This past September, my colleague Paul Alexander wrote about the rise of ready to drink (RTD) cocktails in this space. He detailed several key developments, including Coca-Cola’s partnership with both Brown-Forman and Constellation brands to launch alcoholic beverages. It seems that partnership was just the beginning for Coca-Cola’s foray into alcoholic beverages. In late September, the company expanded its partnership with Molson Coors by launching even more RTD cocktails. An earnings release from Coca-Cola filed on October 25th of this year noted, “These initiatives [releasing RTD beverages] support the company’s disciplined approach on its journey to become a total beverage company with beverage options for all occasions and need states…” What has compelled Coca-Cola to veer into the alcoholic beverage category?
Coca-Cola’s decision to diversify their portfolio by launching alcoholic beverages is not unique. In fact, other traditionally non-alcoholic beverage companies are following a similar playbook. A recent article published by Exploding Topics notes that, “In an effort to capture more sales, many beverage brands [including non-alcoholic] are diversifying their product offerings,”. Taking this a step further, Coca-Cola and other companies could be attracted by the future of the alcoholic beverage market, as recent studies published by Euromonitor forecast sales of alcoholic drinks to jump from $278 billion in 2022 to nearly $332 billion in 2025, representing a 6% CAGR and a nearly a 20% absolute increase.
PepsiCo, the longtime rival of Coca-Cola, has also decided to capitalize on this growth. On January 31st, 2022, the company partnered with Boston Beer Company and released Mountain Dew Hard. Additionally, on September 13th, 2022, the company rebranded SodaStream in order to promote the system’s use for mixology. These changes should come as no surprise, as, during a conference call on February 10th, 2021, Chairman and CEO Ramon L. Laguarta stated, “’We see that space [alcoholic beverages] as strategically, very incremental,’… ‘It’s sizable and it’s profitable. So, obviously, we’d like to participate in a consistent and structural way,’”.
In a similar vein, several other prominent players have also joined the fray. The cofounder of Body Armor launched an alcoholic beverage company on August 23rd, 2022, named Casa Azul. Likewise, on July 6th, 2022, Vita Coco released a Ready to Drink cocktail beverage in partnership with Diageo. On January 13th, 2022, Monster Energy bought Canarchy Craft Brewery. This will add several brands to Monster’s portfolio, including Oskar Blues, Cigar City, and Deep Ellum, to name a few. Furthermore, the company’s first malt alcoholic beverage, “The Beast Unleashed”, is slated to debut in late 2022.
The future seems encouraging for the alcoholic beverage industry, as evidenced by rosy projections and this influx of new market participants. Of course, “market participants” is a euphemism for “competitors.” Accordingly, the incumbents have reason to worry. Renowned food and beverage companies like Coca-Cola and PepsiCo possess the marketing muscle and broad distribution networks necessary to pose a major competitive threat. Moreover, decisions like Coca-Cola’s to sell off small brands like Tab, Zico Coconut Water, and Odwalla to focus on bigger brands demonstrates their intent. If these moves accurately foreshadow what is to come, the previously non-alcoholic giants may be the next great disrupters in this space.
Headlines of the Week
WHP Global Invests $260 Million Into Express
WHP Global plans to invest $260 million into Express in a two-part deal that will allow the retailer to scale internationally and in new categories by way of licensing deals, creating a platform to acquire more brands in the future. The deal is expected to close in the fourth quarter. The deal is multilayered. First, the brand management firm will invest $235 million for a 60 percent stake in an intellectual property joint venture. Express will retain a 40 percent stake. The deal will allow Express to scale internationally and into noncore categories — such as eyewear or children’s apparel — by way of licensing deals. WHP will also purchase $25 million worth of Express common stock through a common equity PIPE investment. The company will purchase 5.4 million newly issued shares at $4.60 per share, which represents a 7.4 percent pro-forma ownership. Express will continue to operate as a publicly-traded company on the New York Stock Exchange. Lastly, the two firms will launch an omnichannel platform to acquire, operate and grow multiple fashion brands.
Fanatics valuation hits $31 billion after $700 million investment round
Michael Rubin’s sports platform company Fanatics has raised $700 million in fresh capital, pushing its value to $31 billion, according to people familiar with the matter. The company plans to use the new money to focus on potential merger and acquisition opportunities across its collectibles, betting and gaming businesses, one of the people said. The round was priced and led by a new investor, Clearlake Capital, in addition to LionTree. The existing investors in the new raise include Silver Lake, Fidelity, and Softbank. Fanatics was previously valued at $27 billion. In March, the company raised $1.5 billion led by Fidelity and Blackrock and Michael Dell’s MSD Partners.
Apparel & Footwear
Wolverine Worldwide to Divest or License Keds Brand and Wolverine Leathers
Wolverine Worldwide has entered into a process to divest or license its Keds brand and Wolverine Leathers, the company’s vertically integrated leather supply business, describing both units as “low-profit contributors.” The announcement comes as Wolverine, which owns the Saucony, Merrell, Sperry and Sweaty Betty brands, among others, undergoes a series of changes to simplify its business structure, which it rolled out last month. As part of the changes at Keds and Wolverine Leathers, the Rockford, Mich.-based company said it reduced part of its workforce earlier this week, a move that it expects to generate close to $30 million in savings in 2023. Wolverine CEO and president Brendan Hoffman said in a statement that recent structural changes and these divestments will help “put the business on an accelerated path to improved profitability and restore Wolverine as a best-in-class brand house.”
Rent the Runway Regains Some Momentum with Sales, EBITDA Gains
Rent the Runway Inc. got a little bit of its groove back. The rental pioneer — which saw a summer slowdown and laid off 24 percent of its corporate employees in September — on Wednesday posted third-quarter gains and boosted its outlook for the year. Net losses for the quarter narrowed to $36.1 million from $87.8 million a year ago, with the most recent period including $5.8 million in restructuring charges. Adjusted earnings before interest, taxes, depreciation and amortization tallied $6.6 million, up from losses of $5.6 million on the same basis a year ago. Revenues for the three months ended Oct. 31 increased 31.2 percent to $77.4 million from $59 million. Rent the Runway’s active subscriber count rose 15 percent to 134,240.
Steve Rendle Exits VF Corp. With Vans Woes, Supreme Debt Bearing Down
For the usually rock solid VF Corp., Steve Rendle’s surprise departure on Monday as president, chairman and chief executive officer counts as a corporate earthquake. While VF spent years as a canny brand operator with the logistical savvy and scale to navigate both good and bad times, the company has been showing signs of increasing stress. Its biggest and most profitable brand, Vans, is in the midst of a turnaround that has yet to bear financial fruit. VF cut its annual adjusted earnings outlook four times this year, going down to $2 to $2.20 a share on Monday from the $3.30 to $3.40 projected in May, with revenue getting downgraded to a 3 percent to 4 percent gain in constant dollars from a better than 7 percent increase. The $2.1 billion Supreme acquisition added debt to the balance sheet, contributing to worries around the company’s dividend. Now, Rendle, 63, has retired “by mutual agreement with the board,” according to a filing with the Securities and Exchange Commission. The change was “effective immediately.” The company has no permanent successor lined up — a very unusual look from VF, which is known for grooming talent and for well-coordinated CEO handovers.
Athletic & Sporting Goods
Anta Exploring Amer Sports IPO
Anta Sports Products, Ltd., the Chinese sports equipment corporation headquartered in Jinjiang, is reportedly holding preliminary talks with investment banks for an IPO of Amer Sports that could raise about U.S. $1 billion or more, according to Bloomberg. Amer Sports, headquartered in Finland, is the parent of Salomon, Arc’teryx, Peak Performance, Atomic, Suunto, Wilson, Armada, ENVE Composites, Louisville Slugger, DeMarini, and Sports Tracker. In April 2019, an investor consortium comprised of Anamered Investments, Inc., Anta Sports, Ltd., FountainVest Partners, and Tencent Holdings Ltd. completed its acquisition of substantially all of the outstanding securities of Amer Sports Corp. for approximately €5 billion ($7.53 billion). Anta is the leading shareholder with a 47 percent stake in Amer.
Fenix Outdoor Sells Primus to Silva Group
Fenix Outdoor AB has signed an agreement to divest Primus AB and its subsidiary Primus Eesti Ou to Silva Sweden AB. The closing is planned to take place in the spring of 2023. Primus was acquired by Fenix Outdoor back in 2002 and has since then been an important part of the portfolio of premium outdoor products that Fenix Outdoor sells. “In recent years we have seen strong growth, increased global presence and a strong increase in direct-to-consumer sales within the Fenix Outdoor Brands Segment. Thus, in the long term, the Fenix Outdoor Management does not feel that they can give a smaller brand like Primus the attention it deserves,” said Fenix in a press release. Fenix Outdoor believes that Primus has significant growth and development potential in the future together with Silva, a company that also operates in the technical segment of outdoor products. Silva being focused within outdoor hardware and technical equipment makes it a natural fit with the long technical legacy of the Primus brand. Primus produces and distributes outdoor cooking equipment for outdoors adventures globally, including stoves, lanterns, LED-lights, vacuum bottles, bottles and mugs, accessories and utensils.
Cosmetics & Pharmacy
Unilever Ventures Leads US$6 Million Series A Funding Round in Indonesia’s ESQA
Indonesia beauty brand ESQA has raised US$6 million in a Series A funding round led by Unilever Ventures, the venture capital arm of Unilever, according to Technode Global. East Ventures also participated in the round. Kezia Trihatmanto, Co-founder and Chief Product Officer at ESQA, said: “Innovation is at the forefront of our brand. Our approach is to think globally and act regionally, therefore ESQA is fast in spotting international trends but catering it to Asian skin and local demands according to our customer-centric focus, providing products that the customer needs.” ESQA is said to be using the additional capital to expand globally, scale up its omnichannel distribution, and grow its product offering, talent building and strengthen its marketing strategy.
How Big Beauty Is Plotting a Recovery in China
China’s biggest e-commerce players didn’t want to talk about Singles Day results this year. Sales, according to analysts, were generally lacklustre, as the country’s Zero Covid policy kept many under lockdown, and triggered some of the biggest protests in years. Beauty and personal care sales fared better than many other categories, however, growing 3 percent year-over-year on Tmall, said Adam Knight, co-founder of China consultancy Tong Global, which works with brands including Clinique, Charlotte Tilbury and Huda Beauty. Still, big beauty companies are tempering their expectations. In its quarterly earnings released in November, The Estée Lauder Companies said it sees full year net sales decreasing between 6 to 8 percent versus last year. In November, after nearly three years of draconian Covid-zero restrictions, frustration following a deadly fire in a lockdowned apartment building triggered nationwide protests. On Monday, Beijing announced it would loosen some policies in several cities, including Shenzhen and Shanghai. China’s economy is widely expected to grow by less than 3 percent this year, the slowest pace in decades.
Discounters & Department Stores
Walmart, Target most popular for in-store holiday shopping: report
Indicating a resurgence in in-store shopping, Jungle Scout’s survey of 1,000 U.S. consumers found that 56% of respondents are shopping at Walmart for their in-store purchases, followed by Target (29%) and Amazon Go or Amazon Go Grocery (17%). Over two-thirds of shoppers (67%) are shopping at Amazon for their online holiday purchases, followed by Walmart.com (36%) and Target.com (18%). More than half (57%) of respondents said they shopped on Black Friday this year, and 43% shopped on Cyber Monday. Over a third (34%) of consumers made their holiday purchases during Amazon Prime’s Early Access sale in October, followed by 32% who shopped during Walmart’s Rollback Sale and 22% who shopped during the Target Deal Days event, the report found. Out of the 33% of shoppers who are cutting their holiday expenses, 59% said they were reducing their holiday gift budget and 20% are buying fewer holiday decorations, per the report. The majority of consumers (67%) expect to spend under $500 on holiday-related expenses this year.
Macy’s, Nordstrom see holiday shoppers pulling back
Anxious to unload inventory and eager to get a jump on the season, a few retailers this year held red-letter holiday sales before Halloween. There was some logic to starting early, because, with inflation squeezing their budgets and federal pandemic support funds depleted, many consumers have to stretch their budgets this year. Other retailers were more patient, though. Overall discounting was actually down in those early weeks before Black Friday compared to last year. For Black Friday itself, the National Retail Federation reported robust turnout, though Placer.ai tracked lighter footfall at malls and physical stores. Some people seem to be in less of a hurry to tend to their lists, possibly because there’s more weekend time before major holidays this year, according to Nordstrom CEO Erik Nordstrom, speaking this week at Morgan Stanley’s Consumer & Retail Conference. Christmas Day falls on a Sunday, and Hanukkah doesn’t end until the day after that.
Dollar General takes $40M hit from delays in temporary warehouse openings
Dollar General encountered unexpected delays in opening enough temporary warehouse space in Q3, resulting in more than $40 million in added supply chain costs, CEO Jeff Owen said on an earnings call. External challenges such as permitting were the main source of the delays, he said. During the same period, seasonal goods came in earlier than anticipated. The lack of adequate space led to fees for delays in returning shipping containers and some stores being serviced “from less-than-optimal distribution center alignments,” which led to higher transportation costs, Owen said. Cost pressures tied to storage constraints are expected to be largely resolved by Q1.
TJ Maxx, Marshalls owner is dominating off price
Just a few months ago, the off-price sector looked like it might be less resilient than in the past. In the second quarter, TJX Cos., Ross and Burlington — which dominate the off-price space and often benefit from both economic upturns and downturns — all demonstrated to varying extents that they weren’t immune to inventory struggles, inflation’s drag on discretionary spending, or fresh competition from highly promotional specialty retailers and department stores. In the third quarter, though, those retailers bounced back. Their promise of good deals on apparel and home goods fits the moment, especially as the holidays grow closer, and they seem to be better controlling their inventories. In October, their combined sales were 20% above October 2019, according to research from Bloomberg Second Measure. Though not addressed in that report, Nordstrom’s off-price Rack business isn’t keeping up with its three main competitors, according to other analysts.
Emerging Consumer Companies
Haircare brand Dae raises $10.6 million
Dae Hair, the beauty brand by influencer and entrepreneur Amber Fillerup Clark, announced a $10.6 million total investment, following an $8 million Series A. The new Series A was led by Verity Venture Partners, with participation from Digital Brand Architects — Clark’s influencer management agency — as well as fellow influencers Whitney Port, Aimee Song and Christine Andrew, and existing investor Willow Growth Partners. With the new investment, Clark said the brand plans to focus on building its Sephora partnership by “meeting customers in real life and doing more activations.” Continuing influencer relationships and leveraging social media and digital advertising are also priorities.
Arena Club, sports trading card platform, raise $10 million
Arena Club, a Los Angeles-based sports trading card platform that counts Derek Jeter as a co-founder, raised $10 million in fresh funding to continue its expansion. The round was led by venture capital firm M13, with participation from Defy.vc, Elysian Park Ventures, Lightspeed Ventures and Bam Ventures. Arena Club has now raised around US$20 million in total. Founded by Jeter, Brian Lee and Jesse Glass, Arena Club offers machine learning-powered automated grading services, card storage facilities, and the ability to buy and sell collectibles, with transactions recorded on the blockchain.
Archive, a retail as a service platform for brands, raises $15 million
Archive, a tech company that builds resale operation systems, has raised $15 million in Series A funding. Lightspeed Venture Partners led the financing round, and Bain Capital Ventures, Fernbrook Capital, G9 Ventures and other investors participated in the round. The company said it will use the funding to hire more employees for its engineering and branding teams and support its expansion in North America and Europe. So far, the company has added The North Face, Oscar de la Renta, and M.M. LaFleur as brand partners and plans to add more companies to its roster next year.
Food & Beverage
Keurig Dr Pepper spends $863M for stake in C4 Energy maker
Keurig Dr Pepper is buying a 30% stake in Nutrabolt, the maker of energy drinks such as C4 Energy and Xtend Energy, for $863 million, the companies said in a statement. The transaction is expected to close this month. As part of the deal, Keurig Dr Pepper and Nutrabolt entered into a long-term sales and distribution agreement. Keurig Dr Pepper has the opportunity to earn additional equity tied to in-market execution, and it will have representation on the Nutrabolt board. While Keurig Dr Pepper is best known for its two namesake liquids, the Texas-based firm has been actively purchasing stakes in a diverse range of beverage upstarts, or acquiring brands outright, to better position its portfolio to changing consumer trends.
General Mills invests in ‘precision pollination’ startup
Food technology startup BeeHero has completed an oversubscribed $42 million Series B funding round, providing further investment to accelerate growth and development of its “precision pollination” platform. BeeHero has raised a total of $64 million to date. Founded in 2017, BeeHero uses advanced data analytics, artificial intelligence and low-cost sensors to optimize commercial crop pollination, resulting in improved crop yields and higher profits for growers. Increasing bee mortality rates have threatened production of many of the world’s fruit, vegetable, seed, nut and oil crops, according to the United Nations. Nearly 100,000 acres of high-value crops across the United States are pollinated using BeeHero’s technology, and the company has begun expansion into Australia, Europe, South Africa and South America.
Ferrero Group captures Blue Bunny with Wells acquisition
The Ferrero Group is acquiring Wells Enterprises, Le Mars, Iowa, for an undisclosed sum. The acquisition gives Ferrero a position in the North American ice cream and frozen novelties market through such Wells’ brands as Blue Bunny, Blue Ribbon Classics, Bomb Pop and Halo Top. Wells Enterprises will operate as a stand-alone business within the Ferrero Group and continue operating its production facilities in Le Mars; Henderson, Nev.; and Dunkirk, NY, once the transaction closes. Mike Wells, current chief executive officer, will shift into an advisory role and Liam Killeen, current president of Wells, will become CEO. The rest of Wells’ existing leadership team will remain in place, according to the Ferrero Group. “This represents a win-win partnership, bringing together ice cream experts and confectionery champions,” said Giovanni Ferrero, executive chairman of the Ferrero Group. “Together, we have the power of one and are well placed to grow and compete in the ice cream market.”
Alt-dairy maker secures $9 million in funding
MALK Organics, a maker of dairy alternatives, has raised more than $9 million in Series B funding led by Benvolio Group and Rotor Capital. Founded in 2015, MALK Organics offers a line of organic plant milks formulated with three to five simple ingredients and no glyphosates, gums, fillers or oils. Offerings include unsweetened almond, vanilla almond, original oat, vanilla oat and chocolate oat. The products are sold at Whole Foods Market, Sprouts Farmers Market, Fresh Thyme and hundreds of other stores across the country. “We are extremely bullish about MALK’s growth prospects, because not only is the product highly differentiated in a growing on-trend category, but the seasoned team in place has delivered exceptional results in 2022 and has a strong plan to accelerate future revenue and achieve profitability,” said Sam Frankfort, managing partner of Benvolio Group.
Grocery & Restaurants
Dine Brands to acquire Fuzzy’s Taco Shop
Applebee’s and IHOP parent company Dine Brands Global, Inc. announced Monday the intention to acquire casual Mexican chain Fuzzy’s Taco Shop from NRD Capital subsidiary Experiential Brands LLC for $80 million. This will be the third brand in the Dine portfolio. Fuzzy’s CEO Paul Damico will still lead the brand under the Dine Brands umbrella. Fuzzy’s currently has 138 stores across 18 states, with approximately $230 million in systemwide sales in 2022. Over time, Dine Brands hopes to double the Fuzzy’s store count. “Fuzzy’s Taco Shop is a compelling business with a loyal customer base and a distinct identity. It is an attractive asset with a tremendous growth trajectory and will be a complementary addition to our highly franchised portfolio,” John Peyton, CEO of Dine Brands said in a statement. “By adding Fuzzy’s to the Dine Brands family, we are investing in a high growth concept as part of our longer-term growth agenda, which is aligned with our strategy to build shareholder value.” According to Dine Brands, the deal is expected to be “immediately accretive.”
Foodtastic to acquire Quesada restaurants in Canada
Canada-based multiple restaurant concept franchisor Foodtastic has reached an agreement to acquire quick service restaurant brand Quesada Burritos & Tacos. Financial details of the deal have not been divulged. Established in 2004, Quesada operates more than 175 restaurants across eight provinces in Canada. Its offerings include burritos, tacos and salsas. Quesada founder and CEO Steve Gill said: “We are extraordinarily proud of our franchisee partners, front-line workers and corporate team. “With their support, we have grown Quesada from a single store into +175 locations across eight provinces. We are excited about the future of the brand and believe that as part of Foodtastic our franchisees will reach new levels of success.” Upon completion of the deal, Foodtastic will have more than 900 restaurants and $830m in sales in the country. Going forward, Foodtastic plans to further develop the Quesada brand with plans to open more than 50 locations over the next 36 months.
Home & Road
Lowe’s in new $15 billion share repurchase program; updates financial targets
Lowe’s Companies reaffirmed its full-year 2022 financial outlook as the end of the year approaches. The home improvement retailer also announced a new share repurchase program as part of a presentation on its key growth initiatives and long-term financial targets ahead of its 2022 investor’s day on Wednesday in New York City. Lowe’s expects total sales of approximately $97 to $98 billion for its full 2022 year, which includes a 53rd week (compared to last year’s 52-week year). The extra week is expected to increase total sales by approximately $1.0 to $1.5 billion. Comparable sales are expected to be flat to down 1% as compared to prior year. Capital expenditures are expected to be up to $2 billion In November, Lowe’s entered into a definitive agreement to sell its Canadian retail business to Sycamore Partners for $400 million in cash, plus a performance-based deferred consideration. The transaction is expected to close in early 2023. Lowe’s noted on Wednesday that the Canadian retail business represents less than 6% of consolidated full year 2022 sales outlook and approximately 60 basis points of dilution on the consolidated full year 2022 adjusted operating margin outlook.
How is Lovesac’s brick-and-mortar strategy working? Q3 earnings tell
Lovesac’s third quarter 2023 sales figures reveal a strong brick-and-mortar component to the company’s net sales of $134.8 million, a 15.5% increase over the same period last year, reflecting a return to in-person shopping and the company’s investment in more showrooms and store-within-stores at Costco and Best Buy. The company noted that showroom net sales increased by 18.5% from the prior year with higher point of sale transactions, strong promotional campaigns and the addition of 41 new showrooms and 13 new kiosks compared to the prior year period. “Other” net sales channels increased 61.8%, reflecting a reintroduction of Costco physical pop-up-shops and the addition of 17 new Best Buy shop-in-shops, for a total of 22 Best Buy shop-in-shop locations. Internet net sales decreased 6.3% as compared with the prior year. The company noted that 38% of recent consumers surveyed indicated they were not “cross-shopping” before making the decision to purchase a Lovesac sectional.
Furniture that’s ‘connecting with customers’ tempers Q3 decline for Kirkland’s Home
In a quarter where net sales dropped to $131 million vs. $143.6 for the prior year third quarter, specialty home furnishings retailer Kirkland’s Inc. saw some relief from its furniture and home textiles categories. In the company’s third quarter earnings call, Steve “Woody” Woodward, president and CEO of Kirkland’s Home, said while the “volatility within the consumer environment made it difficult to predict sales patterns heading into the quarter, our financial results were generally in line with our internal expectations.” Comp sales declined just 2% in August, he said, and while strong promotional offers helped sales in early September. However, he added, “business softened for the balance of September and into early October, as customers proved very price conscious and less interested in harvest décor than years past.” This resulted in total comp sales being down 7% for the quarter ended Oct. 29, including an 8.6% decline in e-commerce sales. Gross profit for the third quarter was $32.7 million, or 25% of net sales, compared to $49.8 million or 34.7% of net sales in the prior year quarter. The decline was attributed to increased promotional activity to drive sales and reduce inventory along with higher freight costs.
Conn’s feels pinch as Q3 headwinds worsen
Top 100 retailer Conn’s HomePlus reported losses or declines in several key metrics in its Q3 earnings report. The Woodlands, Texas-based retailer reported that its consolidated revenue declined 20.8% to $321.2 million in the three months ended Oct. 31, due to a 24.0% decline in total net sales and a 5.7% slip in finance charges and other revenues while same store sales dipped 27.0%. For the quarter, Conn’s reported a net loss of $24.84 million, compared with net income of $18.24 million in the same period in 2021. It reported a $1.04 loss per diluted share in the quarter compared with a 60 cents per share gain in 2021. “Retail sales remain challenged by macroeconomic headwinds, which continues to impact discretionary spending, and lower year-over-year lease-to-own sales,” said Norm Miller, Conn’s interim president and CEO. “As we navigate this environment, we are refocusing our efforts to better serve our core credit constrained customers.”
Jewelry & Luxury
Former LVMH exec to be named CEO of Prada
Andrea Guerra is to be named CEO of Prada Group, taking over the role from husband and wife team Miuccia Prada and Patrizio Bertelli. The Italian fashion house said it will recommend Guerra as its chief at a board meeting on Jan. 26. Miuccia Prada will remain the creative director of Miu Miu and co-creative director of Prada, along with Raf Simons, according to an announcement sent to Retail Dive. She will also stay on as a board member. Patrizio Bertelli will be named chairman of the board of directors, while current board director, Paolo Zannoni, will become the executive deputy chairman.
Signet Anticipates Solid Holiday Season, Raises Guidance
Signet Jewelers Ltd. posted muted overall growth and declining same-store sales in the third quarter as it competed with last year’s strong Q3. However, the jewelry giant, which is the parent company of several large jewelry store chains including Zales, Jared and Kay Jewelers, has raised its fiscal guidance in anticipation of a merry holiday season. “Our strong third-quarter results exceeded guidance and evidence why we believe Signet is uniquely positioned to deliver consistent market share growth and value creation,” CEO Virginia C. Drosos said in a press release on the company’s Q3 results.
Rebag launches digital wallet feature
Continuing its rollout of tech features, Rebag has launched Rebag Wallet, a tool that houses sellers’ payouts and Rebag proceeds, the company announced on Wednesday. After Rebag processes sellers’ transactions, they can access their funds in the wallet account. When they use their seller funds to buy goods on Rebag, the company will give them a 10% spending bonus, according to the announcement. The company will pay out 1% in interest per month for up to 12 months on the seller funds stored within the wallet.
Fashionably ate: Why luxury fashion brands are entering F&B
If a Gucci handbag isn’t your thing, how about a Gucci burger? At the Gucci Osteria restaurant in Seoul, the fourth restaurant opened by the luxury fashion house in as many years, a burger will cost you 27,000 won (US$20) and a full course menu will set you back between 120,000 won (US$89) to 170,000 won (US$125). Value for money? Consumers seem to think so. Reservations for the restaurant, which opened earlier this year, were sold out four minutes after it opened. As pandemic restrictions ease globally, and consumers are eager to go out, it seems the F&B industry is becoming the new segment for luxury fashion brands to conquer as restaurants and cafés bearing their logos pop up nearly every week.
Office & Leisure
GameStop lays off employees — again
Another round of layoffs is underway at GameStop, according to multiple LinkedIn posts by employees this week. “Tough day today as we let go a number of wonderful, talented, collaborative folks across product, engineering, marketing, operations…and others,” GameStop Senior Vice President of E-commerce Neda Pacifico said in a LinkedIn post. Multiple employees with engineer roles announced they were part of the latest round of layoffs, including an iOS engineer who said they worked in the “crypto space,” a software engineer who noted they worked in the GameStop mobile app and a senior software engineer who worked on e-commerce and retail tech infrastructure. Additionally, a senior regional manager of transportation posted about being laid off. This is not the first round of layoffs the retailer has enacted this year. The company was reportedly preparing for layoffs in July and let go of its chief financial officer at the time. GameStop’s second-quarter earnings in September showed its net loss widened by over 75% year over year to $108.7 million.
Funko brings back former CEO, drops CFO after massive decline for stock on holiday forecast
Funko Inc. is putting its longtime chief executive back in charge of the business and looking for new executives to join him after a disappointing holiday forecast chopped the toy maker’s stock in half. Funko, known for its line of Pop! figurines that depict characters from popular culture, announced Monday afternoon that Brian Mariotti would return as CEO. Mariotti served as the CEO for years after acquiring the company with other investors in 2005, but had moved to the role of chief creative officer in January of this year in favor of Andrew Perlmutter. In his return, Mariotti “has a mandate from the board to identify operational improvements while continuing to drive profitable growth,” Monday’s announcement reads. Perlmutter will remain at the company as president, and will also remain on the board of directors. Chief Financial Officer Jennifer Fall Jung will not stay with the company, though: The longtime Gap Inc. employee who was brought in as CFO three years ago is stepping down immediately and being replaced on an interim basis by Scott Yessner, who was found through a search firm. In addition, Funko is bringing in former Walmart Inc. executive Scott Nave as a consultant to “work full-time alongside the management team to drive strategic and operational execution,” and looking to create a role for a chief operating officer.
Technology & Internet
FTC sues to block Microsoft’s acquisition of Activision Blizzard
The Federal Trade Commission said on Thursday it has filed an antitrust case against Microsoft to challenge the software maker’s attempt to acquire video game publisher Activision Blizzard, claiming it would violate U.S. law. This isn’t Microsoft’s first time dealing with competitive pressure. In 1998 the U.S. Justice Department filed a broad antitrust case against the company. Microsoft changed some practices related to its Windows operating system business as a result. Microsoft announced plans to acquire Activision Blizzard for $68.7 billion in January, with the goal of closing it by June 2023. The deal has come under pressure from Microsoft’s competitors in gaming, such as Sony. Microsoft has repeatedly said it won’t be the world’s leader in gaming if the deal were to close, and it has vowed to provide popular “Call of Duty” games on gaming platforms other than those owned by Microsoft. “We continue to believe that this deal will expand competition and create more opportunities for gamers and game developers,” Brad Smith, Microsoft’s vice chair and president, said in a statement. “We have been committed since Day One to addressing competitive concerns, including by offering earlier this week proposed concessions to the FTC. While we believed in giving peace a chance, we have complete confidence in our case and welcome the opportunity to present our case in court.”
Amazon reportedly reaches deal with EU over anti-competitive practices
EU antitrust regulators have reached a final deal with Amazon, three years after officials in Brussels opened a probe into whether the company uses data to engage in anti-competitive practices, according to the Financial Times. Amazon has agreed to give rival products more visibility in its “buy box,” which spurs the majority of the site’s purchases, the Financial Times said. And consumers will reportedly see an additional featured offer in cases where the speed of their delivery is not as important. Sellers who use Amazon’s Prime membership won’t be locked into Amazon’s logistics services, according to the report, and can negotiate terms with different services directly. The deal is expected to be announced on Dec. 20, the U.K. newspaper said, noting the date could be changed. The deal would be a significant victory for the European Union, and it shows how major tech companies will have to comply with the new Digital Markets Act that was adopted in September.
Finance & Economy
Consumers’ caution around holiday spending is the highest since 2013, CNBC survey shows
American shoppers plan to watch their wallets closely this holiday shopping season, with 41% saying they plan to spend less this year than last, according to the CNBC All-America Economic Survey. It marks the most cautious holiday season since 2013. The survey found that average spending intentions for gifts fell about 10% from last year to $907 from $1,004 in 2021 when Americans were flush with cash from government stimulus. This year, though wage expectations are up and Americans feel secure in their jobs, high inflation and concern about the economy and housing prices look to be sapping Yuletide spending cheer.
401(k) ‘hardship’ withdrawals hit record high, Vanguard says — another sign households feel the pinch of inflation
The share of retirement savers who withdrew money from a 401(k) plan to cover a financial hardship hit a record high in October, according to data from Vanguard Group. That dynamic — when coupled with other factors like fast-rising credit card balances and a declining personal savings rate — suggests households are having a tougher time making ends meet amid persistently high inflation and need ready cash, according to financial experts. Nearly 0.5% of workers participating in a 401(k) plan took a new “hardship distribution” in October, according to Vanguard, which tracks 5 million savers. That’s the largest share since Vanguard began tracking the data in 2004.