CNN – Business

Saudi investment conference begins after exodus of CEOs

Saudi investment conference begins after exodus of CEOs

RIYADH, Saudi Arabia (CNN Business) - Saudi Arabia's big investment conference opened on Tuesday under the shadow of Jamal Khashoggi's death.Dozens of top business leaders from around the world hav ... Continue Reading
Dyson will build its electric cars in Singapore

Dyson will build its electric cars in Singapore

LONDON (CNN) - Dyson has announced plans to build electric cars at a new factory in Singapore that will be operational by 2020.The British maker of vacuums and hand dryers said Tuesday that it had ... Continue Reading
Chick-fil-A is trying to get into your home

Chick-fil-A is trying to get into your home

NEW YORK (CNN Business) - Chick-fil-A thinks the future of fast food isn't in the restaurant; it's in your living room. Last week, the company opened up two prototype restaurants devoted exclusivel ... Continue Reading
GE gets a badly needed win in Iraq

GE gets a badly needed win in Iraq

NEW YORK (CNN Business) - General Electric's beleaguered power business scored a badly needed win by reaching a preliminary agreement to rebuild Iraq's war-torn electric grid.Germany's Siemens (SIE ... Continue Reading
Siemens CEO explains why he won't go to Saudi Arabia

Siemens CEO explains why he won't go to Saudi Arabia

NEW YORK (CNN Business) - In an unusual behind-the-scenes glimpse at corporate decision-making, Siemens CEO Joe Kaeser detailed why he pulled out of this week's Future Investment Initiative in Saudi A ... Continue Reading
Costs are going up for European airlines. The weakest won't survive

Costs are going up for European airlines. The weakest won't survive

LONDON (CNN Business) - Europe's largest airline is expecting to emerge from the holiday travel season with fewer competitors. Dublin-based Ryanair said Monday that it is "inevitable" that weaker b ... Continue Reading
Saudi Arabia tries to salvage its investment conference after A-listers pull out

Saudi Arabia tries to salvage its investment conference after A-listers pull out

DUBAI (CNN Business) - Saudi Arabia's investment conference this week was until recently the hottest ticket in business and finance.

Now the program has been stripped of names and the list of speakers, once a who's who of global business, has been heavily revised.

Most of the top global CEOs and finance officials who were due to participate in the Future Investment Initiative, dubbed "Davos in the desert," pulled out in the past 10 days following the disappearance of Jamal Khashoggi at the Saudi consulate in Istanbul, Turkey, on October 2.

The latest to drop out, after much soul-searching, was Siemens (SIEGY) CEO Joe Kaeser.

"Siemens has been a reliable partner to Saudi Arabia for decades ... But for now, the truth must be found and justice must be served," Kaeser said in a statement Monday.

Saudi Arabia had denied any knowledge of what happened to Khashoggi, but late on Friday admitted that the Washington Post columnist died inside the consulate. Members of Crown Prince Mohammed bin Salman's inner circle have been blamed for his death.

Conference organizers say it will be business as usual when the event starts Tuesday. The website of the Future Investment Initiative promises that a detailed program for the three-day event will be "released shortly."

Bin Salman is due to host the conference. But if he attends, he'll be rubbing shoulders with a much less famous crowd than this time last year, when he used the conference to promote his Vision 2030 plan to wean Saudi Arabia's economy off oil.

Among the other A-list executives who have already pulled out are JPMorgan (JPM) CEO Jamie Dimon, HSBC (HSBC) CEO John Flint, Blackrock (BLK) CEO Larry Fink and Uber CEO Dara Khosrowshahi. US Treasury Secretary Steven Mnuchin and IMF managing director Christine Lagarde are also skipping the event.

"The Khashoggi story has damaged the reputation of the kingdom and has increased political uncertainty," said Garbis Iradian, the chief economist for Middle East and North Africa at the Institute of International Finance. "[Businesses] may postpone or reduce doing business dealings in the kingdom and adopt a wait and see attitude," he added.

But the absence of top names won't put a halt to discussions about future business opportunities. Some companies are sending less senior executives. JPMorgan and HSBC are sending representatives, despite their CEOs pulling out. And the head of Morgan Stanley's (MS) international business, Franck Petitgas, is listed on the conference app as a speaker.

Others, such as Airbus (EADSF) --- which has 1,000 employees in the kingdom --- want to keep channels of communication open despite pulling top executives.

The Russian Direct Investment Fund ---- a sovereign wealth fund --- will lead a delegation including more than 30 Russian entrepreneurs, executives and officials.

"We appreciate the constructive dialogue and are happy to share experiences, identify new joint projects and discuss promising areas for the development of comprehensive cooperation between a wide range of partners from Russia, Saudi Arabia and other countries," RDIF CEO Kirill Dmitriev said in a statement on Friday.

Germany has decided to suspend arms sales to Saudi Arabia, but defense contractors from other countries, including the United States, will be at the conference. In an interview with CBS last week, President Donald Trump said that he didn't want to sanction Saudi Arabia because it could cost firms like Boeing (BA) and Raytheon (RTN) billions in arms deals and cost jobs.

Raytheon CEO Thomas Kennedy is listed as a speaker at the event.

Oil industry executives are also expected to attend. Total (TOT) CEO Patrick Pouyanné is on the speaker list. His company signed a deal earlier this month to start working on a $5 billion petrochemical complex in the kingdom.

But the kingdom's budding relationship with the global tech world is coming under intense pressure, and could be damaged.

At the conference a year ago, SoftBank (SFTBF) CEO Masayoshi Son sat alongside bin Salman as the prince announced plans for a $500 billion futuristic city, NEOM.

Son has also launched a $93 billion mega tech fund with nearly half the money coming from the Saudi government. It has already made big investments in dozens of startups such as WeWork and Slack. Son was already planning for a second such fund. Now, that looks unlikely to happen.

Son and the head of SoftBank's international business, Marcelo Claure, were listed as speakers at the Saudi conference until recently. Neither appear on the revised list. The company has stayed silent on whether they will attend.

The kingdom urgently needs to reverse a decline in foreign investment to diversify its economy and end what the crown prince once called an "addiction" to oil. Under Vision 2030, bin Salman wants to grow the private sector, boost tourism and reduce unemployment over the next decade.

The plan caught the imagination of many international players, including billionaire Richard Branson, who jumped on opportunities for two tourism projects and was in talks for a $1 billion investment in his space company.

But Branson was one of the first to suspend his links with Saudi Arabia following Khashoggi's disappearance, and he has questioned whether anyone in the West can continue to do business there.

Many international investors were convinced this time last year that Saudi Arabia was open for business. It will be a much harder sell this time around.

Saudi Arabia has 'no intention' of repeating 1973 oil embargo

Saudi Arabia has 'no intention' of repeating 1973 oil embargo

(CNN Business) - Saudi Arabia has rejected suggestions that it may restrict global oil supply in response to international pressure over the death of journalist Jamal Khashoggi at its consulate in Is ... Continue Reading
Hasbro will lay off hundreds after Toys 'R' Us' closure

Hasbro will lay off hundreds after Toys 'R' Us' closure

NEW YORK (CNN Business) - Hasbro will lay off up to 10% of its employees, victims of the fallout after Toys "R" Us closed its doors. The toymaker has not yet disclosed how many of its 5,400 global ... Continue Reading
China's battered stock market just had its best day in years

China's battered stock market just had its best day in years

HONG KONG (CNN Business) - China's beaten-down stock market had its best day in more than two and and a half years on Monday.The benchmark Shanghai Composite index surged more than 4% after a rare ... Continue Reading
Fiat Chrysler is selling its auto parts business for $7 billion

Fiat Chrysler is selling its auto parts business for $7 billion

HONG KONG (CNN Business) - Fiat Chrysler's new CEO has struck a deal to sell the company's auto parts business for more than $7 billion.The carmaker announced Monday that its Magneti Marelli divisi ... Continue Reading
Things are bad at Sears. They're worse at Kmart

Things are bad at Sears. They're worse at Kmart

NEW YORK (CNN Business) - Sears is going to have a hard time surviving its bankruptcy. Kmart faces even longer odds.Traditional department stores, including Sears, face heavy competition from big b ... Continue Reading
'Halloween' grabs one of the biggest horror openings ever

'Halloween' grabs one of the biggest horror openings ever

NEW YORK (CNN Business) - It's hard to say it any other way: Michael Myers made a killing at the box office this weekend.

Universal's "Halloween," the 11th film in the horror franchise, beat expectations and earned an estimated $77.5 million in North America this weekend. That's the best opening ever for the 40-year-old slasher series.

It also marks second biggest debut for a horror film behind last year's "It," which had a $123 million opening.

The sequel, which stars Jamie Lee Curtis, adds to a blockbuster October. Earlier this month "Venom" notched a record setting $80 million, the best October debut on the books.

"Halloween" capitalized on its own brand recognition and the recent popularity of the horror genre to bring in such a big weekend. Films such as "Get Out," "A Quiet Place" and "It" have all surprised Hollywood in recent years with big box office totals.

The slasher film, which is a direct sequel to the 1978 classic, was also a hit with critics as well as audiences. It earned an 80% score on review site Rotten Tomatoes.

The surprising returns for "Halloween" mark another win for Hollywood, which is up 10.6% from the same point last year, according to comScore. This weekend's box office itself was up a whopping 71.7% from the same weekend in 2017.

The rest of the year also looks promising for the film industry. Potential blockbusters such as Warner Bros.' "Fantastic Beasts: The Crimes of Grindelwald," Paramount's "Bumblebee" and Disney's "Mary Poppins Returns" are still on the schedule for the rest of the year.

How the Khashoggi case and its fallout is affecting global business

How the Khashoggi case and its fallout is affecting global business

(CNN) - The disappearance and death of Saudi journalist Jamal Khashoggi sent shockwaves through the business world, leaving in limbo planned investments, partnerships and projects in banking, transpo ... Continue Reading
Walmart's strategy to solve the Amazon puzzle is working

Walmart's strategy to solve the Amazon puzzle is working

NEW YORK (CNN Business) - Walmart is in the biggest fight of its 68-year history.

To stave off Amazon and remain the world's biggest retailer, Walmart is stepping up its grocery game and buying trendy digital brands. The company is redesigning its stores and building up its online assets.

"We're changing. We're adapting. We continue to transform," chief executive Doug McMillon said at Walmart's annual investor gathering on Tuesday.

Walmart (WMT) is marching forward with a two-track strategy designed for different customer segments: It's offering cheaper and more convenient ways to buy groceries for its low-and-middle income base, while acquiring high-end brands--- including Bonobos and Modcloth--- to draw wealthier shoppers long wary of Walmart's image.

The plan is working: Grocery sales growth is at a nine-year high. Walmart's online sales are expected to grow 40% this year, and the company said Tuesday that digital growth will expand by 35% in 2019.

"They are one of the few incumbents that has effectively landed some counter punches on Amazon," said Jason Goldberg, head of the commerce practice at digital agency SapientRazorfish.

Food fight

The company believes its 182,000-square-foot supercenters are its most effective weapon against Amazon (AMZN). Amazon bought Whole Foods last year, but it can't easily replicate an expansive brick-and-mortar presence across the world.

Walmart's proximity to shoppers' homes gives the company a leg up over its rivals in the grocery race. About 90% of Americans live within 10 miles of a Walmart.

Groceries are the biggest traffic driver to Walmart's stores. They make up 56% of its roughly $500 billion in annual sales.

Under McMillon, the company has bolstered the quality of its fresh grocery selection and invested in private-label brands, including Great Value and wine labels. Walmart has also lowered prices to compete and upgraded its supply chain to keep groceries fresher for longer.

In 2014, Walmart introduced curbside pickup. Shoppers can order online, select a pickup time, and pick up their groceries at thousands of stores without leaving their cars. Walmart has 25,000 trained personal shoppers who select produce and meat for online orders.

Retail experts say that option is more appealing to shoppers who drive to grab their groceries and don't have time to wait at home for them to arrive.

By the end of 2019, curbside pickup will be available at 3,100 Walmart supercenters and neighborhood markets. Whole Foods has only about 470 stores and it appeals to a narrow segment of the grocery market.

Walmart is marshaling its real estate in other ways, too. It will have 700 store pickup towers --- automated vending machines to retrieve online orders --- by the end of the year.

The company is testing a variety of first-and-third-party services to handle deliveries, including Spark, a crowd-sourced platform. The company will be able to cover 40% of the US population through delivery by the end of the year.

Although online delivery still makes up a fraction of the estimated $800 billion US grocery market, Walmart is taking steps to prepare for the future.

Climbing upmarket

Protecting groceries alone isn't enough and building new stores won't cut it anymore.

Walmart is only adding 10 stores next year in the United States after saturating the country with 182,000-square-foot supercenters. So Walmart is attempting to bring wealthier Americans into the fold with more income to spend on clothes, everyday essentials, and home goods.

Walmart dominates lower-income consumers, who make up 30% of the $4 trillion retail market the two are battling over, according to a Morgan Stanley data analysis.

But Amazon is winning in the higher end, which represents half of the available market.

Walmart has developed a shrewd acquisition strategy to reach those wealthier customers and chip away at Amazon's advantage.

Instead of betting on the Walmart name, the company is buying brands like Bonobos and online specialty stores such as Moosejaw, Hayneedle, and Shoebuy. In October alone, Walmart nabbed plus-size digital brand Eloquii and lingerie retailer Bare Necessities.

Walmart also has a new, modern-looking website. It has added more than 2,000 brands to the site in areas ranging from kitchenware to outdoor clothing.

The redesigned page not only helps Walmart appeal to wealthier customers, but convinces top brands to sell on it. For example, on Tuesday, Walmart announced a partnership with Advance Auto Parts for a dedicated page on Walmart.com.

To appeal to city shoppers, Walmart has rolled out a relaunched Jet.com, the online marketplace it bought two years ago from Lore for $3.3 billion.

"We really wanted to position Jet.com and push it more upmarket --- really focus on the higher-income urban Millennials," said Marc Lore, Walmart's head of US e-commerce, on Tuesday. Jet is attracting premium brands like Nike to the site. It will start selling Bonobos clothes there next week.

Bringing startups into the Walmart ecosystem also expands the company's talent pool and expertise as it tries to reach tech-savvy shoppers.

For example, Andy Dunn, the founder of Bonobos, now runs Walmart's portfolio of digitally-native brands, including Bonobos, Modcloth, Allswell and Eloquii. Bare Necessities CEO and co-founder Noah Wrubel will lead Walmart.com and Jet's intimates category.

"When they make acquisitions, they do it a great deal for the intellectual capital they can build around it," said Alan Ellstrand, associate dean of the Walton College of Business at the University of Arkansas.

All roads lead to Amazon

The challenges Walmart faces are steep and expensive.

It lowered its profit guidance on Tuesday for 2019, citing its $16 billion acquisition for a controlling stake of Indian startup Flipkart. The deal, the largest in Walmart's history, will position the company to take a bigger slice of India's fast-growing online retail market. Amazon was reportedly the next-highest bidder for Flipkart.

Walmart's investments to ramp up online will also dent the company's profit margins. "We expect losses to increase some next year," CFO Brett Biggs said on Tuesday.

The company is far behind Amazon on building out its online shipping capabilities: It operates fewer than 10 dedicated e-commerce facilities, compared to Amazon's 122 core fulfillment centers, Morgan Stanley's Gutman noted.

Goldberg, from SapientRazorfish, questioned whether Walmart has the agility and speed to disrupt itself in time to stave off Amazon.

Walmart has an entrenched supply chain and a distribution model that allowed it to become the world's largest retailer, but that same infrastructure makes it challenging to pivot.

"My main concern about Walmart continues to be competition from Amazon," said Ellstrand. "While Walmart continues to innovate in the online space through the acquisitions it has made, its Walmart.com platform continues to trail Amazon."

Clarification: This story has been changed to clarify the title of Walmart's 25,000 personal shoppers who select groceries for online orders, as well as the role of Andy Dunn, Walmart's senior vice president of digital consumer brands.

US importers stuck with Trump's latest China tariffs

US importers stuck with Trump's latest China tariffs

NEW YORK (CNN) - American importers can ask for an exemption from President Donald Trump's tariffs on steel and aluminum, and his first two rounds of tariffs on Chinese goods. But they're stuck pay ... Continue Reading
JPMorgan is building a fintech campus in Silicon Valley

JPMorgan is building a fintech campus in Silicon Valley

NEW YORK (CNN Business) - JPMorgan Chase is building a campus in Silicon Valley as it redoubles its focus on tech --- and looks to compete more aggressively for top talent.The bank said Friday that ... Continue Reading
Patagonia CEO gets political, endorsing two Democratic Senate candidates

Patagonia CEO gets political, endorsing two Democratic Senate candidates

NEW YORK (CNN Business) - Patagonia is taking a political stand. The outdoor goods and apparel store threw its weight behind two Democratic candidates: Jacky Rosen, who is running for Senate in Nev ... Continue Reading
Tom Barrack, CEO and Trump friend, drops out of Saudi conference

Tom Barrack, CEO and Trump friend, drops out of Saudi conference

NEW YORK (CNN Business) - Tom Barrack, CEO of Colony Capital and a close friend of President Donald Trump, has dropped out of next week's Future Investment Initiative in Saudi Arabia.

Barrack told CNN that his session at the summit was canceled because he was scheduled to speak with Treasury Secretary Steven Mnuchin, who pulled out of the event on Thursday.

"As a consequence, I postponed my visit," said Barrack, who chaired the president's inaugural committee.

Barrack, a real estate investor, has known Trump for 40 years. He's previously helped raise money to support Trump's political ambitions and has publicly defended the president.

A wave of top executives withdrew from the high-profile investment conference this week amid growing controversy over dissident journalist Jamal Khashoggi's disappearance and apparent killing.

JPMorgan (JPM) CEO Jamie Dimon, BlackRock (BLK) CEO Larry Fink and Blackstone (BX) CEO Stephen Schwarzman said earlier this week that they will not attend.

Mnuchin announced his decision shortly after Secretary of State Mike Pompeo briefed Trump on his visit earlier this week to Riyadh to discuss the Khashoggi case.

Pompeo urged patience with the Saudi investigation, telling reporters that he advised the President to give the Saudis "a few more days" --- but Mnuchin followed up shortly afterward with a tweet saying he would not go to Riyadh, reversing the position he's taken over the past week.

"Just met with @realDonaldTrump and @SecPompeo and we have decided, I will not be participating in the Future Investment Initiative summit in Saudi Arabia," Mnuchin tweeted Thursday.

Elizabeth Warren wants Wells Fargo to fire its CEO. She wants the Fed's help

Elizabeth Warren wants Wells Fargo to fire its CEO. She wants the Fed's help

NEW YORK (CNN Business) - Senator Elizabeth Warren wants regulators to keep Wells Fargo in the penalty box until the bank replaces CEO Tim Sloan.In a letter to the Federal Reserve on Thursday, Warr ... Continue Reading