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| Hey Insiders, Monday's edition of Inside Business looks at Levi's Q2 earnings report and U.S. job market strengths with ADP and layoff data. Plus, China imposed the largest ever fine on an Internet company — $1B against Ant Group — and Notion raised its Fund Five. Remember to send us your suggestions for future newsletter topics. Happy Monday! Shriram
p/Shriram | |
| 1 | | Levi Strauss decreased its annual profit prediction after reporting a steep reduction in U.S. wholesale revenue; shares dropped by 7% following this announcement. Despite having second-quarter earnings per share of 4 cents, which exceeded market estimates, the quarter's sales decreased by 9% to $1.34B from $1.47B the year before. More: - Levi Strauss has lowered its earlier range of $1.30 to $1.40 to $1.10 to $1.20 for adjusted earnings per share for the entire year.
- In addition, the business narrowed its forecast for revenue, now anticipating sales to increase by 1.5% to 2.5% rather than the earlier range of 1.5% to 3%.
- According to Levi's CEO Chip Bergh, "Levi's has experienced a drop in wholesale revenue due to both a consumer slowdown affecting the retail sector and internal inventory issues leading to product shortages."
- Levi Strauss is concentrating on these areas to grow its direct-to-consumer business and e-commerce channels, which witnessed 13% revenue growth during the quarter.
- Sales fell in the Americas and Europe but rose 18% in Asia because of the DTC channel's success.
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What the numbers say: The number of jobs added by U.S. businesses last month was close to 500,000, the biggest in almost a year. In June, U.S. firms shed fewer jobs than they had in eight months. Leisure and hospitality topped the gains, although other industries also experienced significant growth. Relevance: The data show that the U.S. labor market is robust and resilient. The U.S. service sector expanded in June, exceeding expectations, with the Institute for Supply Management reporting the strongest employment growth in four months. Considering the market's response, which included increased Treasury yields and a decline in the S&P 500, the data may impact the upcoming Federal Reserve meeting. More Info: According to the Labor Department, weekly jobless claims increased by 12,000 to 248,000, surpassing predictions but remaining below June's highest level since 2021. Furthermore, 209,000 new non-farm jobs were added to the U.S. economy last month, fewer than the 225,000 consensus expectations. | | | |
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| 3 | | Chinese regulators have fined Ant Group and its affiliates $984M for several violations, including corporate governance and financial consumer protection. One of the highest fines ever levied against an internet company, it underscores China's efforts to control and stabilize the market while sending a clear message to other internet firms. More: - The fine enables Ant Group to obtain a license as a financial holding company and resume preparing to list on the stock market.
- Other businesses have also received fines for offenses, including Ping An Bank, PICC Property and Casualty, Postal Savings Bank, and Tenpay from Tencent Holdings.
- After the fine was revealed, shares of Ant's affiliate, Alibaba Group, listed on the NYSE, increased by 9%.
- After the fine was revealed on Friday, the Alibaba affiliate proposed a share repurchase, valuing the fintech at a 75% discount to the price promised in a scrapped IPO plan.
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| 4 | | Notion Capital has successfully raised $325.6M (€300M) for its fifth fund, meeting its target for capital raising, which will focus on investing in early-stage companies across Europe. The firm aims to make about 20 core Series A+ investments from this fund, having previously backed over 100 startups, including CurrencyCloud, GoCardless, and Paddle. More: - The company promoted three senior members, with Itxaso del Palacio becoming a general partner and Stephanie Opdam and Kamil Mieczakowski being promoted to partners.
- Cortes Capital LLC, KfW Capital, and TNO are investors in the new fund, and British Patient Capital, Novo Holdings, and RSJ are returning limited partners.
- Stephen Chandler, managing partner at Notion Capital, said, "Notion shifts its emphasis to infrastructure, hybrid cloud, and alternative monetization while warning against unproven generative AI firms and highlighting proprietary data and verticalized strategies."
- In 2024, Notion intends to launch a third Opportunities Fund to accommodate more growth-stage investments.
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| 5 | | A detailed examination of Amazon's proposed $1.65B acquisition of iRobot is being conducted by the European Commission due to worries about possible data access and competition issues in the market for robot vacuum cleaners. The commission has given itself till Nov. 15 to determine the deal's outcome. More: - iRobot Corporation is a U.S. company that creates and manufactures consumer robots for the home, such as the popular Roomba robot vacuum and the Braava family of mopping robots.
- The U.K.'s Competition and Markets Authority allowed the merger based on iRobot's comparatively weak market strength, which is at odds with the commission's ruling.
- Amazon has said that it would work with authorities to remedy any issues brought up.
- Phase 2 investigations can extend the time to assess a deal by around 90 working days, depending on whether regulators decide to demand remedies for their initial worries about competition or to provide their total clearance.
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| 6 | | Samsung Electronics expects a sharp decline of 96% in Q2 operating profit, but analysts believe chip prices will bottom out soon and recover next year. According to Goldman Sachs, Samsung's chip division is expected to turn a small profit in the fourth quarter. More: - After the preliminary earnings report, Samsung shares decreased by 2% amid hopes for an industry resurgence.
- In the second quarter, operational profit is anticipated to fall to roughly $460M, a 22% decrease in sales.
- To benefit from the booming artificial intelligence industry, Samsung wants to enhance its market share in high-bandwidth memory chips used in AI.
- Kim Un-ho, an analyst at IBK Investment & Securities, believes that more reductions in output may be necessary for a recovery in chip prices this year.
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- Bed Bath & Beyond has called off an auction for Buy Buy Baby, but there are still potential buyers interested in purchasing its assets, such as Dream on Me Industries, which has offered $15.5M for the chain's intellectual property.
- Coloplast acquires Kerecis, a fish-skin tissue graft manufacturer, for $1.3B, expanding its wound treatment offerings and leading to an increase in long-term organic growth guidance.
- L Catterton, the private equity firm backed by LVMH, is reportedly considering a $6B IPO for Birkenstock.
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Term of the Day Mobile commerce: Mobile commerce (M-commerce) refers to e-commerce transactions that happen on mobile devices such as smartphones and tablets. Question of the Week Do you think it's ever acceptable to bring politics into the workplace? Join the conversation |
INSIDE BUSINESS LEADERBOARD (7 DAYS) |
 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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