Good morning. Today, we'll delve into Amazon's espionage tale, France's dominance over handbags, and the ongoing rivalry between Nike and Adidas. We'll also discuss the decline in superyacht sales, just in case you're on the waiting list.

FASHION
Adidas Beats Nike

Adidas stock has risen 25% over the last year, outperforming Nike's 26% drop. Their recent quarter exceeded expectations, with the Yeezy line generating $159M in revenue. The retro Adidas sneakers are popular with Gen Z, with celebrities like T-Swift sporting them. CEO Bjørn Gulden is making bold moves, including sharing his cellphone number with 60,000 employees. He's quoted saying he'd rather be a star soccer player than Adidas CEO. They're preparing for the Paris Olympics, unveiling a 41-sport “Athlete Pack”.

MARKETING
Nike’s Paris Strategy

Nike plans to boost shoe sales through the upcoming Olympic Games in July 2024 in Paris. They recently unveiled Olympic kits for their sponsored teams, including US athletes, teams from Canada, China, Germany, Kenya, Uganda, and basketball teams from France, Japan, and Spain. They also designed a kit for Korea's new breakdancing event. Despite a predicted impact on profits due to decreased consumer spending, Nike hopes to regain market share from competitors like Hoka and Lululemon through Olympic exposure.

LUXURY
France Exports More Bags Than Cops

France's leading exports are luxury items, particularly handbags, from the conglomerate LVMH, contributing to 4% of French exports last year. This surpasses the entire agricultural sector, which accounted for 3.2%. The high demand for luxury goods shows the world's preference over the country's wine and cheese.

ECONOMY
Superyacht Sales Drop Due to Fewer Russian Oligarch Buyers

In 2023, the yachting industry faced a 35% sales drop due to supply issues and fewer Russian buyers, as per CNBC. Western sanctions froze Russian oligarch assets, including superyachts, leading to high upkeep costs. Supply-chain delays from the pandemic are easing, and superyacht completions rose by 31% last year.

Russian yacht owners typically purchase yachts averaging 200 feet in length, second only to Saudi Arabian owners. American buyers typically opt for shorter yachts, averaging 177 feet. Despite an increase in yacht completions, there is a backlog leading to waiting lists of up to four years, which raises the costs of labor and materials.

FINANCE
Goldman Loves Luxury

Goldman announced a profit-beat, due to strong investment banking fees. They've doubled down on luxury investment banking, with hiring Cosmo Roe to lead global luxury and beauty. Roe, known for major deals like Amazon's acquisition of Whole Foods, has also led sales for Tom Ford and Estée Lauder.

Goldman has led successful IPOs in the luxury sector. Roe’s strategy aims to attract more public investment in this sector, as barriers for new brands have decreased. The luxury market's dynamics are evolving, with an increase in M&A activities and IPOs, positioning Goldman Sachs as a key player in shaping the future of luxury and beauty investment

FINANCE
More Fashion Mergers

Tapestry, owner of Kate Spade and Coach, has received regulatory approval from the EU and Japan for its $8.5 billion merger with Capri Holdings, which owns Versace and Michael Kors. The US Federal Trade Commission is still reviewing the deal, which aims to boost Tapestry’s European luxury portfolio and compete with LVMH.

E-COMMERCE
Amazon Playing Spy

The Wall Street Journal reported the tale of alleged espionage, saying that in 2015, Amazon created a secret operation— first called “Project Curiosity” and then changed to the less ominous “Small Business Insights”—to gather intel on its rivals in the online retail and logistics industries. Amazon, meanwhile, denies claims that it was spying, saying it stayed aboveboard and was just conducting good old-fashioned competitor research.

They supposedly established Big River Services International, a shell company, to sell products on various marketplaces, including Overstock, Etsy, Alibaba, and Walmart, while also utilizing rival logistics and shipping services. Despite expected losses, Amazon claims Big River aimed to profit like any brand. Employees were reportedly asked to hide their Amazon connections to ensure unbiased treatment.

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