Wendy’s is roasting the competition ahead of its breakfast launch and analysts approve

Wendy’s Co. is known for its spicy Twitter feed, and the fast-food chain is turning up the heat on its competitors ahead of the launch of its breakfast menu.

In the lead up, the company has taken aim at McDonald’s Corp. MCD, -2.79% and Burger King, a Restaurant Brands International Inc. QSR, -2.65% chain. Wendy’s is also using its fans’ tweets to target these quick-service chains.

Wendy’s WEN, -5.41%  breakfast menu, which will include items such as the Breakfast Baconator and the Frosty-ccino, will be available nationally starting March 2.

“We take food quality seriously, but we don’t take ourselves too seriously,” Kurt Kane, Wendy’s chief commercial officer and U.S. president, told MarketWatch in 2018.

BMO Capital Markets analysts see the value of this aggressive approach.

“[W]e think investors are overlooking Wendy’s effective breakfast social media messaging, which should complement the $70 million to $80 million Wendy’s plans to spend on traditional breakfast advertising,” analysts led by Andrew Strelzik wrote.

“In addition, despite a lack of meaningful competitor response, Wendy’s is already leaning into promotional value offers that should not only drive breakfast trial but also promote digital sign-up.”

BMO notes that Wendy’s has invested in its mobile app and will soon launch a loyalty program.

McDonald’s announced on Friday that it is declaring March 2, which happens to be Wendy’s breakfast launch date, National Egg McMuffin Day and is offering free sandwiches to customers who redeem the offer on the McDonald’s mobile app.

But BMO says that it’s not just the competition that Wendy’s has to be on the lookout for.

“While cannibalization of Wendy’s base business will be important to watch, we continue to be optimistic that breakfast is going to work given distinct differences versus past iterations, and we believe the cash flow potential in a post-investment scenario continues to justify upside to shares from current levels,” analysts said.

BMO rates Wendy’s stock outperform with a price target of $24.

Wendy’s previously tried a breakfast menu but abandoned it in 2012 in an effort to find a more profitable way to offer it.

Wendy’s stock is down 16.6% this week, but has gained 15.2% over the past year, outpacing the S&P 500 index SPX, -0.82% , which is up 7% for the period.

Wendy’s reported fourth-quarter results on Wednesday that were in line with expectations. But weak guidance drove down shares.

“The continued strong performance of our core business is critical to our success as we embark on a year of transformational growth with our launch of breakfast,” said Todd Penegor, Wendy’s chief executive, on the earnings call, according to a FactSet transcript.

Penegor said the company has been busy recruiting and training staff, and has confidence that the breakfast menu will benefit franchisee numbers.

Wendy’s expects breakfast will add 6% to 8% to sales.

“In stores currently offering breakfast (including 40 company stores), breakfast sales are in line with management’s expectations, before advertising support,” said analysts at SunTrust Robinson Humphrey, who believe the sales momentum outside of breakfast “appears sustainable.”

Wendy’s has other menu plans, including the recent reintroduction of the Big Bacon Classic and new innovation through the “Made to Crave” platform.

SunTrust rates Wendy’s stock buy with a $26 price target.

“We believe breakfast represents the share price performance’s near-term catalyst,” wrote MKM Partners in a note. But analysts think that’s already priced in.

MKM Partners rates Wendy’s stock neutral with a $23 fair value estimate, up from $20.

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Invincible no more: Liverpool loses for first time in English Premier League

Arsenal’s class of 2003-04 can breathe easy: Liverpool will not be joining them as Premier League “Invincibles.”

“Phew…” was the immediate reaction from Arsenal’s Twitter account after Liverpool collapsed to its first league loss of the season on Saturday, a 3-0 defeat at Watford – a team languishing in the relegation zone.

It marked the end of a 44-match undefeated streak and a record-tying 18-match winning run for Liverpool in the league.

Juergen Klopp’s team headed to Vicarage Road as the champions-in-waiting – with its record 22-point lead – and needing to get through 11 more matches to also become only the second side after Arsenal to complete a full season unbeaten since the start of the Premier League in 1992. Preston also went through the 1888-89 season undefeated.

Liverpool was five games short of matching Arsenal’s 49-match unbeaten streak in the Premier League from May 2003 to October 2004. That run ended when Arsenal lost 2-0 at Manchester United.

Few could have foreseen the manner of Liverpool’s meltdown against Watford, which scored all of its goals in the second half through Ismaila Sarr (two) and Troy Deeney.

Thankfully for Liverpool fans desperate to see their team back on top of English soccer for the first time in 30 years, the loss is far from terminal.

Four wins from their last 10 games will see the Reds become champions for the 19th time.

“There is no reason for panic,” Liverpool defender Virgil van Dijk said.

“The (unbeaten) record, and the talk of the records, is all media. We just try to win every game ahead of us.”

The performance will be a major concern, though, coming soon after a 1-0 loss to Atletico Madrid in their first leg in the Champions League’s last 16.

Indeed, Liverpool’s players have been far below their usual high standards since returning from the Premier League’s first midseason break, having edged past last-place Norwich 1-0 and coming from behind to beat another team fighting relegation, West Ham, 3-2 on Monday. The loss to Atletico was sandwiched between those league matches.

The absence of captain Jordan Henderson, who sustained a hamstring injury against Atletico, has been significant, while the defense looked ragged against Watford with Dejan Lovren filling in at center back for Joe Gomez.

Liverpool’s next game is at Chelsea in the FA Cup on Tuesday.

“We want to strike back, we want to show what we’ve been doing the whole season,” Van Dijk said. “That’s the only way forward.”


While Chelsea’s forwards continue to struggle to score, at least the team can rely on its left back to find the back of the net.

Marcos Alonso made it three goals in two games since returning to the lineup after a two-month absence when he scored twice – including an 85th-minute equalizer – in a 2-2 draw at Bournemouth.

“Marcos Alonso has had a big week,” Chelsea manager Frank Lampard said, “but I don’t want my left back top of the scoring charts. I want our attackers scoring goals and they haven’t.”

Alonso netted what proved to be the winning goal against Tottenham last weekend, only to get sent off in the 3-0 loss to Bayern Munich in the Champions League’s last 16 on Tuesday.

The draw lifted fourth-place Chelsea four points ahead of fifth-place Manchester United having played a game more.

United visits Everton on Sunday. They are two of the eight teams within nine points of Chelsea.


Just when his team looked like being sucked into a relegation battle, former England manager Roy Hodgson has inspired Crystal Palace to back-to-back victories and most probably another season in the Premier League.

The 72-year Hodgson is poised for talks with the Palace board about a contract extension next week, and can go into them feeling fairly content about another solid season’s work in the wake of a 1-0 win at Brighton.

“If they go well,” Hodgson said about upcoming games against relegation candidates Watford and Bournemouth, “we can kiss relegation goodbye.”

The same cannot be said for Brighton after being hit by the sucker-punch of a goal against the run of play by Jordan Ayew.

Brighton is now only one point above the relegation zone.


Can the signing of a player from the second-tier League Championship be the catalyst for West Ham in its bid to secure safety in the Premier League?

Jarrod Bowen’s lively performance in the 3-1 win over Southampton suggested so.

Handed his first start since joining from Hull in the January transfer window, Bowen opened the scoring with a deft chip over goalkeeper Alex McCarthy and was a constant danger with his movement and pace in behind.

“That’s the way it went in my dreams last night,” Bowen said.

West Ham manager David Moyes has eased Bowen into the team, despite the player’s superb scoring record – he struck 16 goals for Hull this season – and the team’s lack of potency of late.

Sebastian Haller and Michail Antonio also scored for West Ham, which moved out of the bottom three and above Bournemouth and Aston Villa in the standings with its first win since Jan. 1.

Southampton manager Ralph Hasenhuettl described the goals his team conceded as “an absolute joke.”

If only Hasenhuettl had a defense boasting the tenacity of Newcastle and Burnley. Clear-cut chances were at a premium in their match at St. James’ Park, which finished 0-0.

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Coronavirus update: 86,584 cases and 2,975 deaths, including first in U.S.

A person has died in Washington state of COVID-19, marking the first such reported death in the United States and prompting officials there to declare a state of emergency.

Already, health officials in California, Oregon and Washington were worried about the novel coronavirus spreading through West Coast communities after confirming at least three patients were infected by unknown means.

Washington state officials confirmed the death there. A spokesperson for EvergreenHealth Medical Center, Kayse Dahl, said the person died in the facility in the Seattle suburb of Kirkland, but gave no other details.

President Donald Trump described the person as being a woman in her late 50s and having a high medical risk. He said during a Saturday press conference that healthy Americans should be able to recover if they contract the new virus.

Washington Gov. Jay Inslee said in a statement the person who died was a man from Washington state, but then issued another one removing the gender and describing the individual as “a Washingtonian.”

There are now a total of 86,584 cases of COVID-19 and at least 2,975 deaths globally, according to the latest figures from the Johns Hopkins Whiting School of Engineering’s Centers for Systems Science and Engineering. About 42,000 people have recovered.

The U.S. has 70 confirmed cases, according to the Johns Hopkins CSSE site. A 60-year-old U.S. citizen died in China in early February.

The novel coronavirus was first detected in December in Wuhan, China. Over the last month, large parts of China have been shut down. Factories are closed or operating with restricted hours, which impacted Chinese economic data, pushing a key index issued this weekend to a record low.

Vice President Mike Pence joined with Trump Saturday to announce that the U.S. was banning travel to Iran and urging Americans not to travel to regions of Italy and South Korea where the virus has been prevalent. There are now 593 cases and 43 deaths in Iran and 3,150 cases and 16 deaths in South Korea. Italy has 1,128 confirmed cases and 29 deaths.

In addition, over the past two days, several countries have reported their first cases of COVID-19, including Brazil, Georgia, New Zealand and Norway.

The World Health Organization (WHO) on Friday said that it had raised its risk assessment relating to COVID-19 for the rest of the world to very high from high. China had previously been designated with a very high-risk assessment. “What we see at the moment are linked epidemics of COVID-19 in several countries, but most cases can still be traced to known contacts or clusters of cases,” Dr. Tedros Adhanom Ghebreyesus, WHO’s director-general, said during a news conference on Friday. “We do not see evidence as yet that the virus is spreading freely in communities.” If that were to be the case, the outbreak would be defined as a pandemic, a definition that WHO has not made.

Hundreds of U.S. nationals were repatriated from mainland China on State Department-chartered flights, starting Jan. 29, and then placed in 14-day quarantines on air bases in California. A new whistleblower complaint alleges that federal employees sent to air bases in California didn’t follow safety protocols while interacting with those individuals, people familiar with the allegations told The Wall Street Journal. Those workers reportedly weren’t tested for COVID-19 before departing March Air Reserve Base in Riverside County and Travis Air Force Base in Fairfield, Calif., and then were sent home on commercial flights.

The allegations round out a roller-coaster week that started with a Centers for Disease Control and Prevention (CDC) official telling Americans to prepare for a pandemic in a series of comments that further troubled stock markets, which have shed $4.3 trillion in value in just the past seven sessions.

On Friday, White House acting Chief of Staff Mick Mulvaney said Americans will “probably” see some schools shut down and “impacts on public transportation.” “But we do this we know how to handle this,” he said at an American Conservative Union event.

Elsewhere in Washington, lawmakers are debating how many billions of dollars in spending that they will set aside for the outbreak. The Food and Drug Administration said Thursday that an unnamed drugmaker has reported a shortage of a medication that uses an active pharmaceutical ingredient made at a site in China affected by the outbreak.

Meanwhile, the rising number of COVID-19 cases and deaths outside of China has led to cancellations of major events, including a two-week shutdown of Tokyo Disney, all gatherings in Switzerland of more than 1,000 people, and caused FacebookFB, +1.43%, MicrosoftMSFT, +2.42%, and WorkdayWDAY, +1.20% to withdraw from or cancel events.

Even Eventbrite Inc. EB, -14.16%, the online events and ticketing company, told investors last week that it is seeing “early evidence” of coronavirus-related event cancellations. “We expect that the outbreak will impact live events and attendance in the near term,” CFO Charles Baker said on an earnings call.

Here’s how companies are being impacted by the COVID-19 outbreak:

• Emerson Electric Co. EMR, -0.42%expects the outbreak to shave $100 million to $150 million off its second-quarter sales, wider than its previous estimate of a hit of $75 million to $100 million. In a regulatory filing, the St. Louis, Mo.-based company said it expects half of the lost revenue to be recovered in the fiscal year. “However, the longer the coronavirus endures, the lower the likelihood of sales recovery this year,” said the filing.

• Deutsche Bank downgraded Royal Caribbean Cruises Ltd. RCL, +4.43% and Norwegian Cruise Line Holdings NCLH, +7.25% to hold from buy and slashed the price target on Carnival Corp. CCL, +5.05% over uncertainty caused by the outbreak. So far this week through Thursday, shares of Royal Caribbean fell 27.4%, Norwegian dropped 26.0% and Carnival shed 23.6%, all to multiyear lows, amid growing concerns over the potential negative impact of the coronavirus outbreak.

• U.S. travel agency ticketing measured by dollars transacted fell 9.4% this week from the year-earlier period, Vertical Research Partners said Friday, amid growing concerns about the coronavirus. On a rolling four-week basis, travel agency ticketing is 4.4% lower than a year ago, also equal to a 400 basis points decline.

Additional reporting by Ciara Linnane, Claudia Assis and Tomi Kilgore

Read more of MarketWatch’s COVID-19 coverage:

Here’s why the U.S. government’s effort to contain the coronavirus outbreak ‘was never going to be successful’

Markets ‘powered through’ SARS, but the coronavirus outbreak is different, Cowen says — and here’s why

Stock futures point to lower start after coronavirus fears put market on track for worst week since 2008 financial crisis

Coronavirus could make your almond milk cheaper in the U.S.

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TTK Prestige readies ₹500-cr. war chest for acquisition

Company targets ₹1,000 cr. revenue from B2B markets; ropes in 30 NBFCs for last-mile reach

TTK Prestige is exploring the possibility of making two acquisitions, one in India and the other in the U.S. or Europe, as part of its market expansion strategy for which it has set aside ₹500 crore.

The company has decided to foray into B2B markets for products such as fans, water heaters, air-conditioners and other appliances. It is currently in talks with five appliance manufacturers in India and abroad.

TTK Prestige chairman, T.T. Jagannathan told The Hindu that, “We are acquiring, to get into new markets and product segments. For instance, we are not yet in fans, water heaters, air-conditioners or something like that. All these products are classified under B2B, and a very small number of these are sold to homes. There are big guys in this market, we are a home-ware firm and we can’t organically venture into B2B. That’s why we are out to shop.’’

As per Mr. Jagannathan, TTK is targeting a revenue of ₹1,000 crore from the B2B space in the next five years. TTK Prestige also has a mandate to hit ₹5,000 crore in revenue by 2025.

Commenting on TTK Prestige’s rural drive, he said the company had already roped in 30 NBFCs across India to ensure last-mile reach for its home and kitchen products.

“A year ago, we realised NBFCs were the best route to reach far-flung markets. Now, we have tied up with 30 of them. The idea is to set up godowns at taluk level and ship products from there to self-help groups or directly to customers. NBFCs will work out the financing and collection models,’’ he explained.

TTK Prestige had already sold products worth ₹140 crore in fiscal 2018-19 through an NBFC.

However, the collaboration was discontinued once the financing firm merged with a bank.

”Last year, we had a windfall revenue of ₹140 crore from rural markets. The NBFC earned 15% of its revenue from selling/financing our products. Our fresh NBFC collaborations have just started working and we are expecting a ₹40 crore revenue this year. From next year, rural growth will kick in big time and we will be able to fully remove the base effect and catch up in growth pace,’’ he added.

Innovation continues to be the key thrust area for Mr. Jagannan. The company has been launching 100 new home/kitchen products every year in the last 15 years. It currently has over 14,000 product SKUs.

“We try to understand pain points of each customer. As we introduce 100 new products a year, we might drop some of them. For instance, if there is a 40,000 drop in a particular product that we normally sell around 4 lakh units a year, that gives us an indication and we may pull that off the market.’’

TTK Prestige’s 30 member design and innovation team uses SOLIDWORKS’ 3D, CAD & CAM solutions, its own prototyping machines and home tools to design and develop products.

The home-ware brand has recently started using artificial intelligence to read, analyse and understand customer data.

“Unfortunately, we started collecting customer data only in the last five years. But what we so far captured is 10 times more than what we could have collected right from our inception. The basic data reveals the address, age, financial background, the products he brought while data mining gives you better customer insights. It helps us big way in ad too, there’s no need of carpet bombing anymore,’’ responded Mr Jagannathan, who has Master’s in Computer Science from Honolulu University.

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Bharti Airtel deposits additional ₹8,004 crore in AGR dues

Total payment reaches ₹18,004 crore; telco claims compliance with court order

Bharti Airtel on Saturday said it had made an additional payment of ₹8,004 crore towards its adjusted gross revenue-related dues to the Department of Telecom (DoT). The company had earlier in February deposited ₹10,000 crore with the DoT.

Also read | Not in sound financial state; can meet liabilities only with govt. support, says Vodafone Idea

In a regulatory filing, the company said it had carried out self-assessment from FY06-07 up to December 31, 2019, and interest thereon up to February 29, 2020.

Additional ₹3,004 crore

“Accordingly, the company has paid an additional amount of ₹3,004 crore towards the full and final amounts due over and above the ad-hoc amount of ₹10,000 crore paid on February 17, 2020 on behalf of the Bharti Group of companies,” it said. The payment included those for liabilities on Bharti Airtel, Bharti Hexacom and Telenor India.

It added that an additional amount of ₹5,000 crore had also been deposited with the DoT “as an ad-hoc payment (subject to subsequent refund / adjustment) to cover differences, if any, arising from the reconciliation exercise with the DoT.”

According to DoT estimates, Bharti Airtel’s liability stands at over ₹35,586 crore, including licence fee and spectrum usage charges with interest on the unpaid amount, penalty and interest on penalty.

The total payment made by the company to the DoT towards AGR dues now stands at ₹18,004 crore.

“Based on the aforesaid payment we have now complied with the AGR judgment and the directions in the order of the Supreme Court dated October 24, 2019,” the company said.

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Another West Coast coronavirus case of unknown origin is reported — this time an Oregon teacher

Health officials in California, Oregon and Washington state worried about the novel coronavirus spreading through West Coast communities after confirming three patients were infected by unknown means.

The patients — an older Northern California woman with chronic health conditions, a high school student in Everett, Washington, and an employee at a Portland, Oregon-area school — hadn’t recently traveled overseas or had any known close contact with a traveler or an infected person, authorities said.

Earlier U.S. cases include three people who were evacuated from the central China city of Wuhan, epicenter of the outbreak; 14 people who returned from China, or their spouses; and 42 American passengers on the Diamond Princess cruise ship, who were flown to U.S. military bases in California and Texas for quarantining.

Convinced that the number of cases will grow but determined to keep them from exploding, health agencies were ramping up efforts to identify patients.

The California Department of Public Health said Friday that the state will receive enough kits from the U.S. Centers for Disease Control to test up to 1,200 people a day for the COVID-19 virus — a day after Gov. Gavin Newsom complained to federal health officials that the state had already exhausted its initial 200 test kits.

Santa Clara County in the San Francisco Bay Area reported two cases where the source of infection wasn’t known. The older woman was hospitalized for a respiratory illness, and rapid local testing confirmed in one day that she had the virus, health officials said.

“This case represents some degree of community spread, some degree of circulation,” said Dr. Sara Cody, health officer for Santa Clara County and director of the County of Santa Clara Public Health Department.

“But we don’t know to what extent,” Cody said. “It could be a little, it could be a lot.”

“We need to begin taking important additional measures to at least slow it down as much as possible,” she said.

Cody said the newly confirmed case in Santa Clara County is not linked to two previous cases in that county, nor to others in the state.

The Santa Clara County resident was treated at a local hospital and is not known to have traveled to Solano County, where another woman was identified Wednesday as having contracted the virus from an unknown source.

Dozens of people had close contact with the Solano County woman. They were urged to quarantine themselves at home, while a few who showed symptoms of illness were in isolation, officials said.

At UC Davis Medical Center at least 124 registered nurses and other health care workers were sent home for “self-quarantine” after the Solano County woman with the virus was admitted, National Nurses United, a nationwide union representing RNs, said Friday.

The case “highlights the vulnerability of the nation’s hospitals to this virus,” the union said.

Earlier Friday, Oregon confirmed its first coronavirus case, a person who works at an elementary school in the Portland area, which will be temporarily closed.

The Lake Oswego School District sent a robocall to parents saying that Forest Hills Elementary will be closed until Wednesday so it can be deep-cleaned by maintenance workers.

Washington state health officials announced two new coronavirus cases Friday night, including a high school student who attends Jackson High School in Everett, said Dr. Chris Spitters of the Snohomish County Health District.

The other case in Washington was a woman in in King County in her 50s who had recently traveled to South Korea, authorities said.

Both patients weren’t seriously ill.

The number of coronavirus cases in the United States is considered small. Worldwide, the number of people sickened by the virus hovered Friday around 83,000, and there were more than 2,800 deaths, most of them in China.

But health officials aren’t taking any chances. Some communities, including San Francisco, already have declared local emergencies in case they need to obtain government funding.

In Southern California’s Orange County, the city of Costa Mesa went to court to prevent state and federal health officials from transferring dozens of people exposed to the virus aboard a cruise ship in Japan to a state-owned facility in the city. The passengers, including some who tested positive for the virus and underwent hospital care, had been staying at Travis Air Force Base in Northern California.

On Friday, state officials said the federal decided it no longer had a crucial need to move those people to the Fairview Developmental Center in Costa Mesa. That’s because of the imminent end of the isolation period for those passengers and the relatively small number of persons who ended up testing positive, officials said.

The new coronavirus cases of unknown origin marks an escalation of the worldwide outbreak in the U.S. because it means the virus could spread beyond the reach of preventative measures like quarantines, though state health officials said that was inevitable and that the risk of widespread transmission remains low.

California public health officials on Friday said more than 9,380 people are self-monitoring after arriving on commercial flights from China through Los Angeles and San Francisco. That’s up from the 8,400 that Newsom cited on Thursday, though officials said the number increases daily as more flights arrive.

Officials are not too worried, for now, about casual contact, because federal officials think the coronavirus is spread only through “close contact, being within six feet of somebody for what they’re calling a prolonged period of time,” said Dr. James Watt, interim state epidemiologist at the California Department of Public Health.

The virus can cause fever, coughing, wheezing and pneumonia. Health officials think it spreads mainly from droplets when an infected person coughs or sneezes, similar to how the flu spreads.

As infectious disease experts fanned out in the Solano County city of Vacaville, some residents in the city between San Francisco and Sacramento stocked up on supplies amid fears things could get worse despite official reassurances, while others took the news in stride.

The woman in the community who has coronavirus first sought treatment at NorthBay VacaValley Hospital in Vacaville, before her condition worsened and she was transferred to the medical center in Sacramento.

Sacramento County’s top health official told The Sacramento Bee on Friday that he expects several medical workers to test positive themselves in the next few days. Numerous workers at both hospitals have been tested, but the tests were sent to labs approved by the CDC and generally take three to four days to complete.

Peter Beilenson, Sacramento County’s health services director, said he expects even those who test positive to become only mildly ill.

Confusion over how quickly the woman was tested for coronavirus concerned McKinsey Paz, who works at a private security firm in Vacaville. The company has already stockpiled 450 face masks and is scrambling for more “since they’re hard to come by.” The company’s owner bought enough cleaning and disinfectant supplies to both scrub down the office and send home with employees.

But they appeared to be at the extreme for preparations.

Eugenia Kendall was wearing a face mask, but in fear of anything including the common cold. Her immune system is impaired because she is undergoing chemotherapy, and she has long been taking such precautions.

“We’re not paranoid. We’re just trying to be practical,” said her husband of 31 years, Ivan Kendall. “We wipe the shopping carts if they have them, and when I get back in the car I wipe my hands — and just hope for the best.”

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Walmart’s new membership program can’t beat Amazon Prime, experts say

Walmart Inc. confirmed it will be launching a membership program, Walmart+, that’s already being called a rival to Amazon.com Inc.’s Prime program, but there are some experts don’t see it that way.

Amazon Prime AMZN, -0.03% has more than 150 million Prime members around the world, according to a statement from Chief Executive Jeff Bezos included in the fourth-quarter earnings announcement.

Amazon Prime has created an ecosystem by bundling its e-commerce offering with other benefits, including speedy one-day delivery, with Prime Video, Whole Foods Market, a music offering and other products and services.

Walmart WMT, -2.46%  declined to give any detail about the benefits that come with Walmart+ membership. Nevertheless, some are already forecasting that it will fall short of the perks that Prime has become known for.

“The thing to anticipate is that they will go in at a dramatically reduced price because that’s really in many ways when you look at the potential features they can offer, the only one they can go in with,” said Stephen Beck, managing partner at cg42, a management consulting firm.

At the center of this problem is Walmart’s approach, which puts its traditional retail business and e-commerce business in different buckets.

“Walmart is very clear that when they’ve attempted to fight the battle with Amazon, it’s with silos, acquisitions and mimicking what Amazon did years ago,” Beck said. “Prime has been around for a long time and has developed way beyond prepaid shipping.”

Prime launched in 2005. At this point, Beck says that Prime is attracting members for things like “Man in the High Castle” and its other programming, just as much as for free delivery.

Part of having a more cohesive approach also comes down to messaging. Lately Walmart has been a bit scattered.

“Walmart’s messaging was always that you didn’t need to pay a fee for fast shipping, right? Jet had a membership program and then killed it very early on, didn’t it?” asks Sucharita Kodali, retail analyst at Forrester.

That actually was part of the messaging from Walmart at the start of the holiday shopping season.

“New this holiday season, customers can order from up to hundreds of thousands of eligible items and have them delivered to their house the very next day without a membership fee,” Walmart wrote in an Oct. 23, 2019 press release.

Overall, Kodali said, she just hopes that Walmart isn’t trying to replicate Prime because “that doesn’t make too much sense.

On its face, a membership program isn’t a bad idea, said Tim Campbell, director of market insights at Kantar. But Walmart must be prepared to constantly improve on what it starts.

“The good news is that Walmart has shown a willingness to continually innovate across its operations from the backroom to fulfillment to associate apps to providing health care for customers,” he said.

Watch: How 5G could revolutionize manufacturing and retail

Walmart has also shown a willingness to change course if something isn’t working. The retail giant acquired Jet.com in 2016 for $3.3 billion. The company announced in June 2019 that it would absorb Jet.com staff as part of what The Wall Street Journal called a “winding down.” And earlier this month WSJ announced that Walmart was shutting down its Jetblack shopping service and laying off hundreds of workers.

“Instead of trying to beat Amazon at its own game, Walmart should focus on solving actual problems for its target demographic,” said Katrin Zimmermann, managing director of the Americas, TLGG Consulting.

“Traditionally from lower income brackets, many of Walmart’s customers don’t own a credit card making it difficult for them to participate in e- commerce. Innovative solutions in the finance and mobile pay sphere might hence be a way for Walmart to retain these customers.”

Even if Walmart doesn’t settle on this strategy, Zimmermann says it can “experiment with different business models around subscription,” which could take them in different directions.

Experts say that grocery and grocery delivery will be key to the membership offering, along with prescriptions and fuel.

Things like free samples and advanced access to new products would “also make a Walmart+ member feel part of an exclusive group of folks who’ve gained access to something,” said Shelly Socol, co-founder of One Rockwell, an e-commerce agency specializing in lifestyle brands.

But perhaps one of the biggest challenges will be trying to entice some of those millions of Prime members into giving up that program for Walmart+. Cg42’s Beck emphasizes that no one will feel the need to be a member of both.

“Have you ever met anyone who said, ‘I’m really frustrated with Prime?’” Beck asked.

Walmart stock has gained 7.5% over the past year while Amazon is up 12.4% for the period. The Dow Jones Industrial Average DJIA, -1.39%  is down 3.5% for the period.

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Coronavirus-driven selling chills IPO market as just one company braves market this week

The bruising selloff in equity markets this week has had a chilling effect on the initial public offering market, as companies put their plans on ice and await more favorable conditions.

The Dow Jones Industrial Average DJIA, -2.69%, the S&P 500 SPX, -2.17% and the Nasdaq Composite Index COMP, -1.51% are all on track for their biggest weekly declines since the 2008 financial crisis as investors spooked by the rapid spread of the COVID-19 coronavirus around the world dump their holdings.

There are now more than 83,704 cases of COVID-19 and at least 2,859 deaths, according to the latest figures from the Johns Hopkins Whiting School of Engineering’s Centers for Systems Science and Engineering. About 36,000 people have recovered.

China continues to bear the brunt of cases and deaths, but the first cases emerged Friday in Brazil, Georgia, New Zealand and Norway.

Against that background, just one company braved the U.S. IPO market this week.

“IPOs that should be under way by now have been put on hold,” said Kathleen Smith, principal at Renaissance Capital, a provider of institutional research and IPO-related exchange- traded funds. She cited as examples Warner Music, J.Crew’s Madewell, wood substitute maker Azek and chemicals company Atotech.

Read now: Here are 5 reasons the stock market is having its worst decline since 2008, and only one of them is the coronavirus

Also: 5 things to know about J.Crew spinoff Madewell and its upcoming IPO

Duncan Davidson, general partner at early-stage venture fund Bullpen Capital, which specializes in technology companies, said IPOs will take a breather until the selling has subsided, but that he is not seeing signs of an industry in a state of panic.

“For VCs, the question is, is this 2000 or 2008,” he said, referring to the dot-com bust and financial crisis. “2000 was bad for tech, but 2008 wasn’t.”

Also: Diary of a quarantined American in coronavirus-era China

The market is still digesting the troubled IPO of mattress company Casper Sleep Inc.CSPR, -2.65%, which Davidson described as Strike 2 for tech IPOs, with the WeWork deal that collapsed last year acting as Strike 1. Casper has stumbled since going public earlier this month amid concerns about its continued losses and uncertain path to profitability. The stock is currently trading about 28% below its IPO issue price.

See now: What does the ‘WeWork effect’ mean for IPOs in 2020?

Casper and WeWork are two examples of “fake tech” companies that have created a bubble that’s about to pop, he said. Casper is an alternative mattress company, while WeWork is a real-estate company, but both tried to persuade investors they belonged in the tech space.

The final blow would be for the next real tech company to have a failed IPO, although a major selloff of a big tech player like a Tesla Inc.TSLA, -4.84% or Apple Inc.AAPL, -1.97% would equally dent sentiment, he said. Davidson is expecting companies to wait until May before attempting a deal.

“The right company should do well, because the market is starved of new properties and buybacks have reduced the stock of shares,” he said.

Meanwhile, the week’s sole IPO, biotech Passage Bio PASG, +20.42%, was performing strongly on Friday, even after the deal priced at the high end of a $16 to $18 price range, and was upsized to 12 million shares from 10 million.

The preclinical company raised $216 million with proceeds to be used to fund clinical development of therapies for rare, monogenic central nervous system disorders.

“Our vision is to become the premier genetic medicines company by developing and ultimately commercializing therapies that dramatically and positively transform the lives of patients suffering from these life-threatening disorders,” the company said in its IPO filing documents.

The stock is listed on Nasdaq under the ticker symbol “PASG.” JPMorgan, Goldman Sachs and Cowen were lead managers on the deal.

The Renaissance IPO ETF IPO, -1.98% was down 0.5% but is still in the black for the year-to-date, while the S&P 500 indexSPX, -2.17% has fallen 9% this year.

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Best Buy says coronavirus-related supply chain issues factored into guidance

Best Buy Co Inc. gave fiscal first-quarter and full-year guidance on Thursday that takes into account the coronavirus epidemic’s impact on the consumer electronics retailer’s supply chain.

Best Buy BBY, -4.35%  forecasts that most of the impact from the coronavirus will happen during the first half of the year.

“Therefore, we view this as a relatively short-term disruption that does not impact our long-term strategy and initiatives,” said Best Buy Chief Financial Officer Matt Bilunas in a statement.

For fiscal first quarter, Best Buy expects enterprise revenue of $9.1 billion to $9.2 billion, same-store sales growth of flat to up 1% and adjusted EPS of $1.00 to $1.05. FactSet is guiding for revenue of $9.27 billion, same-store sales growth of 1.8% and EPS $1.01.

For the year, Best Buy expects revenue of $43.3 billion, to $44.3 billion, same-store sales growth of flat to 2% and adjusted EPS of $6.10 to $6.30. The FactSet guidance is for revenue of $44.2 billion, same-store sales growth of 1.6% and EPS of $6.26.

“There are some supply chain-related issues as a result of coronavirus,” Bilunas said on the earnings call, according to a FactSet transcript. “So on the low end of our guide, we would assume that there’s a material supply chain disruption from that and that we can’t make it all up in the year.”

Even taking the virus outbreak into account, Best Buy Chief Executive Corie Barry says that “trying to size perfectly the coronavirus impact at this point is incredibly difficult.”

Manufacturers and suppliers are on the lookout for complications throughout the flow of merchandise.

“Even if a product isn’t finalized in Asia, some people are waiting for complications that may flow from there,” Barry said. “There are varying levels of safety stock across the industry, and global vendors have varying levels of global inventory. And then obviously estimating the transportation situation once the produce comes back is also difficult.”

Also: Coronavirus could drive up out-of-stocks at stores by April: Wells Fargo

Best Buy reported fourth quarter earnings and revenue that beat expectations. Raymond James analysts say the results show that the company is creating the right mix of products and services.

“This coincides with our thesis that the company’s holistic approach in offering premium consumer electronics, tech services, and healthcare solutions will lead to a more dependable, and higher margin revenue stream in the coming years,” wrote analysts led by Matthew McClintock.

Raymond James rates Best Buy stock strong buy.

Best Buy’s results also show that the retailer was able to withstand the pricing and swift delivery pressure from the competition.

“Pricing discipline was maintained despite an intensely promotional environment, particularly from Walmart and Amazon as both utilized price and shipping promotions to drive sales, with Best Buy able to hold the line on margins despite a drop in gross profit as expenses were leveraged,” said Charlie O’Shea, Moody’s lead Best Buy analyst.

Best Buy also benefitted from a shift in holiday wish lists among younger consumers who prefer electronics like headphones over toys. This is “a factor that also had a detrimental impact on toy sales,” said Neil Saunders, managing director at GlobalData Retail.

Watch: How 5G could revolutionize manufacturing and retail

And appliances, a strong category for Home Depot Inc. HD, -4.27%  , was a strong category for Best Buy as well.

“Best Buy continues to win share in this category, both thanks to the strength of its assortment and because of the drop out and pull back of other players such as Sears and J.C. Penney,” Saunders said.

Best Buy stock slipped 4.7% in Thursday trading, but is up 9.2% over the last year. The S&P 500 index SPX, -3.23%  has gained 3.4% for the last 12 months.

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‘We are focusing on faster growth categories’

Digital business, which is multiple billions, continues to grow in double digits: Cognizant CEO

Cognizant has witnessed a slew of changes in terms of its strategy, spearheaded by Brian Humphries who took charge as CEO on 1 April, 2019. Mr. Humphries talks about the company’s strategy and hiring plans. Edited excerpts:

2019 was a mixed bag for Cognizant with a lot of changes in terms of strategy. How do you see 2020 shaping up?

[The year] 2019 was the year of change for Cognizant, with a new CEO coming in. The new CEO who had inherited the company which might have been little distracted in the last few years. So, it was an important year of analysis and I tried to rally the organisation together behind the promise of returning to growth, a promise of once again being a bellwether in the IT services industry.

Through a transformation office, we have assessed where we stood at various levels in terms of our culture, our delivery organisation, commercial teams etc. We now have our so-called fit-for-growth strategy in order to scale Cognizant from $17 billion to $30 billion in the coming years. For three quarters in a row, we beat Wall Street’s expectations. [The] other good news is that there is a growing level of employee confidence, as evidenced by the fact in Q4, voluntary attrition was at its lowest level in two years. I am very optimistic that all the hard work from last year will serve us well in 2020.

What has been your major strategy shift?

We have refined our previous strategy, which allows us to expose ourselves to faster growth categories. Categories include international markets. By international markets I mean everything other than North America. Today, they represent just 24% of our business and we have a huge opportunity given that we are under penetrated in those countries.

The second part of the strategy is focusing on digital, in which we have selected four key battle grounds — data and analytics, cloud, digital engineering and Internet of Things (IoT). This business, for us today, is already multiple billions in size and larger in operations already. It continues to grow in double digits. We are also leveraging our strong balance sheet to strengthen our strategic execution.

For instance, in the last month, we have acquired two sales force platinum partners with a view to facilitating the execution of our planned strategy.

Do you think the double digit revenue growth rate is a thing of the past?

I hope not. We have a big ambition to return Cognizant to being great again. I think the momentum has been building. And there is a feeling inside of Cognizant, it is coming back and we are on the way once again here to beat and scare the competition. All this starts with client-centricity.

That has been one of the many things I have been preaching and practising ever since I joined Cognizant. As a new CEO, you want to set values and behaviours. One of things I wanted to re-integrate at the executive level is client centricity. It is going all around the world, seeing clients every day, every week and making sure we talk about new face of Cognizant and its new and refined strategy. We are planning to reinvest about $300 million back into revenue growth. One of the great things about our industry is it is huge and market is about $1.3 trillion, growing at about 5%. So, it is a huge growth market. And, there are pockets like digital where the growth is above 10%, which keeps us going.

Your lay-off announcement last year had created a lot of panic. What will be your hiring strategy?

There have not been [any] mass lay-offs and they were just rumours. We are planning to increase our headcount in India. We are adding 23,000 freshers this year starting June, when compared to the 17,000 we added last year. So, you are seeing our commitment to India on an the ongoing basis.

Once in a while, you have to reshape your pyramid because you became little bit heavy in the middle or the top. We will always do that. I don’t wake up and think about headcount reduction, I wake up to think about growth. Currently we are here to make sure that our employees are working for a winning company and drive higher growth rate. Given our focus on digital business, we have gone on record to say we need 25000 skilled people to meet the growth we anticipate in the business. Me and our Indian Head Ramkumar Ramamoorthy have spent a great deal of time working with Universities in India on the required skill sets. The 25000 requirement would be met through combination of freshers hiring and training them, reskilling of existing employees and also through laterals.

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