Story of the Week
General Mills to sell North American yogurt business for $2.1B
General Mills is selling its North American yogurt business to French dairy companies Lactalis and Sodiaal in cash transactions valued at an aggregate $2.1 billion. Lactalis will acquire the U.S. operation and Sodiaal the Canadian business. The deals are expected to close in 2025. The divestitures include the U.S. and Canada operations of several yogurt brands including Yoplait, Liberté, Go-Gurt and Oui, as well as manufacturing facilities in Tennessee, Michigan and Québec. The sale allows General Mills to focus its portfolio on faster-growing categories, such as snacks and pet food, while exiting a yogurt business facing competition from companies like Chobani and Danone. The North American yogurt business contributed approximately $1.5 billion to General Mills’ fiscal 2024 net sales.
Apparel & Footwear
Caleres is lowering its yearly guidance following reported sales below its expectations in the second quarter. According to the St. Louis-based footwear company, net sales in the second quarter of 2024 were $683.3 million, down 1.8 percent from $695.5 million in the second quarter of 2023. Net earnings in the period were 30.0 million, or earnings per diluted share of 85 cents, compared to net earnings of $33.9 million, or earnings per diluted share of 95 cents in the same time last year. By business segment, Caleres reported that net sales at Famous Footwear increased 1.5 percent in Q2, with comparable sales down 2.9 percent.
Designer Brands Cuts Outlook After Q2 Sales, Earnings Miss
Designer Brands Inc. downgraded its 2024 outlook after it delivered fiscal second quarter earnings and sales results that fell short of expectations. Net sales for the DSW parent company decreased 2.6 percent to $771.9 million in the second quarter. Comparable sales decreased 1.4 percent in the period, while adjusted net income was $17.1 million, with adjusted diluted EPS of 29 cents. The results fell short of analysts’ expectations that targeted sales of $816.14 million and EPS of 53 cents. Shares of DBI were down more than 28 percent in pre-market trading on Sept 11th. DBI chief executive officer Doug Howe said in a statement that dress and seasonal categories were challenged in Q2, but overall sales declines were somewhat mitigated by strength in athletic and athleisure brands, the latter of which saw sales increase eight percent compared to the prior year.
Oxford Industries Q2 Earnings and Revenues Miss Estimates
Oxford Industries reported quarterly earnings of $2.77 per share, missing the Zacks Consensus Estimate of $3.05 per share. This compares to earnings of $3.45 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -9.18%. A quarter ago, it was expected that the owner of the Tommy Bahama, Lilly Pulitzer and Southern Tide clothing lines would post earnings of $2.70 per share when it actually produced earnings of $2.66, a surprise of -1.48%. Over the last four quarters, the company has surpassed consensus EPS estimates just once. Oxford Industries posted revenues of $419.89 million for the quarter ended July 2024, missing the Zacks Consensus Estimate by 4.59%.
Under Armour to close California distribution center amid restructuring plan
Under Armour announced it would close one of its primary distribution centers, in Rialto, California, as part of a broader restructuring plan. The retailer plans to exit the facility by March 2026 and incur an additional $70 million in restructuring charges as a result, according to a company press release. Under Armour first introduced the restructuring plan in May, with an initial cost target of between $70 million and $90 million. With the distribution center closure, the projected charges associated with the plan have now basically doubled, to between $140 million and $160 million.
Zara owner Inditex sees early autumn sales perk up after summer slowdown
Zara owner Inditex reported a jump in sales of its autumn/winter collection on Sept 11, boosting its share price as the world’s largest listed fashion retailer recovered from a summer marred by poor weather. Shares in Spain’s Inditex were up 4.6% by 08:55 GMT, outperforming the IBEX35 which was up 1.1%. Inditex said its sales between Aug. 1 and Sept. 8 saw an 11% boost in constant currency compared with a year ago. In the first half, sales growth had slowed to 7.2% from 13.5% in the same period a year ago, partly due to a wet and cold June in its home market.
Athletic & Sporting Goods
CSC Generation Enterprise acquires Backcountry
Park City outdoor gear and apparel brand Backcountry has been acquired by CSC Generation Enterprise. The technology platform is known for acquiring and turning retailers into high-performing, digital businesses. The acquisition includes Backcountry’s family of brands, MotoSport, Competitive Cyclist and Steep and Cheap. Backcountry said it will continue to operate under its brand name under the acquisition and continue its focus on strong customer relationships. The online outdoor retailer, which was started by two Park City locals in their garage 1996, has grown with a corporate headquarters in Park City and warehouses in Salt Lake City, Christiansburg (VA), Portland (OR), and Costa Rica. The company was previously acquired by TSG Consumer Partners LLC, a strategic equity investor in high-growth consumer brands from Liberty Interactive Corporation in 2015.
Snow Peak Acquires Majority Stake in Swift Fly Fishing Co.
Snow Peak recently acquired a majority share in Swift Fly Fishing and announced that the business is now a subsidiary. Founded in 1958, Snow Peak is a Japanese camping and hiking equipment manufacturer offering experiences that bring the “outdoors into everyday life.” Founded by Carl McNeil and Jeanie Ackley, Swift Fly Fishing, headquartered in Wanaka, New Zealand, manufactures the Epic Fly Rod brand that uses graphite, graphene, and Epic’s proprietary “Fast Glass” composite material to create the rods.
Cosmetics & Pharmacy
L Catterton Acquires Majority Stake in Stenders
L Catterton, a leading global consumer-focused investment firm, announced that it has acquired a majority stake in Stenders, a premium bath and body care company founded in Latvia in 2001 that now has a presence in 20 countries across the world. The transaction positions Stenders to accelerate its international expansion across Asia, Europe, the Middle East, and the US, on the back of secular tailwinds in the sector. Consumer trends such as a heightening focus on holistic wellbeing, increasingly sophisticated bath and body care rituals, and rising preferences for products made from natural ingredients have been propelling a shift towards premium offerings.
Mangomint raises US$35 million in Series B funding round
Mangomint has announced that it has closed a US$35 million Series B funding round. The round was led by Altos Ventures with participation from SaaStr Fund and existing investor OpenView Venture Partners. In addition to the equity round, Mangomint also secured US$12 million in venture debt, issued by Avidbank. The salon and spa software provider also announced the launch of a new suite of marketing automation features designed for beauty and wellness businesses to help independent salons to cut costs and save time.
Goop Restructures, Lays Off 18% of Workforce to Refocus on Core Categories
Goop has announced a significant restructuring, cutting 18% of its workforce and focusing on its strongest categories: fashion, beauty, and food. While Goop has previously ventured into wellness, home, travel, and sexual wellness, it will now focus on key areas showing growth. Beauty revenues grew by 40% in 2023, and fashion sales from G.label are up 51% year-to-date. Goop is restructuring to drive efficiency, optimize growth, and prioritize its most successful divisions amid competitive pressure.
Discounters & Department Stores
Big Lots gets court OK for $550M in bankruptcy financing
Big Lots has received interim court approval to immediately access $550 million of $707.5 million in available bankruptcy financing, according to court documents and a Wednesday company announcement. The company filed for Chapter 11 protection last Monday. The financing, along with cash generated from ongoing operations, is expected to provide enough liquidity to continue normal operations, including paying employees and vendors, as Big Lots works through the bankruptcy process. Big Lots remains open and said it plans to stay in business after exiting bankruptcy.
Ross switches up its merchandising leadership team
Ross on Tuesday announced the promotions of two senior executives on its merchandising team. The changes are effective on Dec. 1 and both roles will report to CEO Barbara Rentler, according to a company press release. Karen Fleming is being promoted to chief merchandising officer for Ross Dress for Less. She is currently the chief merchant of DD’s Discounts. Karen Sykes will be the new chief merchandising officer of DD’s Discounts. Sykes currently is the executive vice president of merchandising overseeing men’s and children’s at Ross.
Macy’s unveils Mode of One menswear brand
After two-plus years in development, Macy’s on Thursday launched Mode of One, a men’s private label, part of what the department store said is the latest in its “ongoing private brands reimagination.” Available now in stores and online, the apparel brand has more than 140 SKUs, per a company press release. Prices range from about $25 to $160, in sizes from S to XXL and 30 to 40. Starting in October and through the holidays, Mode of One will offer monthly drops. For the first collection, Macy’s worked with graphic designer Tyrell Waiters, and The Brooklyn Circus founder Ouigi Theodore was the stylist.
Emerging Consumer Companies
Mousse Partners invests in The Row, founded by the Olsen twins
The Wertheimer brothers, via their family office Mousse Partners, and Francoise Bettencourt Meyers’ family vehicle, Tethys Invest, have bought a minority stake in the fashion brand The Row, according to people familiar with the situation, who asked not to be named discussing matters that aren’t public. Other investors are also likely to join the deal, which values The Row at about $1 billion, the people said. The Row was started in 2006 by sisters Mary-Kate and Ashley Olsen, who shot to fame as child actresses in the late 1980s in the sitcom Full House. Their label has established itself as a respected quiet luxury player and presents its collections during Paris fashion weeks. It offers leather handbags like the Margaux, which can cost about $7,000.
Lil Bucks, sprouted buckwheat brand, raises $3 million
Sprouted buckwheat food brand Lil Bucks secured $3 million in Series A funding in a round led by Proterra Investment Partners, following measures to extend its runway amid continued capital-raising challenges. Founded in 2018, Lil Bucks makes crunchy snacks and seasonings from sprouted buckwheat.
Food & Beverage
Cooper Street Snacks expands with acquisition
Cooper Street Snacks, a family-owned company that makes cookies and granola bakes, has acquired Harvest Valley Bakery, Inc., a La Salle, Ill.-based manufacturer of private label cookies, brownies, bars and bites for distribution in retail, vending and institutional markets. Harvest Valley also specializes in custom formulations and manufacturing. Financial terms of the transaction were not disclosed. Following completion of the acquisition, Harvest Valley Bakery will be rebranded as Cooper Street Bakery. “The acquisition aligns with Cooper Street’s vision to strengthen its operational foundation and increase production efficiency,” Cooper Street Snacks said.
French Gourmet, ShellsByDesign merge
Commercial pastry bakery French Gourmet Inc. has merged with Shells By Design LLC, a maker of frozen tart shells and desserts doing business as ShellsByDesign. Financial terms of the deal weren’t disclosed. French Gourmet is a portfolio company of West Des Moines, Iowa-based private equity firm Midwest Growth Partners, which announced the transaction on Sept. 5. Sparks, Nev.-based French Gourmet manufactures a range of artisanal croissants, danishes, dough shells and puff pastries with laminated dough in frozen and pre-proofed formats, as well as pastry fillings. The company supplies hotels, cafes, independent bakeries, diners, grocery store bakeries and other foodservice customers.
One Rock Capital lands deal to acquire Europe Snacks
Private equity firm One Rock Capital Partners LLC has entered an agreement for an affiliate to acquire Europe Snacks, a maker of private label savory snacks for the European market. Financial terms of the deal, announced Sept. 11, weren’t disclosed. Paris-based Europe Snacks makes stacked chips, puffed and popped snacks, crisps, crackers, tortilla chips and popcorn for major food retailers across Europe. The company also serves as a co-manufacturing partner to international brands in the region. “We are looking forward to joining forces with One Rock as we enter our next phase of growth,” said Étienne Lecomte, chief executive officer of Europe Snacks.
Grocery & Restaurants
BurgerFi files for Chapter 11 bankruptcy protection
BurgerFi International Inc. — the Ft. Lauderdale, Fla.-based fast-casual burger chain and parent to Anthony’s Coal Fired Pizza — has filed for Chapter 11 bankruptcy protection. The company declared bankruptcy less than one month after warning investors of this potential outcome in a 10-Q form filed with the U.S. Securities and Exchange Commission, noting at the time that it could not report its latest quarterly earnings by the requisite deadline due to “significant adverse developments that occurred with respect to the company’s business and liquidity.” Just prior to that, BurgerFi had received $2.5 million in funding from Trew Capital Management Private Credit 2 LLC, and was required to illustrate the company’s intent to use the funding to settle its credit obligations.
Kroger: Shrink is down in Q2 as grocer prepares for Albertsons merger
As Cincinnati, Ohio-based Kroger nears the end of its antitrust case this week, the grocer reported better-than-expected results in its Q2 earnings report, which gave its stock value a boost on Sept 12th. Identical store sales, not including fuel, were up 1.2% for the quarter year over year, and digital sales were up 11% for the quarter. “The reduction of excess savings built up during the pandemic, higher interest rates and the effect of inflation are pressuring customers’ ability to spend,” said Kroger CEO Rodney McMullen during the company’s quarterly earnings call. “This is especially true for our most budget conscious customers, as we’ve been seeing for a while now, but we’re now seeing other customer segments beginning to make changes as well. Customers are purchasing lower-price cuts of meat, buying less, and focusing on essentials.”
Thrive Restaurant Group acquires Modern Market Eatery
Thrive Restaurant Group has acquired the 29-unit fast-casual Modern Market Eatery brand from Butterfly Equity, the company confirmed. Wichita, Kan.-based Thrive operates more than 200 restaurants in 18 states, including Applebee’s Neighborhood Grill franchised units, Bakesale, Carlos O’Kelly’s, HomeGrown and Qdoba. It had been a franchisee of Modern Market since 2022, and decided to buy the concept from Beverly Hills, Calif.-based Butterfly Equity, officials said. Thrive Restaurant Group had previously purchased three Modern Markets in Austin, Texas, and has built two Modern Markets in the Kansas City area. The acquisition expands the Thrive holdings into seven states, operating 24 restaurants and five licensed locations.
Franchisee Hostmore’s purchase of TGI Fridays falls through
Hostmore, the United Kingdom-based franchisee of casual-dining TGI Fridays, said its planned reverse takeover of the Dallas-based franchisor was off, and shares of the company fell more than 91% Sep 10th. Hostmore said it expects to be delisted on the U.K. stock exchange after telling shareholders that the Fridays buyout wouldn’t proceed after the franchisor lost control over many of its assets. Hostmore, which owned and operated 87 restaurants, also said its planned sale of corporate stores generated bids that indicate consideration will be less than the borrowings. As such, Hostmore said it didn’t expect to “recover any meaningful value for its ownership.” Hostmore and TGI Fridays agreed in April to merge the 87-unit United Kingdom-based franchisee with the Dallas-based Fridays parent company. Hostmore was Fridays’ largest global franchisee.
Home & Road
Lovesac takes ‘prudent’ outlook for rest of 2024 after recording Q2 sales gain
Despite “a challenging industry backdrop,” home furnishings company Lovesac notched a 1.3%, or $2.1 million, gain in net sales for the second quarter ended Aug. 4. The $156.6 million sales total for the 13-week period was divided among showrooms ($98.8 million), internet ($44.3 million) and other ($13.5 million). Showroom sales rose 0.6%, while Internet business was up 7% for the quarter. Lovesac added 10 showrooms during Q2 and closed two for a total of 254. The 9.3% drop in the other category was largely attributed to the lower productivity of the online pop-up shops on Costco.com, said Keith Siegner, executive vice president and CFO during the company’s earning call.
LL Flooring signs last-minute deal to sell itself to company founder
LL Flooring has reversed course, with some stores to remain open under a new owner. Less than a week after the specialty retailer of hardwood flooring (formerly known as Lumber Liquidators) said it was going out of business and liquidating its assets as efforts to find a buyer failed, the company is not going dark after all — at least not entirely. The bankrupt retailer said it has signed an agreement with Miami-based private equity firm F9 Investments for a “going-concern” sale of its business. F9, which is LL Flooring’s largest shareholder, is run by Thomas Sullivan, who founded the company as Lumber Liquidators in 1994. He left in 2016 following a “60 Minutes” report in 2015 related to claims of unsafe levels of formaldehyde in flooring it had imported from China. The report, which led to class-action lawsuits, proved damaging to the brand, which changed its name to LL Flooring in 2022.
Jewelry & Luxury
Breitling Inks Licensing Deal with the NFL
Breitling kicked off a new partnership earlier this month, a long-term licensing agreement to create team-specific watches for the NFL. Breitling said the collaboration is the first and only of its kind between a Swiss watchmaker and the NFL, widely considered to be the most popular sports league in North America. The model used for Breitling’s NFL watches is the Chronomat B01 42, a 42 mm timepiece powered by the in-house Calibre 01, a COSC-certified chronometer movement with a power reserve of about 70 hours and a five-year warranty.
Signet Jewelers’ Q2 Sales Fall 8%
Signet Jewelers Ltd. sales continued to decline in the second quarter, but it’s seeing brighter days ahead. The jewelry giant, which is the parent company of several large jewelry store chains including Zales, Jared, and Kay Jewelers, reiterated its prediction that the number of engagements will rise in the near future, following a post-pandemic slump. “Both the internal and external metrics we track indicate increasing engagements as we head into the back-half of the year,” said Signet Jewelers CEO Virginia C. Drosos in a statement. Signet’s previously shared data showed engagements occur within three years of a couple dating, but they have been happening less frequently in the wake of the COVID-19 pandemic, which limited people’s ability to connect.
Brilliant Earth Expands International E-Commerce
Brilliant Earth’s jewelry is now available to even more customers. The San Francisco-based jewelry retailer has partnered with e-commerce platform Global-E to expand its e-commerce offerings, now reaching customers in more than 150 countries. Brilliant Earth did not respond to a request for comment on which new markets the company has entered. Prior to the partnership, the company’s jewelry was available for sale online to shoppers in the U.S., Canada, the U.K., and Australia. “Customers across the globe will now be able to view products in local currency, understand the total price of their order, and checkout with confidence using their preferred local payment method, combined with streamlined shipping and logistics,” said the company.
Movado Lowers Guidance as Q2 Sales Slip
Movado Group posted declining sales in its second-quarter results, lowering its fiscal guidance for the year ahead as consumer spending on watches remains “difficult.” “While increased marketing investment coupled with our initiatives to enhance retail performance drove improvement in our sales trend from the first quarter, second quarter sales and earnings were below our expectations due to the challenging consumer spending environment compounded by increased expenses to support future growth,” CEO Efraim Grinberg said. The company previously announced its plan to increase marketing spend to $25 million, which ramped up in the second quarter. It recently launched a new Movado campaign called “When I Move You Move,” a nod to the lyrics in Ludacris’ song “Stand Up,” which is featured in the campaign.
Office & Leisure
Petco Reports Minor Revenue Drop in Q2
Petco Health and Wellness Co.’s net revenue decreased 0.5 percent to $1.52 billion year-over-year during the company’s second quarter ended Aug. 3, company officials reported. The company’s consumables business was up 1.5 percent versus the prior year, and services and other business were up 3.1 percent versus the prior year. Growth in the company’s consumables and services and other business was offset by the company’s supplies and companion animal business, which was down 4.7 percent versus the prior year. “Services and other, which is comprised of services, wholesale and recently disposed non-core businesses, delivered 3 percent revenue growth,” CFO Brian LaRose, said during the company’s earnings call.
Fox Proceeding with Plans to Take FanDuel Stake at $2.2B Discount
Fox Corp. could be preparing to take an 18.6% stake in Flutter Entertainment’s FanDuel, and the media giant could do so at a significant discount to the sportsbook operator’s market value. At the Goldman Sachs Communacopia and Technology Conference, Fox CEO Lachlan Murdoch said the media company is proceeding with plans to take an 18.6% interest in FanDuel, the rights to which were acquired in 2020 when Flutter doled out $12.2 billion for The Stars Group. Fox sold Sky Bet to TSG in 2018 for $4.7 billion, taking an equity stake in the buyer. Murdoch told attendees at the conference that Fox values FanDuel at $35 billion, meaning 18.6% is valued at $6.5 billion.
GameStop eyes more store closures as sales fall 31%
GameStop’s Q2 net sales fell 31.4% to $798 million, down from about $1.2 billion a year ago, the company said in a recent earnings announcement. Gross profit for Q2 fell nearly 19% to about $249 million, down from $306 million a year ago. The retailer swung back to profitability, with net income of $14.8 million for Q2 versus a net loss of $2.8 million a year ago, but posted an operating loss of $22 million for the three months ended Aug. 3. As part of a store portfolio optimization review, GameStop said it is identifying stores for closure. That move “may result in the closure of a larger number of stores than we have closed in the past few years.”
Technology & Internet
iPhone 16, Apple Intelligence, AirPods 4 and more: Everything revealed at Apple Event 2024
Apple’s biggest event of the year has arrived, and with it, the iPhone 16 lineup and a slew of AI-related updates for iOS 18. Apple Intelligence was the star of the Apple event this year, like it was at WWDC in June, and Apple’s lineup of announcements echoed many of the anticipated hardware reveals, including the new iPhone 16, AirPods 4, the Apple Watch Series 10 and more. Whether Monday’s reveals end up inspiring or delaying a “supercycle” of customers adopting the new iPhone 16 lineup remains to be seen, but Apple’s focus on AI as a core part of its sales pitch moving forward is clear. As no surprise, the iPhone 16 “has been designed for Apple Intelligence from the ground up,” in the words of CEO Tim Cook, and the tweaked designs and new colors were revealed at the Apple event.
Apple must pay 13 billion euros in back taxes, EU’s top court rules
Europe’s top court ruled against Apple on Sept 10th in the tech giant’s 10-year court battle over its tax affairs in Ireland. The case stems back to 2016 when the European Commission ordered Ireland to recover up to 13 billion euros ($14.4 billion) in back taxes from Apple. The European Court of Justice’s decision comes hours after the company unveiled new products to revitalize its iPhone, Apple Watch and AirPod lineups. In a statement, the Irish government said that the Apple case “involved an issue that is now of historical relevance only,” adding that its position has always been that it “does not give preferential tax treatment to any companies or taxpayers.” Apple said in a recent filing that it will incur a one-time income tax charge of about $10 billion in its fourth fiscal quarter ending Sept. 28, 2024. The government noted it will now begin the process of transferring the assets in the escrow fund to Ireland.
Finance & Economy
Traders’ Big Bet on a Half-Point Fed Cut Is Back in Bond Markets
Bond traders are once again ramping up wagers on a half-point interest-rate cut by the Federal Reserve next week, just days after that bet seemed all-but-over. The likelihood of a 50-basis-point move climbed to 40% on Sept 13, up from as low as 4% earlier in the week. The repricing added to a rally in US government bonds, lifted small-cap US companies the most in three weeks and weighed on the US dollar. This shift marks a rapid about-face for traders who earlier this week had almost completely discounted the possibility of a large cut in the wake of hotter-than-forecast consumer-prices data and signs the US labor market remains relatively robust. The trigger for the repricing was a Wall Street Journal report that Fed policymakers were considering whether to reduce rates by a regular quarter point, or opt for half a percentage point.
Gold Hits Successive Record Highs Ahead of Expected Fed Rate Cut
Gold rose to another record high, building on Sept 12th’s surge of nearly 2% as traders added bullish wagers ahead of a widely expected Federal Reserve interest-rate cut next week. Bullion climbed as much as 1% to $2,583.45 an ounce on Sept 13, putting it on track for a weekly gain of more than 3%. Gold has surged by more than a quarter this year, supported by the Fed’s path to monetary easing. Central-bank buying and strong haven demand due to conflicts in the Middle East and Ukraine have helped the advance, while interest from retail investors is also picking up.
US consumer sentiment rises in September as inflation eases
U.S. consumer sentiment improved in September amid subsiding inflation, though Americans remained cautious ahead of the November presidential election, a recent survey showed. The University of Michigan’s preliminary reading on the overall index of consumer sentiment came in at 69.0 this month, compared to a final reading of 67.9 in August. Economists polled by Reuters had forecast a preliminary reading of 68.5. “A growing share of both Republicans and Democrats now anticipate a Harris win,” said Surveys of Consumers Director Joanne Hsu. “Consistent with their divergent views of the implications of a Harris presidency for the economy, partisan gaps in sentiment inched up.”
