| Here’s your daily business briefing. - 🥗 Sweetgreen soars with raised sales forecast
- 🔍 Deep Dive: Digital Realty's $1.5B U.S. share sale
- 🚗 Honda boosts buybacks, hybrid profits soar
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Shares of Sweetgreen Inc. ($SG) surged nearly 50% after the salad chain raised its annual sales projection and showed improved profitability, with same-store sales growth now anticipated to reach up to 6% compared to the previous expectation of 5%. This jump marked the largest intraday gain since late 2021, adding to the stock's doubling value for the year through Thursday's close. More: - Sweetgreen intends to deploy its automated kitchen system, Infinite Kitchen, in seven new locations while retrofitting three to four existing restaurants.
- The current robotic kitchen sites are projected to achieve average sales of $2.6M for the year.
- Sweetgreen's strategy to bolster profitability and expand into suburban areas is garnering investor favor amidst widespread challenges in the restaurant industry due to weak demand.
- The company aims to inaugurate 23 to 27 new locations this year and is contemplating the exploration of smaller-store formats and drive-thrus as potential future ventures.
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What the numbers say: Digital Realty Trust Inc. completed the largest sale of new shares ($DLR) by a U.S. public company since March, generating $1.5B, while companies and shareholders in the U.S. raised nearly $46B in the first quarter of 2024 through sales of new and existing shares, excluding IPOs, marking the busiest period since the third quarter of 2021 and suggesting a potential return to pre-pandemic levels of around $150B in total capital raised this year. Relevance: The uptick in equity capital markets activity, such as share sales, reflects Corporate America's drive to enhance capital and strengthen balance sheets. As the earnings-season hiatus concludes, deal-making is expected to increase, especially in follow-on share sales and block trades. More data: Investors and market analysts should observe secondary market activity to gauge the ongoing momentum in share sales and its influence on stock prices, while companies aiming to raise capital or improve their balance sheets might leverage current market conditions to conduct share sales or other equity offerings. | | | |
| 3 | | Honda Motor Co. ($HMC) anticipates a record operating profit of $9.1B for the fiscal year ending March 2025, aligning closely with market expectations and surpassing its earlier forecast of $8B made in February. In the fiscal year ending March 2024, Honda achieved a record operating profit of $8.85B, reflecting a 77% surge from the previous year. More: - As the largest buyback in company history, Honda intends to repurchase up to 300B yen, or 3.7% of its shares.
- The company targets sales of 1 million hybrid vehicles in the coming year, expecting them to bolster profits amid the shift towards electric vehicles.
- Honda intends to manufacture 2 million hybrids by 2030, directing the resulting funds towards electrification initiatives.
- Amidst the global transition to electric vehicles, Honda reaffirms its dedication to hybrids, deeming them a cornerstone of its business strategy.
- Honda also intends to commence production of its inaugural fully electric vehicles in Marysville, Ohio, next year, aiming for electrified cars to constitute 100% of sales by 2040.
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| 4 | | Following the announcement of a $1.2B licensing agreement with Sanofi, shares of Novavax shot up more than 130% to $10.30. Sanofi ($SNY) will market Novavax's COVID-19 vaccine and leverage its technology to create a combined influenza and COVID-19 vaccine. More: - Novavax ($NVAX) will receive a $500M upfront cash payment, equity investment, and an extra $700M, subject to regulatory and developmental milestones.
- About 5% of Novavax will be acquired by Sanofi.
- Double-digit royalties will be paid for selling SanoNovavax's COVID jab and any combo shot that uses its technology.
- Sanofi will spearhead the marketing efforts for Novavax's COVID-19 vaccine in most nations while possessing the authority to integrate Novavax's vaccine technology with its influenza vaccines.
- The partnership bolsters Sanofi's position in the post-pandemic COVID vaccine market as pharmaceutical companies increasingly prioritize combined shots targeting multiple infectious diseases.
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| 5 | | At the Bloomberg Technology Summit, Microsoft announced plans to launch its own mobile game store in July, with Xbox president Sarah Bond detailing the inclusion of Microsoft's first-party titles like Candy Crush and Minecraft. Initially web-based, the store aims for universal accessibility across devices and countries, circumventing closed ecosystem store policies. More: - Microsoft ($MSFT) seeks to offer an alternative to Apple and Google by launching its web-based store, sidestepping the 30% fee charged on sales through their app stores.
- Microsoft has long been contemplating the launch of an Xbox mobile gaming store, with CEO Phil Spencer mentioning discussions with partners as early as December.
- The initiative stems from Microsoft's acquisition deal with Activision Blizzard, intending to utilize the mobile gaming presence of both Activision and King.
- As the EU's Digital Markets Act impacts Apple and Google, Microsoft aims to provide an alternative solution in the U.S. and globally.
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| 6 | | Wolverine World Wide ($WWW) reported a 34.1% decrease in first-quarter total revenue to $395M compared to the prior year, shifting to a net loss of $13.7M from a net income of $18M in the corresponding period. Nonetheless, Wolverine's president and CEO, Chris Hufnagel, remarked that the outcomes exceeded expectations despite the revenue decline as it continued its restructuring plan. More: - Since May 9, Taryn Miller has been named CFO of Wolverine World Wide, replacing Michael Stornant.
- Miller has held positions at Corteva Agriscience, Kimberly-Clark Corporation, and Kraft Heinz Company.
- In November 2023, the company launched a restructuring plan with the goal of achieving $215M in annual savings through divesting noncore assets, reducing inventory, and optimizing its cost structure.
- As part of its streamlining initiatives, Wolverine divested or licensed several divisions in 2023, including Keds.
- Wolverine's brands saw a revenue decrease in the quarter, with Merrell dropping by 26.2%, Saucony by 24.5%, and the namesake brand by 20.3%.
- Wolverine revised its full-year 2024 financial forecast, anticipating revenue to fall between $1.68B and $1.73B, indicating a YoY decline from 15.7% to 13.2%.
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| 7 | | Quick Hits: - Planet Fitness is raising its base-level membership fees for new customers, the first increase since 1998, while also reporting weaker-than-expected first-quarter revenue and lowering its fiscal year guidance.
- According to reports, OpenAI intends to unveil a new AI-driven search engine, aiming to challenge Google, with the announcement set to precede Google's major annual event.
- The Hyundai Elantra, Sonata, and Kia Optima ranked as the three most-stolen vehicles last year, with thefts exceeding 48,000, nearly 43,000, and over 30,000 respectively, according to a report from the National Insurance Crime Bureau.
- Canada's April job data, which revealed five times more job additions than expected and an unexpected unemployment rate holding at 6.1%, countered market expectations for a June rate cut.
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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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