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| Here's your daily business briefing. - ✈️ Lufthansa buys big: 80 planes, $9B
- 👗 Deep Dive: Fast fashion's toxic footprint
- 🛍️ Luxury deal: Prada buying Fifth Ave. building for $425M
Make sure to continue reading the Quarterly Earnings Report and the Quick Hits. Thanks for reading!! Shriram
p/Shriram | |
| 1 | | Lufthansa has placed a $9B order for 80 aircraft, comprising 40 Boeing 737 MAX 8s and 40 Airbus A220-300s, scheduled for delivery between 2026 and 2032. This purchase represents Lufthansa's first acquisition of Boeing narrow-body planes in nearly 30 years. More: - In addition, options for 20 Airbus A220 aircraft, 40 Airbus A320 aircraft, and 60 more Boeing 737 MAX 8 aircraft are included in the contract.
- Although it stopped purchasing Boeing 737s in 2016, Lufthansa has always prioritized Airbus for narrow-body aircraft but kept purchasing Boeing's wide-body aircraft.
- The purchase appears to be a calculated move to satisfy carbon reduction obligations, with the Boeing 737 MAX 8 helping to achieve environmental targets.
- Carsten Spohr, CEO of Lufthansa, highlights the importance of purchasing Boeing and Airbus, reaffirming the airline's partnership with both companies.
- Without significantly impacting capital expenditure in 2023-2024, the purchase is expected to be financed with net investments of $2.7B-$3.2B in 2023 and a similar amount the following year.
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| 2 | | 
What the numbers say: Polyester and cotton, constituting 85% of clothing materials, contribute to environmental harm through energy-intensive processes, water consumption, and contamination. The fashion industry's exponential growth has led to a surge in clothing waste, estimated at 22% of global hazardous waste, prompting a shift towards sustainable practices in design, manufacturing, and materials by brands like Adidas and Hugo Boss. Relevance: The fashion industry's anticipated purchase of over 100 million tons of apparel and footwear by 2030 raises substantial environmental concerns. Despite possible recycling or reuse solutions, current efforts are insufficient to counterbalance the negative impacts of the industry's growth, prompting criticism of significant retailers like Shein, H&M, Zara, and Boohoo for environmental negligence and "greenwashing." More data: Textile production, primarily in apparel, generates 8% of global carbon emissions, exceeding the combined impact of shipping and flights. Shein's IPO filing amid criticism and challenges with proposed solutions like organic cotton underscores the need for substantial shifts in consumer habits for industry transformation. | | | |
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| 3 | | Prada is acquiring its flagship store building on New York's Fifth Avenue for $425M, a property leased since 1997. Prada plans to use the space for its store, offices, and storage after the purchase, reflecting strong demand from American consumers despite a global economic slowdown, as evidenced by unexpected retail sales growth in November, nearing the highest level since April 2022. More: - Comparing U.S. retail sales to China, where a property market crisis influences consumer behavior, the U.S. continues to demonstrate resilience against inflation and high borrowing costs, keeping spending stable.
- Sales for Prada fell in the third quarter, and the company's net revenue of $1.18B fell short of analysts' projections.
- With almost 80% of revenues coming from the Prada brand, growth slowed to 5% from 15% in the previous quarter.
- CEO Andrea Guerra said during an October results call that Prada's company has been impacted by global economic issues, notably the Middle East crisis.
- Even in the face of difficulties, luxury brands like Hermes have proven resilient, with sales spikes fueled by affluent U.S. and European consumers purchasing pricey goods like Birkin and Kelly handbags.
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| 4 | | Due to Black Friday and Cyber Monday promotions, November retail sales rose by almost 6% YoY. The National Retail Federation (NRF) reported a 16.5% return rate for retail merchandise in the last year, totaling about $816B. Holiday returns are projected to be close to 18%, approximately $171B, with online shopping significantly contributing to higher return rates. More: - E-commerce sales rose 10.6% year over year in November, while Black Friday online spending hit a record $9.8B, up 7.5% YoY.
- Retailers are adjusting return policies, with about one-third offering a seven-day return period, 27% providing 14 days, 28% extending to 30 days, and 7% allowing up to 90 days, while over 40% plan to reduce return windows for the holidays.
- In the last year, around 50% of retailers added return fees.
- Bath & Body Works implemented stricter policies, limiting non-receipted returns and exchanges and allowing only store credit for exchanges.
- Transparent return procedures impact 77% of Americans' perceptions of a retailer's credibility, according to Shopify.
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| 6 | | Walgreens Boots Alliance, amid efforts to enhance sales and revamp retail stores, is grappling with significant turnover as it appoints its third CIO in just over a year. Internal disruptions, including contractor cuts, workflow disturbances, diminished morale, and the departure of key managers in the IT department, pose challenges to the company's technology-focused strategy. More: - Walgreens reported lower-than-expected revenue for fiscal Q4, narrowing its year-over-year loss and seeing a 9.2% sales increase.
- IT initiatives may be impacted by the company's $1B in cost reductions and $600M decrease in capital spending.
- Tim Wentworth, the company's new CEO, highlights the need for technology — particularly artificial intelligence — for a successful turnaround.
- The new chief information officer, Neal Sample, joined on Nov. 1 and brings 20 years of executive expertise from his time at Northwestern Mutual and Express Scripts.
- To make Walgreens the "Google of healthcare," former CIO Hsiao Wang concentrated on developing engineering and artificial intelligence skills, which caused annoyance and disruptions in the IT division.
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| 7 | | Quick Hits: - Smart investors are generating passive income by selling their shareholder voting rights. Register on Shareholder Vote Exchange to start earning.*
- Citing plentiful U.S. supply, Goldman Sachs has lowered its prediction for the average oil price by 12% for the upcoming year.
- The FTC's antitrust trial against Amazon is delayed until at least mid-2026, as the government seeks efficiency while the e-commerce giant cites the case's complexity for the postponement.
- Conservative social media platform Parler is set to relaunch in Q1 2024, aiming to return as a vibrant marketplace of ideas amid the intensifying 2024 presidential race.
- Mitsubishi UFJ Financial Group has agreed to acquire Australian financial technology company Link Administration for a deal valued at $800M.
- 100K companies automate scheduling with Calendly. Teams are seeing 2x conversion rates, 30% increased customer retention, and 323% ROI. Sign up free.*
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 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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