| Here’s your daily business briefing. - 🛒 Kohl’s, Instacart partner for same-day delivery
- 🔍 Deep Dive: U.S. adds 175K jobs, unemployment 3.9%
- 🍫 Hershey sales rise amid cocoa shortage prices
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Kohl's ($KSS) has partnered with Instacart to provide same-day delivery from its 1,172 stores nationwide, offering products ranging from beauty items to home essentials. Customers can order via the Instacart app, earning Kohl's Rewards, while the retailer aims to capitalize on Instacart's ($CART) large customer base of 109 million U.S. households. More: - Kohl's CEO, Tom Kingsbury, acknowledges challenges in the digital sector but emphasizes the company's focus on improving its product lineup.
- Kohl's recent efforts involve securing an exclusive licensing agreement with Babies R Us for shop-in-shops in over 200 stores and expanding its home goods and decor selection by 40%.
- Kohl's saw a 1.1% drop in Q4 net sales to $5.7B, with comparable sales down 4.3%, and for fiscal year 2023, net sales fell 3.4% to $16.6B, with comparable sales down 4.7%.
- The influence of same-day delivery services like Instacart on consumer purchasing remains uncertain, with fewer than half of respondents in a Forrester survey reporting it impacting their buying decisions.
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What the numbers say: April saw a notable deceleration in job growth in the U.S., with only 175,000 jobs added and unemployment rising from 3.8% to 3.9%, marking the 27th consecutive month with a jobless rate below 4%. Economists had expected the addition of 235,000 jobs, with the unemployment rate remaining unchanged at 3.8%. Relevance: Slower job growth indicates a moderation in the labor market, possibly impacted by elevated interest rates and the Federal Reserve's inflation control measures. Despite the slowdown, the labor market shows resilience compared to previous years, displaying continued signs of recovery from the pandemic-induced recession. More data: In April, almost half of the employment gains were in health care and social assistance, with growth also seen in transportation, warehousing, and retail trade. However, wage growth slowed notably, prompting analysts to note that while Federal Reserve officials closely monitor wage gains as a potential source of inflationary pressure, the deceleration in job growth doesn't immediately indicate a need for rate cuts. | | | |
| 3 | | Hershey Co. surpassed analyst expectations in sales and profit for the first quarter, driven by double-digit growth in its largest category, North American confectionery, which experienced a nearly 6% price increase. Despite a YTD gain of 5.1%, Hershey's shares ($HSY) dropped 2% in New York trading after the announcement. More: - Due to inadequate harvests in West Africa, there is a severe scarcity of cocoa, which has caused prices to skyrocket to around $12,000 per tonne in recent weeks.
- In response to cocoa shortages, Hershey and other firms raised the prices of their products.
- Hershey plans to diversify its cocoa sourcing by exploring alternative regions globally to address cocoa supply challenges.
- Hershey reiterated its full-year net sales growth forecast of 2% to 3% despite cocoa supply challenges.
- Piper Sandler analyst Michael Lavery notes that cocoa costs are a significant uncertainty for 2025, with Hershey delaying plans to address its positioning until later in the year at the earliest.
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| 4 | | According to a recent NuOrder report, Wholesale dominates brands' sales, comprising roughly 60% of their total revenue, with an expected 51% growth this year. Survey results show brands are increasingly partnering with both big-box retailers (57%) and specialty or boutique retailers (45%) in their wholesale efforts. More: - Wholesale partnerships offer advantages such as brand marketing assistance (60% of respondents), revenue scalability through larger orders (56%), and expansion into new markets and regions (43%).
- Brands are leveraging wholesale to increase sales and reach, partnering with retailers like Walmart, Target, REI, and Dick's Sporting Goods.
- Brands prioritize wholesale growth, citing challenges including finding new retailers (44% of respondents) and a lack of standardization and visibility into buying and merchandising strategies (35% and 32%).
- Conversely, direct-to-consumer (DTC) channels, including brands' own stores, are projected to increase by 11%, with websites expected to see 6% growth.
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| 6 | | Tyson Foods ($TSN) shares tumbled 7.9% on Monday, marking their largest one-day drop in a year, driven by concerns about consumer pressure due to persistent inflation and high commodity costs, potentially affecting future results. Despite second-quarter sales missing analysts' estimates, Tyson outperformed profit expectations. More: - CEO Donnie King voiced worries about subdued third-quarter performance, particularly in Tyson's pork and prepared foods segments.
- Melanie Boulden, president of the prepared foods unit, anticipates that elevated commodity costs will affect third-quarter results in that segment.
- Tyson reassured investors regarding the third-quarter outlook, highlighting the lingering uncertainties surrounding consumer strength and behavior.
- Despite challenges, Tyson raised its fiscal year 2024 total adjusted operating income estimate from $1.4B to $1.8B, from $1B to $1.5B.
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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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