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5 things to know before the stock market opens January 13, 2021

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Levi’s (LEVI) reports Q4 2020 earnings, sales beat

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Levi’s clothes are seen on a store shelf in Miami, Florida.

Joe Raedle | Getty Images

Levi Strauss & Co. reported Wednesday its total holiday-quarter sales dropped 12%, marking an improvement from a more than 20% decline in the prior period, as weak shopper traffic at its stores was partially offset by double-digit growth online.

Shares were recently up more than 1% in after-hours trading after initially falling more than 4%.

Chief Executive Chip Bergh told CNBC that the results for the latest quarter topped the denim maker’s internal expectations, nearly meeting the “best-case scenario” that Levi laid out back when the Covid pandemic first started to hit the United States and disrupt many businesses.

“We pivoted very hard to [direct to consumer] and especially to e-commerce,” Bergh said in a phone interview. “Our e-commerce business was profitable in the fourth quarter, and profitable for the full year.”

Levi’s global digital sales, which include the online sales of its merchandise at wholesale partners, made up 23% of fourth-quarter sales, up from 15% in the prior-year period.

Here’s how Levi Strauss & Co. did during its fiscal fourth quarter compared with what analysts were expecting, using Refinitiv data:

  • Earnings per share: 20 cents, adjusted, vs. 15 cents, expected
  • Revenue: $1.39 billion vs. $1.34 billion, expected

For the three-month period ended Nov. 29, Levi earned $57 million, or 14 cents per share, compared with $96 million, or 23 cents per share, a year earlier. Excluding one-time charges, it earned 20 cents per share, which was better than the 15 cents expected by analysts, using Refinitiv data.

Net revenue fell 12% to $1.39 billion from $1.57 billion a year earlier. That was better than the $1.34 billion forecast by analysts.

Digital sales globally were up 34%, which includes sales made on its partner platforms like Amazon.

Levi said revenue from its wholesale partners dropped 15% during the quarter, while its direct-to-consumer revenue was down 5%, due to lower visits to its stores.

As the coronavirus pandemic continues to disrupt normal business operations, the company said that currently roughly 40% of its stores in Europe, and 17% globally including franchisee-operated locations, are closed.

“The recent resurgence of the virus underscores that the ultimate impact of the Covid-19 pandemic remains highly uncertain,” Levi said in its earnings release. “The company expects that its business … will continue to be significantly adversely impacted for at least the first half of 2021, and there remains the possibility of additional Covid-19 related inventory and other charges.”

Levi shares, as of Wednesday’s market close, are up a little more than 8% from a year ago. The company has a market cap of $8.8 billion.

Find the full press release from Levi Strauss & Co. here.


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More popular movies will be turned into TV shows in the streaming age

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William Zabka and Ralph Macchio reprise their roles as Johnny Lawrence and Daniel LaRusso from the “Karate Kid” in “Cobra Kai.”

Netflix

Reboots, remakes, revamps, call them what you want, Hollywood has spent decades recycling popular franchises and cult favorite films trying to capture the attention of a new generation.

This trend is nothing new in the entertainment industry. What has changed is its frequency.

“Bates Motel,” “Snowpiercer,” “Scream,” “Westworld,” “Fargo,” “Watchmen,” “Teen Wolf,” “What We Do in the Shadows,” “Limitless,” “Lethal Weapon” and “Cobra Kai” are just a few examples from recent years. And more are in the works.

Shows based on “Alien,” “The Mighty Ducks,” “A League of Their Own” and “The Equalizer” are currently in the pipeline. Then there are upcoming series like “Clarice” and the new “Lord of the Rings” that are based on books, but were also hit films, and Disney’s slew of Marvel and Star Wars programs that are tied to its film franchises.

“I don’t think it’s because we are out of good ideas,” said Robert Thompson, a professor at Syracuse University and a pop culture expert. “I think the reason we are seeing so many of these is because there is so much real estate to fill.”

The combination of having more streaming services available to the public than ever before and a massive shift in content consumption habits means that Hollywood is going to become even more reliant on tried-and-true franchises than ever before.

No more channel surfing

Gone are the days of surfing through a finite number of channels, looking for something to watch.

In the last decade, streaming services have disrupted the content pipeline. Cable and network television have a restricted schedule. Day time talk shows and reruns play during the morning and early afternoon hours and new episodes of shows arrive after the evening news. This means that companies can only have a certain number of programs.

Unbeholden to 24-hour scheduling, streaming consumers watch what they want, when they want. That means, a subscriber can watch an entire season of a show in just a few days or an entire series in a week. Then they are hungry for something else to watch.

With few exceptions, studios that have opted to enter the streaming world have provided consumers with all of the episodes of a season of TV upfront instead of on a weekly basis. This strategy means that streaming services need to provide more content to their subscribers than their cable counterparts.

Turning nostalgic films into longform TV shows is an easy way to capture audiences and reduce financial risk.

“The development costs are lower,” said Candice Alger, professor at Creative Media Industries Institute at Georgia State University. “It’s safer to go with a story that’s already proven and characters are already developed.”

If the show succeeds, like “Fargo” or “Cobra Kai,” studios can continue to produce multiple seasons. If the show fails, the losses are smaller.

“It’s a great way to develop content without having to deal with the unpredictability or the risk of trying to establish a new franchise,” said David Schreiber, the creative and entertainment industries chair at Belmont University.

Nostalgia as currency

Hollywood has long tapped into nostalgia to sell movie tickets or to get viewers to tune into a new show. There’s a lot of built-in emotional equity when it comes to franchises big and small.

Disney used this strategy when it launched its streaming service Disney+. The platform has plans to launch series based on “The Mighty Ducks,” “Turner and Hooch,” “Monsters Inc.,” “Night at the Museum” and “The Sandlot,” among others.

“Monsters, Inc.” is getting a new show on Disney+ called “Monsters at Work,” which explores the transition from scream to laugh power in Monstropolis.

Disney

These shows will give audiences a chance to relive their childhoods and to share those childhood favorites with their own children.

While there are a number of TV shows coming that are based on movies made during the 2000s or later, many are from the ’80s and ’90s.

“The ’80s and ’90s is still in the sweet spot,” Thompson said. “It’s not too far away to be forgotten, but not too [recent]. There are fond memories of those movies.”

Not to mention, there’s a great marketing bonus that comes from that sentimentality.

Thompson used “Cobra Kai” as an example. The show, which started as a YouTube series before moving to Netflix, gets its foot in the door with older audiences that saw “The Karate Kid” when they were younger. It also captures the next generation who watched the movie when it played on cable TV.

The show also gets the attention of new consumers who are either being introduced to the content from a parent or from word of mouth.

“The real asset to reboots and remakes is that you’ve got years of marketing budget already bought and paid for,” Thompson said.

These shows are bolstered even more when actors that appeared in the original film return. Keeping with the “Cobra Kai” example, both William Zabka, who played Johnny Lawrence, and Ralph Macchio, who played Daniel LaRusso, returned to be part of the series.

That’s not to say that rebooted shows that do not bring back the original cast will automatically fail, but people often have a strong emotional attachment to the actors that originated iconic characters. That attachment can help entice them to watch the new series.

“We are living an era where people are looking for genuineness and that happens a bit more easily when you bring back those [original] actors,” Schreiber said.


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U.S. reports record number of Covid deaths in January

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Lila Blanks holds the casket of her husband, Gregory Blanks, 50, who died of the coronavirus disease (COVID-19), ahead of his funeral in San Felipe, Texas, U.S., January 26, 2021.

Callaghan O’Hare | Reuters

The United States started 2021 with the deadliest month of the coronavirus pandemic to date.

January’s death toll has already surpassed the previous record number of fatalities set in December, when over 77,400 people in the U.S. died of Covid-19, according to data compiled by Johns Hopkins University. The pandemic has taken more than 79,200 lives so far this month, according to the data.

Over the past seven days, the country has reported an average of more than 3,300 Covid-19 deaths every day, up 12% compared with a week ago, according to Hopkins data.

There’s hope the death toll will slow down in coming weeks. The number of daily new cases reported in the U.S., which epidemiologists use as a leading indicator of whether the outbreak is growing or receding, has been dropping steadily in recent days as a surge driven by interstate travel and holiday celebrations appears to be subsiding.

The U.S. reported about 146,600 new cases on Tuesday, bringing the seven-day average of new cases down to just over 166,300 and down by about 17% compared with a week ago, according to Hopkins data.

The number of people currently hospitalized with Covid-19 across the U.S. is also on the decline, though it remains worryingly high. More than 108,900 people were hospitalized with the disease as of Tuesday, according to data compiled by the COVID Tracking Project, which was established by journalists at The Atlantic. That’s off the peak of more than 130,000 hospitalized patients reported earlier this month.

But the potential spread in the U.S. of new, more contagious strains of the virus, combined with a slower-than-expected rollout of the vaccines, threatens to reverse progress made on combating the outbreak.

The B.1.1.7 strain of the virus, which was first discovered in the United Kingdom and has become the dominant strain there, has been found in a number of states across the U.S. Epidemiologists say that strain appears to spread more easily, and British officials have said it could be more lethal, too.

As of Monday, the Centers for Disease Control and Prevention said 293 cases associated with that strain of the virus have been found in the U.S., mostly in Florida and California.

And earlier this week, the Minnesota Department of Health said it confirmed the first known U.S. case of another strain of the virus that was originally discovered in Brazil. One other so-called variant of concern, called 501Y.V2 or B.1.351, depending on the epidemiologist, was first discovered in South Africa and is worrying scientists because vaccines and drugs appear to be less effective against that strain. No cases associated with that strain have yet been discovered in the U.S.

In an effort to curb the spread of the virus and especially the import of new strains, President Joe Biden earlier this week banned most non-U.S. citizens traveling from South Africa from entering the U.S. and extended travel restrictions for Europe, the U.K. and Brazil.

The president has painted a bleak picture of the outbreak, saying Monday that the U.S. is “going to see somewhere between a total of 600,000 to 660,000 deaths before we begin to turn the corner in a major way.”

While urging people to wear masks and follow public health measures such as social distancing, Biden is working to ramp up the rollout of the Covid vaccines, blaming the initially slow pace on the Trump administration. On Monday, he said the U.S. could top 1.5 million vaccinations per day, up from his previously targeted pace of 1 million per day, which was already nearly met by the last administration.

“Time is of the essence,” he said earlier this week. “We’re trying to get out a minimum of 100 million vaccinations in 100 days, and move in the direction where we are well beyond that in the next 100 days, so we can get to the point where we reach herd immunity in a country of over 300 million people.”

On Tuesday, he said the government is working to buy 200 million more doses of Pfizer’s and Moderna’s vaccines, bringing the U.S. supply from 400 million doses to 600 million, though that won’t ramp up the pace of vaccinations soon. He also said the administration will increase the number of doses being sent out to states each week by about 20%. Some states have said they have the capacity to vaccinate more people but are limited by supply.


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