Business

Delta started its journey to premium travel by fixing basics like on-time flights and reliable checked bag delivery.
The airline is now the most profitable in the U.S. and expects to grow its cash flow this year to as much as $4 billion.
United Airlines is also investing heavily in better cabins and technology to capture higher-paying travelers as it tries to take Delta’s crown.

An Airbus A330-323 aircraft, operated by Delta Air Lines.
Benoit Tessier | Reuters

Delta Air Lines is the country’s most profitable airline. CEO Ed Bastian’s challenge is to make sure his carrier stays on top.
The airline’s unit revenue, the amount it brings in for every seat it flies one mile, outpaced its competitors’ last year. Delta’s share price has soared almost 23% in 2024, more than any rival in the rocky airline sector, in a rally that’s outdone the S&P 500’s. It expects free cash flow to rise as much as 50% this year to between $3 billion and 4 billion, and is eyeing a return to an investment-grade credit rating. And a stat any traveler would appreciate: Delta came in first in punctuality last year, with more than 83% arriving on-time, according to the Transportation Department.

Rival United Airlines — second to Delta in net profit margins — is circling. It says it could grow profits even more this year.
“Knowing that there’s someone that thinks that they can take that mantle from us, that keeps us on our toes and keeps us continuing to drive hard,” Bastian told CNBC.

Ed Bastian, chief executive officer of Delta Air Lines Inc., during an interview in New York, US, on Monday, Nov. 7, 2022. Bastian said that he sees ‘strong demand’ for flights carrying into 2023. 
Jeenah Moon | Bloomberg | Getty Images

Delta has fashioned itself America’s premium airline. It has won over hordes of splurging travelers, many of them carrying American Express cards, Delta’s cash cow of a partner that generated almost $7 billion for the airline last year. Sales growth of Delta’s roomier and more expensive seats continues to outpace revenue from standard coach.
As they vie for luxury flyers, both Delta and United have added more high-end seating to their planes to cater to travelers who deem worthwhile a $300 surcharge for a few inches of extra legroom on a cross-country round trip, or 10 times as much for a seat in business class.
Bastian, a former auditor who said he took his first flight at age 25 for a business trip (New York to Chicago), is in charge of ensuring Delta lives up to its brand luster.

On Wednesday, Delta will take its next shot in the battle for high-spending flyers when it opens its newest, highest tier of airport lounge at John F. Kennedy International Airport for passengers in its Delta One cabin, its top product that features lie-flat beds for longer flights.
At more than 39,000 square feet it will be Delta’s largest lounge, accented with pillows that have iconic zig-zag motif of Italian fashion house Missoni, its new amenity kit partner. It features complementary spa treatments, like ice globes and serum for jet-lagged eyes, along with showers, a full restaurant, and a deck overlooking the airfield, in a bet that travelers’ desire to treat themselves is here to stay.
Delta is taking a page from the playbooks of United and American, which already dedicate their swankiest lounges to customers flying in long-haul business class. Delta plans to open Delta One lounges in Boston and Los Angeles later this year, and is studying airports where it could open others.
“The thing with this industry is no good idea goes uncopied,” said Raymond James airline analyst Savanthi Syth.
Meanwhile, United is placing huge orders for new Boeing and Airbus planes and remodeling hundreds of narrow-body cabins that feature seatback screens and bluetooth technology, a strategy that aims to cater to travelers in international business class or on the cheapest basic economy tickets.
“We haven’t exactly achieved the No. 1 profitability status in the industry, but I know we’re on our way,” United’s Chief Commercial Officer Andrew Nocella said in an interview last month. “If we continue to invest in our customers through great service and great products and great network, we know that will feed upon itself and it’ll help us achieve the financial results that we’re looking for.”
The airlines and American are approaching their 100th birthdays, and are trying to stay ahead — if not drive — shifting travel demand and still turn a profit.
United is adding to the more than 300 airports it serves. Figuring out the next hot destination is “part art” and “part science,” said Patrick Quayle, its head of network planning. The airline’s sprawling global network makes United the biggest U.S. airline by capacity and it recently launched service to places like Dubrovnik, Croatia and Amman, Jordan.
Quayle pointed to United’s addition of Cape Town, South Africa, which it first announced before the pandemic, as a success.
“Another airline has subsequently copied us. … I might want to add based in Atlanta,” he said, alluding to Delta’s home city.
The latest changes come at a difficult time for a lot U.S. airlines. Labor and other costs swelled after the pandemic, eating into margins despite record numbers of travelers. Added capacity in the U.S. market has forced carriers to discount fares in off-peak travel periods.
It’s tricky, and expensive, to change course. Even Southwest Airlines is facing investor pressure to add things like premium seating or seat assignments as its simple business model shows signs of age.

Arrows pointing outwards

Meanwhile, U.S. consumers are growing more selective: Some corporate leaders have lamented a spending pullback while others, like Delta’s CEO, are saying the opposite. Americans are still digging into the so-called experiences economy, and paying for more comfort along the way, according to Bastian.
“They may not be buying that new EV or that that new house, but they’re saying we’re going to go out and experience the world and invest in that experience,” he said. “And that’s why you see it happening in high-end concerts, high-end hospitality.”

‘Brick by brick’

When the U.S. was careening toward recession almost two decades ago, Delta’s leaders made a correct bet that travelers would eventually pay more to fly on its jets.
Delta was emerging from Chapter 11 bankruptcy in 2007, which other U.S. carriers found themselves in the years after the Sept. 11, 2001 terrorist attacks.
Former CEO Richard Anderson said the airline had to start with basics: Stop losing bags. Make sure flights didn’t get canceled and arrived on time. Clean up the cabins.
“It was about building the operation brick by brick,” said Anderson, who handed the reins to Delta’s former president, Bastian, in 2016. “It didn’t matter what you did with AmEx. If the flight canceled, you ruined your brand.”
Delta took better care to avoid maintenance problems. It also started ferrying planes to airports to avoid cancellations if a replacement aircraft was needed.
And the carrier tried to clean up its image, hiring a marketing firm that advised former President Barack Obama’s 2008 presidential campaign.

Anderson said the airline needed to be consistent and not fly its mix of paint jobs and cabin interiors. It faced fresh competition from low-cost airlines like a then-spritely upstart out of Queens, N.Y. called JetBlue Airways. Delta and United had both launched their own low-cost subsidiaries, but they discontinued them.
Delta executives knew they needed a brand to match if they were going to command a premium over competitors.
“One of the things about being a premium product is consistency, consistency in policy, consistency in appearance,” said Anderson. “If you got on a flight in Tokyo we wanted you to feel like you were home.”
After the string of changes, Delta’s performance improved. Corporate business travel contracts helped boost profits and still do, as business travel returns post-pandemic.
Delta had a key advantage over competitors. After it came out of bankruptcy, it merged with Northwest Airlines in 2008, allowing it to stabilize and expand around the world while other carriers floundered. The rest of the industry spent much of the next decade recovering from bankruptcies and a subsequent musical chairs of mergers that left four big carriers in control of about three-quarters of the U.S. domestic market. Delta’s rivals were years behind the carrier on integrating their merged staff, operations, networks and fleets.
Bastian said the carrier’s focus on reliability has made life easier for not just its customers, but also its employees.
“They’re not having to explain for a cancellation or mishandled luggage,” he said. “They have time to serve rather than to apologize.”
Delta is also unique as the least unionized of the major U.S. airlines, at about 20%. In April, as campaigns were underway to organize its flight attendants and other workers, it again raised worker pay. Flight attendants for Delta’s regional carrier Endeavor, which are unionized, have recently demanded compensation on par with the carrier’s mainline flight attendants.

Time to remodel

After Delta got the basics down, Bastian, 67, who joined Delta in 1998, said it was time for the airline to focus on more ambitious projects.
“You had the liberty to start investing in premium,” he said. “You started to figure out how to to make first class more available to customers.”
It has expanded in big-spending New York and Los Angeles, the country’s two largest air travel markets by revenue, according to aviation data firm OAG.
Delta also built up its host of global alliances, joint ventures and minority ownership stakes, giving it more reach. That includes its 49% stake in Virgin Atlantic, which already had a strong foothold in premium air travel and popular lounges.
“I think some of that heritage has made its way into the core of Delta,” said Virgin Atlantic’s CEO Shai Weiss. “I’m not suggesting we are the messiah for Delta, but there is no surprise that Delta and Virgin Atlantic see eye-to-eye on many things.”
The vast majority of the more than 940 million people that flew on U.S. airlines last year fly in coach, and Delta has tried to make its flights more desirable travelers on all sections of the plane.
It remodeled old and dated terminals, and built out its network of luxury airport lounges, which are tied to its lucrative credit card deal with American Express. It added seat-back televisions and better in-flight entertainment options, and in February 2023, it announced its long-awaited free Wi-Fi to customers enrolled in its SkyMiles frequent flyer program.

Delta has invested more than $12 billion to rebuild and update its U.S. hubs with soaring ceilings, new technology and in some lounges, a signature scent. (“It’s proprietary,” said Claude Roussel, who oversees Delta’s lounges, when asked what was in it.)
One of its latest efforts is its terminal and new Sky Club at New York’s LaGuardia Airport, alongside other airlines’ new terminals. A decade ago, then-Vice President Joe Biden famously said someone who was blindfolded and taken to that airport would think, “I must be in some third-world country.”
The airline faced big problems along the way like a dayslong system outage in 2016. And the worst of all: Covid-19. Like other airlines, Delta accepted billions in federal aid to weather the pandemic. The carrier successfully urged some 17,000 workers to take buyouts, hiring newer, lower-paid staff that lacked the experience of departed employees. Early in the process, Bastian said the newer workers gave the company a “juniority benefit.” The airline employed about 100,000 people in the U.S. as of the end of last year.
Delta and its competitors also pulled out of many small cities as the pandemic eased, isolating some smaller cities amid a shortage of regional jet pilots.
But international travel has proved resilient so far, as consumers show they are willing to shell out on experiences.

Luxury air travel? In the U.S.?

Luxury air travel and the United States didn’t go together for many years — and might not still, if you ask well-heeled globetrotters.
U.S. airlines don’t offer on-board showers or roomy suites like those on the superjumbos flown by the likes of Etihad Airways or Singapore Airlines. But the U.S. air travel market, the world’s largest, has gotten a number of upgrades in recent years, and travelers have grown to expect the same convenience they get from their online shopping sites and ride-hailing and food-ordering apps.
“Delta’s not bougie by any stretch, but when your competitors don’t try very hard, it doesn’t take much,” said Henry Harteveldt, a former airline executive and founder of Atmosphere Research Group.
But as a rewards-credit card boom, strong consumer spending, social media envy and a wanderlust that predated the pandemic combined to boost demand, airlines executives were taking notice.
Delta’s sales from premium products are growing faster than revenue from its main coach cabin, a trend the airline forecasts will continue. Sales from Delta’s loyalty business, premium cabins and other streams comprise more than half of the carrier’s revenue.
Airlines have made big changes as they struggle to accommodate the big-spending travelers armed with elite status. Major carriers have all overhauled their frequent flyer programs to reward the biggest spenders instead of those that fly the most miles, and made it harder to earn coveted elite status.
And at Delta and other airlines, many of the perks for luxury flyers come through lounges.
One of Delta’s Sky Clubs in Los Angeles International Airport offers a separate, dedicated security lane for customers flying Delta One, away from the masses at the airport. That feature will make it to the new JFK lounge later this year, a Delta spokesman said.
United and American Airlines have also worked to glam up and expand their airport lounges, access to which is a common perk with credit cards.
Delta softened some restrictions on Sky Club lounge access last year — which it made to end annoying and unsightly long lines to enter its exclusive airport real estate — after an uproar from customers.

‘We’re constantly pushing each other”

Both Delta and United have issued sunny financial forecasts for this year, while many carriers are losing money or not pulling in similar profit margins.
“Watching [Delta] succeed, I became convinced that the product mattered and service mattered, and we have done that at United now,” United CEO Scott Kirby said at a JPMorgan industry conference in March.
And at an investor conference last month, he pointed to how the two are pulling away from the rest of the pack in profitability, particularly at big hubs.
United has made some big bets that paid off. It held onto its wide-body planes, when travel demand collapsed in the pandemic, and has benefitted from the surge in international travel.
With United on Delta’s tail, Bastian is trying to expand the airline’s reach. Bastian has attended the massive Consumer Electronics Show in Las Vegas and has announced new partnerships with Lyft and Starbucks for its loyalty program.

He says he can’t mystery shop on other carriers because he’s too recognizable, but said his team flies on competitors regularly to see what they can improve.
“We don’t own the market rights to innovation in our industry,” he said.
When asked what Delta can improve, Bastian threw kudos back to United for its detailed messages to travelers when there’s a disruption.
“They’ve done some nice things with their app,” he said. “I still think ours is better, but … they’ve done a nice job in terms their communications with their customers and how they manage trip interruptions.”
Bastian added: “We’re constantly pushing each other.” More

Novo Nordisk said it will spend $4.1 billion to boost the supply of its blockbuster weight loss drug Wegovy, diabetes treatment Ozempic and other injectable therapies. 
The investment will fund a new manufacturing plant in Clayton, North Carolina, responsible for filling and packaging syringes and injection pens for the drugs.
Demand for Wegovy and Ozempic has outstripped supply over the last year, spurring intermittent shortages in the U.S.

Novo Nordisk’s new manufacturing facility in Clayton, North Carolina.
Courtesy: Novo Nordisk

Novo Nordisk on Monday said it will spend $4.1 billion to build a new manufacturing plant in Clayton, North Carolina, in a bid to boost the supply of its blockbuster weight loss drug Wegovy, diabetes treatment Ozempic and other injectable therapies. 
Demand for Wegovy and Ozempic has outstripped supply over the last year, spurring intermittent shortages in the U.S. and forcing the Danish drugmaker to invest heavily to increase its manufacturing footprint. The company said it plans to invest $6.8 billion in production this year, up from roughly $4 billion last year. 

The new manufacturing facility will be responsible for filling and packaging syringes and injection pens for the drugs, according to a company release. 
“This investment really gives us the opportunity to serve more patients,” Doug Langa, Novo Nordisk’s head of North American operations, said in an interview. “Importantly, I think the other key message here is it’s further investment in the U.S., so I think we’re very proud of that.”
Construction of the 1.4 million-square-foot facility has begun and is expected to be completed between 2027 and 2029, Novo Nordisk said. The company said 1,000 workers will staff the site, adding to the 2,500 employees already working at its three existing manufacturing plants in North Carolina. 
That includes two sites that are already operational in Clayton — one responsible for fill and finish work and another dedicated to producing the active ingredient in the company’s diabetes pill Rybelsus. The company also has a site in Durham, North Carolina, responsible for manufacturing and packaging oral drugs and another facility in West Lebanon, New Hampshire.

More CNBC health coverage

Twelve other production sites are located in Denmark, France, China, Japan, Algeria, Brazil, Iran and Russia, according to a Novo Nordisk spokesperson.

Three lower doses of Wegovy are currently in shortage in the U.S. due to high demand, according to a Food and Drug Administration database. Patients start Wegovy with lower doses and gradually increase the amount every four weeks until they reach a target dosage.
Wegovy and Ozempic are part of a class of medications called GLP-1s that mimic hormones produced in the gut to suppress a person’s appetite and regulate their blood sugar.
Around 35,000 U.S. patients on average start Wegovy each week today, up from roughly 27,000 in May, a Novo Nordisk spokesperson said in a statement. Still, Langa said the company is being “very purposeful” about how many lower doses it is releasing into the U.S. market to ensure patients who have already started taking Wegovy can continue treatment with higher doses.
Rival drugmaker Eli Lilly has also committed billions of dollars to increase manufacturing capacity for its popular GLP-1s for weight loss and diabetes, Zepbound and Mounjaro. The company similarly has several production plants in North Carolina. 

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Correction: Novo Nordisk’s existing facilities in Clayton, North Carolina, are responsible for fill and finish work and for producing the active ingredient in the company’s diabetes pill Rybelsus. A previous version of this story misstated those functions. More

Disney and Pixar’s “Inside Out 2” has tallied $724.4 million at the box office worldwide as of Sunday, making it the highest-grossing film of 2024.
Box-office experts expect the film will soon surpass $1 billion globally, becoming the first film since Warner Bros.’ “Barbie” to reach that milestone.
The animated sequel is also one of only seven titles to cross $100 million in its second domestic weekend in theaters.

In Disney and Pixar’s “Inside Out 2,” Riley’s Sense of Self is made up of all of her beliefs, each of which can be heard with the pluck of a string. Sadness (voice of Phyllis Smith) and Joy (voice of Amy Poehler) deliver key memories to this formative land.
Disney | Pixar

Disney and Pixar’s “Inside Out 2” could be the first film since Warner Bros.’ “Barbie” to top $1 billion at the global box office.
The animated feature has tallied $724.4 million worldwide as of Sunday, making it the highest-grossing film of 2024. Warner Bros. and Legendary Entertainment’s “Dune: Part Two” previously held this year’s record with $711.8 million.

“Inside Out 2” has yet to open in Japan, which contributed nearly $33 million to the $850.5 million global total of “Inside Out” in 2015.
“As a global phenomenon attracting moviegoers well beyond families and kids and a message that resonates and is relatable across all cultures and languages, ‘Inside Out 2’ is the rare film that is both a box-office sprinter and a marathon runner,” said Paul Dergarabedian, senior media analyst at Comscore. “It is the perfect candidate for admission to the billion-dollar club.”
While Disney’s 2022 film “Avatar: The Way of Water” surpassed the billion-dollar mark on its way to a more than $2 billion haul, the company’s Pixar studio hasn’t seen a movie reach the benchmark since 2019’s “Toy Story 4.”
After the pandemic, both Walt Disney Animation and Pixar struggled to regain a foothold at the box office. The difficulties occurred in part because Disney opted to debut a handful of animated features directly on streaming service Disney+ during theatrical closures and even once cinemas had reopened.
Before “Inside Out 2,” no Disney animated feature from Pixar or Walt Disney Animation had generated more than $480 million at the global box office since 2019.

The film snared another $100 million domestically over the weekend, an untypical 35% drop from its opening weekend. Films typically see a 50% to 70% drop in ticket sales from their debut weekend to their second weekend.
With this feat, “Inside Out 2” becomes one of only seven titles to cross $100 million in its second weekend. The others are five Disney films — “Star Wars: The Force Awakens,” “Avengers: Endgame,” “Avengers: Infinity War,” “Black Panther” and “The Avengers” — and Universal’s “Jurassic World.”
“Inside Out 2” added $100 million from weekday showings on the previous Monday through Thursday.
“‘Inside Out 2’s’ performance is the culmination of many things,” said Shawn Robbins, founder and owner of Box Office Theory. “A meaningful story that people of all ages and backgrounds can relate to, beloved goodwill toward the original film, Disney and Pixar’s legacy brand appeal, pent-up demand for a family movie, a very consumer-friendly runtime under two hours, school breaks, and oppressive heat waves driving many people indoors for air-conditioned entertainment can all be pointed to as ingredients in the recipe for this box-office storm.”
The film has over-indexed with family audiences, which accounted for more than 70% of those in attendance during the film’s domestic debut, according to data from EntTelligence. This moviegoing crowd has been underserved after the pandemic, as many family-friendly titles headed straight to streaming or were displaced from the calendar due to theater closures or production shutdowns.
Last year, that audience came out in droves for Universal’s “The Super Mario Bros. Movie,” which generated more than $1.36 billion at the global box office.
“Inside Out 2” also drove the coveted teen demographic to cinemas, with 14% of foot traffic coming from those aged 13 to 17. This younger generation has been largely absent from the market in recent years.
As the future of moviegoing, this group is particularly important to the industry. Getting them back to the big screen has become a top priority for studios and movie theater operators.
“A blockbuster run is just what the doctor ordered for theater owners as well,” said Robbins. “They were starved of event-level releases to begin the summer season in May, thanks largely to release delays caused by last year’s labor strikes. It typically does not take until the middle of June to see a box-office performer of this stature, but alongside the continued health of ‘Bad Boys: Ride or Die,’ it may well beckon the kind of avalanche of success which the industry hopes for out of several high-potential releases to begin the second half of the year.” 
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is the distributor of “Jurassic World” and “The Super Mario Bros. Movie.”

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Paramount Global will raise the price of its flagship streaming service, Paramount+.
The option with Showtime will increase by $1 a month, while the essential Paramount+ plan will rise by $2.
The price increases come amid a company restructuring after a merger opportunity with Skydance fell through.

Getty Images

Paramount Global is hiking the price of its flagship streaming service as the company looks to turn around its business.
The company said Monday it will raise the price of the Paramount+ with Showtime plan by $1 to $12.99 a month, and the price of its Paramount+ Essential option will increase by $2 to $7.99 a month for all new subscribers.

The price increase takes effect on Aug. 20 for new customers for both plans. Existing Paramount+ with Showtime customers will see the price increase hit on or after Sept. 20. Existing Paramount+ Essential customers — who don’t receive Showtime content — won’t pay more for their plans.
The price of the limited Paramount+ commercial option will also increase by $1 to $7.99 for current customers.
More media companies have increased streaming prices as they look to make a profit on the cash-losing business. Paramount executives had said publicly on multiple occasions they see a lot of opportunities to increase the price of streaming services.
Comcast’s NBCUniversal said it would raise prices for Peacock in July, ahead of the Summer Olympics, which will air exclusively on the NBC broadcast network and Peacock. It will be Peacock’s second price increase in the past year.
Earlier this month, Warner Bros. Discovery announced it would increase the cost of its Max streaming service.

Paramount had combined the Showtime and Paramount+ platforms last year in a push to condense content spending, which has become a particular focus for media companies. The company increased Paramount+ prices late last year, too.
Paramount said in April it had added 3.7 million Paramount+ subscribers during the first quarter, bringing the total to 71 million. However, like most of its media peers, Paramount posted losses related to its streaming service. The company said the losses during the first quarter narrowed to $286 million from $511 million during the year-earlier period.
The price increase comes after National Amusements earlier this month stopped discussions with Skydance on a proposed merger with Paramount. National Amusements, which is owned by Shari Redstone, the controlling shareholder of Paramount, had previously agreed to economic terms of a merger with a consortium including David Ellison’s Skydance, before ending the deal talks.
The company is now being led by a trio of leaders, called the “Office of the CEO,” made up of CBS CEO George Cheeks, Paramount Media Networks CEO Chris McCarthy and Paramount Pictures CEO Brian Robbins.
The three leaders recently laid out their plan to turn around the company at Paramount’s annual shareholder meeting, in the event the deal with Skydance fell through.
The strategic priorities — with an eye toward lowering Paramount’s debt — included exploring streaming joint venture opportunities with other media companies and eliminating $500 million in costs, as well as divesting noncore assets.
The trio said they would unveil further plans during Paramount’s earnings report in August.
— Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

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Ferrari is opening a new E-Building in Maranello, Italy, that will produce traditional internal combustion engine cars alongside hybrid and future all-electric models.
The electric model’s launch is scheduled in the fourth quarter of 2025 and has already sparked debate in the automotive community and among car collectors.
“The final judge will be the client,” CEO Benedetto Vigna told CNBC. “More people have started to drive our electric Ferrari, and they have a good feeling. The driving traits are there.”

Ferrari’s all-electric model won’t be launched for over a year, but early tests indicate it has all the driving traits and emotion of a true Ferrari, according to Ferrari CEO Benedetto Vigna.
“The final judge will be the client,” Vigna told CNBC during the opening of the company’s new E-Building in Maranello, Italy. “More people have started to drive our electric Ferrari, and they have a good feeling. The driving traits are there.”

Vigna said the defining characteristic of a Ferrari is the emotional experience. Having driven the all-electric Ferrari himself, he said, “I had this kind of emotion.”
Ferrari’s plan to build an electric model marks a bold and expensive bet for a luxury automaker famed for its roaring, powerful combustion engines. Little is known about the electric model, which is not scheduled for launch until the fourth quarter of 2025. Yet the notion of an electric Prancing Horse has already set off a vigorous debate in the auto community and among wealthy car collectors.
Much of the debate is focused on engine sound. Ferrari powertrains are prized for their symphony of roars, rumbles, pops and high-pitched whines. Electric motors are largely silent.
Vigna said Ferrari’s power acoustics will always be “authentic,” meaning the company won’t try to recreate the sound of a combustion engine through fake audio programs. He hinted, however, that it could amplify or better showcase the natural sound of an electric motor.
“The electric engine is not silent,” he said. “There is a way to let it play in a unique way.”

Vigna added that engine sound is only one part of the emotional experience of driving the supercar.
“You interact with eyes, with ears, with your full body,” he said. “When you’re talking about the Ferrari experience, the driving traits in a car, you’re talking about having a unique emotion when you’re in the car. Because it’s about linear acceleration, lateral acceleration, braking experience, gearbox change. So there are many dimensions, not just the sound.”
Vigna declined to give projections for the price or overall sales of the all-electric Ferrari. He said the automaker will continue offering customers the choice of internal combustion engines and hybrids alongside the electric model. Ferrari, he said, will remain “technology neutral,” meaning it will leave it to clients to choose their powertrain.

An in-progress Ferrari at the supercar maker’s E-Building in Maranello, Italy.
Crystal Lau | CNBC

With the new E-Building, which spans over 400,000 square feet and cost over 200 million euros ($215 million) to build, Ferrari will for the first time be able to produce cars with any of the three powertrains in the same factory, which maximizes efficiency and flexibility.
“The choice is in the hands of the client,” Vigna said.
The CEO said while he expects some customers will never buy an electric Ferrari, others will make the switch and some drivers will only “become part of the Ferrari family” if they can buy electric.
With the new E-Building, the company also would be better equipped to meet market demand.
Ferrari produced fewer than 14,000 cars last year, and demand remains so strong that wait times for some models are up to three years. Vigna said the new E-Building will allow the supercar maker to expand production, but he declined to provide specific targets.
“Waiting is part of the experience” of owning a Ferrari, Vigna said.

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Fast fashion giant Shein has confidentially filed for a public listing in London, a person familiar with the matter told CNBC.
Shein confidentially filed for a U.S. initial public offering late last year, but the retailer has faced mounting backlash tied to allegations of forced labor in its supply chain.
IPO experts told CNBC a U.S. offering was becoming increasingly unlikely, and that a London offering could sidestep some of the expected hurdles.

Shein sign during its opening, at ABC Serrano, on 26 April, 2024 in Madrid, Spain. 
Alejandro Martinez Velez | Europa Press | Getty Images

Shein, the fast fashion giant with links to China, has confidentially filed for a public listing in London as it faces backlash in the U.S., a person familiar with the matter told CNBC.
The company had confidentially filed for a U.S. initial public offering in November but changed gears to London after it failed to win the support of American lawmakers. Elected officials in the U.S. have repeatedly expressed concerns about the use of forced labor in Shein’s supply chain and its use of a U.S. tax law exemption known as de minimis.

Shein would still prefer to go public in the U.S., sources previously told CNBC, and its filing in London doesn’t mean that an IPO will happen there. Shein had previously sought China’s approval to go public in the U.S. It’s unclear if Beijing has signed off on the London listing.
Shein, which was founded in China, has gone to great lengths to establish itself as a “global” company, moving its headquarters to Singapore in 2021. Still, the vast majority of its supply chain is still based in China, and the fact that it needed to seek Beijing’s approval to go public in the U.S. means regulators there view it as a Chinese company — and could exert control over its operations and data.
Shein’s London filing marks another twist in the company’s so-far long road to a public markets debut. It crashed onto the U.S. fashion scene during the Covid-19 pandemic and won over consumers with its ability to quickly offer the latest styles at rock bottom prices. It’s been a thorn in the side of U.S.-based competitors, which have ceded market share to the digital upstart and struggled to match its speed.
As Shein’s prominence in the U.S. grew, so did its ambitions to go public. It began waging a U.S. charm offensive as it sought to win the approval of lawmakers and the retail industry, but those efforts have not yet succeeded. Shein has applied for membership with the National Retail Federation, the industry’s largest trade association, multiple times and has repeatedly been rejected, CNBC reported.
It’s found itself caught in the crossfire of a tense geopolitical rivalry between the U.S. and Beijing. American lawmakers, concerned about the influence companies with Chinese links can have on the U.S. economy, ramped up their scrutiny of Shein after it filed to go public. Some elected officials at the federal and state level have called on the U.S. Securities and Exchange Commission to block the company’s listing because they say it would violate a U.S. law that bans the import of products made from the Xinjiang region in China, where the government has faced accusations of genocide against the Uyghur ethnic group.

Shein has acknowledged to CNBC that raw materials from banned regions have been found in its supply chain, but previous tests show that it’s done a better job, on average, of ridding such materials from its garments than the industry overall.
In May, the Wall Street Journal reported that Shein changed gears to London after the SEC told the retailer that its listing wouldn’t be accepted unless it made its filing public — a request that experts told the outlet was unusual. Typically, companies file to go public confidentially so they can protect sensitive information surrounding their operations and financials as regulators review the filing.
Even so, Shein’s executive chairman insists that its ambitions to go public are about transparency — not about raising capital.
“Most companies seek to go public for liquidity reasons,” Donald Tang told the outlet. “We seek to go public to embrace scrutiny and public diligence.”
— CNBC’s Sara Salinas contributed to this report More

Target has struck a deal with Shopify to discover new brands and hot items for its third-party marketplace.
For Target, adding the items could help drive online traffic as the discounter tries to get back to sales and e-commerce growth.
Third-party marketplaces tend to be lucrative businesses as retailers get a cut of sellers’ profits and can sell ads or fulfillment services.

Reuters (L) | Getty Images (R)

Target is turning to Shopify to add new and trendier brands to its website.
Starting Monday, the Minneapolis-based discounter said companies that work with Shopify can apply to join Target Plus, its third-party marketplace. Some of Shopify’s customers are smaller or up-and-coming brands that use the e-commerce platform to build and operate a website.

Target and Shopify did not disclose financial terms or the length of the deal.
In an interview with CNBC, Target Chief Guest Experience Officer Cara Sylvester said Shopify will help the retailer discover hot items and quickly make them available for Target’s online shoppers. She said Target plans to put some popular items discovered through the Shopify deal on store shelves.
Target’s marketplace creates a “halo” and is “an accelerant to the total business,” she said. Sylvester added that as the company expands its online assortment and adds eye-catching merchandise, customers tend to visit its website more frequently and buy from both marketplace sellers and Target’s own brands.
The big-box retailer is trying to get back to sales growth as consumers buy less discretionary merchandise, with the discounter lagging behind grocery competitors like Walmart. Target has posted four consecutive quarters of declining comparable sales, and its overall sales have fallen in three of the past four quarters.
The company has struggled to grow its e-commerce business, too. Target’s digital sales grew 1.4% in the first quarter, the first such increase in more than a year.

Company leaders said in May that the retailer is on track to return to sales growth in the second quarter, but that’s partially due to its weak performance year over year. For the full year, Target said it expects comparable sales will range from flat to up 2%, with adjusted earnings per share of $8.60 to $9.60. 
Shares of Target have underperformed the broader stock market. As of Friday’s close, the company’s stock is up about 2% compared with the S&P 500’s nearly 15% increase. Its stock price of $146.13 is also well below the highs it hit during the Covid pandemic years, when it topped $260.
Shopify could also use a boost. Shares tumbled after its earnings report in May and are down about 17% so far this year.
Target Plus has only a tiny fraction of the revenue and sellers of other third-party marketplaces. Unlike Amazon, Walmart, eBay and others, Target allows brands to join by invitation only. It has more than 1,200 sellers, according to Target. Amazon counts about 2 million sellers and Walmart has about 135,000 sellers, according to estimates by Marketplace Pulse, a e-commerce research tracker.
Through the marketplace, Target’s website has carried items like the UnBrush, a detangling hairbrush that went viral on TikTok, and premium products, such as sunglasses from Ray-Ban and Coach. It offers more than 2 million products from brands including Crocs, Ruggable and Timberland. The assortment cuts across many categories including apparel, sporting goods and home decor.
Target said its marketplace has gained momentum. It said its seller and product count have more than doubled over the past calendar year.
The retailer doesn’t split out the revenue made through its third-party marketplace. Instead, it lumps it together in financial filings with “other revenue,” such as money made from credit card profit-sharing and its advertising business, Roundel. That other revenue totaled $388 million, accounting for less than 2% of its $24.53 billion of revenue that it reported in its most recent quarter, which ended May 4.
Yet Sylvester said Target Plus is “one of the fastest growing parts of Target’s business.”
Brands that join Target Plus also become potential customers of Roundel. The advertising business grew by more than 20% in the most recent quarter. Sylvester would not say how much of that came from ads bought by Target Plus sellers.
Third-party marketplaces have become a hot area in retail because they tend to drive higher profits. Instead of buying goods from suppliers, retailers rely on sellers that typically store and own the inventory. Those sellers also take on the financial risks if customers don’t want items or the products must be marked down.
Retailers typically get a cut of sellers’ sales. Plus, they can charge for services, such as fulfilling a brand’s online orders or selling advertisements, like sponsored search results, for sellers’ products.
Target does not offer fulfillment services, instead relying on Target Plus sellers to store, pack and ship their own goods.
Walmart, in particular, has ramped up its marketplace efforts as it tries to close the wide gap with Amazon and its dominant e-commerce platform. It has been recruiting sellers and offering new services, like the ability to ship bulky items like patio furniture or canoes. Sellers in Walmart’s U.S. marketplace grew 36% in the first quarter and it now has more than 420 million unique items, CEO Doug McMillon said on the company’s earnings call in mid-May.
Other marketplaces, such as TikTok Shop and Temu, are growing rapidly, too.

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