Business

Foot Locker is feeling the holiday blues after seeing weak consumer demand and steep promotions across the sneaker marketplace.
The company fell short of Wall Street’s expectations on the top and bottom lines and cut its full-year guidance.
“Consumer spending trends softened following the peak Back-to-School period in August, and the promotional environment was more elevated than anticipated,” CEO Mary Dillon said in a news release.

Foot Locker store location on 34th street in New York City.
Courtesy: Foot Locker

Foot Locker slashed its full-year guidance on Wednesday after reporting a rough set of quarterly results that could be a warning sign for its largest brand partner Nike.
The sneaker giant fell short of Wall Street’s expectations on the top and bottom lines and blamed the miss on soft consumer demand and elevated promotions across the marketplace. The company also saw “softness” at Nike, CEO Mary Dillon told CNBC in an interview. 

“There are definitely some brands that we’re seeing comp gains, and then, you know, we’re also contending with some more recent softness out of Nike,” said Dillon. “Given their size and scale, it kind of makes sense that it would have an impact.” 
Foot Locker shares dropped 15% in premarket trading after it posted the results.
Here’s how Foot Locker did in its third fiscal quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

Earnings per share: 33 cents adjusted vs. 41 cents expected
Revenue: $1.96 billion vs. $2.01 billion expected

In the three months ended Nov. 2, Foot Locker swung to a loss of $33 million, or 34 cents per share, compared with earnings of $28 million, or 30 cents per share, a year earlier. Excluding one-time items related to impairment charges for its atmos brand and other expenses, Foot Locker reported earnings of $31 million, or 33 cents per share. 
Sales dropped to $1.96 billion, down about 1.4% from $1.99 billion a year earlier. 

Dillon explained that consumers are showing up for key shopping moments, such as back-to-school and the recent stretch between Thanksgiving and Cyber Monday, but pulling back in between those events, making the peaks and valleys sharper than expected. Foot Locker is also dealing with slow demand for Nike, which is trying to turn around its business after relying too heavily on the same styles to drive sales. 
Nike veteran Elliott Hill took the helm of the company less than a month ago, and Wall Street has not yet heard his strategy. Given Foot Locker’s performance during its third quarter, Nike could post another set of less-than-stellar quarterly results when it reports on Dec. 19.
Nike is Foot Locker’s largest brand partner, accounting for about 60% of sales. If Nike is struggling, Foot Locker will inevitably suffer, too. 
“It’s not like across the board with all brands. Frankly … I would just say that there’s some that are more promotional, but in total, the category is pretty promotional,” said Dillon. “There’s an elevated promotional level in this category that we hadn’t forecasted to be as it is.” 
She reiterated that Foot Locker’s relationship with Nike and its new CEO is “very strong” and expects the slow demand to be a blip as Hill gets his footing. 
“We have a great relationship with him [and] feel very confident about where he and his team are going,” said Dillon. “I think we’re going to work through all that, that’s the thing.”

Rough guidance

Given the tough situation with Nike and the pressures facing Foot Locker’s lower-income consumer, the company slashed its guidance for the full year and issued a disappointing holiday forecast.
For the holiday quarter, Foot Locker expects sales to be down between 1.5% and 3.5%, compared to a gain of about 2% in the year-ago period. The company said the previous fiscal year had an additional sales week.
Foot Locker’s guidance range is mostly worse than the 1.6% decline that analysts had expected, according to LSEG. The company also anticipates comparable sales will rise between 1.5% and 3.5%, largely below expectations of 3.4% growth, according to StreetAccount. 
For the full year, Foot Locker now expects sales to fall between 1% and 1.5%, compared to previous guidance of down 1% to up 1%. Analysts were expecting a decline of 0.4%, according to LSEG.
The retailer also cut its comparable sales outlook for the full year and now anticipates comps will grow between 1% and 1.5%, compared to previous guidance of 1% to 3%. Analysts expected the metric would climb 1.8%, according to StreetAccount. 
Foot Locker also lowered its full-year earnings outlook and now expects adjusted earnings per share to be between $1.20 and $1.30, below Wall Street expectations of $1.54. Foot Locker previously expected earnings to be between $1.50 and $1.70 per share. 
The company attributed the revised guidance, in part, to elevated promotions and the shorter year, which is expected to impact sales by about $100 million. 
Despite the slashed guidance and gloomy holiday outlook, there were some bright spots during the period. For the second quarter in a row, Foot Locker’s comparable sales grew compared to the previous year, with a 2.4% increase. That’s below the 3.2% analysts expected, according to StreetAccount, but it’s one indicator that Dillon’s turnaround plan is continuing to show signs of life.
Champs, which has been dragging down Foot Locker’s overall business, also posted positive comparable sales at 2.8% growth, as did WSS, which saw an increase of 1.8%.
During the quarter, Foot Locker’s gross margin also improved by 2.3 percentage points, thanks to fewer promotions than during the year-ago period, and it saw the highest conversion it has all year, said Dillon. 
The former Ulta Beauty boss added the company is planning to continue to use its cash on hand to finance its store refurbishment programs and is feeling “really good” about the progress it’s made.
“It is a bit of a tale of two worlds, which is that we feel like what we’re doing is really working well, but in the marketplace that we’re seeing right now, we think this is the right call,” said Dillon of the decision to cut guidance. “It doesn’t shake our confidence in where we’re heading with the Lace Up Plan and it doesn’t shake our confidence that these are the right things to do.” More

General Motors expects a restructuring of its joint venture operations with SAIC Motor Corp. in China to cost more than $5 billion in charges and writedowns.
The restructuring charges for the “SGM” joint venture are anticipated to include “plant closures and portfolio optimization,” according to the filing.
GM said most of the costs are expected to be recognized as non-cash, special item charges during the fourth quarter.

Employees work on Buick Envision SUVs at General Motors’ Dong Yue assembly plant, officially known as SAIC-GM Dong Yue Motors Co., Ltd., on Nov. 17, 2022, in Yantai, Shandong Province of China.
Tang Ke | Visual China Group | Getty Images

DETROIT – General Motors expects a restructuring of its joint venture operations with SAIC Motor Corp. in China to cost more than $5 billion in non-cash charges and writedowns, the Detroit automaker disclosed in a federal filing Wednesday morning.
GM said it expects to write down the value of its joint-venture operations in China by between $2.6 billion and $2.9 billion. It also anticipates another $2.7 billion in charges to restructure the business, including “plant closures and portfolio optimization,” according to the filing.

GM, which previously announced plans to restructure the operations in China, did not disclose any additional details about the expected closures.
“As we have consistently said, we are focused on capital efficiency and cost discipline and have been working with SGM to turn around the business in China in order to be sustainable and profitable in the market. We are close to finalizing our restructuring plan with our partner, and we expect our results in China in 2025 to show year-over-year improvement,” GM said in an emailed statement.
GM said it believes the joint venture “has the ability to restructure without new cash investments” from the American automaker.
A majority of the restructuring costs is expected to be recognized as non-cash, special item charges during the fourth quarter. That means they will impact the automaker’s net income, but not its adjusted earnings before interest and taxes – a key metric monitored by Wall Street.

GM’s operations in China have shifted from a profit engine to liability in the past decade as competition grows from government-backed domestic automakers fueled by nationalism, and as a generational shift in consumer perceptions of the automotive industry and electric vehicles takes hold.

Equity income from GM’s Chinese operations and joint ventures peaked at more than $2 billion in 2014 and 2015.
GM’s market share in China, including its joint ventures, has plummeted from roughly 15% as recently as 2015 to 8.6% last year — the first time it has dropped below 9% since 2003. GM’s equity income from the operations have also fallen, down 78.5% since peaking in 2014, according to regulatory filings.
GM’s U.S.-based brands such as Buick and Chevrolet have seen sales drop more than its joint venture sales with SAIC Motor, Wuling Motors and others. The joint venture models accounted for about 60% of its 2.1 million vehicles sold last year in China.
Prior to this year, the only quarterly losses for GM in China since 2009 were a $167 million shortfall during the first quarter of 2020 due to the coronavirus pandemic and an $87 million loss during the second quarter of 2022.
The Detroit automaker has reported three consecutive quarterly losses in equity income for its Chinese operations this year, totaling $347 million. That includes a loss of $137 million during the third quarter. More

Executives from American, United, Delta, Frontier and Spirit are set to testify before a Senate panel about their seating fees.
U.S. carriers brought in more than $12 billion in seating fees between 2018 and 2023.

Seats in the economy class cabin on board an American Airlines Boeing Co. 777-300ER aircraft.
Brent Lewin | Bloomberg | Getty Images

U.S. airline executives are set to defend their seating fees before a Senate panel Wednesday after the subcommittee accused the industry of charging “junk” fees to bring in billions in revenue.
American, Delta, United, Spirit and Frontier brought in $12.4 billion in seating fees between 2018 and 2023, according to a report released Nov. 26 by the Senate Permanent Subcommittee on Investigations.

“Airlines these days view their customers as little more than walking piggy banks to be shaken down for every possible dime,” Sen. Richard Blumenthal, D-Conn., the subcommittee’s chair, said in written remarks before the hearing.
Those extra charges are for seats with additional legroom, as well as those in “preferred” locations that are closer to the front of the plane, or window or aisle seats, the report noted.
“Our seat selection products are all voluntary,” Stephen Johnson, American’s chief strategy officer, said in written testimony ahead of the hearing. “For customers who value sitting in more in-demand locations, we do offer the opportunity to pay for more desirable seats.”
The Biden administration and some lawmakers have promised to crack down on so-called “junk” fees and have cited the airline industry as a target for cuts.
Executives at large airlines have defended their strategy to offer several types of economy service and add-on fees for selection of certain seats or checked bags, things that used to come for free with a ticket, and have said these options are communicated to customers.

Meanwhile, carriers have been racing to add more premium seats on board to increase revenue.

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“Fares that may require a fee to select a seat, for example, are clearly denoted with a symbol indicating that a seat in a different fare class or with extra legroom will need to be purchased for a fee,” Johnson said. “Similar information is included for potential bag and other fees.”
Discounters such as Spirit and Frontier, which pioneered the fee-based model in the U.S., prompted competitors to come up with their own bare-bones basic economy class. Spirit filed for Chapter 11 bankruptcy protection in November after a failed acquisition by JetBlue Airways, a Pratt & Whitney engine recall, increased competition and more demanding consumer tastes.
The hearing, which begins at 10 a.m. ET, will also include testimony from executives from Delta, United, Frontier and Spirit. More

Eli Lilly said its obesity drug Zepbound led to more weight loss than its main rival, Novo Nordisk’s Wegovy, in the first head-to-head clinical trial on the two weekly injections. 
The findings suggest Zepbound may be a superior treatment for weight loss, helping patients with obesity or who are overweight lose 20.2% of their body weight on average after 72 weeks.
Wegovy helped people lose 13.7% of their weight on average after the same time period.  

A combination image shows an injection pen of Zepbound, Eli Lilly’s weight loss drug, and boxes of Wegovy, made by Novo Nordisk. 

Eli Lilly on Wednesday said its obesity drug Zepbound led to more weight loss than its main rival, Novo Nordisk’s Wegovy, in the first head-to-head clinical trial on the weekly injections. 
The findings suggest Zepbound may be a superior treatment for weight loss, helping obese or overweight patients lose 20.2% of their body weight, or roughly 50 pounds, on average after 72 weeks in the phase three trial. Meanwhile, Wegovy helped people lose 13.7% of their weight, or about 33 pounds, on average after the same time period.  

Eli Lilly said Zepbound provided a 47% higher relative weight reduction compared with Wegovy in the trial. The company added that more than 31% of people taking Zepbound lost at least a quarter of their body weight, compared to just about 16% of those on Wegovy who lost that much weight.
Separate studies on the drugs, along with a recent head-to-head analysis of health records, have similarly implied that Zepbound outperforms Wegovy in terms of weight loss. A late-stage study on Zepbound showed that it helped patients lose more than 22% of their weight on average over 72 weeks, while a separate study on Wegovy showed that it led to 15% weight loss on average over 68 weeks.
But the Wednesday data appears to be the most concrete evidence of Zepbound’s edge, as the trial randomly assigned 751 patients to receive the maximum dose of either drug. The study specifically followed patients who were obese or overweight with at least one weight-related medical condition, not including diabetes.
“Given the increased interest around obesity medications, we conducted this study to help health care providers and patients make informed decisions about treatment choice,” Dr. Leonard Glass, senior vice president of global medical affairs at Eli Lilly Cardiometabolic Health, said in a release.
Eli Lilly is still evaluating the results, which it plans to publish in a peer-reviewed journal and present at a medical meeting next year.

The most common side effects of both drugs were gastrointestinal and generally mild to moderate in severity.
Zepbound’s greater weight loss is a huge advantage for Eli Lilly, which is competing with Novo Nordisk for a larger share of the booming weight loss drug market. Some analysts expect the space to be worth $150 billion a year by the early 2030s. 
Wegovy entered the market around two years before Zepbound, which won approval in the U.S. in late 2023. Still, some analysts believe Zepbound has a strong shot of becoming the best-selling drug of all time after more years on the market.
Data analytics firm GlobalData forecasts Zepbound will generate $27.2 billion in annual sales by 2030 and Wegovy will book $18.7 billion in annual revenue by the same year, according to data from November. 
Demand has far outstripped supply for Zepbound, Wegovy and their diabetes counterparts over the last year, forcing Eli Lilly and Novo Nordisk to pour billions into expanding their manufacturing capacity for the injections. Those efforts appear to be paying off, as the Food and Drug Administration now lists all doses of those treatments as “available” on its drug shortage database. 
Still, some patients struggle to access the drugs due to the spotty insurance coverage of weight loss treatments in the U.S. Without insurance or other savings, Zepbound and Wegovy both cost around $1,000 per month. 
The treatments work differently. 
Zepbound tamps down appetite and regulates blood sugar by activating two gut hormones, called GIP and GLP-1. Wegovy activates GLP-1 but does not target GIP, which some researchers say may also affect how the body breaks down sugar and fat. More

The Centers for Disease Control and Prevention on Tuesday said the deadly E. coli outbreak linked to slivered onions served at McDonald’s is over.
The CDC said 104 people in 14 states were infected in the outbreak.
The agency first announced the outbreak on Oct. 22.

In this photo illustration, a McDonald’s Quarter Pounder hamburger meal is seen at a McDonald’s on October 23, 2024 in the Flatbush neighborhood in the Brooklyn borough of New York City. 
Michael M. Santiago | Getty Images

The Centers for Disease Control and Prevention on Tuesday said the deadly E. coli outbreak linked to slivered onions served at McDonald’s is over, more than a month after the agency began its probe of the spread. 
The CDC said 104 people in 14 states were infected in the outbreak. It led to 27 hospitalizations and one previously reported death of an older adult in Colorado. 

The agency first announced the outbreak on Oct. 22. The CDC pointed to fresh slivered onions served on Quarter Pounders and other menu items as the likely source of this outbreak.
Quarter Pounder hamburgers are a core menu item for McDonald’s, raking in billions of dollars each year. The company temporarily removed those burgers from some locations following the outbreak, but has since brought back the menu item. The last illness onset occurred on Oct. 21, a day before the company took action and the CDC announced its investigation.
While the outbreak is formally over, McDonald’s is still dealing with the sales fallout.
Foot traffic to its U.S. restaurants was down 6.6% on Nov. 18 compared with a year earlier, according to a research note from Gordon Haskett. That’s an improvement from a low point of a seven-day rolling average of 11% traffic declines on Oct. 29.
The 10 states that the CDC first connected to the outbreak have seen steeper traffic declines, like a combined fall of 9.5% on Nov. 18, according to the note.

The company will also invest more than $100 million in marketing and targeted financial assistance for affected franchisees.
McDonald’s has brought back its popular McRib, starting Tuesday, despite a “farewell tour” last year. The chain will also roll out a new McValue menu in January, in the hopes of appealing to consumers looking for cheap deals.
“Looking ahead, we must remain laser focused on regaining our customers’ hard-earned trust and reigniting their brand affinity,” Michael Gonda, McDonald’s North American chief impact officer, and Cesar Pina, the company’s North American chief supply chain officer, wrote in an internal memo on Tuesday.
Shares of McDonald’s have fallen 7% since the CDC first linked the chain’s Quarter Pounders to the outbreak. The company has a market cap of $209.6 billion. More

In the weeks after Donald Trump’s sweeping election victory, American companies sought to reassure investors that they were amply prepared for a new round of tariffs. Some, like Stanley Black & Decker, a toolmaker, highlighted efforts to shift their supply chains away from China. Others, like Lowe’s, a home-improvement retailer, pointed to processes they have put in place to deal with tariffs after Mr Trump’s first term, during which levies were imposed on about $380bn-worth of imports ranging from steel and aluminium to washing machines, mostly from China. More

Constellation Brands will sell Svedka vodka to Sazerac.
The deal is expected to close in the coming months, but no transaction details were disclosed.
Sazerac is a privately-owned, New Orleans-based alcoholic beverage company that owns brands like Buffalo Trace bourbon, Fireball Cinnamon Whisky, Southern Comfort.

Constellation Brands Inc. Svedka vodka at a liquor store in the Upper East Side neighborhood of New York, US, on Friday, June 28, 2024.
Bing Guan | Bloomberg | Getty Images

Constellation Brands announced Tuesday it will sell its Svedka vodka brand to New Orleans-based spirits company Sazerac.
The transaction is expected to close in the coming months, Constellation said in a press release. It did not disclose the value of the deal.

“The actions we have taken over the past several years to reshape our wine and spirits portfolio support our efforts to accelerate the performance of that business,” said Constellation CEO Bill Newlands in the release. “This transaction is another step forward in seeking to ensure that our wine and spirits portfolio is optimized to succeed and to meet our growth objectives.”
Constellation’s wine and spirits business has been dragging on the company’s strong beer portfolio, which includes Modelo and Corona.
“We continue to face incremental category headwinds in our wine and spirits business, particularly in the lower-priced segments,” Newlands said on the company’s latest earnings call in October.
In the second quarter, the company’s wine and spirits shipments dropped 9.8% year over year, the company reported. Net sales and operating income for the segment fell 12% and 13%, respectively.
So far this year, wine and spirits has accounted for just 5% of Constellation’s volumes, but 17% of net sales. Of that, the large majority of new sales came from wine rather than spirits, with an 86% and 14% share, respectively.

Constellation acquired Svedka when it bought Spirits Marque One LLC for $384 million in 2007.
Sazerac, a privately-owned company, will add Svedka to a portfolio that includes Buffalo Trace bourbon, Fireball Cinnamon Whisky, Southern Comfort and many more global brands.
Constellation’s spirits portfolio will continue to own including High West Whiskey, Mi Campo Tequila and Casa Noble Tequila.
Though Constellation shares slid slightly in early trading, investors and analysts appeared to welcome the news.
“While the existing Wine division remains, the divestment of SVEDKA is a clear positive for the segment’s future growth prospects,” said Bernstein analyst Nadine Sarwat. “It also signals that management is willing to make tough decisions to evolve the business, another positive for corporate governance.”
Bernstein maintains a buy-equivalent rating on the stock and $325 price target on shares that currently trade around $237.
Bernstein called the news “a clear positive for Constellation,” saying the company’s wine and spirits weakness has dragged on the beer business.
Additional details around the transaction will be provided at the Morgan Stanley Global Consumer and Retail Conference on Dec. 3, the company said. More

Budget carrier Frontier Airlines plans to install two rows of first-class seats at the front of its Airbus aircraft.
The airline also plans to increase perks for its top-tier frequent flyers.
Frontier CEO Barry Biffle said the carrier expects the initiatives will generate more than $250 million in revenue in 2026 and more than $500 million in 2028.

Frontier Airlines planes are parked at gates in Denver International Airport (DEN) in Denver, Colorado, on August 5, 2023.
Daniel Slim | Afp | Getty Images

Frontier Airlines, one of the world’s biggest budget airlines, is adding first-class seats.
Its change in strategy comes as as the industry is battling for customers who are willing to splurge on more personal space.

Starting in September, Frontier plans to start ripping out the first two rows of its three-by-three economy seats to add four first-class seats, in a two-by-two configuration.
The Denver-based airline is also revamping its loyalty program to offer complimentary seat upgrades to its gold level members and above, when available, and a free companion ticket for its higher-tier platinum and diamond-level members. In mid-2025, customers will be able to redeem their miles for seating upgrades and baggage fees.
CEO Barry Biffle said he expects the new initiatives will bring in about $250 million in 2026 and more than $500 million in 2028.
“While we have the lowest costs in the industry, we don’t have the best revenue model,” Biffle said in an interview.
Biffle said the company’s biggest gaps in its revenue model came from not offering first-class seats and not having enough rewards for its loyalty program members. “This is going to be a game-changer,” he added.

He said expects the new seats will be especially popular on some of Frontier’s cross-country flights.

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Frontier’s cabin changes come as the airline industry is racing to win over higher-paying customers, outfitting planes with more first-class or higher-end seats that fetch higher fares, turning up the pressure on budget airlines to come up with more spacious options.
Those upgrades have come from behemoths like Delta and United, which account for most of the industry profits, and smaller carriers like JetBlue. Frontier will have to compete with carriers that offer other perks to sit at the front of the plane like full meals, but Biffle said that his airline’s best seats will beat them on price.
The carrier in March announced it would start selling rows with blocked middle seats and Frontier plans to keep offering that option, a spokeswoman said.
Southwest Airlines is planning to add extra-legroom seats and introduce seat assignments to increase revenue, switching course from the open-seating cabin it has flown for more than 50 years.
Spirit Airlines, which filed for Chapter 11 bankruptcy protection last month, offers a “Big Front Seat” that is similar to a domestic first-class seat on its aircraft. More