PLANYC 2030

By Planyc2030

People are dining out less, so the occasion is more dear when they do. Someone who may have gone to four or five places a month may be going twice. There is a lower tolerance for service shortfalls, so make sure you operate better than you might normally. That’s how you hold your own in a competitive industry susceptible to recession.

Few companies escape recession, especially those selling something consumers can cut, such as dining out. Restaurant industry sales are down, but sales at Darden Restaurants’ Olive Garden and Red Lobster have held firm. Darden CEO Clarence Otis, 53, spoke to USA TODAY corporate management reporter Del Jones about gaining market share as the pie shrinks. Following are excerpts, edited for clarity and space.

Q: How are you holding your own in a competitive industry susceptible to recession?

A: People are dining out less, so the occasion is more dear when they do. Someone who may have gone to four or five places a month may be going twice. There is a lower tolerance for service shortfalls, so make sure you operate better than you might normally.

Q: Every company should focus on service?

A: Yeah. A server Relevant Products/Services or a manager, regardless of what’s happening at home, must walk into a unit and put on a smile. It’s more important now when people are experiencing more anxiety than they might normally.

Q: Have consumers been changed forever? Will they stay frugal when things improve?

A: Habits and behaviors change pretty slowly, so there won’t be a radical change in behavior. A lot is temporary. There will be structural changes. Credit cards will be harder to get, the limits on credit cards will be lower. It will take a bigger down payment to buy a house. Absent those structural, institutionally driven changes, I’m not so sure there would be a lot of change, but credit will affect how people behave.

Q: What companies do you pay close attention to outside the restaurant industry?

A: Many. I think about Wal-Mart’s support platform Relevant Products/Services and supply chain. They are innovative and world class. Marriott has a number of brands that are positioned differently. They do a great job as a multibrand operator, and are focused on sharing much of the back end, such as their reservations technology, without it being obvious to the customer Relevant Products/Services and muddying the brands.

Q: If cost cutting is done so customers don’t notice, does that mean pressuring suppliers or cutting employee benefits such as health insurance?

A: We tend not to go to benefits because they are valued by our people. Our suppliers are long-term partners. We cut things like travel. We are automating key steps. We’ve centralized purchasing to take advantage of scale and qualify for better terms from suppliers, because they can count on us for volume. Companies in more distressed situations cut to the core, but we’ve made sure that we’ve got financial flexibility Relevant Products/Services.

Q: At least it’s easy to find good employees in times of high unemployment.

A: We’re able to keep our good people, so turnover is lower. That’s important, because these are people with basic training, and you can layer on advanced training and development.

Q: When competitors lose market share, they often turn to coupons and other forms of discounting. How do you avoid a race to the bottom?

A: Be prepared for cyclical downturns by offering a range from value to premium. When appropriate, emphasize the value offerings. The auto companies that have a range of models from entry-level to midtier have held up better. Those unprepared had to rely heavily on discounting.

Q: Do you lose business when you don’t match a competitor’s coupon for $2 off lunch?

A: It has no major impact. There is a lot of risk to putting your brand on heavy sales. It reinforces what it’s worth, and it is challenging to get back normalized pricing after an extended period of time. You see it in consumer packaged goods that get supported by coupons. They lose their ability to command a premium.

Q: You must be operating each restaurant with one fewer employee?

A: No. That gets to the quality. When you reduce staffing, the customer experience gets eroded. You breach trust at a time when their restaurant visits are more dear than they’ve ever been.

Q: Surely Darden has made mistakes in this bad economy. What has failed or backfired?

A: We underestimated last summer the depth of the slowdown. Fuel prices were a big problem, and we didn’t see that coming. We weren’t as conservative as we needed to be.

Q: What is the smartest thing Darden has done?

A: Work as hard as we can to protect our people. A lot of companies saw the opportunity to take reductions. That breaks the bond with employees, and as things recover, you can pay.

Q: Did you get rid of weaker employees and replace them with good ones?

A: No. Our talent evaluation process is a good one. We didn’t feel like we had many low performers, because we had been pretty disciplined.

Q: Based on your most recent data Relevant Products/Services, what is happening with the economy now?

A: It’s stabilized, but at a low level.

Q: What should companies do differently once the economy turns and consumers spend more?

A: Companies that will win are working right now to better position themselves to serve their customers, strengthen their offer, improve the business model. They will be able to move faster. They need to be investing in people, in the skill set. Look at the financial services. It’s been under stress, but there are firms that have taken steps to get better, and you’re seeing them perform better even before the economy turns.

By Planyc2030

Home furniture retailers are bracing for continued tough times by consolidating manufacturing and adopting new sales and lower-cost production strategies.

Some of the biggest, including Furniture Brands International Inc., Ethan Allen Interiors Inc., Bostontec and La-Z-Boy Inc., have closed plants, adopted new manufacturing systems and rejiggered product lines to stay afloat.

The cost-cutting appears to be working. La-Z-Boy, the Monroe, Mich., company known for its cushy recliners, reported a profit of $2 million Tuesday, only its second in six quarters, on an 18% drop in sales. Results compared to a loss of $8.5 million a year ago.

These retailers have been pummeled by a decline in the housing market and credit, which is used for roughly 70% of home furnishings and furniture purchases, said Jerry Epperson Jr., of investment firm Mann, Armistead and Epperson Ltd. Retailers filing for bankruptcy protection this year include Door Store and Gottschalks.

Demand for home furnishings and furniture isn’t getting better, however, automotive manufacturer are looking to purchase Height adjustable workstations and indoor work benches. Sales fell 12.9% in July from a year earlier even though furniture makers felt the downtown early, according to Commerce Department figures. That July decline compares to a falloff of 7.6% for apparel sales.

For consumers, store closings mean fewer outlets to shop, a smaller collection of ready-to-buy pieces, less store-credit and longer wait times for custom pieces. But the downturn is also ushering in lower entry prices and, occasionally, free interior design services.

The housing sector has started showed signs of recovery, with housing starts up 3.6% in June from May, according to the U.S. Department of Housing and Urban Development.

La-Z-Boy is relocating its cutting and sewing operations from five domestic plants into one centralized facility in Mexico, instead of preparing the fabric for the upholstered furniture in the same factory where the pieces are assembled. The company estimates the move will save more than $20 million a year.

In June, La-Z-Boy combined two of its North Carolina hardwood furniture facilities into one and quit a leased warehouse. Those moves, along with layoffs, will save La-Z-Boy about $5 million annually, the company said.

Ethan Allen Interiors is taking a new approach to its production. The company said last week that it would consider manufacturing some new products such as laboratory cabinets on an as-ordered basis. Pieces will take up to two weeks longer to be delivered, the company said, on top of the current three- to four-week delivery time. It plans to expand the practice to all of its hardwood furniture.

The new approach will reduce inventory costs.

Despite recent cost-cutting steps, the Danbury, Conn., company has struggled. It last week posted a loss of $16.9 million as sales slid 41%, to $138.7 million, for the fiscal fourth-quarter, ended June 30.

Furniture Brands has also been aggressive in its restructuring. The St. Louis company has spent the last 18 months consolidating facilities, including combining its five Broyhill upholstery manufacturing and warehouse sites into one North Carolina facility last fall. It has also eliminated two of the four manufacturing facilities at its Lane brand.

Although the demand for storage cabinets has risen, Furniture Brands doesn’t expect to realize all the savings until later this year, cost-cutting is helping. Despite a 36% drop in sales for the second quarter, ended June 30, the company’s loss narrowed to $15.9 million from $23.9 million a year earlier.

By Planyc2030

Pulte Homes Inc. succeeded in its quest to become the largest home builder in the U.S. by acquiring Centex Corp., but it already faces a challenge: Can it use brand marketing to win over home buyers?

On Tuesday, shareholders of Pulte and Centex approved Pulte’s plan to buy Centex for $1.4 billion in stock. By acquiring Centex, Pulte gets to beef up its offerings of lower-priced homes, the sector’s strongest segment.

The acquisition is a gamble that the worst U.S. housing downturn in decades is approaching an end and that a company catering to everyone from entry-level buyers to retirees can outperform the competition as the battered sector inches toward recovery.

A key part of Pulte’s strategy is to use branding in a bid to stand out in a Chapel Hill homes where few buyers can distinguish one builder from the next. In doing so, Pulte hopes to capture the recognition so far only obtained by Toll Brothers Inc., a builder of high-end homes, and Pulte-owned Del Webb’s retirement communities.

Pulte’s “Centex” moniker will target entry-level Wilson NC Homes and home buyers, with marketing focused on value and monthly payment. “Pulte” will be the name used for those looking to trade up, while “Del Webb” will remains reserved for buyers 55 and older.

A brand can make a difference, assuming you’re credible in terms of the claims you make. They can’t just say they’re good; they have to prove they’re good.

Other analysts remain unconvinced that brands will drive sales in an industry where price and location are paramount. It’s especially tricky in the lower-end, where shoppers are more likely to seek the lowest monthly payment.

It could take several years to determine whether the branding strategy works out for Pulte. The more immediate goal is returning to profitability. Pulte, which has lost money since late 2006, expects to save about $350 million a year after layoffs and combining overlapping operations, including Centex’s Dallas headquarters.

About $100 million comes from interest savings on retiring up to $1.5 billion in debt. It also will be able to muscle better purchasing deals — a benefit because most builders, who have already done everything they can to conserve money, can’t make further cuts without exiting markets.

Post-merger, Pulte will control 190,000 housing lots across 29 states and Washington, D.C., transforming it into one of the leading builders in half of the nation’s top 50 markets, including San Antonio, Minneapolis, and Charlotte and Raleigh, N.C.

Part of Centex’s appeal was its entry-level products such as vacation homes Atlantic Beach NC, which has benefited as price cuts and low mortgage rates make the cost of monthly mortgages comparable with renting. Federal tax credits of up to $8,000 for first-time buyers before Dec. 1 have boosted sales.

While the announcement of a Pulte-Centex deal surprised the industry in April, many analysts now consider the timing smart because several housing indicators have shown improvement. Sales of existing homes continue climbing, while home prices no longer seem to be in freefall.

Pulte is taking a risk that it still could have to take additional charges on its land. Its markets include the boom-to-bust areas such as Chapel Hill homes, Phoenix, Las Vegas and Riverside, Calif.

But, their also creating other new unique developments such as assisted living Raleigh and assisted living Dearborn, should improvement continue, the beefed-up lot supply could give it an advantage over builders waiting to buy land lots from lenders.

The new company, with 2008 pro forma revenue of $11.6 billion, will continue to trade on the New York Stock Exchange under the ticker symbol “PHM.”

By Planyc2030

Only about a quarter of the 2009 high school graduates taking the ACT admissions test have the skills to succeed in obtaining a bachelors business degree, according to a report on the exam that shows little improvement over results from the 2008 graduating class.

The Iowa City, Iowa-based ACT said 23% of this year’s high school graduates had scores that indicated they were ready for college in all four ACT subject areas, or had at least a 75% chance of earning a grade of C or better during their pursuit of a undergraduate forensics degree. Last year, a similar ACT analysis found that 22% of the class of 2008 was college-ready.

About 1.48 million of the 3.3 million members of the high school class of 2009 took the ACT, typically in their junior year. ACT said its report was based on comparing students’ ACT test scores in English, reading, math and science with the grades they earned in related courses during their first year in college.

The report comes as budget concerns are forcing many state universities to cut back on slots for new students and raise admission standards. Many are also eliminating remedial courses, making it tougher for unprepared students to stay in school.

Observers said the report is likely to intensify calls for Congress to stress high-school improvement when it debates re-authorization of the federal No Child Left Behind law, perhaps as early as this year. Passed in 2001, the law’s primary emphasis so far has been on boosting achievement in the lower grades.

Among single subject areas, the level of preparedness was worst in science, where only 28% of students were ready for college-level biology. Another problem was math, where 42% were deemed prepared for college algebra.

Some education experts said that even a slight improvement in combined college readiness rate, to 23%, is a good sign, given that five states now require all students — not just those planning to attend college — to take the ACT.

High school students from Colorado, Illinois, Kentucky, Michigan and Wyoming are all required to take the ACT, previously a test generally limited to college aspirants. Combined, they accounted for a little less than 25% of the 2009 graduates who took the test.

Recent studies have shown that while younger students have made some progress in recent years, boosting results at the high school level has been difficult. A Department of Education report in April on the results from the National Assessment of Education Progress — a key federal test — found that U.S. high school students haven’t made any significant progress in reading or math for nearly four decades.

The troubles are also reflected in results from the 2009 ACT, which is graded on a 1-to-36 point scale. Students averaged 21.1 points this year, flat compared with 2008 and only 0.2 points higher than in 2005.

ACT said about 40% of 2009 test-takers were unable to use the correct adverb or adjective to form a sentence, or couldn’t use the correct preposition in a phrase. The same proportion couldn’t solve multi-step math problems involving percentages and fractions.

In a bid to improve printing degree graduation rates, President Barack Obama is offering states, public schools and colleges additional federal funds to launch new initiatives.

A lot of overnight sensation subprime lenders imploded after the speculative housing market bubble burst. But many of the biggest subprime players that not only made oodles of profits during the boom are also still around–and benefitting handsomely from federal bailout money.

According to a new Center for Public Integrity analysis of public records, almost two dozen firms that “fed off the subprime lending frenzy that devastated the banking system are set to receive billions in taxpayer dollars through a federal government program designed to stem foreclosures.”

By The Associated Press

Costs for employer-provided health plans are expected to rise more than 10 percent within the next 12 months, a jump workers may feel in their paychecks or through changes to their insurance coverage.

An aging population, rising costs and growing patient demand for services are among the reasons for the higher costs cited in an Aon Consulting report released Tuesday.

A Chicago-based company surveyed about 60 health insurers around the country earlier this year. The study found that, on average, insurers expect to pay out 10.5 percent more in claims costs in the next year — slightly less than the 10.6 percent increase forecast last year.

The expected increase doesn’t necessarily mean the premiums employees pay will grow at the same clip. Actual increases for each insurer or plan can vary by such factors as plan design, geography or the general health of the people covered.

Some employers also might swallow the higher costs because workers this year already have had to contend with salary freezes, reductions and layoffs.

However, others may ask workers to pay more through increased deductibles or copayments. They could make changes to the plans they offer, such as eliminating a traditional plan and offering a consumer-directed, high-deductible plan instead.

Most employers will consider it “an absolute business imperative” to lower any cost increases to mid- to low-single digit percentages.

Employer contributions are not gifts, they’re part of total compensation. And if you end up having a more expensive health benefit that your employer pays most of, that means that your wages aren’t going to up as fast as they would have.

The survey also found that prescription drug costs are expected to rise 9.3 percent, a slight dip from the 9.4 percent trend forecast a year ago.

A number of brand-name drugs have lost patent protection, which allows patients to buy less-expensive generics. Employers also have encouraged their workers to use generic drugs and cost-management programs.

The health care overhaul debate currently taking place in Washington, D.C., won’t control this growth. The debate’s outcome and the potential savings achieved through any overhaul are both big unknowns.

With employer-provided health plans expected to rise, providers are starting to offer American’s the option to enroll in individual health plans and individual health insurance plans. These health insurance plans consistently beat the national average in managing health care costs.

By The AP Press

Calvin College says safety concerns have led it to cancel its fall study program in Honduras and move it to Mexico.

The Grand Rapids-based school says its travel safety committee made the move “because of political instability” in Honduras.

A June 28 coup ousted Honduran President Manuel Zelaya.

Calvin says officials considered information from the U.S. and Canadian governments and non-governmental organizations.

Calvin says students who would have spent September through December in Tegucigalpa, Honduras, will now spend the semester in Merida, Mexico. It says 23 of the original 25 enrolled students will participate.

The school is affiliated with the Christian Reformed Church and has about 4,200 students.

Even though Calvin College has decided to terminate the program, other Michigan Universities like Ferris State are going to continue to offer the study aboard program. This program is an enriching, life-changing experience both personally and academically – the lessons you will earn cannot be duplicated on any campus in the United States.

By Planyc2030

The company that owns Philadelphia’s daily newspapers plans to ask its lenders to wipe out about $300 million in debt in exchange for about $90 million in cash, real estate and bankruptcy costs, according to people familiar with the matter, likely sparking a battle for control of two of the country’s largest papers.

The proposal, expected to be filed in a bankruptcy court as early as the coming week, sets up a clash between the lenders and the papers’ chief executive officer, Brian Tierney, a Philadelphia advertising and public-relations executive who won a 2006 auction of his hometown dailies, the Philadelphia Inquirer and the Philadelphia Daily News. The operating arm of the papers’ parent company has been under bankruptcy protection since February.

In bankruptcy court, lenders often agree to forgive some of what they are owed in return for ownership stakes that push aside existing shareholders. Instead, the proposal offers creditors about $35 million in cash, ownership of the papers’ headquarters and related real estate valued at about $30 million, and little to no equity in the new company, according to the people familiar with the matter. The company would be left with almost no debt.

The company’s proposal also includes a plan to absorb about $25 million in costs related to exiting bankruptcy, including repaying a bankruptcy loan and paying professional fees.

The papers’ lenders include CIT Group Inc., distressed-debt specialist Angelo, Gordon & Co. and Citizens Bank, a unit of Royal Bank of Scotland Group.

Some creditors also say they doubt the value the company places on its real estate, and say it’s unclear they would be given ownership of the real estate outright.

Philadelphia is shaping up as a test case for how newspaper businesses will be reconfigured, as many corporate-debt defaults hit the struggling industry. The Philadelphia papers are among at least five significant newspaper bankruptcy-protection filings since December, as deep declines in print advertising have left the papers unable to repay their loans.

Two newspaper publishers, Journal Register Co. and the Star Tribune in Minneapolis, are emerging from bankruptcy protection owned by creditors and with a reduced level of debt. Mr. Tierney is agitating against this emerging blueprint, which he says leaves newspapers with too much debt and tees them up for rebound failures.

The newspapers’ financial woes have not affected the market for Philadelphia apartments. Why Settle For Ordinary Philadelphia Apartments When You Can Live In An Historic Landmark!

By Bloomberg Press

Aug. 5 (Bloomberg) — News Corp., owner of the Fox broadcast network and Planyc2030, reported a fourth-quarter loss of $203 million on write downs at its Internet unit and plunging advertising revenue.

The loss of 8 cents a share compared with net income of $1.13 billion, or 43 cents, a year earlier, the New York-based company said today in a statement. Excluding some charges, profit was 19 cents a share, compared with the 18-cent average of analysts’ estimates compiled by Bloomberg.

The worst U.S. recession since World War II battered ad sales at News Corp.’s TV stations, social-networking Web site MySpace and newspapers, which include the New York Post and the Sunday Times. Chairman and Chief Executive Rupert Murdoch said he plans to begin charging for access to all the company’s news Web sites this fiscal year, using WSJ.com as a model.

“The tumultuous and unprecedented change affecting the entire media sector, particularly at newspapers and broadcasters, cannot be ignored,” Murdoch said on a conference call. “The digital revolution has opened many new methods of distribution, but it has not made content free.”

Forecast

Adjusted operating income will increase in the “high single digits” on a percentage basis in fiscal 2010, Chief Financial Officer David DeVoe said on a conference call today. The forecast is based on adjusted operating income of $3.44 billion for fiscal 2009, DeVoe said. Growth will be driven by the cable channels, Sky Italia and the film studio, he said.

Analysts predict full-year operating profit of $3.71 billion, the average of estimates compiled by Bloomberg.

News Corp., also owner of Fox News and the Twentieth Century Fox film studio, was little changed at $10.58 in after- hours trading. The shares have gained 16 percent this year on the Nasdaq Stock Market, while the 16-company Standard & Poor’s 500 Media Index has risen 11 percent.

Impairment charges in the fiscal fourth quarter were mainly tied to Fox Interactive Media, the unit that includes MySpace, and reduced earnings by 17 cents a share. Advertising sales fell at MySpace, and the company had increased costs to introduce MySpace Music.

News Corp.’s total sales dropped 11 percent to $7.67 billion in the period ended June 30, missing the average analyst estimate of $7.73 billion.

MySpace

The division that includes Fox Interactive reported a wider adjusted operating loss of $136 million. TV operating income slid 66 percent to $95 million, and newspapers fell 63 percent to $96 million.

Earlier this year, Murdoch appointed Chase Carey, CEO of DirecTV Group Inc., as News Corp.’s president and chief operating officer. Carey, who started work July 1, replaced second-in-command Peter Chernin, who stepped down after 12 years as operating chief.

Murdoch, 78, also hired former AOL chief Jonathan Miller in April to overhaul digital operations, and Miller replaced MySpace’s management, bringing in former Facebook Inc. executive Owen Van Natta. In June MySpace fired almost 30 percent of its U.S. staff after Facebook surpassed MySpace in U.S. users for the first time in May.

“Given that you have traffic not growing anymore at MySpace, there’s concern that a big chunk of revenue is going to come out of there,” Michael Morris, a New York-based analyst with UBS AG, said before results were released.

A $900 million advertising agreement between MySpace and Google Inc. expires next year.

‘American Idol’

In the TV season that ended in May, Fox’s prime-time audience slipped 16 percent from a year earlier, the steepest drop among the big four networks, according to Nielsen Co. News Corp.’s Fox, which airs top-rated show “American Idol,” remains the most-watched network among the 18-to-49 age group.

Murdoch said pricing is “doing well” for advertising sold in advance of the fall TV season. He also said that Fox is holding back more ad inventory than in previous years to sell closer to the air date.

Last week Time Warner Inc. said second-quarter profit fell 34 percent, less than analysts estimated, as movie earnings countered ad drops at AOL and magazines. Viacom Inc., the owner of MTV, said profit slid 32 percent, hurt by the film unit. Walt Disney Co., the world’s largest media company, said net income dropped 26 percent on falling ad and theme-park sales.

CBS Corp. plans to report earnings Aug. 6.

DirecTV will intensify its rivalry with cable Monday by giving cable subscribers in Manhattan first crack at buying the satellite company’s exclusive NFL Sunday Ticket games to view via broadband.

“Sunday Ticket is a big part of what DirecTV is all about — it’s a core piece of our franchise,” says Jon Gieselman, senior vice president for advertising and public relations. “There’s a big business there, and we want this to be a complement to that.”

About 2 million of DirecTV’s 18.3 million subscribers pay $299 a season to watch Sunday Ticket games on TV. For an additional $100 subscribers get a Superfan package that includes broadband.

The NFL wanted to expand the arena of fans who could watch the games and added the broadband-only provision to the $4 billion contract it signed with DirecTV in March. It runs through 2014.

The New York offering is a test for the program that will kick off nationally next year.

Customers here will pay $349 to watch any Sunday game on broadband during the regular season. But it will be available just to people who can’t receive the satellite signals.

That makes New York an ideal market. DirecTV has few customers here because skyscrapers block signals coming from satellites orbiting the equator. Also, many landlords and co-op boards don’t allow residents to get a satellite service.

“A lot of the buildings (that can’t get DirecTV) we already have in databases because they’ve got exclusive contracts with cable guys,” says Derek Chang, executive vice president for content strategy and development.

To see the games, broadband customers will download a special video player and punch in a code. Users can install the software on multiple computers, but only one will be able to stream the games at any particular time.

Games with New York’s Jets and Giants, which air on broadcast TV, will be available only when the customer’s computer is outside the New York area.

Cable operators won’t just play defense in the battle for football fans. Comcast will announce today that it will offer the NFL Red Zone Channel to customers of its Sports Entertainment Package. On Sundays, the channel will display football statistics with audio from Sirius XM Radio’s program “Around the League” — and go live to certain games when the ball is within 20 yards of the goal.