Barrons : China Has the Jump on Building the Metaverse. These Tech Companies Are

China Has the Jump on Building the Metaverse. These Tech Companies Are Leading the Way.

Mark Zuckerberg lately introduced Western financiers to the metaverse, an immersive online realm that may someday yield enormous profit. Chinese investors were all over it already.

Young companies such as AVIT (ticker: 300264.China), which builds cool virtual-reality gear, and cutting-edge game designer Shenzhen Zhongqingbao Interaction Network (300052.China) have multiplied in value this year based on their metaverse promise.

Chinese tech giants are catching the meta bug, too. Tencent Holding (700.Hong Kong), TikTok parent ByteDance, and e-commerce champion Alibaba Group Holding (BABA) are busy trademarking meta versions of existing “two-dimensional” services and making nine-figure investments in meta start-ups.

“The key assets for the metaverse are scale and the IP [intellectual property] to create an immersive, synchronous experience,” says Igor Tishin, an analyst at Harding Loevner. Companies with those assets are concentrated in two places: the U.S. West Coast and China’s South Coast.

Tencent has a big head start over Meta Platforms, Zuckerberg’s re-christened Facebook empire, through its huge franchise in online gaming, the main portal for early metaverse adopters, says Marko Papic, chief strategist at the Clocktower Group. Millions of Chinese already earn money acting as “game partners,” playing with strangers for a fee, or “gold farming,” acquiring online trinkets and selling them for real-world money. “Chinese interactive mobile platforms, and Tencent in particular, have innovated beyond the U.S. or anyone else,” Papic says.

The only thing that can stop them is China itself, and it might. Beijing once cheered the development of virtual and “augmented” reality, the building blocks of the metaverse. The disciplines got a nod in China’s last five-year plan, and were included in the China 2025 blueprint for matching the U.S. as a technology power.

Now, such next-gen wizardry has become suspect, along with the rest of internet-based commerce. The state-owned Securities Times took a whack at highflying metaverse stocks in September. Those who “blindly invest in such a grand and illusory concept as metaverse will be burnt in the end,” it warned.

The admonition may be warranted, says Brendan Ahern, chief investment officer at KraneShares, which operates a suite of China-focused exchange-traded funds. “You might see some of these companies as the GameStops of China,” he says. “Enthusiasm is somewhat detached from fundamentals.”

More ominous for meta entrepreneurs is Beijing’s broader tilt against gaming. It recently limited minors to three hours a week, at least in theory, and coerced the industry into a pledge to avoid game content that “distorts history,” enhances “money worship,” or encourages “sissy pants” gender erosion. These elastic prohibitions could undo China’s early advantage in building the metaverse, Papic argues. “Chinese policy makers may be handing Facebook an open lane because they decided that computer games are a waste of time,” he says. They have certainly cast a shadow over Tencent, whose shares are down 15% this year.

It’s early days in the metaverse race, however. Tishin and Papic envision a decade’s gestation period, giving China time to fine-tune policy. Nor will the race have just one or two winners. Multiple breakthroughs are needed in hardware—virtual-reality headsets that don’t weigh a ton, sensors that convey subtleties of movement and body language—and software that can bring thousands or millions together for a common virtual experience; current gaming systems max out at 100.

Chinese companies, new and established, will have a big role to play.

Barrons : Vodafone Is Getting a Boost From Fintech in Africa. The Stock Is Due f

Vodafone Is Getting a Boost From Fintech in Africa. The Stock Is Due for a Rebound.

In August 2020, as Vodafone Group shares tumbled, this column said the drop was a buying opportunity. Nine months after that, the telecom giant’s stock gained almost 20%, to 1.40 pounds sterling ($1.91), thanks to value created from asset disposals—such as the initial public offering of its mobile-tower business—and the easing of Covid-related travel restrictions.

But just as the U.K.-listed shares (ticker: VOD.UK) hit their stride, CEO Nick Read unveiled higher-than-expected capital-expenditure plans. He green lighted an extra £500 million a year for more investment in the network, advances in financial-services technology in Africa, and to pursue digital opportunities presented during the pandemic, such as heavy demand for cybersecurity.

This, along with concerns over the health of its core German business, spooked investors, sending shares tumbling 17% to £1.09 in the past six months. That compares to a 1.1% fall at rival Deutsche Telekom (DTE.Germany) and a 2.4% decline at Telefonica (TEF).

The slide presents another buying opportunity ahead of Vodafone ’s half- year update later this month.

Research boutique New Street wrote in a recent note that the German business will recover. “Vodafone’s operational performance remains misunderstood by the market,” analysts wrote, adding that Vodafone is “outperforming operationally in all of their main markets.”

Analysts at Berenberg estimate the stock could rise to £1.55, boosted by its businesses in the Internet of Things (IoT) and African fintech.

The Internet of Things describes devices such as lights that connect to the web and can be activated remotely. It only accounts for 2% of Vodafone’s group revenue, or just under £1 billion, but it’s growing. In the fiscal first quarter to June 30, revenue increased by 22.3% from the same period a year ago.

The IoT enables companies to closely monitor the performance of products, cut costs, and hit environmental targets. Berenberg says the overall market for IoT is expected to expand 16% annually over the next three years.

Another growth area is fintech in Africa, where mobile phones have become vital in connecting people in remote areas and helping them secure access to medical help, finance, e-commerce, and insurance. M-Pesa, Vodafone’s mobile-based money-transfer service, was set up in 2007 with Vodacom Group (VOD.South Africa); Vodafone owns a 60.5% stake. M-Pesa services 15 million customers with nano and micro loans, for people who don’t have access to traditional financial resources.

The M-Pesa platform processed almost 4.5 billion transactions in the three months to June 30, an increase of 45% from the prior year. In terms of revenue and earnings, Vodafone receives a 60% share of everything Vodacom generates.

Vodafone has a market value of £30.7 billion and employs about 100,000 people. It fetches 11.5 times this year’s expected earnings and is valued in line with its peers. Pre-tax profit for 2021, which ended March 31, was €4.4 billion ($4.69 billion), an increase from €795 million in 2020, when the company took a large write-down for financing costs connected to its Indian business. Sales in 2021 were €43.8 billion, down from €44.9 billion in 2020, due to Covid-19 travel bans that reduced revenue from roaming charges and a decline in smartphone sales.

CEO Read tells Barron’s that “we are back to service revenue growth in Europe as well as Africa,” with more than 3% growth in the first quarter. “We have good commercial momentum in the business and we are continuing to build value around our platforms, such as IoT and M-Pesa,” he says.

>>> Weekly Market Update

Weekly Market Update: Animal spirits continue to outweigh fears of stagflation

Stock markets were already riding a wave of momentum and this week’s developments only added to investors’ willingness to take on risk. On Wednesday, the Fed delivered on the long promised tapering announcement, but investors clearly still favored the belief that the bond-buying program and low interest rates will continue to provide accommodation. The next day the Bank of England surprised some analysts by deciding to hold rates steady, though three hawkish members of the MPC Board dissented. Both Fed Chairman Powell and BOE Governor Bailey emphasized they were sensitive to the burden that rising prices put on segments of society least equipped to deal with it, but again played down the prospect of an imminent turn to raising interest rates. Each reiterated their stance still holds that much of the inflation coming through the pipe will ultimately be viewed as transitory, but also acknowledged it remains unclear when supply shocks will subside, allowing prices to move back down. Rates moved lower globally. The US 10-year yield dipped to its lowest level in more than a month, back below 1.50%. Market-implied 2022 central bank rate hike expectations came in only marginally despite the rally in sovereign bond markets. Central bankers in Poland and the Czech Republic showed more concern about inflation and took aggressive action, each raising rates by more than analysts expected.

Friday’s news that Pfizer’s oral antiviral candidate reduced risk of hospitalization or death from COVID by 89% further invigorated animal spirits. Also, October payroll data was a pleasant surprise, with strength seen across a broad number of industries. Nonfarm payrolls rose by 531K in the latest month and saw a 235K upward revision to August and September job gains. Payrolls have now reversed 85% of their initial pandemic losses. The S&P surged above 4,700 and the NASDAQ composite topped 16K for the first time ever. The VIX spent much of the week hovering near 15, just above multi-year lows. WTI crude lost ground heading into another OPEC+ meeting where producers agreed to stay on course by easing their coordinated cuts by another 400K bpd in December. Crude oil prices moved up after the announcement amid jawboning by the Biden Administration, which clearly remains frustrated by the elevated levels. Meanwhile Congressional Democrats continued to wrangle over the infrastructure and reconciliation bills. For the week, the S&P gained 2%, the DJIA added 1.4%, and the Nasdaq was up 3.1%.

In corporate news this week, Google said it would invest $1B into CME Group as part of a 10-year partnership to improve the global derivatives markets through cloud adoption. Moderna shares were battered by an FDA delay to its vaccine EUA request, a poor earnings report, and news of the Pfizer COVID oral antiviral treatment. Bed Bath and Beyond was buoyed after launching a shift in its business model including a collaboration with Kroger. Peloton slashed its outlook and profitability forecast, though it said it still expects to have positive adjusted EBITDA in 2023. Uber posted its first ever quarter of positive adjusted EBITDA and the CEO gave an upbeat outlook, though the ride-share giant reported a larger than expected net losses due to its investment in Didi.

DuPont said it plans to acquire engineered materials and components manufacturer Rogers Corp for $5B, a move to bolster DuPont's existing electronics and industrial business. Coca-Cola confirmed it would acquire the remaining 85% stake in sports drink maker BodyArmor for $5.6B in cash. Tesla CEO Musk rebuffed earlier reports of a deal with Hertz, saying they have yet to reach agreement with the rental car company over the timing of potential vehicle deliveries. On the supply chain front, the CEO of global logistics company Expeditors said he didn’t foresee a meaningful reduction in cargo and port backlogs for at least the rest of the year and that he expects current conditions likely to last well into 2022.


SUN 10/31
MRNA Confirms US FDA requires additional time to complete assessment of EUA request for use of COVID-19 vaccine ("Spikevax", mRNA-1273) at 100 µg dose level in adolescents 12 to 17 years of age due to risk of myocarditis and indicates review may not be completed before Jan 2022
GFS CEO: company's semiconductor chip capacity sold out through end-2023
(US) Goldman Sachs analysts now see Fed to hike interest rates in July 2022 (prior saw in Q3 2023) due to inflation concerns
*(CN) CHINA OCT MANUFACTURING PMI (GOVT OFFICIAL): 49.2 V 49.7E (2nd consecutive contraction)
(CN) China President Xi campaign to reduce the burden of homework and after school tuition for Chinese kids is creating a boom for sports and arts clubs, with 33.0K new arts and sports schools being created

MON 11/1
(HK) Macau Sept Casino Rev (MOP) 4.37B v 5.88B prior; Y/Y +57.3% v 165.9% prior
RYA.UK CEO O'Leary: Raises FY22 passengers 102-103M (prior 90-100M); Sees load factors rising up towards 90% this winter - post earnings comments
(DE) German day-ahead baseload power price at €210.0/MWh +158% d/d
(CN) Global Times' Hu Xijin: Reunification of Taiwan island is inevitable, the most important thing is not the timetable, but at which point and in which specific way the reunification will be most beneficial to China's overall national strategy.
*(US) OCT MARKIT FINAL MANUFACTURING PMI: 58.4 V 59.2E
*(US) OCT ISM MANUFACTURING: 60.8 V 60.5E; PRICES PAID: 85.7 V 82.0E
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 8.2% from 6.6%
(US) Treasury quarterly financing estimates: to borrow $1.02T in Oct-Dec quarter v $830Be (prior estimate to borrow $703B)

TUES 11/2
BP.UK Reports Q3 adj Net $3.32B v $3.0Be, Rev $37.9B v $26.3B y/y; Further $1.25B share buyback planned
MAERSKB.DK CEO: high rates will continue through Q1 2022 - post earnings comments
ROG Confirms to be acquired by DuPont for $277/shr in ~$5.2B deal; DuPont announces intent to divest a substantial portion of its Mobility & Materials segment
PFE Reports Q3 $1.34 v $1.08e, Rev $24.1B v $22.4Be
GPN Reports Q3 $2.18 v $2.14e, Rev $2.20B v $1.99Be
EXPD Reports Q3 $2.12 v $1.67e, Rev $4.32B v $3.45Be; CEO - Doesn't foresee a meaningful reduction in cargo, port backlogs
(NZ) Fonterra Global Dairy Trade Auction Dairy Trade price index: +4.3% v +2.2% prior
(US) Sen Maj Leader Schumer: An agreement has been reached on lowering prescription drug costs
TMUS Reports Q3 $0.55 v $0.54e, Rev $19.6B v $20.1Be
Z Reports Q3 GAAP Net -$328M v +$39.6M y/y, Rev $1.74B v $2.01Be; Confirms plan to wind down Zillow Offers operations; will take several quarters and cut workforce by approximately 25%
MDLZ Reports Q3 $0.71 v $0.70e, Rev $7.18B v $7.04Be
BBBY Kroger collaborates with Bed Bath & Beyond Inc. on a national e-commerce experience and in-store pilot to expand Kroger's Home and Baby Offering
(CN) China increases development of subsidized rental housing - Chinese press
(US) Republican Glenn Youngkin projected to win in the Virginia Governor's race
DE Striking workers Rejected tentative 6-year labor agreement; 55% of workers voted against the agreement - US financial press

WEDS 11/3
(TR) Turkey Oct CPI M/M: 2.4% v 2.8%e; Y/Y: 19.9% v 20.4%e
FUN Reports Q3 $2.60 v $2.19e, Rev $753.4M v $643Me; Demand remains strong through October Halloween events
BMW.DE CFO: sees more disruption from chip shortage in Q4; Does not expect short-term magnesium shortage to affect production - post earnings comments
*(UK) OCT FINAL PMI SERVICES: 59.1 V 58.0E (confirms 8th month of expansion)
*(EU) EURO ZONE SEPT UNEMPLOYMENT RATE: 7.4% V 7.4%E
CVS Reports Q3 $1.97 v $1.79e, Rev $73.8B v $70.2Be; Raises guidance
(RU) Moscow mayor confirms lockdown measures to be ended on Sunday, Nov 7th due to stabilization in COVID-19 situation - press
WBA To provide Pfizer COVID-19 Vaccines to Children Ages 5 to 11 at Select Stores Nationwide Beginning Saturday, Nov 6th
*(US) OCT ADP EMPLOYMENT CHANGE: +571K V +400KE; Job gains are accelerating across all industries
RFL European Medicines Agency grants Orphan Drug Designation to Unit Rafael Pharmaceuticals’ CPI-613 (Devimistat) for treatment of patients with relapsed or refractory Burkitt's lymphoma
*(US) OCT ISM SERVICES INDEX: 66.7 V 62.0E (record high since 1997)
*(US) DOE CRUDE: +3.3M V +1.5ME; GASOLINE: -1.5M V -1.5ME; DISTILLATE: +2.2M V -1ME
(US) DOD report warns China's nuclear stockpile is outpacing forecasts; China may have least 1K warheads by 2030 - press
*(US) FOMC LEAVES TARGET RANGE UNCHANGED BETWEEN 0.00-0.25% (AS EXPECTED); TAPER TO START IN NOVEMBER WITH MONTHLY REDUCTIONS OF $15B
COST Reports Oct total SSS +11.8% (ex-gas and FX) y/y
(US) New Jersey re-elects Murphy (D) as Gov (1st time a Democratic Gov has been re-elected since 1977)
2282.HK Reports Q3 (HK$) adj EBITDA 100.5M v -730.6M y/y; Rev 2.25B v 363.2M y/y
386.HK Signs 20-year agreement for 4.0Mt/year purchase from US Venture Global LNG valued at $30B

THURS 11/4
7203.JP Reports H1 Net ¥1.52T v ¥629.4B y/y; Op ¥1.75T v ¥520.0B y/y; Rev ¥15.5T v ¥11.4B y/y; Announces share buyback for ¥150B (0.86% of shares)
CSGN.CH Reports Q3 (CHF) Net 434M v 546M y/y, Rev 5.44B v 5.20B y/y; Investment Bank unit plans to exit prime services
NOVN.CH To divest 53.3M Roche bearer shares (~33% stake) at CHF356.93/shr for ~$20.7B; Roche affirms FY21 outlook and aiming at increasing the dividend in CHF for 2021
*(FR) FRANCE OCT FINAL PMI SERVICES: 56.6 V 56.6E (confirms 7th straight expansion)
*(DE) GERMANY OCT FINAL PMI SERVICES: 52.4 V 52.4E (confirms 6th month of expansion)
880.HK Reports Q3 (HKD) Net -1.25B v -1.03B y/y, Rev 2.41B v 879M y/y
CI Reports Q3 $5.73 v $5.23e, Rev $44.3B v $43.0Be; Raises FY21 outlook
ABC Reports Q4 $2.39 v $2.36e, Rev $58.9B v $56.7Be; Raises Quarterly dividend 4.5% to $0.46 from $0.44 (indicated yield 1.43%)
MRNA Reports Q3 $7.70 v $8.96e, Rev $5.0B v $6.05Be; Announces share buyback of up to $1B over 2 years; Sees some international shipments and exports may shift vaccine deliveries to early 2022
FAST Reports Oct net sales $531.6M +8.9% y/y
*(UK) BANK OF ENGLAND (BOE) LEAVES INTEREST RATES UNCHANGED AT 0.10%; AS EXPECTED
K Reports Q3 $1.09 v $0.94e, Rev $3.62B v $3.53Be
*(US) Q3 PRELIMINARY NONFARM PRODUCTIVITY: -5.0% V -3.1%E; UNIT LABOR COSTS: 8.3% V 7.0%E
*(US) INITIAL JOBLESS CLAIMS: 269K V 275KE (new post-pandemic low); CONTINUING CLAIMS: 2.11M V 2.15ME
(UK) BOE Gov Bailey: Cautions on the scale of rate rises seen in market; Inflation peak is materially higher than estimated in Aug - post rate decision press conference
CME Signs 10-year partnership with Google Cloud to transform global derivatives markets through cloud adoption
OPEC+ JMMC reportedly supports no change to OPEC policy - Energy Intel's Bakr
(US) Atlanta Fed GDPNow: raises Q4 GDP forecast to 8.5% from 8.2%

FRI 11/5
PFE Novel COVID-19 oral (pill) antiviral treatment candidate (PAXLOVID) reduced risk of hospitalization or death by 89% in interim analysis of Phase 2/3 EPIC-HR study; First oral antiviral of its kind
(UK) RTE Connelly tweets: growing expectation that the UK will trigger Article 16; Much more intense discussion in the European Commission about how the EU should respond
*(EU) EURO ZONE SEPT RETAIL SALES M/M: -0.3% V 0.2%E; Y/Y: 2.5% V 1.5%E
DKNG Reports Q3 -$0.82 v -$1.11e, Rev $213M v $225Me
*(US) OCT CHANGE IN NONFARM PAYROLLS: +531K V +450KE
*(US) OCT AVERAGE HOURLY EARNINGS M/M: 0.4% V 0.4%E; Y/Y: 4.9% V 4.9%E
(JP) The economic stimulus plan being considered by Japan govt is reportedly around ¥35T ($308B) - Nikkei
(US) SEPT CONSUMER CREDIT: $29.9B V $16.0BE

Business Of Fashion : Chanel Hikes Handbag Prices in Run-up to Christmas

Chanel Hikes Handbag Prices in Run-up to Christmas
The move comes at a time when consumer demand is strong and stock is low ahead of the holiday shopping season.

French luxury group Chanel has hiked prices of some of its most sought after handbags at a time when strong consumer demand and low stocks in the run-up to the holiday shopping season are boosting their exclusivity.

Privately-owned Chanel, one of the biggest brands in the 280-billion euros ($340 billion) global luxury industry, and rival LVMH-owned Louis Vuitton have weathered the coronavirus crisis better than most other retailers and have raised prices several times to boost their profit margins.

Sales at Chanel fell 17.6 percent last year, but the core profit margin stood at around 20 percent, according to analysts, making it one of the most profitable companies in the sector. It said in June it expects revenues to increase by double digits this year compared with their 2019, pre-pandemic levels.

The price of Chanel’s Small Classic handbag has gone up by 16 percent to 7,300 euros ($8,429) since the end of September. The hike, first reported by French news channel BFM TV, was confirmed by Reuters using the Internet Archive, a repository of past web pages.

The price of another popular handbag, the quilted leather 2.55 with a golden chain, was 7,800 euros on Chanel’s website on Thursday compared with 6,050 euros in December 2020, an increase of nearly 30 percent, the Reuters analysis showed.

A spokesman for the group which is also known for its tweed suits and No. 5 perfume, said in an email that the price increase “only concerns our iconic models, namely the Timeless Classic and the 2.55.”

Like all major luxury brands, we regularly adjust our prices to take into account changes in our production costs and raw material prices, as well as exchange rate fluctuations,” the spokesman said, without giving further details.

Price adjustments are made in such a way as to avoid excessive differences between regions, the spokesman added.

In June, Chanel’s finance chief had told Reuters that the group had not yet increased prices in 2021, but that this could change in the second half — in line with its policy of reviewing prices worldwide twice a year.

WWD : Ronnie Fieg on Building the Kith Community

Ronnie Fieg on Building the Kith Community
The founder of the buzzy retailer and brand is celebrating his 10th anniversary this year.

It all started when Ronnie Fieg set out to create “the best curated footwear shop in New York City,” a place where people would feel comfortable hanging out. At the time, most of the other trendy shoe retailers were uppity, so he felt there was an opening and a great opportunity for a store that would be more welcoming.

So with the blessing of the owner, he carved out a 580-square-foot space within the Atrium store in Brooklyn and opened Kith. He launched with an Asics collaboration and brought in other sneakers from New Balance, Gourmet, Pro-Keds and Nike alongside Florsheim wingtips, Red Wing boots and Clarks’ casual shoes.

Over the next 10 years, Kith has “grown organically to where it is today,” he said in a conversation with WWD style director Alex Badia, which is a buzzy retailer with eight flagships and three shops-in-shop around the world, an eponymous apparel brand, and even Kith Treats, a concept that sells cereal, ice cream and other munchies.

In the beginning, he said, his ambitions were just to be a footwear shop, but it wasn’t long before he started dabbling in apparel. His first move was the Mercer Pant, a camouflage army pant that he altered with an elastic cuff at the hem. It was a hit with the community he had already begun creating and quickly led to varsity jackets, six-panel hats and other pieces.

“I had an evolving vision that kept changing as we started doing different things,” he said.

Case in point is the Kith Treats concept, which is now six years old. “The goal was to expand the concept and give people the ability to consume the brand for seven bucks — and put smiles on their faces.” He said he believed that footwear fans and sneakerheads also loved cereal, which led to the “crazy idea” of opening a cereal bar in Brooklyn. “It really took off,” he said. “People lined up and it indicated what we should build going forward.”

Running through Kith as its primary theme is New York City, Fieg’s hometown. The 29-year-old was born in Queens and grew up within the confines of the five boroughs. He recalled how he was able to “see and absorb different cultures” as he traveled to work in Greenwich Village. “It really gave me the inspiration I needed to work on apparel and footwear” that would appeal to a wide spectrum of shoppers.

“New York City has always been the North Star for me,” he said, adding that his collection and ethos are “as true to the city as I can make it.”

He also had some real favorites growing up — Bergdorf Goodman, BMW, Coca-Cola — brands that he would eventually collaborate with at Kith. “Growing up, what you love between the ages of 13 and 19, you will love the rest of your life,” he said. These are brands that he has “incredible passion for,” and his goal was to “expand what they’re known for and dimensionalize what they do.”

He was introduced to Bergdorf’s by his mother, who used to take him to the store to browse as a child. “She was inspired by Bergdorf Goodman but couldn’t afford to buy anything,” he recalled. But this experience left a mark and his collaboration with the store in 2016 was the ultimate gift to his mom.

To this day, he views Bergdorf’s as “the Rolls-Royce of retail,” and when the store allowed him to put its logo on pieces like hoodies and baseball caps — and gave him a shop on the third floor of the men’s store — it became a real turning point for his business, and a highlight of his life. A dinner the store hosted for the launch, where Fieg was able to bring his mother, represented “a big moment for me,” he said.

It was also evidence that Fieg’s gut was right. “I felt people wanted to see that logo on a garment and it could expand what people know them for,” he said. For Kith, it brought “global exposure” to his company and “put us on the path to be taken seriously as an apparel brand.” It also exposed his brand to a whole new group of customers.

Fieg credits his success to the development of a community of “like-minded individuals passionate about the same things. It’s a family.”

As far back as his launch in 2011, Fieg said that his nascent footwear shop “became a place of community for locals to hang out. It’s so easy for them to talk to each other, they’re there for the same purpose.” And they didn’t need to buy anything, they were welcome just to hang out, chat with the other shoppers and check out the shoes.

It was also where he first realized that this community “wanted the retail business to become a brand. They dictated the roadmap,” he said. “That type of experience is magic. You can’t create it, you have to let the people guide you.”

What his community has helped him develop is two Manhattan stores, on Lafayette Street and Bleecker Street, as well as locations on Flatbush Avenue in Brooklyn; West Hollywood; Miami Beach; Hawaii; Tokyo, and Paris. In addition to the Bergdorf shop, there are boutiques inside Hirshleifers in New York, as well as in Selfridges in London.

“Every market we enter globally has been a building block for the company,” he said.

For his 10th anniversary, Fieg created a book that chronicles the company’s rise. He worked on it with former GQ creative director Jim Moore and stylist Eugene Tong. He said the book was “one of the greatest projects” he has ever realized and credited them with helping him execute something that usually takes a year but they pulled off in a month.

The book is a visual documentation of his accomplishments and gave him the opportunity to celebrate and reflect on what he’s done and look to the future.

The book looks back at each collection and collaboration and shows the evolution of the brand. But it also shows how much of its initial aesthetic has remained. “You can still look at [something] and know it’s a Kith piece,” he said. “One pant and one varsity jacket started it,” but what has stemmed from that is a natural progression.

The book also showcases a timeline of the business and the “notches in our growth,” which include a collaboration with LeBron James, the car he created with BMW, the Coke logo he created in the Kith font and the original prints from Gianni Versace that he was able to repurpose.

“We sold 150 cars in 11 minutes,” he said of the special-edition M4 BMW he created last fall that retailed for $150,000 and up. “It shocked me, but it shows people are willing to take you seriously in every category of lifestyle, not just footwear and apparel.”

Kith has also been accepted outside its home market. The Paris store, where he opened a Sadelle’s restaurant serving quintessential New York noshes such as bagels with lox and chopped salmon, has been “packed every day,” he said. The new Hawaii store has also been a success, despite the fact that it opened during the pandemic.

With all of his stores, Fieg is careful to ensure that the space is designed specifically for each market. He works with local businesses and studies the local culture to “build a space for locals.” But while his New York roots are never hidden, Fieg never forgets that “we are visitors to each city.”

With his roadmap established and 10 years under his belt, what’s next for Fieg and Kith?

“We will continue to grow organically,” he said, and spread the energy that his brand has become known for. “The next book will go from 300 pages to 600 or 1,000,” he predicted. “But we will create at the same pace and passion as we put in now. We will work on things we love.”

He credited his team as key to him achieving success. “The team helped us get here, and I’m most proud of that. So I’m hoping to continue to inspire and be inspired by the team to continue to grow.”

WWD : The Metaverse, Commerce Anarchy and Tech’s Long Road

The Metaverse, Commerce Anarchy and Tech’s Long Road
The hyper immersive, “embodied internet” is already looking like chaos.

The opportunity for fashion and other brands and retailers in the metaverse may be somewhat vague, but figuring it out has become an imperative since Facebook pivoted from social media giant to metaverse company, now called Meta.

Chief executive officer Mark Zuckerberg wants to leave behind the 2D internet of today and build immersive shared virtual environments that can feel both magical and realistic — “​​where, with just a pair of glasses, you’ll be able to step beyond the physical world,” he has said.

This vision is grandiose, and it will take years to flesh out. But the promise already has companies racing to embrace this new form of internet.

In retail, that effort may come with steep challenges, warned Marcel Hollerbach, chief information officer at product data management firm Productsup. He believes diving headfirst into metaverse commerce will add complication that exacerbates the existing conundrum of omnichannel retail.

Forrester Consulting mapped out the struggle for retailers in its “The Future of Commerce Technology” report: They’re told to “optimize everything, including their product content, processes and operations in each channel.” While companies work on that, they’re also staring down intensifying consumer expectations for a “personalized, consistent and single experience with a business across all touchpoints.”

It’s a contradiction, and businesses can’t keep up, resulting in “commerce anarchy,” the firm said.

Productsup, which commissioned the study, sees the metaverse amplifying the chaos.

“Facebook’s push toward building the metaverse will have a huge impact on supply chains,” Hollerbach told WWD. “In a metaverse future, even more channels will exist for suppliers to connect with shoppers, and those channels will update their selling features even more frequently. Additionally, the flow of product information will speed up significantly, moving nearly in real time.”

He pointed to an example: If, say, Nike offers a unique NFT across “multiple metaverse touchpoints,” he said, “it will have to update the availability and price in real time across all platforms.” That’s not as easy as it sounds. New channels may pop up more frequently and change constantly, with new features that may involve coding or new catalog formats, while the velocity of data moving through the company’s “value chain” accelerates.
Extrapolate that to a larger assortment encompassing virtual goods and perhaps even physical counterparts, across a variety of platforms, and the scale of the problem comes into view.
A global brand like Nike may feel confident about handling that — indeed, the sneaker company already appears to be preparing for the metaverse. It just registered trademarks related to “downloadable goods…for use online and in online virtual worlds,” the U.S. Patent and Trademark Office filing read.
But that’s only one step in the kind of multitiered strategy that metaverse success would require. The next step looks like NFTs.
This year, non-fungible tokens have become hot properties, with releases by everyone from Taco Bell to Clinique, Dolce & Gabbana and Gucci. But because of the intrinsic nature of the blockchain-based tech — which allows for authenticated, and therefore rare or exclusive, digital fashion and other virtual or physical products — it’s viewed as a gateway to commerce in the metaverse.


Now there’s a gold rush of hopefuls racing to set up shop, while others try to break ground on infrastructure to make metaverse shopping viable.
For instance, Bitski, an Andreessen Horowitz-backed “metaverse commerce platform,” just rolled out credit card-based NFT sales on Tuesday “to kickstart economic activity in the metaverse,” according to CEO Donnie Dinch. Last week, Dreamium Labs introduced its NFT-oriented Dreamscape Open Metaverse. The platform turns selfies into full-body “mini” 3D avatars and offers blockchain accounts with an NFT identity system within its so-called “miniverse” environment.
Dreamium Labs’ “mini” avatars

It’s not clear if Dreamscape will connect to Zuckerberg’s metaverse, or if Bitski will work with its platforms, as tech giants tend to favor their own payments systems. (Notably, Meta just unveiled custom web links, so creators can sidestep Apple’s 30 percent cut.) Nike’s trademark seems universally applicable to virtual worlds, but it has yet to be tested across any and all metaverses.
That’s worth pointing out, as Meta won’t be the only one.
Another tech titan just signaled its intentions: At the Microsoft Ignite conference this week, the Redmond, Wash.-based company revealed that Microsoft Teams will support 3D avatars and immersive meetings, and a December preview for the new Dynamics 365 Connected Spaces will show how it blends the metaverse and artificial intelligence for businesses.
“The metaverse enables us to embed computing into the real world and to embed the real world into computing, bringing real presence to any digital space,” said Microsoft CEO Satya Nadella. “What’s most important is that we are able to bring our humanity with us, and choose how we want to experience this world.”
Mesh for Microsoft Teams plans to offer new 2D and 3D meeting experiences with customizable avatars and immersive areas.

In comments to the media, the Microsoft CEO pledged that his Xbox division will also “absolutely” bring the metaverse into its video game business.
That could give Facebook — er, Meta — some stiff competition. Microsoft has experience building for mixed reality through games like Minecraft and its HoloLens headset for businesses. It’s also recommitted to commerce, having launched a dedicated cloud business for it early this year.


In a January blog post, Shelley Bransten, a former Salesforce executive turned Microsoft vice president in charge of global retail, explained that Microsoft Cloud for Retail will address the industry’s most urgent priorities, while “future-proofing retail organizations to proactively be ready for what’s next.”
Apple has been promoting augmented reality as the next big thing in computing for years, and it’s expected to release a mixed reality, AR or VR face-worn device in the near future. That would likely come with software and a platform for those experiences. Its fellow Silicon Valley denizen, Google, showcased Project Starline in May. Through its hologram project, it developed realistic 3D video calling with a “magic window” that lets people far away feel like they are in the same room.
Project Starline’s “magic window” leaves video calls in the dust, with 3D, realistic visuals that gives the other person a sense of presence.

Massively popular games like League of Legends, Roblox, Fortnite and others already offer sprawling virtual, shared environments, and they regularly strike partnerships with fashion brands such as Louis Vuitton, Vans, Stella McCartney, Gucci, Balenciaga and more.
Amazon has remained conspicuously silent on the subject, though some tech experts suspect it may be quietly working on virtual or AR technology.
So far, the “embodied internet,” as Meta called it, looks more fragmented than cohesive, with multiple, siloed metaverses and no real idea of if or how they would snap together. But they would have to someday, for the concept to function at the vast scale of the internet that people know today.
If it follows the trajectory of mobile platforms, the choices could coalesce into a couple of major options run by one or two tech overlords who control everything, including fees, revenue sharing and other details. The America Online model may see one dominate early and rule over a large domain, only to crumble in the face of a more open and more chaotic worldwide metaverse web.
YouNow CEO Jon Brodsky sees it less like iOS or Android, or AOL for that matter, and more like Second Life, a virtual world popular in the early 2000s where people roamed around as avatars, built or bought virtual homes and other goods and met friends. Users created accounts and navigated the environment on their desktop computers.


“I still remember, many jobs ago, when I was told that Second Life was going to be the future. And it was, for about six months,” he said. “Or when Magic Leap was going to change the whole world — until it didn’t.”
Second Life avatar shoppers pose for a pic.

Second Life, developed by San Francisco’s Linden Labs, peaked roughly 15 years ago, even landing avatar Anshe Chung, the world’s first virtual millionaire and real estate mogul, on the cover of Businessweek magazine.
Magic Leap was a hotly hyped mixed reality hardware-maker backed by giants like Google and Alibaba whose concept — which beamed visuals directly into the eyes — stoked excitement. But the reality failed to gain traction. One device launched to disappointing reviews, killing the buzz and prompting the company to ditch consumer plans and target the business crowd.
Both outfits are still around, perhaps hanging on long enough to see metaverse buzz resurrect them. Last month, Magic Leap scored $500 million in more funding to build another AR headset.
But such experiences have jaded technologists like Brodsky. He chafes every time he hears the word “metaverse” now, because what he hears “sounds to me like a bad episode of ‘Star Trek: The Next Generation.’”
From his position running a social media platform for livestreamers, the tech executive believes that “what is sorely missing from my algorithm-driven, heavily filtered competitors is that people are wildly different, and that the internet used to be phenomenal about exposing all of us to those differences. When the things that separate us are the color of our avatar’s coat, we’ve lost something essential.”
The critique might as well land on Zuckerberg’s door. Facebook’s algorithms have drawn heat for their role in amplifying misinformation and disinformation, even mental distress, just so it can sell ads. That’s led critics to wonder, if one can’t trust Facebook’s current platform, why should they trust an even more immersive version of it?
Rep. Alexandria Ocasio-Cortez summed it up in her viral reaction to the Facebook company’s name change, tweeting “Meta as in ‘we are a cancer to democracy metastasizing into a global surveillance and propaganda machine for boosting authoritarian regimes and destroying civil society…for profit!’”

The large, existential cloud hanging over Meta won’t go away anytime soon. But people like Hollerbach are focused more on the nuts and bolts of the metaverse, regardless of whose version of it becomes standard or the yearslong journey it will take to arrive. Retailers should use the time to get ready, he said, so they shouldn’t wait to optimize the way they manage their product data.

“As a brand you need to reach consumers, but if you’re already struggling with that today, how are you going to handle that in an entirely new medium?” he asked. “Hyperscalers born in the cloud will get it quickly, but more traditional retailers need to start thinking about [it].”

WSJ : Square’s Future Needs to Take Shape

Square’s Future Needs to Take Shape
Without the tailwind of stimulus checks, Square has to see some of its longer-term moves start to pay off

Square’s area greatly expanded during the depths of the pandemic. Now it needs to fill in that space.

A boom driven in part by people depositing and spending stimulus checks helped grow Square’s consumer Cash App to a huge base of about 40 million monthly transacting active customers by the middle of this year. That phase looks to be ending: While third-quarter customer balances in Cash App were still more than double what they were a year ago, they declined sequentially from the second quarter, as special government disbursements in the U.S. mostly ended.

That second-to-third quarter stall tracks with many payment companies’ volume-growth trends. So now questions across the sector are being asked about what could cause growth to reaccelerate, such as how quickly cross-border travel will return. For Square, many of those questions may be centered around resetting expectations for the consumer Cash App side of its business.

Square’s seller business, providing services to merchants like accepting digital payments, continued in the third quarter to grow at roughly the same longer-term rate, with a 29% two-year compound annual growth rate in gross profit. But the consumer Cash App’s explosion is slowing, with a two-year compound annual growth rate for gross profit of 104% in the third quarter, slowing from 128% growth in the second quarter.

That is, of course, still rapid growth. But Square’s stock already more than tripled in 2020, so high expectations are baked in. So far this year it is up just 14%. To take another leap forward, investors may need to feel like they have a firmer grasp on what can power continued hypergrowth.

Now, attention is turning to engaging and monetizing Square’s new, bigger audience. Some of that will be done by getting them hooked on Square’s neobank-like products. For example, active users of the debit Cash Card were key drivers of inflows into the app, the company said. Each month in the third quarter they added about 70% more to their accounts than other Cash App users.

With the Afterpay deal still in process, Square hasn’t yet fully laid out its vision for the acquisition. But bringing the split-payment service to Cash App users is surely part of the playbook. Square is even trying to deepen engagement within families, opening Cash App services to teens for things like allowances, first jobs and even designing a glow-in-the-dark Cash Card.

Square has used bitcoin as a hook, too. It has initiatives around hardware wallets, mining and decentralized applications. Others like Robinhood Markets HOOD -0.40% have seen a big bump from alternative digital tokens such as dogecoin. Square’s bet on bitcoin in particular is more concentrated, but may prove less volatile. Its bitcoin gross profit was down roughly 40% in the third quarter from its peak in the first quarter—versus a nearly 80% crypto transaction-based revenue decline for Robinhood from its second-quarter peak.

Like PayPal, PYPL -1.35% Square is also aiming to be a bigger part of the consumer’s shopping journey. For instance it is rolling out Cash App as a way to pay at Square’s sellers. Square is also trying to move up from the smaller merchants it has specialized in. The fastest volume growth in the third quarter was from its biggest sellers, those generating over half a million in annualized payment volume. They were Square’s biggest seller category by gross payment volume, surpassing micro merchants. Afterpay notably works with many big online retailers.

Bigger customers are definitely one way to fill a larger revenue box. To justify its stock price, Square is going to need a lot of that.