Tag: Clothing/Textiles

Denim pioneer Levi’s is rolling out ‘tech pants’ and other new offerings this year. But will retailers stock them?

With a rough 2023 in the rearview mirror, Levi Strauss & Co. this year is trying to tackle its problems with new pants.

That includes pants with lighter-weight denim; pants for women that can be worn as high-rise or low-rise; and even nondenim pants that management, during Levi’s
LEVI,
+1.27%
earnings call on Thursday, referred to as a “tech pant” for men with “moisture control and 360 mobility.” The company also plans to expand its offerings of Performance Cool pants intended to keep the wearer cool and dry on hotter days.

But as those products roll out, the retailers that account for most of Levi’s sales are still cautious about packing their shelves with new apparel — even though Levi’s executives pointed to slightly better demand from clothing stores during the fourth quarter and holiday period. And as the denim pioneer cuts costs, brings in new leadership and tries to be a bigger e-commerce player, Wall Street will now be digging around for signs of a payoff.

“Ultimately, the market will be looking for evidence new strategies can drive accelerated growth,” Stifel analyst Jim Duffy said in a research note on Thursday.

“We continue to believe in brand vitality and opportunities for extension. With product reflective of new direction arriving in the marketplace across 2024, the proof will be in consumer response,” he continued.

In an interview with MarketWatch on Friday, Duffy said he was optimistic about Levi’s standing as an established brand and stronger demand for its dresses, skirts and other women’s clothing items. But the more products a company rolls out, he suggested, the more it has to invest to make them work — and the more it needs to manage if sales falter.

“The risk, as I see it, is that more categories means more SKUs and more product that is fashion rather than core basic styles, and more investment and inventory that, if it doesn’t translate to the marketplace, could result in higher markdowns,” he said, referring to the stock-keeping units by which retailers track inventory.

Levi’s on Thursday said it would lay off between 10% and 15% of its global corporate staff in the first half of this year, a move intended to save $100 million in costs over that period. The layoffs are part of a two-year plan, called Project FUEL, intended to save money and strengthen the part of Levi’s business that sells directly to consumers via its own e-commerce network and its physical stores, as opposed to third-party retail operations.

The layoff announcement arrived days ahead of Chief Executive Chip Berg’s departure from that role, with Michelle Gass taking over on Jan. 29. As the company tries to be bigger than men’s jeans, Gass, in Levi’s earnings release on Thursday, said she saw an opportunity to grow internationally, make Levi’s own online and bricks-and-mortar sales a greater priority, and turn the brand into a larger “denim apparel lifestyle business.”

Levi’s shares fell after hours Thursday, after the company’s full-year profit forecast came in below expectations. The stock rebounded 1.3% on Friday but is still down 10.3% over the past 12 months.

Still, Levi’s direct-to-consumer sales jumped 11% during the fourth quarter, and accounted for 42% of sales overall. Duffy said that the company has pushed deeper into its direct-sales business because it gives executives greater insight into what consumers want, as well as more control over how it markets and sells its clothing. Cutting out other retailers also widens margins on sales, he noted.

Levi’s operating margins were higher in the fourth quarter. It also declared a dividend of 12 cents per share, payable in cash on Feb. 23.

But sales in Levi’s wholesale segment — the sales it gets from retailers who buy Levi’s product, then sell it to consumers — fell 2%. Better results in the U.S. and Asia were offset by a drop in Europe, the company said.

Retailers have spent the past two years trying to clear unwanted clothes from their stockrooms, and cutting prices in the process, after spiking inflation restricted many shoppers’ appetites to basics.

As Gass prepares to take the reins, she sought to put a positive spin on retail-chain sentiment. “So net-net, overall, as a company, we’re exiting the year on a strong note,” Gass said on the earnings call. “And U.S. wholesale, we’re encouraged. But as it relates to that channel, we’re not declaring victory yet. There’s been a lot of volatility this past year, some in our control, some outside. And so we are taking a cautious approach as we look forward.”

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January 26, 2024
Nike says 'newness' is crucial to its growth. One analyst says it's not working

As sneaker makers try to stay relevant amid waning demand, Nike Inc. executives on Thursday said they were banking on “newness and innovation” to win over reluctant shoppers. And as sales deals on shoes proliferate, they said interest in its sneakers that cost over $100 is still solid, and that an expansion of its Jordan brand — beyond basketball gear and shoes — represents an opportunity to boost profits.

But one analyst on Friday cast doubt over whether those plans will work for all of Nike’s
NKE,
-11.83%
customers in the long term.

“Nike needs improved marketing outside of basketball, streetwear and lifestyle trends,” TD Cowen analyst John Kernan said in a research note on Friday. “Innovation at the higher end of its assortment is not resonating at scale while . . . Nike faces disruption from smaller competitors in footwear and apparel. Jordan brand moving into lower price points and away from a scarcity model creates risk to the fastest-growing piece of the business.”

That assessment came after Nike’s quarterly results and dimmer outlook after the market close on Thursday sent shares reeling. Management said that consumers were still cautious, as higher prices for essential goods siphon away what they can spend on new sneakers and clothes.

Following the results, TD Cowen analysts on Friday downgraded the stock to their version of a hold rating. CFRA, meanwhile, also lowered its opinion on the stock to sell from hold.

Shares of Nike were down 11.6% on Friday.

During Nike’s fiscal second quarter, sales trends were shaky in both the athletic-gear maker’s digital channels and its markets abroad, executives said Thursday. In North America, sales slipped 4% year over year. For the holidays, sales were softer outside of the big discount days like Black Friday and Cyber Monday. And competition from the likes of Adidas
ADDYY,
-5.55%,
Deckers Brands
DECK,
-1.48%
subsidiary Hoka One One and running-shoe maker On Holding
ONON,
-3.71%
hasn’t gone anywhere.

Nike’s results, Kernan said, were a sign that Wall Street’s profit estimates were too high for Adidas and other competitors like Vans owner VF Corp.
VFC,
-3.23%
and Under Armour
UA,
-3.52%.

On the company’s earnings call Thursday, Nike said it didn’t plan on getting sucked into a “race to the bottom on digital,” where weaker online traffic forced more markdowns. But like Kernan, Raymond James analyst Rick Patel also had questions about Nike’s efforts to push full-priced product.

“Nike noted that it intends to focus on full-price selling and doesn’t want to participate in aggressive discounting,” he said. “Also, it aims to manage inventories for key franchises more carefully going forward in order to avoid the promotional fray, which also limits sales growth. We view these as the right moves to protect the health of the brand, but also acknowledge that it leaves Nike at a near-term competitive disadvantage to drive revenue.”

CFRA analyst Zachary Warring, in emailed commentary, said some of Nike’s other rivals could cut into demand.

“Although Nike maintains a fortress balance sheet with significant capital returns, we believe the multiple will trend back down to pre-pandemic levels as the company faces competition from brands like Hoka and On [Holding] while it looks for new growth drivers and focuses on cutting costs,” Warring said.

Nike executives on Thursday said Jordan-branded clothing and products for golf, soccer and football, along with products for women and children, would bring stronger results. They said the same for bras, leggings, retro-themed running shoes and other offerings in its business geared toward women.

The company also announced plans to save up to $2 billion over the next three years. That savings effort, it said, could include simplifying its product selection, bringing more automation into its operations, and “streamlining” the company by shedding management layers.

Nike has reportedly already begun laying off workers. The company on Thursday said it expected to book pre-tax restructuring charges of around $400 million to $450 million “primarily associated with employee-severance costs.”

Nike plans to reinvest those savings back into the company. But as the company tries to fatten margins, Jefferies analyst Randal Konik said those reinvestments could do the opposite.

“We would expect [management] to reinvest a majority of these cost savings, likely leaving less margin and earnings ‘cushion’ should top-line performance continue to soften over the next 6-12 months,” he said.

In recent years, Nike has been trying to sell fewer items through outside retail chains and more through its own stores and online channels. But executives on Thursday said that multiyear effort had created “complexity and inefficiencies”

Edward Jones analyst Brian Yarbrough told MarketWatch that Nike is likely cutting costs after weighing the broader economic backdrop and weakness in its digital business against its sales and margin goals.

“Combined with a slower revenue-growth environment — and the fact that digital, which is their more profitable channel, is slowing and in some markets declining — I think they probably said, ‘If we’re going to get there, it’s probably going to have to come with some cost cuts,’” Yarbrough said.

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December 22, 2023
Nike shares dive, company eyes $2 billion in cost cuts amid 'softer' outlook

Shares of Nike Inc. tumbled after hours Thursday after the athletic-gear giant warned of a “softer second-half revenue outlook” on its quarterly earnings call, and said it is targeting up to $2 billion in cost cuts over the next three years as it looks to shed management and focus on women customers and its Jordan brand.

Nike
NKE,
+0.91%
said that the savings could come from simplifying its product selection and using more automation and technology. But the athletic-gear giant has also reportedly begun to lay workers off, and said it expected to book pre-tax restructuring charges of around $400 million to $450 million, much of it in the company’s fiscal third quarter, “primarily associated with employee-severance costs.”

Nike did not immediately respond to questions about job cuts at the company, or how many staff have been or could be laid off. But on the company’s earnings call, management said its plans included “reducing management layers.”

In Nike’s earnings release, Chief Financial Officer Matthew Friend said the company’s fiscal second quarter — in which per-share profit beat expectations while sales were roughly in line — marked “a turning point in driving more-profitable growth.”

But investors appeared skeptical after hours on Thursday, as shares slid more than 11%.

Nike announced the cost-cutting drive as clothing and shoe brands try to steer through weaker demand overall and a broader price-cutting battle in retail stores for inflation-battered customers. Those customers have had to set aside more money to cover the costs of ever-pricier essential goods, at the expense of things like sportswear and sneakers.

“We are seeing indications of more cautious consumer behavior around the world in an uneven macro environment,” Friend said during the call.

Nike executives said consumer demand was strong through the back-to-school season, Black Friday and Cyber Monday, but lagged in between. Demand wobbled online, and in China and Europe.

They also said that the money they planned to save would be reinvested into helping Nike become more nimble and more responsive to consumer preferences, after years of shifting away from selling shoes and gear through traditional retail chains in favor of doing business through its own stores and e-commerce channels. They added that those efforts “added complexity and inefficiencies” as competition grew steeper.

Chief Executive John Donahoe said on the call that the Nike-brand women’s segment was already a $9 billion business. But he said new products — like bras, leggings, retro-themed running shoes and other offerings that span both sports and lifestyle — would help draw more women customers.

Within the Jordan category, Donahoe cited opportunities beyond basketball sneakers. Clothing and golf-, soccer- and football-related products, along with offerings targeted toward women and children, would also help drive growth, he said.

But for the rest of its fiscal year, Nike’s expectations were dimmer. The company said it forecasted “slightly negative” sales growth for its fiscal third quarter. For its fourth quarter, executives expect low-single-digits sales gains. And they said they now anticipate Nike’s full-year sales to increase around 1%, compared to an outlook in September for mid-single-digits gains.

In its fiscal second quarter, which ended on Nov. 30, Nike reported net income in the period of $1.58 billion, or $1.03 a share, compared with $1.33 billion, or 85 cents a share, in the same quarter last year. Revenue rose 1% year over year, to $13.4 billion.

Analysts polled by FactSet expected adjusted earnings per share of 84 cents, on sales of $13.39 billion.

Gross margin rose to 44.6%, helped by price increases and lower costs for ocean-freight shipping.

Outlooks this year from athletic-gear retailers like Foot Locker Inc.
FL,
+1.89%
and Dick’s Sporting Goods Inc.
DKS,
+0.78%
have also been cautious, and Nike has faced competition from the likes of Adidas
ADDYY,
+1.01%
and On Running
ONON,
-1.05%.

Nike management also said in their previous earnings call in September that they aimed to do more to attract women and running-shoe customers. However, they noted that demand for the company’s products remained solid and they were “cautiously planning for modest markdown improvements for the balance of the year,” as the company tightens up its supplies of sneakers and clothing in stock.

On Thursday’s call, executives said that demand for higher-priced products had been “resilient,” and that they didn’t have to cut prices as much as their rivals. And they said new releases — like the Sabrina 1 and Luka 2 sneakers — were the best way to stand out in a sea of discounts.

“We know in an environment like this, when the consumer is under pressure and the promotional activity is higher, that it’s newness and innovation which causes the consumer to act,” Friend said.

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December 21, 2023
Nike Beats Profit Expectations, Sees $2 Billion of Cost Cuts

Nike beat expectations for second-quarter profit and announced a $2 billion cost-cutting plan, as it sees sales softening for the second half of its fiscal year.

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December 21, 2023

Adidas 3Q Net Pft EUR259M

By Andrea Figueras

Adidas on Wednesday posted a decline in net profit and sales for the third quarter while it continued to reduce high inventory levels.

The German athletic apparel and footwear company confirmed its third-quarter preliminary figures and said that net profit fell 25% on year to 259 million euros ($277.1 million).

As reported last month, revenue declined 6.4% to EUR6 billion, although currency-neutral revenue increased 1%, it said.

Operating profit fell to EUR409 million from EUR564 million and the operating margin was 6.8%, down from 8.8% in 2022.

Results for the third quarter were better than expected, but the current performance isn’t good enough, the company said.

Inventory levels decreased more than expected and were down 23% on year, it said. During the first nine months, inventories fell by more than EUR1.1 billion.

Adidas backed its recently updated guidance for 2023, which was raised thanks to Yeezy inventory reductions and a better-than-expected underlying business, it said.

It continues to expect currency-neutral revenues to decline at a low single-digit rate and underlying operating profit–excluding any one-offs related to Yeezy and the underway strategic review–at around EUR100 million.

Adidas also sees an operating loss of around EUR100 million this year.

Write to Andrea Figueras at andrea.figueras@wsj.com

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November 7, 2023

Inside Kanye West’s troubled Adidas partnership: Tears. Rage. Thrown shoes. Even a scrawled swastika.

The ending of the partnership between the artist Kanye West, who now goes by Ye, in October 2022 appeared to come after weeks of his comments about Jewish people and Black Lives Matter, but the New York Times is reporting that the relationship was troubled from the very start.

At a meeting on the collaborative creation of the very first shoe in 2013, Adidas
ADS,
-0.10%

ADDYY,
-0.03%
designers were stunned when West rejected all of the ideas that were presented using fabric swatches on a table and a mood board, the seven-month investigation found. Instead, West, the Times reports, grabbed a sketch and drew a swastika in marker.

The move shocked the Germans in the room. Germany has a strict ban on displaying the symbol of the Nazi era apart from for artistic purposes. Adding to the sense of horror, the company’s founder — Adolf, or “Adi,” Dassler, who died in 1978 — was a Nazi Party member, and the meeting took place close to Nuremberg, where leaders of the Third Reich were famously tried for crimes against humanity.

“A year ago this week, Adidas threw in the towel.”

West’s fixation on the Nazi era continued, the Times reports, when he later told a Jewish manager at Adidas to kiss a portrait of Adolf Hitler every day. He also told Adidas workers that he admired Hitler’s use and command of propaganda.

West also brought porn to the workplace and made crude, sexual comments at meetings, according to the Times report. Before the swastika episode, West, according to the Times, had made Adidas executives watch porn at a meeting in his Manhattan apartment.

In 2022 he reportedly ambushed executives with a porn film. Other workers complained to top managers that he had made angry sexual comments to them.

The artist, said to have been diagnosed with bipolar disorder, also frequently cried or became angry during meetings, according to the Times investigation. In one instance in 2019, he reportedly moved the operation designing his shoes to Cody, Wyo., and ordered the Adidas team to relocate. In a meeting to discuss his demands with executives, he threw shoes around the room, the Times reports.

Adidas sought to adapt to this behavior, given how valuable the West-established Yeezy brand was to the company, locked in a perennial battle for both revenue and buzz with its U.S.-based rival Nike Inc.
NKE,
-2.04%.
Yeezy sales would rapidly surpass $1 billion a year and help Adidas resonate with young American customers.

Ratings Game (July 2020): Gap hopes it can burnish its image with a new Kanye West clothing line, repeating the rapper’s brand success with Adidas

Managers launched a group text chain they called the “Yzy hotline” to discuss his behavior. To reduce stress on individuals, the company is said to have rotated managers in and out of dealing directly with West.

Over time, meanwhile, Adidas sweetened the terms of West’s deal. Under a 2016 contract, he was entitled to a 15% royalty on sales with a $15 million upfront payment as well as millions of dollars in Adidas stock. In 2019, a further $100 million a year was earmarked for marketing, but, in reality, West could spend those funds at will.

A year ago this week, though, as public awareness of West’s problematic attitudes are remarks spiked, Adidas threw in the towel, and as sales of Yeezy shoes fell away, it warned it would record its first annual loss in decades. As West’s net worth plummeted, the company wrestled with the decision of how to dispense with its final $1.3 billion in Yeezy products, mulling options including disassembly and repurposing, donation to charity, and outright disposal.

When a decision was reached to sell the product — in release batches — with some of the proceeds directed to charity and most of the rest flowing to Adidas, West, even then, was entitled to royalties.

From the archives (October 2022): Kanye West is no longer a billionaire after Adidas shelves Yeezy partnership

Also see (November 2022): Nike parts ways with Kyrie Irving as controversy swirls over Brooklyn Nets star’s apparent endorsement of antisemitic film

After bottoming in October 2022, Adidas shares have mounted a 67% comeback, with relief over the company’s not having had to book a damaging loss on the Yeezy line one factor in the restoration of investor confidence.

Adidas is quoted as having told the Times that it “has no tolerance for hate speech and offensive behavior, which is why the company terminated the Adidas Yeezy partnership,” while West reportedly declined requests for interviews and comment.

The Times investigation is said to have been based on access to hundreds of previously undisclosed internal records.

Read on: Michael Jordan is now worth $3 billion. Here’s what billionaire athletes have in common.

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October 27, 2023
Birkenstock’s stock falls 10% in trading debut after IPO priced at lower end of range

Iconic German sandal maker Birkenstock Holdings Ltd.’s stock fell 10% out of the gate in its trading debut Wednesday, signaling that investors remain cautious about new deals and the casual-footwear market remains competitive.

The company’s initial public offering priced at $46 a share late Tuesday, a bit shy of the midpoint of its expected range. The company
BIRK,
-11.63%
is trading on the New York Stock Exchange under the ticker “BIRK.” Goldman Sachs, JPMorgan and Morgan Stanley were the lead underwriters on the deal.

The deal was expected to prove the latest test for the IPO market, which recently saw three key deals perform strongly on their first day of trade, only to fall back in subsequent sessions.

Chip maker Arm Holdings Ltd.
ARM,
-1.09%
; Klaviyo
KVYO,
-3.11%
a digital marketing company; and Instacart, which trades as Maplebear Inc.
CART,
-7.04%
; all enjoyed strong gains on their first day of trade but pared those in the following sessions. Instacart was quoted at $25.50 on Wednesday, well below its issue price of $30.

Birkenstock clearly has its fans, as its customers are brand loyal, with 70% of existing U.S. consumers, for example, purchasing at least two pairs of its shoes, according to its filing documents.

A survey found 86% of recent purchasers said they wanted to buy again, while 40% said they did not even consider another brand while buying.

But as Kyle Rodda, Senior Market Analyst at Capital.com, said the Birkenstock deal was to be a good measure of broader market sentiment and sentiment toward consumer-sensitive stocks.

“It might tell us, too, whether cashed-up millennials like to buy the stocks of products they commonly find on the bottom shelf of their wardrobes,” he said in emailed comments.

The valuation of around $8.6 billion also looks rich, he said. Based on the company’s latest revenue release, the stock’s price-to-sales ratio is above 6, “which is at the higher end of comparable consumer discretionary companies on Wall Street.

“In a higher interest rate environment, these multiples may be hard to sustain in the short term, especially if consumer spending slows as expected next year as interest rate hikes bite households,” Rodda said.

David Trainer, Chief Executive of independent equity research company New Constructs, said ahead of the deal that the valuation was far too high, noting that it was higher than peers such as Skechers USA Inc.
SKX,
-0.67%,
Crocs Inc.
CROX,
-0.12%
and Steve Madden Ltd.
SHOO,
+0.60%.

“Even more shockingly, the only footwear companies with a larger market cap are Nike Inc.
NKE,
+0.80%
and Deckers Outdoor
DECK,
-0.07%,
” he said, referring to the maker of Uggs.

“While Birkenstock is profitable, we think it is fair to say that the $8.7 billion valuation mark is too high, especially for a company that was valued at just $4.3 billion in early 2021. Not a whole lot has changed since then,” Trainer said in a report.

For more, see: Birkenstock is going public: 5 things to know about the iconic German sandal maker’s IPO designs

Trainer estimated that Birkenstock would need to generate more than $3.8 billion in annual revenue to justify its valuation, which is more than three times the $1.24 billion chalked up for all of 2022, according to its filing documents with the Securities and Exchange Commission.

“We don’t doubt that Birkenstock has strong brand equity and produces stylish sandals, but there is really no reason for this company to be public,” said Trainer. “We don’t think investors should expect to make any money by buying this IPO.”

The Renaissance IPO exchange-traded fund
IPO
has gained 29% in the year to date, while the S&P 500
SPX
has gained 13%.

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October 11, 2023
Birkenstock prices IPO at $46 a share, at low end of range

Iconic German sandal maker Birkenstock priced its initial public offering at $46 a share late Tuesday, a bit shy of the midpoint of its expected range, as investors remain cautious about new public debuts and the casual-footwear market remains competitive.

With that pricing, Birkenstock would fetch a valuation of around $8.6 billion. The company did not immediately respond to a request for comment.

Birkenstock had expected to sell more than 32 million shares at an IPO price of between $44 and $49 a share. The company is expected to start trading on the New York Stock Exchange on Wednesday under the ticker “BIRK.” Goldman Sachs, JPMorgan and Morgan Stanley are the lead underwriters.

Also read: Birkenstock’s looming IPO is expected to become the next test of investor appetite for deals

The roughly 250-year-old company would make its debut as other large shoe makers, such as Nike Inc.
NKE,
+0.76%
and Adidas
ADDYY,
+1.44%,
try to capitalize on a broader consumer shift toward more casual sneakers and attire. Birkenstock, which unlike many IPOs is profitable, describes itself as a company that has been welcomed across a variety of scenes over the decades — hippies in the 1970s, environmentalists in the ’80s and, in the ’90s, women inspired by the feminism movement looking for relief from high heels.

“Today, consumers turn to Birkenstock in their search for healthy, high-quality products and as a rejection of formal dress culture,” the company said in its IPO filing.

More recently, Birkenstock’s Boston clogs have enjoyed a rebound in popularity. The “Barbie” movie, which features the sandal, has also spurred greater interest. And the company, which depends on the Americas and Europe for a lot of its sales, has been investing more in e-commerce.

Still, Birkenstock faces “material indebtedness,” and “material weaknesses” in its financial controls, according to its IPO filing. And its debut would follow some shakier performances from other recent IPOs, like Maplebear Inc.
CART,
+9.16%,
better known as the online grocery delivery service Instacart, and chip designer Arm Holdings
ARM,
+2.69%.
Shares of those companies are down since their debuts.

Renaissance Capital Founder and CEO Bill Smith said Birkenstock was hoping to appeal to investors based on a “combination of profitability and growth, along with widespread brand recognition.”

However, New Constructs Chief Executive David Trainer raised concerns about the company’s potential valuation, when compared with rival footwear makers, and noted the weaker performances from Instacart and Arm.

“We don’t doubt that Birkenstock has strong brand equity and produces stylish sandals, but there is really no reason for this company to be public,” he said. “We do not think investors should expect to make any money by buying this IPO.”

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October 10, 2023
Blue Apron notches triple-digit percentage gain while Nike rallies after earnings beat and boosts Foot Locker stock

Here are the day’s biggest movers:

Stock gainers:

Blue Apron Holding Inc.’s stock
APRN,
+133.52%
rocketed by 134% after food-delivery start-up Wonder said it would acquire the company for $13 a share or about $103 million, just a fraction of its $2 billion in 2017 when the company went public.

Shares of Nike
NKE,
+5.96%
rallied 7% as the apparel maker, which is also part of the Dow Jones Industrial Average
DJIA,
reported better-than-expected earnings, news that also lifted shares of European rivals including Adidas
ADS,
+6.22%.

Foot Locker
FL,
+2.71%,
which sells athletic apparel, saw its stock rise by 3%.

Walgreens Boots Alliance Inc.‘s stock
WBA,
+6.39%
rose 6.2% as a top gainer among the Nasdaq 100
NDX
as stocks reacted with gains to the latest inflation data.

Stock decliners:

Bionomics
BNOX,
-11.87%,
whose shares jumped 242% on Thursday after reporting positive results from a mid-stage trial of a treatment for post-traumatic stress disorder, fell 8% in regular trade.

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September 29, 2023
Adidas and Puma shares rally after Nike results

Investors bid up Nike’s rivals Adidas and Puma in early European markets action, after their U.S. peer beat first-quarter earnings forecasts.

Adidas shares
ADS,
+6.09%
jumped 6%, and Puma stock
PUM,
+6.22%
rose 5%, after Nike
NKE,
+0.23%
reported better margins than forecast even though revenue met expectation.

JD Sports Fashion
JD,
+5.04%
shares also jumped 6% in London.

Analysts at JPMorgan led by Olivia Townsend said the read-across to the European sporting goods sector was better-than-expected demand in North America, a solid performance in Europe, expansion in gross margins and ongoing improvements in inventory levels.

The major European indexes also advanced on Friday, with the U.K. FTSE 100
UK:UKX,
German DAX
DX:DAX
and French CAC 40
FR:PX1
each sporting gains around 0.7%.

U.S. stock futures
ES00,
+0.42%
also edged higher ahead of the release of the PCE price index report later. The S&P 500
SPX
ended Thursday with a 0.6% rise.

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September 29, 2023
Nike stock rises as profit beats estimates and inventories fall

Nike Inc. on Thursday reported a fiscal first-quarter profit that beat expectations, although revenue came up just shy of Wall Street’s estimates, amid a drop in sales for Converse sneakers.

Shares
NKE,
+0.23%
were up 1.4% after hours.

The athletic-gear giant reported fiscal first-quarter net income of $1.45 billion, or 94 cents a share, compared with $1.47 billion, or 93 cents a share, in the same quarter last year. Revenue crept higher to $12.94 billion, compared with $12.69 billion in the prior-year quarter.

Analysts polled by FactSet expected Nike to report earnings per share of 76 cents, on revenue of $13 billion.

Gross margin fell 10 basis points to 44.2%, weighed by higher product costs and a tougher foreign-exchange backdrop, and offset by “strategic pricing actions.” The company’s inventories fell 10%, as Wall Street seeks progress on efforts by businesses to narrow down their stockpiles of unsold goods.

Sales for Converse shoes were $588 million, down 9%, amid weaker demand in North America. Growth in Asia, however, acted as a counterweight to that decline.

Nike reported earnings as stiff competition — from the likes of Adidas
ADDYY,
-0.51%
and On Holding
ONON,
+0.27%
— and weaker demand for sneakers and clothing keeps prices lower. While analysts say Nike stands to benefit from an enduring shift toward more casual gear, recent outlooks from sporting-goods chains like Foot Locker Inc.
FL,
+0.65%
and Dick’s Sporting Goods Inc.
DKS,
+0.38%
have been more downbeat.

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September 28, 2023
Micron, Peloton, GameStop, Workday, Nike, CarMax, and More Stock Market Movers
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Summary

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U.S

Europe

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FX

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https://www.barrons.com/articles/stock-market-movers-299270e4

Updated Sept. 28, 2023 6:18 am ET / Original Sept. 28, 2023 4:40 am ET

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These Stocks Are Moving the Most Today: Micron, Peloton, GameStop, Workday, Nike, CarMax, and More

Stock futures were mostly higher Thursday as oil prices surged and the yield on the 10-year Treasury remained near levels last seen in 2007.

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September 28, 2023
After fighting over connected fitness, Peloton and Lululemon join forces

Peloton Interactive’s stock jumped after hours Wednesday after the connected-exercise-bike maker and yoga-wear giant Lululemon Athletica announced a five-year partnership that will combine digital fitness with workout and athleisure gear starting next month.

The move comes as the fitness industry recalibrates after a boom and bust in at-home workouts due to the pandemic, and after Peloton
PTON,
+0.65%
and Lululemon
LULU,
-0.40%
tried to compete with each other directly on connected fitness. But as part of the deal, Lululemon will stop selling its Lululemon Studio Mirror — its answer to Peloton’s pairing of exercise equipment and exercise videos — before the end of the year.

Shares of Peloton climbed 13.3% after hours Wednesday. Lululemon’s stock was up 0.3% after hours.

Under the partnership, Peloton will become the “exclusive digital fitness content provider” for Lululemon. Lululemon, meanwhile, will become Peloton’s “primary athletic-apparel partner.” Some Peloton instructors will also promote Lululemon’s clothing as part of the arrangement.

The partnership will target customers across North America, the U.K., Germany and Australia. Starting Oct. 11, co-branded clothing across Lululemon’s products will be available at Peloton stores and online in the United States, the U.K. and Canada, and in Peloton’s markets by March. Beginning Nov. 1, Lululemon Studio All-Access Members will have access to Peloton classes.

“Our two companies share a vision to advance wellbeing through movement, and this partnership ensures our lululemon Studio Members will have access to the most expansive and dynamic offering of fitness content possible,” Celeste Burgoyne, Lululemon’s president for the Americas and global guest innovation, said in a statement.

Lululemon bought Mirror — an interactive fitness company that displayed workout videos and fitness data on an actual mirror — for $500 million in 2020, when much of the world still faced pandemic-related restrictions.

Then, lockdowns eased and pre-pandemic habits returned. Gyms reopened. Peloton started getting into trouble. It has cut jobs, shaken up leadership and announced a recall of 2 million exercise bikes due to injury risks. Shares of the company have fallen more than 90% since late 2020.

Lululemon stock, however, has run higher since that time. Some analysts last year said that clothing made by the company was less prone to a broader apparel discounting frenzy. During its most recent round of earnings, Lululemon raised its full-year outlook despite what it called a “dynamic operating environment.”

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September 27, 2023
NIO, Moderna, Block, U.S. Steel, and More Stock Market Movers
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https://www.barrons.com/articles/stock-market-movers-8c0c7b23
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September 19, 2023
5 things to know about the new COVID-19 vaccine

It may be time to get your COVID-19 vaccine again.

There’s a new booster that’s coming out to guard against the virus. The Centers for Disease Control and Prevention said Tuesday that it was recommending the vaccine, which is being produced in versions by Moderna
MRNA,
+3.18%
and Pfizer
PFE,
-0.20%
-BioNTech
BNTX,
-2.06%,
for people 6 months of age and older.

Here are answers to some common questions about the shot — and what you may need to know before you receive it.

Why are we seeing another booster?

Boosters are all about maintaining protection against the virus as new COVID-19 variants emerge. The CDC said: “The updated vaccines should work well against currently circulating variants of COVID-19, including BA.2.86, and continue to be the best way to protect yourself against severe disease.” The CDC also noted that “protection from COVID-19 vaccines and infection decline over time. An updated COVID-19 vaccine provides enhanced protection against the variants currently responsible for most hospitalizations in the United States.”

So, everyone who is 6 months or older should receive it?

That’s the CDC’s recommendation, but not everyone sees this booster as a firm requirement, depending on various medical and other factors.

Dr. Paul A. Offit, a pediatrician with the Children’s Hospital of Philadelphia who specializes in infectious diseases, told MarketWatch that the new vaccine is a must for some who are at higher risk for developing serious illness, such as people who are over 75, people who have certain health problems (including diabetes, obesity or chronic lung or heart disease) and people who are immune compromised.

And what about the others? Offit said it can be a case of “low risk, low reward.” Meaning there’s little harm in getting the booster and it may buy “a few months protection against mild disease,” Offit said. But he stops short of saying the booster is an absolute necessity for such people.

Still, CDC director Dr. Mandy K. Cohen counters such an argument. In a column for the New York Times, Cohen noted that all the members of her family, including her 9- and 11-year-old daughters, would be getting the booster. “Some viruses…change over time. This coronavirus is one of them. It finds ways to evade our immune systems by constantly evolving. That’s why our vaccines need to be updated to match the changed virus,” Cohen explained.

What if you recently had COVID? Or have just gotten the previous COVID booster?

Offit said you should wait at least two months — and possibly as long as four months — before receiving the new vaccine.

The CDC said, “You should get a COVID-19 vaccine even if you already had COVID-19,” adding “you may consider delaying your next vaccine by 3 months from when your [COVID] symptoms started or, if you had no symptoms, when you received a positive test.”

When and where can you get the new booster?

The CDC said the vaccine “will be available by the end of this week at most places you would normally go to get your vaccines.”

How much will it cost?

The new shots are expected to have list prices of $110 to $130, but the CDC said, “Most Americans can still get a COVID-19 vaccine for free.” That is, most health-insurance plans will cover the cost.

As for those without insurance, the CDC said there are still plenty of free options, including programs run by local health centers and health departments as well as pharmacies participating in the CDC’s Bridge Access Program. For more information about where to get the booster, go to Vaccines.gov.

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September 13, 2023
CDC recommends updated COVID shots for people 6 months of age and older

The Centers for Disease Control and Prevention on Tuesday recommended updated COVID-19 vaccines for people 6 months of age and older.

Director Mandy Cohen late Tuesday backed the findings of CDC advisers, who voted 13-to-1 for approval earlier in the day. The updated vaccines from Moderna Inc.
MRNA,
-0.53%
and Pfizer Inc.
PFE,
+0.62%
-BioNTech
BNTX,
-1.97%
should become available later this week.

“We have more tools than ever to prevent the worst outcomes from COVID-19,” Cohen said in a statement. “CDC is now recommending updated COVID-19 vaccination for everyone 6 months and older to better protect you and your loved ones.”

The move comes just one day after the U.S. Food and Drug Administration approved the updated shots from Moderna and Pfizer. The FDA approved single-dose vaccines for people 12 and older and authorized emergency use of new shots for children as young as 6 months.

The CDC recommendations Tuesday include some key changes from the recommendations that previously applied to the bivalent COVID vaccines. People age 65 and older were recommended to get a second bivalent dose, for example, but the CDC is not currently recommending two doses of the new shot for older adults. The CDC said it will monitor epidemiology and vaccine effectiveness to determine if additional doses are needed.

The recommendations come as the vaccines are transitioning from federal procurement and distribution to the commercial market. The new shots are expected to have list prices of $110 to $130 per dose. But the Affordable Care Act requires insurers to cover most vaccines recommended by the CDC advisory committee at no cost to plan enrollees, and people with Medicare and Medicaid also have no-cost access to the vaccines.

The CDC meeting Tuesday addressed some concerns about the accessibility and cost of the vaccines for people without health-insurance coverage. The CDC’s new Bridge Access program will provide free shots to uninsured people within days at retail pharmacies as well as local health centers, the CDC said. The agency had previously said that the free shots might not arrive in retail pharmacies until mid-October. The federal government’s vaccines.gov website will be updated later this week to list Bridge Access program sites, the CDC said.

Roughly 25 million to 30 million U.S. adults do not have health insurance. About 85% of people without coverage live within 5 miles of a Bridge Access program site, according to CDC data.

Under the Bridge Access program, CVS Health Corp.
CVS,
+2.57%
will administer doses in stores and Minute Clinics, the CDC said, and Walgreens Boots Alliance Inc.
WBA,
+1.35%
will offer doses in stores and at off-site events that target areas of low access and uptake. Healthcare-services company eTrueNorth is also working with the program to reach lower-access areas without other coverage under the program, the CDC said.

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September 12, 2023
3M Nears Roughly $5.5 Billion Earplugs Settlement

3M Nears Roughly $5.5 Billion Earplugs Settlement

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August 27, 2023
WHO names Eris a COVID variant of interest. Here’s what you need to know.

The World Health Organization has upgraded COVID-19 variant EG.5 to a variant of interest, or VOI, from a variant under monitoring, or VUM, as it continues to become more prevalent around the world.

The variant — which has been nicknamed Eris by some media, following the Greek-alphabet designation used for other variants — has been found in 51 countries, with most sequences, 30.6%, stemming from China, said the WHO.

Other countries that have submitted at least 100 sequences to a central database include the U.S., the Republic of Korea, Japan, Canada, Australia, Singapore, the United Kingdom, France, Portugal and Spain, the WHO said in a statement.

Eris is a descendent lineage of XBB.1.9.2, which is an omicron subvariant. It was first detected on Feb. 17 and designated as a VUM on July 19.

Its latest designation means it’s more prevalent than it was, has a growth advantage over earlier variants and merits closer monitoring and tracking.

Here’s what you need to know about Eris.

Eris is spreading around the world

The strain is increasing in global prevalence, accounting for 17.4% of cases sequenced in the week through July 23, up from 7.6% four weeks earlier. The WHO has been tracking COVID data on a 28-day basis, largely because countries have cut back on testing and surveillance as they emerge from the pandemic, meaning the agency has far less data than it did during the pandemic.

It’s already dominant in the U.S.

Eris has become dominant in the U.S., according to projections made by the Centers for Disease Control and Prevention, although a shortage of data is hampering the agency’s efforts to surveil the illness.

The CDC said last week it was unable to publish its “nowcast” projections, which it releases every two weeks, for where EG.5 and other variants are circulating for every region, because it did not have enough sequences to update the estimates.

“Because nowcast is modeled data, we need a certain number of sequences to accurately predict proportions in the present,” CDC representative Kathleen Conley told MarketWatch.

“For some regions, we have limited numbers of sequences available and therefore are not displaying nowcast estimates in those regions, though those regions are still being used in the aggregated national nowcast,” she said.

It is estimated that EG.5, an omicron subvariant, accounted for 17.3% of COVID cases in the U.S. in the two-week period through Aug. 5. That was up from an estimated 11.9% in the previous period and was more than any other variant.

For more, see: New Eris COVID variant is dominant in the U.S., but a shortage of data is making it hard to track

It’s no riskier than earlier variants

The public-health risk is deemed to be low at the global level, lining up with the risk posed by XBB.1.16 and other currently circulating VOIs, according to the WHO statement. But it’s likely more infectious.

“While EG.5 has shown increased prevalence, growth advantage, and immune escape properties, there have been no reported changes in disease severity to date,” said the WHO.

That growth advantage and immune-escape properties mean Eris may cause a rise in case incidence over time and become dominant in some countries or even the world, according to the WHO.

It has the same symptoms as other strains

The Eris variant causes the same symptoms as seen with other strains of COVID, such as sore throat, runny nose, cough, congestion, fever, fatigue, body aches and a possible loss of taste or smell.

The best defense against Eris is vaccination

Like earlier strains of COVID, the best protection is to be vaccinated with any of the vaccines developed by Pfizer Inc.
PFE,
-0.03%
and German partner BioNTech SE
BNTX,
-0.32%,
Moderna Inc.
MRNA,
-1.01%
or Novavax Inc.
NVAX,
+9.83%

The vaccines that will be made available in the fall will be designed to protect against all subvariants of XBB, including Eris.

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August 10, 2023
Earnings have beaten Wall Street estimates by more than usual in 2nd quarter, but 3rd quarter isn’t looking great

Online retail giant Amazon.com Inc.’s
AMZN,
+8.27%
second-quarter results and third-quarter forecast sales last week were a bet that more consumers would start buying more things, but Wall Street’s expectations for the third quarter overall have only grown dimmer.

With most of the 500 companies that make up the S&P 500 Index
SPX
already through the second-quarter earnings reporting season, slightly more than normal have reported per-share profit that beat Wall Street’s estimates, according to FactSet.

For the third quarter though, analysts now expect a mere 0.2% increase in per-share profit growth overall, according to a FactSet report on Friday, or slightly lower than the 0.4% growth that was expected for the third quarter on June 30,

And with some two months still left in the third quarter, and with that forecast likely to come down as the period progresses, Wall Street’s profit expectations are getting ever closer to turning negative.

Wall Street analysts overall still expect a bigger rebound for the fourth quarter, the FactSet report said. And they expect 2023 overall to eke out a per-share profit gain of 0.8%.

Worries of a U.S. recession emerging at some point during the back half of this year have started to fade at least a little after many economists fixated on the possibility earlier this year when the Federal Reserve was raising interest rates to combat a jump in inflation in 2022 . Some analysts now say savings fatigue could prompt more shoppers to splurge this year, after relentlessly tightening their budgets due to rising prices.

Federal Reserve Chair Jerome Powell last month said policymakers at the central bank had also shucked off their worries of a downturn.

See: Fed no longer foresees a U.S. recession — and other things we learned from Powell’s press conference

“The staff now has a noticeable slowdown in growth starting later this year in the forecast. But given the resilience of the economy recently, they are no longer forecasting a recession,” he said last month.

Not everyone is convinced that a downturn has vanished from the horizon though. Sheraz Mian, director of research at Zacks, told MarketWatch last month that more bearish analysts had kept pushing out their recession forecasts, after being defied by the actual, and more positive, economic data. Some economists continue to push out those forecasts.

“We still expect a recession, but now we are looking for it to begin in Q1 2024 rather than Q3 2023,” Thomas Simons, U.S. economist at Jefferies, said in a research note on Friday.

He said that interest rate hikes from the Federal Reserve were only just starting to affect customer behavior. Households were trying to rebuild their savings, after spending through whatever they had built up during the pandemic. Student-loan payments were returning, he said, and corporate margins were thinning.

“Corporate profit margins are narrowing, and businesses will look to cut costs through layoffs,” he said.

This week in earnings

Among S&P 500 index companies, 34 report results during the week ahead, including one from the Dow Jones Industrial Average, according to FactSet.

Results from Walt Disney Co.
DIS,
+0.95%
will likely gobble up more media attention, but earnings from Paramount Global Inc
PARA,
+3.58%
— which oversees CBS, Showtime, Comedy Central and other channels — will offer more detail about how studios are positioning themselves with Hollywood actors on strike. Lions Gate Entertainment Corp.
LGF.A,
-2.44%
also reports.

Results from Tyson Foods Inc.
TSN,
+0.34%
will give investors and customers a brief look at the state of the grocery aisle where higher food prices over the past year have strained spending on other things. Beyond Meat Inc.
BYND,
-1.38%,
which also reports during the week, will be hoping new product launches of plant-based meat-like alternatives can overtake analyst skepticism, amid competition with fake meat and real meat alike.

Elsewhere, ride-hailing platform Lyft Inc.
LYFT,
-5.73%,
online dating service Bumble Inc.
BMBL,
-3.86%
and video-game maker Take-Two Interactive Software Inc.
TTWO,
-2.45%
also report during the week. And Canadian pot producer Canopy Growth Corp.
CGC,
-3.47%
will get another chance to pick up the pieces, after over-expanding and now trying to hold onto its cash.

The call to put on your calendar

Disney drama: One way or another, people on both coasts are mad at Disney
DIS,
+0.95%
Chief Executive Bob Iger right now, as his company prepares to report quarterly results on Wednesday. Shares of Disney are down slightly this year. The company is currently fighting with Florida Gov. Ron DeSantis, who is trying to stamp out Disney World’s self-governing privileges after the company criticized the state’s restrictions on classroom discussion of gender identity. When Iger accused striking actors and writers in Hollywood of not being “realistic,” the actors and writers shot back, noting his hefty executive compensation plan.

While the friction in Florida hasn’t hurt Disney’s parks attendance, the Hollywood shutdown has threatened Disney’s massive film and TV show operations, as Disney+ subscribers fall and investors more aggressively seek profits from studios’ streaming operations. Elsewhere, Rich Greenfield, an analyst at LightShed Partners, said “Pixar and Disney Animation have not had a breakout hit that impacted children’s play patterns and both Marvel and Lucasfilm feel increasingly tired from overuse.”

The sense is growing that more time is needed for Iger to fix Disney’s problems. On Wednesday, analysts may get a deeper sense of how much more, with the chance of more drama between Disney and its home state and the writers and actors the company depends on.

The number to watch

UPS and the Teamsters deal: United Parcel Service Inc. reports quarterly results on Tuesday, as rank-and-file Teamsters vote on a tentative labor agreement struck with the package deliverer in an effort to avert a strike. The deal, if approved, would raise worker pay and give the economy and businesses a breather, after threats of strikes or work stoppages at the nation’s ports and railways were averted over the past year.

Local Teamsters unions have voted overwhelmingly to at least endorse the agreement, between UPS
UPS,
-0.31%
and the Teamsters union, which represents 340,000 UPS workers, but not everyone was happy with the deal. Some part-timers felt the Teamsters could have used their leverage to wrest more from UPS, following a profit windfall at the company. And investors have held out for more detail from UPS executives themselves on what the deal might mean for the bottom line and for shipping prices.

Analysts will be dissecting the impact of the agreement as shipping demand lags, trucking company Yellow Corp.
YELL,
-0.83%
reportedly shuts down and FedEx Corp.
FDX,
-0.20%
tries to slash costs.

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August 6, 2023
China-Founded Rivals Ramp Up War for American Shoppers

China-Founded Rivals Ramp Up War for American Shoppers

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July 29, 2023