Raphael Stevens

Boeing reported a narrower loss and lower cash burn than analysts feared.
Boeing’s departing CEO Dave Calhoun says the company’s 737 Max supply chain is starting to stabilize.
The company is under increased scrutiny from the FAA after a door panel blew out of one of its Max 9 jetliners in January.

An aerial photo shows Boeing 737 Max airplanes parked on the tarmac at the Boeing Factory in Renton, Washington, on March 21, 2019.
Lindsey Wasson | Reuters

Boeing on Wednesday reported a narrower-than-expected loss and lower cash burn than anticipated, and said it is stabilizing its supply chain as it grapples with the latest 737 Max safety crisis.
Boeing burned $3.9 billion in the first quarter, beating a previous company forecast and Wall Street analysts’ expectations for cash burn of as much as $4.5 billion for the three-month period.

“Near term, yes, we are in a tough moment,” CEO Dave Calhoun, who announced in March that he would step down by year-end, said in a note to employees on Wednesday. “Lower deliveries can be difficult for our customers and for our financials. But safety and quality must and will come above all else. We are absolutely committed to doing everything we can to make certain our regulators, customers, employees, and the flying public are 100 percent confident in Boeing.”
Boeing has been hamstrung in ramping up production, especially of its best-selling 737 Max planes, and instead has lowered output. After the door plug blew out on the Alaska Airlines Max 9 on Jan. 5, the Federal Aviation Administration has barred Boeing from increasing output. The FAA also said it found numerous issues of noncompliance along Boeing’s supply chain.
Calhoun said the company has lowered production to below 38 Max jets per month. Deliveries have slowed sharply this quarter.
Boeing’s all-important commercial airplane unit revenue dropped 31% to $4.65 billion in the quarter compared with last year, with negative margins widening to 24.6% from 9.2%.
“We are using this period, as difficult as it is, to deliberately slow the system, stabilize the supply chain, fortify our factory operations and position Boeing to deliver with the predictability and quality our customers demand for the long term,” Calhoun said. “As these efforts begin to take hold, we’re seeing early signs of more predictable, stable and efficient cycle times in our 737 factory, and expect this will continue to slowly improve.”

Boeing lost $355 million in the first quarter, or 56 cents a share, down from a $425 million, or 69 cent per-share, loss a year earlier. Excluding one-time items, including pension costs, Boeing lost $388 million, or $1.13 a share.
Revenue fell 8% to $16.57 million, slightly ahead of analysts’ estimates.
Here’s what the company reported compared with what Wall Street analysts surveyed by LSEG were expecting:

Loss per share: $1.13 adjusted, vs. estimated adjusted loss $1.76
Revenue: $16.57 billion, vs. estimated $16.23 billion

Boeing executives will hold a call with analysts at 10:30 a.m. ET, and questions abound for Boeing’s lame duck CEO Calhoun and other Boeing leaders.
Among those questions: When will Boeing stabilize its production line and increase production of the 737 Max and other planes? When will Boeing appoint a new CEO? How much will the current crisis cost Boeing? When might Boeing finalize a deal to buy back fuselage maker Spirit AeroSystems. More

Foot Locker debuted its new “store of the future” concept that will be rolled out in five cities and inspire the revamping of 900 stores the sneaker retailer is planning over the next two years.
The store design features an immersive layout, a “drop zone” for new sneaker releases and a “sneaker hub” for customized options like specialized lacing. 
The longtime sneaker retailer does the bulk of its sales in stores so revitalizing its sprawling footprint, and ensuring it’s a place brands want to be, is critical to its survival.

A Foot Locker, Inc. store. 
Courtesy of: Foot Locker, Inc.

A new and improved Foot Locker debuted at a New Jersey mall on Wednesday as the sneaker retailer looks to reverse a sales slump, keep brand partners loyal and win back Wall Street’s confidence by revamping the footprint for its all-important stores. 
The new concept Foot Locker bills as its “store of the future” turns the retailer’s tired mall format on its head through a streamlined layout that’s more immersive than the typical format, which tends to be two walls of shoes with a middle section used for trying on sneakers. The new format also includes a “drop zone” that shows off new sneaker releases, a communal try-on area, elevated brand product displays and a “sneaker hub” for customized options like specialized lacing.

Even the Striper uniform, the iconic black and white striped outfit worn by Foot Locker’s store associates, is getting a refresh, Frank Bracken, Foot Locker’s chief commercial officer, told CNBC in an interview. 
“They’ll be familiar and recognizable; I’d say they’ll be modernized in a really tasteful sort of elegant way,” said Bracken. “We sweated the details between our men’s and our women’s tops and bottoms so that the fit and the choice that they have to put together a uniform could really personalize it to their body and for their style preference.” 

A Foot Locker, Inc. store. 
Courtesy of: Foot Locker, Inc.

The new store, located at the Willowbrook Mall about 20 miles west of Manhattan in Wayne, is the first of five slated to open this year. It is a critical part of the retailer’s “Lace Up” strategy that CEO Mary Dillon unveiled at its investor day in March 2023. Similar concepts are set to open at Foot Locker’s 34th Street flagship store in New York City, in Paris ahead of the Summer Olympics, as well as in Melbourne and Delhi. 
As the retailer draws about 80% of its revenue from its more than 2,500 physical locations, Dillon has focused on revitalizing Foot Locker’s store footprint since she took over in September 2022. She’s working to build new, off-mall locations, close underperforming stores and refresh existing locations. 
Dillon and her team are betting that the new store designs will bring in customers who are shopping outside of malls and give sneakerheads a reason to come to its shops rather than go directly to a brand’s website or store.

A Foot Locker, Inc. store.
Courtesy of: Foot Locker, Inc.

In fiscal 2023, Foot Locker spent $242 million remodeling and building out new stores, among other capital expenditures. The company plans to spend another $200 million on real estate projects this year, according to company securities filings. 
In addition to the five “store of the future” shops Foot Locker plans to open this year, the retailer is using the concept to inspire 900 store redesigns in 2024 and 2025, with about 100 planned for each quarter, said Bracken. 
“All the standards around the storefront, the fixturing, the storytelling, the merchandising standards, we’re going to rapidly deploy that across 900 stores, and there’s a real sort of symbiotic relationship between those refreshes and then the ‘store of the future,’ so they’ll look very complementary,” he said.

Frank Bracken Executive Vice President and Chief Commercial Officer of Foot Locker, Inc.
Courtesy of: Foot Locker, Inc.

Foot Locker’s shifting real estate strategy comes as the retailer contends with an ongoing sales decline and a stock price that is down about 29% year-to-date as of Tuesday’s close, compared to the S&P 500’s gains of more than 6%.
Foot Locker has struggled to grow sales in part because it now competes against its own brand partners, which have spent the last few years building out their own websites and stores and reducing their reliance on wholesalers. 
Keeping brands like Nike and Adidas happy isn’t just critical to Foot Locker’s top line, it’s imperative to the company’s survival. That’s why elevated brand storytelling and enhanced product displays — two central requests from Foot Locker’s partners — are integral parts of the retailer’s new store concepts. 

A Foot Locker, Inc. store. 
Courtesy of: Foot Locker, Inc.

An overall view of a Foot Locker, Inc. store.
Courtesy of: Foot Locker, Inc.

“When we think about this, this isn’t just Foot Locker in isolation thinking what’s important, or what do we want,” said Bracken. “[We’re] partnering very closely with our brand partners to bring digital storytelling and then product merchandising and storytelling to another level.”
Luckily for Foot Locker, its store redesign plans come at a time when sneaker brands like Nike are rethinking their sales strategy and realizing that wholesalers, especially ones with massive footprints, are necessary for their own growth. Earlier this month, Nike CEO John Donahoe acknowledged the company moved too far away from wholesale partners in its quest to drive direct sales and has since “corrected that” by reinvesting with its retail partners. 
That “shift in tides” hasn’t gone unnoticed, said Bracken. 
“We’ve got the support of our brand partners in a way that’s refreshing and maybe hasn’t been as clear and transparent as the last couple of years,” he said. “We feel like we’re very well positioned as a critical, strategic retail partner in the future and now it’s on us. [2024] is definitely an inflection point.”

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Starbucks and the Workers United union will resume bargaining, ending a long stalemate.
In February, the two sides said they found a “constructive path forward,” marking a major strategic pivot for the coffee giant.
Labor laws do not require that the employer and union reach a collective bargaining agreement, only that both bargain in good faith.

Starbucks and the union that represents its baristas will resume contract negotiations on Wednesday, ending an extended stalemate.
The two sides’ return to the bargaining table follows their February announcement that they found a “constructive path forward” during mediation discussions related to litigation over the union’s use of Starbucks’ branding. It marked a major pivot for Starbucks, which had spent the previous two years battling Workers United and the broader movement to unionize its cafes.

Roughly 500 company-owned Starbucks in the U.S. have voted to unionize under Workers United since the first elections in December 2021, according to a tally from the National Labor Relations Board, as of Monday. But none of those locations, which make up a small fraction of total U.S. footprint, have come close to a collective bargaining agreement.
Starbucks and the union, which is affiliated with the Service Employees International Union, have previously met to bargain, but those talks quickly ended in stalemate. Both sides have accused the other of sabotaging the talks.
Starbucks had previously insisted on face-to-face negotiations, with no representatives appearing via Zoom. The union has accused Starbucks of using that excuse as a stalling tactic. It is unclear if all representatives will be appearing in person in the latest round of talks.
Store agreements will be negotiated and ratified separately, but the union might make proposals that could affect all of the Starbucks workers it represents. Workers United has broadly pushed for higher wages and more consistent scheduling, among a range of other priorities.
Labor laws do not require that the employer and union reach a collective bargaining agreement, only that both bargain in good faith. After a year, workers who lose faith in the union can petition to decertify, putting a ticking clock on negotiations. 

The NLRB has 19 pending petitions to decertify. Citing unfair labor practices by Starbucks, the labor board has denied 18 other petitions to decertify.
The company said it has also been negotiating with other unions that represent its cafes, such as the International Brotherhood of Teamsters, which is bargaining for a store outside of Pittsburgh.
The resumption of contract negotiations comes a day after another significant moment for both Starbucks and unions. On Tuesday, the company appeared before the Supreme Court to appeal a lower court’s approval of an injunction sought by the NLRB to reinstate seven fired workers at a Memphis cafe.
Starbucks argued that other agencies seeking injunctions have a higher threshold to receive one than the labor board does. Experts have said that the Supreme Court’s eventual ruling could weaken the NLRB — and organized labor. The court is expected to release its decision this summer.
Starbucks could share more about the union negotiations during its quarterly earnings call. The coffee giant is expected to report its results on Tuesday.

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More than 3 million people with Medicare could be eligible for coverage of Wegovy now that the popular weight loss drug is also approved in the U.S. for heart health, according to an analysis by health policy research organization KFF. 
But some beneficiaries could still face out-of-pocket costs for the highly popular and expensive drug, and certain Medicare prescription drug plans may also wait until 2025 to cover Wegovy.
Medicare’s budget could also be strained as more Part D plans cover the costs of Wegovy.

Boxes of Wegovy made by Novo Nordisk are seen at a pharmacy in London, Britain March 8, 2024. 
Hollie Adams | Reuters

More than 3 million people with Medicare could be eligible for coverage of Wegovy now that the blockbuster weight loss drug is also approved in the U.S. for heart health, according to an analysis released Wednesday by health policy research organization KFF.
But some eligible beneficiaries could still face out-of-pocket costs for the highly popular and expensive drug, KFF said. Certain Medicare prescription drug plans may also wait until 2025 to cover Wegovy.

Medicare’s budget could be strained as more plans cover the costs of Wegovy. The program’s prescription drug plans could spend an additional net $2.8 billion if just 10% of the eligible population, an estimated 360,000 people, use the drug for a full year, according to KFF.
Under new guidance issued in March, Medicare Part D plans can cover Wegovy for patients as long as they are obese or overweight, have a history of heart disease and are specifically prescribed the weekly injection to reduce their risk of heart attacks and strokes. The Food and Drug Administration approved Wegovy for that purpose in March.
KFF said that applies to 3.6 million, or 7%, of total beneficiaries, based on 2020 data. That group also makes up 1 in 4 of the 13.7 million Medicare patients who are obese or overweight. Those numbers may be higher based on more recent data, the nonprofit group said.
The analysis suggests that, for the first time, certain Medicare beneficiaries will be able to access Novo Nordisk’s Wegovy without having to shoulder the total $1,300 monthly price tag alone.
Notably, Medicare prescription drug plans administered by private insurers, known as Part D, currently cannot cover Wegovy and other GLP-1 drugs for weight loss alone. GLP-1s are a buzzy class of obesity and diabetes treatments that work by mimicking a hormone produced in the gut to suppress a person’s appetite and regulate their blood sugar. 

But KFF’s analysis found that Medicare beneficiaries who take Wegovy could still face monthly out-of-pocket costs of $325 to $430 if they have to pay a percentage of the drug’s list price for a month’s supply.
A new Part D cap on out-of-pocket spending would limit beneficiaries’ out-of-pocket costs to around $3,300 in 2024 and $2,000 in 2025. Still, those sums are a significant burden for those who live on modest incomes.
Some patients also may struggle to access Wegovy if Part D plans that decide to cover it implement certain requirements to control costs and ensure the drug is being used appropriately. That could include “step therapy,” which requires plan members to try other lower-cost medications or means of losing weight before using a GLP-1 such as Wegovy.
“These factors could have a dampening effect on use by Medicare beneficiaries, even among the target population,” KFF wrote in its analysis.
Some Part D plans have already announced that they will begin covering Wegovy this year, but it’s unclear how widespread coverage will be. KFF said many plans may be reluctant to expand coverage now since they can’t adjust their premiums mid-year to account for higher costs associated with use of the drug.
That means broader coverage in 2025 could be more likely, KFF added.
Medicare already covers GLP-1s and other treatments for diabetes, such as Novo Nordisk’s blockbuster Ozempic. 
Among the Medicare beneficiaries who are obese or overweight and have a history of heart disease, 1.9 million also have diabetes, according to KFF. That makes them already eligible for Medicare coverage of other GLP-1 drugs approved for that condition.

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E.W. Scripps has hired a bank to evaluate a potential sale of Bounce TV.
If a deal happens, Scripps could sell the network for hundreds of millions later this year, sources said.
Potential buyers include Black-owned production studios and media companies that also looked at buying BET when Paramount Global considered a sale last year.

Tanika Ray, Alyson Fouse, Kym Whitley, Yvette Nicole Brown and Tisha Campbell attend Bounce TV’s “Act Your Age” Los Angeles Series Premiere at The London West Hollywood at Beverly Hills on February 27, 2023 in West Hollywood, California. 
Charley Gallay | Getty Images

E.W. Scripps, one of the largest local TV broadcasters in the U.S., has hired a financial advisor to evaluate inbound interest in acquiring Bounce TV, its over-the-air network geared toward African Americans, according to Scripps CEO Adam Symson.
The sale process comes after Paramount Global shopped around Black entertainment company BET Media Group last year, but ultimately decided not to sell. Interested parties from that potential deal, many of them with Black leadership, have since approached Scripps with interest in owning Bounce TV, Symson said in an exclusive CNBC interview. If Scripps pursues a deal, it hopes to attract a price tag in the hundreds of millions, according to people familiar with the matter.

E.W. Scripps trades for about $3.70 per share at a market valuation of roughly $315 million. The stock is down more than 50% this year amid concerns over pay-TV cancellations that diminish the audience for broadcast networks.
Symson declined to comment on the names of the bidders or the potential price for Bounce TV. People familiar with the process said a deal could happen around mid-year or the third quarter.
“The number of inbounds and conversations that we have had with interested and qualified potential suitors has picked up significantly over the last year,” Symson said. “The earlier BET process, which was never consummated, may have opened up people’s eyes to the power of Bounce.”
Some advertising agencies and big brands earmark some spending specifically for minority-controlled businesses, Symson said, which can increase the value of media assets if they’re sold from conglomerates to Black owners. He added a platform such as Bounce TV could also serve as a landing spot for a catalog of Black creators.
Scripps officials began telling Bounce TV employees about the inbound interest on Tuesday, according to a person familiar with the communications.

Bounce TV, which debuted in 2011, is a free over-the-air network that broadcasts a combination of syndicated shows, movies and original content. All content is geared to African American audiences. Bounce TV’s “Johnson,” a dramedy created by Deji LaRay, is entering its fourth season. The network is also launching a new comedy series, “Mind Your Business,” that premieres June 1.

EW Scripps CEO Adam Symson
Source: EW Scripps

Ratings for Bounce TV have improved in recent years, even as legacy media has struggled. In the first quarter, Bounce TV viewership was up 14% on linear and 9% on connected TVs, Symson said. About 70% of Bounce TV’s audience is over the air. The other 30% is derived through pay TV and streaming, he said.
While Symson declined to give specifics about Bounce TV’s finances, he said the company has doubled the network’s revenue since acquiring it as part of the takeover of Katz Networks for $302 million in 2017.  
Scripps operates a portfolio of more than 60 stations in more than 40 U.S. markets.

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