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    Gap reports another period of declining sales across all brands, warns of ‘uncertain consumer’

    Gap reported mixed results on Thursday and underwhelming current-quarter guidance as the longtime mall retailer saw another quarter of declining sales across all four of its brands.
    Sales dropped 8% to to $3.55 billion, compared with $3.86 billion a year earlier.
    Gap has a new CEO at the helm: former Mattel executive Richard Dickson, who started in the new role on Tuesday.

    Pedestrians walk past Old Navy and GAP stores in Times Square, New York City.
    Drew Angerer | Getty Images

    Gap reported mixed results on Thursday and underwhelming current-quarter guidance as the longtime mall retailer warned of an “uncertain consumer” and posted another quarter of declining sales across all four of its brands.
    The company is projecting net sales to decrease in the low double-digit range for the fiscal third quarter compared to last year’s net sales of $4.04 billion. Analysts had expected third-quarter sales to be down 6.8%, according to estimates compiled by Refinitiv.

    For the three-month period that ended July 29, Gap beat Wall Street’s estimates on the bottom line but fell short on the top.
    Here’s how the apparel retailer did in its fiscal second quarter compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

    Earnings per share: 34 cents, adjusted, vs. 9 cents expected
    Revenue: $3.55 billion vs. $3.57 billion expected

    The company’s reported net income for the quarter was $117 million, or 32 cents per share, compared with a loss of $49 million, or 13 cents per share, a year earlier. Excluding one-time restructuring costs, Gap reported a net income of 34 cents per share.
    Sales dropped 8% to to $3.55 billion, compared with $3.86 billion a year earlier, representing a steeper year-over-year sales drop than during the fiscal first quarter. On a two-year bases, revenue is down 15.7%.
    Gap’s business has been under pressure for numerous quarters as it struggles to hang on to market share and regain the relevance that once defined it against a tough macroeconomic backdrop.

    ‘Choppy consumer’

    During a call with analysts, executives spoke repeatedly about the “weak apparel environment,” “choppy consumer market” and a target consumer that’s under “pressure.”
    It’s feeling that pinch acutely at its largest revenue driver, Old Navy, where its low-income customer is pulling back on spending amid high inflation, interest rates and the looming resumption of student loan payments.
    “We are all well aware of the mixed economic data and uncertain consumer trends in the marketplace, including the new dynamic regarding student loan repayments beginning in the third quarter,” finance chief Katrina O’Connell said on a call with analysts. “As a result, we continue to be prudent in our approach to planning in light of what remains an uncertain macro environment and choppy consumer backdrop.”
    Sales declined 6% at Old Navy, on top of a sharp 13.6% decline in the prior-year period.
    “The core family shopper at Old Navy is under a significant amount of financial pressure and has cut back on spending, but to nowhere near this degree. That means that part of Old Navy’s problem is that its shoppers are defecting to buy apparel elsewhere,” retail analysts and GlobalData managing director Neil Saunders said of the results. “While some of this is the result of people seeking out lower priced alternatives, some is also a consequence of boring ranges and styles at Old Navy.
    “In our view, the brand has lost its edge and is churning out more of the same season after season, rather than being led by trends,” he added. “This, combined with a more cautious consumer, is a losing combination.”
    Across the business, same store sales were down 6% during the quarter, while analysts had expected comparable sales to be down 4.4%, according to StreetAccount.
    Gross margins, which have been expanding over the last two quarters, were up 3.1 percentage points to 37.6% thanks to lower air freight expenses and a slowdown in discounting, Gap said. It expects gross margins to continue to grow throughout the fiscal year.
    Halfway into Gap’s fiscal year, the retailer is expecting full-year sales to drop in the mid-single-digit range compared to last year, which is in line with what analysts had expected, according to Refinitv.
    The report comes two days into Richard Dickson’s tenure as Gap’s new CEO. The former Mattel executive, who started in the new role on Tuesday, is a branding expert who oversaw Mattel’s Barbie franchise. Gap is betting Dickson can breathe new life into Gap’s brands: its namesake banner, Old Navy, Banana Republic and Athleta. 

    Brand results

    All four of the brands, which have vastly different assortments and customer bases, have seen quarter after quarter of sagging sales and that trend has continued.
    Here’s a closer look at how they did during the fiscal second quarter:
    Old Navy: The affordable apparel retailer saw sales and comparable sales both down 6% at $1.96 billion. Its target customer, the lower-income consumer, shopped less during the quarter and sales were slow in its active category. The brand did see bright spots in women’s tops, woven bottoms and upticks in men’s and kids’ apparel. 
    Gap: The eponymous banner saw sales down 14% at $755 million compared to the year-ago period. The brand has been under pressure from the shutdown of Yeezy Gap and the sale of Gap China. Sales were strong in its women’s category but were offset by store closures in North America. Comparable sales were down 1%. 
    Banana Republic: Sales were off 11% at $480 million compared to last year while comparable sales were down 8%. The brand is lapping outsized growth from past quarters when it saw a pull forward in demand from shoppers who suddenly needed clothes for work and going out again after the Covid pandemic ebbed. The brand is in a state of transition and recently launched a homeware category that includes premium bedding, rugs and decor with more to come this fall.
    Athleta: The athletic apparel brand saw sales of $341 million. While revenue was only down 1% compared to the year-ago period, comparable sales were down 7%. For a third quarter in a row, Gap missed the mark on what Athleta customers were looking for as the brand continues to grapple with finding the right product assortment. It recently brought on Chris Blakeslee as CEO. Most recently, he served as president of Athleta’s competitor Alo Yoga and its sister company Bella+Canvas.
    “We’re seeing encouraging signs of progress, as our teams streamline the way we work so we can focus on growth-driving initiatives,” Dickson said in a news release. “This means we have to do things differently, with a clear focus on redefining our brands’ meaning to consumers, focusing on creativity, designing for relevance as a pursuit rather than a goal, and leveraging our remarkable legacy to shape an exciting new future.”
    Those signs of progress include a “fairly well” start to back-to-school shopping and a 29% year-over-year drop in inventories, O’Connell said.
    Despite sluggish sales across Gap’s brands, the finance chief insisted the banners either “maintained or gained” share during the quarter, fueled by strength in the women’s category.
    “We know that regardless of market conditions, strong brands, brands that matter, win,” said O’Connell. “So we remain focused on the levers and opportunities in our control to deliver on behalf of our customers, employees and shareholders.”

    New CEO

    During his first earnings call as Gap’s CEO, Dickson spoke repeatedly about the importance of the retailer’s brands and how his efforts will be focused on reviving them.
    “Our brands matter, but it can matter even more,” said Dickson.
    “In my experience on the board and certainly on the ground for three days running fast, our teams are incredibly creative and they’re all in on this. They’re differentiating and strengthening our brands, being design-centric, being customer-obsessed and ultimately being culturally relevant.”
    Still, he acknowledged that “restructuring is challenging” and change won’t come fast.
    Gap Chair Bob Martin, who served as interim CEO for more than a year prior to Dickson’s appointment, had been working to restructure both its business and management organization so new chief executive would be able to hit the ground running as soon as he arrived.
    Over the last year, Gap has cut more than 2,000 employees, or about 25% of its corporate roles, which has increased the number of direct reports for each manager from two to four and reduced management layers from 12 to eight, the company said previously. The cuts were designed to remove layers of red tape and bureaucracy to make Gap more nimble in its decision-making and focused on its creative efforts.
    The layoffs are saving Gap about $300 million, the first half of which will come in fiscal 2023. During the quarter ended April 29, Gap’s margins shot up 5.6 percentage points year over year to 37.1%. That news sent its stock surging in aftermarket trading despite another quarter of declining sales.  More

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    Viasat reports second satellite malfunction in a matter of weeks

    A second Viasat communications satellite is malfunctioning in orbit, this time from the fleet of recently acquired U.K.-based Inmarsat.
    The I6 F2 satellite, which Inmarsat launched in February, suffered a failure with its power system while climbing in orbit to where it planned to operate as a backup.
    Viasat said the I6 F2 issue “does not impact ongoing customer services,” and is also not expected to “materially affect the financial outlook” the company gave in August.

    An artist’s rendering of an I6 satellite in orbit.

    A second Viasat communications satellite is malfunctioning in orbit, this time from the fleet of recently acquired U.K.-based Inmarsat, the company said on Thursday.
    The I6 F2 satellite, which Inmarsat launched in February, suffered a failure with its power system while climbing in orbit to where it planned to operate as a backup.

    Airbus manufactured the satellite and is, alongside Viasat, assessing whether the satellite can be recovered for use.
    A person familiar with the matter told CNBC that the odds of the satellite recovering are low.
    Viasat said the I6 F2 issue “does not impact ongoing customer services,” and is also not expected to “materially affect the financial outlook” the company gave in August.
    The malfunction with the satellite, inherited by Viasat after closing its $7.3 billion acquisition of Inmarsat in May, comes weeks after the Carlsbad, California-company disclosed that its highly anticipated, $750 million ViaSat-3 Americas satellite suffered a malfunction.
    Viasat has been assessing how to address “unanticipated challenges” presented by the ViaSat-3 Americas problem.

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    I6-F2 had not finished orbit raising nor begun the commissioning process yet.
    Viasat noted the I6 F1 satellite is operational and continues to perform as expected. That satellite launched in December and provides communications services above the Indian Ocean. More

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    Powell’s pivotal speech Friday could see a marked shift from what he’s done in the past

    Many expect a circumspect Fed Chair Jerome Powell when he makes a speech from Jackson Hole, Wyoming on Friday morning.
    “I just think he’s going to play it about as down the middle as possible,” said Joseph LaVorgna, chief economist at SMBC Nikko Securities America. “He doesn’t want to get himself boxed into a corner one way or another.”
    Markets Thursday braced for an unpleasant surprise, with stocks selling off and Treasury yields climbing.
    While the temptation for the Fed now might be to signal it has largely won the inflation war, many market participants think that would be unwise.

    Federal Reserve Chairman Jerome Powell testifies before the House Committee on Financial Services June 21, 2023 in Washington, DC. Powell testified on the Federal Reserve’s Semi-Annual Monetary Policy Report during the hearing. 
    Win Mcnamee | Getty Images News | Getty Images

    Since he took over the chair’s position at the Federal Reserve in 2018, Jerome Powell has used his annual addresses at the Jackson Hole retreat to push policy agendas that have run from one end of the policy playing field to the other.
    In this year’s iteration, many expect the central bank leader to change his stance so that he hits the ball pretty much down the middle.

    With inflation decelerating and the economy still on solid ground, Powell may feel less of a need to guide the public and financial markets and instead go for more of a call-’em-as-we-see-’em posture toward monetary policy.
    “I just think he’s going to play it about as down the middle as possible,” said Joseph LaVorgna, chief economist at SMBC Nikko Securities America. “That just gives him more optionality. He doesn’t want to get himself boxed into a corner one way or another.”
    If Powell does take a noncommittal strategy, that will put the speech in the middle of, for instance, 2022’s surprisingly aggressive — and terse — remarks warning of higher rates and economic “pain” ahead, and 2020’s announcing of a new framework in which the Fed would hold off on rate hikes until it had achieved “full and inclusive” employment.
    The speech will start Friday about 10:05 a.m. ET.

    Nervous markets

    Despite the anticipation for a circumspect Powell, markets Thursday braced for an unpleasant surprise, with stocks selling off and Treasury yields climbing. Last year’s speech also featured downbeat anticipation and a sour reception, with the S&P 500 off 2% in the five trading days before the speech and down 5.5% in the five after, according to DataTrek Research.

    A day’s wavering on Wall Street, though, is unlikely to sway Powell from delivering his intended message.
    “I don’t know how hawkish he needs to be given the fact that the funds rate is clearly in restrictive territory by their definition, and the fact the market has finally bought into the Fed’s own forecast of rate cuts not happening until around the middle or second half of next year,” said LaVorgna, who was chief economist for the National Economic Council under former President Donald Trump.
    “So it’s not as if the Fed has to push back against a market narrative that’s looking for imminent easing, which had been the case from essentially most of the past 12 months,” he added.

    Indeed, the markets seem finally to have accepted the idea that the Fed has dug in its heels against inflation and won’t start backing off until it sees more convincing evidence that the recent spate of positive news on prices has legs.
    Yet Powell will have a needle to thread — assuring the market that the Fed won’t repeat its past mistakes on inflation while not pressing the case too hard and tipping the economy into what looks now like an avoidable recession.
    “He’s got to strike that chord that the Fed is going to finish the job. The fact is, it’s about their credibility. It’s about his legacy,” said Quincy Krosby, chief global strategist at LPL Financial. “He’s going to want to be a little more hawkish than neutral. But he’s not going to deliver what he delivered last year. The market has gotten the memo.”

    Inflation’s not dead yet

    That could be easier said than done. Inflation has drifted down into the 3%-4% range, but there are some signs that slowdown could be reversed.
    Energy prices have risen through the summer, and some factors that helped bring down inflation figures, such as a statistical adjustment for health-care insurance costs, are fading. A Cleveland Fed inflation tracker anticipates August’s figures will show a noticeable jump. Bond yields have been surging lately, a response that at least partly could indicate an anticipated jump in inflation.
    At the same time, consumers increasingly are feeling pain. Total credit card debt has surpassed $1 trillion for the first time, and the San Francisco Fed recently asserted that the excess savings consumers accumulated from government transfer payments will run out in a few months.
    Even with worker wages rising in real terms, inflation is still a burden.
    “When all is said and done, if we don’t quell inflation, how far are those wages going to go? With their credit cards, with food, with energy,” Krosby said. “That’s the dilemma for him. He has been put into a political trap.”
    Powell presides over a Fed that is mostly leaning toward keeping rates elevated, though with cuts possible next year.

    Still no ‘mission accomplished’

    Philadelphia Fed President Patrick Harker is among those who think the Fed has done enough for now.
    “What I heard loud and clear through my summer travels is, ‘Please, you’ve gone up very rapidly. We need to absorb that. We need to take some time to figure things out,'” Harker told CNBC’s Steve Liesman during an interview Thursday from Jackson Hole. “And you hear this from community banks loud and clear. But then we’re hearing it even from business leaders. Just let us absorb what you’ve already done before you do more.”

    While the temptation for the Fed now might be to signal it has largely won the inflation war, many market participants think that would be unwise.
    “You’d be nuts to you know, to put out the mission accomplished banner at this point, and he won’t, but I don’t see any need for him to surprise hawkish either,” said Krishna Guha, head of global policy and central bank strategy for Evercore ISI.
    Some on Wall Street think Powell could address where he sees rates headed not over the next several months but in the longer run. Specifically, they are looking for guidance on the natural level of rates that are neither restrictive nor stimulative, the “r-star (r*)” value of which he spoke during his first Jackson Hole presentation in 2018.
    However, the chances that Powell addresses r-star don’t seem strong.
    “There was a sort of general concern that Powell might surprise hawkish. The anxiety was much more about what he might say around r-star and embracing, high new normal rates than it was about how he would characterize the near-term playbook,” Guha said. “There’s just no obvious upside for him in embracing the idea of a higher r-star at this point. I think he wants to avoid making a strong call on that.”
    In fact, Powell is mostly expected to avoid making any major calls on anything.
    At a time when the chair should “take a victory lap” at Jackson Hole, he instead is likely to be more somber in his assessment, said Michael Arone, chief investment strategist at State Street’s US SPDR Business.
    “The Fed likely isn’t convinced inflation has been beaten,” Arone said in a note. “As a result, there won’t be any curtain calls at Jackson Hole. Instead, investors should expect more tough talk from Chairman Powell that the Fed is more committed than ever to defeating inflation.” More

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    Stocks making the biggest moves after hours: Affirm, Gap, Marvell and more

    Check out the companies making headlines in extended trading on Thursday.

    Customers walk through a shopping mall along the Magnificent Mile in Chicago, March 15, 2023.
    Scott Olson | Getty Images

    Affirm Holdings —  The stock added 10.8% after its quarterly results came in better than expected. Affirm posted a loss of 69 cents per share on revenue of $446 million. Analysts polled by Refinitiv had estimated a loss of 85 cents per share on $406 million in revenue. The CEO cited sequentially improved credit results and accelerated growth.

    Nordstrom — Shares fell nearly 4% after the company reported an earnings and revenue beat in the second quarter. To be sure, sales fell 8.3% from the year-ago quarter. 
    Gap — Shares rose almost 2% in spite of a mixed quarterly report. Gap posted 34 cents per share, after adjustments, beating Refinitiv estimates of 9 cents per share. Revenue, however, missed expectations. The clothing retailer reported $3.55 billion in revenue, shy of the $3.57 million estimate. Management reported a significantly improved inventory position, but expects revenue in the third quarter to decline at a low double-digit pace year-over-year, compared with analyst forecasts of a 6.8% decline.
    Marvell Tech —  Shares of the chipmaker tumbled more than 5% even as the company’s quarterly results topped Wall Street’s estimates. Earnings per share came in at 33 cents, excluding items, while analysts polled by Refinitiv had estimated 32 cents per share. Marvell posted $1.34 billion in revenue, compared with analyst estimates of $1.33 billion. 
    Ulta Beauty — The beauty retailer’s shares gained more than 2% after its second-quarter results came in better than expected. Ulta earned $6.02 per share on $2.51 billion in revenue. Analysts had forecasted earnings of $5.85 per share on $2.51 billion in revenue, according to Refinitiv. The company also raised its full-year forecast.
    Intuit — Shares fell more than 2% despite the company reporting fiscal fourth-quarter earnings that beat on both the top and bottom lines. Intuit’s revenue guidance for the current quarter came in below estimates. The company expects first-quarter revenue to rise between 10% and 11%, while analysts had estimated 13% growth.
    Workday – The cloud-based enterprise management jumped 4% after posting a beat on the top and bottom lines in the second quarter. The company also raised its fiscal 2024 subscription revenue forecast. More

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    August once again lives up to its dismal reputation for stocks

    The S&P 500 is down more than 3% this month, on pace to snap a five-month advance.
    The broad market index is also on track to post its worst monthly performance since December — when it lost 5.9%.
    But this behavior at this time of the year isn’t out of character.

    Traders work on the floor of the New York Stock Exchange, Aug. 15, 2023.
    Brendan McDermid | Reuters

    Wall Street is really suffering through the dog days of August.
    The S&P 500 is down more than 3% this month, on pace to snap a five-month winning streak. The broader market index is also on track to post its worst monthly performance since December, when it lost 5.9%.

    The Nasdaq Composite is also headed for its biggest one-month loss since December, falling 5.2%. The Dow Jones Industrial Average has declined 3% in August.
    These pullbacks are a contrast to the market rally seen earlier this year. The Nasdaq Composite had its best first-half performance in 40 years in 2023. The S&P 500’s gains over the first six months of the year marked the index’s best start to a year since 2021.
    There are several things pressuring Wall Street now, ranging from seasonal factors to concerns about the global economy and the Federal Reserve. Here’s a breakdown.

    Stock chart icon

    Tough month for the S&P 500

    August — historically a tough month

    This behavior at this time of the year isn’t out of character.
    Over the past 10 years, the S&P 500 has averaged a gain of just 0.1% for August — making it the third-worst month for the index, CNBC Pro analysis of seasonal trends showed. Go back 20 years and the performance gets worse: The S&P 500 has averaged a monthly 0.1% loss in that time.

    There are several reasons the market tends to see lackluster performances this month, including:

    Lower trading volumes: Trading tends to decline in August as traders and investors go on vacation before the summer ends. This can lead to more volatile swings in prices.
    Booking profits before September: While August is a tough month for Wall Street, it has nothing on September — historically the worst of all months for the market. The S&P 500 has averaged a 0.5% loss in September over the past 20 years. Over the past 10 years, the S&P 500 has fallen an average of 1% each September.

    “The S&P 500 continues to track its seasonal tendency,” Oppenheimer technical strategist Ari Wald wrote earlier this month. “For S&P 500 levels, we see 4,400 as the start of support (50-day average) that extends down to 4,200 (Feb. peak).”

    China’s struggles

    Economic data out of China has been lackluster, to say the least. The world’s second-largest economy earlier this month reported much weaker-than-expected retail sales growth for July, while industrial production also rose less than expected.
    A slowdown in China’s economy could spell trouble for markets around the world, including the U.S., given the sheer number of major corporations that rely on the country as a strong source of revenue.
    Additionally, concerns over another real estate crisis in China are developing. Heavily indebted Country Garden Holdings fell to a record low and was removed from the Hang Seng stock index in Hong Kong. Evergrande, another Chinese real estate giant, filed for bankruptcy protection in the U.S. last week. All this led the Chinese central bank to cut interest rates this month.
    “The country needs a good U.S.-style restructuring of its real estate market, where apartment prices are slashed, debt is restructured, and new equity investors are brought in as grave-dancers,” Ed Yardeni of Yardeni Research said in a note earlier in August. “Until then, we’re left watching the wreckage unfold.”

    Higher Treasury yields

    Another source of market pressure this month has been concern that the Fed will keep its benchmark lending rates higher for longer than anticipated. Earlier this week, that drove the 10-year Treasury note yield to its highest level since 2007.
    In a summary from its July meeting, the Fed noted that central bank officials still see “upside risks” to inflation — which could lead to more rate hikes. Specifically, the central bank said: “With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy.”
    This all comes as new data appears to show inflation is moving closer to the Fed’s 2% target. The consumer price index, a widely followed inflation gauge, rose 3.2% in July on a year-over-year basis. That rate is well below last year’s pace, when CPI peaked at 9.1%, the highest in 40 years.
    Investors will get more clues on the potential for future Fed tightening on Friday, when Chair Jerome Powell delivers a speech at an annual economic symposium in Jackson Hole, Wyoming. More

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    Dollar Tree’s shares sink 13%, as CEO says ‘challenging’ economy is pressuring discounter

    Dollar Tree beat Wall Street’s fiscal second-quarter earnings and revenue expectations.
    Its shares dropped 13% as the discounter said consumers are spending mostly on food and essentials.
    The company raised its sales outlook but narrowed its profit guidance.

    Shoppers are seen at the parking lot of a Dollar Tree store in Bloomsburg, Pennsylvania.
    Paul Weaver | Lightrocket | Getty Images

    Shares of Dollar Tree fell Thursday and hit a 52-week low, after the retailer said customers’ shopping lists have largely narrowed to food and necessities.
    The discounter joins a growing group of retailers catering to consumers who have become more price-sensitive and selective about spending. Macy’s and Foot Locker also reported this week that sales have been hit as customers largely skip over discretionary items, as they deal with rising interest rates and juggling expenses like commuting, dining out and paying for more expensive groceries.

    On a call with investors, Dollar Tree CEO Rick Dreiling said customers’ shopping patterns reflect a tougher economic backdrop and a reversion to pre-pandemic spending habits.
    “While the challenging macro environment continues to pressure our sales mix in both segments, I am pleased with the gains in traffic, new customers and market share,” he said.
    Dollar Tree, which includes its namesake banner and more grocery-focused Family Dollar, closed nearly 13% lower Thursday — even as it beat Wall Street’s fiscal second-quarter expectations.
    The company raised its full-year forecast for sales, but narrowed its outlook for earnings. Dollar Tree said the guidance reflects improved sales, and attributed the tighter profit range to more low-margin purchases such as food, ongoing challenges with shrink, the term used for lost, damaged or stolen goods, and higher diesel fuel costs.
    Dollar Tree now expects consolidated net sales to range from $30.6 billion to $30.9 billion for the full fiscal year, and earnings per share to range from $5.78 to $6.08. It had previously forecast consolidated net sales of between $30.0 billion and $30.5 billion and diluted earnings per share of between $5.73 and $6.13. Dollar Tree’s guidance disappointed Wall Street, as the lower end of its earnings forecast fell below consensus expectations.

    Here’s how the company did for the three-month period that ended July 29, compared with what Wall Street expected, based on a survey of analysts by Refinitiv:

    Earnings per share: 91 cents vs. 87 cents expected
    Revenue: $7.32 billion vs. $7.18 billion expected

    Net income fell to $200.4 million, or 91 cents per share, from $359.9 million, or $1.61 per share, a year earlier.
    Total revenue rose from $6.77 billion in the year-ago period.
    Same-store sales climbed 6.9% across the company. At the Dollar Tree chain, same-store sales increased 7.8% and for Family Dollar, same-store sales rose 5.8% year over year.
    Dollar Tree is in the middle of a broader effort to revamp its stores and its price points. Dreiling, former executive chairman of the company’s board and ex-CEO of rival Dollar General, has spearheaded the turnaround since he was named chief executive of Dollar Tree early this year.
    The company has expanded its range of items to include more that sell for a higher price point, such as frozen and refrigerated items that sell for $3, $4 and $5.
    During the second quarter, Dollar Tree’s margins got hurt by shoppers’ emphasis on buying food and essentials, which tend to be less profitable. Along with that spending shift, the company’s profits have gotten squeezed by higher expenses including wage increases for store employees, investments in store repairs and bigger utility bills due to hotter summer weather in much of the country.
    Its margins also decreased compared with the year-ago period when it phased in price hikes from $1 to $1.25.
    More retailers have called out shrink as a challenge, too, as some thieves steal goods to sell on third-party marketplaces. On a call with investors, Dreiling said the retailer is rolling out new approaches to try to prevent theft in the back half of the year. Those efforts include moving and locking up some merchandise and even discontinuing some heavily targeted items.
    At both chains, shoppers made more frequent trips to stores in the second quarter. The Dollar Tree chain saw a nearly 10% jump in traffic, but the average amount spent by customers who visited the stores dropped by 1.6%. At Family Dollar, traffic rose by about 3% and the average ticket increased by about 2%.
    Separately, U.S. regulators announced a settlement this week with Dollar Tree and competitor Dollar General, which were both issued workplace safety violations. As part of the settlement, the retailers must fix hazards for employees, such as blocked exits and unsafe storage of materials.
    In a statement, Dollar Tree COO Mike Creedon said the company is “implementing substantial safety policies, procedures, and training, all intended to safeguard the wellbeing of our associates.” More

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    31% of investors are OK with using artificial intelligence as their advisor

    Generative artificial intelligence is technology that uses algorithms to create new content. That can include financial advice, as well as things like essays, song lyrics and art.
    31% of investors would be comfortable putting AI’s financial advice into practice without verifying it first, according to a CFP Board survey.
    AI outputs aren’t necessarily reliable all the time. It may also be difficult to know what questions to ask an AI chatbot, especially for those with complex financial lives.

    Jakub Porzycki/NurPhoto via Getty Images

    Nearly 1 in 3 investors would use artificial intelligence as their financial advisor, a new survey suggests — and that has the potential to lead to flawed advice, experts said.  
    Specifically, 31% of investors queried would be comfortable implementing financial advice from a generative AI program without first verifying those recommendations with another source, according to a poll by the Certified Financial Planner Board of Standards, the body that governs the CFP designation for financial advisors.

    “It is a bit concerning,” said Kevin Keller, CEO of the CFP Board.
    In simple terms, AI is technology that aims to simulate human intelligence. Generative AI uses algorithms to create new content like essays, song lyrics, art, photography and computer code — or, in this case, financial advice.
    ChatGPT, a program that went viral after being debuted to the public late last year, is one example of generative AI.
    More from Personal Finance:Interest rates, inflation push Gen Z to trade on emotion5 cities with the highest property tax rates81% of full-time workers want a 4-day work week
    Would-be financial-advice recipients can use such programs to ask financial questions or prompts.

    Consider this sample prompt from Keller: “Create an asset allocation for a 62-year-old male investor who is moderately risk tolerant.”
    The algorithms that underpin generative AI compile data from sources like the internet to develop responses, and those data sources may not be reliable. The quality of the results depend on the quality of the model, according to McKinsey & Co.
    “The outputs aren’t always accurate — or appropriate,” the consulting firm wrote of generative AI.
    “For its part, ChatGPT seems to have trouble counting, or solving basic algebra problems — or, indeed, overcoming the sexist and racist bias that lurks in the undercurrents of the internet and society more broadly,” it added.
    In short, financial advice outputs won’t necessarily be 100% trustworthy.

    Of course, technology and algorithms aren’t new for investors — nor is the skepticism surrounding that technology.
    So-called robo-advisors, which use algorithms to automate asset allocations for investors, began popping up around the time of the 2008 financial crisis. They’ve grown in popularity, inspiring questions as to whether they can deliver advice on par with human financial advisors.
    Investors — especially those with relatively complicated financial lives — a face an additional hurdle with AI: Engaging with it becomes difficult if someone doesn’t know what questions to ask in the first place, wrote Michael Kitces, a CFP and head of planning strategy at Buckingham Wealth Partners.
    “Have you tried logging into ChatGPT to ask it questions only to find yourself sitting there wondering, ‘What should I ask an AI chatbot?’ Kitces said. “Now imagine that feeling again, but this time you have to ask it the right question because your financial life savings are on the line.”

    It’s the Wild West out there.

    Kevin Keller
    CEO of the CFP Board

    Perhaps counterintuitively, young investors seem more wary about AI outputs than older investors: 62% of investors age 45 and older said they were “very satisfied” with getting financial advice from generative AI, versus 38% of investors under 45, according to the CFP Board poll.
    Yet older investors — who may be in or near retirement — are generally the ones with more complex finances and in need of more tailored advice, experts said.
    Ultimately, there have always been do-it-yourself investors, and there will continue to be, Keller said. Those who leverage AI for financial advice should “trust but verify,” he said.
    “It’s the Wild West out there,” he added. More

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    Lionel Messi lifts MLS to new heights, but the league needs more than ‘the GOAT’ to grow

    Global superstar Lionel Messi joined the U.S. professional soccer team this summer, causing a surge in ticket and merchandise sales, plus viewership of games.
    Still, Major League Soccer lags behind mainstay U.S. leagues like the NFL, NBA and MLB.
    While Messi has provided a significant boost, MLS needs to sign more stars.

    Lionel Messi after scoring against FC Dallas at Toyota Stadium on August 06, 2023 in Frisco, Texas.
    Logan Riely | Getty Images

    Superstar Lionel Messi has only played fewer than 10 games in the U.S. men’s professional soccer league and he’s having never-before-seen effects.
    Messi joined Major League Soccer’s Inter Miami CF in late July, triggering a rise in ticket prices and the markets the team has so far visited. His signing led to record-breaking jersey and merchandise sales. TV and streaming viewership surged.

    “I don’t want to say we underestimated Messi coming to the MLS, but it’s been unbelievably impactful to our league across all points,” said Camilo Durana, executive vice president of club services and fan development at MLS.
    Still, while Messi has had an unprecedented effect on MLS, which was founded in the 1990s, it hasn’t been enough to catch up to the other more prominent professional sports leagues in the U.S. like the NFL and NBA, in terms of viewership and ticket prices.
    “The MLS needs more Messi’s,” sports consultant Lee Berke said, noting MLS’ history of bringing over stars like David Beckham, Wayne Rooney and Thierry Henry in the twilight of their careers and beckoning more fans and viewership in those moments.
    On top of competition from other, more established leagues for top players, Saudi Arabia has also joined the mix recruiting players with offers of boatloads of cash from its Public Investment Fund, including Messi. Brazilian soccer star Neymar recently accepted an offer, following soccer legends Cristiano Ronaldo and Karim Benzema, with contracts worth hundreds of millions of dollars.

    The Messi effect

    The Argentine superstar joined the MLS in July, coming off a World Cup victory in 2022. Messi left the French team Paris Saint-Germain after reluctantly exiting FC Barcelona in 2021 – his home since signing with the team at the age of 13.

    The 36-year-old, often considered the “GOAT,” or “greatest of all time” in the sport, is nearing his retirement and giving MLS – still considered to be in its infancy compared with other U.S. leagues – a much needed boost.

    Supporters of Argentinian soccer player Leo Messi gather outside the Inter Miami DRV Pnk Stadium, in Fort Lauderdale, Florida, July 11, 2023.
    Marco Bello | Reuters

    Since joining, Inter Miami rose to the highest-selling MLS team for tickets from the 13th spot on StubHub.
    Since joining Inter Miami, Messi is the top-selling player across all sports on Fanatics, a digital sports platform that sells gear and team merchandise, a company spokesperson said. In the time since Messi joined Inter Miami, the team has sold more merchandise than it did in all of 2022 on Fanatics. And he’s been a boost to MLS’ TV home, Apple TV+.
    MLS’ Durana also said that the surge in ticket sales came immediately when Messi announced his intention to sign with the league. “And the best part is, he came to play,” said Durana of Messi’s stats since his arrival. 
    Messi so far has only played in the newly expanded Leagues Cup, a tournament between North America’s two leagues MLS and Mexico’s Liga MX, and a U.S. Cup semifinal game. Inter Miami won the Leagues Cup on Aug. 19, and Messi scored at least one goal in all seven of the games he played in.
    On Saturday, Messi will play in his first regular-season game against the Red Bulls in Harrison, New Jersey, about a 30-minute train ride west of Manhattan.
    “These are numbers we don’t see at a MLS match normally,” said Marc de Grandpré general manager of the New York Red Bulls regarding ticket sales. He added lot of people who aren’t fans will be coming to the arena just to see Messi.
    Looking to ride this wave, teams are pushing season tickets as a surefire way to see Inter Miami play again next season at face value.
    Ticket prices on the secondary market have shot up. The average ticket price for Inter Miami on StubHub is $161, nearly 64% higher than the league average. Nationwide match-up ticket sales are up, too.
    The overall average MLS ticket price is up to $98, while the average ticket price for the Leagues Cup overall was $152. For games that Messi has played in, the average ticket price is more than double that at $329, according to StubHub.
    While this has been a boon to MLS, these stats still lag behind the NFL and NBA.
    “It’s hard to compare this to other sports. Yes, what we’re seeing in pricing for the MLS for Messi games is unprecedented. But if you look at average ticket prices for NFL Sunday games, that’s still king in that sense,” said StubHub spokesperson Adam Budelli.
    Anytime Tom Brady – who retired from the NFL earlier this year – was on the road during his last few seasons with Tampa Bay before retiring, StubHub saw ticket prices and demand surge in those markets, too. Or when Lebron James was chasing the NBA’s all-time scoring record earlier this year. 
    “Those average ticket prices were still three times what we’re seeing for Messi games so far this year,” Budelli said.

    Playing catch-up

    Like ticket sales, viewership for MLS games lags far behind professional U.S. sports leagues.
    Disney’s ESPN averaged 14.8 million viewers for each of its NFL games last season while the 34 regular-season MLS matchups it aired in 2022 on ABC and ESPN’s networks averaged 343,000 viewers. This marked the highest MLS viewership across Disney’s networks since 2007.
    Quantifying viewership for this season is difficult as the majority of MLS games are exclusively on Apple’s streaming service Apple TV+ in an add-on package.
    “This is a primarily streaming-only package. If there was a robust linear TV presence, Messi games would find their way onto major prime-time slots and get high viewership,” sports consultant Berke said.

    Tom Brady #12 of the Tampa Bay Buccaneers waves to the crowd as he runs off the field after defeating the New England Patriots in the game at Gillette Stadium on October 03, 2021 in Foxborough, Massachusetts.
    Adam Glanzman | Getty Images

    Apple and MLS signed a 10 year-deal that started this season to broadcast matches. Matches are accessed through the MLS Season Pass, an add-on to the Apple TV+ streaming service, which costs $6.99 a month. MLS Season Pass costs $12.99 as an add on to Apple TV+, and $14.99 on its own.
    The partnership is just months-old, but MLS said subscribers have more than doubled since Messi’s arrival, and Spanish-language viewership on MLS Season Pass has surpassed 50% for Messi matches.
    An Apple representative pointed to comments made by Apple CEO Tim Cook during a recent earnings call, and Jorge Mas, Inter Miami’s managing owner, on X, the platform formerly known as Twitter, regarding the MLS streaming subscribers since Messi’s arrival.
    “It’s clearly in the early days, but we are beating our expectations in terms of subscribers, and the fact that Messi went to Inter Miami helped us out there a bit,” Cook said during the August earnings call.
    MLS’ media rights deal with Apple TV+ came as the league saw an opportunity with its young fanbase, which tends to lean toward streaming, MLS’ Durana said. Since the League Pass is also available globally, it allows MLS to expand its fan base across U.S. borders, where soccer is typically the dominant professional sport unlike the U.S. 
    MLS did sign a four-year deal for some of its matches to air on traditional TV networks, which includes select regular-season games, the Leagues Cup and MLS Cup.
    Leagues Cup matches averaged 680,000 viewers, higher than every MLS postseason average ever, according to Nielsen. In total, 13.6 million people tuned into the Leagues Cup games.
    For the few games that have appeared on traditional TV this season, MLS is averaging 250,000 viewers season to date.
    As media companies still figure out the economics of streaming – and how to make it profitable – sports has remained a driver of viewership on broadcast and pay TV. And the lucrative fees that stem from media rights deals have propped up leagues and teams, often allowing them to invest more heavily in players.
    “You need to invest in more players. In order to do that, the league’s economics need to change,” Berke added. “And it’s not easy when other leagues, and now the Saudis, are throwing money at top players, too.”
    Durana of the MLS noted the league has spent billions investing in its clubs, from players to stadiums, as it grows its following. The Red Bulls’ de Grandpré said Messi validates MLS’ growth and presence on a global scale.
    “Now I think we’ll see more players want to come and join this league, and it will help us over time to build on this momentum,” de Grandpré said. More