Sighs for Sears, Smiles at RBS
Sears sees a decline in sales and a drop in profits. Royal Bank of Scotland writes down almost $5 billion, but still has a very profitable quarter. And in hard times, drinkers are saving the good stuff for home.
EWS AT A GLANCE
Sears hit by 48 percent drop in profits
Sears Holding Corp. said its fourth-quarter profits fell 47.5 percent, to $426 million, on increased discounts and decreased sales at its U.S. Sears and Kmart stores. (Reuters) Revenue fell 6.8 percent, to $15.07 billion, from $16.18 billion. (AP in Yahoo! Finance) The fall was more than analysts had expected. Chairman Edward Lampert announced a broad reorganization to reverse a three-year slide in sales, as customers switched to rival department stores. “I’m not sure that there’s anybody out there who says, ‘Sears or Kmart is my favorite place to shop,’” said David Keuler at Mason Street Advisors. (Bloomberg)
RBS profits beat forecasts
Royal Bank of Scotland, the U.K.’s second largest bank, reported a 16 percent rise in profits for the second half of 2007, to $7.42 billion, beating estimates. (Bloomberg) For the full year, RBS reported an 18 percent rise in net profit, to $14.4 billion. (MarketWatch) The profit was in spite of $4.96 billion in credit-related write-downs, including $1.8 billion linked to its purchase of ABN Amro. “Bears of RBS will want to hear that the write-downs have finally been put to bed, which cannot yet be definitely confirmed,” said analyst Richard Hunter at Hargreaves Lansdown Stockbrokers. (AP in International Herald Tribune)
BAT buys Danish tobacco company
London-based British American Tobacco, the world’s No. 2 cigarette maker, agreed to buy the cigarette businesses of Denmark’s Skandinavisk Tobakskompagni (ST), plus other tobacco units, for $4.1 billion. The deal gives BAT 60 percent of the Scandinavian cigarette market. (Reuters) BAT also said its annual profit rose 11 percent, to $4.6 billion. (MarketWatch) BAT offered $1.72 billion for Turkey’s state-owned tobacco firm Tekel last week; increased smoking in emerging markets is making up for declines elsewhere. “Brand strength, marketing, and geographic exposures will become critical to longer term earnings growth,” said UBS analyst Jonathan Leinster. (Bloomberg)
For the good stuff, happy hour is at home
Alcohol sales generally do well during hard economic times, but in the current downturn, people are doing their top-shelf drinking at home. The decline of the $12 martini “cocktail culture” is bad news for restaurants, where alcohol sales make up about 17 percent of revenue—as pinched diners turn to well drinks or water, on-premises drink growth has slowed to zero, from 5-6 points in 2006. But top-shelf liquor makers are faring better, as 75 percent of sales are off-premises. “It is still an affordable luxury item: People can spring for Patron tequila, even if they can’t buy a new BMW,” said John McDonnell at the Patron Spirits Company. (MarketWatch)
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
MOST POPULAR ON THE WEEK
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- How our botched understanding of 'science' ruins everything
- 43 TV shows to watch in 2014
- California's epic drought
- 6 things the happiest families all have in common
- What would a U.S.-Russia war look like?
- The science of sex: 4 harsh truths about dating and mating
- Why so many Christians won't back down on gay marriage
- How Scotland's independence movement lost the vote and still won everything
- Obama knows he can't really 'defeat' ISIS. Americans need to wake up to that reality, too.
Subscribe to the Week