U.S. retailers used extra promotions and extended hours to draw procrastinators and shoppers delayed by the East Coast snowstorm in the final stretch before Christmas.
Target Corp. extended its hours to midnight Dec. 21 through yesterday. Borders Group Inc., Wal-Mart Stores Inc. and Toys “R” Us Inc. also kept stores open longer. Best Buy Co. offered some DVDs for half off and Jos. A. Bank Clothiers Inc., a men’s clothing chain, deepened discounts to at least 50 percent.
“We didn’t intend to do everything, and now we’re doing everything,” Jos. A. Bank Chief Executive Officer Neal Black, 54, said Dec. 22 by telephone from the company’s Hampstead, Maryland, headquarters. “We’ll be slugging right down to the last minute.”
Sales will be compressed into the final days before Christmas, said Marshal Cohen, chief industry analyst at NPD Group Inc. The snowstorm disrupted the Saturday before Dec. 25. Last year, that was the second-biggest shopping day after Black Friday, the day after U.S. Thanksgiving. Shoppers already had procrastinated more than in recent seasons.
“Retailers will pull out all the stops this week,” Cohen said in a Dec. 21 Bloomberg Television interview. NPD is a Port Washington, New York-based market research firm.
Maintaining Forecasts
The Washington-based National Retail Federation was holding to its forecast for a 1 percent drop in holiday sales, Ellen Davis, a spokeswoman, said Dec. 20. The International Council of Shopping Centers reiterated on Dec. 22 its forecast for a 2 percent increase in sales at stores open at least a year in December, after reporting that the storm slowed growth to 0.4 percent year over year in the week ended Dec. 19.
Jos. A. Bank cut prices of all clothing Dec. 21 and Dec. 22, after store visits slowed, Black said. The chain had planned to offer some of that merchandise at 40 percent and 30 percent off, he said.
The retailer’s shares fell 17 cents to $42.82 at 1:30 p.m. after a shortened pre-Christmas session on the Nasdaq Stock Market. Target, based in Minneapolis, decreased 20 cents to $48.65 in New York Stock Exchange composite trading. Borders, based in Ann Arbor, Michigan, declined 3 cents to $1.22. Bentonville, Arkansas-based Walmart climbed 28 cents to $53.60. Best Buy, based in Richfield, Minnesota, dropped 6 cents to $40.70.
Kathryn Greenberg, a 41-year-old Washington resident who works in philanthropy, said she lucked into some “fantastic” late discounts yesterday 500 fast cash payday loan. She bought clothing for her children and other family members mostly at 60 percent off at a Gap store as well as one of Gap Inc.’s Banana Republic stores.
Bigger Savings, More Buying
“I am spending the same as last year, but getting more,” said Greenberg, who was carrying two bags and heading into Sephora, the cosmetics chain owned by Paris-based LVMH Moet Hennessy Louis Vuitton SA.
Walmart, the world’s largest retailer, will keep most of its 803 discount stores and its Sam’s Clubs open until 8 p.m. today, two hours later than last year, said John Simley, a spokesman. Amazon.com Inc. extended by one day, until Dec. 21, its cutoff for standard shipping.
Gap, based in San Francisco, retreated 20 cents to $20.71 on the New York Stock Exchange yesterday. LVMH gained 44 cents to 77.90 euros in Paris trading. Seattle-based Amazon.com, the largest Internet retailer, dropped 47 cents to $138.47 on the Nasdaq.
East Coast Snow
Stores along the East Coast closed early during the Dec. 19 snowstorm. Twenty-four inches of snow fell on Bethesda, Maryland and 23.2 inches were recorded at Philadelphia International Airport, according to the National Weather Service.
Consumers had completed 72 percent of their holiday shopping through Dec. 20, down from 80 percent a year earlier, the New York-based ICSC said Dec. 22.
Historically, the 10 days before Christmas have made up as much as 40 percent of total holiday sales for November and December, according to Joseph Feldman, a managing director at Telsey Advisory Group in New York.
Sales fell 13 percent to $6.9 billion on the last Saturday before Christmas from the previous year, according to Chicago- based researcher ShopperTrak RCT Corp.
Some of lost sales did translate into online purchases. Sales at Web sites jumped 24 percent on Dec. 18 and Dec. 19 from a year ago, according to Coremetrics, a San Mateo, California- based marketing company.
Some impulse buying and so-called self-purchases, however, were irretrievably lost during the storm, Richard Jaffe, an analyst with Stifel Nicolaus & Co. in New York, said in a Bloomberg Radio interview on Dec. 22.
“It’s not a delay, it’s lost sales,” Jaffe said. “You just don’t recover that.”
WASHINGTON–Home resales surged last month to the highest level in nearly three years, reflecting an extraordinary level of federal support that has pulled the housing market back from the worst downturn since the Great Depression.
Buyers were racing to complete their sales before the original expiration date of a tax credit for first-time buyers that was scheduled to expire Nov. 30. Last month, Congress decided to extend and expand the credit to ensure the housing market could sustain its recovery.
The Realtors estimated that about 2 million homebuyers have taken advantage of the credit so far and forecasts that another 2.4 million will use it by the middle of next year. First-time buyers made up about half of all transactions last month, driving sales up 44 percent above last year's levels, a record jump.
Sales are now up 46 percent from the bottom in January, but down 10 per cent from the peak more than four years ago.
The median sales price was $172,600, down 4.3 per cent from a year earlier, and up 0.2 per cent from October.
"Things are stabilizing," said Pete Flint, chief executive of real estate Web site Trulia.com. "There is a significant amount of buyer interest out there.''
November sales rose 7.4 per cent to a seasonally adjusted annual rate of 6.54 million, from a downwardly revised pace of 6.09 million in October.
Sales had been expected to rise to an annual pace of 6.25 million, according to economists surveyed by Thomson Reuters.
The inventory of unsold homes on the market fell about 1 percent to 3.5 million. That's a healthy 6.5 month supply at the current sales pace, the lowest level in three years.
Besides the existing tax credit of up to $8,000 for first-time buyers, homeowners who have lived in their current properties for at least five years can now claim a tax credit of up to $6,500 if they relocate. To qualify, buyers must sign a purchase agreement by April 30.
Postponing the deadline could mean sales will drop during the winter months and recover in the spring.
"Buyers have no sense of urgency now," said Gary DeRosa, an agent with ZipRealty Inc. in Seattle.
How’s this for a stocking stuffer?
Canadians are generally tightening their purse strings this Christmas shopping season, but some are shelling out a pretty penny for bars of gold.
ScotiaMocatta, the precious metals division of the Bank of Nova Scotia, is enjoying "record sales" of small precious metals products during this holiday season, even though the price of gold continues to trade above $1,100 (U.S.) an ounce.
"By far, the most popular product we are selling is the one-ounce Scotia Gold Bar," said Richard Maskobi, managing director of ScotiaMocatta.
While the retail price for that product fluctuates daily, it is based on the spot price of gold plus a premium to cover other costs such as manufacturing, shipping and storage. On Friday afternoon, the rectangular bar – which has a gold purity of 0.9999 or 24 karats – was selling for about $1,233.90 (Canadian).
ScotiaMocatta does not release specifics about its sales data. Maskobi, however, said sales remain robust during final days before Christmas.
Gold is generally seen as a "safe haven" during financial crises, and demand for the precious metal has been increasing over the past few years.
Earlier this month, gold hit a record above $1,200 (U.S.) an ounce. The price has retreated in recent weeks but consumer demand is not slowing down.
"There isn’t a typical buyer," Maskobi said. "It is varied. Some people are buying a lot of smaller products just as gifts; some people are buying it as (investment) diversification; some people are buying just because they like gold instant personal loans guaranteed."
Scotiabank is one of the world’s largest precious metals dealers. While it is not the only bank selling gold in Canada, it is the only one that does so both through its branches and an online system.
Launched earlier this year, The ScotiaMocatta Precious Metals eStore is currently offering extended holiday hours. Volume is also up at its branches. Said Maskobi: "I know our phone stats are through the roof as well."
Scotiabank is not alone. In November, the U.S. Mint suspended sales of its popular American Eagle one-ounce gold coin after consumers snapped up its entire supply.
While the Royal Canadian Mint has not suspended bullion sales, it has sold out of some gold collector pieces such as two of its "Fine Gold Kilo Coins." One such coin entitled "Toward Confederation (2008)" has a price tag of $49,000 (Canadian). Other gold coins are on back order.
Mint spokesperson Alex Reeves said it is normal for limited edition products to sell out. Still, he notes consumer demand has increased in recent years.
The mint is also recording "much higher" sales but the increase is not necessarily linked to Christmas, Reeves said. Nevertheless, that didn’t stop him from dropping Santa a big hint: "I’d love to find gold bullion coins in my stocking."
Experts on retail sales are obsessed with Thanksgiving weekend — particularly the Black Friday frenzy.
Most pundits agree that the start of the season was just ho-hum. But if you examine the details, you’ll come across all sorts of disagreement over exactly how things have gone. Why is it so hard to judge how many shoppers turned out, and how much they spent?
Here are some answers.
How important is Thanksgiving weekend as a predictor of the season?
The day after Thanksgiving is the traditional start of the season. In recent years, Black Friday has been the busiest shopping day of the year. But it’s not considered a predictor of the rest of the season, since it accounts for 10 percent of total holiday sales.
Still, pundits study the weekend’s receipts to decipher shoppers’ mind-sets. And if stores have a weak start, chances are slim that they will be able to make up for lost sales.
What makes this season’s kickoff particularly hard to assess?
One major factor is that stores have increasingly been hawking deals and offering expanded hours throughout November. That has likely diluted sales for the holiday weekend.
Parsing the data got even trickier because for the first time, major merchants offered early morning Black Friday specials on their websites at the same time as in their stores, as they aimed to compete with pure online retailers.
That helped boost online sales on Thursday and Friday, which rose 11 percent compared with a year ago, according to comScore Inc same day payday loans., an Internet research company. Also, more stores, like Old Navy, were open on Thanksgiving.
"Black Friday was definitely expanded. It wasn’t as concentrated," said Bill Lewis, executive vice president of Karabus Management, a retail advisory firm. He noted that heavy online buying likely depressed store traffic.
What type of data has been out there in recent days? Any contradictions?
The National Retail Federation released data on spending and traffic late Sunday, based on an online poll of 5,000 shoppers. The group extrapolated that total spending reached $41.2 billion for Thursday through Sunday, up 0.5 percent from a year ago; it reported 195 million people were visiting stores and websites, compared with 172 million a year ago.
Meanwhile, research firm ShopperTrak released data that showed customer counts actually declined 1.1 percent for the Friday-through-Sunday weekend, but showed sales were up a more robust 1.6 percent.
When will we get a full picture of the start of this year’s holiday season?
Major retailers’ individual sales reports should offer some sense, even though most figures exclude online business.
U.S. consumer sentiment fell in early November to the weakest in three months amid grim expectations for job and income prospects, a survey showed on Friday.
The Reuters/University of Michigan Surveys of Consumers said its preliminary index of sentiment for November fell to 66.0, the lowest since August, from 70.6 in October. This was well below economists’ median expectation of a reading of 71.0, according to a Reuters poll.
The index of consumer expectations fell to 63.7 in early November from 68.6 in October.
“Confidence tumbled in early November due to the grim financial realities faced by consumers as well as weaker economic prospects for the year ahead — importantly, the decline in confidence was already in place before the announced increase in the unemployment rate to 10 fast payday loan.2 percent on November 6,” the Reuters/University of Michigan Surveys of Consumers statement said.
Within the survey, the 12-month economic outlook index fell to 67, the lowest since April, from 81 in October. The 1-year inflation expectation eased to 2.8 percent from 2.9.
(Reporting by Chris Reese; Editing by Chizu Nomiyama)
American International Group Inc Chief Executive Robert Benmosche said on Wednesday he remains “totally committed” to staying at the company, countering an earlier report that he was considering stepping down.
In a letter to employees obtained by Reuters, Benmosche said he and the company’s board are “frustrated” about restrictions on pay and are in discussions with the U.S. government about them.
AIG, which has received up to $180 billion of federal aid, including more than $80 billion in loans, and is now 80 percent-owned by U.S. taxpayers, posted its second straight quarterly profit last week, helped by a recovery in the value of its investments.
Benmosche said compensation restraints present a “barrier that stands in the way of restoring AIG’s value.”
The Wall Street Journal reported that Benmosche was so frustrated that he told the company’s board last week he was considering stepping down payday cash advance loans. The newspaper cited people familiar with the matter.
The giant insurer’s chief executive said in his letter that he is particularly concerned with the pay of the company’s top 100 executives, which are under the purview of Kenneth Feinberg, the U.S. government’s pay czar.
Benmosche told AIG directors that he was “done” but agreed to think it over when they reacted with shock, the people told the paper.
(Reporting by Steve Eder in New York and Ajay Kamalakaran in Bangalore; editing by Valerie Lee, Andre Grenon, Leslie Gevirtz)
At the new GM, the buck now stops with the board.
The surprise decision by General Motors Co to drop a plan supported by Chief Executive Fritz Henderson to sell the company’s Opel unit has raised new questions about the standing of the veteran GM insider after just six months on the job.
“It isn’t clear who is running GM,” said Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland. “They’ve got a problem here.”
Henderson, who joined GM in 1984 and worked his way up as a financial manager, has only been in charge of GM since this spring, when the Obama administration ousted Rick Wagoner and ordered the company to appoint outsiders to its hitherto insider-dominated board.
The reversal on selling Opel to a group led by Canada’s Magna International Inc suggests to some the new directors — including Ed Whitacre, the former AT&T Inc CEO who now serves as GM’s chairman — are not deferring to anyone. Noteven Henderson, who expressed confidence recently the Opel sale would be wrapped up soon.
The sale was controversial from the start.
“My view was always if at the end of this Opel ended up outside GM, that was a strategic mistake,” Mike Jackson, the head of Auto Nation, told the Reuters Auto Summit in Detroit.
John Smith, a GM group vice president and chief negotiator in the Opel restructuring, told reporters on Wednesday that the decision not to sell Opel was debated vigorously within GM advanced payday loan.
“This has been a close call from the very first of the three detailed reviews with our board,” Smith said. “It was a coin toss in August, it was a coin toss in September and a coin toss of a kind in November.”
HENDERSON HAD FAVORED
Henderson, who vowed to shake up the slow-moving culture of the 101-year-old automaker, had argued the Magna deal was the best remaining choice for cash-strapped GM after seven months of painstaking talks with bidders.
He also said in an interview on CNBC in late October that he thought the board supported the move.
So the company’s announcement on Tuesday that the board had decided to abandon the sale left industry watchers wondering whether Henderson was out of the loop — or losing clout.
“What worries me is the indecisiveness,” Ken Lewenza, the head of the Canadian Auto Workers union told the Reuters Auto Summit on Wednesday. “But if at the end of the day it means success for General Motors, it might make sense.”
Henderson was already looking like the odd man out in Detroit, where the other two car companies, Ford and Chrysler, are now run by executives — Alan Mullaly at Ford and Sergio Marchionne at Chrysler — who have spent most of their careers outside the car industry.
Oil fell more than 2% Wednesday on worries about demand in the world’s largest fuel consumer after data showed a surprise build in U.S. gasoline inventories and weak U.S. new home sales.
U.S. crude oil inventories rose less than expected last week as imports increased, but gasoline stockpiles logged an unexpected gain of 1.7 million barrels, according to data from the U.S. Energy Information Administration.
"Crude stocks were only up 800,000 but the surprise was gasoline stocks. I think that’s what is keeping the market down," said Dan Flynn, analyst at PFGBEST Research in Chicago.
U.S. crude fell $2.09, or 2.63%, and settled at $77.46 a barrel.
Oil prices came under pressure after data showed sales of new U companies making payday loans.S. homes tumbled unexpectedly in September, the first drop in six months, feeding doubt about an economic recovery.
Oil markets have been watching equities and economic data for signs of a rebound that could lift flagging fuel demand.
U.S. and European equity markets fell after the housing sales data. The U.S. dollar rose on safe-haven demand.
Weaker crude oil prices and slumping margins at refineries knocked quarterly earnings lower at ConocoPhillips (COP, Fortune 500), PetroChina (PCCYF) and Hess Corp., (HES, Fortune 500) all of which reported earnings on Wednesday.
Home prices rose for the fourth month in a row during August and suffered a smaller-than-expected annual drop, according to a report issued Tuesday.
Prices in the S&P Case-Shiller Home Price index of 20 cities rose a non-seasonally adjusted 1.2% in August. It was the fourth consecutive monthly increase and followed a 1.6% gain in July.
Prices were down 11.3% versus August 2008, but that drop was less severe than expected. Analysts surveyed by Briefing.com had forecast an 11.9% year-over-year drop.
"Broadly speaking, the rate of annual decline in home price values continues to improve" said David Blitzer, chairman of Standard & Poor’s index committee.
While many U.S. markets remain down versus this time last year, the relative rate of decline "has shown some real improvement," Blitzer added.
Home prices improved on an annual basis in 19 of the 20 major metropolitan markets in the survey.
State by state. In California, home prices have recovered notably from depressed levels in recent months, according to the report.
Home prices rose 2.8% in San Francisco during August, while San Diego prices were up 2.5% and Los Angeles gained 1.8% in the month.
Minneapolis had the biggest increase, with home prices rising 3.2% from July to August.
But prices continued to slide in areas that have been hit hard by foreclosures payday advance low fees. Prices dropped 0.5% in Cleveland and 0.3% in Las Vegas during August.
A shaky recovery. Overall, the housing market has been stabilizing as low home prices and attractive mortgage rates, as well as government tax credits, have revived anemic home sales.
However, the market remains hampered by unemployment, which rose to a 26-year high last month. And real estate analysts warn that the expiration of a popular new homebuyer tax credit next month could stifle the rebound in home sales.
The improvement in home prices could also be hindered by a "wall of supply" coming to market this spring from private sellers and foreclosures, warned Ian Shepherdson, chief U.S. economist at High Frequency Economics.
Given the long-term challenges facing the housing market, the outlook for home prices remains grim.
Home values are predicted to drop in 342 out of 381 markets during the next year, according to a recent study by financial information and analysis firm Fiserv.
Fiserv expects the national median home price to drop 11.3% by June 30, 2010.
There will be no cost-of-living increase for 57 million Social Security beneficiaries next year because consumer prices have fallen, the Social Security Administration announced on Thursday.
It marks the first time that Social Security benefits have not been increased year over year since the cost-of-living adjustment was put into effect in 1975.
To help counterbalance the hit, President Obama is calling on Congress to send another $250 relief payment to seniors and other Americans to stem the economic strain.
"Even as we seek to bring about recovery, we must act on behalf of those hardest hit by this recession," Obama said in a statement Wednesday. "That is why I am announcing my support for an additional $250 in emergency recovery assistance to seniors, veterans, and people with disabilities to help them make it through these difficult times."
Last year, Social Security beneficiaries got a 5.8% cost-of-living adjustment, the largest since 1982, largely because of the spike in energy prices.
"This year, in light of the human need, we need to support President Obama’s call for us to make another $250 recovery payment for 57 million Americans," said Commissioner of Social Security Michael J. Astrue in a written statement.
Since there will be no COLA for benefits, the law also prohibits the Social Security Administration from increasing the maximum amount of earnings subject to the Social Security tax. This year and next, the first $106,800 of a worker’s earnings is subject to the 12.4% Social Security tax. Workers typically pay half of that and their employers pay the other half.
It’s still not clear yet what if any changes will be made to seniors’ Medicare Part B premiums for hospital care next year. The Social Security Administration said in its announcement that if there is an increase that a "hold harmless" provision in the law would protect 93% of Social Security beneficiaries from the increase.
New emergency payment similar to COLA
Obama’s proposed $250 payment is roughly equal to a 2% increase in benefits for the average Social Security beneficiary.
Congress approved a similar payment as part of the $787 billion economic recovery act enacted in February.
As with the first $250 recovery payment, the second one would be exempt from income tax, a senior administration official said in a call with reporters on Wednesday.
If approved by Congress, the payments would be sent out in 2010, most likely in the first half. "It wouldn’t be late in 2010," the administration official said.
The measure would cost $13 billion over 10 years, according to White House estimates.
The call for increased benefits for seniors is one of several proposals to expand stimulus benefits. Lawmakers are also considering extending unemployment benefits and the homebuyer tax credit, both of which were included in the economic stimulus bill passed in February.
In addition to the $250 emergency payments, the White House has also publicly supported the extension of jobless benefits as well as the extension of subsidies to help the unemployed purchase health insurance under Cobra. The president has not said yet whether he supports the expansion of the homebuyer tax credit.
Where the money will come from
The original $250 relief payment was paid out of general revenue. That would likely be the case for the second payment as well.
Obama specified that he "is committed to ensuring that the $13 billion cost of the proposal does not reduce the solvency of Social Security or other social insurance programs."
That means the $13 billion wouldn’t be deducted — on the balance sheet anyway — from the payroll taxes collected to pay for Social Security.
But it also won’t be paid for by reducing spending or raising revenue in other parts of the budget. Typically economic stimulus is exempt from rules requiring that new measures be paid for.
So if the proposal passes, it will add to the country’s annual deficit, which in 2009 was estimated by the Congressional Budget Office to have hit a record high of $1.4 trillion.
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