens said in a press statement.

Rite Aid, which had nearly 4,600 stores in the United States as of May, said the stores to be sold are mainly in the Northeast, Mid-Atlantic and Southeast. The deal also includes distribution centers in Connecticut, Philadelphia and South Carolina.

The decision to sell 2,186 Rite Aid stores will weaken the chain and could still be controversial, said David Balto, an antitrust lawyer who had worked with groups opposing Walgreens’ takeover of Rite Aid.

“Rite Aid’s future is going to be bleak after they sell these stores. This is still going to raise some serious questions. It’s still taking out a major competitor,” Balto said.

The FTC said on Thursday it would review the new proposal.

The agency sued to stop two deals last week, suggesting that the tough antitrust approach taken by the previous Obama administration continued under President Donald Trump.

That said, the agency is currently run by Acting Chairwoman Maureen Ohlhausen while the head of competition, Tad Lipsky, is also in an acting role. Trump must name three more commissioners for the FTC.

Walgreens and RiteAid had altered the terms of the previous deal in January in a bid to win approval. Walgreens had said it would divest more Rite Aid stores than previously proposed and reduced the offer price to $6.50-$7 per share, from $9 per share.

Leerink Partners analyst David Larsen estimated that under the new deal, Walgreens would be paying $2.4 million per Rite Aid store, higher than what it would have paid under the January agreement, where it would have paid $2.04 million to $2.06 million per store.

Walgreens said on Thursday it expects the new deal to close within six months.

Walgreens also reported better-than-expected profit and sales for the third quarter, helped by a rise in prescription volumes in its U.S. pharmacy business.

The company also authorized a $5 billion buyback program and raised the lower end of its full-year profit forecast by 8 cents per share to a range of $4.98 to $5.08.

Analysts on average were expecting full-year profit of $4.96 per share, according to Thomson Reuters I/B/E/S.

The new agreement will assist Rite Aid in addressing pharmacy margin challenges and in significantly reducing debt, the company’s CEO John Standley said in a statement.

Walgreens said it expects the new deal to modestly add to adjusted earnings per share in the first full year after the close and generate savings of more than $400 million.

The company said it would pay Rite Aid a $325 million termination fee.

(Reporting by Siddharth Cavale in Bengaluru; Additional reporting by Diane Bartz in Washington, DC; Editing by Sriraj Kalluvila, Bernard Orr)

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Wall St. extends losses as tech selloff deepens

Wall Street extended losses in early afternoon trading on Thursday with all three major indexes on track to post their biggest one-day drop in a month as a selloff in technology stocks deepened.

Tech stocks, which have led the SP 500’s record run this year, pulled back recently after some investors questioned the sector’s high valuations and shifted to defensive sectors.

The SP tech index .SPLRCT led the laggards among the 11 sectors, with the index on track to post its biggest monthly loss in a year.

Apple (AAPL.O), which fell 1.8 percent, was the biggest drag on all the three major indexes, while Alphabet (GOOGL.O), Microsoft (MSFT.O) and Amazon (AMZN.O) were among the top three drags on the Nasdaq and the SP.

The CBOE Volatility index .VIX, or Wall Street’s “fear gauge”, hit more than a one-month high of 12.38 points.

The financial sector .SPSY, which rose as much as 2.02 percent, before paring gains to trade up 0.31 percent, was one of the only two gainers.

Shares of the top six U.S. banks rose after the Federal Reserve cleared them in the second part of its annual stress test, allowing them to raise dividend payouts and share buybacks.

“Part of the reason why tech is down today is the steam in the recent rotation out of some of big tech winners and into banks,” said Michael Scanlon, portfolio manager at Manulife Asset Management in Boston.

“The catalyst for that rotation today is the really strong stress test results coupled with higher treasury rates this morning and a positive GDP revision, leading investors to move into financial which has underperformed this year.”

The financial index has grown about 6 percent this year, underperforming the 8.1 percent rise in the SP.

At 12:41 P.m. ET (1641 GMT), the Dow Jones Industrial Average .DJI was down 166.04 points, or 0.77 percent, at 21,288.57, the SP 500 .SPX was down 21.49 points, or 0.88 percent, at 2,419.2.

The Nasdaq Composite index .IXIC was down 100.77 points, or 1.62 percent, at 6,133.65, on track to post a monthly loss after seven straight months of gains.

Earlier in the day, data showed the U.S. economy slowed less sharply in the first quarter than initially estimated due to unexpectedly higher consumer spending and a bigger jump in exports.

Oil prices rose to a two-week high, extending the rally into the sixth straight session, after a decline in weekly U.S. production eased concerns about deepening oversupply, helping the energy sector post a gain of 0.38 percent. [O/R]

Among stocks, Rite Aid (RAD.N) slumped as much as 30 percent to a near four-year low after Walgreens Boots Alliance (WBA.O) terminated its agreement to buy the drug store chain and said it would instead buy nearly half of its stores for $5.18 billion.

Declining issues outnumbered advancers on the NYSE by 2,156 to 714. On the Nasdaq, 2,007 issues fell and 786 advanced.

(Reporting by Ankur Banerjee and Tanya Agrawal in Bengaluru; Editing by Arun Koyyur)

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U.S. first quarter economic growth revised up on jump in consumer spending

WASHINGTON The U.S. economy slowed less than feared in the first quarter due largely to a jump in consumer spending, providing a slightly more encouraging outlook for growth this year.

Gross domestic product increased at a 1.4 percent annual rate instead of the 1.2 percent reported last month, the Commerce Department said in its final assessment for the period on Thursday.

The reading was the worst since the second quarter of 2016 but above analysts’ expectations, easing fears the economy had been hobbled at the start of this year. The government had pegged first-quarter growth at a paltry 0.7 percent in its first estimate in April.

“The upward revision occurred even with a downward revision to the inventory data, which has favorable implications for the adding up of second-quarter growth,” said Daniel Silver, an economist at J.P. Morgan.

Economists polled by Reuters had expected GDP growth to be unrevised at 1.2 percent in the first quarter. The economy tends to underperform in that period relative to the rest of the year due to perennial issues with the calculation of the data. The government has said it is working to resolve those issues.

The U.S. dollar .DXY briefly edged up after the release of the data before retracing earlier losses against a basket of currencies. Prices of U.S. Treasuries were trading lower and stocks on Wall Street were down sharply.

First-quarter economic growth was boosted by an upward revision to consumer spending, which accounts for more than two-thirds of U.S. economic activity. Consumer spending rose at a 1.1 percent pace, the weakest reading since the second quarter of 2013 but almost double the 0.6 percent reported last month.

Despite the upward revision to GDP, the Trump administration’s stated target of swiftly boosting annual U.S. economic growth to 3 percent remains a challenge.

A sustained average growth rate of 3 percent has not been achieved in the United States since the 1990s. The U.S. economy has grown an average 2 percent since 2000 and it expanded only 1.6 percent in 2016, which was the weakest growth in five years.

President Donald Trump’s economic program of tax cuts, regulatory rollbacks and infrastructure spending has yet to get off the ground five months into his presidency.

Details of the White House’s tax plan remain sparse as Trump advisers attempt to win over fiscally conservative Republicans in Congress who want any changes to ultimately be revenue-neutral.

Initial signs that economic growth re-accelerated sharply in the second quarter have also faltered in the face of recent disappointing data on retail sales, manufacturing production and inflation. Housing data has also been mixed.

The Atlanta Federal Reserve is currently forecasting annualized growth of 2.9 percent in the second quarter.


Other data on Thursday showed the job market was still flashing a green light.

The Labor Department reported that the number of Americans filing for unemployment benefits last week rose slightly, but the underlying trend remained consistent with a tight labor market. The unemployment rate fell to a 16-year low in May.

U.S. exporters also flexed more muscle in the first quarter. Exports for the period were revised to show a 7.0 percent rate of growth from the previously reported 5.8 percent. Exports in the fourth quarter fell at a rate of 4.5 percent.

Business spending on equipment was revised to show it increasing at a rate of 7.8 percent in the January-March period rather than the 7.2 percent previously estimated.

Businesses accumulated inventories at a rate of $2.6 billion in the first quarter, rather than the $4.3 billion reported last month. Inventory investment rose at a rate of $49.6 billion in the fourth quarter of last year.

Inventories subtracted 1.11 percentage point from GDP growth in the first quarter instead of the 1.07 percentage point previously reported.

The government also reported that corporate profits after tax with inventory valuation and capital consumption adjustments fell at an annual rate of 2.7 percent in the first quarter after rising at a 2.3 percent pace in the prior three months.

(Reporting by Lindsay Dunsmuir; Editing by Paul Simao)

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Blue Apron shares make bland debut

Blue Apron Holdings Inc’s (APRN.N) shares rose as much as 4.6 percent in their debut on Thursday following the meal-kit delivery company’s watered down IPO under the shadow of’s (AMZN.O) deal to buy Whole Foods Market WFM.N.

The stock touched a high of $10.46 in early trading, giving the company a market capitalization of about $2 billion.

The 30-million share offering was priced at $10 per share late on Wednesday, after the company slashed its valuation expectations by a third.

Blue Apron’s IPO, the first for a U.S. meal-kit company, was expected to create a buzz around smaller peers, which are either looking to go public or be acquired at rich valuations.

However,’s $13.7 billion deal to buy Whole Foods Market Inc has left potential investors worried about the prospects of the meal-kit industry.

There are also concerns about the company’s lack of profitability and marketing costs.

Like other meal-kit companies, Blue Apron has spent heavily on marketing to compete for customers who often switch from one service to another, or cancel their subscriptions altogether.

The company spent roughly 18 percent of its $795.4 million revenue in 2016 on marketing, posting a net loss of $54.9 million. It has also faced steep costs of building out delivery infrastructure for fresh food.

Blue Apron was founded in 2012 by Matthew Salzberg, Matt Wadiak and Ilia Papas to deliver ingredients and recipes that would allow customers prepare meals at home.

In 2014, the company started selling curated selections of cooking utensils and pantry items via its online marketplace, Blue Apron Market, and in September 2015, it expanded its culinary gamut to include wine.

The company bought BN Ranch, a supplier of beef, poultry and lamb, in February.

(Reporting By Aparajita Saxena in Bengaluru; Editing by Anil D’Silva)

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Coca-Cola says reaches agreement with S. African government. on acquisition of local arm

JOHANNESBURG Drinks giant Coca-Cola (KO.N) said on Thursday it had reached an agreement with the South African government on a package of conditions as it finalizes the purchase of a controlling 54.5 percent stake in its joint Africa venture with ABInBev (ABI.BR).

New York-listed Coca-Cola said in a statement it would abide by merger conditions agreed with competition authorities in 2016 including a pledge to raise black ownership in Coca-Cola Beverages South Africa to 30 percent by 2021.

“We are pleased to have reached this agreement with the South African government which demonstrates our alignment with the government’s national imperatives for inclusive social and economic development,” said Chief Executive James Quincey.

Last December, Coca-Cola reached a deal to buy Anheuser-Busch InBev’s majority stake in their African bottling venture for $3.15 billion and hold onto it until it finds a new owner. nL5N1EG1RF

(Reporting by Mfuneko Toyana; Editing by Adrian Croft)

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Oil prices edge up to two-week high on dip in U.S. output

NEW YORK Oil futures edged up less than 1 percent after hitting a two-week high on Thursday, extending a rally into a sixth straight session after a decline in weekly U.S. crude production temporarily alleviated concerns about deepening oversupply.

Crude prices slipped to the lowest in 10 months last week but have since rebounded more than 7 percent, stretching their bull run to the longest since April.

It is unclear, however, whether the bearish sentiment has abated in the oil market, given larger-than-usual inventories in the United States for both crude oil and key products like gasoline.

In recent weeks, funds have been unloading long speculative positions, reducing bets on higher prices while brokerages including Goldman Sachs and Barclays have cut their forecasts for crude prices for 2017. Goldman, on Wednesday, cut its forecast for U.S. crude for the next three months to $47.50 a barrel from $55.

“After the steep drop in oil prices of recent weeks, I believe that especially hedge funds saw nice buying momentum and lower U.S. crude production was the trigger to act,” said Hans van Cleef, senior energy economist at ABN Amro.

U.S. crude production dropped 100,000 barrels per day (bpd) to 9.3 million bpd last week, the steepest weekly fall since July 2016. But analysts and traders said the decline was related to temporary factors, including production shut as a precaution in the Gulf of Mexico due to Tropical Storm Cindy, along with maintenance in Alaska.

Brent crude futures LCOc1 were 30 cents, or 0.6 percent, higher at $47.61 a barrel by 11:38 a.m. EDT (1538 GMT), having touched a two-week high of $48.03 earlier in the session.

U.S. crude CLc1 also hit a two-week peak at $45.45 and was last up 35 cents, or 0.7 percent, at $45.09 a barrel.

Global oil supplies remain ample despite output cuts by the Organization of the Petroleum Exporting Countries and other producers of 1.8 million bpd since January.

OPEC and its allies, trying to reduce a crude glut, agreed in May to extend the supply cut through March 2018. OPEC has exempted Nigeria and Libya from the curbs, leaving them free to ramp up output that had been sapped by local unrest.

“That’s going to increase pressure on OPEC cuts,” said Tony Scott, managing director of analytics at BTU Analytics in Denver. “As long as Libya and Nigeria can remain stable – Libya has ramped up several times over last couple of years and then the violence has come back.”

Libyan oil production is now nearing 1 million bpd, a Libyan source with direct knowledge of the matter told Reuters.

Royal Dutch Shell on Wednesday lifted force majeure on Nigerian Bonny Light crude exports after pipeline repairs.

Analysts at investment bank Goldman Sachs said rising Nigerian and Libyan output, as well as increasing U.S. shale oil drilling, would slow the drawdown in crude inventories.

(Additional reporting by Karolin Schaps in London and Naveen Thukral in Singapore; Editing by Marguerita Choy and Edmund Blair)

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