Raphael Stevens

Sweetgreen shared its first quarterly report since going public in mid-November, reporting impressive sales growth and widening losses.
The salad chain also issued a strong sales outlook for 2022, although it doesn’t expect to turn a profit yet.
After a strong debut on the public markets in mid-November, the stock has struggled as investors question the company’s lack of profitability.

A Sweetgreen banner on the NYSE, November 18, 2021.
Source: NYSE

Sweetgreen on Thursday reported widening losses but strong fourth-quarter sales growth and promising performance at its restaurants in its first quarterly report since its initial public offering.
The salad chain also issued a strong sales outlook for 2022, although it doesn’t expect to turn a profit yet.

Shares of the company soared 17% in extended trading. After a strong debut on the public markets in mid-November, the stock has struggled as investors question the company’s lack of profitability, a rarity for publicly traded restaurants.
Sweetgreen shares have shed more than 50% since debuting on the public market, dragging its market value down to roughly $2.2 billion. The stock closed Thursday down roughly 11% before spiking in extended trading on the back of its results.
The chain reported a fourth-quarter net loss of $66.2 million, or $1.14 per share, compared with a loss of $41.1 million, or $2.49 per share, a year earlier. The company recorded a $21.5 million increase in stock-based compensation. Sweetgreen also said that price hikes and killing off its loyalty program helped restaurant-level margins, although higher wages and employee bonuses weighed on its bottom line.
Net sales rose 63% to $96.4 million, topping expectations of $84.7 million, according to a survey of analysts by Refinitiv.
The chain reported same-store sales growth of 36% for the quarter. In the year-ago period, the company saw its same-store sales shrink by 28% as the pandemic took a toll on demand for its warm bowls and salads.

Most of the credit for the quarterly jump in same-store sales comes from an increase in orders, although the chain also reported a 4% benefit from price hikes.
Executives said the company has a lot of pricing power, but they’re wary of rising prices too high and scaring away new customers. Co-founder and CEO Jonathan Neman has previously said that the company’s aim is to become the McDonald’s of his generation.
Sweetgreen said 65% of its sales came from digital orders. While impressive when compared against the broader restaurant industry, that marks a decrease for the company, as more than three-quarters of its transactions came from online orders during the year-ago period.
“Once we take a front-line customer and they’re coming on digital, they’re coming back 1.5 times more,” Neman said on the company’s earnings call.
He added that if customers buy from two different channels, such as stores and online, they come back even more frequently.
This quarter, more customers opted to order through third parties like DoorDash and Grubhub, which charge heftier fees for pickup and delivery orders and can dig into Sweetgreen’s margins.
Looking ahead to the first quarter, Sweetgreen said it anticipates revenue of between $100 million and $102 million and same-store sales growth of 30% to 33%. It’s also expecting adjusted losses before interest, taxes, depreciation and amortization of between $18 million and $20 million.
For the full year, Sweetgreen anticipates revenue of $515 million to $535 million and same-store sales growth of 20% to 26%. Wall Street is expecting the chain to see net sales of $513.1 million in 2022, though analyst coverage on the stock is light.
The company expects to see adjusted losses before interest, taxes, depreciation and amortization of $33 million to $40 million for 2022. Executives said they’re expecting food prices to rise 6% in 2022.
Sweetgreen is also planning to open at least 35 new locations during the year.
Read the full earnings report here.

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The Supreme Court ruled that Kentucky’s Republican attorney general can intervene to defend a restrictive state abortion law that had been abandoned by another government official.
Justices in an 8-1 ruling said a lower court was wrong to deny a bid by GOP attorney general Daniel Cameron to rescue the law, which would largely ban abortions performed using a method common during second-trimester pregnancies.
The Supreme Court has yet to rule in another case related to a Mississippi abortion law that could end long-standing abortion protections guaranteed by the Roe v. Wade ruling.

The U.S. Supreme Court building is seen January 24, 2022 in Washington, DC.
Drew Angerer | Getty Images

The Supreme Court ruled Thursday that Kentucky’s Republican attorney general can step in to defend the state’s restrictive abortion law, which had been abandoned by another top official.
Justices in an 8-1 decision said a lower federal court was wrong to deny Attorney General Daniel Cameron’s effort to intervene in the case in an effort to try to save the law.

That law would largely ban abortions performed using a method common during second-trimester pregnancies.
The ruling dealt with the technical aspects of the legal battle over Kentucky’s law, rather than the merits of the statute itself.
However, the decision is a setback to abortion rights supporters because it could lead to the resurrection of a law that is one of several pushed by anti-abortion advocates to further limit when women can terminate pregnancies.
And the ruling comes as the high court has yet to decide a case involving a strict Mississippi abortion law case that could end or erode long-standing abortion protections guaranteed by its landmark 1973 ruling in the Roe v. Wade case.
Justice Samuel Alito, a conservative, wrote Thursday’s opinion in the Kentucky case. Two liberal justices, Elena Kagan and Stephen Breyer, concurred with the ruling.

The sole dissent came from Justice Sonia Sotomayor, the third liberal voice on the majority-conservative bench.
The Kentucky law, which was signed in 2018, was later ruled unconstitutional by a federal district court. The state then appealed that ruling to U.S. Court of Appeals for the Sixth Circuit.
But before that court issued its decision, Kentucky elected then-Attorney General Andy Beshear, a Democrat, as its governor, while electing Cameron as AG to replace him.
The Sixth Circuit then upheld the lower court’s ruling against the law.
Kentucky’s health secretary afterward opted not to pursue a further appeal, effectively dooming the law from taking effect.
But Cameron tried to intervene in the case, in order to seek another appeals hearing.
However, the Sixth Circuit rejected that bid, saying Cameron’s motion came too late. Cameron then asked the Supreme Court to reverse that decision.
Breyer, during oral arguments in the case in October, signaled he would side with Cameron during oral arguments last October.
“If there’s no prejudice to anybody, and I can’t see where there is, why can’t he just come in and defend the law?” Breyer said at the time.
In the majority opinion Thursday, Alito wrote that despite Beshear becoming governor, those opposing the law in court “had no legally cognizable expectation that the [health] secretary he chose or the newly elected attorney general would” give up on defending the abortion law “before all available forms of review had been exhausted.”
Sotomayor, in her dissent, wrote that the majority was “bend[ing] over backward to accommodate the attorney general’s reentry into the case.”
She also wrote, “I fear today’s decision will open the floodgates for government officials to evade the consequences of litigation decisions made by their predecessors of different political parties, undermining finality and upsetting the settled expectations of courts, litigants, and the public alike.”
Breyer is retiring this summer from the Supreme Court.
President Joe Biden has nominated Judge Ketanji Brown Jackson to replace Breyer. If she is confirmed by the Senate, Jackson would be the first Black woman on the high court.

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Warner Bros.’ “The Batman” is expected to exceed $100 million in ticket sales during its domestic debut and north of $225 million globally.
Between 1989 and 2005, Batman films averaged between $250 million and $400 million in ticket sales at the global box office.
2008’s “The Dark Knight” was the first Batman film to generate more than $1 billion worldwide.

Michael Keaton on the set of “Batman”.
Getty Images (L) | Warner Bros. (R)

On Friday, Batman returns to the box office.
With Robert Pattinson donning the cowl, Warner Bros.’ “The Batman” is expected to exceed $100 million in ticket sales during its domestic debut and north of $225 million globally.

“If anyone thought the success of ‘Spider-Man: No Way Home’ was an anomaly, then ‘The Batman’ looks to show that success for movie theaters is indeed a trend built on the appeal of blockbuster-style films,” said Paul Dergarabedian, senior media analyst at Comscore.
The Covid-19 pandemic has fundamentally changed the box office, as audiences outside of the 18 to 35 demographic have been slow to return. Franchise-based films, particularly those about comic book characters, have been some of the few to break through and generate significant gains at the box office.
Batman has been a staple at the box office since 1989, when director Tim Burton brought the caped crusader to the big screen. Over the last three decades, six actors have taken on the dual role of Bruce Wayne and the masked vigilante. These films have collectively generated more than $4.5 billion globally in the last 33 years.
Between 1989 and 2005, Batman films averaged between $250 million and $400 million in ticket sales at the global box office. With 2008’s “The Dark Knight,” Batman was solidified as a box office titan, generating more than $1 billion worldwide, according to data from Comscore.

Of course, Adam West was the first to bring Batman to the big screen in 1966’s spin-off of the campy television show. However, data on how that film performed during its run in theaters is not available. At the time, box office results were not reported as publicly as they are today.

Also not included in CNBC’s list of Batman films is Zack Snyder’s “Justice League,” in which Batman was part of an ensemble cast, as well as a handful of animated films that were released theatrically.
There was a 23-year gap between West’s portrayal and Michael Keaton’s in Burton’s “Batman.” Since then, there has not been a gap longer than eight years between Batman flicks, with the average being around four years.
“There was a time when the big screen comic book presence could be summed up by two names: Batman and Superman,” said Shawn Robbins, chief analyst at Boxoffice.com. “It wasn’t until the dawn of the 2000s that Marvel franchises like X-Men and Spider-Man began to change that narrative.”
While 1997’s “Batman and Robin” starring George Clooney was not particularly well-received by critics or audiences — it holds a 12% rating on Rotten Tomatoes and was the lowest-grossing Batman film of the bunch — a trilogy of films from Christopher Nolan revitalized the Batman name and the character’s status as a box office giant. 

Christian Bale’s turn as Batman, which spanned three films, led to box office ticket sales in excess of $2.4 billion, the most of any actor who donned the cowl on the big screen.
“Thanks to the wealth of talent and time poured into comic book movies over the last two decades, they’ve become embraced by a much larger audience than just die-hard fandom,” Robbins said.
Disney and Sony’s co-production “Spider-Man: No Way Home” recently topped James Cameron’s “Avatar” to become the third-highest-grossing domestic release in history, with more than $760 million in ticket sales. Globally, the latest Spidey film is the sixth-highest grossing movie of all time, with $1.8 billion in ticket sales.

Robert Pattinson dons the cowl in Matt Reeves’ “The Batman.”
Warner Bros.

“Enthusiasm for this new iteration of [Batman] that has consistently delivered giant returns for decades looks to help generate the best box office debut North America has seen during the pandemic outside of ‘Spider-Man: No Way Home,'” Robbins said. “With potentially strong appeal to both young audiences and adults, there isn’t a better opening act for Warner Bros.’ 2022 slate.”
“The momentum this film can provide will also benefit the greater box office ecosphere as studios ramp up for what looks to be a near-normal tentpole movie slate from April through summer and beyond,” he said.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal owns Rotten Tomatoes.

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Gap Inc. shares climbed after the apparel retailer offered an upbeat forecast for its profits in 2022, in spite of rising inflation and logistics challenges.
Gap Chief Executive Sonia Syngal said in a press release that the retailer faced near-term disruptions during its fiscal fourth quarter that “muted” overall performance.
Still, investors sent shares higher Thursday evening as they made a longer-term bet on the apparel company’s improvements and on more American consumers looking to refresh their wardrobes.

Sale signs are on display in the windows of a Gap retail location.
Scott Mlyn | CNBC

Gap Inc. shares climbed in after-hours trading Thursday after the apparel retailer offered an upbeat forecast for its profits in 2022, in spite of rising inflation and logistics challenges.
Supply chain snarls remain a headache for the retailer, which also owns the Banana Republic and Old Navy brands, but the company said it expects shipping issues to improve. Gap Chief Executive Sonia Syngal said in a press release that the retailer faced near-term disruptions during its fiscal fourth quarter that “muted” overall performance.

Sales in the holiday period came in below pre-pandemic levels, and Gap sees its first-quarter revenue declining more than analysts had anticipated, on a year-over-year basis. Still, investors sent shares higher Thursday evening as they made a longer-term bet on the apparel company’s improvements and on more American consumers looking to refresh their wardrobes.
The comments from Gap about its first quarter outlook echo a shared sentiment among other apparel retailers, including American Eagle Outfitters, Abercrombie & Fitch, Urban Outfitters and Victoria’s Secret, which are facing headwinds from sky-high inflation to a lingering labor crunch to global unrest spurred by Russia’s invasion of Ukraine.
Each of these companies spoke this week to recent troubles securing merchandise over the holiday season due to supply chain constraints. They also cautioned that pressures related to shipping and rising prices will persist at least through the first half of the year. But then they expect to turn a corner, as evidenced by Gap’s annual forecast.
In the first quarter, though, Gap sees revenue contracting by a mid-to-high single-digit rate compared with the prior year. Analysts had been looking for a smaller 3.8% drop.
Here’s how Gap did in its fourth quarter compared with what Wall Street was anticipating, according to a survey of analysts by Refinitiv:

Loss per share: 2 cents adjusted vs. 14 cents expected
Revenue: $4.53 billion vs. $4.49 billion expected

Gap swung to a loss in the three-month period ended Jan. 29 of $16 million, or 4 cents per share, compared with net income of $234 million, or 61 cents a share, a year earlier.
Excluding charges related to strategic changes in its European business, Gap lost 2 cents a share, which was narrower than the 14-cent loss that analysts had been looking for, according to Refinitiv data.
Revenue grew about 2% to $4.53 billion from $4.42 billion a year earlier. That beat estimates for $4.49 billion. Compared with 2019 levels, however, Gap said its sales were down 3%. That was partially due to ongoing and planned store closures.
Same-store sales — a key metric that tracks revenue at retail stores open for at least 12 months — grew 3% year over year, short of the 3.7% increase that analysts had been looking for. On a two-year basis, same-store sales were also up 3%.
Gap said its gross margins contracted to 33.7% in the fourth quarter, falling short of analysts’ estimates for 35.2%, according to StreetAccount. Gap said the metric was pressured by higher air freight costs, which were partially offset thanks to the company selling more hoodies and denim at full price points.

Here’s a sales breakdown, by brand:

Gap said Old Navy was hurt in part due to supply chain complications, with same-store sales flat compared with 2019.
At Gap’s namesake banner, same-store sales climbed 3% on a two-year basis, fueled by double-digit growth in North America. The company said the brand is poised to grow in the coming months thanks to a recent tie-up with Walmart for home goods, as well as its collaboration with rapper Kanye West.
Banana Republic same-store sales dropped 2% from 2019 levels, in part due to ongoing store closures, the company said.
Same-store sales at Athleta, Gap’s growing athletic apparel line for women, surged 42% on a two-year basis. The company said Athleta is still on track to hit $2 billion in annual sales by 2023.

‘More nimble and focused’

During a post-earnings conference call, Syngal, the CEO, told analysts that Gap expects delivery times of inventory shipments to improve as the retailer diversifies its port exposure. She said the retailer has shifted business to Eastern and Southern ports, which are seeing materially better performance than those on the West Coast.
“We have undertaken significant restructuring necessary to become a more nimble and focused company,” she said on the call.
The retailer said it expects inventories to grow in the mid-20% range by the end of the first quarter, compared with a year ago, due to it booking merchandise orders earlier than normal in order to try to offset longer transportation timeframes.
Management touted the strength of the namesake Gap brand, a turnaround shaping up at Banana Republic and the continued momentum at Athleta. Old Navy, which had been a core growth driver for the company in recent years, should correct as the shipping challenges ease, the company said.
“We still have a firm conviction in our ability to grow our core brands,” said Gap Chief Financial Officer Katrina O’Connell. “Our primary focus is on the long-term health of the business.”
For the full year, Gap expects to earn between $1.85 and $2.05 per share, on an adjusted basis, with sales growing a low single digit percentage from 2021. Analysts were projecting annual adjusted per-share earnings of $1.86, with sales up 1.6% from prior-year levels.
O’Connell said Gap expects to spend about 25% less on air freight expenses in 2022, too, compared with the roughly $430 million it shelled out to move goods in the air from overseas in 2021. A little more than half of those expenses will be realized in the first quarter, she said.
Gap shares are down about 45% over the past 12 months, as of Thursday’s market close. The company has a market value of $5.3 billion.
Find the full financial press release from Gap here.

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Wall Street analysts had called on Ford to spin off its electric-vehicle business
Ford announced a restructuring that would separate the EV business from its legacy operations, while keeping it under the Ford corporate umbrella
Investors broadly approved of the compromise.

Ford CEO Jim Farley poses with the Ford F-150 Lightning pickup truck in Dearborn, Michigan, May 19, 2021.
Rebecca Cook | Reuters

Ford Motor said on Wednesday that it will separate — but not spin off — its electric vehicle business from its legacy autos operations.
Many Wall Street analysts and investors have been pressuring legacy automakers such as Ford to spin off their electric vehicle operations, in hopes of capturing a high valuation like those that investors have been awarding some EV start-ups.

While CEO Jim Farley and other Ford executives readily acknowledge that some separation between the company’s EV efforts and its legacy internal-combustion-engine business makes sense, they argue that a full spin-off would have put Ford at a disadvantage to both old and new rivals.
“Today, our corporate structure is holding us back,” Farley said. “It does not allow us to focus. We need the ICE business to be cash generating and serving [Ford’s] iconic brands. We need our electric business, the digital business, to be about innovation. We cannot ask the team to do both at the same time.”

Why didn’t Ford just spin off its EV business?

The case for a spin-off is easy to see. In theory, a spin-off would allow the part of Ford that’s likely to see significant bottom-line growth — the EV business — to win a valuation comparable to those of other pure-play EV makers.
Right now, analysts say, the likely lack of growth for Ford’s mature ICE business is holding down the overall company’s valuation. Morgan Stanley analyst Adam Jonas argued in a November note that ICE “de-adoption” could outpace Ford’s ability to ramp up EV production, and that Ford would need to consider “nontraditional” actions, such as a spin-off, to attract the capital and talent needed to succeed with electric vehicles.
But Ford executives say that the company — and its investors — will be better off with its EV and ICE businesses under one roof, albeit with much more separation than the two have had until now.

Farley said Ford gains “leverage” from areas where the two organizations, together with the Ford Pro commercial-vehicle unit, can draw on each other’s strengths.
“”We are not going to create separate brands. We are not going to compete with each other,” Farley said. “The magic in this is to focus both organizations on what they need to focus on, more than asking everyone to do everything like we do today … and to get that leverage between both organizations.”
“If we spin this out one or both entities, or all three, we really risk that leverage.”

Separating the units has advantages, up to a point

Ford’s plan is to run its new EV unit, called Ford Model e, like a start-up – with lean, flexible teams, a culture of innovation, and the ability to create “clean-sheet” designs that don’t necessarily draw on the existing Ford product lineup.
While Farley will be Model e’s president, its day-to-day leadership will fall to Doug Field, a former Apple and Tesla executive.
Field said that unlike other EV start-ups, Model e has the advantage of an integrated relationship with a profitable legacy automaker — but it will also see advantages from the separation.
“We need a culture in some of these new technologies and for clean sheet EVs, the kind of culture that attracts the best technical talent,” Field said. “We want the best people. I don’t care if they come to work in bunny slippers, but we got to have the best people.”

Making the EV business a standalone unit under the Ford umbrella will “absolutely” assist in attracting new talent, Field said.
“We do need a different way of working in a different environment and the flexibility to do things like remote work,” he said. “That is part of Model e — to give us access to the very best talent.”

Ford doesn’t need to raise capital for its EV plan

Some analysts have argued that a spin-off of Ford’s EV unit would allow that business to take advantage of its new pure-play-EV valuation to raise capital at low cost. That capital could then be used to fund the company’s ambitious future-product plan — or perhaps, to fund an even-more-ambitious plan.
But Ford executives say that the company’s EV business plan doesn’t require raising capital from outside the company. Simply put, the substantial profits that Ford earns from its ICE trucks and SUVs will be ample to fund the company EV plan.
Ford’s cash machine is currently its $42 billion F-Series truck franchise, which has been the best-selling vehicle in the U.S. for decades.
Keeping both businesses in-house allows Ford to internally fund the expansion of EVs and other advanced technologies such as autonomous vehicles with profits from the traditional operations.
“We certainly looked at spin-offs but, No. 1, we can fund this ourselves,” Farley said. “We don’t need access to capital markets.” Secondly, he said the company would lose synergies and leverage if one or the other was spun off.

A compromise that appeased Wall Street – for now

To some extent, Ford’s restructuring plan is a compromise to appease those analysts and investors. It’s separating the operations and providing greater transparency by breaking out their results by next year, while keeping the company whole — something that Farley believes is necessary to lower costs for both operations.
“This change is not about financial management of the company,” Farley said. “This is about focus, capability, better products, better experience. That’s how we’re going to win as a company.”
Investors supported the actions, sending shares up by 8.4% Wednesday to $8.10. The stock is down about 15% this year.
Analysts widely praised the split, but some still have hope that Ford will spin off the operations in the future.
“We note that as the BEV business matures, strategic options could reemerge later in the decade — much as multiindustrials continue to refine their portfolios,” Barclays analyst Brian Johnson wrote Wednesday in an investor note.

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Inflation is pushing up prices everywhere, from the grocery store to gas pumps.
It turns out rising prices may also kill the happiness you may feel from “retail therapy.”
Research finds that people are more likely to second-guess their purchases when they feel financially constrained.

Shoppers are seen inside a shopping mall in Bethesda, Maryland on February 17, 2022.
Mandel Ngan | AFP | Getty Images

Inflation is pushing up prices everywhere, from grocery store shelves to gas pumps.
It turns out that it’s also likely taking something away — that mood boost you may enjoy from so-called retail therapy.

Research from Duke University’s Fuqua School of Business finds that buyer’s remorse is more common when people are feeling financial stress.
“Many of us have this feeling like maybe my dollar isn’t going as far as it used to be,” said Gavan Fitzsimons, a professor of marketing and psychology at Duke’s Fuqua School of Business, during a LinkedIn Live session on research he co-authored with Rodrigo Dias and Eesha Sharma.
The research team set out to find out what happens if you feel your financial resources are limited and you buy something — a new TV, for example — for your family.
More from Personal Finance:How to save at the pump as gas prices soar3 ways to spend your tax refund this yearWhat raising interest rates would mean for inflation
Are you happier that you can enjoy the TV? Or are you less happy because you’re more financially stressed?

“What we find is, to the degree you’re feeling more financially constrained and make a purchase, you’re actually less happy with that purchase than you would have been if you weren’t feeling financially constrained,” Fitzsimons said.
That goes whether you’re high- or low-income, the research, which included more than 25,000 consumers, found.
The results showed those sentiments carried over to online reviews written by customers. Consumers who lived in ZIP codes that were financially strained, based on Census data, were more likely to leave negative reviews when they visited major restaurant chains, according to the research.
One reason for the discontent is that financial stress makes people more likely to think of the ways in which they could have otherwise spent their money. So if you buy a new blender for your kitchen, you may later wonder if you should have instead bought a toaster oven, for example.

“That opportunity cost, the thing I could have done with the money, weighs on me,” Fitzsimons said. “Because that weighs on me, I end up with this reduced happiness.”
So how can consumers feel better about their purchases?
“One thing we know for sure is we can plan,” Fitzsimons said.
By thinking through your consumption, you can make sure the purchase is a good one, and a justified use of the money, he said.
Other research suggests there may be yet another key to happiness — increasing the amount of cash you have on hand.

A field study of almost 600 U.K. bank customers found people with higher liquid wealth had more positive views of their financial well-being and, in turn, greater life satisfaction.
Generally, the aggregate amount of cash you have does not matter. Instead, the larger amount of your assets that you hold in cash, the happier you are, said Gary Zimmerman, CEO of MaxMyInterest, a company that aims to help investors access higher interest rates on their cash.
“It’s because of this psychological cushion in your mind,” Zimmerman said. “Knowing if all else goes to zero, at least I can pay my rent, my mortgage or my kid’s education, whatever the things are that are most important to you.”

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