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Unilever Partners with Lazada to Grow in Southeast Asia
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Unilever PLC (UL - Free Report) has reportedly partnered with Southeast Asia's leading e-commerce player, Lazada in order to expand their businesses in the region. Per the deal, both the companies will work together on supply chain, fulfillment, data, marketing, social commerce and talent development in order to capture bigger share of the online retail market of Southeast Asia in fast-moving consumer goods (FMCG) product category.
Lazada Group was founded in 2012 by Rocket Internet in Singapore with the aim of establishing the business model like that of Amazon.com, Inc. (AMZN - Free Report) in Southeast Asia to take advantage of the nascent online consumer market there. In Apr 2016, Alibaba Group Holding Ltd. (BABA - Free Report) intended to acquire a controlling interest in Lazada, in order to capture the growing and developing market of Southeast Asia.
According to market research by Frost & Sullivan, online sales account for just 2.5% of total retail sales in Southeast Asia, compared to more than 12% in China. The deal will allow Unilever to grow its online sales by three times compared to its 2015 and 2016 levels.
The partnership will allow Unilever to test new products before sending them offline, while also allowing the company to offer exclusive products to Lazada shoppers. The data collected by Lazada will enable Unilever to understand consumer behavior patterns better and zero in on their interests individually online.
Global consumer products giant Unilever expects e-commerce to grow significantly in the region and thus we believe the partnership will prove beneficial for both the companies.
Unilever is currently considering a comprehensive review in order to return more cash to shareholders and undertake medium-sized acquisitions as well as indulge in more aggressive cost cuts. The decision of business review came after the maker of Dove products and Ben & Jerry’s rejected Kraft Heinz Co.’s (KHC - Free Report) $143 billion surprise offer in Feb 2017, as Unilever did not find any strategic or financial benefit in it. However, this bid compelled the company to undertake a business review to evaluate options regarding its portfolio, organization, cost structures, balance sheet and use of cash. The review results will be announced in April.
Meanwhile Unilever continues to struggle with declining volumes in Brazil and a soft economy in Russia. Further, the company is witnessing weakness in the developed markets with little sign of recovery in North America or Europe. Additionally, it has been delivering weak results for the past few quarters due to sluggishness in the emerging markets, which account for about two-thirds of the company’s total revenue. Though the emerging markets offer robust long-term prospects, they are generally volatile.
Overall, we are encouraged by the fact that Unilever is consistently focusing on product improvement through innovation. The company has also accelerated its cost containment measures to lower unnecessary expenses. Unilever has also entered into many deals to fortify its position in home care and personal care products. These acquisitions will strengthen its portfolio and generate substantial revenues.
Coming to the share price movement, prices have spiked following the news of the probable takeover. The stock rallied 18.76% since Feb 16, outperforming the Zacks categorized Soap & Cleaning Preparations industry, which gained just 6.57%.
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Unilever Partners with Lazada to Grow in Southeast Asia
Unilever PLC (UL - Free Report) has reportedly partnered with Southeast Asia's leading e-commerce player, Lazada in order to expand their businesses in the region. Per the deal, both the companies will work together on supply chain, fulfillment, data, marketing, social commerce and talent development in order to capture bigger share of the online retail market of Southeast Asia in fast-moving consumer goods (FMCG) product category.
Lazada Group was founded in 2012 by Rocket Internet in Singapore with the aim of establishing the business model like that of Amazon.com, Inc. (AMZN - Free Report) in Southeast Asia to take advantage of the nascent online consumer market there. In Apr 2016, Alibaba Group Holding Ltd. (BABA - Free Report) intended to acquire a controlling interest in Lazada, in order to capture the growing and developing market of Southeast Asia.
According to market research by Frost & Sullivan, online sales account for just 2.5% of total retail sales in Southeast Asia, compared to more than 12% in China. The deal will allow Unilever to grow its online sales by three times compared to its 2015 and 2016 levels.
The partnership will allow Unilever to test new products before sending them offline, while also allowing the company to offer exclusive products to Lazada shoppers. The data collected by Lazada will enable Unilever to understand consumer behavior patterns better and zero in on their interests individually online.
Global consumer products giant Unilever expects e-commerce to grow significantly in the region and thus we believe the partnership will prove beneficial for both the companies.
Unilever PLC Price, Consensus and EPS Surprise
Unilever PLC Price, Consensus and EPS Surprise | Unilever PLC Quote
Unilever is currently considering a comprehensive review in order to return more cash to shareholders and undertake medium-sized acquisitions as well as indulge in more aggressive cost cuts. The decision of business review came after the maker of Dove products and Ben & Jerry’s rejected Kraft Heinz Co.’s (KHC - Free Report) $143 billion surprise offer in Feb 2017, as Unilever did not find any strategic or financial benefit in it. However, this bid compelled the company to undertake a business review to evaluate options regarding its portfolio, organization, cost structures, balance sheet and use of cash. The review results will be announced in April.
Meanwhile Unilever continues to struggle with declining volumes in Brazil and a soft economy in Russia. Further, the company is witnessing weakness in the developed markets with little sign of recovery in North America or Europe. Additionally, it has been delivering weak results for the past few quarters due to sluggishness in the emerging markets, which account for about two-thirds of the company’s total revenue. Though the emerging markets offer robust long-term prospects, they are generally volatile.
Overall, we are encouraged by the fact that Unilever is consistently focusing on product improvement through innovation. The company has also accelerated its cost containment measures to lower unnecessary expenses. Unilever has also entered into many deals to fortify its position in home care and personal care products. These acquisitions will strengthen its portfolio and generate substantial revenues.
Coming to the share price movement, prices have spiked following the news of the probable takeover. The stock rallied 18.76% since Feb 16, outperforming the Zacks categorized Soap & Cleaning Preparations industry, which gained just 6.57%.
Unilever currently has a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>