Story of the Week
Nordstrom family group offers $3.8B to go private
Nordstrom family members including CEO Erik Nordstrom and his brother Pete, who is president of the company, have teamed up with Mexican retail company El Puerto de Liverpool to buy the department store for $23 per share or $3.8 billion in cash. The deal would be financed “through a combination of rollover equity and cash commitments by members of the Nordstrom family and Liverpool and $250 million in new bank financing.” Existing debt would remain outstanding, per a company press release. A special committee of the board, established earlier this year when the Nordstroms indicated their interest in potentially making an offer, is reviewing the proposal and had no further comment.
Apparel & Footwear
A slowing women’s business is hurting Lululemon’s growth
Lululemon’s revenue growth slowed further in Q2, with sales rising 7% to $2.4 billion in the quarter and comps up 2%, according to a company press release. The retailer is projecting similar growth for Q3, of between 6% and 7% year over year. The North America region saw revenue edge up just 1% and comps fall by 3%, which CEO Calvin McDonald said on a call with analysts was due to a slowdown in the women’s business over a lack of newness. Lululemon cut its full-year guidance as a result of the slower growth, now expecting revenue to rise between 8% and 9% to a maximum of $10.5 billion, versus a prior outlook of revenue growth of 11% to 12% to a maximum of $10.8 billion.
Allbirds plans reverse stock split to regain Nasdaq compliance
Allbirds plans to complete a 1-for-20 reverse stock split, according to a company press release. The financial maneuver, which will trade every 20 shares of Allbirds’ class A and class B common stock for one share, was approved by the company’s board of directors in mid-August and is aimed at bringing the retailer back in compliance with the Nasdaq’s minimum bid price requirement. The decision comes as Allbirds is nearing the end of its grace period from the Nasdaq, which notified the brand in April that it was no longer in compliance with its listing requirements. In order to regain compliance by Sept. 30, Allbirds’ stock has to trade at $1.00 or more for 10 consecutive days.
Gap Inc. CEO: ‘We’re running a fundamentally stronger business’
Gap Inc.’s Q2 performance indicates that the company is once again gaining market share in apparel, according to many analysts and the company itself. “We’re running a fundamentally stronger business,” CEO Richard Dickson said. The turnaround is especially evident at Old Navy, which in recent years had begun to post uncharacteristic declines, but all brands are making headway in their respective turnarounds, Dickson said. Athleta is set to return to positive comps in the second half of the year, and the company is “focused on reestablishing [Banana Republic] to thrive in the premium lifestyle space” and has made assessments around assortment, price and operations even as it continues to search for a new CEO, he said. Sandra Stangl exited the post earlier this year.
Athletic & Sporting Goods
Outside acquires MapMyFitness apps from Under Armour
Outside, a media company that houses dozens of outdoor enthusiast brands, has acquired MapMyFitness — a suite of mapping technology apps — from Under Armour, Outside CEO Robin Thurston told Axios. It’s a special deal for Thurston, who founded MapMyFitness in 2007 and later sold it to Under Armor for $150 million in 2013. MapMyFitness co-founder Kevin Callahan is the VP of product at Outside and will oversee the integration of the MapMyFitness suite into Outside’s product offering. In addition to the general MapMyFitness app, Outside will acquire MapMyRide, MapMyRun and MapMyWalk apps.
Asics to Exit Baseball Equipment Biz; Shifts Attention to Running Category
Asics Corp. announced that it is shuttering its baseball equipment business to focus on sneakers, reported first by Bloomberg. The Kobe, Japan-based owner of the Onitsuka Tiger brand will stop selling gloves, bats and other gear in late September 2025, a company spokesperson said. The company is exiting a business that once sponsored LA Dodgers superstar Shohei Ohtani; however, it will continue manufacturing cleats. Bloomberg noted that Asics made the decision following a review of its domestic business portfolio, adding that its resources for baseball equipment have been “limited” compared to other sports products it produces. Asics currently has sponsorship deals with 11 baseball players, including San Diego Padres pitcher Yu Darvish and Chicago Cubs outfielder Seiya Suzuki.
Local investor group to acquire Killington & Pico ski resorts
Killington Resort, the largest mountain resort in Eastern North America, announced Killington Resort & Pico Mountain are being sold from POWDR “to a passionate group of local passholders.” In a statement, the sale was described as a landmark purchase that represents a commitment to keeping Killington and Pico in the hands of those who know and love it, with plans to increase capital investment while preserving the mountains’ unique character and community. Financial terms were not released. for comparison, Jay Peak was sold in 2022 for $76 million and the ski-only operations of Stowe Mountain Resort was sold in 2017 for $41 million. Killington would likely go for a higher price than either of those transactions if the deal includes the entire properties. In recent years the giant ski resort companies of Vail and Alterra/Aspen have been gobbling up properties from California to Canada to Vermont. POWDR is a comparatively smaller resort company. Vail now owns Mount Snow, Okemo and Stowe, while Alterra has acquired Stratton and Sugarbush.
Cosmetics & Pharmacy
Ulta Beauty Q2 Earnings Miss Wall Street Expectations
Ulta Beauty has released its financial results for the second quarter of fiscal 2024, reporting a slight increase in net sales to US$2.6 billion, while experiencing a 1.2% decrease in comparable sales and a decline in net income to US$252.6 million. Despite the overall rise in net sales, primarily driven by new store openings and growth in other revenue streams, Ulta Beauty faced a decrease in gross profit margins, which fell to 38.3% from 39.3% in the same quarter last year. The company also reported higher selling, general, and administrative (SG&A) expenses, which increased to US$644.8 million from US$600.7 million.
Rite Aid exits bankruptcy, sheds $2B in debt
Rite Aid has emerged out of bankruptcy, having axed about $2 billion from its debt. The company also added some $2.5 billion in exit financing, according to a press release. The drugstore retailer will operate as a private company under a new chief executive. Matt Schroeder, who had been the company’s chief financial officer, will take the post. He succeeds Jeffrey Stein, who was tapped to serve a dual role, as both CEO and chief restructuring officer, during the Chapter 11 process. Schroeder joined Rite Aid over 20 years ago, in 2000, as its vice president of financial accounting.
Bath & Body Works Lowers Annual Sales Forecast Amid Weakening Demand
Bath & Body Works has reduced its annual sales forecast, signaling weaker demand for its high-priced products, including fragrances and scented candles, as consumers prioritize essentials amidst persistent inflation. Despite introducing new fragrance and personal care products for men, the Ohio-based company’s sales in key markets like the U.S. and Canada have been negatively impacted. The retailer now anticipates a 2% to 4% decline in 2024 net sales, adjusting its profit projection to a range of US$3.06 to US$3.26 per share.
Turpaz Industries buys Flavors and Essences UK for £22M to grow globally
Turpaz Industries purchased 100% of the share capital of Flavors and Essences (F&E) UK, a British flavors company, for £22 million (US$28.85 million) from International Flavors and Fragrances. Turpaz chairperson and CEO Karen Cohen Khazon said, “The purchase of F&E is another significant strategic step for Turpaz, which expands our presence in Europe and strengthens our position in the global flavor market.” Turpaz Industries develops, produces and markets flavor and fragrance extracts, and specialty fine ingredients. Similarly, F&E develops, produces and markets flavor extracts for various products.
Discounters & Department Stores
Dollar Tree delivers weak Q2, cuts full-year guidance
Dollar Tree’s consolidated Q2 net sales rose 0.7% to $7.4 billion year over year, the company said in a Wednesday earnings statement. Second quarter same-store sales at the company’s namesake banner were up 1.3%, but were flat for Family Dollar. Net income for the second quarter was $132.4 million. With Q2 results falling short of the company’s expectations, Chief Financial Officer Jeff Davis said lowered full-year guidance reflects a more reserved sales outlook and the costs of converting former 99 Cents Only stores to the Dollar Tree banner. The company also said higher costs to manage and settle legal claims arising from in-store accidents and incidents are affecting profitability. Dollar Tree’s updated full-year outlook now forecasts net sales ranging from $30.6 billion to $30.9 billion — down from $31 billion to $32 billion — and comp growth in the low single digits for the enterprise and its two business segments.
Dollar General sees ‘cash-strapped consumer,’ cuts guidance
Dollar General’s second quarter net sales rose 4.2% year over year to $10.2 billion, up from $9.8 billion, the company said in a Thursday earnings announcement. However, net income fell 20.2% to $374.2 million from $468.8 million. Top line income and nearly flat same-store sales were below expectations, CEO Todd Vasos said. Growth in consumables drove the comp sales rise, as customer spending remained focused on essentials. That growth was partially offset by declines in seasonal home and apparel. In anticipation of continued softness in sales, the company updated its full-year outlook. Dollar General now expects net sales growth ranging from 4.7% to 5.3%, down from 6% to 6.7%, while same-store sales growth is expected to range from 1% to 1.6%, down from 2% to 2.7%.
Off-price retailers poised to take even more market share from department stores
Ahead of financial reports from major off-price retailers, several analysts reiterated the strength of the sector, which tends to do well in up or down economies, with shoppers from a broad income range. These retailers also enjoy a real estate advantage, with most located away from malls in small centers with convenient parking, and are poised to take market share as Macy’s works through its planned closures of 150 stores. UBS analysts led by Jay Sole also noted that online sales of apparel and footwear have plateaued, a boon to the segment, which relies more on brick and mortar than on e-commerce. “As consumers remain pressured by inflation and accrued debt, discretionary items are taking a back seat when it comes to spending.
Emerging Consumer Companies
E-bike maker Cowboy raises $5.5 million, eyes profitability
Cowboy, the Brussels-based company that has been designing and selling electric bikes that you can see in major cities across Europe, has closed a small, strategic funding round of €5 million (around $5.5 million at current exchange rates). That includes €1 million in debt facilities. Cypress Capital led the round, with existing investors Index Ventures, Hardware Club, Future Positive Capital, Isomer and Exor are also participating. Cowboy will also launch an equity crowdfunding campaign to give an opportunity to its customers to invest in the company.
Intimate care brand Queen V shut down
Reflecting a shift away from emerging brands that take patience and investment to gain traction, Reckitt has shuttered Queen V, a brand it acquired in 2021 to raise its profile in sexual wellness and intimate care. The shuttering comes two years after Queen V was rebranded and reentered mass-market retail and nearly a year after a CEO transition at Reckitt—Kris Licht took over the post from Nicandro Durante in October 2023—has led to a reassessment of previous strategies. Reckitt has deleted Queen V’s social media accounts, and its website is redirecting visitors to the global consumer packaged goods conglomerate’s lubricant brand K-Y.
Food & Beverage
Valeo Foods Group, one of Europe’s leading producers of quality sweets, treats and snacks, has agreed to acquire I.D.C. Holding, a major independent producer of quality wafers, biscuits, confectionary and chocolate in Central and Eastern Europe. First established in Slovakia over a century ago, I.D.C. Holding is a transformative addition to Valeo Foods Group’s expanding portfolio. Producing a wide range of branded wafer, biscuit, sugar confectionary and seasonal chocolate products, I.D.C. Holding is a natural fit with Valeo Foods Group’s sweet snacking platform and would form the cornerstone for its operations in the fast-growing Eastern European market.
Billionaire Crown family sells pizza maker Miracapo to private equity firm
Adding to its portfolio of Chicago-area food manufacturers, a private equity firm announced that it has purchased Elk Grove Village-based Miracapo Pizza Co. from the billionaire Crown family. The acquisition gives Brynwood Partners its fourth Chicago-area company producing a range of grocery products, with an emphasis on pizza, and brings its total number of Chicago-area jobs to 1,500. Brynwood deals in “corporate carveouts,” slicing off respected brands from conglomerates whose priorities are elsewhere. Terms of the deal were not disclosed, and the sale closed last month.
Hain Celestial sells ParmCrisps to Pop Secret owner
Hain Celestial sold its ParmCrisps brand to an independent snacks maker for an undisclosed amount. Our Home will also add ParmCrisps’ production facility in York, Pennsylvania. Hain said the transaction focuses its better-for-you portfolio and streamlines its supply chain to drive greater operational efficiency and margin expansion. Proceeds from the sale of the cheese crisp and snack mix brand will be used to pay down debt. Our Home has been building its snacking portfolio through acquisitions. Last week, it purchased Pop Secret popcorn brand from Campbell Soup.
Mount Franklin Foods, LLC Acquires Assets of Stuffed Puffs, LLC
Mount Franklin Foods, LLC, a leading manufacturer of high-quality branded, contract and private label confectionary, nuts, snacks, and foodservice products, announced it has acquired the assets from Bethlehem, Pennsylvania-based Stuffed Puffs, LLC. The acquisition, for an undisclosed sum, is effective immediately. Stuffed Puffs, LLC, known for its innovative and proprietary technology for producing high-quality marshmallow products filled with milk chocolate and other ingredients, has garnered significant consumer attention and has been the leading driver of growth in its category since its launch in 2019.
Grocery & Restaurants
Red Lobster bankruptcy: Court approves plan to exit Chapter 11
A bankruptcy court approved Red Lobster’s plan to exit Chapter 11, putting the seafood chain one step closer to exiting bankruptcy. The company, known for its seafood offerings and cheddar biscuits, filed for bankruptcy protection in May. Red Lobster had struggled with increased competition, expensive leases, last year’s disastrous shrimp promotion and a broader pullback in consumer spending. As part of the restructuring plan, a group of investors under the name RL Investor Holdings will acquire Red Lobster by the end of the month. Once the acquisition closes, former P.F. Chang’s CEO Damola Adamolekun will step in to lead Red Lobster. Current CEO Jonathan Tibus, who led the company through bankruptcy, will leave Red Lobster. “This is a great day for Red Lobster,” Adamolekun said in a statement. “With our new backers, we have a comprehensive and long-term investment plan — including a commitment of more than $60 million in new funding — that will help to reinvigorate the iconic brand while keeping the best of its history.”
7-Eleven’s parent company rejects takeover proposal, says offer ‘grossly undervalues’ company
Seven & i Holdings has rejected the takeover offer from Canadian convenience store operator Alimentation Couche-Tard, saying the offer “is not in the best interest” of its shareholders and stakeholders. In a filing with the Tokyo Stock Exchange, the owner of 7-Eleven revealed that Couche-Tard had offered to acquire all outstanding shares of Seven & i for $14.86 per share. Stephen Dacus, chairman of the special committee that Seven & i had formed to evaluate Couche-Tard’s proposal, called the proposal “opportunistically timed and grossly undervalues our standalone path and the additional actionable avenues we see to realize and unlock shareholder value in the near- to medium-term.” In April, Seven & i announced a restructuring plan for the company, aimed at growing 7-Eleven’s presence globally as well as divesting its underperforming supermarket business.
Home & Road
Kirkland’s Reduces Q2 Loss, Positions for the Holidays
Kirkland’s narrowed its loss in the second quarter compared to a year ago, beating Wall Street estimates while reporting store traffic gains ahead its critical holiday period. Net loss was $14.5 million, or $1.11 per diluted share, versus a net loss of $19.4 million, or $1.51 per diluted share, in the quarter a year earlier. A Yahoo Finance-published analyst consensus estimate was for a loss per diluted share of $1.31 and revenues of $84.2 million.
Comparable sales slipped 1.7%, including a 10.6% decline in e-commerce sales and a 1.8% increase in comp store sales, the company reported. The decline was primarily driven by a decrease in consolidated average ticket and e-commerce traffic, partially offset by an increase in store traffic and conversion.
Helen of Troy Announces New $500M Share Repurchase Authorization
The Helen of Troy, Ltd. Board of Directors had authorized the repurchase of $500 million of its outstanding common shares in keeping with its stated intention to return to shareholders capital not otherwise used for core business growth or acquisitions. The company approved the authorization as part of the Board’s regular process of reviewing Helen of Troy’s capital allocation and existing authorization, effective August 20, 2024, for a period of three years and replaces the company’s existing repurchase authorization, of which approximately $245.3 million remained at the time the new authorization was approved.
Metro Mattress files for Chapter 11 protection
Bedding specialty retailer Metro Mattress Corp. filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Northern District of New York on Sept. 4. The Syracuse, N.Y.-based retailer, which operates 69 stores in five states, cited expansion into new markets, coupled with recent downturns in the industry, as its chief reasons for the filing. As such, it indicated that it will turn its focus to strengthening its New York stores as part of the restructuring and exit its other markets. “The company has a strong business model in our core New York market and will continue our normal business operations in that market,” CEO Dino Cifelli said in a statement. “We have made the tough decision to exit the New England market. This strategic step allows us, with the support of our vendors and loyal customer base, to pave the way to a robust future.”
U.S. furniture manufacturing shows growth, employment gains in August
U.S. manufacturing activity contracted for the fifth consecutive month and for the 21st time in the past 22 months in August, according to the Institute for Supply Management in its latest report. The monthly index came in at 47.2, up 0.4% from July but still showing a contraction. “While still in contraction territory, U.S. manufacturing activity contracted slower compared to last month,” said Timothy R. Fiore, ISM chairman. “Demand continues to be weak, output declined, and inputs stayed accommodative. Demand slowing was reflected by new orders dropping further into contraction, order backlogs remaining in strong contraction territory, and customers’ inventories at the ‘just right’ level. Output continued in moderate contraction with production sagging further, while employment contracted slower as compared to July. Panelists’ companies reduced production levels month over month as head-count reductions continued in August.”
Jewelry & Luxury
Former Chopard, Frederique Constant Executive Tapped to Head Cadar
Ralph Simons, former CEO of Chopard North America and Tane Mexico 1942, is now the CEO of Cadar, the jewelry brand announced Wednesday. He succeeds Jean Poh, who joined the company in February 2022 and left earlier this year. According to his LinkedIn profile, Simons spent six years at Frederique Constant, working his way up to become president of the Americas market for the watch brand. He served as CEO of Chopard North America for two years before moving on to Tane Mexico 1942, a Mexico City-based company that specializes in fine jewelry, collectibles, and objects. Simons has spent the last eight-plus years as the CEO of Uptick New York LLC, his own strategy, consulting, and branding agency.
Brilliant Earth Promotes Two Executives to C-Suite Roles
Brilliant Earth has promoted two executives to newly created roles in its C-suite. Pamela Catlett, who joined the company last year as senior vice president of brand, marketing, and retail experience as per her LinkedIn profile, has been named its chief brand officer. She will be tasked with overseeing the jewelry retailer’s brand strategy, including its retail expansion and omnichannel experience. It is on track to open three new showrooms in the second half of the year, including two in Boston, at the Seaport and in Chester Hill, and its first street-level location in New York City’s Nolita neighborhood. Prior to joining Brilliant Earth, Catlett was the president and COO of Outdoor Voices, and the global head of women’s and youth at Under Armour.
De Beers Looks to India to Boost Demand for Natural Diamonds
With diamond jewelry demand facing headwinds in both the United States and China, De Beers Group is turning to another market to bolster demand, and it is partnering with the country’s largest jeweler to do it. On Wednesday, De Beers Group announced a new strategic collaboration with Tanishq, a retail chain that is a household name in India, with nearly 500 stores nationwide. The announcement came at a press conference held in Mumbai and attended by De Beers Brands CEO Sandrine Conseiller and Ajoy Chawla, CEO of the jewelry division of Titan Company Ltd., Tanishq’s parent company. Modeled on the partnership De Beers formed with U.S. retailer Signet Jewelers earlier this year, the collaboration with Tanishq includes educating both Tanishq staff and consumers about natural diamonds; shaping customers’ experiences around the stones; and a “360-degree” marketing campaign aimed in part at first-time diamond buyers.
China’s Gray Market Is Dominating Luxury Brands’ Online Sales
China’s gray market — where brand new, authentic products are sold at steep discounts — is increasingly dwarfing some global luxury giants’ official sales channels in the country’s dominant e-commerce space, according to a new report. For high-end outdoor wear labels Moncler and Canada Goose, sales for some of their most popular products were 2.5 to 15 times higher on Dewu — China’s largest gray market platform — than in their official stores on e-commerce platform Tmall during the peak shopping season from October to March, data consultancy Re-Hub said in a report released Tuesday.
Office & Leisure
DraftKings Buying Microbet Provider Simplebet
DraftKings said it will acquire Simplebet Inc., a provider of microbetting services, to bolster its suite of in-game betting products. Financial terms of the transaction weren’t disclosed. When rumors of the deal surfaced in May, it was speculated that DraftKings could pay $120 million to $170 million for privately held Simplebet. The pair have an existing relationship. In 2021, they inked a deal in which Simplebet provided microbetting services to DraftKings Sportsbook. “The Proposed Transaction would allow for the integration of Simplebet’s proprietary machine-learning models into DraftKings’ best-in-class pricing and technology platform to create highly accurate betting opportunities during every moment of a game,” according to a statement issued by the buyer.
Zynga exits web3 project Sugartown
Zynga has pulled out of its web3 project Sugartown, and sold it to a new company called D20. The move was announced by the latter on social media, saying it had “acquired all products and assets under Sugartown from Zynga.” D20 was co-founded by Matt Wolf (previously VP of web3 gaming at Zynga) and Tommy Ngo (former general manager for web3 at Zynga). As noted by Pocket Gamer, a staff member mentioned on social media that “D20 is fully comprised of [sic] the members of the ex-Zynga web3 team.”
Technology & Internet
Amazon aggregators Branded, Heyday plan to merge as industry shrinks
Amazon aggregators Branded and Heyday plan to merge, CNBC has learned, as a segment of the e-commerce industry that boomed during the Covid era continues to consolidate. In a note to staffers on Monday, Heyday CEO Sebastian Rymarz said the combined companies will form a new entity called Essor, which translates to “take flight” in French, “capturing our vision of elevating brands to new heights through our platform,” he wrote. The new name will be officially rolled out in the coming days, and the combined companies are expected to generate annual revenue of $400 million, Rymarz wrote. Apollo Global Management and BlackRock are in talks to provide new debt financing to help the combined entity make further acquisitions, according to Bloomberg, citing people familiar with the matter.
Best Buy shares surge on profit beat and guidance hike
Best Buy raised its fiscal-year profit guidance Thursday after exceeding earnings and revenue expectations for the most recent quarter. The company, however, lowered the top end of its guidance ranges for both full-year revenue and comparable sales. “As we look to the back half of the year, we expect our industry to continue to show increasing stabilization,” Best Buy CFO Matt Bilunas said in the company’s press release. Net sales in the quarter dropped to $9.29 billion from $9.58 billion during the same period a year earlier. Comparable sales declined 2.3% during the quarter, compared with a 6.2% fall a year earlier. That drop in comparable sales was the company’s best result for the metric since the fourth quarter of fiscal 2022, CEO Corie Barry said on the company’s earnings call. Barry said the industry is returning to growth, adding that Best Buy’s positioning within the sector is helping the retailer “to capture that growth trajectory.”
Finance & Economy
August payrolls grew by a less-than-expected 142,000, but unemployment rate ticked down to 4.2%
Nonfarm payrolls expanded by 142,000 during August, up from 89,000 in July and below the 161,000 consensus forecast. The unemployment rate ticked down to 4.2%, as expected. However, the “real” unemployment rate edged up to 7.9%, its highest reading since October 2021. The previous two months saw substantial downward revisions. The Bureau of Labor Statistics cut July’s total by 25,000, while June fell to 118,000, a downward revision of 61,000. Average hourly earnings increased by 0.4% on the month and 3.8% from a year ago, both higher than the respective estimates for 0.3% and 3.7%.
Weak manufacturing measures raise specter of U.S. economic slowdown
U.S. factories remained in slowdown mode in August, fueling fears about where the economy is headed, according to separate manufacturing gauges. The Institute for Supply Management monthly survey of purchasing managers showed that just 47.2% reported expansion during the month, below the 50% breakeven point for activity. Though that was slightly above the 46.8% recorded for July, it was below the Dow Jones consensus call for 47.9%. “While still in contraction territory, U.S. manufacturing activity contracted slower compared to last month.
Bond market ‘yield curve’ returns to normal from inverted state that had raised recession fears
The relationship between the 10- and 2-year Treasury yield briefly normalized September 4th, reversing a classic recession indicator. Following economic news that showed a sharp decline in job openings and dovish remarks from Atlanta Fed President Raphael Bostic, the benchmark 10-year yield inched above the 2-year for the first time since June 2022. The respective yields were both around 3.79% on the session, with just a few thousandths of a percentage point separating them. An inverted yield curve, in which the nearer-duration yield is higher, has signaled most recessions since World War II.
