Story of the Week
Job growth totals 114,000 in July, much less than expected, as unemployment rate rises to 4.3%
Job growth in the U.S. slowed much more than expected during July and the unemployment rate ticked higher, the Labor Department reported. Nonfarm payrolls grew by just 114,000 for the month, down from the downwardly revised 179,000 in June and below the Dow Jones estimate for 185,000. The unemployment rate edged higher to 4.3%, its highest since October 2021. The labor market had been a pillar of economic strength but has recently shown some trouble signs, and the July payrolls increase was well below the average of 215,000 over the past 12 months.
Apparel & Footwear
Steve Madden wholesale boosted by accessories, apparel
Steve Madden revenue increased 17.6% in its second quarter to $523.6 million, according to a news release. The footwear giant’s results were driven by “exceptional growth” in its accessories and apparel categories, CEO Edward Rosenfeld said in the release. Steve Madden acquired apparel brand Almost Famous last year, which resulted in significant growth in the company’s wholesale channel. Revenue for wholesale accessories and apparel increased 86% in Q2, or nearly 30%, excluding Almost Famous. Revenue for the overall wholesale business was up 22.5% to $385.3 million, and excluding Almost Famous, wholesale revenue increased 8.2%. Meanwhile, the company’s core footwear segment increased its wholesale revenue by 0.9%.
G-III increases stake in All We Wear Group
G-III Apparel Group has increased its ownership stake in All We Wear Group, the owner of Pepe Jeans London, Hackett and Façonnable, according to a press release. Last month, G-III announced it bought a 12% ownership stake in All We Wear Group in a bid to increase its expansion in Europe. The latest investment brings G-III’s total ownership of All We Wear Group to about 19%, per the release. “We are pleased to expand our investment in AWWG and strongly believe this partnership is another growth opportunity for our business,” G-lll Chairman and CEO Morris Goldfarb said in the release. “This transaction reinforces our strategic priorities and we look forward to further developing our relationship with AWWG and its talented team, as we accelerate our collective businesses.”
Crocs raises EPS guidance after Q2 earnings and sales beat
Crocs raised its earnings guidance for the year after reporting better-than-expected results for the second quarter. However, Hey Dude sales were still in decline. Altogether, the Broomfield, Colo.-based footwear company reported better-than-expected results for the first quarter, which included a 3.6 percent revenue increase from the prior year to $1.11 billion. This was slightly ahead of the $1.1 billion expected by analysts surveyed by Yahoo Finance. Q2 adjusted diluted EPS was up 11.7 percent to $4.01, also ahead of the $3.56 expected by analysts. Revenues for the Hey Dude brand decreased 17.5 percent to $198 million, which reflected declines in both DTC and wholesale.
Athletic & Sporting Goods
Nike Cuts Workforce but Doubles Down on Endorsement Deals
Amid rounds of previously announced layoffs, Nike’s employee headcount at its Beaverton, OR headquarters dropped by 6.1 percent to 10,700 at the close of the company’s fiscal year ended May 31, according to its recently released annual report. The fiscal 2024 10-K shows Nike’s overall worldwide employee count, which includes retail, warehouse and part-time workers, fell 5.1 percent to about 79,400 employees from approximately 83,700 at the same time a year ago. According to Nike’s 10-K, endorsement contract obligations due within one year surged 31 percent year-over-year to $1.7 billion from $1.4 billion last year. The near-term endorsement spend, which represents approximate amounts of base compensation and minimum guaranteed royalty fees Nike is obligated to pay athlete, public figure, sport team and league endorsers of the brand’s products, increased to 3.3 percent of revenue versus 2.5 percent in fiscal 2023.
Brooks Running reports ‘record’ revenue
Continuing its growth from the previous quarter, Brooks Running’s global second quarter revenue saw a 15% jump year over year, the company announced. The privately-held activewear company did not disclose exact revenue figures. The company credited its “record” revenues to the double-digit growth of its wholesale and direct-to-consumer divisions. Its North America Q2 revenues increased 19% year over year, a spike it attributed to its Glycerin 21 super franchise, its Ghost Max line, and the Ghost 16 rollout, the release said. The company also promoted Managing Director of Brooks International Matt Dodge to president and chief operating officer.
Meaningful Partners Acquires Fitness Ventures, the second largest Crunch Fitness Franchisee
Meaningful Partners, LLC announced the closing of its acquisition of Fitness Ventures, LLC, the second largest Crunch Fitness franchisee. Founded by CEO Brian Hibbard in 2016, Fitness Ventures is a leading health and wellness platform that currently owns and operates 47 locations with rights to develop clubs in multiple geographies across the United States. With over 2.5 million systemwide members and 460 locations, Crunch Fitness is the fastest-growing big-box franchised fitness club system in the high-value, low-price (HVLP) category. Headquartered in New York City, Crunch serves 2.5 million members with over 460 gyms worldwide in 41 states.
Cosmetics & Pharmacy
L’Oreal continues to outperform market with 1H2024 sales up 7.3 percent
L’Oreal has announced its results for the first half of fiscal 2024. The French beauty behemoth revealed that it outperformed the market with continued strong growth. Sales hit €22.12 billion, up 7.3 percent versus the prior year. Net profit grew 8.8 percent to €3.65 billion. All divisions delivered ‘positive momentum’, L’Oreal said, but Derma was the stand-out star with sales up 16.4 percent. Luxe, in contrast, reported more modest growth of +2.3 percent. Consumer Products grew 8.8 percent and Professional Products increased sales 5.7 percent.
Core Industrials takes majority stake in Winky Lux
Winky Lux has announced a majority investment by Core Industrial Partners. Financial terms of the deal were not disclosed. The private equity firm said it was positioned to ‘enhance Winky Lux’s ability to grow while preserving the brand’s unique identity and joy-focused approach’. The investment allows Winky Lux to fund the expansion of both its digital and brick-and-mortar retail channels, leveraging Core’s strategic guidance and operational support. The CEO, Co-Founders and management team will all remain at the company. In addition, Winky Lux has appointed industry veterans Zack Zavalydriga and Cassandra Batista to the beauty brand’s Board of Directors.
WellSpring Expands Wellness Stable with Acquisition of vH Essentials
WellSpring Consumer Healthcare, a marketer of OTC and personal care brands sold in the US and Canada, has acquired vH essentials, an intimate care line that includes supplements and topical products. Financial terms of the transaction with Wisconsin Pharmacal Company were not disclosed. vH essentials are distributed through brick-and-mortar retailers and e-commerce channels such as Amazon. WellSpring— a portfolio company of private equity firm Avista Healthcare Partners—also owns intimate care spray brand FDS.
Blake Lively launches hair care brand Blake Brown
American actress Blake Lively is launching her own hair care line, Blake Brown. The eight-piece vegan collection comprises shampoos, masks and styling products inspired by the star’s personal hair care regimen. The products alternate between a ‘strengthening’ and ‘nourishing’ system which claim to leave hair “healthy and strong”. The brand has been seven years in the making and was created in partnership with privately-held beauty group Give Back Beauty. “Performance was paramount,” said Lively. “We were uncompromising, which is why it took an absurd amount of time, but the products show our level of dedication and strict quality control.”
Discounters & Department Stores
Rihanna’s Savage X Fenty picks Nordstrom as first US retail partner
Marking its first retail partner in the U.S., Rihanna’s Savage X Fenty intimates brand on Thursday launched in Nordstrom stores and on its website. The brand’s products will be available in 16 locations in cities including Seattle, New York City, Chicago, San Diego, Los Angeles, Las Vegas, Dallas and Atlanta, according to a Thursday press release. The brand is bringing its Soft N’ Savage collection to Nordstrom, alongside its other core offerings, including more than 130 bra and underwear styles. Starting at $16.95, the assortment in Nordstrom features products in bra sizes ranging from 32A to 46DDD and underwear ranging from XS to 4X, per the press release.
Is Big Lots’ transformation plan enough to save it?
Over the last year, Big Lots’ financial performance and some operational decisions signaled to analysts and industry observers that the discount retailer might be in trouble. The company said in a June 13 filing with the U.S. Securities and Exchange Commission that it plans to close between 35 to 40 stores this year and disclosed that it incurred net losses and used cash for operations in 2022, 2023 and Q1 of this year. As a result of the strain on liquidity, Big Lots said it may not meet all of its credit and term loan obligations in the next 12 months. The company ended 2023 with net sales that fell nearly 14% to $4.72 billion, down from $5.47 billion a year earlier. In the first quarter, the retailer reported a year over year net sales drop of 10.2% and a net loss of $205 million.
Saks Off 5th shakes up merchandising team
The reshuffling continues at the entity to be known as Saks Global. Following the exit of its chief merchant, off-price retailer Saks Off 5th’s merchandising will be led by two of its executives, Allison Ross and Melissa Garrick, a Saks Off 5th spokesperson said by email Monday. Both have had merchandising roles there for several years, according to their LinkedIn pages. They replace Mara Sirhal, who recently left to lead merchandising at home shopping retailer QVC U.S. “With that, we have reevaluated our go-forward structure for the Saks OFF 5TH merchandising team,” the spokesperson said.
Emerging Consumer Companies
Friend’s $99 necklace uses AI to help combat loneliness
Friend, maker of a neck-worn device that is designed to be treated as a companion, raised $2.5 million in funding at a $50 million valuation. The company said it will start taking preorders of its basic white version, which is priced at $99 and expected to ship in January 2025. Rather than focusing on productivity, the device is just a thin layer that connects to your phone via Bluetooth and constantly listens to you, in a bid to combat loneliness. You can tap on the walkie-talkie button on the hardware and talk to the device. It will send you an in-app response like a text, and since Friend is listening to you all the time, it also can proactively send a message. For instance, it might wish you good luck before an interview.
Batbox, baseball-focused food and entertainment chain, raises $7.3 million
Batbox, a baseball entertainment concept founded in Mexico, raised $7.3 million during its Series A funding round, with inventors from the U.S. and Mexico including Emerging Fund and MG partners. The investment will fund the company’s plan to open over 25 locations across the U.S by 2030 with a focus on Dallas, Houston, Boston and other major league baseball markets. Batbox originally opened in Mexico in 2019 and currently has three locations. It plans to open its first U.S. venue in Addison, Texas, early next year.
Oats Overnight raises $35 million
Oats Overnight announces that it has raised $35 million in Series B capital. The round was led by Enlightened Hospitality Investments with participation from new investor Sonoma Brands Capital and from existing investors including Impatient Ventures, Singh Capital Partners, Morrison Seger Venture Capital Partners, and BFG Partners. Founded in 2016, Oats Overnight makes a spoon-free, high-protein oatmeal that is prepped at night and ready when you wake up.
Food & Beverage
Boar’s Head recall expands to include 7 million pounds of deli meat over listeria concerns A recall of Boar’s Head products has expanded to include a whopping 7 million additional pounds of deli and poultry items in a deadly multistate outbreak of listeria infections. 34 people have gotten sick across 13 states in the outbreak — including 33 hospitalizations and two deaths. The fatalities were a patient in Illinois and another in New Jersey. Last week, the deli meat company had recalled more than 207,000 pounds of deli meat, including liverwurst and ham products, because they may contain the bacteria Listeria monocytogenes. Boar’s Head has now expanded that recall, the U.S. Department of Agriculture’s Food Safety and Inspection Service (FSIS) announced in a press release.
Mondelez works through difficult Q2 consumer environment
Mondelez International saw net revenue decline in its fiscal 2024 second quarter as consumers — especially in North America — continued to push back against elevated food prices. Yet Dirk Van de Put, chairman and chief executive officer, said shopper sentiment may be starting to change amid easing inflation. The Chicago-based global snack company also posted decreased operating and net income for the quarter, though adjusted earnings per share (EPS) surpassed the high end of Wall Street’s forecast. “While many food and beverage segments are continuing to experience softness, snacking remains relatively durable,” Van de Put told analysts in a conference call after the market close on July 30.
Value-add products within Gruma SAB de CV’s portfolio continue to grow steadily in the United States, even as strong momentum mounts for private label products, according to the Monterrey-based maker of tortillas. Operating income at Gruma USA in the second quarter ended June 30 totaled $152.2 million, up 14% from $133.9 million in the same period a year ago. Net sales decreased 1% to $921.6 million from $928.5 million, while sales volume dipped to 400,000 tons from 402,000 tons. “To ensure Gruma’s long-term profitability, a client optimization strategy was implemented within the foodservice channel and as a result, there has been a temporary decline in volumes within this business segment,” the company said.
Grocery & Restaurants
McDonald’s earnings, revenues miss estimates
McDonald’s on Monday reported quarterly earnings and revenue that missed analysts’ expectations as same-store sales declined across every division. “Industry traffic has declined in major markets like the U.S., Australia, Canada, and Germany. In several markets, we also continue to be negatively impacted by the war in the Middle East,” McDonald’s CEO Chris Kempczinski said on the company’s earnings call. “These external pressures certainly weighed on our performance for the quarter, with declines in comparable sales globally and across each of our segments, but there were also factors within our control that contributed to our underperformance, most notably, our value execution.” Company executives acknowledged that diners considered their prices too high and said that they are taking a “forensic approach” to evaluating value offerings and working with franchisees to make the necessary adjustments.
Papa Johns names former Wendy’s CEO Todd Penegor as its new CEO
Papa Johns has named Todd Penegor as its new president and chief executive officer, effective immediately. He has also been named to the company’s board of directors. With this announcement, Penegor joins a small handful of permanent CEOs in the company’s 40-year history, following founder John Schnatter, Nigel Travis, Steve Ritchie, and, most recently, Rob Lynch, who left earlier this year for the same role at Shake Shack. Penegor served most recently as president and CEO of Wendy’s, a role he held from 2016 through early February of this year. During his tenure, the company expanded its footprint to more than 7,000 restaurants in 30 markets and U.S. territories and achieved its 12th consecutive year of same-store sales growth. Additionally, Penegor chartered three billion-dollar opportunities for the company, including digital, international and breakfast, and created “The Wendy’s Way” framework. On his watch, in 2021, Wendy’s surpassed Burger King to become the No. 2 player in the burger category by sales.
Home & Road
Wayfair CEO likens home goods slowdown to 2008 financial crisis
Online home goods company Wayfair saw sales decline in its fiscal second quarter as its CEO called the current slowdown in the home goods category “unprecedented” — and likened it to the 2008 financial crisis. “Our credit card data suggests that the category correction now mirrors the magnitude of the peak to trough decline the home furnishing space experienced during the great financial crisis,” Wayfair CEO Niraj Shah said in a news release. “Customers remain cautious in their spending on the home.” The e-tailer fell short of Wall Street’s expectations on both the top and bottom lines. The company reported a loss of $42 million, or 34 cents per share, in the three-month period that ended June 30. That’s slightly better than the loss of $46 million, or 41 cents per share, that it posted during the same quarter a year earlier. Sales dropped to $3.12 billion, down about 2% from $3.17 billion a year earlier. For more than a year, home goods companies like Wayfair have seen sluggish demand for things like new couches and dining sets as the overall housing market turned stagnant against high interest rates. Consumers are buying fewer new homes, which means they have fewer reasons to buy new furniture.
Takeaways from Beyond’s Q2 call: Lightness, liquidation and a loyalty program
While Beyond Inc. won’t be opening up stores for its Bed, Bath & Beyond, Overstock and Zulily brands, there are still many options on the table as the company looks to bring itself back to profitability and enter a growth mode. In Beyond’s Q2 earnings call, Executive Chairman Marcus Lemonis emphasized several times that the company will remain “asset light,” which means the costs associated with leases, distribution facilities and stores that were part of the former Bed, Bath and Beyond model won’t be returning. But, he said, “you can expect in short order that we’ll put Bed, Bath & Beyond and Overstock back in the marketplace.” He said there are multiple opportunities and multiple partners who are available to make that happen, and Beyond has begun those conversations.
Jewelry & Luxury
Bonhams Appoints Former Piaget Head as New Global CEO
Bonhams has hired former Piaget chief executive Chabi Nouri as global CEO of the 14-showroom auction house. Nouri will be based in Bonhams’ London headquarters. She will begin her new role in October. Born in Switzerland, Nouri served as CEO of Piaget, the Richemont-owned watch and jewelry company, from 2017 to 2021. Prior to that, she served as Piaget’s chief marketing officer, according to her profile on LinkedIn. Before joining Piaget, she worked for 10 years for another Richemont brand, Cartier, eventually serving as its global head of jewelry. Since 2022, she has worked with the Mirabaud Group as a private equity partner. Founded in 1793, Bonhams was purchased in 2018 by private equity firm Epiris.
De Beers’ H1 Revenue Falls 21% in ‘Weak’ Market
Revenue declined 21 percent in the first half of the year for De Beers Group, with the company cutting its annual production forecast as weaker demand for natural diamonds persists. De Beers’ results were announced Thursday as part of parent company Anglo American’s half-year report for the period ended June 30. The diamond miner and marketer’s total revenue in the first half of the year fell 21 percent to $2.2 billion, compared with $2.8 billion in the same period last year. Rough diamond sales totaled $2 billion, down 20 percent year-over-year.
Boucheron, Pomellato Post Double-Digit Growth in Q2
Boucheron and Pomellato bucked the trend at parent company Kering in the second quarter, which recorded a double-digit decline in total sales. The Paris-based luxury conglomerate reported Wednesday that total sales in the first half of the fiscal year were €9.02 billion ($9.78 billion) compared with €10.14 billion ($10.99 billion) in H1 2023, an 11 percent year-over-year decline. Recurring operating income plummeted 42 percent, totaling €1.58 billion compared with €2.74 billion a year ago. Group sales also dropped 11 percent in the second quarter, declining at both the stores Kering owns and operates (down 12 percent due to lower store traffic) and its wholesale partners (down 6 percent). Kering continues to feel the effects of stalled sales at Gucci, its flagship brand that accounts for nearly half of total sales.
Luxury Brands Are Betting on Ties (Again). Here’s Why Neckwear Means Money
These days, it seems you’re more likely to spot a tie on a runway than in an office. Slivers of silk have adorned models’ necks at countless menswear shows this year, both those of luxury houses like Prada and Emporio Armani, and cool smaller players such as Japan’s Auralee. Many are not statement ties but blink-and-you’ll-miss-’em designs in sober solids that blend in with their companion shirts.
Office & Leisure
DraftKings to tax winning bets in high-rate states in a bid to boost profit
Mobile betting powerhouse DraftKings is planning a tax on consumers in states with the highest sports betting tax rates, as the company looks to boost profit. The company announced that starting next year, it will implement a gaming surcharge on winning bets in states with multiple betting operators and where the tax rate is above 20%. That includes Illinois, New York, Pennsylvania and Vermont. “We decided that the best course of action is to do what really every other industry [does] — whether it’s hotels, taxis — whatever else you buy generally has some kind of tax,” DraftKings CEO and co-founder Jason Robins told CNBC.
Purina fueled US, Europe sales growth in first half 2024
Purina PetCare continued to lead growth for parent company Nestle in key pet food markets during the first half of 2024. Globally, Purina delivered mid-single-digit growth for Nestle, driven by science‑based premium brands, Purina Pro Plan, Fancy Feast and Purina ONE. Nestle reported their financial performance for January through June 2023 in a letter to shareholders. During that period, Purina’s sales reached $10.7 billion, compared to $10.6 billion from January to June 2023. In North America, Purina PetCare was the largest growth contributor for Nestle, with mid-single-digit growth.
Nintendo Q1 profits decline 55% as the Switch nears the end of its lifecycle
Nintendo reported a significant decrease in sales and net profit for the first quarter of FY2025, in what marks the eighth year of the Nintendo Switch console. The publisher saw decreases across all segments, which it attributed to Q1 2025 being relatively quiet in terms of releases compared to the same period last year, which saw the launch of The Legend of Zelda: Tears of the Kingdom. Sales on Nintendo’s platforms were down 46.4% to ¥229 billion ($1.5 billion), including hardware, software, and accessories. Mobile and IP-related sales also fell by 53.8% to ¥14.7 billion ($98.6 million).
Technology & Internet
Apple reported fiscal third-quarter earnings on Thursday that beat Wall Street expectations, with overall revenue rising 5%. Apple expects similar overall revenue growth in the current quarter, company finance chief Luca Maestri said on a call with analysts. Apple also expects Services to grow at about the same rate as the previous three quarters, which was about 14%. The company sees operating expenditures between $14.2 billion and $14.4 billion in the current quarter, Maestri added, with gross margin of between 45.5% and 46.5%. Apple’s most important business remains the iPhone, which accounted for about 46% of the company’s total sales during the quarter. Apple showed strongest growth in its iPad division, which grew nearly 24% year over year to $7.16 billion in sales. It released new iPads during the quarter for the first time since 2022, which spurred a wave of upgrades. Apple’s Mac division reported $7 billion in sales, up about 2% from the year-ago quarter. Apple Watch sales, headphones such as Beats or AirPods, and HomePod home speakers are reported under “Wearables, Home, and Accessories.” Sales in the catch-all category declined 2% to $8.10 billion during the quarter.
Amazon shares slide on revenue miss, disappointing guiance
Amazon reported weaker-than-expected revenue for the second quarter on Thursday and issued a disappointing forecast for the current period. Amazon forecast revenue in the current quarter to be between $154 billion and $158.5 billion, representing growth of 8% to 11% year over year. The mid-point of that range, $156.25 billion, trailed the average analyst estimate of $158.24 billion, according to LSEG. Amazon continues to reckon with sluggish growth in its core retail business, as competition heats up, largely from discount sites like Temu and Shein, which allow Chinese merchants to sell cheap items to U.S. consumers. Sales in its online stores segment grew just 5% year over year. Revenue from third-party seller services, which includes commissions, and fulfillment and shipping fees, accelerated faster, expanding 12% during the quarter. “We did come in a little short on revenue growth in North America versus our internal estimates,” finance chief Brian Olsavsky told reporters on a call after the report. Olsavsky said the revenue miss was driven by consumers choosing to buy cheaper products, leading to lower average selling price (ASP).
Meta shares pop on revenue and earnings beat, forecast
Meta shares jumped about 7% in extended trading on Wednesday after the company beat Wall Street estimates for revenue and profit and issued a better-than-expected forecast for the current period. The Facebook parent reported second-quarter revenue growth of 22% from $32 billion a year earlier, marking a fourth straight quarter of growth in excess of 20%. Meta’s results point to continued share gains in the digital ad market, the company’s core business. Advertising revenue, which comes largely from the Facebook and Instagram apps, rose 22% from a year earlier. Meta’s financials continue to benefit from cost-cutting initiatives that started in late 2022. The company eliminated a total of about 21,000 jobs over multiple rounds of layoffs. While it’s been downsizing broadly, Meta has been spending heavily on cutting-edge technologies like artificial intelligence and the virtual reality and augmented reality tech needed to underpin the metaverse. Similar to other tech giants, Meta has been pouring money into data center infrastructure and computing resources that CEO Mark Zuckerberg said is necessary to stay ahead of the competition.
Finance & Economy
Fed holds rates steady and notes progress on inflation
Federal Reserve officials held short-term interest rates steady but indicated that inflation is getting closer to target, which could open the door for future interest rate cuts. Central bankers made no obvious indications, though, that a reduction is imminent, choosing to maintain language that indicates ongoing concerns about economic conditions, albeit with progress. They also preserved a declaration that more progress is needed before rate reductions can happen. “The Committee judges that the risks to achieving its employment and inflation goals continue to move into better balance,” the Federal Open Market Committee’s post-meeting statement said, a slight upgrade from previous language.
Paychecks grew more slowly this spring, a sign inflation may keep cooling
Pay and benefits for America’s workers grew more slowly in the April-June quarter than in the first three months of the year, a trend that could keep price pressures in check and encourage the inflation-fighters at the Federal Reserve. Compensation as measured by the government’s Employment Cost Index rose 0.9% in the second quarter, down from a 1.2% increase in the previous quarter, the Labor Department said. Higher wages and benefits are good for employees, but slower pay growth will likely reassure Fed officials that inflation is steadily falling back to their 2% target. Rapid wage growth can lead many businesses to raise their prices to offset the higher labor costs.
American consumers feeling more confident in July as expectations of future improve
American consumers felt more confident in July as expectations over the near-term future rebounded. However, in a reversal of recent trends, feelings about current conditions weakened. The Conference Board, a business research group, said that its consumer confidence index rose to 100.3 in July from a downwardly revised 97.8 in June. The measure of Americans’ short-term expectations for income, business and the job market rose in July to 78.2 from 72.8 in June. A reading under 80 can signal a potential recession in the near future. Elevated prices for food and groceries remain the main driver of consumers’ view of the U.S. economy. Though inflation has come down considerably since the Federal Reserve started boosting interest rates in March of 2022, price increases remain well above pre-pandemic levels.
