Raphael Stevens

David Einhorn’s Greenlight Capital has a $6.8 million stake in Peloton, and he thinks the company could be worth five times it current value, if it cuts more costs.
If Peloton can generate $450 million in EBITDA, about double its current projections, it could reach a stock price of between $7.50 and $31.50 a share, Einhorn said at the Robin Hood Investors Conference.
The Bike and Tread maker has focused on curbing costs and prioritizing profitability over growth after refinancing its debt earlier this year.

David Enhorn pitches Peloton at the Robin Hood Investors Conference.
Getty Images (L) | CNBC (R)

Greenlight Capital’s David Einhorn thinks Peloton could trade as high as $31.50 a share if the company slashes costs, which could double its current adjusted EBITDA projections, CNBC has learned. 
That’s about five times the current price of its shares, which were trading around $6.20 midday on Friday.

In a pitch deck Einhorn presented at the Robin Hood Investors Conference on Wednesday, Einhorn pedaled on a Peloton bike as he explained the company’s many missteps over the years and the wide runway it has to turn its business around, according to a copy of the presentation obtained by CNBC.
If it can generate $450 million in EBITDA, about double its current projections, Peloton could trade between $7.50 and $31.50 a share, based on a benchmark study of comparable companies, said Einhorn. 
Notably, Greenlight’s analysis doesn’t assume “any growth in subscription revenues from new customers or price increases or other new initiatives, such as activation fees from the growing used bike market and international expansion,” Einhorn said. 
“Facing bankruptcy can force change,” he said during the pitch. “Peloton has started to right-size and cash burn has stopped. It refinanced its debt to push out maturities. And with a loyal customer base that pays $44 per month, it’s a valuable subscription business.”
Einhorn structured the presentation as if he was an instructor giving a workout class, occasionally shouting out investors in the room. The first page of the deck was titled “15 minute ‘Stock Pitch Ride'” and shows an image of Einhorn on a Peloton bike.

Source: Greenlight

“Let’s start with some shoutouts,” Einhorn said at the beginning of the pitch, calling out a number of investors and sponsors, similar to the way a Peloton instructor would call out class attendees.
Each page of the deck shows a leaderboard of other apparent riders — including investor Bill Ackman and Robin Hood CEO Richard Buery — along with Einhorn’s speed, cadence and resistance, mimicking what users see while taking a Peloton bike class.
Greenlight and Peloton declined comment to CNBC.
Greenlight, which had a $6.8 million stake in the company as of June 30, conducted a benchmark study analyzing Peloton’s cost structure. The firm compared Peloton to three sets of peer companies: fitness businesses like Planet Fitness, consumer subscription companies like Chewy, and consumer online subscription businesses like Spotify and Netflix. 
The study found that even though Peloton has already cut costs to curb its cash burn, it’s seeing “basically zero adjusted EBITDA versus the peer median of $406 million,” Einhorn stated in the pitch. 
“For peers, over a third of gross profit flows through to EBITDA. Part of the problem is that Peloton spends too much on research and development,” said Einhorn. “Just as one example, Peloton spends about twice the R&D that Adidas spends … in dollar terms. And Adidas has 8 times more sales than Peloton and an order of magnitude more product lines.” 
Peloton’s stock-based compensation expense of $305 million in fiscal 2024 is also double the peer median and comparable to far larger companies like Spotify and Netflix – which are 30 times and 140 times larger, respectively, Einhorn said. 
At the heart of the thesis is Peloton’s high-margin subscription business, which generated $1.71 billion in revenue in fiscal 2024 with a gross margin of about 68%. If Peloton can make deep cost cuts, the company could generate far more free cash flow and EBITDA without needing to sell more bikes and treadmills, and without needing to grow its subscriber base. 
Earlier this year, Peloton announced plans to lay off 15% of its staff, close retail showrooms, and adjust its international sales plans, among other cost savings initiatives. It expects those cuts could reduce annual run rate expenses by more than $200 million by the end of fiscal 2025.
In August, Peloton said it expects it can post adjusted EBITDA of between $200 million and $250 million in fiscal 2025. But Einhorn said if the company gets its cost structure more in line with the benchmark, “there should be $400 – $500 million of EBITDA from the current subscription revenue base.” 
Companies that generate that range of EBITDA tend to trade at nine to 32 times that amount, implying a potential Peloton share price of between $7.50 on the low end and $31.50 on the high end, if it reaches $450 million in EBITDA, he said. 
To get there, Einhorn said the company needs new management. In August, Peloton’s interim co-CEO Karen Boone said she believes the new top executive will be in place by the time the company next reports earnings, which are now scheduled for Thursday. 
“The nice part of our thesis is that we don’t have to convince Peloton this is the right approach,” said Einhorn. “Peloton’s interim co-CEOs are telling the same story of a recurring, high-margin subscription revenue stream business. They have also implemented an initial cost-cutting plan, which still leaves plenty of room for the new CEO.” 
He said the company continues to garner top reviews among consumers and fitness publications and has a rabidly loyal customer base. He added that even though fitness buffs are returning to the gym, home workouts are here to stay.
“Working out in the comfort of your own home is not a fad,” said Einhorn. “And a trend towards healthier lifestyles should all drive underlying subscriber growth over time.”

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McDonald’s stock has fallen 5% since the CDC released an advisory notice saying that its Quarter Pounder burgers have been linked to an E. coli outbreak in 10 states.
The investigation to find the source of the outbreak could take as long as several more months, although investigators have honed in on the onions used in the burger as a likely source.
McDonald’s has also already taken steps to reassure customers that its food is safe to eat, including pulling Quarter Pounder burgers from roughly a fifth of its U.S. locations.

In this photo illustration, a McDonald’s Quarter Pounder hamburger meal is seen at a McDonald’s on October 23, 2024 in the Flatbush neighborhood in the Brooklyn borough of New York City. 
Michael M. Santiago | Getty Images

As McDonald’s and health authorities race to contain a deadly E. coli outbreak, the burger chain faces challenges in the months ahead to keep the trust of diners and investors.
Shares of the fast-food giant have fallen 5% since the Centers for Disease Control and Prevention issued an advisory notice Tuesday, warning that the company’s Quarter Pounder burgers have been linked to an E. coli outbreak in 10 states that has led to one death.

Health investigators have zeroed in on the slivered onions used in the Quarter Pounder as the likely contaminant. McDonald’s confirmed that California-based vegetable producer Taylor Farms is the supplier of onions it removed from its supply chain. Taylor Farms issued a recall on four raw onion products, citing potential E. coli contamination, restaurant supplier U.S. Foods said in a notice to customers Thursday. (U.S. Foods is not a supplier for McDonald’s.)
The CDC reported 49 people became ill from the outbreak from Sept. 27 to Oct. 11, as of Tuesday. Health experts say the number of cases will likely rise as the investigation progresses.
Just two days after the CDC issued its advisory notice, it’s too soon to tell how the outbreak could affect McDonald’s business, especially if the case count grows. But investors are already worried that it could cause sales to fall at the company, which has been trying to rebound from lagging traffic by offering deals to price-sensitive customers.
Company spokespeople said Wednesday that’s it’s far too early to share if the outbreak was having any effect on its restaurants’ sales. McDonald’s is expected to report its third-quarter results on Oct. 29 before the markets open.
The damage to the business will depend in part on how effectively McDonald’s has already contained the outbreak — and how well it can convince diners it is safe to eat at its restaurants.

Where the investigation could go next

Investigations into multistate foodborne outbreaks can last from a few weeks to up to several months. 
But Dr. Thomas Jaenisch, an epidemiology professor at the Colorado School of Public Health, believes it will likely take two or three weeks for federal agencies and McDonald’s to determine the exact source of contamination and chain of events leading to the E. coli outbreak. He said any testing of ingredients and supply sources “really shouldn’t take that long.”
The CDC has said the number of confirmed cases related to the McDonald’s E. coli outbreak could grow as the investigation continues, as many people recover from an infection without testing for it or receiving medical care. It also typically takes three to four weeks to determine if a sick patient is part of an outbreak, the agency added. 
There’s also the possibility that cases could crop up in new states or regions that haven’t reported any illnesses, according to Xiang Yang, a professor and meat scientist at the University of California, Davis. 
For example, a person traveling to a state impacted by the outbreak, such as Colorado, could have gotten infected with E. coli and brought it back to where they are from, according to Yang. It is also unclear if the onion supplier ships ingredients to restaurants in other regions of the U.S., which could potentially spread the E.coli strain that caused the McDonald’s outbreak. 
That strain, called O157:H7, can cause a serious complication that can lead to kidney failure. One of the patients in the McDonald’s outbreak suffered from that condition, known as hemolytic uremic syndrome. The federal government essentially bans the sale of any ground beef contaminated with the strain, requiring suppliers to test their products for it.
E. coli can spread through contaminated food or water, or by an individual coming into contact with an infected person, environment or animal. 
The CDC and the 10 states impacted have been interviewing each patient case to get detailed information about their exposure to E. coli, such as what they ate and when, according to Craig Hedberg, the co-director of the Minnesota Integrated Food Safety Center of Excellence. Hedberg is also a member of the McDonald’s Food Safety Advisory Council, but said he has not worked with the company on its response to the outbreak. 
The CDC and the states have been sharing the information they gather with the Food and Drug Administration to trace onion distribution and identify a specific source of contamination, he said. The information is also shared with the U.S. Department of Agriculture’s Food Safety and Inspection Service, which does the same with ground beef. 
The CDC is investigating both the Quarter Pounder’s uncooked slivered onions and its beef patty as the potential culprit for the outbreak. 
Hedberg said contamination of raw onions with E. coli is “highly plausible,” noting several salmonella outbreaks have been linked to onions in recent years. 
McDonald’s uses a single onion supplier, which washes and slices the vegetable, in the affected area. 
Meanwhile, McDonald’s uses multiple beef suppliers in the region, and its burgers are supposed to be cooked to an internal temperature that would kill the bacteria. The size of the outbreak “would imply widespread undercooking by many different individual McDonald’s restaurants” if beef was the culprit, according to Hedberg.
But he said that seems unlikely since most fast-food chains have designed their cooking systems to prevent E. coli contamination of ground beef, which is a widely recognized hazard. Still, investigators will likely examine the cooking practices of multiple locations as part of the investigation, Hedberg noted. 
Jaenisch said he hopes the investigation will also examine the preparation process for Quarter Pounders to see if there is any potential for cross contamination between slivered onions and other ingredients.
“When you prepare the burger at McDonald’s, at which point are the slivered onions added? Do they have a bowl of slivered onions, someone puts their hands in it and then touches the tomatoes?” Jaenisch said. “I would look very closely at that point of preparation.”
McDonald’s has already pulled Quarter Pounders from restaurants in the affected areas. Roughly a fifth of McDonald’s U.S. restaurants are not selling Quarter Pounder burgers at this time. The company has also instructed restaurants in the area to remove slivered onions from their supply, and has paused the distribution of that ingredient in the region.

Customers pass in the Drive Thru lane during breakfast hours at a McDonald’s restaurant on October 23, 2024 in Omaha, Nebraska.
Mario Tama | Getty Images

Learning from the past

Based on past foodborne illness outbreaks at other restaurant chains, it’s not a given that McDonald’s sales and brand image will suffer.
For example, rival Wendy’s dealt with its own link to an E. coli outbreak two years ago. More than 100 people got sick across six states. Still, the incident didn’t have a long-term effect on the chain’s sales.
“They got past it, and you never really heard about it,” KeyBanc analyst Eric Gonzalez told CNBC. “I think there were some operators in the area that probably saw a mid-to-high single digit, maybe 10% decline for a couple days of a week or so, and then it reverted as the news cycle moved on.”
On the other side of the spectrum is Jack in the Box, which became the poster child for food safety issues decades ago.
An outbreak in 1992 and 1993 linked to the chain resulted in the deaths of four children and infected more than 700 people. Media coverage, coupled with the severity of the outbreak, led to a steep decline in sales that year, fueled three straight years of losses and tarnished Jack in the Box’s reputation for years.
And then there’s Chipotle, a more recent example of a chain that struggled for years to improve its food safety and turn around its image after a string of foodborne illnesses.
“It was sort of a victim of its own inexperience, in a way, where not only were there multiple illnesses — E. coli, salmonella, norovirus — but you didn’t really have the expertise and experience level to manage through the crisis,” Gonzalez said.
After the initial wave of outbreaks in 2015, it took Chipotle several more years and a new CEO to rebuild trust in its burritos and bowls.
While investors fear the outbreak will hit McDonald’s sales, it’s unlikely that the burger giant turns into another Chipotle or Jack in the Box.
“We don’t know where this is going to land, as far as McDonald’s is concerned, but you have to have a little bit of confidence in their ability to contain the outbreak,” Gonzalez said. “It’s a very sophisticated organization with a sophisticated supply chain, and I don’t doubt their capabilities.”

Reassuring customers

McDonald’s has already been taking steps to reassure customers about the safety of its food. Barring a much more serious crisis, it may be able to contain the damage to its brand, experts said.
Shortly after the CDC issued its notice, the company released a statement outlining the steps it’s taken to contain the outbreak, along with a video featuring McDonald’s USA President Joe Erlinger.
The following morning, Erlinger appeared on NBC’s “TODAY,” telling viewers — and potential customers — that its food and drinks were safe to consume.
“Any kind of product safety recall requires some crisis communication and reassurance on the part of the corporation that it takes safety seriously, that it takes consumer health seriously and that it will react appropriately,” said Jo-Ellen Pozner, associate professor at the Santa Clara University Leavey School of Business.
She added that she thinks McDonald’s needs to apologize “very publicly” and aim its messaging at both consumers and its shareholders. However, that transparency means more media coverage, which reminds consumers about the crisis and risks scaring them away from McDonald’s restaurants.
Yang said McDonald’s appears to be “doing what they can do so far” while waiting for more information on the specific source of contamination. 
But other experts hope the chain does more to mitigate the potential spread of the outbreak during the investigation.
Dr. Darin Detwiler, professor of food policy and corporate social responsibility at Northeastern University, said he believes locations in other unaffected states should be “doubling up on their sanitation procedures and protocols and do more testing of their ingredients.” 
“Don’t wait until the lawyers or inspectors say you have a problem,” Detwiler said. 
“Why don’t you make the assumption that there could be something in your state, and check out your product,” he said. “That is being proactive. That is corporate social responsibility.”
Bill Marler, an attorney who specializes in cases involving foodborne illnesses, said McDonald’s should also follow in the footsteps of Jack in the Box, which offered to pay medical bills and lost wages for the victims of its E. coli outbreak.
“They just need to be seen as a good corporate player, and that’s really how they’re going to be able to bounce back pretty quickly,” Marler said.
One potential plaintiff tied to the crisis has already reached out to Marler, who represented hundreds of people who sued Jack in the Box in a class-action lawsuit, leading to a settlement of more than $50 million.
McDonald’s is already facing at least two lawsuits tied to the outbreak.
Both Clarissa DeBock, of Nebraska, and Eric Stelly, a resident of Greeley, Colorado, are suing the company for damages in excess of $50,000 after allegedly testing positive for E. coli after eating at McDonald’s, according to court filings.
“McDonald’s has nowhere to hide. They’re strictly liable for producing food that was contaminated. They may be able to point the finger at the onion supplier or the meat supplier, but ultimately they made the hamburger,” said Marler.
McDonald’s declined to comment on the lawsuits.
While media coverage of related lawsuits could bring more attention to McDonald’s, the suits themselves are unlikely to threaten the chain’s existence, according to Pozner.
“McDonald’s is as ubiquitous as Coke. It’s one of these very taken-for-granted brands, for its value as a brand to be diminished in a significant way, would require a much more serious outcome of the E. coli outbreak,” she said. “The scope of this tragedy is still very contained.”

Slumping sales

The outbreak comes as McDonald’s tries to win back diners who balked at years of price increases. For months, McDonald’s has been locked in a war with its rivals over competing value meals.
The restaurant industry broadly has seen traffic fall as inflation-weary consumers cook more at home and visit eateries less frequently. Fast-food chains, including McDonald’s, Burger King and Wendy’s, have turned to discounts and value meals to win back customers.
McDonald’s U.S. restaurants have been offering a $5 value meal since late June. And earlier this month, the chain launched its Chicken Big Mac nationwide, betting that customers would be willing to pay its higher price point because of the novelty. Those moves seemed to be paying off for McDonald’s before the outbreak.
“This is somewhat of a momentum killer for them,” Gonzalez said, adding that the burger category has plenty of “capable substitutes” for McDonald’s.
Combined, McDonald’s, Burger King and Wendy’s control roughly 70% of the burger quick-service restaurant segment, according to Barclays. McDonald’s alone holds 48.8% market share.
“It’s not a zero-sum game, but the burger category specifically is one of the more concentrated segments,” Gonzalez said. “If McDonald’s loses a point of sales, that’s 3 to 4 points up for grabs for Wendy’s or Burger King to capture.”

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Volkswagen’s Scout Motors revealed its first two vehicles Thursday: A Traveler SUV and Terra pickup truck, scheduled to arrive in 2027.
Scout, a former American vehicle brand from 1961 to 1980, was expected to exclusively offer EVs in a bid for the German automaker to expand its presence in the U.S.
Both the Traveler and Terra are expected to start between $50,000 and $60,000 with available incentives, according to Scout.

Scout Terra pickup truck and Scout Traveler SUV concepts

NASHVILLE, Tenn. — Volkswagen-backed Scout Motors revealed its first electric vehicles Thursday and announced plans for the brand to expand its lineup to include an emerging type of plug-in hybrid electric vehicle in addition to EV models.
Scout, a former American vehicle brand from 1961 to 1980, was expected to exclusively offer EVs in a bid for the German automaker to expand its presence in the U.S. However, slower-than-expected adoption of EVs and higher costs have led it to change course and include extended-range electric vehicles, or EREVs.

“Being a startup that moves quickly, we can pivot,” Scout CEO Scott Keogh, a longtime auto executive who previously led VW’s operations in the U.S., told CNBC. “The pivot that we made a number of months ago into offering range extender definitely was a smart play.”
EREVs are basically a type of plug-in hybrid electric vehicle. They include EV motors and battery cells, as well as a traditional internal combustion engine to power the vehicle’s electric components when the battery loses its energy. The engine essentially acts as a generator to power the EV components when needed.

Scout Terra pickup truck concept

Keogh said Scout added EREVs to better protect the brand from any market volatility amid less-than-expected consumer demand for EVs.
“We think electrification is the future. Range extender sets it up as an EV car, so it introduces people to electrification, yet it has a super smart, let’s say, ‘backup plan,'” he said during an interview Thursday. “It will drive like an EV.”
He said Scout has no plans to offer a traditional, non-electric vehicle with only an internal combustion engine.

The company’s first vehicles — a full-size pickup truck and large SUV — will cover about 40% of the highly profitable U.S. sales market.
Keogh said the company targets to be profitable on an operational basis within the first full calendar year after initial production of the vehicles, which will be built at a $2 billion plant that’s under construction in South Carolina.
“If you look at these profit pools, these two areas, from this size pickup truck to this sized SUV … these are the largest profit pools in the world,” Keogh said.

Scout Traveler SUV concept 

Being profitable during that timeframe would be quite a success, as current EV startups such as Rivian Automotive and Lucid Group lose tens of thousands of dollars on each vehicle they produce after several years.
Meanwhile, Keogh said an announced software deal between VW and Rivian will not impact Scout’s operations. He described the $5 billion software deal, which includes the establishment of a joint venture, as an “exciting opportunity” for Scout.
“It’s good for scaling. It’s good for technology. It’s good for everything,” Keogh said.
Scout’s South Carolina plant is planned to have a production capacity of 200,000 vehicles. Scout expects to use batteries — the most expensive part of an electric vehicle — from VW’s joint venture battery cell manufacturer in Canada.
The company opened reservations for the vehicles Thursday night on its website. Scout plans to sell the vehicles directly to consumers instead of through a traditional franchised dealer network like VW does in the U.S.

New SUV, truck

Scout’s first two vehicles will be the Traveler SUV and Terra pickup truck, scheduled to arrive in 2027.
The company revealed “production-intent concept vehicles” — which means they are largely expected to be the same vehicles that go on sale — Thursday outside of Nashville, Tennessee.

Interior of Scout Traveler SUV concept

Both the Traveler and Terra are expected to start between $50,000 and $60,000 with available incentives, according to Scout. Keogh said pricing for the EREVs is expected to be in that range as well. He declined to say if they will cost more or less than the all-electric models.
The Traveler SUV is expected to account for two-thirds of the company’s initial sales, Keogh said.
The EREV vehicles will feature more than 500 miles of range, according to the company, compared with 300 miles of range for the all-electric models.
The designs of the Traveler and Terra are modernized versions of former Scout vehicles. They feature similar design characteristics but in smoother, more stylish exteriors. The interiors of the vehicles feature large horizontal screens and soft-touch materials.
VW acquired the Scout trademark and name following the global conglomerate’s $3.7 billion acquisition of Navistar, a successor of Scout’s original owner International Harvester, in 2021.

Scout Traveler SUV concept 

Fully electric Scout vehicles are targeted to climb 100% grades and accelerate 0-60 mph in as quick as 3.5 seconds and offer nearly 1,000 lb.-ft. of torque, the company said.
Scout said the vehicles will use the North American Charging Standard, an 800-volt architecture with up to 350-kilowatt charging capability, and will be capable of bi-directional charging that will allow the vehicle to act as a generator.

Tough market, competition

The SUV is expected to be a competitor to traditional off-road SUVs from Jeep as well as the Ford Bronco and Toyota Land Cruiser. It’s larger than Jeep’s well-known Wrangler, which is currently available as a plug-in hybrid electric vehicle.
The truck is a full-size pickup — a segment currently dominated by Ford, General Motors and Stellantis’ Ram brand. But the electric pickup market where Scout will compete remains a developing market.
Automakers such as GM and Ford rushed to release all-electric pickup trucks early in this decade to compete against several EV startups, many of which never materialized, as well as Tesla. Stellantis is expected to release all-electric and EREV full-size pickups by next year.

Scout Traveler SUV concept 

But after rushing the vehicles to market, sales slowed. Much like the overall EV industry, the large vehicles went from commanding significant price premiums to being highly incentivized.
Overall, this electric “truck” market, including the SUVs, accounted for nearly 58,000 vehicles sold during the first half of this year, according to estimates from Motor Intelligence. That’s less than 1% of the roughly 7.9 million light-duty new vehicles sold during that time in the U.S., but a 35% quarterly increase from the first to the second quarter, according to the data.
Keogh believes Scout can differentiate itself in the market with its products, lower pricing and brand appeal. Additional Scout products are expected to follow in the years ahead, Keogh said.
“Can we consider some point in the future sizing down? Absolutely,” he said. “You want to throw the dart at the best place first. And I think we’ve done that between these two vehicles.” More

A federal court judge has blocked the proposed merger between Tapestry-owned Coach and Capri parent Michael Kors.
The reasoning behind the judge’s order wasn’t immediately clear but the FTC had previously argued the merger would harm consumers, raise prices and reduce employee benefits.
Tapestry and Capri announced their $8.5 billion merger last year but the deal has been stalled after the FTC sued to block it.

Coach and Michael Kors.
Michael M. Santiago | Eduardo Parra | Europa Press | Getty Images

A federal judge blocked Tapestry’s acquisition of Capri on Thursday following a brief trial last month in New York.
In her order, Judge Jennifer Rochon granted the Federal Trade Commission’s motion for a preliminary injunction to block the proposed merger, which would marry America’s two largest luxury houses and put six fashion brands under one company: Tapestry’s Coach, Kate Spade and Stuart Weitzman with Capri’s Versace, Jimmy Choo and Michael Kors. 

Tapestry’s stock surged 10% after the order was filed while Capri’s plunged about 50%.
In a statement, Tapestry said it plans to appeal the order, “consistent with our obligations under the merger agreement.”
“Today’s decision granting the FTC’s request for a preliminary injunction is disappointing and, we believe, incorrect on the law and the facts. Tapestry and Capri operate in an industry that is intensely competitive and dynamic, constantly expanding, and highly fragmented among both established players and new entrants,” the company said. “We face competitive pressures from both lower- and higher-priced products and continue to believe this transaction is pro-competitive and pro-consumer.”
Under the terms of the merger agreement, Tapestry agreed to reimburse Capri for expenses incurred in connection with the transaction if it fails to be approved, according to a securities filing. If either Tapestry or Capri walks away from the deal because it didn’t receive regulatory approval or, a government issued a permanent, non-appealable injunction against it, Tapestry agreed to pay Capri between $30 million and $50 million, the filing said.
Capri, on the other hand, has agreed to pay a breakup fee of $240 million if it decides to terminate the proposed merger.

Rochon’s reasoning behind the order wasn’t immediately clear. A detailed opinion was filed under seal and isn’t currently accessible to the public.
The former rivals and longtime competitors announced the $8.5 billion deal more than a year ago but the Federal Trade Commission sued to block it in April and sought a preliminary injunction to stop the agreement. 
The FTC argued if the companies merged, it would harm consumers by making the affordable handbag market less accessible and would leave employees with worse salaries and benefits. Tapestry argued consumers would be better off if it merged with Capri because it would allow them to keep up with trends faster, offer better products and reach more customers.
“Today’s decision is a victory not only for the FTC, but also for consumers across the country seeking access to quality handbags at affordable prices,” Henry Liu, director of the FTC’s Bureau of Competition, said in a statement. “These bags are a product which millions of people rely on throughout their daily lives. The decision will ensure that Tapestry and Capri continue to engage in head-to-head competition to the benefit of the American public.”
The decision comes at a time when consumers are more price-sensitive than ever after years of elevated inflation. The Biden administration, and Democratic presidential candidate Vice President Kamala Harris, have pushed for the federal government to use its power to maintain competition and help keep prices low. Republican candidate Donald Trump has also criticized inflation and has pushed for tariffs to address the issue.
The FTC under Chair Lina Khan has moved to block mergers and acquisitions in the grocery, technology and apparel spaces.
During the trial last month, key witnesses called by the FTC cited research that showed the merger could raise prices for handbags, accessories and apparel, and may give the combined company little incentive to invest in product quality.
Lawyers for Tapestry and Capri argued the companies are not each other’s main competitors. They said shoppers now have more options than ever in the handbag market, and trends can change in a blink in the era of TikTok.
— CNBC’s Melissa Repko contributed to this report More

Burger King and Taco Bell owner Yum Brands have pulled onions from select restaurants following an E. coli outbreak tied to McDonald’s.
It comes after restaurant supplier U.S. Foods on Wednesday issued a recall notification for four onion products produced by Taylor Farms.
Health authorities are investigating if slivered onions served on McDonald’s Quarter Pounders were the source of the outbreak.

A sign is posted in front of a Taco Bell restaurant in Richmond, California, on May 1, 2024.
Justin Sullivan | Getty Images

Burger King and Taco Bell owner Yum Brands have pulled onions from select restaurants following an E. coli outbreak tied to McDonald’s.
“As we continue to monitor the recently reported E. coli outbreak, and out of an abundance of caution, we have proactively removed fresh onions from select Taco Bell, Pizza Hut and KFC restaurants,” a Yum Brands spokesperson said in a statement to CNBC. “We will continue following supplier and regulatory guidance to ensure the ongoing safety and quality of our food.”

Yum did not specify how many of its restaurants are included in the measure. It’s unclear if Yum removed the onions from select locations in response to a recall related to the McDonald’s outbreak.
Taylor Farms supplies McDonald’s onions in the affected region and also provides products to restaurant supplier U.S. Foods. U.S. Foods, which does not supply McDonald’s restaurants, issued a recall on Wednesday for four onion products produced by Taylor Farms.
Taylor Farms has not responded to CNBC’s request for comment.
Restaurant Brands International’s Burger King is removing onions from 5% of its U.S. restaurants after reviewing its supply chain and determining those onions originated at the Taylor Farms Colorado facility at the center of the recall.
The burger chain said it only uses whole, fresh onions. Its employees cut, peel, wash and slice the onions at its restaurants.

“Despite no contact from health authorities and no indications of illness, we proactively asked our 5% of restaurants who received whole onions distributed by this facility to dispose of them immediately two days ago and we are in the process of restocking them from other facilities,” a Burger King spokesperson said in a statement to CNBC.
Health authorities are currently investigating the source of the E. coli outbreak, which has led to one death and 49 confirmed cases across 10 states, including Colorado, Nebraska and Wyoming. The Centers for Disease Control and Prevention has interviewed 18 people, 14 of whom remember eating a Quarter Pounder burger from McDonald’s, as of Tuesday.
In response to the outbreak, McDonald’s has pulled Quarter Pounders from roughly a fifth of its U.S. restaurants. The investigation has honed in on two ingredients in the burgers: the fresh beef patties and slivered onions.
McDonald’s said the affected restaurants all source onions from a single facility, which washes and slices the onions. Its beef patties, on the other hand, come from multiple suppliers in the region. If cooked according to internal standards, the temperature would kill any E. coli in the patty.
— CNBC’s Kate Rogers contributed reporting for this story.

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Spirit AeroSystems is weighing furloughs or layoffs of hundreds more employees if the Boeing machinists’ strike stretches beyond Nov. 25, a company spokesman told CNBC on Thursday.
More than 32,000 Boeing machinists walked off the job on Sept. 13 after turning down an earlier tentative agreement.
Spirit, which makes fuselages for Boeing’s best-selling 737 Max as well as other major parts, had already been preparing to temporarily furlough about 700 workers in its Wichita, Kansas, facilities.
Those furloughs could begin next week.

Boeing 737 fuselages on railcars at Spirit AeroSystems’ factory in Wichita, Kansas, on July 1, 2024.
Nick Oxford | Bloomberg | Getty Images

Spirit AeroSystems is weighing furloughs or layoffs of hundreds more employees if the Boeing machinists’ strike stretches beyond Nov. 25, a company spokesman told CNBC on Thursday.
Boeing’s machinists, whose strike is about to enter its sixth week, voted 64% against a newly proposed labor contract on Wednesday, extending the work stoppage that has halted production of most of Boeing’s aircraft, which is centered in the Seattle area.

Spirit, which makes fuselages for Boeing’s best-selling 737 Max as well as other major parts, had already been preparing to temporarily furlough about 700 workers in its Wichita, Kansas, facilities. Those 21-day furloughs could begin next week.
Further reductions would be in addition to those furloughs, but no decision has been made, said Spirit spokesman Joe Buccino.
Spirit’s consideration of additional furloughs demonstrates how the lengthy strike is weighing on an already-fragile aerospace supply chain. Boeing suppliers have largely hesitated to cut staff in part because they had spent years rebuilding their workforces in the wake of the Covid-19 pandemic. Airbus is also facing similar supply chain pressure.
More than 32,000 Boeing machinists in the Puget Sound area, Oregon and other locations walked off the job on Sept. 13 after turning down an earlier tentative agreement.
Boeing is in the process of acquiring Spirit, a deal it expects to close next year. Spirit has been burning through cash and, on Wednesday, reported a third-quarter net loss of $477 million, more than double a year earlier.
Boeing’s new CEO Kelly Ortberg has said getting a deal with its Seattle-area machinists and ending the strike is a top priority, and the workers’ union has said it is eager to get back to the negotiating table.

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There are more likely sellers than buyers in the global art marke1, according to The Art Basel and UBS Survey of Global Collecting.
The art market is going through a generational shift that’s created a mismatch between supply and demand.
Dealers say the diverging paths of the various generations has led to an oversupply of seven- and eight-figure Impressionist and Abstract works.

A gallery staff member looks at a painting by Andy Warhol & Jean-Michel Basquiat, Collaboration, 1982-1985, estimate £1,000,000 1,500,000 during a photo call at Christie’s auction house showcasing the highlights of 20th/21st Century Evening Sale in London, United Kingdom on October 06, 2023.
Wiktor Szymanowicz | Future Publishing | 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.
The global art market is poised for its second straight year of declines, as demand for the top trophy works wanes and a new generation of buyers favors lower-priced pieces, according to a new survey.

Auction sales in the first six months at Christie’s, Sotheby’s, Phillips and Bonhams fell 26% from 2023 and 36% from the market peak in 2021, according to The Art Basel and UBS Survey of Global Collecting. The number of wealthy collectors surveyed who plan to purchase art in the next year dropped to 43% from over half in 2023. At the same time, the number who plan to sell increased to 55% — meaning there are more likely sellers than buyers in the market.
“For the biggest spenders, there has been a moderating in their spending or slowing of their pace,” said Paul Donovan, chief economist of UBS Global Wealth Management. “They’re taking a more considered approach.”
As the art world prepares for the big auctions in New York in November and Art Basel Miami Beach in December, dealers, galleries and auctioneers are hoping for a post-election rebound.
There are some bright spots. The vast majority (91%) of wealthy collectors were “optimistic” about the global art market’s performance over the next six months, up from 77% at the end of 2023, the survey said. That’s a larger share than were optimistic about the stock market, at 88%. Only 3% of high-net-worth collectors are pessimistic about the art market’s short-term future.
The median spending on art by wealthy collectors remains stable at around $50,000 a year, according to the survey. Over three-quarters of wealthy collectors surveyed had purchased a painting in both 2023 and the first half of 2024.

Yet a broad array of measures — from buyer interest to online sales — point to another year of declines or, at best, flat sales. Dealers and auction experts say geopolitical concerns (especially in the Middle East and Ukraine) along with economic weakness in Europe and China are draining buyer confidence. Higher interest rates also raised the opportunity cost of buying art, since wealthy collectors could earn an easy 5% or more from cash and Treasurys.
Just as in the classic car market, the art market is going through a generational shift that’s created a mismatch between supply and demand. Older collectors are downsizing their collection by selling off pricey but not masterpiece-level works. Younger collectors, mainly Gen Xers and millennials, are coming into the market to replace them, but they’re buying more affordable, more modern work from galleries and art shows.
“2024 suggests that rather than creating a supply-driven boom in value as they may have done in other years, trends towards greater selling will likely primarily affect sales volumes, with collectors tending to sell from the bottom of their collections, deaccessioning more but lower-value works, and advisors reportedly focused on ‘streamlining client collections’ with the disposal of more unwanted or insignificant artworks rather than trying to capture price appreciation,” the UBS report said.
Dealers say the diverging paths of the various generations has led to an oversupply of seven- and eight-figure Impressionist and Abstract works. According to the survey, the high end of the art market, or works priced at $10 million or more, was the strongest before 2022. Now, it’s the weakest.
“Gen X, and to a lesser extent the younger generations, they’re not necessarily going to be going out and buying the most expensive artworks,” Donovan said. “They’re more engaged but they also have potentially more budget constraints. The people who have traditionally been buying the higher-price art are slowing their purchase of those artists.”
Gen Xers, in fact, have quickly become the most important generation for collectibles. According to the UBS survey, Gen X respondents had the highest average spending in 2023 — at about $578,000 — and their lead continued in 2024, at more than a third higher than millennials and more than twice those of boomers and Gen Z respondents.

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Overall, wealthy collectors are reducing their exposure to art. While art’s role as an “asset” is hotly debated, the report said the average allocation to art was 15% in 2024, down from 22% of their portfolios in 2021. Granted, some of the decline may be due to the increased value of stocks and other assets in their portfolios. Yet the drop suggests many collectors have paused their buying.
The super-wealthy have the highest exposure to art. Those worth $50 million or more have an average of 25% of their assets in art, down from 29% last year. Millionaires worth less than $5 million have about 12%.
Collectors who have been active in the market for decades have built up large collections, that will either have to be sold, passed on to family or bequeathed to museums or nonprofits. The average number of works owned by wealthy collectors worldwide is 44, according to the survey. Gen Z collectors have an average of 33 works, while collectors who have been buying for more than 20 years had an average of 110 works.
When asked about their biggest concerns for the art market, the largest number (52%) cited “barriers to the free movement of art internationally.” The second-largest concern was the “rise of legal issues in the art trade,” such as restitution cases, fakes and forgeries, as well as “ethical considerations concerning artists,” such as how they are compensated and promoted. “Art market fluctuations” ranked fourth.
The great wealth transfer, which could see tens of trillions of dollars in wealth passed from older generations to younger generations, could also usher in a great art transfer. Fully 91% of wealthy collectors had works in their collections that were inherited or gifted through a will or other bequest, according to the survey.
Despite the expectation that families will sell the works they inherit, 72% of those surveyed kept at least some of their inherited art. Those who do sell inherited art were more likely to cite a lack of display space or taxes as the reasons, rather than taste.
“There has always been an assumption that as art moves down a generation, the younger generation has different tastes,” Donovan said. “But to assume that this leads to the wholesale breakup of the collections or selling is wrong. Art is something which stimulates the emotions and there may be an association with certain pieces of art with your parents.”

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