| Here’s your daily business briefing. - 🧘 Lululemon stock rises despite weak guidance
- 🔍 Deep Dive: Nvidia overtakes Apple in market value
- 💼 Salesforce's $4B AI center
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Despite surpassing Wall Street's expectations, Lululemon's weak second-quarter guidance reflects a slowdown in its primary market, the Americas, due to inventory issues that impacted sales last quarter. Nonetheless, the company reported Q1 net income of $321M, or $2.54 per share, up from $290M, or $2.28 per share, a year earlier, with revenue climbing approximately 10% to $2.21B. More: - Earnings per share surpassed expectations at $2.54 compared to the anticipated $2.38, while revenue exceeded projections at $2.21B versus the expected $2.19B.
- In Q1, sales growth in the Americas decelerated to 3%, contrasting with a 17% increase in the same period last year, with comparable sales remaining flat from the previous year.
- Overall, Lululemon experienced a 6% growth in comparable sales, slightly underperforming analysts' anticipated 7% increase.
- The company's current quarter guidance falls below analyst estimates, with revenue projected between $2.40B and $2.42B and earnings per share expected between $2.92 and $2.97.
- The stock surged 4.8% during Thursday's trading session in New York, following a previous decline of approximately 40% up to Wednesday's close.
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What the numbers say: On Wednesday, Nvidia surpassed Apple to become the second-most valuable U.S. public company, reaching a market cap of $3.019T as its shares rose over 5%. Microsoft remains the top company with a market cap of $3.15T, while Apple's market value stood at $2.99T. Relevance: Nvidia's market cap surge reflects investor confidence in its dominance in AI chips for data centers, a major revenue driver. This shift underscores the growing importance of AI infrastructure, with Nvidia's growth outpacing Apple, which has faced challenges, and aligning with Microsoft's top position and AI investments. More data: Nvidia's data center business, including GPU sales, soared 427% YoY to $22.6B, making up 86% of total sales. Its stock surged 3,290% over five years, driven by AI, and a 10-for-1 stock split was announced in May. In contrast, Apple's sales growth slowed, with overall sales dropping 4% and iPhone sales falling 10% from the previous year. | | | |
| 3 | | Salesforce will open its first flagship AI center in London's Blue Fin Building on June 18 as part of a $4B, five-year investment in the U.K. The 40,000-square-foot center, led by CEO Zahra Bahrololoumi, aims to create 500,000 AI-related jobs, promote industry collaboration, and host a free training event for over 100 developers. More: - Salesforce Ventures has invested over $200M in U.K. startups, including AutoGen AI and Eleven Labs.
- The AI center's launch was announced at the Salesforce World Tour in London, attended by 17,500 delegates from companies such as Aston Martin, McLaren, Just Eat Takeaway, and John Lewis.
- Salesforce views the U.K. as ideal for AI development due to its challenging regulatory environment, which fosters broader global solutions.
- Despite the investment, Salesforce reported weaker-than-expected fiscal first-quarter revenue of $9.13B and projected lower-than-expected adjusted earnings for the current quarter.
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| 4 | | HanesBrands revealed the sale of its sportswear label Champion to Authentic Brands Group for $1.2B, with the potential for an additional $300M based on performance benchmarks, resulting in a total deal value of $1.5B. Following the announcement, HanesBrands' shares jumped 15.6% in premarket trading. More: - Authentic Brands, recognized for brands such as Aeropostale and Forever 21, seeks to enter the rapidly growing sportswear sector by acquiring Champion.
- The sale enables HanesBrands to streamline its operations and concentrate on its innerwear product lines.
- After divesting Champion, HanesBrands intends to boost investments in brands such as Hanes, Bonds, Maidenform, and Bali.
- The transaction is anticipated to be finalized in the latter half of 2024, with HanesBrands offering transition services for Champion following the closing.
- HanesBrands projects that the acquisition will generate approximately $900M net proceeds.
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| 5 | | Lowe's is piloting its Lowe's Style Studio app on Apple Vision Pro devices at three stores this month, enabling customers to customize kitchen styles using Apple Vision Pro headsets virtually. The pilot service will be available in Charlotte, North Carolina; North Bergen, New Jersey; and Sunnyvale, California, with appointments bookable online or through walk-ins. More: - Lowe's is committed to technological advancements that improve the in-store experience, building upon the introduction of the Lowe's Style Studio experience in February.
- Previous tech initiatives encompassed the Measure Your Space tool and the development of digital twins for store optimization.
- Lowe's aims to empower customers to envision their ideal kitchens through advanced spatial computing technology.
- Despite its technology investments, Lowe's experienced sales declines in its latest quarter, with net sales dropping 4.4% year over year to $21.4B and Q1 comparable sales decreasing by 4%.
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| 6 | | Bath & Body Works' Q1 net sales declined by 0.9% YoY to $1.4B, with 80% of U.S. sales from 37 million loyalty members, but gross margin rose to 43.8%, and net income grew by 7.4% to $87M. The retailer is shifting away from mall locations, opening 15 new off-mall stores and closing 11 mall-based ones, with over half its North American stores outside malls. More: - Despite declining candle sales and losing market share, new product categories like hair care, men's grooming, and lip products boosted overall sales.
- Q1 sales have decreased for the third consecutive year, with the excuse of post-pandemic normalization losing validity as prices have risen multiple times since the pandemic.
- Bath & Body Works faces heightened competition from Amazon and other brands, prompting customers to explore alternative options and diminishing its market share.
- The retailer invests in new categories and high store standards but needs to address threats, enhance productivity, and bridge gaps in retail experience among senior management.
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- Walmart, America's largest private-sector employer, introduces a bonus program for hourly workers, emphasizing long-term tenure by offering up to $1,000 for employees with 20 years or more of service.
- Robinhood Markets announced on Thursday its acquisition of crypto exchange Bitstamp for approximately $200M in cash, marking its largest-ever deal and accelerating its expansion into digital assets.
- Nio anticipates second-quarter deliveries to surpass double from the previous year to between 54,000 and 56,000, with revenue expected to nearly double to approximately $2.3B during the three-month period starting April.
- Five Below Inc. faced its largest stock decline since the pandemic's onset, linked to declining Squishmallows interest, as the retailer reported weaker results and reduced its sales forecast for the year.
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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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