🔓 Walmart’s shoplifting problem

…and Pepsi plans layoffs to recession-proof its biz [Disclosures](   Walmart’s bottom-line blind spot (Chris Hondros/Getty Images)   Yesterday’s Market Moves   Dow Jones 33,596 (-1.03%) S&P 500 3,941 (-1.44%) Nasdaq 11,015 (-2.00%) Bitcoin $16,991 (+0.15%) Dow Jones 33,596 (-1.03%) S&P 500 3,941 (-1.44%) Nasdaq 11,015 (-2.00%) Bitcoin $16,991 (+0.15%) Hey Snackers, [Yetis]( are converging on Alaska, but instead of running for the hills, residents are heading to the coast. A shipping container [spilled]( 1K+ Yeti coolers into the sea, and they're washing up as freebies on Alaskan beaches (beer not included). Stocks tumbled again yesterday as strong econ data stoked concerns that the Fed could hike rates well into next year. Oil prices continued falling and were down for the year so far. China’s loosening of Covid restrictions was a market bright spot. Lifted Walmart says shoplifting could lead to higher prices and closures as losses from organized retail theft mount Calling a store associate… to unlock the fancy razors in the glass case. Yesterday, [Walmart]( CEO Doug McMillon [said]( rising theft could lead to price hikes and store closures. America’s largest retailer is dealing with a surge in shoplifting that’s “higher than what it has historically been,” McMillon added. He said a lax approach from local prosecutors could lead to closures and higher prices if the problem persists. Walmart isn’t the only one… Organized retail theft (think: criminal rings who steal large volumes of products only to resell them) is on the rise. Last year nearly 70% of retailers reported a spike, which contributed to losses of up to $69B. It can be hard to imagine that shoplifting could significantly affect multibillion-dollar corporate giants, but the scale has become so great it’s hitting their bottom line — and losing them hundreds of millions. - [Target]( is also dealing with an increase in stealing, which it says is mostly organized retail theft. Recently, Target’s CFO said shoplifting at its stores has jumped 50% from last year. So far this year, losses from theft have dealt a $400M blow to its profit margins. - [Rite Aid]( said it lost $5M last quarter from theft at its NYC locations, and last year [Best Buy’s]( CEO said that rising theft had been “traumatizing” for workers. THE TAKEAWAY Corporate L’s can come in unexpected forms… When we talk about losses, we usually look at rising costs, slowing demand, and shrinking sales. But as America’s economic situation deteriorates, inflation isn’t retailers’ only problem: crime’s starting to become evident in earnings too. Now, retailers are bulking up safety measures like locking up items and adding armed guards. The downside: a less pleasant shopping experience. Crunch Pepsi plans to lay off hundreds of workers as food titans try to future-proof their pantries Falling flat… [Pepsi’s]( plans to lay off hundreds of corporate staff to streamline its biz. The soda and snack giant has nearly 309K employees worldwide, and over a third are US-based. The latest cuts are aimed at its beverage biz, but will affect snacks too. FYI: Pepsi owns the four big O’s of snacking (Cheetos, Doritos, Tostitos, and Fritos). It isn’t the only one crunching down: - [Coca-Cola]( recently announced plans to restructure through a “voluntary separation program,” which includes buyout offers for some of its 6K North American workers. Party in the pantry... Despite inflated prices, Americans have continued splurging on brand-name groceries from companies like Pepsi, [Kraft]( and [Kellogg](. Pepsi’s offset higher costs by hiking prices or shrinking product sizes (cough, [shrinkflation](. Last quarter Pepsi doubled its annual sales forecast as snacking demand stayed strong. But recession fears are sparking concerns that consumers' label loyalty could be tested: - In October, Pepsi’s popular Frito-Lay brand saw sales volumes dip. Meanwhile, consumers across income levels are starting to trade down to cheaper private labels. - Now, Pepsi execs said they want to offset pressure on margins by preparing for “worsening macroeconomic conditions.” THE TAKEAWAY Pepsi wants to future-proof its biz… Tech layoffs started when things were already getting rough for the sector, but [Pepsi]( is preparing for a snack-pocalypse that hasn’t happened yet. Other companies beyond tech are starting to cut headcount or freeze hiring, from [Ford]( to Walmart to [Beyond Meat](. Economists say there could be spillover effects on more industries. What else we're Snackin' - [Feed]( [Meta]( threatened to boot news links from Facebook if Congress passes a proposal that would empower media outlets to negotiate with platforms. A similar measure in Australia led to Meta paying news outlets. - [SBF’d]( Disgraced FTX founder Sam Bankman-Fried tried to raise cash with a surprising list of private equity as collateral, reportedly including shares of SpaceX, the Boring Company, and Bored Ape creator Yuga Labs. - [Microsony]( [Microsoft]( said it offered [Sony]( a 10-year deal to release "Call of Duty" on PlayStation as it tries to buy CoD developer [Activision](. The move seems aimed at easing regulator antitrust concern. - [iDrive]( [Apple]( reportedly altered its planned self-driving car to include a steering wheel and pedals (anticlimactic). Autonomous tech has lagged expectations, as players like [Tesla]( struggle to deliver on promises. - [Brr]( It could be a cold, dark winter for Europe: British and French officials are planning for rolling blackouts as slashed gas supply from Russia risks an energy shortage. 🍪 Thanks for Snacking with us! Want to share the Snacks? Invite your friends to sign up [here](. Snack Fact Of the Day This year, Fed officials have raised rates at the fastest pace since the early 1980s [Read more]( Wednesday - Earnings expected from Campbell Soup and The Duckhorn Portfolio Authors of this Snacks own: shares of Apple, Microsoft, Tesla, and Walmart ID: 2627462 Robinhood Snacks newsletters reflect the opinions of only the authors who are associated persons of Robinhood Financial LLC (Member [SIPC]( and do not reflect the views of Robinhood Markets, Inc. or any of its subsidiaries or affiliates. 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