It’s not often in the consumer space that we hear about transactions where both the buyer and seller are publicly owned. However, one such transaction was announced last week, when the Korea-based business Naver indicated it had reached an agreement to purchase the U.S. based company Poshmark for $1.2 billion, subject to certain approvals. The purchase price was a 15% premium over the closing price on the day the deal was announced, and the transaction is expected to close in early 2023. The fact that both companies are public allows for additional insight into both the financial metrics and strategic rationale for the transaction.
Poshmark generated annual revenue of $326 million last year, and its primary business channel is as a social marketplace that facilitates the sale of mostly used goods between individuals. The company is “the largest fashion re-commerce platform in the U.S.” with 18.4 million monthly users, over three times the size of its closest competitor, StockX, and almost five times the size of ThredUp. Poshmark owns no inventory, and its highly coveted customer base consists mostly of Gen Z and millennial buyers and sellers. The Company reports it facilitated the sale of $1.8 billion in GMV (gross merchandise value) in 2021. While it calculated adjusted EBITDA of $7.3 million in 2021, its reported unadjusted EBITDA was negative $41 million.
Naver is a nearly $5 billion publicly traded company producing over $1.2 billion in EBITDA last year. It is the largest internet business in Korea, where 95% of its revenue is generated. Per CapitalIQ, approximately half of the company’s revenue is search related, with another 20% from ecommerce sales that require carrying very little inventory. Naver touts itself as “The only search engine in the world that has successfully expanded into ecommerce,” citing examples in both the U.S. and China, where Google is the go-to search engine, while Amazon is the largest ecommerce business. Naver currently does not participate in re-commerce or generate meaningful business in the U.S., but it does provide technical and platform services integral to Poshmark’s business. As is common with transactions involving a strategic buyer, the purchase is expected to generate significant cost savings ($30 million within two years of the transaction close). Poshmark will be maintained as a “standalone” Naver subsidiary in the U.S. led by current management.
Naver is clearly enthused about the international re-commerce opportunity Poshmark brings to its business. According to the transaction materials, global re-commerce growth is projected to have a 20% CAGR through 2025, driven by growth in three of the most important ecommerce metrics: AOV (average order value), annual orders per buyer, and number of buyers. Also importantly, Poshmark’s re-commerce business model provides broader public credibility and exposure for Naver for its ESG efforts, an important issue for its young consumer base.
With clear benefits to the transaction for both buyer and seller, and no financing contingencies, the Naver-Poshmark transaction seems likely to close, adding at least one deal to a small universe of known transaction valuations.
Headlines of the Week
South Korean internet giant Naver is acquiring U.S. e-retailer Poshmark for roughly $1.2 billion, the companies announced Monday. Naver is paying $17.90 per share in the all-cash deal. Naver operates a search engine, e-commerce platform and other services in South Korea. The companies said the deal will deepen Naver’s reach in online retail, while allowing Poshmark to enter international markets. Poshmark is a popular online retail site that lets people shop from the closets of other users. The company went public in January 2021 at $42 a share, hitting the market at a time when online shopping was surging due to the Covid-19 pandemic and investors were flocking to tech stocks. Since then, the stock has fallen sharply, tumbling alongside the rest of the tech industry. The deal adds to recent consolidation in the secondhand clothing market. Etsy acquired fashion resale app Depop for $1.62 billion last year. Depop competes with Poshmark and other resale services like ThredUp.
Apparel & Footwear
High street fashion brand Superdry has bounced back from pandemic-induced store closures to record a 9.6% increase in full year revenues driven by “increased full price sales”. The business, famous for its urban streetwear, also posted a rise in pre-tax profit to £21.9 million to the end of April up from a loss of £12.6 million the previous year. Revenues jumped to £606 million even during what Superdry described as “exceptional times for retail”. Boss of the retailer Julian Dunkerton, said: “Superdry is a premium, affordable, brand, which should mean we are well-positioned as customers think more carefully about their purchases. That said, given the current challenging conditions, we continue to run the business prudently while remaining focused on delivering our strategic goals.” However, Superdry was realistic about the economic environment in its outlook and said it remained “cautious about the near future” as retailers “face a challenging macroeconomic environment, high levels of inflation, and the potential impact of these on consumer spending patterns”.
Rue21 has hired the advising firm Ducera Partners for help with a possible restructuring after earnings fell this year, according to a report from The Wall Street Journal’s Pro Bankruptcy publication that cited anonymous sources. The company is trying to avoid a Chapter 11 filing, according to the report, which also noted that Rue21 is in talks to raise financing. A spokesperson for Rue21 wouldn’t comment on the details of the report but told Retail Dive in an emailed statement, “We routinely work with advisors as we evaluate strategic options.” Rue 21 filed for and emerged from bankruptcy in 2017. In late 2020, the teen apparel retailer announced it was expanding its store footprint with its sales trending up. Rue21 was a fast-growing teen retailer in the early 2000s, with a hot brand that could compete against other strong players in the space like H&M and Forever 21.
After a swift expansion, and taking on a large debt load in a private equity buyout, the retailer ran into the mall retail doldrums of the mid-2010s.
Brookfield Asset Management Inc. is in advanced talks to acquire Hong Kong-based clothing label maker Trimco Group from buyout firm Affinity Equity Partners, according to people familiar with the matter. The investment firms are hammering out the details of a transaction that could value Trimco at as much as $1 billion, the people said, asking not to be identified because the matter is private. Brookfield has been sounding out potential financing banks for the deal, and an agreement could be reached in the next few weeks, the people said. Brookfield, based in Toronto, has emerged as the buyer after outbidding other private equity firms, the people said. Hong Kong-based Affinity has been exploring a sale of Trimco after receiving takeover interest, Bloomberg News has reported. Founded in 1978, Trimco makes clothing labels, radio frequency identification tags, packaging and trimming products and store decorations for some of the biggest apparel retailers, according to its website. The group operates through its Clotex, Labelon and A-Tex units, serving more than 800 brands and 8,600 manufacturers globally. Affinity bought Trimco from Partners Group Holding AG for $520 million in 2018.
A digitally-native retailer known for its inclusive sizing, body positivity and advocacy for women is expanding in brick-and-mortar. ThirdLove, the bra and innerwear brand that was founded online in 2013 and has since expanded into loungewear and activewear, will open four new locations in time for the holiday rush. Three stores will open in October in Washington, D.C.; Dallas; and Boston, with a fourth opening its doors in early November, in Scottsdale, Ariz. The stores, which will range between 1,100 sq. ft and 1,500 sq. ft., will double ThirdLove’s portfolio to eight locations — with more to come in the future. The pandemic forced ThirdLove to halt its physical store plans. With plenty of time to rethink its expansion strategy, in 2021 the company partnered with Leap, a platform that enables brands to deploy stores more rapidly and at significantly reduced cost and risk. With Leap’s help, ThirdLove started its physical expansion, opening four outposts on the West Coast in early 2022, starting with one at Fashion Island, Newport Beach, Calif. It was followed by locations in Venice, San Francisco and Walnut Creek.
Athletic & Sporting Goods
F45 Training Holdings Inc., Austin, Texas, received an unsolicited proposal from one of its investors, Kennedy Lewis Investment Management LP (KLIM), to acquire the company in a $385 million take-private offer, F45 Training announced. Disclosed on a filing with the Securities and Exchange Commission by KLIM, the bid is at a price per share equal to $4.00 in cash and is for all of the outstanding shares of common stock of the company that are not already beneficially owned by KLIM or other stockholders participating in the proposed transaction. KLIM is the third largest shareholder in the company, owning about 14.6 percent of shares after a late August purchase of more than 3.5 million shares of the brand. KLIM is owned by Darren Richman, who sits on the F45 board, and David K. Chene.
Sneaker and apparel maker Adidas said it is reviewing its relationship with the outspoken Kanye West. “After repeated efforts to privately resolve the situation, we have taken the decision to place the partnership under review. We will continue to co-manage the current product during this period,” the company said in a statement. Adidas announced its partnership with West in 2013. The rapper cemented his relationship with the German brand in 2016 to manufacture and distribute items from his Yeezy clothing line. He’s recently been publicly critical of the company and its CEO, accusing the sportswear brand of not giving him enough control over the line and telling CNBC “they were copying my ideas.” In the past few months, West has gone on a social media tirade against the company, calling out CEO Kasper Rorsted and posting pictures of board members. In early September, Kanye posted a doctored image of a New York Times front page falsely claiming Rorsted had died.
Cosmetics & Pharmacy
This week, Amazon-owned Shopbop became the third high-end fashion e-tailer this year to get into beauty. The goal may be more about drawing people to the site than becoming a powerhouse in the category. Amazon is like a dog with a bone when it comes to beauty, and Shopbop, the e-commerce giant’s high-end fashion website, is the latest vehicle it’s using to try and make its imprint on the category. Amazon desperately wants to be taken seriously in beauty, and despite people buying nearly everything else from the platform, the biggest retailer in the world continues to face two major obstacles: consumers are hesitant to buy high-end beauty (or apparel) on Amazon. And as a result, high-end brands are wary of selling there, fearing that they will be seen as less luxurious. Among its numerous attempts to get into the prestige beauty market was an underwhelming partnership with Lady Gaga’s Haus Labs (the brand relaunched as a Sephora exclusive earlier this year). Now, Amazon is trying again, minus the Amazon name. Shopbop debuted beauty this week with a range of mostly prestige labels, including Dr. Barbara Sturm, Augustinus Bader, Costa Brazil and Vintner’s Daughter, which sell $300 serums and $100 body creams.
Coty has a brand-new corporate identity. The beauty company, with a portfolio of recognizable brands across the fragrance, color cosmetics, and skin and body care categories, has based its new company purpose around the value of fearless kindness. The slogan “Together, we unleash every vision of beauty” represents the next phase in growth under the vision and leadership of its CEO, Sue Y. Nabi, the company said. “Beauty has always been, and will always be, at the heart of society and culture. The question of what is beautiful has built and fueled our industry through time,” Nabi said. “We believe that today, no one can control or should dictate what is or is not beautiful. Beauty is formless, like water, a constantly evolving and adapting concept. Therefore, we need to undefine the notion of beauty.” Coty is also encapsulating its new identity under a tagline — Coty, Fearless. Forward. You.
Discounters & Department Stores
Alongside other retailers offering early holiday deals, Walmart is hosting its “Rollbacks and More” October savings event from Oct. 10 to Oct. 13, the retailer said in an email to Retail Dive. The retailer is offering discounts on electronics, home goods, toys, clothing and accessories and other items, according to the announcement. Walmart is offering discounts on brands such as Hot Wheels, Barbie, Lego and Apple.
Joining other retailers in the early holiday promotion trend, Kohl’s is launching its holiday savings offerings starting Oct. 6, according to a company press release. Kohl’s is offering Kohl’s Cash for shoppers to earn daily between Cyber Monday and Christmas Eve, a new promotion for the retailer. Kohl’s Rewards members that use their Kohl’s Card can also earn 7.5% of Kohl’s Rewards on every purchase they make this holiday season, another perk the company is offering for the first time so members can earn no matter when they choose to shop. Kohl’s is also launching a Lego promotion called “Bricktober,” which features twice as many Lego products at select stores as in previous years, with 20% discounts on some Lego products. Shoppers can also take advantage of the store’s weekly deals on toys every week October through December and special offers during Black Friday and Cyber Sale events.
Walmart GoLocal has surpassed its year-end projection to deliver from 5,000 retail and business locations, Harsit Patel, vice president and general manager of GoLocal, said in an interview Wednesday. The white-label delivery service reached that number “about a few weeks ago.” “We are way ahead of our targets that we have established for ourselves in year one,” Patel said of GoLocal, Walmart’s same-day and next-day local delivery provider, which launched in August 2021. “What we’re looking to do is double down on this core delivery-as-a-service business in year two.” Despite declining volumes among the major carriers, Patel said high consumer interest in local deliveries will help drive GoLocal’s expansion. “There’s still persistent demand there and based on what we can tell, that segment continues to grow.”
Target on Wednesday named Prat Vemana as its chief digital and product officer, according to a company announcement. He will join the company on Oct. 31 and report to Chief Guest Experience Officer Cara Sylvester. Vemana will lead the retailer’s digital teams, including site merchandising, user experience, digital operations and product, and Target+, the company’s online third-party marketplace. Vemana comes to Target from Kaiser Permanente where he worked as its senior vice president and chief digital officer, and led its enterprise product management and experience teams.
Emerging Consumer Companies
Yummers, the newly launched omni-channel pet lifestyle brand, announced a $6.3 million seed round led by L Catterton, along with Caravan, FS Investors, C&S Family Capital, Platinum Mile Ventures, and Louis Kreisburg. The new capital will support Yummers’ omni-channel brand strategy, including its national partnership with Petco. Yummers launched in 2022 with the mission to make pet mealtime extra-not-ordinary with high-quality food mix-ins for a complete and healthy meal for dogs and cats. The brand is co-founded by Antoni Porowski and Jonathan Van Ness (devoted pet parents and the stars of the Netflix Emmy award-winning series Queer Eye).
Five-year-old Nécessaire, the Culver City-based brand making clean skincare for the body, announced it has raised growth capital from Cavu Consumer Partners. The company previously raised capital in 2018 from Forerunner Ventures, Able Partners, and Imaginary Ventures. Although terms of the most recent investment were not disclosed, the company shared that the new capital will be used to fuel aggressive plans to expand the brand’s product range and retail strategy. The company expects to achieve $35 million in retail sales this year from selling around 1.5 million units split 50-50 between direct-to-consumer and retail.
Partake Foods offers a variety of cookies and snacks that are free from the top nine allergens, including wheat, tree nuts, peanuts, milk, eggs, and soy. The brand was founded in 2016 by founder and CEO, Denise Woodard, whose daughter was diagnosed with severe food allergies. Today, the company’s products are available in 9,000 retail outlets, including Whole Foods Market, Walmart, Target, Kroger, and Sprouts. The brand announced this week that it has closed $11.5 million in Series B funding from Cleveland Avenue, Fearless Fund and Supply Change Capital, among others. “Inclusivity is at the heart of what Partake is doing,” Ms. Woodard said. “This shows up most notably in creating foods that over 90% of Americans can enjoy safely…with this newly raised capital, Partake will continue to champion radical inclusivity by scaling our team and operations ensuring we can continue to deliver on our promises of making eating and sharing simple and worry-free and lifting as we climb.”
Food & Beverage
Nestlé’s popular Nescafé is the latest brand to commit big money to improve sustainability and ensure future availability for a commodity important for one of its biggest products. The Switzerland-based company said it will work with farmers on regenerative agriculture practices, including planting cover crops to protect soil, incorporating organic fertilizers to improve soil fertility and pruning existing coffee trees or replacing them with disease and climate-change-resistant varieties.
Europe-based ingredient solution provider Solina is set to acquire Saratoga Food Specialties for $587 million, according to a filing from Saratoga’s parent company WH Group. Solina’s acquisition of the custom dry seasoning and liquid solutions manufacturer is expected to close at the end of October. “With Saratoga joining Solina, we will create a leading one-stop-shop for ingredient solutions in North America,” said Anthony Francheterre, chief executive officer of Solina. “We look forward to leveraging the opportunities and value this acquisition will bring to our people and to our collective food industry customers across the globe.”
Stellar Pizza, which uses robots to make pizzas on a mobile pizza restaurant truck, has received a $16.5 million Series A financing round led by Marcy Venture Partners, a venture capital firm founded by music producer Shawn Carter (Jay-Z), Jay Brown and Larry Marcus. The funding comes before Stellar Pizza launches this fall at the University of Southern California in Los Angeles. The company plans to build a fleet of pizza restaurant trucks and expand to other college campuses. After customers order a pizza through a Stellar Pizza app, a ball of dough is dispensed from the refrigerator and pressed into a 12-inch pie. Robots add sauce and toppings before the pizza is placed automatically in an oven set at 900° F. After the pizza is done, a conveyor retrieves it from the oven. A Stellar Pizza employee cuts and boxes the pizza. Another employee drives the truck, which has the capacity to make 420 pizzas. A single pizza takes 5 minutes to prepare.
Cell-based seafood maker BlueNalu says it can make a 75% gross profit in its first year of producing cultivated bluefin tuna toro when it operates at scale in its planned commercial facility. It will take some time for the company to get there. Lou Cooperhouse, co-founder, president and CEO, estimates that the commercial facility will begin production in 2027, and BlueNalu needs to receive approval from the FDA to be able to make cultivated meat for general consumption. But, according to a recent techno-economic analysis looking at the company’s full cost and outcome perspective, they can reach that profit margin with tuna grown from cells that is sold at the same price as that coming from fish. “That gross margin is very achievable and attainable at price parity,” Cooperhouse said. This kind of breakthrough has been central to the mission of BlueNalu from the beginning, Cooperhouse said. The company was not founded to prove that cell-cultured seafood could be made, he said. Instead, it was founded to find areas in the market where cell-cultured seafood could make a difference — increasing access to sought-after premium seafood products that are sustainable, free of environmental contaminants, and come from a predictable supply chain with consistent prices.
Grocery & Restaurants
Costco Wholesale saw sales growth ease in September after tallying bigger gains in the summer months. For the five weeks ended Oct. 2, net sales climbed 10.1% to $21.46 billion from $19.5 billion a year earlier, Costco reported yesterday after the market close. That compared with 15.8% year-over-year net sales growth in September 2021. Companywide, comparable-club sales rose 8.5% for September and were up 8.6% excluding changes in gasoline prices and foreign exchange (FX) rates, versus year-ago comp-sales growth of 14.3% (9.4% excluding fuel and FX). Among core categories, food and groceries posted a strong comp-sales showing (excluding the impact of FX) in September. “Food and sundries were positive in the low double digits. Cooler, candy and frozen foods were the strongest departments. Fresh foods were up mid- to high single digits. Better-performing departments included bakery and produce,” David Sherwood, assistant vice president of finance and investor relations at Costco, said in a phone report.
Home & Road
Helen of Troy reported sales at its Home & Outdoor segment, which includes OXO, Hydro Flask and Osprey, increased 11.8 percent in its second quarter ended August 31 to $240.6 million. Gains from the acquisition of Osprey were partially offset by a decrease in its organic business of 9.0 percent, driven by a decline in sales in home-related categories. The acquisition of Osprey added $47.4 million, or 22.0 percent, to segment net sales revenue growth. The overall growth came on top of a 6.6 percent increase in the prior year period. The organic sales decline was primarily due to lower consumer demand driven by shifts in consumer spending patterns and reduced orders from retail customers due to higher trade inventory levels and lower sales in the club channel. These factors were partially offset by growth in international sales, higher sales in the closeout channel, and the impact of customer price increases related to rising freight and product costs.
Parachute is spreading its wings. The digitally native, upscale home brand has expanded its furniture offerings with a new line that includes sofas, chairs, coffee and side tables, lighting and rugs. Parachute was founded in 2014, offering a curated assortment of bedding. The brand has since expanded into a wide range of home categories such as bath, apparel, décor and furniture, which it entered last year, with the launch of its first line of handcrafted bed frames. The new collection comes as Parachute also continues to double down on its brick-and-mortar expansion. Parachute currently has more than 20 locations, with plans to have a total of 25 storefronts up and running by yearend, more than doubling its store count in 12 months. Parachute’s new locations are five times larger than its original footprint, in part to accommodate the new furniture assortment. The company said it has seen double-digit year-over-year revenue growth in-store.
In an announcement sent to employees, representatives and customers, Marge Carson CEO Jim LaBarge said the company will be ceasing operations at the end of this month. LaBarge said he is closing the business to focus on personal health issues. In addition, the company noted that several entities expressed interest in purchasing Marge Carson in recent weeks. However, economic uncertainty coupled with LaBarge’s health challenges have made a potential acquisition of the company by another brand difficult to finalize, according to the company. The company will be closing its Mexico production facilities. Marge Carson will not be able to fulfill its backlog and will send out cancellations for those pending orders. Company operations in the Philippines and Indonesia will also be closing. Founded by Marjorie Carson, an interior designer, in 1947, the company evolved to produce luxury, custom upholstery and case goods defined by shimmery finishes and fabrics in soft neutrals, luxury seating, attention to couture details and an elevated, comfortable elegance, defining the “California Casual” style.
Jewelry & Luxury
De Beers CEO Bruce Cleaver tells JCK that he plans to stay involved in the company as cochairman after he hands over the CEO job early next year to energy company executive Al Cook. Cleaver, who has served as De Beers CEO since 2016, will become De Beers cochair alongside Anglo American CEO Duncan Wanblad. While Cook is a company outsider, he has a lot of experience in the mining sector. He currently serves as executive vice president of international exploration and production for Equinor, Norway’s state-owned energy company.
Adamas One—the company that purchased the remains of Scio, one of the original lab-grown diamond companies, in 2019—has listed new details on its proposed initial public offering (IPO) in an S-1 filed on Sept. 14. Adamas is offering a total 4.9 million shares of stock. If each share comes in at its proposed price midpoint ($4.75), the company will raise $23.3 million. That’s a drop from the haul it reportedly first sought: $30 million. The filing said the IPO will net the company around $11.9 million. Adamas plans to list on the Nasdaq Capital Market under the symbol “JEWL.”
Jewelry with lab-grown diamonds has comprised around 10% of U.S. diamond engagement ring sales so far in 2022, according to data provided by industry analyst Edahn Golan at Facets 2022, the recent conference held by Antwerp World Diamond Centre. The numbers were calculated by Tenoris, the consultancy Golan cofounded with former National Jeweler publisher Chris Casey. Tenoris calculates its numbers using data from 1,200 specialty jewelry stores in the United States. That lab-grown market share number for engagement rings is up substantially from Tenoris’ numbers for 2021, which found that lab-grown diamond sales represented about 6% of the overall engagement ring market.
Just about the time that The RealReal started to appear on high-risk lists for bankruptcy, Reflaunt announced a new partnership with Balenciaga and Saks Off 5th for its resale-as-a-service offering. Maybe you believe in coincidences, but I don’t. Both The RealReal and Reflaunt compete in the same $32 billion secondhand luxury market that Bain reports grew five-times faster than the primary market from 2017 to 2021, up 65% as compared to 12% for first hand personal luxury. But the companies operate under totally different business models.
Office & Leisure
Analysts at J.P. Morgan have noted investor concerns about retailers potentially reducing the inventory of Hasbro’s products heading into the all-important holiday season as consumers increasingly cut discretionary purchases. Walmart Inc and Target Corp, which have both spelled out plans to drastically reduce inventory levels in recent weeks, together account for over a third of Hasbro’s sales, according to UBS. The Monopoly maker lowered its annual revenue forecast to between flat and slightly down on a constant currency basis from its prior expectation of a low single-digit revenue growth. Hasbro said it expects third-quarter revenue to decline approximately 15% on a reported basis and 12% excluding the impact of foreign exchange. Still, the company aims to increase profit by 50% over the next three years, with plans to expand margins to 20% by 2027 as they focus on selling more toys and games such as Peppa Pig and Nerf Guns directly to consumers and via online channels. Hasbro forecast it will report annual revenue of $8.5 billion or greater by 2027.
Mobile game company FunPlus announced its expansion in Barcelona. The company, which already has a presence in the city, will open a new game development studio there. According to FunPlus, it will work with local government to support the city’s talent pool. FunPlus is best known for its mobile-first strategy titles, such as State of Survival and Guns of Glory — with the former recently hitting its three-year anniversary and hitting 150 million downloads. The company established its original office in Barcelona in 2019. FunPlus’s VP of Europe and LatAm, Enric Cabestany, said in a statement, “Barcelona is a world-renowned center of excellence for talent in the mobile and video game space, and we are honored to expand FunPlus’ commitment to the city with our ambition to develop new games that accompany the company’s strategic ambitions.” Several other companies have opened studios in Barcelona, including Tilting Point and Paradox Interactive.
Fandom, a platform known for documenting and preserving gaming and pop culture-related information, has announced the acquisition of multiple leading brands in the entertainment industry. The first of the new acquisitions under the new expansive Fandom portfolio is Red Ventures. Red Ventures is an American company that recently switched industries from marketing to journalism (via the New York Times) and houses several gaming media outlets. GameSpot, GiantBomb, GameFAQs and Metacritic, despite having varied purposes, are all being brought under the Fandom umbrella. While all these websites are gaming-related, they cover a diverse range of interests, from journalism to walkthroughs to reviews. The terms of the acquisition were not disclosed. Fandom already has more than 250K wiki websites under its belt, with over 4 million individual pages to boot. This news is the next in a series of other acquisitions that Fandom has undertaken in recent years, acquiring other outlets like ScreenJunkies, Curse Media and Fanatical. According to the company’s press release, Fandom is aiming to “extend its lead as the [number one] fan platform in the world” while “operating at the intersection of culture and commerce.”
Technology & Internet
Apple has asked suppliers to begin making some of its AirPods and Beats headphones in India as early as next year, according to a Nikkei Asia report Wednesday. The talks mark the company’s latest attempt to lower the risk of supply chain disruptions in China due to Covid lockdowns and increased U.S.-China trade tensions. Apple was reportedly in discussions in August to shift some of its Apple Watches, MacBooks and HomePods to Vietnam, and it announced in September it is assembling some of its flagship iPhone 14 phones in India. Apple still relies heavily on China for the majority of iPhone production. Foxconn, one of Apple’s manufacturing partners, will make the Beats headphones in India and strive to produce AirPods there in the future, according to the report. Luxshare Precision Industry, which makes Apple’s AirPods in Vietnam and China, will also help with AirPods production efforts in India. Apple has been looking to increase sales in India, the world’s second-largest smartphone market. And though the company’s shift to production in India was initially aimed at increasing sales, it is now treating the country more like a strategic production base, according to the report.
Elon Musk and Twitter may reach an agreement to end their litigation in coming days, clearing the way for the world’s richest person to close his $44 billion deal for the social media firm, a source familiar with the matter told Reuters. Musk, who is also chief executive officer of electric car maker Tesla, proposed to Twitter late on Monday he would change course and abide by his April agreement to buy the company for $54.20 per share, if Twitter dropped its litigation against him. In their effort to end the litigation, the two sides agreed to postpone the billionaire’s deposition in court scheduled for Thursday, the source said on Wednesday, but negotiations are continuing with a full resolution expected to take more time. However, Twitter’s legal team was yet to accept any agreement and Chancellor Kathaleen McCormick, the judge on Delaware’s Court of Chancery, earlier in the day said she was preparing for the looming trial. It is not clear what led the Musk legal team to offer to settle, but his scheduled deposition on Thursday in Austin, Texas, was expected to include some tough questioning, which could have given Twitter leverage in talks to close the deal.
Finance & Economy
The American consumer is accumulating less money each month and tapping into their savings to pay for basic necessities and bills such as utilities, adding to fears of a recession. The personal savings rate in the U.S. for August was down to 3.5%, which is flat compared to July’s rate, according to the Bureau of Economic Analysis that was released on Sept. 30. “It’s a natural consequence of high inflation that has been forcing individuals and households to raid their own savings accounts where they have them,” Mark Hamrick, Bankrate’s senior economic analyst, told TheStreet. “Not everyone has been so fortunate. Others have had to cut back severely or rely more on credit.” Wage growth in many industries has fallen short as inflation has risen exponentially this year.
U.S. inflation remains “stubbornly and unacceptably high,” requiring continued interest rate increases to be sure it begins falling, Federal Reserve Governor Lisa Cook said in her first public remarks on monetary policy since joining the central bank’s Washington-based board. “Inflation remains stubbornly and unacceptably high, and data over the past few months show that inflationary pressures remain broad based,” Cook said, concluding that recent declines in job vacancies, slowing rent increases and other data showing easing price pressures were not enough to conclude the Fed had rounded the corner in its fight against rising prices. “It must come down, and we will keep at it until the job is done,” Cook said, repeating what has become the Fed’s trademark phrase to relay its willingness to raise rates to a restrictive level meant to slow the economy, even at the risk of slower economic growth and rising unemployment.