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The Morning Ledger: Sears Files for Chapter 11 Bankruptcy |
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A Sears store in Chicago, Ill., part of a previous round of closures, on Aug. 24. PHOTO: SCOTT OLSON/GETTY IMAGES
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Good day. Sears Holdings Corp. filed early Monday for bankruptcy protection from creditors, The Wall Street Journal reports. The troubled retailer reached a deal with its lenders over the weekend that would allow it to keep hundreds of stores open for now.
Instant hit: Sears is expected to immediately close at least 150 stores as part of the bankruptcy deal, while another 250 stores will be under evaluation. The company operates roughly 700 Sears and Kmart stores. The company's controlling shareholder, Edward Lampert, has stepped down as CEO but will remain chairman, Sears said.
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Short term volatility: A potential stock liquidation — even if roughly half of Sears’ stores remain open — could dent profitability at key competitors, particularly in the appliance market. However, appliances are largely sold through the oligopoly of Lowes Cos., Best Buy Co. and Home Depot Inc., which is likely to make the liquidation impact short-lived, UBS Group AG analyst Michael Lasser writes. Moreover, recently applied tariffs on washing machines and other home appliances have also muddied the water on pricing and will likely help limit fall out from Sears.
Competition by the numbers: As of the end of 2017, 94% of Sears stores were within a 15 minute drive of Home Depot, 90% were within that distance of Lowes, and 86% were that close to a Best Buy store, according to UBS. In the apparel market, Sears’ closest geographic competitor is Target Corp.; 93% of Sears stores are within a 15 minute drive of a Target store, and 86% are that distance from a Walmart Inc. store. Still, since the end of last year, Sears has shut an additional 150 to 160 stores.
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Bank of America Corp., Charles Schwab Corp. and J.B. Hunt Transport Services Inc. are among the companies scheduled to report earnings today.
The U.S. Commerce Department publishes September consumer spending data. Economists surveyed by The Wall Street Journal expect robust 0.7% growth.
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China will release inflation data on Tuesday, and economists see consumer price growth picking up modestly in September.
The U.S. Federal Reserve Wednesday publishes minutes from its Sept. 25-26 meeting in which the central bank raised short-term interest rates by a quarter percentage point. Britain's statistics office releases inflation figures for September.
China publishes economic growth figures for the third quarter on Friday. Economists’ median forecast for China’s third quarter gross domestic product growth is 6.6%, slightly lower than the second quarter’s 6.7%.
Shares of U.S. home-builders face a key test this week when investors get a fresh look at data on housing starts, existing-home sales and building permits.
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Carl Icahn fought Michael Dell when he took his namesake computer company private in 2013. PHOTO: BRENDAN MCDERMID/REUTERS
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Carl Icahn revealed an 8.3% stake in VMware Inc. and says he plans to vote against Dell Technologies Inc.'s plan to buy the stock as part of a deal intended to return Dell to the public markets.
JPMorgan Chase & Co. Chief Executive James Dimon has backed out of Saudi Arabia’s marquee business conference following accusations that the Saudi government ordered the killing of journalist Jamal Khashoggi.
Harris Corp. and L3 Technologies Inc. said Sunday they will combine in the largest-ever defense industry merger, as the Pentagon expands budgets with an eye toward increased investment by contractors and quicker weapons development.
General Electric Co. delayed the release of it quarterly results by a week, saying its recently appointed Chief Executive Larry Culp needs more time to complete his review of the embattled conglomerate.
CBS Corp. sought to turn the page when it said last month that Leslie Moonves was stepping down as chairman and chief executive and that the media company was settling litigation with its controlling shareholder. Instead, the drama continued.
The Trump administration says tariffs on Chinese imports will shift manufacturing back to U.S. factories, but some small and midsize companies that have done just that say the tariffs are hurting, not helping, their business.
Luzhou Laojiao Co., a producer of a high-alcohol beverage favored by the Chinese, hopes its baijiu will become trendy among Americans.
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FedEx is among companies that have made pension-plan transfers this year. PHOTO: CHINA STRINGER NETWORK/REUTERS
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Companies With Newly Flush Pensions See Chance to Unload
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U.S. corporate pensions are at their highest funded level since the financial crisis, which could lead more companies to turn over to insurers the responsibility for paying retirees, pension consultants say.
Higher funding levels mean corporate sponsors get a better deal when transferring retiree obligations to insurers, so many firms are finding this to be the perfect time to transfer the risks associated with carrying pension plans.
Defined-benefit pension plans of S&P 500 companies were in aggregate 91% funded at the end of September, according to research released Monday by Goldman Sachs Asset Management. That’s the highest level since the end of 2007, when these plans were 108% funded, according to the report. Nearly one-quarter of the plans are now either fully funded or overfunded, the report said.
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Prudential became the largest life-insurance company in America by assets following MetLife’s spinoff of much of its U.S. life-insurance business in 2017. PHOTO: VICTOR J. BLUE/BLOOMBERG NEWS
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U.S. regulators are preparing to vote on whether to remove Prudential Financial Inc. from federal oversight as soon as this week, the latest move to undo Obama-era policies that brought tighter scrutiny to large financial firms outside the banking sector.
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The U.S. Commerce Department has opened an investigation into whether mattresses imported from China are being sold in the U.S. below fair value.
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Three former accountants for BDO USA LLP settled with the U.S. Securities and Exchange Commission Friday and will be suspended from auditing public companies over alleged improprieties in an audit of insurer AmTrust Financial Services Inc.
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An Ontario court judge sided with cosmetics giant Estée Lauder Cos. in a legal fight against Deciem founder Brandon Truaxe, ordering that he be removed from the skin-care company he started in 2013.
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Negotiations over Britain’s departure from the European Union suffered a setback Sunday as the two sides failed to resolve differences, chiefly over how to avoid the re-emergence of a physical border in Ireland.
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Finance executives at U.K. businesses are expecting their bottom line to decline in 2019 amid Britain's departure from the European Union, according to a survey by the Chartered Institute of Management Accountants released Monday.
More than one-third -- 35% -- of businesses forecast their profits will decline, while more than a quarter -- 27% -- expect profits to be flat as a result of Brexit. Only 5% of a total of 1,496 finance professionals said they forecast profits to go up while 33% were unable to provide an estimate, reports CFO Journal's Nina Trentmann.
More than half of respndents said they expect business costs to rise, with 14% forecasting to spend more than £1 million ($1.32 million) on Brexit planning. Seventy-seven percent of businesses have undertaken steps to prepare for Brexit, while only 20% have conducted a full risk assessment, the study said.
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U.S. Treasury Secretary Mnuchin (l.) with European Central Bank President Draghi, Bundesbank President Weidmann and German Finance Minister Scholz. PHOTO: BLOOMBERG NEWS
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The International Monetary Fund kicked off its annual gathering with a stern warning about protectionism, but it ended it with central bankers and finance ministers taking a less confrontational tone after previous meetings.
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China’s central bank Governor Yi Gang during the IMF meeting said policy makers have enough tools to deal with uncertainties from trade frictions with the U.S., Reuters reports.
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China’s $12 trillion bond market is becoming more popular with foreign investors, but sharp swings in trading volumes could present a risk to the country’s financial stability, according to the IMF.
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Emerging markets are raising interest rates and keeping a lid on spending, even though doing so is likely to hurt their long-term prospects.
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Commonwealth Bank of Australia, a Sydney-based bank, named Alan Doherty as chief financial officer. Mr. Doherty has been acting CFO since mid-May when former finance chief Rob Jesudason resigned.
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Prior to his appointment as interim CFO, Mr. Doherty was CFO of CBA's institutional banking and markets division and held senior roles in group finance, group treasury and in the business and private bank. Compensation details were not immediately available.
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