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| Here’s your daily business briefing. - 🔍 Meta unveils next-gen AI chip
- 👜 Deep Dive: Rising prices of world's costly handbags
- 🍺 Constellation brands forecasts strong profit
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Meta Platforms introduces its next-generation AI accelerator chip, internally dubbed "Artemis," to reduce reliance on Nvidia's chips and cut energy costs. The Meta Training and Inference Accelerator (MTIA) chip is optimized for ranking and recommendation models, offering a balanced mix of computing power, memory bandwidth, and capacity. More: - Meta's larger custom silicon initiative includes investigating alternative hardware solutions, which include the MTIA chip.
- The American multinational technology conglomerate intends to make significant software development investments to utilize the capacity of its infrastructure effectively.
- The new chip, manufactured by TSMC using its "5nm" process, boasts three times the performance of its predecessor.
- The chip is currently operational in data centers, actively supporting AI applications, and ongoing enhancements are underway to broaden its capabilities, including accommodating generative AI tasks.
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What the numbers say: Hermès increased the price of its standard Birkin 25-centimeter handbag by 10% to $11,400 in U.S. stores, with steeper hikes for rarer Birkins crafted from exotic skins. Luxury brands such as Prada, Christian Dior, and Louis Vuitton experienced substantial price rises on their flagship items, ranging from 45% to 85%. Relevance: Luxury brands are raising prices to offset rising manufacturing costs and maintain exclusivity amid strong sales and market growth. However, as they expand, they must also navigate the challenge of managing overexposure and preserving aspirational appeal without alienating customers who may find their products less affordable. More data: Projected to increase by 7% in 2024, luxury industry sales will be primarily propelled by price hikes rather than increased sales volume. However, excessive price rises may trigger comparisons with rivals and prompt consumers to turn to secondhand platforms, potentially affecting brand reputation and resale worth.
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| 3 | | Constellation Brands anticipates annual comparable earnings per share for 2025 to range between $13.50 and $13.80, surpassing analysts' average projections of $13.42 per share, while demand for its crucial beer brands like Modelo Especial and Pacifico remains robust despite ongoing inflation. Quarterly sales for Constellation Brands increased, contrasting the declines experienced by competitors such as Brown-Forman and Anheuser-Busch InBev. More: - Constellation reported fourth-quarter net sales of $2.14B, surpassing analysts' average forecast of $2.10B, and achieved comparable earnings per share of $2.26, exceeding estimates of $2.08 per share.
- For the December to February quarter, Constellation's beer business recorded a depletion growth rate of 8.9%, up from 6% growth YoY.
- The company offset increased packaging and raw material expenses through sales growth, price adjustments, decreased marketing costs, and efficient cost-saving measures.
- Quarterly net sales for the wines and spirits segment dropped by 6% due to wholesalers reducing orders for high-priced premium brands.
- Constellation's beer division saw an increase in operating margin of 30 basis points, reaching 34.4%.
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| 4 | | Buffalo Wild Wings (BWW) inaugurated its 100th Go location in New York City, marking a milestone for its smaller outlets geared towards delivery and takeout orders. The surge in off-premise orders, which now comprise around one-third of BWW's sales compared to the previous 15%, spurred the expansion of the Go format, reflecting shifting consumer preferences. More: - BWW ranks as the second-largest U.S. casual dining chain in the bar and grill sector, capturing a 14.4% market share.
- Despite a 1% revenue decline to $2.32B in 2023, BWW's Go format may enhance its attractiveness to prospective investors.
- The initial investments required for traditional BWW locations range from $2.44M to $4.83M, while Go locations cost between $560,000 and $1.05M.
- By the end of the year, BWW intends to launch 50 more Go sites, and over 600 franchisees have committed to opening more outlets.
- Inspire Brands, the parent company of BWW, is reportedly exploring the possibility of an initial public offering (IPO) in late 2024 or 2025, aiming for a valuation of $20B.
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| 5 | | Puma is rolling out its inaugural global brand campaign in ten years, named "Forever. Faster. — See The Game Like We Do," with a spotlight on sports performance, making it the company's most substantial marketing expenditure yet. This initiative marks Puma's debut in consolidating its messaging platform across various sports, including soccer, running, basketball, and handball. More: - The campaign will be amplified by athlete ambassadors such as Neymar Jr. and Breanna Stewart, targeting various media platforms, including social media, TV, public relations, out-of-home, and point-of-sale.
- This strategic action aims to capitalize on forthcoming athletic occasions like the Summer Olympics in Paris and the UEFA Euro tournament.
- The campaign's media investment details were not disclosed, but it spans platforms like Instagram, TikTok, and YouTube and was spearheaded by the agency Matte Projects.
- Puma's prior global ad campaign, featuring athletes such as Usain Bolt under the "Forever Faster" theme, reflected the sports industry's pivot toward streaming and social media.
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| 6 | | MGA Entertainment unveiled the MGA Shop website, consolidating its leading brands, including L.O.L. Surprise!, Little Tikes, and Bratz, while significant retailers will still carry merchandise from MGA's brands alongside the new direct-to-consumer (DTC) platform. The MGA Shop provides online-only exclusives, limited quantity items, and early access to new products and promotions. More: - The California-based firm seeks to enhance sales and capitalize on customer loyalty amidst an 8% decline in the toy industry.
- DTC brands are broadening distribution channels to improve sales and retain customers, while certain traditional wholesale brands are also transitioning towards DTC sales.
- Retail experts highlight the advantages of DTC sales, such as higher margins per unit, direct customer engagement, and valuable insights for product development and pricing strategies.
- Companies like Levi's, Redken, and HI-CHEW have adopted DTC strategies to boost sales and improve customer interaction.
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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 Shriram Jeevakumar | |
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