Good morning.

After a year of shrinkflation, smaller candy bars, and cocoa-free substitutes, real chocolate is quietly making a comeback. A nearly 70% collapse in cocoa prices from their 2024 highs is now pushing major manufacturers to bring cocoa back into recipes that were previously watered down to cut costs.

Hershey said it plans to restore original recipes across Hershey’s and Reese’s products next year after the industry spent months reformulating products with wafers, fillers, and cocoa alternatives.

Let’s dive into today’s edition.

A note on sponsorship. CrossDock readers open at 51%, roughly double the B2B average. 73% are leaders and decision-makers in ops across 3PL, carrier, freight, DTC, and retail. If your company sells to supply chain or operations teams, this is one of the more direct ways to reach them. We have a few sponsorship slots open across our three weekly editions. You can check out the media kit here, and if it looks like a fit, I'll follow up personally.

Target reported its strongest comparable sales growth since 2021, offering fresh signs that the retailer’s multiyear turnaround strategy is beginning to stabilize performance after several difficult years marked by slowing discretionary spending, inventory issues, and political backlash.

What Happened? Comparable sales rose 5.6% in the quarter ended May 2, more than triple analyst expectations and the company’s biggest increase in over four years. The retailer also raised its full-year revenue growth forecast by two percentage points to roughly 4%, citing improving store traffic, stronger digital engagement, and gains across key categories including toys, baby products, health and wellness, and beauty.

Key Details: The quarter marked the first earnings report under CEO Michael Fiddelke, who has focused on revamping merchandise assortments, improving in-store operations, modernizing supply chain and fulfillment systems, and expanding technology integration across the business.

The company said it plans to launch its largest food and beverage overhaul in years, increase new product offerings by 50%, and expand its in-store “beauty studio” concept to more than 600 locations later this year.

Cautious Note: Executives, however, struck a more cautious tone about the quarters ahead, warning that tougher year-over-year comparisons, rising operational costs, fading benefits from tax refunds, and continued inflation pressures could weigh on future growth. Investors reacted negatively despite the stronger results, with shares falling as much as 6.5% following the earnings call

U.S. consumer sentiment fell to a record low in May as rising gasoline prices, inflation pressures, and growing anxiety over the Iran conflict deepened concerns about the cost of living and the broader economy.

Free Fall: The University of Michigan’s Consumer Sentiment Index dropped to 44.8 in May, down from 49.8 in April and below economists’ expectations. The decline marked the weakest reading on record, with sentiment among Republicans and Independents falling to the lowest levels since President Donald Trump returned to office following the 2024 election.

Hormuz Crisis: The worsening mood comes as the nearly three-month-long Iran conflict disrupts shipping through the Strait of Hormuz, driving up global energy prices and straining supply chains.

U.S. gasoline prices have surged more than 50% since the conflict began, reaching a national average of roughly $4.55 per gallon, according to AAA data. Consumers are also facing higher prices across essentials, including food, fertilizers, aluminum, and household goods.

Kroger is preparing its most aggressive price-cutting campaign in years as the U.S. grocery giant attempts to regain market share from rivals, including Walmart, Costco, Aldi, and Amazon, amid mounting pressure from inflation-weary consumers.

Executive Statement: In his first interview since becoming CEO in February, Greg Foran told Bloomberg News that Kroger is laying the groundwork for broad price reductions across “thousands of products” and gradually phasing in cuts across categories. “The basket has to come down,” Foran said, warning that consumers are becoming increasingly sensitive to affordability and rising grocery bills.

Key Categories: Clothing and accessories stores led much of the growth, with sales rising 0.59% sequentially and 9.75% year over year, while digital products jumped 1.11% month over month. Sporting goods, health and personal care, electronics, and grocery categories also posted gains.

More Strategy: Alongside the pricing push, Kroger is accelerating store expansion plans and improving in-store operations. The retailer plans to open 70 to 80 new stores next year — roughly double the number planned for 2026 — while continuing to expand e-commerce and personalization capabilities across its grocery network.

Kontoor Brands has agreed to sell its struggling Lee business to Authentic Brands Group in a deal valued at up to $1 billion as the apparel company sharpens its focus on faster-growing brands, including Wrangler and Helly Hansen.

What’s the deal? The transaction includes an upfront payment of $750 million alongside a potential $250 million performance-based earnout tied to Lee’s future results under Authentic’s ownership. The deal is expected to close in the second half of 2026 pending regulatory approvals. Lee generated roughly $750 million in revenue in fiscal 2025, though sales declined 5% during the year.

Big Picture: Kontoor CEO Scott Baxter said the divestiture is designed to “sharpen” the company’s portfolio and free up capital for higher-growth opportunities across denim, outdoor, and workwear categories. The acquisition further expands Authentic Brands’ growing portfolio of legacy apparel labels following its purchase of Dockers from Levi Strauss & Co. last year.

Walmart warned that American consumers could soon face greater financial pressure as rising fuel prices, fading tax refunds, and persistent inflation begin weighing more heavily on household budgets.

Rising Prices: CFO John David Rainey said higher tax refunds earlier this year temporarily helped offset the impact of surging gasoline prices, but warned consumers are likely to feel more strain as those refunds fade. Walmart said it absorbed roughly $175 million in fuel-related cost pressures during the quarter, with potentially larger impacts expected ahead if energy prices remain elevated.

Key Stats: The big-box retailer continued delivering strong top-line growth despite mounting consumer pressure. Revenue rose 7% year over year to $177.8 billion, beating analyst expectations, while comparable store sales increased 4.1%.

Walmart’s higher-margin digital businesses also remained a major growth driver, with global e-commerce sales rising 26%, its U.S. marketplace business jumping nearly 50%, and advertising revenue surging 37%.

Estée Lauder and Spanish beauty group Puig have ended discussions over a potential merger that would have created a combined beauty giant with nearly $39 billion in market value and roughly $20 billion in annual sales.

No Deal: The collapse of the talks triggered sharp market reactions, with Estée Lauder shares rising as much as 11% in premarket trading while Puig stock plunged more than 14% in Madrid — its steepest decline since listing in 2024.

Back to Growth: CEO Stéphane de La Faverie said Estée Lauder will now focus on its standalone turnaround strategy, including restructuring efforts, faster-growing sales channels, and its “Beauty Reimagined” transformation plan.

The company is currently cutting between 9,000 and 10,000 jobs globally and warned tariff-related pressures could reduce fiscal 2026 profitability by $160 million to $180 million despite mitigation efforts.

BJ's Wholesale Club reported stronger-than-expected first-quarter results, with rising membership growth, higher fuel sales, and strong digital demand helping lift revenue nearly 10% year over year.

Key Numbers: The warehouse retailer posted adjusted earnings of $1.10 per share, beating analyst expectations of $1.03, while revenue climbed 9.9% to $5.66 billion, ahead of forecasts for $5.41 billion. Comparable club sales rose 6.3%, while membership fee income increased 9.9% to $132.4 million as the company added more members and expanded higher-tier memberships.

New Channels: BJ’s also reported 28% growth in digitally enabled comparable sales, continuing its push into e-commerce and omnichannel retail. During the quarter, the company opened one new warehouse club and six new gas stations, expanding its physical footprint.

Future Outlook: Despite a slight decline in net income to $142.7 million, the company maintained its full-year adjusted EPS guidance of $4.40 to $4.60 and said it expects comparable sales excluding gasoline to rise between 2% and 3% this fiscal year.

Major U.S. companies are increasingly moving to reclaim billions of dollars in tariff refunds despite President Donald Trump previously warning he would “remember” companies that chose not to seek repayment.

Long Line: Companies including Walmart, Apple, Nike, Home Depot, General Motors, FedEx, and Costco have either confirmed refund applications or are actively exploring the process following the Supreme Court's ruling striking down several of Trump’s global tariffs. U.S. Customs and Border Protection said more than $35 billion in refunds have already been processed, with roughly $166 billion still owed overall.

Retail Relief: Retailers say the refunds could help offset tariff-related costs and reduce pressure on consumers already facing high prices and elevated fuel costs. Walmart said it plans to use any refund money to help maintain lower prices, while Apple said potential refunds would be reinvested into U.S. innovation and advanced manufacturing.

Shein has agreed to acquire U.S. apparel brand Everlane in a deal that gives the fast-fashion giant ownership of a label known for sustainability and supply chain transparency.

Independent Operation: Everlane said it will continue operating independently following the deal and maintain its sustainability commitments, while leveraging Shein’s global scale to expand internationally. Reuters reported the acquisition values Everlane at roughly $100 million, though common shareholders are reportedly not expected to receive payouts.

What’s Next? Shein is also expected to keep Everlane’s physical stores open and invest further into the brand’s growth. Analysts say the deal could combine Everlane’s premium branding and sustainability positioning with Shein’s highly efficient sourcing, production, and distribution network, potentially creating new cross-selling and global expansion opportunities.