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| Here's your daily business briefing. - 🏋️♂️ Dick's Sporting Goods surges 15% on holiday success
- 🔍 Deep Dive: Warehousing demand declining
- 📉 Adobe stock falls 10% on sales forecast
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Dick's Sporting Goods ($DKS) saw its shares jump more than 15% on Thursday after reporting robust holiday sales and earnings, prompting the company to increase its quarterly dividend by 10%. CEO Lauren Hobart credited the sales surge to a rise in sales of higher-priced items, marking the company's most successful sales quarter to date. More: - Revenue of $3.88B exceeded forecasts of $3.80B, and adjusted earnings per share for the fourth quarter came in at $3.85, topping estimates of $3.35.
- During the quarter, same-store sales increased by 2.8%, exceeding analysts' estimates of a 0.8% increase.
- Dick's anticipates revenue of between $13B and $13.13B, same-store sales growth of 1% to 2%, and fiscal 2024 earnings per share between $12.85 and $13.25.
- Though the company is optimistic about the upcoming year, difficulties are expected in the current quarter, especially in the gross margin, because of increased rates of shrink, which could affect profitability.
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What the numbers say: In Q4 2023, the U.S. saw a record-high of over 156 million square feet of warehouse space listed for sublease, tripling the amount available in Q4 2021. While the average warehouse asking rent surged by nearly 24% year-over-year in 2022, growth slowed to 12.5% in 2023 compared to the previous year, despite a 14.8% increase in leasing activity from Q3 to Q4. Relevance: The U.S. warehousing market is contracting as companies consolidate and upgrade facilities instead of expanding, responding to reduced inventories and pre-pandemic stocking patterns. Retailers and manufacturers like Newell Brands, Rite Aid, and Fanatics are closing or upgrading warehouses, driving a surge in subleases and aligning supply chains with projections for moderate consumer spending growth. More data: The industrial real estate market is shifting, with more subleases and less demand for new warehouse space amid a focus on cost efficiency and adapting to changing market conditions. Despite this, new warehouse space continues to be developed, with leasing activity showing some resilience despite a year-over-year decline. | | | |
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| 3 | | Adobe's shares ($ADBE) plummeted by 11% in after-hours trading after its fiscal first-quarter results were released, with the company narrowly missing its quarterly revenue guidance despite solid performance. Despite exceeding analysts' expectations with adjusted earnings per share of $4.48, Adobe's quarterly revenue of $5.18B was slightly above the anticipated $5.14B, marking an 11% year-over-year growth. More: - Due to regulatory concerns, the business withdrew from its $20B acquisition of design software startup Figma, paying a $1B termination fee.
- Adobe unveiled an early iteration of an AI assistant for its Acrobat and Reader software.
- Adobe projects sales of $5.25B to $5.30B and adjusted earnings per share of $4.35 to $4.40 for the fiscal second quarter, indicating 9% growth.
- David Wadhwani, the president of Adobe's digital media business, highlighted plans to boost digital media revenue with product upgrades like the Adobe Express app and collaboration with OpenAI on Sora.
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| 4 | | Hilton Worldwide Holdings Inc. ($HLT) is purchasing Graduate Hotels, a brand tailored for college campuses, for $210M. Backed by AJ Capital, Graduate Hotels operates over 30 properties strategically located near universities worldwide, including prestigious campuses like Oxford and Cambridge in the U.K. More: - Hilton plans to expand the Graduate brand, targeting a global market of 400 to 500 hotels.
- With this acquisition, Hilton is breaking from its usual practice of creating new brands in-house.
- Chris Nassetta, CEO of Hilton, views Graduate Hotels as a unique chance to increase Hilton's footprint in popular locations.
- The deal is anticipated to be finalized in the second quarter, with AJ Capital owning the underlying real estate.
- Hilton shares have increased by about 50% over the last 12 months.
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| 5 | | Audi, a division of Volkswagen Group, experienced a decline in operating return on sales from 12.3% in 2022 to 9% in 2023, with operating profit falling to $6.8B from $8.28B. Audi's operating profit rose to $8.4B with a return on sales of 11%, while division revenue increased by 13% to $76B, which includes the Audi, Lamborghini, Bentley, and Ducati brands. More: - Sales of automobiles in Asia-Pacific were steady at 3.6 million, although revenue dropped to $54.5B due to fierce competition.
- VW cut its operating profit goal for its joint ventures in China; instead of aiming for $2.8B in 2023, it now projects between $1.6B and $2.2B.
- The software division of the Volkswagen Group, Cariad, reported an operational loss of $2.6B, but software license revenue increased by around 30% to $1.2B.
- Volkswagen's battery division, PowerCo, reported an operational loss of $435M and a net cash outflow of $872M due to expenditures in battery-related activities necessary to manufacture electric vehicles.
- The financial services division recorded an operating profit of $4.1B, down from $6.1B in 2022, mainly due to decreased used-car sale prices following chip shortages in prior years.
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| 6 | | The Philippines is poised to become Asia's second-largest gambling hub, projecting gross gaming revenue to hit $6.1B in 2024, surpassing Singapore. Alejandro Tengco, CEO of Pagcor, forecasts the addition of up to eight new casino projects and intends to privatize state-owned casinos by early 2026, while Manila aims for increased tourist arrivals despite a dip from pre-pandemic levels. More: - To attract new markets and customers, new integrated resorts in Manila, Clark, Cebu, and Boracay are set to be created, each with a potential cost of up to $1.2B.
- Philippine casinos attract South Korean, Japanese, Malaysian, and Singaporean visitors despite declining Chinese tourist numbers.
- Online casinos in the Philippines are predicted to develop faster than land-based casinos, accounting for 20% of total gaming income in 2023.
- To increase revenue before the anticipated sale of its casino assets, Pagcor intends to open its online gambling website and look for a joint venture partner to run it.
- Pagcor plans to privatize its casino assets to generate $1.1-$1.4B from the sale and divest its planned gaming website.
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| 7 | | Quick Hits: *This is a sponsored listing. | | | |
| Upcoming Events | | MAR
27 | | Join DTC industry leaders and CEOs at the pivotal virtual roundtable event 'Shaping the Future of DTC in 2024.' | | | | | | * This is a sponsored event | | | |
 | 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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