The Weekly Consensus

The Weekly Consensus

Maeghan Thompson

Story of the Week

Job Growth Slows in April as Unemployment Rises and Wage Growth Moderates

The long-awaited cooling in the labor market may have begun in April, as payrolls climbed by a weaker-than-expected 175,000, while the unemployment rate ticked up slightly to 3.9%.  Wage growth also slowed, a sign that the Federal Reserve is looking for as it tries to curb stubborn inflation.  The number was below estimates of 240,000 and follows March’s 315,000 increase, revised upward from its original 303,000. Gains were strongest in health care, a sector that has dominated job growth this year, and in transportation and warehousing.  The April number is unlikely to change the Federal Reserve’s posture on interest rates. The central bank is looking for the labor market to cool this year along with inflation that has proven more stubborn than expected.

Apparel & Footwear

Banana Republic’s CEO is out

Sandra Stangl is out as Banana Republic CEO, a Gap Inc. spokesperson confirmed by email. Women’s Wear Daily first reported the news. Stangl arrived in late 2020 from furniture startup Mine. Gap Inc. didn’t reply to questions about the reasons for her departure or whether it has found her replacement. Some observers have been taken aback by Banana Republic’s venture into the home category last year, though, considering Stangl’s extensive experience in home and furniture retail, it is perhaps not all that surprising. In addition to being co-founder and chief merchant at Mine, Stangl spent more than two decades at Williams Sonoma, including a stint as president of Pottery Barn Brands, and launched Pottery Barn Kids and Pottery Barn Teen, per Gap Inc.’s 2020 press release and her LinkedIn page.

In its third bankruptcy, Rue21 plans to shutter all locations

Rue21 on May 2nd filed for Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware, its third bankruptcy filing in a little over two decades. The apparel retailer has started the process of closing all 540-plus stores, according to court documents. As of press time, its website is not operating, indicating only that it’s being updated. The apparel retailer emerged from bankruptcy seven years ago with 420 fewer stores. In 2002, doing business under its original name, “Pennsylvania Fashions,” the company also reorganized under Chapter 11.


AI Styling Firm FindMine Scores Nearly $9M Series A

AI-driven styling outfit FindMine, one of LVMH’s La Maison de Startups, has raised $8.9 million in a Series A that closed recently, the company told WWD. Led by Grayhawk Ventures, the round puts FindMine’s total amount raised to date at $17.6 million. The list of Series A backers includes Grayhawk Capital, Frazier Capital, PJC and angels Sarah Wallis and Vikas Gupta, among others, adding to a robust slate of previous including Adidas Ventures, XRC Labs, RevTech Equity for Women Fund and Amplifyher Ventures.



Athletic & Sporting Goods

Compass Diversified Announces Sale of Crosman Air Gun Business

Compass Diversified, an owner of leading middle market businesses, is announcing the simultaneous entry into a definitive agreement and completion of its sale of Crosman Corporation, the air gun division of its Velocity Outdoor, Inc. subsidiary, to Daisy Manufacturing Company.  Crosman is a leading designer, manufacturer and marketer of air guns, accessories and related consumables sold under the Crosman, Benjamin, Game Face, LaserMax and Centerpoint Optics brands. For more than 100 years, Crosman has served as a pioneer of the air gun industry. Daisy is a designer, manufacturer and marketer of youth and adult air guns, accessories and related consumables sold under the Daisy, BSA, Red Ryder, GAMO and Winchester brands and is a portfolio company of BRS & Co.  Proceeds from the transaction will be used to pay down debt and for general corporate purposes.

Amer Sports sells off Enve

Enve, a well-established wheel, componentry, and latterly bike brand specialising in high-end composite products has announced that it has been acquired by Utah-based private equity firm PV3. The acquisition follows the brand’s move to a new headquarters in Ogden, Utah, in 2016.   PV3 is headed up by Mark Hancock, himself a cycling enthusiast, and is on record as being committed to maintaining the Enve brand heritage. Enve itself, founded in 2007, is an outlier in composite manufacturing insofar as the majority of its products are manufactured domestically in the USA.  The divestment of Enve from its original parent company, Amer Sports, an umbrella under which Wilson, Arc’teryx, and Salomon sit amongst several others, comes against a backdrop of significant industry headwinds in the cycling sector.

Peloton CEO steps down as beleaguered company cuts 15% of workforce

Barry McCarthy has stepped down as CEO of Peloton, the company said, as it decided to cut 15% of its workforce to tackle a post-pandemic slump in demand for its connected fitness equipment. In a note, McCarthy said: “Hard as the decision has been to make additional headcount cuts, Peloton simply had no other way to bring its spending in line with its revenue.”  Shares of the beleaguered New York-based company rose 8% before the markets opened as it also plans to cut back its retail presence, owing to weak demand that has forced Peloton to push back its goal of returning to profit.  The company’s sales had boomed during the pandemic as gyms closed and people tried to stay fit from home. Sales collapsed as the world reopened and McCarthy attempted to revamp Peloton as a subscription business and cut thousands of jobs. Once valued at over $50bn, the company is now worth $1.1bn.

Cosmetics & Pharmacy

Puig Shareholders Raise €2.6 Billion in IPO

Spanish beauty and fragrance group Puig Brands SA and its founding family raised €2.6 billion ($2.8 billion) in an IPO, pricing shares at the top end of the marketed range in Europe’s biggest listing so far this year. The Barcelona-based firm and its shareholders sold 106.5 million shares at €24.50 apiece, according to a statement confirming an earlier report by Bloomberg News. The price compares with a previous range of €22 to €24.50. At the IPO price, Puig has a market value of €13.9 billion, according to the statement. The listing drew orders for multiple times the number of shares available.

L’Occitane goes private in $1.8 billion deal

Hong Kong-listed L’Occitane International’s chairman and controlling shareholder will take the French skin-care firm private, with funding from Blackstone and Goldman Sachs, valuing it at a maximum of HK$13.91 billion ($1.78 billion). Shares of L’Occitane jumped as much as 12.9% to HK$33.30, their highest since January 2022, when the company resumed trading on the following day. As part of the deal, Austrian billionaire Geiger’s investment holding company L’Occitane Groupe in Luxembourg will pay HK$34 for each share not already owned, representing a 30.8% premium to the stock’s last close of HK$26 on Feb. 5.

CVS shares plummet as health company slashes profit outlook on higher medical costs

CVS Health on May 1st reported first-quarter revenue and adjusted earnings that missed expectations and slashed its full-year profit outlook, citing higher medical costs that are dogging the U.S. insurance industry. Shares of the company closed more than 16% lower that day, and were headed for their worst day since November 2009. The drugstore chain expects 2024 adjusted earnings of at least $7 per share, down from a previous guidance of at least $8.30 per share. Analysts surveyed by LSEG were expecting full-year adjusted profit of $8.28 per share. CVS also cut its unadjusted earnings guidance to at least $5.64 per share, down from at least $7.06 per share.

Pioneering Clean Beauty Brand Boscia Closes

Owned by Japanese beauty conglomerate Fancl Corp., the Irvine, Calif.-based brand Boscia announced the closure on May 1st on its social media accounts and website. It’s currently offering a 55% discount on all products on its site, which is scheduled to shutter on May 31. Deborah Regosin, former VP of sales at Boscia and president of beauty consultancy Regosin Consulting Group Inc., describes the brand’s plant-driven formulations and cutting-edge packaging as before their time. “They would process and manufacture their products in a clean room that was very specific, and they had airless components,” she says. “Now a lot of brands are doing airless components, but they were one of the first.”

Discounters & Department Stores

Hudson’s Bay, again a unified retailer, announces layoffs in organizational ‘re-alignment’

Canadian department store Hudson’s Bay is downsizing as part of an organizational “re-alignment” driven by the challenged retail environment in the country, a spokesperson confirmed by email. The layoffs impact “less than 1% of our workforce,” the spokesperson said. “The retail sector in Canada continues to experience pressures, and we are right-sizing our organization to ensure the long-term success of our business,” the spokesperson also said. “While necessary, these are difficult decisions, and we are committed to fairness and respect as we support our associates impacted by these changes.”  The reorganization affects the retailer as a whole, which as of 2022 is once again operating both e-commerce and physical stores as one entity, the spokesperson said.

Sam’s Club’s receipt-verification tech speeds ahead

Sam’s Club is making significant progress in its quest to use artificial intelligence to make it quicker and easier for shoppers to leave its stores. About half of customers who visit the locations where it has deployed automated receipt-verification technology at exits now walk out without needing to show proof to an employee that they have paid for their purchases, the Walmart-owned club retailer announced Tuesday. In turn, that means that all shoppers at those stores are able to leave 23% faster than they were before Sam’s Club installed the systems, according to the company. Sam’s Club developed the equipment to address what it said is a top complaint from shoppers — having to wait in line to present a paper receipt to a worker before being able to depart.

Walmart to close health centers due to ‘lack of profitability’

Walmart plans to close all 51 of its health centers across five states. The retailer said Tuesday it also will end its virtual healthcare offering. Walmart said it did not have specific closing dates for each center but would share that information once decisions are made. The healthcare industry’s “challenging reimbursement environment and escalating operating costs create a lack of profitability that make the care business unsustainable for us at this time,” the company said. Walmart’s nearly 4,600 pharmacies and more than 3,000 vision centers will stay open. The pharmacies will continue to offer health screenings and testing.

Nordstrom debuts online marketplace

Fulfilling its promise to enhance its e-commerce business, Nordstrom is introducing a new digital marketplace on its website, the department store announced Monday. The retailer is showcasing a broader selection of products, sizes and brands through the marketplace. Among its marketplace partners are Mulberry, Adore Me, Cynthia Rowley and DXL, according to the announcement. Shoppers using the Nordstrom marketplace can still earn loyalty incentives and access perks such as styling and alterations.



Emerging Consumer Companies

Swap raises $9 million to enhance e-commerce operating systems

Swap, an e-commerce operating system company, has secured $9 million in a recent funding round. The key development in this article is the successful fundraising which was led by QED Investors and saw participation from Chery Ventures, 9900 Capital, and 2100 Ventures. Swap aims to empower brands to sell directly to consumers by providing them with an operating system that integrates with the brand’s existing systems and platforms. The company’s solution is designed to give brands the ability to unlock new markets through DDP shipping, automated tax remittance and express customs clearance. The newly raised funds will be used to expand the company’s team and broaden its footprint in the UK, Europe, and the U.S..

Simply Good Foods to acquire OWYN for $280M

Simply Good Foods Co, a leading nutritional foods and snacking company, has agreed to acquire Only What You Need Inc. (OWYN), a plant-based protein beverage and functional nutrition company, backed by Purchase Capital. With this acquisition, Simply Good Foods aims to expand its presence in the fast-growing plant-based nutrition category. OWYN’s plant-based protein beverages and functional nutrition products are expected to complement Simply Good Foods’ existing portfolio, which includes Atkins® and Quest®.



Food & Beverage

Danone expands portfolio with acquisition of Functional Formularies

Danone has acquired Functional Formularies, a provider of organic, whole-food enteral feeding formulas, from Swander Pace Capital. Based in the US, Functional Formularies develops formulas designed to provide essential nutrients and support for individuals who may have difficulty consuming solid foods due to various health conditions. Its products are crafted from organic, whole-food ingredients, avoiding artificial additives and preservatives commonly found in traditional nutritional supplements. Transactional details were not disclosed.

Ventura Foods Acquires DYMA Brands

Condiment and oil manufacturer Ventura Foods has reached an agreement to acquire DYMA Brands, maker of liquid portion control and bulk condiments, seasonings and dry blend mixes for the foodservice industry. Headquartered in Atlanta, DYMA Brands has more than 500 employees and operates manufacturing facilities in Bremen and Duluth, Ga.; Bondurant, Iowa; and Visalia, Calif. All DYMA Brands employees and manufacturing locations will be acquired as part of the transaction. DYMA Brands will operate as a wholly owned subsidiary of Ventura Foods.

Coca-Cola Beats Expectations, Raises Revenue Forecast

Coca-Cola, the beverage brand, recently released its quarterly earnings report, surpassing predictions from analysts and adjusting its outlook for full-year organic revenue. The company’s performance sheds light on various market dynamics and consumer trends, offering insights into the beverage industry’s landscape. During the first quarter, Coca-Cola’s global unit case volume witnessed a modest 1% increase, reflecting ongoing consumer demand for its products. Notably, while the company’s North American volume remained relatively flat, CEO James Quincey emphasized the resilience of the U.S. consumer market, despite challenges faced by some low-income customers in maintaining purchasing power.



Grocery & Restaurants

Starbucks Shares Sink as Coffee Chain Slashes Forecast

Starbucks on Tuesday reported weaker-than-expected quarterly earnings and revenue, fueled by a surprise decline in same-store sales. The coffee chain also slashed its forecast for its fiscal 2024 earnings and revenue, predicting that its cafes would keep underperforming for several quarters. “In a highly challenged environment, this quarter’s results do not reflect the power of our brand, our capabilities or the opportunities ahead,” CEO Laxman Narasimhan said in a statement. “It did not meet our expectations, but we understand the specific challenges and opportunities immediately in front of us.” The company’s same-store sales fell 4% as traffic to its cafes declined 6% in the quarter.

Faster service drove Chipotle’s in-store traffic in Q1

Chipotle reported first quarter results after market close Wednesday and the company once again bucked the industry’s declining traffic trends, turning in a plus-5% increase in transactions. Credit Chicken Al Pastor, barbacoa, and improved throughput to meet demand for both. The company also generated 7% comp sales growth, while system sales grew 15% to reach $2.7 billion. CEO Brian Niccol said in-store sales were up by nearly 20% as throughput reached its highest level in four years. That throughput improvement has stemmed from the company’s Project Square One, first put into place during the summer of 2022 to prioritize a focus on operational fundamentals for a workforce that largely dissipated during the pandemic.

Roark Capital completes its purchase of Subway

Roark Capital has completed its acquisition of Subway, the sandwich chain announced Tuesday. “The entire Subway system is excited that our sale to Roark is complete,” Subway CEO John Chidsey said in a statement. “As we look to our future, our growth journey is far from over. With a continued strategic focus on delivering better food and a better guest experience, our next chapter will be the most exciting yet.” The sale was announced in August. There had been speculation that Roark’s ownership of other sandwich chains, most notably Jimmy John’s, might cause regulators to scuttle the deal, but authorities have cleared the way for the deal to be completed, Subway said.

Home & Road

Leggett & Platt Q1 income plummets as sales drop

Industry supplier Leggett & Platt saw its first quarter net income slide 40% to $31.6 million as sales dropped 10% in comparison with the same quarter last year, as sales in the bedding and home furnishings categories continue to struggle. Sales in the company’s bedding and furniture segments continued to weather the industry’s recession. Bedding products sales dropped 15%, while furniture flooring and textiles product sales tumbled 9%. Leggett reported $448 million in sales from its bedding sector, and the company’s furniture, flooring and textiles group posted $333 million in sales. Sales in Leggett’s specialized products, including aerospace, dipped 1% to $315.9 million for the quarter. The company reported overall net sales of $1.1 billion for the quarter ended March 31, a 10% slide compared to $1.2 billion in the same quarter last year.

Kimball acquisition continues to bolster HNI’s earnings in Q1

Office and contract furniture giant HNI reported $588 million in first quarter sales, a 22.7% increase over the same period last year. Just like last quarter, however, it should be noted a bulk of this increase is due to HNI’s purchase of competing contract furniture giant Kimball in March of last year. When looking at organic sales without Kimball, sales fell 8.1%. Gross profit for the quarter was $175.8 million, a 33.6% increase with Kimball and a 0.9% increase organically. Profit margin expanded 320 basis points from last quarter, which the company attributed to favorable price-cost, improved productivity and the impact of the Kimball acquisition. Operating income for the quarter was $29.7 million, more than tripling last year’s $6.4 million.

Flexsteel records another strong quarter in Q3, continuing Q2 momentum

Furniture manufacturer and importer Flexsteel reported $107.2 million in net third quarter sales, an 8.2% increase over last year’s $99.1 million. Last quarter, the company achieved similar growth at 7.5%, which followed two quarters of declines. For the quarter, Flexsteel reported margin expansion to 21.7% compared with 18.8% for the same quarter last year, driven primarily by higher sales and supply chain cost savings. The company recorded sales orders of $111.5 million – a 12.3% increase from last year – and ended the quarter with $4.6 million in cash. Executives said the company will continue to pay down debt in the near-term, but also accumulate cash for potential acquisitions. For the quarter, debt was reduced by $3.7 million, a 21% reduction under its credit line.

Jewelry & Luxury

Mother’s Day Jewelry Spending to Reach $7B, Says NRF

Shoppers plan to spend a little less this Mother’s Day compared with the record-breaking high of last year. Consumers are expected to spend $33.5 billion, down from last year’s $35.7 billion, according to the annual survey by the National Retail Federation and Prosper Insights and Analytics. The forecast would mark the second-highest spend in the history of the survey. “Mother’s Day is a time to celebrate the women who play a meaningful role in our lives,” said NRF President and CEO Matthew Shay. “Retailers know the significant importance of this day and are ready to help their customers with a wide selection of meaningful gifts for loved ones to show their appreciation.” A majority of U.S. adults (84 percent) plan to celebrate the holiday, spending an average of $254.04 on gifts and celebrations.

Pandora Raises Guidance After Strong Q1

Pandora started off its fiscal year on a high note, reporting double-digit revenue growth in Q1. First-quarter revenue was up 17 percent year-over-year at actual exchange rates (18 percent on an organic basis) to 6.83 billion Danish kroner ($980.5 million), with like-for-like sales growth of 11 percent. The new “Be Love” campaign bolstered Pandora’s brand strategy, it said, which aims to reframe consumer perception of the company as a full jewelry brand, rather than just a company that just sells beads and charms. The campaign resonated with customers and drove like-for-like growth across its collections, Pandora said. Like-for-like sales were up 3 percent for its core segment, which includes its “Moments” and “Me” collections and its collaborations.

Luxury buckles up as Q1 signals more turbulence ahead

After a challenging end to the year, luxury’s slowdown continued in the first quarter as challenges persisted for many in China. While there were success stories, some brands — especially those with a more aspirational customer — are battening down the hatches. “If you look at the three French luxury groups, you have Hermès (a sound beat at up 17 per cent), Gucci (huge underperformance, down 18 per cent) and LVMH fashion and leather, in between the two. If you put them together, you get very limited [industry-wide] growth,” says Aurélie Husson-Dumoutier, director of HSBC equity research in luxury and sporting goods, noting that Q2 could be worse as the comparison base toughens. Miu Miu was the indisputable winner. After soaring 82 per cent growth in the fourth quarter of 2023, it grew by another 89 per cent in Q1 of this fiscal year.


Office & Leisure

General Mills Expands Pet Food Portfolio with Acquisition of Edgard & Cooper

General Mills has completed the acquisition of Edgard & Cooper, a European independent premium pet food brand. With this transaction, the company further advances its accelerate strategy, including the prioritization of its core markets, global platforms and local gem brands to drive sustainable, profitable growth and top-tier shareholder returns over the long term, company officials said. “Edgard & Cooper is at the intersection of our accelerate strategy’s core markets and global platforms,” said Jon Nudi, group president of pet, international and North America foodservice at General Mills.

Matthew Bromberg appointed CEO of Unity

Matthew Bromberg has been named as video-gaming company Unity’s new CEO, the company announced. Bromberg will take over the role from interim CEO Jim Whitehurst, starting May 15, 2024. Whitehurst will transfer to the executive chair of Unity’s board, previously held by Roelof Botha who will become independent director of the board. Bromberg has over two decades of experience in the industry, having previously served as COO at Zynga from August 2016 to April 2022. He also held leadership roles at Electronic Arts, including group general manager for BioWare and SVP of strategy and operations for EA Mobile.

Chrissy Teigen and John Legend Launch Premium Pet Food Brand Kismet

Entrepreneurs Chrissy Teigen and John Legend have entered the pet industry with their first-ever joint business venture through the launch of Kismet, a pet lifestyle brand offering premium quality food for dogs, merchandise and content for today’s modern dog families. “Dogs have always been a big part of our lives. We were pet parents before welcoming our children into the world, and we know what that special bond with a dog feels like. In a word, it’s Kismet,” said co-founders Chrissy Teigen and John Legend. “Dogs are silly, playful and messy—and we wanted a brand that represents all of that. Beyond offering exceptionally high quality food to nourish your dog, Kismet is here to provide thoughtfully designed lifestyle goods and engaging content for pets and their people.”

Viking Cruise Line Stocks Surge 10% on Market Debut

Viking, a cruise line renowned for its upscale voyages targeting affluent baby boomers, made a splash on the New York Stock Exchange on May 1st under the ticker symbol “VIK.” Trading began at $26.15 per share, exceeding its initial pricing of $24. The company’s IPO launch aligns with a robust resurgence in cruise bookings, reflecting a growing interest in the industry. Unlike traditional cruise operators, Viking distinguishes itself by offering intimate, high-end experiences devoid of typical cruise ship amenities like casinos and family-centric activities. CEO Torstein Hagen emphasized Viking’s focus on quality over quantity, catering to discerning travelers seeking enriching adventures.

Technology & Internet

Apple Announces Largest-Ever $110 Billion Share Buyback

Apple shares climbed 7% in extended trading on Thursday after the iPhone maker reported fiscal second-quarter earnings that topped estimates and announced an expanded stock buyback program. Apple announced that its board had authorized $110 billion in share repurchases, a 22% increase over last year’s $90 billion authorization. It’s the largest buyback in history, ahead of Apple’s previous repurchases, according to data from Birinyi Associates. However, overall sales fell 4% and iPhone sales fell 10% year over year during the quarter, which Apple attributed to a tough comparison versus last year.


Etsy misses first-quarter sales, profit estimates on lower discretionary demand

Etsy missed Wall Street expectations for first-quarter gross merchandise sales (GMS) and profit on Wednesday, hurt by lower demand for its handcrafted goods and personalized gifts at its online marketplace. Despite Etsy ramping up spending over the past quarters on promotions and advertising, it struggled to keep up with larger retailers in attracting bargain-hungry customers. It is also facing increasing competition from low-cost e-commerce platforms such as Temu. Persistent inflationary pressures have put off customers from spending on big-ticket non-essentials product categories including vintage handicrafts, jewelry and home decor.


Finance & Economy

Private payrolls increased by 192,000 in April, more than expected for resilient labor market

Private payrolls increased at a faster-than-expected pace in April, indicating there are still plenty of tail winds for the U.S. labor market, according to ADP.  A separate report indicated that job openings continue on the decline, falling to their lowest level since early 2021.    The payrolls processing firm reported Wednesday that companies added 192,000 workers for the month, better than the Dow Jones consensus outlook for 183,000 though a slight step down from the upwardly revised 208,000 in March.  At the same time, the firm’s wage measure showed worker pay up 5% from a year ago, a multiyear low that provided some welcome news against multiple other signs showing inflation has proved more resilient than many economists and policymakers had expected.

Consumer confidence drops to 21-month low due to worries about food and gas prices

Consumer confidence fell in April for the third straight month and touched a 21-month low due to the high cost of food and gas and fresh worries about the jobs market.  The consumer-confidence index sank to 97.0 this month from a revised 103.1 in March, the Conference Board said. That’s the lowest level since July 2022.  Consumer confidence tends to signal whether the economy is getting better or worse. Confidence has retreated since the start of the year and sits well below the pre-pandemic high.  The economy is fine by most measures, but still-high inflation and high interest rates have sapped the confidence of consumers.  Buying groceries or going out to eat is expensive and gas prices have risen lately as well. Consumers are also cutting back on purchases of big-ticket items because of high borrowing costs.