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| Here's your daily business briefing. - 👟 Adidas reports first loss in 30 years, warns on U.S. market
- 📈 CPI: February sees price increase
- 👗 Inditex hits record high as 2023 sales surge 10%
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Adidas ($ADDYY) reported its first annual net loss since 1992, with CEO Bjorn Gulden expressing disappointment but highlighting that 2023 ended better than anticipated. Expectations indicate a roughly 5% decline in North American sales for the current year, following a fourth-quarter drop of 21% and a yearly decrease of 16%. More: - Despite challenges, Adidas surpassed competitors like Nike and Puma in regaining market share, notably reducing its inventory by $1.64B in 2023, marking a 24% decrease.
- Except for Yeezy, the company anticipates improving its core business in 2024 and growing by at least 10% in the second half.
- Adidas generated a profit of $330M from the sale of Yeezy last year, bringing in $820M.
- Following 8% growth in 2023, sales in China are predicted to climb at a double-digit rate.
- The surge in demand for low-rise suede "terrace" sneakers such as the Samba and Gazelle contributed to increased footwear sales by 8% in the fourth quarter, while apparel sales declined by 13%.
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What the numbers say: The Consumer Price Index rose by 3.2% for the 12 months ending in February, slightly exceeding economists' forecasts and up from January's 3.1%. In February alone, CPI increased by 0.4%, the sharpest monthly rise since September, driven primarily by higher gas prices and consistent increases in shelter costs, accounting for 60% of the monthly increase. Relevance: February witnessed a surge in inflation driven by rising gas prices, although other sectors, such as food and housing, experienced a deceleration in price growth. This moderation in specific categories is encouraging for both the Federal Reserve and consumers, suggesting a possible stabilization of the economy despite lingering inflation concerns. More data: Food prices stayed steady, with groceries and restaurant costs showing minor fluctuations. Despite stable gas prices in March, shelter inflation eased slightly in February, impacting the annual rate, yet private data suggests ongoing rent increases, especially in costly cities. The Federal Reserve may delay rate cuts to assess inflation trends further, though some analysts predict cuts later in the year. | | | |
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| 3 | | Inditex, Zara's parent company, witnessed a surge in its shares, reaching an unprecedented high with a more than 6% increase during intraday trading. The company achieved record full-year sales of $40B in 2023, marking a significant 10.4% growth across all brands and geographic regions, encompassing online and offline channels. More: - By year's end, the firm operated 5,692 stores; in 2024, it planned to open further locations, including new Zara stores in Los Angeles and Las Vegas.
- In addition, Inditex plans to invest $990M a year in new distribution centers in 2024 and 2025.
- In 2023, net income increased by 30.3% to €5.4B, while total profit increased by 11.9% to €20.8B.
- Zara and Zara Home led sales contributions, followed by Pull & Bear and Massimo Dutti.
- From Feb. 1 to March 11, 2024, sales increased by 11% in constant currency compared to the prior year.
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| 4 | | WWE announced logo placements on its wrestling mat, beginning with Prime Hydration, co-founded by Logan Paul, becoming the "official hydration drink partner" of WWE, with visibility at major events like "WrestleMania." This marks WWE's largest-ever sponsorship deal, with Prime committing an eight-figure sum over two years. More: - Advertising on all WWE events, digital platforms, retail stores, and media properties is included in the arrangement.
- TKO Group ($TKO), created when WWE and UFC merged, seeks to standardize sponsorship tactics for both brands.
- The UFC, which makes a substantial profit from sponsor logos on its Octagon, served as the model for this approach.
- In the final quarter of 2023, UFC brought in $48.3M in sponsorship money, while WWE brought in $15.4M, despite WWE's more significant earnings from content sales and media rights.
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| 5 | | A RevenueCat report on the subscription app economy, analyzing data from 29,000 apps and 18,000 developers, shows that the top 5% of apps earn 200 times more revenue than the bottom quartile in the first year, with a median monthly income below $50. Just 17.2% of apps generate $1,000 or more monthly, but growth prospects improve after reaching this mark. More: - Travel and productivity applications do poorly, even in the top 5%, but health and fitness apps perform better than others.
- The average monthly subscription fee is still $10; however, it has increased by 14% to $8.01.
- North American apps have an RLTV (Realized Lifetime Value) of $0.35 instead of $0.08 globally, which is four times more profitable than the average worldwide.
- Contrary to usual patterns, Japan and South Korea demonstrate higher monetization on Android than iOS platforms.
- The retention rate for monthly subscribers decreased by approximately 14%, although crucial metrics such as conversion rates show a YoY increase.
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| 6 | | According to a Pew Research Center report, approximately 40% of teenagers have cut back on social media use, with 38% admitting to excessive smartphone usage and 27% expressing concerns about social media. This has sparked debates on age restrictions, with some U.S. states proposing laws to limit social media access for those under 16. More: - Even though most teenagers have access to smartphones, most (51%) think they use their phones "about the right amount."
- Teen girls (44%) are likelier than boys (33%) to believe they use their phones excessively.
- Between Sept. 26 and Oct. 23, 2023, Pew polled 1,453 American teens, ages 13 to 17, and their parents.
- When they put down their phones, 72% of teenagers say they feel happy, but 44% say they feel nervous.
- Over two-thirds of teenagers say smartphones are beneficial rather than harmful, yet 42% think they make it more difficult to develop social skills.
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| 7 | | Quick Hits: - Attention busy professionals & feline owners: Meowtel has the largest elite network of insured cat sitters who tailor to your cat's every need.*
- 3M has appointed Bill Brown, the former CEO of L3Harris Technologies, as its new CEO, opting for an external candidate to lead the company through declining sales and legal challenges.
- Liquid Death has concluded a funding round, raising $67M, which will fuel distribution expansion and advance product innovation, valuing the business at $1.4B.
- TikTok expanded its Effect Creator Rewards program to more regions and lowered the payout threshold, rewarding creators for effects developed through its AR platform, Effect House, introduced in May 2023.
- Tyson Foods Inc. announced the permanent closure of its pork facility in Perry, Iowa, as part of its efforts to streamline operations amid declining profits.
- Everyone wants to move fast. But you need a strong DevOps foundation to accelerate your AWS workloads & release pipelines. Jump start DevOps with DoiT.*
*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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