Over the years, several Big Stories with the same title as this one have explored social and political positions taken by consumer companies. In past instances, brands have issued statements and taken actions on salient topics of the day that their leaders believed align with the values of their customers. In times of domestic upheaval like the Black Lives Matter protests in the summer of 2020, prominent brands like Nike, Apple and Amazon, among many others, publicly expressed support for the movement. When Russia attacked Ukraine in early 2022, literally hundreds of companies publicly demonstrated their solidarity with Ukraine by withdrawing from business in Russia. In fact, Yale School of Management professor Jeffrey Sonnenfeld’s tracker grading companies’ responses to Russia’s aggression has gone viral (legal sanctions on Russia are generally inapplicable to consumer businesses, so corporations decide for themselves how to proceed).
Despite a long history of corporate activism peppered with recent instances of businesses going to such extremes as divesting or shuttering divisions to advance their moral convictions, the eruption of war between Israel and Hamas in and around Gaza has found American corporations hesitant to make public statements. Very few brands have expressed positions or taken actions. So, what has caused the answer to this article’s rhetorical headline query to become “No”? Well, in the past year-and-a-half, two major corporations took their messaging beyond the scope of the products and services they provide – and flopped. These cautionary tales may have changed the calculus across c-suites and boardrooms.
The Walt Disney Company jumped into the political fray last year when then-CEO Bob Chapek vocalized disapproval for the Florida Parental Rights in Education Act, a conservative-oriented law regarding the state’s school curriculum, and pledged to use the company’s resources to force its repeal. In addition to alienating supporters of the bill, Presidential candidate and Florida governor Ron DeSantis soon thereafter initiated legislative and executive processes to eliminate special governance and tax status that Disney had enjoyed for decades. What started as a social or political statement transformed into a fight on two fronts for Disney – for the moral high ground and for restoration of valuable economic benefits. Mr. Chapek has been replaced, and lawsuits and counterclaims between the company and the state are pending. Disney World park attendance is down over the course of the dispute; however, attribution is impossible as so many factors impact the business and tourism overall. In any case, there seems to be no scenario where this all is a ‘win’ for Disney.
The second example: earlier this year, the beer brand Bud Light was blindsided when its marketing was hit with expensive backlash. In support of its March Madness basketball contest, Bud Light sponsored transgender social media influencer Dylan Mulvaney to post a video to garner attention. This partnership, including the support Bud Light showed for Dylan, quickly became a high-profile flashpoint between conservative and liberal points of view. Calls for a boycott ensued, and Bud Light’s waffling response has cost it on both sides of the spectrum. “Bud Light’s missteps felt like a betrayal to both its liberal and conservative customers, and that trust is going to take months, if not years, to rebuild,” summarized Daniel Korschun, professor of marketing at Drexel University’s LeBow College of Business. In the ensuing months, Bud Light has terminated executives, endured layoffs, lost up to one-third of its sales and forfeited its spot as America’s top-selling beer brand. Yikes! Going forward, Bud Light said it will focus its marketing efforts on sports and music.
These recent corporate messaging missteps may have tempered the desire of companies to enter the political arena. The same Yale team that tracks corporate actions regarding Ukraine has launched a new list of “Companies That Have Condemned Hamas’ Terrorist Attack on Israel”. For a topic receiving so much press coverage and general conversation, the list is short. Maybe the Israel-Hamas conflict is an aberration. Is a centuries-old dispute in the Middle East just too hot to handle for brands and executives? Or maybe businesses have recalibrated the pros and cons of political and social exposure.
Apparel & Footwear
Vans, North Face owner VF Corp.’s shares jump after activist investor builds stake
Activist investment firm Engaged Capital has taken a stake in VF Corporation, owner of Vans and The North Face brands, and is pushing for cost cuts and changes to the board. Shares of VF Corp. jumped roughly 14% following the news, trading at over $18. The stock is down more than 30% so far this year. Engaged said shares of VF Corp. could jump to a share price of $46 within three years if proposed changes are implemented. It is unclear exactly how much of a stake Engaged has taken in VF Corp. Engaged said former VF Corp. CEO Steve Rendle, who abruptly left the company late last year, made a series of strategic errors during his tenure. Those, according to Engaged, include reduced autonomy among individual brands, underinvestment in Vans and the Supreme brand acquisition, which hurt the balance sheet. Rendle was appointed CEO in early 2017 and became chairman later that year. Engaged is pushing for several sweeping changes, namely an upward of $300 million in cost cuts through “elimination of duplicative costs and corporate excess.” It also wants the company to commit to holding off on acquisitions.
Uniqlo’s new US CEO Yoshihide Shindo plans aggressive American retail expansion
It’s been a big year for Japanese fashion brand Uniqlo. Earlier this month, its parent company, Fast Retailing, posted a quarterly profit boost of 18%. At the same time, the company has been planning to expand its global retail network with 80 new stores. Several of those stores will be in the U.S., a major focus area for the brand’s expansion. To help drive that growth, Yoshihide Shindo was appointed earlier this summer as the brand’s new CEO of operations in the U.S. In his first interview since his promotion to CEO, Shindo told Glossy that he plans to have more than 200 physical stores in the U.S. by 2027. Two new stores will open this month, bringing the total, so far, to 53. Two Long Island, NY locations will open on October 20. “Globally, we are the third-largest apparel retailer, with over 2,400 stores,” Shindo said. “It’s an exciting phase of growth as we continue to open stores throughout North America. Expansion in the U.S. is an important step.” While the bulk of Fast Retailing’s short-term retail growth is planned for China, where it will open 80 stores over the next year, North America is the next biggest market, with 20 more stores planned for the next 12 months.
Kurt Geiger owner mulls £400m sale of the luxury brand
The parent company of Kurt Geiger is preparing to hoist a ‘for sale’ sign above the luxury retailer, with a £400m price tag. According to Sky News, private equity firm Cinven has hired advisors to handle a potential auction. Sources told the publication that the sale process was expected to take place in the coming months and could attract interest from other buyout firms and luxury goods groups. It comes as Kurt Geiger, which has been owned by Cinven since 2015, is currently embarking on a US expansion of standalone stores to sit alongside its wholesale partnerships with Dillard’s and Nordstrom. The retailer announced a £150m debt deal in June to fund its strategy and refinance its existing borrowings. Late last month, Kurt Geiger unveiled its new 2,916sq ft Oxford Street flagship store featuring a novel concept that “celebrates London’s creativity and individuality”.
David’s Bridal names new COO, CFO in executive shuffle
Following its July acquisition by an investment firm, David’s Bridal is promoting executives to two key C-level positions as part of a wider internal management overhaul. David’s Bridal, which filed for bankruptcy in April 2023 and closed on the sale of substantially all its assets to Cion Investment Corp. in July 2023, is making a number of significant promotions. Bob Walker, who joined David’s Bridal in 2019 to serve as chief retail officer, has been promoted to COO, reporting directly to CEO Jim Marcum. Kelly Cook, who joined David’s Bridal in 2019 to serve as executive VP, chief marketing & IT officer, has been promoted to president, brand, technology and finance, reporting to Jim Marcum, CEO. In addition, Rob Cooper, who joined David’s Bridal in 2006, working in the financial planning and analysis function, has been promoted to CFO, reporting directly to Cook.
‘It’s not been enough to carry the day’: Why the Victoria’s Secret rebrand is over
The radical transformation of Victoria’s Secret is over. The American lingerie chain has spent the last two years overhauling its hyper-sexualized image in a bid to regain cultural relevance and win back young consumers who preferred more on-trend upstarts like Savage X Fenty and Parade. There were some successes, including a campaign to launch the “new” Victoria’s Secret featuring soccer player Megan Rapinoe, transgender model Valentina Sampaio and other spokesmodels, but favorable reviews from online critics never translated into sales: the brand is projecting revenue of $6.2 billion this fiscal year, down about 5% from the previous year and well below the $7.5 billion from 2020. More recent campaigns have featured models like Hailey Bieber and Emily Ratajkowski, who would have fit right in with Heidi Klum and Adriana Lima at the 2007 show, as well as new-look ambassadors, including plus-size models Paloma Elsesser and Ali Tate-Cutler. But in a presentation to investors in New York last week, it was clear which version of the brand Victoria’s Secret executives see as its future. “Sexiness can be inclusive,” said Greg Unis, brand president of Victoria’s Secret and Pink, the company’s sub-brand targeting younger consumers. “Sexiness can celebrate the diverse experiences of our customers and that’s what we’re focused on.”
Athletic & Sporting Goods
Vista Outdoor announces plans to sell its ammunition plants to Czechoslovak Group
Vista Outdoor plans to sell its ammunition-making plants to Czechoslovak Group for $1.91 billion in a deal expected to close next year. Czechoslovak Group employs more than 10,000 at its companies and affiliates, according to a news release issued today by Vista Outdoor with the announcement. The company’s segments are comprised of defense, aerospace, ammunition, mobility and business. “CSG is 100% owned and led by Michal Strnad, who has transformed it into a leading Czech industrial group with a strong international footprint,” according to the news release. Vista Outdoor had previously announced plans to split the ammunition manufacturing segment from a portion of the company with brands for outdoor recreation such as Camp Chef, Camelbak and Simms Fishing.
Sports Direct Parent Acquires Top Germany Sports Retailer
Frasers Group plc, the parent company of UK-based sports retailer Sports Direct, entered into a binding agreement with Signa Retail Department Store Holding GmbH to acquire SportScheck, one of the top sports retailers in Germany. The company said the acquisition would enable Frasers to grow its presence in Germany, one of the biggest sports markets in Europe and a key focus area for the sports segment. Frasers shared in a release that SportScheck has over 75 years of expertise in sports retail, with 34 stores in prime city locations across Germany, approximately €350 million in revenue and a loyal customer base of over 13 million visitors per year.
Cosmetics & Pharmacy
Farfetch Puts Violet Grey up for Sale
Two months after Farfetch announced it would shut down its beauty division, the company is now exploring sale options for Violet Grey, the LA-based beauty retailer it acquired last year. Violet Grey, founded by chic visionary and entrepreneur Cassandra Grey curates a detailed and highly regarded collection of luxury and Indie-Luxe beauty brands. Among the impressive lineup are renowned names like Isamaya Ffrench, SimiHaze, Augustinus Bader, Chanel Beauty and Tom Ford Beauty, each representing excellence in their respective fields. Despite its relatively short time of existence, operating for just over a year at Farfetch, Farfetch announced in August that it would gradually wind down its beauty business, shedding light on the inherent challenges faced by online retailers in the highly competitive beauty industry.
The Body Shop: German private equity firm joins bidding race
Orlando Capital has joined the running to snap up The Body Shop. The news comes after the cosmetics retailer’s parent company Natura & Co put the business up for sale in September, as the group sought to return to stable ground after posting six consecutive quarters of losses. Natura bought The Body Shop in 2017 from previous owner L’Oréal but has struggled to maintain its profitability. The private equity firm joins Aurelius Group, Alteri Investors and Elliott Advisors in the race to purchase the brand, a source close to the negotiations reports. However, they said the company’s interest was “odd” since it has no experience working with retail brands or retail investments.
The Body Shop Pins Hopes on India; More Than 50 Stores Planned
The Natura &Co-owned business is said to be planning to open some 50 stores across tier 3 And 4 cities across the country. Amid the rumored bidding process for The Body Shop, Fashion Network reports that the ethical beauty retailer hopes to double its India business as socially conscious consumerism increasingly resonates with Indian shoppers. Vishal Chaturvedi, Vice President for South Asia, told Fashion Network, “Our strategic focus includes expanding our presence in Tier 3 and Tier 4 cities with untapped potential. By opening at least 30 activist workshop stores (to recycle beauty product packaging) annually and adding more markets by 2026, we aim to be closer to our consumers, particularly in smaller towns and cities.”
Fresh From L’Oréal Funding, Debut Wants to Tackle Fragrance
Having closed a total of $40 million in its series B funding led by Bold, L’Oréal’s venture capital fund, biotech firm Debut wants to make the fragrance industry more sustainable. “Having successfully scaled biotechnology with 100 percent success in skin care and leading that category, we are now addressing the urgent challenges facing the fragrance industry,” said Debut founder and chief executive officer Joshua Britton. By developing bio-identical and novel fragrance molecules, San Diego-based Debut believes it will enable fragrance brands to transition to bio-based formulas, while protecting the olfactive integrity of the formulas.
Discounters & Department Stores
After Dollar General’s CEO shuffle, supply chain shakeup could be next
Last week, Dollar General parted ways with CEO Jeff Owen and brought back Todd Vasos to the chief executive role. Vasos led the company as chief for more than seven years until retiring late 2022, with Owen — a decades-long veteran of the company — heading operations under him as COO beginning in 2019. Several analysts pointed out last week that the move was made to stabilize the company and reassure investors after multiple quarters of operational shortfalls. Among other issues, Dollar General experienced a surge in inventory during Owen’s tenure, even as many others in retail regained control of their stock levels.
Target COO John Mulligan to retire
Target’s Chief Operating Officer John Mulligan plans to retire, the company said Tuesday. Mulligan will remain in his position until February, then transition to a strategic adviser role before officially retiring from the retailer in February 2025. Laysha Ward, Target’s chief external engagement officer, is also retiring. Ward will transition to a strategic adviser role through April. Target also announced two leadership appointments Tuesday. Matt Zabel is the new chief corporate affairs officer. Zabel will report to CEO Brian Cornell. Kiera Fernandez has been promoted to chief community impact and equity officer and will report to Zabel.
Macy’s debuts ‘Mstylelab’ digital fashion platform
Diving deeper into the metaverse, Macy’s has launched Mstylelab, an immersive digital fashion hub, the retailer announced Wednesday. The retailer built the space using the metaverse technology platform Journee. In the online space, users can create a profile, design and personalize digital fabric, explore the virtual environment and browse the digital renderings of the retailer’s On 34th brand. They can also create a personalized digital T-shirt to match Mstylelab’s digital fabric, per the press release. The company said it will introduce a Thanksgiving Day Parade experience within the space. It will also add other experiences and enter new partnerships in the future.
Emerging Consumer Companies
Grandstand raises $3 million to empower athletes to join the creator economy
Athlete empowerment startup Grandstand has raised $2.75 million in funding to launch an app that allows fans to follow and financially support their favorite players. The app aims to provide athletes with a digital toolkit to capitalize on their influence and unlock new revenue streams. Grandstand plans to partner with pro golfer James Nicholas for its early access and testing phase, offering fans updates on Nicholas for free, while certain posts and Q&As will be behind a paywall. The platform also offers merchandise and event opportunities for players. Grandstand will take a percentage of revenue generated through its app and is offering equity in the company to participating athletes. The startup was founded by CEO Sandeep Rajan, who previously worked on Patreon’s product.
Gardenuity, modern gardening platform, raises $5.5 million led by Anchor Capital
Gardenuity, a curated platform that promotes gardening and its wellness benefits, has raised $5.5 million in seed funding. The funding round was led by Michael Mann of Anchor Capital and Alan Shor of Retail Connection, with participation from industry-leading investors such as Bonnie Plants and Deason Capital. The capital will be used to enhance Gardenuity’s technology platforms, expand its range of gardens and gardening kits, and support the growth of the business. The company plans to introduce new technology, including an improved version of its Match Technology, which pairs growers with the most suitable garden for their location and lifestyle. Gardenuity also aims to expand its Digital Greenhouse Community, a platform that connects growers and allows them to share tips and recipes. Since its founding in 2017, Gardenuity has experienced significant year-over-year growth and has raised a total of $7.5 million in funding. The company also offers a Gardenuity for Business platform, which has been adopted by over 500 companies, including Google and Cigna, to promote employee wellness.
Society Brands raises $25 million in additional equity funding
Tech-enabled consumer products company Society Brands has raised an additional $25 million in equity funding, bringing its total capital commitment since inception to $230 million. The most recent funding round was led by Gullane Capital, with participation from Callais Capital and North Coast Ventures. The funds will be used to continue acquiring e-commerce native brands, expand the operating team and infrastructure, and strengthen the company’s balance sheet. Society Brands has a unique business model that focuses on building lasting relationships with founders and enabling them to grow their brands by sharing resources and best practices. The company not only acquires brands that sell on Amazon but also those with a strong direct-to-consumer audience on platforms like Shopify. Founders are encouraged to stay on board and are offered rolled equity as part of the deal consideration. Society Brands currently owns and operates seven distinct brands and has additional brands in the acquisition pipeline. The company aims to become a premier tech-enabled consumer products company by partnering with great brands and founders.
Food & Beverage
Ferrara to purchase candy maker Jelly Belly
Ferrara Candy is buying jelly bean maker Jelly Belly Candy for an undisclosed amount. The proposed deal would combine Jelly Belly, whose roots date back to 1869, with Ferrara’s broad portfolio of candies such as Laffy Taffy, Red Hots, Brach’s and SweeTarts. Jeff Brown, who is currently the executive vice president of global operations and distribution of Jelly Belly, will become its CEO. Nutella maker Ferrero Group, which purchased Ferrara in 2017, has been rapidly expanding its U.S. reach through a series of deals by growing its candy portfolio while entering new categories such as cookies and ice cream.
Cultivated seafood startup BlueNalu bags $33.5m in series B round
Cellular aquaculture startup BlueNalu has raised $33.5 million in a series B round from new and existing investors. Prior to this round, BlueNalu had raised a $4.5 million seed round in 2018, a $20 million series A round in 2019, and $60 million in convertible note financing in 2020. BlueNalu currently operates out of a pilot facility in San Diego that it is scaling up to produce sufficient quantities (“batches in the hundreds of pounds”) for a small-scale launch. It hopes to break ground on a large-scale plant in 2026, with a view to starting commercial-scale production 18 months later. The location of the large-scale plant will “depend on some of the market feedback we receive and some of the offtake commitments we hope to get [that could in turn] facilitate getting the capital to build a large-scale facility,” stated cofounder and CEO Lou Cooperhouse.
Eat the Change Raises $14M as Tea Biz Grows
Eat the Change (ETC) has brought in another $14 million in growth capital to fuel its quest of changing consumers’ eating habits by widening distribution of Just Ice Tea and further testing its Cosmic Chews snacks. The round was led by returning investors S2G Ventures and Collaborative Fund, along with the family office for Jeff Swartz, the former CEO of apparel and footwear brand Timberland. Honest Tea co-founder and Eat the Change board member Barry Nalebuff and Chuck Muth, the former VP of sales for Honest Tea, also both took part in the round. Prior to this funding, the company had raised over $20 million, most recently bringing in $14.5 million just over a year ago. CEO Seth Goldman said this round will fund ETC for several years, and take it through to the point of cash flow positive. With over $12 million of sales year-to-date, Goldman projects ETC will close out 2023 with $16 million in revenue. Much of the funding will go towards building out the company’s Just Ice Tea line, which Goldman and his co-founder Spike Mendelson launched in summer 2022 following The Coca-Cola Company’s announcement that it would discontinue Honest Tea, which it acquired in 2011. Goldman said Just Ice Tea is sold in over 5,000 accounts, which is equivalent to the distribution Honest Tea achieved only after eight years in business.
Grocery & Restaurants
Costco Wholesale CEO Craig Jelinek is set to step down from his role effective Jan. 1, with Ron Vachris, current president and COO, set to take over the role of president and chief executive on that date. Jelinek will remain with Costco through April 2024 in an advisory role and also to assist Vachris during the transition. According to Costco, the move is part of a long-standing succession plan that Jelinek had previously discussed with the board of directors. Jelinek will continue to serve on the board and will stand for re-election at the retailer’s January 2024 annual meeting. For his part, Vachris has been with Costco for more than 40 years, starting as a forklift driver and later holding every major role related to Costco’s business operations and merchandising activities.
Starbucks and union sue each other over Israeli-Palestinian conflict
This week, after Starbucks tried to distance itself from Workers United when the union ignited a social media boycott by posting a “Solidarity with Palestine” image on the social media site X, the coffee chain has now filed a legal complaint against its union. The legal complaint, filed with the Southern District of Iowa Eastern Division, asks that legal action be taken against Workers United for using its name, logo, and likeness, claiming that the company’s trademark rights have been violated. Starbucks also sent a separate cease and desist letter to Starbucks Workers United demanding that the union stop using its name, logos, and other intellectual property, claiming that the usage of the Starbucks name and similar logo “in connection with statements advocating for violence in the Middle East” has “caused irreparable harm” to the company, whose views on the escalated Israeli-Palestinian conflict have been conflated with the views of Starbucks. Florida Senator Rick Scott even called for a nationwide boycott of Starbucks, after the now-deleted social media post was seen by numerous people and media outlets.
Home & Road
Z Gallerie files for Chapter 11; looks for buyer
Z Gallerie, the Los Angeles-based contemporary furniture retailer, has filed for Chapter 11, citing liabilities between $50 million and $100 million. The retailer, which is owned by CSC Generation Holdings Inc. and does business as part of DirectBuy Home Improvement Inc., filed for protection in the U.S. Bankruptcy Court in the District of New Jersey. According to the filing, which was reported on Bankruptcycompanynews.com, Z Gallerie has 21 locations in nine states. CSC bought DirectBuy/Z Gallerie out of bankruptcy in July 2019 for $20.3 million. The filing noted that Z Gallerie is getting up $1.1 million of no-interest, debtor-in-possession financing through ZG Lending SPV LLC, which is a CSC affiliate.
Furniture remains off pace in September, but decline not as steep
Furniture and home furnishings sales in September were nearly six points off the pace set in 2022, but the year-over-year decline was less severe than recent months, according to the Department of Commerce’s advance monthly estimates. For the month, furniture and home furnishings recorded an estimated $10.998 billion in adjusted sales, down 5.9% compared with September 2022’s $11.69 billion. In August, furniture and home furnishings sales were off the year-over-year pace by 7.8% and missed the mark by 6.3% in July. September was essentially flat compared with August’s adjusted $11.003 billion in sales. Year-to-date, the DOC says furniture and home furnishings sales are at $100.18 billion, down 4.4% compared with the same span in 2022. The overall retail snapshot showed $704.881 billion in adjusted estimated sales in September, up 3.8% vs. $679.379 last year and 0.7% compared with $699.882 in August.
Jewelry & Luxury
De Beers Appoints New CEO of Brands Division
De Beers Group has appointed Sandrine Conseiller as CEO of De Beers Brands, which oversees its retail chain and Forevermark brand. Conseiller’s hiring follows the decision of Marc Jacheet, to leave De Beers. A former group vice president at Tiffany, Jacheet has been on personal leave since this summer. He joined the company in early 2022, following the retirement of legendary De Beers executive Stephen Lussier. Conseiller joins De Beers after eight years at Maus Frères, where she served most recently as CEO of footwear and textile company Aigle and had previously been group marketing and branding executive vice president for Lacoste.
Shares of Luxury Brands Are Tumbling in a Sign Consumers’ High-End Spending Spree Is Over
Consumers’ spending spree on high-end goods that kicked off during the pandemic has petered out. Luxury retailers that enjoyed bountiful profits during in recent years are beginning to feel some pain in 2023 as financial conditions tighten and consumers appear to pull back on ultra-high-end purchases. LVMH stock fell to a fresh 2023 low in trading in Paris on Thursday, slipping to 675 euros after the firm reported weaker than expected quarterly revenue growth. Sales grew 9 percent in the quarter, down from the 17 percent increase reported in the prior three months. Shares of the European luxury giant have fallen about 20 percent over the past six months, and according to Bloomberg, LVMH has led a sell-off that’s erased $245 billion in value from Europe’s seven biggest luxury firms in that time.
Pandora Eyes Expansion Into ‘New and Underserved’ Markets
Pandora is ready to take on the world, or, at least, a few new markets. During its recent Capital Markets Day, the company shared updates on its “Phoenix” turnaround strategy and plans for the future, including store openings and expansions into new geographies. The Phoenix strategy, launched in 2021, focused on sustainable growth and attracting new, younger consumers. “Looking back at the past few years, we are proud of our achievements. We have fundamentally changed how we work, and the organization is much stronger. It’s clear that Pandora is a very different company today,” said CEO Alexander Lacik. The company said its investments in the brand, store network, organization, and people are paying off.
Office & Leisure
Wyndham rejects $7.8B hostile bid from Choice Hotels
Wyndham Hotels & Resorts rejected a nearly $8 billion hostile takeover bid from rival Choice Hotels on Tuesday due to regulatory concerns. The company announced that its board of directors unanimously rejected the deal to acquire the company at $90 per share in cash and stock. “Choice’s offer is underwhelming, highly conditional, and subject to significant business, regulatory and execution risk. Choice has been unwilling or unable to address our concerns,” Wyndham Chairman Stephen Holmes said in a statement. Holmes also said that the “proposed transaction likely would take more than a year to even determine if, and on what terms, it could clear antitrust review.” Choice Hotels issued an unsolicited proposal to acquire Wyndham, which encompasses 24 brands including Super8, Travelodge and Days Inn, after it walked away from the negotiating table “a few weeks ago.” In total, the proposal had a total value of roughly $7.8 billion. Including Wyndham’s debt, the deal is valued at $9.8 billion. The deal, a 30% premium from Wyndham’s closing stock price on Monday, was Choice Hotels’ latest attempt to stay on track to create a budget hotel giant.
Petfolk, a veterinary urgent and primary care company, raised a $40 million Series B led by Movendo Capital. Petfolk — which has eight locations now with plans to open four more by end of year — offers 24/7 virtual and instant veterinary services. With clinics across North Carolina, South Carolina, Georgia, and Florida, Petfolk provides primary care, exams and diagnostics, dental care, behavioral care and nutrition guidance. The company is planning an additional 20 clinics for 2024. The raise values the business at $200 million post-money, a source familiar tells Axios. The raise represents a 2x step-up from Petfolk’s $40 million Series A, raised in 2022, the source says. Existing investors, including White Star Capital and Idea Farm Ventures, also participated in the round. The raise has an approximately 18-month runway.
Esports company GameSquare, backed by Dallas Cowboys owner Jerry Jones, is set to acquire struggling influencer and gamer brand FaZe Clan. As part of the deal, GameSquare is appointing FaZe Clan founders at the top of the brand, which will operate as an independent division of GameSquare, to “reestablish authority”: Richard “FaZe Banks” Bengtson as CEO, Thomas “FaZe Temperrr” Oliveira as president and Yousef “FaZe Apex” Abdelfattah as COO. Currently, Christoph Pachler is serving as interim CEO of FaZe Clan. According to the companies, their combined annual revenue totaled approximately $138 million in 2022. This deal currently values FaZe Clan at approximately $16 million. When FaZe Clan went public in July 2022, it was in a $725 million SPAC deal. The acquisition, which is an all-stock deal, is expected to close in the fourth quarter. It has been approved by both companies’ boards and is subject to approval by the shareholders. Upon completion of the deal, current GameSquare shareholders will own approximately 55% of the merged company, while current FaZe Clan shareholders will own approximately 45%.
Technology & Internet
Apple iPhone 15 sales look like they’re starting off slow in China
A month after Apple’s latest iPhones came out, analysts and investors are starting to see signs of slow demand in China versus last year’s models. Sales of Apple’s iPhone 15 models in their first 17 days are down 4.5% in China versus last year, according to an estimate from Counterpoint Research. Unit sales of the higher-end Pro Max and Pro are down 14% and 11% versus last year, according to the estimate. Wall Street analysts also point to shorter shipping times on Apple’s website, suggesting that either demand has fallen, or supply has greatly increased. Jeffries analysts say “weak demand” in China has knocked Apple off the top spot for smartphone market share in the country. China is Apple’s third-largest market after North America and Europe, and the apparent sluggish start comes after a few news stories that have some analysts fretting over the iPhone maker’s outlook in the country.
Netflix stock surges after earnings report, jump in subscribers
Netflix shares surged 16% Thursday following a promising quarterly earnings report. The streaming giant reported several victories, including a 70% jump in its new ad-supported subscription tier. As for overall subscribers, Netflix added 8.76 million subscribers for the third quarter, significantly higher than the 5.49 million Wall Street estimated. It’s the biggest jump in subscribers since the second quarter of 2020, when Covid-19 stay-at-home restrictions drove new sign-ups. Wednesday’s report extended a return to growth for Netflix — after the company in April 2022 recorded its first net subscriber loss in over a decade, creating fears that the market had been saturated — and several analysts celebrated the positive news.
Tesla CEO Elon Musk Sounds Pessimistic Note on Economy on Earnings Call
Tesla reported third-quarter results after the bell Wednesday. The company’s shares rose as much as 2.4% in extended trading after the report crossed, but then sank more than 4% after CEO Elon Musk cautioned that the Cybertruck would not deliver significant positive cashflow for 12 to 18 months after production begins, and emphasized that the company is focused on making its cars more affordable amid a high-interest rate environment. Tesla executives said on an earnings call that they are “laying the groundwork to begin construction,” on a new factory planned in Mexico. But Musk said before Tesla goes “full-tilt” on the Mexico factory, the company is working to bring down the price of its cars. He said: “I’m worried about the high interest rate environment we’re in,” and said people buying cars are focused on how much their monthly payments will be. “If interest rates remain high or if they go even higher, it’s that much harder for people to buy the car.” Musk later noted: “I just can’t emphasize enough how important cost is. …. We have to make our products more affordable so people can buy it.”
Finance & Economy
Net worth surged 37% in pandemic era for the typical family, Fed finds — the most on record
Net worth surged for the typical family during the pandemic era, largely on the back of higher home and stock prices and government stimulus measures, the Federal Reserve reported in its triennial Survey of Consumer Finances. Net worth is a measure of household assets after accounting for liabilities. After accounting for inflation, median net worth jumped to $192,900, a 37% increase from 2019-22, the Fed found. That percentage growth was the largest since the Fed started its modern survey in 1989. It was also more than double the next-largest increase on record: Between 2004 and 2007, right before the Great Recession, real median net worth rose 18%. Increases in net worth were “near universal across different types of families,” the Fed said.
Retail sales rose 0.7% in September, much stronger than estimate
Consumers showed surprising strength in September, boosting retail sales well above expectations despite high interest rates and worries over a weakening economy. Retail sales rose 0.7% on the month, well above the 0.3% Dow Jones estimate, according to the advance report the Commerce Department released. Gas station sales helped propel the headline number, rising 0.9% as prices at the pump accelerated. Sales gains were broad-based on the month, with the biggest rise coming at miscellaneous store retailers, which saw an increase of 3%. Online sales climbed 1.1% while motor vehicle parts and dealers saw a 1% increase and food services and drinking places grew by 0.9%, good for a yearly increase of 9.2%, which led all categories.
