Business

The pandemic-era gains that fueled exponential toy industry sales growth waned in 2023 as consumers cut discretionary spending amid rising inflationary costs and increased credit card debt.
Lego continues to focus on Chinese expansion as sales in the region declined for the year.
Digital initiatives remain a top priority following a partnership with Epic Games and Fortnite.

Customers at a Lego store in Shanghai, China, on Feb. 3, 2024.
Costfoto | Nurphoto | Getty Images

The Lego company grew sales 2% last year, even as the global toy industry saw sales slip 7%, according to data from Circana.
The pandemic-era gains that fueled exponential toy industry sales growth waned in 2023 as consumers cut discretionary spending amid rising inflationary costs and increased credit card debt. Meanwhile Denmark-based Lego posted resilient sales, with revenue reaching 65.9 billion Danish krone, or about $9.65 billion, it said Tuesday.

“Being able to again outgrow the market by almost 10 percentage points, like we’ve done the last couple of years, I think it’s really nice to see that we could do that in good years, and we can also do it in bad years,” Lego CEO Niels Christiansen told CNBC.
Lego was among the toy companies that saw massive gains during the Covid-19 pandemic and continues to outperform the industry and snap up market share. The company saw sales jump 27% in 2021 and 17% in 2022.
The toymaker’s top-performing brands last year included Lego Icons, Lego Technic, Lego City, Lego Harry Potter and Lego Star Wars. These kits range in size and difficulty, with the company saying the themes make it fun for children to learn building skills while providing a creative outlet for adults.
In 2023, the company had 780 products, around 50% of which were new items. That’s on par with previous years and is part of the company’s strategy for having fresh and relevant sets for all consumers.
Of course, the company has not been immune to macroeconomic pressures, particularly as shoppers tighten their purse strings. Christiansen said Lego is selling the same volume of products, but the company has noticed that customers “traded down” in 2023 and opted for lower-priced sets.

Net profit in 2023 reached 13.1 billion Danish krone, or about $1.92 billion, down almost 5% from 2022.
In particular, the key Chinese market saw revenue declines.
“Chinese consumers are really holding back on spending,” Christiansen said.
Lego has been growing its footprint in China over the past few years, opening hundreds of retail locations. While Lego first entered the country in 1993, it was only in the last decade that the brick maker began a massive expansion in the region.
Of the 147 new Lego stores opened last year, 81 of them were in China. While Christiansen says that number will fall to around 40 new openings in 2024, brick-and-mortar remains a key focus for the brand as it moves into smaller cities in China.
Lego has also been expanding its digital presence, partnering with Epic Games to launch Lego Fortnite, an open world survival video game.
“We’re basically competing for children’s time and their attention and being relevant with them,” Christiansen said.
Lego’s team of digital experts grew by 27% in 2023, the company said, as it pushed to improve online experiences across the board from shopping to television and film content. The goal is always to tie these digital touchpoints back to physical play.
“At the end of the day, they may spend a little bit on Lego Fortnite or wherever, but I hope when it gets to Christmas that we are on their wish list,” Christiansen said.

Don’t miss these stories from CNBC PRO: More

As companies continue to call retail crime an industrywide dilemma, CNBC has spent about eight months investigating organized retail crime rings, getting a rare glimpse into the complex layers of the organizations.
In some cases, CNBC witnessed low-level shoplifting incidents involving people who appeared to be homeless, and in other cases saw takedowns of alleged organized theft groups that police said were reselling stolen merchandise at flea markets.
One group, in operation for more than a decade, made millions reselling stolen cosmetics on Amazon, police said.

In a tony suburban enclave in the San Diego foothills, police say, an organized retail crime “queenpin” had built an empire.
Tucked behind the stone walls of her 4,500-square-foot Spanish-style mansion, Michelle Mack had stockpiled a small fortune in cosmetics that had been stolen from Ulta and Sephora stores across the country, authorities said. 

Police don’t suspect that Mack, 53, took the items herself. Instead, they say, she pulled the strings from the shadows, employing a network of around a dozen women who stole the items for her so she could resell them on Amazon.

Michelle Mack’s home in Bonsall, California, Dec. 6, 2023.

With their airfare, car rentals and other travel expenses paid by Mack, the suspects committed hundreds of thefts up and down the California coast and into Washington, Utah, Oregon, Colorado, Arizona, Illinois, Texas, Florida, Pennsylvania, Massachusetts and Ohio, investigators said. Mack selected which stores to target and what merchandise to take and the women were sent to clear out entire shelves of merchandise before making off with the stolen goods stuffed into Louis Vuitton bags, investigators said.
Investigators began referring to the theft group as the “California Girls” and considered Mack the crew’s ringleader. She made millions reselling the stolen items on Amazon to unwitting customers at a fraction of their typical retail price, investigators said, before she was arrested in early December.

Michelle Mack is taken into custody, Dec. 6, 2023.

Law enforcement officials say Mack’s alleged theft ring is just one of the many that are plaguing U.S. retailers and costing them billions in losses annually. Their rise has led many companies to lock up merchandise, hire security guards and lobby lawmakers for stricter regulations.
These organized theft groups don’t typically carry out the splashy “smash and grab” robberies seen in viral videos. Instead, they pilfer goods quickly, quietly and efficiently. They often function within elaborate, organized structures that in some ways mimic the corporations they’re stealing from, police said.

CNBC has spent about eight months embedding with various law enforcement agencies and investigating theft groups to understand what organized retail crime looks like from the ground. In some cases, CNBC witnessed low-level shoplifting incidents involving people who appeared to be homeless or mentally ill. In other instances, CNBC saw takedowns of alleged organized theft groups that police said were reselling stolen merchandise at flea markets. Mack’s group, from her alleged network of professional thieves to her lucrative Amazon marketplace, was by far the most sophisticated one CNBC tracked alongside police.

California Highway Patrol officers arrest a retail crime suspect.

But federal agents with Homeland Security Investigations, the Department of Homeland Security’s law enforcement branch, said some crime groups are even more elaborate — and theft is just one facet of their enterprises.
“We’re talking about operations that have fleets of trucks, 18-wheelers that have palletized loads of stolen goods, that have cleaning crews that actually clean the goods to make them look brand new,” said Adam Parks, an assistant special agent in charge at HSI, which is the main federal agency investigating retail crime.
“Just like any business, they’ve invested their capital into business assets like shrink wrap machines, forklifts,” Parks, who works out of HSI’s Baton Rouge, Louisiana, office, told CNBC in an interview. “That is what organized theft looks like, and it actually is indistinguishable from other e-commerce distribution centers.”
These theft groups in their myriad forms have become a thorn in the side of retailers big and small, prompting retailers to cite crime as the reason for lower profits, the inability to hire and retain staff, and the degradation of the in-store experience. They have also united politically divided Americans in their disdain for seeing everyday products locked up behind glass cases and witnessing brazen theft gone unchecked in stores.

Suspected stolen cosmetics found inside Michelle Mack’s home.

Whether organized retail crime is actually rising is up for debate. Retailers including Target, Foot Locker, Walgreens and Ulta have said theft is a growing problem in recent years. But few have said how often it’s happening or how much money they’re losing from it, fueling accusations from some experts and analysts that they’re blaming crime in order to mask operational missteps.
The National Retail Federation estimates that retailers lost $40.5 billion to external theft, including organized retail crime, in 2022. That represented about 36% of total inventory losses — slightly lower than the 37% in 2021.
Even if theft has not meaningfully reduced some retailers’ profits, many have warned that crime can threaten the safety of workers and shoppers.
“The financial impact is real, but way more important is the human impact, the impact it has to our associates, the impact it has to our guests,” Ulta CEO Dave Kimbell told CNBC in a rare sit-down interview.
“It also impacts the communities in which we live,” he said. “If people don’t feel safe going in to shop in certain areas of a community, it really has an impact and can change neighborhoods and change communities over time.”
The government response to the issue has grown in turn. Both local and federal agencies have stepped up enforcement of laws targeting organized retail crime, and lawmakers are proposing and passing more measures that stiffen penalties for theft offenses.

Arrows pointing outwards

HSI initiated 59 cases against organized theft groups in fiscal 2021, resulting in 55 indictments and 61 arrests, the agency said.
By the end of fiscal 2023, cases had more than tripled, to 199. Indictments spiked more than fivefold to 284, while arrests soared to 386, more than six times the number in 2021.
California Highway Patrol, which runs one of the most active retail crime task forces in the country, reports it made 170% more arrests for organized theft offenses in 2023 than it did in 2022.
It’s not clear whether organized theft offenses increased in that time or officials ramped up enforcement as the issue got more public attention and the retail industry’s lobbying engine pressed them to make it a priority.
CNBC embedded with teams from HSI and California Highway Patrol to witness four organized retail crime operations for this investigation. The probe is also based on more than a dozen interviews with law enforcement officers, retail leaders and customers, along with records, including court filings, company reports and property records.

New Orleans

On a sweltering Monday morning in July, about a dozen agents from HSI New Orleans gathered behind the U.S. Custom House, preparing for Operation French Quarter.
The officers were instructed to pose as shoppers inside three Walgreens stores and one CVS store in the area seeing high rates of theft, sometimes as many as 20 to 30 incidents per day, agents said.
As federal law enforcement agents who typically investigate terrorism, sex trafficking and gang leaders such as Joaquin “El Chapo” Guzman, the officers weren’t there to arrest people for petty theft. They had a clear directive: Find out who’s stealing and follow them out of the store to determine who else they may be working with.
“Obviously, the name of the game, guys and girls, is trying to get the bigger and better fish,” Assistant Special Agent in Charge Scott Robles, who led the operation, told the assembled officers. “We’re trying to identify the people who are in charge of this organized crime.”

Assistant Special Agent in Charge Scott Robles of Homeland Security Investigations addresses a team of undercover agents in New Orleans, July 17, 2023.

At the bottom of organized retail crime rings are boosters — the people who go into stores and take the items. Robles was hoping the serial thieves targeting the drugstores could lead them to a larger operation.
“It can be anybody. It could be the mom with five kids just looking for extra money. It can be somebody that’s part of a team. … They may be getting paid with food, they may be getting paid with beer or drugs,” Robles said. “Some people get paid cash or they’re trying to work off a debt.”
Throughout the hourslong operation, agents identified at least one case that they say plainly showed organized theft.
Surveillance footage of the incident shows a man enter one of the Walgreens stores, head to the cosmetics aisle, remove a plastic shopping bag from his pants and calmly load it up with 17 jars of nail polish, valued at around $200. He then walked about a half mile away to the New Orleans Public Library’s main branch, where he sold the nail polish to a security guard, police said.
Federal agents briefly questioned the security guard, and the incident remains under investigation.
Beyond that instance, the vast majority of the thefts agents witnessed during the operation were low-level and petty, involving people who appeared to be homeless, mentally ill or transient. One man stole paper towels and then walked into a homeless shelter. A group took a case of beer and later went to a park to drink it. A woman stole a case of water, set up a stand to resell it and then defecated on the sidewalk.
Operation French Quarter showed how the lowest level of a retail crime operation can function, and how even small thefts can involve coordination among bad actors. Still, the incidents underscore the challenges investigators face when trying to build cases; they also demonstrate just how petty many thefts are, especially in urban areas with high rates of homelessness and addiction.
A Walgreens spokesperson told CNBC that the chain is “focused on the safety of our patients, customers and team members” and is taking steps to “safely deter theft” and “deliver the best patient and customer experience.”
“We are working closely with law enforcement, elected officials and community leaders to draw greater attention to and improve our response to retail crime,” the spokesperson said.

San Jose

Crates filled with unopened jugs of Gain, Tide and Downy detergent. Boxes stuffed with Gillette razors, Olay moisturizer and Allegra allergy pills. A pile of sparkly silver boots in sizes 8, 9 and 10 with the T.J. Maxx tags still on.
This is just some of the merchandise that California Highway Patrol found inside a home and storage container belonging to suspected members of an organized retail crime ring during a raid in November.

A bin filled with sparkly silver boots that police suspect an alleged San Jose, California, crime ring stole from T.J. Maxx.
Gabrielle Fonrouge

In all, investigators uncovered nearly 20,000 items valued at more than $550,000 across five locations connected with the group, according to CHP. Police suspect the majority of the items were stolen from T.J. Maxx stores and a variety of drugstores and grocery stores in and around the Bay Area.
CHP’s probe began in September, when investigators from TJX Companies, the owner of T.J. Maxx, reached out to the agency’s organized retail crime task force with information about a crime ring that it said was buying and reselling stolen goods — a “fencing” operation.
When boosters need to cash in on the items they take, they turn to fencers, who buy the products for pennies on the dollar and resell them at a margin Wall Street could only dream of, retail crime investigators have said.
Experts said retailers can have a hard time persuading law enforcement to investigate theft at stores because it is often considered a property crime, which police tend to see as less urgent than homicides, shootings and narcotics crimes.
To show law enforcement the scope of the problem, TJX investigators began conducting surveillance on the alleged crime ring. CHP agreed to take the case. Sgt. Manny Nevarez, who oversees all organized retail crime investigations in the Bay Area for CHP, told CNBC the group had hit stores in multiple counties in an effort to evade detection.
“They are not catching on that some of the retailers have their own loss prevention personnel and typically, if you target one store in San Jose, then the word gets out and then the next store is notified,” said Nevarez. 

Sgt. Manny Nevarez oversees organized retail crime investigations in the Bay Area for California Highway Patrol.

Police learned that alleged members of the group were reselling the suspected stolen merchandise out of their homes and at the local Capitol Flea Market — a sprawling swap meet on the outskirts of San Jose. Officers also witnessed members of the crew receiving suspected stolen merchandise, transferring those goods to others in their network and exchanging money.
At the end of November, dozens of CHP investigators working with TJX descended on the five locations connected with the alleged fencing ring and carried out search warrants in a raid cops dubbed “Operation Kingsfall.” The locations included numerous homes along with a storage unit. 
“Nosotros somos policia,” the officers shouted in Spanish outside one of the homes. “Police, search warrant. Open the door with your hands up,” they continued, switching between English and Spanish before using a battering ram to knock down the door.

Officers from California Highway Patrol approach a home suspected to be connected with an organized retail crime ring in San Jose, California, Nov. 28, 2023.

The location, an innocuous single-family home with Christmas decorations out front, looked like any other on the block. But on the sidewalk and grass near the property line sat dozens of discarded clothing tags, anti-theft devices, hangers and other retail store detritus.
Inside the home, CHP officers and TJX personnel found mountains of goods they suspect were stolen to resell, including bags of apparel with the tags still affixed, boxes of Huggies diapers, liquor and power tools.
By the time authorities completed the raids, they had enough suspected stolen merchandise to fill three 20-foot-long U-Haul trucks. A spokesperson for the Santa Clara County District Attorney said it is charging nine defendants in connection with the alleged crime ring.

Investigators examine suspected stolen merchandise connected with an alleged organized retail crime ring in San Jose, California.

The law enforcement operation witnessed by CNBC showed the breadth of some of the fencing rings in the U.S. and how flea markets can play a role in the sale of stolen goods. Capitol Flea Market didn’t respond to a request for comment. 
“There’s certain crimes that come up where the public reaches a point where they’re like, ‘We have had enough of this,’ right?” Lt. Michael Ball, who helped oversee the operation, told CNBC. “And this is one of those that’s reached that level where people are saying widely and shouting it all the way up to our governor’s office that they have had enough of this.”
In a statement, a TJX spokesperson said the company is “thankful” for CHP’s efforts and is taking organized retail crime “very seriously.” The spokesperson said TJX is “laser-focused on ways to mitigate theft in our stores.”
The company told CNBC it will not resell the recovered merchandise. If TJX considers the items to be in suitable condition, it will donate them to charities in the area where they were found, the company said. If it deems the products unsuitable, it will work to dispose of them “responsibly,” it said.

San Diego

When Donna Washburn started shopping for a Christmas gift for her daughter in December, she wanted to “splurge” and buy her a bottle of Nars foundation. But she couldn’t find it in stock at a store close to home.
So, like many consumers, she Googled the product. She saw it was available on Amazon and cost around $38 before tax, nearly 30% cheaper than its typical retail price of $52.
“I said, you know, ‘It’s Amazon, it’ll come fast.’ It was the beginning of December. So I really didn’t want to wait too much longer for Christmas,” Washburn told CNBC in an interview, adding she was told it would arrive by Dec. 11.

Donna Washburn bought a beauty product from Michelle Mack’s Amazon store that police suspect had been stolen.

Unknown to Washburn, police say, that bottle of foundation had likely been stolen by the crew of boosters allegedly employed by Mack — the suspected retail crime mastermind accused of running an illicit business from her San Diego mansion.
The Christmas gift ultimately never arrived, because Mack was arrested before she could ship the package, which was one of many found in Mack’s residence by investigators.
“I pay attention, but not that much, you know?” said Washburn, a 63-year-old clinical education associate in St. Augustine, Florida. “I’m shopping from Amazon. Hopefully you can trust it. So now that we know better … we’ll think twice.”
Washburn had bought the foundation from an Amazon storefront dubbed Online Makeup Store, which Mack had opened in 2012. CNBC viewed it before it was taken down in late 2023.

Suspected stolen cosmetics found inside Michelle Mack’s home.

On its face, Mack’s storefront looked no different from the millions of others on Amazon’s marketplace. It had 4.5 stars on more than 100 reviews, and featured cosmetics from popular brands such as Mac, Tarte and Charlotte Tilbury that shoppers can find in neighborhood beauty stores.
There was just one red flag: the prices. Many of the products for sale at Mack’s store were listed at a fraction of the typical retail price, including a $25 bottle of Estee Lauder foundation that typically retails for $52 and Too Faced mascara that typically goes for $29 and was being sold for $17.
The store brought in millions. Since 2012, Mack sold nearly $8 million in cosmetics through the storefront before it was shut down, and she brought in $1.89 million in 2022 alone, Amazon sales records provided to investigators show.
Mack could offer such low prices, police suspect, because her crew of boosters had stolen the products in hundreds of incidents over more than a decade. Some of the thefts brought in around $2,000 in merchandise while others netted as much as $50,000 worth of merchandise, prosecutors said.
Mack’s business was humming along ahead of the holiday shopping season until the carefully crafted empire police say she built crumbled. On a cool December morning just before dawn, a convoy of CHP and HSI agents, armed with a search warrant, raided her sprawling mansion.
Mack, dressed in a baby pink pajama set and a pair of fuzzy mule slippers, was handcuffed and put into a police car as her teenage daughters stood in the driveway, watching.
Inside her garage, investigators found what they described as a “mini-store” — shelves and shelves of beauty products, sunglasses and designer bags organized in neat bins and categorized by product. They also found hundreds of postmarked yellow envelopes destined for unwitting customers, including Washburn, with “Online Makeup Store” marked as the return address.
Police recovered nearly 10,000 items worth a total of more than $387,000, CHP said.

A California Highway Patrol evidence photo of suspected stolen goods taken from the garage of Michelle Mack, who is accused of masterminding an organized retail crime network from her home in San Diego.
Source: California Highway Patrol

A California Highway Patrol evidence photo of suspected stolen goods taken from the garage of Michelle Mack, who is accused of masterminding an organized retail crime network from her home in San Diego.
Source: California Highway Patrol

A California Highway Patrol evidence photo of suspected stolen goods taken from the garage of Michelle Mack, who is accused of masterminding an organized retail crime network from her home in San Diego.
Source: California Highway Patrol

In February, California Attorney General Rob Bonta filed a total of 140 felony charges against Mack; her husband, Kenneth Mack; and seven other alleged members of the crew. The charges included conspiracy to commit organized retail theft, grand theft and receipt of stolen property. The defendants have all pleaded not guilty. CNBC contacted each defendant multiple times for comment, but none of them responded.
“This is a multimillion-dollar criminal scheme. It was complex. It was orchestrated,” Bonta said when announcing the charges. “We are not talking about garden-variety shoplifting.”
Court records filed in connection with the case provide a rare glimpse into the inner workings of an alleged organized retail crime ring. They show text messages between the suspects and details about the operation.
“I’m not stealing regular I’m going to start filling up my bag quick. So I want to know stuff I can grab in bulks too,” Kimora Lee Gooding texted Michelle Mack on Jan. 7, 2023.
Between Jan. 30 and Feb. 16, 2023, Gooding committed at least 10 separate thefts at Ulta stores across California, prosecutors allege in court records. In each case, Gooding took more than $950 worth of goods, the records say.
On Feb. 21, a few days after Gooding’s string of thefts, Mack sent her a screenshot of “Online Makeup Store” with an address she could ship the stolen products to. It was the same business address that was listed on Mack’s Amazon page before it was shut down, and traced back to a post office box a few miles from her home.
“Even without lancome we still did well,” Michelle Mack texted her husband two days later, allegedly referencing a prestige cosmetics brand owned by L’Oreal.
Soon, orders were pouring into Michelle Mack’s Amazon store.

California Highway Patrol Officer Andrew Barclay outside Michelle Mack’s home during her arrest.
Scott Zamost

“Lots of orders let’s get shipping,” Kenneth Mack texted Michelle Mack alongside an image that showed a bin full of paper.
By July 8, it appeared that the haul Gooding and others had allegedly brought in had dried up. Michelle Mack needed more things to sell.
“Did you get some new girls?” Michelle Mack texted Alina Franco, another person charged in connection with the theft crew. “I really need product so if you have anything please let me know.”
A day later, two more thefts connected to the ring were committed and many more followed, prosecutors said.
In addition to Ulta and Sephora, the theft organization targeted a range of other retailers, including Macy’s-owned Bloomingdale’s, Prada, Bath & Body Works, Victoria’s Secret, and Luxottica’s Sunglass Hut and LensCrafters, prosecutors said.
Sephora and Bath & Body Works declined to discuss the case with CNBC. Victoria’s Secret, Macy’s, Prada, Sunglass Hut and LensCrafters didn’t respond to requests for comment.
Despite the recent surge of headlines and commentary on the topic, organized theft groups have long operated around the world. But retail industry leaders and some law enforcement officials argue the rise of online marketplaces and e-commerce has caused such incidents to increase or have made it easier for theft groups to operate.
“There’s an ease of distribution that has become even more prevalent for stolen goods through online marketplaces. … You used to have to sell stolen goods at flea markets or out of the trunk of your car or maybe just locally,” said Ulta’s Kimbell. “Now, you have more sophisticated tools to have a broader reach across the country or even internationally.”

Ulta Beauty CEO Dave Kimbell said online marketplaces need to do more to prevent the sale of stolen goods.

While Kimbell didn’t name Amazon specifically, he said online marketplaces are “part of the problem” and should be using the data, analytics and other technology available to them to be more “proactive” in shutting down bad-actor sellers.
“We shouldn’t have an environment where it’s possible to steal from one retailer and [have it] end up on any other platform, any other large-scale, mainstream platform” that people consider legitimate, said Kimbell.
Bonta called on Amazon and other marketplaces to “do more.” He said they could inform law enforcement, or at least talk to a seller, when red flags such as unusually cheap goods pop up.
“If you freeze out the demand and remove the market by closing out the marketplace where the stolen goods are so easily sold, you make organized retail crime as an organized crime less attractive. And we need to create barriers, instead of ease, for the ability to commit these crimes,” Bonta said in an interview.

California Attorney General Rob Bonta discusses Michelle Mack’s case in an interview on Feb. 16, 2024.

In response, an Amazon spokesperson said that the company has “zero tolerance for the sale of stolen goods” and that the company invests more than $1 billion annually in preventing fraud and abuse.
“We leverage sophisticated detection and prevention solutions across our stores and fulfillment operations, allowing us to quickly spot a range of organized retail crime (ORC) schemes,” the spokesperson said in a statement.
The spokesperson said Amazon supports efforts to trace items throughout the supply chain and investigates allegations of stolen merchandise to find out how products were obtained.
“When we identify an issue, we work closely with law enforcement, retailers, and brands to stop bad actors and hold them accountable, including withholding funds, terminating accounts, and making law enforcement referrals,” which have led to arrests, product seizures and the disruption of retail crime rings, the spokesperson wrote.
The company said it assisted with the investigation into Michelle Mack’s alleged theft crew and provided evidence to investigators. It said it’s “pleased” the suspects were arrested because it “sends a strong message that the sale of stolen goods has severe consequences.”
Consumers, many of whom are hungry for deals as they contend with lingering inflation and high interest rates, may feel that buying stolen goods is a victimless crime, experts say.
Michael Krol, HSI’s special agent in charge, disagrees with that idea. He said not only does theft lead to higher prices for consumers but also the items they’re buying could be unsafe because of how they were stored or otherwise manipulated.
“Those items might not have the quality assurance and compliance that we expect in the United States. Baby formula, your medicines … [Consumers] could be buying baby formula that’s expired by three months,” said Krol.
The Inform Consumers Act, which took effect in June, was designed to curb the sale of stolen, counterfeit or otherwise harmful products on online platforms by requiring marketplaces to verify and share identifying information on certain third-party sellers.
The law was designed to prevent the exact type of illicit business Michelle Mack is accused of conducting on Amazon. If sellers are required to provide their contact information to marketplaces and on their listings, bad actors may be deterred from selling illicit goods.
However, Michelle Mack’s business name and an address belonging to it had been verified and was publicly available on her seller’s page. She’d already been on the platform for more than a decade by the time the Inform Act rolled around.
The verification process that Amazon conducted for Michelle Mack’s store after the Inform Act passed wasn’t enough to raise the company’s suspicions, either.
“In this instance, we did not receive signals to identify the seller was engaged in selling stolen goods,” Amazon said.
As part of the law, marketplaces are also required to provide a way for people to report suspicious product listings. But the law doesn’t require the marketplaces to do anything with that information.
“Amazon works hard to ensure our store is a safe and trusted place for shoppers,” Amazon says on a page where people can report suspicious listings. “If you believe any product, seller or other activity in our store is suspicious, please report this using one of the below methods.”
“While we are not able to respond directly to each report,” it says, “we appreciate your feedback.” 
— Additional reporting by Ali McCadden   More

Join us at the first-ever CNBC Changemakers event on April 18th in NYC.

Jessica Berman become the commissioner of the National Women’s Soccer League in 2022 and is helping to pave the way for a new generation of women in sports.
Berman took the helm after allegations were made of emotional abuse and sexual misconduct across several teams.
Berman has worked to transform the culture of the league and to supersize its business at a time when women’s sports are seeing unprecedented growth.

Jessica Berman, commissioner of the National Women’s Soccer League, speaks during a panel on women’s professional soccer at the Hilton Anatole in Dallas on Feb. 10, 2024.
Omar Vega | Getty Images Sport | Getty Images

At 16 years old, Jessica Berman was one of those rare teenagers who knew exactly what she wanted to do in life: lead a professional sports league.
Nearly 30 years later, the New York City native has not only achieved her dream — becoming the commissioner of the National Women’s Soccer League in 2022 — but she’s helping to pave the way for a new generation of women in sports.

Berman told CNBC the league is at a “pivotal and transformative” inflection point. “This is a movement where the world is recognizing the value of women and the value of investing in women and girls,” she said.
Berman, who was named to CNBC’s inaugural Changemakers list, began her career as a labor and employment lawyer at the Proskauer Rose law firm following internships at the National Hockey League and in college sports. She helped to negotiate the end of the 2004-2005 NHL lockout with a new 10-year collective bargaining agreement between the league and its players.
She spent the next 13 years rising in the NHL ranks, holding positions ranging from vice president of community development to deputy counsel for the league, working alongside Commissioner Gary Bettman.
In 2019, Berman became the first female deputy commissioner of a men’s professional sports league, joining the National Lacrosse League. Less than three years later, she was tapped to run the NWSL and tasked with turning around an organization in crisis.

Taking the field

Berman took the helm at the women’s soccer league after allegations were made of emotional abuse and sexual misconduct across several teams.

Just months after Berman was named commissioner, findings were released from a yearlong independent investigation, led by former U.S. deputy attorney general Sally Yates, which found systemic abuse in the NWSL. The league had failed to put into place basic measures for player safety, the report said, and had fostered a “culture of abuse, silence and fear of retaliation.”
Berman issued an apology and committed to making changes to create a safe and positive environment for players, staff and fans and to rebuild trust in the league.
Over the course of 2023, Berman worked to transform the culture of the league and to supersize its business at a time when women’s sports are seeing unprecedented growth.
Berman helped to improve players’ contracts with the league’s first-ever collective bargaining agreement, which included advancements for compensation and working conditions. She also brought the first-ever million-dollar prize pool to U.S. women’s soccer.
She cleaned up the league’s personnel, issuing lifetime bans on four former coaches over their roles in the misconduct detailed in the Yates report and fining the Chicago Red Stars and Portland Thorns teams $1.5 million and $1 million, respectively.
She’s also lured big-name investors, selling them on her new vision for professional women’s soccer.
Hollywood A-lister Natalie Portman and all-star athletes Serena Williams, Naomi Osaka, Patrick Mahomes, Eli Manning, Kevin Durant and Carli Lloyd are just some of the names with equity stakes in NWSL teams.

Sofia Huerta #11 of Seattle Reign takes on Delanie Sheehan #17 of NJ/NY Gotham FC during the second half of the 2023 National Women’s Soccer League Championship at Snapdragon Stadium in San Diego, Nov. 11, 2023.
Ben Nichols | ISI Photos | Getty Images

Today, Berman said, business is booming and the league has never been stronger or more financially sound.
NWSL in November announced a landmark media rights deal with four major streaming and cable partners, worth $240 million over four years, or 40 times the size of the previous deal. The agreement greatly increases the league’s reach and distribution to new audiences.
“This is the beginning of our future,” Berman said at the time. “These partnerships fundamentally change the game for our league and the players who take the pitch each week.”
On Monday, the NWSL announced an expansion of its partnership with Amazon, naming the company as its exclusive retail sponsor. As part of that deal, the e-commerce giant and streamer will feature an NWSL merchandise shop, and the league will migrate its digital archives of historical behind-the-scenes footage and interviews to Amazon Web Services cloud storage.
Amazon Prime will stream 27 matches this season, which kicks off Friday.
And fans have been packing the stands: The league announced record-breaking attendance for the 2023 season, with more than 1.49 million fans attending an NWSL match, a 32% increase from the previous year.
Under Berman, the league has expanded to 14 teams from 12, with an additional two teams scheduled to take the field in 2026.
Just a few years ago, NWSL teams were valued at about $2 million on average; today, the average team is worth $66 million, according to Sportico. Leading the pack is Los Angeles’ Angel City FC, now valued at $180 million, making it one of the most valuable women’s teams in the world, Sportico said.

The fundamentals

Berman said the thing that makes her most proud is the validation she’s gotten from the people who have been working for decades to change the narrative about women’s sports.
“Seeing how current and recently retired players have really embraced what we’re building — those are the people who carry the authenticity of this game — has really fueled my energy and excitement about what we’re building in the future,” Berman said.
Berman also acknowledges the “army of people” who have helped scale the league’s impact.
“There’s a lot of female empowerment that I feel on a daily basis being surrounded by such incredible leaders and athletes who have worked tirelessly to get to this point,” she said.
She’s also particularly proud of giving her two young boys a front-row seat to history.
“They’ve had to make a lot of sacrifices along the way of my career,” said Berman, who frequently travels as part of her job. Berman said her boys have become personally invested in the league after getting an up-close view of their mom’s work — both the successes and the challenges.
“It makes the whole thing feel so much more meaningful because I can actually see the benefit of what I do on a daily basis for work impacting them positively in their lives,” she said.
Berman credits her success to hard work, ambition and being her “authentic self.” She said while growing up, her psychologist mother instilled in her a sense of self-awareness that’s been key in her career.
And despite the demands of leading a professional sports league, Berman said she makes sure to prioritize taking care of herself — whether through time with loved ones or her three dogs, or through exercise such as running or yoga — which she said makes her a better commissioner.
“It gives me the energy to offer to everything else that I’m doing in my life,” Berman said. More

HAS SAUDI ARABIA stopped believing in a bright future for petroleum? That is the question that in recent weeks has hung over Saudi Aramco. The desert kingdom’s national oil goliath has a central position in the world’s oil markets. Its market value of $2trn, five times that of the second-biggest oil firm, ExxonMobil, and its rich valuation relative to profits are predicated in large part on its bountiful reserves of crude and its peerless ability to tap them cheaply and, as oil goes, cleanly (see chart 1). So Saudi Arabia’s energy ministry stunned many industry-watchers in January by suspending the firm’s long-trumpeted and costly plans for expanding oil-production capacity from 12m to 13m barrels per day (b/d). Was it proof that even the kingpin of oil had finally accepted that oil demand would soon peak and then begin to decline?image: The EconomistTo get a hint of Aramco’s answer, all eyes turned to its financial results for 2023, reported on March 10th. No one expected a repeat of the year before, when high oil prices and surging demand propelled Aramco’s annual net profit to $161bn, the highest ever for any listed firm anywhere. But analysts and investors were still keenly interested in the extent of the decline in the company’s revenue and profit, in any changes to its capital-spending plans and, possibly, in the unveiling of an all-new strategy.In the event, profits did fall sharply, from $161bn in 2022 to $121bn last year, though that was still the second-best performance in the company’s history. Thanks to a recently introduced special dividend, Aramco paid nearly $100bn to shareholders last year, 30% more than amid the bonanza of 2022. It also promised to hand over even more in 2024.Shovelling a larger chunk of a smaller haul to owners could, on its own, imply that the company is indeed less gung-ho about its oily future. Except that the rich dividend was accompanied by two developments that point in the opposite direction. First, Aramco is rumoured to be preparing a secondary share offering that could raise perhaps $20bn in the coming months—a move typically associated with expansion rather than contraction. Second, even more tangibly, Aramco is already ramping up capital spending.Its annual results reveal that investments rose from less than $40bn in 2022 to around $50bn last year. In a call with analysts on March 11th Aramco confirmed that the suspension of its planned capacity expansion will save around $40bn in capital spending between now and 2028. But, it added, that does not mean Aramco is not investing. On the contrary, the aim is to spend between $48bn and $58bn in 2025, and maybe more in the few years after that.A bit of that money will go to clean projects such as hydrogen, carbon capture, renewables and other clean-energy technologies. Some will go to cleanish ones, such as expanding Aramco’s natural-gas production by over 60% from its level of 2021 by 2030, and backing liquefied-natural-gas projects abroad. But most is aimed at ensuring that Aramco can maintain its ability to pump up to 12m b/d of crude.image: The EconomistGiven the company’s actual output of around 9m b/d (see chart 2), this does not compromise its ability to move markets. If anything, it strengthens Aramco’s position because it implies spare capacity of 3m b/d—above the company’s historic average of 2m-2.5m b/d, according to Wood Mackenzie, a consultancy. The world’s biggest oil firm is, in other words, committed both to pumping oil and to preserving Saudi Arabia’s role as the market’s swing producer.That is in part because the company is also committed to pumping money into the economic vision for Saudi Arabia championed by Muhammad bin Salman, the kingdom’s crown prince and de facto ruler. This became more evident on March 7th, when Aramco announced the transfer of 8% of its shares, worth $164bn, out of the hands of the government and into the Public Investment Fund (PIF), a vehicle for Saudi sovereign wealth which Prince Muhammad has tasked with diversifying the economy. This leaves the PIF with 16% of Aramco, compared with the 2% or so that is owned by minority shareholders and traded on the Riyadh stock exchange (the rest remains directly in the government’s hands).In light of all this, Saudi Arabia’s plans to suspend the expansion of production capacity do not reflect a U-turn away from hydrocarbons. Rather, the pause is born of a hard-headed assessment of market realities: a surge in oil production in the Americas, soft demand in China and cuts to output from the OPEC cartel (of which Saudi Arabia is the most powerful member). As Amin Nasser, Aramco’s chief executive, summed it up in the results presentation, “Oil and gas will be a key part of the global energy mix for many decades to come, alongside new energy solutions.” And so will Aramco. ■ More

Pfizer is betting on cancer drugs to help it regain its footing after a rocky year marked by the rapid decline of its Covid business.
The pharmaceutical giant has been trying to shore up investor sentiment after its shares fell more than 40% in 2023.
Pfizer says its combined drug pipeline with cancer drugmaker Seagen could produce at least eight blockbuster medicines by 2030.

Nurphoto | Nurphoto | Getty Images

Pfizer is ready to move on from Covid. 
Now, the company is betting on cancer drugs to help it regain its footing after a rocky year marked by the rapid decline of its Covid business. It just might take a while before that bet pays off. 

Pfizer pitched its deeper push into oncology during a four-hour investor event last week. And it had a splashy 60-second Super Bowl ad that touted its initiative to “outdo cancer.” 
The shift comes at a crucial time for Pfizer. The pharmaceutical giant has been trying to shore up investor sentiment after its shares fell more than 40% in 2023. That share drop erased more than $100 billion in Pfizer’s market value.
Along with plummeting demand for its Covid products, Pfizer disappointed Wall Street last year with the underwhelming launch of a new RSV shot, a twice-daily weight loss pill that fell short in clinical trials and a 2024 forecast that missed expectations. The company has launched a $4 billion cost-cutting program, laying off hundreds of employees and shaving down its research and development spending. 
During the investor day, Pfizer laid out its priorities now that it has fully integrated with the targeted cancer drugmaker Seagen. That $43 billion Seagen acquisition doubled Pfizer’s oncology drug pipeline to 60 different experimental programs. 
With Seagen under its belt, Pfizer says its drug pipeline could produce at least eight blockbuster medicines by 2030, up from just five today. But the company did not disclose which drugs it believes could offer that potential. 

Some analysts noted that it might take a few years for some of Pfizer’s cancer drugs in mid-stage development to show pivotal clinical trial data and become less risky. 
Pfizer’s existing oncology portfolio is also facing some competitive pressure. Revenue from the blockbuster breast cancer drug Ibrance and prostate cancer treatment Xtandi, which Pfizer shares with Astellas Pharma, has declined over the past year. Both drugs are expected to lose market exclusivity in 2027. 
Still, some analysts came out of the investor day feeling encouraged. 
“The company is facing a number of challenges, but we believe the event was a success in laying out a path for the oncology business to help offset upcoming patent losses, and drive growth in the future,” Guggenheim analysts wrote in a note Tuesday. 

Long-term commercial strategy

Pfizer used the investor event to formally introduce its new business division dedicated to cancer research and to lay out a long-term strategy for it through the end of the decade.
That oncology unit hosts a sprawling portfolio of experimental medicines that Pfizer and Seagen discovered or acquired through deals, as well as the treatments both companies have long been selling. 
The unit is led by Chris Boshoff, a longtime Pfizer executive who most recently served as the company’s head of cancer research and development. 
“As a newly combined organization, our expertise and collective capabilities are now amplified to deliver even more impact for patients than each company could do by itself,” Boshoff said last week to kick off the event.  
Boshoff highlighted the scale of Pfizer’s capabilities, noting it has 10 manufacturing sites producing cancer drugs on three continents, while Seagen had just one. He also pointed to Pfizer’s commercial presence in more than 100 countries and a customer-facing commercial team that is triple the size of Seagen’s. 
Pfizer did not provide a specific sales projection for its oncology franchise by 2030. But the company said it expects roughly two-thirds of risk-adjusted oncology revenue to come from new drugs and new indications — or treatment uses — for existing products by the end of the decade.

Signage outside Seagen headquarters in Bothell, Washington, on Tuesday, March 14, 2023.
David Ryder | Bloomberg | Getty Images

Pfizer reiterated its expectation that the Seagen acquisition will bring in $10 billion in sales by 2030. 
But the company provided little guidance on what Seagen’s growth will look like until the end of the decade, UBS analyst Trung Huynh said in a note Thursday. 

A new focus 

Pfizer also highlighted a huge shift in its drug pipeline strategy. 
Boshoff said the oncology division plans to shift to biologic drugs as its main source of revenue, increasing the proportion of those treatments in its pipeline from 6% to 65% by 2030.
Biologics are treatments derived from living sources such as animals or humans, including vaccines, stem cell treatments and gene therapies. They are among the most expensive prescription drugs in the U.S.
Before the Seagen deal, 94% of Pfizer’s cancer products were small-molecule drugs. Those medicines are made of chemicals and have low molecular weights. 

Boshoff said biologics represent “a more durable revenue potential” based on several factors. That includes upcoming patent expirations and potential pressure from President Joe Biden’s Inflation Reduction Act. 
A provision of that law allows Medicare to start negotiating the prices of biologics as early as 13 years after they receive Food and Drug Administration approval, compared with just nine years for small-molecule drugs. The pharmaceutical industry has argued that would deter drugmakers from investing in small molecules.
Pfizer’s decision to rely more on biologics may also offer “better protection” against competition from cheaper copycats, Guggenheim analysts said in their note. Those copycats, or biosimilars, have historically had trouble gaining market share from biologic treatments. That’s unlike with drugs called generics, which are exact copies of small-molecule treatments. 
Small molecules will remain one of three core drug types of Pfizer’s oncology division. The other two are biologics, namely bispecific antibodies, and antibody-drug conjugates, or ADCs. 

Pfizer’s three core oncology drug types

Small-molecule drugs: Treatments with a low molecular weight made up of chemicals created in a lab. 
Bispecific antibodies: Treatments that can bind to two different antigens — or any substance that causes the body to have an immune response — at the same time. Those drugs are biologics because they are developed from living sources that produce antibodies.
Antibody-drug conjugates: Medications that deliver a cancer-killing therapy to specifically target and kill cancer cells and minimize damage to healthy ones. The treatments represent a hybrid between biologics and small-molecule drugs, but the FDA classifies ADCs as biologics.

Notably, the company is developing a “next-generation” platform for ADCs that combines Pfizer’s protein engineering and antibody design capabilities with Seagen’s ADC technology. Together, the companies have 12 ADCs in development, six of which are in early clinical trials or studies on animals.
JPMorgan analyst Chris Schott wrote in a note last week that the firm walked away from the investor event encouraged by the breadth of Pfizer’s mid-stage oncology pipeline. But he noted that it will take time before a number of the treatments show “pivotal data.”

Four core cancer types

Pfizer plans to focus on four main types of cancer: breast cancer; genitourinary cancer, which impacts urinary and genital organs or functions; thoracic cancer, such as lung, head and neck cancer; and hematology-oncology, or cancers of the blood, such as multiple myeloma and lymphomas. 
Pfizer expects breast cancer’s contribution to total oncology sales to drop to about 10% by 2030 from roughly 40% last year, the company’s oncology commercial chief Suneet Varma said during the event. 
That decline accounts for the upcoming loss of exclusivity of top-seller Ibrance, which raked in $4.75 billion in sales in 2023. 
But the company said it has a handful of breast cancer drugs in development that could become “potential growth drivers” as Ibrance sales fall. That includes a certain type of treatment called atirmociclib that could potentially be more effective and easier for patients to tolerate. 
Pfizer is testing the medicine as a second-line treatment for a certain type of breast cancer in a phase three trial. A second-line therapy is given when an initial treatment doesn’t work or stops working. 
The company also plans to start a separate late-stage trial on atirmociclib as a first treatment for the same condition in the second half of the year.

Pfizer expects genitourinary cancer to make up an estimated 35% of oncology sales by 2030, which would make it the largest franchise of the cancer business. That’s up from 20% in 2023. 
Pfizer is testing an experimental ADC called disitamab vedotin — which Seagen licensed from Chinese firm RemeGe — as a treatment for certain bladder cancers, with data from mid-stage and late-stage trials expected in 2025 and 2026.
Notably, RemeGe already sells that drug in China. Pfizer is also examining the medicine’s potential to treat breast cancer and other tumor types.
Meanwhile, Padcev, an ADC Pfizer shares with Astellas Pharma, in combination with Merck’s immunotherapy Keytruda is becoming a new first-line standard of care for bladder cancer. Pfizer executives last week said Padcev had “mega-blockbuster” potential, which the company defines as raking in annual sales of more than $3 billion. 

Pfizer’s key cancer drugs on the U.S. market

Ibrance: treatment for certain breast cancers.
Xtandi: treatment for four types of advanced prostate cancer.
Adcetris: treatment for certain lymphomas from Seagen.
Padcev: treatment for some types of advanced bladder cancer, either alone or in combination with Keytruda.
Elrexfio: treatment for certain adults with multiple myeloma.
Talzenna: treatment for some breast cancers.
Lorbrena: treatment for a type of non-small cell lung cancer.

Pfizer executives expect thoracic cancer to double its revenue contributions by 2030. 
Seagen brings an ADC called sigvotatug vedotin to this franchise. The drug recently entered a late-stage trial as a second-line treatment for a certain type of lung cancer, with data expected around 2026 to 2027. Pfizer also plans to test the ADC as a first-line treatment.
Guggenheim analysts said they expect the treatment to be one of Pfizer’s blockbuster oncology drugs by the end of the decade. Those analysts also expect a bispecific drug called Elrexfio, which falls under Pfizer’s hematology-oncology portfolio, to eventually become a top seller.
The hematology-oncology franchise is expected to account for 25% of the cancer unit’s sales by 2030, up from just 10% in 2023. 
The FDA has approved Elrexfio for patients with multiple myeloma who have tried at least four prior types of therapy. But Pfizer is conducting two late-stage clinical trials on Elrexfio as a second-line treatment, with data not expected until around 2025 and 2026. 

Drugs outside of cancer

Pfizer is splitting the rest of its business outside of oncology into two divisions: a U.S. commercial unit and an international commercial unit. Those divisions are focusing on vaccines, along with metabolic and inflammatory conditions. 
This fall, Pfizer plans to roll out another updated version of its Covid vaccine that will target a new strain of the virus. 
The company previously outlined plans to develop “next-generation” versions of its Covid shot, which aim to broaden and extend the protection people get to a full year. 
But Pfizer hasn’t decided whether to move forward with those plans because the company needs to be convinced that there is still an “eagerness to embrace Covid intervention,” Dr. Mikael Dolsten, the company’s chief scientific officer, told CNBC in an interview last week.

The new vaccine COMIRNATY® (Covid-19 vaccine, mRNA) by Pfizer, available at CVS Pharmacy in Eagle Rock, California.
Irfan Khan | Los Angeles Times | Getty Images

Dolsten pointed to two other “strong pillars” in the company’s vaccine portfolio: bacterial and viral shots. The company is testing a “fourth-generation” version of its vaccine to prevent pneumococcal disease, which is caused by a bacteria that can attack different parts of the body.
Pfizer is also working to expand the use of its shot against respiratory syncytial virus, commonly called RSV, to high-risk patients ages 18 to 59. It’s currently approved in the U.S. for expectant mothers and adults age 60 and above. 
The company is also testing combination vaccines targeting multiple respiratory viruses, including a shot for Covid and the flu in late-stage development.
Outside of vaccines, the company is developing an oral treatment for sickle cell disease called GBT601. Pfizer views that drug as a potentially more effective successor to its drug Oxbryta, which is already approved for the condition.
Pfizer also expects to release mid-stage trial data on its experimental treatment for cancer cachexia, or what Dolsten called “the opposite of obesity.” It refers to the loss of body weight and muscle mass, along with weakness that may occur in patients with cancer, AIDS or other chronic diseases.
Another area that’s top of mind for investors is obesity. Pfizer expects to release early-stage trial data on a once-daily version of its experimental weight loss pill, danuglipron, in the first half of the year. The company is also working on a second drug for obesity, but has not disclosed how it will work. 
Dolsten touted the potential of a weight-loss drug pill, which could help meet the soaring demand for obesity treatments. Much of the existing injectable drugs for the condition are in shortage in the U.S. He also noted that a pill would likely be priced differently than injections, which cost around $1,000 per month before insurance. 
“A pill would allow you also to have more access,” Dolsten said. “If you have 300 million patients per year, it will be one of the biggest medications ever.” More

As the population of the Sun Belt climbs, restaurant chains such as McDonald’s and Portillo’s are looking to those states for future sales growth.
Customers have moved from the Midwest and Northeast to states such as Texas, Florida and North Carolina.
The Sun Belt states largely have reputations for being more friendly to businesses.

A Portillo’s Beef Bus in Kissimmee, Florida.
Source: Portillo’s

When Chicago-based Portillo’s enters a new market, it sends its “Beef Bus” ahead of time, slinging its hot dogs and Italian beef sandwiches to new customers for weeks, introducing them to the brand and whetting their appetites before a new restaurant finally opens.
Recently, the Beef Bus has been making a lot of trips to the Sun Belt.

“Texas, by itself, has grown more people in the last decade than eight midwestern states that we have a presence in combined,” Portillo’s CEO Michael Osanloo told CNBC. “So it’s kind of a no brainer to go where the growth is.”
The chain’s sales are “way stronger” in Texas, Arizona and Florida than in midwestern states such as Indiana and Wisconsin, according to Osanloo. Portillo’s opened its first location in Texas a little more than a year ago. In its first 12 months, the location generated $13 million in sales, the restaurant equivalent to a $1 billion box-office hit.
While the exact states included in the Sun Belt can vary, the name refers to the southern third of the U.S. known for its sunny weather. In recent years, the region has seen booming population growth, setting it apart from the Northeast and Midwest. The trend accelerated during the Covid-19 pandemic as consumers sought more space, warmer weather, fewer government restrictions and cheaper housing in cities such as Charlotte and Phoenix, which count among the most populous in the U.S. along with Texas cities such as Houston and Dallas.
Due to that shift in population, restaurants are now looking to the region to drive sales. Smaller chains are expanding into the Sun Belt earlier, rather than the Midwest or Northeast. For more mature companies such as McDonald’s, it means accelerating new restaurant growth in areas where it’s now underrepresented.
“We always say that retail follows rooftops, so when you’ve got lots and lots of people moving to an area, there’s lots of demand,” said Justin Greider, senior vice president of Florida retail for real estate firm JLL. “Combined with the overall increase in consumer spending towards restaurants we’ve seen, it’s sort of the perfect storm to create a really ripe environment from a lot of restaurant groups who want to be here.”

It isn’t just restaurants looking to the Sun Belt for sales growth. Fort Worth-based American Airlines is updating its routes to reflect the population shift, executives said Monday at an investor event. Macy’s has been opening smaller stores in suburban strip malls, starting in the Dallas and Atlanta areas. Real estate investment trusts such as Phillips Edison & Company that invested in the region earlier have seen the southern migration boost their shopping centers.

Golden arches meet golden rays

As the third-largest restaurant chain in the U.S. by number of stores, McDonald’s can’t be accused of ignoring the Sun Belt, but it has been slower to pick up the trend and saturate those growing markets.
“In our U.S. markets, our store counts have grown much slower than the population in the fastest-growing areas,” McDonald’s Global Chief Customer Officer Manu Steijaert said during the company’s investor day in December. “We do have a significant opportunity to right-size that ratio.”
McDonald’s is aiming to open 900 new restaurants through 2027 in the U.S. Most of those locations will be concentrated in Florida, Texas, Arizona, Georgia and North Carolina, according to JPMorgan.
“What we’ve seen is because of the scale that they already have. That adaptation to grow in the Southeast has not been quite as proactive,” Greider said, speaking about McDonald’s.
But other chains have been quicker to see the opportunity in the Sun Belt. Greider named chicken chain Raising Cane’s, Chipotle Mexican Grill and Starbucks as three companies that have been focused on growing their footprints in the Sun Belt even before the pandemic.
In addition to well-known chains, Greider has also seen restaurants with chef-driven name recognition traveling south from New York and Chicago.
“In the back half of [the pandemic] and post Covid, we saw a number of full-service and chef-driven restaurant groups that have really pushed hard into the Sun Belt, because they’ve seen that’s not just where there’s great opportunities for growth, but where their existing customers have been relocated,” Greider said.
For example, New York City’s celebrity hotspot Carbone, owned by Major Food Group, opened a location in Miami in 2021 and another in Dallas in 2022.

Chains see opportunity in warm weather

For regional chains looking to expand nationwide, the Sun Belt also presents an opportunity to grow their footprint with customers who already know the brand.
For example, 89-year-old chain Friendly’s has largely stuck to the Northeast since its founding in Massachusetts in 1935. Under a new owner, the chain is finally looking to expand beyond the Mississippi River. 
Brix Holdings acquired Friendly’s in 2021, several months after the company filed for Chapter 11 bankruptcy protection. At the time, Friendly’s had more than 100 locations, down significantly from its footprint of 850 restaurants in its heyday.
The chain’s sales are growing again, according to Brix Holdings CEO Sherif Mityas, making it an opportune time to expand Friendly’s footprint.
“More strategically, from a growth perspective, we want to start moving west,” Mityas said.
Many of Friendly’s customers grew up with the brand in the Northeast before moving down to the Sun Belt. Plus, the chain is best known for its ice cream, making warmer climates a better business environment than the Midwest.
Warmer weather is also one reason why coffee chain Dutch Bros. is betting on the Sun Belt.
“More than 80% of our business is cold [drinks], so we find that warmer markets do better — but that doesn’t mean we wouldn’t do well in Minneapolis or the Great Lakes region or the northeast, but we’re just staying out of those for now,” Dutch Bros. CEO Christine Barone told CNBC in a January interview.
The chain is planning to open 150 locations this year, most of which will be in Texas and Southern California. In the next 10 to 15 years, the company aims to operate at least 4,000 locations, with a footprint that looks like a smiley face across the U.S., starting in California, dipping down to Texas and back up to Virginia.

Better for business?

The region’s reputation as friendly to businesses has also played a role in its rise. Seven of the top 10 states in CNBC’s America’s Top States for Business in 2023 were in the Sun Belt.
Although there are some notable exceptions, such as California with its upcoming hike on fast-food wages, states such as Texas and Florida have touted their lower taxes and lax regulation to lure companies. For two consecutive years, Texas has been home to the most Fortune 500 companies, supplanting California and New York.
“In addition to the population growth dynamics, many states in the Sun Belt region have ‘friendlier’ business environments that are also appealing to restaurant operators,” said Kevin Schimpf, director of industry research at Technomic. “[That means] things like fewer restrictions on franchising, lower labor costs and less red tape on new commercial developments.”
That’s part of the appeal for Friendly’s, which wants franchisees to run the new locations.
“From an entrepreneur perspective, and a business perspective, the Sun Belt is really growing faster than the rest of the country,” Mityas said.

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The Food and Drug Administration approved Novo Nordisk’s blockbuster weight loss drug Wegovy for use in slashing the risk of serious cardiovascular complications in people with obesity and heart disease, the company said.
That decision could widen insurance coverage for the drug and similar treatments for obesity, which has been a major barrier to access for patients.
Wegovy and its diabetes counterpart Ozempic sparked a weight loss industry gold rush over the past year for their ability to help patients shed pounds.

Injection pens of Novo Nordisk’s weight-loss drug Wegovy are shown in this photo illustration in Oslo, Norway, Nov. 21, 2023.
Victoria Klesty | Reuters

The Food and Drug Administration on Friday approved Novo Nordisk’s blockbuster weight loss drug Wegovy for use in slashing the risk of serious cardiovascular complications in adults with obesity and heart disease.
Millions of patients already use the popular injectable treatment. But the agency’s decision could widen insurance coverage for the costly drug and similar treatments for obesity, which has been a major barrier to access for patients.

The approval also demonstrates that weight loss drugs have significant health benefits beyond shedding unwanted pounds and regulating blood sugar. Weekly injections of Wegovy slashed the overall risk of heart attack, stroke and death from cardiovascular causes by 20%, according to a landmark late-stage trial on the drug.
Wegovy is now the first-ever weight loss medication to gain an expanded approval for that purpose, Dr. John Sharretts, director of the Division of Diabetes, Lipid Disorders, and Obesity in the FDA’s Center for Drug Evaluation and Research, said in a release.
He noted that adults with obesity and heart disease are at increased risk of those cardiovascular complications, so providing a treatment option that is proven to lower that risk “is a major advance for public health.”
The FDA said Wegovy patients should use Wegovy in addition to a reduced calorie diet and increased physical activity.
Wegovy and its lower-dose diabetes counterpart Ozempic soared in demand and slipped into shortages over the past year for their ability to help patients lose significant weight over time.

They are part of a class of drugs that mimic a hormone produced in the gut called GLP-1 to suppress a person’s appetite. Both Wegovy and Ozempic cost around $1,000 per month before insurance.
In a statement on Friday, Novo Nordisk said the approval represents a “pivotal step forward in addressing some of the most pressing issues of our time.” The company added that it is working to increase manufacturing capacity to “responsibly supply this important medicine.”
Novo Nordisk expects to receive a similar Wegovy approval in the EU this year.
The FDA’s approval was based on a landmark phase three trial called SELECT. The study tested Wegovy in roughly 17,500 people with obesity and heart disease but who did not have diabetes. 
Wegovy reduced the risk of non-fatal heart attack by 28% in the five-year trial. It produced a smaller 7% reduction in the occurrence of non-fatal stroke, though few strokes were seen in the trial overall.
Wegovy also started to show a reduction in overall cardiovascular events within months after participants started the drug. The difference between the drug and placebo widened as the study continued.
Nearly 17% of people receiving Wegovy in the trial stopped taking the drug, mainly because of gastrointestinal issues like vomiting and diarrhea. That’s double the rate of people who discontinued the placebo.
Another limitation of the study was its lack of diversity. Almost three-quarters of the participants were male, and even more were white. Just about 4% of participants were Black.
The new data could also help the Danish drugmaker maintain its lead over Eli Lilly, whose competing weight-loss drug Zepbound was approved in the U.S. in November. Zepbound has been shown to help people lose more weight, but it has yet to demonstrate an effect on cardiovascular outcomes.  More

Satellite manufacturer Terran Orbital is “looking at everything” regarding the company’s future, CEO Marc Bell told CNBC.
Lockheed Martin last week submitted a bid to buy Terran Orbital.
“We’ve had many conversations with many people and continue to run our process. We have no deadline to our process, and our goal is to have maximum value for all of our shareholders,” Bell said.

Terran Orbital

Satellite manufacturer Terran Orbital is “looking at everything” regarding the company’s future, CEO Marc Bell told CNBC, as it considers Lockheed Martin’s acquisition offer.
“We found out about [Lockheed’s takeover bid] when the rest of the world found out about it,” Bell said on CNBC’s “Manifest Space” podcast.

Lockheed’s proposal submitted last week values Terran Orbital at nearly $600 million, or about a third of its equity valuation from when the company went public via a special purpose acquisition company, or SPAC, two years ago. The defense giant is already a significant stakeholder in Terran Orbital, with a 28.3% stake at the time of the proposal.
Terran Orbital declined to comment on a shareholder lawsuit filed Wednesday in response to the company’s board adopting a “poison pill” stock rights plan after Lockheed’s offer.

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Bell emphasized that Lockheed has been “a partner of ours for many years,” but noted that Terran Orbital hired Jefferies in December to lead a strategic review of its path forward, with options ranging from new investors to a potential sale of the company.
“We’ve had many conversations with many people and continue to run our process. We have no deadline to our process, and our goal is to have maximum value for all of our shareholders,” Bell said.
Bell added that Terran Orbital is “thrilled with the validation” that Lockheed’s offer gave it.

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