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| Here's your daily business briefing. - 🛍️ Shein to sell supply-chain tech to global brands
- 🔍 Deep Dive: Brunswick eyes cost amid soft boat demand
- 💻 Micron shares surge 14% on AI-driven earnings beat
Thanks for reading!
Shriram
p/Shriram | |
| 1 | | Shein, a leading fashion company originating from China, intends to sell its small-scale manufacturing approach to international brands and designers amid difficulties in its primary market, the U.S. This initiative, labeled "supply chain as a service," was unveiled by Shein's executive chairman, Donald Tang, during a presentation to investors. More: - As part of this approach, Shein will make its supply-chain technology and infrastructure available to other businesses, enabling them to track consumer popularity and test new fashion products in small numbers.
- The Securities and Exchange Commission has not yet reacted to Shein's November application for a U.S. stock listing, possibly because of political ramifications.
- As an alternative strategy, Shein is contemplating listing options in different locations, such as London.
- In 2023, Shein revealed record-breaking sales and profits, demonstrating its financial resilience in the face of regulatory obstacles.
- The Chinese-Singaporean fast fashion retailer's pioneering manufacturing approach entails numerous Chinese factories creating thousands of fresh styles daily, facilitating swift delivery and minimizing storage expenses.
Zoom Out: - Last year, Shein expanded its operations to introduce a marketplace model in various regions, including the U.S., Mexico, Europe, and Brazil, broadening its product offerings beyond fashion and beauty.
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What the numbers say: Despite Brunswick Corp.'s strong performance with a revenue of $6.4B in 2023, slightly below the previous year's peak, its stock has declined by over 10% this year due to challenges like softer demand and higher interest rates in the recreational boat market. To address these challenges, Brunswick plans to refinance around $450M in debt, implement promotional financing, and expects flat demand for boats in the U.S. in 2024. Relevance: Brunswick's struggles with cost management and adapting to subdued demand mirror more significant economic shifts influenced by rising interest rates and evolving consumer preferences. As a prominent figure in the recreational boating sector, Brunswick's performance provides insight into the overall well-being of the leisure and luxury goods industries, prompting proactive adjustments to its cost structure to maintain profitability. More data: Inventory disruptions and rising prices, with average boat prices climbing around 20% from 2020 to 2023, pose additional hurdles for boat makers. Brunswick is reassessing investment timing and strategic adjustments to maintain cost-effectiveness amid a slower market forecast and expectations of higher interest rates for refinancing. | | | |
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| 3 | | Micron's ($MU) stock saw a notable surge of over 14% in after-hours trading following the release of its second-quarter fiscal 2024 results, which revealed adjusted earnings per share of $0.42, outperforming analysts' projected loss of $0.25. The company's quarterly revenue surpassed expectations, reaching $5.82B compared to the anticipated $5.35B. More: - The Idaho-based firm, which has positioned itself as one of the semiconductor industry's greatest beneficiaries, credits the artificial intelligence surge for its success.
- Compared to the $2.3B net loss recorded during the previous year, the period's net income of $793M represented a substantial improvement.
- The American producer of computer memory and computer data storage expects sales for the third quarter of its fiscal year to be $6.6B, above analyst projections of $6.02B.
- CEO Sanjay Mehrotra emphasized Micron's significance in supplying memory and flash storage for various devices, stressing its critical role in supporting AI systems alongside Nvidia and other companies.
- While Nvidia is well-known for its GPUs in AI applications, Micron gains by providing the required storage and memory components.
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| 4 | | The White House has announced that Intel is slated to receive up to $8.5B in direct funding under the CHIPS Act, along with the possibility of securing up to $11B in loans linked to the CHIPS and Science Act passed in 2022. These awards highlight the Biden administration's commitment to subsidizing semiconductor manufacturing within the U.S. More: - The funding is intended to bolster domestic production of cutting-edge semiconductors, enhancing America's innovation capabilities.
- Intel's ($INTC) distinction from fabless companies like AMD and Nvidia lies in its operation of chip factories (fabs) alongside processor design.
- It is anticipated that the Ohio fab alone will cost more than $20B and provide thousands of jobs in the chip manufacturing and fab building industries, especially for AI chips.
- Intel intends to allocate the CHIPS Act funds to support leading-edge manufacturing facilities and research centers across multiple states, including Arizona, Ohio, New Mexico, and Oregon.
- The CHIPS Act aims to provide nearly $53B in incentives to promote the construction of semiconductor fabs within the U.S., bolstering domestic chip technology.
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| 5 | | Kering, the parent company of Gucci, anticipates a substantial decrease in first-quarter sales, estimating a decline of approximately 10% compared to the previous year, with Gucci's sales expected to drop nearly 20% YoY. Following Kering's announcement, shares in several European luxury stocks, including LVMH, Burberry, and Swatch Group, declined by 2% or more. More: - Profiting from exposure to affluent consumers, Hermes, Richemont, and Brunello Cucinelli announced optimistic sales projections for 2024.
- Kering's cautionary statement contrasts with the upbeat outlook of specific luxury counterparts, reflecting differing industry trajectories influenced by consumer demographics.
- Analysts believe Kering's sales warning, which reflects difficulties in Asia-Pacific countries, particularly China, is a worrying indication for the luxury goods industry.
- Under the leadership of creative director Sabato de Sarno, the firm is investing in revitalizing Gucci, but the results are still preliminary and should take some time to manifest.
- Experts predict that Kering's projected sales and profit in 2024 may be revised due to the impact of the sales warning and further difficulties in essential areas like China.
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| 6 | | Alimentation Couche-Tard Inc., the parent company of Circle K convenience stores and gas stations, experienced a decline in its stock price after releasing third-quarter earnings that failed to meet analyst projections. For the quarter ending Feb. 4, sales dropped by 2.2%, and adjusted earnings per share stood at $0.65, falling short of analysts' anticipated $0.84 per share. More: - The decrease in sales is ascribed to economic challenges that affect food and fuel sales, especially in the U.S. market.
- CEO Brian Hannasch cited low demand for diesel as a sign of softening economic conditions in several industries.
- Fuel sales volume decreased by 1.9% in Europe and other regions, excluding Canada, and 0.8% on a same-store basis in the U.S.
- Across all geographic locations, merchandise revenue per shop fell for the first in more than 10 years, including food and tobacco products.
- Despite the difficulties, Couche-Tard is still looking for opportunities and is open to acquisitions, particularly in the U.S. market, where there are a lot of synergies.
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- Microsoft appointed DeepMind co-founder Mustafa Suleyman to head a new consumer AI division, absorbing a majority of the staff from his startup Inflection to bolster its position in the industry.
- Reddit's initial public offering, set to launch under the ticker "RDDT," priced its shares at $34 each, at the high end of its targeted range, indicating a potential resurgence of investor interest in new offerings.
- Saudi Arabia is reportedly in discussions with venture capital firms such as Andreessen Horowitz to establish a massive $40B AI fund as part of the kingdom's efforts to shift its revenue focus away from oil through investments by its Public Investment Fund (PIF).
- On Tuesday, a Texas school fund announced the termination of its $8.5B contract with BlackRock, alleging that the investment firm's boycott of fossil fuel energy producers, integral to the state's economy, prompted the decision.
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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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