| Here’s your daily business briefing. - ๐ Ford EV, hybrid sales up 65% in May
- ๐ Deep Dive: Zara expands live shopping to Europe, U.S.
- ๐ผ Intel sells 49% Irish venture to Apollo for $11B
Thanks for reading! Shriram
p/Shriram | |
| 1 | | In May, Ford's U.S. new vehicle sales increased by 11.2%, driven primarily by strong demand for all-electric and hybrid models, which saw around 65% growth each. Despite this surge, hybrid and EV sales accounted for only about 14% of Ford's total sales, with approximately 26,600 vehicles sold. More: - Ford strives to increase EV sales to meet stricter standards, but its Model E unit has suffered significant losses, totaling $1.32B from wholesaling 10,000 vehicles.
- In May, Ford saw nearly double the sales of its all-electric F-150 Lightning pickups compared to the same month in 2023, with a 46% increase in Mustang Mach-E EV sales YoY.
- The surge in hybrid sales corresponds with Ford's plan to prioritize hybrid choices throughout its entire North American range by 2030, emphasizing the expansion of hybrid vehicle offerings.
- Through May, Ford's YTD U.S. sales reached 877,685 units, up 5.6% from the same period in 2023, led by a 10% increase in SUV sales and a 2.5% rise in truck and van sales.
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What the numbers say: Zara's five-hour live shopping shows on Douyin in China have been a hit, drawing around 800,000 unique viewers per show. Despite reducing its physical stores from 570 in 2019 to 192 by early 2024, Zara has seen significant growth, with a 50% increase in sold-out products in the first three months of this year compared to the same period in 2023. Relevance: Zara's expansion of live shopping to the U.K., Europe, and the U.S. highlights its strategy to engage Western consumers through a format successful in China. This move aligns with retail trends of leveraging social media and e-commerce to attract younger, health-conscious shoppers as physical stores see declining foot traffic. More data: Zara will host live shows on its app and website in Western markets, featuring Zara Woman collections and well-known fashion personalities, allowing real-time viewer interaction. This expansion, coinciding with Inditex's upcoming quarterly results amid expected slower sales growth, follows similar successful initiatives by brands like Asos, L'Orรฉal, and Puma on platforms like TikTok Shop in the U.K. | | | |
| 3 | | Intel is selling a 49% stake in its Fab 34 plant in Ireland to Apollo Global Management for $11B to attract external funding for factory expansion. CEO Pat Gelsinger aims to revitalize Intel's product lineup and manufacturing capabilities to reclaim its semiconductor industry dominance. More: - The "Smart Capital" deal offers financial flexibility while furthering Intel's transformation strategy.
- Construction on the Leixlip plant is nearing completion, and the transaction is anticipated to be finalized in the second quarter of 2024.
- Fab 34 will employ Intel's 4 and 3 manufacturing technologies, with Intel agreeing to buy a specified minimum output from the facility.
- In 2022, Intel secured a $15B commitment from Brookfield Infrastructure Partners LP to finance its expansion endeavors, particularly for a semiconductor complex in Arizona.
- Despite Intel's initiatives, concerns over its financials and market share loss to competitors like Nvidia have led to a 40% stock decline, lagging behind the Semiconductor Index.
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| 4 | | SAP is acquiring digital adoption platform WalkMe for $1.5B in cash, paying $14 per share, a 45% premium over WalkMe's last closing price. Founded in Israel in 2011, WalkMe offers real-time, on-screen guidance and analytics for user behavior, enhancing retention and engagement across consumer and enterprise applications. More: - WalkMe's market value fell from $2.8B in September 2021 to around $800-900M recently, but shares surged 25% after strong earnings last month.
- In May, WalkMe reported a 4% YoY increase in first-quarter revenue and introduced WalkMeX, an AI-powered copilot for workflow suggestions.
- SAP wants to combine WalkMeX with its AI copilot, Joule, to increase enterprise automation and support.
- This acquisition aligns with SAP's strategy, complementing its previous purchases of Signavio for $1.2B in 2021 and
- LeanIX, focusing on business process automation and enterprise architecture management.
- SAP CEO Christian Klein stated the acquisition would enhance end-user support and accelerate business transformation, with the deal expected to close in Q3 2024 pending approvals.
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| 5 | | Dollar Tree has revealed its intentions to consider selling or spinning off Family Dollar, a move that comes after its acquisition of the chain less than ten years ago. Operating approximately 8,000 stores nationwide, Family Dollar caters to low-income urban customers with products ranging from $1 to $10, yet the chain has faced challenges, including the announcement of over 900 store closures last year. More: - Dollar Tree's CEO mentioned the "unique needs" of the two chains as a motive for considering a separation, with Dollar Tree targeting middle-income suburban shoppers.
- Family Dollar has encountered obstacles such as cluttered stores, steep prices, excessive expansion, and rivalry from major retailers like Walmart and Dollar General.
- Analysts characterize Family Dollar as a "challenging operation" that is negatively impacting Dollar Tree's overall results.
- Last quarter, Family Dollar saw a minimal 0.1% growth in sales from stores open for at least one year.
- The Dollar Tree-Family Dollar merger, valued at $8.5B in 2015, is considered unsuccessful, with Family Dollar stores plagued by issues like neglect, limited products, and worker discontent.
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| 6 | | American consumers are grappling with elevated inflation and the highest interest rates in nearly 25 years, diminishing pandemic savings, and increasing debt, leading to higher delinquencies. Retailers observe shifts in consumer buying patterns as shoppers grow more discerning in response to escalating prices. More: - Despite a robust job market with unemployment below 4% and wage growth surpassing inflation, consumers are experiencing financial pressure.
- Recent economic indicators show a deceleration in consumer spending, as April retail sales remained unexpectedly stagnant and first-quarter GDP was revised downward.
- April's employment report revealed a substantial shortfall in job growth, with only 175,000 jobs added compared to the anticipated 235,000.
- Retail earnings have varied, as decreased discretionary spending among lower and middle-income consumers has affected retailers like Kohl's.
- While certain retailers face difficulties, others, such as TJX and Abercrombie & Fitch, have thrived thanks to bargain-hunting and consumer nostalgia.
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- Max will hike ad-free prices by $1 monthly and $10 to $20 annually, timed with "House of the Dragon," as Warner Bros. Discovery considers bundling Max with Disney's Hulu and Disney+ at a discount.
- Astroscale, a Tokyo-based company pioneering space debris removal spacecraft, witnessed a surge in shares during its Tokyo debut, aiming to provide satellite refueling and repair services.
- Deere & Co. announced job cuts in response to decreased farm equipment demand, aiming to streamline operations and address redundancy, as detailed in a filing following recent media reports.
- TXSE Group, supported by BlackRock and Citadel Securities, plans to launch the Texas Stock Exchange in Dallas, with SEC registration expected later this year following a $120M fundraising.
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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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