Top 12 Accounts Receivable Best Practices For Smaller Companies
In an ideal situation, purchase and payment are simultaneous, but in a modern “trade credit” economy, in order to keep customers and grow your business you need to offer credit terms. Even with the buyer’s agreement on when payment is supposed to be due, payments will often lag, putting a dent in your cash flow or worse, forcing you to increase borrowing to maintain operations. Poor accounts receivable practices equal poor cash flow, so putting some or all of these basic suggestions into practice can help your bottom line. It's that simple.
1. Credit Management: It’s surprising how many smaller companies are penny wise and pound-foolish. They will try to save the $30-$50 cost of a legitimate credit report, either by doing nothing at all and hoping for the best, or relying on cut-rate Internet services costing (and usually worth no more than) a couple of dollars. This is like rolling the dice: sometimes it works out, but when it doesn’t, a multi-thousand dollar bad debt can ensue. In the long-term, it is a strategy destined for failure.
2. Shorten Payment Terms: Forget the 'Net 30' or 'Net 45.' Use 'Payment due upon receipt”, or Cash-in-Advance for problem payers or those with no history with you.
3. Offer Early Payment Discounts: If you do extend trade credit, try a prompt payment cash discount, such as 2%/10 Net 20 Days. Customers want to save a couple bucks, too, and are more inclined to pay up in early if they can get a discount.
4. Enforce Early-Payment Discounts. If you give a discount, whatever you do, don’t get into the habit of letting the customer have the discount and paying late, too.
5. E-Mail Invoices: Using electronic billing or email, deliver invoices to customers instantly. You can also ask them for a confirmation of payment date in the email.
6. Offer Electronic Payment Options: Make sure you take payment via electronic funds transfer -- include your EFT banking information (bank, branch and account number) on your invoices. Be flexible: accept PayPal and credit cards, too.
7. Collection Management: Phone, Phone, Phone: Don't be lazy, pick up the phone and call delinquent accounts directly because the personal touch -- if handled professionally -- is much more effective than e-mail and letters. To get even better results in the future, call back to let the customer know you received the payment. They will remember that.
8. Accounts Receivable Management: Monitor all accounts receivable at least on a weekly basis and follow up on those customers when due, or in the case of very large invoices, a few days ahead of the due date as a friendly reminder to them that it is important to you.
9. Keep Records: Although this should be obvious, keep a running record of all contacts, including e-mails sent, phone calls made, and customer responses received.
10. Systems. Look at credit and accounts receivable tracking and workflow systems that help you manage the entire credit to payment cycle. A well-designed system will ensure that nothing slips through the cracks. There are a number of Internet based systems for all sizes of companies.
11. Professional Outsourcing. Call in a professional credit and accounts receivable outsourcing service. You will save you money, credit losses, and overhead in the long-term. Plus, you know that the job will get done without all the management hassles.
12. If All Else Fails. Before an overdue account turns into a bad debt, contact a Collection Agency. Forget about selling to that customer again, unless it's cash up front, but then again, customers that don't pay are not customers you need.
Smyyth LLC -- since 1906
Order-to-Cash Services and Technology
Smyyth provides Order-to-Cash Outsourcing, Services and Technology. Credit services include credit groups, reporting and scoring, and trade credit insurance. Outsourcing includes management of credit, accounts receivable, collections, deduction management, and profit recovery. Our Carixa Internet technology streamlines operations, slashes costs, and increases your profits. Built on Six Sigma principles and SAS 70 Certified.
For more information: Visit www.smyyth.com
© Smyyth LLC 2011
Monday, September 19, 2011
Tuesday, September 13, 2011
Amazon Deal With California
When Amazon.com threatened to fund a public referendum to overturn California's online tax law that would collect sales tax on online purchases by defining Amazon 'affiliates' as a sales presence in the state, the state compromised by giving a one-year delay in implementing sales tax collection if Amazon dropped its threatened campaign.
Mail order and online companies are not required to collect sales tax on purchases from states where the company does not have a 'physical presence' -- store, warehouse, sales office, and so on. States, which are losing out on an estimated $23 billion in tax collections per year, are defining 'affiliates' -- websites that get paid a commission for every item sold by Amazon via links on the those websites -- as presences. Amazon happens to be the largest online player, but other companies do the same thing and will be subject to sales tax collection.
Retailers assert forcing online companies to collect sales tax would level the selling playing field. Online companies point to a 1992 US Supreme Court decision, Quill Corp. vs. North Dakota, which found that forcing a company with no physical presence in the state to pay sales tax violated constitutional provisions barring interference with interstate commerce.
Amazon's agreement with California -- and you can bet more states will pass such a tax law -- contains the provision that Congress could pass a national sales tax law to supercede state laws in 2012. Such national efforts failed before, and given the bipolar bipartisanship of the current Congress, it seems unlikely a national law could be passed.
Mail order and online companies are not required to collect sales tax on purchases from states where the company does not have a 'physical presence' -- store, warehouse, sales office, and so on. States, which are losing out on an estimated $23 billion in tax collections per year, are defining 'affiliates' -- websites that get paid a commission for every item sold by Amazon via links on the those websites -- as presences. Amazon happens to be the largest online player, but other companies do the same thing and will be subject to sales tax collection.
Retailers assert forcing online companies to collect sales tax would level the selling playing field. Online companies point to a 1992 US Supreme Court decision, Quill Corp. vs. North Dakota, which found that forcing a company with no physical presence in the state to pay sales tax violated constitutional provisions barring interference with interstate commerce.
Amazon's agreement with California -- and you can bet more states will pass such a tax law -- contains the provision that Congress could pass a national sales tax law to supercede state laws in 2012. Such national efforts failed before, and given the bipolar bipartisanship of the current Congress, it seems unlikely a national law could be passed.
A&P Auditing
Great Atlantic & Pacific Tea Company filed with the US Bankruptcy Court on September 12, 2011 a motion to expand the scope of employment of PricewaterhouseCoopers as auditor to include audit services.
Borders Severance Payments
The US Bankruptcy Court on September 8, 2011 signed off on an order that allows the book seller to pay executives Mike Edwards, Scott Henry, Jim Frering, and Rosalind Thompson $125,000 each — the maximum payment allowed under the Bankruptcy Code.
NumBytes 58: Google Power
Google consumed a whopping 2.26 terrawatt hours of electricity in 2010 -- enough to power 200,000 average US homes. They promise to only use that power for good.
Google Advice
Google Industry Director for Retail Todd Pollak, at the Shop.org conference, offered some pointers for retailers seeking to bridge the gulf between bricks and clicks. He suggested retailers commit to turning their company into a single profit center instead of a number of competing fiefdoms because customers don't care about divisions, they just see one single company. Google testing found that closer integration of website and store results in more store visits and sales.
He also contended that retailers need continuous testing of their sites to smooth customer use, even to the extent of studying how customers purchase different items. He asserted the 'one size fits all' interface does not work as well as customized approaches among different products because customers do not buy apparel the same way they buy small appliances or toys or any other product. Finally, Pollak recommended compiling stats on a per customer instead of per channel basis to better cater to customer habits.
He also contended that retailers need continuous testing of their sites to smooth customer use, even to the extent of studying how customers purchase different items. He asserted the 'one size fits all' interface does not work as well as customized approaches among different products because customers do not buy apparel the same way they buy small appliances or toys or any other product. Finally, Pollak recommended compiling stats on a per customer instead of per channel basis to better cater to customer habits.
Monday, September 12, 2011
Disney Retail Strategy Shift
Walt Disney Co. restructured to combine its separate DVDs, toys, apparel, and video games into a single Disney Consumer Products group in effort to boost sagging DVD sales and retain shelf space at major retailers. The company also named Robert Chapek as president of the new division.
BJ's Sale Approved
BJ's Wholesale Club, Inc. reported holders of approximately 72% of the company’s outstanding common stock approved the sale of the company to affiliates of Leonard Green & Partners, LP and funds advised by CVC Capital Partners and 0.4% opposed the sale. BJ's expects the closing of the merger will occur on or about September 30, 2011. Stockholders will receive $51.25 in cash, without interest and less any applicable withholding taxes, for each share of the company’s common stock. BJ’s Wholesale Club continues to operate 190 warehouse clubs in 15 states.
Burlington Coat Credit
Burlington Coat Factory Investments Holdings, Inc. and its operating subsidiaries entered into a Second Amended and Restated Credit Agreement that extended the credit agreement to September 2, 2016, retained commitments of $600 million in the aggregate and under certain conditions may be increased to $900 million, and lowered interest rates and other bank fees for the revolving credit facility.
Burlington Coat's other long term debt had previously been replaced in February 2011 with a new $1.0 billion senior secured term loan facility that matures in 2017 and $450 million aggregate principal amount of 10% Senior Notes due 2019. With the completion of the new Amended Credit Agreement, the company now has no significant debt amortization or maturity over the next five years. The company continues to operate 462 stores in 44 states and Puerto Rico.
Burlington Coat's other long term debt had previously been replaced in February 2011 with a new $1.0 billion senior secured term loan facility that matures in 2017 and $450 million aggregate principal amount of 10% Senior Notes due 2019. With the completion of the new Amended Credit Agreement, the company now has no significant debt amortization or maturity over the next five years. The company continues to operate 462 stores in 44 states and Puerto Rico.
BlueFly Raises $6.5 Million
Bluefly, Inc. raised approximately $6.5 million through the sale of newly issued common stock to entities affiliated with Rho Ventures, Soros Fund Management LLC, and Prentice Capital Management LLC from Bluefly at a market price of $1.80 per share. Rho Ventures is now the largest shareholder, owning approximately 37%, on a fully diluted basis. The cash will be used to promote growth of online presence.
Border's Final Days
The last few days of Border's going-out-of-business sale is upon its 359 remaining locations. All stores will close by mid-September 2011.
NumBytes 57: PO'd
Rain, sleet, and snow may not stop the US mail, but electron storms might. The US Post Office lost $3 billion in the fiscal third quarter as mail volume continued to drop -- off about 25% since 2006 -- and costs continue to rise. Give management credit, it floated a number of money-saving schemes, including laying off 100,000 workers, closing 2500 post offices, and eliminating Saturday delivery. If nothing changes, the US Post Office could lose up to a quarter trillion dollars by 2020...assuming it doesn't go belly up in the process.
Sure Fed Ex and UPS grabbed package delivery market share, but blame the move to e-mail as chief revenue squasher. The Post Office delivers about 48 billion bills, statements, offers, and other such paper mail each year and most of them are continuing the migration to electronic form. In 2010, for the first time, more households reported paying bills online than by check.
The bills still come in the mail, but companies are starting up digital mail services to grab a piece of that electronic bill sending to secure e-mail boxes. Pitney Bowes' Volly, Zumbox's Zumbox, Hearst's Manilla, and Bezos Expeditions' Doxo are all circling while the USPS asserts it is not dead yet and wants to go for a walk. A typical bill costs a company anywhere from 70¢ to $1 to deliver, while Zumbox claims to charge as little as 20 cents per bill. Bill recipients are not charged, just the companies sending the bill.
Of course, the more companies put things online, the greater the chance for a spamfest or hacker intrusion. In fact, given past performance of electronic mail, you can bet on both despite promises of security and opt-out clicks.
The e-storm seems unstoppable. The era of paper correspondence seems all too stoppable.
Sure Fed Ex and UPS grabbed package delivery market share, but blame the move to e-mail as chief revenue squasher. The Post Office delivers about 48 billion bills, statements, offers, and other such paper mail each year and most of them are continuing the migration to electronic form. In 2010, for the first time, more households reported paying bills online than by check.
The bills still come in the mail, but companies are starting up digital mail services to grab a piece of that electronic bill sending to secure e-mail boxes. Pitney Bowes' Volly, Zumbox's Zumbox, Hearst's Manilla, and Bezos Expeditions' Doxo are all circling while the USPS asserts it is not dead yet and wants to go for a walk. A typical bill costs a company anywhere from 70¢ to $1 to deliver, while Zumbox claims to charge as little as 20 cents per bill. Bill recipients are not charged, just the companies sending the bill.
Of course, the more companies put things online, the greater the chance for a spamfest or hacker intrusion. In fact, given past performance of electronic mail, you can bet on both despite promises of security and opt-out clicks.
The e-storm seems unstoppable. The era of paper correspondence seems all too stoppable.
Sears Hires Penkar
Sears Holdings hired Raj Penkar as Senior VP and President, Supply Chain, effective September 15. Mr. Penkar will be accountable for all aspects of the company's supply chain, including logistics, warehousing, inventory management, and distribution.
Bankruptcy Updates
Sbarro
The US Bankruptcy Court on September 8, 2011 approved Sbarro's motion to implement a key employee incentive plan (KEIP), under which total payments can range from $585,000 to $975,000 per measurement period - for a total aggregate cost of $1.17 million to $1.95 million. The Court on September 9, 2011 also approved Sbarro's motion for an order approving and authorizing the Debtors to perform under the exit financing commitment letter with its first lien lenders, approving procedures for consideration of alternative restructuring proposals, scheduling proposal deadlines and an auction, and approving the form and manner of notice thereof. The $18.6 million first-out, delayed-draw term loan facility will be used for general corporate purposes, including to cash collateralize existing or replacement letters of credit.
Nebraska Book Company
The US Bankruptcy Court on September 7, 2011 approved Nebraska Book Company's motion to approve the support agreement between the Debtors, the 8.625% Noteholders, the AcqCo Noteholders, and Weston Presidio. Under the agreement, in exchange for Weston Presidio's support of the Plan, the Debtors have agreed to provide an enhanced package of new warrants.
The US Bankruptcy Court on September 8, 2011 approved Sbarro's motion to implement a key employee incentive plan (KEIP), under which total payments can range from $585,000 to $975,000 per measurement period - for a total aggregate cost of $1.17 million to $1.95 million. The Court on September 9, 2011 also approved Sbarro's motion for an order approving and authorizing the Debtors to perform under the exit financing commitment letter with its first lien lenders, approving procedures for consideration of alternative restructuring proposals, scheduling proposal deadlines and an auction, and approving the form and manner of notice thereof. The $18.6 million first-out, delayed-draw term loan facility will be used for general corporate purposes, including to cash collateralize existing or replacement letters of credit.
Nebraska Book Company
The US Bankruptcy Court on September 7, 2011 approved Nebraska Book Company's motion to approve the support agreement between the Debtors, the 8.625% Noteholders, the AcqCo Noteholders, and Weston Presidio. Under the agreement, in exchange for Weston Presidio's support of the Plan, the Debtors have agreed to provide an enhanced package of new warrants.
Friday, September 2, 2011
Toys R Us, Pop-Ups, And Gluts
Toys R Us, Inc, announced plans to open fewer temporary 'pop-up' holiday stores in 2011 than the 600 it opened in 2010, although the company did not specify exactly how many it would open.
Just as retailers pushed the pop-up trend by finding cheap rents and opening temporary stores -- an estimated 5000 of them opened last year -- so the revival of rents may lead to the downfall of pop-ups. Landlords figured out that pop-up retailers seek the same spaces year after year, and so increased the rents. As more stores compete for prime locations, the pressure grows for rent increases.
In addition, a pop-up glut spreads the wealth as shoppers choose from among many retailers. Halloween offers an excellent example. Where once an area held one or two Halloween pop-up stores, in addition to the usual year-round department, discount, and party stores, last year's deluge of pop-ups created a glut. If retail dollars slow to a trickle, the return from pop-up operations decreases, and even 'defensive' pop-up stores opened by year-round stores to prevent sales from slipping away lose their luster.
Just as retailers pushed the pop-up trend by finding cheap rents and opening temporary stores -- an estimated 5000 of them opened last year -- so the revival of rents may lead to the downfall of pop-ups. Landlords figured out that pop-up retailers seek the same spaces year after year, and so increased the rents. As more stores compete for prime locations, the pressure grows for rent increases.
In addition, a pop-up glut spreads the wealth as shoppers choose from among many retailers. Halloween offers an excellent example. Where once an area held one or two Halloween pop-up stores, in addition to the usual year-round department, discount, and party stores, last year's deluge of pop-ups created a glut. If retail dollars slow to a trickle, the return from pop-up operations decreases, and even 'defensive' pop-up stores opened by year-round stores to prevent sales from slipping away lose their luster.
JC Penney Outlets Out
JC Penney will transfer ownership of its Outlet Stores to SB Capital Acquisitions, LLC within the next 30 to 60 days with no changes to its JC Penney agreement for JC Penney retail. SB Capital plans to continue operating the Outlet Stores as an on-going business and keep the current JC Penney management team and associates in the Outlet Stores. At the time of closing, SB Capital will have no debt on the inventory in the stores and the JC Penney name will change 21 or more months from now.
Malls Vs. Outlets
According to Time, one in 11 store fronts is empty inside traditional enclosed malls, the highest rate in a decade, with rents down to 2006 levels. Outlet malls, however, are booming because shoppers perceive stores within offer more value, even if the less expensive items for sale offer less detail and different levels of quality. The article noted 85% of the items sold at outlet malls were never sold in full-price stores and are not leftover items or goods damaged or returned at first-run, full-price stores -- the products are produced specifically for sale at outlet malls.
Outlets also offer cost advantages to operate versus traditional malls. They put all stores on one level, eliminating requirements for escalators and elevators, and since they are not enclosed, they do not provide heating or air conditioning. These cost savings add up, making rents, including common area assessments, less expensive.
Outlets also offer cost advantages to operate versus traditional malls. They put all stores on one level, eliminating requirements for escalators and elevators, and since they are not enclosed, they do not provide heating or air conditioning. These cost savings add up, making rents, including common area assessments, less expensive.
Hart Into Bankruptcy
On August 30, 2011, Hart Stores, Inc. obtained an initial order for court protection from creditors under the Canadian Companies' Creditors Arrangement Act through September 29, with extensions possible. The retailer, which operates 92 mid-sized department stores throughout Eastern Canada, will be able to borrow $20 million from Wells Fargo Capital Finance Corp. Canada to meet its liquidity requirements, such as paying its staff and suppliers.
Fall Spending
An IBM analytics-based study forecasted that the August through October shopping period will be spectacular for clothing and footwear sales. The study predicted sales of children's apparel to rise 11.1% rise to $2.659 billion, men's apparel up 5.5% to $1.930 billion, footwear up 3.2% to $7.066 billion, and women's apparel up 3.1% to $9.211 billion. Adults are apparently holding back on purchasing for themselves during their back-to-school shopping for the kids. But once the kids are in school, the grown-ups will be looking to treat themselves. Specialty apparel retailers, especially those that cater to teens and young adults, are widely expected to lose sales to discounters and department stores this year, as shoppers look for bargains and deals, noted the study.
NumBytes 56: Waitresses' Revenge $5,753
The Pasco County (FL) sheriff's office charged a waitress at a Mugs 'N Jugs with criminal use of personal identification information, and charged two of the waitress' known associates with scheming to defraud, possession of a card scanning device, and fraudulent use of credit cards. The waitress allegedly used an electronic scanner to skim off card details, her associates used the info to manufacture fake credit cards, and then they went shopping at local retailers. The goods they bought were later sold for cash -- so far only $5,753. That's not much compared to a Bernie Madoff Ponzi scheme, but little alleged crimes like these do add up. Maybe retailers might want to rethink the current practice of not requiring signatures for purchases under $25 or $50. Certainly diners may want to think about tipping their waitresses better.
Books-A-Million Promotions
Books-A-Million Inc. promoted Executive VP and Chief Merchandising Officer Terrance Finley to President and COO and promoted VP Real Estate James Turner to Executive VP Real Estate and Business Development.
Thursday, September 1, 2011
Costco CEO Change
Costco announced announced that CEO Jim Sinegal will step down as Chief Executive Officer effective January 1, 2012 and will be replaced by current President and COO Craig Jelinek.
Economy Watch: Sales, Mortgage, Gas
ICSC Retail Sales Data
The International Council of Shopping Centers and Goldman Sachs reported its chain-store sales index for the week ending on August 27, 2011 posted a tiny increase of 0.1% from the previous week, breaking four consecutive weeks of decline.
For all of August, the ICSC chain store sales index rose by 4.6% based on year-over-year comparable-store sales, matching the July performance. Hurricane Irene's impact was mixed with BJs observing they got a hefty lift to its sales from customers stocking up ahead of the storm, while Macy's, JCP and other apparel retailers were negatively impacted. Overall, ICSC figured sales took a 0.5% to 1.0% hit from the storm.
Mortgage Rates
Bankrate.com reported that the average conforming 30-year fixed mortgage rate fell to 4.37% from last week's 4.41%, according to its weekly national survey ending August 31, 2011. This is the lowest rate since Bankrate started its weekly mortgage survey in September 1985. It also reported that the average 15-year fixed mortgage rate fell to 3.48% from 3.63% last week. The Mortgage Bankers Association reported mortgage applications were down 9.6% compared to the week earlier, with 77.8% of mortgage loans going toward refinancing rather than home purchases.
Gas Prices
The Energy Department announced that for week ending August 29, 2011, the average price of US gasoline rose to $3.627 a gallon from $3.581 per gallon week earlier.
Diesel prices fell to $3.82 from $3.81 last week.
Gas consumption for the first six months of 2011 fell 2% from the same period in 2010, as gas prices hit and surpassed $4 per gallon.
The International Council of Shopping Centers and Goldman Sachs reported its chain-store sales index for the week ending on August 27, 2011 posted a tiny increase of 0.1% from the previous week, breaking four consecutive weeks of decline.
For all of August, the ICSC chain store sales index rose by 4.6% based on year-over-year comparable-store sales, matching the July performance. Hurricane Irene's impact was mixed with BJs observing they got a hefty lift to its sales from customers stocking up ahead of the storm, while Macy's, JCP and other apparel retailers were negatively impacted. Overall, ICSC figured sales took a 0.5% to 1.0% hit from the storm.
Mortgage Rates
Bankrate.com reported that the average conforming 30-year fixed mortgage rate fell to 4.37% from last week's 4.41%, according to its weekly national survey ending August 31, 2011. This is the lowest rate since Bankrate started its weekly mortgage survey in September 1985. It also reported that the average 15-year fixed mortgage rate fell to 3.48% from 3.63% last week. The Mortgage Bankers Association reported mortgage applications were down 9.6% compared to the week earlier, with 77.8% of mortgage loans going toward refinancing rather than home purchases.
Gas Prices
The Energy Department announced that for week ending August 29, 2011, the average price of US gasoline rose to $3.627 a gallon from $3.581 per gallon week earlier.
Diesel prices fell to $3.82 from $3.81 last week.
Gas consumption for the first six months of 2011 fell 2% from the same period in 2010, as gas prices hit and surpassed $4 per gallon.
Sbarro Objection Filed
The US Trustee assigned to the Sbarro case filed with the US Bankruptcy Court on August 31, 2011 an objection to the Debtors' motion for approval of a key employee incentive plan. According to the Trustee, 'the Debtors fail to include vital financial information without which it is impossible for the Court, creditors or the United States Trustee to determine if the Bonus Motion is an incentive program, or merely a program that rewards the participants for remaining employed with the Debtors.'
Wednesday, August 31, 2011
NumBytes 55: Slimy Irene 'Rentals'
Sitcoms and TV movie plots often hinge on a something for nothing scam of varying deviousness. One oft-used plot device finds a middle-class woman buying an over-the-top-of-the-line gown, leaving the pricetags on with the intention of returning it, only to spill wine on it or tear it or whatever that foils her free rental scheme.
Along comes Hurricane Irene, sparking a frenzy of gas-powered generator sales at Wal-Mart, Lowe's Home Depot, and other stores. That's great for business. However, according to an article in the Wall Street Journal, retailers expect many of these desperate customers to return them now that storm has passed -- a practice called 'weekend rentals.'
Mom-and-pop retailers are mostly prohibiting returns, while many chains accept returns but will charge a cleaning and restocking fee if the generator was used.
On the positive side for retailers, many who did not have generators during the emergency come in to buy them in preparation for the next hurricane, nor'easter, or storm.
Given that climate change is producing wilder weather, customers in the northeastern US may want to look to Floridians -- who know a thing or two about hurricanes -- for advice on generators. Generator maker Generac Holdings, Inc., whose units are sold in Home Depot and Lowe's, asserts 2% of Florida's single family homes have backup power systems -- one of the highest rates in the US.
Along comes Hurricane Irene, sparking a frenzy of gas-powered generator sales at Wal-Mart, Lowe's Home Depot, and other stores. That's great for business. However, according to an article in the Wall Street Journal, retailers expect many of these desperate customers to return them now that storm has passed -- a practice called 'weekend rentals.'
Mom-and-pop retailers are mostly prohibiting returns, while many chains accept returns but will charge a cleaning and restocking fee if the generator was used.
On the positive side for retailers, many who did not have generators during the emergency come in to buy them in preparation for the next hurricane, nor'easter, or storm.
Given that climate change is producing wilder weather, customers in the northeastern US may want to look to Floridians -- who know a thing or two about hurricanes -- for advice on generators. Generator maker Generac Holdings, Inc., whose units are sold in Home Depot and Lowe's, asserts 2% of Florida's single family homes have backup power systems -- one of the highest rates in the US.
Harry & David Emerging From Chapter 11
The US Bankruptcy Court on August 30, 2011 confirmed Harry & David Holdings' Chapter 11 Plan of Reorganization, with an anticipated emergence from bankruptcy protection on or around September 13, 2011. The plan allows the company to convert all of its approximately $200 million of outstanding public notes into equity of the reorganized company and includes an equity capital raise that will generate $55 million in equity financing upon emergence. A group of the company's existing noteholders have agreed to backstop the equity capital raise. Harry & David will utilize proceeds from the equity capital raise to satisfy obligations arising from its $55 million post-petition term loan. Additionally, the company obtained a $100 million revolving loan commitment to finance operations after exiting Chapter 11.
Consumer Spending Spree In July
The Commerce Department reported US consumer spending was up 0.8% in July 2011 -- or 0.5% when adjusted for inflation -- thanks in large part to 10% drop in gas prices and personal saving rate drop from 5.5% to 5.0%. This is starting the third quarter off to a good start, but a moribund August, recent Federal Reserve surveys of manufacturing activity showing downward numbers, and an East Coast hurricane named Irene combine to offset this initial welcome news. Personal income rose 0.3%, but after adjusting for inflation, actually dropped 0.1% -- the first decline since September 2010.
Tuesday, August 30, 2011
Lowe's Revamp
After a disappointing second quarter 2011, Lowe's is switching to an 'everyday low pricing' formula, more products available on its new website, and small engine and power equipment repair services to bring in more customers and improve the bottom line.
As for inventory, Lowe's is implementing a new strategy called 'integrating planning and execution' (IPE) that creates an 'institutional memory to maintain local assortment decisions when merchants change' -- otherwise known as getting the right product to the right store at the right quantity to reflect national and local tastes. It's hardly revolutionary in retail, but in a test store, Lowe’s removed much of the standard racking and experimented with more open vignettes, expanded endcaps, and 'drop zones.' The idea is to get customers to buy across product lines at once. Lowe's noted that more than 80% of the merchandising teams have product line reviews in process using these IPE techniques.
As for inventory, Lowe's is implementing a new strategy called 'integrating planning and execution' (IPE) that creates an 'institutional memory to maintain local assortment decisions when merchants change' -- otherwise known as getting the right product to the right store at the right quantity to reflect national and local tastes. It's hardly revolutionary in retail, but in a test store, Lowe’s removed much of the standard racking and experimented with more open vignettes, expanded endcaps, and 'drop zones.' The idea is to get customers to buy across product lines at once. Lowe's noted that more than 80% of the merchandising teams have product line reviews in process using these IPE techniques.
Supplier Woes
Manufacturers are always on the search for stable, cost-efficient, and timely suppliers, but 45% of North American product manufacturing companies expressed a need for new suppliers, according to the MFGWatch Quarterly Survey of North American Manufacturers, covering the second quarter of 2011. The survey noted 48% experienced a significant supply chain disruption in the past three months, up from 42% last quarter and 37% from fourth quarter 2010, causing them to investigate or select new suppliers. This is the second highest response percentage since MFGWatch began monitoring supply chain disruptions in the third quarter 2009. It also represents a considerable opportunity for suppliers to gain -- or lose -- customers.
Top supply chain concerns among buyers during the second quarter 2011: Logistics & Shipping Costs: 47% (up from 21% in the first quarter); Availability of Competent Suppliers: 45% (up from 15%); Product Quality Compliance: 37% (up from 12%); Fuel/Oil Prices: 32% (up from 25%); Supplier Financial Health/Stability: 18% (up from 7%); Unstable Labor Costs: 16% ( up from 4%); Intellectual Property Protection: 14% (up from 6%); Separation of Production from Design or R&D: 9% (up from 3%); and Civil Instability: 5% (up from 1%).
That's a considerable amount of nervousness among manufacturers, especially when you consider half are worried about transportation, almost half about competence, and over a third about quality. The latter two directly impact the reputation of a company, and once the notion of waning product quality gathers momentum, it can be difficult to regain the confidence of customers -- and that's an indirect cost on top of a direct cost of replacing/repairing products.
Reshoring
The *idea* of reshoring -- bringing manufacturing back to the US from overseas -- picked up some steam in the second quarter 2011. Of those surveyed, 31% said they were researching the concept, up from 27% last quarter, while those who said they weren't dropped to 47% from 54%. The biggest jump came from those who didn't know -- 30% in the second quarter, up from 19% in the first quarter.
The *reality* of reshoring lagged behind the concept: only 15% relocated production to North America during the second quarter, down from 17% from the first quarter and 25% from the fourth quarter 2010, while 78% of those surveyed did not, up from 76%. This represents a cooling off of the trend, although any increase in supply chain problems will likely trigger a renewal of reshoring.
These numbers represented somewhat of a churn in the supply chain management and stability sectors, and present real opportunity for US and North American supplier manufacturers. However, as the percentage of manufacturers actually reshoring production to North America continues to fall each quarter, it is still uncertain whether returning production is a trend or just a notion. As prices rise, transportation snags increase, and quality decreases, expect more movement back to US shores.
Hiring
The survey found that 32% of manufacturers increased hiring in the second quarter 2011, up from 27% in the first quarter, however 17% laid off employees, up from 9% in the first quarter. Of note, only 3% of manufacturers expected to lay off workers in the second quarter, so 17% represented strong, unexpected economic instability in many companies and markets.
As for the second half of the year, 20% are aggressively investing in new technology and expanding our workforce; 32% are aggressively investing in new technology but not expanding our workforce; 13% are hiring, but not investing in new technology; and 35% are neither hiring, nor investing in new technology.
Bottom Line
Overall manufacturing business conditions continued to improve, although supply chain disruptions increased significantly in North America -- again -- and threatened to derail economic progress.
Top supply chain concerns among buyers during the second quarter 2011: Logistics & Shipping Costs: 47% (up from 21% in the first quarter); Availability of Competent Suppliers: 45% (up from 15%); Product Quality Compliance: 37% (up from 12%); Fuel/Oil Prices: 32% (up from 25%); Supplier Financial Health/Stability: 18% (up from 7%); Unstable Labor Costs: 16% ( up from 4%); Intellectual Property Protection: 14% (up from 6%); Separation of Production from Design or R&D: 9% (up from 3%); and Civil Instability: 5% (up from 1%).
That's a considerable amount of nervousness among manufacturers, especially when you consider half are worried about transportation, almost half about competence, and over a third about quality. The latter two directly impact the reputation of a company, and once the notion of waning product quality gathers momentum, it can be difficult to regain the confidence of customers -- and that's an indirect cost on top of a direct cost of replacing/repairing products.
Reshoring
The *idea* of reshoring -- bringing manufacturing back to the US from overseas -- picked up some steam in the second quarter 2011. Of those surveyed, 31% said they were researching the concept, up from 27% last quarter, while those who said they weren't dropped to 47% from 54%. The biggest jump came from those who didn't know -- 30% in the second quarter, up from 19% in the first quarter.
The *reality* of reshoring lagged behind the concept: only 15% relocated production to North America during the second quarter, down from 17% from the first quarter and 25% from the fourth quarter 2010, while 78% of those surveyed did not, up from 76%. This represents a cooling off of the trend, although any increase in supply chain problems will likely trigger a renewal of reshoring.
These numbers represented somewhat of a churn in the supply chain management and stability sectors, and present real opportunity for US and North American supplier manufacturers. However, as the percentage of manufacturers actually reshoring production to North America continues to fall each quarter, it is still uncertain whether returning production is a trend or just a notion. As prices rise, transportation snags increase, and quality decreases, expect more movement back to US shores.
Hiring
The survey found that 32% of manufacturers increased hiring in the second quarter 2011, up from 27% in the first quarter, however 17% laid off employees, up from 9% in the first quarter. Of note, only 3% of manufacturers expected to lay off workers in the second quarter, so 17% represented strong, unexpected economic instability in many companies and markets.
As for the second half of the year, 20% are aggressively investing in new technology and expanding our workforce; 32% are aggressively investing in new technology but not expanding our workforce; 13% are hiring, but not investing in new technology; and 35% are neither hiring, nor investing in new technology.
Bottom Line
Overall manufacturing business conditions continued to improve, although supply chain disruptions increased significantly in North America -- again -- and threatened to derail economic progress.
Online Sales: Up Or Down?
According to analyst Shawn Milne at Janney Capital Markets, online retailers such as Amazon.com and eBay may see sales growth reduced should the economy dip into another recession -- no surprise there -- but e-commerce sales will drop slower than retail store sales and may increase market share of online companies as consumers look for more bargains online.
Monday, August 29, 2011
Payless: Less Stores But Not Storeless
Collective Brands, Inc. is planning to close about 475 underperforming and low-volume Payless and StrideRite shoe stores by the end of the fiscal year. The company for fiscal second quarter posted a loss of $35 million, worse than profit of $21.1 million year ago, on 4.9% revenue increase to $882.4 million.
Asso. Grocers of Maine: Chapter 11
Food distribution company Associated Grocers of Maine, Inc. filed for Chapter 11 on August 26, 2011 with the US Bankruptcy Court, listing $23.5 million in liabilities and less than $10 million in assets.
NumBytes 54: Sucking Up
According to a study of 303 senior executives at US companies conducted by Georgetown University and research company Penn Schoen Berland, 84% complain favoritism takes place in their companies, 23% said they do it themselves, and 9% admit it was a factor in determining their last promotion. Almost 75% noted their companies had procedures in place to ensure fairness in promotions -- which is often circumvented when executives limit their searches to a single candidate, have one preference before starting the search, and using criteria such as trustworthiness and comfort.
So, sucking up, er, playing well with others, helps career paths, but being 'disagreeable' may make employees wealthier -- see NumBytes 47: Don't Worry, Be Rude.
So, sucking up, er, playing well with others, helps career paths, but being 'disagreeable' may make employees wealthier -- see NumBytes 47: Don't Worry, Be Rude.
Friday, August 26, 2011
Toys R Us: New Stores
Toys 'R' Us, Inc. will open 11 new 'R' Superstores and 10 new Side-by-Side Stores pairing Toys R Us and Babies R Us together for one-stop shopping. In addition, the company is remodeling 23 other stores as Side-by-Side Stores and hiring 1100 employees. By the end of 2011, the company will operate 43 'R' Superstores nationwide.
Jo-Ann Stores Names CEO
Jo-Ann Stores, Inc. promoted Travis Smith to CEO, replacing Darrell Webb, who will remain chairman of the board and become the interim CEO of Sports Authority.
Frederick's LoRe Resigns
Frederick's of Hollywood Group Inc. announced that President Linda LoRe will resign September 2, 2011, but will continue her employment through January 20, 2012, and will assist in the orderly transition of her responsibilities to senior members of the company's current management team.
Ritz Files For Chapter 11
Ritz Interactive Inc., which operates a variety of websites, including those for such retailers as Ritz Camera and Boaters World, filed with the US Bankruptcy Court on August 19, 2011 for Chapter 11 bankruptcy protection. The company listed assets of $809,000 and debts of $7.2 million.
Sbarro KEIP Plan
Sbarro filed with the US Bankruptcy Court on August 25, 2011 a motion for approval of a key employee incentive plan (KEIP), with three key employees classified as 'insiders.' Under the KEIP, total payments can range from $585,000 to $975,000 per measurement period, for a total aggregate cost of $1.17 million to $1.95 million. The Court scheduled a September 7, 2011 hearing to consider the KEIP.
NumBytes 53: Baby, Bathwater, and Congress
If you think you have problems with your boss complaining about your job performance...just be glad you're not a member of Congress. According to an Associated Press-GfK Group poll of 1000 adults conducted Aug. 18-22, approval of Congress dropped to 12% -- the lowest level ever in AP-GfK polling history -- and down from just 21% in June. Among those polled calling themselves Independents, 65% want their own representative tossed out in 2012. Even if you add in Republicans and Democrats, it's still 53% across the board wanting to toss 'em all out.
Thursday, August 25, 2011
Jobs Gone, Cook In
Apple CEO Steve Jobs resigned from Apple, citing what he considers his inability to perform the job. Jobs has battled pancreatic cancer.
From his resignation letter:
'I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come.
I hereby resign as CEO of Apple. I would like to serve, if the Board sees fit, as Chairman of the Board, director, and Apple employee.
As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.'
From his resignation letter:
'I have always said if there ever came a day when I could no longer meet my duties and expectations as Apple’s CEO, I would be the first to let you know. Unfortunately, that day has come.
I hereby resign as CEO of Apple. I would like to serve, if the Board sees fit, as Chairman of the Board, director, and Apple employee.
As far as my successor goes, I strongly recommend that we execute our succession plan and name Tim Cook as CEO of Apple.'
Duane Reade Ex-CEO Sentenced
Former Duane Reade CEO Anthony Cuti was found guilty of five criminal charges, including conspiracy and securities fraud, and received a three-year sentence to prison. Cuti and former CFO Willam Tennant (also convicted of securities fraud) had been charged with inflating company income with fraudulent real-estate transactions and fictitious credits. Tennant is scheduled for sentencing on August 29, 2011.
US Bank Rollercoaster
The Federal Deposit Insurance Corp reported a 1% increase in borrowing for the second quarter 2011 over the first quarter, the first time in three years that lending expanded. However, banks are still experiencing trouble finding credit-worthy customers, especially under the new lending rules, and their bottom lines are showing rising profits only because of accounting sleight of hand -- they are putting aside less to cover lending losses.
On the positive side, the FDIC closed only 22 banks in the second quarter 2011, the lowest number in any quarter since the beginning of 2009, and about 70 total failures for the year. In addition, the FDIC noted the number of 'problem banks' dropped for the first time in five years to 865 -- although that's still about half of the country's 1700 banks.
A tumbling stock market saw a shift into cash positions, allowing large banks to park an extra $137.3 billion with the Federal Reserve in the second quarter, a 22% increase from the first quarter. The FDIC fund used to pay off depositors if a bank fails also increased to have a positive balance for the first time in two years to $3.9 billion, up from its nadir of negative $20.9 billion at the end of 2009.
The overall effect represents a repetition of turtle-like growth -- just enough to slog forward, but not enough to lift the overall feeling of malaise. Retailers can live with the despair of recessionary sales figures. It's the hope of real growth that drives them mad.
On the positive side, the FDIC closed only 22 banks in the second quarter 2011, the lowest number in any quarter since the beginning of 2009, and about 70 total failures for the year. In addition, the FDIC noted the number of 'problem banks' dropped for the first time in five years to 865 -- although that's still about half of the country's 1700 banks.
A tumbling stock market saw a shift into cash positions, allowing large banks to park an extra $137.3 billion with the Federal Reserve in the second quarter, a 22% increase from the first quarter. The FDIC fund used to pay off depositors if a bank fails also increased to have a positive balance for the first time in two years to $3.9 billion, up from its nadir of negative $20.9 billion at the end of 2009.
The overall effect represents a repetition of turtle-like growth -- just enough to slog forward, but not enough to lift the overall feeling of malaise. Retailers can live with the despair of recessionary sales figures. It's the hope of real growth that drives them mad.
NumBytes 52: 2001: A Patent Odyssey
With companies gobbling up the competition for patents and patent 'troll' law firms suing for all sorts of alleged patent infringement, give some credit to Samsung Electronics' defense against a patent suit by Apple: showing movie clips from 2001: A Space Odyssey.
Apparently, Apple patented the rectangular-ish shape with dominent screen for computing tablets and is suing Samsung for patent infringement over using the same, er, shape and idea. Samsung countered with clips from the 1968 movie showing two astronauts eating and using personal tablet computers, as well as clips from a 1973-1979 British TV show The Tomorrow People also showing a tablet computer.
Arguably, a tricorder from the 1960s TV show Star Trek could have been included, although also arguably not thin enough until the 1980s remake. But if you really want to ultimate 'prior art' defense for a rectangularish high-tech (for the time) device with dominant display, try going back to the ancient era -- wax tablets.
Apparently, Apple patented the rectangular-ish shape with dominent screen for computing tablets and is suing Samsung for patent infringement over using the same, er, shape and idea. Samsung countered with clips from the 1968 movie showing two astronauts eating and using personal tablet computers, as well as clips from a 1973-1979 British TV show The Tomorrow People also showing a tablet computer.
Arguably, a tricorder from the 1960s TV show Star Trek could have been included, although also arguably not thin enough until the 1980s remake. But if you really want to ultimate 'prior art' defense for a rectangularish high-tech (for the time) device with dominant display, try going back to the ancient era -- wax tablets.
Chinese Feeling The Pinch
'Pinch' may be too strong a word while the Chinese economy is expanding at the enviable rate of 9.1%. HSBC's manufacturing index for China showed a preliminary uptick in August 2011 to 49.8 from July's 49.3, but anything below 50 is considered contraction. Small manufacturers in China are starting to take hits on falling orders while also dealing with tighter credit and absorbing rising wages -- central bank pegs labor costs in the second quarter 2011 rising 10% to 30% over last year. An article in the Wall Street Journal noted small businesses are being forced to accept receiveables, a kind of IOU, instead of payment and that payments are being stretched out.
Economy Watch: Sales, Mortgage, Gas
ShopperTrak Retail Sales Data
For the week ended August 22, 2011, ShopperTrak's National Retail Sales Estimate rose 1.2% to $95.863 billion from the week before of $94.760 billion, but was down 4.2% from the same period last year. With only one week left for Back to School, ShopperTrak expects diminishing returns.
ICSC Retail Sales Data
The International Council of Shopping Centers and Goldman Sachs reported its chain-store sales index for the week ending on August 20, 2011 posted a decline of 1.0% from the previous week, the fourth consecutive week of decline. Year-over-year increase was 3.0%.
Mortgage Rates Drop Again
Bankrate.com reported that the average conforming 30-year fixed mortgage rate fell to 4.41% from last week's 4.45%, according to its weekly national survey ending August 24, 2011. This is the lowest rate since Bankrate started its weekly mortgage survey in September 1985. It also reported that the average 15-year fixed mortgage rate rose to 3.63% from 3.58% last week. The Mortgage Bankers Association reported mortgage applications were down 2.4% compared to the week earlier, with 79.8% of mortgage loans going toward refinancing rather than home purchases.
Gas Prices
The Energy Department announced that for week ending August 15, 2011, the average price of US gasoline fell to $3.581 a gallon from $3.604 per gallon week earlier.
Diesel prices fell to $3.81 from $3.84 last week.
Of note, US ethanol exports rose as the market for blending ethanol into gasoline reached its saturation point
Nearly all fuel ethanol currently used in the US is consumed as a blend with gasoline in volumes containing up to 10 percent ethanol (E10), and that market is reaching saturation despite a waiver system to push the blend to 15% ethanol (so-called E15) for vehicles produced after 2000. However, concerns over potential mis-fueling, associated liabilities, and other issues continue to pose significant near-term barriers to the marketing of E15, so producers turned to exports. The use of high-ethanol fuels (E85, for example) is limited in the US. According to the EIA, ethanol imports went from a high of about 130 million gallons in autumn 2006 to a current low of near zero, while exports went from near zero in autumn 2006 to current rate of under 80 million gallons after peaking in the spring 2011 at 120 million gallons.
Looking forward, prospects for US ethanol exports will depend in part on the ability of the US market to absorb additional volumes of ethanol in the form of E15 and/or E85. All else equal, E15 is likely to be a more economically attractive market to domestic ethanol producers. Future developments in agricultural markets for corn and sugar will continue to impact the direction and magnitude of ethanol trade flows. Oil market developments will also be a factor, reflecting the fact that Brazil and some other important global markets allow consumers to choose between renewable and non-renewable motor fuels based on economic criteria.
For the week ended August 22, 2011, ShopperTrak's National Retail Sales Estimate rose 1.2% to $95.863 billion from the week before of $94.760 billion, but was down 4.2% from the same period last year. With only one week left for Back to School, ShopperTrak expects diminishing returns.
ICSC Retail Sales Data
The International Council of Shopping Centers and Goldman Sachs reported its chain-store sales index for the week ending on August 20, 2011 posted a decline of 1.0% from the previous week, the fourth consecutive week of decline. Year-over-year increase was 3.0%.
Mortgage Rates Drop Again
Bankrate.com reported that the average conforming 30-year fixed mortgage rate fell to 4.41% from last week's 4.45%, according to its weekly national survey ending August 24, 2011. This is the lowest rate since Bankrate started its weekly mortgage survey in September 1985. It also reported that the average 15-year fixed mortgage rate rose to 3.63% from 3.58% last week. The Mortgage Bankers Association reported mortgage applications were down 2.4% compared to the week earlier, with 79.8% of mortgage loans going toward refinancing rather than home purchases.
Gas Prices
The Energy Department announced that for week ending August 15, 2011, the average price of US gasoline fell to $3.581 a gallon from $3.604 per gallon week earlier.
Diesel prices fell to $3.81 from $3.84 last week.
Of note, US ethanol exports rose as the market for blending ethanol into gasoline reached its saturation point
Nearly all fuel ethanol currently used in the US is consumed as a blend with gasoline in volumes containing up to 10 percent ethanol (E10), and that market is reaching saturation despite a waiver system to push the blend to 15% ethanol (so-called E15) for vehicles produced after 2000. However, concerns over potential mis-fueling, associated liabilities, and other issues continue to pose significant near-term barriers to the marketing of E15, so producers turned to exports. The use of high-ethanol fuels (E85, for example) is limited in the US. According to the EIA, ethanol imports went from a high of about 130 million gallons in autumn 2006 to a current low of near zero, while exports went from near zero in autumn 2006 to current rate of under 80 million gallons after peaking in the spring 2011 at 120 million gallons.
Looking forward, prospects for US ethanol exports will depend in part on the ability of the US market to absorb additional volumes of ethanol in the form of E15 and/or E85. All else equal, E15 is likely to be a more economically attractive market to domestic ethanol producers. Future developments in agricultural markets for corn and sugar will continue to impact the direction and magnitude of ethanol trade flows. Oil market developments will also be a factor, reflecting the fact that Brazil and some other important global markets allow consumers to choose between renewable and non-renewable motor fuels based on economic criteria.
Wednesday, August 24, 2011
CVS Hires Cosby
CVS Caremark Corp. hired Mark S. Cosby as the new president of CVS/pharmacy, effective Oct. 1. Cosby, former President of stores at Macy's, Inc., will be responsible for all aspects of the company's retail business including its more than 7,200 retail stores and 19 distribution centers as well as retail merchandising, supply chain, marketing, real estate, front store, and pharmacy operations.
Sports Authority Sports New CEO
Sports Authority CEO David Campisi resigned on August 22, 2011 and the company appointed Darrell Webb as interim president and CEO. The company just acquired naming rights to the Denver Broncos' stadium for the next nine years, changing the name from Invesco Field at Mile High to Sports Authority Field at Mile High. Sports Authority is negotiating an extension of the deal to 2035.
Showtime At The Apollo
Private equity firm Apollo Management is preparing a bid to acquire 99 Cents Only Stores, a 285-store deep-discount chain with $1.4 billion in revenue, little debt and 5.3% rise in profit in the latest quarter, according to an article in the NY Post. The interested following a trend for private equity companies buying stakes in dollar stores. 99 Cents had a $1.3 billion deal earlier this year with Leonard Green & Partners to go private. Last week, Berkshire Hathaway disclosed it had made a $48 million investment in Dollar General and earlier this year, billionaire Nelson Peltz offered to acquire Family Dollar for $7 billion.
Why all the interest? Double dip recession fears and cheap food are pulling in ever more cost-conscious customers. The average 99 Cents transaction rose to $9.70 with more than 50% of revenue from food and grocery, pulling customers away from low cost chains such as Wal-Mart Stores, Inc.
Why all the interest? Double dip recession fears and cheap food are pulling in ever more cost-conscious customers. The average 99 Cents transaction rose to $9.70 with more than 50% of revenue from food and grocery, pulling customers away from low cost chains such as Wal-Mart Stores, Inc.
WorkForce MisManagement
A study from the University of California found that employers are increasing high turnover and absenteeism -- and resultant costs -- among hourly retail workers by adhering too closely to workforce management software. The last-minute shuffling of worker hours to stay under a defined percent of store sales budget creates havoc for low-wage employees who often work two or more jobs and deal with child or elder care constraints. While flexible staffing is a boon to managers, the more this practice persists, the less the employee can deal -- or want to deal -- with such shift adjustments. That leaves managers scrambling to find replacement workers at equally short notice and dealing with unhappy workers with all the implied impact on customer service.
On the bright side, WFM software can be used proactively to allow employees to indicate their preferred hours and hours when they are unavailable. Managers still decide the schedule, but fewer problems result when employees add input -- and the report noted happier employees with as little as 3 hours' difference across a 200-hour work week. When emergencies crop up, WFM software can send an automated text message, phone call, or email to available employees (as determined by tracking their self-reported availability), with a first-come, first-served response -- the first one to claim the shift gets it.
On the bright side, WFM software can be used proactively to allow employees to indicate their preferred hours and hours when they are unavailable. Managers still decide the schedule, but fewer problems result when employees add input -- and the report noted happier employees with as little as 3 hours' difference across a 200-hour work week. When emergencies crop up, WFM software can send an automated text message, phone call, or email to available employees (as determined by tracking their self-reported availability), with a first-come, first-served response -- the first one to claim the shift gets it.
NumBytes 51: Back To School Half Done
The National Retail Federation estimated that total spending for Back to School -- and Back to College -- will be $68 billion. That's a lot of pencils and books for the year -- teachers' dirty looks remain complimentary (unless you consider parents' tax bills).
According to NRF’s 2011 Back-to-School survey of 8,632 consumers conducted from August 2-9, 2011 by BIGresearch, the average family completed 43.0% of shopping for K-12 students at this point in August, similar to last year’s 43.2%. College students and their parents completed 44.3% of their shopping, up slightly from last year’s 43.1%.
The survey noted 56.9% of last-minute shoppers plan to shop in discount retailers, 47.1% will visit department stores (up from last year’s 42.7%), 40.8% plan to visit specialty clothing stores (up from 34.3%), and 21.7% plan to shop online (up from 16.0%).
For K-12 students, 43.4% of parents said they would purchase at least one character item, with Disney’s Cars and Star Wars taking the top slots for boys and Dora the Explorer and Hello Kitty at the top of the list for girls.
According to NRF’s 2011 Back-to-School survey of 8,632 consumers conducted from August 2-9, 2011 by BIGresearch, the average family completed 43.0% of shopping for K-12 students at this point in August, similar to last year’s 43.2%. College students and their parents completed 44.3% of their shopping, up slightly from last year’s 43.1%.
The survey noted 56.9% of last-minute shoppers plan to shop in discount retailers, 47.1% will visit department stores (up from last year’s 42.7%), 40.8% plan to visit specialty clothing stores (up from 34.3%), and 21.7% plan to shop online (up from 16.0%).
For K-12 students, 43.4% of parents said they would purchase at least one character item, with Disney’s Cars and Star Wars taking the top slots for boys and Dora the Explorer and Hello Kitty at the top of the list for girls.
Bankruptcy Updates: Nebraska Book and Borders
Nebraska Book Company Plan Support Agreement
Nebraska Book Company filed with the US Bankruptcy Court on August 23, 2011 a motion for approval of a Plan Support Agreement between the Debtors, the 8.625% Noteholders, the AcqCo Noteholders, and Weston Presidio. Under the agreement, in exchange for Weston Presidio's support of the Plan, the Debtors have agreed to provide an enhanced package of New Warrants. The Court scheduled a September 7, 2011 hearing to consider the motion.
Borders Group July Revenue
Borders Group filed with the US Bankruptcy Court on August 23, 2011 its monthly operating report for July 2011 noting the a net loss of $238 million on $152.2 million in revenue.
Nebraska Book Company filed with the US Bankruptcy Court on August 23, 2011 a motion for approval of a Plan Support Agreement between the Debtors, the 8.625% Noteholders, the AcqCo Noteholders, and Weston Presidio. Under the agreement, in exchange for Weston Presidio's support of the Plan, the Debtors have agreed to provide an enhanced package of New Warrants. The Court scheduled a September 7, 2011 hearing to consider the motion.
Borders Group July Revenue
Borders Group filed with the US Bankruptcy Court on August 23, 2011 its monthly operating report for July 2011 noting the a net loss of $238 million on $152.2 million in revenue.
Tuesday, August 23, 2011
The Rising: Prices
Retailers and other merchants sat on price rises during the downturn for fear of chasing away customers, but they could only continue to do so for so long. According to a quarterly Barlow Research Associates survey of 149 retailers and restaurants with annual sales of $10 million to $500 million, 53% lifted prices during the past 12 months, up from 32% a year ago, and 61% plan more price increases in the next 12 months. The US Labor Department reported inflation at 1.8% -- excluding food and energy -- in July 2011, the biggest jump in more than a year. Meanwhile, the US Bureau of Labor Statistics reported the average hourly earnings of all US private-sector employees rose 2.3% in July from a year ago, the highest level since October 2009.
Need A Raise?
According to a JPMorgan Chase report noted in the Washington Post, US salaries are at a 50-year low relative to company sales and GDP. Average profit margins of major companies rose to almost 13%, highest level since the 1960s, and 75% of boom in corporate profit margins comes from steady shrinkage of wages and benefits. Why? High unemployment drives down wages, unions faded in power, and about 2 billion Chinese, Indians, and other Asians are ready to work for far less than US minimum wage.
It cannot be surprising that 46 million people, about 15% of the US population, used food stamps in May 2011, the highest total ever recorded, according to CNN. The US Bureau of Labor Statistics reported that the US unemployment rate fell from 9.2% in June 2011 to 9.1% in July. The decline was helped by the 117,000 gain in jobs in July along with 127,000 people who just gave up the job search and were no longer counted.
With apologies to Plato and a nod to Aristotle, great disparities in wealth and the perceived limited access to become wealthy often generate resentment such that democracy transcends to anarchy, later giving rise to tyranny. In Europe, with unemployment in some countries up to 40% for teenagers and 20-somethings, rioting in UK cities and torching cars in Germany seem the pasttimes of the day. It hasn't come to that in the US...yet, but the 40% of the US population that controls 0.3% of wealth needs to see some leadership from the 0.1% of the population that controls 40% of the wealth. Capital chases efficiency, but humans chase emotion.
It cannot be surprising that 46 million people, about 15% of the US population, used food stamps in May 2011, the highest total ever recorded, according to CNN. The US Bureau of Labor Statistics reported that the US unemployment rate fell from 9.2% in June 2011 to 9.1% in July. The decline was helped by the 117,000 gain in jobs in July along with 127,000 people who just gave up the job search and were no longer counted.
With apologies to Plato and a nod to Aristotle, great disparities in wealth and the perceived limited access to become wealthy often generate resentment such that democracy transcends to anarchy, later giving rise to tyranny. In Europe, with unemployment in some countries up to 40% for teenagers and 20-somethings, rioting in UK cities and torching cars in Germany seem the pasttimes of the day. It hasn't come to that in the US...yet, but the 40% of the US population that controls 0.3% of wealth needs to see some leadership from the 0.1% of the population that controls 40% of the wealth. Capital chases efficiency, but humans chase emotion.
Online Adverts Back To 2007 Levels
EMarketer forecasted that online advertising spending will increase 20% in 2011 to $31.3 billion, up from its previous estimates of $28.5 billion. The company noted that the internet continues to take advertising dollars and share from traditional print publications and estimates that online spending will reach 20% of advertising budgets, second only to television at 38%. Search engine adverts remain the top type of online advertising with just uner $15 billion, while display adverts will hit $12.3 billion. Video adverts are expected to hit $2.16 billion in spending.
You can't blame the advertisers. According to a survey of over 4000 consumers in the US, Australia, China, Germany, and Spain by media research firm Interpublic Group, 52% search online for wide range of brands and products, and 25% noted it became second nature to spread the word about deals and experiences via the internet.
The old marketing adage was '3 - 33.' For every good product or shopping experience, a customer would tell three friends, while every bad experience was mentioned to 33 people. With the internet, the capability is increased a million fold -- great perils and great rewards.
You can't blame the advertisers. According to a survey of over 4000 consumers in the US, Australia, China, Germany, and Spain by media research firm Interpublic Group, 52% search online for wide range of brands and products, and 25% noted it became second nature to spread the word about deals and experiences via the internet.
The old marketing adage was '3 - 33.' For every good product or shopping experience, a customer would tell three friends, while every bad experience was mentioned to 33 people. With the internet, the capability is increased a million fold -- great perils and great rewards.
Monday, August 22, 2011
Winn-Dixie Converts SaveRite
Winn-Dixie Stores Inc. is discontinuing its SaveRite-branded grocery stores and converting them to Winn-Dixie stores over the next four months, during which time the stores will remain open. All SaveRite employees will continue working for Winn-Dixie.
Walgreens To Debut Nice!
Walgreens, following in the footsteps of other retailers, is introducing its Nice! line of 400 private-label products, mostly grocery and paper items, with the intent to stock all 7,742 Walgreens and Duane Reade drugstores by January 2012. Walgreens is phasing out in-house brands, including Deerfield Farms, W, Cafe W, W Ultra, and Chief Karlin and the Walgreens label will also be removed from food and household products but remain on health and wellness items. Walgreens currently has 50 private-label brands throughout its stores.
Website Launches: Target and Lowes
Target unveiled a revamped website that ties store and online sales closer together as well as breaks from Amazon.com, which used to handle the retailer's web operations. Touted as easier for consumers to use, it is also designed for faster checkout.
Lowe's launched a Spanish-language version of its website to appeal to Hispanic customers. How-to articles and shopping are in Spanish, with video content slated to follow in September.
Lowe's launched a Spanish-language version of its website to appeal to Hispanic customers. How-to articles and shopping are in Spanish, with video content slated to follow in September.
NumBytes 50: Credit Card Holders Pay Up
Credit reporting agency TransUnion reported the national credit card delinquency rate, which measures payments that are 90 days or more past due, was 0.6% at the end of the second quarter 2011, a drop of 19% from the first quarter and a 17-year low.
Part of this comes from charge-offs reducing the amount of delinquent credit. Credit card companies typically write off balances as uncollectible when they're six months past due. While the default rate has declined in recent months, credit card issuers wrote off billions in debts since the start of the recession, according to USA Today.
The New York Federal Reserve noted that consumer debt fell $50 billion in the second quarter 2011 to $11.4 trillion, of which consumers' non-real estate debt dropped by $10 billion (0.4%) to $2.28 trillion, 9.5% below its fourth quarter 2008 peak.
Of note: open credit card accounts jumped by 10 million, to 389 million, in the second quarter, and credit card limits increased for the second consecutive quarter by 2%, or about $60 billion.
The Fed is taking the long view, asserting that the next few quarters will offer a better understanding of whether this is a permanent or temporary reduction in total outstanding consumer debt.
Retailers may have to take a shorter view -- like what's going to happen with the upcoming holiday season 2011. All this summer saving may end up priming the fourth quarter holiday spending pump.
Part of this comes from charge-offs reducing the amount of delinquent credit. Credit card companies typically write off balances as uncollectible when they're six months past due. While the default rate has declined in recent months, credit card issuers wrote off billions in debts since the start of the recession, according to USA Today.
The New York Federal Reserve noted that consumer debt fell $50 billion in the second quarter 2011 to $11.4 trillion, of which consumers' non-real estate debt dropped by $10 billion (0.4%) to $2.28 trillion, 9.5% below its fourth quarter 2008 peak.
Of note: open credit card accounts jumped by 10 million, to 389 million, in the second quarter, and credit card limits increased for the second consecutive quarter by 2%, or about $60 billion.
The Fed is taking the long view, asserting that the next few quarters will offer a better understanding of whether this is a permanent or temporary reduction in total outstanding consumer debt.
Retailers may have to take a shorter view -- like what's going to happen with the upcoming holiday season 2011. All this summer saving may end up priming the fourth quarter holiday spending pump.
Cruel Irony: Fashion And Self-Esteem
A study by researchers at University of British Columbia and the University of Alberta called Social Information in the Retail environment: The Importance of Consumption Alignment, Referent Identity and Self-Esteem can offer tips to retailers seeking to redesign their fitting rooms, according to an article in the Calgary Herald.
The study found that customers with low body esteem who tried on an item and then saw a 'person of above average attractiveness' try on the same or similar item reacted negatively to that item. In other words, good-looking customers can ruin shopping trips -- and sales. Oddly enough, attractive sales staff had no effect, as they were perceived to be different than customers, and photos of models wearing the same clothes also had no effect on sales.
Conclusion: put mirrors in dressing room stalls so customers have options other than parading around in front of the rest of the clientele. Fewer comparisons apparently equal better sales.
The study found that customers with low body esteem who tried on an item and then saw a 'person of above average attractiveness' try on the same or similar item reacted negatively to that item. In other words, good-looking customers can ruin shopping trips -- and sales. Oddly enough, attractive sales staff had no effect, as they were perceived to be different than customers, and photos of models wearing the same clothes also had no effect on sales.
Conclusion: put mirrors in dressing room stalls so customers have options other than parading around in front of the rest of the clientele. Fewer comparisons apparently equal better sales.
Friday, August 19, 2011
Liberty Media Invests In B&N
Liberty Media bought $204 million worth of Barnes & Noble, Inc. preferred stock, convertible into approximately 12 million shares or 16.6% (after giving effect to the issuance) of B&N common stock at a price of $17 per share, and with a dividend rate of 7.75% per annum to be paid quarterly. The investment also ended Liberty's efforts at acquiring B&N. Liberty will be entitled to elect two nominees to the board of directors and B&N agreed to expand its board to eleven members and accept Liberty’s two nominees: Gregory B. Maffei, President and Chief Executive Officer of Liberty and Mark D. Carleton, Senior Vice President of Liberty.
Hhgregg To Open 14 Stores
Appliance and electronics retailer Hhgregg will open 14 stores in the Chicago area on Septmeber 15, 2011, hiring 700 employees in the process. Chicago represents a new market for the company, and with the opening of the stores, will become the company’s largest market.
Inflation Inches Up
The US Bureau of Labor Statistics reported the Consumer Price Index for all items -- less food and energy -- increased by 0.2% increase in July, a smaller increase than in the two previous months. Add in food and energy and the CPI rose 0.5%, with a 12-month increase of 3.6%.
Employment Stable
The US Bureau of Labor Statistics reported the national unemployment rate was little changed at 9.1% in July 2011 but was 0.4 percentage point lower than a year earlier. It noted 28 states and the District of Columbia registered unemployment rate increases, nine states recorded rate decreases, and 13 states had no rate change.
The largest over-the-month increase in employment occurred in New York (+29,400), followed by Texas (+29,300), Michigan (+23,000), and Tennessee (+14,300). The largest over-the-month decrease in employment occurred in Illinois (-24,900), followed by Florida (-22,100), Minnesota (-19,800), and Indiana (-10,100). Nevada continued to register the highest unemployment rate among the states, 12.9% in July. California recorded the next highest rate, 12.0%. North Dakota reported the lowest jobless rate, 3.3%, followed by Nebraska, 4.1%.
The largest over-the-month increase in employment occurred in New York (+29,400), followed by Texas (+29,300), Michigan (+23,000), and Tennessee (+14,300). The largest over-the-month decrease in employment occurred in Illinois (-24,900), followed by Florida (-22,100), Minnesota (-19,800), and Indiana (-10,100). Nevada continued to register the highest unemployment rate among the states, 12.9% in July. California recorded the next highest rate, 12.0%. North Dakota reported the lowest jobless rate, 3.3%, followed by Nebraska, 4.1%.
NumBytes 49: Venus And Mars Brands
Men are from Mars, women from Venus when it comes to interacting and connecting with retailers, noted market research firm Motista as part of its ongoing retail study of 4200 customers. Although the study found overall awareness and familiarity with 10 major retail brands it tracks were high at 90% and 71% respectively, only 18% of consumers indicated an emotional connection to their retailers. Deeper connections with consumers can help drive higher levels of purchase intent, response rates, online engagement, and advocacy.
Motista found men take retail more personally and are 50% more likely to feel that their preferred retailer makes them a more valuable person. Appearing to seek to enhance their identities and sense of self through the retailers they choose, men are also 53% more likely to feel that people will see them differently because they shop at a particular retailer and 30% more likely to feel that their retailer personalizes its relationship with them.
On the Venus side of the solar retail system, women seek fun and style and establish connections with retailers around the perception that the retailers are fun and stylish. Women are 18% more likely to connect with retailers they consider to be fun, and 18% more likely to connect with their retailer if they believe the retailer is stylish.
Bottom line: Appeal to the customer's vanity. The study found that when consumers feel a connection with their retail brand, they are 50% more likely to advocate for the brand and recommend the retailer to others. And most every retailer knows the value of word-of-mouth advertising.
Motista found men take retail more personally and are 50% more likely to feel that their preferred retailer makes them a more valuable person. Appearing to seek to enhance their identities and sense of self through the retailers they choose, men are also 53% more likely to feel that people will see them differently because they shop at a particular retailer and 30% more likely to feel that their retailer personalizes its relationship with them.
On the Venus side of the solar retail system, women seek fun and style and establish connections with retailers around the perception that the retailers are fun and stylish. Women are 18% more likely to connect with retailers they consider to be fun, and 18% more likely to connect with their retailer if they believe the retailer is stylish.
Bottom line: Appeal to the customer's vanity. The study found that when consumers feel a connection with their retail brand, they are 50% more likely to advocate for the brand and recommend the retailer to others. And most every retailer knows the value of word-of-mouth advertising.
BPA Ban In Maine
As of January 1, 2012, Maine will ban reusable food and beverage containers like sippy cups, baby bottles, reusable water bottles, and plastic food storage that contain intentionally-added Bisphenol A (BPA). Maine would be the ninth state with a prohibition on the sales of products with intentionally-added BPA along with Connecticut, Maryland, Massachusetts, Minnesota, New York, Vermont, Washington, and Wisconsin.
Manufacturers and distributors of such products must submit compliance plans identifying their products subject to prohibition, specifying whether compliance would be achieved by discontinuing sale or by the substitution of a safer alternative, and confirming that all personnel who offer the product for sale or distribution in Maine have been notified of the prohibition.
BPA is used primarily to make plastics, such as polycarbonate plastic and epoxy resins -- and epoxy resins containing bisphenol A are used as coatings on the inside of almost all food and beverage cans. BPA protects food from direct contact with a can and will leach from the plastic lining.
From a health standpoint, BPA is an endocrine disruptor, which can mimic the body's own hormones, especially estrogen, and may lead to negative health effects. Early development appears to be the period of greatest sensitivity to its effects, and some studies have linked prenatal exposure to later neurological difficulties. Studies showed exposure to BPA lead to higher rates of breast cancer, prostate cancer rates, heart disease, diabetes, attention deficit disorder, and erectile dysfunction.
In a study conducted by the University of Texas School of Public Health in 2010, BPA was found in 63 of 105 samples of fresh and canned foods, foods sold in plastic packaging, and in cat and dog foods in cans and plastic packaging. This included fresh turkey, canned green beans, and canned infant formula. The chemical is also in certain types of thermal and copy paper.
Penn State College of Medicine released a study in May 2011 that found exposure to BPA during pregnancy — particularly the first trimester — may put babies at a greater risk of developing asthma.
Maine compliance plans were originally due on July 5, 2011, but extended to October 3, but the department has yet to receive any, though staff does not definitively know of any company that will be non-compliant. The state runs an electronic reporting system developed by the department that will make it easier for manufacturers to send in their plans and for the department to receive, review, and retain the data.
Canada and other countries have already banned BPA in baby bottles. Wal-Mart, Toys R Us, and others phased the chemical out of baby bottles, sippy cups, and pacifiers. H.J. Heinz, ConAgra, and Hain Celestial offer BPA-free lining for some of their products.
In February 2011, Maine's newly elected governor, Paul LaPage, said on a local TV news show that he hoped to repeal the ban because, 'There hasn't been any science that identifies that there is a problem.' Evidently, the governor didn't plug the term 'BPA' into an internet search engine.
LaPage continued, 'The only thing that I've heard is if you take a plastic bottle and put it in the microwave and you heat it up, it gives off a chemical similar to estrogen. So the worst case is some women may have little beards.' LaPage ran for cover from the outrage and did not veto or sign the bill, allowing it to become law by default.
In April 2011, General Mills announced it found a BPA-free alternative can liner that apparently works even with tomatoes, a highly acidic product that has long baffled the industry in terms of finding a suitable substitute. General Mills noted with the next tomato harvest, it would use the BPA-free alternative in tomato products sold by its organic foods subsidiary Muir Glen. Thus far, there has been no word on whether General Mills will use BPA-free alternatives on any of its other canned products.
In May, Kroger announced that it was ceasing the selling of baby products with BPA, removing the chemical from its store brand canned foods, and purchasing BPA-free paper for its store register receipts.
Groceries, convenience marts, dollar, and other stores are in the process of complying with Maine's law. At least the ban is limited in scope and does not extend to regular drinks. Imagine what a total ban would do. No Coke or Pepsi or bottled water in stores -- maybe just a lot of bootlegged cases of energy drinks. Well, at least until a switch to BPA-free packaging was done.
In a 2009 study, the Canadian government agency Health Canada found BPA in 85% of 72 soft drinks sold in Canadian stores. All Coca-Cola products tested positive for BPA, among them Coca-Cola, 0.18 ug/L (micrograms per liter); Diet Coke, 0.35 ug/L; grapefruit-flavored Fresca, 1.1 ug/L; cherry-citrus Fresca, 0.75 ug/L; Tab, 0.18 ug/L; Sprite, 0.17 ug/L, and Full Throttle energy drink, 0.60 ug/L. Canada's safe level is 25.0 ug/L and the US EPA safe level is 50.0 ug/L -- so these drinks have only a tiny fraction of BPA.
As Coca-Cola points out on its 'Live Positively' website, 'Health Canada's research states that a 60kg individual would have to consume more than 7400 355ml cans a day on a daily basis for the rest of his or her life in order to exceed the Health Canada's acceptable daily limit.' Nevertheless, in 2011, 26% of Coke's shareholders voted to approve a resolution that would remove BPA from Coke can linings.
Manufacturers and distributors of such products must submit compliance plans identifying their products subject to prohibition, specifying whether compliance would be achieved by discontinuing sale or by the substitution of a safer alternative, and confirming that all personnel who offer the product for sale or distribution in Maine have been notified of the prohibition.
BPA is used primarily to make plastics, such as polycarbonate plastic and epoxy resins -- and epoxy resins containing bisphenol A are used as coatings on the inside of almost all food and beverage cans. BPA protects food from direct contact with a can and will leach from the plastic lining.
From a health standpoint, BPA is an endocrine disruptor, which can mimic the body's own hormones, especially estrogen, and may lead to negative health effects. Early development appears to be the period of greatest sensitivity to its effects, and some studies have linked prenatal exposure to later neurological difficulties. Studies showed exposure to BPA lead to higher rates of breast cancer, prostate cancer rates, heart disease, diabetes, attention deficit disorder, and erectile dysfunction.
In a study conducted by the University of Texas School of Public Health in 2010, BPA was found in 63 of 105 samples of fresh and canned foods, foods sold in plastic packaging, and in cat and dog foods in cans and plastic packaging. This included fresh turkey, canned green beans, and canned infant formula. The chemical is also in certain types of thermal and copy paper.
Penn State College of Medicine released a study in May 2011 that found exposure to BPA during pregnancy — particularly the first trimester — may put babies at a greater risk of developing asthma.
Maine compliance plans were originally due on July 5, 2011, but extended to October 3, but the department has yet to receive any, though staff does not definitively know of any company that will be non-compliant. The state runs an electronic reporting system developed by the department that will make it easier for manufacturers to send in their plans and for the department to receive, review, and retain the data.
Canada and other countries have already banned BPA in baby bottles. Wal-Mart, Toys R Us, and others phased the chemical out of baby bottles, sippy cups, and pacifiers. H.J. Heinz, ConAgra, and Hain Celestial offer BPA-free lining for some of their products.
In February 2011, Maine's newly elected governor, Paul LaPage, said on a local TV news show that he hoped to repeal the ban because, 'There hasn't been any science that identifies that there is a problem.' Evidently, the governor didn't plug the term 'BPA' into an internet search engine.
LaPage continued, 'The only thing that I've heard is if you take a plastic bottle and put it in the microwave and you heat it up, it gives off a chemical similar to estrogen. So the worst case is some women may have little beards.' LaPage ran for cover from the outrage and did not veto or sign the bill, allowing it to become law by default.
In April 2011, General Mills announced it found a BPA-free alternative can liner that apparently works even with tomatoes, a highly acidic product that has long baffled the industry in terms of finding a suitable substitute. General Mills noted with the next tomato harvest, it would use the BPA-free alternative in tomato products sold by its organic foods subsidiary Muir Glen. Thus far, there has been no word on whether General Mills will use BPA-free alternatives on any of its other canned products.
In May, Kroger announced that it was ceasing the selling of baby products with BPA, removing the chemical from its store brand canned foods, and purchasing BPA-free paper for its store register receipts.
Groceries, convenience marts, dollar, and other stores are in the process of complying with Maine's law. At least the ban is limited in scope and does not extend to regular drinks. Imagine what a total ban would do. No Coke or Pepsi or bottled water in stores -- maybe just a lot of bootlegged cases of energy drinks. Well, at least until a switch to BPA-free packaging was done.
In a 2009 study, the Canadian government agency Health Canada found BPA in 85% of 72 soft drinks sold in Canadian stores. All Coca-Cola products tested positive for BPA, among them Coca-Cola, 0.18 ug/L (micrograms per liter); Diet Coke, 0.35 ug/L; grapefruit-flavored Fresca, 1.1 ug/L; cherry-citrus Fresca, 0.75 ug/L; Tab, 0.18 ug/L; Sprite, 0.17 ug/L, and Full Throttle energy drink, 0.60 ug/L. Canada's safe level is 25.0 ug/L and the US EPA safe level is 50.0 ug/L -- so these drinks have only a tiny fraction of BPA.
As Coca-Cola points out on its 'Live Positively' website, 'Health Canada's research states that a 60kg individual would have to consume more than 7400 355ml cans a day on a daily basis for the rest of his or her life in order to exceed the Health Canada's acceptable daily limit.' Nevertheless, in 2011, 26% of Coke's shareholders voted to approve a resolution that would remove BPA from Coke can linings.
Thursday, August 18, 2011
Chico's Buys Boston Proper
Chico's FAS, Inc. acquired women's apparel and accessories retailer Boston Proper, Inc. for $205 million funded from available cash balances. Boston Proper will operate as a stand-alone division within Chico's FAS, with Sheryl Clark as President. Former Boston Proper CEO Michael Tiernan retired. The transaction is expected to close within 45 days.
Lowe's Closes Seven Stores
Although Lowe's Co. second quarter sales rose 1.3% to $14.54 billion, it was lower than analysts' estimate of $14.75 billion and net earnings dropped 0.2% at $830 million. The company, which opened two stores during the quarter and rebuilt one destroyed by a tornado, announced the closing of seven stores nationwide. The company blamed consumer reluctance to perform home improvement projects on the anemic economy and declining home prices. Sales at Lowe's stores open at least a year fell 0.3%. The company expects third quarter sales to rise 2% but earnings to decrease 10 to 20 basis points. For the year, the company expects to open approximately 25 stores in 2011 reflecting average square footage growth of approximately 1.3%.
Producer Price Inflation
If you thought things cost more these days, the US Bureau of Labor Statistics can confirm your suspicions. According to the BLS, on an unadjusted basis, prices for finished goods, including food and energy, moved up 7.2% for the 12 months ended July 2011.
The BLS reported its Producer Price Index for finished goods rose a seasonally adjusted 0.2% in July, reversing a 0.4% decrease in June. The finished goods index, measuring prices for finished goods -- less foods and energy -- rose 0.4%.
In July, the finished consumer foods index rose 0.6% for the second consecutive month. A major contributor to the July increase was beef and veal prices, which moved up 2.7%. Higher prices for fresh fruits and melons also played a significant role in the finished foods advance.
On the positive side, the finished energy goods index moved down 0.6% in July, the second straight decline, as prices for gasoline fell 2.8%.
The Producer Price Index for the net output of transportation and warehousing industries increased 0.2% in July, the smallest advance since December 2010. Over 90% of the July increase is attributable to a 1.1% rise in prices received by the scheduled passenger air transportation companies. Higher prices received by the freight transportation arrangement companies and petroleum pipeline companies also contributed to the advance in the transportation and warehousing industries index.
The BLS reported its Producer Price Index for finished goods rose a seasonally adjusted 0.2% in July, reversing a 0.4% decrease in June. The finished goods index, measuring prices for finished goods -- less foods and energy -- rose 0.4%.
In July, the finished consumer foods index rose 0.6% for the second consecutive month. A major contributor to the July increase was beef and veal prices, which moved up 2.7%. Higher prices for fresh fruits and melons also played a significant role in the finished foods advance.
On the positive side, the finished energy goods index moved down 0.6% in July, the second straight decline, as prices for gasoline fell 2.8%.
The Producer Price Index for the net output of transportation and warehousing industries increased 0.2% in July, the smallest advance since December 2010. Over 90% of the July increase is attributable to a 1.1% rise in prices received by the scheduled passenger air transportation companies. Higher prices received by the freight transportation arrangement companies and petroleum pipeline companies also contributed to the advance in the transportation and warehousing industries index.
NumBytes 48: How Wal-Mart Lost Its Groove
A Morgan Stanley survey of 1100 Wal-Mart shoppers found that 60% no longer viewed Wal-Mart as offering the lowest prices on products, even though a Goldman Sachs Group survey of store prices in Chicgo found Wal-Mart prices about 6.2% less than rival Target. Second quarter 2011 same store sales fell 0.9%, the ninth straight quarter drop at Wal-Mart, although Sam's Club same-store sales surged 5% to allow the company as a whole to say comparable store sales were flat overall.
CEO Mike Duke contended Wal-Mart's core shoppers, many of whom live paycheck to paycheck, were running out of money much faster than a year ago. They changed their buying habits, picking up more groceries and household goods while cutting back on non-essential items such as clothing and home furnishings. Wal-Mart also noted fewer shoppers headed into its stores as overall customer traffic at Wal-Mart stores fell compared to the previous year.
What he didn't say was that a couple years ago, the company abandoned its 'everyday low prices' strategy to focus on a special promotional pricing model that consumers found, to be kind, uninspiring. To the surprise of Wal-Mart executives, consumers then shopped around and found better deals elsewhere -- in rival retail stores and online. The company returned to everyday low pricing, but consumers noted 'once burned, twice spurned.' The company certainly has its marketing work cut out for it to gain back the perception of offering the best value around.
For the third quarter, Wal-Mart expects same-store sales at its US stores to range from a decline of 1% to a gain of 1%.
CEO Mike Duke contended Wal-Mart's core shoppers, many of whom live paycheck to paycheck, were running out of money much faster than a year ago. They changed their buying habits, picking up more groceries and household goods while cutting back on non-essential items such as clothing and home furnishings. Wal-Mart also noted fewer shoppers headed into its stores as overall customer traffic at Wal-Mart stores fell compared to the previous year.
What he didn't say was that a couple years ago, the company abandoned its 'everyday low prices' strategy to focus on a special promotional pricing model that consumers found, to be kind, uninspiring. To the surprise of Wal-Mart executives, consumers then shopped around and found better deals elsewhere -- in rival retail stores and online. The company returned to everyday low pricing, but consumers noted 'once burned, twice spurned.' The company certainly has its marketing work cut out for it to gain back the perception of offering the best value around.
For the third quarter, Wal-Mart expects same-store sales at its US stores to range from a decline of 1% to a gain of 1%.
Employment
The Conference Board Employment Trends Index dropped to 100.6 in July from June's revised figure of 100.9, even as the Labor Department reported job growth of 117,000 in July and initial applications for unemployment fell to 395,000, first time below 400,000 in a long time. The unemployment rate dropped from 9.2% to 9.1%, however, about 137,000 'discouraged' workers dropped out of the labor market entirely. As the economy improves, these workers will jump back in. The Bureau of Labor Statistics noted that state and local governments shed 340,000 workers in the last year (611,000 since 2008).
Wednesday, August 17, 2011
Morphing Malls
Facing lower occupancy rates, malls are getting creative about leasing kiosks, carts, and even vacant storefronts to short-term specialty entrepreneurs who would hawk calendars, stuffed animals, sunglasses, seasonal products, and other knick-knacks, according to a Wall Street Journal article. When times were flush, mall landlords treated these entrepreneurs almost as pests, but now, landlords are willing to take the chance on the clutter. According to real estate researh firm REIS, Inc., second quarter 2011 vacancy rates at malls in the top 80 markets was 9.3%, up from 9./1% in the first quarter 2011.
Specialty Retailing Report notes annual US speciality sales were $2.86 billion in 2010, up 10.6% from 2009, but still a miniscule part of the $1 trillion tradition retail sales of 2010, up roughly 3% from 2009.
And it's not just entrepreneurs with a cart. Top retailers like Toys R Us experimented with pop-up stores for last year's holiday season. They did so well, they will be back for 2011...and that will likely make mall owners happy to see spaces filled not only for the revenue, but for the appearance that the mall is worth visiting.
Specialty Retailing Report notes annual US speciality sales were $2.86 billion in 2010, up 10.6% from 2009, but still a miniscule part of the $1 trillion tradition retail sales of 2010, up roughly 3% from 2009.
And it's not just entrepreneurs with a cart. Top retailers like Toys R Us experimented with pop-up stores for last year's holiday season. They did so well, they will be back for 2011...and that will likely make mall owners happy to see spaces filled not only for the revenue, but for the appearance that the mall is worth visiting.
Industrial Production For July
The Federal Reserve reported its Industrial Production Index inched upwards 0.9% in July 2011 to 94.2 from 93.3 in June, beating the estimate that the index would remain unchanged. July 2011 production is about 3.7% higher than July 2010. Note that an index score of 100 means production is equal to 2007's level, so 94.2 is 94.2% of 2007's production.
Manufacturing output rose 0.6% in July, as the index for motor vehicles and parts jumped 5.2%, and production elsewhere moved up 0.3%. The output of mines advanced 1.1% and the output of utilities increased 2.8%, as the extreme heat during the month boosted air conditioning usage.
The capacity utilization rate for total US industry climbed to 77.5%, up from 76.9% and beating estimates of 77%. July 2011 capacity was 2.2% above July 2010's 75.3%.
In total, the US recorded slow, if unspectacular, gains for July. The largest output gain was for automobile products, up 5.9% over June as supply chain problems from Japan's earthquake and tsunami were sorted out.
Manufacturing output rose 0.6% in July, as the index for motor vehicles and parts jumped 5.2%, and production elsewhere moved up 0.3%. The output of mines advanced 1.1% and the output of utilities increased 2.8%, as the extreme heat during the month boosted air conditioning usage.
The capacity utilization rate for total US industry climbed to 77.5%, up from 76.9% and beating estimates of 77%. July 2011 capacity was 2.2% above July 2010's 75.3%.
In total, the US recorded slow, if unspectacular, gains for July. The largest output gain was for automobile products, up 5.9% over June as supply chain problems from Japan's earthquake and tsunami were sorted out.
Housing Starts And Completions For July
Mixed news greeted July housing: new permits and starts were down from June, but completions were up. The completions add to the supply of houses, likely depressing prices further, but lower prices and lower mortgage rates make owning a home more affordable, which will likely increase sales in the fall.
The US Census Bureau reported privately-owned housing units authorized by building permits in July 2011 were at a seasonally adjusted annual rate of 597,000. This is 3.2% below the revised June rate of 617,000, but 3.82% ahead of 575,000 in July 2010. Single-family authorizations in July were at a rate of 404,000, up 0.59% above the revised June figure of 402,000.
Privately-owned housing starts in July 2011 were at a seasonally adjusted annual rate of 604, 000. This is 1.5% below the revised June estimate of 613,000, but is 9.8% above the July 2010 rate of 550,000. Single-family housing starts in July were at a rate of 425,000, up 4.9% from the revised June figure of 447,000.
Privately-owned housing completions in July 2011 were at a seasonally adjusted annual rate of 636,000, 11.8% above the revised June estimate of 569,000 and 9.5% above the July 2010 rate of 581,000. Single-family housing completions in July were at a rate of 470,000, up 6.1% above the revised June rate of 443,000.
The US Census Bureau reported privately-owned housing units authorized by building permits in July 2011 were at a seasonally adjusted annual rate of 597,000. This is 3.2% below the revised June rate of 617,000, but 3.82% ahead of 575,000 in July 2010. Single-family authorizations in July were at a rate of 404,000, up 0.59% above the revised June figure of 402,000.
Privately-owned housing starts in July 2011 were at a seasonally adjusted annual rate of 604, 000. This is 1.5% below the revised June estimate of 613,000, but is 9.8% above the July 2010 rate of 550,000. Single-family housing starts in July were at a rate of 425,000, up 4.9% from the revised June figure of 447,000.
Privately-owned housing completions in July 2011 were at a seasonally adjusted annual rate of 636,000, 11.8% above the revised June estimate of 569,000 and 9.5% above the July 2010 rate of 581,000. Single-family housing completions in July were at a rate of 470,000, up 6.1% above the revised June rate of 443,000.
Economy Watch: Sales, Mortgage, Gas
ShopperTrak Retail Sales Data
For the week ended August 15, 2011, ShopperTrak's National Retail Sales Estimate rose 0.9% to $95.099 billion from the week before of $94.273 billion, but was down 5.4% from the same period last year. So much for Back-to-School sales....
Mortgage Rates Drop Again
Bankrate.com reported that the average conforming 30-year fixed mortgage rate fell to 4.46% from last week's 4.54%, according to its weekly national survey ending August 10, 2011. It also reported that the average 15-year fixed mortgage rate fell to 3.61% from 3.68% last week. The Mortgage Bankers Association reported mortgage applications were up a whopping 21.7% compared to one week earlier, with 75.6% of mortgage loans going toward refinancing rather than home purchases.
Gas Prices Drop
The Energy Department announced that for week ending August 15, 2011, the average price of US gasoline fell to $3.600 a gallon from $3.674 per gallon week earlier.
Diesel prices fell to $3.90 from $3.94 last week.
If there was one good thing about the Congression impasse about the US national debt ceiling, it was that pessimism bloomed about economic recovery, which in turn dampened expectations for greater demand of oil, which drove down per barrel prices 20% from May, which dropped the cost of gas at the pump.
For the week ended August 15, 2011, ShopperTrak's National Retail Sales Estimate rose 0.9% to $95.099 billion from the week before of $94.273 billion, but was down 5.4% from the same period last year. So much for Back-to-School sales....
Mortgage Rates Drop Again
Bankrate.com reported that the average conforming 30-year fixed mortgage rate fell to 4.46% from last week's 4.54%, according to its weekly national survey ending August 10, 2011. It also reported that the average 15-year fixed mortgage rate fell to 3.61% from 3.68% last week. The Mortgage Bankers Association reported mortgage applications were up a whopping 21.7% compared to one week earlier, with 75.6% of mortgage loans going toward refinancing rather than home purchases.
Gas Prices Drop
The Energy Department announced that for week ending August 15, 2011, the average price of US gasoline fell to $3.600 a gallon from $3.674 per gallon week earlier.
Diesel prices fell to $3.90 from $3.94 last week.
If there was one good thing about the Congression impasse about the US national debt ceiling, it was that pessimism bloomed about economic recovery, which in turn dampened expectations for greater demand of oil, which drove down per barrel prices 20% from May, which dropped the cost of gas at the pump.
NumBytes 47: Don't Worry, Be Rude
The office jerk may be called a lot of names, but according to a study of 10,000 workers over 20 years, you can call him wealthier than his peers. The study by by professors at Cornell University, University of Notre Dame, and University of Western Ontario found that 'disagreeable' men earned 18% more, or about $9,772, than 'agreeable' men. Rude women earned about 5% more, or $1,828, than nice peers.
The problem is that organizations don't want uncooperative jerks in the office because it increases employee turnover. However, if company compensation grants employees monetary rewards, jerks rule.
The problem is that organizations don't want uncooperative jerks in the office because it increases employee turnover. However, if company compensation grants employees monetary rewards, jerks rule.
E-Scamming
New York City prosecutors charged Andrew Albert with allegedly duping investors out of $590,000 to build a high-end retail clothing website, but using over half the money to finance a high-end lifestyle instead. The idea was brilliant -- use personalized avatars built to users' measurements to shop Prada, Gap, Ralph Lauren, and other stores. No offense to fashion sites, but most customers do not look like mannikins or fashion models.
Alas, the Wall Street Journal reported he allegedly used $348,360 to pay for groceries, apartment renovations, hair and make-up, dog grooming, health club membership, and other personal items. Worse, he failed to pay income tax in his name of his company's name, Virtual Etail Group LLC, for 2008 and 2009. This case, plus the civil suits filed by the investors, will work their way through the court system.
Alas, the Wall Street Journal reported he allegedly used $348,360 to pay for groceries, apartment renovations, hair and make-up, dog grooming, health club membership, and other personal items. Worse, he failed to pay income tax in his name of his company's name, Virtual Etail Group LLC, for 2008 and 2009. This case, plus the civil suits filed by the investors, will work their way through the court system.
Tuesday, August 16, 2011
Sears Hires Schriesheim
Sears Holdings hired Robert A. Schriesheim will join the company as Executive Vice President and Chief Financial Officer, effective Monday, Aug. 22.
Frederick's of Shanghai?
According to a New York Post article, lingerie chain Frederick's of Hollywood is putting itself up for sale, possibly to a buyer in China. Trounced by rival Victoria's Secret, the company had no comment other than to say it is bringing out new designs and expanding into bath and beauty. Last week, Frederick's disclosed it won a one-year extension to comply with covenants on a $7 million loan from Hilco Trading, which has a brand-licensing division that includes investments in Polaroid, Sharper Image, and Halston.
Made in China: 2.7%
With a wicked trade deficit, you'd expect just about everything to be 'made in China,' but according to the just released San Francisco Federal Reserve report The U.S. Content of Made in China, only 2.7% of all US personal consumption spending was for products made in China while a whopping 88.5% of spending was for American-made items.
Say, what? Everything seems made in China, from Apple iPads to dish towels. The Fed's got it backwards, right?
Not exactly. The kicker is the category called 'services' -- mechanics, hair stylists, accountants, truckers, and so on. They are all US businesses, so when the Fed tallies personal consumption expenditures, these come under 'US' perview...hence the statistical disparity. Of course, statistics exist to be used and abused.
When you buy a $20 toy from China, not all $20 goes overseas -- parts go to the retailer, distributor, trucking company, etc., etc., etc. Services, which make up about two-thirds of spending, are mainly produced locally. On average, of every dollar spent on an item labeled 'Made in China,' 55 cents go for services 'produced' in the United States.
Then there are the other two kickers: gasoline and groceries. Food remains mostly US grown, and although the US imports half its oil from other countries, China is not one of them. About 90% of gasoline used in the US is refined in the US.
Thus, the US produced the vast majority of goods and services sold in the US. In 2010, imports were about 16% of US GDP. Imports from China amounted to 2.5% of GDP. Chinese imported goods consisted mainly of furniture and household equipment; other durables; and clothing and shoes. In the clothing and shoes category, 35.6% of US consumer purchases in 2010 were for items with the “Made in China” label. Over the last 10 years, the overall import content of US consumer goods remained relatively constant while the Chinese share doubled, indicating that Chinese gains have come, in large part, at the expense of other exporting nations.
Cold statistical comfort for shoppers facing shelves full of goods labeled 'Made in China' when they want to buy 'Made in the USA.' As Abraham Lincoln once noted, when you buy goods made overseas, you get the goods and they get the money. When you buy goods made in the USA, we get the goods and the money.
Say, what? Everything seems made in China, from Apple iPads to dish towels. The Fed's got it backwards, right?
Not exactly. The kicker is the category called 'services' -- mechanics, hair stylists, accountants, truckers, and so on. They are all US businesses, so when the Fed tallies personal consumption expenditures, these come under 'US' perview...hence the statistical disparity. Of course, statistics exist to be used and abused.
When you buy a $20 toy from China, not all $20 goes overseas -- parts go to the retailer, distributor, trucking company, etc., etc., etc. Services, which make up about two-thirds of spending, are mainly produced locally. On average, of every dollar spent on an item labeled 'Made in China,' 55 cents go for services 'produced' in the United States.
Then there are the other two kickers: gasoline and groceries. Food remains mostly US grown, and although the US imports half its oil from other countries, China is not one of them. About 90% of gasoline used in the US is refined in the US.
Thus, the US produced the vast majority of goods and services sold in the US. In 2010, imports were about 16% of US GDP. Imports from China amounted to 2.5% of GDP. Chinese imported goods consisted mainly of furniture and household equipment; other durables; and clothing and shoes. In the clothing and shoes category, 35.6% of US consumer purchases in 2010 were for items with the “Made in China” label. Over the last 10 years, the overall import content of US consumer goods remained relatively constant while the Chinese share doubled, indicating that Chinese gains have come, in large part, at the expense of other exporting nations.
Cold statistical comfort for shoppers facing shelves full of goods labeled 'Made in China' when they want to buy 'Made in the USA.' As Abraham Lincoln once noted, when you buy goods made overseas, you get the goods and they get the money. When you buy goods made in the USA, we get the goods and the money.
More Chinese Fakes: 22 Apples
Chinese authorities found another 22 fake Apple stores and Apple China filed complaint with the government and accused the stores of unfair competition and trademark infringement. Reuters noted the Administration for Industry and Commerce ordered the 22 offenders to stop using Apple logo and trademarks, a softer decision than earlier when it suspended the offending stores from doing business.
NumBytes 46: Windwoes for Microsoft
Research firm Canalys, Inc. estimated Microsoft's share of the operating system world via Windows has dropped to 82%, the lowest in 20 years. Blame it on the tablet computers, mostly Apple Inc.'s iPad which sold 28.7 million copies since 2010 (dwarfed by 400 million copies of Window 7 since 2009).
The Windows and Intel combo will not go anywhere soon, and neither will the Apple iPad tablet and the me-too Android-based tablets, although Goldman Sachs predicts tablets will grab 35% of computer sales in 2011 and 33% in 2012. Apple noted that 86% of Fortune 500 companies are deploying or testing iPads this quarter, up from 75% last quarter. Netbooks, those mini-laptop computers that made such a splash a couple years ago, are history, squashed by the tablet steamroller.
One point noted in a Wall Street Journal article: speed to use. Windows takes a few minutes to fire up on the average computer. By comparison, the iPad is almost instantaneous. In our low attention span society, those couple minutes could mean the difference between increasing customer interest by showing something or losing the opportunity to generate customer interest.
The Windows and Intel combo will not go anywhere soon, and neither will the Apple iPad tablet and the me-too Android-based tablets, although Goldman Sachs predicts tablets will grab 35% of computer sales in 2011 and 33% in 2012. Apple noted that 86% of Fortune 500 companies are deploying or testing iPads this quarter, up from 75% last quarter. Netbooks, those mini-laptop computers that made such a splash a couple years ago, are history, squashed by the tablet steamroller.
One point noted in a Wall Street Journal article: speed to use. Windows takes a few minutes to fire up on the average computer. By comparison, the iPad is almost instantaneous. In our low attention span society, those couple minutes could mean the difference between increasing customer interest by showing something or losing the opportunity to generate customer interest.
Monday, August 15, 2011
Wal-Mart Online Shake-Up
Wal-Mart Stores Inc. announced the resignations of its two top online executives, Raul Vazquez and Steve Nave, and also reorganized its e-commerce operations in US, UK, Japan and Canada to better compete with Amazon and other sites. The move is seen as a step in creating closer ties with the core retail business instead of keeping retail and online separate. Interenet Retailer estimates Wal-Mart's online sales at about $4 billion, sixth-largest e-commerce merchant in US and Canada.
Walgreens To Sell Insurance?
According to CNN, drug store chain Walgreens is preparing to sell health insurance this fall, although the company did not confirm or deny the report. Health reform mandates the creation of federal and state-funded public health insurance exchanges by 2014 that will offer subsidized insurance for uninsured and underinsured people -- although with the latest Federal Appeals Court ruling striking down parts of the law, whether the law survives the appeals process remains questionable. Retailers are among firms that are actively looking into starting private health insurance exchanges that are separate from public exchanges. Investment banking firm TripleTree estimated that from 2014 through 2019, as many as 36 million consumers will buy their health insurance from such exchanges. Walgreens already provides health care services that treat minor illnesses and offer seasonal flu shots and vaccinations through more than 350 in-store 'take care clinics.'
Old Navy Gives Ol' College Try
Gap Inc. is teaming up with 70 colleges to sell college-themed sports apparel in over 1000 Old Navy stores. For the colleges, this licensing deal allows them to move products beyond students and alumni and bring in more money. For the Gap, bringing in college goods should increase foot traffic and sales.
Shipments Down
Global Port Tracker reported US ports handled 1.25 million Twenty-foot Equivalent Units (TEU) in June 2011, down 2.6% from May and 5% from June 2010. One TEU is one 20-foot cargo container or its equivalent. June’s volume broke an 18-month streak of year-over-year improvement dating to December 2009. Estimates for July are expected to drop 1.3 million TEU, down 5.7% from July 2010, and August is forecast at 1.4 million TEU, a 1.6% decrease from a year ago. Year-over-year increases are expected to resume in September, which is forecast at 1.48 million TEU, up 10.4% from last year. October is forecast at 1.46 million TEU, up 8% from year ago; November at 1.31 million TEU, up 6.2%, and December at 1.18 million TEU, up 3%.
July Retail Sales Rise
The Commerce Department reported retail sales rose 0.5% in July, the strongest showing since March, as consumers opened up their wallets. July sales of electronics and appliances rose 1.4% from June, furniture was up 0.5%, apparel was also up 0.5%, and auto sales grew 0.4%. On the downside, July sales of sports goods fell 1.5% from June and building materials fell 1.4%.
As gas prices retreat -- oil is flirting with $80 per barrel, down from over $100 scant months ago -- and back-to-school sales increase in August, expect August sales to dribble upwards. A Wall Street Journal survey of 46 economists contend the risk of a double-dip recession is 29%, even as consumer spending increased and initial claims for unemployment dropped below the magic 400,000 level for the first time in months. September may be the make or break month as companies decide whether to use cash on hand to ramp up purchases and employment or continue to sit out the recovery waiting for Godot.
As gas prices retreat -- oil is flirting with $80 per barrel, down from over $100 scant months ago -- and back-to-school sales increase in August, expect August sales to dribble upwards. A Wall Street Journal survey of 46 economists contend the risk of a double-dip recession is 29%, even as consumer spending increased and initial claims for unemployment dropped below the magic 400,000 level for the first time in months. September may be the make or break month as companies decide whether to use cash on hand to ramp up purchases and employment or continue to sit out the recovery waiting for Godot.
Bankruptcy Updates: Harry & David, Borders
Borders Group Bidding Procedures Approved
The U.S. Bankruptcy Court on August 11, 2011 approved bidding procedures in connection with sale of certain of Borders Group's intellectual property assets free and clear of all liens, interests, claims and encumbrances. An auction is scheduled for September 14, 2011. The Court also approved the Debtors' motion for approval of bidding and auction procedures for the sale of unexpired non-residential real property leases. Hearings to consider approval of the sales of the first and second round leases are scheduled for September 8, 2011 and September 20, 2011, respectively.
Harry & David Agreements
Harry & David Holdings reached an agreement with the Pension Benefit Guaranty Corporation (PBGC) on August 12, 2011 relating to the termination of the Company's pension plan and the treatment of the PBGC's claim under the Company's Chapter 11 Plan of Reorganization, which the US Bankruptcy Court confirmed. Harry & David will turn over its pension plan assets to the PBGC, and the PBGC will take over the administration of the pension plan no later than September 12, 2011.
In addition, the plan allows the company to convert all of its approximately $200 million of outstanding public notes into equity of the reorganized company and includes an equity capital raise that will generate $55 million in equity financing upon the company's emergence from Chapter 11 protection. Harry & David will use proceeds from the equity capital raise to satisfy obligations arising from the Company's $55 million post-petition term loan. Additionally, the company has a $100 million revolving loan commitment to finance its normal seasonal working capital needs after it exits Chapter 11.
The U.S. Bankruptcy Court on August 11, 2011 approved bidding procedures in connection with sale of certain of Borders Group's intellectual property assets free and clear of all liens, interests, claims and encumbrances. An auction is scheduled for September 14, 2011. The Court also approved the Debtors' motion for approval of bidding and auction procedures for the sale of unexpired non-residential real property leases. Hearings to consider approval of the sales of the first and second round leases are scheduled for September 8, 2011 and September 20, 2011, respectively.
Harry & David Agreements
Harry & David Holdings reached an agreement with the Pension Benefit Guaranty Corporation (PBGC) on August 12, 2011 relating to the termination of the Company's pension plan and the treatment of the PBGC's claim under the Company's Chapter 11 Plan of Reorganization, which the US Bankruptcy Court confirmed. Harry & David will turn over its pension plan assets to the PBGC, and the PBGC will take over the administration of the pension plan no later than September 12, 2011.
In addition, the plan allows the company to convert all of its approximately $200 million of outstanding public notes into equity of the reorganized company and includes an equity capital raise that will generate $55 million in equity financing upon the company's emergence from Chapter 11 protection. Harry & David will use proceeds from the equity capital raise to satisfy obligations arising from the Company's $55 million post-petition term loan. Additionally, the company has a $100 million revolving loan commitment to finance its normal seasonal working capital needs after it exits Chapter 11.
Friday, August 12, 2011
Wal-Mart Turns To Brazil
Wal-Mart Stores Inc., fresh from gobbling up 51% of South African retailer Massmart, is on the acquisition hunt again, this time looking to buy Carrefour's Brazilian unit of 500 stores, according to the Wall Street Journal. The deal could be worth $6 billion to $8 billion and would double the number of Wal-Mart-owned stores in Brazil.
Labor Turnover And Productivity
The Bureau of Labor Statistics reported 3.1 million jobs were open as of the beginning of July 2011 and noted the hires rate (3.1%) and separations rate (3.1%) changed little over the month of June -- a stable employment situation without much growth. Over the 12 months ending in June 2011, the BLS recorded non-seasonally adjusted data of 47.7 million hires and 46.7 million separations, yielding a net employment gain of 1.0 million. These figures included workers who may have been hired and separated more than once during the year. Nearly half of the hires and nearly half of the separations during these 12 months occurred in three industries: retail trade; professional and business services; and accommodation and food services. The large share of total hires and separations accounted for by these three industries reflects the size of the industries as well as their relatively high hires and separations rates.
The BLS also reported nonfarm business sector labor productivity decreased at a 0.3% annual rate during the second quarter of 2011, with output rising 1.8% and hours worked rising 2.0%. Although the economy continues to grows, albeit feebly, the unpredictability of that growth makes companies cautious about hiring new employees even as sales rise. The labor force may be as productive as it can get for the short term and may not be inclined to do more with less -- a Corporate Executive Board examination of 80 companies' exit surveys found that more than 75% of the 4300 workers surveyed said they would not recommend their company to other workers (See NumBytes 42: Angry Bees). Overall productivity rose 0.8% from the second quarter of 2010 to the second quarter of 2011 as output increased 2.5% while hours rose only 1.6%.
The BLS also reported nonfarm business sector labor productivity decreased at a 0.3% annual rate during the second quarter of 2011, with output rising 1.8% and hours worked rising 2.0%. Although the economy continues to grows, albeit feebly, the unpredictability of that growth makes companies cautious about hiring new employees even as sales rise. The labor force may be as productive as it can get for the short term and may not be inclined to do more with less -- a Corporate Executive Board examination of 80 companies' exit surveys found that more than 75% of the 4300 workers surveyed said they would not recommend their company to other workers (See NumBytes 42: Angry Bees). Overall productivity rose 0.8% from the second quarter of 2010 to the second quarter of 2011 as output increased 2.5% while hours rose only 1.6%.
Made In USA Revival
According to an article on Women's World Daily, New York and Los Angeles are trying to bulk up their declining apparel and textile manufacturing centers as brands start looking to increase control over their supply chains, particularly since price increases in China and increased transportation costs are starting to narrow the savings gap, and also gain the cachet of Made in USA label. NYC efforts include a 'Save the Garment Distict' campaign to encourage new talent to start manufacturing in the city. New York state had 16,000 apparel manufacturing jobs at the end of May, up 0.1% for the month, but down 1.2% year-to-year, according to the NY state labor department. It's a start. Stats showed that NYC lost 64% of its apparel manufacturing jobs from 2000 to 2010, down to 9,850, while textile production fell 75% to 2,920.
NumBytes 45: Apple iPad Rules
Apple sold 28.7 million iPads and iPad2s since debuting the tablets. The rest of the industry supplied a blizzard of me-too tablets with a wide variety of price points and features, but the response has been lackluster at best. As the Wall Street Journal found out, rivals don't even mention sales, just shipments. On that basis, Apple shipped 9.3 million iPads in the second quarter 2011. Motorola shipped 690,000 tablets since February 2011 and Research In Motion shipped 500,000 since April 2011.
Thursday, August 11, 2011
Apple: The Wal-Mart Slayer
Apple Inc., which briefly flitted above ExxonMobil to be come the world's largest company, knocked off mighty Wal-Mart Stores in one small area -- digital music. Wal-Mart announced it was closing its digital music store on August 29, 2011, unable to topple mighty Apple iTunes. Wal-Mart started its online digital music store in 2003, undercut Apple's usual 99 cents per song price by selling songs at 88 cents, and failed to make significant inroads against iTunes. Wal-Mart promised to continue offering support to customers who bought restricted music files through its MP3 store, in the WMA format.
We Got The Beat
In 2010, ticket broker Live Nation Entertainment suffered a 15% decline in ticket sales, and that's when the economy was picking up. Contrary to thinking that a slowing economy would mean even worse ticket sales, Live Nation reported a strong resurgence in sales for the second quarter, with $1.6 billion in revenue, up 23% from the same period in 2010, and net income of $16.6 million, up from a loss of $31.2 million last year. Its operating income also increased by nearly 42%, to $54.7 million.
Live Nation noted it changed pricing policies this year to attract more consumers and the discount plan worked. Attendance for its events in North America, which was hardest hit last year, was up about 13% to 8.9 million; outside North America, attendance dropped slightly, falling about 6% to 4.2 million. Hard to say whether that means the economy is turning around, or that $100 per ticket for a show by aging rockers represents a staycation treat in a time of making do with less.
Live Nation noted it changed pricing policies this year to attract more consumers and the discount plan worked. Attendance for its events in North America, which was hardest hit last year, was up about 13% to 8.9 million; outside North America, attendance dropped slightly, falling about 6% to 4.2 million. Hard to say whether that means the economy is turning around, or that $100 per ticket for a show by aging rockers represents a staycation treat in a time of making do with less.
Economy Watch: Sales, Mortgage, Gas
ICSC Retail Sales Data
The International Council of Shopping Centers and Goldman Sachs reported its chain-store sales index for the week ending on August 6, 2011 posted a decline of 0.5% from the previous week. Analysts asserted exceptionally hot weather limited shopping.
ShopperTrak Retail Sales Data
For the week ended August 8, 2011, ShopperTrak's National Retail Sales Estimate rose 2.0% to $93.419 billion from the week before of $91.567 billion, but was down 2.8% from the same period last year. Back-to-School led the increase, especially since several states held tax-free days. Historically, the week that ends August 15 is the best sales week in the Back to School season.
Mortgage Rates Plummet
Bankrate.com reported that the average conforming 30-year fixed mortgage rate fell to 4.54% from last week's 4.74%, according to its weekly national survey ending August 4, 2011. It also reported that the average 15-year fixed mortgage rate fell to 3.68% from 3.83% last week. The Mortgage Bankers Association reported mortgage applications were up 7.1% compared to one week earlier, with 70.1% of mortgage loans going toward refinancing rather than home purchases.
Gas Prices Down
The Energy Department announced that for week ending August 8, 2011, the average price of US gasoline fell to $3.674 a gallon from $3.711 per gallon week earlier.
Diesel prices fell to $3.94 from $3.95 last week.
Oil prices plummeted to just over $80 per barrel as nervous speculators dumped oil on fears of a double dip recession in the US and mounting sovereign debt problems in Europe.
The International Council of Shopping Centers and Goldman Sachs reported its chain-store sales index for the week ending on August 6, 2011 posted a decline of 0.5% from the previous week. Analysts asserted exceptionally hot weather limited shopping.
ShopperTrak Retail Sales Data
For the week ended August 8, 2011, ShopperTrak's National Retail Sales Estimate rose 2.0% to $93.419 billion from the week before of $91.567 billion, but was down 2.8% from the same period last year. Back-to-School led the increase, especially since several states held tax-free days. Historically, the week that ends August 15 is the best sales week in the Back to School season.
Mortgage Rates Plummet
Bankrate.com reported that the average conforming 30-year fixed mortgage rate fell to 4.54% from last week's 4.74%, according to its weekly national survey ending August 4, 2011. It also reported that the average 15-year fixed mortgage rate fell to 3.68% from 3.83% last week. The Mortgage Bankers Association reported mortgage applications were up 7.1% compared to one week earlier, with 70.1% of mortgage loans going toward refinancing rather than home purchases.
Gas Prices Down
The Energy Department announced that for week ending August 8, 2011, the average price of US gasoline fell to $3.674 a gallon from $3.711 per gallon week earlier.
Diesel prices fell to $3.94 from $3.95 last week.
Oil prices plummeted to just over $80 per barrel as nervous speculators dumped oil on fears of a double dip recession in the US and mounting sovereign debt problems in Europe.
NumBytes 44: Best States for Entrepreneurs
Entrepreneurs should be screaming "I Love New York," according to the University of Nebraska-Lincoln Bureau of Business Research's just released 2010 State Entrepreneurship Index, which measures effectiveness of five business components of each state:
* Percent growth in employer establishments
* Percent growth in employer establishments per capita
* Business formation rate (i.e, company births per capita)
* Patents per thousand residents
* Gross receipts of sole
New York continued to hold the top rank with a score of 2.34 thanks to its strong performance in gross receipts per capita and substantial improvement in two other components, growth in employer establishments, and establishments per capita. Washington was second (2.17), Massachusetts third (2.04), and New Jersey (1.93), and Oregon (1.93) tied for fourth. The bottom five states? South Carolina (0.07) was dead last, Arizona (0.11) was 49th, Mississippi (0.32) was 48th, Nevada (0.33) was 47th, and Alabama (0.41) was 46th. A 'median state' was assigned a score of 1.0. In case you're wondering, Nebraska rated 21st (1.17).
* Percent growth in employer establishments
* Percent growth in employer establishments per capita
* Business formation rate (i.e, company births per capita)
* Patents per thousand residents
* Gross receipts of sole
New York continued to hold the top rank with a score of 2.34 thanks to its strong performance in gross receipts per capita and substantial improvement in two other components, growth in employer establishments, and establishments per capita. Washington was second (2.17), Massachusetts third (2.04), and New Jersey (1.93), and Oregon (1.93) tied for fourth. The bottom five states? South Carolina (0.07) was dead last, Arizona (0.11) was 49th, Mississippi (0.32) was 48th, Nevada (0.33) was 47th, and Alabama (0.41) was 46th. A 'median state' was assigned a score of 1.0. In case you're wondering, Nebraska rated 21st (1.17).
Sbarro Files Plan
Sbarro filed with the US Bankruptcy Court on August 10, 2011 a Chapter 11 Plan of Reorganization and related Disclosure Statement, which uses Section 1129 of the Bankruptcy Code to create a separate plan for each of the 28 Debtors.
The Disclosure Statement explains, "...$35 million of loans expected to be outstanding under the DIP Facility will be converted on a dollar-for-dollar basis into a portion of the $110 million Exit Term Loan Facility and issued to the DIP Lenders on the Effective Date; Approximately $75 million of the Prepetition First Lien Credit Facility will be converted into the remainder of the $110 million Exit Term Loan Facility to be issued Pro Rata to the Prepetition First Lien Lenders on the Effective Date; The remaining approximately $100 million in secured indebtedness outstanding under the Prepetition First Lien Credit Facility (excluding amounts related to existing letters of credit, which will be addressed with the New Money Exit Facility) plus any First Lien Adequate Protection Claims that are not otherwise restructured under the Exit Term Loan Facility will be converted into 100% of the common equity of Reorganized Sbarro and distributed Pro Rata to the Prepetition First Lien Lenders on account of the obligations owed to them under the Prepetition First Lien Credit Facility and the First Lien Adequate Protection Claims; The Debtors' obligations under the Prepetition Second Lien Credit Agreement will be canceled and discharged; General Unsecured Claims against the Debtors, including $150 million in outstanding unsecured Senior Notes plus accrued interest, will be canceled and discharged; The general unsecured Claims held by certain trade creditors with whom the Debtors intend to conduct business post-emergence will receive their Pro Rata share of $250,000 in Cash; All Equity Interests in Sbarro Holdings, LLC will be extinguished; and Certain of the Debtors' Prepetition First Lien Lenders have committed to provide the Debtors with a new money term loan facility of $18.6 million to be used for general corporate and working capital needs (as well as to cash Under the Plan, the Debtors' Prepetition First Lien Lenders will own substantially all of the New Common Stock in Reorganized Holdings, subject to dilution only by shares allocated to Reserved Employee Equity and/or issued in connection with the Management Equity Plan." The Court scheduled a September 7, 2011 hearing to consider the Disclosure Statement.
The Disclosure Statement explains, "...$35 million of loans expected to be outstanding under the DIP Facility will be converted on a dollar-for-dollar basis into a portion of the $110 million Exit Term Loan Facility and issued to the DIP Lenders on the Effective Date; Approximately $75 million of the Prepetition First Lien Credit Facility will be converted into the remainder of the $110 million Exit Term Loan Facility to be issued Pro Rata to the Prepetition First Lien Lenders on the Effective Date; The remaining approximately $100 million in secured indebtedness outstanding under the Prepetition First Lien Credit Facility (excluding amounts related to existing letters of credit, which will be addressed with the New Money Exit Facility) plus any First Lien Adequate Protection Claims that are not otherwise restructured under the Exit Term Loan Facility will be converted into 100% of the common equity of Reorganized Sbarro and distributed Pro Rata to the Prepetition First Lien Lenders on account of the obligations owed to them under the Prepetition First Lien Credit Facility and the First Lien Adequate Protection Claims; The Debtors' obligations under the Prepetition Second Lien Credit Agreement will be canceled and discharged; General Unsecured Claims against the Debtors, including $150 million in outstanding unsecured Senior Notes plus accrued interest, will be canceled and discharged; The general unsecured Claims held by certain trade creditors with whom the Debtors intend to conduct business post-emergence will receive their Pro Rata share of $250,000 in Cash; All Equity Interests in Sbarro Holdings, LLC will be extinguished; and Certain of the Debtors' Prepetition First Lien Lenders have committed to provide the Debtors with a new money term loan facility of $18.6 million to be used for general corporate and working capital needs (as well as to cash Under the Plan, the Debtors' Prepetition First Lien Lenders will own substantially all of the New Common Stock in Reorganized Holdings, subject to dilution only by shares allocated to Reserved Employee Equity and/or issued in connection with the Management Equity Plan." The Court scheduled a September 7, 2011 hearing to consider the Disclosure Statement.
Wednesday, August 10, 2011
Best Buy Kiosk Kraze
Best Buy Co. Inc. is adding 100 Best Buy Express self-service kiosks over the next year to the 150 already in existence. The oversized vending machines offer computer accessories, digital cameras, storage devices, and headphones.
Sears Woos Woo and Huber
Sears Holdings Corp. hired former FreshDirect executive Monica Woo to be its Vice President and Chief Marketing Officer, effective August 15. Its Lands' End division named Edgar O. Huber as its new CEO and president.
JC Penney Early Retirement
JC Penney Co. began a voluntary early-retirement program for an undisclosed number of staff in certain parts of the retailer's organization, according to the Wall Street Journal.
Sycamore's 9.9% Stake in Talbots
Private equity firm Sycamore Partners bought a 9.9% stake in women’s clothing retailer The Talbots Inc. for $21.6 million. Talbots previously adopted a 'poison pill' that triggers a stockholder rights agreement to double the voting power of existing shareholders in the event of a takeover bid. The pill activates when a new shareholder acquires 10% more of Talbots stock.
Bankruptcy Updates
Jackson-Hewlett
Jackson-Hewitt Tax Service filed with the US Bankruptcy Court on August 8, 2011 an Amended Joint Prepackaged Chapter 11 Plan of Reorganization. The company also filed Plan Supplements for its Chapter 11 Plan of Reorganization. On August 9, the US Bankruptcy Court signed an order approving Jackson-Hewitt Tax Service's Disclosure Statement and confirmed the company's Amended Joint Prepackaged Plan of Reorganization. Under the Plan, the Debtors current secured lenders will receive their share of a new $100 million term loan and all of the equity in the reorganized company, and existing stockholders will receive nothing. The company anticipates entering into a new $115 million revolving credit facility to fund operations until the new tax season begins.
Harry & David Holdings Pension Plan
The US Bankruptcy Court on August 9, 2011 approved Harry & David Holdings' motion for an order determining that the financial requirements for a distress termination of its defined benefit pension plan are satisfied and approving a distress termination of the pension plan. On July 29, 2011, the Pension Benefit Guaranty Corporation (PBGC) filed with the Court an objection to the company's' Second Amended Chapter 11 Plan of Reorganization. According to PBGC, the Plan should not be confirmed because it is contingent upon the termination of the defined benefit pension plan, which would be-according to the PBGC-improper under the Employee Retirement Income Security Act.
Jackson-Hewitt Tax Service filed with the US Bankruptcy Court on August 8, 2011 an Amended Joint Prepackaged Chapter 11 Plan of Reorganization. The company also filed Plan Supplements for its Chapter 11 Plan of Reorganization. On August 9, the US Bankruptcy Court signed an order approving Jackson-Hewitt Tax Service's Disclosure Statement and confirmed the company's Amended Joint Prepackaged Plan of Reorganization. Under the Plan, the Debtors current secured lenders will receive their share of a new $100 million term loan and all of the equity in the reorganized company, and existing stockholders will receive nothing. The company anticipates entering into a new $115 million revolving credit facility to fund operations until the new tax season begins.
Harry & David Holdings Pension Plan
The US Bankruptcy Court on August 9, 2011 approved Harry & David Holdings' motion for an order determining that the financial requirements for a distress termination of its defined benefit pension plan are satisfied and approving a distress termination of the pension plan. On July 29, 2011, the Pension Benefit Guaranty Corporation (PBGC) filed with the Court an objection to the company's' Second Amended Chapter 11 Plan of Reorganization. According to PBGC, the Plan should not be confirmed because it is contingent upon the termination of the defined benefit pension plan, which would be-according to the PBGC-improper under the Employee Retirement Income Security Act.
NumBytes 44: Flash Robs
Social networking is all the rage, including 'flash mobs' that arrive at a preset time and place to perform silly dances for You Tube videos. But criminal gangs are using flash mob tactics to loot stores. According to a July 2011 National Retail Federation survey of 106 US retail companies, 79% reported being a victim of an organized robbery with multiple thieves in the past 12 months, with 50% being targeted two to five times -- usually smash and grab style heists. These robberies are usually performed by groups or gangs of juveniles who already know each other. Of troubling note, 10% reported these gangs using flash mob tactics where they do not know each other -- criminals learn about a retail hit via text or e-mail and just show up.
The survey found juvenile offenders were involved in 83% of the events and social media or texting was known to be the communication vehicle in 42% of the apprehended cases. The affected retailer or responding police department made apprehensions in 50% of the incidents. In one example, on June 23, 2011 in Philadelphia, a gang of 40 criminals stormed a Sears store stealing thousands of dollars in sneakers, socks, watches, and other items. Police apprehended 15 juveniles and one adult, who were arrested for retail theft and conspiracy.
The NRF suggests increased vigilance on the part of associates to report unusual gatherings in front of the store, whether it is in a mall, plaza, or street shopping district.
The survey found juvenile offenders were involved in 83% of the events and social media or texting was known to be the communication vehicle in 42% of the apprehended cases. The affected retailer or responding police department made apprehensions in 50% of the incidents. In one example, on June 23, 2011 in Philadelphia, a gang of 40 criminals stormed a Sears store stealing thousands of dollars in sneakers, socks, watches, and other items. Police apprehended 15 juveniles and one adult, who were arrested for retail theft and conspiracy.
The NRF suggests increased vigilance on the part of associates to report unusual gatherings in front of the store, whether it is in a mall, plaza, or street shopping district.
Tuesday, August 9, 2011
End of Monthly Comparable Sales Reporting?
Hot Topic becomes the latest retailer to cease reporting monthly comparable sales figures, switching to reporting only quarterly sales numbers starting in the third quarter 2011. Monthly numbers from BJ's Wholesale will also join the exodus once it goes private.
The two retailers are in good company. Wal-Mart, Sears, Home Depot, Lowe's, Ann Taylor, Chico's, Children's Place, American Apparel, Abercrombie & Fitch, Aeropostale, and American Eagle Outfitters ignore the voluntary monthly sales release. Nor can you blame them. The companies spend time and resources to put them out. While same-store sales help companies with good news when times are booming, any drop in same-store sales finds retailers hemming and hawing about shifting holidays, bad hair days, and Mercury retrogrades. Quarterly sales tend to even out the volatility.
According to Customer Growth Partners, comparable sales reports represent about 10% of total US retail sales and remain heavily skewed towards apparel and department stores, leaving out most consumer electronics and home improvement. In addition, some chains report only sales from stores while others include online sales in their figures. While the end of monthly same-sales reporting may be some time off, the trend among retailers certainly points towards its abandonment.
The two retailers are in good company. Wal-Mart, Sears, Home Depot, Lowe's, Ann Taylor, Chico's, Children's Place, American Apparel, Abercrombie & Fitch, Aeropostale, and American Eagle Outfitters ignore the voluntary monthly sales release. Nor can you blame them. The companies spend time and resources to put them out. While same-store sales help companies with good news when times are booming, any drop in same-store sales finds retailers hemming and hawing about shifting holidays, bad hair days, and Mercury retrogrades. Quarterly sales tend to even out the volatility.
According to Customer Growth Partners, comparable sales reports represent about 10% of total US retail sales and remain heavily skewed towards apparel and department stores, leaving out most consumer electronics and home improvement. In addition, some chains report only sales from stores while others include online sales in their figures. While the end of monthly same-sales reporting may be some time off, the trend among retailers certainly points towards its abandonment.
Executive Moves
Rite Aid Names Henderson CCO
Rite Aid named Susan Henderson as its new Chief Communications Officer, replacing retiring communications chief Karen Rugen.
Ashley Stewart Names Clancy CEO
Ashley Stewart announced today that its Board of Directors has appointed Celia Clancy as President and Chief Executive Officer, replacing Laura Weil, who resigned.
Rite Aid named Susan Henderson as its new Chief Communications Officer, replacing retiring communications chief Karen Rugen.
Ashley Stewart Names Clancy CEO
Ashley Stewart announced today that its Board of Directors has appointed Celia Clancy as President and Chief Executive Officer, replacing Laura Weil, who resigned.
Saks Flashes
Saks Fifth Avenue debuted a flash-sale fashion website that will roll out five events a week and build up to multiple daily sales by the end of August. The site competes with Gilt Groupe, HauteLook, Rue La La, and others.
NumBytes 43: Tallest Building
Kingdom Holding Co. is paying Bin Laden Group $1.23 billion to build the world's tallest building at 3281 feet (1000 meters) in Jeddah, Saudi Arabia, surpassing the 2717-foot Burj Khalifa in Dubai. The Jeddah building would house a Four Seasons hotel, offices, luxury condos, and the world's highest observation spot and be the centerpiece of a $20 billion, 57 million square foot development called Kingdom City. The building was supposed to be one mile high (5280 feet), but soil testing in 2008 cast doubt about over suitability for handling such a massive structure. The architect is Adrian Smith of Adrian Smith + Gordon Gill Architecture in Chicago, the same fellow who designed the Burj Khalifa.
Presumably, shopping would be all around the 5,704,873 sq ft buiilding, although you would think one luxury retailer would take space at the top and brag about having the world's highest store. Big buildings often are ego boosting but economic sinkholes -- the Burj Khalifa has an occupancy rate of 44%. But there may be a better reason behind the development than national pride: jobs. With Middle East autocracies and monarchies falling to people fed up with few jobs and much corruption, putting people to work is the best way to keep the Saudi royal family in power. You only have to look at who owns 95% of Kingdom Holding Co. -- Prince Alwaleed bin Talal, nephew of King Abdullah of Saudi Arabia.
Presumably, shopping would be all around the 5,704,873 sq ft buiilding, although you would think one luxury retailer would take space at the top and brag about having the world's highest store. Big buildings often are ego boosting but economic sinkholes -- the Burj Khalifa has an occupancy rate of 44%. But there may be a better reason behind the development than national pride: jobs. With Middle East autocracies and monarchies falling to people fed up with few jobs and much corruption, putting people to work is the best way to keep the Saudi royal family in power. You only have to look at who owns 95% of Kingdom Holding Co. -- Prince Alwaleed bin Talal, nephew of King Abdullah of Saudi Arabia.
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