Raphael Stevens

Boeing’s deliveries are down year over year through September.
The company handed over 27 of its bestselling 737 Max aircraft last month.
A machinist strike is now in its fourth week, halting work at Boeing’s factories in the Seattle area.

Boeing 737s on the ground in Renton, Washington.
Leslie Josephs | CNBC

Boeing delivered 33 airplanes in September, six more than during the same period a year earlier, as the company and its customers keep an eye on the impact of a machinist strike, now in its fourth week.
Through September, Boeing has handed over 291 aircraft, well below the 371 it had delivered in the first nine months of 2023. Rival Airbus has delivered 447 airplanes this year through August,

Last month’s deliveries were led by 27 of Boeing’s bestselling 737 Max aircraft to customers including United Airlines, which received five, and Ryanair and Southwest Airlines, which each each took three. Deliveries are key to Boeing. It’s already burned through more than $8 billion this year since customers pay the bulk of the price when they receive the airplane.
The aircraft are produced in Renton, Washington, one of the factories where machinists walked off the job on Sept. 13 after workers overwhelmingly voted down a tentative agreement the company had reached with their union. The two sides are back at the negotiating table this week, though the union dismissed a sweetened offer from Boeing last month.

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All but 10 of the 27 Maxes were handed over before the strike began, according to Jefferies aerospace analyst Sheila Kahyaoglu. In a note Monday, she forecast that Boeing will be producing 25 Max aircraft per month if the strike ends in October but the company’s planned ramp-up to 38 Maxes a month will be delayed by a year.
Boeing is scheduled to report quarterly results on Oct. 23, when it will detail the financial impact of the strike.
September deliveries also included four 787 Dreamliner planes, which are made in Boeing’s nonunion factory in South Carolina. For the month, Boeing logged 66 gross orders for new aircraft.

Boeing has spent much of this year dealing with fallout after a near catastrophe on one of its new 737 Max 9s in January, when a door plug that was missing key bolts blew out.
The company’s backlog is 5,456 aircraft.

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PepsiCo reported fiscal third-quarter earnings that beat Wall Street’s estimates, but its revenue was weaker than expected.
The food and beverage giant lowered its full-year outlook for organic revenue.
Recalls related to its Quaker Foods North America business continued to weigh on its sales.

A truck with Pepsi logo on a semitrailer is seen at Interstate 95 highway in Maryland, United States, on October 21, 2022.
Beata Zawrzel | Nurphoto | Getty Images

PepsiCo on Tuesday lowered its full-year outlook for organic revenue after its second straight quarter of weaker-than-expected sales.
The repercussions of the Quaker Foods North America recalls, weakening demand in the U.S. and business disruptions in some international markets weighed on the company’s performance in the quarter, CEO Ramon Laguarta said in a statement.

For 2024, Pepsi now expects a low-single-digit rise in organic revenue, down from its prior outlook of 4% growth. The company reiterated its forecast for an increase of at least 8% for its core constant currency earnings per share.
Shares of the company fell less than 1% in premarket trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: $2.31 adjusted vs. $2.29 expected
Revenue: $23.32 billion vs. $23.76 billion expected

Pepsi reported third-quarter net income attributable to the company of $2.93 billion, or $2.13 per share, down from $3.09 billion, or $2.24 per share, a year earlier.
Excluding items, the company earned $2.31 per share.

Net sales fell 0.6% to $23.32 billion. Organic revenue, which strips out acquisitions, divestitures and currency changes, rose 1.3% in the quarter.
Demand for Pepsi’s snacks and drinks dropped this quarter. The company reported that volume for both its food and beverage divisions declined 2%. Last quarter, executives said shoppers across all income levels are changing their behavior.
In particular, weak demand in North America weighed on Pepsi’s overall volume. Shoppers in the U.S. have grown more cautious, snacking less and making fewer purchases at convenience stores. And Mexican sales slowed, which Laguarta attributed in part to the country’s election in June.
Quaker Foods North America reported the steepest drop-off in volume, with a 13% slide. The company issued its first recall for potential salmonella contamination in December, then widened it in January. In June, Pepsi officially closed a plant tied to the recalls, although production had already stopped.
The consequences of the recalls are now diminishing, Laguarta and Pepsi CFO Jamie Caulfield said in prepared remarks.
Frito-Lay North America reported a 1.5% decline in volume. The company has been trying to offer more value to consumers and improve in-store availability with its snacks, which include Cheetos, SunChips and Stacy’s pita chips. While the division’s volume is improving sequentially, the broader category has slowed down compared with historical performance.
“After outperforming packaged food categories in previous years, salty and savory snacks have underperformed year-to-date,” Pepsi executives said in their prepared remarks.
This fall and winter, Pepsi plans to invest more in Doritos and Tostitos, helped by the football season. The company is offering bonus packs for Tostitos and Ruffles that offer 20% more chips.
Pepsi is also broadening its portfolio in the hopes of appealing to more health-conscious consumers. A week ago, the company announced its purchase of Siete Foods for $1.2 billion. The brand makes Mexican-American food, usually with accommodations for different dietary concerns.
Volume for Pepsi’s North American beverage business fell 3%. Brands like Gatorade and Pepsi saw revenue growth in the quarter, but the energy drink category — including Pepsi’s Rockstar — has seen demand weaken as traffic to convenience stores falls.
“I think it’s part of the economic cycle that we’re in, and that will reverse itself in the future, once consumers feel better,” Laguarta told analysts on the company’s conference call.
The Latin America and Africa, Middle East and South Asia markets also reported shrinking volume for both food and drinks.

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Rolls-Royce has opened its first U.S. “Private Office,” a secret VIP design studio for ultra-wealthy clients who want highly personalized cars.
It’s central to the fabled British automaker’s new strategy of growing sales and profits from selling more customized, higher-priced vehicles rather than boosting production.
Once select customers order a car from a dealer, they can go to the Private Office to work with a designer to create an entirely personalized car.

Rolls-Royce has opened its first U.S. “Private Office,” a secret VIP design studio for ultra-wealthy clients who want highly personalized cars.
The Private Office, in Manhattan’s trendy Meatpacking District, is central to the fabled British automaker’s new strategy of growing sales and profits from selling more customized, higher-priced vehicles rather than boosting production. Rolls-Royce produced 6,032 cars last year, less than half the production of Ferrari, yet continues to generate strong profit growth for its parent company BMW.

While Rolls-Royce customers have been customizing their rides for decades, the Private Office brings the concept of a personalized Rolls to a whole new level. Once select customers order a car from a dealer, they can go to the Private Office to work with a designer to create an entirely personalized car — from special paint colors to their favorite fabrics, woods, lighting schemes and other materials.
“They may want the exterior of their Rolls-Royce to match the color of their dog’s eyes,” said Rolls-Royce CEO Chris Brownridge. “They may want to have interior panels in the car with the mother-of-pearl from their private collection. We can bring those sorts of requests to life through having direct access to the team. And the possibilities really are endless.”

Rolls-Royce CEO Chris Brownridge.

Rolls-Royce calls its top level of personalization the “Bespoke” program. Creating a Bespoke Rolls can add hundreds of thousands of dollars to the sticker price, which for a Rolls-Royce Phantom is just under $500,000, bringing the total sale price of some cars to more than $1 million.
The Private Office is reserved for the most complicated — and expensive — Bespoke projects. It’s not a dealership and there are no actual cars displayed. To get into the Private Office, customers press a black security screen outside an unmarked building and take a secure elevator to the top floor.
With its sleek black kitchen, low sofas, a dining table, outdoor terrace, and turntable with stacks of classic rock and jazz vinyl records, the Private Office looks more like a billionaire’s pied-a-terre than a car showroom. The only hint that it’s a Rolls-Royce facility is a row of shelves along the back wall displaying samples of paint colors, threads, leathers, metals and a row of the famous “Spirit of Ecstasy” hood ornaments in different finishes.

The Rolls-Royce Phantom Syntopia.
Courtesy: Rolls-Royce

The New York Private Office is the company’s third worldwide, following Dubai, United Arab Emirates, which opened in 2022, and Shanghai in 2023. The company is about to open its fourth, in Seoul, Korea.
The idea, Brownridge says, is to bring the expertise and design capability of its Goodwood, U.K., factory to clients around the world. That’s especially important as client requests become more unusual and complex.
One Rolls-Royce client wanted a car inspired by flowers. The Rolls team created an extended-wheelbase Phantom with a headliner covered with more than 1 million embroidered roses. Another client who loves Hawaii and has a favorite rocking chair made of rare Koa wood wanted a Koa-themed Rolls. Since Koa wood is protected in Hawaii, only dead or naturally fallen Koa trees can be harvested. Rolls spent three years waiting and hunting for the right tree, then built a Koa Phantom, with the wood used on the dashboard, center console and doors. The company even made a matching picnic hamper and table. The whole package took more than 500 hours to create.

Interior of the custom Rolls-Royce Koa Phantom.
Courtesy: Rolls-Royce

“A lot of these clients would never, ever sell their cars,” Brownridge said. “It’s so personal and it means to much to them.”
To keep up with the surging demand for custom cars, Rolls-Royce is also expanding its Bespoke workshops in Goodwood. Brownridge said the goal isn’t to produce more cars, but to produce higher-value, more customized cars.
“As our commissions have become more sophisticated, our business has become more successful,” Brownridge said. “Our mission is really to create value for our shareholder, to create value for our retail partners, but most importantly, to create value for our clients. Because when you produce a masterpiece for them, it means so much more than just a motorcar. I often say that the fact that they have four wheels is almost a nice-to-have, because they really are a work of art.”
Brownridge said when customers are building their special Rolls-Royces, they not only visit the factory in Goodwood, but they also get to know the paint shop specialists, the woodworkers, the embroidery experts and other members of the team.
“Every single client that I’ve met, they all say, what makes Rolls Royce Special is that they feel that they are part of a family,” he said. “They’re not customers to us, they’re part of Rolls Royce. Many of our clients will come to Goodwood, and they will know the people that are making their cars. It’s not just the personal connection to the motorcar. It’s the personal connection to the whole team who are producing these magnificent things.”

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General Motors will attempt to address investor concerns during a capital markets day Tuesday at GM’s vehicle and battery plants in Spring Hill, Tennessee.
The automaker is facing slowing consumer demand and changing market conditions.
Wall Street analysts are eager to hear about electric vehicles and hybrids, the company’s embattled Cruise autonomous vehicle unit and its China restructuring.

Mary Barra, chair and chief executive officer of General Motors Co., during a news conference at the Hudson’s building in Detroit, Michigan, US, on Monday, April 15, 2024.
Jeff Kowalsky | Bloomberg | Getty Images

DETROIT — A lot has changed since General Motors’ last investor day two years ago, but one thing that hasn’t is the automaker’s ability to outperform Wall Street’s expectations — doing so every quarter since then.
GM CEO Mary Barra will attempt to convince investors during a capital markets day Tuesday that she and her executive team can continue to do that despite slowing consumer demand and changing market conditions.

Wall Street analysts are eager to hear about plans for electric vehicles and hybrids, the company’s embattled Cruise autonomous vehicle unit, its China restructuring and GM’s near-term plans for free cash flow, lowering costs and rewarding investors.
Many of them are expecting GM will be more grounded in its near-term targets and messaging than it has in its most recent investor days, including three years ago, when Barra and others laid out ambitious long-term financial targets by to double the automaker’s revenue to about $280 billion by 2030.
“It’s clear we enter a very different industry environment vs. three years ago,” Barclays analyst Dan Levy said last week in an investor note. “Accordingly, whereas the theme for GM three years ago was “Growth Motors,” we believe the theme today is “praGMatic Motors.”
The company is expected to tout its “flexibility” when it comes to producing EVs, as well as vehicles with traditional internal combustion engines, commonly called ICE, at the event. To underscore that effort, the event is taking place GM’s vehicle assembly and Ultium EV battery plants in Tennessee. Spring Hill Assembly produces both types of vehicles.
Barra and other executives have stressed such a dual strategy since lowering or withdrawing nearly all of the company’s EV targets amid slower than expected adoption of electric vehicles.

“We are making the most of every opportunity we have in ICE and in EV and leveraging our core strengths,” Barra said during the company’s second-quarter investor call in July. “We’re being flexible and opportunistic, but also importantly, we’re being very disciplined.”

Low expectations

Despite this being the first GM investor day since November 2022, several Wall Street analysts have low expectations.
“Net, while we remain favorable on the stock, we don’t see a particularly attractive tactical risk/reward into the event,” UBS analyst Joseph Spak said in a Sept. 23 investor note.
But as Wolfe analyst Shreyas Pati points out, “relatively low” expectations could provide “room for GM’s message to be more constructive-than-anticipated.”

Mary Barra, CEO, GM at the NYSE, November 17, 2022.
Source: NYSE

Heading into the event, GM’s stock has been under pressure as of late despite billions of dollars in buybacks. While shares are up roughly 28% for the year, they’re off 9% from a high of more than $50 reached in July and down about 8% from the beginning of last month.
The stock also saw a 5.4% drop in one day last month, its second-largest daily decline this year, due to Wall Street analyst downgrades of price adjustments.
Morgan Stanley and Bernstein recently downgraded GM and cut price targets, citing challenging market conditions and low upside potential, among other things.
“We want to wait and see which updates GM shares with the market and downgrade the stock to Market-Perform,” Bernstein analyst Daniel Roeska wrote in a Sept. 23 investor note.
GM’s stock remains overweight with a price target of $54.64 a share, according to average estimates of 29 analysts compiled by FactSet.

Ongoing issues

Investors aren’t only concerned about peak profits potentially being in the rearview mirror for automakers such as GM.
They’re also worried about the company’s restructuring in China. That change was announced with little to no information of what should be expected, other than the company saying it was necessary after GM’s business in the country has been in a yearslong freefall.
The operations, which recorded $2 billion in equity income in 2018, posted a loss of $104 million during the second quarter — its second consecutive quarterly loss after hitting a roughly 20-year low in 2023.
China has been inundated with domestic automakers such as BYD that have caused a pricing war, especially when it comes to EVs.

GM’s 2024 Chevrolet Equinox EV (right) next to a gas-powered Chevy Equinox on May 16, 2024 in Detroit.
Michael Wayland / CNBC

In GM’s home market, investors are seeking updates to its plans for EVs as well as hybrids. Unlike crosstown rival Ford, which has amped up its focus on hybrids, GM hasn’t offered a hybrid option other than a Corvette for many years.
“The event will likely provide a glimpse into GM’s efforts to balance the slowdown in EV adoption with its Future business plan, which we still expect will be centered on electrification, but with a greater emphasis on hybrid technology,” BofA Securities analyst John Murphy said in a Sept. 20 note.
GM has maintained expectations that its EVs will be profitable on a production, or contribution-margin basis, once it reaches output of 200,000 units by the fourth quarter.
Regarding Cruise, Wall Street is particularly interested in the company’s future funding plans for the embattled autonomous vehicle unit.
After ceasing all on-road operations last year and ousting leaders following an accident involving a pedestrian in October, Cruise has slowly been attempting to relaunch operations, but it remains far from it was before the incident. More

Walmart-owned Sam’s Club is opening a club in the Dallas area that offers a glimpse of its future.
The club will have no checkout lanes, will display online-only items and will have a larger area for fulfilling e-commerce orders for curbside pickup and home delivery.
Sam’s Club has been trying to differentiate itself from Costco and other rivals with technology.

Sam’s Club is opening a store in the Dallas area that will require customers to go all digital. Shoppers will use a smartphone app to scan and pay for their own purchases rather than standing in a checkout lane.
Sam’s Club

GRAPEVINE, Texas — When shoppers walk into Sam’s Club’s newest store, they’ll soon see a shiny blue Mercedes-Benz SUV, a sectional sofa and zero checkout lanes.
Welcome to the Walmart-owned membership club’s first all-digital store — and a preview of what could be its future.

Inside the club, which will open in mid-October, customers will have to use a smartphone app called Scan & Go to ring up their purchases as they walk through the aisles. In the area typically reserved for cash registers, the company will display online-only items as wide-ranging as a 12-foot Christmas tree and a five-carat lab-grown diamond. Members can scan QR codes and go straight to the items in the app.
Store workers will have about four times more space for preparing customers’ e-commerce orders for curbside pickup and home delivery, according to Sam’s Club executives.
“It’s kind of the physical manifestation of a journey we’re trying to go on as a company,” Sam’s Club CEO Chris Nicholas said, as he showed off the club before its grand opening.

Online-only items will be on display in Sam’s Club’s new location in the Dallas area. The items will range from a 12-foot Christmas tree to a sectional for the living room. Each will have an QR code nearby where shoppers can scan for more information or to make a purchase.
Sam’s Club

Since Walmart founder Sam Walton opened the first Sam’s Club in 1983, the membership-based club has become the more tech-savvy arm of its retail-behemoth parent. The club has spun out several key innovations that its parent company now uses, too, such as Scan & Go. It’s also used digital offerings to try to outmatch its largest rival, Costco.
Sam’s Club is doubling down on that strategy with the Dallas-area store, which is reopening nearly two years after it was damaged by a tornado.

Nicholas said upon its reopening, the location will become a testing ground for Sam’s Club’s newest features and emerging technology.
“The idea is that over time, we will be 100% digital engagement as a business, and you’ve got to prove that things work before you scale them,” he said.
He added that he hopes “it feels like what it’s like to shop in the future.”

Rivaling Costco

Costco has long been “the king of the warehouse club channel,” said Peter Keith, senior research analyst at Piper Sandler. But Sam’s Club has added features to “upgrade the shopping experiences,” he said, such as introducing a permanent station in some of the clubs where a chef makes sushi rolls in front of customers.
And notably, Sam’s Club has differentiated iself by embracing e-commerce offerings and appealing to customers who are seeking easier and faster ways to shop, such as Scan & Go.
“It really eliminates the most painful part of these membership clubs, which is the long lines to check out,” he said.
Sam’s Club and Costco have roughly the same number of U.S. clubs, but Costco pulls in about twice as much annual revenue. Net sales for Sam’s Club totaled $86.2 billion in its most recent fiscal year, compared with $176.63 billion for Costco’s U.S. clubs.
Sam’s Club has made several other key moves to catch up to Costco: It consolidated its private labels from more than 20 different brands into a single one: Member’s Mark. It cut back on the number of unique items it sells, so it focuses on the proven and popular ones. And it recently announced it would raise average hourly wages for nearly 100,000 of its workers ahead of the holiday season.
Sam’s Club also opened The Clubhouse in August, an approximately 37,000-square-foot office building across from the retailer’s headquarters in Bentonville, Arkansas. It includes workshop rooms and tools such as white boards, arts and crafts supplies, and cardboard models that will help the retailer to come up with new ideas, test products and collaborate on projects with cross-department teams.
And it’s in the middle of an aggressive expansion, with plans to open about 30 new clubs over a five-year period.
Sam’s Club’s comparable sales in the U.S., a metric that includes sales from stores and clubs open for the previous 12 months, grew 5.2% in the most recent quarter, which ended July 31, compared with the year-ago period. That included 22% year-over-year e-commerce growth.

The Dallas-area club will have 6,000 square feet to fulfill e-commerce orders — a jump from an average of about 1,500 square feet at other clubs. It will also have cooling plates where employees can store totes of frozen and chilled items.
Sam’s Club

Nicholas said the new clubs, including the one that’s opening in Grapevine, will be designed to better handle higher volume, too.
For example, the club’s cafe will include a pizza robot that will be able to make as many as 100 pizzas in an hour. It will also test a new system that delivers food orders to an assigned cubby after customers order through Scan & Go.

Digital age

Like its parent company, Walmart, Sam’s Club has been attracting customers across a wider range of incomes and ages as it focuses on offering convenient ways to shop. About half of the new members that joined Sam’s Club during the most recent quarter were millennials or Gen Z, according to the company.
The company said 1 in 3 members currently use Scan & Go when shopping in clubs. It has recently rolled out new exit technology that automatically checks customers’ shopping carts and allows them to exit the club without an employee looking at a receipt or auditing their cart. Shoppers walk under an archway that’s powered by computer vision and artificial intelligence. That system functions similarly to Amazon’s Just Walk Out technology that’s begun to take hold at events stadiums in addition to some of the e-commerce giant’s physical storefronts.
But Nicholas, the Sam’s Club CEO, acknowledged some shoppers may be reluctant to embrace new technology or a new routine.
Tiffany Zuniga, a mom and a Lyft driver who lives in the Dallas area, said she’s eager to return to Sam’s Club, but is a little wary of the new technology. Zuniga said she used to turn to the club for easy family dinners or supplies for church events, but switched to Costco when Sam’s Club was closed because of tornado damage.
She’s never used Scan & Go and said she hopes the new technology doesn’t come at the expense of customer service.
“Sometimes it can get a little dicey if you scan the wrong thing or need help,” she said. “Hopefully, they will have enough staff on hand.”
As construction crews finished up work on Sam’s Club in Grapevine, the retailer put up signs at the nearby Sam’s Club gas station and car wash to alert customers to the return of the club and encourage them to download the Scan & Go app.
And when customers walk into the newly reopened club, employees will be ready to help them download the app or to tag along on a shopping trip if they need help learning how to use it, the company said.
Nicholas said there will be no change to the number of store workers in Grapevine, but some will have new roles. More