Nike adapts to shifting market dynamics: Yearly sales outlook revised, shares drop 11%

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December 22, 2023

On Thursday, Nike revised its yearly sales outlook, attributing the adjustment to conservative consumer spending, a less robust online business, increased promotional activities. The company also disclosed its intention to reduce supplies of critical product lines as a cost-management strategy, leading to an 11% decline in its shares.

The company said it aims to achieve $2 billion in savings over the next three years. This objective involves implementing measures such as tightening the supply of certain products, optimizing the supply chain, reducing management layers, and increasing the utilization of automation.

Nike’s wholesale business faces ongoing challenges, with retailers reducing orders due to fluctuating demand. This downturn is evident in online sales, compelling the company to increase promotions to attract dwindling shoppers. Additionally, sales in China have decelerated, reflecting the impact of the stumbling economy.

“We are seeing indications of more cautious consumer behavior around the world,” Nike’s finance chief Matthew Friend said on a post-earnings call.

Nike projected a roughly 1% increase in full fiscal-year revenue, marking a decline from its previous forecast of mid-single-digit percentage growth. According to LSEG data, analysts had anticipated a 3.8% increase.

“Nike’s talking about reducing the number of products … perhaps the company feels there are too many products that are not high-margin and not really generating significant sales,” David Swartz, senior equity analyst at Morningstar, said.

However, Nike also announced the introduction of newer styles aimed at captivating consumers, building upon the success of recent releases such as the Sabrina 1, LeBron 21, and Tatum 1 basketball shoes.

“In an environment like this when the consumer is under pressure and the promotional activity is higher … it’s newness and innovation which causes the consumer to act … that’s what’s going to pull us through a promotional marketplace,” Friend said.

Anticipating a boost in sales, Nike looks forward to the upcoming releases in the GT Cut, Book 1, and Kobe lines scheduled for the next three months.

Nike did not provide specific details on which product franchises it intends to reduce supplies for. However, the company noted that its iconic lines of sneakers, including Air Force 1, Dunk, and Court, were all experiencing strong performance.

The company recorded a total revenue of $13.39 billion in the fiscal second quarter, which concluded on Nov. 30, falling slightly short of estimates at $13.43 billion. Despite this, per-share earnings stood at $1.03, surpassing the expected 85 cents, thanks to lower freight costs and reduced inventories.

The company reported total revenue of $13.39 billion in the fiscal second quarter ending Nov. 30, falling short of estimates of $13.43 billion. Despite this, per-share earnings stood at $1.03, surpassing expectations of 85 cents, thanks to lower freight costs and reduced inventories.

As part of the streamlining, Nike expects around $400 million to $450 million in pre-tax restructuring charges, mainly linked to employee severance costs, in the third quarter.

Nike shares have experienced a gain of less than 5% this year, in contrast to the S&P 500 index, which has rallied by 24%, and rival Adidas, which has seen a notable gain of 52.5%.

McDonald’s in Ohio closed after customer discovers drug pipe in takeout order

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December 22, 2023

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A McDonald’s establishment in Ohio, USA, closed its doors following the discovery of drug paraphernalia in a customer’s takeout order. The incident came to light when the customer anonymously shared the experience on Reddit. According to the post, the customer visited the McDonald’s outlet in Columbus on a Tuesday morning and placed an order for two breakfast meals through the drive-thru window.

Approximately one hour later, the customer revisited McDonald’s after discovering a crack pipe in the bag of food. A crack pipe is commonly employed for smoking crack cocaine, a prohibited narcotic for recreational use in nearly all countries worldwide.

A 20-year-old McDonald’s employee approached the customer’s vehicle to collect his details, as reported by Newsweek. However, the customer chose not to accept a refund and instead informed Franklin County Public Health about his discovery.

On Wednesday, health officials shut down the McDonald’s establishment after discovering multiple violations of health codes, as reported by the Columbus Dispatch.

According to the inspector’s report, construction workers were observed moving unrestrictedly within the restaurant, resulting in the deposition of “construction dust on surfaces of food preparation counters, equipment, and flooring.”

“Beverage service equipment such as soda dispenser, frappucino machine, frozen beverage dispenser, coffee machine had dust, debris, screws, unassembled computer equipment, wooden trim pieces on the top surfaces,” the report stated. “There was no protective barrier between the construction area and the food service area,” it added.

Alex Mendoza, the proprietor of the local McDonald’s franchise, informed Newsweek that the closure of the restaurant was unrelated to the presence of the crack pipe.

“We’ve undertaken a thorough internal review of the customer’s claim. After reviewing security footage and interviewing employees, we’ve found nothing that suggests this item came from the restaurant—but we are continuing to investigate and have contacted local law enforcement to report the matter,” he said.

The outlet has until January 3 to correct the health code violations it has been accused of.

Gauri Khan redefines Grandmama’s Cafe, blending tradition and contemporary chic

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December 22, 2023

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Gauri Khan has joined forces with Co-founders Abhayraj & Simar Kohli, leveraging her skills to reimagine the style of Grandmama’s Cafe.

“I believe in creating spaces that resonate with warmth and timeless elegance. Designing Grandmama’s Cafe was a journey of weaving cherished memories into every corner, crafting an environment where nostalgia meets contemporary comfort. It was about creating a space where memories can naturally happen,” said Gauri Khan.

Gauri Khan Designs seamlessly blends traditional and contemporary elements to craft a captivating environment. This fusion guarantees a timeless atmosphere that mirrors the delightful culinary experiences it presents.

Simar Kohli, Co-Founder, Grandmama’s Cafe, said “We envisioned a living room, a charming escape into nostalgia. Collaborating with Gauri Khan has breathed life into this vision, and we eagerly anticipate our patrons stepping into this enchanting ambience, we want to see them just as charmed and soak in the brilliance.”

The collaboration between Gauri Khan and Grandmama’s Cafe, ingeniously envisioned and brought to life by Bottomline Media under the leadership of Tanaaz Bhatia, exemplifies a seamless fusion of creativity and culinary excellence.

Specializing in establishing strategic alliances between celebrities and brands, creating distinctive intellectual properties (IPs), and formulating campaigns is the expertise of this agency.

Bottomline Media specializes in luxury hospitality, film marketing, digital strategy, celebrity management, as well as facilitating collaborations and promotions with international artists.

Grandmama’s, traditionally a haven of comfort, has now evolved under Gauri Khan’s influence, embracing a renewed identity that seamlessly merges elements from the past with futuristic concepts.

Agritech startup Fasal secures $12 Million in funding round led by TDK Ventures, British International Investment

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December 22, 2023

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Fasal, the agritech startup, announced on Friday that it has secured around $12 million (INR 100 crore) in a funding round, with TDK Ventures and British International Investment (BII) taking the lead.

The funding round also saw participation from additional investors such as ITI Growth Opportunities Fund, Navam Capital, and Aureolis Ventures. Existing investors, including 3one4 Capital, Omnivore, Wavemaker Partners, Genting Ventures, and The Yield Labs Asia Pacific, were also actively involved.

Based in Bengaluru, the startup collaborates with horticulture farmers, offering them patented Internet-of-Things (IoT) crop intelligence technology across 75,000 acres of land. This technology is employed in the cultivation of various crops, including grapes, pomegranates, bananas, apples, chili, and cardamom.

Fasal asserts that farmers within its network have achieved significant sustainability milestones, including an 82.8 billion-liter reduction in irrigation water consumption, a decrease in pesticide usage by 127,426 kilograms, a mitigation of 54,965 metric tons of greenhouse gas emissions, and improvements in yields and quality of up to 30%.

“With this capital infusion, we plan to expand Fasal’s presence from 75,000 acres to 500,000 acres and enable our technology to deliver more to the farmers by providing them access to sustainable crop inputs, farm-level crop insurance, and working capital at lower interest rates,” said Shailendra Tiwari, Founder, and Chief Executive, Fasal.

Fasal said it has enhanced its capabilities to delve deeper into the supply chain with ‘Fasal Fresh,’ a business-to-business marketplace that facilitates the connection between farmers and consumers through retailers and wholesalers.

Siddharth Mehta, investment director, TDK Ventures, said, “Meeting the horticulture farmers and learning about their core problems convinced me that Fasal’s full-stack approach of combining sensors and technology with the marketplace offers a strong value proposition of improving farmer earnings and a strong sustainable impact.” TDK recently deployed funds into energy-tech startup Exponent Energy.

Indigenous spirits shine: India’s liquor exports soar, set to break $1 Billion barrier

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December 22, 2023

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The demand for Indian spirits is soaring, with a surge in the popularity of domestically produced liquor such as Indri, Amrut, and Radico Khaitan’s Rampur. Anticipated to surpass $1 billion soon, India’s alcohol exports to other countries have witnessed substantial growth. According to Rajesh Agrawal, additional secretary in the commerce ministry, the sector’s exports have already reached $230 million from April to October in the fiscal year ending March 31, 2024, compared to $325 million in the previous fiscal year 2022-23.

“The demand for Indian spirits is increasing…It is expected to go beyond $1 billion in the next few years. Indian beverages market is growing very fast and slowly demand for these brands across the world is also picking up,” Agrawal told reporters in New Delhi.

The global market for alcoholic products is currently estimated at around $130 billion, and within this sector, Scotch whisky claims a notable presence by capturing a significant $13 billion share of the world trade.

When asked if free trade agreements of India will help promote these exports, he said, “This is also one of the areas where we are trying to negotiate upon…we are also trying to see the duty concessions that are required in various destinations, we get (that)”.

The condition regarding a product’s qualification as whisky, stipulating a maturation period of no less than three years, is still unresolved.

The Indian industry asserts that due to the warm climate in India, the product matures within one year, yielding comparable results.

“The debate is still on whether we should brand it as Indian whiskey or look for a scotch (brand)…International law in many countries prohibits that (one-year thing). It is an unresolved issue,” he added.

The Confederation of Indian Alcoholic Beverage Companies (CIABC), representing alcoholic beverages makers, has emphasized multiple times, supported by scientific evidence, that extended maturation is not applicable in a warm Indian climate.

“We believe that it is effectively a non-tariff barrier since long maturation increases the cost of Indian products by 30-40 per cent as spirit evaporates 10-15 per cent every year under Indian climate (compared to 1-2 per cent in Europe),” CIABC Director General Vinod Giri has said.

He also mentioned that the cost of capital invested during maturation in India is high, ranging from 8-10 percent per annum, in contrast to the 2-3 percent observed in Europe.

Agrawal said there will be a dedicated wine and spirits section in the upcoming three-day Indus Food show in Greater Noida, Uttar Pradesh. Participating in the event will be over 2,500 global buyers, 5,000 domestic buyers, and 86 retail chains, along with the presence of over 120 foreign exhibitors.

Ajio set to hit profitability this month, marking first online venture within Reliance Retail to attain financial success

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December 22, 2023

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Ajio, the online fashion arm of Reliance Retail, is set to become profitable this month, marking it as the first online venture within the country’s largest retail group to achieve this milestone, as stated by two senior industry executives familiar with the matter.

According to the executives, Ajio is anticipated to report earnings before interest, tax, depreciation, and amortization (EBITDA) in the range of INR 6-8 crore for the month of December.

The company’s attainment of profitability can be attributed to several factors. The prevailing premiumization trend in the market, coupled with Reliance’s extensive international brand portfolio, contributed to an enhancement in the average billing value. Additionally, the strategic approach of fulfilling a significant portion of orders from physical stores in close proximity to the delivery point helped reduce logistic costs. This approach also contributed to a decrease in return rates, further bolstering the company’s financial performance.

“Reliance wanted profitability in Ajio by this fiscal year and it is achieving it in December itself. The focus going forward will be on profitable growth since Reliance doesn’t want to burn money when the business has achieved scale,” one of the executives said.

As of the time of publication, there was no response to an email seeking comment from Reliance Retail.

Reliance launched Ajio in 2017.

Ajio streamlined its marketing expenses by implementing five distinct storefronts tailored for each consumer class. The company established 4,000 stock points to facilitate last-mile fulfillment, utilizing Reliance Retail’s nearby stores for delivery and thereby lowering operational logistic costs. This strategic approach not only improved efficiency but also contributed to a reduction in return rates, dropping from the earlier range of 35-36% to approximately 28% of orders.

Ajio has achieved an annual gross merchandise value of $2 billion, with 51% of its revenue attributed to the Reliance Retail portfolio and the remaining 49% generated from its proprietary and exclusive brands. In the online fashion sector, Ajio competes with Myntra, Amazon, and Flipkart.

Around 15 million people shop for fashion online, while another 30 million make purchases from both online and offline stores.

Planning a boozy bash in Noida? Don’t forget your occasional bar license!

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December 22, 2023

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If you live in Noida or Greater Noida and plan to host a party at home or a community hall where alcohol will be served, it’s recommended to apply for an occasional bar license to stay in accordance with the law. Not having a liquor license for gatherings, even at home or community events, is a violation of regulations and may lead to legal actions, including fines, warned Subodh Kumar Srivastava, District Excise Officer (DEO) for Gautam Buddh Nagar.

To address people’s poor awareness of excise-related rules, authorities have started reaching out to residents’ welfare associations (RWAs) and citizens, informing them about guidelines for procuring occasional licences.

“If anyone is serving liquor with a licence, whether it is liquor meant for sale in Uttar Pradesh or outside the state, it is totally illegal. It will attract action (from the excise department),” Srivastava said.

Occasional licenses for serving alcohol at gatherings are offered in two categories. The first, priced at INR 4,000, is intended for individuals hosting small gatherings such as house parties. The second category, priced at INR 11,000, permits serving alcohol to larger crowds at events held in community halls, restaurants, banquets, and similar venues, according to the information provided.

“Both these occasional licences are valid for one day. Applicants can apply for them on the website — upexciseportal.in — under the category of useful public services,” the DEO said.

He further mentioned that the public outreach efforts by the excise department are yielding positive results, with an increasing number of individuals now applying for occasional bar licenses.

Official statistics reveal that from April 1 to November 30, 2022, a total of 5,820 such licenses were issued. In contrast, during the corresponding period in the current fiscal year, 8,770 licenses were issued, reflecting a 40% increase.

“The department issued 900 occasional bar licences in November alone, which is the highest in recent times for a single month. This also led to huge revenue earning for the government,” Srivastava said.

On the objective behind the policy covering even private celebrations at home, the excise officer said its advantages are multifold.

“First, when you take a licence, it will ensure that the liquor served in a party would be authentic and not illicit. This will also make sure that the applicant buys liquor locally which is meant for consumption only within the state and is not procured from other states, which would cause a revenue loss to the government,” he explained.

The officer added that the department has also issued a helpline number 8882120733 where residents can share information on the consumption of illegal narcotics or drugs, or any other tip-off related to liquor use.

Asked how would excise officials come to know if liquor is being served at someone’s private party at home, Srivastava said the excise department has a widespread network of informers across the district and also gets information through liquor vends and outlets, which notice abnormally high sales.

“Moreover, sometimes neighbours get annoyed and raise an alarm about nuisance at such parties which leads to offenders landing in the excise net,” the officer added.

Beauty brand Plum’s FY23 revenue soars 71%, reaching INR 322 Crore

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December 22, 2023

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Pureplay Skin Sciences Ltd, the maker of beauty products under the brand name Plum, reported a significant 71.3% year-on-year growth in its total revenue for the 2022-23 fiscal year, amounting to INR 322.3 crore. Despite this positive revenue trend, the company also reported a widening net loss at a comparable rate.

In the financial year 2022-23, the net loss rose by 66% to INR 52.9 crore, compared to INR 31.8 crore in the previous year.

The Mumbai-headquartered company registered a total revenue of INR 188.1 crore for the fiscal year 2021-22, primarily driven by product sales on its platform. Demonstrating a substantial growth, its operating revenue surged by 67.8% year-on-year, reaching INR 309 crore.

The expenses for the fiscal year 2022-23 totaled INR 375.5 crore, marking an increase from INR 218.7 crore in the previous year.

Advertising and promotional activities constituted 42.7% of the overall expenses, totaling INR 160.5 crore. Additionally, noteworthy expenditures encompassed employee benefits at INR 31.2 crore, information technology expenses at INR 20.8 crore, and transportation costs amounting to INR 13.0 crore.

The company’s revenue growth aligns with a comparable pattern observed in direct-to-consumer beauty and personal care enterprises. For example, Sugar Cosmetics, an omnichannel beauty company, experienced a remarkable 90% increase in revenue, reaching INR 428.4 crore in the fiscal year 2022-23. Pilgrim, a beauty and personal care company, saw a more than fourfold surge in operating revenue to INR 76.46 crore. Platforms dedicated to selling such products also thrived, as evidenced by Purplle, an online beauty products retailer, which reported a substantial 116% rise in revenue from operations, reaching INR 475 crore in 2022-23.

The industry is capitalizing on a surge in the adoption and demand for beauty and personal care products throughout the nation. As per a collaborative study conducted by Redseer Strategy Consultants and Peak XV Partners, the beauty and personal care market in India is anticipated to achieve a compound annual growth rate of 10% from 2022 to 2027, outpacing global markets and reaching a valuation of $30 billion.

This year, the industry experienced notable funding events, with Pilgrim securing $20 million in a funding round led by Vertex Ventures Southeast Asia and India. Additionally, Purplle successfully concluded a funding round of $40-50 million, comprising both primary and secondary transactions, maintaining a consistent valuation of $1.1 billion, with participation from entities such as Abu Dhabi Investment Authority.

The strong also come at a time when Honasa Consumer Ltd, the parent company of the personal care brand MamaEarth, listed following an initial public offering on October 31. The firm reported a 93% growth in its net profit to INR 29.4 crore for the quarter ended September, on operating revenue of INR 496 crore.

Continue Exploring: Mamaearth IPO Set for October 31, Price Band at INR 308-324/Share

Plum secured its latest funding of $35 million in a round led by A91 Partners, with ongoing support from existing investors Unilever Ventures and Faering Capital. Established in 2013 by Shankar Prasad, the company specializes in offering vegan, toxin-free beauty products spanning skincare, haircare, personal care, and makeup.

Walmart invests $600 Million in Flipkart as e-commerce giant gears up for $1 Billion funding round

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December 22, 2023

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Flipkart, a prominent e-commerce platform supported by Walmart, is reportedly in the process of raising a new funding round of $1 billion, with a substantial commitment of $600 million from the US retail giant.

According to sources cited by ET, the anticipated new funding is expected to value Flipkart at a premium of approximately 5-10% over its last valuation of $33 billion.

The report indicates that in addition to Walmart and current stakeholders, new investors are set to participate in the funding round of the Bengaluru-based e-commerce major.

While Flipkart confirmed Walmart’s investment of $600 million in the company, it emphasized that the remaining details are speculative. Walmart also officially disclosed its new investment in a regulatory filing.

In 2018, Walmart acquired a 77% stake in Flipkart for $16 billion, establishing the company’s valuation at $22 billion. Following the separation of PhonePe from the group last year, Flipkart’s valuation reached $33 billion.

During the six months concluding on July 31, 2023, Walmart invested $3.5 billion to acquire shares of Flipkart from non-controlling stakeholders, including Tiger Global and Accel.

Flipkart significantly contributes to the quarterly earnings performance of the US-based ecommerce giant. According to Walmart’s Q3 2023 earnings statement, its operations in India were affected by the delayed arrival of the festive season and the shift of Flipkart Big Billion Days sales from Q3 last year to Q4 this year.

Continue Exploring: Walmart’s Q3 performance takes a hit as Flipkart’s Big Billion Day sale shifts to Q4

“The timing of Flipkart’s Big Billion Days pressured International sales growth, as the event moved from Q3 last year to Q4 last year. So we expect the timing to be a benefit to Q4’s growth rate for the segment,” Walmart had said.

Meanwhile, Flipkart continues to experience financial losses. In FY23, Flipkart India, the B2B arm of the company, witnessed a standalone net loss widening by over 42% year-on-year, reaching INR 4,845.7 crore. Despite this, its operating revenue saw a 9.7% increase, reaching INR 55,923.9 crore.

In the fiscal year 2022, Flipkart Internet, the marketplace division of the e-commerce giant, also recorded an increase in losses.

Zomato refutes $2 Billion acquisition offer for Shiprocket, asserts focus on existing business amidst market speculation

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December 22, 2023

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Zomato, a major player in the foodtech industry, has dismissed reports suggesting a $2 billion acquisition offer for the logistics startup Shiprocket.

Continue Exploring: Foodtech giant Zomato makes strategic bid for Shiprocket, valuing logistics unicorn at $2 Billion

In a stock exchange filing, the company issued a “caution” to investors regarding inaccurate reports circulating in the market about potential acquisitions. The statement clarified that the company currently has no intentions of pursuing any acquisitions.

“We have noticed that there are certain news articles circulating in the mainstream media with the subject “Zomato offers to acquire Shiprocket for $2 billion”. We deny this statement and would like to caution investors against such incorrect news floating in the market. We remain focused on our existing businesses with no plans for any acquisition at this moment,” said Zomato in a filing with the BSE.

The company provided the clarification as a measure of “abundant caution,” expressing concern about the potential uncertainty that the reports could generate in the market.

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