A recent exposé on fast-fashion retailer H&M alleges that the company’s environmental promise is undermined by greenwashing. H&M was using a scorecard system to inform customers about the environmental soundness of each product, but a report by Quartz claims that more than half of the scorecards portrayed products as being better for the environment than they actually were. The report also found some instances in which H&M’s scorecards allegedly gave information about the sustainability of a product that was completely opposite from the truth. H&M has removed the scorecards in the wake of Quartz’s report.
The fast-fashion industry has begun to make changes to its model in response to growing customer focus on environmental and sustainability concerns. Developments in the fast-fashion world, however, have called into question the extent to which customers truly care about the environmental posture of the retailers they patronize.
Discussion Questions: What can other chains with an environmental/sustainable promise learn from what H&M is now dealing with? Do you see this controversy having a lasting impact on how the chain is perceived?
Comments from the RetailWire BrainTrust:
There is nothing worse for a brand than breaking the brand promise. Claiming to be “green” is not enough today, consumers are savvy and will demand transparency. As retailers race to adhere to ESG practices, they will encounter not only issues with measurement accuracy but with profit compromise. The best first step for every manufacturer/retailer is to establish a more sophisticated end to end supply chain. Having a strong planning, merchandising and allocation system will better ensure that the right amount of products get made and go to the right places to the right consumers. Produce less waste upfront.
Lucille DeHart, Principal, MKT Marketing Services/Columbus Consulting
Saying you’re “green” is a little like saying you’re a “cool” brand. Don’t say it, just do it. We’ll be the judges of those two attributes, thank you.
Lee Peterson, EVP Thought Leadership, Marketing, WD Partners
Brands and retailers need to be transparent with their customers and employees on their current practices. We only know about this H&M transgression because they were exposed and their practices were questioned. We need to push brands to be more transparent in how they are defining sustainability and the industry needs to examine and implement standards that all brands should follow. There is no consistency across what is considered sustainable and how brands are measured. We need a single source of truth.
Liza Amlani, Principal and Founder, Retail Strategy Group
Hey, thanks H&M for knocking the global trust index down yet a few more points! I often wonder how often this same kind of thing happens with products labeled organic. If no one is checking for facts, who would know? I’m not surprised that this happened, as they are only doing what they feel that they have to do in order to keep profits up. It is NOT okay, and I hope that this bad PR makes others rethink following similar strategies.
Laura Davis-Taylor, Founder, Branded Ground
Firms should treat sustainability reporting the same as they do their financial reporting. These data ought to be of high integrity and be able to pass an audit by any third-party accounting firm. Lately there are more firms that are starting to integrate their ESG reporting into their annual financial reports. I expect to see much more of this in the near term. H&M would be well advised to get their house in order or face consumer backlash at the register and on social media.
David Spear, Senior Partner, Industry Consulting, Retail, CPG and Hospitality, Teradata
Read the entire RetailWire discussion here:
Apparel & Footwear
Untuckit’s Riccobono Teams With Derek Jeter on New Athletic Line
Chris Riccobono has some high-powered friends in the sports arena. And the Untuckit founder has brought three of the country’s most accomplished athletes together to help him in an ambitious new project — the launch of an athletic brand he hopes will unseat some of the biggest names in sports apparel. Riccobono has teamed with newly inducted Major League Baseball Hall of Famer and former Yankees shortstop Derek Jeter, as well as former hockey star Wayne Gretzky and groundbreaking ballerina Misty Copeland to launch Greatness Wins. Riccobono immediately dismissed the idea of launching an athleisure company “because there are so many of them,” he said. Instead, he zeroed in on a pure athletic brand.
Cath Kidston acquired by ‘branded fashion experts’ Hilco Capital
UK fashion and homewares retailer Cath Kidston has been acquired by investment company Hilco Capital for an undisclosed sum and plans to use its expertise in branded fashion to support its next phase of growth. Cath Kidston’s acquisition by Hilco Capital, which is an operating company of financial services firm Hilco Global will see investment firm Baring Private Equity Asia (BPEA) remove its stake in the business. BPEA, which took full control of the business in 2016, struck a pre-pack insolvency deal in 2020, which included closing all 60 of the company’s UK stores with 900 job losses. Cath Kidston was founded in 1993 by Cath Kidston who sold a stake to private equity firm TA Associates about 12 years ago in a deal reportedly worth GBP100m, according to Sky News.
Authentic Brands Group Drops Lawsuit Against Bolt
Authentic Brands Group has settled and dismissed its lawsuit against Bolt, which will continue to provide ABG with its one-click checkout technology. The apparel brand development and management company also said it plans to become a shareholder of Bolt. Jamie Salter, founder, chairman and chief executive officer of ABG, said in a statement that “ABG looks forward to deepening its ties with Bolt by becoming shareholders under the new leadership of chief executive Maju Kuruvilla, and we are excited to continue exploring broader opportunities with our businesses.” The lawsuit was filed in January, but it was sealed until February and then amended in March. The case claimed that Bolt failed to properly deliver its technology, which cost ABG millions in lost sales. Kuruvilla said Bolt is a “proud partner of ABG and has enjoyed powering one-click checkout for Forever 21 and Lucky Brand.”
PNC Bank Agents American Eagle Outfitters’ New $700MM Senior Secured Asset-Based Revolver
American Eagle Outfitters, Inc. obtained a new five-year $700 million senior secured asset-based revolving credit facility with the PNC Bank, as administrative agent and the other parties thereto. The maximum availability under the ABL Credit Facility for revolving loans in U.S. Dollars is $700 million. The ABL Credit Facility will mature, and lending commitments thereunder will terminate, on June 24, 2027. The proceeds of the ABL Credit Facility will be used for general corporate purposes and working capital for the Company and its subsidiaries. The Company’s obligations under the ABL Credit Agreement are secured by certain assets of the Company. Such assets include inventory, accounts receivable, credit card receivables, certain deposit accounts and certain real property owned by domestic subsidiaries, in each case subject to customary exceptions.
Athletic & Sporting Goods
Vista Outdoor To Acquire Fox Racing
Vista Outdoor, Inc. announced it had entered into a definitive agreement to acquire Irvine, CA.-based Fox Racing, the manufacturer of motocross, mountain bike and lifestyle-related gear, at a purchase price of $540 million, with the potential for an additional $50 million earnout based on the company’s financial performance. Vista said Fox Racing, with its 50-year history, “aligns perfectly with Vista Outdoor’s existing portfolio of leading outdoor brands.” Vista Outdoor’s product segments include CamelBak, Bell, Giro, Camp Chef, Bushnell, Bushnell Golf, Foresight Sports, Stone Glacier, and QuietKat. Fox Racing will be part of Vista Outdoor’s Outdoor Products segment and included in its Outdoor Products Company at the completion of the previously announced separation. Altamont Capital Partners own Fox Racing. Altamont originally invested in Fox via majority recapitalization in 2014.
BSN SPORTS acquires the Eastbay Team Sales Business from Foot Locker Retail, Inc.
BSN SPORTS announced that it has entered into an agreement to acquire substantially all of the assets of the Eastbay Team Sales business from Foot Locker Retail, Inc., a subsidiary of Foot Locker, Inc. A spokesperson from Footlocker explained Team Sales, which is a division of Eastbay under Foot Locker Retail, Inc. — is specific to the business which handles custom uniforms, jerseys and equipment. According to a news release, BSN SPORTS is one of the largest direct marketers and distributors of sporting goods, footwear, apparel and branding to the school and league markets and a division of Varsity Brands. Foot Locker also announced it will fully consolidate the Eastbay.com retail website into the Champs Sports banner, completing the integration of those two banners that began in 2019. Eastbay was founded in 1980 to meet the performance needs of local high school and college athletes in central Wisconsin. Foot Locker, Inc. purchased Eastbay in 1997. Dallas-based BSN SPORTS is a manufacturer and distributor of sporting goods apparel and equipment. It has more than 3,000 employees. It was founded in 1972.
Cosmetics & Pharmacy
Walgreens Boots Alliance Concludes Strategic Review and Decides to Retain Boots Business
Walgreens Boots Alliance, Inc. announced its decision to keep its Boots and No7 Beauty Company businesses under its existing ownership. This marks the conclusion of the review that began in January in line with the Company’s strategic priorities. WBA has been encouraged by productive discussions held with a range of parties, receiving significant interest from prospective buyers. However, since launching the process, the global financial markets have suffered unexpected and dramatic change. As a result of market instability severely impacting financing availability, no third party has been able to make an offer that adequately reflects the high potential value of Boots and No7 Beauty Company. Consequently, WBA has decided that it is in the best interests of shareholders to keep focusing on the further growth and profitability of the two businesses. The decision to retain the businesses has also been supported by the ongoing strong performance and growth of Boots and No7 Beauty Company, which have exceeded expectations despite challenging conditions.
Clean Beauty Start-Up Ogee Closes $7 Million Series A
Ogee closed a $7.07 million Series A led by Birchview Capital LP and included previous investors FreshTracks Capital and Coastal Ventures. Founded in 2014 in Burlington, VT, Ogee focuses on providing high-performance, certified-organic skincare and makeup products made from sustainable ingredients. The latest funding is being used to fuel D2C growth through extensive marketing initiatives, substantially expand the brand’s makeup collection and other product lines, and support the expansion into the brick-and-mortar retail channel in Q4. “We are pleased to have the support of Birchview Capital and all our investors as we look to significantly expand our business, launch new product lines, and grow additional channels as well as international sales. We are particularly excited to expand our already successful collection, bringing a greater assortment of healthy, high-performing ingredients to our community,” said Mark Rice, CEO of Ogee.
Discounters & Department Stores
Walmart merges in-home grocery delivery service with Walmart+
Walmart announced Wednesday that it has rolled its InHome Delivery Service, which brings grocery orders to consumers’ refrigerators, into the retailer’s Walmart+ membership program. The retailer has also expanded InHome to cities including Miami; Dallas; San Francisco; Tampa and Orlando, Florida; Austin, Texas; San Jose, California, in a move that almost doubles the geographic reach of the service. Walmart is streamlining and expanding delivery options as retailers increasingly focus on convenience to strengthen ties with shoppers.
Kohl’s turns its attention to its real estate assets
Kohl’s last week said it’s mulling how to monetize its real estate, according to the press release announcing its rejection of a $53-per-share takeover bid from Franchise Group. In May 2020, the department store conducted a sale-leaseback of its San Bernardino, California, e-commerce fulfillment and distribution center, which generated net proceeds of $193 million after fees and a gain of $127 million, according to its Q2 2020 earnings statement filed with the Securities and Exchange Commission. But Kohl’s said the circumstances were unique and otherwise has fought any notion of sale-leasebacks, in a March filing calling them “an inefficient source of financing that would negatively impact margins by adding unnecessary rent expenses in perpetuity and risk Kohl’s investment-grade rating.” Credit analysts last month also warned the maneuver would rob Kohl’s of assets while adding to its expenses.
Target deepens back-to-school offers amid inventory headaches
Target is offering additional discounts as part of its back-to-school shopping promotion, the retailer announced Wednesday. The retailer has increased its discount for Target Circle to 20% off a one-time purchase for college students from July 3 through Sept. 3. The company is also expanding its Teacher Prep Event to take place from July 17 through Sept. 10, an extension from two weeks to eight weeks. Additionally, Target stores in states with sales-tax holiday events will not charge sales tax. The retailer also recently announced its Target Deal Days event, from July 11 through July 13, which will feature savings across product categories.
Inflation the latest challenge for malls
The late-pandemic recovery observed at malls this year is getting interrupted, most likely by high gas prices and other inflation-related changes in consumer behavior, according to research from foot traffic analytics company Placer.ai. In June, visits to outlet malls fell 6.7% year over year; to open-air lifestyle centers they rose 0.5% and to indoor malls they rose 1.5%. That’s in sharp contrast to earlier this year, when malls’ resurgence was greater. In April, for example, outlet mall visits rose 1.3%, lifestyle center visits rose 11.3% and indoor mall visits rose 19.1%, according to an email from Placer.ai. Across the board, malls have yet to recapture their pre-pandemic strength. Compared to June 2019, visits fell 14.3% at outlet malls, 9.4% at lifestyle centers, and 9.5% at indoor malls, Placer found. In April compared to 2019, visits were down just 5.1% at outlet malls, 4.8% at lifestyle centers, and 1.8% at indoor malls.
Emerging Consumer Companies
Current Foods, plant-based seafood company, raises $18 million
Current Foods, a San Francisco-based plant-based seafood company, raised $18 million in seed funding. The round was co-led by Greatpoint Ventures and Union Grove, both early investors in Beyond Meat, with participation from Electric Feel Ventures, Astanor Ventures, Tenacity, and 12-time NBA All-Star CP3. The company intends to use the funds to accelerate its distribution and product offerings – both domestically and internationally (Japan) through DTC and retailers. Soft launched in spring 2021, Current Foods’ flagship salmon and tuna products are primarily available through B2B across food service and fine dining locations. Their plant-based fish provides a sustainable and healthier solution for current environmental and health crises due to the absence of microplastics and mercury.
Last Crumb, luxury cookie brand, raises $3 million in seed funding
Last Crumb, L.A.-based “luxury” cookie brand, has raised $3 million in seed funding led by Electric Feel Ventures. Last Crumb offers a premium, first-of-its-kind cookie experience inspired by high-end streetwear and designer goods. Utilizing an exclusive “drop” model inspired by luxury streetwear, the company releases a $140 box of 12 cookies on a weekly basis with very limited quantities available to purchase for those on the waitlist. They sell out in less than 10 seconds each week. CEO Matthew Jung said Last Crumb will use the funds to focus on expanding its kitchen and growing the team to keep up with the exciting demand they’ve amassed thus far.
Bedding brand Brooklinen builds a bigger retail presence, secures PE investment
Launched in 2014, Brooklinen quickly grew as a direct-to-consumer bedding brand sold exclusively online. Last week, the brand announced it is continuing its brick-and-mortar retail expansion, planning to add stores in five cities across the US. The announcement comes on the heels of a recent investment from private equity firm Freeman Spogli & Co., which was intended to support the brand’s DTC e-commerce operations and accelerate its growing retail and wholesale businesses. “Anytime we open up a physical retail store, not only do we see that driving business within that market but we also see a bump in e-commerce sales,” said Josh Illig, Brooklinen’s vice president of retail.
Atomo raises $40M for molecular coffee and launches RTD products
Atomo Coffee, maker of a molecular version of the brewed beverage, closed a $40 million Series A funding round with investments from S2G Ventures, AgFunder and Horizons Ventures. The Seattle-based startup plans to use the investment on product development and to scale up manufacturing. The company is also officially launching its first products: ready-to-drink cold brews in Classic Black and Ultra Smooth varieties, and Oat Milk Latte. Atomo is selling the products at its website and will begin shipping July 15, with plans for a retail launch later this year. It aims to improve upon the emissions and water usage of traditional coffee without sacrificing taste by reverse-engineering the popular beverage into its “beanless brews.”
Eclipse Foods raises $40 million to invest in plant-based dairy
Eclipse Foods, the San Francisco-based brand and maker of plant-based products, announced a Series B funding round of more than $40 million. Eclipse launched its ice cream in late 2019, with the plan that their creamy dessert would first win over restaurant diners, then spread into retail and other dairy products. It will now use these funds to expand distribution of its ice cream, work on marketing and messaging, and invest in R&D to help it go from a plant-based ice cream company to a full-service plant-based dairy provider, with products in several different categories. The funding round was led by Sozo Ventures, a firm with strong ties to Japan that the company believes will help it eventually expand into the Asian market. Forerunner Ventures, Initialized Capital, Gaingels and KBW Ventures also participated in this round, which Eclipse says brings its lifetime funding to more than $60 million.
Food & Beverage
Mexico’s FEMSA to acquire pretzel maker Valora for $1.2 billion
Fomento Económico Mexicano, S.A.B. de C.V. (FEMSA) on July 5 announced it has reached a binding agreement with Valora Holding AG under which Monterrey-based FEMSA will acquire Valora in a transaction valued at about $1.2 billion. Based in Muttenz, near Basel in northern Switzerland, Valora operations include a large global artisan pretzel business, one that has been expanding in the United States in recent years. Under the acquisition agreement, FEMSA will launch a public tender cash offer to acquire all of Valora’s publicly held shares for 260 Swiss francs ($269) per share.
Judge Confirms $175M Arbitration Award, 5% Royalty on Future Sales Against Band Energy
Bang Energy maker Vital Pharmaceuticals’ motion to vacate a $175 million arbitration award was denied last week, clearing the way for Orange Bang and Monster Energy Company to collect damages plus a 5% royalty on all future net sales of Bang-branded products. The award — in addition to nearly $10 million in attorney’s fees and costs — had been granted in April after family-owned beverage maker Orange Bang and Monster Energy Company successfully argued to an arbitrator that VPX was liable for breach of contract and trademark infringement by falsely claiming its products contain creatine. The case stems from a 2009 trademark infringement filed by Orange Bang against VPX, which had granted it permission to use the Bang trademark on creatine-based products or other beverages that are marketed exclusively in vitamin and supplement channels.
Diageo acquires Flavor Tech company Vivanda
Diageo, the second largest distiller in the world, has purchased Vivanda, a flavor-matching service, according to a press release. Vivanda created the technology behind the distillers’ “What’s Your Whisky” campaign. The technology, known as FlavorPrint, maps consumers preferences across a wide variety of tastes and aromas. After collection, the technology is then able to recommend brands against the consumer’s preferences, helping to streamline drink exploration and offer a clear path to purchase. Diageo plans to integrate FlavorPrint across its business, not just in whiskey. The acquisition of Vivanda will allow the alcohol giant to point consumers firmly in the direction of its offerings while also collecting data on consumer preferences.
Grocery & Restaurants
Panera Bread ends merger agreement with Danny Meyer’s SPAC
Panera Bread will no longer merge with Danny Meyer’s special purpose acquisition group (or SPAC), HUGS, “in light of unfavorable economic conditions, including the deterioration of the market for initial public offerings” Panera parent company JAB Holding Company announced Friday. The partnership was initially announced in November and the merger would have gone through once Panera had released its IPO, and Meyer would have invested in Panera Brands and been named lead independent director of the newly public company’s board. According to the press release, both Panera and HUGS — a subsidiary of Union Square Hospitality Group — have agreed not to renew the contract which lapsed on June 30. “We have tremendous respect for Danny Meyer, HUGS and its management team and have enjoyed a very collaborative relationship since last Fall,” Niren Chaudhary, CEO of Panera Brands said in a statement. “Unfortunately, the deterioration of capital market conditions over the last several months has led to the realization that an IPO may not be imminent, and as a result we felt it was appropriate not to extend our planned partnership.” Chaudhary clarified that the company is still seeking to go public “as market conditions improve” despite the deal with Meyer falling through.
Subway moves away from its traditional service model with new curated sandwiches
Subway, which arguably created the infinitely customizable assembly-line model that dominates fast-casual dining, is de-emphasizing that service style with the launch of a dozen curated sandwiches that are now front-and-center on the quick-service sandwich chain’s menu. Developed by the chain’s senior vice president of culinary and innovation, Paul Fabre, and his team, the new Subway Series line of sandwiches is intended to streamline production and improve guest satisfaction by offering sandwiches with broad appeal that require minimal decision-making on the part of customers. The company says it’s the biggest menu change in its more than 60-year history. All of the sandwiches are customizable, and customers still have the option to order their own sandwiches from scratch, but from now on they can also order the following items by name or number, divided into four categories that already make up the bulk of Subway’s sales.
Home & Road
How new leadership at Bed Bath & Beyond hopes to right the ship
Clearing out bloated inventories, ‘adjusting’ future receipts, lowering supply chain costs and expanding national brands are on the agenda as Bed Bath & Beyond looks to right the ship. Behind the numbers in Bed Bath & Beyond’s unfortunate Q1 results were some more dismal figures for key product categories. During this morning’s investor call, executives said sales in the bedding, bath and kitchen categories declined by double digits over March, April and May. Those three segments account for roughly 50% of the Bed Bath & Beyond chain’s revenue. “We have a lot to do, and we must do it quickly.” Newly appointed interim CEO Sue Gove said she is concentrating on near-term priorities. The company has retained retail advisory firm Berkeley Research Group (BRG) to focus on cash, balance sheet and inventory optimization. Quarter-to-date comps as far in Q2 are trending in the negative 20’s. For the first quarter ended May 28, comp sales were down 23% on a consolidated basis and down 27% at Bed Bath & Beyond.
Why RH is lowering its guidance for the second half
Top 100 retailer RH announced that it adjusted its fiscal 2022 outlook downward based on macroeconomic trends. The Corte Madera, Calif.-based retailer projects fiscal 2022 net revenue to be down 2% to 5% with adjusted operating margin in the range of 21.0% to 22.0% with second quarter net revenue down 1% to 3% with adjusted operating margin in the range of 23.0% to 23.5%. “The deteriorating macroeconomic environment has resulted in lower-than-expected demand since our prior forecast, and we are updating our outlook, particularly for the second half of the year,” said Gary Friedman, RH’s chairman and CEO. “With mortgage rates double last year’s levels, luxury home sales down 18% in the first quarter, and the Federal Reserve’s forecast for another 175 basis point increase to the Fed Funds Rate by year end, our expectation is that demand will continue to slow throughout the year.”
Bassett Furniture sets record quarter, but wary of economic downturn
Bassett Furniture reported $128.7 million in Q2 sales, an $18.7 million increase over the same quarter in 2021, and more than a $10 million increase over last quarter. Retail sales were $75.6 million, a $13.1 million boost over 2021, and a $10 million boost over last quarter. Wholesale sales climbed $11.5 million to $87.5 million, a 15% increase over 2021. CEO Robert Spilman called it one of the company’s strongest showings ever, primarily crediting its domestic upholstery segment. “Our domestic upholstery assortment continues to be our primary growth driver as our styling, comfort, fabrics, and optionality draw consumers to the Bassett brand,” he said. “Also significant was the 26.7% growth harvested by the combined efforts of our outdoor furniture team.” Nevertheless, the company has challenges – particularly in wood furniture and case goods. On the wholesale side, Spilman said Bassett has had trouble passing along price increases to customers.
Jewelry & Luxury
Luxury Brand Tom Ford Hires Goldman Sachs to Explore Potential Sale
Tom Ford, the luxury brand founded by the former longtime creative director for Gucci, is exploring a potential sale, according to people with knowledge of the matter. Tom Ford is working with investment bank Goldman Sachs Group Inc. on the effort, said the people, who asked to not be identified because the matter isn’t public. A deal could value the company at several billion dollars and may include an option that would give any new owner of Tom Ford the right to work with its founder after the sale, one of the people said. No final decision has been made and Tom Ford could still opt to remain independent.
US Sales Grow 44% for Watches of Switzerland in ‘Tremendous’ Q1
Watches of Switzerland kicked off its fiscal year on a high note, posting record sales and profits in the first quarter. The company has had a “tremendous year” so far, said CEO Brian Duffy. “It is particularly pleasing to have delivered this performance against such strong prior-year comparatives, with the expertise and dedication of my colleagues proving invaluable,” he added. Here are five important takeaways from the company’s recent earnings report, including Duffy’s take on the luxury watch supply problem.
U.S. Expands Sanctions to Russian Gold
The U.S. Department of the Treasury has expanded its sanctions on Russian imports, this time including gold of Russian origin. The Treasury announced Tuesday, June 28, that gold of Russian Federation origin cannot be imported into the United States, effective immediately, unless otherwise licensed or authorized by the Office of Foreign Assets Control (OFAC). Excluded from this latest round of sanctions is gold of Russian origin shipped out of Russia before the sanctions were announced. “Today’s actions …. strike at the heart of Russia’s ability to develop and deploy weapons and technology used for Vladimir Putin’s brutal war of aggression against Ukraine,” said the Treasury. Even prior to the new sanctions, certain gold-related transactions involving Russia were sanctionable under an executive order as well as other Russia-related sanctions, noted the Treasury.
US Platinum Jewelry Demand Starts 2022 on a Strong Note
Despite supply chain challenges and economic obstacles associated with the Russia-Ukraine war, platinum jewelry sales in the U.S. started the year on a strong foot. According to the Platinum Guild International’s most recent Platinum Jewelry Business Review, platinum jewelry ounce sales at PGI’s U.S. partners were up 23 percent year-over-year in the first quarter. Bridal jewelry and gemstone fashion jewelry saw strong momentum during the quarter with double-digit growth compared to the prior-year period, while diamond fashion jewelry sales jumped by double digits, according to PGI. PGI also noted its branded collection, Platinum Born, saw sales double in Q1. All of this came despite the U.S. GDP contracting by an annualized rate of 1.5 percent in Q1, reflecting decreases in private inventory investment, exports, and government spending.
Office & Leisure
Meme stock GameStop jumps on share split bandwagon
GameStop Corp’s board has approved a four-for-one stock split that will make it more affordable for investors to own shares of the video-game retailer at the center of last year’s “meme stock” trading frenzy. Shares of the company shot up 5.8% to $124.49 in extended trading on Wednesday after the announcement. Several major U.S. companies have opted for stock splits over the past two years, including Apple (AAPL.O), Tesla (TSLA.O) and Amazon.com (AMZN.O). A stock split makes shares more affordable for individual investors by lowering the price without affecting the company’s valuation. Shares of GameStop skyrocketed more than 680% in 2021 thanks to retail traders on social media platforms such as Reddit who snapped up heavily shorted stocks in a bid to squeeze out hedge funds betting against them.
Microsoft’s Activision Blizzard bid faces UK antitrust probe
Microsoft’s acquisition of game publisher Activision Blizzard faces antitrust scrutiny in the U.K., where competition regulators said Wednesday they’ve opened an initial inquiry into the $69 billion deal. The Competition and Markets Authority said it has started looking into whether the tie-up would result “in a substantial lessening of competition” in the United Kingdom. The U.S. tech giant announced in January that it was buying Activision Blizzard in a deal that would make it a bigger video game company than Nintendo but raised questions about its anti-competitive effects. Microsoft makes the Xbox gaming system while Activision has created or acquired popular video games including Guitar Hero and the World of Warcraft franchise. Microsoft said it expected the scrutiny and thought it appropriate for regulators to take a closer look at the deal.
Hasbro Partners With NBA & NBPA to Relaunch Starting Lineup
Hasbro, Inc. recently teamed up with the National Basketball Association (NBA) and National Basketball Players Association (NBPA) for the relaunch of Starting Lineup — an iconic sports collectibles brand. The Starting Lineup collectibles will have an exclusive, officially licensed Panini NBA trading card. Eric Nyman, president and COO of Hasbro, said, “The NBA and NBPA are tremendous partners for the return of the Starting Lineup brand, and we cannot wait for fans to experience some of the biggest names in the league as action figures.” The Starting Lineup will have NBA superstars as part of its first wave of figures. It can be pre-ordered starting Sep 22, exclusively on Hasbro Pulse and Fanatics.com and official league stores. For 2022, the company estimates cash spend on content across scripted and unscripted live-action, animated TV, and film in the range of $725 million to $825 million.
Technology & Internet
Amazon plans 2 Prime shopping events this year, with second one in Q4
Amazon plans to hold a second shopping event for Prime members, this one in the fourth quarter, according to a notice viewed by CNBC, marking the first time the company will hold two such events in the same year. It comes as Amazon gears up for Prime Day on July 12 and 13, its big annual sale designed to attract new subscribers. The company recently began notifying select third-party merchants of a “Prime Fall” deal event via its internal seller portal, called Seller Central. The notice doesn’t announce any dates, but instructs sellers to submit limited-time “lightning deals” by July 22, well in advance of the fourth-quarter event. The fall event could help drum up additional sales for Amazon, which announced in April that it had booked the slowest quarterly revenue growth since the dot-com bust in 2001. It could also help retailers clear out some of the extra inventory they’ve accumulated as inflation squeezes shoppers, and they shift their spending to areas like travel and entertainment.
Amazon agrees to stake in Grubhub parent company Just Eat Takeaway.com
Grubhub parent company Just Eat Takeaway announced a commercial agreement with Amazon in which the e-commerce giant has agreed to a small stake in Grubhub, with the option of taking over 2% equity stake or up to a further 13% equity stake in the food delivery company at an undisclosed “formula-based price,” which would be based on specific external targets. In total, Amazon could claim more than 15% stake in Grubhub if they so choose. As part of the agreement, Amazon has added Grubhub perks for Prime members who can now sign up for a free one-year membership of Grubhub+, which gives customers unlimited $0 delivery fees and other rewards and benefits. Grubhub expects the partnership will expand Grubhub+ membership and improve 2022 earnings and cashflow. According to the announcement, Just Eat Takeaway is exploring the partial or full sale of Grubhub, which could open the door to selling Grubhub to Amazon. Both companies have redefined the culture of on-demand convenience for customers, especially during the COVID-19 pandemic.
Finance & Economy
Inflation and recession fears are squeezing some industries more than others
People still appear willing to shell out to travel, go to the movies and have a drink or two, even as surging prices and fears of a recession have them pulling back in other areas. How people spend their money is shifting as the economy slows and inflation pushes prices higher everywhere including gas stations, grocery stores and luxury retail shops. The housing market, for example, is already feeling the pinch. Other industries have long been considered recession proof and may even be enjoying a bump as people start going out again after hunkering down during the pandemic. Still, shoppers everywhere are feeling pressured. In May, an inflation metric that tracks prices on a wide range of goods and services jumped 8.6% from a year ago, the biggest jump since 1981. Consumers’ optimism about their finances and the overall economy sentiment fell to 50.2% in June, its lowest recorded level, according to the University of Michigan’s monthly index.
Payrolls increased 372,000 in June, more than expected, as jobs market defies recession fears
Job growth accelerated at a much faster pace than expected in June, indicating that the main pillar of the U.S. economy remains strong despite pockets of weakness. Nonfarm payrolls increased 372,000 in the month, better than the 250,000 Dow Jones estimate and continuing what has been a strong year for job growth, according to data from the Bureau of Labor Statistics. The unemployment rate was 3.6%, unchanged from May and in line with estimates.
