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BusINess » Consumer

Archives for the ‘Consumer’ Category

Activist investors to companies: Show us the money

Family Dollar employee Pamela Ramos, left, assists John Conner, right, with a purchase at a store in Waco, Texas. In September 2010, Family Dollar had announced plans to spend $750 million to buy back its stock, which would be partially funded by its cash on hand. Then in October, the retailer said it had repurchased $250 million of its shares as part of its previous announcement. (AP Photo/Tony Gutierrezfile)

Family Dollar employee Pamela Ramos, left, assists John Conner, right, with a purchase at a store in Waco, Texas. In September 2010, Family Dollar had announced plans to spend $750 million to buy back its stock, which would be partially funded by its cash on hand. Then in October, the retailer said it had repurchased $250 million of its shares as part of its previous announcement. (AP Photo/Tony Gutierrezfile)

NEW YORK (AP) — Companies stopped paying dividends and stockpiled cash during the Great Recession, and shareholders didn’t complain. Now they want a reward for their patience.

American companies are holding $1.9 trillion in cash, a record. The large businesses that make up the Standard & Poor’s 500 index, all of which answer to public shareholders, have $940 billion on hand — $300 billion of it accumulated since late 2008, says Howard Silverblatt, senior index analyst at S&P.

Shareholders want the companies to start putting that cash to use. The most pressure is coming from activist investors, who buy stakes in companies and then try to influence management to make certain changes that they say are in shareholders’ interest.

“We’ve been in bunker mentality for too long,” says Eric Jackson, who runs the hedge fund Ironfire Capital. He predicts that activist shareholders are about to become “a lot noisier.”
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Surging land prices have local analysts, farmers worried bubble could burst

Bobby Hayden, left, and Tom Vandercar walk to the grain bins to unload corn into a trailer for market while getting ready for the spring season at the Hayden family farm in Hebron. (Photograph by Gregg Gearhart | The Times)

Bobby Hayden, left, and Tom Vandercar walk to the grain bins to unload corn into a trailer for market while getting ready for the spring season at the Hayden family farm in Hebron. (Photograph by Gregg Gearhart | The Times)

Hoosier homeowners still are feeling the sting of the recession as property values are sticking in the doldrums after hitting peaks in recent years.

But after taking a slight dip during the recession, agricultural land values are continuing to rise and have doubled their average from a decade ago.

Industry observers are carefully analyzing whether a bubble burst is possible with farmland values akin to what brought the real estate market to its knees, triggering the global financial meltdown.

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Tourism chiefs face post-recession challenges

Fairfield Inn and Suites General Manager Jeff Lawn does a room inspection Thursday at the hotel in Hammond. Lake County hotel bookings and revenue are down. (Photograph by Jonathan Miano/The Times)

Fairfield Inn and Suites General Manager Jeff Lawn does a room inspection Thursday at the hotel in Hammond. Lake County hotel bookings and revenue are down. (Photograph by Jonathan Miano/The Times)

Tourism chiefs across the region are touting initiatives to rebuild after the recession devastated overall hotel revenues and lowered occupancy rates, with some recovery seen last year.

Some are building on existing programs to lure visitors, one is lucky enough to have an expanded convention center, while one is calling for a “game-changer” for the region.

“We need a demand generator,” said Speros Batistatos, CEO of the South Shore Convention & Visitors Authority, based in Lake County. “We need something that will bring people here and move occupancy up.”

That something is a 75,000- to 100,000-square-foot multi-use facility capable of hosting conventions, trade shows and sporting events, Batistatos said. A local sales tax on food and beverages at restaurants and bars is his favored means of paying for it.

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Who’ll pay bigger fees for your debit card use?

Jason Kratovil, lobbyist for the Independent Community Bankers of America, sits at his office in Washington. Bankers and merchants, pillars of the business world and frequent allies, are embroiled in a bitter lobbying war over something Americans do 38 billion times a year, swipe their debit cards. (AP Photo/Jose Luis Magana)

Jason Kratovil, lobbyist for the Independent Community Bankers of America, sits at his office in Washington. Bankers and merchants, pillars of the business world and frequent allies, are embroiled in a bitter lobbying war over something Americans do 38 billion times a year, swipe their debit cards. (AP Photo/Jose Luis Magana)

Bankers and merchants, pillars of the business world and frequent allies, are embroiled in a bitter lobbying battle over something Americans do 38 billion times a year — swipe their debit cards. Both sides vigorously claim to speak for consumers.

At stake is $16 billion annually that the Federal Reserve says stores pay to banks and credit card companies when customers use the cards — fees the Fed has proposed cutting.

Cut the fees, banks say, and they’ll have to abandon free checking and boost other charges to consumers to recover lost revenue. Merchants say lower fees would help them drop their prices and expand their businesses.

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Fewer credit card rate hikes after regulations

Credit card holders are facing fewer interest rate hikes and forking over sharply less in late fees.

A year after new regulations curbed a spate of questionable billing practices, federal officials say over-the-limit penalty charges have also been dramatically curtailed. The findings come from the newly created Consumer Financial Protection Bureau, which will assume responsibility for administering the regulations once it’s officially up and running this summer.

The agency is set to present three sets of data at a conference it’s hosting Tuesday on the one-year anniversary of the Credit Card Accountability, Responsibility and Disclosure Act, or the CARD Act. Here are the highlights:
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Clothing prices to rise 10 percent starting in spring

Customer Brian Begay looks at a pair of Levi Strauss & Co. jeans at a store in Hayward, Calif. Cotton has more than doubled in price over the past year, and the price of other synthetic fabrics has jumped almost just as much as demand for alternatives and blends has risen. Clothing prices are expected to rise by 10 percent in the coming months. (Photograph by Paul Sakuma/The Associated Press.)

Customer Brian Begay looks at a pair of Levi Strauss & Co. jeans at a store in Hayward, Calif. Cotton has more than doubled in price over the past year, and the price of other synthetic fabrics has jumped almost just as much as demand for alternatives and blends has risen. Clothing prices are expected to rise by 10 percent in the coming months.
(Photograph by Paul Sakuma/The Associated Press.)

The era of falling clothing prices is ending.

Clothing prices have dropped for a decade as tame inflation and cheap overseas labor helped hold down costs. Retailers and clothing makers cut frills and experimented with fabric blends to cut prices during the recession.

But as the world economy recovers and demand for goods rises, a surge in labor and raw materials costs is squeezing retailers and manufacturers who have run out of ways to pare costs.
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Hobart Borders to close as company files for bankruptcy

Borders is closing about 200 of its 642 stores over the next few weeks, including its Hobart store at Westfield Southlake mall, shown here, after filing for bankruptcy Wednesday. (Photograph by John J. Watkins, File/The Times.)

Borders is closing about 200 of its 642 stores over the next few weeks, including its Hobart store at Westfield Southlake mall, shown here, after filing for bankruptcy Wednesday. (Photograph by John J. Watkins, File/The Times.)

Borders is closing about 200 of its 642 stores in the next few weeks, including its Hobart location, after filing for bankruptcy Wednesday.

The Borders location at Westfield Southlake mall in Hobart is among those slated to close, according to a list posted on the company website.

“As part of the filing, Borders plans to take a store reduction program, which this store is a part of,” company spokesman Donald Cutler said.

The company took into account economic conditions, cost structures and each location’s viability when it was deciding which stores to close, Cutler said.

The bookseller has struggled with crushing debt and sluggishness in adapting to a rapidly changing industry.

“We do appreciate the loyalty of our customers over the years and look forward to welcoming them into the stores that remain part of the community in general and also online at Borders.com,” he said.

“Over the next several weeks, (the closings) will take place, and customers can continue to use their gift cards and coupons as usual in all the stores.”

Shoppers at the Hobart Borders were surprised Wednesday when they learned of its impending closure, which comes just a few months after another major bookseller, Barnes & Noble, closed its doors across the street in Hobart.

Brian McGue, of Chesterton, said he was surprised because “bookstores always seem busy.”
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More robust spending helps economy gain steam

The economic recovery is now consistently picking up speed, and American consumers are the ones pushing the gas pedal. They increased their spending late last year at the fastest pace since 2006.

The question now is whether they can spend enough this year to make the economy grow even faster and finally bring down unemployment. It’s up to them because the housing market and government spending aren’t offering much help.
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Reeling in Illinois businesses

The Indiana welcome sign is shown above Interstate 80/94 looking eastbound from Wentworth Avenue in Lansing. A number of regional groups are cooperating on an advertising campaign to highlight the area's transportation infrastructure, proximity to Chicago, work force and facilities. (Photograph by Jonathan Miano/The Times.)

The Indiana welcome sign is shown above Interstate 80/94 looking eastbound from Wentworth Avenue in Lansing. A number of regional groups are cooperating on an advertising campaign to highlight the area's transportation infrastructure, proximity to Chicago, work force and facilities. (Photograph by Jonathan Miano/The Times.)

Northwest Indiana economic development groups are seizing new opportunities to recruit disgruntled Illinois businesses. But the effort started long before Illinois raised its income taxes earlier this month.

A number of local groups are cooperating on an advertising campaign to highlight the area’s transportation infrastructure, proximity to Chicago, work force and facilities, said Karen Lauerman, marketing and communications director of the Northwest Indiana Forum, a private group that promotes economic development in the region.

“We’re working with our partners to focus on the advantages of Northwest Indiana and the rest of Indiana,” Lauerman said. “We’ll be using a variety of mediums for this significant public relations effort—everything from billboards to social media to specific advertising.”
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Bears merchandise not exactly flying out the door

Tom Palinca, store manager at Magic Sports shows off some of the Chicago Bears apparel on display at the sports clothing store. The Bears will meet the Green Bay Packers on Sunday for the NFC championship. (Photograph by John Luke/The Times.)

Tom Palinca, store manager at Magic Sports shows off some of the Chicago Bears apparel on display at the sports clothing store. The Bears will meet the Green Bay Packers on Sunday for the NFC championship. (Photograph by John Luke/The Times.)

What some are calling the biggest game in Chicago Bears history may not be translating into increased sales of the team’s merchandise, according to a local proprietor.

“It’s not like 2006 at all,” said Magic MacKeigan, owner of Valparaiso’s Magic Sports, speaking about Sunday’s Bears-Packers game compared to Chicago’s Super Bowl run four years ago. “The Bears-Colts Super Bowl was our best January ever.”

MacKeigan believes that fans have remained skeptical about the Bears despite their recent winning ways.
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