TikTok has put on hold plans to launch its fast-growing e-commerce business across major European markets, focusing instead on growth in the US where it’s fighting a divest-or-ban law.

ByteDance Ltd.’s social media startup has put on hold a rollout of its shopping platform across Spain, Germany, Italy, France and Ireland that was to have taken place as soon as July, according to people familiar with the matter. It also iced plans to bring the Shop feature to Mexico and Brazil, one of the people said. It’s unclear if or when ByteDance may choose to resume the process, the people added, asking they not be identified discussing private information.

The move, which may catch many merchants in the region by surprise, reflects ByteDance’s objective of entrenching itself in the US as a way to prove its value to domestic merchants and consumers. ByteDance’s leadership wants to concentrate on its most lucrative market — with 170 million monthly users — to thwart a potential US ban that’s discouraged some merchants from signing up for the new platform, the people said.

A TikTok spokesperson declined to comment on the paused rollout plans and said the company is “guided by demand.” “We’ve seen the positive impact of TikTok Shop, and we’re excited to continue experimenting with this new commerce opportunity,” the spokesperson said.

It’s set a goal to grow US merchandise volume tenfold to as much as $17.5 billion this year. Importantly, management also recognises that a full-on European expansion could invite regulatory scrutiny similar to the US, the people said.

TikTok Shop — which combines addictive video content with impulse-buying in visual fashion — is the app’s fastest-growing feature. The combination of eye-catching videos, popular influencers and full-scale commerce helps set it apart from rivals like Instagram and YouTube, and opens a path to take on Amazon. TikTok’s template is ByteDance’s own Douyin, today one of the largest Chinese e-commerce platforms. Using that model, TikTok Shop found success in Southeast Asia before debuting in the US in time for last year’s holiday season.

It hasn’t always been smooth-sailing. TikTok Shop’s UK launch as early as 2021 has generated mixed reviews, after Chinese exporters flooded the market with cheap wares. TikTok has since relied more on local A-list brands for later market entries.

In the US, the bigger immediate threat is Washington.

ByteDance filed a legal challenge in May to a measure signed by President Joe Biden that will ban TikTok if its Chinese owner hasn’t divested the app by Jan. 19 — an ultimatum meant to address perceived national security concerns. ByteDance has argued a divestiture is “not commercially, technologically, or legally feasible.”

TikTok has stepped up subsidies and other incentives to super-charge its US e-commerce business in recent weeks. It dropped the threshold for creators looking to join its affiliate program to 1,000 followers from 5,000. Affiliates can post videos touting products sold in TikTok Shop and collect commissions on the sales they generate.

TikTok, in the meantime, is under an European Union probe into whether a lighter version of its app in France and Spain risks fomenting addiction. TikTok Lite promises to pay users cash through a points system as long as they keep scrolling for content, a common marketing tactic in China.

By Zheping Huang

Learn more:

Bytedance May Shut Down TikTok in US if Legal Options Fail

The algorithms TikTok relies on for its operations are deemed core to ByteDance overall operations, which would make a sale of the app with algorithms highly unlikely.

Nordstrom on Thursday warned of an uncertain economy and said consumers were resilient but selective, after the department store owner merely maintained its annual forecasts for sales and profit.

Shares in Nordstrom dropped nearly 5 percent in after-market trading. The company, which sells pricier clothes, shoes, and accessories, beat first-quarter revenue expectations.

Department store chains including Macy’s and Kohl’s have sounded caution on consumer spending as customers have tamped down on discretionary spending amid high interest rates.

Nordstrom reaffirmed its 2024 comparable sales forecast of a 1 percent drop to a 2 percent rise and annual profit per share of $1.65 to $2.05.

“Even though the results seemingly look positive, they were up against weak figures over the year and I think their guidance obviously hasn’t increased. So I think that’s really why we’re still seeing the stock come down,” said Jessica Ramirez, senior analyst at Jane Hali and Associates.

Nordstrom has been trying to drive sales by bringing in more in-demand clothing from brands like Birkenstock and Prada Beauty at its namesake brand.

Sales at the company’s eponymous label recorded a 0.6 percent rise. Discount banner Nordstrom Rack’s sales rose 13.8 percent as the company pushed ahead with plans to open more of its stores in a bid to attract lower-income consumers.

“I mean overall, it’s not terrible. It looks better than what Kohl’s reported this morning,” Morningstar analyst David Swartz said.

Nordstrom’s first-quarter revenue rose 4.8 percent to $3.34 billion, compared to LSEG expectations of a 0.6 percent rise to $3.20 billion. It posted a quarterly loss of 24 cents, compared to estimates of an 8-cent loss.

Gross profit decreased 225 basis points to 31.6 percent, weighed down by “external theft” in its transportation network and inventory cleanup in the supply chain network.

By Ananya Mariam Rajesh; Editing by Maju Samuel

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Buyout Firm Sycamore Vies to Take Nordstrom Private, Sources Say

Nordstrom shares rose 6 percent on the news, giving the company a market value of about $3.3 billion.

Planning and hosting our inaugural The Business of Beauty Global Forum last year was one of the highlights of my time at The Business of Fashion and one that our readers across the globe continue to bring up to me. So, I’m thrilled to be bringing this event back for year two. On Monday and Tuesday, we will head to Stanly Ranch in Napa Valley, California, to challenge the conventional ideals and norms of beauty and wellness in a way only BoF can do.

Last year, our intention was to break the mould and create a new space for fresh, global voices to come together. In our second iteration, our goal is to build on that success with individuals from all corners of the beauty and wellness landscape. Perhaps nowhere is that better reflected than in our first content session: Our Place in Culture.

So often, Gen-Z is spoken about as a monolith by their elders, instead of hearing them in their own words. We wanted to change that. We’re excited to have 18-year-old Katie Fang and 24-year-old Steph Hui, two of the most exciting young influencers, share their thoughts on inclusivity, the power of social media and most importantly, their boundary-shifting generation.

Later, we will hear from trans actress, comic and content creator Dylan Mulvaney on the need for the beauty industry to serve all its customers and the importance of standing up against bigotry and adversity.

Our conversations will also extend across the world as speakers from Asia, like Shiseido’s Angelica Munson and Laneige’s Yoon Sung Choi, will share their thoughts on product innovation and the need for agility in an interconnected beauty world. Dr. Joyce Gikunda of Linton’s Beauty Retail, investor Laureen Kouassi-Olsson and Suki Suki Naturals’ Linda Gieskes-Mwamba will also join us to talk about the untapped African beauty opportunity.

Serving the customer at every touch point is something we dive deep into in our second content session: Inside the Industry. There, Brian Bordainick of Starface World Inc. and The Inkey List’s Colette Laxton will talk about how disruptor brands have changed the mass beauty experience. We’ll also hear from Heela Yang of Sol de Janeiro and Amouage’s Renaud Salmon on the boom of fragrance, with high-end and masstige brands benefiting from younger shoppers and TikTok. And as young, independent labels continue to challenge legacy conglomerates and their heritage lines, Sephora’s Priya Venkatesh and makeup artist Danessa Myricks will discuss just what it takes to build a forever brand today.

We’ll also hear from another guard of experts, who are enabling us to consider a different definition of beauty, in our final content session: Beauty From the Inside Out. There, breathwork leader and Open founder Manoj Dias, TCM practitioner Sandra Lanshin Chiu and racial equity advisor Michelle Cassandra Johnson will discuss the existing gap in wellness, while Alejandro Bataller of SHA Wellness and AB Living Group will share his thoughts on the difference between “lifespan” and “healthspan.” Finally, the iconic Deepak Chopra will unpack the ongoing fascination around longevity.

I hope you can join us via the global livestream. Sign up here to reserve your space. Full access to The Business of Beauty Global Forum livestream is exclusive to BoF Professional All-Access and BoF Professional Beauty & Wellness members.

Here are my top picks from our insight and analysis on beauty and wellness this week:

1. Case Study | Building an Effective Loyalty Programme.

Serving as the ‘heartbeat’ for brands and retailers that deploy them with the right rewards, loyalty programmes incentivise repeat purchases, boost customer lifetime value and provide businesses with invaluable data for personalised marketing. But brands need to balance costs and benefits while creating a programme that supports their goals, maintains brand equity and keeps users engaged.

2. How to Make Beauty Merch That Matters.

Beauty is in the midst of “merch” madness, with brands rushing to debut branded sweatshirts, stickers and more in hopes of securing viral hits like Rhode’s lipgloss phone case. But as more brands focus on merch, making products that stand out takes a sharper strategy.

3. Why Australia Is the Next Step in Glossier’s Global Ambitions.

After expanding to US and UK brick-and-mortar retail, the former DTC darling will be available in 70 Mecca stores beginning July 16.

THE BUSINESS OF BEAUTY NEWS IN BRIEF

L’Oréal and Estée Lauder perfumes linked to child labour, according BBC Eye investigation. Children as young as five work picking jasmine throughout the night, and earn on average as little as $1 a day. The report blamed the issues on poor due diligence practices and pricing pressure from top companies.

Venture studio Squared Circles secures $40 million in series A fundraising round. The funding round was led by L Catterton. With the funding, the company plans to launch and scale at least five additional brands in the next three years.

Indie beauty brand Fara Homidi launches in Sephora. Starting June 1, consumers will be able to shop the brand on the retailer’s e-commerce channel with a brick-and-mortar entrance slated for next year. The company is projected to grow its sales at a rate of 400 percent in this year and expects to reach $15 million in sales in 2025.

Golden Goose Group SpA is seeking to list in Milan in an initial public offering that could value the maker of $500 distressed sneakers at about €3 billion ($3.2 billion) including net debt.

The company, the vast majority of which was bought by private equity group Permira for about €1.3 billion in 2020, is wooing investors as a luxury brand. But it looks more like Dr Martens Plc, in that it’s reliant on a signature shoe style that risks falling out of fashion. Its valuation should reflect this.

True, there are some differences with the British bootmaker, which has had a torrid time since listing in early 2021. Golden Goose has a higher positioning than Dr Martens, selling shoes for up to $2,000 a pair, compared with up to  $200 for Dr Martens boots. It’s also less dependent on selling through third-party retailers in the US, which can be volatile.

Part of Golden Goose’s appeal is that the shoes can be customised in its about 190 stores, a draw for younger shoppers, who value individuality, and with whom the brand is popular.

This formula has generated impressive growth, with 2023 sales up 18 percent excluding currency movements to €587 million, and adjusted earnings before interest, tax, depreciation and amortisation up 19 percent to €200 million. Expansion continued in the first quarter of this year, although sales growth slowed to 12 percent while Ebitda was up 17 percent.

The high price point and customisation delivered a full-year 2023 operating margin of 25 percent, around the level of the big luxury groups, excluding the much more profitable Hermes International SCA. Golden Goose is aiming to expand sales to €1 billion by 2029, implying continued growth over the next five years.

But it’s hard to ignore that 90 percent of Golden Goose’s business comes from its “lived-in” looking sneakers. Although casualisation is a long-term trend, fashion is notoriously fickle. Sneaker styles come and go — just look at the pivot from Nike Inc.’s retro basketball shoes to Adidas AG’s Terrace models led by the Samba.

Already, the vogue for quiet luxury has made more formal styles desirable, with the rise of Loro Piana’s Open Walk and Summer Walk slip-ons, and a viral New Balance shoe that’s a cross between a sneaker and a loafer.

Golden Goose is developing a bag range, which is promising. If successful, this could reduce some of the reliance on footwear, to say 70 percent. Given that luxury brands have pushed up prices so much, there is room for appealing, affordable accessories. But as Burberry Group Plc has demonstrated, it’s hard to stand out in this crowded market when a company’s core competence is elsewhere.

Its worth remembering that when Dr Martens — also then owned by Permira — listed, it too was enjoying strong growth on the back of the fad for chunky boots, which had swept the catwalks in the preceding years. Sales rose 15 percent in the year to the end of March 2021, with Ebitda up 21 percent and an operating margin of about 24 percent.

Since then, the company has struggled, issuing five profit warnings in the last 18 months, and dragging the shares down to less than a quarter of their debut price. It has been hurt by some self-inflicted wounds — such as problems at a new Los Angeles warehouse — which Golden Goose will hope to avoid. But it has also been hit by a slowdown in the US, as consumers have cut back.

With the Americas accounting for 41 percent of Golden Goose’s sales (and Europe another 41 percent), this is a risk for the Italian company too. What’s more, it will be exposed to many of the simply comfortable, rather than uber-wealthy, customers who have been reining in their luxury purchases.

Even Birkenstock Holding Plc, whose styles have transcended from fad to fashion staple, and which upgraded its profit outlook on Thursday, has struggled to win over investors. Although the shares are now trading above their $46 debut price, they have dipped below this level on several occasions since the sandal-maker’s IPO in October.

Golden Goose should be priced accordingly. The mooted enterprise value would imply a multiple to Ebitda closer to that of Moncler SpA on roughly 13 times than Dr Martens’ about 8 times.

Given the uncertain luxury backdrop, the question mark over whether fashionistas will continue to flock to Golden Goose and the similarities to Dr Martens, the British company looks a more appropriate valuation peer.

After the boot brand’s dismal performance, neither Permira, which will continue to have a sizable holding in Golden Goose post-IPO, nor new equity investors will want another shoe to drop.

By Andrea Felsted

Gap raised its annual sales forecast and its first-quarter results beat market expectations, boosted by strength in its Old Navy and Gap brands as budget-strained Americans snap up its trendy denim bottoms and active wear apparel.

Shares of the company surged 21 percent after the bell as the Banana Republic owner saw strong spring shopping, similar to mall-based retailers like Abercrombie & Fitch, which had also hiked its annual sales goal.

Gap’s quarterly store sales jumped 3 percent from a year ago as it has been expanding its store presence, while online sales rose 5 percent to account for 38 percent of the total sales.

The company’s turnaround strategy to lower promotions and focus on right product assortment is yielding results after weak growth last year due to lacklustre demand and supply chain issues.

“Shoppers are willing and able to spend if they see value in an on-trend, well-made dress from Gap or a burrito bowl from Chipotle,” Zak Stambor, a senior analyst at Emarketer said.

Gap also lifted its fiscal 2024 margin forecast to at least 150 basis points growth compared with a prior target of as much as 50 bps expansion.

It now sees annual sales to be up slightly from last year and compared with prior expectations of roughly flat sales.

First-quarter gross margin jumped 410 basis points to 41.2 percent. Analysts had expected margin of 38.54 percent.

At Old Navy, comparable sales grew 3 percent compared with 1 percent decline a year ago, while Gap logged 3 percent growth.

Its net sales for the quarter ended May 4 rose 3 percent to $3.39 billion, edging past analysts’ average estimate of a 0.3 percent rise to $3.29 billion. Comparable sales rose 3 percent from a year ago and compared with expectations of 0.9 percent, according to LSEG data.

It earned 41 cents per share.

Peer American Eagle Outfitters had on Wednesday missed quarterly revenue estimates as sticky inflation hurt demand for its clothing and accessories.

By Savyata Mishra; Editing by Arun Koyyur

Learn more:

Gap Reports Upbeat Quarterly Sales on Improving Demand for Old Navy Apparel

Gap beat Wall Street expectations for fourth-quarter sales on Thursday, buoyed by strong demand on improved product offerings at its Old Navy and namesake brands during the holiday season.

Foot Locker Inc.’s shares surged after the sneaker retailer’s turnaround plan got back on track.

Profit, excluding some items, was 22 cents a share, almost doubling the average analyst estimate. Comparable store sales, a key retail metric, fell 1.8 percent for the quarter ended May 4. That was slightly better than Wall Street’s expectation of a 1.9 percent drop.

“Its business is stabilising as turnaround efforts begin to pay off,” said Bloomberg Intelligence analyst Abigail Gilmartin.

Foot Locker’s turnaround lost momentum in March when executives delayed their growth plan to hit $9.5 billion in annual sales by two years to 2028. That left investors worried about the retailer’s progress, and its shares sank about 30 percent. But now it appears on more solid footing as it reaffirmed its sales and profit outlook for this year.

Its stock gained as much as 32 percent on Thursday morning in New York. The shares had been down nearly 28 percent this year through Wednesday’s close.

Chief executive officer Mary Dillon is looking to diversify the retailer’s brand offerings, expand loyalty programmes and open new store formats. Foot Locker unveiled a new retail store concept in New Jersey in April, with hopes that revitalised shops will attract more shoppers. It plans to roll out the design in New York, Paris, Melbourne and Delhi later this year.

“There’s still pressure on the consumer for us – exposure to inflation, interest rates and reduced savings,” Dillon said in an interview. “But it’s discretionary for a reason. They decide where to spend it.”

Foot Locker is not alone in posting uneven results. The athletic-gear sector has mostly struggled this year. Nike Inc. is cutting $2 billion in costs and laying off 2 percent of its workforce, Lululemon Athletica Inc. reported a slowdown in its US business and Under Armour Inc.’s weak sales have led to a restructuring. One outlier is Dick’s Sporting Goods Inc., which raised its outlook this week as it continued to steal market share with its broad selection.

By Kim Bhasin

Learn more:

Foot Locker Pushes Back Long-Term Sales Growth Plan; Shares Fall

Foot Locker Inc. pushed back a plan to expand its sales to $9.5 billion by two years and now looks to hit that goal by 2028.