Ready, Aim, Bankruptcy

MARKETS

• U.S. markets: Qualcomm led a tech sell-off and the Nasdaq ended its seven-day winning streak. Investors did breathe a sigh of relief though, as inflation grew as expected in February.
• International markets: European stocks took a hit after Secretary of State Rex Tillerson was replaced. Most markets finished lower.

MANUFACTURING

Remington Plans to File for Bankruptcy

Saddled with nearly $1 billion in debt, Remington Outdoor Co. is filing for bankruptcy protection as soon as March 18 (h/t WSJ). And if you’re not sure what Remington is, it’s the American gun holding company that made the AR-15 used in the Sandy Hook shooting.

Ownership will pass from Cerberus, Remington’s private equity owner, to its creditors, including JPMorgan and Franklin Resources (although its new owners will quickly try to flip the business).

Of course, it’s no secret why…

A heated national debate on guns has investors eyeing pretty much any other asset. And those with the nerves of steel to own firearms manufacturers, like Cerberus, haven’t fared well.

Rewind: Cerberus bought Remington—the country’s oldest gun maker (1816)—back in 2007, absorbing $252 million in debt. It bundled Remington with other arms businesses and eventually called it Remington Outdoor Co. The goal? Control the market and sell off most of these holdings (especially Remington) for profit.

And it almost worked

When Obama entered office, gun demand surged. But wait, that feels…counterintuitive.

We know, but the threat of tighter regulation typically leads to increased demand—the “get it while you can” mentality.

* By 2015, Cerberus had made back its investment on Remington.
* In 2016, demand surged after the Paris and San Bernardino terrorist attacks.

Then, 2017 happened. An NRA-friendly administration allowed gun buyers to rest easy. Demand fell, and within nine months, Remington’s sales plummeted $177 million.

Bottom line: Remington’s situation shows how the gun debate has permeated the business world. Some stakeholders have even chosen to keep their names anonymous in the dealings. For Cerberus, the news means a decade-long bet gone sour.

MEDIA

Vice Tries to Mature with a New CEO

Vice Media is hoping that a little stability could go a long way. A+E Networks CEO Nancy Dubuc is leaving to replace Vice co-founder and current chief Shane Smith (who will become executive chairman).

Here’s what Smith had to say:

“She is better than me at everything.”

At the very least, she’s a great media executive. Dubuc spent the last five years successfully steering a crowded ship (A&E Network, History, Lifetime, and more) in the choppy waters of cable TV. She was even considered for the head gig at Amazon Studios.

“We are a modern day Bonnie and Clyde and we are going to take all your money.”

They better. Despite its shocking $5.7 billion valuation, Vice is on thin financial ice with mega-investors like Fox, Disney, and TPG. Last year, it reportedly fell $100 million short of its revenue target and is still dealing with the fallout from a sexual harassment scandal.

RETAIL

Dick’s Stumbled Through Holiday Season

Last time we checked in on Richard’s Sporting Goods (can we call you Richard?), the company banned assault-style rifles at its Field & Stream stores. The decision by CEO Ed Stack led the way for other large retailers (including L.L. Bean) to follow suit.

But in a tough retail landscape, Dick’s has other problems to worry about:

* Same-store sales fell 2% during the holiday season (analysts expected just a 1% drop).
* E-commerce sales grew 9%, but that wasn’t enough to win over investors.

Zoom out: Dick’s took control of the sports retail market when Sports Authority filed for bankruptcy in 2016. But that market seems doomed for failure.

Let’s take shoes for example—one of the largest revenue drivers in the apparel industry. Not only are Nike, Adidas, and Under Armour being cannibalized by niche brands, they are increasingly building out mass-customization, direct-to-consumer channels.

So with all the options and ease of purchase, who is going into a Dick’s to buy shoes anymore?

TRANSPORTATION

Kitty Hawk’s Self-Flying Planes Cleared for Takeoff in New Zealand

You can take your Hobbit stereotypes and throw ’em in the fires of Mount Doom—New Zealand wants to be known for something else: the Silicon Valley of self-flying taxis.

And it got off to a strong start, unveiling a collaboration with Kitty Hawk, a startup backed by Alphabet CEO Larry Page. In a video and blog post, the company introduced Cora, an electric, self-flying taxi that could become commercialized within five years.

How Cora works: The pilotless aircraft, which travels close to 100 mph, takes off and lands vertically like a ‘copter, but otherwise flies like a plane.

Very cool, but what is a California company doing in New Zealand?
As part of Prime Minister Jacinda Ardern’s mission to become net carbon zero by 2050, she’s laying out the Kiwi carpet for sustainability-minded startups…

…an attractive pitch for Larry Page and others in the self-flying space (Uber, Boeing, etc.), who have grumbled about strict FAA regulations in the U.S.

WHAT ELSE IS BREWING

• Fitbit (+1.51%) released another Apple Watch competitor.
• President Trump hinted he might tap conservative economist Larry Kudlow as the new director of the National Economic Council.
• Toys ‘R’ Us could file its liquidation plan today.
• Shareholders gave the thumbs up to CVS’ (-1.10%) $69 billion acquisition of Aetna (-0.10%).

WATER COOLER

FROM THE CREW

From our office, to your inbox. We’ll keep you in-the-know about all the latest happenings from our perspective.

With all the licks tech companies have taken for helping to spread fake news, you’d think they’d try to wall themselves off from any mention of the word.

But instead of shying away from news, tech giants are leaning in. Yesterday, we told you that Apple is acquiring digital magazine subscription service Texture to offer reliable news content.

And then there’s this report from Axios: Facebook is testing out video partnerships with 10 publishers (both legacy and digital-first) for a news section on its Watch platform.

What it means: For tech companies, the answer to fake news is not “no news,” it’s putting extra focus on “real news.”

You know who else focuses on real news?

We do, and we’re looking for another person to help us do it. That’s right, Morning Brew is hiring another writer to work full-time at our office in NYC.

And what better way to grow our team than turn to our amazing community. So if you or anyone you know:

1. Is obsessed with news and business
2. Is an A+ writer with experience meeting tight deadlines (in our case…a few hours)
3. Is passionate about working with a small team and helping build a startup
4. Loves satire, wordplay, puns, etc.

THE BREAKROOM

PRO TIP

If you can, move around your desk at work. Seriously, it’ll help you and your team’s productivity. In South Korea, merchandisers who moved to work next to colleagues with whom they had few previous social ties sourced 25% more deals from new suppliers than before the move. Exposure to new people leads to creativity and innovation. Just ask Steve Jobs.

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