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| Here's your daily business briefing. - 📉 Q4 2023: Warner Bros. misses expectations
- 🔍 Deep Dive: LVMH flourishes, luxury sector falters
- 🤝 Microsoft, Intel partner on processor
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Warner Bros. Discovery ($WBD) shares dropped 12% in Q4 as the company reported a net loss of $400M, missing analyst expectations and revenue of $10.28B, below the expected $10.35B. Warner Bros. Discovery ended 2023 with $6.16B in free cash flow, an 86% rise from the year before, after generating $3.31B in free cash flow in Q4. More: - A 29% decline in adjusted EBITDA to $543M accompanied a 17% decline in studio revenue to $3.17B.
- Due to increasing content spending after the Writers Guild of America and Screen Actors Guild-American Federation of Television and Radio Artists' strikes were resolved, the firm anticipates free cash flow headwinds in 2024.
- The business anticipates that its flagship streaming service, Max, will turn a profit in 2024, and it concluded 2023 with an adjusted EBITDA of $103M for the whole year.
- By the end of 2024, Max's advertising tier will reach 40 foreign markets, with an estimated $1B in EBITDA for 2025.
- With 2% growth from the previous quarter, the business claimed 97.7 million global direct-to-consumer subscribers.
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What the numbers say: Following the earnings release, the company's equity was valued at approximately $406.5B, with shares rising as high as 9%. In Q4 2023, LVMH recorded a 9% surge in sales for its fashion and leather goods division, with group-wide organic growth reaching 10%, exceeding analyst projections of an 8% increase. The full-year group operating margin maintained stability at 26.5%. Relevance: LVMH's robust Q4 and 2023 results underscore its resilience and financial prowess in the luxury sector, surpassing expectations in organic growth and maintaining a stable operating margin, reinforcing its competitive standing in the industry. LVMH's resilient performance is bolstered by its diverse portfolio. Key brands such as Louis Vuitton and Dior are crucial in driving success through consumer familiarity and brand recognition. More data: LVMH's Q4 performance shows continued momentum, with a strong presence in key markets like the U.S. and China. The company's focus on quality and desirability, led by brands like Louis Vuitton and Dior, reflects a strategic approach amidst changing market dynamics. New launch: LVMH is introducing an entertainment initiative overseen by a committee including LVMH heir Antoine Arnault and Anish Melwani, CEO of the group's North America operations, to enhance the marketing of its luxury labels. | | | |
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| 3 | | Microsoft's ($MSFT) utilization of Intel's ($INTC) 18A manufacturing technology for an in-house-designed chip underscores Intel's successful turnaround under CEO Pat Gelsinger. The collaboration aims to secure a stable supply of high-performance semiconductors for Microsoft's data center operations, particularly in AI applications. Intel competes in the foundry market against leaders like TSMC. More: - Through the Chips and Science Act, Intel may obtain government subsidies totaling over $10B with the help of Microsoft.
- Among the biggest purchasers of cutting-edge chips are Microsoft, Amazon, and Google, who are starting to prioritize their own designs above those of more established vendors like Intel.
- Intel intends to close the revenue gap with Samsung in the foundry business by the decade's end.
- Intel is reorganizing its structure by separating design and product groups from manufacturing to accommodate external customers reasonably.
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| 4 | | Luckin Coffee Inc. outpaced Starbucks Corp. ($SBUX) in China with annual sales of $3.45B, surpassing Starbucks' annual sales of $3.16B. Luckin reported quarterly net revenue of $980M, reflecting a 91% increase from the previous year, with net income surging over fourfold yearly to $41M in the same period. More: - Luckin's success is credited to budget-conscious Chinese consumers choosing cost-effective coffee options amid economic uncertainty, priced as low as $1.38 (9.9 yuan) per cup, in contrast to Starbucks' higher costs.
- Luckin, established in 2017, plans to multiply, with over 8,000 new locations opening in 2023 and over 16,200 locations by the end of the year throughout China.
- On the other hand, Starbucks grew very slowly and had around 7,000 locations in China by December.
- China's coffee market has experienced remarkable expansion, as local brands such as Cotti Coffee have opened thousands of stores, establishing China as the country with the highest number of branded coffee shops worldwide, surpassing the U.S.
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| 5 | | Havenly, a provider of interior design services, has acquired The Citizenry, a direct-to-consumer home decor brand, in its third acquisition within two years. Havenly's expansion includes in-person design services in twelve U.S. cities, while The Citizenry operates a flagship store in New York City, and Interior Define has multiple locations nationwide. More: - Havenly seeks to expand its portfolio of home brands and technologies targeting the next generation of shoppers through strategic acquisitions.
- The agreement increases the selection and gives consumers access to products across the country by enabling them to access several home brands on the Havenly website.
- Founded in 2014 by Rachel Bentley and Carly Nance, The Citizenry crafts ethically made, globally-inspired home products in collaboration with artisans and heritage manufacturers.
- Bed Bath & Beyond's Decorist closed in 2022 after an eight-year run, and Modsy also shuttered that year.
Zoom Out: | | | |
| 6 | | Lionel Messi's first full MLS season debut is generating excitement despite a rocky preseason, as ticket prices for Inter Miami's season opener against Real Salt Lake averaged $185 per seat — a 585% increase from last year's first home game. The cheapest seats for the first home game of the season were priced at $95, a considerable increase from the $7 lowest-priced seat from the previous season. More: - Due to Messi's influence on league-wide ticket demand, the average cost of an MLS game this season is $164, a 124% rise over the $73 per seat cost in 2023.
- Seats on the secondary market for Inter Miami's season average $167, up from $99 the year before, a 70% increase.
- Messi's impact is felt worldwide; according to StubHub, tickets have been purchased from 44 different nations, with Argentina ranking as the second-largest source of purchasers behind North America.
- According to StubHub, MLS ticket sales are up seven times over the previous year. Inter Miami is the most in-demand MLS team, with sales up 150 times over.
- Messi's revamped jersey is still selling well, proof of the fans' ongoing interest in soccer-related items.
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| 7 | | Quick Hits: - Intuitive Machines' Nova-C cargo lander, named "Odysseus," achieved the first U.S. soft landing on the lunar surface since 1972, marking the first successful moon landing by a private company.
- AT&T experienced a nationwide network outage, disrupting calls, texts, and internet access for customers; the service was restored to all affected users approximately 11 hours after the issue was reported.
- Vice Media, formerly known for digital journalism, has decided to cease publishing stories and content on its website, signaling a restructuring of the business following its emergence from bankruptcy court protection last year.
- Standard Chartered PLC announced a $1B buyback and anticipated increased income for the year, following a quarterly report of outperformance driven by revenue growth, reduced impairments, and the sale of its aviation finance business.
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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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