| Here's your daily business briefing. - 👟 Nike tumbles on weaker sales, plans $2B in cuts
- 📉 Deep Dive: M&A slumps below $3T in decade-low
- 🚢 Carnival rallies on strong bookings, smaller loss
Make sure to continue reading the Quarterly Earnings Report and the Quick Hits. Thanks for reading!! Shriram
p/Shriram | |
| 1 | | Nike said that in the next three years, it aims to trim expenses by $2B, resulting in a 10% stock decline. The company has adjusted its full-year revenue outlook to a projected 1% growth, down from the earlier mid-single digits forecast, following Q2 sales that missed Wall Street estimates for the second consecutive quarter. More: - Earnings per share exceeded expectations at $1.03 compared to the anticipated $0.85, while revenue slightly missed estimates at $13.39B versus the expected $13.43B.
- Nike's gross margin increased by 1.7 points to 44.6%, slightly above expectations, driven by strategic pricing, lower ocean freight rates, and improved inventory management.
- Inventories decreased 14% to $8B over the period.
- Nike's strategy to reduce costs includes expanding automation, streamlining the company, reducing the variety of products it offers, and utilizing scale to increase productivity.
- CEO John Donahoe highlighted Nike's outperformance, citing nearly 10% growth, record-breaking digital sales during Black Friday, and a peak in-store turnout over the extended Thanksgiving weekend.
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What the numbers say: Mergers and acquisitions (M&A) and related transactions have decreased by around 25% this year, totaling $2.7T, representing the lowest annual total since 2013. This marks the first time in a decade that deal values have not surpassed the $3T mark, and private equity spending has declined by 36% in 2023 compared to the previous year. Relevance: Investment bankers are grappling with a challenging bonus season and the prospect of job cuts amid a downturn in deal activity. Private equity firms face hurdles in obtaining debt financing for significant deals, contributing to the decline in M&A activity. More data: Investment bankers face a challenging bonus season, and potential job cuts loom in 2024 if conditions don't improve. Private equity activity has significantly slowed, causing a drag on deal flow, while geopolitical uncertainties, like the Israel-Hamas conflict, add to the overall uncertainty for dealmakers in 2024. | | | |
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| 3 | | Carnival reported a narrower-than-expected Q4 net loss of $48M, compared to $1.6B last year, attributing it to increased ticket prices amid steady demand. The company's shares rose by 7%, reflecting a more than two-fold increase in value over the year, with Carnival anticipating a more than doubling of first-quarter core earnings. More: - Strong demand was indicated by booking volumes that hit an all-time high on Black Friday and Cyber Monday.
- According to Carnival, net yields, or revenue per passenger per cruise day, are expected to rise by 16.5% annually during the first quarter.
- Nearly two-thirds of occupancy for 2024 is already reserved at significantly higher rates, according to CEO Josh Weinstein, who emphasized the promising outlook.
- Carnival's $5.4B in fourth-quarter sales exceeded $5.31B in market projections.
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| 4 | | BOPIS (Buy online, pickup in-store) constituted 25% of post-Cyber Monday online orders, and according to Salesforce's analysis of data from 1.5 billion consumers, it predicts a Christmas Week surge, estimating one-third of online orders will be for BOPIS. An October ICSC survey showed 17% of consumers anticipated using BOPIS during the holiday season. More: - According to Forrester's projection, click-and-collect sales, including curbside pickup and BOPIS, are expected to surpass $200B by 2028 and $100B in 2023.
- Rob Garf, Salesforce's VP and GM of Retail, suggests that fulfilling online orders from physical stores helps retailers gain market share and extend shipping deadlines.
- Retailers, including Target, entice last-minute holiday shoppers with promoted BOPIS services, extended hours, and same-day delivery options.
- Salesforce's report notes that AI has influenced 17% of orders since November 1, projecting a potential $194B boost in holiday sales this year.
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| 6 | | As part of its holiday marketing push, Target has placed an outdoor ad on the Sphere in Las Vegas, showcasing an 11-story Target resembling gingerbread houses with a colossal six-and-a-half-story tall version of its dog mascot, Bullseye. The Sphere ad, designed as a snow globe, highlights popular toy gift ideas, including Squishmallows. More: - The Sphere campaign, running until Dec. 22, is designed to appeal to last-minute holiday shoppers, featuring a virtual Target three times larger than a standard brick-and-mortar store.
- Target's holiday strategy, encapsulated in the "However You Holiday, Do It For Less" campaign, emphasizes value, addressing economic pressures through last-minute deals and same-day services.
- The campaign consists of virtual 360-degree shoppable experiences on Target's website, a traveling winter wonderland pop-up, and in-store activations.
- According to a report, the expense of advertising the Sphere is high: a one-week campaign can cost $650,000, while a one-day takeover can cost up to $450,000.
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| 7 | | Quick Hits: *This is a sponsored listing. | | | |
 | 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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