Author: CNBC News

A top Walgreens executive on Thursday acknowledged the company may have overblown concerns about thefts in their stores after shrinkage stabilized over the last year. 

During an earnings call, the company’s chief financial officer, James Kehoe, said shrinkage was about 3.5% of sales last year but that number is now closer to the “mid twos.” He also said the company would consider moving away from hiring private security guards.

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“Maybe we cried too much last year,” Kehoe said. “We’re stabilized,” he added, saying the company is “quite happy with where we are.” 

Shrinkage is the difference between a company’s recorded inventory on their balance sheet and its actual inventory. It primarily accounts for items that were shoplifted but also includes inventory that was damaged, lost or stolen by employees.

Over the last two years, Walgreens has been raising the alarm about increased theft. As a result, it hired private security guards and locked up merchandise so it can’t be accessed without a store associate. 

Kehoe said the company has spent a “fair amount” to crack down on the thefts but acknowledged the private security companies they’ve hired have been “largely ineffective.” These guards can do very little but call law enforcement or hold a suspect until police arrive. 

“We’ve put in incremental security in the stores in the first quarter. Actually, probably we put in too much. We might step back a little bit from that,” said Kehoe. The company is using more law enforcement as opposed to private security, he added.

A Walgreens spokesperson declined further comment on the matter.

Other retailers, such as Walmart and Target, have said recently shrinkage remains a growing concern. 

Walmart CEO Doug McMillon claimed he might have to close stores and raise prices if the problem doesn’t get under control. Target claimed in its last earnings report that it recently lost $400 million from shrinkage. 

Earlier Thursday, Walgreens released its fiscal first-quarter earnings. It beat Wall Street’s estimates after an early flu season boosted demand for cough and cold medicine, but also reported $3.7 billion in losses after the pharmacy chain agreed to pay a hefty $5.2 billion settlement related to opioid litigation.

European nations on Wednesday recommended imposing new restrictions on travelers from China amid fears of an increase in Covid cases.

Passengers departing from China will likely have to present a negative Covid test before leaving the country if heading toward one of the 27 EU countries. They will also likely be asked to wear facial masks during the flights and potentially be subjected to random testing on arrival.

“The Member States agreed on a coordinated precautionary approach in the light of Covid-19 developments in China,” said a statement issued Wednesday, following a meeting of EU officials that lasted several hours.

Health policy comes under the jurisdiction of individual governments. It is up to the various capitals to decide whether they will follow EU recommendations. Several EU nations have already stepped up their protection measures against potential new cases from China. Germany confirmed Thursday that it will ask for at least a rapid coronavirus test from visitors from China, according to Reuters.

Officials in China have criticized recently imposed testing requirements on travelers from the country and threatened to take reciprocal countermeasures. China currently requires foreign visitors to produce a negative Covid-19 test before entering the country, as well as to quarantine for eight days following their arrival. Beijing targets to scrap the confinement requirement this coming weekend, but will continue to demand proof of negative Covid-19 tests from visitors from abroad. In December, it also said it would restart issuing visas for residents to travel abroad.

The U.S., India, U.K., Japan and Australia have all announced tougher measures on travelers from China in a bid to prevent a surge in Covid cases.

Italy was among the first EU nations to take action in the aftermath of Beijing abruptly abandoning strict measures that were in place for much of the pandemic.

Rome, one of the hardest hit in Europe by the pandemic, ordered compulsory testing last week. France and Spain had also taken similar stances.

The latest move by the European Commission, the EU’s executive arm, aims to coordinate rules across the region.

In late December, Chinese authorities said they would restart issuing visas for residents to travel abroad. They also said travelers arriving in China would no longer have to quarantine.

However, China has experienced a rise in Covid infections since November and there are concerns about the level of immunization among its population. The country has nine vaccines developed domestically, according to Reuters, but these have not been updated for the omicron variant, considered highly infectious.

European authorities offered to send vaccines to China, but Beijing has not yet responded, according to a spokesperson for the European Commission.

The commission spokesperson told CNBC that the EU had reached out via its delegation in Beijing “to offer solidarity and support, including through sharing of public health expertise and variant-adapted EU vaccine donations.”

Asked on Tuesday about the offer from Europe to provide Covid vaccines, Chinese Foreign Ministry spokesperson Mao Ning replied, “China has established the world’s largest production lines of Covid vaccines with an annual production capacity of over 7 billion doses and an annual output of over 5.5 billion doses, which meet the needs of ensuring that all people eligible for vaccination have access to Covid vaccines.”

“China’s Covid situation is predictable and under control,” she added.

Correction: This story has been updated to reflect that European officials on Wednesday recommended pre-flight testing of travelers from China.

Samsung’s profit could nosedive when it reports fourth-quarter earnings guidance this week as prices for key memory chips continue to plunge amid weak demand.

Analysts expect Samsung to report 7.18 trillion South Korean won ($5.64 billion) in operating profit in the December quarter, according to Refinitiv consensus estimates. That would be a near 50% fall versus the fourth quarter of 2021.

However, some analysts are more bearish than the consensus.

Analysts at Macquarie Research forecast Samsung to report fourth-quarter operating profit of 5.5 trillion won, which would be the lowest since the third quarter of 2016. Daiwa Capital Markets analysts see operating profit at 4.9 trillion won, a 65% year-on-year plunge and would be the lowest since the fourth quarter of 2015.

The pessimism stems from a rapid fall in memory prices. Samsung is the world’s biggest player in so-called NAND and DRAM chips which are used in devices such as laptops and smartphones, through to data centers.

NAND and DRAM prices fell sharply in the fourth quarter due to a lack of demand for the products they eventually go into, such as PCs. This has led to electronics manufacturers and other companies that use such chips holding onto their inventory, further lowering demand for Samsung’s chips.

Samsung is not exempt from the “memory market carnage,” Macquarie analysts said in a note published Tuesday.

“The magnitude and speed of the memory price decline is parallel to the global financial crisis in 2008,” Macquarie said.

“A toxic combination of an end demand slump and excessive channel inventory led to a high inventory level not seen in a decade,” it added.

The analysts said they expect Samsung’s NAND business to be loss making in the fourth quarter while DRAM is “likely to have a razor thin profit margin” in the first half of 2023.

Samsung’s semiconductor business, which includes NAND and DRAM, accounts for nearly 50% of the company’s operating profit. Therefore, any hit to the memory division will have a big impact on the overall profit the company reports.

Analysts also expect weakness in other parts of Samsung’s business including smartphones, which could weigh on earnings.

Samsung will release fourth-quarter earnings and revenue guidance on Friday before its full financial report, likely later this month.

WASHINGTON — The U.S. House of Representatives adjourned for a second night this week without electing a new speaker after GOP leader Kevin McCarthy, R-Calif., failed in six consecutive votes to secure enough support to be elected to the post.

The House adjourned Wednesday night after breaking for several hours earlier in the evening to give Republicans more time to sway 20 of the party’s most conservative members that have been blocking McCarthy’s run for speaker. The House gaveled back in shortly after 8 p.m. ET only to quickly vote to adjourn until Thursday at noon.

Just ahead of adjourning, McCarthy told reporters in the Capitol that he didn’t have a deal with his opponents, but there was “a lot of progress.”

“I don’t think a vote tonight does any different, but a vote in the future will,” McCarthy said.

The lack of a speaker left the House in disarray, largely due to the fact that rank-and-file members can’t be sworn into office until a speaker is elected. This left all 434 members of the House technically still members-elect, not official voting representatives. 

The ripple effects of this historic procedural limbo were felt across Capitol Hill on Wednesday.

Outgoing Rep. Billy Long, R-Mo., pointed out that a host of constituent services were essentially frozen until the new Congress is sworn in.

“Who can legally help any and all of our citizens with issues we normally handle everyday?” Long tweeted. “Passports, IRS, Veterans issues, SBA, Post Office, Immigration issues, Corps of Engineers, etc.” 

He also questioned how congressional salaries would be allocated. “Who’s getting paid? Outgoing or incoming?”

Staffers to some newly elected members also told Politico they were unable to access their official email accounts because their bosses had not been sworn in yet. 

A core group of 20 GOP holdouts voted for Florida Rep. Byron Donalds in several rounds of votes Wednesday, each time denying McCarthy the 218 votes he needs to take the gavel.

All 212 Democrats voted for that party’s incoming Minority Leader, Rep. Hakeem Jeffries, D-N.Y.

The mood on the House floor grew more contentious throughout the day, as Republicans loyal to McCarthy grew increasingly frustrated, and Democrats grew impatient over five hours of voting.

Rep. Lauren Boebert, R-Colo., renominated Donalds in the fifth round of voting before asking McCarthy to withdraw his name.

“You’ve been having my favorite president call us and tell us we need to knock this off,” Boebert said on the House floor, referring to former President Donald Trump. “I think it actually needs to be reversed. The president needs to tell Kevin McCarthy that ‘Sir, you do not have the votes and it’s time to withdraw.'”

Together, Donalds and Jeffries marked the first time that two Black Americans have ever been nominated for House speaker.

Donalds, who was nominated by Texas Republican Chip Roy, told reporters outside the chamber that he would reinstate a House rule to “vacate the chair” if he were elected. That would make it easier to replace the future House speaker.

Former House Speaker Nancy Pelosi, D-Calif., made it more difficult to change leadership by requiring a party leader or a majority vote by one party to force the vote. Donalds said any member of the chamber should be allowed to call for a vote on the House leader.

“This was a mainstay rule in our chamber that empowered all the members of Congress,” said Donalds, who on Tuesday had publicly shifted his support away from McCarthy. “And Nancy Pelosi is the one who stripped it. And so we think it is important for our institution to function correctly on behalf of the American people to put it back in place.”

When asked about national security concerns with Congress in limbo, Donalds said a hypothetical threat shouldn’t affect the voting process.

“I would anticipate (President Joe Biden) would act to secure the homeland to take care of the American people,” he said. “When it comes to leveraging money to be spent in response, that’s something the members would have to put into their calculus as well. But that doesn’t mean that we should speed up our business here for some (hypothetical) that may exist at some point.”

Democrats could help McCarthy by withholding their votes, which would reduce the number of votes he needed to win House speaker, according to the Intercept. But Pelosi and others have reportedly dismissed that out of hand.

Pelosi told reporters outside the House floor earlier Wednesday that the Republican chaos revealed “a lack of respect for the sworn duty we all have to defend the Constitution and get the job done for the American people.”

Little appeared to have changed, publicly or privately, between Tuesday and Wednesday. Both McCarthy’s allies and his opponents delivered effectively the same message in interviews Wednesday that they have been for weeks: We’re not going to budge.

One exception to the stalemate was a fresh endorsement for McCarthy from Trump, who on Tuesday afternoon had initially sounded an uncertain note about the political future of one of his most loyal allies in Congress.

“REPUBLICANS, DO NOT TURN A GREAT TRIUMPH INTO A GIANT & EMBARRASSING DEFEAT,” Trump posted on his Truth Social website Wednesday morning. “IT’S TIME TO CELEBRATE, YOU DESERVE IT. Kevin McCarthy will do a good job, and maybe even a GREAT JOB – JUST WATCH!”

Despite Trump’s broad support among conservative Republican voters, it was not clear his new endorsement would move the needle for any of the holdouts in Congress. While the group of 20 far-right Republicans are all close Trump allies, the former president’s name and his “America First” message have been notably absent from the intraparty GOP debate raging behind closed doors.

McCarthy himself was tight lipped Tuesday and into Wednesday, and he declined to give interviews or take his message to the airwaves or social media.

When asked Wednesday morning what his plan would be, NBC News reported that McCarthy told reporters at the Capitol, “Same game plan as yesterday.”

When a journalist asked how he would get more votes, McCarthy replied: “We’re sitting, we’re talking … I think we can get to an agreement.”

Instead, he authorized a handful of allies to negotiate with the holdouts, many of whom identify with the Freedom Caucus, a loosely organized 40+ member caucus led by Pennsylvania Republican Rep. Scott Perry, who is among the most outspoken opponents of McCarthy’s speaker bid.

Amazon said Wednesday it will cut more than 18,000 jobs, a bigger number than the e-retailer initially said it would be eliminating last year.

The Wall Street Journal reported on the cuts earlier, which Amazon said preempted its planned announcement.

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“We typically wait to communicate about these outcomes until we can speak with the people who are directly impacted,” CEO Andy Jassy wrote in a memo to employees that the company published on its blog. “However, because one of our teammates leaked this information externally, we decided it was better to share this news earlier so you can hear the details directly from me.”

Tech companies are picking up in 2023 where they left off last year, preparing for an extended economic downturn. Salesforce said Wednesday it would reduce head count by 10%, impacting more than 7,000 employees. Both Amazon and Salesforce admitted they hired too rapidly during the Covid pandemic.

Amazon specifically acknowledged that it had added workers too quickly in warehouses as consumers shifted to online ordering. The company employed 1.54 million people at the end of the third quarter.

In November, Jassy said Amazon would eliminate roles, including at its physical stores and in its devices and books divisions. CNBC reported at the time that Amazon was looking to lay off around 10,000 of its employees. Now the number is higher.

“Amazon has weathered uncertain and difficult economies in the past, and we will continue to do so,” Jassy wrote. “These changes will help us pursue our long-term opportunities with a stronger cost structure; however, I’m also optimistic that we’ll be inventive, resourceful, and scrappy in this time when we’re not hiring expansively and eliminating some roles.”

Amazon plans to inform employees who will lose their jobs starting Jan. 18, Jassy wrote, noting that most cuts will come in the stores and People, Experience, and Technology (PXT) groups.

WATCH: Could Bezos return as Amazon CEO?

The share of workers who quit their jobs jumped in November for the first time since last spring — and they’re getting a big pay bump for moving, data shows.

The “quits rate” among U.S. workers was 2.7% in November, up from 2.6% the prior month, according to U.S. Department of Labor data issued Wednesday. It was the first time the rate increased since last March.

The quits rate measures the number of people who quit their jobs during the month as a percent of total employment.

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Almost 4.2 million people left their jobs voluntarily in November, according to Labor Department data. Workers who quit overwhelmingly do so in order to take new jobs, economists said.

The labor market remains strong by historical standards, characterized by a high level of job openings and low layoffs. That translates to ample opportunity for workers, who generally get an increase in pay when they accept a new position.

“Job switching is one of the best ways to get a raise,” said Nick Bunker, economic research director at Indeed. “People are quitting their jobs because it pays to quit their job.”

In fact, the difference in wage growth for job switchers relative to those who stay in their current role is at a record high, said Julia Pollak, chief economist at ZipRecruiter.

Job switchers got a 7.7% increase in wages in November from a year earlier, versus a 5.5% increase for job stayers, according to the Federal Reserve Bank of Atlanta. That 2.2-point difference is about three times higher than the 0.7-point historical trend, Pollak said.

“There are clearly big benefits to switching jobs right now,” Pollak said.

Job openings ballooned to record highs. Quits increased in lockstep — a trend that came to be known as the Great Resignation. Layoffs fell to historic lows as businesses sought to hang onto their existing workers.

“This is one of the best times ever for workers and jobseekers,” said Pollak, adding that workers have an unprecedented degree of job security and opportunity. “It remains a sort of golden era.”

While job openings and the level of quitting have declined from peaks in late 2021 and early 2022, they remain elevated by historic standards. Quits will likely remain high until labor demand takes a serious downturn, Bunker said.

Of course, wage growth hasn’t kept pace with inflation for the average worker. So-called “real” hourly wages — a measure of pay after accounting for inflation — declined by 1.9% in November, according to the Labor Department.

In other words, the average consumer lost buying power because rapidly rising prices for goods and services outstripped pay growth.  

But job switchers did better at keeping up with inflation than those who stayed at their jobs. In fact, in November, their annual 7.7% wage growth beat the 7.1% annual inflation rate, according to a comparison of Federal Reserve Bank of Atlanta wage data relative to the consumer price index.

Wage growth is feeding into inflation, which has declined but remains near its highest level in about four decades. The U.S. Federal Reserve has been raising interest rates aggressively in a bid to reduce demand in the economy, cool the labor market and snuff out stubbornly high inflation.

Wage growth has moderated a bit from 2021, though remains strong relative to its pre-pandemic trend, Bunker said. If wages continue to increase at rapid rates, policymakers may feel the need to raise borrowing costs even more than anticipated — cooling the labor market further in the process.

Currently, the brakes don’t seem to be slamming on the labor market, at least not in the near future.

“The labor market is the bedrock source of strength for the U.S. economy right now,” Bunker said.

Some economists recommend workers prepare in case a downturn eventually comes, and increased layoffs with it.

“Even for those who believe their employment is stable, it would be wise to keep job contacts intact in case things change over the course of the year,” said Mark Hamrick, senior economic analyst at Bankrate.