Raphael Stevens

Adidas said it won’t write off the majority of its unsold Yeezy inventory and instead plans to sell the remaining shoes “at least” at the cost it paid for them as it looks to recoup its losses. 
The German sportswear giant had previously considered writing off about 300 million euros in unsold Yeezy inventory after it cut ties with rapper Ye over a series of antisemitic remarks he made. 
“Our consumer, retail and trade research has shown that we can sell this remaining inventory in 2024 for at least the cost price. This is why we have only written off inventory that was either damaged or very broken in sizes,” CEO Bjørn Gulden said in a statement.

Shoes are offered for sale at an Adidas store in Chicago on Feb. 10, 2023.
Scott Olson | Getty Images

Adidas announced on Wednesday that it won’t write off the majority of its unsold Yeezy inventory and instead plans to sell the remaining shoes “at least” at the cost it paid for them, as the apparel retailer looks to recoup its losses. 
The German sportswear giant had previously considered writing off about 300 million euros, or $325 million, in unsold Yeezy inventory after the company cut ties with rapper Ye, formerly known as Kanye West, over a series of antisemitic remarks he made. 

In its announcement, Adidas said it managed to generate an operating profit of 268 million euros in 2023 after it originally forecast a loss of 100 million euros. The company attributed the profit to its “better-than-expected operational business” during its fourth quarter and the decision to sell the majority of the remaining Yeezy inventory. 
“Following the latest decision, the 2023 operating profit now only includes a low double-digit million amount of Yeezy-related inventory write-offs. Instead, the company plans to sell the remaining Yeezy product at least at cost in 2024,” Adidas said in a news release. 
CEO Bjørn Gulden added: “Our consumer, retail and trade research has shown that we can sell this remaining inventory in 2024 for at least the cost price. This is why we have only written off inventory that was either damaged or very broken in sizes.”
Last year, Adidas sold about 750 million euros worth of Yeezy merchandise and donated some of the profits to groups such as the Anti-Defamation League and the Philonise & Keeta Floyd Institute for Social Change, a group run by the brother of George Floyd. 
It’s not clear if Adidas will donate any portion of the remaining Yeezy sales. The company said it has “no assumed profit contribution from Yeezy” in fiscal 2024.

The company declined to say whether it would donate any more of the proceeds this year.Don’t miss these stories from CNBC PRO: More

Biogen said it will discontinue the development and commercialization of its older and highly controversial Alzheimer’s drug Aduhelm to refocus its efforts to treat the memory-robbing disease. 
The biotech company will continue to roll out Leqembi, a newly approved Alzheimer’s drug it developed with Eisai, and work on a slate of experimental treatments for the disease
Biogen said its decision to drop Aduhelm was “not related to any safety or efficacy concerns.”

The Biogen headquarters in Cambridge, Massachusetts, on Oct. 24, 2023.
Vanessa Leroy | Bloomberg | Getty Images

Biogen on Wednesday said it will discontinue the sale and development of its older and highly controversial Alzheimer’s drug Aduhelm to refocus the company’s efforts to treat the memory-robbing disease. 
The biotech company will focus on rolling out Leqembi, a newly approved Alzheimer’s drug it developed with Japanese drugmaker Eisai. It also plans to work on a slate of experimental treatments for the disease. Those drugs represent a new chapter for the company after the polarizing launch and approval of Aduhelm. 

The U.S. Food and Drug Administration greenlit Aduhelm in 2021 under a program that fast-tracks promising treatments. But controversy shrouded the decision as some experts had concerns about whether the benefits of the drug outweighed its risks.
The federal Medicare program severely restricted access to Aduhelm, limiting its sales potential, and an 18-month congressional investigation would later allege that the FDA’s approval process for the drug was “rife with irregularities.” 
But Biogen noted on Wednesday that its decision to drop Aduhelm was “not related to any safety or efficacy concerns.”
The company said it will discontinue sales of the drug and has taken a one-time charge of $60 million for ending the Aduhelm program in the fourth quarter. 
Neurimmune, the Swiss company that invented the drug, will regain full rights to the medicine, according to Biogen.

Biogen is also terminating a post-approval clinical trial on Aduhelm after failing to find a partner or external financing for the drug. That study sought to prove the treatment’s benefits for patients in the early stages of Alzheimer’s disease.
The company said it will redistribute a large portion of the resources associated with Aduhelm to the rest of its Alzheimer’s drug portfolio.
Among the other Alzheimer’s drugs Biogen has in development is BIIB080, which targets a toxic protein called tau in the brain. That treatment has shown “favorable trends” across several measures of cognition and function in a small study.Don’t miss these stories from CNBC PRO: More

Walmart is planning to open more than 150 of its large-format stores over the next five years.
Some of the locations will be converted, but the majority will be new.
The company already has more than 4,600 stores across the U.S.

Walmart Inc. President and CEO Doug McMillon delivers a keynote address during CES 2024 at The Venetian Resort Las Vegas on January 9, 2024 in Las Vegas, Nevada.
Ethan Miller | Getty Images

Walmart already has a huge U.S. footprint. But the retail giant sees room to get even bigger.
The company plans to build or convert more than 150 large-format stores over the next five years, it said Wednesday. Some of the locations will be expanded from a smaller location into a Supercenter with a full range of groceries and merchandise, but the majority will be new stores, Josh Havens, a company spokesman, said.

Walmart declined to say how much the new stores will cost and where they will be located. The company already has more than 4,600 stores across the country, and nearly 600 Sam’s Club warehouses. Sam’s Club also is in expansion mode, with plans to open more than 30 new stores in the U.S.
The big-box retailer is the largest private employer in the U.S. with about 1.6 million employees. About 90% of the U.S. population already lives with 10 miles of a Walmart store. With the expansion, Walmart is signaling that it sees its brick-and-mortar locations as a key part of the future, despite heightened competition with online players like Amazon and Shein, and its own push for growth of online sales and its third-party marketplace.
Walmart is also building on its relative strength compared with other retailers, which have taken a bigger hit from U.S. consumers pulling back on discretionary merchandise. As the nation’s largest grocer by revenue and a well-known discounter, Walmart has better weathered inflation and even attracted more upper-income households to its stores.
Its stock hit an all-time high last year, and the company on Tuesday announced a 3-for-1 stock split.
In a post on the company’s website Wednesday, Walmart U.S. CEO John Furner said the retailer plans to start 12 new store projects this year and will convert one of its smaller locations into a Walmart Supercenter. The move to open or expand locations is in addition to the company’s plans to renovate other stores, he added.

Furner said the new stores will reflect Walmart’s more modern look, which it is rolling out more broadly. The “store of the future” design has a sleeker layout that emphasizes the retailer’s fashion-forward apparel brands, adds technology like scannable QR codes and features sharper signage.
New stores will also have more sustainability features, such as energy-efficient lighting, he said.
Walmart’s store expansion was first reported by The Wall Street Journal.
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GlaxoSmithKline on Wednesday lifted its long-term outlook following the smash-hit launch of its new RSV vaccine last year.
The shot, called Arexvy, booked £1.2 billion, or $1.5 billion, in sales after only being on the market for roughly half a year. 
The launch of the first-ever vaccines targeting respiratory syncytial virus from GSK and Pfizer last year has proved to be a boon for both companies, even as Pfizer saw fewer sales from its shot.

Company logo of pharmaceutical company GlaxoSmithKline is seen at their Stevenage facility, Britain October 26, 2020. 
Dado Ruvic | Reuters

GlaxoSmithKline on Wednesday lifted its long-term outlook following the smash-hit launch of its new RSV vaccine.
The shot targeting the severe and in some cases life-threatening virus booked around £1.2 billion, or $1.5 billion, in sales after only being on the market for roughly half a year. 

GSK in November had forecast 2023 sales for the shot, Arexvy, between £900 million and £1 billion, following its strong launch in the U.S.
The launch of the first-ever vaccines targeting respiratory syncytial virus from GSK and Pfizer last year has proved to be a boon for both companies — though Pfizer saw fewer sales from its shot than its competitor did.
GSK said it now expects to generate more than £38 billion in sales by 2031, up from a previous forecast of £33 billion. In 2023, the British drugmaker raked in £30.3 billion.
GSK now anticipates sales will rise by more than 7% on a compounded annual growth rate between 2021 and 2026, with adjusted operating profit rising more than 11% during that span. In 2021, it had guided for growth rates of more than 5% for revenue and more than 10% for earnings.
The company’s RSV shot in part drove the higher forecast. The vaccine is approved for use in adults aged 60 and older, but could eventually get a greenlight for those ages 50 to 59, Chief Executive Officer Emma Walmsley said on a media call.

An expanded approval of the vaccine could address another 15 million vulnerable patients, she noted. 
“We are really excited about the prospects of this vaccine as part of our high-value portfolio in adult vaccination that will continue to support these upgraded outlooks for the longer term,” Walmsley said.
She added that GSK is planning for at least 12 major product launches, most of which will be in the next four years. 
Arexvy became the world’s first RSV vaccine to win approval from a regulatory body in May following a green light from the U.S. Food and Drug Administration. The shot later won approvals in the U.K., Canada, Japan and several other countries. 
With $1.5 billion in sales last year, Arexvy is now a “blockbuster” vaccine, which is when a product rakes in annual sales of at least $1 billion.

More CNBC health coverage

The vaccine has about 70% market share for RSV, Walmsley added Wednesday. That’s a huge edge over GSK’s main rival in the market, Pfizer, which has an RSV vaccine approved for adults ages 60 and older and for expectant mothers who can pass on protection to their children. 
Pfizer’s shot, known as Abrysvo, took in about $890 million in sales last year after its launch, the company announced Tuesday.
Pfizer aims to increase its RSV market share by establishing vaccination as a “year-round discussion” and expanding the company’s retail contracting and offerings, CEO Albert Bourla said during an earnings call Tuesday. The company is also examining the shot in people ages 18 to 59. 
Bourla said during a conference earlier this month that the shot had a “bad launch.” 
Meanwhile, biotech company Moderna hopes to launch its own RSV vaccine this year.
RSV usually causes mild, cold-like symptoms. But each year the virus kills 6,000 to 10,000 seniors and a few hundred children younger than 5 in the U.S., according to the Centers for Disease Control and Prevention. 
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SpaceX signed a deal with Starlab, the private space station joint venture of Voyager and Airbus, to launch on the company’s Starship rocket.
The station is one of several currently in development by U.S. companies, as NASA prepares to retire the International Space Station in 2030.
Voyager and Airbus are targeting as early as 2028 for Starlab’s launch.

An artist’s rendering of the Starlab space station in low Earth orbit.
Voyager Space / Starlab Space LLC

A contract written in the stars.
Private station Starlab will fly on a Starship rocket later this decade to get to orbit, the companies developing both spacecraft announced on Wednesday.

Starlab — being built by Voyager Space and Airbus through a joint venture, alongside partners including Northrop Grumman and Hilton — is planned to launch on a single mission of SpaceX’s mammoth rocket.
Starlab represents one of the earliest commercial customers to order a Starship launch from SpaceX. The companies did not disclose the launch contract’s value.
The station is one of several currently in development by U.S. companies, as NASA prepares to retire the International Space Station in 2030.

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Voyager and Airbus are targeting as early as 2028 for Starlab’s launch. The space station’s four-year development and construction timeline also gives SpaceX time to move forward with Starship, advancing from demonstration flights to launching customer spacecraft.

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

Starlab’s modules are designed to be about 26 feet in diameter, or around twice the diameter of ISS modules, limiting the number of rockets that could support launching the space station in one mission.

Voyager Chairman and CEO Dylan Taylor believes launching all of Starlab at once on Starship is “the right way to de-risk our program.”
“You then don’t have to do risky on-orbit assembly and multiple launches,” Taylor told CNBC.
Voyager and Airbus are undergoing design reviews alongside NASA, as Starlab has previously won funding under the agency’s Commercial LEO Destinations program.
The companies are focusing the habitat’s design on the market for microgravity research in space, with Starlab designed to continuously support a crew of four people and last as many as 30 years in orbit.

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Boeing narrowed its losses at the end of last year but the manufacturer’s 737 Max 9 crisis raises questions about it’s financial targets.
The company did not provide a 2024 outlook, weeks after a fuselage panel blew out midflight on a nearly new 737 Max 9 on Jan. 5.
The company’s free cash flow of $2.95 billion in the quarter topped analysts’ expectations.

A grounded Boeing 737 Max 9 aircraft at Los Angeles International Airport.
Eric Thayer | Bloomberg | Getty Images

Boeing narrowed its losses at the end of last year, but its CEO said now is “not the time” for financial targets as the manufacturer grapples with the fallout from a fuselage panel that blew out midflight on one of its new 737 Max 9s earlier this month.
Here’s how Boeing performed compared to what analysts polled by LSEG, formerly known as Refinitiv, expected for the last three months of 2023:

Adjusted loss per share: 47 cents vs. 78 cents expected
Revenue: $22.02 billion vs. $21.1 billion expected

Boeing posted a net loss of $30 million, or 4 cents a share in fourth quarter, down from a $663 million loss, or $1.06 a share a year earlier. Adjusting for one-time items, Boeing reported a net loss of 47 cents per share.
Its free cash flow of $2.95 billion in the quarter topped analysts’ expectations. Revenue grew 10% year over year to $22.02 billion.
Boeing CEO Dave Calhoun, who took the helm of the aircraft giant four years ago in the wake of two deadly crashes of the Max, is again under pressure to clean up the company’s reputation with airline customers, regulators and the public after the accident, after the Jan. 5 accident in which a panel blew out on Alaska Airlines Flight 1282 as the plane climbed out of Portland, Oregon, leaving a gaping hole in the side of the plane.
“While we often use this time of year to share or update our financial and operational objectives, now is not the time for that,” Calhoun said in a message to employees. “We will simply focus on every next airplane while doing everything possible to support our customers, follow the lead of our regulator and ensure the highest standard of safety and quality in all that we do. Ultimately – that is what will drive our performance.”
Federal investigators are examining whether the door plug was improperly installed before the Max 9 plane was handed off to Alaska late last year.

The accident was the most serious in a series of apparent production flaws, which have slowed down deliveries of new planes, and angered some of the company’s biggest airline customers in the process, while main rival Airbus continues to surpass Boeing in handing over new aircraft.
The Federal Aviation Administration last week cleared the Max 9 to fly again but said it would halt Boeing’s planned ramp up in production, which the manufacturer had aimed to get up to about 50 Max planes a month in 2025 or 2026. Boeing confirmed on Wednesday that it is building 38 Maxes a month.
The Boeing 737 Max is the company’s best-selling plane. A delay to production increases could hamper Boeing’s financial targets and affect suppliers that have been preparing for higher output, as well as customers counting on new planes to cater to post-Covid travel demand.
“Our people on the factory floor know what we must do to improve better than anyone. We should all seek their feedback, understand how to help and always encourage any team member who raises issues that need to be addressed,” he said. “We will go slow, we will not rush the system and we will take our time to do it right.”
Calhoun has visited company and supplier production lines as well as lawmakers on Capitol Hill in the weeks since the incident, vowing transparency and to fix any shortfalls in its manufacturing. The company had the first of several production stand-downs last week to discuss with workers manufacturing problems and other potential improvements to Boeing’s processes.
Boeing executives are also going to face questions about how the accident and added scrutiny from the FAA could affect the certification timeline for the Max 7 and Max 10, the smallest, and largest models of the company’s best-selling planes.
On Monday, after pressure from lawmakers, Boeing said it won’t seek a safety exemption for the Max 7 related to a de-icing system, but instead will work on an engineering solution. More

Hollywood studios may reevaluate their streaming release strategy, and opt to send more films to theaters, as Wall Street pushes for profitability over subscriber growth.
While Hollywood’s big-budget blockbusters typically get the most attention, a steady stream of low-to-mid-budgeted films from a variety of genres are essential to the health of the box office and can turn solid profits for studios.
Audience habits were changed by the influx of streaming services and pandemic restrictions that closed movie theaters, but now studios may need to retrain these moviegoers.

Bebe Wood, Renee Rapp and Avantika Vandanapu star as The Plastics in the 2024 adaptation of “Mean Girls.”

Paramount is making a habit of greenlighting low- to mid-budget films for its streaming service, only to about-face and send them to theaters first.
As the media company and its rivals try to claw their way to higher profits, the strategy could gain traction.

“Smile,” a horror film with a $17 million budget, was supposed to go straight to Paramount+ in 2022, but strong results from test screenings brought the flick to theaters. It generated more than $200 million at the global box office. A sequel is now in the works.
Then this year, “Mean Girls,” a musical film adaptation of the Broadway show and beloved 2004 film of the same name, arrived in theaters from Paramount, after positive responses from test audiences led the company to abandon its straight-to-streaming release. Since it came out on Jan. 12, the $36 million film has tallied $83 million globally, according to data from Comscore.
Paramount’s strategy is largely based on an individual film’s potential performance. But box-office and Wall Street analysts expect other studios will lean into the tactic, as they struggle to profit off of films that don’t get a theatrical release.
In the last five years, traditional media companies have pushed low-budget genre films out of theaters and onto their fledgling streaming platforms to pad their libraries and drive subscriber growth. And for a while, Wall Street rewarded these companies for adding more users each quarter.
Investor sentiment has changed. Now, as linear TV ad revenue shrinks, they want more immediate earnings growth, not the promise of profit in a few years. While Netflix is profitable and largely not involved in theatrical releases, traditional media players like Disney, Universal, Paramount and Warner Bros. Discovery may need to rethink their streaming strategies.

“Studios they can’t just bring stuff to streaming and use those movies as loss leaders to gain subscribers because investors want to see profitability,” said Eric Handler, managing director at Roth MKM. “The best way to maximize the profit of a movie is to bring it to theaters first.”

More drama and comedy on the big screen

While Hollywood’s big-budget blockbusters typically get the most attention, a steady stream of low- to mid-budget films from a variety of genres are essential to the health of the box office.
Low-budget films are typically those that cost under $20 million — films from the horror genre often fall in this category, as well as some independent features. Mid-budget films, meanwhile, are usually considered those under $100 million, although usually the budgets are closer to the $30 million to $70 million range. These are commonly comedies, romantic comedies and dramas.
And having more films in cinemas will boost theatrical revenues, box-office analysts say.
The combination of pandemic shutdowns and a push toward streaming significantly decreased the number of wide releases at the domestic box office. This also weighed on ticket sales.
In both 2018 and 2019, there were 112 films that debuted in more than 2,000 theaters. The annual box office those years reached $11.9 billion and $11.4 billion, respectively.

Domestic wide releases by year

2017 — 107 wide releases
2018 — 112 wide releases
2019 — 112 wide releases
2020 — 32 wide releases
2021 — 67 wide releases
2022 — 71 wide releases
2023 — 95 wide releases

* Wide releases are any films that debut in more than 2,000 locations.
Source: Comscore

In 2023, 95 films had wide releases, 15% fewer titles than pre-pandemic times, and the box office barely surpassed $9 billion. The haul was about 20% smaller than in 2019, and 24% less than in 2018.
“Since there is clearly a direct correlation between the number of wide releases and the positive impact on the box office bottom line, the decision by studios to take a given film and elevate it to a theatrical rather than a straight to streaming release is a gamble often worth taking,” said Paul Dergarabedian, senior media analyst at Comscore.
These films don’t often capture the same box-office glory of $200 million tentpoles, but their collective, incremental ticket sales can often represent a few billion dollars at the domestic box office.
Studios like Universal, which often releases a number of low-budget horror films each year, can see a significant return on investment. The company spent just under $250 million to produce “M3GAN,” “Knock at the Cabin,” “Cocaine Bear,” “Renfield,” “The Last Voyage of the Demeter,” “The Exorcist: Believer” and “Five Nights at Freddy’s,” not including marketing fees. All of those films were released in 2023 and generated more than $800 million at the global box office.

Falling back into old habits

But just bringing these kinds of films back to cinemas isn’t enough. Studios need to have a consistent release pattern.
Since many streaming services were released just before or during the pandemic, as consumers were restricted to their couches, viewing habits changed drastically. Platforms exacerbated the shift by releasing streaming-only titles which trained audiences that certain films — rom-coms, dramas and comedies — arrive first on streaming, not theaters.
Because of this convenience, many audiences see theaters as the place to see event movies or big blockbuster tentpoles from major franchises. Therefore, they go less frequently to the cinema even when smaller-budget films are available.
One factor is buoying the box office. More and more moviegoers are opting for higher-priced tickets for premium screens like IMAX, Dolby, ScreenX and 4DX when they choose to leave their couches.

General atmosphere during the IMAX private screening for the movie: “First Man” at the IMAX AMC Theater on October 10, 2018 in New York City.
Lars Niki | Getty Images Entertainment | Getty Images

However, with limited blockbuster titles in the first quarter of the year, audiences are gravitating toward smaller-budget titles.
Sony’s romantic comedy “Anyone But You,” staring Glen Powell and Sydney Sweeney, opened in late December and has continued to generate ticket sales at the box office. The film, which had a reported budget of around $25 million, has tallied $126.4 million in receipts globally.
Similarly, “The Beekeeper,” from Amazon MGM Studios, has tallied more than $100 million at the global box office since Jan. 12 on a reported budget of $40 million.
Paramount’s “Mean Girls,” Amazon MGM’s “The Boys on the Boat,” and Universal and Blumhouse’s “Night Swim” have also contributed to January’s box-office haul. They each have a budget under $40 million.
“As theaters endure what will hopefully be the nadir of a sluggish winter market, the success of films like ‘Mean Girls,’ ‘Anyone But You’ and ‘The Beekeeper’ have been bright spots in the beleaguered narrative of mid-budget films,” said Shawn Robbins, chief analyst at BoxOffice.com. “They’re propping up the box office in a way that sets the tone for 2024, a year of headwinds and transition as lingering impacts from industry strikes and evolving audience tastes converge.”
The first big blockbuster feature of the year is Warner Bros. Discovery and Legendary Entertainment’s “Dune: Part Two,” which arrives March 1.
Amid a slate of upcoming films that includes a number of sequels, prequels and remakes from big franchises like Fast and Furious, Mad Max, Planet of the Apes, Ghostbusters and Despicable Me, a collection of films with relatively small budgets could find success with audiences.
There’s Universal’s action flick “Monkey Man” and horror vampire movie “Abigail,” A24’s “Civil War” and, of course, Paramount’s “Smile” sequel.
“Audience interest in these decidedly un-blockbuster-like profit centers should offer a lesson to the industry that as audience tastes evolve, so too should studios and creatives and recognize the benefits of releasing more such films in this movie marketplace environment,” said Dergarabedian.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC.
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