Raphael Stevens

AMC Entertainment shares plummeted more than 20% on Tuesday, slipping to a new 52-week low of $2.46 per share.
On Friday, the movie theater chain’s preferred equity units, dubbed APE shares, are set to be transformed into common stock just one year after they began trading on the New York Stock Exchange.
AMC also is planning a 10-to-1 reverse stock split of its common stock on Thursday.

An AMC Theatre on March 29, 2023 in New York City.
Leonardo Munoz | Corbis News | Getty Images

AMC Entertainment shares plummeted more than 20% on Tuesday, slipping to a new 52-week low of $2.46 per share, as investors brace for a stock conversion later this week.
On Friday, the movie theater chain’s preferred equity units, dubbed APE shares, are set to be transformed into common stock just one year after they began trading on the New York Stock Exchange.

These preferred equity units are a workaround, of sorts, and free AMC up to sell additional units of stock after investors who feared dilution rejected the company’s efforts to issue additional stock last year. AMC raised billions during the Covid pandemic selling new stock, which aided the company in paying off its debts and staved off bankruptcy during a time when movie theaters were closed or had limited product to screen to audiences.
AMC also is planning a 10-to-1 reverse stock split of its common stock on Thursday.
The company’s authorized share count will increase to 550 million from a prior post-reverse split count of 52.5 million, allowing AMC to issue more than 390 million shares, wrote Eric Handler, managing director at Roth MKM, in a research note published last week.
The share upheaval follows significant back-and-forth: The movie theater chain was sued in February for allegedly rigging a shareholder vote that would allow it to convert preferred stock to common stock and issue hundreds of millions of new shares. A revised stockholder settlement, in response to that lawsuit, was approved by a Delaware judge last week.
Shares of the company have nearly halved since it was announced on Aug. 14 that the APE shares would be converted.

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Shares of AMC plummeted after APE conversion was announced Aug. 14.

“The continued decline in AMC shares … is likely due to investors focusing on the strong possibility that AMC begins issuing large amounts of equity to address the debt balance,” Eric Wold, an analyst at B. Riley Securities, told CNBC on Tuesday. “While this is expected, I think this overlooks the opportunity for management to also utilize that access to capital and the still-elevated valuation multiple to pursue additional acquisition and expansion opportunities outside of the exhibition space.”
Wold sees the stock conversion as a way for AMC to weather the global exhibition industry’s prolonged post-pandemic recovery as well as any future impacts from the ongoing writer and actor strikes in Hollywood.
Current projections from Wold show AMC is unlikely to move into positive free cash flow territory until 2025, so having additional liquidity is necessary for the company’s immediate future.
Wold currently holds a $4.50 price target for the stock, on the high end of analysts who cover AMC.
Meanwhile, Roth MKM’s Handler is on the opposite end: his price target is just 50 cents.
“My negative view towards the shares is really a valuation call,” Handler said. “We continue to believe the company’s shares are trading at an irrational valuation.”
Handler noted that AMC would need to generate nearly $1 billion in adjusted EBITDA to justify its current market capitalization, a figure that is 78% higher than Roth MKM’s forecast for 2024 and 5% higher than the company’s all-time high EBITDA of $929 million, generated in 2018.
Still, liquidity concerns have been alleviated for now, Handler said. More

The median price of a home sold in July was $406,700, an increase of 1.9% from July of last year.
Sales fell month to month in all regions except the West, where they gained 2.7%. Sales fell the most in the Northeast, down 5.9%.
There were 1.11 million homes for sale at the end of July, 14.6% fewer than July 2022 and about half of the pre-Covid supply.

Sales of previously owned homes dropped 2.2% in July from June to a seasonally adjusted, annualized rate of 4.07 million units, according to the National Association of Realtors.
Sales were 16.6% lower compared with July of last year. Homes sold at the slowest July pace since 2010.

This count is for closings, so contracts were likely signed in May and June, when mortgage rates went from around 6.5% to well over 7%.
Sales fell month to month in all regions except the West, where they rose 2.7%. Sales dropped the most in the Northeast, down 5.9%.
The National Association of Realtors is blaming higher rates and still tight supply for the decrease. There were 1.11 million homes for sale at the end of July, 14.6% fewer than July 2022 and the lowest level since 1999. There are now half as many homes for sale as there were pre-Covid.
At the current sales pace, that represents a 3.3-month supply. A six-month supply is considered balanced between buyer and seller.
Short supply continues to push both competition and prices higher. The median price of a home sold in July was $406,700, an increase of 1.9% from July of last year.

“The West is the most expensive region, but it’s also the region that experienced some price decline,” said Lawrence Yun, chief economist for the National Association of Realtors.
Prices in July rose in all regions year over year except in the West, where they were flat.
Roughly three-quarters of the homes sold were on the market for less than a month, indicating still strong demand. About 30% sold for above list price.
“Home shoppers have seen the number of options dwindle as homeowners are largely content to stay put and enjoy their current home, especially those with a low mortgage rate,” said Danielle Hale, chief economist at Realtor.com.
Sales fell across all price categories, but they dropped the least in the highest price category: homes over $1 million. That is because there is much more supply on the high end, while the low end of the market is leanest.
Buyers continue to use cash to gain a competitive advantage. All-cash sales made up 26% of transactions, the same as June but up from 24% in July 2022.
Investors, who tend to use cash most, bought 16% of homes in July. It marked a decrease from 18% in June but was up from 14% in July 2022.
First-time buyers appear to be gaining steam again. The Realtors reported 30% of sales going to these buyers, up from 27% in June.
Demand for Federal Housing Administration loans is also increasing. These loans, which offer low down payments, are favored by first-time buyers.
“The housing market is at a pivotal point as we head into fall,” said Lisa Sturtevant, chief economist at Bright MLS, noting higher mortgage rates in particular. “The decision between renting and buying will tip in favor of renting for some consumers, particularly in markets where rents are falling and new apartments are coming online.” More

Shares of Novavax jumped after the biotech company said its new Covid vaccine generated a broad immune response against the now-dominant Eris variant and another fast-spreading strain of the virus in small animal trials.
The updated shot is designed to target omicron subvariant XBB.1.5, which is slowly declining nationwide. 
Novavax’s vaccine and new shots from Pfizer and Moderna are expected to roll out in the U.S. within weeks, pending approvals from the U.S. Food and Drug Administration. 

A woman holds a small bottle labeled with a “Coronavirus COVID-19 Vaccine” sticker and a medical syringe in front of a Novavax logo in this illustration taken Oct. 30, 2020.
Dado Ruvic | Reuters

Shares of Novavax jumped more than 13% on Tuesday after the biotech company said its new Covid vaccine generated a broad immune response against the now-dominant Eris variant and another fast-spreading strain of the virus in small animal trials.
The updated shot is designed to target omicron subvariant XBB.1.5, which is slowly declining nationwide. 

But the trial results suggest that the shot may still be effective against newer Covid variants gaining a greater foothold in the U.S. That includes Eris and XBB.1.16.6, both of which are also descendants of omicron. 
Novavax’s vaccine and new shots from Pfizer and Moderna are expected to roll out in the U.S. within weeks, pending potential approvals from the U.S. Food and Drug Administration. 
Both Pfizer and Moderna have also released initial trial results indicating that their shots will be effective against Eris, but Moderna is the only company with data on humans.
“We have a lot of confidence in our updated Covid vaccine and are working diligently with global regulatory bodies to ensure our protein-based vaccine is available this fall,” Filip Dubovsky, Novavax’s president of research and development, said in a release.
Eris and several XBB variants are fueling a slight uptick in hospitalizations and cases in the U.S., but numbers remain below the summer peak that strained hospitals last year. 

Eris, also known as EG.5, accounted for 17.3% of all cases as of Saturday, according to the Centers for Disease Control and Prevention. 
The World Health Organization designated Eris a “variant of interest,” meaning it will be monitored for mutations that could make it more severe. 
XBB.1.16.6 is also beginning to surge, accounting for 8% of all cases nationwide as of Saturday, the CDC said. More

Dick’s Sporting Goods reported a profit drop and cut its earnings outlook for the year after seeing an uptick in retail theft and slow sales in its outdoor category.
It’s the first reference the athletic goods retailer has made to shrink in a press release in nearly 20 years.
In a rare miss, Dick’s also fell short of Wall Street’s estimates on both the top and bottom lines.

Signage outside a Dick’s Sporting Goods Inc. store in Clarksville, Indiana, on Monday, Nov. 9, 2020.
Luke Sharrett | Bloomberg | Getty Images

Dick’s Sporting Goods reported a 23% drop in profits and slashed its earnings guidance for the year after it saw an uptick in retail theft and slow sales in its outdoor category, the company announced Tuesday. 
For the first time in three years, Dick’s fell short of Wall Street’s estimates on the top and bottom lines. It also announced cuts to its global head count. The company’s shares fell about 20% in premarket trading.

Here’s how the company did in its second fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

Earnings per share: $2.82 vs. $3.81 expected
Revenue: $3.22 billion vs. $3.24 billion expected

The company’s reported net income for the three-month period that ended July 29 was $244 million, or $2.82 per share, compared with $318.5 million, or $3.25 per share, a year earlier. 
Sales rose to $3.22 billion from $3.11 billion a year earlier.
The company lowered its profit forecast for the year in part because it expects shrink, a retail industry term that refers to inventory lost by theft or internal issues, to get worse before it gets better. 
“Our Q2 profitability was short of our expectations due in large part to the impact of elevated inventory shrink, an increasingly serious issue impacting many retailers,” CEO Lauren Hobart said in a news release. “Despite moderating our 2023 EPS outlook, the enthusiasm we have for our business and the confidence we have in our long-term growth opportunities have never been stronger.” 

Dick’s now expects earnings of $11.33 to $12.13 per share for the year, compared with previously issued guidance of $12.90 to $13.80. It reaffirmed its comparable store sales forecast of flat to up 2% and isn’t cutting its planned capital expenditures. Despite the profit loss during the quarter, the retailer still expects gross margins to increase for the full year compared with 2022. 
The reference to shrink is the first that Dick’s has made in an earnings call or press release in nearly 20 years, according to FactSet. Similar to other retailers that reported earnings last quarter, the reference comes at a time that Dick’s profits are under pressure from numerous sources, including a slowdown in its outdoor category, which includes hard goods like camping equipment.
During the quarter, Dick’s used promotions to offload inventory from the category. Overall, inventories were down about 5% in the quarter compared with the year ago period.
Dick’s gross margins fell to 34% compared with 36% in the year ago period. Analysts had been expecting gross margins of 36%, according to StreetAccount.
Chairman Ed Stack told CNBC about a third of its margin reduction was from shrink. 
“It’s moved. It’s kind of gone up. We expect it could even get a little bit worse. We’ve taken a little bit bigger reserve for that in the second half of the year. Just because what we see going on with organized retail crime, grab and go’s,” Stack said in an interview. “We think we’re doing the best we can to try to curtail it with the security that we have in the stores, working with local authorities.” 
Earlier this month, CNBC published a three-part series on organized retail crime that examined the claims retailers make about it and the action companies and policymakers are taking to combat it. While retail crime is a serious concern, it’s a metric that’s nearly impossible to accurately count and one retailers aren’t required to disclose. Experts said that some retailers could be using theft as a crutch to obscure internal challenges, such as promotions and bloated inventory levels.

Holding on to pandemic gains

While the quarter is a bit rough compared with Dick’s usual reports, the retailer is still holding on to its Covid pandemic gains. Its profits are up compared with 2019. It opened seven new House of Sport locations during the quarter and plans to continue opening new doors ahead. The sprawling specialty stores, which are up to 100,000-square-foot facilities, are interactive and geared toward its athlete customer base.
Same-store sales were up 1.8% in the quarter, compared with down 5.1% in the year-ago period, and were driven by a 2.8% uptick in transactions. Analysts had been expecting them to be up 2.7%, according to StreetAccount.
In a bid to streamline its cost structure and reinvest in different parts of the business, the company cut less than 1% of its global workforce on Monday, primarily at its customer support center. The cuts largely impacted headquarter roles and account for less than 10% of corporate positions, Stack said. 
The cuts will cost about $20 million in severance expenses in the next quarter and may result in additional one-time charges of $25 million to $50 million. 
Stack cautioned that the cuts were not a cost-saving strategy but rather an attempt to reallocate resources. 
“We are going to reinvest all of these dollars back into talent and the technology that we want,” said Stack. “So this was not a cost-cutting move.”
— CNBC’s Courtney Reagan contributed to this report More

Macy’s beat second-quarter adjusted earnings and sales estimates.
Its revenue fell year over year, and it reiterated a cautious forecast for the full year.
Shares fell in premarket trading.

Macy’s store in Herald Square in New York.
Scott Mlyn | CNBC

Macy’s on Tuesday signaled consumers will be pickier and more price-driven in the back half of the year, even as the retailer topped Wall Street’s quarterly expectations.
The company’s shares fell 8% in premarket trading, as the department store operator stood by its conservative full-year guidance. It said it expects comparable owned-plus-licensed sales to fall 6% to 7.5% compared with the prior year. It anticipates adjusted earnings per share will range from $2.70 to $3.20, and sales will be between $22.8 billion and $23.2 billion for the fiscal year.

The retailer cut the forecast in early June.
In a CNBC interview, CEO Jeff Gennette said, “the consumer continues to be under pressure.” The company has seen rising credit card balances in its own card data, he said. Plus, he said, people are spending on experiences and preparing for the return of student loan payments this fall.
But Gennette said that the company is focused on having the items consumers are still willing to buy, such as fragrances and other beauty products. Under Armour and Nike merchandise is also returning to Macy’s after several years of being missing from its shelves.
“We’re moving into areas of interest,” he said. “We’re pulling back on categories that aren’t working. So we’re ready for the back half [of the year] to respond to the consumer where and when they shop.”
Here’s how the retailer did for the fiscal second quarter that ended July 29 compared with what Wall Street expected, based on a survey of analysts by Refinitiv:

Earnings per share: 26 cents adjusted vs. 13 cents expected
Revenue: $5.13 billion vs. $5.09 billion expected

The company swung to a net loss of $22 million, or 8 cents per share, from net income of $275 million, or 99 cents per share a year earlier.
Net sales fell from $5.6 billion a year earlier. Sales at stores declined 8% and digital sales dropped 10% compared with the year-ago period. 
Comparable sales on an owned-plus-licensed basis dropped 7.3%, a little worse than the 6.5% decline that analysts expected, according to Refinitiv.
As a retailer that sells a lot of clothing and accessories, Macy’s has taken a deeper hit from a consumer pullback than those that sell staples. When the department store operator cut its full-year forecast early in the summer, it said it had seen sales weaken in the spring, even at its higher-end chains, Bloomingdale’s and beauty chain Bluemercury.
Those sales patterns largely stayed the same in recent months, Gennette said. July was a strong month compared with the rest of the quarter, but consumers’ purchases were “very value driven,” he said.
Gennette added that the company has cleared through spring merchandise with markdowns and stocked up on the fresh items for the fall and holiday season. Inventory was down 10% year over year and 18% lower than it was in 2019.
Macy’s namesake stores and website put up the weakest sales in the quarter. The chain’s comparable sales fell 8.2% on an owned-plus-licensed basis, but bright spots included fragrances, prestige cosmetics and men’s tailored apparel. 
At upscale department store Bloomingdale’s, comparable sales dropped 2.6% on an owned-plus-licensed basis as shoppers bought beauty items, women’s contemporary and designer apparel, and shoes. Sales of handbags, men’s apparel and dresses were softer in the quarter, the company said.
Its beauty chain, Bluemercury, stood apart with year-over-year sales gains. Comparable sales rose 5.8% on an owned basis, as shoppers bought skin-care items and color cosmetics.
Consumers’ financial pressures also showed up on Macy’s balance sheet. Revenue from other areas of business, including credit cards, decreased by $84 million year over year. The company said it expected credit card delinquencies to rise, but said they shot up faster than anticipated.
As Macy’s looks for ways to grow and refresh its image, it has opened up smaller stores in strip malls. The company announced Tuesday it will open four more of the stores in the fall. So far, it has rolled out 10 of them.
Gennette said that new kind of store has outperformed Macy’s legacy mall anchor locations. The smaller stores that have been open more than a year had sales growth in the second quarter, he said.
Shares of Macy’s closed Monday at $14.73, bringing the company’s market value to $4.01 billion. It has underperformed the market so far this year, as its stock has fallen 28% as the S&P 500 has climbed nearly 15% during the same period.
This story is developing. Please check back for updates. More

Despite a waiting list of three years for some of its cars, Ferrari’s CEO said the company has no plans to supercharge production to meet demand.
“We are a brand that is not looking for volume,” Ferrari CEO Benedetto Vigna told CNBC in an exclusive interview from Pebble Beach.
Vigna said that despite limited supply, the company continues to expand its reach among younger, new clients.

Despite a waiting list of three years for some of its cars, Ferrari’s CEO said the company has no plans to supercharge production to meet demand.
“We are a brand that is not looking for volume,” Ferrari CEO Benedetto Vigna told CNBC in an exclusive interview from Pebble Beach. “We are a brand that is looking for value and respecting the client. For us, the client is very, very important.

“The client is giving a value to our cars because they are unique, because they are limited, because they are exclusive,” he said. “We could make more, but that doesn’t make sense. We will offend our clients.”
The balance between growth and exclusivity has never been more critical to Ferrari. The company’s share price is up 44% over the past year, at a valuation higher than Ford or General Motor, creating pressure from shareholders to continue its strong sales and volume growth.

Benedetto Vigna, chief executive officer of Ferrari NV, in front of a Ferrari Daytona SP3 sports car at the company’s headquarters in Maranello, Italy, on Tuesday, Feb. 7, 2023.
Francesca Volpi | Bloomberg | Getty Images

Yet because the famous prancing-horse brand is built on scarcity — and owners who rely on limited production to maintain their cars’ value — Ferrari is also expected to keep tight reign on production.
Last year, Ferrari produced 13,221 vehicles, up 18.5% over 2021. Demand still far exceeds supply, with dealers saying the wait for a new Purosangue SUV and other models is now at three years or more. Many buyers say they can’t even get on the waiting list for a car, since there is simply not enough production.
Founder Enzo Ferrari famously said Ferrari would produce “one less car than the market demand.” Today’s shortfall is far greater, with some analysts saying the company could easily sell twice as many cars as it produces. Ferrari is building a new factory for its hybrid and electric vehicles, but it’s unclear how much Ferrari will increase production.

Ferrari Purosangue
Source: Ferrari

Vigna said that despite limited supply, the company continues to expand its reach among younger, new clients. Its client base has expanded for 10 quarters in a row, and 30% of its new clients are younger than 40 years old, he said.
“Our new clients are 10% younger than all the clients we have in the world,” he said. “So the prancing horse is kicking strong.”
Vigna added that buying a Ferrari should never be easy or quick, since it’s the ultimate aspirational car.
“Getting a Ferrari is an experience that starts from the time you first see a Ferrari,” he said. “It’s not something you can get very easily.”

Racing DNA

Winning in Formula 1 auto racing, however, has also not come easily to Ferrari in recent years. Ferrari is currently in fourth place in the F1 team standings, behind Red Bull, Mercedes and Aston Martin. Vigna said the chief focus for the team is on improving the car.
“This is very important to us, because our DNA is racing,” he said. “We have a car that is the fastest for us so far, but it is not the fastest on the track. So we have to keep improving.”
Vigna quoted Enzo Ferrari as saying, “The person who comes after me will have to take on a very simple inheritance — to keep alive that desire for progress which has been pursued in the past.”
“That’s what we have to do, in racing and in everything we do,” Vigna said. “We have to keep working.”
When asked if Lewis Hamilton, the famed Mercedes Formula 1 driver, might join Ferrari, Vigna said: “We have Charles (Leclerc) and Carlos (Sainz Jr.), they are doing a fantastic job. They are friends, they are competing. So for us, the main priority is for the car to be more competitive.” More

Lowe’s beat second-quarter earnings expectations but slightly missed on revenue.
The home improvement retailer reaffirmed its full-year guidance.

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

Lowe’s reported mixed fiscal second-quarter results on Tuesday, as consumers tackled springtime projects and helped offset weakening home improvement demand.
The company topped Wall Street’s earnings estimates, but fell slightly short of expected sales.

The home improvement retailer stuck by its full-year forecast. It anticipates total sales will range between $87 billion and $89 billion for the period. It projects comparable sales will drop by 2% to 4% this fiscal year. It expects adjusted earnings per share will range between $13.20 and $13.60.
Here’s how the company did for the three-month period that ended Aug. 4 compared with what analysts expected, according to consensus estimates from Refinitiv:

Earnings per share: $4.56 vs. $4.49 expected
Revenue: $24.96 billion vs. $24.99 billion expected

The company’s shares rose more than 2% in premarket trading Tuesday.
Lowe’s net income for the three-month period was $2.67 billion, or $4.56 per share, compared with $2.99 billion, or $4.68 per share in the year-ago period.
Net sales fell from $27.48 billion a year earlier.

Comparable sales decreased 1.6% in the fiscal second quarter. That’s better than the 2.6% decline that analysts expected, according to FactSet.
For the second quarter, the company said spring projects, online growth and momentum with home professionals lifted sales as lumber prices fell and demand for discretionary do-it-yourself projects dropped.
Lowe’s is more reliant on do-it-yourself shoppers for its sales than Home Depot is, but has tried to change that. Only about a quarter of Lowe’s sales come from home professionals, while Home Depot typically gets about half of its sales from them. Those pros tend to be bigger and more steady spenders.
Lowe’s has already signaled to Wall Street that sales will slow this year as unusually high demand fueled by the Covid pandemic fades. It cut its full-year forecast in May.
Its rival Home Depot has also warned of waning demand. Last week, the company reaffirmed expectations for a tougher year ahead, even as it reported stronger-than-expected quarterly results. Home Depot CFO Richard McPhail said customers are tackling smaller projects and buying fewer big-ticket items, such as appliances.
Spending trends are moderating after the worst of the pandemic, and many Americans have less to fix or purchase after a spree of home improvement-related shopping during that time. Many consumers are also feeling squeezed by inflation or choosing to spend more on services.
Both Lowe’s and Home Depot face a confusing backdrop, as consumers deal with rising interest rates and elevated prices of everyday items — yet the companies also benefit from a strong jobs market and a shortage of housing in the U.S. Mortgage rates have hit their highest level in more than two decades, making first-time homebuying unaffordable for some and discouraging current homeowners from moving. Despite higher mortgage rates, home prices rose for the fourth straight month in May, according to the S&P CoreLogic Case-Shiller home price index.
Shares of Lowe’s closed Monday at $217.59, bringing the company’s market value to $127.5 billion. So far this year, Lowe’s stock is up more than 9%. That’s less than the approximately 14% gains of the S&P 500.
This is a developing story. Please check back for updates. More