October 10, 2008
Bizworld: Weak Sales Figures By Retailers Offer Dim Hopes for Holiday Sales
NEW YORK | Dismal September sales results from mall-based apparel chains, released Thursday, offered more fresh evidence that American consumers, spooked by the financial meltdown, shut their wallets tight last month.
The reports fueled more worries about the holiday shopping season, which was already expected to be bleak.As results came in Thursday, even TJX Cos. - which offers discounts on designer brands and had been one of the few bright spots in apparel selling - was not immune to the mounting economic woes. The retailer, which operates such chains as T.J. Maxx and HomeGoods, lowered its profit outlook as it reported an unexpected drop in sales at established stores.
Others such as Gap Inc., Abercrombie & Fitch Co. and Chico's FAS Inc., which had been mired in a sales slump for months, fared far worse, reporting double-digit same-store sales declines. Same-store sales are sales at stores opened at least a year and are considered a key indicator of a retailer's health.
The reports came a day after many major retailers, including Wal- Mart Stores Inc., the world's largest retailer, was among the few winners, posting a modest sales gain, but even its results were a bit below analysts' estimates, indicating that shoppers are sticking to bare-bones necessities. According to the latest tally by Thomson Reuters, same-store sales for September rose a meager 0.8 percent, the weakest September performance since the research firm started tracking retail sales data in 2000. The pace is well below the 1.9 percent average gain from January through August.
Morgan Stanley falls as ban ends
Morgan Stanley dropped 26 percent, its biggest one-day decline in more than a decade, as a short-selling ban expired and concern escalated that the company might be unable to weather the credit crisis.
The stock fell $4.35 to $12.45 in New York Stock Exchange composite trading after dropping as low as $11.95 earlier in the day. The New York-based company has lost 77 percent of its value this year. Goldman Sachs Group Inc., the firm's larger rival, dropped $11.65, or 10 percent, to $101.35.
Short sellers borrow stock and sell it, hoping to buy it back at a lower price. The SEC's temporary ban ended Wednesday night.
Investors flee mutual funds
Investors pulled a record $52.1 billion from U.S.-managed stock and bond mutual funds in the past week, seeking the safety of government-insured bank deposits as the financial crisis worsened.
Shareholders took $43.3 billion from stock funds and $8.8 billion from bond funds in the week ended Oct. 8, according to data released Thursday by TrimTabs Investment Research in Sausalito, California. The exodus followed $72.3 billion of outflows in September, the most in a single month. Investors deposited $185.5 billion into bank accounts last month through Sept. 22, TrimTabs said, citing Federal Reserve data.
Jobless claims ease slightly
New applications for unemployment benefits dropped last week from a seven-year high, the Labor Department said Thursday, though they remain at elevated levels that indicate recession.
Initial claims for jobless benefits dropped 20,000 to a seasonally adjusted 478,000, the department said, the same level that Wall Street economists expected. The department said Hurricanes Ike and Gustav were responsible for adding about 20,000 claims on a seasonally adjusted basis. That's down from approximately 45,000 the previous week. The four-week average, which smooths out fluctuations, rose to 482,500, the highest since October 2001.
Micron to shed 15% of its force
BOISE, Idaho | Micron Technology Inc. will cut about 15 percent of its global work force as part of a restructuring of its computer memory chip operations, the company said Thursday.
The bulk of the job losses will be in Boise, where the semiconductor company is headquartered.
A company statement said the cuts were a result of declining customer demand and product oversupply, which has driven the selling price for NAND flash memory below manufacturing costs. Micron will shut down the NAND flash memory plant in Boise that it operates as part of a joint venture with Intel Corp. The job cuts will take place over the next two years. Micron employs about 19,000 people worldwide. A reduction of 15 percent would mean 2,850 fewer employees.
Brunswick Corp. to cut 1,450 jobs
Brunswick Corp., the maker of Sea Ray yachts and Life Fitness cardiovascular machines, said it will close four factories and eliminate 1,450 jobs sooner than planned, and might report a loss for the year.
Brunswick, which has posted annual profits since 2001, is "no longer confident of achieving our goal of posting positive earnings for the full year," the company said in a statement Thursday. The U.S. economic slump has eroded demand for boats as Americans have lost jobs and the price of fuel has soared.
Banks seek loans at record pace
Banks borrowed in record amounts from the Federal Reserve's emergency lending facility over the past week, fresh proof of the credit problems gripping the country. The Fed's report released Thursday said commercial banks averaged a record $75 billion in daily borrowing over the past week. That surpassed the old record - a daily average of $44.5 billion - logged a week ago. On Wednesday, $98 billion was drawn.
Vegas casinos feeling pinch, too
Las Vegas Strip casino gambling revenue declined for the eighth consecutive month in August as cash-strapped U.S. consumers curbed entertainment and travel spending .
Gambling proceeds from the Strip fell 7.4 percent to $494 million in August, Nevada's Gaming Control Board said.
- From wire reports
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