We are excitedly counting down the weeks until the return of the Consensus Great Brands Show (CGBS), which will take place September 13th, at the New York Times Center in Manhattan (CGBS Website). CGBS is returning for the 10th time, after a pause for COVID, and we are bringing the show back bigger and better than ever. With the date of the CGBS approaching, we are using this space each week to profile a different company that will be taking the stage in September. We hope our weekly previews underscore our growing anticipation for this year’s show and give you a head start on learning about these dynamic brands and entrepreneurs.
Mid-Day Squares is a rapidly growing snack food brand that makes protein packed, fiber rich, chocolate bars. Between Mid-Day’s delicious products and an innovative approach to marketing, it has become the fastest-growing functional chocolate bar brand on the market. The Canada-based company was founded by Nick Saltarelli, his wife, Lezlie Saltarelli and her brother, Jake Karls, in 2018 after coming from different careers such as product development and marketing.
Lezlie’s desire to get into plant-based foods spearheaded the initial vision of what became Mid-Day Squares. She created the brand’s first product, Fudge Yah, in her kitchen. The Fudge Yah product consists of a double layer of chocolate, chunky on top and soft on the bottom, that includes fiber, protein and Omega-3 to help satisfy the hunger cravings consumers get in the early afternoon.
Collectively known as “the tripod”, Lezlie, Jake, and Nick wanted to ensure Mid-Day Squares was a branded food company built for the next generation. Consumers in other industries, such as beauty and apparel, choose a brand and remain loyal to it based on their connection to its story and their emotional experience with the company. For the most part, grocery store brands lack that deep connection to consumers, so shoppers opt for competitively priced products. Realizing that their brand needs to tell a story, the tripod aims to connect with its customers by stimulating a strong emotional attachment and, eventually, brand loyalty. Their significant social media presence has created a connection with modern consumers and helped to increase demand – the Company now produces 50,000 bars per day (and has 122 thousand followers on Instagram). The Company’s savvy social media strategy is captivating and authentic. Lezlie noted that “Social media is a forever changing landscape, but storytelling has been around for as long as humans have existed.”
Mid-Day Squares’s tripod leadership team believes its online storytelling is one of its main competitive advantages. They vow to post unvarnished, authentic content for their viewers, and such unfiltered content has proved to be highly successful. The group has a podcast, “Mid-Day Squares Uncensored!,” which they view as a mix of Keeping Up with the Kardashians and Shark Tank. They hope to portray behind the scenes of building a business. Lezlie says it includes, “therapy sessions, legal battles, raising money, things that companies never show.” The Company’s unique ability to connect with consumers is clear – they have sold more than one million chocolate bars to date.
We are excited for you to hear the Mid-Day Squares story at the Consensus Great Brands Show on September 13, 2023, at the New York Times Center. Please check out Mid-Day Squares beforehand by visiting middaysquares.com.
Headline of the Week
Birkenstock Owner Plans September IP0 at $8 Billion Value
L Catterton is set to launch an initial public offering of Birkenstock as soon as September that may value the iconic footwear maker at more than $8 billion, people with knowledge of the matter said. The private equity firm backed by luxury French fashion house LVMH is working with Goldman Sachs Group Inc. and JPMorgan Chase & Co. on a potential listing of Birkenstock in the US, Bloomberg News reported earlier this month. A listing could value the German sandal maker at as much as $10 billion, according to one of the people. The company’s sales have been boosted of late by the blockbuster Barbie movie, which stars Margot Robbie in the title role donning a pair of pink Birkenstocks in one scene. Deliberations are ongoing and no final decisions on the size or timing of an IPO have been taken, the people said, asking not to be identified discussing confidential information. An IPO of Birkenstock would come more than two years after the L Catterton and the family investment company of billionaire Bernard Arnault acquired a majority stake in the business, valuing it at about €4 billion.
Apparel & Footwear
Tamara Mellon Announces Partnership With Footwear Licensing Company
Luxury shoe designer Tamara Mellon is partnering with licensing company Titan Industries to operate and manufacture her namesake brand, the two companies announced Friday. Under Titan Industries, which produces footwear for brands like Badgley Mishka and L’Agence, Tamara Mellon will enter wholesale for the first time next year. Terms of the deal were not disclosed. Titan Industries will manage Tamara Mellon’s e-commerce business, which has been its primary distribution channel since launching in 2016. Titan will also move the shoe brand’s production from Italy to Spain, where it has an established network of shoemakers and manufacturers. Mellon, the co-founder of Jimmy Choo, raised at least $87 million in venture funding for her brand, which was an early adopter of the monthly drop model over the traditional seasonal production cycle. In 2018, it opened a flagship location in Los Angeles. The brand generated around $30 million in sales that same year. Tamara Mellon raised $50 million in Series C funding in 2019, in a round led by London-based investment firm Centricus. Other investors included NEA and Quadrille Capital.
Dr. Martens Reported Target of Activist Investor
An activist investor has reportedly acquired a significant stake in Dr. Martens. According to a Saturday report on Sky News in the U.K., activist fund manager Sparta Capital has acquired “stock worth tens of millions of pounds” in Dr. Martens and is working with the brand’s board to help it improve the business. The report added that Sparta is now one of the footwear brand’s top 10 shareholders. Dr. Martens’ stock rose on the news. A Dr. Martens spokesperson did not confirm the Sky News report, but said in a statement: “We engage with all our shareholders on a frequent basis and met with Sparta as part of the regular roadshow after our full-year results.” At the time of its IPO in 2021, Dr. Martens’ listing price was 370 pence a share. The offering comprised 350 million existing shares and valued the boot maker at 3.7 billion pounds. This was more than 10 times what parent Permira Holdings paid back in 2014 to own the brand. Since then the footwear brand’s value has dropped as it has faced troubles in the U.S. market.
Gap Inc. stock closed up 3.1 percent Tuesday after Barclays upgraded the retailer to “overweight” from “equal” weight, as the company continues to trim inventories. An overweight rating suggests that the stock is worth more than it’s currently trading at while an equal weighting suggests the stock will continue to be in line with the average stock performance in the sector. During the first quarter of this year, all four Gap Inc. divisions — Gap, Banana Republic, Old Navy and Athleta — continued to lose market share. But the company did manage to sharply narrow its net and operating losses from the year before, and some near-term bottom line improvement seems probable. Last month, Gap Inc. disclosed two key appointments. Richard Dickson, a former Mattel and Jones New York executive, became president and chief executive officer of Gap Inc., a position that had been vacant for a year. Also, Chris Blakeslee, formerly of Alo Yoga, became president of the Athleta division. Barclays said it believes Dickson “has strong brand-building experience from his years overseeing Barbie, Hot Wheels and Fisher-Price as chief operating officer of Mattel, while also bringing to the table apparel experience from his time as CEO of brands at Jones Group.”
Levi Strauss strengthens East Coast e-commerce fulfillment with Kentucky facility
Levi Strauss opened an e-commerce fulfillment center in Erlanger, Kentucky as the company looks to drive growth in its direct-to-consumer and e-commerce business, CEO Chip Bergh said during a Q2 earnings call. The 575,700-square-foot facility will serve e-commerce orders for the East Coast, according to an announcement from the Kentucky Cabinet for Economic Development, with shipping operations already begun in July, the CEO said. “This completes bringing our U.S. e-commerce business in-house, which will drive more agility and inventory positioning, reducing lead times, improving customer satisfaction and accelerating digital margin expansion over time,” Bergh told analysts. Levi’s struggled to fulfill orders throughout the pandemic due to capacity constraints at some U.S. distribution centers and trapped inventory in closed stores. Since then, the retailer has worked to optimize its fulfillment operations. While the Kentucky facility will serve East Coast customers, Levi’s Nevada distribution center fulfills West Coast e-commerce orders.
Athletic & Sporting Goods
Adidas to Release More Yeezy Inventory in August
Adidas will reportedly go back to the Yeezy well in August after a very successful first-selling effort in May and June boosted second-quarter revenues and prompted Adidas to raise its outlook for the year. The company announced a further release of Yeezy inventory with a range of existing products made available in phases throughout the month of August across the world. As previously communicated, Adidas said it will donate a significant amount to selected organizations working to combat discrimination and hate, including racism and antisemitism. As with the release in May 2023, the second release will feature products that were initiated in 2022. The range available will apparently include some of the most popular existing designs including the Yeezy Boost 350 V2, 500 and 700 as well as the Yeezy Slide and Foam RNR.
Nike plans ‘network’ of boutique fitness studios
Nike is diving deeper into fitness with the planned opening of a “network” of fitness studios. The locations will be supported by an app for at-home workouts and will also feature social fitness events. The retailer also plans to sell merchandise at the locations, but Nike Studios merchandise cannot be returned to Nike retail stores. Nike Studios will offer month-to-month memberships that can be canceled at any time, but customers must give notice 10 days before their next payment to avoid being charged. Memberships are currently only functional for one location, but Nike plans to release an All Access membership tier in the future that allows for workouts at any of its studios. The retailer describes the studios as neighborhood locations with small class sizes, which will feature “blood-pumping tunes” and “‘let’s do this’ lighting.”
Manchester United sign $1.1 billion Adidas kit deal for 10 years
Manchester United signed a 900 million pound ($1.1 billion) deal with Adidas, renewing the English soccer club’s partnership with its official kit supplier for 10 more years. Manchester United, whose U.S. owners have been considering selling the Premier League club, will return to the lucrative UEFA Champions League this year after securing a top-four finish in the domestic league last season under manager Erik ten Hag. German sportswear giant Adidas became the club’s official kit sponsor in the 2015/16 season, reuniting after 23 years and taking over from Nike after sealing a 750-million-pound deal, which was a record at the time.
Cosmetics & Pharmacy
Bondi Sands sold to Japan’s Kao Corporation for $450 million
Japanese beauty giant Kao Corporation has acquired Australia’s Bondi Sands for an estimated US$450m. The deal sees the owner of John Frieda and Molton Brown expand into self-tanning. Founded in 2012, Bondi Sands is now available in 32 markets and has a strong presence in Australia, the UK and US. “The addition of Bondi Sands to our consumer family of brands will greatly advance our mission to be the preeminent leader in the global skin protection business and continue our journey of offering diverse products that promote a ‘kirei’ lifestyle that is healthy, inclusive and sustainable for all,” said Karen Frank, President, Consumer Care Business, Americas and EMEA.
Rhyz Inc., a strategic investment arm of Nu Skin, on August 1st announced the acquisition of BeautyBio, a brand offering skincare products and beauty devices. The acquisition provides Nu Skin entry into “the fast-growing hydration facial and microneedling markets,” according to an equity research note from Jefferies. While terms of the agreement were not revealed, the deal is expected to add around $10-$15 million in sales in the second half of the year. Nu Skin is forecasting annual revenues of $2 billion to $2.08 billion. When reporting its first-quarter earnings, the company had projected annual revenues of $2.03 billion to $2.18 billion. Annual revenues are expected to decline from $2.23 billion in 2022 and $2.70 billion in 2021.
Yves Rocher to close all stores in Germany, Austria and Switzerland
After having announced the closure of all of its stores in Switzerland last May, Yves Rocher is also preparing to put an end to its retail business in Germany and Austria. “With its current business model, Yves Rocher can no longer remain operational in a sustainable and successful way,” explained the beauty brand’s German subsidiary to dpa news agency. About 140 shops and some 350 employees would be concerned in Germany. They were informed mid-March and a social plan has been prepared in collaboration with the employee representative committee.
e.l.f. Beauty’s Q1 2024 Net Sales Spike 76%
e.l.f. Beauty’s Q1 fiscal 2024 net sales grew 76% year over year to $216.3 million, even as the company gained 260 basis points of market share. During Q1, gross margin increased about 280 basis points to 71%, while net income was $53.0 million on a GAAP basis. e.l.f. Beauty notes that the mass color category grew 6% in the period, while e.l.f. grew 48%. The brand now reportedly holds about a 9.5% share of the U.S. mass color cosmetic category. Meanwhile, while the U.S. facial skin care sector grew 10% in fiscal Q1, e.l.f. Beauty’s facial skin care business grew 127%. The brand now reportedly holds a 1.5% share of facial skin care dollar share.
Discounters & Department Stores
Walmart ups stake in Flipkart after buying additional shares from Tiger Global
Walmart confirmed that it has acquired additional shares of Flipkart from Tiger Global. Although the company declined to share further financial details with Retail Dive, The Wall Street Journal reported that Walmart paid $1.4 billion for a larger stake in the India-based e-commerce company. “We value Tiger Global’s involvement and support over the last several years,” a Walmart spokesperson said in a statement emailed to Retail Dive. In 2018, Walmart became Flipkart’s largest shareholder when it paid $16 billion for an initial 77% stake in the e-retailer.
Macy’s chief supply chain officer exits
Dennis Mullahy, the first-ever chief supply chain officer at Macy’s, has left the company after four years in the position, according to a post on his LinkedIn profile. Macy’s confirmed his last day was July 14. The company said Mullahy modernized the department store’s supply chain operations and led a team during industry-wide supply chain upheaval. Mullahy also oversaw the launch of mini distribution centers at 35 stores and the opening of a $584 million distribution center.
Simon Property Group says its retail portfolio is worth $3.5B
Net operating income from Simon Property Group’s retail portfolio, which includes J.C. Penney and other retailers, fell 57% year over year in the second quarter to $50.2 million, according to an earnings presentation filed with the Securities and Exchange Commission. Overall at the company, funds from operations fell 1.4% year over year to $1.08 billion, and lease income rose 5% to $1.3 billion. Portfolio net operating income, which includes international properties at constant currency, rose 3.7%, while U.S. net operating income rose 3.3%.
Emerging Consumer Companies
Coop Sleep Goods and Comphy merge to create sleep platform
Coop Sleep Goods and Comphy have merged to create a partnership that combines their expertise in the sleep industry. Coop Sleep Goods, a portfolio company of Topspin Consumer Partners, offers fully adjustable sleep products, while Comphy is known for its luxurious and durable linens. Both companies were founded to address issues within the sleep industry, with Coop focusing on comfort and support customization and Comphy blending durability and sustainability with softness. The merger aims to provide customers with a seamless experience in designing their sleep environment. Coop Sleep Goods is known for its innovative sleep solutions, including a top-rated pillow, while Comphy is the leading luxury hotel and spa linen brand, with a 97% adoption rate among Forbes 5-Star rated properties. By leveraging their strengths, the two brands aim to solidify their positions as industry leaders and drive future innovation. The merger will allow them to reach more customers and bring their products to more homes across the country.
Podcast company Realm acquires kid-focused Pinna
Podcast company Realm has announced its expansion into the kids and family space by acquiring two podcast companies, Pinna and Lipstick & Vinyl. Pinna offers ad-free, subscription content for children and families, while Lipstick & Vinyl focuses on unscripted shows. Realm, known for its fictional series, sees this move as a logical step to grow its programming portfolio. Molly Barton, Realm’s CEO and co-founder, stated, “Expanding into kids and family makes a ton of sense for us. We already dominated fiction, and now we can take all that we learned and grow the kids and family categories.” The acquisition of Pinna and Lipstick & Vinyl will allow Realm to tap into the growing market for children’s podcasts and expand its reach to a wider audience. This move comes as the podcast industry continues to consolidate, with companies seeking to diversify their offerings and capture new demographics. The financial details of the acquisitions were not disclosed.
HerMD raises $18 million to expand women’s health clinic network
Women’s health company HerMD has raised $18 million in Series A funding to expand its network of women’s health clinics. Founded by Dr. Somi Javaid, HerMD focuses on providing specialized care for women at all stages of life. The company offers longer appointments and comprehensive women’s healthcare services, both in-person and virtually. It also provides aesthetic services like facial injectables and body treatments. With the new funding, HerMD plans to open new clinics in New York City and Nashville, as well as develop virtual services and enhance its training program, HerMD University. The company also intends to invest in mental health services and cutting-edge technologies for sexual health and menopause. Dr. Javaid envisions HerMD having over 200 clinics in the future and aims to establish partnerships with hospital-based systems. She believes that hospitals need a partner like HerMD because their providers often lack training in menopause and sexual health. Additionally, the company plans to introduce e-commerce and physician-curated products.
Food & Beverage
Livekindly Collective expands with acquisition of Alpha Foods
New York-based Livekindly Collective acquired California-based Alpha Foods on Tuesday, marking its sixth food brand acquisition. LKC is on track to become one of the plant-based industry’s leading food companies as the segment struggles with reduced growth and sales for a myriad of reasons. The acquisition comes just a few months after Alpha Foods partnered with the Every Company to create plant-based food with animal-free eggs. The partnership was intended to help Alpha Foods improve its products’ taste and texture — an issue that many companies across the category have dealt with.
Plant-based seafood startup raises $26 million in seed round
Konscious Foods, a plant-based seafood startup, has raised $26 million in seed funding to expand its retail and foodservice businesses, support operations at its production facility and launch marketing initiatives. The brand debuted earlier this year with a line of frozen sushi rolls, onigri stuffed rice snacks and poke bowls made from plants. Formulations include ingredients such as konjac plant, pea fiber and organic red quinoa. The products are available across the United States and Canada at retailers including Whole Foods Market and Sprouts Farmers Market. The brand is slated to grow to more than 4,500 stores by the end of the year. Konscious Foods is the latest venture of Yves Potvin, the French chef who previously founded the Yves Veggie Cuisine and Gardein brands and created the first-to-market veggie hot dog. Investors include Protein Industries Canada, Zynik Capital and Walter Group, among others.
Diageo: Sales Up In 2023; Premium Sales Offsets Volume Losses
Diageo reported a 10.7% rise in net sales for fiscal year 2023, with premium-plus brands contributing 57% of overall organic net sales growth. Net sales grew organically 6% to $21.9 billion for the Don Julio owner, while organic operating profit grew 7%, thanks to price increases more than offsetting the impact of inflation costs. Spirits sales rose 6% organically, earning gains from higher prices and a more premium mix, although volume was flat. Spirit sales were driven by double-digit performances in scotch (+12%) and tequila (+19%). But in the U.S, net sales of spirits declined 1%. That drop contributed to organic net sales remaining flat in North America, which was offset by growth in Canada and Diageo Beer Company USA. The region makes up 39% of the group’s sales. Tequila was a bright spot in the U.S. where net sales grew 15%, driven in part by Casamigos (+14%) which benefited from the recent launch of its Cristalino expression.
Indoor farming company AppHarvest files for bankruptcy
Indoor farming company AppHarvest, which drew investments from major names including Martha Stewart and then-author J.D. Vance, filed for bankruptcy. The startup was a leader in the controlled environment agriculture space, opening one of the world’s largest indoor farming facilities in late 2020. But lower than expected crop yields and elevated operational costs weighed down profits, its Chief Financial Officer said in a court document. The Chapter 11 filing will enable the startup to restructure operations and find a buyer. AppHarvest’s high-tech greenhouses remain operational, and product will continue to flow to grocery chains, restaurants and other partners.
Grocery & Restaurants
Yum Brands Misses Revenue Estimates at Taco Bell and Pizza Hut
Yum Brands on Wednesday reported mixed quarterly results as Taco Bell’s and Pizza Hut’s same-store sales disappointed. Yum executives said on the company’s conference call that inflation has peaked and started to slow in most developed markets. But emerging markets are still seeing inflation rise. Net sales rose 3% to $1.69 billion. The company’s digital sales increased nearly 30% in the quarter, accounting for nearly half of orders. Yum Brands’ same-store sales grew 9% in the quarter, topping StreetAccount estimates of 6.9%. The company’s restaurants saw growing customer traffic and market share gains, executives said. KFC’s same-store sales climbed 13%, fueled by returning demand in China, its largest market. KFC’s system sales in China soared 32%, while its U.S. system sales rose 5%. Most of its U.S. growth came from low-income consumers, Yum CEO David Gibbs said. Pizza Hut reported same-store sales growth of 4%, missing StreetAccount estimates of 6.3%. The pizza chain’s domestic same-store sales rose just 1%. Taco Bell’s same-store sales also rose 4%, falling short of estimates of 4.3%. Its U.S. same-store sales increased 4%, but its international same-store sales shrank 1% in the quarter.
TDR Capital gets taste for chicken with Popeyes deal
Private equity firm TDR Capital has invested £50m into chicken shop chain Popeyes UK. Popeyes UK has so far opened 27 locations across the country since taking its first store in Stratford in November 2021. Tom Mitchell, managing partner at TDR Capital, said: “There is significant demand for the brand and its product, which makes this an exciting, long-term investment opportunity for TDR. Popeyes, largely known as a US fried chicken chain, muscled into the UK market almost two years ago with a plan to open some 350 sites over the next decade. The UK launch was part of a franchise agreement between Restaurant Brands International, Ring International Holdings and Popeyes UK co-founder and Dominos Pizza UK non-executive director, Elias Diaz Sese.
Starbucks U.S. growth slows as company escalates reinvention plan
Starbucks was a tale of two coffee companies for the third quarter ended July 2: While international stores saw double-digit sales growth driven by China’s 46% same-store sales growth, U.S. growth did not fare as well, and transactions were just up 1%. U.S. same-store sales were up 7% driven primarily by price increases, beverage customization, and increased food attachment from customers, which led to record weekly sales, despite the traffic dipping. According to Starbucks, tighter margins in the North America markets can be attributed to investments in improved store experience and staffing as the Seattle-based coffee company moves full-speed-ahead with its reinvention plan, which was first introduced last year as a way to improve operations. A significant part of that plan is to listen to employees’ needs for better hours, benefits, and working conditions, all of which have been major complaints of the Starbucks Union. These store improvements include better equipment, like the continued rollout of the Clover Vertical Brewer, and moving forward with digital menu boards in all locations, both of which are meant to improve productivity and drive up same-store sales.
Home & Road
Wayfair in ‘exciting place’ as it hits on key earnings milestones in Q2
Continued improvements in performance, including achieving positive adjusted EBITDA as previously predicted, was one of the highlights for Wayfair’s second quarter earnings. The online retailer saw total net revenue drop by $113 million to $3.2 billion — a 3.4% year-over-year decrease — although U.S. net revenue fell by just 0.4%, ending up at $2.8 billion for the quarter. International net revenue was down 20.9% year over year, coming in at $386 million for the quarter. Wayfair reported a diluted loss of 41 cents per share and adjusted diluted earnings per share of 21 cents. Adjusted EBITDA was $128 million for the quarter and $114 million for the six months ended June 30. Non-GAAP free cash flow was $128 million for the second quarter. “Last year we laid out a plan to strengthen our business that included a path to sustainable and growing profitability with several key milestones,” said Niraj Shah, CEO, co-founder and co-chairman of Wayfair. “For the past few quarters, you’ve seen us execute against that plan to lower costs, focus on the basics and earn more customer and supplier loyalty. And you’ve seen the tangible impact of this plan as our performance has continued to improve.”
Tupperware announces debt restructuring
In a move that has increased its stock price, Tupperware Brands Corporation announced a finalized agreement with lenders to restructure its debt, according to a company press release Thursday. Tupperware’s agreement includes the reduction or reallocation of $150 million in cash interest and fees, access to a revolving borrowing capacity of about $21 million, a reduction in certain amortization payments and the extension of certain stated maturity. The company said the agreement improves its overall financial position and will allow it to continue its turnaround efforts. Tupperware’s latest announcement follows months of operational and financial distress at the company.
The Container Store Turns to Loss in Q1
In the first quarter, The Container Store went from profits to a loss year over year under pressure from macroeconomic conditions that reduced sales and prompted the company to launch promotional initiatives. Net loss was $11.8 million, or 24 cents per diluted share, compared to net income of $10.5 million, or 21 cents per diluted share, in the year-before quarter, the company noted. Adjusted for one-time events, net loss was $10.1 million, or 21 cents per diluted share, versus adjusted net income of $10.5 million, or 21 cents per diluted share, in the fiscal 2022 period. Comparable sales declined 19.9%, with general merchandise categories down 20.5%, contributing 1,360 basis points of the comp decrease versus the year-prior quarter, Container Store stated. Custom Spaces+ comps declined 18.6% year over year in the period, negatively impacting comparable store sales by 630 basis points.
Ethan Allen’s profits beat 2022 levels despite fourth quarter dip
Top 100 retailer Ethan Allen generated more net income and earnings per share in FY2023 than it did in FY2022. For the full year, the Danbury, Conn.-based retailer picked up $791.382 million in net sales, down 3.23% from $817.762 million in FY2022. Net income for the full year totaled $105.81 million, or $4.03 adjusted per diluted share, an increase of 2.4% from $103.28 million, or $3.93 adjusted per share in 2022. In the quarter ended June 30, Ethan Allen posted net sales of $187.375 million, down 18.42% from $229.683 over the same timeframe in 2022. Net income totaled $25.41 million, or 96 cents adjusted per diluted share, down 19.4% from $31.52 million, or $1.25 adjusted per share in 2022.
Tractor Supply Posts Q2 Gains, Growth Plans but Results Fall Short
As it updated its stores goal to 3,000 across the United States and annual plan of new openings to 90 per year, Tractor Supply announced its second quarter financial results including gains in net and comparable sales as well as earnings. The company posted a net income of $421.2 million, or $3.83 per diluted share versus $396.5 million, or $3.53 per diluted share, in the year-prior quarter. Still, earnings per share came up short of a MarketBeat-published analyst consensus estimate of $3.91 per diluted share as well as a revenue target of $4.26 billion. Net sales increased 7.2% to $4.18 billion in the quarter year over year as comparable sales gained 2.5%, led by 1.8% transactions growth, Tractor Supply maintained. Operating income was $559.3 million versus $525 million in the year-earlier period.
Jewelry & Luxury
Banter by Piercing Pagoda Goes All In on Permanent Jewelry Expansion
After a successful trial run, Banter by Piercing Pagoda is expanding permanent jewelry to more than 60 stores nationwide and plans to add it at other locations soon. “We are excited to make our permanent jewelry services available to as many customers as possible,” Amy Robinson, president of Banter by Piercing Pagoda tells JCK. “We are thrilled to be a leader in the permanent jewelry experience.” Permanent jewelry has gone from a pop-up trend by some jewelers to a full-time offering at many stores in recent years, as evidenced by the entry of Banter by Piercing Pagoda in this experiential jewelry space.
Canada Goose DTC revenue jumps 60% in Q1
Canada Goose’s first quarter total revenue increased 21% year over year to 84.8 million Canadian dollars (about $63.5 million), according to a company press release. The luxury apparel brand reported its net loss increased from CA$63.6 million the year before to CA$85 million. Driven by in-store retail sales, the company’s direct-to-consumer revenue grew 60% to CA$55.8 million. Meanwhile, wholesale revenue decreased 18% and operating loss jumped from CA$82.2 million to CA$99.7 million. Canada Goose’s first quarter results demonstrate the brand’s commitment to DTC channels.
Richemont acquires controlling stake in Gianvito Rossi
Richemont acquired a controlling stake in Italian shoemaker Gianvito Rossi, the company announced. Though financial details of the private transaction weren’t disclosed, the company said in the announcement that the deal wouldn’t have a material financial impact on Richemont’s assets or operating results for its current fiscal year. Gianvito Rossi, the founder, CEO and creative director of his namesake brand, will retain a stake in the company and continue to “nurture and develop” the house in partnership with Richemont, per the release.
Aurate partners with Macy’s, Helzberg Diamonds
Marking its first wholesale partnerships, direct-to-consumer jewelry brand Aurate is releasing two exclusive product lines with Helzberg Diamonds and Macy’s. The Laure by Aurate line at Helzberg Diamonds will launch in August, while Audrey by Aurate at Macy’s is set to launch in September. The Audrey by Aurate line will be available in 167 Macy’s stores nationwide with a median price of $500. Meanwhile, the Laure by Aurate line will be available in 30 Helzberg Diamonds stores — with locations focused in the midwest where Aurate is less known — and on the retailer’s website with median prices at $350.
Office & Leisure
Hasbro to sell film, TV assets as it warns of hit to revenue from Hollywood strike
Hasbro lowered its annual revenue forecast as it expects a hit from the ongoing strike by Hollywood writers and actors, and said it would divest its Canadian film and TV business to focus on selling toys and games. Hasbro said it would sell its eOne film and TV studio to Lionsgate Entertainment by year-end for about $500 million, adding that its revenue forecast includes the performance of the business being sold. The eOne business made up about 85% of the company’s entertainment segment revenue last year, Hasbro CFO Gina Goetter said on a post-earnings call. The unit’s sale is aimed at creating an “asset light model for future live action entertainment, relying on licensing and partnerships with select co-productions,” CEO Christian Cocks said. “With the sale of its eOne Film & TV business to Lionsgate, Hasbro is dodging a bullet in terms of the content pipeline,” said James Zahn, editor of trade magazine The Toy Book. The toymaker said margins at its entertainment segment are expected to slide due to the strike as well as a $25 million charge it took from the lackluster performance of “Dungeons & Dragons: Honor Among Thieves” at the box office.
GameStop to stop support for its crypto wallets due to ‘regulatory uncertainty’
GameStop plans to end its support for its cryptocurrency wallets “due to the regulatory uncertainty of the crypto space.” The retailer said it will remove its wallets, which operated through iOS and Chrome browser extensions, from the market on Nov. 1. The retailer’s decision comes about a year after announcing plans to launch its digital asset wallet, which allowed users to send, store, receive and use cryptocurrency and non-fungible tokens. GameStop advised in a brief note at the top of its crypto wallet website that all customers should verify they have access to their Secret Passphrase by Oct. 1, which will allow them to recover their account in a compatible crypto wallet. Ahead of the launch last spring, former CEO Matt Furlong said in a letter to stockholders that the company’s efforts and interest in crypto had begun the previous year with unspecified investments “to insert GameStop into the blockchain gaming and cryptocurrency worlds.”
Technology & Internet
Amazon Reports Blowout Profit, Beats on Sales and Issues Optimistic Guidance
Amazon reported second-quarter earnings on Thursday that sailed past analysts’ estimates and issued guidance that points to accelerating revenue growth. It was Amazon’s biggest earnings beat since its report for the fourth quarter of 2020. The blowout profit indicates that CEO Andy Jassy’s ongoing cost-cutting efforts are beginning to bear fruit. Amazon initiated the largest layoffs in its history, cutting 27,000 jobs since last fall. The e-commerce giant froze corporate hiring, and Jassy has looked to trim expenses in units across the company. For the third quarter, Amazon expects sales of between $138 billion and $143 billion, or growth of between 9% and 13%. Analysts were expecting revenue of $138.25 billion, according to Refinitiv. The guidance reflects the strength of Amazon’s 48-hour Prime Day discount event, held in July, which the company touted as its “biggest ever.” Amazon has returned to double-digit growth after expansion was mired in the single digits for five of the past six quarters. Jassy, who took over the helm from founder Jeff Bezos in July 2021, attributed some of the improvement to AWS, which had previously been seeing clients slow their spending due to economic uncertainty. Advertising continues to be a booming business for Amazon, with quarterly revenue jumping 22% in the period to $10.7 billion.
Apple shares slide after it reports decreased revenue for iPhone and other hardware
Shares of Apple were down 3% Friday morning after the company reported lower year-over-year revenue for its flagship products in its third quarter earnings report. Apple said revenue for its iPhone, Mac and iPad lines was down from the year before. Overall sales fell 1% year over year, the company reported. Still, Apple beat estimates on earnings per share, which came in at $1.26 compared to the $1.19 analysts had expected, according to Refinitiv. Revenue was also slightly higher than estimates, at $81.8 billion compared to $81.69 billion expected. During the company’s earnings call Thursday, Apple’s stock dipped lower when CFO Luca Maestri told analysts they expected similar sales results in the following quarter. But Maestri added that he expects iPhone sales to do better than the 2% decline in the June quarter, and that Apple’s services division should see an even higher growth rate in the following quarter.
Finance & Economy
The Fitch U.S. ratings cut is here to stay
Growing political instability means the U.S. will not regain its AAA rating with Fitch for the foreseeable future, according to Elliot Hentov, head of macro policy research at State Street Global Advisors. Global stock markets fell sharply after ratings agency Fitch downgraded the United States’ long-term foreign currency issuer default rating from AAA to AA+, citing “expected fiscal deterioration over the next three years” and an erosion of governance in light of “repeated debt-limit political standoffs and last-minute resolutions.”
The U.S. economy added 187,000 jobs in July, fewer than expected
Job growth in July was less than expected, pointing to slower growth in the U.S. economy, the Labor Department reported. Nonfarm payrolls expanded by 187,000 for the month, slightly below the Dow Jones estimate for 200,000. Though the headline number was a miss, it actually represented a modest gain from the downwardly revised 185,000 for June. The unemployment rate was 3.5%, against a consensus estimate that the jobless level would hold steady at 3.6%. The rate is just above the lowest level since late 1969.
