While Starbucks has warned of price competition in China and Apple tries to drum up momentum with a new store in Shanghai, other U.S. consumer brands are seeing growth and planning for more. Domino’s Pizza’s China operator DPC Dash reported Wednesday its 26th straight quarter of same-store sales growth — including the pandemic period. Last year’s revenue of 3.05 billion yuan ($429.6 million) was more than triple that in 2019, while net losses narrowed to about a tenth of what they’ve been in prior years. “We continue to think that the company will turn net profit positive in 2025,” HSBC analysts said in a note Thursday. “Growth from new markets will continue to drive the overall growth of the company,” the analysts said. Chinese President Xi Jinping last week met with visiting U.S. executives as part of Beijing’s bid to bolster foreign investment in China . While advanced tech is a focus of bilateral tensions, the U.S. and China have said they are looking to cooperate in areas such as climate and tourism. China’s massive consumer market of hundreds of millions of households also remains attractive to many businesses. Pizza push Domino’s has a roughly 14% stake in DPC Dash, which listed in Hong Kong about a year ago. The pizza brand opened its 800th store in China in January, and plans to open 200 more by the end of the year. Papa John’s , which does not break out China revenues, said it had 317 franchised locations there in 2023, up from 262 a year prior. Outside of North America, the number of Papa John’s locations in China is second only to those in the U.K. The company said international revenue overall grew by 21% last year. Pizza is also taking off in smaller Chinese cities, and making the global rankings in sales. In 2023, DPC opened the first Domino’s stores in 13 cities outside the better-known metropolises such as Shanghai and Beijing. Four of those new locations jumped to the top of Domino’s global rankings of stores with the most sales in the first 30 days of opening, according to DPC Dash. It added that China locations have now snagged the top 19 spots for best-performing Domino’s store openings. A new store in the north-central city of Xi’an came in first with sales of more than 6.3 million yuan within the first 30 days of opening, according to DPC Dash. That was followed by a new store in the central China city of Changsha, with initial sales of more than 5.2 million yuan. “We didn’t actually spend a lot of marketing dollars to let people know” about the new stores, DPC Dash CEO Aileen Wang told me in an interview on Thursday. “People naturally know and they come.” She characterized it as an inflection point for the company. Advertising and promotion expenses fell to 5.2% of revenue in 2023, down from 5.8% the prior year, DPC said in its 2023 results. New growth markets outside Shanghai and Beijing saw revenue double in 2023, and in the second half of the year contributed to more than half of total revenue for the first time, the company said. It noted that it hasn’t begun delivery services yet for some new stores. As for whether Domino’s Pizza was feeling pressure from any cautiousness among consumers, Wang pointed out the company has a starting price of 39 yuan ($5.49) per order and a 30% discount every Tuesday and Wednesday. Average sales value per order did fall by 7.1% in Shanghai and Beijing in 2023, according to DPC’s latest results. “We are certainly cautious about the catering sector in FY24E,” Hong Kong-based investment bank CMB International said in a note last week. “But we think DPC could still gain market share under the consumption trade down and enjoy rapid boost in growth from new markets expansion.” DPC is the third largest pizza brand in China, CMBI’s analyst Walter Woo said in a separate note. “DPC remains our top pick in the catering sector, thanks to its value for money position, huge room for expansion in China and esp. its consistent success in new growth markets.” Woo has a buy rating on DPC Dash and a price target of 73.05 Hong Kong dollars. HSBC maintained its buy rating on DPC Dash, and trimmed their price target to 71 Hong Kong dollars ($9.07) due to lower expectations about long-term revenue growth. That price target is still more than 40% above where shares closed Thursday. Western food acceptance The Hong Kong Stock Exchange was closed for Good Friday, and doesn’t reopen until Tuesday. The exchange will also be shut on Thurs., April 4, for a local Chinese holiday. The mainland exchanges are closed April 4 and 5 for the holiday. “Chinese people do eat pizza,” DPC Dash CEO Wang said. “As the income level goes up, the acceptance [of] Western food is going higher.” Yum China, which owns Pizza Hut in China among other brands, is set to release earnings in late April. McDonald’s recently acquired a larger stake in its China operations, and in February said it plans to have 10,000 stores in China by the end of 2028. That’s nearly double the company’s store count of 5,903 as of the end of last year. “Certainly in China, as you’ve read about and seen with a number of other companies, consumer sentiment in the country is a little bit more under pressure right now, and that is leading to – in Q4 in particular we saw the environment get more promotional,” CEO Christopher J. Kempczinski said on the company’s latest earnings call, according to a FactSet transcript. But, he said, “we certainly think that we’re going to continue to see good comp performance in that market, as consumer wealth and GDP continue to grow mid-single digits.”
Ted Pick, CEO Morgan Stanley, speaking on CNBC’s Squawk Box at the World Economic Forum Annual Meeting in Davos, Switzerland on Jan. 18th, 2024.
Adam Galici | CNBC
Morgan Stanley topped analysts’ estimates for third quarter profit as its wealth management, trading and investment banking operations generated more revenue than expected.
Here’s what the company reported:
Earnings:$1.88 a share vs $1.58 LSEG estimate
Revenue: $15.38 billion vs. $14.41 billion estimate
Morgan Stanley had several tailwinds in its favor. The bank’s massive wealth management business was helped by high stock market values in the quarter, which inflates the management fees the bank collects.
Investment banking has rebounded after a dismal 2023, a trend that may continue as easing rates will encourage more financing and merger activity.
Finally, its Wall Street rivals have posted better-than-expected trading results, making it unlikely that the firm missed out on elevated activity.
Chinese e-commerce company Alibaba has invested heavily in its fast-growing international business as growth slows for its China-focused Taobao and Tmall business.
Nurphoto | Nurphoto | Getty Images
BEIJING — Chinese e-commerce giant Alibaba‘s international arm on Wednesday launched an updated version of its artificial intelligence-powered translation tool that, it says, is better than products offered by Google, DeepL and ChatGPT.
Alibaba’s fast-growing international unit released the AI translation product as an update to one unveiled about a year ago, which it says already has 500,000 merchant users. Sellers based in one country can use the translation tool to create product pages in the language of the target market.
The new version is based only on large language models, allowing it to draw on contextual clues such as culture or industry-specific terms, Kaifu Zhang, vice president of Alibaba International Digital Commerce Group and head of the business’ artificial intelligence initiative, told CNBC in an interview Tuesday.
“The idea is that we want this AI tool to help the bottom line of the merchants, because if the merchants are doing well, the platform will be doing well,” he said.
Large language models power artificial intelligence applications such as OpenAI’s ChatGPT, which can also translate text. The models, trained on massive amounts of data, can generate humanlike responses to user prompts.
Alibaba’s translation tool is based on its own model called Qwen. The product supports 15 languages: Arabic, Chinese, Dutch, English, French, German, Italian, Japanese, Korean, Polish, Portuguese, Russian, Spanish, Turkish and Ukrainian.
Zhang said he expects “substantial demand” for the tool from Europe and the Americas. He also expects emerging markets to be a significant area of use.
When users of Alibaba.com — a site for suppliers to sell to businesses — are categorized by country, developing countries account for about half of the top 20 active AI tool users, Zhang said.
Chinese companies have increasingly looked abroad for growth opportunities, especially e-commerce merchants. PDD Holdings‘ Temu, fast fashion seller Shein and ByteDance’s TikTok are among the recent global market entrants. Many China-based merchants also sell on Amazon.com.
Zhang declined to share how much the updated version would cost. He said it was included in some service bundles for merchants wanting simple exposure to overseas users.
His thinking is that contextual translation makes it much more likely that consumers decide to buy. He shared an example in which a colloquial Chinese description for a slipper would have turned off English-speaking consumers if it was only translated literally, without getting at the implied meaning.
“The updated translation engine is going to make Double 11 a better experience for consumers because of more authentic expression,” Zhang said, in reference to the Alibaba-led shopping festival that centers on Nov. 11 each year.
Alibaba’s international business includes platforms such as AliExpress and Lazada, which primarily targets Southeast Asia. The international unit reported sales growth of 32% to $4.03 billion in the quarter ended June from a year ago.
That’s in contrast to a 1% year-on-year drop in sales to $15.6 billion for Alibaba’s main Taobao and Tmall e-commerce business, which has focused on China.
Nomura analysts expect that Alibaba’s international revenue slowed slightly to 29% year-on-year growth in the quarter ended September, while operating losses narrowed, according to an Oct. 10 report. Alibaba has yet to announce when it will release quarterly earnings.
Check out the companies making headlines in midday trading: UnitedHealth — Shares plunged 7.2% after the health-care giant lowered its earnings guidance due to ongoing headwinds from a cyberattack earlier in the year. UnitedHealth cut the top end of its full-year earnings forecast, which is now $27.50 to $27.75 per share, compared to previous guidance of $27.50 to $28.00 per share. UnitedHealth still reported a top- and bottom-line beat in the third quarter. Walgreens Boots Alliance — The stock soared 11.9% following the drugstore chain’s fiscal fourth-quarter earnings and revenue beat. Walgreens also plans to close about 1,200 stores over the next three years, which will be “immediately accretive” to its adjusted earnings and cash flow, the company said. ASML — Shares dropped more than 16% after the Dutch semiconductor equipment maker released its earnings report early and offered a weaker-than-expected sales outlook for 2025. The company’s CEO also warned of a “more gradual” recovery ahead. Other chip stocks fell as well, with Nvidia , Advanced Micro Devices and Broadcom last down at least 4% each. Wolfspeed — Shares popped 23% on news that the North Carolina-based chipmaker will obtain up to $750 million in U.S. government grants for its new factories in North Carolina and New York. A group of investors including Apollo and Baupost will provide an additional $750 million in funding for its more than $6 billion plan. Bank of America — The lender saw shares gain 2% after it exceeded analysts’ estimates for third-quarter profit and revenue on better-than-expected trading results. Net interest income, one of the key ways that banks make money, fell 2.9% to $14.1 billion, edging out the $14.06 billion StreetAccount estimate. Enphase Energy — Shares slid 6.8% on the back of a downgrade to sector perform from outperform by RBC Capital Markets. The firm said Enphase should grow at a slower rate than the consensus forecast pencils in. Johnson & Johnson — The health-care conglomerate gained 1.6% after posting quarterly results that exceeded expectations on the back of strong sales of oncology drugs. Johnson & Johnson reported adjusted earnings per share of $2.42 and $22.47 billion in revenue. Meanwhile, analysts surveyed by LSEG had forecast $2.21 in earnings per share on $22.16 billion in revenue. The firm also raised guidance for its 2024 profit and sales. Energy stocks — Energy stocks declined as oil prices dropped about 5% , with the sector last down more than 2%. APA was the biggest laggard, tumbling 6%. Diamondback Energy tanked 4.3%, while Occidental Petroleum , Valero Energy and Halliburton lost more than 3% each. Coty — The CoverGirl parent plunged 11% after trimming its fiscal first-quarter guidance and warning of slower growth trends in the U.S. Citigroup — Shares lost about 4% despite stronger-than-expected third-quarter earnings . The bank posted earnings per share of $1.51 on $20.32 billion in revenue. Analysts polled by LSEG had anticipated earnings of $1.31 per share on revenue of $19.48 billion. Charles Schwab — Shares of the brokerage company rallied more than 8% as third-quarter results topped analysts’ expectations. The company posted earnings of 77 cents, excluding one-time items, on $4.85 billion in revenue. PNC Financial — The Pittsburgh-based regional bank rose more than 3% on a better-than-expected earnings report. Earnings came in at $3.49, topping an LSEG estimate of $3.30 per share. The company reported $5.43 billion in revenue, topping a forecast of $5.39 billion. Boeing — Shares added about 2.1% after the aircraft manufacturer said it could raise up to $25 billion in debt and shares to increase liquidity. — CNBC’s Yun Li, Alex Harring, Hakyung Kim, Michelle Fox, Pia Singh, Sarah Min contributed reporting.