U.S. retail sales rose for a third straight month in December, with households buying a range of goods even as they cut back on purchases of motor vehicles, which could strengthen the view that the economy maintained a moderate growth pace at the end of 2019.
The Commerce Department said on Thursday retail sales increased 0.3% last month. Data for November was revised up to show retail sales gaining 0.3% instead of rising 0.2% as previously reported. Economists polled by Reuters had forecast retail sales would gain 0.3% in December. Compared to December last year, retail sales accelerated 5.8%.
Excluding automobiles, gasoline, building materials and food services, retail sales jumped 0.5% last month after falling by a downwardly revised 0.1% in November.
The so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. They were previously reported to have edged up 0.1% in November.
Sales rose in December despite retailers such as Target Corp , Kohl's, J.C. Penney and Macy's reporting a decline in sales for the holiday period as foot traffic in malls dropped.
Though a report last week showed a slowdown in job growth in December and the increase in the annual wage gain retreating to below 3.0%, consumers will continue to shoulder the longest economic expansion on record, now in its 11th year, thanks to higher savings, rising house prices and a bullish stock market.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 3.2% annualized rate in the third quarter. Growth in consumer spending is expected to have slowed to around or below a 2.5% rate in the fourth quarter. The economy expanded at a 2.1% pace in the July-September period.
Growth estimates for the fourth quarter are as high as a 2.5% rate, in part because of a drop in imports, which compressed the trade deficit.
In December, auto sales fell 1.3%, the biggest drop since last January, after increasing 1.5% in November. Higher gasoline prices lifted receipts at service stations, which jumped 2.8%. Online and mail-order retail sales rose 0.2% after being unchanged in November.
Sales at electronics and appliance stores rebounded 0.6% in December. Receipts at building material stores surged 1.4% and sales at clothing stores accelerated 1.6%. Spending at furniture stores edged up 0.1%.
Americans also spent more at restaurants and bars, with sales rising 0.2% last month. Spending at hobby, musical instrument and book stores rebounded 0.9%.
Sweetheart candy hearts are seen on the shelf at the To The Moon Marketplace on January 29, 2019 in Wilton Manors, Florida.
Joe Raedle | Getty Images
Sweethearts, the conversation heart candy, is back on shelves for Valentine's Day after missing a year because of a change in its ownership.
But consumers might notice a few changes — fewer pithy sayings and a slightly different taste — and they won't be quite as ubiquitous.
Sweethearts' original producer, New England Confectionary Company, went out of business in 2018. Round Hill Investments, which bought Twinkie-maker Hostess while it was in bankruptcy proceedings, purchased the bankrupt candy maker at auction but sold its Necco wafer brand and Sweethearts to Spangler Candy several months later. Spangler's best-known candy is its Dum Dum lollipops.
Because the candy company acquired the brands in the fall of 2018, it was unable to produce Sweethearts in time for Valentine's Day just a few months later even though it was the most popular candy for the holiday in 2018.
"It became really apparent to us how much people were going to miss them," Spangler spokeswoman Diana Moore Eschhofen said.
The long-moving process for transferring the Sweethearts' equipment from Necco's shuttered factory in Revere, Massachusetts, into another plant resulted in the delay, she said. Sixty truckloads of equipment had to be carefully dismantled, packed up and moved. Some larger pieces needed to be lifted out through the roof with a crane.
The entire moving process took about a year, according to Eschhofen. And those challenges are still putting pressure on Spangler's ability to deliver the candy hearts this year.
"Based on consumer response and the technical challenges, we are not going to be able to meet all of the consumer demand for 2020," she said.
The best place to find Sweethearts for Valentine's Day will be nationwide drugstores like CVS and Walgreens, according to Eschhofen. Some regional stores may also carry them, but they will be in limited supply. The goal for 2021 is to return to Sweethearts' normal production capacity.
The equipment also caused another headache for Spangler. The printer that Sweethearts used to press sayings like "you rock" and "love me" on the hearts was unreliable. The company decided to invest in a new printer, but the replacement printing equipment was damaged during production, and Spangler could not get it fixed completely.
For consumers, that means more conversation hearts than usual will be silent.
"We know that's disappointing, but it's a disappointment for us, too," Eschhofen said.
Although fewer Sweethearts will come with the sayings that they are known for, Spangler is bringing the candy back to its roots by reviving the original recipe. The company located the formula buried in paperwork. Necco had tweaked the recipe over the years in an attempt to modernize the 118-year-old candy. The change brings back flavors such as banana and wintergreen.
Morgan Stanley shares popped after the firm exceeded analysts's profit estimates and each of its three main businesses produced more revenue than expected.
The bank said Thursday that fourth-quarter profit surged 46% to $2.24 billion, or $1.30 a share, compared with the 99 cent estimate of analysts surveyed by Refinitiv. Revenue climbed 27% to $10.86 billion, exceeding the $9.72 billion estimate by more than $1 billion.
Shares of the firm rose 2.7% in premarket trading.
"We delivered strong quarterly earnings across all of our businesses," CEO James Gorman said in the release. "Firmwide revenues were over $10 billion for the fourth consecutive quarter, resulting in record full year revenues and net income. This consistent performance met all of our stated performance targets."
In a quarter in which competitors from J.P. Morgan Chase to Goldman Sachs posted huge rebounds to fixed income trading revenue, analysts wanted to see if Morgan Stanley would follow suit.
It did: Bond trading helped power the firm's institutional securities division to a 32% jump in revenue to $5.05 billion, compared to the $4.46 billion estimate.
At the firm's massive wealth management division, revenue rose 11% to $4.58 billion, edging out the $4.39 billion estimate.
But it was
Gorman has tilted Morgan Stanley towards wealth management and overhauled its once-struggling bond trading division. But the trading and advisory operations are still a crucial part of the company's business mix.
Last month, Morgan Stanley cut roughly 2% of its workforce due to an uncertain global economic outlook, a cull that hit technology and operations roles the hardest, people with knowledge of the matter said.
Morgan Stanley is the last of the six largest U.S. banks to report results.
Earlier this week, J.P. Morgan, Citigroup, and Bank of America posted profits that beat analysts' expectations on surging bond-trading results. Results at Wells Fargo and Goldman Sachs were both marred by legal expenses tied to scandals: At Wells, legal charges were tied to its fake accounts issue, while Goldman neared a resolution to its 1MDB investigation.
Here's what Wall Street expected:
Earnings: 99 cents a share, 24% higher than a year earlier, according to Refinitiv
Revenue: $9.72 billion, 14% higher than a year earlier
Wealth management: $4.39 billion, according to FactSet
Trading: Equities $1.93 billion, Fixed Income $933.5 million
FILE PHOTO: Junichiro Hironaka, former lawyer for ousted Nissan boss Carlos Ghosn, speaks at a news conference in Tokyo
By Tim Kelly
TOKYO (Reuters) - Japanese attorneys representing Carlos Ghosn, including lead lawyer Junichiro Hironaka, quit on Thursday following the former Nissan chief's flight to Lebanon from Japan, where he had been fighting financial misconduct charges.
In an emailed statement, Hironaka said that everyone involved in the case at his practice had resigned. A spokeswoman there declined to give a reason.
A second lawyer in Ghosn's three-person legal team, Takashi Takano, also quit on Thursday, according to an official at his office.
A person who answered the phone at the office of the third lawyer, Hiroshi Kawatsu, said she didn't know if he still represented the former automotive executive.
Ghosn, who fled from Tokyo last month, told Reuters in an interview in Beirut with his wife Carole on Wednesday that he was happy to stay in Lebanon for the rest of his life and claimed he was treated with "brutality" during his detention and bail in Japan. Carole said she was "done with Japan."
Japan has issued international wanted notices for the couple, which means the two will live in Lebanon as fugitives and could be arrested if they leave their country. Japan's Justice Minister Masako Mori has described Ghosn's criticism of her country's judicial system as "absolutely intolerable."
Hironaka, who earlier expressed disappointment at his client's decision to abscond, had said he would quit once his client had settled his account.
Hired by Ghosn in February, the 74-year-old lawyer is known for his combative style. He has been called the "Razor" after winning high-profile cases, including the acquittal of a senior lawmaker on financial misconduct charges and the exoneration of a bureaucrat jailed for four months on corruption charges fabricated by prosecutors.
(Reporting by Sam Nussey and Tim Kelly; Editing by Muralikumar Anantharaman and Raju Gopalakrishnan)
Bank of America on Wednesday posted profit that exceeded analysts' expectations on a rebound in trading revenue and as the company repurchased shares.
The bank said fourth-quarter profit was $7 billion, a 4% decline from a year earlier. But earnings per share were 74 cents, an unexpected 6% increase, helped by a reduction in outstanding shares. That exceeded the 68 cent estimate of analysts surveyed by Refinitiv. Revenue fell 1% to $22.5 billion, edging out the $22.35 billion estimate.
"In a steadily growing economy marked by solid client activity, our teammates produced another strong quarter and year, allowing us to increase investments in our customers, communities, and employees," CEO Brian Moynihan said in the release. "We also delivered for shareholders in 2019 by returning a record $34 billion in excess capital through dividends and share repurchases."
The stock was slightly lower in Wednesday's premarket.
Of the bank's three main divisions, only its global markets business posted a quarterly increase in profit. The Wall Street trading division had a 13% increase in earnings to $574 million as bond trading revenue surged 25% to $1.8 billion, exceeding the $1.68 billion estimate. Stock trading produced $1 billion in revenue, a 4% decline and just under the $1.07 billion estimate.
The impact of lower interest rates was felt widely at Bank of America, impacting its core lending and banking operations. Companywide net interest income fell 3% to $12.3 billion, and the bank's net interest margin fell 17 basis points to 2.35%, just under analysts' 2.36% estimate.
At the lender's giant retail bank, profit dropped 10% to $3.1 billion on the impact of lower rates. The company also cited interest rates as a reason for lower revenue in its global banking and wealth management divisions.
The second-biggest U.S. lender after J.P. Morgan Chase is among the most sensitive of large banks when it comes to changes in interest rates, according to analysts. So investors will want to hear how rates — which were cut three times last year by the Federal Reserve — impacted the quarter, as well as guidance for 2020.
Last month, Moynihan said that the U.S. economy remained strong as consumer spending continued to grow. He also said that fourth-quarter trading revenue is expected to climb 7% to 8% from a year earlier (his guidance proved conservative — trading revenue actually climbed 13% in the quarter) and that investment banking revenue was headed 3% to 4% higher.
Shares of the bank surged more than 40% last year, exceeding the 29% gain in the Standard & Poor's 500.
On Tuesday, J.P. Morgan and Citigroup posted profits that beat analysts' expectations on surging bond-trading results and strong revenue from credit-card operations. Wells Fargo missed analysts' profit estimates as it booked costs tied to its fake accounts scandal.
Here's what Wall Street expected for Bank of America:
Earnings: 68 cents a share, a 2.3% decline from a year earlier, according to Refinitiv. Revenue: $22.35 billion, a 2.4% decline from a year earlier. Net Interest Margin: 2.36%, according to FactSet Trading Revenue: Fixed Income $1.68 billion, Equities $1.07 billion
Target was expected to be a winner this holiday season, amidst a sea of disappointing reports. But the big-box retailer said Wednesday that its holiday sales were weaker than planned.
Its shares tumbled more than 8% on the news. Walmart, which hasn't reported holiday results, also traded lower. Its stock was last down about 2%.
Target said its same-store sales during November and December were up just 1.4%, compared with growth of 5.7% a year earlier.
The company said that, despite missing the mark, it is maintaining a prior outlook for fourth-quarter earnings. It also said in a press release that the fourth quarter of 2019 remains on track to mark Target's eleventh consecutive quarter of same-store sales gains.
Target said it found strength in apparel and beauty, while lackluster performance in key holiday categories like electronics, toys and parts of its home business offset those gains.
CEO Brian Cornell said Target "faced challenges throughout November and December in key seasonal merchandise categories." But "because of the durability of our business model, we are maintaining our guidance for our fourth quarter earnings per share."
"While we knew this season was going be challenging, it was even more challenging than we expected," Cornell added in a separate blog post.
Especially this holiday season, Target was expected to be a winner in the toys category. The company has been devoting more square footage in stores to toys, following Toys R Us' liquidation. It has partnered with Disney to open mini Disney shops within certain Target shops. Target also is now powering the website of the Toys R Us brand that has relaunched post bankruptcy.
But this holiday season, Target said toy sales were about flat with the prior year. The company did say, however, that it continued to gain market share in toys throughout the holidays, based on tracking data provided by The NPD Group.
Target said electronics sales were down more than 6% in November and December, while sales of home items were down about 1%. Apparel sales, meantime, were up about 5%, beauty sales inched up roughly 7%, and food and beverage sales climbed about 3% during the holiday period, according to the company.
Overall in the retail industry, sales of electronics and appliances grew 4.6% from Nov. 1 through Dec. 24, while the home furniture and furnishings category was up 1.3%, according to a separate analysis of purchases by Mastercard Spending Pulse. The firm said the apparel category grew just 1%, while department store chains saw their overall sales drop 1.8%.
Target's digital sales rose 19% — thanks to more people utilizing the company's same-day options like curbside pickup when they buy online. Target said use of its same-day services grew more than 50% during November and December compared with 2018, driving about 75% of the retailer's overall digital sales growth this past holiday season.
Target said it now expects fourth-quarter same-store sales to fall in line with the 1.4% growth it experienced during November and December, compared with a prior outlook of 3% to 4% growth. It said this means full-year same-store sales should rise more than 3%. Same-store sales represent a key metric used by the retail industry to keep track of purchases made at stores open for at least 12 months.
Analysts had been calling for Target's same-store sales during the fourth quarter, which includes the holiday season, to be up 3.8%, according to a poll by Refinitiv.
"Our fourth quarter performance will benefit from productivity improvements in our stores and supply chain, as well as meaningfully lower clearance inventory compared with a year ago," Cornell said in the release.
Target's announcement on Wednesday might come as a shock to some, because the retailer was largely expected to have had a strong holiday season, while mall-based apparel retail chains and department store operators struggled through it.
Macy's, J.C. Penney and Kohl's all in recent days have reported same-store sales declines during the holiday season. Kohl's specifically called out its women's apparel business as its biggest weak link. And Target, meantime, proved in its latest fiscal quarter that its apparel sales are on fire.
While leggings maker Lululemon reported a strong holiday season, others like Victoria's Secret owner L Brands and discount chain Five Below added to the malaise.
Thanks to its investments in new private labels like a grocery line called Good & Gather, store remodels and mobile app updates, analysts say Target has been taking market share from struggling rivals. The Minneapolis-based retailer in November raised its annual profit outlook, to expect full-year adjusted earnings per share to fall within a range of $6.25 to $6.45. Those expectations weren't adjusted on Wednesday.
While holiday sales for key general merchandise categories climbed a meager 0.2% in 2019 compared with 2018, according to weekly point-of-sale data tracked by The NPD Group, there were "clear winners." The firm called holiday results overall "lackluster," thanks in part to companies pushing deals earlier and earlier in the year, thereby lessening the significance of historically key days like Black Friday.
The holiday season also had six fewer days in between Thanksgiving Day and Christmas this year compared with last, making for the shortest possible calendar. Many retailers said they kicked off promotions earlier because of the calendar setup, hoping to win shoppers before their peers.
Speaking about the holiday season in October, Cornell had said, "Every day is going to count."
On Wednesday, the CEO said Target noticed this holiday season that people are "more and more comfortable shopping later in the season." Target said that on Dec. 24 its employees prepared almost five times the number of products for curbside pickups compared with the same day in 2018.
The company also on Wednesday announced that its chief stores officer Janna Potts is retiring, to be replaced internally by Mark Schindele, effective immediately.
And it announced changes to the structure of its merchandising team — appointing Christina Hennington to executive vice president and chief merchandising officer of hardlines, essentials and capabilities, and Jill Sando to executive vice president and chief merchandising officer of style and Target's owned brands, also effective immediately.
Target's former chief merchandising officer Mark Tritton resigned late last year to take the CEO post at Bed Bath & Beyond.
Target, which has a market value of about $63.6 billion, has watched its shares rally more than 82% over the past 12 months. The stock on Dec. 20 hit an all-time intraday high of $130.24.
Dating apps Grindr, OkCupid, and Tinder are allegedly spreading user information like sexual preferences, behavioural data, and precise location to advertising companies in ways that may violate privacy laws, according to a study conducted by the Norwegian Consumer Council (NCC).
The study tracked the activity of 10 popular apps during the period June to November 2019 in order to identify howpersonal data is transmitted from these apps to commercial third parties.
The apps tested include the dating apps Grindr, Happn, OkCupid, and Tinder; the period tracker apps Clue and MyDays; the makeup app Perfect; the religious app Muslim: Qibla Finder; the children's app My Talking Tom 2; and the keyboard app Wave Keyboard.
The ten apps were chosen for the study as they were the most popular apps on Google Play at the time in "certain categories where sensitive category personal data were deemed likely to be processed, such as data about health, religion, children, and sexual preferences".
Only the Android versions of these apps were tested, with NCC explaining that this was due to Android being the largest mobile operating system worldwide, in addition to Google being a key player in the ad tech industry.
Following testing, a majority of the ten apps were found to transmit data to "unexpected third parties", with users not being clearly informed about where their information was being sent, and how it was being used.
The study also found that Grindr was among the apps with the most glaring privacy issues as it failed to do the following: Share clear information regarding the way it shares data with non-service provider third parties; share clear information about how user data is used for targeted ads; and provide in-app options to reduce data sharing with third parties.
Image: The Norwegian Consumer Council
When analysing the data flow from the Grindr app, the researchers observed the Twitter-owned company MoPub acted as a mediation network, which facilitated personal data transmissions to other third parties, who then used the data to determine whether they wanted to purchase advertisements directed toward Grindr users.
According to the study, MoPub's advertising partners could also potentially distribute that user data to other companies under certain situations despite not receiving explicit consent from Grindr's users. For example, one of MoPub's partners, AppNexus, could potentially provide data such as users' IP addresses and advertising IDs to other companies such as its parent entity AT&T to sell and target ads, the study said.
"AT&T can use the data from the online tracking industry in combination with first-party data from its TV boxes, in order further to refine its targeted advertising," it added.
Privacy-wise, Grindr encourages users to read the privacy policy from MoPub; meanwhile, MoPub's privacy policy recommends that consumers read the privacy policies of the company's 160 partners in order to understand how their personal data may be used.
According to the study, although MoPub claims to rely on consent in order to process personal data, its partners do not necessarily use consent as a legal basis. This means that if a consumer wants to withdraw their consent from MoPub, the partners may choose not to respect this withdrawal. Thus, the consumer would have to track down each of those partners to ensure their data is not shared.
"This is clearly an impossible task for anyone, illustrating the lack of consumer control when data is being shared widely across the adtech industry," the study said.
And where the consumers do have control, such as from opting out of location data tracking by changing their device settings or by not giving apps access to location data, the study said MoPub's advertising partners like AppNexus could still infer a user's location based on their IP address.
The NCC argues, through the study's findings, that there are widespread breaches of Europe's General Data Protection Regulation (GDPR), especially given that key principles of that EU framework -- such as data protection by design and default -- are not present in a majority of the apps tested.
With consent being a core component of the GDPR's application of data protection, the study added that the language of ad tech companies' privacy policies were often "incomprehensible" with "questionable legal basis".
Under the GDPR, the legal concept of consent requires that users receive clear and easily understandable information about what they are consenting to. Consent also needs to be explicit and freely, meaning that "users must actively opt in, rather than having to jump through hoops to opt out of data sharing", the study said.
"In the cases described in this report, none of the apps or third parties appear to fulfil the legal conditions for collecting valid consent," it writes.
In response to the study's findings, the Norwegian group has since filed complaints asking for domestic regulators to undertake investigations into Grindr and five ad tech companies [PDF] for possible violations of the European data protection law.
If the companies are found to be in breach of the GDPR, they could face fines of up to 4% of their global revenue.
"The multitude of violations of fundamental rights are happening at a rate of billions of times per second, all in the name of profiling and targeting advertising," the NCC writes in the study's conclusion.
"It is time for a serious debate about whether the surveillance-driven advertising systems that have taken over the internet, and which are economic drivers of misinformation online, is a fair trade-off for the possibility of showing slightly more relevant ads."
In 2018, another Norwegian nonprofit group found that Grindr had shared users' HIV status with the third party analytics companies Apptimize and Localytics. Grindr subsequently announced that it had stopped the practice.
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