DETROIT (AP) — Shares of General Motors surged almost 10% Tuesday after the automaker posted a $3 billion third-quarter profit, slightly less the same period a year ago. It was the stock's biggest single day percentage gain in more than four years.
GM's stock closed up 9.8% at $53.73, the biggest increase since March 24, 2020 and the highest price this year.
The earnings came even though GM's U.S. sales were down and a once-reliably profitable joint venture in China lost money.
The Detroit automaker reported $48.8 billion in revenue from July through September, 10% more than last year, aided by U.S. average vehicle sale prices that were steady with last quarter at over $49,000.
Chief Financial Officer Paul Jacobson said that while overall sales in the U.S., GM's most profitable market, fell 2.2% in the quarter, much of that drop was from sales to large fleet buyers. Sales to individuals, which generally are more profitable, rose 3%.
While other automakers have gotten stuck with too many high-priced vehicles when many buyers are looking for lower costs, GM has yet to see such a shift, Jacobson told reporters.
During the quarter, the company gained $900 million year-over-year from higher prices, he said. About half of that came from sales of midsize SUVs such as the Chevrolet Traverse, he said.
“I think that the consumer has held up remarkably well for us,” he said, adding that next year should be consistent with this year as the Federal Reserve continues to reduce interest rates and lower borrowing costs. “Nothing that we've seen has changed from where we've been the last several quarters.”
Excluding one-time items, GM had an adjusted profit of $2.96 per share, beating Wall Street estimates of $2.38, according to FactSet. The company’s revenue also soundly beat estimates of $44.67 billion.
The company’s joint venture in China, though, lost $137 million, compared with a $192 million profit a year ago. Jacobson said the loss is a symptom of tough market conditions there, where domestic brands are turning out well-built products at low costs.
The company, he said, is working with partner SAIC on restructuring the business, with several key meetings in the fourth quarter.
“We really haven’t instituted any of the real restructuring yet,” he said, adding that sales are up and inventory is down.
CEO Mary Barra said China is a difficult environment because some domestic brands “don't seem to prioritize profitability, they're definitely prioritizing production.”
She said GM can make money there in a different way, focusing on a new pickup truck and importing premium vehicles.
Pretax profits in North America rose 13% to $3.98 billion, while losses narrowed to $435 million at the troubled Cruise autonomous vehicle unit. Cruise lost its license to run robotaxis in California after a San Francisco crash last year. The unit has resumed testing with human safety drivers in three markets and driverless testing in Houston.
The third-quarter performance allowed GM to raise the low end of its full-year net income guidance, but it lowered the top end of the range. The company now expects to make $10.4 billion to $11.1 billion, compared with $10 billion to $11.4 billion previously.
Jacobson said next year should be much like this one and Barra said the company would give specific 2025 guidance in January.
The company did point to lower earnings in the fourth quarter. Jacobson said GM pulled ahead some truck and SUV production from the fourth quarter that added $400 million to pretax earnings. The increased production will make up for eight days of lost production around the holidays in November and December, he said.
In the fourth quarter, GM won't see gains from price increases that came during the same quarter last year, he said.
GM also saw a $700 million increase in warranty costs, which Jacobson blamed on inflation in parts and labor costs to fix the problems. He said there were problems with older models that have been fixed in production.
GM said it sold 32,000 electric vehicles during the quarter, with discounts that were 11 percentage points below the industry average. Barra said in a letter to shareholders that GM continues to make progress toward EV profitability. The company expects to produce 200,000 of them this year.
“We’re seeing demand start to inflect a little bit higher as we’re building awareness out there for the products,” Jacobson said.
AP Business Writer Stan Choe contributed to this report from New York.
FILE - A General Motors logo is shown April 24, 2024, in Detroit. (AP Photo/Paul Sancya, File)
FILE - A 2024 Chevrolet Silverado 2500 HD Custom truck is shown at the Pittsburgh International Auto Show in Pittsburgh, Feb. 15, 2024. (AP Photo/Gene J. Puskar, File)
FILE - The Chevrolet logo is seen at a new and used vehicles dealership in Palatine, Ill., on March 20, 2024. (AP Photo/Nam Y. Huh)
NEW YORK (AP) — Former Abercrombie & Fitch CEO Mike Jeffries, his romantic partner and a third man were arrested Tuesday on charges of luring men into drug-laced, outlandish and coercive sex parties held around the world by dangling the promise of modeling for the retailer's once-defining beefcake ads.
For almost 20 years, Jeffries, his partner Matthew Smith and their employee James Jacobson used Jeffries’ status, wealth and a web of household staffers to fulfill the couple's sexual desires in what amounted to an international sex trafficking and prostitution business protected by secrecy, according to an indictment unsealed in federal court in New York.
“Sexually exploiting vulnerable human beings is a crime. And doing so by dangling dreams of a future in fashion or modeling ... is no different,” Brooklyn-based U.S. attorney Breon Peace said at a news conference, calling the case a warning "to anyone who thinks they can exploit and coerce others by using the so-called casting couch system.”
The charges follow and sometimes echo sexual misconduct accusations made in lawsuits and the media by young people who said Jeffries promised modeling work and then pressed them into sex acts.
All three defendants appeared Tuesday in various courts — Jeffries and Smith in West Palm Beach, Florida, where they were taken into custody, and Jacobson in St. Paul, Minnesota, after his arrest in Wisconsin.
Jeffries wore a broad smile but didn’t comment as he left the courthouse after he was released on a $10 million bond. His attorney, Brian Bieber, also didn't comment.
Smith, who is a citizen of the United Kingdom, was ordered detained after prosecutors said they were concerned he might flee the country. His lawyers Joseph Nascimento and David Raben, said by email they would respond to the allegations in court.
Jacobson did not address the allegations during his court appearance in St. Paul, other than to tell the judge “I understand what they claim.” He was not asked to enter a plea and was ordered released on a $500,000 bond. Jacobson has said previously that he didn’t engage in or know about any coercive, deceptive or forceful behavior. Messages seeking comment were sent to Jacobson’s attorney.
The three defendants are charged with sex trafficking and interstate prostitution involving 15 unnamed accusers.
The case is the latest sex crime prosecution of a prominent and wealthy man — from Sean “Diddy” Combs to Harvey Weinstein — accused of abusing his position as a star or possible star-maker, though the status of the cases and important aspects of the allegations vary. An early accuser of the late Jeffrey Epstein said he groped her during a 1997 meeting arranged as a modeling interview for the Victoria’s Secret catalog.
James Dennehy, the assistant director of the FBI’s New York office, called the allegations “abhorrent.”
According to the indictment, the three paid for dozens of men to travel within the U.S. and internationally to engage in paid sex with them and other men in New York and at hotels in England, France, Italy, Morocco and St. Barts between 2008 and 2015. The sometimes graphic indictment describes sexual bacchanals in which the recruited men were given drugs, lubricant, condoms, costumes, sex toys and, sometimes, erection-inducing penile injections that caused painful, hourslong reactions.
The men weren't told ahead of time what sexual practices they'd be expected to engage in, and they were required to give up their clothes and phones during the gatherings and sign non-disclosure agreements afterward, the indictment said. It said the men sometimes got itineraries like those sent to models for photo shoots, leaving the men in the dark about what they were signing up for.
The defendants led the men to believe that attending the events would help their careers, including their chances of getting Abercrombie modeling gigs — or that not complying could harm their prospects, the indictment says.
Jeffries and Smith employed Jacobson to recruit the men, who typically had to undergo “tryouts" by having sex with Jacobson first, according to the indictment. It says other, unnamed household staffers also helped facilitate the events, including by acting as security and providing alcohol, muscle relaxants, Viagra and other items.
The men were subjected to some sex acts without consent, and when witnesses threatened to expose what was going on, Jeffries and Smith used a security company to surveil and intimidate them into silence, according to a letter that prosecutors filed in court.
Peace said at the news conference that prosecutors have “a lot of evidence,” including travel records, financial documents and testimony from accusers and witnesses.
Jeffries became CEO of Abercrombie & Fitch in 1992 and left in 2014. The New Albany, Ohio-based company, which also encompasses Hollister, declined to comment on his arrest.
Prosecutors don't allege that the company's resources or property were used in the alleged sex scheme.
Abercrombie last year said it had hired an outside law firm to conduct an independent investigation after the BBC reported on similar allegations from a dozen men.
A lawsuit filed in New York last year accused Abercrombie of allowing Jeffries to run a sex-trafficking organization during his 22-year tenure, with modeling scouts scouring the internet for victims. At the time, Bieber declined to comment on the allegations.
Abercrombie & Fitch traces its roots to a hunting and outdoors goods store that was founded in 1892. When Jeffries arrived a century later, the brand was a retail also-ran.
He was credited with transforming it into a darling of turn-of-the-millennium teen mall culture, known for its nouveau-preppy aesthetic — and for its sexy ads and store events featuring shirtless, muscular male models. Jeffries talked openly about how the company went after attractive kids who could fit into its clothes.
Those remarks alienated customers who didn't fit — literally or otherwise — the brand’s image, and the 2008 financial crisis and subsequent recession prompted some teens to look to less expensive “fast fashion” chains. A&F's popularity started to fade again.
By the time Jeffries left, the company's sales were slumping. A hedge fund had pushed the board to replace him.
A few months after his departure, the retailer announced it would stop using “sexualized” photos in marketing materials in its shops and calling store staffers “models.” The company told regional managers it wouldn't “tolerate discrimination based on body type or physical attractiveness.”
The company has rebounded in recent years.
AP writer Steve Karnowski in St. Paul, Minnesota contributed to this report.
Michael Jeffries, center, former CEO of Abercrombie & Fitch, leaves with his attorney Brian Bieber, left, following a hearing at the Paul G. Rogers Federal Building and U.S. Courthouse in West Palm Beach, Fla., Tuesday, Oct. 22, 2024. (AP Photo/Rebecca Blackwell)
Michael Jeffries, center, former CEO of Abercrombie & Fitch, leaves with his attorney Brian Bieber, left, following a hearing at the Paul G. Rogers Federal Building and U.S. Courthouse, in West Palm Beach, Fla., Tuesday, Oct. 22, 2024. (AP Photo/Rebecca Blackwell)
Michael Jeffries, center, former CEO of Abercrombie & Fitch, leaves the Paul G. Rogers Federal Building and U.S. Courthouse following a hearing, in West Palm Beach, Fla., Tuesday, Oct. 22, 2024. (AP Photo/Rebecca Blackwell)
Michael Jeffries, right, former CEO of Abercrombie & Fitch, leaves with his attorney Brian Bieber, left, following a hearing at the Paul G. Rogers Federal Building and U.S. Courthouse, in West Palm Beach, Fla., Tuesday, Oct. 22, 2024. (AP Photo/Rebecca Blackwell)
Michael Jeffries, former CEO of Abercrombie & Fitch, leaves following a hearing at the Paul G. Rogers Federal Building and U.S. Courthouse in West Palm Beach, Fla., Tuesday, Oct. 22, 2024. (AP Photo/Rebecca Blackwell)
United States Attorney for the Eastern District of New York Breon Peace speaks during a press conference regarding the arrests of former Abercrombie & Fitch CEO Mike Jeffries and his partners as part of sex trafficking investigation at the U.S. Attorney's Office, Tuesday, Oct. 22, 2024, in New York. (AP Photo/Yuki Iwamura)
United States Attorney for the Eastern District of New York Breon Peace speaks during a press conference regarding the arrests of former Abercrombie & Fitch CEO Mike Jeffries and his partners as part of sex trafficking investigation at the U.S. Attorney's Office, Tuesday, Oct. 22, 2024, in New York. (AP Photo/Yuki Iwamura)
United States Attorney for the Eastern District of New York Breon Peace speaks during a press conference in regards to the arrests of former Abercrombie & Fitch CEO Mike Jeffries and his partners as part of sex trafficking investigation at the U.S. Attorney's Office, Tuesday, Oct. 22, 2024, in New York. (AP Photo/Yuki Iwamura)
Assistant Director in Charge of the FBI's New York Field Office James Dennehy speaks during a press conference regarding the arrests of former Abercrombie & Fitch CEO Mike Jeffries and his partners as part of sex trafficking investigation at the U.S. Attorney's Office, Tuesday, Oct. 22, 2024, in New York. (AP Photo/Yuki Iwamura)
Assistant Director in Charge of the FBI's New York Field Office James Dennehy speaks during a press conference in regards to the arrests of former Abercrombie & Fitch CEO Mike Jeffries and his partners as part of sex trafficking investigation at the U.S. Attorney's Office, Tuesday, Oct. 22, 2024, in New York. (AP Photo/Yuki Iwamura)
Assistant Director in Charge of the FBI's New York Field Office James Dennehy speaks during a press conference regarding the arrests of former Abercrombie & Fitch CEO Mike Jeffries and his partners as part of sex trafficking investigation at the U.S. Attorney's Office, Tuesday, Oct. 22, 2024, in New York. (AP Photo/Yuki Iwamura)
United States Attorney for the Eastern District of New York Breon Peace speaks during a press conference regarding the arrests of former Abercrombie & Fitch CEO Mike Jeffries and his partners as part of sex trafficking investigation at the U.S. Attorney's Office, Tuesday, Oct. 22, 2024, in New York. (AP Photo/Yuki Iwamura)
Assistant Director in Charge of the FBI's New York Field Office James Dennehy speaks during a press conference regarding the arrests of former Abercrombie & Fitch CEO Mike Jeffries and his partners as part of sex trafficking investigation at the U.S. Attorney's Office, Tuesday, Oct. 22, 2024, in New York. (AP Photo/Yuki Iwamura)
Commanding officer of the NYPD, Deputy Chief Carlos Ortiz speaks during a press conference in regards to the arrests of former Abercrombie & Fitch CEO Mike Jeffries and his partners as part of sex trafficking investigation at the U.S. Attorney's Office, Tuesday, Oct. 22, 2024, in New York. (AP Photo/Yuki Iwamura)
United States Attorney for the Eastern District of New York Breon Peace speaks during a press conference regarding the arrests of former Abercrombie & Fitch CEO Mike Jeffries and his partners as part of sex trafficking investigation at the U.S. Attorney's Office, Tuesday, Oct. 22, 2024, in New York. (AP Photo/Yuki Iwamura)
FILE - In this May 22, 2017, file photo, a store window reflects a street scene at an Abercrombie & Fitch store on New York's Fifth Avenue. (AP Photo/Bebeto Matthews, File)
FILE - Michael Jeffries, former CEO of Abercrombie & Fitch, speaks at the annual National Retail Federation conference on Jan. 13, 2009 in New York. (AP Photo/Mark Lennihan, File)
