Last week I received an email from my town’s alert system: “The Health Department and City are advising any persons spending time in the bar area at [Restaurant]…between November 3 and November 12, 2020 to obtain a COVID-19 test. If dining in another part of the restaurant or outdoors, patrons are advised to consult a physician. [Restaurant] has confirmed that multiple employees have tested positive for COVID-19.”
I have not dined inside a restaurant during COVID, but I have dined outside and ordered takeout numerous times. Like many people, I want to support my local restaurants because I recognize the dire situation their operators and employees are in during this pandemic. However, as the alert from my town has shown, there appear to be real concerns associated with any onsite dining.
On Friday, famed restauranteur Danny Meyer discontinued both inside and outside dining at his Union Square Hospitality Group (USHG) restaurants. “Given the growing number of positive COVID-19 cases in New York City, and even within our own USHG community, we are making the decision that is in the best interest of the health and safety of our people,” Meyer said. Previously offering indoor service at 25% of capacity (as allowed in New York City since September 30) and outdoor service on sidewalks and annexed streets, the locations will now focus only on takeout, delivery, shipping and virtual events.
USHG restaurants are not alone in closing their doors. State and local governments across the country are backtracking on restaurant reopening guidance they gave only weeks ago. Last week, Philadelphia closed indoor dining entirely through at least the end of the year. Washington state enacted a four-week restriction limiting all restaurants to take-out and delivery only. California newly restricted restaurants in its 41 “purple tier” counties to take-out, delivery and outdoor dining only. Amid rising case counts, Chicago temporarily closed all indoor dining as of October 30, limiting restaurants to takeout and delivery, with outdoor seating open where available. This patchwork of new restrictions followed a trend in several states the prior week of limiting restaurant and bar activity after 10:00pm each night.
A Stanford University study recently published in science and technology journal Nature placed restaurants among the businesses where large groups spend long amounts of time together that account for the highest contribution of new COVID infections. By analyzing mobile phone data in 10 large cities to track users’ movement and infection rates, the study concludes there is a direct tradeoff between new infections risk and capacity limitations at indoor venues like full-service restaurants, cafes and bars. The National Restaurant Association, among others, have questioned the study’s research, models and conclusions.
This past Tuesday, in a letter to the National Governors Association, the National Restaurant Association addressed the “inconsistent, restrictive mandates” being imposed on restaurants across the country. After citing all the health and safety protocols restaurants have implemented in an effort to keep employees and patrons safe, the National Restaurant Association pushed back against what it describes as the “unfounded impression that restaurants are part of the problem”: “To date, we have not found any systemic outbreaks of COVID-19 from the hundreds of thousands of restaurants around the country that operate within the Association’s guidance and follow local public health and safety regulations.” The letter urges the National Governors Association to reconsider restrictions that the National Restaurant Association claims will likely results in “[t]ens of thousands of additional restaurant bankruptcies—and millions of lost jobs…while the science remains inconclusive on whether any health benefits will accrue.” The National Restaurant Association made clear that it believes restaurants have become scapegoats during the pandemic: “Data tying systemic community outbreaks of COVID-19 to restaurants has yet to emerge, but we are too commonly labeled as ‘super-spreaders’ and have become a convenient scapegoat for reflexive shutdowns.”
Whether or not restaurants have unfairly become scapegoats, the reality is that hard days lay ahead for the restaurant industry. Winter is coming, which means that outdoor dining will no longer be a feasible option for much of the country. We can debate whether the increasing restrictions on indoor dining are reasonable, but the fact remains restaurants raise health and safety concerns that other retail businesses – where patrons can keep masks on, social distance and limit the length of their visit – do not. More studies and data are always valuable, but public health decisions are being made today. Unfortunately, the increasing restrictions on indoor dining will leave the future of many restaurants in doubt. It might be the right move from a public health perspective, but it will have a devastating impact on many proprietors and employees. Whether Congress will step in and help is another story.
Headline of the Week
Home Depot in $8 billion deal to acquire national distributor
In a homecoming of sorts, The Home Depot will acquire a unit it sold some 13 years ago. The home improvement giant said it will acquire HD Supply Holdings, a national distributor of maintenance, repair and operations (MRO) products in the multifamily and hospitality end markets. The home improvement giant will pay $56 per share for HD Supply’s common stock for a total deal value of about $8 billion. The acquisition is expected to position Home Depot as a premier provider in the MRO marketplace. In 2007, Home Depot, which was then under the leadership of Frank Blake, sold HD Supply to a group of private equity firms. The current CEO of HD Supply is Joe DeAngelo, who served as executive VP and COO of the Home Depot from January through August of 2007. “The MRO customer is highly valued by The Home Depot, and this acquisition will position the company to accelerate sales growth by better serving both existing and new customers in a highly fragmented $55 billion marketplace,” said Craig Menear, chairman and CEO of The Home Depot. The deal, which was announced a day before the retailer is due to report fiscal third-quarter results, is expected to be completed during the retailer’s fourth quarter. It is expected to be funded through cash on hand and debt.
Apparel & Footwear
Caleres to close 133 Naturalizer stores in shift to digital
Shoe seller Caleres plans to close 133 stores under its Naturalizer women’s footwear brand by the end of fiscal 2020 and pivot to a digital model in response to consumer trends. The wind-down of the brand’s stores is part of an effort to “improve future profitability and allow greater focus on high-growth, digital channels,” the retailer said in a press release. The closures, in the U.S. and Canada, will cost Caleres between $20 million and $25 million and save the company up to $12 million annually, Caleres said. Naturalizer’s origin goes back to 1927, when Caleres (previously Brown Shoe Co.) says it “realized women deserved a shoe with a beautiful fit.” By the end of 2019, it had 139 stores under the brand, about half of them in malls. Its products, which range from $69 to $250, also have some 46 retail and wholesale partners worldwide. The shift in consumer behavior brought by 2020’s COVID-19 crisis helped spur the company to shutter roughly all the brand’s remaining footprint.
Dr. Martens Prepares for IPO in Early 2021
Dr. Martens is continuing plans for its IPO early next year, with the private equity company that owns the heritage label appointing two banks to lead the listing. Permira, which acquired the company for around £300 million GBP (approximately. $398 million USD) in 2013, has appointed Goldman Sachs and Morgan Stanley to act as global coordinators on the float. Permira purchased the company from the Griggs family, who had owned the company since it was licensed in the U.K. in the late 1950s. The last full financial year depicts a positive outlook for Dr. Martens, with underlying earnings doubling to the end of March. Like most companies, however, the coronavirus pandemic and related measures are likely to seriously affect the company’s bottom line. 2020 has also represented an important year for Dr. Martens as it celebrates the 60th anniversary of its signature 1460 silhouette. Marking the occasion, the label has recruited designers including Raf Simons, A-COLD-WALL* and Marc Jacobs for the 1460 Remastered project.
Francesca’s will close 140 stores, may file for bankruptcy
Francesca’s said Monday that it will permanently close about 140 stores by the end of January, but also warned that it may have to take more significant steps to stabilize its finances — including filing for bankruptcy. The apparel and accessories retailer is “evaluating various alternatives to improve its liquidity and financial position,” such as cutting its operating expenses, raising capital, refinancing its debt or negotiating ways to reduce lease expenses through concessions and deferrals, according to a filing with the Securities and Exchange Commission. “If the Company is unable to raise sufficient additional capital to continue to fund operations and pay its obligations, the Company will likely need to seek a restructuring under the protection of applicable bankruptcy laws,” Francesca’s said in the filing. The retailer said it expects to incur total impairment charges of about $29 million to $33 million because of the store closures. Francesca’s stock, which has a market value of $7.2 million, has fallen 85% over the past year. The shares dropped more than 35% in trading Monday to about $2.36.
Lululemon Athletica names Meghan Frank as chief financial officer
Lululemon Athletica Inc. announced the promotion of Meghan Frank to the post of chief financial officer. Lululemon says Frank will become the company’s first female CFO when she takes over the job officially on Monday. Frank joined Lululemon in 2016 as senior vice-president of financial planning and analysis. She has served as interim co-CFO since April when the company announced the departure of Patrick Guido from role. Guido left Lululemon to become chief financial officer at Asbury Automotive Group Inc., an automotive retail and service company. Before working at Lululemon, Frank held senior roles at Ross Stores and J.Crew.
Athletic & Sporting Goods
GSM Outdoors Acquired by Gridiron Capital
GSM Outdoors, a portfolio company of Sentinel Capital Partners, L.L.C., has been acquired by Gridiron Capital, LLC. Headquartered in Irving, TX, GSM has a broad portfolio of hunting and sport shooting products sold under recognized brand names. GSM’s brands include Walker’s; Muddy, Hawk, and Big Game; Stealth Cam; Birchwood Casey, SME, TekMat, GPS Bags, and CrossFire; HME, Skull Hooker, and Viking Solutions; Hunters Specialties and Western Rivers; Cyclops; Boss Buck and American Hunter; and NAP. GSM sells through a diverse mix of channels, including online retailers, sporting goods stores, mass merchants, outdoorsman retailers, farm and fleet stores, and distributors across the U.S. and Canada. Gridiron is an investment firm focused on partnering with founders, entrepreneurs and management teams, and creating value by building middle-market companies into industry-leaders in branded consumer, B2B, B2C services, and niche industrial segments in the United States and Canada.
JD Sports’ Go Outdoors acquires Naylors Equestrian
Go Outdoors has completed its acquisition of equestrian retailer Naylors Equestrian, as it seeks to offer customers “the best choice for all their equestrian needs”. As part of the deal, Naylors Equestrian will continue to operate through its existing website and three stores in Rochdale, Nantwich and Cannock. In addition, Go Outdoors is planning to launch Naylors concessions in its own stores over the coming months. Go Outdoors operates 66 stores across the UK.
OneWater Marine to Acquire Tom George Yacht Group
OneWater Marine Inc. announced that it has entered into a definitive agreement to acquire substantially all of the assets of Tom George Yacht Group, which will enhance the Company’s presence on the west coast of Florida and expand new and pre-owned boat sales, as well as yacht brokerage and service & parts. The transaction is expected to close before the end of the calendar year. TGYG is an authorized dealer for a number of prestigious brands, including Everglades, Cobalt, and EdgeWater, Invincible, Marquis, and Carver, among others. In addition, TGYG offers quality service and parts, as well as finance and insurance, to its loyal and growing customer base. TGYG generated revenues in excess of $30 million over the past twelve months from these offerings. OneWater Marine Inc. is one of the largest and fastest-growing premium recreational boat retailers in the United States. OneWater operates 61 stores throughout 10 different states, eight of which are in the top twenty states for marine retail expenditures.
Strava raises $110 million, touts growth rate of 2 million new users per month in 2020
Activity and fitness tracking platform Strava has raised $110 million in new funding, in a Series F round led by TCV and Sequoia, and including participation by Dragoneer group, Madrone Capital Partners, Jackson Square Ventures and Go4it Capital. The funding will be used to propel the development of new features, and expand the company’s reach to cover even more users. Already in 2020, Strava has seen significant growth. The company claims that it has added more than 2 million new “athletes” (how Strava refers to its users) per month in 2020. The company positions its activity tracking as focused on the community and networking aspects of the app and service, with features like virtual competitions and community goal-setting as representative of that approach.
Cosmetics & Pharmacy
Amazon launches Amazon Pharmacy
The day the retail pharmacy industry has been bracing for is here. Amazon has launched Amazon Pharmacy, a new store on its website that allows customers to complete an entire pharmacy transaction on their desktop or mobile device. Using a secure pharmacy profile, customers can add their insurance information, manage prescriptions, and choose payment options before checking out. Prime members receive unlimited, free two-day delivery on orders from Amazon Pharmacy included with their membership. “We designed Amazon Pharmacy to put customers first — bringing Amazon’s customer obsession to an industry that can be inconvenient and confusing,” said TJ Parker, vice president of Amazon Pharmacy. “We work hard behind the scenes to handle complications seamlessly so anyone who needs a prescription can understand their options, place their order for the lowest available price, and have their medication delivered quickly.”
C-Beauty Perfect Diary’s Parent Yatsen Raises $617 Million in U.S. IPO
Yatsen Holding Ltd., the parent company of cosmetics and skin-care brands Perfect Diary, Little Ondine, Abby’s Choice and Galénic, raised $616.9 million in a U.S. initial public offering on Thursday, selling 58.75 million American depositary shares for $10.50 each. Its founders David Huang, Yuwen Chen and Jianhua Lv rang the trading floor bells remotely from Rosewood Hotel in Guangzhou. Goldman Sachs, Morgan Stanley, and China International Capital led the transaction. Yatsen’s shares are trading under the symbol YSG on the New York Stock Exchange. The Guangzhou-based company said money raised from the IPO will be used in marketing and daily operations of the company, potential strategic investments and acquisitions, product development and technology development, and physical retail expansion beyond China.
Discounters & Department Stores
Simon Property Group and Taubman Centers Agree on New Merger Deal
Simon Property Group and peer Taubman Centers announced in a joint press release that they’ve amended the terms of their merger agreement. Under the new terms of the deal, Simon will essentially acquire Taubman, paying $43 per share for an 80% stake in its fellow retail real estate investment trust (REIT). That price is the most notable term of the modified deal, as it’s down from the originally agreed $52.50. Since it was originally announced in February, the merger has assumed the dimensions of a soap opera. With the coronavirus pandemic and its devastating effect on the retail sector, Simon tried to back out of the deal entirely. In return, Taubman sued its would-be acquirer to prevent this. That lawsuit has been settled, both companies said.
Ross keeps customers coming to stores in steady Q3
As many consumers continue to avoid indoor shopping due to the pandemic, and without e-commerce to make up for that, Ross Stores in a press release Thursday reported that third quarter total sales fell 2% to $3.75 billion. Store comps declined 3%. After opening 30 Ross and nine dd’s Discounts stores in the period, the company ended with 1,869 stores, up from 1,810 a year ago, and has completed its expansion for the year, CEO Barbara Rentler told analysts Thursday, according to a Motley Fool transcript.
Despite ‘strong’ Q3, Macy’s operating loss approaches $5B for the year
With some sales pulled into the third quarter that normally take place in the fourth, Macy’s on Thursday said that revenue in the period fell 23% to nearly $4 billion from $5.2 billion last year, as e-commerce grew 27% and store-based sales fell about 36%. All stores were open in the period, executives said Thursday. Gross margin fell 440 basis points from last year, but was up “significantly” from the previous quarter, thanks to inventory management, better merchandise sell-through and lower markdowns, according to a company presentation. Inventory was down 29% year over year.
Walmart doubles number of personal shoppers for the holidays
Walmart on Tuesday announced that it has brought on more than double the number of personal shoppers than last year, bringing this year’s total to more than 157,000 associates. Personal shoppers will be putting together customers’ online pickup and delivery orders. Shoppers can place orders for contactless pickup, standard delivery, express delivery and free unlimited delivery via Walmart+, per the company announcement. Walmart launched the program six years ago with a few hundred personal shoppers. The company noted that the service will remain a key part of its business given the COVID-19 pandemic.
Target steals more market share as same-day channels grow 217% in Q3
Heading into the holiday season, Target looks unstoppable as it continues posting banner sales growth and expansion in its omnichannel services. The retailer reported 3rd quarter comparable sales growth of 20.7%, driven by growth in both store traffic (up 4.5%) and ticket size (up 15.6%). Digital comp sales increased 155%, with sales in Target’s same-day channels (Order Pick Up, Drive Up and Shipt) growing 217% in Q3. Target’s top-line sales for the quarter were up 21.3% year over year to $22.3 billion.
Emerging Consumer Companies
Wardrobe acquires Rent My Wardrobe
Wardrobe, the New York-based company that allows owners of high-end and distinctive clothing to rent out their items via local dry cleaners, has acquired Dallas-based competitor Rent My Wardrobe. Wardrobe said the merger will bring in tens of thousands of customers in addition to expanding its geographical footprint and strengthening its position in the southern states. The deal coincides with Wardrobe’s first-year anniversary. Rent My Wardrobe’s founder Rachel Sipperley will join Wardrobe as its vice president of brand and partnerships, focusing on customer acquisition and growth.
Maude raises $2.2 million, Dakota Johnson invests and becomes creative director
Brooklyn-based sexual wellness brand maude announced that Dakota Johnson will be joining the company as co-creative director and investor. This announcement follows maude’s recent $2.2 million dollar seed round, bringing its total seed funding to $3.7 million. To-date, the company has raised $4.2M in funding and founder Eva Goicochea is one of only sixty Latinx women to raise over $1 million in venture capital. The round was led by CASSIUS with notable participation from UK consumer fund True, Outbound Ventures, Vice Ventures, and Patina Brands—who joined existing investors RRE and Tune House Capital.
Baby care brand Coterie raises $2.75 million
Coterie, a New York-based diaper and baby care brand, announced a $2.75 million seed round led by Willow Growth, with participation from RiverPark Ventures and M3 Ventures. Coterie claims its diapers keep babies drier longer, and ensure healthy skin, better sleep, and fewer leaks and blowouts. Coterie diapers are made with the cleanest materials and use clothing-grade, sustainable materials that make them extremely soft and gentle.
Grocery & Restaurants
Ahold Delhaize to buy online grocer FreshDirect
Ahold Delhaize plans to acquire online grocery pioneer FreshDirect in tandem with private equity firm Centerbridge Partners. Under the deal, Zaandam, Netherlands-based Ahold Delhaize will be FreshDirect’s majority owner, with Centerbridge holding a 20% stake. Financial terms of the agreement weren’t disclosed. Plans call for FreshDirect to keep its brand name and operate independently out of its 400,000-square-foot automated fulfillment center and campus in the New York City borough of the Bronx. FreshDirect has provided online grocery shopping and delivery services, primarily in the metropolitan New York area, for more than 20 years. Like other grocery retailers, FreshDirect has seen rising demand for online delivery since the COVID-19 outbreak and responded by stepping up its service capabilities.
Mars to acquire Kind North America
Mars, Inc. has entered into an agreement to acquire Kind North America. Terms of the deal were not announced by the companies, but a report in the New York Times said it may be valued at about $5 billion. Under the agreement, Kind North America will be combined with Kind International to create one company with business interests spanning 35 countries. The newly combined business will operate as a separate business within the Mars portfolio of companies, according to Kind North America. Mars took a minority stake in Kind LLC in late 2017. Under that agreement, Mars led the growth of the Kind business outside of the United States and Canada.
Goldman Sachs to take ‘significant stake’ in Zaxby’s
Goldman Sachs Merchant Banking Division will be acquiring a “significant stake” in Zaxby’s Operating Co. L.P., the companies said Wednesday. The Athens, Ga.-based quick-service company said the new partnership will support growth for the brand “as well as expansion into new sales channels.” The companies expect to finalize the deal by the end of year. Zaxby’s has more than 900 restaurants, serving chicken fingers, wings and sauces, in 17 Southeastern states. Zaxby’s was founded in 1990 by childhood friends Zach McLeroy and Tony Townley.
Walmart nearly exits Japan after selling majority stake in Seiyu to KKR and Rakuten
Walmart is selling a majority stake in Japanese supermarket chain Seiyu to investment firm KKR and e-commerce company Rakuten for over $1 billion, after suffering years of poor profitability amid stiff competition. The deal, which values Seiyu at 172.5 billion yen ($1.65 billion) including debt, comes after on-off speculation about the world’s biggest retailer looking to exit Japan. It is below the 300-500 billion yen it reportedly sought a few years ago. KKR will buy 65% of Seiyu and Rakuten will acquire a 20% stake while Walmart will retain 15%, the companies said in a joint statement on Monday. Walmart first entered the Japanese market in 2002 by buying a 6% stake in Seiyu, and gradually built up its stake before a full takeover in 2008.
Home & Road
Home Depot Q3 same-store sales surge; to make permanent wage increases
The Home Depot reported a strong quarter as it continues to benefit from consumers’ increased spending on home improvement projects amid the pandemic. The retailer also announced that it will make permanent the temporary compensation programs it has implemented for frontline employees during the pandemic. The move will result in $1 billion of additional expenses annually. Home Depot has spent about $1.7 billion on temporary pay and benefits so far in 2020. Net income rose 24% to $3.43 billion, or $3.18 per share, in the quarter ended Nov.1, up from $2.77 billion, or $2.53 per share, in the year-ago period. Analysts had forecast earnings per share of $3.06. Sales rose 23.2% to $33.54 billion, topping analyst expectations of $32.04 billion. Digital sales increased 80%, with customers picking up about 60% of their orders in stores. Home Depot’s U.S. same-store sales surged 24.6% in the quarter.
Casper Q3 revenue dips, while income improves
Casper revenue declined 3.3% in the third quarter ended Sept. 30, but its net loss improved 31.1% for the period. Casper revenue hit $123.5 million for the quarter, driven primarily by direct-to-consumer revenue, which decreased 11.4% to $89.9 million only partially offset by a retail partnership revenue increase of 28.3% to $33.6 million. Meanwhile, the company cut its net loss by 31.1%, coming in at a loss of $15.9 million for the period, compared with $23 million for the year ago period. “We saw record interest for our products evidenced by record website traffic, continued to drive gross margin expansion and progress towards profitability, and had another sequential quarter of growth,” said Philip Krim, CEO. Casper provided outlook for the fourth quarter, based on the assumption that there will be “no material changes in world events, weather, recent consumer trends, economic conditions, competitive landscape or other circumstances beyond our control.” It expects revenue of approximately $132 million to $142 million, drive by the e-commerce channel and expansion of its retail partnerships.
Libbey emerges from bankruptcy
Glassmaker Libbey announced this morning that it has successfully completed its financial restructuring and emerged from Chapter 11. Libbey has become a new private company formed and controlled by Libbey Inc.’s former lenders, Libbey Glass LLC, and will remain under the same leadership, the company said in a statement. It said it has “substantial liquidity,” supported by proceeds from a $150 million term loan and a $100 million asset-based lending facility. The company also said it has significantly reduced operating costs, strengthened its balance sheet and improved liquidity by reducing net debt to less than $150 million. Concurrent with its emergence, the company entered into new exit financing arrangements with Mitsubishi UFJ Financial Group Union Bank, N.A. and a syndicate comprised of a number of Libbey Inc.’s prepetition lenders and new equity owners.
Uhuru Design raises $6.9 million in funding
Uhuru Design, a designer and manufacturer of residential and commercial furniture bearing a “New American” design aesthetic, has received $6.9 million in private capital that it said will support the growth of its e-commerce platform and its national B2B and dealer network. The company, which was founded in 2004, began producing mostly high-end custom residential furniture, but evolved into the commercial and hospitality sector with a line of solid wood desks, dining and occasional tables, mirrors, consoles, credenzas and other storage pieces. The company’s custom line is produced domestically, both at its plant in Pennsylvania and at a number of other domestic workshops, while larger volume orders are produced in Vietnam. The domestic line is produced using largely reclaimed woods in pieces that also feature metal components, offering a clean-lined modern industrial aesthetic it calls New American Design. The portion of the line made in Vietnam bears similar design elements and is slowly but steadily evolving to a mix that is made with more sustainable materials.
Williams-Sonoma crushes estimates as sales soar 22.4%
Williams-Sonoma is heading into the holidays on the heels of a strong third quarter, fueled by record sales at its namesake brand and as consumers continue to spend on all things related to the home. The home goods and furnishings company reported net income of $201.8 million, or $2.54 a share, for the quarter ended Nov.1, compared with net income of $74.7 million, or $0.94 a share, in the year-ago quarter. Analysts had expected earnings of $1.56. Net revenue surged 22.4 % to $1.77 billion, topping estimates of $1.59 billion. Net comparable brand growth rose 24.4%. The retailer reported year-over-year acceleration across all brands, including Williams-Sonoma at a record 30.4%, Pottery Barn at 24.1%, Pottery Barn Kids and Teen at 23.8% and West Elm at 21.8%. E-commerce net comparable brand revenue growth accelerated to 49.3%, with online penetration holding at almost 70% of total net revenues.
Jewelry & Luxury
How Tiffany and LVMH Kissed and Made Up
When LVMH first approached Tiffany & Co. about a takeover in 2019, it was with an initial price of $120 a share. That was turned down. Eventually, the two sides arrived at a final price of $135 a price. Or, at least Tiffany believed that was the final price. Soon, the two parties were back at the negotiating table, after LVMH developed—or pretended to develop—a case of cold feet. In the second round of negotiations, LVMH’s initial offer was…$120 a share. These and other details were revealed in the proxy statement Tiffany filed on Monday with the Securities and Exchange Commission, asking shareholders to approve the new takeover deal, which came out to $131.50 a share.
De Beers Restructures, Brands to Spotlight Social Purchase
De Beers is combining both its corporate affairs and consumer brand units—part of a new focus on offering brands of “true social purpose.” The new brand and consumer marketing unit will meld De Beers’ social engagement and marketing functions. Stephen Lussier, previously executive vice president of consumer and brands, has been appointed executive vice president, consumer markets. He will continue to serve as chairman of De Beers Jewelers and Forevermark.
Local Shoppers Are Luxury Brands’ Hedge Against Covid-19
With few tourists in cities such as Paris and New York this year, luxury brands have had to lean on local shoppers. Their appetite for expensive handbags and watches has been surprisingly strong—a comfort for investors as Covid-19 cases in the West continue to climb. Spending on luxury goods by Chinese consumers in 2020 will be roughly one-third lower than last year, according to estimates released Wednesday by consulting firm Bain & Company. American and European shoppers are proving more resilient, spending a projected 15% less. Partly thanks to these more mature markets, Bain now forecasts that global luxury sales will be down 22% this year, compared with an earlier worst-case estimate of a 35% fall.
Leading luxury brands more dominant than ever, says Deloitte
The share of industry revenue held by the world’s biggest luxury companies has become larger than ever, according to a new report by Deloitte that analyses industry finances from before the Covid-19 pandemic. For the third year in a row, the top 10 list of luxury goods businesses with the biggest sales remains unchanged, with LVMH at the top and Kering in second position. These elite 10 names reported $144 billion in revenues from luxury goods sales in the 2019 financial year, more than half of the $281 billion made by all the companies in the top 100. Of the top 10 companies, only Swatch group reported a fall in sales. Half of the companies recorded double-digit sales increases
Office & Leisure
Gaming company Roblox files IPO prospectus after 91% jump in revenue
Roblox, whose online gaming software has been hugely popular with kids during the pandemic, filed its IPO prospectus on Thursday, joining a growing crop of companies that are trying to go public before the end of the year. Revenue in the third quarter jumped 91% from a year ago to $242.2 million, Roblox said in the filing. Its net loss more than doubled to $48 million. Roblox’s platform contains millions of games that can be played across Apple, Google and Amazon devices as well consoles. Roblox was first released in 2006, but has never seen a year like 2020. Daily active users almost doubled in the period ended September to 36.2 million. A metric the company calls “hours engaged” more than doubled to 8.7 billion.
Caribbean cruise COVID outbreak expands; Cruise line cancels voyages
Plans for luxury cruises have quickly—and perhaps predictably—run aground in the Caribbean. Cruise ship-operator SeaDream Yacht Club this week canceled all voyages for the rest of the year after one of its ships—the first to resume sailing in the region amid the pandemic—was wrecked by a COVID-19 outbreak last week. So far, at least seven of the 53 passengers and two of the 66 crew aboard the yacht-style SeaDream I liner have tested positive for the novel coronavirus, SARS-CoV-2. The infected and those testing negative have since disembarked. The cruise, which boarded passengers in Barbados on November 7, was said to be a “watershed” voyage for the cruise industry. SeaDream set sail on the crusade without many of its colleagues. The trade organization that represents 95 percent of the industry, Cruise Lines International Association (CLIA), had announced earlier that it was extending a voluntary suspension of all cruises through the end of the year.
A door may be cracking open for Americans to travel to Europe again
Two new Covid-19 testing programs may be the key to unlocking travel between the United States and Europe. Select passengers flying on American Airlines, British Airways and United Airlines flights are eligible to participate in testing programs that are evaluating whether preflight Covid-19 tests can be used to relax travel restrictions imposed by both countries. The two programs, however, are quite different. Here is what to know about each. On Nov. 17, American Airlines and British Airways announced the launch of an optional Covid-19 testing trial on flights from the U.S. to London. The testing program will begin on Nov. 25 on flights to Heathrow Airport. Passengers who volunteer for the program will undergo three free Covid-19 tests. The goal “is to capture data to demonstrate the effectiveness of the different tests used at different stages,” he said.
Technology & Internet
US ecommerce sales jump 37% in Q3
Online retail continued to thrive in the third quarter despite reopened stores and the postponement of Amazon.com Inc.’s Prime Day, which pushed the popular sales event into Q4, according to new data released by the U.S. Department of Commerce. From July to September, consumers spent $199.44 billion online with U.S. retailers, up 37.1% from $145.47 billion for the same quarter the prior year, according to retail figures published Thursday by the Commerce Department. That means nearly $1 in every $5 spent came from orders placed online during Q3. While this was a slowdown from the record-breaking 44.4% growth in Q2, when ecommerce benefitted from a seismic shift in buying behavior at the height of the pandemic, digital spending remained at dramatically elevated levels. Q3 2020 marked the second-highest year-over-year growth for any recorded third quarter going back to when the agency first started breaking out full-year ecommerce data in 2000.
Tower Records Relaunches as Online Music Store
Tower Records, the beloved music chain that shuttered all of its U.S. physical locations 14 years ago, has been revived as an online store. After nearly a year of teasing its return via a social media presence, the new Tower Records officially relaunched this week, complete with the return of its Tower Pulse magazine as well as online performances, Deadline reports. The Tower Records relaunch — which includes the online store and planned pop-up shops — was originally scheduled to occur at this year’s SXSW, but that was postponed due to the coronavirus. With many consumers – now primarily vinyl buyers – forced to shop online due to the pandemic, Tower Records has reemerged as a familiar name to music fans. Tower Records’ founder Russ Solomon died in 2018 at the age of 92. As CEO of the chain, Solomon expanded his business from the back of a Sacramento drugstore to, at its peak, a billion-dollar CD giant with over 200 brick-and-mortar stores spanning North America to Japan.
Finance & Economy
US Consumers Pay Down $10B In Credit Card Debt In Q3
Americans paid off $10 billion in credit card debt in the third quarter of 2020, but borrowed more for car and housing loans, according to a report in the Wall Street Journal citing the Federal Reserve Bank of New York. This follows a record $76 billion drop in Q2 credit card debt, as people used COVID-19 stimulus money and pandemic unemployment to pay down financial obligations. According to the Fed’s latest quarterly report on household debt and credit, overall consumer debt hit $14.35 trillion, up $87 billion, a 0.6 percent increase over Q2. Mortgage debt hit $9.86 trillion, up $85 billion, with new housing and refinancing loans totaling $1.05 trillion, the second highest since 2000, the Fed’s report indicated. Auto loans hit $1.36 trillion, up $17 billion. Student loans reached $1.55 trillion, up $9 billion.
Retail sales grew less than expected in October, as economists worry about a ‘difficult winter’
US retail sales grew at a slower pace than economists had predicted last month — prompting worries about a “difficult winter” with lower consumer spending before a recovery next year. Retail sales increased by 0.3% to $553.3 billion on a seasonally adjusted basis in October, the Census Bureau reported. That’s below expectations of a 0.5% increase, and it’s down from a revised 1.6% in September. Boosting that figure significantly were sales of cars and car parts. They have been buoyant since the summer and continued to increase at a faster rate last month, pushing the overall sales numbers up. Stripping out cars, retail sales increased only 0.2% in October.
‘Attack of the debt tsunami’: Coronavirus pushes global debt to record high
The coronavirus crisis pushed global debt levels to a new high of over $272 trillion in the third quarter, the Institute for International Finance said, as it warned of the “attack of the debt tsunami.” The institute said global debt would break new records in the coming months to reach $277 trillion by the end of the year. This would represent a debt-to-GDP ratio of 365%. It comes after governments across the world stepped up support for companies and citizens in the face of a global pandemic which led to widespread stay-at-home orders. Businesses also had to look for alternative funding as activity came to a halt in the wake of Covid-19. Both events translated into higher borrowing and, therefore, more indebtedness.
