FT : Race is on to develop new generation of weight-loss drugs

Race is on to develop new generation of weight-loss drugs
Eli Lilly, Amgen, Pfizer and Regeneron follow Novo Nordisk into obesity treatments worth billions

Surging demand and tight supply for a new class of obesity drugs has sparked a race among several of the world’s largest pharmaceutical companies to develop rival medications for a market projected to be worth $50bn in annual revenues by the end of the decade.

Eli Lilly, Amgen, Pfizer and Regeneron are among the companies aiming to compete with market leader Novo Nordisk in a category which analysts say is rapidly becoming a healthcare priority and could produce several blockbuster obesity treatments this decade.

Nordisk’s treatment Wegovy, which a late-stage trial showed produced 15 per cent average weight loss in patients’ body weight, has proven so popular since its launch in 2021 that the drug has been in short supply for almost a year.

Mounjaro, a similar medication already marketed by Lilly for treating diabetes but which is expected to get a green light from regulators next year for obesity, is also scarce at least in part because of off-label use by patients with obesity.

Many physicians have in the past been reluctant to prescribe drugs to tackle obesity because of the stigma surrounding a condition some thought could be treated with diet and exercise and dangerous side effects caused by previous generations of diet pills.

But the effectiveness of the new drugs, which in some cases can produce weight loss equivalent to bariatric surgery, is changing attitudes among physicians and the public.

“This new class of medicines essentially regulate the hunger-satiety cycle of people and enable doctors to treat obesity like a medical condition,” said Evan Seigerman, an analyst at BMO Capital Markets.

“They are generating a lot of excitement among investors because the total addressable market is so huge,” he said.

More than four in 10 American adults are clinically obese, according to the Centers for Disease Control and Prevention, which estimated the annual medical costs of the condition at almost $173bn in 2019. JPMorgan recently forecast the global obesity drug market would be worth more than $50bn by 2030.

Wegovy and Mounjaro are known as glucagon-like peptide 1 (GLP-1) agonists, which were developed to help control blood sugar levels in people with diabetes. These drugs target an area of the brain that regulates appetite and can lead to substantial weight loss in patients when administered as a once-weekly injection under the skin.

Novo’s Wegovy has a leading position in the market but analysts say supply bottlenecks caused by robust demand and manufacturing hiccups have handed Lilly an opportunity to compete aggressively when Mounjaro is approved to treat obesity. Over the medium-to-long term, the market for this new class of GLP-1 drugs is expected to become fiercely competitive as rival pharmaceutical companies launch new therapies.

Last month Amgen published early-stage trial data showing patients on a high dose of its drug candidate Amgen 133 lost almost 15 per cent of body weight in just 85 days. This result was achieved on a monthly dosing regime, rather than the weekly pace that is required for Wegovy and Mounjaro.

Amgen 133 works in a similar fashion to Novo and Lilly’s obesity drugs as an GLP-1 agonist, which acts to suppress a patient’s appetite. But in a break with these medications, the antibody also binds to and blocks a hormonal receptor called glucose-dependent insulinotropic peptide (GIP).

Some researchers believe blocking the secretion of these hormones in the gut after eating can decrease energy intake and increase expenditure of energy, thereby leading to weight loss.

“Hitting two targets at once with a very specific type of directionality, putting the brakes on one while putting the gas on the other, is actually biologically important,” said Saptarsi Haldar, Amgen’s vice-president of research overseeing cardiometabolic diseases.

Amgen forecasts this mechanism will enable its drug to provide more durable weight loss than GLP-1 agonist drugs.

In early December Amgen released data from its phase 1 trial showing patients maintained double-digit percentage reductions in body weight — 11.2 per cent for those on the high dose — up to 150 days after the last of their three doses of the drug.

“The weight loss persists even after patients are not taking the drug anymore, and the reason for that is that they are eating less calories and eating smaller meals. It’s a habit that they learn,” said Joel Neutel, principal investigator on the Amgen clinical trial.

Analysts have said Amgen 133 shows promise, but have cautioned the company will need to replicate these results in second- and third-stage trials to get the drug approved. If it is successful, the company will still be several years behind Novo and Lilly, they said.

Pfizer, which is flush with cash following its success developing Covid-19 vaccines and treatments, said on December 12 it plans to push ahead with a late-stage trial of an oral GLP-1 drug with potential to treat diabetes and obesity. At an investor event, the company touted the potential to claim $10bn in annual sales by 2030 — with analysts noting that a once-a-day pill may gain a competitive advantage over weekly or monthly injections.

Regeneron is at an even earlier stage of development. The New York-based biotech has done extensive genetic research to find a variation on a gene that protects people from obesity.

Aris Baras, senior vice-president of Regeneron Pharmaceuticals, said the GPR75 gene has the “largest effect size” of a genetic variant ever discovered: people who have the variant are at least 60 per cent less likely to become obese.

The company thinks the gene is so promising that it is trying three different ways to create a drug for it.

Internally, it is working on an antibody, which could be delivered as an injection. Regeneron has also partnered with AstraZeneca for its expertise in chemistry, to make a pill, and with Boston-based Alnylam Pharmaceuticals, to use its novel way of silencing genes, called RNA interference, to produce an injection that could be taken as little as twice a year.

Baras said the GLP-1 drugs from Novo Nordisk and Eli Lilly have been a “fantastic development for the field”. But another drug or a combination of drugs have the potential to increase weight loss, and could come without GLP-1 side effects such as nausea.

In an animal study, which he stresses are imperfect models, the changes to the GPR75 gene made them lose at least as much weight as if they were taking the GLP-1 drugs.

“The current medicines that exist for obesity are good, they are not perfect. They are still going to leave substantial residual weight. It would be great to have more beneficial weight reduction,” Baras said.

Health experts say the development of effective medicines to treat obesity that do not appear to have dangerous side effects is helping to ease concerns over weight loss drugs. But there are hurdles to overcome in terms of persuading insurers to cover the cost of treatments, with prices for Wegovy listed at $1,349 per month.

Medicare, the federal US insurance scheme for people aged over 65 years and with disabilities, does not cover obesity treatments. Many private insurers do not cover the treatments or place restrictions on access.

“The real hurdle that’s going to have to be addressed is getting coverage by insurance companies for these medications,” said Patrick O’Neil, an expert on obesity at Medical University of South Carolina. “That is the next cultural shift that is needed.”

FT : UK faces legal action over windfall tax on energy companies

UK faces legal action over windfall tax on energy companies
A low-carbon electricity generator is threatening to sue over UK government plan for levy on sector

A UK developer of onshore wind farms is threatening the government with legal action unless it scraps or amends a new windfall tax on low-carbon electricity generators that will help subsidise household energy bills.

Community Windpower, a private company that operates eight wind farms in Scotland, has written to Treasury chief secretary John Glen claiming that the tax is “unfairly disproportionate, discriminatory and adverse to the government’s [2050] net zero [emissions] strategy”.

The Cheshire-based company is the first low-carbon electricity generator to threaten legal action against the government’s planned levy.

Community Windpower is warning that some of its proposed new wind farms will be put at risk by the windfall tax, and it has hired the law firm Mishcon de Reya to pursue the case.

Chancellor Jeremy Hunt announced the “electricity generator levy” in his Autumn Statement in November, to help raise funds for the government’s subsidy regime to partially shield households from high energy prices until April 2024.

The levy is intended to capture some of the “exceptional” revenues that low-carbon power generators have been making after wholesale electricity prices, which closely track those of gas, soared following Russia’s invasion of Ukraine.

Some low-carbon power companies have been securing even higher revenues as they benefit from a longstanding government subsidy scheme called the “renewables obligation”.

Hunt’s tax on low-carbon power generators will come into force on January 1 and is intended to raise more than £14.2bn by its anticipated withdrawal date of March 31 2028 by adding a 45 per cent charge on wholesale electricity sold at an average price in excess of £75 per megawatt hour.

Rod Wood, managing director of Community Windpower, said the £75/MWh level of the levy would effectively block new onshore wind projects because many developers have witnessed a big jump in their financing costs following recent turmoil in UK financial markets, while the price of turbines is also rising because of supply chain inflation.

“This needs to be made to work, otherwise there simply will be a moratorium on new investment in this sector,” said Wood, who called the levy a “smash and grab raid on renewables” that will “pull the rug out from under the UK’s efforts” to bolster its energy security and cut carbon emissions.

He said the levy was discriminatory as it only applied to low-carbon electricity generators including solar, wind, nuclear and biomass but controversially would not target gas and coal-fired power station operators, some of which have been reporting strong profits.

Community Windpower is urging the government to reconsider the level of the levy and make other changes, including the addition of an investment allowance similar to one that has been provided to oil and gas companies alongside a separate windfall tax on that sector to help pay for the cost of government support on household energy bills. The allowance is meant to encourage new fossil fuel projects in the UK North Sea.

Community Windpower has invested £500mn in wind farms since 2001, and it has proposed to increase this to £2bn by 2025. The company has benefited from the “renewables obligation” subsidy scheme.

The Treasury said the electricity generator levy was “not designed to penalise electricity generators”, but was instead a “response to the fact that, as a result of exceptional and unforeseen geopolitical events, some electricity generators are realising extraordinary returns from higher electricity prices”.

“The continued investment of generators in the industry is vital to our long-term energy security, and this levy leaves them with a share of the upside they receive at times of high wholesale prices,” said the Treasury.

>>> What to look at today - 28th of December 2022

Shares in Hong Kong jumped on news of a further relaxation of pandemic measures in China, contrasting with declines across Asia. Treasury yields rose on worries that China’s reopening would spur inflation. The Hang Seng Index climbed more than 2%, while equity benchmarks in mainland China fluctuated and those in Japan and Australia fell. South Korea’s Kospi index shed more than 2%. European equity futures dropped and contracts for the S&P 500 traded between positive and negative territory after the index fell 0.4% on Tuesday.
Australia’s 10-year bond yield jumped more than 20 basis points and similar-maturity Treasury yields held their increase from Tuesday when they climbed 9 basis points. The dollar was little changed and the yen weakened after the Bank of Japan announced additional unscheduled bond purchases to cap yields. The cautious sentiment damped investor optimism for a rally in the last trading week of 2022 to cap a brutal year for financial markets.  Global equities have lost a fifth of their value, the largest decline since 2008 on an annual basis, and an index of global bonds has slumped 16%. The dollar has surged 7% and the US 10-year yield has jumped to above 3.80% from just 1.5% at the end of 2021. Reports that China would drop quarantine requirements for inbound visitors and begin issuing passports and Hong Kong travel permits to mainland residents increased concern about global inflation pressures. China’s reopening buoyed the outlook for oil, which clung to a three-week high, and came as Russia imposed some restrictions on crude exports to foreign buyers that adhere to a price cap. ron ore surged to its highest since early August, while copper gained in New York. Gold traded flat after edging above $1,800 an ounce in Tuesday trade. US After Hours Very Quiet After Hours Session; nothing very notable, probably will be quiet all week

Nikkei -0,41% Hang Seng +1,25% CSI -0,40% Shanghai -0,25% Shenzen -0,93%

Eur$ 1,0647 CNH 6,9695 CNY 6,9697 JPY 134,08 GBP 1,2028 CHF 0,9295 RUB 69,8512 TRY 18,6869 WTI$ 79,57 - Gold 1,811,35 BTC 16,630 -0,40% ETH 1,195 -1,2%

S&P +0,09% Nasdaq +0,03% EuroStoxx -0,21% FTSE +0,39% Dax -0,11% SMI

Macro :
- Global Bonds Extend Losses Prompting BOJ to Boost Purchases

Keep an eye on :
- AIR FP : France to Sell Two Observation Satellites to Poland: Minister
- AIR FP : BOC Aviation to Buy 40 Boeing 737 Max 8 Aircraft
- AAL LN : Anglo Evaluates Copper-Shipment Options After Port Fire in Chile
- CO FP : Casino Takes 10% Stake in Smart Good Things (Dec. 27)
- PMAG AV : Pierer Mobility Boosts FY Revenue Guidance to 15% to 20% Growth
- SHEL LN : Shell Shuts LNG Train at Australia’s QCLNG for Maintenance: AEMO
- SKAB SS : Skanska Gets $120m Contract for Road Improvement in California

>>> Europe : Brokers Upgrades & Downgrades - 28th of December 2022

>>> Up
* Chr. Hansen Raised to Buy at DNB Markets; PT 571 kroner

>>> Down
* Nixu Cut to Reduce at Inderes; PT 8.20 euros
* Remedy Entertainment Cut to Accumulate at Inderes; PT 25 euros

>>> Initiation
* Bouygues Resumed Neutral at Citi; PT 29 euros
* Colas Rated New Neutral at Citi

>>> Call
* Bouygues Equity Story ‘Complicated,’ Resumed Neutral at Citi

FT : Energy crunch will trigger eurozone contraction in 2023, economists warn

Energy crunch will trigger eurozone contraction in 2023, economists warn
Respondents to FT survey forecast higher unemployment and crash in house prices

The eurozone economy is set to shrink next year as high inflation and potential energy shortages drag down output and trigger a reversal in the fortunes of the labour market, according to a Financial Times poll of economists.

Almost 90 per cent of the 37 economists surveyed by the FT said they thought the single currency zone was already in recession and the majority forecast gross domestic product would contract over the whole of next year.

“Gas markets in Europe remain a key risk,” said Chiara Zangarelli, an economist at Morgan Stanley. “Additional supply disruptions, or a particularly cold winter, could lead to renewed tensions and prices rising again, forcing another round of adaptation and demand destruction.”

Most economists said they thought Europe was past the worst of its energy crisis, sparked by Russia’s invasion of Ukraine. A mild autumn allowed natural gas storage facilities to remain near to full capacity.


However, many fear the prospect of energy rationing could return next year, particularly if this winter is unusually cold, depleting supplies, or if gas flows from Russia are reduced further during 2023.

“The tail risk of gas rationing has likely been avoided for this winter, but the question of energy supply for the next winter is still open,” said Sylvain Broyer, chief economist for Europe Middle East and Africa at S&P Global Ratings.

European countries have managed to lower their dependence on Russian gas imports by turning to Norway, the US and the Middle East, along with switching to alternative energy sources. But economists warn that, without Russian supplies, it will be much harder to refill Europe’s crucial gas storage facilities ahead of next winter.

“Gas storage levels are dropping quickly now,” said Carsten Brzeski, head of macro research at ING Bank. “There is still the risk of an energy supply crisis this winter. Moreover, next winter will be even more challenging.”

The downturn in the economy, combined with significantly higher mortgage costs across Europe, was also expected to trigger a sharp reversal in the region’s housing market. The European Central Bank raised rates by 2.5 percentage points over the course of 2022 and is expected to increase borrowing costs further in 2023.

On average, economists forecast eurozone residential house prices would fall 4.7 per cent next year. Maria Demertzis, senior fellow at the Bruegel think-tank, said house prices “will not continue to increase if we are in a recession and interest rates increase”.

The economists polled by the FT forecast the eurozone economy would shrink by just under 0.01 per cent next year. That is more pessimistic than both the European Commission and the ECB, which predicted the bloc’s economy would grow by 0.3 per cent and 0.5 per cent next year respectively.

Marcello Messori, an economics professor at Luiss University in Rome, said further interest rate hikes by the ECB to counter the “excessive inflation” that was caused by the energy supply shock stemming from Russia’s invasion of Ukraine would “lead to a severe recession in the euro area”.

Inflation in the eurozone is expected to remain above the ECB’s 2 per cent target for at least two more years, according to the economists. On average, those polled expect prices to rise by just over 6 per cent next year and almost 2.7 per cent in 2024.

Those forecasts are lower than those of the ECB, which earlier this month predicted price growth would average 6.3 per cent next year and 3.4 per cent in 2024.


Wage growth is expected to be 4.4 per cent next year, according to the average prediction in the FT poll, which is below the 5.2 per cent forecast by the ECB.

On average, economists forecast unemployment would rise from a record eurozone low of 6.5 per cent in October to 7.1 per cent at the end of next year.

>>> US After Hours Summary: Very Quiet After Hours Session; nothing very notable

After Hours Summary: Very Quiet After Hours Session; nothing very notable, probably will be quiet all week

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: None

Companies trading higher in after hours in reaction to news: KULR +5.2% (to Introduce All-New Modular Energy Platform), CBOE +0.1% (to re-open floor trading of VIX options on Wed)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: None

Companies trading lower in after hours in reaction to news: QMCO -1.9% (stock offering), ISEE -1.7% (to sell its preclinical stage gene therapies IC-100 and IC-200 to Opus Genetics), GILD -0.4% (buys out remaining financial obligations under GS-1811 license), SNCY -0.4% (stock offering)

>>> US Close Dow +0,11% S&P -0,41% Nasdaq -1,38% Russell -0,65%

Closing Stock Market Summary

The stock market kicked off this last week of trading for the year in mixed fashion. The Dow Jones Industrial Average was able to squeeze out a slim gain while the S&P 500 and Nasdaq closed in the red, held down by sizable losses registered by mega cap stocks. 

Tesla (TSLA 109.10, -14.05, -11.4%), Apple (AAPL 130.03, -1.83, -1.4%), and NVIDIA (NVDA 141.21, -10.85, -7.1%) were among the more influential laggards, driving a 1.3% loss in the Vanguard Mega Cap Growth ETF (MGK). Apple fell to a new 52-week low while Tesla sold off, again, on news that production has been suspended at the company's Shanghai plant, which a company spokesman has denied. The fact that TSLA still struggled despite the denial underscores that investors have other worries on their minds like increased competition, weakening demand, and Elon Musk's Twitter distraction.

Losses in the mega cap space, however, seemingly turned into gains for other stocks. To that end, the Invesco S&P 500 Equal Weight ETF (RSP) closed up 0.1%.

Growth stocks were noticeably weak compared to value stocks. The Russell 3000 Growth Index sported a 1.0% loss versus a 0.1% gain in the Russell 3000 Value Index. 

Most of the 11 S&P 500 sectors closed in the red. The heavily weighted consumer discretionary (-1.6%), communication services (-1.2%), and information technology (-1.0%) sectors were buried at the bottom of the pack, falling under the weight of their respective mega cap components. Meanwhile, the energy sector (+1.1%) closed at the top of the leaderboard. 

The industrials sector (+0.3%) was among the outperformers today despite a sizable loss in Southwest Air (LUV 33.94, -2.15, -6.0%) after the airline canceled thousands of flights due to the winter storm.

Chinese stocks and U.S. stocks with high exposure to the Chinese market were a distinct pocket of strength today. This followed reports China, starting January 8, will end quarantine requirements for international travelers. Wynn Resorts (WYNN 84.33, +3.61, +4.5%), Alibaba (BABA 89.86, +4.21, +4.9%), and Baidu (BIDU 116.48, +4.87, +4.4%) were winning standouts for the group.

Treasury yields climbed noticeably higher today. The 2-yr note yield rose 12 basis points to 4.43% and the 10-yr note yield rose 11 basis points to 3.86%. 

  • Dow Jones Industrial Average: -8.5% YTD
  • S&P Midcap 400: -14.3% YTD
  • S&P 500: -19.7% YTD
  • Russell 2000: -22.1% YTD
  • Nasdaq Composite: -33.8% YTD

Reviewing today's economic data:

  • The advanced report for international trade in goods showed an $83.35 billion deficit in November versus a prior revised $98.8 billion deficit in October (-$99.0 billion). The advanced report for retail inventories reflected a 0.1% build in November following a revised 0.4% decline in October (from -0.2%). The advanced report for wholesale inventories showed a 1.0% build in November after a revised 0.6% build in October (from +0.8%).
  • FHFA Housing Price Index came in flat for October after a 0.1% increase in September
  • S&P Case-Shiller Home Price Index fell to 8.6% (consensus 8.0%) in October from 10.4% in September

Looking ahead to Wednesday, market participants will receive the following economic data:

  • 7:00 a.m. ET: Weekly MBA Mortgage Applications Index (prior +0.9%)
  • 10:00 a.m. ET: November Pending Home Sales (consensus -0.2%; prior -4.6%)

Reuters - Tesla used car price bubble pops, weighs on new car demand

Tesla used car price bubble pops, weighs on new car demand

Tesla buyers who waited months for their new car have had an unusual choice for much of the past two years: keep the new electric vehicle, or sell it at a profit to someone with less patience.
But the days of the Tesla flip are numbered - a potential threat to new car prices that are already getting cut.
Prices of used Teslas are falling faster than those of other carmakers and the clean-energy status symbols are languishing in dealer lots longer, industry data provided to Reuters showed.
The average price for a used Tesla in November was $55,754, down 17% from a July peak of $67,297. The overall used car market posted a 4% drop during that period, according to Edmunds data. The used Teslas were in dealer inventory for 50 days on average in November, compared with 38 days for all used cars.
Rising gasoline prices, an effect of the Ukraine war, boosted demand for Teslas, one of few long-range electric vehicles in the market. Tesla Inc TSLA itself raised prices faster than prices for other cars, building its profit margins. And buyers of some new Teslas took advantage of the booming market to sell their relatively new cars for a profit, then order new ones, driving demand for Tesla's new cars.
Now fuel prices are easing, interest rates are rising, Tesla output is increasing, and EV competition is growing, leading used Tesla prices to fall faster than the market, and creating a cascading effect on prices of new Teslas.
Nearly a third of used Teslas for sale in August were 2022 models up for resale, a sign that original buyers were aiming to flip, analysts said. That compares with about 5% of other brands on the used market, research firm Edmunds said.
Tesla shares fell 7.3% to a more than two-year low of $114.12 in early trading on Tuesday. They are down more than 65% this year.

Thomson Reuters


Thomson Reuters


Thomson Reuters

"You can't sell your current Tesla for more money than you paid for it, which was true for a lot of the past two years," said Karl Brauer, executive analyst at car sales website iSeeCars.com. "That would reduce demand for new Teslas."
On Thursday Musk said that the "radical interest rate changes" have increased the prices of all cars, new and used, and that Tesla potentially could lower pricing to sustain volume growth, which would result in lower profit.
Tesla, which has disbanded its media relations department, did not respond to Reuters' emailed questions.
But Tesla is leading the retreat: the factors that pushed up prices of its vehicles were exaggerated compared with other brands because Teslas were "basically for a long time really the only viable product when it came to used EVs," said Ivan Drury, director of Insights at Edmunds.com.
EVs such as the Ford F-150 Lightning and the Hyundai Ioniq 5 are coming to market with a lot of buzz, said Liz Najman, content marketing manager at EV researcher Recurrent.
Software engineer Greg Profitt bought a new Model Y last year for $49,000 and sold it three months later for $12,000 more. He ordered a new one - but has just bought a used Tesla at a discount.
"The economy kind of scares me to buy new " he said, adding that the new $7,500 discount would be too little to sustain demand.

WWD : Stores See Moderate Gains, Questionable Margins

Stores See Moderate Gains, Questionable Margins
Retailers overcame inflation concerns and a deep early December lull to post midsingle-digit sales increases for the holiday season to date and hope for further gains via clearances in the weeks ahead.

It wasn’t a blockbuster or a bust.
Retailers emerged from the holiday season with midsingle-digit revenue gains, questionable margins and leftover fall and holiday inventories. They now look forward to at least three weeks of intense clearance activity to shed the excess, generate early spring selling and make up for business lost during last week’s lethal “cyclone bomb” from Mother Nature.
The storm caused dozens of deaths, hundreds of thousands of power outages and massive flight delays. More than 183 million people nationwide fell under wind chill advisories and warnings last week. Michigan, Minnesota, Kentucky and western New York were among the areas worst hit by snow, ice and winds. Underscoring the danger, Gov. Andy Beshear of Kentucky on Friday warned Americans, “Stay inside. Stay off the roads. Last-second shopping is not worth it if it would cost you your life.”

Still, major urban areas on the East and West coasts with the biggest concentrations of retail were hit less hard, so the weather event was not that impactful for the industry. Freezing temperatures for most of the East continued through Monday, though it is expected to warm up to the 40s and even high 50s by late this week. That will get people out looking for more deals but won’t do much for winter-related merchandise.
Based on interviews and reports Monday from retailers and analysts, consumer spending held up for most of 2022’s extended holiday season, thanks to perpetual price promoting starting in October. Gas prices dropping from an average of more than $5 in June to just over $3 in December in many states also helped, as did the onset of wintry weather spurring sales of coats and cold-weather accessories. Markdowns this month culminated at up to 50 to 60 percent off in many cases, encouraging both self-purchasing and gift shopping at sufficient enough levels.
A precise read on the holiday season won’t be known until fourth-quarter financial reports are issued in February and March. On everybody’s mind for next year: the probability of a recession. Most retailers and industry analysts believe it will happen, and the real question is whether the economy will land hard — meaning an extended period of recession lasting more than two quarters — or whether it’s a soft landing.
On Monday, Mastercard SpendingPulse reported that U.S. retail sales, excluding automotive, increased 7.6 percent year-over-year this holiday season, running from Nov. 1 through Dec. 24. Mastercard SpendingPulse measures in-store and online retail sales across all forms of payment and is not adjusted for inflation.
“This holiday retail season looked different than years past,” said Steve Sadove, senior adviser for Mastercard and former chief executive officer and chairman of Saks Inc. “Retailers discounted heavily but consumers diversified their holiday spending to accommodate rising prices and an appetite for experiences and festive gatherings post-pandemic.”
Holiday shopping in New York City on Wednesday.
LEXIE MORELAND/WWD
According to Mastercard’s preliminary figures, online sales grew 10.6 percent compared to the same period last year and represented 21.6 percent of total retail sales, up from 20.9 percent in 2021 and 20.6 percent in 2020.

Black Friday was the top spending day of the 2022 holiday season, up 12 percent year-over-year, excluding automotive. This was followed closely by Saturdays in December, Mastercard indicated.
“Building on the ongoing demand for experiences, in-person dining continued to show strong momentum with restaurants up 15.1 percent, year-over-year,” said Sadove.
“Inflation altered the way U.S. consumers approached their holiday shopping — from hunting for the best deals to making trade-offs that stretched gift-giving budgets,” said Michelle Meyer, North America chief economist, Mastercard Economics Institute. “Consumers and retailers navigated the season well, displaying resilience amid increasing economic pressures.”
Craig Johnson, president of Customer Growth Partners, said despite the storm, “It was the strongest pre-Christmas week we’ve seen in memory. Christmas Eve, which is usually muted, was just exceptional. Conversion rates really jumped up on Dec. 23 and 24. The bad news was there was a very deep December lull, down 8 or 9 percent, putting retailers in a worse hole than usual.
“The day after Christmas is always a little slow to get started as people recover from Christmas Day, but once you got near to 11:30 things got busy and stayed strong,” Johnson added.
He sees retailers posting holiday sales gains of 5.5 to 7.5 percent. “Things were strong, but not as strong as last year when there was a post-COVID-19 rebound. Some retailers are having a hard time comping the comp.”
By Johnson’s account, top-performing categories were apparel, toys, food and beverage, cosmetics, fragrances, jewelry, footwear, as well as upscale department stores including Neiman Marcus, Saks Fifth Avenue, Bloomingdale’s and Nordstrom, and the dollar store sector. Big-box stores like Walmart and Costco did OK.
“Overall, the weather lifted demand for need-based categories as well as cold-weather gift-giving categories throughout December leading up to Christmas,” said Evan Gold, executive vice president of Planalytics, a consulting firm that helps retailers plan inventories based on weather forecasts. “The last two weeks of December leading up to Christmas were much colder than last year, helping to drive demand for seasonal categories.

“But looking ahead. January will be warmer than last part, and there will be limited opportunities for clearance of cold-weather categories on a year-over-year basis.”
For some regional retailers, last week’s storm ruined a couple of days of business. “It was horrible. Everywhere from Atlanta up to the Midwest was brutal, in particular Illinois, Iowa, Minnesota and Nebraska,” Jim von Maur, CEO of the Davenport, Iowa-based Von Maur, told WWD. “There were 40 to 60 mile an hour winds for three days, ripping interstate road signs to threads.”
He said 80 percent of Von Maur’s business, which includes 37 department stores and the 70 Dry Goods specialty stores selling contemporary women’s fashion, accessories, shoes and gifts, was impacted by the weather, primarily Thursday and Friday. “If you have a store in Alabama or Atlanta, you just don’t know how to deal with the extreme cold,” von Maur said.
Jim von Maur said December sales were good but more was hoped for.
Still, von Maur said December overall was good, but not like last year. “We were hoping for more but post-Christmas selling keeps getting better and better for us. Monday is a holiday for a lot of people. They will come out shopping. The wind is not nearly as bad, and each day will get better,” as the week progresses.
He said von Maur’s margins are “pretty decent,” though in the junior business, “we had to be a little more aggressive.” Otherwise, Uggs, Vineyard Vines and Tommy Bahama were bestsellers.
“We exceeded our goals for the season,” said Shane Grenley, the U.S. manager for the Barcelona, Spain-based Mango fashion chain. “Traffic was up, not in all locations, but it was up overall. In terms of inventory levels, and having the right product aligned per store, per state, it’s been a positive experience.”
Late in the season, sales of coats, sweaters and dresses really picked up in the U.S., Grenley said. “It was all about people buying for themselves to go out to parties and buying more novelty styles as gifts for others.”
“We only put on sale our underperforms. Our top 40 items we did not put on sale, but a lot of competitors were doing the whole store-wide sale,” Grenley said.

Mango went into full sale mode on Monday to clear out inventory from 2022, and will be bringing in new transitional pieces in mid-January and February. “The goal is to liquidate underperforms and fall. We are starting now to maximize the traffic coming in,” Grenley said.
Mango’s best-selling faux shearling lined jacket, priced #149.
Ken Ohashi, CEO of Brooks Brothers, said the company “had a strong start, felt a little lull and then saw a strong build” right before Christmas. “It wasn’t a consistent flow,” he said, speculating that because there was an extra shopping Saturday this year, customers didn’t feel pressure to shop early.
Cold-weather product “really turned on as the season progressed,” he said, as did sportswear, which has become the largest category for the retailer.
Brooks Brothers’ women’s business continued to post good comps, he continued. In the first half, much of the women’s career and luxury items — where the company focused efforts — were out of stock, but the flow improved in the back half, making “a big difference,” Ohashi said.
The company is also attracting a younger customer thanks to the updated assortment designed by Michael Bastian, he said.
“We should end the month where we thought we would,” he said. “When we look at the total fourth quarter and year, we feel good. And our inventory levels are well-controlled which is very positive as we head into [the first quarter].”
Bob Mitchell, co-CEO of Mitchells Stores, said the holiday season was an enigma. Although overall sales came in below expectations, it was still the second-best Christmas in the history of the company.
“It started slow, the middle was strong and it faded at the end,” he said, as the storm that blew across the country just before Christmas forced stores in Seattle and Portland, Oregon, to close. “We missed plan, but it was still very strong.”
The top sellers were luxury items from brands such as Brunello Cucinelli, Zegna, Loro Piana, Isaia and Akris. Women’s handbags from Saint Laurent, Bottega Veneta and Loewe saw growth on top of a record year in 2021. But jewelry, “a big growth engine” during the height of the pandemic, wasn’t as popular this year.

There were reports that luxury overall has begun to slow in the U.S. after almost two years of strong growth.
Looking ahead, Mitchell said he thinks 2023 will be “good, not great. People are not panicking, but the pent-up demand/binge shopping is over. We’re still cautiously optimistic.”
Ken Giddon, president of Rothmans men’s stores in New York, said, “It was a good season. We kept going to the end so we were pleased. Our suburban stores were strong and the city made a comeback. Everything slowed a little a month ago, but that was from very high levels. We sell a higher-end customer, so we didn’t see the slowdown the national retailers saw.”
Top sellers included outerwear, trousers and denim, he said, and in the week before Christmas, accessories as gifts were strong.
“We’re looking forward to 2023,” Giddon said. “We’re anticipating challenges, but we’ll use what we have learned in the past. If we could handle being shut for six months, we can handle a recession.”
At Macy’s, popular items this holiday season included fragrance gift sets, fine jewelry sets; toys from Toys “R” Us departments inside Macy’s, and online; cosmetic gift sets, and cozy sweaters and coats.
“This year, consumers were hearing about the glut of inventory and were likely waiting do more last-minute holiday shopping to get the best value,” a spokesperson from Macy’s indicated.
“For holiday, we are seeing a new trend with big diamonds set in yellow gold to add even more bling,” said Jamie Singleton, group president and chief consumer officer at Signet Jewelers. “Black diamonds have also trended for both men and women. Additionally, we are continuing to see an the trend in men’s jewelryincrease even blurring the gender lines with both men and women gravitating towards classic trends such as pearl strands, tennis necklaces, diamond studs, and signet rings. Across our retailers, yellow gold continues to be a trend driver. We also saw a demand for luxurious gifts.”
“The weather was pretty brutal up here,” said Harry Cunningham, cofounder and owner of GoodMrkt, located in the Jefferson Pointe mall in Fort Wayne, Indiana. Business was impacted on Dec. 23, with the mall opening late, and by lunchtime, people came out and the afternoon business was OK, Cunningham said. He closed the store early, so employees would get home safely. GoodMrkt sells brands that support a variety of causes, from women’s empowerment to ending poverty and hunger to helping the environment through donations, a percent of proceeds or how the products are manufactured and sourced.

He said business on Christmas Eve was flat to last year, and GoodMrkt saw midsingle gain for the season. “From talking to my retail neighbors, they were certainly happy with how the season was going.”
Some bestsellers were Sackcloth & Ashes blankets, priced $110 to $140, where for every blanket sold another one is given to a homeless shelter. Ranger Station candles, priced $39, also sold well. The candles come in reusable whiskey glasses.
“This year, especially compared to last year, saw promotional activity a lot earlier primarily due to access to product. Last year was far less promotional,” said Stephen Yalof, CEO of Tanger Factory Outlet Centers. “We are heartened by reports that, in the last week or two, customers got out early in anticipation of the dangerous weather that occurred in the more northern states.”
He also said many shoppers used Tanger’s app to “window shop” so to speak and plan online despite the severe weather conditions. “They became far more mission-driven and did less tire kicking.”
Yalof did acknowledge that Tanger lost “a few shopping hours due to early closures particularly at our centers in the north.…With value being the mission and clearance for a lot of our retail partners, I think they were able to execute to what they were planning to.”
“This holiday season has been one of the most competitive environments we’ve seen in recent years,” said Paige Thomas, president and CEO of Saks Off 5th. “We found that customers were searching for luxury at a value and we focused on our value proposition throughout the season, ensuring we delivered. Some of our most popular promotions were our designer flash sales for Golden Goose, Saint Laurent and Valentino. As we head into 2023, we anticipate the market to be highly promotional into January. We’re focused on continuing to offer what the luxury fashion shoppers are looking for — at incredible prices.”
“If you take out the bad weather last week, overall retailers did well. The trick is where did the margins come in,” observed Sharon Leite, CEO of The Vitamin Shoppe, speaking about retailing generally. “The sales line was pretty strong, but it really comes down to what the gross margins were.

“We saw positive trends in our business,” Leite added, citing sports nutrition and supplements and “on- the-go” nutritional drinks and snacks as bestsellers. “We feel pretty good about where the consumer is, though they are cautious.” Post-Christmas and January is The Vitamin Shoppes biggest selling period as people make resolutions about living healthier lifestyles after partying it up during the holidays.
Noting that industry reports through Black Friday and Cyber Monday called for pretty strong gains, including the National Retail Federations’s 6 to 8 percent increase, Leite said, “I’m curious where it ends up because of the cold and snow last week. There still are inventory gluts out there in certain areas of retail. I will be interested to see how deep the after-Christmas sales go.”
Bill Brand, CEO of Rue21, was visiting family in Buffalo, New York, and was stuck there on Monday because the airport was still closed due to the storm. “We pretty much met our expectations. We went into the season with a solid plan and were building up a lot of momentum in the last two weeks. Last week was our biggest week of the year, but the severe weather had an impact, about 10 percent of our stores were impacted. Five percent were closed, another 5 percent had limited hours. Our teams managed really well. Some business was pulled forward as people saw the storm approaching.”
Brand said the season was “all about casual and cozy, and layering for girls. Contour and seamless tops did spectacularly. On top of that we saw a huge business in sweatshirts, shirt jackets and varsity jackets.” Fleece for $29, with a buy one, get one for $10, also sold well. “Jeans are always strong but we are starting to see a return to lightweight cargo pants, and parachute pants just started to sell.”
Brand said Rue21’s margins are up significantly from two years ago, as the company shifted to more of an everyday low price positioning. “We have a low income customer. They want the styles and trends. They just want it as a great value.”
“This holiday season was all about value, value, value with customers feeling the impact of inflation,” said Kevin Tulip, president of Primark U.S. “As a value retailer, this coupled with our three new New York store openings [downtown Brooklyn: Jamaica, Queens and Roosevelt Field mall in Garden City] in as many weeks. We saw a strong run up to Christmas and busy holiday season. Being a bricks-and-mortar only retailer means our store footfall can be a good reflection of shopper sentiment and this year people were definitely back out shopping in person. Our stores were busier than ever. While U.S. shoppers are still getting to know Primark’s offerings, our licensed products, already a firm customer favorite, saw a big jump this holiday season.” NBA, NFL, Marvel, Netflix and Disney are key licensed brands at the Dublin-based Primark.

Primark saw a strong holiday season in the U.S., with a jump in licensed product sales.
NEWSCAST CREATIVE
Businesses on Manhattan’s Madison Avenue, according to Matt Bauer, executive director of the Madison Avenue Business Improvement District, saw their strongest traffic earlier in December, as many of the affluent local residents tended to shop earlier before traveling to second homes for the holidays. Some recent store openings, such as Hermès’ relocated flagship, Irene Neuwirth and Kirna Zabete helped bring in some traffic.
While the absence of many tourists from China continues to be a factor, Madison Avenue hotels reported an uptick in travelers from South America and Europe, he said. During a recent neighborhood tour, The Lowell indicated the property was entirely booked, Bauer said.
David Bassuk, global co-leader of AlixPartners’ retail practice, said the holiday season was in line with the consultancy’s forecast for a 4 to 7 percent gain — an increase that was whittled down to about nothing given the inflation that’s shaped the economy and the consumer mindset.
“It’s been a moderate holiday. Business is up, but not as much” as some hoped, Bassuk said. “Online still is a huge factor, but is decelerating from last year.”
The harsh weather across much of the country kept many people from making their last dash out to stores. And while that had some people logging in and shopping online, Bassuk said the storm has set up an opportunity for retail this week.
“Now that the weather is tapering off a bit, I think we’re going to see a big post-Christmas shopping spree,” Bassuk said. “It’s usually a time for returns,” he said. “This year, I think we’re going to see people go out and get shopping and look for those deals that [they missed] over the last weekend.”
On Monday, clearance activity seemed to crescendo. Gap offered an extra 60 percent off already marked down merchandise. Banana Republic was at up to 60 percent off. Lands’ End was at up to 80 percent off. Saks Fifth Avenue offered up to 40 percent off certain designer brands, and The Container Store was up to 50 percent off.
“Now is the time for retailers to be making aggressive plays to get consumers into their store,” Bassuk said, and try to move that inventory that no retailer wants to be stuck with in January.”

That certainly seemed to be the thinking at Target Corp., which was working hard to get shoppers off their couches post-Christmas. The discount giant launched what it dubbed “The Target Clearance Run” with sale promotions of up to 50 percent off on apparel, sleepwear, shoes, beauty gift sets, toys and more.
As Christina Hennington, executive vice president and chief growth officer at Target, said, “Our guests always look forward to post-holiday deals, whether they’re looking to spend the gift cards they received as a holiday gift, restock their pantries after hosting for the holidays or prepare for a New Year’s celebration.”