Know The Laws, Know Your Rights: Sales

Crisp, high-definition TVs as big as 50 diagonal inches can be had for a few hundred dollars. Why bother upgrading or paying more for a fancy new one? Many people don’t. And if you spend much of your time watching streaming video on a tablet or phone, paying for a better TV seems even more pointless. So for several years now, TV sales have been lackluster.

Electronics manufacturers, though, are not losing hope. And at the 47th International Consumer Electronics Show in Las Vegas, scheduled to open on Monday, they will show how they intend to attract more customers. In many cases, it will be by offering so-called smart TVs that can connect to the Internet and run apps.

“Consumers are telling us they’re more interested in connected” televisions, said Benjamin Arnold, an analyst at the NPD Group, the research firm.

For example, at the show, Roku, the manufacturer known for making set-top boxes that include Netflix streaming, will announce designs for integrating its streaming media service directly into television sets. Two Chinese manufacturers, Hisense and TCL, will make the first products based on the designs. Roku, which is based in Saratoga, Calif., will show six television set models at the show with its service built in, said Anthony Wood, the company’s chief executive.

Mr. Wood says Roku is in a position to make a smarter television than others in the industry. He said most TV set makers do not have the resources to make smart televisions with a broad selection of content, partly because many media companies do not want to create versions of their apps for all the different smart TVs on the market. By contrast, there are already more than 1,200 apps available for Roku, including HBO Go, Netflix, Vudu and others, he said.

“Our strategy is to be the dominant platform on the big screen,” Mr. Wood said in an interview.

Samsung, the No. 1 TV manufacturer in the world, is also bullish about Internet-connected TVs. This year more than 75 percent of Samsung TVs will be smart TVs, said Joe Stinziano, an executive vice president for home entertainment at Samsung Electronics America.

But Samsung, like other television makers, is covering its bases by also trying to grab consumers’ attention with flashy new features for the old-fashioned set. The manufacturers have been introducing these kinds of features for a while now to little avail; last year’s crop of sets offered the ability to watch content in 3-D and included screens with quadruple the pixels. Yet shipments of sets last year were down, and with little content to watch, 3-D TVs are a failure so far.

In the United States, sales of Ultra HD TVs in the 12 months that ended in November accounted for less than 1 percent of overall sales of televisions 40 inches or larger. Nonetheless, this year, Samsung is emphasizing curved high-definition TVs, including a high-end 105-inch Ultra HD TV with a curved display.

The slightly concave screen cuts down on reflections from ambient lighting, like the ceiling lights in a living room, for example. It also allows people who are sitting off to the sides, away from the central sweet spot, to get a better viewing experience, Mr. Stinziano said.

“Your eye is curved and this TV is also curved,” he said. “It’s a much more natural feeling.”

Other TV makers like LG, Panasonic, Sharp, Toshiba and Sony will also showcase their big-screen Ultra HD TVs at the electronics show this week.

Out of all the TV makers’ tricks, smart TVs appear to be gaining some traction. In the year that ended in November, 22 percent of televisions sold in the United States were Internet-connected TVs, compared with 11 percent in the previous year, according to NPD.

Saturday, January 4, 2014

December U.S. Auto Sales Miss Expectations

The tough sledding in December does not suggest a difficult 2014, however, as several executives and analysts expect auto industry growth to continue outpacing the overall U.S. economy as it has since the recession.

In addition to the late U.S. Thanksgiving holiday weekend, December sales were hurt by snow and ice storms that kept consumers away from dealerships, automakers and analysts said.

"Sales were pulled into November, but also people were more impacted by the compressed shopping season, most of which was in December," Kelley Blue Book senior analyst Karl Brauer said. "People were doing more Christmas shopping than car shopping."

He added that industry-watchers should not be overly concerned by a December that was affected by the timing of a holiday in the previous month. Last month included January 2 due to a quirk in the calendar that affected how automakers typically report monthly sales.

Monthly auto sales are seen as an early indicator of consumer spending.

U.S. industry sales in 2013 finished at 15.6 million vehicles, up 7.6 percent from 2012, while December results inched up 0.3 percent. The annualized sales rate in the final month was 15.4 million vehicles, well below the 16 million expected by economists surveyed by Thomson Reuters.

The timing of Thanksgiving weekend had a greater impact on December sales than in recent years, causing automakers to miss expectations, said Mustafa Mohatarem, General Motors Co's chief economist.

The late December holiday season is generally one of the heaviest sales periods at U.S. auto dealerships. GM, Ford Motor Co and Volkswagen AG all said the weather was less of a negative factor than the timing of the Thanksgiving holiday.

December sales were counted through Thursday, when much of the U.S. Midwest was buried in snow. The storm is now over the U.S. Northeast, but January sales will have time to recover from the current storm as the bulk of sales typically occurs later in the month, said Kurt McNeil, GM vice president of U.S. sales operations.

GM shares ended 3.4 percent lower at $39.57 while Ford shares rose 0.5 percent to close at $15.51 on the New York Stock Exchange on Friday.

BEST YEAR SINCE 2007

For all of 2013, industry sales were 50 percent higher than 2009 when they slumped to 10.4 million vehicles during the height of the recession. It was the best full-year performance since 2007, when sales hit 16.1 million vehicles.

While some economists and analysts expect 2014 sales to rise to between 16 million and 16.5 million vehicles, there is growing concern that competition will intensify, leading to higher incentives and lower profit for companies.

Research firm TrueCar.com said vehicle transaction prices fell by an average of $200 per vehicle in December, or 0.6 percent, over last year, while incentives were up $103 per vehicle, or 4 percent.

The gradually improving economy, including stronger job and housing markets, will drive future growth, as opposed to consumers' need to replace aging vehicles, which the industry has described as pent-up demand, said Bill Fay, U.S. head of the Toyota brand. He also cited auto loan interest rates, near historic lows, as a positive.

Ford boasted the biggest gain in U.S. market share for the year, adding four-tenths of a point to finish at 15.9 percent. Subaru also showed the same rate of increase to 2.7 percent.

Chrysler increased its share by two-tenths of a point to 11.3 percent, while GM was flat at 17.9 percent. The biggest losers were Kia and its parent Hyundai Motor Co, which lost four-tenths and three-tenths of a point, respectively, to 3.4 percent and 4.6 percent.

GM's December sales fell 6 percent, to 230,157 new vehicles, below analysts' expectations of a slight sales gain.

Sales of GM's Chevrolet Silverado full-size pickup truck fell 16 percent in the month as analysts said the automaker did not load incentives onto the redesigned vehicle to match what rival Ford was doing with its market-leading but older F-Series.

Ford's sales rose 2 percent to 218,058 vehicles, missing expectations. Its F-Series pickup truck, which finished as the best-selling vehicle in the U.S. market for the 32nd straight year, had an 8 percent sales gain.

Toyota's Camry finished as the top-selling passenger car for the 12th consecutive year.

GM introduced new versions of its Chevrolet Silverado and GMC Sierra pickup trucks last year while Ford will launch a redesign of its trucks later this year.

Toyota Motor Corp's U.S. December sales fell 1.7 percent to 190,843 vehicles, versus expectations of a slight gain.

Chrysler reported a 6 percent gain last month in its U.S. auto sales to 161,007 vehicles. That was the automaker's best December since 2007, but still narrowly missed analyst expectations. Ram pickup truck sales rose 17 percent.

Jeep sales rose 34 percent in the month, led by the new Cherokee, which sold four times as well in December as the vehicle it replaced, the Jeep Liberty, did a year earlier.

Honda Motor Co sales rose 2 percent to 135,255 vehicles, which also missed analysts' expectations.

Nissan Motor Co sales rose 10.5 percent in December, allowing the Japanese automaker to finish with its best year for U.S. sales ever. Hyundai and Kia saw their combined sales also miss analysts' expectations.

Daimler AG's Mercedes-Benz won bragging rights as the top-selling luxury brand, edging BMW by a count of 312,534 vehicles to 309,280 vehicles.

Chrysler is majority-owned by Italy's Fiat SpA. Earlier this week, the two companies announced that Fiat would buy the remainder of Chrysler that is currently owned by a United Auto Workers healthcare trust, for $4.35 billion. That deal is expected to close by January 20.

(Editing by James Dalgleish and Matthew Lewis)

Friday, December 13, 2013

Retail Sales Up 0.7% in November

The Commerce Department said on Thursday retail sales increased 0.7 percent last month after rising by a revised 0.6 percent in October. November's retail sales increase was the largest in five months.

Economists polled by Reuters had forecast retail sales, which account for about 30 percent of consumer spending, advancing 0.6 percent after a previously reported 0.4 percent gain in October.

So-called core sales, which strip out automobiles, food services, gasoline and building materials and correspond most closely with the consumer spending component of gross domestic product, increased 0.5 percent after rising 0.7 percent in October.

That suggested consumer spending would likely step up from a two-year low touched in the third quarter.

Spending is being supported by solid employment gains and steady income increases, which could help limit the drag from inventories on fourth-quarter GDP growth. Lower gasoline prices are also helping, though they are a drag on retail sales figures.

The steady stream of fairly upbeat data should give the Fed confidence to start cutting back its monthly $85 billion bond buying program at least by March.

Retail sales last month were buoyed by a 1.8 percent jump in receipts at auto and parts dealers. That helped to offset a 1.1 percent drop in sales at gasoline stations.

Receipts at building materials and garden equipment stores rebounded 1.8 percent after falling 1.5 percent in October.

There were also gains in receipts at furniture, electronics and sporting goods shops, among others. Sales at electronics and appliance stores rose 1.1 percent, while furniture store sales rose 1.2 percent. However, receipts at clothing stores fell 0.2 percent after rising 2.6 percent in October.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)

Tuesday, October 22, 2013

McDonald’s Sales Miss Estimates

CEO Don Thompson, at the helm for more than a year, has switched top management and shaken up menus to boost sales and profits. Now, analysts are asking if McDonald's woes are due to poor execution rather than external factors.

The company has reported four straight quarters of disappointing sales, Hedgeye Risk Management restaurant analyst Howard Penney said on Twitter.

"When will the (company) transition from blaming the economy to internal issues?" said Penney, who told Reuters that McDonald's high-profile McCafe coffee and beverage expansion masked a slowdown in its core business of selling hamburgers and french fries.

McDonald's shares fell 1 percent in midday trading after investors digested the company's forecast for restaurant margin declines in the fourth quarter similar to those suffered in this year's first quarter.

The outlook suggested more margin pressure than the market was expecting, Morningstar analyst R.J. Hottovy told Reuters.

McDonald's, which has roughly seven times the sales of Wendy's Co and Burger King Worldwide Inc combined, has been slower than its rivals in adapting to changing consumer demands.

Shares of Burger King inched up 0.2 percent and Wendy's rose 0.6 percent.

Global sales at McDonald's restaurants open at least 13 months gained 0.9 percent in the third quarter, falling just short of analysts' average estimate on softer-than-expected results in all of the company's major markets, according to Consensus Metrix.

In the United States, McDonald's Monopoly game promotion and Mighty Wings limited-time offer met internal expectations but failed to substantially lift results amid intense discounting.

While fast-food chains fight hard for the business of cash-crunched, lower-income diners, former McDonald's unit Chipotle Mexican Grill Inc is enjoying more visits from wealthier - and often younger - diners.

"We think (McDonald's) is losing its appeal to the millennial generation, who prefer healthier foods," S&P Capital IQ analyst Jim Yin said in a note. Such customers are often more willing to pay a bit more for their meals.

France, which leads McDonald's top revenue market of Europe, reported its first quarter of same-restaurant sales growth in a year in the third quarter, while results in Germany remained rocky.

McDonald's lacks the ability to raise prices in Europe, CEO Thompson said on a conference call with analysts.

Both Japan and China reported declines in same-restaurant sales for the quarter, dragging down results from the Asia/Pacific, Middle East and Africa region. Based on the results, McDonald's is delaying new restaurant openings in emerging markets like China.

A recent survey from Goldman Sachs suggested McDonald's, which has lagged rivals in introducing popular new menu items, might be losing favor with U.S. diners.

The company, which built a large lead over rivals after the global recession, is fighting to step up sales in the United States amid a barrage of new items and short-time specials from smaller chains.

McDonald's previously got a sales bump from new products including oatmeal, sandwich wraps and lattes, but its more complicated menu has slowed service at the drive-thru window.

Third-quarter net income rose 4.6 percent to $1.52 billion, or $1.52 per share, coming in a penny better than the analysts' average estimate, according to Thomson Reuters I/B/E/S. Revenue was up 2.4 percent at $7.32 billion.

Restaurant margins at both franchised and company-operated stores slipped in the quarter.

McDonald's shares were down 91 cents to $94.29 on the New York Stock Exchange.

(Reporting by Lisa Baertlein in Los Angeles and Aditi Shrivastava in Bangalore; Editing by Sriraj Kalluvila, Maureen Bavdek and John Wallace)

Wednesday, August 21, 2013

Saks Losses Rise as Sales Fall Short Of Forecasts

Saks reported a larger-than-expected second-quarter loss on Monday after disappointing sales of shoes and handbags forced it to reduce prices.

Saks, the luxury retailer that agreed last month to be acquired by Hudson’s Bay Company of Canada for $2.4 billion, reported that sales at stores open at least a year rose 1.5 percent, well below the 4.5 percent increase Wall Street analysts had predicted.

Stephen I. Sadove, chief executive of Saks, acknowledged in a statement that “our sales growth was modestly below our expectations.”

Saks is the latest retailer across the price spectrum to report mediocre sales. Last week, Macy’s, Nordstrom, Kohl’s and Wal-Mart Stores all reported lower-than-expected sales.

Overall sales at Saks rose just 0.5 percent to $707.8 million for the quarter.

Gross profit margin fell because Saks had too much inventory of shoes and handbags and cut prices to clear unsold merchandise.

For the quarter that ended Aug. 3, Saks reported a net loss of $19.6 million, or 13 cents a share, compared with a net loss of $12.3 million, or 8 cents a share, a year earlier.

Excluding costs like expenses related to store closings and the Hudson’s Bay deal, Saks lost 10 cents a share, 2 cents more than analysts had expected.

Saks, which is based in New York, had been scheduled to report its earnings on Tuesday. The company did not hold its regular earnings conference call with analysts and investors because of its pending acquisition by Hudson’s Bay, the owner of Lord & Taylor.

Shares of Saks closed little changed at $15.97, down 5 cents or 0.31 percent, and just below the $16 a share in cash that Hudson’s Bay is offering.

Tuesday, August 20, 2013

Privatization Chief Quits After Another Misstep In Big Greek Asset Sales

One of the ways Greece plans to dig itself out of debt is through the sale of state-owned assets. But that effort has been besieged by missteps.

The latest involved Stelios Stavridis, the chairman of the government privatization agency, who had overseen one of the country’s first big asset sales — a one-third stake in the state gambling company, OPAP, for 652 million euros. But then he hitched a ride to a vacation spot on the private jet of a Greek oil magnate involved in the deal.

Government officials insisted that Mr. Stavridis’s ouster from the privatization agency, Taiped, was “for ethical reasons” and would not upset the country’s state sell-off effort. But the privatization program has suffered from political upheaval and delays and has fallen far short of the revenue targets set by Greece’s so-called troika of foreign creditors, the European Commission, the European Central Bank and the International Monetary Fund.

The Greek finance minister, Yannis Stournaras, on Sunday sought Mr. Stavridis’s resignation from Taiped after a newspaper quoted the chairman as saying he had traveled last week on the Lear jet of the oil and shipping oligarch Dimitris Melissanidis, a major stakeholder in the Greek-Czech consortium Emma Delta, which agreed to buy the OPAP stake in May.

The contract was signed Aug. 12 after much wrangling over the details. A few hours later, Mr. Stavridis, a 65-year-old Swiss-trained engineer, joined the oil magnate on his plane, which dropped Mr. Stavridis on Cephalonia, an island in the Ionian Sea where he spends his summer vacations. “Melissanidis, who was traveling to France, offered to take me with him to accommodate me,” Mr. Stavridis was quoted as telling the Proto Thema newspaper, which published a photograph of him, smiling, sitting next to a flight attendant.

Speaking to the Greek private television channel Skai after his firing on Monday, Mr. Stavridis defended his decision to fly on Mr. Melissanidis’s jet, noting that the trip had come long after the OPAP deal was completed. He referred to “hypocrisy” in Greek society which, he said, was interested in “the facade rather than the essence.”

“I am not a monk and I won’t hide,” said Mr. Stavridis, who founded Piscines Ideales, one of Europe’s largest manufacturers of swimming pools in 1991. More recently, he was head of the Athens water board, Eydap, which is also in the country’s privatizations portfolio.

Less than six months ago, Mr. Stavridis’s predecessor, Takis Athanasopoulos, was accused of a breach of faith during a previous stint at the head of the state electricity board. Prosecutors accused him of commissioning a power station in central Greece even though he knew it could not operate profitably.

The main left-wing opposition party, Syriza, which has vowed to reverse all privatizations if it comes to power, said Taiped was “a tool of the troika” whose goal was “the biggest sell-off of state wealth that Europe has seen since the era of East Germany.” In a statement on Monday, Syriza described the Stavridis affair as “the first clear admission of the dirty relationship between the government of the memorandum and business interests,” referring to the Greek deals for foreign loans.

The troika has urged Athens to speed up state sell-offs and to step up tax collection to raise much-needed money. But revenue targets have been revised downward several times. The original target of 50 billion euros by 2016 was later changed to 19 billion euros, then to 15 billion euros. Since last year, the troika has focused on annual targets. But Taiped is expected to fall 1 billion euros short of its 2.5 billion euro target for 2013.

Saturday, August 10, 2013

Nestlé Posts Rise in Profit, and Warns of Falling Sales

GENEVA — The Swiss food and drinks giant Nestlé posted a 3.7 percent rise in first-half profits Thursday, but warned it would not be easy sticking to its sales targets as it tackled slowing markets around the world and “value-conscious” consumers.

Investors sent shares down 2.2 percent, to 63.30 Swiss francs on Thursday, after Nestlé released its first-half statement showing that underlying sales growth was at its lowest in four years.

Based in Vevey, Switzerland, Nestlé is the world’s biggest food and drink company by revenue and the maker of dozens of household name brands like Nescafé, Haagen Dazs, Jenny Craig and KitKat. It also is a major buyer of food commodities, and its results can serve as an indicator of the entire food industry, worldwide consumer demand and health of the global economy.

Nestlé said it had first-half profits of 5.1 billion Swiss francs ($5.5 billion) in the January-to-June period, up from a restated 4.9 billion francs in the same period last year.

Underlying sales growth fell to 4.1 percent for the first six months of the year, down from 6.6 percent in the comparable period a year earlier. In 2011, its first-half rate was 4.8 percent; in 2010, it was 6.1 percent. But midway through 2009, amid a global financial crisis, its growth rate fell to 3.5 percent.

The company said it expected first-half momentum in so-called organic growth to continue in the second half, however, increasing to about 5 percent. The Nestlé model calls for the company to sustain a 5 to 6 percent rate of organic revenue growth.

“It’s not going to be easy. It’s going to be a stretch,” the chief financial officer, Wan Ling Martello, said in a teleconference.

With consumers struggling in both Europe and emerging markets, Nestlé said its growth in developing markets slowed to 8.2 percent, down from 12.9 percent during the comparable period a year ago, while growth in developed markets fell to 1 percent, down from 2.6 percent last year.

Thursday, August 8, 2013

Magazine Newsstand Sales Plummet, but Digital Editions Thrive

Magazines continued to struggle with sales of subscriptions and newsstand copies in the first half of 2013, but they made inroads in selling digital editions, according to data released on Tuesday.

Total paid and verified subscriptions declined by 1 percent in the first half of 2013, and newsstand sales, which are often an indicator of a magazine’s appeal, dropped by 10 percent. Both declines were similar to the overall trend in the same period a year ago.

Among the hardest hit by the drop in newsstand sales were weekly celebrity magazines and women’s titles, which have struggled to compete with rival content online.

Big names like Vogue and Vanity Fair also had problems at the newsstand. Vogue’s sales declined by 10.4 percent and Vanity Fair’s by 11 percent. In a surprising development for struggling newsweeklies, Time Inc. showed modest growth of 1.2 percent in newsstand sales.

Both Vogue and Vanity Fair had a 2 percent rise in total subscriptions, with Vogue increasing to 977,025 and Vanity Fair to 964,788. Time Inc.’s subscriptions rose by 0.7 percent to 3,242,594.

The numbers, released by the Alliance for Audited Media, also showed that a solid base of loyal magazine readers were simply turning to the digital versions of magazines. Digital replica editions — which replicate the format of the print editions — now make up 3.3 percent of total magazine circulation, with 10.2 million digital replica editions sold in the first half of 2013. During the same time period in 2012, magazines sold 5.4 million digital editions, which made up 1.7 percent of circulation.

“They’re relatively small to the mix,” said Steven Cohn, editor of the Media Industry Newsletter, referring to digital subscriptions. “I would expect these numbers to grow rather steadily. It’s like everything else. You have to walk before you run. Things will accelerate.”

Celebrity weeklies had some of the biggest losses in newsstand sales, including People (11.8 percent decline), Us Weekly (16.7 percent) and Life & Style Weekly (20.9 percent). But Mr. Cohn noted that these titles declined in part because they didn’t have a big event — like the birth of the royal baby — to help stimulate sales.

“The royal birth came in July,” he said. “They needed a stimulant like that and they didn’t have it.

“If it’s a normal news routine, at least with celebrities, they won’t do as well.”

But Mr. Cohn noted that celebrity titles already had benefited in the second half of the year because of birth of Prince George. Larry Hackett, the managing editor of People, said last week that the Aug. 5 “Royal Baby Joy” cover had already sold 1.2 million copies and he expected that to rise 1.4 million issues. “Already at 1.2 it’s the best-selling cover of the year,” Mr. Hackett said.

Mr. Cohn said he was more concerned about women’s magazines, which were hit hard by losses on the newsstand. Cosmopolitan showed a 23.9 percent decline in newsstand sales. Glamour dropped by 28.8 percent and O, The Oprah Magazine, fell by 22.7 percent. “I’m not sure whatever they can do can make a difference,” Mr. Cohn said. “It’s very newsstand-dependent.”

But Hearst magazines, which owns Cosmpolitan and O, The Oprah Magazine, noted the progress both magazines had made in digital subscriptions. Cosmopolitan grew by 33 percent, to 246,815 digital subscribers, and O grew 22 percent, to 99,412 digital subscribers.

Advertising: Advance Ad Sales for New TV Season Called Lukewarm

After months of buildup and weeks of negotiations, the five English-language broadcasters finished their sales last week in what is known as the upfront market, so named because it takes place before each season begins. The results were not as bad as some had expected, but not as robust as others had hoped.

That reflects how trends in television advertising have been, for a while now, “O.K. but not great,” Doug Creutz, a media analyst for Cowen & Company, said in a report late last month.

Pricing in the upfront market, he added, “was generally in line with expectations — perhaps just a touch light,” with increases in a closely watched metric known as cpm, for the cost to reach each 1,000 viewers, in the mid to high-mid single-digit range.

“A touch light” is not a phrase normally associated with upfront seasons, but the broadcasters “suffered their worst annual decline in viewership” during the 2012-13 season since the 2007-8 season, which was affected by the writers’ strike, Mr. Creutz said. There was no true breakout hit among new series, along with a worrisome slump in ratings for the sophomore seasons of popular new shows from the 2011-12 season.

Although it is notoriously difficult to come up with exact figures for the results of each upfront market, estimates are that the five broadcast networks received commitments from marketers to buy about $9 billion worth of commercial time during the 2013-14 season, which begins next month and continues through May. That is roughly on par with or a shade lower than what they took in last summer, in the 2012-13 upfront market. The results are not that bad considering the outcome of the 2012-13 season or the myriad problems of legacy media, as shown by the sales, in rapid succession, of Newsweek, The Boston Globe and The Washington Post.

Television “is not going away for now,” Brian Wieser, senior research analyst at the Pivotal Research Group, said in a phone interview, because it is “still the least bad way to get your reach and frequency,” referring to two important goals of marketers when communicating with consumers.

As valuable as digital media may be, “you can’t do without” television “if you’re a large brand,” he added, because “you can’t accomplish your media goals” without it.

There was a major difference between this year’s upfront negotiations and last year’s: the dickering ended about six weeks later this time around, primarily because of delays in marketers coming to terms with two of the five networks, ABC and NBC. Those talks concluded last week, whereas CBS and CW wrapped up in early June and Fox Broadcasting the previous week.

The later conclusion of the 2013-14 upfront market might have benefited the broadcasters, Mr. Wieser said, because some marketers may have decided to “bring forward” money they planned to spend during the season in what is called the scatter market. With the start of the season now only a month away, he noted, the line between the upfront and scatter markets could have blurred. (Making commitments during an upfront market is a bet that prices will be higher during the season; deciding to hold back money for the scatter market is a bet that prices will be lower during the season.)

CBS, the biggest broadcast network, led in the total dollar amount of commitments, at $2.5 billion to $2.6 billion; by some estimates, CBS’s take may have been as much as $2.75 billion. The cpm rates that CBS is charging advertisers for the 2013-14 season are estimated to be increasing by an average of 7.5 percent.

According to Leslie Moonves, chief executive of the CBS Corporation, CBS fared the best in the upfront marketplace.

“Once again, we took share from our competitors and we were the leader in both volume and pricing,” he told analysts last week.

In something of a backhanded compliment, Mr. Moonves said of the other broadcasters, “I even noticed our competitors got substantial price increases as well, which actually surprised me, how well they did.”

The rest of the estimates for dollar volume are: ABC, part of the Walt Disney Company, $2.1 billion to $2.2 billion; NBC, part of the NBCUniversal division of Comcast, $1.9 billion to $2 billion; Fox Broadcasting, part of 21st Century Fox, around $1.8 billion; and CW, a joint venture of the CBS Corporation and Time Warner, $400 million to $420 million.

For the second consecutive year, cable channels have fared or are faring better in the upfront market than their broadcast competitors. Estimates are that the combined take for the scores of cable channels that sell commercial time will total as much as $9.8 billion. Many channels are enjoying more robust demand than the broadcasters; for instance, AMC, part of AMC Networks, has said its ad sales are nearly 20 percent higher than in the upfront market last year.

Wednesday, July 24, 2013

Home Sales Slip

WASHINGTON — U.S. sales of previously occupied homes slipped in June to a seasonally adjusted annual rate of 5.08 million but remain near a 3½-year high.

The National Association of Realtors said Monday that sales fell 1.2 percent last month from an annual rate of 5.14 million in May. The NAR revised down May's sales, but they were still the highest since November 2009.

Despite last month's dip, home sales have surged 15.2 percent from a year ago. Sales have recovered since early last year, buoyed by job gains and low mortgage rates.

Still, mortgage rates have surged in recent weeks over concern that the Federal Reserve could slow its bond-buying programs later this year. The Fed's bond purchases have helped keep long-term mortgage and other rates low.

Higher mortgage rates slowed sales last month of higher-priced homes in states such as California and New York, the Realtors group said.

The average rate on a 30-year fixed mortgage leapt to 4.46 percent by the end of June from 3.81 percent at the end of May. The rate was 4.37 percent last week.

That rate increase could hamper sales in coming months, economists said. But most expect housing to continue to recover, though at a slower pace.

"There's little doubt the housing market slowed in the summer as mortgage rates rose," Dan Greenhaus, chief global strategist at BTIG LLC, an institutional brokerage, said in a note to clients. "Housing is still expected to grow and contribute to economic output. It just may not be at the pace we've seen of late."

Sales of previously occupied homes in June reflect contracts that were mostly signed in April and May, when mortgage rates were lower. Rising rates can cause some signed contracts to fall through if buyers no longer qualify for mortgages at higher rates.

The one factor that's likely most holding back sales is a limited supply of homes available. Though more sellers put their homes on the market in June, the supply remained unusually low — nearly 8 percent less than a year ago.

At the current sales pace, the number of homes for sale would be exhausted in 5.2 months. That's below the six months' supply that's consistent with a healthy housing market.

Another concern is that first-time buyers, who usually drive healthy markets, aren't participating as much in the current recovery. They made up only 29 percent of buyers in June, below the 40 percent that is typical. Since the housing bubble burst more than six years ago, banks have imposed tighter credit conditions and required larger down payments. That's made it harder for first-time buyers to qualify for mortgages.

Still, mortgage rates remain relatively low and home prices remain affordable despite rising in the past year. And higher mortgage rates could encourage some potential buyers to come off the sidelines and purchase homes before rates rise further.

The strength in housing this year has offset weaknesses elsewhere in the economy, like manufacturing and business investment. Rising home sales tend to lead to more spending at furniture and home supply stores.

Homebuilders have also stepped up construction in the past year, creating more construction jobs. In June, they applied for permits to build single-family homes at the fastest pace in five years.

Thursday, May 23, 2013

Existing-Home Sales Rose in April

The National Association of Realtors said on Wednesday existing home sales advanced 0.6 percent to an annual rate of 4.97 million units, the highest level since November 2009.

The data underscored the housing market's improving fortunes as it starts to regain its footing. Resales were 9.7 percent higher than in the same period last year.

"It's quite supportive of the overall economy," said Michelle Meyer, a senior economist at Bank of America Merrill Lynch in New York. "It's a cushion against some of the other concerns in the economy."

Economic activity appears to have slowed somewhat early in the second quarter as the effects of higher taxes and deep government spending cuts have started filtering through.

Manufacturing, in particular, has been showing strains. But housing has held up surprisingly well, with the gains in home values helping to boost consumer confidence and retail sales.

The ripples from housing's recovery have also extended to the jobs market, with construction employment rising.

That should limit the degree to which the economy slows this quarter. It expanded at a 2.5 percent annual pace in the first three months of the year.

Tight supplies in some parts of the country have constrained the pace of home sales, but sellers are starting to wade back into the market, attracted by rising prices.

In April, the median home sales price increased 11 percent from a year ago to $192,800, the highest level since August 2008. It was the fifth consecutive month of double-digit gains.

With prices rising, more sellers put their properties on the market. The inventory of homes on the market rose 11.9 percent from March to 2.16 million.

SUPPLY STILL TIGHT

The increased inventory represented a 5.2 months' supply at April's sales pace, up from 4.7 months in March. It remained, however, below the 6.0-month level that is normally considered a good balance between supply and demand.

The market has been helped by monetary stimulus from the Federal Reserve that has kept mortgage rates near record lows. On Wednesday, Fed Chairman Ben Bernanke said a decision to scale back the $85 billion in bonds the Fed is buying each month could come at one of the central bank's "next few meetings" if the economy looked set to maintain momentum.

The housing report had little impact on U.S. financial markets, with traders focused on Bernanke's comments. The dollar rose to a near three-year peak against a basket of currencies, while prices for U.S. government bonds slumped.

Wall Street stocks fell, with the Standard & Poor's 500 index posting its biggest decline in three weeks.

Adding to signs that the housing recovery was becoming firmly established, distressed properties - which can weigh on prices because they typically sell at deep discounts - accounted for only 18 percent of sales last month.

That was the lowest since the Realtors group started monitoring them in October 2008. These properties, foreclosures and short sales, had made up 21 percent of sales in March.

In another bright sign, properties are selling more quickly. The median time on the market for homes was 46 days in April, down from 62 days the prior month. That was the fewest days since the NAR started monitoring that number in May 2011. Before the market collapsed in 2006, it usually took about 90 days to sell a home.

"While there are clearly a lot of interested buyers out there snapping up homes at a rapid clip, there do not seem to be enough homes on the market," said Omair Sharif, an economist at RBS in Stamford, Connecticut.

About 44 percent of all homes sold in April had been on the market for less than a month, while only 8 percent had been on the market for a year or longer.

Last month, first-time buyers accounted for 29 percent of the transactions, with investors buying 19 percent of homes. Investors, both individuals and institutions, are mostly buying homes for renting.

Sales were up in three of the four regions, falling 3.4 percent in the Midwest.

(Editing by Andrea Ricci and Dan Grebler)

Wednesday, May 22, 2013

Existing-Home Sales Hit a 3-Year High

The National Association of Realtors said on Wednesday that existing-home sales had advanced 0.6 percent to an annual rate of 4.97 million units, the highest level since November 2009. The data underscored the housing market’s improving fortunes as it starts to regain its footing. Resales were 9.7 percent higher than in the same period last year.

“It’s quite supportive of the overall economy,” said Michelle Meyer, a senior economist at Bank of America Merrill Lynch in New York. “It’s a cushion against some of the other concerns in the economy.”

Tight supplies in some parts of the country have constrained the pace of home sales, but sellers are starting to wade back into the market, attracted by rising prices.

In April, the median home sales price increased 11 percent from a year ago to $192,800, the highest level since August 2008. It was the fifth consecutive month of double-digit gains.

With prices rising, more sellers put their properties on the market. The inventory of homes on the market rose 11.9 percent from March to 2.16 million.

Adding to signs that the housing recovery was becoming firmly established, distressed properties, which can weigh on prices because they typically sell at deep discounts, accounted for only 18 percent of sales last month.

That was the lowest since the real estate association started monitoring them in October 2008. Those properties — foreclosures and short sales — made up 21 percent of sales in March.

In another bright sign, properties were selling more quickly. The median time on the market for homes was 46 days in April, down from 62 days the previous month.

About 44 percent of all homes sold in April had been on the market for less than a month, while only 8 percent had been on the market for a year or longer.

Sales were up in three of the four regions, falling 3.4 percent in the Midwest.

Thursday, May 16, 2013

You're the Boss Blog: For Local Businesses, the Internet Threat Isn’t Just the Sales Tax

An owner’s dispatches from the front lines.

I am a third-generation retailer. My father and grandfather owned a “dime store” (Google it), and working there gave me a foundation that would allow me to become a successful entrepreneur.

Because my father was unable to teach me anything about management (only one nonfamily employee), marketing (didn’t do any) or finance, I learned most of what I know about business through trial and error. But I did learn something more valuable, something more basic from my father. What I learned has since been termed customer service, but it is something I have been giving since I was 7 years old.

My father was good at it. But in the end, it couldn’t make up for the competition from bigger stores that slowly put him, and thousands like him, out of business. All of these years later, I wonder whether specialty stores like mine — picture framing, art, a furniture store — will be put out of business by the latest version of bigger stores, the Internet retailers.

Small retailers have been under attack for 40 years. The number of local hardware stores, shoe stores and clothing stores has fallen drastically. Other small businesses — privately owned drugstores, office supply shops and small electronics stores — have all but disappeared. But some small businesses are at least holding their own, and some are even doing well. The local bakery, locksmith, jewelry store, shoe repair store, bike shop, frame shop, cleaners, hair salon, pizza parlor, tailor and florist still occupy space in strip centers across America.

Many of these businesses have a strong service component, which means they don’t really have Internet competitors. But some do. In particular, I think of the local shoe store. Customers can come into the store, try on numerous pairs of shoes and walk out empty-handed — only to go home and order online, perhaps saving sales tax and maybe a few dollars more. Great customer service may help the local retailers, but nothing is going to stop some people from stealing their time.

A recent You’re the Boss blog post on this topic got quite a response, with many people agreeing that “showrooming” is wrong. But the responses also reminded me that many people do not understand what happens on the other side of the counter. There are many misconceptions about why there are cost savings from buying on the Internet, with some of them stemming from the phrase “bricks and mortar.” There is a common assumption that local retailers charge more because they have to pay more in rent. But that generally is not the case. As a retailer who sells both on the Web and off, I can assure you that competing on the Web is not free. The cost of building and maintaining a Web site can easily eat up whatever savings you enjoy paying warehouse rent instead of retail rent.

So what are the differences? Well, the big Internet businesses are going to have lower costs because of their economies of scale. And labor can be a huge savings. Web retailers don’t have to pay commissions, and they don’t pay people to stand around and wait for the opportunity to serve customers. But much of this cost advantage can disappear if the site offers free shipping.

On the other hand, the advantage Internet retailers have enjoyed by not having to collect sales tax has been greater than many realize. If you have bought from Zappos, you may have noticed that its prices are often the same as the local shoe store’s — until the local store charges for sales tax. Forcing Internet retailers to collect this tax will do much to level the playing field. But there is another reason that some of these big companies charge less, or more accurately choose to charge less, and it is one that is poorly understood. They charge less because they are O.K. with not making a profit. Most small businesses can’t afford to do that.

Why would a company choose to operate without a profit? Because it wants to provide great value? Check. Because it wants everyone to love the brand? Check. Because it wants to gain market share? Check. Because it wants to put everyone else out of business, so that it can one day flick a switch to raise prices and make a fortune? CHECK!

Don’t believe me? Well, here is Jeff Bezos of Amazon, explaining why making a profit isn’t important. Of course, he doesn’t say he’s planning to raise prices after he puts a lot of people out of business, but let me translate something for you: Gaining market share by not taking a profit makes the most sense if you are planning to raise prices later when you have less competition.

If this competition with giant Internet companies seems like some kind of Brave New World, it’s really not. It’s pretty much the same strategy the robber barons employed in the 19th century. Today’s combination of tax avoidance and profit delay enjoyed by the Web retailers has made it very difficult for some local retailers. But is the end near?

Well, the Internet’s free ride on sales tax may be. And I believe that if that ends, the game will change. It may be too late for some, but it will make it easier for local companies to compete. Of course, there will continue to be some casualties because of inventory levels, buying power, and maybe even service. And make no mistake: not all local retailers learned the customer-service lessons my father taught. Meanwhile, some Web retailers do give great service, including Zappos.

But here is some sobering math — and perhaps the ultimate misconception. When a local store loses 10 percent of its business to Internet competition (or for any other reason), it doesn’t sound devastating. But that 10 percent decline in revenue can easily mean a 100 percent decline in profit. Here is the (simplified) math. Let’s say a store has $1 million a year in revenue and a 5 percent profit at the end of the year, or $50,000. If sales fall 10 percent, to $900,000, and the business’s cost of goods sold is 50 percent, the $100,000 drop in revenue will wipe out the entire $50,000 in profit. And if sales should fall 20 percent, the store will post a $50,000 loss. That can’t last long.

People are often surprised when a local store or restaurant that seemed busy closes down. But would an outsider even notice a 10 percent drop in business? Of course, the person paying the bills — or not paying the bills, in this case — will always notice.

So what is the moral of this story? If you are a retailer facing Internet competition, the new sales tax law — if it passes — should help, but it may not solve all of your problems. And if you are a customer, please think twice before you use the services of a local retailer without any intention of buying. We all may pay a hefty price for your “savings.” Empty storefronts don’t help a neighborhood.

Jay Goltz owns five small businesses in Chicago.

Monday, May 13, 2013

Endo Loses Bid to Block Sales of Generic Painkiller

The Food and Drug Administration announced Friday that generic versions of the painkiller Opana ER can remain on the market, dealing a blow to the brand-name manufacturer, Endo Health Solutions, which had asked the agency to declare the generic versions unsafe.

The agency also ruled that a newer, so-called tamper-resistant form of the drug sold by Endo could be misused by cutting, grinding, chewing or injecting it. Endo had asked the F.D.A. to require that older, generic forms of the drug — which did not have such tamper-resistant properties and entered the market this year — be withdrawn.

The agency’s decision came just weeks after it reached the opposite conclusion in the case of another frequently abused painkiller, OxyContin. In that case, the F.D.A. said it would not approve generic versions of OxyContin since the maker of that drug, Purdue Pharma, had introduced a new tamper-resistant formulation in 2010 that appeared to be less prone to abuse than the generic versions. The patent for the original version of OxyContin expired in April.

The agency is closely scrutinizing efforts by drug makers to develop drugs that are designed to deter abuse. This year, it released guidelines for drug makers seeking to make such drugs and has said it will work closely with companies, including Endo, that want to do so. But an agency official, Dr. Douglas C. Throckmorton, said in an interview on Friday that the F.D.A. had to ensure that these products actually worked.

“We believe that the public health value of concluding that a product is abuse-deterrent is very important,” said Dr. Throckmorton, who is deputy director of regulatory programs for the agency’s Center for Drug Evaluation and Research. However, he added, “It is very important to us to make sure that products that have that claim do so as the result of substantial scientific evidence.”

The agency said it found the reformulated Opana did prove resistant to crushing — abusers typically seek to crush or pulverize the product to release the drug’s narcotic payload — but it could still be cut, ground or chewed. The new Opana ER can also be injected or snorted, “using commonly available tools and methods.”

A spokesman for Endo did not return a call for comment on Friday. The company’s stock was down more than 5 percent at the close of trading Friday, to $34.98.

Sunday, May 12, 2013

McDonald’s Reports Lower Sales in April

The company, which had warned of a decline last month, said same-store sales fell 0.6 percent globally. That reflected an increase of 0.7 percent in the United States, where it recently introduced its chicken McWraps.

But sales fell 2.4 percent in Europe, its biggest market by revenue. The company said it was seeking to improve results in the region by emphasizing “everyday affordability” and keeping stores open longer.

In the region encompassing Asia, the Middle East and Africa, sales were down 2.9 percent. The chain blamed the impact of the avian flu in China for the decline, as well as softness in Japan and Australia.

Yum Brands, which owns KFC and is China’s biggest Western fast-food company, has been hurt by the new strain of avian flu as well. It warned late last month that sales at established restaurants in China were down about 30 percent in April. Yum is also trying to recover from a controversy over its chicken suppliers that surfaced late last year.

After years of outperforming rivals, McDonald’s has been struggling to increase sales as it faces intensifying competition, changing eating habits and weak growth in the broader restaurant industry. Late last year, the company reported a decline in its monthly sales figure for the first time in nearly a decade. Soon after, the company ousted the head of its American division.

Sales at restaurants open at least 13 months is an important measurement because it strips out the impact of newly opened and closed locations.

McDonald’s, which has more than 34,000 locations around the world, noted that it had one fewer Sunday and one more Tuesday in April of this year compared with last April. The chain’s sales are generally stronger on weekends.