Despite the economic turmoil brought on by the COVID-19 pandemic, one segment of the consumer products industry continues to race ahead as though nothing is wrong: plant-based foods. Leaders like Impossible Foods and Beyond Meat continue to grow but are now facing increased competition from other emerging plant-based food brands and new products and lines churned out by food industry giants. The heightened competition in this space is backed by massive amounts of investment, with investors ranging from celebrities, to pension funds, traditional venture capital firms, and food conglomerates. Plant-based food startups have raised $1.4 billion in the first seven months of 2020, up from $457 million in all of 2019. According to Meticulous Market Research, the plant-based foods market is expected to increase at an 11.9% CAGR through 2027 to reach $74.2 billion. All the new competitors want a bite.
A number of venture investors are likely seeking to replicate the success of Beyond Meat, which famously had one the most successful IPO’s in history, trading up over 840% from its initial IPO price in under three months. Currently, Beyond Meat (NASDAQ: BYND) is the only publicly traded company with products exclusive to the plant-based food space. However, it will soon have company. A manufacturer, Ittella International Inc., recently entered into a definitive merger agreement with special purpose acquisition company (SPAC) Forum Merger II Corporation to sell plant-based foods under the brand name Tattooed Chef Inc. The company will be available to trade on the NASDAQ later this year following its business combination.
Self-described as a “plant-based food and lifestyle brand, serving plant-based foods for people who give a crop,” Tattooed Chef is looking for the proceeds from its IPO to help it expand distribution, develop new and innovative foods, invest in its infrastructure, and increase brand awareness. The company has a unique portfolio of products, including Smoothie Bowls, Organic Acai Bowls, Cauliflower Pizza, and Buffalo Cauliflower Burgers, and a strong record of sales to defend its ambitious growth projections. Its products are already available in certain Costco and Walmart stores, and it expects to be in 50% of all Walmart stores by the end of this year. According to an 8-K that Forum Merger II Corp filed with the SEC last month, the company expects to have an initial enterprise value of nearly $500 million at IPO, and revenue of $222 million by the end of 2021.
Tattooed Chef is only one instance of the plant-based food market’s new entrants. Discount grocer Aldi is also leaning into the trend, and now boasts a wide array of plant-based food options, including brands such as Amy’s Kitchen, Beyond Meat, Good Foods, Gardein, Burman’s, and JUST, as well as its own line of plant-based products called Aldi’s Earth Grown foods. Other grocers are also tapping into plant-based foods’ momentum; a recent report by the Plant Based Foods Association (PBFA) noted that seven national grocery chains have begun placing plant-based meats in their respective meat departments, a move that the PBFA estimates increases the sales of the category by 23% on average versus merchandising meat substitutes separately. Grocers are also going after plant-based food customers with their own private labels. Kroger-owned King Scoopers was recently ranked first by the Good Food Institute for its selection of plant-based private label products, with 38 different items.
In just a few years, plant-based brands like Beyond Meat and Impossible Foods have become hot commodities at leading grocers nationwide. Their success has invited this new wave of copycats. Who will win in the ensuing competitive battle? Health-conscious consumers, who now have more and more options. And cows.
Headlines of the Week
The US economy contracted at the sharpest rate on record in the second quarter this year, affirming fears that the coronavirus pandemic and measures to contain it drove a historic plunge in consumer and business activity. Market participants were bracing for an ugly second-quarter print, with the coronavirus pandemic forcing business closures and disrupting daily life for much of the April through June period. At 32.9%, the second-quarter annualized contraction marked by far the worst plunge ever recorded, based on Bureau of Economic Analysis data spanning back to 1947. Before the pandemic, the worst GDP print on record was in the first quarter of 1958, when GDP fell 10.0% on an annualized basis.
Home rental unicorn Airbnb opened 2020 with plans to go public, until the coronavirus outbreak brought leisure travel to a halt and slashed business by about 80% in six weeks. But after a sudden return of demand in recent weeks, the IPO plans have come back as well, Airbnb Co-founder and CEO Brian Chesky said, confirming that the company has resumed the work necessary to go public and will do so in 2020 if the market is “ready.” “We’re going to start resuming all the work to be ready to be a public company,” Chesky tells Yahoo Finance’s Andy Serwer, in a newly released interview, taped last Wednesday. He tied the timeline of a potential IPO in part to a widespread willingness to travel, which remains an open question amid ongoing coronavirus outbreaks in the South and West as well as persistent fear of flying among a majority of Americans. Airbnb, valued by investors at $31 billion before the pandemic, has received offers to go public through a special purpose acquisition company, or SPAC, Reuters reported on Wednesday.
Apparel & Footwear
The parent company of Victoria’s Secret is trimming corporate headcount as part of a larger $400 million cost reduction plan. The company, which also owns Bath & Body Works, is reducing its home office headcount by approximately 15%, or about 850 associates. The layoffs follow what L Brands says was a review of its home office organizations to reduce overhead expenses and decentralize shared functions and services in order to establish Bath & Body Works as a pure-play public company and prepare Victoria’s Secret (including Victoria’s Secret Beauty and Pink) to operate as a separate, standalone company. In the second quarter of fiscal 2020, the company expects to record pre-tax severance costs of approximately $75 million related to the headcount reductions. The staff cuts are part of a larger $400 million cost reduction program that L Brands expects to generate approximately $175 million of savings in fiscal 2020. The plan also includes the previously announced closing of 250 Victoria’s Secret stores while negotiating with landlords for ongoing rent relief.
With debt maturities looming next year, Lands’ End acknowledged that there is “substantial doubt” about the company’s ability to survive over the next 12 months. The company is working to replace its term loan financing, which could put to rest those doubts. “Due to the Company’s recent trends of profitable growth, management believes that it will be able to refinance the Term Loan Facility on acceptable terms despite the challenging financial environment reflecting the COVID-19 pandemic,” Lands’ End said in a securities filing. The clothing seller made the disclosure in its report on the first quarter, during which Lands’ End revenue fell more than 17% to $217 million while operating loss grew more than five times over. “COVID-19” appears more than 40 times in Lands’ End’s quarterly report. Some of those mentions regarded direct actions Lands’ End took as it closed its stores and furloughed corporate and store staff to preserve cash. The company also added $25 million in capacity to its ABL facility, which could come due in January depending on whether Lands’ End can extend, pay or refinance its term loan.
At the end of February, just as the coronavirus was beginning to cast its pall over Europe, an elite crowd that included the likes of Anna Wintour, Jeff Bezos and Seth Meyers gathered in the gilded 19th-century halls of the Ministry of Europe and Foreign Affairs in Paris to watch Diane von Furstenberg be awarded the Légion d’Honneur. Within four months, the British and French operations of Ms. von Furstenberg’s company had done the European equivalent of filing for Chapter 11 bankruptcy. Just over 60 percent of the corporate and retail staff in the United States, Britain and France was laid off, creditors were complaining vociferously about unpaid bills, and Ms. von Furstenberg was making plans to close 18 of her 19 remaining directly operated U.S. stores. She was transforming her company from one rooted in bricks and mortar to a business focused on the intellectual property value of her brand name, which can be attached to products and e-commerce initiatives. Her glamorous personal brand had masked the fact that her fashion line had been losing money for years. Her company, like many fashion brands, had been relying on an old business model. When Covid-19 hit and stores were closed, there was nowhere to hide.
Italian luxury fashion group Moncler has reported a first-half operating loss for the first time in its history, as a drop in sales caused by the coronavirus crisis lockdowns accelerated sharply in the second quarter. Total revenues in the six months to 30 June were down by 29% to €403m (£368m), compared with €570m (£520m) in the first half of 2019. By distribution channel, retail sales were down 31% to €300.5m (£274m). Wholesale revenues were down 23% to €102.8m (£94m). Meanwhile, earnings before interests and taxes (EBIT) fell to a loss of €35.5m (£32m) compared with an operating profit of €102.6m (£94m) in the same period last year. This includes “extraordinary costs related to the Covid-19 pandemic” of about €40m (£36m) related to “extraordinary inventory write-downs” of about €30m(£27m) and donations to the city of Milan of about €10m (£9m). The group, which was founded in 1952, did not provide a forecast for the rest of the year but said it expected no immediate relief from the crisis, which has hit revenues across the luxury goods industry.
Plus-sized fashion retailer City Chic Collective will look to raise $90 million from its shareholders to acquire the online assets of collapsed US retailer Catherines in a bid to boost its footprint in the American market. The ASX-listed company told investors on Friday it had been selected as the initial bidder for Catherines, which is part of the Ascena Retail Group that filed for bankruptcy on Thursday, US time. City Chic is offering $US16 million for the business, though it noted that figure may increase. Chief executive Phil Ryan said the purchase would go a long way towards furthering the company’s presence in the US market, which has grown significantly in recent months following City Chic’s acquisition of fellow US clothing chain Avenue last October. “We’ve very excited to have found another version of Avenue so quickly,” Mr Ryan said. “The pillars we look for are curvy businesses, good customer acquisition and being online, and [Catherines] ticks all the boxes for us.”
Athletic & Sporting Goods
RedBird and ‘Moneyball’ Billy Beane launch IPO for sports team acquisition firm
RedBird Capital Partners, the US investment firm led by Gerry Cardinale, has teamed up with Oakland A’s executive Billy Beane to create RedBall Acquisition Corp, which is being billed as the first sports-focused special purpose acquisition company (SPAC). RedBall filed with the securities and exchange commission (SEC) on 28th July for an initial public offering (IPO), during which it plans to raise US$500 million that it then intends to spend on acquiring a professional sports team. Though RedBall could acquire a company in any sector, its filing said it ‘intends to focus on businesses in the sports, media and data analytics sectors’, with a particular focus on professional sports franchises ‘which complement the management team’s expertise and will benefit from its strategic and hands-on operational leadership.’
Firearms maker Remington Arms Co. filed for bankruptcy protection for the second time since 2018, weighed down by more debt than it can repay even as fearful Americans buy more guns than ever. Remington, which supplies weapons for hunting, shooting sports, law enforcement and the military, sought chapter 11 protection and will try to sell its business at a time when civil unrest and worries about personal safety have driven firearm sales to record highs. Despite shedding roughly $775 million in debt in 2018, the company has struggled with high interest costs and has faced litigation related to the 2012 Sandy Hook Elementary School massacre, in which the killer used a Bushmaster rifle manufactured by Remington.
Cosmetics & Pharmacy
L’Oreal’s sales grew slightly less than expected in the second quarter but the world’s biggest cosmetics group pointed to improved trading at its underperforming hair salon products business. Quarterly sales rose 5.2 percent on a like-for-like basis from the same period a year earlier, the company said on Tuesday. Analysts had expected the maker of Garnier shampoo and Yves Saint Laurent perfume to report growth of around 5.5 percent, roughly in line with the previous three months.
Henkel has signed a deal with Berlin-based Invincible Brands Holding to acquire a 75% stake in a business comprised of three fast-growing DTC brands: HelloBody, Banana Beauty, and Mermaid + Me. Invincible Brands is a platform creating direct-to-consumer brands that pioneered innovative and data-driven social commerce and performance marketing in Europe. It was founded in November 2015 in Berlin by Bjoern Keune and Gennadi Tschernow. Invincible Brands has a highly differentiated approach to marketing and a fast product innovation process leveraging deep consumer insights from millions of weekly client and influencer interactions as well as its 250 employees across all brands. The company’s brand portfolio consists of beauty brands HelloBody, Banana Beauty, Mermaid + Me and nutrition company Natural Mojo.
Discounters & Department Stores
As Walmart looks to build out its omnichannel capabilities and centralize merchandising, it is restructuring parts of its corporate workforce. In an internal memo emailed to Retail Dive, Walmart U.S. CEO John Furner and Walmart U.S. eCommerce chief Marc Lore said the company would be “streamlining some roles so we can be more effective and efficient” while creating some new roles around supply chain, stores and other facilities. Those losing their jobs in the reorganization would have chances to apply for other jobs at Walmart or receive benefits and severance.
J.C. Penney is moving quickly to sell itself in a bankruptcy auction by the fall in a plan that would keep the retailer operating under new ownership, attorneys for the retailer said in a hearing Wednesday. Private equity firm Sycamore Partners, department store retailer Hudson’s Bay Co., and landlords Simon Property Group and Brookfield Properties have proposed bids for Penney, according to anonymously sourced reports in the New York Post and Women’s Wear Daily. Kirkland & Ellis partner Joshua Sussberg, who is representing Penney in its Chapter 11 case, mentioned the Post’s story in the hearing, confirming three separate bidders for Penney, without naming them.
Target has opted to close its stores for Thanksgiving Day this year after opening on the holiday for most of the past decade. The announcement comes days after Walmart announced it would close its U.S. stores on Thanksgiving. The mass merchant is also adding 20,000 new products to its pickup and delivery services, including fresh and frozen grocery products. As a kind of antidote to crowded shopping amid a pandemic, Target said it would offer its biggest deals for holiday shopping “earlier than ever,” starting in October, so that customers “can shop safely and conveniently without worrying about missing out on deals that usually come later in the season.”
Nordstrom says that it will lay off some employees, as its sales struggle amid the coronavirus pandemic, which has dampened consumer spending and battered the U.S. economy. “While our hope was to bring back every one of our employees as our stores reopened,” the retailer said in a statement Thursday, “based on our needs today, and what we anticipate our needs being in the future, we must adjust the size of our store sales force.” Nordstrom did not specify how many positions would be cut.
Emerging Consumer Companies
New York-based Ro, the online pharmacy and health company focused on men’s health, announced that it had raised $200 million. General Catalyst led the round, with participation from The Chernin Group and earlier investors FirstMark Capital, Torch, SignalFire, TQ Ventures, Initialized Capital, 3L, and BoxGroup. The investment values the company at $1.5 billion. The company runs its own online pharmacy that delivers 500+ generic drugs for only $5/month each. It is on pace to do $250 million in revenue this year.
Tempo, the San Francisco-based home fitness brand offering digital strength and cardio classes as either live streams or on-demand content, announced a $60 million Series B, led by Norwest Venture Partners and General Catalyst. Earlier investors Founders Fund, Signal Fire, DCM, Y Combinator and Bling Capital also participated. The Tempo device retails for ~$2,000, plus a $39 monthly membership to its content. The company says it’s on track to hit a $100 million run rate by year’s end.
Plant-based food company Impossible Foods announced that it will begin selling in Walmart. The launch brings Impossible to more than 2,000 stores in all 50 states and on the Walmart website. Impossible will now be available in more than 8,000 retail locations nationwide. At Walmart, Impossible’s soy-based product will cost $7.94 per pound. Beyond’s frozen beef alternative, meanwhile, which is made from pea protein, sells at Walmart for $5.48 per pound.
Grocery & Restaurants
McDonald’s Corp. executives believe the worst impacts of the pandemic on sales performance are in the past. In the latest quarter, the restaurant company’s net income dropped 68% and revenues plummeted 30%, driven by temporary restaurant closings, limited operations and dramatic changes in consumer behavior. “As you can see, it remains a dynamic situation as the threat of COVID-19 continues to depress consumer sentiment, and the vagaries of the pandemic create an unpredictable operating environment,” Christopher J. Kempczinski, president and chief executive officer of McDonald’s Corp., said during a July 28 earnings call. “In many markets around the world, most notably in the US, the public health situation appears to be worsening. Nonetheless, I believe that Q2 represents the trough in our performance as McDonald’s has learned to adjust our operations to this new environment.” Revenues totaled $3.8 billion, down 30% from $5.4 billion the year before. Global comparable sales declined 24%. In the United States, comparable sales decreased 8.7% for the quarter, sequentially improving over the three-month period.
Playa Vista, Calif.-based, 250+-unit California Pizza Kitchen filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas on July 30, citing financial troubles due to the ongoing coronavirus pandemic. The restructuring agreement is meant to equitize the company’s long-term debt. During the restructuring period, the casual dining pizza chain will close unprofitable locations, reduce its long-term debt load, and “quickly emerge from bankruptcy as a much stronger company.” “The company has spent the past several months reviewing and negotiating strategic alternatives to obtain additional financing and address its capital structure and lease footprint in a holistic manner.” Additionally, prior to filing for bankruptcy, California Pizza Kitchen had explored a potential sale, strategic merger, consolidation, or business combination in March and were in contact with many viable interested bidders. Although no agreement was reached, the company has asked for an auction in September with a bid deadline of September 11.
Home & Road
The Container Store, facing COVID-19 headwinds, reported a 27.6% drop in sales and a net loss in its first quarter, but said it expects sales and margin performance to improve as fiscal 2020 progresses. Consolidated net sales were $151.7 million in the period ended June 27, 2020, down 27.6%. Online sales increased by 192.3%. Its consolidated net loss was $16.7 million, compared to net loss of $4.1 million in the prior-year quarter. Adjusted net loss was $15.5 million, compared to an adjusted net loss of $4.1 million in the year-ago period. All of its stores are now reopened and operating at close to normalized schedules, with limited capacity.
As part of an effort to improve the strategic focus of both organizations, lease purchase specialist Aaron’s Inc. announced its plans to separate its Progressive Leasing and Aaron’s Business into two independent, publicly traded companies. Expected to be completed by year end, the move is planned as a tax-free spin-off that officials said will create “two highly focused companies.” As a result of the move, Progressive, which had $2.2 billion in revenues last year, will consist of the company’s current Progressive business segment as well as Vive Financial. Aaron’, which had $1.8 billion in revenues last year, will consist of about 1,400 company-operated and franchised stores in 47 states and Canada, as well as the e-commerce platform Aarons.com and Woodhaven Furniture Inds. Steve Michaels, the company’s chief financial officer and president of strategic operations, has been named CEO of the Progressive Leasing business segment, effective July 31. Also effective July 31, Douglas Lindsay will become CEO of the Aaron’s Business. He currently serves as president.
Shares of At Home Group Inc., the home décor superstore, were trading higher after the company posted net sales of approximately $515 million for the second quarter, which ended on July 25, 2020, up 51% from the second quarter of fiscal 2020. The company also posted a comparable store sales increase of approximately 42% for this second quarter of fiscal 2021. “We are emerging from this pandemic stronger and even better positioned, and we believe we are gaining meaningful market share,” said Lee Bird, At Home Group chairman and CEO. “We are becoming the go-to place for consumers looking for a one-stop shop that offers a wide and deep assortment, compelling everyday low prices, the convenience of omnichannel shopping and safe social distancing afforded by our large store format.”
Hooker Furniture reported a nearly 23% decline in net sales and a net loss of $34.8 million in the first quarter ended May 3, according to final results released this week. Net sales totaled $104.6 million, compared to $135.5 million in the first quarter of 2019, a 22.8% decline. Meanwhile the net loss, which equated to $2.95 per share, compared to a net gain of nearly $2 million, or 17 cents per share, during last year’s first quarter. The company reported preliminary results June 12. However, this did not include expected non-cash impairment charges on its intangible assets. According to filing with the U.S. Securities and Exchange Commission, the final report was delayed due to circumstances related to the COVID-19 pandemic, which had adverse economic effects including a reduction in the company’s sales, earnings and market value.
Paint and wood coatings specialist Sherwin-Williams reported a 5.6% drop in consolidated net sales during the second quarter ended June 30, due primarily to softness in demand related to COVID-19. Consolidated net sales fell to $4.6 billion during the quarter, compared to nearly $4.9 billion in the second quarter of 2019. During the first six months, consolidated sales fell 1.9% to $8.75 billion, from $8.9 billion during the first half of 2019. The company said that the quarterly decrease was due to impacts from COVID-19, which caused softness in demand in some end markets in the Americas Group and the Performance Coatings Group. In addition, the change was attributed to unfavorable currency translation rate changes, which were partially offset by higher sales to most of the Consumer Brands Group’s retail customers. The company estimated that the pandemic’s impact on consolidated net sales during the quarter and first six months was 8.2% and 5.2% respectively.
Jewelry & Luxury
LVMH Moët Hennessy Louis Vuitton said net profit plummeted 84 percent in the first six months of the year, although it forecasts a gradual recovery in the second half, supported by a strong recovery in China during the second quarter. Bernard Arnault, chairman and chief executive officer of LVMH, said the group had shown “exceptional resilience” during the health crisis. “While we have observed strong signs of an upturn in activity since June, we remain very vigilant for the rest of the year,” he said in a statement. “Thanks to the strength of our brands and the responsiveness of our organization, we are confident that LVMH is in an excellent position to take advantage of the recovery, which we hope will be confirmed in the second half of the year, and to strengthen our lead in the global luxury market in 2020,” he added.
French luxury group Hermes said on Thursday comparable sales in the second quarter fell by 42% due to the fallout of the coronavirus outbreak and that the impact of the health crisis for the whole year was too difficult to assess at this stage. In unusually cautious comments, the maker of the $10,000-plus Birkin bag said sales were improving in all regions, and particularly in Asia, since the easing of lockdowns but the situation remained “difficult” in Europe and the United States. CEO Axel Dumas added that it was impossible to predict when foreign tourists, who in the summer months can represent 70% of European sales for luxury groups, would resume travelling.
Kingold Jewelry, the Wuhan, China–based jewelry manufacturer that is publicly listed in on Nasdaq, faces a local investigation over its alleged use of a “gilded copper alloy” disguised as gold as collateral for bank loans, it announced in an 8-K filed on July 14 with the Securities and Exchange Commission. The allegations were first brought to light in the local publication Caixin. The company, which primarily sells jewelry to the domestic market, also announced that its bank accounts have been frozen in connection with various legal proceedings.
Office & Leisure
Global air travel won’t recover from the Covid-19 crisis until 2024, the International Air Transport Association (IATA) announced Tuesday. That’s a year later than the airline body’s previous projection. The body, which represents 290 airlines, blamed the sluggish recovery on a number of factors, including a lack of consumer confidence, the decline in business travel, and fresh coronavirus spikes in the United States and elsewhere. The revised baseline forecast is that international passenger traffic will drop 55% in 2020, compared to 2019. Back in April, the IATA had predicted the drop to be just 46%. Passenger numbers are expected to rise 62% next year, but will still be down almost 30% compared to pre-Covid times, with a full recovery to pre-pandemic levels not on the cards until four years from now. “Passenger traffic hit bottom in April, but the strength of the upturn has been very weak,” said Alexandre de Juniac, IATA’s director general and CEO in a statement. “What improvement we have seen has been domestic flying.”
Store closures, product shortages and lower retail inventory hampered Hasbro in its fiscal second quarter, as the company dealt with the fallout of the global coronavirus pandemic. Despite strong demand for toys in the quarter, Hasbro’s revenue fell 29% on a pro forma basis. For the quarter ended June 28, Hasbro posted a net loss of $33.9 million, or 25 cents per share, compared with a profit of $13.4 million, or 11 cents per share, a year ago. Revenue fell to $860.3 million, which was shy of the $922 million analysts expected. Nearly 30% of its global toy and game revenue came from online sales. The company’s gaming portfolio remained strong during the quarter, with revenue in the category rising 11%, fueled by sales of Jenga, Connect 4, Mouse Trap and Twister. However, disruption in Hasbro’s supply chain resulted in stock levels being low and limited its number of shipments during the quarter.
Movie studio Universal Pictures and top theater chain AMC Entertainment have reached an agreement that would allow new films to head straight into your living room after just three weekends in U.S. cinemas, a move that could have major implications for Hollywood’s business model and the future of moviegoing. The deal, announced in a news release Tuesday afternoon, hands AMC the right to screen films from Universal and its art-house division, Focus Features, for 17 days in the U.S. — a dramatic departure from the traditional “theatrical window” of about 90 days. After the 17-day window closes, Universal has the option to shift movies from theaters to “premium video-on-demand” services — including AMC Theatres On Demand, an iTunes-style platform that lets customers rent and buy movies. AMC, the largest theater chain in the world, will get a slice of the revenue that Universal generates during the first weeks a film is available in the home. The two companies did not announce an official start date for the deal, as the vast majority of movie theaters across the U.S. are still closed because of the COVID-19 outbreak.
Technology & Internet
Online grocery sales that tripled year over year powered Amazon.com Inc. to a 43.4% increase in second quarter sales in North America and 33.5% growth worldwide. As more consumers bought groceries online in response to the coronavirus pandemic, Amazon said it increased grocery delivery capacity by 160%, including by increasing headcount in its fulfillment network by 34%. Amazon has hired 175,000 employees since the COVID-19 outbreak caused a spike in sales. The leading online retailer also tripled the number of Whole Foods Market stores where consumers can pick up groceries. CEO Jeff Bezos said sales by outside merchants on Amazon’s 16 marketplaces worldwide grew faster than Amazon’s sales of merchandise it owns.
The U.S. House Judiciary Committee’s antitrust subcommittee Wednesday corralled a foursome of tech CEOs — Facebook’s Mark Zuckerberg, Google’s Sundar Pichai, Apple’s Tim Cook and Amazon’s Jeff Bezos — and for over five hours delivered a bipartisan barrage of questions that sometimes left the tech titans at a loss for answers. That included Bezos, who, like the other witnesses speaking remotely to the committee chamber, was cut off whenever he attempted to repeat the kinds of positive factoids that he habitually includes in his quarterly earnings reports and annual letters to shareholders. In a quest to determine whether Amazon enjoys advantages that could run afoul of antitrust regulations, Democrats and Republicans alike asked him about the fairness of Amazon’s Marketplace and the prevalence of counterfeits or even stolen goods on its website. Amazon Marketplace was in focus, with members of Congress detailing accusations from sellers that Amazon routinely mines their data in order to compete against them through its own first-party marketplace, including developing private-label renditions of their best-selling products or burying their product listings unless they sign up for expensive advertising.
Finance & Economy
U.S. weekly jobless claims rise for a second straight week, total 1.434 million
The number of Americans who filed new claims for unemployment benefits last week totaled 1.434 million, the Labor Department reported Thursday, roughly in line with expectations, as the coronavirus pandemic continues to ravage the U.S. economy. It was the 19th straight week in which initial claims totaled at least 1 million and the second consecutive week in which initial claims rose after declining for 15 straight weeks. Economists polled by Dow Jones had expected claims to rise to 1.45 million for the week ending July 25.
U.S. consumer spending rises for second straight month, income drops further
U.S. consumer spending increased for a second straight month in June, setting up consumption for a rebound in the third quarter, though the recovery could be limited by a resurgence in Covid-19 cases and the end of expanded unemployment benefits. The Commerce Department said on Friday that consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 5.6% last month after a record 8.5% jump in May as more businesses reopened. Consumers stepped up purchases of clothing and footwear. They also spent more on healthcare, dining out and on hotel and motel accommodation. Economists polled by Reuters had forecast consumer spending would advance 5.5% in June.
The United States’ trade deficit in goods fell sharply in June as exports rebounded following several months of decline, suggesting a recovery in global trade after being severely disrupted by the Covid-19 pandemic. The shrinking goods trade gap reported by the Commerce Department did not change expectations that the economy contracted at its steepest pace since the Great Depression in the second quarter because of the coronavirus. Though the smaller goods trade deficit is a boost in the calculation of gross domestic product, it was offset by continued decreases in retail and wholesale inventories. Prior declines in imports forced businesses to draw down inventories.