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| Here's your daily business briefing. - ๐ Walmart surpasses holiday expectations
- ๐ Deep Dive: Capital One, Discover to become a top lender
- ๐บ Nielsen: YouTube leads U.S. TV streaming
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Walmart ($WMT) outperformed expectations in the holiday quarter with a 6% rise in revenue. Adjusted earnings per share were $1.80, surpassing the expected $1.65, and total revenue reached $173.39B, exceeding the anticipated $170.71B, driven by robust holiday season performance and double-digit growth in global e-commerce sales. More: - Additionally, the retailer revealed that it would pay $2.3B to acquire Vizio, a manufacturer of smart TVs.
- Walmart's e-commerce sales increased by 17% in the U.S. and 23% globally, surpassing $100B.
- While Sam's Club experienced a 1.9% increase in comparable sales, including fuel, Walmart U.S. recorded a 4% gain in comparable sales.
- The advertising division of Walmart experienced growth of roughly 22% in the U.S. and 33% worldwide in the previous year.
- Walmart's first-quarter fiscal earnings are expected to range from $1.48 to $1.56 per share on a pre-stock split basis, with consolidated net sales expected to increase by 4% to 5%.
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| 2 | | Capital One is set to acquire Discover Financial Services in a $35B all-stock deal. 
What the numbers say: The acquisition will establish the largest U.S. credit card company by loan volume at $257B (Credit card loans in Q4 2023), enhancing its competitiveness against other major industry players. The agreement offers a 26.6% premium over Discover's closing price on Feb. 16, with Capital One exchanging 1.0192 shares for each Discover share. Relevance: The agreement highlights Capital One's strategic move to control the credit card market by reducing reliance on Visa and Mastercard through Discover's payment networks. Anticipated antitrust scrutiny raises concerns about competition and consumer impacts, but skepticism remains regarding the deal's transformative potential. More data: The acquisition is expected to yield $2.7B in pretax synergies, driving a 12.6% surge in Discover shares during Tuesday's trading. Capital One holders will own approximately 60% of the combined company, pending approvals, with the acquisition expected to conclude in late 2024 or early 2025. Discover's goal to expand payment network usage is emphasized, making it the largest merger of the year. | | | |
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| 3 | | According to Nielsen's January report, YouTube claims the leading position among streaming services in the U.S., representing 8.6% of TV screen viewing. Netflix closely follows with 7.9%, showcasing YouTube's continuous dominance in TV streaming for a year, while users opt for over 1 billion hours of daily TV content on the platform, favoring user-generated videos over traditional shows. More: - YouTube has gained popularity because 61% of Generation Z prefers user-generated content over other forms.
- Prominent YouTubers are witnessing notable surges in their TV viewing duration; some have seen rises above 400%.
- TikTok continues to rule mobile devices despite YouTube's domination on TVs; kids between the ages of 4 and 18 spend 112 minutes a day on the app on average.
- With a native app for Apple Vision Pro, TikTok is moving into the realm of spatial reality, potentially challenging YouTube, and testing the capacity to post 30-minute videos.
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| 4 | | Home Depot ($HD) surpassed earnings and revenue expectations despite a nearly 3% decrease in quarterly sales YoY, reporting Q4 earnings per share of $2.82 compared to the expected $2.77 and Q4 revenue of $34.79B, exceeding the anticipated $34.64B. Over the course of the year, the company plans to open about 12 more locations. More: - 2023 is characterized by Home Depot as a year of moderation, with consumers favoring smaller home improvement projects amid inflation and higher interest rates following pandemic-driven sales spikes.
- CEO Ted Decker highlighted increased customer spending on holiday decorations and record tote sales during a storage event, along with solid performance in the appliances category.
- In fiscal 2024, the company expects total sales to grow by 1%, including an extra week, and comparable sales to decline by about 1%, excluding the extra week.
- With the stock up over 4% year to date, in line with the gains of the S&P 500, Home Depot shares closed roughly flat following the quarterly results.
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| 5 | | In a cash-free, debt-free deal, Orica, an Australian chemicals firm, will acquire U.S. sodium cyanide producer Cyanco for $640M. Orica intends to undertake an equity raising of approximately $262M to finance part of the acquisition. More: - Cyanco's primary market is gold miners in the U.S., Canada, and other countries for which it manufactures and supplies sodium cyanide.
- The goal of Orica is to create a worldwide manufacturing and distribution network by combining Cyanco's operations with its own mining chemicals company.
- With the addition of Cyanco's two manufacturing facilities in Texas and Nevada to Orica's portfolio, the acquisition will increase the company's capacity to produce sodium cyanide.
- Orica plans to offer qualified shareholders a share purchase plan with a maximum value of $42.18M and conduct a fully underwritten placement of new shares valued at $260M.
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| 6 | | Fast-fashion e-commerce leaders Shein and Temu are transforming global air cargo by extensively using air services, sending around 600,000 packages daily from Chinese factories to the U.S. This shift escalates air freight costs and causes capacity shortages, impacting traditional off-peak seasons. More: - Temu ships about 4,000 metric tons daily, or about 108 Boeing 777 freighters, while Shein ships 5,000 metric tons daily on its own.
- Fast fashion accounts for almost one-third of all long-distance cargo aircraft worldwide and half of China's cross-border e-commerce shipments.
- Fast fashion's growing demand is making room on air freighters scarcer for other industries, raising the possibility of longer-term capacity problems.
- Temu and Shein are looking into alternate logistical solutions, such as opening warehouses outside China and shipping goods by sea.
- E-commerce companies are contacting airlines directly in an attempt to obtain additional capacity; Temu is looking to lease 12 wide-body freighters, while Shein is trying to maximize the effectiveness of its fulfillment process.
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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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