Axios Closer

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December 08, 2023

Friday is in the books ✅.

Today's newsletter is 698 words, a 2½-minute read.

🚨 Situational awareness: SmileDirectClub is going out of business, Nathan writes.

🔔 The dashboard: The S&P 500 closed up 0.4%.

1 big thing: Petgo

Illustration: Maura Losch/Axios

Pet adoptions are declining as more Americans return to the office — and that's taking a toll on pet product sellers, Nathan writes.

State of play: Online pet product seller Chewy this week lowered its revenue outlook and swung from net income of $2.3 million in the year-ago period to a net loss of $35.8 million in its most recent quarter.

  • Pet adoptions — which spur purchases of new pet products — are down 16% year over year, Chewy CEO Sumit Singh told investors on Wednesday.

What they're saying: "Right now, pet household formation is muted, and it's muted because of the high kind of pressures that consumers are seeing from every direction," Singh said.

The impact: Shares of Chewy and Petco are down more than 46% and 63%, respectively, in 2023, bucking the overall stock market's strong showing.

  • Chewy cut an unspecified number of jobs in November.
  • Bank of America analyst Curtis Nagle said in a research note that investors should "not expect" Chewy to outline "new, material near-term revenue drivers" as the company grapples with declining rates of pet ownership.

Zoom out: Employers are increasingly demanding that employees relinquish remote-work arrangements, making it more difficult to care for pets.

The big picture: For pet retailers, it's a return to the old normal.

  • Chewy's stock had skyrocketed by over 300% during the pandemic pet boom, from the start of 2020 to its peak in February 2021, and now it trades below where it stood at the start.
  • Petco, which IPO'd at the beginning of 2021, is off more than 87% from its debut.

2. Charted: Economic vibes are shifting

Data: University of Michigan; Chart: Axios Visuals

The "vibe-cession" is on hold: American consumers felt much better about the economy in early December, Axios' Courtenay Brown writes.

  • So says the University of Michigan's widely followed consumer sentiment index, which jumped a whopping 8 points from the prior month.
  • It was the first increase in four months, with broad improvement in sentiment across all age groups and political affiliations.

Why it matters: A key question has been why Americans felt so down about the economy when key indicators — cooling inflation, boom-like economic growth and healthy jobs growth — have been so strong.

  • Those gloomy consumer vibes have political implications: voters remain dissatisfied with the Biden economy, which by most other measures looks solid.

Of note: Inflation expectations for the year ahead were 3.1%, the lowest since March 2021 — a big drop from the prior month's 4.5% that was enough to fuel a stock market rally.

The caveat: The survey — based on a small sample of roughly 420 consumers — is preliminary and will be finalized in the coming weeks.

3. What's happening

🛢️The FTC is reviewing whether Chevron's proposed acquisition of Hess is anti-competitive. (Reuters)

🔐 Honeywell announced a $4.95 billion acquisition of air-conditioning maker Carrier Global's security division. (Axios)

4. Green light for gene-editing treatment

A researcher performs a CRISPR process at the Max Delbrück Center for Molecular Medicine in Berlin. Photo: Gregor Fischer/picture alliance via Getty Images

The FDA today approved the first therapy based on CRISPR gene-editing technology to address the painful effects of sickle cell disease, Axios' Adriel Bettelheim writes.

  • Getting the nod was Casgevy, from Vertex Pharmaceuticals and CRISPR Therapeutics, a one-time treatment for patients 12 years and older.

Why it matters: The technology could be applied beyond the estimated 100,000 Americans with sickle cell to other blood disorders like hemophilia, as well as certain cancers and infectious diseases.

5. Mouse house

An artist's rendering of Storyliving's Asteria community. Image: Courtesy of Storyliving

The Mouse wants to build you a house, Axios Raleigh's Zachery Eanes writes.

  • Storyliving, a housing developer owned by Disney, announced it's building a 1,500-acre, 4,000-unit community called Asteria in Pittsboro, North Carolina.

Details: The neighborhood, which will offer both single-family homes and apartments, will feature Disney-themed activities and events.

The big picture: This is the second Disney-backed community to be announced.

6. What they're saying

"We had started to rely too much this year on self-checkout in our stores."
— Dollar General CEO Todd Vasos, on an earnings call, discussing the company's decision to return to human cashiers as the "primary" way of helping customers complete their transactions.

Today's newsletter was edited by Pete Gannon and copy edited by Sheryl Miller.

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