| Here’s your daily business briefing. - 👟 Dick's hikes forecast on strong sneaker and gear sales
- 🚗 Deep Dive: BYD hybrid - 2,000+ Km range, No stops
- 📈 Abercrombie & Fitch shares surge on strong growth
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Dick's Sporting Goods ($DKS) upgraded its full-year guidance following strong consumer spending on sneakers and athletic gear, with comparable sales growing by 5.3%, surpassing analysts' expectations. The company reported earnings per share of $3.30 and revenue of $3.02B, exceeding analysts' forecasts of $2.95 and $2.94B, respectively. More: - CEO Lauren Hobart expects "robust demand from athletes" to continue, supporting the company's optimistic outlook.
- The retailer increased its full-year earnings per share guidance to $13.35-$13.75, exceeding the analysts' forecast of $13.25.
- Full-year revenue is expected to be $13.1-$13.2B, which aligns with the $13.16B estimate.
- Dick's revised its comparable sales growth forecast to 2%-3%, up from 1%-2%, matching analysts' estimates.
- Rising spending on athletic gear and sneakers signals a rebound in the apparel and footwear markets, with positive sales from retailers like Ross Stores, Ralph Lauren, and Urban Outfitters.
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What the numbers say: BYD Co. has unveiled a hybrid powertrain with a range exceeding 2,000 kilometers, aiming to surpass competitors. This innovation contributed to BYD's strong sales performance, with its Hong Kong-listed shares rising by 4% after the announcement. Relevance: BYD's launch of long-range hybrids intensifies competition with leading automakers like Toyota and Volkswagen in the electric vehicle sector. This reflects a broader industry focus on alleviating range anxiety and promoting environmentally friendly cars. BYD seeks to expand its market share globally, especially in regions without robust charging infrastructure. More data: BYD's new hybrid powertrain, priced below 100,000 yuan ($13,800), will be introduced in two sedan models. With BYD's hybrids accounting for half of China's hybrid sales, the company's move to export the upgraded technology is set to expand its global presence in the electric and hybrid vehicle market. | | | |
| 3 | | Abercrombie & Fitch ($ANF) posted a record fiscal first quarter, with sales surging 22%, well above expectations, leading to a more than 10% increase in its shares during morning trading. Key financial highlights include earnings per share of $2.14 (vs. $1.74 expected) and revenue of $1.02B (vs. $963.3M expected). More: - For the three months ending May 4, Abercrombie & Fitch's net income rose to $113.9M ($2.14 per share) from $16.6M ($0.32 per share) a year earlier.
- Sales rose 22% to $1.02B, with Abercrombie brands growing 31% and Hollister brands 12%.
- The company increased its full-year sales growth forecast to approximately 10%, compared to the previous outlook of 4%-6%, and anticipates mid-teen percentage growth in the current quarter.
- Abercrombie's shift towards inclusivity and targeting working millennials has driven its success, with its stock rising 285% in 2023 and an additional 73% year-to-date.
- The "A&F Wedding Shop" launch aims to capture a share of the U.S. bridal wear market, projected to grow to $83.5B by 2030, with offerings priced from $80 to $150.
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| 4 | | ConocoPhillips ($COP) has agreed to acquire Marathon Oil Corp. ($MRO) in a $17B all-stock deal, providing access to shale assets in Texas and North Dakota, along with reserves in Equatorial Guinea. The transaction, offering a 14.7% premium to Marathon's recent closing share price, carries an enterprise value of $22.5B. More: - ConocoPhillips Exxon Mobil, and Chevron are pursuing production growth through recent acquisitions, aligning with other major oil drillers.
- Unlike recent acquisitions centered on future drilling locations, ConocoPhillips aims to reduce costs in the Eagle Ford and Bakken shale basins by acquiring Marathon.
- ConocoPhillips anticipates the acquisition will increase its resource stock by two billion barrels.
- The deal is set to close in Q4 pending regulatory approval, with ConocoPhillips planning over $20B in share buybacks and a 34% increase in its regular dividend starting then.
- Evercore advised ConocoPhillips on the deal, with legal counsel provided by Wachtell, Lipton, Rosen & Katz, while Marathon was advised by Morgan Stanley and Kirkland & Ellis.
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| 5 | | American Airlines ($AAL) revised its second-quarter earnings outlook downward, citing softer domestic revenue trends and unforeseen costs, prompting CEO Robert Isom to acknowledge a misjudgment and plan strategy adjustments. This led to a significant drop in the airline's shares, falling by as much as 14%, the largest intraday decline in nearly four years, impacting the broader airline industry. More: - A revised forecast of up to $1.45 for adjusted profits per share for the second quarter has been lowered to $1 to $1.15.
- Compared to an earlier prediction of a 1% to 3% decline, revenue from each seat flown a mile is expected to plummet by as much as 6% from a year ago.
- Vasu Raja, the company's chief commercial officer, will retire next month as part of a planned reorganization.
- The commercial chief's departure may indicate strategic shifts, including revisions to the airline's "modern retailing" strategy and increased emphasis on Sunbelt hubs.
- Questions about American's strategy's effectiveness have emerged, with analysts suggesting that rectifying the situation and regaining momentum may take at least a year.
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| 6 | | China established 'the Big Fund,' its National Integrated Circuit Industry Investment Fund, valued at approximately $47.5B (344 billion yuan), to enhance its semiconductor industry and attain chip sovereignty. This initiative underscores China's efforts to reduce reliance on foreign nations for semiconductor use and manufacturing, emphasizing self-sufficiency in chip production. More: - China, like the U.S. and Europe, is addressing concerns about chip sovereignty by mitigating risks in its semiconductor supply chain.
- Taiwan, anchored by Taiwan Semiconductor Manufacturing Co. (TSMC), is a significant player in chip production, presenting a hurdle to China's semiconductor aspirations.
- ASML and TSMC have protocols to deactivate chip-making equipment if a conflict between China and Taiwan occurs.
- China manufactures roughly 60% of traditional chips, but the conflict involves traditional and cutting-edge chip technologies.
- Western chip firms like Nvidia face hurdles balancing the Chinese market and U.S. sanctions, potentially affecting pricing and strategy.
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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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