By Dees Stribling, Contributing Editor
U.S. retail sales, which went along so swimmingly during the holidays, scored only an uptick in January, according to the U.S. Department of Commerce on Tuesday. The gain was 0.3 percent compared with the previous month. Better than a loss, but not as much as some economists had expected.
One idea is that the heavy snows of January in some parts of the country kept more people home than otherwise would have been the case. The fact that online and other nonstore retail sales were up 1.2 percent during the month might mean that the urge to shop carried on despite the snowpocalypses and icetastrophes. On the other hand, higher gas prices might be swiping some of that discretionary income away from other retailers.
Retail sales were also up in January 2011 by nearly 8 percent when compared with the same month in 2010. That’s unambiguously good news, and some retailers are ramping up for higher sales. Home Depot, for instance, announced on Tuesday that it’s going to hire 60,000 seasonal, part-time employees for the spring, its busy season. The DIY specialist expects its sales to rise 2.5 percent this year.
Borders files for bankruptcy
Not all retailers have had a good month, or year, or even decade. In the long-running saga of Borders Group Inc., the company has finally filed for Chapter 11 bankruptcy. The move had been predicted for some time now, as the likes of Wal-Mart and Amazon ate the company’s lunch. According to Borders, the move comes in the wake of a “liquidity shortfall” (a handy business euphemism if there ever was one).
In the filing in the U.S. Bankruptcy Court Southern District of New York, Borders is claiming debt of $1.29 billion and assets of a little less, $1.27 billion. “Borders Group does not have the capital resources it needs to be a viable competitor and which are essential for it to move forward with its business strategy to reposition itself successfully for the long term,” Mike Edwards, Borders’ president, says in a statement.
“Activist” Peltz eyes Family Dollar
One of the retail success stories of the recession–Family Dollar–may go private. Nelson Peltz, invariably referred to as an “activist investor,” has reportedly told the discount chain that he is willing to pay $55 and $60 a share for the 92 percent of the company that he does not own, which would value the chain at $7.6 billion.
Family Dollar has about 6,600 locations and continued expanding briskly last year, opening 200. The premium Peltz offered would be about 36 percent over the company share price as of Tuesday (though it moved up quite rapidly when the story broke). Peltz’s reputation comes from the fact that as the owner of large companies, he has been known to insist that management do his bidding.
Wall Street had a negative day on Tuesday, supposedly upset by the less-than-stellar retail numbers. The Dow Jones Industrial Average lost 41.55 points, or 0.34 percent, while the S&P 500 was down 0.32 percent and the Nasdaq declined 0.46 percent.