Apparel & Footwear

FTC Blocks Tapestry’s $8.5B Acquisition of Capri

The Federal Trade Commission succeeded in its effort to hit pause on Tapestry Inc.’s $8.5 billion acquisition of Capri Holdings with a preliminary injunction — possibly sinking the mega acquisition. While the injunction can be appealed, such rulings are only rarely overturned, according to experts. Technically, the deal is only on hold pending a full trial, but experts said a trial would delay the process long enough that the contract governing the deal would expire and the acquisition would probably be dropped. Tapestry, which owns Coach, Kate Spade and Stuart Weitzman, inked a deal to buy Capri in August 2023, looking to add Michael Kors, Versace and Jimmy Choo to its portfolio.

Skechers Sees Record Q3 Sales on Strong Consumer Demand

Shares for Skechers USA Inc. jumped nearly 10 percent in after-hours trading on Oct 24 following the company’s record third-quarter earnings. The Manhattan Beach, Calif.-based footwear company reported Q3 sales of $2.35 billion, a 15.9 percent increase from $2 billion in the same period last year. Net earnings were $193.2 million and diluted earnings per share were $1.26, compared with prior-year net earnings of $145.4 million and diluted earnings per share of 93 cents. These earnings came at the top of Skechers’ expectations. The company stated last quarter that it expected to see sales between $2.3 billion and $2.35 billion, with diluted earnings per share between $1.10 and $1.15 in Q3. In the third quarter, international sales were up 16.4 percent and domestic net sales grew 15.3 percent.

 

 

Athletic & Sporting Goods

TKO Group to acquire IMG, Professional Bull Riders and On Location from Endeavor for $3.25 billion

TKO Group, the company that owns WWE and UFC, is expanding into sports-adjacent properties by acquiring three businesses for $3.25 billion from its controlling owner, Endeavor Group.  The businesses are Professional Bull Riders, On Location, and IMG, the companies announced.  The transaction expands TKO’s strategic ambitions by broadening its sports focus beyond the operation of leagues. While the company does acquire a new league in PBR, the world’s largest bull riding league, it also is expanding into luxury hospitality with On Location and media rights consultancy through IMG.  PBR puts on more than 200 events annually for more than 1 million fans. PBR CEO and Commissioner Sean Gleason will continue to lead the organization, TKO said in a statement.  On Location provides luxury hospitality for major sporting events including the Super Bowl, the Ryder Cup, March Madness, the FIFA World Cup and the Olympics. IMG packages and sells media rights and brand partnerships, providing strategic consultancy on the biggest TV deals for the NFL, English Premier League, National Hockey League, Major League Soccer, UFC, WWE, and PBR.

Peloton partners with Costco to sell Bike+ as it looks to reach young, wealthy customers

Peloton’s stationary bikes will soon sell at Costco’s stores and on its website as the beleaguered fitness company looks for new ways to reach younger and affluent customers.  Under the terms of the deal, Costco will offer Peloton’s Bike+ in 300 of its U.S. stores for $1,999, and on Costco.com for $2,199 between Nov. 1 and Feb. 15 — a steep discount from the typical price of the Bike+, which is selling on Peloton’s website for $2,495. The offer also includes a 48-month extended warranty, while the Bike+’s pricing typically includes just a 12-month warranty. It is unclear how the bundle will compare to any holiday promotions Peloton plans to offer.  The new partnership comes during a state of transition for Peloton, which is being led by two board members after its former CEO Barry McCarthy stepped down earlier this year.  Long focused on growth at all costs, Peloton has turned its sights to profitability and has had to become more creative as it tries to reach new users.

Garmin acquires Lumishore

Garmin Ltd. announced it has acquired Lumishore, a privately-held company that designs and manufactures high-performance above and underwater LED lighting systems for boats.  With over 15 years of experience, Lumishore offers LED lighting systems used on a variety of vessels from runabouts to superyachts. Lumishore offers a comprehensive range of single, dual and full-color change underwater and above-water lighting systems.  Lumishore is headquartered in Swansea, United Kingdom with a distribution center in Sarasota, Fla.

Cosmetics & Pharmacy

Indian Omnichannel Beauty Platform Purplle Closes Series F Round at $179 Million

India’s omnichannel beauty platform Purplle said it has closed its Series F round at Rs 1,500 crore ($179 million) with a fresh investment tranche of Rs 500 crore ($60 million). The Series F round was led by a subsidiary of the Abu Dhabi Investment Authority (ADIA). Existing backers Premji Invest and Blume Ventures and new investor Sharrp Ventures joined the round. In July of this year, Purplle raised about $120 million in fresh funding led by a wholly-owned subsidiary of ADIA, as part of its Series F round. In 2023, ADIA first invested in Purplle through a secondary purchase of shares from existing investor JSW Ventures.

HiteJinro Expands Beyond Spirits with Acquisition of Korean Cosmetics ODM BNB Korea

HiteJinro Group, South Korea’s leading alcoholic beverage producer, is diversifying into the global beauty market by acquiring BNB Korea, a local original design manufacturing (ODM) cosmetics company. Seoyoung e&t Co., a subsidiary of HiteJinro Group, has acquired a 100% stake in BNB Korea from private equity firm SKS Private Equity, aiming to leverage the ODM company’s strong research and development capabilities to enter the global cosmetics market. BNB Korea is the 15th-largest cosmetics ODM company in South Korea and has reported significant growth in recent years, supplying beauty products to over 100 clients, including notable brands like Dermafactory and Dr. Pepti.

Yse Beauty Secures Investment from Willow Growth Partners

Yse Beauty, a skincare brand founded by actress and author Molly Sims in April 2023, has landed an investment from private equity firm Willow Growth Partners. Willow Growth, based in Los Angeles, has made other notable beauty investments, including Bubble, Kosas, and hair care lines Dae and Jupiter. The terms of the deal have not been disclosed. With Gen X accounting for 20% of the U.S. population and a similar portion of beauty spending, brands are tapping into this influential demographic.

CVS Health Names David Joyner as New CEO Amid Leadership Shakeup

CVS Health has appointed David Joyner as its new CEO, following the company’s ongoing financial challenges and missed earnings expectations. Joyner, who previously led CVS Caremark, will take over from Karen Lynch as the company seeks to stabilize its performance. CVS Health has struggled to meet its financial targets this year, leading to a leadership change aimed at revitalizing the company’s performance. Joyner’s deep knowledge of CVS and its various business units positions him to make an immediate impact, as the company works to navigate a challenging healthcare environment and restore investor confidence.

 

Discounters & Department Stores

Inside the Store: Sam’s Club unveils its store of the future

When customers walk into the newly opened Sam’s Club in the Dallas suburb of Grapevine, Texas, they might notice that traditional checkout counters and self-checkout kiosks are nowhere to be found. Instead, all customers must use the Walmart-owned club retailer’s Scan & Go tool to buy items. “[The store is a] statement of where we want to go in the future,” Sam’s Club President and CEO Chris Nicholas said during a session at Groceryshop earlier this month. The store, which opened last week at 1701 W. State Highway 114, is located near another innovative format in the Dallas area: Sam’s Club Now, a checkout-free technology store and “tech hub,” which is reportedly about one-fourth the size of one of the retailer’s traditional clubs.

Walmart adds pharmacy to same-day delivery

Meeting a top demand voiced by its customers, Walmart on Tuesday said it is expanding same-day delivery to include prescription medications. Eventually customers will be able to get prescriptions delivered within hours or as soon as 30 minutes. The option is now available in six states — Arkansas, Missouri, New York, Nevada, South Carolina and Wisconsin — with plans to expand to 49 by the end of January. Under this program, customers can include prescriptions, grocery items or both for delivery. Walmart+ members, who pay a $98 annual fee for a variety of benefits, will receive free pharmacy delivery, while non-Walmart+ members pay $9.95.

Target cuts prices on 2K items for the holiday season

Target plans to reduce its regular prices on over 2,000 items across its owned and national brand assortment this holiday season, the company said Tuesday. The price cuts are on holiday gifts, toys, board games, health and beauty products, snacks, beverages and grocery items. The company previously announced a round of price cuts on 5,000 items in May. Target said Tuesday it surpassed that goal by lowering prices on over 8,000 items this year to date. By the end of the holiday season, Target says it will have cut prices on over 10,000 items.  The lower prices will be reflected online, in Target’s app and in-store with red tags, a company spokesperson said. However, stores in Alaska and Hawaii are not participating in this pricing promotion.

 

 

Emerging Consumer Companies

Ozlo Sleep, maker of specialty earbuds for sleep, raises $12 million

Ozlo Sleep announced a new $12 million funding round led by LifeArc Ventures and featuring Drive by DraftKings, Wise Ventures, Scrum Ventures, Wheelhouse 360, Modi Ventures, Niremia Collective, and 5Point Venture Partners. The funding joins the $8 million the company raised via crowdfunding. The company was founded by former Bose executives, using IP licensed from the headphone maker.

 

 

Food & Beverage

Coca-Cola tops earnings estimates, as higher prices offset sluggish demand

Coca-Cola on Oct 23rd reported quarterly earnings and revenue that topped analysts’ expectations, thanks to a boost from higher prices that offset sluggish demand. Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG: Earnings per share: 77 cents adjusted vs. 74 cents expected; Revenue: $11.95 billion adjusted vs. $11.60 billion expected. Coke reported third-quarter net income attributable to shareholders of $2.85 billion, or 66 cents per share, down from $3.09 billion, or 71 cents per share, a year earlier. Excluding items, the company earned 77 cents per share.

Keurig Dr Pepper acquiring Ghost

Keurig Dr Pepper is acquiring the Ghost sports nutrition and energy beverage business. The acquisition will occur in two phases, with Keurig Dr Pepper initially paying approximately $990 million to acquire a 60% stake in the company and then acquiring the remaining 40% in 2028 that is based on a pre-negotiated valuation scale and incorporates Ghost’s 2027 financial performance. The Ghost energy beverage business is anchored by the Ghost brand that is available in a variety of flavors. The sports nutrition business offers supplements and ready-to-mix powders.

Second Nature Brands acquiring Voortman cookies

Second Nature Brands is acquiring the Voortman cookie business from the J.M. Smucker Co. for approximately $305 million. The transaction includes a leased manufacturing plant in Burlington, Ont., and approximately 300 employees who will transition with the business. “This strategic and transformative acquisition fits perfectly into our better snacking and treating portfolio of brands,” said Victor Mehren, chief executive officer of Second Nature Brands. “The acquisition of Voortman broadens our scale within the cookie category and unlocks new opportunities and capabilities for future growth in the US and Canada.”

Non-alcoholic beer company Best Day Brewing raises $22.5 million in 2024

Non-alcoholic craft beer company Best Day Brewing has raised $22.5 million in total funding in 2024, according to the company. The funding, which comes from new partners and existing investors, will help the company grow consumer awareness, allow it to reach a larger audience and support retail distribution, according to the company. Best Day Brewing was founded in 2022 by founder and chief executive officer Tate Huffard. Best Day Brewing’s product line includes such varieties as a pilsner, West Coast IPA, Hazy IPA, Kolsch and Electro-Lime.

JAB to acquire Mondelez stake in JDE Peet’s coffee business

Investment firm JAB Holding Co. is acquiring Mondelez International’s stake in the coffee and tea company JDE Peet’s in a €2.16 billion ($2.34 billion) deal. Under the transaction, announced Oct. 21, JAB will buy Mondelez’s 86 million shares in JDE Peet’s for €25.10 ($27.20) per share. Global snack giant Mondelez holds an approximately 17.6% equity interest in Amsterdam, Netherlands-based JDE Peet’s, while JAB holds a roughly 59.1% share. JDE Peet’s was formed in December 2019 when JAB combined its Jacobs Douwe Egberts (JDE) and Peet’s Coffee holdings into a single coffee and tea company, which was taken public via an initial public offering in May 2020. JAB acquired Peet’s in 2012 for nearly $1 billion and Douwe Egberts in 2013 for $9.8 billion, merging the latter in 2014 with Mondelez’s coffee business to create JDE.

 

 

Grocery & Restaurants

Mo’Bettahs acquired by Blue Marlin Partners, Trive Capital

Washington, D.C.-based private investment firm Blue Marlin Partners and Dallas-based private equity firm Trive Capital have partnered to acquire a majority stake in Mo’Bettahs Hawaiian Style Food from Savory Fund. Terms of the deal were not disclosed. Mo’Bettahs was founded by Hawaiian-born brothers Kimo and Kalani Mack in 2008 in Bountiful, Utah. In 2017, it was acquired by Savory Fund, a private equity firm that invests in emerging restaurant concepts. Both Savory and the Mack brothers will retain minority stakes following the Blue Marlin/Trive deal.

Activist investor suggests Potbelly should evaluate a sale

Immersion Investments has penned a letter to Potbelly Corporation’s board of directors and management team urging immediate action to maximize value for shareholders. The activist investor holds 299,906 shares of Potbelly, making it one of the company’s top 20 shareholders. In the letter, Immersion said it believes Potbelly is an underappreciated growth story, adding that the market continues to value the stock at a “meaningful discount” compared to its peers, despite improvements to the business. Immersion wrote it is “impressed” by management’s stewardship of the business since Bob Wright was appointed chief executive officer in July 2020, with unit level revenue and margin improvements exceeding pre-COVID levels and a significant pipeline of franchise commitments. However, the investor adds that the chain’s share price has not kept pace with those improvements.

Cheesecake Factory activist reportedly urges company split

An activist investor in The Cheesecake Factory has suggested spinning off North Italia, Flower Child, and Culinary Dropout into a separately traded public company, a Wall Street Journal report said. A report Monday cited sources saying Houston-based JCP Investment Management, which has a reported stake with another activist in Englewood, Colo.-based Red Robin Gourmet Burgers Inc., has a 2% holding in Calabasas Hills, Calif.-based Cheesecake Factory. “JCP has privately argued to Cheesecake Factory executives that three of its restaurant brands in particular would be better off as a separate company focused on faster growth: North Italia, an Italian casual-dining concept; Flower Child, a health-focused fast-casual chain; and Culinary Dropout, a gastropub known for its pretzel bites and fried chicken,” the Wall Street Journal noted. JCP has told The Cheesecake Factory that it would be willing to invest in the spun-off entity to help growth, the report said.

Home & Road

Flexsteel streak keeps running with strong Q1

Furniture manufacturer and importer Flexsteel reported first quarter sales up 9.9% to $104 million. It has now reported year-over-year and sequential increases for four consecutive quarters. Flexsteel continues to buck the industry trend on the bottom line as well. Gross margin for the quarter, ended Sept. 30, climbed to 21.5% for the first quarter compared with 19.5% in the prior year quarter. Operating income surged to 5.8% of sales, or $6 million, compared to 2% of net sales, or $1.9 million, in last year’s first quarter. Net income more than quintupled, coming in at $4.1 million vs. $752 in the year-ago quarter. Diluted earnings per share were $0.74 vs. $0.14. Flexsteel ended the quarter with cash and cash equivalents of $5.74 million, up handily from $2.98 million in the comparable quarter.

Sherwin-Williams sees slight sales gain in Q3, but misses expectations

Paint and coatings giant Sherwin-Williams reported $6.16 billion in third quarter sales this week, a 0.7% increase over last year. Despite the gain though, analysts had expected higher sales of $6.2 billion, and the company’s stock dropped nearly 5% as a result. Outside of analysts’ expectations, results looked positive, although just slightly. Net income per share rose 7.8% from last year, while EBITDA increased 1.2% to $1.28 billion, or 20.8% of net sales. By segment, net sales rose in the company’s Paint Stores segment by 2.2% due to low-single digit sales volume growth and higher selling prices. Profit for the segment though fell 2.4% due to increased costs to support higher sales, the company said, as well as continued investments in long-term growth. In Consumer Brands, net sales fell 7.5%, primarily due to soft DIY demand in North America. In Performance Coatings, sales were flat, but with profit falling 7.2% to lower North American sales and unfavorable foreign currency rates.

Jewelry & Luxury

De Beers Will Now Tell You Where (Most of) Its Diamonds Are From

De Beers, which has historically been hesitant to specify the origin of its diamonds in its “aggregated” sight boxes, will now provide information on where diamonds over 1.25 cts. came from. It’s a big change for the diamond giant. De Beers has traditionally branded its gems—which are sourced from Botswana, Namibia, South Africa, and Canada, then sold in mixed assortments—as “DTC” (for Diamond Trading Company) and, more recently, “Botswana sort.” But now it will collect country-of-origin information for each diamond and disseminate it through the Tracr diamond tracking program. The stones will be tracked by “digital tags,” Tracr CEO Wesley Tucker tells JCK.  “We will still aggregate our diamonds in boxes,” he says. “But within that box we will be able to tell you which country it came from. And that [involves] scanning them pre-aggregation and then again post-aggregation and algorithmically matching the two together.

Fewer Jewelry Businesses Closed in Third Quarter

Jewelry businesses closures slowed in the third quarter of 2024, after spiking 30% in the first half of the year, according to statistics compiled by the Jewelers Board of Trade (JBT). The JBT logged 167 business discontinuances in the United States and Canada during the third quarter, down from 179 in the same period the prior year. Those 167 businesses included 136 retailers, 17 wholesalers, and 14 manufacturers. All but nine of them were in the United States. The JBT defines a discontinuance as a company ceasing operations, merging or getting acquired, or filing for bankruptcy.

Kering’s Jewelry Brands ‘More Resilient’ Than Other Luxury Goods in Q3

Kering said faltering consumer confidence, lower in-store traffic, and a “soft summer” in Western Europe were among the factors impacting sales in the third quarter. The Paris-headquartered luxury conglomerate reported Wednesday that sales totaled €3.79 billion ($4.21 billion), down 15 percent year-over-year as reported (16 percent on a comparable basis). Year-to-date, Kering’s sales are down 12 percent both as reported and on a comparable basis. Sales at the stores Kering owns and operates fell 17 percent year-over-year on a comparable basis, while wholesale and other revenue dropped 12 percent.

Why The Drop In Luxury Goods Sales Could Be An Ominous Sign

As quarterly results are coming in, fears of a recession are growing. But this isn’t a recession of the general economy—which has more analysts proclaiming we have made a soft landing. The potential slowdown is one of luxury goods, which is an ominous sign for consumer confidence and the strength of the category. Luxury goods powerhouse LVMH, which owns 75 luxury brands—including Louis Vuitton, Christian Dior, Fendi, Veuve Clicquot, Moёt & Chandon and Hennessy—reported disappointing quarterly earnings last week, writes Forbes senior contributor Pamela Danziger. Organic growth across the group was just 3%, a similar slow rate to the previous two quarters, but way down from the 14% revenue growth it saw in 2023. Compared to a year ago, fashion and leather goods revenues are down 5%, and wine and spirits are down 7%. The drop is especially pronounced in China, which previously accounted for 50% of LVMH’s growth. Excluding Japan, Asian sales dropped 16%.

 

Office & Leisure

Frontier, Spirit Airlines revive merger talks, WSJ reports

Frontier Airlines is exploring a renewed bid for Spirit Airlines, the Wall Street Journal reported on Oct 22nd, citing people familiar with the matter. Shares of Spirit rose nearly 30% in premarket trade while Frontier shares were up more than 5%. Spirit has been losing money despite strong travel demand and has failed to report a profit in five out of the last six quarters, raising doubts about its ability to manage looming debt maturities. The two budget carriers have had recent discussions about a possible merger, though the talks are at an early stage and a deal may not come to fruition, the WSJ report said. If Spirit and Frontier reach a deal, it would likely happen as part of Spirit restructuring its debt and other liabilities in bankruptcy, the report added.

Hasbro Q3 results published

Hasbro recently published its Q3 results. Revenue declined 15%. Excluding its recent divestiture of entertainment business eOne, revenue declined 9%. Wizards of the Coast and the Digital Gaming segment declined 5% and Consumer Products declined 10%. However, there was a healthy operating profit of $302m and operating margin of 23.6%. “Outperformance within our gaming and licensing businesses in the third quarter highlights the strength in two of our highest profit areas,” said Chris Cocks, Hasbro chief executive officer. “Our key initiatives around digital, licensing and reinvigorating our product innovation are bearing fruit.”

Mattel reports Q3 financial results

Mattel has reported its third quarter 2024 financial results, revealing a strong performance for its Vehicles segment, driven primarily by the success of Hot Wheels, and an increase in Gross Margin. Ynon Kreiz, chairman and CEO of Mattel, said: “We continue to execute on our multi-year strategy to grow our IP-driven toy business and expand our entertainment offering. In line with our priorities this year, we continue to improve profitability, expand Gross Margin, and generate significant cash flow.” For Q3, Net Sales were down 4% as reported, or 3% in constant currency, versus the prior year’s third quarter. Reported Operating Income was $488m, an improvement of $14m, and Adjusted Operating Income was $504m, a slight decrease of $2m.

PetSmart taps former Foot Locker chief as CEO

PetSmart has named Ken Hicks president and chief executive officer, effective Oct. 31. Hicks will also serve on the company’s board of directors, per a company press release. Hicks is the former CEO and executive chairman at Academy Sports and Outdoors, and prior to that he served as Foot Locker’s CEO. He previously held senior positions with J.C. Penney, Payless ShoeSource, HSN, May Department Stores Company and McKinsey & Company. Hicks is replacing J.K. Symancyk, who left the retailer Sept. 30 after more than six years with PetSmart. Alan Schnaid, PetSmart’s chief financial officer, served as interim CEO during the retailer’s search for a new head.

Technology & Internet

Amazon to shut down speedy brick-and-mortar ‘Today’ delivery service

Amazon is shutting down a service that offers same-day delivery from mall and brick-and-mortar retailers, CNBC has learned. The company has stopped any new development of the service, called Amazon Today, and will begin to wind it down, according to two people with knowledge of the matter. The bulk of the program will be shut down by Dec. 2, the people said. Select retail partners will be able to continue fulfilling orders with Amazon Today through Jan. 24, 2025, Amazon told CNBC. Launched in 2022, Amazon Today allows retailers who sell on Amazon to offer speedy delivery from their brick-and-mortar stores and shopping malls in select cities. Amazon’s contracted Flex drivers, which make deliveries using their own vehicles, fetch the packages and drop them at customers’ doorsteps within hours of when the orders were placed. Amazon Today was part of the company’s push to get online purchases to shoppers’ doorsteps at faster speeds.

Apple releases new preview of its AI, including ChatGPT integration

Apple on Wednesday released a beta version of a slew of Apple Intelligence features, including its long-awaited ChatGPT integration. The company announced its answer to the artificial intelligence boom this summer, but is slowly rolling out its features to users. Investors hope AI features will spur a wave of iPhone upgrades because the tools are only available on newer devices. Apple Intelligence has been available in previews for developers and early adopters, but the official public release will come next week as part of the official iOS 18.1 release, Apple said. This latest batch of features is included in a beta version of iOS 18.2 for software developers that was released Wednesday. Apple developer betas typically go through a cycle of weeks before they are released to the public.

 

Finance & Economy

Existing home sales in September fall to lowest level since 2010

Sales of existing homes fell in September as house hunters remained on the sidelines despite mortgage rates easing during the month. Existing home sales slipped 1% from August to a seasonally adjusted annual rate of 3.84 million, the National Association of Realtors said, marking the lowest monthly rate since October 2010. Economists polled by Bloomberg expected existing home sales to hit a pace of 3.88 million in September. On a year-over-year basis, sales of previously owned homes were 3.5% lower in September. Meanwhile, the median home price rose 3% from last September to $404,500, marking the 15th consecutive month of annual price increases.

US firms point to steady economy but see lower profit margins, Fed says

U.S. economic activity was little changed from September through early October and firms saw a slight uptick in hiring, continuing recent trends that have reinforced expectations the Federal Reserve will opt for a smaller 25-basis-point reduction in borrowing costs in two weeks. The U.S. central bank’s latest temperature check on the health of the economy also showed that inflation pressures continued to moderate while input prices generally rose faster than selling prices, denting firms’ profit margins. The economy, and inflation in particular, remains a key issue among voters ahead of the Nov. 5th U.S. presidential election.