It is expected that within the next few years China will become the world’s largest luxury goods market, a distinction currently held by the U.S. While on this path for a number of years, it seemed last year that China’s ascent may be paused. However, fundamental economic elements and unique consumer behavior have proven that the pause was short after all.
The Chinese luxury market saw nominal growth of 1% annually from 2012 to 2016. However, a bull run began in 2017 that saw luxury sales grow 26% annually through 2019. When COVID struck, this growth further accelerated to 42% annually through 2021 as consumer spending was channeled toward product purchases. Luxury spending had doubled in just two years, reaching $74 billion. Bain & Company pointed out that China represented $0.21 of every luxury good dollar spent globally.
However, in 2022, the Chinese luxury market reversed itself with a 10% decline, which ended the five-year streak of extraordinary growth. This was the result of strict and extensive COVID lockdowns applied across all city tiers, restricting travel and spending. Shopping mall traffic fell by 35%. Further, stock market declines and decreased property values rattled consumers’ outlook. China’s consumer confidence index, as measured by a state agency, fell to an all-time low (90 vs. 125 the year before). While all luxury categories suffered, it is noteworthy that those with strong online penetration fared much better. For instance, with online penetration of 50%, luxury beauty fell only 6% whereas luxury watches fell 25%.
Offsetting the 2021 headwinds, though, were several important economic factors: 1) disposable income rose 5% per capita, 2) unemployment was comparable to pre-pandemic levels of 5% and 3) consumer price inflation was a modest 2%. McKinsey & Company highlighted another factor: foreign direct investments. Contrary to media reports of multinational companies downsizing in China, outside investments were at an all-time high, increasing 20% to exceed $200 billion.
The stage was set for China to resume its march toward claiming luxury’s largest market share when the government lifted preventive COVID measures in December. This timing was purposeful as it was just ahead of the Lunar New Year in January. The return to normal living has meant a return of social life. This in turn has driven demand for luxury goods. A noted Chinese professor of Marketing and Luxury commented, “As China’s economy recovers, a large population of new wealthy individuals, who use luxury goods to symbolize status and financial success, has emerged.” The founder of a large Chinese brand consultancy firm expressed, “China is a hierarchical and status-focused society in which people like to show off their accessories as a way of gaining prestige.” Further, domestic tourism has immediately returned to 89% of pre-pandemic levels. However, international travel remains restricted. Thus, luxury shopping destinations such as Shanghai, Hong Kong, Macau and Hainan have benefitted. As a side note, Hainan is a tropical island that the government designated as duty-free, which offers substantial savings. Due to high tariffs and duties, luxury good prices in China are typically 10% to 30% higher than in Europe and the U.S. depending on the product category.
All this said, the single largest growth engine for global luxury sales is China’s middle class. And this engine is enormous. According to Bain, China’s middle to high-income population is expected to double from 250 million today to 500 million people by just 2030. With such population growth, Bain, McKinsey, PwC and others predict that China’s luxury sales will experience strong double-digit growth this year. In the meantime, U.S. luxury sales are expected to see a modest decline. Further, the collective thinking projects that China will become the world’s largest luxury market in 2025 with a 25% share or more. As evidence, LVMH and Hermes recently released their 2023 First Quarter results. They posted record sales, which they attributed to China.
For global luxury sales, China is the next China.
Headline of the Week
The industry’s largest bedding supplier, Tempur Sealy International, has signed an agreement to buy the industry’s largest sleep retailer, Mattress Firm, in a stock-and-cash deal valued at $4 billion. The acquisition has been a topic of conversation within the industry for a number of years and had increased in volume and details since the first of this year. The transaction will give Tempur Sealy direct ownership of its largest retail partner and control of Mattress Firm’s more than 2,300 stores and e-commerce site. More importantly, with the acquisition, Tempur Sealy locks down significant market share. The transaction will be funded by about $2.7 billion dollars for cash consideration and $1.3 billion in stock consideration issued to Mattres Firm shareholders, reflecting the issuance of approximately 34.2 million shares of Tempur Sealy common stock based on the closing price of $37.62 per share as of yesterday, May 8. Following the transaction, Mattress Firm’s and Tempur Sealy’s shareholders will own approximately 16.6% and 83.4% of the combined company, respectively, based on the company’s shares outstanding at the time of signing. Tempur Sealy expects to expand its existing board of directors by appointing two mutually agreed Mattress Firm directors to the Tempur Sealy Board following the closing of the transaction. Both boards have approved the acquisition, and the deal is expected to close in the second half of 2024.
Apparel & Footwear
Amid a series of turnaround efforts, Wolverine Worldwide Inc. reaffirmed its 2023 outlook after reporting earnings results that exceeded expectations for the first quarter. The footwear company, which owns the Saucony, Merrell, Sperry and Sweaty Betty brands, among others, reported revenues of $599.4 million, down 2.5 percent compared to the prior year. Adjusted diluted earnings per share were $0.09, down from $0.38 from the same quarter last year. Inventories were $725.9 million, down $19 million from Q4. The results come during what CEO Brendan Hoffman described as a “challenging environment” and in the midst of a broad turnaround effort at the company, which has included a group restructure and layoffs to rightsize business. In late March, Wolverine said it would lay off employees in its Sweaty Betty brand and consolidate office space in London to improve its cost structure. The company also divested its Keds business late last year to focus more on higher-growth brands like Saucony and Sweaty Betty and made Designer Brands Inc. the exclusive licensee for Hush Puppies across all channels in the U.S. as well as Canada. Hoffman said in statement that the company is now “exploring strategic alternatives for Sperry” while continuing “the foundational work needed to position the brand for long-term success.”
The RealReal Inc. is aiming higher — and gaining some traction selling more expensive styles — but the resale pioneer continued to post steep losses for the first quarter. RealReal’s net losses for the quarter totaled $82.5 million, which included a $36.4 million restructuring charge and compared with losses of $57.4 million a year earlier. Adjusted losses before interest, taxes, depreciation and amortization narrowed to $27.3 million from $35.3 million a year earlier. Revenues for the quarter ended March 31 fell 3 percent to $142 million. “We believe our strategy of re-focusing efforts on the higher margin consignment business is starting to deliver results,” said John Koryl, chief executive officer, in a statement. Koryl, a digital veteran and former executive at the Canadian Tire Corp., became CEO in February and moved quickly to streamline that month, laying off 7 percent of the workforce, or about 230 employees, while also closing flagships in San Francisco and Chicago. And he signaled on Monday that more cost cuts would be coming and were important in the company’s push toward profitability.
For Destination XL CEO Harvey Kanter, too much inventory is “the kiss of death.” That fear comes from Kanter’s experience on the merchandising side of the retail industry. “You’re chasing your tail when you get over-inventoried and you can’t bring in fresh receipts,” he told Supply Chain Dive in a late-April interview. “Fresh goods are the lifeblood of retail.” Plenty of retailers might agree, in principle, especially after the inventory flood of 2022. But executing isn’t always easy. In the mind of many, inventory is not seen as a cost or a drag but as a future sale. Destination XL ended fiscal 2022 with its inventories at $93 million, up 13.7% over the past year. While in the double digits, that growth was substantially lower than the apparel sector on the whole. DXL noted that levels were up over the inventory-strained year of 2021, and by the end of 2022 inventory was 9.2% lower than the pre-pandemic year of 2019. Inventory turnover has increased 30% in that time. Kanter said that DXL has “put in place the best AI, [machine learning] and inventory management practice that allows us to most efficiently create unique, relevant sorting in our stores.”
J.Jill completed the refinancing of its Asset-Based Revolving Credit Facility, which was previously set to expire in May 2024. The new facility comes in the form of the sixth amendment to the ABL Credit Agreement with CIT, a division of First Citizens Bank, as the administrative and collateral agent. The facility is comprised of a $40 million revolving credit facility maturing in May 2028. Mark Webb, Chief Financial and Operating Officer of J.Jill, Inc., stated, “With this latest refinancing, we have successfully strengthened our balance sheet through extending the maturities for both our ABL and Term Loan facilities, and increased the financial flexibility we have to deliver total shareholder return.” “CIT has had a successful relationship with J. Jill for more than a decade and again worked closely with leadership to understand their current needs,” said Chris Esposito, managing director and group head for CIT’s Asset-Based Lending business. “We were pleased to deliver financing to support their ongoing operations and future growth.”
Amid the backdrop of declining sales, direct-to-consumer footwear brand Allbirds recently underwent a workforce reduction, co-founder and CEO Joey Zwillinger said on a call with analysts Tuesday. A company filing says that 21 employees globally were terminated in May and related expenses mostly realized in Q2 are expected to be immaterial. Allbirds’ co-founder Tim Brown said on the call that he will no longer act as CEO alongside Zwillinger, but has instead transitioned into the chief innovation officer role. The company on Tuesday also reported that its first-quarter net revenue dropped 13.4% year over year to $54.4 million. Allbirds’ net loss increased from $21.9 million to $35.2 million and gross margin declined from 51.9% to 40.1%. Additionally, the company’s selling, general, and administrative expenses increased 10.3% year over year to $42.8 million. Allbirds’ latest announcements are part of a larger effort to turn around the business. The company in March announced a strategic plan to reignite growth and drive profitability, which includes scaling back its store openings. The plan also focuses on reconnecting with core customers and improving cost savings and capital efficiency.
Athletic & Sporting Goods
Foundation Wellness has acquired Currex, a leading brand of insoles designed for athletes and active individuals. Currex is a top brand in retail running stores across the U.S. and Germany. With the acquisition of Currex, Foundation Wellness said it expands its product offerings and strengthens its position as a top provider of wellness solutions for individuals looking to live active and pain-free lives.
JD Sports Fashion has proposed buying France’s Groupe Courir for an enterprise value of 520 million euros ($572 million), in what would be the British group’s first acquisition since setting out ambitious expansion plans in February. JD currently trades from over 3,400 stores across 32 territories, including Britain, France, Germany, the United States and Australia. Courir, which has 313 stores across six countries in Europe, including France, Spain and Belgium, is currently majority owned by Equistone Partners Europe which acquired it in 2018. In 2022, Courir made a profit of 47.4 million euros on revenue of 609.8 million euros.
Cosmetics & Pharmacy
Embr Labs, who previously raised $7.6M from investors including Bose Ventures, DigiTx Partners, Safar Partners, Joy Ventures and Intel Capital, is announcing a new capital injection. Led by Ghost Tree Partners in collaboration with Aon plx, the company has raised $35M via IP-based dept financing. The new funds will support Embr Lab’s consumer growth strategy via retail and geographic expansion. Back in January the company announced partnerships with leading online retailers such as Amazon, Costco, Target, Walmart, or CVS. Embr’s product is an app and wearable bracelet, designed to help women going through menopause with hot flashes, deploys cooling or warming sensations or “waveforms” to the temperature-sensitive skin on the inside of the wrist, detected by nerve endings known as thermoreceptors.
Thesis, the company that offers a customized approach to cognitive performance products based on your unique brain chemistry, today announced that it has raised over $13.5 million in funding. The company recently closed on a Series A round totaling $8.4 million with investors that included Unilever Ventures, Redo Ventures, Alive VC, Break Trail, NBA superstar Kevin Love and model Kate Bock. Previously the company raised $5.1 million in an undisclosed seed round that included Unilever Ventures, MBX, Trust Ventures and Redo Ventures. The new capital will support Thesis as it makes key executive hires, expands out its product selection and undergoes clinical trials.
Mother Science, a revolutionary biotech skincare brand, launches today with its first proprietary product – Molecular Hero Serum – that harnesses the power of Malassezin, a breakthrough, patented and first-to-market ingredient that is a 10x more powerful antioxidant than Vitamin C. Mother Science’s seed round was led by Female Founders Fund with participation from defy.vc, Founders Fund, KarpReilly, H Venture Partners, NewBound Ventures, BFG Partners, Tuesday Capital, Olive Capital, Liquid 2 Ventures, and Hawktail. Other investors include Drew Houston, Founder and CEO of Dropbox, John Paul DeJoria, Co-Founder of Paul Mitchell, Hedi Gores, Co-Founder of Pressed Juicery, Jared Smith, Co-Founder of Qualtrics, Toni Ko, Founder of NYX, Carlos Cashman, Co-Founder of Thrasio, Cyan Banister, Sabrina Hahn, and Molly DeWolf Swenson.
French clean beauty retailer Oh My Cream has acquired supplement start-up Combeau for an undisclosed amount. Combeau was founded by Erika Fogeiro in 2019 with the aim to combine biotechnology-created formulations with natural ingredients to create sustainable supplements. Oh My Cream was launched in 2013 by Juliette Lévy as a multi-brand beauty concept / store featuring premium and clean labels. The retailer today has a footprint of 26 stores in Europe, of which 12 are in Paris, and an e-commerce site. Six years ago, Oh My Cream also created a private-label skincare brand with roughly 30 stock-keeping units.
Discounters & Department Stores
Since the start of the pandemic, inventory management has been like riding a bucking bronco, with supply and demand mismatched and gripped by uncertainty. In 2021, retailers scrambled to acquire goods, especially ahead of the holidays, while last year many were slashing prices in order to work through a glut of merchandise. In the last year or so, that has been an opportunity for off-price retailers. “Availability of quality branded merchandise is phenomenal,” TJX CEO Ernie Herrman told analysts in February. “We are in a great position to take advantage of the opportunities we are seeing in the marketplace.” Around the same time, Barbara Rentler, CEO of rival Ross, noted that “the buying environment right now is very good.”
Cathy Smith, who was previously chief financial officer at Target, will be Nordstrom’s CFO as of May 29, according to a Wednesday filing with the Securities and Exchange Commission. Smith most recently was CFO at Bright Health Group since 2020. Before Target, where she spent the five years until 2020, she had stints in that role at Express Scripts, Walmart International, Gamestop, Centex, Kennametal, Textron and Raytheon. She replaces Michael Maher, chief accounting officer, who took the role in the interim after the December departure of CFO Anne Bramman. Maher, who arrived in 2009, is leaving to pursue other opportunities but will remain through June 16 to help facilitate a smooth transition, per a company press release.
Dollar Tree plans layoffs at its corporate headquarters. “We can confirm fewer than 90 positions are being eliminated as we establish an outsourced model for our Enterprise Contact Center,” a company spokesperson said in a statement emailed Tuesday to Retail Dive. “We are providing transition support for affected associates, including severance pay and outplacement services.” The discount retailer, which also owns Family Dollar, is based in Chesapeake, Virginia. According to a WARN Notice published last month by the Virginia Employment Commission, the impact date for the affected employees is June 23. On or about that date, Dollar Tree said in a memo to state officials that it expects to lay off about 32 people. Another 29 people will be let go on or about Aug. 25, and a final round of layoffs affecting another 29 people is expected around Oct. 27.
Dollar General is growing its supply chain capacity with the addition of three facilities and the expansion of multiple existing ones, the company said in a press release Tuesday. The additions include a previously announced distribution center in Blair, Nebraska, which can service the company’s traditional and DG Fresh product lines. Dollar General called the Blair facility its “first ground-up dual distribution center” that can service both fresh and traditional assortments, as part of the discounter’s “strategic, multi-phased shift to self-distribution of frozen and refrigerated products.” The company expects the Blair distribution center to employ around 400 people at full capacity. It is part of a $140 million investment in Nebraska’s Washington County, according to the release.
Emerging Consumer Companies
Health tracking ring wearable company Oura has acquired digital identification start-up Proxy in an all-equity deal. Proxy offers digital identity technology that aims to replace keys, cards, badges, apps and passwords. The deal values Proxy at $165 million and the company’s team, including its founders, will join Oura. Oura CEO Tom Hale said the deal expands the company’s leadership in health wearables and signals its ambitions to integrate digital identity technology with its existing hardware and software offerings.
Stio, the mountain lifestyle brand headquartered in Jackson Hole, Wyoming, announced it has raised $20M in growth capital to support new Mountain Studio retail locations, future product category development and a pivot towards a more diversified omnichannel approach. Led by LAGO Innovation Fund, the debt and equity raise comes ahead of an anticipated milestone year for the mountain town brand.
Solo Brands, the direct-to-consumer platform for rapidly growing lifestyle brands, announced it has acquired TerraFlame, a company founded with the mission of creating warm, inviting and ambient spaces around clean burning flame. TerraFlame creates warm and inviting places where customers can roast s’mores and gather with friends and loved ones. It combines eco-friendly and sustainable fireplace fuels with artisan crafted fire features that showcase flame in its truest form. The company sells a range of indoor fire products, including its S’mores By TerraFlame® portable tabletop s’mores roaster designed to be used indoors, while still providing the sound of campfire memories. In addition to its e-commerce platform, TerraFlame has a robust retail network including Target, Pottery Barn, William-Sonoma, and Crate & Barrel.
Olyns, a leader in innovative recycling technologies, announced its Series A financing of $4 million, led by Vanedge Capital. The funding will accelerate Olyns’ development of AI-driven technology and expand its dual recycling and media network. Its dual-purpose Cubes, located at the entrance of popular retailers, provide convenient beverage container recycling to consumers and impactful advertising to brands. Olyns’ unique business model, which funds recycling through advertising, delivers value to retailers, brands, and people. Olyns currently partners with The Coca-Cola Company, PepsiCo, and Mars Wrigley and is expanding its network of recycling Cubes in California, Georgia, and other US states.
Food & Beverage
Luxco, Inc., a subsidiary of Indiana-based whiskey giant MGP Ingredients, has acquired Penelope Bourbon for $105 million upfront, the company announced Monday. The deal also includes a maximum potential payout of $110.8 million by the end of 2025 if “certain performance targets” are achieved. MGP is a major whiskey producer in the U.S., supplying distillate for well known brands while also operating its own portfolio of branded spirits, like Rossville Union and George Remus. With the $475 million acquisition of St.Louis-based spirit producer Luxco in 2021, the company furthered its long-term strategy to focus on higher value-added products. MGP’s acquisition of Penelope builds on the company’s efforts to grow its own brands in the premium-plus American whiskey space. Founded in 2018, Penelope Bourbon is a family-owned whiskey company offering a portfolio of bourbon expressions in the premium-plus segment. It is sold in over 30 states and four countries. The deal comes at a time when higher end whiskey is driving spirits sales. American Whiskey sales were up 10.5%, totaling $5.1 billion in 2022, and more than 60% of the spirits sector’s total revenue was from sales of high-end and super-premium spirits, mainly led by Tequila and American Whiskey. Other whiskey acquisitions have made recent headlines: Pernod Ricard made a play for flavored whiskey with a majority stake in Skrewball Whiskey in March, and the Campari Group purchased Wilderness Trail last year for $600 million.
Post Holdings is unwinding Post Holdings Partnering Corporation, a special purpose acquisition company (SPAC) it formed two years ago, after failing to find an acquisition target by a May 28 deadline. The amount being returned to SPAC shareholders is still being calculated. The last day of trading for the shares is expected to be May 26, with the shares deemed canceled a few days after. Post will lose about $10 million, the amount of money it spent to organize and capitalize the SPAC, said CEO Rob Vitale. Post Holdings Partnering Corporation was created during the height of the SPAC boom in May of 2021, but since then the once-hot market has cooled and many companies that entered the public markets through a SPAC deal have seen their values plummet.
The Coca-Cola Co. has chosen a site in Webster, NY, to build a $650 million plant that will process fairlife branded dairy products. The company plans to break ground in the fall and the plant is scheduled to be operational by the fourth quarter of 2025. “Consumer demand for fairlife products is at an all-time high, and a new production facility will allow us to significantly increase capacity and deliver fairlife to even more households across the country,” said Tim Doelman, chief executive officer of fairlife. “As we continue to grow in the Northeast, Webster’s proximity and access to best-in-class dairy farmers make it an excellent location to support our next phase of growth in the region and beyond.” Founded in 2012, fairlife has formulated a line of products that are made through ultra-filtered milk processing that removes the lactose and much of the sugar and leaves behind more of the protein and calcium. The company offers a range of products that are sold under the fairlife, Core Power, and fairlife Nutrition Plan brands. The Coca-Cola Co. acquired the company in 2020. During an April 24 conference call with securities analysts to discuss Coca-Cola’s first-quarter results, James Robert B. Quincey, chairman and CEO, said the fairlife brand had grown volume double-digits for eight-consecutive quarters and reached $1 billion in sales in 2022.
Grocery & Restaurants
Kroger CEO Rodney McMullen says the company’s legal team has been warming up for quite some time. In a recent interview with Bloomberg, McMullen said lawyers were assembled way out in front of the $24.6 billion merger announcement with Albertsons. He said the team is ready to do whatever it takes to sway any judge if the Federal Trade Commission (FTC) blocks the deal, even if the fight takes months. Kroger and Boise, Idaho-based Albertsons continue to work with the FTC over the merger, and McMullen said everything is on schedule. The grocery chief also believes the best professional advisors are being used and told Bloomberg when it is all said and done a Kroger, Albertsons partnership would create a healthy environment with lower prices. He also said he believes the store divestitures will go smoothly. McMullen said there are a handful of potential buyers who could take on the purchase without much debt. It is not clear whether the entire lot of divested stores, which could be as many as 650, would be sold to one buyer or to multiple companies. Recently the United Food and Commercial Workers International Union (UFCW) voted to reject the Kroger, Albertsons merger.
Ahold Delhaize USA brand Food Lion reported its 42nd consecutive quarter of positive sales growth, and U.S. net sales were $14.7 billion, an increase of 5.7% at constant exchange rates and up 10.5% at actual exchange rates. Ahold USA banners include Food Lion, Giant Food, Stop & Shop, Hannaford, and Martin’s. U.S. comparable sales excluding gasoline increased by 6.2%. Online sales were also up 11.9% in constant currency driven primarily by over 20% growth at Food Lion and The Giant Company, which both opened four new click-and-collect locations during the quarter. Underlying operating margin in the U.S. was 4.8%, up 0.4 percentage points at constant exchange rates from the prior year period, building on the strong performance in the prior quarter and higher on-shelf availability resulting from improving supply chains. “The U.S. brands continue to deliver consistent and strong performance. In the quarter, comparable sales grew by 8.1%, excluding weather and calendar shifts,” said Ahold President and CEO Frans Muller. “We also delivered a strong underlying operating profit, driven by better shelf availability, as supply chains are much improved compared to a year ago.”
Home & Road
In a quarter in which Sleep Country Canada Holdings acquired a new brand, net sales for the sleep retailer held relatively steady at C$206.5 million, a 0.3% dip from C$207 million in the first quarter last year. The company’s same-store sales across its 290-unit retail footprint, slid 6.2% in the quarter ended March 31, compared with the same quarter last year. Sleep Country Canada’s net income dropped 38.5% to C$11.3 million from C$18.4 million in the same period last year. Sleep Country Canada acquired the operation assets of Silk & Snow, a direct-to-consumer ecommerce retailer for $C25.1 million and up to C$19.5 million based on specific earnings during a three-year period. Shortly after the quarter end, the retailer acquired the Canadian assets of Casper Sleep for $20.6 million (USD). In that acquisition, the Sleep Country Canada also invested $20 million in five-year convertible notes that have the option of converting into about 5% of Casper Sleep shares.
Comfort innovation company Purple Innovation saw revenue dip 23.6% for the first quarter, ended March 31. Net revenue for the period was $109.4 million, compared with the year-ago quarter at $143.2 million. That included a 25.3% decline in wholesale revenue and a 22.5% drop in direct-to-consumer revenue, decreases that were primarily attributed to changing demand for home-related products, inflationary pressures and the company’s 50.7% reduction in advertising spend compared with the previous year. Gross margin for the period increased from 36.1% in last year’s Q1 to 39.5% this year. The increase was due to lower materials, labor and freight costs compared with the prior year period. Purple’s operating loss increased from a loss of $18.4 million last year to a loss of $22 million this year, and its net loss nearly doubled year-over-year to a loss of $23.4 million this year as compared with last year’s loss of $13.6 million. The company attributed the difference primarily to its accounting for outstanding warrant liabilities.
Jewelry & Luxury
Despite significant “headwinds,” independent jewelers’ sales have mostly held up, even if they’ve dropped a bit from pandemic levels, agreed participants on the “360-Degree View of 2023” panel at the American Gem Society (AGS) Conclave in Louisville, Ky., that was moderated by this author. Sherry Smith, director of business development for the Edge Retail Academy, said her stats showed that in the first quarter of 2023, both smaller and larger independent stores saw increased sales, while midsize retailers—defined as $3 million to $6 million—took a hit. Overall, independent jewelers’ sales fell 3%, she said, with the average order price down and unit sales flat.
With consumers using omnichannel retail and seeking out more personalized shopping experiences, Zales and Rocksbox have debuted the first fine jewelry rental program among Signet’s brands, giving consumers a high-tech way to try out and possibly buy a high-end look. The Zales x Rocksbox program, which began in late April, is available at 28 Zales locations as part of a pilot that will continue through summer before potentially expanding into the fall and beyond. Here’s how it works: Customers schedule an appointment online for an in-store experience at Zales, where they can select and reserve styles for rental. (They can also browse available pieces online.) They have 14 days to wear the pieces during the rental period, after which they can return or purchase them. Zales will apply the rental fee toward the purchase price.
Luxury goods group Richemont beat expectations on Friday after high demand from Chinese consumers for jewelry and watches boosted sales over the three months to March 31, sending shares to record highs. Sales at the owner of brands such as Cartier and Van Cleef & Arpels grew 22% at constant rates, lifted by strong growth in the Asia Pacific and Europe, as well as brisk growth in the United States. “China is doing much better,” Chairman Johann Rupert said in a call with journalists. Shares rose more than 5% in early trade and hit a record of 158.50 Swiss francs ($178.31). The sector’s biggest luxury players, LVMH and Birkin bag maker Hermes have benefited strongly from a rebound in China following three years of disruptions and closures due to COVID-19 lockdowns, as reflected in first-quarter global sales growth of 17% and 23%, respectively.
Office & Leisure
Rivals Mattel and Hasbro, for the first time, have entered into a multi-year licensing agreement to create co-branded toys and games. Hasbro will create Barbie-branded Monopoly games launching in fall 2023. Mattel will produce Transformers-branded UNO games, slated for release later this year, and Transformers-branded Hot Wheels vehicles, set to debut in early 2024. “The frenemy forays just keep coming,” wrote Carol Spieckerman of Spieckerman Retail in an online discussion about the collaboration last week on RetailWire. “Co-branding makes all kinds of sense for Mattel and Hasbro and licensing is the most agile way to make it happen. Mattel and Hasbro retain unique stables of properties that will pack more punch, and gain wider distribution and awareness when combined.” “I see so many things to like about this collaboration,” wrote Dave Bruno, director of retail market insights at Aptos. “Each partner can leverage their competing but complementary brands and licensing deals to the benefit of each other. Broader reach, greater visibility, and higher revenues for both. The definition of a win-win.” “This is a win-win for both companies as they are licensing very popular properties that consumers are likely to scoop up in large quantities,” wrote Ricardo Belmar, retail transformation thought leader, advisor and strategist.
Iconic piano maker Steinway Musical Instruments has withdrawn its SEC filing to conduct a proposed $100M initial public offering. Steinway first filed for the IPO in April 2022. The company never ended up disclosing terms in subsequent filings, but indicated the shares would be sold by an existing shareholder and that the company would not receive any proceeds from the deal. The IPO would have marked Steinway’s second turn as a public company. Steinway held its first IPO in 1996 and remained listed until it was bought by Paulson & Co. in 2013 for $40 per share. The musical instrument maker had intended to list its shares on NYSE under the symbol STWY. Lead bookrunners included Goldman Sachs, BofA Securities and Barclays, according to the original filing.
Joann President and CEO Wade Miquelon retired Monday, according to a company press release. Chief Customer Officer Chris DiTullio and Chief Financial Officer Scott Sekella will lead the interim Office of the Chief Executive Officer. Joann’s board has begun a search to identify a permanent replacement. Miquelon started at Joann in 2016 as CFO, and was appointed interim CEO in 2018. He took the top position in February 2019. His retirement comes after what Miquelon called a “challenging” fiscal 2023. In the company’s most recent earnings report, full-year net sales declined by 8.3% to $2.2 billion, comp sales declined 8.1% and the company reported a net loss of $201 million, compared to a net income of $56.7 million the year prior. Although a CEO change “seemed inevitable,” it “adds a layer of uncertainty” to the company, according to a Wells Fargo analyst note regarding Miqeulon’s retirement. The retailer saw a surge in sales during the height of COVID-19 while people worked on projects at home. An easing of pandemic restrictions and an increase in inflation, which led to a pullback on discretionary spending, impacted the retailer.
Technology & Internet
Best Buy said Thursday that it will double down on its membership program as consumers buy fewer discretionary items. Starting June 27, the program will have three tiers, including a lower-priced option that offers perks like exclusive discounts and access to hot products, the consumer electronics retailer said. The program will also have a new name: My Best Buy memberships. Best Buy is looking for ways to make money and drive customer loyalty as it deals with a drop in demand. Consumers are buying fewer electronics as they cope with higher prices of food and essentials, and some prioritize spending on travel, restaurants and other services. Plus, during the early years of the pandemic, many shoppers sprang for new laptops, home-theater systems and kitchen appliances — the kinds of purchases that people don’t often repeat in the near term. The company said in March that it expects revenue to range between $43.8 billion and $45.2 billion this fiscal year. The total would represent a drop from $46.3 billion from the year-earlier period, and from $51.8 billion the year before that — but a revenue increase from before the pandemic.
NBCUniversal global advertising chief Linda Yaccarino has resigned to join Twitter as its next chief executive. Twitter owner Elon Musk confirmed the hire in a tweet Friday. “I am excited to welcome Linda Yaccarino as the new CEO of Twitter!” Musk tweeted. He said she “will focus primarily on business operations, while I focus on product design & new technology.” He added, “Looking forward to working with Linda to transform this platform into X, the everything app.” The announcement comes a day after Musk said via Twitter that he would step down from the role and that there would be a new CEO of the social media website, although he didn’t name the new person. Musk said in his tweet the person would start in about six weeks. Yaccarino joined NBCUniversal in 2011 and had risen to the top of the company’s global advertising business. On Monday, the ad chief was slated to take part in NBCUniversal’s Upfront event at Radio City in New York – the sales presentation the company, along with its media peers, makes to the advertising industry every year in May. The longtime ad executive brings a wealth of relationships with top chief marketing officers and other advertising executives to Twitter at a time when the platform has seen advertisers flee – therefore losing billions of dollars – after Musk’s takeover last year.
Finance & Economy
Wholesale prices rose less than expected in April, according to a Labor Department report that provides more hope that inflation is trending lower. The producer price index, a measure of prices for final demand goods and services, increased 0.2%, against the Dow Jones estimate for 0.3%. Excluding food and energy, core PPI also rose 0.2%, in line with expectations. A separate Labor Department report Thursday showed that jobless claims for the week ended May 6 jumped to 264,000, an increase of 22,000 from the previous period.
US credit card debt declined in early 2023 at a slower pace than it typically does in the first quarter of each year, as high prices continued to put pressure on household budgets, according to a new report. Card balances fell by 1.5% in the first quarter from the previous three months, data released by TransUnion show. Balances remain near a record high, and up 19% from a year earlier. The January-March period is typically one when consumers seek to rein in their borrowing after robust spending during the holiday season. In the 10 years since 2013, the average first-quarter drop in credit-card balances has been 3%, according to Federal Reserve data. This year, the TransUnion numbers suggest Americans haven’t managed to cut back that much.