Real Estate Daily News Buzz is designed to give news snippets to readers that our (yet to be award winning) editors thought you could use to start your day. They come from various business perspectives, real estate, government, the Fed, local news, and the stock markets to save you time. Here you will find the headlines and what the news buzz for the day will be.
Friday, the Dow Jones industrial average fell 81.72 points, or 0.5%, to 18,132.70. The S&P 500 slid 6.24 points, or 0.3%, to 2,104.50. The NASDAQ lost 24.36 points, or 0.5%, to 4,963.53.
The price of oil was boosted by gains in gasoline and heating oil futures. U.S. oil rose $1.59, or 3.3 per cent, to $49.76. Brent crude, a benchmark for many international oils, rose $2.53, or 4.2 per cent, to $62.58. Wholesale gasoline rose 6 cents to $1.768 a gallon. Heating oil jumped 16.3 cents to $2.30 a gallon. Natural gas rose 3.7 cents to $2.734 per 1,000 cubic feet.
SIGNED CONTRACTS TO BUY US HOMES RISE TO 18-MONTH HIGH
WASHINGTON (AP) — The number of Americans signing contracts to buy homes rose at a healthy pace in January, a sign that home sales are poised to accelerate after a slow start to the year. The National Association of Realtors said Friday that its seasonally adjusted pending home sales index increased 1.7% to 104.2 last month. December’s figure was also revised higher to show a decline of only 1.5%, considerably better than a previously estimated drop of 3.7%. The index is now 8.4% above its level one year ago and is at the highest level since August 2013.
US ECONOMIC GROWTH IN Q4 REVISED DOWN TO 2.2%
WASHINGTON (AP) — The U.S. economy slowed more sharply in the final three months of the year than initial estimates, reflecting weaker business stockpiling and a bigger trade deficit. The Commerce Department said Friday that the economy as measured by the gross domestic product grew at an annual rate of 2.2% in the October-December quarter, weaker than the 2.6% first estimated last month. It marked a major slowdown from the third quarter, which had been the strongest growth in 11 years. Economists, however, remain optimistic that the deceleration was temporary. Many forecast that growth will rise above 3% in 2015, which would give the country the strongest economic growth in a decade. They say the job market has healed enough to generate strong consumer spending going forward.
CHICO’S Q4 WIDENS; TO CLOSE 120 MORE STORES
Fort Myers, Fla. -- Chico’s FAS Inc. has revealed plans to close more stores, cut jobs and decrease its capital spending to $100 million for fiscal 2015, a 29% decrease to its three-year average. As part of its capital allocation, Chico’s will spend $30 million rolling out new POS systems, including mobile technology. The retailer posted a loss of $31.8 million for its fourth quarter, ended Jan. 31, compared with a loss of $348,000 a year earlier. Net sales fared better at $656.9 million, an increase of 7.8% compared to $610.2 million, primarily reflecting 75 net new stores and a 4.3% increase in same-store sales. Chico’s said it plans to close approximately 120 stores, starting in fiscal 2015 through 2017, for savings of approximately $55.2 million upon completion. In fiscal 2015, the retailer will close 35 stores and open 40 new locations. As part of an “organizational realignment to” ensure that resources are better aligned with long-term growth initiatives, including omnichannel, Chico’s is eliminating some 240 existing positions, expected to result in approximately $38 million of annualized savings. The corporate realignment resulted in a 12% reduction of the company's headquarters and field management employee base. Chico’s expects to execute a $250 million accelerated share repurchase agreement in the first quarter of fiscal 2015 to be financed through a combination of cash and debt. At the end of the fourth quarter of fiscal 2014, the company had $290 million remaining under its existing authorization. In other news, private equity firm Sycamore Partners has abandoned its efforts to buy the women’s apparel retailer, the Wall Street Journal reported.“Overall, we are pleased with our fourth quarter performance,” said David Dyer, president and CEO. “The actions we have taken delivered positive same-store sales across all brands, an increase in gross margin dollars and lower inventory levels.” For the full fiscal year, Chico’s net income slightly declined to $64.6 million from $65.9 million. Net sales were $2.67 billion, an increase of 3% compared to $2.59 billion. Same-store sales were flat. For the full year of fiscal 2015, the company is anticipating a positive, low- single-digit same-store sales increase.
AS TASTES CHANGE, BIG FOOD MAKERS TRY HIPSTER GUISES
HUNTINGTON BEACH, Calif. (AP) — At a taco shop in Southern California, milkshakes are served in mason jars and a chalkboard menu lists “The 1%er” made with lobster meat. The logo is a pink skull and instead of buzzers, customers are given license plates so servers can identify them when bringing out orders. Nowhere is it evident that the U.S. Taco Co. is an outpost of a chain better known for cheesy gut bombs: Taco Bell. Major companies are testing whether it would pay to tuck away their world famous logos in favour of more hipster guises: PepsiCo, for instance, introduced a craft soda called Caleb’s last year and McDonald’s opened a cafe that lists lentils and eggplant on its menu. The stealth efforts reflect the pressures on the country’s biggest food makers, which are contending with the surging popularity of smaller brands that position themselves as decidedly less corporate.
‘HOUSE OF CARDS’ DEALT NETFLIX A WINNIG HAND
SAN FRANCISCO (AP) — Even if it never wins another award, “House of Cards” already ranks among the most influential series in television history. The political drama launched Netflix’s expansion into original programming two years ago, a risky bet that might have toppled the Internet video service had “House of Cards” flopped and squandered its estimated $100 million investment. Instead, the show was an immediate hit with viewers and critics, giving Netflix the financial clout and creative firepower to further transform how we watch and define “television.” And it spurred other online services such as Amazon.com Inc. and Google’s YouTube to spend more on their own original content to create shows that rival those produced by broadcast and cable channels.
CUBAN CIGAR MAKERS ANTICIPATE BIG BUCKS FROM US TRAVELLERS
HAVANA (AP) — Over six decades rolling premium cigars with his small, wrinkled hands, Arnaldo Alfonso has taken pride in seeing his “habanos” sampled by visiting heads of state and other dignitaries. Now he’s delighted by the idea of customers lighting them up in New York, Los Angeles and elsewhere in the United States, where Cuban cigars have been outlawed since the U.S. embargo took effect in 1962. Cuban cigar makers are licking their chops over new U.S. rules, announced in December as part of a partial detente, allowing more Americans to travel to the island and legally bring back small quantities of the coveted stogies for the first time in decades.
US CONSUMER SENTIMENT SLIPS IN FEBRUARY ON ICY WEATHER
WASHINGTON (AP) — Harsh winter weather left U.S. consumers feeling a bit less confident this month, the University of Michigan says. But confidence levels still remain at the highest level in eight years. The University of Michigan says its index of consumer sentiment slid to 95.4 in February from an 11-year high of 98.1 in January. Overall, consumers’ assessment of current economic activity and their expectations for the future both fell.
JC PENNEY SWINGS TO 4Q LOSS, WHILE SALES IMPROVE
PLANO, TX -- J.C. Penney swung to an unexpected loss in its fourth quarter amid heavy holiday discounter. But the retailer reported strong, better-than-expected sales, particularly on the online front. Penney posted a loss of $59 million for the quarter ended Jan. 31, compared to a profit of $35 million in the year-ago period. (Penney benefitted from a one-time tax benefit last year.) Total sales rose 2.9% to $3.89 billion from $3.78 billion a year ago. Online sales rose 12.5% to $428 million from a year ago. Men’s apparel, home and fine jewelry were the company’s top performing merchandise divisions during the quarter. Sephora inside J.C. Penney, now in 492 locations, also continued its strong performance. Penney’s strong topline growth combined with improved merchandise mix and margins on clearance products enabled gross margins to expand 540 basis points to 33.8% of sales from 28.4% of sales. As a result, Penney said its operating income increased to $63 million versus a prior year loss of $138 million. That improvement was eroded by $100 million in interest expense which contributed to its net loss. For the full year, Penney’s total sales increased 3.4%, and same-store sales increased 4.4%. Internet sales through jcpenney.com grew $145 million to $1.22 billion for the year, increasing 13.4% over last year. Gross margin for the year increased 540 basis points to 34.8% from 29.4% in the prior year. SG&A decreased $121 million or 210 basis points compared to the prior year. EBITDA was $323 million, a more than $1.1 billion improvement from last year. The company ended the year with liquidity of approximately $2.1 billion.
SEARS Q4 LOSS NARROWS BUT SALES DOWN; REIT TO RAISE $2 BILLION
Hoffman Estates, Ill. -- Sears Holdings Co. reported its 11th consecutive quarterly loss, posting a loss of $159 million for the fourth quarter, down from loss of $358 in the year-ago period, amid cost reductions. The struggling chain saw its losses for the full year widen to $1.7 billion from $1.4 billion, marking its fourth straight year of decline. Total long-term debt rose to $3.2 billion from $2.9 billion a year earlier. Sears also announced that it is amending and extending a $400 million short-term loan that it took out in September from a hedge fund run by Sears chairman and CEO Lampert. The retailer said it will repay $200 million of the loan on Monday, with the remainder extended until June 1, or until the company receives proceeds from the potential REIT transaction. As reported earlier, Sears is looking to spin 200 to 300 of its stores into a REIT. The retailer said Thursday it expects proceeds of more than of $2 billion from those sales and expects to complete the process by June. Sales for the quarter, ended Jan. 31, decreased to $8.1 billion from $10.6 billion. Same-store sales fell 4.4%, with the biggest drop off, 7%, at Sears stores. Kmart's same-store sales were down 2%. Despite the sizable losses, Lampert sounded an optimistic note in the earnings release, reviewing the company’s performance in terms of its adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA. He characterized the fourth quarter results as a significant improvement, with adjusted EBITDA of $125 million reversing a prior year loss of $68 million. For the year, revenues were down to $31.2 billion from $36.2 billion. The company closed about 234 underperforming Kmart and Sears stores in 2014.
AMAZON EYES SOUTH KOREAN MARKET
Seattle – Amazon.com is reportedly preparing to enter the South Korean market. According to South Korea-based Donga News, Amazon is hiring local employees for as many as 300 Korea-based positions, with a target opening date of mid-March 2015. Amazon is mostly hiring IT personnel, leading to speculation it will launch South Korean operations with sales of its Kindle e-reader device, rather than launching a full-fledged e-commerce platform there. Korean media also reports Amazon has leased 10,500-sq.-ft. of office space in Gangnam section of the Korean capital of Seoul, up to February 2024. EBay Korea, which owns local e-commerce sites Gmarket and Auction, is the market leader in Korean e-commerce. Chinese e-commerce platform Alibaba is also reportedly considering setting up operations in Korea.
AMAZON HIRES OBAMA’S FORMER PRESS SECRETARY
New York -- Jay Carney, former White House press secretary for the Obama administration and current CNN analyst, has been appointed senior VP of worldwide corporate affairs for Amazon, effective March 2. The newly created position brings Amazon’s worldwide public relations and public policy shops into one department under Carney. The news was first reported by Politico, which noted that Carney will leave CNN and divide his time between the online retail giant’s headquarters in Seattle and Washington, D.C. Carney served as Obama’s press secretary from 2011 to 2014. He resigned in May, but stayed on the job until mid-June. The Carney hire further bolsters Amazon's political ties to Washington. Bezos bought The Washington Post in 2013, in an acquisition that some interpreted as a way for him to exert political influence in the nation's capital.
STEIN MART OPENING 11 NEW STORES THIS YEAR
Jacksonville, Fla. - Stein Mart is opening 11 new stores this year as part of the company's accelerated store growth that began in 2014. The new stores include the company's March opening of the first-ever San Francisco Bay area location in Cupertino, California, and 10 additional stores opening in the fall. This is an increase from the company's earlier estimate of 10 new stores for 2015 announced in November. In 2014, Stein Mart opened nine new stores. "We are very pleased with the new store sites that we have secured for 2015, which are strategically located in both exciting new markets and some of our strongest existing markets," said Jay Stein, CEO of Stein Mart. "Increasing our number of stores, particularly in targeted growth areas, is key to our sales growth strategy." The Cupertino store will open on March 12. The locations of the 10 new stores planned to open in September through November include: Atlanta; suburban Detroit; Florida (two stores); Southern California (three stores); Long Island; Phoenix; and Virginia Beach. Stein Mart will also relocate one store in Myrtle Beach, South Carolina, to a new location this fall.
KOHLS ENDS WITH STRONG Q4 PERFORMANCE; SALE UP 3.7%
Menomonee Falls, Wis. -- Kohl's Corp. reported better-than-expected profit for its fourth-quarter profit, helped by strong holiday sales. The retailer earned $369 million for the quarter ended Jan. 31, up from $334 million a year ago. Total sales were up 3.9% to $6.34 billion from $6.1 billion in the year-ago period, also better than expected. Same-store sales increased 3.7%, a significant improvement after five straight quarters of decline. "Our fourth quarter results showed significant improvement as many of our Greatness Agenda initiatives took hold,” said Kevin Mansell, Kohl’s chairman, president and CEO. “Our 3.7% increase in comparable sales was driven by both transactions per store - a key area of focus - and average transaction value. The sales strength was broad as all lines of business and all geographic regions reported higher sales. Our teams managed both expenses and inventories well, allowing us to exceed our previous earnings guidance." For the year, Kohl’s posted a profit of $867 million, down from $889 million in 2013. Revenue totaled $19.02 billion. Looking ahead, Kohl’s expected same-store sales to rise by 1.5%-2.5% for the year 2015. Kohl’s ended the quarter with 1,162 stores in 49 states.
BARNES & NOBLE TO SPIN OFF COLLEGE BUSINESS
New York – Barnes & Noble Inc. is separating its college business from its retail and Nook digital businesses. The planned separation of Barnes & Noble Education (which comprises the Barnes & Noble College business) will, when consummated, create two independent, publicly traded companies. The separation is intended to be a tax-free distribution to Barnes & Noble shareholders and is anticipated to be completed by the end of August 2015, subject to customary conditions. Barnes & Noble believes that the separation will allow each business to optimize its strategic opportunities with separate management and board focus. The separation will also allow investors to assess each business as a stand-alone company. “We have a talented College management team in place, led by CEO Max Roberts, and we will continue to invest and innovate to support the mission of our campus partners, expanding to new colleges and universities, students and faculty and increasing our presence in the growing market for digital educational content and services,” said Michael P. Huseby, CEO of Barnes & Noble. Barnes & Noble’s college division operates 714 stores on college and university campuses in the U.S. Barnes & Noble Education will continue to be headquartered in Basking Ridge, N.J. In addition to Roberts continuing to lead the organization, Patrick Maloney and Barry Brover will serve as COO and CFO, respectively.
DOLLAR TREE PROFIT Q4 DROPS AMID MERGER COSTS; CEO TALKS REBRANDING
Chesapeake, Va. -- Dollar Tree reported that its net income dropped 3% to $206.6 million in the fourth quarter of fiscal 2014, down from $213 million in the year ago period. The quarter included $6.7 million in acquisition-related costs associated with the pending merger with Family Dollar Stores Inc. On the chain’s quarterly earnings call, Dollar Tree CEO Bob Sasser said that Dollar Tree will work to boost Family Dollar's sales per square foot and its inventory performance. He also said some Dollar Tree stores could eventually be rebranded as Family Dollar, and vice versa. “Over time, we expect many Family Dollar stores may become Dollar Tree stores. And many Dollar Tree stores may become Family Dollar stores," Dollar Tree spokesman Randy Guiller said in a report by the Charlotte Business Journal. Dollar Tree net sales increased 11% $2.47 billion from $2.23 billion, ahead of Wall Street projections, and consolidated same-store sales rose 5.6%. Increased sales in party supplies helped drive the overall net sales growth. For the full fiscal year, Dollar Tree reported net income of $599.2 million, up fractionally from $596.7 million. Consolidated net sales increased 10% to $8.6 billion from $7.84 billion, with 4.4% same-store sales growth. “We exceeded 1 billion transactions in a year for the first time in company history,” said Sasser. “Our business model is strong, our inventories are fresh, our shelves are full of incredible values, and our store teams are ready for the spring selling season." Dollar Tree is working to obtain final FTC clearance to close its merger with Dollar General, which it hopes to finalize by April 27, 2015. The company estimates consolidated net sales for the first quarter of 2015 to range from $2.15 billion to $2.20 billion, based on a low to mid single-digit increase in same-store sales. Consolidated net sales for the full year are estimated to range from $9.21 billion to $9.45 billion, based on a low to low-mid single-digit increase in same-store sales. The company opened 90 stores, expanded or relocated six stores, and closed five stores during the quarter. Retail selling square footage increased to 46.5 million sq. ft., a 7.4% increase compared to the prior year.
UBER SAYS DATABASE CONTAINING DRIVER INFO WAS BREACHED
NEW YORK (AP) — Uber says a database containing the names and drivers’ license numbers of 50,000 of its drivers was breached in May. The ride-sharing service says it has notified the drivers and hasn’t received any reports of the information being misused. Uber says it will offer a one-year membership in Experian’s ProtectMyID Alert identity theft protection service to the drivers involved. The company said Friday the breach affects drivers in multiple states, but involves only a “small percentage” of its current and former drivers.
FIAT CHRYSLER RECALLS 467K SUVs FOR POSSIBLE STALLING
DETROIT (AP) — Fiat Chrysler is recalling more than 467,000 Dodge and Jeep SUVs worldwide to fix a faulty fuel pump relay at the root of a potential stalling problem. It’s the same problem that caused the recall of 189,000 other SUVs in September of last year, bringing the total to more than 656,000. A safety advocate says the recall should be expanded even further, contending that problems affect up to 5 million Fiat Chrysler vehicles with similar parts. The recall announced Friday by the company covers 2012 and 2013 Dodge Durangos and 2011 Jeep Grand Cherokees outside North America. The Jeeps have diesel engines.
VOLKSWAGEN PROFITS UP 20% FOR YEAR
FRANKFURT, Germany (AP) — German automaker Volkswagen says net profit rose 20 per cent last year to 10.8 billion euros ($12.1 billion), but offered a cautious outlook for this year. The maker of Volkswagen, Audi, Skoda and SEAT brand cars said Friday that it increased its profit margins during 2014 and proposed to raise its dividend to shareholders. For 2015, however, it saw a “persistently challenging market environment.” It said sales would increase by at least 4 per cent, “depending on economic conditions.”
OBAMA PITCHES PRIVACY BILL, DEMOCRATS SAY IT FALLS SHORT
WASHINGTON (AP) — Amid “rapid growth” in the collection of data on Americans, the White House on Friday proposed legislation that calls on businesses to do more to help consumers protect their personal information. The draft bill, first obtained by The Associated Press, gives a nod to consumers fed up with how much of their private lives wind up in the hands of marketers. But the proposal frustrated many privacy advocates, including Democrats on Capitol Hill, who say the bill won’t change much for consumers. They cite several loopholes that would give companies a way to opt out without consequence.