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    Franchise Group considers lowering Kohl's bid closer to $50 a share from about $60, source says

    Retail holding company Franchise Group is weighing lowering its bid for Kohl’s to closer to $50 per share from about $60, according to a person familiar with the deal talks.
    The owner of The Vitamin Shoppe is actively considering whether or not buying Kohl’s is the best use case of Franchise Group’s capital, said the person.
    Kohl’s shares closed Wednesday at $38.61 and traded as low as $34.64 in late May.

    People walk near a Kohl’s department store entranceway on June 07, 2022 in Doral, Florida. Kohl’s announced that it has entered into exclusive negotiations with Franchise Group, which is proposing to buy the retailer for $60 per share. 
    Joe Raedle | Getty Images

    Retail holding company Franchise Group is weighing lowering its bid for Kohl’s to closer to $50 per share from about $60, according to a person familiar with the deal talks.
    Kohl’s shares closed down nearly 9% on Wednesday at $38.61 per share. They traded as low as $34.64 in late May. Franchise Group shares ended the day up about 1% at $36.08 per share.

    Franchise Group, owner of The Vitamin Shoppe and other retailers, is actively considering whether buying Kohl’s is the best use case of Franchise Group’s capital, said the person, who asked to remain anonymous since the conversations are private and ongoing. The company is growing concerned that the environment for certain retailers could become bleaker from here, particularly if the U.S. were to enter a recession, the person said.

    Franchise Group has lined up financing with lenders, the person added. But the company, run by Chief Executive Officer Brian Kahn, is weighing a lower price now as retailers in general grapple with bloated inventory and higher prices.
    Big-box retailer Target said earlier this month that it will take a short-term hit to profits as it cancels orders and marks down unwanted merchandise ahead of the busy back-to-school and holiday shopping seasons. Analysts expect many retailers will have to take a similar hit, and it could be a bigger blow for the ones that aren’t as successful moving products off shelves.
    Earlier this month, Franchise Group proposed a bid of $60 per share to acquire Kohl’s at a roughly $8 billion valuation. The two companies then entered an exclusive three-week window during which they can firm up any due diligence and final financing arrangements. That ends this weekend.
    The off-mall department store chain was first urged to consider a sale or another alternative to boost its stock price in early December 2021 by New York-based hedge fund Engine Capital. At the time, Kohl’s shares were trading around $48.45.

    Then, in mid-January, activist hedge fund Macellum Advisors pressured Kohl’s to consider a sale. Macellum’s CEO, Jonathan Duskin, argued that executives were “materially mismanaging” the business. He also said Kohl’s had plenty of potential left to unlock with its real estate.
    Earlier this year, Kohl’s received a per-share offer of $64 from Starboard-backed Acacia Research, but deemed the bid to be too low.
    In mid-May, Kohl’s reported that its sales for the three-month period ended April 30 fell to $3.72 billion from $3.89 billion in 2021.
    The retailer slashed its profit and revenue forecasts for the full fiscal year, which also muddied the picture for a potential deal.
    Representatives for Kohl’s and Franchise Group didn’t immediately respond to CNBC’s requests for comment.

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    Maine insurance agency faces online backlash after racist Juneteenth sign

    The Harry E. Reed Insurance Agency of Millinocket, Maine, is facing criticism for posting a racist sign on Juneteenth.
    Yelp disabled users’ ability to post on the company’s page.
    National insurer Progressive cut ties with the local affiliate.

    Google Earth view of Reed Agency in Millinocket, Maine.
    Google Earth

    An insurance agency in Millinocket, Maine, is facing online backlash after a photo circulated on Facebook of a sign taped to the business’s door on Monday saying, “Juneteenth ~it’s whatever… We’re closed. Enjoy your fried chicken & collard greens.”
    The image of the sign at the Harry E. Reed Insurance Agency, an affiliate of national insurer Progressive, was originally shared by a Facebook user named Alura Stillwagon, with the caption, “The racism in Millinocket is real.” The original post has been shared more than 100 times.

    The insurance agency did not respond to CNBC’s requests for comment.
    “I’m not angry. Anger gets you nowhere. I’m just deeply, deeply disappointed,” another Facebook user, Ken Anderson, commented on the post. “In this business, in the companies that let this business broker their products, and in the town of Millinocket, in the state of Maine, and the whole damn country. Deeply disappointed. Why? Because I know we can do better. But we’re not trying. And that’s the part that cuts deepest.”
    For many businesses, Monday marked the observance of Juneteenth, a federal holiday that commemorates June 19, 1865, when Union Army soldiers arrived in Texas and announced the end of slavery to more than 250,000 Black people who remained enslaved even after the signing of the Emancipation Proclamation in 1863, according to the National Museum of African American History and Culture.
    Since the image of the sign began circulating online, people have taken to online review site Yelp to condemn the insurance agency, prompting Yelp to disable users’ ability to post on the company’s page.
    “This business recently received increased public attention resulting in an influx of people posting their views to this page, so we have temporarily disabled the ability to post here as we work to investigate the content,” an alert on the Harry E. Reed Insurance Agency’s Yelp page reads. “While racism has no place on Yelp and we unequivocally reject racism or discrimination in any form, all reviews on Yelp must reflect an actual first-hand consumer experience (even if that means disabling the ability for users to express points of view we might agree with).”

    The agency received nearly 90 — largely one-star — Yelp reviews, with many posters condemning the insurance agency as “racist.”
    Jeff Sibel, a spokesperson for Progressive, said in a statement, “We’re aware and appalled by the sign recently posted at the Harry E Reed Agency and are terminating our relationship with the agency.”

    “At Progressive, Diversity, Equity and Inclusion (DEI) are fundamental to our Core Values. We’re committed to creating an environment where our people feel welcomed, valued and respected and expect that anyone representing Progressive to take part in this commitment. The sign is in direct violation of that commitment and doesn’t align with our company’s Core Values and Code of Conduct,” Sibel said in a statement.
    The chair of the Millinocket Town Council, Steve Golieb, released a statement Tuesday denouncing the sign.
    “It is deeply saddening, disgraceful and unacceptable for any person, business or organization to attempt to make light of Juneteenth and what it represents for millions of slaves and their living descendants,” Golieb wrote. “There is no place in the Town of Millinocket for such a blatant disregard of human decency.”
    President Joe Biden and the state of Maine each signed bills into law in June 2021 recognizing Juneteenth as a federal and state holiday.

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    Cramer says a 'bull market within a bear market' situation is possible if these 6 things happen

    Monday – Friday, 6:00 – 7:00 PM ET

    CNBC’s Jim Cramer on Wednesday told investors that there are several things that need to happen for the market to have a “bull market within a bear market situation.”
    “For the broader averages, I’m one of only a handful of people who genuinely believe we could have an entire bull market within a bear market situation, but only if we get some specific signposts,” the “Mad Money” host said.

    CNBC’s Jim Cramer on Wednesday told investors that there are several things that need to happen for the market to have a “bull market within a bear market” situation.
    “We’re going to have rolling bottoms just like we had rolling tops. As long as you know how to identify the signs, you’ll be able to spot them ahead of time and figure out how aggressive you should be and how much money you can possibly make,” the “Mad Money” host said.

    “As for the broader averages, I’m one of only a handful of people who genuinely believe we could have an entire bull market within a bear market situation, but only if we get some specific signposts,” he added.
    Stocks dipped slightly on Wednesday after gaining the day before, exhibiting the market’s volatility as investors grow more fearful of a possible recession.
    Here is Cramer’s list of signposts that will indicate the market’s long-term recovery:

    Oil prices need to stabilize at levels beneficial for producers and the public
    Rampant food inflation needs to end
    Unemployment rates might need to rise to 5% for a couple of quarters: “That would tamp down demand and give us some breathing room in the fight against inflation,” Cramer said.
    Investors need to stop engaging in speculative trading
    The advance-decline line needs to get better: “This is an all-important gauge that measures the overall breadth of the market — how many stocks are going up versus down. When you see it going steadily higher, that’s a solid precursor to a run,” he said.
    Stronger, established firms need to merge with newer, “junk” firms

    “You get all of these, you’ll see the bears on the run and interest rates will plummet. But without them, the market remains a house of pain,” Cramer said.

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    Fanatics CEO Michael Rubin selling ownership stake in Philadelphia 76ers, New Jersey Devils

    Billionaire Michael Rubin is selling his ownership stake in the Philadelphia 76ers.
    This is due to a conflict with Rubin’s growing sports e-commerce company, Fanatics, which is looking to expand into sports betting.
    Fanatics is currently valued at $27 billion.

    Michael Rubin attends Fanatics Super Bowl Party on February 12, 2022 in Culver City, California.
    Shareif Ziyadat | Filmmagic | Getty Images

    Billionaire Fanatics CEO Michael Rubin announced Wednesday that he is selling his 10% stake in the parent company that owns the Philadelphia 76ers and New Jersey Devils, citing a conflict of interest with Fanatics’ collectibles and planned sports betting operations.
    Rubin has no plans to buy into a different team after he sells his stake in Harris Blitzer Sports & Entertainment, a person familiar with the matter told CNBC. His focus is instead on Fanatics, the sports e-commerce company that has grown into a global operation with a $27 billion valuation.

    “When I was part of the ownership group that acquired the Sixers in 2011, Fanatics was just getting started with a small office in King of Prussia selling only licensed sports products online,” the Pennsylvania native said in a statement posted on Twitter. “Today, Fanatics has quickly transformed into a global digital sports platform across multiple businesses, with more than 10,000 employees in 57 countries and serving nearly 100 million sports fans worldwide.”
    Fanatics’ growth has been partly fueled by its acquisitions in recent years of WinCraft, which makes sports-themed merchandise, and Topps, the trading card company it bought for $500 million.
    The NFL, MLB, NBA, NHL, MLS and some players unions all have stakes in Fanatics, which has numerous licensing rights and deals with professional and college athletes.
    Topps recently announced that it will be launching a new line of trading cards featuring college athletes this fall, a program that will include more than 150 schools and cut some of the players in on the profits.
    “I had the amazing opportunity to be part of the ownership group buying the team I grew up idolizing,” Rubin said in his statement. “Attending games, getting to know our players and watching, up close, from the inside has been one of the most exhilarating and educational aspects of my life.”

    Fanatics is a two-time CNBC Disruptor 50 company. Sign up for our weekly, original newsletter that goes beyond the annual Disruptor 50 list, offering a closer look at private companies like Fanatics that continue to innovate across every sector of the economy.

    — CNBC’s Jessica Golden contributed to this article.

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    President Biden calls on Congress to suspend the federal gas tax for 90 days

    US President Biden delivers remarks on efforts to lower high gas prices in the South Court Auditorium at Eisenhower Executive Office Building June 22, 2022 in Washington, DC.
    Jim Watson | AFP | Getty Images

    President Joe Biden called on Congress Wednesday to suspend the federal gas tax for 90 days as prices at the pump surge to record highs.
    The federal tax currently stands at 18 cents for a gallon of regular gasoline, and 24 cents per gallon for diesel.

    “I call on the companies to pass this along — every penny of this 18 cents reduction — to the consumer,” Biden said Wednesday. “There’s no time now for profiteering.”
    The president said such a move will have no impact on the Highway Trust Fund, saying other revenues can be used to fund the roughly $10 billion cost.
    Biden also called on states to suspend their gas taxes, or find other ways to bring some relief.
    Still, some were quick to note that suspending the gas tax will keep demand steady and not address the structural issues in the market.

    Demand for petroleum products has bounced back as global economies reopen, while supply has remained constrained. A lack of refining capacity also has sent prices higher.

    “I fully understand that the gas tax holiday alone is not going to fix the problem. But it will provide families some immediate relief. Just a little bit of breathing room as we continue working to bring down prices for the long haul,” Biden said.
    Prices are rising across the board with inflation at a 40-year high, but the surge in gasoline prices is especially notable. The national average for a gallon of tax topped $5 for the first time on record earlier this month.
    Biden has called the surge in prices “Putin’s price hike.” He has also blamed oil and gas companies for what he calls prioritizing profits at the expense of consumers.
    Last week, he sent a letter to the CEOs of the largest refining companies urging them to increase output. Industry executives say even if they wanted to boost operations, they are constrained from doing so because of labor shortages and other issues.
    “[M]y message is simple: to the companies running gas stations and setting those prices at the pump, this is a time of war … these are not normal times. Bring down the price you are charging at the pump to reflect the cost you are paying for the product,” the president said.
    Biden said these actions could lead to prices at the pump dropping by $1 per gallon or more. “It doesn’t reduce all the pain, but it will be a big help,” he said.
    It remains to be seen whether the White House’s call will gain support on Capitol Hill.
    “Although well intentioned, this policy would at best achieve only minuscule relief while blowing a $10 billion hole in the Highway Trust Fund that would need to be filled if we want to continue to fix crumbling bridges, address the spike in traffic deaths and build a modern infrastructure system,” said Rep. Peter DeFazio, a Democrat from Oregon and chair of the House Committee on Transportation and Infrastructure.

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    Consumer watchdog eyes crackdown on credit card late fees as inflation threatens to increase them

    The Consumer Financial Protection Bureau signaled Wednesday it may try to rewrite rules governing fees for late credit card payments, with the aim of saving cardholders billions of dollars a year.
    The CFPB issued an advance notice of proposed rulemaking. A final rule isn’t likely by the end of 2022, officials said.
    More than 175 million Americans hold at least one credit card, according to the CFPB. In 2019, consumers paid $26 for each late payment, on average.

    Rohit Chopra, director of the Consumer Financial Protection Bureau, testifies during a Senate Banking, Housing and Urban Affairs Committee hearing on April 26, 2022.
    Tom Williams | Cq-roll Call, Inc. | Getty Images

    The Consumer Financial Protection Bureau signaled a crackdown on late fees charged by credit card companies on Wednesday, as inflation threatens to increase those so-called “junk” fees levied on consumers.
    The watchdog, a federal agency created in the wake of the 2008 financial crisis, issued an advance notice of proposed rulemaking seeking information from card issuers, consumer groups and the public on late fees.

    The data will help the regulator draft new rules aimed to shore up “weak spots” in existing laws governing “back-end penalties” imposed by card companies, CFPB director Rohit Chopra said in a press call Wednesday.
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    Public comments are due by July 22. Timing on a formal rule proposal (and ultimately a final rule) is unclear, but agency officials said they don’t expect the process to conclude before year end.
    Officials expect changes to reduce total late fees by billions of dollars each year, they said Wednesday. They also signaled future regulations on other types of fees, without offering specifics.

    Credit card late fees

    Oscar Wong | Moment | Getty Images

    More than 175 million Americans hold at least one credit card, according to the CFPB.

    Companies generally levy late fees when a customer doesn’t make the minimum card payment by their due date.
    In 2019, consumers paid $26 for each late payment, on average, according to the CFPB. The fee rises if another late payment is made within six billing cycles, to an average $34.
    Total late fees amounted to $12 billion in 2020, down slightly from a $14 billion record set the prior year, the CFPB said in a recent report.

    The costs disproportionately impact users in low-income and majority-Black neighborhoods, according to the regulator.
    The watchdog characterizes late fees as a type of “junk” fee charged by credit card issuers. The agency had issued a separate request in January asking consumers for input on hidden and excessive fees from a range of lenders.
    “This is just one project relating to one type of junk fee,” according to a CFPB official, who spoke on background. “I think it’s fair to say there will be other projects relating to other fees in the near future.”

    Missing from this announcement is the fact that banks — more than any other industry — have taken concrete steps to make their products more affordable and accessible for millions of Americans.

    Richard Hunt
    president and CEO of the Consumer Bankers Association

    Richard Hunt, president and CEO of the Consumer Bankers Association, said additional restrictions would harm customers and could ultimately push them to riskier types of credit.
    “Today’s announcement is another reminder the Bureau appears more interested in advancing a particular agenda than developing fact-based policies that improve the lives of hardworking families,” Hunt said in a statement. “Missing from this announcement is the fact that banks — more than any other industry — have taken concrete steps to make their products more affordable and accessible for millions of Americans.”

    What would the CFPB do?

    Current law disallows credit card issuers from charging customers a fee for a late payment, except in certain cases. To levy a fee, the company must determine that the fee is a “reasonable” proportion of the total costs the company incurred to process a late payment.
    But the law also offers a legal safety net: Issuers can generally avoid the cost analysis (and regulatory scrutiny) if they charge $30 or less for a late payment, and up to $41 for each subsequent late payment made within the next six billing cycles.
    “In today’s advance notice of proposed rulemaking, the CFPB is asking for information on these fees in order to assess whether they really are reasonable and proportional,” Chopra said.

    The Consumer Financial Protection Bureau headquarters in Washington, D.C.
    Joshua Roberts/Bloomberg via Getty Images

    These maximum “safe harbor” fees are adjusted for inflation each year — giving urgency to the CFPB’s rulemaking at a time when consumer prices are rising at their fastest pace in about 40 years.
    “This effort is particularly timely given the rule allows banks to increase their fees based on inflation,” according to a CFPB official. “Many [people] are struggling to make ends meet at the moment and struggling under higher costs.”
    Most smaller banks and credit unions charge a maximum late fee of $25 or less, but almost all of the largest issuers have fees at or near the maximum allowed, according to CFPB data.
    “The truth is that late fees have been capped by federal regulation since they were put in place by the Obama administration in 2010, and those caps have been updated annually by the CFPB including last fall,” Sarah Grano, a spokesperson for the American Bankers Association, said in an e-mailed statement. “In addition, the banks that issue credit cards are routinely supervised by the CFPB for compliance with those rules.”
    Chopra questioned whether the cost to process late payments increases with inflation, or if it’s more reasonable to expect those costs to decrease due to improvements in technology.

    However, Hunt of the Consumer Bankers Association framed inflation as a big reason why the CFPB should not impose additional rules on the industry.
    “Imposing more restrictions on bank-offered credit products will hurt hardworking families most, forcing them to meet their needs outside of the well-supervised banking system,” Hunt said. “This risk is even greater now as families contend with the effects of inflation.” 
    The CFPB said it’s seeking information on the following points, among others: factors used by card issuers to set late fee amounts; companies’ costs and losses associated with late payments; the deterrent effects of late fees; cardholders’ late payment behavior; methods firms use to facilitate or encourage timely payments (like autopay and notifications); and their use of “safe harbor” provisions.

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    Raw material costs for electric vehicles have doubled during the pandemic

    Raw material costs for electric vehicles more than doubled during the coronavirus pandemic, according to a new report Wednesday by AlixPartners.
    The cost increase is being led by materials such as cobalt, nickel and lithium – all essential for the production of batteries used to power the electric cars and trucks.
    Automakers from General Motors and Tesla to start-ups like Lucid and Rivian have significantly raised prices on new vehicles.

    Workers inspect a Rivian R1T electric vehicle (EV) pickup truck on the assembly line at the company’s manufacturing facility in Normal, Illinois, US., on Monday, April 11, 2022.
    Jamie Kelter Davis | Bloomberg | Getty Images

    Raw material costs for electric vehicles more than doubled during the coronavirus pandemic, according to a new report Wednesday by AlixPartners, forcing automakers from General Motors and Tesla to start-ups like Lucid and Rivian to significantly raise prices on new vehicles.
    Average raw material costs for an EV totaled $8,255 per vehicle as of May, up 144% from $3,381 per vehicle in March 2020, led by materials such as cobalt, nickel and lithium – all essential for the production of batteries used to power electric cars and trucks. EV-specific costs have increased to $4,500 from roughly $2,000 in the past two years, according to AlixPartners.

    The cost increases aren’t limited to EVs: Raw material costs for traditional vehicles with internal combustion engines have also more than doubled during that time period to $3,662 per vehicle, up 106% from an average of $1,779 per vehicle in March 2020. That uptick is being led by increases in steel and aluminum.

    The cost spikes come as automakers aggressively launch new EVs over the next several years. AlixPartners predicts the number of EV models available on the global market to increase from 80 last year to more than 200 by 2024.
    As a result, AlixPartners expects the higher costs to force a relative slowdown in EV launches, as automakers move away from pushing electric vehicles to market as quickly as possible and refocus on profitability.

    Ford Motor CFO John Lawler last week said rising commodity costs have wiped out the profit it initially expected to make on its electric Mustang Mach-E. While the vehicle was profitable when it was first launched in late 2020, he said that’s no longer the case.
    In the meantime automakers are raising prices for buyers.

    GM on Friday announced it would hike the price of its electric Hummer by $6,250. The automaker blamed higher prices for parts, technology and logistics. Tesla, Rivian, Lucid and others previously announced notable increases in the starting costs of their EVs.
    — CNBC’s John Rosevear contributed to this article.

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    Mars says CEO Grant Reid is retiring and will be replaced by head of pet care unit

    Mars CEO Grant Reid is retiring after more than eight years in the role.
    Poul Weihrauch, the global president of Mars Petcare, will succeed him at the end of September.
    Mars’ board said Reid oversaw more than 50% growth in sales during his tenure.

    Grant Reid, president and chief executive officer of Mars Inc., speaks during a Bloomberg Businessweek Debrief event in New York, U.S., on Thursday, Jan. 10, 2019.
    Alex Flynn | Bloomberg | Getty Images

    Mars CEO Grant Reid is retiring after more than eight years in the role and will be replaced by the head of the company’s pet care business.
    Poul Weihrauch, the global president of Mars Petcare, will succeed him at the end of September, the company said Wednesday. Mars said that Reid informed the board of his decision 18 months ago and will remain at the candy giant until the end of the year.

    Mars, based in McLean, Virginia, is privately held and has a portfolio of brands that includes Snickers, Kind bars and pet food names Pedigree and Whiskas.
    Weihrauch joined the company in 2000 as the European brand leader for Snickers and led Mars Food business before becoming the global president of Mars Petcare in 2014, the company said.
    During Reid’s tenure, Mars said revenue rose by more than 50% and that the number of employees more than doubled from 60,000 to over 140,000. He also guided expansions into veterinary services and healthier snacks, the company said.
    Reid plans to devote more time to his work on climate action and sustainability upon retirement, it added.

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