Category: ECONOMY

Desperation? Simon Property Group (the biggest mall owner in America) sues Starbucks over Teavana closures

Simon Property Group

Simon Property Group, the largest owner of malls in the United States has filed a lawsuit against Starbucks according to this USA Today report. The announcement comes on the heels of Starbucks announcement to abruptly close down all 379 Teavana locations.

Simon Property Group has filed a lawsuit in Marion County against the Starbucks Corp. over for its plans to shutter all of the Teavana stores operating in Simon malls nationwide.

In the lawsuit filed Aug. 21, Simon officials argued that their shopping centers rely on each of their tenants fulfilling their lease obligations, including  continuously operating in the space for the entire lease term.

But when Starbucks announced July 27 that it would be closing all 379 of its Teavana stores, including the 78 stores in Simon shopping centers, the company “put its stock price above its contractual obligations, the viability of Simon and its Shopping Centers, other retailers and consumers who count on the Teavana stores.”

The lawsuit also noted that Starbucks made the decision “unilaterally, without prior consent from Simon.”

During the July 27 announcement, Starbucks officials said the Teavana stores will be closed by next spring and the 3,300 employees will be able to apply for jobs in Starbucks stores, where it is expected to create 68,000 new jobs in the next five years.

Simon, the Indianapolis-based shopping mall giant, is now seeking a preliminary and permanent injunction to keep Starbucks from closing the stores early, as well as all appropriate relief as a result of this legal action.

“Starbucks does not contend that Simon breached any lease or that Starbucks cannot remain viable if it continues to honor its promises in its leases for stores in Simon’s Shopping Centers,” the lawsuit states. “Instead, Starbucks simply believes it can make more money if it violates the leases than if it honored the contractual promises and obligations.”

Cancer and diabetes rates to EXPLODE as McDonald’s unveils plan to open 2,000 more stores in China

China, once known for having some of the lowest cancer and disease rates throughout the world has quietly been sieged by ‘unhealthy’ Capitalism. Pizza Hut, Burger King, Taco Bell, Coca-Cola and finally McDonald’s are aggressively expanding into this untapped market leaving a deadly trail of cancer, diabetes, and disease for future generations to deal with.

According to this South China Morning Post report, McDonald’s will more than double their presence in China bringing the total number of stores to 4,500 by the year 2022.

McDonald’s said on Tuesday it would almost double the number of stores in mainland China by 2022, slightly more than was expected, as part of its strategic partnership with state-backed conglomerate CITIC Ltd and the Carlyle Group.

Earlier in the year, the US fast food chain agreed to sell most of its China and Hong Kong business to CITIC and Carlyle for up to US$2.1 billion. The new partnership had planned to add 1,500 restaurants in the two areas over the next five years.

But McDonald’s, which is betting the partnership will help it expand in the world’s No 2 economy without using much of its own capital, said it expects to increase the number of stores in mainland China to 4,500 by the end of 2022, from 2,500 now.

The company said it was targeting a double-digit annual sales growth in mainland China over the period, and was aiming to add 500 stores annually by 2022 versus 250 stores this year.

“China will soon become our largest market outside of the United States. We are excited to join forces with CITIC and Carlyle for better localised decision-making to meet changing customer demands in this dynamic market,” Steve Easterbrook, McDonald’s chief executive, said.

P/C MIKE MOZART

Drones are quietly taking the jobs of Insurance Inspectors

Insurance Inspectors

Insurance Inspectors are the latest casualty of the much-anticipated tech takeover. According to this WSJ, report drones are becoming the norm as 40% of car insurers no longer use employees to physically inspect damage in some cases.

When Melinda Roberts found shingles in her front yard after a storm, her insurer didn’t dispatch a claims adjuster to investigate. It sent a drone.

The unmanned aircraft hovered above Ms. Roberts’ three-bedroom Birmingham, Ala., home and snapped photos of her roof. About a week later a check from Liberty Mutual Insurance arrived to cover repairs.

“It took a lot less time than I was expecting,” Ms. Roberts said.

Drones, photo-taking apps and artificial intelligence are accelerating what has long been a clunky, time-consuming experience: the auto or home-insurance claim.

Traditionally, an insurance claim associated with minor home damage or fender-bender auto accidents started with a phone call from a customer and ended days or weeks later with a mailed check. In between the insurer often would send an inspector to investigate the situation in person.

But about four in 10 car insurers no longer use employees to physically inspect damage in some cases, according to a LexisNexis Risk Solutions survey of insurance executives. Claims that rely on greater automation can be handled in two to three days compared with 10 to 15 days for a more traditional approach that involves an in-person visit, according to the survey.

Under Armour announces LAYOFFS as sales SLIDE

More bad news for retail. According to this CNBC report Under Armour has announced hundreds of layoffs as sales slide.

Under Armour plans to cut about 2 percent of its global workforce as it restructures its business in the face of slumping sales.

On Tuesday, the sports apparel company reported a narrower-than-expected second-quarter loss, but shares fell as the company trimmed its sales forecast for the year.

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Best Buy’s Geek Squad to Eliminate 399 Jobs

Best Buy’s Geek Squad is the latest to announce layoffs. According to this Fortune report the company will be eliminating 399 jobs.

Best Buy is eliminating 399 Geek Squad positions, but is expected to offer those employees positions within the company.

The affected positions come from Geek Squad’s “Covert Team,” who work remotely to provide technical support to customers. Best Buy says it is transitioning many of them from remote agents to roles in stores or making house calls.

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Neiman Marcus to cut 225 jobs, assess Last Call’s future

Neiman Marcus is in BAD shape. According to this Dallas news report the company will be laying off 225 and reevaluating the future of their discount imprint ‘Last Call’.

Neiman Marcus said Wednesday that a reorganization of its business to reflect changing customer shopping habits will include a reduction of its workforce. The Dallas-based retailer also said it’s assessing its Last Call outlet division.

Continue reading “Neiman Marcus to cut 225 jobs, assess Last Call’s future”

The Retail Apocalypse has DESTROYED these 14 companies

According to this Business Insider report, the retail apocalypse has essentially crashed the share price of these 14 major retailers. I guess these are the lucky ones as many have been put out of business completely.

Shares of Amazon multiplied by a factor of ten since 2009. Shares of Wal-Mart are flat over the past five years but are up 30% since the beginning of 2016. Since mid-2015, shares of Best Buy are up 58%, Home Depot 28%, and Costco 10%. These and other retailers like them saw their share prices rise because they managed to navigate the new retail environment.

Many online retailers and online operations of brick-and-mortar retailers are thriving. Other retailers are thriving because, like Home Depot, they’re in a segment that is booming. So not all brick-and-mortar retailers are melting down. But many are, including the samples in the list below. The percentage denotes the crash in share prices over the past two years:

  • Sears Holdings -65%
  • Macy’s -68%
  • Target -35%
  • Bed Bath & Beyond -59%
  • Hudson’s Bay (owns Saks and Lord & Taylor) -61%
  • Nordstrom -39%
  • American Eagle Outfitters -32%
  • Tailored Brands (formerly Men’s Wearhouse) -81%
  • Boot Barn -80%
  • Christopher & Banks -68%
  • Express -64%
  • Urban Outfitters -47%
  • Foot Locker -32%

And they’re the lucky ones among the brick-and-mortar meltdown lot; others have already filed for bankruptcy, and their shares have become worthless. Yet some of those on the list will likely join the bankruptcy filers over the next 12 months.

Rahm Emanuel speaks on Chicago’s pension crisis: “Our hard work is paying off….It has stabilized the city’s finances”

I don’t know what planet Rahm Emanuel lives on (Israel)  but his latest comments regarding Chicago’s pension crisis reveal he is nowhere near planet earth. According to this Sun Times report Emanuel claims they are stabilizing Chicago’s finances.

Standard & Poor’s surveyed pension obligations in New York, Los Angeles, Chicago, Philadelphia, San Francisco, San Diego, San Jose, San Antonio, Phoenix, Jacksonville, Dallas, Houston, Columbus, Indianapolis and Austin.

Chicago performed the worst across the board — registering the highest annual debt, pension post-employment benefits costs as a percentage of governmental expenditures and the highest debt and pension liability per capita.

The burden in Chicago is $12,427-per-person, double New York city’s $6,115-per-person.

Chicago also had the lowest weighted pension fund ratio, the worst pension contribution vs. required level and the lowest funded return for a single fund.

That dubious distinction went to the Chicago Police Annuity and Benefit Fund, which had assets to cover just 25 percent of its liabilities in fiscal 2015, down from 26 percent the year before.

The report noted that the “median weighted pension funded ratio of 70 percent” for the 15 cities “underlies a wide range of positions with Chicago only 23 percent funded across all plans and Indianapolis the most well-funded at 98 percent.”

Chicago also had the lowest bond rating among the nation’s fifteen major cities, at BBB-plus with a stable outlook. Every other big city had at a bond rating of AA-minus or better. Austin, Columbus and San Antonio have a triple-A bond rating.

Given weak market returns in 2016, funded ratios reported in fiscal 2016 are likely to look worse for most cities, the report states.

“Pension liabilities are a clear credit weakness for Chicago, which stands out with the highest pension liability per capita and the lowest weighted funded ratio among peers,” the report states.

“Chicago’s combined debt service, required pension and actuarial [post-employment benefits] contributions represented the highest share of budget among the largest cities at 38 percent of total governmental fund expenditures in 2015. Of that amount, 26.2 percent represented required contributions to pension obligations.”

S&P noted that Chicago “only made 52 percent of its annual legally required pension contribution” in fiscal 2015.

While Mayor Rahm Emanuel’s 2017 budget contributes more toward employee pensions, amounts budgeted still fall significantly short of the actuarially determined contributions levels,” the report states.

The rating agency noted that dedicated funding sources have now been identified for all four city employee pension funds. But, Emanuel’s plan to save the municipal and laborers pension funds is still awaiting the governor’s signature.

The Illinois House unanimously approved the plan, only to have the governor declare his intention to veto the bill that locked in employee concessions and authorized a five-year ramp to actuarially required funding.

“Notably, the city is unable to change pension benefits for its existing employees due to state constitutional constraints, but has increased contribution requirements for new employees,” the report states.

The mayor’s office had no immediate reaction to the S&P report.

Last fall, Standard & Poor’s affirmed Chicago’s bond rating at three levels above “junk” status, but changed the city’s financial outlook from “negative” to “stable,” thanks to Emanuel’s plan to slap a 29.5 percent tax on water and sewer bills to save the largest of four city employee pension funds.

At the time, S&P said Chicago was “gradually moving in the right direction toward stabilizing its budget and pension plan contributions” and that the utility tax, “coupled with adjustments to benefits offered to new hires” were “tangible steps that forestall credit deterioration” in the near term.

“However, in order to ensure the long-term sustainability of its pension contributions and continued credit stability, we believe that the city will need to identify additional measures to address its mounting pension contributions within the next two years,” that report said.

Emanuel called the outlook upgrade a well-earned recognition of the work that he and the City Council have done to reduce the city’s structural deficit by “more than $600 million” while identifying permanent funding sources for all four city employee pension funds.

“Our hard work is now paying off. . . . It has stabilized the city’s finances,” he told the Chicago Sun-Times.

But, the mayor agreed with S&P that the job is not done.

He has openly acknowledged that the city’s largest pension fund would still be left with a gaping hole in 2023 — even after the utility tax is fully phased in. That hole will require “more revenue” to honor the city’s ironclad commitment to reach 90 percent funding over a 40-year period.

Chicago taxpayers have paid a heavy price for easing the city’s $30 billion pension crisis.