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Today in the Market (3/22/2023)

Good Evening! Wednesday’s decline in U.S. equities was precipitated by the Federal Reserve’s decision to increase interest rates by a quarter point in response to a rapidly escalating financial crisis.

The S&P 500, Dow Jones, and Nasdaq Composite all declined by roughly the same amount of 1.65%, 1.63%, and 1.60% respectively.

WHAT'S IN STORE FOR NIKE?

Nike Inc. (NKE) announced quarterly sales that were above Wall Street’s forecasts as the sportswear brand moved to reduce its excess inventory. However, the company’s profitability fell short of projections due to markdowns and high freight and material expenses.

  • Revenue: $12.39 Billion vs. $ 11.46 Billion Expected
  • Gross Margin: 43.3% vs. 43.7% Expected
  • Earnings Per Share: $0.79 vs. $0.54 Expected

The main problem is finding a solution! Chief Executive Officer John Donahoe and his staff have made headway in addressing the oversupply that has compelled the firm to reduce its items, eroding profit margins. After reporting a 43% increase in the previous quarter, the company’s inventory increased by 16% from the previous year.

And because of this… On a call with investors, CFO Matt Friend said that the business anticipates a reduction in profitability pressures in the next fiscal year. However, the company’s next issue will be consumer confidence heading into the following fiscal year.

"ORDER FOR UH..."

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The drink that no one expected from Starbucks will soon be launching on March 23. The new olive-oil-infused coffee line, Oleato will be available at select U.S. locations, including the Reserve Roasteries in Chicago, Seattle, and New York. The beverages will then be available in Los Angeles and Seattle beginning on March 27. In the near future, the business intends to roll out the line throughout the country.

So what? This new addition will only add to Starbucks’ drink add-ons, such as cold foam, alternative milk, and syrups, which are a sales engine as more consumers want to customize their beverages. Last quarter, sales of modifiers at company-operated U.S. retailers increased by 28%.

No place like home, I mean Starbucks… Starbucks believes that its unique use of olive oil produced by the family-owned Sicily-based company Partanna delivers an experience that cannot be replicated at home or by any other coffee chain. However, with how fast news spreads, this could become the next trend. Only time will tell.

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