Higher Candy Prices Boost Quarterly Estimates

Hershey tops expectations

Welcome to the Retailist Roundup - As summer winds down, the transition to fall brings with it a surge in back-to-school trends, Pumpkin Spice craze and an uptick in business news. Here, we provide you with the latest updates in ecommerce, retail, and DTC brands, curated directly by our editors.

We've distilled the past week to present the most significant headlines, emerging trends, and insights from global retail experts. Here's a look at the standout topics this week:

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A significant challenge faced by influencers transitioning into retail is building consumer trust. While a follower may indicate a level of interest in an influencer's content, it does not automatically translate into trust in their retail offerings.

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In the News: This week’s top headlines

Hershey tops quarterly estimates boosted by higher candy prices. Hershey exceeded Wall Street's expectations for quarterly sales and profits, capitalizing on higher prices for its chocolates and candies despite a slowdown in demand. The company raised prices in response to supply chain disruptions and rising costs due to factors such as the Russia-Ukraine war but is now facing reduced demand as customers, dealing with higher interest rates and grocery prices, resist pricier confectionery items. Hershey's Q3 organic prices increased by 9.8%, while organic volumes grew only 0.9%. Despite these challenges, Hershey maintained its annual profit forecast and anticipates a boost in sales during major holidays like Halloween. [Reuters]

PayPal taps Fiserv as ‘core’ payments partner. PayPal has chosen Fiserv as its "core" payments partner, although specific details about their existing business relationship were not disclosed. Fiserv's strategic advantage lies in its ability to provide services beyond processing and acquiring, including debit routing through its ownership of debit networks Star and Accel, making it a valuable partner for PayPal in expanding their services beyond e-commerce. Fiserv has also partnered with Melio to offer an integrated accounts payable/accounts receivable service to its financial institution clients, aiming to address the payment needs of small businesses and compete with emerging software-led competitors. [Payments Dive]

Ulta expands wellness spaces to more than 1,300 stores. Ulta, the beauty retailer, is set to perform well during the holiday season as it expands its product range and focuses on creating a "spa-like" atmosphere. This strategy aligns with the trend of consumers prioritizing health and wellness, with research showing that 85% to 90% of all age groups maintain their spending in these categories. Ulta is enhancing its wellness offerings in stores and online, including products from various brands, to cater to health-conscious consumers. In the most recent quarter, Ulta reported a 10% increase in net sales, strong comparable store sales, and traffic growth in various categories, reinforcing its strong market position. [Retail Dive]

Chipotle Mexican Grill easily tops earnings estimates, as price hikes help offset higher food prices. Chipotle reported quarterly earnings that exceeded expectations, driven by higher menu prices for its burritos and bowls. The company's net income for the third quarter increased to $11.32 per share, up from $9.20 per share in the previous year. While costs for beef and queso rose, Chipotle raised menu prices due to inflation, resulting in a 5% growth in same-store sales, and the company plans to open more restaurants in 2024. [CNBC]

Toymakers Hasbro, Mattel slump after sounding alarm over holiday spending. Hasbro and Mattel both saw their stock prices drop after warning of weak holiday season performance due to frugal consumer spending. Hasbro reduced its 2023 revenue forecast for the second time this year, expecting a 13%-15% decline, and its third-quarter results showed an 18% drop in revenue from its core toy business. While digital and licensed gaming revenue grew by 40%, both toymakers anticipate an unpredictable and deal-dependent holiday season. [Reuters]

Consumers paid record credit card fees in 2022. The Consumer Financial Protection Bureau (CFPB) is focusing on preventing bait-and-switch tactics related to credit card rewards as credit card debt in the U.S. surpasses a trillion dollars. Late fees increased from $11.3 billion in 2021 to $14.5 billion in the previous year, and the CFPB has proposed regulations to limit these fees. Credit card companies reported high profits in 2022, with general-purpose cards reaching a 5.9% profit margin, and the average APR margin remained significantly above the prime rate, according to a CFPB report. [Payments Dive]

Neiman Marcus preps for the holidays with Christmas Book, Fantasy Gifts. Neiman Marcus is gearing up for the holiday season with a strategy called "Revolutionizing Luxury Experiences," which includes hosting in-store events like White Elephant parties and breakfast with Santa to attract high-end shoppers. The company had previously announced job cuts as part of a strategic realignment to focus on high-value luxury customer growth. Reports suggest that retailers, including Neiman Marcus, could see increased sales this holiday season, with consumers expected to spend 14% more than the previous year, according to a Deloitte report, especially middle- and higher-income shoppers who plan to increase their holiday budgets significantly. Neiman Marcus has a history of offering high-end gifts and experiences to luxury shoppers during the holiday season. [Retail Dive]

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