The cost of living in the U.S. was probably little changed in December as stores discounted merchandise during the holidays, supporting the Federal Reserve
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Retailers are reporting strong sales gains in November, boosted by a discount-fueled spending binge for the start of the holiday shopping season last weekend. Now, the challenge is to keep shoppers spending throughout the most important selling period of the year.
Macy’s Inc., Costco Wholesale Corp., Limited Brands Inc. and teen retailer Buckle Inc. all reported sales gains Thursday that beat Wall Street estimates. Target Corp., however, was a straggler, reporting a slim sales gain that was below what analysts had expected.
The figures are based on revenue at stores opened at least a year and are considered a key indicator of a retailers health.
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Russian investigators say they won’t close a probe against a Russian lawyer who died in jail of an untreated illness.
Sergei Magnitsky died in November 2009. He had been charged with tax evasion and arrested by the same police officials he had accused of a $230 million tax fraud. His death sparked outrage in Russia and globally.
Magnitsky’s family petitioned to get the probe against him closed. But the Investigative Department of the Interior Ministry said Thursday they must still contact his other close relatives to make sure they agree payday loan.
Magnitsky’s mother says Magnitsky does not have other close relatives.
Two prison doctors have been charged with oversight leading to death, but none of the officials Magnitsky accused of framing him have faced charges.
Leaders working to forge a free trade bloc in the Pacific plan to announce an outline for achieving that goal at an annual Asia-Pacific summit this weekend, one of many initiatives aimed at fending off recession as Europe struggles to resolve its debt crisis.
U.S. Trade Representative Ron Kirk ended a meeting of regional trade ministers with praise for Japan’s decision Friday to join negotiations on a U.S.-backed free trade arrangement that is viewed by many in the region as a basic building block for an eventual free trade zone encompassing all of Asia and the Pacific Rim.
The so-called Trans-Pacific Partnership is intended to complement other efforts to promote freer trade, and other countries can join if they are willing to meet the very high standards required, Kirk said.
The Asia-Pacific Economic Cooperation agenda has gained urgency with warnings from the European Union that its debt crisis could trigger a “deep and prolonged recession” next year. Such a recession would be felt sharply in the U.S., where growth is already anemic, and in Asia, which relies on Europe as a big market for its cars, clothing, consumer electronics and other exports.
But China, which some economists say is on course to overtake the U.S. as the world’s biggest economy this decade, has been lukewarm about the Pacific trade pact.
Kirk said the ministers expect leaders of the countries involved in the so-called TPP to announce the broad outlines of a “high-standards, ambitious 21st-century trade pact.”
“Of course, many of us believe that the Trans-Pacific Partnership can be the basis for a long-term APEC goal of a free trade area of the Asia-Pacific,” he said.
At their summit, the leaders of the 21-member APEC forum also will endorse a range of “meaningful steps which will strengthen regional economic integration and expand trade,” he said.
Such strategies include better food security, increased trade and investment in environmental products and services, better access to financing for small and medium-size companies, faster customs clearance and greater harmony in regulatory standards.
The aim is to make it “cheaper, faster, and easier to do business in the APEC region,” according to a statement released by the ministers.
U.S. Secretary of State Hillary Clinton told the ministerial meeting that by agreeing on something as rudimentary as shared safety standards for televisions, countries in the region saw exports of TVs jump by nearly half in three years.
By removing barriers and bottlenecks that slow business, APEC members hope to re-energize growth at a time when the world economy most needs dynamism in the Asia-Pacific region to offset the malaise spreading from crisis-stricken Europe. At the same time they are working toward a broader agreement, countries are continuing to forge separate free-trade deals.
“In the coming 12 months there is quite a strong likelihood that things will go worse,” Hong Kong’s chief executive, Donald Tsang, told a gathering of business leaders on the sidelines of the APEC meetings no teletrek payday advance. “Global performance will be dragged down and then there will be an awakening, I hope,” he said.
Overall, given APEC’s lack of negotiating power _ all decisions are by consensus _ prospects for major changes are slim. But over the years the group’s incremental efforts have helped build support for closer economic ties and freer trade.
The U.S. recently clinched long-sought free trade pacts with South Korea, Colombia, and Panama _ agreements that if ratified will bring to 20 the number of countries that have free trade agreements with the U.S.
On Friday, Vietnam and Chile signed a free trade agreement on the sidelines of the APEC meetings that will further boost the already thriving trade between the two in Chilean copper and steel and Vietnamese garments, rice and coffee.
Japan has announced no timetable for joining the trans-Pacific free trade group, only its intention to join, a senior Japanese government official said Friday.
But the inclusion of the world’s third-largest economy would vastly expand the reach of the trade pact, which now includes the smaller economies of Chile, New Zealand, Brunei and Singapore. The U.S., Australia, Malaysia, Vietnam and Peru are negotiating to join.
To participate, Japan will have to eliminate tariffs on imports from all member economies _ a reciprocal move that its major manufacturers say will improve access to foreign markets and help keep the country from falling behind regional trading rivals.
Japan’s trade minister, Yukio Edano, backed the decision to join and said his government was well aware of the challenges it will face. But he has argued that by delaying further, Tokyo would lose the opportunity to help shape the trading bloc from the start.
China, the world’s second-biggest economy, has appeared tepid toward the plan, with an official saying in Beijing earlier this week that it might be “overly ambitious.”
Asked its stance, Chen Deming, the trade minister, said China expected Japan to live up to earlier pledges to promote regional integration through various forms. Moves toward closer regional economic ties should be “open and transparent,” he said.
“Up to now, we have not yet received any invitation. If one day we receive such an invitation we will seriously study it,” Chen said.
Kirk emphasized that the trans-Pacific bloc is meant to be open, though it requires members to meet high standards for openness and free trade.
“You should not wait for an invitation,” he said. “If they are willing meet the highest standard then any country is welcome to make the same decision the others have done.”
What Wal-Mart Stores Inc. says about how it’s reversing a slump in its namesake U.S. business will be at the front of analysts’ minds at the company’s annual meeting with Wall Street Wednesday.
The discounter also is expected to offer a peek into its winter holiday strategies and a look at the capital spending it plans to do.
The world’s largest retailer announced in August that its second-quarter profit rose 5.7 percent, and it raised its outlook for the year based on strong international sales growth and its cost-cutting efforts.
Business has improved steadily at Wal-Mart’s Sam’s Club warehouse stores, but the company hasn’t been able to stop a two-year sales slump at its U.S. Walmart stores, which account for 62 percent of its total revenue. The company says the weak U.S. job market and other economic woes are straining its core low-income shoppers.
Wal-Mart is a key barometer of U.S. consumer spending, which makes up 70 percent of the economy, including such major expenditures as health care. The retailer rings up nearly 10 percent of all nonautomotive retail dollars spent in the U.S. so any details about how its shoppers are buying everything from cereal to clothing will offer clues about where the economy is heading.
Wal-Mart has promised to reverse nine straight quarters of declines in the key metric of revenue at stores open at least a year by the end of the year. The comparison has fallen less steeply in recent quarters as U.S. customers respond to its turnaround strategies, including changing its merchandising after customers complained about their favorite brands and products disappearing from store shelves.
Wal-Mart started restocking thousands of products scrapped in an overzealous bid to clean up its stores; it stopped using gimmicks like slashing prices temporarily on select item; and it returned to its “everyday low price” strategy, the bedrock philosophy of founder Sam Walton.
Keith Goddard, CEO of Capital Advisors, an investment management firm, said he’ll be looking at how Wal-Mart’s price strategy has affected its profit margin.
“Wal-Mart had lost the perception that they had the lowest prices in town,” Goddard said.
As shoppers paid less for gasoline in recent months they should have been able to spend more on discretionary purchases like home accessories, analysts also said.
“My expectation is it will be good news,” said Madison Riley, managing director at Kurt Salmon, a consulting firm. “I think their efforts are gaining traction.”
Wal-Mart’s shares have risen almost 6 percent since mid-August and 2 percent since the beginning of the year. They are hovering near $55 as investors become more hopeful.
Wal-Mart has been facing increasing competition, particularly from dollar stores, which are offering more name-brand merchandise. Heading into the crucial winter holidays, the climate is expected to get still more competitive.
In response, Wal-Mart, which ditched pay-as-you-go plans in 2006, is rolling out holiday layaway plan that will last from Oct. 17 through Dec. 16. It also is offering more toys for $5 to $10.
Analysts will hope to hear more details such merchandising strategies during the meeting Wednesday in Rogers, Ark., near Wal-Mart’s headquarters in Bentonville, Ark. They’ll also want an update on Wal-Mart’s expansion plans.
Citi Investment Research’s Deborah Weinswig wrote in a research report published Thursday that she expects Wal-Mart to spend more on adding stores in 2012 as it expands abroad and rolls out its small-format stores in the U.S.
It opened the first four Walmart Express stores in the months since June and plans to open 15 to 20 more this year. Walmart Express stores are less than one-tenth as big as supercenters and carry essentials from groceries to general merchandise like hammers and pre-paid phones.
And it has sped up the addition of Neighborhood Market stores, which carry groceries, pharmaceutical products and some general merchandise. There are now about 185.
That’s compared with more than 3,500 Wal-Mart stores in the U.S., of which more than 2,900 are supercenters, plus about 600 Sam’s Club stores. Sam’s Clubs account for about 12 percent of the company’s total revenue.
“We are facing a resizing of the retail footprint,” said Riley. “Looking for ways to address that challenge is a good thing.”
Constellation Brands Inc. said Thursday its fiscal second-quarter profit jumped 78 percent on improved wine and spirits sales in North America, a lower tax rate and a drop-off in charges after four years of cost-cutting.
Its stock rose more than 7 percent in afternoon trading.
The world’s No. 2 vintner raised its full-year guidance, acquired the rest of Italy’s Ruffino wines that it didn’t already own and said it had bought back $251 million worth of its own shares.
Constellation has been pruning methodically to solidify its supremacy in higher-margin wines priced from $5 to $20 a bottle and revive profits and revenue in a choppy economy.
Its brands range from Robert Mondavi, Clos du Bois and Ravenswood wines to Svedka vodka and Black Velvet Canadian whiskey. Through a joint venture, it also imports moderately priced beers such as Corona Extra, Tsingtao and St. Pauli Girl.
“We continue to make significant progress in a number of areas despite the prospects of an unsettled consumer environment,” Chief Executive Rob Sands said in a conference call with analysts.
The June-to-August results exceeded Wall Street expectations, and its shares surged $1.46, or 7.8 percent, to $20.18 in afternoon trading. The stock is trading near the upper end of a 52-week range of $16.42 to $23.19.
Its net income climbed to $162.7 million, or 76 cents per share, in the three months ended Aug. 31 from $91.3 million, or 43 cents per share, a year earlier. Its effective tax rate dropped to 3 percent in the quarter, down from 35 percent a year earlier.
Revenue after deducting excise taxes fell 20 percent to $690.2 million from $862.8 million a year ago, largely because it sold 80 percent of its struggling Australian and British wine business in January.
Excluding $4 million in restructuring and other one-time items, Constellation earned 77 cents per share. Wall Street expected 65 cents per share, according to a survey by FactSet. A year ago, the company recorded $17 million in one-time charges.
Operating income in its beer business fell 4 percent on higher marketing costs despite a 7 percent rise in sales by its Crown Imports joint venture with Mexican brewer Grupo Modelo.
Its wine and spirits sales in North America rose 5 percent. After a sharp drop in wine sales in 2009, especially in bars and restaurants, industry volumes have rebounded this year as Americans take advantage of more discounts to trade up to higher-priced brands.
Constellation jumped into California’s coveted wine market by netting Franciscan in 1999, Turner Road and Ravenswood wineries in 2001 and Robert Mondavi Corp. in 2004. Its 21 acquisitions over 21 years ran through 2007 when it bought Fortune Brands’ U.S. wine business, maker of Wild Horse and Clos Du Bois. Then came the cost-cutting.
It divested Almaden, Inglenook and other low-priced wines that generally sell for less than $5 a bottle, paring its 300 brands to 100. It has slashed its debt to below $3 billion from $5.3 billion and shrunk its payroll to 4,300 from 9,400.
On Thursday, the Victor, N.Y.-based company raised its full-year guidance by 10 cents to a range of $1.92 to $2.02 per share. Analysts expected $1.97 per share.
It also said it had purchased the 50.1 percent it didn’t already own in Ruffino S.r.l. from MPF International S.r.l., which is controlled by the Folonari family of Tuscany, Italy. The price was about $69 million, the company said, and it also assumed about $73 million of debt.
This year, Constellation lost its eight-year status as the world’s No. 1 winemaker when it offloaded 80 percent of a once-promising Australian wine business that had gone awry.
It dropped back to No. 2 in the vintner-by-volume rankings behind longtime leader E. & J. Gallo of Modesto, Calif. But it remains the world’s biggest premium-category winemaker with an estimated 17 percent share of that segment in the United States, ahead of rivals that include Gallo, Treasury Wine Estates, Kendall-Jackson and Diageo.
World stock markets took a beating on Monday after a report showed U.S. companies stopped hiring in August, reviving fears that the world’s largest economy is heading back into recession.
The lack of hiring in the U.S. last month surprised economists, who were expecting about 93,000 jobs to be added. Previously reported hiring figures for June and July were revised lower. The unemployment rate held steady at 9.1 percent _ it has been above 9 percent in all but two months since May 2009.
The jobs crisis has led President Barack Obama to schedule a major speech Thursday night to propose steps to stimulate hiring.
Traders waited for signs that the U.S. Federal Reserve might take action at its September meeting to support the economy _ perhaps a third round of bond purchases, dubbed quantitative easing III or QE3, analysts said.
“Right now the possibility has increased,” said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. “I think they have to do something. The markets are expecting QE3.”
Amid the uncertainty, traders pulled out of any risky investments _ such as stocks, particularly financial ones, the euro and emerging market currencies _ to pile into safe havens: U.S. Treasuries, the dollar, the Japanese yen and gold.
European shares slumped in early trading. Britain’s FTSE 100 dropped 2.9 percent to 5,136.36. Germany’s DAX fell 4.7 percent to 5,280.13, and France’s CAC-40 tumbled 4.6 percent to 3,003.64.
Markets in the U.S. were closed for the Labor Day holiday.
Banking stocks were among the hardest hit after the U.S. government on Friday sued 17 financial firms for selling Fannie Mae and Freddie Mac billions of dollars worth of mortgage-backed securities that turned toxic when the housing market collapsed.
Among those targeted by the lawsuits were Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., and Goldman Sachs Group Inc. Large European banks including The Royal Bank of Scotland, Barclays Bank and Credit Suisse were also sued.
Renewed jitters over the eurozone debt crisis also contributed to the slump in financial stocks amid concerns they would need to raise new capital. Deutsche bank was down 9.4 percent in Frankfurt while Societe Generale in Paris shed 9 percent.
An international debt inspectors’ review of Greece’s finances was interrupted on Friday amid disagreements over the country’s deficit figures. The review will be resumed in about 10 days and must be completed in order for the country to receive its bailout loans at the end of the month.
Signs that the Italian government’s commitment to its austerity program is wavering have also shaken investors. Prime Minister Silvio Berlusconi’s government has backtracked on some deficit-cutting measures, prompting EU economic officials to urge it to stick to its promised plan.
The economic indicators, meanwhile, were mostly downbeat. Although retail sales in the eurozone rose unexpectedly in July, a survey of the services sector showed a slowdown across the continent for the fifth consecutive month.
The purchasing managers’ index for the eurozone showed the services sector was still growing _ unlike the manufacturing sector _ but only barely. That will add pressure on the European Central Bank to keep interest rates on hold when it meets this week.
“Indeed, the latest data and surveys suggest that the ECB’s eventual next move could actually be to trim interest rates, although it is likely to need sustained eurozone economic weakness and possibly even GDP contraction to get the ECB to perform a U-turn on interest rates,” said Howard Archer, economist at IHS Global Insight.
In Asia, indexes closed sharply lower. Japan’s Nikkei 225 stock average sank 1.9 percent to close at 8,784.46, with sentiment also undermined by the persistent strength of the yen, which hurts exporters.
Australia’s S&P/ASX 200 fell 2.4 percent to 4,141.9, and South Korea’s Kospi slid 4.4 percent to 1,785.83. Hong Kong’s Hang Seng slid 3 percent to 19,616.4. Benchmarks in Singapore, Taiwan, New Zealand and the Philippines also were down.
Mainland Chinese investors worried about the economic outlook dumped shares, dragging Shanghai’s benchmark Composite Index down 2 percent to 2,478.74, its lowest close in 13 months. The Shenzhen Composite Index lost 2.4 percent to 1,097.07.
Investors seeking a relatively stable store of value during times of economic turbulence in financial markets have been scooping up gold, sending its price up 50 percent over the past year.
In currencies, the euro weakened to $1.4078 from $1.4187 in New York late Friday. The dollar was roughly flat at 76.92 yen. Last month, the dollar fell under 76 yen, which was a new post-World War II high for the Japanese currency.
Benchmark oil for October delivery was down $1.85 to $84.60 a barrel in electronic trading on the New York Mercantile Exchange. Crude fell $2.48 to settle at $86.45 on Friday.
In London, Brent crude for October delivery was down $1.66 at $110.67 on the ICE Futures exchange.
Most Japanese automakers reported lackluster vehicle production and sales for July, underscoring ongoing malaise in the industry as it grapples with a strong yen, precarious global economy and recovery from the March 11 tsunami.
Worldwide production at Toyota Motor Corp. fell 6.1 percent from a year earlier to 594,614 vehicles, the company said Tuesday. Its domestic sales of passenger cars, trucks and buses tumbled more than 35 percent, and exports fell 5 percent due to weaker shipments to North America.
Toyota, however, said its production returned to levels that were near to what it had planned before the March earthquake and tsunami struck Japan’s northeastern coast, wiping out auto parts suppliers.
The automaker is preparing to ramp up production in the coming months to make up for the capacity lost to the disaster. Between October and March 2012, the automaker plans to build an extra 350,000 vehicles.
The numbers were worse at Honda Motor Co., where global production tumbled more than 34 percent to 206,727 vehicles in July. It was the sixth straight month of decline on line pay day loans.
Honda’s domestic sales of vehicles fell 31.5 percent and exports retreated more than 19 percent.
Standing above the crowd was Nissan Motor Co., which continued to gain momentum and set company records in July.
The Yokohama-based automaker recorded an almost 18 percent jump in worldwide output to 388,680 vehicles _ its best-ever July performance. Production in the U.S. benefited from stronger demand for the Altima sedan, Nissan said.
Although Nissan’s Japan sales fell 17 percent in volume terms, global sales overall rose 8 percent. Exports surged more than 23 percent.
Among Japan’s other car makers, Suzuki Motor Corp. posted a 3.6 percent decline in global production to 228,147 vehicles.
Worldwide output at Mazda Motor Corp. fell almost 13 percent to 103,384 vehicles. At Mitsubishi Motors Corp., it declined about 5 percent to 97,862 vehicles.
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