‘Inside Out 2’ arrives in theaters and could hit a 100-day run. Here’s why that’s increasingly rare

In Disney and Pixar’s “Inside Out 2,” Joy, Sadness, Anger, Fear and Disgust meet new emotions.

Disney | Pixar

Disney is looking to bring a little joy to theaters with its upcoming release of Pixar’s “Inside Out 2.”

Current expectations see the animated sequel easily topping $85 million during its domestic opening this weekend, which would make it the highest debut of any film released in the United States and Canada in 2024. Some are even forecasting the film could secure more than $100 million in ticket sales, a feat not seen since July 2023 when Warner Bros.’ “Barbie” waltzed into cinemas.

Already “Inside Out 2” has tallied $13 million from Thursday night preview showings in North America. For comparison, 2019’s “Toy Story 4” generated $12 million on its Thursday previews and snared $120.9 million for its opening weekend.

Any opening figure north of $50 million would be a boon for Pixar, which has struggled to regain its foothold at the box office in the wake of the pandemic. However, Disney seems confident in “Inside Out 2,” as the film is expected to have a 100-day theatrical run, a nearly unheard-of stint nowadays for animated features and non-blockbuster action flicks.

While most consumers are agnostic about theatrical release windows — the period of weeks or months that a film is shown exclusively in theaters before it hits streaming or other on-demand options — for cinema operators and box office analysts, a commitment to more than three months of exclusivity on the big screen is a big deal.

Before the pandemic, industry standard was what’s known as the 90-day theatrical window (though the average was actually closer to about 75 days in reality, according to market research firm The Numbers).

Only a rare few films would extend beyond that date — usually massive franchise films or blockbuster hits. After that time frame, a film could move into the home video space, which included digital downloads, DVD and Blu-Ray discs and availability on streaming sites. Films would still play in theaters after that date, but would then compete with home-market sales.

When the pandemic hit, and theaters were forced to close, studios had to decide if they were going to hold off on releasing their films until cinemas reopened or place them on streaming or video-on-demand during the interim.

Disney was one of the companies that opted to make a number of its animated offerings available in the at-home market during that time.

As theaters began to reopen, studios renegotiated the amount of time that films were required to remain on the big screen before they could go to the home market. After all, new Covid variants and a not-yet widely available vaccine had led many moviegoers to stay home. The result has been a widely variable time frame of exclusivity, as each studio negotiated its own deal with the major cinema chains.

For example, Universal and Focus Features inked a deal in which movies had to play in cinemas for at least three weekends, or 17 days, before those films could transition to the premium video on-demand platforms.

“Ninety-day windows were always going to be unsustainable,” said Jeff Kaufman, senior vice president of film and marketing at Malco Theaters. “The pandemic sort of accelerated that.”

The shifting theatrical windows has left studios and cinemas with a complex equation.

A shorter window

Studios had been pushing to slim down the window prior to the pandemic in order to cut down on marketing expenses, explained Daniel Loria, senior vice president of content strategy and editorial director at the Box Office Company.

Studios were paying a significant amount to market films for their theatrical release and then months later had to drum up buzz again for a film’s transition to the home market. With shorter windows, studios don’t need to spend as much to refamiliarize audiences with a film as it’s likely still fresh in their minds from its debut.

“My impression of films going to [premium video on-demand] early is usually a decision to not double dip on the marketing spend,” Loria said.

Last year, the average run of a widely released film was 39 days, according to The Numbers. So far in 2024, the average run is 29 days. Of course, as bigger blockbuster titles roll out in the summer months, that figure is expected to grow.

Average theatrical window by major Hollywood studio in 2023

  • Focus Features — 28 days
  • Lionsgate — 30 days
  • Universal — 30.8 days
  • Warner Bros. — 30.9 days
  • Paramount — 42.5 days
  • Sony — 47.75 days
  • 20th Century Fox — 60 days
  • Searchlight — 60 days
  • Disney — 62 days

Source: The Numbers

There are cases where studios have extended their runs well beyond the typical theatrical window. In 2022, for example, Paramount and Skydance’s “Top Gun: Maverick” played for more than 200 days in cinemas before heading to the home market.

And, these figures only refer to when a film becomes available in the home market for rent. Typically, the wait before films are available as part of subscription streaming services, often considered “free” by those subscribers, is much longer.

The Numbers reported the average time span between theatrical release and streaming subscription launch was 108 days in 2023.

Early on there were experiments with day-and-date releases, meaning films would hit cinemas and streaming at the same time. But that faded as studios realized these simultaneous releases cannibalized sales and led to increased piracy rates.

There’s also the consideration that many actors and directors have contract stipulations that award them a percentage of theatrical gains. In 2021, actress Scarlet Johannson sued Disney for releasing the 2020 Marvel film “Black Widow” on streaming and in theaters at the same time. She claimed that her agreement with the company guaranteed an exclusive theatrical release for her solo film, and her salary was based, in large part, on the box office performance. Johannson and Disney later settled for an undisclosed monetary sum.

Still, Universal has dabbled with the day-and-date model for horror movie fare around Halloween, opting most recently to release “Five Nights at Freddy’s” in theaters and on streamer Peacock at the same time. While the film had a stellar opening weekend, topping $80 million at the domestic box office, ticket sales shrunk more than 76% in the second weekend, reaching just $19 million.

Of course, shorter exclusivity and lower ticket sales can be bad for theater chains, which are still struggling to rebound operations after Covid. But some argue that getting the window wrong can be bad for the movie, too.

“A sufficient window is important not only to exhibitors, but also to our studio partners, as it’s necessary to deliver the full promotional and financial benefits of a film’s theatrical release, which continue to meaningfully enhance a film’s lifetime value across all distribution channels, including streaming,” said Sean Gamble, president and CEO of Cinemark.

Disney’s dilemma

It’s a lesson that Disney learned in the wake of the pandemic.

Both Walt Disney Animation and Pixar struggled to regain a foothold at the box office after pandemic restrictions lessened and audiences returned to theaters. Much of this was due to the fact that Disney opted to debut a handful of animated features directly on streaming service Disney+ during theatrical closures and even once cinemas had reopened.

The company sought to pad the company’s fledgling streaming service with content, stretching its creative teams thin and sending theatrical movies straight to digital.

That dynamic trained parents to seek out new Disney titles on streaming, not in theaters, even when Disney opted to return its films to the big screen.

As a result of that and other challenges, no Disney animated feature from Pixar or Walt Disney Animation has generated more than $480 million at the global box office since 2019. For comparison, just before the pandemic, “Coco” generated $796 million globally, while “Incredibles 2″ tallied $1.24 billion globally, and “Toy Story 4” snared $1.07 billion globally.

Box office experts are looking to “Inside Out 2” as a barometer for the health of Pixar and its future. If the film can capture attention from audiences and perform well over its opening weekend and beyond, the animation studios will regain goodwill from audiences and the industry.

Recent Pixar domestic opening weekend results

  • “Elemental” (2023) — $29.6 million
  • “Lightyear” (2022) — $50.5 million
  • “Turning Red” (2022) — streaming release
  • “Luca” (2021) — streaming release
  • “Soul” (2020) — streaming release
  • “Onward” (2020)* — $39.1 million
  • “Toy Story 4” (2019) — $120.9 million
  • “The Incredibles 2” (2018) — $182.6 million

* “Onward” was released just as Covid cases spiked in the U.S. and theaters began closing.

Source: The Numbers

A 100-day window for “Inside Out 2” may be the key.

Disney is one of the only studios that doesn’t have a traditional premium video on-demand window, according to Sebastian Gomez, a research and data analyst at The Numbers. Meaning, that once that theatrical window is up it will go to Disney+ where subscribers can watch it for free, rather than an intermediate rental option.

By delaying its at-home release, Disney is signaling to audiences that its latest Pixar release is a “must see” on the big screen.

The first “Inside Out” film, which hit theaters in 2015, generated $90.4 million during its opening weekend and tallied more than $850 million at the global box office.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.

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The best banks in the Asia-Pacific region, according to customers

SINGAPORE — Customers in Asia-Pacific have picked their favorite banks as lenders scramble to meet consumer expectations in a fast-changing environment.

After a prolonged period of high inflation — and interest rates — banks in the region are starting to navigate the global trend of lower rates. They’re also facing technological innovation that has the potential to transform the sector, as generative AI gains traction around the world.

Against this backdrop, CNBC and market research firm Statista surveyed 22,000 individuals with a checking or savings account in 14 major economies. The report below — the first of its kind — is designed to highlight the banks that best meet consumer needs in their respective markets.

For the survey, participants evaluated their overall satisfaction with a bank, and whether they would recommend it to others. They also rated each based on five criteria: trust, terms and conditions (such as fees and rates), customer service, digital services and quality of financial advice. Read the full methodology here. The ranking only included banks that qualified according to the criteria described in the report.

See below to see which banks made the list in your location.

Australia

1 ING Group
2 Bank Australia
3 Westpac
4 Ubank
5 NAB
6 Alex Bank
7 Newcastle Permanent Building Society
8 People’s Choice Credit Union
9 Beyond Bank
10 ME
11 Suncorp
12 MyState Bank
13 Australian Military Bank
14 Community First bank
15 Heritage Bank

Source: CNBC & Statista

Dutch bank ING came out top in Australia, against a sea of local competition. Like most economies, Australians valued trust the most and were less concerned on the financial advice they were given.

China

1 China Merchants Bank
2 Bank of China
3 ICBC
4 HSBC
5 China Construction Bank
6 Postal Savings Bank of China
7 China Minsheng Bank
8 Standard Chartered
9 SPD Bank
10 Bank of Communications
11 Agricultural Bank of China
12 UBS (China) Limited
13 JPMorgan Chase Bank (China)
14 China Everbright Bank
15 Ping An Bank
16 DBS Bank (China)
17 Bank of Suzhou
18 Bank of Jiangsu
19 Chongqing Rural Commercial Bank
20 Hang Seng Bank
21 Hubei Rural Credit Union Association
22 Huishang Bank
23 East West Bank
24 WeBank
25 Hankou Bank (HKB)

Source: CNBC & Statista

China Merchants Bank, listed in both Shanghai and Hong Kong, earned the top spot in mainland China beating both domestic and foreign players.

Hong Kong

1 China Construction Bank
2 China Minsheng Bank
3 ICBC
4 SPD Bank
5 China Everbright Bank
6 Bank of Communication
7 HSBC
8 CGB
9 Livi Bank
10 China Merchants Bank

Source: CNBC & Statista

China Construction Bank, one of China’s four major state-owned banking institutions, was ranked the top lender over foreign players like HSBC.

India

1 ICICI Bank
2 HDFC Bank
3 Axis Bank
4 Kotak Mahindra Bank
5 State Bank of India
6 HSBC
7 Paytm Payments Bank
8 Standard Chartered
9 Federal Bank
10 IndusInd Bank
11 Union Bank of India
12 Karnataka Bank
13 Punjab National Bank
14 Bank of Baroda
15 Bandhan Bank
16 Fincare
17 DSCB
18 Kerala Gramin Bank
19 Fino Payments Bank
20 APCOB
21 Punjab Gramin Bank
22 IDFC First Bank
23 UCO Bank
24 RBLBank
25 New India Bank

Source: CNBC & Statista

ICICI bank, a leading private sector bank in India, was the top pick in the country despite strong competition from mostly local lenders.

Indonesia

1 Bank Central Asia
2 Bank Mandiri
3 Sea Bank
4 Jago
5 Raya Bank
6 Bank Negara Indonesia
7 United Overseas Bank
8 PermataBank
9 Cimb Niaga
10 DBS
11 Bank Rakyat Indonesia (BRI)
12 BNC
13 Bank Muamalat
14 Jenius
15 BCA Syariah
16 HSBC
17 BDP DIY
18 Bank Aceh
19 Standard Chartered
20 Bank Sumsel Babel

Source: CNBC & Statista

Bank Central Asia, Indonesia’s largest private commercial bank, beat the competition to clinch the top spot. Customers valued both trust as well as digital services in their ranking.  

Japan

1 SBI Sumishin Net Bank
2 Rakuten Bank
3 Sony Bank
4 Aeon Bank
5 au Jibun Bank
6 PayPay Bank
7 Sumitomo Mitsui Banking Corporation
8 Senshu Ikeda Bank
9 The Juhachi-Shinwa Bank
10 Iyo Bank
11 Ehime Bank
12 Japan Post Bank
13 Ja Bank
14 Kyushu Labor Bank
15 Hamamatsu Iwata Shinkin Bank
16 Keiyo Bank
17 Bank of Fukuoka
18 Shinsei Bank
19 The Nishi-Nippon City Bank
20 Aozora Bank
21 Saitama Resona Bank
22 MUFG Bank
23 Lawson Bank
24 Gunma Bank
25 Hachijuni Bank
26 Rokin Bank
27 Kiyo Bank
28 Tokyo Star Bank
29 The Bank of Okinawa
30 Kyoto Chuo Shinkin Bank
31 Abukuma Shinkin Bank
32 North Pacific Bank
33 Ogaki Kyoritsu Bank
34 Tottori Bank
35 Bank of Kyoto

Source: CNBC & Statista

SBI Sumishin Net Bank, a Japan-based company, managed to beat other domestic lenders to come out top. Japanese citizens valued trust as their most important criteria.

Malaysia

1 Maybank
2 Standard Chartered
3 Maybank Islamic
4 HSBC
5 RHB Islamic Bank
6 Bank Islam
7 AmBank Group Islamic
8 OCBC Bank
9 United Overseas Bank
10 Hong Leong Islamic Bank

Source: CNBC & Statista

Maybank, which is the largest bank by market value in Malaysia, was the customers top pick against competition from domestic and foreign lenders.

New Zealand

1 Bank of New Zealand
2 ASB Bank
3 The Co-operative Bank
4 SBS Bank
5 Kiwibank

Source: CNBC & Statista

Bank of New Zealand, one of New Zealand’s big four banks, earned the top spot among consumers who also valued trust as the most important criteria. In some economies, like New Zealand, there are fewer competitors in the market and the size of the banking market differs, thus only five banks made the list.

Philippines

1 Philippine National Bank
2 Union Bank (Philippines)
3 Maya Bank
4 OFBank
5 UnionDigital Bank
6 UNO Digital Bank
7 GoTyme Bank
8 LANDBANK
9 Metrobank
10 BPI

Source: CNBC & Statista

Philippine National Bank, one of the largest banks in the country, earned the top rank against competition from largely local lenders.

Singapore

1 DBS
2 HSBC
3 Citibank
4 Bank of Singapore
5 United Overseas Bank

Source: CNBC & Statista

Singapore’s biggest bank DBS beat its domestic peers to clinch the top spot in the city-state. Given the small market size, there are fewer banking competitors as a result only five made the list.

South Korea

1 TossBank
2 KakaoBank
3 Kwangju Bank
4 K bank
5 Jeonbuk Bank
6 KB Kookmin Bank
7 Industrial Bank of Korea
8 DGB Daegu Bank
9 BNK Busan Bank
10 KEB Hana Bank

Source: CNBC & Statista

Toss Bank, an internet-only bank based in South Korea, managed to fend off domestic competition to emerge as top lender in the country.

Taiwan

1 E.Sun Financial
2 Bank SinoPac
3 Standard Chartered
4 CTBC Bank
5 Taipei Fubon Bank
6 Taishin International Bank
7 HSBC
8 Rakuten International Commercial Bank
9 Cathay Financial
10 Mega International Commercial Bank

Source: CNBC & Statista

Taiwan’s E.Sun Financial, headquartered in Taipei, earned the top ranking with customers focused on trust and less concerned about financial advice.

Thailand

1 Kasikornbank
2 Siam Commercial Bank
3 Bank of Ayudhya
4 United Overseas Bank
5 Krung Thai Bank

Source: CNBC & Statista

Kasikornbank bank, Thailand’s second-largest lender, came out top in the country. Only five banks made the list as there are fewer competitors and the size of banking market varies.

Vietnam

1 Techcombank
2 Vietcombank
3 BIDV
4 Military Commercial Joint Stock Bank
5 ACB
6 Vietinbank
7 VIB
8 TPBank
9 Sacombank
10 VP Bank
11 BVBank
12 Shinhan Bank
13 SeA Bank
14 HDBank
15 Ocean Bank

Source: CNBC & Statista

Vietnamese private lender Techcombank is the customers’ top pick in the country, where trust again was the key factor for survey respondents.

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#banks #AsiaPacific #region #customers

See inside Ford’s new tech campus, a century-old Detroit train station restored for $950 million

Ford Motor is turning an abandoned train station used for decades as an infamous symbol of Detroit’s downfall and blight into a new technology campus for the automaker and mixed-use property for the city.

Michael Wayland / CNBC

DETROIT – Ford’s latest project out of the Motor City is the restoration and reopening of an abandoned train station, for decades a symbol of Detroit’s downfall and now the automaker’s new technology campus.

The $950 million project encompasses the 18-story former train station called Michigan Central Station – once the state’s marquee transit building – an adjacent 270,000-square-foot building and other, supporting facilities.

The 30-acre “Michigan Central” campus and station was initially announced in 2018 and slated to open by 2022. However, the coronavirus pandemic and the extensive work needed to renovate the station delayed its reopening. Ford is celebrating the restoration of the century-old train station on Thursday.

Following the event Thursday, the ground floor of the train station building will be open to the public through June 16, before the first commercial occupants begin moving in this fall.

The new campus comes at a precarious time for Ford investors as the company continues to restructure its business. It also comes as many companies attempt to downsize office space and fill their current buildings with employees who grew accustomed to working from home during the pandemic.

A photo of Michigan Central’s main concourse prior to its renovation sits in the newly restored room toward the back of the building.

Michael Wayland / CNBC

Specifically in Detroit, a stark juxtaposition has emerged: In April, Ford’s crosstown rival General Motors announced it would be downsizing from its towering Renaissance Center headquarters along the city’s riverfront to two floors in a nearby building that’s under construction.

Yet Ford Chair Bill Ford said he believes the investment made in the historic train station is a crucial part of the automaker’s future, including in aspects of talent acquisition and retention.

“We’re in a war for talent, our industry and our company,” Ford, who spearheaded the project, told CNBC. “And you need to give talent two things: You need to give them, first, really interesting problems to solve, and then you have to give them a great place to work. With Michigan Central, we checked both those boxes.”

Bill Ford decided to purchase the dilapidated building after years of trips to Silicon Valley for his Fontinalis venture capital firm and during his tenure as a member of the eBay board of directors. He’s long been outspoken about the need for the traditional automotive industry to compete with newer tech companies in both product and talent acquisition.

Ford Motor released this image of Chair Bill Ford, great-grandson of company founder Henry Ford, when the automaker announced it would be purchasing Michigan Central Station in June 2018.

Ford

Ford said attracting top talent to Detroit is “getting better” but noted that “it’s a tall order” to convince workers from California or the East Coast to relocate to Detroit and work for Ford.

“If you can show them a place like Michigan Central, not just in its beauty, which alone is incredible, but then talk about the kind of things that will be going on there, then it becomes, I think, a really valuable resource for the company going forward,” he said.

Train station campus

The Michigan Central campus is located southwest of Detroit’s main business district in a trendy neighborhood known as Corktown. It’s about 10 miles down the road from Ford’s world headquarters in Dearborn, Michigan.

The Michigan Central campus in total spans 1.2 million square feet of commercial space, including retail, restaurants and hospitality. It was awarded $300 million in state, local and historic rehabilitation tax incentives, according to officials.

The restored grand waiting room inside Ford’s Michigan Central Station in Detroit.

Michael Wayland / CNBC

Ford officials went to great lengths to restore the station to its original glory after decades of vandalism and decay. The project involved 3D-scanning the rooms, matching materials and referencing historical photos to recreate parts of the building.

This was especially true for the first floor of the train station, where a grand room features massive windows, an arcade and a large concourse full of marble and terrazzo flooring, Mankato stone and other unique materials.

Architects and designers opted to leave some graffiti on walls to represent the station’s dormant years after closing in 1988.

As one measure of Ford’s determination, officials traced the facility’s original limestone to a quarry in Indiana only to find out it had since closed. Michigan Central worked with the owners to reopen the quarry.

Some graffiti from when Michigan Central sat dormant for more than 30 years was purposely preserved to represent that part of the station’s history.

Michael Wayland / CNBC

“It has been painstakingly and lovingly restored to, wherever possible, to its original condition,” said Josh Sirefman, Michigan Central CEO, during a tour of the project. “Before we start activating it with lots of things, it’s probably in its most pristine condition.”

Amid national commercial real estate challenges, about two-thirds of the tower has scheduled tenants or planned use cases, officials said. That includes an unnamed restaurant and hotel, pending rezoning approval.

The adjacent building, known as the Detroit Public Schools Book Depository, already houses more than 600 employees from nearly 100 startup companies.

“It really is the beginning of the ecosystem that I want to create,” Bill Ford said. “There’s going to be a lot of experimentation taking place down there.”

Ford plans to house at least 2,500 employees in the building, primarily members of the company’s electric vehicle and connected services teams. Roughly 1,000 of those employees are expected to move into the station’s tower by the end of this year, Ford said.

Other building occupants could include local universities, other businesses and a restaurant. However, officials declined to release a full list of expected tenants. Google, a founding partner of the project, runs its “Code Next” program, which teaches students how to code, from the Book Depository building.

Ford said he expects future automaker employees to be able to collaborate with other occupants of the station’s tower as well as the startups occupying the Book Depository building.  

A photo of Michigan Central’s arcade prior to its renovation sits in the newly restored room toward the east end of the building.

Michael Wayland / CNBC

‘Legacy project’

Resurrecting the train station and surrounding campus is the latest project Bill Ford, a great-grandson of company founder Henry Ford, has undertaken in the Motor City.

He was instrumental in moving the Ford family-owned Detroit Lions from suburban Pontiac to a new stadium, appropriately named Ford Field, in downtown Detroit in 2002. He also was part of the team that brought the Super Bowl to the city in 2006.

And he redeveloped the company’s River Rouge Assembly plant into a “green” production facility amid calls to close it. It’s now a tourist destination for the production of the Ford F-150 full-size pickup.

Ford, who served as CEO of the automaker from 2001 to 2006, described Michigan Central as a continuation of such projects. He called the effort a “legacy project” for himself as well as for those who have been able to work on it.

“I’m very proud of both of those [prior projects], but I think this is going to kind of put an exclamation point on it because this will be a wonderful place to work but it will also be a wonderful place for the public to come,” Ford said.

The renovated “reading room” off of the grand waiting room at Ford’s Michigan Central Station in Detroit.

Michael Waylans / CNBC

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Why Walmart, Walgreens, CVS retail health clinic experiment is struggling

Bobbi Radford showed up at the CVS MinuteClinic in Batavia, Ohio, last Thanksgiving because she had pain in her arm.

“I waited an hour and then was told to go to the [emergency room].,” Radford said. Filling the staffer in on her history of congestive heart failure, she was directed to go to the ER. But Radford says after she did that, it was determined at the ER that she had a case of tennis elbow.

“It was a waste of my time, and I still had to go to my family doctor,” Radford said.

Despite their early promise of convenience and accessibility, in-store clinics haven’t been the golden egg-laying goose many retailers originally envisioned. That’s why Walmart recently announced it would shutter its 51 in-store full-service health-care centers. Another symptom of the ailing market is Walgreens, which announced the closing of 160 VillageMD locations (Walgreens owns a 53% stake in VillageMD, which also operates free-standing clinics). CVS’s MinuteClinic, the largest in-store clinic with over 1,100 locations, has announced dozens of clinic closings this year in Southern California and New England.

Not all patient experiences are negative. Karla Lemon of Conway, South Carolina, says she uses CVS’s MinuteClinic for vaccines or sinus infections. “I’ve had a pretty good experience with them,” said Lemon.

But the business experience in the retail health clinic space has largely disappointed. That’s not a huge surprise to Timothy Hoff, professor of management health-care systems at Northeastern University. Hoff has researched retail health clinics and how they deliver primary care and says that the margins can be thin to non-existent, and that the many other challenges have hindered their success. What was not too long ago viewed as the “2.0” version of primary health care is now being left behind in the wake of closed in-store clinics.

“1.0 was the rise of urgent care centers. Those were places 20 or 30 years ago that gave people alternatives to primary care doctors,” Hoff said. But about 15 years ago, Hoff says, the space began moving into heavily trafficked stores like groceries and department stores with health care attempting to meet people where they were. But this presented challenges that many retailers, and even some providers, weren’t familiar with.

“Some of these organizations grew this part of their business too quickly and didn’t realize the cost model in sustaining these,” Hoff said. Insurance reimbursements at these clinics are low, but the expenses have gone way up. “I just don’t think the math works for many places now to have many of these. Some of these large organizations are retrenching and pulling back,” Hoff added.

The retail clinics depend on volume selling. “If you can’t pump through a lot of patients, it doesn’t work,” Hoff said. Staffing was also a struggle. “They ended up being more expensive to run than they thought, combined with a workforce shortage, they just didn’t work.”

There is also the issue of cross-selling. A lot of retail chains use clinics as loss leaders to steer customers to other products and services they sell: lure customers in, in the hope they buy other stuff. But the model didn’t materialize. If someone is sick enough to seek care, they probably won’t be in the mood to purchase a pint of ice cream or socks while they are out. Likewise, “people coming in for groceries won’t necessarily hop over to the clinic,” Hoff said.

A retail reality check for MinuteClinic

Colleen Sanders, a family nurse practitioner in Washington, D.C., who now works in health-care education, worked a two-year stint at MinuteClinic. She pointed to margin and staffing issues she witnessed.

“Health care is a business in the USA; while we look at the giant numbers of how many billions are generated, it doesn’t mean there will be big margins. I think retailers have realized that they will not be making millions and millions of dollars,” said Sanders. “Margins are small.”

Staffing costs, meanwhile, slicing into already thin margins, meant that when Sanders worked at MinuteClinic, she did everything from checking people in, to billing and cleaning the clinic at the end of the day, and any support staff was undertrained, at best, she said. “That was the model to ensure they could do it so they didn’t have to add staff. But with volume, you need ancillary staff so the professional can dedicate time to patient care, because that is where you can bill insurance and revenue comes in.”

The 15 minutes that she was allotted to see a patient often just wasn’t enough for the complex ailments people sometimes have. For some patients, service simply wasn’t fast enough: Sanders recalled a 7-year-old she was treating remark that treatment was taking more than a minute. Ultimately, Americans’ “want-it-now” culture doesn’t mesh with medicine, and that is what the retail clinic closures are signaling. “The pace at which we want health care to work isn’t congruent with actually providing the level of service we should be providing, coupled with the cost of having support staff,” Sanders said. “If we wanted to make a dent in retail health care, then we would staff with registered nurses instead of medical assistants, but that would cost too much.”

CVS wouldn’t comment directly on the closings, but a spokesperson described the latest strategy as a combination of care delivery capabilities — a blend of virtual, in-store, and in-home services — that delivers a “more convenient experience.”

Walmart and the problem of volume vs. price

In 2019, Walmart announced a bold initiative to open in-store health clinics — according to one press report, its board approved a total of 4,000 to be added over a decade through 2029. Publicly, Walmart had only said it planned to develop a cost-efficient model and scale it appropriately, and disputed that specific number. The plans ended with the recent closing of the 51 clinics it had opened.

“Primary health care is a low margin business,” said Arielle Trzcinski, a principal analyst covering health care at research firm. Forrester. “Compared to what they see in traditional retail, health care is a fundamentally different business,” Trzcinski said, citing the challenges of navigating insurance companies and administrative burdens that health care brings.

Retailers can’t recoup money from offering primary care as a loss leader in the same way other health care organizations can.

“Primary care is a feeder for patients that need higher acuity services, such as surgery or specialists. Hospitals make money on the back end and Walmart or Walgreens didn’t have that,” Trzcinski said. CVS fares better because of its merger with health insurer Aetna that now allows for upselling of other services, including mental health.

“Walmart ultimately thought they were solving an important issue,” Trzcinski said, but she added that Walmart never really put its full marketing muscle behind the effort or created relationships with other employers to make a pathway into the clinic. “They set out to make health care more affordable and convenient for their customers. But to do that you need volume. … It takes volume or a different pricing structure, to make it work, and Walmart, in the end, had neither calibrated correctly.” 

A missed opportunity for rural America

Sanders says the business model’s constraints have even undermined one of the retail clinic concept’s great promises: health-care delivery to rural areas.

“Walmart tried to go into rural areas where providers were scarce and to meet a community need; I think it is a great idea because everyone knows where the local Walmart is. But getting providers to go to rural areas and work is really challenging. The quality of life and the things people can do in a small town are not as appealing as urban centers, so they pay providers a premium to work there,” Sanders said, and that is one more thing that eats into revenue. 

Retailers will continue to experiment with the model.

Dollar General, for example, has attempted a “workaround” by offering mobile clinics that visit some of its rural locations, and offer a variety of minor medical services.

Amazon’s recent launch of One Medical, which features a $9-a-month subscription charge for existing Prime members, offers another way to make money.

“They get your cash whether you end up using the service or not, and it is a good price if you need the care,” said Virgil Bretz, CEO of Washington-based fintech health platform MacroHealth. The care is virtual, but you can walk in if you are near a One Medical facility. Unlike most models that make money when patients come, “Amazon makes more money if you don’t show up. So there is something a little different about this retail model,” Bretz said.

In-store health clinics can be profitable and viable, and retailers are experimenting with piecemeal approaches tailored to the local market. Walgreens recently announced the opening of a handful of in-store health clinics in Connecticut, which will be run by Hartford HealthCare, with the clinics being called  “Hartford HealthCare at Walgreens.” Patients will be able to go beyond typical small-scale clinic services and tap into Hartford’s larger network of specialists and care options. 

And in Phoenix, a Be Well Health Clinic operates in a Walgreens near the campus of Arizona State University, catering just to sexual health issues.

“The common thread is it is a locally-based partnership with a local provider with the shared goal of offering convenience and access,” said a Walgreens spokesperson.

Meanwhile, in Atlanta, Little Clinics, which operate inside Kroger, is shifting services to focus on senior care.

Walmart and Kroger did not respond to requests for comment.

This is all part of what Hoff calls “health care 3.0,” a continuing disruption and evolution of primary care delivery based on market and customer needs, and including retail clinics. New models will emerge, and not every model will work.

Every several years, there is a run of outsiders trying to make changes to health care, good and bad,” Bretz said. Inevitably, they “hit the brick wall of the reality of just how complex health care can be.”

Corrections: Walgreens has a 53% stake in VillageMD, which was reduced as part of a reorganization. Walmart disputes press reports indicating it planned to open 4,000 clinics over a decade. Separately, Virgil Bretz is CEO of MacroHealth.

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It was a strong week for retail earnings. That doesn’t spell a consumer comeback

A Foot Locker, Inc. store. 

Courtesy of: Foot Locker, Inc.

Retail’s biggest winners during first-quarter earnings aren’t thriving because consumers are suddenly spending more on discretionary goods — it’s because they’re executing well and cash-strapped shoppers are choosing them over competitors. 

If there’s one takeaway from results posted by the largest U.S. retailers over the last few weeks, it’s that shoppers are still spending — but being far more selective about where.

Feeling the brunt of sticky inflation, high interest rates and an economy that feels tougher than it may actually be, consumers are prioritizing purchases that have the right combination of value, convenience and fun.

Companies like Abercrombie & Fitch, TJX Companies and Gap impressed Wall Street with their results, while others like Kohl’s, American Eagle and Target disappointed.

Take Gap and Foot Locker — two unlikely winners that posted results on Thursday. Both retailers are in the midst of ambitious turnaround plans and are performing better than expected because of new strategies they’ve implemented. 

Gap posted positive comparable sales for all four of its brands — Athleta, Old Navy, Banana Republic and its namesake banner — for the first time in “many years,” beating Wall Street’s expectations across the board, the company said. 

For years, Gap had been losing market share to buzzy competitors. But under new CEO Richard Dickson, the marketing guru credited with reviving the Barbie franchise, the apparel chain has focused on financial rigor, brand storytelling and product development. In under a year, Gap’s sales and profits have meaningfully improved, and its brands are beginning to be part of the cultural conversation again.

A few weeks ago, actor Anne Hathaway went to a Bulgari party wearing a white Gap shirt dress that had been designed by the company’s new creative director, Zac Posen. Critically, Gap dropped the $158 dress to consumers, and it sold out within hours. This combination of marketing and exclusive product drops is what Gap had long been lacking, and what competitors had already been doing. 

Foot Locker had declined over the last couple of years, but with the right combination of new strategies and a little bit of luck, its turnaround is showing signs of life

Under CEO Mary Dillon, Foot Locker has worked to change its stores, where it does more than 80% of its sales. It has tried to create not only a better shopping experience for consumers but also a better place for its critical brand partners.

Instead of two walls of shoes with competing brands mixed together, Foot Locker is changing its fleet so the brands have their own unique displays. Its new “store of the future” concept at a New Jersey mall that brings that strategy to life has become its best performing store in North America in just a few weeks, Dillon told CNBC, adding that brands are thrilled with the new design. 

The shift couldn’t have come at a better time. Years into Nike’s strategy to cut out wholesalers and sell directly to consumers, the retailer is realizing it went too far and is now changing course.

With refreshed stores and better product displays, consumers are converting more, too, and paying full price — even Foot Locker’s lower-income shopper. 

“Our consumer … this is a category that is very important to them. So when people have discretionary income, it may be limited, but you’re gonna prioritize where you spend it, right?” said Dillon. “We’re proving that people are willing to spend full price, but you have to have the right products and serve it up in a way that makes it enticing, right? So that’s where the whole customer experience really matters.” 

Elsewhere, Dick’s Sporting Goods posted a solid first-quarter report Wednesday, as executives said average selling prices and transactions rose and that they saw no signs of consumers trading down for cheaper options. That may not mean shoppers are spending more broadly, though: Dick’s has long been considered a best-in-class operator that offers a solid shopping experience, meaning it can win even when consumers are picky with their spending.

Denim wars

Two retailers that didn’t have great quarters — American Eagle and Kohl’s — tell a story of executing poorly or missing out on trends. 

American Eagle handily beat earnings estimates thanks to a new strategy designed to boost profitable growth, but it fell short on revenue and issued cautious guidance that was slightly below Wall Street’s expectations. 

American Eagle president and executive creative director Jennifer Foyle told CNBC that the brand is working to cut out items that aren’t landing with shoppers and dig down into the ones that are. She said the retailer was overly focused on jeggings in the past but now, low-rise, baggy fits are in. 

During a store visit at the American Dream mall in New Jersey on Thursday, an associate told CNBC that the location didn’t have the low-rise, baggy fit in-stores, and they were only available online. Meanwhile, there was a wall of jeggings. Still, denim was a strong performer for the company during the quarter, and it had a variety of other styles that resonated with customers at the location, the company said.

Denim is having a moment with shoppers. Search levels for denim are hitting peaks in a 20-year data set, particularly for categories like tops and dresses, according to a Morgan Stanley research note. 

Kohl’s is missing the mark in a far more meaningful way. The retailer posted dismal numbers on Thursday, as both earnings and revenue fell well short of expectations. It cut its full-year forecast and its shares plunged more than 20%, the stock’s biggest single-day percentage decline ever.

The weak results illustrated a challenge the retailer is still contending with: Keeping up with trends and staying relevant. 

CEO Tom Kingsbury told CNBC he expects the “head-to-toe” denim trend to play a role in the back half of the year, but it could already be out of style by the time Kohl’s gets around to adding the clothing items to its shelves.

“Denim is OK business for us. I mean it’s really not the most important time for denim,” said Kingsbury. “We’re selling shorts and tees. And more, you know, warm weather product.” 

Gap, one of the longtime denim leaders, didn’t seem to be concerned about denim going out of favor because the weather is warmer. CEO Dickson said the company is getting ready to launch its “exclusive lightweight denim fabric” dubbed “Ultra Soft” in time for the summer.

Failing to chase trends has been an ongoing issue for the aging department store Kohl’s. Kingsbury told CNBC in March that Kohl’s used to buy product for the juniors department catering to teen girls — one of the most trend-driven areas of its stores — 12 to 14 months in advance. When the apparel hit the sales floor, it was “dead on arrival.”

In an age where viral TikTok videos dictate the life and death of trends, it’s more important than ever for retailers to stay on top of what’s working with customers and what isn’t. They’re not just competing with legacy players, they’re also vying for customers with innovative yet controversial upstarts like Chinese-linked Shein, which can go from an idea to an online product in a matter of weeks.

That’s a far cry from the lead times at Under Armour, where it currently takes about 18 months to get a product from an idea to a showroom floor. During an earnings call with analysts on May 16, CEO Kevin Plank called the system “just plain uncompetitive in the 2024 landscape” as he laid out a plan to streamline the process

Meanwhile, Abercrombie & Fitch posted another stellar set of results, even as it begins to lap tougher comparisons. It has posted torrid growth in part because the company is responsive to its customers and a has nimble supply chain that has allowed it to chase trends quickly and efficiently. 

It posted its strongest first quarter in history, and now expects sales to grow 10% in fiscal 2024, up from previous guidance of between 4% and 6%. 

CEO Fran Horowitz told CNBC that low-rise, baggy jeans are also uber-popular with its customers. During a recent visit by CNBC to its Hollister store just a short walk from American Eagle’s outpost, plenty of those style of jeans were on display for shoppers as soon as they walked into the store.

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Oil alliance OPEC+ could extend production cuts this weekend as focus shifts away from Middle East tensions, sources say

The OPEC logo on the building of the Organization of the Petroleum Exporting Countries.

Thomas Coex | Afp | Getty Images

The oil-producing Organization of the Petroleum Exporting Countries and its allies could extend existing output cuts this week, delegates and analysts told CNBC, even as focus shifts from Middle East tensions to summer demand.

The group, collectively known as OPEC+, was set to convene in person in Vienna on June 1, but last week moved the encounter virtually to June 2.

OPEC+ producers are currently implementing a combined 5.86 million barrels per day of supply cuts. Just 2 million barrels per day of these cuts represent unanimous commitments under OPEC group policy, and expire at the end of this year.

The remainder are reduced voluntarily by a subset of the alliance. A cut of 1.66 million per barrel is in place until the end of 2024, and 2.2 million barrels per day of supplies have been trimmed until the end of the second quarter. Market participants are watching whether this latter cut will be extended for another quarter, amid projected demand hikes.

“Come June, China would be largely out of refinery maintenance, U.S. consumption is improving as summer moves closer, so June should already see negative crude balances. And then August is the peak month for tightness,” Viktor Katona, lead crude analyst at Kpler, told CNBC.

The OPEC+ coalition is also eyeing individual members’ quota compliance, asking overproducers to implement additional cuts. Iraq and Kazakhstan have detailed compensation plans.

Extension

“I think that the clever thing for OPEC+ would be to gradually unwind the voluntary cuts to limit the upside price pressure, to prevent refilling inflation,” Jorge Leon, senior vice president of Rystad Energy’s Oil Market Research, told CNBC. “However, I think that the market right now has priced in a full extension of the voluntary cuts. So I think that is what, probably, they will do.”

He added, “If they decide to fully extend the voluntary cuts, and there is perfect compliance, and they do the full compensation, and then, if, I think prices could reach closer to $100 per barrel this summer.”

Energy security concerns fueled global inflation in the wake of Russia’s invasion of Ukraine and were further stoked after the conflict in Gaza threatened a broader spillover in the oil-rich Middle East, while frequent maritime attacks by Yemen’s Houthi militants disrupted trade transit in the Red Sea.

A high-inflation environment and tight monetary policy in turn reined in oil demand, but central banks have signaled readiness to lower interest rates in the second half of the year.

Tamas Varga, analyst at PVM Oil Associates, told CNBC that the OPEC+ supply restrictions will likely remain in place for the third quarter, adding, “I also believe that the producer group will emphasize that anyone who did not comply with the quota will have to make amends. And I believe that OPEC+ will only ease the supply constraints when they see obvious signs of global oil inventories depleting.”

Kpler’s Katona aligned with the views, but noted that heavyweights Saudi Arabia, Russia and the United Arab Emirates, who participate in the voluntary reductions, could seek to scrap the latter curbs toward the end of the year.

“Further down the line into 2025, unwinding cuts might be challenging for prices as incremental production from Guyana, Brazil, Canada will saturate the markets,” he said, flagging new Floating Production Storage and Offloading facilities due to come online. “This year there’s no new FPSO in Guyana, whilst next year it starts up a new one in [third-quarter] 2025. Brazil, likewise, has one FPSO starting up this year whilst next year it will be a bonanza of new capacity.”

S&P Global Commodity Insights: We expect OPEC+ to extend cuts through year-end

Rising competing supplies have reduced the market prominence of OPEC+, one OPEC+ delegate acknowledged, while analysts signaled that the group’s ongoing output cuts allows unfettered producers to capture their market share.

Priced in

Oil prices have largely languished range-bound in the first half of the year, under ongoing threat of spikes from developments in the Middle East. Regional escalations could top prices with a risk premium of up to $10 per barrel, Rystad’s Jorge Leon noted – while OPEC+ delegates told CNBC that the situation in the Gaza Strip is still adding a little pressure, but that the market has already absorbed the majority of its effect.

Katona likewise noted that the Gaza crisis “will seemingly persist for longer than everyone expected but it doesn’t really have an imprint on OPEC+ coherence and policy.”                     

One OPEC+ delegate meanwhile said that the unexpected death of Iranian President Ebrahim Raisi represented a tragic accident that could not be interpreted as a risk to the market, especially given that his successor will likely pursue similar politics.

“I think the geopolitical risk premium has subsided and I think that the tension between Israel and Hamas will only support prices if it will have an obvious impact on oil production or oil flows, which might come in the form of the closure of the Strait of Hormuz, or attacks on oil infrastructure in the region, something which does not look plausible at the moment,” Varga said.

OPEC+ must also balance its relationship with the U.S., which has previously blasted the coalition’s supply cuts amid concerns over gasoline prices. The Biden administration last week said it will release 1 million barrels of gasoline from reserves in a bid to curb prices at the pump. The U.S. undertook similar crude releases from its Strategic Petroleum Reserve Stocks during the Covid-19 pandemic, but one OPEC+ delegate noted such measures are unlikely to have an impact beyond price relief during the summer. The U.S. typically seeks to replenish the emergency stockpile of its state reserves.

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Luxury homebuyers can now get an art collection as part of the deal

Los Angeles real estate company The Agency is selling homes complete with artwork and furniture. The piece shown is called “The McCoys II” (2019) and is by artist Shaina McCoy.

The Agency | Nils Timm

When Paul Lester joined a luxury real estate agency in Los Angeles, he decided to organize a Beverly Hills property viewing with a difference: he effectively turned it into an art opening, inviting prospective buyers of the home — and those who might be interested in purchasing the artwork he displayed in it.

Individual artworks sold, and so did the property — for a premium. “We were successful in selling the house I would say for a more of a valued number than you might expect, because the entire package was seen as elevated,” Lester told CNBC by phone. The buyer also purchased some of the art displayed.

That was more than a decade ago. Since then, Lester has made it his mandate to feature “significant” work by contemporary artists — alongside designer furniture — in the high-end properties he’s listing, which is often available to buy.

Lester, a partner at real estate firm The Agency, is currently selling several new-build luxury homes in Beverly Hills designed by architecture firm Olson Kundig, and has a put together a “full collection” of art in a handful of them.

Paul Lester, a partner at Los Angeles real estate firm The Agency, said he had made it his “mandate” to feature artwork in the properties the company sells. Seen here is the interior of a home that is part of a collection known as The Houses at 8899 Beverly. The artwork is “Rainbow Universe” (2015) by Lazaros.

The Agency | Nils Timm

The homes — known as The Houses at 8899 Beverly — start at around $5 million. Rather than simply being “staging” pieces brought in temporarily, the art and furniture is also available to purchase, Lester said. The Agency worked with consultancy Creative Art Partners on the homes, which feature work by a number of artists, including Michelle Mary Lee, an arts educator, and Irvin Pascal, a British sculptor and painter.

Homes that are ready to move into, known as “turnkey” properties, are becoming popular with buyers. “We do see people more than not right now — especially with new construction — wanting an entire package that works well,” Lester said. “There have been circumstances where people walk in and say ‘I want this room … I’ll take the furniture and I’ll take the art. I absolutely love it this way and is that possible?’ And we’re able to say ‘yes it is’,” Lester said.

The trick with choosing artwork for such properties is to make sure it works well with their interiors, said David Knowles, founder of art consultancy Artelier, which supplies art for real estate projects in the U.K., U.S. and the Middle East.

“It’s hard to get a kind of uniqueness and a character across if what they’re selling is a turnkey project, because the … art has got to appeal to a wide audience,” Knowles told CNBC by phone. “The art needs to feel like it belongs there,” he said.

To do that, Artelier might commission pieces that have a connection to the area the home is in, and has artists make pieces that will precisely fit the dimensions of the space. This tends to work better than borrowing work from a gallery to display in a home temporarily, Knowles said.

Artelier, an art consultancy, commissions work to fit the dimensions of a wall, or panels, as seen in this living area at a home in Eaton Place, London.

Fenton Whelan | Artelier

Lester’s team discusses whether the art should match a home’s design or contrast with it. They might chose a colorful palette for a more monochrome property, or a mix of abstract work and portraiture, Lester said. Work is sometimes commissioned for properties; other times, Lester might ask artists whether they have pieces available in a particular color.

Artelier has sourced artwork to hang on the walls of some of the world’s most prestigious addresses, such as London’s One Hyde Park, the residences at the Dorchester’s One at Palm development in Dubai, and for an apartment within Eighty Seven Park, an oval-shaped Miami beachfront building designed by Renzo Piano.

London developers are keen to appeal to overseas buyers looking for vacation homes in the city, Knowles said. The consultancy is commissioned by interior decorators or real estate developers to source artwork for wealthy property buyers who “know what they like, and they have got good taste. Or they’ve got someone that works for them that has got good taste,” Knowles said.

Artelier is often the bridge between artists and developers or property buyers, groups that “come from two different worlds,” Knowles said. He works with artists to help them understand that their work can be seen as a luxury product and that clients expect something “exceptional.” At the same time, Artelier might explain to clients that something like a bespoke ceramic piece is likely to have imperfections, such as finger marks.

Artelier commissioned a collection of artwork for the public areas at One at Palm Jumeirah, Dorchester Collection, a residential building in Dubai. The artwork displayed is by textile artist Kristy Kun.

Tooze Studio | Artelier

For Lester, the artwork in The Houses at 8899 Beverly creates an additional opportunity for marketing. “We’re about to start … a campaign, which is going to highlight the artists … which I’ve found to be very effective. So in effect, you’re getting another opportunity to tell the story about the home because you’re telling the story about the art as well,” he said.

The Houses are comparatively more affordable than other properties Lester has on his books. “I have several right now that are privately being offered … The house might be worth let’s say $60 million, $70 million, but the artwork in the house is probably worth $200 million,” he said. Buyers at that level might inquire whether the vendor would consider selling one or two of the artworks, Lester said.

While real estate agency Savills doesn’t often sell art as part of a property deal, the company’s co-head of prime central London, Richard Gutteridge, advises clients to leave artwork on the walls during viewings.

“It is an accessory that a lot of people do identify with. At the top of the market, it’s a layer of [that] lifestyle,” he told CNBC by phone. Gutteridge oversees sales in what he calls the city’s “golden postcode” — Belgravia, Chelsea, Knightsbridge and Mayfair. He said a home’s art collection is occasionally worth as much as the property.

“As much as that helps the [sales] journey, it’s quite nice when [buyers] refocus on the house … The artwork often turns people’s heads,” Gutteridge said.

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Jeep reveals all-electric Wagoneer S in EV offensive, starting at $72,000

2024 Jeep Wagoneer S EV

Jeep

NEW YORK – The first all-electric Jeep SUV for the U.S. will be the 2024 Wagoneer S, starting at about $72,000 when it’s scheduled to go on sale this fall.

The Stellantis-owned brand revealed the vehicle and pricing Thursday, portraying it as a “new chapter” for the quintessential American SUV brand that has struggled with domestic sales in recent years.

“This represents a lot. It is the first global [all-electric vehicle] built in North America, designed in the U.S. … for the world,” Jeep CEO Antonio Filosa told CNBC during an interview after revealing the vehicle. “It is a milestone in our history.”

Filosa, who started leading Jeep in December, said the brand is in “fantastic shape” but it’s in the midst of a “transition like all the automotive brands nowadays” involving electrification.

Despite a slower than expected adoption of EVs in the U.S., Filosa said the brand is not worried about consumer adoption because its additive to the Jeep’s lineup, which will continue to offer traditional gas-powered SUVs, plug-in hybrid electric vehicles and “extended-range” electric vehicles starting next year.

Jeep Wagoneer S EV concept

Michael Wayland / CNBC

A “Launch Edition” of the Wagoneer S will initially be available with a 400-volt, 100-kilowatt-hour battery pack capable of more than 300 miles on a single charge, 600 horsepower and 617 pound-feet of torque for a 0-60 mph acceleration of 3.4 seconds. It is capable of charging from 20%-80% in 23 minutes using a DC Fast charger, according to the company.

Jeep also revealed a Trailhawk off-road performance concept of the EV, which Filosa said “hopefully soon will become a product.”

Filosa said less expensive models of the Wagoneer S will start being released roughly six months after the Launch Edition.

The $71,995 starting price of the Wagoneer S EV sits between gas-powered versions of the Wagoneer, starting at about $63,000, and more luxurious Grand Wagoneer, starting at roughly $92,000.

Jeep also will introduce a new unnamed midsize SUV next year to replace its discontinued Cherokee, Filosa said.

2024 Jeep Wagoneer S EV

Jeep

He also said the company will release electric, extended-range versions of the traditional gas-powered Wagoneer and Grand Wagoneer in 2025. The technology, which uses an engine as a gas-powered generator in addition to EV batteries, is expected to debut on the upcoming Ram Ramcharger pickup truck.

U.S. EV offensive

The Wagoneer S is the beginning of what Stellantis CEO Carlos Tavares this week called the automaker’s EV offensive for the U.S., including six to eight all-electric vehicles this year.

“There is a huge amount of opportunities here in the U.S. We are just starting the offensive of our electrification,” Tavares said Wednesday during a Bernstein investor conference.

For Jeep, the Wagoneer S is expected to be followed by a Wrangler-inspired off-road vehicle called the Recon later this year and a new roughly $25,000 EV “very soon,” Tavares said Wednesday without disclosing additional details.

Stellantis CEO Carlos Tavares holds a news conference after meeting with unions, in Turin, Italy, March 31, 2022.

Massimo Pinca | Reuters

For years, Tavares has been outspoken about the company being forced to produce EVs, which cost 40% more, due to regulatory requirements and not consumer demand. On Wednesday, he described EVs as a “cost-cutting exercise” to ensure the vehicles are profitable.

The EVs are a shift for Jeep in the U.S., where the brand has been focusing on plug-in hybrid electric vehicles, or PHEVs, such as its Wrangler and Grand Cherokee SUVs. The plug-in vehicles accounted for 17.5% of Jeep’s sales this year.

Filosa said Jeep, which is currently No. 1 in PHEVs in the U.S., expects to continue growing sales of those vehicles in addition to the upcoming EVs.

“Electrification to us so far has been working very, very well. Basically,” he said during the reveal event, “we built the PHEV industry. We own this part of the market.

 Jeep Wagoneer S Trailhawk EV concept

Michael Wayland / CNBC

Stellantis’ total PHEV U.S. sales last year was nearly 143,000, up 124% compared to 2022. Leading the way was Jeep, including 67,429 Jeep Wrangler and 45,684 Jeep Grand Cherokee “4xe” SUVs.

Jeep is using 4xe badging as a play on the brand’s off-road reputation combined with electrification, including EVs and PHEVs.

Wagoneer S

2024 Jeep Wagoneer S EV “R-Wing”

Jeep

Despite sharing the “Wagoneer” name with Jeep’s current gas-powered model, the five-passenger, two-row EV shares little with its three-row traditional internal combustion engine counterpart other than some Jeep styling.

The most notable difference on the exterior is a more modern interpretation of the brand’s iconic seven-slotted grille, which the EV doesn’t actually need for cooling. It’s indented and the slots are solid and interconnected with one another compared to seven separate slots.

“We reinvented the traditional seven-slot grille,” said Ralph Gilles, Stellantis head of design. “I am so damn proud of this.”

The Wagoneer S also features a large “R-Wing,” an open spoiler on the back of the SUV. Gilles said the goal was to not make a “jellybean” like many EVs with good aerodynamics currently being sold in the U.S.

The Wagoneer S is far less boxy that the gasoline model, assisting in it in being the most aerodynamic Jeep ever produced by the brand, the company said.

Stellantis design chief Ralph Gilles during the unveiling of the Jeep Wagoneer S EV on May 30, 2024 in New York City.

Michael Wayland / CNBC

Gilles said the Wagoneer name is more representative of the luxuriousness of the vehicle rather than a singular design.

Inside the vehicle more than 45 inches of screens, including a 12.3-inch center display, and a mix of metal, fake leather and other sustainable materials.

Gilles, a longtime renowned car designer with the company, said wood was banned from the interior of the vehicle. It also doesn’t feature any chrome on the exterior of the SUV. Those decisions were made following input from younger designers to make the vehicle more sustainable and attractive for more youthful buyers.

“If this is going to be a green vehicle, we had to rethink the materials inside,” Gilles said. “There was a huge push for sustainable materials everywhere.”

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Why half of all workers may struggle to get weight-loss drug health insurance coverage

An injection pen of Zepbound, Eli Lilly’s weight loss drug, is displayed in New York City on Dec. 11, 2023.

Brendan McDermid | Reuters

Companies are increasing access to new blockbuster weight-loss drugs for employees, but size of employer may make a big difference in early access. Small businesses and their workers are often stuck between a rock and a hard place when it comes to this burgeoning health insurance coverage market.

Small businesses employ roughly half of the workers in the U.S. labor market, and they have been adding jobs at a faster pace than large employers. Since the first quarter of 2021, small-business hiring accounted for 53% of the 12.2 million total net jobs created across all employers, according to the U.S. Bureau of Labor Statistics, consistent with the longer-term trend.

The blockbuster obesity drugs, called GLP-1 agonists, cost roughly $1,000 per month on average — and they are typically taken for a long time. Access to these weight-loss drugs is coming from an increasing number of sources in the marketplace, drug makers are ramping up production, and use cases continue to increase, with clinical trials showing benefits for conditions from sleep apnea to heart disease risk. But many of the 100 million American adults who are obese can’t afford to pay out of pocket for drugs like Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound, and are turning to their employers for help. 

A survey last October of 205 companies by the International Foundation of Employee Benefit Plans found that 76% of respondents provided GLP-1 drug coverage for diabetes, versus only 27% that provided coverage for weight loss. But 13% of plan sponsors indicated they were considering coverage for weight loss. Covering these drugs, however, is harder for smaller employers, many of whom rely on off-the-shelf plans offered by their insurance carriers. While there are plans that cover GLP-1 drugs, the cost can be prohibitive for many small businesses.

There’s strong demand from employees for coverage and smaller employers would like to be able to do it, but there are trade-offs, said Shawn Gremminger, president and chief executive of the National Alliance of Healthcare Purchaser Coalitions, a nonprofit purchaser-led organization. Companies have to consider the impact on wages or other benefits they might like to offer. “The company money has to come from somewhere,” he said.

In some cases, small employers, even if they want to cover weight-loss drugs, are simply priced out of the market and they may have to accept they can’t offer the coverage they would like to. 

“Given the price of these drugs, you have to do the cost-benefit analysis and for a lot of small companies — even some larger ones — they just can’t do it,” Gremminger said. “No matter how much they want to.”

Here are a few issues for small business employers and employees to understand in accessing expensive weight-loss drugs as part of job benefits.

Annual benefits deals are being brokered now. Open enrollment season for health insurance doesn’t occur until the fall, but employers should be having renewal discussions with their benefits broker or agent now, and that conversation should include weight-loss drugs. Small business employers should be telling a broker they would like to be able to provide weight-loss drugs for employees, and ask for help in finding the right carrier or the right plan, said Gary Kushner, chair and president of Kushner & Company, a benefits design and management company.

The market is changing quickly. Last year, an insurance carrier asked about covering weight-loss drugs may have said no, but it’s worth asking the carrier again because they may have been forced to make changes to their offerings for competitive reasons, said Kate Moher, president of national employee health and benefits for Marsh McLennan Agency, which advises employers on plan designs and benefits programs. “You should be asking the question every year,” she said. 

Insurance premiums may rise. To gain access to weight-loss drugs, many small businesses may have to switch insurance carriers, and probably pay more. “It most likely will be more expensive if one is not covering the drugs and the other is,” Kushner said.

Employers also have to decide how much of that can be reasonably passed to employees, without unduly burdening workers who may never need these drugs. “If 20% of your population takes it, everyone’s premium goes up by whatever percentage that is to cover the cost,” Gremminger said.

Small businesses should consider a ‘captive health’ plan. Generally speaking, any business with at least 50 employees might consider working with a captive health insurance plan like Roundstone, ParetoHealth, Stealth and Amwins, Moher said. These businesses allow groups of companies who couldn’t self-insure — the approach most large corporations take — to pool resources and design a group health plan together. 

This approach may allow a small business and its employees more flexibility, Moher said, but owners still have to weigh the costs and there are requirements to qualify. It’s also not something businesses can change every year like they could when working with a traditional insurance carrier. “It’s a long-term play; you can’t jump in and out,” Moher said. 

These plans are designed for the long-term because, as member-owners, the participants all agree to spread the risk, an approach that can keep costs down over time and decrease volatility. But if business owners are looking for a quick-fix or prefer to wait and see how the market develops over the next year, it’s probably not the right model.

A GLP-1 drug standalone coverage option could also work for some small businesses. Companies like Vida Health, Calibrate, Found Health and Vitality Group provide these offerings separate from an employer’s primary carrier, Gremminger said. Employers need to do the math to determine whether it could be more cost effective, and whether the option truly suits their employees’ needs based on the offerings.

Use an FSA to help cover weight-loss drug costs. If insurance coverage options aren’t an effective solution today, small employers may have a few other ways to help employees defray the cost of weight-loss drugs. They might consider, for instance, making contributions to employees’ flexible spending accounts or health savings accounts. They could also consider a health reimbursement arrangement, or HRA, which is an employer-funded plan that reimburses employees for qualified medical expenses. 

However, there are strict rules and requirements for each of these options. For example, with an FSA, the IRS limits an employer’s contribution based on how much the employee contributes, and this still isn’t likely to suffice to cover the cost of these drugs long-term. “Does it help? Sure. Does it solve the problem? No,” Kushner said.

It’s also not a move to make without first getting sign-off from legal counsel. “You need the guidance of your ERISA attorneys to make sure you meet all the criteria,” Moher said. “It’s a creative way of doing it, but you have to make sure you’re meeting all of your compliance requirements.”

Right now, the end result can be very discouraging for small businesses and their employees given the costs and limited options, but it’s also important to know that there are 20 or so drugs in the approval pipeline. Once they get approved, costs are likely to come down, Moher said. “This is something that may be a short-term thing until we get more GLP-1 drugs approved.”

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Shaking seats and piped-in fog: How 4DX is carving out a niche moviegoing market

Chris Hemsworth stars as the villainous Dementus in Warner Bros.’ “Furiosa: A Mad Max Saga.”

Warner Bros. Discovery

In George Miller’s new Mad Max film “Furiosa,” a red paint flare explodes and casts the theater screen in a saturated crimson cloud.

Feet away, among the rows of gyroscopic 4DX chairs, plumes of fog roll in, catching the red hue from the screen as if the flare somehow transcended the fourth wall and infiltrated the cinema. The fog parts, Chris Hemsworth as Dementus comes into focus and grins at the audience.

This is the 4DX viewing experience. It’s one of many multi-sensory moments programmed for “Furiosa: A Mad Max Saga,” which opened in theaters Friday, in order to immerse audiences in Miller’s latest visit to the vast Wasteland. And it amounts to a key value proposition at a time when cinemas are desperate to lure back moviegoers, particularly those in the younger demographics.

“We make movies different,” said Duncan Macdonald, head of worldwide marketing and theatre development for CJ 4DPlex Americas. “We are so different out there, with our motion capabilities and our environmental effects.”

In the wake of the pandemic, audiences grew used to shorter theatrical windows and having access to more content at home. At the same time, pandemic-related shutdowns and production stalls from two Hollywood strikes greatly limited the amount of content hitting theaters. As a result, consumers fell out of the habit of going to cinemas.

Moviegoers who have returned are seeking premium experiences — higher-quality picture and sound — and are willing to pay more for those tickets. 4DX is one option in the premium large format market alongside the likes of IMAX and Dolby Cinema. CJ 4DPlex also owns the ScreenX format.

“Premium movie theatre experiences are key to the health of the industry and with fewer films in the marketplace on average than in past years, the importance and essential nature of a company like 4DX comes into sharp focus,” said Paul Dergarabedian, senior media analyst at Comscore.

4DX utilizes motion seats, practical effects and sensory elements to immerse viewers in a movie. For Warner Bros.’ “Wonka,” the company piped in the smell of chocolate during screenings.

CJ 4DPlex Americas CEO Don Savant says the experience is “complementary” to routine moviegoing experiences, noting that 4DX cinemas attract younger consumers, predominantly in the 10-to-30 age range, who are seeking more experiential viewing.

4DX is a 4D film presentation system developed by CJ 4DPlex, a subsidiary of South Korean cinema chain CJ CGV. It allows films to be augmented with various practical effects, including motion-seats, wind, strobe lights, simulated-snow, and scents.

CJ 4DPlex

For consumers, the 4DX experience costs an average of $8 more than traditional ticket prices, meaning a ticket can range from $20 to $30 each. But the extra cost doesn’t seem to be detering audiences.

Last year, 4DX’s domestic locations tallied $53.4 million in ticket sales.

“Notably, the higher price for premium movie tickets is not a barrier to their success but rather seen as representing a solid value proposition for fans in pursuit of the best possible big screen experience,” Dergarabedian said. “This is good news for theater owners who, facing fewer wide release films in the marketplace, can boost revenues on a per-ticket basis while giving their patrons a great experience that will have them returning to the multiplex more often.” 

And, for major blockbuster titles, 4DX is proving to be even more popular. Ticket sales for Disney’s “Avatar: The Way of Water” topped $83.6 million from 4DX screens, or about 3.6% of the film’s total box office haul. It is currently the highest-grossing film for the screen format, Savant said.

“We want to give customers an easy excuse to leave their homes and visit a local Regal theater,” said CEO Eduardo Acuna of Regal Cinemas. “Premium formats like 4DX offer a movie-watching experience that cannot be replicated by any home theater setup. Each premium format serves a different purpose for storytelling, and each increases the enjoyment of watching a movie in a different and immersive way.”

Acuna noted that 4DX auditoriums are “a strong box office performer” for Regal.

Regal is the largest operator of 4DX screens domestically, with 50 of the 62 locations found in the U.S. and Canada. Globally, there are nearly 750 4DX screens with numerous theatrical partners. The highest volume is in Asia and Europe.

Savant said 4DX is adding around 25 to 30 screens per year worldwide, but is looking to push that figure up to 50 to 60 screens a year. The company is seeking to have around 1,200 4DX locations in the next five years. On average, each theater has around 140 seats.

Moviegoers who venture away from their couches and into a 4DX theater to see Warner Bros.’ “Furiosa” will feel from their seat the rev of motorcycles racing through the desert, smell gunpowder in the air during epic gun battles and even get hit with a soft spray of water as it’s flicked in the face of a character on the screen.

Last year, 4DX programmed more than 100 films for the souped-up viewing experience. Around 40 to 45 of those were major Hollywood titles, Savant said. Others included concert content, musical singalongs, anniversary titles and local language films.

Typically, the 4DX programmers, who are based in Seoul, have two to three weeks to craft the motion and special effects, although Savant said they can turn around a film in a week if the need arises. 4DX can program three titles at a time.

Both Macdonald and Savant referred to 4DX’s programmers as “artists,” describing the process — from the subwoofers in the seats to the fog machines — as different brushstrokes in a work of art.

“Every film is different,” said Macdonald. “So we look at the nuances of the different films that we have and how those are programmed.”

In some cases filmmakers will get involved, offering suggestions for when certain effects should be used and how subtle or bombastic they should feel or look.

“It’s the most dynamic way to see [a film],” Savant said.

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