Sears Gets Aggressive With Debt Forgiveness

Bob Blandeburgo — Tue, 30 Jun 2009 14:00:06 +0000

While economists generally agree the recession has bottomed out, rising energy prices and a high national unemployment rate is prompting the No. 1 appliance retailer in the United States to give concerned consumers a safety net should they lose their jobs.

Starting July 6, Sears Holdings Corp. (Nasdaq: SHLD) will credit one-twelfth of the purchase price of any appliance bought that is $399 or higher should a consumer lose their job between 60 days and one year after the purchase. Those unemployed for more than a year will have the full debt cancelled.

The Sears offer requires consumers to use its branded credit card, backed by Citigroup Inc. (NYSE: C).

The move is similar to previous promotions earlier this year by Ford Motor Co. (NYSE: F), General Motors Corp. (OTC: GMGMQ) and Hyundai Motor Co., but with one important difference: While the debt will be forgiven after a year for those unemployed for a year or more, consumers will be able to keep the appliance.

The Sears promotion more closely resembles one by JoS. A. Bank Clothiers Inc. (Nasdaq: JOSB), which in March offered consumers who involuntarily lost their jobs to get a refund on the price of a suit up to $199 while keeping the suit.

“It’s a differentiated program, and we believe that that’s going to get people to choose us over the other guys,” Sears Chief Marketing Officer for Home Appliances Kevin Brown told Bloomberg News.

Sears’ same-store sales-a key measure of retail performance-dropped 11.7% in stores open 12 months or more for the quarter ended May 2. While the retailer did not go into great detail, it did blame the adverse effects of the shabby housing market for a drop in appliance, lawn and garden and tool sales.

Best Buy Co.’s (NYSE: BBY) appliance sales declined 20.1% in its last quarter ended May 30, versus a 4.9% drop in overall same-store sales for stores that have been open at least 14 months.

Since those earnings were reported, rays of light appeared last week for the durable goods category as a whole, when the U.S. Department of Commerce reported that new orders for manufactured durable goods increased 1.8% in May. Shipments were down 2.1%, but inventories have shrunk five consecutive months to 0.8%.

Sears’ promotion comes at time when the recession is slowing down and headed toward a bottom, after which it is expected to go through a “jobless recovery” that yields better financial results for companies but no hiring due to lost profits in the past.

Sears’ shares rose more than 4% yesterday (Monday) to close at $67.67 a share.

Source: Sears Gets Aggressive With Debt Forgiveness

Oil Falls $2 to Below $39 as Demand Weakens

Contrarian Profits — Mon, 12 Jan 2009 12:30:03 +0000

Iran says OPEC could cut output again in March… Russia-Ukraine gas row not finally resolved…

Oil fell more than $2 to below $39 a barrel on Monday, dragged down by widespread evidence that deepening recession was reducing global energy consumption.

The decline came despite news that Saudi Arabia planned to cut output to below its agreed target, as well as gas supply disruptions in Europe as a result of the Russia-Ukraine dispute and tensions in the Middle East.

U.S. light crude for February delivery fell $2.18 to a low of $38.65 by 1020 GMT. London Brent crude fell $1.62 to $42.80.

U.S. jobless data on Friday set the tone for the market.

A U.S. government report showed employers slashed jobs by 524,000 in December, driving the national unemployment rate to its highest level in almost 16 years.

“The U.S. unemployment numbers on Friday started the latest leg downwards. We have had a string of bad news, with companies and economies all reporting negative data. It is almost relentlessly bad,” said Rob Laughlin, senior oil analyst at MF Global in London.

Oil prices fell 54 percent last year and have shed more than $100 from a record peak of above $147 a barrel last July as the global economic downturn hits demand for fuel.

SUPPLY CUTS

The world’s top oil exporter, Saudi Arabia, plans to cut output by up to 300,000 barrels per day (bpd) below its agreed OPEC target, a proactive step to prop up a collapsing market, industry sources said on Sunday.

Riyadh has already lowered supply this month to 8 million bpd, meeting its target under OPEC’s pact to reduce overall supplies by a record amount from Jan. 1.

Saudi Arabia’s cutbacks add to similar moves earlier this month by other OPEC producers including Iran, the United Arab Emirates, Kuwait and Libya to curb supplies, although evidence that oil producers are cutting output has not lent much support to prices so far.

Iran’s representative to OPEC was quoted as saying that the group could decide to reduce oil output again at its meeting in March if crude prices fell further.

The front months on oil futures have been taking the brunt of the falls with the markets is steep contango. March U.S. crude futures have been trading at a premium of more than $5 above February, while April is around $3 above March.

Traders say the wide price spread partly reflects a lack of prompt demand but also a view that OPEC cuts will eventually start to impact the market and support prices.

Also worrying the oil market was the status of a deal to restore Russian gas supplies via Ukraine to Europe.

In the Middle East, Israel leaders trying to find a knockout blow for Hamas militants defying a 17-day-old assault have thrown army reservists into the battle.

Although the Russian-Ukrainian gas price row and Middle East tensions could help push oil prices higher, analysts said any rebound was expected to be short lived.

Goldman Sachs Commodities said in a research note on Friday that a market surplus was expected to continue to drive inventories higher and put pressure on its forecast oil price of $30 a barrel for the first quarter of 2009.

LONDON, Jan 12 (Reuters)

Contrarian Stock Market Investing News - Featuring Bargain Stocks » National Unemployment Rate

Sears Gets Aggressive With Debt Forgiveness

Oil Falls $2 to Below $39 as Demand Weakens