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| Here’s your daily business briefing. - 🔻 Nordstrom stock drops 10% on 2024 sales decline warning
- 🚗 Deep Dive: Toyota profits from hybrid surge
- 📱 Apple sales drop 24% in China
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Nordstrom ($JWN) surpassed holiday quarter sales expectations, revealing revenue of $4.42B compared to the anticipated $4.39B and adjusted earnings per share of $0.96 against the expected $0.88. Despite the positive performance, the company cautioned about potential sales declines in 2024, projecting a range from a 2% decrease to a 1% gain in full-year revenue, and shares dropped 10%. More: - The off-price brand, Nordstrom Rack, outperformed, with net sales increasing by 14.6% over the holiday quarter.
- In 2024, the business intends to open 22 new Nordstrom Rack locations, emphasizing increasing in-person and online sales.
- The highest year-over-year gain was seen in the fourth quarter in women's clothing, cosmetics, and the active category.
- In the fourth quarter, online sales decreased by 1.7%, accounting for 38% of overall sales, compared to 40% during the same period last year.
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What the numbers say: Hybrid vehicle sales outpaced pure electric vehicles in the U.S. and other markets in 2023, with 1.4 million hybrid and plug-in hybrid cars sold compared to 1.1 million EVs, marking a 63% increase for hybrids and a 51% rise for EVs from the previous year. Toyota anticipates a record net profit of $30.3B for the fiscal year ending March, fueled by increased sales of hybrid vehicles across significant markets. Relevance: Toyota's ($TM) success in hybrid vehicle sales signals sustained demand, addressing consumer concerns about charging infrastructure and EV prices. This trend prompts automakers like Ford and General Motors to consider reintroducing plug-in hybrid models. Yet, Toyota's established leadership in the hybrid market makes executives skeptical of quick competition catch-up. More data: Between January and December, Toyota and Lexus sold 2.7 million hybrid vehicles, comprising 34.7% of total sales, whereas EVs represented only about 1% of unit sales for these brands. Toyota aims to boost hybrid sales to five million by around 2025, showcasing a growing acknowledgment of hybrids as a practical approach for achieving carbon neutrality. | | | |
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| 3 | | Counterpoint Research recorded a 24% drop in iPhone sales in China during the initial six weeks of 2024, attributed to fierce competition from local smartphone brands such as Huawei, Oppo, Vivo, and Xiaomi. In contrast, Huawei's smartphone shipments surged by 64% year over year in the same period, while Oppo faced a 29% decline, and Vivo and Xiaomi saw declines of 15% and 7%, respectively. More: - The introduction of Huawei's 5G smartphone, the Mate 60, was credited with the company's comeback in China.
- Huawei's competitiveness had previously been harmed by the U.S. government's sanctions against it in 2019 and 2020 because of a shortage of 5G and sophisticated chips.
- Neil Shah, an analyst at Counterpoint Research, pointed out that Huawei is trying to win back users who migrated to iPhones, hurting Apple's market share.
- Due to COVID-19 lockdowns in China in late 2022, Apple ($AAPL) also experienced supply chain problems that affected sales trends in later quarters.
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| 4 | | Foot Locker ($FL) shares plummeted over 20% after reporting a holiday-quarter loss of $389M, or $4.13 per share, compared to the previous year's income of $19M, or $0.20 per share, while also issuing weak guidance. In the fourth quarter, the company opened 29 new stores, renovated or relocated 66 locations, and closed 113 stores. More: - For Q4, adjusted earnings per share stood at $0.38, surpassing the expected $0.32, while revenue reached $2.38B, exceeding the anticipated $2.28B.
- Comparable sales fell by 0.7%, while Foot Locker and Kids in North America increased 5.2% and 2.9%, respectively.
- Foot Locker's gross margin declined by 3.5 percentage points, attributed to higher markdowns for excess inventory, with an 8.2% reduction in inventory levels compared to the prior year.
- For the current fiscal year, the company expects adjusted earnings per share to range between $1.50 to $1.70.
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| 5 | | Accenture ($ACN) has announced its acquisition of Udacity to develop an AI-centric learning platform as part of a broader $1B investment in creating a technology learning platform called LearnVantage. The completion of the deal is contingent on regulatory review and antitrust oversight. More: - The purchase price was undisclosed.
- The 2011-founded Udacity will become a part of Accenture to expand its audience and support skill development.
- According to earlier reports, Udacity was in talks for the Indian ed-tech company Upgrad to buy it for $80M, but the deal evidently fell through.
- Udacity was valued at $1B in 2015, having previously raised close to $300M.
- Generative AI's rise is transforming how work is done, necessitating enterprises to train individuals in cloud, data, and AI to build their digital core, states Kishore Durg, global lead of Accenture LearnVantage.
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| 6 | | Reaching a historic peak, gold surged to $2,141.90 per troy ounce on Tuesday, with investors speculating on a Federal Reserve rate cut in the latter part of the year, fostering interest in gold as a resilient investment. Costco's fiscal first quarter of 2024 saw the sale of over $100M worth of gold bars, signaling a rising demand for the precious metal. More: - For the year that ended in January, the Personal Consumption Expenditures price index increased by 2.4%, while the core PCE price index increased by 0.4%.
- The CME FedWatch Tool indicates that traders believe there is a 69% likelihood that the Fed will lower rates at its June policy meeting.
- Awaiting clues about potential future Fed actions are investors' expectations from Federal Reserve Chair Jerome Powell's congressional speech.
- The introduction of spot bitcoin ETFs propelled the cryptocurrency, regarded as digital gold, to a new all-time high of $68,789.
- Stocks have gained significantly this year, with the S&P 500 and Nasdaq Composite hitting new highs despite a recent halt.
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- Meta's platforms, Facebook and Instagram, faced a brief outage on Tuesday due to a technical issue affecting thousands of users, but the problem was resolved within about two hours.
- Kellanova, the owner of Pringles chips, is responding to surging demand by expanding in Asia, opening new factories, and exploring opportunities for sales growth in African countries.
- The RealReal plans a strategic shift by opening new stores, aiming to expand to 30 locations in the coming years as part of its growth strategy as a luxury reseller.
- U.S. job openings marginally decreased in January, along with a decline in hiring, indicating a gradual easing of labor market conditions, according to the Labor Department's monthly Job Openings and Labor Turnover Survey (JOLTS) report.
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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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