A Cruel Month for Retailers

Retailers continue to be clobbered by the recession as consumers chop their spending. Sales tracker Thomson Reuters said a group of 35 retailers saw same-store sales fall by 1.8% in January, the second-biggest drop since the group started tracking such numbers in 2000. Among the chains reporting lousy results were Gap, with a thumping 23% decline in January; Limited Brands, owner of Victoria’s Secret and Bath & Body Works, down 9%; and Abercrombie & Fitch, down 20%.

Wal-Mart, the world’s No. 1 retailer, bucked the trend, as it has since the downturn began. Its same-store sales rose 2.1% for the month. But not all discounters are thriving. Costco said its sales fell 2%, and Target’s declined by 3%.

Source: CNNMoney.com

U.S. Jobless Claims Move Even Higher

New claims for unemployment benefits unexpectedly hit a 26-year high, another signal that the grim labor markets in the U.S. are still getting worse. Claims rose 35,000, to 626,000, in the week ended Jan. 31. That’s the highest level since October, 1982. The total number of people receiving benefits jumped to a record 4.788 million the week before. Economists had expected new claims to fall to 580,000.

Source: Bloomberg

Britain Cuts Rates

The Bank of England slashed its benchmark rate to a record low of 1% in an effort to combat the worsening downturn there. The bank gave no indication that this would be the last cut in the near term, suggesting that it may follow the Fed and eventually move rates close to zero. The European Central Bank, as expected, left its key rate at 2%.

Source: Wall Street Journal

Did the Bailout Fund Overpay?

The Congressional Oversight Panel examining the Troubled Asset Relief Program, or TARP, says that the feds may have overpaid by 30%, or $76 billion, in buying stakes in troubled banks last year. Elizabeth Warren, head of the panel, says the government paid $254 billion for $176 billion worth of assets. She called for closer oversight of the bailout funds.

Source: New York Times

Lenovo Chief Steps Down

William Amelio, CEO of Lenovo, the world’s No. 4 maker of PCs, resigned after the computer company announced a quarterly loss of $96.7 million, triple what most analysts had expected. A former Dell executive, Amelio joined Lenovo after the Chinese company acquired the PC division of IBM in 2005. He will be replaced by current Lenovo chairman Yang Yuanqing, and founder Liu Chuanzhi will return as chairman. Amelio’s departure and Yang and Liu’s new roles show Lenovo is trying to renew its focus on its home market in China. Lenovo’s Hong Kong-traded shares dropped 0.7% on Thursday. The share price has fallen 29% so far this year, coming off a 70% drop in 2008. Lenovo has 7.2% of the PC market globally, and the company has been losing ground to Hewlett-Packard and Acer.

Source: Bloomberg

Obama Administration Cancels Energy Leases Near National Parks

Ken Salazar, President Obama’s new interior secretary, on Wednesday halted controversial leases for oil and gas drilling near national parks in Utah. The former Colorado senator canceled the deals, awarded in the final days of the Bush presidency, and is now reviewing other last-minute moves by the previous administration.

Source: Denver Post

What Falling Prices are Telling Us

Consumer prices in the U.S. fell at a breathtaking annual rate of nearly 13% in the last three months of 2008. Prices plummeted for all sorts of goods, ranging from clothing to TVs to furniture, as retailers advertised sale after sale. But deflation missed big chunks of the economy. For all of 2008, college tuition and fees increased by 5.8%, followed closely by price increases for hospitals and legal services. Even fees for preparing tax returns are going up. This inconsistency casts doubt on the usual explanation for the recession, which is that it’s mainly due to the credit crunch and the resulting squeeze on demand. It also hints at why government efforts to fight the downturn have been ineffective so far..

Source: BusinessWeek

P&G Looking to Sell its Pharma Brands

Procter & Gamble is looking for a buyer of its pharmaceutical division. The company is working with Goldman Sachs to sell the pharma business, which makes gastrointestinal and musculoskeletal drugs as well as drugs that focus on women’s health. The move would be part of a drive by P&G to focus more on its core consumer-products business.

Source: Financial Times

Madoff Whistle-Blower Attacks SEC

Harry Markopolos, the financial analyst who first warned the SEC about Bernard Madoff’s Ponzi scheme, publicly testified for the first time on Wednesday. After first looking at Madoff Securities in 1999, “it took me about five minutes to figure out that he was a fraud,” Markopolos told a congressional hearing. He criticized the Securities and Exchange Commission for failing to take action. “I gave them a road map and a flashlight to find the fraud, and they didn’t go where I told them to go,” Markopolos said.

Source: CBS News

Pay Curbs on Bank Execs Signal End of an Era on Wall Street

With President Obama imposing new curbs on executive pay amid a public outcry over Wall Street bonuses, top bankers could see their compensation fall into line with that of doctors and lawyers. Historically, there’s little difference between finance and other industry industry. Researchers for from NYU and University of Virginia found only two exceptions: the late 1920s until the Great Depression and then again from the mid-1990s to 2006. During those periods, compensation in finance was 30 percent to 50 percent higher than in the rest of industry.

Source: New York Times

New Blow to Boeing as Dubai Firm Cancels Orders

LCAL, a Saudi-backed, Dubai-based company, canceled 16 out of 21 orders for Boeing’s troubled new Dreamliner jet. The plane is almost two years behind schedule. In December, a Russian customer scrapped plans to buy 15 Dreamliners and other would-be customers are expression frustration with the delayed project.

Source: Wall Street Journal

In Your Face: Best Business Books

Reader Bob Sutton Writes: “I agree that Liar’s Poker should have been included. Good to Great shouldn’t be on any list. In the end, of course, this is all subjective.”

Tell Us: What’s No. 1 on Your List of Best Business Books?

Hot Topic on the Business Exchange: Madoff

Want to know more about the Bernard Madoff scandal? Visit BusinessExchange