Arby’s Buys Buffalo Wild Wings for $2.9 Billion

Arby’s Restaurant Group Inc. agreed to purchase Buffalo Wild Wings Inc. for $2.9 billion, which included $2.44 billion in cash and the remaining in debt. Arby’s bought the company for $157 a share. Before the agreement to purchase Buffalo Wild Wings hit the media, the offer to buy the chain circulated and shares in Buffalo Wild Wings rose 6.3% to $155.60, meaning that people are confident in this deal and have faith that Arby’s can change the sports-bar atmosphere chain for the better. Buffalo Wild Wings is known for their chicken wings and their wide array of flavors, including their world-famous Blazin’ flavor, but they have been hurting by the rise in chicken prices and the lack of foot traffic in their restaurants. Their management has been pushing for more expansion, higher profit margins and increasing sales, but the business is not meeting the wants of management. Arby’s has struggles as well, since their premium meat sandwiches are more expensive than other fast food options, but they remain hopeful as this deal could have both parties flourish into bigger and better brands.

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The Economy Is Humming, but Businesses Aren’t Borrowing

The rate of 12 month loan growth at U.S. banks in the third quarter hit its lowest level since the end of 2013. This marks the sixth consecutive quarter of decline for this measure of loan growth. The growth rate for business lending has plumbed to its lowest levels since 2011. It is surprising that these rates are falling even while many signals point to a strong U.S. economy. It still remains unclear why, though, some banks have pointed to lack of clarity from Washington on the fate of key initiatives such as taxes and health care. Other banks have cited heightened competition as more businesses are tapping into the bond market instead of bank loans to take advantage of low interest rates there.

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Black Friday Kicks Off With Upbeat Shoppers and Fewer Discounts

Retailers have been struggling to keep up with consumers shifting to e-commerce. However, Black Friday sales represent a 4.8% increase over Black Friday sales last year. Sales for November and December are expected to increase about 4% to $682 billion which would make 2017 the strongest holiday season since 2014. There is a broad shift in consumer spending away from apparel and accessories and towards dining, travel and entertainment.

Inventory management was quite good coming out of the third quarter so stores were not sitting on piles of excessive goods. As a result, retailers did not need to have aggressive promotions in the fourth quarter to clear out unsold goods. Because of this, the average discount was only 45% compared to 48% last year.

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Hershey Will No Longer Be Your Traditional Candy Company

Hershey Co. recently said that snacks and candy are a treasure thing in the food industry. Regardless of what they say, profit margins are not keeping investors happy. Last quarter, Hershey’s sales rose by 1.5% to 2 billion. Their profit margins have dipped 3 percent, down to 45.3% this quarter.

The health concern of many individuals has created a challenge for the industry and specifically Hershey. Some recent activities of Hershey include acquiring a beef jerky brand and a higher end sweet snack maker such as BarkThins. They have also created pretzels covered in chocolate to shift onto the snack aisle.

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Jet.com Leveling Up to Amazon

It has been a year since Wal- Mart has acquired Jet.com. Walmart has been strategizing a plan to compete with Amazon. The secret weapon includes the use of the startups they have acquired over the past few years. Ultimately, Jet will start selling apparel from niche online sellers like Modcloth and Bonobos. In addition, Jet plans to introduce a new line of private label food and other grocery items.

To kick things off, Jet will release 60 food and household products over the next two months and then add baby, beauty, and pet products. This plan will help Jet.com separate itself from Wal-mart and make it a direct competitor against Amazon by selling a more premium option. In the long run, as Jet produces their own private brand, they’ll be able to produce higher profit margins since it doesn’t require as much marketing expenses.

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Nike, Macy’s Suffer Technical Snafus on Black Friday

On the biggest day of the year, retail company’s Macy’s and Nike suffered a wide range of technical problems. Shoppers trying to shop through Nike’s website faced numerous error messages and customers shopping at Macy’s complained about problems using their credit cards at checkout. These problems come at a critical time for retailers as they continue to transition to a more digital and online experience rather than through the traditional in store model. Nike spokesman, Charlie Brooks said the company was seeing a high level of traffic and sales on its sites. While Macy’s states that the retailer was suffering a “slowdown” with its credit card system.

Customers took to social media to complain about their shopping experience as big retailers Nike and Macy’s look to transition their image to stay alive in the shrinking market. Still, retailers face immense pressure as they continue to slash their prices even lower this season to entice more customers from shopping with online retailers such as Amazon.

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Inflation Worries as December Rate Hike Approaches

The Federal Reserve plans to stay on track to increase short-term interest rates however, inflation remains persistently weak. The last rate increase occurred in June from 1% to 1.25%. Inflation is expected to remain below the 2% annual target which poses questions about the pace of rate increases. Inflation has been weak for several months this year and the Fed believes it is caused by transitory factors and continues to think that a tightening labor market will likely push inflation up.

Other readings however, have been positive. The unemployment rate in October dropped to 4.1%, a 17-year low and prices rose 1.8% from a year earlier in October, the strongest annual gain since April. Many are expecting Fed officials to increase rates however, some are expressing concerns that inflation may become a bigger concern and wish to see data that supports increasing inflation before they decide to raise rates.

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