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Capitola-Soquel Chamber lunch set for Wednesday – Santa Cruz Sentinel

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SOQUEL

Chamber networking lunch set Wednesday

The Capitola-Soquel Chamber of Commerce will hold a networking lunch from 11:30 a.m. to 1 p.m Wednesday at Bargetto Winery, 3535 N. Main St.

The guest speaker is photographer and inspirational speaker Taylor Boone. Her presentation, “The Power of Video– Visual Storytelling for Business, will explain video marketing for business

Whole Foods Market Capitola will cater lunch and Zizzo’s Coffeehouse & Wine Bar will provide coffee. Heritage Chocolates Corralitos will provide chocolate. Wine from Bargetto Winery will be available for purchase. The lunch will also include raffle prizes and an opportunity for networking.

Cost: $20 for Capitola-Soquel Chamber members and $25 for nonmembers. Seating is limited. Advance registration is required. Register at master.capitolachamber.com.

To view previous business digest items, visit santacruzsentinel.com/tag/business-digest/. Send your business news items to eingalls@santacruzsentinel.com or call 831-706-3253.

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Target reports fiscal 2019 q2 earnings

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Target’s profit jumped 17% during the second quarter as its in-store pickup and same-day shipping services drew more customers, prompting the retailer to raise its outlook for the rest of the year, the company said Wednesday.

Sales at the company’s stores that have been open for at least a year grew 3.4% during the second quarter, also exceeding expectations. Target said same-day fulfillment services, including order pick up, drive up and Shipt same-day delivery business contributed nearly 1.5 percentage points of its overall same-store sales growth.

Target’s shares surged 13% in premarket trading, on pace to open at a record high.

Here’s what Target reported for the fiscal second quarter ended Aug. 3 compared with what analysts were expecting, based on Refinitiv data:

  • Earnings per share: $1.82 vs. $1.62 expected
  • Revenue: $18.42 billion vs. $18.34 billion expected
  • Same-store sales: up 3.4% vs. growth of 2.9% expected

Target and its peers are searching for ways to make shopping more convenient. To compete with Amazon, they are improving their online stores and trying to ship faster. They are also betting that consumers do not mind visiting stores, especially when it’s faster than waiting for delivery.

“By appealing to shoppers through a compelling assortment, a suite of convenience-driven fulfillment options, competitive prices and an enjoyable shopping experience, we’re increasing Target’s relevancy and deepening the relationship between our guests and our brand,” Target CEO Brian Cornell said in a statement announcing the earnings results.

Net income rose to $938 million, or $1.82 a share, compared with $799 million, or $1.49 per share, a year ago. That was 20 cents better than expectations for earnings per share of $1.62, based on Refinitiv data.

Total revenue grew 3.6% to $18.42 billion from $17.78 billion a year ago, topping estimates for $18.34 billion.

Sales at Target stores open for at least 12 months and its website were up 3.4%, better than expectations for growth of 2.9%. A year ago, same-store sales climbed 6.5%. Target said traffic was up 2.4% during the latest quarter. Meanwhile, digital sales surged 34%, down from a 42% increase during the first quarter.

Like Walmart, Target is expected to have seen somewhat of a sales bump around Amazon’s 48-hour Prime Day event in early July.

Cornell said the company had “outstanding performance” during the first half of 2019, giving it the “confidence” it needed to boost expectations. Target is now calling for adjusted earnings per share to fall within a range of $5.90 to $6.20, up from a prior range of $5.75 to $6.05.

“Traffic and sales continue to grow,” Cornell said.

Target’s report comes on the heels of its bigger rival Walmart’s, which last week reported earnings that topped expectations and also raised its outlook for the year. That’s despite the ongoing threat of additional tariffs taking effect amid the U.S.’ trade war with China.

Analysts have largely expected Target to continue to see same-store sales gains, while other retailers like department store chains are struggling to draw traffic. Target also suffered a register outage during the latest quarter, but that wasn’t enough to noticeably weigh on sales.

Target’s report comes on the heels of its bigger rival Walmart, which last week reported earnings that topped expectations and raised its outlook for the year. That’s despite the ongoing threat of additional tariffs taking effect amid the U.S.’s trade war with China.

Analysts have largely expected Target to continue to see same-store sales gains, while other retailers like department store chains are struggling to draw traffic. While Target suffered a register outage during the latest quarter, which could end up slightly hitting its same-store sales, its traffic is still anticipated to climb this quarter.

Target this week announced the launch of a new grocery line, called Good & Gather, marking its biggest private-label venture to date. The retailer has been investing heavily in incubating its own brands. It’s also been investing in store remodels, opening small-format locations in major metros like New York and rolling out curbside pickup for online orders.

Target shares, which have a market cap of $44.2 billion, are up more than 30% this year.

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Netflix and Big Theater Chains Haggle Over Release of Scorsese’s ‘Irishman’

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LOS ANGELES — When Martin Scorsese signed with Netflix to make “The Irishman,” the star-studded epic scheduled to have its premiere on the opening night of the New York Film Festival next month, he put himself in the crossfire of the so-called streaming wars.

The film, which may represent Mr. Scorsese’s grandest statement yet on the intersection of organized crime and American politics, is expected to be a strong contender in the 2020 Oscar race. He took his $159 million movie, with Robert De Niro in the lead role, to Netflix after his home studio of recent years, Paramount Pictures, balked at the budget.

The full extent of the theatrical rollout remains up in the air. Where, exactly, moviegoers will be able to see “The Irishman” won’t be clear until the discussions between Netflix and select major theater chains end. They have been dragging on for months. The negotiations are just the latest chapter in the conflict between the film industry’s old guard and the tech-driven upstarts.

“The Irishman,” a throwback to the 1990s Scorsese hits “Goodfellas” and “Casino,” was announced more than a decade ago at Paramount, the studio where he made “The Wolf of Wall Street” and “Silence.”

Mr. Scorsese struck the deal with Netflix in 2017, and filming started soon afterward. The film, which makes use of “de-aging” special effects to keep the actors looking the right ages in a saga that spans decades, is in the final stages of postproduction as the director works to get it done in time for its Sept. 27 festival premiere.

Adam Aron, the AMC chief executive, said in a statement, “Talks are underway with Netflix about our showing ‘The Irishman’ and other Netflix films, but the outcome of those conversations is not yet clear.”

AMC and Cineplex are negotiating with Netflix separately, the people familiar with the talks said. A crucial sticking point has been the major chains’ insistence that the films they book must play in their theaters for close to three months while not being made for available for streaming at the same time, which does not sit well with Netflix. Talks broke down in July, only to pick up again two weeks ago, the people said.

Netflix, Mr. Scorsese and Cineplex declined to comment for this article.

Because of the impasse over the three-month theatrical window, Netflix has yet to give any of its films the kind of blockbuster theatrical releases that companies like AMC can provide. The streaming giant’s reluctance to concern itself with weekend box-office numbers reflects its laser focus on its main mission: delivering streaming video on demand to its 151 million subscribers worldwide.

Having built itself into an entertainment powerhouse by keeping its subscribers interested and coming back for more, the company does not want to be distracted by the demands of the old-style movie business, even as it makes deals with legendary filmmakers like Mr. Scorsese.

“Netflix is in the subscriber happiness business,” said Richard Greenfield, a tech and media analyst. “They need to attract more members and make current members happier. ‘The Irishman’ is really important.”

Many Netflix movies, like the Adam Sandler vehicle “Murder Mystery,” which Netflix said had 78 million household views in its first four weeks, seem made for living-room viewing. But Netflix has also come out with more ambitious offerings, like “Roma,” the meditative black-and-white film from the director Alfonso Cuarón. “Roma” won praise from critics on its way to three Oscars this year, for best director, best cinematography and best foreign language film.

Oscar eligibility is not much of a factor in how Netflix handles the rollout. To qualify for the Academy Awards, a film must have a 7-day run in a commercial theater in Los Angeles County, according to rules recently confirmed by the Academy of Motion Picture Arts and Sciences’ board of governors; it can even be shown on another platform at the same time. Still, there is an Academy contingent that may look askance at Netflix if it does not play by the old rules for a cinematic feature like “The Irishman.”

Despite its craving for Oscar gold, Netflix does not want to be distracted from its core business — especially now that it will be challenged by the Walt Disney Company, which plans to unveil its Disney Plus streaming service Nov. 12, and Apple, which is starting its equivalent, Apple TV Plus, on an unspecified date this fall. Following those giants into the increasingly crowded digital-video marketplace will be WarnerMedia and Comcast, among others.

In an effort to stay ahead of its current and future rivals, Netflix spent $12 billion on original content in 2018. While the company has paid large sums to star television producers like Ryan Murphy, Shonda Rhimes and the “Game of Thrones” duo David Benioff and D.B. Weiss, it has not stinted on its movie division, which made 55 films last year, not counting documentaries and animated movies, and has brought aboard A-list directors like Noah Baumbach, Ron Howard, Dee Rees, Steven Soderbergh and Guillermo del Toro.

Even as it works to add subscribers, Netflix cannot afford to alienate top filmmakers. Mr. Stuber is mindful that the way to keep the talent happy is to get their work on the big screen. He recently bolstered the Netflix film arm by hiring two distribution executives from 21st Century Fox, Spencer Klein and Pablo Rico.

AMC and other large chains worry that if they grant Netflix a shorter theatrical window, they will have to do the same for other studios. In his statement, Mr. Aron added that he would be “delighted” to show Netflix movies, but he had a caveat: “We can only do so, however, on terms that respect AMC’s important and close relationships with our longstanding studio partners, including Disney, Warner Brothers, Universal, Sony, Paramount, Lionsgate and so many other filmmakers who are the lifeblood of our substantial business.”

Some Hollywood executives have said the theater chains must adapt if the cinematic experience is going to compete with the convenience of streaming. “Both the studios and the exhibitors have to look at every aspect of how we do business together and figure out different paradigms to move it forward,” said Chris Aronson, the former chief distribution executive at Twentieth Century Fox.

More than 95 percent of movies stop earning their keep in theaters at the 42-day mark, well short of the three-month window demanded by major chains, according to Mr. Aronson. That suggests the need for change, he said.

“The movie theaters feel that if they blink at all, it will all blow up,” said Jeff Blake, the former chairman of worldwide marketing and distribution for Sony Pictures.

Netflix’s unwillingness to promise wide releases has come with a cost. The company lost out on the rights to “Crazy Rich Asians,” the 2018 romantic comedy that grossed nearly $240 million at worldwide box offices. The director, Jon M. Chu, and the author of the novel it was based on, Kevin Kwan, decided to go with Warner Bros., saying they wanted the movie to play in as many theaters as possible.

Netflix’s stance has also put it at odds with the theatrical chain Regal, which said in a statement to The Times: “Currently, we are not in any discussion with Netflix on ‘The Irishman’ nor on any other movie. Of course, if Netflix will decide to respect the industry business model and release the movie with a proper theatrical window, we will be more than happy to discuss the booking of the movie in Regal theaters.”

Mr. Scorsese directed another film for Netflix, “Rolling Thunder Revue: A Bob Dylan Story by Martin Scorsese,” a playful documentary released simultaneously in select theaters and on the streaming service in June, but he plans to make his next film, “Killers of the Flower Moon,” starring Leonardo DiCaprio, at Paramount.

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DealBook Briefing: Trump Admitted to Exploring Tax Cuts. Here’s Why.

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Good Wednesday morning. Apparently President Trump was serious about wanting the U.S. to buy Greenland: He called off a state visit to Denmark after the Nordic country’s prime minister said that the island wasn’t for sale. (Was this email forwarded to you? Sign up here.)

President Trump confirmed yesterday that he is considering tax reductions, after White House officials denied the idea. The reason: The U.S. economy might need the extra help.

Mr. Trump said he’s weighing cuts to payroll taxes and capital gains taxes. He claimed that it’s not because he is worried about a recession, and argued that the U.S. economy remains “incredible.”

But he surely sees warning signs in many of his favored economic indicators:

• Private nonresidential fixed investment has dropped well below its 2018 peak.

• The growth rate for companies’ investments in new equipment is just under 1 percent.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin in New York, and Michael J. de la Merced and Jamie Condliffe in London.

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The company said its screening “will never be perfect, but added that it is “always looking for ways to improve our policies and enforcement.”

The Justice Department is doing it. So are the F.T.C. and Congress. Oh, and state attorneys general, too. We’re talking about antitrust investigations of Big Tech — but it’s unclear what kinds of remedies might result from the inquiries. Steve Lohr of the NYT takes a look at four main possibilities.

Bright-line breakups. The idea here is that a company can’t sell goods on a dominant online marketplace or platform that it owns, Mr. Lohr writes. It’s an aggressive approach that could prevent companies from entering new businesses. Many economists are leery of the approach, but it’s not implausible — and is supported by the presidential candidate Senator Elizabeth Warren.

Selective split-ups. “This is a case-by-case approach to breakups,” Mr. Lohr writes. One example: forcing Facebook to shed Instagram and WhatsApp. It’s probably more palatable to economists than the bright-line approach, but it’s important to consider whether it would actually enhance competition. There’s also a question of how easy it would be, if the businesses have become tightly enmeshed.

A tech watchdog. A new regulator “would be an expert group to supplement traditional antitrust regulators,” Mr. Lohr writes, that would be “able to move faster and have the expertise to constantly track the tech markets and trend.” Yet it’s unclear how much traction this idea would have with the Trump administration, despite bipartisan concern about Big Tech.

Unlocking our data. There are also more targeted ideas, some of which propose loosening companies’ control of user data, letting customers easily move from one service to another. Proponents say this would remove a barrier to competition. But it would require some finely crafted technical solutions.

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