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.
NEW YORK, Nov. 13, 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 a new licensing agreement with ALPHA OES, a provider of eCommerce services and strategies for brands. Under the terms of the licensing agreement, ALPHA OES will take over the day-to-day operations for Xcel’s Longaberger eCommerce business.
“We’re excited to partner with ALPHA OES on the Longaberger brand,” said Robert W. D’Loren, Chairman and CEO of Xcel Brands. “Since we acquired Longaberger in 2019, we’ve been able to evolve the business from a direct sales company into a social commerce marketplace for home products featuring Longaberger’s American made baskets. We believe that partnering with ALPHA OES, who is an expert in investing in and driving profitable growth eCommerce businesses that show strong brand affinity will help us continue to grow the Longaberger brand and business.”
“Longaberger is an American heritage brand with a strong consumer following and unique positioning in the market,” said Charles Mertz, CEO of ALPHA OES. “We’re thrilled to partner with Xcel to continue to build Longaberger’s eCommerce business and build upon the reputation and brand positioning that Longaberger enjoys and Xcel has invested in over the past several years. We’re also excited to work with Xcel on bringing Longaberger onto their social commerce marketplace, which we believe has the potential to reinvent customer acquisition of eCommerce brands that have a highly engaged audience through social commerce.”
Under the new agreement, ALPHA OES will take over day-to-day management of Longaberger’s eCommerce business under a license with Longaberger Licensing, a subsidiary of Xcel. Xcel will continue to build out its social commerce and short form video technology and plans to transition the Longaberger stylists onto its new platform by year-end. Xcel continues to strategically invest in social commerce technology platforms and partnerships that enable it to connect brands directly with consumers through short-form and live-stream video content.
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
About ALPHA OES
ALPHA OES, a premier Outsourced eCommerce Solutions company, forms strategic partnerships with leading brands to maximize digital commerce and revolutionize direct-to-consumer (DTC) engagement. Leveraging proprietary FoxLogic performance marketing strategies, ALPHA OES drives sustainable revenue and contribution margin growth while supercharging a brand’s digital presence. The comprehensive suite of eCommerce services developed by ALPHA OES is customized to serve unique brand needs while scaling for continuous growth.
Low-Cost Business Model and Disciplined Capital Allocation Drive Solid Operating Performance and Strong EPS Growth
Third Quarter Revenue of $2 Billion with GAAP EPS of $1.79; Adjusted EPS of $1.88
GAAP Operating Income of $91 Million; GAAP Net Income of $70 Million; Adjusted EBITDA of $125 Million
Repurchased $32 Million of Shares in the Third Quarter of 2023
Updates Full-Year 2023 Guidance
BOCA RATON, Fla.–(BUSINESS WIRE)–Nov. 8, 2023– The ODP Corporation (“ODP,” or the “Company”) (NASDAQ:ODP), a leading provider of products, services, and technology solutions to businesses and consumers, today announced results for the third quarter ended September 30, 2023.
Consolidated (in millions, except per share amounts)
3Q23
3Q22
YTD23
YTD22
Selected GAAP and Non-GAAP measures:
Sales
$2,009
$2,172
$6,025
$6,385
Sales change from prior year period
(8)%
(6)%
Operating income
$91
$84
$232
$188
Adjusted operating income (1)
$95
$95
$247
$238
Net income from continuing operations
$70
$67
$176
$142
Diluted earnings per share from continuing operations
$1.79
$1.36
$4.38
$2.84
Adjusted net income from continuing operations (1)
$73
$73
$187
$177
Adjusted earnings per share from continuing operations (fully diluted) (1)
$1.88
$1.48
$4.66
$3.54
Adjusted EBITDA (1)
$125
$131
$342
$347
Operating Cash Flow from continuing operations
$112
$163
$261
$79
Free Cash Flow (2)
$86
$138
$183
$11
Adjusted Free Cash Flow (3)
$89
$160
$192
$54
Third Quarter 2023 Summary(1)(2)(3)
Total reported sales of $2.0 billion, down 8% versus the prior year, primarily due to lower sales in its Office Depot consumer division, largely driven by 71 fewer retail locations in service compared to the prior year, as well as lower retail and online consumer traffic and transactions
GAAP operating income of $91 million and net income from continuing operations of $70 million, or $1.79 per diluted share, versus $84 million and $67 million, respectively, or $1.36 per diluted share, in the prior year
Adjusted operating income of $95 million, flat compared to the third quarter of 2022; adjusted EBITDA of $125 million, compared to $131 million in the third quarter of 2022
Adjusted net income from continuing operations of $73 million, or adjusted diluted earnings per share from continuing operations of $1.88, versus $73 million or $1.48, respectively, in the prior year
Operating cash flow from continuing operations of $112 million and adjusted free cash flow of $89 million, versus $163 million and $160 million, respectively, in the prior year
Repurchased 659 thousand shares at a cost of $32 million in the third quarter of 2023
$1.2 billion of total available liquidity including $384 million in cash and cash equivalents at quarter end
“I am extremely impressed seeing the day-to-day commitment and exceptional execution from our team as I fulfill Chief Executive Officer Gerry Smith’s responsibilities while he is on medical leave,” said Joseph Vassalluzzo, ODP’s chairman of the board. “In the quarter, our team delivered strong operating income and earnings per share results against a challenging economic backdrop, reflecting our unwavering commitment to operational excellence and to our low-cost business model approach.
“We continue to make progress across our four business units as we execute our three horizons strategy. This included expanding margins at ODP Business Solutions, new product testing and category expansion at Office Depot, securing new third-party customers at Veyer while remaining on track to more than double third-party EBITDA this year, and enhancing our platform and customer engagement at Varis.
“Our shareholder value creation formula, which integrates operational excellence with a shareholder-focused capital allocation plan, including the repurchase of approximately $32 million of shares during the quarter, contributed to a meaningful year-over-year increase in adjusted earnings per share for the third quarter and revised upward EPS guidance for the full year,” Vassalluzzo added.
“As we look ahead, we anticipate the macroeconomic environment to remain challenging throughout the remainder of the year. However, we are confident in our position of strength and will continue to focus on driving value for shareholders through our low-cost business model, leveraging our multiple routes to market, and continuing with our disciplined capital allocation,” Vassalluzzo concluded.
Consolidated Results
Reported (GAAP) Results
Total reported sales for the third quarter of 2023 were $2 billion, a decrease of 8% compared with the same period last year. This was driven primarily by lower sales in its consumer division, Office Depot, primarily due to 71 fewer stores in service compared to last year related to planned store closures, as well as lower retail and online consumer traffic. Sales at ODP Business Solutions Division were down slightly compared to last year, largely driven by slower return to office trends and lower sales of technology products. Meanwhile, Veyer provided strong logistics support for the ODP Business Solutions and Office Depot Divisions, and continued to capture additional demand for its supply chain and procurement solutions among other third-party customers.
The Company reported operating income of $91 million in the third quarter of 2023, up 8% compared to operating income of $84 million in the prior year period. Operating results in the third quarter of 2023 included $4 million of charges. These charges consisted primarily of $3 million associated with non-cash asset impairments largely related to the operating lease right-of-use (ROU) assets associated with the Company’s retail store locations. Net income from continuing operations was $70 million, or $1.79 per diluted share in the third quarter of 2023, up from $67 million, or $1.36 per diluted share in the third quarter of 2022.
Adjusted (non-GAAP) Results(1)
Adjusted results for the third quarter of 2023 exclude charges and credits totaling $4 million as described above and the associated tax impacts.
Third quarter of 2023 adjusted EBITDA was $125 million compared to $131 million in the prior year period. This included depreciation and amortization of $28 million and $32 million in the third quarters of 2023 and 2022, respectively
Third quarter of 2023 adjusted operating income was $95 million, flat compared to the third quarter of 2022
Third quarter of 2023 adjusted net income from continuing operations was $73 million, or $1.88 per diluted share, compared to $73 million, or $1.48 per diluted share, in the third quarter of 2022, an increase of 27% on a per share basis
Division Results
ODP Business Solutions Division
Leading B2B distribution solutions provider serving small, medium and enterprise level companies with an annual trailing-twelve-month revenue in excess of $4 billion
Reported sales were $1.0 billion in the third quarter of 2023, down approximately 3% compared to the same period last year primarily related to lower sales of technology products and weaker macroeconomic conditions
Stronger sales in cleaning and breakroom supplies were more than offset by lower sales of technology and core supplies
Total adjacency category sales, including cleaning and breakroom, furniture, technology, and copy and print, were 44% of total ODP Business Solutions’ sales
Continued strong pipeline and net new business customer additions
Operating income was $56 million in the third quarter of 2023, up 17% over the same period last year, related primarily to higher gross margins. As a percentage of sales, operating income margin was 6%, up 90 basis points compared to the same period last year
Office Depot Division
Leading provider of retail consumer and small business products and services distributed via Office Depot and OfficeMax retail locations and an award-winning eCommerce presence
Reported sales were $1.0 billion in the third quarter of 2023, down 12% compared to the prior year period partially due to 71 fewer retail outlets in service associated with planned store closures, as well as lower demand relative to last year in certain product categories, softer back-to-school seasonal demand, and lower online sales. The Company closed 14 retail stores in the quarter and had 938 stores at quarter end. Sales were down approximately 6% on a comparable store basis
Stronger sales of copy and print services were more than offset by lower sales in supplies, technology, and other categories
Store and online traffic were lower year over year due to a greater percentage of customers having returned to the office post pandemic, as well as weaker macroeconomic activity
Operating income was $66 million in the third quarter of 2023, compared to operating income of $83 million during the same period last year, driven primarily by the flow through impact from lower sales. As a percentage of sales, operating income was 7%, flat compared to the same period last year.
Veyer Division
Veyer is a supply chain, distribution, procurement and global sourcing operation with over 35 years of experience and proven leadership, supporting Office Depot and ODP Business Solutions, as well as third-party customers. Veyer’s assets and capabilities include 8 million square feet of infrastructure through a nationwide network of distribution centers, cross-docks, and other facilities throughout the United States; a global sourcing presence in Asia; a large private fleet of vehicles; and next-day delivery to 98.5% of US population
In the third quarter of 2023, Veyer provided strong support for its internal customers, ODP Business Solutions and Office Depot, as well as for its third-party customers, generating sales of $1.3 billion
Operating income was $10 million in the third quarter of 2023, up from $9 million in the prior year period related to the favorable impacts of higher sales to external third parties and lower product costing
In the quarter relative to last year, sales and EBITDA generated from third party customers was up 57% and 119% respectively, resulting in sales of approximately $11 million and EBITDA of $3 million in the quarter
Varis Division
Varis is a tech-enabled B2B indirect procurement marketplace launched in the fourth quarter of 2022, which provides buyers and suppliers a seamless way to transact through the platform’s consumer-like buying experience and advanced spend management tools
Successfully launched the platform in the fourth quarter of 2022; adding and on-boarding new customers, incorporating feedback, and adding new features and capabilities to the platform
Varis generated revenues in the third quarter of 2023 of $2 million, flat compared to the third quarter of 2022
Operating loss was $17 million, flat compared to the third quarter of 2022, as the division continued to enhance its platform and onboard new customers
Share Repurchases
The Company continued to execute under its previously announced $1 billion share repurchase authorization, available through year-end 2025. During the third quarter of 2023, the Company repurchased 659 thousand shares at a cost of $32 million. Since the inception of the authorization beginning in November 2022, the Company has repurchased 9 million shares for approximately $420 million.
The number of shares to be repurchased in the future and the timing of such transactions will depend on a variety of factors, including market conditions, regulatory requirements, and other corporate considerations. The current authorization could be suspended or discontinued at any time as determined by the Board of Directors.
Balance Sheet and Cash Flow
As of September 30, 2023, ODP had total available liquidity of approximately $1.2 billion, consisting of $384 million in cash and cash equivalents and $771 million of available credit under the Third Amended Credit Agreement. Total debt was $173 million.
For the third quarter of 2023, cash generated by operating activities of continuing operations was $112 million, which included $3 million in restructuring and other spend, compared to cash provided by operating activities of continuing operations of $163 million in the third quarter of the prior year, which included $22 million in restructuring and other spend. The year-over-year change in operating cash flow is largely related to the timing of certain working capital items.
Capital expenditures in the third quarter of 2023 and 2022 were $25 million, reflecting continued growth investments in the Company’s digital transformation, distribution network, and eCommerce capabilities. Adjusted Free Cash Flow(3) was $89 million in the third quarter of 2023, compared to $160 million in the prior year period.
“I would like to recognize our entire team for their commitment and dedication in managing inventory and working capital, which has resulted in another quarter of strong cash flow generation,” said Anthony Scaglione, executive vice president and chief financial officer of The ODP Corporation. “As we work to close out the year, we maintain our disciplined approach, focusing on managing costs, maximizing cash flow, and executing our capital allocation plan,” Scaglione added.
Updated 2023 Expectations
“Our team’s unwavering commitment to delivering value is evident in our compelling customer proposition, strong free cash flow generation, and strategic capital allocation for the benefit of our shareholders,” highlighted Vassalluzzo. “While we acknowledge the influence of the challenging macroeconomic environment on consumer and business activity, we remain steadfast in our dedication to driving long-term value within our business through effective execution of our three horizons strategy.”
The Company’s full year guidance for 2023 included in this release includes non-GAAP measures, such as Adjusted EBITDA, Adjusted Operating Income, Adjusted Earnings per Share and Adjusted Free Cash Flow. These measures exclude charges or credits not indicative of core operations, which may include but not be limited to merger integration expenses, restructuring charges, acquisition-related costs, executive transition costs, asset impairments and other significant items that currently cannot be predicted without unreasonable efforts. The exact amount of these charges or credits are not currently determinable but may be significant. Accordingly, the Company is unable to provide equivalent GAAP measures or reconciliations from GAAP to non-GAAP for these financial measures without unreasonable effort.
The Company is updating its full year guidance for 2023 as follows:
Previous 2023 Guidance
Updated 2023 Guidance
Sales
Approximately $8 billion
Revised to $7.8 – $7.9 billion
Adjusted EBITDA
$400 – $430 million
Affirmed
Adjusted Operating Income
$270 – $300 million
Revised to $280 – $310 million
Adjusted Earnings per Share(*)
$5.00 – $5.30 per share
Revised to $5.30 – $5.60 per share
Adjusted Free Cash Flow(**)
$200 – $230 million
Affirmed
Capital Expenditures
$100 – $120 million
Affirmed
*Adjusted Earnings per Share (EPS) guidance for 2023 includes tax benefits related to R&D and employee-related tax credits and includes expected impact from share repurchases
**Adjusted Free Cash Flow is defined as cash flows from operating activities less capital expenditures excluding cash charges associated with the Company’s Maximize B2B Restructuring and expenses incurred in connection with our previously planned separation of the consumer business and re-alignment
“Our year-to-date performance speaks to the resilience of our team and the strength of our low-cost business model and capital allocation approach,” said Scaglione. “While the weaker macroeconomic conditions have impacted the level of consumer and business activity creating top-line headwinds, our continued focus on operational excellence has us well positioned to continue driving strong operating results as we close out the year. Our updated guidance assumes a consistent overall macroeconomic environment and reflects our year-to-date revenue trends, while increasing our outlook for adjusted operating income and adjusted EPS.
Our increased adjusted EPS outlook also assumes a lower full-year effective tax rate driven by the execution of certain tax credits, lower than anticipated interest expense associated with projected intra-quarter ABL borrowings, and the impact from our continued share buyback activity,” Scaglione added.
The ODP Corporation will webcast a call with financial analysts and investors on November 8, 2023, at 9:00 am Eastern Time, which will be accessible to the media and the general public. To listen to the conference call via webcast, please visit The ODP Corporation’s Investor Relations website at investor.theodpcorp.com. A replay of the webcast will be available approximately two hours following the event.
(1)
As presented throughout this release, adjusted results represent non-GAAP financial measures and exclude charges or credits not indicative of core operations and the tax effect of these items, which may include but not be limited to merger integration, restructuring, acquisition costs, and asset impairments. Reconciliations from GAAP to non-GAAP financial measures can be found in this release as well as on the Company’s Investor Relations website at investor.theodpcorp.com.
(2)
As used in this release, Free Cash Flow is defined as cash flows from operating activities less capital expenditures. Free Cash Flow is a non-GAAP financial measure and reconciliations from GAAP financial measures can be found in this release as well as on the Company’s Investor Relations website at investor.theodpcorp.com.
(3)
As used in this release, Adjusted Free Cash Flow is defined as Free Cash Flow excluding cash charges associated with the Company’s Maximize B2B Restructuring, and expenses incurred in connection with our previously planned separation of the consumer business and re-alignment. Adjusted Free Cash Flow is a non-GAAP financial measure and reconciliations from GAAP financial measures can be found in this release as well as on the Company’s Investor Relations website at investor.theodpcorp.com.
About The ODP Corporation
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 omni-channel presence, which includes 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 ODP Business Solutions, LLC; Office Depot, 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.
This communication may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements or disclosures may discuss goals, intentions and expectations as to future trends, plans, events, results of operations, cash flow or financial condition, the potential impacts on our business due to the unknown severity and duration of the COVID-19 pandemic, or state other information relating to, among other things, the Company, based on current beliefs and assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as “anticipate,” “believe,” “plan,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “expectations”, “outlook,” “intend,” “may,” “possible,” “potential,” “predict,” “project,” “propose” or other similar words, phrases or expressions, or other variations of such words. These forward-looking statements are subject to various risks and uncertainties, many of which are outside of the Company’s control. There can be no assurances that the Company will realize these expectations or that these beliefs will prove correct, and therefore investors and stakeholders should not place undue reliance on such statements.
Factors that could cause actual results to differ materially from those in the forward-looking statements include, among other things, highly competitive office products market and failure to differentiate the Company from other office supply resellers or respond to decline in general office supplies sales or to shifting consumer demands; competitive pressures on the Company’s sales and pricing; the risk that the Company is unable to transform the business into a service-driven, B2B platform that such a strategy will not result in the benefits anticipated; the risk that the Company will not be able to achieve the expected benefits of its strategic plans, including its strategic shift to maintain all of its businesses under common ownership; the risk that the Company may not be able to realize the anticipated benefits of acquisitions due to unforeseen liabilities, future capital expenditures, expenses, indebtedness and the unanticipated loss of key customers or the inability to achieve expected revenues, synergies, cost savings or financial performance; the risk that the Company is unable to successfully maintain a relevant omni-channel experience for its customers; the risk that the Company is unable to execute the Maximize B2B Restructuring Plan successfully or that such plan will not result in the benefits anticipated; failure to effectively manage the Company’s real estate portfolio; loss of business with government entities, purchasing consortiums, and sole- or limited-source distribution arrangements; failure to attract and retain qualified personnel, including employees in stores, service centers, distribution centers, field and corporate offices and executive management, and the inability to keep supply of skills and resources in balance with customer demand; failure to execute effective advertising efforts and maintain the Company’s reputation and brand at a high level; disruptions in computer systems, including delivery of technology services; breach of information technology systems affecting reputation, business partner and customer relationships and operations and resulting in high costs and lost revenue; unanticipated downturns in business relationships with customers or terms with the suppliers, third-party vendors and business partners; disruption of global sourcing activities, evolving foreign trade policy (including tariffs imposed on certain foreign made goods); exclusive Office Depot branded products are subject to additional product, supply chain and legal risks; product safety and quality concerns of manufacturers’ branded products and services and Office Depot private branded products; covenants in the credit facility; general disruption in the credit markets; incurrence of significant impairment charges; retained responsibility for liabilities of acquired companies; fluctuation in quarterly operating results due to seasonality of the Company’s business; changes in tax laws in jurisdictions where the Company operates; increases in wage and benefit costs and changes in labor regulations; changes in the regulatory environment, legal compliance risks and violations of the U.S. Foreign Corrupt Practices Act and other worldwide anti-bribery laws; volatility in the Company’s common stock price; changes in or the elimination of the payment of cash dividends on Company common stock; macroeconomic conditions such as higher interest rates and future declines in business or consumer spending; increases in fuel and other commodity prices and the cost of material, energy and other production costs, or unexpected costs that cannot be recouped in product pricing; unexpected claims, charges, litigation, dispute resolutions or settlement expenses; catastrophic events, including the impact of weather events on the Company’s business; the discouragement of lawsuits by shareholders against the Company and its directors and officers as a result of the exclusive forum selection of the Court of Chancery, the federal district court for the District of Delaware or other Delaware state courts by the Company as the sole and exclusive forum for such lawsuits; and the impact of the COVID-19 pandemic on the Company’s business. The foregoing list of factors is not exhaustive. Investors and shareholders should carefully consider the foregoing factors and the other risks and uncertainties described in the Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the U.S. Securities and Exchange Commission. The Company does not assume any obligation to update or revise any forward-looking statements.
FORT WAYNE, Ind., Nov. 01, 2023 (GLOBE NEWSWIRE) — Vera Bradley, Inc. (Nasdaq: VRA) (the “Company”) today announced that it plans to report results for the third quarter ended October 28, 2023 at 8:00 a.m. Eastern Time on Wednesday, December 6, 2023.
The Company will host a conference call to discuss its financial results at 9:30 a.m. Eastern Time that same day. A live webcast of the conference call will be available on the Investor Relations section of the Company’s website, www.verabradley.com. Alternatively, interested parties may dial into the call at (888) 204-4368, and enter the access code 7089328. A replay will be available shortly after the conclusion of the call and remain available through December 20, 2023. To access the recording, listeners should dial (844) 512-2921, and enter the access code 7089328.
ABOUT VERA BRADLEY, INC.
Vera Bradley, Inc. operates two unique lifestyle brands – Vera Bradley and Pura Vida. Vera Bradley and Pura Vida are complementary businesses, both with devoted, emotionally connected, and multi-generational female customer bases; alignment as causal, comfortable, affordable, and fun brands; positioning as “gifting” and socially-connected brands; strong, entrepreneurial cultures; a keen focus on community, charity, and social consciousness; multi-channel distribution strategies; and talented leadership teams aligned and committed to the long-term success of their brands.
Vera Bradley, based in Fort Wayne, Indiana, is a leading designer of women’s handbags, luggage and other travel items, fashion and home accessories, and unique gifts. Founded in 1982 by friends Barbara Bradley Baekgaard and Patricia R. Miller, the brand is known for its innovative designs, iconic patterns, and brilliant colors that inspire and connect women unlike any other brand in the global marketplace.
In July 2019, Vera Bradley, Inc. acquired a 75% interest in Creative Genius, Inc., which also operates under the name Pura Vida Bracelets (“Pura Vida”). Pura Vida, based in La Jolla, California, is a digitally native, highly engaging lifestyle brand founded in 2010 by friends Paul Goodman and Griffin Thall. Pura Vida has a differentiated and expanding offering of bracelets, jewelry, and other lifestyle accessories. The Company acquired the remaining 25% of Pura Vida in January 2023.
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today announced that its board of directors has declared a quarterly cash dividend of $0.075 per share. The dividend will be paid on December 6, 2023, to stockholders of record as of the close of business on November 15, 2023.
“This is the Company’s 24th quarterly cash dividend since it began paying dividends in 2018. The Company’s dividend has become an important part of our capital allocation strategy and we remain committed to supporting our quarterly dividend with our robust free cash flow. At the current stock price, on an annualized basis, our shareholders are receiving an almost 6% yield on their investment,” said Tom Tedford, President and Chief Executive Officer of ACCO Brands.
About ACCO Brands Corporation
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.
LAKE ZURICH, Ill.–(BUSINESS WIRE)– ACCO Brands Corporation (NYSE: ACCO) today announced that it will release its third quarter 2023 earnings after the market close on November 2, 2023. The Company will host a conference call and webcast to discuss the results on November 3 at 8:30 a.m. ET. The webcast can be accessed through the Investor Relations section of www.accobrands.com and will be available for replay.
About ACCO Brands Corporation
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.
Christopher McGinnis Investor Relations (847) 796-4320
The US housing market continues to show signs of a significant downturn, with existing home sales in September dropping to the slowest pace since October 2010. This marks a 15.4% decline compared to September 2022, according to new data from the National Association of Realtors (NAR).
The sharp drop in home sales highlights how rising mortgage rates and declining affordability are severely impacting the housing market. The average 30-year fixed mortgage rate now sits around 8%, more than double what it was just a year ago. This rapid surge in borrowing costs has priced many buyers out of the market, especially first-time homebuyers.
Only 27% of September home sales went to first-time buyers, well below the historical norm of 40%. Many simply cannot afford today’s high home prices and mortgage payments. As a result, sales activity has fallen dramatically. The current sales pace of 3.96 million units annualized is down markedly from over 6 million just two years ago, when rates were around 3%.
At the same time, inventory remains extremely tight. There were just 1.13 million existing homes available for sale at the end of September, an over 8% decline from last year. This persistent shortage of homes for sale continues to put upward pressure on prices. The median sales price in September hit $394,300, up 2.8% from a year ago.
While higher prices are squeezing buyers, they are not denting demand enough to significantly expand inventory. Many current homeowners are reluctant to sell and give up their ultra-low mortgage rates. This dynamic is keeping the market undersupplied, even as sales cool.
Not all buyers are impacted equally by higher rates. Sales have held up better on the upper end of the market, while declining sharply for mid-priced and affordable homes. This divergence reflects that high-end buyers often have more financial flexibility, including the ability to purchase in cash.
All-cash sales represented 29% of transactions in September, up notably from 22% a year earlier. Wealthier buyers with financial assets can better absorb higher borrowing costs. In contrast, first-time buyers and middle-income Americans are being squeezed the most by rate hikes.
Looking ahead, the housing slowdown is likely to persist and potentially worsen. Mortgage applications are now at their lowest level since 1995, signaling very weak demand ahead. And while inflation has eased slightly, the Federal Reserve is still expected to continue raising interest rates further to combat it.
Higher rates mean reduced affordability and housing activity, especially if home prices remain elevated due to limited inventory. This perfect storm in the housing market points to significant headwinds for the broader economy going forward.
The housing sector has historically been a key driver of economic growth in the US. But with sales and construction activity slowing substantially, it may act as a drag on GDP growth in coming quarters. Combined with declining affordability, fewer homes being purchased also means less spending on furniture, renovations, and other housing-related items.
Some analysts believe the Fed’s aggressive rate hikes will ultimately tip the economy into a recession. The depth of the housing market downturn so far this year does not bode well from a macroeconomic perspective. It signals households are pulling back materially on major purchases, which could contribute to a broader economic contraction.
While no significant recovery is expected in the near-term, lower demand could eventually help rebalance the market. As sales moderate, competitive bidding may ease, taking some pressure off prices. And if economic conditions worsen substantially, the Fed may again reverse course on interest rates. But for now, the housing sector appears poised for more weakness ahead. Homebuyers and investors should brace for ongoing volatility and uncertainty.
U.S. retail sales rose an unexpectedly robust 0.7% in September, surpassing economist forecasts of a flat or negative number. The solid spending data provides a dose of optimism that the economy can achieve a soft landing amidst high inflation and aggressive Fed rate hikes.
September’s gains were broad-based across categories like autos, gasoline, furniture, clothing, hobbies, and food services. The growth comes even as inflation persists at elevated levels, with the September Consumer Price Index report showing prices climbed 8.2% year-over-year.
However, the 0.4% monthly CPI increase was smaller than anticipated. This potentially indicates inflationary pressures are beginning to gradually ease.
Markets rallied on the retail sales beat, interpreting it as a sign of consumer resilience despite inflation chipping away at budgets. Stocks rose on hopes a soft landing—where the Fed engineers an economic cooldown without triggering a recession—appears more plausible.
Retail spending has seesawed in recent months, decreasing 0.4% in August as high prices at the pump drained consumer budgets. But gas prices have since moderated, alleviating some of this pressure. This freed up disposable income in September, evidenced by solid auto sales and increases in discretionary categories.
The better-than-expected data implies consumers still have some power to prop up the economy, though inflation remains a challenge. Prices dipped from the previous month’s 8.3% annual increase but continue running severely above the Fed’s 2% target. This explains why the central bank is almost certain to enact another large interest rate hike in early November.
Firms are bracing for a potential downturn, with many announcing hiring freezes and cost cuts. However, the job market has yet to take a significant hit, which would severely impair consumer spending power. As long as individuals keep spending reasonably well, it makes a soft landing more feasible.
Looking ahead, the path for retail sales and inflation remains highly uncertain. More data will be required to determine if September’s retail boost was an anomaly or the start of more sustainable momentum. Inflation similarly needs to keep dropping before proclaiming victory.
But for now, September’s numbers provide a dose of positivity that the economy is not yet on the brink of cratering into recession. Consumers are weathering the inflation storm better than feared, aided by falling gas prices and healthy job gains.
This means the Fed can continue ratcheting up interest rates with less risk of immediately crashing growth. However, policymakers are unlikely to declare mission accomplished and halt hikes anytime soon.
For the soft landing narrative to play out, retail strength and inflation moderation will need to persist over coming months. September offered promising signs, but more evidence is required to confidently say a harsh recession is avoidable. The Fed will be monitoring data closely to ensure its forceful actions steer the economy in the right direction.
Consumer inflation accelerated more than expected in September due largely to intensifying shelter costs, putting further pressure on household budgets and keeping the Federal Reserve on high alert.
The consumer price index (CPI) increased 0.4% last month after rising 0.1% in August, the Labor Department reported Thursday. On an annual basis, prices were up 3.7% through September.
Both the monthly and yearly inflation rates exceeded economist forecasts of 0.3% and 3.6% respectively.
The higher than anticipated inflation extends the squeeze on consumers in the form of elevated prices for essentials like food, housing, and transportation. It also keeps the Fed under the microscope as officials debate further interest rate hikes to cool demand and restrain prices.
The main driver behind the inflation uptick in September was shelter costs. The shelter index, which includes rent and owners’ equivalent rent, jumped 0.6% for the month. Shelter costs also posted the largest yearly gain at 7.2%.
On a monthly basis, shelter accounted for over half of the total increase in CPI. Surging rents and housing costs reflect pandemic trends like strong demand amid limited supply.
“Just because the rate of inflation is stable for now doesn’t mean its weight isn’t increasing every month on family budgets,” noted Robert Frick, corporate economist at Navy Federal Credit Union. “That shelter and food costs rose particularly is especially painful.”
Energy and Food Costs Also Climb
While shelter led the inflation surge, other categories saw notable increases as well in September. Energy costs rose 1.5% led by gasoline, fuel oil, and natural gas. Food prices gained 0.2% for the third consecutive month, with a 6% jump in food away from home.
On an annual basis, energy costs were down 0.5% but food was up 3.7% year-over-year through September.
Used vehicle prices declined 2.5% in September but new vehicle costs rose 0.3%. Overall, transportation services inflation eased to 0.9% annually in September from 9.5% in August.
Wage Growth Lags Inflation
Rising consumer costs continue to outpace income growth, squeezing household budgets. Average hourly earnings rose just 0.2% in September, not enough to keep pace with the 0.4% inflation rate.
That caused real average hourly earnings to fall 0.2% last month. On a yearly basis, real wages were up only 0.5% through September—a fraction of the 3.7% inflation rate over that period.
American consumers have relied more heavily on savings and credit to maintain spending amid high inflation. But rising borrowing costs could limit their ability to sustain that trend.
Fed Still Focused on Inflation Fight
The hotter-than-expected CPI print keeps the Fed anchored on inflation worries. Though annual inflation has eased from over 9% in June, the 3.7% rate remains well above the Fed’s 2% target.
Officials raised interest rates by 75 basis points in both September and November, pushing the federal funds rate to a range of 3-3.25%. Markets expect another 50-75 basis point hike in December.
Treasury yields surged following the CPI report, reflecting ongoing inflation concerns. Persistently high shelter and food inflation could spur the Fed to stick to its aggressive rate hike path into 2023.
Taming inflation remains the Fed’s number one priority, even at the risk of slowing economic growth. The latest CPI data shows they still have work to do on that front.
All eyes will now turn to the October and November inflation reports heading into the pivotal December policy meeting. Further hotter-than-expected readings could force the Fed’s hand on more supersized rate hikes aimed at cooling demand and prices across the economy.
Legendary German footwear company Birkenstock priced its highly anticipated initial public offering at $46 per share on Tuesday, at the lower end of its projected range of $44 to $49 per share.
The conservative pricing comes as investors are displaying caution towards new public offerings in the face of market volatility. At $46 per share, Birkenstock would raise approximately $1.5 billion in proceeds and gain a valuation of $8.6 billion.
The sandal maker is slated to begin trading Wednesday on the New York Stock Exchange under the ticker symbol “BIRK.”
Birkenstock is going public at an intriguing moment for the footwear industry, as major players like Nike and Adidas adapt their offerings to capitalize on surging demand for comfortable, casual styles that became popular during the pandemic.
As a storied brand known for its sandals and clogs, Birkenstock is uniquely positioned to ride this trend. However, questions remain about the nearly 250-year old company’s growth trajectory and valuation.
Built on Heritage, Positioned for Growth
Dating back to 1774, Birkenstock has a long legacy as a comfort-focused footwear brand, securing devotees across the decades with its contoured footbeds and versatile sandal styles. The company lays claim to inventing the original cork footbed.
In recent years, Birkenstock has experienced a resurgence in popularity, spearheaded by its iconic Boston clogs. Younger consumers are discovering the brand, enticed by its commitment to quality, comfort and sustainability.
This has fueled strong financials, with Birkenstock generating 1.2 billion euros in revenue in its latest fiscal year, representing a CAGR of 17% over the last decade. Its sales are split nearly evenly between Europe and the Americas.
To stoke further growth, Birkenstock plans to expand its digital presence, having already grown e-commerce sales to just under 20% of total revenue. It will also continue broadening its product portfolio into areas like athletic leisure.
Reasons for Caution Among Investors
However, Birkenstock also holds substantial debt of around 1 billion euros, sparking questions about its financial profile.
Additionally, the company conceded in its prospectus that it has “identified material weaknesses in our internal control over financial reporting” – never reassuring words for potential investors.
Some analysts argue that Birkenstock’s projected valuation range of up to $5 billion was simply too optimistic, given the market environment. The tepid pricing indicates investors are unwilling to take an exuberant bet on the storied brand.
Many also point to the fiercely competitive footwear arena, where Birkenstock must compete with a range of established casual brands and new direct-to-consumer upstarts. While Birkenstock enjoys enviable brand cachet, it may lack the scale and resources of giants like Nike and Adidas.
The Road Ahead
While Birkenstock took a conservative approach with its IPO pricing, the offering will still generate a substantial cash infusion to fuel the company’s expansion.
The true test will be whether Birkenstock can sustain momentum among younger demographics while defending its turf against deep-pocketed rivals. Its ultimate post-IPO performance will be determined by strategic decisions in areas like brand positioning, product innovation, and digital sales.
But with almost 250 years of history behind it, few companies can claim a legacy comparable to Birkenstock’s. This pedigree provides confidence that the brand has staying power, whatever public market challenges may arise. For long-term investors, Birkenstock remains a compelling story combining heritage and growth.
Food delivery app DoorDash announced it will transfer its stock exchange listing from the New York Stock Exchange to the Nasdaq. The company will begin trading on the Nasdaq Global Select Market under the ticker ‘DASH’ starting September 27, 2023.
This represents a high-profile switch that exemplifies the fierce competition between the NYSE and Nasdaq to attract Silicon Valley tech listings. It also reflects shifting sentiments around brand associations and target investor bases.
DoorDash first went public on the NYSE in December 2020 at a valuation of nearly $60 billion. At the time, the NYSE provided the prestige and validation desired by the promising young startup.
However, DoorDash has since grown into an industry titan boasting a market cap of over $30 billion. As a maturing technology company, Nasdaq’s brand image and investor mix provide better positioning.
Tony Xu, co-founder and CEO of DoorDash, emphasized the benefits of the Nasdaq in the company’s announcement. “We believe DoorDash will benefit from Nasdaq’s track record of being at the forefront of technology and progress,” he said.
Nasdaq has built a reputation as the go-to exchange for Silicon Valley tech firms and growth stocks. Big name residents include Apple, Microsoft, Amazon, Tesla, Alphabet, and Facebook parent company Meta.
The exchange is also home to leading next-gen companies like Zoom, DocuSign, Crowdstrike, Datadog, and Snowflake. This creates an environment tailor-made for high-growth tech outfits.
Meanwhile, the NYSE leans toward stalwart blue chip companies including Coca Cola, Walmart, Visa, Walt Disney, McDonald’s, and JPMorgan Chase. The historic exchange tends to attract mature businesses and financial institutions.
Another factor likely influencing DoorDash is the investor makeup across the competing exchanges. Nasdaq generally appeals more to growth-oriented funds and active traders. The NYSE caters slightly more to institutional investors like pension funds, endowments, and passive index funds.
DoorDash’s switch follows ride sharing pioneer Lyft’s jump from Nasdaq to the NYSE exactly one year ago. Like DoorDash, Lyft desired a brand halo as it evolved past its early startup days.
“It’s a signal of us being mature, of us continuing to build a lasting company,” said Lyft co-founder John Zimmer at the time of the company’s NYSE listing.
Jared Carmel, managing partner at Manhattan Venture Partners, believes these exchange transfers reflect the “changing identities of the companies.”
As startups develop into multi-billion dollar giants, they evaluate whether their founding exchange still aligns with their needs and desired perceptions. Brand association and shareholder registration are becoming as important as operational capabilities for listings.
High-flying growth stocks like DoorDash also consider indexes, as the Nasdaq 100 often provides greater visibility and buying power from passive funds tracking the benchmark. Prominent inclusion in those indexes requires trading on Nasdaq.
Whether mature blue chips or emerging Silicon Valley darlings, the rivalry between Nasdaq and NYSE will continue heating up as each exchange vies to attract and retain brand name public companies. With lucrative listing fees on the line, exchanges will evolve branding, services, and capabilities to better cater to their target customers.
The DoorDash switcheroo exemplifies the changing perspectives and motivations influencing exchange selection. As companies lifecycles and personas transform, they reevaluate decisions made during those frenetic early IPO days.
Microsoft’s proposed $68.7 billion acquisition of Activision Blizzard has the potential to completely transform the gaming landscape. While regulators have scrutinized the deal over competition concerns, the merger could bring tremendous benefits to Microsoft, Activision, and the broader video game industry.
For Microsoft, owning Activision Blizzard will expand its catalog of exclusive titles and strengthen its position in the rapidly growing cloud and mobile gaming markets. Activision’s stable of popular franchises, including Call of Duty, World of Warcraft, and Overwatch, will give Microsoft’s Xbox platform exclusive access to some of the most iconic brands in gaming.
The deal also bolsters Microsoft’s Game Pass subscription service. By adding Activision games into the Game Pass library, Microsoft could attract millions of new subscribers. Game Pass now has over 25 million subscribers, and Activision’s titles provide strong incentive for even more gamers to sign up.
Microsoft also aims to leverage Activision’s titles to boost its cloud gaming efforts. Cloud gaming allows players to stream games over the internet, without needing expensive hardware. Microsoft’s Project xCloud trails behind competitors, but owning rights to Activision’s diverse lineup of games could help close the gap with rivals.
For Activision Blizzard, the deal provides much-needed stability after a rocky couple of years. The company faced intense backlash over allegations of sexual harassment and discrimination against female employees. Activision also lost favor with gamers over accusations of declining game quality. Joining forces with Microsoft gives Activision renewed focus along with the resources to potentially revitalize its culture and game development efforts.
The merger can also reinvigorate Activision’s floundering esports leagues. Microsoft brings immense expertise in managing leagues like the NBA 2K League. With dedicated support, Activision’s Overwatch League and Call of Duty League can get back on track to engage fans.
More broadly, the deal validates the tremendous growth potential of the $200 billion gaming market. Investors originally balked at the $68.7 billion price tag, which was nearly a 50% premium over Activision’s market value. However, Microsoft likely sees this as a long-term investment, as analysts forecast the gaming sector to expand to over $300 billion by 2027.
While there are understandable concerns about one company gaining so much influence, Microsoft has committed to keeping Activision games available across multiple platforms. The tech giant also faces strong incentives to continue investing in blockbuster franchises like Call of Duty rather than making them Xbox exclusives.
After months in limbo, the deal now appears to be back on track for completion in late 2023 or early 2024. Assuming it passes the final regulatory hurdles, this acquisition has the scope to reshape gaming for players and developers alike. By bringing together two titans of the industry, the new Microsoft-Activision partnership could help unlock gaming’s true potential.
Casino and hotel operator MGM Resorts tumbled last week after revealing it was hit by a data breach impacting over 10 million former guests. The hack showcases the cyber risks facing hospitality firms and dragged down related stocks as investors weighed the potential fallout.
MGM shares dropped over 4% following its disclosure of the breach as investors reacted to the cyberattack. The stock slide reflected concerns over potential costs from lawsuits, technical remedies, and reputational damage.
The attack also stoked fears of similar incidents across the broader hospitality sector. Airline, cruise, and casino stocks all declined as analysts noted cyber threats facing the industry. Leisure companies handle vast customer data and suffer from downtime, making them prime hacker targets.
Broader equity markets proved resilient to the MGM incident. But cybersecurity stocks rallied on expectations companies may now invest more in protecting data and systems going forward. Top gainers included cyber firms Palo Alto Networks and CrowdStrike.
The MGM breach follows several recent high-profile hacks of casinos and gaming firms. The frequency of attacks has put the industry on notice. New Nevada regulations now require prompt breach disclosures from casinos. Once inside a network, hackers can often access customer financial data. Small casinos have paid millions in ransoms to regain control of systems.
While the MGM breach didn’t significantly sway major indexes, it highlights the dangers posed by cyber criminals. A larger incident paralyzing critical infrastructure could certainly roil markets. This incident is an important reminder of the growing cyber threats facing corporations and customers alike in today’s digitally connected world.
