BUSINESS BRIEFS
High-end retailers struggle; low-end stores do better
Advertiser Staff and News Services
MINNEAPOLIS — In a slowing economy, the more upscale the retailer, it seems, the more they're struggling.
Department store operator Macy's needed a one-time tax benefit to rescue the fourth-quarter results it released yesterday. Cheap-chic Target did better, with an 8 percent drop in quarterly earnings that was still a little higher than analysts expected. And Wal-Mart, with its strong emphasis on low prices, reported a solid fourth quarter last week.
Other examples: Nordstrom said Monday that profits declined 8.6 percent, while discounter TJX Cos. said last week that its fourth-quarter earnings rose almost 47 percent.
HOME DEPOT HAS FIRST SALES DECLINE
ATLANTA — Hobbled by the housing slump and a loss of market share, The Home Depot Inc. posted its first-ever annual sales decline yesterday and released a 2008 outlook that is more gloomy than that of its chief rival, Lowe's.
The Atlanta-based company, reporting fourth-quarter profits had declined more than 27 percent, said an earlier halt to a program to buy back up to $22.5 billion in Home Depot stock will continue until markets improve.
Home Depot appeased some investors with plans to significantly cut back the number of new store openings.
POPCORN HELPS PAY FOR THE MOVIE
SAN JOSE, Calif. — What's a movie without popcorn? According to a new economic analysis, it would be a lot more expensive.
As one price goes up, the other comes down. So rather than cursing the cost of your next bag of buttered popcorn, take comfort that it subsidizes your ticket — and helps fill seats, say researchers at the University of California-Santa Cruz and Stanford University.
Moviegoers aren't being gouged at concession stands, the researchers conclude. Rather, the high cost of snacks helps keep ticket prices down, which allows more people to attend.
The researchers' analysis — based on data from thousands of showings at 43 multiplex theaters in 30 cities in a five-year period — answers the question of why a couple of hours in the dark with Daniel Day-Lewis costs only twice as much as a big box of Milk Duds.
ON US AIRWAYS, 2ND BAG COSTS $25
TEMPE, Ariz. — US Airways Group Inc. said yesterday it will start charging fliers $25 to check in a second bag, the latest effort by the company to raise revenue and deal with rising costs.
The new charge will begin May 5 for tickets bought beginning today, the company said.
The announcement follows a similar policy change disclosed early this month by United Airlines.
US Airways spokesman Morgan Durant said the baggage charge is expected to generate $75 million in revenue and cost savings each year. The carrier decided to add the charge as it looked for new ways to make money while dealing "with the operating reality that we have with $100 a barrel in oil," he said.
ALLSTATE TO BUY BACK $2B IN STOCK
NORTHBROOK, Ill. — Allstate Corp. plans to increase its dividend and buy back $2 billion of its stock, the insurer said yesterday.
Allstate declared a 41-cent dividend, payable April 1 to shareholders as of March 14. The change marks a 7.9 percent increase over the 38-cent dividend paid last quarter.
Based on yesterday's closing price, the company's stock will boast a dividend yield of 3.4 percent.
Allstate also said it plans to buy back up to $2 billion of its stock through March of next year. The insurer will launch the new buyback program once its existing $4 billion program is finished by the end of the first quarter. Allstate plans to keep buying back stock at a pace of about $2 billion a year.
SALE OF TROUBLED MORTGAGES VIEWED
WASHINGTON — Investors could sell up to $15 billion of troubled mortgages to the government under a plan key House members are discussing to bolster the U.S. housing market.
The tentative plan would allow the government to purchase up to 1 million mortgages over five years in an effort to help struggling borrowers avoid foreclosure and financial markets avoid more credit-related losses. The loans would be bought by the Federal Housing Administration, a Depression-era agency that insures loans made to borrowers with poor credit.
The effort shows that the housing crisis has evolved to the point where government officials are considering bailing out large groups of borrowers and Wall Street investors — something that seemed anathema to Democrats and Republicans all last year. Still, many lawmakers and the Bush administration have been leery of proposals that would transfer risks to U.S. taxpayers.
