Raphael Stevens

Starbucks CEO Kevin Johnson defended the coffee chain’s plans to hike wages for baristas, saying that the move will help the company gain market share.
The company’s forecast for its fiscal 2022 earnings was lighter than expected, reflecting inflationary pressure and investments, such as the wage hike.
“It’s better to do this investment now as customer mobility is increasing, and we believe it’s the right strategic bet to take,” Johnson said on CNBC’s “Squawk on the Street.”

Kevin Johnson, CEO, Starbucks
Scott Mlyn | CNBC

Starbucks CEO Kevin Johnson on Friday defended the coffee chain’s plans to hike wages for baristas at least twice next year, saying that the move will help the company gain market share.
Investors are less confident in the plan, sending shares down 7% in Friday morning trading. Thursday afternoon, the company reported its fiscal fourth-quarter earnings and shared its fiscal 2022 outlook, which included a weaker-than-expected forecast for its full-year earnings. Starbucks is anticipating its GAAP earnings per share to shrink by 4% and adjusted earnings per share to rise by at least 10%, below Wall Street’s expectations of 15% growth.

Stifel downgraded the stock Friday, citing inflationary pressures and investments, such as the pay hikes. Starbucks announced the plan to raise wages on Wednesday. By summer 2022, its pay floor will be $15 an hour, with an average hourly wage of $17 an hour, up from the current average of $14.
“It’s better to do this investment now as customer mobility is increasing, and we believe it’s the right strategic bet to take,” Johnson said on CNBC’s “Squawk on the Street.”
He said the coffee chain wants to make sure that it’s gaining market share as consumers leave their homes for their daily coffee. Other restaurant companies including Domino’s Pizza and McDonald’s have had to shorten hours or shutter dining rooms to cope with understaffing, putting pressure on sales and potentially losing some customers.
Johnson also said gaining market share will allow the company to increase its operating income.
Including Friday’s losses, shares of Starbucks have fallen roughly 2% this year, giving it a market value of $124 billion.

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Abortion and guns are front and center as the Supreme Court heads back to the bench in November to hear oral arguments in some of the highest-profile cases of the term.
The court will hear back-to-back arguments in two cases challenging a restrictive Texas law that bans most abortions after about six weeks of pregnancy.
Then the court will hear arguments in a case that centers on the scope of the Second Amendment’s right to carry guns in public.

A demonstrator holds up an abortion flag outside of the U.S. Supreme Court as justices hear a major abortion case on the legality of a Republican-backed Louisiana law that imposes restrictions on abortion doctors, on Capitol Hill in Washington, U.S., March 4, 2020.
Tom Brenner | Reuters

Abortion and guns are front and center as the Supreme Court heads back to the bench in November to hear oral arguments in some of the highest-profile cases of the term.
On Monday, the justices will hear back-to-back arguments in two cases, Whole Woman’s Health v. Jackson and United States v. Texas, challenging a restrictive Texas law that bans most abortions after about six weeks of pregnancy.

Two days later, the court will hear arguments in New York State Rifle & Pistol Association v. Bruen, a case that centers on the Second Amendment’s protections of the right to carry guns in public.
The cases, which deal with two of the most fraught and polarizing topics in American politics, will be handled by a court that had already stoked furious backlash and accusations of politicization even before its latest term began. Experts say the court’s conservative shift during the Trump administration may be part of the reason some of these cases are being heard in the first place.
Here’s what to know:

Abortion

The court on Monday will consider questions about the structure of the Texas law, S.B. 8, rather than grapple with the legal precedent for abortion — including Roe v. Wade and Planned Parenthood v. Casey — that the state is accused of violating.

United States Capitol Police in riot gear stand between Women rights activists and anti-abortion activist, as they gather in front of the supreme court after a rally at freedom plaza for the annual Women’s March October 2, 2021 in Washington, DC.
Tasos Katopodis | Getty Images

S.B. 8 was signed by Republican Gov. Greg Abbott in May, and it went into effect in September. It bans nearly all abortions in Texas by outlawing the procedure after the detection of a fetal heartbeat, which occurs as early as the sixth week of pregnancy.

Rather than task state officials with enforcing the six-week ban, S.B. 8 delegates that power to private citizens, who are empowered to sue, for at least $10,000, anyone who “aids or abets” an abortion.
Critics call that enforcement mechanism a loophole, intended to avoid responsibility and judicial review. The Supreme Court is hearing oral arguments against the law from the Department of Justice and from a group of abortion providers, both of whom filed legal challenges against Texas officials.
Texas argued that since the abortion law is not enforced by the state, they are not the ones who should defend it in court. “No state executive official actually enforces [the law],” Texas wrote Wednesday in a 93-page brief to the high court, “making the injunction an improper attempt to enjoin a law rather than a person.”
The Justice Department wrote in its own court brief that “other states are already regarding S.B. 8 as a model” and that “if Texas is right, no decision of this Court is safe.”
The justices on Dec. 1 are set to hear arguments in another case, Dobbs v. Jackson Women’s Health Organization, taking direct aim at the rulings that have upheld abortion rights for decades.
Court watchers following along on Monday via livestream audio — a novelty of the coronavirus pandemic — will be listening closely for hints about how certain justices, including Chief Justice John Roberts, will approach Roe and Casey in that case and others in the near future.
“I think everyone will be watching the chief justice very closely,” said Jaime Santos, a partner in the Supreme Court and appellate litigation practice at law firm Goodwin.
“Of the conservative justices, he is most inclined to protect the principles of stare decisis” — the adherence to precedent in similar cases — “and most concerned about public perceptions of the Court as a fair and independent body,” Santos said.
The oral arguments over Texas’ law come less than two weeks after the court approved the two cases on a highly accelerated schedule. The rocket-docket proceedings could also lead the justices to issue rulings much more quickly than if the cases were moving at normal speed, Georgetown University business law professor Thomas Cooke told CNBC.

Pro-choice activists march past the U.S. Supreme Court in Washington, D.C., U.S., on Monday, Oct. 4, 2021.
Stefani Reynolds | Bloomberg | Getty Images

Abortion-rights advocates and providers in Texas asked the Supreme Court in late August to temporarily block S.B. 8 before it went into effect Sept. 1 at midnight. But the court did not respond until hours after the law took hold.
In a late-night ruling, a bare majority of five justices — including all three who were appointed by former President Donald Trump — voted to deny the advocates’ emergency request, largely on procedural grounds. Roberts sided with the court’s three liberals, writing in a dissent that “the statutory scheme before the court is not only unusual, but unprecedented.”
As a result of the 5-4 ruling, abortion providers say, hundreds of patients in Texas have been denied care, while clinics in neighboring states have been overwhelmed.
Critics, including President Joe Biden, fumed. The Supreme Court’s approval rating sank to a new low, and calls to reform the high court — already a topic of study in the Biden administration — grew even louder.
In quick succession, multiple justices, including Samuel Alito, Clarence Thomas and Amy Coney Barrett, spoke out in defense of the court. “This court is not comprised of a bunch of partisan hacks,” Barrett reportedly said in September.
That same month, the abortion providers whose request had been denied filed another petition to the high court. This time, they asked the justices to quickly take up their case challenging the law, even though litigation in the 5th Circuit Court of Appeals was still pending.
Separately, the DOJ sued Texas in federal court, winning an injunction that was then suspended by an appeals court. The agency then approached the Supreme Court, asking it to block the Texas law by vacating the lower court’s decision to reinstate the abortion ban.
The Supreme Court in late October agreed to hear both cases on the expedited schedule.
Two other cases originally set for argument on Nov. 1, Ramirez v. Collier and Shinn v. Ramirez, were rescheduled for later in the term.

Guns

Wednesday’s arguments center on a century-old New York law, which requires some applicants to demonstrate “proper cause” to receive licenses to carry a concealed handgun in public.

Tom King, head of the New York State Rifle and Pistol Association (NYSRPA), and a challenger in a case being heard by the U.S. Supreme Court with regards to the right to carry handguns in public, poses at the NYSRPA office in East Greenbush, New York, U.S. October 20, 2021.
Cindy Schultz | Reuters

The case before the Supreme Court stems from a lawsuit brought in 2018 by the New York State Rifle & Pistol Association and Robert Nash and Brandon Koch.
Nash and Koch are New York residents whose applications to carry guns in public for self-defense reasons had been denied. The licensing officer who denied their requests said they “did not demonstrate a special need for self-defense that distinguished [them] from the general public.”
The petition for the Supreme Court to review the case argues that a lower court’s ruling upholding the New York law was “untenable.”
In a brief in July, petitioners argued that the language of the Second Amendment — securing “the right of the people to keep and bear Arms” — refers to two separate rights. To “keep” arms is to be able to own them, while to “bear” arms is to be able to carry them, they argued.
New York Attorney General Letitia James had argued in February that the Supreme Court should not take up the case.
“The law is consistent with the historical scope of the Second Amendment and directly advances New York’s compelling interests in public safety and crime prevention,” James wrote.
The most recent major Supreme Court decisions on guns came more than a decade earlier in District of Columbia v. Heller, when the court held that the Second Amendment protects the individual right to carry a gun for self-defense inside the home. 
Last year, the court declined to issue a substantial ruling in another case about gun regulations in New York, which has some of the strictest such rules in the country. Justice Brett Kavanaugh, Trump’s second appointee, urged his colleagues to hear another Second Amendment case “soon.”

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Small satellite builder and operator Terran Orbital is preparing to go public.
Terran is merging with special purpose acquisition company Tailwind Two Acquisition Corp., a SPAC which trades under the ticker TWNT.
The deal gives Terran a $1.8 billion equity valuation and is expected to close in the first quarter of 2022.

Terran Orbital

Small satellite builder and operator Terran Orbital is preparing to go public, making it the latest in a flurry of space companies to announce a SPAC merger this year.
Terran is merging with special purpose acquisition company Tailwind Two Acquisition Corp., a SPAC which trades under the ticker TWNT. The deal gives Terran a $1.8 billion equity valuation and is expected to close in the first quarter of 2022, resulting in Terran listing on the New York Stock Exchange under ticker LLAP.

A SPAC or special purpose acquisition company raises capital in an initial public offering and uses the proceeds to purchase a private firm and take it public.
“Terran Orbital is the largest independently-owned manufacturer of small satellites in the United States,” Terran Orbital co-founder and CEO Marc Bell said in a statement. “With our high volume, innovative manufacturing of small satellites, we will be able to deliver emerging technologies to space faster, more affordably and with greater reliability than anyone.”
Shares of Tailwind Two rose 1% in trading from its previous close of $9.89.
Headquartered in Boca Raton, Florida, the company last month announced plans to develop a 660,000 square foot manufacturing facility near Cape Canaveral, Florida. Terran says the facility will cost $300 million to build, and will be able to produce over 1,000 spacecraft per year once operational.
The deal is expected to add about $330 million in cash for Terran’s growth, with funds coming through those raised by Tailwind Two as well as a $50 million PIPE round – or private investment in public equity – which included investors AE Industrial Partners, Beach Point Capital and Lockheed Martin.

Terran also plans to build its own system of earth imagery satellites, with 96 spacecraft in orbit. The company plans to launch the first two of its satellites next year, and have the full constellation in orbit by 2026.
The company had $25 million in revenue last year, all from its satellite solutions unit, and expects that to rise to $35 million this year. The company expects to be profitable on an adjusted EBITDA basis by 2023, and projects $2.6 billion in revenue by 2026 – with $918 million coming from satellite solutions and $1.7 billion from its earth imagery business.
Terran joins a trend of space companies going public through SPAC deals, with Virgin Galactic the first of the recent generation in 2019. Several have closed and begun trading – including Astra, AST SpaceMobile, Rocket Lab, Spire Global, BlackSky, Momentus, and Redwire – with others having merger agreements in place – including Planet Labs, Virgin Orbit and Satellogic.

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“Say Yes to the Dress America.”
Photo by Dennine Dyer

“I felt like I was on top of the world. Like, I’m working on these amazing projects, with all these celebrities — and then everything stopped,” says Dyer. “And now I’m by myself, I’m not able to see my family, I’m not able to see my friends. I was scared to leave my apartment because of the fear of the unknown.” 
Now, less than two years later, she’s the CEO of her own company in a whole new field.

Virtual cooking classes led to a ‘whoa’ moment

Like many New Yorkers, Dyer, who is from a close-knit family in Brooklyn, New York, spent the next few months cooped up in her one-bedroom apartment. To stay connected, she suggested the family do virtual cooking classes. They were an instant hit. Uncles, aunts, cousins, and nephews were teaching the group of up to 14 family members how to make anything from traditional West Indian dishes to focaccia, Pad Thai, and pesto. 
When Dyer proposed that an uncle lead an ice cream–making class, it was quickly dismissed with complaints like, “It’s too much work.” But Dyer didn’t take “no” for an answer. After a quick web search, she bought the necessary ingredients and mixed them up with some ice in a Ninja blender she’d borrowed from her mother. 
It didn’t go as planned: The Ninja exploded all over her small Brooklyn kitchen. 
“I’m like, ‘Alright. It failed the first time, we’re gonna figure it out the second time.’ It was a long night. And then, like, I scooped it. I’m like, ‘Whoa, this is ice cream. I did it.'” 

Dennine making ice cream.
Grow team shoot

‘I was an intern in my own company, trying to figure it out’

Dyer was hooked. She spent the next few months researching everything she could about ice creams, sorbets, ice pops, and popsicle making. Turning to ice cream became her creative outlet. 
When she told her family she was going to make it a business, they presented her with a $1,400 check to help pay for her license and LLC. They prayed for her success via Zoom. With that seed money, plus a couple of thousand dollars in savings, Solo Scoop Creamery was born in October 2020. 

It was a long night. And then, like, I scooped it. I’m like, ‘Whoa, this is ice cream. I did it.’

Dennine Dyer
Founder, Solo Scoop Creamery

“Imagine for the past 10 years, you’ve been doing one thing, you went to school, and you learn this, and now you’re in a space where you don’t know anything. I feel like I was an intern in my own company, trying to figure it out,” she says.
“It was hours of research every night. What do I need to do? How do I figure this out? Who do I need to connect to? And the doors just started opening up.”

Getting ready ‘to compete against the big dogs’

While starting and running a business isn’t all new to Dyer, a product-based business is. 
Making artisanal ice cream profitable isn’t straightforward, either. Start-up costs are high due to expensive equipment; margins are low, unless you make the ice cream in bulk, which Dyer wants to avoid at all costs; and demand for ice cream is seasonal. Not to mention that giants including Ben and Jerry’s, Breyers, and Haagen-Dazs, as well as smaller brands such as Van Leeuwen and Ample Hills, dominate the $13.1 billion industry. 
But Dyer isn’t worried. She says building a brand is mostly about storytelling, a strength she’s drawing on from years of creating visual stories with her work as a stylist. Fun flavor combos don’t hurt, either: Her lychee and pear popsicle has been a fan favorite, and the $5 treats sell out at each event. 

Solo Scoop Creamery.
Courtesy Dennine Dyer

“The most important thing with creameries is getting into that freezer space, being able to tap into that grocery market. That’s the hardest part. I’m not ready for that yet,” she says. “My thing is artisanal. It’s convenient in your own neighborhood. I feel like when I get to that space where I have to compete against the big dogs, I’m gonna be ready.
“There’s nothing that’s gonna stop me.”

‘It’s even better to make money’

A year into Solo Scoop Creamery’s launch, Dyer has spent about $19,000 in start-up costs. Between securing a commercial kitchen, experimenting with flavors and offerings, creating a website, and making sure she reaches a loyal consumer base at borough-wide pop-ups and food markets, she’s had her hands full.
In April, she ever so slightly crossed the break-even point with $500 in profit. It was a proud moment. In September, she closed her first year in business with about $5,500 in profit.

I’m very conscious of making sure this is a real business. It’s beautiful to create, it’s even better to make money.

Dennine Dyer
Founder, Solo Scoop Creamery

While she says she has a long way to go, she’s celebrating every small win.  
“When you’re freelance, you only know how to hustle. You don’t know when your next job is coming, so you figure out how to make money stretch, and that’s what I’m doing now,” she says. “I’m very conscious of making sure this is a real business. It’s beautiful to create, it’s even better to make money.”  

Preparing for slow season with styling as a side hustle

Because ice cream is seasonal, Dyer could be facing a few tough months ahead. September was by far Solo Scoop’s slowest month yet. Her ice creams, sorbets, popsicles, and ice-pops are mainly sold at pop-ups and food markets, which are at their busiest during the summer. 
For now, Dyer is supplementing some of the loss in income by picking up occasional styling jobs as a seasonal side hustle. She’s determined to see Solo Scoop through to when the weather starts to heat up again — and demand along with it. 

Dennine with family.
Courtesy Dennine Dyer

Dyer has found a close-knit community of small batch creameries to lean on when the going gets tough. Her parents and extended family are supportive, too.
“When I decided to pivot into ice cream, my parents were like, ‘You’ve proven yourself this far, you’re going to take the risk, you’re not going to listen to anyone else, and we’re just going to support you and encourage you,'” she says. “And I think this is what makes it really special is that I know I have their support no matter what.” 
The article “How a 32-Year-Old Stylist With a Billboard in Times Square Became an Ice Cream CEO During Lockdown” originally published on Grow (CNBC + Acorns). More

Activist group Jana Partners is hoping to tap into what has been a buzzy market for digital retailers that is driving valuations higher.
Investors have largely favored tech-focused names promising faster growth over traditional department store operators.
Activist Jana Partners believes Macy’s e-commerce business could snag a market capitalization of at least $15 billion.

Macy’s Herald Square Flagship Department Store in Midtown Manhattan New York.
Nicolas Economou | NurPhoto | Getty Images

An activist investor is pressuring Macy’s to split its digital operations from its stores in a bid to unlock value at the 162-year-old department store chain.
And while it might be an attractive move in the short term, some experts are raising red flags about the proposal’s long-term logic.

Activist shareholder Jana Partners is hoping to tap into what has been a buzzy market for digital retailers that is driving valuations higher. Investors have largely favored tech-focused names since the companies promise faster growth over traditional department store operators. The former have seen sales accelerate as consumers buy more goods online. E-commerce savvy retailers, such as Mytheresa and Zalando, are also considered asset-light because they have few to no stores. This allows management to invest in other areas of the business, like marketing.
“The market is willing to pay a big multiple on an e-commerce-oriented business,” said Michael Kollender, head of consumer and retail investment banking at Stifel. “So how do we unlock that value?”
A separation at Macy’s could mimic a similar move earlier this year by the luxury department store chain Saks Fifth Avenue. Run by President Larry Bruce, Saks stores are still entirely owned by HBC. Saks’ digital unit, however, received an investment from the venture capital firm Insight Partners, which now has a minority stake in the business. Marc Metrick, formerly chief executive officer of the combined Saks businesses, leads the digital side.
Although the two businesses are separate financially, customers likely don’t know anything has changed because their experience is seamless.

Jana eyes sky-high valuation

The thinking at Jana, according to a recent investor presentation, is that Macy’s e-commerce business could snag a market capitalization of at least $15 billion, or roughly twice what the combined company was worth before news started swirling about the potential break-up. Macy’s stock has rallied roughly 18% since Bloomberg first reported on Oct. 6 that Jana was calling for a digital spinoff.

Pushing that valuation higher is the fact that Macy’s e-commerce business is still growing, despite its entire revenue base shrinking. Digital sales grew 7.7% in 2019 and then by 23.7% in 2020. Overall, Macy’s revenue declined by 1.6% and 29% during those same years, respectively.
Rapid e-commerce gains have propelled the multiples of other online retailers, too. Fashion giant Revolve Group is trading at 6.5-times expected 2021 revenue. Farfetch, another online luxury fashion platform, fetches a multiple of 5.9-times. While Macy’s is trading at a multiple of 0.3-times expected 2021 sales.
And just a few months after its separation was official, Saks’ digital arm is reportedly aiming to go public with a valuation of $6 billion, or roughly six-times revenue. It had a $2 billion valuation as recent as March.
A representative from HBC declined to comment.

But one calls it ‘insane financial engineering’

But some experts still don’t think the structure makes much sense.
“It’s insane financial engineering,” said David Shiffman, co-head of the global consumer retail group for Solomon Partners. “It’s impossible to separate the two. I’m not saying someone’s not going to try, and I’m not saying that someone’s not going to pay a lot of money for that. But at some point, it doesn’t work.”
One retail entity can’t be making all the money while the other is holding onto all the assets, he explained.

A shopper exits Saks Fifth Avenue in New York.
Scott Eells | Bloomberg | Getty Images

Saks has arranged its businesses so that the stores segment receives affiliate fees that account for online sales and other benefits that having a physical presence can drive. The Saks.com entity, meantime, has used its extra capital to invest in website upgrades and amplified marketing to consumers.
“It completely goes against everything we’ve learned,” said Steve Dennis, a retail strategist and former senior vice president at Neiman Marcus. “It’s all about these nutty valuations that are being ascribed to online-only businesses.”
Dennis said brands such as Warby Parker and Allbirds, which initially started only on the internet, are now plotting massive store expansions. The companies say having more shops will help raise awareness for brands and boost profitable sales.
“There’s no question that if you were Saks.com, an independent organization, you would need to have stores,” Dennis said.
Furthermore, Dennis predicts there could be a slowdown coming soon for digital fashion players, which have benefited during the pandemic from consumers stuck at home and surfing the web from the couch. Wealthier consumers have had more money in their bank accounts, but that could change as they shift spending back to travel, dining out and other experiences. That wouldn’t bode well for the standalone e-commerce operations, he said.
“It’s hard not to see how online fashion doesn’t have significant headwinds going into next year,” Dennis said. “You’ve got this dead cat bounce in the numbers and an unnatural amount of e-commerce business.”
“That’s not to say that e-commerce isn’t going to continue to grow. But the growth rates are going to moderate a lot,” he added.

Macy’s touts ‘retail ecosystem’

Macy’s declined to comment, ahead of its fiscal third-quarter earnings report. In August, though, Chief Executive Jeff Gennette touted on an earnings conference call that the department store chain was running a “fully integrated business,” between its roughly 800 stores — including Bloomingdale’s — and website.
“Our commitment to delivering a dynamic, seamless omnichannel experience across a customer shopping journey has never been stronger,” he said. “To me, it is clear that a comprehensive retail ecosystem with physical stores in the best malls and the most productive off-mall locations integrated with a best-in-class e-commerce offering is a powerful combination.”
Macy’s has also said previously that customers who visit both its stores and website spend two-and-a-half to three and-a-half times as much money compared with a customer who only purchases from one channel. And the company has said it sees a drop off in e-commerce sales in regions where it closes a department store.
Stores also serve other purposes, such as acting as a mini-fulfillment center for online orders. Macy’s said 24% of its digital sales in the fiscal second quarter were fulfilled by stores.
So, while a potential separation could offer a near-term boost Macy’s share price, it could end up causing more headaches later.
“This raises an enormous number of operational questions in terms of how loyalty schemes, branding, product development, marketing, and customer communication would function,” said GlobalData Retail Managing Director Neil Saunders. “There is a huge potential for muddle and confusion, especially if the separate companies want to diverge over time.”

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A more than 100-year-old movie theater chain, AMC Entertainment, has been on a wild ride this year after losing $4.6 billion in revenue in 2020. The coronavirus pandemic pushed the company to the brink of bankruptcy, but today its market cap is more than $18 billion thanks, in part, to a group of 4.1 million retail investors who now own 80% of the company.
Some of these retail investors call themselves “apes,” a play on Wall Street referring to them as “dumb money.” In a digital uprising on Reddit, Twitter and YouTube, they have jumped into the stock giving AMC a billion-dollar lifeline.  

The company’s CEO, Adam Aron, is one of the most interesting characters in this whole drama because he has leaned into AMC’s “meme stock status.”  
Aron communicates with retail investors directly on social media and he’s incorporating their ideas for the company, like accepting crypto at AMC theaters, into his strategy. The CEO is known for turning around struggling companies and he’s prepared for the fight to save this one.
“We have a massive valuation of our company right now in market cap, and we need to grow into that valuation,” Aron said. “And I think as the next six, 18, 30 months play out, you’ll see AMC branching out and doing more interesting things. And that will be the definition of success.”
CNBC’s Melissa Lee interviewed Aron about his plans to revive the company, as well as some of the ape’s biggest influencers — Trey Collins, known as Trey’s Trades, and Matt Kohrs, to hear why the apes think Wall Street is rigged, and what they are trying to do about it.
Watch the video for the full story.

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