🚀 Walmart targets fast food eaters

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Market Overview
Read time 1.4 minutes

Year To Date Performances:

1. Walmart is aiming to lure in diners from fast-food chains by offering value meals in its grocery aisles, as eating out becomes increasingly expensive. The retailer's Chief Financial Officer, John David Rainey, highlighted that it's 4.3 times more costly to eat out than to cook at home, a difference that's driving customers to seek cheaper meal options in Walmart's stores. This strategy has paid off, with Walmart's recent quarter showing sales growth fueled by customers opting for affordable grocery items over pricier fast-food options. In contrast, restaurant chains like McDonald’s, Starbucks, and Yum Brands are experiencing a decline in foot traffic and sales, attributing it to bad weather and a slowdown in consumer spending, particularly among lower-income individuals. McDonald’s, in particular, is facing criticism over its prices, with a viral post about an $18 Big Mac combo drawing attention to the issue. Despite this, some fast-casual chains like Chipotle, Wingstop, and Sweetgreen are thriving, indicating that not all restaurants are struggling with higher prices. Walmart's response to this trend includes offering a new grocery brand, Bettergoods, which features affordable, health-conscious items tailored for families. This approach aligns with the current consumer behavior, where the price gap between eating out and cooking at home continues to widen, making value-oriented grocery options more appealing.

2. Under Armour is undergoing a significant restructuring plan in response to a 10% sales decline in its largest market, North America, with profits plummeting over 96% in the fiscal fourth quarter. The company's shares initially dropped but later rebounded after it announced the plan, which is expected to cost between $70 million and $90 million and includes undisclosed layoffs. Under Armour's reported net income for the quarter was $6.6 million, down from $170.6 million a year earlier, with sales falling to $1.33 billion. The company anticipates sales in North America to worsen further, projecting a 15% to 17% decline in the current fiscal year. Founder and CEO Kevin Plank attributed the challenges to lower wholesale demand and inconsistent execution, emphasizing the need to refocus the brand. Under Armour plans to reduce promotions and discounting, expecting its gross margin to improve. Plank acknowledged past leadership issues and aims to simplify the business, streamline product development, and prioritize core apparel offerings, particularly men's apparel. The restructuring aims to refocus the company on its primary goal of "selling more shirts and shoes."

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4. Headlines

   1. Dow Jones hit 40,000.

   2. Average US consumer carries $6,218 in credit card debt.

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