1. Rite Aid Files for Bankruptcy
2. Biden Tightens China Chip Export Rules
3. LinkedIn Announces Second Round of Layoffs
4. Charles Schwab Beats Deposit Forecast
5. Nearly Half of South Africans Face Food Insecurity
6. iPhone 15 Off to Weak Start in China
7. Lululemon Joins S&P 500 Index
1. Rite Aid Files for Bankruptcy
U.S. drugstore chain Rite Aid announced that it is filing for bankruptcy and will close additional physical stores while restructuring its debt.
Under court supervision, the company secured $3.45 billion in new financing from multiple creditors and reached a restructuring agreement with holders of its senior debt.
Rite Aid said the new funds will provide sufficient liquidity to support the company’s turnaround. It has appointed bankruptcy turnaround expert Jeffrey Stein as its new CEO.
In August, S&P downgraded Rite Aid’s credit rating to junk status due to the large amount of debt maturing in 2025.
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2. Biden Tightens China Chip Export Rules
Sources revealed that President Biden plans to strengthen restrictions on the export of advanced semiconductors and chipmaking equipment to China, and to block Chinese firms from acquiring them.
More Chinese firms will be added to the U.S. trade blacklist, and overseas chipmakers serving Chinese clients will be required to apply for U.S. licenses. It will also become harder for companies to reroute shipments through third-party countries.
A year ago, Biden implemented an initial ban on advanced chip exports to China to slow its technological progress. In response, China has ramped up domestic chip R&D.
China’s Ministry of Foreign Affairs criticized the move as politicizing and weaponizing trade and technology.
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3. LinkedIn Announces Second Round of Layoffs
LinkedIn, the job networking site owned by Microsoft, said it will cut 668 employees across engineering, product, HR, and finance departments in a second round of layoffs this year.
In a statement, LinkedIn said it is focusing on strategic investments and delivering more value to users.
Demand for LinkedIn’s services has been hit by cooling supply and demand in the job market. In May, the company shut down its Chinese app and laid off 716 employees.
Microsoft acquired LinkedIn in 2016 for $26.2 billion.
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4. Charles Schwab Beats Deposit Forecast
Charles Schwab reported Q3 earnings today. CFO Peter Crawford said that despite another Fed rate hike, the pace of client withdrawals has slowed.
Client deposits fell 28% year over year to $284.4 billion, but beat analysts’ expectations.
As clients moved funds into higher-yielding products, Schwab’s net interest income dropped 24% to $2.2 billion.
Schwab benefits from rising rates due to its offering of floating-rate investment products.
The company expects full-year revenue to fall 8% to 9% from 2022.
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5. Nearly Half of South Africans Face Food Insecurity
According to World Data Lab, nearly 49% of South Africans will be unable to meet minimum food intake requirements by 2025, just shy of the 52% peak during the COVID-19 pandemic.
Shoprite’s head of social investment, Sanjeev Raghubir, said the pace of progress must accelerate to change the country’s trajectory.
World Inequality Lab also ranked South Africa as the most unequal country in the world.
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6. iPhone 15 Off to Weak Start in China
Market tracker Counterpoint Research estimates iPhone 15 sales in China fell 4.5% in the first 17 days after launch compared to its predecessor. The decline is attributed to growing competition from brands like Huawei.
Jefferies analyst Edison Lee believes iPhone 15 sales could be down over 10% from the iPhone 14, especially due to the strong launch of Huawei’s Mate 60 Pro.
Reports of overheating have also plagued the iPhone 15, potentially making this the weakest iPhone launch in China since 2018.
Sales in the U.S. — Apple’s largest market — have remained strong in the past two weeks.
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7. Lululemon Joins S&P 500 Index
Last Friday, athletic apparel brand Lululemon announced that its stock will be added to the S&P 500 index on October 18. The news sent shares up 10% today.
Year-to-date, Lululemon shares are up 29%, outperforming the S&P 500’s 14% gain and the S&P retail sub-index’s 1% drop.
Oppenheimer analyst Brian Nagel called the inclusion a potential catalyst for Lululemon’s stock.
Some analysts also believe Lululemon could benefit from the rising popularity of GLP-1 weight-loss drugs.
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This content is sourced from Financial Times, Bloomberg, and The Real Deal, among other financial news outlets.