Consumer & Retail Report #4: 7/31 Recap

Summary of the Week in Consumer and Retail

Welcome to our Consumer and Retail recap where we share noteworthy headlines, updates, and insights. Never spam.

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Table of Contents:

1. Company Announcements

2. Corporate Shakeups

3. M&A Updates

4. Insider Buying/Selling

5. Regulatory Updates

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Company Announcements

• RUMOR: Farfetch FTCH 0.00%↑ – The online luxury fashion seller was close to a deal with Switzerland’s Richemont that would see it absorb Richemont-owned fashion retailer YNAP.

• Mister Car Wash MCW 0.00%↑ files mixed securities shelf offering; also files for common stock offering by selling shareholders.

• Dollar General DG 0.00%↑ announces plans for three new distribution centers.

• PepsiCo PEP 0.00%↑ files mixed securities shelf offering.

• Apple AAPL 0.00%↑ hires Lamborghini executive to help steer EV program

  • Why this matters? - It’s been long rumored that one of Apple’s long-awaited products would end up being an “Apple car.” While rumors have come and gone, this news seems to be worth some weight towards the rumor.

• F45 Training FXLV 0.00%↑ to do corporate layoffs, transition to new CEO as it revises down 2022 guidance.

  • Why this matters? - In-person fitness was a part of the reopening play in a post-COVID world. F45 going public last year was supposed to benefit from this trend but quite the opposite has happened. The company is down 88% since going public and management seems to not know how to right the ship. If you’re looking at other opportunities, Xponential Fitness is the way to go. You can read both my reports from this link.

• Xponential Fitness XPOF 0.00%↑ says total members grew 32% to 539,000 in Q2, from 408,000 last year.

  Paul Cerro @paulcerro

  $XPOF says total members grew 32% to 539,000 in Q2, from 408,000 last year SWS for the quarter were $250M y/y vs $172M. SSS +25% expecting to meet or EXCEED 2022 guidance which any noob following this stock would have known already based on the last print CGC PT $30

• Apple prepares rare iPhone discount for China buyers.

  • Why this matters? - The discounts come as China’s economy tries to bounce back from major Covid-19 lockdowns in business hubs Shanghai and Beijing, which have hurt sales of leading domestic smartphone brands from Xiaomi Corp. to Vivo and Oppo. Apple bucked the trend by registering healthy growth in China shipments in June, according to national statistics, though the discounts suggest even it has surplus inventory heading into the latter half of the year.

• The RealReal REAL 0.00%↑ expands into trading cards and comics grading services with partnership with Beckett Collectibles.

  • Why this matters? - In 2022 alone, search demand within the collectibles category has more than doubled, with consignments increasing by more than 48% since the start of the year.

• Kohl's KSS 0.00%↑ is the exclusive retailer for a limited-edition Levi's SilverTab 90s collection.

• Amazon AMZN 0.00%↑ records $3.9 billion loss on Rivian RIVN 0.00%↑ investment, bringing markdown for the year to $11.5 billion.

• Amazon to raise Prime prices in Europe as retailer wrestles with costs.

• H&M to sell Russian business to local or foreign company.

• Saks OFF 5TH partners with Rent the Runway RENT 0.00%↑ to offer pre-owned fashion.

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Corporate Shakeups

• Weber WEBR 0.00%↑ replaces CEO, warns of layoffs as inflation bites into business.

• SmartRent SMRT 0.00%↑ Chief Revenue Officer Christopher Jon Edmonds was terminated from his position on July 25.

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M&A Updates

• Vista Outdoor VSTO 0.00%↑ announces the acquisition of Simms Fishing Products for a purchase price of $192.5 million

• RCI Hospitality RICK 0.00%↑ acquires Cheetah Gentlemen's Club in Hallandale Beach, Florida

Eric Langan, RCI President & CEO, said: "Cheetah becomes our fourth adult nightclub in South Florida, 15th club acquisition this fiscal year, and 52nd club in our portfolio. We believe it should generate approximately $4 million in adjusted EBITDA."

• Altria MO 0.00%↑ also said it cut the estimated fair value of its 35% stake in Juul Labs, a vape products company, to $450 million.

  • Why this matters? - That’s more than 70% lower than the $1.6 billion at the end of March. Altria is Juul’s largest investor, originally paying $12.8 billion in 2018.

• Sankyo Seiko to purchase French luxury fashion house Leonard.

  • Why this matters? - With luxury retail and areas of apparel the only thing to be holding up in the consumer discretionary space, many rumors are floating around that further consolidation will occur. LVMH has done well to weather all the turmoil so far in the economy and adding to its already existing portolio could be in the cards for smaller players.

  Compounding Quality @QCompounding

  Conglomerate LVMH in one picture:

  

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Insider Buying/Selling

• Domino’s DPZ 0.00%↑ Director sold 14,000 shares at $386.71 - $387.72 worth ~$5.4 million.

• NDLS NDLS 0.00%↑ 10% owner, Mill Road Capital III, L.P., bought 113,371 shares at $4.5041 to $4.5911 worth ~$511K.

• CAG CAG 0.00%↑ Director bought 30,000 shares at $34.0299 - $34.0899 worth ~$1.0 million.

• SMRT SMRT 0.00%↑ owner, Bain Capital Ventures, has sold ~354k shares at a value of ~$1.8 million over the last 10 days.

• MCG MCG 0.00%↑ President sold 86,211 shares at $6.96 - $7.04 worth ~$604K.

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Regulatory Updates

• Altria MO 0.00%↑: Iowa AG Tom Miller sues tobacco companies over $133 million in withheld payments.

• Revlon REV 0.00%↑ gets court OK on $15.4M bonus plan for ‘critical’ employees.

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Until next time,

Paul Cerro | Cedar Grove Capital

Personal Twitter: @paulcerro

Fund Twitter: @cedargrovecm

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