Business Week in Review: Anticipating 2021 boom, Q4 GDP revised to 4.1%

A shopper in a face mask looks over cuts of beef piled up in a cold room for purchase at a Costco warehouse store Tuesday, May 5, 2020, in west Denver.  The U.S. economy rebounded at an even-stronger pace in the July-September quarter than first reported but a resurgence in the coronavirus is expected to slow growth sharply in the current quarter with some analysts even raising the specter of a double-dip recession.  (AP Photo/David Zalubowski)
A shopper in a face mask looks over cuts of beef piled up in a cold room for purchase at a Costco warehouse store Tuesday, May 5, 2020, in west Denver. The U.S. economy rebounded at an even-stronger pace in the July-September quarter than first reported but a resurgence in the coronavirus is expected to slow growth sharply in the current quarter with some analysts even raising the specter of a double-dip recession. (AP Photo/David Zalubowski)

Credit: David Zalubowski

Credit: David Zalubowski

The economy grew at a 4.1% pace in the final three months of 2020, slightly faster than first estimated, ending a year in which the overall economy, ravaged by a global pandemic, shrank more than in any year in the past seven decades.

The 4.1% gain in the gross domestic product — the broadest measure of economic health — is a slight upward revision from 4% growth in the first estimate released a month ago, the Commerce Department reported Thursday.

The revision does alter the nation’s annual GDP which shrank 3.5%, the largest decline since 1946 when the U.S. demobilized after World War II. MARTIN CRUTSINGER, ASSOCIATED PRESS

RETAIL

Specialized mini Apple stores to open in Target

Apple mini stores will open in select Target locations and online this month, expanding the number of iPhones and other products available.

The Monticello, Minn., store will be one of the first with the concept. The mini stores will expand to locations throughout 2021, Target said Thursday.

CATHERINE ROBERTS, STAR TRIBUNE

JOBS

Best Buy cut 5,000 jobs even as sales soared

Best Buy said Thursday that it laid off 5,000 full-time store workers earlier this month, even as the company’s sales soared during the pandemic as homebound people bought laptops, TVs and other gadgets.

Best Buy said it cut the jobs because more shoppers are choosing to buy online instead of coming inside its stores. Best Buy said it will replace the full-time employees with 2,000 part-time workers.

Best Buy has more than 100,000 workers, down by 21,000, or 17%, from the year before.

JOSEPH PISANI, ASSOCIATED PRESS

BRANDING

Mr. Potato Head goes gender neutral

Mr. Potato Head is no longer a mister.

Hasbro, the company that makes the potato-shaped plastic toy, is giving the spud a gender neutral new name: Potato Head. The change will appear on boxes this year.

JOSEPH PISANI, ASSOCIATED PRESS

FAST FOOD

U.S. pizza sales

start to slow

Domino’s and Papa John’s pizza chains both said Thursday that their same-store sales lost steam in the fourth quarter compared to the huge increases they saw earlier in 2020. Same-store sales are expected to continue seeing percentage declines well into this year.

Pizza delivery remains popular, but diners’ choices are expanding, with more restaurants offering delivery. In a survey of 3,500 U.S. restaurant operators last fall, the National Restaurant Association found that 27% had added delivery from a third party like DoorDash, while 17% had added in-house delivery. Pizza could also be pressured as the pandemic eases and dining rooms reopen.

DEE-ANN DURBIN, ASSOCIATED PRESS

ECONOMY

Powell: Fed in no hurry

to raise interest rates

Federal Reserve Chairman Jerome Powell told Congress on Wednesday that the central bank will not start raising interest rates until it believes its goals on maximum employment and inflation have been reached.

Powell also warned that many who had worked in industries hardest hit by the pandemic and ensuing recession will likely need to find different jobs.

As he did before the Senate Banking Committee on Tuesday, Powell told the House Financial Services Committee that the Fed is in no hurry to raise its benchmark short-term interest rates or to begin trimming its $120 billion in monthly bond payments used to put downward pressure on longer-term rates.

Powell said the Fed does not see any indication inflation could race out of control. While price increases might accelerate in coming months, Powell said those increases are expected to be temporary and not a sign of long-run inflation threats.

CORPORATE EARNINGS

Lowe’s 4Q results surge amid home investments

Lowe’s Cos. extended its strong sales streak through the holiday season as customers kept investing in their homes during the pandemic.

The nation’s second largest home improvement retailer behind Home Depot reported that fourth-quarter profits almost doubled from a year ago, while sales rose 27%. Both results surpassed Wall Street expectations. Sales at stores opened at least a year soared nearly 29%, following a 30.4% increase in the fiscal third quarter.

The strong showing, announced Wednesday, followed results from Home Depot, which reported Tuesday that fourth-quarter sales surged 25%. Global sales at Home Depot stores open at least a year, a key indicator of a retailer’s health, climbed 24.5%, and by 25% if only U.S. stores are counted.

Home improvement stores have become hot destinations during the pandemic with millions working from home and attending school remotely. Many Americans have found the time to update or change their homes to add home offices and other elements.

The home improvement retailer posted revenue of $20.31 billion in the period, compared with $16.03 billion in the year-earlier quarter. Eight analysts surveyed by Zacks expected $19.54 billion.

CORPORATE LEADERSHIP

GameStop CFO Jim Bell announces resignation

GameStop chief financial officer Jim Bell will resign from his position effective March 26, according to a release from the video game retailer.

GameStop has begun a search for Bell’s replacement, and said that it would appoint chief accounting officer Diana Jajeh as interim CFO if it was unable to find a permanent candidate for the role by Bell’s resignation date.

The company did not provide a reason for Bell’s resignation.

Bell’s resignation comes after day traders organizing on Reddit led a surge in GameStop’s stock price from $20 a share to $483 over a two-week period in January.

GameStop has attracted the attention of activist investors and its leadership has also seen a number of shake-ups in recent years. Between 2017-2019 the company had seen four different CEOs as GameStop talked about transforming the company into one that could thrive in a world where more video games are being sold digitally than ever before.

DOM DIFURIO

THE DALLAS MORNING NEWS

HOME PRICES

Home prices jump at fastest pace since 2014

Home prices in 20 U.S. cities surged in December, with low mortgage rates fueling the housing market.

The S&P CoreLogic Case-Shiller index of property values climbed 10.1% from a year earlier, beating the median estimate of 9.9% in a Bloomberg survey of economists. It followed a 9.2% gain in November and was the biggest jump since 2014.

Phoenix, San Diego and Seattle posted the biggest gains in prices, according to a press release on Tuesday. Nationally, the Case-Shiller index jumped 10.4% in December, also the biggest surge since 2014.

Historically low mortgage rates have fueled a pandemic housing rally, with a scant inventory of homes to buy helping to boost prices.

CRAIG GIAMMONA, BLOOMBERG NEWS

CONSUMER SPENDING

Consumer confidence up in 2nd straight month

U.S. consumer confidence rose again in February as an accelerating COVID-19 vaccine push provides hope for Americans who have lived through a year of unprecedented restrictions.

The Conference Board reported Tuesday that its consumer confidence index rose to 91.3, up from 88.9 in January.

However, despite the improved vaccination rollout, consumers are more optimistic about current conditions than they are about the near future. The present situation index, which is based on consumers’ assessment of current business and labor market conditions, rose to 92 from 85.5 last month.

But the expectations index — based on consumers’ near-term outlook for income, business, and labor conditions — ticked down slightly to 90.8 this month from 91.2 in January. That’s somewhat surprising to economists as many experts have predicted that widespread vaccinations and warmer weather could make for a summer of relative normalcy.

MATT OTT, ASSOCIATED PRESS

RETAIL

Kohl’s pushes back on group’s takeover efforts

Kohl’s is fighting back against an investor group’s efforts to take control of the department store chain’s board, arguing that it would derail its progress and momentum.

The response comes after the investor group said it had nominated nine members for Kohl’s board of directors as it looks to boost the company’s stock and its financial performance. The group owns a 9.5% stake in Kohl’s.

The investor group is made up of Macellum Advisors, Ancora Holdings, Legion Partners Asset Management and 4010 Capital. They said Kohl’s hasn’t kept up with the fast-changing retail landscape and needs to cut its inventory, fix its store label assortment, cut expenses and improve its app and website among other things.

Kohl’s said its management team and board have been in discussion with the investor group since early December and it remains open to new ideas that will improve its performance. However, it said attempts to seize control of the board would “disrupt” its momentum.

ANNE D’INNOCENZIO, ASSOCIATED PRESS

TECHNOLOGY

Microsoft, EU publishers seek news payments

Microsoft is teaming up with European publishers to push for a system to make big tech platforms pay for news, raising the stakes in the brewing battle led by Australia to get Google and Facebook to pay for journalism.

The Seattle tech giant and four big European Union news industry groups unveiled their plan Monday to work together on a solution to “mandate payments” for use of news content from online “gatekeepers with dominant market power.”

They said they will “take inspiration” from proposed legislation in Australia to force tech platforms to share revenue with news companies and which includes an arbitration system to resolve disputes over a fair price for news.

KELVIN CHAN, ASSOCIATED PRESS

SPIRITS

Moet Hennessy get 50% stake in Jay-Z’s brand

Moet Hennessy is acquiring a 50% stake in rapper and entrepreneur Jay-Z’s Champagne brand in an effort to up its cool factor and expand distribution.

Armand de Brignac, known as Ace of Spades because of its distinctive label, is produced in France’s Champagne region by a father and son who are 12th and 13th generation wine growers.

Jay-Z, whose real name is Shawn Carter, gave the brand a boost in 2006 when he featured one of their bottles in a music video after a public fallout with Cristal, a rival brand. Carter accused Cristal of racism after an executive for the brand mused in an interview about whether partnering with a rapper would harm its image.

DEE-ANN DURBIN, ASSOCIATED PRESS

COURTS

Judge says railroad talks should be in lawsuits

A federal judge has ruled that the details of conversations between the nation’s four largest railroads should be included in lawsuits challenging billions of dollars of charges the railroads imposed in the past.

The ruling Friday undercuts one of the defenses Union Pacific, BNSF, CSX and Norfolk Southern had offered in dozens of lawsuits major companies filed last year questioning the way railroads set rates. The lawsuits say the railroads conspired to boost prices starting in 2003 by imposing coordinated fuel surcharges and pocketing billions in profits.

JOSH FUNK ASSOCIATED PRESS

FISHING INDUSTRY

Rules to save right whale loom over lobster fishers

America’s lobster fishery is getting close to the date when it will have to contend with new rules designed to try to save a species of whale from extinction.

The North Atlantic right whale numbers only about 360, and scientists have said the animal’s small population of breeding females could spell doom for the species. The National Marine Fisheries Service is developing new rules to reduce the possibility of entanglement in fishing gear, which can kill the whales.

A court decision required the fisheries service to finalize the rules by May 31. The agency is on track to produce the final rules on time, said Jennifer Goebel, a spokesperson.

PATRICK WHITTLE, ASSOCIATED PRESS

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