A plea to shed
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St. Louis should expect little improvement in the local job market or housing prices this year, according to a dismal new forecast from economists at PNC Bank.
Some excerpts:
St. Louis has not been able to accelerate its economic growth beyond stall speed thus far since the end of the recession. Employment growth is barely positive, and the market area’s labor force is declining in the absence of new job opportunities. What had appeared to be another manufacturing-centric turnaround story alongside so many other Midwest regional economies in early 2011 has sputtered entering 2012. The labor force has either been flat or seen outright declines in three of the past five quarters, indicating that would-be workers are falling out of the labor force count for lack of significant job opportunities. St. Louis looks set for sub par job creation through the next several quarters. Price declines (for homes) show little sign of bottoming out in the very near term, leading to expectations that even minimal price growth will be delayed until 2013. With employment gains temporarily stalled, housing demand will offer little price support in the coming year. St. Louis has traditionally posted a median household income level slightly greater than the Midwest and U.S. averages. This standing is under threat over the next few years, however, as the market area struggles to steady its labor market, and therefore its earnings potential.
The report expands on remarks made by an economist for the large Pittsburgh bank on a visit to St. Louis last week.
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Stock futures rose Tuesday as government data showed that consumers spent slightly more in April as prices remained flat.
Dow Jones industrial average futures rose 60 points to 12,715. Standard & Poor’s 500 futures added 7.6 points to 1,341.7. Nasdaq composite futures rose 19 points to 2,604.
With gasoline prices down and possibly an earlier-than-usual start to the spring shopping season, the Commerce Department reported that retail sales rose 0.1 percent in April. Retail spending had risen 0.7 percent in March and 1 percent in February.
A very warm winter may have had shoppers out early, and could explain some of the slowdown in spending, as could lower gas prices.
However, even with gasoline removed, consumer spending rose only 0.2 percent.
U.S. consumer prices were flat last month as cheaper gas offset modest increases for food, clothing and housing. The data indicate that inflation remains in check, according to the Labor Department.
A pair of retailers, Home Depot and Saks, posted first quarter earnings Tuesday.
Shares of Saks Inc. slid more than 3 percent on disappointing revenue numbers, though profit rose 13 percent for the quarter.
And shares in The Home Depot Inc. slumped as well after full-year revenue guidance from the world’s biggest home-improvement company fell short of Wall Street expectations.
One of the last vestiges of hope for Jamestown Mall has been its JCPenney outlet store.
While other retailers have deserted the mall in droves, the 124,000 square-foot anchor store’s presence – and success — has been something that the mall’s proponents have hung onto as proof of the area’s potential. (A Macy’s is also still open at the mall.)
In January of last year, J.C. Penney Co. announced it was exiting the outlet business. At the time, it sounded like a possible death knell for Jamestown Mall.
“For ten months we were in limbo,” said Steven Bingham, the outlet store’s manager.
But then SB Capital Group came to the rescue, buying most of those outlet stores in October and converting them to a new name: JC’s Five Star Outlet. Glen Gammons, who ran J.C. Penney’s outlet division for years, came on board to run the rebranded chain under the new owner.
In a recent phone interview, Gammons said the company’s plan for the Jamestown Mall store is the following: to keep it open. J.C. Penney still owns the building, he noted.
And what’s more, he said, the store is still profitable. In fact, its sales performance put it within the middle tier among the other 14 stores in the chain, he said.
Gammons thinks the mall could see better days down the road. The city needs to team up with a developer to bring in a retailer such as a Sam’s Club or Burlington Coat Factory to the site, he said.
“There’s potential for the mall to be revived,” he said. “I’m not naïve that there are challenges. … But it’s a good piece of real estate.”
In the meantime, the outlet store is in the midst of a 21-month transition to separate the systems and name between JCPenney and JC’s Five Star Outlet.
The slow changeover has led to some confusion. The sign outside the store still says “JCPenney outlet store.” So does the store’s glossy advertisements. The store no longer accepts JCPenney gift cards, but you can use that retailer’s credit card in the outlet.
While a lot of the systems behind the scenes are in flux, what hasn’t changed as much is what customers see on the sales floor. The store still gets about 20 to 25 percent of its merchandise from overstock and end-of-season inventory from J quick payday loan.C. Penney – the same level as before, Gammons said. But he said the chain is also expanding its other vendors to bring in different products into the store.
Not surprisingly, many customers haven’t realized the store has changed names. At the same, the store is also facing the opposite problem.
“A lot of our customers think we are closed,” Bingham said, referring to the previous publicity about J.C. Penney exiting its outlet stores.
So the store has seen a dip in traffic, he said. But it’s gradually building back up as word spreads that it’s still open.
Another thing the store has going for it is a loyal following. Some customers have been shopping at the outlet since it first opened in East Alton in 1980. It moved a couple times before ending up at Jamestown Mall in 1999.
“We are definitely a destination,” Bingham said. “We have some customers who are here everyday, scoping out the new merchandise.”
KELLWOOD
Kellwood Co.’s newly-minted chief executive didn’t get too settled in during her pit stop to the apparel company’s Town and Country headquarters. Jill Granoff popped into the local office earlier this week in between visits to the company’s New York and California offices.
A Connecticut resident, she will be working out of the company’s New York office.
It makes sense in some ways since New York is the center of the fashion world. But it also makes you wonder a bit about the future of the local headquarters where about 150 people work.
Her predecessor, Michael Kramer, once told me that he would keep the headquarters in this region as long as he was in charge. Then he took a job as chief operating officer for J.C. Penney.
However, Erin Haggerty, a company spokeswoman, noted in an email that the previous CEO before Kramer lived in New York.
“So it’s not uncommon for Kellwood to base its CEO there,” she wrote.
Still, I asked if there were any plans to move the company headquarters. Haggerty said there wasn’t — at least not “at this time.”
On the road to this week’s launch of their new running apparel line, Michael Burnstein and Dave Spandorfer have learned a lot of valuable lessons, including this one: use a brand name that a) people can easily pronounce and b) doesn’t create confusion with a wildly popular British singer and songwriter.
Last year, they changed the name of their company from Edele — or “opportunity” in Amharic — to Janji — or “promise” in Malay.
“We’re pretty sold on Janji now,” said Spandorfer, smiling, as he met for coffee earlier this week. “Janji has a nice springy feel to it. And people remember it — unlike Edele, Adele, whatever you want to call it.”
They held a launch party for Janji this week at Big River Running in west St. Louis County. In the coming weeks and months, they will be hitting the road for Boston, Chicago, and Anchorage to attend similar events at stores that will soon begin carrying their products.
In total, about 70 specialty running stores have already placed orders for their shirts and running shorts — a number that at times astounds even them.
“They could easily wait and see how the launch goes and then decide to carry us,” Burnstein said. “These are small business owners and it’s a pretty big risk for them to take on a new product.”
The two first hatched the idea for the clothing line on a bus trip on the way to a track tournament in 2010. They were both then members of the Washington University cross country team. (Spandorfer graduated last year and Burnstein is just finals away from finishing his senior year.)
They knew that runners like to participate in races for just about every cause under the sun. So, they thought, why not imbue that same sense of social conscious into a clothing line?
For every pair of shorts ($38) or shirt ($30) a customer buys, the company donates $4 to a nonprofit organization. For example, some of the proceeds from the shirt modeled after the Haitian flag goes to Meds and Food for Kids, which works with undernourished children in Haiti. And a line of Kenyan-themed products helps fund KickStart, which sells subsidized water pumps to people in Kenya.
In addition to changing the brand name, another challenge along the way has been finding a factory to make the clothes. They initially worked with a factory in Vietnam, but were not satisfied by the samples they received back.
Even though it delayed their launch, they decided to find a different factory. After receiving some 400 samples, they settled on a factory in China that they found through a sourcing agent in St payday loans. Louis.
“One of our biggest concerns is having ethical labor standards,” Spandorfer said. “We know if we don’t do that right, no matter how great our mission is, it won’t matter.”
So they had a third party agent check out the factory. Then more recently, one of their team members flew out there to oversee production and to check out the working conditions firsthand.
They’ve received a lot of help along the way, too. They won $15,000 through Washington University’s Skandalaris Center for Entrepreneurial Studies. And they raked in another $20,000 from a contest through the University of Colorado at Colorado Springs. On top of that, their families and friends have chipped in some start-up funds.
They eventually have plans to expand the product line and to partner with more nonprofits.
But for the time being, they are focused on the initial launch. And for Burnstein, he’s got finals, track tournaments and graduation to juggle, too.
CITY FOR CHEAPSKATES
At first blush, it may not seem like an honor to be called the best city for cheapskates.
But upon further reflection, St. Louis’ clinching of the top spot in Kiplinger.com’s list of top 10 cities for cheapskates may just be something to brag about.
St. Louisans earn roughly the same income as other Americans, our cost of living is 9 percent below the norm).
It listed free — or nearly free — stuff to do as judged by number of libraries and museums in region (St. Louis Zoo, Science Center, Citygarden, etc.), and the number of Dollar General stores in the region (59 in a 30-mile radius for the Lou!).
“St. Louis isn’t a huge city, but if we’re counting per capita, it boasts more museums and libraries than any city on our list (and it beats New York and Washington, D.C., by a factor of 25),” the website writes.
That’s definitely nothing to be ashamed about.
So the next time your mother (or friend or whoever) asks you why you live in the one of the “most dangerous” cities in the U.S. — one of the city’s other rankings over the years — just tell them it’s because you’re a cheapskate.
WASHINGTON • Negotiations aimed at regulating repair of rental vehicles with defects have bogged down, dimming hopes of passing legislation that has become the focus of a nationwide Internet campaign.
Clayton-based Enterprise Holdings Inc., a key player in the talks, is being accused by consumer advocates of seeking loopholes that would let companies rent and sell cars under recall for safety reasons without getting them fixed.
The advocacy group Consumers for Auto Reliability and Safety contended in a letter to Enterprise last week that provisions the companies want “would radically weaken consumer protections.”
Enterprise paints a different picture. The company says it has joined with all major rental firms — except Hertz Corp. — in supporting legislation that would, for the first time, give the government authority over rental company policies for recalled autos.
Hertz has embraced a compromise with consumer advocates that is stricter than what corporate rivals, such as Enterprise, will accept.
Enterprise contends that the legislation it wants is “pretty similar” to a version drafted by consumer groups and — with limited exceptions — would prohibit renting or selling recalled vehicles.
In a statement, the company said it is seeking “a responsible and practical approach that reinforces the policies and practices that rental car companies already use to ensure that our customers rent cars that are safe to drive.”
Until earlier this year, privately held Enterprise, which owns the National and Alamo rental companies, had insisted that any legislation was unnecessary.
But in February, Enterprise relented after becoming the target of an Internet protest pressing the company to support a regulatory bill in Congress. As of this week, more than 160,000 people had signed the Enterprise Rent-a-Car petition at Change.org.
The online protest was organized by Carol Houck, the mother of two California sisters who died in a fiery crash eight years ago while driving a vehicle rented from Enterprise. A jury awarded the Houck family $15 million two years ago after testimony that the vehicle, a PT Cruiser, had a power steering fluid leak that had gone unrepaired.
Last year, manufacturers and the National Highway Traffic Safety Administration together recalled 15.5 million vehicles for various reasons.
Typically, manufacturers cover the cost of repairs to recalled cars. The measures currently under consideration wouldn’t change that. But while the government has authority over how auto manufacturers and dealers handle recalls, the safety agency lacks power to dictate what rental companies must do with recalled vehicles.
Often, recalled vehicles can be found in rental fleets. Hertz, for instance, has grounded more than 100,000 of its vehicles over the past three years after recalls that ranged from serious safety concerns to minor problems.
Richard Broome, the company’s senior vice president for corporate affairs, said Hertz was reluctant at first to endorse national legislation but decided that it would be in the best interest of his company and the industry in general to join consumer advocates in a compromise.
“We were very happy to be on board,” he said. “We think consumers should know they aren’t driving a car that has been recalled or, if it has, that it has been repaired.”
Pamela Gilbert, chief negotiator for the consumer groups, said that the likely next step is fighting out the issue in Congress. She expects a Senate hearing to be held soon. But given limited successes this election year in the polarized Congress, the lack of compromise diminishes the prospect of rental companies getting regulated any time soon.
Gilbert, a former executive director of the U.S. Consumer Product Safety Commission, said she is most disturbed at a proposal from Enterprise and its allies that would allow unrepaired, recalled vehicles to be rented if consumers were notified of the defect. She described that provision as a significant change from recall systems for any products.
“The point is to get a remedy, a replacement or a repair,” she said.
Gilbert said consumer groups also object to a rental companies’ proposal that would allow unrepaired vehicles to be sold by rental companies on a wholesale basis. “If recalled cars don’t get fixed by the rental companies, they probably don’t get fixed,” she said.
Enterprise defends those provisions. The company says that it would rent a recalled vehicle “to avoid turning away customers who show up at their locations when their desired vehicle is subject to a recall which the manufacturer deems appropriate for disclosure rather than grounding.” A company spokeswoman used the example of a defective seat belt chime, in which the seat belts themselves and warning lights still worked. In such cases, she wrote, “a disclosure served the same purpose as the chime itself.”
With regard to automobile sales, Enterprise says that unlike all other dealers in used cars, rental companies would be unfairly singled out if forced to repair recalled vehicles sold on a wholesale basis.
Meanwhile, Houck said she had hoped to see the legislation named after her daughters, Raechel, 24, and Jacqueline, 20, who died in the 2004 accident, but thinks that is unlikely given the flagging negotiations. She said she has not heard from Enterprise even though the company said in its February statement that “we hope for the opportunity to work with” her.
“All we want is for them to fix recalled cars and not rent them. It’s so simple,” she said.
WASHINGTON
Malaysian Prime Minister Najib Razak
Sales of new homes probably increased in March for the first time in three months, indicating the market is struggling to stabilize, economists said before a report today.
Purchases rose to a 318,000 annual rate, up 1.6 percent from 313,000 in February, according to the median estimate in a Bloomberg News survey of 77 economists. Other reports may show consumer confidence dropped for a second month and home prices decreased at a slower pace.
Residential real estate remains a soft spot in the economy, challenged by stricter lending standards and more foreclosures, which depress property values. At the same time, an improved labor market and mortgage rates near historic lows may help prevent the market from slipping further.
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