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| Here’s your daily business briefing. - 🛑 Walmart shuts down innovation unit
- 🌊 Deep Dive: Red Sea attacks spike shipping rates
- 🚺 Honey Pot acquired for $380M
Thanks for reading!! Shriram
p/Shriram | |
| 1 | | After seven years of operation, Walmart ($WMT) is closing its innovation unit, Store No. 8, created to drive innovation and compete with Amazon's expanding online business. Named after the Arkansas store where Walmart founder Sam Walton tested new ideas, the closure marks the end of the unit's efforts. More: - The American multinational retail corporation intends to look at new methods for testing technologies and cut expenses.
- Following the shutdown, the company's senior vice president and store manager, Scott Eckert, will depart.
- John David Rainey, the CFO of Walmart, said that the organization is now integrating the competencies that Store No. 8 built.
- The firm has embraced several Store No. 8 concepts, including text-message shopping (which was later shut down in 2020) and online home delivery.
- This action fits with Walmart's larger strategy changes and cost-cutting initiatives in light of cautious consumer spending.
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What the numbers say: According to Drewry Shipping Consultants, average global shipping costs for a 40-foot container rose 23% to $3,777 in the week ending Jan. 18, doubling in the past month. Spot-market rates for shipping a container from China to Los Angeles increased 38% to $3,860, while maritime traffic through the Suez Canal fell 37% in 2024, leading significant carriers to reroute ships around Africa, adding over a week to transit times. Relevance: Global shipping route disruptions, notably in the Suez Canal, are causing supply chain delays and higher transportation expenses, aggravated by Houthi rebel attacks in the Red Sea, resulting in increased volatility and shipping difficulties. This affects multiple industries, leading to production suspensions and logistical challenges for manufacturers and retailers. More data: Ongoing Houthi attacks on commercial vessels have prompted some European apparel companies to shift to airfreight and restrict vessel transit through the Panama Canal due to a drought impacting freight flows. Manufacturers, including Tesla and Volvo, suspended production due to part shortages from shipping delays. | | | |
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| 3 | | Compass Diversified is acquiring The Honey Pot, a natural feminine care brand, for $380M, excluding adjustments upon closing. Co-founder and CEO Beatrice Dixon will continue to lead the company, with existing owners retaining a significant minority stake, and the deal is anticipated to close in February, subject to customary conditions. More: - For the fiscal year 2023, The Honey Pot projected gross sales of approximately $121M and adjusted EBITDA of $29M.
- Since 2020, the brand has grown at a compound annual growth rate of 54% in gross sales.
- The purchase intends to make it easier for The Honey Pot to launch new products beginning this year.
- Laura Tedesco, chief strategy and marketing officer at The Honey Pot, said, "The company has a 10-year innovation roadmap, which includes entry into the body care market with pH cleansers in 2024."
- The Honey Pot currently offers its merchandise online and in more than 33,000 physical stores around the country, such as Target, Walmart, CVS, Walgreens, and Kroger.
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| 4 | | La Francaise des Jeux (FDJ) proposes a $2.7B acquisition of Kindred Group (KIND), a Swedish gambling company, through a cash offer of 130 kronor ($12.41) per share, reflecting a 24% premium over Kindred's closing price the previous Friday. FDJ plans to finance the offer using internal cash reserves and loans from BNP Paribas and Societe Generale. More: - After the announcement, FDJ shares surged up to 6.1%, the most since May 2022, while Kindred shares jumped as much as 19%, the most significant increase since 2009.
- If approved, the merger of FDJ and Kindred's businesses will establish one of Europe's largest gambling conglomerates.
- Kindred gives FDJ access to almost 30 million internet gamers, sports bettors, and casino patrons.
- The offer has been accepted by shareholders representing 27.9% of Kindred, including Nordea Bank, Premier Investissement, Corvex Management, Eminence Capital, and Veralda Investment. The board has unanimously recommended accepting the offer.
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| 5 | | Starting Jan. 22, Applebee's is launching a $200 subscription date night pass, providing 52 date nights from Feb. 1, 2024, to Jan. 31, 2025. The pass covers up to $30 for food and non-alcoholic beverages during each outing. More: - According to a 2022 survey by Match Group, the company behind dating apps like Tinder and Hinge, the average amount spent on dates has climbed by 40% over the previous 10 years.
- The subscription pass seeks to present a cost-effective dining solution for couples, addressing the growing expenses linked to dating activities.
- Applebee highlights its position as an affordable restaurant by running specials like $1 margaritas and unlimited boneless wings.
- A limited number of passes — which do not include 16 sites across multiple states — will be offered for sale on Applebee's website.
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| 6 | | In 2023, China surpassed Japan to become the top global car exporter, shipping over 5 million vehicles. Established Chinese automakers, including SAIC and Dongfeng, and newcomers like BYD and Nio significantly increased production and exports, while U.S. vehicle exports saw a 25% decline in 2022 compared to the peak in 2016, according to the U.S. Bureau of Economic Analysis. More: - China's BYD, supported by the Beijing government, has surpassed Tesla in sales to become the world's largest seller of electrified vehicles.
- Chinese automakers are entering foreign markets, such as those in Europe, Mexico, and maybe the U.S., with the help of government assistance and subsidies.
- Low-cost models, electric cars, and high levels of vertical integration that facilitate economical manufacture have all been linked to the rise of Chinese automakers.
- BYD's inexpensive electric vehicles, like the BYD Seagull, which starts at about $11,400, have raised eyebrows in the international market by setting a new benchmark for affordability.
- According to some experts, Chinese automakers might replicate the success of Japanese and South Korean automakers in the U.S. market.
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- Sony Group of Japan has dropped its $10B merger with Zee Entertainment in India, ending the potential creation of a major TV broadcaster in the country.
- Terraform Labs, creator of the TerraUSD stablecoin, filed for Chapter 11 bankruptcy in the U.S. after the 2022 collapse that impacted cryptocurrency markets.
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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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