Making up for lost sales (Future Publishing/Getty Images)
Making up for lost sales (Future Publishing/Getty Images)
T. Swift fans can’t get enough of her record-breaking Grammys night: lip-readers on TikTok are analyzing what Swift and other celebs said during audio-free moments. Experts warn that a bias for hot goss could make their readings spicier than reality.
The Dow and S&P 500 had a case of the Monday blues, retreating from the record highs they hit on Friday (relatable). Investors are expecting more than six weeks of interest-rate winter, after Punxsutawney Powell suggested once again that cuts likely wouldn’t happen next month. Traders’ bets on a cut in March sank to 17% — from 64% a month ago.
Beauty blues… Estée Lauder may’ve topped earnings estimates yesterday, but the results were far from pretty. FYI: Estée houses big name brands like MAC, Bobbi Brown, and Tom Ford. The world’s second-largest beauty biz saw quarterly sales dip 7% and earnings slide 43%, citing the Israel-Hamas war and chilly China demand. Asia makes up a third of Estée’s sales, and the company lowered its yearly profit forecast. Still:
Beauty counterintuitive: Estée’s stock jumped 12% yesterday after the cosmetics powerhouse announced plans to let go of 3K+ workers. It hopes its restructuring program will eventually help it save up to $500M a year.
Meltdown on the mainland… China has the world’s second-largest cosmetics market (worth ~$52B), but sales have been sliding as millions of shoppers forgo pricey beauty hauls as their economy struggles to recover. LVMH's beauty biz (which includes brands like Benefit and Fenty) also saw sales slide in the first half of 2023. And luxe skincare brand Shiseido slashed its annual profit forecast in November on slow China demand.
Different shades: Drugstore biggies like L'Oréal and E.l.f. (which reports today) have fared better thanks to resilient demand in their key markets of Europe and North America.
It’s hard making up for a top customer… It isn’t just China's sluggish economy weighing down sales: global conglomerates aren’t as able to keep up with local trends. Smaller Chinese beauty brands are grabbing market share from corporate giants by advertising on Douyin (TikTok’s Chinese sister app) and quickly adapting to viral cosmetic trends like redness creams. China’s geopolitical beef with the West is also leading some patriotic consumers to shop domestic.
Tech’s running it back… on its “year of efficiency.” Snap announced it would lay off 10% of its workforce (~540 employees). Snap — which is set to report earnings today — joined dozens of tech cos that’ve recently reduced headcount. Power players including Amazon, Google, and Microsoft have laid off 33K workers so far this year — more tech cuts than the second half of 2023. This year’s notable difference: a lot of the companies announcing layoffs are #thriving.
Before: Tech’s cuts last year came after the Fed hiked interest rates seven times in 2022 (recall: recession jitters were high).
Now: Rates have held steady since July, and last month the US added 353K jobs (almost twice what economists had expected). Moreover, Big Tech just reported blockbuster earnings. Meta tripled its profit, and Microsoft and Google notched record sales.
Tech’s new playbook… cut and sprint. Tech optimism has roared back — the Nasdaq is up 30%+ over the past year — but many of the industry’s issues remain, including pandemic overhiring. Despite all the gloom, Apple, Meta, Amazon, Microsoft, and Google still employ 71% more people than they did prepandemic. Google CEO Pichai hinted that rolling layoffs weren’t likely to end anytime soon, and Meta boss Zuckerberg said that the company’s leaner structure is here to stay.
Cutting costs comes with added costs… Techies have boosted profits by slashing payrolls, but overall spending remains high — though now it’s being funneled into multibillion-dollar AI investments instead of new hires. For the first time, some tech cos like Meta are starting to cite AI innovation as a factor in staff reductions. The downside: cuts can hurt productivity, and they aren’t free. Google’s recent layoffs will cost it $3B in severance expenses.
🌋 When crypto gains a presidential proponent…
El Salvador reelected its pro-bitcoin president to his second five-year term with what he said was more than 85% of the vote. President Nayib Bukele is a millennial who made BTC legal tender and promised to bring investment $$ to the country with bitcoin “volcano bonds.” His pro-crypto stance has given hope to an industry desperate for friendly officials. But human-rights advocates say Bukele’s anti-gang efforts, which imprisoned 75K people without charges, are anti-democratic.
Fried: McDonald’s stock fell after the Golden Arches posted slower-than-expected sales growth for the first time in years. McD’s, Starbucks, and other American chains have blamed Middle East turmoil for slower sales.
Covert: Palantir stock spiked 12% after it revealed better-than-expected 20% revenue growth. The secretive software co, which crunches data for gov’t clients like intelligence agencies, said AI was fueling its growth.
Inject: Novo Nordisk said it’ll acquire drug manufacturer Catelent for $16.5B to boost production of Wegovy and Ozempic. The weight-loss-aiding drugs have been selling out as rivals like Eli Lilly’s Mounjaro rise up.
Frozen: Shares of Tyson hit a nine-month high after the US’s biggest meat company served up an earnings beat, courtesy of cost cuts. The frozen-nuggets staple closed five US chicken plants over the past year.
ByAI: Microsoft is teaming up with media co Semafor to develop AI-assisted news stories. The New York Times has sued Microsoft and Open AI over copyright infringement as publishers worry their work’s being used to train bots.
This year’s Super Bowl tickets are the most expensive on record, averaging ~$10K apiece
Annual trade-deficit report
Earnings expected from Eli Lilly, Spotify, Hertz, BP, Toyota, Snap, Ford, Chipotle, Elf Beauty, Amgen, VF Corp, Gilead, H&R Block, and MicroStrategy
Authors of this Snacks own bitcoin and shares of: Alphabet, Amazon, Apple, Eli Lilly, Microsoft, Snap, and Starbucks