Apparel & Footwear

Exclusive: Allbirds CEO Joey Zwillinger Steps Down, the Second Top Executive Shift in a Year

Amid a turnaround plan, Allbirds had made another big C-suite change. Allbirds co-founder and chief executive officer Joey Zwillinger will step down as the company elevates chief operating officer Joe Vernachio to the CEO role and adds him to the board of directors. Zwillinger, who went from Allbirds’ co-CEO to sole CEO last May, will remain with the company as a member of the board of directors and special advisor. The changes are effective March 15. The CEO transition comes at a crucial time for Allbirds, which is one year into its business turnaround plan it outlined last March. This strategy focuses on revamping product, optimizing U.S. distribution and store profitability, re-evaluating its international strategy and improving cost savings. Since outlining this plan, Allbirds’ revenues have been challenged by decreases in average selling price, higher promotional activity and fewer sales per unit. In its fourth quarter reported on Tuesday, Allbirds’ revenues were down 14.5 percent to $72 million. Net loss in the fourth quarter was $56.8 million or $0.37 per basic and diluted share. For the full year of 2023, net revenues were down 14.7 percent to $254.1 million and net loss was $152.5 million, or $1.01 per basic and diluted share.

 

Mango’s 2023 Revenue Climbs 20 Percent as It Eyes 4 Billion Euros in Sales

Barcelona-based retailer Mango crossed 3 billion euros in sales in 2023 and the retailer has outlined an ambitious growth plan with a target of 4 billion euros in sales by 2026. The company’s turnover topped 3.1 billion euros in 2023, up 20 percent at constant exchange. That resulted in a net profit of 172.1 million euros. Much of the growth was fueled by its rapid expansion, with net 130 new stores opened in the last year. The sales figure was a record for the company and just above the guidance issued in December. In 2022 Mango’s sales were 2.68 billion euros. More than 1 billion euros of the 3.1 billion euros in revenue were from online sales, or about 33 percent, as the company has invested in its omnichannel strategy with a loyalty program, an in-house app and using AI to boost data management. The bump in sales led to a doubling of the company’s net profit to 172 million euros from 81 million in 2022. Women’s lines remain the bulk of the business, with a focus on party and formalwear, but men’s is growing, now about 11 percent of sales, while kids and teen accounts for about 8 percent. Combined, sales were up 20 percent in those categories. Mango is also pushing forward with its aggressive expansion plan, named 4E for “Elevate, Expand, Earn and Empower.” That roadmap will see it add 500 stores to its existing 2,700 worldwide by the end of 2026.

Outdoor Voices to Shutter All Stores

Outdoor Voices is living up to its motto, but likely not in the way it hoped. The brand known for “Doing Things” announced it would shutter its 16 U.S. stores at the end of last week, according to reports from its retail employees. The 11-year-old Austin, Tex.-based athleticwear label has laid off store associates across the country, with plans to take the business fully online. The workforce was notified Tuesday, according to posts on social media. Outdoor Voices, which also has locations in Texas, Massachusetts, Arizona, Washington, D.C., Florida, Colorado, Illinois, North Carolina and Georgia, did not file Worker Adjustment and Retraining Notifications (WARN) in any of the states in which it operates. The newly announced store closures come after months, if not years, of speculation about the health of the business and the future of the brand. Founded by millennial entrepreneur and Parsons graduate Ty Haney, Outdoor Voices was a unicorn startup that raised $7.5 million in investments in its first two years on the back of its pastel, color-blocked leggings and sports bras. Former Gap, Inc. CEO Mickey Drexler was appointed chairman of the board in 2017, and the brand shot into the stratosphere, earning a $110-million valuation by 2018. Haney left the brand suddenly in 2020 amid rumors of mismanagement in her role as CEO and reported infighting with Drexler, and valuation took a nosedive, falling to $40 million.

 

Athletic & Sporting Goods

Yeezy fiasco helps push Adidas into loss as US sales continue to fall

Adidas has slumped to a rare annual loss, hit by the fallout from its costly break-up with rapper Ye, falling sales in North America and a huge tax bill.  The German sportswear giant posted a net loss of €58 million ($63 million) in its core business in 2023, as revenue was hurt by lower sales of Yeezy-branded clothing and sneakers, while its tax burden shot up.  In October 2022, Adidas broke off its high-profile partnership with Yeezy designer Ye, the rapper formerly known as Kanye West, after he made a string of anti-semitic remarks.  Adidas has been selling its remaining Yeezy stock, saying it will donate a “significant amount to selected organizations working to combat discrimination and hate, including racism and antisemitism.”

Luxury Fitness Chain Equinox Raises $1.8B to Refinance Debt Caused by Pandemic

Luxury gym chain Equinox has raised $1.8 billion from a group of private capital investors to refinance $1.2 billion in debt amassed in the wake of the COVID-19 pandemic. As reported by the Financial Times, citing a press release issued last week, Sixth Street, one of the largest private lenders globally, and private equity group Silver Lake, an existing investor, are leading the effort to infuse $1.8 billion toward the refinancing of maturing loans and to fund working capital and the growth of new clubs. The investor group also includes private credit groups Ares Management and HPS, and L Catterton, a private equity group that invested in Equinox in 2017. Executives of Related are also investing in the deal. The refinancing would be done in two tranches of loans and does not include any preferred equity, or other debts that can be converted into equity and dilute Equinox’s existing equity owners, according to two people familiar with the matter, Antoine Gara and Eric Platt of the Financial Times reported. Equinox, which is owned by the founders of real estate group Related Companies, faced a liquidity crunch as a result of the 2020 pandemic when it was forced to close gyms for many months and saw its membership decline. Since then, its financial health has improved, but rising interest rates and its high debt level limited its options to refinance the loans, amplifying fears it would face a liquidity crunch, Gara and Platt reported.

Cosmetics & Pharmacy

Galderma IPO Is Expected to be Among Europe’s Largest in 2024

Galderma AG, the Swiss pure-play dermatology products maker, expects to start trading on the SIX Swiss Exchange March 22 in what could become among the largest public offerings in Europe this year. On Wednesday morning, the Zug, Switzerland-based producer of Cetaphil said it had begun the book-building process for an IPO that could raise about 2.3 billion Swiss francs, or $2.6 billion. IPOs are heating up in the beauty space as stock markets rally and interest-rate rises mitigate. Galderma’s news comes a day after Douglas, the German omnichannel premium beauty retailer, said it intends to go public in Frankfurt on March 21. Spanish beauty and fashion company Puig has said it is mulling an IPO as part of strategic options for the future. And Brazil’s Natura & Co. is considering spinning off beleaguered Avon into a separate publicly traded company.

Sephora at Kohl’s Targets Sales of More Than $2 Billion by 2025

Kohl’s has announced that its Sephora at Kohl’s partnership is going from strength to strength. Sales exceeded US$1.4 billion in 2023 and the department store says it is on track to surpass its goal of US$2 billion by 2025. Some 140 new small format (75 sq ft) locations will open by summer in 40 states, Kohl’s said. Shoppers will notice a curated merchandizing approach in these smaller-format stores, with products displayed by category rather than brand. Nick Jones, Kohl’s Chief Merchandising and Digital Officer, reveals, “We are proud of the continued success of our partnership with Sephora. Not only are we well on our way to having a Sephora presence in every Kohl’s store across America, but we’re also seeing strong sales momentum from our current stores, and the experience is bringing new customers to Kohl’s. Over the past three years, Sephora at Kohl’s has become a beauty share leader, and our continued investment in bringing prestige beauty offerings to more stores this year demonstrates our steadfast belief in the power of our partnership.”

Marla Beck named CEO of BeautyHealth

After a short stint as interim CEO, Marla Beck has assumed the permanent leadership position at BeautyHealth, per a news release. Beck, who founded beauty chain Bluemercury, joined BeautyHealth’s board of directors in June 2022 and took on the interim CEO position last November replacing Andrew Stanleick, who left and relinquished his seat on the board. Beck’s appointment came as BeautyHealth this week reported a 1.3% year-over-year decline in fourth-quarter net sales, as it swung to a net loss in the period. For the full year, net sales were up 8.8% to $398 million, while its net loss reached $100.1 million.

 

Discounters & Department Stores

Dollar General plans 800 stores this year as rival Dollar Tree pulls back

One month after opening its 20,000th store, Dollar General said during a Thursday earnings call that it plans to open 800 more new stores, remodel 1,500 locations and relocate 85 stores this year — 2,385 real estate projects overall. The news comes one day after chief rival Dollar Tree Inc. said it plans to close about 600 of its Family Dollar locations this year and an additional 400 stores under both banners in the coming years as leases expire. New stores and same-store sales growth helped push Dollar General’s full-year net sales up 2.2% to $38.7 billion. Net income for the year declined 31% to $1.7 billion from $2.4 billion a year earlier. Same-store sales in Q4 and for the year were just above flat, driven by growth in consumables that was moderated by declines in home, seasonal and apparel.

Kohl’s brings in Babies R Us after rough holiday quarter

With the help of an extra week in the holiday quarter, Kohl’s Q4 net sales fell 1.1% year over year to $5.7 billion, with comps, excluding the extra days, down 4.3%. Other sales, including credit card revenue, were essentially flat at $246 million. Gross margin expanded to 32.4% from 23% the year before, with inventory down 10%. The retailer swung into the black with net income of $186 million, from a $273 million net loss a year ago. The department store also announced an exclusive licensing agreement with Babies R Us, now owned by WHP Global. The first shop-in-shops will open in August, with plans to expand to 200 stores in the fall.

Target’s Cat & Jack kid’s apparel headed to Hudson’s Bay in Canada

Target’s Cat & Jack children’s apparel brand will debut on Thursday in most of Canadian retailer Hudson’s Bay’s 82 physical stores, along with the retailer’s online store, the companies said in an announcement last week. Hudson’s Bay will put “a dedicated Cat & Jack experience in every store,” the retailer said. The move puts a popular Target-owned brand back into Canada nearly a decade after the retailer closed all of its big box stores and withdrew from the country. That move came after less than two years of operation following a failed attempt to expand its retail footprint beyond the U.S. Hudson’s Bay President and CEO Liz Rodbell said in a statement that Cat & Jack will be a key part of the retailer’s assortment.

 

 

Emerging Consumer Companies

Serenity Kids closes $52m Series B investment round

US-based shelf-stable baby and toddler food brand Serenity Kids has closed a $52 million minority funding round led by investment firm Stride Consumer Partners. The brand offers nutrient-dense products that contain high-quality proteins and healthy fats across pouches, puffs and toddler formula. The growth capital is set to propel key areas of Serenity Kids’ business, including marketing, talent and innovation. Since its launch in 2018, Serenity Kids said it has become the fastest selling shelf-stable baby food pouch brand in US grocery channels, with national distribution in over 18,000 stores.

Murphy’s Naturals secures $8 million in funding for expansion
Murphy’s Naturals, a Raleigh, NC-based outdoor lifestyle company, closed an $8 million Series B funding round led by Point King Capital. The funding will support nationwide retail distribution expansion, research and development of new products, and increased manufacturing capacity. The company, known for its natural mosquito repellents, also plans to continue donating two percent of its revenue to conservation and community impact organizations. CEO Philip Freeman, a U.S. Navy veteran, expressed gratitude for partners whose mission aligns with the brand’s purpose. The company’s rapid growth landed them on the Inc. 5000 Mid-Atlantic Regional Winners list in 2023, with plans to expand retail presence to include REI and Walmart in 2024. Melissa Dolan of Emil Capital Partners praised Murphy’s Naturals as well-positioned for retail expansion and growth, emphasizing the company’s dedication to its mission of “Doing Others Good.”

 

 

Food & Beverage

Liquid Death closes $67 million in strategic financing including top distributors at $1.4 billion valuation

Liquid Death, the healthy beverage platform and one of fastest growing non-alcoholic brands, has closed $67 million in financing from strategic partners and new investors including top national distributors, along with notable names in entertainment and sports. The $1.4 billion valuation is a strong increase over prior funding rounds. Distributor investors include the No. 1 distributors in North Carolina, Oregon, Utah, and Washington, and top distributors in other key markets around the country. New institutional investors include SuRo Capital alongside follow-on investors Live Nation, Science, Inc., and Gray’s Creek Capital Partners. Other prominent investors in the round include actor Josh Brolin, NFL All-Pro and entrepreneur DeAndre Hopkins, The Chapelle Show co-creator Neal Brennan, Brazil’s largest metal band Sepultura’s Derrick Green, and Australian comedian Jim Jefferies. Liquid Death hit $263 million in retail scanned sales through registers in 2023 and expanded to 113,000 retail doors across the US and UK.

SAMBAZON Acquires SunOpta’s Açaí and Smoothie Bowls Business

SAMBAZON announced it has purchased SunOpta’s frozen Açaí and Smoothie bowl business, expanding SAMBAZON’s manufacturing capabilities in the United States. This strategic acquisition will unlock innovation offerings within SAMBAZON’s bowl portfolio with new dry toppings, savory toppings, organic fruit inclusions on top of bowls as well as innovative bases that include tropical fruits, purees, as well as emerging and popular seed bowls. The new manufacturing lines also double SAMBAZON’s production capabilities. SAMBAZON is a global brand of Açaí and the first Certified Organic and Fair Trade Açaí company selling its consumer-packaged items in more than 30,000 supermarkets mass merchandisers and club locations in more than 50 countries. SAMBAZON’s Açaí and smoothie bowls are packaged in eco-friendly plant-based, fiber bowls and are Forest Stewardship Council (FSC) Certified. Terms of the transaction were not disclosed.

Green Boy invests in Sigma Oil Seeds, a growing Plant-based Organic Oil Producer

Green Boy announced an investment in Sigma Oil Seeds B.V., a manufacturer and global supplier of plant-based organic and conventional oils and fats, established in 2017 in Rotterdam, The Netherlands. Sigma Oil Seeds specializes in supplying high quality virgin and refined oils, such as Coconut, Sesame and Walnut oil, to the plant-based food and cosmetic industry. “We as Sigma Oil Seeds could not be more excited about having Green Boy as a stakeholder in our company,” says Timo van Dorland, owner of Sigma Oil Seeds “as we want to grow our plant-based oil business further on a global scale. Green Boy has access to a large plant-based food market due to their strong presence in North America, Europe and Australia. We view Green Boy as a strategic partner that can help us realize our expansion”. Terms of the transaction were not disclosed.

 

 

Grocery & Restaurants

Kroger, Albertsons file pointed responses to FTC

Kroger and Albertsons both filed sharply worded comments this week asserting that the Federal Trade Commission defined the competitive retail and labor markets much too narrowly in its effort to block the retailers’ planned merger. Unlike their statements to the media after the FTC announced in February that it would sue to block the proposed $24.6 billion merger, the retailers took a much more combative stance and provided detailed objections to the FTC’s specific allegations in their latest filings. “The Commission’s claims are premised entirely on the Commission’s distortion and willful ignorance of basic but critical facts,” Albertsons said in its comments. Albertsons said the Commission “entirely ignores” the realities of the competitive grocery landscape. It cited competition from other grocery retailers, including Walmart, Target, Costco, Amazon/Whole Foods, other specialty grocers such as Trader Joe’s and Sprouts, and dollar stores. Albertsons cited Costco in particular as one of the company’s “most fervent competitors.” Both Albertsons and Kroger also contested the FTC’s assertion that C&S Wholesale Grocers would not be a viable operator for the hundreds of stores that the two companies plan to divest to meet antitrust concerns.

Mike Burns named CEO of &pizza, replacing founder Michael Lastoria

Fast-casual pizza chain &pizza has named Mike Burns its new CEO, taking over from co-founder Michael Lastoria, the company said Thursday. Burns has actually been in the position for some time, according to the release announcing his appointment, and in the past two months has overhauled the mission-driven chain’s tech stack and relaunched its web site, mobile app, loyalty program, and point-of-sale systems at all 55 locations. Before joining &pizza, Burns was chief operating officer and executive vice president of Rave Restaurant Group, which owns the Pie Five Pizza and Pizza Inn concepts. He also had been vice president of operations of Pei Wei Asian Kitchen and spent more than a decade overseeing more than 175 Bojangles locations.

FAT Brands wants to acquire salad, sandwich, or coffee brand next

Twin Peaks and Fazoli’s parent company FAT Brands is coming off of a mixed fourth quarter, balancing massive growth (the company expanded tenfold over the past three years) with a net loss of $26.2 million, for the fourth quarter ended Dec. 31, 2023. The beleaguered Beverly Hills, Calif.-based company is also facing down a Wells notice from the U.S. Securities and Exchange Commission, indicating that the federal government has concluded its investigation into FAT Brands. Despite these fiscal and legal challenges — the latter of which, former CEO Andy Wiederhorn declined to comment further on — FAT Brands is looking to continue its aggressive expansion strategy, both within the brands it already owns, and looking ahead to new acquisition possibilities. “As we continue to assess potential targets for acquisition, our focus remains on identifying strategic and EBITDA accretive opportunities with brands that have demonstrated long-term sustainability and robust profitability,” Wiederhorn said during Thursday’s earnings call. “We are also interested in categories we currently do not operate in to round out our portfolio, such as salad, sandwich, or coffee brands. Acquisition targets must be both scalable and synergistic with our existing platform, including leveraging our existing manufacturing capacity when possible.”

Home & Road

Revenues slip YOY for Q4 and FY, but Williams-Sonoma tops expectations

Despite sales slipping in the fourth quarter and the full 2023 fiscal year, Top 100 retailer Williams-Sonoma, Inc. bested its guidance in its latest earnings report. “We are pleased with our strong finish to 2023. We delivered an annual operating margin of 16.4% with full-year earnings per share of $14.85, beating our 2023 comp guidance of -10% to -12% and hitting our operating margin range of 16% to 16.5%,” said Laura Alber, president and CEO. For the three months ended Jan. 28, Williams-Sonoma’s net revenues totaled $2.279 billion, down 7.1% compared with $2.453 billion in the same quarter of FY2023. Net earnings came in at $354.44 million, or $5.44 per diluted share, essentially running even against $355 million, or $5.28 per diluted share a year ago. By segment, Pottery Barn totaled $874 million in revenues in the quarter, a 9.6% decline vs. $967 million in 2022, while West Elm’s $453 million was 15.3% off the pace of 2022’s $534 million.

Purple sees first revenue increase in 8 quarters

Mattress provider Purple Innovation saw a year-over-year increase in net revenue for the fourth quarter ended Dec. 31, 2023, the first time in eight quarters, although revenue for the year declined. Net revenue was $145.9 million, an increase of 1.1% compared with the same period last year and an increase of 4.2% compared with the third quarter this year. Direct-to-consumer revenue increased at a higher rate, up 4.3% compared with the previous year. This offset wholesale revenue, which dropped 2.7% compared with Q4 2022, although it was up 6.7% compared with Q3 2023. The company showed a Q4 operating loss of $16.2 million compared with a loss of $11.9 million last year. And its net loss for the period showed significant improvement year over year, at a loss of $18.3 million compared with a loss of $71.7 million last year.

Consumer sentiment toward furniture purchases shows it’s still a waiting game

It’s a tale of two consumer mindsets right now when it comes to home furnishings purchases: the delayers and the spenders, with the wait-until-later shoppers maintaining the edge. A look at the most recent consumer sentiment surveys from Dentsu, a provider of integrated marketing solutions, shows that in February, while 29% said they were reducing their spending or delaying a furniture purchase, 19% were just as likely to increase their spending or make an impulse buy. In January, the numbers were higher for both (35% and 25%, respectively) but sustained the 10 percent-point differential. Home décor showed a similar dichotomy: There were more savers than spenders in both months, but the spread remained the same: 12 percentage points in the favor of those delaying a purchase. When consumers did make a purchase in either the furniture or home décor category, they more often opted to do it with a switch to cheaper or bargain items. Nearly one-third (30%) of those surveyed in January said they opted for the less-expensive brand when buying furniture vs. 19% who said they splurged on an expensive or high-quality item.

Haworth reports $2.5B in 2023 sales, highlights year achievements

Workplace furniture giant Haworth reported $2.57 billion in sales in 2023, a 3% increase over 2022. The company has grown 16% since 2019. “Our optimism for 2023 proved mostly true, and we saw continued improvement across all business segments,” said Franco Bianchi, Haworth President and CEO. “Our strategy is creating and expanding our customer base for wherever people work and live.” Haworth shared a few highlights of 2023, including its 75th anniversary. In April, Cassina, a high-end furniture brand part of Haworth’s Lifestyle Design’s segment, acquired Zanotta, another high-end Italian furniture maker. In December, Haworth Lifestyle Design announced a deal with Ralph Lauren. Also in 2023, Haworth joined Leesman’s definitive global study into the impact and future of hybrid working. The company said it continued to invest in showrooms and its global headquarters, as well as supporting dealer partners. Haworth’s innovation pipeline included the debut of Haworth DesignLab, a curated collection of product design concepts from emerging designers, and several new product introductions.

Jewelry & Luxury

De Beers Says Retailers Are ‘Restocking Conservatively’

De Beers Group’s rough diamond sales improved again in February, though the company’s CEO noted that U.S. retailers are still being cautious with their buying. During its second sales cycle of 2024, De Beers sales totaled $430 million, down 13 percent when compared with the same period last year ($497 million) but up 15 percent compared with the first round of sales in 2024, which totaled $374 million. It is the third sales cycle in a row in which De Beers’ sales have increased. Year-to-date, the company’s rough diamond sales have totaled $804 million, compared with $951 million in 2023.

Luxury brands are grappling with billions of euros of unsold inventory

The issue of excess inventory is commonly associated with fast fashion and ultra-fast fashion retailers due to their rapid production cycles and the need to constantly introduce new styles. However, luxury companies are similarly struggling with substantial amounts of unsold stock, proving the situation is no longer exclusive to the lower end of the market. Luxury brands, often characterized by their exclusivity and premium pricing, face challenges related to changing consumer preferences, economic downturns, and unforeseen disruptions such as the COVID-19 pandemic. When consumer demand doesn’t align with production volumes, it leads to a surplus of unsold inventory. According to the Business of Fashion (BoF), the combined unsold products of major players like Kering and LVMH have more than doubled from 2014 to 2023, reaching an alarming 4.7 billion euros. LVMH reported 3.2 billion euros of unsold goods in 2023, representing 4 percent of the group’s revenue, while Kering recorded 1.5 billion euros, equivalent to 8 percent of its revenue.

Porsche’s stock climbs as luxury brand touts dividend hike, model launches

Shares of Porsche Automobil Holding SE rose Tuesday after the German luxury carmaker forecast a tougher 2024, but also declared a dividend. Annual sales for the German premium sports-car maker rose 7.7% to EUR40.5 billion and it reported an operating profit of EUR7.3 billion, a gain of 7.6%. Those numbers both beat Visible Alpha consensus of EUR40.29 and EUR7.23 billion, respectively. But Porsche also warned that it expects operating return on sales to fall to between 15% and 17% in 2024, following a return of 18% in 2023. Part of that comes as the automaker plans several car launches this year – the Panamera, Macan, Taycan and 911 models. Oliver Blume, chairman of the executive board flagged 2024 as “a year of product launches” for the company, saying that would surpass anything it has done before. “We will be introducing a variety of exhilarating sports cars to the road, they will delight our customers around the world,” said Blume. The company had total auto deliveries of 320,221 in 2023, a gain of 3.3% over 2022.

Office & Leisure

Funko CFO to step down as toymaker preps for ‘softer’ content schedule

Funko Inc. CFO and Chief Operating Officer Steve Nave will step down from his role effective March 15 after a year’s tenure in the toymaker’s top financial seat, according to a Thursday filing with the Securities and Exchange Commission. Deputy CFO Yves LePendeven will step in as acting finance chief also as of March 15, the Everett, Washington-based company said. LePendeven first joined the company in October 2019 and has served as deputy CFO since August 2023. Funko is not planning to fill the COO role at this time, according to the company filing. Nave’s departure comes as the company continues to face economic headwinds, including continued impacts from the past year’s strikes in Hollywood. Nave joined the company a year ago to help the toymaker execute its cost reduction and “operational improvement plan,” interim CEO Michael Lunsford said Thursday during the company’s earnings call. Nave “led our efforts to address our excess inventory and improve our Buckeye distribution center, negotiate lower shipping costs, rightsize our cost structure, and manage our liquidity and improve our free cash flow,” Lunsford said. Nave’s decision to leave was partially influenced by the fact that “we largely completed and accomplished the job I was brought in for,” he said Thursday during the earnings call.

LEGO Maintains Strong Revenue in 2023 Despite Trade-Downs and China Pullback

According to data from Circana, The LEGO Group had a 2% growth last year, despite the toy industry seeing a drop in sales of 7% across the world, as per a CNBC report. The growth from the pandemic that expedited sales in the toy industry dropped in 2023 when consumers took a step back from spending as inflation and credit card debt spiked up. On Tuesday, however, LEGO, which is based in Denmark, reported strong sales, with a turnover hitting 65.9 billion Danish krone which is around $9.65 billion. LEGO CEO Niels Christiansen told CNBC, “Being able to again outgrow the market by almost 10 percentage points, like we’ve done the last couple of years, I think it’s really nice to see that we could do that in good years, and we can also do it in bad years.” LEGO was prominent as one of the toy companies that saw significant gains during the COVID-19 pandemic and continues to outpace the industry, securing a larger market share. The company witnessed a sales surge of 27% in 2021 and maintained robust growth at 17% in 2022. In the previous year, LEGO introduced 780 products, with half of them being new additions. This output aligns with the company’s long-standing strategy of maintaining a steady stream of fresh and relevant sets for all consumers, a practice consistent and in line with its approach in previous years.

NFT brands are stepping into the toy category

More NFT brands are blurring the lines between digital and physical collectibles by entering the toy category. Pudgy Penguins, an NFT line originally founded in 2021, expanded its partnership with Walmart last month to make its products available in 3,100 retail locations. Claynosaurz, a collection of 3D animated NFTs, is set to launch a line of dinosaur plush toys early this year, and already did a limited-edition release in November. Digital art collectible brand World of Women teamed up with WS Game Company to introduce a special edition of Monopoly back in October. The NFT market has had a tumultuous year. Data from DappRadar suggests that the sales of NFTs from January to July 2023 declined 49%. Layoffs also plagued the industry with NFT fantasy sports startup Sorare letting go of 13% of its staff last week and NFT marketplace OpenSea slashing 50% of employees in November. Now, many NFT brands are trying their hand in the toy category where they could both grow the popularity of their characters outside of the digital space and gain a new revenue source.

Petco in search of a new CEO as Q4 disappoints

Petco is in search of a new CEO, announcing on Wednesday that Ron Coughlin has stepped down as the pet retailer’s chief executive officer and board chairman. Mike Mohan, lead director since 2021, has stepped in as interim CEO. He has been serving on various company boards since leaving Best Buy that same year. He spent 17 years at the electronics retailer, most recently as chief operations officer, per his LinkedIn page. The same day, Petco reported that, including an extra sales week, Q4 net sales rose 6.1% year over year to $1.7 billion, with comps edging down 0.9%. The retailer swung into the red, with a $22.6 million net loss, from $32.7 million in net income a year ago. Petco is shaking up its leadership after struggling for much of last year, and some analysts see that as a welcome change. The retailer had enjoyed a boom during the pandemic as many consumers adopted pets and had additional spending money. But as that dissipated amid inflation and the end of pandemic-era government support, the company “did not anticipate the magnitude of the shift to value in both our consumables and discretionary business,” Mohan told analysts Wednesday morning.

Scholastic to Buy Kids’ Content Studio 9 Story for $185 Million

Scholastic Corp., the biggest publisher and distributor of children’s books, has agreed to acquire 9 Story Media Group, as it looks for ways to broaden the audience for its library of children’s stories. Scholastic will pay C$250 million ($185 million) for 9 Story Media Group, which creates, produces and distributes television content for kids through an animation studio and a consumer products division. Scholastic said the deal will give it all of the economic interest and a minority of voting control rights in the content company. The goal is to turn more of Scholastic’s books into television content and vice versa. The two companies have collaborated previously on projects including the reboot of Clifford the Big Red Dog through an animated series. 9 Story’s animation studio Brown Bag Films is known for shows including Daniel Tiger’s Neighborhood, Doc McStuffins and The Magic School Bus Rides Again. “We have strong capabilities in creating content, delivering it to audiences and taking the IP and extending it into merchandising and licensing,” Vince Commisso, chief executive officer of Toronto-based 9 Story, said in an interview. “Scholastic has an unmatched library of kids IP. Put those two things together and one plus one equals more than 10.”

Technology & Internet

As the US TikTok ban advances, what does it mean for brands?

A US TikTok ban — in discussion since 2022 — just got closer to becoming a reality: the House of Representatives passed a bill on Wednesday that means unless TikTok divests from its Chinese owner Bytedance, the platform could very well be removed from app stores in the US. The bill won by an overwhelming majority in a rare bipartisan vote, passing on a 352-to-65 vote ratio. Next, it will go to the Senate and if it passes there, President Biden is expected to sign it into law. It’s a controversial move. The ban’s critics hold that it is a First Amendment violation, and also critique lawmakers for focusing on banning TikTok before dealing with America’s more pressing issues. Other concerns include the impact on small businesses that have come to rely on the app for sales, as well as the seemingly rushed process (it went from committee to vote in four days). Supporters of the ban believe TikTok poses a national security risk and shouldn’t be allowed to operate in the US while owned by a Chinese company. A TikTok ban would disrupt an emerging ecosystem for creators, small businesses and major brands that have built up followings and strategies based on TikTok’s short-form videos as well as TikTok Shop, the in-app e-commerce platform that rolled out in the US last September. TikTok is the second-top social shopping destination for young consumers (Instagram is first), according to Insider Intelligence. More important than Shop usage, though, is the app’s reach. TikTok contributed $24.2 billion to US GDP last year, according to a report by economics consultancy Oxford Economics. It drove $14.7 billion in small business owners’ revenue, and supported 224,000 jobs. And there are over 170 million active users in the US (as per the report), ready to watch.

 

Why Walmart’s quick success in gen AI search should worry Google

Planning purchases for a special occasion like recent Super Bowl parties or Valentine’s Day celebrations might typically require consulting more than one online source — or the primary source of Google — but if Walmart has its way, that is going to change in the future. Walmart is talking up its ability to use generative AI as a one-stop shop to search when you need to plan an event, rather than online destination to search for individual items. During a call with analysts after its February earnings, Walmart CEO Doug McMillon talked about the gen AI search capabilities in its app. “The thing we’re most excited about that’s already happened is the way search has improved, and the way generative AI helped us really improve a solution-oriented search experience for customers and members,” McMillon said on the earnings call. “And it happened pretty quickly.” It also adds to the questions about future use of a search engine like Google. Walmart long ago established itself as a major tech player, successfully fending off years of anxiety over Amazon and remaining a leader in the retail space.

 

Amazon plans spring sale for March 20 to 25 not limited to Prime

Amazon will host a spring sale this week with discounts on seasonal items, and this one is not restricted to Prime members. Amazon said Thursday that the event, which it’s calling the “Big Spring Sale,” will run for six days starting March 20, in North America. Unlike the Prime Day discount bonanza typically held in the summer, next week’s event will be open to shoppers who don’t pay for a Prime membership. The subscription program costs $139 per year, or $14.99 a month, in the U.S., and perks include free, speedy shipping; video streaming; and access to exclusive Prime Day deals. Spring fashion, fitness products, outdoor furniture, Amazon-branded devices and other “warm weather essentials” are among the categories that will be discounted, Amazon said. It’s the first time Amazon has held such an event in the first quarter. In recent years, Amazon has added shopping events, including a “Prime Big Deal Days” in the fall, a 48-hour “Pet Day” and a beauty-focused sale ahead of the holiday shopping season.

 

Finance & Economy

Wholesale inflation rose 0.6% in February, much more than expected

Wholesale prices accelerated at a faster-than-expected pace in February, another reminder that inflation remains a troublesome issue for the U.S. economy.  The producer price index, which measures pipeline costs for raw, intermediate and finished goods, jumped 0.6% on the month, the Labor Department’s Bureau of Labor Statistics reported. That was higher than the 0.3% forecast from Dow Jones and comes after a 0.3% increase in January.  The PPI is considered a leading indicator for inflation as it indicates costs early in the supply chain.

Retail sales rebounded in February, but consumers may be growing more cautious

Spending at U.S. retailers rebounded in February, but consumers may be growing more cautious as they continue to face high interest rates and steeper prices for everyday goods.  Retail sales, a measure of how much consumers spent on a number of everyday goods including cars, food and gasoline, climbed 0.6% in February, the Commerce Department said. That is lower than both the 0.8% increase projected by LSEG economists and the revised 1.1% decline recorded in January.  Excluding the more volatile measurements of gasoline and autos, sales rose just 0.3% last month.  The February advance is not adjusted for inflation, meaning that consumers may be spending the same but getting less bang for their buck.