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Albertsons sues Kroger after judge rules against grocery merger

suimt — Wed, 11 Dec 2024 18:43:27 +0000

Traders work as screens display the trading information for Kroger Co. and Albertsons Companies Inc. on the floor of the New York Stock Exchange on Oct. 14, 2022.

Brendan McDermid | Reuters

Albertsons on Wednesday formally terminated its proposed $25 billion merger with Kroger and filed a lawsuit against its supermarket competitor, saying Kroger violated its contract and did not follow through on commitments to help get the deal approved.

It comes a day after a judge blocked the planned tie-up.

In a news release, Albertsons said Kroger broke its merger agreement “by repeatedly refusing to divest assets necessary for antitrust approval, ignoring regulators’ feedback, rejecting stronger divestiture buyers and failing to cooperate with Albertsons.”

“Kroger’s self-serving conduct, taken at the expense of Albertsons and the agreed transaction, has harmed Albertsons’ shareholders, associates and consumers,” Albertsons’ General Counsel and Chief Policy Officer Tom Moriarty said in a statement. “We are disappointed that the opportunity to realize the significant benefits of the merger has been lost on account of Kroger’s willfully deficient approach to securing regulatory clearance.”

In a statement, Kroger called the allegations in the lawsuit “baseless and without merit.”

“This is clearly an attempt to deflect responsibility following Kroger’s written notification of Albertsons’ multiple breaches of the agreement, and to seek payment of the merger’s break fee, to which they are not entitled,” the company’s statement said.

About two years ago, Kroger announced plans to buy Albertsons and combine forces to fend off Walmart, Amazon and Costco. The deal would have put nearly 40 supermarket chains, including Kroger’s Fred Meyer and Albertsons’ Safeway, under a single company.

The lawsuit Wednesday amounts to something of a corporate divorce battle.

The companies are at odds about who should pay for the legal fees associated with the merger and who, if anyone, is responsible for paying a breakup fee.

Albertsons said in its news release that it is owed both a $600 million termination fee and “relief reflecting the multiple years and hundreds of millions of dollars it devoted to obtaining approval for the merger, along with the extended period of unnecessary limbo Albertsons endured as a result of Kroger’s actions.”

Kroger, on the other hand, pushed back against payments to Albertsons in its statement and said it “looks forward to responding to these baseless claims in court.”

Shares of Albertsons and Kroger were up about 0.5% and 1%, respectively, in early trading Wednesday.

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Ulta Beauty shares pop as retailer beats earnings expectations despite demand fears

Aseem — Thu, 05 Dec 2024 22:15:24 +0000

Ulta Beauty on Thursday beat Wall Street’s fiscal third-quarter expectations, fending off fears of fiercer competition and slowing demand for makeup and skincare.

The retailer hiked its full-year outlook slightly to reflect the better-than-expected results. For the fiscal year, it said it now expects net sales to range from $11.1 billion to $11.2 billion, compared with its previous guidance for $11 billion to $11.2 billion.

It said it now expects full-year earnings per year to range from $23.20 to $23.75, up from $22.60 to $23.50. For the full year, the comparable sales forecast ranges from a decline of 1% to flat. The comparable sales metric tracks sales at Ulta stores open at least 14 months along with online sales,

Despite the raised outlook, the company expects holiday-quarter comparable sales to decline by the low single digits.

In a news release, CEO Dave Kimbell said he’s “proud of the progress” the company’s made and “encouraged by early signs that our efforts to reinforce our market position and drive improved performance are gaining traction.”

Here’s what the beauty retailer reported for the three-month period ended Nov. 2 compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: $5.14 vs. $4.54 expected
Revenue: $2.53 billion vs. $2.50 billion expected

Ulta shares rose roughly 10% in after-hours trading.

Beauty has been a strong category for many retailers, holding up over the past couple of years even as inflation stretched families’ budgets and many shoppers pulled back on discretionary purchases. The category’s resilience caused companies, including Target, Walmart, Kohl’s and Macy’s, to expand their offerings of makeup and skincare.

Yet Ulta began to hint at potential troubles in April, with Kimbell warning of cooling beauty demand at an investor conference.

In recent quarters, Ulta’s results have reflected discerning shoppers and heightened competition. The company missed earnings results and cut its full-year outlook in August after a drop in same-store sales. It marked the first time that the retailer missed Wall Street’s expectations in about four years.

Shares of the company have fallen, too. As of Thursday’s close, Ulta’s stock is down about 19% so far this year, trailing the S&P 500’s approximately 28% gains during the same period.

For the fiscal third quarter, the retailer reported net income of $242.2 million, or $5.14 per share, compared with $249.5 million, or $5.07 per share, during the year-ago quarter.

Revenue rose from $2.49 billion in the year-ago period.

Comparable sales increased 0.6% year over year, as the retailer saw a tiny uptick in traffic and average ticket.

Customer transactions across its website and stores grew 0.5% year over year and average ticket, the amount spent by shoppers during those visits, rose 0.1% year over year.

On the company’s earnings call, Kimbell said the launch of new brands, rollout of digital tools and in-store events helped drive Ulta’s better performance in the quarter.

For example, he said, Ulta is selling an exclusive line of makeup tied to the release of Universal‘s “Wicked” movie. It also added new features for online, including virtual try-on enhancements and new digital buying guides. And it had in-store events, including workshops where customers received coaching from Ulta’s stylists on how to get “salon-worthy blowouts”

For beauty retailers, including Ulta, the holidays are a critical time of year. Kimbell said the company is “encouraged by our performance through Cyber Monday.”

Still, he hinted of a still challenging backdrop. He said the company is ready for the shopping season, even as “our insights suggest that economic concerns are driving a greater focus on value.”

On the earnings call, CFO Paula Oyibo said the company continues to take a “cautious view of the consumer and operating environment” and factored that into its forecast. She said the compressed holiday season, which has five fewer days between Thanksgiving and Christmas, could also hurt sales.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is the distributor of “Wicked.”

Dollar General tests same-day delivery as discounter chases Walmart

suimt — Thu, 05 Dec 2024 16:56:01 +0000

The exterior of a Dollar General convenience store on August 30, 2024 in Austin, Texas.

Brandon Bell | Getty Images

Dollar General is testing same-day delivery to customers’ homes as the deep discounter tries to fend off fiercer competition with Walmart.

On an earnings call Thursday, Dollar General CEO Todd Vasos said the retailer “soft launched” the delivery program in September. Now it offers same-day delivery at about 75 stores, he said. It is offered through a third-party company, which he did not name.

“We’ve always said here, ‘We’re going to do delivery our way when it’s time,'” Vasos said. “We believe it’s time.”

He said the company expects it will ultimately expand the offering to “thousands of stores.”

With same-day delivery, the Tennessee-based dollar store is acknowledging the pressure from other retailers like Walmart, Amazon and Temu that offer convenience along with low prices. Walmart, for instance, has significantly grown its online business, posting 10 quarters in a row of double-digit e-commerce gains in the U.S., as it offers curbside pickup and speedier home deliveries.

Dollar General, on the other hand, typically does not share updates or specific figures about its e-commerce business in quarterly earnings reports because of its heavy reliance on brick-and-mortar sales.

Yet over the past year, Dollar General has felt the pinch from both economic challenges and its own strategy. Consumers, particularly low-income households, have pulled back on discretionary purchases because of the cumulative effect of high inflation. Dollar General also has paid millions of dollars of fines for sloppy stores and blocked fire exits that became both workplace safety hazards and potential turnoffs for its shoppers.

In recent months, Dollar General’s CEO has spoken about losing market share to Walmart. Vasos said at a Goldman Sachs retail conference in September that “the guys in Bentonville [the Arkansas home of Walmart’s headquarters] took a little bit larger piece” of the retailer’s middle-income customer base.

Vasos said the company launched its own program after learning from its DoorDash deliveries, which are available at about 16,000 of its stores.

The new offering, DG Delivery, is available for customers at select stores, according to Dollar General’s website. Customers place orders through Dollar General’s app and can get the same store prices and delivery in as little as an hour. The program also accepts digital coupons and offers cash back rewards.

DG Delivery does not appear to charge a fee or have a minimum order requirement, according to the website.

On Dollar General’s earnings call on Thursday, Vasos said Dollar General is still working on its business model for the online offering, but said it relies on labor from a third party rather than using store employees or company-employed delivery people. He said same-day delivery is an opportunity to grow the retailer’s advertising business, too, since customers would engage with the app more frequently when placing orders.

But the option is still available at only a tiny fraction of Dollar General’s stores. It has more than 20,000 stores across the country, including many in rural parts of the U.S.

Dollar stores are struggling to win over bargain hunters — here’s why

suimt — Tue, 03 Dec 2024 17:19:03 +0000

As shoppers look for value, dollar stores might seem to be logical destinations. But that penny-pinching mentality hasn’t been enough to lift sales for Dollar Tree and Dollar General.

Shares of the deep discounters have plunged so far in 2024. The retailers have each cut their full-year forecasts because of weaker-than-expected sales. And both have had leadership shakeups: Dollar General and its former CEO Jeff Owens parted ways in October 2023, and Dollar Tree CEO Rick Dreiling stepped down Nov. 4. Dollar Tree is also exploring selling off Family Dollar, its more grocery-focused brand.

Those results are a sharp turnabout for the dollar stores, which were once Wall Street darlings. The struggles have put scrutiny on the two retailers, which will report quarterly earnings this week.

Dollar General and Dollar Tree stores

Getty Images

Peter Keith, a retail analyst for Piper Sandler, said a challenging mix of factors hurt the retailers. Lower-income customers, who tend to shop at the chains, are most vulnerable to economic changes such as inflation. Razor-thin operating models, such as lean staffing and low hourly pay, contributed to sloppy aisles and a poor customer experience, he said. And competition grew fiercer, as legacy retailers such as Walmart made significant investments in e-commerce to keep up with consumers’ changing habits during the pandemic, he said.

“Dollar stores inherently are sort of convenient because they have a lot of locations, but they don’t have very strong digital offerings,” he said. “And I think that’s become a disadvantage in the current environment.”

Shares of Dollar Tree and Dollar General have both fallen more than 40% this year, while the S&P 500 has gained more than 26% during the same period.

acquired in 2015 for nearly $9 billion, is found in more urban areas and sells more food and household staples. Family Dollar has been the weaker part of Dollar Tree. In March, the company announced plans to close about 1,000 Family Dollar stores. It is also exploring a potential sale of the business.

Dollar General focuses primarily on rural customers. It historically sought out small towns or residential areas where shoppers otherwise had to drive a long distance to get to a grocery store or a Walmart. In recent years, it’s debuted a new store concept, Popshelf, which sells more discretionary merchandise aimed at middle- and upper-income shoppers, such as makeup, candles and throw pillows.

Though they deployed different strategies, both chains relied on store openings to fuel sales growth. The two retailers are the largest in the U.S. by store count. Dollar Tree has more than 16,000 stores, while Dollar General has nearly 20,000 locations across the U.S. Between the two brands, there is more than one dollar store for every 10,000 people in the U.S.

They have many more stores than their rivals: Walmart has roughly 4,600 stores, and Target has nearly 2,000 locations across the country.

Yet high inflation has tested their business models. About 60% of Dollar General’s overall sales come from households with an annual income of less than $30,000 per year, CEO Todd Vasos said at Goldman Sachs’ retail conference in September.

Those frequent customers tend to feel the pinch first during challenging economic times.

Vasos said in September that Dollar General saw “a pretty drastic slowdown” in the middle of the three-month period that ended Aug. 2. He said the drop-off “happened across every region, every division that we had, almost the same amount” — including its newest stores.

And the past two years of high inflation have played out differently than in the Great Recession, Piper Sandler’s Keith said. During the roughly 2007-to-2009 period, middle- and upper-income households started shopping more at the dollar stores to stretch their budgets further.

This time around, unemployment has remained low, and other value-focused retailers, including Walmart, have attracted those middle- and upper-income shoppers, Keith said.

In the most recent fiscal quarter, most of Walmart’s market share gains came from households with annual incomes of over $100,000, CFO John David Rainey said.

Warehouse clubs such as Costco and Walmart-owned Sam’s Club, online players such as Amazon and Temu, and private label-focused grocers Aldi and Trader Joe’s are also competing for — and sometimes stealing away the business of — price-conscious shoppers.

Dollar General has acknowledged stiffer competition. “The guys in Bentonville [the Arkansas home of Walmart’s headquarters] took a little bit larger piece” of the retailer’s middle-income customers, Vasos said at the September conference.

On Dollar Tree’s earnings call in early September, Chief Operating Officer Mike Creedon, who was recently named interim CEO, said the retailer had to cut its full-year outlook to reflect “how the challenging macro environment continues to pressure our customers.”

He said Family Dollar’s core customer, who is lower income, “remains weak.” Yet he said Dollar Tree, a chain that draws a more diverse mix of customers, noticed a pullback from shoppers across middle and upper incomes in the recent quarter, as the toll of inflation, high interest rates and economic pressures mounted.

Discretionary merchandise items, which tend to be more profitable than food or household essentials, were some of the worst sellers at Family Dollar in the most recent quarter, as shoppers bought fewer home decor, seasonal and beauty products, Creedon said on the earnings call.

Daniel Acker | Bloomberg | Getty Images

to pay $12 million in penalties for workplace safety concerns, on top of more than $21 million in fines from the federal Occupational Safety and Health Administration since 2017.

Dollar Tree agreed to improve worker safety in a 2023 settlement with federal regulators after it had racked up more than $13.1 million in OSHA fines since 2017. In February, it pleaded guilty and agreed to pay nearly $42 million after inspectors found live and dead rodents in an Arkansas warehouse that stored food, drugs and cosmetics.

Those safety violations can scare away customers who see those news headlines and notice when employees seem overworked and shelves are sloppy, Keith said.

“No one wants to shop in what looks like a kind of a dirty, messy environment,” he said.

Some of those problems date back to the Covid pandemic, said Alasdair James, who was Dollar Tree’s chief customer officer from early 2021 to early 2022. As the government paid out stimulus funds and the Covid virus spread, retailers struggled to fill jobs at their stores.

Some Dollar Tree locations wound up with a single worker who was left to juggle all the duties, from checking people out to stocking shelves — resulting in messy stores that turned off shoppers, he said.

Plus, vendors and consumer packaged goods companies prioritized big-box stores during the pandemic by making the more typical bulk sizes of items rather than the downsized, budget-friendly sizes sold by dollar stores, James said.

He said those out-of-stocks and poorly staffed stores drove customers to rivals.

Dollar Tree has also shaken up its pricing approach. During the pandemic, the retailer raised the price of most of its items to $1.25, and it has rolled out merchandise at higher price points, including $3, $5 and $7.

In a statement, a Dollar Tree spokesperson said the “multi-price expansion at Dollar Tree, which we believe will be a long-term growth driver, continues to resonate with our customers.” He described the retailer as “a solution for families who may be feeling the financial strain of inflation,” including families who don’t live near a grocery store or pharmacy.

Both companies also face a new risk under the administration of President-elect Donald Trump. Trump has pledged to roll out additional tariffs on imports from China, a source of many goods sold at the dollar stores.

Dollar General declined to comment about the company’s challenges.

It recently touted one strategy aimed at attracting more visits from holiday shoppers, though. Dollar General is promoting a “24 Days of Savings” event in December, where it offers a deal on a featured item each day. The promotions, such as discounted holiday mugs or 12-ounce packs of bacon, are only available in stores.

— CNBC’s Ryan Baker contributed to this story.

As retailers enter the holiday shopping season, the winners are pulling away from the pack

suimt — Fri, 29 Nov 2024 13:32:53 +0000

Shoppers outside a Target store ahead of Black Friday, in Clifton, New Jersey, Nov. 26, 2024.

Victor J. Blue | Bloomberg | Getty Images

As the holiday season heats up, retailers are getting a fresh opportunity to attract even the most selective shoppers and persuade them to splurge on discretionary items such as party outfits, makeup or toys.

But the free-spending season isn’t lifting sales for everyone.

Retailers’ earnings reports over the past two weeks have illustrated a sharp divide between brands that are winning sales and those that are missing out.

Target, Kohl’s and Best Buy each reported disappointing third-quarter results as early holiday deals fell short of meaningfully boosting their businesses. On the other hand, Walmart, Dick’s Sporting Goods and Abercrombie & Fitch posted strong sales in their most recent quarters.

The reports come after a more-than-two-year stretch of inflation in the U.S. that caused shoppers to become selective about spending while balancing higher prices on groceries, housing, restaurant meals and more. Those patterns have persisted, even as inflation has cooled, forcing retailers to work harder to get customers to open up their wallets.

Choosy consumers have made the gulf between successful and struggling retailers even more stark heading into the holiday shopping season, said Neil Saunders, managing director of GlobalData Retail.

“People are still spending, but they perhaps don’t have as much to spend,” he said. “So rather than buying five things, they might be buying three things. And under that environment, it’s easy to say, ‘Well, where do I not go to buy things? Who am I going to cut out?’ And they’ll cut out the weak retailers.”

hiked their full-year outlooks this week and said they expect a strong holiday shopping season.

“We’ve seen a strong early response to our holiday assortments, and we are ready and excited for the peak selling period to kick into high gear this week,” Abercrombie’s Chief Operating Officer Scott Lipesky said on the company’s earnings call Tuesday.

Nordstrom and Walmart struck a more cautious note.

On Nordstrom’s earnings call Tuesday, CEO Erik Nordstrom said the department store owner noticed slower shopping trends at the end of October and factored those into its forecast. The company offered a muted guidance adjustment, raising the low end of its sales forecast, despite beating Wall Street’s third-quarter sales expectations.

Walmart Chief Financial Officer John David Rainey told CNBC that the holidays are “off to a pretty good start” but that consumers are still being careful with spending and are waiting for better prices.

The big-box retailer raised its sales forecast and its results reflected a promising change in trends, however. For the second quarter in a row, Walmart’s sales of general merchandise — items outside the grocery department or household essentials aisles — rose year over year. Before that, sales of general merchandise had declined for 11 straight quarters.

Rainey said that swing likely reflects both easing inflationary pressures on families as food prices come down as well as the company’s own ability to sell more discretionary items as it’s added more to its website through its third-party marketplace.

Target and Kohl’s had downbeat forecasts. Kohl’s warned it will have a deeper-than-expected drop in sales and announced a change in CEO ahead of the crucial shopping season.

Target said it expects comparable sales for the holiday quarter to be roughly flat. That metric includes sales on Target’s website and at stores open at least 13 months.

Even with its lackluster forecast, Target emphasized ways it’s trying to grab shoppers’ attention and dollars. On an earnings call Nov. 20, Chief Commercial Officer Rick Gomez said Target would carry more than 150 items inspired by Universal’s movie “Wicked,” including clothing, food, beauty items and toys. It will also drop an exclusive vinyl and book for Taylor Swift fans on Black Friday.

Target will also lean on a tried-and-true retail tactic to try to drive traffic: It will cut prices on 2,000 additional items for the holiday season, after reducing them on 5,000 items earlier this year.

Wants and needs

GlobalData’s Saunders said Target, Kohl’s and department stores such as Macy’s are in a tougher spot this holiday season, since they sell more wants than needs.

Customers have “more of a tilt towards experiences” this year and want to buy gift items that have practical value.

“The little stupid games and novelty socks and things — those are the areas where people are really cutting back a bit because they’re just meaningless purchases, and people don’t want to waste money, even if it’s just for a gift,” he said. “They want the gifts to be useful and relevant.”

Some companies may have bought too much inventory headed into the shopping season — or the wrong mix of items. At Kohl’s, for instance, Saunders said he’s seen a lot of clothing and small appliances such as coffeemakers and air fryers on display as the retailer gets ready for Black Friday. If shoppers don’t show up in full force, those items could wind up on the clearance rack.

“I’m just looking at it and thinking ‘Is this going to sell through?'” he said. “Because you’re not getting the foot traffic into stores already. So why is that going to change over Black Friday?”

Marshal Cohen, chief retail advisor for market research firm Circana, said the winning formula this holiday season will be value, not only with lower prices but the perception of “the best bang for the buck” with items that have novelty or quality.

And, he added, retailers are already teeing up external factors to blame in the event their holiday season underwhelms.

“Every year, retailers always position themselves to have a good reason why they may not make their numbers,” Cohen said. “So when they talk about the weather, or they talk about a dock strike, or they talk about supply chain issues, it has more to do with the fact that they’re hedging their bet that they may have some challenges ahead.”

“I always say, ‘OK, here comes the excuse this year. What’s it going to be?'”

Disclosure: Comcast is the parent company of CNBC and NBCUniversal. NBCUniversal distributed “Wicked.”

— CNBC’s Gabrielle Fonrouge contributed to this report.

How President-elect Donald Trump's policies may affect investors in these 8 market sectors

Harsh — Tue, 26 Nov 2024 19:22:18 +0000

President-elect Donald Trump at a viewing of a test-flight launch of the SpaceX Starship rocket in Brownsville, Texas, Nov. 19, 2024.

Brandon Bell | Getty Images News | Getty Images

As Inauguration Day nears, investors are trying to unravel what booms or busts lay ahead under President-elect Donald Trump.

Trump’s campaign promises — from tariffs to mass deportations, tax cuts and deregulation — and his picks to lead federal agencies suggest both risks and rewards for various investment sectors, according to market experts.

Republican control of both chambers of Congress may grant Trump greater leeway to enact his pledges, experts said. However, their scope and timing is far from clear.

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“There’s so much uncertainty right now,” said Jeremy Goldberg, a certified financial planner, portfolio manager and research analyst at Professional Advisory Services, which ranked No. 37 on CNBC’s annual Financial Advisor 100 list.

“I wouldn’t be making large bets one way or another,” Goldberg said.

tailpipe-emissions rule expected to push broader adoption of EVs and hybrids. He also intends to kill consumer EV tax credits worth up to $7,500 — although states such as California may try to enact their own EV rebates, blunting the impact.

Losing the federal credit would make EVs more costly, driving down sales and perhaps making “per unit economics even less favorable” for automakers, John Murphy, a research analyst at Bank of America Securities, wrote in a Nov. 21 research note.

Some companies seem well-positioned, though: Ford Motor, for example, “has a healthy pipeline of hybrid vehicles as well as traditional [internal combustion engine] vehicles to supplement the EV offerings,” Murphy wrote.

Tariffs and trade conflict pose threats to the auto industry, since the U.S. relies heavily on other nations to manufacture cars and parts, said Callie Cox, chief market strategist at Ritholtz Wealth Management.

They “could affect the cost and availability of cars we see in the U.S. market,” Cox said.

Economists expect tariffs and other Trump policies to be inflationary.

In that case, the Federal Reserve may have to keep interest rates higher for longer than anticipated. Higher borrowing costs may weigh on consumers’ desire or ability to buy cars, Cox said.

However, lower EV production could be a boon for companies that manufacture traditional gasoline cars, experts said.

Trump has also called for a “drill, baby, drill” approach to oil production. Greater supply could reduce gas prices, supporting demand for gas vehicles, experts said. But trade wars and sanctions on Iran and Venezuela could have the opposite impact, too.

— Greg Iacurci

CNBC FA 100 list.

“The larger banks probably benefit more from that,” Spinelli said.

Less regulation — combined with the prospect that interest rates could stay higher — will provide a net positive for the bank industry, since banks may be able to lend out more risk-based capital, said David Rea, president of Salem Investment Counselors in Winston-Salem, North Carolina, which is No. 8 on the 2024 CNBC FA 100 list.

One issue that emerged this year that could resurface is concern about regional banks’ exposure to commercial real estate, Spinelli said.

“It wasn’t that long ago, and I don’t think those problems disappeared,” Spinelli said. “So you question, is that still looming out there?”

— Lorie Konish

housing market has been “frozen” in recent years by high mortgage rates, said Cox, of Ritholtz.

Lower rates would likely be a “catalyst” for housing and associated companies, she said.

However, that may not materialize — quickly, at least — under Trump, she said. If policies such as tariffs, tax cuts and mass deportations stoke inflation, the Federal Reserve may have to keep interest rates higher for longer than anticipated, which would likely prop up mortgage rates and weigh on housing and related sectors, she said.

The whims of the housing market affect retailers, too: Home goods stores may not fare well if people aren’t buying, renovating and decorating new homes, Cox said.

That said, deregulation could be “absolutely huge” for the sector if it accelerates building timelines and reduces costs for developers, Goldberg said.

Trump has called for opening public land to builders and creating tax incentives for homebuyers, without providing much detail.

Housing policy will be “one of the most-watched initiatives coming out of the next administration,” Cox said. “We haven’t gotten a lot of clarity on that front.”

“If we see realistic and well-thought-out policies, you could see real estate stocks and related stocks” such as real estate investment trusts, home improvement retailers and home builders respond well, Cox said.

— Greg Iacurci

$100,000 benchmark before its recent runup ended.

As president, Trump is expected to embrace crypto more than any of his predecessors.

Notably, he has already launched a crypto platform, World Liberty Financial, that will encourage the use of digital coins.

Those developments come as new ways of investing in crypto have emerged this year, with the January launch of spot bitcoin ETFs, and more recently, the addition of bitcoin ETF options.

Yet financial advisors are hesitant, with only about 2.6% recommending crypto to their clients, an April survey from Cerulli Associates found. Roughly 12.1% said they would be willing to use it or discuss it based on the client’s preference. Still, 58.9% of advisors said they do not expect to ever use cryptocurrency with clients.

“The No. 1 reason why advisors aren’t investing in cryptocurrency on behalf of their clients is they don’t believe it’s suitable for client portfolios,” said Matt Apkarian, associate director in Cerulli’s product development practice.

Even for advisors who do expect they may use crypto at some point, it’s “wait and see,” particularly regarding how the regulatory environment plays out, Apkarian said.

However, investors are showing interest in cryptocurrency, with 90% of advisors receiving questions on the subject, according to research from Christina Lynn, a certified financial planner and practice management consultant at Mariner Wealth Advisors.

For those investors, exchange-traded funds are a good starting place, Lynn said, since there’s less chance of falling victim to one of crypto’s pitfalls such as scams or losing the keys, the unique alphanumeric codes attached to the investments. Because crypto can be more volatile, it’s best not to invest any money you expect you’ll need to pay for near-term goals, she said.

Investors would also be wise to think of cryptocurrency like an alternative investment and limit the allocation to 1% to 5% of their overall portfolio, Lynn said.

“You don’t need to have a lot of this to have it go a long way,” Lynn said.

— Lorie Konish

repeal the Inflation Reduction Act, a law enacted under Biden that includes clean energy incentives.

If Trump continues to make it easier to create more oil supply, that might not be a great thing for oil companies, according to Adam, of Raymond James.

“Because there’s more supply, it may tamp down on the price of oil, and that’s one of the biggest drivers of that sector,” Adam said.

Eagle Global Advisors, a Houston-based investment management firm that specializes in energy infrastructure, is “cautiously optimistic” about Trump’s impact on the sector, according to portfolio manager Mike Cerasoli. Eagle Global Advisors is No. 35 on the 2024 CNBC FA 100 list.

“We would say we’re probably more on the optimistic side than the cautious side,” Cerasoli said. “But if we know anything about Trump it’s that he’s a wild card.”

A lot of the Inflation Reduction Act may stay intact, since the top states that benefited financially from the law also handed Trump a victory in the election, according to Cerasoli.

When Biden won in 2020, there was a lot of panic about the outlook for energy, oil and gas. Cerasoli recalls writing in a third-quarter letter that year, “I don’t think it’s going to be as bad as you think.”

Four years later, he has the same message for investors on the outlook for renewables. In the days following Trump’s inauguration, Cerasoli expects there may be a deluge of executive orders.

“Once you get past that, you’ll get a sense of exactly how he’s going to treat energy,” Cerasoli said. “I think people will realize that it’s not the end of the world for renewables.”

— Lorie Konish

big vaccine makers such as Merck, Pfizer and Moderna, said David Weinstein, a portfolio manager and senior vice president at Dana Investment Advisors, No. 4 on CNBC’s annual FA 100 ranking.

Cuts to Medicaid and the Affordable Care Act, also known as Obamacare, are also likely on the table to reduce government spending and raise money for a tax-cut package, experts said.

Publicly traded health companies such as Centene, HCA Healthcare and UnitedHealth might be affected by lower volumes of Medicaid patients or consumers who face higher health-care premiums after losing ACA subsidies, for example, Weinstein said.

Robert F. Kennedy Jr. during the UFC 309 event at Madison Square Garden in New York City, Nov. 16, 2024.

Chris Unger | Ufc | Getty Images

Medical tech providers — especially those that supply electronics with semiconductors sourced from China — could be burdened by tariffs, he added.

Conversely, deregulation might help certain pharmaceutical companies such as Thermo Fisher Scientific and Charles River Laboratories, which may benefit from faster approvals from the Food and Drug Administration, Goldberg said.

Vivek Ramaswamy, a former biotech executive whom Trump appointed as co-head of a new advisory panel called the “Department of Government Efficiency,” has called for streamlined drug approvals. But Kennedy has advocated for more oversight.

“There’s a real dichotomy here,” Weinstein said.

“Where do we end up? Maybe where we are right now,” he added.

— Greg Iacurci

how the policies are structured.

Home Depot, Lowe’s and Walmart, for example, source a relatively big chunk of their goods from abroad, Weinstein said.

Home Depot CEO and President Ted Decker said Nov. 12 during the firm’s third-quarter earnings call that the company sources more than half its goods from the U.S. and North America, but “there certainly will be an impact.”

“Whatever happens in tariffs will be an industrywide impact,” Decker said. “It won’t discriminate against different retailers and distributors who are importing goods.”

It’s a good idea for investors to own “high quality” retailers without a lot of debt and with diversified inventory sources, Goldberg said. He cited TJX Companies, which owns stores including TJ Maxx, Marshalls and HomeGoods, as an example.

“Direct imports are a small portion of [its] business and TJX sources from a variety of countries outside of China,” Lorraine Hutchinson, a Bank of America Securities research analyst, wrote in a Nov. 21 note.

Deregulation may be positive for smaller retailers and franchises, which tend to be more sensitive to labor laws and environmental and compliance costs, Goldberg said.

— Greg Iacurci

Amazon, Apple, Alphabet, Meta, Microsoft, Nvidia and Tesla.

Even broadly diversified investors may find it difficult to escape those names, as they are among the top weighted companies in the S&P 500 index.

Information technology — which includes all those stocks except Amazon and Google parent Alphabet — comprises the largest sector in the S&P 500 index, with more than 31%.

Trump is poised to have an influence on looming antitrust issues, amid considerations as to whether Google’s influence on online search should be limited.

Any tariffs put in place may also prompt some sales to decline or the cost of raw materials to go up, said Rea of Salem Investment Counselors.

Nevertheless, Rea said his firm continues to have a “pretty heavy” tech allocation, with strong expectations for generative artificial intelligence. However, the firm does not own Tesla, due to its expensive valuation, and has recently been selling software company Palantir, a winning stock that may have gotten ahead of itself, he said.

Technology valuations are trading well into the high double digits on a price-to-earnings basis, which often signals forward returns will decline, according to Halbert Hargrove’s Spinelli.

Consequently, prospective investors who come in now would basically be buying high, he said.

“If you think you’re going to get the same double-digit returns in the next five years, sure, it could happen on a one-year basis,” Spinelli said. “But your chances historically have been that your returns come down.”

— Lorie Konish

Walmart pulls back on DEI efforts, removes some LGBTQ merchandise from website

suimt — Tue, 26 Nov 2024 18:01:23 +0000

A Walmart Supercenter in Burbank, California, Nov. 21, 2024.

Allen J. Schaben | Los Angeles Times | Getty Images

Walmart on Monday confirmed that it’s ending some of its diversity initiatives, removing some LGBTQ-related merchandise from its website and winding down a nonprofit that funded programs for minorities.

The nation’s largest employer, which has about 1.6 million U.S. workers, joined a growing list of companies that have stepped back from diversity, equity and inclusion efforts after feeling the heat from conservative activists.

Some have also attributed changes to the U.S. Supreme Court’s decision last year that struck down affirmative action programs at colleges.

Those companies include Tractor Supply, which said in June it was eliminating DEI roles and stopping sponsorship of Pride festivals. Lowe’s, Ford and Molson Coors have also walked back some of their equity and inclusion policies in recent months.

Others, such as Anheuser-Busch-owned Bud Light and Target, have faced sharp backlash and falling sales after marketing campaigns or merchandise focused on the LGBTQ community.

In a statement, Walmart said it is “willing to change alongside our associates and customers who represent all of America.”

“We’ve been on a journey and know we aren’t perfect, but every decision comes from a place of wanting to foster a sense of belonging, to open doors to opportunities for all our associates, customers and suppliers and to be a Walmart for everyone,” the statement said.

Among the changes, Walmart will no longer allow third-party sellers to sell some LGBTQ-themed items on Walmart’s website, including items marketed to transgender youth such as chest binders, company spokeswoman Molly Blakeman said.

She said it also recently decided to stop sharing data with the Human Rights Campaign, a nonprofit that tracks companies’ LGBTQ policies, or with other similar organizations.

Additionally, the big-box retailer is winding down the Center for Racial Equity, a nonprofit that Walmart started in 2020 after George Floyd’s murder sparked protests across the country. At the time, Walmart and the company’s foundation pledged $100 million over five years to fight systemic racism and create the center.

Over the past year, the company has phased out supplier diversity programs, which gave preferential financing to some groups, such as women and minorities, after the Supreme Court decision striking down affirmative action.

It’s also moved away from using the term “diversity, equity and inclusion” or DEI in company documents, employee titles and employee resource groups. For example, its former chief diversity officer role is now called the chief belonging officer.

Blakeman said Walmart will continue to award grants, disaster relief, and funding to events such as Pride parades, but with more guidelines on how funding can be used.

Some recent changes came on the heels of pressure from conservative activist Robby Starbuck, who threatened a consumer boycott of Walmart. Starbuck, a vocal DEI opponent who had also put heat on Tractor Supply, touted Walmart’s changes in a post on X, describing them as “the biggest win yet for our movement to end wokeness in corporate America.”

Walmart had conversations with Starbuck over the last week and already had some DEI-related changes underway, Blakeman said.

Walmart’s DEI changes were first reported by Bloomberg News.

Walmart will report earnings before the bell. Here's what to expect

suimt — Tue, 19 Nov 2024 05:01:01 +0000

The Walmart logo is seen outside of one of its stores in Selinsgrove, Pennsylvania.

Paul Weaver | Lightrocket | Getty Images

Walmart will report earnings before the bell on Tuesday, as inflation eases and the holiday season heats up.

Here’s what the discounter is expected to report for the fiscal third quarter, according to a survey of analysts by LSEG:

Earnings per share: 53 cents
Revenue: $167.72 billion

The nation’s largest retailer will deliver its latest sales results and read on the U.S. consumer to Wall Street as investors gauge consumer sentiment and weigh the outlook for the most crucial shopping season of the year.

Retailers, including Walmart, are contending with a mixed bag of factors this holiday season. Inflation has moderated as gas prices decline and grocery inflation moderates. Fears of a dragged-out process to determine the winner of the U.S. presidential race never materialized.

Yet, President-elect Donald Trump’s proposal for tariffs on imports from China and other countries has fueled fresh fears about prices rising again. The holiday season is also shorter this year and parts of the U.S. have had unseasonably warm weather, two dynamics that could hurt retailers.

Holiday spending is expected to increase this year, but at a modest rate. The National Retail Federation, a retail trade group, said it expects holiday spending in November and December to increase 2.5% to 3.5% compared with 2023, to a range between $979.5 billion and $989 billion. That would be lower than the 3.9% year-over-year jump from the 2022 to 2023 holiday season, when spending totaled $955.6 billion.

Walmart, for its part, has benefited from its large grocery business and growing online sales. The company raised its full-year forecast in August and said it expects sales to rise 3.75% to 4.75% for the full year, and adjusted earnings to come in between $2.35 and $2.43 per share. Even so, its adjusted earnings outlook of between 51cents and 52 cents per share in the third quarter came in shy of what investors had then anticipated.

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Jim Cramer's week ahead: Earnings from Nvidia, TJX and Walmart

Aseem — Fri, 15 Nov 2024 23:50:48 +0000

CNBC’s Jim Cramer on Friday highlighted the biggest events next week on Wall Street, pinpointing earnings reports from Nvidia, TJX and Walmart. And as postelection worries create an uncertain market landscape, he advised that investors proceed with caution.

“Look, I’ve told you that there are many pitfalls with individual stocks when it comes to Trump 2.0. Most of them are buying opportunities,” he said. “But with stocks still up so much from a few months ago, you can’t be too eager to buy the dips.”

On Monday, Cramer will be waiting for an investor meeting from Vertiv, which supplies companies with products need for data centers. He noted that the outfit is largely immune to any issues that might arise when President-elect Donald Trump takes office. He said investors could open a small position in the company, but that he’d rather wait for a little more weakness to buy.

Tuesday brings earnings from Walmart, Lowe’s, Medtronic and Viking Holdings. Cramer praised the two retailers but said investors might want to wait for a pullback before diving in to Walmart. Similar to Home Depot, home improvement retailer Lowe’s tends to do well when the Federal Reserve cuts rates, he added. Medtronic has been a winner so far, Cramer continued, incorporating artificial intelligence into some of its medical devices. He also said that luxury cruise line Viking could be a good buy before and after earnings.

Retailers TJX, Target and Williams-Sonoma will report Wednesday morning. Cramer recommended investors “wait and see” with Target as Wall Street worries about the impact of potential tariff increases by the Trump administration. TJX, he noted, has a tendency to sell off when it reports, while Williams-Sonoma can “catch on fire” during a rate cutting cycle. After the market closes, Palo Alto Networks and Nvidia report, and Cramer said both could sell off post-earnings.

On Thursday, Gap and Intuit are set to report. Cramer said he’d be a buyer of the clothing retailer ahead of the quarter. And while he said he likes enterprise software outfit Intuit, he “can’t get excited” about the stock until it cools off. Procter & Gamble and GE Healthcare Technologies will host investor days Thursday. Cramer said the consumer goods company has valuable insight into topics including China, raw costs and tariffs. He added that the medical technology company can tell a good story that will resonate with investors.

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Nvidia, TJX, GE Healthcare, Home Depot and Palo Alto Networks.

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Mattel pulls thousands of 'Wicked' dolls off shelves after printing adult website on packaging

suimt — Mon, 11 Nov 2024 19:23:15 +0000

Still from the film “Wicked”

Source: Universal Studios

Thousands of Mattel’s “Wicked”-branded fashion dolls are flying off shelves, but not because of consumer demand.

The toy company has been forced to pull its line of character dolls after a package misprint. Instead of listing the website for Universal’s “Wicked” movie, boxes featured a link to a pornographic website for a group called Wicked Pictures.

“Mattel was made aware of a misprint on the packaging of the Mattel Wicked collection dolls, primarily sold in the U.S., which intended to direct consumers to the official WickedMovie.com landing page,” Mattel said in a statement. “We deeply regret this unfortunate error and are taking immediate action to remedy this. Parents are advised that the misprinted, incorrect website is not appropriate for children. Consumers who already have the product are advised to discard the product packaging or obscure the link and may contact Mattel Customer Service for further information.”

Target, Walmart and Amazon had removed the line of “Wicked” dolls from their online storefronts as of midday Monday, as had Best Buy, Barnes & Noble and Macy’s. The products were also being sold at Kohl’s and DSW, among other retailers. Some sites were still taking action on the listings throughout the day Monday.

It is unclear if Mattel will reprint the packages or provide retailers with stickers to cover the incorrect website domain. Mattel did not return CNBC’s request for additional comment after providing its initial statement.

“Like any business, mistakes can and do happen in the toy business,” said James Zahn, editor in chief of The Toy Book. “This was likely an innocent oversight that made it through the normal processes. Most consumers — kids and adults alike — will never read the fine print on a package, and at the end of the day, the packaging is designed to end up in the trash. The odds of a kid reading the back of a doll box and being inclined to go online and visit the website are pretty slim.”

The mishap comes as Universal floods retail shelves with “Wicked”-related product ahead of the film’s Nov. 22 release. The green-and-pink barrage is expected to bring a big boost to the retail industry just in time for the crucial holiday period.

However, Mattel could see its revenue impacted by the cost of removing the dolls.

“I suppose the impact depends on the resolution, which we don’t yet know,” said Jaime Katz, an analyst at Morningstar.

“The big winners in the short term are resellers, as this snafu sparked a flipper frenzy this weekend as retail shelves were quickly emptied by opportunists looking to make a quick buck by selling on eBay or Facebook Marketplace,” Zahn noted.

Already dozens of Mattel’s misprinted dolls are available on eBay for list prices ranging between $40 and $2,100. The dolls retailed for between $20 and $40 depending on the character and outfit.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC. NBCUniversal is the distributor of “Wicked.”