What do Allbirds, Warby Parker, Chewy.com, and Peloton all have in common? First off, they are all digitally native direct to consumer (DTC) brands. Secondly, they all grew rapidly during the COVID-19 pandemic in 2020 and 2021. DTC e-commerce has become increasingly popular over the past two decades, but the pandemic led to strongly accelerated growth for companies using the business model. However, now in 2022, it seems that at least some digitally native DTC brands have slowed compared to their trajectories during the pandemic, which begs the questions: why, and is this going to continue?
First, why have many DTC e-commerce businesses slowed in recent months? One major driver is that consumers are being more cautious about their spending across the board given high inflation and rising concern about an economic slowdown. Deloitte’s July State of the Consumer Tracker reported that planned discretionary spending among U.S. consumers has declined. Additionally, more people are shopping in brick-and-mortar stores as they view physical shopping as a social activity that they would like to resume now that pandemic restrictions and fears have eased. According to Mastercard payment data, May 2022 online retail sales increased 2.2% compared to May 2021, whereas in-store sales grew by 13.4%. Furthermore, disruptions in the global supply chain remain a problem as my colleague Shane O’Grady highlighted in this space two weeks ago. Delays and elevated freight costs strongly impacted certain digitally native DTC companies as many such businesses are smaller, dependent on imported products, and incapable of passing on substantially higher costs.
This unfriendly environment for DTC e-commerce has led to a number of unfavorable outcomes for companies in the space. On July 26th, Shopify announced that it will lay off 10% of its global workforce, which is approximately 1,000 workers. Shopify enables businesses to sell to consumers online over its e-commerce platform. The company invested heavily in expansion during the pandemic, but recently, with many of the businesses using its platform struggling, Shopify has had to backtrack, leading to the layoffs. On the same day as the Shopify announcement, digitally native beauty retailer Glossier announced that it will sell its products through Sephora, marking its first wholesale partnership with a brick-and-mortar retailer. Despite having enjoyed strong growth both before and early on during the pandemic, Glossier has slowed year over year in 2021 and 2022. The company consequently laid off 80 corporate employees, a third of its workforce. Glossier hopes its entrance into the physical wholesale channel increases its reach and ultimately its sales. Allbirds made a similar move earlier this year, partnering with Nordstrom to sell its shoes in Nordstrom’s stores.
Might this recent slowdown become a secular, long-lasting decline for e-commerce businesses? Probably not. According to Digital Commerce 360, digital sales increased from $216.7 billion to $231.4 billion in Q1 2022, a growth rate of 6.7%. This underscores that e-commerce is still growing, albeit at a slower pace than it did during the pandemic, when growth topped 40% in certain quarters. Many expected e-commerce’s momentum to persist post-pandemic, but it seems that growth has decelerated to roughly the trajectory it was on before 2020. This view was expressed by Shopify CEO Tobi Lutke following the company’s layoff announcement: “[We are now seeing] the mix reverting to roughly where pre-Covid data would have suggested it should be at this point. Still growing steadily, but it wasn’t a meaningful 5-year leap ahead.”
Ultimately, 2022 has been a disappointing year thus far for certain digitally native DTC brands, hampered by macroeconomic issues and a rebound in in-store shopping. However, this should not be seen as permanent. With technology still improving and consumers continuing to gravitate to online shopping’s convenience and value, the future is still bright.
Headline of the Week
PepsiCo is investing $550 million to take an 8.5% stake in energy drink maker Celsius Holdings. PepsiCo will nominate a director to serve on Celsius’ board, increasing its size from eight to nine. The beverage giant has also signed a long-term strategic distribution agreement with Celsius to become its preferred distribution partner in North America and globally, effective Aug. 1. The agreement will cover both retail and foodservice channels. The investment in Celsius allows PepsiCo to broaden its exposure in the energy drink segment with a functional offering after acquiring Rockstar for $3.85 billion in 2020.
Apparel & Footwear
Allbirds last week laid off 23 employees, or 8% of its global corporate workforce, the DTC footwear company said by email on Wednesday. The layoffs followed an evaluation of “roles and processes in each department, and in each market, to ensure our operating structure is set-up for the next phase of growth. In this process, we looked for ways to streamline workflows, reduce duplicative efforts, and put past learnings and operational insights into practice,” according to a brand spokesperson. The company declined to provide specifics regarding severance, but said the decision was not “made lightly, and we are supporting impacted team members to give them a soft landing.”
Save the Duck has big plans. The Italian outerwear brand known for its jackets filled with a down alternative is expanding after securing new investors this year. “In the next two to three years, you will see the company invest,” chief executive officer Nicolas Bargi said during an interview. “We will open many shops, and we will grow our digital, online direct business.” Save the Duck generates 85 percent of its revenue via wholesale channels and 15 percent by selling directly to consumers – 8 percent of which comes through e-commerce. In the future, a higher percentage of turnover – as much as 30 percent – might come from direct sales to consumers, Bargi said at menswear fair Pitti Uomo in Florence in June.
A strong performance in North America and in the Europe, Middle East and Africa (EMEA) regions contributed to a 12 percent increase in first-half revenues of Italian accessories company Furla. Thanks to a recovery of local spending and a return of tourist flows, the EMEA area saw a 43 percent jump in revenues. In North America, sales soared 74 percent. Despite the COVID-19 pandemic and the restrictions enforced in the first quarter of the year in Japan, the main single market for the company, revenues in the region increased 6 percent. On the other hand, the measures to curb the spread of the pandemic in China and a rationalization of Furla’s points of sale in the Asia Pacific area drove revenues in the region down 27 percent. As reported, Furla owners are considering a sale of a stake in the Italian accessories company, according to market sources. Sources say Furla has tapped Lazard as its adviser and a dossier is circulating in Milan. It is also understood that former Valentino CEO Stefano Sassi is consulting with Furla on a potential deal.
Gordon Brothers has acquired the women’s lifestyle Orsay brand, archives, related trademarks and other intellectual property from Orsay GmbH. In doing so, Gordon Brothers aims to maintain Orsay’s ethos while also introducing new apparel, footwear and accessories. Terms of the deal were not disclosed. During an interview Wednesday, Gordon Brothers’ president of brands Tobias Nanda, said that Orsay generated nearly 500 million euros in sales pre-COVID-19. Contrary to reports earlier this year that the Willstatt, Germany-based fashion retailer had announced plans to terminate contracts for its 200 German stores and lay off 1,200 employees, Nanda said Orsay has more than 190 stores across Europe in franchisees and wholesale accounts. Last fall, Orsay GmbH applied for protective shield proceedings due to impending insolvency in the first quarter of 2022. That turned into insolvency proceedings by self-administration at the end of January. At that time, the holding company of the French entrepreneurial Mulliez family passed Orsay on to the restructuring specialists Gordon Brothers.
Lids has set its sights on the collegiate market. The headwear and apparel retailer is launching a new retail concept called Lids University, or Lids U, dedicated to apparel and sports products for the college market. The first three stores opened Friday at Gurnee Mills in Chicago, the Mall of Georgia in Buford, Ga., and the San Marcos Premium Outlets in San Marcos, Texas, and the plan is to open an additional eight units by the end of the year. Lids operates more than 1,200 stores around the U.S. Britten Maughan, president of Lids, said the idea of launching this new concept came about because the typical Lids store is heavily focused on product for professional leagues and only measures around 1,000 square feet. “The customer is coming in looking for collegiate product,” he said, a category that is one of the largest in licensed sports. But this customer is not being served in a regular Lids store, so Lids U was born.
Athletic & Sporting Goods
Britain’s largest sportswear retailer JD Sports Fashion will sell Footasylum to German asset management firm Aurelius Group for an enterprise value of about 45 million euros ($46 million), the companies said. Britain’s competition regulator last year ordered JD Sports to sell Footasylum after it found that the combination could lead to a “worse deal” for consumers. JD Sports, which sells brands such as Nike, Adidas and Puma in its physical and online stores, bought Footasylum in 2019 for 86 million pounds ($102.9 million) in its quest for dominance in the sportswear market.
Bandon Holdings, the largest Anytime Fitness franchisee, has been acquired by Sentinel Capital Partners. The Austin-based multi-unit franchisee operates 213 Anytime Fitness clubs and has more than 140,000 members in 24 states. Bandon Holdings has grown by focusing on owning and operating clubs in small suburban and rural markets where there are limited fitness club options. Sentinel has a long history of investing in franchise partners. Over nearly three decades, Sentinel has invested in 14 franchisors and 3 franchisees across a wide range of industries, including restaurants, healthcare, and consumer retail. The company has recently invested in American West Restaurant Group, a multi-unit Pizza Hut operator; Vital Care, an infusion therapy clinics franchisor; and The Recreational Group, the franchisor of Purchase Green artificial grass and lawn retail stores.
Cosmetics & Pharmacy
Cosmetics maker Estee Lauder Cos Inc is in talks to acquire luxury brand Tom Ford in what could be a $3 billion deal, the Wall Street Journal reported, citing people familiar with the matter. The potential deal would be the Clinique brand owner’s biggest acquisition ever, the report said, adding Estee is not the only suitor for Tom Ford. Estee Lauder declined to comment, while Tom Ford did not immediately respond to a Reuters request for comment. The move could help Estee beef up its luxury offerings at a time when demand for high-end apparel and accessories remains resilient, as luxury consumers continue to splurge on goods despite record inflation in the United States. Founded by fashion designer Tom Ford in 2005, the luxury brand is known for its menswear, but also counts women’s apparel, handbags, cosmetics and perfumes as part of its product line.
Estee is especially interested in Tom Ford’s beauty business and could potentially look to license the brand’s apparel offerings elsewhere, the report said. Also known for brands like La Mer and M.A.C., Estee Lauder, whose shares have lost more than 26% in value this year, has a market cap of $97.59 billion.
Beiersdorf AG posted a strong second quarter and first half, and confirmed guidance for full-year 2022, but said it expects additional headwinds. The maker of Nivea, La Prairie and Tesa products on Thursday reported first-half sales of 4.48 billion euros, up 15.5 percent in reported terms and 10.5 percent on a like-for-like basis. The Hamburg, Germany-based company’s adjusted operating margin came to 15.9 percent. The results beat the financial community’s expectations. “Implied [second-quarter] organic sales growth was 10.7 percent, compared to Visible Alpha consensus of 5.6 percent (Jefferies 5.5 percent),” Molly Wylenzek, equity analyst at Jefferies, said in a research note. “Three-year growth CAGR stepped up materially to 5.2 percent,” wrote Bruno Monteyne, senior analyst at Bernstein AG. “The organic growth beat was evenly split between the consumer and adhesive [Tesa] divisions, with good growth in the main consumer brands despite headwinds [China lockdowns impacting La Prairie sales].”
Symrise AG reported its net profits advanced 16.6 percent on sales that grew 18.5 percent in the first half of 2022. Due to the strong results, the German fragrance and flavors supplier has raised its sales forecast for the full year. “In a volatile business environment caused by rising commodity prices, ongoing global supply bottlenecks and the Russia-Ukraine war, we managed to continue on our profitable growth course,” said Heinz-Jürgen Bertram, chief executive officer of Symrise, in a statement. The organic uptick for the Holzminden, Germany-based company’s sales of 2.26 billion euros was 10.2 percent in the six months ended June 30. Symrise’s Scent and Care segment posted sales of 862.9 million euros, up 15.2 percent in reported terms and 6.3 percent on an organic basis. The Fragrance division’s sales advanced by a single-digit percentage, while the Fine Fragrance business achieved a double-digit sales increase in organic terms.
Discounters & Department Stores
Neiman Marcus on Wednesday announced the appointment of Ryan Ross to the position of president effective Aug. 15, according to a company press release. The new role will “fuel acceleration by strengthening the brand and customer experience,” per the company. Ross will report to CEO Geoffroy van Raemdonck. Ross resigned from Williams-Sonoma last week, where he was serving as the president of the Williams Sonoma brand.
Walmart has begun laying off some of its employees following the cut to its profit outlook issued last week. “We’re updating our structure and evolving select roles to provide clarity and better position the company for a strong future,” Walmart spokesperson Jimmy Carter said by email. About 200 corporate employees are affected, according to a source familiar with the situation. Including store associates, the company employs about 2.3 million people globally, about 1.6 million of them in the U.S. The Wall Street Journal reported that the roles were in merchandising, global technology and real estate. Walmart’s Carter said the retail giant is “investing in key areas” including e-commerce, technology, health and wellness, supply chain and advertising.
After taking the long view and firmly addressing its inventory glut, Target is now in good position for the second half of the year, according to a Monday client note from Wells Fargo analysts. The retailer does deserve “some criticism for its inventory missteps” and “took the earliest and biggest margin hit in retail” as it heavily marked down the excess, analysts led by Edward Kelly said. But its swift and “decisive action should help protect pandemic share gains (the real prize at the end of the day)” and pave the way to a recovery, Wells Fargo said.
Emerging Consumer Companies
Boisson, a NYC-based non-alcoholic beverage retailer, has closed a $12M seed round, which marks the largest seed round for a non-alcoholic brand to date. The round was co-led by Connect Ventures, the investment partnership between entertainment and sports agency Creative Artists Agency (CAA) and global venture capital firm New Enterprise Associates (NEA), and Blue Scorpion Investments. The fundraise is intended to expand the brand’s store footprint to Los Angeles, to launch a new on-premise arm of the business, and to debut new content platforms. Launched in 2021, Boisson currently has an extensive collection of over 125 non-alcoholic beverage brands that offer zero-proof wines, beers, spirits, aperitifs and mixers. Boisson was born in the middle of the COVID-19 pandemic, at a time when many people were reconsidering their drinking habits.
Casual footwear-maker Crocs announced continued gains in its digital sales and strong uptake of its newly acquired Hey Dude shoe brand, but it also warned that the pace of growth would likely slow down. According to the company’s Q2 earnings, Crocs brand digital sales grew 16.8%, which marks for 37.2% of Crocs brand revenues, while Hey Dude digital sales were 31.5% of that brand’s overall revenues. The company expects Hey Dude’s pro forma revenues to reach $1 billion this year.
Food & Beverage
Beyond Meat Inc. lowered its revenue forecast for the year and announced job cuts as rising inflation hurt the company’s efforts to make its pricier plant-based meat more affordable for consumers. Higher prices of plant-based meat have slowed the growth of the category with people trading down to lower-priced chicken and beef, Beyond Meat Chief Executive Ethan Brown said on an earnings call. The second quarter saw sequential contraction in U.S. household penetration of plant-based meat for the first time in more than four years, Brown said, citing data from Numerator. Beyond Meat now expects 2022 revenue of $470 million to $520 million, compared with its prior range of $560 million to $620 million. Analysts were expecting revenue of $559.4 million, according to Refinitiv data.
Del Monte Foods purchased Kitchen Basics, a line of ready-to-use stocks and broths, from McCormick & Co., boosting the CPG’s retail presence in a category popular with at-home cooks. The purchase of Kitchen Basics supports Del Monte’s growth strategy as the 136-year-old company focuses on innovating and broadening its iconic brand portfolio. It also expands the geographic reach of its stocks and broths business, currently led by College Inn, while providing additional scale to help Del Monte grow the category across its North American footprint. The terms of the deal were not disclosed.
Grocery & Restaurants
Despite inflationary pressures and ongoing tensions with a growing union, Starbucks reported major growth momentum for the third quarter ended July 3, according to an earnings release posted on Tuesday. Same-store sales were up 3% globally, driven by a 6% increase in average ticket, partially offset by a 3% decline in comparable transactions. U.S. same-store sales were particularly strong, with a 9% increase in same-store sales, driven by 8% ticket growth. One of the most notable milestones of the quarter was Starbucks’ record-breaking quarterly revenues, which grew 8.7% to $8.2 billion, with the North America segment alone increasing revenues by 13% to $6.1 billion. The Seattle-based coffee chain’s momentum was primarily driven by the U.S. and other markets outside of China, which took a nosedive in Q3 due to COVID-related store closures.
McDonald’s Corp. has quietly ended its 600-unit test of the McPlant burger in the United States, the company confirmed. While the plant-based offering remains on the menu in some foreign markets, its domestic future remains clouded. The Chicago-based burger brand confirmed the McPlant test, which began last November in eight units and then expanded to a 600-restaurant market test in February, had “concluded as planned.” The company did not divulge its domestic plans for McPlant, which has been introduced in foreign markets like Austria, Denmark, the Netherlands, Sweden and the United Kingdom and recently debuted in a limited, Victoria, Australia, test in July. An analyst cited by CNBC last week said some McDonald’s employees told him the burger didn’t sell well in the U.S. restaurants, which were mostly in the San Francisco and Dallas markets, which would jeopardize a larger rollout.
Home & Road
The Container Store proclaimed a good start to its fiscal 2022 after reporting gains in consolidated net sales well as in its retail business in its first quarter. It also noted strength in its kitchen and home fragrance categories. In the first quarter ended July 2, 2022, consolidated net sales increased 7.1%, to $262.6 million. Net sales in The Container Store retail business were up 7.9%., to $246.8 million. Elfa International AB third-party net sales declined 4.4%, to $15.9 million. Excluding the impact of foreign currency translation, Elfa third-party net sales were up 11.9%. Comparable store sales increased 5.1%, with Custom Closets up 14.7%. Consolidated net income was $10.5 million compared to $17.7 million in the first quarter of fiscal 2021, a 40.7% decline.
Residential furniture orders fell a whopping 41% in May compared with May 2021, according to accounting firm Smith Leonard’s latest Furniture Insights survey. Orders for the year are down 25% from last year. But, as has been the case for the past few months, orders are up dramatically over 2020, some 47% higher for May. And perhaps more importantly, orders seem to be more in-line with what they were before the pandemic began. Orders for May 2022 were up 2% over May 2019. Price increases should also be factored in, which were implemented in late 2020 and all of 2021. Shipments were much better, says Smith Leonard, up 10% over May 2021 and up 7% year-to-date. Shipments were up for 76% of the participants year-to-date. As shipments exceeded new orders, backlogs dropped again falling 4% from last May, when they were up 214%.
Havertys said its earnings for the second quarter, ended June 30, were driven by “solid gross margin improvement and attention to operating costs.” Net sales for the period were$253.2 million, up 1.3% from the same period in 2021. Comp-store sales were up 1.1%, and total written sales were down 13.3% for the quarter. Gross profit margins increased 130 basis points to 57.9% for this year’s second quarter, which the company attributed to pricing discipline and merchandise mix. Net income for the company was $21.7 million, down 5% year over year from last year’s $22.9 million. Still, Havertys reports earnings per share of $1.27, up from $1.21 last year. “These results are particularly gratifying as we are comparing with last year’s record-setting growth,” said Clarence H. Smith, chairman and CEO, in the earnings report. “Supply chains issues are subsiding, and we are restoring our operating inventory levels and reducing our backlog of orders.”
Diversified manufacturer Leggett & Platt reported second quarter net income of $95.2 million, 15% decline from net income of $112.2 million in the same quarter last year. Sales for the quarter were $1.33 billion, a 5% increase from second quarter sales of $1.27 billion last year. Year-to-date earnings were $185.6 million, a slide of 7% from $199.7 million net income in the first half of last year. Sales for the first half of the year climbed 10% to $2.66 billion from $2.42 billion in the first half of 2021. “We delivered quarterly record sales, solid earnings, and strong cash from operations,” said Mitch Dolloff, president and CEO. “These results are attributable to the excellent work of our employees as they continue to effectively navigate a dynamic operating environment and reflects the value of the diversity of our portfolio.”
Jewelry & Luxury
David Yurman Names Nike Veteran Chief Operations Officer
David Yurman has chosen Marcelo Tao, a veteran of Nike and Boston Consulting Group, to be its new chief operations officer. Tao will be responsible for supply chain, technology, and real estate operations, playing a critical role in driving the brand’s continued growth, global retail expansion, product innovation and execution, and digital transformation. Tao joins David Yurman from Nike, where he served as vice president, head of strategy, global operations and technology. Prior to Nike, Tao served as a partner and managing director at the Boston Consulting Group. President Evan Yurman said in a statement that he looks forward to leveraging Tau’s experience “in leading operational growth and transforming global companies across the retail sector.”
Just months after its April Fools’ foray into cryptocurrency, Tiffany & Co. is actually entering the world of NFTs. An NFT, or a non-fungible token, is a financial security comprised of digital data stored on a blockchain. Tiffany’s NFT, called NFTiff, will be powered by blockchain provider Chain and be available exclusively to CryptoPunks holders. CryptoPunks is an NFT digital art collection of 10,000 different pixelated punk rock characters on the Ethereum blockchain. Ownership of an NFT is recorded on the blockchain and is able to be transferred to a new owner as NFTs are sold and traded. CryptoPunks holders who purchase an NFTiff will receive access to create an exclusive, custom Tiffany & Co. pendant inspired by their own Cryptopunk character.
The founding family and largest shareholder in Italy’s Tod’s said it would spend up to €338 million ($344 million) to buy out other investors in the luxury goods brand and take it private, aiming to spur its revival. The Della Valle brothers said in a statement their holding company would pay 40 euros for each Tod’s share, a 20.4 percent premium to the stock’s closing price on Tuesday, valuing the company at €1.32 billion. The offer is equal to the price the company set at the time of its initial public offering back in 2000.
Aether Diamonds, a fast-growing lab diamond company that harvests stones from carbon found in the air, is launching its first jewelry collection. The Bombé collection features rings, necklaces, pendants and bracelets made with its proprietary lab-grown diamonds and yellow gold. It will be available to shoppers directly through Aether’s site and represents an evolution for a brand that in recent months has added multiple big-name executives to its advisory board, including Alain Bernard — Richemont’s former head of North America and the recent founder of Abbey Road Advisory. While most lab-grown diamond brands set their stones in very classic jewelry, Aether purposefully went in a more fashionable direction to further its self-described “luxury” positioning. Every piece comes with a description of how many months of carbon emissions have been offset by the production of its Aether diamond components — ranging from one month to nearly 11 years of offsets, all calibrated toward the average individual’s annual carbon impact.
Office & Leisure
JetBlue Airways shares tumbled more than 6% Tuesday after a surge in costs drove it to another quarterly loss just as it plans its takeover of Spirit Airlines. The New York-based airline had a loss of $188 million in the second quarter on record revenue of close to $2.45 billion as it grappled with a nearly 35% increase in cost per available seat mile compared with three years ago. Fuel, labor and other expenses rose sharply last quarter. Despite the loss, JetBlue said it expects to return to its first profit since the Covid pandemic began this quarter and that it would remain cautious on growth while costs surge. JetBlue last week announced it had finally reached a deal to acquire ultra-low-cost carrier Spirit Airlines for $3.8 billion in cash after a long bidding war with discounter Frontier Airlines.
Golf gamers in rainy Seattle can drive and stay dry indoors using Topgolf’s new Full Swing indoor bays. Seattle is a place where “tech is at the center of everything,” according to Topgolf’s COO, so the company will introduce Swing Suite simulator bays at its new center in the home of Microsoft. Washington State’s first Topgolf will also employ the company’s first skylit central atrium architecture design. With comfortable seating, yard games, and a giant video wall, the atrium creates a hangout spot that connects the indoor and outdoor gaming experience with a patio, bars, and rooftop terraces. Located off Logan Avenue near The Landing shopping mall and the Boeing Company’s Renton factory, the venue will employ approximately 500 Topgolf associates. It is Topgolf’s 78th global location.
Technology & Internet
Amazon is acquiring iRobot for $61 a share in an all-cash deal that values the Roomba maker at $1.7 billion, the companies announced Friday. The deal will deepen Amazon’s presence in consumer robotics. Amazon made a bold bet on the space last year when it unveiled the Astro home robot, a $1,449.99 device that’s equipped with the company’s Alexa digital assistant and can follow consumers around their homes. It also offers an array of smart home devices, like connected doorbells after its 2018 acquisition of Ring, as well as voice-activated thermometers and microwaves. “Over many years, the iRobot team has proven its ability to reinvent how people clean with products that are incredibly practical and inventive — from cleaning when and where customers want while avoiding common obstacles in the home, to automatically emptying the collection bin,” said Dave Limp, Amazon’s hardware devices chief, in a statement. “Customers love iRobot products — and I’m excited to work with the iRobot team to invent in ways that make customers’ lives easier and more enjoyable.”
Social media giants Meta and Snap are telling investors that the online advertising market is experiencing some turbulence due to the economic slowdown. Amazon is sending a very different message. While the bulk of its business comes from e-commerce and cloud computing, Amazon has built a robust online ad division by getting brands to pay big bucks to promote their products on the company’s website and app. As of late last year, Amazon commanded 14.6% of the U.S. digital ad market, third to Google at 26.4% and Facebook at 24.1%, according to Insider Intelligence. In the second quarter, Amazon grew faster than either of its larger peers in the market and also beat out the rest of the major players. Amazon’s ad revenue rose 18% from a year earlier to $8.76 billion, topping analysts’ expectations and underscoring the unit’s rapid ascent and increasing importance to brands. By contrast, Facebook’s ad business shrank for the first time ever, missing analyst estimates, and the company forecast a second consecutive decline in revenue in the current period.
Finance & Economy
Hiring in July was far better than expected, defying multiple other signs that the economic recovery is losing steam, the Bureau of Labor Statistics reported. Nonfarm payrolls rose 528,000 for the month and the unemployment rate was 3.5%, easily topping the Dow Jones estimates of 258,000 and 3.6%, respectively. The unemployment rate is now back to its pre-pandemic level and tied for the lowest since 1969, though the rate for Blacks rose 0.2 percentage point to 6%. Leisure and hospitality led the way in job gains with 96,000, though the industry is still 1.2 million workers shy of its pre-pandemic level.
Retail in-store and online consumer spending excluding automotive increased 11.2% year-over-year (YOY) in July across all payment types, with demand and higher prices both contributing factors, according to new Mastercard data. The July Mastercard SpendingPulse report showed that retail sales excluding automotive and gas were up 9.0% and overall eCommerce sales were up 11.7% YOY. The Mastercard SpendingPulse report reflects nominal spending and is not adjusted for inflation. July’s increase in spending outpaced monthly YOY growth this year, with inflation playing into how consumers navigate between wants and needs, according to a Mastercard press release about its SpendingPulse report.