What a difference a year makes. At this time last year, the plant-based meat (PBM) category was riding high. Impossible Foods was about to announce a new $500 million financing round amid record revenue growth, and public company bellwether Beyond Meat was trading at about $100 per share, or about 14x revenue.
Today, the PBM category looks dramatically different. Beyond Meat is struggling, with its stock dropping to $14 per share recently, down roughly 85% from a year ago. Disappointing Q1 and Q2 earnings results, revised downward guidance for the upcoming Q3 earnings release, multiple rounds of layoffs, and the much-publicized September exit of Beyond Meat’s COO have driven the steep decline in shareholder value.
But Beyond Meat is not the only PBM company experiencing challenges. Impossible Foods has announced layoffs (totaling 10% of its workforce) and a net loss of nearly $100 million. Citing stalled sales driven by low repeat purchases, Maple Leaf Foods, maker of the Lightlife brand, announced it would not make additional investments in the PBM category. JBS Foods, one of the world’s largest meat producers, shuttered its U.S. PBM operations earlier this year.
What is the source of all this bad news? Consumer demand is stalling. Earlier this year, Maple Leaf Foods COO Curtis Eugene stated that while trial rates of PBM were “super high” in 2020 and 2021, penetrating an estimated 60% of US households, “consumer needs simply were not met,” resulting in low repeat purchase rates and stagnant category growth in 2022.
The high price point for many PBM products is an issue for consumers. With food prices steadily rising and a recession looming, price is an increasingly important consideration. And PBM is expensive. On a per pound basis, a consumer will pay anywhere from a 40%-60% premium for a Beyond or Impossible product relative to ground beef.
Another potentially big long-term issue for the PBM market relates to consumer health concerns. As Impossible and Beyond launched, consumers believed these products were a healthier alternative to ground beef. Upon further review, consumers realized that these products were highly-processed and full of sodium, oils and artificial ingredients. Ironically, the ingredients panel on ground beef can look a lot “cleaner” than those of Impossible or Beyond.
A recent survey of nutritionists from the Center for Consumer Freedom found that 75% do not recommend consuming PBM, with 40% saying that consuming red meat in moderation is preferable to PBM alternatives. Lentils, beans and grains are clean, superior sources of protein to PBM.
Ultimately, the market for PBM may be significantly smaller than initially projected. Future of Fresh, a recent study from Deloitte, stated, “The addressable market may be more limited than many thought,” with sales in 2022 flat after several years of double-digit growth. If the PBM market eventually becomes a niche market comprising 2-3% of total meat category sales, there may be more hard times ahead for Impossible and Beyond. Keep an eye out for Beyond’s Q3 earnings report, which is due to be released on November 9th.
Adidas on Tuesday ended its partnership with Ye, formerly known as Kanye West, after the musician made a series of offensive and antisemitic comments. Hours later, Gap and then Foot Locker said they would immediately remove Yeezy products from its stores.
“Foot Locker, Inc. does not tolerate any form of antisemitism, or hateful and discriminatory behavior. While we remain a partner with adidas and carry a wide assortment of their collections – we will not be supporting any future Yeezy product drops,” a Foot Locker spokesperson said. Gap also shut down YeezyGap.com, which now redirects to the Gap website.
Tesla CEO Elon Musk is now in charge of Twitter. Twitter CEO Parag Agrawal and finance chief Ned Segal have left the company’s San Francisco headquarters and will not be returning, sources said. Vijaya Gadde, the head of legal policy, trust and safety, was also fired, The Washington Post reported. Musk had until Friday to complete his $44 billion acquisition of Twitter or face a court battle with the company. The billionaire tweeted “the bird is freed” in an apparent reference to the takeover being completed. In April, Twitter accepted Musk’s proposal to buy the social media service and take it private. However, Musk soon began sowing doubt about his intentions to follow through with the agreement, alleging the company failed to adequately disclose the number of spam and fake accounts on the platform. When Musk said he was terminating the deal, Twitter sued the billionaire, alleging he “refuses to honor his obligations to Twitter and its stockholders because the deal he signed no longer serves his personal interests.” In the ensuing months, Twitter and Musk would trade barbs via their attorneys as the two parties were slated to head to Delaware’s Court of Chancery to determine the fate of the company and whether it would end up in the Tesla chief’s hands. Earlier in October, Musk had a change of heart and said he wanted to pursue his acquisition of Twitter at the original price of $54.20 a share if the social messaging service dropped its litigation.
Apparel & Footwear
VF Corp. has downgraded its earnings outlook for fiscal year 2023 once again. The maker of brands such as Vans, The North Face and Timberland announced the downgrade as it reported its results for the second quarter. Revenues were $3.1 billion, marking a 4% decline. Adjusted earnings per share were $0.73, down 34% and in line with analysts’ expectations, according to Yahoo. VF said that the downgraded outlook reflects foreign exchange headwinds, higher-than-usual inventory levels and more promotional activity in the marketplace. VF said its inventories were up 88% compared with Q2 last year, partially due to in-transit inventory worth about $510 million that VF decided to take ownership of from the point of shipment rather than destination. VF Corp. chairman, president and CEO Steve Rendle said in statement that despite the “challenging environment,” the company is “protecting profitability by tightly controlling all non-strategic spend.“ In September, VF outlined a long-term plan to grow its business by 2027, which hinges on innovating within an existing brand portfolio, building and developing new brands, leveraging a DTC focused supply chain, and becoming a more agile organization.
Skechers delivered another quarter of record sales on Wednesday, reporting double-digit growth in its wholesale and direct-to-consumer segments. In the third quarter of 2022, the Los Angeles-based footwear company reported total sales of $1.88 billion, a 20.5% increase over the same period last year. In a statement on Tuesday, Skechers noted that Q3 sales gains are the result of a 14.9% increase domestically and a 24.6% increase internationally, primarily driven by strength in its wholesale sales. All segments experienced growth, with wholesale increasing 26.2% to $247.1 million and direct-to-consumer increasing 11.9% to $72.8 million. “All regions grew, led by EMEA with improvements of 48% as we realized growth across our largest European subsidiaries—Germany, Spain, and the United Kingdom, as well as strong distributor growth,” Skechers COO David Weinberg said in a statement. Weinberg added that the Americas achieved 16% growth, primarily due to robust demand in the United States and Canada, and the APAC region grew 9% despite the COVID-related challenges in China and Japan during the quarter. Along with this sales growth though, Skechers reported its net earnings for Q3 were $85.9 million, a decrease of 16.7% over the prior year. Similarly, gross margins in the quarter took a hit of 280 basis points to 47.1%. The company said this was primarily the result of increased freight and logistics costs, and a higher proportion of distributor sales, partially offset by average selling price increases.
The Children’s Place named Sheamus Toal as its new chief financial officer, effective Nov. 7, according to a press release. Toal is the second new CFO in less than a year and a half at the company. Toal most recently served as CFO of online mattress retailer Saatva, and before that spent 16 years at apparel retailer New York & Co and its parent, RTW Retailwinds, which liquidated in 2020. He will report to CEO Jane Elfers. Toal replaces Robert Helm, who left in October after starting in April 2021. The Children’s Place said in a September filing that Helm’s employment was terminated though not over any disagreements with the company or issues related to disclosures or accounting matters. The Children’s Place has had a bumpy path through the pandemic era. The retailer’s new CFO is no stranger to tough times. Toal led RTW Retailwinds through its Chapter 11 in 2020 and the sale of the company’s intellectual property. He took over as chief executive after a massive leadership exodus in the months before bankruptcy. Prior to taking over as CEO, Toal also served as CFO, COO, and chief accounting officer and treasurer at the company.
Athletic & Sporting Goods
FeraDyne Outdoors acquired Outdoor Product Innovations, Inc. (O.P.I.), the parent company to the Rhino Blinds, Rhino Tree Stands, Capsule Game Feeders, Wicked Tree Gear, LidCAM, and LegCuff brands. O.P.I.’s suite of brands adds to FeraDyne’s growing position in the general hunting market, including tree stands, hunting blinds, hand tools, feeders, and accessories. FeraDyne specializes in archery, hunting and outdoor products. Its legacy brands include Axe Crossbows, Rage broadheads, Muzzy broadheads, Muzzy Bowfishing, Carbon Express arrows and accessories.
Pure Hockey, the largest hockey retailer in the U.S., announced today that it has agreed to acquire The Penalty Box, a full-service hockey retailer located in Las Vegas, Nevada. Through the acquisition, Pure Hockey expands its retail presence to Nevada, one of the fastest-growing hockey markets in the United States. Pure Hockey now operates over 65 retail locations across the United States. This is Pure Hockey’s sixth store opening of 2022, following the expansion in Florida, Illinois, Pennsylvania, and Texas.
Brooks, the running shoe unit of billionaire Warren Buffett’s Berkshire Hathaway Inc., has settled a lawsuit accusing the retailer Brooks Brothers of diluting its reputation and confusing customers by marketing athletic wear with the “Brooks” name, but without “Brothers.” Brooks originally sued Brooks Brothers in February 2020, accusing it of undermining the companies’ 1980 “coexistence” trademark agreement by seeking federal approval to use “Brooks” on clothing and sporting goods, as well as on retail stores. It objected last year to Brooks Brothers’ launch of “faux” athletic wear, saying it threatened to “demoralize” consumers who associate the Brooks name with high-quality athletic wear, and to Brooks Brothers’ “Back to Brooks” marketing campaign.
Cosmetics & Pharmacy
Stride Consumer Partners, whose partners were early investors in Tatcha, Skinfix, First Aid Beauty and Drybar, among others, has taken a minority stake in the business founded by professional artist Patrick Ta. Terms of the deal were not disclosed, though industry sources estimate Patrick Ta Beauty’s sales are expected to reach $30 million in 2022. Ta founded the brand in 2019 alongside Rima and Avo Minasyan, and it is exclusively sold at Sephora and via its own website. “I wanted to create a brand that allowed women and people to feel confident within their own skin,” Ta said. “Everything is catered to people to amplify their natural beauty.” That ethos filled a white space for Stride Consumer Partners, which said it was attracted to the brand’s versatile proposition — and its founders’ tenacity. Makeup is still the largest category in prestige beauty, with $2 billion in sales in the last quarter in the U.S.. according to data from the NPD Group.
Beauty-tech start-up Social Bella, which owns omnichannel beauty chain Sociolla, has closed $60 million in funding led by existing investors Temasek and L Catterton. Founded in 2015, Social Bella has evolved from an e-commerce platform to a physical and digital ecosystem. To date, it has 48 physical stores across Indonesia and 13 locations in Vietnam. In addition to the online and offline platform Sociolla, Social Bella offers an end-to-end distributor service for beauty and personal care brands. It also operates the consumer review platform SOCO as well as beauty and lifestyle online media Beauty Journal, which also provides an online-to-offline marketing service. The company’s latest venture is Lilla by Sociolla, a beauty and personal care e-commerce service designed for “young and sophisticated mothers.” The funding follows robust and sustainable growth, with store count up 20-fold in just two years, in part due to cross-border expansion. The round was well below the $150 million the business initially targeted to raise. Social Bella has raised more than $226 million since 2018 at a $564 million valuation. Social Bella secured $58 million in a Series E funding round in July 2020 from existing investors Temasek, Pavilion Capital, and Jungle Ventures.
Scentbird has made its first acquisition. The subscription-based fragrance company has snapped up Drift, a company founded in 2016 by Ryan Baylis and Christian Thrapp that seeks to elevate the car air freshener experience with clean ingredients, thoughtfully crafted scents and minimalist, functional design. Also based on a subscription model, Drift boasts more than 60,000 subscribers who, for $8 a month, are shipped the scent of the month (recent ones being pine, cabana, amber and teak) in the form of their choosing; either a metal, wood or stone freshener, all of which come with attachable metal clips. “I hate to use the phrase ‘makes sense,’ because it’s such a cliché for both brands, but it just does,” said Baylis, who is also Drift’s chief executive officer, of the deal. “We do the same thing basically, but in a different vertical.” While Scentbird and Drift will maintain their separate subscription models, a bundle subscription including offerings from both companies is in the pipeline, slated to launch in 2023.
On the heels of announcing its Chapter 11 filing, Revlon also shared that the New York Stock Exchange Regulatory Oversight Committee decided to delist its common stock. In addition, Revlon shared that it expects the New York Stock Exchange staff to make an application for the Securities and Exchange Commission to delist its common stock in the near future. Since then, NYSE has suspended trading in Revlon’s common stock and it is expected to trade on the OTC marketplace/pink sheets following the delisting.
Discounters & Department Stores
Just in time for the holiday season, Walmart on Thursday announced new online shopping enhancements that are focused on personalization and savings, according to details shared with Retail Dive. Among the updates, Walmart will now have a virtual queue allowing customers to continue browsing while they wait in line for high-demand products. The retailer is also expanding its augmented reality “View in Your Home” feature to include over 200 TVs on its iOS app, opening its outfit styling function to men’s, baby and kids’ apparel for select brands, and populating searches with the most viewed or purchased products. Walmart has also added a green tag to mark products on sale throughout the site as well as a “buy now” button to most products for a faster purchase.
Target and Apple are deepening their relationship with added shop-in-shops and tech perks tied to the retailer’s loyalty program. The number of Apple shop-in-shops inside Target stores has tripled this year, to over 150 locations, the retailer said in a press release. The two companies started with just 17 locations in early 2021. The shops include Apple-trained Target tech consultants and have twice the space for Apple products, according to Target. Jill Sando, Target’s chief merchandising officer, framed the Apple shops as one of a handful of “branded and immersive retail experiences” the retailer has been building out in recent years along with its Ulta Beauty, Disney and Levi’s collaborations.
Inflation woes are not affecting department stores equally. Placer.ai analysis found that, based on the four months studied, visits to Dillard’s declined the most between June and September year-over-year compared to Kohl’s, Macy’s and Belk. Dillard’s saw the most significant drop in June at -20.9%, followed by July (-19.9%), August (-14.5%) and September (-12.4%). In its analysis of luxury department stores Neiman Marcus, Bloomingdale’s, Nordstrom and Saks Fifth Avenue, Placer.ai found that Nordstrom saw its visits fluctuate between June and September. Nordstrom saw the greatest year-over-year decline in August at -9.7%, followed by -3.9% in July, -2.5% in September and -2.1% in June. Among the luxury department stores, Saks Fifth Avenue was the only store that saw year-over-year growth in visits between June and September. While its visits declined in June (-2%), July (-3.7%), and September (-4.5%), the retailer’s in-store visits increased by 0.6% in August, according to Placer.ai.
Adding another C-suite executive to its ranks, Belk hired MaryAnne Morin to become its new president and chief merchandising officer, the retailer announced Tuesday. Upon starting her new position on Wednesday, Morin will manage the company’s merchandising, planning and private brand teams, according to the press release. Prior to joining Belk, Morin was previously the president of Stein Mart and the Republic Clothing Group. She also worked at Hudson Bay Company, Lord & Taylor, Macy’s and Echo Design Group.
Emerging Consumer Companies
Scout, a maker of high quality canned seafoods, has raised $4 million in a seed funding round led by Semillero Partners, an investment firm focused on growth-stage companies in the food and beverage industry. Founded in 2020, Scout’s product line consists of chef-crafted recipes intended to expand the canned seafood market beyond tuna, including offerings like Atlantic Canadian lobster, rainbow trout with dill and smoked wild pink salmon. Scout will use funding from the seed round to accelerate its omni-channel brand strategy and operational expansion. The company’s products are currently available in more than 1,500 major and retail specialty stores across the United States and Canada, with plans to launch in major nationwide and regional retailers throughout 2023.
Heura, an alternative protein startup, has raised €20 million from Unovis Capital and individuals like Ricky Rubio and David Broncano. The company has reported tremendous growth as it has reached €14.7 million in revenue, up from €7.6 million during the same period last year. This growth is no surprise as the company has secured a number of major retailers to stock its plant-based foodstuffs (including Ocado in the U.K., Migros in Switzerland, Carrefour in Italy, E.Leclerc, Intermarché and Super U in France). Heura is already planning a larger Series B round next year and is treating this round as a pre-Series B. The recent €20 million should act as a bridge and as a sales pitch ahead of what it expects to be one of 2023’s largest B rounds in Europe for alternative proteins.
Food & Beverage
Cold-pressed juice maker Suja has acquired California-based Vive Organic, producers of a range of 2 oz juice shots, for an undisclosed fee. The deal is Suja’s first acquisition since its sale to private equity firm Paine Schwartz Partners in July 2021. Founded in 2015, Vive Organic emerged as a pioneering brand in the refrigerated premium juice shot category, offering a range of immunity focused, physician-formulated blends sold at retailers like Whole Foods, CVS, Target and other major national chains. The company secured a $13 million series B funding round led by Monogram Capital in July 2020. Having emerged a few years earlier in 2012, California-based Suja helped seed the retail market for premium cold-pressed juices, operating out of its own 200,000 sq. ft. production and toll processing facility in Miramar, California, and eventually expanded to a wide variety of juice-based drinks, including kombucha, enhanced water, sparkling juice and shots with functional ingredients.
Mondelez International plans to invest another $600 million, which would push the total investment to $1 billion, into its Cocoa Life program by 2030. The company aims to work with about 300,000 farmers in the program by 2030, which would be up from the current 200,000 farmers. Chicago- based Mondelez launched Cocoa Life in 2012 to secure supply of more sustainable cocoa and establish an integrated approach to address systemic issues in the cocoa industry, including farm productivity, farmer livelihoods, community development, child labor and deforestation. Since then, farmer net incomes have increased by about 15% in Ghana and 33% in the Ivory Coast. Child labor monitoring and remediation systems cover 61% of Cocoa Life communities in West Africa. The goal is to reach 100% by 2025.
Grupo Bimbo SAB de CV has acquired St. Pierre Groupe, a United Kingdom-based baker of premium brioche-style products with a growing presence in the United States. St. Pierre’s products include brioche buns, brioche bagels and brioche sub rolls. Specialty products include chocolate chip brioche loaf, croissants, chocolate and hazelnut rolled crepe, brioche waffles and brioche cinnamon twist. The company said its business was inspired by the Parisian cafe culture with “a passion for quality and a love of good brioche, pastries, crepes and waffles.” Terms of the transaction were not disclosed. Based in Manchester, England, St. Pierre Groupe sells its products under the St. Pierre, Baker Street and Paul Hollywood brands.
Grocery & Restaurants
Yum Brands has sold its KFC restaurants in Russia to local franchisee Smart Service Ltd., which is responsible for rebranding the approximately 1,000 KFC restaurants into non-Yum entities. Once the transaction is finalized, it will mark the global restaurant company’s full exit from the country. Yum’s transfer of Pizza Hut ownership was completed in July, also to a local operator, Noi-M, who has since rebranded the locations to Pizza H, according to TAdviser. There are no Taco Bell or Habit Burger Grill restaurants in Russia. Yum’s efforts to disentangle its business from Russia began about two weeks after the country’s late-February invasion of Ukraine. On March 7, Yum announced it was pausing investment and development in Russia. A day later, Yum went a step further and suspended KFC company-owned restaurants and announced a finalized agreement to suspend all Pizza Hut operations in the country. Prior to these announcements, Yum’s Russia presence included approximately 1,000 KFC restaurants and 50 Pizza Hut locations, nearly all of which were operated by licensees or franchisees. Notably, Russia had been a unit growth target for KFC International and the brand opened nearly 430 net new units during Q2 2021 with “significant builds” in Russia, along with China, India, Latin America and Thailand, CFO Chris Turner said during that earnings call.
McDonald’s reported its third quarter earnings Thursday morning, including a 6.1% increase in same-store sales for its U.S. system. This marks the company’s ninth consecutive quarter of comp sales growth in the U.S., and the 22nd out of the past 23 quarters. Like its industry peers, much of that lift is coming from higher menu prices. McDonald’s prices are about 10% higher than they were a year ago, for context. Unlike many of its industry peers, however, McDonald’s also generated positive traffic counts in Q3, despite those higher costs. During the company’s earnings call, CEO Chris Kempczinski credited the fledgling MyMcDonald’s loyalty program as a “significant growth driver,” as well as the chain’s marketing presence. There are now 25 million active members of the loyalty program, launched just last year in the U.S., which is exceeding expectations, according to Kempczinski. Further, delivery performed well for McDonald’s on the quarter. Kempczinski said Q3 was one of the highest delivery quarters ever in the U.S., which is a bit of a surprise given the return to dine-in business and the added fees and costs associated with delivery. McDonald’s is currently integrating a new feature where customers can earn loyalty points or pay for delivery orders through the app.
Home & Road
After four months of executive search, Bed Bath & Beyond found its new leader close to home. The company has announced that board member and interim CEO Sue Gove will serve as president and CEO. She succeeds Mark Tritton, who left the company in June. She will continue to serve on the board of directors. “During her tenure as interim CEO, Sue took consequential actions to increase liquidity and establish the groundwork to improve customer loyalty, traffic, and market share,” said Harriet Edelman, independent chair of the Bed Bath & Beyond Inc. board. Edelman cited Gove’s focus on cash and her expertise in managing working capital and liquidity as well as her leadership skills. “A strong team builder and hands-on leader, Sue has earned the trust of associates across headquarters, stores, and operations and is working alongside our two brand presidents to support our important supplier community,” she added. Gove has been an independent director of Bed Bath & Beyond Inc. since May 2019, when a major executive shake-up saw the exist of then-CEO Steve Temeras and several other senior leaders.
Attendance at the High Point Market continues bouncing back from the doldrums of the early days of the COVID pandemic. That was one of the takeaways from the High Point Market Authority’s board meeting at the String & Splinter on the final day of the fall market. The preliminary numbers as of Oct. 25 show that year-over-year, attendance at the Oct. 22-26 market was up 8.7% over fall 2021 numbers and 5.3% higher than attendance in April. International buyers, who hadn’t been able to attend recent markets, came back, to the tune of a 45.13% increase. The preliminary figures say the most recent market is the best-attended High Point show since before the pandemic, down about 15% from fall 2019, the last market before COVID. Outgoing CEO Tom Conley reported that Wayfair sent around 150 buyers to the show, and of the Market Authority’s top 200 targets, there were 164 in attendance. The vendor count continues to grow as well, as 1,689 brands were represented. New buyers were at market in force, with 1,720 first timers in attendance.
At Home has had a busy October. The value home décor retailer opened three new stores in October, for a total of 258 locations. The new stores are in St. Petersburg, Fla.; Fayetteville, Ga; and East Northport, N.Y. The company has a long-term goal of 700-plus stores nationwide. At Home stores average 100,000 sq. ft. and sell up to 45,000 items. The offerings include furniture, rugs, wall art, housewares tabletop, patio and holiday décor. At Home was acquired in July 2021 by private-equity firm Hellman & Friedman in an all-cash transaction valued at $2.8 billion.
Ethan Allen Interiors Inc. reported sales of $214.5 million for its fiscal 2023 first quarter ended Sept. 30, besting the prior year’s quarter by 17.7%. On the company’s conference call following the earnings release, company leadership outlined plans for the future. “We are just getting started. Crisis creates opportunity. We will focus on continued transitioning from a furniture store to an interior design destination,” said Farooq Kathwari, Ethan Allen’s chairman, president and CEO. The company is focused on adding technology to enable designers to work effectively with clients in design centers and remotely, repositioning of design centers in Manhattan, Chicago, San Jose, Northern Florida and New Hampshire and refreshing current locations to be more effective as design locations.
Jewelry & Luxury
Online sales, branded diamonds, and female self-purchases all scored big gains in 2021, according to De Beers’ latest Diamond Insight Report. The company’s research, based on a survey of 18,000 U.S. women, estimates U.S. natural diamond jewelry sales hit $47 billion in 2021, a 34% leap from the prior year. The report also found: Branded diamond jewelry represented two-thirds of all diamond jewelry purchases in the United States in 2021, more than double the percentage in 2015. It also comprised almost 80% of all sales by value. Younger consumers embraced branded diamonds more than their elders: 76% of diamond jewelry purchases by Gen Z consumers were branded, compared with 64% for Gen X and only 38% for baby boomers.
September was one of the best months in the history of the Swiss watch business, according to new statistics released by the Federation of the Swiss Watch Industry (FH). FH said that its recorded exports for September—2.2 billion francs—represented a 19.1% increase in exports compared with September 2021. Overall, the Swiss industry appears to be headed for a record year. Year to date, exports stand at 18.1 billion francs, 12.6% higher than the first nine months of 2021, which was itself a record year. The strong September results were propelled by healthy demand from the United States, the world’s largest market, which recorded a whopping 33.2% in imports of Swiss watches in September. There was also a nice boost in demand from Japan (up 34.2%), Singapore (up 38.9%), and the United Arab Emirates (up 36.1%). The markets in China, the United Kingdom, Italy, and Germany also saw double-digit growth.
Baoji, an industrial city in northwest China with a population of 3 million, doesn’t conform to most people’s idea of a luxury goods market. Sometime soon, however, it will be home to a store for American brand Coach. The store is one of 30 in China that Coach parent Tapestry is looking to open in the coming 12 months, the company’s Asia Pacific president Yann Bozec told Reuters. Tapestry’s planned expansion in China is unusual, both for the company’s willingness to tap lower-tier cities where most Western competitors are reluctant to tread, as well as for its timing – coming as it does amid a deep slump in Chinese luxury sales. It also follows some 60 Tapestry store openings in China over the last two years.
Office & Leisure
Mattel agreed to pay $3.5 million to the Securities and Exchange Commission to settle charges related to what the agency said were misstatements about its financials in 2017. The SEC said that Mattel understated a tax-related valuation allowance by $109 million in Q3 of 2017 and overstated its tax expense by the same amount in 2017, according to an SEC release. Mattel did not immediately reply to Retail Dive’s request for comment. The effect was to understate and then overstate the company’s net loss in Q3 and Q4, respectively, of that year. The erroneous financials were still uncorrected when the toy giant was selling new bonds to the market in 2018. Mattel later canceled the note offering after learning of the error in a whistleblower letter. The SEC found that Mattel had no internal controls in place to prevent such an issue. The error went uncorrected until November 2019 and the lack of internal control to catch the error went undisclosed, according to the agency. In its order against Mattel, the SEC found that the company violated negligence-based antifraud provisions as well as securities laws around records, reporting and internal controls. Mattel agreed to a cease-and-desist order as well as the $3.5 million penalty without admitting or denying the SEC’s charges.
Hobby Lobby founder David Green announced through an Oct. 21 op-ed at Fox News that he’s giving up his company, and that he “chose God” over wealth. Green credited his faith and higher power as the “true source” of his success, noting that “God was the true owner of my business,” and felt that passing the company down to his children and grandchildren would’ve been the wrong move. “As an owner, there are certain rights and responsibilities, including the right to sell the company and keep the profits for yourself and your family,” Green wrote. “As our company grew, that idea began to bother me more and more. Well-meaning attorneys and accountants advised me to simply pass ownership down to my children and grandchildren. It didn’t seem fair to me that I might change or even ruin the future of grandchildren who had not even been born yet. “When I realized that I was just a steward, it was easy to give away my ownership,” added, Green, whose net worth is $14 billion according to Forbes. The news comes after Patagonia founder Yvon Chouinard gave up his company a month earlier as a means to fight the climate crisis. In a separate interview with Fox & Friends, Green said 100% of the company’s voting stock has been moved to a trust. Separate details of how he’s giving away the company were not revealed.
Technology & Internet
Amazon shares plummeted 13% in extended trading on Thursday after the company issued a disappointing fourth-quarter forecast and missed on revenue estimates. Amazon said it expects to post fourth-quarter revenue between $140 billion and $148 billion, representing year-over-year growth of 2% to 8%. Analysts were expecting sales to come in at $155.15 billion, according to Refinitiv. Revenue grew 15% in the third quarter, marking a return to double-digit sales expansion, but it still fell short of Wall Street’s projections. Like the rest of Big Tech, Amazon has had a rocky year so far as it confronts macroeconomic headwinds, soaring inflation and rising interest rates. Those challenges have coincided with a slowdown in Amazon’s core retail business, as consumers returned to shopping in stores. It’s the second time this year Amazon’s results have been disappointing enough to spark a double-digit percentage selloff. In April, a weak forecast for the second quarter led to a 14% drop in the stock. Under CEO Andy Jassy, who took the helm from founder Jeff Bezos in July 2021, Amazon has responded to rising expenses by aggressively cutting costs across numerous divisions in recent months. It shed warehouse space, halted some experimental projects, shuttered its telehealth service and froze hiring for corporate roles in its retail business.
Apple reported fiscal fourth-quarter earnings on Thursday that beat Wall Street expectations on revenue and earnings per share. However, Apple came up short versus revenue expectations in core product categories including the company’s iPhone business and services. Apple did not provide official guidance for its first fiscal quarter, which ends in December and contains Apple’s biggest sales season of the year. It hasn’t provided guidance since 2020, citing uncertainty. However, Apple CFO Luca Maestri gave investors a few data points that caused the stock to dip momentarily during the company’s earnings call. He said that total year-over-year revenue would grow in December less than the 8.1% during the September quarter. He added that Mac sales would actually decline in the December quarter on an annual basis. He also said that services would grow year-over-year during the quarter, but would be hurt by the macroeconomic environment. Total sales in Apple’s fiscal 2022 were up 8% to $394.3 billion.
Finance & Economy
U.S. consumer confidence ebbed in October after two straight monthly increases amid rising concerns about inflation and a possible recession next year, but households remained keen to purchase big-ticket items like motor vehicles and appliances. The Conference Board survey also showed more consumers planned to buy a home over the next six months, despite soaring borrowing costs. The steady rise in consumers’ buying intentions could provide some stability for the economy in the near-term. But there are signs that the Federal Reserve’s aggressive interest rate hikes are starting to cool the labor market, with a decline in the share of consumers viewing jobs as “plentiful” and a rise in those saying employment was “hard to get.”
The U.S. economy posted its first period of positive growth for 2022 in the third quarter, at least temporarily easing inflation fears, the Bureau of Economic Analysis reported. GDP, a sum of all the goods and services produced from July through September, increased at a 2.6% annualized pace for the period, according to the advance estimate. That was above against the Dow Jones forecast for 2.3%. That reading follows consecutive negative quarters to start the year, meeting a commonly accepted definition of recession, though the National Bureau of Economic Research is generally considered the arbiter of downturns and expansions. The growth came in large part due to a narrowing trade deficit, which economists expected and consider to be a one-off occurrence that won’t be repeated in future quarters.