| Here’s your daily business briefing. - 📉 Q1: Target earnings miss, sales decline
- 🔍 Deep Dive: Retailers chase youth market
- 🛡️ Tech giants join to fight online fraud, crypto scams
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Target's ($TGT) Q1 earnings per share were $2.03, missing the expected $2.06, with revenue slightly above expectations at $24.53B, but sales fell 3% YoY. CEO Brian Cornell noted continued weak demand in discretionary categories and emphasized the need to offer value to customers amid high prices. More: - Target expects flat to 2% growth in comparable sales and adjusted earnings per share between $8.60 and $9.60.
- After the earnings release, premarket trading saw an 8% decrease in Target's shares.
- Target faces heightened challenges, with only 20% of its sales from food compared to Walmart's 60%, and has cut prices on everyday items to attract more customers.
- Comparable sales declined by 3.7%, with customer traffic and average spending per visit decreasing by 1.9%, while digital sales grew by 1.4%, marking the first increase over a year.
- Apparel sales improved nearly 4 percentage points from the previous quarter, with special collections driving significant online traffic and larger purchases.
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What the numbers say: Department stores like Macy's ($M), Kohl's ($KSS), and Nordstrom ($JWN) are struggling to attract younger customers. Macy's and Kohl's have 36% and 40% baby boomer customers, respectively, while Nordstrom has a higher proportion of millennial and Gen X shoppers. Macy's is closing many of its stores and opening smaller ones, Kohl's is adding trendier clothing and Sephora shops, and Nordstrom is partnering with popular brands and expanding its marketplace. Relevance: Department stores are pressured to attract younger shoppers as sales slow and core customers age. Macy's, Kohl's, and Nordstrom are revamping their products and store formats to appeal to millennials and Gen Z, crucial for their future viability. More data: Macy's, Kohl's, and Nordstrom project modest full-year sales changes, with Macy's expecting $22.2-$22.9B in net sales. Macy's and Nordstrom are expanding their third-party marketplaces to attract younger customers. | | | |
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| 3 | | Tech Against Scams, comprising Meta, Match Group, Coinbase, and others, seeks to counter online fraud spanning dating apps, social media, and crypto platforms. Their mission involves combating scamming tools and enhancing public awareness about financial fraud, which is crucial in light of the crypto sector's susceptibility to fraudulent activities leading to legal repercussions for industry leaders. More: - U.S. consumers lost $770M to social media scams in 2021, up 18-fold from 2017, while investment scams in 2022 topped $3.8B, doubling the losses from the previous year.
- According to the FTC, romance scams inflicted the highest financial toll on victims in 2019 compared to any other form of consumer fraud.
- Since scams frequently occur across many platforms, businesses must improve their data exchange to tackle these problems.
- Scammers are employing AI to create convincing calls, emails, and messages, making it more difficult to distinguish scams from real encounters.
- The coalition aims to jointly develop user protection strategies, share information, and collaborate with law enforcement to tackle and investigate online fraud.
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| 4 | | Scale AI, a data-labelling startup, has surged its valuation to $14B with a $1B funding round, doubling its previous value. Both existing investors like Accel, Nvidia, Thrive Capital, Tiger Global Management, and Index Ventures, alongside new ones including Amazon, Meta, Intel Capital, and AMD Ventures, participated in this round, underscoring the growing significance of data in AI and the substantial investor interest in data-centric firms. More: - Since its inception in 2016, Scale AI has experienced substantial growth, providing precise data labeling services to companies developing AI models.
- Last year, the company generated around $700M in revenue, prioritizing the provision of top-notch datasets for AI model training.
- Scale AI's CEO, Alexandr Wang, stresses the significance of high-quality data in pushing AI capabilities beyond current models.
- Scale AI has secured contracts with the Department of Defense, underscoring its role in vital AI projects, and is contemplating an IPO for its future plans.
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| 5 | | CyberArk Software Ltd. ($CYBR) plans to purchase Venafi, a cybersecurity firm backed by Thoma Bravo, for $1.54B, with $1B in cash and $540M in CyberArk shares included in the deal. This acquisition marks a strategic move by CyberArk, based in Israel and listed in the U.S., to strengthen its position in the cybersecurity market. More: - Venafi, based in Salt Lake City, specializes in machine identity management, safeguarding identities from physical machines to IoT devices and software applications.
- Venafi holds over 30 patents and serves major U.S. clients in the health insurance, airline, payment card, and banking sectors.
- In 2020, Thoma Bravo, a U.S. private equity firm, invested in Venafi, valuing the company at $1.15B.
- Morgan Stanley advised CyberArk on the deal, while Thoma Bravo worked with Piper Sandler Cos.
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| 6 | | Hims & Hers Health Inc. ($HIMS) is launching $199 monthly weight-loss shots with the same active ingredient as Wegovy, significantly cheaper than Wegovy's $1,350 monthly. The company's stock surged to 38%, marking its largest intraday gain over three years. More: - Hims' new weight-loss shots aim to tackle shortages and high costs of branded medications.
- Demand for compounded weight-loss drugs has surged as manufacturers like Novo Nordisk and Eli Lilly face supply shortages.
- Compounded medications lack FDA approval and do not undergo the same safety, effectiveness, and quality reviews as branded drugs.
- Hims started prescribing off-label weight-loss medications in December, driving its fastest-growing division, projected to exceed $100M in revenue by the following year.
- The American telehealth company intends to introduce compounded tirzepatide, found in Mounjaro and Zepbound, soon, considering the addition of branded medications as supply conditions ameliorate.
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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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