Here are five things you need to know this morning:
Nike axes CEO, brings back former exec
Nike has ousted its CEO John Donahoe and coaxed one of its former execs out of retirement in a bid to turn the company’s fortunes around. Elliott Hill was head of the athletic giant’s consumer business until he retired in 2020. He will return next month to take over the top job from outgoing Donahoe. The company’s shares have lost more than a quarter of their value on slumping sales while losing market shares to upstarts like On and Hoka, and traditional rivals like Adidas, Puma, Reebok and New Balance. Unlike Elliott, who has been with the company since 1988, Donahoe came over from eBay only in 2015 and has essentially been in charge of the company for the entirety of its recent decline, which began in around 2022. The stock is up more than seven per cent in premarket trading this morning, but despite that surge is still worth about half of what it was in December, and only about a third of what it was valued at in late 2021.
Canadian retail sales surging
Sales at Canadian retailers had a strong July and likely an even better August, Statistics Canada reported this morning. All in, Canadian retailers racked up $66.4 billion in sales in July. That’s an increase of 0.9 per cent from June’s level. Preliminary numbers for August suggest another 0.5 per cent bump on top of that figure, beating expectations. A big reason for the July uptick came from car dealerships, where sales in July topped the June figure by a wide margin, largely because a lot of dealerships saw a much lower baseline in June due to a cyberattack that impacted their operations for weeks. All in, even assuming a flat number for September, the new numbers mean retail sales are on track to increase by 0.8 per cent for the third quarter as a whole. That’s a reversal from a 0.4 per cent decline in Q2 and 0.5 to start the year. “We need to see more rate relief before we see an upswing in consumer spending,” BMO economist Sal Guatieri told BNN Bloomberg’s The Street this morning,“but it does suggest Canadian consumers have a little left in the tank.”
FedEx delivers bleak outlook
Shares in package delivery giant FedEx are getting clobbered this morning after the company warned its business would slow in the year ahead and reported a worse-than-expected quarterly profit. The company has been trying to cut costs, but that plan isn’t going well enough to offset a slowdown in demand for its services. Bloomberg Intelligence analyst Lee Klaskow says the market is correctly interpreting the numbers as a bad omen for the overall state of the economy. “The sense of urgency isn’t there,” to pay more for fast shipping, he wrote. “That usually happens when things are kind of tough, when people are trying to save money.”
Tiff Macklem talks AI
Bank of Canada governor Tiff Macklem will speak at an artificial intelligence conference in Toronto today, and the text of his remarks has been released. Despite the breathless and dire prognostications about AI, Macklem says it’s too early to tell exactly how the technology is going to impact things like productivity, the labour market and inflation, but it’s a topic the bank is monitoring closely. He also said the bank itself is already using the technology to analyze data, but stresses a lot more study and caution is needed. You can read his speech here.
Going nuclear
Speaking of artificial intelligence, we got an eye-opening reminder this morning of just how much demand for electricity is going to increase as the technology ramps up. How badly do we need more power? Put it this way: the owner of the Three Mile Island nuclear reactor in Pennsylvania says it plans to bring the facility back into service as soon as 2027 because Microsoft has signed on as a long-term customer, citing a near insatiable demand for power to meet its AI-related data centre needs. Constellation Energy Corp. is going to spend US$1.6 billion to revive the facility that was shuttered almost half a century ago after the worst accident in the history of the U.S. nuclear industry. But that was then, and this is now. “Policymakers and the market have received a huge wake-up call,” CEO Joe Dominguez said. “There’s no version of the future of this country that doesn’t rely on these nuclear assets.”