Sears Holdings severs ties with Paula Deen

Friday, June 28th, 2013 | Finance News

NEW YORK (AP) — Paula Deen just lost another business partner.

Sears Holdings Corp. announced Friday that it is cutting ties with the Southern celebrity chef, adding to the list of companies severing their relationship following revelations that Deen used racial slurs in the past.

The company, based in Hoffman Estates, Ill., said Friday that it decided to phase out all products tied to the brand after "careful consideration of all available information."

"We will continue to evaluate the situation," said Amy Diamond, a spokeswoman at the parent company of Sears and Kmart stores.

Both Sears and Kmart sold Paula Deen products.

Sears joins Wal-Mart Stores Inc., Target Corp. and Home Depot as retailers that plan to stop selling cookware and other items with Deen's brand.

Meanwhile, on Thursday, Novo Nordisk said it and Deen have "mutually agreed to suspend our patient education activities for now." Deen, who specializes in Southern comfort food, had been promoting the company's drug Victoza since last year, when she announced she had Type 2 diabetes

On Monday, pork producer Smithfield Foods dropped her as a spokeswoman.

Caesars Entertainment also announced that Paula Deen's name is being stripped from four buffet restaurants owned by the company. Caesars said that its decision to rebrand its restaurants in Joliet, Ill.; Tunica, Miss.; Cherokee, N.C.; and Elizabeth, Ind., was a mutual one with Deen.

Last week, the Food Network said that it would not renew her contract.

The stakes are high for Deen, who Forbes magazine ranked as the fourth highest-earning celebrity chef last year, bringing in $17 million. She's behind Gordon Ramsay, Rachael Ray and Wolfgang Puck, according to Forbes.

Deen's empire, which spans from TV shows to furniture and cookware, generates total annual revenue of nearly $100 million, estimates Burt Flickinger III, president of retail consultancy Strategic Resource Group.

But Flickinger says that the controversy has cost her as much as half of that business. He also estimates that she could lose up to 80 percent by next year as suppliers extricate themselves from their agreements.

Still, book-buyers are so far standing by Deen. As of Friday morning, "Paula Deen's New Testament: 250 Recipes, All Lightened Up," remained No. 1 on Amazon.com. The book is scheduled for October. Another Deen book, "Paula Deen's Southern Cooking Bible," is No. 2. Several other Deen books were out of stock.

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Consumer sentiment ends June to near six-year high

Friday, June 28th, 2013 | Finance News

By Richard Leong

NEW YORK (Reuters) - Consumer sentiment improved in late June, ending the month close to a near six-year high set in May, as optimism among higher-income families rose to its strongest level in six years, a survey released on Friday showed.

The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment was 84.1 points, just slightly below a near six-year high of 84.5 in May. The late-June figure was higher than the preliminary reading of 82.7.

Economists polled by Reuters had forecast the final June reading of 82.8.

"Consumers believe the (economic) recovery has achieved an upward momentum that will not be easily reversed," survey director Richard Curtin said in a statement.

He added the recent drop in stock prices and the jump in mortgage rates have not caused a deterioration in consumers' view on the economy.

"To be sure, few high or low income consumers expect the economy to post robust gains or think the unemployment rate will drastically shrink during the year ahead," Curtin said.

Consumer sentiment is considered by some economists as a predictor on consumer spending, which accounts for 70 percent of the U.S. economy.

The latest Thomson Reuters/University of Michigan data was consistent with the June consumer confidence readings from the Conference Board released earlier this week. The research group's U.S. consumer confidence index rose to 81.4 this month, the highest since January 2008.

Household expenditures, however, have remained sluggish despite improving optimism. Consumer spending grew at an annualized 2.6 percent in first quarter, faster than the 1.8 percent pace in the last three months of 2012 but slower than an earlier government estimate of 3.4 percent.

The barometer of current economic conditions ended at 93.8 in June, down from 98.0 in May. This was above an early June reading of 92.1 and economists' forecast of 92.8.

The survey's gauge of consumer expectations ended June at its highest level since October at 77.8, up from 75.8 in May. The latest reading was stronger than the preliminary June figure of 76.7. Economists had projected a late-June figure of 77.0.

Other areas of the U.S. economy have been uneven, which economists have blamed on higher taxes and federal budget cuts. Weak overseas growth especially in China has been a drag on business activities and hiring, economists say.

The Institute for Supply Management-Chicago said its index on Midwest business activity posted a steeper-than-expected drop in June to 51.6. A reading below 50 points suggests business contraction.

"It's not firmly in expansion territory where businesses are ready to hire and invest," said Tim Quinlan, an economist with Wells Fargo Securities in Charlotte, North Carolina.

HIGHER-INCOME FAMILIES

There was a divergence in outlook between higher-income families and lower-income ones, according to the latest Thomson Reuters and University of Michigan consumer survey.

Higher-income households showed increased optimism about their incomes and wealth, while lower-income ones reported less optimism. Families in the top third income bracket were the most optimistic since the June 2007 survey.

Rising home and stock prices likely bolstered sentiment among wealthier families, although gains on Wall Street were reduced by a recent market sell-off due to worries that the Federal Reserve might pare its $85 billion monthly bond purchases later this year.

Still, the Standard & Poor's 500 index is currently up 2.1 percent for the quarter and 12.4 percent for the year, its best first-half performance since 1998, though it is on track for its first monthly loss since October.

Domestic single-family home prices posted their biggest annual gain in seven years in April, according to data from S&P/Case Shiller released on Tuesday.

The survey's one-year inflation expectation ended June at 3.0 percent down from 3.1 percent in May and from the 3.2 percent in early this month.

The survey's five-to-10-year inflation outlook ended unchanged at 2.9 percent for a third straight month. It dipped from 3 percent in early June.

(Reporting by Richard Leong; Editing by Chizu Nomiyama)

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Germany blocks EU carbon cap to protect automakers

Friday, June 28th, 2013 | Finance News

BERLIN (AP) — Germany has blocked a European Union agreement on capping car carbon emissions because the deal could have cost jobs and harmed its domestic auto industry, officials said Friday.

The blunt admission that Europe's biggest economy put business interests before environmental standards is at odds with Germany's image as a champion of green issues. The country has invested heavily in renewable energy and Chancellor Angela Merkel has previously advocated a global agreement to curb climate change, which scientists say is largely driven by carbon emissions.

"At a time when we're spending days sitting here talking about employment, we must pay attention not to weaken our own industrial base despite the need to make progress on environmental protection," Merkel said at a meeting in Brussels, where EU leaders were discussing the continent's youth unemployment crisis.

Environmental campaigners had lobbied to limit emissions from passenger cars to an average of 95 grams of CO2 per kilometer within seven years. But Germany wants to allow automakers such as BMW, Daimler and Audi — whose emissions are higher than those of their European competitors — to collect "credits" they can use to offset higher pollution levels beyond 2020.

"A fair solution also has to take account of the particularities of the German auto industry," government spokesman Georg Streiter told reporters in Berlin, explaining why Germany asked for a decision on the issue to be postponed Thursday.

An estimated 700,000 jobs in Germany depend on the auto industry and the country has enjoyed economic prosperity in recent years, unlike many of its European neighbors.

"We wouldn't be doing so well today if the auto industry were doing badly," Streiter said.

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Juergen Baetz contributed from Brussels.

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