Most Americans may not even remember the last time they wrote a check.
Only 15% of adults said they wrote a few checks a month in 2023, according to a recent report by GoBankingRates. At the time of the late November survey, 46% of the more than 1,000 respondents said they hadn’t written a single check in 2023.
These days, consumers are far more likely to “tap and go.”
In fact, in the years since the Covid pandemic, Americans have fully embraced contactless and digital payment methods, while check writing has steadily declined into near-oblivion.
As of July 15, Target joined a growing list of retailers, including the Aldi supermarket chain, Whole Foods, Old Navy and Lululemon, that no longer accept personal checks as payment.
Even more businesses are likely to follow suit, according to Scott Anchin, vice president of operational risk and payments policy for the Independent Community Bankers of America. That’s in part because check fraud is a significant issue, he said.
“The check is inherently insecure,” Anchin said. “Handing over a check is akin to sharing a screenshot of bank details alongside a Venmo transfer — no one would consider this safe.”
With significant advancements in security, thanks to authentication, monitoring and data encryption, the shift by retailers and consumers to contactless and digital payment methods will only continue to grow, accelerating the move toward a “check zero” world, he said.
So, if personal checks are heading toward extinction, who, if anyone, is affected?
In 2024, check writers skew older and are likely at the margins of the banking community, according to Anchin. Americans over the age of 55 are the most likely to write checks every month, GoBankingRates also found.
However, it wasn’t always that way.
Although checks, as we know them today, first originated in the 11th century, they didn’t become mainstream until the early 20th century, following the Federal Reserve Act of 1913, according to a historical survey by the Federal Reserve Bank of Atlanta.
But back then, “everyday people didn’t have checking accounts, that was for rich people,” said Stephen Quinn, professor of economics at Texas Christian University and co-author of the Atlanta Fed’s report. “It wasn’t until after World War II that checking accounts were a common thing.”
Postwar prosperity greatly expanded the use of checking accounts to middle-class households, making checks the most widely used noncash payment method in the U.S., the Atlanta Fed found.
Personal checks continued to gain steam until the mid-1990s, when credit and debit cards largely took over. Since 2000, check-writing has plummeted by nearly 75%.
Despite the rapid decline, “a form of payment with a thousand-year history is unlikely to vanish overnight,” the Atlanta Fed report said.
And yet, today’s young adults are increasingly eschewing the traditional banking and credit infrastructure altogether in favor of peer-to-peer payment apps.
Quinn said his students rely almost exclusively on digital wallet payments such as Apple Pay, Venmo and Zelle — hardly anyone carries cash, and it’s likely that few even know how to write a check.
Still, there remains a place for personal checks, Quinn said.
“The paper check might linger where it began, at the high end — for large one-off payments,” he said, such as charitable donations or real estate transactions. “In this way, checks might hold on for some time.”
As consumers watch their wallets, companies have felt pressure from investors to do the same. Executives have sought to show shareholders that they’re adjusting to consumer demand as it returns to typical patterns or even softens, as well as aggressively countering higher expenses.
Airlines, automakers, media companies and package giant UPS are all digesting new labor contracts that gave raises to tens of thousands of workers and drove costs higher.
Companies in years past could get away with passing on higher costs to customers who were willing to splurge on everything from new appliances to beach vacations. But businesses’ pricing power has waned, so executives are looking for other ways to manage the budget â or squeeze out more profits, said Gregory Daco, chief economist for EY.
“You are in an environment where cost fatigue is very much part of the equation for consumers and business leaders,” Daco said. “The cost of most everything is much higher than it was before the pandemic, whether it’s goods, inputs, equipment, labor, even interest rates.”
There are some exceptions to the recent cost-cutting wave: Walmart, for example, said last month that it would build or convert more than 150 stores over the next five years, along with a more than $9 billion investment to modernize many of its current stores.
And some companies, such as banks, already made deep cuts. Five of the largest banks, including Wells Fargo and Goldman Sachs, together eliminated more than 20,000 jobs in 2023. Now, they’re awaiting interest rate cuts by the Federal Reserve that would free up cash for pent-up mergers and acquisitions.
But cost reductions unveiled in even just the first few weeks of the year amount to tens of thousands of jobs and billions of dollars. In January, U.S. companies announced 82,307 job cuts, more than double the number in December, while still down 20% from a year ago, according to Challenger, Gray and Christmas.
And the tightening of months prior is already showing up in financial reports.
So far this earnings season, results have indicated that companies have focused on driving profits higher without the tailwind of big price increases and sales growth.
As of mid-February, more than three-quarters of the S&P 500 had reported fourth-quarter results, with far more earnings beats than revenue beats. The quarter’s earnings, measured by a composite of S&P 500 companies, are on pace to rise nearly 10%. Revenues, however, are up a more modest 3.4%.
And the layoffs haven’t been contained to tech. UPS said it was axing 12,000 jobs, saving the company $1 billion, CEO Carol Tome said late last month, citing softer demand. Many of the largest retail, media and entertainment companies have also announced workforce reductions, in addition to other cuts.
Warner Bros. Discovery has slashed content spending and headcount as part of $4 billion in total cost savings from the merger of Discovery and WarnerMedia. Disney initially promised $5.5 billion in cost reductions in 2023, fueled by 7,000 layoffs. The company has since increased its savings promise to $7.5 billion, and executives suggested in its Feb. 7 quarterly earnings report that it may exceed that target.
JetBlue Airways, which hasn’t posted an annual profit since before the pandemic, is deferring about $2.5 billion in capital expenditures on new Airbus planes to the end of the decade, culling unprofitable routes and redeploying aircraft in addition to the worker buyouts.
Some cuts are even making their way to the front of the cabin. United Airlines, which also posted a profit in 2023, at the start of this year said it would serve first-class meals only on flights more than 900 miles, up from 800 miles previously. “On flights that are 301 to 900 miles, United First customers can expect an offering from the premium snack basket,” according to an internal post.
Several of the country’s largest automakers, such as General Motors and Ford Motor, have lowered spending by billions of dollars through reduced or delayed investments on all-electric vehicles. The U.S.-based companies as well as others, such as Netherlands-based Stellantis, have recently reduced headcount and payroll through voluntary buyouts or layoffs.
Even Chipotle, which reported more foot traffic and sales at its restaurants in the most recently reported quarter, is chasing higher productivity by testing an avocado-scooping robot called the Autocado that shortens the time it takes to make guacamole. It’s also testing another robot that can put together burrito bowls and salads. The robots, if expanded to other stores, could help cut costs by minimizing food waste or reducing the number of workers needed for those tasks.
Industry experts have chalked up some recent cuts to companies catching their breath â and taking a hard look at how they operate â after an unusual four-year stretch caused by the pandemic and its fallout.
EY’s Daco said the past few years have been marked by a mismatch in supply and demand when it comes to goods, services and even workers.
Customers went on shopping sprees, fueled by government stimulus and less experience-related spending. Airlines saw demand disappear and then skyrocket. Companies furloughed workers in the early pandemic and then struggled to fill jobs.
He said he expects companies this year to “search for an equilibrium.”
“You’re seeing a rebalancing happening in the labor markets, in the capital markets,” he said. “And that rebalancing is still going to play out and gradually lead to a more sustainable environment of lower inflation and lower interest rates, and perhaps a little bit slower growth.”
The auto industry, for example, faced a supply issue during much of the Covid pandemic but is now facing a potential demand problem. Inventories of new vehicles are rising â surpassing 2.5 million units and 71 days’ supply toward the end of 2023, up 57% year over year, according to Cox Automotive â forcing automakers to extend more discounts in an effort to move cars and trucks off dealer lots.
Automakers have also been contending with slower-than-expected adoption of EVs.
David Silverman, a retail analyst at Fitch Ratings, said companies are “feeling a bit heavy as sales growth moderates and maybe even declines.”
Cost cuts at UPS, Hasbro and Levi all followed sales declines in the most recent fiscal quarter. Macy’s, which reports earnings later this month, has said it expects same-store sales to drop, and there’s early evidence that may come to bear: Consumers pulled back on spending in January, with retail sales falling 0.8%, more than economists expected, according to the latest federal data.
Most major retailers, including Walmart, Target and Home Depot, will report earnings in the coming weeks.
Credit ratings agency Fitch said it doesn’t expect the U.S. economy to tip into recession, but it does anticipate a continued pullback in discretionary spending.
“Part of companies’ decision to lower their expense structure is in line with their views that 2024 may not be a fantastic year from a top-line-growth standpoint,” Silverman said.
Plus, he added, companies have had to find cash to fund investments in newer technology such as infrastructure that supports e-commerce, a resilient supply chain or investments in artificial intelligence.
Companies may have another reason to cut costs now, too. As they see other companies shrinking the size of their workforces or budgets, there’s safety in numbers.
Or as Silverman noted, “layoffs beget layoffs.”
“As companies have started to announce them it becomes normalized,” he said. “There’s less of a stigma.”
Even with rolling layoffs, the labor market remains strong, which may help explain why Wall Street has by and large rewarded those companies that have found areas to save and returned profits to shareholders.
Shares of Meta, for example, almost tripled in price in 2023 in that “year of efficiency,” making the stock the second-best gainer in the S&P 500, behind only Nvidia. After laying off more than 20,000 workers in 2023, Meta on Feb. 2 announced its first-ever dividend and said it expanded its share buyback authorization by $50 billion.
UPS, fresh from job cuts, said it would raise its quarterly dividend by a penny.
Overall, dividends paid by companies in the S&P 500 rose 5.05% last year, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices, and he estimated they will likely increase nearly 5.3% this year.
â CNBC’s Michael Wayland, Alex Sherman, Robert Hum, Amelia Lucas and Jonathan Vanian contributed to this story.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
Here are the biggest calls on Wall Street on Wednesday: Redburn Atlantic Equities reiterates Amazon as buy Redburn said Amazon Web Services’ pricing power will drive share acceleration for Amazon. “The combination of fading optimisation headwinds, increased deployment of new workloads and the February price hike bodes well for a meaningful growth reacceleration of AWS above market expectations. Bank of America reiterates Alphabet as buy Bank of America said AI is a “top stock driver” for Alphabet “Overall, we do not see a major traffic impact for Google and continue to expect progress with AI to be top stock driver.” Leerink downgrades Amgen to market perform from outperform Leerink downgraded the biotech company due to rising obesity competition and the firm says more info is needed for Amgen’s experimental weight-loss drug. “We await data with longer-term administration to better understand drug efficacy and tolerability.” KeyBanc initiates Crocs and Deckers as overweight Key said it’s bullish on footwear companies like Crocs and Deckers. “Another Year of Macro Uncertainty Is Upon Us, but Footwear Should Remain Strong and Steady.” Gordon Haskett upgrades Target to buy from neutral Gordon Haskett said in its upgrade of the stock that “comp prospects will begin to brighten.” “Finally, in order to capitalize on our expectation for an uptick in discretionary sales we are upgrading Target to Buy.” Redburn Atlantic Equities upgrades Toast to buy from neutral Redburn said the restaurant technology company is underappreciated. ” Toast’s ability to maintain a stable gross payment take rate while onboarding larger merchants is clear evidence of pricing power on SMB [small midsize business] merchants.” Jefferies initiates Sprout Social as buy Jefferies said the social media software provider is a market leader. “We initiate on social media management software company SPT with a Buy.” Citi downgrades Steven Madden to neutral from buy Citi said in its downgrade of Steven Madden that it sees margin headwinds for the shoe company. “Margin Headwinds Limit EPS Upside in F24E; D/G to Neutral.” JPMorgan downgrades New York Community Bancorp to neutral from overweight JPMorgan said in its downgrade of the regional bank that executive departures and a disappointing earnings report earlier this week have the stock “outside of our comfort zone.” “It has been a very challenging week for NYCB shares since NYCB reported 4Q23 earnings which included (1) the company reporting a wide EPS miss on 4Q23 results (on significant provision build) and (2) a disappointing 2024 outlook tied to the bank ramping up liquidity, reserves, and capital as part of becoming a Category 4 bank ($100B+ in assets).” Jefferies upgrades Quest Diagnostics to buy from hold Jefferies said in its upgrade of Quest that the medical diagnostic’s stock is “compelling.” “U/G to Buy: Guidance Is Attainable, M & A To Drive Upside, Valuation’s Compelling.” Morgan Stanley names Huntington Bancshares a top pick Morgan Stanley said it likes the regional bank’s low exposure to commercial real estate. “Making HBAN , with its low CRE exposure and high reserve ratio our Top Pick.” Morgan Stanley reiterates Nvidia as overweight Morgan Stanley raised its price target on Nvidia to $750 per share from $603. “We continue to see a very strong near term picture, and think that various second derivative anxieties are missing the bigger picture; we raise #s yet again.” Morgan Stanley downgrades Aptiv to underweight from equal weight Morgan Stanley said it sees slowing growth for the automotic tech company. “A slowdown in demand for EVs and legacy OEMs’ willingness to make them challenges APTV’s growth-over-market (GOM) assumption which underpins earnings and valuation.” Jefferies upgrades Semrush to buy from hold Jefferies said the search engine optimization company has “pricing power.” “We assume coverage of Semrush — an SEO, competitor intelligence, and digital marketing platform— upgrading the stock to Buy from Hold.” JPMorgan upgrades Crown Holdings to overweight from neutral JPMorgan said shares of the packaging company have an attractive risk/reward. “We think that Crown Holdings has reached an equity value that leads to a favorable risk/reward balance.” Piper Sandler initiates Civitas Resources as buy Piper said shares of the energy producer are underappreciated. “We initiate coverage of Civitas Resources (CIVI) with an Overweight rating and $92 PT.” DA Davidson upgrade Symbotic to buy from neutral DA said shares of the robotic automation company are attractive. “We find SYM’s long term fundamentals attractive and its technology unrivaled and highly differentiated.” Goldman Sachs downgrades VF Corp to neutral from buy Goldman downgraded the owner of brands of like Vans and North Face and says it doesn’t see any near term positive catalysts for VF Corp. “Longer-dated path to turnaround as profit pressures persist; downgrade to Neutral.” Bank of America downgrades New York Community Bancorp to neutral from buy Bank of America said New York Community Bancorp’s outlook is too “muddled” after the recent selloff. “We believe the persistent sell-off in the stock over the last two days on perceived risks tied to the commercial real estate (CRE) book and the heightened degree of regulatory scrutiny is likely to weigh on the EPS outlook and on investor sentiment to add exposure to the stock.” DA Davidson reiterates Apple as neutral DA raised its price target on the stock to $200 per share from $166 and says it’s bullish on Apple’s Vision Pro. The firm said it was maintaining its neutral rating overall. “We are more positive on AAPL after experiencing a Vision Pro demo first hand.” Oppenheimer upgrades Enphase to outperform from perform Oppenheimer upgraded the energy company after its earnings report on Tuesday and says estimates have bottomed. “With ENPH guiding well below consensus and shares trading substantially higher, we believe the debate on shares will now focus on lingering channel inventory overhang, underlying demand levels, and the competitive landscape.” Jefferies initiates ZoomInfo as buy Jefferies initiates the software data company with a buy and says it sees new customer growth. “We initiate on sales and marketing intelligence company ZI with a Buy.’
Walmart Inc. will shut down Store No. 8, the big-box retailer’s startup incubator and innovation hub, the Wall Street Journal reported on Friday. It’s the latest move by a retailer to trim expenses and protect profits as shoppers continue to grapple with higher prices.
Chief Financial Officer John Rainey told employees in a memo that much of what Store No. 8 did had already been incorporated into the company’s operations as a whole, the Journal said.
“We’ve graduated capabilities from this operating approach that are now fully embedded in our organization,” Rainey said in the memo, according to the Journal.
“The responsibility to shape the future of retail is now shared by all segments,” he continued.
Walmart launched Store No. 8 in 2017 in an effort to experiment with new ideas, including augmented reality, artificial intelligence and new ways of delivering products, and to stay nimble in a retail landscape increasingly defined by online shopping. The Journal said that Scott Eckert, who led Store No. 8, was leaving the company.
Walmart did not immediately respond to a request for comment. Shares were up fractionally after hours, after finishing 0.5% lower during the day.
Walmart and other retailers have signaled that they are rethinking what technology to invest in and what stores to keep open. Those decisions would follow years of online-sales adoption, pandemic-related disruptions to shopping and a jump in prices for basics that began in 2022 and led people to shy away from buying things like laptops and clothing.
The Wall Street Journal, which first reported that news, said Macy’s intended to bring more automation to its supply chain and invest “in areas that impact consumers,” like visual displays in stores and efforts to smooth out the online-shopping experience.
Target’s shuttered small-format store on Folsom Street in San Francisco’s SoMa neighborhood, November 2023.
Gabrielle Fonrouge
On Sept. 26, Target set off a national firestorm when it said it would close nine stores in four states because theft and organized retail crime had made them too dangerous to run.
On its face, Target’s announcement was evidence that retail crime was preventing one of the country’s most prominent retailers from operating stores profitably and safely. It challenged skeptics who believed that retailers had exaggerated the impact of organized retail crime and used it as an excuse for poor financial performance.
There was just one problem with the explanation Target gave for closing stores: The locations it shuttered generally saw fewer reported crimes than others it chose to keep open nearby, a monthslong CNBC investigation has found.
In some cases, Target chose to keep operating stores in busier areas that had better foot traffic or higher median incomes, even though the locations saw more theft and violence, the probe revealed. In those areas, police departments may be better funded due to higher tax bases, and shoppers may have more to spend on discretionary goods.
Many of the locations Target closed were “small-format” stores the company opened over the last five years as part of an experiment to expand its footprint in dense, urban areas. The moves followed Target’s decision to shutter four similar stores in the spring that it said were underperforming, Retail Dive previously reported.
At the time it announced the nine store closures in September, Target said, “We cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance. We can only be successful if the working and shopping environment is safe for all.”
The news came just hours after the National Retail Federation issued a key annual retail security survey — in which it said violence at stores had increased but losses from theft hadn’t changed much — and exactly one month before the trade group was planning to lobby Congress for stiffer punishment for organized theft offenders. Target CEO Brian Cornell sits on the NRF’s board of directors and is a member of its executive committee.
One longtime retail executive and expert questioned whether Target’s claims about theft at the stores were designed to mask its struggles, as the retailer’s sales fell from the prior year in both its second and third quarters.
“I don’t want to use the word ‘stunt,’ because I don’t know exactly what went on in Minneapolis [where Target is based], but to me, it read like a stunt, looking to divert attention from the company’s lack of performance overall,” said Mark Cohen, a professor and director of retail studies at Columbia Business School who previously served as the CEO of Sears Canada, Bradlees and Lazarus department stores.
“They did not disclose their actual shortage statistics,” he added. “They talked about it in general terms; they did not disclose any other factors that would have caused them to decide to close any of those stores. They implied that the only reason they were closing the stores was because of theft. That may or may not be true. My guess is: Not true.”
In response, Target spokesperson Jim Joice told CNBC that as a growth company, Target is “continuously opening new stores, initiating remodels, investing in our team and infrastructure, and refining our operations as we seek to deliver the shopping experience that people have come to expect of Target.”
“In 2023 alone, we opened 21 new stores and remodeled 150 stores as part of our nearly $5 billion investment in strategic initiatives. The recently announced store closures related to safety, retail theft, and unsustainable business performance represent less than 0.5% of our U.S. footprint, with 1,956 stores currently operating and serving our guests,” Joice said.
Target shoppers are encouraged to call for help accessing products that are kept in locked cases.
Gabrielle Fonrouge
CNBC used public record requests and law enforcement sources to obtain crime statistics and 911 call data for 21 Target stores in New York City, Seattle, the San Francisco Bay Area, and Portland, Oregon — the four areas where the retailer closed stores. The data includes the nine stores Target shuttered and similar locations it kept open nearby, spanning from January 2021 through September 2023, when the closures were announced. The records show how many times Target was listed as the victim of a crime at the locations, or how many times police were called to the stores and arrested someone, said they addressed the issue or generated a report or log of what occurred.
The records paint a startling picture of the frequent crime at the locations. But they also show a clear trend. Nearly every store the retailer closed saw less police activity and fewer reportedcrime incidents than the locations it kept open nearby.
Only one of the nine stores that Target closed across the four regions, a location in Pittsburg, California, saw more crime and police activity than its closest comparable location, in Antioch, California, according to CNBC’s analysis.
Store-specific crime data for the nine locations Target closed has not been previously reported.
Like most data on theft, organized retail crime, and “shrink,” or retailers’ inventory loss, the records obtained by CNBC are not complete. Theft and crime overall are difficult to measure, as they frequently go unreported and undetected, experts have told CNBC.
Target declined to provide its internal crime figures. Without those numbers, the records obtained by CNBC are “the only picture that you’re going to get” about what crime looked like at the locations the retailer closed and the ones it didn’t, said Christopher Herrmann, an assistant professor at John Jay College of Criminal Justice and an expert in crime analysis and mapping.
“It’s interesting that they’re using public safety, or employee safety, as an excuse, kind of, for closing the stores,” said Herrmann. “Because the reality is, they’re not closing the stores with the highest rate of retail theft.”
In response, Target’s Joice told CNBC that “store-level incidents vary widely in severity, and police data won’t show the full extent of what our teams experience on the ground.”
“We have repeatedly shared financial data and internal data on the increase of theft-related crime,” Joice said. “We have also consistently conveyed our emphasis on safety and highlighted team members’ experiences that demonstrate the impact that theft and organized retail crime have had on our company, our guests, and the communities we serve.”
“We continue to invest heavily in safety, including strategies to prevent and stop theft and organized retail crime in our stores, as well as partnering with law enforcement, legislators, and retail peers to seek long-term solutions,” Joice said.
Target closed three stores in the San Francisco Bay Area — one in San Francisco, one in Oakland and another in Pittsburg, a suburb about 40 miles outside the city.
All the locations were within a few miles or a short drive away from another Target that remained open, which could have played a role in the company’s decision to shutter them, experts said.
Retailers often “miscalculate how much the new store will cannibalize existing stores,” said Cohen, of Columbia Business School.
Target opened its now-closed small-format store in Oakland in 2019, just two miles away from its Emeryville location. Between January 2021 and September 2023, 96 crime incidents were reported at the Oakland store compared with 440 at the Emeryville store over the same time frame.
Target’s Emeryville, California, location remains open about two miles away from a store the retailer closed in Oakland.
Gabrielle Fonrouge
The findings reflect some overall theft trends in Oakland and Emeryville in 2023. Overall theft, excluding car theft, was down 15% in Oakland from Jan. 1 to Oct. 29, compared with the same period a year ago, according to police records. In Emeryville, petty theft and grand theft were up 16% and 14%, respectively, for the period from Jan. 1 to Oct. 31, compared with the same period a year ago, police records show.
Demographics is another factor that could be at play.In the ZIP code where the Oakland store is located, the median income level is $76,953, compared with $114,286 in Emeryville, according to U.S. Census Data.
People with higher incomes tend to have more money to spend on discretionary goods.Police departments in those areas may also be more inclined to enforce property crimes such as theft if there is less violent crime to attend to, which could explain the difference in police responses between stores, experts who study crime have told CNBC.For example, one homicide and three rapes have been reported in Emeryville so far this year. In comparison, 106 homicides and 159 rapes have been reported in Oakland in the same time frame.
Looters rob a Target store during protests in Oakland, California, on May 30, 2020, over the death of George Floyd.
Josh Edelson | AFP | Getty Images
Within the city of San Francisco, the small-format store on Folsom Street that Target closed saw at least 84 crime incidents that resulted in police reports between January 2021 and September 2023.
Two miles away at Target’s sprawling Union Square location, which remains open, 486 incidents were recorded during the same time frame.
The stores’ neighborhoods and the foot traffic they saw also differentiated them.
The Target sign from its Mission Street store in San Francisco’s Union Square glows on a building across the street, November 2023.
Gabrielle Fonrouge
The closed store was sandwiched between a car dealership and a freeway in an area that locals said had light foot traffic and had attracted a homeless encampment during the Covid pandemic. In comparison, Target’s Union Square location is in the heart of San Francisco’s bustling tourist and shopping district.
Target closed three stores in the city of Portland that saw less crime than locations it kept open.
For example, the Target on Southeast Washington Street, which remains open, had 718 reported incidents between January 2021 and the end of September 2023, which is more than all three closed stores saw combined over the same time period, according to police records.
One of the locations, a small-format store on Northeast Halsey Street, was open for less than three years before it was closed.
Based on available data in Portland, CNBC’s findings echo some area crime statistics.
In the Hazelwood neighborhood, where Target’s store on Southeast Washington Street remains open, reported larcenies are up 5% in 2023 between Jan. 1 and the end of October, compared with the same period a year ago. In Hollywood and Richmond, where Target closed stores, reported larcenies were down 37% and 8%, respectively, for the same time period.
However, in downtown Portland, where Target’s store on Southwest Morrison Street was closed, reported larcenies were up 13% for that time period.
Target closed two stores in Seattle, both small-format locations that saw fewer crimes than the nearest Target stores.
For example, the shuttered Targets on Northwest Market Street and University Way Northeast had 235 and 395 reported incidents, respectively, between January 2021 and the end of September 2023. In comparison, two locations about five miles away that remain open, on Second Avenue and Northeast Northgate Way, saw 878 and 901 reported incidents, respectively, during the same time period.
In some cases, the data also matches local crime statistics. Between Jan. 1, 2021, and Oct. 31, 2023, reported larcenies were 30% lower in the area of Target’s Northwest Market Street location and 33% lower in the area of the University Way store, both of which were closed, than in the area where Target’s Northeast Northgate Way store remains open.
Target closed one store in New York City. The location was in East Harlem and housed within a larger shopping complex that borders the East River, about a 15-minute walk from the nearest subway station.
It recorded at least 844 incidents between January 2021 and the end of September 2023, but the figures pale in comparison with those during the same time period at other Target stores dotted across the Big Apple.
A store on Greenwich Street in Lower Manhattan saw 2,090 reported incidents, more than double the number in East Harlem in that time period. At another location, on Grand Street, 1,628 incidents were recorded.
The locations are vastly different. The two Lower Manhattan locations are in busier areas with more foot traffic and higher median income levels. In the ZIP code where the East Harlem store was located, the median income is $36,989, compared with more than $250,000 in the area around the Greenwich Street store and $43,362 in the area around the Grand Street location, U.S. Census data shows.
Target closed the East Harlem location — because of crime and safety, it said — at the same time it planned to open a store about a mile and a half away on West 125th Street in Harlem. Crime trends are worse in the area where the new store is opening, according to police records.
Target’s New York City store in East Harlem was housed within a larger shopping complex.
Gabrielle Fonrouge
At the time Target announced the East Harlemclosure, reported petty theft incidents were down 2.5% between Jan. 1 and Sept. 24, 2023, in the area where the East Harlem store was and up 9% during the same period in the area where the proposed store will be, compared with the same period a year ago. Target did not comment on the discrepancy.
Methodology: When analyzing 911 call logs and other crime data for this report, CNBC included in its tally only incidents that led to an arrest, police report or log, or incidents that police said they responded to and handled. Unfounded complaints, duplicate calls, requests for backup, and store and welfare checks were weeded out from the logs and not counted, along with other irrelevant information. Mental health crises, overdoses, vehicle thefts, vehicle burglaries and other events that weren’t directly related to Target or appeared to happen outside the confines of the store were also not included.
Shoppers arrive at an Ulta Beauty store in Las Vegas, Nevada, US, on Monday, May 22, 2023. Ulta Beauty Inc. is scheduled to release earnings figures on May 25.
Bridget Bennett | Bloomberg | Getty Images
Shares of Ulta Beauty rose in after-hours trading on Thursday, as the company said its third-quarter sales rose while shoppers showed once again they’re willing to spend on makeup, face masks and more even when the budget is tight.
The specialty beauty retailer raised the bottom end of its range for full-year sales and earning expectations. It said it expects net sales for the fiscal year to be between $11.10 billion and $11.15 billion, and comparable sales to range from 5.0% to 5.5%. It said adjusted earnings per share for the year will range from $25.20 to $25.60
In a news release, CEO Dave Kimbell said the retailer saw healthy sales trends and added customers to its loyalty program. He said it’s ready for the holidays and believes “the outlook for the Beauty category is bright.”
Here’s what Ulta reported for the three-month period that ended Oct. 28:
Earnings per share: $5.07
Revenue: $2.49 billion
It was not immediately clear if those numbers were comparable to consensus estimates from LSEG, formerly known as Refinitiv.
The company’s shares rose as much as 10% in extended trading.
Ulta also announced a leadership change on Thursday. Chief Financial Officer Scott Settersten is retiring in April after nearly two decades at the beauty retailer. The company said he will be replaced by Paula Oyibo, Ulta’s senior vice president of finance.
In the fiscal third quarter, net income rose to $249.5 million, or $5.07 per share, from $274.6 million, or $5.34 per share, in the year-ago period. Revenue increased from $2.34 billion in the year-ago period.
Comparable sales, a metric that tracks Ulta stores open at least 14 months along with online sales, increased 4.5% year over year.
During the quarter, customers made more trips to Ulta’s stores and website, but spent slightly less. Transactions went up by nearly 6% and average ticket declined by 1.4% compared with the year-ago period.
Beauty has been one of the hottest categories for retailers over the past year. Even as consumers pull back on other types of discretionary purchases, they have continued to spend on makeup, face masks, fragrances and more.
That’s inspired retailers, including Macy’s, Target and Kohl’s to lean into the category by adding new brands, products and square footage. Target, for example, has a growing number of Ulta shops in its stores.
As of Thursday’s close, Ulta shares had fallen about 9% so far this year. That compares to the S&P 500, which is up about 19% year to date.
Shares of the company closed at $425.99on Thursday, bringing the company’s market value to about $20.97 billion.
This is breaking news. Please check back for updates.
Black Friday shoppers pick out clothing in a Lacoste store as retailers compete to attract shoppers and try to maintain margins on Black Friday, one of the busiest shopping days of the year, at Woodbury Common Premium Outlets in Central Valley, New York, U.S. November 24, 2023.
Vincent Alban | Reuters
Black Friday e-commerce spending popped 7.5% from a year earlier, reaching a record $9.8 billion in the U.S., according to an Adobe Analytics report, a further indication that price-conscious consumers want to spend on the best deals and are hunting for those deals online.
“We’ve seen a very strategic consumer emerge over the past year where they’re really trying to take advantage of these marquee days, so that they can maximize on discounts,” said Vivek Pandya, a lead analyst at Adobe Digital Insights.
Black Friday’s spending spike reflects a consumer who is more willing to spend than in 2022, when gas and food prices were painfully high.
Pandya noted that impulse purchases may have played a role in the Black Friday growth since $5.3 billion of the online sales came from mobile shopping. He noted that influencers and social media advertising have made it easier for consumers to get comfortable spending on their mobile devices.
Still, shoppers are price-sensitive, managing tighter budgets due to last year’s record inflation and interest rates. According to the Adobe survey, $79 million of the sales came from consumers who opted for the ‘Buy Now, Pay Later’ flexible payment method to stretch their wallets, up 47% from last year.
The best-selling categories of Black Friday, the Adobe report found, were electronics like smartwatches and televisions, along with toys and gaming. Meanwhile, home-repair tools underperformed. Pandya said top sellers directly correlated to whichever products had the best discounts.
Adobe gathers its data by analyzing one trillion visits to U.S. retail websites, 18 product categories and 100 million unique items. It does not track brick-and-mortar retail transactions.
A Mastercard analysis of this year’s Black Friday sales found that in-store sales rose just over 1% versus online sales, which grew by over 8% compared to last year.
“I do think the paradigm has changed around the in-store Black Friday experience, the long lines and things like that,” said Adobe’s Pandya.
Consumers are “more in the driver’s seat” when they are online shopping, he added, because it is easier to make side-by-side price comparisons and secure a better price.
Retailers are aware of the rise of deal-hunting consumers and want to capture as many of them as possible. Companies like Best Buy and Lowe’s have both announced higher discounting levels. Other retailers like Target and Ulta Beauty have rolled out pop-up promotions that offer 24-hour discounts on certain brands and items.
Black Friday kept the momentum going from the day before on Thanksgiving when online sales totaled $5.6 billion, according to a prior Adobe analysis.
Adobe expects the spending strength to hold over the weekend and through Cyber Monday with the biggest bargains still ahead. The report forecasts that online shoppers will spend roughly $10 billion over the course of Saturday and Sunday, and a record $12 billion on Cyber Monday.
But spending will likely begin to taper off deeper into the holiday season, according to Pandya. Cyber Monday, as the last major deal day of the holiday season, could be the final spending spike on non-essential goods for the rest of the year.
“We do expect growth to weaken because those discounts will weaken and they are dictating a lot in terms of buyer behavior this season,” said Pandya.
He noted that there are always gift-givers who procrastinate their holiday shopping so spending could continue to trickle in late into December. But the real growth surges, he said, “end up being in November and Thanksgiving week.”
A person walks past a sales advertisement at Saks Off 5th department store ahead of the Thanksgiving holiday sales in Washington, D.C., on Nov. 21, 2023.
Saul Loeb | AFP | Getty Images
There’s a dark cloud hanging over Black Friday.
A slew of retailers have issued tepid, cautious or downright disappointing fourth-quarter outlooks over the past few weeks, casting a pall over the crucial holiday season right as they gear up for the biggest shopping day of the year.
The companies, which include everyone from luxury goods giant Tapestry to big boxer BJ’s Wholesale Club, cited a host of dynamics that led them to reduce their outlooks or issue forecasts that came in below expectations.
Some, such as Best Buy and Nordstrom, cited the uncertain state of the consumer following months of persistent inflation, while others, such as Hanesbrands, said demand is simply drying up for its basic T-shirts, socks and underwear as wholesalers look to keep inventories in check.
If there’s one theme that captures the commentary, it’s caution, and while some retailers may have been overly conservative with their outlooks, the resounding lack of confidence spells trouble for the holiday quarter and raises questions about the overall health of the economy.
“Consumers are still spending, but pressures like higher interest rates, the resumption of student loan repayments, increased credit card debt and reduced savings rates have left them with less discretionary income, forcing them to make trade-offs,” Target CEO Brian Cornell told analysts on a call last week.
“As we look at recent trends across the retail industry, dollar sales are being driven by higher prices with consumers buying fewer units per trip. In fact, overall unit demand across the industry has been down 2% to 4% in recent quarters, and the industry has experienced seven consecutive quarters of declines in discretionary dollars and units,” he said.
When asked about the upcoming holiday season, Cornell said it was too soon to weigh in on early sales, saying only that the company was “watching the trends carefully.”
The holiday shopping season over the past couple of years has seen outsize growth brought on by the Covid-19 pandemic, which gave consumers stimulus payments and an opportunity to pad their bank accounts while they were stuck at home and unable to travel or dine out.
In 2020, holiday spend was up 9.1% from the year prior, according to the National Retail Federation. In 2021, spend was up 12.7% year over year, and in 2022, it was up 5.4%.
As 2023 comes to a close, savings accounts dwindle and consumers continue to face inflation and high interest rates, that growth in holiday spend is expected to slow to 3% to 4%, according to the NRF. That’s consistent with the slower growth rates seen between 2010 and 2019 in the lead up to the pandemic.
The expected slowdown has led many retailers to approach the holiday season with more caution than Wall Street anticipated.
On Monday, Bank of America’s consumer team found that out of 43 retailers that issued earnings forecasts, 37, or 86%, came in light of Street expectations.
Take Walmart, for example. The retailer struck a cautious tone with its outlook, which came in below expectations, after it saw consumer spending weaken toward the end of October. Last week, it said it expects adjusted earnings per share of $6.40 to $6.48 for the year, lower than the $6.48 analysts had projected, according to LSEG, formerly known as Refinitiv.
“Halloween was good overall,” Chief Financial Officer John David Rainey said on a call with CNBC. “But in the last couple of weeks of October, there were certainly some trends in the business that made us pause and kind of rethink the health of the consumer.”
For some retailers, even good news wasn’t cheery enough.
Dick’s Sporting Goods raised its forecast Tuesday after posting strong top- and bottom-line beats and said it now expects full-year earnings per share of between $11.45 and $12.05, compared with the $11.27 to $12.39 range that analysts had projected, according to LSEG.
But compared to its strong third-quarter results, the outlook came off as tempered.
The retailer said it was “excited” for the holiday but couched that optimism with executives repeatedly noting they were looking forward to the things “within our control” — a refrain heard four times during the hour-long call.
“We are very excited about what we have within our control for Q4. Our products are in stock. We’ve got tremendous gifts … and the teams are pumped to deliver an amazing holiday experience,” CEO Lauren Hobart said on a call with analysts. “We’re balancing all of that with caution about the macroeconomic environment and the consumer, because we know that consumers are going through a lot right now. So, I think, we’ve been reasonably cautious in our guidance.”
The explosive growth of Temu, the U.S. arm of Chinese e-commerce giant Pinduoduo , could spell trouble for some major retailers, according to Bank of America. Temu offers products directly from manufacturers worldwide, allowing it to keep costs and prices low. It generated sales of around $12 billion in 2022, equivalent to 12% of Target’s sales, according to the Wall Street bank’s analysis of credit card data. Just six months ago, Temu’s sales were only 4% of Target’s. Consumers have welcomed Temu’s rapid growth, but competitors are likely to lose market share and could see smaller profits in the near future. “Retailers targeting young adults at low price points are particularly vulnerable,” said Bank of America’s analysts, led by Thomas Thornton, in a note to clients on Nov. 17. The analysts say Temu’s growth has been fueled by aggressive advertising using influencers, social media and search, with daily active users reaching 40% of Amazon’s level. Retailers at risk The BofA analysts say retailers competing on price alone are particularly exposed to Temu’s disruption. They suggest Old Navy and Kohl ‘s private brands are “at risk of being out-priced.” Fashion-oriented companies like Revolve , Urban Outfitters , and American Eagle could also be undercut on price, the bank said. European retailers aren’t immune to Temu’s disruption either. Bank of America believes online fashion retailers like Boohoo and Asos are vulnerable to losing their market share, while H & M is more exposed than Zara parent Inditex , which can leverage supply chain speed and higher prices. Despite the broad risks to Western retailers, Bank of America cautioned that Temu’s rapid expansion may not be sustainable in the long term if the appetite for losses and ad spending by its parent wanes. However, Pinduoduo is expected to grow ad spending again in 2024, which could help Temu avoid slowing down in the medium term, the analysts said. Insulated retailers In the United States, the analysts suggest Walmart and Target have advantages that should insulate them. Those include long-standing consumer trust, perception of product quality, and ease of access. Bank of America also thinks Five Below will be resilient as its value proposition goes beyond price. Just like the grocers, Five Below’s in-store experience creates urgency and drives repeat visits in a way online shopping does not, the analysts said. Separately, analysts at UBS investment bank also see Temu’s growth in a similar vein. “Overall, we think the risk that Temu will significantly disrupt many of these retailers is limited,” the Swiss bank’s analysts wrote in a note to clients on Nov. 20. UBS said Costco , ULTA , Home Depot , Lowe ‘s, and auto part retailers were the “most insulated” from the rise of the Chinese e-commerce app. — CNBC’s Michael Bloom contributed to this report.
Atchison, Kansas. Walmart store logo with gardening products for sale.
Universal Images Group | Getty Images
Walmart on Thursday topped Wall Street’s fiscal third-quarter earnings estimates as sales rose, but the big-box retailer struck a cautious tone with its outlook after it saw consumer spending weaken at the end of the period.
The company’s shares slid more than about 8% on Thursday after they touched an all-time high the previous day. Walmart gave a slightly lower-than-expected forecast for the year as it enters the critical holiday shopping season.
The company anticipates adjusted earnings per share of $6.40 to $6.48 for the year, lower than the $6.48 analysts expect but higher than its previous range. Walmart expects consolidated net sales will rise 5% to 5.5%, also an increase from its prior range.
Inflation has also waned — and for some categories, deflation has taken hold — a trend that could help Walmart’s shoppers but hurt the company’s sales.Prices of some grocery items remain higher, but they have fallen for dairy, eggs, chicken and seafood, CEO Doug McMillon said on the company’s earnings call. He added that relief is coming for customers as they look for holiday gifts.
General merchandise prices have continued to fall, setting up the company for a turnabout. Its sales have risen in part because shoppers have had to pay higher prices for many items during a period of inflation.
“In the U.S., we may be managing through a period of deflation in the months to come and while that would put more unit pressure on us, we welcome it, because it’s better for our customers,” he said.
In a separate interview with CNBC, Chief Financial Officer John David Rainey said consumers are “leaning heavily” into major promotions as they watch their spending and search for deals. As customers hold out for lower prices, the company has seen a drop in purchases before and after a sales event.
“Our events have been strong,” he said. “We’ve been pleased with those. Halloween was good overall. But in the last couple of weeks of October, there were certainly some trends in the business that made us pause and kind of rethink the health of the consumer.”
At the start of the holiday quarter, however, he said sales of items including clothing picked up as holiday promotions gained momentum.
Here’s what Walmart reported for the three-month period ended Oct. 31 compared with what analysts were expecting, according to consensus estimates from LSEG, formerly known as Refinitiv:
Earnings per share: $1.53 adjusted vs. $1.52 expected
Revenue: $160.80 billion vs. $159.72 billion expected
In the fiscal third quarter, Walmart’s net income rose to $453 million, or 17 cents per share, compared with a loss of $1.8 billion, or 66 cents per share, in the year ago period. Walmart posted a loss in that quarter due to a settlement of opioid-related legal charges.
Revenue rose from $152.81 billion in the year-ago period. It climbed on the strength of the retailer’s grocery business, which has thrived during a period of high inflation, and digital sales.
Comparable sales, an industry metric also known as same-store sales, rose 4.9% for Walmart U.S. and at Sam’s Club, they rose 3.8% year over year.
In the U.S., shoppers both visited and spent more. Customer transactions rose 3.4% and the average ticket grew 1.5% compared with a year earlier. E-commerce sales increased 24% in the U.S. and 15% across the globe year over year.
Walmart is also making money in newer ways, such as selling ads and annual memberships to Walmart+, its answer to Amazon Prime.
Revenue for its ad business, Walmart Connect, jumped 26% from the prior-year period.
As the holidays approach, investors have bet the big-box retailer has the ingredients to drive sales, even as shoppers are more discerning. It’s the nation’s largest grocer, which helps drum up steadier foot traffic.
Shares of the company touched an all-time high Wednesday dating to when Walmart debuted on the New York Stock Exchange in August 1972. The stock closed at nearly $170 on Wednesday, up about 19% for the year. On Thursday, however, shares closed the day at $156.04.
Walmart topped third-quarter estimates and raised fiscal-year guidance. But investors were expecting more from the world’s largest retailer, sending the stock lower in premarket trading.
(This is CNBC Pro’s live coverage of Thursday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest post.) Thursday started with a rare sell-equivalent rating placed on Tesla. HSBC initiated coverage of the electric vehicle maker with a reduce rating and a price target that implies more than 30% downside from Wednesday’s close. Meanwhile, Evercore ISI placed tactical outperform ideas on Five Below and Target. Check out the latest calls and chatter below. 5:49 a.m. ET: Evercore ISI says buy Five Below and Target ahead of earnings Evercore ISI added Five Below and Target to its tactical outperform list ahead the companies’ earnings reports: On regarding Five Below, analyst Michael Montani said the company has “been able to buck the industry moderation trend, with positive traffic, comps and a constructive outlook likely for its discretionary core business into the all important holiday season (35% of CY22 Sales, 65% of profit).” Meanwhile, analyst Greg Melich said Target’s “near term comp pressures are well understood, while Target’s ability to manage earnings can drive EPS upside.” “With TGT trading near pre-pandemic levels and down 28% YTD, we believe that the stock reflects much of the bad news of a softer consumer backdrop, mix headwinds, and operational missteps over the course of the past year and a half,” he said. Target reports earnings next week. Five Below is slated to post results in December. — Fred Imbert 5:49 a.m. ET: HSBC initiates Tesla coverage at reduce HSBC says Tesla may have gotten ahead of itself. The bank initiated coverage of the electric vehicle giant with a reduce rating accompanied by a $146 per share price target. HSBC’s forecast implies more than 34% downside from Wednesday’s close. “As outsiders, we struggle to challenge the feasibility of the group’s ideas. So, our caution stems from the uncertainty around the timing and commercialisation of its varied ideas,” HSBC head of European automotive Michael Tyndall said. “We see considerable potential in Tesla’s prospects and ideas, but we think the timeline is likely to be longer than the market and valuation is reflecting.” “Tesla delivers but rarely adhering to the promised timelines,” he said. “Whether it is a function of overly ambitious timelines … or delays with Gigafactory licenses and applications, production delays appear to be becoming the norm.” Tesla shares have surged more than 80% this year. TSLA YTD mountain TSLA in 2023 — Brian Evans
Venture-capital giant Softbank notched a $15 billion-plus gain on its 2016 deal to buy Arm Holdings when the artificial intelligence-enabling semiconductor firm went public last month. But not as many investors know about Softbank’s “other” big AI investment, Wilmington, Mass.-based software and robotics maker Symbotic, which Walmart has taken a big stake in itself.
That may soon change.
Symbotic, a company that has already generated market heat selling AI-powered robotic warehouse management systems to clients including Walmart, Target and Albertson’s, is partnering with Softbank to play in a potentially giant and transformative market. The two are teaming up in a joint venture called GreenBox Systems which promises to deliver AI-powered logistics and warehousing to much smaller companies, delivering it as a service in facilities different companies share. They say it’s a $500 billion market, and an example of the kind of change AI can bring to the economy at large.
If it works, GreenBox will reach companies that could never afford the multi-million dollar required investment, in the same way cloud computing puts high-end information tech within reach, said Dwight Klappich, an analyst at technology research firm Gartner.
“I’ve seen a lot of robotics tech and I’ve never seen anything like it in my life,” TD Cowen analyst Joseph Giordano said. “Compared to what it replaces, it’s like day and night.”
Erasing memories of a big WeWork real estate blunder
It might even mute the memory of Softbank’s most disastrous commercial real estate management investment ever, the notorious office-sharing company WeWork.
Like WeWork, GreenBox is a promise to fuse technology and real estate. Indeed, its sales pitch of “warehouse as a service” recalls the “space as a service” slogan in WeWork’s 2019 IPO prospectus almost exactly. The big difference: with WeWork, outside analysts struggled to identify what technological advantage WeWork ever offered clients over working at home or in traditional offices, let alone one that justified its peak valuation of $47 billion. WeWork today is worth under $150 million and is now under bankruptcy watch as it warned in August of its potential inability to remain “a going concern,” and more recently stopped making interest payments on debt, asking lenders to negotiate.
At GreenBox, the technology is the whole point, Giordano said. And unlike WeWork, which wanted people to change the way they used offices, Symbotic and GreenBox are out to let companies that already run warehouses boost efficiency and profits, he said.
“Contract warehousing exists today – but those operations are mostly manual,” said Robert W. Baird analyst Rob Mason.
Softbank owns more than 8% of Symbotic, according to data from Robert W. Baird, and took it public through a special purpose acquisition company last year. Softbank also owns 65% of the GreenBox venture, which launched with $100 million in investment by the two companies. Walmart owns another 11% of Symbotic, according to a proxy statement from the robotics company, and is by far its biggest customer until the GreenBox venture ramps up, accounting for almost 90% of revenue.
“We share the same vision of going big and going fast,” Symbotic CEO Rick Cohen said. “We believe this market is massive.”
Symbotic has generated stock-market excitement even before the GreenBox deal. Its shares are up 190% this year. Sales in its most recent quarter climbed 77%, and orders for its existing warehouse-management systems jumped to $12 billion – a backlog it would take the company years to fulfill Add in the $11 billion of Symbotic software and follow-on services GreenBox committed to buy over six years in July, and that backlog soars to $23 billion for a company that expects its first billion-dollar revenue year in fiscal 2023, and to break even on an EBITDA basis for the first time as a public company in the fourth quarter.
The best indication of the future may be from Walmart, which bought its Symbotic stake as part of the companies’ deal to automate the retailer’s 42 U.S. regional distribution centers for packaged consumer goods.
The product is the reason why, analysts say.
At prices of $25 million to hundreds of millions, according to a conference call Symbotic held with analysts in July, a Symbotic system blends as many as dozens of autonomous robots that scoot around warehouses at speeds up to 25 mph, moving and unloading boxes from pallets and picking orders with AI software that optimizes where in a warehouse to put individual cases of goods, and lets boxes be packed to the warehouse’s ceiling, Giordano said, wasting much less space in the building.
The system works something like a disk drive that uses intelligence to store data efficiently and retrieve the right data on demand – but with boxes of stuff. And a large warehouse can use several different systems, piling up the required investment to get moving.
Because Symbotic’s system can track inventory down to the case easily, where stuff is put can be matched much more easily to incoming orders, making it possible to more fully automate order picking. It can also match the design of outgoing pallets to the layout of the store the pallet is headed to, speeding up unloading and shelf stocking, Klappich said.
But the biggest innovation the tech allows is in business models, rather than in technology itself. That hasn’t spread outside of giant companies yet, but Giordano and Mason say they think it will.
The AI’s precision will let multiple companies share the same warehouse, and even commingle their goods for efficient shipping without confusion, much as cloud computing lets multiple clients share the same computer servers, Mason said.
“Through sharing infrastructure, you can get out of the infrastructure business and focus on what’s important to you,” Klappich said. “Larger-scale automation without the capital expense has been a challenge.”
Born out of stealth work with Walmart, minting a multi-billionaire
The idea grew out of a vision Cohen had when running his family’s grocery distribution company, C&S Wholesale Grocery, which he has grown to $33 billion in annual revenue from $14 million since 1974. Symbotic was founded in 2006, and worked in stealth mode for years while refining its prototypes with Walmart.
“I’ve spent my whole life in the outsourcing and [logistics] business with C&S, so, this — the ability to run warehouses for people — has always been on the plate, Cohen said in the July analyst call. “We said we’re going to take care of Walmart first. …We are now starting to say, I think we can do more.”
Symbotic and C&S have made the 71-year old Cohen one of America’s richest men, with a net worth hovering around $15.9 billion, according to Forbes.
Symbotic teamed up with Softbank to build GreenBox in order to preserve its own capital, Cohen told analysts. The joint venture was initially capitalized 65% by Softbank and 35% by Symbotic, for a total of $100 million. Analysts say the venture will require much more capital, possibly raised by having GreenBox itself borrow money in the bond market. Symbotic said it will use its share of the profits from sales to GreenBox to keep its equity stake in the joint venture around 35%.
“The question has been, who has the capital to set it all up?” Klappich said. “Softbank could be the key because they have deep pockets.”
The joint venture will buy software from Symbotic, then turn around and sell the warehouse space, equipment and related services as a package to tenants.
Many questions remain, and potential threats from Amazon, private equity
Much else about the new company remains unknown, beginning with the identity of its not-yet-announced chief executive, Mason said. The venture could either develop warehouses or rent them, though Symbotic said it will probably mostly rent them. Pricing for the warehouse-as-a-service is undisclosed.
But the rise of Greenbox more than doubles Symbotic’s potential market, and nearly doubles its backlog. Symbotic has said that its total market is about $432 billion, a figure chief strategy officer Bill Boyd repeated on the conference call when the GreenBox alliance was announced. Early adopters will be in businesses like grocery and packaged goods, with Symbotic expanding into pharmaceuticals and electronics over time, according to Symbotic’s annual federal regulatory filing this year.
The GreenBox market for smaller companies shapes up as another $500 billion of possible demand, Gartner’s Klappich said. The estimates are based on the number of warehouses in those industries, the likely percentage of warehouses in each whose owners can afford the technology, either independently or through GreenBox, and the average price of Symbotic-like systems.
The third quarter of the company’s fiscal year, which ends in October, illustrates how the company’s profits might scale. Revenue jumped 77% to $312 million, and its loss before interest, taxes and non-cash depreciation and amortization expenses shrank to $3 million. Mason says the company will turn profitable on an EBITDA basis in the fiscal year that begins this fall, before orders from GreenBox begin, and EBITDA will be “in the mid-teens” as a percent of sales by the following year.
Clients stand to save money all the way through the warehouse, Klappich said.
Giordano estimated the savings at eight hours of labor per outgoing truck. The technology can also cut space rental costs by allowing goods to be packed closer together and stacked higher.
Using the facility as a service will let seasonal companies cut back on the space and robot time they use during slow periods, rather than carry them all year. The warehouse should run with many fewer workers, Giordano said. And GreenBox will pay for upgrades to robots and software every few years, rather than making tenants invest more, he said.
Walmart led investors on a tour of its Brooksville, Fla. warehouse in April, and said technology investments like the Symbotic alliance will let profits grow faster than sales. More than half of distribution volume will move through automated centers within three years, improving unit costs by about 20% as two-thirds of stores are served by automated systems. The company has said little about the impact on jobs, but CEO Doug McMillon said overall employment should stay about the same size but shift toward delivery from warehouse roles.
Competition will be arriving soon enough, analysts say. Building something like Symbotic, and especially moving it down into the realm where companies other than global giants can afford it, takes a combination of technology, money and vision, Klappich said.
Amazon could expand into the space, using its warehousing expertise in a service that resembles its Web hosting business model, or private-equity firms awash in investable cash might acquire combinations of companies to produce competing products and business models, Klappich said.
For Softbank, the payoff if GreenBox works is potentially huge. Analysts on average project Symbotic shares to rise another 53% in the next year after pulling back amid recent recession fears, according to ratings aggregator TipRanks. With post-IPO estimates arguing that Arm shares will stagnate, and taking into account that Softbank paid a reported $36 billion for Arm in 2016, it’s possible Symbotic will be the bigger win in the end, at least on a percentage basis, as the 65% share of GreenBox rises in value.
Retail executives over the past year have talked a lot about “shrink” — or the losses they take due to theft, fraud or employee error — amid a flood of headlines about sometimes violent organized thefts at stores. But results from a retail-industry survey released Tuesday found the metric rose only modestly last year.
The report from the National Retail Federation, a retail industry group, found that the average shrink rate in 2022 crept higher to 1.6% from 1.4% in the prior year, when calculated as a share of sales. The figure from 2022 is in line with those seen in 2020 and 2019.
Still, the losses amounted to billions of dollars — $112.1 billion, up from $93.9 billion in 2021 — according to the report. And the report said that retailers were increasingly concerned about the violence of those crimes.
“Far beyond the financial impact of these crimes, the violence and concerns over safety continue to be the priority for all retailers, regardless of size or category,” David Johnston, the NRF’s vice president for asset protection and retail operations, said in a statement.
The NRF, working with the Loss Prevention Research Council — a research group founded by some of the nation’s biggest retailers — surveyed people in the industry who work in loss-prevention and asset protection. The report contained responses or information from 177 retail brands. The survey was distributed in May, June and July.
“In this case, we cannot continue operating these stores because theft and organized retail crime are threatening the safety of our team and guests, and contributing to unsustainable business performance,” Target said in a statement.
The chain joins other retailers sounding the alarm about retail theft and closing stores, amid what executives have described as a spike in organized retail theft, or theft with the intent of reselling the goods. However, executives’ takes on earnings calls have differed slightly, and retailers are contending with other issues — like the fallout from inflation — that have hit financials.
The fight over theft has played out, perhaps predictably, on partisan lines, with some blaming what they say are lax crime policies in large cities. But other analysts point to changes in the flow of foot traffic through population centers since the pandemic, and say the data is often too squishy and subjective to make any hard calls about the state of crime — and whether it’s rising or falling, particularly at retailers — in a particular area.
More than two-thirds of the retailers surveyed by the NRF “said they were seeing even more violence and aggression” from organized retail theft compared with a year ago. Twenty-eight percent reported being “forced” to close a specific store location, the report said, while 45% said they cut operating hours, and 30% said they reduced or changed an in-store product selection as a result of retail crime.
“The types of products shoplifters are targeting may not be based solely on price point,” the National Retail Federation said.
“Products can range from high-price, high-fashion items to everyday products that have a fast resale capability,” the group said. “While ORC groups have traditionally targeted specific items or types of goods, that list has expanded to new categories like outerwear, batteries, energy drinks, designer footwear and kitchen accessories.”
Fidji Simo, chief executive officer of Instacart Inc., speaks during a Bloomberg Studio 1.0 interview in San Francisco, California, U.S., on Thursday, March 3, 2022.
David Paul Morris | Bloomberg | Getty Images
Instacart, the grocery delivery company that saw its business boom during the pandemic, priced its long-awaited IPO at $30 a share on Monday, and will become the first notable venture-backed tech company to hit the U.S. public market since December 2021.
The offering came in at the top end of the expected range of $28 to $30 a share, and values Instacart at about $10 billion on a fully diluted basis.There were 22 million shares sold in the IPO, with 14.1 million coming from the company and 7.9 million from existing shareholders. The stock is set to debut on the Nasdaq on Tuesday under ticker symbol “CART.”
The 11-year-old company, which delivers groceries from chains including Kroger, Costco and Wegmans, had to drop its stock price dramatically to make it appealing for public market investors. In early 2021, at the height of the Covid pandemic, Instacart raised money at a $39 billion valuation, or $125 a share, from prominent venture firms like Sequoia Capital and Andreessen Horowitz, along with big asset managers Fidelity and T. Rowe Price.
The tech IPO market has been largely shuttered since December 2021, as inflationary pressures and rising interest rates pushed investors out of risk and led to a plunge in the prices of internet and software stocks. Instacart’s performance, along with the upcoming debut of cloud software vendor Klaviyo, could help determine if other billion-dollar-plus companies in the pipeline are willing to test the waters.
Instacart has sacrificed growth for profitability, proving in the process that its business model can generate earnings. Revenue increased 15% in the second quarter to $716 million, down from growth of 40% in the year-earlier period and about 600% in the early months of the pandemic. The company reduced headcount in mid-2022 and lowered costs associated with customer and shopper support.
Instacart started generating earnings in the second quarter of 2022, and in the latest quarter reported $114 million in net income, up from $8 million a year prior.
At $10 billion, Instacart will be valued at about 3.5 times annual revenue. Food delivery provider DoorDash, which Instacart names as a competitor in its prospectus, trades at 4.25 times revenue. DoorDash’s revenue in the latest quarter grew faster, at 33%, but the company is still losing money. Uber’s stock trades for less than 3 times revenue. The ridesharing company’s Uber Eats business is also named as an Instacart competitor.
The bulk of Instacart’s competition is coming from Amazon as well as big brick-and-mortar retailers, like Target and Walmart, which have their own delivery services. Target acquired Shipt in 2017 for $550 million.
Sequoia is Instacart’s biggest investor, with a fully-diluted stake of 15%. While the Silicon Valley firm is sitting on a paper profit of over $1 billion on its total investment, the $50 million in shares it purchased in 2021 are now worth about one-quarter that amount.
Instacart co-founder Apoorva Mehta owns shares worth over $800 million, and is selling a small portion of them in the IPO. Mehta has been executive chairman since the company appointed ex-Facebook executive Fidji Simo as his successor as CEO in 2021. Mehta is resigning from the board in conjunction with the IPO, and Simo is assuming the role of chair.
Only about 8% of Instacart’s outstanding shares were floated in the offering, with 36% of those sold coming from existing shareholders. The company said co-founders Brandon Leonardo and Maxwell Mullen are each selling 1.5 million, while Mehta is selling 700,000. Former employees, including those who were in executive roles as well as in product and engineering, are selling a combined 3.2 milion.
Instacart, the grocery delivery company that slashed its valuation during last year’s market slide, filed its paperwork to go public on Friday in what’s poised to be the first significant venture-backed tech IPO since December 2021.
The stock will be listed on the Nasdaq under the ticker symbol “CART.” In its prospectus, the company said net income totaled $114 million, while revenue in the latest quarter hit $716 million, a 15% increase from the year-ago period. Instacart has now been profitable for five straight quarters, according to the filing. PepsiCo has agreed to purchase $175 million of the company’s stock in a private placement.
Instacart said it will continue to focus on incorporating artificial intelligence and machine learning features into the platform, and that the company expects to “rely on AIML solutions to help drive future growth in our business.” In May, Instacart said it was leaning into the generative AI boom with Ask Instacart, a search tool that aims to answer customers’ grocery shopping questions.
“We believe the future of grocery won’t be about choosing between shopping online and in-store,” CEO Fidji Simo wrote in the prospectus. “Most of us are going to do both. So we want to create a truly omni-channel experience that brings the best of the online shopping experience to physical stores, and vice versa.”
Instacart will try and crack open the IPO market, which has been mostly closed since late 2021. In December of that year, software vendor HashiCorp and Samsara, which develops cloud technology for industrial companies, went public, but there haven’t been any notable venture-backed tech IPOs since. Chip designer Arm, which is owned by Japan’s SoftBank, filed for a Nasdaq listing on Monday.
Founded in 2012 and initially incorporated as Maplebear Inc., Instacart will join a crop of so-called gig economy companies on the public market, following the debut in 2020 of Airbnb and DoorDash and car-sharing companies Uber and Lyft a year earlier. They’ve not been a great bet for investors, as only Airbnb is currently trading above its IPO price.
Instacart shoppers and drivers deliver goods in over 5,500 cities from more than 40,000 grocers and other stores, according to its website. The business took off during the covid pandemic as consumers avoided public places. But profitability has always been a major challenge, as it is across much of the gig economy, because of high costs associated with paying all those contractors.
Headcount peaked in the second quarter of 2022, Instacart said, “and declined over the next two quarters, reducing our fixed operating cost base.” At the end of June, the company had 3,486 full-time employees.
In March of last year, Instacart slashed its valuation to $24 billion from $39 billion as public stocks sank. The valuation reportedly fell by another 50% by late 2022. Instacart listed Amazon, Target, Walmart and DoorDash among its competitors.
The biggest area for cost reductions has been in general and administrative expenses. Those costs shrank to $51 million in the latest quarter from $77 million a year earlier and a peak of $102 million in the final period of 2021. Instacart said the drop was the “result of lower fees related to legal matters and settlements.”
Simo took over as Instacart’s CEO in August 2021 and became chair of the company’s board in July 2022. She was previously head of Facebook’s app at Meta and reported directly to CEO Mark Zuckerberg. Apoorva Mehta, Instacart’s founder and executive chairman, plans to transition off the board after the company’s public market debut, according to a 2022 release.
The company’s board also includes Peloton CEO Barry McCarthy, Snowflake CEO Frank Slootman and Andreessen Horowitz’s Jeff Jordan.
Instacart will be one of the first independent grocery delivery companies to go public. Amazon Fresh, Walmart Grocery and Google Express are all units of large corporations. Shipt was acquired by Target in 2017 and Fresh Direct, another direct-to-consumer grocery delivery company, was bought by global food retailer Ahold Delhaize in 2021.
Sequoia Capital and D1 Capital Partners are the only shareholders owning at least 5% of the stock. Instacart said those two firms, along with Norges Bank Investment Management and entities affiliated with TCV and Valiant Capital Management, have “indicated an interest, severally and not jointly” in purchasing up to $400 million of shares in the IPO at the offering price.
Instacart’s move into AI has come largely through a string of acquisitions in the past two years. Those deals include the purchase of e-commerce startup Rosie, AI-powered pricing firm Eversight, AI shopping cart and checkout solutions provider Caper, and FoodStorm, a software startup specializing in self-serve kiosks for in-store customers.
The company also touted its use of machine learning in predicting grocery availability for retailers and increasing consumer sales. It said its algorithms predict availability every two hours for the “large majority” of its 1.4 billion grocery items, and that more than 70% of customers purchased items through Instacart’s recommendation algorithm in the second quarter of 2023.
Goldman Sachs is leading the offering. That’s the former employer of Instacart finance chief Nick Giovanni, who was previously global head of the tech, media and telecom group at the investment bank.
No-frills discounter Aldi is the latest grocer to shake up the industry with big moves.
The German retailer announced this week that it plans to acquire about 400 Winn-Dixie and Harveys Supermarket locations across the Southern U.S. As part of the deal, it would take over operations of the stores, which are in Florida, Alabama, Georgia, Louisiana and Mississippi, and put at least some of them under the Aldi name.
The deal is expected to close in the first half of next year.
Aldi is already expanding aggressively across the country. It has more than 2,300 stores across 38 states. Separate from the acquisition, it is on track to open 120 new stores by year-end.
Like Trader Joe’s and fellow Germany-based rival Lidl, Aldi relies heavily on its own brands. About 90% of products it carries are Aldi’s private label, which allows it greater scale and lower costs in areas like marketing and the supply chain. Aldi also gets creative to keep costs low, including byreducing the size of a pasta sauce lid and other packaging and using electronic shelf labels that save on labor and materials.
As inflation cools, that could present a new challenge for Aldi — if shoppers revert to old habits like shopping at neighborhood grocery stores that may have higher prices, or opt for a favorite name-brand cereal or more variety. It’s also had to race to keep up with competitors’ online options, prompting Aldi to expand curbside pickup to more stores.
The privately held retailer did not share financial details of the acquisition. But the deal has big implications for publicly traded competitors including Walmart and Kroger, as well as regional grocers.
CNBC spoke to Jason Hart, the CEO of Aldi U.S., about why the company is doing the deal and how it sees Aldi fitting into a fast-changing grocery landscape. His comments were edited for brevity and clarity.
Why was Aldi interested in acquiring Winn-Dixie and Harveys Supermarket? Why acquire rather than build your own hundreds of stores in similar locations?
This acquisition provides us speed to market with quality retail locations, great people and a solid core business in a region of the country, the Southeast, where we’ve already had and experienced significant growth and success, but we also see much more opportunity and there’s much more consumer demand to meet.
Doing this [expanding] on our own organically, that has been our plan, and that has been our trajectory over a number of years, and in the Southeast as well. …. This acquisition really gives us the opportunity to accelerate all of those plans.
Jason Hart, Aldi U.S. CEO
ALDI Creative Quarter Studio/ Katrina Wittkamp
What should shoppers expect to see at those stores on the other side of the acquisition?
We’re currently evaluating which locations we’ll convert to the Aldi format to better support the communities that we’ve now got the opportunity to serve more closely. We’re going to convert a significant amount to the Aldi format after the transaction is closed and over the course of several years.
For those stores we do not convert, our intention is that a meaningful amount of those will continue to operate as Winn-Dixie and [Harveys] Supermarket stores.
In stores that you choose not to convert with the acquisition, will people start to see some of those Aldi products on Winn-Dixie shelves?
We can certainly see and imagine some future synergies and learnings from each other, whether that’s consumer insights, product ideas, merchandising ideas, but at this point, we just don’t have any definitive plans to announce.
We carry a limited number of SKUs [stock keeping units, the term used to describe each type of product carried by a retailer] first and foremost — a couple of thousand SKUs in our stores versus our competition that may have many times that — that drives higher volume per SKU, driving scale that provides efficiency both in our business and for our suppliers.
The dozens of brands and sizes and small variants of the same product — the result of that [in rival stores] is tens of thousands of products that isn’t necessarily the result of customer demand. It’s more so the brand’s demand for shelf space within those stores. And the result actually can frustrate customers by overcomplicating the shopping experience. At Aldi, we simplify that shopping experience for the customer, offering great quality and great prices.
Why do you think we’re seeing so many big moves in the grocery industry right now?
The way that consumers are shopping is changing quite dramatically. And also the drive to value. And obviously, there are alternative retail formats that are growing quicker than the traditional formats. We’re very proud to be one of those alternative formats that’s really disrupting the industry.
Consumers seem to be willing to try other ways to fill their grocery list, whether that’s through e-commerce, whether that’s through trying out discounters like Aldi, [and] trying out different products like private label.
When consumers are seeing these changes, and seeing other retailers and other products meet their needs, they change their shopping habits.
What are the trends with online and in-store sales now as the pandemic is more in the rearview mirror?
We’re now seeing equal growth in both our bricks-and-mortar sales and in our e-commerce sales. I would anticipate if I was to look at the crystal ball of the future, it’s going to go back to e-commerce growing slightly more than what bricks and mortar is both in the market and for Aldi.
A customer pushes a shopping cart full of groceries outside a Wal-Mart in Rogers, Arkansas, left, and a pedestrian passes a Target store in the Tenleytown neighborhood of Washington, D.C.
Getty Images
Target and Walmart are both catering to thriftier shoppers, but the two big-box retailers have seen very different outcomes when it comes towinning their dollars.
Walmart, the nation’s largest grocer, makes more than half of its annual revenue from selling groceries — a category that shoppers buy even when times are tight. Target draws only about 20% of its yearly revenue from grocery, making it rely more on sales of items such as clothing, earrings and throw pillows that customers may skip when feeling frugal.
Wall Street added to the confusion with its own counterintuitive moves. After earnings reports, it snapped up Target’s stock on Wednesday and sold off Walmart’s shares on Thursday. The potentially surprising moves could reflect the companies’ recent stock performance, since shares of Walmart are up about 10% this year compared with Target shares’ decline of about 13% during the same period.
Despite the differences, the companies showed they still have much in common. Target and Walmart leaders offered similar descriptions of American consumers who now think twice before spending money on nonessential items while paying more for food.
“As we look at the consumer landscape today, we recognize the consumer is still challenged by the levels of inflation that they’re seeing in food and beverage and household essentials,” Target CEO Brian Cornell said on a call with reporters. “So that’s absorbing a much bigger portion of their budget.”
Walmart Chief Financial Officer John David Rainey echoed similar sentiments, describing consumers as “choiceful or discerning” on a call with CNBC.
Yet both executives added that shoppers can be persuaded to spend, with a good deal or when getting ready to celebrate holidays or seasonal events.
Here’s a closer look at three key ways that Target’s and Walmart’s most recent quarterly results diverged:
As shoppers head out into the world again, some retailers have seen double-digit declines in online spending.
Target followed that pattern in the second quarter. Its digital sales dropped by 10.5% year over year.
Walmart bucked the trend. E-commerce sales rose 24% for Walmart U.S. in the second quarter.
Both retailers pointed to curbside pickup as a major driver of online sales — a key differentiator from competitor Amazon.
Walmart chalked up online sales gains to store pickup and delivery, as well as more advertising revenue. It also credited its third-party marketplace, which is Walmart’s take on Amazon’s online business model. The online marketplace is made up of vendors who list items on Walmart’s website, which helps to expand the merchandise assortment and comes with a higher profit margin than selling online items directly.
Customers are also visiting Walmart’s website and app more often, Rainey said. The number of weekly active digital users grew more than 20%, he said on the company’s earnings call. The number of customers buying items on Walmart’s marketplace increased 14% in the second quarter, with double-digit growth across home, apparel and hard lines, a category that includes sports equipment and appliances.
Target has lagged behind in online sales. But it is making moves to try to turn around trends.
The retailer will roll out a remodel of its digital experience in the next three months, Target Chief Growth Officer Christina Hennington said on an earnings call Wednesday. She said the website will “include different landing experiences, more personalized content, enhanced search functionality, ease of navigation and other updates to bring more joy and convenience to our digital guests.”
Walmart, for its part, refreshed the look of its website and app in the spring.
For more than a year, Americans have generally shown reluctance to spring for new outfits, gadgets or other items that they can live without.
That’s made life harder for retailers, which rely on big-ticket and impulse-driven purchases to buoy sales. The merchandise tends to drive higher profits than selling the basics such as milk, bread and paper towels.
Rainey, Walmart’s CFO, pointed to signs that may be changing. He said there was “modest improvement” in discretionary goods in the second quarter, even though general merchandise sales still dropped by low double digits year over year. He said sales of blenders, hand mixers and other kitchen tools popped, as some consumers cook more at home.
Target didn’t see the same relief. Sales of frequency categories, such as food and beauty items, weren’t enough to offset weaker discretionary sales at the retailer.
Target’s Hennington said trends in discretionary categories “remain soft overall.” She pointed out some exceptions, including the popularity of a Taylor Swift vinyl and colorful Stanley tumblers designed with Chip and Joanna Gaines.
Both retailers, however, said they’re stocking up on essential items and placing more modest orders for discretionary stuff. Target, for instance, said at the end of the second quarter, its overall inventory levels fell year over year — but it intentionally reduced discretionary inventory even more.
Retailers have plenty to worry about as food prices remain high, interest rates rise and student loan payments return.
But Walmart and Target struck contrasting tones when speaking about the months ahead.
Target CEO Cornell said sales trends improved in July, but not enough to keep the company from cutting its outlook for the year. When asked about back-to-school shopping, Cornell and Chief Financial Officer Michael Fiddelke stressed it was very early in the season.
Walmart hit a more confident note. On the earnings call, CEO Doug McMillon said general merchandise sales outperformed the company’s expectations. He said the popularity of GLP-1 drugs, medications such as Ozempic that are used for diabetes and weight loss, could also drive foot traffic and revenue going forward.
And, he added, “the trends we see in general merchandise sales make us feel more optimistic about those categories in the back half of the year.”
McMillon said back-to-school has gotten off to a better start than the company predicted. He said that spending tends to correlate with consumer spending later in the year — which could be a positive sign for the critical holiday season.
“Typically when back-to-school is strong, it bodes well with what happens with Halloween and Christmas and GM [general merchandise] in the back half,” he said.
Target shared similar hopes that customers will open up their wallets and reverse the retailer’s sales slump as the season of pumpkin spice and gift-giving approaches. It saw traffic and sales trends improve in July, which it credited in part to spending for the Fourth of July holiday.
“We know our guests want to celebrate culturally and seasonally relevant moments and will be leaning into those moments in a big way in the third quarter and the upcoming holiday season,” Hennington said.
Stocks fell Wednesday for the second consecutive day as investors digested news from the Federal Reserve. The Nasdaq Composite fell more than 1.15%, while the S&P 500 dropped 0.76%. The Dow Jones Industrial Average slipped by 180.65 points, or 0.52%. August has been a rocky month for stocks, and the major averages are well in negative territory. Valuations have also been falling from their lofty heights. Follow live market updates.
Federal Reserve Board Chairman Jerome Powell speaks during a news conference following a Federal Open Market Committee meeting, at the Federal Reserve in Washington, DC, on July 26, 2023.
Saul Loeb | AFP | Getty Images
The Federal Reserve released minutes from its latest meeting in July that showed officials are still concerned about the pace of inflation. Fed members also noted that more rate hikes could be coming unless conditions change. The Fed raised rates by a quarter percentage point at its July meeting, bringing the federal funds rate to the highest level in more than 22 years. The minutes also showed uncertainty among members, however, with some saying they thought the committee could skip a hike and see how previous efforts were affecting the economy.
Customers shop at a Walmart store on May 18, 2023 in Chicago, Illinois.
Scott Olson | Getty Images
Walmart‘s discount reputation keeps drawing customers. The big-box retailer raised its full-year forecast when it released its second-quarter earnings Thursday morning before the bell — a notable contrast to Target, which cut its forecast the day before. Walmart also topped analysts’ expectations for sales and profits. Chief Financial Officer John David Rainey told CNBC’s Melissa Repko that seasonal moments, such as the Fourth of July holiday and back-to-school, have helped drive sales. He also said Walmart is starting to see “modest improvement” with big-ticket purchases, which have seen weaker sales as consumers have focused on necessities such as food.
A view of a home that was destroyed by a wildfire on August 16, 2023 in Lahaina, Hawaii.
Justin Sullivan | Getty Images
The wildfires in Hawaii have left the town of Lahaina devastated. More than 100 people are missing and thousands more are homeless after the deadliest wildfire in the U.S. in more than century. The town of Lahaina in Hawaii will have to be completely rebuilt, and residents are now worried that outside developers will swoop in to buy up valuable land on Maui once the reconstruction process starts. Hawaii Gov. Josh Green even warned mainlanders not to invest in property, saying the Hawaii state government is considering acquiring land in Lahaina to protect it. Meanwhile, Hawaiian Electric, the state’s biggest power utility, is being investigated for the role it might have played in the fire, with a lawsuit arguing years of inaction and negligence contributed to the spread.
HOLLYWOOD, CA – JULY 20: General views of the ‘Barbie’ skyscraper billboard campaign at Hollywood & Highland on July 20, 2023 in Hollywood, California. (Photo by AaronP/Bauer-Griffin/GC Images)
Aaronp/bauer-griffin | Gc Images | Getty Images
Pink is the new black. “Barbie” has breezed past Batman to become the highest-grossing domestic movie in Warner Bros. Discovery‘s 100-year history. With $537 million at the domestic box office, “Barbie” has topped the company’s previous domestic record set in 2008 with “The Dark Knight.” The bubblegum pink box office hit has earned more than $1.2 billion worldwide since it was released July 21 and is on track to be the highest-grossing film of the year.
— CNBC’s Hakyung Kim, Alex Harring, Pia Singh, Jeff Cox, Spencer Kimball, Sarah Whitten, Melissa Repko and NBC News contributed to this report.
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Market Movers rounded up the best reactions from investors and analysts on Target . The pros, including Jim Cramer , talked about the retailer’s mixed second-quarter financial results . Target’s earnings beat analysts’ expectations, but sales fell short. The company also cut its full-year sales and profit guidance as it tries to win over more cost-conscious customers. The retailer also shared that backlash toward its Pride merchandise, as well as nationwide theft during the quarter, hurt its bottom line. Target shares had touched a 52-week low Tuesday. The stock surged during premarket trading Wednesday and ended the session with a nearly 3% gain.
