Tag Archives: Spirit Airlines Inc

Jobs report will make or break July’s rally

CNBC’s Jim Cramer on Monday said the most important data this week is the Bureau of Labor Statistics release of the July nonfarm payrolls report on Friday morning.

“If it shows some job growth with no wage inflation, then the fabulous July rally can stand. But if it shows booming hiring with exceptionally large wage increases, then some of this rally, if not much of it, is going to be repealed,” the “Mad Money” host said. 

Job growth has been strong this year, leading economists to say the U.S. is not in a recession even with two back-to-back quarters of negative GDP. 

Another strong jobs report could mean the Federal Reserve, which added a three-quarters a percentage point interest rate hike last week, will have to take stronger action to slow down the economy and inflation.

Cramer also previewed this week’s slate of earnings. All earnings and revenue estimates are courtesy of FactSet.

Tuesday: Uber, AMD, Starbucks, Airbnb, JetBlue, PayPal

Uber

  • Q2 2022 earnings release at TBD time; conference call at 8 a.m. ET
  • Projected loss: loss of 27 cents per share
  • Projected revenue: $7.36 billion

Cramer said he believes Uber will always struggle to make money unless it gets “real” autonomous vehicles.

AMD

  • Q2 2022 earnings release at 4:15 p.m. ET; conference call at 5 p.m. ET
  • Projected EPS: $1.03
  • Projected revenue: $6.53 billion

AMD will likely report a strong performance, Cramer predicted.

Starbucks

  • Q3 2022 earnings release at 4:05 p.m. ET; conference call at 5 p.m. ET
  • Projected EPS: 77 cents
  • Projected revenue: $8.15 billion

Cramer said he wants to bet on Starbucks CEO Howard Schultz, not against him.

Airbnb

  • Q2 2022 earnings release between 4 p.m. and 4:05 p.m. ET; conference call at 4:30 p.m. ET
  • Projected EPS: 45 cents
  • Projected revenue: $2.11 billion

The company will likely report it’s doing well, Cramer said, adding that he believes shares of Airbnb won’t go higher unless it turns its cash flow into actual earnings.

JetBlue

  • Q2 2022 earnings release at 7 a.m. ET; conference call at 10 a.m. ET
  • Projected per share loss: 11 cents
  • Projected revenue: $2.45 billion

Cramer said he believes the Justice Department will block JetBlue’s deal to acquire Spirit Airlines.

PayPal

  • Q2 2022 earnings release at 4:15 p.m. ET; conference call at 5 p.m. ET
  • Projected EPS: 87 cents
  • Projected revenue: $6.78 billion

“If PayPal misses again, this is Elliott’s ballgame,” Cramer said, referring to activist investor Elliott Management’s recently acquired stake in the payment platform.

Wednesday: CVS

  • Q2 2022 earnings release at 6:30 a.m. ET; conference call at 8 a.m. ET
  • Projected EPS: $2.18
  • Projected revenue: $76.41 billion

Cramer said he expects the retail giant to report great numbers.

Thursday: Eli Lilly, Warner Bros Discovery, DoorDash

Eli Lilly

  • Q2 2022 earnings release at 6:25 a.m. ET; conference call at 9 a.m. ET
  • Projected EPS: $1.70 
  • Projected revenue: $6.85 billion

Cramer said he believes the success of Eli Lilly’s new weight loss drug will help the company report a great quarter.

Warner Bros Discovery

  • Q2 2022 earnings release after the bell; conference call at 4:30 p.m. ET
  • Projected EPS: 12 cents
  • Projected revenue: $11.85 billion

Cramer said he believes the company will try to muddle through getting rid of its huge debt load totaling around $55 billion.

DoorDash

  • Q2 2022 earnings release at 4:05 p.m. ET; conference call at 6 p.m. ET
  • Projected per share loss: 21 cents
  • Projected revenue: $1.52 billion

Cramer said he’s unsure whether DoorDash will be able to revive its stock price.

Disclosure: Cramer’s Charitable Trust owns shares of AMD and Eli Lilly.

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How JetBlue’s takeover of Spirit could change air travel

Passengers wait in line at the Spirit Airlines check-in counter at Orlando International Airport.

Paul Hennessy | LightRocket | Getty Images

Spirit Airlines relented this week and agreed to sell itself to JetBlue Airways for $3.8 billion, hours after breaking off a merger agreement with Frontier Airlines that failed to win enough shareholder support.

The new deal would mean big changes for travelers if it passes regulatory hurdles.

JetBlue has earned a reputation for passenger comforts like relatively generous legroom, seatback screens, live television, free Wi-Fi, and complimentary snacks like Cheez-Its and Stellar vegan butter pretzel braids. It also offers business class, with lie-flat seats.

Spirit, by contrast, has become a punchline for its bare-bones service. The cabins in its bright yellow planes are more cramped, and passengers have to pay extra for “optional services” like carry-on luggage and getting to pick a seat.

“It’s historic. This is the first time anyone wanted Spirit Airlines,” quipped “The Late Show” host Stephen Colbert about the deal on Thursday.

Still, Spirit has expanded rapidly and profitably by offering cheap tickets to vacation hotspots that can sometimes run less than a trip to the movies or a few burgers. The airline’s “Big Front Seat,” however, does offer 36 inches of legroom for a surcharge of up to $250.

As the two distinct airlines push ahead with their plans to combine, here’s what passengers can expect:

What are JetBlue’s plans for Spirit?

JetBlue wants to get bigger, and Spirit has the planes and pilots to help it do that. The New York-based carrier plans to retrofit Spirit’s planes in JetBlue’s style, ripping out the packed-in seats for a roomier layout with more amenities.

Combined, the airlines would become the country’s fifth-largest carrier, behind American, Delta, United and Southwest. Both have a big presence in Florida and each has expanded into Central and South America as well as the Caribbean in recent years. JetBlue last year started flying to London.

The two carriers will continue to operate as separate airlines until after the deal closes, which is subject to regulatory approval. Afterward, passengers might be confused if they’re flying in Spirit planes that haven’t been retrofitted yet.

JetBlue has some experience with such situations through its alliance with American in the Northeast, which allows the carriers to sell seats on each others’ planes. Last year, JetBlue revamped its website to better highlight the differences in onboard features like business class seats or free Wi-Fi.

Despite comedians’ digs, Spirit has improved its reliability in recent years — and is faring better than JetBlue by some measures.

JetBlue came in last among 10 airlines in on-time arrivals this year through May, while Spirit ranked seventh, according to the Transportation Department’s latest available data.

So far this year, a third of JetBlue’s flights were delayed and 4% have been canceled, according to flight tracker FlightAware. By comparison, slightly more than a quarter of Spirit’s flights have arrived late and 2.7% have been canceled.

JetBlue’s CEO Robin Hayes says improving reliability is a priority. The carrier has scaled back growth plans, saying it did not want to overextend its crews and other resources.

“A bigger JetBlue that is late is not a better JetBlue,” said Henry Harteveldt, a former airline executive and founder of Atmosphere Research Group, a travel-industry consulting firm.

Is this the end of cheap fares?

The Biden administration has vowed to take a tough stance on both consolidation and inflation, so the disappearance of an ultra low-cost airline could be a tough sell.

“Spirit might not be an elegant experience, but they are cheap,” said William Kovacic, a professor at the George Washington School of Law and a former chair of the Federal Trade Commission. “If they disappear as an independent enterprise … is that going to remove a source of downward pressure on price?”

But JetBlue’s Hayes says the airline needs to grow quickly and better compete with big airlines that control more than three-quarters of the U.S. market. Hayes argues a bigger JetBlue would mean more relatively lower fares to more destinations.

Like some of the airline giants, JetBlue has already added certain low fares that mimic carriers like Spirit. Those tickets also don’t come with seat assignments or other perks that were once standard with a coach fare.

But JetBlue’s business model of offering more comforts costs more than Spirit’s, meaning it likely won’t offer as many of the rock bottom fares that Spirit does.

Frontier Airlines, meanwhile, is already saying it’s happy to take on a bigger share of the ultra-low-cost market after its Spirit deal fell apart. Shortly after the airlines announced the end of their agreement, Frontier projected it would grow 30% next year and started a fare sale with 1 million seats going for $19 apiece.

The airline will become the largest discount carrier in the U.S. if Spirit is ultimately acquired. Others include Allegiant and Sun Country.

“That just gives us a huge amount of breathing room for growth,” said Frontier CEO Barry Biffle. “That’s why this is such a windfall for our employees and our shareholders.”

When is this happening?

Not immediately. JetBlue and Spirit expect the deal won’t get regulatory approval until late 2023 or early 2024, then close in the first half of 2024.

Integrating airlines is a lengthy and costly process. For example, United and Continental flight attendants didn’t even fly together until eight years after those airlines merged in 2010.

Retrofitting planes can take years too, and JetBlue wouldn’t be able to start that process with Spirit’s fleet until at least 2025. But the airline notes it recently outfitted more than 100 of its Airbus planes with new interiors.

“We’ve got a lot of recent experience in how to do it,” said Hayes.

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JetBlue agrees to buy Spirit in $3.8 billion deal to create 5th-largest U.S. airline

LaGuardia International Airport Terminal A for JetBlue and Spirit Airlines in New York.

Leslie Josephs | CNBC

JetBlue Airways reached a deal to buy Spirit Airlines, hours after the discount carrier scrapped plans to merge with Frontier Airlines.

JetBlue said it will pay $33.50 a share in cash for Spirit in a $3.8 billion deal.

A JetBlue acquisition of Spirit would create the country’s fifth-largest carrier, and if approved by regulators, would leave Frontier as the largest discount carrier in the U.S.

JetBlue’s surprise, all-cash bid for Spirit in April had thrown Spirit’s plan to combine with fellow discounter Frontier into question. For months, Frontier and JetBlue competed for Spirit, each sweetening their offers, until the original merger plan fell apart earlier Wednesday, clearing the way for JetBlue.

Spirit said it planned to continue talks to sell itself to JetBlue after ending the Frontier agreement.

JetBlue executives have argued for months that buying Miramar, Florida-based Spirit would help it compete with large carriers like American, Delta, United and Southwest, which control most of the U.S. market, and fast-track its growth by giving it access to more Airbus jetliners and pilots, both of which are in short supply.

New York-based JetBlue wants to refurbish Spirit’s planes in JetBlue style, featuring seatback screens and more legroom.

Spirit previously rebuffed JetBlue’s bids and said such a deal wasn’t likely to be approved by regulators, in part because JetBlue’s alliance with American, which the Justice Department sued to block last year.

The deal faces a high hurdle for regulatory approval.

Spirit shares were up more than 4% in premarket trading after the deal was announced, while JetBlue was up 0.5%.

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Spirit again delays vote on Frontier deal to continue deal talks with budget airline and JetBlue

A Frontier Airlines plane near a Spirit Airlines plane at the Fort Lauderdale-Hollywood International Airport on May 16, 2022 in Fort Lauderdale, Florida.

Joe Raedle | Getty Images

Spirit Airlines is again delaying a shareholder vote set for Friday on its deal to merge with Frontier Airlines, a win for competing suitor JetBlue Airways, which wants to buy Spirit outright.

It is the third time Spirit has postponed the vote, which was originally scheduled for June 10. It was later pushed to June 28, but Spirit had delayed it until July 8 last week, a day before the vote.

Spirit said Thursday it would now hold the vote on July 15 so it could continue deal talks with both airlines.

The delays bode well for JetBlue Airways, which swooped in with a $3.6 billion all-cash offer to buy Spirit in April. Two months earlier, Frontier and Spirit announced a $2.9 billion cash-and-stock deal to combine into a discount behemoth.

“We are encouraged by our discussions with Spirit and are hopeful they now recognize that Spirit shareholders have indicated their clear, overwhelming preference for an agreement with JetBlue,” JetBlue’s CEO Robin Hayes said in a statement after the latest delay.

Spirit’s board repeatedly rejected JetBlue’s offers, including sweetened proposals, arguing it didn’t think regulators would sign off on the deal. JetBlue said both deals would face regulatory scrutiny, and Hayes said that Spirit’s board didn’t give JetBlue’s offers full consideration.

It wasn’t clear if Spirit would have the shareholder support it needed to get the Frontier deal passed ahead of the last scheduled meeting, according to a person familiar with the matter.

Frontier, which also sweetened its offer for Spirit, nearly doubling the cash portion to $4.13 a share, didn’t immediately comment on the latest vote delay.

Spirit shares were up 2% in afterhours trading, while Frontier shares were down less than 1%. JetBlue was little changed.

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Buttigieg urges airline CEOs to ensure reliability this summer after waves of disruptions

Passengers line up at John F. Kennedy International Airport after airlines announced numerous flights were canceled during the spread of the Omicron coronavirus variant on Christmas Eve in Queens, New York, December 24, 2021.

Dieu-Nalio Chery | Reuters

Transportation Secretary Pete Buttigieg urged airline CEOs on Thursday to ensure they can fly their schedules reliably this summer after a rise in delays and cancellations this year, according to a person familiar with the call.

The secretary asked airlines what steps they were taking to ensure that disruptions that occurred over Memorial Day weren’t repeated during July 4 weekend and the rest of the summer, the person said. Buttigieg also pushed airlines to improve customer service so that passengers can rebook quickly, the person said, describing the call as “productive and collaborative.”

Airlines have struggled with routine disruptions such as weather alongside staffing shortfalls and a surge in travel demand. JetBlue Airways, Delta Air Lines, Spirit Airlines, Southwest Airlines and Alaska Airlines have already scaled back their spring and summer travel schedules to give themselves more room to handle disruptions.

More than 7,100 U.S. flights were delayed and nearly 1,600 were canceled as multiple thunderstorms snarled travel to and from some of the country’s busiest airports, according to flight-tracking site FlightAware.

The Thursday meeting came after Sens. Richard Blumenthal (D-Conn.) and Edward Markey (D-Mass.) earlier this month wrote to U.S. airlines’ industry group, Airlines for America, pressing for more information about disruptions over Memorial Day weekend.

“We appreciated the opportunity to meet with Department of Transportation Secretary Buttigieg to discuss our shared commitment to prioritizing the safety and security of all travelers as they reunite with friends, family and colleagues this summer,” Nick Calio, CEO of Airlines for America, which represents large U.S. carriers, said in a statement.

Airline executives have occasionally placed blame on air traffic control.

The Federal Aviation Administration last month called carriers to Florida for a meeting about recent flight disruptions in the state, where flight hurdles include frequent thunderstorms, military exercises and space launches, as well as a surge in demand.

The FAA, which participated in Thursday’s meeting, had said it would increase staffing at a key air traffic facility in Florida, among other measures.

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Spirit Airlines, Didi Global and more

Take a look at some of the biggest movers in the premarket:

Spirit Airlines (SAVE) – Spirit jumped 6.1% in the premarket after JetBlue (JBLU) sweetened its bid for Spirit. JetBlue will increase its breakup fee for the deal to $350 million and pay part of that as a dividend if the deal is consummated, increasing the value to $31.50 per share. JetBlue shares were unchanged.

Didi Global (DIDI) – Didi shares skyrocketed in the premarket after The Wall Street Journal reported that China regulators have concluded a year-long probe and it is set to lift an order banning the company from adding new users.

Keurig Dr Pepper (KDP) – The beverage maker’s stock will be added to the S&P 500 index prior to the opening of trading on June 21, along with ON Semiconductor (ON) and real estate investment trust VICI Properties (VICI). Keurig rallied 7.9% in premarket action, with ON Semiconductor surging 7.2% and VICI jumping 8.4%.

Eli Lilly (LLY) – The drugmaker’s stock rose 1.2% in premarket trading, after announcing successful results in studies involving diabetes drugs Trulicity and Jardiance.

Under Armour (UAA) – Under Armour stock is among those being replaced in the S&P 500 on June 21. Under Armour will move to the S&P MidCap 400, along with laser maker IPG Photonics (IPGP). Under Armour lost 1.2% in the premarket.

Revlon (REV) – Revlon is in talks with lenders on pushing back debt payment deadlines as the cosmetics maker tries to avoid a bankruptcy filing, according to people familiar with the matter who spoke to The Wall Street Journal. The talks involve extending the maturity date on about $1.7 billion in debt that comes due as early as 2024. Revlon added 1.6% in premarket trading.

Starbucks (SBUX) – Starbucks is considering only external candidates to be its next CEO, according to interim Chief Executive Officer Howard Schultz. He told The Wall Street Journal that the company needs to add new talent to its executive ranks. Starbucks was up 1.8% in the premarket.

Apple (AAPL) – Apple shares are on watch as the company’s annual Worldwide Developers Conference begins. Apple stock has lost 16.9% so far this year amid concerns about a slowdown in demand. Apple gained 1.4% in premarket trading.

Solar companies – Shares of solar equipment providers rose in premarket trading, following a Reuters report saying the White House would declare a 24-month exemption from solar panel tariffs as well as other moves to spur U.S. solar panel production. SolarEdge Technologies (SEDG) added 4.3%, Sunrun (RUN) jumped 11.1%, First Solar (FSLR) gained 2.3%, JinkoSolar (JKS) rallied 5.9% and SunPower (SPWR) rallied 7.2%.

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Frontier offers $250M reverse breakup fee if Spirit merger is blocked

A Frontier Airlines plane near a Spirit Airlines plane at the Fort Lauderdale-Hollywood International Airport on May 16, 2022 in Fort Lauderdale, Florida.

Joe Raedle | Getty Images

Frontier Airlines’ parent company on Thursday said it would pay a $250 million reverse breakup fee to Spirit Airlines if regulators don’t approve the planned combination of the two discount carriers for antitrust reasons, an effort aimed at convincing investors to approve the deal next week as rival JetBlue Airways tries to buy Spirit outright.

“The combination of a higher reverse termination fee and a much greater likelihood to close in a Frontier merger provides substantially more regulatory protection for Spirit stockholders than the transaction proposed by JetBlue,” Mac Gardner, Spirit’s chairman said in a news release.

New York-based JetBlue offered $33 a share, or $3.6 billion cash for Spirit, in April, above the $2.9 billion cash-and-stock deal that Spirit and Frontier announced in February.

Spirit’s board rejected JetBlue’s advances, and JetBlue last month made a tender offer of $30 a share and has urged Spirit shareholders to vote against the deal.

Spirit said a deal with JetBlue wouldn’t likely be approved by regulators. JetBlue’s offer includes a $200 million reverse breakup fee if regulators don’t approve the acquisition.

On Tuesday, proxy advisory firm Institutional Shareholder Services advised Spirit shareholders to vote against the Frontier deal, raising concerns about the lack of a reverse termination fee.

Spirit’s shareholder meeting is set for June 10.

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JetBlue launches hostile takeover bid for Spirit Airlines

JetBlue Airways on Monday commenced a hostile all-cash takeover bid for Spirit Airlines, two weeks after the discount carrier rejected an offer from the larger rival.

JetBlue, which in early April offered $33 per share, is locked in a takeover battle for Spirit with Frontier Group Holdings and has argued a deal will help better compete with the “Big Four” U.S. airlines that control nearly 80% of the passenger market.

In a letter to Spirit shareholders on Monday, JetBlue offered $30 per share and said it was ready to “negotiate in good faith a consensual transaction at $33, subject to receiving necessary diligence.”

Spirit rejected the earlier offer, saying it had a low likelihood of winning approval from regulators.

JetBlue said on Monday it had filed a “Vote No” proxy statement urging Spirit shareholders to vote against the planned merger with Frontier, which cash and stock for each share of the discount carrier that was valued on Friday at $18.81 a share.

Shares of Spirit rose more than 17% to $19.90 in premarket trading. JetBlue shares were down 1.5%

Frontier and Spirit did not immediately respond to Reuters requests for comment.

Spirit will hold a shareholder meeting on June 10 to vote on its proposed merger with Frontier.

JetBlue said Monday that on March 29 its Chief Executive Robin Hayes called Spirit Chief Executive Edward Christie to inform him of the airline’s interest in buying Spirit and said in a letter “the combination of our two companies would create a leading player best positioned to serve our customers by offering increased flight schedules and more competitive fares.”

JetBlue, the sixth largest U.S. passenger carrier, would operate Spirit under the JetBlue brand and does not think any divestitures are needed, but promised a $200 million reverse break-up fee, or $1.80 per Spirit share, if the deal did not go through for antitrust reasons.

Spirit in April had sought a significantly higher reverse break-up fee, JetBlue said.

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Jim Cramer says these two airline stocks are the most profitable

CNBC’s Jim Cramer on Monday offered two airline stocks that he believes investors should pick up for their portfolios.

“There’s always a bull market somewhere and right now it’s flying at 30,000 feet high. My favorites are the two most profitable, that’s [Delta Air Lines] and [Alaska Air Group]. Just remember to ring the register gradually on the way up, because remember, these are airlines. They tend to be a very boom and bust industry,” the “Mad Money” host said.

Shares of Delta fell 0.96% on Monday while Alaska stock slipped 0.19%.

Delta said earlier this month that it expects unit revenues to increase double digits in the second quarter compared to pre-pandemic, three years ago. The company also expects overall sales to recover up to 97% of 2019 levels

Chief executive Ed Bastian said on “Squawk Box” on the heels of the company’s latest quarterly results that the airline recorded its highest ever monthly sales in terms of bookings in March and that this trend is continuing into April. 

“I’m still stunned,” Cramer said of Bastian’s comments.

Alaska set a sales record in March but trimmed its schedule 2% through the end of June due to a pilot shortage.

“Although they’re not one of the majors, it is extremely well-run, still, with a much higher mix of leisure travelers compared to business ones,” Cramer said.

“The only problem with this stock is that everybody knows Alaska Air’s one of the strongest players in the industry, which makes it harder for them to deliver an upside surprise. That’s why the stock is actually down a few bucks from where it was trading before the quarter,” he added.

Cramer said that even though there is a bull market in airlines, there are a few companies whose stocks investors should avoid.

“I’d steer clear of the companies involved in the bidding war for Spirit Airlines – that’s JetBlue, Frontier and Spirit itself,” he said.

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Biogen, Spirit, Robinhood and more

Check out the companies making headlines before the bell:

Biogen (BIIB) – Biogen fell 1% in premarket trading after the government announced that Medicare will limit coverage for Aduhelm, Biogen’s Alzheimer’s disease treatment. Coverage will only be provided for patients enrolled in clinical trials.

Spirit Airlines (SAVE) – Spirit said it will begin talks with JetBlue (JBLU) about its rival’s $3.6 billion takeover bid. Spirit had agreed earlier this year to be taken over by Frontier Airlines parent Frontier Group (ULCC) but said the JetBlue offer could lead to a “superior proposal.” Spirit rose 1.4% in premarket trading, while JetBlue added 1% and Frontier jumped 2.5%.

Robinhood Markets (HOOD) – The financial services and stock trading platform operator’s stock slid 4.1% premarket after Goldman Sachs downgraded it to “sell” from “neutral.” Goldman believes consensus estimates for Robinhood are too high and it sees a high bar for the company to achieve profitability in 2023.

WD-40 (WDFC) – WD-40 surged 9.5% in the premarket following better-than-expected quarterly earnings and revenue. The lubricant maker earned $1.41 per share for the quarter, 40 cents above estimates, although it cut its full-year guidance slightly due to inflationary challenges.

Designer Brands (DBI) – The footwear and accessories retailer raised its full-year earnings outlook and reinstated its quarterly dividend after a two-year pause. The upbeat forecast comes ahead of the company’s annual investor day. Designer Brands stock jumped 4.6% in the premarket.

Kroger (KR) – The supermarket operator’s stock added 2.6% in premarket action after Bank of America Securities upgraded it to “buy” from “neutral.” BofA said elevated food inflation will be among several upside earnings drivers.

CrowdStrike (CRWD) – CrowdStrike rallied 3.7% in premarket action after the cloud computing company received authorization to protect critical assets of the U.S. Department of Defense.

Workday (WDAY) – The finance and human resources software company struck a new $1 billion credit agreement with lenders, replacing a prior credit pact.

PriceSmart (PSMT) – PriceSmart beat estimates by 3 cents with a quarterly profit of $1.03 per share and the discount retailer’s revenue was slightly above Wall Street forecasts. Merchandise sales were above $1 billion for the first time ever and membership levels also set a record.

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