From Wall Street to Silicon Valley, these are the top stories that moved markets and had investors, business leaders, and entrepreneurs talking this week on Cheddar.
Jobs Report Disappoints
U.S. job growth fell short of expectations for the month of August, adding to concerns that the economy is slowing amid the headwinds of the trade war and softness in manufacturing. The economy added 130,000 payrolls, which was artificially inflated due to the federal government hiring 25,000 temporary workers in preparation for next year's Census. The median estimate was for a gain of 160,000 new jobs. Still, the unemployment rate remained historically low, unchanged at 3.7 percent, as wage growth exceeded expectations. Markets had a tempered reaction to the miss, largely because it helped bolster the idea that the Fed would move to cut interest rates when it meets later this month. The Wall Street Journal reported the central bank was planning a modest quarter-point cut.
Top Retailers Shut Down Open-Carry
Walmart ($WMT) made some major changes to its gun and ammunition policy this week: announcing that it will cease selling ammunition that could be used in assault-style rifles; calling on Congress to consider an assault weapon ban and debate a background check bill and also revising its long-standing policy of letting customers "open carry" their firearms in states where it's legal. Walmart CEO Doug McMillon called on other retailers to join him ー and they did. Kroger also asked customers to refrain from carrying weapons in stores, followed by Walgreens ($WBA), CVS ($CVS), and Wegmans. Some major chains, including Panera ($PNRA), Starbucks ($SBUX), and Target ($TGT), had changed their open-carry policies years ago while Walmart stood firm. But the latest rash of mass shootings, including one at an El Paso Walmart last month that killed 22 people, forced the Arkansas-based retailer to reevaluate its stance on the issue.
WeWork May Cut Valuation, Delay IPO
One of the most anticipated IPOs of the year may be shelved. WeWork, formally known as The We Company, is reportedly in talks with its investors and advisers to delay its forthcoming public offering, planned for later this month. The company's CEO, Adam Neumann, is said to be weighing whether to slash WeWork's private valuation from $47 billion to something in the neighborhood of $20 billion. WeWork's biggest independent investor is SoftBank, the Japanese conglomerate that is heavily invested in major American tech giants like Uber ($UBER) and Slack ($WORK) (and is currently underwater on the former) through its Vision Fund. SoftBank is advising the office-rental startup on whether to delay an IPO until next year. WeWork has come under increasing scrutiny as it files the necessary paperwork ahead of an IPO, which has cast a pall over its corporate governance and business model. A growing number of analysts have raised concerns that, should the U.S. be facing a recession, a company that is deeply unprofitable, debt-ridden, and heavily leveraged to expensive urban real-estate would make for a poor investment.
New Scrutiny on Facebook, Google
Facebook ($FB) and Google ($GOOGL) are facing more investigations into their market power. State attorneys general are taking the lead in two separate antitrust investigations. On Friday, a bipartisan, multistate investigation led by New York state AG Letitia James was announced with a focus on Facebook. At the same time, the Wall Street Journal reported that a different group of state AGs, led by Texas' Ken Paxton, will unveil a probe into Google's dominance of the ad market on Monday. Those investigations are on top of federal probes and come after both companies just paid record fines for unrelated privacy violations. Facebook was fined $5 billion in July by the FTC for its various data lapses, while last week Google-owned YouTube agreed to pay $170 million in a settlement related to how it served ads to children. The former was the largest fine ever instituted by the FTC; the latter was the largest ever stemming from a violation of the Children's Online Privacy Protection Rule (COPPA).
Lululemon Leads the Way
In a sign that the retail apocalypse is sparing some best-in-breed brands, Lululemon ($LULU) reported quarterly earnings that blew past expectations. The athleisure giant also raised its full-year outlook, as CEO Calvin McDonald predicted "significant runway" ahead. While other retailers have been shuttering stores, Lulu recently opened its biggest store ever, in Chicago, with plans for more. It's also expanding its focus from trendy leggings and sports bras into personal care and investing heavily in e-commerce. The strategy is working: online sales were up over 30 percent in the quarter as Lulu expanded its "BOPIS" offering (buy online, pickup in store) nationwide. Same-store sales rose 15 percent, and the stock is up more than 50 percent on the year. Meanwhile, American Eagle ($AEO) shares were slammed after it missed its earnings ー but the miss masked a more intriguing trend. Aerie, the retailer's lingerie spinoff, saw its 19th consecutive quarter of double-digit growth. Like Lulu, the results show that specialty retailers that make strong connections to their core customer base can thrive, even amid industry turmoil.