Business

Starbucks has informed workers at two stores in Seattle and Kansas City, Missouri, that the locations will be closing.
The coffee chain said union activity at the locations is not the reason for the closures.
The union for Starbucks workers says the company is retaliating for organizing activity.

A sign is seen as Activists participate in an event dubbed the Un-Birthday Party and picket line for Starbucks CEO Howard Schultz on July 19, 2022 in New York City. Activists gathered near Schultz’s West Village home on his 75th birthday to protest the treatment of Starbucks workers attempting to unionize, as well as Schultz’s recent announcement to permanently close 16 locations.
Michael M. Santiago | Getty Images

Starbucks has informed workers at two locations that their stores will be closing, a move that the coffee chain’s union says is retaliation for organizing efforts.
The company said the union activity isn’t the reason for the closures. It said a Kansas City, Missouri, location, where vote results are pending, is closing due to safety issues. It said a Seattle location, where workers voted to organize in April, will close and reopen, operated as a licensed location by a neighboring grocery store. Starbucks will engage in bargaining with the union to seek an agreement that gives workers there the opportunity to transfer to other stores.

“We continue to evaluate the partner and customer experience at all of our stores as a regular course of business,” Starbucks said in a statement Tuesday about the Seattle location, adding that its decision would help build on the location’s relationship with customers of the grocery store.
About 200 of Starbucks’ roughly 9,000 locations in the U.S. have voted to unionize.
Under interim CEO Howard Schultz, Starbucks has been focusing on the company’s reinvention and emphasizing priorities including store safety and advancement opportunities for workers. As part of the push, Starbucks closed more than a dozen stores over safety concerns, most of them on the West Coast. A letter sent to employees last month cited personal safety and mental health issues and drug use at some of the locations.

But the union maintains some closures are about more than safety, pointing to a list of 19 Starbucks locations that have closed or are closing, with eight of them having unionized, filed or started to organize.
“If Starbucks was serious about solving safety issues, they could work with partners and our union. Instead, Schultz and Starbucks have sent a message loud and clear — complain about safety, and we’ll close your store,” Starbucks Workers United said in a statement.

The latest moves by Starbucks come after the company asked the National Labor Relations Board to suspend all mail-in ballot union elections at its stores nationwide, alleging inappropriate actions during the voting process in the Kansas City area, and likely elsewhere. The company cited a whistleblower who approached it regarding the voting process and asked the labor board to halt elections until an investigation is complete.
Last month Chipotle permanently closed a store in Augusta, Maine, saying it could not fix staffing issues there. Workers seeking to organize that store filed a complaint with NLRB, claiming the move was retaliatory.
In an email to an attorney for Starbucks Workers United regarding the Seattle location, counsel for Starbucks said its goal is to get employees working in others stores as soon as possible so there is “no gap in their work lives.” The email, seen by CNBC, also says the company reserves the right to “seek a withdrawal of [union] certification” if misconduct is found in the store’s election.

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A shopper wearing a protective face mask walks inside the Urban Outfitters retail store during Black Friday sales at Roosevelt Field shopping mall in Garden City, New York, November 26, 2021.
Shannon Stapleton | Reuters

Check out the companies making headlines after the bell: 
Nordstrom — Shares of the department store tumbled more than 12% in extended trading after the company slashed its financial forecast for the full year. Nordstrom said it faces a glut of inventory that it must discount to move off shelves. The company did report fiscal second-quarter earnings and sales ahead of analysts’ estimates.

Urban Outfitters — The clothing retailer saw its shares fall about 3% in after-hours trading after an earnings miss. Urban Outfitters posted a quarterly earnings of 64 cents, missing the 68 cents analysts were looking for, according to Refinitiv. Its revenue came in at $1.18 billion, matching expectations.
La-Z-Boy — Shares of the furniture retailer jumped as much as 9% in extended trading after its quarterly earnings and sales beat estimates. La-Z-Boy said its retail segment sales rose 30% to $236 million, marking an all-time quarterly record.

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Comcast agreed to sell its majority ownership in regional sports network NBC Sports Washington to Monumental Sports & Entertainment
Monumental, which has owned 33% of the network since 2016, will become the sole owner of NBC Sports Washington
NBC Sports Washington has the exclusive local rights to the NBA’s Washington Wizards and NHL’s Washington Capitals.

Alex Ovechkin #8 of the Washington Capitals races up the ice with the puck during a game against the Toronto Maple Leafs at Capital One Arena on April 24, 2022 in Washington, D.C.
John Mccreary | National Hockey League | Getty Images

Comcast has agreed to sell its majority ownership stake in NBC Sports Washington, the regional sports network that airs local Washington, D.C., NBA and NHL games, to Monumental Sports & Entertainment.
Monumental, which invests in sports teams and businesses, has owned a 33% stake in the network since 2016. Following the close of the deal, of which terms weren’t disclosed, it will take ownership of Comcast’s 67% position.

NBC Sports Washington has aired the NBA’s Wizards and NHL’s Capitals since 1984, when the network was launched. The channel is available throughout D.C., Maryland and Virginia, as well as parts of Pennsylvania, Delaware and West Virginia.
As part of the deal, Comcast’s NBCUniversal said it will continue to assist in operating the network for up to 18 months.
The move comes as local sports channels have been under pressure as consumers continue to drop their subscriptions to cable and satellite TV packages. The media companies behind these networks have been figuring out a viable business that offers a streaming option.
In June, the New England Sports Network, the local channel that airs Boston’s Red Sox and Bruins games, launched a stand-alone streaming subscription, which charges $29.99 a month.

Read more media coverage

Sinclair Broadcast Group, owner of the largest portfolio of regional sports networks, has started offering a streaming option in some of its markets and plans to roll out streaming access for all of its channels in coming months.
Comcast still owns a handful of other local sports channels, such as NBC Sports Philadelphia. The Wall Street Journal previously reported it was exploring a sale of the networks.
Disclosure: CNBC is owned by Comcast’s NBCUniversal.

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Owner Arte Moreno is exploring selling the Los Angeles Angels.
Moreno, who bought the team for $180 million in 2003, made most of his money with his company Outdoor Systems.

General manager Billy Eppler and Owner Artie Morena look on as Joe Madden speaks to the media during a press conference where he was introduced today as the new manager of the Los Angeles Angels during a press conference at Angel Stadium of Anaheim on October 24, 2019 in Anaheim, California.
Jayne Kamin-oncea | Getty Images

Los Angeles Angels owner Arte Moreno is exploring a possible sale of the team and other strategic options, the team announced Tuesday.
“It has been a great honor and privilege to own the Angels for 20 seasons,” Moreno said in a release. “Although this difficult decision was entirely our choice and deserved a great deal of thoughtful consideration, my family and I have ultimately come to the conclusion that now is the time.”

The Angels are valued at $2.2 billion, according to Forbes. The team is under .500 for the season despite the standout performance of pitcher and designated hitter Shohei Ohtani.
Moreno, who bought the Angels in 2003 for $180 million, made most of his money with his company Outdoor Systems, which was purchased by Infinity Broadcasting in 1999 for $8.7 billion.
The Angels have been implicated in an political scandal in the city of Anaheim, where Disneyland is also based. The FBI said in a court filing that Harry Sidhu, Anaheim’s mayor who has since resigned, is believed to have shared confidential information with Angels representatives about the city’s planned sale of Angel Stadium in exchange for a donation to his reelection campaign, according to the Los Angeles Times.
The issue is part of a larger scandal in Anaheim, according to the L.A. Times. The former head of the city’s chamber of commerce was charged with lying to a mortgage lender, and the FBI has described a small group of public officials, consultants and business leaders who sought to exert influence over Anaheim’s government.

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Kevin Durant will remain with the Brooklyn Nets this upcoming season, the team said Tuesday.
The announcement comes following summer-long uncertainty about Durant’s and fellow star Kyrie Irving’s futures with the team.
“We have agreed to move forward with our partnership,” read a statement from Sean Marks, the Nets’ general manager.

Kevin Durant #7 of the Brooklyn Nets dribbles during the first half against the Cleveland Cavaliers at Barclays Center on May 16, 2021 in the Brooklyn borough of New York City.
Sarah Stier | Getty Images

Kevin Durant will remain with the NBA’s Brooklyn Nets this upcoming season, the team said Tuesday.
The announcement comes after a couple disappointing seasons from the talent-packed Nets and a summer-long uncertainty about Durant’s and fellow star Kyrie Irving’s futures with the team.

The Nets were swept by the Boston Celtics in the first round of last season’s playoffs. Reports of Durant potentially being traded to Boston and Memphis circulated as recently as Monday.
“We have agreed to move forward with our partnership,” read a Twitter statement from Sean Marks, the Nets’ general manager. “We are focusing on basketball, with one collective goal in mind: build a lasting franchise to bring a championship to Brooklyn.”
Marks, coach Steve Nash and owners Joe and Clare Wu Tsai met with Durant and his manager Rich Kleiman in Los Angeles on Monday to make the agreement, according to the team. Durant, a two-time NBA champion and former MVP, has four years on his contract.
NBC Sports reported that both Durant and Irving were unhappy with Nash and Marks’ leadership with the team, partially due to Marks not giving the unvaccinated Irving a long-term contract extension.
The Nets also plan to keep Irving for this upcoming season, according to NBC Sports. The Athletic’s Shams Chania said that Irving has been working out with teammates and holding constructive dialogue with the organization.
The Nets play their season opener Oct. 19 in Brooklyn, against the New Orleans Pelicans.

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Amazon Prime and DirecTV reached a multi-year agreement that will see the satellite-TV provider air “Thursday Night Football” games in more than 300,000 bars, restaurants and other businesses.
Amazon Prime holds the exclusive rights to “Thursday Night Football” games for the  next 11 seasons.
DirecTV will air the first game, a preseason matchup, on Thursday.

Javonte Williams #33 of the Denver Broncos carries the ball against the Cincinnati Bengals at Empower Field At Mile High on December 19, 2021 in Denver, Colorado.
Matthew Stockman | Getty Images

Amazon’s Prime Video reached a deal with DirecTV to air its “Thursday Night Football” games in more than 300,000 businesses such as bars and restaurants.
The announcement comes as the National Football League’s preseason is underway. DirecTV will air its first game with Amazon Prime Video — a matchup between the San Francisco 49ers and Houston Texans — on Thursday.

Amazon Prime, which has been building out its sports offerings to its streaming subscribers, will be the exclusive home of Thursday Night Football and air its first regular season game on Sept. 15. Local broadcast stations for the teams playing in a given week will also carry the games.
Amazon is the first streaming service to hold exclusive rights to a package of NFL games.
The deal was part of an 11-year media rights agreement the NFL reached last year with media companies that also include Comcast Corp.’s NBCUniversal, Paramount Corp.’s CBS Sports, Walt Disney Co.’s ESPN and Fox Corp.
Amazon’s deal with DirecTV gives current business customers, which also includes hotels, casinos, sports books and retailers, the Prime Video feed of Thursday Night Football at no extra cost.
DirecTV isn’t new to offering NFL games to commercial and residential customers. The company currently holds the rights to Sunday Ticket, the NFL’s subscription package for out-of-market games, which will end after the upcoming season.

The NFL has yet to announce a new partner for Sunday Ticket, although Commissioner Roger Goodell said in July he expects the league will select a streaming service by the fall. Apple, Amazon and Disney are all interested in holding the rights to Sunday Ticket, CNBC has previously reported.
While DirecTV isn’t bidding again on the rights for the Sunday Ticket, the company is interested in maintaining a relationship with businesses like bars and restaurants, CNBC has reported, which would be similar to the deal with Amazon Prime for Thursday Night Football.
Disclosure: CNBC is owned by Comcast’s NBCUniversal.

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SMALL BUSINESS PLAYBOOK 2022
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Goldman Sachs expects household cash flow to reverse a year-long decline beginning right after Christmas.
Gains will begin small and accelerate through the next year, making up for the recent decline in cash from federal stimulus payments, and that could help avert the recession that both the stock market and most small businesses have been fearing.
In the retail sector, big box stores and internet giants like Amazon will likely gain, while smaller rivals could get squeezed.

Customers shop at a Walmart in Houston on Aug. 4, 2021.
Brandon Bell | Getty Images

After a year-long dip, household cash flow will begin growing again right after Christmas, and accelerate through the new year, according to new research by analysts at Goldman Sachs.
These gains will reverse a year of negative growth of about $600, or 4.2%, in household discretionary cash flow, according to Goldman’s analysis.

“This year, we’re looking at negative discretionary cash flow for the first time since the 2008-09 financial crisis,” Goldman consumer goods analyst Jason English said on a recent webinar with the press. The biggest driver of the cash flow improvement next year, he said, will be wages.
That’s good news for retail sales after a yearlong struggle to keep up with inflation, and for the economy’s ability to avoid a recession, according to Mark Zandi, chief economist at Moody’s Analytics, which has a similar forecast of improving consumer finances.
“Cash flow got hit during 2022 but it’s coming back, and cash flow is what drives spending,” Zandi said. “Businesses are unlikely to cut jobs because they know their biggest problem is finding workers,” Zandi added.  

The link between consumer cash flow and retail

While much has been made of the consumer resilience during a period of slowing economic growth, the market has punished retail companies, which have declined roughly twice as much as the broader U.S. stock market index this year, measured by the relative performance of the SPDR S&P Retail ETF and S&P 500 Index. This year’s sloppy performance in consumer spending is happening because households have less cash coming in — even though they have more savings — since stimulus payments designed to fight the Covid pandemic ended in 2021.
Retail sales in the U.S. have risen about 10% in the last year, but most of that reflects the surging dollar value of gasoline and other goods sold at this year’s inflated prices, according to recent Commerce Department data. Auto sales have risen just 1.5 percent, far below the pace of inflation. That has helped the pace of inflation-adjusted consumer spending growth slow to about 1.5 percent in the first half of 2022, compared with nearly 12 percent a year earlier.

The surge in capital goods spending during the brief Covid recession, as consumers snapped up furniture and other home-related goods when they spent more time at home due to the pandemic, contributed to retail’s slump this year because it pulled demand forward, English said.
But the turn is coming, according to Goldman.
The drop in consumer cash flow began as a steep one, but the spread between 2021 and 2022 has been steadily narrowing. In the first quarter, consumers had 10% less discretionary cash available than in the same month a year earlier, which Goldman says will narrow to a 2.7 percent dip this quarter and a 1.2 percent drop for the holiday season.
The cash flow measure Goldman uses adds other sources of cash, like government transfer payments and borrowing, to current income, and subtracts essential expenses like food and fuel, giving a fuller picture of consumers’ likely ability and willingness to spend. 
Next year, the numbers get more positive through the year, Goldman’s estimates show. Consumer cash flow will rise by 2 percent in the first quarter, and rise to 6 percent-plus in the second half of 2023, an overall gain of about $600 billion.

Big box retailers may benefit the most

While the upswing in consumer income is good news for the economy, it may not benefit all firms equally, according to CFRA Research analyst Arun Sundaram, who expects the gain in consumer income will help big retailers the most. Large-scale players like Amazon and Walmart, and to a lesser degree Target, will be winners and take market share, he said.
The sluggish retail conditions of this year may keep smaller consumer companies from gaining access to capital markets that have gotten more selective even as conditions improve. “They should have raised money a year ago,” Sundaram said. “Now markets are tighter … They’re trying to cut expenses and reduce their cash burn.” 
While Sundaram was focusing on consumer startups that went public in recent years, such as Oatly and Beyond Meat, the mood among America’s broader small business community is not optimistic, with inflation continuing to hurt Main Street’s ability to maintain margins at a time of higher prices in inputs, from raw materials to energy, transportation and labor. Most small business owners believe a recession is inevitable; in fact, some think the recession has already begun and have reduced their sales outlook into the next year, according to the latest CNBC|SurveyMonkey Small Business Survey for Q3 2022, which saw small business confidence hit an all-time low.
Meanwhile, the world’s largest retailer Walmart — which had lowered second-quarter profit targets but then reported a beat on August 16, devoted much of its second-quarter earnings call to explaining its investment plans — which chief financial officer John David Rainey said will be one source of the chain’s hopes to boost profitability in the year ahead. 
Walmart has boosted capital spending 50% to $7.5 billion in the first half of its fiscal year, which ends in January. Rival Target, which experienced a 90 percent drop in second quarter earnings, nearly doubled investment, to $2.52 billion from $1.34 billion. Walmart CFO John Rainey cited the buildout of automation and technology throughout its business, and how it will continue to help drive greater efficiency, in a call with analysts after its earnings. He pointed to the company’s augmented-reality Viz Pick technology, which uses workers’ cell phones to speed up restocking of shelves to avoid lost sales.
Before the coming pop in customer income, retailers still have to get through the back to school and holiday shopping seasons, when household income will still be a little lower than it was in 2021 and retailers will still be dealing with excess inventory of home-related goods that they have been marking down and writing off.
“If we’re cleared by the holidays, we’re in much better shape going forward than the market is currently estimating,” English said.  More

Macy’s on Tuesday cut its full-year forecast, saying it anticipates deteriorating consumer spending on discretionary items like apparel.
The warning comes even as the retailer reported a fiscal second-quarter profit and revenue that topped analysts’ expectations.
CEO Jeff Gennette said that Macy’s so-called Polaris turnaround plans have made the company faster and more agile.

Macy’s Herald Square Flagship Department Store in Midtown Manhattan New York.
Nicolas Economou | NurPhoto | Getty Images

Macy’s on Tuesday cut its full-year forecast, saying it anticipates deteriorating consumer spending on discretionary items like apparel that will force the department store chain to use heavy markdowns to move items off shelves.
The warning comes even as the retailer reported a fiscal second-quarter profit and revenue that topped analysts’ expectations.

Macy’s now sees fiscal 2022 revenue in a range of $24.34 billion to $24.58 billion, down from prior estimates of $24.46 billion to $24.7 billion. It puts its annual adjusted earnings per share in a range of $4 to $4.20, down from prior guidance of $4.53 to $4.95. Wall Street analysts had been looking for full-year guidance of $24.36 billion and $4.51 per share, according to Refinitiv consensus estimates.
The revised forecast from Macy’s follows big-box giants Walmart and Target last week both reiterating their annual forecasts even as their profits are pressured. Kohl’s, however, cut its guidance again saying that its middle-income customers are being hurt by inflation.
Companies that rely on sales of discretionary items like apparel and footwear are at greater risk of underperforming in an environment where shoppers are increasingly thinking about pulling back spending. Over summer in particular, many Americans opted to splurge on vacations and dining out rather than physical goods.
“The consumer is not as healthy as they were in prior quarters,” Chief Financial Officer Adrian Mitchell told analysts on a conference call. “We have seen declining retail traffic in areas of weakening apparel sales over the quarter as the consumer faces higher costs on essential goods, particularly grocery.”
Macy’s noted both its Bloomingdale’s and Bluemercury banners captured demand in the latest quarter from higher-income customers spending on luxury items. Both businesses outperformed, it said.

Here’s how Macy’s performed in its fiscal second quarter compared with what analysts were anticipating, based on Refinitiv estimates:

Earnings per share: $1 adjusted vs. 85 cents expected
Revenue: $5.6 billion vs. $5.49 billion expected

Net income in the three-month period ended July 30 fell to $275 million, or 99 cents per share, from $345 million, or $1.08 a share, a year earlier.
Net sales fell slightly to $5.6 billion from $5.65 billion a year earlier.
Macy’s comparable sales on an owned plus licensed basis dropped 1.6% from the prior year. Analysts had been looking for a 2% decrease, according to Refinitiv.
Digital sales fell 5% from the prior year but were still up 37% compared with pre-pandemic levels, Macy’s said. E-commerce revenue accounted for 30% of total sales, down slightly from the prior year, as people returned to stores to shop.
CEO Jeff Gennette said that Macy’s so-called Polaris turnaround plans, which have entailed store closures and investments in its digital operations, have made the company faster and more agile. This has been “essential to navigate rapidly changing consumer trends and macro conditions,” he said in a press release.
As Macy’s scales back its exposure to traditional shopping malls, the company is opening smaller-format stores in off-mall locations. It’s also testing other ways to lure shoppers into its stores, including a partnership with the owner of Toys R Us to bring an assortment of toys and games to hundreds of Macy’s locations ahead of the holidays.
Gennette said he anticipates shoppers will begin buying gifts, decorations and other holiday merchandise as soon as October, as was the case during 2020 and 2021.
Still, Macy’s can’t escape changing consumer behavior amid decades-high inflation.
Spending trends fell as June progressed, Gennette said on a conference call. After Father’s Day and into July, Macy’s year-over-year sales trended about five percentage points lower than they had been in the preceding weeks, he said.
Macy’s reported inventory levels in the second quarter up 7% from prior-year levels. The department store chain said it is targeting “appropriate” inventory levels by the end of the year.
It said it’s using markdowns to clear aged inventory in seasonal goods, private-brand merchandise and pandemic-related categories like active wear, sleepwear and home goods.
At the same time, Macy’s said it will invest in bringing in fresh inventory of categories that its customers are looking for over the holiday season.
During its second quarter, Macy’s reported strength in dresses and work wear for women, tailored sports wear for men, fragrances and luggage.
“The past couple of years have been good ones for Macy’s and the company is now in a better state than it was pre-pandemic,” said Neil Saunders, managing director of GlobalData Retail. “However, unless the business capitalizes on this fortune to make major changes, it will continue to lag the overall market.”

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