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| Here's your daily business briefing. - ✈️ Boeing stocks dip as FAA grounds 737 Max fleet
- 🛒 Carrefour axes Pepsi, Lay's over price hike
- 🥃 China targets French brandy in trade dispute
Thanks for reading!! Shriram
p/Shriram | |
| 1 | | Boeing shares fell up to 9% following the FAA's grounding of multiple Boeing 737 Max 9 planes due to a midair door plug incident at 16,000 feet on an Alaska Airlines flight. The stock partially rebounded, down around 6%, after Boeing issued inspection instructions for the 737 Max 9 to airlines. More: - The stock of Spirit AeroSystems, which produces 737 Max fuselages, plunged 7%, while shares of Alaska Air declined by around 1%.
- As Boeing looks to ramp up Max production, the mishap puts its quality claims under scrutiny.
- Boeing CEO Dave Calhoun has been attempting to rebuild trust following previous incidents, such as deadly collisions and interruptions to the supply chain.
- A total of 171 aircraft worldwide are impacted by the FAA's emergency airworthiness order; notable operators include Alaska and United Airlines.
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| 2 | | One of the biggest grocery chains in the world, Carrefour, is discontinuing several PepsiCo items in France, Italy, Spain, and Belgium because of price rises that it considers unsustainable. 
What the numbers say: PepsiCo expects a slowdown in product price increases in 2024, aligning with overall inflation rates, following two years of sharp hikes on soft drinks, snacks, and packaged foods, according to finance chief Hugh Johnston. In Europe, Carrefour stores in the mentioned countries contribute approximately 0.25% to PepsiCo's global revenue, representing 14% ($9B) in the first nine months of 2023. Relevance: Carrefour's public dispute with PepsiCo over rising prices highlights concerns about the impact of increased costs on retailers and consumers. Carrefour's decision serves as a protest against PepsiCo's price hikes on products like Lay's, Doritos, Cheetos chips, Benenuts snacks, Alvalle gazpacho, Lipton teas, Pepsi, 7Up, and Quaker foods. More data: Carrefour labeled products impacted by shrinkflation about four months before discontinuing certain PepsiCo items. With food-price inflation in France nearing 16% in March 2023, the government has criticized major manufacturers and aims to advocate for lower prices. | | | |
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| 3 | | China, at the request of local liquor producers, launched an anti-dumping investigation into the price of imported brandy from the EU, as announced by the Ministry of Commerce. This is reportedly a response to the European Union's investigation into low-cost Chinese electric vehicles overtaking European markets. More: - The investigation impacts European brandy manufacturers, which lowers the stock prices of luxury goods companies.
- Pernod Ricard's stock decreased about 4%, Rémy Cointreau's stock plunged more than 11%, and LVMH's stock fell 1%.
- The European Commission will work with EU spirits firms during the investigation while evaluating the documentation.
- According to Citi, the nation makes up roughly 30% of Rémy Cointreau's operational earnings and 9% of Pernod Ricard's.
- The action has been speculated to be a reprisal for France's ardent backing of the EU's probe into China's exports of electric vehicles and potential government subsidies.
Zoom Out: - Temporary tariffs of up to 24% were placed on some plastic products imported from China by the European Commission in November.
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| 4 | | Abercrombie & Fitch, American Eagle Outfitters, and Lululemon have revised their fiscal fourth-quarter outlooks after a prosperous holiday season, citing positive sales in November and December, with holiday spending estimates indicating growth. According to Adobe Analytics, online sales in November and December rose 4.9% year-over-year, reaching $222.1B. More: - As of Dec. 30, American Eagle reported around an 8% increase in quarter-to-date revenue, with its namesake and Aerie brands experiencing solid sales growth.
- Abercrombie anticipates a mid-teens rise in net sales and a 15% operating margin for the fiscal fourth quarter, surpassing initial projections.
- According to the CEO of Abercrombie & Fitch, sales for the women's division are predicted to reach all-time highs in the fourth quarter.
- Lululemon slightly revised its fourth-quarter revenue projection, estimating net revenue between $3.17B and $3.19B.
- Mid-February marks the start of the retail earnings season, with complete holiday reports from Lululemon, American Eagle, and Abercrombie anticipated in March.
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| 5 | | Audacy, a prominent radio broadcaster, filed for Chapter 11 bankruptcy in Texas to trim its debt from $1.9B to $350M, citing significant debt and slowed advertising revenue. The move aims to position Audacy for future growth, leveraging its leadership and premium audio content after being delisted from the NYSE in November 2023. More: - The Philadelphia-based corporation, founded in 1968, is among the nation's leading radio broadcasters and controls hundreds of radio stations.
- WFAN Sports Radio, KCBS, and 1010 WINS in New York are all owned by Audacy.
- David Field, the company's CEO, emphasized the ongoing macroeconomic difficulties and the notable decline in radio ad spending over the previous four years.
- Audacy seeks to exit bankruptcy with a robust capital structure, emphasizing its ability to innovate and grow in the audio business while ensuring no impact on advertisers, partners, or employees.
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| 6 | | Theft insurance claims for Hyundai and Kia models spiked by over 1,000% between H1 2020 and H1 2023. Specific models experienced a tenfold increase in thefts over the past three years, with the rate rising from 1.0 per 1,000 in H1 2020 to 11.2 per 1,000 in H1 2023, while the theft rate for other car makes remained stable. More: - Due to their lack of basic auto theft prevention systems, older Hyundai and Kia automobiles manufactured between 2015 and 2019 are especially vulnerable.
- Through social networking sites, particularly TikTok, the stealing technique — using a USB cable's metal tip — spread.
- A $200M settlement was reached between Hyundai and Kia and up to 9 million car owners to resolve complaints about insufficient security measures.
- The high theft rate of these older Hyundai and Kia models has caused auto insurers to decline to cover them in some markets.
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- In 2023, Ford Motor's almost 2 million vehicle sales rose by 7.1% from the previous year, slightly below the industry average, while the F-Series remained America's top-selling vehicle.
- Psychedelic firm Atai, backed by Thiel, plans to inject $50M to acquire around 35% of Beckley, complementing Atai's portfolio of psychoactive compounds.
- Newell Brands, up 3.33%, is set to cut 7% of office roles and shrink its real-estate footprint in an organizational realignment, anticipating annual pretax savings of $65M to $90M, mainly realized this year.
- Tiger Woods' longtime agent, Mark Steinberg, informed CNBC that the golfer, after 27 years of partnership, has made a business decision not to renew with Nike.
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 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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