Business

CNBC asked industry insiders including Fran Horowitz, Michelle Gass, Marc Lore, Jens Grede and Mickey Drexler for their predictions of what retail will be like in five years.
They weighed in on the biggest disruptions to the industry, how artificial intelligence will change the customer experience and what will become a retail standard that doesn’t exist today.

Illustration by Christina Locopo

Retail has seen unprecedented upheaval over the last several years.
Some of the industry’s key decision-makers expect even more evolution ahead.

Covid-related shocks have upended retail, after clogged ports and merchandise shortages gave way to excess inventory levels and shifting consumer demands amid persistent inflation. 
Those disruptions accelerated transformations in the industry that were just hitting some companies before the pandemic, such as the growth of curbside pickup and increased use of mobile apps.
As retail leaders enter 2024 hoping the turmoil is now behind them, they’re building businesses for the future and making changes that will transform the industry.
Over the past few months, CNBC has spoken with a dozen of the retail industry’s top executives and leaders to get a sense of what’s next.
So what will retail actually look like five years from now, and how will it change? 

The following is a sampling of their insights, which were edited for brevity and clarity.

In five years, what will the role of stores be and how will brick-and-mortar locations change?

Fran Horowitz, Abercrombie & Fitch CEO: The future of retail is small, efficient, omni stores, and they’re located where the customer tells us. [For Abercrombie] these big, massive stores were just not productive and not efficient — the consumer was responding to a much more intimate associate experience, and then economically, they were not productive. You don’t get the kind of traffic through the stores like you did in the past when there wasn’t a digital option, so you have to provide a location that is financially sound, which has X amount of traffic and X amount of digital orders that come together.

Fran Horowitz, CEO of Abercrombie & Fitch Co.
Patrick MacLeod | WWD | Penske Media | Getty Images

Michelle Gass, Levi Strauss CEO: The role of the store needs to be much more experiential than it is today. I think consumers are going to raise the bar, and they’re just going to expect that because when you can just shop and do a transaction a click away, there has to be a higher purpose for a store. It’s not just about the consumer-facing aspect, but the back end of the operation becomes even more important. The store becomes a mini distribution center. Perhaps what it does is it lessens the need over time to put up the next distribution center, because you’re using your store footprint as these mini fulfillment centers.
Jens Grede, Skims CEO: Higher concentration [of stores] in better locations. Trends come and go, but Fifth Avenue by the park will be Fifth Avenue. It was that a hundred years ago, it will be so in another hundred years, right? So important locations are only becoming more important. I don’t know where that leaves the B and C location, but I think the B and C location will struggle because they’re not offering the experience. I think when people go shopping, they go to an A location or they go online, but there really is very little need for B and C locations. 
Geoffroy van Raemdonck, Neiman Marcus CEO: Five years from now, there’ll be even bigger what we call “retail-tainment” — when you come in the store and you have a multisensory experience that really takes you in a space that has a theme, where the brand or the retailer is expressing something that re-transports you in another world and that transport is a physical experience, not a digital experience.
Trina Spear, Figs CEO: Stores just acting kind of as a transactional thing in the world is going to become less and less relevant, and what’s going to become more relevant is having an experiential destination for our community to come together, to meet and be connecting with not only the brand, but also each other. 

Trina Spear, Figs CEO, speaks during the Milken Institute Global Conference in Beverly Hills, California, Oct. 18, 2021.
Patrick T. Fallon | AFP | Getty Images

Chris Nicholas, Sam’s Club CEO: The most expensive and most difficult piece of e-commerce is that last mile of fulfillment, and if you’re closest to the customer [with stores] and you’re willing to use all of your assets in service of e-commerce then what you get to do is you get to give the customers what they want, which is more convenience and more speed. You need to make sure that stores are great and that they’re well looked after and they’re inspirational places to shop. But there is an ‘and,’ and the ‘and’ is that they are also last-mile fulfillment nodes that allow you to serve those customers in the way they want.
Kara Trent, Under Armour’s president of Americas: Some brands have moved to super experiential, other brands have moved to super transactional. I think you’ll end up with a blend,— and I think the brands that get the blend of experience while driving commerce are the ones that will succeed. I think that does shape how brands will look at real estate and what streets and what neighborhoods are most important, and almost thinking a bit more micro than macro, right? What a consumer in New York City might need versus a city in middle America, versus how you think about the different types of retail locations, even in a massive city like New York.

What are the most disruptive forces in retail? And how will those shape the industry’s future?

Levi’s Gass: Technology, data, machine learning, and even AI. I get really, really excited about what this means in the operations of the business, using predictive analytics to help us forecast demand. The power of machine learning, of predictive analytics, as a retail operator is extremely powerful because it is going to help us execute at a higher level to better serve our customers. 
Tom Ward, Walmart U.S. chief e-commerce officer: The most disruptive force is always going to be the customer demand. Wherever customers want to go is where the retail industry is going to follow and the technologies that support that — whether it’s in the front end or the back end or the supply chain.  The customer is always going to be the driving force of change, for sure. If you assume that to be true across everybody, then the technologies that are emerging that are helping retailers follow the customers’ lead most efficiently are going to be the most disruptive. So obviously things like AI are going to be important. 

Tom Ward, chief e-commerce officer for Walmart U.S.
Erin Black | CNBC

Abercrombie’s Horowitz: The biggest change that we have seen — and it’s a very important part of our business — is what I would refer to as our affiliate business. We have longstanding partnerships with affiliates [such as social media influencers] who are brand lovers and spend time selling your brand for you [online]. As the world continues to evolve on digital, anything is possible, so perhaps there’s even a transaction that takes place through them, as opposed to sending them back to our website and processing the sale, maybe it’s a dropship.
Figs’ Spear: Turning physical stores into a real true hub. For many brands, this is going to be the shift, right? Where people want a place to gather and to learn, they want to be part of something bigger than themselves. Especially the younger generation, Gen Z, it can’t just be about transacting, everyone wants to believe in something bigger than themselves and be a part of something bigger than themselves and that I think is going to be the most disruptive force.
Marc Lore, former CEO of Walmart U.S. e-commerce and founder of Jet.com: Conversational commerce — I think it’s one of those things that takes time to evolve. … In five years’ time, people will understand that that’s the future. I think we’ll be far enough along that people will be able to connect the dots to a future where the world evolves into more conversational commerce where people can use voice or text to have a conversation with a digital assistant that knows you as well as your best friend.
Mickey Drexler, former CEO of Gap and J.Crew: Social media has had enormous, enormous influence on retail. When I was growing up, you put an ad in The New York Times. You put it in Time magazine. You had maybe TV ads. Look, Gap and Old Navy were built with fantastic, creative TV ads. Now, the ads are on social media, they’re on Instagram. They’re on emails. Instagram is hugely powerful in influencing consumers. And TikTok also.

Mickey Drexler, former CEO of J.Crew
Adam Jeffery | CNBC

Ulta CEO Dave Kimbell: It really is this blurring of digital and physical and how we don’t see those as distinct, but really integrated. … The guest is so connected and has tools and expectations that even got elevated over the last three years. It’s really important that we’re understanding how we can leverage the assets that we have — both the physical assets, in our case, almost 1,400 stores, but also the digital tools and capabilities.

In five years, what tech will transform retail and how? How do you see artificial intelligence and automation shaking up the industry?

Ex-Walmart exec Lore: If you’re going to take anything away from this conversation, it would be my conviction on how transformational conversational commerce is going to be. And it’s unlocked by AI and the ability to process natural language like never before. The search engine is going to be archaic. It’s going to be the cassette tape in 20 years. Younger generations are going to laugh at the idea of using a search engine, because search engines aren’t that intelligent. 

Marc Lore, former CEO of Walmart e-commerce.
Scott Mlyn | CNBC

Neiman’s van Raemdonck: Right now if you look at a product, you have to try it on to know if it’s your size, if it fits, and I think there’s so many technologies that are going to be able to show you the product in 3-D to see how it would fit on you and if it’s the right fit. There’s so many ways that companies will be able to interact with you, recognizing you and anticipating what you may want. There’s so much friction in helping the customer buy the product that is right for them, and technology is going to remove a lot of that, and I think we’re going to see the return rate go down and customer satisfaction go up. 
Levi’s Gass: If you think about the technology today, broadly speaking, a lot of what you might see in the personalization is, okay, if you’re an avid buyer of [Levi’s] 501s [jeans], you might get a recommendation on the next exciting wash of a 501, or something similar. But I think where the technology is going to go is it’s going to be able to leap into something like, to go from you’re a 501 shopper to this is going to be the perfect denim skirt for you and make bolder leaps, but do it in a way that’s informed based on your shopping history and who you are … and by the way, this doesn’t mean that this is just all being served up in a digital world. I think the most powerful and exciting way this will be served up is when it’s with the stylists, because if you’re spending time with the stylist, they’re getting to know you, they know your purchase history — bringing that all together, it’s kind of the art and the science.

Michelle Gass, photographed Nov. 11, 2018.
WWD | Penske Media | Getty Images

Figs’ Spear: AI is going to be super helpful in terms of, I need this style, I need this size, I need what will fit best on me. AI is going to be really transformative as it relates to fit and people getting what they need very quickly, and getting support and answers very quickly, whether that’s online or in stores. How does it create a more personalized experience around product discovery, around face recognition? We know you, you’ve been here before, we know what you like, what’s going to work best with where you work, what you do, your body type, your style. And so that’s going to be incredibly helpful. I think long term, it will be game-changing.
Yael Cosset, Kroger’s chief information officer: The biggest transformation related to AI is going to first be around our associate — not to replace the work that our associates do, but quite the opposite, which is to augment and amplify what they do. How do I help our associates in our stores engage with our customers by simplifying some of their activities and giving them more time to interact? If they’re in the cheese department, the cheesemonger could have a better experience with our customers to help answer a question or answer a pairing question with wine or bread. That’s going to be the low-hanging fruit for us. 
Ulta’s Kimbell: AI more broadly has been a big focus for us for a while in personalizing our guests’ connection with us. The power of our data and the ability to unleash that in ways that makes the communication we have with our guests more meaningful and more relevant and more timely, we think is really exciting. We’ve made progress in that, but we see a lot ahead of us as we personalize our experience, with the ultimate goal of getting to true one-to-one personalization. 

Ulta CEO Dave Kimbell.
Arturo Holmes | WWD | Getty Images

Under Armour’s Trent: When you’re thinking about malls, and this is a real-life experience, one of the things that brands are going to have to figure out as they think about all these digitally connected tools is the internet. It’s actually quite hard to get the fast … speed internet in some of these big-box locations to enable. That’s been one of the biggest pain points we’ve faced over here in terms of just bandwidth and WiFi speed in terms of being able to enable a smart fitting room, an RFID, a remote POS-type system. So I do think that’s one of the things for the long haul that real estate development teams are going to have to figure out. 

Five years from now, where will the consumer do the majority of their shopping – online or in stores? 

Ulta’s Kimbell: In beauty and at Ulta Beauty, we see the majority of transactions in store as they are today and we think that’ll be the case over the next five years. 
Kroger’s Cosset: In five years, stores will continue to account for the majority of sales, because even for a significant portion of what we sell digitally, it will be fulfilled in the stores. 
Figs’ Spear: I don’t think it’s one or the other. I think the more three dimensional and the more you can have both digital and offline, the more powerful it becomes. I do think the younger generation, they’re kind of coming back out in the world, and you’ve seen offline grow a lot. I think there’s more to come on that.
Abercrombie’s Horowitz: Stores matter. You need a store. I’ve watched a lot of pure plays over the years and they end up opening up stores because you need a store, you need that hub for the return, the exchange, the pickup, whatever it might be that they’re using that hub for. So there were years of the apocalypse of the mall and how stores were ending. I don’t believe any of that. Stores matter. I say it all the time, and I firmly believe they matter. It’s just a balance. It’s a balance between the channels and what works for the consumer depending upon what their lifestyle is and age.

Jens Grede attends as Swarovski celebrates Skims collaboration and unveils its flagship store in New York City, Nov. 7, 2023.
Dia Dipasupil | Getty Images

Skims’ Grede: The majority of shopping is going to still happen in store, but the vast majority of intent or the decision to shop will start online. Young customers today always know what they want to buy when they shop in stores, so the transaction happens in the store, but the customer journey starts online, and I think that will go for everybody in the coming five years.
Ex-Walmart exec Lore: The younger generation has a higher percentage of online shopping. As the older generation ages out and there’s more of the younger generation, by definition, you’re going to see a higher percentage of shopping being done online.
Neiman’s van Raemdonck: It’s not going to be one or the other, and I really believe in this notion of integrated retail — that customers will continue to shop differently depending on the day of the week, their mood and what they’re looking for. I do believe that, especially in luxury, the connectivity to a human and someone who knows you and someone who’s got your best interest, that’s going to be the main way customers who are truly involved in luxury will want to shop and, that will be still very much in stores. But I think it’ll be complemented by remote selling. 

In five years, which retailers and brands will be the most influential and dominant players? Which are most at risk of not existing? 

Skims’ Grede: It’s hard to disregard the strength of the business models of Temu and Shein. They have a supply chain model that is impossible to replicate for a U.S. or European retailer, so it gives them a structural advantage. It’s hard to see that fall away, but that’s on the real mass end. Generally I think every brand in the mid-price segment is going to hurt. The market’s polarizing between luxury or premium or value, and I think general retailers at the mid-price are going to face extinction. If you would say Nike’s mid-price then I really believe in Nike, I believe in Lulu, I believe in Alo [Yoga], I believe in Skims, I believe in Inditex, I believe in all retailers that either offer great value for money or at a great price, or just simply the lowest possible price. All retailers in the mid-price segment, I would be nervous if I were them. I would predict that we’re gonna have a really high turnover of brands in mass retail over the next five years. I think it’ll look unrecognizable to today.
Ex-Gap and J. Crew boss Drexler: TJX Companies. Look at the growth. Look at the volume. Look at the earnings. Zara. Their goods are right on, style-wise. They get it with trends. They’re worldwide, a zillion stores, and their operations and execution, aside from their merchandising, I think they’re always on top of the game. The other name I’ll mention is LVMH. What they have done is extraordinary. Every single one of their businesses speaks to quality and integrity. 
Abercrombie’s Horowitz: Very specific category stores will have a harder time existing. The companies that cater to a lifestyle and have a balanced assortment are the ones who will continue to thrive. If everyone was dressing very casually and you were completely a dress-up brand, you’re in a bit of trouble. Having a balanced lifestyle brand is the way to be, and I’ve seen a lot of athletic brands evolving into lifestyle brands, I mean that’s a huge trend that’s happening out there, and my take on that is, you can’t be too narrow. 
Under Armour’s Trent: Luxury is a very specific space that adds a ton of value for very different lenses for the consumer. You look at what Dior or Louis Vuitton or Hermes do for a consumer — that space remains quite niche and specific. So I think they stay, and I think they continue to exist and thrive in the space they’re thriving in.

Kara Trent, Under Armour president of Americas.
Under Armour

Levi’s Gass: I think the ones that will thrive are the ones that stay true to who they are in their heritage but also embrace where the consumer is going and embrace these new tools that will help them personalize and shape their experience with the consumer. 
Ulta’s Kimbell: It’s really pretty clear — making sure you’re meeting the ever elevating expectations of consumers, as they get more savvy, as they bring new expectations. Their willingness to tolerate less than ideal experiences, whether it’s in store or online, is less and less. The options are increasing, the expectations are elevating, so it comes back to delivering great human connection certainly in store, but also online.

What’s one thing that will become a retail standard that isn’t one today? 

Under Armour’s Trent: Customer service. I mean, I think it’s a lost art, if I’m to be honest. I think if someone’s making an attempt and an effort to walk across your lease line, I think creating relationships with your customer in person becomes one of the intangibles that I think we forget in retail sometimes.
Levi’s Gass: While we today do use traditional cash registers, fast forward five years from now, I don’t think you’ll see those in our stores, right? That’s important merchandising space. … The transactional part of shopping will become just so easy. Even today, with as much technology, there’s a lot of friction once you’re actually going to buy an item, right? Waiting in line, the process, etc. I think the winners five years from now, that just goes away, and so the time spent in the store is all around the discovery, the inspiration, and far less about the transaction.
Skims’ Grede: Inclusive sizing is becoming a retail standard. When my wife [Emma Grede] and Khloe [Kardashian] started Good American, they were really one of the first brands to offer the full size range, from extra small to three or four X, and in the department store, refusing to split the product range between departments. So since then, over the last five, six, seven years, it is becoming more and more commonplace. I mean, when Kim [Kardashian] and I started Skims we couldn’t have dreamt of not doing it. And I think it’d be very hard to launch a brand today that isn’t inclusive in sizing. And I believe in five years, it’s going to become the absolute standard. I think that’s a no-brainer. 
Walmart’s Ward: Customers will expect a level of personalization. Customers will expect that if they spend a lot of time with a retailer like Walmart, that we get to understand you and we get to know you, and we don’t treat you like a stranger every time you come back to us. … If we know you’ve got a pet dog, and you buy dog food from us every single week, we should probably show you great deals on pet beds or leashes or dog outfits, and start to show up in a way that helps you feel like we understand your needs and we can serve you really well.

Geoffroy van Raemdonck
Patrick Mckleod | WWD | Penske Media | Getty Images

Neiman’s van Raemdonck: Shopping will not look like shopping. Shopping will feel like an experience that could happen in your home or in the most beautiful space, where the product has a key role, but where everything else around the product, from service and experience, will be at the center. I would imagine a store that actually doesn’t have a lot of visible products, doesn’t have a cash register, but is really an incredible room where you go and you have a moment for yourself, where products are presented to you, where you have the time to step out of the room, have a drink at the bar, come back. I think it’s going to be a real experience where all the artifacts of retail will not be there, so you won’t see product racks, you won’t see sales associates positioned behind a counter and a cash register. I think you’re going to see an interaction with someone in a setting that doesn’t look like retail, but looks like a fantastic experience. Much more akin to: I’m going to a friend’s house and it’s intimate and it’s a dinner with people I love.
Figs’ Spear: Customization will become the new standard. It will apply to everything in retail, right? It will apply to adding a patch or adding a specific detail to your jacket or your scrubs. In other spaces having initials on your headphones, having your fit exactly what it needs to be, not just with apparel, but with kind of everything across the landscape of retail. There’ll be less people, but the people will be more impactful. So they’re not answering questions or helping you with things that the technology has already helped you with. 
Abercrombie’s Horowitz: Just in time inventory … there’s lots of ways you can think about it, whether that’s a digital front, whether that’s drop shipping to a consumer, right? Going directly from a factory to a drop ship, superseding the distribution centers, there’s lots of different ways to think about it.
Nicholas of Sam’s Club: Another retail standard that is really going to be important beyond the customer is energy. Having sustainable, regenerative sources of energy — that is solar, it is wind, it is buying into community solar, it is electric vehicles — all of these things are going to be really important for sustainable operations into the future. And if you’re not thinking about it now, you really ought to be on top of that.

Chris Nicholas, President and CEO of Sam’s Club.

Ulta’s Kimbell: The role of retailers’ apps. All of us have them, of course, and they play a role today, but I just see a growing opportunity and a trend of the app as a centralized hub. … In this growing need to personalize experiences, to create human connections, we see apps or some variation of that as a place to deliver great guest experience, to educate, to deliver brand communication, to be a destination around things like loyalty or promotions or help with in-store navigation.  More

Starbucks opened a new cafe designed to be more accessible and inclusive for customers and employees with disabilities.
Changes include tweaks to the stores’ lighting and acoustics, as well as lower counters.
All future company-owned locations will follow a similar framework.

The exterior of Starbucks’ new Union Market location
Source: Starbucks

Starbucks has unveiled a new store design focused on accessibility and inclusion, with fresh light fixtures and open floor plans.
The coffee giant opened the first location with the new design on Friday in Washington, D.C.’s Union Market.

“Designing for disabilities is just good design for everybody,” said Sara Trilling, president of Starbucks North America.
She added that designing a more accessible cafe took about two years and that the company solicited input from Starbucks baristas.

Starbucks designed the store to have an unobstructed path for customers.
Source: Starbucks

The Union Market cafe has power-operated doors so customers can use less effort to enter the cafe. Once inside, they can place their orders with baristas using a new point-of-sale system that has an adjustable angle stand, voice assist, screen magnification and photos of menu items.
“Imagine somebody who doesn’t speak English as a first language, and you’re trying to make sure that you’re getting [the order] right and providing great service. You’ll have an opportunity through some visual cues to make those confirmations,” Trilling said.
The counters are also lower, making them more accessible for wheelchair users, for example.

The store’s counters are lower, giving wheelchair users a better experience.
Source: Starbucks

Behind the counter, Starbucks’ new Clover Vertica system for brewing drip coffee has a more accessible design, with a large dial and protruding buttons.
“You can actually feel the settings by touch or using light to indicate when brewing cycles and other things have been completed,” Trilling said.

Starbucks’ new Clover Vertica brewing system features large dials and protruding buttons for easier use.
Source: Starbucks

Digital status boards show customers when their drinks are ready to pick up, in addition to baristas calling out their names.
Starbucks also changed the store lighting to minimize glare, shadows and backlighting that can make it more difficult to see. Insulation has been improved, too, so stores aren’t as noisy.
And Starbucks designed the overall floor plan of the store to be free of obstacles and to have open sightlines.
All future company-owned locations will follow a similar framework. Starbucks plans to open more than 600 new stores this year, increasing its U.S. footprint by 4%, including licensed locations.

The store’s lighting is softer, and insulation keeps noise levels lower.
Source: Starbucks

Building more accessible stores won’t be materially more expensive than using current designs, according to Trilling.
“I think about it as something that’s going to help us in terms of customer connection. It’s going to help us in terms of employee engagement,” she said. More

DraftKings posted fourth-quarter results that missed Wall Street’s estimates on Thursday.
The sports betting company saw 44% growth in revenue year-over-year.
DraftKings also reported a 37% increase in monthly unique payers.

In this photo illustration the DraftKings logo seen displayed on a smartphone.
Rafael Henrique | Sopa Images | Lightrocket | Getty Images

DraftKings on Thursday posted quarterly results that missed Wall Street estimates on the top and bottom line, but it increased its revenue by 44%.
Here’s what DraftKings reported compared with what Wall Street was expecting, according to analyst estimates compiled by LSEG, formerly known as Refinitiv:

Loss per share: 10 cents vs. expected profit of 8 cents
Revenue: $1.23 billion vs. $1.24 billion expected

The sports betting company saw a 44% increase in revenue year-over-year. DraftKings recently launched its Sportsbook product in Maine and Vermont, bringing it to a total of 24 states allowing its mobile sports betting.
For the last three months of 2023, DraftKings reported a net loss of $44.6 million compared with $242.7 million in the same period a year earlier. Losses per share improved to a loss of 10 cents versus a loss of 53 cents in 2022.
DraftKings garnered 3.5 million average “monthly unique payers,” a 37% increase from the same period in 2022. The company’s average revenue per MUP saw a 6% boost in the fourth quarter compared to the previous year.
DraftKings also announced after the bell Thursday that it plans to acquire lottery app Jackpocket for approximately $750 million.
For 2024, the company is increasing its fiscal year guidance to between $410 million and $510 million compared to its prior guidance of between $350 million and $450 million. That excludes the company’s estimated impact due to its planned acquisition of Jackpocket. More

Shake Shack shares surged following the company’s strong earnings results.
The company reported total revenue of $286.2 million and a strong 2024 outlook.
For 2024, Shake Shack expects to grow total revenue by 11% to 15% and open 80 new restaurants.

The Chicken Shack sandwich from Shake Shack.
Shake Shack

Stock chart icon

Shake Shack stock.

Here’s how the company performed during the period, compared with estimates from LSEG, formerly known as Refinitiv:

Earnings per share: 2 cents vs. 1 cent expected
Revenue: $286.2 million vs. $280.3 million expected

For the last three months of 2023, Shake Shack reported a net income of $6.8 million, up from a loss of $8.1 million the year prior. Earnings per share increased to a 15-cent profit from a 20-cent loss during the year-ago period.
Adjusting for one-time items, Shake Shack reported earnings per share of 2 cents.
The burger chain also saw a 20% increase in revenue year over year and opened 15 new restaurants during the quarter.
For 2024, Shake Shack expects to grow total revenue by 11% to 15% and open 80 new restaurants — which would bring the total, including company-owned and licensed, to nearly 600 locations, more than double the footprint five years ago, according to the report.

“We ended the year on a high note, with positive traffic in the fourth quarter through the success of our sales-driving strategies and continued margin expansion,” CEO Randy Garutti said in a letter to shareholders. “Our leadership teams are energized and excited as we embark on our 2024 Strategic Priorities and target another year of strong growth and margin expansion.”
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Shares of Intuitive Machines spiked on Thursday, as the space company began its first mission to the moon’s surface.
A SpaceX rocket launched Intuitive Machines’ IM-1 mission successfully.
The company went public via a SPAC merger last year and, despite nearly doubling so far this year, trades at about half the stock’s debut price.

A SpaceX Falcon 9 rocket carrying the Nova-C lander for the IM-1 mission launches from pad 39A at the Kennedy Space Center at 1:05 a.m. EDT on February 15, 2024 in Cape Canaveral, Florida.
Paul Hennessy | Anadolu | Getty Images

Shares of Intuitive Machines spiked in trading on Thursday, as the space company began its first mission to the moon’s surface earlier in the morning.
A SpaceX rocket launched Intuitive’s IM-1 mission successfully. The cargo lunar lander, loaded with research, is headed for the moon and Intuitive expects to make a landing attempt next week.

Intuitive’s stock 34.5% in trading to close at $6.70 a share. The company went public via a SPAC merger last year and, despite nearly doubling so far this year, trades at about half the stock’s debut price.
Before the launch, Intuitive Machines CEO Steve Altemus told CNBC that shareholders should be reassured that “we built resiliency into our business so that we’re not a one-off kind of company that built a lunar lander and is going to throw it to the moon.”

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“You could make money a whole lot of ways – but this isn’t just about making money. It’s about achieving something while running a business and innovating,” he said. More

Ford CEO Jim Farley urged Wall Street to forget about Tesla as the future of the auto industry, arguing investors should instead focus on Ford’s “Pro” fleet business.
Ford Pro is made up of the automaker’s traditional fleet and commercial businesses as well as emerging telematics, logistics and other connective operations for business customers.
Ford expects the Pro unit’s pre-tax earnings to increase to between $8 billion and $9 billion this year, the automaker said earlier this month.

Ford Motor Co., CEO Jim Farley gives the thumbs up sign before announcing Ford Motor will partner with Chinese-based, Amperex Technology, to build an all-electric vehicle battery plant in Marshall, Michigan, during a press conference in Romulus, Michigan February 13, 2023.
Rebecca Cook | Reuters

DETROIT – Ford Motor CEO Jim Farley on Thursday urged Wall Street to forget about Tesla and its FSD driver-assistance systems as the future of the auto industry, contending investors should instead focus on the Detroit automaker’s “Pro” fleet business.
Farley compared the unit, which roughly doubled pretax earnings last year to $7.2 billion, to where Deere & Co. was seven years ago. The farm equipment maker’s stock has increased by about 235% since then.

“If you’re looking for the future of the automotive industry, stop looking at FSD and Tesla. Look at Ford Pro. It’s got half a million subscribers with 50% gross margin,” Farley said during a Wolfe Research conference.
Ford Pro is made up of the automaker’s traditional fleet and commercial businesses as well as emerging telematics, logistics and other connective operations for business customers – ranging from local plumbers and electricians to massive corporations. It also includes parts and services for businesses.
Ford expects the Pro unit’s pretax earnings to increase to between $8 billion and $9 billion this year, the automaker said earlier this month. That compares with earnings expectations for the company’s “Blue” traditional business of about $7 billion to $7.5 billion and projected losses in its Model e EV business of $5 billion to $5.5 billion.
Tesla does not break out revenue or earnings from its premium driver-assistance software, marketed as its Full Self-Driving Beta, FSD or FSD Beta. Many Wall Street analysts have speculated that such software could bring in tens of billions of dollars per year by 2030.

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Ford Motor, Tesla and Deere & Co. stocks over the last seven years

Ford has said it expects revenue from telematics and other nontraditional subscription services to increase to $2,000 per vehicle annually, or about $167 a month, for Ford Pro in the years ahead. Farley reiterated Thursday that 20% of Pro’s overall revenue is expected to come from such services by 2026.

Farley reiterated that Ford Pro is undervalued within the automaker. Some on Wall Street agree.
Morgan Stanley’s Adam Jonas last week called Ford Pro the company’s “Ferrari,” referring to the extremely profitable luxury sportscar manufacturer that was significantly undervalued before being spun out of Fiat Chrysler in 2016.
“I remember a time when Fiat owned Ferrari, and I had a valuation of about $4 billion on it. Now Ferrari is worth $80 billion today, and the business was totally ignored by investors when it was part of Fiat,” Jonas said during Ford’s quarterly earnings call earlier this month. “Now Ford has a Ferrari, it’s called Ford Pro. And I think we agree, people are ignoring the cash cow.”
Jonas, a longtime Tesla bull, contended the business is being overlooked because profits from it are being siphoned to fund Ford’s “EV science project.”
Some investors may be skeptical of Farley’s comments. The Ford executive has previously discussed Ford being a growing competitor to Tesla with its vehicles and technologies, but that, in general, has largely not occurred yet.
Ford is delaying or cutting spending by billions of dollars on EVs, including domestic battery production, amid slower-than-expected adoption of its current models as well as significant losses on its electric vehicles. The company is in the middle of developing its next-generation EVs that it promises will be profitable within a year of going on sale.
Farley said Thursday that while EV demand is slower than expected for consumers, fleet customers are actually adopting all-electric vehicles faster than the company had anticipated.
The Pro operations are a major part of Farley’s “Ford+” restructuring and growth plan. The unit is led by Ted Cannis, who is considered a successful utility man within the company.
“We always had a super successful pro-business … but there was no focus on it,” Farley said. “I think people are just starting to see [it].”
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The total wealth of Americans under 40 surged by 80%, to $9.5 trillion, between the first quarter of 2019 and the third quarter of 2023, according to a study by the New York Federal Reserve.
The biggest driver of the wealth gains for younger generations was stocks, according to the study.
Granted, those under 40 are still the poorest of the generations.

Younger generations grew their wealth much faster than older Americans after the pandemic began, thanks largely to stocks, according to a new study.
The total wealth of Americans under 40 surged by 80%, to $9.5 trillion, between the first quarter of 2019 and the third quarter of 2023, according to a study by the New York Federal Reserve. The wealth increase far outpaced that of older generations. Americans between the ages of 40 and 54 saw their wealth increase just 10% over the same period, and those over 55 had wealth gains of 30%.

The biggest driver of the wealth gains for younger generations was stocks, according to the study. Americans under 40 saw the value of their financial assets increase by 50% since 2019, while those 55 or older saw only a 20% increase.
The study said that younger generations received larger stimulus checks during the pandemic and used the funds in part to buy stocks. For those under 40, corporate equities and mutual funds made up 25% of their financial assets as of the third quarter of 2023 — up from 18% in 2019 — the fastest growth of any age group.
“The under-40 group experienced a much greater increase in equity portfolio share than the older groups did,” the study said. “This increased exposure to equities — the fastest-growing financial asset class during the period — enabled younger adults to record higher growth in both financial assets and overall wealth. This shift in portfolio composition toward equities likely reflects the fact that younger adults, being farther away from retirement, can afford to invest in risky assets at a higher rate than older adults.”
Granted, those under 40 are still the poorest of the generations. Their total wealth of $9.5 trillion is a fraction of the wealth held by those 40 to 55, at $29 trillion. Wealth for those over 55 totals $104 trillion. The disparity is largely the result of the life-cycle of wealth, where every generation builds wealth as they get older.
A study led by Rob Gruijters, an associate professor of education and international development at England’s University of Cambridge, found that the median millennial had 30% lower wealth than the median boomer at the age of 35 — $48,000 vs. $63,100.

Still, with the real-estate market out of reach for many millennials and Gen Z buyers, stocks have become the most important wealth builder. As the stock market hovers near record highs, the wealth gap between the younger and older generations may continue to narrow.
“We find that faster wealth growth among younger adults has led to a limited narrowing of age-based wealth disparities over the past four years,” the study said.
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True Religion, the Y2K-era jeans brand that managed to survive two bankruptcies, is exploring a sale.
A wide range of consumer-focused private equity firms and a number of large, publicly traded apparel companies have been targeted as potential buyers.
The company, known for its stitching and horseshoe logo, has made inroads with an entirely new customer base, and a survey conducted by the company says it has high customer loyalty.

A True Religion brand storefront.
True Religion

The hedge fund that owns True Religion is exploring a sale of the Y2K-era jeans brand as it returns to growth and profitability after emerging from its second bankruptcy, CNBC has learned. 
True Religion sales jumped about 20% to around $280 million last year, and it brought in $80 million in earnings before interest, taxes, depreciation and amortization, people familiar with the matter said. 

It’s unclear what valuation True Religion is seeking, but it could sell for a mid-single-digit multiple of its EBITDA, said the people, who spoke on the condition of anonymity because the discussions are private.
The sale process began in January and the sellers have targeted a wide range of consumer-focused private equity firms and a number of large, publicly traded apparel companies as potential buyers, the people said. 
Farmstead Capital Management, True Religion’s owner, has hired Baird to run the sale process. 
Baird and True Religion declined to comment on the sale.
True Religion, best known for disrupting the jeans industry in the early 2000s with its signature stitching, embroideries, and smiling Buddha and horseshoe logos, has been on a roller-coaster journey over the last decade or so. 

When it emerged on the Los Angeles fashion scene in 2002, consumers were embracing maximalist styles from brands like Von Dutch and Juicy Couture. True Religion’s flashy jeans became a staple item among A-listers like Jessica Simpson and Britney Spears. 
At the time, the jeans retailed for about $200 to $300 a pair, and True Religion found its niche catering to female consumers who made about $200,000 annually and tended to shop at high-end department stores like Neiman Marcus, Bloomingdales and Saks Fifth Avenue, CEO Michael Buckley said.
True Religion went public in 2003 and made headlines for its growth and profits. But as the decade wore on, it faced increased competition from cheaper alternatives such as Gap and Forever 21.
By the time the 2010s hit, athleisure was taking off and denim had started to fall out of favor. The brand was taken private in 2013 and by 2017, it was bankrupt. 
True Religion eventually emerged from that bankruptcy and did so again in 2020 after it filed for a second time at the height of the Covid pandemic. However, these days, the brand’s trips through Chapter 11 are in the rearview mirror. 
Buckley, who helmed the company during its 2000s heyday and returned in 2019, has transformed True Religion into a leaner machine. The brand still focuses on its maximalist roots, but has dialed into a new consumer as Y2K-era styles make a comeback. 
True Religion’s primary shoppers are diverse with an average income of $60,000 to $65,000. Its typical price point for jeans has come way down to less than $100 a pair, which is in line with competitors like Levi Strauss and Gap, and better suited for its customer base.
“You have to know who your consumer is. The previous management, before I came back, was still trying to market to who they thought that customer was in 2010,” Buckley told CNBC during a recent interview. “Like, they left the brand. There’s a lot more followers out there [today] than there is, you know, call it the early adopters that wanted this brand back then.” 
True Religion recently conducted a market research survey and found its net promoter score, which measures customer loyalty, is more than 10% higher than its competitor peer set, including mega brands like Levi’s, Nike, Michael Kors and Ralph Lauren. 
Buckley said True Religion has the potential to be a billion-dollar brand. Over the next few years, he plans to double its revenue by focusing on its digital sales, expanding its product assortment and winning over female shoppers.
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