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Walmart nabs Goldman Sachs bankers to help lead its new fintech start-up

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Cars drive past a Walmart store in Washington, DC, on August 18, 2020.

Nicholas Kamm | AFP | Getty Images

Walmart has nabbed two veteran bankers from Goldman Sachs to help spearhead its new fintech start-up, as the company looks beyond retail to drive revenue.

Omer Ismail, who leads Goldman’s consumer bank, and David Stark, another Goldman banker, are leaving for the retailer. A Goldman Sachs spokesman confirmed their departures. The news was first reported by Bloomberg.

Walmart announced in January that it is creating a new company to develop unique, affordable financial products for customers and employees. It has teamed up with Ribbit Capital, a venture capital firm, but will own a majority stake in the start-up. Walmart did not share the name of the company or when services would be available. Walmart executives, including CFO Brett Biggs and Walmart U.S. CEO John Furner, will be on the start-up’s board.

Walmart said it may acquire or partner with other fintech companies as part of the venture.

The discounter declined to share details beyond what the company previously announced.

With the hires, Walmart is putting money and muscle behind its financial services ambitions. The company is also underscoring its strategy for the years ahead. At a recent investor day, CEO Doug McMillon said the world’s largest retailer will use its size and scale to drive revenue in other areas, from opening health-care clinics to turning consumer data into targeted ads. He said Walmart will deepen customer loyalty with a growing ecosystem of products and its subscription service, Walmart+. It plans to step up investments to make that happen, boosting them to about $14 billion for this year versus the company’s typical annual rate of $10 billion to $11 billion.

Walmart already offers some financial services, such as a prepaid debit card that customers can load with money and use for purchases. The card is also an alternative for people who may have a challenged credit history, with features like no overdraft or monthly fees and no required minimum balance.

The company’s shares are up nearly 23% over the past year, bringing its market value to more than $374 billion.

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Macy’s (M) reports Q4 2020 earnings, sales beat

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People wear facemasks as they walk through Herald Square on January 8, 2021 in New York City.

Angela Weiss | AFP | Getty Images

Macy’s on Tuesday reported its first quarterly profit in a year, as its efforts to slash inventories during the holidays and rely less on deep discounting paid off.

The company said it expects 2021 to be a recovery and rebuilding year, as it claws its way back from the losses it has suffered during the pandemic. It offered an outlook that anticipates continued pandemic-related obstacles during the spring, with momentum escalating in the back half of 2021.

Like many of its peers, Macy’s has been hurt by shoppers taking fewer trips to the mall during the health crisis, and purchasing less clothing as they work from home and attend fewer special events.

Macy’s shares were up more than 3% in premarket trading.

Here’s how the company did during the fourth quarter ended Jan. 30, compared with what analysts were anticipating, based on a poll by Refinitiv:

  • Earnings per share: 80 cents, adjusted, vs. 12 cents, expected
  • Revenue: $6.78 billion vs. $6.5 billion, expected

Net income fell to $160 million, or 50 cents per share, from $340 million, or $1.09 per share, a year earlier. Excluding one-time charges, the company earned 80 cents per share, better than the 12 cents expected by analysts.

Sales fell to $6.78 billion from $8.34 billion a year ago. That came in better than the $6.5 billion that analysts were expecting.

Macy’s said its same-store sales, on an owned plus licensed basis, fell 17.1% from 2019 levels. Analysts were calling for a 21.3% drop, according to Refinitiv data.

CEO Jeff Gennette remarked the company saw the most strength in home, beauty, jewelry and watches during the quarter, as consumers diverted more of their spending away from clothes and fancy shoes, and more toward accessories and items to dress up their homes.

E-commerce sales were up 21% in the latest period. The company said digital sales accounted for 44% of net sales, while roughly a quarter of Macy’s digital sales were fulfilled from its stores during the quarter.

Macy’s said it expects its annual online sales will eclipse $10 billion within the next three years, as the department store operator anticipates shoppers’ habits of buying more on the internet will stick beyond the pandemic.

Macy’s is in the midst of pruning its real estate, too, to keep what it says are its better-preforming stores in America’s best malls open for business. In 2019, the company said it would shut 125 locations by 2023. Earlier this year, Macy’s released the locations of more than 40 stores to shut by mid-2021, as part of its three-year closure plan.

Looking to fiscal 2021, Macy’s is calling for sales to fall within a range of of $19.75 billion to $20.75 billion. Analysts had been calling for annual revenue of $20.13 billion.

It expects adjusted earnings per share to fall within a range of 40 cents to 90 cents. Analysts had forecast adjusted earnings of 77 cents a share.

Read the full press release and materials from Macy’s here.

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Business

Home Depot (HD) earnings Q4 2020

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People wear protective face masks outside Home Depot in the Flatiron district as the city continues Phase 4 of re-opening following restrictions imposed to slow the spread of coronavirus on August 8, 2020 in New York City.

Noam Galai | Getty Images

Home Depot’s fourth-quarter earnings surged past investors’ expectations on Tuesday, as consumers continued to invest in their homes due to the pandemic and strength of the real estate market.

Shares are down more than 1% in premarket trading, after the company did not provide an outlook for the year.

Home Depot Chief Financial Officer Richard McPhail said the retailer is not sure how long the pandemic will last and how that may influence consumer spending. He said if demand from the second half of last year continues, it would lead to slightly positive same-store sales growth and an operating margin of at least 14% this year.

Here’s what the company reported for the quarter ended Jan. 31 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $2.65 vs. $2.62 expected
  • Revenue: $32.26 billion vs. $30.73 billion expected

Home Depot’s net income rose to $2.86 billion, or $2.65 per share, up from $2.48 billion, or $2.28 per share, a year earlier. Analysts surveyed by Refinitiv expected earnings per share of $2.62.

Net sales rose 25% to $32.26 billion from $25.78 billion a year ago, and outpacing estimates of $30.73 billion.

Its U.S. same-store sales jumped by 25%. Its overall same-store sales grew by 24.5%, higher than the 19.2% growth that analysts expected, according to a StreetAccount survey. The growth is in line with what Home Depot reported during the second and third quarter, when it benefited from keeping doors open as an essential retailer.

Home Depot also announced Tuesday that its board approved a 10% increase in its quarterly dividend to $1.65 per share.

This story is developing and will be updated.

Read the complete press release here.

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Business

Walmart (WMT) earnings Q4 2021 miss expectations

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Walmart’s fourth-quarter earnings felt short of Wall Street’s expectations on Thursday, as the retailer aims to turn the strength of its e-commerce business during the pandemic into lasting momentum and higher profits.

Shares are down nearly 5% in premarket trading.

The discounter’s e-commerce sales in the U.S. grew by 69% — a large number, but the slowest growth rate since the start of the global health crisis. Same-store sales in the U.S. grew by 8.6%, higher than the increase of 5.8% expected by a StreetAccount survey. Its subsidiary, Sam’s Club, also reported low single-digit same-store sales growth, excluding fuel and tobacco.

Walmart, however, cautioned that it expects sales to moderate this year. It said earnings per share will decline slightly, but be flat to higher after excluding divestitures. The company’s tailwinds from pandemic trends may also fade, as more Americans get Covid-19 vaccines and spend their budget in other ways, such as going out to dinner or filling up the gas tank on a commute back to the office.

Walmart CEO Doug McMillon said that the company has stepped up investments to keep up with the significant ways that retail has changed over the past year. He said it will also boost the wage of U.S. workers, raising the average for hourly employees to above $15 per hour. 

“This is a time to be even more aggressive because of the opportunity we see in front of us,” he said in a news release. “The strategy, team and capabilities are in place. We have momentum with customers, and our financial position is strong.”

Walmart swung to a loss of $2.09 billion, or 74 cents per share, from earnings of  $4.14 billion, or $1.45 share, a year earlier. The company said a loss on its U.K. and Japanese operations reduced earnings by $2.66 per share, which was partially offset by a gain of 49 cents per share on equity investments.

Excluding these and other items, Walmart earned $1.39 per share, missing analysts estimates. 

Walmart’s e-commerce business has had dramatic gains, but it has not yet turned a profit. The company’s Chief Financial Officer Brett Biggs told CNBC that its e-commerce margins continue to improve, however.

He said Walmart plans to spend $14 billion on capital expenditures this fiscal year, up from a rate of $10 billion to $11 billion as it invests in supply chain, automation and ways to improve the customer experience.

Total revenue grew by 7.3% to $152.1 billion from $141.67 billion a year earlier, topping Wall Street’s expectations of $148.30 billion.

Its membership warehouse club, Sam’s Club, reported same-store sales grew by 8.5% excluding fuel and tobacco. The membership warehouse club’s e-commerce sales jumped by 42%.

Walmart is raising its dividend by a penny to 55 cents per share and approved a $20 billion stock buyback program.

This story is developing and will be updated.

Read the full press release here.

—CNBC’s Courtney Reagan contributed to this report.

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Business

How CVS and other retailers will dole out any surplus Covid vaccine doses

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A healthcare worker wearing a protective mask fills a syringe with a dose of the Pfizer-BioNTech Covid-19 vaccine at a large scale vaccination site in Sacramento, California, Feb. 4, 2021.

David Paul Morris | Bloomberg | Getty Images

As Covid-19 vaccination efforts get underway at major retailers and pharmacies such as CVS and Walgreens, what to do with excess vaccine becomes a bigger question.

Both versions of the vaccine need to be stored at very low temperatures. After thawing, the vaccine must be administered within hours. In addition, vaccine vials contain multiple doses.

Companies told The Wall Street Journal that they are planning to use waitlists and will consider vaccinating employees who are eligible when excess supplies are available. The goal is to avoid wasting any doses, which continue to be in short supply.

Starting Thursday, vaccine doses are being sent to thousands of pharmacies and grocery stores such as CVS and Walmart in the U.S. This move will start with about 6,500 retail locations and help accelerate the rollout, ensuring that more Americans will be protected from Covid-19.

The companies are scheduling appointments based on the amount of vaccine they receive at each location, but they could find themselves with surplus vaccine if customers don’t show up for an appointment or if a vaccine vial contains more vaccine than anticipated.

Currently only two vaccines, one from Pfizer-BioNTech and another from Moderna, have received emergency use authorization from the Food and Drug Administration. Both types require two doses of the shot to be effective.

The retailers are having to navigate varying state and local rules on eligibility requirements as they manage waitlists and determine what to do with any excess doses. In some states, retail workers qualify to receive the vaccine, while in other states they are not considered a high priority group unless they are above a certain age or have a specific medical condition.

A Walmart spokeswoman told the paper that the retailer has approached shoppers or workers who qualify under a state’s guidelines with an opportunity to be vaccinated if there is surplus supply.

Walmart worked with state health departments on protocols to avoid waste, a Walmart spokesperson told CNBC. These protocols allow excess opened and available doses to be administered to individuals, including employees, who fall under eligible groups in order of priority.

A Walgreens spokesperson told CNBC that they will consider their employees for the remaining doses and will communicate with state and local jurisdictions for doses beyond that.

Meanwhile, pharmacists at CVS will keep a list of qualified patients by state and will use that to determine who receives leftover doses of the vaccine, senior vice president of CVS Health Chris Cox told CNBC.

Read the full story in The Wall Street Journal.

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Business

Aldi plans to add 100 new stores in the U.S., expand curbside pickup

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A sign hangs outside an Aldi grocery store in Chicago, Illinois.

Scott Olson | Getty Images

The German supermarket chain Aldi said Wednesday it plans to open up about 100 new stores in the U.S. and extend its curbside pickup service to 500 additional stores by the end of the year.

The company said it will focus on adding new locations in Arizona, California, Florida and the Northeast.

Aldi’s expansion of curbside pickup will make the service available at more than 1,200 stores, the company said. It still plans to offer grocery delivery through Instacart from most of its stores.

Curbside pickup has become a popular service during the coronavirus pandemic, as shoppers looked to avoid going inside stores during the health crisis. Retailers expect consumers to continue to seek out this option even as Covid cases subside because it makes shopping more convienent.

The supermarket chain, which has more than 2,000 stores in 37 states, will also construct a regional headquarters and distribution center in Loxley, Alabama to support the Gulf Coast region. This facility will allow Aldi to open up to 35 new stores in the Gulf Coast region, with the first two slated to open in Tallahassee, Florida later this year.

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Heart-shaped Kate Spade bag sold out after going viral on TikTok: Tapestry CEO

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Tapestry CEO Joanne Crevoiserat told CNBC on Thursday the company saw a surge in demand for a heart-shaped Kate Spade bag that went viral on TikTok last month.

“We were able to harness that. The bag sold out. We got it restocked. We’re learning how to engage that community better and better,” Crevoiserat said in an interview on “Closing Bell,” after the retailer reported better-than-expected earnings for its holiday quarter earlier in the day.

Crevoiserat’s comments provide another example of the potential social media platforms like TikTok represent for Tapestry and other consumer brands. Its influence appears to stretch categories, too. For Tapestry, the increasingly popular app drove sales for its crossbody heart bag while toy companies also have seen sales growth linked to TikTok during the pandemic.

TikTok’s potential for brands is perhaps best exemplified by Walmart’s decision to pursue a minority stake in the app’s U.S. operations. The deal, first announced in September, remains pending. But in October, Walmart CEO Doug McMillon detailed TikTok’s allure for the retail giant in a CNBC interview.

“If you’re watching a TikTok video and somebody’s got a piece of apparel or an item on it that you really like, what if you could just quickly purchase that item?” McMillon said then on “Squawk Box.” “That’s what we’re seeing happen in countries around the world. And it’s intriguing to us, and we would like to be part of it.”

Tapestry shares closed higher by 4.6% Thursday to $36.18 apiece after the New York-based company beat Wall Street forecasts on the top and bottom lines. Although quarterly sales of $1.69 billion were down 7% compared with a year earlier, it reported a triple-digit increase in digital sales globally. In addition to Kate Spade, Tapestry owns the Coach and Stuart Weitzman brands.

The company’s stock is up more than 160% since early August and notched a fresh 52-week high during Thursday’s session.

Crevoiserat said she’s been pleased with how Tapestry scaled up its e-commerce operations during the pandemic, as consumers stayed home and did more shopping online. The company’s $1.3 billion online sales over the past 12 months is “more than double where we were a year ago,” she said. “We’ve had the capabilities and we’re getting better and better at engaging consumers on digital channels and on social channels.”

Tapestry still sees brick-and-mortar locations playing a key role even with its online growth, said Crevoiserat, who became permanent CEO in October. She’d been serving as interim since July.

‘We think stores are still important, and we’ll continue to innovate in our stores,” she said. “We have raised our expectations around productivity and profitability for our store fleet, but we think that physical touch point, that manifestation of the brand in a physical way, is important for consumers.”

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Business

Jack Ma tension with Beijing casts shadow over Alibaba’s future

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HANGZHOU, CHINA – NOVEMBER 13: Alibaba founder Jack Ma attends the 5th World Zhejiang Entrepreneurs Convention at Hangzhou International Expo Centre on November 13, 2019 in Hangzhou, Zhejiang Province of China.

VCG | Getty Images

GUANGZHOU, China — Jack Ma, Alibaba’s high-profile founder appears to be on the wrong side of the Chinese government, sparking a chain of events that has upped regulatory scrutiny on the e-commerce giant and cast uncertainty over its future.

Even after Alibaba reported December-quarter earnings above expectations, analysts and experts have warned that Ma’s friction with Beijing could hurt growth.

“Investors are looking at Alibaba with a much more careful eye after having been attracted by the growth story and the founder’s global profile,” Rebecca Fannin, author of “Tech Titans of China,” told CNBC by email.

“The current frictions are a new reality for investors who may not have carefully considered how the company’s rise as a powerful tech titan could be a threat to the status quo.”

It began in October when Ma made some negative comments about Chinese financial regulators just days ahead of the initial public offering (IPO) of Ant Group in Shanghai and Hong Kong, which would have been the world’s biggest. Ma also founded Ant Group and Alibaba owns about a third of the company.

There are two major concerns now. First, that Ant Group could be forced to restructure and even scale back some of its businesses like lending which has driven its growth. Such moves could seriously slash its valuation. The second concern is whether regulators might force Alibaba to break up or change parts of it core commerce business, which is its biggest profit driver.

“For now the greatest risk seems to be around investors’ confidence in the Alibaba brand and ecosystem,” Neil Campling, head of tech, media and telecom research at Mirabaud Securities, told CNBC by email.

“But if there is tighter regulation for the core drivers of the Alibaba platform then it could certainly stunt the growth of Alibaba. After all innovation and intricate weaving of the different aspects of the ecosystem combine to bring economies of scale and growth.”

Campling has a long-term buy rating on Alibaba’s stock.

Just ‘noise’ for long-term investors

Fannin believes Ma’s friction with Beijing will “ease up” but it will take some “agility on Alibaba’s part to deal with government pressure, changing consumer needs in a digital economy, and investor concerns.”

Alibaba’s U.S.-listed stock has been under pressure since the Ant Group IPO was pulled, falling from a record closing high of $317.14 on Oct. 27 to $254.50 at the close on Tuesday, a nearly 20% drop.

But some analysts and investors remain bullish.

Mizuho increased its price target on the stock from $270 to $285 on Tuesday saying the “stock (is attractive with the regulatory overhang mostly priced in.”

Matthew Schopfer, head of research at Infusive, an asset manager which is invested in Alibaba, said that the recent concern around the tech giant “will prove to be noise for the long-term investor.”

“Alibaba is a leading example of China’s technological capabilities and we do not expect the government to permanently damage the business. Additionally, heightened regulation will only further entrench the scale players like Alibaba,” Schopfer told CNBC by email.

“When we get to the other side of these regulatory headwinds, we think the market will again focus on Alibaba and its platforms as a critical part of the Chinese consumer’s everyday life and a major beneficiary from growth in Chinese spending power and the increasing digitalization of consumption.”

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Jeff Bezos to step down as Amazon CEO, Andy Jassy to take over in Q3

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Rep. Ken Buck, R-Colo., a member of the House Judiciary Committee, said on Twitter shortly after the announcement that he has questions for Jassy, hinting at an early hurdle when Jassy is installed.

Bezos said he will stay engaged in important Amazon projects but will also have more time to focus on the Bezos Earth Fund, his Blue Origin spaceship company, The Washington Post and the Amazon Day 1 Fund.

“As much as I still tap dance into the office, I’m excited about this transition,” Bezos said in his internal announcement. “Millions of customers depend on us for our services, and more than a million employees depend on us for their livelihoods. Being the CEO of Amazon is a deep responsibility, and it’s consuming. When you have a responsibility like that, it’s hard to put attention on anything else.”

Industry CEOs and Amazon competitors congratulated Bezos and Jassy on the coming transition, with Microsoft CEO Satya Nadella calling Jassy’s promotion “well-deserved.”

Alphabet CEO Sundar Pichai offered Bezos “best wishes” on his other projects.

Fellow Amazonians:

I’m excited to announce that this Q3 I’ll transition to Executive Chair of the Amazon Board and Andy Jassy will become CEO. In the Exec Chair role, I intend to focus my energies and attention on new products and early initiatives. Andy is well known inside the company and has been at Amazon almost as long as I have. He will be an outstanding leader, and he has my full confidence.

This journey began some 27 years ago. Amazon was only an idea, and it had no name. The question I was asked most frequently at that time was, “What’s the internet?” Blessedly, I haven’t had to explain that in a long while.

Today, we employ 1.3 million talented, dedicated people, serve hundreds of millions of customers and businesses, and are widely recognized as one of the most successful companies in the world.

How did that happen? Invention. Invention is the root of our success. We’ve done crazy things together, and then made them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more. If you get it right, a few years after a surprising invention, the new thing has become normal. People yawn. And that yawn is the greatest compliment an inventor can receive.

I don’t know of another company with an invention track record as good as Amazon’s, and I believe we are at our most inventive right now. I hope you are as proud of our inventiveness as I am. I think you should be.

As Amazon became large, we decided to use our scale and scope to lead on important social issues. Two high-impact examples: our $15 minimum wage and the Climate Pledge. In both cases, we staked out leadership positions and then asked others to come along with us. In both cases, it’s working. Other large companies are coming our way. I hope you’re proud of that as well.

I find my work meaningful and fun. I get to work with the smartest, most talented, most ingenious teammates. When times have been good, you’ve been humble. When times have been tough, you’ve been strong and supportive, and we’ve made each other laugh. It is a joy to work on this team.

As much as I still tap dance into the office, I’m excited about this transition. Millions of customers depend on us for our services, and more than a million employees depend on us for their livelihoods. Being the CEO of Amazon is a deep responsibility, and it’s consuming. When you have a responsibility like that, it’s hard to put attention on anything else. As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions. I’ve never had more energy, and this isn’t about retiring. I’m super passionate about the impact I think these organizations can have.

Amazon couldn’t be better positioned for the future. We are firing on all cylinders, just as the world needs us to. We have things in the pipeline that will continue to astonish. We serve individuals and enterprises, and we’ve pioneered two complete industries and a whole new class of devices. We are leaders in areas as varied as machine learning and logistics, and if an Amazonian’s idea requires yet another new institutional skill, we’re flexible enough and patient enough to learn it.

Keep inventing, and don’t despair when at first the idea looks crazy. Remember to wander. Let curiosity be your compass. It remains Day 1.

Jeff



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Starbucks (SBUX) Q1 2021 earnings top estimates

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Kevin Johnson, CEO, Starbucks

Scott Mlyn | CNBC

Starbucks on Tuesday reported that its U.S. same-store sales fell 5% during its fiscal first quarter after a surge of new Covid-19 cases led to harsher dining restrictions.

The company also announced that COO Roz Brewer will be leaving Starbucks at the end of February to become chief executive of another publicly traded company. Her responsibilities will be split up among other members of the existing leadership team.

Shares fell more than 1% in extended trading.

Here’s what the company reported for the quarter ended Dec. 27 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: 61 cents, adjusted, vs. 55 cents expected
  • Revenue: $6.75 billion vs. $6.93 billion expected

The company reported fiscal first-quarter net income of $622.2 million, or 53 cents per share, down from $885.7 million, or 74 cents per share, a year earlier.

Excluding items, the coffee giant earned 61 cents per share, topping the 55 cents per share expected by analysts surveyed by Refinitiv.

Net sales dropped 5% to $6.75 billion, falling short of expectations of $6.93 billion. Worldwide, the company’s same-store sales fell 5%. The chain saw 19% fewer transactions during the quarter, but the average ticket jumped 17%.

In the U.S., same-store sales fell by 5%. The company’s recovery in its home market was hampered by another surge of new Covid-19 cases as the temperatures grew colder. The number of Starbucks Rewards members who have been active in the last 90 days rose 15% to 21.8 million people.

In China, Starbucks’ second-largest market, same-store sales turned positive for the first time since the health crisis started. Its same-store sales rose 5%, although transactions still declined compared with the same time a year ago.

The company opened 278 net new cafes during the quarter and now has a footprint nearing 33,000 locations.

Next quarter, Starbucks is forecasting U.S. same-store sales growth of 5% to 10%. In China, same-store sales are expected to nearly double. It expects to earn 36 cents to 41 cents per share. On an adjusted basis, it’s projecting earnings per share of 45 cents to 50 cents.

The company also raised its outlook for its fiscal 2021 earnings. It now expects earnings per share between $2.42 to $2.62, up from its prior forecast of $2.34 to $2.54.

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