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| Here's your daily business briefing. - 🧱 Lego revenue rises despite challenges
- 💳 February consumer spending rebounds: CNBC/NRF
- 🛍️ U.S. private label sales up 6% to $217B: Report
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Lego's 2023 revenue rose by 2% to $9.65B, while net profit decreased by nearly 5% to $1.92B compared to 2022. Despite a 7% downturn in the global toy industry, Lego outperformed by nearly 10 percentage points. More: - In 2023, Lego Icons, Lego Technic, Lego City, Lego Harry Potter, and Lego Star Wars were among the company's best-performing brands.
- Lego introduced 780 products, with approximately 50% being new items, which aligns with its strategy of providing innovative and relevant sets.
- In its crucial Chinese market, revenue decreased as consumers displayed hesitation to spend.
- The company focuses on digital initiatives, such as collaborations like Lego Fortnite, to vie for children's engagement while merging digital experiences with traditional play.
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What the numbers say: The CNBC/NRF Retail Monitor rose by 1.06% in February, excluding autos and gas, and by 0.95% when restaurants were also excluded. Accounting for the leap day, sales increased by 0.4%, with various sectors like online sales, sporting goods, health and personal-care stores, and clothing and accessories stores seeing positive month-over-month and year-over-year growth. Relevance: Consumer spending bounced back in February after a decline in January, propelled by factors like robust employment and rising real wages. The Retail Monitor, utilizing real credit and debit card transactions, provides immediate insights into consumer actions, indicating sustained spending despite worries about interest rates and inflation, which helps maintain economic stability. More data: The Retail Monitor showed robust growth in sectors such as online sales, sporting goods, and health and personal-care stores, reflecting strong consumer activity both MoM and YoY. By relying on transaction data rather than surveys, the Retail Monitor offers a more precise view of consumer behavior, indicating sustained spending momentum despite January's downturn. | | | |
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| 3 | | In 2023, U.S. private-label brand sales surged by 6% to $217B, according to Circana, but unit sales only rose by 0.9%. Nevertheless, private-label brands expanded their market share from 24.7% to 25.5% of total unit sales from 2022 to 2023, with growth observed across various categories, including food, beverages, beauty, and home. More: - Millennials and Gen Xers without children represented 36% of private-label food and beverage sales, slightly surpassing the 35% contributed by households with children.
- According to an October FMI survey, consumer interest in private-label brands has risen, with 54% of consumers expecting to buy more from private labels than name-brand products.
- According to data from the Private Label Manufacturers Association, more than a fifth of supermarket unit sales comprised private-label goods last year.
- To take advantage of growing consumer demand, retailers like Target and Macy's are increasing the variety of private-label products they sell.
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| 4 | | EQT Corp. ($EQT) is set to buy Equitrans Midstream ($ETRN) in a $5.5B all-stock deal, with each Equitrans share valued at $12.50 exchanged for 0.3504 EQT shares. The merged entity, estimated to surpass $35B, is anticipated to generate annual synergies of $250M by aligning upstream and midstream operations. More: - Reuniting with Equitrans, the midstream pipeline firm that broke away in 2018, is the goal of natural gas production company EQT.
- The merger will consolidate control over natural gas production and transportation, utilizing more than 2,000 miles of pipeline infrastructure.
- A significant player in the Mountain Valley Pipeline project, Equitrans anticipates completion in the second quarter of 2024, with a total estimated cost of $7.57B to $7.63B.
- EQT's current shareholders will possess roughly 74% of the merged entity upon completion, leaving Equitrans' stockholders with the remaining stake.
Zoom Out: - Recent pipeline acquisitions in North America, such as Oneok's $14B deal for Magellan Midstream Partners and Energy Transfer's $7B acquisition of Crestwood Equity Partners, contribute to the trend.
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| 5 | | Kohl's ($KSS) will collaborate with WHP Global, the parent company of Babies R Us, to introduce Babies R Us sections in approximately 200 U.S. stores, featuring baby essentials and furniture in spaces ranging from 750 to 2,500 square feet. This strategy covers a vacuum created by closing well-known specialist stores like Buy Buy Baby and Babies R Us. More: - Kohl's is expanding its baby category to attract younger shoppers and boost foot traffic, including plans to enrich its online selection of baby products and introduce a new baby registry feature.
- According to Tom Kingsbury, CEO of Kohl's, the plan to have a more relevant goods mix includes expanding the baby segment.
- Despite a 1.1% drop in net sales, Kohl's posted mixed holiday-quarter earnings that exceeded Wall Street's forecasts for both revenue and profitability.
- Kohl's expects Sephora shops within its stores to exceed $2B in sales by 2025 and plans to open 140 new small-format Sephora locations, driving foot traffic since their partnership in 2020.
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| 6 | | Tweens' growing fascination with skincare products has led to the moniker "Sephora Kids," but experts caution against potential risks associated with improper product usage. The trend, fueled by social media, is evident in numerous videos showcasing tweens' visits to beauty retailers such as Sephora and Ulta. More: - Tweens are drawn to stores like Sephora because they provide a try-before-you-buy option, and they frequently choose pricey and trendy skincare goods.
- The store provides birthday events for tweens and teens, featuring a group beauty makeover or a skincare 101 tutorial before or after regular opening hours.
- Dermatologists caution against tweens' use of skincare products like retinol, citing risks of allergic reactions and aggravated acne due to improper suitability.
- Market research firm Circana, tracking point-of-sale data, noted Gen Alpha's increasing interest in skincare during the recent holiday season.
- Checkout data reveals a 16% surge in spending on premium beauty products among affluent households with children under 18, outpacing the 6% growth in households without children.
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| 7 | | Quick Hits: *This is a sponsored listing. | | | |
 | 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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