In addition to all the usual challenges facing retailers, this year they also have to deal with an unfriendly calendar. With the fourth Thursday in November falling on the 28th, Thanksgiving was as late as it can be this year. The ripple effect is that there are only 26 shopping days between Thanksgiving and Christmas, the shortest timeframe possible for what many think of as the holiday shopping season. Last year, there was almost an additional week between the two holidays, with Thanksgiving occurring November 22nd. For some retailers, this year’s tightened calendar puts additional stress on what is already a make or break period.
The holiday shopping season is more critical than for some companies than it is for others. We looked at over 130 publicly-traded retailers to determine which ones are most reliant on holiday revenue. Overall, these retailers record approximately 28% of their sales in the quarter that includes Christmas, just slightly above the 25% one would expect if there was no seasonality at all. However, for a certain group of companies, seasonality is unmistakable. For example, 1-800-Flowers does nearly 50% of its sales in its 4th quarter, thanks to both Thanksgiving and Christmas. The only other retailer that consistently records over 40% of its annual sales in the 4th quarter is workwear retailer Duluth Holdings. I guess men really are hard to buy for, and rugged apparel is a dependable gift item.
Other publicly-traded retailers that record around 35% of their sales in Q4 include Five Below, L Brands (Victoria’s Secret and Bath & Body Works parent), GameStop, Signet Jewelers (Kay, Zales, and Jared parent), Lands’ End, and Best Buy. All these retailers anxiously watch weather reports hoping for cool crisp air with light snow flurries to remind shoppers that the holidays are near, but not enough snow to deter traffic. With such a condensed calendar, any severe snowstorms, especially on weekends, puts stress on retailers’ ecommerce businesses to pick up the slack. If storms arrive too close to the holidays for gifts bought online to arrive in time, those sales may never be made up.
Speaking of the internet, Amazon records roughly one third of its total sales in the fourth quarter, driven by Cyber Monday. But not all ecommerce sites have a busy holiday season. Not surprisingly, e-tailer PetMed Express, has found that Q4 is its slowest quarter of the year, accounting for just over 20% of its annual sale volume. Among other retailers with the lowest holiday sales concentration were Camping World and MarineMax. So, if you were hoping for an RV or a fishing boat under the tree, you might be disappointed.
As a group, Department Stores (32%) and Consumer Electronics Retailers (31%) have the largest concentration of sales in the fourth quarter. In fact, nine of the ten retailer categories examined had more than a quarter of their annual sales in Q4. Only Home Improvement Retail (24%), came in below 25%.
Ultimately, whether what you are selling is giftable or not, the fact is that Q4 is when consumers are spending, and to be successful, retailers must find a way to get their fair share of that spend. Automotive Retailers are working hard to position cars as a perfectly reasonable Christmas gift. By watching commercials, you would think that on the morning of the 25th nearly every driveway has a shiny new car with a big red bow on top. Even with all that marketing, Automotive Retail gets barely over 25% of its sales in Q4. But as retailers have learned, if you don’t connect with consumers while they are in spend mode, it will be a long 12 months waiting for them to get back into the holiday spirit.
Headlines of the Week
Cyber Monday transforms into Cyber Week at many online retailers
More than 60% of top merchants have extended the popular web shopping day beyond 24 hours, a Digital Commerce 360 analysis finds. Cyber Monday is evolving into Cyber Week. Or at least extending beyond a one-day event at many online retailers. Online sales on Monday reached record highs, growing nearly 20% on the popular holiday shopping day—coined Cyber Monday—that occurs when consumers head back to their work computers rather than stores and continue their holiday shopping online. Sales on Dec. 2 reached $9.42 billion, according to Adobe Analytics, up from $7.87 billion a year earlier. As more shoppers turn to the web while at work to check off their gift lists quickly, many e-retailers are extending the sales they offer on Cyber Monday for several days or the full week, transforming Cyber Monday into Cyber Week in many cases. An analysis of 50 top online retailers conducted on Tuesday by Digital Commerce 360 finds that 31 retailers, or 62%, extended their deals beyond Monday.
Madewell IPO gets the green light from lenders
Crew has been crippled by debt that remains, as it was a year ago, at $1.9 billion, CFO Vincent Zanna noted on Monday. That’s set to be cleared up at last if the spinoff and IPO of Madewell goes through as planned. After some signs that lenders wouldn’t agree to the arrangement, they have now given it the green light, Zanna and Mike Nicholson, the company’s president, chief operating officer and interim CEO, said during a call on Monday. The company and its lenders have agreed to terms that have also been approved by a special committee of its board, paving the way for the creation of two separately managed companies that will each enjoy “sustainable capital structures” and allowing a valuation of Madewell “that is appropriate for its profitability and growth profile,” Nicholson said. What’s “appropriate” may be left to interpretation, and Madewell may not be the juggernaut that the company and its lenders hope it to be: Moody’s Investors Service in September questioned the company’s $1.9 billion to $2.9 billion valuation of it, saying it’s likely closer to $1.2 billion to $1.9 billion.
Apparel & Footwear
Jill CEO steps down as sales fall nearly 5% in Q3
Jill CEO Linda Heasley has stepped down from the position as well as her board post, the women’s apparel seller said in a press release Thursday. The company did not disclose a reason for her departure. Board member James Scully has taken over as interim CEO while the company searches for Heasley’s permanent replacement. The board has already begun the search, and Scully is set to stay in the position until the process is complete. Also on Thursday, J. Jill reported that third quarter comparable sales fell 7% and top-line sales fell 4.6% to $166.1 million. Net income fell by more than 64% to $2.4 million. Scully in the past has served as chief operating officer for Avon Products and J. Crew, among other leadership positions in retail.
Permira, North Face owner among bidders for sneaker brand Golden Goose: sources
U.S. apparel and footwear conglomerate VF Corporation and buyout funds Permira and Advent are lining up indicative offers for Italian shoe brand Golden Goose ahead of a mid December deadline, sources familiar with the matter told Reuters. Golden Goose, owned by private equity fund Carlyle, makes luxury sneakers priced at roughly 400 euros ($440) a pair and is being sold as part of an auction process. The Venice-based firm, founded in 2000 by designers Francesca Rinaldo and Alessandro Gallo, is valued at up to 1.4 billion euros and has drawn interest from financial investors and some U.S. fashion groups. Owner Carlyle has invited a small group of bidders to submit non-binding offers in mid December – the first step of an auction which is expected to wrap up early next year.
Destination Maternity Gets $50 Million Bid from Marquee Brands
Marquee Brands has made an offer to buy Maternity apparel retailer Destination Maternity’s e-commerce business and other intellectual assets for approximately $50 million. Destination Maternity Corp. filed a motion to approve the selection of Marquee Brands as the stalking horse bidder in its ongoing marketing and sale process. Marquee Brands would purchase the company’s e-commerce businesses, intellectual property, leased departments within department stores and baby specialty stores, strategic marketing partnerships and the right to designate certain inventory and related assets for sale by its partners, Gordon Brothers and Hilco Merchant Resources. Destination Maternity filed for Chapter 11 bankruptcy protection in October. Marquee Brands’ bid of approximately $50 million represents a baseline bid and is subject to higher or otherwise better offers in an open auction process.
Secondhand apparel platform Vinted raises $141M
Vinted, the Lithuania-based used clothing and item marketplace founded in 2008, received 128 million euros ($141 million at the time of publication) in a Series E funding round from Lightspeed Venture Partners and other investors, according to Lightspeed’s announcement published on Nov. 28. According to the platform’s website, Vinted operates in 12 different markets: Spain, France, Luxembourg, Belgium, the Netherlands, Germany, Austria, the Czech Republic, Poland, Lithuania, the U.K. and the U.S. Vinted is estimated to facilitate the exchange of 1.3 billion euros worth of merchandise this year alone. Per Lightspeed’s post on Medium, the investment round allowed the venture capital firm, which has also invested in Stitch Fix, Bonobos and Rothy’s, to expand into Europe. In its funding announcement, Lightspeed praised Vinted’s ability to survive during economic ups and downs, and its sustainable appeal to consumers.
Athletic & Sporting Goods
Norwest Equity Partners Sells Its Investment Interest in Christy Sports to TZP Group
Norwest Equity Partners has divested its investment interest in Christy Sports to TZP Group. Christy Sports is one of the largest snow sports and outdoor furniture specialty retailers and service providers in the Western U.S. The transaction closed on November 25, 2019, and financial terms were not disclosed. Christy Sports was founded in 1958 and has grown to more than 60 locations in Colorado, Utah, New Mexico and Washington.
Pure Fishing Inc., a platform company of the private equity firm Sycamore Partners, has acquired fishing brands Fin-Nor and Van Staal from W.C. Bradley/Zebco Holdings Inc. Financial terms of the deal weren’t disclosed. The addition of these brands adds to Pure Fishing’s dominant offering in the saltwater category, including the premium PENN Fishing brand, one of the most widely respected saltwater fishing equipment brands. Sycamore Partners acquired Pure Fishing from Newell Brands in November 2018 for $1.3 billion.
TRUE Sports Acquires Aerotech Golf Shafts
Lincolnshire Management announced that TRUE Sports, a portfolio company and the leading golf shaft manufacturer in the world, has acquired Aerotech Golf, a designer and distributor of high-end composite golf shafts. This third acquisition during Lincolnshire Management’s ownership was financed from the balance sheet of TRUE Sports, but no other financial information was disclosed. True Temper is known throughout the golf industry as the number one shaft in golf. Aerotech is renowned for its unique multi-material SteelFiber line of golf shafts that combine carbon fiber with high strength steel filaments.
Cosmetics & Pharmacy
Ulta Beauty shares rally on earnings beat, but analysts see weak cosmetics sales ahead
Ulta Beauty beat third-quarter profit estimates on Thursday, driven by sales of higher-margin cosmetics products, sending the retailer’s shares up nearly 13% during midday trading Friday. Ahead of the earnings report, investors had been worried that the retailer would see weaker makeup sales, but the nearly 30-year-old company has capitalized on booming demand for celebrity-led beauty brands, which are usually priced at a premium. Ulta has attributed cosmetics lines from Kylie Jenner and YouTuber James Charles for driving customers to its stores.
CVS Health to acquire IlliniCare Health
CVS Health announced that in connection with the previously announced merger of Centene and WellCare Health Plans, the retailer will acquire IlliniCare Health Plan. The transaction entails the sale of Centene’s Medicaid and Medicare Advantage lines of business in Illinois, the company said. “Expanding our Medicaid and Medicare Advantage presence in Illinois will allow us to serve more members with our proven holistic approach that addresses physical, behavioral and social determinants of care,” Karen S. Lynch, the executive vice president of CVS Health and president of Aetna, said.
Perrigo closes acquisition of Prevacid 24HR OTC rights
Perrigo has completed its acquisition of the OTC rights to Prevacid 24HR. The company announced the acquisition of the product from GSK Consumer Healthcare in September, though the financial terms were not disclosed. Perrigo executive vice president and president of consumer self-care Americas, Jeff Needham, has said that the acquisition is strategically important for the company’s self-care growth strategy. “The closing of this tuck-in transaction expands our U.S. OTC presence with a leading brand in the digestive health category and enhances our leadership position in this strategically important category,” Needham said. “I am confident that we can accelerate the growth of this margin accretive brand, as well as the total category by leveraging Perrigo’s commercial infrastructure, including our manufacturing expertise, R&D capabilities and expansive customer network.”
Discounters & Department Stores
Hal Lawton, who has served as Macy’s president since 2017, will step down from the department store to take the top leadership post at Tractor Supply, according to a press release from the retailer released December 5th. Lawton will arrive as president, chief executive officer and a member of the board effective Jan. 13, 2020, replacing Greg Sandfort, who had already announced his retirement, Tractor Supply said. Lawton has resigned from Macy’s effective December 6th, the department store said in its own release. Before joining Macy’s, he led eBay’s North America business for two years. He also spent 10 years in various executive roles at Home Depot, most recently as senior vice president for merchandising, according to Tractor Supply’s release.
Target plans to open a store in New York’s Times Square in 2022
Target is bolstering its presence in the Big Apple with a store in the heart of Times Square, CNBC has learned. The discount retailer has signed a lease to open a small-format store on 42nd Street between 7th and 8th Avenues. The store, projected to open in 2022 at roughly 33,000 square feet, will be Target’s 10th small-format shop in the Manhattan area.
Target has rapidly expanded its presence in the New York area in the past year, including on the Upper East and Upper West Sides and multiple locations on the Lower East Side. Target’s strategy to move into densely populated areas like New York and to college campuses, with stores that span a fraction of the square footage of a traditional big-box store, has been key to the retailer’s overall success, according to CEO Brian Cornell.
Sears limps through the holidays
Nearly 10 months out of bankruptcy, Sears is limping into the holiday shopping season. Eddie Lampert, the hedge fund billionaire who promised to save 425 Sears and Kmart stores and roughly 45,000 jobs when he bought the company out of bankruptcy, has seen his $5.2 billion lifeline wither. While there were plans for new small stores centered on appliances, only three have opened. The chain is still shrinking. By February, the store count will be down to 182. Many of the stores that remain have the same old problems. They’re grungy and understaffed, poorly stocked and losing vendors. At the end of the year — a crucial time for retailers — Sears’ threadbare Black Friday catalog signals it’s going to have problems getting shoppers to its doors. And online, it can’t compete with Amazon and its traditional rivals.
How Nordstrom uses robots and shelves inspired by ants to deliver lipstick faster
If you’re in retail these days, you’re likely trying to solve these two problems: how to cut costs, and how to get products to your customers as quickly as possible. Nordstrom thinks it has found a solution that will help it do both. And it starts at a warehouse in Newark, California. The Seattle-headquartered company has tapped two new partners, robotics supply chain company Attabotics and parcel-sorting provider Tompkins Robotics, to test a more modern facility in the San Jose area. If successful, the retailer could expand its use to Nordstrom’s eight other U.S. distribution centers.
Emerging Consumer Companies
Everlane to open store in Boston
Everlane, the apparel and accessories brand launched in 2011 around “radical transparency,” will open a new location in Boston in the spring of 2020. The planned 2,300-sq.-ft. store will be in Boston’s Seaport neighborhood. It will be the sixth physical location for the company, and the first in Massachusetts.
Dolls Kill raises $40 million from Sequoia
Dolls Kill, the San Francisco based apparel and accessories brand, raised $40 million in Series B funding from Sequoia. The deal brings Dolls Kill’s funding to roughly $60 million. The funding will be used to expand international operations, improve the digital experience, and increase the product offerings. The company has retails stores in San Francisco and Los Angeles.
Glossier partners with Nordstrom
Glossier, the New York based beauty business, is opening temporary shops within seven Nordstrom stores, including the new Nordstrom flagship location in New York. The six other Glossier spaces will be at Nordstrom locations in Seattle, Chicago, Dallas, Houston, Washington, D.C., and Santa Anita, California. Only one product will be available for purchase – the “Glossier You” fragrance, which was introduced in October 2017. Glossier has two stores – in New York and Los Angeles – and has had pop-ups in cities like Boston, Austin, Miami and London. To date, the company has not worked extensively with traditional retailers.
Grocery & Restaurants
Kroger misses Wall Street’s earnings forecast in Q3
Despite continued comparable-store sales momentum, The Kroger Co. posted virtually flat overall sales in the fiscal 2019 third quarter and fell short of Wall Street’s earnings projection. Kroger also said Thursday that, after a portfolio review, it has decided to divest its stake in specialty grocer Lucky’s Market. In April 2016, Kroger announced a strategic partnership with the Niwot, Colo.-based natural and organic supermarket chain that included an undisclosed equity interest. Looking ahead, Kroger affirmed its fiscal 2019 EPS forecast and issued guidance for fiscal 2020.
Constellation Brands Will Sell Struggling Ballast Point to Small Illinois Brewery
Six months before Constellation Brands purchased San Diego’s Ballast Point Brewing Company for an eye-popping $1 billion in 2015, an entrepreneur by the name of Brendan Watters sold his small hotel franchise business for a comparatively tiny $8.5 million to Red Lion Hotels Corporation. Now, four years later, the former hotelier-turned-brewery owner has agreed to acquire Ballast Point in a move that left craft beer industry watchers scratching their heads on Tuesday evening. In a press release, Constellation — the country’s third-largest beer company and owner of popular Mexican import beer labels Corona, Modelo, and Pacifico — said the Illinois-based Kings & Convicts Brewing would purchase the Ballast Point brands, along with its breweries and brewpubs throughout the country.
Hostess Brands to acquire Canadian cookie company
Hostess Brands, Inc. has entered into an agreement to acquire Voortman Cookies Ltd. from the private equity company Swander Pace Capital for approximately $320 million. The companies expect the transaction to close in January 2020. Voortman Cookies is a manufacturer of wafers, sugar-free and specialty cookies that is based in Burlington, Ont. Voortman is the No. 1 player in crème wafers and sugar free cookies, as reported by Nielsen for the 52-week period ended Nov. 2, 2019, and has achieved compound annual point of sale growth over the last three years of approximately 5%, according to data provided by Hostess Brands.
PepsiCo to acquire PopCorners snacks maker
PepsiCo, Inc. has entered into a definitive agreement to acquire BFY Brands, maker of air-popped chips and veggie crisps. The Middleton, N.Y.-based company will be managed by PepsiCo’s Frito-Lay North America division. Financial terms of the transaction were not disclosed. BFY Brands was formed in 2015, after a company funded by private equity firm Permira acquired Medora Snacks, L.L.C. and Ideal Snacks Holding Corp. The deal combined the two businesses under the BFY banner. The brand’s primary product is PopCorners, a better-for-you popped corn snack.
SNAP rule change would cut food stamp benefits to 700,000 recipients
Nearly 700,000 people would lose food stamp benefits under the Supplemental Nutrition Assistance Program (SNAP) after the U.S. Department of Agriculture finalized a rule that would impose stricter work requirements. Under the new SNAP rule, published Wednesday in the Federal Register, states would be subject to narrower criteria to waive a requirement that able-bodied adults without dependents (ABAWDs) work at least 20 hours a week to retain their benefits. Provisions of the final rule, proposed this past February, are scheduled to become effective April 1, 2020.
Home & Road
Luxury home furnishings retailer RH reported another strong period of growth in its fiscal third quarter with a 6.4% increase in revenue to a record $677.5 million. Net income for the period leapt 161% from the same prior-year period to $52.5 million, with earnings per share up 197% to $2.17. Taking into account a two-point drag from eliminating unproductive product categories and fringe promotions, revenues at RH (which recently saw a Berkshire Hathaway investment of around $200 million) would have would have increased 8.4% in the third quarter. After beating third-quarter expectations, RH has raised its fiscal 2019 guidance for the fourth time this year. The company expects net revenue growth of 8% to 12%, adjusted operating margins in the high teens to low twenties, adjusted net income growth of 15% to 20%, and return on invested capital in excess of 50%. That includes “a clear path to more than $5 billion in North America revenues,” according to Chairman and CEO Gary Friedman.
New stores lead to At Home Group Q3 net sales increase
Shares of At Home Group Inc., the home décor superstore, are up slightly this morning after the company posted a net sales increase of 19.3% to $318.7 million in the third quarter ended Oct. 26, driven mainly by the increase in open stores – compared to $267.2 million in last year’s third quarter. “We exceeded our profit guidance, driven by strong productivity of our new stores and outperformance in our fall and Halloween assortments,” said Lee Bird, At Home Group chairman and CEO. “However, our revised outlook for the year primarily reflects weaker performance in our Christmas offering, largely driven by a more promotional holiday environment and the impact of a late Thanksgiving. As a result, we are taking decisive pricing action to address this issue.” In the third quarter, gross profit decreased 0.7% to $85.4 million from $86 million in the third quarter of fiscal 2019.
Wayfair’s Thanksgiving weekend sales increase 36% over 2018
Direct retail gross sales increased 36% year-over-year for the five-day shopping period of Thanksgiving Day through Cyber Monday for Wayfair, an online retailer of home furnishings and décor. On Black Friday and Cyber Monday, Wayfair sold a rug every second, a barstool every four seconds, a sofa every seven seconds and a vanity or faucet every 10 seconds. “As in past years, the Thanksgiving weekend marked a very strong sales period,” said Niraj Shah, CEO, co-founder and co-chairman for Wayfair.
Saatva opens first physical location in Manhattan
The Saatva Company, an online luxury mattress retailer, has opened its first 3,300-square-foot brick-and-mortar location in Manhattan, called a “Viewing Room” and conceived by interior designer Vincente Wolf. The Manhattan store showcases Saatva’s full range of luxury sleep products, including the company’s five eco-friendly mattress types in 11 comfort levels, organic cotton sheets and pillows, and designer bed frames. The location features a blue-sky ceiling, surrounded by natural materials and Mediterranean colors. Information stations and iPads located throughout the space allow guests to interact with Saatva’s collection, and trained sleep guides are available to assist and answer questions. The company intends to roll out more Viewing Rooms in major design centers around the country next year.
Jewelry & Luxury
De Beers Diamonds Reflect a Changing Market
De Beers is facing up to a tough reality: The world’s diamond deposits won’t last forever.
The mining behemoth, a unit of Anglo American PLC, is rewriting its century-old playbook as discoveries of new diamond troves grow scarce and its aging mines become more costly to operate. Global diamond production is falling, companies and analysts say, pushing De Beers to make investments and strategic changes that were almost unthinkable a few years ago. The former monopoly famed for secrecy is developing a traceability system to verify a diamond’s provenance, a bid to attract more socially conscious buyers. De Beers also stunned the industry last year with plans to sell its first synthetic diamonds through a new subsidiary. The synthetic stones are identical to natural stones in composition but are made in labs rather than mined from the earth.
When it comes to jewelers, conventional wisdom says millennial couples just aren’t all that interested in diamonds. But Signet Jewelers latest earnings report, if not Tiffany’s, suggests that narrative might not be quite right. Signet raised its outlook for the year, suggesting turnaround efforts at the owner of jewelry stores including Zales, Kay, and Jared are taking hold. Signet shares shot 8% higher Thursday to around $18, leaving the stock down 44% this year. Signet’s bigger rival, Tiffany, missed earnings expectations by a long shot, with per-share profit in the third quarter of 65 cents a share, down from 77 cents a year prior. Analysts had expected earnings of 87 cents a share.
French luxury stocks drop as Trump threatens heavy new tariffs
Shares of French luxury goods makers, including LVMH and Hermes, dropped in European trading on Tuesday after President Donald Trump’s administration said it may place heavy tariffs on several goods. LVMH – which includes the brands Louis Vuitton and Hennessy – and Hermes each fell more than 2% following the announcement. The move by the U.S. comes in retaliation to France’s implementation of a Digital Services Tax. Under the new tariffs, which may begin in late January, the U.S. Trade Representative could add levies up to 100% on around $2.4 billion imports from France.
What Brands Need to Know About Chinese Airport Travelers
For Chinese passengers, international airports have evolved from mere transportation hubs to the ultimate shopping destinations thanks to their appealing duty-free policies. In fact, Chinese shoppers are splurging on luxury goods in airports more than any other group, topping the charts of the 2018 global duty-free sales market with a 13.2 percent share, according to the Swiss travel market research agency M1nd-set’s report on the global duty-free market. As the passenger group with the most buying power in the world, Chinese travelers’ swelling traffic and consumer demands offer a lot of potential revenue, and to reach relevant Chinese consumers, worldwide airports, duty-free companies, and Chinese tech giants have collaboratively prepared an organic retail ecosystem for luxury brands.
Office & Leisure
A downbeat quarter for Michaels
The Michaels Companies reported third-quarter earnings and sales that fell below analysts’ estimates and lowered its guidance for the fourth quarter and full year. The arts-and-craft retailer reported that its net income fell to $29.9 million, or $0.19 a share, in the quarter ended Nov. 2, from $86.8 million, or $0.50 a share, in the year-ago period. The company recorded more than $30 million in impairment charges, net of tax, for its Darice wholesale crafts supplies business, with the charges impacting its profit in the quarter. Net sales fell to $1.22 billion from $1.27 billion, missing estimates of $1.26 billion. Michaels attributed the decrease primarily due to a 2.2% decrease in comparable store sales, the closure of its Pat Catan’s stores during the fourth quarter of 2018, and a decrease in wholesale revenue.
College Bookstores Oppose Cengage-McGraw Merger
College bookstores have joined the growing list of opponents to the planned merger of two major academic publishers: Cengage and McGraw-Hill Education. The National Association of College Stores, which represents more than 3,000 institutionally owned and operated stores, on Tuesday declared its opposition to the merger in an emailed letter to Cengage. In early November, Cengage sales reps began reaching out to bookstore managers to inform them of pending pricing changes that Ed Schlichenmayer, CEO of NACS, believes will limit the ability of bookstores to offer competitive prices to students. Previously, all Cengage products were discounted by 20 percent off the list price so that bookstores could match the price on Cengage’s website and still make a profit. From mid-December, the publisher will no longer discount some of its products. This means bookstores will have to sell these products at a higher price than Cengage does in order to maintain their profit margins.
Party City has had little to celebrate lately as sales falter
These should be celebratory times for Party City. The Christmas holiday season is the most important period for the retailer of all things festive. But recent events have let the air out of the company’s balloon. The latest include a quarterly loss that punctured Party City Holdco Inc.’s stock and sent its bonds to deeply distressed levels. Then came downgrades from credit raters, who said online shopping, tariffs and high helium prices will make it tough to manage a $2.9 billion debt load. While this makes it sound like Party City is next in line for the retail apocalypse, the chain hasn’t posted an annual loss since 2012 and analysts expect it will post a full-year profit next year. “The issue is not whether they can survive tomorrow,” said Allen Adamson, co-founder of marketing consulting company Metaforce. “But whether they will thrive the day after tomorrow.”
Pet-food boom drives crop giant ADM’s push in $91 billion market
At Archer-Daniels-Midland Co.’s new animal-nutrition lab in Decatur, Illinois, food scientists aren’t coming up with the next generation of rations for the world’s pigs, cows or chickens. They’re making dog cookies. Just-baked bone-shaped treats containing ancient grains including quinoa, buckwheat and chia sit on a lab counter that looks more like a large kitchen island. The smell is so good they could be mistaken for real cookies. And that’s the objective, as animal lovers across America increasingly project their personal tastes on their cats and dogs. Dog treats may seem like a strange bet for one of the world’s largest traders of crops such as corn, wheat and soybeans. But the $91 billion pet-food market is growing so rapidly it will be almost as big as the chocolate confectionery market by 2024, according to data from Euromonitor International Ltd.
Technology & Internet
Google’s founders have made Sundar Pichai CEO of both Google and Alphabet. The founders’ decision to step down ends a multiyear effort to turn their company into the Berkshire Hathaway of technology by embracing Warren Buffett’s hands-off management style. Larry Page and Sergey Brin created the Alphabet Inc. holding company in 2015 to give themselves more time to invest in new tech businesses and handed responsibility for Google to Sundar Pichai. The model was inspired by Buffett’s approach of allocating capital to disparate businesses and letting independent CEOs decide how to run the operations. On Tuesday, the Google founders effectively unwound this structure by making Pichai CEO of both Google and Alphabet.
Many digitally native retailers avoid Cyber Monday promotions
Nearly a third of Top 1000 DNVBs did not offer discounts on Cyber Monday, promoting everyday prices as year-round deals instead. Digitally native vertical brands often tout the value they give to consumers by cutting out the middleman, instead designing, manufacturing and marketing products directly to customers all online with little physical footprint. But with no middleman, it can be harder to offer discounts on days when nearly every shopping site has markdowns. Or, at least, that’s what they’re telling customers.
Finance & Economy
Jobs growth soars in November as payrolls surge by 266,000
The jobs market turned in a stellar performance in November, with nonfarm payrolls surging by 266,000 and the unemployment rate falling to 3.5%, according to Labor Department numbers released. The jobs growth was the best since January’s 312,000 and well clear of the November 2018 total of 196,000. While hopes already were up, much of that was based on the return of General Motors workers following a lengthy strike.
U.S. consumer sentiment improves markedly in December
American consumer attitudes improved markedly in December, the University of Michigan said in a preliminary estimate. The University of Michigan’s gauge of consumer sentiment rose to a preliminary December reading of 99.2 from a final November reading of 96.8. Economists polled by MarketWatch has expected a December reading of 96.9. Combined with the strong November jobs report, rising confidence eases some worries about the near-term economic outlook.
