Apparel & Footwear

Inside Foot Locker’s Plan to Reach $9.5 Billion in Sales by 2026

Foot Locker chief executive officer Mary Dillon rolled out a multipronged strategy to help the retailer increase market share and grow sales to $9.5 billion by 2026. Dubbed its “Lace-Up” plan, the new strategy will aim to grow Foot Locker’s business to more than $9.5 billion in annual revenue by 2026 by diversifying its brand portfolio, relaunching the Foot Locker brand with new store formats focused on an off-mall presence, maximizing its loyalty program and investing in technology to enhance the customer journey. Dillon also said the business is back on track with Nike, an important brand in the retailer’s overall mix. Foot Locker chief merchandising officer Chris Santaella added that the partnership is focused on creating a strategy that is “complementary to the Nike direct-to-consumer strategy.” As the standout brand in the retailer’s portfolio, Nike will make up between 55 percent and 60 percent of Foot Locker’s total sales mix by 2026, Santaella said. Nike made up 70 percent of sales in 2021 and 75 percent of sales in 2020.

John Varvatos’ OTD Label Shuttered

John Varvatos’ second chapter has come to a close. In October 2021, the menswear designer launched a new brand, On This Day, or OTD, just over one year after he had exited his namesake collection following a bankruptcy filing and sale to a private equity firm. His ambitions were high and the first collection featured more than 200 stock keeping units for men and women as well as two sizable brick-and-mortar locations on both coasts. But the brand and the business have now been shuttered. The decision to close down came earlier this month with the website/e-commerce site as well as the 4,000-square-foot stores in New York’s SoHo and the Sunset Strip in West Hollywood shutting their doors. One source close to the company attributed the failure of the business primarily to trying to launch an unknown label with that breadth of product in the middle of a pandemic. It didn’t help that OTD also could not be associated with Varvatos because of contractual agreements with his former label. Instead of touting that Varvatos had designed the line, he was only referred to as the president of the company.

Scotch & Soda Files for Bankruptcy in Netherlands

Amsterdam-based men’s and women’s lifestyle brand Scotch & Soda has filed for bankruptcy in its home country of the Netherlands, citing “severe cash flow issues” caused by the domino effect of the pandemic, war in Ukraine, and inflation. Managing director Frederick Lukoff has stepped down, effective immediately. “Despite record sales, a structural cash flow deficit has led to the company’s failure to absorb the negative effects of [COVID-19] and high inflation,” the company said in a statement. Its 32 stores in the Netherlands will remain open “for the foreseeable future,” while the brand searches for a buyer. The bankruptcy does not affect the entities outside of the Netherlands. The company earned record revenues of 342.5 million euros in financial results reported for the 2022 fiscal year, but said that the previous two years of pandemic restrictions “affected its business performance and financial health negatively.” Store closures in the Netherlands over the holiday period of December 2021 and January 2022 were “particularly damaging,” it said.

DSW parent undergoes layoffs as the company ‘pares back every line of spending possible’

Designer Brands is working to “pare back every line of spending possible,” including labor costs and management incentive compensation, CFO Jared Poff said on an earnings call Thursday. The parent company of DSW Designer Shoe Warehouse said that it has streamlined operations, and that “a number of our employees have been affected by this action,” according to CEO Roger Rawlins.  The company has taken action to “promote collaboration and make our organization more efficient,” Rawlins said. “We are sensitive to the fact that a number of our employees have been affected by this action. We’re working closely with them to aid in their transition, and I personally would like to thank them for all their contributions to DBI.” Designer Brands on Thursday reported fourth quarter and fiscal year 2022 financial results. For the quarter, net sales decreased 7.5% to $760.5 million, while comparable sales decreased 5.5%. For the full year, net sales increased 3.7% to $3.3 billion, while comparable sales increased by 4.4%.

 

 

Athletic & Sporting Goods

Fanatics will become the NHL’s official uniform supplier, replacing Adidas

Fanatics will replace Adidas as the official uniform supplier for the National Hockey League starting with the 2024-2025 season, the league announced.  The 10-year deal marks a deepening of the company’s relationship with the NHL and the first time Fanatics branding will appear on official player uniforms in professional sports. Terms of the deal were not immediately available.  Fanatics runs the NHL’s e-commerce site with more than 90 million customers worldwide. Since 2018, the company also has produced the league’s performance and training apparel, in addition to all headwear for players and coaches.  In addition, Fanatics has long-standing relationships with more than 80 current and former hockey stars through its memorabilia and collectibles division.

Powers Gymnastics raises nearly $17M in Series A funding round

Powers Gymnastics has quietly assembled the largest network of USA Gymnastics-certified gyms in the U.S. Now, the company is primed for even further expansion: Powers Gymnastics has raised a $16.8M Series A funding round led by the Tennessee-based Relevance Ventures.  Powers now owns 16 gyms across Arizona, Colorado, Florida, North Carolina and Texas.

Nike sales to gain from Adidas-Kanye split, Jordan Retro demand

Nike is expected to report a rise in third-quarter revenue and grow its market share through 2023, helped by major rival Adidas’ split with designer and rapper Kanye West that caused the German company to lose about $600 million in quarterly sales.  Nike (NKE.N) is also expected to get a boost from higher sales of its Jordan Retros and some newer launches as the world’s No. 1 sportswear maker stays ahead of rivals through its innovative product lines.  Nike has doubled down on its product lines such as the LeBron 20s and Nike Mercurial shoes, while also grabbing a bigger chunk of the growing China market.

Cosmetics & Pharmacy

L’Oréal’s Genomatica Investment to Power Sustainable Biotech Beauty Ingredients

L’Oréal has invested in Genomatica (Geno) to develop, produce and commercialize sustainable alternatives to common cosmetics and personal care ingredients. Previously announced investors included Unilever and Kao Corporation.  According to Crunchbase, Genomatica has raised at least $386m across at least 10 funding rounds.  Other investors include Lululemon, Viking Global, and Ginkgo Bioworks.  Geno’s biotechnology platform uses proprietary engineered microorganisms to ferment plant sugars that produce ingredients. These materials will then be leveraged under the partnership to improve the environmental profile of popular products and meet consumer demand for more traceable supply chains.  L’Oréal previously set goals to, by 2030, produce 100% eco-designed formulas that respect the diversity of aquatic ecosystems using 95% ingredients from renewable plant-based sources or abundant minerals.

True Botanicals Announces Series B Investment From NextWorld Evergreen

True Botanicals, a leading prestige clean skincare brand, has announced a Series B investment from NextWorld Evergreen, a San Francisco-based growth equity firm with a focus on conscious consumer brands. This partnership will accelerate True Botanicals’ retail footprint while advancing its mission around social and environmental impact.  Terms of the transaction were not disclosed, but prior to this Series B True Botanicals had raised at least $18m, according to Crunchbase.  Next World Evergreen are also owners of clean beauty retailer Credo Beauty, one of the distribution partners of True Botanicals.

Mad Rabbit Tattoo $10M Series A Round Comes Amid a Category Boom

Four-year-old aftercare brand Mad Rabbit Tattoo, which is currently growing 138% year-over-year, has closed a $10 million Series A funding round, quadrupling its valuation to $56 million. The funds will be leveraged to expand the brand’s product line, increase its marketing efforts and grow its team.  The round was led by Lucas Brand Equity (LBE) with Mark Cuban, Acronym Venture Capital, H Venture Partners and others participating.  Mad Rabbit reportedly sells one tattoo balm every 90 seconds and has helped preserve more than 3 million tattoos to date. The brand retails at madrabbit.com, verishop.com vitaminshoppe.com, and in-store at 350 Urban Outfitters and 1,200 GNC locations, as well as 350 tattoo shops in the United States.

Sunscreen brand Vacation expands to 700 Ulta locations

Vacation, the “leisure” beauty brand, that likes to be known for making sun care fun, is ready for a bigger, broader audience. This month, the brand expands to 700 more Ulta Beauty locations, its largest national partner, bringing its total door count to 1,200-plus stores. It’s growing its product assortment in tandem: last week Vacation launched its Super Spritz SPF 50 face mist, the label’s first daily product meant to take customers from the “beach to the boardroom and vice versa.” Since soft-launching direct-to-consumer in April 2021, the line has committed to the fun philosophy with sunscreen that looks like Reddi Wip, oils that smell like Chardonnay, retro-inspired collaborations with tennis brand Prince and ads that ooze Club Med. In December 2022, the brand secured a $6 million Series A capital raise, led by Silas Capital, bringing the brand’s total fundraising to $11.2 million.

Winky Lux Beauty partners with Shoppers Drug Mart to expand in Canada

Winky Lux Beauty, the digitally-native cosmetics brand hoping to become the “Zara of cosmetics”, has announced its expansion into Canada through a partnership with Shoppers Drug Mart, one the country’s largest pharmacy chains. Between 40 and 70 of the brands products will be available at the Canadian retailer’s stores.  Winky Lux’s partnership with Shoppers Drug Mart is expected to increase the brand’s reach and popularity among Canadian consumers, and adds to its wholesale partner list, which includes Target, Ulta and Urban Outfitters.

 

Discounters & Department Stores

After 150 years, Bloomingdale’s names its first-ever chief merchant

Bloomingdale’s has promoted Denise Magid, who has been a merchandising executive there for four years, to chief merchandising officer, effective Tuesday. The Macy’s-owned department store has created the role for the first time in its 151-year history, according to a company press release. Magid began her merchandising career at Lord &Taylor, spent 11 years at Saks Fifth Avenue and was chief merchant at Intermix, per LinkedIn. She joined Bloomingdale’s in 2019 as a general merchandising manager in ready to wear and concessions, adding off price in 2020 and women’s accessories in 2021, per the release.

Walmart lays off hundreds of workers at e-commerce facilities

Walmart is laying off hundreds of employees at e-commerce facilities across the country, as the big-box giant and other retailers brace for a tougher year ahead. Walmart, the nation’s largest private employer, is shrinking its workforce as many retailers plan on roughly flat or declining sales. Inflation and the shift back to services is taking a bite out of sales of goods, particularly after a Covid pandemic-fueled spending boom.

Target Rolls Out Curbside Service for Returns

There was a time when people thought getting food at McDonald’s without leaving the car was the height of “what will they think of next?” innovation. To which Target today replies: hold my beer. Or more accurately: hold my pumpkin spice latte. The retailer is going all in with its Pick Up and Drive-Up curbside service. Since 2017, Target has been rolling out the service, which allows consumers to pick up merchandise they ordered online, including fresh and frozen groceries, and Starbucks coffee, outside of stores.

Kohl’s Announces Locations of 250 New Sephora at Kohl’s Opening This Year

Kohl’s announced the 250 stores that will be adding the full-sized, 2,500 square foot Sephora at Kohl’s experience in 2023. The addition of 250 new locations brings the total Sephora at Kohl’s fleet to more than 850, achieving the partnership’s initial planned goal of the Sephora at Kohl’s rollout. “We are making great strides in building a formidable beauty business with the addition of Sephora at Kohl’s,” said Karen Daoust, Kohl’s senior vice president, general manager, Sephora at Kohl’s. “The completion of our 850 stores in 2023 is just the beginning as we look to expand Sephora at Kohl’s to all stores, enhance the customer experience and deliver prestige beauty to our customers across the country.” The 850 full-sized Sephora at Kohl’s shops feature a fully immersive beauty experience that mimics the look and feel of a freestanding Sephora.

 

 

Emerging Consumer Companies

Topo Designs takes in equity investment

Topo Designs, a Colorado-based outdoor brand offering sustainable, durable apparel and accessories, announced a significant equity investment from Gart Capital Partners. This investment marks the first time that the brand has taken on outside funding since its founding in 2008. The investment will be used to build brand awareness and expand customer acquisition programs under the brand’s mission of The New Outdoor™, inspiring more people to get outside by integrating the outdoors seamlessly into life. Since 2008, Topo Designs has grown from a vision of two founders into a talented 70-person team. Consumers can find its products in over thirty countries across six continents with wholesale distribution to 1,200 stores, including specialty outdoor and independent lifestyle shops, as well as leading retailers, like REI, Backcountry, Urban Outfitters, Nordstrom, Moosejaw, Bespoke and Zappos.

Blank Street raises $20 million

Blank Street Coffee started with a single cart in Williamsburg, Brooklyn, and the promise of decent coffee delivered with efficiency and at lower prices than Starbucks and specialty cafés. In less than three years, the coffee chain is on its way to ubiquity, with more than 40 locations in New York City, and new outposts in Washington, D.C., Boston, and London. The company raised $67 million in 2021. Now, it has closed a $20 million round with investors that include Left Lane Capital, HOF Capital, General Catalyst, and Tiger Global.

Pinkie, maker of period pads for adolescents, raises seed round

Pinkie, the New York-based maker of period pads for tweens and teens, raised a $1 million seed, founders Fiona Simmonds and Sana Clegg announced. Proceeds from the raise will be invested in marketing and product runs as Pinkie launches in 500 Target stores. Raising funds from male investors proved difficult — until the founders asked them to take the idea back to their wives and daughters for their opinion on market needs. That’s when the round began gaining more traction, to the point it was oversubscribed, the founders say.

Matter of Fact Closes $6 Million Series A

Beauty brand Matter of Fact has closed its second round of funding, to the tune of $6 million. The brand, founded by Paul Baek in 2021, closed a series A round with participation from Horizon Ventures and Cowboy Ventures, in addition to James and Nicky Hilton Rothschild, as well as Birchbox cofounder Hayley Barna. That brings Matter of Fact’s total funding to $16 million. The company raised $10 million in seed funding in 2021. Matter of Fact currently only has two products and sells directly on its website. The brand launched with a 20 percent vitamin C serum, which boasts two years of shelf stability due to a patent-pending delivery system, and also sells a moisturizer.

 

Food & Beverage

PepsiCo to invest $216 million in regenerative ag

PepsiCo, Inc. plans to invest $216 million in three farmer-facing organizations to support the uptake of regenerative agricultural practices on over 3 million acres. The partnerships with Practical Farmers of Iowa, the Soil and Water Outcomes Fund and the IL Corn Growers Association are expected to deliver a reduction and removal of about 3 million tons of greenhouse gas emissions by 2030.  PepsiCo will work with the three organizations to establish and scale financial, agronomic and social programs that enable the transition to regenerative agriculture practices through education, upfront investment in outcomes, peer coaching and networking, and sharing costs.  PepsiCo by 2030 plans to reach about 1.5 million acres by partnering with Practical Farmers of Iowa, nearly 1 million acres by partnering with the Soil and Water Outcomes Fund and about 500,000 acres by partnering with IL Corn Growers Association.

Momofuku Goods raises $17.5M

Pantry essentials brand Momofuku Goods announced Monday that it raised $17.5 million in a Series A funding round.  The funding was led by Siddhi Capital, a growth equity firm that is also invested in brands such as Ripple plant-based milk, Magic Spoon cereal and Aura Bora sparkling water.  Momofuku Goods — a CPG brand spun off from the Momofuku restaurants — plans to use the funding to grow product offerings and support its growing operations, which will include scaling its team and marketing efforts.

Eat Just gets FDA clearance for cultivated meat in US

Eat Just received tacit approval from FDA for its cultivated chicken to be consumed in the United States. The FDA’s no questions letter means that the regulatory body accepts the company’s conclusion that its cultivated chicken, under the Good Meat brand, is safe to eat.  Once Eat Just’s Good Meat chicken gets its second regulatory approval — from USDA, which must approve Eat Just’s facilities and inspect the meat it produces — the cultivated chicken will be served at a Washington, D.C. restaurant owned and operated by Eat Just board member and chef José Andrés.  Eat Just is the only company in the world that can sell cultivated meat. Good Meat chicken first received regulatory approval in Singapore in 2020. The United States is the second country to move forward with cultivated meat regulatory approval, and issued a no questions letter for Upside Foods’ cultivated chicken in November.

 

 

Grocery & Restaurants

Darden Restaurants Raises Outlook as Same Store Sales Jump

Darden Restaurants on Thursday raised its revenue outlook for fiscal 2023 for the second consecutive quarter after reporting results that showed growth across the board. For its 2023, Darden now expects sales of $10.45 billion to $10.5 billion, up from its prior range of $10.3 billion to $10.45 billion. Darden CEO Rick Cardenas credited the quarter’s strong sales growth to its strategy of pricing below inflation. He said on the company’s earnings call that Darden’s sales and traffic outperformed the broader restaurant industry, and that consumers aren’t trading down. “Now, there is a tension between what people want and what they can afford,” he told analysts. Still, Cardenas said, most consumers are slow to give up eating at restaurants because it’s an affordable luxury.

 

Good Eggs raises $7 million, sees steep decline in valuation
Good Eggs, the Oakland-based company that delivers fresh produce and groceries, raised $7 million from the Greenwich-based hedge fund Glade Brook Capital Partners at a pre-investment valuation of $15 million, according to sources. That represents a 94% valuation drop from late 2020, when the pandemic boosted food-delivery services and the startup raised $60 million at a pre-investment valuation of $270 million. The sources also said that the new deal effectively wiped out the value of stakes held by earlier investors such as Benchmark that chose not to contribute more money.

1000 Degrees Pizza acquires My Pie

1000 Degrees Pizza, a 25-unit chain based in Galloway, N.J., has announced its purchase of six-unit My Pie Pizza in the first of what the new owner of the larger chain said will be a series of acquisitions. Amandeep Judge acquired 1,000 Degrees in October of last year. That chain focuses on traditional Neapolitan and Roman style pizzas, while My Pie offers New York Style pizza, calzone, chicken wings, and salads, but the acquiring company said the synergies between the companies would help enable both concepts to grow. All My Pie locations and all but one 1000 Degrees units are franchised.

Home & Road

Franchise Group, owner of 2 Top 100 retailers, receives unsolicited takeover bid

The Franchise Group, Inc., parent company of Top 100 furniture retailers American Freight and Badcock Home Furniture & more, has received an unsolicited non-binding proposal to acquire all of its outstanding common stock. The proposal, from an unnamed party, sets the cash price per share at $30. The closing price on Franchise Group (FRG) shares was $22.75 on Friday. In a release announcing the proposal, which is subject to certain conditions, Franchise Group said its board of directors “will carefully evaluate the proposal to determine the course of action that it believes is in the best interest of the company and FRG stockholders. The company makes no assurance that the proposal will result in a transaction.” In its most recent earnings report, FRG posted gains in revenue but losses in income for the fourth quarter and its 2022 fiscal year. Along with its furniture company holdings, which includes lease-to-own brand Buddy’s Home Furnishings, Franchise Group owns Pet Supplies Plus, Wag N’ Wash, The Vitamin Shoppe and Sylvan Learning. Among all its brands, the company operates 3,000 locations that are either company-run or operated under franchise or dealer agreements.

Bed Bath & Beyond Plans Reverse Stock Split

As it continues working to repair its finances, Bed Bath & Beyond has set plans for a special shareholder meeting to update the company’s Amended and Restated Certificate of Incorporation so it can execute a reverse stock split. The intention is to give the board of directors the power to engineer the reverse split of Bed Bath & Beyond’s common stock in a range from 1-for-5 to 1-for-10, the company noted. The board would determine the ratio. Holders of Bed Bath & Beyond common stock at business day’s end on March 27 would be entitled to notice of and to vote in the special meeting, according to the plan. Bed Bath & Beyond will communicate the time, location and other details regarding the special meeting at a later date via proxy materials that have been filed with, and are subject to review by, the United States Securities and Exchange Commission, the company pointed out. In announcing the special meeting initiative, Sue Gove, Bed Bath & Beyond president and CEO, said, “Our proposal for a reverse stock split will enable us to continue rebuilding liquidity to execute our turnaround plans and better position the company financially.”

Jewelry & Luxury

Gold Price Nears $2,000 Again—With New Records In Sight

The price of gold is likely to top the $2,000-per-ounce benchmark for the second time this week—and some predict the yellow metal is on a trajectory to top its past records. At press time, gold’s spot price was $1,994 an ounce. Analyst predictions for gold now range from $2,200 to as high as $2,600 an ounce. Goldman Sachs has raised its 12-month gold price target to $2,050 an ounce from $1,950, according to Reuters. “It’s very plausible that we see a strong performance in gold over the coming months,” Craig Erlam, a senior market analyst at foreign exchange company Oanda, told CNBC. “The stars appear to be aligning for gold which could see it break new highs before long.”

Lightbox Appoints Chief Operating Officer

Lightbox, De Beers’ lab-grown diamond brand, has appointed Adam O’Grady as chief operating officer. O’Grady currently serves as the general manager of Lightbox, overseeing operations and engineering at its production facility in Gresham, Ore. He will continue in this role and, as chief operating officer, take on overall responsibility for Lightbox’s supply chain and manufacturing activity. O’Grady has spent the entirety of his professional career at Element Six and has held a series of general management and senior project roles for the last 10 years. He will transition to the chief operating officer role on March 27 and will be based in Gresham.

Swarovski Names New GM for North America

Kolja Kiofsky has been named Swarovski’s general manager for North America. Kiofsky will be based in New York City. His priorities will include the November 2023 launch of Swarovski’s new flagship store at 680 Fifth Avenue in Manhattan, as well as the U.S. rollout of the brand’s first jewelry collection made with Swarovski Created Diamonds. Kiofsky started his career at Porsche in the automotive industry. He joined Swarovski in 2010 as head of marketing development at the brand’s Zurich headquarters. He later became global senior vice president for customer experience and omnichannel management, where he was responsible for all points of purchase globally as well as ensuring high-quality store distribution, architecture, omnichannel solutions, training, customer experience, and service.

Luxury Brand Telfar Lets Consumer Demand Set Its Prices

Luxury fashion brand Telfar wants to let consumers set their own prices. In an era when high-priced goods continue to show durability, the New York-based designer is set to begin offering a “live price” model, Fast Company reported Monday. “Many brands use price as a barrier to entry,” Telfar Clemens, the company’s founder, told the publication. “I never wanted that for my brand.” It works like this: When Telfar debuts its new collection next week, shoppers will see that prices aren’t fixed. Instead, the label’s website will feature a dynamic pricing tool designed to make sure that the post popular items are priced lower, the report stated. Clemens is a rising fashion star, according to the report, with his bags carried by Alexandria Ocasio-Cortez and Dua Lipa. He was also name-checked in song by Beyonce. They sell out within seconds online and go for nearly twice their retail price — which is between $157 and $250 — on secondhand sites.

 

Luxury resale platform Kream raises $168 million

Luxury resale platform Kream has raised $168m in a Series C funding round, more than doubling its previous October 2021 valuation to $742m. The South Korean firm’s gross merchandise value rose 270% and 190% in Q3 and Q4 2022, respectively. The round was led by Altos Ventures, with participation from SoftBank Ventures Asia, Naver and Samsung Securities, among others. Kream plans to maintain minority stakes in Asian counterparts, such as Soda in Japan, Sasom in Thailand and Shake Hands in Malaysia. It also aims to expand connections with other reselling platforms in the region, while developing an inspection program to address counterfeit goods.

 

Office & Leisure

Mattel CFO sees movie tie-in boosting Barbie sales

While acknowledging some challenges ahead, Anthony DiSilvestro, CFO of toy company Mattel, remained bullish on his company’s future, pinning his hopes on strong third and fourth quarters this year to compensate for anticipated sales and earnings declines in the first and second.  The El Segundo, California-based company has been struggling with both changing consumer habits and macroeconomic headwinds that, combined, led to a 22% plunge in earnings over the holiday period where double-digit sales growth in December was unable to overcome lower-than-expected demand in the autumn, according to The Wall Street Journal. During a talk at the UBS Global Consumer and Retail Conference on Thursday, DiSilvestro said he anticipated that net sales will be comparable to the prior year, led by strong growth in the doll and vehicle sectors at the point-of-sale level. Overall, Mattel’s gross margins are expected to increase to 47% by the end of the year, compared to 45.9% the previous year.  He remained confident that toys in general will continue to be a strong sector due to their fundamentals.

Petco adds 1M customers in 2022

Proving the resilience of the pet sector of retail, Petco on Wednesday reported fourth-quarter net revenue grew 4.2% year over year to $1.6 billion, while comparable sales increased 5.3%, marking its 17th consecutive quarter of growth in that measure. The pet retailer recorded its 16th consecutive quarter of customer growth, adding about 70,000 net new customers in Q4 and 1 million net new customers in 2022. Petco’s operating income in Q4 fell 6% year over year to $77.6 million, while its net income grew 20% to $32.7 million. For the full year operating income fell 15% to $225.6 million, while net income decreased 44% to $89.9 million. The pet sector of retail has historically been resilient to economic uncertainty. Leaning into health and service offerings is further helping Petco maintain its position. The retailer on Wednesday announced it formed a partnership with pet food brand Freshpet to offer a customized fresh pet food subscription.

GameStop posts first quarterly profit in two years

GameStop on Tuesday reported its first quarterly profit in two years. The retailer last recorded a profit in Q4 2020. For the current quarter, GameStop reported net income of $48.2 million during the holiday quarter compared to a net loss of $147.5 million year over year. Net sales fell slightly to $2.23 billion from $2.25 billion. For the year, the company’s net sales were nearly flat at $5.93 billion versus $6.01 billion in the previous year. GameStop reported a net loss of $313 million. CEO Matt Furlong said on a call that the company “is a much healthier business today than it was at the start of 2021,” but added that GameStop will continue to “aggressively cut costs” and “pursue further cost containment.” Part of GameStop’s turnaround strategy includes reducing its headcount. The company most recently initiated rounds of layoffs in December and January. GameStop also closed a Kentucky distribution center that month.

Technology & Internet

TikTok CEO grilled by lawmakers from both parties over China ties

“Welcome to the most bipartisan committee in Congress,” boomed Rep. Buddy Carter, R-Ga., speaking to the TikTok CEO Shou Zi Chew, a couple hours into a marathon hearing about the potential threat to U.S. consumers from the massively popular short-form video app. “We may not always agree on how to get there, but we care about our national security, we care about our economy and we sure as heck care about our children,” Carter said. Chew found little reprieve during the questioning from either side of the aisle on Thursday. Lawmakers grilled him on the app’s potential to harm kids through its addictive features and potentially dangerous posts, as well as whether data from U.S. users could end up in the hands of the Chinese government through its China-based owner, ByteDance.

 

Amazon layoffs: Company to cut 9,000 more workers

Amazon will lay off 9,000 more employees in the coming weeks, CEO Andy Jassy said in a memo to staff on Monday. The cuts are on top of the previously announced layoffs that began in November and extended into January. That round totaled more than 18,000 employees, and primarily affected staffers in its retail, devices, recruiting and human resources groups. Amazon made the decision to lay off more employees as it looks to streamline costs. It took into account the economy, as well as the “uncertainty that exists in the near future,” Jassy said. The company just wrapped up the second phase of its annual budgeting process, referred to internally as “OP2.” “The overriding tenet of our annual planning this year was to be leaner while doing so in a way that enables us to still invest robustly in the key long-term customer experiences that we believe can meaningfully improve customers’ lives and Amazon as a whole,” Jassy said.

 

Finance & Economy

Jobless claims dip to 3-week low of 191,000 — labor market still very strong

The number of Americans who applied for unemployment benefits last week slipped to a three-week low of 191,000, signaling little erosion in a strong U.S. labor market even as the economy faced fresh strains.  New U.S. applications for benefits fell by 1,000 from 192,000 in the prior week, the government said.  The number of people applying for jobless benefits is one of the best barometers of whether the economy is getting better or worse. New unemployment applications remain near historically low levels.

Fed hikes rates by a quarter percentage point, indicates increases are near an end

The Federal Reserve on Wednesday enacted a quarter percentage point interest rate increase, expressing caution about the recent banking crisis and indicating that hikes are nearing an end.  Along with its ninth hike since March 2022, the rate-setting Federal Open Market Committee noted that future increases are not assured and will depend largely on incoming data.  While comments Fed Chair Jerome Powell made during a news conference were taken to mean that the central bank may be nearing the end of its rate-hiking cycle, he qualified that the inflation fight isn’t over.