It has been a tumultuous year for Bed Bath and Beyond (“Bed Bath”) as it continues to narrowly avoid bankruptcy. The turmoil began in early January with a “going concern” warning issued by the company, which then drove its lender, JPMorgan Chase, to issue a default notice and call for immediate repayment of Bed Bath’s debts. The company did not have the necessary cash to pay down its debts. Led by CEO Sue Gove, the company enacted a turnaround plan, which included closing its 50-store chain of Harmon beauty stores, laying off 1,300 employees in New Jersey, and committing to reduce its store footprint target from 771 stores (a goal set one year ago) to 360 top-performing stores by the end of April 2023. Despite these maneuvers, the company continues to underperform: Bed Bath recently reported fourth quarter net sales of $1.2 billion, a decline of +40% from the same period last year. Many Wall Street analysts do not believe the company will survive. RapidRatings CEO James Gellert said recently, “It’s hard to survive when you’ve lost your customer base, supplier confidence in your ability to pay them, and [have] a heavy debt load in need of refinancing. Add inflation, higher interest rates and an equity market that doesn’t like Hail Mary passes, and you’ve got a tough time.” Facing near certain bankruptcy, the company announced this past week one seemingly promising deal and a “Hail Mary” reverse stock split offering to preserve its liquidity and continue operations.
One of home retailer’s major problems has been adequately stocking its shelves after its vendors tightened credit terms and required prepayments prior to fulfilling orders. To combat this critical issue, Bed Bath announced this past week that it has entered a vendor consignment deal with ReStore Capital, an investment manager under Hilco Global that will have ReStore purchase up to $120 million of prearranged merchandise from Bed Bath’s key suppliers to boost inventory levels. Ms. Gove commented on the announced deal, “We are doing what we must to sustain our business immediately.” She continued, “Our new vendor consignment program enables us to increase our inventory position in top items that customers are buying and improve the customer experience.” The company’s inventory program with Hilco, while a lifeline that may prove to be beneficial over time, will not alone preserve the business.
In addition to its mounting operational challenges, Bed Bath also faces liquidity issues that, if not immediately addressed, will send the business into bankruptcy. Seeking quick sources of liquidity, Bed Bath announced on March 30th a $300 million stock offering in the form of a reverse stock split. In that filing, the company warned it will likely need to file for bankruptcy if it does not fully consummate the offering. Bed Bath would use the proceeds to pay its lenders and buy merchandise to bolster its shrinking inventory levels. This is not the first time that Bed Bath has sought immediate liquidity this year. In February, the company announced it had secured a financing deal with Hudson Bay that would provide more than $1 billion, conditional on Bed Bath’s share price remaining at least $1.25. That deal has since fallen through as the company’s stock price fell to $0.31.
Despite leaving no stone unturned, Bed Bath appears on a collision course with bankruptcy. Executing a reverse stock split and bolstering inventory levels with the newly announced program with Hilco could delay a bankruptcy filing, but there remain significant structural issues with the business that are reflected in its plummeting quarterly revenues, rapidly falling share price, and operational failures like its highly leveraged balance sheet.
Headline of the Week
L’Oréal buys Aesop in $2.5 billion deal, its biggest acquisition ever
L’Oréal is buying Australian brand Aesop in a deal that values it at $2.5 billion, in the biggest brand acquisition ever made by the French beauty giant. The sale was announced by Aesop’s parent, Brazilian firm Natura & Co, which also owns The Body Shop and Avon. It brings Aesop, which is known for its luxury skin and body care products, under the same umbrella as brands such as Garnier and Maybelline. Aesop was founded in Melbourne, Australia in 1987. Natura picked up a 65% stake in the company in 2012, and formally acquired it in 2016. Since then, Aesop’s sales have skyrocketed nearly 20 times — from $28 million in 2012 to $537 million in 2022, according to Natura. Over the past year, Aesop posted double-digit growth in revenue.
Apparel & Footwear
Staff Cuts Hit American Eagle’s Quiet Platforms Unit
American Eagle Outfitters’ supply chain strategy has hit a speed bump. AEO is reducing the size of the workforce at its Quiet Platforms logistics unit due to macro headwinds and Quiet Platform’s failure to meet certain of its business plans. Among those departing from Quiet Platforms is Shekar Natarajan, executive vice president and chief supply chain officer at American Eagle, who has also been leading the Quiet Platforms and AirTerra logistics businesses, which are both owned by American Eagle Outfitters. American Eagle Outfitters is just one of a long list of retailers, tech firms and banks that have triggered cuts this year, including Saks, J. Crew Group, Kohl’s and others. Responding to a media report of the changes at Quiet Platforms, American Eagle Outfitters issued a statement Tuesday indicating, “While Quiet’s third party business has grown nicely, it has not achieved the plans we envisioned. As a result, we must pull back on expenses to reset the business. This is necessary to improve profitability, particularly given prevailing macro headwinds.” In November 2021, AEO furthered its supply chain capabilities by purchasing Quiet Platforms for $350 million in cash.
Rocky Brands Sells Servus Boot Brand Two Years After Acquiring It
Rocky Brands Inc. has divested one of its brands. The Nelsonville, Ohio-based company announced on Monday that it sold Servus, one of its boot brands, to PQ Footwear, LLC, a subsidiary of Industrias PetroQuim, SA. The deal closed on March 30 and the terms were not disclosed. Rocky Brands said the proceeds were used to pay off debt. Servus specializes in waterproof and safety-certified work boots. Rocky Brands, best known for its work and military boots, acquired Servus in March 2021 in a deal to buy the performance and lifestyle footwear business from Honeywell International Inc. for $230 million in cash and debt. Along with Servus, the transaction included Honeywell’s Original Muck Boot Company and the Xtratuf, Neos and Ranger boot brands. For 2022, Rocky Brands reported that net sales increased 19.7% to $615.5 million, which included $179 million in net sales from the acquired brands from Honeywell. Adjusted net income decreased 26% to $24.1 million, with $3.27 per diluted share. Rocky Brands’ portfolio also includes the Rocky, Georgia Boot, Durango and Lehigh brands.
French lingerie giant Etam to open its first U.S. store — here’s where
Simon announced that Etam will open its first U.S. store, at Dadeland Mall, Miami, in summer 2023. Founded in 1916, the storied — and affordable — French brand is best known for its lingerie, but also offers swimwear, sleepwear and loungewear. Etam currently operates more than 850 stores throughout Europe, Middle East, Latin America and Asia. “Opening a store in Miami is a strategic turning point for the group,” said Laurent Milchior, CEO of Etam. “We are thrilled to partner with Simon for this opening and look forward to bringing our French lingerie expertise to the U.S. market.” Etam first entered the U.S. market in 2022, starting with an online presence and making its products available in select Nordstrom locations and on the retailer’s web site. Etam opened its first Paris boutique in 1928 on Rue-Saint Honoré.
Levi’s gets a grip on inventory as denim rebounds
Levi’s Q1 net revenue rose 6% to $1.7 billion, but profits and margins were down. Net income fell 41% to $115 million and gross margin contracted to 55.8% from 59.3%. Inventories rose 33% year over year, a 25% improvement over last quarter’s 58% increase, Chief Financial and Growth Officer Harmit Singh told analysts. In Q2, inventory is on pace to be “substantially lower,” and should be in line with sales by the end of the year, he said. Levi’s inventory struggle has largely been centered in the U.S., where at the end of the fourth quarter it was up 90% year over year, but has eased both in terms of dollars and units, Singh said Thursday. Dealing with this hasn’t been great for the bottom line, and the lingering effect on gross margin will be felt throughout the year. But Levi’s is taking share in a rebounding denim market, according to CEO Chip Bergh. The denim spike seen during the height of the pandemic had eased as consumers bought dressier apparel. But the category in the U.S. grew 1%, on top of 16% growth a year ago, he told analysts. Levi’s research shows it’s “the outright leader” among U.S. jeans consumers between 18 to 30 years old, and is growing share in women’s denim bottoms.
Shoe City is going out of business. The Baltimore-based sneaker and streetwear retailer, with the official business name of Esco Ltd., commenced going-out-of-business sales on Thursday for all of its 39 retail store locations throughout Maryland, Virginia and Washington, D.C. with the help of Gordon Brothers. The sales are expected to conclude by May 31, 2023. This move comes after the retailer, which also did business as “Your City, My City” (YCMC), filed for Chapter 11 reorganization at the U.S. Bankruptcy Court in Maryland on March 31. According to court documents, Esco Ltd. had an unpaid principal balance to a $12 million credit facility of $3.2 million as of March 28, 2023. The company also estimated in the filing that it owed $16 million in outstanding unsecured debt to vendors. Shoe City’s largest unsecured creditors include New Balance, which the retailer owes $1.596 million; Timberland, which is due $1.407 million; and Puma, which is owed $1.351 million. In May 2022, The Athlete’s Foot parent company, Arklyz Group, executed a deal to acquire Shoe City in an effort to expand on Arklyz’s North American presence. But the deal fell through.
Athletic & Sporting Goods
US sports giant Fanatics acquires top Italian football club merchandiser
Fanatics has captured much of the sports merchandise market in the U.S., with the sports platform holding deals with leagues including the NBA, NFL, MLB, NHL and MLS to sell all sorts of fan apparel, collectibles and jerseys. The company is increasingly setting its sights abroad, with its latest acquisition not only helping it further grow in Europe but also establishing another foothold in the global game of football. Fanatics has acquired Italian sports merchandise company Epi for an undisclosed amount and will rebrand the Milan-based company as Fanatics Italy. The company operates the ecommerce, in-venue, physical retail store and third-party logistics for several of the top football clubs in Italy including AC Milan, Inter Milan and Juventus, as well as the Italian Football Federation, which oversees the Italian national team. The deal also includes NBA merchandise in the country.
UFC, WWE combine to create $21.4B entertainment company
Endeavor, the parent company of UFC, and WWE announced that they have signed a landmark agreement to form a new, publicly traded company — listed on the New York Stock Exchange as “TKO” — that will consist of the MMA and pro wrestling brands. The sale of WWE to Endeavor — which is expected to close in the second half of this year pending regulatory approval — will merge the two biggest global brands in combat sports. The transaction values the new, unnamed sports entertainment company at $21.4 billion (UFC at $12.1 billion and WWE at $9.3 billion). Endeavor CEO Ari Emanuel will continue in that role along with becoming the CEO of the new company.
Cosmetics & Pharmacy
Sephora to Continue its Retail Expansion in an Unexpected Place
Sephora plans to begin selling its beauty products on online footwear site Zappos, according to the Business of Fashion, which cites a webinar in which Sephora executives spoke about the new partnership. Neither Sephora nor Zappos has yet released a formal announcement about the deal. Zappos has been steadily expanding beyond its footwear roots into fashion and accessories for several years, but beauty remains relatively untouched by the Amazon-owned ecommerce platform. During the same period, Sephora has been rapidly expanding its U.S. brick-and-mortar footprint through store-in-store partnerships, first with JCPenney and more recently at Kohl’s locations across the country. BoF said that on the webinar Sephora outlined “how Zappos will add another major retailer to the company’s U.S. distribution network while marking the footwear seller’s biggest move into beauty to date.” Sephora said that the Zappos opportunity would be offered to all the brands it sells and distribution will be handled by Sephora. Zappos customers will have access to Sephora’s Beauty Insider Program, and Sephora shoppers will be able to collect loyalty points at both retailers.
Revlon Gets $2.7B Debt Reduction Deal
Revlon has received the court’s approval to exit bankruptcy with a deal from its lenders that would slash $2.7 billion from its debt. Under the arrangement, Revlon’s lenders will become the new owners in exchange for cutting the debt of the cosmetics brand, taking full control from previous shareholders. The company’s reorganization plan was backed by 88% of the company’s 4,500 creditors, with the supporting creditors holding 98% of the company’s debt, according to Reuters. The newly formed entity plans to raise $670 million from the sale of new equity shares, which will provide the brand with a much-needed fresh start and a sustainable foundation for future growth.
Kevin Murphy Group buys hair extensions company Showpony
Kevin Murphy Group has acquired Australian hair extensions company Showpony for an undisclosed amount. Showpony specialises in premium hair extensions and accessories for consumers and industry professionals. It claims to offer a variety of natural looking colours, lengths and application methods suited to people of all ages and hair types. It uses only ethically-sourced hair with a quality assurance process. Demand for wigs, toppers and hair extensions is growing globally, with the $5.8bn market predicted to increase at a 13% CAGR to 2026, according to Arizton.
Discounters & Department Stores
Walmart Has Better Prices on Groceries Than Dollar General, New Study Shows
According to a new study by Bank of America, Walmart and Aldi have the best prices on food and other basic necessities. The study looked at grocery prices in February at retailers in Dallas, including Walmart, Kroger, Target, Dollar General, Aldi and more. The analysts compared prices to data collected at the same stores in 2020. A cart of 33 items at Walmart rang up at $187.50 and a cart with the same items totaled $194.15 at Target. Prices were more expensive at discount dollar chains, adding up to $201.14 at Dollar General and $203.67 at Family Dollar. Aldi was the best in almost every category, noted Supermarket News, except household and personal care goods. Over the last three years, prices at Dollar General went up 36%, and Bank of America analysts Robert Ohmes and Kendall Toscano wrote that this was the largest increase of all retailers. Business Insider pointed out those higher prices could be due to Dollar General’s reliance on shelf-stable items, like canned veggies and pasta. This group of items “has been more inflationary vs. categories like produce,” the analysts wrote.
Walmart banks on stores, robots as it stokes e-commerce
Speaking to investors and analysts on day two of its annual investors meeting, executives reminded their audience that Walmart’s inventory sits within 10 miles of 90% of the U.S. population. For decades the retail giant has staked its growth and profits on this vast brick-and-mortar network of what is now more than 5,300 locations, including 600 Sam’s Club warehouse stores. Despite the fact that it sees huge potential in e-commerce, and is targeting much of its investment to stoking online sales, that footprint remains crucial to its success. To the extent that a brick-and-mortar fleet is an advantage, it’s not one available to Amazon, which has a much smaller footprint of much smaller locations, mostly Whole Foods. During Wednesday’s meeting, which was broadcast via video conference, Walmart U.S. CEO John Furner called the company’s stores “the key nodes” in its omnichannel operation.
Kohl’s Makes a Major Change Its Customers Will Love
To say Kohl’s has had a tumultuous year in the last 12 months could be considered a massive understatement. Kohl’s had survived decades without really making major strides in advancing its fashion and retail image. It had definitely started to wear on the company as the department store’s competition had in some cases shut down, like Sears, or updated their retail concept, like Target. So, during 2022 Kohl’s had been entertaining prospective buyout options, and it wasn’t until Kohl’s was about to close the deal with Franchise Group, at the end of the second quarter that it abruptly pulled out of the deal. Kohl’s cited a volatile market as its reason for ending the deal talks. Kohl’s then made a surprising move and quickly began to revamp its inventory and fashion departments. Within a couple of weeks after ending the deal with Franchise Group, Kohl’s developed a new section of its store known as Discover @ Kohl’s. Whether the retailer had been working on this all alone or just came up with this new concept is uncertain, but it came out quickly featuring fashions By Women For Women, a Family Fall lineup, and supporting a charity with its new concept by featuring products that give back.
Emerging Consumer Companies
Padel Haus raises $7.5 million Series A, plans expansion in US
Padel Haus, a padel club in Brooklyn, has raised $7.5m in Series A funding to open three additional clubs across the Northeast in the next two years. Padel is a racquet sport that was invented in the 1960s and is a mashup of tennis and squash. The sport has taken hold in Spain, where it currently hosts 5 million players and 11,500 courts. As of late 2022, the fast-growing sport counted 25 million global players in 90 countries. Padel Haus is tapping athletics and wellness to build a lifestyle-focused social club complete with indoor courts, training programs, a juice bar, and more. Padel and pickleball are on similar growth trajectories, and both sports appear to be locked in an arms race, with gyms and developers building 130 pickleball courts per month to meet outsized demand from an estimated 36.5 million players.
Boxed files for bankruptcy
Boxed, purveyor of essential home products in bulk that likened itself to an online Costco, has filed for Chapter 11 bankruptcy protection after failing to find a buyer and enduring sustained weak revenue and earnings, a far cry from the promise of its SPAC-based IPO in December 2021. At the same time, Boxed said in its SEC filing it was negotiating a sale of software-as-a-service offering Spresso to an affiliate of the company’s first lien holder. Listed creditors included Wilmington Savings Fund Society and U.S. Bank. Last week, Boxed began winding down its retail business, entering into a purchase agreement for remaining inventory at fulfillment centers in Dallas and Las Vegas. It expected to cease operations from those FCs as of April 3, continuing to accept orders through a third facility at its headquarters in Union, NJ.
Food & Beverage
GoodBelly, Cheribundi Merge Under NextFoods Banner
NextFoods, the maker of functional food and beverage brand GoodBelly, is merging the business with tart cherry juice producer Cheribundi. As part of the deal, NextFoods will remain as the majority shareholder of the combined entity, which will operate under the GoodBelly name. Venture capital firm Emil Capital Partners (ECP) is the company’s largest investor. Founded in 2004, Cheribundi is based in Stamford, Connecticut and produces a line of functional tart cherry juices and concentrates marketed towards “everyday athletes” with drinks tailored around post-workout recovery and immunity with additional products built around protein and sleep. In 2020, Cheribundi closed a $15 million financing round led by ECP and at its height the company reported a national footprint of over 50,000 doors. The brand is currently sold to over 400 professional and collegiate sports teams – which will be an “area of focus” for NextFoods, the company said – and reported 120% year-over-year annual sales growth. Founded in 2006, Boulder, Colorado-based NextFoods markets a variety of probiotic juice drinks, shots, kids drinks, supplements and powders under the GoodBelly label.
Report: Alt. Deals in CPG Rising Amidst Economic Squeeze
Despite rising inflation and a grim economic forecast, CPGs can still access growth capital thanks to a “much broader toolkit” of alternative M&A options, according to a recent Bain & Co report. 2022 represented a “reset” for the global M&A market, specifically in its second half. During the first five months of the year, dealmaking remained around pre-pandemic levels, but that changed in June after interest rate hikes by the Federal Reserve pushed M&A activity down by around 50%. Consumer goods fared better relative to the whole, though value (-10%) and volume (-5%) were still both down. Over the 12-month period, multiples dropped from historically high deal levels (around 19x) to a 10-year low of 12x. Yet optimism remains higher in consumer products than any other sector, according to Bain’s report. While large deals are fewer and further between, respondents voiced confidence that a steady pace of smaller transactions will continue this year. With valuations down across the board, targets that were previously out of reach may potentially come into play as well.
Cat Food Brand Smalls Raises $19 Million To Expand Its Feline-Focused Mission
In a pet industry that seems to be overly invested in keeping dogs and dog owners happy, Smalls co-founder and CEO Matt Michaelson sees a big opportunity in cats. Smalls, a six-year-old direct-to-consumer startup that makes human-grade food for cats, announced that it has raised $19 million in new funding round. The round, which includes investment by venture funds affiliated with pet-food giants Mars, Inc, and General Mills, brings Smalls’ total funding raised to $34 million. Other investors in the round were Left Lane Capital, Valor Capital, and the Ohio State University endowment fund. The company does not reveal its revenues, but its sales were in the eight figures in 2022, and sales typically have doubled, year-over-year, since it was launched in 2017.
Grocery & Restaurants
McDonald’s closes corporate offices as it lays off hundreds of workers
McDonald’s is closing its U.S. corporate offices Monday through Wednesday as the company lays off hundreds of workers, a person familiar with the matter told CNBC. CEO Chris Kempczinski announced in January that the company would be cutting jobs as part of a broader corporate restructuring. McDonald’s told employees that they’ll be notified virtually, starting Monday and ending Wednesday, if they’re affected by the cuts. McDonald’s reorganization will include deprioritizing and halting certain initiatives, Kempczinski said back in January. At the time, McDonald’s said the layoffs weren’t a cost-cutting measure, but instead are meant to help the company innovate faster and work more efficiently.
Area 15 Ventures acquires Port of Subs sandwich brand
Area 15 Ventures LLC, a private-equity firm based in Castle Rock, Colo., has acquired the 50-year-old Port of Subs sandwich brand, the companies announced this week. Reno, Nev.-based Port of Subs, which has 130 units in seven western states, was founded in 1972. Area 15 Ventures also owns the Daddy’s Chicken Shack brand and is working on regional developments. Area 15 is led by Dave Liniger, the co-founder and former CEO of Re/Max, the real estate company. Representatives said the acquisition aims to increase Port of Subs’ growth, focusing on a regional development model. Port of Subs, which bills itself as “your neighborhood sandwich shop,” was opened in Sparks, Nev., in 1972.
Home & Road
RH latest to lay off, as it cuts 440 in reorganization
In a 10-K filing with the SEC filed on March 29, Top 100 retailer RH noted that it cut approximately 440 positions in March as it implemented what it’s calling a business reorganization. “On March 24, we implemented a restructuring that includes workforce and expense reductions in order to improve and simplify our organizational structure, streamline certain aspects of our business operations and better position us for further growth,” the company wrote in the filing. “As a result of the workforce reduction associated with the initiative, which affected approximately 440 roles, we expect to incur certain charges. The reorganization and accompanying workforce reduction includes the elimination of numerous leadership and other positions throughout the organization.”
Design Holding Sees 1B Euros in Sales; No IPO Plans
Italy’s leading high-end design, furniture and lighting company Design Holding said Wednesday that it closed 2022 with a surge in sales and expects to reach the 1 billion euro mark in just a few years. Founded in November 2018, Design Holding comprises leading brands B&B Italia, Flos, Menu, By Lassen, Lumens, Louis Poulsen, Arclinea, Maxalto, Azucena and produces Fendi Casa through a joint venture with the Roman fashion house. It has a presence in more than 130 countries. In the 12 months ended Dec. 31, pro-forma revenues rose 15.7 percent to 867.6 million euros, compared with 2021, boosted by business in the U.S. and Asia Pacific, as well as its high-end contract business.
Kirkland’s CEO to retire; Q4 sales fall 9%
Kirkland’s Home is looking for a new chief executive. The home décor and furnishings retailer said that president and CEO Steve “Woody” Woodward will retire, effective May 31. Board member Ann Joyce will serve as interim CEO until a successor is named. The company said its board is evaluating options for a permanent successor. Woodward has served as CEO of Kirkland’s Home since October 2018. Prior to that, he was president and chief merchant of Create and Barrel. In a release, Kirkland’s Home noted that Joyce has an extensive background in the retail industry, having served in various executive and senior-level positions for companies such as Chico’s FAS, Aeropostale and Ralph Lauren. Kirkland’s Home also announced that Amy Sullivan, senior VP and chief merchandising and stores officer, has been promoted to the role of president and COO. Sullivan joined the retailer in 2012, and in recent years her leadership role expanded to include global sourcing, stores and omnichannel operations.
Jewelry & Luxury
Luxury Tuxedo Rental Company Enters Wedding Ring Business
For 10 years the Black Tux has dressed people for the biggest occasion in their lives—their wedding ceremony—and its recent acquisition of a wedding ring maker means the luxury formal wear company can prep them right down to their fingers. The Black Tux acquired Marke New York for an undisclosed purchase price, and sees this as the next step in helping customers find stylish gear for their wedding day, co-founder Andrew Blackmon told JCK. The Black Tux and Marke have a lot in common—timeless design, old-school craftsmanship, and a transparent process—so Blackmon believes they will create a good kind of disruption in the jewelry world. “I’m excited to learn more about the jewelry industry. We’re approaching it with humility,” he says.
David Yurman Sues Another Company for Allegedly Copying Its Designs
David Yurman has filed a lawsuit against Zoé del Mar, accusing the Puerto Rico-based jewelry brand of copying its designs. The lawsuit, filed March 27 in U.S. District Court for the District of Puerto Rico, accuses defendant Mary Ann Valentín, as well as other unnamed entities and individuals related to the business, of copyright and trademark infringement, trademark counterfeiting, and false designation of origin, meaning the seller has been untruthful about where a product was made or who made it. While the brand does not appear to have marketed its jewelry as being made by David Yurman, the suit argues that the alleged resemblance to Yurman’s copyrighted designs is enough to confuse consumers into thinking Zoé del Mar is selling David Yurman jewels.
Luxury Watch Brands Go Digital to Target Young Consumers
How do you convince a generation unused to wearing wristwatches to change their habits? If you’re a luxury brand like Rolex and Cartier, you apparently try to court them using Snapchat and bitcoin. That’s according to a Fashion Network report, which noted research indicating luxury spending by millennials and Generation Z consumers is expected to increase three times faster than that of other generations by 2030. As PYMNTS has noted, many of these young consumers still live at home, giving them more disposable income. They’re also interested in sustainability, which has helped drive a recent boom in luxury fashion resale. Watchmakers at last week’s Watches and Wonders trade fair in Geneva seemed to be looking for ways to tap into these young digital natives, the Fashion Network report said.
Office & Leisure
Office Depot sells Boca Raton headquarters for about $104 million
Office Depot has sold its corporate headquarters in Boca Raton for about $104 million. The office supply company announced Thursday in a news release that it has completed the sale of its headquarters on Military Trail “to a buying entity for approximately $104 million.” “We are pleased to complete this transaction as it provides us with greater flexibility and lowers our annual operating costs,” Anthony Scaglione, Office Depot’s chief financial officer, said. Office Depot said its headquarters will remain in Boca Raton and the company will lease back a portion of the building from the buyer for a minimum of two years. The company moved from its old corporate headquarters in Delray Beach into its Boca Raton building in 2008.
Cineworld shares tank after Regal Cinemas owner ditches plans to sell US and UK businesses
Shares in Cineworld plunged more than 30%, hitting their lowest level since late August, after the owner of Regal Cinemas said it planned to terminate efforts to sell its US, UK and Irish businesses. The world’s second-largest movie theater chain also announced a debt restructuring plan with lenders to help it exit bankruptcy. The deal does not provide for any recovery of funds for shareholders, the company said in a statement. “This agreement with our lenders represents a ‘vote of confidence’ in our business and significantly advances Cineworld towards achieving its long-term strategy in a changing entertainment environment,” said CEO Mooky Greidinger. Cineworld — which, like many cinema operators, was hit hard by the pandemic — filed for Chapter 11 bankruptcy protection in September. Over the past year, the company’s shares have lost more than 93% of their value. Under the proposed debt restructuring, lenders will reduce Cineworld’s debt pile by $4.5 billion and receive equity in the reorganized group; provide $1.46 billion in new debt; and backstop a $800 million share issue.
Technology & Internet
American teens are not into virtual reality, only 4% use it daily
Virtual reality hasn’t caught on with American teens, according to a new survey from Piper Sandler released on Tuesday. While 29% percent of teens polled owned a VR device — versus 87% who own iPhones — only 4% of headset owners used it daily, the investment firm found, and 14% used them weekly. In addition, teenagers didn’t seem that interested in buying forthcoming VR headsets. Only 7% said they planned to purchase a headset, versus 52% of teens polled who were unsure or uninterested. The survey results suggest that virtual reality hardware and software has yet to catch on with the public despite billions of dollars in investment in the technology from Big Tech companies and a number of low-cost headsets on the market. Teenagers are often seen as early adopters of new technology and their preferences can provide a preview of where the industry is going. “To us, the lukewarm usage demonstrates that VR remains ‘early days’ and that these devices are less important than smartphones,” Piper Sandler analysts wrote.
Mark Zuckerberg is spending most of his time on A.I., says Meta CTO
Meta’s top executives including CEO Mark Zuckerberg, chief product officer Chris Cox and chief technology officer Andrew Bosworth are spending most of their time working on artificial intelligence, according to an interview Bosworth gave to Nikkei Asia Wednesday. While Bosworth said some of that work will benefit the metaverse — the digital world the company has said it’s working to build — it shows how important AI is to Meta as other large tech companies like Microsoft and Alphabet also invest in the space. Meta, which owns Facebook and Instagram, announced a product group in February that is focused on generative AI— a new set of machine learning techniques that allow computers to generate text, draw pictures, and create other media that resemble human output. Meta has its own large language model called LLaMa that it said in February it would release to researchers. LLaMa, like competing AI models, is capable of answering questions and summarizing documents.
Finance & Economy
Job growth totals 236,000 in March, near expectations as hiring pace slows
Nonfarm payrolls rose about in line with expectations in March as the labor market showed increased signs of slowing. The Labor Department reported that payrolls grew by 236,000 for the month, compared to the Dow Jones estimate for 238,000 and below the upwardly revised 326,000 in February. The unemployment rate ticked lower to 3.5%, against expectations that it would hold at 3.6%, with the decrease coming as labor force participation increased to its highest level since before the Covid pandemic.
Consumer Confidence in Housing Market Remains Near Historic Lows
Elevated mortgage rates continue to weigh on existing homeowners’ sense of homebuying conditions. The Fannie Mae Home Purchase Sentiment Index increased 3.3 points in March to 61.3, but it remains only slightly above its all-time low set late last year. Overall, four of the HPSI’s six components increased month over month, most notably those associated with home-selling conditions and consumers’ sense of job security. While the former component remains slightly positive on net, in March 40% of consumers reported that it’s a bad time to sell a home, down from 44% last month, and 21% expressed concern about losing their job in the next 12 months, down from 24% last month. Year over year, the full index is down 11.9 points.
