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| Here's your daily business briefing. - 📈 Disney beats earnings, raises guidance on lower streaming losses
- 👟 Deep Dive: Nike rushes to fend off agile rivals
- 🍔 Q4 2023: Yum Brands sales hit by Middle East conflict
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Disney ($DIS) outperformed quarterly earnings estimates with adjusted earnings per share at $1.22, surpassing the expected $0.99, while revenue slightly missed expectations at $23.55B against the anticipated $23.64B. Disney expects to exceed its goal of cutting costs by at least $7.5B by the end of fiscal 2024, projecting earnings per share for the year to be around $4.60, a growth of over 20% from 2023. More: - Disney's direct-to-consumer unit disclosed a $138M operating loss, while overall streaming losses decreased to $216M from the previous year's $1.05B.
- Disney+ price increases resulted in a 1.3 million decline in core users, although average income per user increased.
- Disney's entertainment division saw a 7% decline in revenue to $9.98B, while ESPN saw a 4% increase to $4.84B.
- Despite lower attendance at domestic parks in Florida, Disney's experiences division reported a 7% revenue increase to $9.13B.
Zoom Out: - Disney declared its intention to launch its flagship ESPN streaming service in the autumn of 2025, along with a $1.5B investment in Fortnite creator Epic Games.
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What the numbers say: Nike ($NKE) athletes dominated with 17 individual gold medals in running events at the 2019 World Athletics Championships, but non-Nike athletes surpassed them at the 2023 Championships, securing 12 golds compared to Nike's 10. Nike's revenue rose 10% in the fiscal year ending May 2023, but profits dropped by 16%, while Foot Locker achieved 36% of recent quarter sales from non-Nike brands, aiming for 40% by 2026. Relevance: In 2019, Nike's Vaporfly 4% trainers led competitors to allow elite athletes to wear them with covered logos; by 2023, the entire running industry adopted the Vaporfly's technology, including the carbon-fiber midsole plate. Under CEO John Donahoe, Nike confronts heightened competition, triggering a restructuring focus on direct sales, cost-cutting, and reinvestment, while agile newcomers challenge its dominance, as seen in Foot Locker's rising sales from non-Nike brands. More data: Adidas, Nike's main rival, has warned of a potential annual loss, underscoring the challenges faced by established players in the industry. Hoka, known for its "maximalist" shoes, is the fastest-growing brand in Deckers Outdoor Corporation's portfolio. On Running gained global visibility with an investment from tennis champion Roger Federer in 2019. | | | |
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| 3 | | Yum Brands ($YUM) reported quarterly earnings and revenue falling below analyst expectations, citing diminished KFC, Taco Bell, and Pizza Hut sales. Yum CEO David Gibbs identified the conflict as a low-single-digit headwind to overall sales growth, with adjusted earnings per share at $1.26 against the expected $1.40 and revenue at $2.04B versus the expected $2.11B. More: - Sales were adversely affected by the Israel-Hamas conflict, with varying impacts in Middle East markets, Malaysia, and Indonesia.
- Pizza Hut announced a 2% drop in same-store sales, partially attributable to the conflict's dampening effect on sales in several areas.
- Same-store sales at Taco Bell increased by 3%, which was also below predictions, and KFC's same-store sales increased by 2%, below estimates.
- Yum intends to have over 60,000 outlets by 2024, including over 20,000 Pizza Hut locations and over 30,000 KFC restaurants worldwide.
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| 4 | | Health and beauty brands are diversifying Super Bowl ads to attract female viewers, traditionally dominated by beverage and auto brands. Taylor Swift's association with Kansas City Chiefs star Travis Kelce is seen as a factor in potentially boosting female viewership for the game between the Chiefs and the San Francisco 49ers, which is expected to draw around 110 million viewers. More: - A 30-second Super Bowl advertisement costs between $6.5M and $7M, and according to CBS, every available slot has been taken.
- Cardi B and the cast of "Suits" are the faces of two new advertisers, L'Oreal NYX Professional Makeup and e.l.f. Cosmetics, respectively.
- Anheuser-Busch, State Farm, and Oreos are among the classic Super Bowl sponsors still in action.
- Celebrities such as Scarlett Johansson, Jennifer Aniston, and Kate McKinnon are promoting products in clever and amusing commercials aimed at female audiences.
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| 5 | | Chipotle's ($CMG) Q4 2023 earnings and revenue exceeded analysts' expectations, driven by increased customer traffic to its restaurants. The reported adjusted earnings per share stood at $10.36, surpassing the anticipated $9.75, while quarterly revenue reached $2.52B, exceeding the estimated $2.49B. More: - In contrast to industry averages, foot traffic at Chipotle locations climbed by 7.4% during the quarter.
- Sales at the same store increased by 8.4%, exceeding forecasts of 7.1%.
- Sales received a boost from the reintroduction of carne asada and a 3% menu price hike in October, while increased costs for beef, produce, and queso impacted margins.
- The American chain of fast-casual restaurants expects mid-single-digit same-store sales growth in 2024 and aims to open between 285 and 315 new sites.
- In 2024, Chipotle is set to conduct an in-restaurant trial of the Autocado, a robot designed to scoop avocados, along with an automated make line for burrito bowls and salads.
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| 6 | | California Resources Corp. ($CRC) is acquiring Aera Energy LLC in an all-stock deal valued at about $2.1B, enhancing its drilling portfolio in the Western state. This acquisition positions California Resources as the largest oil and gas company in California by production, prompting an 8.4% surge in the company's shares, the most significant intraday increase in nearly a year. More: - The acquisition occurs amid California's strict environmental regulations, deterring global oil giants and causing a decline in the state's oil output.
- With intentions to boost oil recovery in the future, the deal will significantly expand California Resources' portfolio of producing assets.
- As businesses look to profit from the post-pandemic spike in oil prices, the domestic oil and gas sector has seen several billion-dollar acquisitions.
- In exchange for the deal, California Resources would issue 21.2 million shares of common stock to the equity shareholders of Aera, which include the Canada Pension Plan Investment Board and IKAV-managed businesses.
Zoom Out: - California Resources spun off from Occidental Petroleum Corp. in 2014 and filed for bankruptcy in 2020 due to low oil prices, but successfully emerged later that year.
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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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