Tiffany CEO Frederic Cumenal to Step Down

Luxury jewelry and specialty retailer Tiffany & Co. announced on Sunday that its Chief Executive Officer Frederic Cumenal had stepped down after the company’s disappointing financial performance, which includes lower than anticipated holiday sales.

Board chairman Michael Kowalski will become the top executive on an interim basis as Cumenal’s resignation will come into effect at once. Kowalski will also retain his chairman responsibilities, the company said.

Interestingly, Cumenal had succeeded Kowalski as the company’s CEO in 2014. Kowalski had held the top spot in the company since 1999 before being replaced by Cumenal.

The new CEO issued a formal statement saying that the board is “committed to our current core business strategies, but has been disappointed by recent financial results.” Kowalski thanked Cumenal for boosting the company’s management team and putting Tiffany in an advantageous long-term position. He also underlined the need to accelerate the execution of company’s plans to enhance competitiveness.

“The board believes that accelerating execution of those strategies is necessary to compete more effectively in today’s global luxury market and improve performance,” added Kowalski. “As such, we remain focused on enhancing the customer experience, increasing the rate of new product introductions and innovation, maximizing marketing effectiveness, optimizing the store network, and improving our business operations and processes.”

57-year-old Cumenal issued a personal statement thanking the company’s management team and employees. He also expressed “great confidence in Tiffany’s brand, strategic direction, and people.” The French businessman had held a series of senior leadership posts at LVMH Group, where he had also been the CEO of Moët & Chandon, before joining Tiffany in 2011 to oversee the luxury jeweler’s sales and distribution. He was appointed president and joined the board a couple of years later.

The New York-based company, which manufactures fine jewelry and has retail stores all over the world, has faced tough times of late. As a stronger dollar makes shopping trips dearer, the 180-year-old company has struggled to overcome its declining same-store sales for several quarters.

Tiffany had reported a 4% decline in its same-store sales during the holiday period in North America. The company has blamed the disappointing results on the “post-election traffic disruptions” near Tiffany’s New York City headquarters, which is located right next to President Donald Trump’s Manhattan home and office headquarters.

Despite recording an increase of about 7% in the Asia-Pacific and 16% in Japan in its holiday season sales, the declining profits in the Americas and Europe have more than offset the company’s performance in the Far East. The signs do not look very positive for the company, which has seen its profits stagnate at around $4 billion since 2014.

However, Tiffany had some good news in December last year as its shares scaled a recent high of $85.06 on December 8. The stock seemed well-poised at $80.47 in Friday trading.

Meanwhile, amid plummeting sales and the resignation of its CEO, the company aired its first Super Bowl advertisement on Sunday. The ad starred Lady Gaga.

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Goldman Sachs Warns Not To Expect Economic Growth In The Near Future

Goldman Sachs, the reputed and leading global investment banking corporation has warned that the economic boost promised during the election campaigns of Donald Trump may not be realized in the near future. The stock market was already having a tough time as it struggles to maintain a positive outlook of the economy. Immediately after the announcement of the election results, the stock market enjoyed a boom as the DOW average shot beyond 20,000. Within two weeks of acting as the President of the USA, Donald Trump has managed to increase political and economic risks.

Goldman Sachs gave a clear assessment of Trump’s policies in a note sent to its clients on Friday. Trump’s White House is set to face bipartisan political resistance for the administrative initiatives. The corporation commented that the risks are positively tilted in the present situation. Even the members of the Republican party have divided opinions on the immigration ban and financial reform outlook. Investors boosted the stock value in the later part of last year, but they now worry about the economic implications of the travel ban.

Trump has promised fiscal boost immediately after taking over the White House administration. However, it is the least of the worries of the White House now. The Republican party was keen on repealing Obamacare, but now, the party members are getting increasingly nervous. Their plan on bringing about a better and cheaper insurance plan is not materializing amidst support for Affordable Care Act. Also, the administration has to take care of the implications of travel ban which will consume a lot of political capital. All this points to the fact that the fiscal boost will be pushed to 2018.

Senator Orrin Hatch expressed his dissatisfaction on the proposed broad tax reforms. Border adjustment tax is also not welcomed by several members of the Republican party. Goldman Sachs points out that the Trump administration will focus on trade and immigration promises of the election campaign. This can be disruptive for the economy as there are potential risks for the USA as well. Goldman Sachs predicts that the economy fiscal boost will be around 1% through tax cuts. However, it is skeptical of the tax reforms promised earlier. The bank also predicts an increase on import tariffs and decreased scope for immigration.

The immigration restrictions are severely condemned by the tech companies and legal action is being taken. Banning immigrants can add stress to the labor market and it will affect the productivity. There is a huge risk to corporate profits due to this controversial travel ban. The trade restrictions also add to the financial burden of the companies. If the trading partners retaliate, the negative consequences will affect the economy greatly.

Trump initially had the potential to win the Democratic votes for his infrastructure rebuilding initiative. However, as his administration now focuses on travel ban and repealing Obamacare, it will only lead to more uncertainty in the political condition. With more political and economical risks, the Trump administration will not have enough time and capital this year to boost growth.

Hudson’s Bay, Macy’s Witness Surge in Share Price

Friday saw the shares of Hudson’s Bay Co. and Macy’s go up after reports that the Canadian department store chain had made a takeover bid for the American company.

While Hudson’s Bay shares scaled as high as $10.62 on the Toronto Stock Exchange before pulling back to trade at $10.45, up by four percent from Thursday’s close, Macy’s shares soared by eight percent, trading at $33.34 on the New York Stock Exchange.

The Wall Street Journal cited unnamed sources to report that talks were being held between the companies. The negotiations, however, are at any early stage, and may or may not materialize. Alternatively, the talks may even lead to a partnership of some kind instead of a sale. Uncertainty is the only certainty as of now, the sources added.

In an email response to another print media house, Tiffany Bourré, director of corporate communications at Hudson’s Bay, said that he didn’t want to comment on “rumor or speculation”.

The takeover approach comes at a time when Macy’s finds itself in all sorts of troubles as it struggles with the declining relevance of department store business and the reduced margins on account of heavy discounts to consumers. Traditional brick-and-mortar stores like Cincinnati-based Macy’s have struggled to keep pace with the upstart retailers as e-commerce businesses keep gaining momentum and consumers start buying more over the Internet.

Recession came as a boon for discount stores. Traditional department stores have been forced to cut their prices, which has had a direct bearing on their margins. The fact that Macy’s announced its plans to cut over 10,000 jobs last month besides detailing its intentions to close 68 stores by mid-2017 after another poor performance in the holiday season only underlines the recent nosedive in its fortunes. Macy’s comparable stores’ sales fell by 2 percent in the last quarter.

Macy has been urged by a prominent activist hedge fund, Starboard Value, to generate some cash by selling off the real estate underneath its stores. Starboard had earlier valued the land at about $21 billion. Macy’s later went on to add Starboard as an ally on its board.

Hudson’s Bay, on the other hand, has been on an acquisition spree in recent years. In 2013 it acquired New York-based Saks Fifth Avenue department store chain for USD 2.9 billion before gobbling up German department store chain Galeria Kaufhof. The company had also announced its acquisition of Gilt, a membership-based online retail store, in January last year. With stores throughout Canada, Belgium, Germany, and the United States, the company now aims to own Macy’s, which has a market cap of 10.6 billion US dollars as against Hudson’s Bay’s 1.88 billion Canadian dollars (USD 1.4 billion). Hudson’s Bay has also associated itself with mall owners and property developers with the goal of showing shareholders the value of its real estate without actually selling it off.

While Macy’s market value is about 8 times bigger than Hudson’s Bay’s, the latter has the option of raising equity and debt against its real estate portfolio, which, according to some sources, could be worth $14 billion. Macy’s debt burden of $7.5 billion is, however, a hindrance to the takeover.

Nissan-Renault CEO Ghosn to Head Mitsubishi Motors

Carlos GhosnCarlos Ghosn, chief executive of Japan’s Nissan Motor and France’s Renault, is to take up the role of chairman at Mitsubishi Motors in the drive to improve on the fortunes of the embattled automaker.

Mitsubishi’s current Chairman and Chief Executive Osamu Masuko said Ghosn has agreed, albeit reluctantly, to take over from him to steer the affairs of the car maker as it seeks to bounce back from the mileage scandal it has been battling for a while.

“I speak for all of us when I say we will give our absolute commitment to support Mitsubishi Motors,” Ghosn said at a news conference organized by the companies. “We are sending a clear message we believe in the underlying strength of Japanese car making.”

The Brazilian-born French said Nissan would do all it can to ensure governance is improved at Mitsubishi and that trust is restored. He also promised to work to guarantee regulatory compliance at the automaker.

Ghosn stated that he has no intention of interfering with the activity of the company’s management, which will continue to be headed by Masuko. He said his own interest is in making sure that the auto manufacturer is managed to meet the expectations of its shareholders.

Nissan became Mitsubishi’s largest shareholder after paying 237 billion yen (around $2.3 billion) for a stake of 34 percent. The deal was formally sealed on Thursday after regulatory approval was finally granted.

The two companies said they would continue to retain their different identities, brands and dealerships.

In April, Nissan agreed to take over at Mitsubishi after the latter admitted to inflated mileage for its minicar models eK Wagon and eK Space. Some mini-vehicles manufactured for Nissan were also affected.

The extent of the scandal became broader when government ordered in August that eight more of the Minato, Tokyo-based automotive manufacturer’s models should no longer be sold. The mileage ratings of the vehicles were said to have been inflated. Affected models included the Pajero SUV and the i-MiEV electric car.

The mileage scandal contributed to worsen Mitsubishi’s reputation which had already been tainted by systematic cover-up of defects, first noticed in the early 2000s.

Ghosn is credited with reviving Nissan from total collapse in 1999 and leading it to become a global brand with steady profits today. The 62-year-old was able to achieve the amazing turnaround at the leading Japanese automaker by cutting costs, further building on his reputation as an efficient manager. He will be expected to work his magic at Mitsubishi as well.

Sales of Mitsubishi vehicles have slumped considerably in Japan, following the disclosure months ago that fuel-economy data had been falsified by employees. The company has also been confronted with huge costs in compensation to numerous thousands of car owners in the Asian country. It is expected to report more than $2 billion in losses for the year ending March 2017.

Nissan and Mitsubishi have plans to exchange technical expertise, including on self-driving technology and gas-electric hybrid system, moving forward. They will also work to cut costs by sourcing raw materials together.

Four new members in total will be nominated by Nissan to the board of Mitsubishi, including Executive Vice President Trevor Mann and Senior Technology Adviser Mitsuhiko Yamashita.

Approval is still required from Mitsubishi shareholders before the changes to its leadership can take effect.

Over 1 Million Pro Payday Loan Letters Sent to CFPB

payday loan lettersWhen the Consumer Financial Protection Bureau (CFPB) announced its proposal to create a federal regulatory framework pertaining to the payday loan industry and provided a 90-day window for comments, the federal consumer watchdog likely expected some pushback from the industry. It probably also expected that most of its comments would be in support of the new rules, or would at least demand tougher laws.

Did CFPB and director Richard Cordray think that most of the comments would be in favor of payday loans? That is exactly what happened.

When the 90-day window closed earlier this month, the CFPB received more than 1.4 million comments from the general public. And most of them were pro-payday loans.

According to a new report from Politico, the payday loan industry is ecstatic that it was able to submit approximately one million letters to the CFPB that argued against the 1,300-page rule and argued in favor of payday loans. It becomes even more interesting when you consider that they weren’t typical letters from payday loan businesses and industry trade representatives combating new rules.

In fact, the report notes, a lot of the protest letters were conducted by grass-root campaigns.

“We’re very pleased,” said Dennis Shaul, chief executive officer of the Community Financial Services Association of America, a trade group representing small-dollar, short-term lenders. “Now we all have to be concerned about whether they’re all going to be opened, read and put on their portal. They shouldn’t begin their meditative period of time that’s meant to get them toward the final rule until everyone has had a chance to comment.”

Whether or not the CFPB will accept the letters as legitimate remains to be seen. But already there is some push back against the push back itself. At least according to the Stop the Debt Trap campaign, a coalition of consumer groups that favors tough rules on payday lending. The group alleges that most of the pro-industry comments came under duress and coercion and that they shouldn’t be considered.

Oregon Democratic Senator Jeff Merkley believes that most of the comments in defense of payday loans were in fact produced by payday lenders themselves. However he did not provide any evidence to back up his claim that businesses that offers payday loans online created these letters. The senator just suggested that he experienced the same thing in his home state.

He may need to retract his comments because at least two federal agencies urged the CFPB to reconsider its position. The National Credit Union Administration (NCUA) and the Small Business Administration (SBA) wrote to the federal agency saying that many people rely on payday loans.

“Imposing these strict regulations may deprive consumers of a means of addressing their financial situation,” the SBA wrote. “The CFPB has underestimated the potential economic impact of this rulemaking on small entities.”

The CFPB has said since June 2 that it will finalize its ruling after it peruses the comments. After that, experts project that the rules could be enacted as early as next year. That is if members of the House can fight against the pushback that some Republicans are putting forward.

Mexican Peso Hits Six-Week High Following Final Clinton-Trump Debate

PesoIncreased optimism over a Hillary Clinton victory against Donald Trump helped Mexico’s peso to rally to its strongest level in six weeks, following the final debate between the candidates ahead of next month’s presidential election in the U.S.

Following the debate, the Mexican currency jumped as high as 18.4558 against the dollar, as reported by Bloomberg. That was the highest level seen since Sept. 8.

The performance of the peso has been considered a reflection of what investors think on whether Trump will emerge winner in next month’s election. The currency falls when the Republican candidate is having an upper hand in the campaign and rises when he is not doing so well.

Trump has not kept his desire to take certain actions that would very likely hurt America’s southern neighbor should he become the next president. He has emphasized his intention to have the terms of the North American Free Trade Agreement renegotiated.

A stronger peso is indicative of expectations in the market that the billionaire is now less likely to win. The currency has done better than all of its major peers since the commencement of the presidential debate on Sept. 26, soaring by more than 7 percent.

Clinton’s prospect of winning the U.S. presidential election improved following the final debate, as she appeared to have made better positive impression. Around 52 percent of debate watchers sampled in a CNN/ORL poll said the Democratic candidate won, while 39 percent supported her opponent.

A national survey by Bloomberg Politics on Wednesday showed that Clinton has extended her lead over Trump.

“Never in the history of the U.S. has a candidate faced such a deficit in the polls as Trump currently holds, with at least two well-known sites (that model the probability of the outcome) putting an 85-90 percent chance of a Clinton win,” IG Group’s chief market strategist Chris Weston said in a note.

Weston however stated that “it can often pay to expect the unexpected” based on recent precedents.

Seemingly aware that he was losing ground, Trump frantically tried to turn the table to no avail during the final debate before the U.S. presidential election. He dismissed Clinton’s claim that he was a puppet of Vladimir Putin, saying his Democratic opponent had been outsmarted by the Russian president on several occasions.

Trump also accused Clinton’s campaign of being behind accusations by some women who said he made uninvited sexual advances towards them. The Republican candidate, who described his opponent as “a nasty woman,” said the claims were completely untrue.

Some analysts believe the markets heavily reflect preference for a Clinton win.

The Mexican peso slumped heavily last month after recording the most losses among major currencies as Trump appeared to be having the edge over Clinton. Investors are concerned about the negative effects the businessman’s plan to curb trade with Mexico and deport millions of Mexicans without proper documentation could have on the economy of the U.S. neighbor.

So far, Trump has not stated whether he would accept the results of the November election if he loses. He had previously implored his supporters to monitor inner-city polling units to guard against voter fraud.

Marriott Selects Downtown Bethesda for New Headquarters

marriottForemost hospitality company Marriott International says it has settled for downtown Bethesda as the new location for its headquarters, with the decision being influenced by promise of incentives from the government for it to remain in the region.

The world’s largest hotel company made the announcement on Tuesday after receiving promise of up to $62 million in subsidies funded by taxpayers. It said around 3,500 employees, who are currently spread across three offices, would be moved to new headquarters to be built in the proximity of the Bethesda Metro station by 2022.

Marriot has yet to determine a specific location where the $600 million complex will be erected. It is said to still be assessing several locations easily accessible to Metro, with a selection expected in the first half of next year.

The company had announced early last year that it would move from its longtime Rock Spring Center office park to an area more accessible to Metro. D.C., Northern Virginia and Prince George’s County expressed interest in hosting the complex, but the incentives promised contributed to sway the company’s management to remain in Montgomery County.

“Marriott has been headquartered in the State of Maryland for more than 20 years and we intend to remain close to our roots,” Arne Sorenson, president and chief executive of the hotel company, said in a statement. “Our goal is to provide a cutting-edge workspace for our associates, offering state of the art technology, modern amenities, and access to a range of transportation options.”

The Marriott CEO said the company decided on downtown Bethesda because it “offers multiple sites that meet our priority needs.”

The proposed complex will have office space of 700,000 square feet to house Marriott employees. The company is working with architecture company Gensler and real estate brokerage firm JLL.

Political leaders in Maryland, especially Montgomery County, were believed to have pushed strongly for Marriott to remain in the region to preserve jobs. They had been criticized in the past for not doing enough in this regard.

The $62 million incentive package includes $44 million grants to be shared by the state and county. It also includes $18 million in tax benefits, majority of which would be provided by the state.

This is the second taxpayer-funded incentive package Marriott would be offered by the state and county in less than two decades. This may likely raise questions on the limit government should be willing to go to keep companies from moving.

Marriott became the largest hotel company in the world following its acquisition of Starwood Hotels & Resorts Worldwide Inc. last month. The transaction added Sheraton, Westin and St. Regis to the hospitality giant’s family of brands, which includes the Marriott and Ritz.

It is not yet clear the number of Starwood employees that would be moved to the new headquarters when completed.

Marriott becomes the latest company to move away from suburban office parks to more urban areas. General Electric and McDonald’s are two of the major corporations that have already left office parks.