Business

Bed Bath & Beyond has been in discussions with lenders as it tries to nail down financing that would keep it afloat during a likely bankruptcy filing, according to people familiar with the matter.
The company is also running a sale process in hopes of selling its home goods chain of stores, as well as its Buybuy Baby banner, the people said.
Interested buyers include Sycamore Partners and Authentic Brands, they added.

A “Store Closing” banner on a Bed Bath & Beyond store in Farmingdale, New York, on Friday, Jan. 6, 2023.
Johnny Milano | Bloomberg | Getty Images

Bed Bath & Beyond has been in discussions with prospective buyers and lenders as it works to keep its business afloat during a likely bankruptcy filing, according to people familiar with the matter.
The retailer is in the midst a sale process in hopes of finding a buyer that would keep the doors open for both of its major chains, its namesake banner and Buybuy Baby, said the people, who weren’t authorized to discuss the matter publicly.

At the same time, Bed Bath has also been looking for a lender to provide financing that would keep the company going if it were to file for bankruptcy protection in the coming weeks, the people said.
A Bed Bath spokeswoman said Wednesday the company doesn’t comment on specific relationships but has been working with strategic advisers to evaluate all paths to regain market share and enhance liquidity.
“Multiple paths are being explored and we are determining our next steps thoroughly, and in a timely manner,” the spokeswoman said, declining to comment further.

A representative for AlixPartners, which CNBC recently reported was hired as the company’s advisor, declined to comment.
Earlier this month Bed Bath warned it may need to file for bankruptcy after its turnaround plans failed to substantially boost sales and repair its balance sheet. The company reported net losses that exceed $1.12 billion for the first nine months of the fiscal year. It’s blown through its liquidity in recent months, shouldered a heavy debt load, and faced strained relationships with its suppliers.

Comparable sales declined 32% year over year in the most recent fiscal quarter, ended Nov. 26. Company leaders said the company has had a harder time keeping shelves stocked, as vendors change payment terms or decide not to ship merchandise because of the retailer’s financial challenges.
Last week, CNBC reported Bed Bath had begun another round of layoffs in an attempt to further cut costs. The company had about 32,000 employees as of Feb. 26, 2022, according to public filings.
The company has been working to find a route that sees its chains survive, the people added. A day before Bed Bath issued a “going concern” warning, it announced in an employee memo that it had hired Shawn Hummell, a former Macy’s executive, to lead its namesake brand’s retail, store operations and merchandising operations as senior vice president of stores. Prior to his time at Macy’s, Hummell worked for Abercrombie & Fitch, another retailer that underwent a turnaround.
One possible buyer circling Bed Bath is private equity firm Sycamore Partners, according to the people familiar with the discussions. Sycamore is particularly interested in Buybuy Baby, Bed Bath’s banner for infants and toddlers, which has outperformed the broader company. Buybuy Baby has been deemed most likely to survive going forward, the people said.
Still, a sale of Bed Bath as a whole remains on the table — albeit with a much smaller footprint of stores than it currently has, the people said.
Sycamore is known for acquiring retailers, like women’s apparel chain Talbots, including distressed companies that have sought bankruptcy attention like Ascena’s Ann Taylor. A Sycamore Partners spokesperson declined to comment. Dealbook previously reported Sycamore’s interest in Buybuy Baby.
Bed Bath has also drawn interest from companies that acquire the intellectual property, or brands, of companies, particularly those under distress, the people said. Authentic Brands, which has frequented many bankruptcy-run sales for retailers like Forever 21, has also been looking at Bed Bath, the people said. A representative for Authentic Brands declined to comment.
Short of a sale, the company and its advisors have been looking to nail down additional financing for a bankruptcy filing, which could occur in the coming weeks, the people said. The company’s advisors are looking for a loan of at least $100 million, one of the people said.
Last year, Bed Bath received $375 million in new funding from lender Sixth Street Partners, which has provided financing to other retailers like J.C. Penney and Designer Brands.
Sixth Street’s facility could be converted into bankruptcy financing, the people said, or the lender or others could convert their debt to equity and become Bed Bath’s owner. A representative for Sixth Street declined to comment.
Bed Bath’s financing strategy comes as fellow retailer Party City sought Chapter 11 protection this week. Also with a hefty debt load, Party City is looking to restructure its balance sheet and move forward with a smaller footprint.
Bankruptcy attorney Eric Snyder from law firm Wilk Auslander said a sale was unrealistic for Bed Bath due to its declining sales and inventory, as well as its expanded losses.
“They don’t have the availability to right the ship, and they don’t have the cash to continue to operate,” Snyder said. “I just don’t see any other option other than a bankruptcy and a liquidation.”
—CNBC’s Melissa Repko contributed to this report.

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State of Freight

DHL Supply Chain is investing heavily in North American e-commerce operations.
The retail holiday sales data for 2022 was a disappointment, but DHL said it is “continuing to see large growth in e-commerce.”
Categories including autos, engineering, manufacturing, and high-end consumer goods are doing well.
Core consumer retail may rebound in the mid-to-late second quarter, DHL’s head for North America tells CNBC.

The market did not like what it saw from the final retail holiday sales numbers for 2022 which sets up a tough year for retailers, but e-commerce is continuing to boom, including in areas outside the core retail consumer.
Trucking data shared by DHL with CNBC shows that while the core consumer market has pulled back, in many categories e-commerce sales remain strong.

“E-commerce is continuing to boom,” said Jim Monkmeyer, president of transportation for DHL Supply Chain, North America.
DHL described large growth in e-commerce and the logistics company is investing heavily in that segment.
“I would say the other spaces that are still growing fairly rapidly for us are automotive and high engineering, manufacturing as well as high-end consumer goods and spirits. Food products and life sciences areas are also doing well,” Monkmeyer said.
Amid weak holiday sales year over year, it was online and nonstore sales that saw the biggest year-over-year gains, jumping 9.5% during the holiday season, according to the National Retail Federation data released on Wednesday.
But Monkmeyer said DHL is seeing a continued downturn of the core retail consumer, with the near-record inventories a stark reminder of the pullback. As a result, more retailers are slashing prices to get rid of their inventory.

Arrows pointing outwards

In December, Scott Sureddin, CEO of DHL Supply Chain, told CNBC he anticipated more discounts post-holiday. “I have never seen inventory levels like this and after the first of the year, retailers can’t continue to sit on this inventory so the discounts they’ve been pushing will have to continue,” he said.
Inflation is one of the reasons behind frugal consumer holiday spending.
Retail sales data released on Wednesday showed a decline of 1.1% in December, slightly more than the 1% forecast, reflecting tepid consumer demand during the holiday shopping season.
The holiday sales period was facing difficult annual comparisons given the Covid boom, and Monkmeyer is confident there will be a turnaround as supply chain inflationary pressures, such as freight rates, fall back below pandemic peak levels. Recent inflation readings, both the Consumer Price Index and Producer Price Index, have provided confirmation of inflation easing.
“I think we’ll see the turning point come sometime in mid to late second quarter,” he said. “The cost of the ocean containers moving from $20,000 a container to $3,000 will drive down costs to a lot of different products. And on top of that, you have fuel costs coming down, and they’re projected to continue to go down slowly but steadily for the rest of this year. I think consumers will notice that right away and we will hopefully get back to some of that spending that we were seeing in the last two years.” More

Marvel Cinematic Universe movies will return to China in February for the first time in nearly four years.
“Black Panther: Wakanda Forever” will hit Chinese theaters on Feb. 7 and “Ant-Man and the Wasp: Quantumania” will arrive on Feb. 17.
Box office analysts worry piracy and Covid could hurt the movies’ grosses in China

Marvel Studios’ “Ant-Man and the Wasp: Quantumania.”

Marvel films are returning to China in February, marking the first time in nearly four years that Disney’s comic book cinematic universe landed a release in the country.
“Black Panther: Wakanda Forever” will hit Chinese theaters on Feb. 7, and “Ant-Man and the Wasp: Quantumania” will arrive Feb. 17. The reopening of the Chinese market is likely a boon for Disney in the long term, but box office analysts worry these upcoming February releases may not provide substantial ticket sales due to online piracy and a recent Covid surge.

China has been a crucial distribution hub for Hollywood blockbusters, especially those connected to the Marvel Cinematic Universe. Since 2012′s “The Avengers,” China has been the second-highest-grossing box office market for all Marvel movies, just behind the U.S. and Canada.
“It’s a welcome dose of positive news for Disney and the industry as a whole considering how much money has been left on the table without China releases for recent Marvel films,” said Shawn Robbins, chief analyst at BoxOffice.com. “Global releases can’t truly be global when such a major market is absent.”
The last Marvel film to open in China was 2019’s “Spider-Man: Far From Home.” The de facto ban started in 2021, when “Shang-Chi and the Legend of the Ten Rings” became the first film in the MCU not to be granted approval for distribution in the country, and only the second not to be released in the region. The underlying controversy stemmed from the film’s casting and the perception of the comic book series that “Shang-Chi” is based on.
The 2021 release of “Black Widow,” coincided with a blackout period in China in which the country leaves theaters open for local productions and boxes out foreign films. Therefore, while it was approved for distribution, it did not make it to Chinese theaters.
In addition, “Eternals,” “Doctor Strange in the Multiverse of Madness” and “Thor: Love and Thunder” were not approved for release in China, nor was the Sony-Disney coproduction “Spider-Man: No Way Home.”

“Black Panther: Wakanda Forever” will break that pattern. Yet, since it was released in other markets in November, it likely experienced a surge in online piracy because it was unavailable to the Chinese public. While moviegoers will still attend screenings, the film may not see the same number of ticket sales that it might have if it was released earlier.
There are also concerns about muted ticket sales from China as the coronavirus once again roils the region since the government lifted its “zero Covid” policy. The market was slated to be a major source of revenue for releases like Disney and James Cameron’s “Avatar: The Way of Water,” but has underperformed expectations there.
At present, the film has generated around 11% of its total global gross from China, or about $214 million. For comparison, the first “Avatar” collected around $250 million in ticket sales during its run in 2009 and 2010.
If the Covid wave ebbs in the region, “Quantumania” could get a welcome ticket boost. The previous two Ant-Man solo films generated 20% of their box office from China.

Additionally, while previous Ant-Man films have tallied smaller global box office numbers in comparison to other flicks in the MCU — 2015’s “Ant-Man’ scored $519 million and “Ant-Man and the Wasp” snared $622 million — “Quantumania” is expected to pull in more moviegoers because it features the MCU’s newest major villain, Kang.
Kang, played by “Lovecraft Country” star Jonathan Majors, is the next overarching villain of the MCU and is expected to remain a looming threat throughout the Multiverse Saga, which includes phase four, five and six of the franchise. He was introduced in the Disney+ show “Loki.”
“The feature film debut of one of the most dynamic and intriguing characters in the MCU, Kang the Conqueror in the film could push its potential global revenue into the $1 billion realm which would be a first for ‘Ant-Man’ films,” said Paul Dergarabedian, senior media analyst at Comscore. “And with the addition of the China market, the planets could align to make ‘Ant-Man and the Wasp: Quantumania’ the first global mega-hit of 2023.”

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Fresh economic data Wednesday showed U.S. consumer spending slowed during the holiday season as inflation, though easing, continued to squeeze shoppers. That’s likely to make off-price retailers like Club holding TJX Companies (TJX) even more attractive to many Americans looking for cost-saving deals in the new year. Total retail sales in the U.S. dropped 1.1% in December month-on-month, the Commerce Department said Wednesday, in the second consecutive monthly decline. Retail sales had fallen by 1% in November. The monthly sales report, which is not adjusted for inflation, showed declines across a range of categories, with a steep drop of 6.6% in department-store sales and a 4.6% fall in sales at gasoline stations. The retail data comes as the Labor Department’s producer price index, also released Wednesday, showed prices of wholesale goods and services came down at a faster rate than expected in December. That’s a sign the Federal Reserve’s interest rate hikes are working to slow inflation, which could benefit consumers. But with the state of the economy still uncertain — inflation remains high, even as fears of a recession persist — Morgan Stanley on Wednesday highlighted off-price retailers like TJX and competitors Ross Stores (ROST) and Burlington Stores (BURL) for their “defensive qualities in the face of recession.” Companies like TJX, which operates stores like T.J. Maxx and Marshalls, have benefited from a retail inventory glut that’s plagued major department stores over the past year, buying up excess apparel and other items at a discount then passed onto shoppers. Morgan Stanley analysts expect off-price retailers to benefit from consumers shifting spending habits away from high-end shopping toward discounts. “Looking into 2023, we think TJX, ROST & BURL’s businesses should benefit from trade down once again, as well as see margin tailwinds on normalizing freight costs & [merchandise] margins, creating an attractive setup for the sub-sector in a potentially challenging macro environment,” the analysts wrote in a research note. The analysts singled out TJX as the only off-price retailer to successfully raise prices over the last couple years, helped by their more than 20,000 vendor partners, while also attracting a higher-income demographic compared to competitors. Shares of TJX closed down 2.13% Wednesday, at $79.81 apiece. Bottom line A second consecutive monthly drop in retail sales shows that shoppers are increasingly careful about how and where they spend their hard-earned dollars. This trend could be foreshadowing slower growth in upcoming retail earnings for the first quarter. At the same time, if inflation continues to moderate, it could create space for more discretionary spending. But for the moment, inflation is still a challenge for many consumers, even as the economy slows. This positions TJX to be a preferred shopping destination during a potential economic downturn. Off-price retailers like TJX have a great opportunity to snag a wide range of merchandise from big-box retailers with elevated inventory for very cheap prices. They can then sell items quickly, which allows for quick product turnover and a boost to their top lines. TJX also offers a dividend yield of 1.44% to shareholders, sweetening our investment case. TJX is set to report its fiscal fourth-quarter earnings on Feb. 22. (Jim Cramer’s Charitable Trust is long TJX. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

A shopper carries a bag outside a TJ Maxx store in New York, U.S.
Victor J. Blue | Bloomberg | Getty Images

Fresh economic data Wednesday showed U.S. consumer spending slowed during the holiday season as inflation, though easing, continued to squeeze shoppers. That’s likely to make off-price retailers like Club holding TJX Companies (TJX) even more attractive to many Americans looking for cost-saving deals in the new year. More

Disney said one of the reasons it decided not to give activist investor Nelson Peltz a board seat was his lack of media and entertainment expertise.
Nearly every current member of the Disney board came from industries that aren’t associated with media and entertainment.
While Peltz may still not be right for the Disney board, if this is a compelling argument for Disney, it suggests it may want to add new directors with media industry experience.

Nelson Peltz
David A. Grogan | CNBC

Disney directors unanimously rejected activist investor Nelson Peltz’s request to join the board this month, in large part due to his lack of media industry expertise.
That would be a stronger argument if Disney’s current board members had ample media and entertainment experience when they joined. Almost all of them didn’t.

This isn’t justification for Peltz’s case to join the board. Many public company boards have directors with a wide variety of experience. Peltz’s strongest claim for a board seat is probably ensuring that succession planning finally happens in an organized and coherent way – which doesn’t appear to be the primary argument he’s making.
Still, if Disney feels it’s important for Peltz to have media and entertainment experience, it may want to make broader changes to its board to bring on several other people who can navigate a complicated and rapidly changing industry. A Disney spokesperson declined to comment.
According to a company filing Tuesday, Disney decided not to offer Peltz a board seat because he didn’t suggest any specific strategic ideas and had minimal industry experience.
“Among the drivers for such concern was the combination of Mr. Peltz’s lack of media or technology industry experience coupled with his repeated focus in his presentation on successful approaches from businesses like Heinz, Procter & Gamble and DuPont which have little in common with Disney,” Disney wrote.
It’s true that Peltz has minimal experience on media boards, though he did serve as a director of MSG Networks from 2014 to 2015 and still serves as a Madison Square Garden director. But Disney’s board is filled with directors whose prior experience have little to do with streaming services, legacy pay TV, theme parks or films. Their collective experience is actually closer to businesses like Heinz and Procter & Gamble.

Disney’s board

Newly appointed chairman Mark Parker has been employed at apparel-marker Nike since 1979, serving as CEO from 2006 to 2020.
Safra Catz was an investment banker before she joined enterprise technology company Oracle in 1999, where she’s been CEO since 2014.
Mary Barra has been CEO of General Motors since 2014. She first got a job at GM in 1980. Her background is in electrical engineering.
Francis DeSouza is CEO of Illumina, a biotechnology company. Before that, he was president of products and services at cybersecurity company Symantec.
Michael Froman is vice chairman and president of strategic growth at Mastercard since 2018. He worked at Citigroup from 1999 through 2009. He’s also held a variety of government jobs.
Maria Elena Lagomasino is CEO of WE Family Offices, a wealth advisor serving high net worth families. She’s held a variety of roles at financial firms for the past four decades.
Calvin McDonald is CEO of athletic apparel company Lululemon. His prior jobs were all in the retail industry.
Derica Rice was formerly the president of CVS Caremark. Before that, he worked at pharmaceutical company Eli Lilly.

Only CEO Bob Iger, Amy Chang and Carolyn Everson have some prior experience in media. Chang’s experience is tangential to Disney’s core business, as global head of product at Google Ads Measurement. Everson just joined the board in September — perhaps a sign Disney’s board is also acknowledging its own relative lack of media understanding.
Disney’s board members have experience in operations, brand management and technology. But Peltz argued in a CNBC interview that Disney should be viewed more as a consumer company than a media company.
“This is a lot more than a media company. This is a consumer company, with a basketful of the greatest brands in the world,” Peltz said.
Disney’s choice in directors seems to be in accordance with that viewpoint. But as decisions await such as whether to spend $10 billion or more on Comcast’s 33% stake in Hulu and what to do with a slowly dying legacy cable network business, perhaps Disney finally needs more media expertise on its board.
WATCH: Disney is more than a media company, it’s a consumer company, says Trian’s Nelson Peltz

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Many people still identify with being in the middle class, although that doesn’t mean what it used to.
Inflation is largely to blame.

As inflation spiked, Americans in the middle class were particularly hard hit.
For them, prices increased faster than their income, according to a September report by the Congressional Budget Office. Households in the lowest and highest income groups saw their income grow faster than prices over the same time period, the report found.

Even though middle-class wage growth is high by historical standards, it isn’t keeping up with the increased cost of living, which in December was up 6.5% from the prior year — making it harder to live the same lifestyle previous middle-class generations did.
More from Personal Finance:4 key money moves in an uncertain economyHere’s the best way to pay down high-interest debt63% of Americans are living paycheck to paycheck
Nearly three-quarters, or 72%, of middle-income families say their earnings are falling behind the cost of living, up from 68% a year ago, according to a separate report by Primerica based on a survey of households with incomes between $30,000 and $100,000. A similar share, 74%, said they are unable to save for their future, up from 66% a year ago.

The middle class is shrinking

Economists’ definitions of middle class vary. The Pew Research Center defines middle class as those earning between two-thirds and twice the median American household income, which was $70,784 in 2021, according to Census Bureau data. That means American households earning as little as $47,189 and up to $141,568 are technically included, although the median income is roughly $90,000.
As is often cited, the share of adults who live in middle-class households is shrinking. Now, 50% of the population falls in this group as of 2021, down from 61% 50 years earlier, according to Pew.

Their share of the country’s wealth is also getting smaller, while the top 1% continue to amass more and more, several other studies show.

‘It is only going to get worse’

Blueflames | Getty Images

Financial well-being is deteriorating overall, according to a recent “Making Ends Meet” report by the Consumer Financial Protection Bureau.
Across the board, households have been slow to adjust their spending habits. Even as prices rise significantly, consumer spending hasn’t changed that much.
To bridge the gap, Americans are dipping into their savings accounts and running up credit card balances. That leaves them more financially vulnerable in the event of an economic shock.
With economists now forecasting a possible recession, 62% of middle-income households said they need to get financially prepared, Primerica also found.

“Unfortunately, I think it is only going to get worse,” Ted Jenkin, CEO at Atlanta-based Oxygen Financial and a member of CNBC’s Advisor Council, said of Americans’ financial standing.
Hope for the American dream is at an all-time low, especially among the middle class, according to the latest Gallup poll, which tracks Americans’ assessments of the next generation’s likelihood of surpassing their parents’ living standards.
Now, 59% of middle-income Americans — or those making between $40,000 and $100,000, according to Gallup — said it is very or somewhat unlikely that today’s young adults will have a better life than their parents compared to only 48% of those with annual household incomes under $40,000 who feel that way. 

Amid inflation, ‘you really have to get disciplined’

“As middle-income families prepare for a possible recession this year, it’s more vital than ever that they take control of their personal finances by addressing debt, setting a budget and keeping spending in check,” Glenn Williams, Primerica’s CEO, said in a statement. 
Experts often recommend starting with high-interest credit card debt. Credit card rates, in particular, are now more than 19%, on average — an all-time record. Those annual percentage rates will keep climbing, too, as the Federal Reserve continues raising its benchmark rate.
If you currently have credit card debt, tap a lower-interest personal loan or 0% balance transfer card and refrain from putting additional purchases on credit unless you can pay the balance in full at the end of the month and even set some money aside.
“You really have to get disciplined or you’re going to outspend your income,” Jenkin said.

To curtail your spending, Jenkin said some simple financial hacks can help, such as going to the grocery store less and cutting back on online shopping.
“Grocery stores are just like Las Vegas; they are there to separate you from your wallet.” Meal planning is one way to edit down your shopping list to weekly essentials and save money.
Disabling one-click ordering or deleting stored credit card information can also help. “Anyone that shops on Amazon and has a stored credit card, you are basically pouring lighter fluid on your budget,” Jenkin said.
Jenkin recommends waiting 24 hours before making an online purchase and then using a price-tracking browser extension such as CamelCamelCamel or Keepa to find the best price.
Finally, tap a savings tool like Cently, which automatically applies a coupon code to your online order, and pay with a cash-back card such as the Citi Double Cash Card, which will earn you 2%.
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Holiday sales came in below industry expectations, as shoppers felt pinched by inflation and rising interest rates.
Sales during November and December grew 5.3% year over year to $936.3 billion, below the NRF’s prediction.
The gains include the impact of inflation, too, which drives up total sales.

Shoppers walk through the Urbanspace Holiday Shops at Bryant Park in New York, U.S., on Sunday, Dec. 12, 2021.
Gabby Jones | Bloomberg | Getty Images

Holiday sales came in below industry expectations, as shoppers felt pinched by inflation and rising interest rates, according to data from the National Retail Federation.
Sales during November and December grew 5.3% year over year to $936.3 billion, below the major trade group’s prediction for growth of between 6% and 8% over the year prior. In early November, NRF had projected spending of between $942.6 billion and $960.4 billion.

The retail sales number excludes spending at automobile dealers, gasoline stations and restaurants, and is based on data from the U.S. Census Bureau. It covers the period from Nov. 1 to Dec. 31.
The holiday sales gains include the impact of inflation, which drives up total sales. The consumer price index, which measures the cost of a broad mix of goods and services, was up 6.5% in December compared with a year ago, according to the Labor Department.
For retailers, the shopping season’s results reflect the challenges ahead. As Americans continue to pay higher prices for groceries, housing and more month after month, they are racking up credit card balances, spending down savings and having fewer dollars for discretionary spending.
Plus, retailers are following years of extraordinary spending. During the Covid pandemic, Americans fought boredom and used stimulus checks by buying loungewear, throw pillows, kitchen supplies, home theater systems and more.
That translated to sharp year-over-year jumps in retail sales in the past two holiday seasons — a 14.1% gain in 2021 and 8.3% gain in 2020. On average, holidays sales have grown by 4.9% annually over the past decade, according to NRF.

NRF Chief Executive Matt Shay said those upward leaps were unsustainable, especially as people return to commuting, going out to dinner and booking vacations again. Plus, he said, Americans are paying higher prices across the board, from pricier rents to more expensive groceries.
“It just signals that consumers continue to be cost-conscious,” Shay told CNBC. “They’re feeling it. They’re aware of the pressures of managing their daily, weekly, monthly expenses.”
Sales rose in most major retail categories during the holiday season. Online and nonstore sales saw the biggest year-over-year gains, jumping 9.5% during the holiday season. Sales at grocery and beverage stores, which have had significant price increases, rose 7.8% versus the year-ago period.
Demand in some categories noticeably weakened. Sales at furniture and home furnishings stores declined 1.1% and sales at electronics and appliances stores dropped 5.7% year over year.
Shay said in the year ahead, retailers will have to work harder to attract and retain customers.
“There’s a premium on execution,” he said. “Everyone will not be a winner in an environment in which consumers are more selective.”

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Firearm sales, which soared to unprecedented levels in 2020 and 2021, are falling toward pre-pandemic levels.
The National Shooting Sports Foundation estimates that new gun ownership fell to 16 million in 2022, after reaching a high of 21 million in 2020.
Major firearm manufacturers are beginning to feel the financial strain but are assuring investors that their business models are prepared for the slowdown in demand.

A selection of AR-15-style rifles hangs on a wall at R-Guns store on Jan. 11, 2023, in Carpentersville, Illinois, a day after the state ban.
Armando L. Sanchez | Tribune News Service | Getty Images

The largest firearm manufacturers in the U.S. are facing a post-Covid slump.
Gunmakers saw top-line benefits in recent years as Americans experienced feelings of insecurity and instability during the pandemic, protests over police killings of unarmed Black people, and the 2020 presidential election. But the past year has seen gun sales fall precipitously as demand wanes.

American Outdoor Brands and Vista Outdoor have reported weaker sales in their shooting categories of late. Sturm, Ruger & Company, the largest publicly traded gunmaker in the U.S. by market value, reported a 28% year-over-year drop in net sales for fiscal third quarter, reporting $139.4 million, down from $178.2 million in the same period in 2021.
“These decreases are attributable to decreased consumer demand for firearms from the unprecedented levels of the surge that began in 2020 and remained for most of 2021,” CEO Christopher Killoy said of Sturm, Ruger’s November financials during an earnings call.
New gun ownership, as measured by the number of background checks for gun purchases, rose to 21 million in 2020, an all-time high for the industry, according to trade group National Shooting Sports Foundation. In 2019, that number had been just 13 million.
In 2021, background checks for gun purchases totaled 18.5 million, the industry’s second-biggest year. In 2022, they totaled 16.4 million.

NSSF warns background checks aren’t a perfect equivalent to new ownership because not all background checks are associated with individual sales of new guns, but they’re the best barometer of yearly sales trends. The organization has tracked the data since 2000.

“During the pandemic, people were worried about societal collapse in one way or another,” said Dru Stevenson, a law professor at South Texas College of Law Houston. “If you didn’t own a gun and you decided you better get one for self defense, you went and bought your gun, and now you’re done.”
Waning sales, alongside rising material and manufacturing costs, dented profitability for manufacturers.
Sturm, Ruger saw its gross margin tighten to 28% in the third quarter from 36% in the same period a year earlier. Sturm, Ruger & Company did not immediately respond to CNBC’s request for comment. The company reports its next quarterly results Feb. 22.
“We’re seeing that as you come off the highs, the market is settling out and we’re finding that new normal,” said Mark Oliva, managing director of public affairs at NSSF. This “new normal,” added Oliva, is what firearm manufacturers are trying to get their shareholders to understand.
Gunmaker Smith & Wesson reported second-quarter net sales of $121 million, a decrease of 47.5% from the same quarter last year. However, the company added that those results are still 6.4% higher than the comparable quarter in fiscal 2020, pre-pandemic. Smith & Wesson did not immediately respond to CNBC’s request for comment. The company is set to report its next batch of quarterly results March 2.
In a December conference call with investors, Smith & Wesson CEO Mark Smith said despite firearm sales reaching “more normal demand levels,” the company’s business model is “specifically designed for this” and has “effectively managed through these cycles before.”
Smith & Wesson’s stock is down 40% from a year ago, while Sturm, Ruger & Company saw its stock fall 19% in the same time frame.
Other gun manufacturers including American Outdoor Brands and Vista Outdoor, which purchased Remington Ammunition out of bankruptcy in late 2020, are seeing similar declines in gun sales.
American Outdoor Brands reported quarterly net sales were $54.4 million, a decrease of $16.3 million, or 23.1%, compared with net sales of $70.8 million for the same quarter last year, “resulting primarily from reduced demand in the shooting sports category.”
Vista Outdoor reported a sales decline of 4% to $432 million for its sporting products, which includes its Remington acquisition.
American Outdoor Brands and Vista Outdoor did not immediately respond to CNBC’s requests for comment.
Despite the drop in sales, Oliva said the “floor of this new market” remains “higher than the ceiling” of the last market. He said much of the losses seen now are likely to be recovered during the next surge in sales, which he said may come during the 2024 presidential election.

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