Story of the Week
Fed Chair Powell indicates interest rate cuts ahead: ‘The time has come for policy to adjust’
Federal Reserve Chair Jerome Powell laid the groundwork Friday for interest rate cuts ahead, though he declined to provide exact indications on timing or extent. “The time has come for policy to adjust,” the central bank leader said in his much-awaited keynote address at the Fed’s annual retreat in Jackson Hole, Wyoming. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.” With markets awaiting direction on where monetary policy is headed, Powell focused as much on a look back at what caused the inflation that led to an aggressive series of 11 rate hikes from March 2022 through July 2023. However, he did note the progress on inflation and said the Fed can now turn its focus equally to the other side of its dual mandate, namely to make sure the economy stays around full employment. “Inflation has declined significantly. The labor market is no longer overheated, and conditions are now less tight than those that prevailed before the pandemic,” Powell said. “Supply constraints have normalized. And the balance of the risks to our two mandates has changed.” He vowed that “we will do everything we can” to make sure the labor market says strong and progress on inflation continues.
Apparel & Footwear
Steve Madden sells Greats to Unified Commerce Group
Unified Commerce Group has acquired all assets for upscale sneaker brand Greats from Steve Madden for an undisclosed amount, according to a recent press release. UCG will take over operational responsibility for the brand, and Steve Madden, through one of its subsidiaries, will become a shareholder of UCG, per the release. Brooklyn, New York-based Greats is the third brand in UCG’s portfolio. In 2023, the retail platform acquired Los Angeles-based athleisure company Spiritual Gangster, and in 2020, UCG launched with the acquisition of Canada-based fashion line Frank And Oak.
Is Kizik Building the Next Billion-Dollar Sneaker Brand?
It’s not easy to put a shoe on a toddler. You need to hit the heel at just the right angle, and with a quick flip of the wrist, jam in a little foot. Mike Pratt, the founder of the slip-on sneaker brand Kizik, is showing me a prototype of a toddler shoe that could avoid this delicate dance. The sneaker is shaped like a green monster, and when you squeeze the sides of the sole, the mouth opens like a clamshell, creating a generous space for a tiny, squirming foot to slide in. A serial entrepreneur and inventor, Pratt, 63, spends a lot of time thinking about how to make life easier. About 15 years ago, he got the idea there had to be a better way to put on sneakers–one that didn’t require bending over and tying laces. A slip-on sneaker could help people with disabilities or injuries, kids who haven’t yet learned to tie their shoes, and anyone in a rush.
Shein sues Temu over copyright infringement, alleges rival loses money on every sale
Chinese-linked fast-fashion giant Shein is suing rival Temu, alleging the retailer stole its designs and built an empire using counterfeiting, intellectual property infringement and fraud. The suit, filed August 19th in Washington, D.C., federal court, comes as Shein itself fends off similar allegations from a wide variety of brands and independent artists, including Levi Strauss and H&M. In its complaint, Shein alleges that Temu, owned by PDD Holdings, is “masquerading” as a legitimate online marketplace because it encourages its sellers to steal other brands’ designs and then prevents them from removing products from the platform, even after they have admitted to infringement.
Athletic & Sporting Goods
Outtech Adds Antler King to Outdoor Brand Portfolio
Outtech has added Antler King, the manufacturer of wildlife nutrition products, to its outdoor brand portfolio. The Ohio-based company produces nutritional products for whitetail deer, including food plot blends, cover screen options, feed blocks, attractants, and supplemental feed to promote healthy development and growth. John Seliga, president of Outtech, expressed his enthusiasm about the partnership: “Maintaining a healthy deer population is vital for the growth and success of the bowhunting industry. The Antler King team are true experts in creating premium food plots, attractants, and feed to ensure this.”
Amer Sports Raises FY Guide as Wilson Returns to Growth, Salomon and Arc’teryx Grow double digits
Amer Sports Inc. reported that second-quarter revenue increased 16 percent to $994 million and 18 percent year-over-year on a constant currency (cc) basis. Based on the strong quarter and solid results from all major brands, the company raised its guidance for the full year 2024. Technical Apparel, which primarily includes the Arc’teryx brand business, increased 34 percent (+38 percent cc) to $407 million in the second quarter, reflecting an omni-comp growth of 26 percent on top of the 80 percent omni-comp growth in Q2 last year. Omni-comp trends reflect the year-over-year revenue growth from owned retail stores and e-commerce sites open for at least 13 months.
Cosmetics & Pharmacy
Fabrizio Freda prepares to step down as Estée Lauder CEO
Estée Lauder Companies CEO Fabrizio Freda has informed the board of directors that he will step down at the end of the fiscal year, which began July 1, after 16 years at the helm. The board is “well advanced in its long-established CEO succession planning process” and has already considered candidates to replace him, per a company press release. The news was accompanied by the report that, for the fiscal year ended June 30, net sales dropped 1.9% to $15.6 billion and net earnings shrank by more than half, from about $1 billion to $409 million.
Dolly Parton Expands Beauty Empire with New Makeup Line
Country music legend Dolly Parton is launching her own makeup line, Dolly Beauty, starting with the Heaven’s Kiss lipstick collection. The collection, available on Dolly Beauty’s website, features four lipstick shades priced at US$20 each, with packaging adorned in signature rhinestones. The line, developed in collaboration with Scent Beauty CEO Steve Mormoris, has been meticulously crafted over two years, with Dolly herself deeply involved in the formulation and design process. Future plans include expanding into other makeup categories and potentially even hair care. Dolly Parton’s venture into cosmetics follows the success of her fragrance line and aligns with her lifelong passion for beauty.
Topspin Consumer Partners Invests In Leading Sweat Control Brand Carpe
Topspin Consumer Partners (“Topspin”), an operationally-driven private equity firm focused on the consumer sector, announced its investment in Carpe (or the “Company”), a disruptive, digitally-native sweat control brand that has revolutionized custom sweat solutions for the entire body. Financial terms of the transaction were not disclosed. Topspin is partnering with Carpe founders David Spratte and Kasper Kubica, who will continue to lead the business going forward. Established in 2015 in Durham, NC, Carpe has grown from a cult favorite solution for excessively sweaty hands — a condition the founders personally faced — to a full range of dermatologist-tested products targeting the entire body, including underarm antiperspirant, anti-sweat cosmetics, and sweat absorbing products for neglected areas like breast, thigh, groin, and scalp.
Coty has released results for the full fiscal year 2024 and the fourth quarter ended June 30, 2024. In FY24, total net revenues grew 10% on a reported and 11% on a LFL basis. Coty said it continued to deliver balanced reported net revenue growth, including growth in both prestige and consumer beauty, across all regions and in each of its core categories. For the year, Coty said it delivered a “healthy reported growth mix with a low-single-digit percentage volume growth and a low double-digit percentage contribution from a combination of price, mix and other.” In the second half—which Coty said largely balances out the elevated comparisons in the fourth quarter—net revenues grew 4% on a reported basis and 8% on a LFL basis, with reported results supported by growth across all core categories and regions.
Discounters & Department Stores
Macy’s Q2 sales disappoint as stores slated for closure post steep declines
Macy’s Inc. on Wednesday said Q2 net sales fell 3.8% year over year to $4.9 billion, with overall comps down 3.3%. Considering only Macy’s go-forward stores, which will remain open after the banner’s planned downsizing, overall comps fell 3%. By banner: Macy’s net sales fell 4.4%, with comps down 3.6%; go-forward store comps fell 2.3% and the others fell 6.5%. At “first 50” Macy’s stores, which have been revamped, comps rose 1%. Bloomingdale’s net sales declined 0.2% as comps fell 1.4%. And Bluemercury net sales rose 1.7%, with comps up 2%, the spa retailer’s 14th straight quarter with positive comps. The company swung into the black, reaching $150 million in net income, up from last year’s $22 million net loss.
Same day services, price cuts drive Target growth in Q2
Target swung back to growth in the second quarter with sales rising 2.6% to $25 billion, up from $24.4 billion a year earlier, the company said Wednesday. Net earnings rose nearly 43% to $1.2 billion, up from $835 million year over year. Operating income was $1.6 billion for the quarter, up 37% from $1.2 billion a year ago. Traffic drove comparable sales growth, with overall comps rising 2% year over year in Q2, while store comps rose 0.7%. Digital comps rose 8.7%. Q2’s gross margin was 29%, compared to 27% a year ago. Same-day services accounted for over two thirds of digital sales. Drive up was the largest share of digital, generating sales of $2 billion in Q2 and over $4 billion so far this year, CEO Brian Cornell said during an earnings call.
T.J. Maxx owner raises full-year guidance, posts 5.6% sales gain for the most recent quarter
TJX Cos. raised its full-year guidance on Wednesday after posting another quarter of strong sales, but its outlook still fell just short of Wall Street’s expectations. The discounter behind Marshalls, HomeGoods and T.J. Maxx is now expecting full-year earnings to be between $4.09 and $4.13, compared with estimates of $4.14, according to LSEG. For the current quarter, TJX is expecting earnings per share to be between $1.06 and $1.08, compared with estimates of $1.10. So far this earnings season, retailers that disappoint with guidance haven’t seen much negative impact to their shares, suggesting investors are prepared for uncertainty in the second half of the year ahead of the U.S. presidential election and a potential rate cut from the Federal Reserve. Shares of TJX rose nearly 6% in afternoon trading.
Walmart adds a Burger King benefit to its membership program
Walmart members are in for a whopper of a deal. The retailer on Thursday announced a new partnership with fast-food chain Burger King that will offer members of its Walmart+ subscription program 25% off any Burger King order made through the BK app. Members will also be eligible for a free flame-grilled Whopper every three months starting in September with a purchase, according to a news release. Walmart positioned the added benefits as cost savings for its members. It comes at a time when cost-conscious diners increasingly hunt for value. “We’re confident our members will welcome the additional savings, and we’re thrilled to collaborate with a trusted brand like Burger King to offer this benefit,” Venessa Yates, senior vice president and general manager, said in a statement.
Emerging Consumer Companies
The Rounds, brand behind household essentials in reusable packaging, raises $24 million
The Rounds, the startup that delivers recurring grocery and household essentials in reusable packaging, announced it has raised a $24 million Series B. The new capital will go toward product development, hiring, and expanding the service to additional markets. Alongside the funding announcement, The Rounds introduced new features for customers, including the ability to make one-time purchases and the flexibility of choosing their delivery day. It also enhanced its AI-powered algorithm to provide smarter predictions on when customers’ products need to be restocked. Launched in 2019, The Rounds offers a $10 subscription for shoppers to order weekly bundles, ranging from things like household basics and personal care items to pantry staples and dry goods, as well as items from local bakeries, coffee roasters, or other sellers.
Sneex, comfortable heels brand from Spanx founder, launches
Spanx founder Sara Blakely is entering the shoe market through the launch of her next venture, Sneex. The shoe brand combines features from a high heel and a sneaker to create a hybrid heel, or what the company calls “hy-heels.” Using materials such as napa leather and suede from Italy and Spain, Sneex shoes retail for $395 to $595 and come in sizes 5 to 11, according to a company press release. The product, which is available in three styles and 10 colorways, is available for purchase on Sneex’s website.
Baseball Dugout, entertainment concept, raises $22.5 million
Home Run Dugout, an eatertainment concept featuring indoor, soft-toss baseball, secured $22.5 million in Series A funding led by Lagniappe Capital Partners with follow-on investment from BCS Capital and ongoing support from existing investors, the company said in an email to Restaurant Dive on Monday. The company will use the funds to expand its Houston location, hire additional executives, pursue licensing and open new locations. Eatertainment chains have recently secured funding from private investment firms, with Batbox, another baseball-focused eatertainment chain, and Five Iron Golf gaining millions in funding this year.
Food & Beverage
Nestle CEO Schneider was ousted after underperformance, sources say
Nestle CEO Mark Schneider was ousted in a sudden decision by the world’s biggest food maker as a result of the group’s underperformance, three sources familiar with the matter told Reuters on August 23. Nestle announced Schneider’s departure following a board meeting and appointed company veteran Laurent Freixe as its new CEO. This put an end to a near eight-year tenure by Schneider, a 58-year-old German, the first company outsider to lead Nestle in nearly a century. The company declined to give further details beyond comments made on a recent investor call, where Chairman Paul Bulcke said the board together with Schneider had assessed the current environment and together had agreed to make the change.
Private equity company takes stake in Snak King
Snak King, a City of Industry-based manufacturer of private label and co-manufactured snack products, has received an undisclosed investment from the private equity firm Falfurrias Management Partners. As part of the transaction, several executives with food industry experience are joining the company’s board of directors. Snak King is a manufacturer of chips, pork rinds, cheese puffs and other snack products. The company has manufacturing plants in Southern California and Chicago and employs 780. In addition to its co-manufacturing and private label businesses, Snak King also has such brands as El Sabroso, The Whole Earth, Granny Goose, and Jensen’s Orchard.
Pernod Ricard sells Red Heart rum to KWV
The South African division of Pernod Ricard has agreed to the divestment of local rum brand Red Heart to KWV. The transaction, for an undisclosed sum, is the latest in a line of “non-core” brand offloads by the group. Red Heart, which according to a spokesperson is a “very local” seller, will join the likes of Cruxland gin, Ponchos tequila and Wild Africa cream liqueur on KWV’s books. Red Heart, which is available in original and spiced versions in South Africa, joins Clan Campbell blended scotch and Czech bitters Becherovka in having a new owner. Stock Spirits took on Clan Campbell from Pernod Ricard just over a year ago, while Polish conglomerate Maspex acquired Becherovka in December.
Grocery & Restaurants
Alimentation Couche-Tard to acquire GetGo Café + Market from Giant Eagle
Alimentation Couche-Tard Inc. (ACT), the parent company of the Circle K convenience-store brand, has reached a definitive agreement to acquire GetGo Café + Markets convenience stores from supermarket retailer Giant Eagle Inc. The move follows Couche-Tard’s submission today of a friendly, nonbinding proposal to Seven & i Holdings Co. Ltd., the parent company of 7-Eleven Inc., to acquire all outstanding shares of Seven & i. GetGo operates approximately 270 convenience retail and fueling locations across Pennsylvania, Ohio, West Virginia, Maryland and Indiana and has approximately 3,500 employees. GetGo has a variety of models, from open-concept stores to standalone kiosks and features a menu of made-to-order foods. The companies expect the acquisition to close in calendar year 2025 subject to standard regulatory approval and closing conditions and will be financed using the company’s available cash and/or existing credit facilities, including its U.S. Commercial Paper Program. The companies are not disclosing the financial terms of the transaction.
Alimentation Couche-Tard makes bid for 7-Eleven
Alimentation Couche-Tard Inc. (ACT), the parent company of the Circle K convenience-store brand, has submitted a “friendly,” nonbinding proposal to Seven & i Holdings Co. Ltd., the parent company of 7-Eleven Inc., to acquire all outstanding shares of the company. Seven & i has confirmed that it has received the confidential, nonbinding and preliminary acquisition proposal from Couche-Tard. “The company is focused on reaching a mutually agreeable transaction that benefits both companies’ customers, employees, franchisees and shareholders,” Couche-Tard said in a statement. The Seven & i board of directors has formed a special committee, comprised solely of independent outside directors, led by Stephen Hayes Dacus as chairperson, to review the proposal, the company said.
Portillo’s draws activist investor, Engaged Capital
Portillo’s Inc. has drawn the attention of an activist investor, Engaged Capital LLC, which reportedly has been in talks with the fast-casual company, Securities and Exchange Commission filings indicate. Engaged Capital LLC, based in Newport Beach, Calif., and the Cayman Islands, filed documents Thursday that note it owns at least 9.9% of the Chicago company’s shares. CNBC reported Friday that Engaged, in talks with Portillo’s, has urged it to no longer own and develop its real estate and to reduce the size of restaurant units.
Cava earnings beat estimates as restaurant traffic climbs nearly 10%
Cava on Thursday raised its full-year outlook as its restaurants reported strong traffic, fueling better-than-expected quarterly earnings and revenue. Shares of the company rose 9% in extended trading. The stock has more than doubled its value this year, bringing Cava’s market cap up to about $11.6 billion, as of Thursday’s close. Earnings per share were 17 cents (vs. 13 cents expected), and revenue was $233 million (vs. $220 million expected). The company’s same-store sales rose 14.4%, topping StreetAccount estimates of 7.9%. While many other restaurant companies have reported declines in visits as consumers pull back their spending, Cava said its traffic grew 9.5% in the quarter. Cava CEO and co-founder Brett Schulman credited the chain’s new grilled steak option as one reason customers kept coming to its restaurants during the quarter.
Home & Road
Lowe’s cuts full-year outlook as it expects weaker home improvement sales
Lowe’s on August 20th cut its full-year forecast, as the retailer’s quarterly sales declined and it projected weak home improvement spending in the second half of the year. The company said it now projects total sales of between $82.7 billion and $83.2 billion for the full year, compared with the $84 billion to $85 billion that it previously expected. It said it expects comparable sales to fall by 3.5% to 4%, compared with its prior forecast of a decline of 2% to 3%. It anticipates adjusted earnings per share will be about $11.70 to $11.90, compared with the prior outlook of between $12 and $12.30.
Ace Hardware sales up 3% as it leans into stores
Ace Hardware’s second-quarter revenues were $2.7 billion, a 3.1% year-over-year increase from $2.6 billion last year. Increases across outdoor power equipment, tools, lawn and garden, and grilling drove the largest gains in revenue, per a company press release. However, retail revenue fell 0.8% to $259 million from a year ago. Net income for Q2 fell $12.3 million or 9.7% to $114.4 million. Marketing expense increases and retail store expenses drove the decline, Ace said. Online sales increased 16%, and the company continued to invest in new stores, opening its 5,000th location in the quarter and remaining on track to open 200 new stores this year. Same-store sales declined 1.7% in Q2 at the approximately 3,800 Ace stores in the U.S. that share sales data. Same-store transactions fell 2.6%, offset by a 0.9% increase in average ticket.
Earnings up for Williams-Sonoma despite revenue dip
Top 100 retailer Williams-Sonoma Inc., which owns and operates Pottery Barn and West Elm and other holdings, reported an increase in net profits for the second quarter of fiscal year 2024, even as net sales didn’t reach 2023’s levels. For the three months ended July 28, the San Francisco-based retail group’s net revenues totaled $1.788 billion, down 3.99% against $1.863 billion over the same 13-week period of 2023. Net earnings for the quarter came in at $225.75 million, or $1.74 per diluted share, an increase of 12.03% compared with profits of $201.51 million, or $1.56 per diluted share. On July 9, the company effected a 2-for-1 stock split of its common stock through a stock dividend. All historical share and per share amounts in its report were retroactively adjusted to reflect the stock split.
Jewelry & Luxury
Chanel Invests in “Quirky” Watch Brand MB&F
Chanel has taken a 25% stake in MB&F, the high-end Swiss watch brand whose designs have been described as “unusual” and “quirky.” MB&F’s creative director and CEO, Maximilian Büsser, remains its majority owner, with a 60% stake (down from his former 80%). Serge Kriknoff, head of R&D and production, now owns 15%. Büsser and Kniknoff will continue to run the company, along with Charris Yadigaroglou, its head of marketing, and Thibault Verdonckt, its head of sales. Financial terms of the Chanel purchase were not disclosed.
Large Gold Bars Are Now Worth $1 Million
With gold hitting $2,500 an ounce last week, the value of a large gold bar—which typically weighs 400 troy ounces—is topping $1 million. Even the generally conservative World Gold Council celebrated the milestone on LinkedIn, posting a chart showing gold’s rise since 1970. Of course, not all gold bars contain 400 troy ounces of the metal. For instance, Costco’s popular gold bars weigh just 1 ounce. The spot price of gold hit $2,500 an ounce for the first time ever on Aug. 16. At press time, it was trading over that benchmark, at $2,508 an ounce.
World’s second-largest diamond discovered in Botswana
One of the largest diamonds ever to be excavated was found in Botswana at a mine owned by Canadian firm Lucara Diamond. The 2,492-carat diamond is the world’s second-largest discovery and comes more than a century after a 3,106-carat gem was found in South Africa in 1905. That stone, known as the Cullinan Diamond, was cut into nine large pieces, many of which were incorporated into the British Crown Jewels. Lucara said on Wednesday that the gem was discovered at the Karowe Diamond Mine in northeastern Botswana using X-ray technology. The mining company did not provide a value for the “high-quality” stone. “We are ecstatic about the recovery of this extraordinary 2,492 carat diamond,” William Lamb, president and CEO of Lucara, said in a statement. “This find not only showcases the remarkable potential of our Karowe Mine, but also upholds our strategic investment in cutting-edge [X-ray Transmission] technology,” he added.
Office & Leisure
Thunderful calls 2024 “a transitional year” as net revenue drops 14.5% YoY
Thunderful said its “transition to a pure-play game company is complete” as it published its financial information for Q2 2024 and its performance in the year thus far. Citing the beginning of 2024 as “very eventful” and “marked by an intense transformation into a pure-play company dedicated to the publishing and development of video games,” Thunderful Group said that as it has now completed the divestment of its distribution operations, its board has concluded it should “withdraw its existing financial targets.”
The Cannabist Co. Enters $16.4 Million Definitive Agreements for Florida Assets
The Cannabist Co. Holdings Inc., one of the most experienced cultivators, manufacturers and retailers of cannabis products in the U.S., announced that it entered into a definitive agreement with a leading multistate operator to acquire the Lakeland cultivation facility. Additionally, The Cannabist Co. entered into a definitive agreement with MINT Cannabis and Shango, as joint venture partners (the “MINT Shango JV”), to acquire all 14 Cannabist dispensaries in Florida and the company’s cultivation and manufacturing facilities in Alachua and Arcadia. MINT Cannabis and Shango are leading, privately held multistate dispensary operators and cultivators that will bring strong operational expertise, award-winning genetics and innovative customer experience to these dispensary locations, which post-closing are expected to be rebranded to “MINT Cannabis.”
Technology & Internet
YouTube takes on TikTok with expanded Shopify partnership
YouTube is positioning itself against the rising popularity of TikTok Shop by giving Shopify retailers more selling options. The video-oriented social media platform, which initially partnered with Canadian e-commerce company Shopify in 2022 to let Shopify retailers sell their full range of products via YouTube in three ways (livestreams, videos, and store tabs) is extending the range of the collaboration. Now, all eligible members of the Shopify Plus and Advanced initiatives in the U.S. can sign up for the YouTube Shopping affiliate program through the Google & YouTube app on Shopify. This enables YouTube creators to showcase products from Shopify sellers at scale in their videos. Presumably a major driver of YouTube’s decision to launch this new joint effort with Shopify is the sharp rise of rival video-based social platform TikTok, which has offered a robust e-commerce offering in the U.S. via its TikTok Shop storefront since September 2023.
Walmart’s exit raises questions about JD.com’s future
E-commerce retailer JD.com needs to convince investors of its relevance amid a stagnant Chinese e-commerce market, aggressive price war and now, the departure of Walmart, its biggest shareholder. Walmart announced this week a full exit from the Beijing-based e-commerce platform, selling off its $3.74 billion stake, which triggered a 10% slump in its share price and raised questions about JD.com’s ability to withstand the changed landscape. A decade ago, founder Richard Liu persuaded investors the company could take on Alibaba, its bigger rival with his own business model, raising $1.8 billion, in what was then the biggest IPO by a Chinese firm in the U.S. Its business model, which involves direct selling to shoppers and heavy investment in supply chains and logistics, allowed the firm to nearly double its market share from 14% a decade ago to 27% in 2023.
Finance & Economy
Gas prices are down. We could be headed for lows not seen since 2021
If you’re planning to squeeze in one last summer road trip over the coming Labor Day weekend, it won’t cost as much to fill up your tank compared to a few months ago.
The national average for a gallon of regular has fallen more than 20 cents since May and is now at $3.38 — about 47 cents lower than this time a year ago. Experts say the trend is likely to continue in the coming months, possibly leading to $3-a-gallon gasoline for the first time since 2021. According to AAA, as of Thursday, the price per gallon for regular gasoline ranged from $4.59 in California, where state gas tax is the highest in the nation, to $2.93 in Mississippi, which has one of the lowest tax rates on fuel.
