Raphael Stevens

Gap is laying off more than 500 employees in an attempt to cut costs and become more efficient.
The cuts will be larger than the 500 layoffs the apparel retailer announced in September for corporate positions.
“Our goal is to flatten the organization, increase spans of control to create more robust roles and individual empowerment, and decrease layers to remove bottlenecks and make better, faster decisions,” Bob Martin, Gap’s chairman and interim CEO, told employees in a memo.

A clearance sale sign is seen at the Gap retail store on September 20, 2022 in Los Angeles, California.
Allison Dinner | Getty Images

Gap is laying off more than 500 employees in an attempt to cut costs and become more efficient, as the company tries to move back to profitability, CNBC has learned. 
The exact number of layoffs is unclear, but the head count reduction will be larger than the 500 or so cuts to corporate positions the company announced in September, a person familiar with the matter said Tuesday. 

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“Our goal is to flatten the organization, increase spans of control to create more robust roles and individual empowerment, and decrease layers to remove bottlenecks and make better, faster decisions,” Bob Martin, Gap’s chairman and interim CEO, told employees in a memo last week.  
Gap shares dropped about 6% on Tuesday. The stock has fallen more than 16% this year.
The cuts come after Martin told investors during a March earnings call that the apparel retailer’s staff has been “dampened by a complicated organizational structure, bureaucracy, and outdated processes.”
He noted Gap is planning to decrease management layers to “improve the quality and speed of decision-making.” The changes will result in $300 million in savings, the first half of which will come in fiscal 2023, according to Martin. 
At the time, the company didn’t disclose the total number of positions that would be cut as part of the overall restructuring but did note it was eliminating its chief growth officer position, previously held by Asheesh Saksena.

Athleta’s CEO, Mary Beth Laughton, has also left the company. Chief People Officer Sheila Peters plans to exit her role at the end of the year.
“Each of our brands now have consistent leadership structures focused on delivering excellence for our customers by elevating design and brand creative, focusing on merchandising end to end, and providing better oversight to the customer experience across all markets and channels,” Martin said on the call in March.
Impacted employees in Gap’s international sourcing division were notified about the latest cuts on April 18, while those at its San Francisco headquarters will be notified this week, the person said. 
Members of the finance team who will be laid off will be told in late May, the person said. 
The apparel retailer — which includes its namesake brand, Old Navy, Banana Republic and Athleta — has had a rough year as it struggled with a drop in sales, bloated inventory levels and a search for a permanent CEO. 
In the three months that ended Jan. 28, Gap posted $4.24 billion in sales, but reported a net loss of $273 million, or 75 cents a share. 
It managed to turn an annual net profit in 2021, but reported net losses in both 2020 and 2022. 
As of Jan. 28, Gap employed about 95,000 staff members, 81% of which work in retail locations. More

UPS CEO Carol Tomé said the company expects volume to remain under pressure in light of “current macro conditions.”
The Atlanta-based company’s earnings report arrives as contract negotiations between the company and its unionized workforce kick off, which could lead to a strike.
A UPS strike, which hasn’t happened since 1997, would significantly derail UPS operations.

United Parcel Service shares fell Tuesday after the American trucking and delivery giant reported first-quarter misses on both earnings and revenue. 
To some analysts, the relatively weak report from UPS hints at a wider economic slowdown, particularly when coupled with CEO Carol Tomé’s comments. 

“In the first quarter, deceleration in U.S. retail sales resulted in lower volume than we anticipated, and we faced ongoing demand weakness in Asia,” Tomé said in a statement. “Given current macro conditions, we expect volume to remain under pressure.”
Here’s how UPS performed in the first quarter compared with what Wall Street anticipated, based on an average of analysts’ estimates compiled by Refinitiv:

Earnings per share: $2.20 adjusted vs $2.21 expected
Revenue: $22.93 billion vs $23.01 billion expected

For the quarter ended March 31, net income fell to $1.9 billion, or $2.19 per share, from $2.66 billion or $3.03 per share, a year earlier. Revenue fell 6% from the same quarter last year.
Tomé told CNBC on Tuesday that a larger, industry-wide decline in retail sales in the month of March impacted UPS as well.
She noted that a “change in consumer shopping behavior” has led to increased spending on services and categories such as food and dining, rather than the kinds of goods that might be delivered by UPS.

The Atlanta-based company had previously predicted its 2023 profit margin would be tighter following a record profit in 2022. In its first-quarter report, the company said it now expects its full-year earnings to fall within the low end of its initial outlook, citing “challenging macro conditions and changes in consumer behavior.” 
The company now expects full-year revenue of $97 billion. Previously, UPS projected revenue between $97 billion and $99.4 billion, versus analysts’ estimates of $99.98 billion. 
In its fourth-quarter earnings call, Chief Financial Officer Brian Newman said the company expected 2023 “to be a bumpy year.” The company has seen volume fall in light of cooling demand and formerly said it expects the majority of its profit to arrive in the second half of 2023.
The first-quarter report comes amid a period of high-stakes workforce discussions at UPS. 
Contract negotiations between the company and its unionized workforce kicked off earlier this month, marking the largest private collective bargaining agreement in the United States. The Teamsters union involved in the negotiations represents more than 340,000 UPS workers, and the Teamsters have publicly pledged to strike if they’re unable to reach a satisfactory contract with UPS. 
The current national contract is set to expire on July 31. Tomé previously said that she believes negotiations will conclude before the end of July.
“It would be naïve of us to think there wouldn’t be some volume diversion [as a result of negotiations], and there has been, but not much,” Tomé told CNBC on Tuesday.
A UPS strike, which hasn’t happened in more than 25 years, would significantly derail UPS operations while causing pile-ups for businesses and consumers that rely on its services. The 1997 walkout led to hundreds of millions of dollars in losses for the company. A UPS walkout in 2023 would likely have even an even bigger impact.
UPS and the Teamsters last signed a five-year agreement in 2018. In the years since, the package-delivery industry was majorly altered by the pandemic: A Covid-spurred e-commerce boom fed into a spike in UPS shipping volumes, which the union says worsened working conditions amid high profits for the company. 
The Teamsters have said they are looking for higher wages, more manageable shifts and improved safety measures, among other demands.  More

Biogen said it is not worried about competing with Eli Lilly as they both try to roll out drugs to treat the early stages of Alzheimer’s disease. 
Biogen CEO Christopher Viehbacher said Eli Lilly’s decision to stop dosing the drug after it clears a certain amount of toxic amyloid brain plaque in a patient may not be the best approach.
Eli Lilly and Biogen may need to consider rolling out maintenance doses that will keep brain plaque levels low, the executive said during a Q1 2023 earnings call.

A person skateboards past Biogen Inc. headquarters in Cambridge, Massachusetts, on Monday, June 7, 2021.
Adam Glanzman | Bloomberg | Getty Images

Biogen isn’t worried about competing with Eli Lilly as they both attempt to bring an Alzheimer’s drug to the market, Biogen’s CEO said Tuesday. 
“I think it will be good if there are other players in the market, but I don’t think we are too concerned about competing with donanemab,” Christopher Viehbacher, the chief executive, said during the company’s first quarter earnings call, referring to one of Eli Lilly’s potential Alzheimer’s treatments. 

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Clinical trial data on both Eli Lilly’s donanemab and leqembi, a highly anticipated drug from Biogen and Japanese drugmaker Eisai, indicate they reduce a protein called amyloid. The protein builds up on the brain in Alzheimer’s patients and disrupts cell function.
Researchers argue that the accumulation of amyloid plaque is a crucial first step toward the cognitive decline observed in Alzheimer’s disease. More positive data on donanemab “further reinforces” that argument, according to Viehbacher. 
But he said Eli Lilly’s decision to stop dosing the drug after it clears a certain amount of amyloid plaque in a patient may not be the best approach to treating the disease.
“Most neurologists I talked to don’t believe that fits anymore with the way we’re thinking about the treatment of Alzheimer’s,” Viehbacher said. 
Eli Lilly didn’t immediately respond to a request for comment.

Patients in a phase two trial on donanemab stopped dosing as early as six months due to clearing amyloid plaque in their brains. Fewer than 100 patients received 12 months of the drug.
The Food and Drug Administration declined to grant accelerated approval for donanemab in part due to the lack of data on longer term use of the drug. 
Read more: FDA grants accelerated approval for Biogen ALS drug that treats rare form of disease
Viehbacher noted that amyloid plaque will accumulate in the brain again even after an Alzheimer’s drug manages to clear it. He said that will likely require Eli Lilly and Biogen to roll out maintenance doses that will keep plaque levels low. 
Biogen and Eisai expect the Food and Drug Administration to grant full approval of leqembi by the summer. The companies are already preparing to apply for approval of maintenance doses by the first quarter of 2024, Biogen said in its first quarter earnings report.
Eli Lilly has not announced similar maintenance dosing plans for donanemab. The company plans to unveil data from a phase three trial on donanemab during the second quarter this year.
The two drugmakers are racing to bring a new Alzheimer’s treatment to the market after both of their previous drugs flopped. 
Biogen is banking on the success of its drug leqembi after the disastrous approval and rollout of its old Alzheimer’s drug aduhelm last year. 
The company said it booked an $18 million loss from Alzheimer’s disease treatments during the first quarter.
Eli Lilly is developing donanemab and another drug, remternetug, after the company’s older treatment, solanezumab, failed to slow the progression of Alzheimer’s in clinical trials. 
An estimated 6.7 million Americans age 65 and older are living with Alzheimer’s, according to the Alzheimer’s Association. By 2050, that group is projected to rise to almost 13 million. 
One in three seniors die with Alzheimer’s or another form of dementia, which kills more people than breast cancer and prostate cancer combined, the association said. More

The Food and Drug Administration granted accelerated approval for Biogen’s ALS drug that treats a rare form of the disease. 
The FDA’s approval requires Biogen to further study its drug tofersen and verify its clinical benefits in patients with amyotrophic lateral sclerosis, also known as Lou Gehrig’s disease.
The decision was based on late-stage clinical trial results published in 2021.

A pedestrian walks past Biogen Inc. headquarters in Cambridge, Massachusetts, on Monday, June 7, 2021.
Adam Glanzman | Bloomberg | Getty Images

The Food and Drug Administration on Tuesday granted accelerated approval for Biogen’s drug tofersen, which treats a rare and aggressive form of the disease known as ALS.
Accelerated approval is an FDA designation that clears drugs faster if they fill an unmet medical need for serious conditions. The approval requires Biogen and its co-developer Ionis to further study tofersen and verify its clinical benefits.

If a subsequent trial confirms those benefits, the FDA can grant traditional approval for the drug.
The FDA said its decision is based on mixed late-stage trial results published in 2021, which indicated that tofersen significantly reduced a key protein called neurofilament light. That protein is associated with the severity of the mind-wasting disease. 
“The findings are reasonably likely to predict a clinical benefit in patients,” the agency said in a press release.
An independent panel of advisors to the FDA last month similarly voted that tofersen’s effect on neurofilament could produce a clinical benefit in ALS patients. 
Biogen CEO Chris Viehbacher said in a statement the FDA’s decision is a “pivotal moment in ALS research.”

“We gained, for the first time, consensus that neurofilament can be used as a surrogate marker reasonably likely to predict clinical benefit in SOD1-ALS,” Viehbacher said. “We believe this important scientific advancement will further accelerate innovative drug development for ALS.”
ALS, commonly known as Lou Gehrig’s disease, is a progressive and fatal neuromuscular disease that causes nerve cells in the brain and spinal cord to break down over time. 
Tofersen specifically targets a form of ALS in people with mutations in a specific gene, which are passed down through generations within families.
Those mutations can cause a protein called SOD1 to accumulate to toxic levels, which damages the nervous system and leads to the development of ALS.
The phase three trial found that patients who received tofersen saw their SOD1 protein levels decline between 26% and 38% compared with those given a placebo. 
Stephanie Fradette, Biogen’s head of ALS development, said those SOD1 protein levels are “indirect evidence” that tofersen targets the rare form of ALS.
But Fradette noted that SOD1 “does not tell us anything about the impact on disease progression.” 
Neurofilament is more strongly associated with the disease’s progression and a patient’s survival overall, she said. 
“Neurofilament is a tool to see how much neurodegeneration is occurring even before someone shows clinical signs and symptoms of ALS,” she told CNBC. “It’s directly correlated with survival.” 
The trial found that patients who received tofersen saw a 55% reduction in NfL levels by week 28 of the study. But there was an average 12% increase in NfL levels in people who were given a placebo. 
Tofersen’s failure to slow disease progression in the trial may be due to limitations in the way the study was designed, according to Fradette. She said the trial’s length was 28 weeks, which may not have been enough time to observe the drug’s effect on stalling progression.

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Dr. Timothy Miller, a researcher who worked on the late-stage trial, said ongoing studies of tofersen already suggest that patients benefit from being on the drug for a longer period of time. 
An extension study on patients from the phase three trial found that those who took tofersen experienced improvements in muscle strength and respiratory function after 52 weeks, according to Miller. 
That extension trial is slated to finish in 2024, he said. 
A few thousand people worldwide have been diagnosed with the rare SOD1 mutation, or around 2% of the 168,000 people who have ALS around the world, Biogen said.
In the United States, a little more than 300 people are affected by the SOD1 mutation. 
The SOD1 mutation is associated with 20% of cases that occur within families.
The drug’s approval could herald a new area of promising research on how to target the genetic cause of ALS. The disease afflicts an estimated 5,000 new people in the U.S. every year.
Researchers from the National Institutes of Health estimate that ALS cases worldwide will increase by nearly 70% to around 376,000 by 2040. More

McDonald’s diners are adding fewer items to their orders, and some markets are pushing back against price increases.
Still, the fast-food giant reported its third consecutive quarter of U.S. traffic growth in the first quarter.
Companies like PepsiCo and Coca-Cola are reporting mixed reactions to higher prices during the first quarter.

McDonald’s customers are pushing back against higher prices in some markets and adding fewer menu items to their orders, CEO Chris Kempczinski said Tuesday.
Shares of McDonald’s fell slightly Tuesday, but the stock hit a new 52-week high. McDonald’s is up about 10% so far this year.

Kempczinski’s comments come as consumer companies report mixed reactions to higher prices during the first quarter. For example, Coca-Cola saw a muted reaction to demand as it kept raising prices on its drinks. Rival PepsiCo, on the other hand, said in February it won’t hike prices further but reported a 2% decline in its first-quarter volume, which excludes price or currency changes.
For roughly a year, companies have been raising prices to mitigate inflation, particularly after Russia’s invasion of Ukraine sent commodity prices soaring. But consumers’ spending habits are changing in response, too, even as inflation cools. Coca-Cola CEO James Quincey said Monday on the company’s conference call that inflation and higher mortgage rates are top of mind for many consumers, despite low unemployment and improvements in gas prices.
Kempczinski said that consumers’ resistance to higher prices has come from going “off script” from the models it uses to determine its pricing strategy.
“When we execute where we know we have pricing power, we do quite well, but what we do find as we try to take pricing in the areas that are maybe a little bit more sensitive, the consumer pushes back on it,” he said on CNBC’s “Squawk on the Street.”
Additionally, Kempczinski said diners are less likely to add extras like French fries to their orders. Items per transaction have fallen by the low single-digits, he said.

But consumers are largely still buying Big Macs and McNuggets. The fast-food giant reported its third consecutive quarter of U.S. traffic growth, and it’s gaining market share across all income brackets.
Additionally, McDonald’s topped Wall Street’s estimates for its first-quarter earnings and revenue, helped both by its higher prices and increased demand.
Watch the full interview with McDonald’s CEO Chris Kempczinski on CNBC Pro: More

Lucid has begun testing its upcoming electric luxury SUV, called Gravity, on U.S. public roads.
The Gravity is expected to launch next year.
Lucid has promised that the Gravity will have greater electric range than any SUV currently on the market.

Lucid showing a preproduction version of the Gravity, a luxury electric SUV, testing on US public roads. The Gravity is expected to begin shipping in 2024.
Courtesy: Lucid

Luxury electric-vehicle maker Lucid Group said Tuesday that it has begun testing its next model, a large SUV called Gravity, on public roads in the U.S., a key milestone ahead of the Gravity’s expected launch next year.
Lucid hasn’t yet fully revealed the Gravity in production-spec trim. But the company has said that the Gravity will have seating for up to seven people, with “the driving dynamics of a sports car.” The interior will feature new high-resolution displays powered by a new generation of Lucid’s proprietary software operating system, Lucid said on Tuesday.

The Gravity is an important product for Lucid. While Lucid’s first vehicle, the Air sedan, has impressed reviewers and won several important industry awards, demand for the high-priced EV appears to have fallen well short of Lucid’s internal expectations.
Shares have fallen about 30% since Lucid said in February that it expects to build just 10,000 to 14,000 Airs in 2023, versus the 27,000 that Wall Street had expected. The stock was hit again in March, when Lucid cut 18% of its workforce, about 1,300 employees.
CEO Peter Rawlinson said in a statement that development of the Gravity is driving further advancements of Lucid’s in-house software and battery technology.
“The Lucid Air redefined the sedan category, and as our technology continues to evolve and lead the market, we are in a place where the Gravity is positioned to change the world of SUVs,” Rawlinson said.

A preproduction version of the Lucid Gravity, a luxury electric SUV, seen from the rear. The Gravity is expected to begin shipping in 2024.
Courtesy: Lucid

Lucid has promised that the Gravity will have greater electric range than any SUV currently on the market. The new vehicle will incorporate the advanced batteries and charging systems developed by Lucid for its Air sedan, and is expected to debut with range close to the Air’s industry-leading 516 EPA-estimated miles in top trim.

The Gravity’s likely electric luxury SUV rivals – Rivian’s R1S, Tesla’s Model X, and the BMW iX – have maximum EPA-estimated ranges of 390 miles, 333 miles and 324 miles, respectively.
Lucid had originally planned to release the Gravity later this year. But in February 2022, after beginning production of the Air, Rawlinson said Lucid would delay the Gravity until 2024 to refine the design and incorporate lessons learned from the Air’s launch. The Gravity will be built alongside the Air at Lucid’s factory in Casa Grande, Arizona.
Lucid confirmed that it expects to begin deliveries of the Gravity next year. The vehicle was originally slated for the first half of 2024, but that timeline has since been adjusted. More