Business

Even with hits like “Avatar: The Way of Water,” movie theaters are struggling with empty seats and heavy debt loads.
Some theater CEOs remain optimistic that more upscale food and beverage offerings like flatbreads and cocktails will bring in more revenue.
Theaters generate significantly more profitability from concessions, with some large chains pulling in more than 40% of their revenue from food and beverage.

The AMC Empire 25 near Times Square is open as New York City’s cinemas reopen for the first time in a year following the coronavirus shutdown, on March 5, 2021.
Angela Weiss | AFP | Getty Images

Movie theaters have struggled to fill seats during the Covid pandemic, but some are facing another problem — what to do with their menus.
At many movie theaters, popcorn and soda appear alongside flatbreads, lobster grilled cheese and elaborate cocktails. But with loads of debt and a shortage of box-office winners, theater chains of all sizes have been forced to change menus and launch creative food initiatives to beef up revenue.

“The American consumer now is really demanding more than just a popcorn and a drink or nachos or candy,” said Rolando Rodriguez, chairman of the National Association of Theatre Owners and senior advisor at Marcus Theatres. “They’re really looking for experiences that they’re having for meals associated with watching the films. The expansion … on the food and beverage is absolutely a must.”
Since 2019, before the pandemic, the number of North American screens has fallen by more than 3,000, according to Comscore. Market research firm Mintel said just 54% of people had been to a theater between April and October 2022.
Mike Gallinari, senior travel and leisure analyst at Mintel, said people are more inclined to wait to see a movie, giving streaming services a leg up on theaters. This has forced some theaters to improve their food game.
“It is things like concessions and how that fits into a broader movie theater experience that really are things that movie theaters need to focus on and hammer in,” Gallinari said. “Not only is that the part of the experience they can control, but that’s more of the revenue they can control since movie theater box office [performances] are variable based on the movie.”

Not enough films

Theaters struggled to keep their doors open during the pandemic. Cineworld, which operates Regal Cinemas, filed for Chapter 11 bankruptcy protection in September, reporting $8.9 billion in net debt. Regal Cinemas will reject leases for 39 theaters beginning Feb. 15.

AMC Entertainment, the world’s largest movie theater chain, exited its third quarter with more than $5.3 billion in debt. AMC’s stock has fallen around 50% over the past 12 months. On Monday, the company announced it will change ticket pricing depending on seat location.
AMC, which operates dozens of AMC Dine-In Theaters, is unlikely to turn free cash flow positive until 2024, said Eric Wold, an analyst at B. Riley Securities.
Lack of content is the biggest problem for theaters, he added. Compared with 2019, there were 50% fewer films released in theaters last year, Wold said. Box-office sales were down more than 30%. He predicted the industry will not return to pre-pandemic film release numbers until 2025 due to delays and production backlogs.
To be sure, though, studios have been more specific about what films get shown in theaters, favoring blockbuster-style releases. “Avatar: The Way of Water,” which came out in December, and “Spider-Man: No Way Home,” released in late 2021, are among the 10 all-time highest-grossing films.

Tom Holland is Spider-Man in the Sony-Marvel film “Spider-Man: No Way Home.”

“A restaurant can open if it can get its hands on food and chefs. A theme park can open if it has electricity and people to run the rides. But if there are no films coming out, a movie theater can’t open and show whatever they want,” Wold said.
While contending with lower attendance, Marcus Theatres reduced menus at its Zaffiro’s, Reel Sizzle and Take Five Lounge concepts, as well as its Movie Tavern locations. Now, menus are mostly back to what they were pre-pandemic as consumer spend grew.
“There’s a kitchen in everybody’s house, but people still go out to eat,” Marcus CEO Greg Marcus said.
“At the end of the day, humans want to be amongst each other,” he said. “They want to get out. They don’t want to stay home and they don’t want to sit on their couch.”

The economics of concessions

Revenue from ticket sales is about a third larger than concessions sales, according to Wold. But theaters generate significantly more profitability from concessions than from ticket sales.
About half the money from ticket sales goes to studios, while theaters keep all concessions margins, which typically amount to more than 80%, Wold said. Marcus Theatres pulls in 44% of its total revenue from concessions, compared with 39% at Cinemark Theatres and 36% at AMC.
“No matter how great of a flatbread or how amazing of a cocktail a theater can make, if the movie is crummy, no one is going to come to the theater,” Wold said. “If you can create better food while someone is already there and give them an added reason to why they want to go to a theater to see a film … that definitely is a draw and can be an added revenue source.”
According to data from research firm EntTelligence, the average medium popcorn at domestic movie theaters is $8.14, while a medium drink runs for $6.20. Wold said these items typically have mid-90% margins.
For more upscale items, margins are significantly smaller, meaning theaters cannot do away with the classics, but instead seek incremental revenue from sandwiches or entrees.
“Throughout the pandemic, you’ve seen the average concessions per patron go up dramatically,” Wold said. “That’s a combination of getting more out of each patron through increasing the basket size of what they order at the counter, but also getting more people to the counter who otherwise would’ve skipped it.”
Prior to fourth-quarter earnings, Wold said theaters have not seen pressure on consumer concessions spending despite rate hikes. Concessions have been a “pretty recession-resilient segment,” he said.

A Cinemark employee serves popcorn to a customer at a concession stand at Cinemark’s Century 16 at the South Point Hotel & Casino on August 14, 2020 in Las Vegas, Nevada.
Ethan Miller | Getty Images News | Getty Images

Theaters with larger menus, however, face issues similar to those of restaurants, according to Mintel’s Gallinari, with some raising prices in response to increasing egg and meat prices. Some are adopting healthier food and bakery items, as well as partnering with local businesses.
“With movie theaters and concessions already having a reputation for being overpriced, being subject to the wills of the market in that way can really work against the movie theater’s favor,” Gallinari said.
Wold said theaters have used the pandemic to make concession sales more streamlined amid labor shortages. Pre-pandemic, some theaters adopted a dine-in model in which servers would bring food from a central kitchen to auditoriums, though many have shifted toward pick-up apps and reserved seating.
Marcus Theatres recently debuted an online ordering app that more efficiently handles large quantities of orders. He said the app has been more effective for upselling consumers and reducing lines.
“If you take a minute or two, minute and a half off the [ordering] process and multiply that times 15 million transactions, that is a meaningful number if you can figure out how to structure yourself from a labor perspective to move from order taking to just order fulfillment,” Marcus said.

Hungry for long-term success

With some menus exceeding 50 items, theaters have been more methodical about staffing and food preparation for slower and heavier nights, Wold said.
Some theaters, such as Dallas-based Studio Movie Grill, predict attendance weeks in advance.
“We’ve got enough history with enough analysis to say we know, whether it’s a horror movie or a romantic comedy, how they are going to perform based on national predictions and based on our particular locations,” said CEO Ted Croft.
Studio Movie Grill, which takes orders at customers’ seats, recently shortened menus to focus on burgers, pizzas and alcoholic beverages, which the team can execute quickly to accommodate at times more than 1,000 seats. About 25% of the overall field team is back-of-house kitchen staff, Croft said.
After bringing operating hours back to pre-pandemic levels — and introducing themed drinks for films like “Black Panther: Wakanda Forever” — Croft said per-person concessions averages continue increasing.
“The fact that we are outperforming pre-pandemic key performance indicators gives us a lot more confidence that if we just get more movies, we’re going to continue to grow,” Croft said.

Angela Bassett stars as Queen Ramonda in Marvel’s “Black Panther: Wakanda Forever.”

Rich Daughtridge, president and CEO of Maryland-based Warehouse Cinemas, noticed a similar trend. He said about two-thirds of staff at the theater’s locations are in the kitchen or behind the concessions, preparing gourmet grilled cheeses, hot dogs with homemade beer cheese, and classics like nachos and a seasonal popcorn mix.
Daughtridge said the menu stays away from more perishable and lower-margin items such as steak or seafood.
There is a selection of craft cocktails and 32 craft beers and ciders on tap at its self-serve beer wall. This month, the theater will offer a themed cocktail for the movie “Winnie the Pooh: Blood and Honey.”
“Hollywood creates great stories, and it’s our job to make sure our products, the sound, the picture, the seat, all those things together are something that they desire as a big-screen event,” said Daughtridge, who is also president of the Independent Cinema Alliance.
Cinépolis, a Mexican theater chain with 25 U.S. locations, updates its menu twice yearly and serves lobster tacos and truffle mushroom pizza, among other nontraditional theater munchies.
For an advanced screening of the bloody culinary satire “The Menu,” Cinépolis launched its “Movie and a Meal” initiative to curate seasonal specials with the film. The company will be doing another iteration for “Cocaine Bear,” featuring two drinks, two appetizers, a main course and a dessert.
“As our founder used to say back in Mexico, we build theaters to sell food,” said CEO Luis Olloqui.
– CNBC’s Sarah Whitten contributed reporting.
Disclosure: “Cocaine Bear” is being distributed by Universal Pictures, which is part of CNBC’s parent company, NBCUniversal.
Clarification: This story has been updated to clarify that AMC Entertainment exited its third quarter with more than $5.3 billion in debt.

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Near the bay in Mountain View, California, sits one of biggest profit pools in business history. The site is the home of Google, whose search engine has for the past two decades been humanity’s preferred front door to the internet—and advertisers’ preferred front door to humanity. Every second of every day, Google processes perhaps 100,000 web searches around the world—and, thanks to its “PageRank” algorithm, serves up uncannily relevant answers. That has conferred onto Google verb status. It also adds up to billions of daily opportunities to sell ads that the searchers see alongside the results of their queries. The results’ accuracy keeps users coming back, and rivals at bay: all other search engines combined account for barely a tenth of daily searchers (see chart 1). Advertisers pay handsomely for access to Google’s users, not least because they are typically only charged when someone actually visits their website. The revenue of Google’s parent company, now called Alphabet, has grown at an average annual rate of over 20% since 2011. In that period it has generated more than $300bn in cash after operating expenses (see chart 2), the bulk of it from search. Its market value has more than trebled, to $1.4trn, making it the world’s fourth-most-valuable public company. Unlike Apple and Microsoft, its bigger middle-aged tech rivals, it has not felt the need to reinvent itself. Until now.The reason for the soul-searching in Mountain View is ChatGPT, an artificially intelligent chatbot designed by a startup called OpenAI. Besides being able to have a human-like conversation, ChatGPt and others like it More

Some regional banks are testing out branches on wheels to bring financial services to areas with limited access to brick-and-mortar banks.
Banking deserts have made financial access worse in Black communities where individuals are statistically the most unbanked and underbanked in the U.S.
“A physical branch is the solution. The mobile branch is a temporary thing,” said a spokesperson for a New York bank on wheels.

A banking van for the Lower East Side People’s Federal Credit Union parked on the curb of West Tremont Avenue in The Bronx.
Rebecca Picciotto | CNBC

NEW YORK – Parked on the curb of West Tremont Avenue in the Bronx, amid a chain of sedans and minivans, there is sometimes a bank on wheels.
The Lower East Side People’s Federal Credit Union, a nonprofit that provides banking services to New York’s financially underserved neighborhoods, launched its mobile branch in a refurbished school bus in 2014 following the devastation of superstorm Sandy, which forced the closure of its brick-and-mortar branch. It has since upgraded to a specially designed Mercedes-Benz van that serves New York’s Lower East Side, East Harlem, the Bronx and Staten Island, partnering with community groups in the boroughs.

The van provides most of the services of a traditional bank like opening a savings or checking account, securing loans and providing financial advice. It does not, however, have an ATM due to the security risks that come with storing cash in a vehicle.
Banks on wheels are an attempt to repair the gaps within the U.S. banking landscape, which disproportionately impact Black and Hispanic communities. According to a 2022 Federal Reserve report, 40% of Black individuals are unbanked and underbanked, the highest of any racial demographic in the U.S. They are followed by Hispanic individuals, 29% of whom are either unbanked or underbanked.
Adults are considered unbanked if they do not have a bank account and rely exclusively on alternative financial services that charge high fees like check cashing, payday loans, pawn shop loans, as some examples. Underbanked means one has a bank account but still partially relies on alternative financing.
To be sure, the number of unbanked individuals has seen yearly declines, coming down to 4.5% in 2021 compared to 8.2% in 2011, according to a 2021 report from the Federal Deposit Insurance Corporation. That decline correlated with a rise in online banking usage, one of the primary drivers of brick-and-mortar consolidation.
But given existing digital divides, if online banking fully replaces access to in-person branches, financial equity in the U.S. would remain under threat.

Banks on wheels aim to offer at least a partial solution to the increasingly deserted banking landscapes in minority communities. But even the people driving the efforts do not see them as a permanent fix.
“A physical branch is the solution. The mobile branch is a temporary thing to try and build up the physical branch – to build up membership and to build up partners,” said Alicia Portada, a spokesperson for the FCU.
Still, Portada cannot ignore the value of the mobile branches as credit unions and banks shut down faster than they open annually: “It is absolutely needed to have other options.”
BankonBuffalo, a regional bank located in Buffalo, New York, debuted its own bank on wheels this winter.
Darnell Haywood, community responsibility officer at BankonBuffalo, said that at one point, Buffalo had a bank “on every other corner within the city.” Now, Haywood describes an emptier banking landscape. The nearest bank branch is more than two miles from the city center, which, he notes particularly impacts the area’s Black and brown residents.
“When you think of Black and brown communities when it comes to banking, when it comes to anything regarding finances, the No. 1 reason why they may not have financial knowledge is because they’re not privy to access,” said Haywood. BankonBuffalo’s mobile branch is an attempt to bridge those access gaps.
Banking deserts

Employees inside the bank on wheels of Lower East Side People’s Federal Credit Union help a new customer discuss her credit and lending options
Rebecca Picciotto | CNBC

On a chilly January day in the Bronx, the FCU mobile branch had no pre-booked appointments but was ready to accept walk-ins. It was parked outside the University Neighborhood Housing Program Resource Center, an affordable-housing nonprofit. The mobile branch partners with a variety of nonprofits like the UNHP.
A UNHP member, who did not provide her name, entered the resource center office in the midafternoon. As she chatted with Jumelia Abrahamson, a UNHP director, she also met one of the LES People’s FCU representatives, Cristal Veras. After a quick conversation with Veras, she entered the mobile branch to learn more.
Inside the van, there were two small employee desks, a laminate bench for clients to wait for service and a couple of filing cabinets. It took some maneuvering for the customer to navigate the narrow aisle of the vehicle. Then she found a seat across from Gian Alvarado, the bank’s marketing and outreach specialist, who walked her through her lending and credit options. After consulting with Alvarado for roughly a half hour, the customer exited the bank on wheels, having applied for a $12,000 loan.
Historically, banks on wheels tend to make their appearance after disasters like Hurricane Katrina or public health crises, when brick-and-mortar branches are forced to pause operations. In 2022, the Lower East Side FCU mobile branch saw membership grow even higher than it had during the earlier days of the Covid pandemic, according to Portada, the FCU spokesperson.
And as online banking takes off, boosted by the pandemic, more brick-and-mortar locations are closing their doors. In 2021, U.S. bank closures reached a record high. That trend has made a lack of access to banks more than a temporary problem.
Bank deserts are any areas where there are no bank branches within 10 miles of its center, according to the U.S. Census Bureau. To be sure, many areas that do not meet that formal criteria still lack considerable access to financial services.
Nearly 10% of all U.S. bank branches shut down between 2017 and 2021 – one-third of those closures were in majority-minority and low- to moderate-income neighborhoods, according to a report from the National Community Reinvestment Coalition. When the pandemic began in March 2020, the closure rate doubled from 99 to 201 per month.
The acceleration of bank closures has only worsened preexisting gaps in Black and minority neighborhoods.
The Bronx, for example, which is predominantly populated by Hispanic and Black residents, has the fewest bank branches per household of any New York borough, according to the Association for Neighborhood & Housing Development. The borough currently has 123 bank branches, according to a national bank branch location database, down from 144 in 2018.
A Brookings analysis found that in 2017, Black-majority ZIP codes nationwide had substantially less banking competition than non-majority-Black ZIP codes, meaning that there were fewer bank branches within those areas. Less banking competition often leads to higher interest rates and lower saving rates for customers.
The racial divides of the banking landscape are especially visible in Baltimore.

Arrows pointing outwards

A data map from the Urban Institute highlighting the butterfly-like distribution of residents in Baltimore, Maryland based on race or ethnicity.
The Urban Institute

Lawrence Brown, a researcher of racial equity and author of “The Black Butterfly: The Harmful Politics of Race and Space in America,” has analyzed geographic data of the city to outline what he coined a “Black butterfly.” That is, Baltimore is composed of a “white spine” — an affluent, predominantly white strip running down the center of the city — with “Black wings” where less developed, predominantly Black neighborhoods are concentrated.
Baltimore’s Black butterfly corresponds with which parts of the city receive investment, and, consequently, where banks are incentivized to keep doors open. For example, in Baltimore’s Roland Park, a predominantly white residential community, there are four banks on the same side of the street within one corner.

Arrows pointing outwards

“But there are large areas, predominantly occupied by Black Baltimoreans, where they have no bank, no loan officer that they can sit down and talk to,” said Brown.
Though banking deserts are on the rise in the wake of the pandemic, lack of access to financial services in Black-majority neighborhoods is not a new phenomenon.
A brief history of banking while Black in America
The fact that banking access is disproportionately limited in Black-majority neighborhoods is, in part, a lingering effect of 20th century redlining policies, according to Brown.
After the stock market crash of 1929 and the ensuing Great Depression, the federal government created the Federal Home Loan Bank system to provide loans for housing development.
“The federal government turns the banking system into a system that redlines Black neighborhoods,” said Brown.
The FHLB provided economic development loans based on maps that outlined Black areas in red, pointing to where loan officers were to limit resources. A similar practice was conducted for Federal Housing Administration loans.
In the latter half of the 20th century, the federal government officially outlawed redlining. In 1977, Congress passed the Community Reinvestment Act, which said that banks must start lending in minority and low-income neighborhoods. According to Brown, it was not a total fix.
“Now these neighborhoods have banking institutions, but they’re receiving predatory loans. So it’s not quite the same and as it evolves, it is still having these very racialized predatory impacts,” said Brown.  
’13 generations behind’
Rashida Webb is a Black business owner who runs Salon Rx, a beauty salon in south Baltimore. When she sought seed money to start her business, she knew a traditional bank loan wouldn’t be an option. Loan officers had regularly told her that her debt, a product of her student loans, is too high.
“Well, of course. Because I’m a Black American. I’m 13 generations behind other people in this country so it’s going to be different for me,” said Webb. To get her business off the ground, she resorted to payday loans of a couple thousand dollars with roughly 17% interest rates.
“Stuff like that sometimes has to be an option when you have to put money down on a place or buy supplies,” Webb added. “And even though I’m able to pay off this predatory loan, a bank won’t give me the money because their criteria is your debt-to-income ratio. And if you’re a Black American, most likely your debt-to-income ratio is high for reasons that are out of your control.”
Given how many times Webb has been denied a loan from traditional banking institutions, she said she does not trust them. While she has not heard of mobile branches in her area, Webb said she would “definitely use a bank on wheels,” if it was properly regulated and evaluated one’s eligibility for loans on a more individualized basis.
Webb is not the only Black entrepreneur who has had to rely on alternative financing methods to launch a small business.

Arrows pointing outwards

A data map by the Urban Institute depicting the size of small business loans in households in Baltimore, Maryland from 2011 to 2016.
The Urban Institute

Dwight Campbell, who co-owns Baltimore plant-based ice cream purveyor Cajou Creamery, used what he calls “out-of-the-box” funding strategies.
Campbell and his wife, Nicole Foster, who runs the business with him, launched a Kickstarter campaign to fund their first machine but otherwise paid for everything out of pocket to launch their business while working full-time jobs. Campbell and Foster now run their ice cream business full time but are still looking for alternative ways to raise money to fund expansion.
“The space for Black capital is very small. It’s like you’re in a museum, but the only space you have is a broom closet,” said Campbell. “There’s no doors open for capital unless it’s very, very expensive money.”
Foster has not personally heard of banks on wheels in Baltimore, but she finds banking that emphasizes community relationships appealing. She said that given the purpose of banks on wheels to bridge financial access in underserved communities, it could have been helpful in the early days of Cajou Creamery.
“Had that existed, I think it’s something we would have tapped into,” said Foster. “If we find one now even, it might be something we tap into.”

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Fox said its advertising revenue increased 4% thanks in part to the men’s World Cup and the NFL, as well as political ads during the midterm elections.
Fox will air the Super Bowl on Sunday. Executives said its advertising spots were sold out and will be a record in terms of total revenue.
Last month, Rupert Murdoch called off the proposed merger of Fox and News Corp.

Striker, The U.S. Soccer Star balloon from Fox Sports is waked in the 2022 Macys Thanksgiving Day Parade past Columbus Circle in honor of the U.S. Mens National Team competing in the 2022 FIFA World Cup in Qatar on November 24, 2022 in New York City.
Ira L. Black | Getty Images

Fox Corp said Wednesday it will rake in a record amount of Super Bowl ad revenue as it reported a boost in its fiscal second quarter results.
The strong quarter was due in large part to a sports event slate that included the men’s World Cup and NFL Sunday games. Class A shares of the company rose about 5% on Wednesday.

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The company said its advertising revenue during the quarter increased 4%, attributing it to live events like the Qatar World Cup, which aired during November and December. Ad revenue also got a boost from political advertising due to the midterm elections, as well as Fox’s free ad-supported streamer Tubi. 
The positive advertising picture came as the industry has been contending with a challenging advertising market. In recent months, major media companies like Paramount Global and Warner Bros. Discovery, which have portfolios of entertainment cable-TV channels in addition to sports and news outlets, have warned of the worsening ad market weighing on their businesses. 
NFL and college football games helped drive ratings and advertising revenue, Fox executives said Wednesday. 
Fox CEO Lachlan Murdoch said Wednesday the company hasn’t been seeing the soft advertising market that its peers have described in recent months. Instead, he said, they see the market being “fluid and money coming in late,” but Fox is still hitting goals and revenue targets, attributing it to their portfolio of live sports and news.
The company’s broadcast network will air the Super Bowl on Sunday, which is known to be the marquee event for advertisers. Murdoch said Wednesday it will be a record Super Bowl for the company with about $600 million in gross advertising revenue coming in.

“The money came in late for Super Bowl advertising, so we had some nervous moments,” Murdoch said. “But it will be a record Super Bowl for us in terms of total revenue and what we achieved for each spot.”

Stock chart icon

Fox A class shares performance

Fox has said its sold out on commercial spots for the Super Bowl, with peak prices at more than $7 million for 30-second spots. 
Fox said its fiscal second quarter revenue increased 4% to $4.61 billion compared to the same period last year. 
Murdoch said on a call with investors Wednesday that the company has “flourished” since spinning off its entertainment assets to Disney, as its focused on live sports and news. 
The company’s free streaming service, Tubi, continued to be a bright spot as Fox’s answer to the streaming wars. Tubi saw a 25% increase in ad revenue during the quarter, and a rise in viewership, with December being its highest viewership and engagement month ever. Murdoch said the company would continue to invest and grow Tubi, noting it requires minimal investment compared to its peers in the streaming space.
On Wednesday, Murdoch also briefly addressed that he and his father called off the proposed merger between Fox and News Corp in recent weeks after determining it wasn’t an optimal time for the combination to take place. He added that the rationale behind the deal was about scale, flexibility and synergies.
Murdoch added that the company is open to potential mergers and acquisitions opportunities. “We don’t have anything on the table today, but I think we are in a strong position,” Murdoch said.

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Check out the companies making headlines in premarket trading.

Uber said it is “currently responding to a cybersecurity incident” after reports that a hacker compromised its systems.
Rafael Henrique | Sopa Images | Lightrocket | Getty Images

Uber — The ride-hailing app’s shares rose more than 7% after it posted fourth-quarter earnings that topped analyst estimates. Uber earned 29 cents a share, beating analysts’ estimate of an 18 cent loss, Refinitiv data showed. Uber’s revenue for the quarter was up 49% year-over-year. CEO Dara Khosrowshahi said Uber ended 2022 with its “strongest quarter ever,” capping off its “strongest year.”

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an hour ago

Chipotle Mexican Grill — Shares of the fast casual restaurant chain fell more than 5% on the back of disappointing quarterly results. Chipotle said it saw customers pull back on their restaurant spending during the fourth quarter. “As we got around the holidays, we just didn’t see that pop, that momentum, that we normally see,” CFO Jack Hartung said on a conference call.
Microsoft — The Xbox maker rose 1.6% after it released a new AI-powered homepage for its Bing search engine.
Lumen Technologies  — The cloud network data company lost 17% premarket after reporting a fourth quarter loss of $3.1 billion (including a $3.3 billion goodwill writedown), and adjusted EPS of 43 cents vs 51c a year ago. This year’s adjusted earnings guidance missed StreetAccount estimates.
Fortinet — The cybersecurity company’s shares rose 11% after it beat analysts’ estimates in the most recent quarter by five cents a share, according to StreetAccount.
Under Armour — The athletic apparel retailer jumped nearly 8% after fiscal third-quarter earnings beat expectations. Under Armour earned adjusted EPS of 16 cents vs a StreetAccount estimate of 9 cents. Revenue also topped estimates.

TripAdvisor — The online travel company’s stock jumped 5% after Bank of America double upgraded it to buy. The bank anticipates upside of almost 60% for TripAdvisor as consumers book more travel.
Enphase Energy — The solar company rose 8.5% after it posted fourth quarter adjusted earnings of $1.51 per share vs a $1.27 estimate, on revenue of $725 million against a $707 million estimate, according to StreetAccount.
Illumina — Shares of the biotechnology company dropped almost 3% on fourth-quarter earnings showing quarterly revenue of $1.08 billion, down 10% year-over-year.
— CNBC’s Fred Imbert, Tanaya Macheel, contributed reporting

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Under Armour posted $1.58 billion in revenue and an adjusted 16 cents earnings per share, beating Wall Street’s expectations.
The athletic apparel company is still contending with a glut in inventory that’s up slightly from its previous quarter and 50% year-over-year.
The retailer, known for its signature moisture-wicking shirt, also raised its earnings guidance for the fiscal year.

Under Armour shoes are seen inside of a store on November 03, 2021 in Houston, Texas.
Brandon Bell | Getty Images

Under Armour reported holiday quarter earnings Wednesday that beat Wall Street’s expectations, but the retailer is contending with a growing inventory glut that heavy promotions and discounting failed to alleviate.
The company’s stock rose in light pre-market trading.

Despite the inventory challenges, the athletic apparel company raised its earnings outlook for the fiscal year. It now expects to see per share earnings 52 cents to 56 cents, compared to the previously expected range of 44 cents to 48 cents.
Here’s how Under Armour did in its fiscal third quarter compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

Earnings per share: 16 cents adjusted vs. 9 cents expected
Revenue: $1.58 billion vs. $1.55 billion expected

The company’s reported net income for the three-month period that ended Dec. 31 was $121.62 million, compared with $109.66 million a year earlier. Sales rose to $1.58 billion, compared to $1.53 billion a year earlier.
Like other retailers, the athletic apparel company has been grappling with an inventory glut brought on by supply chain woes and shifting trends in consumer demand. During its fiscal third quarter, Under Armour’s inventory was up 50% year-over-year. Despite heavy promotions and discounting during its crucial holiday quarter, inventory was up slightly from its previous quarter.
Promotions and discounts continued to cut into Under Armour’s margins, which declined 6.5% compared to the prior year period.

The company saw a 7% jump in wholesale revenue and a decline in its direct-to-consumer sales.
While sales were down 9% in Asia, Under Armour saw big gains internationally. Revenue increased 45% in Latin America and 32% in Europe, the Middle East and Africa.
A 2% decline in apparel, which accounts for the majority of Under Armour’s sales, was offset by a 25% jump in footwear revenue.
In December, the company announced former Marriott executive Stephanie Linnartz would be taking over as CEO and starting in the role on Feb. 27. Colin Browne has been serving as interim CEO since June after the retailer’s previous top executive, Patrik Frisk, unexpectedly resigned in May.
Under Armour has been working to build out its e-commerce operations and is banking on Linnartz’s experience leading Marriott’s multibillion-dollar digital transformation to accelerate the company’s digital initiatives. 
E-commerce sales increased 4% in the quarter and accounted for 36% of Under Armour’s total DTC revenue.
Read the full earnings release here.

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In 2022, the sporting goods business had an estimated market size of $67.2 billion and was enjoying its ranking as one of the fastest-growing industries in the U.S. since 2018. The most significant player in the space, Dick’s Sporting Goods, controls an estimated 14.2% of the market, the most by a single company.
In 2021, Dick’s posted a record annual revenue, hitting $12.3 billion, and its net income tripled as it pivoted its distribution strategy during the pandemic.

Dick’s looks to sustain its record growth under CEO Lauren Hobart, the first nonfamily business chief in the company’s history, with a focus on technology as it navigates tough competition in the sporting goods e-commerce space. 

To compete, survive and thrive in today’s environment, technology is an important part for a retailer. If you haven’t invested in technology over the last 10 years, you’ll probably have a tough time.

Executive Chairman

Dick’s Sporting Goods was founded in 1948 by 18-year-old Dick Stack who had just $300 in his pocket when he opened his first store. At the time, it was a simple bait and tackle shop that later expanded to work clothes, sportswear, equipment, camping gear and picnic supplies. Still, expansion was slow to take hold, with nearly two decades passing before the second Dick’s store opened.
It wasn’t until the 1970s and 1980s when business started to take off, when Ed Stack, Dick’s son, bought the company. In the 1990s, the company expanded its offerings to include more sports, outdoor equipment, apparel and footwear, and by 1996, there were 50 Dick’s Sporting Goods stores.  
Dick’s went public in 2002, with 141 stores across 25 states. During the early 2000s, competitors like Sports Authority emerged as the sporting goods segment grew in popularity as sports participation became a big part of the business. 
Sports Authority, it biggest rival at the time, had 221 more stores than Dick’s and generated more revenue. But Dick’s saw consistent revenue and net income growth as the company grew its reach with more stores.

Improving operating margins was vital to the company’s sustained success, and eventually Dick’s topped Sports Authority in size — overtaking the once king of sporting goods retail in 2005.
Dick’s went on a spending spree from 2004 to 2007; it acquired Galyan’s Trading Company, Golf Galaxy, and Chick’s Sporting Goods. That expansion boosted the company’s footprint from 234 stores to nearly 487 in 2008. From 2008 to 2014, revenue jumped almost 65%.
While Dick’s Sporting Goods was expanding, its archrival Sports Authority was on the verge of collapse. The company began selling its assets to former competitors, primarily Dick’s, in 2016.
Dick’s purchased Sports Authority’s IP that year which proved to be a boon to its e-commerce business thanks to the 28.5 million loyalty program members associated with the IP, and an estimated 114 million customer files, including emails, addresses and transaction-history data. 
Since 2017, Dick’s has prioritized its investments in e-commerce amid a changing landscape following the bankruptcy and closing of Sports Authority, and with the slowing of its own same-store sales. It launched dicks.com that year and saw sales jump 17% to $1.2 billion year over year. 
Heavy investment into e-commerce has paid off in a big way for the company. In 2021, sales reaching $12.3 billion, a 46% increase from 2018.
During the pandemic nearly 70% of online orders were fulfilled directly by stores through curbside orders. A pioneer in the service, Dick’s made it possible for customers to place their orders online and drive to pick them up at a place outside the store. The practice also allowed the company to offload its massive inventory at a time when stores were subject to lockdowns.
In addition, Dick’s has invested in establishing itself as an omnichannel, which has enabled nearly 900 stores across the U.S. to operate as distribution centers for e-commerce and has made for more efficient stocking of customer orders. 
Dick’s Sporting Goods’ momentum continued well into 2021 as the company set new records. Revenue grew nearly 30%, net income nearly tripled, and Wall Street was paying attention.
Share prices shot up to record heights, peaking at $145.19 on Oct. 30 that year. Then, in the third quarter of 2002, net sales increased 7.7% year over year — and were over 50% higher than 2019.
Analysts noted that the company, under Hobart, the new CEO, was continuing its strong performance with high-quality product lineups, and a focus on the future that included expanding in-house brands, developing its e-commerce network and widening margins.

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Yum Brands topped Wall Street’s estimates for its quarterly earnings and revenue.
Taco Bell outperformed analysts’ expectations, but weak sales in China hurt Pizza Hut and KFC.
Pizza Hut’s U.S. same-store sales rose 4%, a sign that consumers have recovered from last year’s pizza fatigue.

Signage is displayed outside a Yum! Brands Inc. Taco Bell and Kentucky Fried Chicken (KFC) restaurant in Louisville, Kentucky, U.S., on Thursday, Jan. 30, 2020.
Luke Sharrett | Bloomberg | Getty Images

Yum Brands on Wednesday reported quarterly earnings and revenue that topped analysts’ expectations, fueled by strong same-store sales growth at Taco Bell.
Overall, the restaurant giant saw strong U.S. demand for its food, but weak sales in China once again weighed on KFC’s and Pizza Hut’s results. After the Chinese government relaxed its zero Covid policy, a wave of new outbreaks has hit the country, hurting recovery for Yum and other restaurant companies, like Starbucks.

Here’s what Yum reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

Earnings per share: $1.31 adjusted vs. $1.26 expected
Revenue: $2.02 billion vs. $1.92 billion expected

Yum reported fourth-quarter net income of $371 million, or $1.29 per share, up from $330 million, or $1.11 per share, a year earlier.
Excluding expenses tied to its decision to exit Russia and other items, the company earned $1.31 cents per share.
Net sales rose 7% to $2.02 billion. The company’s global same-store sales increased 6% in the quarter, driven by diners’ strong appetite for Taco Bell.
Taco Bell, which is typically the strongest performer in Yum’s portfolio, reported same-store sales growth of 11%, beating StreetAccount estimates of 6.7%. Most of the Mexican-inspired chain’s locations are in the U.S., although it’s been expanding internationally in recent years.

KFC fell short of Wall Street’s expectations as weak performance in China weighed on its results. The fried chicken chain reported same-store sales growth of 5%, just shy of estimates of 5.4%. Excluding China, its largest market, KFC’s same-store sales increased 9%.
Weak sales in China also hurt Pizza Hut’s fourth-quarter performance. The pizza chain’s global same-store sales ticked up 1%, but its international same-store sales fell by 1%. Pizza Hut’s U.S. same-store sales rose 4%, a sign that consumers have recovered from last year’s pizza fatigue after over-ordering pies during Covid lockdowns.
The Habit Burger Grill, Yum’s latest addition, said sales at locations open at least a year shrank 1% in the quarter. However, its system sales, which tracks transactions at all of the chain’s restaurants rather than at only locations that have been open 12 months, climbed 12%, thanks to Yum’s rapid expansion of the chain.
Shares of the company rose less than 1% in premarket trading.
Read the full Yum Brands earnings report here.

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