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Nasty winter blamed for TJX Cos. net income drop

Written By Unknown on Kamis, 27 Februari 2014 | 20.26

The harsh winter weather plaguing retailers has even proved to be a speed bump for high-flying, off-price darling TJX Cos. Inc.

The Framingham owner of T.J. Maxx, Marshalls and HomeGoods posted fourth-quarter earnings that missed Wall Street estimates and reported markdown-induced lower merchandise margins for the first time in 10 quarters.

"It's not a huge deal at this point," Sterne Agee analyst Ike Boruchow said. But, he added: "For the company to disappoint on earnings and then guide (the first quarter) and next year below the Street, it's not a good thing when your stock is trading at a hefty premium.

TJX shares dropped 
1.15 percent yesterday to $60.29.

The company's net income fell 3.7 percent to $582 million for the period ending Feb. 1, or 81 cents per share. Analysts expected 82 cents per share. Sales rose 1 percent to $7.8 billion.

A very promotional retail environment forced TJX to get aggressive on pricing and make markdowns in January after a slower holiday period to clear inventory ahead of the new season, Boruchow said.

But Wall Street is giving retailers a "pass" right now in terms of missed earnings because of inclement weather, said analyst Ken Perkins of Retail Metrics.

"It's been so severe and so disruptive for so many retailers and particularly for TJX," he said. "They have a very strong presence in the Northeast, mid-Atlantic and Midwest."

But there is concern that TJX and competitor Ross Stores Inc. will have more difficulty buying merchandise this year because other retailers are ordering more cautiously, and manufacturers won't have excess product on hand for them to pick up, Perkins said.


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The Ticker

SkillWorks gets $150,000 grant

SkillWorks, a multiyear initiative to improve workforce development in Boston and in Massachusetts, has been awarded a new $150,000 Social Innovation Fund grant by the National Fund for Workforce Solutions. SkillWorks brings together philanthropy, government, community organizations and employers to help low-income individuals attain family-supporting jobs and help businesses find skilled workers.

U.S. home sales rebound in Jan.

Sales of new U.S. homes rebounded in January to the fastest rate in more than five years. The strength in purchases followed a slowdown that had been linked to higher mortgage rates and severe winter weather.

The sales gain for new homes in January was led by a 74 percent surge in the Northeast. Sales were up 11 percent in the West and 10 percent in the South. The only region where sales declined was the Midwest, where they fell 17 percent. 


TODAY

 Labor Department releases weekly jobless claims.

 Commerce Department releases durable goods for January.

 Freddie Mac releases weekly mortgage rates.

THE SHUFFLE

Appel Insurance Advisors has added 40-year veteran lawyer Joseph H. Newberg to its "People InsuranceTM" business to increase the team's partnerships with legal and financial experts to benefit business and estate planning clients. Newberg recently retired as a tax partner at Weil, Gotshal & Manges LLP in Boston.


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City may landmark markets

The historical significance of Faneuil Hall Marketplace's North Market and South Market buildings could impact redevelopment plans for the center.

The Boston Landmarks Commission has listed both buildings, which flank the domed Quincy Market, as priorities for reports on whether they're worthy of historic landmark status.

The municipal preservation agency received three petitions in the late 1970s to declare all three buildings historic landmarks. It moved only on Quincy Market — the "most important" of the three — designating it a landmark for its exterior and portions of it interior, including the first-floor main hall and rotunda, according to executive director Ellen Lipsey.

"This is kind of recognizing that they're an ensemble," she said of the decision to possibly study the North Market and South Market buildings this year.

Such designations affect proposed changes to buildings, plans for which are subject to the commission's review.

In the case of the North Market and South Market buildings, a landmark designation likely would apply to their exteriors, according to Lipsey.

The commission's decision to possibly move on petitions received decades earlier comes as Ashkenazy Acquisition Corp. — which leases and manages Faneuil Hall Marketplace — prepares to present a master plan for its redevelopment.

Quincy Market's landmark status came into play for the New York real estate investment firm when it recently floated plans to add a pair of two-story tenant additions encased in glass "sheds" and two escalators.

After an advisory design review, the commission expressed concern that escalators and proposed first-floor walls would disrupt the building's traditional east-west flow.

"Maintaining that historical public realm was cited as being an important part of the building," its letter to Ashkenazy stated.

The commission also suggested that general second-floor access, closer to the rotunda, would provide greater public benefit and could be served just as well by stairs, pointing to concerns that "individual tenants were driving the changes to an important landmark."

Ashkenazy could not be reached for comment.

The Boston Redevelopment Authority said it's working with the company and commission to "activate the marketplace" to make it more attractive to locals while "maintaining (its) historic qualities."


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US safety agency to probe GM recall response

DETROIT — The U.S. government's auto safety watchdog is investigating whether General Motors acted quickly enough to recall 1.6 million older-model small cars in a case linked to 13 deaths.

The National Highway Traffic Safety Administration said Wednesday night that it opened the probe "to determine whether GM properly followed the legal processes and requirements for reporting recalls."

The agency has the authority to fine GM as much as $35 million under legislation that went into effect late last year. The previous maximum fine automakers faced per incident was $17.35 million. Automakers must report evidence of safety defects within five days of discovering it.

On Tuesday, GM doubled the number of cars in the recall for faulty ignition switches. The problem has been linked to 31 front-end crashes that caused the 13 deaths. The company also issued a rare apology, saying its process to examine the problem was not robust enough when it surfaced about a decade ago.

A chronology of events filed Monday with NHTSA by GM show it knew of the problem as early as 2004.

Since undergoing a painful bankruptcy in 2009, GM has removed layers of bureaucracy, improved the quality of its vehicles and is quicker to issue recalls when problems occur. However, the admission that its procedures were lacking 10 years ago shows how the old culture can still haunt the automaker.

"The chronology shows that the process employed to examine this phenomenon was not as robust as it should have been," GM North America President Alan Batey said in a statement Tuesday. "Today's GM is committed to doing business differently and better."

On Feb. 13, GM announced the recall of more than 780,000 Chevrolet Cobalts and Pontiac G5s (model years 2005-2007). Then on Tuesday, it doubled up, adding 842,000 Saturn Ion compacts (2003-2007), and Chevrolet HHR SUVs, Pontiac Solstice and Saturn Sky sports cars (2006-2007). Most of the cars were sold in the U.S., Mexico and Canada.

GM says a heavy key ring or jarring from rough roads can cause the ignition switch to move out of the run position and shut off the engine and electrical power. That can knock out power-assisted brakes and steering and disable the front air bags. In the fatalities, the air bags did not inflate, but the engines did not shut off in all cases, GM said.

It was unclear whether the ignition switches caused the crashes, or whether people died because the air bags didn't inflate.

Margie Beskau, of Woodville, Wis., whose teenage daughter, Amy Rademaker, died in an October, 2006, crash involving a Chevy Cobalt, said she was relieved that GM agreed to the recall. The move finally gave her family answers about what happened in the crash that killed Rademaker, 15, and her friend, Natasha Weigel, 18.

"I feel like we're getting justice for Amy and Tasha because GM had to step forward and let people know what happened," she said. "That was huge."

According GM's chronology, the company knew of the problem as early as 2004, and was told of at least one fatal crash in March of 2007. GM issued service bulletins in 2005 and 2006 telling dealers how to fix the problem with a key insert, and advising them to warn customers about overloading their key chains. The company's records showed that only 474 vehicle owners got the key inserts.

GM thought the service bulletin was sufficient because the car's steering and brakes were operable even after the engines lost power, according to the chronology.

By the end of 2007, GM knew of 10 cases in which Cobalts were in front-end crashes where the air bags didn't inflate, the chronology said. GM's chronology also shows that NHTSA knew about the problem and a fatal accident in March of 2007. In its investigation, NHTSA likely will try to find out if GM withheld information or was slow to produce it.

In 2005, GM initially approved an engineer's plan to redesign the ignition switch, but the change was "later canceled," according to the chronology.

GM spokesman Alan Adler said that initially the rate of problems per 1,000 vehicles was too low to warrant a recall.

GM has hired an outside law firm to find out what went wrong in the ignition recall. But Adler wouldn't say whether the firm will look into other safety problems that occurred around the same time. "We are focused on this case," he said.

GM also said Wednesday that it will send letters to all 1.6 million owners globally starting March 10 telling them to use only the key in the ignition until repairs are made. Another letter will go out in April telling people they can take their cars in for repairs.

If General Motors Co. is fined, it will be the third automaker to face significant penalties for being slow to report safety problems. From 2010 through 2012, Toyota Motor Corp. paid a series of fines totaling more than $66 million for delays in reporting unintended acceleration problems. Ford Motor Co. last year paid $17.35 million for being too slow to report sticky gas pedals in some Escape SUVs.

____

AP Reporter Amy Forliti contributed to this report from Hammond, Wis.


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Escalating tensions in Ukraine roil global markets

LONDON — An escalation in tensions in the Ukrainian region of Crimea roiled global markets on Thursday.

As reports emerged that dozens of heavily armed pro-Russia gunmen have seized control of local government buildings in Crimea, stocks in Europe — and not just in Moscow and Kiev — took a pounding while the dollar and gold advanced. Investors are worried that the tensions in the strategically important peninsula may take the Ukrainian crisis into a new, more dangerous phase.

While Russia has raised questions over the legitimacy of the new Ukrainian authorities after President Viktor Yanukovych fled Kiev last week and has initiated surprise military drills, Ukraine has put its domestic security forces on high alert and urged Russian forces not to leave their base in southern Crimea.

Over the past couple of weeks, investors monitored developments in Ukraine with a degree of nonchalance. Now they are worrying that Russia may be drawn in. Geopolitical worries tend to prompt investors to search out the sanctuary of safe haven assets such as gold and the dollar.

"The perceived risk of military intervention by Russia has heightened," said Lee Hardman, an analyst at Bank of Tokyo-Mitsubishi UFJ.

In Europe, the main stock indexes, which had started the session flat, were trading sharply lower. Germany's DAX was down 1.5 percent at 9,518, while Britain's FTSE 100 fell 0.6 percent at 6,758. The CAC-40 in France was 0.7 percent lower at 4,368.

Unsurprisingly, markets in Ukraine and Russia were feeling the heat. Russia's RTS stock index was down 2.1 percent while the Ukrainian currency, the hryvnia, briefly touched another record low against the dollar, at 11.25 per dollar

"The Ukrainian hryvnia is off another 10 percent today, as the country is in desperate need of an aid package," said Benjamin Reitzes, an analyst at BMO Capital Markets.

Wall Street was poised for a lower opening, too, with both Dow futures and the broader S&P futures down 0.3 percent.

In other markets, the price of an ounce of gold has risen 0.3 percent to $1,333 while the euro has fallen 0.2 percent to $1.3658.

While keeping an eye on developments in Ukraine, investors will also be monitoring comments later from the Federal Reserve chair Janet Yellen to the Senate's Banking Committee. Stocks jumped on Feb. 11 when Yellen reassured Congress over the central bank's market-friendly, low-interest rate policies.

Earlier in Asia, shares were mixed with most of the news reports over Crimea coming after the close.

Hong Kong's Hang Seng gained 1.7 percent to 22,828.18 and Seoul's Kospi added 0.4 percent to 1,978.43. Markets in Southeast Asia were also mostly higher and China's Shanghai Composite added 0.3 percent to 2,047.35. Japan's Nikkei 225 stock index edged 0.3 percent lower to 14,923.11.


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Bitcoin crash may hurt Hub biz prospects

Written By Unknown on Rabu, 26 Februari 2014 | 20.25

The crash of one of the largest Bitcoin exchanges this week has sent Boston Bitcoin entrepreneurs scrambling to defend the digital currency's reputation and increase its stability.

Mt. Gox, a Tokyo-based Bitcoin exchange, halted trading this week and went offline, and a document reportedly leaked from the exchange said $365 million in bitcoins are missing. Bitcoin, an online currency that is not backed by a central authority, has gained momentum in recent months. Overstock.com and the Sacramento Kings both began accepting the digital currency recently.

The price of one Bitcoin on Mt. Gox fell from $330 on Sunday evening to $131.71 when transactions were halted. The average price of one Bitcoin across all exchanges has fallen by nearly $100 since the weekend to about $500.

"Despite the promise of digital currency, and Bitcoin in particular, we cannot ask consumers to foot the bill while the technology and the industry endures inevitable growing pains," said Jeremy Allaire, founder and CEO of Circle, a Boston startup building a payment system for Bitcoin.

Alex Peterson, CEO and co-founder of Vis Nova Ventures, said there will be fallout that will hamper Bitcoin's acceptance for consumers.

"It's a PR issue," he said. "Right now it's going to hurt what we're doing."

Vis Nova plans to install a Bitcoin ATM in Cambridge in the coming weeks.

Chris Yim, co-founder of Liberty Teller, a Bitcoin ATM company, said about 20 percent of customers asked about the Mt. Gox news at Liberty Teller's ATM in South Station.

"People are already interested in Bitcoin," Yim said. "We can help correct their perceptions of it."


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Biotech co. pushes FDA to OK drug for pregnancy disorder

A Framingham biotech firm is moving to expand the use of its blood clot treatment to become the first drug specifically for the pregnancy disorder preeclampsia.

REVO Biologics Inc. yesterday asked the U.S. Food and Drug Administration for approval to test its therapy, ATryn, in women with preeclampsia who are 24 to 28 weeks pregnant. The drug was approved in 2009 to treat serious blood clots in pregnant women.

REVO, a subsidiary of the European company LFB Group, believes the drug can prolong pregnancy in women with early preterm preeclampsia and postpone when they deliver their babies.

"There is currently no treatment for preeclampsia," said Tom Langford, a spokesman for rEVO. "The only thing doctors can do is to deliver the baby — which often results in severely premature births. The alternate is to try to keep the baby in vitro for as long as possible. But each day of waiting increases the danger to the mom's life."

Preeclampsia is a sudden spike in blood pressure that can be life-threatening. It affects 5 percent to 8 percent of all pregnancies, according to the Preeclampsia Foundation.

The condition is more common in developing countries than in the United States, but rEVO's target market for its drug is domestic, Langford said.

The FDA has 30 days to respond to rEVO's request. The company is seeking 120 women for its trial, which will continue throughout 2015.

The drug, which is derived from the milk of genetically engineered goats, will be given intravenously.


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Parking woes dog Logan

After a record number of passengers flew out of Logan International Airport last year, the airport has become a victim of its own success, struggling to find parking spaces for travelers' cars with little relief in sight.

Yesterday, the Massachusetts Port Authority diverted at least 1,500 cars to Suffolk Downs after Logan's 16,200 parking spots filled up, offering passengers free parking and shuttle service to Logan.

"We're out of options," Massport Director of Aviation Ed Freni said. "We are paying for the transportation back and forth. It's a considerable amount of money."

The diversions came after Massport used valets to cram about 2,000 cars into any available space at Logan, but no more cars could be squeezed in yesterday. The agency turned to the valet service during 40 weeks last year, Freni said.

Freni said back-to-back school vacation weeks in Massachusetts and New Hampshire brought about yesterday's crisis, but he said there is simply not enough parking for the rising number of passengers.

Use of the overflow lots is expected to continue during high- volume periods, such as the upcoming April vacation week, he said.

Part of the problem, Freni said, is travelers have not been willing to take alternate modes of transportation. Two weeks ago, Massport announced a discount for its Logan Express parking lots, and in 2012 it made Silver Line access free from Logan to South Station.

"People still continue to want to park close to the terminals," Freni said.

Last year, Logan saw more than 30 million passengers, and Freni said they could "possibly break 31 million in 2014."

"It's been progressing over the years," he said.

The increase in passengers is largely due to more international travelers. New flights to Tokyo and Panama City have driven up the number of international passengers, and more flights are coming soon. In March, Emirates Air will begin service, and Turkish Airlines will begin flying here in May. Within 10 years, Logan could be handling 40 million passengers a year, Freni said.

Massport spokesman Matthew Brelis said cars may be diverted to overflow lots at Suffolk Downs again today. Yesterday, officials said cars would be diverted until 4 p.m., but it continued until 6 p.m.

Massport is developing a "strategic plan" to help with the overflow, including adding 2,000 new spots to eliminate the valet parking. The plan is still in its initial phase, Freni said.


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Broke church gets court̢۪s blessing

Dorchester's Greater Love Tabernacle Church won bankruptcy court approval yesterday for a fundraising campaign to help refinance its mortgage.

Donations raised will be protected from the church's creditors, including its Texas mortgage holder, VFC Partners 18 LLC. They'll be held in escrow and must be returned to donors if the church fails to refinance or restructure its approximately $700,000 loan.

Greater Love, which held a January interfaith service to raise community awareness about its troubles, already has raised nearly $61,000, according to its pro bono attorney, John Morrier. It has not set a fundraising goal, he said.

"My heart was overwhelmed when I saw the amount of support and people that came to our interfaith service," Pastor William E. Dickerson II said. "It's refreshing to know the work and labor of this church has not gone in vain."

Another fundraiser/service is set for March 30, and Dickerson said he's confident the financial issues will be resolved.

The 24-year-old church filed for bankruptcy protection in December with about $803,000 in debt after being threatened with foreclosure. It fell into financial trouble after signing a 2010 lease for a nearby site on which it hoped to build a community center. But the church was unable to raise needed funds for the project, and the monthly lease payments — which ran as high as $4,800 — caused it to fall behind on mortgage payments for the church, court documents state.

Phoenix Management Services is working pro bono to stabilize the church's financial management, Morrier said. The lease for the undeveloped land expired at the beginning of the year, and is "no longer an issue," he said.


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Airbus posts higher 2013 profit

TOULOUSE, France — European jetmaker Airbus Group said Wednesday record demand for its civilian jetliners from airlines around the world drove higher sales and profits last year.

The Boeing Co. rival, known until this year as EADS, said net profit rose 22 percent to 1.47 billion euros ($2 billion) in 2013, up from 1.2 billion euros the previous year.

The company, which competes with Boeing in the multi-billion-dollar market for large civilian aircraft, forecast jet deliveries to remain at about the same level this year as last year when it sold 626 aircraft.

"We're not planning new adventures in 2014, the focus is on execution, execution, execution," Chief Executive Tom Enders said at a press conference.

Enders said that while Airbus will "take a little break" this year in terms of production, after 11 straight years of growth, he predicted orders will remain higher than deliveries. Last year Airbus took in a record 1,619 new orders.

In a statement, Airbus also announced plans to ramp up production of its single-aisle jets to 46 a month by 2016, from 42 now.

The A320 single aisle family of jets competes with Boeing's 737, and has seen high demand in recent years alongside exceptional growth in the air travel market in developing countries in Asia and the Middle East.

Airbus' earnings came in below the 1.97 billion-euro consensus forecast of analysts surveyed by Factset. The 2013 accounts were dented by higher costs connected to Airbus' new A350 twin-aisle jet, which Airbus hopes to start delivering to customers by the end of this year.

Airbus has received over 820 orders so far for the wide body A350, with around 30 percent coming from Asian airlines. The region is a crucial market for plane makers because its economic growth is driving rapid expansion of jet fleets.

Airbus shares rose 1.5 percent in early trading Wednesday on the Paris stock exchange, as investors applauded the group's hitting financial targets including higher operating profit and better-than-expected free cash flow.

Airbus says the A350 program "remains challenging," after it took a 434 million-euro charge against the program in the fourth quarter last year. Development of the jet, an intended rival to Boeing's 787 Dreamliner, has cost around 10 billion euros over the last decade. Qatar Airways expects to take delivery of the first A350 in the fourth quarter of this year.

Airbus is in the midst of a corporate restructuring that will see it cut 5,800 jobs over two years. A failed merger with British defense firm BAE Systems scuttled Airbus' plans to grow its own defense business, which now accounts for about 30 percent of the group's total sales.

A slowdown in U.S. and European military spending has forced Airbus and Boeing to overall their defense businesses.


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