STOCK MARKET NEWS: Target shares tumble, FTX fallout widens, retail sales jump

RETAIL

Target exec says retail theft has hurt company's gross profit margin

The chief financial officer of Target Corporation, Michael Fiddelke, said on Wednesday that store theft has hurt the retail giant's gross profit margin.

Shoplifting is hurting Target’s profitability. CFO Michael Fiddelke said “incremental shortage” has reduced gross margin by more than $400 million versus last year, and the department store chain expects to reduce gross margin by more than $600 million for the full year.

Third quarter gross margin rate was 24.7%, compared with 28% in 2021.

Gross margin was also impacted by higher markdown rates and merchandise and freight costs, net of retail price increases,

Bath & Body Works is surging in extending trading. The personal care and home fragrance retailer topped Wall Street revenue estimates.

Third quarter net sales fell 5% to $1.60 billion, topping the estimate of $1.56 billion.

Net income for the three months ended October 29 was $91 million, up from $87.8 million a year ago.

Diluted earnings per share were 40 cents; analysts were looking for 20 cents.

The company is forecasting fourth quarter earnings from continuing operations per diluted share between $1.45 and $1.65.For fiscal 2022, the company is forecasting earnings from continuing operations per diluted share between $3.00 and $3.20, compared to its prior full year forecast of $2.70 to $3.00.

Logo of technology company Nvidia at its headquarters in Santa Clara, Calif., Feb. 11, 2015. (Reuters/Robert Galbraith)

Chip designer Nvidia Corp beat expectations for third-quarter revenue on Wednesday, thanks to sustained demand in its data center business on the back of rising cloud adoption.

Nvidia’s A100 data center chip and ramp-up in its “Hopper” series will help the company maintain its momentum in the data center space.

Cloud companies are increasingly using Nvidia chips in their systems. Microsoft is working with the company to build a “massive” computer to handle intense artificial intelligence computing work in the cloud.

While U.S. export restrictions have been a cause for worry, Nvidia’s production of a downgraded iteration of the A100, called A800, which complies with recent export control rules, has been a bright spot as it could help lessen the financial blow.

Moreover, Nvidia has been clearing piled-up inventory to make room for new product launches including gaming graphics chips series “Ada Lovelace”.

The company forecast revenue of $6 billion, plus or minus 2%. Analysts on average expect revenue of $6.09 billion, according to Refinitiv data.

The company's adjusted revenue for the quarter ended Oct. 30 was $5.93 billion. Analysts on average had expected revenue of $5.77 billion, according to Refinitiv data.

Sign bearing the logo of Cisco Systems outside one of its offices in San Jose, Calif., Aug. 11, 2022. (Reuters/Paresh Dave)

Cisco Systems Inc beat first-quarter revenue estimates on Wednesday, as easing supply chain constraints and a COVID-19 recovery in China helped meet demand for its broad networking products portfolio, sending the company's shares 5% higher in extended trading.

Easing supply chain snags and Cisco's recent investments in cloud offerings and targeted price hikes have helped the company improve its business and attract customers amid an economic slowdown.

Cisco forecast current-quarter revenue to grow between 4.5% and 6.5%, while expecting adjusted earnings between 84 cents and 86 cents per share.

The company's revenue was $13.63 billion in the first quarter, above analysts' estimates of $13.31 billion, according to Refinitiv data.

Excluding items, Cisco earned 86 cents per share.

FTX Trading is distancing itself from Sam Bankman-Fried. The cryptocurrency exchange said the former CEO has “no ongoing role” at the firm or at Alameda Research and “does not speak on their behalf.”

The statement came from chief restructuring officer John Ray in response to Bankman-Fried’s public statements.

SAM BANKMAN-FRIED’S FTX CRYPTO COLLAPSE STEMS FROM ‘BROKEN’ MARKETS, TECH ENTREPRENEUR SAYS

Elon Musk, CEO of SpaceX, Tesla and Twitter, leaves after a trial about his Tesla pay package at the Delaware Court of Chancery in Wilmington, Del., Nov. 16, 2022. (Reuters/Evelyn Hockstein)

MARKETS

Elon Musk reveals Twitter CEO plan

Twitter CEO Elon Musk revealed his plans about whether he'll continue to helm the social media company in the future during court testimony Wednesday.

Elon Musk says he’d like to "find somebody else to run" Twitter "over time,” The Wall Street Journal reported.

Musk’s testimony is part of the trial that kicked off Monday for a lawsuit filed by Tesla shareholder Richard Tornetta in 2018. The lawsuit seeks to invalidate and rescind his compensation plan at the electric vehicle maker.

TECHNOLOGY

Amazon confirms rare layoffs have started as final number could reach 10,000: reports

Amazon has announced Wednesday that it has started laying off employees in a round of job cuts that could eliminate up to 10,000 positions, according to reports.

Amazon has confirmed it may furlough as many as 10,000 employees, though the numbers are not final.

The largest online retailer said it is trying to "consolidate some teams and programs.

"A company spokeswoman told FOX Business Wednesday that "As part of our annual operating planning review process, we always look at each of our businesses and what we believe we should change.”

Target store in Voorhees, N.J., Oct. 29, 2022

MARKETS

Target warns of weak holiday season, CEO says consumer stressed

Target shares took a beating Wednesday as the retailer lowered its outlook and CEO Brian Cornell told investors that inflation is impacting customers.

Shares in several U.S. retailers slid on Wednesday after Target Corp warned of a gloomy outlook for the crucial holiday quarter with surging inflation hitting sales and as it announced plans to save up to $3 billion in cost cuts to shore up profits.

Target, which said third-quarter profit halved, warned of "dramatic changes" in consumer behavior that was hurting demand for everything from toys to home furnishings.

Target's update echoed its quarterly report in August when it posted a bigger-than-expected 90% fall in earnings.

With annual inflation running at 7.7% in October and high interest rates, shoppers are reining in discretionary spending, bad news for retailers that rely on year-end shopping to boost annual sales.

TECHNOLOGY

Elon Musk shares date for Twitter Blue subscription relaunch, says it will be 'rock solid'

Elon Musk told social media users on Tuesday that Twitter Blue would be launched only after ensuring the verification subscription service is "rock solid."

Twitter head Elon Musk plans to launch his blue verification service on Nov. 29, the billionaire said on Twitter.

The initial announcement led to strong reaction and debate, on and off the social media platform.

Musk has pledged to keep with works and change what doesn’t.

Oct 2, 2022; Tampa, Florida, USA;Tampa Bay Buccaneers quarterback Tom Brady (12) against the Kansas City Chiefs during the first half at Raymond James Stadium. (Kim Klement-USA TODAY Sports)

MARKETS

FTX founder Sam Bankman-Fried hit with class-action lawsuit that also names Brady, Bundchen, Shaq, Curry

Tom Brady, Stephen Curry and Naomi Osaka are among the celebrities named in a new class action lawsuit against Sam Bankman-Fried's collapsed crypto trading company FTX.

Class action attorney Adam Moskowitz has filed the first and only lawsuit in the nation on behalf of all FTX investors. David Boies from Boies Schiller Flexner LLP is co-council on the case.

This nationwide class action lawsuit is against the former management of FTX and numerous celebrity endorsers, related to the $10 billion dollar loss.

The following people are named in the lawsuit: Former FTX CEO Sam Bankman-Fried, Tom Brady, Gisele Bundchen, Stephen Curry, Golden State Warriors, Shaquille O’Neal, Udonis Haslem, David Ortiz, William Trevor Lawrence, Shohei Ohtani, Naomi Osaka, Lawrence Gene David, and Kevin O’Leary.

All are parties who either controlled, promoted, assisted in, and actively participated in FTX Trading.

NASA’s Space Launch System rocket carrying the Orion spacecraft launches on the Artemis I flight test, Nov. 16, 2022 (Credits: NASA/Bill Ingalls)

TECHNOLOGY

NASA's Artemis I rocket launches on historic journey to the moon

NASA's Artemis I lunar rocket launched from Florida's Kennedy Space Center early Wednesday morning. The mission will send the uncrewed Orion capsule by the moon.

NASA's Orion spacecraft is on its way to the Moon as part of the Artemis program. Carrying an uncrewed Orion, the Space Launch System lifted off for its flight test debut at 1:47 a.m. EST Wednesday from Launch Pad 39B at NASA’s Kennedy Space Center in Florida, NASA said.

The launch is the first leg of a mission in which Orion is planned to travel approximately 40,000 miles beyond the Moon and return to Earth over the course of 25.5 days. Known as Artemis I, the mission is a critical part of NASA’s Moon to Mars exploration approach, in which the agency explores for the benefit of humanity. It’s an important test for the agency before flying astronauts on the Artemis II mission. 

POLITICS

House lawmakers to probe FTX collapse in December hearing

The House Financial Services Committee will hold hearings on the collapse of cryptocurrency exchange FTX in December, lawmakers announced Wednesday.

The House Financial Services Committee will hold a bipartisan hearing into the collapse of FTX and the broader consequences for the digital asset ecosystem.

The Committee expects to hear from the companies and individuals involved, including Sam Bankman-Fried, Alameda Research, Binance, FTX, and related entities, among others.

T.J. Maxx store, owned by TJX Cos Inc in Pasadena, Calif., May 15, 2017. (Reuters/Mario Anzuoni)

TJX Cos Inc raised annual same-store sales forecast and beat quarterly profit estimates on Wednesday, as cash-strapped consumers turn to the discount store for affordable clothing and home décor items ahead of the crucial holiday season.

Lower-income consumers, hit by decades-high inflation, have shown a preference for shopping at stores such as TJX that offer branded products at cheaper prices.

Separately, TJX named John Klinger as its new finance chief effective Jan. 29. Klinger succeeds Scott Goldenberg who has been the company's finance head since 2012.

TJX third-quarter gross profit margin fell 0.4 percentage point to 29.1% from a year earlier, as it battles higher freight and labor costs due to lingering supply chain disruptions, the Russia-Ukraine war and surging inflation.

The HomeGoods stores owner expects 2023 same-store sales to decrease 1% to 2%, compared to its earlier forecast of a 2% to 3% drop.

It now sees full-year adjusted profit per share between $3.07 and $3.11, compared with its prior outlook of $3.05 to $3.13.Excluding items, TJX earned 86 cents per share in the third quarter, topping analysts' estimates of 80 cents, but sales missed estimates.

Dell logo in a store in Manhattan, New York City, Nov. 24, 2021. (Reuters/Andrew Kelly)

Dell Technologies Inc on Wednesday said it reached a $1 billion settlement of a lawsuit accusing it of short-changing some shareholders in a controversial $23.9 billion transaction in 2018 that marked its return as a publicly traded company.

The all-cash settlement is subject to approval by a Delaware Chancery Court judge, and will be reflected in Dell's third-quarter results.

It resolves claims against the Round Rock, Texas-based computing and technology services company and controlling shareholders, including billionaire Chief Executive Michael Dell and private equity firm Silver Lake.

The disputed December 2018 transaction involved a stock swap related to Dell's interest in software maker VMware.

Dell paid $14 billion in cash and issued 149.4 million Class C shares in exchange for outstanding Class V shares, which tracked VMware's publicly traded stock.

Holders of the Class V shares sought $10.7 billion in damages, saying their stock was worth far more than Dell paid for it, while the Class C stock was worth far less than Michael Dell and Silver Lake claimed.

Shoppers load a box of merchandise into a truck after visiting a Lowe's hardware store in Philadelphia, Pa., Nov. 4, 2020. (Reuters/Mark Makela)

Lowe's Cos Inc raised its annual profit forecast on Wednesday, betting on record consumer savings and rising mortgage rates to fuel home improvement trends even as the housing market cools from a pandemic-led boom.

Higher mortgage rates are keeping consumers from buying new homes and instead renovating their existing properties, buoying demand for home improvement projects.

Lowe's optimism comes in contrast with comments from larger rival Home Depot Inc which on Tuesday left its annual forecasts unchanged despite beating quarterly estimates, citing caution over "mixed signals" around demand.

In fact, Lowe's said its customers were trading up and investing more in flooring, appliances and kitchens.

Analysts said Lowe's, which earlier this year named insider Brandon Sink its new finance chief, showed real progress in its third-quarter results, after two quarters of decline in its comparable sales.

Lowe's comparable sales grew 2.2% in the third quarter, beating analysts' forecast of a 0.9% rise, driven by strong demand from professional customers and improving demand from its core do-it-yourself customer base.

The company forecast full-year adjusted earnings of $13.65 to $13.80 per share, compared with the prior estimate of $13.10 to $13.60.

Main entrance to Micron corporate headquarters in Boise, Idaho, Feb. 3, 2012. (Reuters/Brian Losness)

Micron Technology Inc said on Wednesday it will reduce memory chip supply and make more cuts to its capital spending plan, as the semiconductor firm struggles to clear excess inventory due to a demand slump.

Micron was the first major chipmaker to sound an alarm about falling demand for PCs and smartphones earlier this year in the face of decades-high inflation.

"In order to significantly improve total inventory ... DRAM bit supply will need to shrink and NAND bit supply growth will need to be significantly lower than previous estimates," the company said.

Micron is reducing DRAM and NAND wafer starts — or the initial process in semiconductor production - by about 20% compared with the fourth quarter that ended on Sept. 1.

For 2023, the company expects its year-on-year bit supply growth to be negative for DRAM and in the single-digit percentage range for NAND.

ECONOMY

Homebuilder sentiment falls sharply in November as higher mortgage rates bite

Builder sentiment in the market for single-family homes tumbled in November to the lowest level in 10 years, indicating the housing market is officially in a recession.

Builder confidence in the market for newly built single-family homes declined for the 11th straight monthly decline in November.

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index of homebuilder sentiment dropped five points to 33.

This is the lowest confidence reading since June 2012, with the exception of the onset of the pandemic in the spring of 2020.

Experian logo on a smartphone in front of stock graph in this illustration, Dec. 1, 2021. (Reuters/Dado Ruvic/Illustration)

Experian is higher Wednesday. The data analytics and consumer credit reporting company said revenue for the six months ended September 30 rose 7% to $3.2 billion.

Earnings per share came in at 65.4 cents, up 6% from 61.7 cents.

Consumer Services organic revenue grew 12% and B2B organic revenue increased 7%.

“This was a decent half for Experian who’ve been able to maintain momentum despite consumers and businesses dealing with higher inflation and rising costs. The threat of a global downturn very much remains, though, but as consumers work through their savings and look to borrowing to finance their lifestyles, Experian’s in a position to get some relief there,” said Matt Britzman, Equity Analyst at Hargreaves Lansdown.

Bitcoin was trading around $16,000, after gaining in three of the last four days.

For the week, Bitcoin was trading lower by 9%.

For the month, the cryptocurrency was off 17%.

Bitcoin is down more than 63% year-to-date.

Ethereum was trading around $1,200, after losing 6% in the past week.

Dogecoin was trading at 8 cents, after losing 2% in the past week.

Gas Prices (AAA)

The nationwide price for a gallon of gasoline slipped Wednesday to $3.743, according to AAA.

The average price of a gallon of gasoline on Tuesday was $3.759.  

One week ago, a gallon of gasoline cost $3.805. A month ago, that same gallon of gasoline cost $3.888.

Gas hit an all-time high of $5.016 on June 14.

Diesel slipped to $5.352.

Oil rigs working (Reuters)

Oil prices bounced between gains and losses on Wednesday as COVID-19 cases in China continued to climb.

That is raising concerns of lower fuel demand that outweighed concerns about an escalation of geopolitical tensions and tighter oil supply.

U.S. West Texas Intermediate (WTI) crude futures traded around $86.00 a barrel. 

Brent crude futures traded around $93.00 a barrel.

Oil prices settled higher on Tuesday after oil supply to parts of Eastern and Central Europe via a section of the Druzhba pipeline was temporarily suspended, according to oil pipeline operators in Hungary and Slovakia.

The disruption came concurrent with an explosion in a village in eastern Poland near the Ukraine border that killed two people and raised the possibility that the Russian-Ukraine conflict could spill over.

That has dampened the oil demand growth outlook, with the International Energy Agency (IEA) forecasting demand growth to slow to 1.6 million bpd in 2023 from 2.1 million bpd this year, according to Reuters.

U.S. crude oil inventories fell by about 5.8 million barrels for the week ended Nov. 11, according to market sources citing American Petroleum Institute figures.

The financial community may not have a happy holiday as this year's bonus season may not look anything like last year.

Wall Street compensation consulting firm Johnson Associates is flashing a caution signal to fund managers, bankers and brokers when the time arrives for those annual checks.

Payouts for private-equity fund managers could drop as much as 15% this year compared with 2021 while public equities investment managers could endure cuts of as much as 25%, according to the Wall Street Journal.

Investment bankers at the largest institutions stand to absorb the sharpest cuts of as much as 40%, the firm added.

The forecast said the declines stem partly from inflated incentive payments coming out of last year's record level of activity for private equity, investment bankers and others on Wall Street.

By comparison, last year was a banner year for bonuses where private-equity managers last year stood to see increases of as much as 20%, and investment bankers were expected to enjoy 30% to 35% increases in their annual incentive payments, according to Johnson's forecast in November 2021.

Read more on the story by clicking here: Bonus season not looking bright for private equity, Wall Street