March 2024
THE SITUATION IN MARCH
The data shows consumer sentiment is increasing, inflation is subsiding and spending is ‘stable to improving’.
Yet no one on the brand or retail side believes we’re out of the woods. Most are playing it safe. There’s a ‘gut feeling’ that smart money is erring on the side of caution – likely until mid year. Until we see more prolonged stability in the market.
INSIGHTS
Artificial intelligence is helping Walmart improve inventory management and order fulfillment, the company said. E-commerce sales are expected to hit $100 billion globally this year.
To continue reading, please login
Not yet a member? Find out about joining
FINANCIAL SNIPPETS
Amer Sports (Finland) IPO raised $1.37 billion, with shares selling at $13, below the $16-$18 the company had hoped for.
Nike (USA) is set to cut more than 1,600 jobs, or 2% of its total workforce, in an attempt to reduce costs as consumer spending slows.
John Lewis (UK) is currently in the process of stripping £900m ($1,300 million) worth of costs out of the business as the retailer aims to return to profitability this year. As many as 11,000 jobs will be cut as part of a drastic turnaround plan.
Adidas (Germany) expects to hit $542 million in operating profits this year, less than half the average analyst estimate. The brand hopes to make up for some of that by selling its remaining Yeezy inventory, which it expects to sell off at cost, generating an estimated €250 million ($270 million), per Bloomberg.
Rag & Bone (USA) is being acquired by Guess? (USA) and WHP Global (USA), which will jointly own Rag & Bone’s intellectual property. Guess? will acquire all the Rag & Bone operating assets. In 2023, Rag & Bone’s unaudited annual revenue reached approximately $250 million, with EBITDA of $18 million. This is Guess? first acquisition.
MOVING THE MARKET
Shein Eyes London IPO
Shein is reportedly considering the possibility of switching its planned initial public offering to London from New York because of hurdles to the listing in the U.S. The fast fashion company has determined that it’s unlikely the Securities and Exchange Commission will approve its IPO, Bloomberg reported.
Kering Aims to Pump Up Gucci
Once a ‘must have’ brand, in recent quarters Gucci has been underperforming relative to other luxury brands. In 2023, sales fell 4% to $21 billion while profits were down 15% at $5 billion.
Parent company Kering (France) has vowed to sacrifice short term profits and invest heavily in building back sales.
VF Corp Expected to Sell Off More Brands
A growing number of analysts expect VF Corp (USA) to sell one or more of its brands in an effort to reduce the company’s $6 billion debt to a target of $4 billion and substantially enable it to get back on a growth track.
In the near term, declines are forecast for VF’s biggest brands – The North Face, Vans, Timberland and Dickies.
S&P Global has forecasted VF revenues to decline 10%, down an early forecast of a 6% decline. The ratings agency further downgraded VF’s stock to ‘-BBB’ from ‘BBB’.
INSIGHTS: VF faces the predicament of needing to sell one or more brands to pay down some of its debt. The question is will the remaining brands be successful enough to drive a return to profitable growth.
