| Here's your daily business briefing. - 🏥 Merck beats expectations; Keytruda, Gardasil soar
- 🔍 Deep Dive: Spotify leads streaming, profitability lags
- 👟 Lululemon expands into men's shoes
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Merck exceeded Q4 revenue expectations with $14.63B and reported adjusted earnings per share of $0.03, beating projections of a $0.11 per share loss. Merck's performance reflects resilience in critical markets despite a net loss of $1.23B for the quarter, attributed to increased demand for blockbuster drugs like Keytruda and Gardasil. More: - Keytruda generates $6.61B in revenue, a 21% increase from last year's quarter.
- Sales of Gardasil total $1.87B, a 27% increase from Q4 2022.
- Merck has projected revenue of $62.7B to $64.2B for 2024, with adjusted earnings per share ranging from $8.44 to $8.59.
- The corporation has revealed its 2024 restructuring plan, which aims to enhance its manufacturing networks for animal health and pharmaceuticals.
Zoom Out: - Merck & Co. will acquire Elanco Animal Health Inc.'s farmed fish health products unit for $1.3B, representing about 7.4 times the estimated revenue of the aqua business.
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What the numbers say: Spotify, holding a 30% market share in the audio-streaming industry with approximately 600 million users, faces challenges in profitability despite its dominant position. The company's ventures into podcasting, concert hosting, ticket sales, and high-fidelity audio have encountered setbacks, contributing to losses and prompting layoffs of around 2,300 employees in 2023. Relevance: Despite its position as the top audio-streaming platform, Spotify struggles to achieve consistent profitability, facing challenges in ventures like podcasting, concerts, and high-fidelity audio. The company, aiming to become a broader audio-focused entity, has undergone layoffs and shifted focus to more efficient operations amid its ambitious expansion plans. More data: Facing competition from tech giants, Spotify aims to leverage its unique combination of streaming music, podcasts, and audiobooks for profitability. Despite losses in some ventures, the company's push into audiobooks, music streaming, and podcasts is expected to contribute to sustained profits in 2024, making it a potential takeover target. | | | |
| 3 | | Lululemon ($LULU) is expanding its product offerings with its first men's footwear line, featuring a casual sneaker named "Cityverse" and two upcoming running shoe models. This move is part of Lululemon's strategy to double its men's business and achieve a revenue target of $12.5B by 2026, emphasizing innovation and proprietary technologies to strengthen its brand in a competitive market. More: - Lululemon strives to stand out in the competitive athletic apparel market, contending with established players like Nike and newer entrants like On Running.
- Lululemon sees its expansion into men's footwear as a calculated strategic move, but it still views garments as the "juggernaut" and the center of the business.
- The company, which reported a 19% sales increase in the three months ended October 29 after showing a 28% spike in the same quarter last year, admits that its growth rate has slowed.
- Calvin McDonald, CEO of Lululemon, emphasized the potential for growth by pointing out "the low brand awareness among men."
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| 4 | | Exxon Mobil ($XOM) and Chevron ($CVX) achieved their second-highest annual profits in a decade, with Exxon earning $36B and Chevron $21.4B. However, both companies faced challenges in the fourth quarter, as Exxon's earnings decreased by 40%, and Chevron's quarterly profit dropped by 64%, primarily due to impairment charges related to regulatory issues in California. More: - Exxon and Chevron are negotiating an unpredictable future by striking a balance between the current dominance of fossil fuels and anticipated shifts in energy use.
- With global efforts to shift away from coal, oil, and natural gas, political reaction against the oil industry has intensified.
- Cash distributions to shareholders are part of Exxon's and Chevron's strategies; they have reached record levels of $32B and $26B, respectively.
- While both businesses want to invest in low-carbon technologies, their existing profits are primarily derived from the oil and gas industry.
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| 5 | | Ikea achieved an 11.5% reduction in greenhouse gas emissions last year, contributing to a 22% decrease in its overall climate footprint compared to 2016 and a 12% drop from the previous year. The company credits the decline to increased use of renewable electricity, enhanced energy efficiency in lighting, and reduced production volumes. More: - Ikea produced about 24.1 million metric tons of carbon dioxide equivalent in the 2023 fiscal year.
- The extraction and processing of raw materials accounted for the majority of emissions (46.6%), with the consumption of products in consumers' homes coming in second (15.9%).
- Ikea has revised its climate plan to become net-zero by 2050 and cut greenhouse gas emissions from its supply chain in half by 2030.
- The company supports stopping deforestation, tackling the underlying causes of air pollution, and ultimately phasing out fossil fuels and subsidies.
- Ikea aims to adopt finalized guidance from the GHG Protocol and expand its responsibility to include the climate footprint of customers, suppliers, and material sourcing areas.
Zoom Out: - The company's updated climate strategy aligns with sustainability initiatives from last year, including solar installations and renewable heating and cooling projects in various U.S. units and stores.
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| 6 | | Super Bowl ticket prices have dropped 15% to $6,944 for the "get-in" price, but the average purchase price has surged to a record high of $9,850, up 70% from last year's average of $5,800, according to TickPick. The most expensive purchase on TickPick has been six tickets in Section 336, totaling $88,860 at $14,810 each. More: - With 37% of purchases coming from California and 7% from Kansas and Missouri, 49ers fans may outnumber Chiefs supporters for the game.
- Roundtrip flights from Kansas City to Las Vegas have spiked to $666, a 350% increase from last year, and San Francisco to Las Vegas flights average $383, up 262% YoY.
- The average cost of a hotel room for the weekend is approximately $400, although some exclusive resorts charge as much as $25,000, a 76% increase YoY.
- The Super Bowl has raised demand and pricing for hotels in Las Vegas, as evidenced by the 130% rise in searches for lodging in recent weeks.
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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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