The first ten months of 2023 have seen big-name retailers, including David’s Bridal, Bed Bath & Beyond, Party City, and Rite Aid, and many small businesses file for bankruptcy protections. In the 12-month period ending June 30, 2023, bankruptcy filings rose 23% year-over-year according to the Administrative Office of the U.S. Courts, and Chapter 11 filings jumped 68%. The nationwide uptick in bankruptcy filings is mainly due to three factors: 40-year high inflation, the Federal Reserve increasing interest rates, and consumers spending less on discretionary items.
The U.S. Bureau of Labor Statistics reported inflation at 3.7% in September 2023, which is markedly lower than the 9.0% inflation rate in June 2022, but is still higher than recent historical averages. As inflation remains high, businesses are grappling with continued high product, labor and freight costs that negatively weigh on earnings. American consumers have responded accordingly to high prices and are cutting back: 80% of consumers said they have cut spending on nonessential items, a category that covers entertainment, home décor, appliances and clothing, according to a 2023 CNBC-Morning Consult survey. Elizabeth Han, a senior director on Fitch Ratings’ U.S. leveraged finance team, recently commented, “A lot of retail is consumer discretionary so in the event of an economic pullback, or economic uncertainty, you’ll see some of that revenue come down because it’s more of a discretionary purchase.” The combination of inflationary pressures on costs and decreased consumer demand has led to a flurry of recent bankruptcies.
Like large retailers, U.S. small businesses have not been immune to these macroeconomic pressures. According to the American Bankruptcy Institute, 1,500 small businesses filed for bankruptcy this year through September 28th, which is nearly as many small business bankruptcies as there were in all of 2022. Many of the increased bankruptcies are coming from filings under Subchapter V, a newer provision in the federal bankruptcy code that makes it less expensive for small businesses to restructure and get a fresh start. The Federal Reserve’s efforts to reduce inflation by raising interest rates 11 times over the past 18 months have been particularly painful for small businesses, which often operate with tighter profit margins and smaller cash reserves than larger retailers. A September 2023 survey of 1,500 small businesses by Goldman Sachs revealed that 73% of respondents reported that rising interest rates were having a negative impact on their business. Even businesses with healthy balance sheets have been stressed by increased interest rates as the cost of acquiring new capital has increased dramatically, and those companies that are overleveraged now teeter on the brink of tripping covenants and going into delinquency or default.
Moody’s Investors Service noted recently that defaults and bankruptcies in retail and apparel would likely continue to increase over the next 12 months, jumping from 6.0% to 8.6% as they predict the aforementioned macroeconomic conditions that are driving recent bankruptcies, are likely to persist. Like the experts, we will keep our eye on retail businesses that are overleveraged as they struggle to navigate an economy with persistent inflation, weak consumer demand and elevated interest rates.
Apparel & Footwear
Deckers Plans to Divest Sanuk, Plots New ‘Super’ Sneaker Brand
Deckers Brands announced late Thursday it plans to divest its Sanuk brand. The Goleta, Calif.-based footwear company dropped the news in a short section within its second quarter earnings report on Thursday evening, stating it made the decision to divest the comfort shoe brand as it “continues to focus on allocating resources that best align with its long-term objectives.” On the company’s second quarter earnings call, Deckers president and CEO Dave Powers addressed the news further to analysts. “I’m proud of how the teams have managed this brand over the last few years from a marketplace management standpoint,” Powers said. “And the product right now is very, very strong. But what we realized is that the journey to scale that brand so that it’s meaningful in our portfolio, it’s just too long.”
Kim Kardashian’s Skims to Launch Men’s
After months of rumors, Kim Kardashian has finally made it official: her Skims brand is going into menswear. Although the Internet was abuzz with reports as far back as 2021 saying that the launch of Hims by Skims was imminent, it’s taken until now for the brand to take the plunge. The line, which is just called Skims Mens – probably to avoid confusion with the Hims, an unrelated hair loss treatment brand – will launch Thursday with an assortment of men’s underwear and will employ the same game plan as the brand’s popular women’s collection. It will feature briefs and boxers, tanks and Ts in ultra-soft fabrics in three distinct collections: cotton, stretch and sport. Jens Grede, co-founder and chief executive officer of Skims, said: “Mens has been three years in the making.“ Although the men’s underwear market is crowded, Grede believes Skims Mens will find its niche. Grede would not provide an estimate for how large the men’s line can be, but is optimistic that it can be sizable.
L Catterton Sells Stake in Rhone
L Catterton has cashed out of its investment in Rhone. On Wednesday, the Connecticut-based menswear brand revealed that it closed a series D round of financing through a special purpose vehicle (SPV) fund, with management and a select group of investors — including former NFL players Tim Tebow and Steve Young — buying back the minority stake L Catterton had purchased in 2017. Although the series D closed in July, Rhone just revealed the deal now and said it reflects its move to chart a more independent course. The amount of the investment wasn’t revealed, but half of the funds came from seven owners of professional sports teams in the NBA, NFL, MLB, MLS and EPL, the company said. In addition to Tebow and Young, other investors included Blackstone executive David Blitzer, former hedge fund manager Gabe Plotkin and Larry Miller Group. Prior investors have included Justin Tuck and Troy Aikman. Family members of chief executive officer Nate Checketts are also part of the investment team, he said in a Facebook post, including his father David Checketts. The investment, believed to be around 30 percent, is being used to continue to fuel Rhone’s growth. As reported, the brand will launch womenswear next spring and has opened 11 stores over the last 12 months. Rhone was founded in 2014 and has around $100 million in sales.
Second Activist Investor Gunning for VF
The activist hedge fund that went after Kohl’s, Guess and other fashion giants is coming after VF Corp., little more than a week after Engaged Capital launched a campaign calling for change at the Timberland and The North Face owner. Activist heavy-hitter Legion Partners Asset Management has now put a bullseye on the Denver-headquartered apparel giant, Bloomberg first reported Tuesday. Engaged got things started last week when it laid out a plan for how the Supreme parent can cut more than $300 million in costs and reinvest much of those savings in The North Face and Vans, two of VF’s biggest and best-known brands. But the activist investor’s agitation could put Timberland and Supreme up for strategic review and even under new ownership. Engaged wants VF to sell assets to pay down some of the $5.72 billion it has in debt as of this summer, per a regulatory filing. VF has $11.33 billion in liabilities and $14.04 billion in assets. There’s a strong chance Legion’s demands look a lot like Engaged’s.
Steve Madden Buys Almost Famous in $52 Million Deal
Steve Madden is building in apparel. The footwear company said it bought Almost Famous in a $52 million cash deal on Monday. Almost Famous has been the exclusive licensee of the Madden NYC apparel line since its launch in 2022 and also makes private label goods for mass merchants, department stores and off-pricers. For the year ended Sept. 30, the private company logged revenues of about $163 million. The purchase price is subject to a working capital adjustment and also an earn-out based on financial performance. Former owners Peter Kossoy and Robbie Regina serve as co-presidents of Almost Famous and said, “We are proud of what we’ve built at Almost Famous and look forward to partnering with Steve Madden to take the business to new heights in the coming years.” Steve Madden has grown through acquisition before, for instance, by buying up the debt of Betsey Johnson and then taking control of the company in 2010. And in 2019, the company bought the digital native Greats sneaker brand.
Athletic & Sporting Goods
September Golf Equipment Sales Up Again
Golf Datatech (GDT) reported that golf equipment sales posted a back-to-back increase in on- and off-course specialty stores in September after experiencing 11 consecutive months of contracting sales through July. Total golf equipment sales reportedly grew over 6 percent for the month in the channel. GDT said the mid-single-digit increase was due to sales of Irons. Thanks to a 26.5 percent increase in Irons sales for the month of September, driven by new product availability from major manufacturers, overall Golf Equipment sales grew 6.1 percent for the month. September sales were up 43.5 percent versus the 2019 comparable month. Seven out of nine categories saw improved year-over-year sales versus the same period in 2022, with only Golf Bags and Golf Footwear trailing levels from the previous year.
Nike, Hibbett launch connected loyalty membership
Two years after Nike connected its loyalty program to Dick’s Sporting Goods, the athletics retailer launched a connected rewards membership with Hibbett. Nike is leaning into its wholesale partners to grow its loyal customer base. The athletics brand started the experiment with longtime partner Dick’s Sporting Goods in 2021, and has since released its largest joint ad campaign with the retailer. More broadly, Nike in recent months has emphasized its desire to build out better experiences with some of its key wholesale partners.
Cosmetics & Pharmacy
Speculation has swirled around the subject for decades, but the buzz is rife this week, with reports suggesting that the Spanish, family-owned beauty and fashion company is preparing for a possible public listing soon. Reports indicate that the owner of brands such as Paco Rabanne and Carolina Herrera plans to launch an IPO in 2024, with an estimated valuation of 8 billion euros, market conditions permitting. Puig in 2022 sped past its 3 billion-euro sales goal and lassoed a 10 percent market share of prestige fragrances worldwide. The company registered net sales of 3.62 billion euros in the 12 months, a 40 percent rise in reported terms and a 30 percent increase on a like-for-like basis, driven by each of its product categories, which posted double-digit sales gains.
Ulta expands wellness spaces to more than 1,300 stores
Ulta Beauty this week announced the expansion of its in-store wellness spaces to more than 1,330 locations nationally. Dubbed “The Wellness Shop,” the spaces will have “a new, elevated spa-like redesign, and added educational information throughout the displays to help fuel discovery,” the retailer said by email. Ulta expanded into the wellness space with the dedicated shops in May 2021. Ulta also is expanding its assortment, with new brand introductions as well as increased offerings from existing partners in supplements, oral care and hydration, among other categories.
FounderSix Raises $12 Million in Funding
FounderSix, the influencer beauty brand incubator behind Allie Glines’ Ravie Beauty, Alex Renee’s Ary World and Lauren Perez’s Anablue, has gained a new investment. The incubator, which was founded in 2020, has raised $12 million from KD Capital. The firm has previously invested in OkCupid, ShopRunner, Spot Hero and Teleon Health, among other companies, according to its website. Industry sources estimate that combined, the existing brands will reach between $15 million and $20 million in first-year sales.
J-Beauty Retailer Yoshitsu to Open Stores in Canada
Yoshitsu has announced that it is set to launch direct-sale stores in Canada. The shops will be designed to cater to the local demand for J-beauty. The move is expected to streamline the Japanese wholesaler’s operational processes, improve its response time to customer preferences and enhance brand awareness in the Canadian market.
Discounters & Department Stores
Retail inventories are under control ahead of holidays: NRF CEO
Retailers have largely gotten their inventory under control ahead of the holiday shopping season, National Retail Federation CEO Matthew Shay told the press on Monday. He said inventory-to-sales ratios have normalized to pre-pandemic levels as evidence of the industry’s position. Inventories did not come up as a priority in recent conversations with CEOs, he added — a stark contrast to the first few quarters of 2022. “The industry is in a better place and will be well positioned for what happens after the holiday season as we get into the spring selling season,” Shay said during the Port of Los Angeles’ monthly media briefing.
Neiman Marcus preps for the holidays with Christmas Book, Fantasy Gifts
Continuing its pursuit of high-end customers, Neiman Marcus debuted the 97th edition of its Christmas Book, the retailer announced Wednesday. The book contains gifts ranging from handbags and fine jewelry to men’s suits, women’s shoes and ready-to-wear fashions, as well as experiential “Fantasy Gifts.” The 64th annual collection of Fantasy Gifts includes the chance to have yourself turned into an animated character by Walt Disney Animation Studios, attend the Olympic Games Paris in 2024 with Team USA and Ralph Lauren representatives and take a walk-on role in an American Ballet Theater performance, among other things. Neiman Marcus also launched its “Neiman’s Express”-themed holiday campaign featuring model Jessica Stam. The department store will host White Elephant parties at select stores and breakfast with Santa events, alongside offerings like gift personalization and access to its personal shoppers.
Inside J.C. Penney’s holiday marketing strategy
The J.C. Penney Company on Wednesday revealed a glimpse into its holiday marketing playbook, including a deluge of savings opportunities and giveaways, video ads, a social media “Penney Prepper” challenge, paid creator partnerships and more. The retailer unpacked its Q4 strategy at a virtual briefing hosted by CEO Marc Rosen and Chief Merchandising Officer Michelle Wlazlo. Focused on value, the seasonal push is one of the first marketing efforts in support of JCPenney following the launch of a $1 billion turnaround plan in September, which includes a brand repositioning and accompanying “Make It Count” ad campaign centered on accessibility, loyalty and promoting positive change.
Walmart, Angi partner on holiday light installation
Walmart and Angi want shoppers to leave holiday decorating to the pros. The companies are partnering on the installation and removal of holiday lights, according to a Thursday press release. Walmart shoppers can access the service through QR codes in stores, on packages of lights or through the retailer’s website. The code will take customers to a landing page where they will have the chance to purchase installation from a professional from Angi. Roof light installation starts at $149 for 150 feet, while a bundled special of $229 covers both installation and removal. Other services include artificial Christmas tree assembly and decor setup and removal. The home services offered via Walmart can help customers make the most of their time during the season, according to Marlena Bond, vice president of Walmart’s seasonal merchandise.
Emerging Consumer Companies
PopUp Bagels raises $8 million to fuel growth and expansion
PopUp Bagels, a viral bagel startup, has closed an $8 million Series A funding round to support its future growth and expand its executive team. The round was led by Stripes, a growth equity firm based in NYC, with participation from previous investors including Tastemaker Capital and Habitat Partners. PopUp Bagels was launched in 2020 by Adam Goldberg in Westport, Conn, and quickly gained popularity for its crispy outside, chewy inside, and perfect amount of seeds. The company won the “Best Bagel” award at the Brooklyn Bagelfest for two consecutive years and raised significant capital last year to expand its retail footprint. PopUp Bagels gained attention from influencers and social media platforms like TikTok, resulting in long lines of customers eager to try their bagels. The brand also boasts a list of celebrity investors, including Paul Rudd and J.J. Watt. PopUp Bagels offers a unique experience, encouraging customers to buy multiple bagels and dip them into artisan schmears with flavors and brand collaborations changing weekly. The company aims to finance its operations to allow more people to experience the “PopUp Bagel way.”
Sky Labs secures $15 million for ring-type blood pressure monitor
South Korean health tech startup Sky Labs has raised $15.3 million in a Series C funding round, led by the Korea Development Bank. This brings the company’s total investment to $40.5 million. Sky Labs is known for its AI-powered ring-type blood pressure monitor called CART BP, which tracks PPG signals on the wearer’s finger to measure blood pressure. The device supports personalized treatment and management of hypertension. The company plans to use the funding to conduct clinical research, obtain market licenses, and establish marketing and distribution partnerships. Despite a dry spell in health technology investment, Sky Labs was able to secure significant funding due to the market’s anticipation of its cuffless continuous BP monitoring device, which is unique in the medical device market. The company’s wearable device for 24/7 continuous BP monitoring is a capability not seen in existing BP monitors.
Hello Bello, celebrity-backed baby brand, files for bankruptcy amid rising costs
Hello Bello, a baby care product brand founded by actors Kristen Bell and Dax Shepard, has filed for bankruptcy. The company cited rising costs and inflation as the reasons for the filing. Hello Bello aims to provide high-quality and environmentally friendly products at affordable prices. It initially sold exclusively at Walmart but later expanded to other retailers. The brand reached an agreement to be acquired by Hildred Capital Management, a private equity firm focused on the healthcare industry. Filing for bankruptcy will protect Hello Bello from creditors while it works out a repayment plan. The company owes $22 million to a tissue products supplier. Hello Bello’s bankruptcy filing will allow it to continue paying employee wages and benefits. The sale of the brand is expected to close in the next few months.
Food & Beverage
Keurig Dr Pepper enters sports hydration with Electrolit partnership
Keurig Dr Pepper will sell and distribute Electrolit, a premium hydration beverage, as part of a long-term sales and distribution agreement with Grupo PiSA. The partnership expands Keurig Dr Pepper’s portfolio into sports hydration, which it called “a key white space category for the company.” The businesses said Electrolit ”has a long runway for growth among a broad multi-cultural consumer base” that it can tap into using Keurig Dr Pepper’s distribution network. Electrolit already has a strong following among the Hispanic demographic and in certain regions. While Keurig Dr Pepper is best known for the coffee and soda brands within its corporate name, it has been rapidly growing its reach into trendier categories, largely by entering into distribution deals like with Electrolit, or by taking a minority stake in a brand.
Coca-Cola ‘very focused on’ impact of weight loss drugs
The Coca-Cola Co. is among food and beverage companies bracing for the potential impact of popular diabetes and weight loss drugs on the industry. James Robert B. Quincey, chairman and chief executive officer, said “it is an area that we are very focused on.” Marketed under brands including Ozempic, Wegovy, Mounjaro and others, such medications may lead to a significant reduction in calorie consumption among the growing population of users in the United States. Mr. Quincey pointed to the Atlanta-based company’s “total beverage strategy,” noting, “we are well positioned to provide choice and to provide options for people’s respective motivations and needs. “Sixty-eight percent of our products have low or no calories today, and we continue to invest in innovation and choice…,” Mr. Quincey said during an Oct. 24 call with securities analysts to discuss third-quarter financial results.
ADM rethinks scope of $300M plant-based investment
Archer Daniels Midland is changing course on a $300 million plan to expand production of alternative proteins as consumer appetite for plant-based foods wanes, CEO Juan Luciano said. ADM has “re-scoped” its investment project “to better match the expected lower growth demand environment,” Luciano said. The company has seen market destocking as consumer demand softens, and expects headwinds to persist into next year.
Grocery & Restaurants
Mrs. Fields, TCBY parent company acquired by Pearl Street Equity
Lake City-based Famous Brands Franchising, the parent company of Mrs. Fields and TCBY, has been acquired by Pearl Street Equity. Terms of the deal were not disclosed. The acquisition comes on the heels of Joe Lewis’ appointment as president and chief operating officer of Famous Brands Franchising. Lewis has over 25 years of experience in the retail and food and beverage sectors, including with brands like Smoothie King, Twist Brands, and Smalls Sliders. In his new role, he will lead the company’s franchising growth with a goal of expanding its global reach. Famous Brands’ current footprint includes more than 350 franchised locations in the U.S., Canada, Australia, Hong Kong, Morocco, Panama, Taiwan, and the Bahamas.
Chipotle Mexican Grill Easily Tops Earnings Estimates
Chipotle Mexican Grill on Thursday reported quarterly earnings that beat expectations, helped by higher menu prices for its burritos and bowls. Beef and queso costs rose this quarter, largely offsetting last year’s menu price hikes. Earlier this month, the restaurant chain raised menu prices for the first time in more than a year, citing inflation. The company had paused its aggressive price hikes earlier this year as consumers pulled back their spending. Still, executives have maintained that Chipotle has pricing power and more room to run. Chipotle’s net sales climbed 11.3% to $2.47 billion. Same-store sales rose 5%, beating StreetAccount estimates of 4.6%. The company credited higher transactions and menu prices for the quarter’s same-store sales growth. Chipotle prices were up 2.8% compared with the year-ago period, due to last year’s price hikes. Looking to 2024, the company expects that it will open 285 to 315 new restaurants.
Home & Road
HomeGoods abruptly turns its back on e-commerce
Just two years after launching its online store, HomeGoods is dropping out of the e-commerce rat race. In an email to customers on Oct. 18, HomeGoods announced that the last day to shop the site would be Saturday, Oct. 21, according to reports from Parade and other outlets. In the email, HomeGoods said it will soon announce a host of new store openings. That news could arrive when parent company TJX Cos. releases its Q3 results, which is expected to take place in mid-November. At the end of the second quarter, HomeGoods had 907 stores. TJX Cos. also operates online sites for TJMaxx (launched September 2013) and Marshalls (launched September 2019) off-price nameplates. Company executives have repeatedly noted that e-commerce accounts for a small percentage of total sales.
Ethan Allen overcomes revenue hit to deliver strong gross margins
Top 100 retailer Ethan Allen saw orders drop off by double digits during its fiscal first quarter but managed to slice expenses by more than $11 million. For the first quarter ended Sept. 30, consolidated net sales fell 23.6% to $163.9 million. Net income was halved, coming in at $14.94 million, or 62 cents adjusted per diluted share, compared with $29.88, or $1.11 adjusted per diluted share, in the year-ago quarter. Sales were negatively impacted by $15 million due heavy flooding at Ethan Allen’s Vermont facility in September, which resulted in a pre-tax charge of $2.1 million. Retail net sales fell 23.6% to $163.9 million while wholesale net sales declined 13.3% to $99.4 million. On the expense side, Ethan Allen managed to slash sales, general and administrative expenses down to $80.298 million compared with$91.962 million in last year’s first quarter. The company also reduced inventory levels, which ended the quarter at $149.6 million, 10.8% lower than a year ago.
Newell Brands Q3 Sales Slip but Earnings Still Beat Street
Newell Brands posted a big third-quarter earnings beat versus Wall Street estimates but fell short of analyst forecasts on sales, including sales declines in its home product businesses. The company reported a net loss of $218 million, or 53 cents per diluted loss per share, compared with net income of $19 million, or five cents per diluted share, in the prior year period. Adjusted for one-time events, net income was $163 million, or 39 cents per diluted share, versus $208 million, or 50 cents per diluted share, in the prior year period, the company noted.
Jewelry & Luxury
De Beers Production Declines 23 Percent in Q3
De Beers Group recorded a 23 percent drop in production in the third quarter, though the company said its production target for the full year remains unchanged. The company mined 7.4 million carats of diamonds in Q3, a 23 percent year-over-year decrease. The biggest decline came from the Venetia mine in South Africa, where production fell 78 percent year-over-year to 365,000 carats as the mine continues its transition from an open-pit to an underground operation. Venetia will continue to process lower-grade surface stockpiles over the next few years as it waits for underground operations to start up, De Beers said. Production also was down in Botswana, De Beers’ top producing country, due to planned maintenance.
Kering’s Q3 Sales Slide Amid Luxury Sales Slowdown
The recent slowdown in spending on luxury goods hit Kering in the third quarter, though the three jewelry brands owned by the luxury conglomerate seemed to hold their own. On Tuesday, the company reported a 13 percent decline in sales (9 percent on a comparable basis) to €4.46 billion ($4.72 billion). Wholesale sales (down 20 percent on a comp basis) fell more sharply than revenue from the stores Kering operates directly (down 6 percent). The company said it saw a decline in foot traffic in its stores in Q3. It also has been tightening control over its wholesale distribution. Year-to-date, Kering’s sales have totaled €14.6 billion ($15.43 billion), down from €15.07 billion ($15.94 billion) at this time last year, a 3 percent decline.
Tougher Times for Luxury Brands Separate Winners From Losers
The luxury-goods industry’s first slowdown since the pandemic is separating the winners from the losers. Kering SA warned that its flagship Gucci brand will see a drop in profitability this year, with no sign of a rebound in 2024. The Italian label is getting hit harder than rivals as internal turmoil worsens the effect of weakening global demand. The performance of the group controlled by the Pinault family contrasts with that of French rival Hermes International, which has more rich customers lining up for its $10,000 handbags than it can accommodate, insulating it from the downturn. The first signs of a slowdown appeared about a year ago, when shoppers in the US curbed their spending on entry-level treats. Then in China, an uncertain macroeconomic backdrop and high youth unemployment dashed hopes consumers would splurge on bags and shoes after the strict lockdowns of last year. They have spent, but not as much as hoped.
Office & Leisure
Barbie stokes Mattel’s Q3 sales, leaving Hasbro in the dust as holidays loom
Hasbro’s Q3 revenue fell 10% to $1.5 billion, as 40% growth in Wizards of the Coast and its digital gaming segment failed to offset an 18% drop in consumer products and a 42% plunge in entertainment, mostly due to the writer and actor strikes, the toy maker said Wednesday. The company swung to a $171.1 million loss, from $129.2 million in net earnings a year ago. The performance was in sharp contrast to rival Mattel, where Barbie helped push Q3 net sales up 9% to $1.9 billion. But Mattel’s net income dropped by half year over year to $146.3 million. While the company raised full-year guidance for margins and other variables, its sales expectation remains the same, implying uncertainty at the holidays, according to UBS analysts led by Arpine Kocharyan. At 64 years old, Barbie may be nearing retirement age, but instead the doll and her IP are in the midst of a blockbuster revival. Mattel said that gross billings for dolls rose 27% to $884 million, driven by growth in Barbie, Disney Princess and Disney Frozen, and Monster High. But Mattel is hardly focused only on dolls, or even toys generally. CEO Ynon Kreiz told analysts that the success of the Barbie movie “speaks to the potential of Mattel films and the significant progress of our strategy to capture the full value of our IP.”
After a beloved pet-costume parade was canceled, dog food brand Get Joy helped resurrect it
It’s never easy to determine the value a brand gets from sponsoring an event. Who’s to say for certain that a particular purchase was driven by your brand’s logo being on a lanyard or banner at an outdoor concert or half-marathon? But it would be hard to overstate the value that Get Joy, a Connecticut dog wellness company, is getting from sponsoring this year’s Tompkins Square Halloween Dog Parade, a pet costume contest that draws national and international press attention and took place last weekend. The event, after all, nearly didn’t happen. It had been canceled on September 27 by its organizers, who explained in an Instagram post that “despite our best efforts…there was just no way to hold the parade this year.” In the dog house: Joseph Borduin, who has volunteered to run the event in recent years, has called himself the “lead pooper scooper” and “head of operations” for the Tompkins Square Dog Run. Borduin told Gothamist in the wake of the cancellation that, due to construction in the park, permits and insurance would cost more than $50,000 for the event. It turns out, the New York Times reported, that the mayor’s office helped get the permits down from $45,000 to $5,000, which as part of its sponsorship Get Joy agreed to pay along with other fees, including the cost for a stage, which Borduin told the Times would be $10,000
Technology & Internet
United Parcel Service (UPS) announced it will acquire reverse logistics company Happy Returns for an undisclosed amount. Happy Returns manages returns for online retailers through kiosks called Return Bars. Customers use Return Bars to send back purchases from online retailers. UPS will acquire the vendor from PayPal, which purchased it in 2021. “By combining Happy Returns’ easy digital experience and established drop-off points with UPS’s small package network and footprint of close to 5,200 The UPS Store locations, box-free, label-free returns will soon be available at more than 12,000 convenient locations in the U.S,” says UPS CEO Carol Tomes in a statement. Happy Returns says it has more than 10,000 locations, many of which are through partnerships with retail chains Ulta, Petco, and Staples. It works with 800 retailers and has grown revenue to 10 times 2020 levels, Happy Returns says. Happy Returns charges retailers a monthly service fee for handling returns and a per-item fee that varies, depending on the processing work required. Retailers with return kiosks benefit from the increased foot traffic, which can lead to browsing shoppers and potential sales.
Amazon Reports Better-Than-Expected Results, Sales Jump 13%
Amazon reported third-quarter earnings and revenue on Thursday that sailed past analysts’ estimates. Amazon said fourth-quarter sales, which include the key holiday period, will be between $160 billion and $167 billion. Analysts were expecting revenue of $166.6 billion, according to LSEG. At the mid-point of its guidance range, revenue of $163.5 billion would represent growth of 9.6% from $149.2 billion a year earlier. Revenue jumped 13% in the third quarter, a sign that the business is seeing some acceleration after a difficult 2022 that was marred by soaring inflation and rising interest rates. Amazon has been in cost-cutting mode for the past year as it became clear that it expanded too quickly during the pandemic. Sales in Amazon’s core e-commerce business continued to recover, expanding 7% year over year, after growing 4% in the previous quarter. The September quarter includes the results of this year’s Prime Day promotion, which took place in July. Amazon described it as its “biggest ever” sale. Digital advertising continues to be a bright spot for Amazon, as third-party sellers and large brands bolster their ad spending to improve visibility in an increasingly competitive marketplace. Ad revenue soared 26% from a year earlier.
Finance & Economy
U.S. GDP grew at a 4.9% annual pace in the third quarter, better than expected
The U.S. economy grew even faster than expected in the third quarter, buoyed by a strong consumer in spite of higher interest rates, ongoing inflation pressures, and a variety of other domestic and global headwinds. Gross domestic product, a measure of all goods and services produced in the U.S., rose at a seasonally adjusted 4.9% annualized pace in the July-through-September period, up from an unrevised 2.1% pace in the second quarter, the Commerce Department reported. Economists surveyed by Dow Jones had been looking for a 4.7% acceleration in GDP, which also is adjusted for inflation. The sharp increase came due to contributions from consumer spending, increased inventories, exports, residential investment and government spending.
Mortgage rates close in on 8% with no relief in sight
Mortgage rates increased again last week, closing in on 8% and convincing many homebuyers to give up on the market for now. The average 30-year mortgage rate jumped to 7.79% from 7.63% the previous week, according to Freddie Mac. The average borrowing rate has remained above 7% for 11 straight weeks and has risen eight weeks in a row. To mitigate the sting of higher rates, homebuyers still in the market are gravitating toward incentives from homebuilders or are taking out adjustable-rate mortgages, or ARMs. But those alternatives may be tested as rates are expected to climb higher.
