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☆ Chewy Looks to Open More Automated Fulfillment Centers in Drive to Control Costs
▼ + stars: | 2023-01-03 | by ( Nina Trentmann | ) www.wsj.com time to read: +5 min

Online pet retailer Chewy Inc. plans to open more automated fulfillment centers in 2023 to control costs and raise efficiency, which could help the company repurpose certain capital spending, its finance chief said. Photo: Chewy Inc.“When we think about the future of our fulfillment network, automation is at the center of that,” Mr. Marte said. The company, which had over 21,000 employees and 13 fulfillment centers in December, usually requires about 1,200 people for a manned distribution center. “Those are real dollars,” Mr. Marte said, adding that Chewy is working to grow profits and taking out costs. Over time, the company could defer or lower some of its capital expenditures, Mr. Marte said.

☆ Qualcomm CFO Trims Operating Expenses as Industry Faces Down High Inventories
▼ + stars: | 2022-12-29 | by ( Nina Trentmann | ) www.wsj.com time to read: +5 min

Mr. Palkhiwala: Yes, it’s a combination of those instruments and also our cash balance on our balance sheet. WSJ: Are there any positive effects from higher rates on your business? Mr. Palkhiwala: When you have a significant cash balance, when the rate goes up, we also see the benefit on the cash balance side. If we do end up doing new issuances at higher rates, it might still put us in a reasonable place with increased income on the cash balance. WSJ: How do you think about working capital in the context of higher rates?

☆ AllianceBernstein Executive Helps Chart Firm’s Course Overseeing Finances and Operations
▼ + stars: | 2022-12-26 | by ( Nina Trentmann | Alliancebernstein S Kate Burke | ) www.wsj.com time to read: +5 min

Ms. Burke took on the responsibilities of chief financial officer this summer, after becoming the financial firm’s chief operations officer in July 2020. Kate Burke, CFO and COO of AllianceBernstein. Photo: AllianceBernsteinWSJ’s CFO Journal talked to Ms. Burke about her dual role, the outlook for the firm’s business and the impact of higher interest rates on markets. We are going to continue to look to the private markets, building out our alternatives, our private credit offerings. Ms. Burke: People still have pretty healthy balance sheets overall, but they’ve been impacted by inflation and so are less healthy than they were a year ago.

☆ Fanatics Hires CFO for Collectibles Business After Topps Deal
▼ + stars: | 2022-12-23 | by ( Nina Trentmann | ) www.wsj.com time to read: +5 min

Jacksonville, Fla.-based Fanatics said this week that Greg Abovsky started as chief financial officer for the collectibles business earlier this month. As CFO, Mr. Abovsky plans to build out the division’s finance team and its trading card business as it looks to expand. Fanatics plans to expand its portfolio into culture and entertainment cards, said Mike Mahan, chief executive officer of the collectibles business. Fanatics expects its collectibles business will fare well in the coming years, despite the threat of a potential downturn. Both Mr. Abovsky and Mr. Mahan declined to comment on if and when Fanatics could list on the public markets.

☆ Fed Rate Increases Upended Funding Markets in 2022. Here’s What CFOs Can Expect in 2023.
▼ + stars: | 2022-12-14 | by ( Nina Trentmann | ) www.wsj.com time to read: +9 min

Here’s a look at how different financing instruments fared in 2022 and what’s ahead for 2023. Activity in the convertible debt market has picked up in recent weeks. Still, there could be financing opportunities for deals in 2023 in the form of syndicated loans, bankers said. “CFOs have to be aware of that and focus on cash conversion and margins,” he said, pointing to the increase in financing costs. “We expect deals will continue to get done,” he said, adding that those could however come with more oversight from lenders.

☆ GE Healthcare Plans to Reduce Debt and Costs, Pursue Tuck-In Acquisitions
▼ + stars: | 2022-12-08 | by ( Nina Trentmann | ) www.wsj.com time to read: +5 min

As a stand-alone company, GE Healthcare will also look to improve its working capital and lower logistics costs, Mr. Zodl said. GE Healthcare will also take a look at its real estate holdings and target over 100 sites, executives said. Ratings firms S&P Global Ratings, Fitch Ratings and Moody’s Investors Service have all given GE Healthcare an investment-grade rating. PREVIEWApart from reducing debt and costs, GE Healthcare will scout for potential tuck-in acquisition targets, Chief Executive Peter Arduini said. GE retains a 19.9% stake in GE Healthcare.

☆ Nissan Grapples With Currency Volatility, Even as Weak Yen Boosts Earnings
▼ + stars: | 2022-12-06 | by ( Nina Trentmann | Nissan Chief Financial Officer Stephen Ma | ) www.wsj.com time to read: +6 min

For Nissan Motor Co. finance chief Stephen Ma, the weak yen has been both a boon and a bane. “The current weakness of the yen has given us short-term benefits, which is good,” Mr. Ma said. Mr. Ma said he is working to repay debt and increase the auto maker’s profitability while managing issues such as currency volatility, semiconductor shortages and pricing. “We have some stickiness in terms of pricing power,” Mr. Ma said. Nissan has had “common sense, commercial-based” discussions with Renault, according to Mr. Ma.

☆ U.K. Tax Change to Yield Higher Costs, but Much-Needed Certainty for Companies
▼ + stars: | 2022-12-04 | by ( Jennifer Williams-Alvarez | Nina Trentmann | ) www.wsj.com time to read: +6 min

Now, under a new prime minister, the government is pledging fiscal austerity, accompanied by an increase in the corporate tax rate to 25%. Photo: Agence France-Presse/Getty ImagesWith the latest change, the corporate tax rate has flip-flopped four times in less than a year. The tax increase, from the current rate of 19%, will apply to companies with annual profit of more than £250,000, equivalent to more than $307,000. We know it is increasing to 25%.”The U.K. government’s change brings the corporate tax rate in line with those of other large economies. Photo: Jason Alden/Bloomberg NewsU.K. companies’ costs are rising on multiple fronts.

☆ U.K. Tax Change to Yield Higher Costs, But Much-Needed Certainty For Companies
▼ + stars: | 2022-12-04 | by ( Jennifer Williams-Alvarez | Nina Trentmann | ) www.wsj.com time to read: +6 min

☆ With Debt Coming Due, Investment-Grade Companies Are Paying Up, Too
▼ + stars: | 2022-12-01 | by ( Nina Trentmann | ) www.wsj.com time to read: +7 min

What’s more, volatile markets have resulted in fewer opportunities for companies to sell their debt. Investment-grade U.S. companies have between $550 billion and $750 billion coming due per year from 2023 through 2027, according to Goldman Sachs Group Inc., with about $59 billion left to pay off or refinance in 2022. Of the $615.54 billion, $504.31 billion were new issuances, compared to $111.23 billion in refinancings, Dealogic said. But investor demand for bonds has been stronger in recent days, leading Amazon.com Inc. and others with near-term debt coming due to the market. Among the businesses that recently took out bond debt at a higher cost is retail giant Walmart Inc.

☆ Zero-Based Budgeting, Currency Hedges Among the Tools CFOs Can Use to Weather Headwinds
▼ + stars: | 2022-11-27 | by ( Nina Trentmann | ) www.wsj.com time to read: +6 min

One area to which finance chiefs scouting for efficiencies have turned is zero-based budgeting, a tool that gained popularity early in the pandemic and requires finance executives to question and justify each line item in every new budget period. Reese’s peanut-butter cup maker Hershey Co., based in Pennsylvania, regularly goes through every line of its profit and loss statement, Finance Chief Steve Voskuil said. Detroit-based General Motors Co. is slowing and in some areas even freezing hiring, and homing in on other fixed costs, Chief Financial Officer Paul Jacobson has said. Facing high inflation and an uncertain outlook, finance chiefs are using zero-based budgeting to lower expenses in areas including operations, real estate, logistics, sales and marketing. Finance executives at large U.S. companies, including Coca-Cola Co. and materials-science company Dow Inc., are increasing their foreign-currency hedges and covering longer time periods.

☆ The Disney CFO Who Raised Concerns About Bob Chapek Has Respect on the Street
▼ + stars: | 2022-11-25 | by ( Nina Trentmann | Mark Maurer | ) www.wsj.com time to read: +6 min

Christine McCarthy, Walt Disney Co. ’s longtime finance chief, took an unusual step when she expressed a lack of confidence in the chief executive to directors of the entertainment giant. But Ms. McCarthy had raised concerns to Disney directors, The Wall Street Journal reported earlier this week. Newsletter Sign-up WSJ | CFO Journal The Morning Ledger provides daily news and insights on corporate finance from the CFO Journal team. Following the leadership shake-up, Disney faces a challenge to regain trust from the street and Ms. McCarthy needs to realign with her old and new chief executive Mr. Iger, analysts said. Age 67, Ms. McCarthy is likely to stay on while Mr. Iger reviews Disney’s strategy and searches for another successor to himself, analysts said.

☆ Some CFOs Are Boosting Their Credit Lines as Insurance Against Recession
▼ + stars: | 2022-11-16 | by ( Kristin Broughton | Nina Trentmann | ) www.wsj.com time to read: +7 min

In addition to recession-planning, some companies are expanding their credit lines in response to higher input and inventory costs, corporate bankers said. Term loans are also funded at the outset, unlike credit lines. Photo: Xcel EnergyThe company increased its revolving credit lines primarily because it is expanding and also confronting higher commodity costs, Mr. Johnson said. Xcel doesn’t typically allow its commercial-paper balances to exceed 40% of its total borrowing capacity under its revolving credit lines, Mr. Johnson said. Bombardier in the third quarter closed on a new $300 million, five-year revolving credit facility.

☆ Coupa Software Weighs Right Time to Refinance Low-Rate Debt Amid High Rates
▼ + stars: | 2022-11-15 | by ( Mark Maurer | ) www.wsj.com time to read: +6 min

Coupa Software Inc. is searching for the right time to refinance over $2 billion in convertible debt that it holds at nearly evanescent rates—despite rising financing costs and the fact that its maturities are more than two years away. Tony Tiscornia, chief financial officer at Coupa Software. “For a young software company, we would really like to see a lot of the focus on just growth at this time, over profitability,” she said, speaking generally. The company will likely refinance with convertible debt because the interest rate tends to be lower than that of straight debt, he said, adding that more equity would dilute shareholdings. Conagra said it had $8.98 billion in net debt as of Aug. 28, down from $9.19 billion a year earlier.

☆ Businesses Rush to Sidestep Rate Shock by Paying Down Debt
▼ + stars: | 2022-11-09 | by ( Kristin Broughton | ) www.wsj.com time to read: +7 min

Executives are aggressively paying down debt as higher interest rates increase the cost associated with having debt and businesses face the prospect of a recession. As a result, some are taking steps to rein in expenses and cut interest costs, while others are looking to put cash reserves to work as their bank deposits continue to generate minimal yields. Beauty paid an annual interest rate of 4.9% on the loan, according to Mandy Fields, the company’s chief financial officer. About two-thirds of the loan carried a 5% interest rate that was fixed through a swap, which was set to expire in 2025. The two transactions reduced KAR’s annual interest costs by $70 million, to an estimated $15 million a year, Mr. Loughmiller said.

☆ Tyson Foods CFO Arrest Adds to Governance Challenges for Board
▼ + stars: | 2022-11-08 | by ( Jennifer Williams-Alvarez | ) www.wsj.com time to read: +6 min

Photo: Michael Conroy/Associated PressThe Tyson family had nearly 71% of the total voting rights in the meat giant as of December 2021, according to a securities filing. It didn’t immediately respond to a request for comment on whether Mr. Tyson would make his debut to analysts and investors by taking part in the earnings call. As CFO, Mr. Tyson has an annual base salary of $650,000, according to a regulatory filing. Tyson Foods CFO John R. Tyson was arrested on public intoxication and trespassing allegations. Photo: Associated PressThe Fayetteville Police Department’s report said that the woman didn’t know Mr. Tyson and that she thought he came in through an unlocked door.

☆ CFOs Boost Currency Protections, Extend Hedge Contracts as Strong Dollar Takes Toll
▼ + stars: | 2022-11-07 | by ( Nina Trentmann | ) www.wsj.com time to read: +6 min

Changes to companies’ hedge contracts include covering larger amounts of earnings as well as longer durations beyond the usual 18 to 24 months. Newsletter Sign-up WSJ | CFO Journal The Morning Ledger provides daily news and insights on corporate finance from the CFO Journal team. There are growing indicators of the impact of the strengthening dollar on companies’ results and stocks, according to Goldman Sachs Group Inc. Many companies have hedges in place to protect cash flows, earnings and balance sheets from currency fluctuations, said Mr. Neu. Prologis Inc., a San Francisco-based operator of warehouses, is working to extend its hedges, CFO Tim Arndt said.

☆ Hertz CFO Sees Limited Impact From Rising Interest Rates on Company Finances
▼ + stars: | 2022-11-04 | by ( Nina Trentmann | ) www.wsj.com time to read: +6 min

Kenny Cheung, CFO of Hertz Photo: Hertz Global Holdings Inc.WSJ: How far is Hertz impacted by rising interest rates? If underlying interest rates move by 1%, it will impact our profit and loss [statement] by about $30 million net at current debt levels. On the variable portion of the ABS, we have an interest rate cap in place to manage our exposure to fluctuations in interest rates. WSJ: Does the rapid rise in interest rates lead to you managing working capital more efficiently? The Federal Reserve raised interest rates by another 0.75 percentage point to combat inflation, Chairman Jerome Powell said on Wednesday.

☆ Rising Rates Boost Companies’ Focus on Working Capital Management
▼ + stars: | 2022-11-03 | by ( Nina Trentmann | Kristin Broughton | ) www.wsj.com time to read: +5 min

Higher interest rates are putting more pressure on companies to free up cash from their operations, a cheaper option than relying on credit. PREVIEWRising financing costs are one of several factors pushing companies to improve how they manage working capital, alongside high inventory levels and persistent inflation. “The only difference now is that with your cost of capital being higher, sometimes the economics change, but we’re always looking at working capital,” he said. “Working capital management comes more in focus,” Mr. Fracassa said, as it costs more for companies to draw on their revolving lines of credit with today’s higher rates. “It was kind of the unique rebuild period for working capital,” Mr. Wells said.

☆ Rising Rates Boosts Companies’ Focus on Working Capital Management
▼ + stars: | 2022-11-03 | by ( Nina Trentmann | Kristin Broughton | ) www.wsj.com time to read: +6 min

☆ Aflac CFO Taps Japanese Debt Investors to Bring Down Interest Costs
▼ + stars: | 2022-11-02 | by ( Nina Trentmann | ) www.wsj.com time to read: +7 min

CFO Journal spoke to Chief Financial Officer Max Brodén about the considerations for the transaction and what Aflac has done with the proceeds. WSJ: Aflac recently sold about $1.21 billion in debt to Japanese investors. Mr. Brodén: We issued a total of 180 billion yen [equivalent to about $1.21 billion]. We are replacing debt that we were paying 3.49% for with new debt that we’re paying 0.89% for. Mr. Brodén: The yen market is not as deep as the U.S. dollar market.

It isn’t clear yet who will succeed Mr. Segal as CFO. Twitter and Mr. Musk on Friday didn’t respond to requests for comment. Mr. Segal on Friday tweeted that “the work isn’t complete,” referring to Twitter’s ambition to build “the world’s townsquare.” Mr. Segal didn’t respond to a request for additional comment. Mr. Musk has said buying Twitter would accelerate his creation of an app that combines the capabilities of several apps in one. The future executives that Mr. Musk installs will have to share his vision for Twitter, Mr. Ives said, and prepare to support growth initiatives that will take years to build.

☆ Unilever CFO Struggles With Forecasting Accuracy Amid High Inflation
▼ + stars: | 2022-10-27 | by ( Mark Maurer | ) www.wsj.com time to read: +4 min

Unilever on Thursday said its expected net inflation from materials is €4.5 billion—equivalent to $4.5 billion—for 2022, up from €1.3 billion the previous year. Materials inflation generally ranged from €100 million to €300 million during the years before 2021, Mr. Pitkethly said. “Our forecasting accuracy has been a lot worse over the last year or so since this period of inflation hit,” he said. Graeme Pitkethly, chief financial officer at Unilever. Further hiking prices in the fourth quarter is a “distinct possibility,” Mr. Pitkethly said, adding he doesn’t expect the increases to deter consumer demand.

☆ Junk-Rated Companies Search for the Right Time to Tap Investors
▼ + stars: | 2022-10-16 | by ( Nina Trentmann | ) www.wsj.com time to read: +8 min

While there is limited pressure overall as many businesses refinanced in 2020 and 2021 when funding was cheaper and investor appetite stronger, high-yield companies with immediate financing needs have to find the right time to tap investors, corporate bankers say. Adding loans and revolving-credit facilities, speculative companies have maturities of around $1.47 trillion through 2027, ratings firm Moody’s Investors Service said last week. And the high-yield bond market isn’t closed, it has just become more expensive, bankers said. Movie theater chain AMC Entertainment Holdings Inc. on Friday said that its subsidiary Odeon Finco PLC priced a $400 million bond. Bankers said they have received few calls from triple C-rated companies in recent months looking for maturity extensions.

☆ BASF CFO Faces Wild Swings in Energy Prices as Company Looks to Budget for 2023
▼ + stars: | 2022-10-07 | by ( Nina Trentmann | ) www.wsj.com time to read: +6 min

There are roughly 15,000 people working for Mr. Engel, including in the company’s digital, finance and global shared-service teams. Mr. Engel declined to comment on the financial impact of the cut in production. However, the company expects it will become more difficult to pass on higher costs to customers, Mr. Engel said. Cash flows from operating activities came in at €1.2 billion in the second quarter, down €1.3 billion from the prior-year period. The company is slowing down its hiring and reducing its marketing budget, Mr. Engel said, adding that it hasn’t started cutting jobs.

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