Robust sales in North America were offset by weakness in China as Starbucks reported a modest profit increase Tuesday as it boosts investment in US stores amid a unionization campaign.
The coffee giant scored a 12 percent jump in comparable sales in North America, while suffering a 23 percent slide in China amid that country’s latest Covid-19 outbreak.
Interim Chief Executive Howard Schultz said the chain was ramping up investments in “high-returning” drive-thru stores and cafe renovations in its home market.
“We are single-mindedly focused on enhancing our core US business through our partner, customer and store experiences,” Schultz said in a news release.
“The investments we are making in our people and the company will add the capacity we need in our US stores today and position us ahead of the coming growth curve ahead.”
Net income edged up 2.3 percent to $674.5 million in the quarter ending April 3 following an 14.5 percent jump in revenues to $7.6 billion.
The company’s North America division saw lower profit margins due to higher material costs, increased employee wages and “new partner training, on-boarding and support costs to address labor market conditions,” Starbucks said in a news release.
Under Schultz — the longtime leader of the company who rejoined in March — Starbucks has doubled down on its opposition to a push to unionize stores that has grown following the December vote of two New York stores to unionize.
Some 250 Starbucks stores have launched unionization campaigns in the United States, with employees voting for a union in 47 stores, said the group, Starbucks Workers United.
Shares of Starbucks rose 1.8 percent to $75.63 in after-hours trading.
US sues cryptocurrency exchange run by Winklevoss twins
US regulators on Thursday said they are suing the Gemini Trust cryptocurrency exchange, which is run by Cameron and Tyler Winklevoss, for giving misleading answers in 2017 about a bitcoin project.
The Commodity Futures Trading Commission lawsuit filed in federal court in New York accuses Gemini of not being upfront about how easy it would be to manipulate a bitcoin futures project proposed at the time, the agency said in a statement.
The futures contract launched at the end of 2017 and stopped trading two years later, according to blog posts from Gemini and a partner company
Making false or misleading statements to the commission undermines its work to protect market participants, prevent price manipulation, and promote fair competition, acting director of enforcement Gretchen Lowe said in the statement.
“This enforcement action sends a strong message that the Commission will act to safeguard the integrity of the market oversight process,” Lowe said.
The US agency is seeking financial penalties, the surrender of any ill-gotten gains, and an injunction forbidding Gemini from such behavior in the future, it said.
Gemini defended its record when asked about the suit.
“We have an eight year track-record of asking for permission, not forgiveness, and always doing the right thing,” it told AFP, adding: “We look forward to definitively proving this in court.”
Cameron and Tyler Winklevoss, twin Harvard classmates of Mark Zuckerberg, who sued him over claims he stole the idea for Facebook from them, started and run New York-based Gemini.
The brothers told Gemini employees on Thursday that about 10 percent of them were being laid off as staff is trimmed to endure a “crypto winter” likely to persist for a while, according to a copy of the email posted online by the company.
“The crypto revolution is well underway and its impact will continue to be profound, but its trajectory has been anything but gradual or predictable,” the brothers said.
The industry is in a “contraction phase that is settling into a period of stasis — what our industry refers to as ‘crypto winter'” compounded by macroeconomic and geopolitical turmoil, they added.
NFT market sees first insider trading case in US
US authorities have charged a former manager at a digital exchange platform with fraud and money laundering, in what they said was the first insider trading case involving non-fungible tokens, or NFTs.
Nathaniel Chastain was working as a product manager at New York-based OpenSea last year when he secretly bought dozens of NFTs that were about to be featured on the platform’s home page, federal prosecutors said in a statement Wednesday.
Chastain, 31, went on to sell the NFTs for two to five times the initial price after they got star billing at the OpenSea website, the criminal case against him states.
NFTs are tokens linked to digital images, collectable items, avatars in games or objects in the burgeoning virtual world of the metaverse.
“NFTs might be new, but this type of criminal scheme is not,” US attorney Damian Williams said in a release. “Nathaniel Chastain betrayed OpenSea by using its confidential business information to make money for himself.”
Chastain was arrested in New York on Wednesday on charges of wire fraud and money laundering that each carry a maximum penalty of 20 years in prison, prosecutors said.
US media reported that he was later released on bail after entering a non-guilty plea.
The arrest was touted by prosecutors as the first-ever insider trading bust involving digital assets.
“With the emergence of any new investment tool, such as blockchain supported non-fungible tokens, there are those who will exploit vulnerabilities for their own gain,” FBI assistant director-in-charge Michael Driscoll said in the release.
Part of Chastain’s job was to pick NFTs to be featured on OpenSea’s homepage, with the choices kept secret because prices typically jumped after they got top billing, the criminal complaint said.
The likes of Paris Hilton, Gwyneth Paltrow and Serena Williams have boasted about owning NFTs and many under-30s have been enticed to gamble for the chance of making a quick profit.
Prices have fallen and the reputation of the industry has been hammered for much of the year.
Ford to invest $3.7 bn, boosting legacy Midwestern plants
Ford on Thursday announced fresh multi-billion-dollar capital projects in Midwestern factories near its Detroit home, as the auto giant spreads new investments throughout the United States.
The 119-year-old carmaker plans to spend $3.7 billion to add manufacturing capacity for a mix of electric vehicles (EVs) and conventional gasoline-powered autos in the states of Michigan, Ohio and Missouri, much of it at existing plants that have been in the company’s portfolio for years.
The move follows an announcement last September of an $11.4-billion push with SK Innovation, a South Korean battery company, to build greenfield car production and battery plants in Tennessee and Kentucky.
Major car companies are investing billions of dollars in a race to bring EVs to market, develop driver-assistance programs and outfit their products with the latest and greatest digital equipment.
“We’re investing in American jobs and our employees to build a new generation of incredible Ford vehicles,” said Ford Chief Executive Jim Farley.
Thursday’s announcement was made jointly with the United Auto Workers, which agreed to the new projects outside of standard union contract negotiations.
Ford will add more than 6,200 new manufacturing jobs and convert around 3,000 temporary UAW employees to permanent status.
“This announcement is a testament to UAW members who contribute their skill, experience, and knowledge to the success of Ford Motor Company,” said UAW President Ray Curry.
“We are always advocating to employers and legislators that union jobs are worth the investment. Ford stepped up to the plate by adding these jobs and converting 3000 UAW members to permanent, full-time status with benefits.”
About $2 billion of the investment will go to projects in Michigan, including boosting production of the new F-150 Lightning electric truck and the production of new pickup and coupe vehicles.
The company will spend $1.5 billion in Ohio on assembly of new EV models and other projects, and $95 million in Missouri to add a shift at a plant that makes commercial vans and will add an electric van.
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