I need space
This morning, we want to salute the heroes who are taking a Pennsylvania potato chip producer to court over allegedly underfilling snack bags. Here's your Brew for April 5th, filled to the brim with the business news you need to start your day.
QUOTE OF THE DAY
"If you don't have a healthy financial services sector, then you don't have a healthy economy" - JPMorgan Chase CEO Jamie Dimon, after releasing his much-awaited annual letter to shareholders.
- Oil prices and energy stocks moved higher in tandem again yesterday, leading the S&P, Dow and Nasdaq to slightly higher closes thanks to crude's highest price in a month
- Treasury yields fell to 2.35% on this week's less-than-stellar economic data, while the dollar beat out every currency but the yen
The Best a Man Can Get?
…Gillette shaves prices amid fierce competition in the razor industry. For a while, Procter & Gamble's (+0.26%) Boston-based unit tried to maximize profits by raising prices of its advanced blade technology ("advanced technology"...). However, due to the tremendous success of online startups like Dollar Shave Club and Harry's, which offer razors at much lower prices, P&G admitted yesterday that Gillette needs a new strategy. In fact, Dollar Shave Club has seen so much success that Unilever acquired it last summer for a whopping $1 billion. And there's more: Target (-1.11%) teamed up with Harry's last summer to bring its razors to the discount retailer's shelves.
So, what's Gillette doing about it? The 115-year-old brand hopes to fend off competition by slashing prices by as much as 20%. That's what happens when you lose U.S. market share for six straight years. The changes led a Barclays analyst to ponder whether this is an "act of desperation for Gillette?" We'll let you be the judge.
Yelp Has Plans Beyond Customer Reviews
…And they involve in-store customer tracking. The San Francisco-based reviews site has purchased Canadian WiFi marketing firm Turnstyle Analytics for $20 million. Brick-and-mortar stores are at a disadvantage in the retail wars: while Amazon and other e-tailers can track customers' digital crumbs, retail chains and restaurants are left in the dark about shopper habits.
In 2013, it was revealed that Nordstrom and other major retailers were tracking customers' smartphones without their consent by using mobile WiFi signals. Luckily for consumers, Turnstyle's tracking involves a customer logging into the store's network. CEO Devon Wright said the company is working with the Future of Privacy Forum to protect consumer data across the industry.
Staples Stock Soars After Buyout Rumors
…But Kate Spade's price plummets after similar stories surfaced. Why? The Massachusetts-based office supply chain (+9.82%) received offers valuing its almost 4,000 stores at upwards of $7 billion, well above its market cap of $6.13 billion.
Kate Spade (-14.65%) tells a very different story. Retail's woes are nothing new (see above) and plenty of retailers are feeling the crunch. Even though buyout offers reportedly came from big names like Coach and Michael Kors, Kate Spade's decision to do the whole "I need more time to think about things" thing didn't go over so well with investors. The company's stock has fallen 15.64% so far this week on concerns that buyout bids are coming in below current market value.
International Visitors Bring $246 Billion to the U.S. Every Year
...But that could change, should new vetting procedures finalized Tuesday by the White House take effect. So called "extreme vetting" measures could include thorough searches of social media, bank accounts, cell phones and more, which could discourage tourism. "Leisure travelers may say the U.S. looks less welcoming and they may say, 'I don't want to go there,'" a hotel analyst told the Wall Street Journal.
Approximately 5% of Americans are connected in some way to the tourism industry, all of whom stand to lose money if foreign visitors decide to stop spending their vacations in the U.S. Marriott International (-0.30%) CEO Arne Sorenson said last month that the hotel chain has seen a "decline in international visitation from the Middle East and decline from Mexico."
What Else Is Happening…
- Jeffrey Lacker has resigned from the Federal Reserve in Richmond after admitting he was the source of a 2012 leak
- WhatsApp is reportedly trying to get into the mobile payments game
- Microsoft released an A.I.-powered camera to take on Snapchat and Facebook
- ahoo will rebrand as 'Oath' once Verizon deal closes
Note From the Brew Crew
Morning Brew is in the finals of a startup competition at the University of Michigan and we need your help to win! All you need to do is click onlink and give it a thumbs-up!
- Monday: Motor Vehicle Sales, PMI Manufacturing Index (-), Gallup US Consumer Spending Measure (+/-)
- Tuesday: Redbook (+)
- Thursday: Fed Balance Sheet, Money Supply; Earnings: Neiman Marcus
- Friday: Employment, Baker Hughes Rig Count, Consumer Credit; Earnings: Cargill
FOMC Minutes; Earnings: Bed Bath & Beyond, Monsanto, Walgreens Boots Alliance
Buffett Endorses Cherry Coke, in a Big Way
Can't get enough Cherry Coke? Neither can Warren Buffett. The billionaire has been frequently spotted drinking Cherry Coke in public (and owns a huge chunk of the company), so Coca-Cola decided to ask Buffett if he would grace Cherry Coke bottles and 500ml cans in China with his face, literally:
- Atlanta-based Coca-Cola (+0.64%) admitted that they were "surprised" when Buffett agreed to the deal. But it's not all that surprising
- Berkshire Hathaway, Buffett's company, has been Coca-Cola's largest single shareholder since the 1980s, owning 9.3% of the company. In its most recent annual report, Berkshire reported a $15 billion gain on its investment in Coca-Cola.
- The Oracle of Omaha doesn't seem to care that he's not getting paid for his newest modeling gig. Possibly because the special edition cans and bottles are only on shelves for a limited time.
Interview Question of the Day
There is a 100 pound watermelon laying out in the sun. 89 percent of the watermelon's weight is water. After laying out for a few hours 88 percent of the watermelon's weight is water. What is the weight of the water evaporated? (Answer)
Guess That Logo
Check your answer here.
Food for Thought
$71 million: that's the new world record for any gem, set yesterday at Sotheby's by Hong Kong-based jeweler Chow Tai Fook. The previous record was $58 million, set last May.