Over the last year, we’ve written in this space about two of the most important trends in beauty, clean beauty and biotech beauty. While those trends continue, one transaction announced last week underscored a third major trend in the space. Ceremonia, a Latinx clean hair care brand, raised $10 million in a series A led by Sandbridge Capital to support its growth, including a recent expansion to 500 Sephora stores. This is only the most recent of a number of transactions and developments that comprise another of the top developments in beauty and personal care: inclusive beauty.
The inclusive beauty movement aims to address and correct racial inequity in the beauty industry. There are two main components to the trend. The first is increasing support for black-and-brown beauty founders, a group that has historically struggled to obtain funding and strategic partnerships. The second is the launch of new products and brands that deliver beauty and personal care solutions to underserved BIPOC (black, indigenous, and people of color) populations. However, inclusive beauty goes beyond these two examples to include all efforts to make the beauty industry open to everyone, regardless race, gender, age, etc., from inclusive marketing, to thoughtful packaging, to accessible pricing.
Industry observers point to two moments that accelerated the inclusive beauty discussion. The first was Rihanna’s launch of Fenty Beauty in 2017, which kicked off with an unprecedented 40 different shades of foundation to help women of all skin tones find the right product for them. Fenty was heralded for making inclusivity central to its mission, with Time magazine naming the foundation line Invention of the Year. Another seminal moment for the trend was the creation and adoption of The Fifteen Percent Pledge. Launched in 2020 following the death of George Floyd and the resulting outcry for social justice, the Fifteen Percent Pledge challenged national retailers to devote at least 15% of their shelf space to Black-owned businesses. A number of large companies signed the pledge, including Nordstrom, Macy’s, Gap, and Victoria’s Secret. In beauty, Sephora and Ulta both committed to the pledge.
The building momentum of inclusive beauty can be seen in both recent transactions, and the proliferation of companies devoted to the movement. A recent bellwether transaction related to the trend is Mielle Organics, a black-founded natural hair care business that reportedly raised $100 million from Berkshire Partners in 2021 before being acquired by Proctor and Gamble this January. Another noteworthy example of inclusive beauty’s growth is Thirteen Lune, an inclusive beauty retail and brand development company that raised $8 million in a seed round in January. Thirteen Lune pledges that 90% of the brands it carries are BIPOC-founded. JCPenney tapped Thirteen Lune last year to fill a significant portion of the void that was created in its stores when Sephora pulled its shop-in-shops out of JCPenny Beauty and moved to Kohls. Also recently, Live Tinted, a makeup and skin care brand for all skin types and tones, raised $10 million in February from a group led by Monogram Capital.
Inclusive beauty aims to address a social imperative, but demographic projections suggest it also makes good business sense. According to the Pew Research Center, Asian, Hispanic, and Black population growth in the U.S. has significantly outpaced the White demographic since 2000. Asian and Hispanic U.S. populations have grown roughly 80%, and 70%, respectively in that time, while the White population has increased just 1%. This dynamic is expected to continue. According to the U.S. Census Bureau, the U.S. population is projected to grow 24% by 2060, driven largely by immigration, while the White U.S. population is expected to decline roughly 10% over the same time frame.
Similar to clean beauty, inclusive beauty isn’t expected to be a temporary trend, but we may hear the term uttered less frequently in the future as it becomes commonplace. As the beauty industry addresses ever larger BIPOC populations, the idea of inclusive beauty may just get swallowed up by the oldest principle in the history of retail: give the customer what they want.
Headlines of the Week
Count Vince as the latest fashion brand to come into the orbit of Authentic Brands Group. In what it dubbed “a transformative strategic partnership,” Vince Holding Group said it plans to transfer its intellectual property to a newly formed Authentic subsidiary, ABG Vince, in return for $76.5 million in cash and a 25 percent membership interest in the subsidiary. The deal marks something of a changeup for Authentic, which has made a name for itself buying up brands and then finding licensing partners. With Vince, the branding giant is buying three-fourths of the brand and has a built-in supplier — the parent company that is already producing the line. Vince will continue on as a public company led by chief executive officer Jack Schwefel and plans to use proceeds from the deal to increase its working capital and repay $27.7 million outstanding under a term loan credit facility. The two signed a 10-year license that will allow Vince to continue running its current wholesale, retail and e-commerce operations, with the option for eight 10-year renewals.
Gap will lay off about 1,800 employees as part of a broad effort to cut costs and streamline operations, the company said Thursday. The cuts, first revealed on Tuesday, are more than three times larger than the 500 layoffs it announced in September. The layoffs will affect roles at Gap’s headquarter locations along with upper field positions, or workers such as regional store leaders who hold leadership titles outside of a headquarter office, the company said. The job cuts come as the apparel retailer struggles to return to profitability while sales sag. The layoffs are expected to result in annualized savings of $300 million, Gap’s interim CEO Bob Martin said in a statement. Gap expects to see half of those savings in 2023, and expects to complete the layoffs by the end of July, according to a securities filing.
Apparel & Footwear
Footwear retailer Crocs on Thursday reported first-quarter revenue of $884.2 million, a nearly 34% year-over-year rise for the three months ending March 31. The company attributed the growth to its brand strength and new product introductions. Revenue for the Crocs brand rose 19% year over year to $648.8 million, while revenue for the company’s HeyDude brand rose nearly 105% year over year to $235.4 million. Crocs acquired HeyDude early last year for $2.5 billion. Crocs reported a Q1 gross profit of $476.3 million, net income of $149.5 million and $125.7 million in cash. Crocs’ solid first-quarter performance led the company to raise its Q2 and full-year guidance. CEO Andrew Rees called the first quarter results “exceptional” in an earnings announcement and said new clog and sandal introductions at the Crocs brand are seeing strong response. Together, Crocs and HeyDude reached a record $3.6 billion in revenue in 2022. Crocs completely revamped the HeyDude brand shortly after acquiring it. The revamp included new logos, messaging and marketing, along with a new tagline: “Good to Go-To.” Crocs aspires to make HeyDude a billion-dollar brand by next year, Retail Dive previously reported.
“We’ve become a retailer.” That’s how Rodrigo Bazan, chief executive officer of Thom Browne, described the brand’s positioning now. With the opening of its 103rd retail location this week in Boston, most of the luxury designer brand’s sales come from its own direct-to-consumer efforts. As a result, the strategy is to continue rolling out retail with a goal to grow to 115 stores by the end of this year and 150 within four to five years, he said. This count includes company-owned freestanding flagships as well as in-store shops. At the end of the first quarter, there were 62 stand-alone stores, according to Ermenegildo Zegna Group, the brand’s majority owner. Although Thom Browne is based in the U.S., the company only operates six stores in North America: in its hometown of New York City as well as Miami; Costa Mesa, California; Vancouver, and Toronto. Boston is the seventh store to open on this continent and follows a unit in San Francisco that debuted in October in the historic Yeon Building in Jackson Square. Bazan said that while the retail rollout plan is aggressive, there are not currently any other units planned for the States this year.
Patti Cazzato has come a long way from being employee No. 8 at Sam & Libby when the shoe company was in its early stages some 30 years ago. But she is tapping into that experience and more as the new chief executive of NakedCashmere, a Southern California direct-to-consumer women’s and men’s cashmere line launched seven years ago by husband-and-wife team Bruce and Leslie Gifford. They heard about Cazzato, who most recently was the head of emerging businesses at Victoria’s Secret. In that job, she negotiated the lingerie company’s $18 million strategic investment last year in Frankies Bikinis, a swimwear and lifestyle brand started in Malibu, California, by Francesca Aiello and her mother, Mimi. That deal got her noticed. The new CEO said the job heading up parent company 360sweater and its subsidiary, NakedCashmere, intrigued her because it met her requirements for a satisfying work experience.
Athletic & Sporting Goods
In a blockbuster sports deal, Endeavor says that it has agreed to sell its IMG Academy sports education business to the private equity firm BPEA EQT in a deal valued at $1.25 billion. IMG Academy assets include a campus in Bradenton, Florida, sports camps across the country and worldwide, and online coaching and college recruiting businesses. Endeavor acquired IMG, which also includes events, media and licensing businesses, in 2014 for $2.3 billion. BPEA EQT is associated with EQT, the Sweden-based private equity firm that is also the largest outside shareholder in UTA. IMG Academy is expected to partner with EQT’s portfolio company Nord Anglia Education, which operates a network of international schools, following the transaction.
Solidcore reported that its founder, Anne Mahlum, is selling her shares to Kohlberg & Company for an undisclosed amount. As part of the transaction, all full-time employees working for the company for at least one year before the transaction date will receive a portion of the proceeds, which the company created in 2018. Over the years, Mahlum raised substantial capital from private equity firms Peterson Partners, Kohlberg & Company and VMG Partners, who are majority owners of the company. For the past two years, with Mahlum as executive chairwoman and Myers as CEO, the chain expanded to 99 studios in 24 states. The funding will accelerate growth.
Cosmetics & Pharmacy
The beauty and wellness platform behind Il Makiage and Spoiled Child is investing more than $100 million to acquire a biotech startup and open a U.S.-based lab. Oddity is buying startup Revela for $76 million, its largest acquisition to date, and is putting another $25 million toward building Oddity Labs in Boston. The merger will bring to Oddity a team of scientists tasked with creating brand-new molecules, using artificial intelligence, that can be used in its cosmetics brands and future lines. AI-based molecule discovery is a common tool used in the pharmaceutical industry to create new drugs, but it isn’t widely used in the beauty and wellness industry. Legacy brands have long relied on building products using proprietary formulations with a similar set of active ingredients, such as retinol, hyaluronic acid and peptides. Oddity hopes to develop new molecules designed to address specific pain points, such as hair loss, wrinkles and the myriad other concerns consumers have long turned to legacy brands to solve with varying results.
Babba Rivera is used to moving fast — but now she’s going into overdrive. Ceremonia, the Latinx clean hair care brand Rivera launched in 2020, has raised $10 million to support its recent expansion to more than 500 Sephora stores with a series A investment round led by Sandbridge Capital. That has the buzzy brand working with an investment firm that’s proven to have a knack for big exits with Ilia (sold to the Courtin-Clarins family holding company), Youth to the People (L’Oreal) and Thom Browne (Ermenegildo Zegna). Existing Ceremonia investors Silas Capital and Female Founders Fund also re-upped during the round.
Amid a color cosmetics boom in the U.S. market, DIBS Beauty has received “a significant” but undisclosed growth capital investment from L Catterton. The brand has grown more than 450% year-over-year, primarily via a direct-to-consumer strategy, though the brand did expand to its first retailer, Revolve, in July 2022. The brand was launched in September 2021 and, in addition to Lee, a former COO of ARod Corp., boasts Ken Landis, the former co-founder of Tula and Bobbi Brown Cosmetics, tech entrepreneur Dan Reich, and entrepreneur Courtney Shields (Bow & Brooklyn). DIBS’ vegan and cruelty-free products, including the Desert Island Duos and Status Sticks, were designed to provide low lift, high payoff for beauty consumers seeking value, simplicity and convenience.
Aussie skincare brands Boost Lab and tbh Skincare have merged under a new beauty umbrella — York Street Brands. The merger is part of a $5 million Series B funding round led by Alium Capital. Both brands launched back in 2020, with tbh Skincare quickly becoming known for its acne-focused products, including creams, cleaners and pimple patches. As of April 2023, tbh has been available in over 400 Priceline stores. The brand has also seen 509% revenue growth since January 2022. This merger, and the fresh funding round, will be used for new product development as well as expansion into new international markets. There will also be a focus on new distribution channels under the York Street Brands name.
Discounters & Department Stores
Following last week’s bankruptcy of Bed Bath & Beyond, The Container Store announced on Wednesday that it will offer a 20% discount on any single item through May 31 for customers who bring a “competitor’s blue coupon,” to any store location. In a separate announcement, Big Lots on Thursday said that any shopper that brings in a Bed Bath & Beyond coupon will receive 20% off their entire purchase of $50 or more through May 7. Terms and conditions apply to both retailer’s promotions. Although Bed Bath & Beyond and BuyBuy Baby stores are open and serving customers during the company’s wind-down process, shoppers can no longer redeem its coupons, according to the retailer’s website.
Walmart plans to give away 20,000 Walmart+ memberships to new moms next month ahead of Mother’s Day. The promotion is in partnership with the Pampers hospital gift bag program. Starting in May, patients who have recently delivered a baby can receive a reusable fabric bag, a sample pack of wipes and a one-year subscription to Walmart+ while supplies last, the retailer said in Monday in a press announcement. The upcoming holiday falls on May 14. The Walmart+ annual membership is $98 and membership includes omnichannel benefits such as unlimited free shipping on eligible items with no order minimum, free delivery from stores, fuel discounts, in-store mobile scan and go, and access to the Paramount+ streaming service. Walmart+ members also get access to early product releases and online deals, and they can make returns from home. Members also have access to limited-time offers on a variety of services.
Target is dangling a new perk to get shoppers to swing by its stores: customers can make returns without leaving their car. The curbside-returns service, which began last week at roughly a quarter of Target’s nearly 2,000 stores nationwide, will be available across the chain by the end of summer. Target is sweetening its curbside-pickup service, Drive Up, to attract and retain customers as the retailer braces for a potential sales slowdown and tries to hang on to pandemic-fueled gains. Total annual revenue grew by about $31 billion – or nearly 40% – from fiscal 2019 to 2022. Now, as shoppers become more budget conscious and buy fewer discretionary items, Target said it expects comparable sales to range from a low single-digit decline to a low single-digit increase this fiscal year. At an investor day in February, it projected full-year earnings per share of between $7.75 and $8.75, below Wall Street’s expectations of $9.23 per share, according to StreetAccount estimates.
Emerging Consumer Companies
Frozen foods startup 8 Myles has raised $1.05 million in seed funding to expand operations and attract new hires. The company markets and distributes a line of frozen macaroni and cheese meals featuring whole grain elbow pasta tossed in cheese sauce and topped with a breadcrumb crust. Described as “clean comfort food,” the products are sold in hundreds of retailers across the country, including Sprouts Farmers Market, Whole Foods Market and Target stores. Participants in the seed round were Andreessen Horowitz’s a16z Talent x Opportunity Initiative, Virginia Venture Partners, The Enterprise Center, gener8tor’s Bronze Valley Investment Accelerator, Kompass Ventures and various angel investors.
Summer, a student debt repayment tool that works with financial institutions, employers and other organizations to help employees plan for college, learn ways to reduce the student loan debt burden and optimize retirement savings through employer matches, raises $6 million in additional Series A funding. General Catalyst, QED, Flourish Ventures, Partnership Fund for NYC, Story Ventures, Gaingels, Calm VC and Avidbank participated in the round, which brings the certified B Corp.’s Series A funding to $16 million, and $18 million in total funding. The company has secured partnerships with companies like Fidelity Investments and Intuit, and expanded its work with the American Federation of Teachers to put Summer in front of tens of millions of employees.
ŌURA, the company behind the smart ring that delivers personalized health data, insights, and daily guidance, announced its first US-based, large-scale retail partnership with Best Buy. Oura Ring in both Heritage and Horizon styles is now available at more than 850 Best Buy stores nationwide, as well as on BestBuy.com. With sleep as its foundation, Oura fosters healthy habits to make wellness and recovery a mindful, daily practice. Founded in Finland with offices in Oulu, Helsinki, San Francisco, and San Diego, ŌURA has raised more than $350 million.
Food & Beverage
A group of more than two dozen institutional investors urged Nestlé to set a target to increase the portion of sales that come from better-for-you products. In a two-page letter to the world’s largest food company, the shareholders said the market is currently oversaturated with foods that cause harm to public health and that create “systemic risks to investor returns.” “We have already made clear our willingness to escalate our engagement, should [Nestlé] fail to provide assurance that it intends to reduce reliance on the sale of less healthy products,” the groups said. Food makers have come under pressure to improve the nutritional content of their portfolios as consumers look to eat healthier, a trend that has grown in recent years, especially since COVID-19.
The Coca-Cola Company has licensed its Simply and Minute Maid brands to multinational fruit sales and marketing company Frutura which will distribute fresh grapes and citrus fruit under Coke’s labels. The terms of the agreement were not disclosed. The announcement marks the first time that the beverage company has dipped into the fresh fruit and produce industry. As part of the agreement, the Simply Select brand will be used on packaged citrus fruit from Dayka & Hackett (D&H) – a Reedley, California-based subsidiary of Frutura – including clementines, lemons, limes, oranges and mandarins. D&H will use the Minute Maid brand on red, green and black seedless table grapes. Products are expected to hit retail shelves during the second quarter of 2023. Founded in 2005, D&H is a grower, packer and distributor of fruit from California’s Central Valley. According to the company website, D&H annually ships more than 20 million cartons of fresh fruit (roughly 16 pounds per carton) nationwide to many retail grocery chains. The produce company was bought by privately-owned Frutura in June 2021 which sources fruit from North and South America to be distributed globally.
Despite mixed results due to price realization, inflationary headwinds and volume/mix volatility, Keurig Dr Pepper (KDP) reaffirmed its current full-year guidance during its Q1 2023 earnings call last week. Net sales increased 8.9% to $3.3 billion during Q1 2023, primarily driven by favorable net price realization of 9.9% and only partially offset by a 1% drop in volume. Despite forecasting more mid-single digit inflation, KDP expects net sales to increase 5% this year. In terms of category performance, KDP’s U.S. liquid refreshment beverages (LRB) saw strong net sales momentum, increasing 12.7% to $2 billion compared to the same period last year. The performance was supported by strong initial traction for its latest innovation, Dr Pepper Strawberries & Cream, as well as contributions from the company’s new sales and distribution contract with Nutrabolt’s C4 energy.
Grocery & Restaurants
Private equity firm L Catterton has made a “significant investment” in the nine-unit Colorado-based Urban Egg concept, the companies said Thursday. Colorado Springs, Colo.-based Urban Egg, owned by Rocky Mountain Restaurant Group Inc., has units in Colorado and Kansas, and will use the investment to grow its daytime-dining concept, the companies said. Urban Egg, founded in 2012 by Randy and Liz Price, offers breakfast, brunch and lunch and a menu based on locally sourced ingredients. Units are open 7 a.m. to 2 p.m. Monday through Friday and 7 a.m. to 2:30 p.m. on Saturday and Sunday.
Chipotle Mexican Grill on Tuesday reported quarterly earnings and revenue that topped analysts’ expectations, fueled by better than expected same-store sales growth. Like McDonald’s, Chipotle said traffic to its restaurants grew during the first quarter despite higher prices. Chipotle’s menu prices are up roughly 10% from a year earlier. CEO Brian Niccol said the chain has demonstrated that it has pricing power. “We don’t want to be in front of the inflationary environment, but we also don’t want to fall behind,” he said on the company’s conference call. For now, Chipotle is pausing price increases, Niccol said on CNBC’s “Closing Bell.”
McDonald’s on Tuesday reported quarterly earnings and revenue that topped analysts’ expectations as U.S. consumers keep buying Big Macs and Shamrock Shakes. But executives offered a conservative view of the economy, reiterating last quarter’s warning that recessions could hit the U.S. and Europe later this year. Customers in some of McDonald’s markets have pushed back more than expected against price increases, and diners have slightly decreased how many menu items they include in an order. Still, executives stressed they are confident that the fast-food giant can handle any challenges. “At McDonald’s, we perform well in good times and in bad, so that gives us optimism as we go through the rest of the year,” CEO Chris Kempczinski said on the company’s conference call.
Home & Road
A year after a near dead-heat between China and Vietnam for the bragging rights as the top furniture exporter to the United States in 2021, Vietnam reclaimed the top spot it first earned in 2020 and widened the gap as well. Vietnam saw its exports to the United States rise by 7%, reaching nearly $9.7 billion for 2022, while China’s business fell by 7%, dropping it to about $8.5 billion and reducing its share of the overall market to 28%. In 2021, China and Vietnam each accounted for 31% of the U.S. export market and just $17.5 million separated them. For Vietnam, it was a mixed bag of categories that propelled it to the No. 1 spot, Furniture Today research shows. Unlike 2021, when all categories grew to give Vietnam a 23% gain in business, 2022’s 7% was based primarily on increases in miscellaneous wood furniture, wood bedroom furniture and wood beds in contrast to dips in upholstery, both wood frame seats and chairs. China was down by double-digits in 2022 in three of its five leading categories—wood frame upholstered seats and chairs and miscellaneous wood furniture — while making smaller gains in its new top category, metal outdoor seats with textile-covered cushions — and metal frame upholstered seats.
Ikea on Wednesday announced the U.S. launch of its Ikea Business Network loyalty program. It’s a free-to-join global program intended to support small businesses by offering a variety of perks for companies and employees. The program’s perks include access to Ikea Family loyalty program benefits, like 5% savings on in-store purchases. Members receive access to all Ikea Family discounts on products, food and services, including discounted delivery options. Ikea said loyalty program perks and discounts also apply to orders placed by phone or email.
A sixth-generation family-owned Swedish company that makes luxurious beds and mattresses is expanding its U.S. footprint. Luxury distributor MadaLuxe Group has entered into a strategic partnership with Hästens to open 20 Hästens stores across the U.S. during the next five to seven years. MadaLuxe’s home division has already signed leases for two stores in Texas, with the first set to open in the upscale Knox Henderson shopping district in Dallas in early May. The second location will open in Houston’s River Oaks Shopping Center this fall. Founded in Sweden in 1852, Hästens’ currently operates 15 stores and 15 in-store shops in the U.S. The company said it is on a mission is to change the way people think about and prioritize sleep, so they can enjoy a better quality of life. Each Hästens bed is handcrafted using natural materials, including sustainably sourced cotton, wool and slow-grown pine. The brand also offers a wide range of accessories that include headboards and covers, bed legs, bed skirts, bed linen, down pillows and quilts, mattress protectors and more.
Jewelry & Luxury
On April 28, Tiffany & Co. will reopen its legendary New York City flagship on 57th Street following a glitzy makeover that has added digital screens, paintings, and homages to the brand’s celebrated history. This is the first time the store, which the company has dubbed “the Landmark,” has had a “holistic renovation” since it opened in 1940, a Tiffany statement said. Tiffany announced it would renovate the iconic building—which has traditionally accounted for around 10 percent of its sales—in 2018, prior to LVMH’s purchase of Tiffany.
Shoppers plan to spend a record amount on Mother’s Day this year, with jewelry gifts taking the No.1 spot in terms of spending dollars. Consumers are expected to spend $35.7 billion, nearly $4 billion more than last year’s record high of $31.7 billion, according to the annual survey by the National Retail Federation and Prosper Insights and Analytics. A majority of U.S. adults, 84 percent, are expected to celebrate the day. “Mother’s Day provides Americans with an opportunity to honor important women in their lives,” said NRF President and CEO Matthew Shay. “As people make plans to celebrate this year, retailers are prepared to help shoppers find gifts of appreciation and admiration for those they want to recognize on this special day.”
Kering posted muted first-quarter results as its star brand, Gucci, continues its recovery. However, its jewelry houses, which include Boucheron and Pomellato, had an “outstanding” quarter, said the company. Kering’s overall performance stood in contrast to rival luxury titan LVMH’s strong start to the year, with revenue up double digits. Here are four important takeaways from Kering’s most recent earnings report. Q1 sales faltered as Gucci revenue lagged. Kering posted first-quarter revenue of €5.08 billion ($5.57 billion), up 2 percent year-over-year. Sales for Gucci, a top-performing brand for the luxury conglomerate, posted a modest increase of just under 1 percent.
Office & Leisure
Party City continues to shrink its physical store footprint as part of its ongoing Chapter 11 bankruptcy case. The retailer is closing nine additional stores after failing to reach agreements with landlords, A&G Real Estate Partners said last week. The party goods retailer filed for Chapter 11 bankruptcy in January and is looking to shed leases as part of its reorganization. The retailer announced 22 stores would close in February and in January asked to be released from 28 other store leases. A&G has so far put 33 Party City stores up for auction. As part of the company’s post-bankruptcy plan, Party City said in a regulatory filing that it will seek to go private. The company reached $2.35 billion in revenue in 2019. But the pandemic hit Party City hard as most people canceled in-person celebrations, events and gatherings during the early weeks of the global COVID-19 health crisis. The pandemic cost Party City $174 million in EBITDA in 2020, the company said. At the end of 2021, the company said it had $1.4 billion in debt.
In another sign that disability representation is entering the mainstream, Barbie has released its first doll representing a person with Down syndrome. Designed in partnership with the National Down Syndrome Society (NDSS), the new Barbie is the latest edition to the Mattel brand’s Fashionistas line, which features a range of diverse dolls. This year’s collection also includes a Barbie with braces and a Ken doll with a prosthetic leg. The Down syndrome doll is a milestone in the 64-year history of Barbie, which recently has been on a mission to become more inclusive across its products. “We have been on a journey for about eight years now to modernize the Barbie brand,” Lisa McKnight, executive vice president and global head of Barbie and Dolls at Mattel, told Adweek. To promote the launch, Barbie released a video of children with Down syndrome and their parents seeing the doll for the first time. McKnight said that while only one style of the doll was launched for the time being, she sees “limitless possibilities” of expanding to include more ethnicities and a Ken version.
Technology & Internet
Amazon reported better-than-expected revenue on Thursday, but the stock’s initial pop was wiped out after executives raised concerns of ongoing weakness in cloud growth. Sales at AWS rose about 16% in the first quarter to $21.35 billion, above the $21.22 billion projected by Wall Street. Still, that marks a deceleration from the previous quarter, when AWS grew 20%. Companies have been trimming their cloud spend in recent months amid a challenging economic environment, and finance chief Brian Olsavsky warned on the call after the report that clients keep tightening their belts. “Our advertising business continues to deliver robust growth, largely due to our ongoing machine learning investments that help customers see relevant information when they engage with us, which in turn delivers unusually strong results for brands,” CEO Andy Jassy said in the earnings statement. Jassy, who succeeded founder Jeff Bezos at the helm in July 2021, has been aggressively slashing costs as Amazon grapples with slowing sales in its online shopping and cloud-computing divisions. Amazon is laying off 27,000 employees, the largest job cuts in its 29-year history.
Meta can thank Chinese retailers for helping lift the company’s first-quarter sales after three consecutive quarters of revenue declines. As chief financial officer Susan Li told analysts during the earnings call, the social networking giant “saw acceleration among advertisers in China targeting users and other markets, which we believe was due in part to dropping shipping costs and easing Covid lockdown for those advertisers.” In other words, Chinese companies spent a lot of money over a three-month period ended in late March on Facebook ads intended for consumers living outside the country. It’s a sign that China’s recent easing of its zero-Covid policy has indirectly benefited Meta, with Chinese companies using Facebook and Instagram’s massive reach around the world to land new customers. Still, Meta’s sales grew only 3% year over year to $28.65 billion during the first quarter, underscoring that there’s still turbulence in the digital advertising market. Meta expects “a volatile macro environment” for the rest of the year and a “challenging regulatory environment” overall, Li said, referring to European Union regulators who continue imposing tough data privacy laws and requirements that affect the company. But the mere fact that Meta was able to turn the tide on its declining sales after a harsh period was enough to cause investors to rejoice, sending the company’s shares rising nearly 12% in after-hours trading.
Finance & Economy
Growth in the U.S. slowed considerably during the first three months of the year as interest rate increases and inflation took hold of an economy largely expected to decelerate even further ahead. Gross domestic product, a measure of all goods and services produced for the period, rose at a 1.1% annualized pace in the first quarter, the Commerce Department reported Thursday. Economists surveyed by Dow Jones had been expecting growth of 2%. The growth rate followed a fourth quarter in which GDP climbed 2.6%, part of a year that saw a 2.1% increase. Consumer spending as measured by personal consumption expenditures increased 3.7% and exports were up 4.8%.
Consumer confidence fell to a 9-month low in April amid fears of a looming recession, according to a survey released by the Conference Board. The business group’s closely watched consumer confidence index fell for the third time in four months and reached its lowest level since July 2022. The index fell from 104 in March to 101.3 in April. Economists had expected it to remain flat. The index found that while consumers are comfortable with the present situation, they’re less hopeful about the future. Just 13.5 percent of consumers said business conditions will improve, down from 16.4 percent last month. Their outlook on the number of jobs also worsened. Consumer spending on products has been falling fast in recent months as inflation and higher borrowing costs take a toll on Americans, particularly low-income families.