Nine months ago, I wrote in this space about the growing popularity of Dry January and the broader category of no- and low-alcohol (NoLo) beverages. The NoLo trend continues. NielsenIQ reports that as of May, trailing 12-month sales of non-alcoholic spirits were up 116% year over year. Celebrities are starting to hop on the trend as well. Blake Lively recently launched a non-alcoholic line called Betty Buzz, and Katy Perry recently launched De Soi, which uses the tagline “no booze, all botanicals.” However, NoLo isn’t the only trend in alcoholic (or non-) beverages. In fact, one current trend with more potency than NoLo is on the other end of the alcohol-by-volume (ABV) spectrum.
Ready-to-Drink (RTD) cocktails are surging in popularity and becoming increasingly mainstream. The RTD category was already growing before the pandemic but accelerated strongly when consumers needed alternatives to bars and other cocktail-friendly venues. Even now with bars and restaurants largely reopened, the category continues to appeal to consumers for its convenience and diversity of flavors. According to NielsenIQ, trailing 12-month RTD cocktails sales as of October 2021 increased 126% year over year, and, according to Mintel, the number of adults reporting having recently consumed RTD cocktails has increased ten percentage points from 2018 to 2021.
A number of large beverage companies are chasing the RTD trend. Earlier this year, global beverage leader Diageo opened a new canning facility in Illinois to expand its RTD production capacity for certain RTD cocktails, including Ketel One Botanical Vodka Spritz and Crown Royal Whiskey Lemonade. For its part, Pernod Ricard recently launched RTD cocktails under the Absolut, Malibu, and Jameson brands. And Coca-Cola just last week announced details about its forthcoming Fresca canned cocktail line, following the June announcement of a Jack and Coke collaboration with Jack Daniels Whiskey.
RTD drinks are not all high in alcohol, but a number of popular brands are. Alcohol delivery company Drizly reported for 2021 that while its top selling RTD brand was High Noon (4.5% ABV), its number two selling brand was Cutwater Spirits (7% to 12.5% ABV), and others in the top ten included On the Rocks (20% to 35% ABV) and Fisher’s Island Lemonade (7% to 9%).
RTD cocktails’ high ABV rates and growth rates are a contrast to those of the largest segment of the ready-to-drink market, hard seltzer, which saw a 5.5% annual decline last year, according to NielsenIQ. After peaking early in the pandemic, hard seltzer has suffered both from an oversaturation of brands in the marketplace and competition from other growing categories. Category leading brand White Claw has seen its annual growth rate decline from 140% in 2020 to 11% in 2021.
With beer having lost share for several years leading into the pandemic, and now hard seltzer losing momentum while both RTD cocktails and NoLo options gain steam, consumers appear to be gravitating away from the middle and toward the higher and lower ends of the ABV spectrum in an interesting barbell-ing trend. Whether this is a conscious move away from middle-of-the-road options or just a coincidence is unclear. Unfortunately, inflation and recession concerns may change the picture again soon anyway. According to David Burwick, president of the Boston Beer Company, on a recent call with analysts and investors, “[W]e’re seeing a volume shift from hard seltzer back to premium lights beers with their lower pricing, particularly among 35- to 44-year-olds.” That development bears watching. In the meantime, don’t feel alone if the tumultuous trends in this category leaving you wanting a drink.
Headline of the Week
CVS Health is making its biggest push yet into the home health-care space as it continues to expand beyond its retail roots. The retail pharmacy and health insurance giant said it has reached an agreement to acquire health-care company Signify Health for $30.50 per share in cash. The total transaction value is put at about $8 billion. Signify provides technology and analytics to help with in-home patient care. It also has a network of more than 10,000 clinicians across all 50 states — including physicians, nurse practitioners and physician assistants — who make home-based visits to identify a patient’s clinical and social needs, and then connect them to appropriate follow-up care and community-based resources. The two companies said they expected the deal to close in the second half of 2023, pending regulatory and shareholder approval. CVS has been expanding its medical offerings and the company said in early August that it would either purchase or take a stake in a primary-care company by the end the of the year.
Apparel & Footwear
G-III Apparel Group has grown more cautious amid the inflationary pressures weighing on both its consumers and its own supply chain. The multifaceted fashion mainstay — which owns DKNY, Donna Karan and Karl Lagerfeld and also has big licensed businesses with Calvin Klein and Tommy Hilfiger — showed many second-quarter gains, but missed profit expectations. More importantly, G-III cut its profit outlook for the year, offering another sign of just how much the second half of 2022 will differ from the strong run fashion saw at the end of 2021. G-III’s second-quarter net income increased 89 percent to $36.3 million, or 74 cents a diluted share, from $19.2 million, or 39 cents, a year earlier. However, the result was inflated by a number of items, including a $30.9 million gain in the fair value of G-III’s minority ownership of the Karl Lagerfeld brand, which the company acquired full control of in June. Sales for the three months ended July 31 rose 25.3 percent to $605.2 million, up from $483.1 million a year earlier and above the $594.8 million analysts projected. Morris Goldfarb, the company’s chairman and chief executive officer, who is used to navigating tough markets and recently marked his 50th anniversary at the company, said the deal for Lagerfeld expanded the companies’ reach and that its largest brands were seeing “significant year-over-year sales growth.” “Given the challenging environment that has rapidly developed over the last few months, we are taking a more conservative view for the balance of the year,” Goldfarb said.
American Eagle Outfitters Inc on Wednesday missed second-quarter profit estimates and said it would pause quarterly dividend as it fortifies its finances against a hit from inflation, sending its shares down over 14% after market. The apparel maker would also freeze hiring, cut non-critical expenses and lower capital spending, Chief Executive Officer Jay Schottenstein said in an earnings call, as the company looks to minimize damages from rising costs and slowing demand. American Eagle’s gross margins for the reported quarter declined due to higher freight costs, steeper discounts and increased promotional activity to get rid of excess spring and summer goods. Schottenstein said the company entered third quarter with better inventory levels with fresh back-to-school and fall merchandise. The company’s Aerie division, a pandemic beneficiary that makes activewear, swimsuits and bralettes, recorded an 11% jump in revenue in the second quarter ended July 30, while namesake division American Eagle posted an 8% decline.
Associated British Foods warned of lower profit next year, as its Primark fashion brand contends with worsening costs and increasingly cautious customers who are dealing with an income squeeze, sending shares to nearly a decade low. Primark, one of Europe’s biggest fast fashion chains, will limit price hikes next year as parent ABF said it was likely that customer’s incomes will reduce further as inflation worsens. That decision, along with soaring energy, raw material and labour costs, and a stronger dollar that have pushed up its purchasing costs, would squeeze margins at Primark, it said. “This could act as a ‘reality check’ for the sector,” said analysts at JPMorgan. “Being a reminder that whilst the extent of the consumer demand shock might not be as bad as previously anticipated given government support, there are material margin headwinds facing retailers into the coming year.” ABF’s profit warning comes as the group’s performance this financial year ending Sept. 17 improved significantly from pandemic-hit year ago figures. Total sales for Primark is expected to be some 7.7 billion pounds this financial year, about 40% ahead of a year ago.
About six months after Authentic Brands Group finalized its acquisition of Reebok, the company has named a new CEO for the brand. Todd Krinsky, a 30-year veteran of Reebok, is taking over the top spot from current president and CEO Matt O’Toole. O’Toole will transition to a role as executive vice chairman of parent company Authentic Brands in January. Krinsky has been a part of Reebok’s leadership team for more than a decade, according to a company press release, and was most recently the senior vice president of the Reebok Design Group, which oversees product design, development and innovation. O’Toole has led Reebok for 15 years, and in his new role, he will continue working on the brand’s global expansion, as well as focusing on broader strategy and new acquisitions for Authentic Brands. According to Authentic Brands, the post-Adidas strategy is already seeing meaningful results. That includes a 40% U.S. market share gain and “unprecedented global growth,” the company said in its release. The new strategy emphasizes Reebok’s most well-known styles and focuses on the brand’s athletic roots. Krinsky himself has led the growth of the company’s classics business, which has seen “consistent growth worldwide for over a decade,” the company said.
Athletic & Sporting Goods
Excel Fitness, an Austin, Texas-based franchisee of Planet Fitness, has acquired 14 Planet Fitness locations in the Hampton Roads region of Eastern Virginia from the KSMA group. Excel Fitness, which was acquired by private equity firm Olympus Partners for an undisclosed amount in April 2022, has opened five new clubs in 2022 so far. It now operates 107 Planet Fitness locations with multiple locations in development, including a new club in Williamsburg, Virginia. This deal includes development rights to bring six more locations to the Virginia market over the next five years. Excel Fitness serves seven markets including Austin, Dallas-Fort Worth, Northwest Arkansas, Raleigh-Durham, Tulsa, Virginia and Utah.
MasterCraft Boat Holdings, Inc. announced that its NauticStar business was acquired by a subsidiary of Iconic Marine Group. Iconic Marine Group assumed substantially all liabilities related to the NauticStar business and intends to continue operating the NauticStar business as usual. The transaction, which closed on September 2, 2022, is subject to a customary working capital adjustment. Headquartered in Vonore, Tenn., MasterCraft Boat Holdings, Inc. is a leading innovator, designer, manufacturer and marketer of recreational powerboats through its three brands, MasterCraft, Crest and Aviara.
Cosmetics & Pharmacy
Church & Dwight signed a definitive agreement to acquire Hero Cosmetics in a $630 million deal. Hero Cosmetics is an acne and skin solutions brand launched in 2017 with one Mighty Patch Original product. Now, Hero Cosmetics sells a Mighty Patch box every two seconds. Hero Cosmetics has expanded beyond the pimple patch category, creating innovative solutions for every pimple problem. From post-acne healing to prevention to daily protection to body care, Hero Cosmetics has grown into a comprehensive range of 30 stock-keeping skin solutions priced from $12.99 to $32. Church & Dwight, founded in 1846, is the leading US producer of sodium bicarbonate, popularly known as baking soda. The company manufactures and markets a wide range of personal care, household, and specialty products under recognized brand names such as Arm & Hammer, Trojan, Oxiclean, Spinbrush, First Response, Nair, Orajel, Xtra, L’il Critters, Vitafusion, Batiste, Waterpik, Zicam, Flawless, and Therabreath. These 15 key brands represent approximately 85% of the company’s product sales.
Discounters & Department Stores
Target CEO Brian Cornell has committed to staying in the role for roughly three more years, the company said in a press release. Cornell, 63, will pass Target’s traditional retirement age for its chiefs. With Cornell’s extension, Target’s board scrapped its policy, designed to “initiate a discussion regarding the possible retirement of its CEO at the age of 65,” the company said. Target also announced that Arthur Valdez, chief supply chain and logistics officer, will retire. Gretchen McCarthy, who served as Target’s senior vice president for global inventory management, will take over effective immediately.
Kohl’s has received a bid for its owned real estate that could reach $2 billion, according to a Reuters report that cited anonymous sources. Kohl’s and the bidder, private equity firm Oak Street Real Estate Capital, have met in recent days to discuss a deal in which Kohl’s would sell real estate for $1.5 billion to $2 billion and lease back its stores, according to Reuters. Kohl’s and Oak Street did not immediately respond to Retail Dive’s requests for comment. The Reuters report stipulated that there is no certainty around a deal or continued negotiations.
In the midst of a beauty revamp, J.C. Penney on Thursday introduced new beauty experiences powered by artificial intelligence and augmented reality through a partnership with Revieve. The department store launched an AI-driven skincare adviser experience, which uses diagnostics technology to analyze selfies and provide recommendations for a personalized skincare routine. Users of the online experience will also answer a questionnaire. Alongside its skincare adviser experience, J.C. Penney also debuted makeup try-on capabilities via AR.
Alongside other retailers and brands developing virtual shopping experiences, Bloomingdale’s has tapped Emperia, a virtual reality tech developer, to create a virtual store in celebration of its 150th anniversary, according to a press release Thursday. The virtual store will showcase products from Polo Ralph Lauren, Marc Jacobs, David Yurman and other luxury brands. Visitors to the virtual store can view a video highlighting the transformation of Bloomingdale’s over time, play games, receive access to an exclusive anniversary-themed collection and more, according to the announcement. The retailer is introducing the virtual store during New York Fashion Week as part of its anniversary campaign and will continue celebrating its anniversary at other events across the U.S., featuring designers and exclusive merchandise.
Emerging Consumer Companies
Founded in 2015 in Boulder, Colorado, Bond Pet Foods is known for offering plant-based pet treats that aim to serve the growing community of pet owners looking for healthier options for their four-legged friends. The company announced its $17.5 million Series A in June, with participation from ADM Ventures, Cavallo Ventures, and Genoa Ventures, among others. This round of funding is intended to buoy the company’s move from a plant-based treat brand to a brand that will develop precision fermented “meat-identical” proteins for use in pet foods. To that end, the company plans to invest in its meat protein portfolio and scale up production at a new 15,000-square-foot facility in Boulder while also tripling the size of its team, with a commercial launch of the meat protein products expected in 2024.
On, the popular footwear and athletic apparel brand, is the latest player to join the growing cohort of brands moving resale in-house. The company, which was founded in 2010, backed by tennis star Roger Federer, and had its IPO in September 2021, launched its resale site, Onward, last week. Through this new site, customers will be able to buy and sell used shoes, and apparel is expected to be added to the platform by the end of this year. In return for trading in shoes that are in good condition for resale, customers will receive a $35 credit toward the purchase of other On products. The company is hoping that Onward will allow the business to move towards full circularity.
Food & Beverage
With this deal, Wicked Kitchen is reeling in a big one. Good Catch’s products are available nationwide and include a variety of both shelf-stable and frozen seafood options. The brand has a longstanding partnership with traditional seafood giant Bumble Bee, which uses its sales, distribution and logistics expertise to get Good Catch to consumers. And Good Catch also has a relationship with Long John Silver’s, which did a test run of its Plant-Based Breaded Fish-Free Fillet and Crab-Free Cake in California and Georgia last year. In Canada, Good Catch is sold under the Swell Catch brand.
According to Crunchbase, Good Catch has raised more than $77 million in its lifetime. The company’s fundraising haul has included notable Big Food investors such as Maple Leaf Foods’, Greenleaf Foods, and General Mills’ venture capital arm 301 Inc. as well as several celebrities.
Riviana Foods is investing $80.6 million to expand and renovate its processing and packaging plant for rice products in Memphis, Tennessee. The project will add about 65,000 square feet to the plant, and involve renovating approximately 20,000 square feet. This will boost the plant’s current production capacity for Riviana’s Minute rice microwaveable cups and add new production capacity for ready-to-serve pouches of its Tilda, Carolina and Mahatma brands. The expansion will add around 80 full-time jobs.
Construction is slated to begin in first-quarter 2023, with the plant beginning to use its new production capacity in the first quarter of 2024.
Coca-Cola and Constellation Brands have launched their first Fresca Mixed cocktail offerings. Previously announced in January, the companies have finally provided more details about the collaboration. The pre-mixed drinks are available in two varieties: Vodka Spritz and Tequila Paloma. Both flavors contain 100 calories per 12-ounce serving and have 5% alcohol by volume. They also are made with real spirits and contain zero sugar. Constellation will produce, distribute and market Fresca Mixed as part of a brand authorization agreement with Coca-Cola. The beverages will be sold at retailers across the country with a four-pack of 12-ounce cans having a suggested retail price of $9.99.
Misfits Market will acquire Imperfect Foods, creating a combined business set to surpass $1 billion in sales and reach profitability by early 2024. Both online grocers focus on reducing waste by partnering with producers to rescue and redistribute irregular or surplus produce, pantry staples and more to consumers at lower costs. Imperfect Foods, founded in 2015, and Misfits Market, founded in 2018, have collectively saved nearly 500 million lbs of food from “lesser outcomes,” according to the companies. The brands will continue separate operations in the short term. Abhi Ramesh, founder and chief executive officer of Misfits Market, will lead the combined company, and executives from Imperfect Foods will join the Misfits Market leadership team.
Grocery & Restaurants
Starbucks announced that former PepsiCo executive Laxman Narasimhan will become the company’s next CEO, replacing interim CEO Howard Schultz, who came on in April 2022 after Kevin Johnson left the company. Narasimhan will join Starbucks as incoming CEO on Oct. 1 during a transitionary period, before assuming the role of CEO and joining the executive board on April 1, 2023. Narasimhan has 30 years of business experience and was most recently CEO of Reckitt, a FTSE-12 listed multinational consumer health, hygiene and nutrition company. He also held various leadership roles at PepsiCo, including as global chief commercial officer, CEO of PepsiCo Latin America, and CFO of PepsiCo Americas Foods. Prior to PepsiCo, he was a senior partner at McKinsey & Company. Schultz returned to Starbucks as interim CEO during a time of great upheaval and change at the company and set into motion multiple changes like getting rid of the COO position, strengthening Starbucks’ anti-union stance, and closing stores due to safety reasons. During the transition period, Narasimhan and Schultz will work together, and he will “gain in-depth exposure to the brand, company culture, and reinvention plan” before taking on the role of CEO in the spring. After the transition, Schultz will remain on the Board and act in an advisory capacity to Narasimhan.
Burger King on Friday said it plans to spend $400 million over the next two years on advertising and renovating its restaurants as part of a broader strategy to revive lagging U.S. sales. The Restaurant Brands International chain unveiled a turnaround plan for its U.S. business in Las Vegas at its annual franchisee convention. The investments are expected to weigh on its adjusted earnings per share for 2022 and 2023 by 10 to 12 cents annually. The company expects the investments to start paying off by 2025. It’s planning to spend $200 million to fund remodels of roughly 800 locations. Another $50 million will go toward upgrading about 3,000 restaurants with technology, kitchen equipment and building enhancements. The company has more than 7,000 Burger King locations in the U.S. Historically, remodeled restaurants see an average sales increase of 12% in their first year and outperform older locations over time, according to Burger King. The company is hoping that being more selective and strategic with its projects will produce even stronger sales growth, although it could take longer to see results. Burger King will also increase its U.S. advertising fund’s budget by 30% by investing $120 million over the next two years.
Home & Road
In a move seen at other retailers, home goods specialty merchant Bed Bath & Beyond Inc. on Wednesday revealed a strategic and business update that is focused on the basics, which means offering a more relevant assortment. The retailer is also closing underperforming stores. The company said its new approach is to better serve the customer by meeting their needs. And that includes removing one-third of its private-label brands. Similar to Kohl’s, assortments will spotlight national and emerging brands. At Bed Bath & Beyond, the company said its customers are expected to benefit “from swift actions the company is taking in its Bed Bath & Beyond banner to rebalance its assortment and improve inventory. These include adjusting merchandise allocations to lead with customer preference and bringing back popular national brands, and introducing new, emerging direct-to-consumer brands.” Bed Bath & Beyond said it is working “expeditiously to increase its national brands inventory where possible and will increase inventory penetration by 20 percentage points over the long term.”
Direct-to-consumer mattress brand Purple Innovation has acquired fellow Utah-based gel mattress manufacturer Intellibed in an all-stock deal for 8 million shares of Purple Class A common stock. The deal closed Wednesday following the market close. Purple’s stock closed Wednesday at $2.86, a 3.05% drop. At that price, the deal would be valued at $22.88 million. In after-hours trading the stock got a 0.7% boost to $2.88. Intellibed’s 2021 revenue is estimated at $50 million. Bob Rasmussen, founder of Intellibed, will remain with Purple and will oversee manufacturing for Intellibed and work with Purple Chief Operating Officer Eric Haynor. Colin House, Intellibed’s CEO, will transition out of the company. In its latest earnings report, Purple reported net revenue for the second quarter ended June 30 dropped 21.1% of $144.1 million, a 21.2% decline from $182.3 million in the same quarter last year. The company also revised its outlook for the balance of the year. The company said it expects full year 2022 net revenue to be between $570 million and $590 million, compared with its prior range of $650 million to $690 million.
Flexsteel Inds. announced that its board of directors, in consultation with its independent financial and legal advisors, has unanimously rejected the unsolicited, preliminary non-binding proposal from CSC Generation Holdings to acquire Flexsteel for $20.80 per share in cash. “After careful review and consideration of CSC’s unsolicited proposal, our board determined that the proposal substantially undervalues Flexsteel, is opportunistic and is not in the best interest of the company or our shareholders,” said Flexsteel Chairman Thomas M. Levine. “The board is confident that the management team’s continued successful execution of Flexsteel’s strategic plan will generate superior long-term value for shareholders.”
Bassett Furniture has acquired Noa Home, a mid-priced e-commerce furniture retailer based in Montreal. Bassett said Noa had revenues of around C$19.1 million for the recent fiscal year. The company didn’t disclose the purchase price but did say it included C$5.7 million for debt repayment and C$2 million for Noa’s co-founders. “We are excited to add the digital commerce ability and the entrepreneurial spirit of the Noa Home management team to the Bassett portfolio,” said Rob Spilman, Bassett chairman and CEO. The Canada-based Noa was founded in 2016 by Jeremy Kopek and Jean-Claude Renaud. Kopek served as vice president at Canadian furniture retailer Structube from 2005 to 2015, while Renaud founded Quebec based e-commerce site Vie Urbaine in 2010, which was later acquired in 2017.
Conimar Group, a tabletop and housewares company, has acquired Thirstystone from Cambridge Silversmiths for an undisclosed sum. All of Thirstystone’s employees will remain with the company, which is based in Gainesville, Texas, and the two brands will be integrated only at the executive and financial level, President Eric Robinson told HFN. Thirstystone’s lineup, which encompasses a wide range of products geared toward home entertaining and dining, complements that of Conimar. “For more than three decades, Thirstystone has been a premier manufacturer of decorative coasters, a core category for Conimar,” said Terry Crawford, CEO of the family owned Conimar. “The addition of the Thirstystone brand provides a significant opportunity for growth of our existing product offerings, while expanding into new tabletop and serveware categories.” Cambridge Silversmiths, which owned Thirstystone for nine years, sold its Cambridge flatware division to Lenox in July, but at the time of the deal did not announce plans for Thirstystone.
Jewelry & Luxury
Richemont shareholders voted overwhelmingly to keep former Bulgari CEO Francesco Trapani off of its board, after Richemont’s chairman dubbed him an “inappropriate” candidate, given his ties to rival conglomerate LVMH. Activist fund Bluebell Capital Partners had wanted Trapani—one of the fund’s cofounders—to represent the company’s A shareholders on the Richemont board. Bluebell has also urged Richemont to focus more on watches and jewelry. But shareholders favored the board’s approved candidate, Wendy Luhabe.
After a decade of false starts, Coach is finally hitting its stride with products people want, restrained discounting and distribution, a newfound digital savvy and fluency in Gen-Z. Finding new ways to grow without falling back into its old habits will still be tricky. At its investors day Friday, the New York-based leather goods brand announced a repositioning away from accessible luxury and the constant discounting that comes with that label. The brand introduced the idea of “expressive luxury,” a bid to lean more into luxury and court Gen-Z with refreshed marketing. To grow, the brand will have to give more consumers reason to buy Coach products other than the fact that they’re cheaper than European luxury brands’ merchandise.
When a virtual Gucci Dionysus handbag sold online for the equivalent of $4,115 last year, it wasn’t the price tag alone that made headlines — it was the fact you could have bought the real thing for $700 less. The four-figure sum, paid by a user on the gaming platform Roblox, was relative pocket change for a label that generated revenues of $9.7 billion in 2021. In fact, the Italian luxury giant had initially sold the digital bags for just 475 “Robux” (equivalent to under $6) each, with the astronomical prices only later achieved on the re-sale market.
Office & Leisure
GameStop’s net loss in the second quarter widened by more than 75% from a year ago to $108.7 million. Sales, at roughly $1.1 billion, fell slightly from last year. The company’s corporate costs fell by 14.3%, after GameStop pivoted quickly to cost-cutting from “a period of significant investment in long-term initiatives,” according to a press release. On the company’s earnings call, CEO Matt Furlong referenced cuts to the company’s corporate headcount — after a period in which it hired 600 people — without specifying how many employees were let go. That follows reports of layoffs at GameStop this summer. Furlong detailed the company’s transformation efforts since Ryan Cohen, the Chewy founder turned activist investor, shook up GameStop’s board and executive team starting early last year. “When our board began turning over early last year, GameStop was saddled with significant debt, decaying systems, limited employee depth and a host of other issues,” Furlong said. The chief went on to say that, after a heavy period of investment, “the upshot is we now have a more diversified product catalog, strengthened fulfillment network, improved tech stack and e-commerce presence, and fortified corporate infrastructure.” Now that it has invested in those things, the company is “able to start focusing on a new set of priorities that include achieving profitability, launching proprietary products, leveraging our brand in new ways, and investing further in our stores,” Furlong added.
The owner of Regal Cinemas declared bankruptcy on Wednesday in a bid to deal with billions of dollars in debt and subpar movie attendance. Cineworld, which has nearly $5 billion in debt, said it plans to cut costs by renegotiating how much it pays in rent for theaters. The company, which filed for Chapter 11 protection in the United States Bankruptcy Court for the Southern District of Texas, plans emerge from bankruptcy by early next year. Movie theaters have taken a major financial hit during the COVID-19 pandemic as customers shunned group settings. Adding to their challenges, some film studios are foregoing theatrical releases altogether, choosing instead to premiere highly anticipated movies on streaming services. U.K.-based Cineworld, which acquired Regal Cinemas in 2017, is the world’s second-largest theater operator, with 9,189 screens across 751 locations including in Europe and the Middle East. Cineworld, which has about 28,000 employees, previously said its admissions levels have recently been below expectations. With a “limited film slate” coming in over the next few weeks, Cineworld said it expects the lower ticket sales to continue until November.
Pet owners might feel squeezed by inflation, but they’re still pampering their animals when it comes to food. This week, pet products retailer Chewy said it’s not seeing any significant trade down among shoppers in pet food. Rival pet retailer Petco made similar remarks last week, though both noted a pullback in spending on products such as leashes and toys. The comments are in line with the trend of pet owners increasingly spoiling their cats and dogs with foods that are more like the dishes they’d feed themselves or other family members. To capitalize on the ongoing shift, Petco recently partnered with snack bar maker Clif to sell a version for pets. It also launched a line of frozen, human-grade meals for dogs. “Pet parents are driving one of the biggest trends the pet industry has seen as they increasingly seek out fresh, human-grade food for all members of the family,” Petco CEO Ron Coughlin said in a release. Coughlin said the growing “humanization” of animal companions is being led by Gen Z and Millennial consumers who are “hyper focused” on their pets’ health and wellness.
Technology & Internet
During Apple’s annual iPhone launch event on Wednesday, the company revealed devices with better displays, cameras, a satellite messaging feature, and a slightly new design on the Pro models, replacing the notch with a smaller, more integrated cutout. But the biggest surprise from Apple is something that didn’t happen: a price increase. Despite surging inflation around the world and supply chain challenges that have made it more challenging to procure parts, Apple said the entry-level iPhone 14 will start at $799, the same amount that it initially charged for last year’s iPhone 13. The successor to the iPhone 13 Pro, the iPhone 14 Pro, remains at $999. Apple’s highest-end iPhone, the Pro Max, still starts at $1099 for the new version. Analysts had been expecting some price hikes in Apple’s lineup. In holding steady, Apple didn’t want to further dent demand with the risks of a deteriorating economy already threatening to crimp consumer spending.
Amazon has acquired Cloostermans, a Belgian company that makes technology used in warehouses, the company announced Friday. Terms of the deal weren’t disclosed. Amazon began working with Cloostermans in 2019, using its technology to help move and stack heavy palettes and goods, as well as package products together for delivery, the retail giant said. Cloostermans will become part of Amazon Robotics, Amazon’s division focused on automating aspects of its warehouse operations. The unit was formed after Amazon acquired Kiva Systems, a manufacturer of warehouse robots, for $775 million a decade ago. In a blog post, Ian Simpson, vice president of Global Robotics at Amazon, said the company is investing in robotics and other technology to make its warehouses safer for employees. “As we continue to broaden and accelerate the robotics and technology we design, engineer and deploy across our operations, we look forward to welcoming Cloostermans to Amazon and are excited to see what we can build together,” Simpson said.
Finance & Economy
Inflation is a Scrooge. Although the holiday season is still months away, consumers are already concerned about how they will afford this year’s gifts as prices continue to rise, several studies show. Roughly 40% of holiday shoppers said inflation is changing the way they shop, with most trying money-saving strategies, according to a new Bankrate.com report, such as buying fewer items or less expensive brands and using coupons, discounts and credit card rewards to offset costs. More than half — or 59% — of Americans are stressed about buying gifts this holiday season due to higher prices, another recent survey said.
Some homeowners are losing wealth as high mortgage rates weigh on home values, at least on paper, as the once red-hot housing market cools quickly. Sales have been slowing down for several months, with mortgage rates now double what they were at the start of this year. Roughly 85% of major markets have seen prices come off peaks through July, with one-third coming down more than 1% and about 1 in 10 falling by 4% or more. As a result, after gaining trillions of dollars in home equity collectively during the first two years of the Covid pandemic, some homeowners are now losing equity.