On Holding CEO: Our DTC channel has grown stronger than wholesale
In an interview on CNBC's Mad Money, Martin Hoffmann said the On brand is in a 'really strong position.' 'We have done a lot of work to earn pricing power and we will use it,' he noted. According to Hoffmann, the company had its strongest month ever in April, despite the macro uncertainty.
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New York Post
14 minutes ago
- New York Post
Office space is now being razed or converted faster than it's being built — for the first time in 25 years
While return-to-office mandates may be the talk of the town, office conversions and demolitions reign supreme. More office space is being demolished or converted than is being built through new construction this year. That's according to CBRE Group data reported by CNBC. This marks the first time the scales have shifted in at least 25 years, according to the commercial real estate services firm, demonstrating the lasting and seismic impact of remote work culture in the wake of COVID-19. The inflection point is clear — 23.3 million square feet of office space across the largest 58 US markets will be demolished or converted by the end of 2025, CNBC reported. Just 12.7 million square feet of new office construction will be completed. 5 5 Times Square was left nearly vacant by its former tenant, the auditing firm Ernst & Young. Now it's destined for a residential makeover. Bloomberg via Getty Images 5 The former facade of the since-converted 25 Water St. The office building slowly emptied as JPMorgan Chase, the National Enquirer and the New York Daily News departed. Stefano Giovannini 'We have more office space than we need, and most of the office space that's being demolished is functionally obsolete,' Barry DiRaimondo, CEO of the West Coast-based commercial real estate developer SteelWave, told The Post. 'So I think it's probably good all the way around.' Widespread pressure by major companies to get employees back in their cubicles, especially in New York City, gave a recent boost to office-leasing activity. More office space is now being occupied than vacated, CNBC reported, but office vacancies continue to hover around record highs at 19%. There are significant silver linings to the decline of office construction. Steven Shoumer, a partner at Blank Rome and co-chair of the firm's real estate group, told The Post in an email that shrinking supplies of new offices will help to stabilize rents as return-to-office demands grow. 'However, it will be interesting to see if office space availability gets tighter with vacancy rates lowering in the coming years, and consequently causes office rents to rise (which would also be good for building owners),' Shoumer wrote. Luxury, 'Class A' office owners and investors will particularly benefit from a thinned-out field of competitors, while well-positioned developers can be the star of the show with office-to-residential conversions. 5 Plans are being cooked up for the conversion of a near-empty office building along Flatbush Avenue to turn into Brooklyn's second-tallest residential tower. Binyan Studio and TenBerke Architects 5 One Wall Street, once the largest city's office-to-condo conversion, has since gained several converted FiDi neighbors. Evan Joseph Photography 5 A rendering of the converted interiors of 25 Water St. Streetsense Developers have primed 85 million square feet of former office space for conversions over the next few years, CNBC added. New York City is leading the pack in office-to-apartment conversions, according to RentCafe, with more than 8,000 new apartments expected from repurposed office buildings projected as of February. That number is only increasing with new conversion plans popping up at neglected addresses every few weeks, from Downtown Brooklyn's 395 Flatbush Ave. to 5 Times Square. Successful conversions across the city are racking up. FiDi's 25 Water St. — the former home of JPMorgan Chase, the National Enquirer and the New York Daily News — set a record this year as the largest office-to-resi conversion in the country. There's also Pearl House in the Seaport District, the massive former-bank One Wall Street and ex-Goldman Sachs HQ 55 Broad. Less office construction can also be a boon to the average Joe, too. Although shrinking office footprints might not get folks out of their morning commute into Midtown, the conversion of other, obsolete offices will offer a boost to housing supplies and cheaper rents.
CNBC
19 minutes ago
- CNBC
How big drop in trade deficit as tariffs hit imports looks inside U.S. supply chain and economy
The U.S. trade deficit fell by the largest amount on record in April as imports fell by over 16% after a surge in orders to beat President Trump's tariffs, but there's a worrying flip side for the consumer. As the trade war whipsaws global economic activity, supply chain data shows that the retail inventory crunch could be next. From freight orders to inventory and warehousing, the latest logistics data shows the inability of importers to make decisions on adding to inventory levels. One closely watched data point is the widening gap between inventory levels and inventory costs. These metrics generally track together, according to the Logistics Managers' Index. In 2024, the average space between these metrics was 12.1 points. But in May 2025, the gap has expanded to 26.8 points, the third-highest in the history of the index, said Zachary Rogers, associate professor of supply chain management and Colorado State University Supply Chain Management Forum director. When inventories are high and quickly expand, warehouses cost more. Traditionally, when warehouse inventories decrease, warehouse costs slow down as well. But because of the front-loading of products ahead of the tariffs in the January-March period, inventory is flat, with replenishment orders not coming in. But costs are still up because the inventory is being held longer. "The situation we're in now, inventories are up, and they're sitting there," said Rogers. "Essentially, imports in January, February, and early March looked a lot like what we would normally see in August, September, and early October." Normally in mid-October, holiday sales kick into gear, which would move inventory out of the warehouse. But given the uncertainty in tariffs and concerns about the financial health of the consumer, retailers have told CNBC they are not placing full orders. "Warehousing capacity is tight, which means there is no inventory movement, and the associated costs (e.g., warehousing prices and inventory costs) are much higher than what we would normally see at this time of the year," Rogers said. "This means the inventory is getting more expensive to hold." Ocean freight orders from around the world to the U.S. show the pause button in product orders continues. As President Trump and Chinese President Xi Jinping held their first call since a raft of new tariffs on China in an initial attempt to de-escalate the trade war, data on Chinese ocean freight bookings to the U.S. shows a picture similar to the softness in global orders after the surge. A recent drop in freight vessel sailings from China drove up the cost for imports as there has been less capacity available on ships. Peter Sand, Xeneta chief shipping analyst, said the recent 88% increase in ocean freight spot rates on the China to U.S. trade route indicates demand of some shippers willing to pay to pull forward their freight during the 90-day tariff pause. "However, this will not last because [vessel] capacity is heading back to the Transpacific and the desperation of shippers to get supply chains moving again will ease once boxes are on the water and inventories begin to build up," said Sand. "Spot rates are expected to peak in June before downward pressure returns." The conditions in the freight market resulted in an advantage for larger firms over small businesses, according to Rogers. "Smaller firms were boxed out during the big rush of imports in Q1, so they have had to bring inventories over later, resulting in higher costs," he said. But since the larger companies aren't continuing to stock up, as the surge ends it is impacting smaller supply chain companies directly too. The smaller firms in the Logistics Managers' Index survey sample are representative of the "middle mile" in supply chains, wholesalers and logistics service providers as the points in the supply chain where freight is transported between a supplier's warehouse, distribution center and the final point of delivery, which could be a retail store or a customer's doorstep. They get hit when large manufacturers and retailers avoid inventory as much as possible — unlike Covid, they are running leaner inventory overall, which further squeezes the "middle mile." "Essentially, it is the small businesses of America that are bearing the brunt of the tariffs right now," Rogers said. "This could change as inventories move downstream to retailers if costs could be passed down to the consumer," he added. Recent Federal Reserve survey data shows many firms planning to pass on price increases resulting from tariffs to customers. But the ability to pass on price increases to customers varies business to business, and based on end customer. Helen Torkos, president and owner of Regent Tek Industries, which manufactures pavement markings, tells CNBC the global trade war has greatly impacted the cost of importing the raw components needed to manufacture the highest grade of thermoplastic road markings, the product that is on state, city, and local roads and highways. "The majority of our components are now being tariffed," said Torkos. "Our cost has gone up tenfold. We cannot pass on these costs to some of our customers because they cannot afford the increases. We also cannot source these products domestically." Torkos said the uncertainty of future tariff costs has also led to the cancellation of key projects. "The recent removal from several bid processes due to the tariffs causing rising material prices further underscores the impact of these tariffs on our operations," Torkos said. To address the swings in tariffs, and in an effort to offer more certainty on possible freight costs, logistics firms are launching tariff analysis tools. C.H. Robinson and Flexport are among companies to roll out technology that allows businesses and consumers to model tariff impact on price. Wine for Europe is one example that can impact both the business and consumer. The EU was threatened by President Trump in a social media post of a 50% tariff, only to have that threat walked back by the president, delaying that increase from June 1 to July 9. According to the Flexport Tariff Simulator, if a container with bottles of Chianti from Italy was processed by U.S. Customs on June 2, the wine would be under a 10.24% tariff rate. The duties for one 20-foot container filled with 0.75L bottles of Chianti would be $27,024. If the tariff were increased by another 50%, the tariff bill would soar from $27,024 to $132,624. The tariff rate was based on a wholesale value of $264,000 ($20 a bottle w/13,200 bottles in a container.) Then, there is the stacking of multiple tariff layers already implemented during the trade war. These duties have pushed up costs to import retail goods much higher than the 30% associated with the tentative agreement. Using an example of a common summer retail purchase, Flexport data shows a 20-foot container storing 60 fully assembled aluminum chaise lounge chairs with a wholesale value of $60,000, departing from China on June 2 and arriving on July 15, would face a 70% tariff — that includes Section 301 tariffs at 25% under the 1974 Trade Act's unfair practices policy; Section 232 tariffs on steel and aluminum at 25%; and the national emergency powers fentanyl tariffs at 20%. The total amount in tariffs for that single container would be $42,000. "It's not that simple to calculate," said Ryan Petersen, Flexport CEO. "There's still a lot of uncertainty about what's going to happen. For example, it may not be on the tip of everyone's tongue right now, but July 8 is the end of the reciprocal tariffs pause. That could end, and tariffs may not be 10% everywhere. Commerce Secretary [Howard] Lutnick has made comments he is committed to making the tariffs higher." A women's top imported from India faced a tariff rate on June 2 of 42%. After the reciprocal tariff deadline is lifted, the same top will be taxed at 58%. Mike Short, president of global forwarding at C.H. Robinson, said for companies to save on tariff costs, they need to have the ability to search their SKUs and identify the product's point of origin so they can tabulate tariff costs. "Based on that information, they could then quickly compare their total duty spending versus various alternative sources," said Short. "Knowing the spending scenarios can provide businesses with clarity on where to focus their efforts to achieve savings and diversification, down to the individual product level."
CNBC
19 minutes ago
- CNBC
Corporate layoffs have ramped up in recent weeks. Here are the companies making cuts
While Elon Musk has ended his government cost-cutting initiative that resulted in thousands of federal job cuts, mass layoffs are still roiling corporate America. Companies are under increasing pressure to trim costs against the backdrop of global economic uncertainty brought on by President Donald Trump's tariff policies. Several companies have announced price hikes. Layoffs mark another way to pull back. Trade tensions have also raised concerns about the general health of the U.S. economy and the job market. While the April jobs reading was better than expected, a separate reading from ADP this week showed private sector hiring hit its lowest level in more than two years. Though many companies declined to provide specific reasoning for announced workforce reductions — instead lumping the layoffs in with larger cost-cutting strategies or growth plans — tech leaders are starting to cite artificial intelligence as a clear consideration in hiring and headcount adjustments. Klarna CEO Sebastian Siemiatkowski told CNBC last month the fintech company has shrunk its headcount by 40%, in part due to investments in AI. Likewise, Shopify CEO Tobias Lütke told employees in April that they will have to prove why tasks can't be performed by AI before asking for more headcount and resources. Here are some of the companies that have announced layoffs in recent weeks: Pampers and Tide maker Procter & Gamble said on Thursday it will cut 7,000 jobs, or about 15% of its non-manufacturing workforce, over the next two years as part of a restructuring program. CFO Andre Schulten said during a presentation that the company is planning a broader effort to implement changes across the company's portfolio, supply chain and corporate organization. The company did not specify the regions or divisions that would be impacted. Microsoft said last month it would reduce its workforce by about 6,000 staffers, totaling about 3% of employees across all teams, levels and geographies. A Microsoft spokesperson told CNBC at the time one objective of the cuts was to reduce layers of management. The company announced a smaller round of layoffs in January that were performance-based. The spokesperson said the May cuts were not related to performance. Citigroup said in a statement Thursday it plans to reduce its staff by around 3,500 positions in China. The cuts mostly affect the information technology services unit, which provides software development, testing and maintenance. Some of the impacted roles will be moved to Citi's technology centers elsewhere, the bank said. Under the leadership of CEO Jane Fraser, Citi has undertaken a large-scale reorganization with an eye toward profitability and stock performance. The bank consistently underperformed its major bank peers in recent years. Citi announced a broader plan last year to reduce its workforce by 10%, or about 20,000 employees globally. Last month, Reuters reported Walmart was planning to slash about 1,500 jobs in an effort to simplify operations. The teams affected include global technology, operations and U.S.-based e-commerce fulfillment as well as Walmart Connect, the company's advertising business. Walmart employs around 1.6 million employees, making it the largest U.S. private employer. CFO John David Rainey told CNBC during an interview last month that Walmart shoppers would likely see price increases at the start of the summer in response to tariffs. Klarna's Siemiatkowski told employees last month that the Swedish buy now, pay later firm would lay off 10% of its global workforce. "When we set our business plans for 2022 in the autumn of last year, it was a very different world than the one we are in today," Siemiatkowski told employees. The week before that announcement, he told CNBC that Klarna has shrunk its workforce by about 40% due to investments in AI and natural attrition in its workforce. Cybersecurity software maker CrowdStrike announced plans last month to cut 500 employees, or about 5% of its staff. CEO George Kurtz in a securities filing attributed the move largely to artificial intelligence. "We're operating in a market and technology inflection point, with AI reshaping every industry, accelerating threats, and evolving customer needs," he said, adding that the move was part of the company's "evolving operating model." The Walt Disney Company said earlier this week it plans to cut several hundred employees worldwide across several divisions. The layoffs impact teams in film and TV marketing, TV publicity and casting and development. The cuts are part of a larger effort to operate more efficiently, a Disney spokesperson said. Online education firm Chegg said last month it would lay off 248 employees, or about 22% of its workforce. The cuts come as AI-powered tools like OpenAI's ChatGPT take over education. CEO Nathan Schultz said on the company's May earnings call that the layoffs are part of a cost reduction plan and he expects cost savings of between $45 million and $55 million this year, followed by a further $100 million to $110 million next year. Amazon said in May it would eliminate about 100 jobs in its devices and services division, which includes the Alexa voice assistant, Echo hardware, Ring doorbells and Zoox robotaxis. A spokesperson for Amazon told CNBC at the time the decision was part of an ongoing effort to "make our teams and programs operate more efficiently." The cuts come as CEO Andy Jassy has sought out cost-trimming efforts at the company. Since the beginning of 2022, Amazon has laid off roughly 27,000 employees. Warner Bros. Discovery will lay off fewer than 100 employees, according to multiple media reports this week. No particular network or channel would be affected more than others, according to the reports. The WBD cuts follow the company's move to reorganize into two divisions: a global linear networks division and a streaming and studios unit. That process was completed during the first quarter.
