The department store chain Macy's has stopped carrying Israeli settlement products of SodaStream, according to the Wall Street Journal. Macy's has been targeted the past year by pro-Palestinian activists, who have called on it and other major chains to stop carrying the SodaStream home carbonation system and soda flavourings due to the company's role in the military occupation of Palestine. This news comes amidst sinking share prices of the company, which earlier this month announced preliminary results for the fourth quarter. It projected $125 million in revenue in the quarter and operating income of $8.5 million. That’s well short of the $154.4 million of revenue and $17.6 million in operating income expected by analysts. In the third quarter of last year, the revenue was about the same, but operating income of $18 million was more than double what it expects this year. Its shares have dropped by 45% so far this year.
Jim Charnier, an analyst at Monness Crespi Hardt, told the Wall Street Journal that he had been expecting a poor quarter when he learned early in September that Macy's had stopped carrying SodaStream and saw other negative figures from the market.
Macy's did not respond to questions by North American activists concerning SodaStream.
For more than a year, religious and human rights organizations throughout the United States have urged Macy’s, Target and other corporations to de-shelve SodaStream products because of the company's complicity with Israel's occupation and settlements. SodaStream products are largely manufactured in the West Bank Mishor Adumim settlement industrial zone.
“We are very disappointed in our recent performance,” said Daniel Birnbaum, Chief Executive Officer of SodaStream. “Our U.S. business underperformed due to lower than expected demand for our soda makers and flavors which was the primary driver of the overall shortfall in the third quarter. While we were successful over the last few years in establishing a solid base of repeat users in the U.S., we have not succeeded in attracting new consumers to our home carbonation system at the rate we believe should be achieved. The third quarter results are a clear indication that we must alter our course and improve our execution across the board. We have already begun a strategic shift of the SodaStream brand towards health & wellness, primarily in the U.S., where we believe this message will resonate more strongly with consumers….”
SodaStream states that calls for boycott are indeed a "risk factor" and a cause for "rising political tensions and negative publicity", although this official notice makes no mention of boycott. However, the company has declared in the past that moving its factory out Mishor Adumim would require the expenditure of resources and, more importantly, "limit certain of the tax benefits for which we are currently eligible." These benefits stem from the fact that the Israeli government provides economic incentives, including tax deductions, for businesses operating in West Bank settlements.
John Lewis in the UK had been the latest retailer to stop stocking SodaStream products and protests forced a SodaStream store in Brighton, UK, to close recently. SodaStream also had to deal with a public relations headache early this year when the U.K. charity Oxfam criticized its brand ambassador Scarlett Johansson for working with the settlement company. Johansson stepped down from her role with Oxfam and defended the company.
Soros Fund Management, the family office of the billionaire investor George Soros, also sold its stake in SodaStream this past August.
“Soros Fund Management does not own shares of SodaStream,” Michael Vachon, a spokesman for the fund, told The National, declining to comment further on when and why it sold the shares.
In a May filing with the US markets regulator, the fund said it had bought 550,000 shares of SodaStream during the first quarter. Bloomberg reported that the fund acquired the shares for $24.3 million, with the new holding making up 0.3 per cent of the fund’s $9.3 billion stock portfolio.
“After pressure from Soros partners in the region and the world, they dropped SodaStream and promised, in private letters so far, to issue guidelines similar to those adopted by the EU to prevent any investment into companies that sustain the Israeli occupation and settlements in particular,” said Omar Barghouti, the Palestinian activist and co-founder of the BDS movement.
The activist group Adalah-NY continues its campaign against SodaStream following the decision by Macy's, and at the end of October will visit New York stores that stock and sell SodaStream, letting owners and managers know why they should stop. Adalah-NY notes that this planned week of visits will be used to develop its future NYC-based campaign against SodaStream.
