The Weekly Consensus

Takin’ Care of Business

Billy Busko

Bachman-Turner Overdrive famously sang, “You get up every morning from your alarm clock’s warning, Take the 8:15 into the city.”  The song is about the daily routine of takin’ care of business (unless you are lucky enough to be a musician).

Elon Musk must be a Bachman-Turner Overdrive fan.  Last week, he sent a pair of similar memos, one to Tesla employees and one to SpaceX employees.  In the first, Mr. Musk wrote, “Anyone who wishes to do remote work must be in the office a minimum of 40 hours.  Those who decline should depart Tesla.”  In the second, Mr. Musk added, “The more senior you are, the more visible must be your presence.  That is why I spent so much time in the factory – so that those on the line could see me working along side them.”

Mr. Musk is in the return-to-work camp along with the likes of Goldman Sachs and Netflix while companies such as Spotify, SAP and 3M are allowing all employees to work remotely.  A recent Microsoft study concluded that 50% of companies interviewed already require or will require employees to return to the office full-time within the year.  However, 52% of employees expressed that they want a full-time remote or hybrid job.

Considering the full picture, a recent Stanford University study showed that in May 2020, the percent of full-time paid days at home was 62% for US employees.  This rate has decreased to 41% in Spring of this year.  While this is a large decrease, the workforce remains very far from returning to the historical “normal” as this number stood at only 5% pre-COVID. A Deloitte survey concluded that the average number of days per week spent working from home has decreased in the past six months from 3.5 to 3.1.  Where does this trend end?  A PwC survey reported that 72% of workers would like to work from home two days per week.

The pros and cons of at-home (or you pick the setting) versus in-office work typically center around the elements of time savings, productivity, schedule flexibility, family needs, cost savings, trust, collaboration, informal interactions, customer interfacing and culture sustainability/creation.  Whatever one’s views, however, prognosticators and surveys generally support that some degree of remote work will outlive the pandemic.

What are some of the ways this shifting work environment impacts the Consumer and Retail sector?  Deloitte forecasts several lasting spending changes although not all are obvious.  Grocery purchases are expected to remain high, and conversely restaurant demand is not expected to return to former levels.  The nesting lifestyle will continue, and spending on the home will remain high.  Relatedly, spending on new clothes will not return to prior levels (in spite of current short-term upticks as consumers emerge from their homes). Perhaps surprisingly, the amount of total consumer driving is not expected to change as remote workers still drive as much as in-office workers.  Also, the amount of in-store or online purchases is independent of where people work as the number of days people work from home has little correlation with how they purchase.

Retailers are adjusting their strategies, too.  Perhaps in part due to what Deloitte surmised, online retailers are opening more brick and mortar locations – many of which are following the Great Migration to the suburbs.  Last month, Amazon announced a new store format, Amazon GO, targeting suburban shoppers.  Wayfair and Warby Parker have also announced suburban store strategies.  Further, retailers who have been suburban focused, such as Target and Dollar General, are doubling down on their strategy.  On the last earnings call, David Simon of mall owner Simon Property Group expressed, “suburbs are where the action is in the future.”

It was the Greek philosopher Heraclitus who said, “The only constant in life is change.”  Bachman-Turner Overdrive’s other hit claimed, “You ain’t seen nothing yet.”

Headline of the Week

Puig to Acquire Byredo

Puig is set to acquire Byredo, the Swedish brand known for its crisp, minimalist branding and high-end, gender-neutral perfumes. While the companies declined to provide financial details of the transaction, recent reports of a potential sale to L’Oréal cited a valuation as high as €1 billion. Founded by Ben Gorham in 2006, fast-growing Byredo has been at the forefront of the surging niche fragrance market thanks to its products like €140 “Gypsy Water” perfume and €65 “Bibliothèque” candles. Byredo reported 2021 sales of €119 million ($134 million), up 63 percent year-on-year and almost double its pre-pandemic turnover of €62 million ($70 million) in 2019. Puig’s move to acquire the brand from Manzanita Capital comes as sales of niche fragrances accelerate, with sales in the super-premium specialist category doubling last year compared with 49 percent growth in the wider fragrance market, according to consultancy NPD.



Apparel & Footwear

Isaac Mizrahi Brand Sold to WHP Global in Deal Valued at $68 Million

Isaac Mizrahi, the brand with the big personality behind it, is aiming for another growth phase through new ownership. Xcel Brands Inc. has sold a 70 percent stake in the Mizrahi brand to WHP Global, a brand management firm that’s been rapidly building up its portfolio, for $46.2 million in cash, valuing the Mizrahi business at $68 million. Xcel retains a 30 percent minority interest in the Isaac Mizrahi brand and continues to manage Mizrahi’s QVC business with WHP Global. Xcel has also entered into a new license agreement to design and distribute Isaac Mizrahi apparel in the U.S. and Canada. Mizrahi continues to serve as chief design officer of his namesake brand. “I’m very excited to harness the power of my brand. I couldn’t ask for better partners,” he said in a statement. The New York-based WHP Global owns Anne Klein, Joseph Abboud, Joe’s Jeans, William Rast, Toys “R” Us, Babies “R” Us and Lotto, the Italian sports apparel and footwear brand. The company also owns WHP+, a direct-to-consumer digital e-commerce platform for brands, and WHP Solutions, a sourcing agency in Asia.

Intermix CEO exits

Almost a year following Gap Inc.’s announcement that it would sell Intermix to private equity firm Altamont Capital Partners, longtime Intermix CEO Jyothi Rao is leaving the business.  Gap Inc. first acquired the apparel retailer in 2012, and ran its physical retail and online business until it sold it to private equity.  Karen Katz was named interim CEO of Intermix.  Prior to her time at Intermix, Rao worked at various positions at Gap. Inc for over a decade, followed by leadership roles at Calvin Klein and Gilt Groupe, according to her LinkedIn. Intermix declined to comment on where Rao is going after her departure from the company.  Interim CEO Katz worked with Neiman Marcus Group in various positions for over three decades, serving her last eight years with the company as CEO before her retirement in 2018.


Mike Ashley’s Frasers Group Beats Boohoo, Buys Missguided

British retail magnate Mike Ashley’s Frasers Group bought troubled fast-fashion retailer Missguided out of administration on Wednesday for 20 million pounds, or $25.16 million, edging out competitors like Boohoo, Shein, and JD Sports. The owner of House of Fraser, Sports Direct, Flannels, Agent Provocateur, and Jack Wills has also purchased Mennace, the men’s wear brand of Missguided. Following completion, Missguided will be operated by the administrator for around eight weeks. After that, the Manchester-based brand will operate as a standalone business within Frasers Group.

Ted Baker rises on report Authentic Brands nearing takeover

Shares in Ted Baker rose last week following a report that Juicy Couture owner Authentic Brands is the British fashion chain’s preferred bidder and that the two firms could agree on a 300 million pound ($379.35 million) deal. Ted Baker put itself up for sale in April, and last week said it had picked a preferred suitor to take forward the process after a flurry of revised proposals.  Sky News reported earlier that Authentic Brands has indicated it is willing to pay more than 150 pence per share for the company. At their peak in 2015, shares of Ted Baker were trading at 2,972 pence apiece. Known for its suits, shirts and dresses with quirky details, Ted Baker is in the middle of a turnaround plan and had rejected several bids from private-equity group Sycamore before launching the sale process. Last week, Ted Baker posted a smaller annual loss and pointed to robust sales in the coming months as demand for office and leisure wear rebounds

Athletic & Sporting Goods Acquires Zimagear, the online lacrosse specialty retailer, announced the acquisition of Zimagear.  Over the past decade, Zimagear has become known for its custom helmet decals, sublimated uniforms and apparel design. During its time in the lacrosse industry, Zimagear has worked with collegiate teams, elite clubs and high school programs. Zimagear is also recognized for its work with Maverik Showtime, providing uniforms and decals for its annual recruiting event.


Bob’s Stores, Eastern Mountain Sports acquired

The U.K. owner of Bob’s Stores and Eastern Mountain Sports has sold the two sporting goods and clothing brands to a company that focuses on intellectual property rights management through divisions in music, video networks and brands.  Frasers Group plc has sold Bob’s and EMS to GoDigital Media Group (GoDigital) for $70 million in cash. Frasers, then trading as Sports Direct International, acquired the two brands out of bankruptcy in 2017 as part of a bid to boost its U.S. presence.  EMS operates some 20 locations in seven U.S. Northeastern states and has a robust e-commerce platform. Bob’s operates 22 stores in the Northeast.

Cosmetics & Pharmacy

Ulta Beauty Q1 sales surge 21%; raises outlook

Ulta Beauty reported strong results for its first quarter with better-than-expected sales and earnings growth, supported by double-digit comparable sales growth across all major categories. On the beauty giant’s earnings call, CEO Dave Kimbell noted that store traffic trends were strong during the quarter as beauty services came back in full. “In the first quarter, our services delivered double-digit growth,” he told analysts. Ulta’s net income increased to $331.4 million, or earnings per share of $6.30, in the quarter ended April 30, compared to $230.3 million, or $4.10 per share, in the year-ago period. Analysts had projected earnings per share of $4.49. Net sales surged 21.0% to $2.3 billion, also much better than analysts expected. Ultra attributed the increase to the “favorable impact of fewer Covid-19 restrictions” compared to the year-ago period. Comparable sales increased 18%, driven by a 10% increase in transactions and a 7.3% increase in average ticket. Ulta raised its outlook for the 2022 fiscal year. It now projects between 6% and 8% year-on-year sales growth, to between $9.35 billion and $9.55 billion. Its previous outlook ranged from $9.05 billion to $9.15 billion.

Swiss Fragrance Maker Firmenich To Merge With DSM

The Netherlands’ DSM is set to take control of powerful Swiss fragrance house Firmenich in a merger that would create a challenger to sector leader Givaudan. Firmenich manufactures top fragrances including CK One, Gucci Bloom, YSL Black Opium, and Flower by Kenzo, working with star noses like Armani Acqua di Gio creator Alberto Morillas or Annick Menardo (the nose behind Dior’s cult Bois D’Argent perfume). Mass-market scents include Axe Body Spray and Persil detergent. The move will allow DSM to complete a transition away from engineering into producing more consumer-facing products like vitamins, while Firmenich’s owners will receive shares as well €3.5 billion ($3.75 billion) in exchange for a controlling stake in the combined group, which will boast revenues of over $12 billion. Givaudan, long the sector leader in fragrances and flavors with scents including Lancôme Idole, Boss Hugo Boss, and Tom Ford Black Orchid reported around $7 billion in annual sales last year.


Discounters & Department Stores

Dollar General names 11 new executives as it springs ahead

Dollar General has named 11 people to executive positions — moves that include the appointment of a trio of new senior vice presidents who will oversee the discounter’s real estate, private label and distribution departments, respectively, according to a Tuesday press release sent by email. The appointments also include eight new vice presidents, who will handle roles in distribution, store operations, merchandising, human resources and information technology, Dollar General said. Dollar General is beefing up its leadership ranks as the chain rapidly expands its store fleet and looks to strengthen its financial performance.

Belk and Conn’s partner for shop-in-shops

Belk and specialty home retailer Conn’s on Wednesday announced they’ve formed a partnership to pilot shop-in-shops in up to 20 of Belk’s department store locations. The new store format, which will be between 10,000 and 25,000 square feet, will launch under a new brand name to be announced at a later date. Beginning this summer, consumers can shop Conn’s products — including in the furniture, home electronics and appliance categories — on Belk’s website and in select stores, according to a company press release. Through the partnership, Belk customers will gain access to Conn’s white-glove, next-day delivery and in-house repair service capabilities.

Dollar General piloting self-checkout-only stores

Dollar General recently started piloting self-checkout as the sole way to make purchases at select stores, Chief Operating Officer Jeff Owen said Thursday during the discount retailer’s first-quarter earnings call. The test will involve about 200 of Dollar General’s more than 18,000 locations throughout the rest of the year, Owen said. The trial comes as the discounter expands self-checkout overall, with plans to have the units, which were in more than 8,000 stores at the end of Q1, in 11,000 stores by the end of the year, Owen added. Dollar General is stepping up the deployment of automation in its stores as the company works to mitigate challenges brought on by persistent supply chain issues and inflation.

Retail turmoil comes for off-price

Off-pricers tend to shrug off many of the challenges that roil other retailers. Their recovery from the pandemic lockdown seemed solid as the pandemic eased last year, for example. Then, their fourth quarter performance led some analysts to warn that the first half of this year could be tough. Now, that’s coming true, to a greater degree than many observers predicted. As even discounters Walmart and Target also learned during their first quarters, inflation is cutting into discretionary spending. The off-price segment’s two largest players, Ross and TJX Companies, missed their own and analysts’ expectations for the first quarter in several metrics.

Macy’s Polaris turnaround gains traction in Q1

Heaping praise on its Polaris turnaround strategy, Macy’s on Thursday said Q1 net sales rose 13.6% year over year to $5.3 billion, with overall comps up 12.4%. Namesake comps rose 10.1%, Bloomingdale’s comps rose 26.9% and Bluemercury comps rose 25.2%. E-commerce rose 2% year over year and 34% compared to 2019, with digital sales penetration down 4 percentage points year over year to 33% of net sales, according to a company press release. Inventory was up 17% year over year and down 10% versus 2019. Gross margin in the quarter expanded to 39.6%, from 38.6% last year. Net income rose 178% to $286 million.



Emerging Consumer Companies

‘Plus is a team sport’: Dia & Co. acquires 11 Honoré in aim to be the go-to retailer for plus-size apparel

Brands have struggled to become a fashion source for women wearing clothing beyond size 12. Now, two retailers that have built out the plus-size category with big-name brands are merging, becoming a one-stop shop. On Wednesday, 7-year-old plus-size fashion e-tailer Dia & Co. announced the acquisition of its luxury fashion-focused counterpart, 11 Honoré. Both companies declined to share the financial specifics of the deal. Both companies have remained strictly focused on catering to women that have been underserved, with Dia & Co. specializing in sizes 10-32 and 11 Honoré offering sizes 12-24. That’s as retailers and brands including Nordstrom and Universal Standard have prioritized providing the same shopping experience to women of all sizes, in rejection of the age-old setup of a separate plus-size department.  According to Dia & Co.’s March 2021 State of Inclusive Fashion Report, 100 million American women, or 67% of the female population, wear size 14 or larger. At the same time, in 2020, sales of styles in sizes 14-plus accounted for just 13% of the women’s apparel market.

Baby brand Coterie raises $23.8 million

Coterie, an emerging baby brand looking to take on the $6.2 billion US diaper market, raised $23.8 million to fund new products and bolster its advertising. The round, which included model Ashley Graham and was led by Align Ventures, brings the company’s total fundraising to $34 million. Launched in 2019, the New York-based company sells premium diapers designed to be more absorbent and faster wicking than the leading brands. The company, which also sells wipes, plans to introduce other products parents need in the nursery, and will expand its advertising beyond platforms such as Facebook and into other avenues including TV.

Omorpho, Portland, Oregon-based fitness apparel brand, raises seed round

Fitness apparel company Omorpho has raised $6 million in seed funding at a $26 million valuation. The investment was led by KB Partners, a venture capital firm focused on the intersection of sports and technology, with participation from Greenchain Capital and Madison Square Garden Sports (MSG Sports). The brand is challenging the perception that lightweight apparel is better for all sports and training. Since launching in November 2021, Omopho has established itself as an innovator in the sportswear market via its gravity sportswear collection powered by MicroLoad. The collection places small amounts of weight across the body, and is designed to make wearers fitter, faster and stronger without limiting natural movement.

Kickoff, personal training app, raises $7 million

Personal training platform Kickoff landed a $7 million investment led by 645 Ventures with support from FJ Labs and Expa. Founded in 2019, Kickoff has raised $11M in total funding. The app helps fitness professionals build digital businesses while linking exercise seekers to certified trainers. Users are paired with a coach based on their goals, schedule, and experience level. After an initial consultation, packages range from $95–365/month. Kickoff co-founder and CEO John Gardner said the platform boasts more than 20K coaches, and that year-over-year revenue has tripled for three consecutive years.



Food & Beverage

General Mills sells Helper and Suddenly Salad units to Eagle Family Foods

General Mills is selling its Helper and Suddenly salad businesses to local peer Eagle Family Foods Group for $610 million, as part of a previously announced portfolio re-vamp.  The net sales generated by the Helper and Suddenly salad businesses totaled approximately $235m in General Mills’ fiscal 2021 year.  Cleveland’s Eagle Family Foods Group can trace its roots back 150 years but has existed in its present form since 2015 when private-equity firm Kelso & Company bought a batch of canned-milk assets – including the Eagle brand – from US food group J.M. Smucker. Its portfolio of products also includes the Popcorn Indiana brand.

Coke to discontinue Honest Tea brand

The Honest Tea beverage brand is being phased out by its corporate parent, the Coca-Cola Company.  It won’t be the end for the brand: offshoot product Honest Kids will remain active after the organic tea line is discontinued at the end of 2022, Coke  announced on Monday.  Honest Tea, which was launched by entrepreneurs Seth Goldman and Barry Nalebuff in 1998 and acquired by Coke in 2011, was initially considered a model for the larger company to incubate and grow smaller companies via Venturing and Emerging Brands (VEB), a group that was initially tasked with finding companies that could eventually become the “next generation of billion dollar brands.”  The brand was highly influential, offering low-sugar and zero-sugar options and helping usher organic beverages into mainstream supermarket aisles. Nevertheless, Honest Tea’s sales have not scaled as Coke had hoped in the years since the acquisition. Honest Kids, which uses aseptic pouches and has been adopted by both foodservice outlets and families, has long outsold its portfolio stablemate.

Bolthouse to acquire Evolution Fresh from Starbucks

Starbucks Coffee has agreed terms with Bolthouse Farms for the sale of its cold-pressed juice brand and business Evolution Fresh, the two companies announced late on Tuesday. Financial details of the transaction, expected to close later this year, were not released.  By joining Bolthouse Farms, itself owned by private equity group Butterfly, Evolution Fresh will have the opportunity to accelerate its growth trajectory.  Based in California, Bolthouse Farms produces plant-based milks, juices, protein drinks, salad dressings, and baby carrots. The company was acquired by Butterfly from The Campbell Soup Company in a $510 million transaction in 2019. The group’s portfolio also includes Chosen Foods, MaryRuth Organics, Orgain, and Pete and Gerry’s Organics.  The sale marks another shakeup in the premium juice category, which has seen market momentum slow over the past decade. Over the past two years, major brands including Naked, Tropicana, Odwalla and Suja have all either been discontinued or sold to private equity groups.



Grocery & Restaurants

Wendy’s biggest investor, Trian, explores taking over chain

The biggest investor in The Wendy’s Co., Trian Fund Management L.P., has explored options that include taking over the burger chain, according to federal filings Tuesday. Trian, controlled by Wendy’s chairman Nelson Peltz, and affiliates own more than 19% of Wendy’s shares. Trian said in its Securities and Exchange Commission filing that it had discussed strategic options with the Dublin, Ohio-based company’s board. Late Tuesday, Wendy’s issued a statement, saying, “The Wendy’s Co.’s board of directors and management team regularly review the company’s strategic priorities and opportunities with the goal of maximizing value for all stockholders. Trian, in its SEC filing, said it advised the board Tuesday that it intended “to explore and evaluate the possibility … alone or with third parties” a potential transaction.

Centre Partners buys Captain D’s again

Private-equity firm Centre Partners has completed its acquisition of Captain D’s seafood again, the company announced Monday. Terms of the deal were not disclosed. New York-based Centre Partners had sold the Nashville, Tenn.-based brand to Sentinel Capital Partners in 2017. Captain D’s, founded in 1969, has more than 500 seafood-focused quick-service restaurants across the United States. Centre Partners said it was partnering with Phil Greifeld, Captain D’s CEO, to re-acquire the chain. It had initially acquired the brand in 2013. Captain D’s owns, operates and franchises restaurants that focus on affordable seafood, and the menu features fish, shrimp and chicken as well as hushpuppies, desserts and Southern-style sweet tea.

FAT Brands acquires Nestle Toll House Café by Chip

FAT Brands announced the acquisition of Nestle Toll House Café by Chip from Crest Foods on Wednesday for an undisclosed amount and will begin rebranding the dessert shops as Great American Cookies, which FAT Brands also owns. Crest Foods currently franchises 85 Nestlé® Toll House Café by Chip cafés in the United States and they will each be folded into the FAT Brands portfolio. “In 2022 we are focused heavily on our deep organic growth pipeline, but we saw great value in making this accretive acquisition,” FAT Brands CEO Andy Wiederhorn said in a statement. “These stores will fold seamlessly into our Quick-Service Division and provide us the opportunity to increase the capacity of our manufacturing business, a key growth objective. To date, acquisitions have been a strong growth vehicle for FAT Brands, and we anticipate the combination of our production and distribution facility and scale to increase the profitability of the franchisees that are joining us in this acquisition.”

Home & Road

RH Q1 results saw a 59 percent jump in this key metric

While the first quarter proved to be difficult for many, Top 100 retailer RH continued on course with another record quarter in the three month period ended April 30.  Net revenues increased 11% to $957 million vs. $861 million in the same period in 2021. Net income came in at $201 million, a 54% increase compared with $131 million last year, while adjusted diluted earnings per share for the quarter were $7.78, a jump of 59% from $4.89. In the executive statement accompanying the results, Gary Friedman, chairman and CEO of RH, said the Corte Madera, Calif.-based retailer saw value in going against the grain, and the quarter’s results show the wisdom of that mindset. “While there has been a widespread return to discounting across our industry as evidenced by the barrage of sale emails filling our inboxes, and there may be short-term risk of market share loss by choosing not to promote, we believe there is certain long-term risk of brand erosion and model destruction once you begin down that path,” Friedman said.

Natuzzi boosts Q1 furniture sales by 16%, but cautions of ‘prudent’ customer

Sales are up for Italian upholstery and case goods manufacturer Natuzzi, but supply chain disruptions and inflation are provoking the company to be cautious. Written orders hit $119.6 million for Q1, an increase of 35.4% over 2021 and a 50% increase over 2020. “The demand of our branded products in the first quarter has been robust,” said Natuzzi Chairman Pasquale Natuzzi. “At the same time, the context around us invites to be extremely prudent. Generalized inflation, persisting supply-chain disruptions and the conflict in Ukraine provide multiple challenges to our supply chain. “Since the month of April, we are seeing a more prudent approach of consumers, mainly because of the current global uncertainty,” said CEO Antonio Achille.

Container Store to open 70-plus stores during next five years

The Container Store exceeded $1 billion in sales in 2021 for the first time in its history.  With a goal of doubling its sales to $2 billion by fiscal 2027, the Texas-based retailer of storage and organization products and solutions said it plans to open 76 stores during the next five years, including two locations this year. The Container Store noted that it currently has only 5% of the $20 billion home storage and organization market. “This growth coupled with our more productive store base, and disciplined expense management is expected to result in low double-digit operating margins over time as inflationary headwinds abate,” said Satish Malhotra, CEO and president, in a statement with the company’s fourth-quarter earnings. The Container Store exceeded the $1 billion mark in net sales for the first time in its history in fiscal 2021 (ended April 2), posting $1.1 billion in consolidated net revenues. Net income was $81.7 million, or $1.62 per share, in fiscal 2021 compared to net income of $58.3 million, or $1.17 per share in fiscal 2020.

Furniture orders fall 26% in March as demand continues to drop

Residential furniture orders fell 26% in March 2022 over March’s 2021 numbers. But, just like in previous months, numbers are still up over what they were in 2020. According to accounting firm Smith Leonard’s monthly Furniture Insights survey, March results brought the year-to-date decline in orders to 21% over 2021. Orders were down for 79% of the participants for both the monthly and year-to-date comparisons. Comparing with 2019, which Smith Leonard says gives a better picture, orders were up 5%, some of which probably reflects price increases that were made in 2021 and 2022. Shipments were up 19% over March 2021 as backlogs are finally beginning to shrink. Shipments were up 4% year-to-date. Some 76% of the participants reported increased shipments year-to-date, a good thing says Smith Leonard as shipments drive eventual cash. As shipments exceeded orders, backlogs fell 4%. Backlogs were still 20% ahead of last year when they were very high at that time.

Jewelry & Luxury

Gucci opens persistent digital space on Roblox

Gucci has opened a persistent digital space on Roblox, per a press release shared with sister publication Marketing Dive. Previously, the luxury brand opened the Gucci Garden in Roblox in May 2021. A virtual piazza, Gucci Town includes Mini Game Heights, a Creative Corner for creating art pieces, an exhibition space called Vault Plaza, a shop that sells digital Gucci items, and a Power-up Place where community members can meet and interact. Users can earn in-experience currency called GG Gems and purchase virtual items. Gucci Town is an extension of the brand’s previous activations in the metaverse and its experimental concept store, Vault. As part of a push to amplify emerging talents, Gucci Town products and content were developed with several Roblox creators.


Rocksbox Founder, CEO Meaghan Rose Steps Down

Meaghan Rose, who founded and served as CEO of Rocksbox, the jewelry subscription service that was acquired by Signet Jewelers last year, left the company she founded a decade ago in April, she announced on LinkedIn. Allison Vigil has taken over as the company’s president. Prior to her new role, Vigil served as the subscription service’s senior vice president, member experience, and vice president, merchandising. She first joined Rocksbox in 2016.

Dubai’s DAMAC Group Acquires De Grisogono

Swiss jewelry brand De Grisogono has a new owner. Dubai-based property development company DAMAC Group announced Tuesday it has acquired the company for an undisclosed price. Hussain Sajwani, founder and chairman of the DAMAC Group, was the top bidder among several others vying for the company. DAMAC Group is looking to expand into the luxury and high-end fashion worlds, so the acquisition was a natural fit, said Sajwani. “A relatively young, but established brand, it has immense potential that needs to be uncovered and leveraged. I believe that with DAMAC’s expertise and know-how, we will be able to bring the brand to a justifiable success, by strengthening its global development and network,” he said.


Office & Leisure

Souq raises $3.3M to manage players’ Web3 game assets

Souq G-Commerce announced it raised a $3.3 million pre-seed funding round as well as the beta test availability of its portfolio manager for Web3 game assets. The funding will be used to further expand Souq’s flagship product for managing and tracking blockchain game assets, supporting players and games across all major blockchains. Souq onboards players in less than 30 seconds, and allows them to track and manage their portfolio across any blockchain or wallet, the company said. Souq was founded in 2021 to provide consumer asset management software in the Web3 gaming space. The focus is on building the first financial market for game economies, enabling players to participate and share in the upside of these virtual worlds. Souq estimates people playing Web3 games have somewhere between four million and eight million wallets with more than $3 billion in crypto assets.

Chewy sales up nearly 14% in Q1

Chewy on Wednesday reported first quarter net sales increased 13.7% year over year to $2.4 billion, according to a company press release.  Chewy beat expectations on both its top and bottom lines during the first quarter as consumers continue to spend on their pets. The pet category experienced a boost in the early days of the pandemic as adoption rates increased and consumers allocated more dollars to their pets. Chewy was particularly well-positioned to benefit from selling both in a category in high demand and online where consumers were doing most of their spending at the time. The pet retailer has been able to hold onto some of those gains, lapping last year’s sales and posting a 50% increase over the same period in 2020.  And despite concerns over inflation intensifying, Chewy executives expect sales growth to continue in the quarter ahead. In the second quarter, the company projects net sales to be between $2.43 billion and $2.46 billion, a 13% to 14% year-over-year increase. The pet category historically has been resilient in times of economic uncertainty because even as consumers pull back spending on some discretionary purchases, they will often continue to spend on their pets.

Technology & Internet

Best Buy says softer demand is sticking around, but company isn’t planning for a recession

Best Buy reported lower sales in the fiscal first-quarter, and the retailer lowered its outlook for the year, citing softer demand that doesn’t appear to be letting up. “That trend has continued into the beginning of Q2 and it does not appear that it will abate in the near-term,” Best Buy CEO Corie Barry said on an analyst call Tuesday. The economic landscape has worsened since the company provided guidance at an investor day. But while Best Buy is factoring that into its outlook, Barry said the company isn’t “planning for a full recession.” Even as consumers watch their budgets, she said, Best Buy is selling merchandise that has become more central to their lives. ″Consumer electronics over time is a stable industry,” Barry said. “The last two years have clearly underscored the importance of tech in people’s lives, so I think it’s important for us to have that as a backdrop.”


Facebook parent Meta COO Sheryl Sandberg is stepping down

Sheryl Sandberg is stepping down from her role as Chief Operating Officer at Meta, the company formerly known as Facebook. Sandberg joined Facebook in early 2008 as the No. 2 to Facebook CEO and co-founder Mark Zuckerberg, and helped turn Facebook into an advertising juggernaut and one of the most powerful companies in the tech industry, with a market cap that topped $1 trillion at one point. Javier Olivan, the company’s chief growth officer, will take over as COO this fall. Sandberg, who informed Zuckerberg of her decision this past weekend, will continue to serve on Meta’s board of directors. “Over the next few months, Mark and I will transition my direct reports,” Sandberg said in a lengthy Facebook post discussing stepping down. Meta is also planning an internal reorganization to go along with the change, Zuckerberg said. Meta has come under fire in recent years for its massive influence, its lack of success in stopping the spread of misinformation and harmful material, and its acquisitions of one-time rivals like Instagram and WhatsApp. Zuckerberg and other execs have been forced to testify before Congress multiple times in the last three years, although Sandberg has largely escaped that spotlight.


Finance & Economy

U.S. productivity tumbles in first quarter; labor costs surge

U.S. worker productivity fell at its steepest pace since 1947 in the first quarter, while growth in unit labor costs accelerated, the government confirmed, signs that strong wage gains will likely persist and contribute to inflation staying uncomfortably high for a while.  Nonfarm productivity, which measures hourly output per worker, tumbled at a 7.3% annualized rate last quarter, the deepest since the third quarter of 1947, the Labor Department said on Thursday. That was an upward revision to the 7.5% pace of decline estimated last month.  Productivity grew at a 6.3% rate in the fourth quarter.  Economists polled by Reuters had expected that the decrease in productivity would be unrevised at a 7.5% rate.

U.S. labor market tightening; unemployment rolls smallest since 1969

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week as demand for labor remained strong, helping to underpin the economy amid rising interest rates and tightening financial conditions.  The weekly unemployment claims report from the Labor Department, the most timely data on the economy’s health, also showed state jobless benefits rolls declining to their lowest level since 1969 in the second-half of May.  The Federal Reserve’s aggressive monetary policy stance as it fights high inflation has fanned fears of a recession. While other data showed private payrolls rose far less than expected in May, that was most likely because of worker shortages. There were over 11 million job openings at the end of April. The U.S. central bank is trying to dampen demand for labor, without pushing the unemployment rate too high.

U.S. importers turn to prayer and the President as West Coast port labor talks begin

For more than two years, Isaac Larian has used every available tool to overcome global supply-chain bottlenecks and keep retailers stocked with enough Bratz and LOL Surprise! dolls to meet pandemic demand. Asked how he’s preparing for this summer’s West Coast port labor talks, the chief executive of Los Angeles-based MGA Entertainment deadpanned, “I’m praying two times a day.” Larian and a half-dozen suppliers for major retailers like Walmart, and Target told Reuters that COVID-related ocean shipping snafus have exhausted the workarounds they’d use in the event that talks between 22,000 workers and employers at 29 West Coast ports hit an impasse after their contract expires on July 1. The International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) employer group met for the first time on Tuesday. Talks are scheduled to continue daily in San Francisco until an agreement is reached. Any deadlock could delay or halt shipments at the No. 1 U.S. seaport in Los Angeles/Long Beach and other Pacific coast gateways that handle 58.1% of goods from the Far East. That would “hurt the already fragile U.S. economy even more,” said Larian, who is among the importers calling on the White House to intercede – as it has in the past.

Households are now spending an estimated $5,000 a year on gasoline

U.S. households are now spending the equivalent of $5,000 a year on gasoline, up from $2,800 a year ago, according to Yardeni Research.  In March, the annual rate of gasoline spending was at $3,800, Yardeni noted. During the week of May 16, the national retail price for gasoline reached a record $4.59 per gallon, the firm said.  Yardeni said consumers’ inflation-adjusted incomes are barely growing, but they have accumulated a lot of savings, and they are charging more on credit cards.  Retail sales data for April was surprisingly strong. On a year-over-year basis, retail sales rose 8.2% for the month.