Story of the Week
In 2017, Epic Games was among a handful of companies selected to participate in Walt Disney’s Accelerator incubator program, where the game company’s founder held ambitions of incorporating the entertainment giant’s well-known characters into his digital playground. Now, Disney is making a much bigger bet that will make this possible. Disney CEO Bob Iger on Wednesday announced a $1.5 billion investment aimed at letting consumers interact with stories and characters from Disney, Marvel, Pixar and Star Wars, on Epic’s Fortnite, where 100 million players gather each month. It was an acknowledgement of the amount of leisure time Generation Alpha, Generation Z and millennials devote to gaming. Epic CEO Tim Sweeney had long envisioned Disney’s characters populating Fortnite’s digital playground, according to two former executives. The companies will work together to create a “huge Disney universe” where consumers can interact with characters and stories from Disney, Pixar, Marvel, Star Wars and Avatar, Iger said. Other companies, such as Lego, have similarly forged partnerships with Epic. Iger’s move was seen as part of a series of responses to activist investor Nelson Peltz.
Apparel & Footwear
Schutz parent company Arezzo & Co is merging with fellow Brazilian fashion company Grupo Soma in a new deal that sees the union of two of the largest fashion companies in Latin America. As part of the deal, Arezzo and Grupo Soma will join together in a newly-formed company, with Arezzo owning a 54 percent controlling interest and Soma owning 46 percent. The name of the new company will be released at a later date, Arezzo said. While specific terms of the deal were not disclosed, Arezzo noted that the new company would have yearly revenues of 12 billion reals ($2.42 billion) with a collective portfolio of 34 brands, including Arezzo, Farm Rio, Hering, Reserva, Animale, Schutz, NV, Anacapri, Alexandre Birman, Cris Barros, Carol Bassi and Oficina, among others. In an overview of the newly formed company, based on the trailing twelve months ending in the third quarter of 2023, the deal values the EBITDA at $1.5 billion reals ($300 million), reflecting a margin of 15.6 percent. Additionally, the net profit stands at $753 million reals ($152 million).
Gap Inc. has appointed noted fashion designer Zac Posen as its new creative director as the retailer seeks to overhaul its image amid flagging sales. Posen will also serve as the chief creative officer of Gap’s Old Navy brand, the company said. Gap’s other brands include Banana Republic and Athleta. Posen launched his own eponymous clothing brand in 2001, dressing celebrities including Natalie Portman and Rihanna. He closed his atelier in 2019 when it was no longer financially sustainable. He was also the women’s creative director for Brooks Brothers, designed collections for Target and David’s Bridal, and served as a judge on reality television show Project Runway. In his new role, Posen will lead design, merchandising and marketing for Old Navy, one of the largest apparel brands in the U.S.
Deckers, the footwear, apparel and accessories company, has named Stefano Caroti as its new president and CEO. Dave Powers, the company’s current president and CEO, will retire Aug. 1 and continue serving on its board of directors through its 2025 annual meeting, according to a Thursday press release. Caroti now serves as Deckers’ chief commercial officer, a position he began in April 2023. He also served as interim president of Hoka. Prior to that Caroti spent about six years at Puma and over a decade at Nike, according to his LinkedIn profile. Deckers expects that Caroti will be nominated to the company’s board during its 2024 annual stockholder meeting, per the press release. In a separate announcement on Thursday, Deckers reported sizable sales gains in its third-quarter earnings report. The company’s net sales in the quarter increased 16% year over year to $1.6 billion, driven by DTC sales increasing 22.7% to $858.1 million and wholesale sales increasing 8.6% to $702.2 million.
VF Corp.’s crippling $1.7 billion debt has prompted a strategic portfolio review by its board and management. Now, the company is assessing its vision to reshape the business for near-term and long-term profitability. The North Face, Vans and Timberland have long been considered VF’s core three brands and the crown jewels of its business. While Vans and Timberland have been struggling for some time, third-quarter results saw The North Face post its first decline in years. Performance workwear brand Dickie’s also posted declines in all regions during the quarter. On VF’s third-quarter earnings conference call on Tuesday, management said the firm has $1 billion in debt due Dec. 30, 2024, and $700 million due on April 23, 2025. Company leaders forecasted $600 million in free cash flow for Fiscal Year 2024, with expectations that VF can generate the same amount for Fiscal Year 2025. Even if VF hits those targets, however, the combined amount is below what’s needed to pay down the debt if it wants to maintain a decent balance sheet. And while the company could refinance its debt, current rates mean VF will have to then account for higher interest expenses.
A woman’s apparel and home brand that is part of the Qurate Retail portfolio has unveiled its first-ever full-price retail store. Garnet Hill has opened at Legacy Place, an outdoor shopping center in Dedham, Mass. The new outpost offers the best of the brand’s apparel and home textiles offerings. It also includes a bedding design center where customers can coordinate and layer their favorite combinations of fabrics, colors and patterns, with the help of store design associates. The store was created as a curated destination where customers can shop Garnet Hill’s exclusive designs and also learn about and experience first hand the brand’s signature renewable and recycled fibers. Founded in 1976, Garnet Hill is part of Qurate Retail Group, whose brands include QVC, HSN, Ballard Designs, Frontgate and Grandin Road.
Athletic & Sporting Goods
SweetSpot, a backyard sports brand, rebranded and relaunched to increase its footprint across various outdoor sports. A group of seasoned industry leaders spearheaded the new direction for the company, including SweetSpot CEO Joe Lawrence, co-founder of Marucci Sports, and a fundraising round led by Elysian Park Ventures, the private investment arm affiliated with the Los Angeles Dodgers ownership group, with participation from Hockey Hall of Famer Wayne Gretzky. Previously known for its recreational baseball and softball products, including a Major League Baseball licensed line, SweetSpot is expanding its reach to feature an array of offerings for other sports, including football, soccer, golf, and pickleball, through its online store and major retailers.
Columbia Sportswear is facing tough outdoor and wholesale challenges ahead. A lackluster fourth-quarter report resulted in layoffs, as well as an expectation for “erosion in profitability” in 2024. And the company’s challenges include cautious retail partners and greater competition from other brands. “Looking ahead, we expect 2024 to be a challenging year. Retailers are placing orders cautiously, and economic and geopolitical uncertainty remains high,” Timothy P. Boyle, chairman, president and CEO, told investors in an earnings conference call on Thursday, adding that spring and fall order books “reflect these challenges.”
Alterra Mountain Company, a ski resort conglomerate that owns the Ikon Pass, plans to purchase Arapahoe Basin Ski Area this year, according to statements released by both organizations. A-Basin is currently owned by Dream Unlimited Corp., a Canadian real estate company based in Toronto, which acquired the ski area in 1997. The sale, if it goes through, would bring Alterra’s portfolio to 18 year-round mountain destinations throughout North America. In Colorado, Alterra owns Steamboat Ski Resort and Winter Park Resort. Arapahoe Basin Ski Area Chief Operating Officer Alan Henceroth said the sale could be completed sometime later this year, adding there will be no changes to Ikon Pass access at A-Basin this ski season.
Cosmetics & Pharmacy
Billionaire Reinold Geiger is making a renewed push to take global cosmetics firm L’Occitane International SA private, the strongest indication yet that a succession plan is underway. Private equity firm Blackstone Inc. is considering teaming up on a buyout with 76-year-old Geiger, who is chairman and holds a controlling stake in the skincare brand. If Geiger succeeds, it will cap a tumultuous three years for the company that sells products like citrus verbena hand cream and almond shower oil. Geiger relinquished his role as chief executive officer in 2021 to Andre J. Hoffmann, his business partner for nearly 30 years. Then, last month, Geiger announced Hoffmann will be replaced in April by a new CEO who previously worked at LVMH. A vehicle ultimately controlled by Geiger owns more than 70% of L’Occitane, exchange filings show.
10Beauty, creator of the first full salon-quality manicure machine, announced it will launch at the end of this year, having secured $38 million in equity financing, including a newly closed $17 million extension to their Series A led by Shine Capital. Imaginary Ventures, Lerer Hippeau and Red Sea Ventures led their previous funding rounds. 10Beauty is leveraging robotics and automation to reimagine how people interact with machines to receive beauty services. The company’s first product – “The 10” – has seen unexpectedly robust pre-launch demand. 10Beauty’s first 1,000 machines are sold out, as the company solidified pre-sale deals with four enterprise customers, including Nordstrom and Ulta Beauty, as well as dozens of high-end hair salons. The company plans to install The 10 at 1,000 initial locations, representing a run rate of $13 million in annual manicure pod subscription revenue. These partnerships have potential to eventually represent $50 million in revenue and presence at 3,000 locations.
Natura & Co. is looking into spinning off Avon International into a separate publicly traded beauty company in order to unlock further shareholder value. The announcement fits in with the recent strategy of simplifying its corporate structure and follows the recent divestments of Aesop and The Body Shop. Natura & Co. off-loaded The Body Shop to Aurelius in a deal valuing the British retailer at 207 million pounds. Prior to that, it sold Aesop to L’Oréal in a deal that valued the personal care brand at $2.5 billion. The structure of the potential transaction is still being assessed but it is expected that it would result in two separate, stand-alone entities (Natura and Avon), the company said. Natura would continue to operate with both brands in the region, so the potential separation would not impact the integration of the brands in Latin America. In turn, Avon would indirectly benefit from the sales in Latin America through a commercial arrangement with Natura. Natura & Co. does not own Avon U.S.
Discounters & Department Stores
Target is weighing a new paid membership program for its customers similar to Amazon and Walmart, Bloomberg News reported on Wednesday, citing people familiar with the matter. The new program, internally titled as Project Trident, could launch as soon as this year, the report said. Target did not immediately respond to a Reuters request for comment. It will be a late entrant into the market of paid membership and will have to compete with Amazon’s Prime, Walmart Plus and Kroger’s Boost programs. Paid memberships usually get customers access to free deliveries on their orders, while getting additional deals and discounts, driving more revenue for companies. Target has been dealing with sluggish sales over the past year as Americans cut back spending on discretionary products that make a larger part of the retailer’s product assortments.
An activist hedge fund chaired by former Canadian Prime Minister Stephen Harper is pushing U.S. department store operator Kohl’s to sell itself, according to people familiar with the matter. Kohl’s rejected acquisition offers worth as much as $64 per share in 2022, when it also came under pressure from several activist shareholders to explore a sale. It held on for a bid worth more than $70 per share that never came, and has since struggled to make its stores more profitable and grow its e-commerce business. Its shares are now hovering at around $26. Vision One Management Partners, a fund co-founded by Harper and former Carl Icahn protégé Courtney Mather, has built a stake in Kohl’s and expressed concerns to the company about its future, the sources said. Vision One has asked Kohl’s to launch a sale process and also give it board representation, the sources added, requesting anonymity because the matter is confidential.
Emerging Consumer Companies
Yeti acquires backpack company Mystery Ranch
Yeti, the outdoor products company based in Austin, has announced its acquisition of backpack brand Mystery Ranch. The terms of the deal were not disclosed. Mystery Ranch is known for its load-bearing equipment designed for harsh environments, and its products align with Yeti’s focus on durability and performance. Mystery Ranch will continue to operate out of Bozeman and will work with Yeti to integrate teams and functions. This is Yeti’s second acquisition, following its parent company’s acquisition of Osprey in 2021. Mystery Ranch has experienced rapid growth since the COVID-19 pandemic, with its direct-to-consumer business surpassing its goals and revenue numbers exceeding those of 2019. The brand, founded in 2000, now has 106 employees and sells to around 450 retailers in North America. Mystery Ranch recently launched a new line of technical backpacks for outdoor activities.
Perelel Health raises $6 million in funding for prenatal vitamins
Los Angeles-based prenatal and postnatal vitamin brand Perelel Health has raised $6 million in series A funding from Unilever Ventures, Willow Growth, and Selva Ventures. The investment reflects the growing trend of consumers choosing young brands that can prove safety and efficacy. Perelel Health, launched in 2020, has seen significant growth and is approaching profitability. The brand has sold 31 million capsules in the last year, with one-third of customers returning for prenatal support in subsequent pregnancies. The company has now raised a total of $12.1 million in funding. The investment will be used to expand the team, fund clinical studies, release new products, and scale the direct-to-consumer subscription side of the business.
JuneShine receives investment from InvestBev for marketing and expansion
San Diego-based hard kombucha and ready-to-drink spirits brand, JuneShine, has received an investment from InvestBev. The amount of the deal was not disclosed. The investment will be used to accelerate the company’s marketing and product line expansion efforts. JuneShine, launched in June 2018 by CEO Greg Serrao, offers a range of hard kombucha flavors and ready-to-drink canned cocktails. The products are available in 28 states through wholesale distribution channels. Serrao expressed gratitude for having InvestBev as part of the team and stated that they have big plans for the future as they continue to build a better-for-you alcohol platform. He believes that InvestBev will be valuable partners and advisors as JuneShine enters its next stage of growth.
Food & Beverage
Sakara Life has tapped a Glossier alum as its new chief executive officer. Henry Davis, who served as president and chief operating officer at Glossier from 2014 to 2018, succeeds cofounders Danielle DuBoise and Whitney Tingle as CEO. DuBoise and Tingle will remain as founders and executive chairs, focusing on education and creative vision. Since its launch more than a decade ago, Sakara Life has become a nine-figure business, according to Tingle. In May 2023, WWD reported that the business was on track to reach $150 million by the end of the year, according to industry sources. Now, Davis joins the team on a mission to expand Sakara Life’s reach further.
US-based private investment firm Bansk Group has acquired a majority stake in jerky maker No Man’s Land for an undisclosed fee. The deal sees Bansk acquire what was described as a “majority interest”. Full terms were not disclosed. Based in Oklahoma, No Man’s Land produces beef jerky and meat sticks using a slow-drying production process. The company, founded in 1997, will continue to be led by CEO Pete Dillingham, president Clint Beagley and the existing leadership team. Bansk’s investment in No Man’s Land marks the firm’s second investment in the food and beverage sector, following its acquisition of Red’s All Natural, a clean-label frozen burritos and breakfast sandwiches brand, in January 2023. The investor said No Man’s Land would use its backing to “expand distribution and increase market share in a large category with attractive tailwinds”.
Accolade Wines, maker of brands including Hardys, Echo Falls and Mud House, has been taken over by a consortium led by Bain & Co. The deal brings an end to five years of ownership by US-based investment group Carlyle. Carlyle, which paid A$1bn to acquire Accolade in 2018, had been seeking to offload the wine maker after premiumisation trends and ongoing Chinese tariffs on Australian wine dragged on sales. It had already been selling off assets, including Tasmanian brand Bay of Fires, to service Accolade’s debts. The buying consortium, called Australian Wine Holdco, includes asset managers Intermediate Capital Group, Capital Four, Sona Asset Management and Samuel Terry Asset Management. It had already been buying Accolade’s debt at a discount and said it hoped to complete the company’s recapitalisation by the middle of 2024. Accolade is the second biggest winemaker in Australia, behind Treasury Wine Estates.
Grocery & Restaurants
McDonald’s and Starbucks, two of the biggest U.S. restaurant companies, both said the Israel-Hamas war hurt their sales at the end of last year. Shares of McDonald’s fell nearly 4% on Monday, after it reported that a sales slowdown in the Middle East contributed to its fourth-quarter revenue miss. Starbucks’ stock has fallen roughly 2% since Tuesday, when the company reported that the war dented its U.S. sales in the final three months of the year, too. The two restaurant giants became some of the largest U.S. companies to say the Middle East conflict hurt their sales — and will likely hit demand in future quarters, as well.
Chipotle Mexican Grill on Tuesday posted quarterly earnings and revenue that beat analysts’ expectations as more customers visited its restaurants. Net sales rose 15.4% to $2.52 billion. The company’s same-store sales rose 8.4%, beating StreetAccount estimates of 7.1%. Executives said sales grew across every consumer income level. Chipotle said foot traffic rose 7.4% in the quarter, bucking an industry-wide trend of declining visits. Restaurant giants McDonald’s and Starbucks both reported traffic declines for the last three months of the year. Additionally, Chipotle’s sales received a boost from a 3% menu price increase it implemented in October. The company opened 121 new locations during the quarter. Looking to 2024, Chipotle is forecasting full-year same-store sales growth in the mid-single-digit range and plans to open between 285 and 315 new locations.
U.S private equity firm Apollo Global Management is in talks to buy a minority stake in the Middle East, North Africa and central Asia Starbucks franchise operated by Kuwait’s AlShaya Group, three sources close to the matter said. Dubbed “Project Emerald”, according to two of the people, the privately owned retailer is looking to sell a minority stake of about 30% in the business, Reuters reported previously. Saudi Arabia’s sovereign wealth fund, the Public Investment Fund (PIF), which has previously been shortlisted to buy the stake, is also still involved in the talks, one of the people and a third one said. The Starbucks unit runs around 2,000 outlets in 13 countries, across the Middle East and North Africa, Kazakhstan and Azerbaijan. It was valued at between $4 billion and $5 billion in 2022, Reuters reported previously, before it exited Russia.
Home & Road
The Container Store posted year-over-year sales and earnings declines for its third quarter, although it noted new product success during the period. Consolidated net loss was $6.4 million, or 13 cents per share, versus net income of $4.2 million, or eight cents per share, in the year-before quarter. Adjusted for one-time events net loss was $4.1 million, or eight cents per share, versus net income of $4.1 million, or eight cents per share, in the year-past period, The Container Store reported. According to Yahoo Finance, adjusted loss per share in the quarter missed an analyst estimate, which came in as a loss of five cents per share. Comparable sales slid 16.8% in the quarter year over year, with general merchandise categories down 20.4%. Comps in the Custom Spaces+ business declined 9.2% from the year-earlier period, the company stated.
Housewares supplier Evriholder Products LLC has announced its second acquisition of the year, having purchased BASE4 Ventures, a provider of value-oriented impulse products in the toy, beauty, outdoor living and the general merchandise categories. The purchase price was not disclosed. Last month, Evriholder acquired Progressive Intl., a kitchen tools and storage company. Adding BASE4 Ventures to Evriholder’s portfolio “will help propel us into our next chapter of growth,” said Ivan Stein, Evriholder’s CEO. “Not only does BASE4 have a complementary customer base in the drug, dollar, beauty and mass merchant channels, but its attractive product assortment is one that we can cross merchandise to our customers as well.”
The RoomPlace, a Chicago-based retailer since 1912, has announced a Chapter 11 restructuring that will include the closing of eight stores. In a statement announcing the restructuring the company said the filing would enable it to, “align its costs with its projected sales and economic realities. “What was once viewed as taboo is now a strategic way to realign and strengthen a business,” said Bruce Berman, CEO of The RoomPlace. Berman pointed to declining retail sales across the country and noted that the furniture industry has been particularly challenged. “We’re making the tough decisions now to ensure we’re around for another 100 years,” he said.
Tractor Supply Company is upping its store openings in 2024 despite a disappointing fourth quarter. The nation’s largest rural lifestyle retailer’s capital plans for 2024 include opening 80 Tractor Supply stores (up from 70 in 2023) and 10 to 15 new Petsense by Tractor Supply stores as well as continuing its “Project Fusion” remodels and garden center revamps. In July, citing “market insights,” Tractor Supply increased its long-term store target to 3,000 locations, up 200 stores from its previous guidance. (In 2025 and beyond, the company plans to accelerate its growth to 90 new stores a year. It currently has 2,216 locations.)
Jewelry & Luxury
Neiman Marcus Group is ending its commercial partnership with luxury e-commerce platform Farfetch, and its Bergdorf Goodman banner will no longer be replatforming onto Farfetch Platform Solutions, Neiman Marcus confirmed by email. Neither Coupang nor Farfetch immediately returned requests for comment. The tie-up with Bergdorf was announced in 2022, the first move in a global strategic partnership between Neiman Marcus Group and Farfetch unveiled at the same time. The partnership entailed Farfetch making a minority common equity investment of up to $200 million into the legacy department store company, and on Wednesday Neiman said that Farfetch continues to be a minority investor. Last month, South Korean e-commerce company Coupang completed its acquisition of Farfetch for $500 million.
Patek Philippe has confirmed that it raised prices on its watches worldwide—but disagreed with a Bloomberg report that pegged the average increase at 7%. “We do not confirm the percentage mentioned by Bloomberg,” says a Patek spokesperson. “The percentage of increase varies per market. As we are an independent, family-owned company, we do not communicate any further specifics.” The price hikes began Feb. 1.
A few lucky luxury brands have always sold their goods to people who can afford them, no matter what shape the economy is in. Others that are trying to muscle in on this ultrarich patch risk leaving their usual customers out in the cold. Shares in Hermès rose 5% in early European trading Friday after the Birkin handbag maker said sales for the three months through December rose 18% compared with a year earlier. A 7% average price increase for Hermès goods in 2023 flattered the brand’s top line and helped boost the full-year operating margin to a record high of 42%. This results season, shareholders have been pleasantly surprised to learn that shoppers are still spending on designer baubles. Luxury stocks have been weak recently because of worries that sales would suffer as Americans and Europeans sobered up following a bumper three-year spending spree. Even after reassuring results from heavyweights like LVMH, major luxury stocks are still 15% cheaper than their five-year average, based on multiples of expected earnings. Hermès is the exception, trading at a 6% premium.
Office & Leisure
OpenGate Capital, a global private equity firm, announced that it has completed its previously announced acquisition of Player One Amusement Group from Cineplex, Canada’s leading entertainment and media company. OpenGate acquired all issued and outstanding common shares of Player One for a total transaction value of CAD $155 million. OpenGate plans to partner with Player One’s management team to create best-in-class experiential entertainment for consumers that drives superior location profitability for customers. As part of the transaction, OpenGate is making strategic investments in the Company’s people, infrastructure, deployable assets, and systems to enable Player One to better serve existing and new customers. Player One is an amusement services provider based in Toronto, Ontario serving customers across Canada and the US. The business provides amusement gaming equipment and outsourced operations and maintenance support to customers. In addition, the business sources, distributes, and maintains amusement gaming equipment for commercial and retail venues across North America.
Last week, Indigo Books & Music Inc., confirmed it has received an unsolicited non-binding privatization proposal. Canada’s leading book and lifestyle retailer announced that the proposal comes from Trilogy Retail Holdings Inc. and Trilogy Investments L.P. controlled by Gerald W. Schwartz, a member of the Indigo Board. The proposal outlines “a potential transaction to acquire all of the issued and outstanding common shares of the Company that Trilogy and its joint actors do not currently own for $2.25 in cash per common share of the Company,” said Indigo. Schwartz is spouse of Heather Reisman, Founder and CEO of Indigo, who also sits on the company’s board. In its last financial results, released November 7, the company reported total revenue of $206.9 million in the its second quarter for Fiscal Year 2024, compared to revenue of $236.2 million in the same period last year, when the company achieved its highest ever merchandise sales in a second fiscal quarter. Adjusted EBITDA for the quarter was a loss of $13.8 million, compared to a loss of $10.6 million in the prior year. In January, Indigo laid off an unspecified number of staff as part of the retailer’s ongoing efforts to streamline its operations. In the past year, the retailer has dealt with a massive cyber attack as well as several executive changes.
Technology & Internet
The online ad market is bouncing back. But the spoils are not being evenly shared. After Meta blew away Wall Street estimates last week in its fourth-quarter earnings report, pushing the stock to a record, smaller rival Snap came up short Tuesday, sending investors rushing for the exits. Meta’s ad business, which includes Facebook and Instagram, grew 24% from a year earlier, lifting the company to its fastest rate of expansion since mid-2021. Snap reported an increase of just 5% year over year, its sixth straight quarter of single-digit growth or a decline in sales. That’s slower than advertising growth at Google, Amazon and Microsoft in addition to Meta. Broadly, the digital ad market is recovering from a brutal 2022, when soaring inflation and rising interest rates led brands to reel in spending. Now ad platforms are seeing improvements from a more stable economy along with upcoming events like the 2024 Olympics in Paris and the presidential election later this year.
Pinterest shares dropped in extended trading on Thursday after the company issued a weaker-than-expected forecast and reported disappointing revenue. The stock pared some of its losses after Pinterest revealed a new Google partnership. Revenue rose 12% from $877.2 million a year earlier, while net income was $201 million, or 29 cents a share, up from $17.49 million, or 3 cents a share, the previous year. Monthly active users in the fourth quarter rose 11% to 498 million, topping analyst estimates of 487 million. The company said its global average revenue per user was $2, lower than analyst estimates of $2.05. Pinterest said first-quarter revenue will be between $690 million and $705 million, which equates to year-over-year growth of 15% to 17%. The middle of that range, $697.5 million, is below the average analyst estimate of $703 million. The stock initially sank as much as 28% to an after-hours low of $29.40. After Pinterest CEO Bill Ready announced a “third-party app integration with Google” during a call with analysts, the company’s shares rebounded to $37.82, equating to a nearly 10% decline.
Finance & Economy
The number of Americans filing for jobless claims fell last week despite more layoff announcements from high-profile companies recently. Applications for unemployment benefits fell by 9,000 to 218,000 for the week ending Feb. 3, the Labor Department reported. The four-week average of claims, which evens out some of the weekly volatility, increased by 3,750 to 212,250. Weekly unemployment claims are seen as a proxy for the number of U.S. layoffs in a given week. They have remained at extraordinarily low levels despite efforts by the U.S. Federal Reserve to cool the economy.
Credit card delinquencies surged more than 50% in 2023 as total consumer debt swelled to $17.5 trillion, the New York Federal Reserve reported. Debt that has transitioned into “serious delinquency,” or 90 days or more past due, increased across multiple categories during the year, but none more so than credit cards. With a total of $1.13 trillion in debt, credit card debt that moved into serious delinquency amounted to 6.4% in the fourth quarter, a 59% jump from just over 4% at the end of 2022, the New York Fed reported. The quarterly increase at an annualized pace was around 8.5%, New York Fed researchers said. Delinquencies also rose in mortgages, auto loans and the “other” category. Student loan delinquencies moved lower as did home equity lines of credit.