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| Here's your daily business briefing. - 🎯 Target soars 10% despite weak sales forecast
- 🍺 Deep Dive: Athletic Brewing dominates non-alcoholic beer
- 📈 Cadence to acquire BETA CAE for $1.24B
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Target shares ($TGT) increased 10% after it reported better-than-expected holiday-quarter revenue and earnings, exceeding estimates with earnings per share at $2.98 compared to $2.42 expected and revenue reaching $31.92B against an expected $31.83B. Despite these positive results, Target foresees another year of weak sales, with comparable sales declining for the third consecutive quarter. More: - Target credited reduced expenses, greater inventory control, and increased traffic to its stores and website for its advancement.
- The improvement in traffic trends, shifting from a 4.1% decline in the third quarter to a 1.7% decline in the fourth quarter, was fueled by an increased adoption of curbside pickup by shoppers.
- CEO Brian Cornell emphasized plans to launch a new membership program and prioritize same-day delivery to spur expansion.
- Comparable sales fell in stores and online, with a 5.4% YoY drop in comparable store sales and a 0.7% improvement in digital sales compared to a 6% decline in the third quarter.
- The company anticipates a 3%-5% decline in current quarter comparable sales with adjusted earnings per share between $1.70 and $2.10 while projecting flat to up 2% in comparable sales and adjusted earnings per share ranging from $8.60 to $9.60 for full-year 2024.
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What the numbers say: Surpassing renowned brands like Heineken and Budweiser, Athletic Brewing Company has become the leading nonalcoholic beer brand in U.S. grocery stores, contributing to the rapid growth of the nonalcoholic beer sector, which saw sales nearly triple since 2019 in a stagnant overall beer market. Last year, Athletic Brewing's sales exceeded $90M, marking a significant achievement in the expanding market. Relevance: Athletic Brewing's triumph reflects changing consumer preferences, driven by a broader moderation trend and a growing interest in health, particularly among younger demographics. The surge of nonalcoholic beer, championed by companies like Athletic, is reshaping the industry and challenging traditional perceptions of beer consumption. More data: A Gallup Poll indicates a decline in alcohol consumption among adults under 35, dropping from 72% to 62% over two decades. Athletic Brewing, initially backed with $3M and later receiving a $51M investment from Keurig Dr Pepper, showcased remarkable growth, scaling from 875 to 450,000 barrels in its new brewery, capturing a 2.2% market share in groceries and constituting 10% of beer sales at Whole Foods. In contrast, nonalcoholic beer sales in restaurants and bars outpaced overall beer sales growth, increasing by 13% last year. | | | |
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| 3 | | Cadence Design Systems ($CDNS) is set to acquire BETA CAE Systems International AG for $1.24B in a combination of cash and stock, with approximately $744M in cash and the remaining portion in stock. Cadence intends to use cash generated from operations to pay down the debt resulting from the acquisition, with the announcement having minimal impact on its stock, down 1.5% premarket. More: - Cadence, a company well-known for its computer chip design software, has been branching into larger physical systems, such as jet design software.
- The automotive and aerospace sectors, which include Honda, General Motors, and Lockheed Martin as clients, heavily rely on BETA CAE's software.
- This acquisition comes after Synopsys revealed plans to buy Ansys, a different provider of physical analysis software, for $35B.
- An estimated $40M will be added to Cadence's 2024 revenue from the BETA CAE purchase, which is anticipated to close in the year's second quarter.
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| 4 | | CNN reports that major companies like Walmart, Starbucks, Delta, and Chevron are using AI to monitor employee communications, sparking privacy concerns. The growing sophistication of AI in monitoring, including internal social platform scrutiny and cyber risk detection, is noted by experts, raising questions about its impact on employee behavior and morale. More: - According to a Qualtrics survey, 46% of workers find AI in the workplace "scary."
- Aware, a firm, is bringing artificial intelligence to work-related apps like Zoom and Slack to identify problems like cyberattacks, harassment, and bullying.
- Concerns around employee surveillance and trust erosion arise when AI is used in the workplace.
- Amidst the integration of AI technology in the workplace, experts stress the crucial need to establish and uphold trust among employees.
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| 5 | | Monzo, the London-based digital bank, secured $430M in a funding round led by Alphabet's CapitalG, boosting its valuation to $5B, surpassing its 2021 valuation of $4.5B. The funding also saw contributions from HongShan, Tencent, Passion Capital, and other existing investors. More: - According to CEO TS Anil, Monzo sees tremendous growth potential and wants to revolutionize banking worldwide.
- Monzo aims to re-enter the U.S. market by forming a banking partnership to overcome past regulatory challenges without needing a license application.
- Additionally, the business referenced potential future forays into German and French markets in Europe.
- Despite previous financial difficulties and regulatory scrutiny, Monzo anticipates making a profit this year.
- Although Monzo's valuation is below rival Revolut's $33B, it holds a complete banking license and is advancing steadily, unlike Revolut, which is still in the process of obtaining a license from U.K. regulators.
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| 6 | | China is offering "computing vouchers" ranging from $140,000 to $280,000 to AI start-ups in at least 17 cities, aiming to ease financial strains related to rising data center costs and chip shortages. Concurrently, tech giants Alibaba, Tencent, and ByteDance are limiting the rental of Nvidia GPUs for AI processing, prioritizing internal usage and key clients. More: - Due to shortages brought on by tighter U.S. regulations on AI chips, businesses are stockpiling, repurposing, or turning to the underground market.
- Securing high-performance chips has become challenging as Alibaba Cloud has predominantly assigned its advanced GPUs to internal business units.
- Analysts predict that while subsidies will alleviate some cost barriers, shortages will still exist.
- Beijing intends to launch a subsidy program for AI companies utilizing native chips to lessen dependency on imported parts.
- China is developing its cloud services and data centers, including state-run data centers and internet marketplaces where users can rent computer capacity.
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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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