The Weekly Consensus

The Death of the Hockey Stick?

Mike O'Hara

Most finance professionals agree that nothing beats the discounted cash flow (DCF) method for valuing a business. This is because the method is based on projected cash generation and does not rely on comp sets that can often be not-so-comparable.  However, the most glaring flaw in DCF models can be best described by the phrase “garbage in, garbage out.”  In particular, bankers and investors must occasionally deal with projections that contain the dreaded “hockey stick,” or the notion that a company’s sales performance is just about to grow dramatically, even though nothing in its history points to such an inflection point.  Now, this flaw is being addressed by a group of academics: practitioners not of finance, but of marketing science.

Last week, the American Marketing Association (AMA), a group comprised primarily of academics studying how organizations reach people through marketing, met in Chicago.  This particular meeting was unusual, as its focus was aimed not at Madison Avenue but at Wall Street.  Consensus and other financial firms were invited to participate in this program to lend our view to how this evolving science is playing out in the real world.

While there were many topics covered in the meeting that merit discussion in this forum at another time, perhaps the most evolved discussion centered on how modern marketing science has advanced the financial community’s ability to project revenue (and certain expenses) in consumer-facing businesses.  Typically, sales projections are built off of historically observed revenue trends, combined with the modeler’s best guesses on how trends may change in the future.  But, as the AMA program emphasized, advanced analytical techniques, coupled with more reliable consumer data sets (ecommerce, credit card data, etc.), have yielded new tools for predicting revenues that (i) build off of the residual expected future purchases of an existing customer base (called Residual Lifetime Value) and (ii) contemplate new customer acquisition, net of customers who “churn” away from the company.

The leaders of this movement are Professor Peter Fader (UPenn Wharton), who has been at the forefront of customer value analytics for greater than two decades, and Professor Daniel McCarthy (Emory Goizueta), who often co-authors research papers with Fader and co-founded the analytics advisory businesses Zodiac and Theta with him.  Their work promises an escape from oxymorons such as “3-year lifetime value” by deploying algorithms that predict the future purchases of existing customers based on a mix of each customer’s own prior behavior, the behavior of others in the same and similar cohorts and third-party look-alike data.  The result is a highly refined tool kit that can support (or discredit) management’s projections of future revenue growth.  And having a more refined and precise sense of future revenues is a game changer in corporate valuations because projections are central to both intrinsic (DCFs) and market based (comp set) analyses.

Not everyone in the market has implemented Fader’s and McCarthy’s methods yet because to do so, one needs organized, comprehensive, and anonymized customer level data; a baseline understanding of important terminology such as decay rates, re-activation costs, and post-acquisition value; and access to Fader and McCarthy.  The good news is, all of these barriers seem to be coming down since Fader and McCarthy made their methods accessible (for a charge) through their business, Theta.  Mass adoption of these techniques may mean that lovers of the DCF method and those who have nightmares about hockey sticks may soon rejoice in seeing much less garbage in, and garbage out.



Headline of the Week

Signet buys Blue Nile for $360M

Signet Jewelers has struck a deal to acquire rival Blue Nile for $360 million in cash, according to a press release and securities filing. Signet said in the release that the acquisition “accelerates Signet’s efforts to expand its bridal offerings and grow its Accessible Luxury portfolio while extending its digital leadership in the jewelry category.” The deal, expected to close in the third quarter, follows Signet’s $490 million acquisition of Diamonds Direct last year.



Apparel & Footwear

Primark continues expansion into new states; announces price freeze

Primark has signed three new leases, bringing it into two states, as it continues to slowly but steadily grow its U.S. footprint. The global, value-priced retailer also said it is freezing prices for the back-to-school season on thousands of kids’ products, ranging from underwear and t-shirts to dresses and jeans. Primark’s newly announced stores will see the brand open its first-ever locations in Maryland and North Carolina, as part of its goal to hit 60 stores in the U.S. by the end of 2026, up from 13 today. Primark, known for its extremely low prices, said its expansion comes at a time when many U.S. households are feeling the impact of inflation. The retailer’s assortment includes women’s, men’s and kids fashion, as well as beauty, homeware and accessory items. Founded in Ireland in 1969 under the Penneys brand, Primark is aiming reach 530 stores by the end of 2026, including upcoming new markets of Romania and Slovakia.

GU to open first store in US

Japanese apparel retailer GU will open its first store in the U.S. this fall in the SoHo neighborhood of New York City, according to a company press release.  The pop-up marks the first location of GU outside of the Asia region, and will feature trendy apparel for men and women. GU is owned by Fast Retailing, which also owns Uniqlo. The company currently has around 450 locations which are mainly in Asia. GU’s current objectives include strengthening its ability to offer trendy fashion pieces at low prices, reducing lead times, and buying and stockpiling raw materials so it can expand its range of low-priced products. The brand contributes nearly 12% to Fast Retailing’s net sales. Pronounced with the letters G and U, the retailer’s name is close in sound to the Japanese word jiyu, which means freedom. GU’s sister brand Uniqlo has around 800 stores in Japan and over 1,500 stores globally.

Profits remain elusive in Q2 as The RealReal’s customers buy lower-priced apparel

As other retailers turn to layoffs to cut costs, The RealReal has been staffing up after labor shortages impaired its ability to obtain inventory, executives said on Tuesday. Total Q2 revenue rose 47% year over year to $154 million, as gross merchandise value rose 30% to $454 million. The resale site’s customers shifted to lower-priced items in the period, helping to send average order value down 7% to $486 in the last 12 months. In that time, the number of orders rose 39% and the number of active buyers rose 22% to 889,000. Net loss narrowed to $53.2 million compared to $71 million in the same period last year, according to a company press release. Speaking to analysts on Tuesday, The RealReal’s executives — who are still in search of a chief executive after founder Julie Wainwright’s abrupt departure in June — said they expected the late-pandemic surge in demand for apparel to subside eventually. But that happened more quickly than they anticipated. In addition, customers switched from buying higher-end items like jewelry and watches to less pricey clothes and footwear, they said.



Athletic & Sporting Goods

US golf club maker Sacks Parente Golf files for a $15 million IPO

Sacks Parente Golf, which designs and manufactures premium golf putters, filed with the SEC to raise up to $15 million in an initial public offering.  The company states that its shaft and putter technology was shown by The Golf Lab to improve players’ ability to make putts, feel of the putter head, stroke, face angle at impact, and consistency for distance control. The company intends to manufacture and assemble substantially all of its products in the United States.  The Camarillo, CA-based company was founded in 2018 and booked $200 thousand in sales for the 12 months ended March 31, 2022. It plans to list on the Nasdaq under the symbol SPGC. The Benchmark Company is the bookrunner on the deal. No pricing terms were disclosed.

BRP Acquires 80% Stake in Germany’s Pinion

Bombardier Recreational Products Inc., which operates as BRP Inc., said it has acquired an 80% stake in gearbox technology company Pinion GmbH in Germany for an undisclosed sum.  The Canadian manufacturer of leisure craft said Pinion focuses on the design, development, assembly and sale of mechanical gearboxes for traditional and electric bicycles.  The acquisition is part of a move to expand into new categories such as urban mobility and services, BRP said.

Cosmetics & Pharmacy

CVS Health to make offer for Signify Health

CVS Health Corp. may be about to take another deep dive into health care. The drug store and health insurance giant is planning to make a bid to buy health-care platform Signify Health in a move to expand into home-health services. The news was first reported by the Wall Street Journal. Signify Health is working with bankers to explore strategic alternatives, including a sale, and initial bids are due this week, with CVS planning to enter one, the report said. Signify, which had a stock-market capitalization of $4.66 billion as of August 5,has a platform that uses technology and analytics to support healthcare providers with in-home care. CVS has been expanding its medical offerings and the company said last week that it would either purchase or take a stake in a primary-care company by the end the of the year.


Olaplex sales surge during first half of 2022

Hair care specialist Olaplex saw sales surge during the first half of 2022, driven by new product launches and sales growth across its major geographies. Net sales increased by 46.9% to US$397m for the six months ended 30 June 2022, with gross profit also up 39% to $297m. The strong half-year performance was boosted by a 38.6% increase in net sales to $210.9m seen in Olaplex’s second quarter results. During the quarter, the brand reported sales growth of 41.3% in the US and 35.2% internationally.

Shiseido Fund Invests in Chinese Biomaterials Maker

The Shiseido Beauty Innovations Fund has unveiled its first investment — into a Chinese maker of recombinant collagen-based biomaterials. The China-focused fund, with Shiseido as its lead investor, is pouring close to 100 million renminbi, or $14.5 million, into Jiangsu Trautec Medical Technology Co. Ltd. It is a company that produces materials primarily for use in the medical and cosmetics industries. The Japanese beauty giant said it also will partner with Trautec to work on product research-and-development, raw material supply and sales channels to speed up research into new areas of functional skin care — which is related to sensitive skin, aging care and clean beauty. The beauty industry is increasingly focused on and investing in biomaterials, as the greening of the business and functional skin care are in increasing high demand.

Weak Demand in Japan Weighs on Shiseido’s Earnings

Shiseido’s sales and profit fell in the first half of the fiscal year on the back of weak domestic demand. The company, whose brands include Nars and Drunk Elephant, as well as its namesake Shiseido label, saw net sales decrease 0.4 percent year-on-year to 493.4 billion yen, or $3.72 billion, in the first six months of the fiscal year ended June 30. At the same time, core operating profit dropped 23.9 percent year-on-year to 17.5 billion yen, or $132.1 million. While the cosmetics company enjoyed strong growth in net sales in its travel retail business, the Americas, EMEA, and Asia Pacific and a stellar performance from brands Clé de Peau Beauté and Nars, weak demand in its domestic market and COVID-19 lockdowns in China weighed on the overall numbers.


Discounters & Department Stores

Sears Holdings reaches $175M settlement with Lampert and company

After nearly four years in bankruptcy, Sears Holdings and its one-time creditors said they have reached a settlement with its former CEO and majority owner Eddie Lampert and other investors. If approved by a federal bankruptcy judge, the settlement could resolve years-long litigation filed against Lampert and other defendants over allegations of asset stripping and “rank” self-dealing in the years leading to Sears Holdings’ 2018 bankruptcy. The settlement would pay plaintiffs $175 million. Of that, $125.6 million would come from insurers, $41.9 million would come from the defendants and $7.5 million would come from shareholding funds.

Kohl’s expands self-pickup to all stores

In order to streamline operations headed into the holiday season, Kohl’s on Wednesday announced the expansion of its self-pickup service to all stores, according to a company press release. Customers who select “in-store pickup” for their online order will receive an email that will specify if it will be found in the designated self-pickup area of the store. Customers are then directed to an area within their local Kohl’s for an email-guided pickup process. The service is available on eligible online orders at all 1,100 Kohl’s stores, and will be ready within two hours.

Walmart reportedly seeks streaming partner to bolster Walmart+

Walmart recently met with executives from Disney, Comcast and Paramount about how streaming content might boost its Walmart+ membership program, The New York Times first reported. The Times said it is unclear whether any of the streaming providers are eager to strike a deal. Walmart views the addition of the right selection of content as a potentially important value-add for customers. Walmart+, which launched in September 2020, costs $12.95 per month and currently offers perks like free shipping and a six-month trial of Spotify’s premium tier. But it’s missing a noteworthy stake in streaming media, an area that has bolstered chief rival Amazon.

Walmart acquires omnichannel tech specialist Volt Systems

Walmart said it is acquiring Volt Systems, a software company focused on vendor management and product tracking. With the acquisition, Walmart will take on Volt System’s talent, technology and customer agreements, the retailer said in a press release. Terms of the deal were not disclosed. Walmart said that the deal “affirms Walmart’s continued investment in technology and innovation that enables us to better anticipate customer demand.”



Emerging Consumer Companies

Warby Parker, NYC-based Online Eyewear Brand, Reacts to Changing Consumer Behavior

Warby Parker laid off 15% of its corporate staff as it navigates changes in consumer behavior stemming from the volatility in the global economy. The reductions will not affect customer-facing jobs in retail or customer experience, or at the brand’s in-house optical labs.  With more than 160 stores across the U.S. and Canada, Warby Parker has one of the largest brick-and-mortar footprints among DTC retailers, and the fact that its layoffs won’t impact existing stores suggests that the channel is doing well despite an uncertain economic outlook. Unfortunately, layoffs have not been uncommon recently as many other DTC and retail brands have been forced to lay off staff such as Allbirds, Glossier and Walmart.


Haus, Low-Alcohol Aperitif Startup, is Up for Sale & Begins ABC Process

This week, Haus announced its intention to sell itself after its Series A funding fell through. Launched in 2019, the California-based DTC brand offers low ABV wine-based spirits as an alternative for modern consumers looking to drink less. The brand, backed by Coefficient Capital and Evolution VC, has raised $7.5 million to date across several seed rounds. Constellation Brands, the maker and marketer of beer brands including Corona Light, Modelo Especial, and Pacifico, was expected to lead the brand’s Series A, but unexpectedly dropped out of the round, leaving Haus with inadequate cash to support its operations. Now, Haus is seeking alternatives, and looking to go through an ABC to keep the business afloat through an accelerated sales process.

Sella, a Resale Platform Startup, Raises $3M in Seed Funding

Sella, a Portland, Oregon-based resale platform, announced its $3M seed round this week, led by Flying Fish Ventures. The company, which uses gig workers to market, list and sell items from users, intends to use the proceeds to expand into new markets, including Seattle. The company currently offers its platform service in Portland and Dallas, and also offers a nationwide mail-in service. The resale market has grown significantly in recent years, largely driven by the pandemic. Sella aims to capitalize on this shift by removing the inefficiencies customers experience when trying to buy and sell items on marketplaces like Craigslist and eBay. It has built an end-to-end selling service for consumers by stitching together distributed local gig labor, remote resale exports, and logistics that drastically reduce the frustrations that arise in the reselling ecosystem.



Food & Beverage

Honest Tea Founder Raises $14.5M for New Ice Tea Launch

Eat the Change, the healthy snack brand founded by Seth Goldman has raised $14.5 million in new funding to support its expansion into the ready-to-drink tea category.  In June, Goldman announced plans to launch a new organic bottled tea line called Just Ice Tea under the Eat the Change platform after The Coca-Cola Company said it will discontinue Honest Tea, which Goldman co-founded and ran from 1998 to 2019. The new brand is intended to “fill the void” for a clean label, semi-sweet tea drink that Honest will leave behind when it is officially discontinued later this year.  The latest financing round was led by Collaborative Fund and S2G Ventures, which combined contributed around $10 million. Collaborative Fund founder Craig Shapiro and S2G senior executive partner Walter Robb will join the brand’s board as observers. Additional investors include Honest Tea co-founder and Eat the Change board member Barry Nalebuff, tea suppliers and some Honest customers, Goldman told the publication.

Food waste tech firm Afresh raises $115M

Afresh has raised $115 million. The latest funding round can help the company get closer to achieving its goal of working with 10% of grocery stores in the U.S. by the end of 2022.  Founded in 2017 and headquartered in San Francisco, the technology firm offers its AI-powered Fresh Operating System to help grocers stem food waste in their produce aisles. The system offers solutions for forecasting as well as inventory, ordering and store operations — areas Afresh said are “disjointed processes” for retailers.  Stores using Afresh get AI-powered product ordering recommendations to help strike a balance between keeping shelves stocked and having excess food that ends up getting discarded. Afresh’s technology also allows retailers to track item-level sales, shrink and merchandising data.

Constellation Brands buys minority stake in canned wine Archer Roose

While Constellation is best known for its Mexican beers such as Modelo and Corona, the alcohol giant has been doubling down on its RTD portfolio recently. In addition to its investment and eventual acquisition with Austin, Constellation last month announced its Woodbridge brand is debuting a wine soda.  Archer Roose was created in 2015 “to democratize wine by introducing consumers to luxury wine in an approachable format.” Today, its canned products are available in varieties like Rosé, Pinot Grigio, Sauvignon Blanc and Malbec in 46 states.   Archer Roose is positioned to benefit from “consumer moderation trends that we are beginning to see take hold,” Mallika Monteiro, executive vice president and chief growth, strategy, and digital officer at Constellation Brands, said in a statement. “Archer Roose is well-positioned to grow the category by introducing premium wine to this segment.”



Grocery & Restaurants

Qdoba and Modern Market Eatery to merge in private equity acquisition

Private equity firm and Modern Market Eatery parent company, Butterfly Equity, announced Tuesday the intent to acquire fast-casual chain, Qdoba Mexican Eats for an unspecified amount. The transaction, which is expected to close in Q3 2022, will merge Modern Restaurant Concepts (comprised of Modern Market Eatery and Lemonade) with Qdoba into one fast-casual restaurant platform, though all three will continue to operate separate brands. Butterfly Equity is a healthy and organic food-focused private equity firm, with other portfolio investments including Bolthouse Farms and Chosen Foods. Together, all three brands will comprise of 800 restaurants nationally in nearly every U.S. state, with plans to nearly quadruple in size across all three brands. As of Tuesday, Modern Market announced a new multi-unit franchise development agreement with a national franchisee to bring 40 new Modern Market units to seven states. Qdoba also has a plan to open 300 new units over the next five years. Asset manager King Street Capital Management is investing alongside Butterfly Equity.

Papa Murphy’s parent MTY acquires Famous Dave’s parent BBQ Holdings

MTY Food Group, parent to Papa Murphy’s, acquired Famous Dave’s parent BBQ Holdings, the company announced on Tuesday. The deal was priced at $17.25 a share, or about $200 million. BBQ Holdings, parent to Famous Dave’s as well as Village Inn, Barrio Queen, Granite City and other restaurants, operates over 200 franchised locations and 100 corporate-owned stores. BBQ Holdings acquired Barrio Queen earlier this year. “This transaction represents another key acquisition for MTY as we further scale and enhance our existing U.S. portfolio through the addition of nine unique brands,” said Eric Lefebvre, CEO of MTY, in a release. MTY Food Group, based in Montreal, franchises and operates a variety of quick-service and casual-dining restaurants including TCBY Frozen Yogurt, Cold Stone Creamery and Planet Smoothie. It merged with Vancouver, Wash.-based Papa Murphy’s Holdings Inc. in 2019.

Home & Road

Sales in 2 key channels drive Arhaus revenue, income increases

Arhaus Inc., a lifestyle brand and omnichannel retailer of artisan-crafted home furnishings, saw net revenue and income increases for the second quarter ended June 30, primarily driven by demand in the showroom and e-commerce channels. Net revenue increased 66.4% to $306 million, compared with $184 million in the same period last year. Income from operations increased to $50 million, compared with $9 million in the 2021 quarter, primarily driven by higher net revenue and partially offset by higher product costs, transportation costs and variable rent expense related to the increased net revenue, as well as higher SG&A expenses to support the growth of the business and new public company related costs. Net and comprehensive income was $37 million compared with $7 million last year. Adjusted net income was $39 million in the second quarter of 2022 compared with $28 million in the second quarter of 2021.

5 things impacted Purple 21% decline in second quarter sales

Digital native bedding brand Purple Innovation attributed its second quarter net sales slide to five key things: pull-forward consumer demand and the economic stimulus in the prior-year quarter during COVID; shifting consumer demand, inflationary impact on consumer spending and the company’s reduced advertising spend. The company’s net revenue for the second quarter ended June 30 dropped 21.1% to $144.1 million, compared with net revenue $182.3 million in the second quarter of 2021. The company’s wholesale revenue decreased 5.9% compared with the same quarter last year, while second quarter direct-to-consumer revenue dropped 29.8% when compared with the same period last year. For the second quarter, the company reported a net loss of $8.3 million in the second quarter ended June 30, compared with net income of $2.6 million in the same period last year.

Facing macroeconomic challenges, Lifetime reports net loss for Q2

Inventory buildup at retail and other industrywide challenges stunted Lifetime’s performance for Q2, resulting in a net loss of $3.46 million for the quarter ended June 30, 2022, down from net income of $5.79 million in the same period a year ago.  Lifetime’s net sales for the quarter dropped 19% to $151.3 million, from $186.6 million a year ago. For the six months ended June 30, the company reported a net loss of $3.08 million, down from net income of $8.86 million for the same period a year ago. Net sales for the first six months were $334 million, down 12.6% from $382.3 million a year ago. The company’s performance “was impacted by the macroeconomic challenges that companies across industries and retailers in particular continue to face,” said CEO Rob Kay. “Inflation and supply chain disruptions have created inventory buildup in the retail channel and weaker end market demand as these impacts created a slowdown in durable good purchases from consumers and all channels of retail this quarter.”

Conn’s tests in-store shop concept at five Belk locations

Belk has expanded its offerings via a partnership with Conn’s, a specialty retailer of home goods including furniture, appliances and consumer electronics. As part of the agreement, which was announced earlier this year, Conn’s has opened five store-within-a-store pilot concepts in five Belk locations under the name “Conn’s x Belk.” The new store format provides Belk customers with access to Conn’s home product categories and core services such as white-glove, next-day delivery. Additional Conn’s x Belk locations are planned to open throughout the summer and early fall, along with an eCommerce experience coming to this fall. Ranging from about 10,000- to 25,000-sq.-ft. depending on the specific Belk location, the Conn’s x Belk shops feature a name brand assortment of all major Conn’s product categories, including furniture, home electronics and appliances.

Ace Hardware continues store, distribution center expansion

Ace Hardware continues to grow its portfolio. The world’s largest retailer-owned hardware cooperative recently opened its 105th store this year. Ace expects to open at least an additional 60 more new stores by the end of the year. To keep pace with the growth, Ace continues to invest in expanding its distribution network to house more inventory closer to the growing number of Ace stores and customers. The company plans to add 4.4 million square feet of capacity to its distribution network by opening three new warehouses in the next five years. That’s in addition to the more than 2.5 million square feet it’s added in the past four years. Headquartered in Oak Brook, Ill., Ace operates more than 5,600 locally owned hardware stores in all 50 states and 70 countries, with global sales topping $20 billion.

Jewelry & Luxury

Tiffany & Co.’s CryptoPunk Pendant NFTs Are Sold Out

Tiffany & Co. introduced limited-edition CryptoPunk NFT pendants last week, and they’ve already sold out. An NFT, or a non-fungible token, is a financial security comprised of digital data stored on a blockchain. The jeweler’s NFT, called NFTiff, was made available exclusively to CryptoPunk holders. CryptoPunks is an NFT digital art collection of 10,000 different pixelated punk rock characters on the Ethereum blockchain. NFTiff holders are able to create an exclusive, custom pendant inspired by their own CryptoPunk character. The 24×24 pixel art images, generated by an algorithm, were launched by Larva Labs in 2017 and were originally available for free to anyone with an Ethereum wallet.

Why Luxury Brands are Increasingly Turning to Gifting in China

As COVID-19 restrictions and lockdowns have brought growing uncertainty to the luxury market in China, consumers and brands alike are looking for ways to forge stronger connections through online channels. Throughout Chinese shopping festivals such as the “Qixi Festival” (the Chinese Valentine’s Day), gifting has emerged as one of the best ways for luxury brands to gain insights into consumer behaviors and trending categories as well as to better understand how consumers want to interact in a digital world. By capitalizing upon gifting and digital platforms, luxury brands can continue staying top of mind for consumers and gain more certain growth for their business and consumer base. Research and consulting firms have noted that Chinese consumers will continue to account for a significant portion of the growth in the global luxury market, projecting strong economic resilience and long-term consumption growth.


Capri Holdings sales rise as luxury goods show signs of resilience

Fashion group Capri Holdings reported strong earnings results in the first quarter, highlighting the resiliency of the luxury market amid inflationary periods. Capri — which owns brands like Versace, Jimmy Choo and Michael Kors — saw its total revenue rise 8.5% year-over-year in the first quarter to $1.36 billion. For individual brands, Versace’s revenue increased 14.6% to $275 million compared to last year, Jimmy Choo’s revenue rose 21.1% to $172 million and Michael Kors’ revenue was up 4.8% to $913 million. The company’s growth was largely driven by the consistent demand for luxury goods from high-income shoppers. Retail analysts said shoppers of luxury goods aren’t as easily swayed by inflationary pressures. As a result, the company has remained optimistic about its long-term potential.


Office & Leisure

Chewy expands insurance offering with launch of CarePlus

In an effort to expand its insurance and wellness offerings, Chewy on Thursday launched CarePlus, a suite of pet wellness and insurance plans. The program is currently available in 31 states and will expand nationwide by the end of the year, according to a company press release. The wellness plans, which start at $20 a month, cover preventative care like vaccines, parasiticides and annual exams. The insurance plans — which start at $20, $60 or $100 a month — provide financial help for accidents, surgeries and unexpected illnesses. The service offers 24/7 access to the retailer’s customer care team, coverage for prescription medications, supplements and food on Chewy’s website. CarePlus builds on Chewy’s existing health offerings. After introducing its online pharmacy in 2018, the company in late 2020 launched Connect with a Vet, a telehealth service, and expanded that feature last year. And last September, Chewy introduced Practice Hub, a veterinarian-only marketplace aimed at growing clinic revenue and streamlining pharmacy operations. Petco also operates thousands of mobile vet clinics and has around 200 vet hospitals.

Dufry’s Sales Continue to Accelerate

Dufry Group, the world’s largest travel-retail operator, reported accelerating sales growth in the first half of 2022. The Basel, Switzerland-based group said Tuesday that growth in the six months ended June 30 grew 146.2 percent in reported terms to 2.92 billion Swiss francs, or $3.07 billion. Against first-half 2019, prior to the coronavirus pandemic, its sales were down 30.1 percent. Dufry said the momentum has continued into the third quarter, with its net sales in July estimated to be at 90 percent of July 2019 levels at constant exchange rates. Currency effects impacted sales negatively, by minus 1 percent in first-half 2022. “The category mix mirrors the continued normalization of travel, including inter-regional and international routes across all regions except for APAC,” said Dufry, referring to China, where denizens have been unable to leave the country due to COVID-19 restrictions. Duty-free generated 58.3 percent of Dufry’s net sales, with the remainder coming from duty-paid trade. Business in airports accounted for 91.2 percent of sales.

Leadership changes at Petco include new COO

Petco Health and Wellness Company has made several key appointments to “further align its leadership team to activate Petco’s strategy that puts the customer first.” Petco has appointed Justin Tichy, chief pet care center officer, as chief operating officer, taking on additional responsibility for company-wide logistics including oversight of the company’s distribution centers. He will continue to run Petco’s 1,400-plus U.S. stores (“pet care centers”). Tichy succeeds Mike Nuzzo, COO and president of Services, who will be leaving Petco after more than seven years. Darren MacDonald, chief digital and innovation officer, is taking on an expanded role as chief customer officer.  Amy College, chief merchandising officer, is taking on responsibility for demand planning. Jason Heffelfinger, senior VP services, has been promoted to chief services officer.

Technology & Internet

Toast shares pop after second-quarter revenue beats estimates

Toast shares closed up 8% Friday after the restaurant software vendor beat revenue estimates and said the number of locations it serves surged 40% in the second quarter. Toast provides technology that can serve as a restaurant’s operating system across dine-in, takeout, and delivery channels. Its products gained rapid adoption during the pandemic as restaurants moved to contactless payments and rushed to go digital. Revenue in the second quarter increased 58% from a year ago to $675 million, soaring past the $651 million expected by analysts, according to Refinitiv. Toast also offered an upbeat third-quarter forecast, and raised revenue and adjusted earnings guidance for the full year. The rally in Toast’s shares on Friday is the latest sign of a possible rebound in the tech stocks that were hit the hardest in this year’s market swoon. Toast is still down 42% in 2022, but is up 68% from its low reached in May. CEO Chris Comparato said on the earnings call with analysts that Toast is excelling by helping restaurants become more efficient with their sales while also managing their expenses. That’s particularly important because the industry is facing soaring costs due to a 40-year high in inflation.

Meditation app Calm reportedly lays off 20% of employees

The popular meditation startup Calm, known for its wellness app of the same name, has laid off 20% of its staff, according to The Wall Street Journal, which viewed a memo sent by CEO David Ko to employees on Thursday. Roughly 90 out of 400 Calm employees were laid off, according to the Wall Street Journal. Founded in 2012, the San Francisco-based startup was valued at $2 billion in 2020. “I can assure you that this was not an easy decision, but it is especially difficult for a company like ours whose mission is focused on workplace mental health and wellness,” Ko said in the memo, according to the report.

Finance & Economy

Wholesale inflation fell 0.5% in July, in another sign that price increases are slowing

Wholesale prices fell in July for the first time in two years as a plunge in energy prices slowed the pace of inflation, the Bureau of Labor Statistics reported.  The producer price index, which gauges the prices received for final demand products, fell 0.5% from June, the first month-over-month decrease since April 2020, the month after Covid-19 was declared a pandemic. Economists surveyed by Dow Jones had been expecting an increase of 0.2%.  On an annual basis, the index rose 9.8%, the lowest rate since October 2021. That compares with an 11.3% increase in June and the record 11.7% gain in March.  Most of the decline came from energy, which dropped 9% at the wholesale level and accounted for 80% of the total decline in goods prices, which fell 1.8%. The index for services rose 0.1%.  Stripping out food, energy and trade services, PPI increased 0.2% in July, which was less than the expected 0.4% gain. Core PPI rose 5.8% from a year ago.

U.S. consumer sentiment shows continued stability

Americans’ economic sentiment remains stable for the second consecutive reading, as the Ipsos-Forbes Advisor U.S. Consumer Confidence Tracker shows a gain in its main index of 0.8 point from two weeks ago. Despite this continued constancy, the index remains below the 50-point mark for the fifth consecutive reading.  The Expectations Index rebounded, as it was the only sub-index to post a gain. However, much like the overall index, it continues to trail modern historical levels. The index remains below the 60-point mark for the eighth consecutive reading, a threshold it never crossed in 2021.