Business

While most restaurant companies crushed earnings expectations, a number of them fell short of Wall Street’s estimates for their quarterly revenue.
Falling traffic hurt chains like Wendy’s and Chipotle Mexican Grill.
McDonald’s benefited from its successful Grimace Birthday Meal promotion and strong value perception.

A McDonald’s restaurant near Times Square, NYC on July 29th, 2023. 
Adam Jeffery | CNBC

Restaurant companies navigating some of the same challenges in the second quarter fell into two categories: winners and losers.
Some chains said their higher menu prices alienated diners, while others said consumer behavior hasn’t changed even as their food and drinks grow more expensive. Promotions drove customers to certain restaurants — or fell flat as diners focused on value. And low-income customers visited some restaurants more frequently, but skipped visits at other eateries.

Broadly, foot traffic to restaurants has fallen. Sales growth has slowed as many eateries hold off on another round of the price hikes that drove strong revenue a year ago. Customers have become more selective about how they spend their money, including where they eat, leading to a sharpening divide in chains’ performance.
While most restaurant companies crushed earnings expectations, a number of them fell short of Wall Street’s estimates for their quarterly revenue. McDonald’s and Wingstop both reported second-quarter earnings, revenue and same-store sales growth that topped analysts’ expectations, a rarity this quarter for restaurant companies.
On the other end, Papa John’s, Wendy’s, and Chipotle Mexican Grill were among the flock of companies that disappointed investors with weaker-than-expected sales. All three companies’ stocks haven’t recovered yet.
Here are three trends that defined the quarter and determined its winners and losers:

Restaurant traffic

Two metrics shape a company’s same-store sales growth: how much customers spend on every order, and how often they visit the restaurant chain.

As eateries delay more price hikes and customers watch their wallets, restaurants have to rely on the second benchmark — traffic — to bolster their same-store sales. And Wall Street is watching closely.
“Investors certainly want lots of traffic as a sign of health for the concepts,” TD Cowen analyst Andrew Charles told CNBC.
McDonald’s, Chipotle, Texas Roadhouse and Wingstop were among the few chains that reported U.S. traffic growth in the latest quarter.
On the other end, Restaurant Brands International said U.S. traffic slipped for three of its chains: Popeyes, Burger King and Firehouse Subs. Rival Wendy’s reported its domestic transactions fell 1% in the second quarter.
Looking ahead, traffic could fall even more in the second half of the year.
“And as we move through 2H23, menu pricing will likely fall fast as inflation no longer justifies the prices, and barring a rapid traffic reversal, the comps should optically fall just as fast,” Barclays analyst Jeffrey Bernstein wrote in a note to clients Aug. 11. “This does not bode well for restaurant stock performance in coming months, in our view.”

Value perception

Inflation is cooling, and more economists are predicting a “soft landing” rather than a recession. But consumers are still looking for value.
Broadly, the fast-food sector has benefitted from consumers trading down from fast-casual restaurants into their cheaper burgers and tacos. But consumer perception of value differs across chains.
For example, McDonald’s CEO Chris Kempczinski said the chain is performing well with consumers who make less than $100,000, and with those who make under $45,000. On the other hand, Wendy’s CEO Todd Penegor said the burger chain saw diners who make less than $75,000 pull back on their purchases.
Likewise, Wingstop said its customers’ perception of its value is improving, coinciding with falling chicken wing prices.
“We are seeing positive trends in value scores with guests, in an environment where many brands are measuring decline,” Wingstop CEO Michael Skipworth told analysts.
Fast-casual rival Chipotle has also benefited from diners’ perception of its burrito bowls’ value. Chipotle has seen low-income consumers return to its restaurants more than they were a year ago, CFO Jack Hartung told analysts.
Still, Chipotle’s low-income customers aren’t visiting as frequently as they were before inflation began accelerating. The chain has paused price hikes for now, but will decide closer to the fourth quarter if it will raise them again.
One fast-casual chain has struggled with consumers’ value perception. Noodles & Company said its traffic cratered by double digits in the first part of the quarter as customers pushed back against its higher prices, which rose 13% from the year-ago period. In response, Noodles dropped its prices by 3% and pivoted its marketing to focus on value.

Promotions

As restaurants and customers focus on value, discounts and combo meals have stolen most of the marketing thunder. Limited-time menu items also helped some restaurants’ sales — but weren’t enough to offset weakness for others.
On one end of the spectrum was McDonald’s. The burger chain’s Grimace Birthday Meal fueled buzz on social media and traffic to its restaurants.
“This quarter, the theme was, if I’m being honest, Grimace,” CEO Kempczinski said on the company’s conference call.
The promotion featured the limited-time purple Grimace milkshake and core menu items, like the choice of a 10-piece McNugget or a Big Mac. It leaned on nostalgia for the mascot.
But not all promotions helped restaurants’ top line.
For example, Papa John’s released Doritos Cool Ranch-flavored Papadias for $7.99 in May. The limited-time menu item also drove social media buzz and traffic to restaurants, according to executives. However, the new Papadias couldn’t compete with the chain’s pepperoni-stuffed crust pizza it released a year earlier for $13.99.
“That traffic increase wasn’t enough to offset check decline, and therefore you had weaker same-store sales,” BTIG analyst Peter Saleh said. More

UAW labor talks could cost the automakers billions of dollars in additional labor costs, work stoppages or, in a worst-case scenario, both.
Contracts between the Detroit automakers and union expire at 11:59 p.m. ET on Sept. 14.
The new UAW leadership team has dubbed these talks the union’s “defining moment” and has hinted at the likelihood of worker strikes.

United Auto Workers members on strike picket outside General Motors’ Detroit-Hamtramck Assembly plant in Detroit, Sept. 25, 2019.
Michael Wayland / CNBC

DETROIT — The Oracle of Omaha is cutting exposure to the U.S. automotive industry amid union negotiations — potentially for good reason.
Warren Buffett’s Berkshire Hathaway this week said it nearly halved its stake in General Motors in the second quarter. While the firm didn’t disclose its reasoning, the year-end is expected to be a challenging one for the U.S. automotive industry amid contentious contract talks between the United Auto Workers union and GM, Ford Motor and Stellantis.

The talks, which cover nearly 150,000 U.S. autoworkers, could cost the automakers billions of dollars in additional labor costs, work stoppages or, in a worst-case scenario, both.
The new UAW leadership team has dubbed these talks the union’s “defining moment.” President Shawn Fain has already deployed harsh messaging and a few theatrics, including throwing contract proposals by Stellantis in a trash bin, and this late in the process there’s been little to no talk about “give and take” or “win-win” deals.
“They’re ready to strike if a deal does not happen,” said Melissa Atkins, a labor and employment partner at Obermayer. “Going in with that mindset, I anticipate it being very contentious … and just given the history, there probably will be a strike.”
Aggressive efforts by the union are great for organized labor and the embattled UAW, which is attempting to regain its footing after a yearslong federal corruption probe landed several top leaders in prison for bribery, embezzlement and other crimes — but not for the companies or their shareholders.
Here are the numbers investors should know ahead of the expiration date for current contracts between the Detroit automakers and UAW at 11:59 p.m. ET on Sept. 14.

$80 billion

Contract proposals made by the UAW at this point would add more than $80 billion in labor costs for each of the biggest U.S. automakers over the length of the contract, Bloomberg News first reported earlier this month.
“One might think of these UAW contracts as a set of three large purchase orders to secure the labor needed to assemble future vehicles, parts, and components — contracts that are collectively worth roughly $70–$80 billion over the course of the next four years,” Kristin Dziczek, automotive policy advisor for the Federal Reserve Bank of Chicago’s Detroit branch, wrote in a Wednesday blog post.

United Auto Workers President Shawn Fain greets workers at the Stellantis Sterling Heights Assembly Plant, to mark the beginning of contract negotiations in Sterling Heights, Michigan, U.S. July 12, 2023. 
Rebecca Cook | Reuters

The demands include a 46% wage increase, restoration of traditional pensions, cost-of-living increases, reducing the workweek to 32 hours from 40 and increasing retiree benefits.
If the UAW gets those demands, without any changes to other benefits, the all-in hourly labor cost for the automakers would more than double from at least $64 per hour to more than $150 per hour, according to media reports.
That would be a significant increase over wage hikes seen during the previous four-year agreements, according to estimates from the Center for Automotive Research. The 2019 deals were projected to increase average hourly labor costs over the length of the contracts by $11 per worker for then-Fiat Chrysler, now Stellantis, and $8 per worker at GM and Ford.
Under the current pay structure, UAW members start at about $18 an hour and have a “grow-in” period of four years to reach a top wage of more than $30 an hour.

$5 billion

A work stoppage by nearly 150,000 UAW workers at GM, Ford and Stellantis would result in an economic loss of more than $5 billion after 10 days, according to Anderson Economic Group, a Michigan-based consulting firm that closely tracks such events.
AEG estimates the total economic loss by calculating potential losses to UAW workers, the manufacturers and the auto industry more broadly if the sides cannot reach tentative agreements before the current contracts expire.
In another analysis, Deutsche Bank previously estimated that a strike would hit earnings at each affected automaker by about $400 million to $500 million per week of production.
Strikes could take various forms, including a national strike, where all workers under the contract cease working, or targeted work stoppages at certain plants over local contract issues. A strike against all three automakers, as Fain has alluded to, would be the most impactful but also the riskiest and most costly for the union.

$825 million

The UAW has more than $825 million in its strike fund, which it uses to pay eligible members who are on strike. The strike pay is $500 per week for each member — up from $275 per week last year.

Speaking in front of a backdrop of American-made vehicles and a UAW sign, President Joe Biden, then a presidential candidate, speaks about new proposals to protect U.S. jobs during a campaign stop in Warren, Michigan, Sept. 9, 2020.
Leah Millis | Reuters

Strike pay is available after the eighth day of a work stoppage, and a bonus check is paid the week prior to the Thanksgiving and Christmas holidays. Recipients must be in good standing with the union and participate in picket lines to receive the assistance.
UAW members can also seek outside employment, however if their pay is $500 or more per week, they will no longer receive strike pay. They will continue to receive medical and prescription drug assistance, according to the union’s website.
Assuming 150,000 or so eligible workers, the weekly strike pay would be about $75 million. A fund of $825 million, then, would cover about 11 weeks. One caveat: that doesn’t include health-care costs that the union would cover, such as temporary COBRA plans. 
The UAW is scheduled to hold a procedural strike authorization vote next week, which would grant union leaders the ability to strike, if warranted. The measure historically passes overwhelmingly.

1.5 million

If the union decides to strike against all three Detroit automakers, production losses would quickly add up.
S&P Global Mobility estimates a 10-week strike would mean lost production of roughly 1.5 million units, according to an investor note from Mizuho Securities USA.
A 40-day strike against GM during the last round of negotiations in 2019 led to a production loss of 300,000 vehicles, the company said at the time. It also cost the automaker $3.6 billion in earnings, GM said.
Industry experts argue a strike against all or any of the automakers would likely affect the operations and bottom lines of the companies more quickly than four years ago since the U.S. auto industry is still recovering from supply chain problems caused during the coronavirus pandemic.
Vehicle inventory levels for the automakers also are lower than they were four years ago.
Heading into 2019 contract negotiations, U.S. vehicle supply was 3.73 million — essentially enough units to last 86 days of selling under normal conditions at the time, according to Cox Automotive. The industry is currently just under 2 million units, with 56 days of sales supply.
“In 2019, there was quite a slack in there. There’s almost no slack now,” AEG CEO Patrick Anderson said Thursday during a webinar with the Automotive Press Association. “If we are to get a strike, within the first week, the numbers start to get serious for each of the automakers.” More

With $3.3 million from Thursday night previews, Warner Bros. Discovery’s “Blue Beetle” is expected to take in between $22 million and $32 million during its opening weekend domestically
The film arrives in theaters after recent DC Comics-based films have flopped at the box office and as the studio undergoes a major regime change.
Box office analysts predict the film could thrive on word-of-mouth and an influx of Hispanic moviegoers, even as fellow Warner Bros. release “Barbie” keeps scoring big bucks.

Xolo Mariduena stars ase Jaime Reyes in Warner Bros.’ “Blue Beetle.”
Warner Bros. Discovery

It’s pink vs. blue at the box office this weekend.
As “Barbie” continues a historic run in theaters, a little-known superhero called “Blue Beetle” is looking to take the top spot on the charts this weekend.

With $3.3 million from Thursday night previews, Warner Bros. Discovery’s latest film based on a DC Comics character is expected to take in between $22 million and $32 million during its domestic debut.
Meanwhile, Warner Bros.’ “Barbie,” which has steadily tallied $545 million domestically since its late July release, is expected to add between $17 million and $22 million during its fifth weekend.
“Blue Beetle” arrives in theaters after several DC Comics-based films have flopped at the box office and while the studio undergoes a major creative regime change.
“The four movies released this year are orphans,” said Robert Thompson, a professor at Syracuse University and a pop culture expert, referring to DC titles “Shazam! Fury of the Gods,” “The Flash,” “Blue Beetle” and the upcoming “Aquaman and the Lost Kingdom.”
“They’re part of the old universe that’s about to get completely rebooted. [Warner Bros.] has to promote these, they want them to be big hits, obviously, but there is a sense that they’re part of the old guard,” Thompson said.

And audiences haven’t turned out for these films so far. “Shazam! Fury of the Gods” generated just $57.6 million domestically and “The Flash” tallied a little more than $100 million in the U.S. and Canada.
These performances show an “indifference” from audiences, said Paul Dergarabedian, senior media analyst at Comscore.

Will ‘Blue Beetle’ take flight or be squashed?

When “Blue Beetle” first entered development in 2018, there was potential for the character of Jaime Reyes, the man behind the moniker, to cross paths with DC’s other famed heroes. However, turnover at the studio, mostly due to the merger between Warner Media and Discovery, has put the future of the hero in question.
As superhero movies have become more popular in the cultural zeitgeist, much of the appeal of big franchises has been the interconnectability of the stories. It’s why Disney’s Marvel Studios was able to to introduce obscure comic book characters like the Guardians of the Galaxy, Ant-Man and Moon Knight into the Marvel Cinematic Universe and turn them into fan favorites.
Blue Beetle, without the promise of interaction with Justice League veterans like Batman, Superman, Wonder Woman, the Flash or Aquaman, might not be able to drum up much enthusiasm at the box office.
To be sure, standalone, unconnected films have had success for DC in the recent past, but they featured well-known characters like Batman and the Joker.
“We’re in limbo now,” said Shawn Robbins, chief analyst at BoxOffice.com. “In a world where superheroes aren’t really novelties anymore, that’s going to be a tough sell for a lot of people.”
Robbins said “Blue Beetle,” which features a Mexican-American family at its core, could benefit from an influx of Hispanic moviegoers in the same way that Marvel’s “Black Panther” saw Black moviegoers who were not comic book fans rush out to see the film.
Critics have raved about Xolo Mariduena’s magnetic performance as the titular character and how the film centers on a hero who is family-focused, not a lone gunslinger.
“Blue Beetle” still falls into some of the old trappings of past superhero movies, including chaotic, repetitive CGI fight sequences, but some say as DC course corrects in the next few years, it should look to keep Mariduena and Blue Beetle on its roster.
“A film like ‘Blue Beetle’ could benefit from solid word-of-mouth,” said Dergarabedian. “Judgement for the latest DC entry should come after the first three weeks, not the first three days in theaters.”

A new era on the horizon

“Blue Beetle’s” biggest battle is recouping enough at the box office to justify its $125 million budget and any additional marketing costs spent by the studio.
The figure pales in comparison to the $200 million budget of “The Flash,” which capped its theatrical run at $268.5 million globally. After marketing costs and splitting ticket receipts with theaters, the film will not break even for the studio.
Similar concerns abound for “Aquaman and the Lost Kingdom,” which is scheduled for a December release. The sequel has a budget of around $205 million, but has gone through three separate rounds of reshoots as well as endured pandemic production costs. While many blockbusters will turn to reshoots to punch up dialogue or insert scenes to clarify beats within the film, few require this many rounds of additional photography.
Much of the film’s issues came from conflicting creative directions previous heads of the studio wanted for the the overall DC Extended Universe. And now, with James Gunn and Peter Safran at the helm, the film appears to be going through its final series of changes.
Yet, the upcoming era of Gunn and Safran doesn’t guarantee a surefire future for DC Studios, said Thompson.
“I don’t think there’s going to be this sort of miracle all of a sudden,” he said, noting that despite the pair’s pedigrees in the industry, including Gunn’s success with three Guardians of the Galaxy films for Marvel, won’t immediately erase years of hit-or-miss films from DC and the toll that took on audiences.
“That’s pretty optimistic,” Thompson said. More

After years of talk and a SPAC boom in the sensor sector, automakers have finally started incorporating lidar units into their vehicles.
A few — namely Innoviz, Luminar and Ouster — could finally be poised for major growth, and soon, as automakers rush to adopt more advanced hands-free driving systems.
“We believe that a major portion of the industry market share is going to be determined in the next 12 to 18 months,” Innoviz CEO Omer Keilaf said.

A Hesai lidar sensor on top of a vehicle in Shenzhen, China, July 10, 2022.
Jade Gao | AFP | Getty Images

For investors in lidar startups, this has been a long time coming.
After years of talk — and a SPAC boom in the sensor sector — automakers have finally started incorporating lidar units into their vehicles. And many more lidar-equipped models are expected over the next few years.

Lidar, short for light detection and ranging, is a sensor technology that uses invisible lasers to create a detailed 3D map of the sensor’s surroundings. Lidar sensors are considered important components of nearly all autonomous-vehicle systems currently under development. They’re also finding increasing applications with advanced driver-assist systems as well as many other areas of robotics.
Playing into investors’ intense interest in self-driving technology, many lidar startups went public via mergers with special purpose acquisition companies, or SPACs, over the last few years. Valuations for those companies have since fallen sharply, but a few — namely Innoviz, Luminar and Ouster — could finally be poised for major growth, and soon, as automakers rush to adopt more advanced hands-free driving systems.
While the big money is still a few years away, some of those startups are already separating themselves from the pack with growing order books, fast-evolving technology, and revenue — right now, or soon — in the tens of millions of dollars.

Market share up for grabs

Israel-based Innoviz, which went public via a SPAC merger in late 2020, will soon see its units on the road. A hands-free highway-driving package on BMW’s new 7 Series, set to launch in Germany by the end of the year and elsewhere in 2024, will include an Innoviz lidar sensor nestled in the big sedan’s front grille.
That sensor, together with software that Innoviz developed for BMW, gives the vehicle’s computer brain a constant look at what’s in front of the car, out to about 250 meters.

Innoviz CEO Omer Keilaf thinks the new BMW series will be followed by a wave of vehicles equipped with lidar sensors.
“The technology is safety critical, there are very high levels of tech differentiations, and the player that wins the most business is ultimately going to have a scale and cost leadership advantage that is likely going to be difficult to match,” Keilaf said during Innoviz’s earnings call earlier this month.
“We believe that a major portion of the industry market share is going to be determined in the next 12 to 18 months,” he said.
Not all of that market share will be claimed by Innoviz, of course. Some will go to existing global auto suppliers, which may or may not turn to startups for the technology. In China, the market is already led by local lidar maker Hesai, which generated $123.2 million in revenue in the first half of 2023.
But the worldwide addressable market is likely to be large enough to leave significant opportunities for a few of the post-SPAC U.S. startups.
Aside from its work with BMW, Innoviz has a big contract with Volkswagen and is deep in talks with several other global automakers.
Analysts polled by Refinitiv expect Innoviz to report just $6 million in revenue in 2023, but they see it growing to $17.1 million in 2024 once its shipments to BMW get up to full speed.
That’s more than most other lidar companies that recently went public via SPACs are expected to generate, but it’s well behind forecasts for the two emerging leaders of the group, Luminar and Ouster.

Building to scale

Luminar, based in Orlando, Florida, has perhaps the most name recognition of the group among U.S. investors. It has the largest market cap as well, at around $2.2 billion.
Luminar is focused entirely on automotive lidar, designing its own silicon chips and offering related software as well.
Led by CEO Austin Russell, Luminar has locked up deals to supply lidar and software to Volvo Cars, EV maker Polestar, Mercedes-Benz, and Israeli automotive visual sensing giant Mobileye, among others. The deals cover more than 20 upcoming new vehicles from major automakers in total.

Austin Russell, chairman and chief executive officer of Luminar Technologies.
Bloomberg | Bloomberg | Getty Images

Luminar, which began shipping its lidar units in November, has big ambitions, but as Russell pointed out during its most recent earnings call, it doesn’t need huge market share to make money.
“Our target market penetration by the end of the decade is only 3% to 4%,” Russell said, “because we think even with that, we’ll be able to achieve around $5 billion revenue and $2.5 billion EBITDA with as much as a $60 billion forward-looking order book at that point.”
Russell sees Luminar growing its forward-looking order book, which stood at $3.4 billion at the end of 2022, by at least another $1 billion in 2023. But most of that revenue is years away, and the company still has a long way to go before it starts reporting profits.
Luminar CFO Tom Fennimore said earlier this month that investors shouldn’t expect Luminar to hit breakeven until the end of 2025.
Wall Street thinks Luminar has the cash to stick around until then, and it likes the look of the lidar maker’s pipeline: Analysts expect Luminar to deliver $84.5 million in revenue this year, growing to $268.4 million in 2024, according to Refinitiv.

Looking outside autos

Ouster is arguably Luminar’s closest rival, but it has a somewhat different focus — and a much smaller market cap, at around $250 million.
While waiting for the auto industry to adopt lidar at scale, CEO Angus Pacala has sought out opportunities beyond autos. Ouster’s lidar units can be found in automated mining trucks and forklifts, in drones used for mapping, and even in cities, helping to improve pedestrian safety.
But Pacala agrees that the market for automotive lidar is about to grow significantly. He said earlier this month that Ouster is about to begin shipping samples of a new low-cost solid-state lidar sensor called DF to automakers. A more advanced version — incorporating a new custom chip — is set to follow next year.
Wall Street doesn’t expect Ouster’s revenue to grow quite as dramatically as Luminar’s, but it’s still likely to see significant growth — from $82 million in 2023 to $136.3 million in 2024, per Refinitiv.
Unlike Luminar and Innoviz, Ouster hasn’t yet announced big orders from automakers. But Pacala thinks DF could bring in a lot of new business.
“You don’t need to be first as long as you’re building the thing that’s going to be sustainable long term, and that’s an integrated solid state digital technology,” he said. “And so the DF shines because it’s low cost, it’s solid state, it’s digital. There’s really nothing like it in the world other than this device, and we’re putting it in the automakers’ hands this quarter.” More

New Covid vaccines from Pfizer, Moderna and Novavax will likely provide protection against the new “Eris” variant, now the dominant strain of the virus in the U.S.
The drugmakers designed their updated coronavirus shots to target the omicron subvariant XBB.1.5, which is slowly declining nationwide.
All three companies are still waiting for the Food and Drug Administration to approve their vaccines, meaning those jabs won’t be available to the public for a month or so.

A pharmacist prepares to administer Covid-19 vaccine booster shots during an event hosted by the Chicago Department of Public Health at the Southwest Senior Center in Chicago, Illinois, Sept. 9, 2022.
Scott Olson | Getty Images

New Covid vaccines from Pfizer, Moderna and Novavax will likely provide protection against the new “Eris” variant, now the dominant strain of the virus in the U.S.
The drugmakers designed their updated vaccines to target the omicron subvariant XBB.1.5, which is slowly declining nationwide. But health experts and initial data suggest that the new shots will still be effective against Eris, or EG.5, and other widely circulating variants – all of which are descendants of omicron. 

“I think that these vaccines will provide very substantial protection against EG.5. Maybe just a little bit of loss, but it’s nothing that I’m very concerned about,” Dr. Mark Mulligan, director of the NYU Langone Vaccine Center, told CNBC. “It looks like we’re going to be OK.”
All three companies are still waiting for the Food and Drug Administration to approve their vaccines, meaning those jabs won’t be available to the public for a month or so. The Centers for Disease Control and Prevention also has to decide which Americans should get the shots and how often. 
Still, the upcoming arrival of those vaccines offers some reassurance to Americans as Eris and other Covid variants fuel a slight uptick in cases and hospitalizations across the country but remain below the summer peak that strained hospitals this time last year.
Eris accounted for 17.3% of all cases in the U.S. as of earlier this month, according to the latest data from the CDC. The new strain surpassed XBB.1.5, which accounted for roughly 10% of all cases. 
The World Health Organization earlier this month designated Eris a “variant of interest,” meaning it will be monitored for mutations that could potentially make it more severe. 

But the health agency and experts said Eris does not appear to pose a significant threat – or at least no more than any of the other omicron variants currently circulating in the U.S. It’s also not expected to cause a huge wave of Covid cases like other strains have in previous years. 

Why are the shots likely effective against Eris?

The new vaccines will likely provide protection against Eris because the strain has a very similar genetic makeup to XBB.1.5. 
The key difference is that Eris carries an additional amino acid mutation, which may make the strain only slightly more capable of evading immunity from previous infection or vaccination. 
“It’s not like back then when we had the alpha, beta, delta and omicron variants emerge and they were significantly different from one another,” said Dr. Nicole Iovine, chief hospital epidemiologist and an infectious disease physician at the University of Florida. “These are all omicron variants, so they’re much more similar to each other. I think this vaccine is actually going to be quite effective because of that.” 

A nurse administers a booster shot at a Covid-19 vaccination clinic on April 0=6, 2022 in San Rafael, California.
Justin Sullivan | Getty Images

That’s backed up by new data from the three companies.
Moderna on Thursday said its updated shot caused a “significant boost” in protective antibodies against Eris and another quickly spreading strain of the virus called “Fornax,” or FL 1.5.1, in a clinical trial. The company didn’t provide specific data on antibody levels since the trial results are preliminary. 
But Moderna President Stephen Hoge said in a release that the results “reflect our updated vaccine’s ability to address emerging Covid-19 threats.” 
A Pfizer spokesperson, in a statement to CNBC on Thursday, said the company’s own shot “effectively neutralized” a number of omicron variants, including Eris and XBB.1.5, in a recent study on mice. The company plans on releasing the entirety of the study results in a research publication, the spokesperson said. 
A Novavax spokesperson also told CNBC that it expects its updated Covid vaccine to work against Eris given its similarity to the XBB.1.5 strain. 
“We’re now conducting testing to demonstrate that,” the spokesperson added. 

Should you wait for the new shots? 

As Eris gains a stronger foothold in the U.S., some Americans may be questioning whether they should get one of the currently available Covid boosters rather than waiting for the new shots to arrive. 
Some experts say it depends on individual circumstances and risk levels, so patients should talk to their doctors.
Mulligan said unvaccinated or immunocompromised people who haven’t gotten the available boosters could potentially consider taking them now. Those patients are at a higher risk of getting severely sick from Covid. 
But he added that most people, especially healthy patients, could probably afford to wait for the new vaccines.

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Eris isn’t expected to infect a substantial number of Americans before the shots come out. “Some of us may get impacted, but I don’t expect us to see a huge wave in a short period of time between now and the next month or two,” Mulligan said.
The currently available boosters also might not provide as much protection against Eris because the variant has “drifted too far away” from omicron BA.5, according to Dr. Dean Blumberg, chief of the division of pediatric infectious diseases at UC Davis Health. The boosters target BA.5, BA.4 and the original strain of Covid. 
“It’s probably not going to be that beneficial and we do expect the updated vaccines to be available in about a month or so,” Blumberg said. “So I would wait for that one and get one as soon as it’s available.” 
Still, it’s unclear how many Americans will take the new Covid shots given widespread vaccine fatigue. More

Starboard Value now owns 9.9% of Bloomin’ Brands’ shares, according to a regulatory filing.
Shares of the Outback Steakhouse owner rose on the news.
Starboard has previously pushed for successful turnarounds at Darden Restaurants and Papa John’s.

An Outback Steakhouse truck sits parked outside a restaurant in New York.
Daniel Acker | Bloomberg | Getty Images

Shares of Outback Steakhouse owner Bloomin’ Brands rose 9% in premarket trading Friday after an activist investor disclosed its interest in the restaurant company.
Starboard Value now owns 9.9% of Bloomin’s shares, according a regulatory filing.

In recent quarters, Bloomin’s sales growth has slowed. Earlier in August, the company reported that its U.S. same-store sales grew just 0.8% in the second quarter as traffic to its restaurants shrank.
In addition to Outback, Bloomin’ also owns Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse and Wine Bar.
Going into Friday, Bloomin’ shares have risen 27% this year, giving the company a market value of more than $2.2 billion.
It’s unclear what changes Starboard plans to push for at Bloomin’ Brands at this point. Past activists investors targeting the company, including Jana Partners and Barington Capital Group, have tried to pressure Bloomin’ to cut costs and spin off some of its brands.
Starboard Value has a proven track record of successful turnarounds at restaurant companies. In 2014, Starboard took control of Darden Restaurants’ board and implemented a number of changes, like improving Olive Garden’s breadsticks, that helped boost sales and the stock.
More recently, the firm struck a deal with Papa John’s in 2019 as the pizza chain sought to end a feud with disgraced founder John Schnatter and revive sinking sales caused by his scandals. Earlier this year, Starboard CEO Jeff Smith stepped down as chairman from Papa John’s board, and the company bought back most of the investment firm’s shares. More

Moderna’s new Covid vaccine generated a robust immune response against the now-dominant Eris variant and another rapidly spreading strain of the virus in a clinical trial.
The updated shot is designed to target omicron subvariant XBB.1.5.
Moderna’s vaccine and new shots from Pfizer and Novavax are slated to roll out within weeks.

Nikos Pekiaridis | Lightrocket | Getty Images

Moderna’s new Covid vaccine generated a robust immune response against the now-dominant Eris variant and another rapidly spreading strain of the virus in an early clinical trial, the biotech company said Thursday. 
The updated shot is designed to target omicron subvariant XBB.1.5, but the results suggest that the jab may still be effective against newer variants of the virus that are gaining ground nationwide. That includes Eris and another variant nicknamed Fornax, both of which are also descendants of the omicron virus variant. 

Moderna’s vaccine and new shots from Pfizer and Novavax are slated to roll out within weeks, pending potential approvals from the U.S. Food and Drug Administration. 
Meanwhile, Covid-related hospitalizations fueled by Eris and other variants continue to accelerate but remain below the summer peak that strained hospitals this time last year.
Eris, also known as EG.5, accounted for 17.3% of all cases as of earlier this month, according to the Centers for Disease Control and Prevention. 
The World Health Organization designated Eris a “variant of interest,” meaning it will be monitored for mutations that could make it more severe. 
Fornax, or FL 1.5.1, is also beginning to surge in parts of the U.S. It accounted for 8.6% of all cases nationwide as of earlier this month, the CDC said.
A Pfizer spokesperson on Thursday said the company’s own updated Covid shot effectively neutralized XBB.1.5 and Eris, among other variants, in a recent trial on mice. More

Target and Walmart posted sharply divergent fiscal second-quarter results and offered starkly different outlooks for the months ahead.
Walmart’s online sales in the U.S. rose in the three-month period, while Target’s fell.
The contrasting results illustrate some of the companies’ fundamental differences, but also capture how some retailers are having more success than others.

A customer pushes a shopping cart full of groceries outside a Wal-Mart in Rogers, Arkansas, left, and a pedestrian passes a Target store in the Tenleytown neighborhood of Washington, D.C.
Getty Images

Target and Walmart are both catering to thriftier shoppers, but the two big-box retailers have seen very different outcomes when it comes to winning their dollars.
Target missed Wall Street’s sales expectations for the fiscal second-quarter. Walmart beat Wall Street’s revenue estimates for the three-month period. Target slashed its forecast for the year, while Walmart raised its outlook.

The companies’ diverging performances illustrate some of the retailers’ fundamental differences.
Walmart, the nation’s largest grocer, makes more than half of its annual revenue from selling groceries — a category that shoppers buy even when times are tight. Target draws only about 20% of its yearly revenue from grocery, making it rely more on sales of items such as clothing, earrings and throw pillows that customers may skip when feeling frugal.
Target, which tends to draw a more affluent customer than Walmart, may also be seeing a more dramatic swing in spending as consumers shell out on Taylor Swift tickets and European vacations. Those shoppers could also be trying to balance splurging on services with shopping at places perceived to be cheaper, such as Walmart or TJX Companies-owned T.J. Maxx, Marshalls and Home Goods, which posted year-over-year sales and profit growth earlier this week.
Yet Target’s and Walmart’s contrasting results also capture how some retailers are having more success than others catering to fickle consumers and navigating economic headwinds.
Wall Street added to the confusion with its own counterintuitive moves. After earnings reports, it snapped up Target’s stock on Wednesday and sold off Walmart’s shares on Thursday. The potentially surprising moves could reflect the companies’ recent stock performance, since shares of Walmart are up about 10% this year compared with Target shares’ decline of about 13% during the same period.

Despite the differences, the companies showed they still have much in common. Target and Walmart leaders offered similar descriptions of American consumers who now think twice before spending money on nonessential items while paying more for food.
“As we look at the consumer landscape today, we recognize the consumer is still challenged by the levels of inflation that they’re seeing in food and beverage and household essentials,” Target CEO Brian Cornell said on a call with reporters. “So that’s absorbing a much bigger portion of their budget.”
Walmart Chief Financial Officer John David Rainey echoed similar sentiments, describing consumers as “choiceful or discerning” on a call with CNBC.
Yet both executives added that shoppers can be persuaded to spend, with a good deal or when getting ready to celebrate holidays or seasonal events.
Here’s a closer look at three key ways that Target’s and Walmart’s most recent quarterly results diverged:

Online winners and losers

As shoppers head out into the world again, some retailers have seen double-digit declines in online spending.
Target followed that pattern in the second quarter. Its digital sales dropped by 10.5% year over year.
Walmart bucked the trend. E-commerce sales rose 24% for Walmart U.S. in the second quarter.
Both retailers pointed to curbside pickup as a major driver of online sales — a key differentiator from competitor Amazon.
Walmart chalked up online sales gains to store pickup and delivery, as well as more advertising revenue. It also credited its third-party marketplace, which is Walmart’s take on Amazon’s online business model. The online marketplace is made up of vendors who list items on Walmart’s website, which helps to expand the merchandise assortment and comes with a higher profit margin than selling online items directly.
Customers are also visiting Walmart’s website and app more often, Rainey said. The number of weekly active digital users grew more than 20%, he said on the company’s earnings call. The number of customers buying items on Walmart’s marketplace increased 14% in the second quarter, with double-digit growth across home, apparel and hard lines, a category that includes sports equipment and appliances.
Target has lagged behind in online sales. But it is making moves to try to turn around trends.
The retailer will roll out a remodel of its digital experience in the next three months, Target Chief Growth Officer Christina Hennington said on an earnings call Wednesday. She said the website will “include different landing experiences, more personalized content, enhanced search functionality, ease of navigation and other updates to bring more joy and convenience to our digital guests.”
Walmart, for its part, refreshed the look of its website and app in the spring.
Target will dangle another perk to attract more online business. Starting this summer, it is adding Starbucks drinks to curbside pickup at most stores.

Mixed reads on discretionary spending

For more than a year, Americans have generally shown reluctance to spring for new outfits, gadgets or other items that they can live without.
That’s made life harder for retailers, which rely on big-ticket and impulse-driven purchases to buoy sales. The merchandise tends to drive higher profits than selling the basics such as milk, bread and paper towels.
Rainey, Walmart’s CFO, pointed to signs that may be changing. He said there was “modest improvement” in discretionary goods in the second quarter, even though general merchandise sales still dropped by low double digits year over year. He said sales of blenders, hand mixers and other kitchen tools popped, as some consumers cook more at home.
Target didn’t see the same relief. Sales of frequency categories, such as food and beauty items, weren’t enough to offset weaker discretionary sales at the retailer.
Target’s Hennington said trends in discretionary categories “remain soft overall.” She pointed out some exceptions, including the popularity of a Taylor Swift vinyl and colorful Stanley tumblers designed with Chip and Joanna Gaines.
Both retailers, however, said they’re stocking up on essential items and placing more modest orders for discretionary stuff. Target, for instance, said at the end of the second quarter, its overall inventory levels fell year over year — but it intentionally reduced discretionary inventory even more.

Optimism vs. pessimism about what’s ahead

Retailers have plenty to worry about as food prices remain high, interest rates rise and student loan payments return.
But Walmart and Target struck contrasting tones when speaking about the months ahead.
Target CEO Cornell said sales trends improved in July, but not enough to keep the company from cutting its outlook for the year. When asked about back-to-school shopping, Cornell and Chief Financial Officer Michael Fiddelke stressed it was very early in the season.
Walmart hit a more confident note. On the earnings call, CEO Doug McMillon said general merchandise sales outperformed the company’s expectations. He said the popularity of GLP-1 drugs, medications such as Ozempic that are used for diabetes and weight loss, could also drive foot traffic and revenue going forward.
And, he added, “the trends we see in general merchandise sales make us feel more optimistic about those categories in the back half of the year.”
McMillon said back-to-school has gotten off to a better start than the company predicted. He said that spending tends to correlate with consumer spending later in the year — which could be a positive sign for the critical holiday season.
“Typically when back-to-school is strong, it bodes well with what happens with Halloween and Christmas and GM [general merchandise] in the back half,” he said.
Target shared similar hopes that customers will open up their wallets and reverse the retailer’s sales slump as the season of pumpkin spice and gift-giving approaches. It saw traffic and sales trends improve in July, which it credited in part to spending for the Fourth of July holiday.
“We know our guests want to celebrate culturally and seasonally relevant moments and will be leaning into those moments in a big way in the third quarter and the upcoming holiday season,” Hennington said. More