| Here’s your daily business briefing. - đź›’ Walmart unveils new grocery brand: Bettergoods
- 🔍 Deep Dive: 1% wealth hits $44T
- ⚕️ Eli Lilly exceeds targets, raises outlook on Zepbound, Mounjaro sales
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Shriram
p/Shriram | |
| 1 | | Walmart ($WMT) is launching Bettergoods, a new grocery brand featuring trend-driven and chef-inspired foods, priced mostly under $5, in response to growing demand for elevated culinary and healthier options, particularly among younger and more affluent shoppers. This initiative is part of Walmart's strategy to expand its private label offerings and retain its status as the top U.S. retailer amidst rising inflation. More: - In the latest fiscal year, Walmart's U.S. grocery sales surged by almost 7%, reaching $264.2B.
- The rise of budget-friendly grocery chains such as Aldi, Lidl, and Trader Joe's, coupled with the success of Costco's Kirkland brand, has altered consumer attitudes toward store labels.
- Retailers like Walmart are enhancing their private-label strategies to offer a wider array of distinctive and diverse food offerings and are moving away from generic or imitative products.
- Bettergoods is set to introduce a range of items spanning frozen foods, dairy, and snacks, priced between under $2 and $15.
- The new brand's addition will enhance Walmart's grocery department, alongside its existing private labels like Great Value, currently the top-selling private grocery brand in the U.S.
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What the numbers say: The wealth of the wealthiest 1% soared to a historic high of $44.6T by the fourth quarter's end, propelled primarily by stock market gains, which added $2T. Corporate equities and mutual fund shares accounted for a substantial portion, totaling $19.7T, with the top 1% experiencing a 49% surge in wealth since 2020, totaling almost $15T. Relevance: The wealth surge among the top 1% underscores the concentration of riches, mainly driven by stock ownership. Economists note the "wealth effect" from the stock market's boom, boosting investor confidence and spending, yet data exposes its unequal benefits, with the top 10% controlling 87% of individual stocks and mutual funds and the top 1% owning half of all individual stocks. More data: Although the top 1% have experienced a wealth surge, it may not significantly impact consumer spending, given their tendency to save rather than spend. Inequality, gauged by the wealth gap, has reverted to pre-pandemic levels, with the top 1% controlling 30% of national wealth and the top 10% holding 67%.
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| 3 | | Eli Lilly ($LLY) exceeded Wall Street's expectations in the first quarter and raised its full-year guidance, now anticipating adjusted earnings of $13.50 to $14.00 per share and revenue between $42.4B and $43.6B. The increased outlook is driven by robust sales of its diabetes drug Mounjaro and weight loss treatment Zepbound. More: - First-quarter revenue surged to $8.77B, marking a 26% YoY increase, with adjusted earnings per share at $2.58, surpassing analyst predictions.
- Despite encountering shortages projected to persist until June, Zepbound achieved sales of $517.4M for the quarter.
- Mounjaro sales surged to $1.81B but missed analyst projections due to reduced utilization of savings card programs.
- Trulicity and Verzenio experienced revenue growth but fell short of analysts' forecasts.
- Jardiance, a medication for lowering blood sugar in Type 2 diabetes patients, generated $686.5M in sales for the first quarter, slightly below analysts' projected sales of $718.3M.
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| 4 | | Starbucks ($SBUX) reported disappointing quarterly earnings and revenue, with an unexpected decline in same-store sales, leading to a 17% drop in its shares. Its fiscal second-quarter net income fell to $772.4M, or $0.68 per share, from $908.3M, or $0.79 per share, compared to the previous year, leading to a downward revision of its fiscal 2024 earnings and revenue forecast due to ongoing café challenges. More: - Contrary to expectations of 1% growth, same-store sales declined by 4%, attributed to a 6% decrease in café traffic.
- The American multinational chain observed declining traffic and same-store sales across all regions.
- In the U.S., Starbucks experienced a second consecutive quarter of struggle, with same-store sales declining by 3% and traffic dropping by 7%.
- Internationally, Starbucks saw a 6% decrease in same-store sales, with China particularly affected by an 11% decline.
- The Seattle-based firm has adjusted its fiscal 2024 forecast, now expecting low single-digit revenue growth and adjusted EPS growth ranging from flat to low single digits, in contrast to the previous projections of 7% to 10% and 15% to 20%, respectively.
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| 5 | | Samsung Electronics anticipates a more than 10-fold rise in first-quarter operating profit, driven by robust demand for AI and a limited supply of high-end chips. Despite a year-to-date decline, Samsung shares rose 1.8% following the optimistic forecast, with plans to substantially boost the production of high bandwidth memory (HBM) chips for AI applications. More: - The South Korean multinational manufacturing company initiated mass production of 8-layer HBM3E chips for AI chipsets and aims to introduce 12-layer versions in the second quarter.
- Samsung's first-quarter revenue rose 13% to $52.14B, driven by a 96% surge in memory chip revenue to $12.62B.
- The chip division's operating profit surged to $1.3B in the first quarter, rebounding from a loss of $3.3B a year earlier.
- Samsung's mobile devices business achieved a $2.53B operating profit, with approximately 60 million smartphones shipped in the quarter.
- Samsung credited the S24 phones' first-quarter profitability to AI functions, with around half of the customers buying them for this feature and 60% regularly using it.
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| 6 | | SES SA is set to acquire Intelsat SA for $3.1B in cash, forming a satellite behemoth with contingent value rights, a deal greenlit by both companies' boards. Approximately 73% of Intelsat's common shareholders have committed to supporting the agreement, which follows failed discussions between SES and Intelsat last year, reignited recently. More: - The Luxembourgish satellite telecommunications network provider plans to finance the $5B deal using existing cash, equivalents, and new debt.
- SES's depositary receipts dropped 3.8% in Paris after announcing the deal.
- The merged entity will have its main office in Luxembourg and a strong foothold in the U.S., especially in the greater Washington region.
- Intelsat, established in 1964 and privatized in 2001, emerged from bankruptcy in 2022.
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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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