Troubled Gap division pulls down stock
Gap Chief Executive Officer Art Peck blamed poor-fitting women's clothing for a lingering slump at the retailer's Banana Republic chain, which just posted another month of falling sales.
Banana Republic's same-store sales tumbled 10 percent in September, the San Francisco-based company said Thursday. That was far worse than the 5.6 percent drop predicted by Retail Metrics and marked the seventh decline in eight months.
"I've been disappointed in the women's product in Banana Republic," Peck said in an interview. Customers are "being clear that it doesn't fit well. It's not as versatile or flattering as it should be given the price point."
Gap also said on Thursday that Banana Republic's creative director will step down from her day-to-day role at the chain. Marissa Webb, who took the job in April 2014, will focus more on her personal label. The retailer hired Webb, formerly at J. Crew, to help restore Banana Republic's fashion credibility.
Gap shares fell $1.53, or 5.3 percent, to close Friday at $27.42. The shares had already slid 31 percent this year through the close of trading Thursday.
Peck has been reshuffling the retailer's leadership since taking the helm in February, including naming new brand presidents at the Gap and Banana Republic chains. His comeback effort was dealt a blow last week when Old Navy Global Brand President Stefan Larsson was lured away to become CEO of Ralph Lauren Corp.
-- Bloomberg News
Atlanta Fed chief expects rate rise in '15
Federal Reserve Bank of Atlanta President Dennis Lockhart said the first interest rate increase since 2006 will likely be warranted later this month or in December.
"The economy remains on a satisfactory track, and, speaking for myself, I see a liftoff decision later this year at the October or December FOMC meetings as likely appropriate," Lockhart said in prepared remarks Friday in New York, referring to the Federal Open Market Committee.
Lockhart supported the committee decision last month to leave interest rates unchanged, after market turmoil and slowing growth in China raised doubts about the U.S. outlook. The committee hesitated because it saw risks to its forecast that inflation would return to its 2 percent target as expected, according to minutes of the meeting released Thursday.
"The ambiguity of the moment reinforces the need to closely watch the vital signs of the economy over the coming weeks to determine if the outlook has changed," he said.
Lockhart, who has never dissented, said consumer activity will be a key signal that the U.S. economy can sustain its momentum despite the global slowdown.
"The consumer-based dimension of the economy has been robust for several months," Lockhart said to the Society of American Business Editors and Writers, even as manufacturing and exports have been hurt by a stronger U.S. dollar.
-- Bloomberg News
Sales decline as wholesalers stock up
WASHINGTON -- Cheaper oil and less demand for autos and machinery weighed on wholesalers in August, as their inventories edged up just slightly while sales dropped.
The Commerce Department said wholesale stockpiles rose 0.1 percent, and sales fell 1 percent. Sales have dropped 4.7 percent over the past 12 months. Inventories have increased 4.1 percent.
Falling oil prices account for much of the declining sales.
Oil inventories -- which are measured in dollars -- plummeted 4.6 percent in August and 36.6 percent over the past 12 months. Sales of autos and machinery also slipped, but rising inventories for equipment suggest that wholesalers still see ongoing demand heading into the end of the year.
Wholesale inventories are at a seasonally adjusted $583.9 billion, 4.1 percent above a year ago.
-- The Associated Press
Group spotlights corporate tax evasion
LIMA, Peru -- Finance officials from the world's 20 biggest countries are committing to tougher laws to prevent multinational companies from avoiding as much as $250 billion a year in taxes.
The unanimous agreement was announced Friday in Peru's capital on the sidelines of the annual meeting of the International Monetary Fund. The plan will be presented for approval by heads of state from the Group of 20 nations at a summit next month in Turkey.
Officials at a news conference said the plan will address concerns about whether companies such as Apple and Google are paying their fair amount in taxes.
The new rules would seek to enhance existing tax treaties and align domestic rules affecting cross-border economic activities to prevent companies from so-called "tax shopping" for the most favorable rates.
-- The Associated Press
Oil companies will cut jobs, budgets
Oil and natural gas explorers in the U.S. Rocky Mountains plan to fire more workers and reduce already shrunken drilling budgets amid expectations the energy slump will persist for at least another year.
Energy producers in the seven U.S. states covered by the Kansas City Federal Reserve Bank are being squeezed by tightening financial conditions and are reducing drilling activity in response, according to a statement from the bank on Friday.
The oil industry worldwide has cut more than 200,000 jobs in the 16 months since crude markets began to collapse under the weight of a glut of supplies from U.S. shale fields and the Persian Gulf. Explorers have been scaling back drilling projects, delaying some of their costliest developments and reducing or halting dividend payouts to conserve cash.
"As in the spring, firms on average reported needing domestic oil prices to be around $60 per barrel to be profitable," Chad Wilkerson, an economist at the Kansas City Fed, said in the statement. "They now don't expect that price until at least 2017 and so many are planning further capital spending cuts and layoffs."
U.S. crude has averaged $50.88 a barrel this year, 45 percent below the full-year 2014 average of $92.91. The region covered by the Kansas City Fed's survey included Kansas, Colorado, Nebraska, Wyoming, Oklahoma, the northern half of New Mexico and the western third of Missouri.
-- Bloomberg News
Business on 10/10/2015