Black Friday 2023 is officially here, kicking off the year’s biggest shopping weekend both online and in stores. Early indicators suggest consumers are hungry for deals, with e-commerce sales on Thanksgiving Day jumping 5.5% year-over-year to $5.6 billion according to Adobe Analytics.
The robust online sales activity on Turkey Day comes ahead of an expected $9.6 billion in Cyber Monday revenue, a 5.7% increase from last year. While these growth figures represent a slowdown from the blistering pace set during the pandemic, they highlight that holiday shoppers are still responding to discounts even amidst broader economic uncertainty.
This sets the stage for a pivotal Black Friday that may determine whether projections for up to 4% gains in total holiday sales materialize. Shoppers are expected to turn out in force to scoop up deals on popular items like toys, apparel, jewelry, and consumer tech that were top sellers online on Thanksgiving.
Mobile Shopping Surge Drives Online Revenue
Fueling the growth in Thanksgiving e-commerce sales is the continued surge in smartphone shopping. A record 59% of online revenue came from mobile devices as people browsed and bought gifts on the go. With mobile penetration rising every year, retailers have adapted their sites and apps to make it easier for iPhone and Android users to capitalize on promotions.
Savvy shoppers are discovering they can beat crowds and inventory shortages by taking advantage of online-only deals as well as ordering online and picking up in store. Retailers are encouraging this omnichannel behavior by making curbside pickup fast and frictionless. The convenience of mobile ordering combined with flexible fulfillment options underlies the shift towards more Thanksgiving and Black Friday spending happening digitally.
Top Deals Entice Consumers
Despite economic pressures from inflation and higher interest rates, consumers have shown a willingness to spend when the price is right. Adobe tracked toys discounted up to 28%, electronics up to 27% off, and computers 22% off on Thanksgiving, leading to triple-digit surge in those categories versus October.
Amazon and Target rolled out additional Black Friday toy deals with major markdowns on Barbie dream campers, Marvel action figures, and Nintendo Switch gaming bundles expected to rank among the most popular purchases.
Similarly, doors opening early at retailers like Best Buy, Walmart, and Apple will likely attract shoppers chasing deals on big-screen TVs, Bluetooth speakers, tablets, and the hot new Airpods Pro 2 earbuds. Though buying conditions are tougher this year, bargain hunters still prioritize snagging discounted must-have gifts for loved ones.
What’s at Stake for Retailers
While Thanksgiving and Black Friday don’t determine overall holiday fortunes, they set the tone for retailers during the critical year-end sales period. Those who miss targets this weekend play catch-up and may have to result to profit-busting promotions to move stagnant inventory later in December.
However, retailers who excite shoppers out the gates with alluring deals and experiences create positive momentum they can ride into the New Year. The outperformance of those players better able to adapt to the mobile and omnichannel-centric future of holiday shopping will be on full display this weekend.
For consumers, the state of Black Friday offers clues into buying conditions for the next month as they weigh completing wish lists amidst budget realities. With early reads tilting positive, cautious optimism seems warranted – though restraint may still pay off waiting to see if deals sweeten further in December.
One thing is certain: all eyes turn to how activity plays out on the unofficial start to the holiday sales season. Black Friday retains symbolic importance for retailers and consumers alike – so expect the 2023 version to again provide intrigue and insights into the health of the US consumer.
Xcel Brands, Inc. 1333 Broadway 10th Floor New York, NY 10018 United States https:/Sector(s): Consumer Cyclical Industry: Apparel Manufacturing Full Time Employees: 84 Key Executives Name Title Pay Exercised Year Born Mr. Robert W. D’Loren Chairman, Pres & CEO 1.27M N/A 1958 Mr. James F. Haran CFO, Principal Financial & Accou
Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.
Jacob Mutchler, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Solid Q3 results. The company reported $2.9 million in revenue, which was in-line with our estimate of $2.6 million. Adj. EBITDA loss of $1.4 million was modestly lower than our estimate of a loss of $0.8 million. Notably, Q3 operating results were affected by less QVC programming due to talent scheduling conflicts related to a return to an in-studio production policy and non-recurring restructuring expenses.
Favorable licensing model. In November, the company completed its transition to a licensing model, and should report the last portion of its restructuring costs in Q4. Notably, we anticipate significant reductions in direct operating expenses from 2022 levels of roughly $7.5 million to roughly $4.0 million in 2024. Additionally, in Q4, we estimate sequential licensing revenue growth from Q3.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Xcel Brands, Inc. 1333 Broadway 10th Floor New York, NY 10018 United States https:/Sector(s): Consumer Cyclical Industry: Apparel Manufacturing Full Time Employees: 84 Key Executives Name Title Pay Exercised Year Born Mr. Robert W. D’Loren Chairman, Pres & CEO 1.27M N/A 1958 Mr. James F. Haran CFO, Principal Financial & Accou
Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.
Jacob Mutchler, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Solid Q3 results. The company reported $2.9 million in revenue, which was in-line with our estimate of $2.6 million. Adj. EBITDA loss of $1.4 million was modestly lower than our estimate of a loss of $0.8 million, as illustrated in Figure #1 Q3 Results. Notably, Q3 operating results were affected by less QVC programming due to talent scheduling conflicts related to a return to an in-studio production policy and non-recurring restructuring expenses.
Transition toward a licensing model. In November, the company completed a restructuring process by entering into licensing agreements for its Longaberger and made in the US baskets businesses. The new licensing model is expected to significantly lower operating costs and be a key catalyst toward a swing to positive cash flow in 2024.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Treasury Secretary Janet Yellen recently pointed to persistently high food and rent prices as a major reason why public perception of the economy remains negative, despite progress on overall inflation. With President Biden’s reelection chances closely tied to economic views, this consumer disconnect poses a threat.
In an interview with CNBC, Yellen acknowledged inflation rates have meaningfully declined from last year’s 40-year highs. However, she noted that “Americans still see increases in some important prices, including food, from where we were prior to the pandemic.”
While the administration touts top-line statistics pointing to economic strength, Yellen admitted that “this remains notable to people who go to the store and shop.”
Rent inflation also sticks out painfully to consumers, even as broader price growth cools. “Rents are rising less quickly now, but are certainly higher than they were before the pandemic,” Yellen said.
Polls Reveal Sour Public Mood Despite “Bidenomics”
This stubborn inflation in highly visible categories is clashing with the White House’s rosier messaging. The administration has dubbed the economy “Bidenomics” and trumpets metrics like robust job gains.
But almost 60% of voters disapprove of Biden’s economic leadership in the latest polling. His approval rating lags the economic data as people feel pinched by prices at the grocery store and housing costs.
Per Yellen, the disconnect boils down to prices remaining “higher than they used to be accustomed to.” She stressed the administration must now “explain to Americans what President Biden has done to improve the economy.”
Yellen expressed optimism views will shift “as inflation comes down, prices stop rising, and the labor market remains strong.” Time will tell if this turnaround happens soon enough to impact the 2024 election.
Food Prices Remain a Stinging Reminder of Inflation’s Sting
Of all consumer goods, food prices stand out as a persistent driver of inflation angst. Grocery bills grew 12% year-over-year in October, far above the 7.7% overall inflation rate. From eggs to lunch meats, few foods escape sticker shock at the store.
Russia’s invasion of Ukraine damaged vital grain supplies, resulting in huge price spikes for wheat, corn and cooking oils. Lingering supply chain dysfunction continues hampering food transport and packaging.
Restaurants also face higher food costs, which owners pass along through bigger menu price tags. Rising labor costs further squeeze restaurant margins.
In all, grocery and dining prices have become stinging daily reminders that inflation remains an economic burden. This clouds public sentiment despite falling gas prices and cheaper consumer goods.
Rents and Housing Costs Also Weigh Heavily on Consumers
Along with food, Yellen called out persistent rent inflation as a culprit of economic gloom. Annual rent growth sits around 7%, down from last year but still squeezing household budgets.
Low rental vacancy rates give landlords continued pricing power in many markets. While mortgage rates have shot higher, rents have yet to meaningfully slow for lack of alternatives.
Surging rents are especially painful due to housing’s outsize impact on living costs. One report estimated that housing accounts for 40% of a typical family’s inflation burden.
Beyond rent, housing costs like property taxes, homeowner insurance, and home services are also outpacing overall inflation. And higher mortgage rates make buying a home even less affordable.
These housing stresses help explain why such a large majority of Americans still rate current economic conditions as poor. With shelter eating up more paychecks, consumers feel deprived despite broader progress.
All Eyes on Food and Housing Costs as Midterms Approach
Yellen made clear that stubborn inflation in categories like food and rent is the administration’s biggest obstacle to touting economic gains. As President Biden gears up for a likely 2024 reelection bid, perceptions of the economy will carry substantial weight.
Democrats are hoping the public mood brightens as the impact of cooling prices materializes. But that remains uncertain with high-visibility costs still stinging consumers.
If relief arrives soon across grocery aisles and rent rolls, voters may yet reward President Biden and Democrats for delivering an overdue inflation reprieve. But the clock is ticking with the 2024 campaign cycle fast approaching.
For now, Biden’s political fate remains tied to the cost of bread and monthly housing bills. If lidding inflation can make such necessities feel affordable again, the president may stand to benefit.
Validated science-based targets emphasize The ODP Corporation’s commitment to environmental sustainability
BOCA RATON, Fla.–(BUSINESS WIRE)–Nov. 16, 2023– The ODP Corporation is proud to announce that it has successfully earned validation from the Science Based Targets initiative (SBTi) of its science-based targets for scope 1, scope 2, and scope 3 greenhouse gas (GHG) emissions. This significant milestone demonstrates The ODP Corporation’s commitment to environmental sustainability and aligns with its ongoing efforts to combat the effects of climate change.
The science-based targets reflect The ODP Corporation’s goals for reducing GHG emissions, including a commitment to reduce absolute scope 1 and 2 GHG emissions 46.2% by 2030 from a 2019 base year. The Company further commits to reduce scope 3 GHG emissions from downstream transportation and distribution and use of sold products 55% per USD value added by 2030 from a 2019 base year.
As part of its dedication to driving sustainability throughout its supply chain, The ODP Corporation also commits that 75% of its suppliers by spend covering purchased goods and services will have science-based targets by 2027. This collaborative effort will contribute to reducing emissions and fostering an environmentally responsible business ecosystem.
“We are incredibly proud to have our science-based targets validated, as it underscores our commitment to make meaningful changes in our environmental impact,” said Shannon Hunter, vice president of sustainability at The ODP Corporation. “By setting these targets, we are sending a clear message to all of our stakeholders—including our employees, customers, and partners—that we are dedicated to environmental sustainability and actively reducing our carbon footprint.”
Achieving validation of our science-based targets is a testament to The ODP Corporation’s ongoing sustainability journey. The ODP Corporation remains committed to continuously improving its environmental practices and embracing innovative solutions. This announcement marks a pivotal step forward in the company’s sustainability efforts and reinforces its position as a responsible corporate citizen.
The ODP Corporation (NASDAQ:ODP) is a leading provider of products, services, and technology solutions through an integrated business-to-business (B2B) distribution platform and omnichannel presence, which includes world-class supply chain and distribution operations, dedicated sales professionals, a B2B digital procurement solution, online presence and a network of Office Depot and OfficeMax retail stores. Through its operating companies Office Depot, LLC; ODP Business Solutions, LLC; Veyer, LLC; and Varis, Inc., The ODP Corporation empowers every business, professional, and consumer to achieve more every day. For more information, visit theodpcorp.com.
ODP and ODP Business Solutions are trademarks of ODP Business Solutions, LLC. Office Depot is a trademark of The Office Club, LLC. OfficeMax is a trademark of OMX, Inc. Veyer is a trademark of Veyer, LLC. Varis is a trademark of Varis, Inc. Any other product or company names mentioned herein are the trademarks of their respective owners.
Conference call scheduled for 5:00 p.m. ET on November 20, 2023
NEW YORK, Nov. 15, 2023 (GLOBE NEWSWIRE) — Xcel Brands, Inc. (NASDAQ: XELB) (“Xcel” or the “Company”), a media and consumer products company with billions of dollars in retail sales generated by its brands through social commerce and live-stream shopping, today announced that it will report its third quarter 2023 financial results on November 20, 2023. The Company will hold a conference call with the investment community on November 20, 2023, at 5:00 p.m. ET.
Interested parties unable to access the conference call via the webcast may dial 800-715-9871 or 646-307-1963 and use the Conference ID 8167522. A replay of the webcast will be available on Xcel’s website.
About Xcel Brands Xcel Brands, Inc. (NASDAQ: XELB) is a media and consumer products company engaged in the design, production, marketing, livestreaming, wholesale distribution and direct-to-consumer sales of branded apparel, footwear, accessories, fine jewelry, home goods and other consumer products, and the acquisition of dynamic consumer lifestyle brands. Xcel was founded in 2011 with a vision to reimagine shopping, entertainment and social media as one thing. Xcel owns the Judith Ripka, Halston, LOGO by Lori Goldstein, and C. Wonder brands and a minority stake in the Isaac Mizrahi brand. It also owns and manages the Longaberger brand through its controlling interest in Longaberger Licensing LLC. Xcel is pioneering a true omni-channel sales strategy that includes the promotion and sale of products under its brands through interactive television, digital livestream shopping, social commerce, brick-and-mortar retail and e-commerce channels. The company’s brands have generated in excess of $4 billion in retail sales via livestreaming in interactive television and digital channels alone.
Headquartered in New York City, Xcel Brands is led by an executive team with significant livestreaming, production, merchandising, design, marketing, retailing and licensing experience and has a proven track record of success in elevating branded consumer products companies. With an experienced team of professionals focused on design, production and digital marketing, Xcel maintains control of product quality and promotion across all of its product categories and distribution channels. Xcel differentiates by design. www.xcelbrands.com
For further information please contact: Andrew Berger SM Berger & Company 216-464-6400 andrew@smberger.com
Consumers tapped out from inflation may finally get a reprieve this holiday season in the form of falling prices. According to Walmart CEO Doug McMillon, deflation could be on the horizon.
On a Thursday earnings call, McMillon said the retail giant expects to see deflationary trends emerge in the coming weeks and months. He pointed to general merchandise and key grocery items like eggs, chicken, and seafood that have already seen notable price decreases.
McMillon added that even stubbornly high prices for pantry staples are expected to start dropping soon. “In the U.S., we may be managing through a period of deflation in the months to come,” he said, welcoming the change as a benefit to financially strapped customers.
His comments echo optimism from other major retailers that inflation may have peaked. Earlier this week, Home Depot CFO Richard McPhail remarked that “the worst of the inflationary environment is behind us.”
Government data also hints the pricing pressures are easing. The consumer price index (CPI) for October was flat compared to September on a seasonally adjusted basis. Core CPI, which excludes volatile food and energy costs, dipped to a two-year low.
This emerging deflationary environment is a reprieve after over a year of runaway inflation that drove the cost of living to 40-year highs. Everything from groceries to household utilities saw dramatic price hikes that squeezed family budgets.
But the October CPI readings suggest the Federal Reserve’s aggressive interest rate hikes are having the desired effect of reining in excessive inflation. As supply chains normalize and consumer demand cools, prices are softening across many categories.
For instance, the American Farm Bureau Federation calculates that the average cost of a classic Thanksgiving dinner for 10 will be $64.05 this year – down 4.5% from 2022’s record high of $67.01. The drop is attributed largely to a decrease in turkey prices.
Still, consumers aren’t out of the woods yet when it comes to stubborn inflation on essentials. While prices are down from their peak, they remain elevated compared to historical norms.
Grocery prices at Walmart are up mid-single digits versus 2022, though up high-teens compared to 2019. Many other household basics like rent, medical care, and vehicle insurance continue to rise at above average rates.
And American shopping habits reflect the impact of lingering inflation. Walmart CFO John David Rainey noted consumers have waited for discounts before purchasing goods such as Black Friday deals.
McMillon indicated shoppers are still monitoring spending carefully. So while deflationary pressure is a tailwind, Walmart doesn’t expect an abrupt return to pre-pandemic spending patterns.
The retailer hopes to see food prices in particular come down faster, as grocery inflation eats up a significant chunk of household budgets. But experts warn it could take the rest of 2023 before inflation fully normalizes.
Consumers have been resilient yet cautious under economic uncertainty. If deflation takes root across the retail landscape, it could provide much-needed relief to wallets and mark a turning point toward recovery. For now, the environment looks favorable for a little more jingle in shoppers’ pockets this holiday season.
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands (NYSE: ACCO), a world leader in branded consumer and end user products, was named one of America’s Safest Companies in 2023 by EHS Today. The magazine for environment, health, and safety leaders, announced its list of the 2023 America’s Safest Companies last month with 10 companies on the list. These companies are involved in a broad range of activities, from industrial contracting to robotics, from packaging to cabinetry, from consumer packaged goods to electrical construction, and more.
ACCO Brands was among the outstanding companies being honored because of a committed understanding of the value that safety brings to an organization. This is the third time that ACCO Brands has been awarded this title, something only six other companies have achieved.
For more than 20 years, the America’s Safest Companies competition has sought to identify those characteristics that differentiate good safety programs from great ones, and to then celebrate the best practices and procedures that exemplify safety excellence.
“Every America’s Safest Company winner is a standard-bearer of safety excellence. Each winning company has engrained into their culture and their employees a consistent and constant need to keep every person and every situation free from harm,” said EHS Today Editor-in-Chief Dave Blanchard.
To be considered as one of America’s Safest Companies, organizations must complete an application that requires them to demonstrate excellence in several areas: support from leadership and management for EHS efforts; employee involvement in the EHS process; innovative solutions to safety challenges; injury and illness rates lower than the average for their industries; comprehensive training programs; evidence that prevention of incidents is the cornerstone of the safety process; good communication about the value of safety; and a way to substantiate the benefits of the safety process.
As a company with a personal stake in all things ergonomic, ACCO Brands understands the discomfort of aches and pains. That is why the company provides on-site massages using the certified active release technique (ART) to all U.S. manufacturing and distribution center employees—regardless of whether those aches and pains are job-related or not.
“While there is a significant cost to providing the ART benefit to our employees, we believe we have prevented many minor employee issues from becoming more serious medical issues and have a healthier workforce as a result of this program,” says James Edwards, senior director of environmental, health and safety, ACCO Brands.
The best practices from the 2023 America’s Safest Companies are featured in a special section in the July/August 2023 issue of EHS Today magazine and on the brand’s website, www.ehstoday.com. Since 2002, America’s Safest Companies has honored more than 250 organizations for their unwavering commitment to worker safety, health, and environmental stewardship.
About ACCO Brands ACCO Brands, the Home of Great Brands Built by Great People, designs, manufactures and markets consumer and end-user products that help people work, learn, play, and thrive. Our widely recognized brands include AT-A-GLANCE®, Five Star®, Kensington®, Leitz®, Mead®, PowerA®, Swingline®, Tilibra® and many others. More information about ACCO Brands Corporation (NYSE: ACCO) can be found at www.accobrands.com.
About EHS Today Owned by Endeavor Business Media, EHS Today is an American occupational safety, and health media brand. It is the leading US magazine for environmental, health and safety management professionals in the manufacturing, construction, and service sectors.
The Last Great Hamburger Stand Set to Debut in Hidalgo County
LOS ANGELES, Nov. 14, 2023 (GLOBE NEWSWIRE) — FAT (Fresh. Authentic. Tasty.) Brands Inc., parent company of Fatburger and 17 other restaurant concepts, announces a new development deal set to bring six additional franchised Fatburger locations to Hidalgo County, Texas in the next five years. The news comes on the heels of the recent opening of the first co-branded Fatburger and Round Table Pizza restaurant in Lantana, Texas.
“The Fatburger brand continues to expand in Texas,” said Taylor Wiederhorn, Chief Development Officer of FAT Brands. “Fatburger has a pipeline of approximately 50 restaurants to be built in Texas alone and the franchisee demand to develop more Fatburger restaurants throughout the state has not slowed down. We look forward to adding six more restaurants to our existing development pipeline in Texas with further growth near the southern border.”
Ever since the first Fatburger opened in Los Angeles 70 years ago, the chain has been known for its delicious, grilled-to-perfection and cooked-to-order burgers. Founder Lovie Yancey believed that a big burger with everything on it is a meal in itself; at Fatburger “everything” is not just the usual roster of toppings. Burgers can be customized with everything from bacon and eggs to chili and onion rings. In addition to its famous burgers, the Fatburger menu also includes Fat and Skinny Fries, sweet potato fries, scratch-made onion rings, Impossible™ Burgers, turkeyburgers, hand-breaded crispy chicken sandwiches, and hand-scooped milkshakes made from 100 percent real ice cream.
FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets and develops fast casual, quick-service, casual and polished casual dining restaurant concepts around the world. The Company currently owns 18 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Smokey Bones, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.
About Fatburger An all-American, Hollywood favorite, Fatburger is a fast-casual restaurant serving big, juicy, tasty burgers, crafted specifically to each customer’s liking. With a legacy spanning 70 years, Fatburger’s extraordinary quality and taste inspire fierce loyalty amongst its fan base, which includes a number of A-list celebrities and athletes. Featuring a contemporary design and ambiance, Fatburger offers an unparalleled dining experience, demonstrating the same dedication to serving gourmet, homemade, custom-built burgers as it has since 1952 – The Last Great Hamburger Stand™.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements relating to the future financial and operating results of the Company, estimates of future EBITDA, the timing and performance of new store openings, future reductions in cost of capital and leverage ratio, our ability to conduct future accretive acquisitions and our pipeline of new store locations. Forward-looking statements generally use words such as “expect,” “foresee,” “anticipate,” “believe,” “project,” “should,” “estimate,” “will,” “plans,” “forecast,” and similar expressions, and reflect our expectations concerning the future. Forward-looking statements are subject to significant business, economic and competitive risks, uncertainties and contingencies, many of which are difficult to predict and beyond our control, which could cause our actual results to differ materially from the results expressed or implied in such forward-looking statements. We refer you to the documents that we file from time to time with the Securities and Exchange Commission, such as our reports on Form 10-K, Form 10-Q and Form 8-K, for a discussion of these and other risks and uncertainties that could cause our actual results to differ materially from our current expectations and from the forward-looking statements contained in this press release. We undertake no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of this press release.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
3Q23 Revenue. Revenue increased 7.2% y-oy to $40.9 million and represents the 16th consecutive quarter of y-o-y revenue growth. We had forecasted $39.5 million. Revenue growth was driven by volume growth in drinkable kefir, up 9% y-o-y, and the impact of price increases taken last December. Significantly, there does not appear to be any significant trading down, even with the uncertain economy.
GM and EPS. Gross margin in the third quarter improved 730 basis points to 27.3% and was better than our 25.6% estimate. Net income totaled $3.4 million, or EPS of $0.23, up from $983,000, or $0.06/sh, last year. We were at $2.4 million, or $0.14/sh. Higher volumes and more favorable milk prices y-o-y drove the results.
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This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Net sales increase 7.2% year-over-year to $40.9 million; 16th consecutive quarter of year-over-year net sales growth
730 basis points of year-over-year gross profit margin expansion
MORTON GROVE, Ill., Nov. 13, 2023 /PRNewswire/ — Lifeway Foods, Inc. (Nasdaq: LWAY) (“Lifeway” or “the Company”), a leading U.S. supplier of kefir and fermented probiotic products to support the microbiome, today reported financial results for the third quarter ended September 30, 2023.
“I am excited to announce that our strong momentum continued in the third quarter as we once again set a Company record on the topline, and delivered robust, year-over-year gross profit margin expansion of 730 basis points,” commented Julie Smolyansky, President and Chief Executive Officer of Lifeway Foods. “Net sales were up 7.2%, marking our 16th consecutive quarter of year-over-year growth, and continued to be driven by volume growth in our flagship Lifeway drinkable kefir. This growth is particularly impressive as we lapped an exceptional third quarter of 2022, illustrating both the loyalty of our customers, who have maintained their dedication to our premium, healthy offerings in light of inflation-justified price increases last year, as well as the success of our strategic investments in capturing incremental consumers seeking better-for-you offerings at a great value. Additionally, our proactive operating discipline and favorable milk pricing helped achieve vastly improved year-over-year profitability alongside the heightened sales, a testament to the execution by the whole Lifeway team. Looking ahead, we will continue to assess further distribution opportunities and pursue additional brand exposure for our core Lifeway kefir products and farmer cheese. This was an amazing start to the second half of 2023, and I want to thank the Lifeway team, our customers and retail partners for helping us deliver yet another quarter of record revenue.”
Third Quarter 2023 Results
Net sales were $40.9 million for the third quarter ended September 30, 2023, an increase of $2.8 million or 7.2% from the same period of 2022. The net sales increase was primarily driven by higher volumes of Lifeway branded drinkable kefir, and to a lesser extent the impact of price increases implemented during the fourth quarter of 2022.
Gross profit as a percentage of net sales was 27.2% for the third quarter ended September 30, 2023, compared to 19.9% in the same period of 2022. The 730 basis point increase versus the prior year was primarily due to the higher volumes of Lifeway branded products and the favorable impact of milk pricing, and to a lesser extent the price increases implemented during the fourth quarter of 2022 and decreased transportation costs.
Selling, general and administrative expenses as a percentage of net sales were 14.6% for the third quarter ended September 30, 2023, compared to 16.4% in the same period of 2022.
The Company reported net income of $3.4 million or $0.23 per basic and diluted common share for the third quarter ended September 30, 2023 compared to net income of $1.0 million or $0.06 per basic and diluted common share during the same period in 2022.
Conference Call and Webcast A pre-recorded conference call and webcast with Julie Smolyansky discussing these results with additional comments and details is available through the “Investor Relations” section of the Company’s website at https://lifewaykefir.com/webinars-reports/ and will also be available for replay.
About Lifeway Foods, Inc. Lifeway Foods, Inc., which has been recognized as one of Forbes’ Best Small Companies, is America’s leading supplier of the probiotic, fermented beverage known as kefir. In addition to its line of drinkable kefir, the company also produces cheese, probiotic oat milk, and a ProBugs line for kids. Lifeway’s tart and tangy fermented dairy products are now sold across the United States, Mexico, Ireland and France. Learn how Lifeway is good for more than just you at lifewayfoods.com.
Forward-Looking Statements
This release (and oral statements made regarding the subjects of this release) contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, future operating and financial performance, product development, market position, business strategy and objectives. These statements use words, and variations of words, such as “continue,” “build,” “future,” “increase,” “drive,” “believe,” “look,” “ahead,” “confident,” “deliver,” “outlook,” “expect,” and “predict.” Other examples of forward-looking statements may include, but are not limited to, (i) statements of Company plans and objectives, including the introduction of new products, or estimates or predictions of actions by customers or suppliers, (ii) statements of future economic performance, and (III) statements of assumptions underlying other statements and statements about Lifeway or its business. You are cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events and thus are inherently subject to uncertainty. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from Lifeway’s expectations and projections. These risks, uncertainties, and other factors include: price competition; the decisions of customers or consumers; the actions of competitors; changes in the pricing of commodities; the effects of government regulation; possible delays in the introduction of new products; and customer acceptance of products and services. A further list and description of these risks, uncertainties, and other factors can be found in Lifeway’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and the Company’s subsequent filings with the SEC. Copies of these filings are available online at https://www.sec.gov, http://lifewaykefir.com/investor-relations/, or on request from Lifeway. Information in this release is as of the dates and time periods indicated herein, and Lifeway does not undertake to update any of the information contained in these materials, except as required by law. Accordingly, YOU SHOULD NOT RELY ON THE ACCURACY OF ANY OF THE STATEMENTS OR OTHER INFORMATION CONTAINED IN ANY ARCHIVED PRESS RELEASE.
Media: Derek Miller Vice President of Communications, Lifeway Foods Email: derekm@lifeway.net
General inquiries: Lifeway Foods, Inc. Phone: 847-967-1010 Email: info@lifeway.net
LIFEWAY FOODS, INC. AND SUBSIDIARIESConsolidated Balance SheetsSeptember 30, 2023 and December 31, 2022(In thousands)
September 30,2023
December 31,
(Unaudited)
2022
Current assets
Cash and cash equivalents
$
12,632
$
4,444
Accounts receivable, net of allowance for doubtful accounts and discounts & allowances of $1,430 and $1,820 at September 30, 2023 and December 31, 2022 respectively
13,095
11,414
Inventories, net
9,321
9,631
Prepaid expenses and other current assets
1,621
1,445
Refundable income taxes
260
44
Total current assets
36,929
26,978
Property, plant and equipment, net
22,285
20,905
Operating lease right-of-use asset
203
174
Goodwill
11,704
11,704
Intangible assets, net
7,033
7,438
Other assets
1,900
1,800
Total assets
$
80,054
$
68,999
Current liabilities
Current portion of note payable
$
1,250
$
1,250
Accounts payable
9,102
7,979
Accrued expenses
5,555
3,813
Accrued income taxes
500
–
Total current liabilities
16,407
13,042
Line of credit
2,777
2,777
Note payable
1,731
2,477
Operating lease liabilities
130
104
Deferred income taxes, net
3,029
3,029
Total liabilities
24,074
21,429
Commitments and contingencies (Note 9)
–
–
Stockholders’ equity
Preferred stock, no par value; 2,500 shares authorized; no shares issued or outstanding at September 30, 2023 and December 31, 2022
–
–
Common stock, no par value; 40,000 shares authorized; 17,274 shares issued; 14,691 and 14,645 outstanding at September 30, 2023 and December 31, 2022, respectively
6,509
6,509
Paid-in capital
4,338
3,624
Treasury stock, at cost
(16,695)
(16,993)
Retained earnings
61,828
54,430
Total stockholders’ equity
55,980
47,570
Total liabilities and stockholders’ equity
$
80,054
$
68,999
LIFEWAY FOODS, INC. AND SUBSIDIARIESConsolidated Statements of OperationsFor the three and nine months ended September 30, 2023 and 2022(Unaudited)(In thousands, except per share data)
Three Months EndedSeptember 30,
Nine months EndedSeptember 30,
2023
2022
2023
2022
Net sales
$
40,896
$
38,140
$
118,030
$
105,730
Cost of goods sold
29,099
29,962
85,428
85,032
Depreciation expense
654
590
1,953
1,833
Total cost of goods sold
29,753
30,552
87,381
86,865
Gross profit
11,143
7,588
30,649
18,865
Selling expenses
2,884
2,843
8,974
8,527
General and administrative
3,085
3,415
10,028
9,546
Amortization expense
135
135
405
405
Total operating expenses
6,104
6,393
19,407
18,478
Income from operations
5,039
1,195
11,242
387
Other income (expense):
Interest expense
(109)
(77)
(322)
(171)
Gain on sale of property and equipment
–
–
33
–
Other (expense) income, net
(1)
(5)
(1)
(10)
Total other income (expense)
(110)
(82)
(290)
(181)
Income before provision for income taxes
4,929
1,113
10,952
206
Provision (benefit) for income taxes
1,517
130
3,554
(2)
Net income
$
3,412
$
983
$
7,398
$
208
Earnings per common share:
Basic
$
0.23
$
0.06
$
0.50
$
0.01
Diluted
$
0.23
$
0.06
$
0.49
$
0.01
Weighted average common shares:
Basic
14,677
15,490
14,659
15,462
Diluted
15,101
15,848
15,063
15,759
LIFEWAY FOODS, INC. AND SUBSIDIARIESConsolidated Statements of Cash Flows(Unaudited)(In thousands)
Nine months ended September 30,
2023
2022
Cash flows from operating activities:
Net income
$
7,398
$
208
Adjustments to reconcile net income to operating cash flow:
Depreciation and amortization
2,358
2,238
Stock-based compensation
1,078
755
Non-cash interest expense
5
5
Bad debt expense
2
–
Deferred revenue
–
(23)
Gain on sale of equipment
(33)
–
(Increase) decrease in operating assets:
Accounts receivable
(1,683)
(1,576)
Inventories
310
(907)
Refundable income taxes
(216)
(309)
Prepaid expenses and other current assets
(176)
(115)
Increase (decrease) in operating liabilities:
Accounts payable
928
3,085
Accrued expenses
1,673
1,003
Accrued income taxes
500
(725)
Net cash provided by operating activities
12,144
3,639
Cash flows from investing activities:
Purchases of property and equipment
(3,146)
(2,609)
Proceeds from sales of equipment
40
–
Acquisition, net of cash acquired
–
(580)
Purchase of investments
(100)
–
Net cash used in investing activities
(3,206)
(3,189)
Cash flows from financing activities:
Repayment of note payable
(750)
(750)
Net cash used in financing activities
(750)
(750)
Net increase (decrease) in cash and cash equivalents
8,188
(300)
Cash and cash equivalents at the beginning of the period
4,444
9,233
Cash and cash equivalents at the end of the period
$
12,632
$
8,933
Supplemental cash flow information:
Cash paid for income taxes, net
$
3,270
$
640
Cash paid for interest
$
343
$
158
Non-cash investing activities
Accrued purchase of property and equipment
$
194
$
250
Increase in right-of-use assets and operating lease obligations
Office Depot, Inc., together with its subsidiaries, supplies a range of office products and services. It offers merchandise, such as general office supplies, computer supplies, business machines and related supplies, and office furniture through its chain of office supply stores under the Office Depot, Foray, Ativa, Break Escapes, Worklife, and Christopher Lowell brand names. The company also provides graphic design, printing, reproduction, mailing, shipping, and other services through design, print, and ship centers. It has operations throughout North America, Europe, Asia, and Central America. The company also sells its products and services through direct mail catalogs, contract sales force, Internet sites, and retail stores, through a mix of company-owned operations, joint ventures, licensing and franchise agreements, alliances, and other arrangements. As of December 31, 2008, Office Depot operated 1,267 North American retail division office supply stores and 162 international division retail stores, as well as participated under licensing and merchandise arrangements in 98 stores. The company was founded in 1986 and is based in Boca Raton, Florida.
Joe Gomes, Managing Director, Equity Research Analyst, Generalist , Noble Capital Markets, Inc.
Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
3Q23 Results. Revenue came in at $2.009 billion, down from $2.172 billion in 3Q22, driven by store closures, lower comparable sales, and a challenging economic environment. Adjusted net income was flat at $73 million, while adjusted EPS rose to $1.88 from $1.48 as a result of the reduction in outstanding shares. Adjusted EBITDA was $125 million, compared to $131 million last year.
Strategy Is Working. ODP delivered solid operating results in spite of the challenging economic environment, with strong adjusted EPS and adjusted free cash flow. Adjusted FCF in the quarter was $89 million. The Company’s low cost operating model continues to deliver.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).
*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
WeWork, once the most valuable startup in the United States with a peak valuation of $47 billion, filed for bankruptcy protection this week – a stunning collapse for a company that was the posterchild of the shared workspace industry.
Founded in 2010 by Adam Neumann and Miguel McKelvey, WeWork grew at breakneck speed by offering flexible office spaces for freelancers, startups and enterprises. At its peak in 2019, WeWork had 528 locations in 111 cities across 29 countries with 527,000 members.
The company was initially successful at attracting both customers and investors with its vision of creating communal workspaces. SoftBank, its biggest backer, poured in billions having bought into Neumann’s grand ambitions to revolutionize commercial real estate. WeWork was the cornerstone of SoftBank’s $100 billion Vision Fund aimed at taking big bets on tech companies that could be mold-breakers.
However, WeWork’s model of taking long-term leases and renting out spaces short-term led to persistent losses. The company lost $219,000 an hour in the 12 months prior to June 2023. Occupancy rates are down to 67% from 90% in late 2020. Yet WeWork had $4.1 billion in future lease payment obligations as of June.
Problematic corporate governance and mismanagement under Neumann also came under fire. Eyebrow-raising revelations around Neumann such as infusing the company with a hard-partying culture and cashing out over $700 million ahead of the planned IPO while retaining majority control further eroded confidence.
The lack of a path to profitability finally derailed the company’s prospects when it failed to launch its Initial Public Offering in 2019. The IPO was expected to raise $3 billion at a $47 billion valuation but got postponed after investors balked at buying shares. Neumann was forced to step down as CEO.
Since the failed IPO, WeWork has tried multiple strategies to right the ship. It has attempted to renegotiate leases, cut thousands of jobs, sold off non-core businesses, and reduced operating expenses significantly. For example, it got $1.5 billion in financing in exchange for control of its China unit in 2022.
WeWork also tried changing leadership to infuse more financial discipline. It brought in real estate veteran Sandeep Mathrani as CEO in 2020. Mathrani helped cut costs but could not fix the underlying business model. He was replaced in 2022 by David Tolley, an investment banker and private equity executive.
Additionally, WeWork tried merging with a special purpose acquisition company (SPAC) in 2021 that valued the company at $9 billion. But the co-working space leader continued struggling with low demand and high costs.
Commercial real estate landlords also pose an existential threat by offering their own flexible workspaces. Large property owners like CBRE and JLL now provide custom office spaces. With recession looming, demand for flexible office space has waned further.
As part of the Chapter 11 bankruptcy filing, WeWork aims to restructure its debt and shed expensive leases. However, it faces an uphill battle to rebuild its brand and regain customers’ trust. The flexible workspace model also faces an uncertain future given hybrid work arrangements are becoming permanent for many companies.
WeWork upended the commercial real estate industry and had a meteoric rise fueled by stellar growth and lofty ambitions. But poor management and lack of profitability finally brought down a quintessential startup unicorn valued at $47 billion at its peak. The dramatic saga serves as a cautionary tale for unproven, cash-burning companies and overzealous investors fueling their growth.
