Raphael Stevens

Starbucks’ quarterly earnings met expectations, but the company’s revenue fell short of Wall Street’s estimates.
In China, same-store sales dropped 14%.
The coffee reiterated its outlook after it slashed it last quarter, predicting that its sales slump would not end any time soon.

Starbucks glass art on a store in Tokyo.
Jakub Porzycki | Nurphoto | Getty Images

Starbucks on Tuesday reported quarterly revenue that missed analysts’ expectations as both its U.S. and international cafes faced weaker demand.
Still, the results weren’t as bad as investors feared. Shares of the company rose more than 5% in extended trading.

Here is what the company reported compared to what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: 93 cents adjusted vs. 93 cents expected
Revenue: $9.11 billion vs. $9.24 billion expected

The coffee giant reported fiscal third-quarter net income attributable to the company of $1.05 billion, or 93 cents per share, down from $1.14 billion, or 99 cents per share, a year earlier.
Excluding items, Starbucks earned 93 cents per share.
Net sales dropped 1% to $9.11 billion. The company’s same-store sales fell 3% in the quarter, fueled by a 5% decline in transactions.
Traffic to its U.S. stores fell again this quarter, dropping 6%. Domestic same-store sales fell 2%, boosted by an increase in average ticket. Last quarter, executives discussed plans to revive the lagging U.S. business that included leaning on discounts and new drinks to bring back customers who had abandoned the chain.

CEO Laxman Narasimhan said on Tuesday that more shoppers are buying its packaged coffee at grocery stores, but a “challenging consumer environment” is weighing on sales at its cafes.
Still, the company sees green shoots in the U.S. business already, like the success of new products. Its Summer-Berry Refreshers drinks with boba-inspired pearls broke the company’s record for a week-one product launch. Next quarter will also bring the return of its Pumpkin Spice drinks, a perennial favorite since its launch more than two decades ago.
The company now allows customers to order via its mobile app and pay without joining its rewards program. Improvements to its app also mean that it’s more accurate at predicting when an order will be ready, lowering customer complaints. In a letter posted on LinkedIn after last quarter’s gloomy report, former CEO Howard Schultz said the company needed to fix the mobile app experience to win back customers.
Schultz isn’t the only investor upset with Starbucks’ performance lately. Activist hedge fund Elliott Management has accrued a stake in Starbucks. Narasimhan acknowledged that the firm is a shareholder in Starbucks and said conversations so far have been constructive.
Outside of North America, same-store sales slid 7%. In China, Starbucks’ second-largest market, same-store sales tumbled 14% as both average ticket and transactions shrank.
Starbucks has faced stiffer competition in China from local coffee shops that undercut the coffee giant on price. But there are encouraging signs in the country, too. Average daily transactions and weekly sales in China have improved sequentially quarter-over-quarter, according to Narasimhan.
The company is in the “early stages” of exploring strategic partnerships to accelerate its growth in China, Narasimhan said. It’s unclear what kind of shape that partnership could take.
Starbucks opened 526 net new stores in the fiscal quarter.
The company reiterated the outlook it provided last quarter. The company projects revenue growth of a low single-digit percentage and earnings per share growth in a range of flat to a low single-digit percentage.

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The breakthrough Alzheimer’s drug Leqembi slowed disease progression in patients over three years, demonstrating the need for them to stay on the treatment long term.
That’s according to new data presented by Japanese drugmaker Eisai at a medical conference.
The study results on Leqembi, which Eisai shares with Biogen, also found that the health of Alzheimer’s patients who take the therapy worsens after they stop treatment.

The newly FDA approved Alzheimer’s treatment Leqembi is prepared at Abington Neurological Associates in Abington, PA., on Tuesday, November 7, 2023. 
Hannah Yoon | The Washington Post | Getty Images

The breakthrough Alzheimer’s drug Leqembi slowed disease progression in patients over three years, demonstrating the need for them to stay on the treatment long term, according to new data released Tuesday by Japanese drugmaker Eisai. 
The study results on Leqembi, which Eisai shares with Biogen, also found that a patient’s Alzheimer’s disease worsens after they stop treatment. Rates of adverse side effects associated with Leqembi, including brain bleeding and swelling, dropped after six months of treatment, Dr. Lynn Kramer, Eisai’s chief clinical officer of deep human biology learning, told CNBC. 

That decline is critical: Those side effects in the brain have raised concerns among some doctors and are the main reason a European drug regulator recommended against approving Leqembi last week.
The study is the longest available efficacy and safety data to date on Leqembi, which has had a bumpy rollout in the U.S. since winning regulatory approval last summer due to bottlenecks related to diagnostic test requirements and regular brain scans, among other issues. Eisai released 24-month data on Leqembi in November.
Eisai presented the findings on Tuesday at the Alzheimer’s Association International Conference in Philadelphia, the world’s largest meeting for dementia research. The results are a first glimpse at what Alzheimer’s patients’ future could look like on therapies such as Leqembi, which is currently taken twice a month through an infusion.
The drug is a monoclonal antibody that targets toxic plaques in the brain called amyloid, a hallmark of Alzheimer’s, to slow the progression of the disease during its early stages. Leqembi also works by clearing protofibrils, the building blocks of amyloid plaque.
The data demonstrates the importance of early and sustained treatment for people living with the notoriously hard-to-treat brain disorder — even after a drug clears a patient’s amyloid plaque. 

“Continuing treatment is important if you would like to maintain cognition and functionality longer,” Kramer said. 
While Leqembi is not a cure, “if you start early enough, it can give you years of benefit,” he said.
Kramer added that Eisai believes patients can eventually switch to a maintenance dose of Leqembi after roughly 18 to 24 months of treatment, which could be a less frequent or more convenient way to take the drug over a long period. 
Eisai and Biogen are seeking regulatory approval for a once-monthly infusion of Leqembi, with a decision expected in January. The drugmakers also aim to bring to the market an injectable form of Leqembi that patients can take at home once a week. 
“Those two things will change the paradigm, make it easier for the patient, make it easier for the whole medical system,” Kramer said in an interview. 
Nearly 7 million Americans have the condition, the fifth-leading cause of death for adults over 65, according to the Alzheimer’s Association. By 2050, the number of Alzheimer’s patients is projected to rise to almost 13 million in the U.S.

Long-term study details

The results are based on extended research on certain participants in mid-stage and late-stage trials on Leqembi.
One phase three trial, called Clarity AD, examined three different groups of patients for 36 months. 
One group of participants took Leqembi for the full three years, while another received a placebo for the first 18 months before switching to Eisai’s drug for the same length of time. Eisai observed a last group of patients outside of the trial who did not receive any treatment over three years. 

Tek Image/science Photo Library | Science Photo Library | Getty Images

Patients who started Leqembi early continued to benefit from the drug over three years, showing a slower rate of cognitive decline compared to the other two groups, according to an Eisai presentation. 
The difference in cognitive decline between the “early start” Leqembi group and patients who did not receive anything throughout the study period grew larger between 18 and 36 months, according to Kramer. 
Leqembi “interrupts the natural progression of the disease, and it has an effect more and more,” he said, adding that “the earlier you catch it, the better.” 
Patients who started on a placebo saw a slower rate of cognitive decline after switching to Leqembi at the 18-month mark. But their Alzheimer’s disease was still worse than the group that started Leqembi earlier through the 36 months.
A sub-study of the trial partly examined patients with no or very low levels of another protein that builds up in the brain called tau, which is considered a marker of Alzheimer’s severity. People with low levels of that protein are at the earlier stages of the disease. 
After three years on Leqembi, 59% of people with no or very low tau levels did not see their Alzheimer’s progress at all, according to the presentation. A little over half of that patient population actually saw their condition improve. 
Meanwhile, one phase two trial, called Study 201, examined patients who temporarily stopped treatment with Leqembi. 
For 18 months, one group of participants took Leqembi and another received a placebo. The groups then took nothing during a gap period of two years on average before all patients started treatment with Leqembi for another 18 months. 
Leqembi’s positive effect on a patient’s disease was maintained even after they stopped treatment, according to the presentation.
But the rate of cognitive decline in patients who stopped Leqembi reverted to the rate of people who had taken a placebo during the gap period. That shows that even when amyloid plaque is removed, the disease continues to progress when a patient stops Leqembi, Eisai said in a release.
“The concept is, if you stop, you get worse,” Kramer said. 

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JetBlue Airways posted a surprise profit for the second quarter.
The carrier said it would defer another $3 billion in aircraft spending through 2029 to improve cash flow.
JetBlue has spent recent months cutting unprofitable routes and reducing costs to try to stop losing money as it faces higher expenses and an oversupplied domestic market.

A JetBlue Airways jet comes in for a landing after flights earlier were grounded during an FAA system outage at Laguardia Airport in New York City, New York, U.S., January 11, 2023. 
Mike Segar | Reuters

JetBlue Airways shares jumped 12% on Tuesday after the airline posted a surprise profit and said it would defer another $3 billion in aircraft spending through 2029 to improve cash flow.
The carrier posted a $25 million profit for the second quarter, down nearly 82% from last year. Wall Street analysts had expected a quarterly loss.

JetBlue hasn’t posted an annual profit since before the pandemic. It has spent recent months cutting unprofitable routes and reducing costs to try to stop losing money as it faces higher expenses and an oversupplied domestic market.
JetBlue said Tuesday that it has halted 50 routes and is focusing more on service from New York, New England and Puerto Rico, where it has historically been strong. It also is trying to better deploy its planes outfitted with premium seats like its Mint aircraft to maximize revenue.
JetBlue says the changes will help it add $800 million to $900 million in pretax profit from 2025 through 2027.
It’s deferring delivery of 44 Airbus A321neo aircraft until 2030 or later. The airline has also been impacted by a Pratt & Whitney engine recall.
“We have and are taking aggressive action on every front,” CEO Joanna Geraghty said on an earnings call on Tuesday.

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Geraghty said Tuesday the airline is taking additional steps to improve reliability, such as adding more buffer time to flights. JetBlue has consistently ranked toward the bottom of U.S. carriers in punctuality.
The airline plans to cut capacity by as much as 6% in the third quarter and as much as 5% for the full year. Even with the reductions it expects third-quarter revenue to drop as much as 5.5% from last year and full-year sales to be down as much as 6% over 2023.
Airline executives have blamed weaker-than-expected revenue this summer on an oversupply of capacity.
Tuesday’s results and the investor reception was a win for Geraghty, a JetBlue veteran, who took the reins in February. Hours after she started in the top role, activist investor Carl Icahn disclosed a nearly 10% stake in the company. He won two board seats days later.
JetBlue and Spirit Airlines called off their merger agreement earlier this year after the New York airline’s planned acquisition of the budget carrier was blocked by a federal judge. Both carriers have said they are challenged in competing with larger rivals.

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Automaker Stellantis plans to once again reduce its U.S. employee headcount through a broad voluntary buyout, as the company attempts to reduce costs and boost profits.
The company, which reported disappointing first-half results last week, said that if not enough employees participate in the buyout, involuntary terminations could follow.
In an email to employees Tuesday morning, Stellantis said it would offer a voluntary separation program to nonunion U.S. employees at the vice president level “and below in certain functions.”

CEO of auto giant Stellantis Carlos Tavares speaks to journalists during a joint media event by Stellantis and Leapmotor in Hangzhou, in eastern China’s Zhejiang province on May 14, 2024. 
– | Afp | Getty Images

DETROIT — Automaker Stellantis plans to once again reduce its U.S. employee headcount through a broad voluntary buyout, as the company attempts to reduce costs and boost profits.
In an email to employees Tuesday morning, the company said it would offer a voluntary separation program to nonunion U.S. employees at the vice president level “and below in certain functions.”

The company, which reported disappointing first-half results last week, said that if not enough employees participate in the buyout, involuntary terminations could follow. The message said eligible employees will be sent an email in mid-August with instructions on how to access their individualized offers.
Stellantis confirmed the buyout program, which was first reported by Automotive News, early Tuesday afternoon.
“As Stellantis continues to address inflationary pressures and, importantly, provide consumers with affordable vehicles at the highest quality, we remain focused on taking the necessary actions to reduce our costs to protect the long term sustainability of the company,” the company said in an emailed statement.
Stellantis CEO Carlos Tavares has been on a cost-cutting mission since the company was formed through a merger between Fiat Chrysler and France’s PSA Groupe in January 2021. It’s part of his “Dare Forward 2030” plan to increase profits and double revenue to 300 billion euros ($325 billion) by 2030.
The cost-saving measures have included reshaping the company’s supply chain and operations as well as previous headcount reductions.

“With our commitment to executing our Dare Forward 2030 strategy, we must continue to adapt by streamlining operations and finding efficiencies that will enhance our competitiveness to ensure our future sustainability and growth,” the company said in the email Tuesday, which was viewed and verified by CNBC.
Several Stellantis executives previously described the earlier cuts to CNBC as difficult but effective. Others, who spoke on the condition of anonymity due to potential repercussions, described them as grueling to the point of excessiveness.
Tavares last week pushed back on the claim that the company’s massive cost-cutting efforts had created problems.
“When you don’t deliver for any reason … you may want to use a scapegoat. The budget cut is an easy one. It’s wrong,” Tavares said.
Stellantis has reduced headcount by 15.5%, or roughly 47,500 employees, between December 2019 and the end of 2023, according to public filings. Additional job cuts this year involving thousands of plant workers the U.S. and Italy have drawn the ire of unions in both countries.
The automaker last conducted a voluntary buyout program in November, offering the deals to roughly half of its U.S. white-collar employees.
Automakers have been attempting to lower costs and boost profits and cash reserves to pay for new technologies such as all-electric vehicles.
For example, GM last year offered voluntary buyouts to a “majority” of its U.S. white-collar employees.
For its part, Ford Motor last year conducted involuntary layoffs, primarily affecting engineering jobs in the U.S. and Canada, as the automaker sought to cut billions in a restructuring of its business operations.

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Spirit Airlines, known for its discount fares and fees for add-ons like cabin baggage, is introducing new classes of service next month.
The carrier plans to bundle services like Wi-Fi, cabin baggage, snacks and drinks for its highest classes.
The struggling airline is trying to increase revenue and compete with larger rivals like United.

A Spirit commercial airliner prepares to land at San Diego International Airport in San Diego, California, U.S., January 18, 2024. 
Mike Blake | Reuters

Free Wi-Fi? Free checked bag? Free snacks? On Spirit?
The Florida-based carrier that is practically synonymous with budget air travel in the U.S. said Tuesday that it plans to offer packages for its highest-priced tickets, wrapping in perks it used to charge for a la carte. It’s a bid to increase revenue as it struggles with the aftermath of a U.S.-blocked takeover by JetBlue, engine recalls, an oversupplied domestic market, and larger rivals who have capitalized on premium and cost-conscious travelers alike.

Starting late next month, Spirit will offer four categories of service:

“Go Big” Tickets will include a spot in one of the airline’s Big Front Seats, its roomy seats at the front of its Airbus planes. Instead of upselling travelers for the seat alone, the assignment will come with free Wi-Fi, a checked bag, one piece of cabin luggage, and, CEO Ted Christie told CNBC, “unlimited” snacks and drinks, including alcoholic beverages.
Below that package is “Go Comfy,” which will offer travelers a seat with standard legroom but a blocked middle seat for extra space. That offer also includes earlier boarding, one snack, one nonalcoholic beverage, and checked baggage and a carry-on.
“Go Savvy” fares come with either a checked bag or a carry-on.
Then there’s just “Go,” essentially Spirit’s original product, with just a seat and fees for checked bags, cabin luggage, seat selection, Wi-Fi and snacks.

The options will be available to book Aug. 16, and all four will be available on flights from Aug. 27.
Spirit is competing with larger airline rivals like United that have capitalized on cost-conscious travelers with their own bare-bones products but still offer higher-priced options like extra legroom and first class.

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“What we realized now is that we were sort of ceding other markets to other airlines,” Christie said in an interview. “Now we’re saying, no, we can still do what we were doing before, but we’re also going to compete for people who are willing or want a little bit more of a premium feel and and would pay for that. They just didn’t have it on us.”
Spirit earlier this month warned of a wider-than-expected loss after nonticket revenue — what it collects in the form of fees — came in lighter than it had previously forecast. The carrier has also warned pilots about potential furloughs in the coming months.
Spirit isn’t the only carrier looking to increase its upmarket seats to attract more customers. Southwest Airlines, also under pressure to raise revenue, last week said it plans to ditch open seating and offer “premium” seats with more legroom, the biggest overhaul in the airline’s more than 50 years of flying. Frontier Airlines in March said it would start offering blocked middle seats at the front of the plane for a higher price.

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