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U.S. Retail Sales Fell 1.1% in December

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Purchases at stores, restaurants and online, declined a seasonally adjusted 1.1% in December from the prior month, the Commerce Department said Wednesday. Sales were also revised lower in November and have fallen three of the past four months. The department seasonally adjusts monthly data to make it comparable over time. On an unadjusted basis, December is typically the peak sales month for the year.

A Federal Reserve report Wednesday found economic activity was relatively flat at the start of the year and businesses are pessimistic about growth in the months ahead. A separate Fed report showed U.S. industrial production slumped in December, led by weakness in manufacturing. A Labor Department report showed inflation was cooling.

Stocks fell Wednesday after the data releases. The S&P 500 shed 1.6%. The Dow Jones Industrial Average was down 1.8%, while the Nasdaq Composite Index lost 1.2%. The yield on the benchmark 10-year Treasury note declined 0.16 percentage point to 3.374%.

The latest data add to signs that the U.S. economy is slowing as the Fed pushes up interest rates to combat inflation. Hiring and wage growth eased in December, U.S. commerce with the rest of the world declined significantly in November, and existing-home sales have fallen for 10 straight months.

S&P Global downgraded its estimate for fourth-quarter economic growth Wednesday by a half percentage point to a 2.3% annual rate. Economists surveyed by The Wall Street Journal this month expect higher interest rates to tip the U.S. economy into a recession in the coming year.

“The lag impact of elevated inflation weighs heavily on U.S. households, it’s very clear that the median American consumer is still reeling from the loss of wages in inflation-adjusted terms,” said

Joseph Brusuelas,

chief economist at RSM US LLP. “We’re moving towards what I would expect to be a mild recession in 2023,” he added.

Federal Reserve Bank of St. Louis President

James Bullard

said Wednesday the central bank should keep on rapidly raising interest rates and supported a half-percentage-point increase at the Jan. 31-Feb. 1 meeting. 

“We want to err on the tighter side to make sure we get the disinflationary process to take hold in the economy,” he said at a Wall Street Journal Live event.

Mr. Bullard’s position is at odds with several of his colleagues, who have suggested that a slower pace of rate increases would be appropriate to allow Fed officials to gauge how their aggressive pace of policy tightening has affected the economy.

Inflation, while still historically high, is showing signs of cooling as demand eases. Unlike many government reports, retail sales aren’t adjusted for inflation. 

Consumer prices advanced 6.5% from a year earlier in December, the sixth straight month of deceleration. The producer-price index, which generally reflects supply conditions in the economy, fell in December from the prior month, and increased at the slowest annual pace since March 2021, the Labor Department said Wednesday.

The National Retail Federation said Wednesday holiday sales were disappointing. The trade group said November and December sales rose 5.3% compared with the same period last year to $936.3 billion. In November, the NRF said it expected holiday sales to rise between 6% and 8%. The NRF figures aren’t adjusted for inflation and exclude fuel, auto and restaurant spending.

Somewhat slower inflation at the end of the year didn’t offset weaker demand, said NRF Chief economist

Jack Kleinhenz.

 Consumers are “hit with higher food prices, they are getting hit with higher service prices and they are having to make choices,” he said. Some spending was likely pulled into October as retailers kicked off deals early this year, he added. Retailers discounted heavily and early to clear excess stock from their shelves and warehouses.

Zach Carney, of Boston, said he has been cutting back on eggs and red meat because the prices are so high. “The price of eggs really jumps out at you,” the 28-year-old publicist said. Instead, he has been stocking up on value packs of chicken and buying more store-brand cereal and olive oil, which cost less than national brands.

In 2021, officials thought high inflation would be temporary. But a year later, it was still near a four-decade high. WSJ’s Jon Hilsenrath explains factors that have kept inflation up longer than expected. Illustration: Jacob Reynolds

The retail sales report showed spending declined in a number of gift-giving categories in December, including at electronics, clothing and department stores, and with online retailers, a category which includes companies such as Amazon.com Inc.

Dining out at bars and restaurants dropped 0.9% in December. Sales of furniture and vehicles, which are sensitive to higher borrowing costs, both fell sharply. The only categories to post slight growth in December were grocery, sporting goods and home improvement stores, as winter storms battered many parts of the U.S.

Some retailers have said the recently completed holiday shopping season turned out to be weaker than expected. Macy’s Inc. warned of softer sales, and Lululemon Athletica Inc. said its profit margins were squeezed as shoppers bought more items on sale.

Many retailers had benefited from surging sales earlier in the pandemic as shoppers stocked up on everything from toilet paper to home electronics and furniture, supported by government stimulus dollars. Those tailwinds have cooled, leaving retailers and product manufactures to confront slower spending in some categories and the longer term dynamics of the industry, such as a gradual shift to online spending.

Apparel retailers are especially exposed to the current pullback in discretionary spending, said Kelly Pedersen, the U.S. retail leader at PwC, a consulting firm. “Buying fashion items at department stores is discretionary,” said Mr. Pedersen. Many apparel retailers are still working to sell through excess inventory and offering deep discounts amid weak demand, he said. 

Department stores, which saw a 6.6% sales drop in December, struggled to boost sales before the pandemic quickly shifted buying habits. In 2020, a string of department stores filed for bankruptcy, including Lord & Taylor, J.C. Penney Co., Neiman Marcus Group Ltd. and Stage Stores Inc. 

Party City Holdco Inc. filed for chapter 11 bankruptcy this week while noting inflationary pressures have hampered customers’ willingness to spend. Bed Bath & Beyond Inc. said this month it plans more layoffs and cost cuts amid falling sales.

The retail sales report offers a partial picture of consumer demand because it doesn’t include spending on many services such as travel, housing and utilities. The Commerce Department will release December household spending figures covering goods and services later this month.

Corporate reports out in February will add to that picture. Walmart Inc., Target Corp. and other large retailers—which sell a variety of goods such as food, clothes and décor—report quarterly earnings next month, which will include December sales.

—Suzanne Kapner and David Harrison contributed to this article.

Write to Harriet Torry at harriet.torry@wsj.com and Sarah Nassauer at Sarah.Nassauer@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Kohl’s, Bed Bath & Beyond and Uniqlo add self-checkout

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New York
CNN Business
 — 

Self-checkout arrived in the late 1980s at supermarkets. A decade later, it began spreading to big-box chains and drug stores. Now, self-checkout, loved by some and hated by others, has entered discount clothing and department stores.

Kohl’s

(KSS) is testing self-checkout stations at a handful of stores. H&M added them at three stores and plans to roll the program out to more than 30 stores by the end of next year. Bed Bath & Beyond

(BBBY) first tried self-checkouts at its flagship in New York City last year and has since added them to several locations. Zara has it at 20 of its largest US stores.

Plus Uniqlo, Primark and other chains have started to roll out self-checkout machines at some of their stores.

These retailers are beginning to adopt self-checkout for a variety of reasons, including labor savings, customer demand and improvements to the technology.

Labor is one of the largest expenses for stores, and they are trying to save money as costs rise and more shoppers buy online. Self-checkout transfers the work of paid employees to unpaid customers.

Self-checkout stations eliminate some of the need for human cashiers, which is why retail unions typically oppose the technology. The number of cashiers in the retail industry is expected to decline by 10% over the next decade, in part due to the rise of self-checkout, according to the Bureau of Labor Statistics.

These stores are also responding to customers who prefer self-checkout and perceive it to be faster and more convenient than checking out through a traditional cashier. Millions of customers used self-checkout for the first time during the Covid-19 pandemic to minimize close interactions with workers and other shoppers, and got accustomed to the technology.

But these companies’ attempts to bring self-checkout to stores come with risks, including irritated customers and more shoplifting.

According to a survey last year of 1,000 shoppers, 67% said they’d experienced a failure at a self-checkout lane. Errors at the kiosks are so common that they have even led to dozens of memes and TikTok videos of customers complaining of “unexpected item in the bagging area” alerts.

Customers make honest errors scanning barcodes as well as intentionally steal items at unstaffed self-checkout stands.

“It does present some real challenges,” said Adrian Beck, an emeritus professor at the University of Leicester and retail industry consultant who researches self-checkout. Retail losses are higher at self-checkout stations than at staffed checkout, Beck has found.

Traditionally, clothing and department stores have relied on hard security tags on merchandise to prevent shoplifting. This is a problem for self-checkout: customers aren’t used to removing security tags themselves, and most self-checkout machines aren’t equipped to do so.

To get around this, some apparel stores are using wireless “radio frequency identification” security tags, known as RFID, on merchandise instead of hard tags.

Stores such as Uniqlo have invested in new self-checkout machines that automatically recognize these tags, eliminating the need for customers to scan any products themselves or remove security tags. Customers simply drop their merchandise in a designated box at the self-checkout station and the machine automatically identifies the item and displays the price on a screen.

The spread of self-checkout to budget-oriented clothing and department stores has other impacts, too.

It entrenches a divide in retail where one segment of customers gets better service than others, said Christopher Andrews, a sociologist at Drew University and author of “The Overworked Consumer: Self-Checkouts, Supermarkets and the Do-It-Yourself Economy.”

Although shoppers of all incomes visit these stores, it’s unlikely that luxury brands will have customers do “quasi-forced unpaid work under surveillance,” Andrews said.

“Is this an early glimpse of a future where the affluent get in-person service and the working classes are required to perform free work to get their food and clothing?”

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Lawsuit that may have played role in Bed Bath & Beyond exec’s suicide hits snags

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An explosive shareholder lawsuit that may have played a role in the shocking suicide of Bed Bath & Beyond’s former financial chief Gustavo Arnal has recently run into trouble of its own.

The $1.2 billion suit — which accuses the home-furnishings retailer, its late CFO, JPMorgan and a big investor of orchestrating a “pump and dump” stock scheme — was recently handed over to a new law firm, even as legal experts question its prospects in court, The Post has learned.

Arnal, 52, jumped to his death on Sept. 2 from the 18th floor of the “Jenga Building,” a chic luxury tower in lower Manhattan’s Tribeca neighborhood, while his wife was inside the apartment, which they reportedly were renting for $18,500-a-month. Arnal was a father to two daughters.

Meanwhile, the suit — which some media reports have cited as contributing to the stress Arnal was facing as the CFO of the financially embattled company — was filed Aug. 23 by an attorney based in Falls Church, Va. who is both the counsel and the plaintiff in the case — an unusual arrangement that typically presents a conflict of interest that wouldn’t pass muster with a judge, according to legal experts.

Gustavo Arnal joined the retailer in 2020.

The attorney, Pengcheng Si, who specializes in immigration law, declined to comment on “ongoing litigation” in an email to The Post. He also said he realizes “this is emotion[al] hell for Gustavo Arnal’s family … I would like to extend my sympathy and condolence[s] for Mr. Arnal[‘s] family’s loss.”

Filed in federal court in Washington, DC, the complaint is seeking class-action status and claims that Si and his wife lost $106,480 because of a scheme cooked up by Arnal and Bed Bath & Beyond’s former largest investor, Chewy.com’s billionaire founder Ryan Cohen. The latter sold his shares between Aug. 16 and 17 before the stock crashed, bagging $68 million.

On those same two days, Arnal sold more than 55,000 shares worth $1.4 million, according to securities filings — transactions that the filings claimed had been part of a pre-arranged plan set up in April.

The Jenga building at 56 Leonard St. where Arnal lived.
Robert Miller

On Sept. 6, however, the plaintiff Si hired law firm Cohen Milstein Sellers & Toll, which specializes in class-action litigation, to take over the case, according to a public notice.

“Once [Si] learned how the class-action mechanisms work, he decided to withdraw as counsel,” partner Steven Toll told The Post in an interview. “He wasn’t aware of the challenges of being both a plaintiff and counsel.”

The complaint alleges that Arnal had “heavy communications” with JP Morgan and Cohen about “creating a buying frenzy of [the company’s’] stock,” and that JPMorgan helped Arnal and Cohen “launder the proceeds of their criminal conduct.”

The suit does not, however, lay out how Si, an individual investor, got the information, notes Richard Schoenstein, a securities attorney for Tarter Krinsky & Drogin who isn’t affiliated with the case.

“The complaint doesn’t reveal the source of the information regarding the allegations which makes it vulnerable to being dismissed,” Schoenstein told The Post.

Ryan Cohen sold his shares in Bed Bath & Beyond between Aug. 16 and 17, bagging $68 million.
Twitter/Ryan Cohen

Indeed, Toll said, “I don’t have any information on how he would have knowledge of conversations between Cohen and Arnal,” adding that Si might have “read it somewhere or heard about it from another person or he believes it happened.” 

Elsewhere, the suit erroneously named “Arnal Gustavo” as a defendant throughout rather than “Gustavo Arnal.” In another instance, the suit refers to the plaintiff, Si, as a female — a mistake that will be corrected, according to his lawyer.

Bed Bath & Beyond said in an email to The Post that it “is in the early stages of evaluating the complaint, but based on current knowledge the company believes the claims are without merit.” Reps for Cohen’s investment firm RC Ventures declined to comment as did reps for JPMorgan.

Gustavo Arnal jumped to his death from the 18th floor of his luxury apartment building in Tribeca.
Robert Miller

According to Si’s bio on his law firm’s web site – DWS Law Group – he is also referred to as Simon P. Si. A native of China, Si’s bio says in addition to immigration law he “provides strategic advice on business formation, real estate, investment and international trade.” 

Toll’s firm has meanwhile begun soliciting other plaintiffs to join the case. Si’s is the “first and ONLY” class action lawsuit “thus far” the law firm said in a public notice required by the SEC.

But there are at least several other big law firms fishing for investors to be part of future class action lawsuits against Bed Bath & Beyond over similar allegations.  

It’s not clear whether the complaints, including Si’s, will replace Arnal as a defendant in the complaint with his estate, Toll said.

“The question is whether it’s a good strategic move,” Toll said, adding “you wouldn’t do that unless you thought there was a lot of money in the estate. If [the estate] is worth $10 or $50 million a lawyer would need to weigh that.”

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Bed Bath & Beyond’s Gustavo Arnal was overwhelmed before suicide

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Bed Bath & Beyond CFO Gustavo Arnal was stressed out by working 18-hour days and was considering taking a leave in the weeks before he killed himself, a new report said.

The late executive was also upset about the fallout his mid-August $1.4 million stock sale generated because he had preplanned the sale and was still holding more than $5 million in company shares, The Wall Street Journal reported Wednesday.

Arnal was 52 when he plunged to his death from his 18th story, $18,500 a month rental in Tribeca on Sept. 2 while his wife was home. The medical examiner ruled his death a suicide.

The week before the Venezuelan immigrant and father of two took his own life, he had been named in a $1.2 billion “pump-and-dump” lawsuit filed against BBB and GameStop chairman Ryan Cohen and accused of artificially raising the price of the stock to cash in.

Cohen raised $68.1 million in profits by unloading his massive stake on Aug. 16, the same day Arnal’s $20 limit order sale took place, according to the article. The BBB stock price lost half its value over the next three days.

Authorities at the scene after Gustavo Arnal jumped from the building.
Robert Miller

The company told The Journal it considered the lawsuit to be meritless, and an internal investigation found no evidence of fraud or collusion on Arnal’s part while revealing the late financial executive did not have any one-on-one communication with Cohen, a billionaire investor activist, according to the report.

In the months before the stock sale and lawsuit, officials and directors at the home goods chain were reportedly growing concerned about the demands Arnal was facing in the midst of the company’s financial crisis, which was accelerated by the COVID-19 pandemic.

Bed Bath & Beyond, Inc. was valued at $17 billion ten years ago but was worth less than $1 billion when Arnal took the job in May of 2020.

Bed Bath & Beyond’s value began to drastically fall in 2019 as online shopping reigned king.
Bloomberg via Getty Images

Cohen revealed in March he had a 10% stake in the company — which was swept up in the meme-stock craze — and called on it to restructure. A cascade of senior executives left BBB in the following months, but Arnal was one of the few that stayed, according to the report.

On Aug. 31, two days before his suicide, Arnal and other officials had announced the company secured new financing and would be closing a fifth of its 800 stores while reducing costs by 20 percent.

At the time he was clocking 18-hour days on the restructuring plan while also being bombarded with emails from individual investors and lawsuit plaintiffs, friends and coworkers told the paper.

BBB leaders had considered replacing Arnal but didn’t want to make a change while he was in the midst of raising money, according to the article. He was scheduled to talk with other executives about possibly “taking a break” from work after the Labor Day holiday, the report said.

The medical examiner ruled Arnal’s death a suicide.
Robert Miller

“I could see the stress on him,” former chief executive of Avon Products Jan Zijderveld told the paper after having a dinner with Arnal and his wife that stretched until 1 a.m. six weeks ago in Manhattan.

Arnal reportedly told Zijderveld he was under pressure at work, but seemed upbeat and animated as he burned the midnight oil.

“He’s the sort of guy who carries the world on his shoulders,” Zijderveld said.

“It was 24/7, ‘Let’s fix this thing,’” he reportedly said. “He was full of intensity. This is not a half-measure kind of guy.”

If you are struggling with suicidal thoughts or are experiencing a mental health crisis and live in New York City, you can call 1-888-NYC-WELL for free and confidential crisis counseling. If you live outside the five boroughs, you can dial the 24/7 National Suicide Prevention hotline at 988 or go to SuicidePreventionLifeline.org.

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Business

Bed Bath & Beyond exec Gustavo Arnal ID’d as NYC ‘Jenga Building’ jumper: source

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The chief financial officer of troubled Bed Bath & Beyond has been identified as the man who jumped to his death from the iconic new Tribeca skyscraper known as the “Jenga Building,” The Post has learned.

Gustavo Arnal, 52, who was also an executive vice president for the struggling home goods retailer, plunged from the 18th floor of 56 Leonard Street on Friday, police sources said.

The 60-story building is best known for its purposely misaligned apartments stacked atop each other, resembling the popular game “Jenga.”

Messages left with Bed Bath & Bed and Arnal’s family Saturday were not immediately returned.

On Aug. 16, Arnal sold 42,513 shares in company stock for a little over a $1 million, according to MarketBeat.com.

Arnal joined the company in 2020. The company has been struggling financially as of lately.
Robert Miller

Arnal joined Bed Bath & Beyond in 2020. He previously worked as chief financial officer for cosmetics giant Avon based out of London and had a 20-year career working overseas leading Procter & Gamble.

In 2021, he made more than $2.9 million via Bed Bath & Beyond, including $775,000 in salary and the rest in stock awards, according to InsiderTrades.com.

Bed Bath & Beyond has recently been facing turbulence.

Shares in the Union, New Jersey-based business lost nearly a quarter of their value Wednesday, after the company announced a restructuring that includes store closures, layoffs and a possible stock offering.

The company said it has obtained more than $500 million in new financing and was reducing 20% of its workforce. It plans to close about 150 namesake stores but will keep its buybuy BABY chain.

56 Leonard Street is a luxury building, home to many celebrities.

In mid-August, shareholder activist Ryan Cohen, the billionaire co-founder of online pet-products retailer Chewy Inc., sold his shares in Bed Bath & Beyond after taking on a 10% stake just months before and pledging to make big changes.

The “Jenga Building” features 19-foot ceilings, double-height windows, white oak and stone floors, a gas fireplace, a chef’s kitchen and three terraces totaling 1,252 square feet with panoramic water and city skyline views. 

It is also a celebrity-packed home to the mega-wealthy, including singer Frank Ocean.

Additional reporting by Larry Celona and Steven Vago

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Business

Ryan Cohen’s Stock Sale Is No Problem for Bed Bath & Beyond’s True Believers

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A stupefying rally in

Bed Bath & Beyond Inc.’s

BBBY -40.54%

stock came skidding to a halt last week when one of the company’s biggest shareholders cashed out. 

Now, a crowd of individual investors say they are hoping to ride out the worst of the selloff.

Even as Bed Bath & Beyond slumped Friday in its worst one-day pullback ever, individual investors continued to cheer the stock on social-media platforms like Reddit, Discord and

Twitter.

Many posted emojis of diamonds and hands—internet shorthand for someone who holds steadfast to their investments even when there is rising pressure to sell. Others tagged their posts with “HODL”: hold on for dear life. 

Their message to the world? We aren’t giving up.

Wil Lobach, a 39-year-old investor from New Jersey, said he is hoping to use the selloff as a way to add to his Bed Bath & Beyond holdings. 

He owns more than 250 shares of the struggling retailer. Having scooped them up at an average price of around $6.50, he is still up about 70% on his initial investment. Bed Bath & Beyond shares fell 41% Friday to $11.03.

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Mr. Lobach said the volatility in the stock last week did little to scare him. He also owns stakes in meme stocks

GameStop Corp.

and

AMC Entertainment Holdings Inc.

, both of which are also known for their wild swings. 

“I’m proud of him,” Mr. Lobach said of billionaire investor

Ryan Cohen,

whose sale of his stake triggered the selloff in Bed Bath & Beyond’s shares last week. 

Cohen’s “army is right behind him,” Mr. Lobach added, noting that he supports the sale and believes Mr. Cohen isn’t done with Bed Bath & Beyond yet. “It’s been incredible to be a part of this moment in history.” 

Mr. Cohen, the co-founder of pet-supply retailer

Chewy Inc.

, has developed a devoted following of individual investors, who cheered his rapid ascension last year from activist investor to GameStop chairman. Many individuals piled into Bed Bath & Beyond’s shares after he revealed a sizable stake in the company in March and issued a letter to its board pushing for major changes.

David Simpson, a 30-year-old from Seattle, said he is committed to holding on to his Bed Bath & Beyond investment until at least 2023, by which time he believes the stock will have risen to around $200. 

After years of declining sales, Bed Bath & Beyond is facing an existential crisis. WSJ’s Suzanne Kapner explains why the company has fallen on hard times and looks forward to what is next for the veteran retailer. Photo Illustration: Laura Kammermann/WSJ

He wasn’t deterred by news of Mr. Cohen selling his stake. In fact, he says his conviction in his Bed Bath & Beyond trade has only gotten stronger. He referenced Mr. Cohen’s role in Chewy’s growth from a small startup into a company that would later be acquired by PetSmart for $3.35 billion, a deal that was at the time the biggest e-commerce acquisition ever.

“My instincts tell me the same is true” for Bed Bath & Beyond, Mr. Simpson said, adding that he believes the company will be able to strengthen its financial position by the end of the year.

Bed Bath & Beyond is searching for a $375 million loan to build cash and help pay down debt, The Wall Street Journal previously reported. In June, the company said sales for the current quarter were trending down 20% from the year-earlier period.

Individual investors’ resolve is the latest twist in a meme-stock mania that has endured much longer than many professional investors and analysts could have ever predicted. Some individual investors say they have good reason to believe the shares will spike again.

Many are also continuing to hold out for what they believe will be a massive short squeeze, a phenomenon that occurs when a stock rises so much that investors who bet against it are forced to buy back shares, driving the stock even higher.

At the moment, those betting on the stock face an uphill battle.

On Friday, the selloff hitting Bed Bath & Beyond spread to other meme stocks, with GameStop losing 3.8%, AMC Entertainment falling 6.6% and

Coinbase Global Inc.

shedding 11%. The S&P 500 finished down 1.3%. 

Data also show pressure from short sellers has continued to grow.

Roughly half of Bed Bath & Beyond’s shares that were available to trade Friday afternoon were being shorted, according to

Ihor Dusaniwsky,

head of predictive analytics at S3 Partners, a technology and data analytics firm.

“This has been a roller-coaster week,” Mr. Dusaniwsky said in an email, noting the value of short sellers’ positions was down hundreds of millions of dollars in the first half of the week, only to jump hundreds of millions of dollars on Thursday and Friday.

Wall Street analysts are also warning there could be more pain ahead for shareholders. 

Wedbush Securities analyst

Seth Basham

said he believes Bed Bath & Beyond’s stock should be trading at around $5—55% below where it closed Friday. He cut his rating for the stock to “underperform” from “neutral” in a note after Mr. Cohen made his plans to sell his stake public Wednesday.

Even if the company manages to achieve goals like fixing its inventory and supply-chain problems, its stock has surged so much that the risk-to-reward ratio for investors remains “disproportionately skewed to the downside,” Mr. Basham added.

Bed Bath & Beyond shares are still up 122% for the quarter, compared with the S&P 500, which has risen 12%.

Wells Fargo analyst Zachary Fadem, who covers Bed Bath & Beyond, is holding a price target of $3 for the stock—73% below where it closed Friday.

Among Mr. Fadem’s concerns: Foot traffic at Bed Bath & Beyond’s stores and web traffic on its site seem to be decelerating. The company is also in a financially vulnerable position. It is working with external advisers to try to strengthen its balance sheet.

“We believe the writing is on the wall that BBBY shares have again decoupled from economic reality,” Mr. Fadem said in a note.

There could be more pain ahead for Bed Bath & Beyond shareholders, Wall Street analysts warn.



Photo:

Michael M. Santiago/Getty Images

Write to Akane Otani at akane.otani@wsj.com and Caitlin McCabe at caitlin.mccabe@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Kohl’s Gets $9 Billion Bid From Starboard Value Group

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A consortium backed by activist hedge fund Starboard Value LP has offered roughly $9 billion to buy department store

Kohl’s Corp.

KSS -2.60%

, according to people familiar with the matter.

A group led by Acacia Research Corp., which Starboard controls, offered to buy the department-store chain for $64 a share in cash Friday, the people said. It told the company it has received assurances from bankers that it would be able to get financing for the bid, the people said.

There are no guarantees that the group will ultimately line up all the funding needed and make a firm offer or that Kohl’s will be receptive. Other suitors may emerge too.

Kohl’s shares closed at $46.84 Friday. The bid represents a 37% premium.

Based in Menomonee Falls, Wis., Kohl’s has been under pressure to boost its share price, which rose early last year but is little changed from roughly two decades ago. Two activist shareholders—Macellum Advisors GP LLC and Engine Capital LP—have recently called on the company to explore selling itself.

Kohl’s said earlier this week that its strategy is producing results and that its board “regularly works with specialized advisers to evaluate paths that have the potential to create long-term value.” It said it plans to unveil its strategic plans at an investor day in March.

Little-known Acacia has a market value of just $215 million, but the consortium told Kohl’s it received what is known as a “highly confident” letter from a bank asserting that it will be able to attain a debt-financing package for a portion of the bid, the people said. While such letters are no guarantee, they can be a meaningful vote of confidence.

Led by Chief Executive Jeff Smith, Starboard Value is one of the most visible activist investors.



Photo:

Christopher Goodney/Bloomberg News

Other details of the consortium’s proposal—and who is in the group—couldn’t be determined. Reuters reported earlier this week that Acacia was exploring a possible bid for Kohl’s.

Should it succeed, the group could aim to sell the company’s real estate to another party, which could make pulling off the transaction easier. Activists have proposed that Kohl’s explore sale-leasebacks of its real estate, which they have estimated could be worth $7 billion or more.

Macellum said in an open letter to Kohl’s shareholders Tuesday it has been pushing the company to add additional directors with retail experience or to hire bankers to explore a sale.

Before Starboard invested in the firm and joined its board in 2019, Acacia was primarily a holding company for patents. It now focuses on buying and improving companies. In October, it bought privately held Printronix Holding Corp., a manufacturer of line matrix printers, for $33 million, and it has made offers for other companies including

Comtech Telecommunications Corp.

Starboard, led by Chief Executive

Jeff Smith,

is one of the most visible activist investors. It holds seats on the boards of companies including

Papa John’s International Inc.

and

NortonLifeLock Inc.

Write to Cara Lombardo at cara.lombardo@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the January 22, 2022, print edition as ‘Group Offers To Buy Kohl’s for $9 Billion.’

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Business

Is the Stock Market Open Today? Here Are the Hours on Labor Day 2021.

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Labor Day 2021 is here. Some exchanges are closed over the long weekend.


CHANDAN KHANNA/AFP via Getty Images

Text size

Labor Day in the U.S. is here, and that means an extended weekend for traders and investors alike as stocks regularly set fresh record highs.

Heading into the weekend, U.S. equities continued their upward march, boosted by technology stocks after private payrolls data on Wednesday suggested the Federal Reserve might not have to taper its bond purchases as soon as expected. The Fed has kept interest rates low and asset prices high by buying bonds.

The

S&P 500

and

Dow Jones Industrial Average

traded lower Friday after the government’s broader report on August hiring came in far short of expectations. The more contagious Delta variant of Covid-19 weighed on hiring, raising more concerns over economic growth.

While Hurricane Ida this week shut down much of U.S. oil production and refining capacity, boosting oil prices, financials proved to be the dogs of the index. Wells Fargo was the worst S&P 500 component for the week, while Capital One was third-worst. 

The Labor Day holiday harks back to the 19th century labor movement during the height of the Industrial Revolution. New York City celebrated the first Labor Day on Sept. 5, 1882, and two years later President Grover Cleveland made the first Monday in September a national holiday.

Is the Stock Market Open on Labor Day 2021?

The New York Stock Exchange and Nasdaq are both closed on Monday, Sept. 6. The same is true for U.S. over-the-counter markets. They’ll reopen on Tuesday at 9:30 a.m. Eastern Standard Time. U.S. bond markets will also be closed on Monday.

In Canada, the Toronto Stock Exchange is also closed Monday for what that country calls Labour Day. Generally, other international markets are open, including the London Stock Exchange, Shanghai Stock Exchange, Hong Kong stock exchange, and Tokyo Stock Exchange.

How Will Covid-19 Impact Labor Day?

Rochelle Walensky, the director of the Centers for Disease Control and Prevention, said this week that unvaccinated people shouldn’t travel over the Labor Day weekend, as the U.S. is wrestling with a surge of cases linked to the highly contagious Delta variant. She added that people who are vaccinated—currently adults and adolescents age 12 and over are eligible for shots—can travel but should take precautions such as wearing masks in crowded locations and on public transportation.

Some services will be closed on Labor Day because it’s a federal holiday. Mail, for example, won’t be delivered. Most banks also shut their branches in honor of the holiday. But there are also some festivities normally held on the day that have been canceled because of the pandemic, including New York City’s West Indian Day parade and local parades and celebrations across the country.

Labor Day is a popular weekend for sales, especially because it falls in the middle of the back-to-school shopping season.

Bed Bath & Beyond,

(ticker: BBBY) for example, is offering up to 60% off select bedding, kitchen and bath items, and vacuums.

Macy’s

(M) is also advertising a sale of 20% to 60% off.

Kohl’s

(KSS) is offering 40% off on jeans, and

Wayfair

(W) has discounts up to 70%.

How Have Stocks Performed Historically During the Week After Labor Day?

September is generally considered a bad month for stocks, with the broad market giving up an average of 1% for the month in the years going back to 1928. 

Labor Day week can be particularly brutal. Last year, the S&P 500 fell 2.51% during the holiday week, its worst Labor Day week performance since 2008, when it fell 3.2%.

Write to Liz Moyer at Liz.Moyer@barrons.com

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Business

GameStop, Microsoft, AMC: What to Watch When the Stock Market Opens Today

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Here’s what we’re watching ahead of Wednesday’s opening bell.

—U.S. stock futures slipped, as investors awaited a bumper day of major earnings reports and a meeting of the Federal Reserve.

S&P 500 futures were down 1.1%, while futures tied to the technology-heavy Nasdaq-100 edged down 0.7%. Dow Jones Industrial Average futures fell 1.1%.

What’s Coming Up

—Earnings updates expected:

Tesla,

TSLA -0.71%

Apple

AAPL -0.22%

and

Facebook

FB -2.39%

are due after the close. The electric-car maker is expected to record its first full-year profit.

The Federal Reserve releases a policy statement at 2 p.m. and Chairman Jerome Powell holds a press conference at 2:30 p.m.

Market Movers to Watch

—And then there’s GameStop. Its stock popped again ahead of the bell, soaring 73% in wildly volatile trading. CNBC reported that Melvin Capital, a hedge fund that has posted big losses so far this year in part because of a wager against the videogame retailer’s stock, had closed out its short position on Tuesday afternoon. The report caused a stir on the online platform Reddit—popular among day traders waging a battle against hedge-fund short-sellers—where some members wrote that it was an attempt to pull

GameStop

GME 109.79%

‘s share price back down. And

Elon Musk

weighed in on the stock again last night with a tweet, “Gamestonk!!“

—The show must go on: Another heavily shorted stock, movie-theater operator

AMC Entertainment Holdings,

AMC 133.87%

saw its shares vault more than 350% higher premarket.

—Headphone maker

Koss

KOSS 72.20%

has also joined the party, and its shares jumped 109% premarket.

—

Bed Bath & Beyond

BBBY 28.21%

resumed its upward trajectory, up 20% ahead of the bell. Online traders point to an early 2020 change in management and the fact that the company is buying back shares as signs that the share price will continue to increase.

—

Microsoft

MSFT 1.44%

shares are up 2.1% premarket. The software giant’s profit and sales jumped, propelled by pandemic-fueled demand for videogaming and accelerated adoption of its cloud-computing services.

—

Boeing

BA -4.46%

shares fell 3.3% premarket after the plane maker reported its biggest-ever annual loss and took a huge financial hit on its new 777X jetliner, reflecting the pandemic’s worsening toll.

—

Abbott Laboratories

ABT 1.12%

shares added 1.5% premarket after it logged hearty profit growth in the latest quarter as a surge in demand for its Covid-19 diagnostics services contributed to higher revenue.

—

Starbucks

SBUX -5.30%

slipped 3% premarket after the coffee chain reported that sales fell during the holiday quarter but showed signs of recovery, particularly in China. Its operating chief

Roz Brewer

is leaving to become CEO of

Walgreens

WBA 6.21%

Boots Alliance, where she’ll be the only Black woman leading a Fortune 500 company. Walgreens shares climbed 5%.

A Walgreens store in Tomball, Texas, Jan. 16, 2021.



Photo:

Jeff Lautenberger for The Wall Street Journal

—

AT&T

T -1.11%

shares slipped 1.3% premarket after it reported a fourth-quarter loss as it booked a $15.5 billion charge on its pay-TV business.

—Chip maker

Texas Instruments

TXN -2.81%

‘s shares slipped 1.7% premarket even though quarterly results and outlook both topped Wall Street estimates after Tuesday’s close.

Market Fact

Retail order flows have reached 20% of the U.S. stock market’s total, according to

UBS

research, twice what they were in 2010.

Chart of the Day

GameStop shares have become a favorite of online traders who are seeking to make money from buying options.

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