Raphael Stevens

On a call with CNBC, Home Depot CFO Richard McPhail said consumers are waiting for a Federal Reserve interest rate cut and expect one to come soon.
The home improvement retailer has been hurt by higher interest rates, which have slowed housing turnover and demand for bigger projects.
But CEO Ted Decker said consumer uncertainty could linger, even if mortgage rates drop.

A sign is seen posted on the exterior of a Home Depot store on February 21, 2023 in El Cerrito, California. 
Justin Sullivan | Getty Images

Just like Wall Street, Home Depot is closely watching the Federal Reserve’s next move.
In an interview with CNBC, Chief Financial Officer Richard McPhail said homeowners have postponed moving into new houses or starting major projects that require financing because of higher interest rates. That waiting game has only intensified with a potential interest rate cut in sight.

“What our customers tell their pros is, ‘Everything I read tells me interest rates will be lower in three to six months,'” McPhail said. “‘Why would I borrow to finance the project now rather than just wait a few months?'”
CEO Ted Decker also told investors on an earnings call on Tuesday that many homeowners face a “golden handcuffs dynamic” because they have mortgages as low as 3% and don’t want to move, locking themselves into a higher rate.
An interest rate cut could help move the needle for Home Depot as sales slow. The company on Tuesday beat analysts’ expectations for quarterly earnings and revenue, but gave a disappointing full-year forecast. It said it expects comparable sales, a metric that takes out the impact of store openings and closures and other one-time factors, to drop by 3% to 4%. That’s a deeper fall than the 1% decline it previously anticipated.
The Federal Reserve has dropped hints that an interest rate cut could come soon. In late July, Fed Chair Jerome Powell said central bankers could reduce rates at their next meeting in September if the economic data backs up the decision.
Some fresh data on Tuesday pointed in a positive direction. The producer price index, which measures wholesale prices, rose 0.1% in July, which was less than economists expected.

Decker said on Tuesday’s call with investors that it is tricky to guess the “magical rate number” that would drive Home Depot’s business up again. But he said when mortgage rates dropped late last year, the company saw “an immediate increase in housing activity,” including mortgage applications and mortgage refinancing applications.
He said a drop to around 6.5% for mortgage rates would likely approach “a level that people are going to engage.”
Rates fluctuate, but have hovered closer to that level lately. The average rate on a 30-year fixed mortgage declined to 6.4% early this month, according to Mortgage News Daily. That is the lowest rate since April 2023.
But it’s unclear whether consumer uncertainty could still drag on Home Depot, even when lower mortgage rates stick.
Home Depot’s leaders chalked up some of its weaker sales to a newer sense of caution among its customers, even though the vast majority of them own houses and have seen huge home equity gains.
“What more recently has happened is a broader concern with the macroeconomy,” Decker said on the call. “There’s just a lot of noise with the political and geopolitical environment. Unemployment ticked up. Inflation keeps eating away at disposable income, and I think people just took a pause as we’ve progressed through the quarter.”
Even with an interest rate cut, Decker said, “people still might pause a little bit until some of this gets sorted out.”
— CNBC’s Diana Olick contributed to this report.

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Cryptocurrency speculator Chun Wang bought a SpaceX multi-day flight for an undisclosed amount, the company announced on Monday.
Calling the mission “Fram2,” Wang is leading a quartet on what would be the first crewed spaceflight in polar orbit, flying end-to-end over the Earth.
SpaceX plans to launch Fram2 near the end of this year.

SpaceX’s Crew Dragon capsule “Endurance” is seen during the Crew-3 mission for NASA on May 5, 2022.

Private polar expeditions are reaching a new level: Space.
Cryptocurrency speculator Chun Wang bought a SpaceX multi-day flight for an undisclosed amount, the company announced on Monday, with plans to lead the first crewed space mission in polar orbit, flying end-to-end over the Earth.

Called “Fram2,” an ode to the 19th-century polar expedition ship Fram, the mission is scheduled to launch near the end of this year. It will fly on SpaceX’s Falcon 9 rocket and use its thrice-flown Dragon capsule named Endurance — an apt coincidence, as a NASA crew three years ago named the spacecraft after explorer Sir Ernest Shackleton’s famed ship.
For the mission, Wang invited a trio of Arctic specialists to join him: Jannicke Mikkelsen, 38, a Norwegian filmmaker; Eric Philips, 62, an Australian explorer and guide; and Rabea Rogge, 28, a German researcher.
“I’ve been interested in space from a very young age … and for the first time, a private person can plan and design their own very personal mission,” Wang told CNBC.
Wang, 42, was born in Tianjin, China, but now hails from the Mediterranean island country of Malta, having become a citizen last year. Wang said he met his fellow crewmembers while living in Svalbard, the far north Norwegian archipelago, and describes himself as “nomadic,” having visited more than 100 countries the past few years.

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Even as the cost of human spaceflight has come down from the exclusive domain of superpower governments, a multi-day mission is still only accessible to ultra-high-net-worth individuals.

SpaceX does not advertise the price of its crewed missions, even though the company does disclose its price tag for launching satellites. NASA has previously disclosed it pays about $55 million per seat to fly astronauts on Dragon, meaning a crewed mission is upward of $200 million.
Wang confirmed that “I paid for this mission,” but declined to specify how much.
Aside from showing off his trips around the world on social media, Wang has kept a low profile and his unspecified net worth appears mostly, if not fully, tied to work mining cryptocurrency.
On LinkedIn, Wang says he mined 7,700 bitcoin over two years, an amount that would be worth about $450 million at current prices. He also says he was the co-founder of F2Pool, a self-described decentralized collective that helps generate cryptocurrency — and the organization says it’s mined more than 1.3 million in bitcoin in the past 11 years, an amount that would be worth over $76 billion in today’s dollars.
Mikkelsen, who is Wang’s neighbor in the Svalbard town of Longyearbyen, said she was shocked when she went from friend to future astronaut.
“I absolutely did not believe Chun when he just randomly texted me,” Mikkelsen told CNBC.
Wang said his proposal to SpaceX for the Fram2 mission came together after the historic private Inspiration4 flight in 2021.
Like Inspiration4, the spacecraft will have a “cupola” window installed and will spend three to five days in orbit. The Fram2 crew has plans to conduct a variety of research as well, including studying the upper atmosphere — especially looking at “fragments in the aurora” above Earth, Mikkelsen said — as well as analysis of spaceflight effects on the human body.
The crew members started training with SpaceX this week, having done their own “extreme environment” training in Alaska a month ago, and hope their flight furthers the idea that space is becoming more accessible. Mikkelsen said she hopes to do more than “just film a documentary,” but make “an immersive production, so you also can experience it as if you are in Dragon.”
“We are trying to make the door wider and make people feel that everyone can have their own very personal space mission,” Wang added. More

Home Depot’s fiscal second-quarter earnings and sales beat expectations, but it said it expects comparable sales to decline this year.
The home improvement retailer’s CFO told CNBC that homeowners are now deferring projects due to a “sense of greater uncertainty in the economy.”
Home Depot kicks off a wave of retail earnings from companies like Walmart and Target, which investors and economists will watch for signs of consumer weakness.

The Home Depot logo is seen in Florida Keys, United States on May 7, 2024. 
Jakub Porzycki | Nurphoto | Getty Images

Home Depot on Tuesday topped quarterly expectations, but cautioned that sales will be weaker than expected in the back half of the year as high interest rates and consumer uncertainty dampen demand.
The home improvement retailer said it now expects full-year comparable sales to decline by 3% to 4% compared with the prior fiscal year. It had previously expected comparable sales, a metric that takes out the impact of store openings and closures and other one-time factors, to decline about 1%.

Home Depot’s total annual sales will get a boost from its recently completed acquisition of SRS Distribution, a company that sells supplies to professionals in the landscaping, roofing or pool businesses. Total sales are expected to increase between 2.5% and 3.5% including a 53rd week in the fiscal year and approximately $6.4 billion in sales from SRS. Yet excluding sales from SRS, its new full-year forecast would have amounted to a revenue cut.
In an interview with CNBC, Chief Financial Officer Richard McPhail said Home Depot has contended with consumers who have a “deferral mindset” since the middle of 2023. Interest rates have caused them to put off buying and selling homes and borrowing money for bigger projects, such as a kitchen renovation. 
Yet over the past quarter, he said surveys of customers and home professionals like contractors have captured another challenge: a more cautious consumer.
“Pros tell us that, for the first time, their customers aren’t just deferring because of higher financing costs,” he said. “They’re deferring because of a sense of greater uncertainty in the economy.”
Here’s what the company reported compared with what Wall Street expected for the three-month period that ended July 28, based on a survey of analysts by LSEG:

Earnings per share: $4.60 vs. $4.49 per share expected
Revenue: $43.18 billion vs. $43.06 billion expected

The company’s shares were down about 1% in premarket trading.
Home Depot kicks off a wave of retail earnings, as economists, investors and politicians pay close attention to the health of the American consumer and try to forecast the economic outlook, including the odds of a recession. Though inflation has cooled, higher prices – particularly for everyday costs like groceries, energy and housing – continue to frustrate customers. They’ve also become a major talking point on the 2024 campaign trail.
Consumer clues will keep coming this week and next, as Walmart reports earnings and the government shares retail sales numbers on Thursday. Other retailers, including Target, Macy’s and Best Buy, will also post results in the coming weeks.
Compared with many other retailers, Home Depot has a more financially stable customer base. About half of its sales come from home professionals and about half come from do-it-yourself customers. About 90% of those DIY customers own their own homes.
Yet Home Depot still felt the impact of consumer uncertainty, McPhail said. He said the company saw slower demand for a wide range of project-driven items, including lighting and flooring.
Home Depot’s net income for the fiscal second quarter decreased to $4.56 billion, or $4.60 per share, from $4.66 billion, or $4.65 per share, in the year-ago period.
Revenue rose slightly from $42.92 billion in the year-ago period.
Comparable sales dropped 3.3% in the quarter across the business and declined 3.6% in the U.S. That was worse than the 2.1% decrease that analysts expected, according to StreetAccount.
It marked the seventh consecutive quarter of negative comparable sales at Home Depot.
Shoppers visited Home Depot’s stores and its website less frequently, and spent less when they did, during the quarter compared to the year-ago period. Customer transactions fell nearly 2% and average ticket dropped slightly to $88.90 from $90.07 in the year-ago quarter
Consumers have postponed projects in part because of a widely anticipated rate cut by the Federal Reserve, McPhail said. In late July, Fed Chair Jerome Powell said policymakers could cut rates at the central bank’s September meeting if the data supports it.
That would lead to lower mortgage rates and borrowing costs for homeowners who want to tack on an addition or finance a project, such as a bathroom remodel.
“What our customers tell their pros is, ‘Everything I read tells me interest rates will be lower in three to six months,'” McPhail said. “‘Why would I borrow to finance the project now rather than just wait a few months?'”
Yet Home Depot leaders have emphasized home improvement’s bright long-term outlook, referring to the country’s aging homes, its shortage of houses and significant property value gains, especially during the years of the Covid pandemic. 
And McPhail said most of Home Depot’s customers remain financially healthy and employed, even if they’re spending less on home improvement right now.
Shares of Home Depot closed at $345.81 on Monday. As of Monday’s close, the company’s shares are down less than 1% so far this year, trailing behind the S&P 500’s 12% gains. 
– CNBC’s Robert Hum contributed to this story.

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Starbucks has ousted CEO Laxman Narasimhan, effective immediately.
Chipotle CEO Brian Niccol will step in as the coffee chain’s new leader on Sept. 9.
Starbucks’ sales have struggled in recent quarters due to shrinking demand in the U.S. and China, its two largest markets.

Restaurants Starbucks replaces CEO Laxman Narasimhan with Chipotle CEO Brian Niccol.
CNBC (L) | Getty Images (R)

Starbucks announced Tuesday it’s replacing CEO Laxman Narasimhan with Chipotle CEO Brian Niccol as the coffee chain tries to reverse a sales slump.
Shares of Starbucks rose 15% in premarket trading on the news, while Chipotle’s stock fell 8%.

Narasimhan’s departure is effective immediately. Starbucks CFO Rachel Ruggeri will step in as interim chief executive until Sept. 9, when Niccol officially takes over the top job.
Narasimhan took over as chief executive in March 2023. The coffee giant’s performance has struggled this year, hurt by weak sales in the U.S. and China, its two largest markets. In its latest quarter, Starbucks reported a 3% decline in same-store sales.
Pressure on the company mounted as it struggled to drive traffic to stores. Former CEO Howard Schultz, who handpicked Narasimhan as his successor, had written an open letter in May, weighing in on the company’s issues and offering advice but never addressing Narasimhan by name. Activist investor Elliott Management had acquired a stake in the company in recent weeks.
Starbucks’ shares have fallen 21% during Narasimhan’s tenure, excluding Tuesday’s move.
Before joining Starbucks, Narasimhan was chief executive of Reckitt, which owns brands like Lysol and Mucinex. After being tapped as incoming CEO, he spent months learning about Starbucks’ business, including training as a barista.

Niccol has served as Chipotle’s CEO since 2018, and previously led Yum Brands’ Taco Bell. During his time at Chipotle, its stock soared 773%. As CEO of Chipotle, he helped the chain rebound from its foodborne illness scandal and led its restaurants through the pandemic. In recent quarters, while other restaurants have reported a sharp pullback in consumer spending, Chipotle has seen its traffic and sales climb, bucking the trend.
Mellody Hobson, who stepped down as Starbucks chair to become lead independent director as part of Tuesday’s leadership shakeup, said the board had been thinking about replacing Narasimhan for several months.
“Our board, a couple months ago, started to engage in a conversation about the leadership of the company, and I made an overture through someone to Brian, and he took the call,” Hobson said on CNBC’s “Squawk Box” on Tuesday. “We thought we had the opportunity to engage with one of the biggest names in the industry, someone whose track record is just clearly proven, not only through the spectacular results that he’s had at Chipotle, but also before that at Pizza Hut and Taco Bell. He knows this industry, and we thought he would be the right leader for this moment.”
Hobson acknowledged that Narasimhan faced some challenges coming into Starbucks without restaurant experience, but added that he helped decrease turnover and address supply chain issues. However, it appears that the board has more confidence that Niccol will be able to turn around the business quickly.
“But what we saw with Brian was someone who’s, quite honestly, been there done that — through all sorts of market environments, all sorts of cycles. When I talked to him I remember him saying, ‘I know what to do,'” Hobson said.
One of Chipotle’s strengths under Niccol has been its app, which has helped fueled its strong performance in recent quarters. Starbucks’ app has been one of the scapegoats of its weak performance. Schultz and other Starbucks critics have pointed to the glut in mobile orders, which slows down service and hurts the customer experience.
Chipotle, on the other hand, has added a second assembly line to its restaurants specifically for mobile orders to keep up with digital demand. The burrito chain has been building locations with “Chipotlanes,” which are reserved for digital order pickup.
Narasimhan’s surprise ouster also suggests that Starbucks’ board isn’t interested in a deal with activist investors. When news of Elliott’s stake in Starbucks first broke in July, the hedge fund offered Starbucks’ board a settlement that would protect Narasimhan’s job, CNBC previously reported. The board hadn’t told Elliott about its leadership shakeup ahead of time, Hobson said Tuesday.
Starbucks’ board did not initially respond or engage with Elliott for some time, driven in part by the lingering influence of Schultz. Elliott has amassed a stake that was worth as much as $2 billion.
However, the two sides met as recently as last week to discuss a settlement offer, CNBC previously reported.
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Chipotle CEO Brian Niccol is leaving his role later this month to become CEO of Starbucks.
Niccol has been CEO since March 2018 and led the company through a foodborne illness scandal and the pandemic.
Chipotle has seen its traffic and sales climb while other restaurants have struggled in recent quarters.

Chipotle stock fell as much as 10% in premarket trading Tuesday as the company announced CEO Brian Niccol would be leaving his role on Aug. 31 to become CEO of Starbucks.
Niccol began as Chipotle CEO in March 2018. Chipotle stock has risen more than 700% since since he took over.

Chipotle’s board named Chief Operating Officer Scott Boatwright as interim CEO. He’s been at the company since 2017. The board also announced that Chief Financial Officer Jack Hartung, who had announced his intention to retire, would stay with the company indefinitely and assist with the transition.
“What we saw with Brian was someone who’s, quite honestly, been there done that — through all sorts of market environments, all sorts of cycles,” Mellody Hobson, who was the board chair at Starbucks but stepped down to become lead independent director as part of Tuesday’s changes, said on CNBC’s Squawk Box. “When I talked to him I remember him saying, ‘I know what to do.'”
Chipotle has seen strong same-store sales growth and traffic while other restaurants have reported that consumers are pulling back on customer spending.
Chipotle reported second-quarter earnings in July that topped analyst estimates, with $2.97 billion in revenue. Net sales climbed 18.2% during the quarter, with same-store sales up 11.1%. 
Niccol helped lead Chipotle through a foodborne illness scandal and oversaw the chain of restaurants during the pandemic.

Before taking over at Chipotle, Niccol was the CEO at Yum Brands’ Taco Bell.
Analyst Mark Kalinowski, chief executive of Kalinowski Equity Research, struck a cautious tone on the CEO change.
“While this will be viewed as bad for Chipotle in the short term, Mr. Niccol had been CEO there 6+ years, so perhaps the opportunity to bring some new thinking to that highly-respected company isn’t the worst thing in the world for the long run,” Kalinowski wrote in note on Tuesday.
— CNBC’s Amelia Lucas contributed to this report. More

The direct-to-consumer health-care startup Ro launched a new free tool to help patients determine whether their insurance will cover a class of weight loss and diabetes medications called GLP-1s. 
Some patients may be missing out on treatment because they simply don’t know they have coverage.
Ro said it hopes its new tool will be able to help patients understand their coverage options so they can decide how to pursue weight loss, and it could also drive some patients to join the company’s GLP-1 program.

Arrows pointing outwards

The direct-to-consumer health-care startup Ro launched a new free tool Tuesday to help patients determine whether their insurance covers a buzzy class of weight loss and diabetes drugs called GLP-1s. 
Most insurance plans cover GLP-1s when they are used to treat diabetes, so those patients can usually avoid the roughly $1,000 monthly price tag of the medications. But coverage of weight loss treatments is less widespread, and navigating the complex insurance landscape can be challenging for patients and time consuming for doctors who prescribe the medications. 

Some patients may be missing out on treatment because they simply don’t know they have coverage. Ro said nearly half of the company’s patients have some form of insurance coverage for a GLP-1, according to its customer data. 
Ro said it hopes its new tool can help patients understand their coverage options so they can decide how to pursue weight loss. The digital health company may benefit too, as it could drive some patients to join the company’s GLP-1 program.
Demand for GLP-1s, including Novo Nordisk’s weight loss treatment Wegovy and diabetes injection Ozempic, has outstripped supply over the last year in the U.S. Other drugmakers — and digital health companies like Ro — are scrambling to capitalize on the booming GLP-1 market, which analysts say could be worth more than $100 billion by the end of the decade. 
Patients in Ro’s program can get prescribed a GLP-1, and the company also offers compounded versions of the medication when the branded versions are in short supply. Compounded GLP-1s are custom-made alternatives to brand drugs designed to meet a specific patient’s needs. 
The program also allows patients to meet monthly with a doctor and access an educational curriculum for weight management. It includes 24/7 messaging, one-on-one coaching with nurses and help with navigating insurance coverage. 

“The burden to understand the cost, as well as the burden to get coverage is the No. 1 reason why patients don’t even take the first step,” Ro co-founder and CEO Zachariah Reitano told CNBC in an interview. “We really just wanted to make sure that at the earliest possible moment in a journey, patients have that information to be able to decide the best next step.”

How Ro’s insurance tool works

Arrows pointing outwards

Source: Ro

Ro’s insurance checker is available online, and patients will need to input some of their basic medical and insurance information.
After around one to three days, patients will receive a personalized report that shows whether they have coverage, whether a prior authorization is required and what their estimated copay will be for each major GLP-1 medication. All of the information in the report comes directly from insurers. 
The tool also outlines next steps the patient can take, like getting started with Ro’s GLP-1 program or sending a link with the findings to their doctor. 
“One of the things that need improvement to the overall patient journey … is trying to get as much information to patients as possible earlier in their journey, because it really does influence the path downstream,” Reitano said. 
One sample report involving a patient, provided by Ro, showed a summary of the insurance coverage, supply availability and estimated copay for each drug, including Wegovy, Ozempic, Eli Lilly’s weight loss injection Zepbound and compounded semaglutide, the active ingredient in Novo Nordisk’s GLP-1s. 
For example, the report said the patient has insurance coverage for Wegovy and meets the eligibility requirements for their plan’s prior authorization, such as having a certain body mass index and other health conditions like diabetes and heart disease. 
That means the patient “should be able to receive coverage without significant challenges,” the sample report said. 
The patient’s estimated copay is $0 if their prior authorization is approved, which is based on information from a representative at their insurer, Blue Cross Blue Shield, according to the report. 
The patient’s report also included a table that outlined the potential out-of-pocket cost for Wegovy over the next 12 months. That is based on the drug’s list price of $1,350 per month and an estimated yearly deductible for $2,000. The table estimated that the patient would pay $1,350 for the first month on Wegovy, $650 for the second and nothing for the third month, and beyond. 
Another part of the report said some doses of Wegovy are in short supply, which is based on the Food and Drug Administration’s drug shortage database along with Ro’s recently launched GLP-1 supply tracker. Most Ro patients on Wegovy are not able to pick up the treatment within 14 days of their prescription being sent to a pharmacy, according to the report.
“I think this should be the very first step in someone’s journey if they’re interested in GLP-1s,” Reitano said. “Because regardless of whether they want to go to Ro or they want to go to their in-person doctor, you want to better understand what their options are.”

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