November 20, 2019

Bangladesh Pollution, Told in Colors and Smells

The odor rises off the polluted canal — behind the schoolhouse — where nearby factories dump their wastewater. Most of the factories are garment operations, textile mills and dyeing plants in the supply chain that exports clothing to Europe and the United States. Students can see what colors are in fashion by looking at the canal.

“Sometimes it is red,” said Tamanna Afrous, the school’s English teacher. “Or gray. Sometimes it is blue. It depends on the colors they are using in the factories.”

Nearly three months ago, the Rana Plaza factory building collapsed, killing more than 1,100 people, in a disaster that exposed the risks in the low-cost formula that has made Bangladesh the world’s second-leading clothing exporter, after China, and a favorite of companies like Walmart, J. C. Penney and H M. That formula depends on paying the lowest wages in the world and, at some factories, spending a minimum on work conditions and safety.

But it also often means ignoring costly environmental regulations. Bangladesh’s garment and textile industries have contributed heavily to what experts describe as a water pollution disaster, especially in the large industrial areas of Dhaka, the capital. Many rice paddies are now inundated with toxic wastewater. Fish stocks are dying. And many smaller waterways are being filled with sand and garbage, as developers sell off plots for factories or housing.

Environmental damage usually trails rapid industrialization in developing countries. But Bangladesh is already one of the world’s most environmentally fragile places, densely populated yet braided by river systems, with a labyrinth of low-lying wetlands leading to the Bay of Bengal. Even as pollution threatens agriculture and public health, Bangladesh is acutely vulnerable to climate change, as rising sea levels and changing weather patterns could displace millions of people and sharply reduce crop yields.

Here in Savar, an industrial suburb of Dhaka and the site of the collapsed Rana Plaza building, some factories treat their wastewater, but many do not have treatment plants or chose not to operate them to save on utility costs. Many of Savar’s canals or wetlands are now effectively retention ponds of untreated industrial waste.

“Look, it’s not only in Savar,” said Mohammed Abdul Kader, who has been Savar’s mayor since his predecessor was suspended in the wake of the Rana Plaza disaster. “The whole country is suffering from pollution. In Savar, we have lots of coconut trees, but they don’t produce coconuts anymore. Industrial pollution is damaging our fish stocks, our fruit produce, our vegetables.”

Bangladesh has laws to protect the environment, a national environment ministry and new special courts for environmental cases. Yet pollution is rising, not falling, experts say, largely because of the political and economic power of industry.

Tanneries and pharmaceutical plants are part of the problem, but textile and garment factories, a mainstay of the economy and a crucial source of employment, have the most clout. When the environment ministry appointed a tough-minded official who levied fines against textile and dyeing factories, complaining owners eventually forced his transfer.

“Nobody in the country, at least at the government level, is thinking about sustainable development,” said Rizwana Hasan, a prominent environmental lawyer. “All of the natural resources have been severely degraded and depleted.”

Less than two miles from the site of Rana Plaza, the Genda primary school has a student body made up mostly of the children of garment workers. Golam Rabbi, 11, who is the top-ranked student in the third grade there, lives with his mother and two younger brothers in a single room. The boys use price tags collected from factory floors as makeshift playing cards.

“The school always smells,” Golam said. “Sometimes we can’t even eat there. It is making some kids sick. Sometimes my head spins. It is hard to concentrate.”

Julfikar Ali Manik contributed reporting.

Article source: http://www.nytimes.com/2013/07/15/world/asia/bangladesh-pollution-told-in-colors-and-smells.html?partner=rss&emc=rss

Common Sense: Netflix Looks Back on Its Near-Death Spiral

It was the thousands of e-mails that poured in from angry and disappointed customers.

“I realized, if our business is about making people happy, which it is, then I had made a mistake,” Mr. Hastings told me this week, in a rare public comment on an episode that could have destroyed the company. “The hardest part was my own sense of guilt. I love the company. I worked really hard to make it successful, and I screwed up. The public shame didn’t bother me. It was the private shame of having made a big mistake and hurt people’s real love for Netflix that felt awful.”

This week, Netflix announced that it gained three million subscribers globally in the first quarter and that revenue for the quarter exceeded $1 billion, a record for the company. On Tuesday, the stock jumped 22 percent, the first time it has traded over $200 since the Qwikster episode, and it is up 135 percent so far this year, making Netflix the best-performing company in the Standard Poor’s 500-stock index. The company is basking in the critical glow of its original series, “House of Cards,” and this month narrowly surpassed HBO in total subscribers.

In the annals of corporate missteps, there are few parallels to such a rebound from what once looked like a death spiral, especially in the momentum-driven world of technology. Zynga, the online game maker, and Groupon, the Internet coupon company, are struggling with brutal competition. In an old-economy industry like retail, J. C. Penney was in the midst of a similarly bold attempt to reposition the company when it fired its chief executive, and is now fighting to survive.

How did Netflix simultaneously manage both a fundamental transformation of the company and a public relations disaster?

Mr. Hastings said he realized that the company’s attempt to both raise prices and separate into two companies, one the legacy DVD-by-mail business and the other the up-and-coming broadband streaming business, was trying to do too much too fast. Angry subscribers abandoned the company in droves (800,000 in the fourth quarter of 2011 alone), revenue missed estimates and the stock plunged.

“I messed up,” Mr. Hastings wrote in an unusually forthright September 2011 blog post. Citing the precedents of AOL and Borders Books, which struggled or failed to make the digital transition, “my greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming.” But in the rush to accelerate the transition, he wrote, “In hindsight, I slid into arrogance based upon past success.” He also made a video apology.

Mr. Hastings said he didn’t expect the apology alone to “turn it around,” adding, “I wasn’t naïve enough to think most customers care if the C.E.O. apologizes, but I thought it was honest and appropriate.”

The mea culpa resonated, though, with some important constituencies, including some Wall Street analysts, who were punishing the company’s stock. Richard Greenfield, an influential media analyst at BTIG, said that he was impressed that Mr. Hastings “realized his mistakes and openly admitted them.”

“He dusted himself off, stood back up and started running,” Mr. Greenfield said. “Very few people can do that.”

Still, Mr. Hastings said, “The situation made me nervous and very focused.

“I couldn’t say with confidence that we’d recover. We were in a place that was quite risky. We didn’t have the reserves to make a second stumble.”

On the other hand, he didn’t panic, and he didn’t lose confidence. Although he made some big changes, like scrapping Qwikster, he never questioned his original vision for the company, which he helped found in 1997. Nor did he lunge at supposedly transformative opportunities that were pressed upon him — a lesson he learned from a four-year war with Blockbuster that began in 2004, when Blockbuster, then the dominant and much larger DVD distributor, tried and failed to crush its upstart competitor.

“There were elements of panic in my reaction back then,” Mr. Hastings said. “We got desperate and we did some dumb things.” (He cited online advertising on the Web site; starting Red Envelope, an independent film producer and distributor, since shut down; and buying DVDs out of the Sundance Film Festival.) “After we eventually won the Blockbuster battle, I looked back and realized all those things distracted us. They didn’t help, and they marginally hurt. The reason we won is because we improved our everyday service of shipping and delivering. That experience grounded us. Executing better on the core mission is the way to win.”

Article source: http://www.nytimes.com/2013/04/27/business/netflix-looks-back-on-its-near-death-spiral.html?partner=rss&emc=rss

Common Sense: The Headache in Housewares for J. C. Penney

Yet that didn’t stop him from signing a deal with Martha Stewart — his “new best friend,” according to an e-mail — even though she already had an exclusive deal with Macy’s. “Macy’s deal is key. We need to find a way to break the renewal right in spring 2013,” he wrote in one message. “The ball is in her court now to talk to Macy’s about a break in a tight, exclusive agreement they have with her,” he said in another.

The e-mails emerged this week in a New York courtroom, where Macy’s has accused J. C. Penney of inducing Martha Stewart to breach her contract and is trying to block its rival from carrying out its plan to open Martha Stewart boutiques inside J. C. Penney stores. J. C. Penney has been floundering — it recently reported a staggering $4.28 billion loss in sales for the year since Mr. Johnson became chief executive, announced the layoff of 2,200 workers this week, and its shares have dropped more than 60 percent. So the star-crossed Martha Stewart deal may not be its biggest problem. But it’s a purely self-inflicted one. With calls mounting for Mr. Johnson’s ouster, the deal is also a window into his judgment, experience and management skills.

“I’m very concerned that this could be a fatal blow to J. C. Penney,” said Walter Loeb, a veteran retail analyst, referring to the lawsuit. That Mr. Johnson “would talk about ‘breaking’ a deal between Martha Stewart and Macy’s is simply incredible. Ron Johnson has never been a chief executive, and I can only assume this reflects his naïveté and lack of experience.”

Much of the coverage of the trial has focused on the appearance in court of Ms. Stewart, nine years since her conviction and sentencing on federal felony charges of false statements regarding her sale of shares in ImClone Systems (she also settled civil insider trading charges without admitting or denying them).

At one point this week she told the presiding judge, Justice Jeffrey K. Oing of New York State Supreme Court, “I keep looking at this entire episode of this lawsuit wondering why it isn’t — it’s a contract dispute, an understanding of what is written on the page, and it just boggles my mind that we’re here sitting in front of you.”

Justice Oing seemed to agree, and on Thursday ordered the parties to pursue mediation to resolve the matter. Legal experts I spoke to also expressed incredulity that the costly and time-consuming dispute has ended up in court, since the contract itself seems straightforward, with numerous clauses giving Macy’s exclusive rights to Martha Stewart products in various categories, including “soft home,” like sheets and towels, as well as housewares, home décor and cookware, and specifically limits her rights to distribute her products through any other “department store.”

J. C. Penney is undeniably a department store and one of Macy’s major competitors. So the only issue is whether a Martha Stewart boutique within a J. C. Penney store would qualify as a separate Martha Stewart store, since the contract states that the restrictions “shall not apply” to products “marketed or promoted” through the MSLO Web site “or MSLO store.” (MSLO is the often-used acronym for Martha Stewart Living Omnimedia.)

Even that shouldn’t be hard to determine. Charles Fried, a noted professor of contracts at Harvard Law School, told me that the law is well settled that contracts should be interpreted according to the plain meaning of their words, should reflect the intent of the parties, and that technical or specialized terms should be interpreted according to trade usage. While he said he didn’t want to comment on the Macy’s contract itself, he said, “Whether a boutique inside J. C. Penney qualifies as a Martha Stewart store shouldn’t be difficult to determine based on prevailing standards in the retail industry.”

In that regard, Mr. Johnson testified that J. C. Penney, and not Martha Stewart Living Omnmedia, would set prices of the merchandise, decide when it would be promoted, employ the people who sold the goods, own the goods, source the goods, book the sales, bear the risk and own the shop. No space would be leased to Martha Stewart’s company. J. C. Penney contended nonetheless that any space displaying the Martha Stewart mark and containing Martha Stewart merchandise qualified as a store.

Article source: http://www.nytimes.com/2013/03/09/business/the-headache-in-housewares-for-j-c-penney.html?partner=rss&emc=rss

After a Slow Start, Holiday Sales Improved

Many major American retailers were able to recover from a slow start to December shopping, according to monthly sales results reported on Thursday.

Despite early indications that the holiday season would be lackluster, the 17 apparel chains tracked by Thomson Reuters reported a 4.5 percent increase for December sales at stores open at least a year, exceeding the 3.3 percent gain analysts had expected.

However, Target, the nation’s second-biggest retailer after Walmart, said its December sales were flat.

Retailers relied on discounts to get that December revenue, which may hurt results when they report fourth-quarter profit.

“Sales came late in the holiday shopping season and, as a result, were at deeper discounts than planned,” said Kevin Mansell, Kohl’s chief executive. He said the company would take further markdowns as it prepares for spring.

The stores reporting sales data on Thursday ranged from apparel retailers to department stores, though some large retailers, including J. C. Penney and Saks Fifth Avenue, as well as Walmart, do not report monthly data.

Analysts noted a rush of last-minute promotions after slow sales early in the month.

“We’ve noticed significant promotions at retailers looking to recover preholiday sales, and fewer promotions at retailers we believe have performed well,” Oliver Chen, a Citigroup analyst, wrote in a research note.

With drugstores included in the totals, the rise in December retail sales from a year ago was 2.3 percent, Thomson Reuters said. Drugstores are dealing with consumers switching to cheaper generic drugs. ShopperTrak, which counts shoppers at the nation’s malls, reported that traffic picked up in the final week before Christmas. Still, in December it lowered its sales forecast for November and December to a 2.5 percent gain over last year, down from the 3.3 percent it had estimated previously.

Another reading on the holiday season was also tepid. MasterCard Advisors SpendingPulse, which estimates overall consumer spending, said last week that holiday-related sales rose 0.7 percent from the end of October through Christmas Eve, the smallest increase since 2008. Last year, sales were up 2 percent.

Most of the department stores reporting results Thursday beat analysts’ expectations.

At Nordstrom, sales at stores open at least a year, a measure known as same-store sales, were up 8.6 percent, shooting past estimates of 3.4 percent.

Kohl’s said its same-store sales rose 3.4 percent, above analysts’ estimates of 1.2 percent but below Kohl’s internal expectations.

Macy’s same-store sales were about in line with analysts’ expectations, at 4.1 percent. Macy’s said fourth-quarter earnings would be in a lower range than it had previously announced, at $1.91 to $1.96 a share, down from $1.94 to $1.99 a share.

Target, which heavily promotes the holiday season, said its same-store sales were flat compared with last December, while analysts had expected a 0.8 percent gain. Its heavily promoted collection of designer holiday gifts, in partnership with Neiman Marcus, was a disappointment, according to some analysts. The company said that the number of same-store transactions fell compared with last year, but the average amount spent per transaction rose, and that the food, health and beauty, apparel and home categories were up over last year.

“Strong results late in the month did not completely offset softness in the first three weeks,” Gregg W. Steinhafel, Target’s chief executive, said in a statement.

The discounter Costco did much better than expected, with a 9 percent same-store sales gain, above the 6.5 percent that analysts had projected.

Among apparel stores, the teenage clothing retailer Wet Seal posted a decrease of 9.7 percent and Zumiez posted a decline of 1 percent.

Article source: http://www.nytimes.com/2013/01/04/business/retailers-post-4-5-increase-in-december-sales.html?partner=rss&emc=rss

DealBook: A Dose of Realism for the Chief of J.C. Penney

J.C. Penney reported a $123 million in the latest quarter.LM Otero/Associated PressJ.C. Penney reported a $123 million loss in the latest quarter.

You should know you have a problem when sales at your stores fall 26.1 percent in one quarter.

That was the surprising decline J. C. Penney reported last week when it disclosed that it had lost $123 million in the previous three months.

However, inside the fantasy world that is the executive suite of J. C. Penney, apparently it was just part of the plan. Ron Johnson, the former head of Apple’s retail business who was handpicked to turn around J. C. Penny a little over a year ago, was in full spin mode, brushing off the challenges and promoting the success of the company’s store renovation plan as “gaining traction with customers every day and is surpassing our own expectations in terms of sales productivity, which continues to give us confidence in our long-term business model.”

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To gain a more realistic view of J. C. Penney’s prospects, however, here’s the Deutsche Bank analyst Charles Grom: “Trends at J. C. Penney are obviously getting worse, not better, and we are becoming more and more convinced that sales in 2013 will also decline, which could lead to a going-concern problem next year.”

The company’s stock has fallen nearly 50 percent since the beginning of the year. Even its online sales, through jcp.com, fell 37.3 percent last quarter from a year ago.

Yet Mr. Johnson, a well-regarded and charismatic retailer who worked at Target before his meteoric rise at Apple, appears to be trying to mimic Steve Jobs and create what Mr. Jobs’s biographer, Walter Isaacson, called a “reality distortion field.”

Mr. Johnson has spent the last several months trying to persuade investors that his transformation of J. C. Penney was the equivalent of Mr. Jobs’s efforts to turn around Apple a decade ago.

“You know, I watched this movie before. When I joined Apple in 2000, Apple was a company dwindling. Everyone said to me, ‘What are you doing there?’ ” Mr. Johnson told investors in September. “Apple wept through 2002 and I think sales were down 38 percent as we dreamed about becoming a digital device company. But Apple invested during that downturn. That’s when Apple built, started to build its chain of stores. That’s when Apple transitioned to Intel. That’s when Apple started its app division. That’s when Apple imagined and built the first iPod.”

O.K., Mr. Johnson, but that was Apple. And J. C. Penney is not Apple — and let’s be honest, it can never be Apple. The company doesn’t make its own magical, revolutionary products that bring tears of joy to its customers. It is a low-end department store that Mr. Johnson is hoping to turn into a slightly higher-end department store that sells clothing made mostly by other manufacturers.

Still, Mr. Johnson has sought to remake the company quickly, perhaps too quickly, by eliminating promotions and discounts, moving the stores more upscale, re-branding the company as JCP and putting in place a “fair and square” pricing model. (J. C. Penney is, however, putting on a special sale for the holidays.)

Yet the renovations are hardly finished — or in some cases even started. Only 11 percent of its stores’ floor space has been remodeled with his successful specialty-store-within-a-store concept in which he has opened up outposts for brands like Levi’s, Izod, Liz Claiborne and the Original Arizona Jean Company.

J. C. Penney may have been dying a slow death before Mr. Johnson’s arrival — some rivals used call it “death by coupon,” given the retailer’s penchant for discounts — but the company’s decline has only accelerated.

But the lessons, and successes, of the rollout of Apple stores are proving that they do not apply to Penney. While the customer experience at Apple is in a class by itself, and Mr. Johnson should rightly receive credit for that, the success of the stores was in large part a function of stunning products with a fan base that would stand outside stores for days in the rain to get their hands on them without any chance of a discount. Do you think there are customers who will ever stand outside J. C. Penney overnight for the next Liz Claiborne sweater? (J. C. Penney bought the Liz Claiborne brand last year.)

“Ron Johnson’s remake of JCP has assumed the consumer — the only one who matters — is the one who shops at Target or Macy’s or Nordstrom’s. Instead of pivoting on and strengthening the historic JCP brand, Johnson’s decided to recreate the Target and Apple wheel, a move akin to Toyota suddenly deciding it’s Porsche. In short, a ridiculous and condescending move,” Margaret Bogenrief, a partner at ACM Partners, a boutique crisis management and distressed investing firm, recently wrote.

There is something romantic about watching Mr. Johnson try to remake a dying classic icon. At some gut level, you have to root for Mr. Johnson. He’s making a bold bet. Transitions are inherently painful. And everyone loves a great comeback story.

Here’s the good news: In the stores that have been transformed, J. C. Penney is making $269 in sales per square foot, versus $134 in sales per square foot in the older stores. So the model itself is working. And Mr. Johnson has the support of the company’s largest shareholder, Pershing Square’s Bill Ackman, who personally recruited Mr. Johnson. If Mr. Johnson were starting with a blank slate, it might be a great business.

Mr. Ackman declined to comment. J. C. Penney did not make Mr. Johnson available.

Now here’s the bad news. Mr. Johnson still has to convert nearly 90 percent of his square feet of shopping space. That will very likely take $1 billion and as long as three years. If the sales decline that occurred last quarter accelerates, the company could run out of money. It now has about a half-billion in cash and access to a credit line for as much as $1.5 billion.

Of course, it remains possible that Mr. Johnson, who people close to him say is a realist, could always decide that the transformation isn’t working and change course to return to the old model of J. C. Penney and save all that money remodeling. But that would be a huge setback.

The question Mr. Johnson may be asking himself now is: What would Steve do?

Article source: http://dealbook.nytimes.com/2012/11/12/a-dose-of-realism-for-the-chief-of-j-c-penney/?partner=rss&emc=rss

Looking Ahead: Economic Reports for the Week of Nov. 5

ECONOMIC REPORTS Data to be released will include I.S.M. service for October (Monday); consumer credit for September (Wednesday); weekly jobless claims and the trade deficit for September (Thursday); and import prices for October, wholesale trade for September and Thomson Reuters/University of Michigan consumer sentiment index (Friday).

CORPORATE EARNINGS Companies scheduled to release quarterly earnings include HSBC, Humana, Toyota MotorAOL, BMW, Cablevision, CVS Caremark, Dish Network, Nissan Motor, NYSE Euronext, Office Depot and News Corporation (Tuesday); Kraft Foods, Macy’s, Molson Coors, Time Warner, WellPoint, CBS and Qualcomm (Wednesday); Kohl’s, Siemens, Walt Disney, Groupon and Nordstrom (Thursday); and J.C. Penney (Friday).

IN THE UNITED STATES On Monday, a federal judge in Madison, Wis., will begin hearing testimony on Apple’s contention that Google breached its obligations to license so-called essential patents.

On Friday, the Agriculture Department will release its monthly report on crop supply and demand.

OVERSEAS On Monday, finance ministers and central bank officials from the Group of 20 will meet for a second day in Mexico City.

On Wednesday, Chancellor Angela Merkel of Germany will address the European Parliament in Brussels and the European Commission will publish new economic forecasts.

On Thursday, the European Central Bank and the Bank of England will issue interest rate decisions.

Article source: http://www.nytimes.com/2012/11/05/business/economy/economic-reports-for-the-week-of-nov-5.html?partner=rss&emc=rss

J.C. Penney’s Chief, Ron Johnson, Announces Plans to Revamp Stores

“We want to be the favorite store for everyone, for all Americans rich and poor, young and old,” Mr. Johnson said at a meeting with about 700 investors and media members. “This isn’t your favorite department store. Our ambitions are much higher. We want to be your favorite store.”

J. C. Penney has been struggling as shoppers turn away from midtier department stores and malls. In November, its sales at stores open at least a year fell 2 percent, and in December, same-store sales rose 0.3 percent, both well below industry averages.

From 2006 to 2011, “J. C. Penney has had the worst performance among peers,” a Barclays Capital analyst, Robert Drbul, wrote in a note to clients.

Mr. Johnson said Penney would turn to a three-tiered pricing structure: regular prices, monthlong special prices and clearance prices.

Currently, Mr. Johnson said, 72 percent of Penney’s revenue comes from products sold at a discount of 50 percent or more. The company is currently repricing all its items to fit within the three tiers. For instance, a T-shirt that was priced last year at $14 but sold closer to $6 after promotions will now be priced at $7.

It will not adopt an everyday low price strategy like Walmart’s, the company said, meaning it will not focus on always having the lowest price versus competitors.

Mr. Johnson said the company would simplify its sales events to 12 a year. In 2011, Penney ran 590 unique promotions, he said, and the average customer visited just four times.

“So customers ignored us 99 percent of the time,” he said. “At some point, you, as a brand, look desperate if you have to market that much.” He will move to monthlong promotions, on which Penney will spend $80 million a month, he said. And instead of mailed fliers, the company will have a 96-page magazinelike circular.

Penney also announced a new spokeswoman, Ellen DeGeneres; a new logo (a red outline of a box with a blue box containing “jcp” in the corner of it); and a new designer partnership with Nanette Lepore, who will create a line of clothing for teenagers.

In an interview, Mr. Johnson said there were no plans to close stores.

“Why would we go close stores when we haven’t gotten the whole concept right yet? It doesn’t really make sense,” he said. “Now we’d love to be in malls that are all thriving, but the truth is not all malls thrive.”

J. C. Penney has more than 1,100 stores in the United States. More than 60 percent of Penney stores as of 2010 had been built in the 1980s or before, according to Barclays Capital.

Over the next three and a half years, Penney will divide its stores into 100 unique shops, to try to give a specialty-store feeling to the floor. “When we want a great product today we go to a specialty store — we might go to J. Crew, we might go to HM, Uniqlo,” Mr. Johnson said.

Mr. Johnson also said he would create a “town square” in the middle of each store that will offer services, along the lines of Apple’s Genius Bar.

Mr. Johnson declined to provide details, but said that the town squares would “dramatically enhance the experience of going to J. C. Penney, because there will be services that you can enjoy before you want to buy, as you want to buy, after you’ve bought.”

Article source: http://feeds.nytimes.com/click.phdo?i=802011aeac504c82d72ebd507e6bcb16

DealBook: Liz Claiborne Sells Namesake Brand, Monet to J.C. Penney

William L. McComb, left, the chief of Liz Claiborne, at Juicy Couture's promotion for Fashion's Night Out in 2009.Lisa Lake/Getty Images for Juicy CoutureWilliam L. McComb, left, the chief of Liz Claiborne, at Juicy Couture’s promotion for Fashion’s Night Out in 2009.

Liz Claiborne continues to clean out its closet of brands.

The women’s apparel maker on Wednesday announced the sale of its namesake brand and Monet to J.C. Penney, with Bluestar Alliance buying Kensie. The transactions, along with the recent sale of its Dana Buchman brand to department store Kohl’s, will generate $328 million in cash proceeds, the company said.

“Over the past few years, we have worked diligently to turn this into a more efficient, dynamic, brand-centric, retail-based company, and today marks the culmination of these efforts,” William L. McComb, the head of Liz Claiborne, said in a statement. “At the close of these transactions, at a time when most economists in the world are now agreeing that major European and the U.S. markets are facing significant risks of another recession, we will be a more appropriately levered, more capital efficient, growth-oriented company.”

Liz Claiborne has been on a campaign to shed its brands and licenses in an effort to cut its debt load.

In August, the company sold a group of fragrance licenses to Elizabeth Arden for $58.4 million. Then in September, it offloaded Mexx, a young women’s apparel brand, to a joint venture led by buyout firm the Gores Group. Under the terms of the sale, Liz Claiborne received $85 million and a minority stake in the joint venture. On Wednesday, the company also announced that it has terminated its licensing agreements with Donna Karan International, one year early. The recent string of transactions is expected to reduce its debt to $270 to $290 million by the end of this year, the company noted in its statement.

With the loss of its namesake brand, the retailer also said it will rebrand itself with a new corporate name that reflects its remaining, flagship brands: Juicy Couture, Lucky Brand and kate spade. The trio, a group of labels focused on young women’s fashion, have been strong performers for Liz Claiborne’s portfolio. Though Juicy Couture noticed a small dip in same-store sales in September, Lucky Brand recorded a 24 percent increase; sales at kate spade, which caters to a wealthier demographic, more than doubled, gaining 114 percent. The company hasn’t not announced a new name.

Article source: http://feeds.nytimes.com/click.phdo?i=8042cc22e505ad48a6500a4e587572a3

Apple Retail Executive to Lead J.C. Penney

The Apple executive, Ron Johnson, will replace Myron E. Ullman III as Penney’s chief executive on Nov. 1, the retailer announced. Mr. Ullman will then take a role as executive chairman.

“In the U.S., the department store has a chance to regain its status as the leader in style, the leader in excitement,” Mr. Johnson, 52, said in an interview. “I saw a very shared vision amongst the board to really take this great American brand and make it become something unbelievably exciting.”

He added, “It will be a period of true innovation for this company.”

Penney first contacted Mr. Johnson three or four years ago, Mr. Ullman said. That was about the time that the chief of merchandising and second-in-command at Penney, Ken C. Hicks, resigned; Mr. Hicks was not replaced. It is unclear whether Penney had contacted Mr. Johnson about Mr. Hicks’s position, about a board position, or about another job.

This time, the wooing of Mr. Johnson started with the two activist investors who joined Penney’s board in January. In November, the investor groups, Pershing Square Capital Management and Vornado Realty Trust, bought 26.4 percent of Penney stock. In January, William A. Ackman from Pershing and Steven Roth from Vornado joined the Penney board, and as part of that arrangement, got to appoint an additional director.

“It wasn’t until this year, when our two new investors had the right to appoint a third investor, that they reached out to Ron about getting him to take a board seat, with the hidden agenda of getting him to be my successor,” Mr. Ullman said.

“Bill Ackman and Steve Roth had the initial contact with the search firm,” he added, but “every single member of the board was involved in the recruitment.”

For his part, Mr. Ackman said, “Ron Johnson is the Steve Jobs of the retail industry.”

Mr. Johnson has gotten widespread credit for being the mastermind of Apple’s hugely successful retail strategy. He came to Apple in 2000, when the company was struggling to survive. When it opened its first store in Tyson’s Corner, Va., just over 10 years ago, Apple’s foray into retailing was received with heavy skepticism. But Apple defied critics.

Computers had previously been sold at drab big-box stores, but Apple came in with stores designed with glass and steel. It invited passers-by in to check their e-mail or play around on new gadgets, offered accessible technical support at stations dubbed “Genius Bars,” and held one-on-one training sessions and group workshops on how to use Apple’s products.

The stores, now numbering more than 300 worldwide, bring in a constant flow of both Apple loyalists and new customers attracted by the company’s ever-expanding array of hits, like the iPod, iPhone and iPad. “They turned retail upside down,” said Charles Wolf, an analyst with Needham Company. “Instead of filling shelves with items, they built this Zen-like environment. They created a unique experience and became a community for Mac owners.”

Analysts and investors cheered the hire, with shares rising more than 17 percent to close at $35.37.

“I really think this is a game changer,” said Deborah Weinswig, a retail analyst for Citi. “We’re at a very interesting kind of intersection right now where retail needs to be fun, it needs to be exciting, because the consumer doesn’t need to go to the store — they can do everything from their office or from their home.” What Apple has done “in terms of retail is absolutely unbelievable, so if he can take a little bit of that magic and sprinkle it on to J.C. Penney, you could really create the next generation of retailing,” she said.

Mr. Johnson did not specify what his plans were for Penney.

“I don’t have a priority list,” he said. “I have so many ideas in my head that I can’t quite sort them out, to tell you the truth.”

As for his experience at Apple, he said: “Apple has taught me, really, what breakthrough innovation is and how to energize teams to accomplish that. I’ve seen that happen on the product side at Apple; we’ve done that in our stores. I think that’s what I bring.”

Michael J. de la Merced and Miguel Helft contributed reporting.

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Stocks Close Lower on Wall Street

The retailers Gap Inc. and Aeropostale each lost more than 14 percent after cutting their profit forecasts for the year, in part because of higher costs for raw materials. Gap’s sales have been sluggish, a worrying sign for investors who are counting on shoppers to lead a recovery in consumer spending.

Gap’s results pushed down other clothing companies who have been hit hard by the rising price of cotton and shoppers who are reluctant to splurge. Polo Ralph Lauren and J.C. Penney each dropped nearly 4 percent, while Urban Outfitters fell nearly 3 percent.

At the close, the Dow Jones industrial average was down 93.28 points, or 0.7 percent, to 12,512.04.

The Standard Poor’s 500-stock index fell 10.33, or 0.8 percent, to 1,333.27. The Nasdaq composite fell 19.99, or 0.7 percent, to 2,803.32.

One exception to the gloom among retailers was Barnes Noble. The bookseller jumped 30 percent after Liberty Media offered to buy the company for $1 billion in cash.

A stronger dollar has also hurt stocks. The dollar rose against the euro after the Fitch ratings agency downgraded Greece’s debt three notches further into junk status, escalating worries about the European debt crisis.

In recent months, markets have fallen when the dollar rises against the euro because the stronger American currency has signaled that European countries are still struggling to get their debt under control.

“A stronger dollar and a stronger U.S. market can coincide, but not when the U.S. economic data are weak,” said Quincy Krosby, chief market strategist for Prudential Financial. “This has been a stronger dollar that has come because of another currency weakening, not a stronger U.S. economy.”

Concerns about the strength of the economy pushed government bond prices higher as investors sought out safer assets. The yield on the benchmark 10-year Treasury note fell to 3.15 percent from 3.18 percent late Thursday. Bond yields fall when their prices rise.

Oil prices settled at $99.49, up $1.05, after trading lower most of the day on new signs that demand for gasoline is falling. Even as most energy stocks fell, Anadarko Petroleum jumped 5 percent on hopes that the company would owe less than expected to the oil giant BP for its part in the Deepwater Horizon disaster.

BP said it would receive a $1 billion payment from Moex, which owned a 10 percent stake in the Macondo oil well in the Gulf of Mexico. The settlement was for a smaller amount than Moex investors feared, and suggested that Anadarko, which owned 25 percent of the well, would also pay less to BP.

BP’s stock rose more than 2 percent on expectations that other companies will share costs related to the Gulf of Mexico oil spill.

There were two notable exceptions to the downward trend. The software company Salesforce.com rose more than 10 percent after its first-quarter profit beat expectations. The social networking and job search site LinkedIn added to Thursday’s gains, when it more than doubled in its stock market debut. The company rose 2 percent.

In Europe, shares moved lower late in the session. The FTSE 100 index of leading British shares ended 0.1 percent lower, while Germany’s DAX was off 1.2 percent. The CAC 40 in France was down 0.9 percent.

The euro slid to $1.4197 from $1.4311 late Thursday.

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