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| Here’s your daily business briefing. - ๐ Levi's sales shift: Online & stores rise
- ๐ Deep Dive: Cigarette dependency declining
- ๐ Ford's U.S. hybrid sales surge boosts overall sales
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Shriram
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| 1 | | Levi Strauss now derives almost half its revenue from direct-to-consumer sales, reaching a record high of 48% in the fiscal first quarter, up from 42% the previous year. Despite a $10.6M net loss, the company exceeded Wall Street's earnings expectations with adjusted earnings per share of $0.26, while quarterly revenue slightly surpassed analysts' estimates at $1.56B. More: - Levi's anticipates a 1% to 3% growth in full-year sales and projects adjusted earnings per share to range from $1.17 to $1.27, surpassing earlier forecasts.
- The company targets direct-to-consumer sales to comprise 55% of total sales, with continuous initiatives to broaden its online and retail footprint.
- As part of its transition, Levi's will offer more skirts, dresses, and tops, focusing on the denim lifestyle and expanding its product line beyond denim pants.
- The company underscores its cultural relevance, as exemplified by Beyoncรฉ naming a song after Levi's on her latest album, enhancing the brand's visibility and appeal.
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What the numbers say: The U.S. nicotine industry saw cigarettes' market share drop to 60% in 2023 from 80% in 2018, and it's projected to dip below 50% within three years. British American Tobacco recorded a $35B impairment of its U.S. tobacco brands due to their diminished long-term prospects, as cigarette sales in the U.S. plummeted by around 8% in 2023, double the usual decline rate, resulting in a 6% revenue decrease for BAT despite price increases. Relevance: Growing numbers of American smokers are shifting towards smoke-free options like e-cigarettes and oral nicotine pouches, presenting a significant hurdle for traditional tobacco firms. Factors such as inflation, higher prices, and the rise of alternative nicotine products are driving down cigarette sales, prompting tobacco companies to pivot towards smoke-free brands to sustain profitability. More data: Last year, oral nicotine pouches and illegal disposable vapes from China experienced the highest growth among nicotine products in the U.S. The tobacco market undergoes a notable shift towards noncombustible options when they comprise approximately 7% of total nicotine sales, indicating changing consumer preferences. | | | |
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| 3 | | Ford reported a 7% increase in U.S. auto sales in the first quarter, driven by a 42% surge in hybrid vehicle sales attributed to solid demand. However, sales of their best-selling F-Series trucks dipped by 10% to 152,943 units due to delays in deliveries for quality checks, including over 60,000 electric F-150 Lightning models postponed since February 9 due to undisclosed quality issues. More: - Ford has had the most recalls among U.S. automakers over the past three years, so CEO Jim Farley is prioritizing quality improvements.
- Ford seeks to enhance reliability and rival the segment-leading quality of the Toyota Tundra with the revamped F-150.
- Sales of electric vehicles increased by 86%, with the battery-electric F-150 seeing an 80% increase in sales to 7,743 units.
- The battery-powered Mustang Mach-E saw a 77% increase in sales in February following price reductions of up to $8,100.
- Ford is reducing its investment in electric vehicles by $12B due to consumer resistance to high prices and inadequate charging infrastructure for plug-in models.
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| 4 | | Kering, the parent company of Gucci, acquired a prime retail block located at Via Monte Napoleone 8 in Milan from Blackstone for $1.4B, representing Europe's largest property transaction since 2022. This purchase also stands as Blackstone's largest-ever single asset real estate sale in Europe, with the building hosting Kering's Saint Laurent store, Prada, and the LVMH-owned Cafe Cova. More: - High-end retail sites are seeing significant real estate investments as luxury fashion brands vie for flagship locations in strategic global cities.
- According to MSCI, three of the top five real estate transactions in Europe last year were purchased by Kering and its competitor LVMH.
- Adding to its collection of significant properties in Paris and Tokyo, Kering's acquisition in Milan comes after it spent $963M buying a skyscraper in New York.
- After Fifth Avenue in New York, Via Monte Napoleone is the second-highest-rent shopping boulevard in the world.
- Despite a profit warning, Kering sees investing in key real estate assets as integral to its long-term brand-strengthening strategy.
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| 5 | | As a rare total solar eclipse approaches on April 8, brands seize the opportunity to create eclipse-themed products. Pizza Hut will offer a "Total Eclipse of the Hut" deal, providing any large-sized pizza for $12 on the day of the eclipse, while Krispy Kreme introduces the "Total Solar Eclipse Doughnut" featuring black chocolate icing, silver sprinkles, buttercream made with Oreo pieces, and an Oreo cookie center, available from April 5 to April 8. More: - Frito-Lay's SunChips will release a limited-time flavor, pineapple habanero, and black bean spicy gouda for free on SunChipsSolarEclipse.com during the eclipse's total duration.
- Smoothie King introduces the "Eclipse Berry Blitz Smoothie" nationwide until April 8, while Burger King offers a buy-one-get-one deal on eclipse day, giving customers free whoppers.
- Warby Parker is providing complimentary ISO-certified solar eclipse glasses at all its stores to ensure safe viewing of the event.
- RVshare has experienced a 725% surge in bookings for the week of the 2024 solar eclipse compared to Memorial Day weekend, with an 82% increase in states along the path of totality.
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| 6 | | Hilton Worldwide Holdings Inc. is increasing its stake in Sydell Group to bolster the NoMad Hotels brand and enrich Hilton's luxury portfolio, with ambitions to establish NoMad properties in major international cities and own them outright. NoMad Hotels, recognized for its flagship in London, will become part of Hilton's operational framework. More: - Hilton's Chris Silcock, president of global brands and commercial services, plans to expand the NoMad brand to around 100 properties.
- Christopher Nassetta, the CEO of Hilton, has indicated a desire to expand the company's portfolio beyond its classic luxury brands, such as Conrad and Waldorf Astoria.
- Sydell Group CEO Andrew Zobler launched the inaugural NoMad hotel in Manhattan in 2012, with other boutique brands like Freehand and the Ned not part of the Hilton agreement.
- The NoMad deal indicates a strategic shift for Hilton, coinciding with its recent alliances with AutoCamp and Small Luxury Hotels of the World.
- Excluded from the agreement, NoMad Las Vegas will rebrand in the upcoming months.
Zoom Out: - Last month, Hilton announced plans to acquire the Graduate Hotels brand for $210M, known for its focus on properties situated in college and university towns.
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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 Shriram Jeevakumar | |
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