Finance news. My opinion.

Avon Products Inc. says it has tapped one-time Johnson & Johnson executive Sherilyn S. McCoy as its new CEO as the struggling beauty products company looks to regain its past luster.

McCoy will take over the post from Andrea Jung, who will stay on as executive chairman.

Founded in 1886, Avon became a fixture in households across the country as its legions of “Avon ladies” went door to door selling makeup to family, friends and acquaintances.

But North American sales have dropped and its profit has shrunk easy to get unsecured personal loans. Investors and analysts had blamed Jung for being slow to react to declining results and wrap up a bribery investigation that began in China and spread elsewhere.

Avon said Monday that the 53-year-old McCoy will become CEO and a board member effective April 23.

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Japan is setting stricter, clearer safety guidelines for nuclear power plants to ease public concern about restarting reactors idled after the disasters a year ago.

Facing a national power crunch, the government is anxious to restart two reactors in Fukui, western Japan, before the last operating reactor of the 54 in the country goes offline in May.

But the government has faced strong public opposition due to the meltdowns at the Fukushima Dai-ichi power plant, and local leaders are reluctant to give their approval.

Authorities say the new safety guidelines are more extensive than past “stress tests,” which were essentially computer simulations meant to test how reactors would cope in the event of major earthquakes, tsunamis or other emergencies. Many questioned the objectivity of the tests and whether they guaranteed the plants’ safety, even though two reactors passed the tests.

If utilities can show they meet the new guidelines, authorities hope the public will be convinced that the reactors are safe to restart, including the two in Ohi, Fukui prefecture.

The new guidelines, based on 30 recommendations adopted last month by the Nuclear and Industrial Safety Agency, require nuclear power plants to install filtered vents that could reduce radiation leaks in case of an accident, as well a device to prevent hydrogen explosions, among other steps. No deadline is cited by which these steps must be taken.

Chief Cabinet Secretary Osamu Fujimura said the government can order utilities to restart reactors regardless of local opposition, because obtaining residents’ consent is not legally required.

The plan will be officially announced later Friday after Prime Minister Yoshihiko Noda and three Cabinet ministers in charge of nuclear crisis management finalize the measures pay day advance.

All but one of Japan’s 54 reactors have been shut down for inspections, required every 13 months. None have been restarted since the March 11, 2011, tsunami set off meltdowns in three reactors at the Fukushima Dai-ichi plant.

The reactor on the northern island of Hokkaido goes off line in early May. If none of the reactors are restarted, Japan could face power shortages this summer. Before the crisis, Japan depended on nuclear power for one-third of its electricity.

To make up for the shortfall, Japan has expanded production at conventional gas- and oil-fired plants.

But officials in cities and towns near Fukui are requesting explanations for the rush.

“Why rush? It’s too soon to decide. I think they should gain understanding from the public first,” said Yukiko Kada, governor of Shiga prefecture bordering Fukui.

Toru Hashimoto, the outspoken mayor of Osaka _ a top shareholder of Kansai Electric Power Co. that runs the Ohi plant in Fukui _ criticized the government for compiling the new guideline in two days.

Economy and Trade Minister Yukio Edano said earlier Friday that many of the safety measures have been already taken and the new guidelines aim to set even higher standards.

Fukui, home to 13 reactors clustered in four complexes along the Sea of Japan coast, is called Japan’s nuclear alley.

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For Express Scripts, Medco Health Solutions will be a very big pill to swallow. Could it bring on a little indigestion?

With $70 billion in revenue last year,  Medco far outsells Express Scripts Inc.’s $46 billion. Medco employs 23,200 people versus 13,100 at Express Scripts.

Yet the smaller pharmacy benefit management company is buying the big one, in a deal that closed on Monday.

Observers are betting that Express Scripts will be able to successfully digest Medco, although they expect burps and hiccups.

“These are two top companies doing the same thing,” says Judson Clark, an analyst at Edward Jones investments in Des Peres. Both handle pharmacy benefits for employer health plans.

“There will be a couple of headaches, sure. But it’s not like the airlines coming together and merging reservation systems and everyone ending up stranded in Tallahassee,” Clark said.

Express Scripts has a track record. This is the third time it has doubled its size or more through acquisitions since 1998.

“If anybody can pull this off, it’s Express Scripts,” said Ed Lawrence, a finance professor at the University of Missouri-St. Louis, who co-authored a company-financed study of Express Scripts’ economic impact on St. Louis.

Still, mergers produce anxiety — among employees worried about at least $1 billion in cost-cutting, among senior executives who must figure out how to integrate the separate businesses, and among customers who worry whether merger glitches could affect their prescriptions.

The company says it’s working to avoid the latter.

“Service and stability are our job one,” said Express Scripts spokesman Brian Henry.

Although both dispense drugs, the firms have different strengths.

Medco has a reputation as the better company at the nitty-gritty of getting drugs to patients. Express Scripts is best at “understanding what motivates patient behavior,” says Clark.

For instance, Express Scripts is good at getting patients to actually take their drugs, and converting patients to cheaper generic drugs.

Express Scripts will try to take the best of both, which raises the question of which executives will end up running what.

Big mergers set off a game of musical chairs in management, as the company tries to cut costs.

Fear about that “permeates the entire organization,” says Stuart Greenbaum, former dean and professor emeritus at the Washington University business school.

Some firms settle those turf disputes quickly. Others drag them out, cutting executive staff by attrition and internal competition.

All that can have an effect on efficiency.

“You want to get a full day’s work out of people, not have them spending half the day polishing their résumés,” Greenbaum said.

When big companies merge, customers sometimes feel the effect as new leaders change rules and customer-relations staff is shaken up. Competitors often use that opportunity to swipe customers away.

There may be some of that in the Express Scripts deal but probably not much, says analyst Clark. The company’s customers are mainly big employers.

“The process of rebidding is not easy,” says Clark. “It’s not easy for HR to undertake, and they are not eager at the prospect of doing it again just for kicks.”

Putting systems together and closing duplicate operations also can cause headaches.

“The IT side is often a very difficult challenge,” says Greenbaum. “Talk to the airlines, and they’ll tell you that sometimes it blows up in your face and sometimes it goes smoothly.”

Firms often take that slowly, integrating systems over a year or two.

For customers, the question is how much they’ll benefit from the deal.

The merged company may have more clout to demand better prices from drugmakers and the drugstores.

How much patients and employers will share in the savings remains to be seen. Critics say the company’s dominance will allow it to keep much of the savings. The smart management move would be to pass along much of the savings “and be very visible about it,” said Greenbaum. That would head off cries for more regulation later.

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Spanish Prime Minister Mariano Rajoy will today face down the first general strike against his three-month old government as pressure from investors and European peers trumps demands from unions.

Auto workers at factories of Volkswagen AG (VOW3) and Renault SA followed the strike during the nightshift and 100 percent of miners also joined the walkout, union Comisiones Obreras said in a statement. Power demand was 22 percent below that of a typical day, grid operator Red Electrica Corp SA data showed.

The People

The Federal Reserve has not yet decided whether to embark on a third round of quantitative easing, or QE3, though it remains an option, an influential Fed official said on Monday.

New York Fed President William Dudley, a close ally of Chairman Ben Bernanke, painted a mixed picture of the economy, tempering recent signs the recovery is gaining speed with warnings that it could just as easily stall out.

“Nothing has been decided,” he said of QE3, in which the Fed would make large-scale asset purchases in an attempt to lower rates and give the economy another controversial shot of adrenaline.

“It all depends on how the economy evolves,” Dudley added. “It’s about costs and benefits, and if we get to a point where we think the benefits of another program of QE outweighs the costs, then we’ll certainly do so.”

Dudley, like Bernanke in recent testimony to Congress, defended the central bank’s ultra-easy policy stance but seemed to temper any talk of exactly what more it was prepared to do to help along the recovery and ratchet down the unemployment rate, which remains high 8.3 percent.

After a meeting in Washington last week, the Fed’s policy-setting committee made no policy change and gave few clues how it interpreted some recent jobs growth, coupled as it has been with worries over GDP growth and oil price-driven inflation.

Dudley said U.S. economic activity is not yet strong or sustained enough to put a dent in the economy’s “slack,” which is keeping many Americans out of work some three years after the deep recession ended.

“The incoming data on the U.S. economy has been a bit more upbeat of late, suggesting that the recovery may be finally establishing a somewhat firmer footing,” Dudley said, citing expanding GDP late last year, payrolls, sales of motor vehicles, and somewhat firmer housing starts.

“While these developments are certainly encouraging, it is far too soon to conclude that we are out of the woods,” Dudley, a policy dove with a permanent vote on the Fed’s policy-setting committee, told a gathering of the Long Island Association no fax payday loan.

GASOLINE AND OTHER HEADWINDS

The U.S. central bank has kept interest rates near zero since late 2008 and bought $2.3 trillion in long-term securities to help revive the economy after the 2007-2009 recession.

Upbeat data so far this year has tempted some, including some Fed policymakers, to say the recovery is well underway and that the Fed will take no further steps.

Yet Bernanke and others have said more bond purchases remain an option. Last year, Dudley was among the most vocal about the efficacy of buying mortgage-based securities to help revive that sector of the economy.

Dudley warned that higher gasoline prices are “definitely” a risk to the world’s largest economy, which is heavily dependent on consumption.

“The upward pressure on prices caused by rising gasoline are offset by downward pressure on prices caused by all the excess slack in the U.S. economy,” he said. “It’s very hard to have an inflation problem when compensation costs are rising quite slowly.”

The annual rate of core inflation, Dudley argued, “has peaked and we expect it to begin to decline later this year.” He added that inflation expectations “remain well anchored.”

Besides gas, other headwinds include impediments to the housing sector, fiscal drags at the federal and state levels, and risks that foreign growth is weaker than expected, Dudley said.

Asked about a Fed expectation to keep rates low through late 2014, Dudley said: “We view this as the best path to an early-as-possible economic recovery … and the earliest normalization in short term rates.”

Bernanke, who along with Dudley spear headed the Fed’s unprecedented and easy policy steps, is set to deliver a public lecture on Tuesday.

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Former Gannett Co. CEO Craig Dubow’s received a severance package valued at about $32 million after chronic health problems prompted his resignation from the largest U.S. newspaper publisher.

The owner of USA Today and more than 80 other U.S. newspapers disclosed the details of Dubow’s compensation in a regulatory filing late Friday. A contract that Dubow signed in February 2007 guaranteed he would receive his full pension, stock awards, a severance payment and other benefits if he became disabled.

Dubow resigned last October after six years as CEO and 30 years with the company. He stepped down after taking two medical leaves during 2010 and 2011 to deal with hip and back ailments.

Dubow’s final compensation package includes $12.8 million in retirement benefits, $6.2 million in disability benefits and a $5.9 million severance payment, according to the filing. Gannett stock options and restricted stock, which Dubow had accrued during his years of employment with the company, were also part of the package. Those stock awards are valued at nearly $7 million.

Separately, Gannett will pay $25,000 to $50,000 annually for a $6.2 million life insurance policy covering Dubow and another $70,000 annually for benefits such as health insurance, home computer and secretarial assistance and financial counseling. He will receive most of these benefits for three years unless he goes to work for a competitor, according to the filing.

Dubow’s tenure as Gannett’s CEO coincided with deep cutbacks in staff, triggered by a sharp decline in print advertising, the main source of revenue in the company’s publishing division. Gannett’s revenue from print advertising plunged from $5.2 billion in 2005 to $2.5 billion last year no fax pay day loan. Gannett’s stock price plummeted by 86 percent while Dubow was CEO, dropping from $72.69 to $10.45.

The shares have rallied under Dubow’s successor, Gracia Martore, amid hope by investors that a recently introduced program to charge readers for online access to most of Gannett’s newspapers will boost profits. Gannett’s stock ended the week at $15.21, a 46 percent gain since Dubow’s resignation. The Standard & Poor’s 500 index is up nearly 21 percent during the same stretch.

Martore was Gannett’s chief operating officer before Dubow’s departure. Martore declined a raise when she became CEO last year, according to Gannett’s filing. Instead, she agreed to maintain her salary of $900,000, the same amount that she had been receiving as Gannett’s chief operating officer. Even before she was named CEO, Martore was working under a contract that entitled her to a $950,000 salary, but she voluntarily lowered it to $900,000 beginning in 2010 in recognition of the tough times facing Gannett.

Martore’s compensation, including a bonus and the estimated value of stock options, totaled $4.7 million last year.

Gannett is the second major newspaper publisher in a week to disclose a large severance payment to a former CEO. The New York Times Co. said its former CEO, Janet Robinson, got a package valued at about $23 million after she retired at the end of last year.

Dubow, who was 56 at the time he resigned from Gannett, is a member of The Associated Press’ board of directors. His term ends in April.

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China says its trade rebounded in February after a Lunar New Year slowdown but a broader measure gave clear signs both global and Chinese demand are weakening.

Customs data Saturday showed exports grew 18.4 percent over a year earlier, up from January’s 0.5 percent contraction. Imports jumped 39.6 percent, up from the previous month’s decline of 15 percent.

China’s exporters have been hurt by weakening global demand amid Europe’s debt crisis and U.S. economic troubles. Imports have been supported by relatively strong Chinese economic growth but that also is easing.

Combined data for January and February showed export growth fell to 6.9 percent over the same two-month period last year, well below December’s 13.4 percent. Imports for the two-month period rose 7.7 percent, down from December’s 11.8 percent.

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Home prices fell in December for a fourth straight month in most major U.S. cities, as modest sales gains in the depressed housing market have yet to lift prices.

The Standard & Poor’s/Case-Shiller home-price index shows prices dropped in December from November in 18 of the 20 cities tracked. The steepest declines were in Atlanta, Chicago and Detroit. Miami and Phoenix were the only cities to show an increase.

The declines partly reflect the typical slowdown that comes in the fall and winter.

Still, prices fell in 19 of the 20 cities in December compared to the same month in 2010. Only Detroit posted a year-over-year increase. Prices in Atlanta, Las Vegas, Seattle and Tampa dropped to their lowest points since the housing crisis began.

Nationwide, prices have fallen 34 percent nationwide since the housing bust, back to 2002 levels. A gauge of quarterly national prices, which covers 70 percent of U.S. homes, fell to its lowest point on records dating back to 1987.

“The pick-up in the economy has simply not been strong enough to keep home prices stabilized,” said David M. Blitzer, chairman of the S&P’s index committee. “If anything, it looks like we might have reentered a period of decline as we begin 2012.”

The Case-Shiller monthly index covers half of all U.S. homes. It measures prices compared with those in January 2000 and creates a three-month moving average. The December data is the latest available.

Home values remain depressed despite some hopeful signs at the end of last year payday advances.

Builders are growing more optimistic after seeing more people express interest in buying this year. Sales of previously occupied homes are at their highest level since May 2010. More first-time buyers are making purchases. And the supply of homes fell last month to its lowest point in nearly seven years, which could push home prices higher.

Homes are the most affordable they’ve been in decades. And mortgage rates have never been cheaper.

Much of the optimism has come because hiring has picked up. More jobs are critical to a housing rebound.

But home prices tend to lag behind sales, which are still below healthy levels. And a large number of vacant homes are sitting idle on the market, which means prices will likely stay unchanged for several years.

Conditions are improving for those in position to buy a home. Still, many people can’t afford to buy or are unable to qualify for mortgage. Some people in position to buy are holding off, worried that prices could fall even further.

The biggest reason why prices are still falling is foreclosures, which are still high across the country. Foreclosures and short sales _ when a lender accepts less for a home than what is owed on a mortgage _ are selling at an average discount of 20 percent.

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There’s still no sign of flinching in the game of chicken between two proposed outlet mall centers in Chesterfield.

Both projects have been going full steam ahead even though it’s apparent that only one will end up getting built.

They both have submitted site plans to the city – though Chesterfield Outlets is a bit further along in the vetting process than its rival. And now St. Louis Premium Outlets has got the ball rolling on applying for financing.

The developers of the proposed St. Louis Premium Outlets recently filed an application with the city to form a community improvement district.

It would raise as much as $30 million through bonds, which would be paid back through a sales tax of up to one percent that would be levied on this property.

I might add that back in October, Stephen Coslik, chief executive of Texas-based Woodmont Co., one of the backers of this $85 million outlet project, said he would not seek tax-increment financing. But he didn’t rule out then the possibility of seeking assistance through other government programs. Now we know why. (Simon Property Group, owner of St. Louis Mills, is the other major partner on this project.)

The city gave a preliminary OK to the special taxing district earlier this month, but it still has to go through another round of scrutiny before coming up for final approval.

In the meantime, the city has not yet received any financing applications from the other proposed project – Chesterfield Outlets, which is being spearheaded by Taubman Centers. But there have been informal discussions with city officials about creating a transportation development district, which would help provide some funds for the project.

The site plans for this development are a couple steps ahead of the other project and have already been approved by the city’s architectural review board and are now going before the planning commission next week.

On a conference call with investors earlier this month, Robert Taubman, the company’s chief executive, said that he expects Chesterfield Outlets to receive final site plan approval and to start construction in April, with an opening slated for fall of 2013.

“With 2.8 million people and no outlet center in the market, tenants have responded strongly,” he said, though he didn’t mention any specific retailers.

So, yes, neither is backing down. It will be interesting to see who blinks first.

AMERICAN GIRL

Of all the stories I’ve written in the past year, perhaps no other has spurred as many phone calls as the news that an American Girl store is coming to Chesterfield Mall no credit check payday loans.

Well, I’m now happy to report (so people can stop asking me) that the store is scheduled to open in April. It will hold a grand opening on April 21 and 22, but there will be a “soft” opening a couple days earlier, according to a mall spokeswoman.

The arrival of a new American Girl store often creates a lot of buzz because of its devoted following and few stores. The Chesterfield store will be the retailer’s 12th nationwide and the first in the St. Louis region.

The American Girl store undoubtedly will boost Chesterfield Mall, where Abercrombie & Fitch, Franklin Covey, and Johnston & Murphy recently closed stores. Francesca’s Collections is already planning to open in the latter location this spring.

But I’m guessing that those other vacant spaces will be a bit easier to fill now that American Girl is moving into the neighborhood.

MORE ON BLOCKBUSTER

There was confirmation this week that the Blockbuster store closings in the St. Louis region are mirroring what’s going on nationwide.

Last week, I wrote about how 10 of 26 local Blockbuster stores are closing. The company wouldn’t say much about it at the time — nor would it provide a total number of store closings.

Well, in a fourth-quarter earnings call this week, a Dish Network executive said the company is closing about 500 Blockbuster stores in the first quarter. That is about a third of stores nationwide.

Dish, which bought Blockbuster at a bankruptcy auction last year, has about 1,500 stores (at least until this recent round of store closings began.)

Joe Clayton, Dish’s chief executive, said that the overall Blockbuster business was “break even” for the third straight quarter, according to a transcript of the earnings call.

“The overall business came in very close to where we’d expected,” he said.

But he added that the company has said from the beginning that it would take action when necessary and soit was closing these stores for reasons such as underperformance, size of the stores, or inflexible landlords.

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Crocuses sprouting in front yards are just one indicator that spring has arrived early. Another, less welcome sign is rising prices at the pump, and the political rancor that accompanies an angry electorate in an election year.

Regular gasoline averaged $3.45 a gallon in St. Louis and surrounding Missouri suburbs early Thursday. That’s up 20 cents over the past month and 40 cents from the same time last year, according to the AAA’s Daily Fuel Gauge Report. In the Metro East, where taxes are higher, the average was $3.65.

Patrick DeHaan, a Chicago-based analyst for GasBuddy.com, a website that tracks gasoline prices, said retail prices had risen another nickel a gallon during the day on Thursday and could go as much as 15 cents higher by the end of the weekend.

DeHaan said wholesale prices in the Great Lakes region have soared by 61 cents in the past week, and the increase has yet to be fully reflected in retail prices.

While local prices are still far short of the records seen here last May, gasoline is the most expensive it’s ever been at this time of year. And prices typically rise in spring as people drive more and oil refiners drain inventories and switch to producing cleaner-burning summer gasoline.

The overwhelming reason for the recent jump is higher oil prices paid by refiners.

Oil futures rose $1.55 a barrel Thursday on the New York Mercantile Exchange to $107.23 — the highest level since early May. Prices are up about $10 in just the past two weeks, mostly on fears of instability in Iran and the possibility it could affect oil shipments from the Middle East.

“The market has to discount the worst case outcome (in Iran) and the probability of that worst case outcome,” said Bill O’Grady, chief market strategist at Confluence Investment Management in Webster Groves.

By itself, a $10 increase in oil prices equates to a 25 cent a gallon jump in gasoline prices.

Refinery outages and closures on the coasts are also affecting Midwest gasoline prices, though to a lesser extent, analysts said.

The largest refinery in the state of Washington, with capacity to process 230,000 barrels of oil a day, remains idled following a fire on Friday. On the East Coast, two refineries near Philadelphia have shut down in recent months.

The loss of refining capacity on the coasts “does not affect out market directly, but it causes tighter markets in other parts of the country,” O’Grady said. And if the difference between gasoline prices in different regions of the country is great enough, it justifies the cost of transporting fuel and selling to those markets.

In past years, gasoline price increases were frequently blamed on rising fuel consumption and dwindling domestic oil production. But the opposite is true today.

The U.S. is pumping more oil than it has at anytime since 1994 and gasoline demand is at an 11-year low.

Nonetheless, motorists remain vulnerable to geopolitics and a volatile global energy markets that push up the price of crude oil.

Just a few years ago, the price of oil used to account for a little more than half of the cost of gasoline, with refining, distribution and marketing and taxes making up the rest. Today, oil represents 75 percent of the retail price, according to the Energy Information Administration.

Government forecasters predict nationwide gasoline prices will average $3.55 a gallon in 2012, or 2 cents a gallon more than last year. The current nationwide average is $3.61 a gallon.

The run-up in crude oil and gasoline prices has generated plenty of consumer angst and given rise to criticism of President Barack Obama and his administration’s energy policy — including the rejection of the Keystone XL pipeline from Canada’s tar sands.

Thursday, Obama took on those critics, including Republican presidential candidates, during a speech in Miami, where he stopped to raise cash for his re-election bid.

“Only in politics do people greet bad news so enthusiastically. You pay more, and they’re licking their chops?” Obama asked rhetorically. “And you can bet that since it’s an election year, they’re already dusting off their three-point plans for $2 gas.”

Among the most vocal critics is Sen. Roy Blunt, R-Mo., who last week introduced an amendment to give federal regulators more leeway to waive requirements for anti-pollution “boutique fuels.” The measure would also direct the government to study the effect such fuels have on gasoline markets.

Meanwhile, Sen. Claire McCaskill, D-Mo., urged the president to release oil from the Strategic Petroleum Reserve to provide relief for consumers. U.S. presidents have ordered releases from the strategic reserve three times since 1991 and in each case lowered fuel prices, she said.

McClatchy News contributed to this report.

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