Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 21, 2022. REUTERS/Brendan McDermid
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Walmart cuts profit forecast; news hits retailers
McDonald’s up as sales, profit top estimates
Coca-Cola up on forecast raise
Indexes down: Dow 0.8%, S&P 500 1.3%, Nasdaq 2%
NEW YORK, July 26 (Reuters) – U.S. stocks were sharply lower on Tuesday afternoon, with Nasdaq down more than 2%, as a profit warning by Walmart dragged down retail shares and fueled fears about consumer spending.
Walmart (WMT.N) shares fell 8% after the retailer cut its full-year profit forecast late on Monday. Walmart blamed surging prices for food and fuel, and said it needed to cut prices to pare inventories. read more
Shares of Target Corp (TGT.N) declined 3.8% and Amazon.com Inc (AMZN.O) dropped 5.1%. read more
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Also, Amazon said it would raise fees for delivery and streaming service Prime in Europe by up to 43% a year. read more
Amazon was among the biggest drags on the Nasdaq and S&P 500, while consumer discretionary (.SPLRCD) fell more than 3% and led declines among S&P 500 sectors.
“The majority of companies that reported today beat earnings, and that’s been the case. But of course there have been some warnings, and that’s what the market is focusing on,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“Walmart basically pulled the plug, and most retailers are lower across the board.”
Meanwhile, Coca-Cola Co (KO.N) gained 1.9% after the company raised its full-year revenue forecast. McDonald’s Corp (MCD.N) rose 3% after beating quarterly expectations. read more
A busy week for earnings includes reports from Alphabet Inc (GOOGL.O) and Microsoft Corp (MSFT.O) after the bell. Microsoft was down 3.4% and Alphabet was down 2.9%.
The Dow Jones Industrial Average (.DJI) fell 239.66 points, or 0.75%, to 31,750.38, the S&P 500 (.SPX) lost 52.28 points, or 1.32%, to 3,914.56 and the Nasdaq Composite (.IXIC) dropped 239.38 points, or 2.03%, to 11,543.29.
The Federal Reserve started a two-day meeting and on Wednesday, it is expected to announce a 0.75 percentage point interest rate hike to fight inflation. read more Investors have worried that aggressive interest rate hikes by the Fed could tip the economy into recession.
Earnings from S&P 500 companies are expected to have risen 6.2% for the second quarter from the year-ago period, according to Refinitiv data.
Among the week’s heavy slate of economic news, data Tuesday showed U.S. consumer confidence dropped to nearly a 1-1/2-year low in July, pointing to slower economic growth at the start of the third quarter. read more
Advance second-quarter GDP data on Thursday is likely to be negative after the U.S. economy contracted in the first three months of the year.
Declining issues outnumbered advancing ones on the NYSE by a 1.82-to-1 ratio; on Nasdaq, a 1.51-to-1 ratio favored decliners.
The S&P 500 posted 1 new 52-week highs and 30 new lows; the Nasdaq Composite recorded 32 new highs and 123 new lows.
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Additional reporting by Shreyashi Sanyal and Aniruddha Ghosh in Bengaluru; Editing by Arun Koyyur, Anil D’Silva and David Gregorio
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PARIS, July 15 (Reuters) – American tourist Shawna Wilson says she has splashed out on four dresses at the high-end LVMH-owned department store La Samaritaine in Paris, tempted by the prices as the euro reached parity with the U.S. dollar.
The euro tumbled below $1 on Wednesday for the first time in two decades on fears that rising energy prices triggered by the Ukraine conflict could tip the European Union into a prolonged economic crisis. read more
“It’s like it’s on sale here,” said Wilson, 49, from Colorado, whose purchases included two dresses for her daughter. “Because the euro and the dollar are about the same, it definitely encourages us to spend.”
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The weak euro is big draw for tourists, particularly Americans – who are flagged as a key growth driver for the European luxury goods sector in the second quarter, according to analysts from Barclays.
The strong dollar versus the euro contributed to a four-fold rise in tourism spending in Europe in June compared with last year, with an acceleration in spending from Americans, analysts at UBS, citing data from VAT refund provider Planet, said.
The luxury sector has rebounded quickly from the pandemic as people rushed to spend money saved during lockdowns — buying themselves treats as socialising resumed.
But sales in China, the world’s largest luxury goods market, have plunged this year as a new wave of strict COVID-19 lockdowns shuttered shops, crimped demand and also meant fewer high-spending Chinese tourists in Europe. read more
So as Americans fill up transatlantic flights, their eagerness to cash in on the weak euro is helping to replace business lost as a result of the lack of Chinese visitors, who were the main source of luxury sales growth in Europe pre-pandemic.
Luxury goods companies Richemont (CFR.S) and Burberry on Friday reported higher sales in Europe, which helped to offset a drop of more than 30% in China. read more
France has benefited most from the tourists’ splurge.
Sales to tourists in France in June climbed to just 11.3% below 2019 levels, a positive sign for French luxury labels that have a big exposure to their home market, UBS analysts said.
The Dior logo is seen on a building under renovation of luxury brand Dior on the Champs-Elysees avenue in Paris, France, July 13, 2022. REUTERS/Rali Benallou NO RESALES. NO ARCHIVES
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American tourists were thronging Paris’s Avenue Montaigne this week, browsing in the luxury boutiques, which include designer names such as Louis Vuitton, Chanel and Gucci.
Cheryl Penn, 70, a realtor from Delray Beach, Florida, had already bought herself a skirt and stocked up on baby clothes for her granddaughter.
“We just got on the Avenue, so we just started our shopping spree,” said Penn.
“I like that the euro and the dollar are equal so I know exactly what I’m spending,” she said.
Jennifer Groner, a TikTok influencer, went on a shopping spree in Paris in April when the euro was under pressure versus the dollar.
“I’ve never seen anything like this in terms of the price savings,” she told Reuters, estimating that she snapped up a Birkin bag from Hermes in Paris for $4,000 less than it would have cost her in the United States, paying little over $9,000, thanks also to a VAT refund.
“You’re able to travel to Europe, take in the culture but at the same time buy a bag,” said Groner, who also bought handbags and accessories from Prada, Dior, Louis Vuitton and Chanel, for overall savings of $8,000 compared with U.S. prices, based on her calculations.
Monika Arora, founder of pursebop.com, a news and information website for luxury brands, said she believes the brands will eventually “harmonise” prices.
“They’ve done that many times before,” she said.
Chanel told Reuters in May it could implement further price increases in July to account for currency fluctuations – particularly the weakness of the euro – and inflation. read more
The pull of Paris remains strong for American shoppers even though New York’s high end shopping streets teem with luxury European designer brands.
“So many of my friends more than ever are taking little weekend trips to Paris and other places and they are shopping while they are there — because that’s what you do while you’re in Paris,” said Jennifer Tumpowski, outside Gucci’s flagship store on New York’s Fifth Avenue.
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Reporting by Lea Guedj, Doyinsola Oladipo, Gigi Zamora and Mimosa Spencer. Editing by Jane Merriman
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Average age of vessels up more than two years since 2017
New emissions rules may force older ships to go slower
One-fifth of ships fitted with energy saving devices
New vessels and alternative fuels the long-term solution
LONDON, July 11 (Reuters) – If shipping is the beating heart of global trade, its pulse is about to get slower.
Faced with uncertainty about which fuels to use in the long term to cut greenhouse gas emissions, many shipping firms are sticking with ageing fleets, but older vessels may soon have to start sailing slower to comply with new environmental rules.
From next year, the International Maritime Organization (IMO) requires all ships to calculate their annual carbon intensity based on a vessel’s emissions for the cargo it carries – and show that it is progressively coming down.
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While older ships can be retrofitted with devices to lower emissions, analysts say the quickest fix is just to go slower, with a 10% drop in cruising speeds slashing fuel usage by almost 30%, according to marine sector lender Danish Ship Finance.
“They’re basically being told to either improve the ship or slow down,” said Jan Dieleman, president of Cargill Ocean Transportation, the freight division of commodities trading house Cargill, which leases more than 600 vessels to ferry mainly food and energy products around the world.
Supply chains are already strained due to a surge in demand as economies rebound from lockdowns, pandemic disruptions at ports and a lack of new ships. If older vessels move into the slow lane as well, shipping capacity could take another hit at a time when record freight rates are driving up inflation. read more
At the moment, only about 5% of the world’s fleet can run on less-polluting alternatives to fuel oil, even though more than 40% of new ship orders will have that option, according to data from shipping analytics firm Clarksons Research.
But the new orders are not coming in fast enough to halt the trend of an ageing fleet across all three main types of cargo vessels: tankers, container ships and bulk carriers, the data provided to Reuters by Clarksons Research shows.
The average age of bulk carriers, which carry loose cargo such as grain and coal, had jumped to 11.4 years by June 2022 from 8.7 five years ago. Container ships now average 14.1 years, up from 11.6, while for tankers the average age was 12 years, up from 10.3 in 2017, according to the data.
“Some ship owners have preferred to buy second-hand vessels because of the uncertainties around future fuels,” said Stephen Gordon, managing director at Clarksons Research.
TALL ORDER
Orders for new container ships surged to a record high in 2021 and are still coming in at healthy clip this year, but as the appetite for new tankers and bulk carriers is much lower, the current order book across all three types of vessel only stands at about 10% of the fleet, down from over 50% in 2008.
Shipping companies are responsible for about 2.5% of the world’s carbon emissions and they are coming under increasing pressure to reduce both air and marine pollution.
The industry’s emissions rose last year, underlining the scale of the challenge in meeting the IMO’s target of halving emissions by 2050 from 2008 levels. The organization is now facing calls to go further and commit to net zero by 2050.
Some companies are testing and ordering vessels using alternative fuels such as methanol. Others are developing ships that can be retrofitted for fuels beyond oil, such as hydrogen or ammonia. There’s even a return to wind with vast, high-tech sails being tested by companies such as Cargill and Berge Bulk. read more
But many of the potential low-carbon technologies are in the early stages of development with limited commercial application, meaning the majority of new orders are still for vessels powered by fuel oil and other fossil fuels.
Of the vessels on order, more than a third, or 741, are set to use liquefied natural gas (LNG), 24 can be driven by methanol and six by hydrogen. Another 180 have some form of hybrid propulsion using batteries, Clarksons data shows.
Many shipping firms are hedging their bets mainly because prolonging the life span of vessels is cheaper and lower risk than new builds. They also gain breathing space while waiting for the winning new technologies to become mainstream.
“We have a clash between an industry that is very long-term investment oriented and a very fast pace of change,” said John Hatley, general manager of market innovation in North America at Finnish marine technology company Wartsila (WRT1V.HE).
Cargill says that as of now it doesn’t expect to have many new-build ships in its fleet, instead fitting energy saving devices to older vessels and prolonging their use, while there’s still uncertainty about future technology.
They’re not alone, with more than a fifth of global shipping capacity fitted with such devices, according to Clarksons.
Devices include Flettner rotors, tail spinning cylinders that act like a sail and let ships throttle back when it’s windy, or air lubrication systems that save fuel by covering the hull with small bubbles to reduce friction with seawater.
While energy saving devices go a long way to tackling emissions, ultimately, newer vessels are a better bet, said Peter Sand, analyst at shipping and air cargo data firm Xeneta.
“The next generation of fuel oil ships will be much more carbon efficient, they will be able to transport the same amount of cargo emitting only half of the emissions that they did over a decade ago,” he said.
THE POSEIDON PRINCIPLES
Shipping firms are set to come under growing pressure to comply with targets set by the IMO, which will rate the energy efficiency of ships on a scale of A to E, as the ratings will have a knock-on effect when it comes to finance and insurance.
In 2019, a group of banks agreed to consider efforts to cut carbon emissions when lending to shipping companies and established a global framework known as the Poseidon Principles.
The Poseidon Principles website shows that 28 banks, which include BNP Paribas (BNPP.PA), Citi , Danske Bank (DANSKE.CO), Societe Generale (SOGN.PA) and Standard Chartered (STAN.L), have committed to being consistent with IMO policies when assessing shipping portfolios on environmental grounds.
“Lending decisions on second-hand ships are going to become an issue on older tonnage,” said Michael Parker, chairman of Citigroup’s global shipping, logistics and offshore business, adding that environmental factors would be taken into account when lenders decided whether to refinance vessels.
“Second-hand ships will continue to get financing, provided that the owner is doing the right things about keeping that vessel as environmentally efficient as possible,” he said.
One early adopter of new technology is shipping giant A.P. Moller-Maersk . It has ordered 12 vessels which can run on green methanol produced from sources such as biomass, as well as fuel oil as there is not yet enough low carbon fuel available.
The Danish company doesn’t intend to use LNG because it is still a fossil fuel and it would prefer to shift directly to a lower carbon alternative.
Wartsila, meanwhile, is launching an ammonia-fueled engine next year, which it says is generating a lot of interest from customers, as well as a hydrogen engine in 2025.
Ship owners are facing a lot of uncertainty over how to “future proof” their fleets and avoid regretting investment decisions now within a couple of years, said Wartsila’s Hatley.
“They would rather wait for maybe the whole life of the ship of 20 years, but that’s even more uncertain now because of the pace of change.”
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Reporting by Sarah McFarlane; Editing by Veronica Brown and David Clarke
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June 23 (Reuters) – Sales of Juul e-cigarettes were blocked by the U.S. Food and Drug Administration on Thursday, in a major blow to the once high-flying firm whose products have been tied to a surge in teenage vaping.
The agency said the applications “lacked sufficient evidence” to show that sale of the products would be appropriate for public health, following a nearly two-year-long review of data provided by the company.
Some of the findings raised concerns due to insufficient and conflicting data, including whether potentially harmful chemicals could leach out of the Juul pods, the FDA said.
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“We respectfully disagree with the FDA’s findings … intend to seek a stay and are exploring all of our options under the FDA’s regulations and the law, including appealing the decision and engaging with our regulator,” said Joe Murillo, chief regulatory officer at Juul.
The company said it had appropriately characterized the toxicological profile of its products and that the data met the statutory standard of being “appropriate for the protection of the public health”.
Juul and other e-cigarette brands, including British American Tobacco’s (BATS.L) Vuse and Imperial Brands’ (IMB.L) Blu, had to meet a September 2020 deadline to file applications to the FDA showing the products provided a net benefit to public health.
The heath regulator had to judge whether each product was effective in getting smokers to quit and, if so, whether the benefits to smokers outweighed the potential health damage to new e-cigarette users, including teenagers, who never smoked.
BAT’s Vuse Solo was the first e-cigarette to get the agency’s clearance in October. read more
“The agency has dedicated significant resources to review products from the companies that account for most of the U.S. market. We recognize … many have played a disproportionate role in the rise in youth vaping,” FDA Commissioner Robert Califf said in a statement.
Teenage use of e-cigarettes surged with the rise in popularity of Juul in 2017 and 2018. Its use among high school students grew to 27.5% in 2019 from 11.7% in 2017, but fell to 11.3% in 2021, a federal survey showed.
Juul did not provide evidence to show the products were up to its standards and that raised “significant questions”, the FDA said, but added it has so far not received clinical information to suggest an immediate hazard tied to the device or pods.
An electronic cigarette device made by JUUL is shown in this picture illustration taken September 14, 2018. REUTERS/Mike Blake/Illustration
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“Without the data needed to determine relevant health risks, the FDA is issuing these marketing denial orders,” Michele Mital, acting director of the FDA’s Center for Tobacco Products, said.
Shares of tobacco giant Altria Group Inc (MO.N), which partly owns Juul, have lost about 7%, or nearly $6 billion in market value, since Wednesday when the Wall Street Journal first reported the FDA was preparing to order Juul’s e-cigarettes off the market.
‘HAWKISH FDA’
Juul had sought approval for its vaping device and tobacco and menthol flavored pods that had nicotine content of 5% and 3%.
E-cigarette makers have been selling products in the United States for years without being officially authorized by the FDA, as regulators repeatedly delayed deadlines for the companies to comply with federal guidelines.
Thursday’s decision was cheered by public health groups, who had long warned that e-cigarettes were getting a new generation of teenagers hooked on nicotine after major strides in reducing youth cigarette use.
In 2020, the FDA banned all flavors except tobacco and menthol for cartridge-based e-cigarettes such as Juul. The company pulled all other flavors including mint and mango in late 2019.
The Biden administration has been looking at other ways to help people quit smoking in an effort to cut down on preventable cancer deaths. It said this week it plans to propose a rule establishing a maximum nicotine level in cigarettes and other finished tobacco products to make them less addictive. read more
The surprise decision was an indication of a more hawkish FDA, some analysts said, as it was expected that some Juul products would be approved, following the agency’s clearance of several other e-cigarette products.
BAT overtook Juul as the leader of the U.S. vaping market in April, according to data Nielsen provided to brokerage J.P. Morgan. Juul led the market in 2021, with a 38% share of the $11 billion retail sales market.
“The only opportunity for Juul to create value may be in international markets, but we expect other regulators to take a similar stance to the FDA in limiting the marketing of e-cigarettes to minors,” Morningstar analyst Philip Gorham said.
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Reporting by Chris Kirkham and Aishwarya Venugopal; Additional reporting by Praveen Paramasivam, Ananya Mariam Rajesh and Uday Sampath in Bengaluru; Editing by Bill Berkrot, Sriraj Kalluvila and Shounak Dasgupta
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A woman holds a Juul e-cigarette while walking in New York, U.S., September 27, 2018. REUTERS/Brendan McDermid
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June 22 (Reuters) – The U.S. Food and Drug Administration is preparing to order Juul Labs Inc to take its e-cigarettes off the market in the United States, the Wall Street Journal reported on Wednesday, citing people familiar with the matter.
Shares in tobacco giant Altria Group (MO.N), which owns a 35% stake in the vaping products maker, fell 8.5% following the report. The decision could come as early as Wednesday, the report said.
Juul has faced heightened scrutiny from regulators, lawmakers and state attorneys general over the appeal of its nicotine products to teenagers. Under pressure, the company in late 2019 had halted U.S. sales of several flavors.
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The FDA declined to comment on the report, while Altria and Juul did not respond to requests for comment from Reuters.
“This clearly comes as a surprise to the market … we would expect that Juul would appeal the decision, and remain on the market through that process, which would likely take a year or more,” Cowen analyst Vivien Azer said.
The looming verdict comes nearly two years after Juul had applied for approval to keep selling e-cigarettes in the country.
The FDA’s review of the applications was based on whether the e-cigarettes are effective in getting smokers to quit and, if so, whether the benefits to smokers outweigh the health damage to new users, including teenagers.
In October, the FDA had allowed Juul rival British American Tobacco Plc (BATS.L) to market its Vuse Solo e-cigarettes and tobacco-flavored pods, the first-ever vapor product to get clearance from the health regulator. read more
The estimated fair value of Altria’s investment in Juul was $1.6 billion as of March end, a fraction of the $12.8 billion it paid in 2018, as a crackdown on vaping has upended the once fast-growing industry.
“The investment in Juul was always a mistake, the company paying top dollar for a business which was already clearly (on) the wrong side of the regulators,” said Rae Maile, analyst at Panmure Gordon.
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Reporting by Praveen Paramasivam and Deborah Sophia in Bengaluru; Editing by Devika Syamnath and Sriraj Kalluvila
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GENEVA, June 17 (Reuters) – The World Trade Organization agreed the first change to global trading rules in years on Friday as well as a deal to boost the supply of COVID-19 vaccines in a series of pledges that were heavy on compromise.
The deals were forged in the early hours of the sixth day of a conference of more than 100 trade ministers that was seen as a test of the ability of nations to strike multilateral trade deals amid geopolitical tensions heightened by the Ukraine war.
Delegates, who had expected a four-day conference, cheered after they passed seven agreements and declarations just before dawn on Friday.
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Director-General Ngozi Okonjo-Iweala told them: “The package of agreements you have reached will make a difference to the lives of people around the world. The outcomes demonstrate that the WTO is in fact capable of responding to emergencies of our time.”
Earlier she had appealed to WTO members to consider the “delicate balance” required after nearly round-the-clock talks that have at times been charged with anger and accusations.
The package, which the WTO chief called “unprecedented”, included the two highest profile deals under consideration – on fisheries and on a partial waiver of intellectual property (IP) rights for COVID-19 vaccines.
The accord to curb fishing subsidies is only the second multilateral agreement setting new global trading rules struck in the WTO’s 27-year history and is far more ambitious than the first, which was designed to cut red tape.
At one stage, a series of demands from India, which sees itself as the champion of poor farmers and fishermen as well as developing countries, appeared set to paralyse talks but accommodations were found, trade sources said.
The WTO’s rules dictate that all decisions are taken by consensus, with any single member able to exercise a veto.
‘LOT OF BUMPS’
“It was not an easy process. There were a lot of bumps, just like I predicted. It was like a roller coaster, but in the end we got there,” an exhausted but elated Okonjo-Iweala told a final news conference.
The deal to ban subsidies for illegal, unreported and unregulated fishing or fishing of an over-fished stock has the potential to reverse collapsing fish stocks. Though pared back significantly, it still drew approval.
“This is a turning point in addressing one of the key drivers of global over-fishing.” said Isabel Jarrett, manager of The Pew Charitable Trusts’ campaign to reduce harmful fisheries subsidies.
Okonjo-Iweala said it was the first step after 21 years of talks towards what she hoped would be a more comprehensive deal.
The deal on a partial IP waiver to allow developing countries to produce and export COVID-19 vaccines has divided the WTO for nearly two years, but finally passed. It has also drawn the fiercest criticism from campaign groups that say it barely expands on an existing exemption in WTO rules and is too narrow by not covering therapeutics and diagnostics.
“Put simply, it is a technocratic fudge aimed at saving reputations, not lives,” said Max Lawson, co-chair of the People’s Vaccine Alliance.
One agreement also reached was to maintain a moratorium on e-commerce tariffs, which business says is vital to allow the free flow of data worldwide. read more
Overall, many observers said the deals should boost the credibility of the WTO, which was weakened by former U.S. President Donald Trump’s crippling of its ability to intervene in trade disputes, and set it on a course for reform.
European Trade Commissioner Valdis Dombrovskis said the WTO meeting had clinched outcomes of global significance despite unprecedented challenges.
“The profound divergences here amply confirm that a deep reform of the organisation is urgently needed, across all its core functions,” he said, adding he would work to get it agreed at the next ministerial conference due in 2023.
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Writing by Emma Farge and Philip Blenkinsop; Editing by Richard Pullin and Raju Gopalakrishnan
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WASHINGTON, June 16 (Reuters) – Russian-flagged ships have been carrying grain harvested in Ukraine last season and transported it to Syria, U.S. satellite imagery company Maxar said on Thursday.
Maxar’s images showed two Russian-flagged bulk carrier ships docked in the Russian-controlled Crimean port of Sevastopol in May and being loaded with grain, the company said.
Days later, Maxar satellites collected images of the same ships docked in Syria, with their hatches open and semi-trucks lined up ready to haul the grain away, Maxar said. Syria and Russia are staunch allies.
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The company said another image from June also showed a different ship being loaded with grain in Sevastopol.
Ukraine has accused Russia of stealing grain from the territories that Russian forces occupied since its invasion began in late February. The war threatens to cause severe food shortages as Russia and Ukraine account for about 29% of global wheat exports.
Ukraine is one of the world’s largest grain exporters, and Western countries have accused Russia of creating the risk of global famine by shutting Ukraine’s Black Sea ports.
On June 8, the deputy head of Ukrainian agriculture producers union UAC said that Russia has stolen about 600,000 tonnes of grain from occupied territory and exported some of it.
Russia calls its action in Ukraine a “special military operation” claiming its aim was to disarm and “denazify” its neighbor. The West and Ukraine say this is a pretext for unprovoked aggression.
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Reporting by Kanishka Singh in Washington; editing by Grant McCool
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June 12 (Reuters) – It might look and smell like McDonald’s but now it’s Vkusno & tochka. The golden arches are gone, the filet-of-fish is simply a fish burger. The Big Mac has left Russia.
A new era for Russia’s fast-food and economic scene dawned on Sunday as McDonald’s (MCD.N) restaurants flung open their doors in Moscow under new Russian ownership and with the new name, which translates as “Tasty and that’s it”.
The rebranding of the outlets, three decades after the U.S. burger giant first opened in Moscow in a symbolic thaw between East and West, is once again a stark sign of a new world order.
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The fortunes of the revamped chain, which McDonald’s sold when it exited the country over the conflict in Ukraine, could provide a test of how successfully Russia’s economy can become more self-sufficient and withstand Western sanctions.
On Sunday, scores of people queued outside what was once McDonald’s flagship restaurant in central Moscow. The outlet sported a new logo – a stylised burger with two fries – plus a slogan reading: “The name changes, love stays”.
The queue was significantly smaller than the thousands of people who thronged to the original McDonald’s opening there in 1990 during the Soviet era.
Vkusno & tochka’s menu was smaller and did not offer the Big Mac and some other burgers. A double cheeseburger was going for 129 roubles ($2.31) compared with roughly 160 under McDonald’s and a fish burger for 169 roubles, compared with about 190 previously.
The composition of burgers has not changed and the equipment from McDonald’s has remained, said Alexander Merkulov, quality manager at the new company.
Sergei, a 15-year-old customer, saw little difference.
“The taste has stayed the same,” he said as tucked into a chicken burger and fries. “The cola is different, but there really is no change to the burger.”
Employees take part in preparations before the opening of a new restaurant, following McDonald’s Corp company’s decision to sell its restaurants in Russia to one of its local licensees that will rebrand them under a new name, in Moscow, Russia June 12, 2022. REUTERS/Evgenia Novozhenina
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MUCH DIFFERENCE?
The flagship Moscow restaurant is among 15 rebranded outlets that will initially open in and around the capital on Sunday. Oleg Paroev, chief executive of Vkusno & tochka, said the company was planning to reopen 200 restaurants in Russia by the end of June and all 850 by the end of the summer.
The chain will keep its old McDonald’s interior but will expunge any references to its former name, said Paroev, who was appointed Russia McDonald’s CEO weeks before Moscow sent tens of thousands of troops into Ukraine on Feb. 24.
“Our goal is that our guests do not notice a difference either in quality or ambience,” Paroev told a media conference in the restaurant. He said the chain would keep “affordable prices” but did not rule out slight rises in the near term.
McDonald’s closed its restaurants in Russia on March 14 and said in mid-May it decided to leave the market.
“For three months we did not work,” said Ruzanna, manager of a Moscow branch that will open in July. “Everyone is very pleased.”
Alexander Govor, the new owner of the chain, said up to 7 billion roubles ($125.56 million) would be invested this year in the business, which employs 51,000 people.
“The corporation asked me to, first of all, keep the headcount, to provide people with work. That’s what I’m going to do,” he added.
Govor said the company was looking for new suppliers of soft drinks as Coca Cola (KO.N), which has said it was suspending its business in Russia.
Moments after the press conference finished a man stood up in front of the cameras holding a sign that read “Bring back the Big Mac”. He was swiftly escorted out by restaurant staff.
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Reporting by Reuters; Editing by Pravin Char
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WASHINGTON, May 18 (Reuters) – President Joe Biden took steps on Wednesday to address the shortage of infant formula in the United States, invoking the Defense Production Act to help manufacturers obtain the ingredients needed to ramp up supply, the White House said.
Biden also directed U.S. agencies to use Defense Department commercial aircraft to bring formula into the United States from overseas.
Baby formula aisles at U.S. supermarkets have been decimated since top U.S. manufacturer Abbott Laboratories (ABT.N) in February recalled formulas after complaints of bacterial infections.
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On Monday, Abbott said it had reached an agreement with the U.S. health regulator to resume production of baby formula at its Michigan plant, a major step toward resolving the nationwide shortage.
In a letter to Health and Human Services Secretary Xavier Becerra and Agriculture Secretary Tom Vilsack, Biden noted that the industry should be producing more formula in the coming weeks and months.
Empty shelves show a shortage of baby formula at CVS in San Antonio, Texas, U.S. May 10, 2022. REUTERS/Kaylee Greenlee Beal
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“Imports of baby formula will serve as a bridge to this ramped-up production. Therefore I am requesting you take all appropriate measures available to get additional safe formula into the country immediately,” he said.
The White House said Biden was invoking the Defense Production Act to ensure manufacturers have the ingredients to make safe formula.
“The president is requiring suppliers to direct needed resources to infant formula manufacturers before any other customer who may have ordered that good,” the White House said.
In addition, he launched “Operation Fly Formula” to hasten imports of infant formula and get more formula to stores quickly.
Biden has directed HHS and USDA to use military commercial aircraft to pick up overseas infant formula that meets U.S. health and safety standards.
“Bypassing regular air freighting routes will speed up the importation and distribution of formula and serve as an immediate support as manufacturers continue to ramp up production,” the White House said.
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Reporting by Eric Beech and Steve Holland; Editing by Tim Ahmann and David Gregorio
Our Standards: The Thomson Reuters Trust Principles.
May 16 (Reuters) – McDonald’s Corp (MCD.N) on Monday became one of the biggest global names to exit Russia, laying out plans to sell all its restaurants after operating for more than 30 years in the country following its invasion of Ukraine.
The world’s largest burger chain, which owns about 84% of its nearly 850 restaurants in Russia, will take a related non-cash charge of up to $1.4 billion.
McDonald’s had in March decided to close its restaurants in the country, including the iconic Pushkin Square location in central Moscow – a symbol of flourishing American capitalism in the dying embers of the Soviet Union.
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In the Russia of the early nineties, the burger chain became a way to sample Western food and spirit for millions of people, even though the cost of one burger was several times bigger than many city dwellers’ daily budgets.
“Some might argue that providing access to food and continuing to employ tens of thousands of ordinary citizens is surely the right thing to do,” Chief Executive Chris Kempczinski said in a letter to employees. “But it is impossible to ignore the humanitarian crisis caused by the war in Ukraine.”
Though a vast majority of the stores in Russia are closed, a few franchised stores have stayed open, cashing in on its skyrocketing popularity. It generated about 9%, or $2 billion, of its revenue from Russia and Ukraine last year.
A logo of the McDonald’s restaurant is seen in the window with a reflection of Kremlin’s tower in central Moscow, Russia March 9, 2022. REUTERS/Maxim Shemetov
Over the weekend, long, snaking queues were seen at the restaurant in Moscow’s Leningradsky Station, one of the capital’s only branches that has remained open, social media footage showed.
McDonald’s said it was looking to sell its restaurants in Russia to a local buyer, but will retain its trademarks.
“Given the circumstances of the sale, the financial challenges faced by potential Russian buyers, and the fact that McDonald’s will not license its brand name or identity, it is unlikely the sale price will be anywhere near the pre-invasion book value of the business,” Neil Saunders, managing director of GlobalData, said.
McDonald’s said it would ensure its 62,000 employees in Russia continue to be paid until the close of any transaction and that they have future jobs with any potential buyer.
After McDonald’s decision to close stores in March, several American brands including Starbucks Corp (SBUX.O), PepsiCo Inc (PEP.O) and Coca-Cola Co (KO.N) followed suit, scrambling to comply with sanctions and deal with threats from the Kremlin that foreign-owned assets may be seized. read more
“I would not be surprised to see other companies follow McDonald’s lead of exiting the market,” Edward Jones analyst Brian Yarbrough said.
Earlier in the day, French carmaker Renault (RENA.PA) said it would sell its majority stake in Avtovaz (AVAZI_p.MM) to a Russian science institute. read more
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Reporting by Uday Sampath and Deborah Sophia in Bengaluru; Editing by Sriraj Kalluvila and Arun Koyyur
Our Standards: The Thomson Reuters Trust Principles.