With customers continuing to seek lower-priced options due to inflation, the major players in value retailing are already far outpacing others in opening new stores in 2022 and appear to be riding mighty tailwinds heading into 2023.
For the fiscal year in January, Dollar General and Dollar Tree are on track to open 1,300 new stores combined, according to The Wall Street Journal. Dollar stores’ appeal is proving particularly strong in remote areas where major global retailers like Walmart cannot be found, and where amenities like next-day delivery from Amazon are rarely available.
Dollar General has announced plans to expand its slightly higher-market concept, Popshelf, into more suburban markets, according to CNBC. The chain intends to double Popshelf’s store count to 300 next year, to open 1,000 stores in the next three years, and to eventually operate 3,000 Popshelf locations. The format sells products mostly under $5 and targets a higher-income demographic looking for deals. The company has also opened forty Popshelf shops inside its Dollar General stores.
Among other value-players, Five Below and TJX stand out with more than 100 new stores arriving in 2022.
Value concepts in grocery have likewise expanded their footprints greatly over the past year, according to Winsight Grocery Business. Aldi will have opened 150 stores as it expands into the Southeast. Deep-discounted supermarket Grocery Outlet has been opening stores across the East Coast and Mid-Atlantic regions in eight states. And BJ’s Wholesale Club sped up its expansion in New York and nationwide.
Discussion Questions: How much of the expansion of dollar stores and budget grocers depends on enduring inflation? What other factors may be more important?
Comments from the RetailWire BrainTrust:
I think it is fair to say that inflation had some impact on the growth of value retailing. But one look at the tremendous growth of these brands over the past decade tells me that until the dynamics of our bifurcated economy change, value retailing will continue to be needed to meet the needs of many households. And the performance of value retailing will sustain.
Dave Bruno, Director, Retail Market Insights, Aptos
Sounds like all this inflation is leaving an indelible mark on the thinking of shoppers everywhere. And it’s not just about value … it’s also about share of wallet. With a greater share of wallet going to food, gas and energy, what discretionary categories will suffer the most? Apparel, travel, new cars? Value shopping will solve part of the problem. And just plain doing without may solve another part of the problem. It’s hard not to think about some level of recession as part of the corollary to this story.
Jeff Sward, Founding Partner, Merchandising Metrics
Sure, high food prices and stagnant wages are driving some shoppers to value retailers, thus hurting mainstream grocers to a degree. The good news for the latter is that private label sales are rising at the same time. All of this puts pressure on higher priced name brands.
John Karolefski. Editor-in-Chief, CPGmatters
In 1979 and 1980, the inflation rate reached 15%. For the entire decade of the ’70s, it was just under 7%. We didn’t have the expanse of value retailers then. As a result, the private label share of market soared and held for the next several decades. Today there are a wide variety of value retailers with their business going in the right direction. The problem on the horizon is there is only so much business to grab, and soon they will be stealing share from each other. It is not likely that all these low-margin retailers will be able to support the extraordinary expansion noted in the article. The value retailers’ margins are insufficient to survive a bump in the road.
Gene Detroyer, Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Value will always be en vogue. However, I continually advocate for consistent experiences, relevant assortments, and convenience. Presuming dollar stores, budget grocers, and other value-first retailers deliver on these factors together with a genuine dose of value for money, it’s likely their expansion will not be slowed.
Dave Wendland, Vice President, Strategic Relations, Hamacher Resource Group
Read the entire RetailWire discussion here:
Headline of the Week
Retail sales jump 7.6% during critical holiday shopping season
Retail sales jumped 7.6% during the critical holiday season that runs from Nov. 1 to Christmas Eve, according to Mastercard SpendingPulse, which tracks sales across all payment types. Americans chose to eat out during the holidays, with restaurant spending up 15.1% over the same time frame in 2021. Clothing rose 4.4%, while in-store sales rose 6.8% and online sales rose 10.6%. Electronics and jewelry fell 5.3% and 5.4% respectively. “This holiday retail season looked different than years past,” Steve Sadove, a senior adviser at Mastercard and former CEO of Saks Incorporated, said in a statement. “Retailers discounted heavily but consumers diversified their holiday spending to accommodate rising prices and an appetite for experiences and festive gatherings post-pandemic.”
Apparel & Footwear
L Catterton invests in plus-size brand BloomChic
Investment giant L Catterton announced an investment in plus-size digital retailer BloomChic. The investment is expected to position BloomChic to embark on its next stage of growth and further realize its vision of enabling mid- and plus-size women to easily find clothes that fit. In particular, it will leverage L Catterton’s global consumer insights and operating capabilities to scale its operations. The size of the investment was not disclosed. Bill Hu, the founder and chief executive officer of BloomChic, said, “L Catterton has an impressive track record of helping companies to build iconic brands, broaden product suites, enter new geographic markets, and attract talent. We are thrilled to begin working together to better serve the global plus-size women’s community.” Established in 2021, BloomChic is a digital-first fashion and lifestyle destination established for modern women sized 10-30.
Patagonia to close stores, give employees paid week off for the holidays
Patagonia employees in the U.S. and Canada will get a paid week off to end the year again. The nearly 50-year-old privately held outdoor apparel retailer also closed its U.S. and Canadian stores, warehouses and offices last year during the week between Christmas and the New Year and gave employees paid time off. “We’re doing it again this year,” CEO Ryan Gellert wrote on LinkedIn. “Our North [American] stores, customer service operations and warehouse will be closed from December 25 through January 1 because we believe in providing quality of life for our people,” said Gellert. The decision to repeat the end-of-year break drew widespread praise on the social media platform. Patagonia lists a little under 40 U.S. stores on its website and says it has 70 stores worldwide. In addition to North America, the company also has offices or operations in the Netherlands, Japan, South Korea, Australia, Chile and Argentina. It operates two distribution centers.
Athletic & Sporting Goods
Eastbay announced on its website that it will close. “We’re saying goodbye to Eastbay at the end of December 2022. We encourage you to shop at champssports.com to find great deals for your athletic shoes, clothing, and more,” reads the statement on Eastbay.com. The closure comes as Foot Locker announced in November 2021 that it officially merged its Champs Sports and Eastbay brands after integrating the corporate organizations for both banners in 2020. BSN Sports acquired the Eastbay team sales business in June 2022. Eastbay, founded in 1980, was acquired by Foot Locker, Inc. in 1997.
Under Armour taps 25-year Marriott veteran Stephanie Linnartz as CEO
Under Armour’s CEO search has ended, with the retailer naming Stephanie Linnartz as its incoming chief, effective Feb. 27, 2023. Linnartz joins from Marriott International, where she is currently president, according to a company press release. She has spent 25 years at the hotel company and is also currently a member of The Home Depot’s board of directors. As Under Armour CEO, Linnartz will receive a base salary of $1.3 million, according to a filing with the Securities and Exchange Commission. Colin Browne, who has served as interim CEO since Patrik Frisk stepped down in June, will resume his position as chief operating officer.
Cosmetics & Pharmacy
Bricks Outperform Clicks as US Holiday Prestige Fragrance Sales Increase 4%
Prestige fragrance in the US shows no signs of slowing down this holiday season after posting an 11% increase, bringing category sales of $1.3 billion in the third quarter. The NPD Group reported fragrance dollar sales grew by 4% from October 2 through December 3, 2022, compared to the same period in 2021. The category also outperformed overall discretionary general merchandise spending during key weeks, including Black Friday and Cyber Monday. Fragrance category sales growth was attributed to higher average prices combined with fewer discounts during this nine-week holiday period. NPD said the price increase was primarily due to consumers shifting their spending to higher-priced products, such as higher fragrance concentrations and luxury brands. Weekly retail tracking data from NPD during Black Friday week showed fragrance sales at brick-and-mortar outlets outperformed the online channel, driven by prices that are notably higher offline. Physical stores remain important for the fragrance category during the holiday period, accounting for 70% of sales in the nine weeks ending December 3, 2022, which is an increase of 1 point versus the same period last year.
Revlon’s Bankruptcy Plan Would Wipe Out Stockholders, Hand Ownership to Lenders
Ronald Perelman’s Revlon Inc. will likely pursue a debt restructuring that hands ownership of the company to lenders and wipes out stockholders, according to an agreement between the bankrupt cosmetics giant and two key creditor groups. The company entered a restructuring support agreement with a critical lender group and its official committee of unsecured creditors on Monday, filings show. The deal calls for doling out ownership stakes in Revlon to secured lenders, while mostly wiping out the company’s lowest-ranking creditors and leaving existing stockholders with nothing. The agreement assumes Revlon will seek bankruptcy court approval of the plan to hand ownership to lenders in the coming months, but allows the company to sell itself instead if a deep-pocketed buyer is found. Under the deal, Revlon must submit the plan to its bankruptcy judge this week and exit Chapter 11 protection in April.
Discounters & Department Stores
Retailers brace for tougher times and more frugal customers in 2023
January is typically an overlooked month for retailers. Shoppers make returns and exchanges. They come to stores with gift cards in hand. And they may spring for workout clothes or other items to follow through on New Year’s resolutions. But this year, January carries higher stakes. The next few weeks, which close out many retailers’ fiscal year, could help determine whether the holiday quarter is a win or a bust. It’s an important time for helping stores clear out excess inventory, too. January could also set the tone for 2023 — when some economists and retail industry watchers anticipate the U.S. will tip into a recession. So far, early holiday results have been better than some economists and retailers feared. Sales from Nov. 1 to Dec. 24 rose 7.6%, according to data from MasterCard SpendingPulse, which measures in-store and online retail sales across all forms of payment. The figure includes restaurants and is not adjusted for inflation, which rose 7.1% year over year in November.
Dollar General’s new Popshelf stores chase inflation-weary shoppers in the suburbs
Dollar General’s next big strategy for growth is tucked in a strip mall in suburban Nashville, and it is coming to other cities soon. It’s a new store called Popshelf. Over the past two years, the Tennessee-based discounter has tested the store concept, which caters to suburban shoppers with higher incomes, but sells most items for $5 or less. A wide range of merchandise fills the shelves, including holiday-themed platters, party and crafting supplies, novelty foods such as gourmet chocolates and Portobello mushroom jerky, and gifts like dangly earrings, lip gloss and toys. It’s designed to be a treasure hunt that keeps shoppers coming back.
Emerging Consumer Companies
Maker of smart air purifiers, Mila, raises $10 million Series A
San Francisco-based Mila, which launched its smart air purifier on Kickstarter three years ago, announced that it has closed a $10 million Series A at a $52 million post-money valuation. The round was led by existing investor Cercano Management and joined by Electrolux. The company plans to use proceeds from the round to hire, scale operations, and expand its product portfolio. “We’re at the cusp of a great ‘air awakening’ as the quality of the air we breathe becomes more top of mind for families. But the products families typically turn to provide little to no insight on whether or not they’re actually working. With Mila, families can finally monitor and control their indoor air quality effortlessly,” commented Grant Prigge, CEO and co-founder of Mila. “This investment will allow us to meet growing demand while continuing to build thoughtful, beautiful experiences that improve the health of our homes.”
Organic infant formula brand, Bobbie, teams up with Uber to make formula more accessible
Bobbie, the Mom-founded and led infant formula company founded in 2018, has been on a mission to improve accessibility to high-quality, organic infant formula since its inception as the first direct-to-consumer, subscription-based infant formula company in the US. Launched in 2021, the brand has since hit shelves at Target, and has now announced a partnership with Uber Eats. “Formula is food and nourishes our most vulnerable population. For years, we’ve helped our customers order nearly every type of food on Uber Eats, and we’re so proud to work with Bobbie to now help parents and caregivers get their babies formula on-demand through our app,” said Beryl Sanders, Head of New Verticals Partnerships at Uber Eats. “As a Bobbie mom myself, I know how important it is to have access to high-quality formula at any given moment. This first-of-its-kind partnership couldn’t have come at a better time against the backdrop of this year’s formula shortage, and we’re thrilled to offer New Yorkers the opportunity to get their beloved Bobbie on Uber Eats.”
NOBULL, the Boston-based sporting goods company which has gained a cult following around its colorful CrossFit sneakers since its founding in 2014, has raised an undisclosed amount from 32 Equity, the NFL’s venture capital fund. An agenda from a meeting of the NFL owners last week listed a vote on NOBULL, though both the NFL and NOBULL have declined to comment further. The news comes on the heels of an announcement in August, which named NOBULL as the official Combine training partner of the NFL and on-field supplier of apparel and headwear for the NFL Scouting Combine. The Combine gives the sponsoring apparel company the opportunity to showcase soon-to-be NFL players using their gear and represents an appealing marketing opportunity for an emerging fitness brand like NOBULL, especially as the brand continues to expand into categories beyond footwear and apparel for CrossFit athletes.
Food & Beverage
Mars acquires better-for-you snack maker Trü Frü
Mars, Incorporated plans to buy better-for-you snacking brand Trü Frü in a deal that is expected to close in the first quarter of 2023. Terms of the deal were not disclosed. Trü Frü makes frozen and shelf-stable snacks out of fruit coated in chocolate. When the brand becomes an official part of Mars, Trü Frü will operate as its own business unit under the larger company’s umbrella. It will continue to be run by its current CEO, Brian Neville. Mars, which is best known for its confections but has a deep presence in dinner foods, pet care and food science research, has used recent acquisitions to build up its better-for-you snacking portfolio. Mars bought Kind North America in 2020, and then bought Nature’s Bakery through Kind a month later.
IFF sells Savory Solutions Group for $900M
International Flavors & Fragrances (IFF) plans to sell its Savory Solutions Group to private equity firm PAI Partners in a deal valuing the business at $900 million. The sale is expected to close in the second quarter of 2023. The segment focuses primarily on prepared foods and foodservice ingredients, including products for butchers and plant-based meat analog makers. It has about 1,800 employees at business units in Austria, Germany, Italy, Ireland, Poland, Canada, Mexico and Thailand, and generated about $475 million in revenue in the last 12 months. At IFF’s Investor Day earlier this month, CEO Frank Clyburn said the company planned to announce three sales of non-core business units in the next quarter. This is the first divestiture of that group.
Mondelēz Backs Pretzel Co Eastern Standard Provisions
Eastern Standard Provisions has completed a $13.5 million venture funding round with participation from Mondelēz International’s venture arm SnackFutures, according to a form filed with the Securities and Exchange Commission last week. In addition, the documents indicate that the Waltham, Massachusetts-based pretzel maker has an additional $6.45 million in outstanding capital to potentially be raised. Tapan Shah, Head of Venture Capital for SnackFutures, was listed on the form as a director. Founded in 2019, Eastern Standard Provisions specializes in artisanal soft pretzels, belgian waffles and a selection of branded sauces, mustards and pretzel toppings. The company offers its fresh baked goods direct-to-consumer in a variety of gift boxes and subscription options, also selling frozen pretzels in Fresh Thyme and select northeastern Costco stores, according to the brand’s social media accounts.
John B. Sanfilippo buys baked cheese brand to expand snacking portfolio
John B. Sanfilippo & Son purchased “substantially all of the assets” of the Just the Cheese brand business from Specialty Cheese Company, the maker of nut and dried fruit-based products said in a statement. The purchase price was not disclosed. Just the Cheese sells 100% real cheese snack bars and cheese crisps. It primarily competes in the baked cheese snack category, which it estimates at $100 million. The acquisition by John B. Sanfilippo & Son continues what has been an active M&A period in the food and beverage space as companies look to build out their portfolios into faster-growing snacking categories.
Grocery & Restaurants
Freshii to be acquired by franchisor Foodtastic for $74.4 million
After closing dozens of restaurants over the past couple of years, struggling Canadian fast-casual chain Freshii is being acquired by restaurant franchisor Foodtastic for $2.30 per share or $74.4 million. The all-cash acquisition of the struggling healthy food concept is expected to help grow and improve the profitability of Freshii. “We believe that this transaction recognizes the tremendous value of the Freshii brand,” Daniel Haroun said in a statement. “For almost 20 years, our incredibly passionate franchisee and other business partners and team members have been delivering on the mission of making healthy food accessible and building a leading Canadian health food brand. We believe that Freshii’s brand, franchise network and talent will benefit from Foodtastic’s greater scale – in particular, we believe that this combination will improve Freshii’s potential for growth, enhance franchisee profitability, and generate additional opportunities for our CPG business.” Other brands under the Foodtastic umbrella include other quick-service and fast-casual Canadian restaurants like Quesada, Second Cup, Pita Pit, Milestones, Fionn MacCool’s, Shoeless Joe’s, Au Coq, La Belle et La Boeuf, and Monza, totaling 1,200 restaurants, including 150 locations outside of Canada.
Inspire Brands sells Rusty Taco to Gala Capital Partners
Dunkin’ and Sonic Drive-In parent company Inspire Brands announced the sale of fast-casual brand Rusty Taco to Californian private investment firm Gala Capital Partners. The terms and price of the brand’s acquisition were not disclosed, though the Rusty Taco management team, including president Brendan Mauri, invested in the acquisition and will also stay onboard as part of the team. Inspire Brands initially acquired a controlling interest in Rusty Taco in 2018 as part of its purchase of Buffalo Wild Wings and grew the brand 50% over the past four years. “Inspire’s tightly integrated shared services model is optimized for brands at scale, and all our scaled brands have ample runway for continued growth,” Christian Charnaux, chief growth officer with Inspire Brands said in a statement. “Therefore, we concluded that an owner focused on emerging brands would be the best partner for Rusty Taco’s next chapter of growth. After a thorough vetting process, we believe that GCP is precisely that partner, and we will be cheering on the brand’s continued success.” The new owners of Rusty Taco, Gala Capital, invests in or acquires mid-sized restaurant brands past the proof-of-concept phase with 25-500 units, including include Dunn Brothers Coffee, Cicis Pizza and MOOYAH Burgers, Fries & Shakes—investments that were all announced over the past five years, with the latest being Dunn Brothers Coffee, which was announced earlier this year.
Home & Road
Sleep Country agrees to acquire Silk & Snow
Sleep Country Canada Holdings Inc., a Canadian omnichannel specialty sleep retailer, has announced it will acquire 100% ownership of Silk & Snow, one of Canada’s fastest-growing direct-to-consumer sleep brands specializing in high-quality sleep and lifestyle products. Following a successful Kickstarter campaign in 2017, Silk & Snow launched its e-commerce site with its made-in-Canada single memory foam mattress. Co-founded by Albert Chow and Kenneth Mo, the company has grown into a one-stop, curated lifestyle brand offering mattresses, furniture, bed essentials and its new bath lineup. For three consecutive years, Silk & Snow has been ranked as one of the fastest growing companies in Canada and has also made inroads into the U.S. market, which accounts for about 25% of sales in the most recent fiscal year. Silk & Snow will operate as an independent entity within Sleep Country, led by Chow as CEO and Mo as COO, who both will join the Sleep Country’s senior leadership team. Sleep Country has agreed to acquire substantially all of the assets of Silk & Snow. Sleep Country will pay approximately $24 million in cash at closing and has agreed to pay up to an additional $19.45 million in cash in early 2026 based on Silk and Snow achieving certain growth and profitability targets in aggregate for fiscal years 2023, 2024 and 2025. The transaction will be financed through Sleep Country’s cash on hand and revolving credit facility. Subject to customary closing conditions, the transaction is expected to close effective Jan. 1, 2023.
$90 million stock offering sends Purple shares on downward slide
A $90 million mixed offering by sleep brand Purple Innovation sent the company’s stock sliding in premarket trading on December 27th. Purple’s stock price dropped 4.55% to $4.61 per share in early trading on this morning’s news. In its filing with the Securities and Exchange Commission, the company said the $90 million offering of Class A common stock, preferred stock, warrants, debt securities, subscription rights and units will be used for “general corporate purposes, which may include working capital, capital expenditures, other corporate expenses and acquisitions of complementary products, technologies or businesses.” In September, Purple acquired Intellibed in a $28.3 million stock deal. The acquisition allowed the company to consolidate the ownership of its intellectual property.
Steelcase sales improve in third quarter, but battle with inflation continues
Office furniture giant Steelcase reported third quarter revenue of $826.9 million, a 19% gain over the same period last year. Inflation remains a chief concern, however. “Our gross margin improvement in the Americas this quarter reflected the benefits from the pricing actions we’ve been implementing in the face of extraordinary inflation levels,” said Dave Sylvester, senior vice president and CFO. “On a global basis, year-over-year pricing benefits have exceeded year-over-year inflation for the last two quarters; however, we estimate cumulative inflation over the past seven quarters exceeds the cumulative benefits from our pricing actions by approximately $60 million. Moving into the fourth quarter and first half of fiscal 2024, we expect continued year-over-year gross margin benefits from our pricing actions, as we aim to recover the cumulative impact of inflation.” The company attributed cost cutting measures – including its decision to eliminate 180 salaried positions in September – as one reason for the gain.
Jewelry & Luxury
Many young adults in the U.S. live with their parents to save money amid high inflation and real estate costs — but a lot of that money’s going somewhere else. Nearly half of all young adults (48%) between the ages of 18 and 29 reside at home with their parents, and their savings are fueling luxury retail sales, according to a report from a conglomerate of analysts citing data from the U.S. Census Bureau, per Fox Business. The data stemmed from a Pew Research Center analysis, USA Today, the University of Minnesota and a team of Morgan Stanley analysts led by Edouard Aubin.
Rocksbox Now Selling Jewelry to Non-Members
Rocksbox, the jewelry subscription business Signet acquired last spring, is now selling jewelry to non-members. Launched in 2012, the company allows subscribers to rent three pieces of fashion or demi-fine jewelry every month, swapping out their picks for something new the following month or buying the pieces they were sent. With its new buy-it-now option, Rocksbox’s jewelry is available for immediate purchase to those who don’t have a membership. Rocksbox offers a curated list of jewels, rather than the entire inventory, to non-members, including the “Miranda” statement drop earrings ($65) and a tennis necklace from Sophie Harper ($70). Non-members do not receive the same discounts as members, but Rocksbox was offering promotions to draw in new members, like a free month of membership, up until Dec. 25.
Daniel Paltridge to Head Americas Division of Valentino
Italian jeweler Valentino has named former Bulgari exec Daniel Paltridge CEO of its Americas division. The news first appeared in WWD. It was confirmed by Paltridge on LinkedIn. According to LinkedIn, Paltridge was president and CEO of Bulgari’s North American division from June 2015 to August 2022. Prior to that, he was senior vice president of Louis Vuitton Americas. Paltridge wrote on LinkedIn that he was excited to partner “with the team in writing the next chapter in this brand’s iconic journey as the foremost Italian Maison de Couture.”
Luxury Brand Montblanc Sees Opportunity in Airports and Smaller Cities
Luxury brand Montblanc is looking at airports and smaller cities as new opportunities. In its effort to boost sales of its writing instruments, bags, perfume and accessories in India, the luxury brand is opening stores in airports and in Tier 2 cities, the Economic Times (ET) reported Thursday (Dec. 29). “We will be expanding to newer markets and newer cities and channels looking very promising, where we see expansion happening, is travel retail,” Neeraj Walia, managing director and CEO of Montblanc India Retail Private Limited, told ET. The company is targeting airport retail stores — both duty-free and duty-paid — because those locations allow it to engage with customers it wouldn’t see in a traditional store and because there’s a growing number of airports opening in the country, according to the report. It’s looking at smaller cities, too, because there is demand from customers in those locations.
Office & Leisure
Adults are buying toys for themselves, and it’s the biggest source of growth for the industry
There are two things keeping the toy industry afloat right now: inflation and a consumer group known as “kidults.” These kids at heart are responsible for one-fourth of all toy sales annually, around $9 billion worth, and are the biggest driver of growth throughout the industry, according to data from the NPD Group. This cohort, which NPD defines as ages 12 and older, has been steadily contributing to the industry for years, but spending has accelerated in the wake of the pandemic, leading to year-over-year gains despite tough comparisons. It’s an important moment for the toy industry, too, with the holiday season upon us. While sales surged across the board for board games, puzzles and playsets during the pandemic, the first nine months of 2022 saw a 3% decline in sales volume. Higher toy prices helped outweigh these losses, as sales revenue for the time period jumped 3%, NPD reported. Kidults, who tend to spend more on toys, have a great fondness for cartoons, superheroes and collectibles that remind them of their childhood.
Party City faces NYSE delisting
Party City received notification from the New York Stock Exchange on Dec. 15 that the company is no longer in compliance with NYSE continued listing criteria requiring an average closing share price of at least $1.00 over a 30 trading-day period. Party City has six months to regain compliance with the NYSE’s minimum share price requirement. The company will continue to be traded under the ticker PRTY during this period, but will have an added designation of “.BC” to indicate the status of the stock as “below compliance” with the NYSE continued listings standards. The indicator will be removed when the company regains compliance. Party City faces delisting in the middle of a tumultuous time for the retailer. The company earlier this month reportedly engaged attorneys to address liquidity issues and help with restructuring. In its latest earnings the retailer reported net sales of $502.2 million, down 1.6% year over year, and a net loss of nearly $373 million for the quarter. Party City lowered its EBITDA guidance from a high of $300 million forecast in February to a high of $150 million as supply chain costs cut into its margins.
AMC says it’s no longer in talks to acquire theaters from bankrupt Cineworld
AMC said it is no longer in talks to acquire theaters from Regal parent company Cineworld, which had filed for bankruptcy protection earlier this year. Cineworld, which is based in the United Kingdom, had been in discussions with AMC to hand over some of its theaters after filing for Chapter 11 bankruptcy in September. In a filing with the Securities and Exchange Commission on Wednesday, AMC said the discussions with Cineworld lenders regarding assets in the U.S. and Europe had ended. The disclosure comes after AMC reported another quarterly loss last month despite an increase in revenue, as the theater chain spent more than it brought in. The world’s largest movie theater company has been trying to reduce its debt loads, which were exacerbated during the pandemic when people hunkered down at home and streaming services boomed. Even as audience attendance has rebounded more recently, the disruption of movie production over the past two years has left theater operators such as AMC hurting for new releases to boost ticket sales.
Pet Supplies Plus charts aggressive expansion
The largest independent pet franchise in North America is growing its footprint. Pet Supplies Plus and Wag N’ Wash are on track to end the year with 115-plus new store agreements in development. Pet Supplies, which has more than 640 stores in 41 states, acquired the self-wash, grooming and natural pet food franchise, which has some 15 locations, in February 2022. Under the terms of the acquisition, each brand continues to operate as separate entities. The new developments include the first dual-branded multi-unit agreement, which will be for two Pet Supplies Plus stores and one Wag N’ Wash location. While separate entities, Pet Supplies and Wag N’ Wash share the same infrastructure of back-end support including buying power, advanced marketing initiatives and supply-chain efficiencies. The expansion comes as the pet supplies and services retail industry continues to grow, with 2022 sales estimated at $120 billion.
Technology & Internet
Amazon reaches settlement with EU on antitrust case
Amazon has agreed to make some significant changes to its business in Europe as part of a settlement of antitrust investigations that could have resulted in a hefty fine for the e-commerce titan. The European Commission, the EU’s executive arm, announced that Amazon had made a series of commitments to address allegations that the company was using independent sellers’ data to its advantage. The regulator had expressed concerns with Amazon’s dual role as both a marketplace and a competitor to merchants selling on its platform. Amazon, for its part, says it is an enabler of small businesses in the region. In November 2020, the Commission issued Amazon a statement of objections over its “systematic” use of non-public business data from independent sellers to benefit its own retail business. It also opened a second investigation into claims that criteria set by Amazon for selecting featured merchants in its “buy box” tool and enabling sellers to offer products to users of its Prime membership program gave preferential treatment to Amazon’s retail business or sellers using its own delivery services. On Tuesday, the Commission said that Amazon had made assurances that it would change some of those practices. One of the commitments was to stop using non-public data on independent sellers for its retail business or for selling branded goods and private label products. The company also agreed to display a second buy box when there is a second offer that is different from the first on price or delivery, and to let Prime sellers choose any carrier for their logistics or delivery services. The changes apply only to the European Economic Area.
Apple will reportedly begin producing some MacBooks in Vietnam in 2023
Apple will begin producing some of its MacBook computers in Vietnam next year, according to a Nikkei Asia report. The move reflects the tech giant’s push to expand its manufacturing beyond China, as it grapples with increased U.S.-China trade tensions and supply chain disruptions related to Covid lockdowns. Apple was reportedly in talks in August to move some production for its Apple Watches, MacBooks and HomePods to Vietnam. Now, the company’s assembly partner Foxconn could begin producing MacBooks in the country as soon as May of 2023, according to Nikkei Asia. Apple makes around 20 million to 24 million MacBooks each year, according to the report. Nikkei Asia said the company has been planning to shift some of its MacBook production to Vietnam for the last two years. The company’s manufacturing partners already build some iPhones in India and have been in talks to build AirPods there, too. Meanwhile, Apple CEO Tim Cook has committed to buying U.S.-made chips from a new Taiwan Semiconductor Manufacturing factory in Arizona. TSMC is building two plants in the state, with the first set to open in 2024 and another to open in 2026.
Finance & Economy
Jobless benefits rolls grow but U.S. labor market remains resilient
The number of Americans filing new claims for unemployment benefits edged higher last week and a week earlier the total number on jobless assistance reached the highest since February, but both remain at levels indicating the U.S. job market remains tight, even as the Federal Reserve works to cool demand for labor as part of its bid to lower inflation. Initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 225,000 for the week ended Dec. 24, the Labor Department said, in line with the median estimate among economists polled by Reuters. Meanwhile, the number of people receiving benefits after an initial week of aid rose 41,000 to 1.710 million in the week ending Dec. 17.
