Raphael Stevens

Retail and entertainment conglomerate Authentic Brands Group announced it has entered into a partnership to co-own and oversee David Beckham’s global brand.
Authentic Brands declined to disclose the terms of the deal. But a person familiar with the transaction said Authentic Brands paid about $269 million for a 55% stake DB Ventures.
In connection with the partnership, Beckham has become a shareholder in Authentic Brands, which owns retailers including Forever 21 and Barneys New York.

Retail and entertainment conglomerate Authentic Brands Group announced Thursday it has entered into a partnership to co-own and oversee David Beckham’s global brand.
Authentic Brands declined to disclose financial terms of the deal. A person familiar with the transaction said the company paid about $269 million for a 55% stake in the soccer star’s DB Ventures.

As part of the deal, Beckham will become a shareholder in Authentic Brands, which owns retailers such as Forever 21 and Barneys New York, and the rights to iconic stars including Elvis Presley and Shaquille O’Neal, who is also a major investor.
The transaction will allow Authentic Brands to open its European headquarters in Beckham’s existing London offices, the company said.

David Beckham appears at an event in Singapore.
Suhaimi Abdullah | Getty Images

Authentic Brands also said it is now the largest shareholder in Studio 99, a production company Beckham co-founded in 2019.
“David and his team have built an enterprise that spans sports, entertainment, lifestyle and luxury, and we see significant opportunities to scale his brand and expand it into new verticals,” said Jamie Salter, founder, chairman and CEO of Authentic Brands.
DB Ventures currently manages Beckham’s endorsement deals with companies including Tudor watches and whisky label Haig.

Authentic Brands shelved its plans to go public after it agreed in November to sell a 25% stake to private equity firm CVC Capital Partners and hedge fund HPS Investment Partners. The deal gave the company an enterprise value of $12.7 billion.
Authentic Brands also is in the process of acquiring sneaker label Reebok from Adidas for about $2.5 billion. That deal is expected to close in the first quarter of this year.

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Planet Fitness is seeing more teens sign up for their first gym memberships during the coronavirus pandemic.
Generation Z — people born between 1997 and 2012 — was the fastest-growing demographic group that took out memberships in 2021.
CEO Chris Rondeau said in an interview that many younger users flocked to its fitness centers last year as school activities and sports leagues were temporarily paused.

A user on a treadmill at a Planet Fitness gym.
Source: Getty Images

Planet Fitness is seeing more teens sign up for their first gym memberships during the coronavirus pandemic, helping to fuel the company’s overall growth.
When the gym operator reported its fourth-quarter results on Thursday, it said Generation Z — people born between 1997 and 2012 — was the fastest-growing demographic group for Planet Fitness memberships in 2021.

CEO Chris Rondeau said in an interview that many younger users flocked to its fitness centers last year as school activities and sports leagues were temporarily paused. The trend has continued into 2022, he said, despite the resumption of many group activities and the return of in-person learning at schools.
“This past September, when school sports were in play and recreation centers were back open, [membership rates] didn’t drop off,” he said, adding Gen Zers put extra emphasis on staying active and maintaining their mental health. “They continue to join, quite a bit above pre-Covid levels.”
Planet Fitness memberships start at a monthly rate of $10, which is significantly more affordable than higher-end chains like Life Time Fitness and Equinox.
According to Rondeau, about 62.5% of members have upgraded to Black Card, which is growing in popularity as the company expands. The $22.99-a-month option gives customers access to all of its 2,000-plus gyms in the U.S., along with other perks like tanning beds and guest passes.
At the end of January, Planet Fitness counted 15.6 million members, which it said surpasses its pre-pandemic peak.

Net income attributable to Planet Fitness shareholders for the three-month period ended Dec. 31 fell to $5.7 million, or 7 cents per share, compared with $8.7 million, or 11 cents a share, a year earlier. Excluding one-time items, it earned 26 cents a share, in line with analysts’ estimates for 26 cents, based on Refinitiv data.
Total sales soared 37.3% to $183.6 million from $133.8 million a year earlier. That topped estimates for $178.8 million.
Planet Fitness shares closed Thursday down less than 1%, having fallen about 1.5% year to date. The company’s market cap is $7.7 billion.
Find the full financial press release from Planet Fitness here.

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Walmart is kicking off an exclusive, three-week sales event for members of Walmart+, its subscription service.
The membership program, the retailer’s answer to Amazon Prime, includes fuel and prescription discounts, free delivery of grocery orders, and free shipping for online purchases.
Walmart+ had an estimated 11.5 million members as of Jan. 31, according to market research firm Consumer Intelligence Research Partners.

The Walmart+ home screen on a laptop computer in Brooklyn, New York on Wednesday, Nov. 18, 2020.
Gabby Jones | Bloomberg | Getty Images

Walmart is giving customers a new reason to sign up and stick with the subscription service Walmart+: exclusive deals on items from air fryers to exercise bikes.
The sales event, which kicks off Thursday, is part of the retailer’s strategy to expand the program and turn customers into more frequent shoppers and bigger spenders. Walmart+ is also seen by the company as a lever it can pull to boost its e-commerce business and better compete with Amazon as it builds on recent growth during the pandemic.

Walmart’s e-commerce sales in the U.S. rose 11% in the fiscal year ended Jan. 31, and soared 90% on a two-year basis. Online sales account for roughly a third of all of Walmart’s sales in the U.S., according to the company’s financial filings.
The big-box retailer launched Walmart+ in September 2020. The program costs $98 a year, or $12.95 on a monthly basis, and includes perks like fuel and prescription discounts, free delivery of grocery orders of $35 or more, and free shipping for online purchases.
Since the program’s debut, however, Walmart has shared few details about the program’s performance — including its subscriber count.
Market researcher Consumer Intelligence Research Partners estimates a subscriber count of 11.5 million as of Jan. 31, based on its quarterly consumer surveys and industry research. That’s a fraction of the size of Amazon Prime, which debuted in 2005 and counts an estimated 172 million members in the U.S., according to CIRP.
About one in four Walmart.com shoppers are Walmart+ members, according to CIRP’s estimates.

Walmart CEO Doug McMillon has declined to give financial updates on Walmart+ during earnings calls, saying only that the retailer is focused on delivering a great customer experience and adding more membership benefits.
Last summer, Walmart tapped Chris Cracchiolo, a veteran of American Express, to lead the membership program, and it has added automation to dozens of stores to crank up capacity for online grocery orders, one of the program’s key perks.
With the sales event this week, Walmart is riffing off of a strategy used by Amazon Prime — but on a smaller scale. Amazon has thrown its exclusive sales event, Prime Day, since 2015, and it has become a popular sales holiday.
Walmart’s sales event will last for three weeks, with a rotating mix of items that are up to 40% off. On Thursday, the company’s website highlighted deals on items such as car seats and tires, with exclusive access to buy hot products like the Sony PlayStation 5 video game console.
The retailer has had other special deals for Walmart+ members, including giving them early access to Black Friday deals and exclusive access to gaming consoles on Cyber Monday this past holiday season.
Mike Levin, a partner and co-founder of CIRP, said Walmart’s reasons for boosting the service are clear: Those who sign up for membership programs buy more.
In the holiday quarter, for example, the average Walmart+ member spent $79 per visit to the website, according to CIRP. They also reported shopping an average of 29 times per year on the retailer’s website.
The average Walmart.com customer spent about $62 per visit in the three-month period and reported online shopping an average of 18 times per year, CIRP found.
Plus, Levin added, similar to members of warehouse clubs like Costco and Walmart-owned Sam’s Club, subscribers are “paying for the privilege” — creating another revenue stream for companies and an incentive for customers to go to stores and websites to get their money’s worth.
“They’re just there a lot more often,” he said. “That’s like a fantasy for retailers.”

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Moderna Chief Medical Officer Paul Burton said Covid is entering an endemic phase in the Northern Hemisphere.
Burton said cases, hospitalizations and deaths will be more stable when Covid is endemic.
However, some people will still get sick and die from Covid when the virus is endemic, he said.
Moderna executives said a booster shot that targets both the omicron and delta variants will be needed this year.

Maryland National Guard Specialist James Truong (L) administers a Moderna coronavirus vaccine at CASA de Maryland’s Wheaton Welcome Center on May 21, 2021 in Wheaton, Maryland.
Chip Somodevilla | Getty Images

Senior executives at Moderna on Thursday said Covid-19 is shifting from a pandemic to an endemic phase in some parts of the world, with regions in the Northern Hemisphere hopefully entering a period of relative stability.”We do believe that we are transitioning into an endemic phase marked by a period of stability in case counts, hospitalizations and deaths at least in the Northern Hemisphere,” Moderna Chief Medical Officer Paul Burton told analysts during a call Thursday morning after the company reported fourth-quarter earnings.
North America, Europe, most of Asia and much of Africa are in the Northern Hemisphere. However, Burton said Moderna is closely monitoring the trajectory of the virus in the Southern Hemisphere, which includes large nations such as Brazil and South Africa, as winter approaches there.

Burton said Covid will continue to circulate during an endemic phase but at a more static and predictable rate. It will likely follow seasonal patterns like other respiratory viruses, such as the flu, he said. However, Burton warned people will still get sick and die from Covid even when the virus becomes endemic. He noted that other endemic coronaviruses cause 340,000 hospitalizations and 20,000 deaths annually for people older than 65 years old, citing data from the Organization for Economic Cooperation and Development.

CNBC Health & Science

Moderna CEO Stephane Bancel told CNBC on Thursday that although Covid is entering an endemic phase in some parts of the world, people will need another booster shot in the fall. This is particularly true for individuals over 50 and those who are at high risk due to underlying health conditions, he said.
“I got a flu shot every year, not that I was worried of dying or getting hospitalized — I just don’t want to get sick,” Bancel said. On Thursday’s earnings call, Bancel said he expects Covid shots will have a similar role in the future as the virus becomes seasonal.
“Some countries like the U.K. and others wanted to secure supply because they believe very deeply that the endemic market will require annual boosters,” Bancel said.
Moderna on Thursday announced that it is developing a booster vaccine that targets omicron and other Covid variants such as delta. Burton said the current booster protects against hospitalization from delta and to a lesser extent from omicron. However, he said the effectiveness of the vaccine declines over time.

“We do see waning of protection over time against hospitalization due to infection, and this fits with the profound immune evasion we know to be the case with omicron,” Burton said. Due to waning immunity, a booster that targets both the omicron and delta variants will be needed in 2022, he said.
“This is because delta, as we know, is associated with strong pathogenicity, and omicron as we have seen due to its transmissibility and infectivity is also associated with substantial morbidity and strain on health-care systems through sheer bulk of cases,” Burton said. “Protection against both delta and omicron may well be necessary in the next boost of vaccination.”
Burton said the disease burden and deaths have declined from their highest levels during the first wave of infection, when no one had immunity to the virus.
“With each subsequent wave in mid-2021 with delta and late 2021 and early 2022 with omicron, the morbidity observed from these waves tended to be less severe, certainly relative to the first wave, as our immune systems became more experienced at fighting the SARS-CoV-2-virus,” Burton said.
In the U.S., Covid cases have fallen 90% from their peak level during the omicron wave on Jan. 15. The U.S. is reporting a seven-day average of about 80,000 new cases per day, according to data compiled by Johns Hopkins University, roughly one-tenth of the pandemic record of more than 800,000 average daily cases.
Hospitalizations have also fallen sharply to about 60,000 patients with Covid in U.S. hospitals from a high mark of more than 159,000 on Jan. 20, based on a seven-day average of data from the Department of Health and Human Services.
Worldwide, Covid cases are down 21% and new deaths have fallen 8% over the previous week, according to data from the World Health Organization. Infections are dropping in every region except the Western Pacific. However, new infections remain high, with 12 million reported for the week ended Feb. 20. More than 67,000 people died from Covid worldwide during that week alone.

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Food and beverage giants say consumers aren’t balking yet at paying more for their Lay’s chips and Tyson chicken nuggets.
But those comments preceded the Russian invasion of Ukraine, which has already led to surging prices for oil and gas, metals and grains.
Walmart said earlier this month that consumers are aware of rising prices but haven’t changed their behavior yet.

A customer shops at at a grocery store on February 10, 2022 in Miami, Florida. The Labor Department announced that consumer prices jumped 7.5% last month compared with 12 months earlier, the steepest year-over-year increase since February 1982.
Joe Raedle | Getty Images

Food and drink prices are rising, but CEOs from PepsiCo’s Ramon Laguarta to Tyson Foods’ Donnie King say consumers aren’t balking yet at paying more for their Lay’s chips and chicken nuggets.
Inflation has led many food and beverage companies to raise prices by shrinking package sizes, cutting promotions or outright price increases at the grocery store. But companies have to strike a delicate balance, raising prices enough to offset higher costs without making products too expensive for consumers, who could always trade down to cheaper alternatives like private-label brands.

“We’re feeling good about how our consumers are staying loyal to our brands in spite of some of our pricing decisions,” Laguarta said on Pepsi’s earnings call in early February.
In January, the producer price index for final demand rose 1%, according to the Bureau of Labor Statistics. The metric tracks rising costs paid by domestic producers for commodities. For food, prices ticked up 1.6% compared with December and 12.3% compared with 12 months ago.
Consumers, on the other hand, saw food prices tick up 0.9% in January compared with a month earlier and 7% compared with the year-ago period, according to the BLS’ consumer price index. Many shoppers have had more cash to spend at the grocery store after receiving government stimulus checks during the Covid pandemic and changing other behaviors, like traveling and eating out less.
These inflation measurements came before the Russian invasion of Ukraine, which has already led to surging prices for oil and gas, metals and grains — all key exports of Russia. Aluminum prices hit a record high of $3,450 per ton on the London Metal Exchange. Still, most companies hedge to protect themselves from short-term spikes in commodity prices, although at this point it’s unclear how long the crisis will persist and when shoppers will start feeling the pinch.

‘Cracks in the foundation’

On Thursday, Procter & Gamble, which manufactures consumer staples like Tide detergent and Pampers diapers, expressed caution when talking about its ability to deal with rising inflation.

“While it’s too soon to declare success, given the strength of our portfolio, broad-based share gains and early in-market results, we feel relatively well positioned about our position to execute pricing,” CFO Andre Schulten said in the company’s virtual CAGNY presentation.

P&G has raised prices across all 10 of its U.S. categories, affecting about 80% of sales in its home market. The consumer giant might have the right approach, warning investors that there may be bumps in the road ahead.
“The cash pile that most consumers are sitting on is dwindling fast, and we are seeing elasticity start to get back to normal levels, pre-pandemic, and with inflation and gas prices, we’re seeing pockets of the market where we’re starting to see some weakness,” RBC Capital Markets analyst Nik Modi said an interview.
Modi said that categories that tend to skew lower income, like tobacco, beer and energy drinks, are beginning to see consumers trading down to cheaper options.
“There’s cracks in the foundation, and we’ll have to monitor it,” he said.
Walmart, the largest grocer in the U.S., said shoppers are paying attention to rising prices and inflation, even if it isn’t showing up in their behavior yet. CFO Brett Biggs said in an interview last week with CNBC that low unemployment, rising wages and an increase in household savings during the pandemic mean the average consumers is still in good shape.
Miller Lite brewer Molson Coors Beverage echoed that line of thinking during its earnings call Wednesday. The beverage company raised its prices by 3% to 5% in January and early February — sooner than its usual springtime hikes and at a slightly higher-than-typical level.
“Frankly, the price increases, as I just said, for us, 3% to 5%, well lower than inflation rates, which are sticking in the consumers’ minds,” CEO Gavin Hattersley said.

Price hikes face backlash

Even if consumers aren’t shying away from higher prices yet, some companies have already garnered criticism for raising prices to protect their profit margins.
For example, Sen. Elizabeth Warren, a Massachusetts Democrat, has taken aim at Tyson for its price hikes, saying the increases have surpassed necessary levels because the company doubled its fiscal first-quarter profit.
Tyson is already under scrutiny from the Biden administration, which has contended that consolidation in the meatpacking industry has driven up prices for beef, chicken and pork in recent years.
But Tyson has defended its actions. In a statement to CNBC, the company said, “Economists and industry analysts confirm that today’s higher meat prices are a direct result of constrained supplies due to the labor shortage, higher input costs for such things as grain, labor and fuel, and stronger consumer demand.”
In early February, Tyson said its cost of goods sold was up 18% compared with the year-ago period. In response, its average sales price for its fiscal first quarter climbed 19.6%.
“This helped us capture some of the unrecovered costs due to the timing lag between inflation and price,” CEO King said on the company’s latest earnings call with analysts.
Tyson executives also shared that consumers aren’t yet balking about paying more for prepared foods, which includes its Jimmy Dean and Hillshire Farm brands.
RBC’s Modi said the cost increases faced by companies like Tyson are real.
“Now, do they need to take the pricing? Not to survive, but they need to take them to protect their margins,” he said. “Protecting their margins allows them to reinvest in marketing, in [research and development].
“Quite frankly, the retailers wouldn’t let them take cost increases if it wasn’t justified,” he added.
For example, Walmart CEO Doug McMillon said on its recent earnings call that the retailer leans on its long relationships with food and beverage companies to keep prices down for customers.
“During periods of inflation like this, middle-income families, lower middle-income families, even wealthier families become more price sensitive,” McMillon said.

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Russia’s invasion of Ukraine could further strain supplies of semiconductor chips amid a shortage that has already caused global production disruptions for tech companies and automakers for more than a year.
Russia and Ukraine are critical suppliers of neon gas and palladium that are used to produce semiconductor chips.
The White House earlier this month warned chip suppliers to diversify their supply chains in case Russia retaliates against threatened U.S. export curbs by blocking access to key materials.

A chip made by Taiwan Semiconductor Manufacturing Company

Russia’s invasion of Ukraine could further strain supplies of semiconductor chips amid a shortage that has already caused global production disruptions for tech companies and automakers for more than a year.
Russia and Ukraine are critical sources of neon gas and palladium that are used to produce semiconductor chips, according to officials.

The U.S. neon supply, which is used for lithography processes for chip production, comes almost entirely from Ukraine and Russia, according to Techcet, a California-based market research firm that specializes in critical supply chain materials and components.
Russia produces neon, a gas that’s a byproduct of steel manufacturing, which is then sourced and purified by a specialized Ukrainian company, according to Techcet. The price of neon shot up 600% the last time Russia invaded Ukraine in 2014.
“This will have an impact,” Techcet President and CEO Lita Shon-Roy told CNBC during an online interview Thursday. “It will continue to constrain the chip source going into the automotive industry.”

A global shortage of semiconductor chips caused sporadic shutdowns of manufacturing facilities, specifically automotive plants, over the past year or so.
Companies expected the supply crunch to gradually ease throughout this year. But Russia’s invasion could change that and create further disruption for the already strained global supply chain.

Russia also is a key palladium supplier, along with South Africa, and supplies approximately 33% of the global demand, according to Techcet. For the automotive industry, palladium also is a key metal used for catalytic converters. Palladium prices jumped by more than 7% on Thursday as part of a larger surge in precious metals.
“It’s just one more thing that is going to force prices up,” Shon-Roy said, adding the increase likely won’t be felt for six months, if not a year, because most chip manufacturers have long-term agreements for such raw materials. “The automotive market is going to feel that to be sure.”
The White House earlier this month warned chip suppliers to diversify their supply chains in case Russia retaliates against threatened U.S. export curbs by blocking access to key materials, Reuters reported.
“Part of that is working with companies to make sure that if Russia takes actions that interfere with supply chains, companies are prepared for disruptions,” a senior White house official said.
Large chip companies said they expected limited supply chain disruption for now from the Russia-Ukraine conflict, thanks to raw material stockpiling and diversified procurement, Reuters reported Thursday.
The origin of the chip shortage dates to early 2020 when Covid caused rolling shutdowns of vehicle assembly plants. As the facilities closed, the chip suppliers diverted the parts to other sectors such as consumer electronics, which weren’t expected to be as hurt by stay-at-home orders.

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