| |
| Happy Friday Insiders!! Today's Business newsletter covers: - 🎮 Gaming: EA's football game reboots with solid sales
- 🚗 Deep Dive: Car listings up, sales down
- 👟 Nike's revenue misses, but earnings and margins beat
If you enjoy reading this newsletter, please share it with your friends and colleagues. Make sure to continue reading for Quick Hits and the Knowledge Hub. Thank you!! Shriram
p/Shriram | |
| 1 | | Electronic Arts (EA) changed the name of their well-known football video game franchise from "FIFA" to "EA Sports FC," and pre-release sales for the new game have skyrocketed, with 6.8 million individuals have purchased pre-release access, a 25% increase over the previous year's edition. The long-standing business relationship between EA and FIFA, which brought in roughly $150M a year in the past, has been a critical source of income for FIFA and is its most significant commercial agreement outside of the men's World Cup. More: - Between 1995 and 2022, according to market research firm GfK, the franchise outsold other well-known games like Call of Duty and Super Mario.
- According to Ampere Analysis, the football brand increased EA's annual net income from $500M in fiscal 2010 to over $2B in 2020.
- As a result of the dispute with FIFA, EA rebranded the series as EA Sports FC, accompanied by a massive marketing campaign to notify gamers of the change.
- Despite the renaming, the game's content is still comprehensive, with over 700 clubs and 19,000 players in various leagues, including men's and women's football.
Q: Do you believe rebranding a well-established franchise can be a successful strategy for a video game company? Join the conversation here. |     | |
| 2 | | 
What the numbers say: Total advertising spending by new car dealerships has increased for three years, reaching $8.57B in 2022. Online automobile markets like Cars.com, CarGurus, and TrueCar are thriving due to the change from a seller's to a buyer's market in the automotive industry. These platforms make money from subscription fees from dealers, advertising, and extra services. Still, because dealers spend much of their marketing budgets on them, some platforms have increased pricing for dealer customers this year. Relevance: Dealers acknowledge the importance of online platforms for consumer research, and the current market conditions offer opportunities for these platforms to upsell their services to dealers. Cars.com and CarGurus, despite some recent price increases for dealer clients, still maintain reasonable valuations with multiples below their five-year averages. More data: The combined revenue from dealers for Cars.com and CarGurus is predicted to be $1.3B this year. About $20B is set aside yearly by dealers, even independent ones, for marketing. In the sluggish auto-selling industry, projections indicate that online marketplaces will continue flourishing. Shares of Cars.com and CarGurus have climbed by about 25% this year. | | | |
| A message from our sponsor, Guidde. |  | | Tired of explaining the same thing over and over again to your colleagues? It’s time to delegate that work to AI. guidde is a GPT-powered tool that helps you explain the most complex tasks in seconds with AI-generated documentation. Turn boring documentation into stunning visual guides: - Save valuable time by creating video documentation 11x faster
- Share or embed your guide anywhere for your team to see
- Simply click capture on our browser extension and the app will automatically generate step-by-step video guides complete with visuals, voiceover and call to action.
The best part? Our extension is 100% free. Try it for free | |
|
| 3 | | In its fiscal first quarter, Nike exceeded expectations with earnings per share of $0.94, surpassing the anticipated $0.75. While the revenue of $12.94B fell just shy of the expected $12.98B, the company's gross margin outperformed expectations at 44.2%, compared to the predicted 43.7%. More: - While sales in China climbed by 5% to $1.7B, falling short of analyst expectations, Nike's North American sales, its largest market, decreased by 2% to $5.42B.
- Nike's direct channel, which includes owned shops and online, increased by 6% from the previous year.
- Wholesale revenue remained unchanged at $7B for the quarter, while inventory decreased by 10% to $8.7B.
- Footwear constituted 68% of Nike's total sales, experiencing a 4% increase to $8.4 billion, while apparel witnessed a 1% decline to $3.4B.
- Sales for the Converse brand totaled $588M, a 9% decrease from the previous year.
- The business kept its forecast for the entire year, which called for mid-single-digit sales growth and a 1.4–1.6% point increase in gross margin.
| | | |
| 4 | | Big Deal Round-Up Major M&A deals are reshaping cybersecurity and healthcare with Splunk's $28B sale to Cisco and Intercept Pharmaceuticals' $794M acquisition by Alfasigma, while private equity moves include Cellnex's Nordics telecom divestment and Lawrence Stroll raising his stake in Aston Martin; Peloton and Lululemon formed a five-year partnership combining fitness content and apparel. M&A: - Cisco Systems has announced a $28B acquisition of cybersecurity firm Splunk, marking its largest-ever deal to bolster its software business and leverage the growing artificial intelligence trend.
- Two years after its IPO, Cinven plans to buy German lab company Synlab for $1.3B amid decreased testing demand post-pandemic.
- Alfasigma S.p.A. has struck a deal to acquire Intercept Pharmaceuticals for $794M, expanding its treatment offerings in liver diseases and digestive system disorders and enhancing its U.S. presence.
- Enovis Corp. is set to acquire Italian surgical implant manufacturer LimaCorporate for around $850M, including debt.
Private Equity: - Cellnex has agreed to sell its 49% stake in the Nordics for $772M, marking CEO Patuano's first significant divestment since taking the role.
- A group led by Lawrence Stroll has raised its stake in Aston Martin to 26%, resulting in an 11% surge in the share price, showcasing confidence in the carmaker's performance, which outperformed Q2 analyst predictions.
Partnerships: - Peloton and Lululemon have entered a five-year partnership: Peloton will provide digital fitness content for Lululemon's exercise app, and Lululemon will be Peloton's primary athletic apparel provider.
| | | |
| |
|
| 5 | | Unseasonably warm weather in the U.S. and Europe is affecting the sales of winter clothes, leading companies like H&M to provide discounts and get rid of extra inventory due to shifting consumer preferences towards necessities rather than discretionary items. Warmer temperatures are expected to persist throughout the fourth quarter, potentially resulting in excess winter inventory. More: - Due to warmer-than-usual weather, H&M's Cos brand has commenced a 20% off sale for knitwear and outerwear.
- Warm weather coincided with Pepco Group's autumn and winter clothing stockpile in Central and Eastern Europe.
- Bill Kirk, CEO and founder of Weather Trends International, said the warmer weather might result in more extra inventory and higher markdowns over the holiday shopping season.
- Costco and discount retailers like TJX may be better able to adjust to seasonal fluctuations than retailers like Walmart and Dick's Sporting Goods.
| | | |
| 6 | | The Saudi Pro League aims to rank among the world's top 10 soccer leagues, investing more than $1B in transfer fees and luring prominent European players like Neymar, Sadio Mane, Karim Benzema, and Cristiano Ronaldo. Their investment strategy centers on long-term development, encompassing on- and off-field growth initiatives. More: - The Saudi Arabian government's larger drive to diversify its economy away from oil includes investments in sports.
- Critics contend that Saudi Arabia's efforts in sports are a type of "sportswashing" to divert attention from issues relating to human rights.
- The league seeks to enhance commercialization, fan involvement, governance, and product quality, according to COO Carlo Nohra.
- Additionally, he said, "Saudi Pro League's global distribution is significantly growing, and it is extending its global television footprint."
| | | |
| 7 | | Quick Hits: - No-code development is here to stay, according to industry experts. Gartner predicts 80% of technology products will be built by those who are not IT professionals by 2024.*
- After former CEO Matthew Furlong was sacked, Ryan Cohen was named CEO, president, and chairman of GameStop without receiving any payment, which caused a spike in the stock price.
- The U.S. claims Beijing is using deceptive strategies to spread totalitarian propaganda and has accused China of starting a worldwide information war.
- Ed Bastian, the CEO of Delta, acknowledged that the company had gone "too far" with the new SkyMiles restrictions and promised that the loyalty program would be changed.
- Due to macroeconomic concerns, oil prices fluctuated and fell on Friday, with Brent November futures finishing at $95.24 per barrel.
- NEXT WEEK in LA, redefine development at DockerCon! Use DCHALF for 50% off in-person registration, or participate online for free. Come learn with us!*
*This is a sponsored listing. | | | |
| Upcoming Events | | OCT
16 | | Meet Our Fund 5, Building and Investing in AI | | | | | | * This is a sponsored event | | | |
Term of the Day Minimum viable product (MVP): A minimum viable product (MVP) is an early functioning model of a new product that can be presented to early adopters and investors. Question of the Week Do you share details about your salary with your coworkers? 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 | |
| |
 | Magically create video documentation with AI. For Free. | |
|
 | DoiT delivers the true promise of the cloud with ease, not cost. | |
|
| |
