Newsflash


NEW YORK -- A massive snowstorm slammed the eastern U.S., hitting Washington, Philadelphia and parts of Virginia and the Carolinas before winding its way north.

Flurries began to hit Long Island at around 11:30 on Saturday, but it didn't start snowing in Manhattan until after 1:00. So far, "it's just a dusting," said John Guiney a meteorologist at the National Weather Service's regional office. "The major accumulations will begin in the early evening, with the heaviest snowfall overnight," which he said was a good thing for retailers.

 

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Associated Press Andres Alarcon, 29, of Colombia and a student at Washington's Howard University, sleeps by a Christmas tree inside of Reagan National Airport in Washington after the airport was closed due to a large snow storm that hit the region on Saturday

In lower Manhattan, as snowflakes fell, cash-register lines at Anthropologie, Gap and Paragon Sports were long and the stores thronged. At Gap, dozens lined up, as clerks worked all eight registers. At Paragon Sports, winter-wear shoppers mixed with holiday shoppers and check-out lines on all three floors numbered 20 or more at a time, and expediters kept the lines moving efficiently.

Mr. Guiney expects portions of Long Island to see anywhere from 12 to 24 inches of snow by Sunday afternoon. In New York City, snowfall will be 10 to 16 inches, but the snowfall should end by early Sunday morning.

In addition to the broader human and economic threat such an event always poses, the storm could deter shoppers and hurt retailers eager to ring up sales on a critical weekend. "Super Saturday," the last Saturday before Christmas, is typically one of the biggest shopping days of the year, with an estimated $15 billion changing hands, according to weather consultancy Planalytics. The Northeast accounts for at least a quarter of those sales.

This year, the highly anticipated weekend is expected to be even more crucial to the retail industry. Shoppers procrastinated longer than ever in hopes of seeing the radical markdowns of last year. But retailers headed into the weekend feeling relatively positive, as they had planned inventories more conservatively this year, reducing the need to resort to sharp discounts to move excess inventory. Retail analysts had expected sales industrywide to be relatively flat this holiday but profits to climb on increasing margins.

If shoppers stay home, that prediction is in danger. Some sales may move to retailers' Web sites, but the e-commerce season had been expected to taper off after Friday, the last day of free-shipping deals.

In New York City, store traffic was slow in the early morning, building steadily through the day. Brian Sozzi, a retail analyst with research firm Wall Street Strategies Inc., said he was surprised to see robust shopper traffic during his early morning visits to Long Island malls, such as Smithhaven and South Shore. "I think it's just a lot of people trying to get out and beat the storm," he said.

In most years, the timing of such a storm may have been a negative, Sozzi said. This year, though, "A lot of people waited until the last minute holding out for the discounts," he said. "A lot of these people don't have gifts, so they're going to have to go back to the stores and buy something, whether it's snowing or not."

[snowstore]
AFP/Getty Images

A sign advising of a store closure is seen on a shop front in the Georgetown neighborhood of Washington.

Before the weekend, Toys "R" Us Chief Executive Jerry Storch had said he'd been pleased with sales and traffic so far. But he admitted he was nervously monitoring the weather, as the company had planned numerous promotions to drive last-minute shoppers to its stores. Some analysts had estimated that 20% of toy sales were still up for grabs this weekend.

"Business started off strong with customers shopping early to beat the storm and to take advantage of values, as well as to snag a Zhu Zhu Pet," a robotic hamster that is one of the seasons hottest toys, said Toys "R" Us Inc. spokewoman Kathleen Waugh. The company added a two-day sale on Friday and Saturday with two days left for standard shipping.

By Saturday afternoon, the storm had dumped 26 inches of snow in parts of Virginia to the southwest of Washington, D.C., and about a foot of snow by Reagan National Airport, where as of 1:45 p.m., most flights had been cancelled. The National Weather Service predicted "record-breaking December snowfall" of one to two feet in the region for the weekend and warned residents not to travel on Saturday.

In Virginia, Gov. Tim Kaine declared a state of emergency. The Associated Press reported that snow, ice and freezing rain blanketed western North Carolina on Friday, cutting off power to almost 60,000 customers in the Asheville area.‪‪In Copenhagen Friday, President Barack Obama said he was leaving before the final vote on a climate change agreement "because of weather constraints in Washington."

Three of Taubman Centers Inc.'s shopping centers in Virginia were affected by the storm. Although the malls stayed opened, half the stores were closed due to the difficulty employees had getting to work. Two of the mall managers stayed at hotels on or near their malls to monitor the situation throughout last night and will do so again tonight.

Westfarms Mall in Hartford, Conn, was bustling since this morning, as people tried to beat the snowfall, expected to begin later this afternoon.

In North Carolina, which marked the southern boundary of the wintry mix associated with the storm, mountain areas such as Asheville, N.C., and Boone, N.C., were socked with as much as two feet of snow, while Charlotte and Raleigh got mostly rain and ice that generally cleared in time for stores and malls to open on schedule.

Airport travel, however, was affected in the South. Delays were reported at Charlotte-Douglas International Airport, and flights from Raleigh-Durham International Airport to the New York area on Delta Airlines and Continental were cancelled, airport spokesman Andrew Sawyer said. "The weather here is fine, it's just wet, but we're getting impacted by conditions elsewhere pretty heavily," Mr. Sawyer said, adding that Southwest Airlines scratched flights to Baltimore-Washington International Thurgood Marshall Airport and United Airlines cancelled flights to Washington Dulles International Airport.

"This is not good for the malls, that's for sure," said Peter Morici, a professor at the University of Maryland's Smith School of Business in College Park, Md.

"My feeling is that online sales will benefit, but overall retail sales will take a small hit," he said. "People still have to buy X number of presents, but they won't be doing as much shopping for impulse stuff."

Some of the biggest winners may be FedEx Corp. and United Parcel Service, Mr. Morici said.

Richard Jaffe, an analyst for Stifel Nicolaus, predicted that retailers with strong e-commerce sites would benefit, as consumers stayed home and shopped over the Internet, citing Urban Outfitters Inc. and J. Crew Group Inc. as two such retailers. He said retailers located mostly in strip centers, including TJX Cos. and Kohl's Corp., would likely be hit the hardest.

Karen Burke, a 47-year-old business manager from New York, decided to get up early and waited outside American Eagle Outfitters in midtown before it opened at 9 a.m. By 10:30 she had snapped up pajamas, hooded sweatshirts and tops that were being offered with a "buy one, get the second at 50% off" deal.

"I wanted to avoid the storm," said Ms. Burke, who was planning on heading home by noon.

The coming storm appeared to motivate consumers to buy certain categories of cold-weather goods. At Macy's, Michelle Smith, 38, and her sister Wanda Torrence were trying on Timberland boots, which they needed for the "weather heading this way right now," Ms. Torrence said. The sisters, from Astoria, N.Y., woke up at 5:30 a.m.--a couple of hours earlier than they had initially planned--to get to stores before the snowstorm to buy gifts for their families.

"We're leaving in 30 minutes. We have to get back to Queens before it starts snowing," said Ms. Smith at 11 a.m.

Amid a crush of shoppers at Bloomingdale's flagship store in New York, Wayne Boydstun, a 49-year-old businessman from Salt Lake City, didn't understand what the fuss was about. "It's funny to watch everybody in a panic," said Mr. Boydstun. "We get 12 inches of snow in an hour." He bought a pair of Ralph Lauren gloves for his 16-year-old son, Cole, who had forgotten to pack a pair.

A spokesman for Macy's declined to comment. A spokeswoman for J.C. Penney said "we have no plans to move any promotions up and have not gotten word of any store closings" as a result of the storm.

"We are a neighborhood store and snow rarely stops New Yorkers as well as tourists on a mission to see and get it all," says Anne Keating, a spokeswoman for Bloomingdale's. The company's Washington stores were closed early "and we are evaluating Philadelphia," she said. Representatives for TJX Cos. and Kohl's Corp. didn't respond to requests for comment.

Target Corp., which Planalytics said has about 31% of its store base receiving snowfall on Super Saturday, on Friday began stocking its stores with shovels, scrapers, ice melt and other standard winter items, making sure additional quantities were available to keep pace with increased demand.

"Target isn't planning any store closures yet but is keeping a close eye on how the storm develops," said spokeswoman Anne Zeltinger.

Between e-commerce and shoppers visiting stores early to fill their carts before the storm descends, the prized retail weekend could still prove profitable. But Scott A. Bernhardt, chief operating officer of Planalytics, said that in such bad weather conditions, shoppers, when they do hit the stores, are likelier to do so with a more single-minded focus, cutting back on browsing and impulse buys.

"There's a reason why retailers count the number of shopping days between Thanksgiving and Christmas," Mr. Bernhardt said. "When you get a storm like this, it's not good news."

— Veronica Dagher and Mary Ellen Lloyd contributed to this article.

 

 



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Home arrow Blog arrow Wagoner never saw the ax coming in Washington
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Monday, 30 March 2009

 

GM chief executive Rick Wagoner

Rick Wagoner has been forced out of GM. Photograph: Rebecca Cook/Reuters

Barack Obama has forced the chief executive of General Motors, Rick Wagoner, to resign in a move that has fuelled fears that America's carmaking industry could be forced into bankruptcy.

Wagoner confirmed this morning that he stepped down after the Obama administration threatened to withhold more bailout money for the struggling US carmaker. He has been replaced by Fritz Henderson, the company's chief operating officer.

"On Friday I was in Washington for a meeting with administration officials," said Wagoner. "In the course of that meeting, they requested that I 'step aside' as CEO of GM, and so I have."

Wagoner's departure comes as Obama is set to announce further actions to restructure GM and Chrysler later today. Both companies could be pushed into bankruptcy.

In a hardline stance that has taken industry experts both in Washington and Detroit by surprise, the administration's car industry taskforce told GM and Chrysler that their recovery plans submitted last month "did not establish a credible path to viability" and were "not sufficient to justify a substantial new investment of taxpayer resources".

With a new chief executive and half of its board involuntarily replaced, GM has been given 60 days to come up with a more aggressive proposal in co-operation with a team of US treasury officials who will base themselves in Detroit.

Chrysler, meanwhile, is being administered its last rites as an independent entity. The government has concluded that it is simply "not viable as a standalone company" and that its best chance of survival is to develop an alliance with Italy's Fiat, which is considered strong in smaller, more fuel-efficient cars. The taskforce has given Chrysler just 30 days to strike a deal with Fiat, with an incentive of $6bn (£4.2bn) of public funds if a satisfactory collaboration is agreed.

There was a stark warning for both GM and Chrysler that unless they deliver radical reforms within the government's tight timetable, they will be forced into bankruptcy. In a statement, the Treasury taskforce said: "Their best chance at success may well require utilising the bankruptcy code in a quick and surgical way."

GM and Chrysler have received more than $17bn in emergency loans from the US treasury and are asking for another $20bn. Ford, the other member of Detroit's Big Three, thinks it can get through the downturn without government aid.

GM warned at the start of March that it could go bust within 30 days without government help. Despite this, Wagoner has resisted filing for bankruptcy protection, arguing this would destroy any remaining confidence among GM's dealers and consumers.

GM also announced it had appointed Kent Kresa, the chairman emeritus of Northrop Grumman and a GM director, as interim chairman.

Wagoner, 56, has led the biggest US carmaker for the last eight years. He became chief executive in 2000 and also assumed the role of chairman in 2003. He has spent his entire 32-year career at the company, having joined GM's treasury department straight after leaving Harvard university with an MBA in 1977.

The new chief executive, Henderson, 50, became GM's president and chief operating officer last year, having previously served as vice chairman and chief financial officer.

Wagoner described Henderson as an "excellent choice" and said he stood ready to support him and Kresa "in every way possible".

"Having worked closely with Fritz for many years, I know that he is the ideal person to lead the company through the completion of our restructuring efforts. His knowledge of the global industry and the company are exceptional, and he has the intellect, energy and support among GMers worldwide to succeed," said Wagoner.

The government's decision to force Wagoner to leave the helm at GM has proven controversial. Thaddeus McCotter, a Republican congressman from Detroit, asked why the bosses of bailed-out Wall Street banks had been allowed to keep their jobs: "When will the Wall Street CEOs receiving funds summon the honour to resign? Will this White House ever bother to raise the issue? I doubt it."

Under pressure from the US administration, GM said it intended to nominate a list of directors for the next annual meeting, with a majority of new candidates.

"The board has recognised for some time that the company's restructuring will likely cause a significant change in the stockholders of the company and create the need for new directors with additional skills and experience," it said.

Yesterday, Obama made it clear he felt GM and Chrysler had not done enough to restructure their companies.

"They're not there yet," he told CBS television on Sunday. "We think we can have a successful US auto industry. But it's got to be one that's realistically designed to weather this storm and to emerge at the other end much more lean, mean and competitive than it currently is."

 

 

By John Crawley

WASHINGTON (Reuters) - Rick Wagoner, late of General Motors, never saw the ax coming.

When he arrived at the Treasury Department for a meeting last Friday with Obama administration's autos task force, he was a 32-year GM veteran and a chief executive carrying the weight of the company's wrenching restructuring on his 6-foot-4 frame. Pressure for him to quit last fall when he first approached Washington for a bailout had faded.

But Wagoner's plan for a GM turnaround and a $16 billion bailout was rejected in the meeting and the company where he spent his entire professional life fell off his shoulders.

"In the course of that meeting, they requested that I step aside as CEO of GM, and so I have," Wagoner said in a message posted on the automaker's Website early Monday.

A majority of GM's board will also be replaced.

Wagoner stepped into the afternoon air jobless.

He could not be reached Monday for further comment.

Wagoner has become the most-recognizable casualty of a once vaunted industry brought to its knees by a confluence of disastrous circumstances that coincided with the later years of his tenure. Some of the wreckage was out of Detroit's control, but some of it -- as President Barack Obama has said -- was self inflicted.

"Yes, we were surprised," Fritz Henderson, Wagoner's former top deputy and now his replacement, said of the task force rejection of the company's plan that he helped construct.

Henderson said emotions for many people in the GM community over Wagoner's ouster has ranged from shock to sadness to pride.

"He was asked to step aside and he did because he felt that was one of the requirements in order to move forward," Henderson said in a conference call with reporters.

"I think the organization is quite sad about that but our job is to move forward and get the job done," Henderson added.

Obama last week cited years of corporate mismanagement as a factor for the U.S. auto industry's decline. Wagoner presided over GM's rapid deterioration in the past five years.

While the remark raised few eyebrows and some references were made to the entrenched Wagoner, many industry insiders believed he had begun to mute critics and was moving GM in a new direction.

At the very least, he was not resisting change.

"This is not meant as a condemnation of Mr. Wagoner, who has devoted his life to this company," Obama said in a speech laying out an restructuring strategy he promises to aggressively pursue.

"It's a recognition that it will take a new vision and new direction to create the GM of the future," Obama said.

Lawmakers who spoke with Obama said he was "matter-of-fact" about the decision to seek Wagoner's resignation.

"The president said he had decided to do that. He wasn't asking for opinions," said U.S. Sen Carl Levin, a Michigan democrat. "There wasn't much point in arguing whether it was fair or unfair, wise or unwise."

Wagoner's counterparts at Chrysler, Bob Nardelli, and Ford Motor, Alan Mulally, are relatively new to their jobs and both recruited from other industries.

"We are left to look back and say that Wagoner's appointment as both chairman and CEO in 2003 was little more than an act to ensure the dynasty of GM boardroom arrogance and failure continued," said Howard Wheeldon, senior strategist at brokerage BGC Partners.

Wheeldon said Wagoner's departure had been all but inevitable since the automaker sought government funds. At the time of the company's $13.4 billion bailout last fall, Sen Christopher Dodd, chairman of a committee overseeing corporate rescue funds, had publicly called for Wagoner to step down.

(Reporting by John Crawley; Editing Bernard Orr)

 



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