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Mattel, Hasbro Could Win As Toy Retailers Scramble to Stock Up for Holiday
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Mattel announces cost cuts after fourth-quarter results miss expectations
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Toy maker Mattel Inc. on Wednesday reported fourth-quarter results that missed expectations, with the company saying it plans to cut costs this year while continuing to buy back stock.
The cost cuts would follow layoffs by rival Hasbro Inc.
HAS,
+1.34%
amid a slowdown in demand for toys. They also come as other companies over the past several weeks have announced layoffs and plans to tighten up expenses, as investors seek out bigger profit margins.Shares of Mattel
MAT,
+1.57%
were up 1.5% after hours.“Looking ahead, we are launching a new cost-savings program focused on profitable growth and expect to improve profitability and continue share repurchases in 2024,” Mattel Chief Financial Officer Anthony DiSilvestro said in the company’s earnings release.
Mattel — known for its Barbie and Hot Wheels toys and, increasingly, its efforts to turn them into content — reported fourth-quarter net income of $147.3 million, or 42 cents a share. That compares with net income of $16.1 million, or 4 cents a share, in the same quarter in 2022.
Adjusted for things like severance, product recalls and changes to deferred tax assets, Mattel earned 29 cents a share. Sales rose 16% to $1.62 billion.
Analysts polled by FactSet expected Mattel to report adjusted earnings per share of 31 cents, on revenue of $1.65 billion.
“Execution on our toy strategy was strong and we made meaningful progress in entertainment across film, television, digital and publishing,” Chief Executive Ynon Kreiz said in the company’s earnings release.
“We ended 2023 with the strongest balance sheet we have had in years, putting us in an excellent position to execute our strategy to grow Mattel’s IP-driven toy business and expand our entertainment offering,” he continued.
Mattel reported earnings after the key holiday-shopping season, and as analysts try to gauge the sales impact from the success of the “Barbie” movie released last summer. Mattel executives have said they want to make more films based on some of its other popular toys, and turn “Barbie” into a film franchise.
However, toy demand has been cooler recently, thanks to two years of inflation-fueled higher prices for goods and necessities. Retailers have taken a cautious approach toward stocking their shelves, after getting caught two years ago with too many toys and electronics that people didn’t want.
The Wall Street Journal reported this month that activist investor Barington Capital had taken a stake in Mattel, adding that Barington believed the company should consider “pursuing strategic alternatives” for its Fisher-Price and American Girl businesses.
Bank of America analysts on Tuesday said Mattel and Hasbro were among the companies that were “most at risk of direct impact” from shipping disruptions in the Red Sea. Yemen-based Houthi fighters opposed to Israel’s war in Gaza have attacked ships in the area, forcing lengthy detours and driving up shipping costs. Mattel, the analysts noted, got around 24% of its total sales from the Europe, Middle East and Africa regions in 2022.
During a conference in December, Kreiz said he believed in the long-term growth of the toy industry. But he said that after a jump in growth between 2019 and the pandemic, 2023 would likely be tamer.
“We believe 2023 will be back to normal in terms of shopping patterns and consumer behavior,” he said. “And also even inventory at the retail level and at our level is now reverting back to historical norms.”
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Nike says 'newness' is crucial to its growth. One analyst says it's not working
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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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'Smidcap' companies are becoming a big deal. Here's a look at some of the best.
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The stocks of long-neglected small companies are finally showing signs of life as the market rally broadens. But these tiny companies still remain vastly undervalued. So, they are one of the best buys in the stock market right now.
Small- and medium-cap companies, or smidcaps, have not been this cheap since the Great Financial Crisis 15 years ago. “Smidcaps relative to large caps look very attractive,” says says portfolio manager Aram Green, at the ClearBridge Select Fund LBFIX, which specializes in this space. “Over the long term you will be rewarded.”
Green is worth listening to because he is one of the better fund managers in the smidcap arena. ClearBridge Select beats both its midcap growth category and Morningstar U.S. midcap growth index over the past five- and 10 years, says Morningstar Direct. This is no easy feat, in a mutual fund world where so many funds lag their benchmarks.
The timing for smidcap outperformance seems about right, since these stocks do well coming out of recessions. Technically, we have not recently had a recession. But there was an economic slowdown in the first half of the year, and the U.S. did have an earnings recession earlier this year. So that may count.
To get smidcap exposure, consider the funds of outperforming managers like Green, and if you want to throw in some individual stocks, Green is a great guide on how to find the best names in this space.
I recently caught up with him to see what we can learn about analyzing smidcaps. Below are four tactics that contribute to his fund’s outperformance, with nine company examples to consider.
1. Look for an entrepreneurial mindset: Green’s background gives him an edge in investing. He’s an entrepreneur who co-founded a software company called iCollege in 1997. It was bought out by BlackBoard in 2001. He knows how to understand innovative trends, identify a good idea, secure capital and quickly ramp up a business. This experience gives him a “private market mindset” that helps him pick stocks to this day.
“Founder-run companies regularly outperform.”
Green looks for managers with an entrepreneurial mindset. You can glean this from company calls and filings, but it helps a lot to meet management — something most individual investors cannot do. But Green offers a shortcut, one which I regularly use, as well. Look for companies that are run by founders. This will give you exposure to managers with entrepreneurial spirit.
Here, Green cites the marketing software company HubSpot
HUBS,
+0.79% ,
a 1.9% fund position as of the end of the third quarter. It was founded by Massachusetts Institute of Technology college buddies Brian Halligan and Dharmesh Shah. They’re on the company’s board, and Shah is chief technology officer.Academic studies confirm founder-run companies regularly outperform. My guess is this is because many founders never lose the entrepreneurial spirit, no matter how easy it would be to quit and sip Mai Tai’s on a beach after making a bundle.
In the private market, Green cites Databricks, a data management and analytics company with an AI angle. This competitor of Snowflake
SNOW,
-0.92%
is likely to go public in 2024. If you feel like an outsider because you lack access to private market investing, note that Green says he typically buys more exposure to private companies on the initial public offering (IPO), and then in the market. “We like to spend time with them when they are private so we can pounce when they are public,” Green says.2. Look for organic growth: When companies make acquisitions their stocks often decline, and for good reason. Managers make mistakes in acquisitions because they overestimate “synergies.” Or they get wrapped up in ego-enhancing empire building.
“We favor entrepreneurial management teams that do not make a lot of acquisitions to grow, but use their resources to develop new products to keep extending the runway,” says Green.
Here, he cites ServiceNow
NOW,
+2.62% ,
which has grown by “extending the runway” with new offerings developed internally. It started off supporting information technology service desks, and has expanded into operations management of servers and security, onboarding employees, data analytics, and software that powers 911 emergency call systems. Green obviously thinks there is a lot more upside to come, given that this is an overweight position, at 4.6% of the portfolio (the fund’s biggest holding).Green also puts the “Amazon.com of Latin America” MercadoLibre
MELI,
+0.17%
in this category, because it continues to expand geographically and in areas such as logistics and payment systems. “They have really morphed into a fintech company,” Green says. He puts HubSpot and the marketing software company Klaviyo
KVYO,
-5.73%
in this category, too.3. Look for differentiated business models: Green likes companies with offerings that are special and different. That means they’ll take market share, and face minimal competition. They’ll also enjoy pricing power. “This leads to high margins. You don’t have someone beating you up on price,” he says.
Green cites the decking company Trex
TREX,
+0.10% ,
which offers composite decking and railing made from recycled materials. This gives it an eco-friendly allure. Compared to wood, composite material lasts longer and requires less maintenance. It costs more up front but less over the long term. Says Green: “The alternative decking market has taken about 20% of the market and that can get to 50%.”Of course, entrepreneurs notice success, and try to imitate it. That’s a risk here. But Trex has an edge in its understanding of how to make the composite material. It has a strong brand. And it is building relationships with big-box retailers Home Depot and Lowe’s. These qualities may keep competitors at bay.
4. Put some ballast in your portfolio: Green likes to keep the fund’s portfolio balanced by sector, size, and business dynamic. So the portfolio includes the food distributor Performance Food Group
PFGC,
-1.69% .
The company is posting mid-single digit sale growth, expanding market share and paying down debt. Energy drinks company Monster
MNST,
-0.85%
also offers ballast. Monster’s popular product line up helps the company to take share and enjoy pricing power, Green says.It’s admittedly unusual to see a food companies in a portfolio loaded with high-growth tech innovators. But for Green, it’s all part of the game plan. “Rapid growth, disrupting businesses are not going to work year in year out. There are times they fall out of favor, like 2022. So, having that balance is important because it keeps you invested in the equity market.”
In other words, keeping some ballast means you’re less likely to get shaken out by sharp declines in high-growth and high-beta tech innovators when trouble strikes the market.
Michael Brush is a columnist for MarketWatch. At the time of publication, he owned AMZN, TSLA and MELI. Brush has suggested AMZN, TSLA, NOW, MELI, HD and LOW in his stock newsletter, Brush Up on Stocks. Follow him on X @mbrushstocks
More: Nvidia, Disney and Tesla are among 2023’s buzziest stocks. Can they continue to sizzle in 2024?
Also read: Presidential election years like 2024 are usually winners for U.S. stocks
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Activision Blizzard to pay $55 million to settle California civil-rights lawsuit
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Videogame maker Activision Blizzard has agreed to pay nearly $55 million to settle a California civil-rights lawsuit brought over complaints of sexual harassment, discrimination and pay disparities by women employees that helped trigger the company’s acquisition by Microsoft.
The settlement, announced by the California Civil Rights Department on Friday evening, resolves the lawsuit filed against the “Call of Duty” videogame studio by the agency in 2021 over claims that it “discriminated against women at the company, including by denying promotion opportunities and paying them less than men for doing substantially similar work,” CRD said.
The agreement, subject to court approval, will see Activision pay nearly $46 million into a settlement fund dedicated to compensating women employees and contract workers at the company, plus more than $9 million in attorneys’ fees and costs. Additionally, Activision will take steps “to help ensure fair pay and promotion practices at the company,” including retaining an independent consultant to evaluate its compensation and promotion policies.
Yet the settlement also sees CRD withdraw its initial claims alleging a culture of widespread, systemic workplace sexual harassment at Activision, according to a copy of the agreement provided to MarketWatch. The document notes that the department is filing an amended complaint that removes the sexual-harassment allegations against the company and focuses on the gender-based pay and promotion claims.
CRD made no note of its prior sexual-harassment claims against Activision in its announcement Friday. A spokesperson for the department said the statement “largely speaks for itself with respect to the historic nature of this more than $50 million settlement agreement, which will bring direct relief and compensation to women who were harmed by the company’s discriminatory practices.
Representatives for Activision declined to comment.
The Wall Street Journal first reported the news of the settlement Friday.
The California agency’s complaint was one of several high-profile investigations by both state and federal regulators in recent years into alleged workplace misconduct at Activision and failures by its leadership to respond appropriately.
While Activision repeatedly denied the allegations, they ramped up pressure on the Santa Monica, Calif.-based company and its CEO, Bobby Kotick, and eventually led to a $68.7 billion takeover bid by Microsoft
MSFT,
+1.31%
in January 2022. The acquisition closed this October after receiving approval by U.K. and E.U. antitrust regulators, though the U.S. Federal Trade Commission continues to challenge the deal in court. Kotick is expected to leave the company, which he led for more than three decades, at the end of this year.The settlement would be the second-largest ever for the California Civil Rights Department, according to the Journal, after its $100 million agreement with another Los Angeles-area videogame developer, Riot Games, to resolve gender-discrimination allegations in 2021. The agency had initially sought a much-larger settlement with Activision, the publication reported, citing how the state had estimated the company’s liability at nearly $1 billion to some 2,500 employees with potential claims.
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Hasbro to lay off more workers amid toy sales slump
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Hasbro Inc. is cutting about 900 jobs as the company is facing a slump in toy and game sales after a boom during the pandemic.
The cost-saving plan will result in “the reallocation of people and resources,” including early retirement for some employees and layoffs over the next two years, Hasbro
HAS,
+0.39%
said in a filing late Monday.The Wall Street Journal reported the layoff plans earlier Monday, citing a memo it had viewed.
The maker of My Little Pony and Monopoly launched the plan in January, and at the time announced the layoffs of about 15% of its workforce.
It has booked about $94 million in expenses related to severance, stock compensation and employee benefits, and expects to book an additional $40 million, the company said in the filing Monday.
Hasbro in October missed third-quarter earnings expectations and slashed its full-year outlook, citing a “softer toy outlook.”
Shares of Hasbro and rival Mattel Inc.
MAT,
+0.05%
fell about 4% and 3%, respectively, in the extended session Monday, as the Wall Street Journal report also cited “early data points to another weak year” for the toy industry following the a boom during the pandemic.Mattel in October reported a better-than-expected third quarter, thanks in part to its wildly successful Barbie movie.
Shares of Mattel have gained 6% this year, which contrasts with a 20% drop for Hasbro stock. Both stocks, however, have underperformed in relation to the S&P 500 index
SPX,
which is up about 20% in 2023.In a February filing, Hasbro said it had about 6,500 employees worldwide as of the end of 2022.
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Americans did a record amount of shopping on Thanksgiving. Here’s what they bought.
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Americans opened both their mouths and their wallets on Thanksgiving, doing a record amount of shopping on the annual day of giving thanks.
Consumers spent an all-time high of $5.6 billion shopping online on Nov. 23, up 5.5% compared with last year’s Thanksgiving, according to Adobe Analytics ADBE, which tracks ecommerce and mobile shopping.
That’s…
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Walmart, Nvidia, Novo Nordisk, Vista Outdoor, GM, and More Stock Market Movers
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[ad_2]Stock futures pointed higher Friday as Wall Street returned for a shortened trading session following the Thanksgiving holiday. Retailers will be in focus on Black Friday, which marks the unofficial start to the Christmas shopping season.
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Plug Power, Trade Desk, Doximity, Unity Software, Illumina, Wynn, and More Stock Market Movers
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These Stocks Are Moving the Most Today: Plug Power, Trade Desk, Doximity, Unity Software, Illumina, Wynn, and More
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Unity Software’s stock skids 12% on revenue miss, uncertain outlook
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Unity Software Inc.’s stock fell about 12% in extended trading Thursday after the company reported a revenue miss and withheld from offering guidance.
“Our results in the third quarter were mixed,” Unity
U,
-3.15%
said in a letter to shareholders. “While revenue came in within guidance, we believe we can do better.”The beleaguered game-engine software company has been whipsawed by a series of missteps and departures. In September, it announced new fees based on the number of people who install games built with Unity’s editor software — only to backtrack and revamp its plan following a chorus of complaints that dented the stock. Last month, John Riccitiello announced he was retiring as chief executive, effective immediately.
Also read: Opinion: Unity Software has a fleeting moment to win back developers — and investors
“While we did not expect the introduction of the fees to be easy, the execution created friction with our customers and near-term headwinds,” Unity said in the letter. “We expect the impact of this business-model change to have minimal benefit in 2024 and ramp from there as customers adopt our new releases.”
Unity executives are mulling several new strategies that include layoffs, a reduction in office space and product discontinuations, but it did not offer timing or guidance, according to the shareholder letter.
Unity reported a fiscal third-quarter net loss of $125.3 million, or 32 cents a share, compared with a net loss of $250 million, or 84 cents a share, in the year-ago quarter.
Revenue was $544.2 million, up from $322.9 million a year ago.
Analysts surveyed by FactSet had expected revenue of $554 million.
Shares of Unity have dipped 12% this year. The broader S&P 500 index
SPX,
-0.81%
is up 13% in 2023.[ad_2]
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Hasbro’s stock is having its worst month since the 1980s as toys sales tumble
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Shares of Hasbro Inc. got rocked Thursday, making investors suffer through the worst month in four decades, as a weakening toy market led the company to report disappointing third-quarter results.
Heading into 2023, the toy market was expected to be down in the low-single-digit percentage range for the year, but the market’s performance has been “more challenging that planned,” Chief Executive Chris Cocks said on the post-earnings conference call with analysts.
“We saw the category soften during [the third quarter] to negative 10%,” Cocks said, according to an AlphaSense transcript.
The stock
HAS,
-11.42%
fell 11.5% toward a seven-month low in afternoon trading and was headed for the biggest one-day selloff since it sank 18.7% on March 16, 2020.It has fallen in 14 of the 19 trading days in October, to plunge 26.7% in the month to date. That puts it on track for the worst monthly performance since the record 43.1% selloff in October 1987, the month when “Black Monday” occurred.
Overall, third-quarter revenue fell 10.3% to $1.5 billion, to miss the FactSet consensus of $1.62 billion. The company’s consumer-products business, which includes toys, dropped 17.6% to $956.9 million, missing expectations of $1.1 billion.
Sales for Habro’s entertainment segment fell 41.9% to $122.9 million, below Wall Street projections of $127.8 million, but the company was able to blame that weakness on the effects of the writers and actors strikes on film and TV revenue.
It wasn’t all bad for Hasbro, however. Wizards of the Coast and digital-gaming revenue soared 39.6% to $423.6 million, well above expectations of $390.3 million, amid a more than doubling in digital- and licensed-gaming revenue behind “Baldur’s Gate III” from Larian Studios.
For 2023, the company now expects revenue to be down 13% to 15% from 2022, which is much worse than previous guidance for a decline of 3% to 6%. The current FactSet revenue consensus of $5.5 billion implies a 6.1% decline.
Hasbro also reported a net loss of $171.1 million, or $1.23 a share, after recording net income of $129.2 million, or 93 cents a share, in the same period a year ago. Excluding nonrecurring items, such as losses on assets held for sale, adjusted earnings per share rose to $1.64 from $1.42 but missed the FactSet consensus of $1.72.
CFRA analyst Zachary Warring cut his price target on Hasbro’s stock to $68 from $85 but reiterated his strong buy rating, as the new target implied 40% upside from current levels.
“Even though we were caught offside on this quarter’s results, we believe this is a multi-year opportunity to buy shares and expect digital gaming to continue momentum while consumer products has little downside,” Warring wrote in a note to clients.
Meanwhile, shares of Hasbro rival Mattel Inc.
MAT,
-7.63%
also dropped, down 7.1% toward a four-month low, even though the company’s third-quarter profit and sales beat expectations. That’s because strong sales of Barbie, Disney Princess and Disney Frozen dolls offset weakness in toys.Mattel said it expects toy-industry sales to decline in the mid-single-digit percentage range for the year.
Mattel’s stock was down 15.2% in October, while the S&P 500
SPX
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Microsoft’s Activision Deal Gets Green Light From UK Regulator
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By Kim Mackrael
Microsoft’s acquisition of videogame company Activision Blizzard won approval from U.K. competition authorities, clearing a path for the companies to close the $75 billion deal after a lengthy struggle with regulators.
The U.K.’s Competition and Markets Authority said Friday that the proposed deal no longer poses a major threat to competition in cloud gaming. The shift comes after Microsoft offered to restructure the deal by forfeiting cloud-streaming rights for “Call of Duty” and other popular Activision franchises in much of the world.
-Sarah E. Needleman contributed to this article
Write to Kim Mackrael at Kim.mackrael@wsj.com
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Nike stock rises as profit beats estimates and inventories fall
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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.[ad_2]
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Micron, Peloton, GameStop, Workday, Nike, CarMax, and More Stock Market Movers
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This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.
https://www.barrons.com/articles/stock-market-movers-299270e4
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After fighting over connected fitness, Peloton and Lululemon join forces
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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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Microsoft’s Revised Activision Deal Addresses Competition Concerns, Says UK Regulator
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By Elena Vardon
Microsoft’s proposals to modify its $75 billion Activision acquisition address the concerns with the U.K. antitrust authority, the regulator said in a provisional decision Friday.
The U.K. Competition and Markets Authority said that the new deal submitted by Microsoft should lessen any harm to competition in cloud gaming.
The CMA said that the restructured transaction–through which Activision would sell its cloud gaming rights to Ubisoft–opens the door to the deal being cleared.
The regulator is consulting on remedies put forward by Microsoft to address residual concerns it has before making a final decision, it said.
The CMA opened a consultation on these remedies which will last until Oct. 6, it added.
Write to Elena Vardon at elena.vardon@wsj.com
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Microsoft proposes Ubisoft license to win U.K. approval for Activision Blizzard buyout
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Microsoft will change the terms of its Activision Blizzard buyout offer in a new effort to win approval from the U.K. competition regulator.
The regulator, the Competition and Markets Authority, said Microsoft
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will now license Activision’s global cloud streaming to Ubisoft Entertainment, for any game available now or in the next 15 years. Ubisoft, in its own release, highlighted the ability to stream the popular Call of Duty franchise.Financial terms were not released, but the regulator said Ubisoft will make a one-off payment and also agree a market-based wholesale pricing mechanism.
The license will be exclusive except in the European economic area. Ubisoft would have the ability to require Microsoft to provide versions of games on operating systems other than Windows, such as Linux.
Ubisoft shares
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jumped nearly 5% in opening Paris trade.The regulator now says it’s inviting comments on the structure of the new offer. “This is not a green light. We will carefully and objectively assess the details of the restructured deal and its impact on competition, including in light of third-party comments,” said the regulator’s CEO, Sarah Cardell.
Microsoft last year agreed to buy Activision Blizzard for $68.7 billion, or $95 per share. Activision stock
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closed Monday at $90.72.In a blog post, Microsoft Vice Chair Brad Smith said it anticipates the CMA review processes can be completed before the 90-day extension in its acquisition agreement with Activision Blizzard expires on Oct.18. He also said the deal with Ubisoft was carefully structured not to interfere with an existing deal struck with European regulators.
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This Barbie ‘holy grail’ doll is on sale for $25,000 — but one rare Barbie collectible could fetch $1 million
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With the release this weekend of the new “Barbie” movie starring Margot Robbie and Ryan Gosling, there’s growing attention being paid to the world of Barbie collectibles. As in the hundreds of dolls that have been released over the years, to say nothing of such accessories as Barbie outfits and furniture.
But there’s one collectible above all — the holy grail of Barbies, if you will. We’re referring to Barbie No. 1, the first doll ever released by Mattel to bear the Barbie name, dating from 1959.
Barbie fanatics speak of it in reverent terms. “I lost sleep over this doll,” one collector said in a YouTube
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video that documented the arrival and unboxing of a Barbie No. 1.Needless to say, collectors will pay a pretty penny for a Barbie No. 1. Prices can easily reach $10,000-plus, according to Barbie experts. The original doll sold for about $3, but there’s a Barbie No. 1 doll on eBay
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currently going for $25,000.But before you plunk down five figures for an investment-grade doll, we figured you might want to know a little more about this one-of-a-kind Barbie. Here goes:
What makes the ‘Holy Grail’ Barbie so special?
Obviously, it’s all about being the first of its kind, not unlike a baseball player’s rookie card (the 1952 Mickey Mantle card is often considered the holy grail of sports collectibles, though that can sell for millions of dollars). It’s also about rarity. Experts say around 300,000 to 350,000 of those debut Barbies were sold in 1959, but the number of Barbie No. 1s that survived throughout the years — dolls are sold as toys, after all, not necessarily collectibles — is considerably less.
(Mattel
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reportedly now releases about 60 million Barbies annually, but the company didn’t respond to a MarketWatch request for comment and information.)There’s also something to be said for No. 1’s distinct look, marked by what veteran Barbie appraiser Dr. Lori Verderame describes as its “deep profile” with a protruding nose and high forehead. It’s a design very much inspired by the German-made Bild Lilli dolls that intrigued Barbie creator Ruth Handler.
Are there any really rare examples of the original Barbie?
Red-headed Barbie No. 1s are known to exist. Marl Davidson, a Barbie dealer based in Bradenton, Fla., says she once sold one for $50,000, and perhaps the holiest of holy grails is a salesman’s Barbie sample case dating from the doll’s early years. Davidson says she believes only two or three are around. And one surfaced? “It could go for $1 million,” she says.
And what makes some Barbie No. 1s more valuable than others?
As with almost any collectible category, it’s all about condition. Barbie buyers are looking for a No. 1 that’s as close to mint condition as possible, with all the original items — namely, the box, black stand, sunglasses, shoes, brochure and zebra-striped swimsuit. (There are also outfits and accessories dating from Barbie’s early years, but these were sold separately; Verderame says a popular outfit from this period can sell for $150 to $200.)
Ironically, if the Barbie has stayed in the original box, it may affect the condition — Verderame explains that the packaging is acidic so it can “damage the piece over time,” but she says collectors still “want it in the box.”
Then, there’s the hair color. The original Barbie came in both blonde and brunette versions. Verderame says the blondes are generally more sought after since that’s what most people think of as the Barbie classic. But Davidson says brunettes can actually have value since there were fewer made of them. Then again, she says, the collectors “who can afford it will have one of everything.”
How can you tell if a first-edition 1959 Barbie is a fake?
There are various elements that will signify an original Barbie — most notably, a marking on the doll’s, um, right buttock (this also applies to later Barbies, though). Also look for holes in the feet and what the Doll Reference site describes as “tight curly bangs,” among other identifiers. It’s worth keeping in mind that you might find an original No. 1 doll, but with other parts that are not original — say, a replacement stand.
What’s the current market for the original Barbie?
It’s soaring because of the movie, Verderame says. She notes that Barbie No. 1s that went for $10,000 as recently as three months ago are now selling in the $15,000-$25,000 range. Verderame anticipates the market will cool off after the fervor for the Warner Bros.
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film dies down. But Davidson remains bullish on Barbie’s longer-term prospects because of the doll’s iconic appeal: “The price can only go up,” she says.Are there any affordable alternatives to a first-edition Barbie?
Davidson says collectors can also consider Barbie No. 3 as a collectible. It’s a very early model, but it has a far more approachable price — Davidson says collectors can find one between $1,000 and $3,000.
If you want something way more affordable that still has potential to appreciate, Verderame says to consider iconic Barbies from the 1990s and 2000s that are currently selling for between $50 and $150.
But if you insist on a Barbie No. 1, Davidson says you can always buy one in lesser condition for a lesser price. Still, even a bald Barbie No. 1 won’t come cheap, she warns. “It’s going to go for a couple of grand,” she says.
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FTC files appeal, again seeks to block Microsoft-Activision deal
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The Federal Trade Commission on Thursday asked an appeals court to temporarily block Microsoft Corp.’s $69 billion acquisition of Activision Blizzard Inc. while it challenges a ruling earlier this week green-lighting the deal.
The FTC on Thursday asked U.S. District Judge Jacqueline Scott Corley to postpone her ruling — which she promptly denied — and also appealed to the Ninth U.S. Circuit Court of Appeals in San Francisco to pause the acquisition “to preserve the status quo” while the case is reviewed, claiming it is likely to succeed in its appeal.
According to the filing, the FTC claims the judge applied the wrong legal standard to its request for a preliminary injunction, and erred in a number of other matters.
The deal is set to close in the coming days, and letting it happen will “irreparably harm the public interest and the FTC,” regulators said.
Also see: GOP blasts FTC Chair Khan as a ‘bully’ after agency’s loss in Microsoft case
In a response filed with the court, Microsoft said the FTC “failed to carry its burden on independent, fact-based grounds” and “dragged its heels” before appealing.
“The court has already found that it would be inequitable” to order an injunction that could lead to “the potential scuttling of the merger,” Microsoft said, in asking for the FTC’s request to be denied.
The FTC has claimed the tie-up of a major videogame platform — Microsoft’s
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Xbox — with a major videogame publisher — Activision
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makes the wildly popular “Call of Duty,” among other titles — would be harmful to the videogame industry and consumers.Microsoft has pledged to keep “Call of Duty” available to Sony’s
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PlayStation console for 10 years, and will make it available for Nintendo’s
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Switch and some cloud-gaming platforms.In her ruling clearing the deal Tuesday, Corley said the FTC did not show “this particular vertical merger in this specific industry may substantially lessen competition.”
Bloomberg News reported late Thursday that Microsoft and Activision are considering giving up some control of their cloud-gaming business in the U.K. to win approval of British regulators, who — if the U.S. appeals court does not act — are the final hurdle to the deal closing on time.
FTC Chair Lina Khan testified on Capitol Hill on Thursday, where Republican lawmakers assailed her actions and sharply criticized her agency’s court losses in trying to block the Microsoft-Activision deal and Meta’s
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acquisition of a virtual-reality gaming company earlier this year.Read more: After Microsoft defeat, ‘toothless’ FTC needs to pick better battles if it wants to rein in Big Tech
Also: FTC’s probe of OpenAI marks key moment in Khan’s push to rein in Big Tech
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