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    Macy’s beats earnings estimates, as turnaround plan shows early progress

    Macy’s topped earnings estimates, and said it saw early signs of progress in its turnaround strategy.
    The department store operator is moving to close about 150 namesake locations and open new Bloomingdale’s and Bluemercury stores.
    CEO Tony Spring said 50 locations that Macy’s invested more in during the quarter performed better than its other namesake stores.

    The Macy’s company logo is seen at the Macy’s store on Herald Square on January 19, 2024 in New York City. Macy’s department-store chain announced that they will be laying off roughly 2,350 employees which is about 3.5% of their workforce. The company says that it will also be closing five stores in order to adjust to the online-shopping era. (Photo by Michael M. Santiago/Getty Images)
    Michael M. Santiago | Getty Images News | Getty Images

    Macy’s fiscal first-quarter earnings topped Wall Street’s expectations on Tuesday, and the retailer’s revenue came in roughly in line with revenue expectations as it pointed to early signs of momentum in its turnaround strategy.
    The department store operator raised its full-year earnings expectations to reflect the first-quarter beat, along with the low end of its sales outlook. But the retailer said in a news release that it “assumes customers will continue to be discerning in their discretionary purchases.”

    The company’s share rose more than 4% in premarket trading.
    On an earnings call with investors, CEO Tony Spring said the company is in the “early innings” of turning around its namesake stores. As the retailer has stepped up investments at 50 of its Macy’s stores, customers have responded by visiting more often and buying more when they do, he said.
    For example, Macy’s had made sure there are sales associates at those stores ready to help customers in the fitting rooms and shoe department, and at jewelry counter. The company has rolled out new brands like Donna Karan and expanded others like French Connection, Free People and Hugo Boss. And Macy’s has tried to give shoppers more reasons to stop by, such as by offering personal styling sessions, fashion shows and fragrance bottle engraving, Spring added.
    “We need more variety,” he said. “We need less redundancy. We need more interest within the assortment and I think that’s making a difference in the customer’s reception to the stores.”
    Here’s what Macy’s reported for the three-month period that ended May 4 compared with what Wall Street expected, based on a survey of analysts by LSEG:

    Earnings per share: 27 cents adjusted vs. 15 cents expected
    Revenue: $4.85 billion adjusted vs $4.86 billion expected

    Macy’s first-quarter net income tumbled 60% to $62 million, or 22 cents per share, compared with $155 million, or 56 cents per share, in the year-ago quarter. 
    Net sales fell from $4.98 billion in the year-ago period.

    Macy’s now anticipates net sales of between $22.3 billion and $22.9 billion, which would still represent a drop from $23.09 billion in 2023. It expects comparable sales, which take out the impact of store openings and closures, to range from a decline of about 1% to a gain of 1.5% on an owned-plus-licensed basis and including third-party marketplace sales. It had previously expected comparable sales to decline as much as 1.5%.
    It expects adjusted earnings per share of between $2.55 and $2.90, raising its previous outlook of between $2.45 and $2.85.

    Macy’s turnaround strategy takes shape

    Macy’s is getting smaller as it tries to grow sales again. The department store operator, which includes Bloomingdale’s and beauty chain Bluemercury, said earlier this year that it would close about 150 of its namesake stores. That’s more than a quarter of namesake Macy’s locations. It had already announced five store closures and more than 2,300 layoffs in January.
    Yet the retailer said it will invest in parts of the business that have fared better, including the roughly 350 Macy’s stores that will stay open. It plans to open more Bloomingdale’s and Bluemercury locations, and smaller Macy’s stores in suburban strip malls.

    In the first quarter, Bloomingdale’s and Bluemercury continued to fare better than the company’s namesake brand. At Bluemercury, comparable sales, a metric that takes out the impact of store openings and closures, rose 4.3%. At Bloomingdale’s, comparable sales increased 0.3% on an owned-plus-licensed basis, including third-party marketplace sales. 
    At Macy’s, comparable sales declined 0.4% on an owned-plus-licensed basis, including the third-party marketplace.
    The company said the 150 underperforming Macy’s stores – which will close by early 2027 – dragged down the results.
    At the approximately 350 Macy’s stores that will stay open, comparable sales were up 0.1% on an owned-plus-licensed basis. At the first 50 of those stores to get additional investment, comparable sales were even better: up 3.4% on an owned-plus-licensed basis.
    On the company’s earnings call, CFO and COO Adrian Mitchell said the company assumes in its outlook that consumers “will remain under pressure for the balance of the year.”
    But, he added, Macy’s expects to get a lift this year as it pushes ahead with its turnaround strategy online and in stores.
    Along with taking a hard look at its store footprint, Macy’s has tried to attract more customers, including more Millennial and Gen Z shoppers, by launching new exclusive brands and overhauling its existing ones.
    Macy’s has contended with another challenge: a takeover bid by an activist investor. Arkhouse Management and Brigade Capital have made a bid to buy Macy’s and take the company private. Arkhouse also waged a proxy fight, but settled the fight in April when Macy’s agreed to add two new board members.
    Shares of Macy’s closed Monday at $19.10, bringing the company’s market value to $5.26 billion. As of Monday’s close, the company’s stock has fallen about 5% so far this year, lagging behind the S&P 500’s approximately 11% gains during the same period. More

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    Short-seller alleges Oddity Tech is misleading investors

    Short seller Ningi Research published a report alleging that Oddity Tech has been misleading investors.
    The group, which has a short position in the company, alleged that Oddity has a fleet of stores and isn’t the online-only retailer it’s claimed to be.
    Ningi alleged that Oddity’s sales growth is built on deceptive billing practices.

    Oddity Il Makiage
    Coutesy: Oddity

    A short seller on Tuesday alleged that beauty and wellness company Oddity Tech has been misleading investors and isn’t the online-only retailer it’s claimed to be. 
    The firm, Ningi Research, published a 50-page report that details a slew of allegations against the newly-public retailer, including that it runs a fleet of stores in Israel and engages in deceptive billing practices. Ningi has a short position in Oddity, but didn’t disclose the size of that position.  

    Oddity Tech, the parent company of makeup brand Il Makiage and skincare brand Spoiled Child, sold investors on the premise that it’s disrupting the legacy beauty industry by changing the way people buy makeup online. It bills itself as a purely-digital retailer that sells directly to consumers and has said its seen outsized profits and growth that’s been difficult for similar businesses to achieve. 
    Shares of Oddity fell more than 12% in premarket trading Tuesday, though with low trading volume. Oddity didn’t immediately return request for comment from CNBC.
    Ningi Research is alleging that Oddity is not a purely digital company and that its Il Makiage brand has more than 40 stores in Israel, where the company is based. Ningi further claims the majority of Oddity’s profits are coming from the region – not the U.S. It said that it visited the Il Makiage stores in Israel and purchased two of the company’s best-selling products from different locations. It claimed the stores are not part of a franchise but are instead owned by the company. 
    The short seller also alleges that the “secret” to Oddity’s digital growth is in subscriptions, which Ningi claimed can be difficult for consumers to get out of or cancel. 
    “The sell-side touts ODDITY’s ‘impressively high’ repeat purchase rates of 100 percent, but we don’t buy that. Our research indicates that customers unknowingly enter into non-cancelable plans, allowing ODDITY to recognize repeat purchases in the following quarters even though the customers don’t want the product,” the report states. 

    It details a host of complaints from the Better Business Bureau and social media from customers who claim they’ve been wrongfully charged.
    In October, an analyst asked the company about those complaints and if the issue was happening “at scale.” In response, CEO Oran Holtzman said it’s “important to understand the magnitude of the claim and we’re talking about a fraction of a percent.” 
    Oddity previously told CNBC that more than half of its business is from repeat customers. 
    “Any online company that operates even close to our sales will experience this, like there will always be a certain percentage who are unhappy,” said Holtzman. He acknowledged for a “small portion” of its customers, it can be easy to get confused about pre-authorizations made to their cards related to Oddity’s “Try before you buy” option – which allows a customer to try out a makeup item. 
    “Now, I don’t think that it makes sense to cancel this massive customer benefit because a super small fraction of users who didn’t fully read up like how it works and were confused,” said Holtzman. “We’ll continue to work hard to educate those users and we’ve invested a lot in technology around it.”  More

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    Fed Governor Waller wants ‘several months’ of good inflation data before lowering rates

    Fed Governor Waller said Tuesday he does not think further interest rate increases will be necessary.
    However, cuts are probably “several months” away, the central bank official said during a speech in Washington.

    Christopher Waller, governor of the US Federal Reserve, during a Fed Listens event in Washington, D.C., on Friday, Sept. 23, 2022.
    Al Drago | Bloomberg | Getty Images

    Federal Reserve Governor Christopher Waller, citing a string of data showing that inflation appears to be easing, said Tuesday that he does not think further interest rate increases will be necessary.
    However, the policymaker added he will need some convincing before he backs cuts anytime soon.

    “Central bankers should never say never, but the data suggests that inflation isn’t accelerating, and I believe that further increases in the policy rate are probably unnecessary,” said Waller, who has been generally hawkish in his recent views, meaning he supports tighter monetary policy.
    The comments came in prepared remarks for an appearance before the Peterson Institute for International Economics in Washington.
    Waller pointed to a string of recent data, from flattening retail sales to cooling in both the manufacturing and services sectors, to suggest the Fed’s higher rates have helped ease some of the demand that had contributed to the highest inflation rates in more than 40 years.
    Though payroll gains have been solid, internal metrics such as the rate at which workers are leaving their jobs show that the ultra-tight labor market that had driven up wages last a level consistent with the Fed’s 2% inflation goal has displayed signs of loosening, he added.
    Yet Waller said he’s not ready to back interest rate cuts. As a governor, Waller is a permanent voting member of the rate-setting Federal Open Market Committee.

    “The economy now seems to be evolving closer to what the Committee expected,” he said. “Nevertheless, in the absence of a significant weakening in the labor market, I need to see several more months of good inflation data before I would be comfortable supporting an easing in the stance of monetary policy.”
    April’s consumer price index showed inflation running at a 3.4% rate from a year ago, down slightly from March, with the 0.3% monthly increase slightly below what Wall Street economists had been expecting.
    The Labor Department report was “a welcome relief,” Waller said, though the “the progress was so modest that it did not change my view that I will need to see more evidence of moderating inflation before supporting any easing of monetary policy.” He gave the report a C-plus grade.
    Markets have had to recalibrate their expectations for monetary policy this year.
    In the early months, futures markets traders priced in at least six rate cuts this year starting in March. However, a string of higher-than-expected inflation data changed that outlook to where the first cut is not expected to happen until September at the earliest — with at most two reductions of a quarter percentage point before the end of the year, according to the CME Group’s FedWatch Tool.
    Waller did not provide an indication for his expectations on the timing or extent of cuts and said he will “keep that to myself for now” on what specific progress he wants to see on future inflation reports. More

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    Lowe’s beats on earnings and revenue, even as consumers spend less on DIY projects

    Lowe’s beat first-quarter earnings and revenue expectations.
    Sales fell year over year, and the home improvement retailer said do-it-yourself customers bought fewer pricey items.
    Lowe’s results follow a revenue miss for its rival Home Depot.

    An exterior view of a Lowe’s home improvement store at the Buckhorn Plaza shopping center. 
    Paul Weaver | Lightrocket | Getty Images

    Lowe’s topped Wall Street’s quarterly earnings and revenue expectations on Tuesday, even as do-it-yourself customers bought fewer pricey items.
    The home improvement retailer’s results echoed those of Home Depot last week. Home Depot missed revenue expectations, which it attributed to a tougher housing market and a delayed start to spring.

    Lowe’s stuck by its full-year forecast. It said it expects total sales of between $84 billion and $85 billion, which would be a drop from $86.38 billion in fiscal 2023. It anticipates comparable sales will decline between 2% and 3% compared with the prior year, and expects earnings per share of approximately $12 to $12.30.
    Here’s what the company reported for the fiscal first quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

    Earnings per share: $3.06 vs. $2.94 expected
    Revenue: $21.36 billion vs. $21.12 billion expected

    In the three-month period that ended May 3, Lowe’s net income fell to $1.76 billion, or $3.06 per share, compared with $2.26 billion, or $3.77 per share, a year earlier.
    Sales dropped from $22.35 billion in the year-ago period. It marked the fifth quarter in a row that Lowe’s posted a year-over-year sales decline.
    Compared with Home Depot, Lowe’s draws less of its business from painters, contractors and other home professionals who tend to provide steadier business even when do-it-yourself customers pull back. Roughly half of Home Depot’s sales come from pros compared with about 20% to 25% at Lowe’s.

    Yet Lowe’s has been trying to win business from more of those pros. In the company’s news release, CEO Marvin Ellison said gains with pros and online sales growth helped to partially offset a decline in do-it-yourself spending.
    Lowe’s is lapping a year-ago quarter when the company slashed its full-year outlook and posted a year-over-year sales decline. At the time, Ellison warned investors that the retailer expected “a pullback in discretionary consumer spending over the near term.”
    For each of the three quarters since then, Lowe’s sales have also dropped from the year-ago periods.
    Shares of Lowe’s closed Monday at $229.17, bringing the company’s market value to $131.13 billion. As of Monday’s close, the company’s stock is up nearly 3% this year, trailing the 11% gains of the S&P 500.
    This is breaking news. Please check back for updates.

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    Family offices become prime targets for cyber hacks and ransomware

    Family offices, which manage significant amounts of money for wealthy families, often with small staffs, have become lucrative targets for hackers.
    But a growing fear of cyberattacks has not translated into better defenses.
    A recent survey shows less than a third of family offices say their cyber risk management processes are well-developed.

    A computer with a “system hacked” alert due to a cyber attack on a computer network.
    Teera Konakan | Moment | Getty Images

    A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide to the high net worth investor and consumer. Sign up to receive future editions, straight to your inbox.
    Family offices are under increasing attack from cybercriminals, and many don’t have the staff or technology to prepare, according to a new survey.

    More than three quarters, 79%, of North American family offices say the likelihood of a cyberattack “has increased dramatically in the past few years,” according to a survey of single-family offices by Dentons, a global law firm. A quarter of family offices surveyed reported suffering a cyberattack in 2023, up from 17% in 2020. Half say they know another family office that suffered a cyberattack, according to the survey.
    With their large wealth and small staffs, family offices have become lucrative targets for hackers and cybercriminals, experts say.
    “It’s the Willie Sutton effect,” said Edward Marshall, global head of family office and high net worth at Dentons, referring to the famous bank robber who targeted banks “because that’s where the money is.”
    Marshall said family offices often have minimal staff with access to highly sensitive information about a wealthy family’s finances and private companies. Since family offices value efficiency and speed over risk management, he said, today’s family offices often don’t have adequate technology and planning in place for possible cyberattacks.
    “Family offices often have a bias toward efficient service versus security,” he said.

    Using in-house security teams can be expensive for family offices, he added, while using third-party vendors and suppliers also creates risks from “sophisticated criminals and bad actors.”
    The growing fears of cyberattacks, however, have not yet translated into better defenses. Less than a third of family offices say their cyber risk management processes are well-developed, according to the survey. Just 29% say their staff and cyber-training programs are “sufficient,” and less than half said they have upgraded staff training programs or regularly update cyber policies.
    “These findings reveal an alarming gap between awareness of cybersecurity risks and the actions put in place to prevent and repel attacks,” the report said.
    A separate report from EY U.S. and the Wharton Global Family Alliance says family offices should tackle cybersecurity by addressing each of the three main components of tech risk: hardware, software and applications.
    Rather than sending emails with financial information or personal information, the report recommends that family offices use a website or intranet site. The report also suggests the use of password vaults and better vetting of tech vendors for security.
    Marshall said family offices need to take a more proactive stance on overall assessment that goes beyond cyberattacks.
    “They need a mind shift from accepting the unexpected to expecting the unexpected,” he said.
    Sign up to receive future editions of CNBC’s Inside Wealth newsletter with Robert Frank. More

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    China’s sweeping measures to prop up the property sector will need time to show results

    China’s sweeping moves on Friday to increase support for real estate will take time to show results, analysts said.
    For real estate to see significant stabilization, homebuyers’ demand and confidence will need to improve after a market downturn of nearly three years, Edward Chan, director, corporate ratings, S&P Global Ratings, said during the firm’s webinar on Monday.
    S&P is still sticking to its base case from earlier in the month that China’s property market is likely still “searching for a bottom,” he said.

    A real estate construction site in Wanxiang City, Huai ‘an City, East China’s Jiangsu province, May 17, 2024. 
    Future Publishing | Future Publishing | Getty Images

    BEIJING — China’s sweeping moves on Friday to increase support for real estate will take time to show results, analysts said.
    Despite the news, S&P is still sticking to its base case from earlier in the month that China’s property market is likely still “searching for a bottom,” Edward Chan, director, corporate ratings, said during the firm’s webinar on Monday.

    “The significance of the policy rollout last Friday was that the government is rolling out all these policies at one go, at the same day, at one time,” he said. “This shows the government is serious, as well as dedicated, in stabilizing the property sector.”
    But he pointed out that for real estate to see significant stabilization, homebuyers’ demand and confidence will need to improve after a market downturn of nearly three years.
    Hong Kong-listed property stocks surged late last week, but were barely changed on Monday, according to an industry index from financial database Wind Information.

    Chinese authorities on Friday lowered down payment minimums to as low as 15%, versus 20% previously, in addition to cancelling the floor on mortgage rates nationwide.
    Policymakers also sought to boost developers’ liquidity by releasing 300 billion yuan ($42.25 billion) in financing for local state-owned enterprises to buy unsold, completed apartments in order to turn them into affordable housing.

    We believe Beijing is headed in the right direction with regard to ending the epic housing crisis.

    Chief China economist, Nomura

    “Although some of these measures are unprecedented (e.g., the minimum downpayment requirement was never below 20% previously), they are still insufficient compared to our property team’s estimates of at least RMB1tn funding needed to start digesting excess inventory and to allow new home prices to find a bottom within a year,” Goldman Sachs’ Chief China Economist Hui Shan said in a note Sunday.
    “We believe Beijing is headed in the right direction with regard to ending the epic housing crisis,” Nomura’s Chief China Economist Ting Lu said in a report Monday.
    “Beijing has already pivoted from building public housing to ensuring the delivery of numerous pre-sold homes to rebuild buyers’ confidence, marking a significant step towards cleaning up the big mess.”
    “However, this is proving to be a daunting task, and we think markets need to exercise more patience when awaiting more draconian measures,” he said.
    Official data released Friday showed real estate investment declined at a steeper pace in April versus March, with new commercial floor space sold for the first four months of the year down by 20.2% from a year ago. The data also showed retail sales grew less than expected in April.
    The majority of household wealth is in property, while uncertainty about future income has weighed on consumer spending.

    Rebuilding homebuyer confidence

    Homebuyers’ confidence depends partly on their economic outlook, and whether they can receive apartments they have paid for but have yet to receive, S&P’s Chan said.
    Apartments in China are usually sold ahead of construction. But in recent years, financing troubles for property developers and other issues have prolonged delivery times — with some buyers waiting for several years.

    “If there is stabilization in home price, I think there will be more homebuyers willing to enter the market,” Chan said. He noted that since buying an apartment is a major investment for most people, they “don’t want to see their capital shrinking.”
    The official 70-city house price index released Friday fell more quickly in April than in March, according to Goldman Sachs analysis that looks at a seasonally adjusted, annualized weighted average.
    Housing prices in China have dropped by 25% to 30% on average from their historical highs in 2020 and 2021, Nomura’s Lu estimates.
    He also estimates there are still around 20 million pre-sold apartments that have yet to be completed, for a funding gap of around 3 trillion yuan ($414.58 billion).
    Lu expects that in the next few months, Beijing will likely conduct a national survey of residential projects to estimate how much money is needed to finish construction and deliver homes.
    “In our view, rebuilding homebuyers’ confidence in the presale system is the precondition for a true revival of China’s housing markets,” he said. More

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    JPMorgan CEO Jamie Dimon signals retirement is closer than ever

    JPMorgan Chase CEO Jamie Dimon signaled retirement is closer than ever, striking a key change in messaging during the bank’s investor day.
    The ambiguity of Dimon’s plans has made succession timing at JPMorgan one of the persistent questions for the bank’s investors and analysts.
    Dimon is 68 years old.
    “We’re on the way, we’re moving people around,” Dimon said.

    Jamie Dimon, Chairman and CEO of JPMorgan Chase, testifies during a Senate Banking Committee hearing at the Hart Senate Office Building on December 06, 2023 in Washington, DC.
    Win Mcnamee | Getty Images

    Jamie Dimon’s days as CEO of JPMorgan Chase are numbered — though it is unclear by how much.
    In a response to a question Monday about the bank’s succession planning, Dimon indicated that his expected tenure is less than five more years. That is a key change from Dimon’s previous responses to succession questions, in which his standard answer had been that retirement was perpetually five years away.

    “The timetable isn’t five years anymore,” Dimon said at the New York-based bank’s annual investor meeting.
    The ambiguity of Dimon’s plans has made succession timing at JPMorgan one of the persistent questions for the bank’s investors and analysts. Over nearly two decades, Dimon, 68, has made his lender the largest in America by assets, market capitalization and several other measures.
    Still, Dimon added Monday that he still has “the energy that I’ve always had” in managing the sprawling company.
    The decision of when he moves on will ultimately be up to JPMorgan’s board, Dimon said, and he exhorted investors and analysts to examine the executives who could take his place.
    Atop the short list of candidates is Marianne Lake, CEO of JPMorgan’s consumer bank, and Jennifer Piepszak, who co-leads its commercial and investment bank. The executives were given their latest assignments in January.

    “We’re on the way, we’re moving people around,” Dimon said.
    Even when he steps down as CEO, however, it is likely he will stay on as the bank’s chairman, JPMorgan has said.

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    Peloton shares drop after it announces refinancing to stave off cash crunch

    Peloton has launched a “global refinancing” so it can buy back its debt and extend its loan maturities.
    The connected fitness company is offering $275 million in convertible senior notes in a private offering.
    The refinancing comes as Peloton contends with slowing sales and a business that is deeply in the red.

    A pedestrian walks by a Peloton store in Palo Alto, California, on May 8, 2024.
    Justin Sullivan | Getty Images

    Peloton shares plunged on Monday after the connected fitness company said it is launching a “global refinancing,” as it looks to stave off a cash crunch amid falling sales. 
    The company is offering $275 million in convertible senior notes due 2029 in a private offering and plans to enter into a $1 billion five-year term loan and $100 million revolving credit facility. 

    Peloton plans to use the proceeds to buy back about $800 million of its 0% convertible senior notes, which are currently due in 2026, and refinance its existing term loan. 
    Shares fell more than 12% in extended trading after Peloton announced the refinancing, but later regained some ground. 
    Last month, Peloton announced that its CEO Barry McCarthy was stepping down and said it planned to lay off 15% of its workforce because it “simply had no other way to bring its spending in line with its revenue.”
    The restructuring was designed to improve Peloton’s cash position as demand for its connected fitness products continues to fall. The company has been working to achieve positive free cash flow, which “makes Peloton a more attractive borrower” and “is important as the company turns its attention to the necessary task of successfully refinancing its debt,” McCarthy said in a memo to staff prior to his departure.
    In a letter to shareholders, the company said it is “mindful” of the timing of its debt maturities, which include convertible notes and a term loan. It said it is working closely with its lenders at JPMorgan and Goldman Sachs on a “refinancing strategy.”
    “Overall, our refinancing goals are to deleverage and extend maturities at a reasonable blended cost of capital,” the company said. “We are encouraged by the support and inbound interest from our existing lenders and investors and we look forward to sharing more about this topic.”

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