Tuesday, April 30, 2024

Coca-Cola beats earnings, raises revenue forecast / Deep Dive: Whirlpool bets on $2K espresso amid woes / Domino's tops sales targets with pizza promotions

Plus, Mcdonald's earnings dip, Middle East boycotts hit sales

Inside Business

For April 30, 2024

Here’s your daily business briefing.

🥤 Coca-Cola beats earnings, raises revenue forecast
🔍 Deep Dive: Whirlpool bets on $2K espresso amid woes
🍕 Domino's tops sales targets with pizza promotions

Thanks for reading!

Shriram
p/Shriram

Coca-Cola ($KO) exceeded analyst expectations with quarterly earnings of $0.72 per share, while quarterly revenue of $11.30B surpassed Wall Street's estimate. The company's net income attributable to itself increased to $3.18B, or $0.74 per share, from $3.11B, or $0.72 per share, in the previous year.

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The American multinational corporation reported a $760M non-cash impairment charge for Bodyarmor, a sports drink brand acquired fully in 2021 for $5.6B.
Net sales rose 3% to $11.30B, driven by an 11% increase in organic sales during the quarter.
The Georgia-based firm's global unit case volume grew by 1%, while North American volume stayed steady in the quarter.
The company revised its full-year organic revenue growth forecast to 8% to 9%, an increase from the previous range of 6% to 7%.

Whirlpool Corporation ($WHR), facing sluggish sales of large appliances amid decreased home sales and frugal consumers, introduced high-end KitchenAid espresso makers priced up to $2,000 to attract those accustomed to indulging in luxury coffee beverages, particularly remote workers.

What the numbers say: Coffee maker sales in the U.S. surged to $2.96B last year, marking a 3.6% rise from the prior year. Whirlpool anticipates a strong performance in its small domestic appliance segment, projecting an operating margin exceeding 15% this year, compared to its overall companywide operating margin of about 6.8%.

Relevance: Whirlpool's move into high-end espresso machines aims to counterbalance declining large appliance sales by capitalizing on the expanding small domestic appliance market. Targeting consumers seeking premium coffee experiences, especially amid the work-from-home trend, Whirlpool foresees potential in this category due to its higher margins and enduring consumer demand for coffee-related products.

More data: The new KitchenAid espresso machines target a broader consumer base, aiming to democratize the luxury coffee segment and dispel the notion that these products are exclusively for the wealthy.

Domino's Pizza Inc. ($DPZ) beat expectations with a 5.6% increase in domestic same-store sales, driven by robust order counts in carryout and delivery across all income groups, according to CEO Russell Weiner. Following the announcement, the company's stock surged 4%, reflecting a 21% increase in value YTD, outperforming the S&P 500 Index.

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Despite lower-income consumers facing dining-out challenges, Domino's achieved significant sales growth.
The multinational pizza restaurant chain's positive sales performance can be attributed to growth initiatives like enhanced advertising and operational improvements.
The company is advancing promotions like its 50% discount during carry-out "boost" weeks and offering customers a $3 coupon for online tips of $3 or more to their delivery drivers.
- Additionally, the company noted a more significant proportion of single-user transactions via Uber Eats compared to its own platforms.
The Michigan-based company has surpassed analysts' expectations for domestic same-store sales for two consecutive quarters.

McDonald's ($MCD) quarterly earnings fell short of projections, as same-store sales failed to meet expectations, partly due to boycotts in the Middle East amid the Gaza conflict. Despite revenue growth driven by increased prices, the company faced challenges attracting low-income customers, with CEO Chris Kempczinski highlighting heightened consumer discretion amid rising prices in everyday spending.

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Adjusted earnings per share for the quarter were $2.70, slightly below the expected $2.72, while quarterly revenue slightly surpassed expectations at $6.17B compared to the anticipated $6.16B.
The American multinational fast food chain's U.S. same-store sales rose 2.5%, slightly below the expected 2.6%, attributing the growth to increased menu prices.
The chain has introduced upgraded burgers nationwide, featuring its Hamburglar mascot in advertising to persuade customers of the value despite the prices.
McDonald's international operated markets segment recorded a 2.7% growth in same-store sales, while sales in France declined.
- Same-store sales in international developmental licensed markets saw a 0.2% decline.

Skechers ($SKX) achieved record first-quarter sales of $2.25B, representing a 12.5% year-over-year growth. Notably, the wholesale segment, which had experienced declining sales in the past three quarters, rebounded with nearly a 10% increase, while the direct-to-consumer business saw a robust growth of 17.3%.

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The footwear and apparel company raised its sales projection for the entire year, estimating a 9%–11% growth in sales between $8.7B and $8.9B.
With growth rates of 11.5% in EMEA, 15.3% in APAC, and 5.9% in the Americas, Skechers' wholesale revenue came to $127.1M.
COO David Weinberg credited better global inventory and domestic orders for wholesale growth, while CFO John Vandemore remained optimistic about overall YoY growth.
By region, EMEA experienced the highest sales surge at 17.4%, followed by APAC at 15.9%, and the Americas at 7.8%.

Despite worries over China's property market and economic slowdown, consumer spending on items like diapers and select Colgate toothpastes has slightly increased. Major corporations like Procter & Gamble, Reckitt, and PepsiCo are observing these modest improvements in consumer spending within China.

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Colgate's premium offerings, like whitening toothpaste, drive strong sales in China, accounting for approximately 14% of the company's overall sales in Asia.
- Despite some success with premium products, Colgate's overall sales in China remain sluggish, primarily attributed to reduced spending by rural consumers.
Reckitt is finding success in China through livestream shopping for Durex condoms, with the CEO highlighting the positive impact of new materials and enhancements.
L'Oreal and P&G are encountering difficulties in selling beauty products and cosmetics in China, with L'Oreal adopting a cautious stance and P&G witnessing a 30% drop in sales of its SK-II brand.
P&G experienced growth in its diaper and appliance businesses in China, while PepsiCo observed increased savings and cautious spending behavior among Chinese consumers.

Quick Hits:

Paramount Global announced the departure of CEO Bob Bakish, creating significant ripples within the media conglomerate amid ongoing acquisition discussions with Skydance Media.
NBCUniversal, under Comcast, is hiking Peacock's subscription fees, with ad-supported plans going up by $2 to $7.99 monthly and ad-free options rising by the same amount to $13.99 monthly, ahead of the Summer Olympics.
A new U.S. rule on high-speed braking, prompted by fatal car crashes, has been introduced despite concerns from automakers about potential unintended consequences.
A Pew Research Center survey found that 78% of American adults, including 84% of Republicans and 74% of Democrats, believe social media companies have too much political influence, marking a 6% increase since the last presidential election year.

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Shriram Jeevakumar

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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Getir to exit US, UK, Europe markets / Startup equity compensation plummets / Ola ousts CEO, cuts 180 jobs

Plus, Tether takes up a majority stake in Blackrock Neurotech

Inside Startups

For April 30, 2024

Here’s your daily Startups briefing:

⛔ Getir will exit the U.S., U.K., and European markets to focus on Turkey
🔻 Equity compensation for startup employees plummeted by 37% between Nov. 2022 to Jan. 2024
👥 Ola ousted its CEO and laid off 180 employees as part of a profitability push

Thank you.

Karan
p/karan-chafekar

Instant delivery startup Getir is exiting the U.S., U.K., and European markets to focus solely on its home market of Turkey. The move will impact at least 6,000 jobs across the closing markets. In addition to the closures, the company is raising a new investment round led by Mubadala and G Squared to extend its runway and double down on its home market.

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The Turkish startup was once valued at nearly $12B and has raised about $2.3B from investors, including Sequoia, Tiger Global, Silver Lake, Goodwater, and Mubadala.
Getir acquired competitors Fresh Direct and Gorillas during its aggressive expansion phase.
In May 2023, Getir let go of 14% of its workforce and curbed down on its geographic expansion plans.
Getir officially laid off about 1,500 employees in the U.K. and reportedly notified 1,800 employees in Germany.
The company claims that the closing markets accounted for only 7% of Getir's revenues.
However, documents seen by TechCrunch reveal that the company raked in $1B revenue from the U.S. and Europe out of its $3.3B global revenue in 2023.

The average new equity compensation awarded to startups on the Carta platform declined by 37% between Nov. 2022 and Jan. 2024.

What the numbers say: Meanwhile, the average salaries for new hires remained steady during the same period. Startups are reducing the size of employee equity packages due to economic uncertainties and shifting employee preferences toward cash compensation. The portion of vested, in-the-money stock options exercised by employees dropped from 58% in Nov. 2021 to 30% in Nov. 2023 due to plummeting startup valuations.

What happened: Equity package declines were most significant at the senior contributor and senior manager levels, both witnessing over 25% reduction from May 2023 to Jan. 2024. Companies are strategically adjusting equity issuance to align with changing employee attitudes and market conditions.

Indian ride-hailing startup Ola has ousted its CEO, Hemant Bakshi, after just four months at the helm, a source informed TechCrunch. In addition to the CEO's departure, the firm is also laying off about 180 employees as part of a restructuring initiative aimed at improving the company's profitability, per founder and chairman Bhavish Aggarwal's email addressed to the employees.

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Ola is gearing up for its next phase of growth and an eventual IPO listing later this year after the planned public listing of its electric vehicle unit, Ola Electric.
Ola Electric, a startup that spun out of Ola, is looking to raise over $650M in its upcoming IPO.
Earlier this month, Ola ceased operations in the U.K., Australia, and New Zealand.
Ola competes with Uber in India and is backed by investors like SoftBank and Tiger Global.

Stablecoin issuer Tether took up a majority stake in brain-computer interface startup Blackrock Neurotech after investing $200M. The deal valued the company at around $350M, per Reuters. Tether invested through its newly launched Tether Evo arm, which aims to invest in transformative technologies that merge innovation and human potential.

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The Salt Lake City-based startup is creating brain implants that allow people to control computers and neuroprosthetics.
The startup had previously raised only $10M, according to Crunchbase.
Tether plans to use the surplus earnings from the U.S. Treasuries and other instruments used to back its USDT stablecoin reserves to fund investments through Tether Evo.
The move comes amid growing interest in brain-computer interfaces, with Elon Musk's Neuralink raising nearly $700M from investors.

Direct air capture (DAC) climate tech startup 280 Earth is gearing up to start its first 500-ton commercial demonstration plant being built next to a Google data center in The Dalles, Oregon. The startup spun out from Alphabet's X lab and is led by John Pimentel as its CEO. Pimentel believes the company's technology can offset the DAC industry's major challenges, such as high energy intensity and costs.

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280 Earth is building a supplemental cooling system that cools the hot water from sources like data centers and returns it to them, thereby reducing their energy consumption and water usage and prolonging the life of their infrastructure.
By 2030, the company aims to deliver 10M tons of DAC capacity through a modular system, with a 5,000-ton module coming online in 2025.
280 Earth is backed by Google's co-founder Sergey Brin.

Puyallup Tribal Enterprises inked an exclusive manufacturing deal with startup Skip Technology to build innovative energy storage devices. Additionally, Puyallup led a $1.3M investment round in the company. The partnership aligns with the tribal company's values of environmental sustainability and economic diversification beyond casinos.

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Skip Tech is developing long-duration hydrogen bromine flow batteries that can store excess renewable energy and discharge it over 10-12 hours, a much longer timeframe than comparable lithium batteries.
Puyallup will manufacture all the components for Skip Tech's batteries except the cells.
The company will initially house the operations in a 140,000-square-foot facility in Fife, Washington.
Skip Tech previously received a $750,000 grant from the National Science Foundation in 2019 and a $1M grant last year.
The company plans to do an "alpha test" this fall, aiming for a commercial prototype pilot in 2025.

Quick Hits:

AI computing startup Blaize secured $106M in fresh funding from Bess Ventures, Franklin Templeton, Denso, Mercedes-Benz, Temasek, Rizvi Traverse, Ava Investors, BurTech, and other investors.
Indonesian online travel Traveloka Indonesia PT has repaid a $300M private credit loan availed from BlackRock, Orion Capital Asia, Indonesia Investment Authority, and Allianz Global Investors.
Healthcare-focused AI startup Thoughtful Automation moved its headquarters from Chicago to Austin.
Backflip, a startup that helps real estate investors secure short-term loans, raised a Series A funding round worth $15M. FirstMark Capital led the round with additional backing from existing investors Vertical Venture Partners, LiveOak Venture Partners, Revel Partners, ECMC, and Crow Holdings.

Karan Chafekar

Analyst

Karan Chafekar is a Management Consultant, Business enthusiast, and Licensed Pilot.

This newsletter was edited by Karan Chafekar

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