Target, Klarna and Sesame Street's new addy

Summary

The Indicator from Planet Money
Episode: Target, Klarna and Sesame Street's New Addy
Release Date: May 23, 2025
Hosts: Waylon Wong, Adrienne Ma
Guest: Sarah Gonzalez (Planet Money)

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Introduction

In this engaging episode of The Indicator from Planet Money, hosts Waylon Wong and Adrienne Ma are joined by Sarah Gonzalez from Planet Money to delve into three significant economic indicators shaping today's landscape: Target's declining sales, the challenges faced by Buy Now, Pay Later (BNPL) services like Klarna, and the strategic move of Sesame Street to a new streaming platform.

Klarna and the Struggles of Buy Now, Pay Later (BNPL)

Sarah Gonzalez kicks off the discussion by highlighting a concerning financial indicator for Klarna, one of the leading BNPL companies.

Sarah Gonzalez [02:19]: "My indicator is 99 million. That is how much... Klarna lost in just the first three months of the year."

This substantial loss underscores the growing issues within the BNPL sector. Gonzalez draws parallels between BNPL and the traditional layaway program, emphasizing that while consumers are eager to purchase immediately, the repayment phase presents significant challenges.

Sarah Gonzalez [03:07]: "Buy now, pay later is like that except pig draw. You don't have to wait to get your... you can get the dress now and pay later, but it's having a little problem right now."

The core issue lies in the "paying part" of the equation. Klarna's financial woes are exacerbated by a surge in late payments and defaults, reflecting broader strains on consumers' financial health.

Sarah Gonzalez [03:34]: "People are not paying off those mini loans or they're paying late. And this may be a sign of the strain that consumers are feeling right now."

Interestingly, a significant portion of BNPL usage is not limited to discretionary spending. About a quarter of Klarna's customers are using these loans for essential groceries, indicating deeper economic pressures on households.

Sarah Gonzalez [04:03]: "A quarter of buy now pay later customers get these loans to pay for their groceries. And that is more than it was last year."

Target's Declining Sales: DEI, Tariffs, and Inflation

Adrienne Ma presents her economic indicator: Target's net sales have declined by 2.8% compared to the previous year.

Adrienne Ma [04:15]: "My indicator is minus 2.8%. So the retailer Target just announced its financials for the first quarter and the company reports its net sales are down 2.8% compared to a year ago."

Target attributes this downturn to three main factors, all of which have been prominent in recent news cycles:

1. Scaling Back DEI Initiatives:
   Target's CEO, Brian Cornell, announced in January a reduction in Diversity, Equity, and Inclusion (DEI) programs. This move has sparked backlash from civil rights activists and faith leaders, leading to consumer boycotts that have negatively impacted sales.

   Adrienne Ma [04:48]: "In January, Target's CEO Brian Cornell announced the company was scaling back its DEI initiatives."

   Waylon Wong [05:07]: "Some of them included goals for hiring more black employees and sourcing more of its products from black owned businesses."

2. Trade Wars and Tariffs:
   Approximately half of Target's merchandise is imported, with a significant portion coming from China. The uncertainty surrounding tariffs has forced Target to navigate complex decisions regarding vendor negotiations, inventory purchasing before tariff implementations, and potential price adjustments for consumers.

   Adrienne Ma [05:41]: "About half the stuff it sells is actually imported from other countries, and a large chunk of those imports come from China."

3. Declining Consumer Confidence Amid Inflation:
   The overarching economic climate, marked by rising inflation and fears of a recession, has dampened consumer spending. The University of Michigan’s Consumer Sentiment Index reflected this sentiment, hitting one of its lowest points.

   Sarah Gonzalez [06:28]: "Inflation. People feel like there's, like, a recession or inflation around the corner."

   Adrienne Ma [06:34]: "The University of Michigan's Consumer Sentiment index... hit 50.8 in May, which is the second lowest level on record."

Sesame Street's New Home on Netflix

Waylon Wong shifts the focus to the beloved children's program Sesame Street, announcing its upcoming 56th season on Netflix.

Waylon Wong [07:20]: "My indicator is 56, as in the upcoming 56th season of Sesame Street."

This move comes after challenges with previous streaming partners, notably HBO, where Sesame Street faced a potential future and financial constraints leading to staff layoffs.

Waylon Wong [07:34]: "Before the Netflix deal, this seemed like a real possibility...[Sesame Street] had been on HBO for the last decade... faced a big funding shortfall."

The new partnership with Netflix is poised to revitalize the program by providing access to over 300 million subscribers. Notably, new episodes will be available simultaneously on PBS and its online platforms, maintaining accessibility.

Waylon Wong [08:09]: "New episodes will be available the same day on PBS and then on PBS online platforms."

Additionally, Netflix plans to expand Sesame Street's reach through educational video games, aiming to blend entertainment with learning.

Adrienne Ma [09:20]: "Children's programming is huge for Netflix. It accounts for 15% of viewing... adding Sesame Street to the mix is maybe a way to encourage parents to keep subscribing."

Conclusion

The episode wraps up with light-hearted banter among the hosts, reflecting on the discussions and the interconnectedness of economic indicators with everyday life decisions, from shopping habits to beloved children's programming.

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Notable Quotes with Timestamps:

• Sarah Gonzalez [02:19]: "My indicator is 99 million. That is how much one of the leading buy now, pay later companies Klarna lost in just the first three months of the year."

• Adrienne Ma [04:15]: "My indicator is minus 2.8%... Target reports its net sales are down 2.8% compared to a year ago."

• Waylon Wong [07:20]: "My indicator is 56, as in the upcoming 56th season of Sesame Street."

This episode effectively unpacks the complexities of consumer finance challenges, corporate strategies amidst social and economic pressures, and the ever-evolving landscape of media consumption, providing listeners with a comprehensive understanding of these pivotal issues.

Transcript

[NPR Host]

Npr.

[Waylon Wong]

This is the indicator from Planet money. I'm Waylon Wong.

[Adrienne Ma]

And I'm Adrienne Ma. And we're joined today by Planet Money's Sarah Gonzalez. What's up?

[Sarah Gonzalez]

Yes, and I'm here on my favorite day of the week, indicators of the.

[Adrienne Ma]

Weekday, really best, like better than Monday?

[Sarah Gonzalez]

Well, I mean, it's a Friday, so it's already being Monday.

[Adrienne Ma]

It's true. This, of course, is the day of the week when we talk about our favorite numbers from the news. Today's episode, we're talking about Target's sagging sales, Buy now, pay later problems and a new streaming address for Sesame Street.

[Waylon Wong]

We'll tell you how to get there after the break.

[NPR Sponsor]

This message comes from NPR sponsor Charles Schwab with its original podcast on investing. Each week you'll get thoughtful in depth analysis of both the stock and the bond markets. Listen today and [e-mail] oninvesting or wherever you get your podcasts. This message comes from Apple Card. Somewhere in the world, an Apple Card user is getting 3% daily cash back on the purchase of an iPhone 16 at Apple. That's not all. They also earned 2% back on the new shoes they bought using Apple Pay. Visit Apple Co Card calculator and see how much daily cash back you can earn. Subject to credit approval. Apple Card issued by Goldman Sachs Bank USA, Salt Lake City branch terms and.

[NPR Host]

[e-mail] this message comes from Amazon Business. How can you grow your business from idea to industry leader? Bring your vision to life with smart business buying tools and technology from Amazon Business. Simplify how you stock up to get ahead. Go to amazonbusiness.com for support. This message comes from NPR sponsor Shopify. Start selling with Shopify today. Whether you're a garage entrepreneur or IPO ready, Shopify is the only tool you need to start, run and grow your business without the struggle. Go to shopify.com NPR it is indicators of the week.

[Waylon Wong]

Sarah, you are up first.

[Sarah Gonzalez]

Okay, my indicator is 99 million. That is how much one of the leading buy now, pay later companies Klarna lost in just the first three months of the year.

[Adrienne Ma]

Ooh, ouch.

[Sarah Gonzalez]

Yeah, not great. And I'm just gonna get this out of the way. Buy now, pay later. Should really be called get now, pay later. But whatever it is like the modern day layaway. You guys remember layaway?

[Waylon Wong]

I remember layaway. It's from like the heyday of the department store era, like Sears.

[Sarah Gonzalez]

Buy now, pay later is like that except pig draw. You don't have to wait to get your whatever 8th grade graduation dress until you pay it off. You can get the dress now and pay later, but it's having a little problem right now. People are buying now. Yes, but they are not paying later.

[Waylon Wong]

Mm. It's that pesky second half of the value proposition.

[Sarah Gonzalez]

Yeah, the paying part. One of the reasons that Klarna has lost so much money, which is actually double what they lost in the same period last year, is that people are not paying for their purchases, not paying off those mini loans or they're paying late. And this may be a sign of the strain that consumers are feeling right now and a sign of consumers financial health in general.

[Waylon Wong]

I mean, I guess Klarna is probably cleaning up on late fees though, right?

[Sarah Gonzalez]

Oh yeah. I mean Klarna makes money by charging customers a fee for failing to pay their loans on time. And I think I just want to say that it is not just like graduation dresses and like fun things like that. One kind of grim point I saw in the data is that a quarter of buy now pay later customers get these loans to pay for their groceries. And that is more than it was last year.

[Waylon Wong]

Okay, so another potentially grim indicator to watch going forward. I mean it does seem like people are shopping more through Klarna, but maybe not shopping as much at other places, right Adrian?

[Adrienne Ma]

That's right. My indicator is minus 2.8%. So the retailer Target just announced its financials for the first quarter and the company reports its net sales are down 2.8% compared to a year ago. And on top of that, Target also reduced its sales outlook for the whole year. And this is my indicator of the week because Target points to a few reasons behind this sales decline. And three of those reasons are very much in the news right now. Very zeitgeisty. So any guesses as to what these three things are?

[Sarah Gonzalez]

Dei.

[Adrienne Ma]

Yeah. Yes, that is correct. In January, Target's CEO Brian Cornell announced the company was scaling back its DEI initiatives.

[Waylon Wong]

So we did an episode on this recently and those DEI initiatives that got scrapped, some of them included goals for hiring more black employees and sourcing more of its products from black owned businesses.

[Adrienne Ma]

Right. And this, you know, perceived 180 turn from the company explicitly supporting social justice and racial equity has provoked a lot of backlash among civil rights activists and faith leaders who pushed a boycott of the store. And we have been wondering, will this hurt Target sales? Well, the CEO says yes it did. It's not clear that it's the main reason, but it's definitely one of them. So there are two more. Any other guesses as what, what the other factors were?

[Waylon Wong]

The trade war, Tariffs.

[NPR Sponsor]

Yes.

[Adrienne Ma]

Ding, ding, ding. Okay, get this. According to the company, about half the stuff it sells is actually imported from other countries, and a large chunk of those imports come from China. As we know, all of this tariff hullabaloo has really created a lot of uncertainty for businesses, including Target. You know, it's trying to decide how to handle those tariffs. Should they negotiate with vendors? Should they buy more merchandise before tariffs go into effect? Should they maybe change which countries they import from or raise prices on customers? So this is kind of hurting the company's financial situation as well. Okay, final round for all the beans. Any guesses as to the third and final reason Target is hurting right now?

[Sarah Gonzalez]

Inflation. People feel like there's, like, a recession or inflation around the corner.

[Adrienne Ma]

You got it.

[Sarah Gonzalez]

So, Target CEO, we must be economics reporters or something.

[Adrienne Ma]

This is unfair advantage. Target CEO says declining consumer confidence is one of the factors for its declining sales. And you can see some numbers recently that speak to just how much consumer vibes have declined. Right. One of the most watched indicators, the University of Michigan's Consumer Sentiment index. It hit 50.8 in May, which is the second lowest level on record. Should be worth noting that the worry is much stronger among Democrats and independents. Republicans, though, they have also soured a bit on the economy in the past month or so. So, Waylon, you want to bring us home or maybe to another place?

[Waylon Wong]

Ooh, I certainly would. My indicator is 56, as in the upcoming 56th season of Sesame Street.

[NPR Sponsor]

Sunny Day, Swee.

[Waylon Wong]

It's gonna come out later this year at a new home, Netflix. And that is thanks to a deal unveiled this week by Netflix and Sesame Workshop, which is the nonprofit that makes Sesame Street. By the way, Netflix is a financial supporter of NPR season 56. That is so good. Did you know that when I was little, I was scared of the Count segments because of the thunder and lightning? It wasn't really the Count. It was the thunder and lightning. Well, what's even scarier than thunder and lightning is the prospect of Sesame street may be going away. And before the Netflix deal, this seemed like a real possibility. You might remember that Sesame street had been on HBO for the last decade. Then HBO's parent company did not renew that deal. Sesame Workshop was reportedly facing a big funding shortfall and then had to lay off 20% of its staff this year. But now it has a new home. Netflix has more than 300 million subscribers. That is a lot of eyeballs. They will get the new episodes plus 90 hours of old episodes.

[Sarah Gonzalez]

All right, Netflix coming in hot. Saving the day, saving Elmo for the people. I do wonder though, like, okay, so you have to. You have to be a Netflix customer in order to watch Sesame Street.

[Waylon Wong]

Now then, you actually don't have to have a Netflix subscription.

[Sarah Gonzalez]

They're sticking with the free, free, free model.

[Waylon Wong]

Yes, and this is what is kind of unusual about this deal. So new episodes will be available the same day on PBS and then on PBS online platforms. And this is interesting because under the previous deal with hbo and episodes wouldn't get released on PBS until months later.

[Adrienne Ma]

To put my. My calculating business reporter lens on here for a second, like, what does Netflix actually get if it doesn't have exclusive rights to this content?

[Waylon Wong]

Yeah, well, children's programming is huge for Netflix. It accounts for 15% of viewing. They've got Ms. Rachel and Peppa the Pig. And so adding Sesame street to the mix is maybe a way to encourage parents to keep subscribing and not to jump ship to a different streaming service, which is always perennial concern for streamers is the churn. And this deal also allows Netflix to develop video games based on Sesame Street.

[Sarah Gonzalez]

Yeah, I don't know if the Sesame street parent crowd really wants their kids playing video games.

[Waylon Wong]

What if it's packaged as educational games, though?

[Sarah Gonzalez]

Oh, okay. Yeah, no, sign me up. Sure. Subscribing to Netflix. Thank you.

[Adrienne Ma]

There we go. We have 1, 2, 3.

[Sarah Gonzalez]

Ah, ah, ah.

[Adrienne Ma]

Indicators for this Friday. Thank you so much, Sarah, for coming on the show.

[Sarah Gonzalez]

Adrian, I feel like you're really trying to get that side gig as a backup count for Sesame Street.

[Waylon Wong]

I mean, I think he's got it in the bag. That was very convincing. This episode was brought to you by the letter. J for producer Julia Ritchie, G for engineer Gilly Moon, and S for fact checker Sierra Juarez. Kicking Cannon is our editor, and the indicator is a production of N.

[Sarah Gonzalez]

That was so cute. Wait, I think you're also auditioning for a side gig with Sesame Street.

[Waylon Wong]

I'm trying to get a job at Sesame Workshop.

[NPR Host]

This message comes from Mint Mobile. Mint Mobile took what's wrong with wireless and made it right. They offer premium wireless plans for less and all. Plans include high speed data, unlimited talk and text, and nationwide coverage. See for [e-mail] Switch this message comes from Capital One. Banking with Capital One helps you keep more money in your wallet with no fees or minimums on checking accounts. What's in your wallet? Terms apply. See capitalone.combank for details. Capital One NA Member FDIC this message comes from Mint Mobile. If you're tired of spending hundreds on big wireless bills, bogus fees and free perks, Mint Mobile might be right for you with plans starting from 15 bucks a month. Shop plans [e-mail] Switch upfront payment of 45 dollars for 3 month 5 gigabyte plan required. New customer offer for first 3 months only, then full price plan options available, taxes and fees extra. See Mint Mobile for details.