February was a great month for Wall Street. These were our 5 best-performing stocks

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., February 23, 2024. 

Brendan McDermid | Reuters

February was a strong month for stocks and the Club’s portfolio.

The advance came as investors parsed through fourth-quarter earnings results and fresh economic data, searching for clues about when the Federal Reserve will finally cut interest rates. The Nasdaq Composite led the march higher in February, gaining 6.1% and finishing the month at its first record close since November 2021. Meanwhile, the Dow Jones Industrial Average and S&P 500 both hit a series of all-time highs throughout the month, climbing 2.2% and 5.2%, respectively.

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Best Buy warns of layoffs as it issues soft full-year guidance

People walk past a Best Buy store in Manhattan, New York City, November 22, 2021.

Andrew Kelly | Reuters

Best Buy surpassed Wall Street’s revenue and earnings expectations for the holiday quarter on Thursday, even as the company navigated through a period of tepid consumer electronics demand.

But the retailer warned of another year of softer sales and said it would lay off workers and cut other costs across the business. CEO Corie Barry offered few specifics, but said the company has to make sure its workforce and stores match customers’ changing shopping habits. Cuts will free up capital to invest back into the business and in newer areas, such as artificial intelligence, she added.

“This is giving us some of that space to be able to reinvest into our future and make sure we feel like we are really well positioned for the industry to start to rebound,” she said on a call with reporters.

For this fiscal year, Best Buy anticipates revenue will range from $41.3 billion to $42.6 billion. That would mark a drop from the most recently ended fiscal year, when full-year revenue totaled $43.45 billion. It said comparable sales will range from flat to a 3% decline.

The retailer plans to close 10 to 15 stores this year after shuttering 24 in the past fiscal year.

One challenge that will affect sales in the year ahead: it is a week shorter. Best Buy said the extra week in the past fiscal year lifted revenue by about $735 million and boosted diluted earnings per share by about 30 cents.

Shares of Best Buy closed more than 1% higher Thursday after briefly touching a 52-week high of $86.11 earlier in the session.

Here’s what the consumer electronics retailer reported for its fiscal fourth quarter of 2024 compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

  • Earnings per share: $2.72, adjusted vs. $2.52 expected
  • Revenue: $14.65 billion vs. $14.56 billion expected

A dip in demand, but a better-than-feared holiday

Best Buy has dealt with slower demand in part due to the strength of its sales during the pandemic. Like home improvement companies, Best Buy saw outsized spending as shoppers were stuck at home. Plus, many items that the retailer sells like laptops, refrigerators and home theater systems tend to be pricier and less frequent purchases.

The retailer has cited other challenges, too: Shoppers have been choosier about making big purchases while dealing with inflation-driven higher prices of food and more. Plus, they’ve returned to splitting their dollars between services and goods after pandemic years of little activity.

Even so, Best Buy put up a holiday quarter that was better than feared. In the three-month period that ended Feb. 3, the company’s net income fell by 7% to $460 million, or $2.12 per share, from $495 million, or $2.23 per share in the year-ago period. Revenue dropped from $14.74 billion a year earlier.

Comparable sales, a metric that includes sales online and at stores open at least 14 months, declined 4.8% during the quarter as shoppers bought fewer appliances, mobile phones, tablets and home theater setups than the year-ago period. Gaming, on the other hand, was a strong sales category in the holiday quarter.

In the U.S., Best Buy’s comparable sales dropped 5.1% and its online sales decreased by 4.8%.

During the quarter, traditional holiday shopping days were Best Buy’s strongest, CFO Matt Bilunas said on the company’s earnings call. Comparable sales were down 5% year over year in November but fell just 2% in December around the gift-giving holidays. January was the weakest month during the quarter with comparable sales down 12%, he said.

Barry said customers “were very deal-focused through the holiday season.” Sales on days known for deep discounts like Black Friday and the week of Cyber Monday matched expectations, but the December sales lull was worse than expected.

Demand was stronger than the company anticipated in the four days before Christmas.

Signs of ‘stabilization’

On the earnings call, Barry said Best Buy expects the coming year to be one “of increasing industry sales stabilization.”

She said the company is “focused on sharpening our customer experiences and industry positioning,” along with driving up its operating income rate. That metric is expected to improve in the coming year.

Strength in services revenue, which includes fees from its annual membership program, in-home installation and repairs, has helped to offset weaker demand for new items. It’s a growth area that the company expects will persist in the coming year.

Some gains in its service business came from a switch to My Best Buy, a three-tiered membership program that ranges in price from free to $179.99 per year depending on the perks and benefits.

The company removed home installations as a perk of that program, which Barry said on a call with reporters resulted in more people choosing to pay for that service.

As of the end of the fiscal year, My Best Buy had 7 million paid members. She said customers who belong to the program spent more at Best Buy than those who don’t.

Barry said Best Buy’s services will help the retailer stand out, especially as customers seek guidance as artificial intelligence becomes part of more devices.

The retailer has been waiting for customers to upgrade and replace their consumer electronics after the pandemic-induced wave. There are some signs that cycle has begun, Barry said on the earnings call. For example, she said, year-over-year comparable sales for laptops turned positive in the fiscal fourth quarter and have remained positive in the first quarter.

She cited other positive indicators, too, including cooling inflation and “green shoots” in the housing market. Sales at Best Buy are not directly correlated to the housing market, which has seen slower turnover, but home purchases do tend to spur appliance and TV purchases, she said.

Best Buy paid dividends of $198 million and spent $70 million on share buybacks during the period. On Thursday, the company said its board of directors had approved a 2% increase in the regular quarterly dividend to 94 cents per share, which will be paid in April.

As of Thursday’s close, Best Buy’s stock is up roughly 3% so far this year. The company has underperformed the approximately 7% gains of the S&P 500 during that period. Best Buy has a market value of about $17.4 billion.

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Walmart beats Wall Street’s holiday expectations as e-commerce sales soar

Walmart said Tuesday that quarterly revenue rose 6%, as shoppers turned to the big-box retailer throughout the holiday season and the company’s global e-commerce sales grew by double digits. 

The retail giant also announced Tuesday that it would acquire smart TV maker Vizio to accelerate growth of its advertising business. Walmart is acquiring the company for $2.3 billion, or $11.50 per share. 

In a CNBC interview, Chief Financial Officer John David Rainey said customers have still shown discretion with purchases. They are putting fewer items in their baskets but shopping more frequently, he said. Electronics, TVs, computers and some other expensive items have been a tougher sell, Rainey added.

Yet, he said even after the holiday rush, Walmart saw continued sales strength.

Here’s what Walmart reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

  • Earnings per share: $1.80 adjusted vs. $1.65 expected
  • Revenue: $173.39 billion vs. $170.71 billion expected

In the three-month period that ended Jan. 31, Walmart’s net income fell to $5.49 billion or $2.03 per share, compared with $6.28 billion, or $2.32 per share, in the year-ago period.

Revenue increased from $164.05 billion in the year-ago period.

Walmart said it expects consolidated net sales to rise 4% to 5% in its fiscal first quarter. It also anticipates adjusted earnings of $1.48 to $1.56 per share on a pre-stock split basis.

For its fiscal 2025, the retailer expects consolidated net sales will climb 3% to 4%. Walmart anticipates adjusted earnings will be $6.70 to $7.12 per share on a pre-stock split basis.

Walmart shares closed 3% higher Tuesday after the company shared its results, outlook and acquisition news. Shares of Walmart are up more than 11% this year, outperforming the S&P 500, which is up about 4% during the same period.

Walmart’s e-commerce strength

Walmart has weathered high inflation better than many other retailers. It has used its value reputation to draw in families across income levels and has leaned into new ways to make money, such as selling ads, expanding its third-party marketplace and offering a subscription-based program called Walmart+.

Comparable sales, an industry metric also known as same-store sales, rose 4% for Walmart U.S. At Sam’s Club, comparable sales increased 1.9%, including fuel. 

Global e-commerce sales jumped 23% year over year, topping $100 billion in total. In the U.S., e-commerce rose 17% as shoppers used curbside pickup and got orders delivered to their homes.

Customer transactions increased 4.3% compared with the year-ago period in the U.S. However, average ticket, or the amount that a customer spent, declined slightly. 

Prices have fallen in some categories. Private brands made by Walmart, which tend to be cheaper, have gained popularity in the U.S. and other parts of the world.

CEO Doug McMillon said on an earnings call Tuesday that prices of general merchandise, a category that includes items such as clothing, are lower than a year ago and even two years ago for some things. For food, prices are lower for some items such as apples, eggs and deli snacks, but higher for other items such as asparagus and blackberries.

Prices of dry grocery items, paper goods and cleaning supplies are up mid-single-digit percentages compared to last year and high teens compared with two years ago.

Walmart also backed away from predictions of deflation. On the company’s third-quarter earnings call in November, McMillon said the company could soon face a deflationary environment, where prices not just stabilize, but also decline. He said those lower prices could help customers pay for more discretionary items.

On Tuesday, however, Rainey told CNBC that deflation seems less likely now. “The possibility overall [of deflation] still remains, but prices are more stable than where they were three months ago,” he said.

Profit push

One reason for Walmart’s earnings growth? The company is selling more than just cereal, socks and shampoo.

Walmart has shifted into more profitable businesses — and that new model is a major part of its future. For instance, the retailer makes money from packing and shipping online orders for sellers that are part of its third-party marketplace. It had a delivery business that drops off purchases from major companies such as Home Depot, and local shops such as bakeries.

It’s also selling more ads, posting gains for the business of about 33% globally and 22% in the U.S. year over year.

Rainey told CNBC that the Vizio acquisition will be “an accelerant” for the “high-margin, fast-growing part of our business.” By using the TV’s operating system, Walmart could not only show ads, but also have better data that tracks how customers engage with the ad and if it leads to purchases.

The company has also boosted efficiency by adding automation to distribution centers that replenish store shelves and fulfillment centers that keep up with online orders.

At an investor day last year, Walmart spoke about how it planned to grow profits faster than sales over the next five years.

On an annual basis, Walmart now expects to grow sales more than 5% and operating income more than 8% on average, Rainey told investors on Tuesday’s earnings call.

Walmart’s e-commerce business is not yet profitable, but Rainey said the company is getting closer. He said the cost of fulfillment has fallen 20% over the past year, as the company drops off more packages on each delivery route and sells related services, such as online ads.

Customers are shopping more on Walmart’s website and app, which helps create those denser delivery routes. Weekly active e-commerce customers grew 17% over the past year, he said.

Expanding stores, boosting dividend

As many other companies have announced cost cuts, Walmart has done the opposite. It announced in late January that it would open or expand more than 150 stores in the U.S. over the next five years. That’s on top of an aggressive plan to upgrade more than 1,400 of its existing Walmart stores to have a more modern look.

Stores that have gotten that fresh design have had higher sales within their four walls and lifted sales in the surrounding market, Rainey told investors on the earnings call. He said the renovated stores make more room for online pickup and delivery orders and have improved Walmart’s reputation with shoppers.

Along with those store investments, Walmart said it would raise store manager wages to an average of $128,000 per year and make managers eligible for a bonus of up to 200% of their base salary.

It also announced a 3-for-1 stock split in late January, as shares hovered near an all-time high.

On Tuesday, Walmart said it would reward shareholders, too. It is raising its dividend by 9% this year, the largest increase in more than a decade.

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New Macy’s CEO Tony Spring looks to revive a 166-year-old retailer fighting for relevance

Tony Spring speaks at an event unveiling the Macy’s new women’s apparel brand, On 34th, in July. Spring is former CEO of Bloomingdale’s and begins as Macy’s CEO in February 2024, succeeding longtime Macy’s CEO Jeff Gennette, right.

Melissa Repko | CNBC

Inside its headquarters in New York City’s Herald Square, Macy’s got ready to unveil its newest women’s clothing brand. Its incoming CEO Tony Spring prepared for his own reveal.

Spring took the stage in mid-July in front of fashion influencers, reporters and Macy’s employees, standing beside his soon-to-be predecessor, Jeff Gennette. He was at the pinnacle of his career, making his first public in-person appearance since being named CEO-elect of the 166-year-old department store operator.

Yet where many top executives would have lapped up the limelight, the 58-year-old retail veteran and leader of Macy’s higher-end department store chain Bloomingdale’s kept his remarks brief. He spoke for less than two minutes, then quickly stepped aside for On 34th, the company’s new brand of women’s clothing and accessories, to get the spotlight.

Spring will step onto a bigger stage and inherit the iconic department store’s issues when he takes over the role of Macy’s CEO on Sunday. His push to revive the retailer will depend in no small part on his ability to curate strong brands and store designs — and let the products win over shoppers.

Among the company’s challenges, Spring will contend with inflation-weary shoppers who continue to watch their discretionary spending, confront lower employee morale after more than 2,000 recent layoffs and stare down a contentious battle with activist investors. Macy’s has lost cachet with younger shoppers and brands who see its sprawling stores and endless aisles of merchandise as a relic of the past.

Investors have taken notice. Macy’s stock closed at $18.63 per share Friday, giving it a market cap of $5.11 billion. Shares have fallen about 24% in the last year.

Spring will face existential questions about how Macy’s can stay relevant and grow rather than shrink, as competitors such as Amazon, T.J. Maxx and even Target and Walmart steal away sales. He will also lead Macy’s promising efforts to chase suburban shoppers with smaller stores in strip malls, expand its offerings of trendier exclusive brands and luxury names, and build on the strong performance of newer businesses such as its beauty chain, Bluemercury, and its off-price business, Backstage.

In CNBC interviews, current and former Macy’s employees, industry leaders and investors said Spring will bring a deep retail background, a merchant’s sharp eye and credibility with coveted national and global brands from his decades at Bloomingdale’s.

Yet they acknowledged the new CEO will have his hands full. Some expressed concern that as a longtime executive at the company, Spring won’t bring the same scrutiny an outsider would.

“When you have an internal appointment, you don’t tend to see that much shake-up in the wider team, and sometimes that’s needed,” said Neil Saunders, managing director of research firm GlobalData. “The biggest risk is just really that. Someone new comes in the post, but we just see a continuation of the same old strategies without much new thinking.”

Macy’s declined interview requests for this story, but Gennette praised Spring as the right person for the job when the company announced his retirement and his successor’s appointment in March. Gennette pointed to Bloomingdale’s strong results — the higher-end department store has outperformed the namesake Macy’s brand in recent years — and described Spring as “an ally and trusted partner in advancing Macy’s, Inc.’s strategies.”

“Tony consistently innovates for the customer, is an exceptional brand builder and an excellent talent developer who has strengthened our culture through his leadership,” he said in the news release.

‘A merchant at heart’

Spring’s ascension to the top role at Macy’s is the culmination of nearly four decades with the retailer. Fresh from graduation from Cornell University, he was hired by Bloomingdale’s in 1987 as an executive trainee in the White Plains, New York, store.

He moved up the ranks, ultimately becoming CEO of the higher-end department store in 2014.

Even as he rose, Spring described himself as committed to one of retail’s key building blocks: making sure stores draw customers in, invite them to linger and surprise them with beautiful displays and items they didn’t know they needed. It’s a touch shoppers and Wall Street believe Macy’s could use as it fights for relevance.

“I’m a former merchant,” he told the audience at the launch event for Macy’s “On 34th” brand in July. “I still consider myself a merchant at heart.”

Bloomingdale’s is known for having a knack for understanding customers and which brands to carry. The chain, which has 55 locations across the country, has been a crown jewel of its parent company despite its smaller size. It carries pricey and prominent luxury brands, including Theory, Sandro and Alice + Olivia, but also has popular and more affordable in-house brands, such as Aqua.

It has also drawn shoppers with limited-edition pop-ups and collections of merchandise that tap into the cultural zeitgeist or cater to the Instagram and TikTok generations, such as an exclusive Barbie-themed clothing line.

Macy’s namesake brand accounts for most of its stores and revenue, yet Bloomingdale’s and Bluemercury have seen better sales trends.

On CNBC’s “Mad Money” in October, Spring said his time at Bloomingdale’s reinforced “it’s all about curation of product and the delivery of a better experience for the customer.”

“Retail is theater,” he said in the interview.

He described Bloomingdale’s as “a growth vehicle” but said the company’s namesake brand can be one, too.

“We’re talking to different customers and we can obviously learn from one another without becoming one another,” he said.

GlobalData’s Saunders has criticized Macy’s for sloppy displays, bland merchandise and poor customer service at its namesake stores. He said after leading “the better-run part of the business” in Bloomingdale’s, Spring needs to bring those “softer skills” to Macy’s.

“Get some pride back into the business,” he said. “That might mean making some investments. It might mean putting back in visual merchandising teams. It might mean investing more in staff and labor hours, but I think it’s a decision worth taking. And it’s a relatively easy win.”

Spring will have tougher tasks, though, Saunders said. In a competitive industry, Macy’s needs a sharper identity to compete with specialty retailers, big-box stores and off-price players that often beat the department store on convenience, value and fashion, he said.

And, he added, Spring must take a hard look at the company’s real estate footprint to decide where it should shut stores, shrink locations or expand outside the mall.

Wooing investors and brands

In his new role, Spring will have to charm investors, shoppers and hot brands. It’s a delicate balance, as its efforts to boost sales, make the store experience more appealing to customers and win over investors hungry for profits could at times clash.

As its stock value has eroded, Macy’s has gotten smaller by most other key metrics, too. Over the past decade, the company has closed about a third of its namesake stores. Its annual net sales have fallen during that same period, from about $28 billion in 2013 to $24.4 billion in the last full fiscal year it has reported, which ended in late January 2023.

Macy’s struggles have turned the retailer into a target for the activist investors Spring will face down as he becomes CEO. Its board last month rejected a $5.8 billion proposal by Arkhouse Management and partner Brigade Capital Management to acquire the shares of the retailer that they don’t already own and take the department store operator private.

In an interview on CNBC after that rejection, Arkhouse managing partner Gavriel Kahane signaled that he hasn’t given up yet. He called on Macy’s to open up its books to the investors, or the firm will take the matter to shareholders, he said.

Certainly not done with pursuit of Macy's acquisition, says Arkhouse's Kahane

Investors will get their best glimpse into the health of the company Spring is inheriting in late February, when Macy’s is expected to report its holiday-quarter results and its outlook for the year ahead. In the previous quarter, the retailer said it expected same-store sales to decline by up to 7% in the fiscal year that ended in late January.

Though the company’s sales are sagging, Spring will take over promising pockets of the business, as well. Its smaller stores, which Macy’s is opening in a growing number of strip malls, have outperformed sales at its traditional, mall-based locations. After launching the women’s clothing brand On 34th, Macy’s plans to debut and refresh other lines that shoppers can find only at its stores and on its website. That private brand strategy has succeeded for other retailers, such as Target.

Spring’s career as an insider has raised concerns among some industry analysts. A Macy’s spokesperson said that while Spring came up through Macy’s, he has pushed for adding fresh perspectives to the retailer’s leadership team. Many of the company’s recent top hires have come from the outside.

Those include his successor at Bloomingdale’s, Olivier Bron, who was most recently CEO of department stores in Thailand; and Sharon Otterman, Macy’s new chief marketing officer, who came from Caesars Entertainment.

Having the right national brands will also shape Macy’s future success. It’s another area where Spring’s experience as a merchant could benefit the company.

Compared with rival Nordstrom, Macy’s has been slow to add younger and newer brands that can draw fashion-forward customers.

As Macy’s expands its third-party marketplace, some new brands have joined its website. One of those is Untuckit, a men’s apparel brand typically sold directly through its own stores and website.

Just ahead of the holiday season, the company’s clothing debuted on Macy’s website. It was Untuckit’s first meaningful push into wholesale, said the brand’s CEO and co-founder Aaron Sanandres.

Sanandres said he saw Macy’s as a way to reach shoppers who haven’t yet discovered Untuckit. Now, he said, it’s considering its next moves in wholesale — including the possibility of selling apparel at Macy’s stores.

Yet he said he has grappled with the same questions that other popular brands may have. Will merchandise get confined to a corner of Macy’s huge stores? Will its reputation take a hit from being carried by a retailer associated with old-school malls or 40%-off signs? Can it keep tight control over its own brand’s level of promotions?

“There are a lot of conversations around that, and it’s partly why we’re baby-stepping into the relationship to make sure we don’t see any negative pushback from our customer,” he said.

One of the most crucial parts of Spring’s job will be attracting millennial and Gen Z shoppers who don’t share the same loyalty as their parents and grandparents to Macy’s namesake stores and website, said Oliver Chen, an equity research analyst for TD Cowen.

Winning those shoppers over will come down to having better merchandise and a sense of style, he said.

“You need to be inspired by Macy’s,” he said. “The customer doesn’t necessarily want the cheapest thing from Macy’s. They want a nice, fashion-forward thing.”

Some of those shoppers are like Annie Rush. On a recent weekday, she zipped in and out of Paramus Park mall in New Jersey to make a purchase for one of her teenage sons.

Rush said she prefers to shop online, where she can search for what she wants with the help of filters. At a Macy’s store, the sea of options can be overwhelming, she said.

“Sometimes they offer too many things,” Rush said. “It’s like decision paralysis. You can’t find what you want or have to dig.”

With an Old Navy bag in hand, she cut through Macy’s only to get to the mall’s parking lot.

— CNBC’s Gabriel Cortes contributed to this report.

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Sweetgreen wants to be the ‘McDonald’s of its generation.’ This rival salad chain could beat it

The drive-thru entrance to a Salad and Go location.

Source: Salad and Go

When Sweetgreen went public two years ago, co-founder and CEO Jonathan Neman said the salad chain aspired to be the “McDonald’s of its generation.”

But another salad rival could beat Sweetgreen to the punch: Salad and Go.

Founded in 2013, the upstart chain is nearing its publicly traded rival’s store count, with more than 100 locations and counting. With backing from private equity firm Volt Investment, it has ambitious expansion plans for 2024 beyond its roots in the Southwest.

Salad and Go’s appeal comes in no small part from its affordability. One of its 48 ounce salads costs less than $7 and comes with chicken or tofu, while a comparable salad from Sweetgreen costs about $12.

As the chain plots an ambitious expansion path, its C-suite is packed with restaurant industry veterans, including former Wingstop CEO Charlie Morrison. He joined Salad and Go’s board in 2020. Two years later, Morrison took over as chief executive, departing Wall Street’s favorite chicken wing chain after a decade in favor of a little-known salad chain that then had only 50 locations.

“The brand was designed around the idea of completely rebuilding the supply chain, and fixing what I believe is broken today,” Morrison said at the annual ICR Conference earlier this month.

Since Morrison became chief executive, Salad and Go has more than doubled its footprint, which is now around 130 locations across Arizona, Nevada, Oklahoma and Texas. Last year, the chain opened about a restaurant every week, and it plans to keep up that pace in 2024 and enter new markets such as Southern California. For reference, Sweetgreen has 220 open locations, as of Sept. 24.

Morrison said the company is currently profitable in “established mature markets.”

How Salad and Go works

A salad or wrap from Salad and Go starts at one of the chain’s commissary kitchens, where its produce is washed and its proteins are prepared. Those ingredients are then shipped to its 750-square-foot locations, which are roughly the same size as a typical restaurant kitchen. The restaurants have drive-thru lanes, but no indoor seating.

Its small footprint has helped the chain expand quickly with relatively low rent. Other industry disruptors, such as ghost kitchens and the coffee startup Blank Street Coffee, have used a similar real estate strategy to cut overhead costs.

Salad and Go customers order online or in those drive-thru lanes, and a team of two employees makes their customized salads and wraps.

The simplified restaurant kitchen features a walk-in cooler and cooling counters underneath the make lines where workers assemble orders. A few ingredients, such as the eggs for its breakfast burritos and avocados for its salads, are prepared on site, rather than in its commissaries.

But the Salad and Go locations lack the freezers, broilers, fryers, hoods and fire suppression systems that typical fast-food restaurants need — and are often a culprit for delays as locations wait on equipment inspections ahead of opening.

On average, a Salad and Go customer exits the drive-thru line in under four minutes, according to Morrison. Increasingly, its customers are picking up orders for more than just one meal.

“The unique thing about Salad and Go against any other [quick-service restaurant] brands out there is that we enjoy a two-daypart single occasion,” Morrison said. “You can show up at 6:30 in the morning and get your breakfast burrito, get your cold brew coffee or hot coffee, and get your salad for lunch during the same occasion.”

Replacing burgers, not salads

Charlie Morrison, CEO of Salad and Go, speaking on CNBC’s “Power Lunch” in Englewood Cliffs, New Jersey, on Dec. 5 2023.

Adam Jeffery | CNBC

As Salad and Go enters new territory, Morrison is confident that the chain’s salads have universal appeal.

“We’ve been able to put these stores in these differentiated markets, with different income levels, different levels of diversity, different focal points, and found that great performance quite consistent,” Morrison said.

Salad and Go’s first customers in a new market tend to be regular salad eaters anyway, but Morrison said the chain has also been able to attract other consumers because of its cheap prices and tasty food.

“What we see with our fans, with our guests, is this very strong loyalty and affinity,” Salad and Go Chief Marketing Officer Nicole Portwood told CNBC.

Portwood previously helped turn Tito’s Handmade Vodka from a craft distiller to the nation’s most popular vodka. Like Morrison, she started at Salad and Go as a member of its board before being tapped as its CMO in October.

Other salad players, such as Sweetgreen, Just Salad or Salata, are usually in the same markets as Salad and Go. Salad and Go isn’t the only chain to prioritize convenience for on-the-go customers. Sweetgreen has been opening restaurants with drive-thru lanes dedicated to digital orders.

But Morrison told CNBC that the chain doesn’t worry about those options, which usually charge at least double what his company does for their healthy fare.

“Our concept is not tailored to compete against them. It’s tailored to compete against eating occasions that are unhealthy for you, but otherwise you couldn’t afford to eat well,” he said.

In other words, Salad and Go is looking to take down fast-food restaurants such as McDonald’s, which pulled its salads off menus during the Covid-19 pandemic and hasn’t brought them back yet.

Ambitions for thousands of restaurants

Salad and Go is looking to emulate fast-food rivals in other ways, too.

“We have expansion plans that will carry us well into the thousands of restaurants,” Morrison said. “Ultimately, we believe this brand has the potential for a very large footprint.”

Similar to Sweetgreen, Salad and Go owns rather than franchises its restaurants. That approach requires more capital — so do its commissaries, or central kitchens, as Salad and Go calls them. But Morrison said the kitchens mitigate labor challenges, requiring less training for its workers and fewer employees in its actual restaurants.

Today, Salad and Go runs two commissary kitchens: one in Phoenix, and the other in Dallas. The Texas kitchen was Salad and Go’s original prototype, and the chain plans to upgrade to an improved facility by this spring that can service as many as 500 locations in the future, including potential restaurants as far away as Atlanta.

For now, Salad and Go’s goals for the future are focused on building more restaurants and spreading the word about its salads. When asked about long-term plans for the company, such as an initial public offering, Morrison said all options are in play.

“It’s less of a concern now. The concern for us is just expanding the footprint and getting into the market, fulfilling our mission,” he said. 

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Nike sinks 12% after it slashes sales outlook, unveils $2 billion in cost cuts

Nike on Thursday unveiled plans to cut costs by about $2 billion over the next three years as it lowered its sales outlook.

The stock fell about 12% in premarket trading Friday. Nike shares were up 4.7% so far this year through Thursday’s close, lagging far behind the S&P 500’s gains for the year. Retailer Foot Locker, which has leaned heavily on Nike products, fell about 8% in extended trading.

Nike now expects full-year reported revenue to grow approximately 1%, compared to a prior outlook of up mid-single digits. In the current quarter, which includes the second half of the holiday shopping season, Nike expects reported revenue to be slightly negative as it laps tough prior year comparisons, and sales to be up low single digits in the fourth quarter.

“Last quarter as I provided guidance, I highlighted a number of risks in our operating environment, including the effects of a stronger U.S. dollar on foreign currency translation, consumer demand over the holiday season and our second half wholesale order books. Looking forward, the impact of these risks is becoming clearer,” finance chief Matthew Friend said on a call with analysts.

“This new outlook reflects increased macro headwinds, particularly in Greater China and EMEA. Adjusted digital growth plans are based on recent digital traffic softness and higher marketplace promotions, life cycle management of key product franchises and a stronger U.S. dollar that has negatively impacted second-half reported revenue versus 90 days ago.”

The company still expects gross margins to expand between 1.4 and 1.6 percentage points. Excluding restructuring charges, it expects to deliver on its full-year earnings outlook.

As part of its plan to cut costs, Nike said it’s looking to simplify its product assortment, increase automation and its use of technology, streamline the overall organization by reducing management layers and leverage its scale “to drive greater efficiency.”

It plans to reinvest the savings it gets from those initiatives into fueling future growth, accelerating innovation and driving long-term profitability.

“As we look ahead to a softer second-half revenue outlook, we remain focused on strong gross margin execution and disciplined cost management,Friend said in a press release.

The plan will cost the company between $400 million and $450 million in pretax restructuring charges that will largely come to fruition in Nike’s current quarter. Those costs are mostly related to employee severance costs, Nike said.

Earlier this month, The Oregonian reported that Nike had been quietly laying off employees over the past several weeks and had signaled that it was planning for a broader restructuring. A series of divisions saw cuts, including recruitment, sourcing, brand, engineering, human resources and innovation, the outlet reported.

The company didn’t immediately respond to CNBC’s request for comment on The Oregonian’s report.

During Nike’s fiscal second quarter, it posted a strong earnings beat, indicating its cost-savings initiatives were already underway. But, for the second quarter in a row, it fell short of sales estimates, which is the first time Nike has seen consecutive quarters of revenue misses since 2016.

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

  • Earnings per share: $1.03 vs. 85 cents expected
  • Revenue: $13.39 billion vs. $13.43 billion expected

The company reported net income for the three-month period that ended Nov. 30 was $1.58 billion, or $1.03 per share, compared to $1.33 billion, or 85 cents per share, a year earlier.

Sales rose about 1% to $13.39 billion, from $13.32 billion a year earlier.

Nike is considered a leader among industry peers such as Lululemon, Adidas and Under Armour, but its profits have been under pressure and it has been in the middle of a strategy shift that has seen it rekindle its relationships with wholesalers including Macy’s and Designer Brands, the parent company of DSW.

Focus on margins

For the past six quarters, Nike’s gross margin has declined compared to the prior-year period, but the story turned around on Thursday. Nike’s gross margin increased 1.7 percentage points to 44.6%, slightly ahead of estimates, according to StreetAccount.

This time last year, Nike’s inventories were up a staggering 43% and the retailer was in the middle of an aggressive liquidation strategy to clear out old styles and make way for new ones, which weighed heavily on its margins. Several quarters later, however, Nike is in a far better inventory position, which is a boon for margins.

During the quarter, inventories were down 14% to $8 billion.

Nike’s gross margin turnaround came as the retail environment overall has been flooded with steep promotions and discounts as retailers struggle to convince inflation-weary consumers to pay full price. In September when Nike reported fiscal first-quarter earnings, finance chief Friend said Nike was “cautiously planning for modest markdown improvements” given the overall promotional environment.

While the company repeatedly pointed out the overall promotional environment, it said the average sales price of footwear and apparel were up during the quarter and the average selling price grew across channels with higher-priced products proving particularly “resilient.”

The company attributed the gross margin uptick to “strategic pricing actions and lower ocean freight rates,” saying it was partially offset by unfavorable foreign exchange rates and higher product input costs.

As one of the last retailers to report earnings before the December holidays, investors are eager to hear good news when it comes to Nike’s expectations for the crucial shopping season. When many retailers issued holiday-quarter guidance in November, the commentary was largely tepid and cautious as companies looked to under promise and over deliver in an increasingly uncertain macro environment.

Nike struck a note that hit somewhere in the middle. Its sales miss and focus on cost cuts signal larger demand issues, but CEO John Donahoe was upbeat when discussing Black Friday week sales.

“We outpaced the industry, driving growth of close to 10%, Nike digital had its strongest Black Friday week ever and a record number of consumers shopped in our stores over the long Thanksgiving weekend,” said Donahoe.

China is another key part of the Nike story. As the region emerges from the Covid-19 pandemic and widespread lockdowns, China’s economic recovery has so far been a mixed bag. In November, retail sales climbed 10.1% in the region.

It was the fastest pace of growth since May, but those numbers were up against easy comparisons and the growth was largely driven by car sales and restaurants, according to a research note from Goldman Sachs.

During the quarter, China sales came in at $1.86 billion, which fell short of the $1.95 billion analysts had expected, according to StreetAccount. Sales in Europe, the Middle East and Africa also fell short of estimates, but revenue came in ahead in the North America, Asia-Pacific and Latin America markets, according to StreetAccount.

Read the full earnings release here.

Don’t miss these stories from CNBC PRO:

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As inflation falls, corporate America won’t rush to pay the price

U.S. President Joe Biden delivers remarks during an event to celebrate the anniversary of his signing of the 2022 Inflation Reduction Act legislation, in the East Room of the White House in Washington, U.S., August 16, 2023. 

Kevin Lamarque | Reuters

In recent weeks, President Joe Biden has been doing everything he can to point the finger at big corporations for high prices.

“Too many things are unaffordable,” the president said.

“Stop the price gouging,” Biden said on another recent occasion.

The blame game may be good retail politics, and the president has announced some real actions to alleviate consumer financial stress, forgiving as much student debt on the margins as he can under the law, unveiling various plans to eliminate “junk fees,” and using new powers under the Inflation Reduction Act to bring down key drug prices.

Some recent research supports the case that corporations have taken more advantage of the current inflationary era than they really need to do. But amid the political pressure, don’t expect corporate America to be swayed.

As the Federal Reserve signals for the first time that it’s getting comfortable with the decline in inflation, and even short of declaring “mission accomplished” seemed to say this week it doesn’t wholly disagree with the market view that rates cuts are the next phase in its monetary policy, the one major force in the economy not talking about cuts in a major way is corporations.

That’s been on the mind of Fed presidents as the central bank contemplates a big shift. Richmond Fed President Tom Barkin, a former corporate sector CFO, recently told CNBC that one area he monitors and speaks to companies about is price setting. Companies won’t be giving up their power to raise prices “until they have to,” Barkin, who will be a voting member of the FOMC next year, said.

It’s been a hard-won advantage. Over the past two decades, price setters “have been beaten up,” Barkin said, by the combination of ecommerce, globalization, access to new supply and the power of big box retailers. “If you go back to 2018-2019, you had people who really weren’t into raising prices [as they] didn’t think they had the power to do it. I’m out there talking to price setters now and there are some who have taken a step back and said, ‘Okay, we’re on the backside of this,’ but I still talk [to others] who are looking to get more price.”

During an interview later in November with Barkin at CNBC’s CFO Council Summit in Washington, D.C., the subject came up again, and an informal poll of CFO Council members in the room on the subject of pricing plans for 2024 was taken. A majority said their companies would be raising prices next year; a minority said they would keep pricing the same; none said they would be lowering prices. 

“I’m looking for the point where they’re no longer taking outsized price increases because they’re worried the volume and the market won’t sustain it,” Barkin said.

That is happening in certain goods markets where the Covid outsized demand has waned, and as the pressures in the real estate market with high mortgage rates have cut down on purchases for the home. It’s also a function of a massive freight market recession, which has sharply lowered transportation costs for shippers after a period of huge contract rate increases during the pandemic boom. A recent decline in energy prices has also lessened input cost pressures.

Costco CFO Richard Galanti said after its earnings this week that inflation for the quarter just ended was in the 0% to 1% range. But the big moves were in the “big and bulky items,” like furniture sets due to lower freight costs year-over-year, as well as on “things like domestics,” he said. And what he called the “deflationary items” were steeply down in price, as much as 20% to 30%.

Toys are another example.

No one wants to be the first to cut prices

Overall, though, the economy is not headed for deflation, and the Fed’s stance this week may have given companies more room to keep prices where they want if real wage growth proves sustainable. Inflation is falling faster than wages,” said KMPG chief economist Diane Swonk. “That does not equate to deflation. The goal is to keep that trend going, so that consumers regain the purchasing power lost to inflation.”

But with any easing of rates, the central bank is “willing to throw the dice, and enable the economy to grow more rapidly rather than risk recession,” Swonk said. “That is a major shift from where we were a year ago. They knew that the decision to call an end to rate hikes would trigger financial markets to ease. That was like a stealth cut in rates. It will stimulate the economy. Improvements in inflation are expected to continue, but the pace at which price increases decelerate could slow.”

The recent tailwinds from a softer freight market may be near their end, too. A logistics CFO speaking on a CNBC CFO Council member call on Tuesday about the market outlook said that after one of the longest stretches in recent history for a freight recession, the trough may have been reached. “Truck rates may start bouncing off of a bottom here,” said the logistics CFO on the call, where chief financial officers are granted anonymity to speak freely.

While the Fed may get its wish of a “soft landing” for the economy, that doesn’t mean prices will land as softly for consumers, according to Marco Bertini, a professor of marketing at business school Esade who studies pricing strategy and pricing psychology. “Companies will do what they want and will never react at the speed you want them to, especially after they have been increasing prices,” Bertini said. “Why would I be the first to cut my margins when we just went through a period where we had the world’s best excuse [inflation] to recover margins?” he said.

At some point, companies will need to reassess pricing strategy, especially with margins more than recovered for many, and this period of rapid inflation in the U.S. doesn’t have a precedent for companies to use as a barometer of how to shift. “It’s uncharted territory for the U.S. market,” Bertini said.

That’s part of the reason why not one CFO raised their hand at the CNBC CFO Council Summit when asked if any were considering a price decrease for 2024.

“Imagine I am the first to say I am holding on prices, and make that known to customers? That’s how a price war starts and the competitive advantage from being the ‘good guy’ lasts two seconds,” Bertini said. “No one wants a race to the bottom. The gains over the past few years evaporate in a few months.”

Deflation versus slowing of price increases

There are some signs that the pricing conversation is starting to become more prevalent inside companies beyond the goods areas where demand has been hit hard. But recent declines in pricing don’t indicate that companies will continue in that direction across a broader array of products and services.

“The Fed doesn’t want to see deflation,” said one retail sector CFO on the recent CNBC CFO Council call. “They just want to see inflation cool. And they want to see us get to the point where we can’t raise prices anymore.”

While the CFO said there has been a “settling in the market in the last couple of months, I wouldn’t call it deflation.”

But he pointed to transportation costs as a deflationary force that is having an influence on importers, “a one-time kind of release of supply and demand imbalances … but it’s a price correction to me that is different than deflation. … I think we’ve kind of been through an interesting phase of price correction. But I’d say things are pretty stable from our perspective.”

Consumers have been 'as resilient as they could be,' says former Walmart U.S. CEO Bill Simon

In food distribution, costs for key commodities continue to experience deflation on a sequential basis. But consumers going out to eat won’t see that in the prices they pay.

“We’re in a period where restauranteurs have taken many prices up,” said another retail CFO on the call. “They’re seeing that deflation in their underlying ingredients, so they’re actually going to start seeing a little bit better performance in terms of their bottom line. Now that they’ve taken the prices up, we just don’t think they’re gonna take it down very quickly.”

The science of pricing, according to Bertini, dictates that as long as a company can point to an externality — in this case, higher input costs — the buyer ultimately accepts the situation, and price stickiness is the result.

But the current environment is edging into more of an “unstable equilibrium.”

“When inflation is in the public domain, it’s perfect to collaborate in a perfectly legal way to increase prices. Now the shocks are gone and costs slowly coming down, and the appetite to be the one to decrease prices and get market share gain is increasingly getting bigger,” he said. “But being the first will take some time, because they’re still enjoying it. … What it will take in most markets is a competitor who sees a clear path to getting lots of market share.”

When the party will end for corporations

This difficult balance is also coming during a period of time when the consumer has defied expectations of a slowdown in spending, making it harder for companies to pinpoint just how big the market opportunity really is. Retail sales, as an example, just came in much stronger than expected.

“We’re still trying to understand how strong November retail sales should have been relative to normal, and relative to what’s happened the last three years. It makes it hard,” the logistics CFO said on the recent CNBC CFO Council call.

The view from Costco CFO Galanti after its earnings this week is instructive. Speaking about food, he said it’s been a different story than with goods: “There hasn’t been significant price cuts passed on to the consumer yet.”

“There are a few things that are up and a few things are down, but no giant trend either way. Look, as you’ve known us for a long time, we want to be the first to lower prices. We’re out there pressing our vendors as we see different commodity components come down and certainly on the non-food side as we saw shipping costs come down, things like that. And so, probably a little more than less, but we’ll have to wait and see.”

If the period of price increases is to end, expect there to be a lag between that and other forces in the economy, such as the Fed, said Bertini. “Who wants to end the party early? They will want to see some really strong evidence that the party has ended.”

Another analogy from a CFO on the recent CNBC Council call may have put it best:

“We’re all a bunch of cars on a highway. You’ve got the customer, a retailer, you’ve got the manufacturer. Maybe you’ve got capital providers. And who hits the brakes first? Who wants to hit the brakes before the person in front of them hits the brakes?” 

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Jim Cramer’s top 10 things to watch in the stock market Thursday

My top 10 things to watch Thursday, Dec. 14

1. U.S. stocks are higher in premarket trading Thursday, with S&P 500 futures up 0.46%. Equities rallied Wednesday after the Federal Reserve held interest rates steady, while indicating it would cut rates three times in 2024 — a decision more dovish than I expected. Meanwhile, bond prices are also strengthening, with the yield on the 10-year Treasury falling below 4%.

2. Toll Brothers announces a new $20 million share-buyback program — and there are only 100 million shares. But CEO Doug Yearley thinks it’s ridiculous that his stock sells at eight-times earnings when it’s more of a secular grower, despite changes in the housing industry.

3. UBS upgrades Club holding Coterra Energy to buy from neutral, citing its strong balance sheet strength and oil diversification. But the firm lowered its price target to $31 a share, down from $33.

4. Piper Sandler raises its price target on Club name Amazon to $185 a share, up from $170, while maintaining an overweight rating on the stock. The firm cites improving retail margins and an expected acceleration at cloud unit Amazon Web Services. Amazon is Piper’s top large cap pick.

5. Stifel raises its price target on Lululemon Athletica to $596 a share, up from $529, while reiterating a buy rating on the stock. The firm argues that “still sound” U.S. consumer balance sheets and wage growth should support margin expansion for companies like Lululemon with “brand specific drivers.”

6. Nike is back. Baird raises its price target on the sneaker company to $140 a share, up from $125, while keeping an outperform rating on the stock. Nike’s “quality growth profile plus margin recovery potential support a continued favorable outlook,” the firm contends.

7. Mid-stage trial data shows that Merck and Moderna‘s experimental cancer vaccine, used in conjunction with Merck’s Keytruda therapy, reduces the risk of death or relapse in patients with melanoma skin cancer after three years.

8. JPMorgan raises its price target on L3Harris Technologies to $240 a share, up from $213, while maintaining a neutral rating on the stock. The firm has “high confidence” in the aerospace-and-defense-technology company’s targets for sales and cash flow.

9. Piper Sandler upgrades Club holding Foot Locker to overweight from neutral, while raising its price target to $33 a share, up from $24. The firm cites Foot Locker’s margin expansion opportunity in 2024, arguing the company is best positioned among the athletic-and-footwear group over the next year.

10. Bernstein raises its price target on FedEx to $340 a share, up from $305, while reiterating an outperform rating on the stock. FedEx, which Bernstein expects to benefit from cost cuts and improved international market conditions, is set to report quarterly results on Dec. 19.

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Hasbro laying off 1,100 workers as weak toy sales persist into holiday season

Hasbro is laying off about 1,100 employees as the toy maker struggles with soft sales that have carried into the holiday shopping season, according to a company memo obtained by CNBC.

Hasbro had about 6,300 employees as of earlier this year, according to a company fact sheet.

Shares of the company fell more than 2% Tuesday. Rival Mattel’s stock also slipped.

“We anticipated the first three quarters to be challenging, particularly in Toys, where the market is coming off historic, pandemic-driven highs,” CEO Chris Cocks said in the memo. “While we have made some important progress across our organization, the headwinds we saw through the first nine months of the year have continued into Holiday and are likely to persist into 2024.

Hasbro, which already laid off hundreds of employees earlier this year, had warned in October that trouble was on the horizon. In the company’s most recent quarterly earnings report, Hasbro slashed its already-soft full-year outlook, projecting a 13% to 15% revenue decline for the year.

Popular toy brand sales had dropped significantly, Hasbro also said in the October quarterly report. Popular brands like My Little Pony, Nerf and Transformer had fallen 18% at the time, due to “softer category trends.”

Hasbro’s stock was down nearly 20% through Monday’s close.

Hasbro competitor Mattel had also warned of soft sales. Yet Mattel’s stock is up about 6% through Monday, powered a great deal by the box office success of the film “Barbie.” That’s still behind the 17% gain posted by the S&P 500 so far this year, though.

Retailers overall could be in for a tepid holiday season, and toys saw lower discounts for consumers when compared to discounts a year ago.

Read the full memo from CEO Chris Cocks:

Team,   

A year ago, we laid out our strategy to focus on building fewer, bigger, better brands and began the process of transforming Hasbro. Since then, we’ve had some important wins, like retooling our supply chain, improving our inventory position, lowering costs, and reinvesting over $200M back into the business while growing share across many of our categories. But the market headwinds we anticipated have proven to be stronger and more persistent than planned. While we’re confident in the future of Hasbro, the current environment demands that we do more, even if these choices are some of the hardest we have to make.   

Today we’re announcing additional headcount reductions as part of our previously communicated strategic transformation, affecting approximately 1,100 colleagues globally in addition to the roughly 800 reductions already taken.  

Our leadership team came to this difficult decision after much deliberation. We recognize this is heavy news that affects the livelihoods of our friends and colleagues. Our focus is communicating with each of you transparently and supporting you through this period of change. I want to start by addressing why we are doing this now, and what’s next. 

Why now? 

We entered 2023 expecting a year of change including significant updates to our leadership team, structure, and scope of operations. We anticipated the first three quarters to be challenging, particularly in Toys, where the market is coming off historic, pandemic-driven highs. While we have made some important progress across our organization, the headwinds we saw through the first nine months of the year have continued into Holiday and are likely to persist into 2024.  

To position Hasbro for growth, we must first make sure our foundation is solid and profitable. To do that, we need to modernize our organization and get even leaner. While we see workforce reductions as a last resort, given the state of our business, it’s a lever we must pull to keep Hasbro healthy. 

What happens next? 

While we’re making changes across the entire organization, some functional areas will be affected more than others. Many of those whose roles are affected have been or will be informed in the next 24 hours, although the timings will vary by country, in line with local rules and subject to employee consultations where required. This includes team members who have raised their hands to step down from their roles at the end of the year as part of our Voluntary Early Retirement Program (VRP) in the U.S. We’re immensely grateful to these colleagues for their many years of dedication, and we wish them all the best.   

The majority of the notifications will happen over the next six months, with the balance occurring over the next year as we tackle the remaining work on our organizational model. This includes standardizing processes within Finance, HR, IT and Consumer Care as part of our Global Business Enablement project, but it also means doing more work across the entire business to minimize management layers and create a nimbler organization. 

What else are we doing? 

I know this news is especially difficult during the holiday season. We value each of our team members – they aren’t just employees, they’re friends and colleagues. We decided to communicate now so people have time to plan and process the changes. For those employees affected we are offering comprehensive packages including job placement support to assist in their transition.  

We’ve also done what we can to minimize the scale of impact, like launching the VRP and exploring options to reduce our global real estate footprint. On that note, our Providence, Rhode Island office is currently not being used to its full capacity and we’ve decided to exit the space at the end of the lease term in January 2025. Over the next year, we’ll welcome teams from our Providence office to our headquarters down the road in Pawtucket, Rhode Island. It’s an opportunity to reshape how we work and ensure our workspace is vibrant and productive, while reflecting our more flexible in-person cadence since the pandemic.   

Looking ahead 

As Gina often says, cost-cutting is not a strategy. We know this, and that’s why we’ll continue to grow and invest in several areas in 2024.  

As we uncover more cost savings, we’ll invest in new systems, insights and analytics, product development and digital – all while strengthening our leading franchises and ensuring our brands have the essential marketing they need to thrive well into the future.  

We’ll also tap into unlocked potential across our business, like our new supply chain efficiency, our direct-to-consumer capabilities, and key partnerships to maximize licensing opportunities, scale entertainment, and free up our own content dollars to drive new brand development. 

I know there is no sugar-coating how hard this is, particularly for the employees directly affected. We’re grateful to them for their contributions, and we wish them all the best. In the coming weeks, let’s support each other, and lean in to drive through these necessary changes, so we can return our business to growth and carry out Hasbro’s mission.  

Thanks,    

Chris  

–CNBC’s Claudia Johnson contributed to this report.

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Jim Cramer’s top 10 things to watch in the stock market Friday

My top 10 things to watch Friday, Dec. 8

1. U.S. stocks are lower in midmorning trading, with S&P 500 futures down 0.3% and on track to break a five-week winning streak. But the Nasdaq Composite, down 0.55% in early trading, looks set to post a sixth-consecutive week of gains. Bond yields tick up slightly, with that of the 10-year Treasury hovering just below 4.2%.

2. Oil prices pare some of their recent losses, climbing by more than 2% Thursday morning. West Texas Intermediate crude, the U.S. oil benchmark, is now back above $70 a barrel but is still down for seven-straight weeks.

3. Club holding Honeywell International reaches a deal to buy Carrier Global‘s security business for $4.95 billion. Carrier will reportedly use the money from Honeywell to accelerate its debt paydown. The companies expect the all-cash transaction to close before the end of the third quarter of 2024.

4. Club holding Broadcom reports mixed fiscal fourth-quarter results, missing on revenue but delivering strong profits. And tailwinds from artificial intelligence and the company’s acquisition of VMware should keep profits growing and more than offset some of the cyclical parts of the semiconductor business.

5. Mizuho raises its price target on Broadcom to $1,000 a share, up from $960, while maintaining a buy rating on the stock. The firm cites the semiconductor firm’s strong guidance, along with its industry-leading margins and free cash flow.

6. India’s Tata Group plans to build one of the country’s biggest iPhone assembly plants, with roughly 20 assembly lines and 50,000 workers, Bloomberg reports. The new factory would help Club holding Apple in its efforts to diversify its supply chain and expand its presence in India.

7. Morgan Stanley raises its price target on Apple to $220 a share, up from $210, while reiterating an overweight rating on the stock. The firm says the macroeconomic backdrop is still a challenge for Apple, but argues that excitement around Edge AI, services, and gross margin strength “reignites the bull case.”

8. Bernstein calls Tesla a “best idea,” outlining the short case for the electric-vehicle maker in 2024. “In our view, Tesla’s key challenge is that it has a demand problem due to its narrow (and expensive) product family of essentially two vehicles,” Bernstein analysts write. The firm has an underperform rating on Tesla stock, with a price target on $150 a share.

9. Mizuho raises its price target on DoorDash to $120 a share, up from $105, while reiterating a buy rating on the stock. The firm expects continued margin expansion, as the food-delivery platform continues to gain market share.

10. Lululemon Athletica delivers strong third-quarter results, while reporting a positive start to the holiday shopping season. The athletic-apparel retailer receives a slew of price-target raises Friday from Wall Street firms — including Barclays, which goes to $530 a share, up from $480, with a buy rating on the stock.

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