Headlines of the Week

Sycamore Buying Chico’s for $1 Billion

Sycamore Partners is continuing its push to consolidate in retail, scooping up Chico’s FAS Inc. with a $1 billion deal.  The private equity firm agreed to pay $7.60 a share to take the 1,258-door retailer private, a 65 percent premium over the Chico’s closing price on Wednesday. Sycamore has a long history of dealmaking in fashion and retail, having previously cut deals for Ann Taylor, Lane Bryant, The Limited, Belk, Hot Topic, Talbots, Torrid, Coldwater Creek, Jones New York, Stuart Weitzman and more. Stefan Kaluzny, managing director of Sycamore, said: “We are pleased to have reached this agreement with Chico’s FAS and its board of directors. We have long admired the company’s three iconic brands, including Chico’s, White House Black Market and Soma.  The deal includes a 30-day go-shop period, giving Chico’s time to play the field and attract a better offer from another buyer.

 

Lululemon and Peloton Ink Five-Year Strategic Global Partnership

Lululemon and Peloton inked a five-year strategic global partnership whereby Peloton becomes the exclusive digital fitness content provider for Lululemon, and Lululemon is the primary athletic apparel partner to Peloton.  Lululemon and Peloton will “engage their global community of members in the United States, Canada, the United Kingdom, Germany, and Australia through technical athletic apparel, real-life experiences, special programming, and original content, expanding the brand awareness and reach for both companies.” In addition, a select number of Peloton instructors will become Lululemon Ambassadors as part of the partnership.

 

 

Apparel & Footwear

Style Capital Acquires Majority Stake in French Label Soeur for Expansion and International Growth

Italian private equity firm Style Capital has acquired a majority stake in French contemporary apparel and accessories label Soeur. The terms of the deal have not been disclosed. Under its leadership, Style Capital plans to expand Soeur’s wholesale presence and enter new international markets. Founded in 2008 by sisters Domitille and Angélique Brion, Soeur currently operates 48 stores and its digital channels contribute to 30% of all sales. Previous investment partner Experienced Capital will exit the company with the new deal. Style Capital’s acquisition of Soeur aims to drive the brand’s growth by expanding its wholesale presence and entering new international markets. With 48 stores already in operation, Soeur plans to leverage its digital channels to further boost sales. The partnership with Style Capital provides the brand with the necessary resources and expertise to expand its reach and capitalize on new opportunities. Style Capital has a track record of successful investments in the fashion industry, including brands like Golden Goose, Re/Done, and Zimmermann. This acquisition further strengthens their portfolio and solidifies their position as a key player in the fashion private equity space.

G.H. Bass Expands Into Apparel to Complement Classic Weejuns Loafers

Classic American sportswear is among the most popular trends for fall and G.H. Bass wants a piece of the action. The venerable brand, whose roots trace back to 1876, is introducing a premium-priced collection under the G.H. Bass name for the first time this fall. For the past several years, the brand has produced a lower-priced line under license, Bass Outdoor, that is heavily skewed to outdoor-related clothing for men, women and children. That line is sold at Macy’s, Belk, Saks Off 5th, Sierra Trading and other retailers for under $200. But the new G.H. Bass line is centered around essential pieces such as oxford button-down shirts, workwear-inspired vests, wool boucle trousers, waterproof tech jackets, rugby sweaters and varsity jackets for men. Called Modern Ivy, the apparel collection is designed to complement Bass’ fall footwear assortment of the same name and intended to honor the brand’s heritage. “The footwear began rolling out in August and is performing really well,” said Chris Paulk, president of G.H. Bass. “Now we’re broadening it into apparel.” Paulk, who joined the company in September 2021 after 13 years with Tommy Hilfiger, is the architect of a repositioning of the Bass brand that includes elevating the product offering, revamping the logo, closing of a fleet of outlet stores and heightening the focus on direct-to-consumer selling.

Dickies Chief to Bring the Brand Back to Its Workwear Roots

On paper, Todd Dalhausser’s background is mainly in footwear. His résumé includes Saucony, Reebok, Vans, and most recently, Altra. But Dalhausser, who was named global brand president of Dickies in April, is quick to point out that he was actually responsible for apparel at most of his past jobs. That puts him in good stead to oversee Dickies, which has a 101-year history as a workwear brand. In his new role, the industry veteran has been charged with getting the venerable brand back on a growth trajectory for its parent, VF Corp., which owns both Dickies and Altra. As he settles into his new job, Dalhausser has a clear vision of what needs to be done. In a nutshell, he plans to bring Dickies back to its roots and stop chasing the fickle lifestyle customer who has embraced the brand of late. In addition, the number of styles will be dramatically reduced.

Bollman Hat Company Has A New Feather In Its Cap: Streetwear Favorite Kangol Headgear

Founded in 1868, Bollman Hat Company has the title of being the country’s oldest hat company and is among the longest continuously operating consumer products company in the U.S. But it’s not resting on its laurels. Bollman recently acquired a 51% controlling stake in Kangol, a streetwear favorite, from U.K.-based Frasers Group for $21.4 million. Bollman has a long history with Kangol, having licensed, distributed and manufactured it since 2001. Despite its modest appearance, Bollman has an international presence, distributing products across four continents and in more than 70 countries. It answers a growing need for headgear, as the New York Times recently reported, suggesting climate change has sparked a “global hat renaissance.”

Authentic Taps Liberated for Quiksilver, Billabong, RVCA and More

Authentic Brands Group is starting to make some more action and outdoor connections. The brand management giant said it inked a long-term agreement with Liberated Brands to operate retail and e-commerce for Quiksilver, Billabong, Roxy, RVCA, Honolua and Boardriders in the U.S. and Canada. Likewise, the Costa Mesa, Calif.-based Liberated will become Authentic’s license partner and wholesale distributor for Billabong, RVCA and Honolua in the U.S. and Canada, handling sportswear, activewear, swimwear and other categories. Earlier this month, Authentic closed what was said to be a $1.25 billion deal to buy Boardriders, the action sports company that owned the brands. Now the Authentic playbook is being put to work with the brand management company led by Jamie Salter holding on to the intellectual property and finding partners to operate the brands. Liberated is becoming a serial collaborator as it was already the core licensee and operating partner for the Authentic-owned Volcom and Spyder.

 

 

Athletic & Sporting Goods

Dick’s to shutter 11 Moosejaw stores amid integration with Public Lands

After announcing its intention to acquire Moosejaw in February for an undisclosed amount, Dick’s is consolidating its two outdoor banners under one team.  However, while Moosejaw will still operate a handful of stores, the majority of its locations are now slated for closure. One of the few remaining open is a store the outdoor retailer opened in former owner Walmart’s hometown of Bentonville in 2021. Dick’s did not respond to questions about what its long-term plans are for Moosejaw’s physical retail footprint.

Pro volleyball league prepares for launch with $35M in new Series B funding

Youth and professional sports company League One Volleyball (LOVB) has announced $35 million in Series B funding.  The latest round brings the league’s total funding to nearly $60 million.  LOVB (pronounced “love”) said it will use the capital to scale its professional and club operations as it signs athletes, coaches, and trainers to its teams, builds out branding, secures game venues and develops training facilities as it progresses towards the planned launch of its pro league following the 2024 Paris Olympics.  The oversubscribed round, led by Left Lane Capital with participation from Ares Management Funds, includes investors Lindsey Vonn, an Olympic Skiing gold medalist; WNBA player Candace Parker; Olympic volleyball gold medalist Jordyn Poulter; and comedian Amy Schumer as well as Amy Griffin (G9 Ventures), and Linda Henry (Partner in Fenway Sports Group).

Cosmetics & Pharmacy

Rite Aid prepares bankruptcy filing, store closures amid opioid lawsuits

Rite Aid stock fell more than 50% Friday after The Wall Street Journal reported the retail pharmacy is preparing to file for Chapter 11 bankruptcy as it faces mounting costs related to opioid lawsuits.  Over the past year, the company’s stock has lost 90% of its value. The company’s market cap stands at $41 million.

Feminine-Care Products Maker Honey Pot Is Exploring a Sale

The Honey Pot Co., which makes tampons, supplements and sexual-wellness products, is exploring a sale and could be valued at over $500 million in a potential deal, according to people with knowledge of the matter.  The Atlanta-based company is working with an adviser on the potential deal, the people said, asking not to be identified discussing private information. Honey Pot has more than $100 million in annual revenue, one of the people said. No final decision has been made and Honey Pot could opt to remain independent, the people said.  Founded by Bea Dixon in 2014, the company is one of the largest, independent Black-owned consumer businesses in the US. Its products range from menstrual cups to probiotic supplements that are targeted to help with urinary tract infections, according to its website.

Trautec Completes RMB 200 Million Series B Fundraise Led by L Catterton

Trautec, a pioneer and market leader in China’s synthetic recombinant human collagen (“SRHC”) industry, today announced that it has completed a RMB 200 million ($27 million) Series B fundraise led by L Catterton, a leading global consumer-focused investment firm. The successful fundraise positions Trautec to cement its pole position in the country and accelerate its international expansion amid the broadening use of SRHC in skincare products, as well as medical dressings and aesthetic treatments.  “Trautec aims to be a world-leading biotechnology platform for the intelligent and sustainable production of synthetic recombinant human collagen with an unwavering commitment to product safety and efficacy,” commented Trautec founder Qian Song. “SRHC is gaining more and more traction in the cosmetics market and field of regenerative medicine, creating incredible scope for our solutions to be applied to many consumer products. We are thrilled that L Catterton has joined us on our journey as the firm’s extensive experience, expertise, and network in the global beauty and personal care industry will enable us to embark on a new phase of exciting growth.

L’Oréal Invests in Chinese Biotech Company ‘Shinehigh Innovation’

L’Oréal has agreed to make a minority investment in Shinehigh Innovation, an innovation-led biotech company in China, to establish a long-term partnership for the co-development of novel and sustainable beauty solutions.  This is L’Oréal’s first open innovation investment in China through Shanghai Meicifang Investment Co., Ltd (Meicifang), with the support from BOLD (Business Opportunities for L’Oréal Development), L’Oréal Groupe’s strategic innovation venture capital fund company. It is also the first investment from L’Oréal’s BIG BANG Beauty Tech Innovation Challenge initiated four years ago in China.

Discounters & Department Stores

Kohl’s appoints former Tuesday Morning CEO as director of stores

Kohl’s appointed Fred Hand to senior executive vice president and director of stores, the retailer announced Tuesday. Hand was most recently the CEO of Tuesday Morning. As part of his new role, Hand will report to president and COO Dave Alves and assist the company in driving store sales and productivity. He will oversee the retailer’s more than 1,100 locations, including store operations and experience, loss prevention and design. Hand has over 30 years of leadership and executive experience at major retailers. Prior to his time as chief executive of Tuesday Morning he was the chief operating officer at Burlington, where he led the retailer’s Stores organization for over 13 years. He held senior leadership positions in stores and visual merchandising at Macy’s and Filene’s.

 

Target to close 9 stores over theft, safety concerns

Target announced on Tuesday it’s closing nine stores in four states, effective Oct. 21. The retailer said it has been unable to manage theft and organized retail crime at these locations, which threatens the safety of store employees and customers, and contributes “to unsustainable business performance.” Three stores will close in the San Francisco and Oakland, California, region; three will close in the Portland, Oregon, area; two are closing in the Seattle area; and one store is closing in New York City. Target said it decided to close these locations after investing in more security staff, using third-party guard services and implementing theft-deterrent tools didn’t work. The retailer said it continued “to face fundamental challenges to operating these stores safely and successfully.”

As US consumers slow down, Walmart is muscling out its competition

The U.S. consumer may be slowing down, but Walmart is not. The retail giant is notching market share gains by leveraging its massive legacy brick-and-mortar footprint as well as embracing new revenue streams, according to recent research from analysts at various firms. In the process, Walmart is treading on territory previously staked out by Target, Amazon and others. “In the medium term, Walmart continues to expand its vision beyond retail and e-commerce, with a focus on building a powerful ecosystem globally, including advertising, merchant services, last-mile delivery, health services, and digital payments,” Telsey Advisory Group analysts led by Joseph Feldman said in an August report.

J.C. Penney Q2 sales, profits slide

J.C. Penney’s Q2 net sales fell 10% year over year to $1.6 billion. Including credit card revenue, (down 11% to $71 million), total revenue in the period fell 10% to $1.68 billion. Digital sales as a percentage of total sales rose an unspecified amount. Merchandise margin in the quarter improved by 70 basis points from last year, thanks in part to strength in kids and home, and frequency of store visits rose 350 basis points. Inventory was down 14%. Net income in Q2 plunged 65% to $36 million. For the first half of the year, EBITDA tumbled 56% from the comparable period in 2022 to $147 million, per filings with the Securities and Exchange Commission.

 

 

Emerging Consumer Companies

TeachMe.To secures $2 million funding to connect beginner athletes with coaches
TeachMe.To, a sports coaching platform for beginner athletes, has raised $2 million in seed funding to expand its platform and launch a new app for students. The startup, founded in late 2021, aims to make it easier for consumers to try out a new sport or hobby by facilitating the booking process. TeachMe.To provides access to local lessons in over 100 U.S. cities, offering tailored classes in sports such as pickleball, tennis, golf, surfing, and boxing. The platform also offers complimentary insurance and a money-back guarantee. TeachMe.To not only benefits students but also helps instructors build their client portfolio or start a teaching career. The platform charges a one-time matchmaking fee and takes a 20% commission from coaches. Top instructors on the platform are currently earning $5,000 per month, and the company expects coaches to take home over $2 million by the end of 2023. TeachMe.To aims to make learning new skills more accessible and affordable for everyone.

Whipnotic raises $2.5 million for innovative whipped cream flavors
Whipnotic, a kosher whipped cream company, has raised $2.5 million in seed funding from investors including GTM Investments, East Dune Holdings, and Crenshaw Ventures. Co-founders and CEOs Tracy Luckow and Lori Gitomer created Whipnotic to bring innovation to the whipped cream market, which they felt had remained largely unchanged for years. The sisters developed a patented invention that swirls unique flavors into the cream as it comes out of the can. Inspired by frozen yogurt machines, they wanted to create a way to add flavor to whipped cream on a larger scale. The idea was put on hold until March 2020 when the COVID-19 pandemic provided them with the time to perfect and patent their invention. Whipnotic launched in 2022 and has sold over 100,000 cans in hundreds of stores across more than 30 states.

Fast-absorbing energy gum company REV GUM raises $6 million
REV GUM, a mission-driven energy gum company, has raised $6 million in a series A funding round led by YETI Capital. The gum was invented by entrepreneur Blake Settle and co-founders Sam Ehlinger and Reed Burch. Settle, a type-1 diabetic, created REV GUM as a healthy alternative to sugar-loaded energy drinks. Each serving of the gum provides a comparable amount of caffeine as an espresso shot and is made with zero sugar. Since its launch in 2019, REV GUM has become the top-selling energy gum in the US, with four varieties available. The company has seen its revenue increase by over 250% annually and is currently sold in over 20,000 retailers, including Walmart, Target, Dollar General, 7-Eleven, and Circle K. REV GUM plans to expand both online and in retail, with 2024 marking its first full year of national retail coverage. Blake Settle, the CEO of REV GUM, believes the company is strategically positioned to attract health-focused shoppers and drive innovation in the energy gum market.

 

 

Food & Beverage

JM Smucker to sell Sahale Snacks to Brownie Brittle owner for $34M

J.M. Smucker reached a deal to sell Sahale Snacks, a maker of fruit and snack mixes, to Second Nature Brands for about $34 million. Second Nature is a creator of premium, nutritional and better-for-you snacks and treats.  The deal will include all trademarks and the company’s leased manufacturing facility in Seattle, Washington. An estimated 100 employees will transition to Second Nature.  The sale marks the latest transaction for Smucker in 2023 as the Ohio-company modifies its portfolio to sharpen its focus and support growth. So far this year, Smucker has sold portions of its pet food business to Post Holdings for $1.2 billion, and it recently announced plans to buy Twinkies manufacturer Hostess Brands for $5.6 billion.

Manna Beverages to Acquire Nor-Cal Beverage Co.

Manna Beverages & Ventures (MB&V) is set to acquire California-based co-packer Nor-Cal Beverage Company for an undisclosed sum. Based in Kentucky, MB&V is an affiliate of Manna Capital Partners, an investment firm founded by former NBA star and businessman Ulysses L. “Junior” Bridgeman and investor Kevin Attkisson. Bridgeman is also the founder of bottler Heartland Coca-Cola, which services Kansas, Missouri, and Southern Illinois, and the owner of more than 200 franchise restaurant outposts, including Wendy’s and Fazzoli’s.  MB&V has aimed to build a portfolio of beverage manufacturing facilities for both alcoholic and non-alcoholic products, and last year announced plans to build a new $600 million, 1.7 million square-foot beverage production plant in Montgomery, Alabama. That plant, which is expected to create around 280 jobs, is scheduled to go online in 2025.  Founded 86 years ago, Nor-Cal Beverage is one of the largest independent beverage co-packers in the Western United States, operating two locations in California and specializing in teas, chilled juices, water, energy drinks and ades with capabilities to produce cans, PET and glass bottles.

 

 

Grocery & Restaurants

Wonder Group to acquire Blue Apron

The meal delivery company Wonder Group is acquiring Blue Apron for approximately $103 million. With the acquisition, Wonder is expected to use Blue Apron as a platform to build out its online delivery service.  “Wonder is creating the mealtime super app, serving a broad range of occasions that feature cuisines from some of the world’s best chefs and restaurants while leveraging our culinary engineering and vertically integrated model,” said Marc Lore, founder and chief executive officer of Wonder Group. “At-home meals play a key role in this vision and have been on our strategic roadmap since the beginning.”  Wonder initially launched as a meal delivery company that featured vehicles from which meals would be prepared and delivered in New York City. But earlier this year the company changed its strategy and began delivering meals from storefronts.  As part of the agreement, Blue Apron shareholders will receive $13 per share of class A common stock. The per share purchase price represents a 137% premium to Blue Apron’s Sept. 28 closing price of $5.49 per share, according to Wonder Group.

FAT Brands acquires Smokey Bones Barbecue for $30 million

FAT Brands announced Monday the acquisition of Smokey Bones Barbecue from private equity firm Sun Capital Partners for $30 million. This acquisition marks the company’s first brand purchase since acquiring Nestle Toll House Café by Chip from Crest Foods in May 2022, and will be FAT Brands’ first foray into the barbecue category. “We continue to be selective and opportunistic in our acquisition strategy, targeting brands that are both scalable and synergistic with our existing platform,” Rob Rosen, Co-CEO of FAT Brands, said in a statement. “We are pleased to add another polished dining brand, which will provide more options for our sales team to offer our franchise partners to further their new unit development.” With the new acquisition of Smokey Bones, the purchase is expected to increase annual adjusted EBITDA by about $10 million and will bring 61 new restaurant locations under FAT Brands’ restaurant portfolio.

Home & Road

Bassett reports substantial sales drop, says writing orders is ‘very challenging’

Bassett Furniture reported $87.2 million in consolidated third quarter sales, a 26.1% drop from the same time last year, and a $13.3 million decline from last quarter. Overall, the company reported a $2.6 million loss. Wholesale sales fell 28.2% from last year to $56.7 million, representing a $30 million decline from last quarter. In retail, sales fell 26.2% to $52.3 million, around an $8 million drop from last quarter. This is the third consecutive quarter the company’s sales have declined from the previous quarter. “Writing new business, both at wholesale and retail, proved very difficult in the 12 weeks between Memorial Day and the start of our Labor Day promotion in late August,” said CEO Robert Spilman. “Although we continue to see increased business around the important holiday events, day-to-day store traffic and wholesale order writing between the big events remain very challenging.”

Big Lots’ furniture sales tumble below pre-Broyhill level

Furniture sales for the first half of the fiscal year fell back for the third year in a row at Big Lots. Worse, they hit an eight-year low. Over the first six months of the current fiscal year, furniture sales dropped 23% to $575.9 million, according to Big Lots’ Form 10-Q filing with the SEC earlier this month. The last time first-half furniture sales rang in below the $575 million mark was in 2015, four years before Big Lots acquired the rights to the Broyhill name and trademarks. First half performance in furniture at the Top 100 retailer has steadily eroded since the pandemic boom of 2020. The sudden closure of United Furniture Inds. in late November 2022 further added to the challenge of getting the business back on track as product shortages stifled Q1 sales in the category. Although the Columbus Ohio-based discounter began rolling out new goods in late spring, its core low-income shoppers have shown no appetite for higher-ticket purchases. Total net sales for the second quarter of fiscal 2023 fell 15.4% to $1.139 billion while comparable sales declined 14.6%.

Ross home sales recover in 1st half, up 26% from pre-COVID era

Compared to the first 6 months of 2022, when home sales contracted a bit, the category rebounded at Ross Stores during the 1st half of this year. Sales for the consolidated categories of home accents, bedding and bath rose 6% to $2.357 billion, according to the Form 10-Q Ross filed with the SEC earlier this month. Year-to-date home sales outpaced the category’s previous peak of $2.33 billion during comparable period of 2021. In addition, it marked a 23% gain in category sales compared to the first half of 2019. Data for 2020 shows just how hard hit Ross was by the COVID pandemic. Unlike other retailers that grabbed a big piece of market share in home during the 2020 boom, Ross missed the boat. As a non-essential retailer, its stores were shuttered for several weeks. Because it has no e-commerce operation, it was unable to compete for digital sales. But the tide turned in 2021, and Ross appears to be growing the share it snapped up that year.

Jewelry & Luxury

Mejuri Opening Five New Stores This Year

Mejuri, the digital-native jeweler that targets younger shoppers, plans to open five new stores by the end of the year, it announced. That will bring its store total to 29. The new stores will be located in San Francisco, Los Angeles, Nashville, Miami, and in London. This will be Mejuri’s second store in San Francisco, its third in Los Angeles, and its third in the United Kingdom. Founded in 2015, Mejuri opened its first store in New York City in 2018. Last year, it added 17 stores. The Toronto-based e-tailer recently released an app and introduced a membership program.

Signet-Owned Rocksbox Now Sells Pre-Owned Fine Jewelry

Jewelry subscription service Rocksbox, owned by Signet Jewelers, is now offering pre-owned fine jewelry. The move marks another step for Signet into the secondary luxury market. Kay, Zales, and Jared offer pre-owned fine jewelry on their websites. For Rocksbox, it’s the first time it will offer a fine jewelry collection. The brand started with fashion jewelry, later expanding to demi-fine. “Pre-Owned Luxury by Rocksbox” offers pre-owned fine jewelry for rental or sale that has been inspected and certified by parent company Signet.

 

Office & Leisure

Toys R Us is planning a brick-and-mortar comeback in the U.S., with up to 24 new flagship stores

Toys R Us is plotting a bold comeback in the U.S., as it plans to expand its brick-and-mortar presence with as many as 24 new flagship stores and a separate rollout at airports and on cruise ships starting this holiday season. The toy retailer’s parent company, WHP Global, announced what it called the “Air, Land and Sea” expansion on Friday. Toys R Us aims to start opening up to two dozen flagship stores as early as next year in partnership with Go! Retail Group. The company plans to roll out the locations in “prime cities” that complement its current retail footprint, WHP said. The first airport store is set to open in November, in time for the holiday season, in Terminal A of Dallas/Fort Worth International Airport, the world’s second-busiest airport. “The Toys R Us brand is growing fast and our expansion into air, land and sea is a testament to the brand’s strength,” said Yehuda Shmidman, chairman and CEO of WHP, in a statement. Toys R Us filed for bankruptcy in 2017, though it could not come out of it on its own, pushing it into liquidation. WHP acquired a controlling interest in Toys R Us’ parent company, Tru Kids, in 2021.

 

GameStop names Ryan Cohen as CEO effective immediately, won’t receive salary

GameStop said Thursday morning that billionaire activist investor Ryan Cohen would take over as the video game retailer’s chief executive, chairman and president effective immediately — and he won’t be collecting a salary. GameStop’s board, with Cohen abstaining, unanimously voted to appoint the entrepreneur as the retailer’s top executive on Wednesday. Cohen had previously held the title of executive chairman but will step down from the role upon his latest appointment, according to a securities filing. Cohen won’t “receive any compensation” for his work, a news release said. The move comes more than three months after GameStop fired CEO Matthew Furlong, made Cohen executive chairman and appointed longtime company soldier Mark Robinson as its “principal executive officer” and general manager.

Lego drops plans to make bricks from recycled plastic bottles

Lego has abandoned plans to make its famous bricks from recycled plastic bottles, saying that the manufacturing process would be more polluting than the current production of oil-based bricks. Lego made the decision after it spent years testing recycled polyethylene terephthalate (PET) as a more climate-friendly alternative to the acrylonitrile butadiene styrene (ABS) it uses in the majority of its toys. The toymaker has pledged to use only sustainable materials in its products by 2032 and, two years ago, unveiled a prototype brick made from recycled PET. The plastic was sourced from bottles that are typically used for water or soda. Since then, however, Lego has found that making bricks from the recycled material would require investing in new equipment and involve more steps, which would ultimately lead to more planet-heating pollution than the status quo, a company spokesperson told CNN Monday. Lego’s move underscores the challenge companies face in trying to adapt their products and processes in response to the climate crisis. Testing also found that the recycled plastic wasn’t as durable and safe as ABS and didn’t have the material’s “clutch power,” which enables bricks to stick together and be pulled apart easily, the spokesperson added.

Thousands of Las Vegas hospitality workers vote to authorize strike

Sin City is known for its extravagance. But behind the scenes are the tens of thousands who cook the meals, mix the drinks and clean the suites. On Tuesday, they filled the Thomas & Mack Center at the University of Nevada, Las Vegas, where members of both the Culinary Workers Union and its sister union, the Bartenders Union, voted by a 95% margin in favor of authorizing a strike if a new five-year labor deal is not reached. The strike authorization applies to about 40,000 of the 60,000 members who make up the Culinary Workers and Bartenders unions across Nevada, the organizations said in a news release. Among their demands are significant wage increases, reduced workloads and more on-the-job safety protections, including expanding the use of safety buttons for workers in the event of criminal behavior by customers. They also want protections against company tracking technology. Three major hotel chains are negotiating with the unions. Talks are scheduled for next week.

Technology & Internet

FTC and 17 States Sue Amazon on Antitrust Charges

The Federal Trade Commission has filed its long-anticipated antitrust lawsuit against Amazon. In a sweeping complaint filed in federal court in Seattle Tuesday, the FTC and attorneys general from 17 states accused Amazon of wielding its “monopoly power” to inflate prices, degrade quality for shoppers and unlawfully exclude rivals, thereby undermining competition. The agency laid out a two-pronged strategy by which Amazon “unlawfully maintains” its monopoly power. It pointed to so-called anti-discounting measures the company uses to punish sellers and deter other online retailers from offering lower, more competitive prices than Amazon, which translates to keeping prices higher for products across the internet, the FTC said. Amazon also “effectively requires” that sellers use its “costly” fulfillment services in order to obtain the vaunted Prime badge for their products, the FTC said, which in turn makes it more expensive to do business on the platform. Sellers are paying $1 of every $2 to Amazon, FTC Chair Lina Khan told reporters at a briefing Tuesday.

 

Amazon to invest up to $4 billion in Anthropic, a rival to ChatGPT developer OpenAI

E-commerce giant Amazon on Monday said it will invest up to $4 billion in artificial intelligence firm Anthropic and take a minority ownership position in the company. The move underscores Amazon’s aggressive AI push as it looks to keep pace with rivals such as Microsoft and Alphabet’s Google. Anthropic was founded roughly two years ago by former OpenAI research executives and recently debuted its new AI chatbot called Claude 2. Amazon is looking to capitalize on the hype and promise of so-called generative AI, which includes technology like OpenAI’s ChatGPT, as well as Anthropic’s Claude chatbots. The two firms on Monday said that they are forming a strategic collaboration to advance generative AI, with the startup selecting Amazon Web Services as its primary cloud provider. Anthropic said it will provide AWS customers with early access to unique features for model customization and fine-tuning capabilities. Anthropic will also use custom AWS-designed semiconductors to train the foundational models that underpin its AI applications.

Finance & Economy

U.S. Consumer Confidence Slides to Four Month Low

The Conference Board’s Consumer Confidence Index dropped to a four-month low in September, weighed down by rising interest rates, still-high inflation and a stalemate over the federal budget in Washington.  The Index fell for a second consecutive month, dropping to 103 in September from an upwardly revised 108.7 the month before. According to Conference Board data, the Index is at its second-lowest level this year, landing just above May’s 102.5 reading. Analysts were expecting a smaller decrease to a reading of 105.  The Index measures Americans’ assessment of current economic conditions and their outlook for the next six months.  Based on consumers’ assessment of current business and labor market conditions, the Present Situation Index rose slightly to 147.1 from 146.7.

Credit card losses are rising at the fastest pace since the Great Financial Crisis

Credit card companies are racking up losses at the fastest pace in almost 30 years, outside of the Great Financial Crisis, according to Goldman Sachs.  Credit card losses bottomed in September 2021, and while initial increases were likely reversals from stimulus, they have been rapidly rising since the first quarter of 2022. Since that time, it’s an increasing rate of losses only seen in recent history during the recession of 2008.  It is far from over, the firm predicts.  Losses currently stand at 3.63%, up 1.5 percentage points from the bottom, and Goldman sees them rising another 1.3 percentage points to 4.93%. This comes at a time when Americans owe more than $1 trillion on credit cards, a record high, according to the Federal Reserve Bank of New York.

US mortgage rates climb to 7.31%, hitting their highest level in nearly 23 years

US mortgage rates surged to their highest level in nearly 23 years this week as inflation pressures persisted.  The 30-year fixed-rate mortgage averaged 7.31% in the week ending September 28, up from 7.19% the week before, according to data from Freddie Mac. A year ago, the 30-year fixed-rate was 6.70%.  Mortgage rates have spiked during the Federal Reserve’s historic inflation-curbing campaign — and while a good deal of progress has been made since June 2022, when inflation hit 9.1%, Fed officials say there is still a ways to go.