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| Here's your daily business briefing. - 📉 Q3 2024: Best Buy cuts forecast
- 💪 Deep Dive: Wellness industry booms to $5.6T
- 🛠️ Lowe's sales dip as DIY projects decline
Make sure to continue reading the Quarterly Earnings Report and the Quick Hits. Shriram
p/Shriram | |
| 1 | | Best Buy has lowered its full-year sales forecast, anticipating cooler demand and price-conscious holiday shoppers. The revised guidance includes fiscal year revenue ranging from $43.1B to $43.7B (down from $43.8B to $44.5B) and a decline in comparable sales between 6% and 7.5% (compared to the earlier 4.5% to 6% drop), with adjusted earnings per share now projected at $6 to $6.30 (down from $6 to $6.40). More: - Best Buy surpassed Wall Street's quarterly earnings expectations with an adjusted EPS of $1.29, but reported revenue of $9.76B, falling short of the expected $9.90B.
- Comparable sales fell 6.9% YoY and 7.3% in the U.S., driven by reduced purchases of appliances, computers, home theaters, and mobile phones, although gaming sales grew.
- In the U.S., Best Buy's internet sales fell by 9.3%.
- Despite lower merchandise demand, Best Buy increased profitability by capitalizing on its annual membership program, selling products with better margins, and reducing supply chain costs.
- The Minnesota-based firm's shares closed at $68.11 on Monday, marking a year-to-date decline of about 15%, contrasting with the 18% gains of the S&P 500 over the same period.
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What the numbers say: The global wellness industry, valued at $5.6T in 2022, is projected to reach $8.5T by 2027. Key segments include personal care and beauty at $1.08T, healthy eating, nutrition, and weight loss at $1.07T, and wellness tourism at $651B. North America leads in per capita wellness spending at $5,108 annually, surpassing Europe's $1,596. Relevance: The global wellness industry's unexpected resilience post-pandemic surprises observers, encompassing diverse businesses from personal care to tourism. Increased spending on public health and personalized medicine reflects shifting priorities, while workplace wellness declines with the prevalence of remote work, contrasting with the hospitality sector's focus on wellness tourism. More data: Per capita wellness spending in North America far exceeds Europe, signaling a robust regional market. The report highlights a growing trend among hospitality firms to integrate wellness features, aligning with changing consumer preferences for well-being-focused experiences in luxury hotels. Spending on public health, prevention, and personalized medicine increased from $358B in 2019 to $611B in 2022, while workplace wellness contracted from $52.2B in 2019 to $50.6B in 2022 due to remote work trends. | | | |
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| 3 | | Lowe's revised its full-year sales and earnings guidance, citing weaker-than-expected spending on DIY projects, causing its stock to drop about 2% in early trading. The home improvement retailer's fiscal third-quarter sales fell nearly 13% YoY, and it now anticipates fiscal year sales of around $86B, down from the prior range of $87B to $89B. More: - Projected fiscal year comparable sales decline to about 5%, exceeding the prior estimate of 2% to 4%, with adjusted earnings per share expected at $13, below the previous range of $13.20 to $13.60.
- Lowe's third-quarter net income was $1.77B, or $3.06 per share, compared to $154M, or 25 cents per share, in the year-ago period, which included a $2.1B impairment charge from selling its Canadian business.
- The revenue of $20.47B falls short of the expected $20.89B.
- CEO Marvin Ellison reported that consumers have pulled back on big-ticket purchases and discretionary projects "greater than expected."
- During the quarter, sales to home professionals increased, making up around 25% of the whole business, while internet sales decreased by 4%.
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| 4 | | Dick's Sporting Goods revised its full-year outlook upward following a sales and profit rebound in fiscal Q3, having previously reduced its outlook due to theft and aggressive markdown concerns. In the third quarter, the retailer reported adjusted earnings per share of $2.85, exceeding expectations of $2.44, with revenue reaching $3.04B, surpassing the anticipated $2.94B. More: - Compared to $228M, or $2.45 per share, a year earlier, net income for the three months was $201M, or $2.39 per share.
- Dick's Sporting Goods increased its full-year earnings per share guidance to a range of $11.45 to $12.05, leading to a more than 9% surge in the company's shares upon the announcement.
- Dick's Sporting Goods raised its comparable sales outlook, anticipating a full-year increase ranging between 0.5% and 2%.
- Dick's Sporting Goods, like other businesses concerned about dampened demand, is cautious as the holiday season approaches, despite the excellent results.
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| 6 | | Mastercard has gained approval from China's central bank and financial regulator to launch a bank card business there, marking a significant development in its expansion efforts in the Chinese payments market. This comes more than three years after regulators allowed Mastercard and NetsUnion Clearing Corporation (NUCC) to establish a domestic bank card-clearing institution. More: - With a combined 91% market share, Alipay and WeChat Pay dominate China's electronic transaction business, which generates $434T in revenue annually.
- Michael Miebach, CEO of Mastercard, views the approval as a "milestone" and the outcome of China's continuous economic liberalization efforts.
- This measure enables Mastercard to grow its business in the Chinese market by processing and collecting fees for a broader range of transactions.
- Before Visa applied for a license, which has not yet been approved, American Express was the first foreign company to get direct market access in China in 2020.
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- Mattel has hired Michelle Mendelovitz, a former Fox and Sony executive, to head its television studio as part of the company's focus on adapting its toys for the screen, highlighted by the success of the "Barbie" film this summer.
- Kim Kardashian's private equity firm, SKKY Partners, has made its first investment, acquiring a "significant minority stake" in Truff sauces, known for their truffle-infused offerings priced at around $20 per bottle.
- Blackstone will close a fund offering exposure to various hedge funds and trading strategies, citing an almost 90% decline in assets over four years, as revealed to Reuters on Tuesday.
- Broadcom is poised to complete its $69B acquisition of cloud computing firm VMWare on Wednesday, marking one of the tech industry's most significant takeover deals that faced extensive global regulatory scrutiny.
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 | 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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