| Here's your daily business briefing. - 🚀 Gap soars on strong holiday earnings fueled by Old Navy sales
- 🔍 Deep Dive: Spirits trump beer and wine, with minimal growth
- 📉 Costco misses holiday revenue despite online boost
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Gap ($GPS) outperformed Wall Street's expectations for holiday earnings, fueled by Old Navy's resurgence, with sales at Old Navy increasing by 6% to $2.29B, contributing to Gap's overall gross margin surge to 38.9%. In the fourth fiscal quarter, earnings per share reached $0.49 versus the expected $0.23, revenue totaled $4.3B compared to the anticipated $4.22B, and shares of Gap jumped about 5%. More: - Comparable sales for the quarter were flat, accounting for 40% of overall revenue, with internet sales down 2% and in-store sales up 4%.
- The American worldwide clothing and accessories retailer saw higher average selling prices for all of its brands, and for the fiscal year 2024, it anticipates growing its gross margin by at least 0.5 percentage points.
- The California-based firm's CEO, Richard Dickson, highlighted its initiatives to reclaim its pop culture reputation and cultural relevance.
- Old Navy and Gap demonstrated positive momentum, while Banana Republic and Athleta experienced varying performances within the portfolio of brands.
- Old Navy: Sales up 6% to $2.29B, with comparable sales up 2%.
- Gap: Sales down 5% to $1.01B, with comparable sales up 4%.
- Banana Republic: Sales down 2% to $567M, with comparable sales down 4%.
- Athleta: Sales down 4% to $419M, with comparable sales down 10%.
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What the numbers say: In 2023, U.S. spirits maintained their market share strength, experiencing a marginal 0.2% growth as supplier sales reached $37.7B. The fastest-growing category within spirits was ready-to-drink cocktails, recording a 26.7% revenue increase to $2.8B last year. Relevance: In 2023, the spirits industry surpassed beer and wine sales, showing resilience despite minimal overall growth. Consumer preferences shifted toward vodka, high-end tequila and mezcal, American whiskey, and ready-to-drink cocktails, with the latter emerging as a notable growth area outpacing complex seltzer products. More data: In 2023, vodka maintained its top-selling position, and categories like tequila, mezcal, blended whiskey, and American whiskey experienced significant revenue growth. Despite some reported weakness in premium spirits, the industry is emphasizing the promotion of pricier bottles and labels, and an agreement between the U.S. and the European Union extended the suspension of EU tariffs on American whiskey until March 31, 2025. | | | |
| 3 | | Costco ($COST) fell short of revenue expectations for its fiscal Q2 of 2024, reporting $58.44B instead of the anticipated $59.16B, although adjusted earnings per share exceeded expectations at $3.92 compared to the expected $3.62. Despite this, the Washington-based company noted YoY sales growth and robust e-commerce gains in its quarterly report. More: - Comparable sales grew 5.6% annually and 4.3% in the United States, accompanied by increases in worldwide and domestic traffic of 5.3% and 4.3%, respectively.
- Sales from e-commerce increased by 18.4% over the prior year.
- During the quarter, Costco added four new locations: three in the United States and one in Shenzhen, China, the company's sixth in that country.
- The number of app downloads rose by 2.8 million, reaching over 33 million.
- The retailer's digital enhancements included an updated mobile app homepage and the availability of Apple Pay for online transactions.
- Membership sign-ups rose as Costco tightened its policy on membership sharing, yet the company has not increased membership fees.
Zoom Out: - Costco has ventured into selling silver coins, offering 25-count tubes of 1 oz. Canada Maple Leaf Silver Coins online for $675, aiming to replicate the success it achieved with gold bars.
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| 4 | | American Eagle ($AEO) reported that it exceeded Wall Street expectations for Q4, with adjusted earnings per share reaching $0.61 versus the anticipated $0.50 and revenue totaling $1.68B compared to the expected $1.67B. Additionally, the Pennsylvania-based firm unveiled a new three-year strategy to enhance profitable growth while reporting $94M in impairment charges linked to its Quiet Platform logistics business. More: - Sales increased to $1.68B, marking a growth of approximately 12% from the previous year's $1.5B.
- American Eagle projects a mid-single-digit percentage increase in Q1 sales and a 2% to 4% increase in full-year sales.
- With three key pillars — Amplify, Execute, and Optimize — the corporation presented its "powering profitable growth plan," with an annual expansion of operating income targeted at the mid to high teens.
- American Eagle intends to grow its brands, support Aerie's growth, and expand its selection of activewear under the Offline name to raise revenues.
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| 5 | | Beyond Inc. secured Zulily's intellectual property and brand assets in a $4.5M cash deal, excluding liabilities, liens, and debts, encompassing the website, domain names, trademarks, customer database, social media accounts, and website software. Marcus Lemonis, executive chairman of Beyond, highlighted the significance of the off-price market in the company's growth strategy. More: - Zulily, recognized for its flash sales, attained a peak market cap of $7B in 2014 but ceased operations by the end of the previous year.
By the end of the second quarter, the new Zulily website should be up and running, utilizing the Shopify connection and current infrastructure.
Beyond-owned Overstock acquired Bed Bath & Beyond's intellectual property for $21.5M and is set to reintroduce its brand later in March.
Beyond wants to use Zulily's resources to increase its market share in the low-cost sector, improve its inventory turnover, and boost its bottom line. | | | |
| 6 | | Databricks posted remarkable revenue of $1.6B for the year ending Jan. 31, 2024, showcasing over 50% growth from the previous year, a particularly notable achievement in the current market climate. Specializing in aiding companies with the management and processing of extensive data volumes essential for AI and enterprise computing, Databricks has seen significant success. More: - The American software company's primary rival is Snowflake; however, Databricks distinguishes itself with its quick expansion rate, premium subscription offerings, and over 80% profit margins.
- The business' 140% net expansion rate is more evidence of its high client retention and rising revenue.
- Products like Databricks SQL, which increased by more than 200% annually to a run rate of more than $250M, are credited with contributing to Databricks' growth.
- Analysts estimate Databricks to be valued at around $35B, underscoring its significant growth and market standing.
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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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