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Target hopes value-hungry shoppers will come to the rescue this holiday season



Target is stressing value this holiday season, as consumers feel pinched by inflation. At its store in New Jersey, signs that advertise low-priced items are more prominent than in previous years.

Melissa Repko | CNBC

FAIRFIELD, N.J. — Inside of this large store in the suburbs, Target is trying to create some holiday magic for shoppers.

Christmas tunes play over the loudspeaker. Adult- and kid-sized mannequins show off matching family pajamas. Red and green pillows decorate the shelves.

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The big-box retailer is looking for some of its own magic, too. The holiday shopping period has become higher stakes for Target, after it put up disappointing earnings results for three quarters and cut its forecast for the current one. Excess inventory has dragged down the company’s profits, as sales have slowed.

Target is competing in an environment where retailers must work harder to get inflation-weary consumers to spend. Its huge Covid pandemic gains are at risk as middle- and upper-income shoppers spend money on other expenses, such as commuting, vacations, and sending kids to piano lessons and soccer camp. Many already replenished their closets and sprung for big-ticket items like flat-screen TVs, leaving fewer items on the wish list. And even wealthier households are turning to discounters like Walmart, which are known for cheaper groceries.

Other retailers are under pressure, too. Kohl’s, Under Armour and Gap are all navigating the season while looking for new CEOs. Bed Bath & Beyond is trying to revive its business, as it shrinks its store footprint and workforce. Nearly every retailer is trying to get inventory in a cleaner position, while juggling both unwanted goods and more price-sensitive shoppers.

But Target is by far the biggest company of these, with a market value of around $66 billion, and it has a lot on the line. Shares of Target has fallen more than 37% so far this year. That stock slump came after Target in May missed fiscal first-quarter earnings and in June warned it would take a hit to profits as it marked down merchandise.

Target has more than 1,700 toys that are exclusive to its stores and website this holiday season. It also has a deal to sell items from storied toy brand FAO Schwarz.

Melissa Repko | CNBC

Bigger price signs, fresher merchandise

On a recent tour of the Fairfield store, Chief Merchandising Officer Jill Sando pointed out a big sign touting Target’s holiday price match guarantee, displays with bigger price signs and low-priced gifts sprinkled throughout the sales floor, from $5 scrunchies to $20 necklace-and-earrings sets.

“We want to celebrate value,” Sando said. “When we talk about affordable joy, you see the pride in the work. You see the pride in the product. We’re not whispering it. We’re shouting it.”

Target is also trying to cut through the noise of a more promotional holiday season. The big-box player, which has a reputation for cheap chic, has struck exclusive deals with brands and created its own fresh merchandise.

One of those deals is with storied toy brand FAO Schwarz. Another is with Marks & Spencer, a British retailer, which created a line of specialty food items like shortbread cookies in a tin shaped like a London bus and tea bags in a collectible lantern.

And, as shoppers juggle holiday parties and hit stores again, Target wants shoppers’ store visits to be convenient and fun, said Cara Sylvester, chief guest experience officer.

Store associates will rotate displays and ends of aisles to feature unique items, including make-your-own gingerbread house kits and beauty gift sets. She said the goal is to be a “holiday happy place” where shoppers want to stay awhile and fill up their carts.

In the parking lot, Target recently added Starbucks orders to its curbside pickup option, Drive Up. Along with picking up online purchases, shoppers can also get a coffee without leaving the car. It began rolling out the option at 240 stores just ahead of the holidays — with plans to add it to more stores soon.

For customers who have a full calendar of holiday outings and events, it has more mini Ulta Beauty shops inside of its stores, with special holiday gift sets, fragrances, makeup staples and some giftable items for $5 or $10. There are 350 of the shops — up from around 100 a year ago.

A hard problem to shake

But Target doesn’t have the same edge it did during the early years of the pandemic — a time when it stayed open as an essential retailer, became an alternative to the shopping mall and benefited from customers who were flush with stimulus cash.

Weekly store traffic at Target is down when compared on both a year-over-year basis and when compared with pre-pandemic store traffic in 2019, according to data from, which tracks retail foot traffic. It was down 6.1% year over year and down 4.7% versus 2019 for the week of Dec. 5, the most recent data available.

That downward trend has cut across other retailers, including Walmart, Macy’s and Best Buy. It does not capture whether shoppers are spending more or less than previous years.

Michael Baker, a retail analyst at D.A. Davidson, said Target is still haunted by a strategic error — making a big bet on discretionary goods at the wrong time.

Only about 20% of Target’s annual sales come from groceries, according to company filings. Most sales come from apparel, home goods and other discretionary merchandise — the very items that aren’t selling like they did before.

Target wound up with too much of that merchandise, as supply chain clogs eased and inflation soared. It announced an aggressive plan to clear through the glut. Yet on its third-quarter earnings call in November, it shared a new challenge: A sharp slowdown in sales in late October and early November.

Baker said investors hope to see signs Target’s sales are picking up as the holiday rush gains steam.

“If things got worse from there, it raises the question of what’s going on with Target,” he said.

With so much uncertainty, between inflation and the possibility of a recession, Target’s Sylvester said she doesn’t expect the broader economy to be so “rosy” in the coming year. So, she said, Target will keep emphasizing.

During the Fairfield store visit, Sylvester said Target can win with its wide merchandise mix. Shoppers can come for groceries. They can buy inexpensive workout gear from Target’s own brand, All in Motion, as they make New Year’s resolutions. And they can choose from more products in a historically recession-proof category — beauty — as Ulta shops open at more stores, she said.

“How do we double down and bring sort of the joy and the magic of Target to our guests who are going to need it even more?” she said. “Affordable joy shouldn’t just be a holiday thing. That’s all year round.”

Dollar General ramps up expansion of Popshelf stores

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Lucid to cut 1,300 workers amid signs of flagging demand for its EVs



Lucid Motors CEO Peter Rawlinson poses at the Nasdaq MarketSite as Lucid Motors (Nasdaq: LCID) begins trading on the Nasdaq stock exchange after completing its business combination with Churchill Capital Corp IV in New York City, New York, July 26, 2021.

Andrew Kelly | Reuters

Struggling EV maker Lucid said in a regulatory filing on Tuesday that it plans to cut about 18% of its workforce, or roughly 1,300 employees, as part of a larger restructuring to reduce costs as it works to ramp up production of its Air luxury sedan.

Lucid said it will incur one-time charges totaling between $24 million and $30 million related to the job cuts, with most of that amount being recognized in the first quarter of 2023.

News of the job cuts was first reported by Insider earlier on Tuesday. Lucid’s shares closed down over 7% on Tuesday following the Insider report.

In a letter to employees, CEO Peter Rawlinson said the job cuts will hit “nearly every organization and level, including executives,” and that affected employees will be notified over the next three days. Severance packages will include continued healthcare coverage paid by Lucid, as well as an acceleration of equity vesting, Rawlinson wrote.

Lucid ended 2022 with about $4.4 billion in cash on hand, enough to last until the first quarter of 2024, CFO Sherry House told CNBC last month ahead of the company’s fourth-quarter earnings report. But there have been signs that demand for the high-priced Air has fallen short of Lucid’s internal expectations, and the company may be struggling to convert early reservations to sold orders.

Lucid said that it had more than 28,000 reservations for the Air as of Feb. 21, its most recent update. But it also said that it plans to build just 10,000 to 14,000 vehicles in 2023, far fewer than the roughly 27,000 that Wall Street analysts had expected.

With Lucid’s factory currently set up to build about 34,000 vehicles per year, the company has warned of continuing losses.

“As we produce vehicles at low volumes on production lines designed for higher volumes, we have and we will continue to experience negative gross profit related to labor and overhead costs,” House said during Lucid’s earnings call on Feb. 22.

Lucid hasn’t yet announced a date for its first-quarter earnings report.

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Virgin Orbit extends unpaid pause as Brown deal collapses, ‘dynamic’ talks continue



NEWQUAY, ENGLAND – JANUARY 09: A general view of Cosmic Girl, a Boeing 747-400 aircraft carrying the LauncherOne rocket under its left wing, as final preparations are made at Cornwall Airport Newquay on January 9, 2023 in Newquay, United Kingdom. Virgin Orbit launches its LauncherOne rocket from the spaceport in Cornwall, marking the first ever orbital launch from the UK. The mission has been named Start Me Up after the Rolling Stones hit. (Photo by Matthew Horwood/Getty Images)

Matthew Horwood | Getty Images News | Getty Images

Virgin Orbit is again extending its unpaid pause in operations to continue pursuing a lifeline investment, CEO Dan Hart told employees in a company-wide email.

Some of the company’s late-stage deal talks, including with private investor Matthew Brown, collapsed over the weekend, people familiar with the matter told CNBC.

Hart previously planned to update employees on the company’s operational status at an all-hands meeting at 4:30 p.m. ET on Monday afternoon, according to an email sent to employees Sunday night. At the last minute, that meeting was rescheduled “for no later than Thursday,” Hart said in the employee memo Monday.

“Our investment discussions have been very dynamic over the past few days, they are ongoing, and not yet at a stage where we can provide a fulsome update,” Hart wrote in the email to employees, which was viewed by CNBC.

Brown told CNBC’s “Worldwide Exchange” last week he was in final discussions to invest in the company. A person familiar with the terms told CNBC the investment would have amounted to $200 million and granted Brown a controlling stake. But discussions between Virgin Orbit and the Texas-based investor stalled and broke down late last week, a person familiar told CNBC. As of Saturday those discussions had ended, the person said.

Separately, another person said talks with a different potential buyer broke down on Sunday night.

The people asked to remain anonymous to discuss private negotiations. A representative for Virgin Orbit declined to comment.

Hart promised Virgin Orbit’s over 750 employees “daily” updates this week. Most of the staff remain on an unpaid furlough that Hart announced on Mar. 15. Last week, a “small” team of Virgin Orbit employees returned to work in what Hart described as the “first step” in an “incremental resumption of operations,” with the intention of preparing a rocket for the company’s next launch.

Virgin Orbit’s stock closed at 54 cents a share on Monday, having fallen below $1 a share after the company’s pause in operations.

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Virgin Orbit developed a system that uses a modified 747 jet to send satellites into space by dropping a rocket from under the aircraft’s wing mid-flight. But the company’s last mission suffered a mid-flight failure, with an issue during the launch causing the rocket to not reach orbit and crash into the ocean.

The company has been looking for new funds for several months, with majority owner Sir Richard Branson unwilling to fund the company further.

Virgin Orbit was spun out of Branson’s Virgin Galactic in 2017 and counts the billionaire as its largest stakeholder, with 75% ownership. Mubadala, the Emirati sovereign wealth fund, holds the second-largest stake in Virgin Orbit, at 18%.

The company hired bankruptcy firms to draw up contingency plans in the event it is unable to find a buyer or investor. Branson has first priority over Virgin Orbit’s assets, as the company raised $60 million in debt from the investment arm of Virgin Group.

On the same day that Hart told employees that Virgin Orbit was pausing operations, its board of directors approved a “golden parachute” severance plan for top executives, in case they are terminated “following a change in control” of the company.

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Historic UAW election picks reform leader who vows more aggressive approach to auto negotiations



Supporters wave signs during an address at the Time Warner Cable Arena in Charlotte, North Carolina, on September 5, 2012 on the second day of the Democratic National Convention (DNC).

Mladin Antonov | AFP | Getty Images

DETROIT – United Auto Workers members have ousted their president in the union’s first direct election, ushering in a new era for the prominent organized labor group ahead of negotiations later this year with the Detroit automakers.

The union’s new leader will be Shawn Fain, a member of the “UAW Members United” reform group and local leader for a Stellantis parts plant in Indiana. He came out ahead in a runoff election by hundreds of votes over incumbent Ray Curry, who was appointed president by union leaders in 2021.

Fain, in a statement Saturday, thanked UAW members who voted in the election. He also hailed the election results as a historic change in direction for the embattled union, which he says will take a “more aggressive approach” with its employers.

“This election was not just a race between two candidates, it was a referendum on the direction of the UAW. For too long, the UAW has been controlled by leadership with a top-down, company union philosophy who have been unwilling to confront management, and as a result, we’ve seen nothing but concessions, corruption, and plant closures,” Fain said.

Curry, who previously protested the narrow election results, said in a statement that Fain will be sworn in on Sunday and that Curry is “committed to ensuring that this transition is smooth and without disruptions.”

“I want to express my deep gratitude to all UAW staff, clerical support, leaders and most of all, our union’s active and retired members for the many years of support and solidarity. It has been the honor of my life to serve our great union,” Curry said.

More than 141,500 ballots were cast in the runoff election that also included two other board positions, a 33% increase from last year’s direct election in which neither of the presidential candidates received 50% or more of the votes.

The election was overseen by a federal monitor, who did not immediately confirm the results. The election results had been delayed several weeks due to a run-off election as well as the close final count.

Shawn Fain, candidate for UAW president, is in a run-off election with incumbent Ray Curry for the union’s highest-ranking position.

Jim West for UAW Members United

Fain’s election adds to the UAW’s largest upheaval in leadership in decades, as a majority of the union’ s International Executive Board will be made up of first-time directors who are not part of the “Administration Caucus” that has controlled the union for more than 70 years.

Fain and other members of his leadership slate ran on the promise of “No corruption. No concessions. No tiers.” The last being a reference to a tiered pay system implemented by the automakers during recent negotiations that members have asked to be removed.

The shuffle follows a yearslong federal investigation that uncovered systemic corruption involving bribery, embezzlement, and other crimes among the top ranks of the UAW.

Thirteen UAW officials were convicted as part of the probe, including two past presidents. As part of a settlement with the union in late 2020, a federal monitor was appointed to oversee the union and the organization held a direct election where each member has a vote, doing away with a weighted delegate process.

For investors, UAW negotiations with the Detroit automakers are typically a short-term headwind every four years that result in higher costs. But this year’s negotiations are anticipated to be among the most contentious and important in recent memory.

Fain has said the union will seek benefit gains for members, advocating for the return of a cost-of-living adjustment, or COLA, as well as raises and job security.

The change in the UAW comes against the backdrop of a broader organized labor movement across the country, a pro-union president and an industry in the transition to all-electric vehicles.

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