Retailing: If you thought the holidays were bad ...
Major retailers reported their December sales last week, and the results were even worse than expected, said Jayne O’Donnell in USA Today. Wal-Mart was “about the only retailer to increase sales,” but its 1.7 percent gain was less than had been forecast, and the giant discounter warned that prospects for January were bleak. Macy’s said December sales dropped 4 percent from December 2007 and announced that it would close 11 underperforming stores. Regional department-store chain Gottschalks reported a 9.6 percent decline, adding a warning that “it could run out of cash by month’s end.”
Expect more such warnings in coming weeks, said Stephanie Rosenbloom in The New York Times. For most retail chains, this was “the worst holiday shopping season in decades,” with many reporting double-digit declines. And the picture will only darken in January, “typically a slow month for retailers.” A wave of bankruptcies, which has already taken out such well-known names as Linens ’n Things and Sharper Image, “is expected to grow substantially worse in coming months.”
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Banking: Citi gets some good news
Tottering banking giant Citigroup sold a controlling stake in its Smith Barney brokerage unit to Morgan Stanley this week, in a deal that could give Citi a $6 billion boost, said Bradley Keoun and Christine Harper in Bloomberg.com. The price paid by Morgan Stanley for 51 percent of Smith Barney implies a value of about $20 billion for the entire unit. Citi’s remaining 49 percent stake is thus worth about $10 billion, or $6 billion after taxes, which “would flow into Citigroup’s capital.”
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