Raphael Stevens

A group of labor unions is ending its proxy fight at Starbucks, a person familiar with the matter told CNBC.
The two sides agreed last week to work toward a “foundational framework” on collective bargaining.
The labor group, the Strategic Organizing Center, argued that Starbucks had responded to a yearslong union push with a “flawed” strategy.

Steph Kronos, a pro-Union activist, tries to talk to Starbucks customers as she joins Starbucks workers, former employees, and supporters in holding signs in support of a strike, outside of a Starbucks store in Arlington, Virginia, on November 16, 2023.
Saul Loeb | AFP | Getty Images

A group of labor unions is ending its proxy fight at Starbucks, a person familiar with the matter told CNBC, after the two sides agreed last week to work toward a “foundational framework” on collective bargaining.
The labor group, the Strategic Organizing Center, argued that Starbucks had responded to a yearslong union push with a “flawed” strategy that diminished shareholder returns and presented reputational risk. The SOC said in its proxy filings that the company’s response to widespread unionization efforts had cost the company nearly $250 million.

It had put forth three nominees to Starbucks’ board of directors, which the SOC is now withdrawing, according to the person familiar.
The cessation comes after two influential proxy advisors, Institutional Shareholder Services and Glass Lewis, both recommended that shareholders vote for management board nominees.
The fight would have been unusual given the small size of the SOC’s economic interest and the composition of the group. It was the first time that a labor union — typically opposed to activist campaigns — had drawn on the activist toolkit.
The SOC hired well-respected communications, legal and proxy advisors who have worked on behalf of major activists and hedge funds. Together, they built a thesis that drew a line from slipshod bargaining tactics to weakened shareholder returns.
Reuters first reported that the SOC was ending its proxy fight.
Starbucks’ annual shareholder meeting is scheduled for March 13. More

The Consumer Financial Protection Bureau unveiled a new rule on Tuesday that it said would cap late fees that banks charge customers at $8 per incident.
The new rule, long expected after an initial proposal was floated last year, comes after a the agency said it reviewed market data related to the 2009 Card Act.
“For over a decade, credit card giants have been exploiting a loophole to harvest billions of dollars in junk fees from American consumers,” CFPB Director Rohit Chopra said in the release.

Rohit Chopra, director of the CFPB, testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress,” in Dirksen Building on Thursday, November 30, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images

The Consumer Financial Protection Bureau unveiled a new rule on Tuesday that it said would cap late fees that banks charge customers at $8 per incident.
By cutting late fees to $8 from an average of around $32, more than 45 million card users would save an average of $220 annually, the CFPB said in a release.

The new rule, long expected after an initial proposal was floated last year, comes after the agency said it reviewed market data related to the 2009 Card Act. Regulations tied to that law granted issuers the ability to charge ever-increasing amounts of late fees.
“For over a decade, credit card giants have been exploiting a loophole to harvest billions of dollars in junk fees from American consumers,” CFPB Director Rohit Chopra said in the release. “Today’s rule ends the era of big credit card companies hiding behind the excuse of inflation when they hike fees on borrowers and boost their own bottom lines.”
This story is developing. Please check back for updates. More

Wilson tennis racket maker Amer Sports issued its first earnings report since its IPO, saying its losses narrowed in the fourth quarter.
The company, which also makes Louisville Slugger baseball bats, went public last month.

Amer Sports, (AS.N) parent company of sporting goods brands, banner hangs on the front of the New York Stock Exchange (NYSE) during the company’s IPO in New York City, U.S., February 1, 2024. 
Brendan McDermid | Reuters

Shares of Amer Sports, the maker of Wilson tennis rackets and Lousiville Slugger baseball bats, fell in premarket trading Tuesday even after the company said its holiday-quarter losses narrowed, driven by strong sales in China.
Here’s how the newly public athletic company did in its fourth fiscal quarter. CNBC didn’t compare the results to Wall Street estimates because it’s the first earnings report since Amer Sports went public.

Loss per share: 25 cents
Revenue: $1.32 billion

In the three months ended December 31, the company reported a net loss of $94.9 million, or 25 cents per share, compared with $148.3 million, or 39 cents per share, a year earlier. 
Sales rose to $1.32 billion, up about 10% from $1.2 billion a year earlier.
Shares fell more than 2% in pre-market trading.
Amer, which also owns Arc’teryx, Salomon and a number of other athletic equipment and apparel brands, operates in three distinct business segments. They are technical apparel, which includes its pricey Arc’teryx winter jackets, outdoor performance, such as Salomon’s winter sports equipment, and ball and racquet sports, which includes equipment and apparel from Wilson and Louisville, among others.  
The company started trading on the New York Stock Exchange last month under the ticker “AS.” Shares rose just 3% in Amer’s debut on the public markets after it priced its IPO at a discount. Sellers showed muted interest in the stock during its first day of trading over concerns about its connections and exposure to China and its debt-laden balance sheet. 

Founded in Helsinki in 1950, Amer was a Finnish public company until it was taken private in 2019 by a consortium of investors led by China’s ANTA Sports, FountainVest Partners, Anamered Investments and Tencent. 
Since the acquisition, sales grew about 45% from $2.45 billion in 2020 to $3.55 billion in 2022. Revenue jumped again in 2023 to $4.37 billion, the company said Tuesday.
Still, Amer failed to turn a profit between 2020 and 2023. In fiscal 2023, the company lost $208.8 million, but its losses narrowed from $230.9 million in fiscal 2022.
In a statement on Tuesday, Amer’s CEO James Zheng said the company is still in the “early stages” of its “profitable growth journey.”
“We are winning in the premium segment of the sports and outdoor market, which remains healthy and growing. Driven by our technical performance products, we believe Amer Sports’ brands resonate strongly with consumers everywhere, but are still relatively small players on the global stage,” said Zheng. “Looking forward, our confidence is enhanced by the fact that our highest margin brand, region, channel, and category are growing fastest.”
Much of its expansion has come in China. Between 2020 and 2022, Amer grew sales in the region from 8.3% of total revenue to 14.8%. In the nine months ended Sept. 30, nearly 20% of sales came from the region. But the growth also came during a time when China was reopening from the Covid pandemic and some retailers saw large spikes in demand that may not be sustained over time. 
That growth story continued during Amer’s fiscal fourth quarter. Sales in Greater China jumped by 45% and all three of the company’s segments saw “solid growth.”
Amer’s supply chain is also heavily exposed to the region. The majority of its products are sourced from suppliers “predominantly” in the Asia Pacific region, including China, according to a securities filing. 
Amer says it’s a global company with a diverse reach across a myriad of geographies, but those regions are growing at an uneven pace. In 2023, sales in Europe, the Middle East and Africa represented about 33% of total revenue, down from 36% in 2022. North America made up about 39.5% of sales in 2023, down from 42.4% of sales in 2022.
Conversely, China represented about 19% of sales in 2023, compared to 14.8% in 2022. Sales in Amer’s APAC region represented 8% of total revenue in 2023, up from 7% in 2022.
During the fourth quarter, sales in APAC grew by 22% and in North America, revenue only increased by a mid-single digit percentage. Strength in Amer’s direct channels lifted sales in the region, but that boost was offset by a slowdown in wholesale revenue.
For its fiscal first quarter, Amer expects reported revenue to grow between 6% and 8%, and it expects its adjusted gross margin to be around 53.5%. It anticipates earnings to range between a loss per share of 1 cent to earnings per share of 2 cents.
The company expects technical apparel revenue to grow about 30%, sales for its outdoor performance categories to be flat year over year and its ball and racquet segment sales to be down a double digit percentage.
For the full year, Amer expects sales to grow by a mid-teens percentage, and it anticipates an adjusted gross margin of between 53.5% and 54%. It is forecasting earnings per share between 30 cents and 40 cents.
Read the full earnings release here. More

Target forecast another year of lackluster sales as it reported better-than-expected holiday-quarter results.
The retailer said it will launch a new membership program.
Target grew profits from the year-ago quarter.

The Target logo is seen on its store on 42nd Street in Times Square, New York City.
Deb Cohn-Orbach | UCG | Universal Images Group | Getty Images

Target on Tuesday posted holiday-quarter revenue and earnings that topped Wall Street’s expectations, but the company said it expects another year of weak sales. 
The Minneapolis-based retailer’s shares jumped about 8% in premarket trading as it showed progress in boosting profits and margins.

Even so, Target’s comparable sales declined for the third quarter in a row. The key metric, which includes digital sales and takes out the impact of store openings, closures and renovations, fell 4.4% in the fiscal fourth quarter. 
Target doesn’t anticipate sales will bounce back quickly. For the current quarter, Target said it expects comparable sales to drop by between 3% and 5% and adjusted earnings per share to range from $1.70 to $2.10. The company said it expects full-year 2024 comparable sales to be flat to up 2% and adjusted earnings per share to range from $8.60 to $9.60.
Yet Target stressed its progress after a rough stretch marked by lower discretionary spending. Store and website traffic, while still down year over year, improved for the second quarter in a row. Profits jumped as the company better managed inventory and benefited from falling supply chain, freight and e-commerce fulfillment costs. And an emphasis on lower price points resonated with shoppers. 
In an interview with CNBC’s “Squawk Box,” CEO Brian Cornell said the company has made “really solid progress” in managing inventory better and becoming more efficient. He said the retailer will focus on “growing traffic and making sure that we make Target a growth company again.”
Those new sales drivers for the year ahead will include a membership program, he said. Cornell declined to share more details to CNBC, but said “it’s going to be a really important part of what drives growth for us as we go into next year.” He added that the company plans to emphasize same-day delivery to the home, so that customers can get groceries or other items within two hours. Target already owns Shipt, a membership-based delivery service.

Company leaders will share more of their strategy at an investor meeting in New York City on Tuesday.
Here’s what the retailer reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

Earnings per share: $2.98 vs. $2.42 expected
Revenue: $31.92 billion vs. $31.83 billion expected

Target’s sluggish sales have reflected a pullback in discretionary spending over the past two years, especially after huge pandemic-driven gains. Its annual total revenue grew by about $31 billion – or nearly 40% – from fiscal 2019 to 2022 before sales leveled out. Target also said it took a hit in recent quarters from elevated levels of theft and the fallout from backlash to Target’s merchandise collection for Pride Month.
To attract shoppers, the big-box retailer has emphasized value and more frequently bought categories, such as food and beauty. Over the holiday season, for example, Target touted a wide assortment of gifts and a holiday meal for four for under $25. 
Last month, it launched a new low-priced private brand called Dealworthy, with products like socks, paper towels, laundry detergent and more. Most items cost under $10.
Target’s profits have suffered along with its sales. But the retailer made more money in the fourth quarter than it did a year ago, as it marked down fewer items and had more products in stock. 
Target’s net income for the three-month period rose by nearly 58% to $1.38 billion, or $2.98 per share, from $876 million, or $1.89 per share in the year-ago quarter. That was significantly higher than Target’s forecasted range of between $1.90 and $2.60 per share.
Its margins also were healthier compared with a year ago. Its fourth quarter operating income margin rate was 5.8% compared with 3.7% in the year-ago quarter, a time when Target’s results took a hit as customers bought fewer higher-margin items like clothing, and more of lower-margin ones, such as food and household essentials.
In the fiscal fourth quarter that ended Feb. 3, Target’s total revenue grew nearly 2% from $30.98 billion in the year-ago period. Those results got a boost from an additional week of sales compared to fiscal 2022.
Comparable sales dropped in stores and online. Comparable store sales fell 5.4% year over year. Digital sales declined 0.7% year over year, marking an improvement from the 6% drop in the third quarter.
The sequential improvement in traffic trends – from a 4.1% decline in the third quarter to a 1.7% decline in the fourth quarter – was fueled by more shoppers using curbside pickup. 
As of Monday’s close, Target’s shares are up nearly 6% so far this year. That falls short of the approximately 8% gains of the S&P 500 during the same period. Target’s shares closed on Monday at $150.49, bringing the company’s market value to $69.48 billion. More

JetBlue Airways and Spirit Airlines on Monday said they are ending their agreement to merge.
The CEOs of JetBlue and Spirit cited regulatory hurdles in ending their merger agreement.
Spirit will receive $69 million from the deal termination its CEO said.

A JetBlue Airways plane sits on the tarmac at the Fort Lauderdale-Hollywood International Airport on January 31, 2024 in Fort Lauderdale, Florida.
Joe Raedle | Getty Images

JetBlue Airways and Spirit Airlines on Monday said they are ending their agreement to merge, weeks after losing a federal antitrust lawsuit that challenged the deal.
The CEOs of the two carriers cited regulatory hurdles in ending their merger agreement.

A federal judge in January sided with the Justice Department and blocked JetBlue’s attempted takeover of budget carrier Spirit. In his ruling, Judge William Young said JetBlue’s takeover of Spirit would “harm cost-conscious travelers who rely on Spirit’s low fares.” The airlines had argued that they needed to combine to better compete with the larger airlines that control most of the U.S. market.
JetBlue and Spirit had appealed the judge’s decision, but JetBlue noted the appeal was required under the terms of the merger agreement. Analysts had expected little chance of a successful appeal.
The Justice Department cheered the news on Monday, a year after it filed its suit to block the deal. “Today’s decision by JetBlue is yet another victory for the Justice Department’s work on behalf of American consumers,” Attorney General Merrick Garland said in a statement.
Spirit’s shares tumbled almost 11% on Monday to end the trading session at their lowest closing price on record, $5.76 per share, while JetBlue’s stock closed more than 4% higher at $6.75.
Almost two years ago, JetBlue swooped in with an unsolicited bid for Spirit Airlines, which had weeks earlier struck a merger agreement with fellow budget airline Frontier. JetBlue ultimately won Spirit shareholder approval to take over the discount carrier.

“It was a bold and courageous plan intended to shake up the industry status quo, and we were right to compete with Frontier and go for an opportunity that would have supercharged our growth and provided more opportunities for crewmembers,” JetBlue CEO Joanna Geraghty said in a note to staff on Monday.
“However, with the ruling from the federal court and the Department of Justice’s continued opposition, the probability of getting the green light to move forward with the merger anytime soon is extremely low,” she said.
Geraghty took over as CEO from Robin Hayes last month, tasked with stopping JetBlue’s losses, improving its operation and trimming costs. Activist investor Carl Icahn disclosed a nearly 10% stake in the airline on her first day, and days later won two board seats at the New York-based airline.
JetBlue’s prospective purchase of Spirit would have been a buoy for the struggling discounter airline, which is facing the grounding of dozens of its Airbus planes for inspections stemming from a Pratt & Whitney engine defect. Spirit expects compensation from the engine-maker as a result of the flaw.
With the deal off the table, Spirit must confront its financial problems alone, something its leaders say it is equipped to do.
The company said it was working to refinance its debt, and last month said it was on a path back to profitability thanks to better-than-expected demand. It projected revenue for the first quarter above analysts’ expectations.
“Throughout the transaction process, given the regulatory uncertainty, we have always considered the possibility of continuing to operate as a standalone business and have been evaluating and implementing several initiatives that will enable us to bolster profitability and elevate the Guest experience,” Spirit CEO Ted Christie said Monday.
He said that Spirit shareholders received $425 million in prepayments from JetBlue during the agreement, and that JetBlue will pay Spirit $69 million related to the agreement’s termination.
The Spirit deal wasn’t JetBlue’s first attempt at linking up with another airline to gain scale. It previously had a partnership with American Airlines in the congested Northeast U.S. to coordinate schedules and routes.
But last year a different federal judge sided with the Justice Department and knocked that partnership down, calling it anticompetitive. That ruling left open the possibility of tweaking the structure of the agreement and reviving it.
American appealed the ruling last year, but JetBlue did not, saying it would instead focus on its Spirit deal.
American CFO Devon May told reporters at an investor event on Monday: “We’ll see what opportunities there are going forward of having a new relationship.”
JetBlue didn’t immediately comment.
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American ordered 260 new narrow-body planes.
The order includes jets from Airbus, Embraer and Boeing’s yet-to-be certified 737 Max 10.
American said it would start retrofitting its A319 and A320 planes in 2025 for a bigger first class.

American Airlines flight 718, a Boeing 737 Max, takes of from Miami International Airport on its way to New York on December 29, 2020 in Miami, Florida.
Joe Raedle | Getty Images

American Airlines said Monday it is ordering 260 new narrow-body jets, including dozens of Boeing’s long-delayed 737 Max 10.
The order includes 85 of Boeing’s 737 Max 10 planes and 85 of the Airbus A321neo, aircraft it says will help it upgauge on domestic and short-haul international routes. The Fort Worth, Texas-based airline is also ordering 90 Embraer E175 planes.

American’s order is a vote of confidence for Boeing, which is struggling with a series of production flaws and certifications of new planes that have taken years longer than originally expected. Scott Kirby, CEO of rival carrier United Airlines, said earlier this year that his airline has been weighing fleet plans without its Max 10s because of the delays.
American’s CFO Devon May said the airline has additional Airbus options for new aircraft as well as financial protections with Boeing, and the ability to take already-certified models if the Max 10 certification is further delayed.
“We don’t in any way want to be harmed financially through any of these aircraft orders,” May told reporters on Monday.
May said American currently expects the Max 10 deliveries to start in 2028.
He noted the Max 10, the largest of the Max family, wouldn’t have lie-flat seats, but would be configured like some of the airline’s A321neo aircraft, with about around 190 seats and about 20 first-class seats up front.

American said it would also convert orders for 30 Boeing 737 Max 8 planes, a model that is already a staple of its fleet, into the larger 737 Max 10s. The order includes purchase options for another 193 planes from the three manufacturers.
Boeing is facing additional scrutiny from the Federal Aviation Administration after a door plug blew out midair during an Alaska Airlines flight in January. That flight was operated on a Boeing 737 Max 9.

Read more CNBC airline news

American is planning to grow its first class on some of its narrow-body planes, the carrier also said Monday alongside its first investor day in more than six years. Starting in 2025, it will retrofit its older Airbus A319 and A320 planes to increase the number of first-class seats from eight to 12 and 12 to 16, respectively.
The airline is planning to retire its fleet of 50-seat, single-class regional jets in favor of the two-class planes, with in-seat power and satellite Wi-Fi by the end of the decade. The planes will be operated by American’s wholly-owned regional airlines.
The aircraft orders are included in American’s previous capital expenditure targets.
Airlines have been grappling with high demand for first class and other premium seats as more customers rack up points with credit cards and appear willing to shell out for more space on board.
American said on Monday that it expects about 80% of its revenue this year to come from “premium content,” meaning products beyond the cheapest tickets, and its loyalty program, up from a 70% share in 2017.
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