Archive for November, 2009
NEW YORK (Reuters) –
Like many U.S. employers, Tish and Snooky Bellomo are asking their workers to take on additional duties, rather than hiring new employees, at their New York cosmetic and hair accessory company.
Earlier this year the two got rid of a consultant and, rather than rehiring, turned to their 13 employees at Manic Panic, which has sold punk rock inspired fashions and hair dyes since 1977, and asked them to pick up the slack.
The two are not alone in foisting more responsibilities on employees of their cluttered packaging facility floor in a gritty neighborhood in Queens in New York City. Government data earlier this month showed U.S. employee productivity rose at its fastest pace in six years in the third quarter of this year.
The 9.5 percent jump at an annual rate in the amount of output per employee came at a time when many American employers are slashing jobs in an effort to cut costs. The U.S. unemployment rate climbed in October to 10.2 percent, a 26-1/2 year high.
"We have given people a lot more responsibility since we have gotten rid of this consultant, so now everyone is doing everything and people are not just doing their specific job," says Tish Bellomo, who co-founded the company with her sister.
Employees now handle public relations and marketing duties formerly managed by the consultant.
The Bellomo sisters are unusual in that the deepest recession in decades has not hit their business. In fact, Manic Panic is having their best year ever, with revenues expected to top $5 million in 2009.
It seems that rather than spending upward of $200 at a salon for a hair dye job, people are instead paying about $12 for a jar of the dye, either online or at a retail outlet, and coloring their hair with "vampire red" or "atomic turquoise," themselves at home.
"We have always done well when times are hard because what we sell is a quick fix. You can get a whole new look really cheap. It is such an inexpensive way to change your entire look," Snooky says.
Rather than hiring new staff to meet demand, the sisters are drawing more heavily on their employees. So far, those employees say the extra responsibility, and time at work, have not been a particular burden.
"Everyone jumps in, you just try and get more done during the day," says Ken West, who is unofficial manager of sales and has worked for the company for 15 years, adding "I'm working harder, and faster during the day, so I am certainly more exhausted."
Rising worker productivity comes as the U.S. economy continues to shed jobs. As of October, U.S. employers' payrolls had declined for 22 months and 7.3 million people had lost their jobs since December 2007.
A wide gauge of labor-market slack that includes unemployed Americans who have given up looking for work hit a record 17.5 percent last month, the government said.
A recovery in jobs is seen by economists as crucial to any kind of return to a healthy economy.
While employers are requiring more output from the same or even fewer number of people, some economists say the jump in productivity may have used up much of the productivity slack in the existing workforce.
"Companies are clearly determined to maintain very tight control over labor costs in the face of a once-in-a-lifetime collapse in demand, but they surely cannot keep up this pace," said Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York.
Shepherdson is looking for productivity to slip 4.0 percent in the fourth quarter.
Rather than hiring, data suggests U.S. companies are holding on to cash while economic uncertainty looms.
Standard and Poor's has said cash and its equivalents for the S&P industrial companies in the third quarter was 12 percent ahead of the record set in the second quarter of over $770 billion.
But back at Manic Panic, the Bellomo sisters are holding off on hiring while they ask their employees to do more.
"If we were going to add people we would do it now because there are so many good people out there that are desperate for jobs -- so many people we know in fact," Tish says.
"We had one really good salesperson who left for a better paying job, and now she is coming around asking if we are hiring any sales people," she said.
(Reporting by Chris Reese: )
SAN FRANCISCO (Reuters) –
Consumers spent significantly less at the start of the holiday season this weekend, dimming hopes for a retail comeback that would help propel the economy early in 2010.
While shoppers turned out in force as early as Thanksgiving Day on Thursday, many said they had zeroed in on highly discounted items, would buy only what they needed and would walk out of a store if they did not find a good deal.
"Shoppers proved this weekend that they were willing to open their wallets for a bargain," said National Retail Federation Chief Executive Tracy Mullin in a statement on Sunday. Retail chains "know they have their work cut out for them to keep people coming back through Christmas."
Consumers said they will have spent nearly 8 percent less on average, or about $343 per person, over the weekend that includes Thanksgiving, Black Friday and runs through Sunday, according to the NRF.
Traffic to stores and websites rose to 195 million people from 172 million in 2008, but shoppers were focused on buying low-priced items, like $10 toys and $9 books, the NRF said.
The NRF has forecast a 1 percent decline in holiday sales this year, which would mark an unprecedented drop for two straight years after a global financial crisis erupted in 2008.
Total retail sales edged up just 0.5 percent to $10.66 billion on Black Friday, which is often the single-busiest day of the holiday shopping season, ShopperTrak said on Saturday.
Online retailers, however, enjoyed an 11 percent jump in Black Friday spending to $595 million, with and Wal-Mart Stores Inc's enjoying the biggest surges in traffic, according to comScore.
Retailers had warned investors they would take a conservative view of holiday sales and have cut inventory and reduced expenses to compensate.
"You're clearly down on a two-year run rate," said Bill Taubman of mall operator Taubman Centers Inc. But he added, "margins are going to be extremely good because (retailers) have been careful about what they bought." For a graphic on U.S. holiday sales trends, click on http://graphics.thomsonreuters.com/119/US_RTLXMS1109.gif
DEPARTMENT STORES ATTRACT
Shoppers interviewed across the country by Reuters over the weekend said they were lured by bargains, but would stick to pared-down budgets.
"If they don't have rebates and sales before Christmas, I don't think people are going to go back shopping after Black Friday," said Joel Wincowski, a higher education consultant shopping at a Best Buy store in Plattsburgh, New York. He bought an Xbox 360 game console for $299.
"We're going to cut back on everybody, even the kids."
Discount chains like Walmart, department stores and higher-end chains like Saks Inc seemed to have lured more spending and avoided steep discounts, retail consultants and executives said on Sunday.
"The market has had a negative bias toward the state of consumer spending," said Bill Dreher, senior analyst at Deutsche Bank. "We continue to believe that there are pockets of strength with discount retailing doing very well, with select luxury retailers doing very well, like Nordstrom and Saks, which have brought down their price points."
Specialty apparel chains, however, may face another tough year as they relied on heavy promotions to draw shoppers.
"Going through the mall on Friday, the stores that had not been doing as well -- AnnTaylor, Limited, Gap -- were very aggressively promoting," said Jeff Edelman, director of retail and consumer advisory services at RSM McGladrey.
Edelman expects holiday sales to be flat this year, but he said he expected profits for most retailers to be higher.
The NRF said shoppers' destination of choice appeared to be department stores, with nearly half of holiday shoppers visiting at least one. A little more than 43 percent of shoppers said they went to a discount retailer this weekend.
(Additional reporting by Jessica Wohl in Chicago and Phil Wahba in New York; Editing by Michele Gershberg, Matthew Lewis and Maureen Bavdek)
DUBAI (AFP) –
The United Arab Emirates central bank on Sunday pumped more liquidity into its banking sector amid fears that local stock markets may plunge after debt-laden Dubai asked to suspend debt payments.
The intervention is seen as a step to soothe investors and bank depositors after the shock announcement that state-controlled Dubai World wants to halt payments to creditors until at least May next year.
"This is a step aimed to calm investors... Markets should be calmer (than feared) tomorrow," said Emirati financial analyst Nasser bin Gaith.
"This means that banks will be on the safe side," a UAE official who requested anonymity told AFP.
The central bank's move came just before the the stock markets in Dubai and neighbouring emirate Abu Dhabi have their first chance on Monday to react to the disclosure of the debt difficulties, which were unveiled just before the start of a four-day holiday for the Muslim holiday of Eid al-Adha.
The central bank said in a statement, unusually issued during a holiday, that it was providing banks with extra liquidity, stressing its support to the banking sector.
But bin Gaith expects the decision to have no real immediate impact on Dubai's debt problem, pointing out that Dubai World is largely indebted to foreign banks.
"On practical level,there is no direct impact... Local banks have limited exposure to Dubai World, unlike foreign banks," he said.
British banks reportedly have a total exposure of 30 billion dollars to Dubai World.
And until the UAE stock exchanges reopen on Monday it is uncertain to what extent investors will be reassured by the central bank's statement.
"I expect to see a drop in Dubai's market when it opens Monday... a minimum of two-three percent," Saudi financial analyst Ali Daqaq told AFP. Dubai stock market rules limit the index to a change of 10 percent in one day.
"The banking sector will be the hardest hit, due to exposure to loans, and the danger of default on this debt," he said, speaking before the central bank pledged support for banks.
The central bank said the UAE banking sector stands stronger and more liquid than a year ago and that it enjoys a "strong base of stable deposits."
Other Gulf stock markets have also been on holiday since Thursday for Eid al-Adha, sparing them an immediate impact from Dubai's announcement.
However, the news sent jitters throughout Asian and European stock markets on Thursday and the US market on Friday as investors feared a possible default by Dubai and its state-owned businesses, which together owe 80 billion dollars.
Some economists say the delay in the reaction by Gulf markets because of Eid might reduce the severe impact on those bourses.
"Market fundamentals say that the local market should be negatively affected by the announcement, especially banks and real estate stocks," bin Ghaith told AFP before the central bank announcement.
"The reaction by the global markets was psychological, and came strongly. I expect the reaction here to be less hard because the first shock was absorbed by the global markets," he said.
Dubai and Abu Dhabi will be the only Gulf stock markets to open on Monday, while Kuwait follows on Tuesday. Saudi Arabia's financial market, the largest Arab bourse in capitalisation, will remain on holiday until Saturday.
The markets of Dubai and Abu Dhabi will have only two days of trading before they go again on holiday until Sunday December 6, for the national day.
Gulf investors outside the UAE are worried about contagion from Dubai's problems.
"Even here in Saudi Arabia people are talking about withdrawing from the market when it opens (next) Saturday in fear of the impact of the banks' exposure to Dubai's debt," Daqaq said.
Saudi economist Abdulwahab Abu-Dahesh expects a crash in the region's markets. "I expect Gulf bourses to dive like the September crash last year," following Lehman Brothers bankruptcy, he said.
Dubai does not have big oil reserves, unlike Abu Dhabi which sits on around 95 percent of the UAE's crude deposits.
But doubts have been growing about Abu Dhabi's commitment to buoy Dubai, despite a full subscription by two Abu Dhabi-controlled banks to Dubai bonds worth five billion dollars, announced a few hours before Dubai hinted at debt default.
The once-rapidly-booming economy of Dubai came to a screeching halt -- most noticeably in its real estate sector, after being hit by financing shortage due to the global financial crisis.
Property prices in the once-booming desert city have slumped by 50 percent.
The latest edition of Britain's Sunday Times newspaper was barred from news-stands in Dubai because of a graphic showing the emirate's ruler Sheikh Mohammad bin Rashed al-Maktoum sinking in a sea of debt.
"The Sunday Times was not distributed today," an official from the UAE national media council told AFP, requesting anonymity.
"We cannot accept a personal insult. It is against our traditions," he said.