Archive for August, 2011

August sales likely rose despite hurricane

Wednesday, August 31st, 2011 | Finance News

NEW YORK (Reuters) – U.S. retailers should report higher monthly sales in August, even though consumer confidence sagged and Hurricane Irene disrupted shopping along the East Coast during a key back-to-school weekend.

U.S. chain stores are expected to post a 4.6 percent gain in August sales at stores open at least a year, or same-store sales, based on analysts' expectations of sales at 25 retailers tracked by Thomson Reuters. Most report the sales on Thursday.

The tally includes warehouse club operator Costco Wholesale Corp, department store chain Nordstrom Inc and clothing seller Gap Inc, and speaks to the strength of consumer spending, which accounts for roughly 70 percent of U.S. economic activity.

August is the peak of the back-to-school shopping season, the second most important period for U.S. retailers after the year-end holiday season. Sales in recent months have held up despite weak economic indicators, offering hope of consumer resiliency in August and the rest of the year.

"If August continues as June and July did, I think that could bode well for a solid (year-end) holiday. I'm not saying that we're going to have a blow-out holiday, but a solid holiday," said Madison Riley, managing director of retail consulting firm Kurt Salmon.

The holiday shopping season, which traditionally starts the day after the U.S. Thanksgiving holiday, can make up as much as 40 percent of a retailer's annual revenue.

Graphic on same-store sales:


Hurricane Irene, which hit a wide area from North Carolina up to Vermont, essentially shut down malls during the last weekend of August, hurting sales of traditional back-to-school items like clothes, shoes and electronics.

Macy's Inc and J.C. Penney Co Inc were among the many chains forced to shut stores in the New York area.

"The storm's impact is clearly a wild card heading into Thursday's reports," said Ken Perkins, president of Retail Metrics.

Apparel retailers are expected to show the smallest sales gains in August, according to Thomson Reuters data. A glut of unsold merchandise could lead retailers to offer discounts to clear it, which could hurt quarterly profit margins.

By contrast, discount chains and drugstores are expected to show the biggest increases, helped by hurricane-related sales of things like batteries and bottled water. Walgreen Co, the biggest U.S. drugstore chain, will not report its monthly tally until next week, leaving investors to wait and see just how well that sector did.

The storm's full impact on monthly sales will not be felt until September's monthly report, since many retailers' August reporting periods ended on Saturday.

(Additional reporting by Dhanya Skariachan, editing by Bernard Orr)


Upstate New York surveys damage, worries about local economy

Wednesday, August 31st, 2011 | Finance News

KEENE, New York (Reuters) – Residents of normally picturesque upstate New York towns struggled on Wednesday to dig out from devastation left by Hurricane Irene, which destroyed homes, cut off roads and threatened the local economy.

The Ausable River overflowed its banks and inundated the tiny towns of Upper Jay and Keene, both popular tourist destinations, where local merchants were surveying their damaged buildings and ruined merchandise.

This summer had been a good one for local tourism prior to the storm, and merchants feared the devastation could keep visitors away over the typically busy Labor Day holiday and beyond.

Shop owner Gary Burke said he had recently reduced the flood insurance on his gift shop and home, which sit on the banks of the river, after a threatened storm in the spring turned out to be harmless.

Now a massive tree is lodged in the rear door of his store, and mud covered most of the merchandise.

"This is a very hard place to live, and now I'm fed up," he said.

National Guard units, state workers and convicts from a nearby prison were deployed to repave roads and chop up downed trees.

In Upper Jay, a house was lifted off its foundation and swept a quarter-mile away, where it settled in a field.

"It just gently rolled down the stream," said Julie Robards, who runs an antique store in the town that was filled with several feet of water. "This was such a charming town, and now it's devastated,"

She said at least a thousand antique books, pottery, upholstered furniture and a gallery of paintings by local artists were destroyed, she said.

The town's firehouse, where $25,000 worth of renovations was completed two weeks ago, and its library were ravaged as well. Fire Chief Jeff Straight said the firehouse may have to be condemned.

Local bakery owner Paul Johnson said his home a few yards from the river, in his family for 150 years, had never flooded until Sunday.

In Keene, where the roof of the firehouse partially collapsed, locals gathered at the unscathed Tip-a-Canoe restaurant to trade stories and commiserate.

"It's a tough little town," said Brooks Townsend, who works at the restaurant. But he said he was fearful that local businesses would take a heavy blow as tourists stay away.

Governor Andrew Cuomo, who toured Keene on Tuesday, said Irene had caused about $1 billion in damages across the state. President Barack Obama has declared more than a dozen New York counties as disaster areas, paving the way for them to receive federal aid.

"These are not communities of deep pockets, and these are communities that will need economic help to restore themselves," Cuomo said.

Despite the extent of the damage, many residents of the towns remained optimistic.

"We have a fighting spirit in this town," said Robards, who lives in Upper Jay.

(Editing by Ellen Wulfhorst and Cynthia Johnston)


UAW Ford workers ready to OK routine strike vote

Wednesday, August 31st, 2011 | Finance News

DETROIT (Reuters) – A vote by Ford Motor Co union workers to authorize a strike if negotiations between the United Auto Workers and Ford turn sour is well on its way to passage, union officials said on Wednesday.

United Auto Workers at five of Ford's biggest plants have overwhelmingly voted this week to authorize a strike. The lowest rate of affirmative votes at the five plants was 97 percent.

The latest two results were released on Wednesday from workers at UAW Local 600, which represents about 3,600 production workers at the Dearborn Truck Plant in Michigan and UAW Local 2000, which represents about 1,750 workers at the Ohio Assembly Plant, officials from the local union halls said.

All of the Ford plants that collectively have about 41,000 UAW-represented workers will have voted by the end of this week.

Three UAW negotiating teams are separately meeting with Ford, General Motors Co and Chrysler Group LLC bargaining teams in an effort to reach contracts to replace current pacts that expire on September 14.

Once those contracts are reached, workers at the three automakers must ratify them. The contracts are expected to be for four years.

Ford is the only Detroit automaker vulnerable to a strike. Chrysler and GM workers gave up the right to strike in this round of talks as part of the 2009 U.S. government bailouts of the two companies.

Bob King, UAW president, said this week he hopes to avoid a strike at Ford, but he also said relations with the automaker would not likely be damaged if workers voted for a strike.

"This is just something we do during each negotiation," said Jeff Wright, president of UAW Local 249 which represents about 3,650 workers at the Kansas City Assembly Plant in Missouri. "It's pretty routine."

The vote this week at Kansas City, the second-largest Ford plant in terms of production workers, was 99.4 percent (3,049 to 18) in favor of the strike authorization, Wright said.

Wright said the vote shows "no indication" of how UAW Local 249 members would vote once Ford and the UAW national negotiating team reach a proposed contract.

In a separate interview, UAW Local 862 President Todd Dunn, said that, while routine, the strike authorization vote gives the UAW's national negotiating team a stick in case one is needed.

Dunn and UAW Local 862 represent workers at two big plants, including the largest Ford plant in terms of number of workers, the Kentucky Truck Plant, which has about 3,825 hourly production employees. The local also represents about 1,100 workers at the Louisville Assembly Plant.

Both plants are in Louisville, Kentucky.

Chrysler is majority-owned and is managed by Fiat SpA.

(Reporting by Bernie Woodall; editing by Andre Grenon)