The Weekly Consensus

The Weekly Consensus

Maeghan Thompson

Story of the Week

Google cancels plans to kill off cookies for advertisers

After years of delay, Google says it will no longer cancel and replace third-party cookies — a practice long used by advertisers — for its internet browser Chrome. Cookies are “a small file or part of a file stored on a World Wide Web user’s computer, created and subsequently read by a website server, and containing personal information (such as a user identification code, customized preferences, or a record of pages visited),” according to Merriam-Webster. The practice has fueled much of the digital advertising ecosystem, providing the ability to track users across multiple sites to target ads. In 2020, Google said it would end support for those cookies by early 2022 once it figured out how to address the needs of users, publishers and advertisers and come up with tools to ease workarounds. But in June 2021, Google pushed back the timeline, giving the digital advertising industry more time to iron out plans for more privacy-conscious targeted ads. Then, in 2022, the company said feedback has shown that advertisers needed more time to transition to Google’s cookie replacement as some pushed back, claiming it would significantly impact their businesses. In a blog post on Monday, the company said it has received feedback, from both advertisers and regulators, that informed its latest decision to cancel the plan to kill off third-party cookies in its browser.

Apparel & Footwear

Deckers Brands’ sales soar 22.1% in Q1 FY25

Deckers Brands, a leading US-based firm in designing, marketing, and distributing innovative footwear, apparel, and accessories, has reported a 22.1 per cent increase in net sales in the first quarter of fiscal 2025 (Q1 FY25), reaching $825.3 million, compared to $675.8 million in the same period last year. On a constant currency basis, net sales rose by 23 per cent. In the direct-to-consumer (DTC) segment, net sales surged by 24.0 per cent to $310.6 million, up from $250.4 million. DTC comparable net sales also saw a significant increase of 21.9 per cent. Wholesale net sales experienced a 21.0 per cent rise, reaching $514.8 million compared to $425.4 million, the company said in a media release.

Skechers’ sales ascend 9.8% in H1 FY24

Footwear brand Skechers has reported a 9.8 per cent increase in sales in the first half of fiscal 2024 (H1 FY24), reaching $4.409 billion. This growth reflects an 11.1 per cent rise in international sales and a 7.8 per cent increase domestically. Wholesale sales saw an increase of $186.2 million, or 7.9 per cent, driven by growth in the AMER region (8.0 per cent), EMEA region (8.4 per cent), and APAC region (6.7 per cent). Wholesale volume increased by 8.3 per cent, though the average selling price declined by 0.4 per cent, the company said in a press release.

Columbia Sportswear posts sales of $1.34 bn in H1 FY24

Columbia Sportswear has reported a 7 per cent decline in net sales in the first half of fiscal 2024 (H1 FY24), reaching $1.340 billion, down from $1.441 billion in the comparable period of FY23. On a constant-currency basis, net sales decreased by 6 per cent. The company’s gross margin remained flat at 49.5 per cent of net sales, identical to the same period in 2023. Selling, general, and administrative expenses totaled $652.0 million, accounting for 48.6 per cent of net sales. This is a slight decrease from the $659.9 million, or 45.8 per cent of net sales, reported for the comparable period in 2023, the company said in a press release.

 

 

Athletic & Sporting Goods

GSM Outdoors Sold to Private Equity Firm

Platinum Equity has signed a definitive agreement to acquire GSM Outdoors from Gridiron Capital. The transaction is expected to be completed in the third quarter of 2024. Gridiron Capital acquired GSM in 2020.  The parties did not disclose the financial terms.  GSM Outdoors CEO Eddie Castro will continue to lead the outdoor and consumer sporting goods company.  GSM, based in Irving, TX, is home to a diverse, growing portfolio of over 50 brands.  Gridiron Capital Managing Partner Kevin Jackson said his firm partnered with Eddie Castro and the GSM management team in 2020 to “build an industry-leading outdoor enthusiast platform.”

Move over Nike, Adidas and Puma—Swiss shoemaker On is dominating the Paris Olympics

Swiss shoemaker On Holding AG has more than tripled the number of athletes wearing its sneakers at the Paris 2024 Olympics, the firm’s first major Games as one of the main challengers to Nike and Adidas.  A cohort of 66 athletes are using the Zurich-based company’s gear, competing in 18 disciplines across track and field, triathlon, marathon and tennis. Each competitor can earn a bonus for medaling in Paris, but executives declined to disclose payment amounts.  Established brands including Nike, Adidas, Puma and Asics have long dominated the kit worn by athletes at the Olympics. Founded in 2010, On is a rare newcomer to the field.  On had about 20 athletes at the Tokyo Olympics, which was heavily impacted by the pandemic. Paris is On’s first real experience as a major brand at one of the world’s biggest athletics events.

JD Sports Completes Acquisition of Hibbett as It Continues to Build Growing US Portfolio

Hibbett is now officially one with JD Sports. According to the athletic-inspired fashion retailer, its acquisition by JD Sports Fashion was completed, officially closing a deal that was first announced in April. Now that the deal is done, Hibbett is officially part of JD and will cease to be a stand-alone publicly traded company. Mike Longo will continue as president and chief executive officer of Hibbett and Jared Briskin will assume the role of chief operating officer. The company will maintain its corporate headquarters in Birmingham, Alabama.

Cosmetics & Pharmacy

American Exchange Group acquires Indie Lee

American Exchange Company has acquired beauty skin care brand Indie Lee, according to a press release. The acquisition marks a “strategic milestone” for American Exchange Group as it continues to build out its presence in the beauty space. In 2023, the company acquired beauty and personal care brands NatureWell, Orlando Pita Play, Txtur and Found Active. Through the deal, Indie Lee will have the opportunity for distribution expansion through American Exchange’s retailer portfolio, per the announcement. “Beauty and personal care are among the fastest-growing categories, and with this acquisition, AXNY Group is poised to become a dominant leader in the space. We see a tremendous opportunity to develop Indie Lee’s direct-to-consumer business by leveraging American Exchange Group’s expertise and resources,” Alen Mamrout, CEO of American Exchange Group, said in a statement

Oddity set to launch medical grade skin care brand

Oddity is gearing up for the launch of a medical grade skin care and body care brand. The line, which is yet to be named, will comprise OTC and prescription-only products designed to treat skin conditions ranging from acne to eczema. According to a report published by the Wall Street Journal, the tech firm is aiming to plug a gap in the market identified via the AI-powered recommendations it runs for its existing brands. This, the third brand to launch, will use vision technology to assess shoppers’ skin remotely and products will be formulated with molecules developed by Oddity Labs.

Summer Fridays lands investment from TSG Consumer Partners

Summer Fridays, the beauty brand founded by influencers Marianna Hewitt and Lauren Ireland in 2018, has received a strategic growth investment from private equity firm TSG Consumer Partners. TSG took a majority stake in the company, though terms of the deal were not disclosed. Hewitt and Ireland will retain a significant stake and continue to lead the company along with the rest of the Summer Fridays management team, including John Heffner, chairman and chief executive officer of Summer Fridays. Prelude Growth Partners, which invested in 2019, will exit its investment in the company as part of the transaction. Terms of Prelude’s minority investment were not disclosed, but at the time, Summer Fridays was said to be on track to do $20 million in retail sales.

 

Discounters & Department Stores

Saks Global confirms layoffs

Following the announcement that Saks Fifth Avenue owner HBC has an agreement to acquire rival Neiman Marcus Group for $2.65 billion, Saks on Wednesday confirmed a shakeup of its operations that will entail an undisclosed number of layoffs. HBC has already said that once the deal closes it would establish an entity dubbed Saks Global, which combines its Saks Fifth Avenue and Saks Off 5th banners with Neiman Marcus Group’s Neiman Marcus and Bergdorf Goodman banners. Its Canadian department store Hudson’s Bay will be its own entity.

Walmart leans into value, touting ‘thousands’ of back-to-school items under $10

As back-to-school shopping kicks off, Walmart is selling “thousands” of back-to-school items for less than $10, the retail giant announced. That includes pens, backpacks and lunchboxes, the retailer said. Walmart is again offering its Classroom Registry tool on its website and mobile app to help teachers make a list of class supplies, buy items from the list and share the list with others. Shoppers can purchase items from teachers’ registries by searching on Walmart for teachers’ last names and states, the press release said. The retailer also introduced a “one-click food basket” this year, which advertises two weeks of lunches for about $2 per day. The offering, which is available through Sept. 15, includes ingredients for PB&Js, as well as juice, snacks and other affordable items.

Belk shrinks debt load by nearly $1B

Belk is reducing its debt load by more than $950 million, while also amassing about $485 million via new loans. Some of Belk’s lenders, including KKR and Hein Park, will have a controlling interest in the business, the department store said Tuesday. The new financing includes $275 million in secured term loans and a $210 million securitization facility secured by revenue streams from Belk’s loyalty credit card, according to a company press release. The transaction with Belk’s first and second lien lenders and equity sponsor Sycamore Partners also extends the maturity date of its existing asset-based credit facility by five years, per the release.

Ross Stores adds 24 new locations in 2 months

Ross announced it has opened 24 new stores in June and July. The retailer said it opened 21 stores under its namesake banner and three DD’s Discount stores in 17 states, according to a company press release. “These recent openings reflect our ongoing plans to continue building our presence in both existing and newer markets,” Richard Lietz, Ross’s executive vice president of property development, said in a statement. “This summer, Ross expanded its footprint in several existing markets and added locations in Michigan, Minnesota, and New York, states we entered last year, while DD’s also expanded its presence in Colorado, Pennsylvania, and Texas.” The company, which opened 18 new stores overall during Q1, said as of Monday it operated 1,795 Ross locations in 43 states, Washington, D.C. and Guam, and 353 DD’s Discounts in 22 states, giving the retailer a physical presence of 2,148 total stores.

 

 

Emerging Consumer Companies

Jake Paul’s men’s personal care brand W raises $14 million in Series A funding

W, the men’s personal care brand founded by professional boxer Jake Paul, announced on Tuesday that it has raised $14 million in Series A funding, led by Shrug Capital. This latest round of financing brings W’s valuation to over $150 million. The funding includes seed financing and incubation from Anti Fund, with prominent co-investors such as Range Group, 305 Ventures, Uphonest Capital, Quiet Capital, and Palm Tree Crew. Notable individual investors include Celsius’ CEO John Fieldly, Fanatic’s CEO Michael Rubin, rapper Lil Durk, tennis star Nick Kyrgios, Naomi Osaka, and entrepreneurs Carter Reum and Paris Hilton.

Digestiva Closes $18.4 million Series A Financing

Digestiva, a food biotech company, successfully closed its Series A equity financing round, raising $18.4 million. This milestone was led by Magdalena, a global leader in sugar cane processing, with participation from UC Investments, and existing investors The March Fund and Astanor. The company’s enzyme technology platform was initially discovered by co-founder Dr. Wilson Mak, in the lab of UC Davis faculty member Dr. Justin Siegel, a global leader in enzyme discovery, development, and design.

 

RxDiet raises $3 million, hopes to drive down healthcare with food as medicine

RxDiet, a New York-based company focused on Food as Medicine, announced today a $3 million seed funding round led by Giant Ventures, with significant participation from Better Ventures, Form Life, and notable angel investors including Immad Akhund (Mercury Bank). RxDiet uses AI to create medically tailored food plans, with fresh ingredients and behavioral support, and deliver them directly to patients with chronic illnesses like diabetes and hypertension. Their platform personalizes meal plans based on individual medical needs and taste preferences, offering a cost-effective alternative to existing programs that reduces wastage. RxDiet will utilize the new funding to expand their team, strengthen their grocery network, and offer their services to a wider range of healthcare payers.

 

 

Food & Beverage

Califia Farms acquires Uproot in bid toward its goal of more sustainable packaging

Plant-based beverage brand Califia Farms announced its acquisition of Uproot Inc., a plant milk dispenser system for food service. The financial details were not disclosed. Uproot is expected to allow Califia to reach more consumers by expanding its presence in food service locations as Uproot’s turnkey technology dispenses plant-based milk to reduce packaging waste. The acquisition comes a few months after the California-based plant milk maker made another major move in a bid toward more sustainable packaging, transitioning all of its bottles in the U.S. and Canada to 100% recycled plastic in February.

Coca-Cola tops earnings estimates, hikes full-year outlook as global demand rises

Coca-Cola raised its full-year outlook as global demand for its drinks rose in the second quarter. For 2024, Coke now expects organic revenue growth of 9% to 10%, up from its prior forecast of 8% to 9%. The company also raised its outlook for comparable earnings growth to a range of 5% to 6% from a previous range of 4% to 5%. “Our updated 2024 guidance reflects the momentum of our business in the first half of the year and our confidence in our ability to execute on our plans during the second half of this year,” CFO John Murphy said on Coke’s conference call.

Manna Tree takes controlling interest in Verde Farms

Private equity firm Manna Tree has assumed controlling interest in Boston-based Verde Farms, a beef company specializing in organic and grass-fed products. Manna Tree’s first investment in the company was in early 2020. Financial terms of the new transaction were not disclosed. “At Manna Tree, we believe that by investing in the next generation of health-and-wellness-focused companies, we will empower consumers to live better, longer lives, and Verde perfectly delivers that vision,” said Steve Young, managing partner of Manna Tree, who also is a Verde Farms board member. “Through its organic, grass-fed, regeneratively farmed beef, Verde offers consumers a more nutrient-dense protein option, and we believe the company is well positioned to serve the growing demand for cleaner, more sustainable food choices by today’s consumer.”

Nestle cuts sales guidance amid struggle to win back shoppers

Nestle SA lowered its sales outlook for the year as consumers balk at price increases on branded food, water and pet-care products that had driven revenue growth during a post-pandemic bout of inflation. The Swiss company said it now expects sales to grow at least 3%, lower than the roughly 4% previously targeted. The world’s biggest food company has struggled to win back market share after shoppers switched to cheaper alternatives. Revenue rose 2.1% in the first half, compared with the 2.5% expected by analysts, the maker of Nespresso and Purina said. Almost all of that growth came from higher pricing, which sharply slowed in the second quarter.

 

 

Grocery & Restaurants

Red Lobster moves closer to bankruptcy sale to lenders

Red Lobster is moving closer to a bankruptcy sale that would put lenders, including Fortress Investment Group, in charge of the company after no other bidders stepped up with an offer to repay the struggling U.S. restaurant chain’s debt, according to court documents. Red Lobster filed for bankruptcy in Florida in May with about $300 million in debt and a plan to close some restaurants and sell itself to its lenders or a higher bidder. The company, which took an additional $100 million loan to fund its restructuring, had planned to conduct an auction, but it said in a court filing that it had received no qualified bids.

Chipotle continues to gain traffic, market share

During Chipotle’s second quarter earnings call Wednesday after market, CEO Brian Niccol summed up the company’s results in a single word: “Outstanding.” Such a statement isn’t really disputable – the chain’s revenue jumped 18.2% year-over-year, while same-store sales increased by 11.1% driven in large part by an 8.7% increase in transactions. The chain’s traffic growth continues to buck overall industry trends as inflation-weary consumers have pulled back on their restaurant spending in favor of cooking at home. Many quick-service chains have responded to this pullback by launching a value war, with meal deals and bundles ranging from $2 to $7. Such activity has proven to help slightly move the needle at those chains, but it hasn’t impacted Chipotle’s business at all. “We’re gaining market share every month. As we stay focused on executing our core business, we see results not only in comps and transactions, but also with the market share gains we’re making,” Niccol said during the call. “Chipotle is not built on promotional prices; it’s built on great culinary exactly how you want it with great speed. We keep executing and continue to get market share and our value scores continue to move up. We’re going to play our offense throughout this whole process.”

Krispy Kreme sells majority of Insomnia Cookies for $172.4 million

Krispy Kreme has sold its majority stake in Insomnia Cookies to private equity firms Verlinvest and Mistral Equity Partners, the doughnut chain announced Monday. It will remain a minority shareholder, retaining around 34% of the cookie company. Krispy Kreme received $127.4 million for the sale and expects an additional $45 million in the coming weeks as Insomnia Cookies’ debt is refinanced, for a total of $172.4 million. The move isn’t exactly a surprise: Krispy Kreme said last October that it was considering “strategic alternatives” for Insomnia Cookies, including a sale. Krispy Kreme bought Insomnia Cookies in 2018, and since then Insomnia’s revenue has tripled. The sale puts its enterprise value at $350 million, double what it was when Krispy Kreme bought it. The doughnut chain, a subsidiary of JAB Holdings, said it would use the proceeds of the sale to pay down debt as well as expand.

Home & Road

Conn’s Files For Bankruptcy, Posts 70 Store Closings

Conn’s HomePlus has filed for Chapter 11 protection with the United States Bankruptcy Court for the Southern District of Texas after revealing a store closing plan for 70 locations. However, if it is to emerge, a buyer may need to step forward. The Conn’s voluntary filing was made on July 23. By press time, the company had made no statement about the Chapter 11 filing. In reviewing the case, Pulse Ratings noted that the company has, in its declarations to the court, cited significant headwinds in the market and a shift in purchasing patterns after the COVID-19 pandemic as contributors to the challenges that led up to the bankruptcy. Then, a merger with W.S. Badcock didn’t go as planned and strained liquidity. Pulse Ratings also noted that Conn’s made a separate filing to conduct going-out-of-business sales at all its stores by October 31 if need be.

Overstock.com is back from the dead

Overstock.com, which was one of the biggest names in e-commerce, is being revived just a year after its new owners ditched the name in favor of Bed Bath & Beyond.

The relaunched Overstock.com sells a lot of stuff similar to its previous incarnation, including indoor and outdoor furniture, home improvement tools and jewelry, but with a bigger emphasis on closeout and liquidation deals. Its sister site will still use the Bed Bath & Beyond name and continue to operate with a refined focus on home goods and as a destination for registries for weddings and other life events. In June 2023, Overstock.com changed its name to Bed Bath & Beyond after Overstock’s parent company bought the bankrupt retailer’s brand’s name and domain in a failed effort to benefit from its name recognition. A few months later, Overstock’s corporate name was changed to Beyond Inc.

Jewelry & Luxury

Hodinkee Will Stop Selling Watches

Hodinkee, the watch blog that had morphed into a timepiece e-tailer, will now return to being a watch blog. “Moving forward Hodinkee’s primary focus will once again be creating…watch content,” founder Benjamin Clymer wrote on the site yesterday. “The last few years have been challenging…. Suffice it to say, we’ve learned a lot. And now it’s time to get back to basics. “As of today, we aren’t going to be adding any more pre-owned watches to Hodinkee or Crown & Caliber [a watch e-tailer owned by Hodinkee]. Nor will we add any new models to our modern watch business. Instead, we’ll be dedicating our efforts to evolving our editorial into something truly special and industry-leading.” Hodinkee was founded in 2008 “out of pure boredom at work,” Clymer once wrote on the site. As it became a recognized name in the watch space, its vision expanded.

LVMH Admits Tiffany Is Under “Pressure”

A decline in aspirational spending and a shift in sales strategy have hurt Tiffany & Co. in the United States, LVMH chief financial officer Jean-Jacques Guiony said during LVMH’s July 23 earnings call, according to a SeekingAlpha transcript. “The pressure is there on Tiffany,” Guiony told analysts. The first problem, he said, is a general slowdown in aspirational spending in the United States, with customers feeling the pinch of inflation and high interest rates. Another factor has been lower sales for bridal: “Bridal, particularly in the U.S., is an extremely large part or a disproportionately large part of the portfolio for Tiffany in the U.S. compared to other geographies, and it’s really under pressure. So we get really negative pressure from that.”

De Beers Receives Cash Infusion Amid Production Cuts

De Beers’ depleted coffers just received a much-needed boost with the sale of some Australian iron ore royalty rights for $150 million. The company announced that Taurus Funds Management has purchased De Beers Exploration Australia, which owns the right to collect royalties from the Onslow Iron project in the Pilbara region of Western Australia. The price includes $125 million cash up front, and as much as $25 million in deferred consideration. De Beers discovered the iron ore deposit while unsuccessfully prospecting for diamonds in Australia. It eventually sold the property for cash and royalty rights. De Beers is now disposing of those rights as part of its focus on “streamlining the business and divesting non-core assets in support of our Origins strategy,” said a company statement. Yet even as De Beers receives this pile of cash, there are new hints the diamond giant may be facing more pain ahead.

Jewelry Business Closures Increasing, JBT Says

The Jewelers Board of Trade (JBT) reported 420 North American jewelry business discontinuances in the first half of 2024, a 30% leap from the prior year (when closures decreased). Of those businesses, 341 were retailers, 51 were wholesalers, and 28 were manufacturers. According to the JBT, a company experiences a discontinuance when it ceases operations, merges or gets acquired, or files for bankruptcy. The number of businesses entering the industry fell 22% in the first half, compared with the same period in 2023, the JBT said. It added 184 new businesses to its roster during the first six months of 2024—141 retailers, 30 wholesalers, and 13 manufacturers.

Office & Leisure

Casino operator Bally’s to be bought by top investor in $4.6 bln deal

Bally’s Corporation has agreed to be acquired by its largest stockholder, Standard General, in a deal that values the casino and gaming company at $4.6 billion, including debt. The hedge fund already owns nearly 23% stake and has agreed to pay $18.25 per share in cash for the rest of the shares. After the deal, Bally’s will combine with the Queen Casino & Entertainment, a regional casino operator majority-owned by funds managed by Standard General. “The addition of the complementary QC&E assets builds upon the Company’s attractive growth profile,” said Soo Kim, chairman at Bally’s and managing partner at Standard General.

Hasbro beats second-quarter estimates, goes ‘all in’ on digital gaming segment

Toy company Hasbro beat Wall Street expectations for the second quarter, thanks in part to growth in its digital gaming segment. Hasbro reported earnings per share of $1.22 adjusted vs. 78 cents expected, along with revenue of $995 million vs. $944 million expected. The company also reported a net income of $138.5 million, or 99 cents per share, for the quarter. That marked a significant gain from the same quarter last year, when Hasbro reported a net loss of $235 million, or $1.69 per share. Though Hasbro’s revenue declined 18% overall for the quarter, its Wizards of the Coast and digital gaming segment saw 20% revenue growth.

Technology & Internet

FTC launches probe into ‘surveillance pricing’ that it says links cost to customer data

The Federal Trade Commission is launching an investigation into so-called surveillance pricing, seeking more information about how artificial intelligence is used to change pricing rapidly based on data about customer behavior and characteristics. The FTC says the practice allows companies to charge different customers, different prices. The agency is serving eight companies with a mandatory request for information — all companies it says advertise their AI and other tech tools along with a trove of customer information to target prices to individual customers. The list includes Mastercard, JPMorgan Chase, Accenture and consulting giant McKinsey. It also includes software firm Task, which counts McDonald’s and Starbucks as clients; Revionics, which works with Home Depot, Tractor Supply and grocery chain Hannaford; Bloomreach, which services FreshDirect, Total Wine and Puma; and Pros, which was named Microsoft’s internet service vendor of the year this year. “Firms that harvest Americans’ personal data can put people’s privacy at risk,” FTC Chair Lina Khan said in a news release. “Now firms could be exploiting this vast trove of personal information to charge people higher prices.”

 

Finance & Economy

U.S. economy grew at a 2.8% pace in the second quarter, much more than expected

Economic activity in the U.S. was considerably stronger than expected during the second quarter, according to an initial estimate from the Commerce Department.  Real gross domestic product, a measure of all the goods and services produced during the April-through-June period, increased at a 2.8% annualized pace adjusted for seasonality and inflation. Economists surveyed by Dow Jones had been looking for growth of 2.1% following a 1.4% increase in the first quarter.  Consumer spending helped propel the growth number higher, as did contributions from private inventory investment and nonresidential fixed investment.  Personal consumption expenditures, the main proxy in the Bureau of Economic Analysis report for consumer activity, increased 2.3% for the quarter, up from the 1.5% acceleration in Q1. Both services and goods spending saw solid increases for the quarter.

 

Fed’s key inflation gauge rose 2.5% in June from a year ago, easing path to rate cut

An important gauge for the Federal Reserve showed inflation eased slightly from a year ago in June, helping to open the way for a widely anticipated September interest rate cut. The personal consumption expenditures price index increased 0.1% on the month and was up 2.5% from a year ago, in line with Dow Jones estimates, the Commerce Department reported Friday. The year-over-year gain in May was 2.6%, while the monthly measure was unchanged. Fed officials use the PCE measure as their main baseline to gauge inflation, which continues to run above the central bank’s 2% long-range target. Core inflation, which excludes food and energy, showed a monthly increase of 0.2% and 2.6% on the year, both also in line with expectations. Policymakers focus even more on core as a better gauge of longer-run trends as gas and groceries costs tend to fluctuate more than other items.