RetailWire: Impossible Foods Says There’s Nothing Faddish About Plant-Based Meat
On January 19, Bloomberg published an article entitled, “Fake Meat Was Supposed to Save the World. It Became Just Another Fad.” On January 22, Impossible Foods took out a full-page ad in The New York Times and posted a blog entry vigorously defending plant-based meat. The Times ad included criticism of the article from a Reddit thread. One comment read: “Uh, it’s an option in many very large restaurant chains as a meat alternative. That’s huge. No idea where this article is coming from.”
The blog entry amounted to a line-by-line pushback against the Bloomberg article’s findings:
Impossible Foods concluded, “The reality is that the plant-based meat category is still young and yet to be fully defined. We’re proud of our leadership in the category, even if that means we take the heat sometimes.”
The Bloomberg article came following a year in which Beyond Meat’s stock price lost 76 percent of its value amid concerns about plant-based meat’s growth. A New York Times article from November indicated those concerns include revelations that plant-based meats may not be as healthy as advertised, inflation, and that the number of consumers open to trying plant-based meat had “reached its limit.”
Discussion questions: Do you applaud Impossible Foods’ response to the Bloomberg article or was it unnecessary and counterproductive? Does the plant-based meat category look like a trend undergoing growing pains or more like a fad?
Comments from the RetailWire BrainTrust:
Under its new-ish leader, Peter McGuinness, Impossible Foods is taking a more aggressive stance and the Bloomberg blog response is the latest example. I wouldn’t recommend responding to every click-bait piece, but why shouldn’t Impossible present a fact-based counterargument? The health argument (and scrutiny) is spurious since most animal-based meats are presented without nutrition labels. The lack of transparency and disclosure around how these products are “grown” and “processed” is a whole ‘nother story.
Carol Spieckerman, President, Spieckerman Retail1 day 45 minutes ago
An industry with growing consumer adoption cannot “reach its limit” unless consumer interest wanes. When it comes to the plant based meat category, consumer interest hasn’t even fizzled. A growing 30% of Gen-Z plan to go without meat. As the impacts of global warming and awareness of the innate worth of sentient beings increases, so will interest in compassionate meat alternatives. After all, why choose harm when you don’t have to? Counter to the narrative that vegans are weak hippie dippy woke folk, Impossible Foods defended their brand and position with cold hard facts. This is a great example of how it’s become socially acceptable for brands to defend their position in a fact based, vitriol-free way. Dispelling the “snowflake” narrative surrounding compassionate choices, one skillful clap back at a time.
Jasmine Glasheen, Content Marketing Manager, Surefront
I can’t decide if Bloomberg’s article was simply generationally incorrect or if some meat industry group persuaded the company to write the piece. I say that because there’s no mention of plant-based milk or cheese, which is odd — those categories are also growing significantly. Plant-based foods are exploding, not just among vegetarians but among people looking for healthier-based alternatives. I think Millennials and Gen Z have a different perspective than the Gen X’rs and Boomers that drive the Street. Time will tell, but my bet is it’s here to stay.
Paula Rosenblum, Co-founder, RSR Research
Read the entire discussion on RetailWire.
Apparel & Footwear
Vera Bradley shakes up leadership, takes full ownership of Pura Vida
Vera Bradley last week shook up its business, including its leadership. Brand President Daren Hull, Chief Creative Officer Beatrice Mac Cabe, and Chief Revenue Officer Mary Beth Trypus all left, with their positions eliminated. The brand is looking to fill the newly created role of senior vice president of merchandising and design. For $10 million, the company will acquire the 25% interest in DTC bracelet brand Pura Vida that it doesn’t yet own. Pure Vida co-Presidents and founders Griffin Thall and Paul Goodman left the company last Saturday, according to Securities and Exchange Commission filings. As Vera Bradley searches for someone to serve as president of Pura Vida, the brand’s vice president of finance, Sujay Shah, will assume day-to-day oversight. Vera Bradley also named Alison Hiatt chief marketing officer, overseeing digital marketing, customer data and e-commerce, and supervising its creative marketing, store and brand experience teams.
Rent the Runway secures extended credit facility as part of debt restructuring
Rent the Runway (RTR) has announced an amended credit facility with its existing lender and administrative agent Double Helix, extending the maturity date from October 2024 to October 2026. The facility will also reduce cash interest payments, totaling over 20 million dollars in cash over the next two years. Previously set at 12 percent total interest, the rate reduction will now come in at two percent from February 1 through to July 31, increasing to five percent for the remainder of the term. Additionally, the lender will receive warrants to purchase two million shares of the company’s common stock at five dollars per share. Other key provisions will remain unchanged, including the minimum liquidity covenant of 50 million dollars. It comes as part of RTR’s recent efforts to improve its cost structure and profitability, such as reducing its fixed cost base and transforming the capital efficiency of its product acquisition.
A consultant is joining the C-suite at Destination XL Group. The men’s big-and-tall clothing and footwear retailer has appointed Dara Pauker as COO, effective January 27. Pauker has been working with DXL on a long-range strategic growth plan as a consultant since December 2021. She brings more than 20 years of strategy and leadership experience, with a particular emphasis on growth initiatives, the company said. Prior to joining DXL, Pauker operated her own consultancy, called Dauntless Decisions, through which she has held many interim GM roles and advised public and private retail companies and investors in retail on a broad array of topics related to defining and executing growth strategy. Earlier in her career, Pauker held executive roles at Liz Claiborne and The Jones Group.
Athletic & Sporting Goods
Nike Files Footwear Infringement Lawsuit Against Lululemon
Nike Inc. sued Lululemon Athletica Inc. in U.S. federal court in Manhattan, charging that at least four of Lululemon footwear products infringe its patents. In the complaint, Nike said the three patents at issue concern textile and other elements, including one addressing how the footwear will perform when force is applied, according to a report from Reuters. Nike said it suffered economic harm and irreparable injury from Lululemon’s sale of its Blissfeel, Chargefeel Low, Chargefeel Mid and Strongfeel styles and is seeking unspecified damages. Nike in January 2022 sued Lululemon for infringing on six patents related to Lululemon’s Mirror home gym. The patents include technology that enables users to target specific levels of exertion, compete with other users, and record their own performance.
Giant Group buys minority share in Stages Cycling in $20 million deal
Giant Group has made a $20 million investment in Stages Cycling, acquiring 32.5% of the company’s common stock according to a filing with the Taiwan stock exchange. Stages, based in Portland, Oregon, makes stationary smart bikes for the commercial gym and home markets, crankarm-based power meters, and GPS bike computers. Giant has manufactured some of Stages smart and commercial indoor bikes for several years, and Giant also distributes some Giant-branded Stages GPS computers to its dealers globally. According to the announcement in Taiwan, on Jan. 20 Giant’s board approved the purchase of 32.5% of Stages Cycling Inc. common stock for $6.5 million and Stages Cycling’s convertible corporate bonds for $13.5 million. Giant made the investment through its subsidiary Gaiwin US I Investment Inc. Giant said its strategy is to expand Giant Group’s presence within the indoor cycling market and to build Giant’s “cycling ecosystem.”
Cosmetics & Pharmacy
Aesop reported target in $2bn bidding war between French groups
Aesop, an Australian luxury cosmetics, shampoo and bodycare brand, is said to be at the center of a $2bn bidding war between French multinationals LVMH and L’Oréal – as well as Japan’s Shiseido. Aesop, which was founded by the Melbourne hairdresser Dennis Paphitis in 1987, has been majority-owned by the Brazilian cosmetics multinational Natura for more than a decade. Natura, which also owns The Body Shop, has appointed Bank of America and Morgan Stanley to explore the possibility of selling a stake in Aesop. Aesop is sold from 320 shops across 25 countries, and is popular in expensive restaurants bathrooms and in aspirational homes.
Unilever Ventures Invests $2M in Straand Prebiotic Scalp Care
Unilever Ventures has invested $2 million in Australian scalp microbiome hair care brand Straand, per a new report. The vegan, cruelty-free brand was founded in 2022. Straand is powered by IFF Lucas Meyer Cosmetics’ ‘Defenscalp’ which reportedly helps decrease sebum production on the scalp, reduces the appearance of dandruff flakes and soothes scalp irritation. Straand comprises four prebiotic scalp care products and is preparing a premium range for a forthcoming U.S. expansion via direct-to-consumer and Amazon. It is also set to expand into the United Kingdom, Europe and China.
CVS unveils One+Other beauty, personal care brand
CVS is introducing One+Other (pronounced “one another”) – a new private label beauty and personal care brand with over 200+ self-care essentials. One+Other was created to democratize access to personal care products so that everyone can practice self-care in their own unique way at an affordable price point. CVS Health cited a survey conducted by The Harris Poll on its behalf showing that while 91% of Americans agree self-care is important, one in three (34%) Americans do not see themselves reflected in the self-care movement, and nearly four in 10 (38%) Americans say they can’t afford to practice self-care. The retailer said the brand offers self-care staples at an affordable price, and that One+Other’s marketing campaign will showcase diverse voices and faces of all “genders, races, ethnicities, sexual orientations, ages, disabilities and body types.”
Sexual Healthcare Provider TBD Health Secures $4.4M In Funding To Expand Services
Digital and in-person sexual healthcare provider TBD Health has closed a $4.4 million seed round, led by Tusk Venture Partners. TBD Health launched in 2020. This new round brings them to $5 million in total funding. With the latest capital infusion, TBD is expanding the reach of its telehealth sexual healthcare offerings consisting of at-home sexually transmitted disease (STD) testing and emergency contraception to 50 states.
Discounters & Department Stores
Kohl’s chooses Tom Kingsbury as permanent CEO
Kohl’s on Thursday announced interim CEO Tom Kingsbury will assume the role permanently. Kingsbury had led the company since December following the departure of former CEO Michelle Gass, who left the company late last year to become president of Levi’s. Along with two other independent directors, Kingsbury joined Kohl’s board of directors in 2021 as part of a settlement with activist investors. Kingsbury will retain his board seat while serving as CEO. In connection with Kingsbury’s move to CEO, Kohl’s said it’s entered a cooperation agreement with one of those investors, Macellum Advisors. Under the agreement, Macellum has agreed to a multi-year standstill agreement and other provisions.
J.C. Penney names new chief transformation and strategy officer
J.C. Penney this week announced the appointment of Keith Melker as the company’s chief transformation and strategy officer. He started with the company on Wednesday. Melker oversees the transformation office and will drive consumer traffic, enhance inventory management, advance digital growth, explore partnerships and evolve the company’s value delivery model, according to a company press release. Katie Mullen, who came to J.C. Penney in 2022 as its chief digital and transformation officer from Neiman Marcus Group, will remain the retailer’s chief digital officer.
Kohl’s lays off 60 at corporate headquarters
Kohl’s on Wednesday confirmed to Retail Dive that it recently initiated layoffs that resulted in the elimination of “less than 60 positions.” Most of those people who lost their jobs worked on the company’s marketing or merchandising teams. Kohl’s said the decision was necessary to “drive greater efficiency in our operations.” Those affected will receive severance packages and outplacement services. The move came less than a month into the new year and followed a third quarter sales slowdown. Q3 revenue fell 7% to $4.3 billion, while net income fell by 60% to $97 million. In its Q3 report in November, Kohl’s withdrew its guidance for 2022. The company has not set a date to announce its Q4 or 2022 annual earnings.
Emerging Consumer Companies
Amass Brands acquires operating assets of direct-to-consumer wine company Winc
Amass Brands, a private equity firm that invests in consumer packaged goods, has acquired the operating assets of Winc, a California-based direct-to-consumer wine company. Winc offers a personalized wine subscription service, where customers can discover new wines based on their taste preferences and receive monthly deliveries of hand-selected bottles. The acquisition will allow Amass Brands to enter the growing direct-to-consumer wine market and build on Winc’s success with its growing customer base and reputation for high-quality wines and exceptional customer service. The financial details of the acquisition were not disclosed.
Foxtrot Convenience Store Expands to Washington D.C.
Foxtrot, a modern convenience store and delivery company, is expanding its retail presence with the opening of its 24th location in Farragut Square, Washington D.C. Founded in 2014, Foxtrot currently has locations across Chicago, D.C. and Dallas, with plans to continue expansion in both existing and new markets this fall and is poised to change the way people shop for everyday essentials. Foxtrot offers a unique shopping experience, both online and in-person, featuring a full café, craft beers and wines selected by an in-house sommelier, and an array of local products from more than 50 local makers. The company’s innovative delivery technology allows customers to place orders and receive them in as little as an hour.
Food & Beverage
Dole selling its fresh vegetables division for $293M to Chiquita subsidiary
Dole is selling its fresh vegetables division to an affiliate of Fresh Express, a subsidiary of Chiquita for about $293 million in cash. The transaction will close once the companies receive regulatory approval. Net proceeds from the sale will be used primarily to pay down Dole’s debt. The divestiture is the latest in a series of sales and proposed sales as large CPGs look to shore up their businesses and focus on faster-growing offerings.
Unilever taps Royal FrieslandCampina head as new CEO
Unilever has named Hein Schumacher as its next CEO. Schumacher is currently CEO at European dairy giant Royal FrieslandCampina. He takes over for Alan Jope on July 1. Schumacher has been with Royal FrieslandCampina since he was hired as CFO in 2014. He has been its CEO since 2018. Prior to that, he was with H.J. Heinz for more than a decade, serving in positions in the U.S., Europe and Asia, where he led a turnaround of the Asia Pacific zone. He began his career as a finance manager at Unilever. Unilever CEO Alan Jope announced his retirement in September, following a year of change for the company.
Report: Impossible Foods cutting staff by 20%
Impossible Foods plans to reduce its staff by 20%, according to Bloomberg. The company currently employs approximately 700. The report also said the company offered voluntary separation payments and benefits to some employees at the end of 2022 and had cut 6% of its workforce in October. It is unclear if the Impossible Foods news is being driven by the overall US economic environment, weak growth in the market for plant-based meat alternatives or both. In October, Beyond Meat, Inc. said it was laying off 19% of its workforce and lowering its fiscal 2022 sales outlook. The company cited ongoing softness in the market for plant-based meat alternatives, especially the refrigerated subsegment, inflation and competition as reasons for the changes.
Grocery & Restaurants
McDonald’s Profit Grows as Inflation-Weary Customers Flock to its Restaurants
McDonald’s on Tuesday reported that U.S. customers are visiting its restaurants more, helping the fast-food giant top Wall Street’s estimates for its fourth-quarter earnings and revenue. It’s the second consecutive quarter that the company noted increasing traffic domestically, bucking the industry trend. Many consumers have cut back restaurant spending in response to inflation. But McDonald’s has largely benefitted from the change in consumer behavior since many have traded down from full-service restaurants to its Big Macs and McNuggets. The fast-food giant is expecting that short-term inflation will continue in 2023, according to a statement from CEO Chris Kempczinski. Net sales fell 1% to $5.93 billion but rose 5% when stripping out foreign currency changes. Globally, same-store sales climbed 12.6% in the quarter, fueled by strong demand in the U.S. and its largest European markets. In McDonald’s home market, higher menu prices and increased demand drove same-store sales growth of 10.3%, topping StreetAccount estimates of 8.1%. The company also noted the success of its McRib promotion, which labeled the limited-time item’s annual return as its “farewell tour.”
Subway sandwich sales climb amid turnaround, potential sale talks
Subway said its same-store sales climbed 9.2% in 2022, signaling the sandwich chain’s turnaround is taking hold as it reportedly explores a sale. The company is not required to disclose its financial results because it’s privately owned. However, Subway has recently shared periodic sales updates as it has undertaken a turnaround. Those announcements could entice potential buyers to step forward. The Wall Street Journal reported in January that Subway hired advisors to explore a sale that could value the chain at more than $10 billion. CEO John Chidsey said in a statement Thursday that the chain has set two years of record sales and is “getting its swagger back.” Subway has seen eight consecutive quarters of sales growth, and digital sales have more than tripled since 2019, the company said in a release. Its North American locations’ same-store sales jumped 7.8% in 2022, breaking decade-old average weekly sales records, according to Subway. The trend reverses years of sales declines for the once-ubiquitous sandwich chain, which was at one time the largest U.S. restaurant company by number of locations. Its U.S. footprint fell to 21,147 outlets in 2021, down 22% from its peak of 27,103 in 2015, according to franchise disclosure documents.
Home & Road
Bed Bath & Beyond potentially facing liquidation
Efforts to find a buyer for Bed Bath & Beyond have run aground, and the company is preparing to file bankruptcy soon, according to Bloomberg. The company is on a path toward liquidation unless a buyer emerges, the news outlet reported. Potential acquirers consider the Buybuy Baby chain to be the company’s chief asset, it added. As the process grinds forward, Bed Bath & Beyond confirmed on Friday that it is closing an additional 87 Bed Bath & Beyond stores and shutting down its Harmon health & beauty chain, which consists of 52 stores. “As we consider all paths and strategic alternatives, we continue to work with our advisors and implement actions to manage our business as efficiently as possible,” Bed Bath & Beyond spokeswoman Julie Strider told Yahoo Finance in a statement, later adding: “We will update all stakeholders on our plans as they develop and finalize.”
Evriholder sold to investment firm
Kitchenware company Evriholder, a portfolio company of Edgewater Funds and JZ partners, has been sold to Kainos Capital for an undisclosed sum. Kainos is an investment firm based in Dallas that focuses exclusively on food and consumer industries. There will be continuity in the business and no management changes, Evriholder CEO Ivan Stein told HFN. The acquisition, he said, “solidifies our approach and growth strategy.” Evriholder acquired Murray Sales, a Montreal-based company that creates kitchenware items under the Joie brand, in 2021. Under Kainos’ ownership, Stein said, Evriholder will maintain this acquisition momentum. “It validates our growth strategy over the last few years,” he said of the acquisition. The company has grown in the “consistent double digits” in recent years. Evriholder’s product assortment is centered around cleaning, storage and organization tools, primarily for the kitchen and in a variety of materials, but its lineup also includes pet products, a line of baking tools and the DreamTime line of products that promote health and wellness, such as shoulder wraps, eye pillows and weighted blankets. Evriholder, which was founded in 1995, was acquired by Edgewater in July 2019.
Jewelry & Luxury
Nike, Tiffany announce collaboration
Nike and Tiffany announced a collaboration on Tuesday that includes a special-edition shoe and several sterling silver accessories, all set to drop on March 7, according to details emailed to Retail Dive. The sterling silver accessories include a whistle, shoe horn, shoe brush and dubrae, and range in price from $250 to $475. The Nike x Tiffany & Co. Air Force 1 1837 shoe, which is made from black suede and features a Tiffany blue swoosh and silver detailing, will sell for $400 and is available in sizes 3.5M to 18M. The accessories will be available on Tiffany’s website, while the pair of shoes will sell through Nike’s SNKRS app, select Nike wholesale partners, and at two Tiffany stores in New York — the company’s SoHo location and its Tiffany Flagship Next Door.
Canada Goose Joins Growing List of Luxury Brands Offering reCommerce
Add Canada Goose to the list of luxury retailers hopping aboard the reCommerce train. The past few months have seen several high-end brands — including Gucci, Burberry, Balenciaga and Rolex — offer resale options as consumers look to save. It’s a trend that hasn’t gone unnoticed by the broader eCommerce world, with Amazon teaming up with What Goes Around Comes Around, the godfather of New York’s luxury resale scene. eBay, meanwhile, said last fall that it was betting on a rise in demand for second-hand goods among younger shoppers. “We’re leaning into where Gen Z and millennials are,” CEO Jamie Iannone said in October. “There’s a bigger focus on sustainability, and ‘re-commerce.’” That focus on sustainability is driving Canada Goose’s venture, the Toronto outerwear company announced Tuesday (Jan. 31).
Tiffany & Co. Shines for LVMH in 2022
LVMH had a strong year in 2022, posting record revenue growth in its fashion and leather goods segment. The luxury titan reported double-digit revenue growth in the fourth quarter and its full year, with each of its business categories also up double digits for the year. Here are five important takeaways from the company’s most recent earnings report. LVMH shined in spite of economic and geopolitical struggles. LVMH put on a strong performance in the fourth quarter, reporting revenue growth of 13 percent year-over-year to €22.7 billion ($24.7 billion). For the full year, revenue totaled €79.2 billion ($86.2 billion), up 23 percent year-over-year. “Our performance in 2022 illustrates the exceptional appeal of our maisons and their ability to create desire during a year affected by economic and geopolitical challenges,” said LVMH CEO Bernard Arnault.
Office & Leisure
How ‘crunch’ time and low pay are fueling a union drive among video game workers
For months, Andrés Vásquez’s days working on the first-person shooter game “Doom” blended into one another. A quality assurance tester for id Software in Texas, he spent 10 hours a day sitting at a desk and “crunching” on the game with his colleagues, repeatedly playing through its map creation mode and running through multiplayer matches in search of glitches ahead of its 2016 release. He’d often work weekends, logging nearly 60-hour weeks. Video game workers have long decried so-called crunch periods, many of them dreading the months-long gantlet that leads up to a game’s release. Those and other grievances — including claims of discrimination and calls for fair and transparent pay — have led a growing segment of the industry’s workforce to unionize — a tactic many might associate more with old-school factory lines than 21st century software gigs.
Chewy’s push into pet telehealth runs into regulatory hurdles, skeptical veterinarians
Chewy, the e-commerce pet-goods giant best known for its convenient auto-ship services and generous return policies, wants to grow its veterinary telehealth service as part of an overall push into health care. While the telehealth service is a small part of the company’s rapidly expanding health offerings, it is important to its strategy. Yet it also faces regulatory obstacles and skepticism from the veterinary community. Longtime veterinarians told CNBC the service can have some benefit for minor situations, or for people who don’t have easy access to vet care. But it could create problems for pets, too, they said. Chewy’s service, called Connect With a Vet, has experienced significant growth, but it’s been limited by a specific kind of regulation known as the veterinary client patient relationship, or VCPR, according to Chewy CEO Sumit Singh. Most states forbid veterinarians from performing their primary duties – diagnosing conditions and prescribing medication – until they establish a VCPR by seeing an animal in-person and performing a physical exam.
Paperchase: Tesco buys stationery brand but not its shops
Tesco has bought the brand and intellectual property of High Street stationery chain Paperchase, hours after it fell into administration. But the grocer has not acquired the chain’s 106 shops in the UK and Ireland, leaving the future of 820 staff in doubt. Tesco will now sell the stationer’s goods in its stores across the UK. It follows a challenging few years for Paperchase which has been hit recently by rising costs and falling sales. The business also has stores in train stations, which have suffered from reduced footfall due to more people now working from home. Paperchase’s administrators, Begbies Traynor, said Paperchase’s stores would remain open for now and it would issue an update in due course.
Technology & Internet
Amazon Beats on Fourth-Quarter Revenue but Provides Light Guidance
Amazon on Thursday issued first-quarter guidance that came in light of estimates, overshadowing better-than-expected revenue for the fourth quarter. Amazon closed out its slowest year of growth in its quarter century as a public company. Revenue for the year increased 9% as inflationary pressures and rising rates put a damper on consumer spending. The stock price lost almost half its value in 2022. The e-retailer said it expects to post first-quarter revenue of between $121 billion and $126 billion, representing year-over-year growth of 4% to 8%. Analysts were expecting sales to come in at $125.1 billion, according to Refinitiv. Sales in Amazon’s online stores segment contracted 2% year over year. The company has been contending with slowing sales as rising gas and food prices forced consumers to pull back discretionary spending. The pandemic-fueled e-commerce boom has also fizzled with consumers increasingly returning to physical retailers. CEO Andy Jassy, who succeeded founder Jeff Bezos at the helm in July 2021, has spent the past year working to reel in costs. In January, Amazon said it’s eliminating 18,000 jobs among its corporate workforce, after cutting a number of employees in November. The company has also instituted a hiring freeze in its corporate ranks, cut some projects and paused warehouse expansion in an effort to tame rising expenses.
Apple Sales Drop 5% in Largest Quarterly Revenue Decline Since 2016
Apple missed expectations for revenue, profit, and sales for many of its lines of business on Thursday, sending the stock lower in extended trading. Apple’s overall sales for the holiday quarter were about 5% lower than last year’s, the first year-over-year sales decline since 2019. Apple CEO Tim Cook said three factors hurt the results: a strong dollar, production issues in China affecting the iPhone 14 Pro and iPhone 14 Pro Max, and the overall macroeconomic environment. Apple shares dropped over 4% at one point during extended trading on Thursday before rising after the tech giant provided data about the outlook for the current quarter. The company’s data points suggested iPhone sales won’t decline as rapidly as they did during the holiday quarter. Apple did not provide guidance for the current quarter ending in March. However, Apple did offer some data points on performance expectations. Chief Financial Officer Luca Maestri said March quarter revenue would have a similar declining trend as the December quarter. Services are expected to grow, Maestri said, but Mac and iPad sales are both expected to decline double digits from the year-earlier period. IPhone sales will decline less in the March quarter versus the December quarter, Apple added. The quarter was a stunning miss by Apple, and its first earnings miss versus consensus expectations in almost seven years.
Meta ‘Year of Efficiency’ Call From Zuckerberg Was What Wall Street Needed
With one simple slogan, Meta CEO Mark Zuckerberg temporarily quelled investor discontent with his company’s multibillion-dollar investment into the futuristic metaverse. “Our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization,” Zuckerberg said as part of the release of Meta’s fourth-quarter earnings report. Following a 64% plunge in Meta’s share price in 2022, Wall Street cheered the report, sending the stock up almost 20%, extending a rally that began late last year. Growth is not what’s getting investors excited. Meta reported better-than-expected revenue in the fourth quarter, but sales still sank 4% from a year earlier, marking the third straight quarterly decline. And the forecast range for the first quarter suggests that year-over-year revenue could increase, but it could also fall again. Rather, Zuckerberg’s commitment to cost cuts and efficiency is a sign that increasing profitability is important to Meta, which was known as a growth machine prior to last year’s slump. “The first 18 years I think we grew it 20%, 30% compound or a lot more every year,” Zuckerberg said on the earnings call. “And then obviously that changed very dramatically in 2022, where our revenue was negative for growth, for the first time in the company’s history.” In looking to the future, Zuckerberg struck a realistic tone. “We don’t anticipate that that’s going to continue,” he said, regarding the recent drop in revenue. “But I also don’t think it’s going to go back to the way it was before.”
Finance & Economy
Fed delivers small rate increase; Powell suggests ‘couple’ more hikes coming
The Federal Reserve said it had turned a key corner in the fight against high inflation, but that “victory” would still require its benchmark overnight interest rate to be increased further and remain elevated at least through 2023. In announcing its latest policy decision, the U.S. central bank scaled back to a quarter-percentage-point rate increase after a year of larger hikes and swept aside in its statement the long list of reasons, from war to the pandemic, that were driving prices higher to say simply that “inflation has eased.”
Important wage inflation measure for the Fed rose less than expected in Q4
Employment costs increased at a slower than expected pace in the fourth quarter, indicating that inflation pressures on business owners are at least leveling off. The employment cost index, a barometer the Federal Reserve watches closely for inflation signs, increased 1% in the October-to-December period, the Labor Department reported. That was a bit below the 1.1% Dow Jones estimate and less the 1.2% reading in the third quarter. It also was the lowest quarterly gain in a year. Wages and salaries for the period also rose 1%, down 0.3 percentage point, while the cost of benefits increased just 0.8%, down from 1% in the previous period.
Payrolls increased by 517,000 in January, crushing estimates, as unemployment rate hit 53-year low
The employment picture started off 2023 on a stunningly strong note, with nonfarm payrolls posting their strongest gain since July 2022. Nonfarm payrolls increased by 517,000 for January, above the Dow Jones estimate of 187,000. The unemployment rate fell to 3.4% vs. the estimate for 3.6%. That is the lowest jobless level since May 1969. Growth across a multitude of sectors helped propel the massive beat against the estimate. Leisure and hospitality added 128,000 jobs to lead all sectors. Other significant gainers were professional and business services (82,000), government (74,000) and health care (58,000).