Why Now Might Be A Good Time For Adidas To Sell Its Reebok Brand

Adidas To Sell Reebok

Adidas might sell its struggling Reebok brand, potentially taking advantage of the strength of athletic goods, which have been a bright spot in apparel during the Covid-19 crisis.

On Monday, Adidas (ticker: ADDYY) said it was reviewing Reebok’s future, which could include a sale. The news comes ahead of the company’s five-year blueprint, which it is set to present in March, although the German athletic giant said it could ultimately decide to keep the brand.

Adidas purchased Reebok for $3.6 billion (A$4.76 billion) in 2006, as it looked to extend its reach in the U.S. But the process wasn’t a smooth one, and Adidas Chief Executive Kasper Rørsted announced a turnaround plan for Reebok shortly after he took the helm in 2016. On the one hand, that has been a success in that Reebok once again became profitable, two years ahead of schedule, and last year increased U.S. sales by double digits.

In another sense, though, Reebok remains a weak point in Adidas’s portfolio. It has lagged behind during the pandemic, with third-quarter sales falling 12.3%, nearly double the flagship brand’s 6.7% decline. Some analysts estimate that Reebok could sell for as little as $2.3 billion (A$3.04 billion), well under what Adidas paid for it.

While many investors have called on Adidas to divest itself of the brand before, now could be a particularly auspicious time for such a move. The pandemic has decimated demand for clothing and accessories in general, as people work and learn at home, but athleisure has bucked that trend.

Companies such as Nike (NKE) and Lululemon Athletica (LULU) have seen sales shrink much less dramatically than peers this year, and have been rewarded with rallies of 34.5% and 52%, respectively. Partner and third-party retailers, including Foot Locker (FL) and Nordstrom (JWN), have highlighted strength in fitness categories, as well, in recent earnings reports.

Athleisure isn’t a new trend, but consumers’ renewed focus on health and comfort during Covid has been a major tailwind. That has led for renewed calls for other companies to sell their outperforming fitness-focused labels, such as Gap’s (GPS) Athleta, although Gap said it plans to hold on to the brand.

That means that if Adidas were to sell Reebok in the near future, it could fetch a higher price, especially if it can continue to show improvement throughout the holiday season.

That would be welcome news for the stock. Compared with Nike and Lululemon, Adidas hasn’t done as well. Its American depositary receipts are up just over 7% year to date, and the European shares have been laggards.

H&M Has Lagged Behind Zara Owner Inditex In Online Shopping. Both Stocks Fell.

Zara & H&M

The Covid-19 pandemic caused sales to slump at retail giants Inditex and Hennes & Mauritz (H&M) in November, reversing glimmers of a recovery and shining a light on the very different online sales performance between the two companies.

Shares in both companies fell in European trading, with Inditex, which owns Zara, trading near 2% lower and H&M dropping more than 2% on Tuesday.

The back story. As global coronavirus infection rates slowed through the summer and government restrictions were loosened, shoppers flocked back to stores after months of retail closures. Both Spanish Inditex and Swedish H&M—the largest and second-largest fashion chains in the world, respectively—returned to profitability in the autumn after large losses.

With the Covid-19 pandemic keeping millions of shoppers housebound, Inditex has made a key investment in expanding online shopping. In June, the company announced a €2.7 billion ($4.34 billion) investment plan to improve online operations and increase store footprint, of which €1 billion was earmarked for digital investments.

H&M, still controlled by its founding Persson family, was already struggling before the pandemic hit. The company has been slower to shift to online shopping in favour of its more than 5,000 stores and the low-cost fashion strategy it helped pioneer.

What’s new. Both companies reported results on Tuesday—Inditex for the three months to the end of October, and H&M for the quarter ending Nov. 30 as well as the full year.

Store and online sales grew slowly from August to October at Inditex, with October sales at 94% of 2019 levels at constant currencies. In total, net sales of €6.1 billion in the third quarter were 14% lower than the same period in 2019. However, as coronavirus cases surged in November, 21% of stores remained closed and sales fell to 81% of 2019 levels.

At H&M, net sales for the fourth quarter were 10% lower in local currencies from the same period last year. Much of that came in the final month: sales were down by just 3% year-over-year from Sept. 1 to Oct. 21, but were 22% lower than 2019 in the period from Oct. 22 to Nov. 30.

Looking ahead. The results from the retail giants show the impact the second wave of Covid-19 has brought on sales. Fears over how much this hurts the bottom line for the full year is what may have caused both stocks to fall.

But the results also shine a light on the companies’ different online strategies—a crucial sales platform beyond the pandemic. Inditex reported that online sales grew 76% in the nine months to the end of October, while analysts expect H&M to lag far behind. The Swedish retailer didn’t post any fresh online figures on Tuesday. It had posted online sales growth of 40% in the second quarter and just 27% in the third.

Charitable Gift Annuities Are 0n The Rise

Move over, charitable trusts. Make way for the charitable gift annuity.

Typically viewed as entry-level gifting methods thanks to low minimum contribution amounts, low cost, and simplicity, charitable gift annuities have had a spike in inflows from wealthy donors lately. According to a BNY Mellon Wealth Management study, in 2019, assets in gift annuities were up 21% over the prior year, and the average gift was 56% larger. Assets continued to flow into charitable trusts, but at only a slightly higher level than in 2018.

The surge in popularity in gift annuities is likely a result of people’s desire for a guaranteed lifetime annuity at a time when yields are at historic lows in the fixed-income market, and a hesitation to sock money into a charitable remainder annuity trust (CRAT). 

A CRAT is the gift annuity’s equivalent in the trust world, and typically a popular tool. But ultralow interest rates and high valuations in the stock market make for a lousy environment for CRATs, says Crystal Thompkins, national director of gift planning services at BNY Mellon Wealth Management, who expects gift annuities’ popularity to extend through this year. 

As winds shift in the economy, the markets, and regulatory environment, it’s not uncommon for the popularity of different charitable planning tools to rise and fall. Given the surge in popularity of gift annuities, it’s worth a look at how they size up these days relative to their closest charitable trust cousin. 

Charitable Gift Annuities

A charitable gift annuity is a simple contract guaranteeing that if you give a nonprofit organisation a lump sum, it will pay you a fixed, lifetime annuity based on actuarial factors—a host of market factors combined with your life expectancy. Minimum donations are around $2,000 and, unlike a trust, no attorney is required to set one up (hence no attorney fees).

Even if you live beyond your life expectancy, after your lump-sum equivalent has been paid out, you continue to receive the annuity. Depending on the contract, the annuity can continue to pay out to a surviving spouse. If you and your spouse die before your lump sum has been paid out, the charity keeps the balance in its coffers.

Payments can be deferred, which increases the amount paid out in the future annuity. A partial donation for the gift can be taken upfront. Capital gains taxes on the growth of underlying assets are spread over the annuity payments. When interest rates are low, the future capital gains’ bite out of annuity payments is lower, leaving more intact as income, Thompkins says. 

Nonprofit groups that offer charitable annuities have large infrastructures, such as museums and universities. “We’re talking those with hundreds of millions in assets that are segregated to support their annuity programs,” Thompkins says. “These are diverse pools designed to absorb potential risk. It’s like managing a pension.”

The downside is that not all nonprofits offer gift annuities, and they aren’t customised, says Pam Lucina, chief fiduciary officer at Northern Trust. 

Charitable Remainder Trusts

In contrast, trusts can pay out to a number of different charities, over a specified period of time instead of a lifetime, and can be used to transfer assets to heirs. The CRAT is the most similar to a gift annuity: It turns a lump sum into an annuity, and what’s left at the end goes to charity—at least 10% of assets transferred to the trust is required to be left as a gift. 

But the CRAT has lost its luster lately, Thompkins says. The annuity and future gift are dependent on the high probability of the underlying invested assets performing within certain parameters. With stock market valuations high, and the economy in ragged shape due to Covid-19, there’s good reason for concern that the market could enter a sustained bear market.

“In 2008 and 2009, there were trusts that were exhausted with no benefit to either the charity or the donor,” Thompkins says. “Many people are leery now.”

Book Recommendations From Business Leaders and Cultural Influencers

Jenny Johnson

President and CEO, Franklin Templeton

A Woman of No Importance: The Untold Story of the American Spy Who Helped Win World War II, by Sonia Purnell

“This is a remarkable story of an American woman who served as a secret undercover agent in France during World War II—first as a spy for the British Intelligence agency SOE, because the U.S. state department refused to let her join, and then later for the U.S. She had unbelievable success in mobilizing the French resistance—fortunately, unconscious bias worked in her favor, as the Germans could not imagine that a woman with a disability could be so effective at undercover work—including bold prison breaks! Despite her success, the SOE refused to promote her, until finally it became abundantly clear that she was far more effective than her

superiors, and she was appointed to a leadership position.”

Greg Norman

World Golf Hall of Famer, Chairman and CEO, Greg Norman Co. 

Rise and Kill First: The Secret History of Israel’s Targeted Assassinations, by Ronen Bergman

“The book was recommended by a few of my friends. I recently went on a trip to Israel and was fascinated by how such a small nation has had such a difficult history. This book really showcased how hard Israel has fought and continues to do so for its sovereign rights.”

David Hunt

President and CEO, PGIM 

The Third Pillar: How Markets and the State Leave the Community Behind, by Raghuram Rajan

“While the globalization of capitalism has been responsible for lifting millions of people out of poverty, in an age of rising inequality, many are rightfully questioning the system as a whole. Rajan’s The Third Pillar offers an

excellent framework to understand the problems associated with market-based economic systems and help us think about solutions.”

Dana Canedy

Senior Vice President and Publisher, Simon & Schuster

White Ivy, by Susie Yang

“I absolutely love fiction with characters that are so richly realized and that defy stereotypes and show us new ways to see cultures and the people who make them so complex and vibrant. Yang does not disappoint, with this brilliant work of literature that offers a unique view of the immigrant experience and left me thinking about class and character in unexpected ways.”

Cristina Mariani-May

CEO, Banfi Vintners

Can’t Hurt Me: Master Your Mind and Defy the Odds, by David Goggins  

“I was inspired by Goggins ’ perseverance and drive. As a working mom who recently reorganized her business after 100 years of being family owned and operated and who worked to reposition it for today and the next generation, I really loved the role model I found in Goggins. I am also an ultra-marathon runner, and David tells amazingly detailed stories of long-distance trail runs. If you want to feel empowered, read this book!” 

Fighting Bushfires Goes High Tech With Laser Drones, Sensors And Satellites

Australian Bushfire

SYDNEY—In October, a sensor mounted on an 8.5-metre pole in the Australian countryside detected small particles in the air near a timber plantation and sent out an alert.

When plantation staff arrived, they found a small man-made fire that was already under control, but the incident offered a glimpse of how authorities hope to use new technology to battle bushfires that have grown increasingly intense in recent years.

As a new fire season begins in Australia—a recent bushfire ravaged about half of Fraser Island in the country’s east—researchers are looking to rely more on technology to find blazes quickly and better predict their path.

A monthslong government inquiry into the devastating 2019-2020 fire season in Australia, which killed more than two dozen people and burned an area bigger than Washington state, concluded that authorities need to be better prepared and recommended that officials work with the private sector to develop new technology.

“We’re still detecting fires with people in towers and binoculars. We’ve got to move beyond that,” said Leigh Kelson, program director at FireTech Connect in Australia, a government-funded effort to help startups develop new firefighting technologies. Firefighters also rely on the equivalent of 911 calls to find new blazes.

The ideas researchers are exploring include fitting drones with lasers that can map dry areas at higher fire risk and whether satellites can detect extreme fire behaviour.

Last fire season, authorities were surprised by how quickly the blazes spread and how long they burned, which they later attributed to a prolonged drought that had left the land parched with plenty of dry vegetation to fuel the flames. Last year was Australia’s hottest year on record, according to the government’s Bureau of Meteorology, and fires are projected to become more intense and frequent because of climate change.

Parts of Australia have received more rainfall in recent months, and the current fire season isn’t expected to be as severe. Still, firefighters have struggled to control some of the blazes. The fire on Fraser Island, the largest sand island in the world and a Unesco World Heritage site, prompted officials to tell some residents to evacuate from homes in the path of the flames. On Sunday, firefighters said rainfall had finally helped to contain that blaze, which started in mid-October.

Other regions, including the western U.S. and even in frosty Siberia, have experienced particularly intense fire seasons recently, stretching global firefighting resources and making early detection of fires more crucial. Fires left unchecked can create their own weather systems, raining embers down on nearby communities and pushing dangerous smoke into big cities and even to neighbouring countries.

The sensor that picked up the October fire near the timber plantation is one of more than 40 in a network that covers an area nearly double the size of New York City in Australia’s Victoria state. The solar-powered, cylinder-shaped sensors are packed with instruments including optical and thermal cameras, flame detectors, particle counters for air quality, and ground-vibration readers. The data are publicly available online in real-time.

Attentis Pty. Ltd., a Melbourne, Australia-based company, finished installing the network in early 2019 as a pilot project to demonstrate the technology. They didn’t get much use detecting fires last season because the blazes were too far away.

Cameron McKenna, managing director at the company, said he is in talks to install similar sensor networks to improve fire detection capabilities in other parts of the country. “We use multiple methods of detection as opposed to a single method,” he said.

In Canberra, Australia’s capital, researchers are working with a local firefighting agency to install video cameras on four fire towers. One tower will also have a thermal camera installed.

A computer program will scan images from the thermal camera to detect fires, and a person will monitor the other video feeds. Researchers plan to develop a computer program to automatically scan the video feeds too, said Marta Yebra, director of the Australian National University Bushfire Initiative. The idea is to determine whether the cameras detect new fires quicker than the old-fashioned way of having a person in the fire tower, she said.

Rohan Scott, who leads the rural fire service in the Canberra area, said people in towers on average spot fires within seven minutes of ignition. But the towers are only staffed on high-risk days.

“If we can get detection 24/7 but at the same speed as a human-manned fire tower, then I think that would be a good outcome,” he said. “Anything quicker than that would be a definite bonus.”

Other ideas involve using drones fitted with lasers to create detailed maps so authorities know which areas have more dry vegetation and present a higher fire risk. One recent effort involved researchers poring over satellite imagery in an attempt to build a model for detecting extreme fire behaviour from orbit. They found that changes in smoke colours could help predict fire behaviour, according to the Minderoo Foundation, a nonprofit that sponsored the research.

One company, Fireball.International Pty. Ltd., says its machine-learning method can detect smoke from ground-based cameras and fires from heat signatures on thermal-satellite images. Its system is already being used by a big power company in California, and Fireball plans to begin pilot programs in Australia this fire season, executives said.

A prototype of the system detected smoke from fires within 15 minutes of ignition, while averaging less than one false positive a day per camera, according to an analysis published in a peer-reviewed journal in January. It said there is room for improvement.

“People are beginning to realise, ‘Gosh, we really can detect a fire in the first five minutes,’” said Tim Ball, an academic and co-founder of the company who is also a former firefighter.

A Cliffside Manor With A Modern Refresh

Gap Road, Watsons Bay

Privately positioned cliffside 8 Gap Road, Watsons Bay offers expansive views of the city’s twinkling harbour, via a former 1920s Masonic Lodge that has been reimagined and delivered to luxurious modern standards by renowned architects Weir Phillips.

Dream living all year — through arguably the perfect new year’s eve party pad — the 5-bedroom, 5-bathroom home boasts a tangible sense of airiness and ease as driven by stately proportions and 5-metre ceilings across open plan living areas, bespoke arched windows connecting not only to history but the literal inside to outflow.

The finishes throughout are impeccable and unique, with 200-year-old French parquetry flooring paired to a Calacatta marble kitchen that’s fitted with Gaggenau appliances and an elongated, showpiece, marble benchtop for dining.

The upper level, accessible by private lift, sees the five large bedrooms each fitted with under-floor heating and Perrin & Rowe marble ensuites in each as well as a separate self-contained guest level.

The master suite comprises a dressing room larger than most Paddington boutiques (what’s left of them) and more views over Sydney Harbour.

Outdoors feature a covered entertaining area as well as a separate balcony space with in-built outdoor kitchen. There’s also a rebuilt Egyptian limestone pool with William Dangar designed gardens completing the space.

8 Gap Road Watsons Bay

Parking for two cars is secured by an electronic gate, security and camera system. The house sits within a two-minute stroll of Watson’s Bay Boutique Hotel, Robertson Park and known restaurants such as Doyle’s and Dunbar House.

The listing is with Michael Pallier of Sotheby’s Sydney, +61 417 371 544; POA.

sydneysothebysrealty.com

Martin Benn Finally Reveals The Name Of New Melbourne Restaurant

Martin Benn

When three-hatted chef Martin Benn announced that his lauded Sydney fine-diner Sepia was closing more than three years ago, heightened levels of anticipation surrounded his next move.

Combining with Melbourne restaurateur, Chris Lucas, Martin Benn and Vicki Wild kept their cards close, only revealing that an upcoming venue would be housed at 80 Collins street in Melbourne’s CBD.

Today, the trio announced the launch of Society – a 300-seat landmark establishment of dining and drinking due to open in late March 2021.

“This year we have been challenged like never before, but we have proven our resilience and in 2021 we will celebrate our achievements,” says Lucas. “Society is a restaurant for Melbourne and Australia, it will signal a rebirth of our great city and I hope it will be a restaurant that places us comfortably on a global stage.”Three venues will complete the offering at 80 Collins Street, with the centrepiece, the Society dining room – to also offer customised private dining – alongside the Lillian Terrace and a luxurious lounge bar.

The fit-out, by leading Melbourne design firm Russell & George will see the lounge bar connect the two restaurants, acting as a perfect hideaway for a Martini and a pre-dinner taste of what’s to come. Elsewhere, the main Society dining room sees lofty ceilings for a grand, yet intimate experience and the Lillian Terrace enjoys a leafy, open-air terrace experience for indoor-outdoor dining.

Martin Benn’s avant-garde cooking style will continue to evolve on the plate however the menus in all three environments will be entirely unique to each setting and will be a la carte throughout.

Societyrestaurant.com.au

Sydney’s ‘Villa Florida’ Is On The Market

Tivoli Avenue Villa Florida

Offering true waterfront, 12 Tivoli Avenue, Rose Bay, Sydney – built-in 1928 – is set across 1290sqm and is ready for sale.

Enjoying an extensive refresh courtesy of acclaimed architect Michael Suttor, the three-storey, 7-bedroom, 9-bathroom, 4-car parking residence – affectionately named ‘Villa Florida’ – offers an elusive street-to-waterfront property with views of Sydney Harbour.

Suttor and his team restored the home beyond its former glory, making use of its architectural features – such as the arched windows, a pitched cathedral ceiling, wrought iron balcony details and a jaw-dropping spiral staircase – drawing a line heightened levels of ‘European’ luxury.

The home sees a manicured courtyard area usher you into the approx. 930sqm home. Inside, the residence is replete with a combination of parquetry flooring, travertine limestone tiling and sandstone finishes alongside Venetian plastering finished in beeswax.

On the lower ground floor sits the billiard room, family room and kitchen, fitted with European appliances, granite benchtops and custom cabinetry.

Also on the lower ground floor are two bedrooms, each complete with an ensuite, accompanied by a further bedroom and access to the terrace.

Up the aforementioned spiral staircase to the ground floor lands the master suite which features a walk-in-robe and ensuite with access to a private balcony and the sunroom providing further water views through the arched windows. A further two bedrooms are also found on this level.

Elsewhere, on the ground floor, arrives the formal dining and living, complete with a working stone fireplace and another kitchen – with finishes coordinating with the downstairs offering.

Throughout the expansive residence, the nine bathrooms feature mosaic tiling and travertine limestone flooring with granite details.

Upstairs further to the first floor sees a further two bedrooms and a library that is accompanied by a large sandstone terrace that has capacity for 200 people.

Outside, the sandstone adorned pool loggia arrives with a bathroom and chef’s kitchen. Here, the terraced gardens guide you down to the water’s edge allowing the owner to soak in the best of what Sydney has to offer.

The listing is with Black Diamondz Property Concierge’s Monika Tu (+61 409 898 888) and Jad Khatta (+61 432 669 287). Price guide $45 million.

Blackdiamondz.com.au

Wi-Fi Wonderland: A Guide to Smart Home Holiday Decorations

Christmas House Lights

It’s the most wonderful time of the year—when you get the opportunity to outfit your home in all manner of illuminated goodness.

Whether you’re a fan of bold decorations or understated elegance, classic or contemporary styles, smart home technology can help you achieve the look—and manage it—with ease.

Below, a few options for high-tech holiday cheer.

Twinkly

Perhaps the name in connected Christmas lighting, Twinkly offers multi-color LED lighting options in a variety of forms—strings, icicles, curtains, clusters—all with clever and convenient smart technology. In addition to providing a palette of over 16 million colours, Twinkly makes it simple for users to get the exact look they want. In addition to offering voice control via Amazon Alexa or Google Assistant, Twinkly’s user-friendly app allows owners to program the colours they want down to the exact bulb—even letting them draw and customize the light scheme they desire by tracing with their finger. And if you’re not feeling particularly creative, no worries. Twinkly has a suite of pre-programmed lighting effects and animations that can be simply selected via the app or voice command. And, of course, as you would want from any holiday light, Twinkly lights are IP44-rated weatherproof, making them ideal for indoor or outdoor use.

Twinkly multicolour LEDs range from approx. $70 to $263, depending on size and configuration.

AtmosKIT Plus (M1)

Multicolour LEDs aren’t your only opportunity to play with light and magic this holiday season. The AtmosKIT Plus is a ViewSonic M1 short-throw projector that can quickly and easily drape your home in cinematic digital decorations. The endlessly portable projector, which weighs under two pounds and features a built-in, 360-degree smart stand, is capable of projecting on to surfaces 40 to over 100 inches away—and comes with 12 holiday decoration projections, with hundreds more available for download from AtmosFX.com. Or you can find and create your own. The AtmosKIT is able to wirelessly mirror and project anything you can play on an iOS or Android device, meaning you can loop snowflakes falling on your window, or play the entirety of “It’s a Wonderful Life” on your wall.

The AtmosKIT Plus (M1) is available for approx. $448.

Meross Smart WiFi Indoor/Outdoor Plug

The holiday season is all about traditions and perhaps you have some decorations which you use every year; maybe they’ve even been passed across generations. Well, never fear—you, too, can take advantage of smart technology. The Meross Smart WiFi is a dual port, indoor/outdoor plug that works with Apple Homekit, Amazon Alexa and Google Assistant, and can easily handle any of the weather conditions that mark the holiday season in colder climates. In addition to offering users voice control, app control and the ability to schedule when to power on and power off devices, the Meross lets you control each outlet independently—meaning you can power your decorations together, or decide to alternate between various holiday cheer scenes.

The Meross Smart WiFi Indoor/Outdoor Plug is available for around $40.

Hamilton’s Hottest Home Is Up For Grabs

Perched on the spectacularly private Hamilton hill, 55 Markwell street is a luxurious three-story residence boasting panoramic views of Brisbane’s CBD.

Designed by architect Shaun Lockyer, the 6-bedroom, 5-bathroom, 4-car garage residence is filled with a raft of resort-like amenities across a 2456sqm plot, only 10 minutes from the CBD and airport.

The main house offers over 1000sqm of living space and is fitted with a heady combination of timber, glass and stone achieving a contemporary aesthetic through floor to ceiling glass doors and windows, lofty ceiling heights and timber panelling.

On the first level, the kitchen well-appointed with Miele appliances, a marble island and is bordered with stonework pylons alongside a walkthrough butler’s pantry. Creating a free-flowing space are connections to the formal dining, casual dining, family room, lounge and outdoor deck area.

Additionally, on the first level is a study alongside four of the bedrooms, three of which come with ensuites.

Throughout the home, the bathrooms are adorned in a combination of limestone tiling or marble benchtops, with the aforementioned timber, stone, glass design trinity referenced.

Up the marble staircase, the upper level sees the master retreat, complete with its own ensuite, boasting twin vanities and ‘his’ and ‘hers’ walk-in robes and more impressive views.

The lower level of the home sees a private squash court, games room, personal gym, theatre and cellar, along with a laundry and yet another bathroom.

Built to entertain, the deck area and backyard host an outdoor kitchen, complete with barbecue, pizza oven, sink, built-in refrigeration and fire pit. There’s also a jaw-dropping 21-metre heated lap pool complemented by a spa and sauna.

On the technology front, the home is fitted with a C-bus lighting system, multi-zone security system with cameras and a Sonos sound system.

The residence also offers a separate fully self-contained one-bedroom cottage for the housekeeper or guests.

The listing is the Ray White New Farm’s Matt Lancashire (+61 416 476 480). POA

Rwnf.com.au