- __[WFH](https://sherwoodmedia.com/snacks/newsletters/dVp7geMbUIPwB931MAQ4s/articles/7BeN3vWpvBNGUjqylY97IJ/):__ __Hilton__ and __Marriott__ announced extended-stay brands to tap into hybrid workers’ flexible travel style. Extended-stay hotels had 75% occupancy last year, compared to 63% for the overall market.

- __[Smize](https://sherwoodmedia.com/snacks/newsletters/6Dn5NOVENzBNXXKh6CVwlL/articles/5otNlLPhOHFGvtEhVwJGgR/):__ Budget makeup brand __E.l.f__ stunned investors with 80% quarterly sales growth. E.l.f.’s no-frills products have gained buzz on social media, helping it become Gen Z’s #1 beauty brand.

- __[Chipper](https://sherwoodmedia.com/snacks/newsletters/6Dn5NOVENzBNXXKh6CVwlL/articles/3azSiyhkUyVo8TAf9d8Khw/):__ __Nvidia__ soared near a trillion-dollar valuation as it positions its supercomputing chips as shovels in the AI gold rush. But quarterly revenue was down 13% as demand for its gaming chips sagged.

ICYMI

Last week's highlights

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__More heated than the “Succession” finale…__ the [greedflation](https://www.wsj.com/articles/greedflation-is-realand-probably-good-for-the-economy-6c475b8e) debate. With inflation still stubbornly high, some are pointing fingers at corporate profits. The idea, also dubbed profit-led inflation or “[excuseflation](https://www.bloomberg.com/news/articles/2023-03-09/how-excuseflation-is-keeping-prices-and-corporate-profits-high),” is that some corporations hike prices beyond what's needed to cover rising costs — leaning on broad inflation and black-swan events (like: pandemic, war) as an excuse. In a recent [survey](https://dashboard.askattest.com/survey/K9CBNJNR7QC2VG/results/overview?date=1676470808278) of 2K US consumers, over half said they believe greedflation is happening “a lot.” They’re not alone. 

- __Makin’ bank:__ European Central Bank economists said that businesses have been padding profits, which they argued was a bigger inflation driver than rising wages in the second half of last year.

- __Corporate profit margins__ hit a 70-year high last year as consumers stomached higher prices, and this year companies continued [flexing](https://sherwoodmedia.com/snacks/newsletters/48bbCfnWRsuLXxDs0G1SaW/articles/2Eq0FgXv6pjFfOOzgnM1Xp/) their “pricing power.”

__Not everyone's on team #greedflation…__ While some margin-padding may be happening, many economists say there’s little evidence that corporate profits are significant contributors to inflation. Last week, former Fed Chair Ben Bernanke and ex-IMF chief economist Olivier Blanchard [released](https://www.wsj.com/articles/why-inflation-erupted-two-top-economists-have-the-answer-6919042c) a study that pointed to Covid supply shocks (and the trillions in gov’t stimulus that followed) as the main causes of US pandemic-era inflation. Picture: fewer goods available + more $$ to buy them with. Last year, Treasury Secretary Yellen rejected the idea that corporate greed is driving inflation, pointing to good-old supply and demand as the main culprit.

A scrambled debate (Justin Sullivan/Getty Images)

Spicy

__The “greedflation” debate is a symptom…__ of unusually resilient demand. US consumer spending jumped last month and inflation accelerated. Despite its aggressive interest-rate hikes, the Fed hasn’t been able to cool demand/inflation/the labor market nearly as fast as hoped. Without continued spending, prices wouldn’t have been able to stay so elevated. Resilient demand could be a result of extraordinary stimulus measures and years of near-zero rates that helped lead to historically low unemployment and rising wages. But some retailers are starting to see that consumers are tightening their budgets.

Corporate price hikes get the side-eye as #greedflation trends, stoking the inflate debate

__Not-so-fancy feast…__ Americans are (finally) starting to spend less on their furry friends after years of explosive growth in the $124B US pet market. __Chewy__ thrived during the pandemic as 1 in 5 Americans took in furry companions and showered them with goodies. But Chewy’s sales growth has slowed recently as the puppy-palooza wanes. Last week, rival __Petco__ dropped disappointing results as owners ditched pricey kennels for smaller treats. Analysts think the trend could keep chomping on Chewy when it reports Wednesday.

__Little brown bag…__ __Macy’s__, which reports Thursday, predicted lower sales this year as consumers cut back on discretionary splurges. But the mall staple’s non-namesake, higher-end brands have been a bright spot: Blue Mercury, Bloomingdale’s, and mini stores called Market by Macy’s and Bloomie’s (s’cute) have outperformed the flagship. __Kohl’s__ got a boost from its in-store Sephoras last quarter, and __Urban Outfitters__ from Anthropologie and Free People. __Abercrombie__'s stellar earnings last week could bode well for Macy’s smaller-format foray.

Events

Coming up this week

__Shock me like an electric wheel…__ California is [reportedly](https://www.reuters.com/business/autos-transportation/california-seeks-us-approval-end-gas-only-new-vehicle-sales-by-2035-2023-05-23/) urging the EPA to approve a proposal that could supercharge EV adoption. In August, America’s most populous state approved a plan to ban new sales of gas-only vehicles by 2035 (sales would have to be electric or plug-in hybrid). But CA still needs the Biden admin’s approval to move forward, and the White House hasn’t endorsed setting a hard date to phase out gas vehicle sales. Still, CA is leading the EV charge: last year the state accounted for 40% of zero-emission vehicles sold in the US. 

__Esports on hard mode…__ Esports has [struggled](https://www.nytimes.com/2023/05/20/technology/e-sports-revenue-video-gaming.html) to turn hype into profits as it copes with budget-tightening from sponsors (especially crypto ones) and waning lockdown-era interest in gaming. Last week the __Madison Square Garden Co.__ offloaded its team, and esports org __FaZe Clan__ said it’s laying off 40% of staff. The team Evil Geniuses is reportedly ditching high-paid players. But it could be hard to cut costs since companies running the tourneys (like __Tencent__-owned __Riot Games__) are charging lofty entry fees (even $10M+).

Last week's highlights

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