Nike Just Upped The Ante On Under Armour And Adidas, Plus Nestle Looking To Sell Their Candy Business

by 4 months ago

morning brew

Here’s your hand-crafted Brew for June 16th.  QUOTE OF THE DAY: “No soup for you!” –– Soup Nazi. Soupman, the New York soup shop Seinfeld brought into our hearts and home, is now seeking bankruptcy court protection.

Market Snapshot

  • Major U.S. indexes sunk yesterday as large-cap tech stocks fell again.
  • Oil fell even lower today as concerns mount due to rising crude inventories.
  • The dollar rose to its highest point in two weeks.

World War Foo(d)

Kroger’s feeling more neglected these days than Ethyl’s powdered goat milk in aisle five. Shares dropped 18% Thursday to their lowest point in 15 years after the largest U.S. supermarket chain said heightened competition (we’ll get to this later) would eat away at earnings.

Shares of other grocers tumbled on the news as well.

Example: Whole Foods has been rotting from the inside out. Two years of declining sales have cut shares in half. And those 1,200 new stores they were about to open? Forget about it.

Now tack on a European invasion—Kroger and friends are in for a real treat.

One if by land, two if by sea

German-based supermarket Lidl just opened its first U.S. locations today in a larger plan to open 900 stores in just five years.

And just think: Lidl’s the awkward, nose-picking younger brother to Aldi—another German grocer that has grown its U.S. presence since 1976.

Aldi has 1,600 U.S. stores and plans to invest $5 billion in 900 new ones, plus make hundreds more look nice and pretty.

It’s not getting any better anytime soon

To add insult to injury, Kroger and other food retailers are stuck in the middle of an all-out price war between Wal-Mart and Amazon.

And per its all-too-familiar motto, “Everyday low prices,” Wal-Mart really means it.

The company has been running price-comparison tests in 1,200 stores across the U.S. to guarantee that it has the lowest prices in 80% of head-to-head offerings.

*Amazon slowly shakes its head from left to right*

Bezos’ baby has been running price algorithms to determine the absolute lowest price on any given product across the country and undercutting them.

The bottom line? Kroger and supermarket chains are paying—we’re eating.

Lace ‘Em Up

Yesterday, Nike upped the ante on Under Armour and Adidas by launching its Direct Consumer Offense. It sounds alarming, but we assure you, it’s a good thing.

The $88 billion athletic brand is looking to boost digital sales by streamlining mass product customization and speeding up lead time to delivery. And it’s all to meet the fast-changing insatiable tastes of Nike’s favorite person—you.

In doing so, it will remain laser-focused on the 12 cities that Nike believes will drive 80% of growth until 2020.

Here’s the catch: it’ll be dropping 1,400 of its 70,000 employees along the way.

Now Playing: Bleeding Love

While you were busy head-bobbing to Bieber, Spotify announced a 71% boost in paid subscribers (up to 48 million) in 2016. Sounds impressive, right?

Not quite: Spotify still posted a net loss of $601 million—double last year’s pain—despite 90% of revenue coming from premium members.

In what can only be described as a half-assed Netflix model, whereby all content is purchased and none is created, Spotify remains at the mercy of labels pulling Mr. Wonderful-style royalties…a number totaling $2 billion over the next two years.

Bye Bye, Butterfinger

Americans are increasingly snubbing sugar, and Nestle (+0.43%) is taking note. As the Swiss company looks to shift to a healthier portfolio, it may shed its sweeter U.S. segments to cut costs amidst sluggish global sales.

In the U.S. confectionery market, Nestle only holds an 8.4% market share—as in—it’s probably time to bid adieu to Butterfinger, Baby Ruth and other childhood favorites.

Luckily for us, Nestle doesn’t plan to sell its signature Toll House brand, so our beloved chocolate chip cookies are safe (for now).

What Else Is Happening…

  • Amazon is showing interest in a possible takeover of popular messaging and collaboration startup, Slack.
  • Verizon to absorb $500 million in second quarter pre-tax expenses from Yahoo deal.
  • Amidst billions in liabilities from its defective airbag inflators, Takata will be filing for bankruptcy as early as next week.
  • Fiat Chrysler is recalling 297,000 vehicles because of airbag deployment issues.

Economic Calendar


Water Cooler

Gimme 5…FICO

As of 2015, the average American owned 2.24 credit cards, and that number remains on the rise (not yet at pre-recession levels, though).

But when it comes down to it, so few of us know how to navigate the #1 determinant of our credit destiny: FICO (i.e. your credit score).

Until now…here’s how your FICO score is calculated:


The Breakroom

Interview Question of the Day

Edward spent $21 on drinks for a party. If the bottle of vodka he purchased was twice the price of the case of beer, and the lemonade was half the price of the beer, how much did Edward spend on the beer?

(Give up?)

Who Am I?

  1. I was valedictorian at my high school in Dallas.
  2. I attended Duke University, where I earned a double bachelor’s degree in Computer Science and Economics.
  3. In 2012, I donated $560 million to help women in third world countries.
  4. I was ranked third in the Forbes 2013 and 2014 lists of 100 Most Powerful Women.

(Who am I?)

Stat of the Day

$95 million

That’s how much J.K. Rowling has made since last June—more than Cristiano Ronaldo and Ellen DeGeneres. Now that’s a muggle who’s doing pretty well for herself. Filthy mudbloods.


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