MARKETING/SOCIAL MEDIA

Apple unseats Coke as world’s most valuable brand

BY Marianne Wilson

New York — Apple is the most valuable brand in the world, replacing Coca-Cola, which held the top position for 13 years, according to an annual study by brand consultancy Interbrand.

Apple’s brand value jumped 28% to $98.3 billion, followed by Google, with a brand value of $93.3 billion. Coca-Cola, which has held the top spot since Interbrand issued its first Best Global Brands report in 2000, fell to third place, at $79.2 billion. (The top 25 brands are ranked below.)

The annual report rates companies based on three key factors: financial performance, the role the brand plays in influencing consumer choice, and the strength the brand has to command a premium price, or secure earnings for the company. Companies must have a presence on at least three major continents to qualify for consideration.

“Every so often, a company changes our lives — not just with its products, but with its ethos,” said Jez Frampton, Interbrand’s global CEO. “This is why, following Coca-Cola’s 13-year run at the top of Best Global Brands, Apple now ranks #1. Tim Cook has assembled a solid leadership team and has kept Steve Jobs’ vision intact – a vision that has allowed Apple to deliver on its promise of innovation time and time again.”

Here are the top 25 brands in the Interbrand report:

  1. Apple
  2. Google
  3. Coca-Cola
  4. IBM
  5. Microsoft
  6. GE
  7. McDonald’s
  8. Samsung
  9. Intel
  10. Toyota
  11. Mercedes-Benz
  12. BMW
  13. Cisco
  14. Disney
  15. HP
  16. Gillette
  17. Louis Vuitton
  18. Oracle
  19. Amazon
  20. Honda
  21. H&M
  22. Pepsi
  23. American Express
  24. Nike
  25. SAP
keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

Polls

Consumer confidence is high. Is that reflected in your stores’ revenues?

View Results

Loading ... Loading ...
News

What Mid-Size Retailers Should Know about Navigating Today’s Debt Capital Markets

BY CSA STAFF

By Jim Hogan, [email protected]

The U.S. economic recovery is firmly underway and the growth prospects for many mid-size companies are better today than they’ve been for more than five years. The Federal Open Market Committee expects steady growth in the 3% range through the end of 2014 in the US, and the latest data (Q2, 2013) from the National Center for the Middle Market shows that more than half of mid-size retail companies have confidence in the current state of the U.S. economy, a sentiment that has been trending upward since Q3 2012.

For mid-size retail companies — those with anywhere from $10 million to $1 billion in revenue — the combination of steady growth and affordable capital is rare indeed. There is also ample liquidity as traditional middle market lenders are being joined by institutional investors with deep pockets and a strong desire to participate in these loans. What’s more, new products are available that give borrowers more flexibility.

In short, it’s a near ideal environment for mid-size company borrowers. However, that doesn’t make navigating the debt capital markets any easier. With more lenders and more options, it’s arguably become more complex. There are new senior debt options available from banks, financial companies and institutional investors that can be structured as either asset-based loans (ABL) or cash-flow-based loans. Junior debt offerings in the form of second-liens and mezzanine funding remain widely available in the private market. Meanwhile, the biggest mid-size retail companies could bypass these private offerings altogether and tap the public debt markets instead, where they can lock in low rates for longer periods. CEOs and CFOs looking to take advantage of the current environment to ramp up borrowing should keep a few developments in mind.

Liquidity from institutional investors
In the past, lending to mid-size retailers was dominated by banks and finance companies. But now large institutions such as pension funds, hedge funds and bank run mutual funds are getting involved and account for 60%-70% of senior lending at the higher revenue end of the middle market.

A big reason for this increase in lending is institutional investors’ desire to diversify their holdings from fixed-rate debt to include more floating-rate debt, which offers some protection should interest rates start to rise. Plus, the yield is relatively good. Asset-based lending for middle market companies is typically 175-200 basis points over the London Interbank Offered Rate (LIBOR) while cash flow lending is usually rating-dependent with typical spreads at LIBOR plus 300-500 basis points.

The return of products and flexibility
Historically, the long-term financing available in the bond markets has only been open to larger mid-size companies with revenues closer to $1 billion. Most middle market companies have had to settle for bank loans that amortized in five years. But following the financial crisis, institutional investors are once again re-emerging to offer bond-like facilities to smaller middle market companies. They’re offering loans with virtually no amortization, as low as 1%, so these loans function more like bonds.

Other borrower-friendly products include “delayed draw facilities” and “incremental draw facilities.” In a traditional loan, the company gets all the money up front and immediately begins paying interest on the whole loan. For a fee, delayed draw facilities give a company the flexibility to draw down the cash and begin paying interest when they need it — often over a one- or two-year window. It’s similar to a revolver but in the form of a term loan. It can be a cost effective option for borrowers.

What’s more, as banks and institutional investors compete for assets in a slow growth economy, “covenant-lite” loans for mid-size companies have also returned. Loan covenants are certain measures that serve as early warning signs should a borrower run into trouble. Covenant-lite loan agreements have fewer restrictions and allow the borrower greater flexibility and often fewer reporting requirements.

The importance of holding and trading
There are some important lessons from the financial crisis that CEOs and CFOs of mid-size retailers should consider when assessing lenders. One of these is the lender’s loan syndication strategy. According to “A Syndicated Loan Primer” by Standard and Poor’s, a syndicated loan is provided by a group of lenders and is structured, arranged, and administered by one or several commercial or investment banks known as arrangers or agents. There are three types of syndications: in an underwritten deal the arranger guarantees the entire loan and then places part or all of the loan with a group of lenders. In a “best-efforts” syndication the arranger commits to underwrite less than the entire amount of the loan, which means if other lenders can’t be found the loan may not close. Finally, there is the “club deal.” These are smaller loans, usually $25 million to $100 million, but as high as $150 million that are pre-marketed to a group of lenders. The arranger is generally a first among equals, and each lender gets a full cut, or nearly a full cut, of the fees.

In all types of syndications, the agent’s relationships with other lenders and the ability to hold part of the loan on its own books are critical to the smooth execution of the deal. Before the financial crisis, many agents would syndicate the entire loan and not hold any on their own books, which wasn’t a problem unless the borrower ran into a rough patch and tried to amend the loan terms. If its agent didn’t own the loan, the borrower had to negotiate with a large group of lenders with whom it had no relationship. For this reason, many mid-size company borrowers now prefer to have their agent and a few core lenders hold at least 51% of the loan.

Some borrowers might also benefit from an agent that actively trades in the secondary market — where investors buy and sell previously issued loans—and makes a market for its loans. This trading activity offers valuable insight into how the company is viewed by the market. If, for instance, a company’s loan trades above par, it’s a sign that lenders might be willing to extend the company a new loan at a lower interest rate, as with bonds, loan prices and interest rates are inversely related.

Regulatory outlook
CEOs and CFOs may benefit by remaining attune to the regulatory issues that lenders’ face, which have become more burdensome since the financial crisis. For instance, the Federal Reserve just released new guidance for highly leveraged transactions (HLTs) directing all lenders to be extra vigilant when underwriting loans and demonstrate adequate capital to withstand losses. It’s too early to know the effects of the new guidance with certainty, but it could dampen some bank lending in the future.

Overall, the environment for mid-size company borrowers has rarely been brighter. According to the National Center for the Middle Market, retail executives expect a 4.2% increase in revenue in the next 12 months. More lenders, new products and good terms mean that quality companies have access to capital to grow and take advantage of the country’s economic recovery. By keeping a few key developments in mind, CEOs and CFOs can successfully navigate today’s debt markets and build a long-lasting relationship with the right lender.

Jim Hogan is senior managing director at GE Capital, Corporate Retail Finance, a leading provider of senior secured loans to retailers in North America, supporting working capital, growth, acquisitions and turnarounds (gecapital.com/americas). He can be reached at [email protected].


More Web Exclusives/Guest Commentaries

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

Polls

Consumer confidence is high. Is that reflected in your stores’ revenues?

View Results

Loading ... Loading ...
News

Holiday preview: Walmart touts digital capabilities

BY CSA STAFF

Walmart opened a dedicated online fulfillment center in Fort Worth this week and said its largest facility ever will open next spring in Bethlehem, Pa.

The two facilities will be full dedicated to the fulfillment on online orders and join an existing stable of 130 U.S. distribution centers, some of which also are used to fulfill orders placed online, according to the company. The Fort Worth facility measures 800,000-sq.-ft., will employ 275 full time workers and be operated by Brentwood, Tenn.-based OHL, a global supply chain management solutions company. The Bethlehem facility will be more than one million-sq.-ft., employ 350 workers and be operated by Walmart.

The new facilities are part of what Walmart calls its next generation fulfillment network that will allow it to deliver U.S. online orders faster and at a lower cost.

"With our dedicated online facilities and 4,100 stores within five miles of two-thirds of the U.S. population, we gain a significant advantage by being positioned in the most important location — close to our customers," said Joel Anderson, president and CEO of Walmart.com. "This unique combination allows us to get more products to our customers faster and at a lower cost."

The distribution enhancements come as Walmart has dramatically expanded its online assortment. The company said its online offering now exceeds five million items, more than double the number offered last year.

The company also reiterated earlier guidance indicating its ecommerce sales will exceed $10 billion this year and offered other nuggets information to showcase the growth of its digital business. For example, Walmart said its online assortment would reach into the tens of millions in the coming year and that global ecommerce growth, primarily Brazil, China and the United Kingdom, grew at 30% in the most recent quarter.

The company also noted that more than 10% of its orders are shipped from stores and more than 50% are shipped in less than two days.

keyboard_arrow_downCOMMENTS

Leave a Reply

No comments found

Polls

Consumer confidence is high. Is that reflected in your stores’ revenues?

View Results

Loading ... Loading ...