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Target opening CVS pharmacies in stores is scary news for consumers

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Target opening CVS pharmacies in stores is scary news for consumers

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patients at cvs pharmacy in target 4 HRCVS HealthThis week, CVS is opening its first pharmacy inside a Target store.

Over the next six to eight months, all 1,660 of Target’s pharmacy locations will become CVS-branded units. Additionally, the discount retailer’s 80 in-store health clinics will rebrand as CVS MinuteClinic locations.

When CVS announced its $1.9 billion acquisition of Target’s pharmacy business in June, many worried it could set off a series of similar partnerships as cost pressures hurt profits at grocery-store pharmacies. In October, Walgreens and Rite Aid — the second- and third-largest pharmacy chains in the US, after No. 1 CVS — announced a $9.4 billion merger.

While these acquisitions may help the bottom line at companies, it could be bad news for shoppers.

Mergers mean less competition in the market, which could lead to higher prices for consumers. If CVS and Walgreens acquire more pharmacy businesses, this effect could be even greater.

lining up at targetThe mergers additionally significantly reduce competition in the retail clinic business, reports the Washington Post’s Ariana Eunjung Cha. The acquisitions combine the No. 1 provider of retail clinics (CVS MinuteClinic) with the No. 5 provider (Target), as well as the No. 2 provider (Walgreens) with No. 6 (Rite Aid).

Generally, more competition means lower prices for consumers.

The Post also notes that the deals could result in conflicts of interest.

A CVS pharmacy is seen in New York City July 28, 2010. REUTERS/Mike Segar Thomson ReutersA CVS pharmacy is seen in New York City

"Some analysts worry that medical professionals staffing retail clinics could face pressure to overprescribe in order to boost their employers' bottom lines," Cha writes.

Target and CVS maintain that the change will simply increase convenience and accessibility for consumers.

“Our heart is in every prescription we fill, and providing accessible, supportive and personalized health care is part of our DNA,” Helena Foulkes, the president of CVS Pharmacy, wrote on CVS Health’s website on Wednesday. “On behalf of all of us at CVS Health, I am delighted to invite Target guests to experience our innovative pharmacy care services and unique digital offerings.”

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Deadline upcoming in $48 Million Settlement in the CVS Corporation (NYSE: CVS) Investor Lawsuit

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Deadline upcoming in $48 Million Settlement in the CVS Corporation (NYSE: CVS) Investor Lawsuit

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CVS Corporation Logo The Shareholders Foundation announced that a deadline is coming up on March 23, 2016 in the settlement reached in the securities class action lawsuit filed on behalf of investors who purchased shares of CVS Corporation (NYSE: CVS) between October 30, 2008 and November 4, 2009.

Investors who purchased a significant amount of shares of CVS Corporation (NYSE: CVS) between October 30, 2008 and November 4, 2009, have certain options and should contact the Shareholders Foundation by email at mail@shareholdersfoundation.com or call +1(858) 779 – 1554.

The settlement proof of claim form or detailed settlement notice for the settlement in the CVS Corporation (NYSE: CVS) Investor Securities Class Action Lawsuit can be downloaded at: http://shareholdersfoundation.com/case/cvs-corporation-nyse-cvs-investor-securities-class-action-lawsuit-11172009

In order to submit a claim an investor has to submit the claim proof to the class action claim administrator in a timely manner. The deadline to submit the proof with the class administrator is March 23, 2016. The class action administrator for this case is A.B. Data, Ltd.

The lawsuit was originally filed in the U.S. District Court for the District of Rhode Island against CVS Corporation over alleged violations of Federal Securities Laws in connection with certain allegedly false and misleading statements made between October 30, 2008 and November 4, 2009. According to the complaint the plaintiff alleges that CVS Corporation and certain of its officers and directors violated the Securities Exchange Act of 1934 by issuing between October 30, 2008 and November 4, 2009 numerous positive statements regarding CVS Corporation’s financial condition, business and prospects and failing to disclose operating problems in the PBM business, the more than $6 billion in contractual losses for 2010 and the adverse impact this would have on its 2010 financial results. According to the complaint, CVS Corporation disclosed that the Federal Trade Commission (“FTC”) had begun a “nonpublic investigation” in August 2009 into whether CVS Corporation’s business practices and service offerings violated antitrust laws. Among the business practices of CVS Corporation that the FTC is reportedly investigating is the improper use of pricing and patient data from its retail pharmacy operations to steer its PBM members to CVS Corporation stores, so the lawsuit. Then on November 5, 2009, CVS Corporation issued a press release announcing the disclosures of the adverse material facts concerning the PBM business and their adverse impact on CVS Corporation’s financial results for 2010, and the FTC investigation.

Those who purchased shares of CVS Corporation have certain options and should contact the Shareholders Foundation.

Contact:
Shareholders Foundation, Inc.
Michael Daniels
3111 Camino Del Rio North – Suite 423
92108 San Diego
Phone: +1-(858)-779-1554
Fax: +1-(858)-605-5739
mail@shareholdersfoundation.com

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Yahoo CEO ‘confident’ in strategic plan

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Yahoo CEO ‘confident’ in strategic plan

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Yahoo CEO Marissa Mayer took to the business TV news circuit Wednesday to discuss the company's plans, but stopped short of saying the Net media company is actively seeking a buyer.

The troubled online and mobile advertising and media company is streamlining its workforce and its product offerings while also looking to separate its 15% stake in Alibaba, worth about $25 billion, while considering offers for all or parts of its core Internet business.

That was the message from the company's fourth quarter earnings announcement Tuesday. However, when CNBC's David Faber and Jim Kramer asked Mayer about whether the company was for sale, Mayer was coy.

"I can't speculate," said Mayer, adding that she would no comment on what all "strategic alternatives" the company might consider.

"On the whole, our focus here is to maximize the tremendous potential we see at Yahoo," she said on CNBC's Squawk on the Street. The company has 1 billion monthly users including 600 million on mobile, she said.

Investors weren't reassured. Shares of Yahoo (YHOO) were down more than 7% Wednesday to $26.84, setting a new 52-week low. Shares have fallen nearly 40% over the past 12 months.

Mayer also declined to comment on a potential sale when she appeared on Bloomberg TV a few minutes later.

"I will say Yahoo’s situation is complicated," Mayer said. "Particularly with some of the assets we have with Yahoo Japan (it owns 36%) and Alibaba plus the core (business). We need to have a somewhat complicated solution  … because we need to address how do we really see the most value we can from the operating business and how do we realize the most value we can, in particular from the Alibaba stake but also maximizing Yahoo Japan."

Investors weren't reassured. Shares of Yahoo (YHOO) were down more than 7% Wednesday to $26.84, setting a new 52-week low.

Yahoo chief finance officer Ken Goldman offered a clearer answer to Barron’s on Tuesday saying that the company would consider offers.  “A number of companies have said they want to look at us, and there are a number of private equity firms that are interested in looking at us," he told Barron's. "I’m not saying that we’ve received offers. I’m not saying that at all. I’m saying parties have expressed interest in us. And what we’re saying is that we’ll be open to that.”

Mayer said it had taken Yahoo longer to build its mobile advertising platform than expected and the company is tempering expectations for 2016. The company's forecasts call for a decline in revenue of at least 14% in the first quarter and as much as 12% for the full year.

The company also took a $4.5 billion impairment charge, meaning that it considers the value of assets such as Tumblr, Flurry and Polyvore have fallen by that amount.

Mayer said she understands now how long it would take to build its mobile business "and do it really well. ...We feel good about our plan and we are confident in that plan but I do think it makes sense for us to have a more reasoned perspective in terms of how quickly we can really move it."

The complex plan and tempered forecasts left Nomura Global Markets Research analyst Anthony DiClemente discouraged, he said in a note to investors Wednesday. The firm lowered its target price for shares to $34 from $40, keeping its Neutral rating, citing "the complexities of navigating the three different strategies at the same time."

Yahoo has sidestepped answering how industrious it would be about a sale, said SunTrust Robinson Humphreys Internet equity analyst Robert Peck noted. "The Board plans to engage on qualified strategic proposals, and recognizes that a parallel process is in the best interest of shareholders. However, no word was given on the Active or Passive nature of the process," he said in a note Wednesday.

Yahoo's core business could be worth $4 billion to $8 billion, depending on the buyer, said Peck, who maintained a $40 target price for Yahoo stock. "The mere separation of the core from Alibaba ... would make ANY monetization of the core a positive for shareholders."

Investment firm AllianceBernstein dropped its target price to $42 from $44, but kept an "Outperform" rating saying Yahoo remains "primarily a bet on Alibaba's value," said senior analyst Carlos Kirjner in a note Wednesday.

The "threat of a proxy war" when board slots come open this summer could be catalyst to the company's move to simplify the business, he said. "It may be too little, too late."

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Home Depot hiring 80000 seasonal workers

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Home Depot hiring 80000 seasonal workers

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HOME DEPOT-HIRING

Home Depot (HD) is on a hiring spree as the company boosts seasonal staffing for its busiest selling period.

The nation's largest home improvement retailer said it plans to hire more than 80,000 sales associates nationwide to ensure that Home Depot's nearly 2,000 stores are staffed and ready to welcome spring 2016.

The hiring, roughly equivalent to spring season staffing in recent years, includes job opportunities in sales, operations and cashier positions across all departments, the company said. Merchandising teams also seek new associates to set product displays, maintain store appearance and help keep products customer-ready, Home Depot said.

Applications should be submitted online at Home Depot's careers site, www.careers.homedepot.com, the company said.

The company estimates that more than half of seasonal hires transition to permanent Home Depot jobs. The working time that new hires accrue during the seasonal assignments will apply to eligibility for benefits if they transition to permanent positions, the company said.

"There's no better time to join our team than spring, whether you're a college student, recent grad or a veteran hoping to build a career, a retiree who wants a fund job, or anyone who simply enjoys home improvement," said Tim Crow, Home Depot's executive vice president-Human Resources.

Atlanta-based Home Depot in December reaffirmed its sales and earnings-per-share guidance for fiscal year 2015. The company forecast an approximately 5.7% increase in sales for the year, with earnings per share rising roughly 14% to $5.36.

Home Depot also projected total sales of approximately $101 billion for the year.

The company is scheduled to report its fourth-quarter financial earnings on Feb. 23. The consensus forecast of financial analysts surveyed by S&P Capital IQ projects earnings per share of $1.10 on sales of nearly $20.4 billion.

More information about working at home and remote careers can be found here:

https://www.carefulcents.com/work-from-home-jobs

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ADP National Employment Report: Private Sector Employment Increased by 205000 Jobs in January

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ADP National Employment Report: Private Sector Employment Increased by 205000 Jobs in January

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ADP National Employment Report: Private Sector Employment Increased by 205,000 Jobs in January

Private sector employment increased by 205,000 jobs from December to January according to the January ADP National Employment Report®. Broadly distributed to the public each month, free of charge, the ADP National Employment Report is produced by ADP® in collaboration with Moody's Analytics. The report, which is derived from ADP's actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis.

January 2016 Report Highlights*

View the ADP National Employment Report Infographic at www.adpemploymentreport.com.

Total U.S. Nonfarm Private Employment: 205,000

* Sum of components may not equal total, due to rounding.

Payrolls for businesses with 49 or fewer employees increased by 79,000 jobs in January, down from December's upwardly revised 101,000. Employment among companies with 50-499 employees increased by 82,000 jobs, up still further from December's upwardly revised 77,000. Employment at large companies -- those with 500 or more employees -- came in at 44,000, half of December's downwardly revised 88,000. Companies with 500-999 added 15,000 jobs, while companies with over 1,000 employees gained 30,000 jobs.

Goods-producing employment rose by 13,000 jobs in January, well off from December's upwardly revised 30,000. The construction industry added 21,000 jobs, which was roughly in line with the average monthly jobs gained during 2015. Meanwhile, manufacturing neither added nor lost jobs.

Service-providing employment rose by 192,000 jobs in January, down from an upwardly revised 237,000 in December. The ADP National Employment Report indicates that professional/business services contributed 44,000 jobs, down from 69,000 in December. Trade/transportation/utilities grew by 35,000, up slightly from a downwardly revised 33,000 the previous month. The 19,000 new jobs added in financial activities were the most in that sector since March 2006.

"One of the main reasons for lower overall employment gains in January was the drop off in jobs added at the largest companies compared to December. These businesses are more sensitive to current economic conditions than small and mid-sized companies," said Ahu Yildirmaz, VP and head of the ADP Research Institute. "Over the past year, businesses with less than 500 employees have created nearly 80 percent of new jobs."

Mark Zandi, chief economist of Moody's Analytics, said, "Job growth remains strong despite the turmoil in the global economy and financial markets. Manufacturers and energy companies are reducing payrolls, but job gains across all other industries remain robust. The U.S. economy remains on track to return to full employment by mid-year."

To see Chart 1. Change in Total Nonfarm Private Employment, please click here: http://media.marketwire.com/attachments/201602/MOD-23985_Chart1.ChangeinTotalNonfarmPrivateEmployment.jpg

To see Chart 2. Historical Trend -- Change in Total Nonfarm Private Employment, please click here: http://media.marketwire.com/attachments/201602/MOD-23986_Chart2.HistoricalTrendChangeinTotalNonfarmPrivateEmployment.jpg

To see Chart 3. Change in Nonfarm Private Employment by Selected Industry, please click here: http://media.marketwire.com/attachments/201602/MOD-23987_Chart3.ChangeinNonfarmPrivateEmploymentbySelectedIndustry.jpg

To see Chart 4. Change in Nonfarm Private Employment by Company Size, please click here: http://media.marketwire.com/attachments/201602/MOD-23988_Chart4.ChangeinNonfarmPrivateEmploymentbyCompanySize.jpg

The matched sample used to develop the ADP National Employment Report was derived from ADP payroll data, which represents 411,000 U.S. clients employing nearly 24 million workers in the U.S. The December total of jobs added was revised from 257,000 to 267,000.

To obtain additional information about the ADP National Employment Report, including additional charts, supporting data and the schedule of future release dates, or to subscribe to the monthly email alerts and RSS feeds, please visit www.adpemploymentreport.com.

The February 2016 ADP National Employment Report will be released at 8:15 a.m. ET on March 2, 2016.

About the ADP National Employment Report®
The ADP National Employment Report® is a monthly measure of the change in total U.S. nonfarm private employment derived from actual, anonymous payroll data of client companies served by ADP®, a leading provider of human capital management solutions. The report, which measures nearly 24 million U.S. workers, is produced by the ADP Research Institute®, a specialized group within the company that provides insights around employment trends and workforce strategy, in collaboration with Moody's Analytics, Inc.

Each month, ADP issues the ADP National Employment Report as part of the company's commitment to adding deeper insights into the U.S. labor market and providing businesses, governments and others with a source of credible and valuable information. The ADP National Employment Report is broadly distributed to the public each month, free of charge.

The data for this report is collected for pay periods that can be interpolated to include the week of the 12th of each month, and processed with statistical methodologies similar to those used by the U.S. Bureau of Labor Statistics to compute employment from its monthly survey of establishments. Due to this processing, this subset is modified to make it indicative of national employment levels; therefore, the resulting employment changes computed for the ADP National Employment Report are not representative of changes in ADP's total base of U.S. business clients.

For a description of the underlying data and the statistical model used to create this report, please see "ADP National Employment Report: Development Methodology" at http://adpemploymentreport.com/common-legacy/docs/ADP-NER-Methodology-Full-Detail.pdf.

About Moody's Analytics
Moody's Analytics helps capital markets and risk management professionals worldwide respond to an evolving marketplace with confidence. The company offers unique tools and best practices for measuring and managing risk through expertise and experience in credit analysis, economic research and financial risk management. By providing leading-edge software, advisory services, and research, including the proprietary analysis of Moody's Investors Service, Moody's Analytics integrates and customizes its offerings to address specific business challenges. Moody's Analytics is a subsidiary of Moody's Corporation (NYSE: MCO), which reported revenue of $3.3 billion in 2014, employs approximately 10,200 people worldwide and maintains a presence in 35 countries. Further information is available at www.moodysanalytics.com.

About ADP (NASDAQ: ADP)
Powerful technology plus a human touch. Companies of all types and sizes around the world rely on ADP's cloud software and expert insights to help unlock the potential of their people. HR. Talent. Benefits. Payroll. Compliance. Working together to build a better workforce. For more information, visit ADP.com.

The ADP logo, ADP, the ADP National Employment Report and the ADP Research Institute are registered trademarks of ADP, LLC. ADP A more human resource. is a service mark of ADP, LLC. All other marks are the property of their respective owners. Copyright © 2016 ADP, LLC.

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GM reports record $9.7 billion earnings in 2015

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GM reports record $9.7 billion earnings in 2015

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General Motors Co. on Wednesday said it earned a record $9.7 billion in 2015, including $6.3 billion in the fourth quarter

The Detroit automaker posted a record $10.8 billion pre-tax profit, with profit margins of 7.1 percent. The strong numbers were driven by good performances in China and North America, where GM earned a record $11 billion with record adjusted profit margins of 10.3 percent. It reached the milestone 10 percent margins a year ahead of schedule.

As a result, GM’s roughly 49,600 hourly UAW employees will make up to $11,000 in profit sharing, which will be paid out Feb. 26.

GM’s adjusted earnings per share last year was $5.02 a share, beating the consensus of $4.83. Its earnings per share in the fourth quarter was $1.39 a share, beating the consensus of $1.21 per share.

The automaker gained $1.5 billion from special items last year due to a $3.9 billion net gain from the reversal of certain valuation allowances on deferred tax assets. It lost $1.4 billion last year due to charges for litigation matters related to the ignition switch recall, and lost $600 million due to a Venezuelan bolivar currency devaluation.

“It was a strong year on many fronts, capped with record sales and earnings, and a substantial return of capital to our shareholders,” GM Chairman and CEO Mary Barra said in a statement. “We continue to strengthen our core business, which is laying the foundation for the company to lead in the transformation of personal mobility. We believe the opportunities this will create in connectivity, autonomous, car-sharing and electrification will set the stage for driving value for our owners for years to come.”

The automaker’s earnings were nearly entirely driven by North America, where a continued demand for SUVs and trucks fueled record sales.

In Europe, GM lost $800 million, better than the $1.4 billion it lost there a year ago.

Its international operations reported adjusted earnings of $1.4 billion, up from $1.2 billion a year ago.

GM’s troubled South America business unit lost $600 million in 2015, a greater loss than the $200 million from 2014. But the automaker was encouraged by break-even results there in the fourth quarter.

GM’s total net revenue for the year was $152.4 billion, down from $155.9 billion a year ago. GM said the numbers are a result of a negative net foreign currency exchange impact of $9.3 billion.

The automaker predicts its adjusted earnings per share in 2016 will fall between $5.25 and $5.75 in 2016.

Some analysts expect the momentum to continue.

“We remain bullish on GM,” David Kudla, CEO and chief investment strategist of Mainstay Capital Management in Grand Blanc, said in a statement. “We expect the company to take full advantage of continued robust demand, successful product launches and low energy costs this year.”

Fiat Chrysler Automobiles last week reported a profit of 377 million euros (about $410 million) for 2015, a substantial decrease from 632 million euros from the previous year due to recall and investment costs. Ford Motor Co. last week said it earned $7.4 billion in 2015, including $1.9 billion in the fourth quarter.

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Intel Has Made Some Big Steps Toward Its Diversity Goals, So Why Are People Leaving?

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Intel Has Made Some Big Steps Toward Its Diversity Goals, So Why Are People Leaving?

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It’s been a year since Intel’s CEO Brian Krzanich announced a $300 million, five-year plan to bring the company’s workforce to "full representation" by 2020. A few months ago, we reported that the company surpassed its hiring goals for 2015.

In its ongoing effort to be radically transparent about the progress it's making toward diversity and inclusion in a number of areas (not just hiring), Intel issued another report on its first full year of results. Not surprisingly, the company is pleased with the strides it's already made for an investment of $52.4 million across the board in 2015.

What They've Accomplished

Overall, Danielle Brown, Intel’s chief diversity and inclusion officer, noted that the company has continued to hold every one of its more than 107,000 employees accountable to its diversity goals through a company-wide bonus program, a strong factor in determining how it exceeded its hiring goals last year. According to the report, the program yielded more than twice the number of referrals as in the previous year. Intel’s efforts to recruit a more diverse staff also pushed into more schools with greater diversity (a move we’ve reported can impact the number of black engineers at a company) and conferences.

Intel has also met its goal to retain overall diverse employees at the same rate as the rest of the population, and is bumping both its hiring and retention goals for 2016.

The company also boosted representation of women by 5.4% in 2015, which now makes its total female employee population stand at nearly one quarter (24.8%). Separating out the tech workforce, women represent 20.1% (including senior principal engineers), which is up 5.8% over the previous year. Intel’s senior leadership now stands at 17.6%. Still low, but for all these women there is pay parity with their male counterparts. Brown notes that a compensation analysis brought Intel to 100% pay parity in 2015.

To get there, Intel conducted a further compensation analysis examining gender pay parity for U.S. employees across job types and levels, to ensure no one was getting paid less than their job responsibilities dictated. This compares to the 23% pay gap in the overall technology industry, and the approximately 20% pay gap across the U.S., according to the Bureau of Labor Statistics. "In 2016, we’re intensifying our existing efforts with enhanced audits, to comply with recent changes in the laws of California and other states regarding pay equity," according to the report.

"Of course, we still have work to do," Brown admitted in a teleconference.

What They Still Have To Do

Most notably, the company has only made slight improvements to increasing the number of underrepresented minorities on staff (a total of 0.1%, to end the year at 12.4%), but fell short of retaining underrepresented minorities. For example, African-American workers had a higher exit rate than the rest of the staff. Although 209 were hired, 201 (not necessarily the same individuals) left the company. Eleven Native American employees were hired, and 19 left last year. For comparison, last year Intel hired 2,805 new staffers, and 3,364 left the company.

All this work to hire doesn’t mean a thing if Intel, or any company, can’t convince its newest employees that they are going to feel like they landed in an inclusive workplace.

Why are people leaving Intel? Brown tells Fast Company that after all the analysis on retention, "The reasons an employee chooses to stay or leave is intensely personal." Therefore, she says, Intel can’t expect that there will be one overall solution to get people to stay. "Community building is important," she says, like building a network of senior level women who can make connections. "It is complex," she confesses.

Brown says that last year, Intel’s retention strategy was heavily focused on forming and building greater community among its diverse populations, and held many internal events focused on that goal. "That community building was useful, because it helped strengthen networks and create a sense of belonging and affinity," she says. But it wasn’t all positive.

"The heavy focus on internal events ended up pulling our diverse employees out of their day jobs too frequently, which didn’t set them up for optimal success for progression and growth in their organizations," Brown observes. Likewise, focusing on events for individual communities did the opposite of fostering inclusion, she says, "because we didn’t extend the events to include different, diverse perspectives beyond the group the event focused on."

The Importance Of Inclusion

With over 107,000 employees in offices across the globe, subcultures are bound to sprout up. "Working as a technician in our labs is very different than working as a marketing professional in headquarters," Brown says. "We understand we must tailor our approaches in retention and progression and understand the underlying, individual reasons employees stay or leave a company, and what challenges they individually face in retention and progression," she says.

On a company wide scale, Brown points out that while Intel has been conducting unconscious bias training for over a decade, that, too, wasn’t making much of a dent in retention and progression numbers. "We are still working on engineering bias out of our processes," she asserts, "but we needed to do more."

Debora Bubb, Intel’s vice president of HR and its director of global leadership and learning, chimes in to talk about GROW, the company’s portal to a site that contains videos, research summaries, and practice tools designed by neuroscientists and aimed at teaching employees how to progress in their careers as well as how to be more inclusive.

Employees who don’t stick around consistently cite reasons such as feelings of isolation, a negative environment, manager quality, or lack of ability to progress. Bubb says that GROW is a "direct response to those themes." She says GROW engaged 25,000 employees in its first month, which coincided with the year’s end and holidays.

"We’re already practicing new habits and integrating new language into our work and team interactions," Bubb says. One is to simply remember to insert the word "yet" at the end of a sentence. That effectively changes a statement such as, "I’m not good at this," to, "I’m not good at this yet."

The neuroscience-based curriculum is "a real breakthrough in the approach to retention and development," according to Brown.

Joelle Emerson, cofounder and CEO of the diversity and inclusion consultancy Paradigm, tells Fast Company that due to the size of Intel, it would be hard to not only teach 100% of employees about inclusivity, but also to encourage 100% of employees to change their behaviors.

"But what we know from social science research is that well-designed interventions can be remarkably impactful in changing people's mind-sets and behaviors," Emerson says. "For example, in the area of "growth mind-set," from which I believe Intel is hoping to draw, Stanford researchers found that brief interventions delivered online can improve learning and academic achievement across large bodies of students," notes Brown. "If Intel designs GROW effectively, I think there is a strong possibility that it will help a majority of employees practice more inclusive behavior."

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Michael Kors’s latest sales results send a message to its doubters

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Michael Kors’s latest sales results send a message to its doubters

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A Michael Kors store in Almaty, Kazakhstan. (Andrey Rudakov/Bloomberg)

If it seems like you see a Michael Kors purse on every shoulder when you walk down the street or hit the mall, there’s something to your observation: The brand had a years-long hot streak after going public in 2011 when its jet-set-inspired handbags and accessories became a must-have for aspirational luxury shoppers.

But in the last year, investors and fashion insiders have begun to wonder if the brand was shooting itself in the foot by muscling into so many malls and by selling its bags for promotional prices that made them more accessible to the masses. Sales growth slowed dramatically, suggesting that as the brand became more ubiquitous, it was starting to lose some of the exclusive vibe that made it a hit in the first place.

On Tuesday, Kors delivered an earnings report that sent a message to its doubters: There is, it seems, a path forward for the brand to thrive and recalibrate in the face of these perceptions.

Kors said that comparable sales — a measure of sales at its stores open more than a year — were down 0.9 percent in most recent quarter. While that figure still pales in comparison to the blockbuster growth it posted two or three years ago, it is a clear improvement over what was seen in the previous three quarters. And the brand managed to notch improvement during a holiday season that was a tough one overall for the retail industry.

Digging into the report more deeply offers some other reasons for optimism about the brand’s future. For one, the company said its average unit retail price was pressured this quarter, but it was pressured for the right reasons. On a conference call with investors, chief executive John D. Idol said the decline was not driven by having to resort to deep discounts to unload slow-selling merchandise, a tactic the brand has had to employ in the past. Instead, he said it was because shoppers are embracing the trend toward small-sized purses, crossbody bags and small wallets — pieces which logically come with a lower price tag than, say, a tote bag.

So, overall, the company saw a strong increase in the number of items it sold in its core handbag business. That sends a message that Kors is figuring out how to score with something other than the $300 mid-sized handbags that have been its bread-and-butter (and which have also been crucial for rivals such as Coach and Kate Spade.)

Kors has earlier stated that it is pulling back on its wholesale business of selling pieces in department stores in an effort to fight the perception that the brand is too omnipresent and thus lacks cachet. The improved results in its own retail outlets this quarter are, in a way, a validation of that strategic tack. While Kors has previously leaned heavily on department store sales — by one estimate, almost half of its sales come from such outlets — the momentum at its own stores and website offers hope that there is a viable iteration of this business that leans more heavily on direct-to-consumer selling.

Investors sent Kors’s stock up a whopping 25 percent today, a sign that they were pleasantly surprised by the brand’s report. The company said revenue was up 6.3 percent to $1.4 billion in the quarter, and profit was $294 million, lower than the same quarter last year.

The results come just days after a key rival, Coach, reported somewhat improved sales amid an ongoing struggle to polish the image of its overexposed brand.  Taken together, the results at Kors and Coach suggest that these accessible luxury titans may be getting closer to putting their brands in the sweet spot between being overexposed and underutilized.

Sarah Halzack is The Washington Post's national retail reporter. She has previously covered the local job market and the business of talent and hiring. She has also served as a Web producer for business and economic news.

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Chipotle Mexican Grill, Inc. Finishes Tough 2015, Heads Into 2016 Ready to Win Back Customers

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Chipotle Mexican Grill, Inc. Finishes Tough 2015, Heads Into 2016 Ready to Win Back Customers

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Chipotle has made major changes to how it handles ingredients, but it's unclear when that will bring back customers. Source: Chipotle.

"The fourth quarter was without question the most challenging in our history. But we have responded and implemented an industry-leading food safety program that reduces our food safety risk to as near to zero as possible."
-- Chairman and co-CEO Steve Ells

So began the Chipotle Mexican Grill fourth quarter earnings call, and Ells was certainly right. Concerns about food safety kept customers away in droves in the fourth quarter. Sales fell 15% at restaurants open more than one year, and total revenue dropped 7% in the quarter.

Chipotle isn't the first (and certainly won't be the last) major restaurant chain to have food-safety problems, but it's one of the highest-profile ones, and it has come to represent high-quality, fresh food. Its "Food With Integrity" motto, and its focus on local, organic, and natural ingredients, are key parts of its relationship with its customers. How long it will take the company to rebuild that trust is the million-dollar question.

Let's take a closer look at the company's performance in the quarter and full year, as well as what management has done to address food safety, and to begin rebuilding the brand and bring its customers back.

The painful results 
Fourth quarter:

  • Revenue decreased 6.8% to $997.5 million.
  • Comparable restaurant sales decreased 14.6%.
  • Restaurant level operating margin was 19.6%, a decrease of 700 basis points.
  • Net income was $67.9 million, a 44% decrease.
  • Diluted earnings per share were $2.17, a 43.5% decrease.

The impact of the E. coli outbreak in the west, and then the Norovirus incident in Boston were the primary drivers behind the huge drop in sales. Chipotle finished the year with 9.6% revenue growth, essentially all from new restaurant openings, as comparable sales were flat for the year. Through the end of the third quarter, Chipotle's net sales were up 15.3%, and comps were up 5.5%. That's how bad Q4 was, erasing over 5% in growth.

Some key full-year profitability metrics that also took a big hit from a terrible Q4:

  • Restaurant-level operating margin finished 2015 at 26.1%, and was on track to finish the year above 28%.
  • Net income was $475.6 million, up 6.8%, trailing revenue growth because of the decline in operating margins.

Steps to address safety 
Ells outlined several key steps the company has implemented in its food preparation and supply chain to reduce the risk of foodborne illness going forward:

  • DNA-based testing of produce and meats to screen for pathogens (such as E. coli) before they enter the supply chain.
  • Implementation of a real-time tracking system to identify exactly where a box of product originated and where it's been.
  • Preparation of key fresh produce in central kitchens instead of local Chipotle restaurants.
  • Blanching (such as avocado, citrus, and onion) in-restaurant before preparation.
  • Updating the marinating process for meats to reduce the risk of cross-contamination.
  • Marinating other fresh ingredients in citrus before making salsas and guacamole to further reduce risk of contamination.
  • Enhancing crew training to be sure employees are aware of food safety programs, educated about foodborne illness, and knowledgeable of their role in food safety.

Co-CEO Marty Moran continued describing the steps Chipotle has taken to continue supporting the company's focus on food safety and bringing back customers. The company has ramped up in-restaurant auditing, with weekly audits performed by in-house employees, and a third-party performing audits no less than quarterly. The third-party auditor score will account for half of store-level manager's bonuses, while the other half will be tied to sales recovery.

CDC E. coli investigation complete, but criminal probe expanded 
On Feb. 1, the Centers for Disease Control and Prevention ended its investigation, saying that the E. coli outbreak that started last fall appears to be over, but an investigation by the U.S. Attorney's office for the Central District of California has been expanded. Chipotle received an expanded subpoena, requesting information about communications related to food safety, going back as far as 2013, according to Moran on the earnings call.

Moran made it clear that the company will cooperate fully with the investigation, and that he was confident that the investigation -- which is aimed at making sure Chipotle met its obligations under a federal food safety statute dealing with selling food that could be harmful -- would find no wrongdoing.

Ready to reach out to customers 
At the height of the food safety scare, a survey of Chipotle customers indicated that around 60% who were aware of the issues would eat there less often. However, recent surveys have shown a leveling off of negative sentiment, and historically, companies that have dealt with similar issues see customers return once it's clear the issues have been dealt with.

With that in mind, Chipotle will launch a marketing campaign that CFO Mark Crumpacker described as the "largest in the company's history" and would include print, outdoor signage, as well as social and Web, scheduled to run from early February through June.

Hartung also said that the campaign -- with one small exception -- would not mention food safety or the recent incidents, instead focusing on the fresh, high-quality ingredients and delicious food the restaurant has been known for.

The campaign will also have a major direct marketing component from early February through mid-May, that will use both mail and social media.

Based on how customers respond, Chipotle will continue marketing throughout the rest of 2016. Crumpacker said the company will spend significantly more on marketing than in previous years -- about six times last year's Q1 spend as a percentage of sales, just to start the program.

Sales and profits could get worse before they get better, but management is focused on the long term
The impact of the negative publicity and food safety concerns has continued to weigh heavily on Chipotle. CFO John Hartung said comps in January were down 36%, even worse than the 34% comps decline following the Norovirus incident in Boston in December.

Hartung also said that labor and P&L management at store levels would be less of a focus as the company attempts to regain customers. To paraphrase, the company would rather have too many people on hand than risk having customers return and not be able to meet their expectations.

In other words, Chipotle management is investing in a long-term recovery and accepting that its costs will rise in the short term. However, the company isn't willing to let the customer experience suffer, simply to reduce costs while business languishes.

There's almost certainly going to be more short-term pain for the company and for shareholders, but if its plan to rebuild trust and bring customers back works, it will almost certainly pay off in the long term.

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California gas leak: Prosecutors charge utility with crimes for leak

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California gas leak: Prosecutors charge utility with crimes for leak

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FILE - In this Jan. 16, 2016 file photo, Tera Lecuona, resident of the heavily-impacted Porter Ranch area of Los Angeles, holds a protest sign during a hearing in Granada Hills over a gas leak at Southern California Gas Company’s Aliso Canyon Storage Facility. California’s attorney general is suing Southern California Gas Co. over a massive out-of-control natural gas leak. Attorney General Kamala Harris said the company violated several state laws and failed to report the leak to necessary agencies for three days after it was discovered in October. (Richard Vogel, File/Associated Press)

By Associated Press February 2 at 8:25 PM

LOS ANGELES — The Latest on federal regulations announcing plans to propose new safety standards after California gas leak (all times local):

5:12 p.m.

Los Angeles prosecutors have filed misdemeanor criminal charges against a utility for failing to immediately report a massive gas leak in October.

Los Angeles County District Attorney Jackie Lacey said Tuesday that Southern California Gas Co. needs to be held accountable for the leak that has been out of control nearly 15 weeks.

The criminal complaint charges the company with four misdemeanor counts. If convicted, the company could be fined up to $25,000 for each of the three days it didn’t notify the state Office of Emergency Services of the leak.

Lacey says the company also could be fined up to $1,000 per day for air pollution violations.

SoCalGas says it discovered the leak Oct. 23 at its Aliso Canyon storage facility.

The company didn’t immediately respond to a request for comment.

___

3:45 p.m.

Federal regulators say they plan to propose new safety standards for underground natural gas storage after a massive leak at a Los Angeles-area facility.

The Pipeline and Hazardous Materials Safety Administration said Tuesday it is working on new regulations and has advised operators to review the safety of their facilities.

The agency issued the advisory nearly 15 weeks after a Southern California Gas Co. well blowout.

The nonstop leak has spewed millions of tons of climate-changing methane and uprooted more than 4,400 Los Angeles families sickened by the stench or concerned about their health.

The agency says gas storage operators should check for leaks and identify potential failures from corrosion and other damage.

The SoCalGas leak is under investigation, but the agency says it probably occurred in a well casing.

___

11:06 a.m.

California’s attorney general has added her name to the long list of parties suing Southern California Gas Co. over a massive out-of-control natural gas leak.

Attorney General Kamala Harris said Tuesday the company violated several state laws and failed to report the leak to the necessary agencies for three days after its discovery in October. Harris says the leak created a public health and statewide environmental emergency.

The company did not immediately respond to messages seeking comment, but has previously cited a policy of not commenting on litigation.

The company is facing more than two dozen lawsuits over the leak that has forced thousands of residents from their homes in the Porter Ranch section of Los Angeles and has spewed more than 2 million tons of climate-changing methane.

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ES Morning Update February 4th 2016

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ES Morning Update February 4th 2016

2c414ec0-b9f3-4745-aa1e-eeba242ba2a4Resistance 1920-1930.  Support 1865 triple bottom area.

Looking at various charts and time frames this morning I can't see any clear picture for the next direction.  Most charts are overbought (short term) and should rollover but some are bottomed and pointing up.  It's very mixed today.  There is overhead resistance that the market wants to breakthrough, but I don't think it has the strength today.  I'm leaning toward a choppy day of nothing to trade.  I don't see the bulls breaking out strongly, but I don't see the bears taking it down either.  There's just no clear edge today for me to forecast the direction.

Yahoo announces a bold turnaround plan – including 1600 job cuts

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Yahoo announces a bold turnaround plan – including 1600 job cuts

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Michael Nagle/Bloomberg

Yahoo unveiled an ambitious turnaround plan Tuesday — but that may not keep it off the auction block.

Chief executive Marissa Mayer announced that Yahoo will cut 15 percent of its workforce by the end of 2016 -- about 1,600 jobs -- and entertain "strategic proposals" for its future, an indication that the company is open to selling itself to a suitor.

It's been a rocky road for Yahoo and for Mayer, who has been under growing pressure from shareholders to revitalize the company or sell it outright. Mayer said Tuesday that the company's plan streamlines the business while focusing on mobile and video ad products. But it also involves cost-cutting -- beyond the job reductions, Yahoo said that it would close five of its global offices -- in Dubai, Mexico City, Buenos Aires, Madrid and Milan. By next year, its full-time workforce is expected to be roughly 9,000 employees, down 42 percent since 2012.

“Today, we’re announcing a strategic plan that we strongly believe will enable us to accelerate Yahoo’s transformation,” said Mayer.

The company had announced in December that Yahoo would spin out its core business to separate it from its valuable stake in the Chinese firm Alibaba. But that move also makes the core business easier to sell.

"The Board is committed to the turnaround efforts of the management team and supportive of the plan announced today," Maynard Webb, Yahoo's board chairman, said in a statement. "In addition to continuing work on the reverse spin, which we've discussed previously, we will engage on qualified strategic proposals."

The company also reported better-than-expected revenue of more than $1 billion in sales. Most analysts had forecast the company to report revenue of $948.7 million -- Yahoo has not reported less than $1 billion in revenue since 2004. Ahead of its earnings report, shares were down 33 percent from the same time last year. The stock dropped nearly 2 percent in regular trading Tuesday to close at $29.06. It slid about 3 percent in after-hours trading.

Many of the company's activist investors have publicly stated that they've lost faith in Mayer who wanted to spin off Yahoo's stake in Alibaba -- which is likely worth more than $30 billion -- and use the proceeds to turn the company around. Investors worried that much of the money would face a huge tax penalty and pushed the company's board to sell off the core business instead.

The board capitulated to some of those concerns by announcing in December that it would indeed spin-off its core Internet business. But it has not been forthcoming about whether it is definitely putting the firm up for sale. Several analysts said the announcement that the firm is considering strategic options is a strong indication that it will, in fact, sell the heart of its business, which investors have said has very little value on its own.

Companies such as Verizon have been open about their interest in looking at Yahoo as a potential acquisition.

Mayer, who joined Yahoo in 2012, has faced intensifying criticism over the past year. Many have questioned the way she's handled the 2o year-old company -- particularly her penchant for high-profile acquisitions of startups such as Tumblr, which haven't paid off for the firm.

And some remained skeptical of Yahoo's latest announcement.

“It is clear that our voice on behalf of shareholders has been heard, but we believe the strategic plan does not fully address the core issues which have destroyed shareholder value - poor capital allocation, bad strategic partnerships, out of control spending and a bloated workforce," said Springowl, an investment firm that has been critical of Yahoo and Mayer. "We are committed to continuing to push for moves that will fundamentally turn the company around and result in a higher stock price and value creation for all shareholders.”

On the company’s video earnings webcast, Mayer spoke like a woman defending her job. She took a moment to refute rumors about spending at the company, saying that reports of a $7 million holiday party and $400 employee food budget were “exaggerated” and were, in fact, less than a third of what was reported.

“I have found these untruths to be upsetting, and I’m sure our investors do as well,” she said. “We are very thoughtful about how we spend company resources and we will continue to be.”

“Yahoo today is a far stronger, more modern company than the one I joined three and half years ago,” she added, noting that every line of business the firm had was on the decline when she took over.

But she also acknowledged that the firm is not exactly healthy. She said that she will continue to “sunset” — that is, cut — parts of the business that aren’t performing well. She added that the firm will make more products for a global market, rather than offering versions of the same product for individual international markets.

She said that the firm will continue to focus on its three legacy businesses: search, communications (Yahoo Mail) and its Tumblr-centric digital content businesses. That section also includes four publishing verticals, focused on news, sports, finance and lifestyle.

Hayley Tsukayama covers consumer technology for The Washington Post.

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ES Morning Update February 3rd 2016

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ES Morning Update February 3rd 2016

11fb88c5-b135-4441-8850-ae4e3d97e2bbStill unknown on whether this wave up makes a lower high or higher high?

MACD's turning up... should make a lower high then the 10+ high on the 1st

Yesterday I thought we'd drop to the 1900 area on this ES Futures chart, and we did... plus a little more. The charts were bearish then and they are bullish today. Even the 6 hour chart is trying to turn back up. If it gets going then we could make a higher high? Too early to say right now.

We are looking for a lower high today that we can short into Thursday, but we have to let SkyNet tell us what it wants to do, and today it looks like it wants to rally. This 2 hour and the 4,6 and 60min charts are all supporting a rally. We have to let them go up as far as they want until they run out of steam and hit resistance they can't break.

The wave count is still just a guess. I suggested that we could be in an ABC wave down from the high. On this chart I can already see all 3 waves, so it could be completed? So, if we make a lower high today then the move down yesterday was likely a larger A wave with 3 smaller ABC waves inside it. That suggests that the lower high today would be a larger B wave up, and that leaves us open for a nasty C wave down Thursday.

If this move up makes a higher high then yesterday's ABC down move was likely just a larger wave 4 of some kind from the Jan. 20th low and we'd be in wave 5 up. As you can see, just doing wave counts along could kill you if you get one wrong and are on the wrong side of the trade. That's why I mix in a little of everything and look at technical analysis first. During the day (in the chatroom) I give out new information to try to figure it out. There's oil inventories out at 10:30 am EST and that could move the market one way or the other. Keep an eye on that. If you are long from yesterday near the close (again, as we discussed in the chatroom) then congratulations.

Yahoo to lay off 15% of workforce amid $400M cost-cutting

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Yahoo to lay off 15% of workforce amid $400M cost-cutting

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Mike Snider and Kaja Whitehouse, USA TODAY
6:51 p.m. EST February 2, 2016

Struggling search engine company Yahoo Inc. said it plans to cut about 15% of its workforce as part of a $400 million cost-cutting effort intended to "simplify" the troubled Net company.

The Sunnyvale, Calif.-based Yahoo plans to lay off about 1,500 employees and close five offices in Dubai, Mexico City, Buenos Aires, Madrid, and Milan — with the bulk of cuts by the end of March, Yahoo said Tuesday.

By the end of 2016, the online and mobile advertising company expects to have about 9,000 employees and fewer than 1,000 contractors, down from closer to 12,000 last year.

The cuts were announced as part of Yahoo's newly announced strategic refocus to " simplify the company" amid criticisms that Mayer has failed to grow it through acquisitions and hiring. In addition to staff reductions, Yahoo will thin its online and mobile offerings to support those that generate the most revenue.

Also, as the company attempts to separate its Internet advertising and media business from its $25 billion stake in Chinese Net retailing giant Alibaba, Yahoo's board will entertain strategic proposals, which could potentially include either a sale of part of the company or a potential merger.

In all, Yahoo said it will reduce operating expenses by more than $400 million by the end of 2016 by dropping support for products like Yahoo Games. It also plans to raise as much as $1 billion in cash through the sale of non-strategic assets, including real estate.

“We believe a simplified Yahoo will increase shareholder value over the long term,” said CEO Marissa Mayer during a conference call Tuesday. “Having fewer products means we can improve those products faster and increase profitability and focus.”

However, the changes will also result in a “transition year” with lower revenue and earnings, she said.

Yahoo expects revenue after subtracting the cost of traffic acquisition will range, in the first quarter 2016, from $820 million to $820 million, a decline of at least 14%, and for fiscal year 2016 revenue of $3.4 billion to $3.6 billion, a 12% decline.

Yahoo (YHOO) shares fell about 2% in after hours trading to $28.44, however, as shareholders digested the new plan and the news that Charles Schwab has stepped down from the board, marking the second director to resign in just two months.

Board member Max Levchin departed in December. Shares closed Tuesday at $29.08 down 1.66%.

Yahoo Tuesday also reported fourth-quarter earnings of 13 cents, beating analysts' expectations of 12 cents per share, according to S&P Capital IQ Consensus Estimates. Fourth quarter revenue of $1 billion beat estimates of $948 million.

Mayer's plan to simply the business and cut costs is likely aimed at pleasing shareholders who have been calling on Mayer to concede that her turnaround plan has failed by putting the core Web businesses up for sale.

But some Yahoo shareholders said they were not impressed. Yahoo’s cost cutting plan “does not fully address the core issues which have destroyed shareholder value - poor capital allocation, bad strategic partnerships, out of control spending and a bloated workforce,” hedge fund firm SpringOwl said in an emailed statement.

“We are committed to continuing to push for moves that will fundamentally turn the company around and result in a higher stock price and value creation for all shareholders,” SpringOwl said.

Last month, hedge fund investor Starboard Value threatened a board battle unless “significant change” is made, including a new CEO and efforts to sell the company. Starboard — owners of 0.8% of Yahoo's outstanding shares — initially urged Yahoo to spin off its 15% Alibaba stake. But the value of that stake fell from $40 billion to about $25 billion and in November Starboard urged Yahoo to reconsider selling some of its core assets instead.

In advance of Tuesday's announcement, analysts' expectations of layoffs ranged from 10% to 25% of the company's nearly 11,000 estimated employees. With the company's board up for re-election this summer, there were expectations from Mayer and the board on Tuesday.

“The only thing to stop a proxy fight is if the board fires Mayer or announces it is exploring strategic alternatives,” said Eric Jackson, managing director of Yahoo shareholder SpringOwl. He also said Yahoo could stave off investor threats by announcing a partnership with a large strategic investor, like Verizon or Liberty Media.

"There's been a laundry list of people who have written letters to the board or spoken out publicly against (Mayer)," he said on CNBC Tuesday. "I think the reason why this company announced they were going to pursue strategic alternatives is because they realize they really don’t have a leg to stand on in terms of preventing someone from coming forward and launching a proxy fight by the end of March unless they do say this now."

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Chipotle Food-Safety Issues Drag Down Profits

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Chipotle Food-Safety Issues Drag Down Profits

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A Chipotle Mexican Grill in Washington, D.C. Chipotle hired a food-safety expert to overhaul its food safety practices.

The food safety scandal that has tarnished Chipotle Mexican Grill’s reputation also did significant damage to the company’s financial performance in recent months.

As had been announced earlier, sales in stores open at least a year, or same-store sales, sank 14.6 percent in the quarter that ended Dec. 31. Profits plunged 44 percent to $67.9 million, or $2.17 a share, compared with $121.2 million, or $3.91 in the same quarter last year, the company said Tuesday.

“The fourth quarter of 2015 was the most challenging period in Chipotle’s history,” Steve Ells, the company’s founder and co-chief executive, said in a news release.

The company also announced that federal authorities issued a broader subpoena last week that would expand a federal inquiry into its handling of food-borne illnesses at its stores after outbreaks in several states. “The new subpoena requires us to produce documents and information related to companywide food safety matters dating back to January 1, 2013, and supersedes the subpoena served in December 2015 that was limited to a single Chipotle restaurant in Simi Valley, California,” the company said in its statement.

Chipotle said it was cooperating with the investigation.

Since July, more than 500 people who have eaten in Chipotle restaurants from the Pacific Northwest to Boston have become ill. The majority of them, about 370, were infected with norovirus after eating at a restaurant in Simi Valley, Calif., and a restaurant in Boston.

More than 60 got sick from salmonella poisoning after eating at a Chipotle restaurant in Minnesota.

Most concerning were outbreaks involving two strains of E. coli, bacteria that can cause severe intestinal cramps, diarrhea and fever. The first, in October, sickened 53 people in multiple states, though the majority of victims were in Oregon and Washington. A separate E. coli strain was identified in November, after five people became sick in Kansas, North Dakota and Oklahoma within a week of eating at Chipotle.

The Centers for Disease Control and Prevention announced on Monday that it was closing its investigation into the E. coli contamination without identifying a culprit.

The federal investigation, however, continues into the norovirus outbreak at the Simi Valley restaurant, with the Justice Department and Food and Drug Administration considering a possible criminal case. Under the Food, Drug and Cosmetic Act, there is broad criminal liability for food “prepared, packed or held under insanitary conditions whereby it may have become contaminated with filth, or whereby it may have been rendered injurious to health.”

Chipotle hired the food safety specialist Mansour Samadpour, chief executive of IEH Laboratories and Consulting Group, who overhauled its food safety regime to a level that he has said brought the risk of contamination to “near zero.”

Lettuce is now being cleaned and cheese is being grated in a central location and packed in sealed containers, then shipped to individual restaurants. Onions, jalapeños and other vegetables are being blanched in boiling water, and raw meat is being handled differently, the company has said.

The company also instituted a paid sick leave policy, unusual in the fast-food business. On Monday, it plans to close all stores for a few hours to review the food safety changes it has made and discuss them with employees.

The company has become a lightning rod for its in-your-face advertising and marketing critical of commercial food operations and for its decision to end the use of ingredients from genetically engineered sources. (Drinks it sells may still contain genetically engineered ingredients, and its meat may come from animals fed genetically altered grains.)

The biotech lobby and its legion of social media activists have tried to pin the company’s problems with food-borne illnesses on its use of fresh, locally sourced ingredients, but food safety experts and federal officials dispute that contention, noting that many restaurants today make food from the same kind of ingredients.


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January auto sales weather winter storm; level with ’15

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January auto sales weather winter storm; level with ’15

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Winter storms across much of the central and eastern United States didn’t stop consumers from driving off dealer lots in new vehicles.

Car and truck sales in the United States last month were essentially level (down 0.5 percent) compared to January 2015 with 1.15 million vehicles sold, according to Autodata Corp. Industry analysts expected the industry to be down as much as 4.5 percent.

“The American market overcame a variety of headwinds, including a literal headwind in the form of a major East Coast blizzard, to post positive results in January, outperforming our expectations,” said Kelley Blue Book Jack R. Nerad, executive editorial director and executive market analyst

Officials are downplaying the stagnant growth. The sales pace made for one of the three strongest Januarys ever, which is typically the slowest sales month of the year.

The Detroit automakers beat expectations but reported mixed results: Fiat Chrysler Automobiles NV sales were up 6.9 percent to 155,037 cars and trucks; General Motors Co. were up 0.5 percent to 203,745; and Ford Motor Co. sales were down 2.8 percent to 173,723.

Nissan Motor Co., Hyundai Motor Corp., Mercedes-Benz AG and BMW AG all reported sales gains of less than 2 percent. Kia Motors Corp. was level, while most others were down less than 5 percent. Volkswagen AG continued to struggle, with sales crashing 8.9 percent in the wake of the company’s diesel emissions scandal and dependence on cars.Utility vehicles — pickups, crossovers and SUVs — led the industry for nearly all major automakers, while car sales declined. Truck sales, which include SUVs and some crossovers, totaled 681,812 in January, up 6.5 percent. That compares to car sales declining 8.2 percent to 486,254.

“The drivers of the ‘car’ market’s strength are the same as they have been: sport utilities and pickup trucks as well as commercial vehicles,” said Autotrader senior analyst Michelle Krebs. “Companies with portfolios heavy in those models did well in January.”

On the heels of Fiat Chrysler CEO Sergio Marchionne’s announcement it will discontinue U.S.-built Chrysler 200 and Dodge Dart sedans in coming years to focus on hot-selling pickups and SUVs, the automaker’s total car sales in January were down 24.4 percent, while truck sales increased 18.8 percent.

The Ford brand had its best start for SUVs since 2004 — totaling 50,212 sales last month, a 3 percent increase versus a year ago.

“For Ford, overall transaction prices were up $1,800 in January — almost three times more than the overall industry average — driven largely by strong customer demand, especially for our SUVs and F-Series pickups,” said Mark LaNeve, Ford vice president of U.S. Marketing, Sales and Service.

There were some bright spots for cars, as GM reported combined sales of Buick’s passenger cars were up 73 percent and Chevrolet retail car sales were up 25 percent.

GM sold 203,745 vehicles in January 2016, the company’s best January sales performance in eight years.

“GM began 2016 in very strong competitive position,” said Kurt McNeil, GM U.S. vice president of sales operations. “We built on that momentum in January, with Chevrolet, Buick and GMC outperforming the retail industry by a wide margin. In fact, Chevrolet continues to grow faster than any other full-line brand.”

Fiat Chrysler’s Jeep, Dodge and Ram Truck brands each posted year-over-year sales gains, with Dodge leading the pack with a 19.1 percent increase. Jeep posted a 14.6 percent increase, while Ram was up 5.2 percent. The Fiat and Chrysler brands were down 20.3 percent and 22.1 percent, respectively. Incremental sales of the subcompact Renegade pushed the Jeep brand to its best January sales ever and its 28th consecutive month of year-over-year sales gains.

“Mother Nature was no match for our Jeep brand last month as we recorded our best January Jeep sales ever,” said Reid Bigland, head of U.S. sales. “Overall, FCA US achieved its best January sales in nine years and our 70th-consecutive month of year-over-year sales increases.”

Analysts expected winter storms, including “Snow Storm Jonas” from Jan. 22-24, to put a chill on vehicle sales in January. Many anticipate the industry to be down slightly compared to a year ago. The estimated decline ranged from less than 1 percent to more than 3 percent compared to January 2015, depending on the analyst.

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A look at investigations into Flint’s lead-tainted water

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A look at investigations into Flint’s lead-tainted water

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Flint resident Sharon Moore, left, leaps up to shout out her support as she listens to pastor David Bullock during a town hall meeting packed with more than 500 people to discuss the ongoing Flint water crisis on Monday, Feb. 1, 2016 at First Trinity Missionary Baptist Church in Flint, Mich. Flint switched its water source from Detroit’s water system to the Flint River in 2014 to save money while under state financial management. The river water was not treated properly and lead from pipes leached into Flint homes. (Jake May/The Flint Journal - MLive.com via AP) (Associated Press)

By David Eggert | AP February 2 at 1:36 PM

The FBI is working with a multi-agency team to investigate the lead contamination of Flint’s drinking water, the U.S. Attorney’s office in Detroit said Tuesday.

Flint switched its water source from Detroit’s water system to the Flint River in 2014 to save money while under state financial management. The river water was not treated properly and lead from pipes leached into Flint homes.

Flint’s public works director, Michigan’s top environmental regulator, a state spokesman and a high-ranking federal regulator have resigned in connection with the crisis. Two other state environmental officials have been suspended pending an investigation.

A look at various investigations taking place:

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U.S. ENVIRONMENTAL PROTECTION AGENCY

The EPA announced in November an audit of how Michigan enforces drinking water rules, and plans to identify ways to possibly strengthen state oversight. The Justice Department has confirmed it is helping the EPA, where one high-ranking official has resigned, and said Tuesday that the FBI is working with a multi-agency team investigating the lead contamination. Officials have not said whether criminal or civil charges might follow.

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U.S. HOUSE OVERSIGHT COMMITTEE

The House Oversight Committee is scheduled to hold a hearing Wednesday on Capitol Hill looking into Flint’s water crisis and the EPA’s role in administering the Safe Drinking Water Act there.

Witnesses invited include Joel Beauvais, an acting EPA deputy assistant administrator; Miguel Del Toral, a researcher in the EPA’s Region 5 Water Division; Keith Creagh, Michigan Department of Environmental Quality interim director; Marc Edwards, professor of environmental and water resources engineering at Virginia Tech; and Darnell Earley, former state-appointed emergency manager of Flint, who has chosen not to testify.

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MICHIGAN ATTORNEY GENERAL

Michigan Attorney General Bill Schuette has appointed a special counsel to aid his office’s investigation into whether laws were broken regarding Flint’s lead-tainted water. It is unclear if the probe could result in criminal or civil charges.

Schuette announced the inquiry more than four months after Virginia Tech’s Edwards said the Flint River was leaching lead from pipes into people’s homes because the water was not treated for corrosion, after declining to investigate earlier. He said new information that came to light around New Year’s prompted him to open a probe.

Special counsel Todd Flood has mostly declined to detail which criminal or civil laws could be reviewed for potential violations, though he has cited prohibitions against misconduct by public officials.

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GOVERNOR’S TASK FORCE

An independent panel appointed by Gov. Rick Snyder determined that the Michigan Department of Environmental Quality was primarily responsible for the water contamination because it failed to require Flint to treat its water for corrosion after switching from Detroit’s system to the Flint River. A final report is expected early this year. The task force has recommended that the state ask the federal Centers for Disease Control and Prevention to help assess an outbreak of Legionnaires’ disease in Genesee County that some experts suspect is linked to the water. At least 87 cases, including nine deaths, were confirmed during a 17-month period.

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MICHIGAN AUDITOR GENERAL

The auditor said in a preliminary report that the DEQ should have required Flint to treat its water to keep lead from leaching from service lines into people’s homes but did not purposely mislead federal officials about the lack of corrosion control. State officials interpreted federal rules to mean Flint could make the transition and then test the new water for lead over two six-month intervals to determine potential corrosion treatment. In February 2015, a DEQ water supervisor told the EPA that Flint had a corrosion control program in place. But in April, an EPA official confirmed through another DEQ official that the city was not practicing corrosion treatment, according to emails. The EPA apparently interpreted the word “program” to mean treatment, while the DEQ meant it as testing to determine if corrosion controls would be needed in the future, according to the auditor.

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EPA OFFICE OF INSPECTOR GENERAL

The EPA’s internal watchdog has announced plans to examine the circumstances of, and the agency’s response to, the water contamination. The office plans to visit Michigan and the EPA’s regional headquarters in Chicago.

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MICHIGAN CIVIL RIGHTS COMMISSION

The commission will hold hearings to explore whether the civil rights of Flint residents were violated during the switch to the Flint River and subsequent contamination. A majority of Flint residents are black. The first hearing could be held this month.

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LAWSUITS

A lawsuit filed last week asks a federal judge to force Michigan and the city of Flint to replace all lead pipes in Flint’s water system to ensure residents have a safe drinking supply. The complaint says service lines from water mains into homes should be replaced at no cost to customers. The suit seeks an order requiring city and state officials to remedy alleged violations of the federal Safe Drinking Water Act. It is at least the fourth lawsuit filed over Flint’s lead-tainted water. The others seek financial damages on behalf of residents.

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The Latest: Ex-Flint emergency manger declining to testify

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The Latest: Ex-Flint emergency manger declining to testify

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This Sept. 21, 2012 file photo shows Saginaw City Manager Darnell Earley at a news conference in Saginaw, Mich. Earley, the state-appointed emergency manager for Detroit’s troubled school district, is leaving the job about 4½ months early, Gov. Rick Snyder announced Tuesday, Feb. 2, 2016. (Saginaw News, Jeff Schrier, File/Associated Press)

By Associated Press February 2 at 12:02 PM

FLINT, Mich. — The latest on the lead-contaminated drinking water crisis in Flint, Michigan (all times local):

11:50 a.m.

The former state-appointed emergency manager for Flint when its water source was switched in 2014 isn’t expected to testify at a U.S. House committee hearing on the city’s crisis with lead-tainted water.

Detroit Public Schools spokeswoman Michelle Zdrodowski tells The Associated Press in an email that Darnell Earley declined an invitation to testify Wednesday before the U.S. House Oversight and Government Reform Committee.

The confirmation came shortly after Michigan Gov. Rick Snyder announced Tuesday that Earley, who currently is the emergency manager for Detroit’s school district, is leaving the job about 4½ months early.

The AP left a message for Earley.

State regulators failed to require water from the Flint River be properly treated, allowing lead from pipes to leach into the supply and causing a public health emergency.

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8:20 a.m.

Federal prosecutors say the FBI is working with a multi-agency team investigating the lead contamination of Flint’s drinking water.

U.S. attorney’s spokeswoman Gina Balaya in Detroit told The Associated Press in an email Tuesday that her office also is working with the U.S. Postal Inspection Service and U.S. Environmental Protection Agency.

Word of the FBI’s involvement was first reported by the Detroit Free Press.

The U.S. attorney’s office in Detroit said in January it was investigating the water crisis with the EPA.

Officials haven’t said whether criminal or civil charges might follow.

Flint switched its water source from Detroit’s water system to the Flint River in 2014 to save money while under state financial management. The river water wasn’t treated properly and lead from pipes leached into Flint homes.
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How pharma bro Martin Shkreli described his own drug price hike: ‘Almost all of it is profit’

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How pharma bro Martin Shkreli described his own drug price hike: ‘Almost all of it is profit’

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Martin Shkreli , former chief executive officer of Turing Pharmaceuticals departed U.S. Federal Court in New York in December. (REUTERS/Lucas Jackson/Files)

In late May of last year, Turing Pharmaceuticals, then a little-known drug company, was nearing a deal to acquire Daraprim, a 62-year-old drug that fights a rare but severe parasitic infection.

"Very good. Nice work as usual," the company's young chief executive, Martin Shkreli, wrote to the chairman of the board. "$1 bn here we come."

In August, he wrote that hiking the price of the drug would bring in $375 million a year -- "almost all of it profit," which he predicted would continue for three years.

"Should be a very handsome investment for all of us," Shkreli wrote. "Let's all cross our fingers that the estimates are accurate."

By the end of that year, Shkreli would be a minor celebrity -- a "pharma bro" notorious for his unapologetic drug price increase, which cast an intense spotlight on how the pharmaceutical industry operates. Turing, the company that promptly jacked up the price of a single pill of Daraprim by more than $700 would be under Congressional investigation.

In the run-up to a Thursday hearing, Rep. Elijah E. Cummings (D-Md.), ranking member of the House Committee on Oversight and Government Reform, released two memos summarizing some of its key findings so far. The committee received more than 250,000 pages of documents turned over by Turing and more than 74,000 pages from Valeant Pharmaceuticals, a second company that appears to have built its business model around significant price increases of drugs that it did not invent.

[How an $84000 drug got its price: "Let's hold our position "]

The internal documents provided by Turing provide a window into the operations of the company, showing that the skyrocketing drug price was part of the plan from the beginning. The company anticipated that the drug's main audience -- the organized community of HIV patients whose weakened immune systems make them vulnerable to the infection -- could pose a problem because of their expert use of advocacy. But they thought this could be kept under control since in general in the U.S., no one pays the full list price of the drug. Although the company has emphasized that its patient assistance programs and discounts meant that no patients paid full price for the drug, the internal documents reveal that some patients did experience high co-pays, with at least one patient facing a $16,830 coinsurance payment and another with a $6,000 co-pay.

"We may need to make some updates based on co-pay amounts we've been seeing since the price change ... there are patients waiting now for product who have a $6,000 co-pay," Tina Ghorban, the director of business analytics and consumer insights at Turing wrote in an internal email in August.

But even as these wrinkles developed, the company continued to make significant revenue from the drug.

In mid-September, Ghorban wrote in an internal email that a single purchase had come through for 96 bottles of Daraprim. Previously, a bottle of the medicine cost $1,700 -- but the company had recently raised the price to $75,000. That single order nearly equaled the annual sales of the company Turing had bought the drug from, according too Ghorban.

"Another $7.2 million," Ghorban wrote. "Pow!"

Hospitals also began to contact the company to let it know that the price increase had made it difficult to obtain drugs. Massachusetts General Hospital in Boston complained to the company in early October that after spending a week trying to obtain Daraprim for an uninsured patient, they had not had succcess and had received inaccurate information from the team.

"I think we are acting a little like a deer in the headlights, and need to take some action steps now," Ed Painter, the head of investor relations wrote in an e-mail. "If a hospital like Mass General is having issues, we are in trouble."

Shkreli constantly stressed that the company was giving away the drug, for example saying that the price to Medicaid was very low: "90%+ off the list price," he wrote on Twitter.

In internal communications, that compassionate tone shifted. When Shkreli was told that Medcaid represented 23 percent of the drug it was selling to Walgreens, he responded: "Nice, so only 23 percent of drug is being given away?"

As media attention continued to focus on the company, its leaders debated strategy: a commitment to reducing the price by X percent per year, in part to discourage generic competitors from coming online.

"I don't think so," Patrick Crutcher, director of business development at Turing, responded. "Think it's best we don't PR [press release] a something like that unless it's something we're willing to commit to doing."

[The drug industry wants us to think Martin Shkreli is a rogue CEO. He isn’t.]

An outside consultant brought in during October suggested that Shkreli step down as chief executive and a significant price decrease occur.

"This will force reporters to focus on the byzantine nature of drug pricing and health care and ensure the patient message gets out," the consultant wrote.

Instead, Shkreli stayed and the price did not budge.

It was not until Shkreli was charged with securities fraud charges for his actions at previous companies, unrelated to the drug prices hikes, that Shkreli stepped down as chief executive.

“These new documents provide a rare, inside look at the motivations and tactics of drug company executives,” Cummings said in a statement.  “They confirm what Americans across the country have experienced firsthand for years—that many drug companies are lining their pockets at the expense of some of the most vulnerable families in our nation.  The documents show that these tactics are not limited to a few ‘bad apples,’ but are prominent throughout the industry.”

The hearing will be a strange line-up. The chief executive of Valeant Pharmaceuticals, one of the companies that has drawn scrutiny for raising drug prices, has been out on medical leave since December, after being hospitalized with severe pneumonia. So Howard Schiller, the interim chief executive, will attend in his stead.

The star of the hearing is inarguably Martin Shkreli, the former chief executive of Turing Pharmaceuticals who stepped down from leading the company after he was charged with securities fraud in December. The company's current chief commercial officer, Nancy Retzlaff, will be there, but Shkreli, who has become a celebrity of sorts for his carefully cultivated social media personality is the one people will be interested in -- although his presence may be disappointing, since he has vowed to take the Fifth Amendment.

Shkreli has a garrulous social media stream and never seemed to shy away from saying what he thinks before, but if there's one thing the last few months have revealed about him, it's that he loves surprising people.

"They can ask me any question,"  Shkreli told Bloomberg News.  "‘What color is the sky?’ 'Fifth Amendment.'"

Carolyn Johnson is a reporter covering the business of health. She previously wrote about science at The Boston Globe.

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Lumber Liquidators to pay $10 million in timber-sourcing case

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Lumber Liquidators to pay $10 million in timber-sourcing case

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Specialist Anthony Rinaldi works on the trading floor of the New York Stock Exchange, adjacent to the post that handles Lumber Liquidators, Feb. 1, 2016. (Richard Drew/AP)

By Andrew Harris and Peter Galuszka February 1 at 7:31 PM

Lumber Liquidators must pay $10 million in fines and penalties for telling U.S. officials that timber for its wood flooring came from Germany rather than the actual source — the habitats of endangered Siberian tigers in southeast Asia.Shares of Lumber Liquidators jumped as much as 17 percent on the news, and trading volatility briefly triggering market circuit breakers.

U.S. District Judge Raymond Jackson in Norfolk on Monday accepted a plea agreement that the company reached last year with federal prosecutors. The deal also calls for five years’ probation and the appointment of an outside auditor.

Jackson warned of the consequences that would follow if the company fails to abide by its terms. “Lumber Liquidators will cease the importation of hardwood if they do not follow the plan,” the judge said.

After the hearing, company representatives left the court without speaking to reporters. In a statement, the company said, “Lumber Liquidators is pleased to put this legacy issue behind us.”

The Toano, Va.-based business pleaded guilty in October to five charges, conceding that some of its timber came from the east Asian habitat of endangered Siberian tigers and not from Germany as indicated on import paperwork. It agreed at the time to pay $13.2 million in sanctions, including forfeitures, the biggest fine ever imposed under the Lacey Act, which criminalizes the importation to the U.S. of timber taken in violation of another country’s laws.

Although that admission of wrongdoing ended a two-year federal probe, it left untouched dozens of federal lawsuits pending in Alexandria, Va., contending the company’s Chinese-made laminate flooring contained excessive levels of formaldehyde. Those allegations were sparked by a “60 Minutes” investigative news report aired in March.

The timber-sourcing problem also originated in China, where many of the company’s suppliers are located. Lumber purchased by the retailer was actually harvested in far eastern Russia and Burma, according to court papers filed by federal prosecutors on Oct. 7.

Lumber Liquidators was charged with making false statements — a felony — and four lesser offenses. The company has said it fully cooperated in the investigation and has since enhanced its sourcing and compliance practices.

The tigers hunt deer and wild boar that feed on Mongolian oak acorns. There are only about 450 of the great cats in existence, according to National Geographic. Amur leopards, which also hunt the east Asian forests, are also endangered, according to the World Wildlife Fund’s website.

As part of its agreement, Lumber Liquidators will pay the federally chartered National Fish and Wildlife Foundation $880,825. Another $380,825 will be dedicated to conservation of Amur leopards and their habitat. An additional $350,000 will be paid to the U.S. Fish and Wildlife Service’s Rhinoceros and Tiger Conservation Fund for the protection of wild tigers and their habitats.

 

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