Apparel Sales Cool Down in July
July was a quiet month for many of the nation's retailers, who were left with only modest sales gains after selling most of their summer merchandise in June. Hot weather also wilted sales of some early fall items such as sweaters.
As merchants reported their results, the winners appeared to be some discounters such as Wal-Mart Stores, BJ's Wholesale Club, and Costco Wholesale, whose business was helped by sales of air conditioners and food items. But business was sluggish for many other apparel-focused stores including Federated Department Stores, J.C. Penney, Limited Brands, Gap, and Kohl's.
AIG Restatement Challenged
Lawyers for Maurice R. "Hank" Greenberg, the ousted chief executive of American International Group, told federal regulators that much of the insurer's $3.9 billion earnings restatement was "exaggerated and unnecessary." AIG and its auditor, PricewaterhouseCoopers, had the relevant information before the corrections were made and changed rules "retroactively," Greenberg's lawyers said in a 20-page memo.
MERGERS & ACQUISITIONS
Overnite Shareholders Back Deal
Shareholders of trucking company Overnite overwhelmingly approved a proposed $1.25 billion acquisition by UPS. The cash transaction, which values Overnite shares at $43.25 a share, is scheduled to close today. The buyout already has been approved by the Federal Trade Commission.
NYSE Board Members Resign
Two New York Stock Exchange board members, Herbert M. Allison Jr. and Dennis Weatherstone, resigned, the NYSE said. Both Allison, the president and chief executive of TIAA-CREF, and Weatherstone, retired chairman of J.P. Morgan, had served since 2003.
The two said they would stay on until the board decided on the exchange's acquisition of electronic rival Archipelago Holdings. The $6 billion acquisition deal was announced April 20. No immediate plans were made to nominate new directors.
401(k) Account Balances Rising
The average 401(k) account balance rose 10 percent in 2004, reaching a five-year high of $61,000, but the average balance remains below 1999 levels of $64,000, according to preliminary study data by Fidelity Investments.
Workers appear to be contributing roughly the same percentage of their salary to their 401(k) plans as they have in years past. Workers deferred an average of 7 percent of their pretax salary to employer-sponsored plans in 2004, a percentage that has remained steady since 2001, according to Fidelity. Sixty-six percent of eligible workers participated in their plan in 2004, the same as in 2003.
Chrysler Turns to Snoop Dogg
DaimlerChrysler's Chrysler division will run a television commercial pairing rapper Snoop Dogg with former chairman Lee Iacocca to pitch the company's offer of employee discounts on cars and trucks for all buyers. The recording artist will appear as a golfing partner in commercials with Iacocca, chairman of Chrysler from 1979 to 1992.
In the new commercial, Snoop Dogg adapts the former Chrysler executive's "If you can find a better car, buy it" mantra from the 1980s into "If the ride is more fly, then you must buy."
Viacom's second-quarter profit of $753.8 million was unchanged from 2004's second quarter. Excluding effects from Blockbuster and other discontinued operations, earnings from continuing operations grew 6 percent to $762.2 million from $717.2 million. Revenue rose 10 percent to $5.88 billion.
The company plans to split its MTV Networks and CBS Television units into separate companies next year. Sumner Redstone, 82, confirmed he will step down as chief executive but remain chairman of both companies after the split.
Sara Lee Corp. swung to a fiscal fourth-quarter loss of $148 million from a profit of $354 million in the comparable period a year ago. The food and household products maker attributed much of the loss to charges related to a sweeping reorganization, but quarterly sales were down 5 percent, to $4.75 billion.
For the fiscal year ended July 2, the company posted profit of $719 million, down 44 percent from fiscal 2004. Revenue for the year rose 1 percent, to $19.25 billion.
Gillette said its second-quarter profit grew 17 percent, to $498 million. Sales rose 13 percent, to $2.77 billion. Procter & Gamble's $57 billion acquisition of Gillette is expected to close in the fall.
Compiled from staff and news service reports.