- Kroger and Albertsons Companies Announce Comprehensive Divestiture Plan with C&S Wholesale Grocers, LLC in Connection with Proposed Merger PR Newswire
- Report: Kroger, Albertsons to sell 400 grocery stores as part of merger deal WLWT
- Bloomberg News Now: Listen to the Latest Headlines This Hour Bloomberg
- Kroger looks to sell 400 stores before merger: report FOX31 Denver
- Kroger, Albertsons to sell more than 400 stores to C&S Wholesale in a $1.9 billion cash deal in connection with the proposed merger MarketWatch
- View Full Coverage on Google News
Tag Archives: Wholesale
Chevron Rides High Oil Prices to Record $35.5 Billion Annual Profit
Chevron Corp.
CVX -4.44%
banked historic profit last year as the pandemic receded and the war in Ukraine pushed oil prices to multiyear highs, with its shares climbing 53% for the year while other sectors tumbled.
The U.S. oil company in its quarterly earnings reported Friday that it collected $35.5 billion in its highest-ever annual profit in 2022, more than double the prior year and about one-third higher than its previous record in 2011. Almost $50 billion in cash streamed in from its oil-leveraged operations, another record that is underpinning plans to pay investors through a new $75 billion share-repurchase program over the next several years.
That payout, announced Wednesday, is roughly equivalent to the stock-market value of companies such as the big-box retailer
Target Corp.
, the pharmaceutical firm
Moderna Inc.
and
Airbnb Inc.
Chevron, the second-largest U.S. oil company after
Exxon Mobil Corp.
, posted revenue of $246.3 billion, up from $162.5 billion the previous year. The San Ramon, Calif., company reported a fourth-quarter profit of $6.4 billion, up from $5.1 billion in the same period the prior year.
The fourth-quarter results came short of analyst expectations, and Chevron shares closed down more than 4% Friday.
For all of its recent winnings, though, Chevron and its rival oil-and-gas producers could face a rockier year in 2023, according to investors and analysts, if an anticipated slowdown in U.S. economic growth dents demand for oil, and if China’s reopening from strict Covid-19 restrictions unfolds slowly.
U.S. oil prices have held steady this year, but are off about 36% from last year’s peak. The industry is proceeding with caution, holding capital expenditures for 2023 below prepandemic levels and saying production will grow only modestly. Chevron has said it plans to spend about $17 billion in capital expenditures this year, up more than 25% from the prior year, but $3 billion less than it planned to spend in 2020 before Covid-19 took root.
Oil companies are still outperforming other sectors such as tech and finance, which have seen widespread job cuts in recent weeks. The energy segment of the S&P 500 index has climbed 43.7% over the past year, compared with a 6.7% drop for the broader index.
Chevron Chief Executive Mike Wirth said the company is unsure of what 2023 will bring after global energy supplies were squeezed because of geopolitical events last year, particularly in Europe following Russia’s invasion of Ukraine. He said markets appeared to be stabilizing.
“We certainly have seen a very unusual and volatile year in 2022,” Mr. Wirth said, noting the European energy crisis has proven less dire than anticipated thanks to milder winter weather, growing natural gas inventories in Europe. “China’s economy has been slow throughout the year, which looks to be turning around. It’s good that markets have calmed.”
Chevron projects its output in the Permian Basin of West Texas and New Mexico to grow at a slower pace this year.
Photo:
David Goldman/Associated Press
Chevron hit a record in U.S. oil-and-gas production in 2022, increasing 4% to about 1.2 million barrels of oil equivalent a day, stemming from its increased focus on capital investments in the Western Hemisphere, particularly in the Permian Basin of West Texas and New Mexico, where it boosted output 16% last year. Worldwide, Chevron’s oil-and-gas production was down 3.2% compared with the prior year, at 2.99 million barrels of oil-equivalent a day.
Its overall return on capital employed came in at 20%, it said.
“There aren’t many sectors generating the type of free cash flow that energy is right now,” said
Jeff Wyll,
an analyst at investment firm Neuberger Berman, which has invested in Chevron. “The sector really can’t be ignored. Given the supply-demand balance, you have to have some things go wrong here to see a pullback in oil prices.”
Even so, institutional investors have shown limited interest so far in returning to the energy sector, after years of poor returns and heightened concerns about their environmental impact prompted large financiers to sell off their stakes in oil-and-gas companies or stop investing in drillers outright.
Pete Bowden,
global head of industrial, energy and infrastructure banking at
Jefferies Financial Group Inc.,
said energy companies in the S&P 500 index are throwing off 12% of the group’s free-cash flow, but only account for about 5% of the index’s weighting—an indication their stock prices are lagging behind.
Investors’ concerns around environmental, social and governance-related issues are a constraint on the share prices of energy companies, “yet the earnings power of these businesses is superior to the earnings power of companies in other sectors,” he said.
Chevron and others have faced criticism from the Biden administration and others that they are giving priority to shareholder returns over pumping oil and gas at a time when global supplies are tight and Americans are feeling pain at the pump. On Thursday, the White House assailed Chevron’s $75 billion buyout program, saying the payout was proof the company could boost production but was choosing to reward investors instead.
Pierre Breber,
Chevron’s finance chief, said the company expects oil prices to be volatile but within a range needed to sustain its dividend and investments. There are some optimistic signs, he added, including that the U.S. economy grew faster than expected in the fourth quarter, at 2.9%.
“Supply is tight. Oil-field services are near capacity, and we continue to have sanctions on Russian production,” Mr. Breber said. “You’re seeing international flights out of China are way up, and low unemployment in the U.S.”
Mr. Breber said Chevron’s output in the Permian this year is expected to grow at a slower pace, around 10%, because it has exhausted much of its inventory of wells that it had drilled but hadn’t brought into production.
Exxon, which has typically posted quarterly earnings on the same day as Chevron, will report Tuesday. Analysts expect it will also post record profit for 2022, according to FactSet.
Both companies expect to slow their output growth this year in the Permian, considered their growth engine. The two U.S. oil majors, which had been growing output faster in the U.S. than most independent shale producers, are beginning to step up their focus on shareholder returns and allow output growth to ease, said Neal Dingmann, an analyst at Truist Securities.
“This has all been driven by investor requirements,” Mr. Dingmann said.
Write to Collin Eaton at collin.eaton@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
CVS, Walmart to Cut Pharmacy Hours as Staffing Squeeze Continues
CVS, the largest U.S. drugstore chain by revenue, plans in March to cut or shift hours at about two-thirds of its roughly 9,000 U.S. locations. Walmart plans to reduce pharmacy hours by closing at 7 p.m. instead of 9 p.m. at most of its roughly 4,600 stores by March.
Walgreens Boots Alliance Inc.
previously said it was operating thousands of stores on reduced hours because of staffing shortages. Combined, the three chains operate some 24,000 retail pharmacies across the U.S.
Walmart last year raised pay for pharmacy technicians.
Photo:
Ryan David Brown for The Wall Street Journal
Earlier in the pandemic, CVS and Walgreens struggled to meet demand for Covid shots and vaccines. The chains cut hours and, in some cases, closed pharmacies for entire weekends. Walmart, which sells a wider variety of goods, cut overall store hours, in part, to cope with Covid-related labor shortages and make time to restock empty shelves as demand for basics such as toilet paper surged.
CVS, in a recent notice to field leaders, said most of its reduced hours will be during times when there is low patient demand or when a store has only one pharmacist on site, which the company said is a “top pain point,” for its pharmacists.
CVS said in a statement it periodically reviews pharmacy operating hours as part of the normal course of business to ensure stores are open during high-demand times. “By adjusting hours in select stores this spring, we ensure our pharmacy teams are available to serve patients when they’re most needed,” the company said, adding that customers who encounter a closed pharmacy can seek help at a nearby location.
At Walmart, the shorter hours offer pharmacy workers a better work-life balance and best serve customers in the hours they are most likely to visit the pharmacy, said a company spokeswoman. “This change is a direct result of feedback from our pharmacy associates and listening to our customers,” she said. Some Walmart pharmacies already close before 9 p.m., which will become standard across the country after the change.
An online community message board for Holliston, Mass., a small town about 30 miles outside Boston, was populated with messages last month from locals venting about the unpredictable hours of the CVS in town, said resident Audra Friend, who does digital communications for a nonprofit. Ms. Friend said she struggled for a week in November to refill a prescription for a rescue inhaler at the store because the pharmacy was sporadically closed.
“I would go in, and there was a note on the door saying, ‘Sorry, pharmacy closed,’” said Ms. Friend, who switched her prescriptions to a 24-hour CVS about 5 miles away. She said it would be better to have consistently shorter hours if that meant fewer unexpected closures. “At least that way we’re not just showing up at CVS to find out the pharmacist isn’t there,” she said.
A CVS spokeswoman said that in recent weeks the Holliston store has had no unexpected closures.
The drugstore chains have been working to stop an exodus of pharmacy staff by offering such perks as bonuses, higher pay and guaranteed lunch breaks. Pharmacists were already in short supply before the pandemic, and consumer demand for Covid-19 shots and tests put additional strains on pharmacy operations. Walgreens recently said staffing problems persist and remain a drag on revenue.
Retail pharmacies, which benefited from a bump in sales and profits during the pandemic, are now reworking their business models as demand for Covid tests and vaccines decline and generic-drug sales generate smaller profits.
CVS and Walgreens are closing hundreds of U.S. stores and launching new healthcare offerings as they try to transform themselves into providers of a range of medical services, from diagnostic testing to primary care.
This past summer, Walgreens was offering bonuses up to $75,000 to attract pharmacists, while CVS is working to develop a system in which pharmacists could perform more tasks remotely. The median annual pay for pharmacists was nearly $129,000 in 2021, according to Labor Department data, which also projected slower-than-average employment growth in the profession through 2031.
In the past year, the chains have poured hundreds of millions of dollars into recruiting more pharmacists and technicians but staffing up has proven difficult. Pharmacists remain overworked, pharmacy-chain executives have acknowledged, and fewer people are attending pharmacy schools. The number of pharmacy-school applicants has dropped by more than one-third from its peak a decade ago, according to the Pharmacy College Application Service, a centralized pharmacy-school application service.
Meanwhile, many pharmacists who aren’t quitting the field are leaving drugstores to work in hospitals or with other employers.
Walmart raised wages for U.S. pharmacy technicians in the past year, bringing average pay to more than $20 an hour. Walmart said it planned to raise the minimum wage for all U.S. hourly workers in its stores and warehouses to $14 next month, from $12.
CVS and Walgreens last year raised their minimum wages to $15 an hour.
Write to Sharon Terlep at sharon.terlep@wsj.com and Sarah Nassauer at Sarah.Nassauer@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
These healthy diets were associated with lower risk of death, according to a study of 119,000 people across four decades
Eat healthy, live longer.
That’s the takeaway from a major study published this month in JAMA Internal Medicine. Scientists led by a team from the Harvard T.H. Chan School of Public Health found that people who most closely adhered to at least one of four healthy eating patterns were less likely to die from cardiovascular disease, cancer or respiratory disease compared with people who did not adhere as closely to these diets. They were also less likely to die of any cause.
“These findings support the recommendations of Dietary Guidelines for Americans that multiple healthy eating patterns can be adapted to individual food traditions and preferences,” the researchers concluded, adding that the results were consistent across different racial and ethnic groups. The eating habits and mortality rates of more than 75,000 women from 1984 to 2020 over 44,000 men from 1986 to 2020 were included in the study.
The four diets studied were the Healthy Eating Index, the Alternate Mediterranean Diet, the Healthful Plant-Based Diet Index and the Alternate Healthy Eating Index. All four share some components, including whole grains, fruits, vegetables, nuts and legumes. But there are also differences: For instance, the Alternate Mediterranean Diet encourages fish consumption, and the Healthful Plant-Based Diet Index discourages eating meat.
The Alternate Mediterranean Diet is adapted from the original Mediterranean Diet, which includes olive oil (which is rich in omega-3 fatty acids), fruits, nuts, cereals, vegetables, legumes and fish. It allows for moderate consumption of alcohol and dairy products but low consumption of sweets and only the occasional serving of red meat. The alternate version, meanwhile, cuts out dairy entirely, only includes whole grains and uses the same alcohol-intake guideline for men and women, JAMA says.
The world’s ‘best diets’ overlap with study results
The Mediterranean Diet consistently ranks No. 1 in the U.S. News and World Report’s Best Diets ranking, which looks at seven criteria: short-term weight loss, long-term weight loss, effectiveness in preventing cardiovascular disease, effectiveness in preventing diabetes, ease of compliance, nutritional completeness and health risks. The 2023 list ranks the top three diets as the Mediterranean Diet, the DASH Diet and the Flexitarian Diet.
The DASH (Dietary Approaches to Stop Hypertension) Diet recommends fruits, vegetables, nuts, whole grains, poultry, fish and low-fat dairy products and restricts salt, red meat, sweets and sugar-sweetened beverages. The Flexitarian Diet is similar to the other diets in that it’s mainly vegetarian, but it allows the occasional serving of meat or fish. All three diets are associated with improved metabolic health, lower blood pressure and reduced risk of Type 2 diabetes.
Frank Hu, a professor of nutrition and epidemiology at the Harvard School of Public Health and co-author of the latest study, said it’s critical to examine the associations between the U.S. government’s Dietary Guidelines for Americans and long-term health. “Our findings will be valuable for the 2025-2030 Dietary Guidelines Advisory Committee, which is being formed to evaluate current evidence surrounding different eating patterns and health outcomes,” he said.
Reducing salt intake is a good place to start. In 2021, the Food and Drug Administration issued new guidance for restaurants and food manufacturers to, over a two-and-a-half-year period, voluntarily reduce the amount of sodium in their food to help consumers stay under a limit of 3,000 milligrams per day — still higher than the recommended daily allowance. Americans consume around 3,400 milligrams of sodium per day, on average, but the Centers for Disease Control and Prevention recommends that people consume less than 2,300 milligrams each day.
Related: Eating 400 calories a day from these foods could raise your dementia risk by over 20%
How Apple Has So Far Avoided Layoffs: Lean Hiring, No Free Lunches
No company is certain to avoid significant cutbacks in an economic environment as volatile as the current one, and Apple isn’t immune to the business challenges that have hit other tech giants. It is expected next month to report its first quarterly sales decline in more than three years. Apple has also slowed hiring in some areas.
But the iPhone maker has been better positioned than many rivals to date in part because it added employees at a much slower clip than those companies during the pandemic. It also tends to run lean, with limited employee perks and businesses focused on hardware products and sales that have so far largely dodged the economic downturn, investors say.
An Apple spokesman declined to comment.
From its fiscal year-end in September 2019 to September 2022, Apple’s workforce grew by about 20% to approximately 164,000 full-time employees. Meanwhile, over roughly the same period, the employee count at Amazon doubled, Microsoft’s rose 53%, Google parent
Alphabet Inc.’s
increased 57% and Facebook owner Meta’s ballooned 94%.
Apple has about 65,000 retail employees working in more than 500 stores who make up roughly 40% of the company’s total workforce.
On Friday, Alphabet became the latest tech company to announce widespread layoffs, with a plan to eliminate roughly 12,000 jobs, the company’s largest-ever round of job cuts.
Alphabet’s cut follows a wave of large layoffs at Amazon, Microsoft and Meta. The tech industry has seen more than 200,000 layoffs since the start of 2022, according to Layoffs.fyi, a website that tracks cuts in the sector as they surface in media reports and company releases.
The last big round of layoffs at Apple happened way back in 1997, when co-founder
Steve Jobs
returned to the company, which then cut costs by firing 4,100 employees.
So far, Apple’s core business has shown itself to be resilient against broader downturns in the market. The other four tech giants have suffered amid slowdowns in digital advertising, e-commerce and PCs. In its September quarter, Apple reported that sales at its most important business—the iPhone—advanced 9.7% from the previous year to $42.6 billion, surpassing analyst estimates.
Apple may face a rougher December quarter, which it is scheduled to report on Feb. 2, as the company encountered manufacturing challenges in China, where strict zero-Covid policies damped much economic activity. Many analysts expect that demand hasn’t subsided for its iPhones and as the company continues to ramp back up manufacturing, demand is anticipated to move to the March quarter.
The company’s business model hasn’t been totally immune to broader slowdowns. Revenue from its services business continued to slow, growing 5% annually to $19.2 billion in the September quarter, shy of the gains posted in recent quarters.
Tom Forte,
senior research analyst at investment bank D.A. Davidson & Co., said he expects Apple to reduce head count, but it might do that quietly through employee attrition—by not replacing workers who leave. The company could move in the direction of making other cuts or adjustments to perks that are common in Silicon Valley. Apple doesn’t offer free lunches to employees on its corporate campus, unlike other big tech companies such as Google and Meta.
Some of the tech giants cutting jobs have spent heavily on projects that are unlikely to turn into strong businesses anytime soon, said Daniel Morgan, a senior portfolio manager at Synovus Trust Co., which counts Apple among its largest holdings. “Both Meta and Google are terribly guilty of that,” he said.
Meta has been pouring billions of dollars into its Reality Labs for its new ambitions in the so-called metaverse. Meta Chief Executive
Mark Zuckerberg
has defended the company’s spending on Reality Labs, suggesting that virtual reality will become an important technological platform.
After announcing the layoffs, Alphabet Chief Executive
Sundar Pichai
said the company had seen dramatic periods of growth during the past two years. “To match and fuel that growth, we hired for a different economic reality than the one we face today,” he wrote in a message to employees on Friday.
Apple also is working on risky future bets, such as an augmented-reality headset due out later this year and a car project whose release date is uncertain, but at a more measured pace.
Write to Aaron Tilley at aaron.tilley@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Google Parent Alphabet to Cut 12,000 Jobs Amid Wave of Tech Layoffs
Google’s parent company said it would cut its staff by 6% in its largest-ever round of layoffs, extending a retrenchment among technology companies after record pandemic hiring.
Alphabet Inc.
GOOG 5.72%
said the cuts would eliminate roughly 12,000 jobs across different units and regions, though some areas, including recruiting and projects outside of the company’s core businesses, would be more heavily affected.
The layoffs reached as high as the vice president level and affected divisions including cloud computing and Area 120, an internal business incubator that had already faced cuts last year, said people familiar with the matter.
The Google cuts make January the worst month yet in a wave of tech layoffs that began last year, according to estimates from Layoffs.fyi, which tracks media reports and company announcements. This week,
Microsoft Corp.
said it would eliminate 10,000 jobs, the largest layoffs in more than eight years. Online furniture seller
Wayfair Inc.
said it is laying off about 10% of its workforce, and
Unity Software Inc.,
which provides tools for creating videogames and other applications, also cut staff.
Earlier this month,
Amazon.com Inc.
said layoffs would affect more than 18,000 employees and
Salesforce Inc.
said it was laying off 10% of its workforce. Last year,
Meta Platforms Inc.
said it would cut 13% of staff.
Technology companies including Google expanded rapidly during the pandemic as life moved online. Recent cuts have been part of a broader pivot toward protecting profit and cementing the end of a growth-at-all costs era in technology. Google executives have in recent months said the company would be tightening its belt, reflecting a new period of more disciplined and efficient spending. But the company hadn’t announced cuts as deep as those of its Silicon Valley peers.
Google hired aggressively as demand for its services rose during the health crisis, leading to more than 50% growth in total employee count across Alphabet since the end of 2019. The cuts this week appeared to fall short of the almost 12,800 employees Alphabet added to its roster in the third quarter last year.
“Over the past two years we’ve seen periods of dramatic growth. To match and fuel that growth, we hired for a different economic reality than the one we face today,” Alphabet Chief Executive
Sundar Pichai
wrote in a message to employees sent out Friday and posted on the company’s website.
“I take full responsibility for the decisions that led us here,” Mr. Pichai wrote. The corporate mea culpa for overhiring has become a recurring message in recent months at tech companies as executives realized that some of the hiring they undertook to keep pace with soaring demand for all things digital early in the pandemic left them overstaffed as the business environment soured.
Among the executives who have made such apologies are Salesforce Co-Chief Executive
Marc Benioff,
Meta Platforms CEO
Mark Zuckerberg
and Twitter Inc. co-founder
Jack Dorsey.
Alphabet recorded $17.1 billion of operating income in the third quarter last year, an 18.5% decrease from the same period in 2021. Google executives partly blamed a slowdown in revenue growth on the company’s historic performance during the tail end of the pandemic. Alphabet shares rose 4.5% to $97.24 in morning trading Friday.
Alphabet earlier this month said it would cut more than 200 jobs at its Verily Life Sciences healthcare business, accounting for about 15% of the roles at the unit. Before that, some of the last major cuts Google announced were in 2009, when the company said it was reducing the number of jobs in its sales and marketing teams by roughly 200 globally.
Activist hedge fund TCI Fund Management, which had called on Alphabet to cut costs aggressively in November, said Friday the company should go further.
“Management should aim to reduce headcount to around 150,000, which is in line with Alphabet’s headcount at the end of 2021,”
Christopher Hohn,
TCI managing director, said in a letter. “This would require a total headcount reduction in the order of 20%.”
Current and former Google employees said layoffs would likely affect the company’s famously loose and collegial culture, which has been widely imitated in the tech industry.
Google employees have long enjoyed one of the most accommodating environments among large U.S. companies. A letter to potential investors in Google’s 2004 initial public offering said the company provided many unusual benefits, such as washing machines, and would likely add more over time.
As job cuts have accumulated in the tech industry, many employees at Google have pressed executives about the possibility of layoffs at the company. At a companywide meeting in December, Mr. Pichai told employees that the company had tried to “rationalize where we can so that we are set up to better weather the storm regardless of what’s ahead.”
A Google spokesman said that Friday’s cuts would affect not just Google, but also other Alphabet subsidiaries, but didn’t specify at what levels. Alphabet subsidiaries include Verily and the Waymo self-driving-car unit. The spokesman didn’t comment on which specific products or engineering units would be affected.
“Alphabet leadership claims ‘full responsibility’ for this decision, but that is little comfort to the 12,000 workers who are now without jobs,” said Parul Koul, executive chair of the Alphabet Workers Union, in a statement. “This is egregious and unacceptable behavior by a company that made $17 billion dollars in profit last quarter alone.”
Alphabet said it would offer U.S.-based employees two months notice, plus 16 weeks of severance pay, along with two additional weeks for each year an employee being laid off from the nearly 25-year-old company has worked there. In other countries, the company will follow local processes and laws, which sometimes require consultations with employee representatives before workers are laid off.
The company will also offer former employees access to resources to help them with their immigration status, job placement and mental health, the spokesman said. Tech companies in the U.S. often have employees on work visas tied to their employment.
Write to Sam Schechner at Sam.Schechner@wsj.com and Miles Kruppa at miles.kruppa@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
U.S. Retail Sales Fell 1.1% in December
Purchases at stores, restaurants and online, declined a seasonally adjusted 1.1% in December from the prior month, the Commerce Department said Wednesday. Sales were also revised lower in November and have fallen three of the past four months. The department seasonally adjusts monthly data to make it comparable over time. On an unadjusted basis, December is typically the peak sales month for the year.
A Federal Reserve report Wednesday found economic activity was relatively flat at the start of the year and businesses are pessimistic about growth in the months ahead. A separate Fed report showed U.S. industrial production slumped in December, led by weakness in manufacturing. A Labor Department report showed inflation was cooling.
Stocks fell Wednesday after the data releases. The S&P 500 shed 1.6%. The Dow Jones Industrial Average was down 1.8%, while the Nasdaq Composite Index lost 1.2%. The yield on the benchmark 10-year Treasury note declined 0.16 percentage point to 3.374%.
The latest data add to signs that the U.S. economy is slowing as the Fed pushes up interest rates to combat inflation. Hiring and wage growth eased in December, U.S. commerce with the rest of the world declined significantly in November, and existing-home sales have fallen for 10 straight months.
S&P Global downgraded its estimate for fourth-quarter economic growth Wednesday by a half percentage point to a 2.3% annual rate. Economists surveyed by The Wall Street Journal this month expect higher interest rates to tip the U.S. economy into a recession in the coming year.
“The lag impact of elevated inflation weighs heavily on U.S. households, it’s very clear that the median American consumer is still reeling from the loss of wages in inflation-adjusted terms,” said
Joseph Brusuelas,
chief economist at RSM US LLP. “We’re moving towards what I would expect to be a mild recession in 2023,” he added.
Federal Reserve Bank of St. Louis President
James Bullard
said Wednesday the central bank should keep on rapidly raising interest rates and supported a half-percentage-point increase at the Jan. 31-Feb. 1 meeting.
“We want to err on the tighter side to make sure we get the disinflationary process to take hold in the economy,” he said at a Wall Street Journal Live event.
Mr. Bullard’s position is at odds with several of his colleagues, who have suggested that a slower pace of rate increases would be appropriate to allow Fed officials to gauge how their aggressive pace of policy tightening has affected the economy.
Inflation, while still historically high, is showing signs of cooling as demand eases. Unlike many government reports, retail sales aren’t adjusted for inflation.
Consumer prices advanced 6.5% from a year earlier in December, the sixth straight month of deceleration. The producer-price index, which generally reflects supply conditions in the economy, fell in December from the prior month, and increased at the slowest annual pace since March 2021, the Labor Department said Wednesday.
The National Retail Federation said Wednesday holiday sales were disappointing. The trade group said November and December sales rose 5.3% compared with the same period last year to $936.3 billion. In November, the NRF said it expected holiday sales to rise between 6% and 8%. The NRF figures aren’t adjusted for inflation and exclude fuel, auto and restaurant spending.
Somewhat slower inflation at the end of the year didn’t offset weaker demand, said NRF Chief economist
Jack Kleinhenz.
Consumers are “hit with higher food prices, they are getting hit with higher service prices and they are having to make choices,” he said. Some spending was likely pulled into October as retailers kicked off deals early this year, he added. Retailers discounted heavily and early to clear excess stock from their shelves and warehouses.
Zach Carney, of Boston, said he has been cutting back on eggs and red meat because the prices are so high. “The price of eggs really jumps out at you,” the 28-year-old publicist said. Instead, he has been stocking up on value packs of chicken and buying more store-brand cereal and olive oil, which cost less than national brands.
The retail sales report showed spending declined in a number of gift-giving categories in December, including at electronics, clothing and department stores, and with online retailers, a category which includes companies such as Amazon.com Inc.
Dining out at bars and restaurants dropped 0.9% in December. Sales of furniture and vehicles, which are sensitive to higher borrowing costs, both fell sharply. The only categories to post slight growth in December were grocery, sporting goods and home improvement stores, as winter storms battered many parts of the U.S.
Some retailers have said the recently completed holiday shopping season turned out to be weaker than expected. Macy’s Inc. warned of softer sales, and Lululemon Athletica Inc. said its profit margins were squeezed as shoppers bought more items on sale.
Many retailers had benefited from surging sales earlier in the pandemic as shoppers stocked up on everything from toilet paper to home electronics and furniture, supported by government stimulus dollars. Those tailwinds have cooled, leaving retailers and product manufactures to confront slower spending in some categories and the longer term dynamics of the industry, such as a gradual shift to online spending.
Apparel retailers are especially exposed to the current pullback in discretionary spending, said Kelly Pedersen, the U.S. retail leader at PwC, a consulting firm. “Buying fashion items at department stores is discretionary,” said Mr. Pedersen. Many apparel retailers are still working to sell through excess inventory and offering deep discounts amid weak demand, he said.
Department stores, which saw a 6.6% sales drop in December, struggled to boost sales before the pandemic quickly shifted buying habits. In 2020, a string of department stores filed for bankruptcy, including Lord & Taylor, J.C. Penney Co., Neiman Marcus Group Ltd. and Stage Stores Inc.
Party City Holdco Inc. filed for chapter 11 bankruptcy this week while noting inflationary pressures have hampered customers’ willingness to spend. Bed Bath & Beyond Inc. said this month it plans more layoffs and cost cuts amid falling sales.
The retail sales report offers a partial picture of consumer demand because it doesn’t include spending on many services such as travel, housing and utilities. The Commerce Department will release December household spending figures covering goods and services later this month.
Corporate reports out in February will add to that picture. Walmart Inc., Target Corp. and other large retailers—which sell a variety of goods such as food, clothes and décor—report quarterly earnings next month, which will include December sales.
—Suzanne Kapner and David Harrison contributed to this article.
Write to Harriet Torry at harriet.torry@wsj.com and Sarah Nassauer at Sarah.Nassauer@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Jack Ma Cedes Control of Fintech Giant Ant Group
Billionaire
Jack Ma
is ceding control of Ant Group Co., capping a tumultuous period for the Chinese fintech giant.
Mr. Ma will no longer be the controlling person of Ant, the company said in a statement on Saturday, confirming a previous report by The Wall Street Journal.
The changes are being made to reduce Ant’s reliance on the flamboyant Chinese billionaire, who co-founded
Alibaba Group Holding Ltd.
BABA 2.70%
and helped create Ant, the Journal reported previously.
Mr. Ma will continue to hold voting rights in an entity that controls Ant, alongside nine Ant executives and employees who will be also given voting rights.
Mr. Ma doesn’t hold an executive role at Ant or sit on its board, but is a larger-than-life figure at the company. He has controlled Ant via an entity in which he holds the dominant position. The agreements that allowed Mr. Ma’s dominance will be terminated. The nine other Ant executives and employees to be given the voting rights at the company can exercise their power independently of each other and of Mr. Ma, according to Ant’s statement.
Ant, which owns the popular digital-payment platform Alipay, has been forced to overhaul its operations amid a government crackdown that began with Beijing calling off the company’s multibillion-dollar initial public offering in November 2020. The IPO, which had been slated to happen in Shanghai and Hong Kong concurrently, would have raised more than $34 billion and valued Ant at more than $300 billion.
Ant has been revamping its various business lines, from consumer lending to insurance, and will eventually become a financial holding company subject to regulations in line with traditional financial firms.
The change of control moves Ant a step closer to finishing its overhaul. Yet it also could put back a potential revival of Ant’s IPO for a year or more. Chinese securities regulations require a timeout on public listings for companies that have gone through a recent change in control.
Regulators didn’t demand the change but have given their blessing, the Journal reported previously. Ant is required to map out its ownership structure when it applies to become a financial holding company.
The nine others who will hold voting rights include Chairman
Eric Jing,
Executive Vice President Xiaofeng Shao and Chief Technology Officer Xingjun Ni, in line with the details in the previous Journal report. Mr. Shao is also the general secretary of Ant’s Communist Party committee, according to people familiar with the matter. Mr. Ni was instrumental in founding Alipay in 2004.
Mr. Ma has all but vanished from the public spotlight since he laid into Chinese regulators in a controversial speech days before Ant’s planned IPO in 2020. He retired from Alibaba in 2019 but continued to control Ant. The two companies that Mr. Ma co-founded have been charting separate courses in light of Beijing’s crackdown on big internet platforms.
Mr. Ma’s control over Ant goes back more than a decade to the period when he was CEO of Alibaba. Throughout the years, he had contemplated giving up control of Ant out of corporate-governance concerns that risks may arise from Ant being too reliant on a single dominant figure atop the company, the Journal reported previously.
Write to Jing Yang at jing.yang@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Amazon Layoffs to Hit Over 17,000 Workers, the Most in Recent Tech Wave
Amazon.
AMZN -0.79%
com Inc.’s layoffs will affect more than 17,000 employees, according to people familiar with the matter, the highest reduction tally revealed in the past year at a major technology company as the industry pares back amid economic uncertainty.
The Seattle-based company in November said that it was beginning layoffs among its corporate workforce, with cuts concentrated on its devices business, recruiting and retail operations. At the time, The Wall Street Journal reported the cuts would total about 10,000 people. Thousands of those cuts began last year.
The rest of the cuts will bring the total number of layoffs to more than 17,000 and will be made over the coming weeks, some of the people said. As of September,
Amazon
AMZN -0.79%
employed 1.5 million people, with a large percentage of them in its warehouses. The layoffs are concentrated in the company’s corporate ranks, some of the people said.
Amazon
was one of the biggest beneficiaries of the Covid-19 pandemic as customers flocked to online shopping. The rush to Amazon’s various businesses, from e-commerce to groceries and cloud computing, pushed forward years of growth for the company. To keep up with demand, Amazon doubled its logistics network and added hundreds of thousands of employees.
When demand started to wane with customers moving back to shopping in stores, Amazon initiated a broad cost-cutting review to pare back on units that were unprofitable, the Journal reported. In the spring and summer, the company made targeted cuts to bring down costs, shutting physical stores and business units such as Amazon Care. Amazon later announced a companywide hiring freeze before deciding to let employees go.
Many tech companies have cut jobs as the economy sours. Amazon’s layoffs of more than 17,000 employees would represent the highest number of people let go by a tech company in the past few months, according to tallies released on Layoffs.fyi, a website that tracks the events as they surface in media reports and company releases.
The trend has affected companies such as Amazon and others that have acknowledged they grew too quickly in many cases.
parent
Meta Platforms Inc.
said it would cut more than 11,000 workers, or 13% of its staff, adding to layoffs at
Lyft Inc.,
HP Inc.
and other tech companies. On Wednesday,
Salesforce Inc.
said that it was laying off 10% of its workforce. Co-Chief Executive
Marc Benioff
said the business-software provider hired too many people as revenue surged earlier in the pandemic. “I take responsibility for that,” he said.
Write to Dana Mattioli at dana.mattioli@wsj.com and Jessica Toonkel at jessica.toonkel@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Appeared in the January 5, 2023, print edition as ‘Amazon Layoffs To Exceed Initial Reports.’
Tesla is not alone: 18 (and a half) other big stocks are headed for their worst year on record
In the worst year for stocks since the Great Recession, several big names are headed for their worst year on record with just one trading day left in 2022.
The S&P 500 index
SPX,
+1.75%
and Dow Jones Industrial Average
DJIA,
+1.05%
are both headed for their worst year since 2008, with declines of 20.6% and 9.5% respectively through Thursday. But at least 19 big-name stocks — and half of another — are headed for a more ignominious title for 2022, according to Dow Jones Market Data: Worst year ever.
Tesla Inc.
TSLA,
+8.08%
is having the worst year among the group of S&P 1500 constituents with a market capitalization of $30 billion or higher headed for record annual percentage declines. Tesla shares have declined 65.4% so far this year, which would be easily the worst year on record for the popular stock, which has only had one previous negative year since going public in 2010, an 11% decline in 2016.
Tesla may not be the worst decliner on the list by the time 2023 arrives, however, as another Silicon Valley company is right on its heels. Meta Platforms Inc.
META,
+4.01%,
the parent company of Facebook, has fallen 64.2% so far this year, as Chief Executive Mark Zuckerberg has stuck to spending billions to develop the “metaverse” even as the online-advertising industry that provides the bulk of his revenue has stagnated. It would also only be the second year in Facebook’s history that the stock has declined, after a 25.7% drop in 2018, though shares did end Facebook’s IPO year of 2012 30% lower than the original IPO price.
Only one other stock could contend with Tesla and Meta’s record declines this year, and Tesla CEO Elon Musk has some familiarity with that company as well. PayPal Holdings Inc.
PYPL,
+4.46%,
where Musk first found fame during the dot-com boom, has declined 63.2% so far this year as executives have refocused the company on attracting and retaining high-value users instead of trying to get as many users as possible on the payments platform. It would be the second consecutive down year for PayPal, which had not experienced that before 2021 since spinning off from eBay Inc.
EBAY,
+4.76%
in 2015.
None of the other companies headed for their worst year yet stand to lose more than half their value this year, though Charter Communications Inc.
CHTR,
+1.99%
is close. The telecommunications company’s stock has declined 48.2% so far, as investors worry about plans to spend big in 2023 in an attempt to turn around declining internet-subscriber numbers.
In addition to the list below, Alphabet Inc.’s class C shares
GOOG,
+2.88%
are having their worst year on record with a 38.4% decline. MarketWatch is not including that on the list, however, as Alphabet’s class A shares
GOOGL,
+2.82%
fell 55.5% in 2008; the separate class of nonvoting shares was created in 2012 to allow the company — then still called Google — to continue issuing shares to employees without diluting the control of co-founders Sergey Brin and Larry Page.
Apart from that portion of Alphabet’s shares, here are the 19 large stocks headed for their worst year ever, based on Thursday’s closing prices.
| Company | % decline in 2022 |
|
Tesla Inc. TSLA, +8.08% |
65.4% |
|
Meta Platforms Inc. META, +4.01% |
64.2% |
|
PayPal Holdings Inc. PYPL, +4.46% |
62.6% |
| Charter Communications Inc. | 48.0% |
|
Edwards Lifesciences Corp. EW, +2.87% |
41.9% |
|
ServiceNow Inc. NOW, +3.67% |
39.9% |
|
Zoetis Inc. ZTS, +3.00% |
39.3% |
|
Fidelity National Information Services Inc. FIS, +2.03% |
37.8% |
|
Accenture PLC ACN, +2.00% |
35.3% |
|
Fortinet Inc. FTNT, +2.82% |
31.5% |
|
Estee Lauder Cos. Inc. EL, +1.52% |
32.5% |
|
Moderna Inc. MRNA, +1.34% |
29.6% |
|
Iqvia Holdings Inc. IQV, +2.94% |
26.3% |
|
Carrier Global Corp. CARR, +2.17% |
22.8% |
|
Hilton Worldwide Holdings Inc. HLT, +1.63% |
19.2% |
|
Broadcom Inc. AVGO, +2.37% |
16.2% |
|
Arista Networks Inc. ANET, +2.27% |
15.2% |
|
Dow Inc. DOW, +1.32% |
10.7% |
|
Otis Worldwide Corp. OTIS, +2.16% |
9.2% |