Business

Abercrombie & Fitch beat expectations on the top and bottom lines but slashed its profit guidance as it prepares for the impact of tariffs.
The company is now expecting full year earnings per share to be between $9.50 and $10.50, down from a previous range of between $10.40 and $11.40.
Abercrombie expects tariffs currently in effect to reduce its earnings by $50 million.

Fashion brand Abercrombie & Fitch advertising on a large scale digital billboard on the exterior of the Outernet building on 4th November 2024 in London, United Kingdom.
Mike Kemp | In Pictures | Getty Images

Shares of Abercrombie & Fitch soared on Wednesday, even after the retailer slashed its profit outlook due to tariffs, which are expected to hit its business by $50 million. 
The company is now expecting full year earnings per share to be between $9.50 and $10.50, down from a previous range of between $10.40 and $11.40. Analysts were expecting earnings of $10.33 a share, according to LSEG. 

Abercrombie also cut its operating margin forecast, another closely watched metric by investors. It’s now expecting its operating margin to be between 12.5% and 13.5%, down from a previous range of between 14% to 15%. 
The company’s guidance includes the estimated impact from tariffs that are currently in effect, including a 30% tariff on imports from China and a 10% levy on goods from dozens of other countries. It excludes other currently paused tariffs.
Still, shares of Abercrombie soared 25% in premarket trading after the company issued first-quarter results that beat Wall Street’s expectations on the top and bottom lines and issued revenue guidance that beat forecasts. The stock had fallen nearly 49% this year entering Wednesday.
Here’s how the apparel company performed in the first quarter compared with expectations, based on a survey of analysts by LSEG:

Earnings per share: $1.59 vs. $1.39 expected
Revenue: $1.10 billion vs. $1.07 billion expected

The company’s reported net income for the three-month period that ended May 3 was $80.4 million, or $1.59 per share, compared with $114 million, or $2.14 per share, a year earlier. 

Sales rose to $1.10 billion, up about 8% from $1.02 billion a year earlier. In a news release, Abercrombie said sales reached a record high for the fiscal first quarter. 
“This was above our expectations and was supported by broad-based growth across our three regions,” CEO Fran Horowitz said in a statement. “Hollister brands led the performance with growth of 22%, achieving its best ever first quarter net sales, while Abercrombie brands net sales were down 4% against 31% sales growth in 2024.”
Beyond its profit outlook, Abercrombie slightly raised its full-year sales guidance and is now expecting revenue to rise between 3% and 6%, up from a previous range of between 3% and 5%. That’s largely ahead of expectations of 3.3% growth, according to LSEG. 
For its current quarter, Abercrombie anticipates sales will rise between 3% and 5%, which is in line with expectations of 4.7% growth at the high end, according to LSEG. The company expects its operating margin to be between 12% and 13%, lower than expectations of 14.1%, according to StreetAccount. It anticipates earnings per share will be between $2.10 and $2.30, below expectations of $2.50. 
Abercrombie’s weak guidance largely reflects how tariffs will cut into its profits, but its sales are also expected to take a hit as it contends with a slowdown at its namesake banner. Abercrombie’s eponymous chain fueled its historic comeback over the last few years, but sales fell 4% at the brand in the first quarter, following 31% growth in the year-ago period.
Meanwhile, comparable sales for the Abercrombie brand plunged 10%. 
The slowing sales could simply be a normalization after Abercrombie’s supercharged growth, but they could also be a sign that the company is losing market share. 
The company’s Hollister brand performed much better than its namesake banner. During the quarter, sales at Hollister surged 22%, while comparable sales grew 23%. The teen-focused chain is expected to drive Abercrombie’s growth ahead. More

Toyota Motor is targeting significant growth in plug-in hybrid electric vehicles, or PHEVs.
The automaker plans to increase PHEVs from 2.4% last year to roughly 20% of its U.S. sales volume by 2030, according to company sources.
PHEVs can function as an all-electric vehicle for a certain number of miles before a traditional gas-powered engine is needed to propel the vehicle.

2023 Prius Prime on display, April 6, 2023.
Scott Mlyn | CNBC

PLANO, Texas — Twenty-five years after introducing many Americans to hybrid vehicles with the Prius, Toyota Motor is targeting significant growth in plug-in hybrid electric vehicles, or PHEVs.
Such vehicles can function as an all-electric vehicle for a certain number of miles before they need a traditional gas-powered engine. Unlike traditional hybrids like the Prius that use a small amount of battery technologies, PHEVs also need to be charged with a plug, like an EV, to use the electric range.

PHEVs aren’t new. Toyota first introduced the Prius as a PHEV in the U.S. in 2016, but such plug-ins are experiencing a renaissance as automakers try to meet federal fuel economy standards and emissions regulations. They’ve also acted as potential steppingstones to all-electric vehicles for consumers who might be hesitant to go fully electric.
“We are going to grow our PHEV volume through the lineup over the next few years,” David Christ, head of the Toyota brand in North America, told CNBC during a visit to the company’s North American headquarters. “We love the PHEV powertrain. We’re working to increase, perpetually increase, the amount of miles you can drive on EV-only range.”
Company sources said Toyota plans to increase PHEVs from 2.4% of its U.S. sales volume last year to roughly 20% by 2030. However, they said that could change based on regulations, customer acceptance of electrified technologies and affordability, among other factors.
That percentage of sales would match the amount of PHEV mix allowed under the California Air Resources Board’s Advanced Clean Cars II rule, which requires automakers to exclusively sell zero emissions vehicles in the state by 2035. President Donald Trump is expected to eliminate that rule.
Toyota’s planned PHEV expansion comes amid the regulatory uncertainty and slower-than-expected adoption of all-electric vehicles, which the company also continues to invest billions of dollars in annually. The performance of PHEVs also continues to improve.

“We’re looking at plug-ins across the lineup, and it’s more a function of where can we build them, and what is the product strength versus the competition,” Christ said.

2026 Toyota RAV4

The EV-only range of PHEVs has increased from a few dozen miles in ideal conditions to 50 miles for vehicles such as the automaker’s redesigned RAV4 that was introduced last week.
Sales estimates and forecasts for PHEVs vary, as their sales are limited and not all companies break out such models when reporting results. Several automotive data and forecasting companies expect modest PHEV growth, to between 4% and 5% of U.S. industry sales by 2030.
“The growth is likely limited due to the expensive dual powertrain cost structure. For those already invested, it may make sense to continue along the path,” said Chris Hopson, principal analyst at S&P Global Mobility. “However, for those who haven’t already made significant investments, it is a large incremental cost that must be balanced.”
S&P has PHEV sales in the U.S. growing from about 2% last year to 5% by the end of the decade. AutoPacific expects PHEVs to grow to about 4.2% by 2030, while AutoForecast Solutions expects such sales to be relatively stable around 3.3% over the coming years.
PHEV sales for Toyota, including its luxury Lexus brand, increased roughly 39% last year, according to company data. That included a 30% increase for the Toyota brand’s Prius and RAV4 PHEVs, as well as an 88.6% jump for Lexus’ three PHEVs, including a new “TX” model.
That compares to the automaker’s more than 20 hybrid models that experienced a combined sales increase of 53% last year, including a 56% increase for the Toyota brand amid several new introductions.
“We’re looking across the lineup and saying, ‘How many power trains can we offer on what products?'” Christ said. “We are going to increase the percentage of hybrids and PHEVs.”

Christ said the Toyota brand expects hybrids, including PHEVs, to account for more than 50% of U.S. sales this year, increasing from roughly 46% in 2024 and nearly 30% in 2023.
Cooper Ericksen, Toyota North America senior vice president of product and battery electric vehicles, or BEVs, compared the automaker’s “electrified” vehicle approach to having the bases loaded in a baseball game with different players.
“We’ve got ICE. We’ve got hybrid. We got plug-in hybrid. We got EV,” he said. “So, our chances of being successful in scoring runs is just a lot better than if you’re really overly committed to any one of those power trains.”
Ericksen, citing Toyota research and studies, said once people understand how PHEVs work and their benefits, there’s a massive swing in customer interest from traditional vehicles, hybrids and even some EVs.
“Once we educate people, by far the biggest swing from all the powertrains is PHEV. It goes up exponentially,” he told CNBC during a separate interview. “PHEV is really important for us. There are people that will consider a PHEV that will not consider a BEV.”
Consumer understanding of PHEVs has been a challenge in the past. It was partially to blame for the slow sales and discontinuation of General Motors’ Chevrolet Volt, which the automaker produced from 2010 to early 2019.
Many consumers also have voiced concern about having to plug the vehicle in. (But the vehicles can still operate as a traditional gas-powered vehicle without ever being plugged in, which has drawn criticism from some EV supporters.)
PHEVs are also costly due to the need for both EV technologies and an engine. Toyota’s PHEVs currently cost thousands of dollars more than traditional or hybrid vehicles.
“There are a lot of negatives in the production side of it, and buyers, unless they’re forced to, don’t really opt for the PHEV models,” said Sam Fiorani, AutoForecast Solutions vice president of global vehicle forecasting.
Toyota’s 2025 RAV4 PHEV carries a roughly $15,000 price premium over the base model and $12,000 over the hybrid version.
“It’s kind of like getting two cars in one,” Ericksen said. “And if it serves a compliance benefit, maybe we sweeten the pot a little bit on the price to get more people to consider it.” More

The domestic box office tallied in an estimated $326 million in ticket sales over Memorial Day Weekend, the highest haul for the holiday period ever.
Shares of AMC, Marcus Corporation and Cinemark and soared on Tuesday following a record-breaking weekend.
AMC, Cinemark and Marcus Theatres each posted their best Memorial Day Weekend hauls of all time, as well as record food and beverage sales for the holiday.

Still from Disney’s newest live-action remake “Lilo & Stitch.”

Shares of movie theater companies soared on Tuesday following a record-breaking Memorial Day Weekend at the domestic box office.
AMC saw its stock jump more than 23%, while shares of Marcus Theatres’ parent company Marcus Corporation climbed 10% and Cinemark stock leaped nearly 4%.

The tandem releases of Disney’s live-action “Lilo & Stitch” and Paramount’s “Mission Impossible — The Final Reckoning” alongside holdovers Disney and Marvel’s “Thunderbolts*,” Warner Bros.’ “Sinners” and “Final Destination Bloodlines” led to an estimated $326 million haul, the highest Memorial Day box office ever, according to data from Comscore.
It is also more than double the $132 million in ticket sales collected last year during the same period.
“Everything came together at the right time with two eagerly anticipated, positively reviewed tentpoles courting a diverse range of audiences,” said Shawn Robbins, director of analytics at Fandango and founder of Box Office Theory. “This record holiday frame continues a box office winning streak which began in the spring and has now grown into bona fide momentum for what will likely be a $4 billion-plus summer at domestic cinemas thanks to a string of promising blockbusters on the slate.”
AMC, Cinemark and Marcus Theatres each posted their best Memorial Day Weekend ticket revenues of all time, as well as record food and beverage sales for the holiday.
“Finally it would appear that our industry has turned a corner,” Adam Aron, CEO of AMC, said in a statement. “Since early April, weekend after weekend, moviegoers have been demonstrating their preference for theatrical moviegoing. A record-setting Memorial Day holiday is yet another sign of the continued strength and relevance of moviegoing in 2025.”

“Lilo & Stitch” tallied $183 million during the four-day frame, leading the pack, while the eighth installment in the Mission Impossible franchise scooped up $77 million. “Final Destination Bloodlines” took in $23.9 million, “Thunderbolts*” added $11.8 million and “Sinners” snared $11 million, Comscore reported.
The combination of new product and strong carryover from previously released films fueled the weekend, Chad Paris, chief financial officer at Marcus Corp, told CNBC.
“This is the first time this year where I would say we’ve had a fulsome amount of product for the weekend,” he said. “And we’re now getting into the stretch in the calendar where we’ll have a steady cadence of product releases and across genres, a lot of different products for people to go see.”
Over the summer period, which ends Labor Day Weekend, the domestic box office will see the release of Universal’s live-action version of “How to Train Your Dragon,” a new Disney and Pixar feature “Elio,” the hotly anticipated “Jurassic World Rebirth,” Warner Bros.’ “Superman” reboot, and Disney and Marvel’s “The Fantastic Four: First Steps.”
In between these tentpoles are a slew of low-and-mid budget films across genres like horror, drama, comedy and sports.
“Every other studio and every other movie on the horizon over the next few weeks are going to ride a wave and benefit from the performance of the past couple of months,” said Paul Dergarabedian, senior media analyst at Comscore. “We’re going to have one hell of a summer and if Memorial Weekend is any indication, we’re certainly looking at a $4 billion plus summer at potentially $4.2 billion plus and that’s great news after a summer of 2024 that failed to reach that milestone.”
Disclosure: Comcast is the parent company of Fandango, NBCUniversal and CNBC. More

China’s internet moguls are nothing if not fiercely competitive. Take, for instance, the jockeying for leadership in the market for cloud services. Baidu, the country’s search giant, surprised industry watchers on May 21st when it revealed that revenue from its cloud-computing business in the first quarter had surged by 42%, year on year, blowing through analysts’ predictions. The same day Tencent, maker of the WeChat super-app, hosted a cloud-computing conference at which it promised a big upgrade to its platform and cut its prices. The next day Alibaba, China’s biggest e-commerce firm, told an audience at its own cloud-themed conference that it was expanding globally and that its services would soon be available in dozens of countries. More

China’s internet moguls are nothing if not fiercely competitive. Take, for instance, the jockeying for leadership in the market for cloud services. Baidu, the country’s search giant, surprised industry watchers on May 21st when it revealed that revenue from its cloud-computing business in the first quarter had surged by 42%, year on year, blowing through analysts’ predictions. The same day Tencent, maker of the WeChat super-app, hosted a cloud-computing conference at which the firm cut its prices and promised a big upgrade to its platform. The next day Alibaba, China’s biggest e-commerce firm, told an audience at its own cloud-themed conference that it was expanding globally and that its services would soon be available in dozens of countries. More

For all the unwieldiness it entails, scale has always brought enormous benefits in business. Fixed costs are set against more revenue, raising profits and supporting investment. Heft brings bargaining power with suppliers and financiers. From the early 2000s, the advantages of scale became more pronounced. Intangible assets, including software and intellectual property, gave the upper hand to companies that could afford to invest in them. Globalisation provided big companies with more room to grow, as well as access to larger—and cheaper—pools of labour. In America, the gap in profitability between big and small firms widened (see chart 1). Economists began to speak of “superstar” firms racing further ahead of the competition. More

Southwest Airlines will start charging many passengers for checked bags on Wednesday.
The policy ends more than half a century of “two bags fly free” for all passengers.
Travelers with Southwest credit cards or who book in the highest classes of service can still check bags without paying a fee.

Passengers check in for Southwest Airlines flights at Chicago Midway International Airport on Feb. 18, 2025 in Chicago, Illinois.
Scott Olson | Getty Images

Set your alarm. Southwest Airlines customers have only one day to go before the company starts charging to check bags for the first time in more than half a century.
Starting Wednesday, Southwest will end its blanket “two bags fly free” policy.

It was a perk that was sacrosanct among customers and the airlines’ longtime executives alike, setting the airline apart from competitors. But baggage fees brought in nearly $7.3 billion for U.S. airlines last year, according to federal data, and Southwest executives who have long vowed to hold onto the policy have been under pressure to raise revenue.
The airline hasn’t yet said how much it will charge to check bags, but rivals generally charge about $35 or $40 for a first checked bag for domestic flights, though there are some exceptions.
Along with starting to charge for checked bags, Southwest has announced major changes to its business model over the past year, like getting rid of open seating. The carrier is also debuting basic-economy tickets like those sold by Delta Air Lines, American Airlines and United Airlines on Wednesday.
Here’s what travelers should know about the end of free bags on Southwest:

What is changing?

Southwest will no longer offer two free checked bags with many tickets purchased on or after Wednesday. For tickets purchased before then, a Southwest spokesman said the carrier will honor the terms of those fares, like the two free checked bags.

The fees will apply to its no-frills Basic, its Wanna Get Away Plus and its Anytime fares.
Southwest announced the policy in March after months of pressure from activist Elliott Investment Management, which took a stake in the airline last year and won five board seats, pushing for major changes at the company like its free checked bags, changeable tickets and open seating.

Are there exemptions?

Yes. Travelers with top-tier status in Southwest’s Rapid Rewards loyalty program will get two free checked bags, as will customers in the highest-level Business Select fares.
Customers with a Southwest Airlines co-branded credit card and their travel companions booked together with the same card won’t get charged for their first standard checked bag.
A-List frequent flyer members, the second-highest tier in the loyalty program, will also get their first bag checked free of charge.

Read more CNBC airline news

New fare type: Basic

Southwest on Wednesday will also start selling basic-economy tickets.
With the new Basic fare, customers won’t be able to make changes to their tickets, they’ll be among the last customers to board and their fare credits will expire in six months, compared with 12 months for other ticket classes.
In another change, the airline is ending its Wanna Get Away fare, which was the lowest tier ticket before the changes.

What about assigned seats?

Southwest has been known for its open-seating model for decades. Loyalists often obsessively check in a day before their flight in hopes of scoring a favorable boarding slot.
But later this year, Southwest says it will start selling tickets for flights in 2026 that will have seat assignments. It is also outfitting its planes with extra legroom seats, like many of its competitors, that fetch higher prices.

Can Southwest handle it?

Southwest executives have told staff that they expect passengers to carry on more luggage (those policies for free carry-ons aren’t changing) and have said the airline is installing larger overhead bins on its Boeing fleet, which should help with an influx of carry-on bags.
Executives have also said staff will get mobile bag-tag printers at gates and airport lobbies to assist customers.

Are people mad?

Southwest can hardly post on social media — even about babies and puppies on board — without getting angry comments about the changed baggage policy.
But CEO Bob Jordan told CNBC last month that the policy change announcement the company made on March 11 hasn’t deterred customers.
“We have seen no book-down on that day or after that day,” he said on “Squawk on the Street” on April 24. More

The deal includes 40% increases in “total economic improvements” in the first year.
United Airlines’ flight attendants had pushed for better pay, scheduling and other quality of life improvements.
The deal must still be approved by membership.

United Airline flight attendants picketed outside Terminal B at Logan Airport Thursday morning seeking a new contract.
John Tlumacki | Boston Globe | Getty Images

United Airlines reached an “industry-leading” tentative labor deal for its 28,000 flight attendants, their union said Friday.
The deal includes “40% of total economic improvements” in the first year and retroactive pay, a signing bonus, and quality of life improvements, like better scheduling and on-call time, the Association of Flight Attendants-CWA said.

The union did not provide further details about the deal.
United flight attendants have not had a raise since 2020.
The cabin crew members voted last year to authorize the union to strike if a deal wasn’t reached. They had also sought federal mediation in negotiations.

Read more CNBC airline news

U.S. flight attendants have pushed for wage increases for years after pilots and other work groups secured new labor deals in the wake of the pandemic. United is the last of the major U.S. carriers to get a deal done with its flight attendants.
The deal must still face a vote by flight attendants, and contract language will be finalized in the coming days, United said. More