Finance news. My opinion.

June 28, 2011

This teacher was worth $1M by age 38

Filed under: money, prices — Tags: , , , — Professor @ 5:24 am

Moneyville blogging contest runner up Larry Cuozzo is 43, a teacher and has built a net worth of $2 million without inheriting a penny. Here’s how he did it.

I’m a 43-year-old Toronto teacher and I have not inherited any money or won any lotteries. However, my wife and I have managed to build a net worth of $2 million by making the sort of choices any middle-class family can with a little discipline and planning.

There are no tricks, no need for high-risk investing and you and your family do not have to live in poverty to make it happen. I know because we did it. We have become financially independent at a relatively young age by saving, being disciplined and being lucky.

The $2 million is made up of our mortgage-free house in a Toronto suburb and the value of our pensions and investments. I admit we have been lucky in some respects with timing beyond our control but the principles remain the same.

It took us 38 years to hit the $1 million mark and another six to hit $2 million. I have no idea if this will continue. It doesn’t really matter. For the past 20 years, we have been able to contribute to society and enjoy life with much less money than we have now. I don’t see why that would change.

The guide for how to live our lives came from our parents. Mine emigrated from Italy in the 1960s and eventually settled in Scarborough. My wife grew up in Brantford. My parents taught me that it was important to develop realistic but optimistic financial goals because you can accomplish almost anything with effort, patience and planning.

In high school I started a disc jockey business with friends. The money I earned doing that, plus summer jobs, help from my parents and a small scholarship meant I could move away from home for university and still graduate debt free. This was my first lesson.

Lesson 1: If you can stay out of debt, everything you make belongs to you.

I enrolled in pre-business at the University of Western Ontario and my goal was to get in to the honours business administration program in third year. In the summer of first year, I became the manager of a College Pro window cleaning franchise, hoping to impress the business school selection committee. It worked and I graduated with a degree in business administration.

The degree opened doors and I found a job with a large consumer goods company as an assistant marketing manager. I quickly realized I hated my job. I enjoyed studying business and economics, but found the day-to-day life quite dull, even though it was well paid. Eventually, I quit and followed my future wife Liana into teaching. The cost was huge. It took five years before my salary as a teacher equalled my beginning salary in business. But here I learned another lesson.

Lesson 2: Don’t be afraid to invest in your career or future, even if in the short term it doesn’t pay off.

After teacher’s college I found a job in a small high school in a town about 90 minutes from home. I enjoyed teaching business and economics. Because it was a small school, I became a department head after three years, which would not have happened if I had been in a large school guaranteed personal loan approval.

One of the benefits of teaching in Ontario is the pension plan. Eleven per cent of your gross pay is automatically deducted and our school board matches this amount. This arrangement is fantastic.

First, it is a forced savings plan; teachers must contribute to this plan. Second, the Ontario Teacher’s Pension Plan can invest at very little cost. So, while many mutual funds charge fees of 2.5 per cent or more, the teacher’s plan fees are around 0.5 per cent. This makes a big difference and is the main reason the vast majority of mutual funds do not beat market indices over the long term.

If I had stayed in business, my employer would have provided a matching contribution to my Registered Retirement Saving Plan, up to 9 per cent of my gross annual pay. I would have taken advantage of this benefit and invested this money in financial products that do not charge high fees. This was my third lesson.

Lesson 3: Start saving for retirement early and let the compounding power of interest help you. Any saving is better than none and payroll deduction is a painless way since you don’t notice it.

In the early 1990s the Toronto-area real-estate bubble had burst and we were lucky to be looking for our first home. We had saved $59,000 and bought a tiny 900-square-foot home at Yonge and Sheppard, just steps to the subway, for $197,000. We saw the potential to live on the main floor while renting the basement, so we turned the basement into a rental suite. For the next six years a tenant helped us pay down the mortgage.

Lesson 4: Alternate sources of income are a good way to reduce your debt, pay down a mortgage or save for something you want.

By the late 1990s our mortgage was gone and we decided to have kids, so we needed a bigger house. We sold our first home for $255,000 and bought a monster in Markham for $455,000. It was 4,250 square feet, brand new and in the suburbs, close to my parents. We took out a mortgage of $180,000.

Six years and a second child later my wife decided to take an extended maternity leave. Our monster home was worth more than $700,000, but we decided to downsize. After a bidding war, our home sold for $721,000. (It’s a lot more fun being on the selling side during a bidding war.) Our new house cost $475,000, and we pocketed $201,000.

So, it was the summer of 2005, we owned our home mortgage-free and had a considerable nest egg set aside. When the value of our pension plans was added to our other assets, our family’s net worth surpassed the $1 million mark. We had reached my original goal of being financially secure by age 40.

Also read:

5 things your grocery store won’t tell you

Larry Cuozzo teaches business and is a department head at an adult high school in Toronto. He enjoys taking charge of his personal financial affairs.


June 26, 2011

Fitz’s starts new growth spurt after former owner takes reins

Filed under: marketing, prices — Tags: , , , — Professor @ 9:44 am

The boxes in his basement filled with vintage Fitz’s Root Beer shirts, menus and recipe books were nagging reminders to Michael Alter of all that he had given up.

Alter helped revive the root beer brand two decades ago by opening Fitz’s restaurant and bottling plant in University City. After building Fitz’s into a regional soda brand sold at dozens of stores and restaurants, he sold the business in 1999. .

But Alter’s passion for the business ran deep, and when the opportunity arose to buy Fitz’s back last year, he knew he couldn’t say no.

“There was so much unfinished business when I left,” he said. “Since I’ve been back, it’s been a ton of work. But when you love what you do, I don’t count the hours. I don’t look at my watch.”

Alter, 52, has spent nearly $300,000 renovating Fitz’s restaurant and bottling plant, both at 6605 Delmar Boulevard, since buying the company from Clayton Capital Partners for an undisclosed amount in October. He also is making strides in growing the brand by increasing distribution and developing new flavors and packaging.

Expanding distribution is important for a small brand, which doesn’t have the marketing budget of larger competitors, said Harry Balzer, vice president of the NPD Group, a consumer marketing research firm in Long Island. “Nothing will increase sales like having it in new places where people can try it.”

On a recent afternoon, Alter stopped to take a break from checking on the bottling line while he kept an eye on the 200-seat restaurant at the front of the two-story building that was filled to capacity.

His two oldest children, who remembered the days when their dad had the coolest job in town, asked him frequently over the years when he would buy Fitz’s back.

There also was another deeply personal pull. Alter met his wife, Dana, at Fitz’s in 1993 shortly after the restaurant opened. He can still remember the float he served her: a Mississippi, with scoops of chocolate ice cream swimming in root beer. “I made her a float, and the rest is history,” he says now. “There’s magic in those floats.”

A wall of unobstructed glass windows separates the bottling plant from diners. The view of hundreds of glass bottles moving along the conveyer system causes young and old to stop and stare wide-eyed.

The bottling plant’s machines produce a steady hum, and the smell of hamburgers hot off the grill intermingles with the ever-present sticky sweet smell of root beer.

“It’s like coming home to a family member,” Alter says of his return. “Even when I was away, all I had to do was walk down the street and see someone holding a bottle of Fitz’s to make me smile.”


Long before Alter opened the Loop bottling plant and restaurant, Fitz’s had a loyal following in St. Louis.

Fitz’s Root Beer was first served in 1947 at Fitz’s Drive-In at Brentwood Boulevard and Clayton Road in Richmond Heights, where a Homewood Suites by Hilton now stands. Fitz’s

June 24, 2011

Stocks slide on weak technology earnings

Filed under: mortgage, term — Tags: , , , — Professor @ 7:04 pm

If weak financial results from big tech companies are sign of what’s to come, stock traders are in for a tough summer.

Stocks fell early Friday as poor earnings reports from technology companies suggested that the weak economy hurt corporate profits in the second quarter.

Micron Technology Inc. fell 13 percent after the company said lower sales of computer chips hurt its earnings, which were far less than analysts had expected. Oracle Corp. fell 4 percent after its sales of computer hardware fell sharply.

Technology stocks were broadly lower. Micron had the biggest loss of any stock in the Standard & Poor’s 500 index. Cisco Systems Inc. fell 2 percent, and Microsoft Corp. lost 1 percent. SanDisk Corp. fell more than 4 percent.

Technology companies are seen as an early indicator of other corporate earnings reports because they release financial results a couple of weeks before most other companies.

A series of poor reports on the economy have already weakened investors’ expectations for the next round of earnings from big U.S. companies, which will start to come out in early July. The early indications from Micron and Oracle raised the prospect that investors may need to lower the bar even further.

“No one is expecting good news, but if it’s worse than expectations, this is really a very shaky market,” said Uri Landesman, president of Platinum Partners, a hedge fund.

Landesman expects that the Standard & Poor’s 500 index will fall to 1,200 this summer as more companies report second-quarter earnings next month. The last time the S&P 500 crossed that threshold was in December 2010.

The Dow Jones industrial average fell 83 points, or 0.7 percent, to 11,966 in morning trading no teletrack payday loan. The S&P 500 fell 10, or 0.8 percent, to 1,273. The Nasdaq composite fell 21, or 0.8 percent, to 2,666.

Italian stocks fell 1.6 percent after Moody’s said it was considering downgrading the credit ratings of that nation’s banks.

The poor reports from technology companies followed another weak report on the U.S. economy. The government said the economy grew at a 1.9 percent annual rate in the first quarter, slightly higher than an earlier estimate of 1.8 percent but still very slow for a post-recession recovery. Economists expect little improvement in the second quarter, which ends next week.

The government also reported that orders of long-lasting goods increased by 1.9 percent in May after a sharp decline in April. Businesses ordered more machinery, equipment and airplanes.

The U.S. economy has cooled since late April, pulling the stock market down in six out of the past seven weeks. Recent reports on housing, employment, manufacturing and retail sales all have been weak. The debt crisis in Greece and fears that China’s growth is slowing have also pushed markets lower.

The Dow is on track for another week of losses. The S&P 500 is flat for the week, while the Nasdaq is up 1.7 percent since last Friday’s close.

Drug company Pfizer Inc. dropped 2 percent after the government rejected its application to sell a new pain drug.

Newell Rubbermaid Inc. rose 2 percent after the company late Thursday named Unilever executive Michael Polk CEO. Polk has been on Newell’s board of directors since 2009. Analysts applauded the choice.


June 23, 2011

Anxiety, as condo sales hit record high

Filed under: money, technology — Tags: , , , — Professor @ 4:08 am

Are too many condominiums being built in Toronto?

Analysts have been sounding warning bells for more than a year that the market is being seriously overbuilt. But so far, sales and prices have been chugging merrily upward.

According to the Building, Industry and Land Development Association, last month was the best May ever for sales. High-rise sales are up by a staggering 50 per cent in May to 2,433 sales. This comes on the heels of an April that was also the best on record.

On a year to date basis total new home sales in the GTA are running 12 per cent ahead of last year, but that’s purely on the back of condominiums, since low rise sales are down from last year.

“Those high rise sales are extremely high and above normal demographic levels, suggesting there is a lot of investor activity,” said Toronto housing analyst Will Dunning.

On an annualized basis, May sales are running at 26,000 units per year, when demographic demand would suggest a rate of 14,000 to 15,000 per year, said Dunning.

“The economy is in a recovery and a lot of the jobs are focused on downtown, but even in a healthy economy I don’t know if those numbers would be supported,” said Dunning.

Bank of Canada governor Mark Carney warned last week that housing, particularly in big city condo markets were in danger of overheating, fueled by ultra-low interest rates.

The sale of a $28 million penthouse at the Four Seasons residences in Toronto last month by a foreign investor certainly caught the attention of the international real estate community. At 9,038 square feet, the condo sold for about $3,000 a square foot, by far the highest price paid for a high rise unit in Canada.

Nationally, Carney said prices are about 13 per cent above pre-recession peaks. In cities such as Vancouver, prices are up by a significant 25.7 per cent year over year, to $831,55 or 11 times the average household income.

In Toronto, where average prices are $485,000 prices are at 6.7 times income compared with 4.3 times income in 2001, according to figures by BMO Capital Markets.

“Prices simply can’t keep rising forever,” warned Capital Economics economist Dave Madani.

Capital Economics has warned of a bubble in the Canadian housing market and that a decline of up to 25 per cent in the average price over the next three years is not out of the question.

“The likelihood of a substantial decline in house prices over the next year or two is fairly high,” said Madani.

The investor driven condo market has been the subject of particular concern by some analysts. The Toronto market alone has more than 280 projects being marketed, thought to be the most in North America. Investors buy an estimated 45 to 60 per cent of all new units according to market research firm Urbanation Inc. One issue for investors is that while prices are rising, rents have barely budged, making it more difficult to see positive cash flow on their investments.

That could spell trouble in the market. If investors are unable to cover their expenses then they will pull out.

“Too many homes have been built over the last ten years,” said economist Madani in a report. “Over building is reflected on the supply side and the demand side, which is mirrored by the disproportionate share of total household wealth being accounted for by housing assets. Our concern is that these excesses will eventually lead to a house price correction.”

If investors started selling their properties because prices were falling, you would see an overflow of new listings in the resale market, said Madani.

“Such a situation would exert downward pressure on home sale transaction prices, or worse case scenario, lead to a noxious downward price spiral.”

However, some analysts have said that the condo building boom is sustainable, mainly because of a structural shift in the market. There is a shortage of new low rise housing in urban areas, which forces buyers into towers. And for some buyers, high rise living is now a much more acceptable lifestyle choice.

“These last few months have witnessed some incredible condo buyer demand,” said Stephen Dupuis, CEO of the Building, Industry and Land Development Association, which represents builders. “The primary factors driving the market appear to be affordability, low interest rates, and to give builders their due, some great building and suite designs.”

According to the Conference Board of Canada in a report Tuesday most Canadian markets remain in “balanced” territory, neither favoring buyers or sellers.

The Toronto market, which saw prices increase by 8.5 per cent year over year in May, is experiencing tighter than normal listings, according to the board.

Listings are down by about 20 per cent in May compared with a year earlier, creating upward pressure on pricing, said board economist Robin Wiebe.

Analysts expect more listings in the second half of the year which should help to cool the market. However, that could also depend on the extent of investor interest, particularly from overseas.

“Some Asian wealth is being invested in selected international housing markets as those investors seek out diversification and hard assets,” said central banker Carney in a speech last week.

As in Vancouver, an influx of Asian buyers primarily from China and Hong Kong have helped to buoy the Toronto market.

Some investors pay mainly by cash, and are not as affected by a rise in interest rates. However, they can also be fickle.

“They are mainly concerned about capital preservation, so they are holding on for the long term, they see Canada as a safe, stable place to park their money,” said real estate investor Ken Chin. “But trust me, they are also looking closely at the Toronto market to see whether prices have peaked.”


June 21, 2011

APNewsBreak: FDA issues graphic cigarette labels

Filed under: debt, money — Tags: , , , — Professor @ 1:04 pm

In the most significant change to U.S. cigarette packs in 25 years, the Food and Drug Administration released nine new warning labels that depict in graphic detail the negative health effects of tobacco use.

Among the images released Tuesday are rotting and diseased teeth and gums and a man with a tracheotomy smoking.

The labels will take up the top half of a pack of cigarette packs. Warning labels also must appear in advertisements and constitute 20 percent of an ad. Cigarette makers have until the fall of 2012 to comply.

Mandates to introduce new graphic warning labels were part of a law passed in 2009 that, for the first time, gave the federal government authority to regulate tobacco, including setting guidelines for marketing and labeling, banning certain products and limiting nicotine.



Proposed Warning Labels:


June 19, 2011

Talks under way for second Greek bailout

Filed under: management, marketing — Tags: , , , — Professor @ 10:12 pm


June 17, 2011

Deepening crisis casts shadow over Lagarde IMF bid

Filed under: loans, news — Tags: , , , — Professor @ 9:04 pm

Christine Lagarde’s bid to head the International Monetary Fund could face new scrutiny now that Greece’s worsening debt storm risks toppling one of her candidacy’s key pillars _ her track record shepherding the eurozone through the worst crisis of its 12-year existence.

With Greece coming close to a default, which would spark a chain reaction that some fear could break up the eurozone, the crisis management strategy of Lagarde and her European colleagues will come in for renewed criticism, analysts say.

Lagarde, France’s finance minister, heads to Washington D.C. next week to try to drum up critical U.S. support for her bid. Her distant lead over the rival candidate, Mexican central banker Agustin Carstens, means a Greek default now is unlikely to derail her campaign.

But it will come back to haunt her _ should she be chosen _ because Europe’s indecisive and disjointed handling of the crisis has caused the total size of the final bill to balloon, experts say.

Ever since Greece began its death spiral early last year, Lagarde has been one of the highest profile architects of the European response. She once threatened to pull the plug on Europe’s financial lifeline to Greece if the country didn’t honor its terms.

But a year on from its bailout, Lagarde and her European cohorts are again preparing yet another rescue package for Greece, despite its failure to meet promised deficit cuts.

“She’ll argue that she’s well placed, with political skills and managerial skills to broker compromises,” said Simon Tilford, chief economist at the Center for European Reform, a London-based think tank. “But the problem is that in many people’s eyes the eurozone leadership is discredited” by its failure to get a handle on its Greek problem once and for all.

“I think she’d make a brilliant president of the EU Commission, but I’m not entirely convinced she’s the right person for this job,” Tilford said.

Many investors and economists say Greece’s debt problems will eventually end in default and that European leaders are guilty of misdiagnosing the crisis from the beginning.

One indication of that strategy’s cost was given Thursday by a top official at the European Central Bank. Nout Wellink, a member of the ECB’s rate-setting council, said European governments need to be ready to increase the size of their bailout fund to euro1.5 trillion _ double the size of the package that Lagarde and other officials said only months ago would be enough to stave off disaster.

“For the sake of argument, a year’s delay has cost at least euro750 billion,” Neil MacKinnon, an analyst at VTB Capital in London. And that excludes indirect costs such as higher interest rates and bond yields, particularly in countries on Europe’s troubled periphery such as Greece, Portugal and Ireland loans for people with bad credit.

Europe’s leaders have been “kicking the can down the road, and now we’re running out of road,” he added.

In launching her candidacy, Lagarde said she’d “bring all my expertise as a lawyer, a minister, a manager and a woman” to the job.

Her popularity is based in part on her reputation for deftness in international negotiations to stabilize the world economy during the world financial crisis. She also was seen as instrumental in getting the IMF and European Union to agree on rescue plans for Greece, Ireland and Portugal when their debt crises threatened the entire shared euro currency.

The 55-year-old headed the law firm Baker & McKenzie in Chicago before joining French politics in 2005. With excellent English, a direct manner and relatively pristine image, she is seen by many as a good candidate to quickly step into the job vacated by Dominique Strauss-Kahn and manage Europe’s continuing debt difficulties as well as the myriad other challenges to the world economy.

Carstens, Lagarde’s rival, has won the support of 12 Latin American countries, but not those with the most voting power _ Argentina and Brazil.

The United States has continued to stay on the sidelines with the Obama administration not announcing its support for a candidate yet. Treasury Secretary Timothy Geithner met with Carstens on June 13 and is expected to confer with Lagarde when she is in Washington next week.

The top position became vacant after Dominique Strauss-Kahn resigned last month following his arrest on sexual assault charges, allegations that he denies.

The IMF’s 24-member executive board is expected to interview both Lagarde and Carstens next week and aims to make a decision by June 30.

Lagarde was unavailable for an interview. Her spokesman Bruno Silvestre said that the potential worsening of the European financial crisis would have no bearing on Lagarde’s candidacy. “She’s ridden the wave, she knows how to handle a crisis,” Silvestre said. Without Lagarde’s input, the crisis “could have been a lot more severe for a lot more people,” he added.

That argument holds little water with Tilford, however.

Europe’s ineffective and divisive handling of the Greek debt crisis “has caused a lot of damage to political relations between member states,” Tilford said. “That’s going to make it difficult to bring about what’s needed, which is closer political integration,” Tilford said.


Germany: 3,408 infected with E.coli

Filed under: economics, online — Tags: , , , — Professor @ 5:32 pm

New sicknesses are still being reported in the European E. coli outbreak that has killed 39, but Germany’s national disease control center said Friday indications are that the crisis is tapering off.

The number of reported infections in Germany, the epicenter of the outbreak, is now up to 3,408, including 798 people who have developed a serious complication that can lead to kidney failure _ about 100 more overall cases than the day before _ the Robert Koch Institute said.

Still, Robert Koch spokeswoman Susanne Glasmacher said all evidence is that the outbreak remains on the decline.

“It sometimes takes days until we get reports about infected persons,” Glasmacher said. “In general we can say that the number of infected persons is continuing to go down.”

Thirty-eight people have died in Germany and one in Sweden in the epidemic, which was traced last week to sprouts from a farm in northern Germany payday loan.

According to the World Health Organization more than 100 people have been infected in 13 other European countries, Canada and the U.S.

Germany’s health minister has warned that although the outbreak is abating, more deaths are possible.

On Friday, health officials in the Netherlands said a strain of E. coli found on Dutch beet sprouts last week has not been seen before in the country and that researchers sent samples for further analysis to labs in Italy and Denmark.

Nobody appears to have been sickened by the strain, the Dutch Food Safety Authority said.

Dutch Health Minister Edith Schippers said the fresh round of tests will likely take weeks.


Mike Corder contributed to this report from The Hague


June 16, 2011

Inflation slows in May while factories rebound

Filed under: legal, online — Tags: , , , — Professor @ 2:52 am

Falling energy prices cooled inflation in May and U.S. factories rebounded after natural disasters slowed production for the first time in nearly a year.

The latest economic data suggest two of the biggest factors that hampered the economy this spring _ high gas prices and supply disruptions stemming from the Japan crises _ are starting to ease.

Overall consumer prices rose 0.2 percent, the smallest increase in six months the Labor Department said. It was the first drop in energy costs in nearly a year.

Gas prices have fallen since peaking last month at a national average of $3.98 per gallon. On Tuesday, the national average price was roughly $3.69 per gallon. While that is giving motorists some relief, gas prices are still $1 higher than a year ago.

So-called “core” consumer prices, which exclude volatile food and energy, rose by the most in nearly three years last month. Economists say that’s mostly because temporary increases in cotton and other commodities are forcing up costs.

Inflation “is probably now close to peaking,” said Paul Ashworth, an economist at Capital Economics. “While the bigger monthly rise in core prices is a concern, a lot of it was due to temporary factors that could be reversed in the next few months.”

U.S. factories produced more business equipment and construction materials last month, the Federal Reserve said. That boosted manufacturing output 0.4 percent last month, the Federal Reserve said. The gain followed the first decline in 11 months of gains.

Overall industrial production was basically flat for the second month in a row. It was dragged down by a decline in utility activity caused by milder spring weather.

Ashworth said the report confirms that the April decline in factory output was a temporary lull. The March 11 earthquake in Japan created a parts shortage that affected U.S. car makers. And tornadoes in the U.S. slowed factory output in the South. Ashworth said factories are back to increasing production. But the rate of growth has slowed since last year.

“Certainly things have slowed down a bit, but I don’t think it’s a big deal,” Ashworth said. “Things seem to be getting back to normal in Japan, so supply disruptions should ease up and it should unwind itself.”

Economists expect factory output to keep growing in the coming months as Japanese automakers, such as Toyota and Honda, bring production at their U.S. plants back to pre-earthquake levels. Full production likely won’t be restored until fall.

Other reports Wednesday show the economy, for now, is still weak totally free credit score. A survey of manufacturers in the New York region found that activity slowed in June. The New York Federal Reserve’s Empire State index fell to -7.8, down from 12 the previous month. Any reading below zero indicates that the sector is shrinking.

And homebuilders are getting even more pessimistic, according to a report from the industry’s trade group. An index that measures builders’ sentiment fell to 13 in June. That’s the lowest level in nine months and just five points about the record low, reached in January 2009.

Some inflation can be healthy for the economy because it encourages people to spend and invest rather than sitting on their cash. More spending drives corporate growth, which makes businesses more likely to hire people.

But higher food and gas prices have hurt growth this year. Consumers have had to spend more at the grocery stores and to fill their tanks, leaving less money for spending on other goods and services, like appliances, furniture and vacations, that drive the economy.

Federal Reserve Chairman Ben Bernanke has said that the rise in food and gas prices would likely be temporary. The latest readings on consumer and wholesale inflation seem to support that view.

In addition to the drop in consumer gas prices, the government reported this week that wholesale food prices fell in May by the most in nearly a year. Much of that decline resulted from a sharp fall in vegetable and fruit prices. Most economists expect overall food prices to stabilize later this year.

Consumer prices rose 3.6 percent from June 2010 through May 2011, the biggest one-year gain since October 2008. The yearly gain in the index was only 1.1 percent as recently as November.

Excluding the volatile food and energy categories, which account for about 20 percent of the index, core prices rose only 1.5 percent in that same period. That’s below the Federal Reserve’s informal inflation target of about 2 percent.

Autos and apparel drove core consumer prices higher in May. New car prices rose 1.1 percent last month, after rising 0.7 percent in April. Auto dealers have fewer popular fuel-efficient models on their lots because of the supply disruptions. As a result, they are offering fewer deals to boost sales.

Clothing rose 1.2 percent in May, a result of higher cotton prices and increasing labor costs overseas, where most U.S. apparel is made.


June 14, 2011

Tesco posts solid sales rise despite flat UK

Filed under: business, technology — Tags: , , , — Professor @ 11:48 am

British supermarket group Tesco says its sales rose 7.8 percent in the 13 weeks ending May 28 despite a relatively subdued performance in its home market.

Tesco, the world’s third-largest retailer, said Tuesday that overall sales excluding petrol were up 6.7 percent compared to a year earlier.

Its British operations underperformed, with sales there up only 3.4 percent on a same-stores basis. When taxes and petrol sales were excluded, sales were actually down 0.1 percent in Britain.

The company’s performance in Britain was likely to have been distorted by the royal wedding, which was a public holiday. Tesco’s trading statement did not comment on the impact of the extra holiday.

Philip Clarke, Tesco’s chief executive, said high fuel costs contributed to the sluggish U.K. performance.

“Customers have to direct some of their spending to petrol at the expense of their normal shopping and this remains a drag on both industry and our own like-for-like growth,” Clarke said.

Tesco shares were down 1.2 percent at 402.4 pence in early trading on the London Stock Exchange.

“A cocktail of anemic U.K. numbers, high expectations and a market in little mood to take prisoners have conspired to mark the shares down in early trade,” said Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers.

Tesco’s Fresh & Easy venture in the United States reported sales up 11 percent on a same stores basis, or 22 percent higher including recently opened stores.

Like-for-like sales excluding petrol were up 3.2 percent in Asia and 2 percent in Europe, Tesco said.


Newer Posts »

Powered by WordPress