China’s Covid lockdown guidelines ship costs larger

Freeman H. Shen, Founder, Chairman & CEO of WM Motor, speaks during Fireside Chat on Day 2 of CNBC East Tech West at LN Garden Hotel Nansha Guangzhou on November 28, 2018 in Nansha, Guangzhou, China.

Dave Zhong/Getty Images for CNBC International

BEIJING — Covid-related restrictions have increased production costs for Chinese electric car start-up WM Motor, even as existing chip and battery shortages are driving up costs, CEO Freeman Shen told CNBC.

“Adding all these things together, this industry is a fast-growing industry, but the cost part of the equation is also going to be a challenge,” Shen, also founder and chairman of WM Motor, said Wednesday.

Sales of new energy vehicles — which include battery-only and hybrid-powered cars — more than doubled last year in China, the world’s largest automobile market. The country has become a hotbed for electric car start-ups and a launch pad for many traditional auto giants making the shift to electric.

China quickly controlled the local spread of the coronavirus in 2020 by imposing swift lockdowns on cities and neighborhoods. But after the emergence of the highly transmissible omicron variant, some analysts started to question whether the costs of the zero-Covid policy now outweigh the benefits.

The impact is already being felt by factories. A Chinese ministry overseeing manufacturing said this month the lockdowns would be a drag on industrial production in the first quarter.

Shen laid out the impact of Covid-related restrictions on his start-up:

  • A chip manufacturer in Malaysia had production problems and stopped delivering to Bosch China, which then stopped delivering to WM Motor.
  • Within China, after Covid cases emerged in Nanjing, one of WM Motor’s battery cell suppliers stopped deliveries.
  • In the last few months, similar disruptions affected two of the company’s suppliers in the Shangyu district of Shaoxing city, near Hangzhou.
  • Covid-related restrictions on the Ningbo port area also stopped delivery from three suppliers there.

“So, all these things were killing us,” Shen told CNBC.

Automakers around the world have cut production due to a shortage of semiconductors. Geopolitical tensions and overwhelming demand for chips in the wake of the pandemic contributed to a shortfall in supply that has lasted for more than a year.

Shen said he expects the chip shortage to improve in the second half of this year, based on conversations with his start-up’s 11 chip suppliers.

Electric car battery shortage

However, he pointed to another looming problem that could get worse: Rising raw material costs for batteries.

Battery-grade lithium carbonate prices were up more than 500% year-on-year as of earlier this month, according to S&P Global Platts. The firm’s survey of industry insiders released this week found that 80% of respondents expect those lithium prices to remain high this year — about four times higher than the start of 2021.

The battery shortage will likely worsen as demand for electric cars in China picks up in the second quarter, Shen said. For 2022, he expects electric car sales in the country to nearly double from last year to about 5 million vehicles.

An electric WM Motor car is seen inside a shopping mall in downtown Shanghai, China, April 26, 2021.

Costphoto/Barcroft Media | Future Publishing | Getty Images

Read more about electric vehicles from CNBC Pro

Reassessing a Japanese manufacturing model

One of the reasons the pandemic disrupted the supply chain is that factories have historically used a longstanding Japanese model of “just-in-time” or lean manufacturing, in which factories only purchase parts as needed to reduce costs and increase efficiency, Shen pointed out .

But now, the strategy is changing.

“In order to make sure you can deliver your car, you probably will start thinking: We have to waste some of our money to keep some stock,” he said. “For a car company, the biggest loss would be losing the sales to your customer.”

Part of WM Motor’s sales strategy is to work with property developers to open test drive sites in more residential neighborhoods, while building up the cars’ autonomous driving capabilities such as in parking, Shen said.

He said the company will need to raise prices to cope with rising costs, as others in the industry already have.

For one, Tesla raised the price for its Model Y in China by 21,088 yuan ($3,300) in December to 301,840 yuan ($47,450), after subsidies. WM Motor’s cars are about half that price.

Travel restrictions affect business

Economists say China’s Covid-related travel restrictions affect consumer spending more than factories.

Cities frequently change Covid testing requirements for travel, while flights and train tickets can get canceled based on newly reported Covid cases.

These restrictions have also affected WM Motor, Shen said. The company has research and development, factory and other business-side operations in Shanghai, Chengdu, Zhejiang province and Hubei province, in addition to about 500 brick-and-mortar stores across the country.

He said the company had to use more technologies like virtual reality and augmented reality to help employees and customers communicate despite travel restrictions.

“We have to use this kind of technology, because if not, the user experience is going to be terrible, and the efficiency is going to be very bad. And we sometimes cannot even get things done,” Shen said.

Asked if he had any IPO plans, Shen said there was no news to announce on the listing front, and cited the pressing delivery issues.

“Obviously people had a lot of expectation, our investor had a lot of expectation, but we are very busy these days to deliver our product,” he said. “Hopefully we can get something to announce in the near future.”

Larger restaurant wages whack earnings—some warn extra ache continues to be forward

Employees prepare orders for customers at a Chipotle Mexican Grill restaurant in Hollywood, California.

Patrick T. Fallon | Bloomberg | Getty Images

Customers are returning to restaurants in droves, but workers are not, putting even more pressure on fast food chains to hold market share and protect profits while navigating a tight labor market.

In the past two weeks, restaurant managers have painted a bleak picture of the personnel challenges investors face in their profit calls. CEOs like Domino’s Pizza Ritch Allison, Chipotle Mexican Grills Brian Nickol and MC Donalds Chris Kempczinski shared how restaurants have cut opening times, restricted ordering methods, and lost sales because they couldn’t find enough workers. Some chains have been hit harder by the labor shortage, such as Brands International’s restaurant Popeyes, that saw about 40% of its dining rooms closed due to lack of staff.

“Here we separate the wheat from the chaff,” says Kevin McCarthy, an analyst at Neuberger Berman.

Raising wages is a popular approach to personnel problems, although not a perfect solution. McDonald’s wages at its franchise restaurants have risen about 10% so far this year to attract workers. Higher labor costs have resulted in higher menu prices, up about 6% year over year, according to McDonald’s executives.

Starbucks plans to spend around $ 1 billion on improving services for its baristas in fiscal 2021 and 2022, including two planned wage increases. The decision reduced the earnings forecast for fiscal year 2022, disappointing investors and save $ 8 billion in market cap. McCarthy believes, however, that more companies should take a page out of the company’s playbook and invest in their people.

“The stock is in the red, but I think they are a winner. Big step on your part, definitely the right decision in the long run,” he said.

McCarthy said he expected restaurant businesses to lose about 5 points in traffic due to staff shortages.

Looking ahead to the rest of 2021 and into 2022, most publicly traded restaurants expect the problem to persist for at least a few more quarters. Texas Roadhouse CEO Gerald Morgan told analysts on Thursday that there are “a bit” more people in the pool of applicants, but he still believes there is still a long way to go before the company has enough people to meet demand.

Mark Kalinowski, founder of Kalinowski Equity Research, said executives at privately owned restaurant companies are more pessimistic about the timing of the labor market recovery.

“When high-ranking people in private companies say it is getting worse, it usually is,” Kalinowski said.

He has slashed estimates for Starbucks’ fiscal 2022 results and Domino’s U.S. revenue growth for the next quarter, according to the company’s latest earnings reports.

“Not every company will inevitably see a change in its sales forecast, but the margin side has to be considered more closely, especially for concepts that have 100% company-owned locations in the US or are primarily company transactions,” said Kalinowski.

Kalinowski said he prefers stocks with a higher concentration of franchise restaurants. McDonald’s, for example, only operates 5% of its US locations, while the rest is operated by franchisees.

More restaurant income is still ahead. Owner of an outback steakhouse Bloomin ‘brands, Wing stop and Applebees owners Your brands and IHOP parents Your brands are among the companies expected to release their latest results next week. Some analysts, like Wedbush Securities’s Nick Setyan, have revised their estimates in light of earnings reports from peer companies.

Learn how to discover increased rates of interest in your cash amid inflation worries

Your emergency savings could depreciate in value due to one thing: inflation.

The costs are increasing from gasoline, which rose 20% during the pandemic, to bacon, which rose 18.7%.

Meanwhile, persistently low interest rates make it difficult to get a return on your cash and keep your money in a place that is readily available.

While all eyes are on policy makers to see what steps they can take to mitigate the situation, you may want to reassess where your money is invested.

Keep it safe

While it is frustrating to know that you are not getting a high return on your money, the important thing to remember is that you want those funds to be there when you need them.

“If cash is intended for an emergency fund or a short-term spending, it must be kept safe,” said Ken Tumin, Founder and Editor of DepositAccounts.com.

“Stocks or Bitcoin or any other type of investment are not suitable,” he said.

When it comes to keeping your emergency fund safe, there are usually a handful of options: certificates of deposit, checking accounts, savings and money market accounts, and savings bonds.

Each has potential advantages and disadvantages.

Certificates of deposit

In general, it is not a good time to invest in CDs, Tumin said, as their prices are currently at an all-time low. If you invest now, you could set this rate for the long term.

That could lead to regrets if interest rates rise in the next year or two.

Note also with CDs: hard prepayment penalties. However, around a dozen online banks now offer CDs that won’t penalize you for withdrawing your money early, Tumin said.

As a result, it can be worth poking around.

“The only reason to get a CD would be if you could get significantly more than you can get for a savings account,” said Tumin.

Online accounts

High yield checking accounts

According to Tumin, around 1,200 US banks and credit unions currently offer high-yielding premium checking accounts.

More than 150 of them offer accounts that pay at least 3% interest on deposits of up to $ 10,000.

That exceeds the average savings account, which usually just earns 0.14% interest.

As with other accounts, these often come with some conditions, such as: B. Regular use of debit cards.

However, there are other potential benefits such as no monthly fee or 2% cashback on purchases up to $ 200 per month.

Savings bonds

SelectStock | Getty Images

According to Tumin, investing in I-bonds offers a particular advantage in today’s environment, as these are inflation-indexed.

Unlike some other investments, I-bonds allow you to defer federal taxes on the money until you pay it back or until you reach their 30-year maturity.

There are some tradeoffs, however. One disadvantage is that you are limited in how much you can invest per year. Currently the limit is $ 10,000.

You also cannot redeem the money within the first 12 months of the issue date. If you withdraw the money within the first five years, you could lose interest for three months. However, that surpasses the prepayment penalties for some five-year CDs that can earn interest for at least six months, Tumin noted.

Do your due diligence

As the demand for higher interest rates increases, new startups are pushing into this market. It is therefore particularly important to know how your deposits are protected.

FDIC insurance generally covers up to $ 250,000 when your institution fails. But not all accounts and companies are covered.

For example, cryptocurrency savings accounts usually do not offer any protection.

“I would consider this a high risk and not a place for your money,” said Tumin.

Also, check to see if the company is working with one or more banks to hold your deposits.

“The most important thing is to stay with fintechs that only work with one bank,” said Tumin.

Some clients of a company called Beam Financial found this out the hard way when they struggled to access their deposits last year. The company that had a model that involved working with multiple banks ended up being closed by the Federal Trade Commission from the conduct of banking business.

From the Coronary heart to Larger Training: The 2021 Faculty Essays on Cash

Despite the loud street music, the arcade lights and the swarms of people, it was hard to be distracted by the stand on the corner serving steaming cups of tteokbokki – a mix of rice cake and fish cake topped with a hot, sweet sauce. I swallowed when I felt my friend pull on the sleeve of my jacket, expecting that he would try. After all, I promised him that I would spoil him when he visits me on my winter vacation in Korea.

The tteokbokki cups, garnished with sesame leaves and tempura, were a high-end version of street food, nothing like from my childhood. The price of 3,500 Korean won was also not what I remembered it was, simply asking for more to sell on a busy street. If I declined to buy, I could comfort my friend and brother by buying larger meals elsewhere. Or we could spend now on overpriced food to indulge in the instant gratification of a convenient but short-lived snack.

With every seemingly insignificant effort, I weigh the pros and cons of possible purchases, as if I hold my whole fate in my hands. To be generously hospitable, but ruthlessly skimming the travel expenses we needed for two weeks? Or be budget wise but possibly risk being stingy? That is the question and a calculation that I detest so much.

Unable to secure a future job and plagued by livelihood problems, there was no place in my father’s household to be ashamed of austerity or scraping crumbs. Ever since I was taught to dilute shampoo with water, I’ve revamped my formula to reduce eye irritation. Every visit to a fast food chain included a request for a sheet of discount coupons – the parameters of all future menu choices – and an earlier receipt with the code of a completed survey that could be redeemed for a free cheeseburger. Using combinations of multiple promotions to maximize savings at such facilities felt as exciting as cracking war cryptography, which is critical to minimizing cash losses.

However, while disciplined spending restraint can be virtuous in the private sphere, paradoxically, spending less – when it comes to status – on outings, even among friends, costs more. In Asian family style eating habits, a dish ordered is usually available to everyone and the total bill is split evenly regardless of what you or did not consume. I am ashamed to be excluded from paying for dishes that I did not order or eat, so I completely decided not to be invited to dinner. Even at meals where the welcoming host has offered to treat everyone, I am suspicious because I fear that if I only partake in “free meals” I would be pinned as a parasite.

While I can now run t-tests to extract correlations between multiple variables, calculate marginal import propensity, and assess whether a developing country is at risk of being trapped in the middle-income trap elsewhere in the world, my day-to-day decisions keep twirling or elementary arithmetic. I feel haunted, cursed by the compulsion to diligently deduct pennies from purchases in the hopes that it will eventually accumulate to a dollar, as if the slightest miscalculation in a single purchase would plunge my family’s balance sheet into irreversible poverty.

Will I ever stop stressing out about spending too much?

I am not sure if I will ever do it.

But I know that. When I gave 7,000 won in exchange for two cups of tteokbokki that the three of us – my friend, brother and me – could share, I was reminded that even if we don’t swim in shine, our dignity through the generosity of sharing. If you limit your conscience to just wondering which roads lead to wealth, you run the risk of blindness to rarer wealth: friends and family who do not measure their worth by their net worth. Perhaps one day such strict monitoring of financial activities will no longer be necessary, but even if not, it is still enough.

Stay Nation Leisure Inventory May Resume Path Greater

The shares of Live Nation Entertainment, Inc. (NYSE: LYV) are up 1% to $ 86.80 on its most recent review after the entertainment company named Joe Berchtold as CFO yesterday. In addition, ASM Global has expanded its partnership with Ticketmaster by enabling the company to conduct ticket sales for shows promoted by Live Nation. The stock is already up 75.8% year-over-year, hitting a record high of $ 94.63 on March 3rd. The even better news is that LYV recently pulled back on a trendline with historically bullish implications, suggesting the stock could climb back up the charts soon.

Specifically, the security was just within one standard deviation of its 80-day moving average after spending about a month above this trendline. According to data from Schaeffer’s Senior Quantitative Analyst Rocky White, 10 similar signals have occurred in the past three years. Live Nation stocks returned positive returns 70% of those times a month later, up an average of 7.3%. From its current position, a similar move would bring the LYV above the $ 93 mark, which is just below the stock’s record high.

LYV 80 days

A short squeeze would keep the stock in the back of the wind. Short rates rose 10.1% over the last period, and the 12.95 million stocks sold short now account for a whopping 8.6% of the stock’s free float, nearly two weeks of pent-up purchasing power.

Now seems like a good opportunity to weigh Live Nation stock’s next move with options. The Schaeffer’s Volatility Index (SVI) of 34% is in the extremely low 1st percentile of its annual range. This means that option players are pricing in low volatility expectations.

China Covid instances inflicting greater transport prices, delayed items

Sea containers from China and other Asian countries will be unloaded at the Port of Los Angeles on September 14, 2019 in Long Beach, California, as the trade war between China and the United States continues.

Mark Ralston | AFP | Getty Images

At first it was a critical shortage of shipping containers due to the pandemic. Then came a massive one Blockage in the Suez Canal.

Now businesses and consumers are preparing for another shipping crisis as a virus outbreak in southern China disrupts port services and delays deliveries, driving costs up again.

China’s Guangdong Province has seen a sudden surge in Covid-19 cases. Authorities have closed districts and businesses to prevent the virus from spreading rapidly.

This leads to massive shipping delays in large Chinese ports and drives up the already high shipping costs, as the waiting times at the berth “skyrocketed” according to analysts and representatives of the shipping industry.

“The disruptions in Shenzhen and Guangzhou are absolutely massive. Alone they would have an unprecedented impact on the supply chain, ”Brian Glick, founder and CEO of the supply chain integration platform Chain.io, told CNBC.

Together with the challenges that the global supply chain has been facing since this year, shipping is in “absolutely uncharted waters,” said Glick.

Guangdong, a major shipping hub, accounts for about 24% of China’s total exports. It is also home to the Port of Shenzhen and the Port of Guangzhou, which are the third largest and fifth largest in the world by container volume, according to the World Shipping Council.

The first local case of the Delta variant, first discovered in India, was found in Guangzhou in May and has since increased to over 100 cases. The authorities have imposed bans and other measures that limit the processing capacity in the ports.

Global supply chain at risk again

When various parts of the world recovered from the pandemic late last year, there was a buying boom that resulted in containers being critically undercut. This caused massive delays in shipping goods from China to Europe and the US, and drove up prices for businesses and consumers.

Then one of the largest container ships in the world, the Ever Given, got stuck in the Suez Canal and blocked the important trade route for almost a week. Around 12% of world trade is transacted via the Suez Canal, which an average of more than 50 ships pass through each day.

The incident sparked a global shipping crisis and kept $ 9 billion a day in international trade.

Now the recent crisis in southern China is again disrupting the global supply chain.

Shipping costs are at an all-time high … we’ve broken so many price caps that no one can say where that peak will be.

Brian Glick

Founder and CEO, Chain.io

“I think the risk of a supply chain disruption increases and export prices / shipping costs are likely to continue to increase. Guangdong Province plays a critical role in the global supply chain, ”said Zhang Zhiwei, chief economist at Pinpoint Asset Management.

JP Wiggins, vice president of corporate development for shipping software company 3GTMS, told CNBC that the port crisis in China will cause much more disruption for the American consumer as many of the shipments affected are destined for North America. In comparison, the Suez Blockade had a greater impact on European trade as many of the late deliveries were destined for Europe.

Wiggins also said that consumer expectations must remain in “Covid mode”.

“Expect shortages and sell-out of all products made in Asia,” he said.

Shipping costs ‘at all time high’

The increasing shipping costs are a direct result of the crisis.

“Many small and medium-sized shippers throw their hands up because shipping costs exceed the margins of the products they want to ship,” said Glick. “Shipping costs are at an all-time high with anecdotal quotes hitting 5 to 10 times the historical norm. We have broken so many price caps that no one can say where this will peak.”

Read more about China from CNBC Pro

Wiggins warned that prices are “volatile” and said he advises shippers to spend twice as much as it is unclear where this is going.

Shippers who cannot afford the delays will increasingly try to convert ocean shipments to air, which will further increase shipping costs, said Shehrina Kamal, vice president of intelligence solutions at Everstream Analytics.

Ripple effect

Waiting times for ships docking at the Yantian International Container Terminal in Shenzhen have “skyrocketed” from an average waiting time of 0.5 days to 16 days, according to Kamal.

The backlog will exacerbate other ports.

The problem is already worsening in nearby ports as airlines begin diversion, Kamal said. The port of Nansha in Guangzhou is experiencing an influx of cargo due to the diversions, and the congestion and ship delays are expected to last for another two weeks – if not longer, she said.

Coupled with the pandemic in India and the Southeast Asian economies … this surge in Covid cases in Guangdong could add to higher inflationary pressures in other countries.

Zhang Zhiwei

Chief Economist, Pinpoint Asset Management

According to Kamal, the consequences will even spread to neighboring provinces such as Guangxi, Yunnan, Hunan and Hubei.

Fears of inflation

In addition to mainland China, the port at the Hong Kong financial center is also affected.

Cross-border delivery was possible there by truck, but the authorities recently tightened the measures due to the pandemic. That means, among other things, all cross-border trucks will need to be sterilized, which is likely to delay freight traffic and processing overall, Kamal said.

Overall, transshipment at the ports in Guangdong will remain slow in June and other parts of China will likely become more cautious, said Zhang of Pinpoint Asset Management.

This could lead to higher prices, although investors are concerned about rising inflation and the potential impact on interest rates.

“Coupled with the pandemic in India and the Southeast Asian economies … with rising raw material and shipping costs, this surge in Covid cases in Guangdong may add to higher inflationary pressures in other countries,” he warned.

California Governor Seeks Extra Cash for Larger Schooling

California Governor Gavin Newsom proposed spending Friday more about higher education than in its previous budget – and won praise from college leaders as a result.

Issued by the University of California this statement: “The University of California is deeply grateful to Governor Newsom for proposing the largest government investment in UC history: more than $ 807 million, including more than $ 506 million in ongoing funding for core campus operations, the Student Needs and Medical Education. Reflects, with the support of the legislature, an earlier agreement to fully restore more than $ 300 million in budget cuts approved in the 2020 state budget. “

California State University Chancellor Joseph I. Castro said“The governor’s proposal to revise the budget in May provides significant additional funding for public higher education and California State University, and contains many visionary strategies that will enable the Golden State’s economy to revive. Two of those bold proposals are transformation investments in Humboldt State University to accelerate a transition that continues to meet California’s needs and to create a national Hispanic Serving Institution (HSI) Equity Innovation Hub at California State University in Northridge. We are grateful for the proposed recurring investment in the CSU. Investing in the CSU – the largest and most diverse public university in the country – continues to be one of the smartest and most consistent decisions leaders can make with a return seven times the return on every dollar, the Californi invested in the university. “

The Community College League of California said, “The league commends Governor Newsom for his bold proposal to invest in California community colleges by repaying deferrals, investing in labor training, increasing the cost of living, funding delayed maintenance and housing students. “

Analyst Forecasts For Accel Leisure, Inc. (NYSE:ACEL) Are Surging Greater

Celebrations may be appropriate for Accel Entertainment, Inc. ((NYSE: THAT) Shareholders, with analysts vastly improving their legal estimates for the company. Consensus estimates suggest that investors can expect sharp increases in statutory sales and earnings per share, with analysts modeling a real improvement in business performance. Investors were pretty bullish on Accel Entertainment, too, with its stock rising 11% to $ 13.46 over the past week. It will be interesting to see if today’s upgrade is enough to propel the stock any higher.

After the upgrade, the six analysts at Accel Entertainment are now forecasting sales of $ 684 million in 2021. If that were achieved, it would mean a significant increase in sales of 92% compared to the previous 12 months. The losses are expected to go away in the next year, with earnings projected at $ 0.37 per share this year. Prior to this last update, analysts had forecast sales of $ 612 million and earnings per share (EPS) of $ 0.26 for 2021. So we can see that analyst sentiment has risen significantly lately in both sales and earnings per share according to the latest estimates.

Check out our latest analysis for Accel Entertainment

NYSE: ACEL earnings and revenue growth May 15, 2021

It won’t be surprising to learn that as a result of these upgrades, analysts increased their target price for Accel Entertainment by 8.7% to $ 15.58. However, setting a single price target can be unwise because the consensus target is effectively the average of the analyst price targets. As a result, some investors enjoy looking at the various estimates to see if there are different opinions about company valuation. There are a few different perceptions at Accel Entertainment, with the most bullish analyst rating it at $ 20.00 and the most bearish at $ 13.00 per share. Analysts definitely have different views on the business, but we don’t think the spread of estimates is wide enough to suggest extreme results could be awaiting Accel Entertainment shareholders.

One way to get more context about these predictions is to examine how they compare to past performance and how other companies in the same industry are doing. For example, we’ve determined that Accel Entertainment’s rate of growth is expected to accelerate significantly. Annual sales growth of 138% is forecast by the end of 2021. This is well above the historic decline of 18% per year last year. In contrast, our data suggests that other companies (with analyst coverage) in the industry are forecasting revenue growth of 22% per year. Not only are Accel Entertainment revenues expected to improve, but analysts expect faster growth than the industry as a whole.

The bottom line

Most importantly, with this upgrade, analysts have revised their earnings per share estimates for this year in anticipation of an improvement in business conditions. They have also updated their sales estimates for this year, and sales are expected to grow faster than the broader market. Given that the consensus seems almost broadly bullish with a significant increase in forecasts and a higher price target, Accel Entertainment may be worth investigating further.

Analysts are definitely bullish at Accel Entertainment, but no company is perfect. In fact, you should know that there are a few potential concerns to be aware of, including last year’s dilutive stock issue. For more information, you can click through to our platform Learn more about this and the other two flags we identified .

Another way to look for interesting companies that might be Reaching a turning point is to track whether the management buys or sells with ours free List of growing companies that insider buy.

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L Manufacturers spinning off Victoria’s Secret at greater valuation

Shoppers walk past a Victoria’s Secret store in a mall in San Diego, Calif., On April 22, 2021.

Bing Guan | Bloomberg | Getty Images

L brands said Tuesday it would outsource its Victoria’s Secret brand instead of selling it.

The company said it had received interest from several potential buyers, but concluded that splitting Victoria’s Secret and Bath & Body Works into two separate public companies would be a better option. The spin-offs are expected to be completed in August.

Andrew Meslow, CEO of L Brands, will remain in his position and will also lead Bath & Body Works after the spin-off. Martin Waters, CEO of Victoria’s Secret, will continue to run the independent business after the separation.

“We have made significant progress in transforming the Victoria’s Secret business over the past ten months,” said Sarah Nash, chairwoman of L Brands, in a statement.

L Brands shares fell 3.7% in premarket trading.

Improved outlook

The Columbus, Ohio-based retailer also released preliminary financial results for the first quarter, which were stronger than expected as stimulus payments and eased Covid restrictions helped drive customer traffic.

L Brands expects earnings of $ 1.25 per share for the May 1 period after adjustments, compared to an earlier outlook of 85 cents to $ 1 per share. Net sales are estimated at $ 3.02 billion compared to $ 1.65 billion last year.

According to a Refinitiv poll, analysts had expected L Brands to earn 98 cents per share on sales of $ 2.89 billion.

This is the third time the company has increased its outlook for the first quarter.

A turnaround is taking place

L Brands said the split will allow both brands to continue building on the newfound momentum. As a separate company, each company can better focus on growing and have greater financial flexibility to adapt to a changing retail landscape.

Victoria’s Secret has long had a dominant market share in the lingerie industry but fell out of favor due to its overtly sexy marketing that avoided certain body types. That marketing message wasn’t working for a lot of women and they had started shopping at other brands like Aerie that included inclusivity and convenience. Victoria’s Secret had to spin to meet their needs.

Since that past holiday season, the momentum at Victoria’s Secret has picked up. The company’s efforts have included changes in marketing, fewer promotions, and most importantly, new products like more comfortable items like bralettes.

L brands too More than 200 stores were closed in 2020 to focus on its more profitable locations and invest online.

Analysts from Citi and JPMorgan recently valued Victoria’s Secret as an independent company at around $ 5 billion.

L brands Talks with potential buyers restarted for Victoria’s Secret after a sale to private equity firm Sycamore Partners fell apart last year due to the pandemic. That deal would have valued the lingerie label at $ 1.1 billion.

Sycamore sued L Brands last April, demanding around $ 525 million to cancel a deal that would have given the private equity firm 55 percent control of Victoria’s Secret. It has been argued that L Brands violated the terms of the agreement by not paying rent and not taking workers off. L Brands prevented a lawsuit by agreeing to break off the deal.

The plans for the split were first published in the New York Times.

L Brands shares are up roughly 84% since the start of the year. It has a market cap of $ 19.2 billion.

Coldplay launch new music Increased Energy into the world from Area | Leisure

Coldplay premiered their new single “Higher Power” in space.

Chris Martin and Co asked the French ESA astronaut Thomas Pesquet for help to bring their new song into the world on Thursday evening (June 5th, 21st) from the International Space Station.

The band members – including Guy Berryman, Jonny Buckland and Will Champion – participated in a live video chat with the spaceman currently aboard the ISS, before performing the track with alien-inspired CGI choreography and visual effects took place reflected back to earth by Pesquet.

Front man Chris told the astronaut, “We sent you music because we can’t play for anyone on Earth right now, so we thought we’d only play for you.”

Coldplay will open the BRIT Awards on May 11th with a spectacular performance of ‘Higher Power’ filmed from a platform on the Thames.

Before the single was released, cryptic billboards around the world pointed to a mysterious website called alienradio.fm.

And fans managed to decipher the letter-like symbols to reveal the song title and release date.

Meanwhile, it was recently reported that Coldplay’s new album is imminent after the ‘ALIENS’ group registered and officially applied for a trademark for the term ‘Music Of The Spheres’, the name for music, merchandise and more in the United States to use.

A source said, “Chris and co have been dropping clues for a while but it’s finally getting started. They were working on new music during lockdown and it will all culminate in the record that has the working title.” ‘Music Of The Spheres’. Chris and the group have now officially registered the name as a trademark for an album. It also contains goods and everything you need for a gate. It’s a really exciting time for everyone. There is no doubt that this project will also go straight to the top. “

‘Music Of The Spheres’ was also printed in a book accompanying the vinyl version of Coldplay’s 2019 album ‘Everyday Life’, along with ‘Coldplay, Coming Soon’ in fine print.

‘Higher Power’ is now available for all major streaming services.