Headlines of the Week

Coach owner Tapestry to acquire Michael Kors, Jimmy Choo parent Capri Holdings for $8.5 billion

Tapestry, the fashion conglomerate behind Coach and Kate Spade, will acquire competitor Capri Holdings in a $8.5 billion deal announced on Thursday. The deal will create an American fashion giant that — while still not quite as large as its European competitors — will be better positioned to compete in the luxury market. It brings together six fashion brands: Tapestry’s Coach, Kate Spade and Stuart Weitzman and Capri’s Versace, Jimmy Choo and Michael Kors.  Together, the company will have the size and scale to reach more customers across the globe and better compete in the luxury market, Tapestry CEO Joanne Crevoiserat said on a call Thursday morning. She said the combination pulls together “six iconic brands” that have a presence in over 75 countries and drive over $12 billion in annual revenue. Capri, in particular, has been hit by slowing sales. Tapestry, meanwhile, raised its full-year outlook in its most recently reported quarter. The deal is not subject to any financing conditions. It will be funded with bridge financing from Bank of America and Morgan Stanley in a combination of senior notes, term loans and cash, a portion of which will be used to pay some of Capri’s outstanding debt, the companies said.

Advent buys Australian fashion brand Zimmermann in $1 bln deal

Private equity firm Advent International has bought a majority stake in Zimmermann from the founding family and Italy’s Style Capital, in a deal which sources said values the Australian fashion brand at more than one billion U.S. dollars. While the financial terms were not disclosed, two people close to the matter said the transaction valued the brand at around 14 times its core profit – meaning around $1.15 billion. Zimmermann has revenue of some $260 million and a more than 30% core profit margin, the people said. The investment by Advent will allow Zimmermann to speed up expansion abroad including in Asia and the Middle East, and boost its distribution network, including the digital offer, Advent, Zimmermann and Style Capital said in a joint statement. Style Capital – an Italian private equity firm that specializes in luxury brands and owns labels such as Twin-Set, Sundek and Golden Goose – and the Zimmermann family will retain a relevant minority stake, they said, adding that the company will continue to be run by its founders and current management. Founded in Sydney in 1991 by sisters Nicky and Simone Zimmermann, the brand has grown in the last three decades to gain international recognition for its luxury swimwear and sophisticated floral prints reminiscent of still-life painting.

 

 

Apparel & Footwear

AllSaints, John Varvatos Post Strong Revenue, Profit Growth in Fiscal 2023

Sister brands AllSaints and John Varvatos saw sales and profits climb in the year to January 2023, according to owner Lion Capital. The results include a full year of business for the New York-based John Varvatos, which AllSaints purchased in October 2021. Total revenue for the 12-month period was up 36 percent to 457 million pounds. AllSaints revenue rose 25 percent to 390.9 million pounds, with retail up 22 percent, and wholesale, franchise and licensing revenue rising 44 percent. John Varvatos revenue was 66.1 million pounds. According to Lion, operating profit for the group nearly tripled to 28.5 million pounds, while post-operating, exceptional EBITDA rose 66 percent to 59.1 million pounds. Lion said the fashion group’s performance was bolstered by new products and continued international store rollout, including in Taiwan and South Korea, and the momentum has continued into the current year. As reported, John Varvatos sold his company to Lion Capital in 2020. Lion had the winning bid at an auction for the bankrupt men’s designer brand’s business. The Lion bid was in the $97 million range, according to estimates in sale documents filed in Delaware bankruptcy court, where John Varvatos filed for Chapter 11 in May 2020.

Kenneth Cole Enters Strategic Partnership With The Kasper Group for Women’s Apparel

Kenneth Cole wants to dress the next generation of young professional women. His company, Kenneth Cole Productions, has entered a strategic partnership with The Kasper Group, a wholly owned subsidiary of Premier Brands Group Holdings, to manufacture and distribute a new line of modern, wear-to-work women’s apparel. Starting with the spring 2024 season, Kasper will manufacture and distribute women’s tailored sportswear under the Kenneth Cole New York label. The assortment will consist of tech-infused career inspired essentials designed for the young professional woman encompassing jackets, shirts, pants, skirts and dresses. The collections will be sold at premium and major department stores and select specialty stores throughout the U.S. The Kasper Group has such international brands as Nine West, Anne Klein, Kasper and Le Suit.

Wolverine Worldwide fires CEO as company reports weak Q2

Wolverine Worldwide said Thursday that it has terminated CEO Brendan Hoffman and named Christopher Hufnagel president and CEO. Hufnagel joined the company in 2008, has served as president since May and previously held multiple leadership roles at Wolverine. Hoffman’s termination, effective Aug. 6, was without cause and was not a result of any disagreements relating to the company’s operations or policies, Wolverine said in a regulatory filing. The leadership change comes as the company reported a soft second quarter. Revenue fell 17.4% year over year to $589.1 million. Wolverine lowered its full-year guidance Thursday, citing low order demand for global wholesale. In addition to its namesake brand, the company’s portfolio includes Hush Puppies, Sperry, Bates and Stride Rite. Wolverine is also the global licensee for Cat and Harley-Davidson footwear. Before his appointment as president in May, Hufnagel was president of the company’s active group. In earlier roles at the company, he was president of direct-to-consumer and senior vice president of strategy. Before joining Wolverine Worldwide, Hufnagel held senior leadership roles at Under Armour, Gap and Abercrombie & Fitch.

 

 

Athletic & Sporting Goods

YogaSix Hits Key Milestone with Over 600 Signed Franchise Agreements

YogaSix, the boutique yoga brand, reported exceeding 600 signed franchise agreements in the U.S. YogaSix said it had experienced unprecedented growth over the last several years with a significant consumer demand for health and fitness that addresses the mind/body connection. The company said expansion in key markets, including Alexandria, VA; Los Angeles, CA; Boston, MA; and Long Island, NY, would fuel the brand’s yoga experience that includes six core formats.

JD Sports Acquires Balance of Shares in Poland-Based Sports Retailer

JD Sports Fashion Plc, the parent of the JD, Finish Line, DTLR, and Shoe Palace retail brands in the U.S. and others worldwide, exercised its right under a call option and entered into a conditional agreement to acquire the outstanding 40 percent minority stake of Marketing Investment Group SA (MIG) from its minority shareholders to become the 100 percent sole owner of MIG. In the year ended January 31, 2023, MIG generated approximately £270 million in revenue. Completion of the acquisition is subject to customary approval by the European Commission and anticipated no later than the fourth quarter of 2023.

Cosmetics & Pharmacy

Amyris Files for Chapter 11 Bankruptcy

Amyris, a onetime biotech darling that sought to change the beauty industry with innovative and sustainable ingredients and later moved into the celebrity brand world, has filed for Chapter 11 bankruptcy in a Delaware Court and is looking to off-load its consumer arm. The announcement comes just a few days after it shuttered three brands – Costa Brazil with former Calvin Klein designer Francisco Costa, Onda Beauty cofounded by Naomi Watts and Purecane – and terminated 260 positions, a rep confirmed. As part of the process, Amyris has secured a commitment from an entity affiliated with existing lender Foris Ventures for $190 million of debtor-in-possession financing to support continued day-to-day operations. Court documents state that its debt totals $1.3 billion.

Olaplex Q2 2023 Net Sales Drop 48.2%

Olaplex Holdings, Inc.’s Q2 2023 net sales dropped 48.2% year-over-year to $109.2 million; as a result, the company has downgraded its full-year forecast from a range of $563-634 million to a range of $445-465 million. Professional channel sales fell 61.2% year-over-year, totaling $40.9 million, while specialty retail fell 53.7% to $29.8 million. Direct-to-consumer sales totaled $38.5 million, for the period, down 6.4% year-over-year.

 

Walgreens Boots Alliance Sells Shares of AmerisourceBergen Corporation for $1.85 Billion of Initial Proceeds

Walgreens Boots Alliance, Inc. announced that it has sold shares of AmerisourceBergen Corporation common stock pursuant to prepaid variable share forward transactions executed through a registered public offering for current proceeds of approximately $1.6 billion. In addition, Walgreens Boots Alliance entered into a concurrent share repurchase by AmerisourceBergen for proceeds of approximately $250 million, subject to the consummation of the purchase and sale of the shares of AmerisourceBergen in the registered public offering.

Farfetch ‘to exit beauty business’

Rumours that Farfetch will exit its beauty business appear to be correct with reports that it will be shut down as soon as 31 August. There has been plenty of speculation in recent periods around the move but Farfetch hasn’t commented officially on the plan so far, although the absence of any denial of the reports suggests they’re correct. But for now, its website has no information suggesting anything is changing. It’s believed that its acquired Violet Grey beauty operation and Browns Beauty will continue. It’s not much more than a year after Farfetch launched the beauty business on its website (in April 2022) with much fanfare and it’s a bit longer since it bought upscale beauty retailer Violet Grey (January 2022).

 

Discounters & Department Stores

Target to expand Starbucks curbside pickup service nationwide

By October, customers at 1,700 Target stores that have a Starbucks and offer Drive Up service for retail purchases will be able to get curbside delivery of beverages and food, the company announced on Wednesday. Curbside Starbucks service at Target is currently available at select or all store locations in 24 states. The full nationwide rollout Starbucks curbside service expands an initiative that began in early 2022. At that time, the retailer said the ability to add Starbucks to a curbside order was a top request, according to a survey of Target shoppers.

Last RI Christmas Tree Shops store to close on Aug. 12

The last Christmas Tree Shops location in Rhode Island, along with those across the country, will close its doors Saturday, Aug. 12, as the company continues to liquidate after declaring bankruptcy in May. Christmas Tree Shops was unable to find a buyer and defaulted on a $45-million bankruptcy loan in June after demand exceeded expectations, leaving store shelves empty. The liquidation sale started on July 6, the company stopped accepting gift cards on July 21 and the Warwick location closed on July 30. Christmas Tree Shops announced on its website that all stores will close on Aug. 12.

 

Walmart’s share of grocery spending keeps growing

Walmart’s grocery market share keeps growing and growing. The Bentonville, Arkansas-based retail Goliath now takes in 25.2% of all grocery dollars, up about 1.5 percentage points since 2021. That’s according to new data released by consumer research firm Numerator, which tracked purchase data and surveyed buyers to understand shifts in behavior. Kroger came in at No. 2, with 10.7% dollar share, though its share has shrunk as Walmart’s has increased. Also among the top five retailers are Costco, followed by Albertsons and Sam’s Club. Of the Top 10 food retailers by dollar share, none has seen as steep a drop since 2021 as Kroger.

 

 

Emerging Consumer Companies

Ozlo Sleep emerges from stealth with $10 million Series A
Boston-based company Ozlo Sleep has emerged from stealth mode after securing $10 million in Series A funding. The funding round, led by LifeArc Ventures and ARTIS Ventures, took place last fall. Dr. Imran Hamid from LifeArc Ventures and Vasudev Bailey from ARTIS Ventures have joined the company’s Board of Directors. Ozlo Sleep, co-founded by three former Bose employees, aims to improve sleep quality and overall well-being without the use of pharmaceuticals. The company plans to achieve this through the launch of its Sleepbuds®, a headphone specifically designed for sleep. The Sleepbuds will utilize sleep-related technology acquired and licensed from Bose Corporation. The product is set to be released later this summer.

Digital media startup, Puck, raises $10 million Series B
Digital media startup Puck has raised over $10 million in a Series B funding round led by British investment firm J Rothschild Capital Management. Founded in 2021, Puck previously raised $7 million in a Series A round. The company currently has around 240,000 subscribers, with 30,000 of them being paid subscriptions. Puck’s co-founder and CEO, Joe Purzycki, stepped down in May, and the company is currently searching for a replacement. The recent funding round included participation from existing investors Standard Investments and TPG. With the new funds, Puck plans to expand its subscription and advertising businesses and hire more employees. The company aims to add eight to 10 new staff members by the end of 2023. Although Puck is not yet profitable on an annual basis, it has experienced profitable months. The Series B funding round values Puck at approximately $70 million. Puck’s business model allows journalists to receive a share of the subscription revenue generated by their reporting, emphasizing the importance of individual talent in building a brand. The company aims to redefine the business model of journalism and prioritize the creators.

 

 

Food & Beverage

Campbell’s to Buy Sovos Brands for $2.7 billion

The Campbell Soup company announced it was purchasing Sovos Brands, the owner of Rao’s, Michael Angelo’s and Noosa Yogurt.  At a purchase price of $23 per share in cash, the deal values Sovos at approximately $2.7 billion, a 14.6 adjusted EBITDA multiple, including expected annual run rate synergies of approximately $50 million.  Of its three brands, Rao’s is the dominant contributor to revenue, representing roughly 69% of Sovos’ adjusted net sales for fiscal year 2022. The sauce, pasta, soup and frozen meal brand grew organic net sales by 34.9% as compared to the prior year.  Founded in 2017 by investment group Advent International, Sovos acquired the Michael Angelo’s and Rao’s brands in January and June 2017, respectively. It went on to acquire yogurt brand Noosa in 2018 and baking brand Birch Benders in 2020, undergoing an IPO in 2021. The company sold off Birch Benders in 2022, at the time stating it planned to narrow its focus around meals and sauces.  For Campbell, the deal allows it to grow the multinational to grow its Meals and Beverages division, particularly within frozen entrees and pasta sauces.

Anheuser-Busch to sell 8 beer and beverage brands to cannabis company Tilray

Cannabis company Tilray Brands said it has reached a deal to purchase eight beer and beverage brands from Anheuser-Busch. Terms of the deal were not disclosed.  Tilray will acquire Shock Top, Breckenridge Brewery, Blue Point Brewing Company, 10 Barrel Brewing Company, Redhook Brewery, Widmer Brothers Brewing, Square Mile Cider Company and HiBall Energy. The expected sales volume of the acquired brands will elevate Tilray to the 5th largest craft beer player in the U.S., up from 9th place.  The purchase comes as cannabis companies deal with a crowded marketplace and struggle to make meaningful progress in the U.S. without federal regulations, leaving them to turn to other revenue channels for growth.

Food bankruptcies surging as companies struggle with shift in consumer habits, access to cash

A spate of recent bankruptcies upending the food and beverage space is likely just the beginning of the failures as more companies are expected to collapse in 2023 amid changing consumer tastes and challenges raising money to fund their cash-intensive businesses.  This year has seen a meaningful uptick in bankruptcy filings. According to data compiled by New Generation Research for Food Dive, 85 food, beverage and tobacco companies have filed for bankruptcy through July 18, the largest number since the early days of the COVID-19 pandemic. In 2022, 61 companies filed for bankruptcy during the same period.  Among the highest-profile businesses to file for Chapter 11 bankruptcy are plant-based food maker Tattooed Chef, which launched in 2018 and upcycling company Do Good Foods. Companies with ties to agriculture have been hit hard, too, with indoor agriculture companies AppHarvest, once valued at more than $3.5 billion, and AeroFarms, also filing.  These follow the high-profile collapse last November of Bang Energy, which filed for Chapter 11 protection as it struggled to recover following multiple costly lawsuits. It was sold recently to energy drink giant Monster Beverage for $362 million.

 

 

Grocery & Restaurants

Report: Pollo Tropical to be sold for $225M

Fiesta Restaurant Group, the Dallas-based parent company of Pollo Tropical, is reportedly going to be sold to Authentic Restaurant Brands for $225 million. ARB is part of New York-based Garnett Station Partners and includes Primanti Bros., PJ Whelihan’s, and Mambo Seafood. Garnett Station Partners also acquired Firebirds Wood Fire Grill in March and has investments in Checkers, Kona Ice, Fat Tuesday, and Carrols Restaurant Group, in addition to companies in other segments. Fiesta became a public company on May 7, 2012 through a spin-off from Carrols Restaurant Group and trades on the Nasdaq under the symbol FRGI. The company used to own Taco Cabana but divested that chain in August 2021.

 

El Pollo Loco board adopts poison pill amid Sardar Biglari stock buys

El Pollo Loco Holdings Inc.’s board has adopted a limited-duration shareholder rights plan, or poison pill, to protect shareholders’ interests amid share purchases by Sardar Biglari and his affiliates, the company said Wednesday. The Costa Mesa, Calif.-based quick-service Mexican restaurant chain said the rights plan is effective immediately and will expire on Aug. 7, 2024. Biglari, whose San Antonio, Texas-based Lion Fund had earlier made activist-investor pushes at Lebanon, Tenn.-based Cracker Barrel Old Country Store Inc. and San Diego, Calif.-based Jack in the Box Inc., filed Securities and Exchange Commission documents in July that stated he and his companies had accumulated 9.1% of shares in El Pollo Loco and increased that to 11.3% of shares in Aug. 8 filings. Biglari Holdings owns the Steak ‘n Shake and Western Sizzlin brands. El Pollo Loco, in a statement, said “the limited-duration rights plan was adopted in response to the rapid and significant accumulation of El Pollo Loco stock by Biglari Capital Corp. (together with its affiliates, ‘Biglari Capital’).” “In adopting the rights plan, the board noted that Biglari Capital has a track record of acquiring substantial and sometimes controlling interests in public restaurant companies,” the company said in a statement.

Home & Road

iRobot Tops Wall Street Q2 Estimate Despite Deeper Loss

Although iRobot Corp. second-quarter earnings slipped, the company managed to beat a Wall Street estimate as it continues to await the conclusion of its merger with Amazon. Net loss was $80.8 million, or $2.93 per diluted share, versus $43.4 million, or $1.60 per diluted share, in the year-earlier quarter, the company stated. Adjusted for one-time events, net loss was $39.3 million, or $1.42 per diluted share for the second quarter of 2023, versus $9.5 million, or 35 cents per diluted share, in the year-prior period.  A Zacks Investment Research average estimate for adjusted diluted earnings per share was a loss of $1.69. Revenue was $236.6 million versus $255.4 million in the year-previous quarter. Operating loss was $71.1 million versus an operating loss of $63.9 million in the year-before period while adjusted operating loss was $50.5 million compared to an adjusted operating loss of $53.3 million, iRobot noted. On July 24, iRobot entered into a $200 million financing facility to fund ongoing operations. At the same time, iRobot and Amazon amended the existing terms of their merger agreement to reflect a reduction in the price per share. The companies expect the change in price per share to largely offset an increase in iRobot’s net debt under the new financing facility.

These 5 things caused Purple’s Q2 earnings results to falter

Omnichannel mattress brand Purple Innovation attributed its 16.1% decline in second quarter net revenue to $120.9 million from $144.1 million in the prior-year period to five key influences. Net loss for the quarter grew to $37.5 million compared with a second quarter loss of $8.3 million in the same quarter last year. The company said the decline was due to softening demand for home-related products, the impact of inflation on discretionary consumer spending, pull-forward buying by consumers during the pandemic, industry-standard price reductions on the sell-in of new mattress and adjustable base floor models to wholesale partners, and increased discounting on discontinued models sold through the company’s direct-to-consumer channels. Purple said its wholesale revenue dropped 15.5%, while direct-to-consumer sales dropped 16.6% in the quarter compared with the same period last year. It attributed the drop of its direct-to-consumer revenues to lower e-commerce sales that were partially offset by growth in its sales from its branded showroom sales buoyed by 16 new showrooms opened during the last year.

Declining demand for luxury goods reflected in 1stDibs’ Q2 financials

Online marketplace 1stDibs is feeling the effects of softer demand for its goods such as furniture and art amid slower luxury home sales, resulting in net revenue and gross profits declines in the second quarter. Net revenue fell by 15% year over year in the second quarter to $20.9 million, while gross profit decreased 12% YoY to $14.6 million for Q2. Non-GAAP adjusted EBITDA and adjusted EBITDA margin were down $4.6 million and 21.9%, respectively, compared with a decline of $6.1 million and 24.7% in Q2 2022. Both orders and active buyers fell as well. Orders were 32,000 or off 9% from Q2 2022, and active buyers, defined as those who have made at least one purchase through the online marketplace within a 12-month period ended with the second quarter, decreased 6% to 65,000. Gross merchandise value for the quarter was $89.9 million, down 14% YoY.

Leon’s says after declines in Q2, second half is looking better

While economic pressures were cited for the declines in Leon’s Furniture Ltd.’s second quarter numbers, President and CEO Mike Walsh says things “seem to be stabilizing.” Revenue for the period decreased 8.2% year over year, coming in at C$593.8 million for the period ended June 30. Same-store sales were C$581.7 million, down 8.1% from the 2022 quarter. Gross profit margin increased 12 basis points to 43.94%, thanks to a favorable product mix and reduced inbound freight. Both EBITDA and net income took a hit, attributed to lower sales during the period, with adjusted diluted earnings per share down 41.4% to C41 cents per share. “Exiting Q2, we began to see some improvement in consumer demand, which has carried over into early Q3, giving us a more positive outlook for the second half of the year,” said Walsh in the earnings release. “LFL is very well-positioned going into the balance of 2023.” Leon’s retail banners include Leon’s, The Brick, Brick Outlet and Thee Bric Mattress Store, as well as The Brick’s MidNorthern Appliance and Leon’s Appliance Canada. The company has 304 retail stores under these banners, and it operates six websites.

Jewelry & Luxury

Adamas One to Buy Lab-Grown Diamond Manufacturer

Adamas One Corp. has announced plans to acquire India-based lab-grown diamond manufacturer Flawless Allure Grown Diamonds LLP. The company entered into a non-binding letter of intent (LOI) regarding the purchase. The LOI is subject to due diligence, confirmations within industry standards and approval by Adamas One’s board of directors. Financial terms of the deal were not disclosed. In the acquisition, Adamas One will gain control over Flawless Allure’s diamond production, as well as its cutting and polishing capabilities.

De Beers’ Rough Diamond Sales Drop 36% in July

De Beers Group’s rough diamond sales fell 36 percent year-over-year in July as the trade remains cautious about the back half of the year. During the course of sightholder and auction sales held July 10-25, De Beers’ rough diamond sales totaled $410 million, down 36 percent from $638 million in the same sales period last year. Compared with the $456 million reported in the fifth sales cycle of 2023 (June 5-20), sales were down 10 percent. Year-to-date, De Beers’ rough diamond sales have totaled $2.84 billion, down 25 percent from $3.78 billion at this point last year, a banner year for diamond sales.

Office & Leisure

Funko lays off 12% of workforce

Amid continuing sales declines and surplus inventory issues, toy company Funko announced it laid off about 12% of its workforce or 180 employees, per a company press release. The jobs cuts are a result of the company rationalizing its product lines to focus more on the products and businesses that are the most productive, Funko Chief Operating Officer and Chief Financial Officer Steve Nave said on a call with investors Thursday. The layoffs came as Funko reported second-quarter net sales fell by 24% year over year to $240 million, while it swung to a net loss of $75.9 million from a profit of $15.8 million for the same period last year. The company’s gross margin in Q2 fell to 29.2% from 32.7% last year. Funko, which is known for its pop-culture-inspired vinyl figures and collectibles, has implemented a plan that includes a number of initiatives aimed at cutting costs. In addition to enacting layoffs, the company is cutting back on product after surplus inventory strained its fulfillment network in the fourth quarter of last year, forcing the brand to destroy between $30 million and $36 million worth of inventory. At the time, the company’s inventory was up 48% from the prior year.

Mattel Adventure Park Set for 2024 Opening

Hot Wheels rollercoasters and a life-size Barbie Beachhouse are just a few of the attractions underway at Mattel Adventure Park, which will become Arizona’s first fully themed indoor/outdoor amusement park upon opening in 2024. Set to open south of State Farm Stadium in Glendale at VAI Resort, Mattel Adventure Park will welcome guests 365 days a year, serving as an Arizona entertainment destination showcasing Mattel’s expansive portfolio of brands. The nine-acre park combines inspiration from Mattel, Epic Resort Destinations and other partners in amusements and entertainment. Substantially indoors, the park’s attractions load and unload inside a fully air-conditioned space. Mattel Adventure Park includes two fully themed Hot Wheels rollercoasters – Hot Wheels Bone Shaker: The Ultimate Ride and the Hot Wheels Twin Mill Racer. Other Mattel-themed attractions include: Thomas & Friends: World of Sodor, a full-scale Barbie Beachhouse, Masters of the Universe, and a mini golf experience featuring nine holes inspired by Magic 8 Ball, Pictionary and other Mattel games and a custom climb UNO structure.

Party City, Creditors in talks to spin off balloon business, Bloomberg reports

Party City Holdco is considering splitting up its balloon manufacturing and retailing businesses as the latter charts a course out of bankruptcy, Bloomberg News reported on Friday, citing people familiar with the situation. The company has held confidential talks with debt holders about spinning off its Anagram unit, the report said, adding that talks are continuing and the situation may change. In January, Party City filed for bankruptcy protection after it saw its fortunes taper following a slowdown in sales due to lockdowns and store closures. This along with inventory shortages and tight supplies of helium due to global supply chain disruptions hurt the party supplier further. The company said its subsidiaries outside of the United States, its franchise stores and its Anagram business were not part of the bankruptcy proceedings.

Staples taps DoorDash for same-day delivery

Adding to a roster of retail partners, DoorDash has partnered with Staples to offer deliveries from nearly 1,000 U.S. stores, DoorDash announced Monday. DoorDash has a back-to-school deal hub featuring Staples, Office Depot, Walgreens and other major retailers offering school supplies deliveries. Shoppers can order school supplies or work-related items and receive them same-day in under an hour, on average. DoorDash users can browse Staples’ school supplies on its marketplace. Besides Staples’ collaboration with DoorDash, the retailer recently added more services for its customers. In December, the company piloted an Amazon returns partnership where select Staples stores were tested as in-person drop off locations for Amazon product returns. The companies have since expanded the offering to all Staples stores so that eligible unpackaged, unlabeled Amazon items can be dropped off at full-service shipping areas inside Staples stores.

WeWork shares sink after warning of bankruptcy risk

WeWork warned of a possible bankruptcy in a stunning reversal of fortune for the shared workspace provider that four years ago was one of the world’s most prized startups with a valuation of $47 billion. The SoftBank-backed company, valued at just $446.8 million as of last close, has been in turmoil ever since it filed its IPO paperwork in 2019 as investors pointed out governance issues involving its then founder-CEO Adam Neumann. The company went public in 2021 through a SPAC merger after abandoning its IPO plans, but the struggles continued as investors doubted its business model while clients moved to hybrid work since the pandemic. The company said on Tuesday it may need to consider strategic options, including raising more money or obtaining relief under the U.S. Bankruptcy Code. In March, WeWork had reached a deal to cut debt by about $1.5 billion and extend the date of some maturities to preserve cash. The company is yet to turn a profit and has been cited as an example of over-inflated valuations commanded by Silicon Valley firms. WeWork said it was planning to shore up liquidity by cutting rent and tenancy costs, controlling expenses and reducing member churn.

Technology & Internet

Amazon is running a second Prime Day sale in October

Amazon is hosting a second Prime Day-like sales bonanza in October, the company announced Tuesday, seeking to hook consumers planning to start their holiday shopping early. The company didn’t share exact dates for the event, called “Prime Big Deal Days,” but said it will be held in 19 countries. Amazon last year added two separate shopping events for members of its $139-per-year Prime loyalty club, with the event seeing mixed success, according to data from third-party analysts. Amazon first created Prime Day in 2015. The discount celebration is partially designed to secure new Prime subscribers, to promote Amazon’s products and services, and to provide a sales boost in the middle of the year. The company held a 48-hour Prime Day event in July that boosted U.S. online sales 6.1% to $12.7 billion, according to Adobe Analytics.

 

Amazon axes some private label brands as part of wider cost cuts

Amazon is cutting some of its private label brands as part of a broader effort to rein in costs, the company confirmed to CNBC. In addition to the plethora of products sold by third-party sellers, retailers and household names, Amazon also sells goods produced in-house, similar to a store brand. The number of Amazon’s private label brands has expanded rapidly over the years to include things like Goodthreads apparel, Rivet furniture and Presto paper towels, as well as Amazon Basics batteries. Matt Taddy, vice president of Amazon Private Brands, said in a statement that the company has looked to eliminate some in-house products after determining they didn’t resonate with customers. “We always make decisions based on what our customers want, and we’ve learned that customers seek out our biggest brands – like Amazon Basics and Amazon Essentials – for great value with high quality products at great price points,” Taddy said. The company didn’t say how many private brands it plans to eliminate. Dozens of brands are expected to be cut, leaving Amazon with fewer than 20 house brands, according to The Wall Street Journal, which first reported the news. Amazon is significantly paring back its apparel and furniture brands, some of which will remain on its site until they run out of stock, the Journal reported, citing sources familiar with the matter. The move is part of Amazon’s wider cost-cutting initiatives, but also in anticipation of a possible long-awaited antitrust lawsuit from the Federal Trade Commission, the Journal said.

 

Finance & Economy

July CPI report shows inflation gauge rose 3.2%, less than expected

The consumer price index rose 3.2% from a year ago in July, a sign that inflation has lost at least some of its grip on the U.S. economy. Prices accelerated 0.2% for the month, in line with the Dow Jones estimate, the Bureau of Labor Statistics reported. However, the annual rate was slightly below the 3.3% forecast though higher than June. Excluding volatile food and energy prices so-called core CPI also increased 0.2% for the month, equating to a 12-month rate of 4.7%, the lowest since October 2021. The annual rate for core also was slightly below a Dow Jones consensus estimate for 4.8%.

Credit card balances jumped in the second quarter and are above $1 trillion for the first time

Americans increasingly turned to their credit cards to make ends meet heading into the summer, sending aggregate balances over $1 trillion for the first time ever, the New York Federal Reserve reported. Total credit card indebtedness rose by $45 billion in the April-through-June period, an increase of more than 4%. That took the total amount owed to $1.03 trillion, the highest gross value in Fed data going back to 2003. The increase in the category was the most notable area as total household debt edged higher by about $16 billion to $17.06 trillion, also a fresh record.