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Connected rowing company Hydrow, which Peloton once tried to buy, is growing at a time when the pandemic darling is shrinking.
The company took a majority stake in strength training company Speede Fitness as fitness buffs move away from cardio in favor of weights.
Hydrow also announced that its founder Bruce Smith is stepping down as CEO and will take over as the company’s chair.

Hydrow fitness rowing machines.
Courtesy: Hydrow

Connected fitness company Hydrow, which Peloton once tried to buy, is growing sales and has acquired a majority stake in strength training company Speede Fitness as gymgoers move away from cardio exercises in favor of weights, the company told CNBC on Thursday. 
Hydrow also announced that its CEO and founder Bruce Smith will step back from day-to-day operations and hand the reins over to President and Chief Financial Officer John Stellato. Smith will take over as the chair of Hydrow’s board. 

The company, most known for its pricey connected rowing machines that cost between $1,700 and $4,000, is backed by private equity bigwigs such as Constitution Capital and L Catterton. It counts several professional athletes and celebrities among its investors, including Kansas City Chiefs tight end Travis Kelce and singer Justin Timberlake.
Hydrow has raised more than $300 million in funding. It said it acquired Speede Fitness so it can expand into strength training, one of the fastest-growing segments in fitness today. 
The acquisition comes as gymgoers pull back on cardio exercises such as running and biking in favor of weight training. 
Planet Fitness said in November that it would replace its cardio equipment more slowly, in part to free up capital.
“Our members are consistently seeking more strength and less cardio,” said Planet Fitness CFO Thomas Fitzgerald on the company’s third-quarter earnings call, adding that strength equipment costs less than cardio equipment.

Life Time fitness highlighted a similar trend in its annual fitness survey. More than one-third of respondents said “building muscle” is their No. 1 goal for 2024, an increase of more than 3% from the prior year.
Speede Fitness makes a connected strength training machine that looks somewhat similar to a BowFlex, but incorporates advanced technology such as artificial intelligence-powered cameras, sensors and a large touch screen.
“Strength training has one of the largest total addressable markets in fitness, and with Speede’s advanced technology outperforming current offerings, this acquisition is a significant milestone for both companies,” Hydrow said. “This investment supports Hydrow’s mission to expand as a whole-body health company … with a consumer product expected to come to market next year.” 
Hydrow’s acquisition and sales growth come as Peloton, which is credited with creating the connected fitness market, struggles to turn around a slowing business. In its heyday at the height of the Covid-19 pandemic, Peloton tried to acquire Hydrow rather than build its own rowing machine, but the company declined, it told CNBC. Peloton did not respond to CNBC’s request for comment.
Now, Peloton has become an acquisition target itself as numerous private equity firms consider taking it private after it posted another quarter of declining sales and losses, CNBC reported on Tuesday.
Peloton has said demand for its fitness equipment has been sluggish as consumers pull back on big-ticket items. Still, Hydrow has managed to grow as Peloton has shrunk. 
Hydrow’s delivered unit sales for its connected rowing machine jumped 23% this year from the year-ago period. On Amazon, sales increased 273% in the 12 months that ended March 31 compared to the prior-year period. 
Hydrow’s growth raises questions about whether Peloton’s problems are more related to weakness in the broader at-home fitness market or its internal stumbles and product misses. Plus, the company primarily sells cardio machines, which are falling out of favor with consumers, and its own members are flocking to strength training. The company has said its strength training content, not its cycling or running classes, is the most popular type of class for digital members and the No. 2 among those who have Peloton hardware. 
Peloton debuted its rowing machine, the Peloton Row, in September 2022, but has done little to advertise or highlight the $3,000 machine. 
It previously debuted the Peloton Guide, an AI-powered device for at-home guided strength training, but the device has received even less attention than the company’s rowing machine. 
In Peloton’s fiscal third-quarter shareholder letter, the Guide received one mention. It was about a $9.1 million write-down the company took for its product inventory. More

WHAT IS THE ideal job to outsource to artificial intelligence? Today’s AIs, in particular the ChatGPT-like generative sort, have a leaky memory, cannot handle physical objects and are worse than humans at interacting with humans. Where they excel is in manipulating numbers and symbols, especially within well-defined tasks such as writing bits of computer code. This happens to be the forte of giant existing outsourcing businesses—India’s information-technology (IT) companies. Seven of them, including the two biggest, Tata Consultancy Services (TCS) and Infosys, collectively laid off 75,000 employees last year. The firms say this reduction, equivalent to about 4% of their combined workforce, has nothing to do with AI and reflects the broader slowdown in the tech sector. In reality, they say, AI is an opportunity, not a threat.Chart: The Economist More

Disney and Warner Bros. Discovery are teaming up to bundle their streaming services.
The offering is reminiscent of the traditional cable TV bundle and the latest partnership between the two media giants in recent months.
Pricing has yet to be disclosed. The bundle will be available this summer.

In this photo illustration the Disney+ logo seen displayed on a smartphone screen.
SOPA Images | LightRocket | Getty Images

The bundle is back.
Disney and Warner Bros. Discovery are planning to offer their streaming services — Disney+, Hulu and Max — in a bundle mirroring the traditional cable TV package, the companies said Wednesday.

The latest iteration of the bundle, which will be available this summer, will be offered on both the ad-supported and commercial-free tiers. Pricing has yet to be disclosed, but the option will be offered at a discount, according to a person familiar with the matter.
Disney will essentially act as the distributor in this case, collecting subscription fees from subscribers and paying out Warner Bros. Discovery a percentage, the person added.
This mashup of Max, Disney+ and Hulu will give streaming subscribers access to a wide breadth of content from broadcast networks ABC and Fox, as well as cable networks including TNT, TBS, CNN, Discovery Channel, Food Network, Disney Channel and more. Fox, which doesn’t have its own entertainment streaming subscription service, licenses its content on Hulu.
The offering, which is reminiscent of the cable TV bundle that has been upended in recent years and continues to bleed customers at a fast clip, is the latest partnership between the two media giants in recent months.
Warner Bros. Discovery and Disney’s ESPN, along with Fox Corp., have also joined forces to offer a sports-streaming service, which is expected to launch this fall.

Earlier on Wednesday, Fox CEO Lachlan Murdoch said on an earnings call he thought the sports-streaming venture would likely be bundled with other entertainment streaming services.
Disney has been offering its streaming services — Disney+, Hulu and ESPN+ — as a bundle for some time. ESPN+ will still coexist with the sports-streaming venture, but is not included in the Warner Bros. Discovery and Disney bundle. Hulu content has also been recently integrated into the Disney+ platform, though the two still require separate subscriptions.
Max costs $9.99 a month with ads, or $15.99 without. Disney+’s basic tier with ads costs $7.99 per month — or bundled with Hulu, $9.99 a month — while its premium plan is $13.99 per month, or $19.99 with Hulu. Meanwhile, Hulu on its own costs $7.99 with ads, or $17.99 ad-free.

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Two New Yorkers were charged with possessing more than $1 million in stolen goods and reselling them through their business in Midtown Manhattan, New York authorities said.
About $212,000 of the merchandise was stolen from Macy’s, while the remaining came from CVS, Rite Aid, Walgreens-owned Duane Reade and other retailers, according to Manhattan District Attorney Alvin Bragg.
The charges come as retailers such as Target and Ulta increasingly cite theft as a growing problem at their stores.

The Macy’s logo is seen at its store in Herald Square in New York City on Jan. 19, 2024.
Michael M. Santiago | Getty Images

A New York beauty store just blocks away from the Empire State Building resold more than $1 million worth of goods that’ had been stolen from Macy’s and a slew of other retailers, authorities said Wednesday.
Two New Yorkers were charged with possessing more than $1 million in stolen goods and reselling them through their business, Rehana’s Cosmetics, a perfume and cosmetics store in Midtown Manhattan, the borough’s district attorney Alvin Bragg said at a press conference.

About $212,000 of the merchandise was stolen from Macy’s, while the remaining came from CVS, Rite Aid, Walgreens and Walgreens-owned Duane Reade, Ulta, Victoria’s Secret, Bath & Body Works and the NHL Shop, Bragg said.
“Through our investigation, we found that Rehana’s Cosmetics was well-known to shoplifters, who would willingly bring them stolen items,” Bragg said. “We allege that created a motive for shoplifters to steal, and thus that the defendants, we allege, were drivers of crime.”

Manhattan District Attorney Alvin Bragg announced an indictment relating to more than $1 million in stolen goods as part of a retail theft fencing operation.
Courtesy: Manhattan District Attorney’s Office

Rehana’s Cosmetics, Bragg alleged, claimed to be a “beauty and perfume store,” but was instead found to have hundreds of boxes filled with products not typically found at such stores, including designer purses, over-the-counter medications, kitchenware and more. He said the defendants obtained the stolen items from shoplifters for the purpose of reselling.
“The root cause we allege here is greed,” Bragg said. “They were doing this to make money. This is the motive that is old as time.”
The charges come as retailers such as Target and Ulta increasingly cite theft as a growing problem at their stores. In March, a monthslong CNBC investigation showed how police broke up an organized retail crime ring that stole millions in cosmetics from Ulta stores and resold them on Amazon.

While Bragg was unable to give a specific number when asked how many stores are believed to be engaging in similar operations, he noted that there have been “far too many assaults” on employees at stores that have experienced theft.
“By using a multi-pronged prosecution strategy, we can make a lasting dent in retail theft that will keep our store employees safe, cut off the incentives to steal and resell stolen goods and allow our retail sector to thrive,” he said.
In a statement to CNBC, a Macy’s spokesperson said, “We appreciate the work of law enforcement and the Manhattan District Attorney’s Office and defer any comments about the case to them.”
A spokesperson for CVS said the drugstore is “grateful” for the work of the Manhattan District Attorney’s office.

Manhattan District Attorney Alvin Bragg announced an indictment relating to more than $1 million in stolen goods as part of a retail theft fencing operation.
Courtesy: Manhattan District Attorney’s Office

“Our partnerships with law enforcement are integral to our efforts to prevent organized retail crime (ORC) rings from stealing and then selling stolen goods online. We look forward to continuing our strong partnership with the DA’s Office as we work to combat ORC across New York City,” the spokesperson said.
A Walgreens spokesperson told CNBC earlier this year that the chain is taking steps to “safely deter theft” and “deliver the best patient and customer experience.”
The other retailers alleged to have stolen goods included in the bust did not immediately respond to CNBC’s request for comment.

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Applebee’s and IHOP have been losing low-income customers, but parent company Dine Brands is hoping its deals can help the chains compete with fast food.
Dine reported disappointing first-quarter earnings and revenue, yet reiterated its full-year forecast.
Dine Brands CEO John Peyton told CNBC that full-service restaurants, fast-food chains and even eating at home are competing for diners’ dollars.

Scott Mlyn | CNBC

Applebee’s and IHOP owner Dine Brands thinks its deals can lure away fast-food customers who have grown frustrated with menu prices.
As consumers pull back their restaurant spending, Applebee’s and IHOP are fighting against a larger group of rivals than usual for a smaller pool of customers. Dine Brands CEO John Peyton said full-service restaurants, fast-food chains and even eating at home are all competing for diners’ dollars.

To rise above the competition, Applebee’s has been leaning into value with a slate of promotions that includes the return of Dollaritas, which makes Peyton confident that it can beat out the fast-food chains vying for its customers.
“The Whole Lotta Burger for $9.99 — if you can have our burger for $10, which is great quality, abundant and eat in our restaurant, in our experience, why would you eat a $10 burger out of a paper bag in your car?” he told CNBC.
Low-income consumers visited less frequently and spent more carefully when they did eat out in the first quarter, according to Peyton. Consumers with incomes under $50,000 account for about 40% to 50% of Dine’s customers, he said.
Dine Brands reported first-quarter earnings that fell short of Wall Street’s estimates, and both Applebee’s and IHOP’s same-store sales shrank more than expected. Still, Dine reiterated its full-year outlook and said sales have improved sequentially. Shares of the company closed roughly flat.
But it’s too soon to tell if Dine will succeed in winning over diners — and investors. The company will need to improve its same-store sales significantly to meet the full-year outlook it reiterated this quarter, Raymond James analyst Brian Vaccaro wrote in a research note on Wednesday. Dine is projecting same-store sales growth will range from flat to 2% this year; in the first quarter, they fell 4.6% at Applebee’s and 1.7% at IHOP.

Applebee’s isn’t the only casual dining chain aiming at McDonald’s and the rest of the fast-food category. Chili’s, which is owned by Brinker International, recently rolled out an ad campaign that calls out the Big Mac and other fast-food burgers for their prices.
And McDonald’s is certainly feeling the heat. CEO Chris Kempczinski told analysts on the company’s latest earnings call that “everybody’s out there with a value message,” which is why the chain is looking to create a nationwide value menu.
Besides leaning into deals, Applebee’s might also get an edge on the competition from a triad of recent pop-culture moments: a pivotal cameo in the tennis drama film “Challengers,” an Applebee’s-motivated meltdown on “Survivor” and a shoutout from football legend Peyton Manning during Netflix’s roast of his former rival Tom Brady.
Not since Beyonce name-dropped Red Lobster on her hit song “Formation” has a casual-dining chain felt so relevant in pop culture.
“It’s top of mind for so many people, and it’s because they’ve grown up with Applebee’s,” Peyton said.

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Two years ago companies in America were scrambling to plug vacancies from shop floors and call centres to corporate headquarters. Workers laid off during the pandemic proved difficult to lure back, particularly those that had opted for early retirement. Others who spent their lockdowns dreaming of new beginnings resigned en masse once business resumed as normal. The share of American workers quitting their jobs each month went from 2.3% before the pandemic to a record 3% at the start of 2022. By March of that year there were two job openings for every unemployed worker in America.Chart: The Economist More

For the first time since 2009, the summer box office doesn’t have a Marvel film to kick off the key movie season.
Instead, Universal’s “The Fall Guy” stumbled to $28 million during the first weekend in May.
That doesn’t bode well for the summer box office, which was already set to decline from last year’s $4.1 billion haul after dual Hollywood labor strikes halted production and clogged the pipeline of new film releases.

Ryan Gosling stars in Universal’s “The Fall Guy.”

For the first time since 2009, the box office doesn’t have a Marvel film to kick off the summer movie season — and it shows.
Since the 2008 release of “Iron Man,” Marvel Cinematic Universe films have consistently launched this highly lucrative moviegoing season, with only two films generating less than $100 million openings in that time (not including pandemic years).

This year, the headline film for the first summer weekend was Universal’s “The Fall Guy.” And despite strong marketing efforts and solid reviews, it failed to drum up ticket sales during its opening last weekend. The film tallied less than $28 million during its domestic debut.
“‘The Fall Guy’ had quality co-stars in Ryan Gosling and Emily Blunt, but the lack of a known franchise brand and a niche storyline made it too narrow to attract a mass summer-like audience,” Eric Handler, managing director at Roth MKM, wrote in a note to investors Monday.
That stumble doesn’t bode well for the summer box office, which was already set to decline from last year’s $4.1 billion haul after dual Hollywood labor strikes halted production and clogged the pipeline of new film releases.
The result could send the 2024 summer box office down as much as $800 million compared to 2023, according to Comscore’s Paul Dergarabedian, and have ripple effects for the whole year. After all, the key summer period, which runs from the first weekend in May through Labor Day, typically accounts for 40% of the total annual domestic box office.
A limited and unsteady stream of new films means moviegoers haven’t been exposed to film trailers and poster promotions at their local cinemas and may not be aware of what features are headed to the big screen. Additionally, this summer’s movie slate is not as strong as prior years, with fewer blockbusters and major franchise films.

There’s only one superhero film slated for the summer — “Deadpool and Wolverine,” the first R-rated Disney Marvel flick — and it doesn’t arrive until late July.
At present, analysts believe the summer movie season will exceed $3 billion in ticket sales, but just barely. Before Covid, the summer box office consistently topped more than $4 billion. The last time ticket sales were as low as $3 billion during this season was in 2000, according to data from Comscore.
“Even with the inevitable year-over-year revenue downturn, the summer of ’24 should be judged more by the quality and value of the moviegoing experience than the quantity of box office cash in the drawer,” said Dergarabedian.

A lackluster summer

So far this quarter, the box office is tracking down 48% year-over-year, Handler noted. While he expects the May slate to help strengthen ticket sales, the box office “will need to see some big splashes” to “reclaim some lost ground.”
“Right now, cinema operators are in need of a significant content infusion,” Handler wrote. “Not only is the volume of content down in 2Q, but it also lacks sizzle.”

The biggest summer movie releases

May 9 — “Kingdom of the Planet of the Apes”May 17 — “IF”May 17 — “The Strangers: Chapter 1″May 24 — “Furiosa: A Mad Max Story”May 24 — “The Garfield Movie”
June 7 — “Bad Boys: Ride or Die”June 14 — “Inside Out 2″June 21 — “The Bikeriders”June 28 — “A Quiet Place: Day One”
July 3 — “Despicable Me 4″July 19 — “Twisters”July 26 — “Deadpool and Wolverine”
August 9 — “Borderlands”August 16 — “Alien: Romulus”August 23 — “The Crow”

For the rest of May, Disney’s “Kingdom of the Planet of the Apes” is currently tracking for a domestic opening weekend of between $55 million and $60 million. Paramount’s “IF” is looking at around $40 million. And Warner Bros.’ “Furiosa” is expected to hit between $40 million and $50 million.
However, those forecasts pale in comparison to major releases during the same month last year. Universal’s “Fast X” tallied $67 million during its opening, and Disney’s live-action “The Little Mermaid” opened to $96 million.
It’s yet to be seen if this summer will have any breakout hits, like Angel’s “Sound of Freedom” last year, that could bolster the overall box office.

A strong finish

What the summer 2024 slate has going for it is more family-friendly fare. A slew of animated features from established franchises should draw out parents and kids during school vacation.
Currently, Universal’s “Kung Fu Panda 4” is the second-highest grossing film domestically for 2024, with $188.4 million in ticket sales. Warner Bros. and Legendary Entertainment’s “Dune: Part Two” is the highest-grossing domestic release so far this year with $281.3 million.
And there’s some heavy-hitters coming during the last stretch of the year.
“Beetlejuice Beetlejuice” arrives in early September, “Joker: Folie a Deux” hits in October alongside “Venom: The Last Dance,” and November sees “Gladiator II,” “Moana 2” and “Wicked.” Additionally, December will have “Kraven the Hunter,” “Sonic the Hedgehog 3” and “Mufasa: The Lion King.”
Notably, the first “Joker” tallied $335 million domestically in 2019, both “Venom” films generated $213 million apiece, 2016’s Moana took in $248.7 million and the two previous “Sonic” movies scored $146 million and $190 million during their runs in theaters.
“Ultimately the race is won at the multiplex and not on a spreadsheet,” said Dergarabedian.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. More

Oddity Tech, the parent company behind the Il Makiage and Spoiled Child brands, disagreed with recent comments from Ulta CEO Dave Kimbell that beauty demand was cooling.
“What we do see is an industry that’s transforming. So the consumer is moving online and the consumer is moving to high-efficacy products that really solve their problems,” Chief Financial Officer Lindsay Drucker Mann told CNBC.
The beauty and wellness company, which uses AI to develop new products, blew past Wall Street’s expectations and saw first-quarter sales grow 28% compared to the prior year.

Courtesy: Oddity

As Ulta Beauty says it expects a slowdown in retail’s most resilient category, an upstart says it is bucking the trend. 
Oddity Tech, the newly public Israeli cosmetics platform that uses artificial intelligence to develop products, posted first-quarter results that blew past expectations and raised its full-year guidance. 

Here is how the beauty retailer behind the Il Makiage and Spoiled Child brands performed compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

Earnings per share: 61 cents adjusted vs. 49 cents expected
Revenue: $211.63 million vs. $205 million expected

The company reported net income of $32.98 million, or 53 cents per share, for the three-month period that ended March 31, compared with $19.59 million, or 35 cents per share, a year earlier. Excluding one-time items, Oddity reported earnings of 61 cents per share. 
Sales rose to $212 million, up about 28% from $166 million a year earlier. 
The company is now expecting full-year revenue to be between $626 million and $635 million, compared to a prior outlook of $620 million to $630 million. Analysts had expected $627 million, according to LSEG. It expects adjusted earnings per share to be between $1.57 and $1.62, up from prior guidance of $1.49 to $1.54. Analysts had expected $1.51, according to LSEG. 
For the current quarter, Oddity is expecting sales to be between $185 million and $189 million, and adjusted earnings per share to be in the range of 61 cents to 64 cents. Analysts had expected revenue of $186.5 million and earnings per share of 56 cents, according to LSEG. 

Shares jumped nearly 10% in extended trading Tuesday.
Oddity, which started trading on the Nasdaq in July, aims to disrupt the legacy beauty and wellness industry by using AI to develop new products and tailor recommendations.
Oddity believes beauty and wellness products are best sold online, and that consumers will not need to visit beauty shops such as Ulta and Sephora if product selection can be improved. 
Last month, Ulta Beauty CEO Dave Kimbell warned that demand for beauty products was cooling, sending its stock down 15% that day and hitting shares of e.l.f. Beauty, Estée Lauder and Coty.
“We have seen a slowdown in the total category,” Kimbell said at an investor conference hosted by JPMorgan Chase. “We came into the year — and we talked about this on our [earnings] call a few weeks ago — expecting the category to moderate. It has [had], as I said, several years of strong growth. We did not anticipate it would continue at the rate that it’s been growing.”
He added that the slowdown has been “a bit earlier and bit bigger than we thought.” Kimbell said the downturn has cut across price points and beauty categories, but has been more significant in prestige makeup and hair care.
Lindsay Drucker Mann, Oddity’s chief financial officer, disagreed that the category is slowing down. 
“There’s no slowdown for us, not in our new users, and not in the way our existing users are behaving. If anything, the quarter shows there’s massive demand for online,” Drucker Mann told CNBC in an interview. 
“What we do see is an industry that’s transforming,” she said. “So the consumer is moving online and the consumer is moving to high-efficacy products that really solve their problems and these are two really unstoppable trends that we see driving the industry that we are leading.”
Read the full earnings release here.

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