Archive for December, 2008

Summary Box: Retailers see more holiday haggling (AP)

Monday, December 22nd, 2008 | Finance News

THE DEAL: With only three more shopping days left before Christmas, retailers are becoming more willing to negotiate on prices or extend their return policies to offer consumers a better deal and boost their sales.

SHOPPER'S MARKET? Retail analysts say shoppers have the upper hand this year due to sliding sales at retailers. Despite big discounts, sales are still projected to be the worst in years.

HOW TO GET THE BEST DEALS: Experts say to research competitors' prices, since many chains are willing to match the lowest price. Also, be willing to ask for a better price from a manager.

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Toyota sees first operating loss (Reuters)

Monday, December 22nd, 2008 | Finance News

NAGOYA, Japan (Reuters) –
Toyota Motor Corp forecast a first-ever annual operating loss, blaming a relentless sales slide and a crippling rise in the yen in what it said was an emergency unprecedented in its 70-year history.

Toyota, the world's biggest automaker, had been expected to issue its second profit warning in less than seven weeks after domestic rival Honda Motor Co also cut its outlook again last week, but the downward revision was bigger than predicted.

"This is very, very, very bad," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments. "There's a chance they could fall into the red in the next business year as well.

"This is also not just a problem for Toyota. What is good for Toyota is good for the Japanese economy."

Automakers around the world face their toughest business environment in recent memory, caught in a sharp reversal of demand as the financial crisis spreads, squeezing credit and consumer sentiment.

Toyota cut its group operating forecast to a loss of 150 billion yen ($1.7 billion) for the year to end-March, after shocking financial markets last month by slashing its group operating profit forecast by 1 trillion yen to 600 billion yen.

It made a record profit of 2.27 trillion yen last year.

Analyst forecasts on Reuters Estimates ranged from a loss of 150 billion yen to a profit of 800 billion yen for figures not updated since conditions deteriorated in the past month.

Toyota now expects group net profit of 50 billion yen instead of 550 billion yen.

Toyota shares closed down 0.2 percent ahead of the announcement in a firmer Tokyo market. Its Frankfurt-listed shares fell 2.4 percent in light trade.

BIG STEP BACK

Like the rest of the industry, Toyota has idled factories, slowed assembly lines and delayed manufacturing projects, such as the start of a Mississippi plant under construction to build the Prius hybrid model, and said it would continue those moves until the tide turned.

"We are facing an unprecedented emergency," President Katsuaki Watanabe told a year-end news conference. "This is a crisis unlike the crises of the past."

Toyota will postpone all projects to expand capacity, move 16 of its 75 global assembly lines to a single shift, and cancel directors' bonus payments for this year, among a wide range of steps aimed at improving near-term profitability, he said.

Even the electric hand dryers at the company's Nagoya office building have been unplugged in an effort to cut costs.

Watanabe stopped short of projecting what global car sales and earnings would do next year, saying only that Toyota hoped to return to profit and cut capital spending to below 1 trillion yen next year, compared with the 1.4 trillion yen planned this year.

"Conditions next fiscal year could be more severe given the yen's strength and worsening market conditions, unless the company and the government cope flexibly with external factors," Shotaro Noguchi, auto analyst at Mitsubishi UFJ Securities, said.

Toyota lowered its dollar assumption for the remainder of the year to 90 yen and its euro assumption to 120 yen, versus current rates of 90 yen and 126 yen.

Honda made a similar move last week, cutting its annual profit forecast by 67 percent, and outlined a list of counter-measures such as putting off non-urgent investments to prop up its profitability.

In the United States, automakers are in even bigger trouble, with President George W. Bush throwing General Motors Corp and Chrysler LLC a lifeline of up to $17.4 billion to stave off bankruptcy.

India's Tata Motors Ltd has agreed to inject "tens of millions" of pounds into Jaguar Land Rover to prevent an immediate cash flow crisis, the Financial Times reported.

Elsewhere, Japanese small-car makers Suzuki Motor Corp and Daihatsu Motor Co announced more production cuts, of 29,000 units and 16,000 units, respectively, by the end of March, along with a reduction of non-permanent workers. Germany's BMW was also considering further production cuts, an executive said.

Bridgestone Corp, Japan's largest tire maker, on Monday cut its operating profit forecast for 2008 by 24 percent to 118 billion yen on slower tire demand for new cars and replacement purposes.

Its French rival Michelin said it faced costs of nearly 150 million euros ($209 million) as it cuts back operations to cope with a decline in tire demand.

MUM ON DIVIDEND

Departing from past practice, Toyota did not disclose its sales and production forecasts for the coming calendar year, saying it was impossible to predict where the bottom for the global vehicle market lay.

"We need to be prepared for the tough conditions to continue, and maybe even worsen," Watanabe said. He said Toyota was undecided about what to do with its dividend, which rose to a record 140 yen last year and is widely feared to fall.

For 2008, Toyota estimated group-wide global sales, which include sales at units Daihatsu and Hino Motors Ltd, at 8.96 million vehicles, down 4 percent from last year.

For the business year to March 31, Toyota lowered its vehicle sales forecast to 7.54 million vehicles from 8.24 million. It sold 8.913 million vehicles last business year.

($1=89.27 Yen)

(Additional reporting by Kiyoshi Takenaka, David Dolan and Yumiko Nishitani; Editing by Lincoln Feast)

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Last holiday shopping weekend keeps retailers edgy (AP)

Monday, December 22nd, 2008 | Finance News

CHICAGO – The deals were there and, by most accounts, so were the shoppers. But at the close of the final holiday shopping weekend, consumers confessed they were still nervous about buying.

"This is going to be a poor Christmas," said Dee Dobbins, a 31-year-old from Goldsboro, N.C., who finished her holiday shopping with money she'd received from her recent graduation from North Carolina State University. "At least I had it, because I don't know what I would have done."

From flagship department stores to main street shops, consumers found packed parking lots, massive markdowns and extended hours — in some places, around-the-clock shopping — as merchants hope to salvage one of the worst shopping seasons in decades, brought on by the recession and growing economic uncertainty.

For those willing to spend, the deals abounded.

In Miami, Ana Solis bought T-shirts from the Disney Store featuring Kermit the Frog and Tigger. One shirt — original price $24.99 — was marked down to $7.99 before another 40 percent discount.

At the flagship Macy's store on 34th Street in New York, shoppers swarmed racks offering 65 percent off women's clothing. Elsewhere, the store was offering 50 percent off handbags by designers such as Dooney & Bourke and Coach and 40 percent off gold earrings.

Chris Moscardelli snagged a cashmere blanket for more than half off.

"It's been a great day," the 38-year-old said.

But not for Ahmad Parpia, the store manager of Marquise Jewelers inside Dallas' Valley View Mall, who's seen his most profitable period of the year fizzle out. Few shoppers are coming inside the jeweler's four stores to buy diamond-encrusted chains, gold watches and jewelry, despite signs advertising: "Financing available up to $10,000. Will beat any competitive price."

"It's almost like 80 percent down over the last two years," he said. "I've never seen before a Christmas like that, and I've been in this business almost 15 years."

The International Council of Shopping Centers expects established stores to post their worst performance for the holidays since at least 1969, when it began tracking such data. It predicts same-store sales — or sales at stores open at least a year — will fall as much as 1 percent for the November and December period, and fears the decline could even be steeper.

Still, shoppers were out at Kmart and Sears stores this weekend as customers stocked up on last-minute gifts and electronics like Nintendo's Wii, Blu-ray players, digital cameras and tools. In some cases, shoppers lined up before stores opened for weekend doorbuster deals.

"For the most part, we beat our previous week, which was a great kind of benchmark, because last week was strong for us," said Tom Aiello, a spokesman for the stores owned by Sears Holdings Corp.

But store traffic was slower in some parts of the Midwest and New England where storms dumped snow and ice, he said. In the Midwest, wind chills dipped to minus 30 or lower, and shoppers in Iowa and Illinois had to brave blizzard warnings.

More than a dozen Macy's Inc. stores were spending the weekend in the midst of a retail marathon, pledging to stay open around the clock until Christmas Eve.

At Woodfield Mall in Schaumburg, Ill., shoppers were making purchases at 4 a.m. and officials expected the overnight shopping crowd to grow each night as Christmas Eve nears.

"It was active," said Mike Dervos, a Macy's executive, who added that shoppers are buying many of the same items they've sought in previous years, like cosmetics and fragrances. "We were pleased."

Still, some people inside America's malls seemed more like scouts than actual customers, waiting for last-minute bargains or browsing stores but holding few, if any, bags.

After electronic gadgets, practical gifts seemed to be among the most popular.

At Regency Square in Richmond, Va., items like sweaters, jeans, hats, scarves were some of the most common items being bought by shoppers. And at Fairlane Town Center in Dearborn, Mich., near the headquarters of Ford Motor Co. — which has been hurt by the drop in auto sales — shoppers were eschewing jewelry and fur and leather items for unisex apparel, boots and outwear, according to mall owner Taubman Centers Inc.

Philadelphia resident Amy Warner managed to cross off her shopping list items like DVDs, wine, jewelry and gift cards, including a grocery store gift card for her grandparents who live near Allentown, Pa.

"My grandmother said, 'All we really want is a gift card from Wegmans,'" Warner said. "They're retired. They have a fixed income. I don't think there's anything they really needed other than this."

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Associated Press writers Lauren Shepherd and Vinnee Tong in New York, Andre Coe in Dallas, Jessica Gresko in Miami and Barbara Rodriguez in Raleigh, N.C., contributed to this report.

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