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Tag: Retail industry

  • LVMH boss Bernard Arnault under investigation in Paris over Russian oligarch transactions

    LVMH boss Bernard Arnault under investigation in Paris over Russian oligarch transactions

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    Bernard Arnault, Chairman and CEO of LVMH Moet Hennessy Louis Vuitton, attends a news conference to present the 2022 annual results of LVMH in Paris, France, January 26, 2023.

    Gonzalo Fuentes | Reuters

    The Paris public prosecutor’s office is investigating LVMH CEO Bernard Arnault over financial transactions involving Russian oligarch Nikolai Sarkisov.

    French newspaper Le Monde reported Thursday, citing France’s Tracfin financial intelligence unit, that Sarkisov had bought real estate at an Alpine resort with the help of a loan from Arnault.

    The Paris prosecutor’s office confirmed Friday that a preliminary investigation had been underway since 2022, and that a Tracfin report “drawing the attention of the prosecutor’s office to operations concerning Mr. Bernard Arnault and Mr. Sarkisov, likely to characterize acts of money laundering, has been attached to this procedure.”

    The prosecutor’s office declined to comment further on the ongoing investigations. A preliminary investigation does not necessarily imply wrongdoing, and Le Monde cited a close associate of Arnault as saying the deal was carried out within the scope of French law.

    Arnault, founder, CEO and chairman of the world’s largest luxury goods company and one of the world’s richest men, lost a high court case against French tax investigators in February over the legality of a 2019 raid on LVMH’s headquarters. The raid related to a tax fraud probe linked to activities in Belgium.

    Nikolai Sarkisov is a senior figure at his brother Sergey’s Russian insurance company, RESO-Garantia.

    RESO-Garantia Deputy CEO Igor Ivanov told CNBC on Friday that neither the company, nor Nikolai Sarkisov personally had been involved in the transaction, and that Sarkisov had never met Arnault.

    “The transaction was managed by a small investment unit which invests professionally in European real estate. It consisted of acquiring flats in an old building in Courchevel from various private owners, with the view to sell them later to a developer once the entire building was bought out,” Ivanov said in an email.

    “All transactions were carried out by French companies, through French notaries by French lawyers on all sides. This was a usual real estate deal.”

    He added that neither the company nor Sarkisov had received any request for documents from French authorities.

    LVMH this weekend sent CNBC a comment from Jacqueline Laffont, Arnault’s lawyer, who said the allegations of money laundering were “as absurd as they are unfounded.”

    “The operation that was conducted to allow the expansion of the White Horse Hotel in Courchevel is well known and was conducted in compliance with the laws and with the support of councils. The investigation, apparently in progress, will not fail to recognize this,” she said, according to the statement.

     “Moreover, who can seriously imagine that Mr. Bernard Arnault, who for the past 40 years has built France and Europe’s top company would engage in money laundering to expand a hotel? I think that the senseless nature of these allegations cannot escape anyone.”

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  • Nike misses revenue expectations for the first time in two years, beats on earnings and gross margin

    Nike misses revenue expectations for the first time in two years, beats on earnings and gross margin

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    A shopper leaves a Nike store along the Magnificent Mile shopping district with a purchase in Chicago, Dec. 21, 2022.

    Scott Olson | Getty Images

    Nike reported revenue Thursday that fell short of Wall Street’s revenue expectations for the first time in two years, but it beat on earnings and gross margin estimates.

    Here’s how the sneaker giant performed during its fiscal first quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG, formerly known as Refinitiv:

    • Earnings per share: 94 cents vs. 75 cents expected
    • Revenue: $12.94 billion vs. $12.98 billion expected

    The company’s reported net income for the three-month period that ended August 31 was $1.45 billion, or 94 cents per share, compared with $1.47 billion, or 93 cents per share, a year earlier.

    Sales rose to $12.94 billion, up about 2% from $12.69 billion a year earlier.

    Nike shares rose by about 1% in extended trading Thursday.

    Investors have been laser focused on Nike’s recovery in China, its relationship with its wholesale partners and how the resumption of student loan payments will impact sales. 

    They’re also keen to see Nike’s margins recover after bloated inventories, high promotions and supply chain woes contributed to lower profits over the last few quarters. 

    During the quarter, Nike’s gross margin fell about 1 percentage point to 44.2%, but it was higher than the 43.7% analysts had expected, according to StreetAccount.

    Sales in China grew by 5% compared to the year-ago period to $1.74 billion, which fell short of the $1.84 billion analysts had expected, according to StreetAccount.

    During the previous quarter ended May 31, Nike saw China sales jump 16% compared to the year-ago period. But the numbers were against easy comparisons because the region was still under Covid-related lockdown orders during the prior year. 

    While Nike remains bullish on China, the region’s economic recovery has so far been a mixed bag. Following a sluggish July, retail sales picked up during the month of August to rise 4.6% compared to the prior year, beating expectations of a 3% growth forecast by Reuters. 

    When it comes to its wholesale revenues, Nike’s relationship with those partners have been rocky. As the company has pivoted to a direct-to-consumer model, it has focused on driving sales online and in its stores at the expense of its wholesale accounts. 

    However, as Nike grappled with excess inventories throughout 2023, it relied on those partners to move through that merchandise. It has now restored its relationship with both Macy’s and DSW – accounts that it previously cut in favor of its DTC strategy. 

    Some analysts expected Nike’s wholesale revenue to be sluggish during the quarter because excess inventories have been a problem throughout the retail industry – and some wholesalers are being more particular in what they order to avoid another backlog. 

    Wholesale revenue during the quarter was flat compared to the year-ago period at $7 billion.

    Amid decades-high inflation rates, consumers have been pulling back on apparel and footwear. With the resumption of student loan payments looming ahead, some analysts expect those sectors to take an even greater hit. 

    Jefferies conducted a survey on U.S. consumer spending and found 54% of respondents plan to spend less on apparel and accessories. Meanwhile, 46% plan to spend less on footwear, which doesn’t bode well for Nike. 

    It may still be too early to gauge the impact of student loan payments on Nike. Its first quarter ended in late August, and payments aren’t set to resume until October.

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  • Peloton shares soar on digital content partnership with Lululemon

    Peloton shares soar on digital content partnership with Lululemon

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    Jen Van Santvoord rides her Peloton exercise bike at her home in San Anselmo, California.

    Ezra Shaw | Getty Images

    Peloton shares spiked Wednesday after the company announced a five-year partnership to develop digital fitness content for Lululemon.

    As part of the agreement, Lululemon will become Peloton’s primary athletic apparel provider.

    Peloton’s stock jumped more than 15% in extended trading. Shares of Lululemon — which has a roughly $48 billion market cap compared to Peloton’s $1.7 billion — were flat in after-hours trading.

    Lululemon said it will stop selling the Studio Mirror, which allows users to stream workout classes, by the end of the year. It will still offer service and support for existing Mirror equipment.

    The news comes a day after Peloton announced co-founder and Chief Product Officer Tom Cortese is leaving the company. Peloton has shifted its strategy to focus more on subscriptions and less on its pricey exercise equipment.

    This is breaking news. Please check back for updates.

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  • Shoppers face higher orange juice prices as futures hit another record

    Shoppers face higher orange juice prices as futures hit another record

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    Coca-Cola Co.’s Minute Maid and Simply Orange brand orange juices sit on display in a supermarket in Princeton, Illinois.

    Daniel Acker | Bloomberg | Getty Images

    Orange juice is the latest item to succumb to higher prices at the grocery store, with futures on the commodity good reaching an all-time high this week.

    Future prices for the breakfast staple have been steadily climbing over the past few months, hitting a record high of $3.69 per pound Tuesday morning. That number is up 13% month to date and almost 78% year to date.

    With the price hike, the juice joins other major grocery store items facing high prices even as inflation slows, including raw sugar and cocoa.

    The drink’s price has shot up due to hurricanes and bad weather that slammed Florida — the main producer of orange juice for the U.S. — last year, which reduced the crop to its lowest level in nearly 80 years. A late freeze at the end of last year also devastated the crops.

    In July, the U.S. Department of Agriculture said it expected Florida to produce just around 15.9 million boxes of oranges this year, down 70% from the 2020-21 season.

    Other exporters such as Brazil and Mexico also lowered their estimated yields for the year, citing crop difficulties from warmer weather.

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  • Levi’s Strauss CEO says his biggest mistake was not firing the wrong people fast enough

    Levi’s Strauss CEO says his biggest mistake was not firing the wrong people fast enough

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    Pedestrians walk past a Levi’s store in Midtown Manhattan.

    Sopa Images | Lightrocket | Getty Images

    The CEO of the world’s most famous denim jeans company said he knew from his second day on the job that the best way to turn around the company was to fire more than half of his executives.

    “The easiest way to change the culture is to change the people. I had 11 direct reports, and in the first 18 months, nine of them were gone,” Charles Bergh, CEO of Levi’s Strauss, said.

    Still, Bergh told CNBC’s Christine Tan that his biggest regret was not firing the wrong people fast enough.

    “My biggest regret is that we didn’t lean into some of these great leaders, and we lost some because I held on to somebody longer than I should have.”

    Bergh joined the apparel retailer in 2011 at the worst possible time — consumers were no longer buying Levi’s jeans.

    “The brand was really lost. We had a whole generation of consumers that didn’t grow up wearing Levi’s like I did when I was a kid,” Bergh said.

    “The company’s performance had been really erratic for more than 10 years. One year the revenues would go up, but the profits would go down. The next year, they would fix the profits, but the revenues went down.” 

    Charles Bergh, CEO of Levis Strauss & Co., speaks during the 2015 Fortune Global Forum in San Francisco, California, U.S., on Tuesday, Nov. 3, 2015.

    Bloomberg | Bloomberg | Getty Images

    Six years later, Bergh brought what he called a once “broken” brand back into the limelight.

    In 2017, Levi’s delivered 8% annual revenue growth — its highest in a decade and well above the 3.1% growth posted a year earlier. The company kept building, notching 14% year-on-year revenue growth in 2018.

    Bergh is stepping down as CEO next year and said his biggest legacies will be jolting the company out of complacency and building a team with the brand at the center of culture.

    “I am just the orchestra conductor and have built an amazing team around me,” he added.

    Trouble still brewing

    Still, it’s not all smooth sailing ahead. The company severely cut its 2023 profit outlook after it reported a steep decline in wholesale revenue and soft sales in the U.S., its largest market. It now expects sales to grow between 1.5% to 2.5% this year versus the prior range of 1.5% to 3%.

    Like many apparel companies, Levi’s had to adapt to changing consumer preferences, especially the growing demand for comfortable and looser fit garments as workers returned to offices after the pandemic.

    A guest wears a blue denim shirt from Levi’s during New York Fashion Week, on September 13, 2022 in New York City.

    Edward Berthelot | Getty Images Entertainment | Getty Images

    In 2021, the company acquired activewear brand Beyond Yoga, a move that Bergh previously told CNBC would help grow its women’s business. At the time, he said the goal is for women’s wear to account for 50% of Levi’s business.

    “It drives me crazy watching a woman walk into our store, buying our bottoms and then walking out and going to an unnamed competitor’s store to buy their top,” Bergh said.

    Sales of women’s products made up 35% of net revenue in the first half of the year.

    Expanding footprint in Asia

    One promising area for Levi’s growth is its expansion in Asia.

    “We’re opening bigger stores [and] we’re having more of a consumer impact,” Bergh said, emphasizing how revenge spending among Chinese customers will be a “huge opportunity” for the brand. ho

    In the second quarter, revenue from Asia increased by 18% to $262 million.

    Pedestrians walk past a Levi´s store in Hong Kong.

    Sopa Images | Lightrocket | Getty Images

    Still, Asia accounts for less than 20% of the company’s total sales and China makes up less than 3% of the company’s total business, according to Bergh. 

    “Many of our competitors are 10% or more. Look at Nike, 40% of Nike’s market cap is probably China. So we know we’ve got an opportunity here,” he said.

    “We’re adding about 100 doors a year net globally, and about a third of those stores are going to be here in Asia.”

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  • Peloton co-founder and Chief Product Officer Tom Cortese is leaving the company

    Peloton co-founder and Chief Product Officer Tom Cortese is leaving the company

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    People walk past a Peloton store in Coral Gables, Florida, on Jan. 20, 2022.

    Joe Raedle | Getty Images

    Peloton co-founder and Chief Product Officer Tom Cortese is leaving the company and will be replaced by longtime Silicon Valley veteran Nick Caldwell, the company announced Tuesday. 

    Cortese, who helped found the connected fitness company alongside former CEO John Foley in 2012, will move into an advisory role beginning Nov. 1, the company said. 

    “After nearly 12 years of pouring myself into Peloton and serving our Members, I have decided it is time to move on and create space for new perspectives,” Cortese said in a news release.

    “I’m eager for new growth for Peloton and for me personally, but I’m also excited to support and watch this next phase of Peloton’s evolution. I could not be more proud of what we have accomplished, together.”

    Caldwell most recently served on the board of tech companies Bitly, HubSpot and True Search and previously did stints at Twitter, Google, Reddit and Microsoft, where he worked for nearly 16 years at the start of his career, according to his LinkedIn profile. 

    He’ll oversee global product development and will start the new role Nov. 1. 

    “I want to thank Tom for his tireless dedication since launching Peloton nearly 12 years ago as a Co-Founder of the business. We simply wouldn’t be here today without his contributions,” CEO Barry McCarthy said in a statement. “Nick brings impressive engineering, design, and product experience to the Peloton team. Nick joins us at an exciting time as we lean into growing our subscriber base online and on our connected fitness hardware.”

    Churn at the top

    The news comes more than a year into McCarthy’s stint as Peloton’s CEO. Since he took over, he has tapped Leslie Berland as the company’s marketing chief and Dalana Brand as its chief people officer, among other hires. Both Berland and Brand were executives at Twitter before joining Peloton. 

    With Cortese’s departure, just two executives from Peloton’s early days remain in its C-suite. Jennifer Cotter, the company’s chief content officer, and Dion Camp Sanders, its chief emerging business officer, have both been with the company since Foley was at the helm. 

    During an interview with CNBC earlier this year, Cortese recalled Peloton’s early days and what inspired him and Foley to start the business.

    Peloton co-founder Tom Cortese.

    Source: Peloton

    “[In] 2013, so 10 years ago now, I was standing in the Short Hills Mall in New Jersey, my kids thinking that I was a mall retail guy, and we were selling people on the idea of being able to access energetic, remarkable fitness from the most convenient place on Earth: their home,” Cortese told CNBC.

    “The reason we were doing that is because what we saw happening in the real world … brick and mortar, was that people were turning to boutique studio fitness as something that was starting to excite them, right? So just going to the gym wasn’t quite doing it … hence the Peloton Bike, and all that goes with it, was born.”

    Cortese started as the company’s chief operating officer and took over as product chief in August 2021, according to his LinkedIn. Most recently, he was involved in the development of Peloton’s app and the introduction of new product features on its connected fitness products.

    Shift toward subscription

    Back in the company’s early days, Peloton was a product-first retailer that made the bulk of its revenue selling its pricey connected fitness products, including its Bike, Bike+ and Tread, as an alternative to the gym. 

    However, in the years since, Peloton’s products have undergone numerous recalls for a series of manufacturing flaws, some that left customers injured. 

    Its Tread+ treadmill was recalled after a child was killed. The company has since been mired in fines and legal battles related to its products and their recalls. 

    When Peloton last reported earnings Aug. 23, executives said they believe the most recent recall of its Bike seat post led to increased membership churn and was costing the company far more than it anticipated. 

    These days, subscription revenue is Peloton’s primary revenue driver. Earlier this year, it announced a massive brand overhaul that elevated Peloton’s subscription offerings and signaled the company is just as invested in its app as it is its hardware. 

    While the company frequently insists hardware is still one of its primary focus areas, new product development appears to have slowed.

    When asked earlier this year if the company had plans to introduce new hardware, Cortese hinted at more to come.

    “We maintain a strong hardware development team,” he said. “They are certainly not twiddling their thumbs.”

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  • I walked more than 100 miles in Kyoto. Here are 5 new places worth visiting

    I walked more than 100 miles in Kyoto. Here are 5 new places worth visiting

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    Kyoto’s flat geography makes long strolls easy.

    And by using bustling Shijo Street — also known as Shijo-dori — as a main street for navigation, it was a breeze to weave through the city during my three-month trip in May.

    Between meal runs and plotting routes to popular attractions such as Nijo Castle and Kiyomizudera, I clocked close to 130 miles on foot.

    Kyoto’s traditional businesses and ancient temples didn’t disappoint, but a new trend caught my attention. More artisanal shops are popping up — many not far from the city’s most famous sights.

    Here are five of my favorites.

    O’Chill — for meditation and tea

    Opened in June 2023
    Closest to: Kyoto Imperial Palace (12 minutes)

    The path to the front door of O’Chill.

    Source: Morgan Awyong

    Curiosity was my main motivation to visit O’Chill, which allows visitors the chance to drink — and smoke — tea.   

    Phones are strictly forbidden in the zen-like ceremony room, where matcha is served in a traditional tea ceremony. Guests are then given hookahs, with tobacco replaced by tea leaves. 

    Co-founder Kiruta Wataru explains that tea leaves remove the prejudice often associated with smoking, while the fired leaves act like incense. The experience is a form of “shiko-hin,” or self-nurturing ritual, he said.

    “We believe that any lifestyle is good if the person is happy,” Wataru said.

    My eyes widened with the first puff. The perfume of the tea leaves produced a sweet, woody flavor, as I passed the pipe between the company’s other co-founder Daichi Isokawa and two guests.

    The 90-minute experience includes a guided meditation and refreshments.  

    Rokuhichido — for paper objects

    Opened in April 2023
    Close to: Hokan-ji Temple (1 minute)

    Visitors shop the handmade paper products at Rokuhichido.

    Source: Morgan Awyong

    With all eyes on the famous five-story pagoda nearby, it is easy to miss Rokuhichido, a shop that makes Japanese paper products using methods like silk screen printing and paper cutting.

    The brand first gained popularity with postcards, then expanded to produce playful paper balloons and miniature figurines, shaped like marine animals or places like Mount Fuji.

    Designs are based on Japanese traditions and culture, the four seasons and landscapes, manager Shota Yamada said. Its ukiyo-e postcards, featuring classic motifs like geisha and shogun, are the most popular, he added.

    “Depending on the product, a single craftsman can produce only a few dozen of our products per day,” said Yamada.

    Gokago — for matcha drinks and food

    Opened in June 2023
    Close to: Kiyomizudera Temple (2 minutes)

    The front door to Gokago.

    Source: Morgan Awyong

    There’s no shortage of matcha cafes in Kyoto, but no one does it quite like Gokago. The finely ground green tea — in everything from drinks and donuts to ice cream — is whisked right in front of guests.

    Tea ceremonies are a wonderful Japanese tradition, said the company’s director Kazuaki Nakanishi. “Since experiencing the traditional tea ceremony can be a hurdle, we thought it was important to offer it in a casual style to make it accessible to as many people as possible,” he said.

    Admittedly, the experience here doesn’t replace the real thing, but it’s still a great stop for an authentic matcha brew en route to Kiyomizudera, one of Kyoto’s most famous temples. And visitors get to see the precise movements and formal presentation of the ingredients, which is part of the ritualistic grace of a formal ceremony.

    Kaji Kyoto — for Peruvian and Japanese fine dining

    Opened in May 2023
    Closest to: Nishiki Market (11 minutes)

    Food at the Peruvian Japanese restaurant, Kaji Kyoto.

    Source: Morgan Awyong

    Traditional restaurants are everywhere in Kyoto, but Kaji Kyoto isn’t one of them.

    “I want guests to leave Kaji and see how Japanese people that left Japan had to adapt because the ingredients they had were different — and were just as delicious,” said head chef Keone Koki.

    Koki brings his Peruvian heritage to Japanese cooking, in one example using passion fruit from Okinawa as a marinade for a tiradito, an onion-free ceviche. “It’s also a bit different since most sashimis are only eaten with shoyu,” he said.

    With only eight seats, the restaurant is housed in a traditional merchant house, with seating split by a small kitchen in between. The effect is much like a performance, with Koki and his crew of five endearing themselves to guests with light banter.

    Fuku Coffee Roastery — for specialty coffee

    Opened in March 2023
    Close to: Kennin-ji Temple (4 minutes)

    Fuku Coffee Roastery is in a machiya, or traditional wooden townhouse, that Morio Ajiki inherited from his grandmother.

    I initially thought this was a coffeehouse, but I found out from Morio Ajiki that his company provides high quality coffee beans to businesses.

    Luckily, visitors can still drop by for a cup.

    “There were customers stopping by my shop who wanted to try my coffee,” Ajiki said. “So I decided to serve them.”

    It’s easy to strike up a conversation with the shy but affable Ajiki, who will likely pop through a set of sliding doors that lead to his home. You might even catch a glimpse of his cat, which the store is named after.

    Cups of coffee are meant to be had on the go, but there are two benches — one inside and the other out front — for those who wish to stay.  

    The roastery displays products made by artists in the neighboring alley. This level of mutual respect between artisans in Kyoto makes discoveries like this well worth the walks.

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  • McDonald’s to raise royalty fees for new franchised restaurants for first time in nearly 30 years

    McDonald’s to raise royalty fees for new franchised restaurants for first time in nearly 30 years

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    McDonald’s franchisees who add new restaurants will soon have to pay higher royalty fees.

    The fast-food giant is raising those fees from 4% to 5%, starting Jan. 1. It’s the first time in nearly three decades that McDonald’s is hiking its royalty fees.

    The change will not affect existing franchisees who are maintaining their current footprint or who buy a franchised location from another operator. It will also not apply to rebuilt existing locations or restaurants transferred between family members.

    However, the higher rate will affect new franchisees, buyers of company-owned restaurants, relocated restaurants and other scenarios that involve the franchisor.

    “While we created the industry we now lead, we must continue to redefine what success looks like and position ourselves for long-term success to ensure the value of our brand remains as strong as ever,” McDonald’s U.S. President Joe Erlinger said in a message to U.S. franchisees viewed by CNBC.

    McDonald’s will also stop calling the payments “service fees,” and instead use the term “royalty fees,” which most franchisors favor.

    “We’re not changing services, but we are trying to change the mindset by getting people to see and understand the power of what you buy into when you buy the McDonald’s brand, the McDonald’s system,” Erlinger told CNBC.

    Franchisees run about 95% of McDonald’s roughly 13,400 U.S. restaurants. They pay rent, monthly royalty fees and other charges, such as annual fees toward the company’s mobile app, in order to operate as part of McDonald’s system.

    The royalty fee hikes probably won’t affect many franchisees right away. However, backlash will likely come, due to the company’s rocky relationship with its U.S. operators.

    McDonald’s and its franchisees have clashed over a number of issues in recent years, including a new assessment system for restaurants and a California bill that will hike wages for fast-food workers by 25% next year.

    In the second quarter, McDonald’s franchisees rated their relationship with corporate management at a 1.71 out of 5, in a quarterly survey of several dozen of the chain’s operators conducted by Kalinowski Equity Research. It’s the survey’s highest mark since the fourth quarter of 2021, but still a far cry from the potential high score of 5.

    Late Friday, The National Owners Association, an independent advocacy group of more than 1,000 McDonald’s owners, sent out a memo to its membership regarding the news from corporate. The memo, viewed by CNBC, called Friday an “extremely hectic day” as U.S. owners woke up to emails from CFO Ian Borden and U.S. President Erlinger about the decision to increase service fees for new owners and reclassify the name to royalties.

     “Although McDonald’s believes they have the right to make changes to their fee structure, franchise agreement terms and the conditions of engagement, these self-proclaimed rights do not establish that the changes are the right thing to do for the business, the relationship, or the future of our Brand,” the memo said, adding that while system gross sales have increased to start this year, resulting in “record-breaking revenue” for corporate, the benefits are not evident in franchisee cash flow. The memo goes on, adding that franchisee restaurant cash flow has not kept pace with inflation, and that owners are flowing less money today than they were in 2010.

    “What’s more, per restaurant EBITDA percent is crashing and will likely hit a 12-year low of around 12.25% in Q4, or certainly in 2024. In spite of the incredible sales growth the restaurants are driving, franchisees are making less money per restaurant today than they did in 2010,” the memo states.

    The NOA memo also says the change in terminology from service fees to royalties is “very significant” and will have a key impact on the owners’ “rights to receive the all-important services, support and assistance that McDonald’s is now obligated to provide us,” claiming it removes the company’s duty to provide services. It urges owners to carefully review agreements received from the company and have an experienced attorney review them before executing, and says reinvestment decisions should be reconsidered, as those looking to open new restaurants will not have a “historical return” provided, due to the change.

    This is the latest outcry from owner advocates against corporate, as the NOA just last week sent out a communication to its members regarding California’s AB 1228, claiming the legislation would have a “devastating financial impact” on operators in the state.

    McDonald’s declined to comment on the NOA’s position on both the service fee change and the California negotiations.

    Despite the turmoil, McDonald’s U.S. business is booming. In its most recent quarter, domestic same-store sales grew 10.3%. Promotions such as the Grimace Birthday Meal and strong demand for McDonald’s core menu items, such as Big Macs and McNuggets, fueled sales.

    Franchisee cash flows rose year over year as a result, McDonald’s CFO Borden said in late July. The company said average cash flows for U.S. operators have climbed 35% over the last five years.

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  • We’re buying more of this turnaround toolmaker stock in this week’s down market

    We’re buying more of this turnaround toolmaker stock in this week’s down market

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    Taking the other side of the doom-and-gloom trade, we're putting more of our healthy cash position to work.

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  • These rare stocks are paying a higher dividend than the 10-year Treasury yield right now

    These rare stocks are paying a higher dividend than the 10-year Treasury yield right now

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  • Clorox says last month’s cyberattack is still disrupting production

    Clorox says last month’s cyberattack is still disrupting production

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    Colorox brand toilet bowl cleaner sits on display at a supermarket in Princeton, Ill.

    Daniel Acker | Bloomberg | Getty Images

    Clorox on Monday warned of a material financial hit from ongoing production disruptions caused by a cyberattack last month.

    The company, which produces its namesake bleach products and Pine-Sol, among other household items, also said it doesn’t have an estimate for when it will be able to resume full operations.

    The cybersecurity breach will impact fiscal first quarter results due to product outages and delays, Clorox said.

    Nonetheless, the company said it believes the threat is contained. It expects to start bringing systems back up to speed next week, and will ramp up to full production “over time.”

    Clorox had disclosed the attack Aug. 14, saying that its systems had been breached. After learning of the attacks, the company took systems offline and involved law enforcement.

    Now, a month later, the attack is still causing “widescale disruption” to the companies operations, according to a Clorox securities filing. While systems are being repaired, the company has had to go manual on many of its procedures. As a result, the company has scaled back its order processing, meaning fewer products are making their way onto store shelves.

    The breach at Clorox comes as Las Vegas casino companies MGM and Caesars reckon with their own cyberattacks. MGM also warned of a potential material impact on its finances.

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  • French grocery chain adds ‘shrinkflation’ labels to products in bid to shame supplier pricing

    French grocery chain adds ‘shrinkflation’ labels to products in bid to shame supplier pricing

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    Shopping cart in a department of a Carrefour supermarket, in front of pastas and sauces.

    Andia | Universal Images Group | Getty Images

    French grocery chain Carrefour has taken the unusual step of adding labels to its products that have recently shrunk in size but have ramped up in price.

    The move — both in stores and on its website — looks to pile pressure on its suppliers that have increased prices for the chain, despite raw material prices having recently eased.

    Carrefour added the “shrinkflation” warning stickers to a range of products, from Lipton Iced Tea and Pepsi, to boxes of Lindt chocolates and baby milk powder.

    “Obviously, the aim in stigmatizing these products is to be able to tell manufacturers to rethink their pricing policy,” Stefen Bompais, a director of client communications at Carrefour, said in an interview with Reuters.

    Carrefour did not immediately respond to a CNBC request for comment.

    Carrefour marked 26 products, according to Reuters, with a label reading: “This product has seen its volume or weight fall and the effective price by the supplier rise,” as translated by the news agency.

    The move was taken as brands are soon to negotiate their place with certain retailers, Reuters said.

    Carrefour announced a new strategic plan to tackle the current macroeconomic, geopolitical and climate challenges in November 2022, which is based around the idea of making its products accessible to its customer base.

    Cases of shrinkflation tend to increase in high inflation environments, Edgar Dworsky, founder of Mouse Print, a website that tracks instances of shrinkflation in groceries, told CNBC in April. But these changes don’t tend to be announced by manufacturers, making it difficult for consumers to notice the changes, he said.

    — CNBC’s Mike Winters contributed to this report.

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  • Planet Fitness shares sink 15% after board ousts CEO in shocking move

    Planet Fitness shares sink 15% after board ousts CEO in shocking move

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    Chris Rondeau, CEO of Planet Fitness

    Adam Jeffery | CNBC

    In a move that stunned investors and employees alike, Planet Fitness ousted company veteran Chris Rondeau from his post as CEO, the workout chain said Friday in a press release.

    The stock dropped 15% in the wake of the announcement, hitting a 52 week low.

    Planet Fitness said it is searching for its next chief both internally and externally. Craig Benson, a member of the company’s board, will serve as the interim CEO.

    Rondeau’s departure appears sudden, and it’s not clear what triggered the decision, especially after a stronger-than-expected second quarter earnings report last month. Some staff close to Rondeau learned about his departure around the time the news was announced publicly, leaving them shocked, according to a person familiar with the matter.

    Rondeau has been with the company for decades. He has served as CEO since 2013. He will continue as a member as of the board of directors and will be nominated for re-election in 2024. Rondeau will also serve in an advisory role as part of the transition.

    Prior to his post as CEO, Rondeau worked as the company’s operating chief. In 1993, he worked at the front desk of the chain’s first location in Dover, New Hampshire, which was owned by founders Michael and Marc Grondahl. Since being founded in 1992, the chain has grown to over 2,400 locations.

    “As we enter the next chapter of Planet Fitness’ journey, the Board felt that now was the right time to transition leadership,” Planet Fitness Chairman Stephen Spinelli Jr. said in a press release. “In today’s evolving environment, Planet Fitness is continuing to enhance our competitive advantage, capitalize on our size and scale, and drive further shareholder value.”

    The company’s stock is down about 34% this year, giving it a market value of about $4.47 billion.

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  • Why the Arm IPO is good news for these bank stocks

    Why the Arm IPO is good news for these bank stocks

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  • Birkenstock warns in IPO filing that knock-offs on Facebook are a top risk

    Birkenstock warns in IPO filing that knock-offs on Facebook are a top risk

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    Nordstrom department store display of Birkenstock sandals at the Shops at Merrick Park, Miami.

    Jeff Greenberg | Universal Images Group | Getty Images

    Birkenstock, the iconic sandal maker founded in 1774, filed its paperwork for an initial public offering on Tuesday, and warned investors of the risks posed by counterfeit brands that use social media to promote their products.

    The footwear company, which was started in Germany and is now based in London, plans to go public on the New York Stock Exchange, under ticker symbol “BIRK.”

    Birkenstock has long struggled to protect its intellectual property, as copycats have taken advantage of the brand’s popularity and premium prices to try and undercut the company with cheaper alternatives. In its prospectus, Birkenstock says that some of the competition comes from “private label offerings” from retailers, but there are also “knock-off products” that are stealing its IP and trying to convince people on Facebook and elsewhere on the web that the items are authentic.

    “In the past, third parties have established websites to target users on Facebook or other social media platforms with ‘look alike’ websites intended to trick users into believing that they were purchasing Birkenstock products at a steep discount,” the filing said. “Should counterfeit products be successfully sold on e-commerce platforms managed by third parties, our brands and reputation could be damaged.”

    Birkenstock doesn’t name Amazon anywhere in the 206-page — plus footnotes — filing, but it does say that it has “refrained, and we may in the future refrain, from using certain third-party websites to distribute our products due to the selling of counterfeit products on such platforms.”

    Seven years ago, Birkenstock publicly quit Amazon in the U.S. due to an eruption of counterfeit and unauthorized sales on the site. The company also said at the time that it would no longer allow authorized Birkenstock merchants to sell on Amazon.

    “The Amazon marketplace, which operates as an ‘open market,’ creates an environment where we experience unacceptable business practices which we believe jeopardize our brand,” then-Birkenstock USA CEO David Kahan wrote in a memo on July 5, 2016, addressed to “our valued Birkenstock partners.”

    Kahan, whose title is now President Americas, went on to say that “policing this activity internally and in partnership with Amazon.com has proven impossible.”

    Prior to its departure from Amazon, legions of Chinese sellers had been promoting Birkenstock’s flagship Arizona sandal for $79.99, or $20 below the retail price, according to CNBC’s reporting at the time.

    Since 2016, according to the prospectus, Birkenstock has “significantly expanded” its direct-to-consumer efforts in e-commerce in the U.S. For the fiscal year ending Sept. 30, 2022, that channel represented 38% of revenue, the company said, adding that “one of our strategies is to continue to increase the proportion of our revenues from e-commerce.”

    Subsequent to the Amazon clash, Birkenstock sold a majority stake in the company to LVMH-backed private equity firm L Catterton in February 2021. After the IPO, L Catterton will continue to own a majority of Birkenstock, according to the filing.

    “We see ourselves as the oldest start-up on earth,” the company said in the filing. “We are a brand backed by a family tradition of a quarter of a millennium with the resilience, timeless relevance, and credibility of a multigenerational business.”

    Facebook parent Meta is well aware of the efforts taken by counterfeiters on its platform. In 2021, Facebook and luxury brand Gucci filed a joint lawsuit in California, alleging that a user of Facebook’s U.S. sites was using the platform to sell fake Gucci products.

    The companies said in a statement that over a million “pieces of content were removed from Facebook and Instagram in the first half of 2020, based on thousands of reports of counterfeit content from brand owners, including Gucci.”

    In the six months ending March 31, Birkenstock’s revenue climbed 19% to 644.2 million euros, or $693.2 million. Net income over that stretch dropped 45%, largely due to a foreign exchange loss.

    WATCH: Birkenstock files for U.S. IPO on NYSE

    Birkenstock files for U.S. IPO on NYSE under 'BIRK'

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  • Bet against America’s love for junk food? Morgan Stanley sees tough times ahead for snack stocks like Hostess

    Bet against America’s love for junk food? Morgan Stanley sees tough times ahead for snack stocks like Hostess

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  • Ripple buys crypto infrastructure startup in its second acquisition of 2023

    Ripple buys crypto infrastructure startup in its second acquisition of 2023

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    Cryptocurrency company Ripple announced on Friday it will acquire Fortress Trust, a startup specializing in crypto infrastructure, giving it a license in Nevada and allowing it to expand beyond its core bread and butter of blockchain-enabled payments.

    Ripple did not disclose the terms of the deal.

    Founded in 2021 by Scott Purcell, an entrepreneur with a background in equity and debt crowdfunding, Fortress Trust aims to help large enterprises interact with digital currencies. Purcell was formerly CEO of Prime Trust, a crypto custodian which shut down after BitGo abandoned a deal to acquire the firm.

    Ripple is mostly known for its role as a cross-border payments firm. The company uses a blockchain-based messaging system, akin to SWIFT, to approve speedy transactions between a network of banks and other financial institutions.

    Ripple’s partners include Britain’s Modulr, Singapore’s Nium and Japan’s SBI Remit.

    The company also uses XRP, a cryptocurrency it owns a significant portion of and has become closely associated with, for cross-border payments between banks and other financial institutions.

    XRP didn’t move substantially on the news. The token was up about 0.4% in the past 24 hours, trading at a price of 50 cents.

    Ripple has struggled in recent years, with the U.S. Securities and Exchange Commission targeting the firm with a lawsuit alleging XRP should be considered a security and that its executives sold over $1 billion worth of the token to investors in an illegal securities offering.

    Ripple had previously partnered with MoneyGram, which used XRP in a pilot to make instant transfers, using XRP as a “bridge” currency to move funds without the need for pre-funded accounts. Following the lawsuit, MoneyGram and Ripple abandoned their partnership in March 2021.

    In July, though, Ripple secured a key victory as a judge ruled that the XRP token was “not necessarily a security on its face.”

    Ripple has seen momentum in its business build recently — particularly outside the U.S., where most of its clients are based. Asked whether the ruling meant that American banks would return to Ripple to use its ODL product, Stu Alderoty, Ripple’s chief legal officer, told CNBC, “I think the answer to that is yes.”

    Fortress is Ripple’s second acquisition this year. In May, the company agreed to buy Metaco, a Swiss provider of crypto custody services, for $250 million.

    A Ripple spokesperson declined to comment on the size of the deal but said that it is less than the sum Ripple paid to buy Metaco. Ripple was a minority investor in Fortress Trust’s seed funding round.

    Ripple said the deal would “support our existing lines of business — specifically in terms of improving the customer experience within our payments and liquidity solutions.”

    Ripple also obtained a Nevada trust with its acquisition of Fortress Trust, adding to its growing list of regulatory permits globally. A company spokesperson said this would enable the firm to “provide regulated services — for both fiat and crypto —  to certain customers in the U.S.”

    Ripple already holds a New York BitLicense, which lets it engage in regulated virtual currency activities in the state of New York, as well as 30 money transmitter licenses across the U.S. and an in-principle Major Payment Institution License from the Monetary Authority of Singapore, the country’s central bank. The company told CNBC previously it was also looking to get an e-money license with the Irish central bank.

    “Longer term, we anticipate there will be ways we can leverage the technology to support new initiatives on our roadmap and enable Ripple to serve a broader segment of customers and use cases,” a Ripple spokesperson told CNBC via email.

    Ripple is one of many players in the so-called “crypto custody” space, meaning it’s focused on helping companies and individual users store their tokens in a secure, decentralized address without requiring all the technical knowhow.

    Fortress Trust uses application programming interfaces, or APIs — programs that allow different apps to interact with each other — to allow companies to pull data from other bits of software, such as wallets holding cryptocurrencies and nonfungible tokens.

    Per Fortress’s website, the startup works with “crypto exchanges, NFT marketplaces, tokenization platforms, corporate brands, agencies, securities exchanges, real estate, healthcare, neobanks, sports and entertainment celebrities, musicians, influencers and other innovators.”

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  • India’s consumer market set to become the world’s third largest by 2027, behind the U.S. and China

    India’s consumer market set to become the world’s third largest by 2027, behind the U.S. and China

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    People check Apple Macbook laptops at the new Apple Inc. store in New Delhi, India on April 20, 2023.

    Nurphoto | Nurphoto | Getty Images

    India’s consumer market is set to become the world’s third largest by 2027 as the number of middle to high-income households rise, according to a report by BMI.

    The country currently ranks fifth, but the Fitch Solutions company predicts a 29% increase in real household spending will push India up two spots.

    In fact, the report forecast that the growth in India’s household spending per capita will outpace that of other developing Asian economies like Indonesia, the Philippines and Thailand at 7.8% year-on-year.

    “Overall, the gap between total household spending across ASEAN and India will also almost triple,” the report said.

    BMI estimates India’s household spending will exceed $3 trillion as disposable income rises by a compounded 14.6% annually until 2027. By then, a projected 25.8% of Indian households will reach $10,000 in annual disposable income.

    “The majority of these households will be located in the economic centres, such as New Delhi, Mumbai and Bengaluru. The wealthier households are mainly located in urban areas, making it easy for retailers to target their key target markets,” BMI said. 

    Growing young population

    India’s large youth population is also a driving force for increased consumer spending. 

    Approximately 33% of the country’s population is estimated to be between 20 and 33 years old, and BMI expects this group to spend big on electronics.

    The report predicts communications spending will grow by an average of 11.1% annually to $76.2 billion by 2027 due to a “technology-literate, urban middle class with increasing amounts of disposable income that would encourage expenditure on aspirational products such as consumer electronics.”

    The country’s ongoing urbanization will also help boost consumer spending as companies can more easily access consumers and open more physical retail stores to cater to them.

    In April, Apple opened two retail stores in Delhi and Mumbai. Samsung announced in the same month that it will set up 15 premium experience stores across India by the end of the year in major cities like Delhi, Mumbai and Chennai. 

    BMI also noted that global investors such as Blackstone Group and APG Asset Management have injected more money into the country’s shopping mall business to capitalize on consumer spending growth.

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  • CNBC Daily Open: Despite Monday’s bounce, stocks are still wobbly

    CNBC Daily Open: Despite Monday’s bounce, stocks are still wobbly

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    A trader works on the floor of the New York Stock Exchange during opening bell in New York City on August 21, 2023. 

    Angela Weiss | AFP | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    What you need to know today

    Markets’ last burst for August
    U.S. stocks started the final week of August on an upbeat note, with all three major indexes closing in the green. All but one sector in the S&P 500 were positive. Asia-Pacific markets followed Wall Street higher Tuesday. Hong Kong’s Hang Seng Index extended gains from yesterday and added around 1.87%. Japan’s Nikkei 225 inched up 0.34% even as the country’s unemployment rate for July was a higher-than-expected 2.7%, compared with the 2.5% consensus.

    Goldman offloads another acquisition
    Goldman Sachs is selling its personal financial management unit to Creative Planning, a wealth management firm. In May 2019, Goldman acquired United Capital Financial Partners for $750 million. CEO David Solomon heralded the deal as a way to reach high net worth clientele (Goldman focuses on ultra high net worth clientele) — but the bank only captured around 1% of that market by February.

    Artificial intelligence, human control
    Artificial intelligence must be “subject to human control,” Microsoft’s president and vice-chairman Brad Smith told CNBC in an exclusive interview. “We need to ensure that we have humans in control,” Smith said. It follows, then, that AI won’t replace jobs, but will serve as a tool to help the humans doing the work, Smith added.

    Monetizing Google Maps data
    Google is planning to license solar and environment data to companies, CNBC has learned. Google has energy data on over 350 million buildings, according to documents CNBC viewed, and sees opportunity to sell the data to companies like Tesla Energy, Aurora Solar and Zillow. The tech giant hopes revenue can hit $100 million in the first year.

    [PRO] ‘Absolutely formidable’ semiconductor firm
    With a market capitalization of $1.15 trillion, Nvidia is the world’s most valuable chipmaker and has been the focus of this year’s AI-fueled frenzy. But there’s a semiconductor company that’s “absolutely formidable” in terms of its dominance in the foundry business, according to an analyst from asset management firm Sanlam Investments UK.

    The bottom line

    “There’s an old adage amongst people who cover consumer markets,” said Michael Zdinak, an economist who leads the U.S. consumer markets service at S&P Global Market Intelligence. “Never bet against the U.S. consumer because we’re always willing to spend money we don’t have.”

    Analysts at Deutsche Bank and Morgan Stanley, however, aren’t so optimistic about the consumer.

    “The consumer is less healthy than it appears,” wrote Morgan Stanley analyst Simeon Gutman. Consumers are spending more on services than goods, according to Gutman, which isn’t good news for consumer retailers. Indeed, the retail sector’s been roiled by volatility the last two weeks amid choppy earnings, said Deutsche Bank analyst Krisztina Katai. And investors should expect more turmoil ahead.

    Maybe that warning comes from an overabundance of caution. After all, retail rallied Monday, along with nine other sectors in the S&P 500 (only utilities dipped by 0.04%). Markets broadly rose: The S&P added 0.63%, the Dow Jones Industrial Average gained 0.62% and the Nasdaq Composite climbed 0.84%.

    Markets are trying to make up for a dismal August — so far, the S&P has shed around 3.4%, the Dow 2.8% and the Nasdaq 4.5% — but that might prove a difficult feat. Monday’s rally was just one data point. Moreover, there are more obstacles ahead.

    “The ‘Wall of Worry’ that had all but disappeared by July is being rebuilt – U.S. 10 year yields above 4%, anxiety rising in China, Europe’s economy slumps, and a more sober tone from some U.S. retailers,” Evercore ISI senior managing director Julian Emanuel wrote in a Sunday note.

    That’s not news investors want to hear heading into September, a historically bad month for stocks. Hence, even if markets manage to claw back some losses by the end of this week, it’d be prudent to brace for another trying month.

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  • CNBC Daily Open: Despite Monday’s bounce, stocks are still shaky

    CNBC Daily Open: Despite Monday’s bounce, stocks are still shaky

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    Traders work on the floor of the New York Stock Exchange during morning trading on August 25, 2023 in New York City.

    Michael M. Santiago | Getty Images

    This report is from today’s CNBC Daily Open, our new, international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

    What you need to know today

    Markets’ last burst for August
    U.S. stocks started the final week of August on an upbeat note, with all three major indexes closing in the green. All but one sector in the S&P 500 were positive. The pan-European Stoxx 600 rose 0.89%, helped by technology and construction stocks, which were the best-performing sectors. U.K. markets were closed for a bank holiday.

    Goldman offloads another acquisition
    Goldman Sachs is selling its personal financial management unit to Creative Planning, a wealth management firm. In May 2019, Goldman acquired United Capital Financial Partners for $750 million. CEO David Solomon heralded the deal as a way to reach high net worth clientele (Goldman focuses on ultra high net worth clientele) — but the bank only captured around 1% of that market by February.

    Monetizing Google Maps data
    Google is planning to license solar and environment data to companies, CNBC has learned. Google has energy data on over 350 million buildings, according to documents CNBC viewed, and sees opportunity to sell the data to companies like Tesla Energy, Aurora Solar and Zillow. The tech giant hopes revenue can hit $100 million in the first year.

    Doomed hope on meme stock?
    Bed Bath & Beyond filed for Chapter 11 bankruptcy protection in April; its share price has hovered around 20 cents since then. Yet investors are still trading the stock at enormous volumes: More than 15 million transactions took place on Aug. 16, according to Nasdaq data. It seems investors are still seized by meme stock frenzy — and might be left as empty handed as the company.

    [PRO] Stocks’ September vulnerability
    We’re in the last trading week for August. Investors may be heaving a sigh of relief because stocks have had more down weeks than up so far this month. But September’s historically the worst month for stocks, according to CFRA data. And stocks still look vulnerable going into the new month, CNBC Pro’s Bob Pisani writes. Here’s why.

    The bottom line

    “There’s an old adage amongst people who cover consumer markets,” said Michael Zdinak, an economist who leads the U.S. consumer markets service at S&P Global Market Intelligence. “Never bet against the U.S. consumer because we’re always willing to spend money we don’t have.”

    Analysts at Deutsche Bank and Morgan Stanley, however, aren’t so optimistic about the consumer.

    “The consumer is less healthy than it appears,” wrote Morgan Stanley analyst Simeon Gutman. Consumers are spending more on services than goods, according to Gutman, which isn’t good news for consumer retailers. Indeed, the retail sector’s been roiled by volatility the last two weeks amid choppy earnings, said Deutsche Bank analyst Krisztina Katai. And investors should expect more turmoil ahead.

    Maybe that warning comes from an overabundance of caution. After all, retail rallied Monday, along with nine other sectors in the S&P 500 (only utilities dipped by 0.04%). Markets broadly rose: The S&P added 0.63%, the Dow Jones Industrial Average gained 0.62% and the Nasdaq Composite climbed 0.84%.

    Markets are trying to make up for a dismal August — so far, the S&P has shed around 3.4%, the Dow 2.8% and the Nasdaq 4.5% — but that might prove a difficult feat. Monday’s rally was just one data point. Moreover, there are more obstacles ahead.

    “The ‘Wall of Worry’ that had all but disappeared by July is being rebuilt – U.S. 10 year yields above 4%, anxiety rising in China, Europe’s economy slumps, and a more sober tone from some U.S. retailers,” Evercore ISI senior managing director Julian Emanuel wrote in a Sunday note.

    That’s not news investors want to hear heading into September, a historically bad month for stocks. Hence, even if markets manage to claw back some losses by the end of this week, it’d be prudent to brace for another trying month.

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