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Adidas Wonders What To Do With Yeezy Shoes After Ye Split in 2022

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Germany,  FRANKFURT — After splitting with the artist formerly Kanye West, Adidas is still trying to figure out what to do with 1.2 billion euros ($1.3 billion) worth of Yeezy sneakers. This has resulted in a significant loss for the German sportswear manufacturer at the end of 2017 and future pain expectations.

Selling the well-liked shoe line would entail paying royalties to Ye, who was fired by Adidas five months ago after making anti-Semitic remarks on social media and in interviews, according to CEO Bjorn Gulden. During an earnings call on Wednesday, he mentioned “several variables” regarding what to do with the shoes that are currently stored in warehouses.

Although some businesses have provided recycling options, destroying them could “create sustainability difficulties,” according to Gulden, who was appointed CEO following the uproar over Ye’s comments. Restitching them to sell them while obscuring the Yeezy brand “is not very honest. Therefore, it’s not an option,” he continued.

The goods would “come back again very quickly” because of their high market value, so suggestions to donate them to those in need in locations like earthquake-stricken Syria or Turkey “aren’t an option,” Gulden said.

“I can promise you that the people who this has wounded will also get something positive out of it and gain donations and revenues in different ways, shapes or forms,” Adidas CEO said if the company decides to sell the shoes.

Adidas cut relations with Ye in October after other companies had been pressured to do the same due to the rapper’s harsh comments towards Jews and other groups. Currently, the business is attempting to replace its flagship Yeezy brand, which experts have estimated to account for as much as 15% of its net income and find new ways to become profitable.

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Adidas cut relations with Ye in October.

In the final three months of 2022, the Ye split cost 600 million euros in lost revenues, contributing to the company’s 513 million euro net loss. In contrast to the decline, ascribed to rising supply prices and declining sales in China, the fourth quarter of 2021 saw a profit of 213 million euros.

If the company chooses not to repurpose the remaining Yeezy products in stock, it anticipates further losses of 500 million euros to its earnings this year. The business anticipates an operating deficit of 700 million euros in 2023.

Gulden claimed that while “so many corporations” were ready to purchase the well-liked shoes, doing so would require paying royalties to Ye. But, “it is not accurate” that the corporation was discussing selling them.

“Gazillions of people” had expressed their thoughts, and “when you’re sitting on the inside, it looks a little bit different than it looks on the outside,” he had heard.

Adidas, according to Gulden, is currently looking into claims made by former workers that Ye poisoned the workplace and that the sportswear firm was aware of his unsavory behavior but did little to safeguard staff.

In 2024, the CEO predicted, “we can start to establish a profitable firm again.” The CEO referred to 2023 as “a transition year.”

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Net sales for the fourth quarter of last year increased just 1.3%, to 5.21 billion euros

Net sales for the fourth quarter of last year increased just 1.3%, to 5.21 billion euros, over the same period in the previous year. The company cited a 50% decline in revenue in China and greater supply and shipping expenses, which pricing increases could not compensate for.

The Herzogenaurach, Germany-based corporation reported a net profit of 638 million euros for the entire year on revenues that increased 6% to 22.5 billion euros.

Adidas’ top sales and marketing executives were replaced, further upending its hierarchy. Following Roland Auschel’s retirement from the company after 33 years, Arthur Hoeld, now in charge of the Europe, Middle East, and Africa region, will take over as global sales chief.

Brian Grevy, the head of global brands, will retire on March 31. CEO Gulden will handle his marketing and product duties.

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SOURCE – (AP)

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Why Is Costco’s Hot Dog Still $1.50 When Everything Has Become So Expensive?

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Inflation has affected almost everything over the last two years, including Trader Joe’s 19-cent banana. However, Costco’s hot dog-and-soda combo price remains unchanged.

Costco’s hot dog deal, available in its food courts, remains at $1.50, the same price as in 1985, before the Great Recession, the housing crisis, the pandemic, and the most recent about of decades-high inflation.

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Why Is Costco’s Hot Dog Still $1.50 When Everything Has Become So Expensive?

According to the Bureau of Labor Statistics, consumer prices have increased about 20% since the pandemic began. Many crucial industries, such as housing and groceries, have seen even higher price increases.

If Costco’s hot dog sale had kept up with inflation, it would be three times as expensive now, nearly $4.50. But Costco’s $1.50 combo is a deliberate decision, also known as a loss-leader: The firm is willing to lose money selling the hot dogs at that price — inflation be damned — as long as it helps Costco attract and retain consumers.

“It’s branding,” explained Scott Mushkin, a retail analyst at R5 Capital. The $1.50 offer fosters client loyalty, he noted. “It reminds customers of who Costco is.”

Costco loses money on more than 100 million hot dogs yearly, but it counters these losses by raising prices on other products. Costco has raised the prices of pizzas and other goods in its food courts.

However, Costco has a unique business plan allows it to keep costs low: it makes almost all of its money from memberships, selling things on its warehouse floor for practically cost – and occasionally less.

In a recent interview, Richard Galanti, Costco’s longstanding financial chief who retired this month, stated that the $1.50 pricing was “probably safe for a while.”

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Why Is Costco’s Hot Dog Still $1.50 When Everything Has Become So Expensive?

declining inflation and declining prices
Most businesses need the benefit of a membership model like Costco. They can’t afford to sell the majority of their items for a small profit — or to lose money on products that sell 100 million units each year.

Inflation has fallen significantly since its peak of 9.1% in June 2022. To reduce inflation, the Federal Reserve implemented 11 severe rate hikes designed to crush demand and discourage spending.

According to the Bureau of Labor Statistics, total consumer prices increased by 3.2% in February.

While we may want reduced prices, decreasing prices are a red flag indicating that the economy is in bad shape. We’re not there yet, so don’t worry.

Companies have reported unusually high profitability in recent months owing to strong consumer spending. Even when companies like Costco must hike prices (even on hot dogs in some circumstances), Americans continue to spend.

Consumer spending is the most powerful engine driving the US economy. When individuals spend less money, firms prefer to lay off employees, which can lead to even lower spending and more layoffs. This cycle has the potential to drive the economy into a recession, but again, this is not occurring yet.

“A lack of demand causes price declines. “That means we’d be in a recession,” said Gus Faucher, chief economist at PNC.

“If you raise the effing hot dog, I will kill you.”
Costco’s hot dogs fought inflation from the outset.

Costco’s hot dog offering originated in the company’s early days. Costco added a Hebrew National kiosk to its second warehouse store in Portland, Oregon, shortly after it opened in 1983.

To keep hot dogs’ pricing consistent, Costco found ways to cut other costs in the food court, such as switching from 12-ounce soda cans to cheaper 20-ounce fountain drinks.

costco

Why Is Costco’s Hot Dog Still $1.50 When Everything Has Become So Expensive?

Costco sold kosher hot dogs in its food courts until 2009 when meat supplies began to run low. Recognizing the value of low-cost hot dogs, the business moved production in-house and launched its Kirkland Signature brand. Costco’s factories generate around 388 million non-kosher hot dogs annually for both food courts and retail sales.

Jim Sinegal, Costco’s co-founder, famously threatened former CEO Craig Jelinek, “If you raise the effing hot dog, I will kill you.” “Figure it out.”

“I know it sounds crazy making a big deal about a hot dog, but we spend a lot of time on it,” Sinegal told the Seattle Times in 2009. “We’re recognized for our hot dogs. That is something you do not mess with.

Last year, Costco sold over 130 million hot dog-soda combos worldwide, totaling around $195 million.

SOURCE – (CNN)

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Krispy Kreme Donuts Are Coming To McDonald’s.

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Customers at McDonald’s will soon be able to pair Krispy Kreme doughnuts with their morning McCafe, thanks to a new food alliance that aims to expand both brands but may harm them.

McDonald’s outlets will begin selling three types of Krispy Kreme doughnuts later this year: original glazed, chocolate iced with sprinkles, and chocolate iced “kreme” filled, the firms told CNN on Monday.

Krispy Kreme stock soared over 18% on Tuesday morning. McDonald’s shares fell 0.2%.

This is not the first time two contestants have partnered together. For example, Wendy’s added Cinnabon to its breakfast menu early this year. According to some studies, brand alliances can lead to new customers, brand expansion, and innovation. However, some retail experts believe that alliances might be dangerous and undermine the respective brand names.

krispy kreme

Krispy Kreme Donuts Are Coming To McDonald’s.

According to Truist analysts, the Krispy Kreme doughnut delivery strategy must determine how to successfully serve rural McDonald’s locations more than 20 miles from an urban hub.

Customers have also criticized McDonald’s when the prices of its other menu items climb. McDonald’s chief financial officer, Ian Borden, stated earlier this month that some lower-income Americans are choosing to cook at home rather than dine at its restaurants. In February, CEO Chris Kempczinski addressed McDonald’s “affordability” issue, indicating that the business might reduce prices on certain menu items.

To commemorate the collaboration, Krispy Kreme will give away a free glazed doughnut to guests who visit a donut location between 5 and 9 p.m. on Tuesday.

Adding a Krispy Kreme doughnut to McDonald’s breakfast orders began as a test in 160 Kentucky stores. The doughnuts will be accessible countrywide at participating eateries by the end of 2026, following a staggered deployment that begins later this year. Trust experts say the extensive testing period decreases risk for both sides.

krispy kreme

Krispy Kreme Donuts Are Coming To McDonald’s.

The donuts will be available individually or in six packs, beginning at breakfast and continuing until supplies run out.

The company have fewer outlets than McDonald’s, which had about 13,500 in the United States in 2022. However, customers can purchase Krispy Kreme doughnuts at other locations, including Walmart and other grocery stores. The collaboration could broaden Krispy Kreme’s reach, as the company has been increasing its supply chain to meet its promise of delivering fresh dough daily.

“By making Kreme Krispy (sic) accessible to fans nationwide through this partnership, we expect to more than double our points of access by the end of 2026,” stated Krispy Kreme President and CEO Josh Charlesworth.

Krispy Kreme has centered its business activities around its doughnuts. The Charlotte-based corporation also owns Insomnia Cookies but said in 2023 that it is considering other possibilities, such as selling the cookie brand.

krispy kreme

Krispy Kreme Donuts Are Coming To McDonald’s.

The company returned to the market in 2021 with an initial public offering (IPO). However, its stock remains trading below its IPO price of $17.

“What does this signify for the company’s previously announced aspirations to expand its locations? How will it affect an existing point of access from a McDonald’s down the street? Truist analysts stated.

SOURCE – (CNN)

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Apple, Google And Meta At Risk Of ‘Heavy’ Fines As Europe Launches New Probes

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The European Union has begun investigations into Apple, Google, and Facebook parent Meta, alleging they fail to comply with a new historic European rule to encourage competition in digital services.

The European Commission stated that it “suspects” that all three corporations’ actions “fall short of effective compliance” with the Digital Markets Act (DMA), which took effect earlier this month. If the investigations reveal a “lack of full compliance,” they may face “heavy fines,” according to European Commissioner Thierry Breton.

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Apple, Google And Meta At Risk Of ‘Heavy’ Fines As Europe Launches New Probes

The DMA mandates dominant online platforms to provide users with more options and competitors with more opportunities to compete. It currently applies to the three internet titans under investigation, as well as Amazon (AMZN), Microsoft (MSFT), and TikTok’s Chinese parent company, ByteDance.

The EU has stated that the list might include Elon Musk’s X and Booking.com by mid-May.

Violations of the new rule may result in severe penalties, including fines of up to 10% of a company’s global revenue and up to 20% for further violations. This would amount to tens of billions of dollars for most regulated enterprises.

The European Commission is looking into Meta’s “pay or consent” policy, among other activities. Last October, Meta (META) announced a subscription service named “Subscription for no ads,” which allows European users of Facebook and Instagram to pay up to €12.99 ($14) per month for ad-free versions.

“The Commission is concerned that the binary choice imposed by Meta’s ‘pay or consent’ model may not provide a real alternative in case users do not consent, thereby not achieving the objective of preventing the accumulation of personal data by (large companies),” the agency said in a statement.

A Meta representative responded: “Subscriptions as an alternative to advertising are a well-established business model across many industries, and we created ‘Subscription for no advertisements’ to fulfill multiple overlapping legal duties, including the DMA. We will continue to work constructively with the Commission.

The EU is also looking into app marketplaces run by Apple (AAPL) and Google. According to the DMA, significant digital platforms, often called gatekeepers, must allow app developers to “steer” consumers to deals outside the two leading shops for free.

europe

Apple, Google And Meta At Risk Of ‘Heavy’ Fines As Europe Launches New Probes

Among other issues, the EU fears that Apple and Google’s parent Alphabet (GOOGL) limit developers’ capacity “to freely communicate (with end-users), promote offers, and directly conclude contracts, including by imposing various charges,” the Commission stated.

“We are concerned that Alphabet, Apple, and Meta are not meeting their obligations; for example, Apple and Alphabet continue to charge recurring fees to app developers,” European Commissioner Margrethe Vestager wrote on X Monday.

The European Commission has also raised concerns about Apple’s “choice screen” for Safari. According to the DMA, Apple must alert consumers with “choice screens that must effectively and easily allow them to select an alternative default service, such as a browser or search engine on their iPhones.”

In a statement to CNN, Apple said: “We’re confident our plan complies with the DMA, and we’ll continue to constructively engage with the European Commission as they conduct their investigations.”

Another of the Commission’s worries is about Google Search. Alphabet may not have done enough to guarantee that third-party services appearing in search results are treated in “a fair and non-discriminatory manner” compared to Alphabet’s services, such as Google Shopping and Google Flights.

europe

Apple, Google And Meta At Risk Of ‘Heavy’ Fines As Europe Launches New Probes

Google’s competition chief, Oliver Bethell, said in a statement: “To comply with the Digital Markets Act, we have made major modifications to how our services function in Europe.

“Over the last year, we have held dozens of events with the European Commission, stakeholders, and third parties to solicit and respond to input, as well as to balance competing needs within the ecosystem. We will continue to defend our stance in the coming months.”

SOURCE – (CNN)

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