Raphael Stevens

More stories

  • 113 Shares109 Views

    in Business

    Hybrids lead Consumer Reports’ top 10 new vehicle picks

    Hybrid vehicles led the 2024 top vehicle rankings released Tuesday by influential product testing organization Consumer Reports.
    Toyota Motor had the most top picks of any automaker, at four, followed by Subaru at two. Tesla, Ford Motor, Mazda and BMW each had one vehicle on the list.
    Plug-in hybrid vehicles are a “dark horse” for the U.S. automotive industry, according to Jake Fisher, senior director of auto testing at Consumer Reports.

    Toyota hybrid vehicles for sale at a dealership in Chicago, Feb. 6, 2024.
    Scott Olson | Getty Images

    Hybrid vehicles led the 2024 top vehicle rankings released Tuesday by influential product testing organization Consumer Reports.
    Such “electrified” vehicles, including plug-in hybrid models, represented six of the top 10 picks by the nonprofit consumer organization. The non-hybrid models rounding out the list were the all-electric Tesla Model Y crossover and three gas-powered vehicles with no hybrid variants.

    It marks the second consecutive year that seven electrified or fully electric vehicles have been included in Consumer Reports’ top picks, as automakers release numerous models of the vehicles to meet consumer demand as well as tightening federal fuel economy regulations.
    Toyota Motor had the most top picks of any automaker, at four, followed by Subaru at two. Tesla, Ford Motor, Mazda and BMW each had one vehicle on the list.
    Toyota’s four vehicles in the top 10 rankings were all hybrid or plug-in hybrid vehicles.
    “The markets are changing. There’s a lot more powertrain choices today than there have really ever been,” Jake Fisher, senior director of auto testing at Consumer Reports, told CNBC. “When we’re looking at the top vehicles, the top picks, a lot of them turn out to be electrified choices, because they just tend to do the things that people really want from a car.”
    Both hybrids and plug-in hybrids have a traditional engine combined with EV technologies. A traditional hybrid such as the Toyota Prius has electrified parts, including a small battery, to provide better fuel economy to assist the engine. Plug-in hybrids typically have a larger battery to provide for all-electric driving for a certain number of miles until an engine is needed to power the vehicle or electric motors.

    2024 BMW X5

    Fisher said plug-in hybrid vehicles, which bridge the gap between a regular hybrid and an EV, are a “dark horse” for the U.S. automotive industry that many consumers are just beginning to understand.
    This year’s Consumer Reports rankings feature three plug-in hybrid vehicles, the most ever for the annual list.
    “In terms of surprising and what we’ve learned this year, it’s really been about plug-in hybrids,” Fisher said. “They’re not well understood, but depending on what your situation is, it can be kind of the best of both worlds of electric vehicle and gas.”
    Consumer Reports selects top models at a variety of price points and classifications based on its testing of new vehicles. The organization tests about 50 new vehicles each year.
    Here’s the full list:

    Small car: Mazda 3
    Midsize car: Toyota Camry Hybrid
    Hybrid/Plug-in hybrid car: Toyota Prius/Prius Prime plug-in hybrid
    Subcompact SUV: Subaru Crosstrek
    Compact SUV: Subaru Forester
    Midsize SUV: Toyota Highlander Hybrid
    Luxury SUV: BMW X5/X5 PHEV
    Small pickup: Ford Maverick/Maverick Hybrid
    Plug-in hybrid SUV: Toyota RAV4 Prime plug-in hybrid
    Electric vehicle: Tesla Model Y

    The Tesla Model Y dominated in the U.S. and beyond last year. It appears to displace Tesla’s entry-level Model 3 sedan in the top 10 rankings after that model made the list last year.
    According to data from Kelley Blue Book, a subsidiary of Cox Automotive, 1.1 million battery-electric vehicles were sold in the U.S. last year. Nearly 655,000 of those vehicles were Tesla EVs, including 394,497 of the Tesla Model Y, sales partly driven by discounts and tax credits domestically.
    While battery-electric vehicle sales are still growing, hybrid electrics remain an appealing favorite for many car buyers in the U.S., in part because charging infrastructure is not yet as prevalent or reliable as it is in nations with broader adoption of fully electric cars, such as Norway.
    The top picks are factored into Consumer Reports’ annual auto brand report cards, based on its internal testing as well as reliability, safety and overall customer satisfaction according to owner surveys.
    BMW topped the overall brand list, followed by Subaru, Porsche, Honda and Lexus to round out the top five brands. At the bottom of the rankings were Rivian, GMC, Jaguar, Land Rover and Jeep.
    Here’s the full Consumer Reports report card for each brand and their overall score:

    Don’t miss these stories from CNBC PRO: More

  • 125 Shares99 Views

    in Business

    Four reasons Walmart wants to buy smart TV maker Vizio

    Walmart announced last week that it plans to acquire smart TV maker Vizio in a $2.3 billion deal.
    With the move, the big-box retailer is pushing deeper into the world of advertising.
    The company is also uniquely positioned because it is a major seller of Vizio TVs and can link advertisements to customers’ purchases.

    A worker walks past televisions, including the Vizio brand, on display in a Walmart Supercenter on February 20, 2024, in Hallandale Beach, Florida. 
    Joe Raedle | Getty Images

    Walmart is doing some shopping of its own.
    The retail giant announced last week that it plans to buy smart TV maker Vizio in a $2.3 billion deal. If the acquisition goes through, the discounter will own a consumer electronics company that already sells many flat-screen TVs and soundbars through Walmart’s website and stores.

    Yet the heart of the acquisition is the value of getting in front of millions of people while they stream their favorite TV shows and movies, and being able to link that leisure time to the Walmart purchases they make later.
    “It’s not really about the televisions,” Jefferies retail analyst Corey Tarlowe said. “It’s about advertising.”
    Here’s a closer look at the major reasons Walmart wants to buy Vizio.

    Walmart can capitalize on Vizio’s reach

    When shoppers think of Vizio, they likely envision store aisles filled with giant TVs. But the growing, and increasingly lucrative, part of the company’s business is a little harder to see.
    In the past few years, the company, based in Irvine, California, has reinvented itself to become more of a software company. Its TVs come with the SmartCast operating system, which allows viewers to pull up and watch streaming apps, such as Netflix and Hulu, without a “plug-in” device such as an Amazon Fire TV stick or Apple TV. It also allows Vizio to sell ads.

    Vizio can make money from advertising in three ways using the SmartCast system, said Dan Day, an equity research analyst who covers digital advertising for B. Riley Securities. It can sell ads on SmartCast’s home screen. It can sell them in WatchFree+, Vizio’s own free, ad-supported streaming app. And it gets a small inventory of ads that it can sell as part of agreements with third-party streaming companies.
    Vizio’s SmartCast system has 18 million active accounts, according to Walmart.
    As Vizio’s owner, not only could Walmart set the price of Vizio TVs on its website and in stores, but it could also expand how many people use SmartCast by adding it to the big-box retailer’s own brand of TVs, Jefferies’ Tarlowe said. Some of Walmart’s rivals, such as Amazon, Best Buy and Target, that carry Vizio TVs could continue to sell Vizio products after the deal, but some retail analysts have raised questions about whether they may downplay their competitor’s items.
    Walmart’s in-house TV brand, Onn, currently has a licensing deal with smart TV competitor Roku. The TVs are loaded with Roku’s operating system, which supports the rival company’s advertising revenue.
    Tarlowe and other analysts are betting that once that contract ends, SmartCast will become the operating system on Walmart’s private label TVs — putting ads in front of millions more eyeballs.

    Walmart will get Vizio’s data

    Vizio knows what customers watch. Walmart knows what they buy.
    With the acquisition, the two companies can combine that data to make advertisements more personalized and effective.
    Vizio TVs include automatic content recognition technology, which allows the company to understand a customer’s streaming preferences, said Kirby Grines, founder of 43Twenty, a digital marketing company that works with tech companies in the video space.
    If Vizio knows that a viewer plays Xbox for two hours a day or streams a lot of children’s shows, the company can then decide whether to show an ad for a certain snack or a brand of diapers.
    “You’ll know where to insert advertisements for more reach,” Grines said.
    Walmart, on the other hand, knows what its shoppers buy in store and online — and has more granular data about customer preferences as it expands Walmart+, its subscription service and answer to Amazon’s Prime.
    With the Vizio deal, Walmart can use its shopping insights to give customers more relevant ads, and it will know if they lead to a purchase, said Michael Morton, an analyst who covers Amazon and other internet companies at MoffettNathanson.
    He described that as the “holy grail” for brands.
    “I’m sure you’ve heard that joke: ‘50% of my advertising spend is wasted. I just don’t know what 50% it is,'” he said. “That’s not the case for these retail media networks. The vendors can measure all of it.”

    Ads are much more lucrative than milk, bread and socks

    When running a store, Walmart has to keep the lights on, pay employee wages and buy items to stock shelves. With its online business, it has to pick, pack and ship orders.
    Advertising, on the other hand, costs a lot less, Morton said.
    “It’s incredibly profitable,” he said, especially when comparing the costs of packing and shipping an online order with the costs of tacking a product placement ad onto a webpage.
    Operating margin, which measures how much a company makes from each dollar of sales after subtracting costs, is 65% or higher for advertising, according to an estimate by Jefferies’ Tarlowe. That compares with the roughly 4% operating margin Walmart reported in the most recent fiscal year.
    Walmart is trying to grow profits faster than sales by using automation and leaning into higher-margin businesses. Tarlowe compared it to building out two separate income statements — one for its legacy retail operations and a second for its newer businesses such as Walmart+, fulfillment services for its third-party marketplace and more.
    By combining the two, Walmart becomes a higher-margin company overall.
    Plus, Walmart sees how much money its competitor, Amazon, makes from advertising — and wants to run the same play.
    Sales in Amazon’s advertising unit grew 27% year over year to nearly $15 billion in its most recently reported fiscal quarter. It sells ads for its website, such as by putting sponsored products at the top when a customer searches for items.
    In January, the company began showing ads on Prime Video content, too — an indicator that it sees streaming as a bigger moneymaking opportunity.

    Advertising is already a fast-growing Walmart business

    With Vizio, Walmart could fuel an already fast-growing part of its business.
    The retailer has offered more advertising opportunities at its big-box stores. Those include third-party ads on self-checkout lane screens and TVs in store aisles, advertising spots on the store radio and demo stations where brands can pay to have customers sample their products.
    As Walmart expands its third-party marketplace, sellers can buy sponsored ads that put them toward the top of search rankings or promote their product on other parts of Walmart’s homepage.
    In the most recent fiscal year, Walmart’s global advertising business grew about 28% to reach $3.4 billion. In the most recent quarter, Walmart Connect, the company’s U.S. ad segment, grew 22% and its global business grew 33%.
    With ownership of Vizio, Walmart has another type of advertisement that it can sell: TV spots on streaming services, which it can potentially bundle with other types of ads.
    It also will collect a “gatekeeper fee,” since many streaming services share a portion of their advertising revenue with the smart TVs or smart devices that they ride on, 43Twenty’s Grines said.
    Walmart leaders shared few details on the company’s recent earnings call about its plans for Vizio, saying they will wait for the deal to close.
    Yet in a CNBC interview, Walmart CFO John David Rainey described advertising as “a very exciting part of our business” and the acquisition as “a way for us to complement what we’re already doing organically.”
    “We think of this as simply an accelerant to what we’re already doing,” he said.
    Don’t miss these stories from CNBC PRO: More

  • 138 Shares99 Views

    in Finance

    How Trump and Biden have failed to cut ties with China

    Donald Trump and Joe Biden do not agree on much, but they are of a similar mind when it comes to America’s trade relations with China. They believe that the world’s largest economy is simply too reliant on its second-largest. Thus American officials travel the world touting the benefits of “friendshoring”—or shifting production out of China and into less risky markets. Business leaders make positive noises, and are sincerely worried by China’s weak economic growth, not to mention its volatile politics. The number of comments in earnings calls referring to “reshoring” has exploded.Yet how much of this is anything more than talk? Last year The Economist argued that lots of the supposed decoupling between America and China is in fact illusory. Look closer, we wrote, and the two countries’ economic relationship is holding strong, even if this fact is masked by tricks on both sides. Since then a growing body of evidence confirms, and strengthens, our original findings. The economies of America and China are not coming apart. Indeed, some changes to supply chains may be binding the two countries even closer together.Of TikTok and solar panelsA complete picture of Chinese-American trade would cover trade in services, including America’s use of Chinese apps and China’s love of American films. But these flows are difficult to track, meaning that economists have focused their attention on trade in goods, which customs officials measure reasonably accurately. Here, the headline figures will cheer Messrs Biden and Trump. Last year Mexico overtook China as America’s largest source of imports. Since 2017 the share of America’s imports coming from China has fallen by a third to around 14%, according to American figures. A chunk of that decline came after Mr Trump implemented high tariffs in 2018. Another chunk reflects growing worries about China’s territorial ambitions: if China invades Taiwan, many Asian supply chains will become unworkable.image: The EconomistThe headline figures do not tell the whole story, however. To understand why, start with Mr Trump’s tariffs, which Mr Biden has largely kept in place. Before their introduction in 2018, American statistics suggested that America received many more imports from China than did Chinese statistics. Now the opposite is true. China reports that its exports to America rose by $30bn between 2020 and 2023, whereas America says its Chinese imports fell by $100bn. If China’s data are correct, the country’s share of American imports has still declined, but by much less.What accounts for the gap between the measures? Adam Wolfe of Absolute Strategy Research, an advisory firm, suggests that the switch reflects the fact that American importers have an incentive to underreport how much they are buying from China in categories covered by tariffs. Mr Wolfe estimates that, as a consequence, America now understates its imports from China by 20-25%. At the same time, in recent years the Chinese government has cut taxes on exporters, reducing the incentive for domestic businesses to undercount goods leaving the country.Other data provide additional reason for scepticism about decoupling. “Input-output” tables, as published by the Asian Development Bank, show the share of a country’s economic activity that can be traced back to other ones. Examining 35 industries, we calculate that in 2017 the Chinese private sector contributed on average 0.41% of American firms’ inputs. That may not sound like much, but it beat the 0.38% that came from Germany and the 0.24% from Japan. By 2022 China’s share had more than doubled to 1.06%, a larger proportional increase than for either Germany or Japan. It is hard to know exactly what is behind this trend. America’s attempts to build clean-energy infrastructure could be one factor, making imports of Chinese electrical equipment much more important. American service-sector firms also appear to be increasingly reliant upon intellectual property owned in China. Whatever the cause, the figures are hard to square with supposed decoupling.Developments on the Chinese side also push against decoupling. China’s leaders have no intention of relinquishing their country’s role in global supply chains, even as its biggest trading partner is half-heartedly trying to cut it off. In December the Central Economic Work Conference, China’s agenda-setting economic council, made expanding trade in intermediate products (those used to make finished goods) a priority. State banks are redirecting credit from property to manufacturing, raising the prospect of a glut of Chinese exports. And many of the new titans of Chinese industry, like Contemporary Amperex Technology, a battery firm; BOE Technology Group, a producer of organic light-emitting-diode displays; and LONGi Green Energy Technology, which makes components for solar panels, are well placed to benefit from this strategy.Green with envyIndeed, the growth of these sorts of companies is already having an impact. We estimate that since 2019 China’s global exports of intermediate goods have risen by 32%, compared with a rise in other sorts of exports, such as finished goods, of only 2%. The surge is driven by exports to countries such as India and Vietnam, which are two of the American government’s preferred trading partners. American trade with these countries is, in turn, increasing—from 4.1% of its goods imports in 2017 to 6.4% today. In combination, these trends imply that the two countries often act as something akin to packaging hubs for goods made with Chinese input that are destined for America’s shores.Across the world, many such arrangements are emerging. Take the case of India, where the government is trying to build up its manufacturing base. Following the introduction of subsidies, mobile-phone exports have soared, suggesting that India is eating China’s lunch. However, in a recent paper Rahul Chauhan, Rohit Lamba and Raghuram Rajan, three economists, point out that the import of mobile-phone parts, such as batteries, displays and semiconductors, has also jumped. India appears to be more of a mobile-phone go-between than it does a smartphone powerhouse.image: The EconomistVietnam’s trade with America is booming. But its production remains deeply intertwined with Chinese supply chains, meaning that much of the increase may be accounted for by products with little Vietnamese content. In the most extreme cases, Vietnamese exports are essentially re-routed from China, as America’s Department of Commerce occasionally gripes. The correlation between Vietnam’s exports to America and its imports from China is now significantly higher than it was before Mr Trump’s tariffs were put in place. This suggests that that the South-East Asian manufacturing high-flyer increasingly plays a role as a go-between, matching Chinese production to American demand.In Mexico the situation is more complicated. Standards established by the United States-Mexico-Canada Agreement require a higher “regional-value content”, meaning that exports are scrutinised to ensure that production was conducted in North America. In some industries where Mexican exports to America are booming, like the production of cars, the growth is difficult to attribute to decoupling, since China has never exported large quantities of vehicles and parts to America: in 2018 it was the source of just 6% of American imports of such goods. All the same, Mexico’s imports of Chinese industrial supplies have surged, rising by about 40% since 2019. Even in America’s backyard, decoupling is not going to plan.The overall picture is therefore clear: Chinese supply chains may be less visible, but they remain extremely important to the American economy. Will they retain their pivotal role? Mr Trump has threatened enormous tariffs on all Chinese products should he become president in November. Such levies may be enough to encourage some companies to move out of China for good. Aggression from Xi Jinping—whether in Taiwan or elsewhere—could have a similar impact. Over decades, some countries that currently act as a final step in production lines may develop more impressive industrial capabilities, and challenge China’s position.In the absence of drastic shifts in American or Chinese policy, do not expect much to change any time soon. Many countries are more than happy to play both sides—receiving Chinese investment and intermediate goods, and exporting finished products to America. Economic efficiency, provided by China’s huge scale and manufacturing expertise, is a powerful force in favour of the status quo. Decoupling may be strong rhetoric, but that is not quite the same thing. ■ More

  • 138 Shares169 Views

    in Business

    Warner Bros. Discovery halts merger talks with Paramount Global, sources say

    Warner Bros. Discovery is no longer pursuing a merger with Paramount Global as its shares trade near a 52-week low, according to people familiar with the matter.
    Skydance Media is still doing due diligence on a potential transaction with Paramount Global, the people said.
    Comcast isn’t interested in buying any Paramount Global assets but would consider commercial partnerships, like bundling or merging Peacock and Paramount+.

    President and C.E.O. of Warner Bros. Discovery David Zaslav speaks during the New York Times annual DealBook summit on November 29, 2023 in New York City.
    Michael M. Santiago | Getty Images

    Warner Bros. Discovery has gone “pencils down” on a potential acquisition of Paramount Global, halting talks after several months of kicking the tires on merging the media companies, according to people familiar with the matter.
    Skydance Media, the film and TV studio run by David Ellison, is still performing due diligence on a potential transaction, two of the people said, who asked to speak anonymously because deal talks are private.

    Paramount Global has set up a special committee, which has hired its own financial advisor, to sift through potential bids for the whole company or certain assets. Media mogul Byron Allen offered $14 billion for the company last month, though he has a history of bidding on and not buying large media assets.
    Comcast, the owner of CNBC parent NBCUniversal, isn’t interested in acquiring Paramount Global assets, one of the people said. Comcast has been working with house bankers to explore a potential commercial partnership with Paramount Global, according to people familiar with the matter.
    That could include bundling or merging streaming services Peacock and Paramount+, as previously reported by The Wall Street Journal, or a different arrangement. Still, it’s unclear if Paramount Global would have interest in this as it explores sale scenarios.
    Spokespeople for Comcast, Paramount Global, Skydance Media and Warner Bros. Discovery declined to comment.
    Warner Bros. Discovery Chief Executive Officer David Zaslav had a preliminary conversation with Paramount Global CEO Bob Bakish, CNBC reported in December. The companies engaged in more serious merger discussions in January, but talks have cooled off this month.

    Warner Bros. Discovery shares fell 10% on Friday after the company missed analyst targets for earnings and revenue. The stock has fallen 47% in the past year and is near a 52-week low.
    Paramount Global is also trading close to a 52-week low as it prepares to announce its earnings Wednesday.
    Don’t miss these stories from CNBC PRO:

    WATCH: The big question facing Warner Bros. Discovery is whether it can grow, says Tom Rogers More

  • 100 Shares129 Views

    in Business

    Here are this year’s most competitive rental markets

    Miami is the most competitive city in the nation for renters, but on a regional level, the Midwest ranks first for competition.
    For a one-bedroom apartment nationally, the latest estimated median rent is $1,207; for a two-bedroom it’s $1,359.
    While rental supply is rising, demand is sustaining thanks to the short supply of homes for sale in today’s market and rising mortgage rates.

    Apartments are seen undergoing construction on February 28, 2023 in Austin, Texas. 
    Brandon Bell | Getty Images

    The apartment market is finally loosening up. At the same time, competition is heating up in some key markets.
    There is an enormous supply of new apartments coming online this year. And rents have fallen for six straight months, now at their lowest levels since March 2022, according to search site Apartment List.

    For a one-bedroom apartment nationally, the latest estimated median rent is $1,207; for a two-bedroom it’s $1,359. The nationwide median is down 0.3% in February from January, down 1% year over year and down 4.7% from an all-time high in August 2022, according to Apartment List.
    Rents are expected to fall further, with the nationwide multifamily vacancy rate at 6.5% and forecast to rise this year as more units go up for rent.
    Still, all real estate is relative, and some apartment markets are hotter than others. A new report from RentCafe, another apartment search site, ranks the most competitive rental markets, with Miami topping the list for 2024.
    The rankings are based on five factors: The number of days apartments stayed vacant, the occupancy rate, the number of prospective renters competing for an apartment, the percentage of renters who renewed their leases and the share of new apartments completed recently.
    In Miami, apartments now lease within 36 days, according to the report, compared with a 41-day national average. They have 14 prospective renters for each unit compared with the national average of seven, and the city’s occupancy rate is 96.5%, compared with 93% nationally.

    Milwaukee comes in second, with apartments renting in 37 days on average and occupancy at 95.1%. Chicago and Grand Rapids, Michigan, are also high on the list, as the Midwest becomes more popular among younger renters due to its relative affordability.
    The option of remote work has also sent more people to the region, but the supply of apartments there is dwindling, making it more competitive. The Midwest was the most sought-after region for renting in the report.
    “Renting in the Midwest is a good choice for many aspiring homeowners, including longtime residents and newcomers,” according to the RentCafe report. “That’s because this housing arrangement allows them to save up for down payments until they’re able to fulfill the American dream of owning a home.”
    While rental supply is rising, demand is sustaining thanks to the short supply of homes for sale in today’s market and rising mortgage rates. Home prices are still high, even with rising mortgage interest rates, making it increasingly difficult for younger Americans to make the transition from renter to homeowner.
    Don’t miss these stories from CNBC PRO: More

  • 200 Shares169 Views

    in Business

    Macy’s posts another quarter of falling sales as it unveils strategy to get back to growth

    Macy’s said sales fell nearly 2% in the holiday quarter and forecast another year of stagnant sales.
    Yet the department store operator unveiled a plan to get back to growth by closing some of Macy’s namesake stores and opening more Bloomingdale’s and Bluemercury stores.
    The company’s new CEO Tony Spring took the helm earlier this month.

    The Macy’s logo is seen at its store in Herald Square in New York City on Jan. 19, 2024.
    Michael M. Santiago | Getty Images

    Macy’s on Tuesday said sales fell nearly 2% in the holiday quarter, as the 166-year-old department store operator unveiled its strategy to get back to growth. 
    Here’s what Macy’s reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

    Earnings per share: $2.45 adjusted vs. $1.96 expected
    Revenue: $8.12 billion vs. $8.15 billion expected

    The retailer said it expects sales to remain stagnant. It projected net sales of between $22.2 billion to $22.9 billion for this fiscal year, down from $23.09 billion in 2023. It anticipates comparable sales, which take out the impact of store openings and closures, will range from a decline of about 1.5% to a gain of 1.5% compared with the year-ago period on an owned-plus-licensed basis and including third-party marketplace sales.
    Yet the company’s new CEO Tony Spring laid out a brighter outlook for the following fiscal year and how Macy’s plans to get there. Spring is the former CEO of Macy’s higher-end department store Bloomingdale’s. He took the helm earlier this month, weeks after Macy’s announced layoffs and as it faced pressure from activist investors.
    In an interview with CNBC, he said the company is taking a clear-eyed look at its business — particularly its struggling namesake stores.
    “Yes, there are headwinds, certainly on discretionary categories and the middle-income consumer, but we take responsibility for what we control,” he said. “Let’s put better products into our stores. Let’s make sure it’s merchandised appropriately at a decent value. And then we have more opportunity for conversion and more [market] share.”

    Macy’s strategy ahead

    As part of the retailer’s push to woo shoppers and restore investor confidence, Macy’s said it will make big changes to its store footprint. Macy’s plans to close about 150 unproductive locations and to prioritize investing in about 350 other namesake locations.
    It plans to focus more on selling luxury goods by opening about 15 new Bloomingdale’s stores and at least 30 new Bluemercury stores over the next three years. It will also remodel roughly 30 existing stores of the beauty chain during that time. 
    Macy’s had already announced five store closures and more than 2,300 layoffs last month. It also said last year that it would open up to 30 smaller versions of its namesake stores in strip malls over the next two years.
    In a news release on Tuesday, Macy’s said it will also take a hard look at how to operate more efficiently – such as scrutinizing the network of warehouses used for its e-commerce business.
    In the fiscal year that starts in early 2025, Macy’s said it expects low-single digit comparable sales growth on an annual basis, including owned, licensed and marketplace sales. It said it expects capital spending to fall below 2024 levels and free cash flow to drop to pre-pandemic levels. Its outlook does not include any potential impact from a proposed credit card late fee ruling by the federal government. 
    Macy’s, which includes its namesake banner, Bloomingdale’s and Bluemercury, has faced scrutiny from activist investors Arkhouse Management and Brigade Capital Management, who made a rejected bid to buy the retailer. Arkhouse recently nominated a slate of nine directors to Macy’s board.

    Fourth-quarter sales dip

    For the fiscal fourth quarter that ended Feb. 4, Macy’s swung to a loss of $71 billion, or 26 cents per share, from net income of $508 million, or $1.83 per share, a year earlier. The losses included $1 billion of impairment and restructuring costs related to Macy’s plans to close about 150 locations, which are part of its turnaround strategy.
    Revenue fell from $8.26 billion in the year-ago period. Digital sales declined 4% compared to the prior-year quarter and brick-and-mortar sales were roughly flat.
    Across the company, comparable sales on an owned-plus-licensed basis fell 4.2% from the year-ago period. That was better than the 5.8% decline that analysts expected, according to LSEG.
    Macy’s continued to be the weakest store banner – a trend reflected in the company’s plans to close many of its stores. The namesake store’s comparable sales on an owned-plus-licensed basis dropped by 4.7%, as the women’s shoes and cold weather apparel and accessories categories struggled. Beauty and Macy’s off-price business, Backstage, were stronger performers in the quarter. 
    Bloomingdale’s and Bluemercury, the two store chains that the parent company plans to expand, both fared better in the holiday quarter. 
    At Bloomingdale’s, comparable sales declined 1.6% on an owned-plus-licensed basis, as the men’s and designer handbag businesses came in soft.
    Bluemercury’s comparable sales rose 2.3%, as shoppers bought skincare items and color cosmetics. 
    Net credit card revenue also took a hit, as Macy’s said it tumbled by 26% from the prior year to $195 million as the company dealt with higher net credit card losses. 
    So far this year, shares of Macy’s have fallen about 4%. The company’s stock has underperformed the approximately 6% gains of the S&P 500 during the same period. Shares of Macy’s closed Monday at $19.30, bringing the company’s market value to $5.29 billion.
    This is breaking news. Please check back for updates. More

  • 225 Shares99 Views

    in Business

    Lowe’s beats earnings estimates as sales fall — and the company expects revenue to slide again this year

    Lowe’s beat Wall Street’s earnings and revenue expectations for its fourth quarter.
    Sales fell during the period, and the home improvement retailer expects revenue to drop again during its current fiscal year.

    The Lowe’s logo is displayed on the front of the store near Bloomsburg.
    Paul Weaver | Lightrocket | Getty Images

    Lowe’s on Tuesday beat Wall Street’s quarterly earnings and revenue estimates, even as the company continued to see customers tackle fewer home projects.
    The home improvement chain was going up against lower expectations for its fourth quarter. It had cut its full-year forecast in November, after CEO Marvin Ellison said the company had felt a “greater-than-expected pullback” on pricier items and discretionary home projects.

    Lowe’s said it factored economic uncertainty into its forecast for the current fiscal year, too. It said it expects total sales of between $84 billion and $85 billion, which would be a drop from $86.38 billion in fiscal 2023. It anticipates comparable sales will decline between 2% and 3% compared with the prior year, and expects earnings per share of approximately $12 to $12.30.
    Here’s what the company reported for the fourth quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

    Earnings per share: $1.77 vs. $1.68 expected
    Revenue: $18.60 billion vs. $18.45 billion expected

    The company’s net income for the three-month period that ended Feb. 2 was $1.02 billion, or $1.77 per share, compared with $957 million, or $1.58 per share, a year earlier. Excluding the costs associated with Lowe’s sale of its Canadian retail business, earnings per share were $2.28.
    Sales fell from $22.45 billion in the year-ago period. The company said its prior-year quarter included an additional week and sales from its Canadian business.
    Comparable sales dropped by 6.2% year over year, as the home improvement retailer saw weaker demand for do-it-yourself projects and poor weather in January. Comparable sales for home professionals, a category that includes plumbers, electricians and contractors, were flat year over year in the quarter, however.

    During the fourth quarter, Lowe’s spent $404 million on share buybacks and paid $633 million in dividends.
    As of Monday’s close, Lowe’s shares were up nearly 4% this year. That trails the approximately 6% gains of the S&P 500 during the same period. Shares of Lowe’s closed at $231.32 on Monday, bringing the company’s market value to about $133 billion.
    Rival Home Depot last week beat Wall Street’s earnings and revenue expectations, but its sales fell year over year and the retailer’s leaders described the past year as one of “moderation” after unusually high demand during the pandemic. The company also said customers were continuing to put off bigger projects because of higher interest rates.
    Don’t miss these stories from CNBC PRO: More

  • 138 Shares129 Views

    in Business

    FAA closes Starship investigation as SpaceX seeks license for next launch

    The Federal Aviation Administration on Monday announced the close of its investigation alongside SpaceX into the second Starship flight.
    Elon Musk’s company seeks a license to launch the towering rocket again.
    “Prior to the next launch, SpaceX must implement all corrective actions and receive a license,” the FAA said in a statement.

    SpaceX’s next-generation Starship spacecraft atop its powerful Super Heavy rocket is launched from the company’s Boca Chica launchpad on an uncrewed test flight, near Brownsville, Texas, on Nov. 18, 2023.
    Joe Skipper | Reuters

    The Federal Aviation Administration on Monday announced the close of its investigation alongside SpaceX into the second Starship flight, as Elon Musk’s company seeks a license to launch the towering rocket again.
    SpaceX led an investigation that the FAA oversaw into the Nov. 18 launch of a Starship prototype that reached space before being intentionally destroyed due to a problem with the rocket.

    The FAA noted that SpaceX identified 17 corrective actions from the mishap.
    “Prior to the next launch, SpaceX must implement all corrective actions and receive a license. … The FAA is evaluating SpaceX’s license modification request and expects SpaceX to submit additional required information before a final determination can be made,” the federal regulator said in a statement.

    Sign up here to receive weekly editions of CNBC’s Investing in Space newsletter.

    SpaceX, in a post on its website on Monday, identified some of the issues that cut the second Starship launch short.
    The 33 engines of the “Super Heavy” booster worked as the rocket ascended. Shortly after the upper part of Starship separated from the booster, “several” of the engines “began shutting down.” Then, “one engine failed,” a process that was “quickly cascading” before the booster broke apart, the company said.
    Starship itself flew for several more minutes after separating from the booster. But SpaceX said “a leak” in the rear of the spacecraft developed when a fuel vent led to “a combustion event and subsequent fires,” cutting the connection “between the spacecraft’s flight computers” and shutting down Starship’s six engines. The rocket’s flight termination system — a standard safety feature in rockets, as it destroys the vehicle if a problem arises or it flies off course — then triggered.

    The company emphasized that it has already made “changes on upcoming Starship vehicles” to resolve the issues from the second test flight, with “upgrades” to the booster and Starship prototypes that are set to launch the third test flight.
    The 17 corrective actions following the second Starship flight also represent a marked improvement from the first, which required 63 corrective actions before the rocket launched again.
    Musk said in a social media discussion last week that he expects the company to be ready to launch the third Starship test flight as soon as mid-March, although the SpaceX CEO also said, shortly after the November launch, that the third flight’s rocket would be “ready to fly in three to four weeks.”
    As the FAA noted, the next launch is pending regulatory approval of a license.

    Don’t miss these stories from CNBC PRO: More