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Good Morning!
Happy Wednesday! Let’s see what is moving markets:
👉 Buy Now, Pay Later regulation
👉Target’s earnings are in
👉Pixar job cuts
Regulation: Buy Now, Pay Later
The Consumer Financial Protection Bureau (CFPB) announced that buy now, pay later (BNPL) customers now have the same protections as credit card users.
Source: Washington Post
The new rule classifies BNPL lenders like Affirm, Klarna, and PayPal under the Truth in Lending Act, requiring them to issue refunds for returns, investigate disputes, and provide detailed billing statements. The CFPB, which has been regulating the financial industry, started looking into BNPL in late 2021. While many BNPL companies already offer these protections, the rule ensures they are applied consistently. The rule will take effect in 60 days.
🎯 GRIT TAKE: This regulatory shift could have mixed …upgrade to VIP now to read the full GRIT Take! Massive Memorial Day Sale!
EARNINGS: Target
On Wednesday, Target reported a sales decline and missed Wall Street’s earnings estimates as high prices led consumers to buy fewer items. Revenue was roughly in line with expectations.
Source: Target
CEO Brian Cornell noted weak trends in discretionary categories and emphasized the company’s focus on offering value, including recent price cuts on essentials like milk and bread. Target maintained its full-year forecast, expecting flat to 2% growth in comparable sales and adjusted earnings per share between $8.60 and $9.60. Despite the earnings miss, leaders are optimistic about sales growth in the second quarter. Net income slightly fell to $942 million, or $2.03 per share, from $950 million, or $2.05 per share, a year ago. Total revenue dropped about 3% from $25.32 billion last year. Target faces challenges from reduced consumer spending and competition from discounters like Walmart, Aldi, and Lidl.
PIXAR: Layoffs Are Here
Pixar Animation Studios will lay off about 175 employees, roughly 14% of its workforce. This decision is part of CEO Bob Iger's plan to prioritize quality over quantity in content creation.
Source: CNBC
Pixar's layoffs were delayed due to production schedules, though other Disney divisions faced cuts last year. Initial reports had suggested that 20% of Pixar’s employees might be laid off. Iger, who returned as CEO in late 2022, addresses Disney's recent box office struggles caused by content choices and pandemic shutdowns. Disney’s animated films have had difficulty resonating with audiences, and no Disney animated feature has made over $480 million globally since 2019.
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Source: GS Investing
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