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| Here’s your daily business briefing. - 🧸 Toy companies woo adult customers
- 🚶♂️ Deep Dive: Nike shoe sales fall in North America
- 🔽 Alphabet shares fall on cloud miss
Make sure to continue reading the Quarterly Earnings Report and the Quick Hits. Thank you!! Shriram
p/Shriram | |
| 1 | | A growing trend among adults, often called "kidults," involves buying toys and products that evoke nostalgia from their youth. This trend has notably boosted toy sales for adults, accounting for approximately 17% of total toy sales in the U.S., with adult toy sales increasing by $1.7B, reaching $6.4B from June 2021 to June 2023. More: - Due to the pandemic's increased anxiety and nostalgia, adults have been purchasing toys for themselves more and more, which has caused them to yearn for the comforts of their youth.
- Social media helped drive up sales of games, puzzles, trading cards, construction sets, and collectibles as people looked for diversions throughout the pandemic.
- The trend has gained momentum because of the creation of content on social media platforms, especially TikTok, that features nostalgic toys and goods.
- Recognizing the trend, companies like American Girl and Lego appealed to adults by creating products specifically for them.
- Juli Lennett, Circana's toy industry advisor, said, "Nostalgia is still a good coping strategy and a way to connect with others, despite worries that macroeconomic factors may cause an adult toy purchase slowdown."
Q: What childhood toys or items would you like to see re-released for adults? Join the conversation here. |     | |
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What the numbers say: Nike experienced a 2% dip in North American footwear sales, its first decline in over a year, while Hoka's sales soared from $223M in 2019 to $1.4B in the year ending March 31. On Holding, the parent company of On, reported a substantial 69% sales increase to approximately $1.3B for the year ending Dec. 31. Relevance: Growing competition from brands like Hoka, On, Adidas, and New Balance in the running and streetwear sectors has contributed to Nike's sales volume drop in North America, driven by consumer demand for more comfortable and cushioned footwear. In response, Nike is pivoting toward everyday runners and introducing more budget-friendly performance shoes, moving away from a reliance on limited-edition releases. More data: Nike is actively enhancing its product marketing, assortments, and engagement with everyday runners. While the pace of innovation appears to be slowing, Nike is shifting its focus to launch innovative products that cater to a broader consumer base, given disruptions in the supply chain during the COVID-19 pandemic. Shares of Nike have increased by 16% over the past year, outperforming the S&P 500's gain of approximately 13%. | | | |
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| 3 | | Alphabet achieved Q3 revenue growth of 11%, marking the first time it reached double digits in over a year. Earnings per share stood at $1.55, surpassing the anticipated $1.45 per share, and Q3 revenue totaled $76.69B, exceeding the expected $75.97B. More: - YouTube's ad revenue reached $7.95B, exceeding the $7.81B forecast.
- Google Cloud's $8.41B in revenue was about $20M less than anticipated, and the shares were down almost 7% after the announcement.
- Despite the setback, cloud revenue increased by 22% over the prior year.
- A minor decrease from the prior year was seen in other businesses, which included Waymo and Verily, as they reported sales of $297M with a loss of $1.19B.
- Alphabet shares were up 47% for the year before the after-market decline, outpacing the S&P 500, which increased by roughly 11% during the same time frame.
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| 4 | | Microsoft's 2024 Q1 earnings surpassed expectations with an EPS of $2.99, outperforming the expected $2.65, and Q1 revenue of $56.52B, exceeding the anticipated $54.50B. Additionally, the company raised its guidance for fiscal Q2 revenue to $60.4B to $61.4B, implying a 15% growth, exceeding the expected $60.9B. More: - The quarter's net income of $22.29B was a 27% rise from $17.56B YoY.
- Revenue for Q1 increased by over 13% year over year to $50.12B.
- Revenue from Microsoft's Intelligent Cloud division, which includes Azure, increased by 19% to $24.26B.
- Azure revenue increased by 29% in the quarter, faster than forecast and growing at an accelerated rate of 28% in constant currency.
- Revenue from the Productivity and Business Processes unit was $18.59B, up 13%, while revenue from the More Personal Computing sector was $13.67B, up 3%.
- Following five quarters of year-over-year reductions, the business claimed a 4% rise in sales of Windows operating system licenses to device makers.
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| 6 | | 3M exceeded expectations in its third-quarter results, reporting adjusted earnings per share of $2.68 and adjusted sales of $8.02B. As a result, the company raised its year-end earnings per share guidance to $8.95 to $9.15 from the previous range of $8.60 to $9.10. More: - After accounting for one-time costs, 3M declared a loss of almost $2B for the quarter, which included a $4.2B pretax charge from a $6B settlement involving military earplugs.
- The business is dealing with legal issues, such as a lawsuit about water pollution, including PFAS chemicals, and an investigation underway in Belgium.
- With shares down 20% since the CFO's comment that the company was in a "slow growth environment" that would last until 2024, the company has been facing dropping share prices.
- Restructuring at 3M will result in job losses and the division's best-performing business, healthcare, being spun off into a new independent business early next year.
- Currently, 3M concentrates on vehicle electrification, next-generation electronics, and personal safety equipment with significant development potential.
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- U.S. home loans saw their interest rate rise to the highest since September 2000, marking a seventh consecutive weekly increase and driving mortgage applications to a 28-year low, as per a survey.
- Goldman Sachs CEO David Solomon expresses uncertainty about current deals but remains optimistic about the long-term outlook, highlighting the bank's competitive position to attract talent.
- Dutch lawmakers questioned the Netherlands' Trade Minister about the unilateral U.S. imposition of new export rules for ASML Holding's chipmaking machine to China.
- According to Bloomberg, Macquarie intends to invest $275M in the American internet startup SwyftFiber.
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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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