By Kathy Chu and Taylor McGraw, USA TODAY
In a verdict that could have far-reaching implications for elderly and disabled bank customers, the California Supreme Court ruled this week that banks can tap Social Security benefits in bank accounts to cover bounced-check fees.
The decision, in the Miller v. Bank of America case, effectively reverses a 2004 San Francisco trial court ruling ordering the bank to pay at least $284.4 million in damages to more than 1.1 million customers.
Spokeswoman Shirley Norton says the verdict confirms that BofA "has always acted lawfully in maintaining and balancing its customer accounts." James Sturdevant, the lawyer who brought the case against BofA (BAC), says the opinion "condemns the most vulnerable bank consumers to predatory practices."
The Center for Responsible Lending, an advocacy group, has found that consumers heavily dependent on Social Security income pay $1 billion in overdrafts a year. Most overdrafts are triggered by small-dollar debit card transactions, says Eric Halperin, director of the center's Washington office.
The California ruling — along with a 2002 federal verdict in Lopez v. Washington Mutual Bank favoring the thrift — could make it more daunting to challenge banks' ability to deduct overdraft fees from government benefits. "It will make plaintiffs pause at least in bringing other cases," says Greg Taylor, associate general counsel at the American Bankers Association, a trade group.
FIND MORE STORIES IN: Bank of America Washington Mutual American Bankers Association
But Margot Saunders, counsel for the National Consumer Law Center, says the Supreme Court ruling merely "interprets a California statute" and doesn't prevent similar cases from moving forward elsewhere. It also won't stymie general lawsuits dealing with overdrafts, she says.
BofA, in an unrelated overdraft case, recently agreed to a $35 million settlement. The lawsuit alleged the bank processed transactions and provided account information in a way that increased overdraft fees. In settling, the bank denied the claims and said it fully complied with the law.
Federal law generally prohibits creditors from seizing Social Security or other government benefits to pay a debt. But California law says overdraft charges are not debt. The highest state court viewed the bank account as "a running tally of debits and credits," entitling banks to deduct overdraft charges, says Daniel Bussel, law professor at UCLA.
The U.S. government sided with BofA. The government said if banks are not able to tap Social Security benefits for overdraft charges, they may restrict electronic deposits, which could force the government to issue costly paper checks.
Friday, June 5, 2009
By Sharon Silke Carty, USA TODAY
DETROIT — Car buyers and deal-hunters heading out to Chrysler showrooms this weekend hoping to snag a once-in-a-lifetime deal may be out of luck: Closing dealers have little inventory to sell.
Dealers scheduled to close Tuesday have only 1,981 vehicles left to sell, and many of those dealers still have the option of finding another dealer to buy their excess inventory, Chrysler spokeswoman Carrie McElwee says. Dealers closing down soon sold 16,000 cars in May, and another 23,000 have been cherry-picked by dealers remaining in business.
The automaker told 789 dealers last month that they would remain Chrysler dealers only until June 9, at which time their franchises would be revoked.
Some affected dealers went before Chrysler's bankruptcy judge Thursday to protest the closing notice, and closing arguments by Chrysler and dealer attorneys are scheduled for Tuesday. McElwee says the dealers will remain part of Chrysler until the judge issues a decision, which may not be until later next week.
Any dealer with remaining inventory can ask Chrysler to help find another dealer to sell their vehicles, or keep the cars and try selling them without the benefit of Chrysler incentives. Also, once the store is dropped by Chrysler, the cars and trucks will be considered used, since they'll need to be registered in the dealership's name.
FIND MORE STORIES IN: Jeep Edmunds.com Chrysler
But dealers may not want Chrysler's help. The automaker is asking $350 per car to help redistribute the vehicles, which could add up if a dealer has a significant number of cars on its lots.
Dealers say some buyers have been calling Chrysler stores, asking for $10,000 discounts. But even though their franchise agreements are being dropped, store owners are bristling at the bargain hunters.
"Just because a brand is hurting doesn't mean that a shopper can automatically walk in and simply get a great deal," says Philip Reed, consumer advice editor for Edmunds.com.
Daniel Amaral, a dealer in Newtown, Conn., has just two Chryslers left: a four-door Sebring and a PT Cruiser. Someone called this week asking if he'd take $15,000 for the Sebring. The sticker price is $26,500, and he's asking $23,500.
"I'll keep it," says Amaral, who plans to keep the dealership open as a used car store and repair shop. "Eventually, people will need cars, and when they do, they'll know this is a good price."
Wade Walker, a Jeep dealer in Montpelier, Vt., found another dealer nearby to take the seven Jeeps he had on his lot at the start of May. He says he feels bad both for colleagues being cut off who are stuck with Chrysler vehicles, and for dealers staying in business who he says are being pressured to take on new cars they may not want or need.
"The market is just going to be flooded with these discounted vehicles for a while," Walker says.
DETROIT — Car buyers and deal-hunters heading out to Chrysler showrooms this weekend hoping to snag a once-in-a-lifetime deal may be out of luck: Closing dealers have little inventory to sell.
Dealers scheduled to close Tuesday have only 1,981 vehicles left to sell, and many of those dealers still have the option of finding another dealer to buy their excess inventory, Chrysler spokeswoman Carrie McElwee says. Dealers closing down soon sold 16,000 cars in May, and another 23,000 have been cherry-picked by dealers remaining in business.
The automaker told 789 dealers last month that they would remain Chrysler dealers only until June 9, at which time their franchises would be revoked.
Some affected dealers went before Chrysler's bankruptcy judge Thursday to protest the closing notice, and closing arguments by Chrysler and dealer attorneys are scheduled for Tuesday. McElwee says the dealers will remain part of Chrysler until the judge issues a decision, which may not be until later next week.
Any dealer with remaining inventory can ask Chrysler to help find another dealer to sell their vehicles, or keep the cars and try selling them without the benefit of Chrysler incentives. Also, once the store is dropped by Chrysler, the cars and trucks will be considered used, since they'll need to be registered in the dealership's name.
FIND MORE STORIES IN: Jeep Edmunds.com Chrysler
But dealers may not want Chrysler's help. The automaker is asking $350 per car to help redistribute the vehicles, which could add up if a dealer has a significant number of cars on its lots.
Dealers say some buyers have been calling Chrysler stores, asking for $10,000 discounts. But even though their franchise agreements are being dropped, store owners are bristling at the bargain hunters.
"Just because a brand is hurting doesn't mean that a shopper can automatically walk in and simply get a great deal," says Philip Reed, consumer advice editor for Edmunds.com.
Daniel Amaral, a dealer in Newtown, Conn., has just two Chryslers left: a four-door Sebring and a PT Cruiser. Someone called this week asking if he'd take $15,000 for the Sebring. The sticker price is $26,500, and he's asking $23,500.
"I'll keep it," says Amaral, who plans to keep the dealership open as a used car store and repair shop. "Eventually, people will need cars, and when they do, they'll know this is a good price."
Wade Walker, a Jeep dealer in Montpelier, Vt., found another dealer nearby to take the seven Jeeps he had on his lot at the start of May. He says he feels bad both for colleagues being cut off who are stuck with Chrysler vehicles, and for dealers staying in business who he says are being pressured to take on new cars they may not want or need.
"The market is just going to be flooded with these discounted vehicles for a while," Walker says.
By Tim Higgins, Detroit Free Press
DETROIT — General Motors announced a tentative deal Friday for Roger Penske to acquire GM's struggling Saturn brand and distribution network.
Penske's Saturn will continue to receive GM-made vehicles for two years, and is looking for another manufacturer to make vehicles that will bear the Saturn brand.
"We will have a supply of vehicles for at least two years with existing brands, and we have been in discussions during this diligence period with a number of manufacturers on a worldwide basis," Penske said Friday morning. "We would expect to have a lineup going forward, which would be manufactured by a worldwide partner."
Penske said he expects the vehicles to be manufactured in the United States if sales are sufficient.
Saturn would be wholly owned by the Penske Automotive Group. Penske said he hopes retired Chrysler President Tom LaSorda, who was advising Penske on the deal, will have a role with the company.
FIND MORE STORIES IN: General Motors Roger Penske Jill Lajdziak
The deal is expected to close in the late third quarter. A price was not disclosed.
As part of its effort to narrow its offerings from eight brands to four, GM has been trying to find a buyer for Saturn. Earlier this week, the automaker said it had 16 interested parties.
A deal to sell Saturn caps a week of sweeping restructuring efforts tied to GM's bankruptcy filing, including the announcement that GM plans to sell Hummer to a Chinese manufacturer.
"We are bringing together two icons: the Saturn brand and the Penske organization," said Jill Lajdziak, Saturn's general manager. "When completed, this deal will save more than 350 dealerships and over 13,000 jobs in the United States."
Saturn dealers will be offered a franchise agreement, Penske said.
The deal includes Saturn's parts operation.
Penske called the dealer network "one of the best in the business."
The idea that Penske was closing in on a deal to acquire the Saturn brand and its dealer network appealed to franchise owners, who could have seen their businesses phased out.
In February, GM announced it would phase out Saturn after 2011 unless dealers could find a better option. In April, GM said it would close the brand down at the end of the year if a deal wasn't arranged.
"There's a lot of us that hope that's the deal because we know Roger Penske is a guy that's detail-oriented, who has capital and standing in the automotive community," George Nahas, president of Saturn of the Lakes in Tavares, Fla., said Thursday. "I think Roger Penske would be a great fit for us."
Saturn sold about 188,000 vehicles last year, down 21.7% from 2007. It has about 380 U.S. stores.
About 25 years ago, GM launched the stand-alone Saturn brand to be "A Different Kind of Car Company" in an attempt to better compete against Japanese brands. It gathered some of the industry's best car dealers to be franchise holders.
Analysts today say the value of Saturn lies with that dealer network, which gained a reputation for being consumer-friendly.
"The only real value in Saturn, frankly, is that distribution network. There is no discrete plant, there is no discrete model," said Aaron Bragman, an industry analyst with IHS Global Insight. "I can't imagine that GM is going to continue to make these vehicles much beyond selling the brand because they would be competing against themselves."
GM's Spring Hill, Tenn., assembly plant opened to build Saturn vehicles but no longer builds them and is among plants facing closure.
Penske has made a name for himself by taking struggling companies and fixing them, such as Hertz Truck Leasing in the 1980s and Detroit Diesel in the 1990s.
In 1999, he invested $83 million into United Auto Group Inc., now called the Penske Automotive Group. The group is the second-largest auto dealer in the United States and is the sole U.S. distributor of the Smart car.
Penske said Friday he would not be combining Saturn and Smart car operations
DETROIT — General Motors announced a tentative deal Friday for Roger Penske to acquire GM's struggling Saturn brand and distribution network.
Penske's Saturn will continue to receive GM-made vehicles for two years, and is looking for another manufacturer to make vehicles that will bear the Saturn brand.
"We will have a supply of vehicles for at least two years with existing brands, and we have been in discussions during this diligence period with a number of manufacturers on a worldwide basis," Penske said Friday morning. "We would expect to have a lineup going forward, which would be manufactured by a worldwide partner."
Penske said he expects the vehicles to be manufactured in the United States if sales are sufficient.
Saturn would be wholly owned by the Penske Automotive Group. Penske said he hopes retired Chrysler President Tom LaSorda, who was advising Penske on the deal, will have a role with the company.
FIND MORE STORIES IN: General Motors Roger Penske Jill Lajdziak
The deal is expected to close in the late third quarter. A price was not disclosed.
As part of its effort to narrow its offerings from eight brands to four, GM has been trying to find a buyer for Saturn. Earlier this week, the automaker said it had 16 interested parties.
A deal to sell Saturn caps a week of sweeping restructuring efforts tied to GM's bankruptcy filing, including the announcement that GM plans to sell Hummer to a Chinese manufacturer.
"We are bringing together two icons: the Saturn brand and the Penske organization," said Jill Lajdziak, Saturn's general manager. "When completed, this deal will save more than 350 dealerships and over 13,000 jobs in the United States."
Saturn dealers will be offered a franchise agreement, Penske said.
The deal includes Saturn's parts operation.
Penske called the dealer network "one of the best in the business."
The idea that Penske was closing in on a deal to acquire the Saturn brand and its dealer network appealed to franchise owners, who could have seen their businesses phased out.
In February, GM announced it would phase out Saturn after 2011 unless dealers could find a better option. In April, GM said it would close the brand down at the end of the year if a deal wasn't arranged.
"There's a lot of us that hope that's the deal because we know Roger Penske is a guy that's detail-oriented, who has capital and standing in the automotive community," George Nahas, president of Saturn of the Lakes in Tavares, Fla., said Thursday. "I think Roger Penske would be a great fit for us."
Saturn sold about 188,000 vehicles last year, down 21.7% from 2007. It has about 380 U.S. stores.
About 25 years ago, GM launched the stand-alone Saturn brand to be "A Different Kind of Car Company" in an attempt to better compete against Japanese brands. It gathered some of the industry's best car dealers to be franchise holders.
Analysts today say the value of Saturn lies with that dealer network, which gained a reputation for being consumer-friendly.
"The only real value in Saturn, frankly, is that distribution network. There is no discrete plant, there is no discrete model," said Aaron Bragman, an industry analyst with IHS Global Insight. "I can't imagine that GM is going to continue to make these vehicles much beyond selling the brand because they would be competing against themselves."
GM's Spring Hill, Tenn., assembly plant opened to build Saturn vehicles but no longer builds them and is among plants facing closure.
Penske has made a name for himself by taking struggling companies and fixing them, such as Hertz Truck Leasing in the 1980s and Detroit Diesel in the 1990s.
In 1999, he invested $83 million into United Auto Group Inc., now called the Penske Automotive Group. The group is the second-largest auto dealer in the United States and is the sole U.S. distributor of the Smart car.
Penske said Friday he would not be combining Saturn and Smart car operations
FAYETTEVILLE, Ark. (AP) — Wal-Mart Stores' newly installed President and CEO Mike Duke pledged to shareholders Friday that the world's largest retailer will build on its success by keeping its customers even when the economy improves.
But at an annual meeting that was often about celebrating recent business success, the CEO emphasized that the discounter also needs to make even more strides in larger issues of sustainability and health care.
"I believe the economic crisis has brought a fundamental shift in consumer attitudes and behavior," Duke told cheering shareholders packed into a University of Arkansas arena in Fayetteville, about 30 miles from its Bentonville headquarters.
"There is a 'new normal' in which people want to save money and are getting smarter about saving money. ... So let me be clear, and people ask me about this all the time: Our customers will stay with us when this economy turns around," he said.
Wal-Mart (WMT) has taken customers from competitors and been a bright light in a bleak recession for retailers. The company's challenge now is to make sure new shoppers stay when the economy recovers.
FIND MORE STORIES IN: Wal-Mart Goldman Sachs Fidel Castro Target Corporation
As a testament to recent success, Wal-Mart announced it would launch a $15 billion share buyback. The program replaces a $15 billion program begun in 2007 that $3.4 billion of remaining authorization.
In his address, Duke touched on various issues from increasing career advancement and developing better training for its workers to accelerating its environmental efforts like further reducing waste.
Duke, who had been vice chairman of the company's international business, succeeded Lee Scott, who retired Feb. 1. Scott is continuing as chairman of the executive committee of the board until January 2011.
Chief Financial Officer Tom Schoewe told shareholders that the company was increasing sales and profits faster than its competitors. He noted that Wal-Mart forecast earnings per share for fiscal 2008 of between $3.30 and $3.43.
The company came in at $3.35. Meeting that projection came as the economy went into a nosedive.
"Did we know when we provided guidance that consumer confidence would look like this?" Schoewe said, pointing at a graphic that featured a sharp downward arrow. He said the retail environment became increasingly difficult and that Wal-Mart was pressured internationally by a stronger dollar.
The meeting featured Wal-Mart's customary celebrity appearances. Miley Cyrus, who has a new apparel line with Wal-Mart, performed, as did American Idol winner Kris Allen, who is from Arkansas. Basketball legend Michael Jordan also spoke briefly.
Vice Chairman Eduardo Castro-Wright promised shareholders that the company will press for more diversity in its workforce and create more career opportunities for advancement.
"In the year ahead, we will take bold steps. We will not confuse efforts with results," said Castro-Wright Ark. Without offering specifics, Castro-Wright said that the company will do more to help associates, including hourly associates, advance in the workforce and get competitive pay.
The nation's biggest private employer has long been under pressure by labor-backed critics to keep improving its workplace practices, though criticism has diminished recently.
Castro-Wright says that 40% of regional general managers are "of color"; 20% of that group are women.
Wal-Mart, which generated more than $400 billion in sales last year, has pulled shoppers away from rivals around the globe because its re-emphasis on low prices along with the right mix of merchandise and marketing have come together just as the economy went sour.
Even entertainer Ben Stiller, the host of the meeting, took the opportunity to take a jab at Target.
"You guys get up early," said Stiller, referring to the 7 a.m start of the meeting. "I hear they are still sleeping over at Target."
Still, after enjoying a 20% surge in its stock price in 2008, Wal-Mart has seen its shares fall 7.5% so far this year as Wall Street turns to retailers that sell more discretionary goods and could benefit when the economy improves. That has driven up share prices for such merchants as Macy's and Target.
Wal-Mart continues to move forward with an aggressive remodeling of its stores, which includes a better display of electronics and lower shelves to help shoppers navigate the store more easily. The company plans to remodel 500 of its more than 3,600 stores in the U.S. this year.
The company is also launching more exclusive launches in apparel and home furnishings that should help shoppers buy more than just detergent and groceries. This week, the company launched a new fashion line with teen star Cyrus and BCBG designer Max Azria for the critical back-to-school shopping season.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
But at an annual meeting that was often about celebrating recent business success, the CEO emphasized that the discounter also needs to make even more strides in larger issues of sustainability and health care.
"I believe the economic crisis has brought a fundamental shift in consumer attitudes and behavior," Duke told cheering shareholders packed into a University of Arkansas arena in Fayetteville, about 30 miles from its Bentonville headquarters.
"There is a 'new normal' in which people want to save money and are getting smarter about saving money. ... So let me be clear, and people ask me about this all the time: Our customers will stay with us when this economy turns around," he said.
Wal-Mart (WMT) has taken customers from competitors and been a bright light in a bleak recession for retailers. The company's challenge now is to make sure new shoppers stay when the economy recovers.
FIND MORE STORIES IN: Wal-Mart Goldman Sachs Fidel Castro Target Corporation
As a testament to recent success, Wal-Mart announced it would launch a $15 billion share buyback. The program replaces a $15 billion program begun in 2007 that $3.4 billion of remaining authorization.
In his address, Duke touched on various issues from increasing career advancement and developing better training for its workers to accelerating its environmental efforts like further reducing waste.
Duke, who had been vice chairman of the company's international business, succeeded Lee Scott, who retired Feb. 1. Scott is continuing as chairman of the executive committee of the board until January 2011.
Chief Financial Officer Tom Schoewe told shareholders that the company was increasing sales and profits faster than its competitors. He noted that Wal-Mart forecast earnings per share for fiscal 2008 of between $3.30 and $3.43.
The company came in at $3.35. Meeting that projection came as the economy went into a nosedive.
"Did we know when we provided guidance that consumer confidence would look like this?" Schoewe said, pointing at a graphic that featured a sharp downward arrow. He said the retail environment became increasingly difficult and that Wal-Mart was pressured internationally by a stronger dollar.
The meeting featured Wal-Mart's customary celebrity appearances. Miley Cyrus, who has a new apparel line with Wal-Mart, performed, as did American Idol winner Kris Allen, who is from Arkansas. Basketball legend Michael Jordan also spoke briefly.
Vice Chairman Eduardo Castro-Wright promised shareholders that the company will press for more diversity in its workforce and create more career opportunities for advancement.
"In the year ahead, we will take bold steps. We will not confuse efforts with results," said Castro-Wright Ark. Without offering specifics, Castro-Wright said that the company will do more to help associates, including hourly associates, advance in the workforce and get competitive pay.
The nation's biggest private employer has long been under pressure by labor-backed critics to keep improving its workplace practices, though criticism has diminished recently.
Castro-Wright says that 40% of regional general managers are "of color"; 20% of that group are women.
Wal-Mart, which generated more than $400 billion in sales last year, has pulled shoppers away from rivals around the globe because its re-emphasis on low prices along with the right mix of merchandise and marketing have come together just as the economy went sour.
Even entertainer Ben Stiller, the host of the meeting, took the opportunity to take a jab at Target.
"You guys get up early," said Stiller, referring to the 7 a.m start of the meeting. "I hear they are still sleeping over at Target."
Still, after enjoying a 20% surge in its stock price in 2008, Wal-Mart has seen its shares fall 7.5% so far this year as Wall Street turns to retailers that sell more discretionary goods and could benefit when the economy improves. That has driven up share prices for such merchants as Macy's and Target.
Wal-Mart continues to move forward with an aggressive remodeling of its stores, which includes a better display of electronics and lower shelves to help shoppers navigate the store more easily. The company plans to remodel 500 of its more than 3,600 stores in the U.S. this year.
The company is also launching more exclusive launches in apparel and home furnishings that should help shoppers buy more than just detergent and groceries. This week, the company launched a new fashion line with teen star Cyrus and BCBG designer Max Azria for the critical back-to-school shopping season.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
NEW YORK (AP) — Many retailers said same-store sales fell in May, as expected, as shoppers continue to spend cautiously, focusing on bargains and food.
The declines came in largely in line with analyst expectations, with frequent standouts such as The Buckle (BKE) posting better results. Cheap chic discounter Target (TGT) reported a bigger drop than analysts expected, as apparel and home products continued to be weak sellers. Overall, necessities like food and health care products continued to be the strongest sellers.
According to a preliminary tally by Thomson Reuters, 13 retailers missed estimates, five retailers beat estimates and one matched expectations.
"There's general softness across the board, as consumers continue to face rising unemployment, falling home values and rising gas prices," said Ken Perkins, president of retail consulting firm Retail Metrics LLC. He expects same-store sales to fall 3.6% overall. "One good sign so far is that results aren't coming in drastically worse than expected, so maybe there is stabilization taking place here."
Another positive was some retailers said traffic had improved during the month.
Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance because they measure growth at existing stores rather than newly opened ones. Economists closely monitor consumer spending because it accounts for about 70% of economic activity.
Drawing conclusions about the broader economy from the numbers is more difficult, Perkins said, because Wal-Mart (WMT), the world's largest retailer, stopped reporting monthly same-store sales as of this month. He said Wal-Mart accounts for about 10% of retail sales.
The world's largest retailer has also been a standout in recent months. "Wal-Mart has been lifting everybody for the last year and a half," Perkins said.
WAL-MART: Plans to create 22k jobs in '09
Also weighing on results was last year's $50 billion fiscal stimulus, which shoppers received in May last year and retailers credited for a lift in sales.
Elsewhere, "the trends we've seen through the first quarter are continuing," said Stifel Nicolaus analyst Richard Jaffe. "The consumer has voted with their pocketbook, they want better value and higher quality at better prices."
Target same-store sales fell 6.1%, a bigger drop than the 4.3% analysts expected. Non-discretionary items such as healthcare and baby products and food were the best sellers, while apparel and home products were weaker.
Warehouse club operator Costco Wholesale (COST) said same-store sales slipped 7% in May. Its strongest categories included fresh food and other food products.
Meanwhile BJ's Wholesale (BJ) said same-store sales fell 6.8%, while analysts predicted a 4.4% decline. Traffic was up 5% compared with a year ago, however. Food, TVs and computer equipment were the strongest sellers.
TJX Cos. (TJX)— which said same-store sales rose 5%, above expectations — also said traffic increased.
Department-store operator Macy's (M) said same-store sales slipped 9.1%, slightly above the 9.3% drop Wall Street expected.
The teen sector continued to be among the best performing sectors, with low-price stores doing the best. The Buckle and Aeropostale (ARO), both known for good deals on trendy fashions, reported double-digit increases.
However, Abercrombie & Fitch (ANF)— which has kept prices high despite competitors' markdowns — said same-store sales fell 28%. Last month, Abercrombie finally bowed to pressure and said it has started to reduce prices.
Limited Brands (LTD), which operates Victoria's Secret and Bath & Body Works stores, said same-store sales fell 7%, matching analyst expectations. Gap (GPS) same-store sales fell 6%, below expectations, though its Old Navy chain posted a 3% rise.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed
The declines came in largely in line with analyst expectations, with frequent standouts such as The Buckle (BKE) posting better results. Cheap chic discounter Target (TGT) reported a bigger drop than analysts expected, as apparel and home products continued to be weak sellers. Overall, necessities like food and health care products continued to be the strongest sellers.
According to a preliminary tally by Thomson Reuters, 13 retailers missed estimates, five retailers beat estimates and one matched expectations.
"There's general softness across the board, as consumers continue to face rising unemployment, falling home values and rising gas prices," said Ken Perkins, president of retail consulting firm Retail Metrics LLC. He expects same-store sales to fall 3.6% overall. "One good sign so far is that results aren't coming in drastically worse than expected, so maybe there is stabilization taking place here."
Another positive was some retailers said traffic had improved during the month.
Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance because they measure growth at existing stores rather than newly opened ones. Economists closely monitor consumer spending because it accounts for about 70% of economic activity.
Drawing conclusions about the broader economy from the numbers is more difficult, Perkins said, because Wal-Mart (WMT), the world's largest retailer, stopped reporting monthly same-store sales as of this month. He said Wal-Mart accounts for about 10% of retail sales.
The world's largest retailer has also been a standout in recent months. "Wal-Mart has been lifting everybody for the last year and a half," Perkins said.
WAL-MART: Plans to create 22k jobs in '09
Also weighing on results was last year's $50 billion fiscal stimulus, which shoppers received in May last year and retailers credited for a lift in sales.
Elsewhere, "the trends we've seen through the first quarter are continuing," said Stifel Nicolaus analyst Richard Jaffe. "The consumer has voted with their pocketbook, they want better value and higher quality at better prices."
Target same-store sales fell 6.1%, a bigger drop than the 4.3% analysts expected. Non-discretionary items such as healthcare and baby products and food were the best sellers, while apparel and home products were weaker.
Warehouse club operator Costco Wholesale (COST) said same-store sales slipped 7% in May. Its strongest categories included fresh food and other food products.
Meanwhile BJ's Wholesale (BJ) said same-store sales fell 6.8%, while analysts predicted a 4.4% decline. Traffic was up 5% compared with a year ago, however. Food, TVs and computer equipment were the strongest sellers.
TJX Cos. (TJX)— which said same-store sales rose 5%, above expectations — also said traffic increased.
Department-store operator Macy's (M) said same-store sales slipped 9.1%, slightly above the 9.3% drop Wall Street expected.
The teen sector continued to be among the best performing sectors, with low-price stores doing the best. The Buckle and Aeropostale (ARO), both known for good deals on trendy fashions, reported double-digit increases.
However, Abercrombie & Fitch (ANF)— which has kept prices high despite competitors' markdowns — said same-store sales fell 28%. Last month, Abercrombie finally bowed to pressure and said it has started to reduce prices.
Limited Brands (LTD), which operates Victoria's Secret and Bath & Body Works stores, said same-store sales fell 7%, matching analyst expectations. Gap (GPS) same-store sales fell 6%, below expectations, though its Old Navy chain posted a 3% rise.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed
TOKYO (AP) — Mitsubishi Motors' electric vehicle is twice as expensive as popular hybrid cars by rivals Toyota and Honda, but Japan's No. 4 automaker said Friday the i-MiEV will help it survive increasingly intense global competition.
"With the electric vehicle, we will challenge global players," said Mitsubishi President Osamu Masuko at a news conference where the company rolled out the electric model.
The i-MiEV is powered solely by electricity, and can be recharged from a regular home socket. The four-seater vehicle can run up to 100 miles after charging seven hours at 200 volts.
"It is a zero-emission vehicle. It does not rely on oil, which is different from hybrid cars," Masuko said. A hybrid car switches between a gasoline engine and an electric motor to boost mileage.
Initially, Mitsubishi aims to target local governments and companies, and hopes to sell 1,400 units of the electric car for the fiscal year through March 2010, mostly in Japan.
FIND MORE STORIES IN: Japan Mitsubishi Toyota Motor Corporation Nissan Motor Co., Ltd. Tesla Motors Honda Motor Company, Ltd Mitsubishi Motors
Mitsubishi also aims to sell 250 units abroad, mainly in Britain and other European countries, in the current financial year.
Individual buyers in Japan can place orders for the car in July, with deliveries starting in April 2010.
It also plans to sell the car in China and the United States, but Masuko gave no details.
Mitsubishi's i-MiEV costs 4.59 million yen ($47,560), more than twice as much as Toyota's Prius hybrid, which is just over 2 million yen ($20,700), or Honda's Insight, which starts at 1.89 million yen, the cheapest hybrid on the market.
Masuko acknowledged the high price is a major hurdle to encouraging people to buy the i-MiEV, which stands for Mitsubishi innovative electric vehicle. (The initial "i" doesn't have any particular meaning, the company says.)
"This is not the price that ordinary people can easily buy. But as we increase our production, we aim to cut the price below 2 million yen," he said without elaborating further.
Masuko noted that i-MiEV Japanese consumers can receive hefty subsidies and pay no tax under a government program promoting the use of ecological vehicles. With the help of government subsidies, the car costs 3.209 million yen, down 43% from the original price, or about $33,000.
The subsidy program for electric vehicles runs from April to next March. But an official at the trade ministry said the government plans to extend the program.
Also, electric cars, as well as hybrids, are tax-free for three years in Japan.
Masuko said the company had spent more than 40 years to develop the i-MiEV, but declined to say how much the company had invested in its development.
"We are looking ahead. We look at the global auto market of 10 or 20 years later from now," the president said. "We are in the midst of global auto competition, and we should not be left behind."
Various automakers are racing to develop electric cars amid rising oil prices and concerns about global warming.
Malaysia's national carmaker Proton and Detroit Electric, a Netherlands-based company, plan to make electric cars by early next year. U.S.-based Tesla Motors has a prototype electric car that is scheduled to be produced by 2011.
Toyota said it plans to sell electric vehicles in the U.S. by 2012, while Nissan said it will market electric vehicles in Japan and the U.S. after April 2010.
Globally, Mitsubishi hopes to sell 15,000 units for the year through March 2012.
But it can only make a profit on the electric car if it produces 30,000 units per year, Masuko said.
"We want to reach that level as early as possible," he said.
He added that the company is considering making a commercial electric vehicle.
Mitsubishi's share price has jumped recently on hopes for the new car. On Friday, it rose 2.3% to close at 175 yen after surging almost 12% Thursday.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
"With the electric vehicle, we will challenge global players," said Mitsubishi President Osamu Masuko at a news conference where the company rolled out the electric model.
The i-MiEV is powered solely by electricity, and can be recharged from a regular home socket. The four-seater vehicle can run up to 100 miles after charging seven hours at 200 volts.
"It is a zero-emission vehicle. It does not rely on oil, which is different from hybrid cars," Masuko said. A hybrid car switches between a gasoline engine and an electric motor to boost mileage.
Initially, Mitsubishi aims to target local governments and companies, and hopes to sell 1,400 units of the electric car for the fiscal year through March 2010, mostly in Japan.
FIND MORE STORIES IN: Japan Mitsubishi Toyota Motor Corporation Nissan Motor Co., Ltd. Tesla Motors Honda Motor Company, Ltd Mitsubishi Motors
Mitsubishi also aims to sell 250 units abroad, mainly in Britain and other European countries, in the current financial year.
Individual buyers in Japan can place orders for the car in July, with deliveries starting in April 2010.
It also plans to sell the car in China and the United States, but Masuko gave no details.
Mitsubishi's i-MiEV costs 4.59 million yen ($47,560), more than twice as much as Toyota's Prius hybrid, which is just over 2 million yen ($20,700), or Honda's Insight, which starts at 1.89 million yen, the cheapest hybrid on the market.
Masuko acknowledged the high price is a major hurdle to encouraging people to buy the i-MiEV, which stands for Mitsubishi innovative electric vehicle. (The initial "i" doesn't have any particular meaning, the company says.)
"This is not the price that ordinary people can easily buy. But as we increase our production, we aim to cut the price below 2 million yen," he said without elaborating further.
Masuko noted that i-MiEV Japanese consumers can receive hefty subsidies and pay no tax under a government program promoting the use of ecological vehicles. With the help of government subsidies, the car costs 3.209 million yen, down 43% from the original price, or about $33,000.
The subsidy program for electric vehicles runs from April to next March. But an official at the trade ministry said the government plans to extend the program.
Also, electric cars, as well as hybrids, are tax-free for three years in Japan.
Masuko said the company had spent more than 40 years to develop the i-MiEV, but declined to say how much the company had invested in its development.
"We are looking ahead. We look at the global auto market of 10 or 20 years later from now," the president said. "We are in the midst of global auto competition, and we should not be left behind."
Various automakers are racing to develop electric cars amid rising oil prices and concerns about global warming.
Malaysia's national carmaker Proton and Detroit Electric, a Netherlands-based company, plan to make electric cars by early next year. U.S.-based Tesla Motors has a prototype electric car that is scheduled to be produced by 2011.
Toyota said it plans to sell electric vehicles in the U.S. by 2012, while Nissan said it will market electric vehicles in Japan and the U.S. after April 2010.
Globally, Mitsubishi hopes to sell 15,000 units for the year through March 2012.
But it can only make a profit on the electric car if it produces 30,000 units per year, Masuko said.
"We want to reach that level as early as possible," he said.
He added that the company is considering making a commercial electric vehicle.
Mitsubishi's share price has jumped recently on hopes for the new car. On Friday, it rose 2.3% to close at 175 yen after surging almost 12% Thursday.
Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
By David Ellis, CNNMoney.com staff writer
NEW YORK (CNNMoney.com) -- The recent bank stock rally may have finally run its course.
After bottoming out in early March on fears that some of the biggest banks were insolvent, shares across the sector skyrocketed before government regulators finally unveiled the findings of their stress test program for the nation's largest financial firms in May.
Since then, however, investor interest in banks has cooled considerably. Two of the most widely-watched barometers of the sector - the KBW Bank Index and S&P Banking Index - have each fallen more than 10% since the stress test results were announced and remain well below where they were trading back in mid-September before the collapse of Lehman Brothers.
Lenders that enjoyed the biggest returns during the months of March, April and early May, such as Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500), have taken a hit in recent days.
Citigroup fell again Monday, despite a broad market rally, on the news that it was being removed from the Dow Jones industrial average. Ironically, it is being replaced by the Travelers Companies, a leading insurer that once was part of Citigroup.
Big banks aren't the only one suffering from pullbacks. Shares of SunTrust (STI, Fortune 500) and Regions Financial (RF, Fortune 500), two top regional banks based in the Southeast which were also deemed to be in need of additional capital by the government, are both off more than 30% since the results of the stress test were revealed.
Massive gyrations in the financial sector are hardly a new phenomenon. For nearly a year now, bank stocks have endured wild swings, falling as much as 25% in a single trading session.
Still, those who track the industry tend to agree that investors are now viewing bank stocks differently.
Blake Howells, director of research at Portland, Ore.-based Becker Capital Management, which oversees $1.7 billion in assets, said investors are now more focused on whether banks can return to normal, stable earnings growth, rather than fears about nationalization and an institution's solvency.
Some critics insist that the surprisingly strong numbers generated by large lenders in the first quarter were exaggerated as banks tried to pass the government's stress test. A surge in mortgage refinancing activity did not hurt either, although that is a trend that many analysts see as unsustainable -- especially since mortgage rates have been rising in the past few weeks.
Banks also remain saddled with loan portfolios that are ripe for further losses, particularly in areas like commercial real estate. The percentage of construction and development loans that were 30 to 89 days past due climbed to 3.56% from 2.92% during the first quarter, according to figures published last week by the Federal Deposit Insurance Corporation.
"Credit trends are negative across the board whether you are a community lender, regional or national bank," said Eric Hovde, chief executive of Hovde Capital Advisors LLC, a money-management firm in Washington that focuses on the financial services sector.
Of course, other factors could figure into bank stock performance in the coming quarters, including future actions by the government. Banks with sizable credit card businesses suffered somewhat of a setback last month following the passage of legislation that reined in lenders' credit card practices.
There is also widespread speculation that banking regulators could take a hard line on the industry, demanding that lenders, for example, hold more capital on their books to compensate for future losses. That could crimp profitability.
Curves ahead
Others have a less dire view however. Bank stock bulls contend that the worst may be over for many lenders, as some banks have, and will continue to, aggressively reserve for future losses.
The increasing number of signals that the nation's economy may finally have reached a bottom is also encouraging for the industry.
Weekly figures on first-time unemployment claims, often viewed as a real-time assessment of labor conditions, have started to slow in recent weeks even as continuing claims remain at historic levels.
Activity in the manufacturing sector has also been on the mend in recent months, according to recent readings by the Institute for Supply Management.
0:00 /1:56Banks face good, bad and ugly
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The emergence of such signals foreshadowed an economic recovery in five of the last recessions dating back to the 1970s, notes Peter Winter, managing director at BMO Capital Markets. Winter upgraded a number of regional banks two weeks ago, including U.S. Bancorp (USB, Fortune 500) and California-based lender EastWest Bancorp (EWBC).
Should a similar trend occur this time around, that would certainly bode well for the more than 8,200 lenders that make up the nation's banking system and the roughly $13.5 trillion in assets they control.
But investor confidence in the banking sector, much like the U.S. economy itself, remains shaky at best, setting up what most analysts believe will be another volatile, albeit more modest, period for bank stocks.
"Unfortunately the group is going to trade more on economic news than anything else, at least in the near term because the recovery is tentative," said Winter.
Of course, some lenders are widely believed to be better positioned than others to navigate the current environment, including JPMorgan Chase (JPM, Fortune 500) and U.S. Bancorp, two banks that were deemed not to need any additional capital by the government.
Their position of strength may translate into stable stock performances rather than outsized returns though. Part of that is due to the fact that healthier banks didn't fall as sharply as weaker lenders.
For that reason, Howells of Becker Capital Management, whose firm owns shares of U.S. Bancorp and JPMorgan Chase, said some of the undercapitalized regional lenders could enjoy the biggest bounces going forward.
Some of those bets could misfire, Howells said. But he added that it is not farfetched to think that Fifth Third (FITB, Fortune 500) or KeyCorp (KEY, Fortune 500) -- two Ohio-based banks that were also told by the government to raise capital -- or Regions Financial could double in price before long
NEW YORK (CNNMoney.com) -- The recent bank stock rally may have finally run its course.
After bottoming out in early March on fears that some of the biggest banks were insolvent, shares across the sector skyrocketed before government regulators finally unveiled the findings of their stress test program for the nation's largest financial firms in May.
Since then, however, investor interest in banks has cooled considerably. Two of the most widely-watched barometers of the sector - the KBW Bank Index and S&P Banking Index - have each fallen more than 10% since the stress test results were announced and remain well below where they were trading back in mid-September before the collapse of Lehman Brothers.
Lenders that enjoyed the biggest returns during the months of March, April and early May, such as Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500), have taken a hit in recent days.
Citigroup fell again Monday, despite a broad market rally, on the news that it was being removed from the Dow Jones industrial average. Ironically, it is being replaced by the Travelers Companies, a leading insurer that once was part of Citigroup.
Big banks aren't the only one suffering from pullbacks. Shares of SunTrust (STI, Fortune 500) and Regions Financial (RF, Fortune 500), two top regional banks based in the Southeast which were also deemed to be in need of additional capital by the government, are both off more than 30% since the results of the stress test were revealed.
Massive gyrations in the financial sector are hardly a new phenomenon. For nearly a year now, bank stocks have endured wild swings, falling as much as 25% in a single trading session.
Still, those who track the industry tend to agree that investors are now viewing bank stocks differently.
Blake Howells, director of research at Portland, Ore.-based Becker Capital Management, which oversees $1.7 billion in assets, said investors are now more focused on whether banks can return to normal, stable earnings growth, rather than fears about nationalization and an institution's solvency.
Some critics insist that the surprisingly strong numbers generated by large lenders in the first quarter were exaggerated as banks tried to pass the government's stress test. A surge in mortgage refinancing activity did not hurt either, although that is a trend that many analysts see as unsustainable -- especially since mortgage rates have been rising in the past few weeks.
Banks also remain saddled with loan portfolios that are ripe for further losses, particularly in areas like commercial real estate. The percentage of construction and development loans that were 30 to 89 days past due climbed to 3.56% from 2.92% during the first quarter, according to figures published last week by the Federal Deposit Insurance Corporation.
"Credit trends are negative across the board whether you are a community lender, regional or national bank," said Eric Hovde, chief executive of Hovde Capital Advisors LLC, a money-management firm in Washington that focuses on the financial services sector.
Of course, other factors could figure into bank stock performance in the coming quarters, including future actions by the government. Banks with sizable credit card businesses suffered somewhat of a setback last month following the passage of legislation that reined in lenders' credit card practices.
There is also widespread speculation that banking regulators could take a hard line on the industry, demanding that lenders, for example, hold more capital on their books to compensate for future losses. That could crimp profitability.
Curves ahead
Others have a less dire view however. Bank stock bulls contend that the worst may be over for many lenders, as some banks have, and will continue to, aggressively reserve for future losses.
The increasing number of signals that the nation's economy may finally have reached a bottom is also encouraging for the industry.
Weekly figures on first-time unemployment claims, often viewed as a real-time assessment of labor conditions, have started to slow in recent weeks even as continuing claims remain at historic levels.
Activity in the manufacturing sector has also been on the mend in recent months, according to recent readings by the Institute for Supply Management.
0:00 /1:56Banks face good, bad and ugly
vidConfig.push({videoArray: ["/video/news/2009/05/26/news.052609.whitney3.cnnmoney.json"], collapsed:true});
The emergence of such signals foreshadowed an economic recovery in five of the last recessions dating back to the 1970s, notes Peter Winter, managing director at BMO Capital Markets. Winter upgraded a number of regional banks two weeks ago, including U.S. Bancorp (USB, Fortune 500) and California-based lender EastWest Bancorp (EWBC).
Should a similar trend occur this time around, that would certainly bode well for the more than 8,200 lenders that make up the nation's banking system and the roughly $13.5 trillion in assets they control.
But investor confidence in the banking sector, much like the U.S. economy itself, remains shaky at best, setting up what most analysts believe will be another volatile, albeit more modest, period for bank stocks.
"Unfortunately the group is going to trade more on economic news than anything else, at least in the near term because the recovery is tentative," said Winter.
Of course, some lenders are widely believed to be better positioned than others to navigate the current environment, including JPMorgan Chase (JPM, Fortune 500) and U.S. Bancorp, two banks that were deemed not to need any additional capital by the government.
Their position of strength may translate into stable stock performances rather than outsized returns though. Part of that is due to the fact that healthier banks didn't fall as sharply as weaker lenders.
For that reason, Howells of Becker Capital Management, whose firm owns shares of U.S. Bancorp and JPMorgan Chase, said some of the undercapitalized regional lenders could enjoy the biggest bounces going forward.
Some of those bets could misfire, Howells said. But he added that it is not farfetched to think that Fifth Third (FITB, Fortune 500) or KeyCorp (KEY, Fortune 500) -- two Ohio-based banks that were also told by the government to raise capital -- or Regions Financial could double in price before long
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