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| Here's your daily business briefing. 👗 Nuuly surpasses Rent the Runway in profitability
🎁 Deep Dive: Discounts reveal holiday sales fears
🚀 Abercrombie & Fitch soars on sales surge Make sure to continue reading the Quarterly Earnings Report and the Quick Hits. Shriram
p/Shriram | |
| 1 | | In the fiscal third quarter, Urban Outfitters' clothing rental service, Nuuly, achieved its first profit with an operating income of $300,000 on $65.5M in revenue. Nuuly's revenue grew by 86%, outpacing Rent the Runway, marking a significant milestone since its launch in 2019. More: - The business provides six outfits for a monthly subscription fee of $98.
- The number of active Nuuly users reached 198,000 throughout the quarter, more than the 137,566 Rent the Runway users as of July 31.
- With revenues of $1.28B and earnings per share of $0.88, the parent company, Urban Outfitters, exceeded expectations in every way.
- Comparable sales for Urban Outfitters' flagship brand fell by 14.2%, while overall sales decreased by around 12% to $324M.
- Urban's portfolio company, Anthropologie, with $550M in revenue and 13.2% growth in comparable sales, led the way throughout the quarter.
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What the numbers say: In October, early Black Friday discounts surpassed those of previous years, indicating retailer concerns about lackluster holiday demand, with promotions across various categories notably higher than in 2021 and 2022. Despite increased online sales of nearly 6% to $76.8B YoY, driven by deep discounts and the growing use of buy now, pay later services, only electronics and toys among the eight tracked holiday-popular categories had fewer discounts in October than in previous years. Relevance: Increased and early discounts in October indicate retailer concerns about the holiday season's strength in a cautious consumer environment. According to Adobe, retailers leverage promotions to stimulate demand and stay competitive amid ongoing inflation, with substantial discounts driving increased online spending. More data: October's record-high average discounts of 24.1% across various categories signal a cautious consumer environment, shaping retail strategies for managing demand and competition, according to Adobe's digital price index. | | | |
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| 3 | | Abercrombie & Fitch surpassed estimates with a 20% increase in fiscal third-quarter sales, reaching $1.06B compared to $880M a year earlier. Earnings per share were $1.83, surpassing the expected $1.18, and revenue reached $1.06B, beating the expected $981M, with net income for the quarter at $96.2M compared to a loss of $2.21M a year earlier. More: - Abercrombie anticipates net sales increase in the low double digits for the fourth quarter compared to the previous year.
- The net sales growth estimate for the entire year was raised from a previous estimate of roughly 10% to between 12% and 14%.
- Abercrombie's stock has increased by 223% YoY, which indicates the company's successful transition into an inclusive store with a famous product line.
- The operating margin estimate for the entire year has increased from the prior range of 8% to 9% to approximately 10%.
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| 4 | | American Eagle's shares fell nearly 16% as the company presented a holiday forecast that disappointed investors. While the retailer anticipates high single-digit sales growth for the holiday quarter, surpassing analysts' 3.4% estimate, its operating income projection of $105M to $115M fell below expectations. More: - In Q3, American Eagle reported earnings per share of $0.49, exceeding the anticipated $0.48, and revenue of $1.3B, beating the expected $1.28B.
- Compared to $81.3M, or $0.42 per share, a year earlier, the net income for the quarter was $96.7M, or $0.49 per share.
- American Eagle's gross margin was 41.8%, below the expected 42.1%, and its 5% sales increase amid the industry slowdown didn't impress Wall Street.
- American Eagle has tightened its full-year operating income prediction to $340M to $350M and forecasts mid-single-digit sales growth.
- Shops like Abercrombie & Fitch and American Eagle have voiced concerns about the lackluster holiday demand, mirroring Best Buy's and Lowe's statements.
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| 6 | | Lowe's, Best Buy, and Kohl's face sales declines and project subdued holiday performance, reflecting consumer caution amid inflation and financial concerns. Consumers adjust their spending, favoring essential purchases, potentially benefiting value-focused retailers such as Walmart, Costco, and discount clothing stores. More: - Best Buy CEO Corie Barry pointed out that customers are deal-focused and demand is unpredictable and inconsistent.
- In contrast to a 14% rise in 2021 and a 5% growth in 2022, Moody's forecasts weaker holiday sales growth of 1% to 3% this year.
- Due to rising living expenses and depleting savings, Moody's analysts predict that consumers in the low and middle-income categories will reduce their Christmas.
- A trend towards an extended Christmas season is being noticed, and retailers are enticing customers with Black Friday offers earlier than before.
- A few businesses have shown signs of revival; in the most recent quarter, profit bounced back for Dick's Sporting Goods.
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| 7 | | Quick Hits: - Raising capital? Fundingstack's DB of 200,000 investors is your secret weapon. Use code "Inside" for 30% off x 3 months. Start your trial here and get funded faster.*
- Sam Altman's return as OpenAI CEO, amid chaos and Microsoft's influence, comes after intense pressure from OpenAI's investors, with Altman agreeing to an internal investigation surrounding his dismissal.
- The U.K.'s Advertising Standards Authority has banned a Toyota truck ad for promoting off-road driving, joining a series of environmentally focused rulings that also affected ads from Lufthansa, HSBC, and Unilever.
- Warren Buffett is donating about $870M to four family-run foundations ahead of Thanksgiving, maintaining his tradition of generous philanthropy with a wealth estimated at around $120B.
- Aristocrat Leisure increased its dividend following a 53% surge in full-year profits, driven by a 26% rise in North American slots sales.
- Experience exciting new stories of innovation from prominent brands like LEGO, Ben and Jerry's, Delta, and VMware on Season 2 of Adobe's The Power of Teamwork podcast.*
*This is a sponsored listing. | | | |
| Upcoming Events | | NOV
25 | | AI in Financial Services with Saroop Bharwani | | | | | | | NOV
25 | | The Future of Fractional Work with David Berkowitz | | | | | | * This is a sponsored event | | | |
Term of the Day Marketing plan: A marketing plan is a comprehensive document that outlines an organization's marketing objectives, strategies, and tactics for a specific period Question of the Week What perks would convince you to return to the office? Join the conversation |
 | 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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