Retirees Snared By Medicare
As People Work Longer, They Risk Penalties For Missing Deadlines
By Ann Tergesen - Wall Street Journal
December 30, 2009

Rules for enrolling in Medicare are complex. But when people postpone retirement past age 65, as many people are doing these days, it's easy to get caught up in red tape.

Older adults can't get into Medicare any time they want. The easiest time to sign up is when you turn 65, and, if you're already collecting Social Security, enrollment is automatic. But if you keep working beyond that age and opt instead to stay with your employer's group health plan, your options for getting Medicare can be sharply limited. It's important to pay attention to strict enrollment deadlines, or you may face a fine and risk going without coverage for months.

That's what happened to Barbara Gardner, 66, who chose to continue on her former employer's plan instead of signing up for Medicare when she retired last year. "My employer's plan offers much better coverage," says the Austintown, Ohio, resident, who suffers from rheumatoid arthritis and asthma.

Now, Ms. Gardner realizes her decision caused her to run afoul of a Medicare rule that required her to enroll within eight months of leaving her job. As a result, Ms. Gardner's next chance to sign up for Medicare is in January, and her coverage won't begin until July. With her current health plan due to expire in March, Ms. Gardner is facing several months without insurance. And as a penalty for missing the deadline, her monthly Medicare premium will permanently be increased by 10%.

"I don't know what I am going to do," she says, adding that she can't afford to purchase an individual policy for the months she'll be without insurance.

Medicare advocates say a growing number of older adults are getting ensnared in the program's complex rules, as more seniors return to work or put off leaving their jobs. The nonprofit Medicare Rights Center says that before the recession it typically received a handful of calls each month from people trying to sort out the enrollment rules. Now, the organization says it gets several such calls a day.

In January, Rep. Kurt Schrader (D., Ore.) plans to introduce a bill designed to make it easier for those 65 and older who leave jobs to switch from their employer's group health insurance to Medicare, his office says. Among other things, the bill would eliminate the delays that some experience before their Medicare benefits go into effect.

"Many seniors are going without coverage because of problems transitioning into Medicare and are unable to pick up temporary coverage because of their age," Rep. Schrader says.

A spokesman for the Centers for Medicare & Medicaid Services, which administers Medicare, says the agency is just following the laws governing the insurance program. "We just don't have the discretion" to accommodate those who miss enrollment deadlines, he says.

Some workers postpone enrolling in Medicare because their health coverage on the job can be less expensive. Even though Medicare Part A, which covers hospitalization, is free for most people 65 and older, Medicare Part B, which covers doctor visits and other forms of outpatient care, charges a monthly premium of between $96.40 and $353.60, depending on a beneficiary's income.

Many people also choose to purchase private "supplement" policies, which pay for expenses Medicare doesn't cover, and so-called Part D prescription-drug plans. Others choose to receive benefits through private Medicare Advantage plans, which generally charge premiums, co-payments and deductibles.

But it's important to do some homework before deciding to stick with an employer's plan alone. Those who are employed can switch at any time from a group health plan to Medicare. But once an employee stops working—voluntarily or not—he or she has only eight months to sign up for Medicare Part B. Those who miss this window—called a special enrollment period—must wait for Medicare's general enrollment period, from Jan. 1 to March 31, to sign up. Worse, their Part B benefits won't go into effect until the following July, and late-enrollment penalties may apply. Common Traps

One common trap: Many people on Cobra, a federal law that permits workers temporarily to stay enrolled in an employer's health plan, or those receiving retiree medical benefits are unaware that the eight-month deadline applies to them, says Pamela Meliso, senior attorney at the nonprofit Center for Medicare Advocacy Inc. in Mansfield, Conn.

Other people get into trouble by failing to check whether their company's plan requires them to sign up for Medicare Part B upon turning 65. Such rules are typical of companies with fewer than 20 employees and also often apply to former employees on Cobra. After age 65, these plans at best provide only supplementary coverage, paying only for expenses that Part B won't cover, says Hannah Oakland, a health advocate at Medicare Rights Center. Limits of Cobra

Carla Arnett, of Dripping Springs, Texas, found out too late the limits of opting for Cobra instead of signing up for Medicare when she turned 65 last year. When she recently left her job in a retail store, she discovered she had to wait until January to sign up for Part B and wouldn't begin receiving benefits until July 2010, according to her son, Edward Arnett.

He says his mother was diagnosed with lung cancer this summer and didn't want to be without insurance. So she paid to continue her former employer's coverage through the Cobra program, not realizing that she was buying a plan that only provided supplementary coverage.

Mr. Arnett says his mother recently learned that the Cobra plan will only cover a small fraction of the more than $20,000 in medical bills she has incurred since her cancer diagnosis.

"They informed me that they consider their coverage to be secondary," or supplementary, to Medicare Part B, says Mr. Arnett. She is "fighting for her life and watching as the bills stack up higher and higher," he says. Mr. Arnett says his mother has little choice but to continue the Cobra coverage, at a cost of $376 a month, until she can qualify for Medicare next year.

If you plan to delay signing up for Medicare, experts recommend keeping good files about your decision and copious notes from phone conversations with officials you contact for advice, including employees at Medicare and Social Security Administration, which handles Medicare enrollments. Misinformed

Bill Bregar, a former software engineer, accepted a voluntary retirement package from his employer in June 2007. Now 68, Mr. Bregar and his wife were able to remain on the company's health insurance plan, via Cobra, for two years. "The cost was very reasonable and the plan covered everything," says the Lake Oswego, Ore., resident. He says he was assured by a representative at Social Security that he would be able to switch to Medicare when this coverage expired on May 31, 2009.

But when Mr. Bregar tried to enroll in Medicare Part B in May, he was told he was out of luck. Because he had missed the eight-month deadline in which to sign up for Medicare Part B, which expired in early 2008, he was relegated to Medicare's general enrollment period from Jan. 1 to March 31. And, when their Medicare benefits finally would be set to kick in next July, the Bregars would also be subject to a 10% late-enrollment penalty. "We were stunned," Mr. Bregar says.

With help from Rep. Schrader's office. Mr. Bregar submitted a request to Social Security asking for "equitable relief," a legal protection that allows for immediate enrollment in Medicare Part B without penalty.

He attached a letter documenting his earlier conversation with the Social Security representative who had misinformed him about Medicare's rules. A few weeks later, the Bregars received notice from Social Security that the agency was granting the couple's request for enrollment.

A Social Security spokeswoman says people requesting "equitable relief" should submit a letter explaining their case. Generally, Social Security looks for evidence that the person was misled by an agent of the federal government, she says.

Deals Few and Far Between
It took a strong stomach, and a lot of luck, to get commercial real-estate deals done in 2009.
By Maura Webber Sadovi  - Wall Street Journal
December 30, 2009

With lenders loath to extend credit and property values plummeting, transaction activity was scant. As of Monday, $48.8 billion of commercial-real-estate deals had closed, down from $150.8 billion in 2008 and $533.4 billion in 2007, according to Real Capital Analytics, a New York real-estate-research firm. Real Capital counted transactions valued at $5 million and above.

Here is a look back at a few of the more interesting transactions highlighted in past Deal of the Week columns.

• Sears Tower Name Game:
The iconic Chicago building formerly known as the Sears Tower served up an example of just how far the pendulum has swung in the tenant's favor. In March, Willis Group Holdings Ltd. announced that the name of North America's tallest building would be changed to the Willis Tower. The change was a condition of Willis signing a 15-year agreement to lease about 140,000 square feet of office space in the 3.8-million square-foot building.

Willis made its request early on in its negotiations with the tower's owners, which include American Landmark Properties Ltd. of Skokie, Ill., and New York investors Joseph Chetrit and Joseph Moinian of the Moinian Group. With Willis eager to increase its North American brand awareness, the insurer made the "had-to-have" name requirement clear as far back as the summer of 2008 when it first toured the tower, said Kent Ilhardt, executive vice president of Cushman & Wakefield of Illinois who represented Willis in the negotiations. Willis agreed to pay $14.50 a square foot annually, at the low end of typical rates in the building.

In a better economy, Mr. Ilhardt said the London insurer mightn't have had much of a shot at getting such a good deal. "The timing was good," Mr. Ilhardt said. "The market was down."

• A Not-So Big Easy Deal:
The $42.1 million sale of a largely empty office tower, mall and parking garage next to New Orleans's Superdome almost didn't happen. Hertz Investment Group of Santa Monica, Calif., acquired the former Dominion Tower, New Orleans Centre Mall and a parking structure in 2003 for $36 million. After the buildings were damaged by Hurricane Katrina, Hertz struggled to sell or fill them.

Last year, the state-appointed agency charged with running the Superdome let an option to buy the properties for $45 million lapse as it grappled with the deteriorating economy. It was the property's location near the Superdome that helped trump the financial crisis. Judah Hertz, chief executive of Hertz Investment Group, said he still is amazed the deal closed given the lack of buyers for office buildings nationwide. "It was a fluke," Mr. Hertz said.

A company wholly owned by the family of Tom Benson, owner of the National Football League's New Orleans Saints, purchased the complex in September and will lease most of the office building back to the state of Louisiana. The deal helped pave the way for Mr. Benson to sign the Saints to continue playing in the Superdome through 2025 and for New Orleans to host the Super Bowl in 2013.

• LA Buzz Off:
One of the most watched office-sale sagas in Los Angeles has fizzled out. Macquarie Office Trust, an Australian real-estate investment trust, took One California Plaza off the market last week, according to a person familiar with the property. The decision comes about one year after the 992,000-square-foot, glass-clad office building in the tony Bunker Hill neighborhood was put on the block.

The lukewarm response of bidders likely led in part to the decision. The 42-story building was in negotiations with at least one potential buyer for a price in the $220 million range.

Additionally, the difficulty that potential buyers have had nationwide cobbling together financing also likely was a factor, some brokers said. A Macquarie spokesman declined to comment on the status of the building. But the move also may signal the company's confidence in a recovery. In a briefing with unit holders this month, Macquarie executives seemed to suggest a change in its U.S. asset strategy. This year, Adrian Taylor, Macquarie's chief executive, said the company would sell some U.S. assets. In the more recent briefing, the company said it planned to invest in the U.S. portfolio as the markets start to recover rather than to sell assets at a low point in the cycle, according to a document posted on the company's Web site.

What Doctors and Patients Have to Lose Under ObamaCare
By Scott Gottlieb - Opinion - The Wall Street Journal
December 24, 2009

Democrats are touting the American Medical Association's endorsement of President Obama's health plan. But there's an important reason why the American College of Surgeons and 18 other specialty groups are opposed.

The plan's most tangible efforts to restrain medical costs are through its controls on specialist physicians. Based on the government's premise that they often make wasteful treatment decisions, the health-care legislation in Congress will subject doctors to a mix of financial penalties and regulations to constrain their use of the most costly clinical options. The penalties and regulations are aimed first and foremost at surgeons and the medical devices that they use, largely because that's where the bulk of spending is.

It all starts with the sweeping power that the Senate bill gives to the Centers for Medicare and Medicaid Services. The agency will be given the authority to unilaterally write new rules on when medical devices and drugs can be used, and how they should be priced. In particular, the Obama team wants to give the agency the power to decide when a cheaper medical option will suffice for a given problem and, in turn, when Medicare only has to pay for the least costly alternative.

The government has already sought to acquire this same power administratively. But on Tuesday the Obama Justice department got swatted down by the U.S. Court of Appeals for the D.C. Circuit, in what the judges described in their opinion as an attempt by Mr. Obama's legal team to "end-run around the statute [Medicare]."

Hays v. Sebelius involved a patient who said Medicare unfairly denied her a prescribed treatment for her serious lung disease. Medicare decided instead to pay for a different drug that bureaucrats argued was a suitable but cheaper alternative.

Now the Obama team will use murky provisions embedded in the Senate bill to subtly attain in law those powers they couldn't more artfully acquire in court. In fact, the bill lets Medicare seek almost any restrictive payment authority it wants from a Medicare Commission established for the purposes of cost control.

If Congress believes Medicare has overreached, it has to pass a separate law to explicitly block the agency's newly acquired powers. These provisions are deliberately designed to leverage Congress's inability to act in a timely fashion.

The Senate health-care bill also exempts Medicare's actions from judicial review, taking away the right of patients to sue the government. Unlike existing Medicare coverage laws, patients won't have the ability to appeal any of the decisions of this new Medicare Commission.

Ironically, private health insurers must comply with new patient appeals rights under the Senate bill. The government has exempted itself from the same sort of protections.

Thus Medicare will have the power to control which medical devices surgeons use. But clamping down on expensive procedures also means the agency will need to have authority over the specialists themselves. The organization of doctors into mostly small, disaggregated practices always made it hard for a central bureaucracy to control individual physicians. ObamaCare tries to fix this by putting doctors on the financial hook for their treatment decisions.

Primary-care doctors who refer patients to specialists will face financial penalties under the plan. Doctors will see 5% of their Medicare pay cut when their "aggregated" use of resources is "at or above the 90th percentile of national utilization," according to the chairman's mark of Section 3003 of the bill. Doctors will feel financial pressure to limit referrals to costly specialists like surgeons, since these penalties will put the referring physician on the hook for the cost of the referral and perhaps any resulting procedures.

Next, the plan creates financial incentives for doctors to consolidate their practices. The idea here is that Medicare can more easily apply its regulations to institutions that manage large groups of doctors than it can to individual physicians. So the Obama plan imposes new costs on doctors who remain solo, mostly by increasing their overhead requirements—such as requiring three years of medical records every time a doctor orders routine medical equipment like wheelchairs.

The plan also offers doctors financial carrots if they give up their small practices and consolidate into larger medical groups, or become salaried employees of large institutions such as hospitals or "staff model" medical plans like Kaiser Permanente. One provision, laid out in Section 3022, allows doctors to share with the government any savings to the government they achieve by delivering less care—but only if physicians are part of groups caring for more than 5,000 Medicare patients and "have in place a leadership and management structure, including with regard to clinical and administrative systems."

While these payment reforms are structured as pilot programs in the legislation, this distinction has little practical meaning. Medicare is being given broad authority, for the first time, to roll these demonstration programs out nationally without the need for a second authorization by Congress.

Regulation of medicine has always been a local endeavor, and it's mostly the province of medical journals and professional medical societies to set clinical standards. This is for good reason. Medical practice evolves more quickly than even the underlying technologies that doctors use. This is especially true in surgery, where advances flow from experimentation by good doctors to try different surgical approaches.

The regulation of medical devices and their pricing will also have consequences for patients by discouraging innovation. Most improvements in medical devices come incrementally, with each generation of a device having small but clinically relevant advance over prior versions. This owes to the underlying hardware, which turns on embedded software and microprocessors that themselves undergo constant upgrades.

But if Medicare starts pricing similar devices off one another—a form of the same "reference" pricing schemes used in Europe—manufacturers will start holding back the small changes. Instead, they will introduce new models every four or five years that are sufficiently unique to fall outside of Medicare's pricing scheme. Meanwhile, patients will have lost the benefit of regular improvements and annual upgrades that characterize medical devices today.

The impact of these provisions won't be confined to Medicare. Private insurance sold in the federally regulated "exchanges" will take cues from Medicare, since they're both managed from the same bureaucracy. Medicare will set the standard for medical care across the entire marketplace.

Mr. Obama promised that under his plan people wouldn't have to change their doctors. But it's clear that doctors will be forced to change how they make their medical decisions.

Dr. Gottlieb, an internist and a resident fellow at the American Enterprise Institute, is a former senior official at the Centers for Medicare and Medicaid Services. He is partner to a firm that invests in health-care companies.

John E. Jeuck, 1916-2009:
Retired University of Chicago business school fixture
By Jared S. Hopkins - Staff Reporter - Chicago Tribune
December 23, 2009

Something must have felt right to John E. Jeuck when he was born in the hospital at the University of Chicago because he returned to teach at the campus for nearly 40 years.

Dr. Jeuck, 93, a professor at the U. of C. business school who helped create an influential scholarship program after his retirement, died of congestive heart failure Friday, Dec. 18, in his Evanston home, said his friend Harry Davis.

By the time he retired in 1988, Dr. Jeuck had established a reputation as a devoted and creative mentor who changed the direction of the business school, now the Booth School of Business.

His 1950 book "Catalogues and Counters: A History of Sears, Roebuck & Co.," co-written with Boris Emmett, chronicled one of the nation's leading businesses at the time.

Former students said Dr. Jeuck stood apart because, in an era when instructors emphasized math, he instead chose to emphasize lessons of the gritty real world of business. A popular course with computers was designed to simulate situations students would see upon graduation: running companies, buying and selling products, and negotiating deals.

Philip J. Purcell, former chairman and CEO of Morgan Stanley, recalled when his team's company was leading a simulated business competition only to have Dr. Jeuck sink their ships and burn a factory, calling it an "act of God" and forcing the students to recover.

"He would just introduce uncertainty," said Purcell, whose family vacationed regularly with Dr. Jeuck. "It was a great lesson."

Dr. Jeuck attended De La Salle Institute and Parker Experimental School, then received his bachelor's, master's and doctorate degrees from the U. of C.

During World War II, he was a Navy officer aboard a destroyer in the Pacific.

He joined the U. of C. faculty in 1946 while completing his doctorate from the business school. Aside from three years teaching at Harvard Business School, he remained there until retiring.

As dean from 1952 to 1955, Dr. Jeuck reorganized the school's curriculum and led the way to establish a location downtown for part-time students in the business school. The downtown location eventually moved to the Gleacher Center off North Michigan Avenue and now is attended by more master's degree students than the Hyde Park campus.

Dr. Jeuck also eliminated a requirement for faculty members to turn over their consulting fees to the university, which was considered a major deterrent to faculty retention in the 1950s.

In 2003, with help from friends and former students, he formed the Distinguished Fellows Program, which provides five top MBA students with tuition, a stipend and an education program.

Bill Uhrig, a former student who became friends with Dr. Jeuck and was his guardian for the last 25 years, said his teacher valued friendships with his students. The classes, he said, were eye-openers.

"Most people taking these courses are very junior, and they aren't used to the rough and tumble world of hardball negotiating and people driving for the last penny -- essentially not getting what you want," said Uhrig, who now runs an investment firm. "You look back at that course and you think it was the best course you took."

Dr. Jeuck had no immediate survivors. A service will be held in the spring at the University of Chicago.

Day One: How Obamacare Will Alienate Americans
By Dick Morris & Eileen McGann - DickMorris.com
December 22, 2009

Obama's health care bill, the poisoned Kool-Aid making its way through the Senate, will not confer any of its supposed benefits on Americans until 2013. But they will find themselves chafing at its restrictions and paying its taxes immediately after the law takes effect. Then, they will see no gain, but plenty of pain, for the next three years.

This odd juxtaposition of "suffer now, benefit later" is the byproduct of the Administration's sleight of hand in specifying ten years worth of cuts and taxes in the legislation, but deferring its benefits for the first four years. By comparing six years of spending with ten years of taxing, it managed to appear deficit neutral under the rules of the Congressional Budget Office. In fact, the annual revenues fall far short of covering any single year's worth of spending, adding to the deficit for each of the last six years over the next ten, but, viewing the decade as a whole, it appears deficit neutral.

Yet the political price is hardly neutral. Democrats who misguidedly vote for this monstrosity will face immediate political repercussions.

The harshest of these backlashes will come from the elderly who will suddenly visit their doctors and be told "no" when they ask for therapies or treatments. The rationing of medical care will start immediately on enactment and, one hopes, the outraged phone calls will start to descend on those whose votes enabled it. The first "no" will hit the ten million elderly who now rely on Medicare Advantage to pay for the care Medicare itself does not cover. In a payoff to AARP, Obama gutted this program in his bill, ending over $100 billion in federal premium subsidies. These ten million voters will get the grim news that their premiums are going up and their benefits dropping early in 2010. The goal, of course, is to force them to drop Medicare Advantage and sign up, instead for Medigap insurance -- offered, not coincidentally, by the AARP -- which provides less coverage at higher cost.

Young people without health insurance can expect to start writing $750 annual checks to Washington to pay the fines written into the bill. (And, after the Conference Committee finishes its work, the fines may be higher).

All Americans will soon find their insurance premiums rising as a result of the bill. The young, uninsured will not buy policies. Why should they? Why not just pay the $750 fines each year? Why pay between 2% and 10% of their household income before subsidies kick in? It makes no financial sense for anyone making more than $30,000 to pay for coverage. (And most of those under that threshold will be covered by Medicaid, not by private insurance).

There is no reason for the young to buy private insurance. The legislation requires that health insurers take all comers and not raise rates based on pre-existing conditions. So the young can get coverage when they need it, having only paid $750 per year beforehand. The difference in cost will, of course, be borne by families throughout America who will see their health insurance premiums increase. President Obama and his Democratic rubber stamps may appreciate that they are not raising taxes on the middle class, just raising mandatory health insurance premiums, but the distinction is likely to be lost on swing voters.n From now on, any increase in health insurance premiums will become the political responsibility of the Obama Administration. As General Colin Powell once said of Iraq "You break it. You own it." Since these premiums have been rising by an average of 10% per year for more than the past decade, this is a legacy most politicians would sensibly avoid if they could.

Judge tosses 2004 lawsuit filed by Sears Shareholders
By Karen Gullo - Bloomberg News
December 22, 2009

Sears Holdings Corp., the largest U.S. department-store company, won dismissal of a 2004 shareholder lawsuit claiming the company and former CEO Alan Lacy misled investors by failing to disclose talks about Sears' sale to Kmart Corp.

U.S. District Judge Robert Gettleman in Chicago granted Sears' request to throw the case out in a ruling Friday.

He said merger talks began after the period shareholders claimed the company had a duty to disclose them and Sears didn't have to publicize the negotiations even after they became material Friday.

The lawsuit was filed in 2004 against Sears and Lacy, Sears' CEO until 2005, by Maurice Levie on behalf of other shareholders. Levie said he lost money because he sold Sears stock before a Nov. 17, 2004, announcement that Kmart would acquire Sears. Sears shares jumped 17% on the announcement.

Levie alleges statements by Sears and Lacy before the announcement were misleading because they failed to reveal the talks between Sears and Kmart.

Mark Miller, an attorney for shareholders with Wexler Wallace LLP in Chicago, didn't immediately return a message left on voicemail.

Chris Brathwaite, a Sears spokesman, had no immediate comment.

WLS a farm-targeted Sears spinoff
By Diana Dretske - Columnist - Daily Herald - Suburban Chicago
December 22, 2009

On April 19, 1924, WLS Radio in Chicago aired the first National Barn Dance program. It became one of the most popular and longest-running Country and Western radio programs next to the Grand Ole Opry.

To understand why a Chicago radio station would broadcast a country-themed program, you need to explore the origins of WLS radio with Sears, Roebuck and Company.

Sears was founded as a farmers catalog in 1888, and incorporated in Chicago in 1893. In the 1920s, the company did radio advertising and decided to create its own program to broadcast information to farmers.

The first official broadcast at its own Chicago studio was April 12, 1924, with the call letters WLS for World's Largest Store.

The 1925 Sears catalog stated: "WLS was conceived in your interests, is operated in your behalf and is dedicated to your service. It is your station."

While the focus was farm and civic programming, the station also aired popular music, comedies and radio serials.

The National Barn Dance was one of the station's first programs, but when it aired, Sears' management was appalled by the "disgraceful lowbrow music." The listening audience disagreed and sent telegrams telling WLS they wanted more.

The Barn Dance served rural farm audiences, and city dwellers who had come from rural communities. It also appealed to folks who wanted to hear songs from the "good old times."

The Barn Dance continued to grow in popularity, and a live studio audience was added, along with broadcasts being picked up by other stations coast to coast. Tickets were sold out for the live shows eight weeks in advance.

All of the performers were thought of as "family" by the listeners. Popular performers included Rex Allen, the "King of Cowboys" in 1950s films; Gene Autry, who began on WLS in 1930 as the Oklahoma Yodeling Cowboy; the Maple City Four from LaPorte, Ind., who specialized in barbershop harmony and clowning around; and Lulu Belle and Scotty, the Sweethearts of Country Music.

The Barn Dance theme was so successful that the radio program went on the road to date fairs. Local communities, including Antioch and Grayslake, also imitated the format as fundraisers, especially during the Great Depression.

By the 1950s, audience numbers began to dwindle, and in 1957 the National Barn Dance stopped its live performances. The program continued on WLS until the station was sold and switched formats to contemporary music. The Barn Dance found a home on WGN for several years before it went off the air.

Lawsuit against Sears dismissed
By Sandra M. Jones - Staff Reporter - Chicago Tribune
December 21, 2009

A federal court in Chicago dismissed a longstanding shareholder lawsuit against Sears Holdings Corp. that stemmed from Kmart Holding Corp.'s 2005 takeover of Sears Roebuck and Co.

The lawsuit, filed in 2004, alleged that Sears and its then-Chairman and CEO Alan Lacy along with Kmart's then-Chairman Edward Lampert and Lampert's hedge fund ESL Partners LP misled investors because they didn't disclose talks between the two retail chains.

Sears and Kmart began to explore a possible deal in February 2004, one in which Sears would buy Kmart, according to court documents. By October 2004, Lampert broached the subject of Kmart acquiring Sears during a meeting with Lacy at Lampert's house, the court filing said. In the end, a deal for Kmart to buy Sears was announced Nov. 17, sending Sears stock up 17 percent that day.

A shareholder group, led by Maurice Levie and H. Robert Monsky, allege the two retailers had a duty to disclose the discussions, noting the shareholders who lost money because they sold Sears stock before the announcement. U.S. District Judge Robert Gettleman threw out the case in a ruling Friday, saying in essence that the retailers had no such obligation to make the talks public.

Officials at Hoffman Estates-based Sears declined to comment. Shareholder attorney Mark Miller at Chicago-based Wexler Wallace LLP couldn't be reached for comment.

As Stores Sputter, Sales Sizzle Online
By Geoffrey A. Fowler - Wall Street Journal
December 21, 2009

Dec. 15 Sets Record for Web-Site Revenue;
Sears, Macy's, Other Big Retailers Lure Internet Shoppers

A holiday season of Web price wars and aggressive online promotions by store-based retailers is leaving e-commerce a larger force in American retail.

While sales conducted at brick-and mortar stores are about flat this season compared with 2008, online retailing grew 4% from the beginning of November through Dec. 18 to $24.8 billion, according to Web tracking company comScore Inc. Online sales on Dec. 15 totaled $913 million, marking a one-day record for the industry.

Most online holiday sales began winding down Friday with the expiration of deadlines to receive free shipping. But Web analytics company Coremetrics Inc. reported that sales Friday and Saturday broke expectations to increase 24% compared to the Friday and Saturday before Christmas last year, as snowstorms in the eastern U.S. prompted some consumers to do last-minute shopping online. EBay is taking a "mobile boutique" of its top-selling products around the U.S. over the holidays, as part of an effort to win shoppers back to the online marketplace. WSJ's Geoffrey Fowler reports. While e-commerce accounted for 6% of all U.S. retail sales excluding cars, travel and prescription drugs in 2008, it could end the holiday season this year representing about 7%, said Sucharita Mulpuru, an analyst at Forrester Research.

 "Price and convenience are probably the biggest factors—you can often save money shopping online," she said. Online sales just over the holidays likely will reach 10% of all retail, she added. The lion's share of the online growth went to larger retailers that were in a better position to offer deep discounts and lures such as free shipping. Out of the top 500 retail sites, the percentage of visits to the top 20 such sites rose 9% over the past five weeks, versus the same period last year, according to Experian PLC's Hitwise Web-tracking service. The percentage of visits to the rest—including sites such as Petco.com and Hallmark.com—fell 9%.

Amazon.com Inc. appeared to be the biggest winner, at least in terms of site traffic. Its share of traffic among the top 500 retailers rose nearly 31% to more than 16% in the week ended Dec. 12. That's more than double its nearest competitor, Wal-Mart Stores Inc., which launched aggressive price wars with Amazon on books, video games and other products. Amazon, which declined to divulge sales statistics, has said only that December marked the best month ever for sales of its Kindle e-reader.

 Sears.com, owned by Sears Holdings Corp., leapt from No. 6 last year to No. 4 this year on Hitwise's traffic rankings, thanks to an 11% pickup in share during the week ended Dec. 12. Sears has been promoting a service that lets online shoppers pick up their purchases in its stores and created an online community called MySears.

 "Everybody raised their game," said Fiona Dias, executive vice president for marketing and strategy at GSI Commerce Inc., which runs about 100 retail Web sites. "People are going to have to be much more creative in a world where the big guys are consolidating."

To compete with the mega-sales from the largest retailers, this year GSI encouraged about 30 online merchants to band together and email each others' best customers for a "world's greatest friends and family event" last Sunday and Monday.

Yet some of the sales growth came at the expense of profit. MyBuys Inc., which tracks sales by individuals at dozens of client sites to provide product recommendations, said that for the month of December through the 17th, the average discount on promoted items rose 5.6% to total 26.4%, compared to last year.

Large retailers got the biggest boost from discounting, with sales from such promotions leaping 213% among the top quarter of retailers by size that MyBuys tracks. Some smaller online retailers say they are having a harder time standing out. Vanessa Barcus, the owner of the designer-clothes site Shopgoldyn.com, said she can't compete with the holiday marketing budgets of large sites and has tried to rein in discounting as the economy picks back up. "No one wins—big or small—when we all cut down our margins so much," Ms. Barcus said. Still, her holiday sales so far are up 37% compared to last year's, and selling online has become more important than sales in her Denver showroom.

EBay Inc.'s giant online marketplace, where traffic has slumped in recent years, lost shoppers every week since the end of November compared to the same period of last year, according to Compete Inc. EBay, which has cut back on coupons this year to instead focus on a multimedia marketing campaign and cross-country mobile shopping display, declined to comment.

But some of the largest merchants on eBay.com reported a pickup, especially last week. ChannelAdvisor Corp., which helps brands sell on a variety of online destinations, said its comparable-store sales on eBay were up 4% from Dec. 1 to Dec. 15. Including merchants that were new to eBay this year, sales were up 20% year over year, the company said.

 Yet comparable-store sales among ChannelAdvisor clients on Amazon's marketplace were up 74%. "Clearly, Amazon continues to do very very well and is taking share from everyone in the ecommerce world," said ChannelAdvisor's chief executive, Scot Wingo.

Change Nobody Believes In
A bill so reckless that it has to be rammed through on a partisan vote on Christmas eve.
The Wall Street Journal - Review & Outlook
December 21, 2009

And tidings of comfort and joy from Harry Reid too. The Senate Majority Leader has decided that the last few days before Christmas are the opportune moment for a narrow majority of Democrats to stuff ObamaCare through the Senate to meet an arbitrary White House deadline. Barring some extraordinary reversal, it now seems as if they have the 60 votes they need to jump off this cliff, with one-seventh of the economy in tow.

Mr. Obama promised a new era of transparent good government, yet on Saturday morning Mr. Reid threw out the 2,100-page bill that the world's greatest deliberative body spent just 17 days debating and replaced it with a new "manager's amendment" that was stapled together in covert partisan negotiations. Democrats are barely even bothering to pretend to care what's in it, not that any Senator had the chance to digest it in the 38 hours before the first cloture vote at 1 a.m. this morning. After procedural motions that allow for no amendments, the final vote could come at 9 p.m. on December 24.

Even in World War I there was a Christmas truce.

The rushed, secretive way that a bill this destructive and unpopular is being forced on the country shows that "reform" has devolved into the raw exercise of political power for the single purpose of permanently expanding the American entitlement state. An increasing roll of leaders in health care and business are looking on aghast at a bill that is so large and convoluted that no one can truly understand it, as Finance Chairman Max Baucus admitted on the floor last week. The only goal is to ram it into law while the political window is still open, and clean up the mess later.

• Health costs. From the outset, the White House's core claim was that reform would reduce health costs for individuals and businesses, and they're sticking to that story. "Anyone who says otherwise simply hasn't read the bills," Mr. Obama said over the weekend. This is so utterly disingenuous that we doubt the President really believes it.

The best and most rigorous cost analysis was recently released by the insurer WellPoint, which mined its actuarial data in various regional markets to model the Senate bill. WellPoint found that a healthy 25-year-old in Milwaukee buying coverage on the individual market will see his costs rise by 178%. A small business based in Richmond with eight employees in average health will see a 23% increase. Insurance costs for a 40-year-old family with two kids living in Indianapolis will pay 106% more. And on and on.

These increases are solely the result of ObamaCare—above and far beyond the status quo—because its strict restrictions on underwriting and risk-pooling would distort insurance markets. All but a handful of states have rejected regulations like "community rating" because they encourage younger and healthier buyers to wait until they need expensive care, increasing costs for everyone. Benefits and pricing will now be determined by politics.

As for the White House's line about cutting costs by eliminating supposed "waste," even Victor Fuchs, an eminent economist generally supportive of ObamaCare, warned last week that these political theories are overly simplistic. "The oft-heard promise 'we will find out what works and what does not' scarcely does justice to the complexity of medical practice," the Stanford professor wrote.

• Steep declines in choice and quality. This is all of a piece with the hubris of an Administration that thinks it can substitute government planning for market forces in determining where the $33 trillion the U.S. will spend on medicine over the next decade should go.

This centralized system means above all fewer choices; what works for the political class must work for everyone. With formerly private insurers converted into public utilities, for instance, they'll inevitably be banned from selling products like health savings accounts that encourage more cost-conscious decisions.

Unnoticed by the press corps, the Congressional Budget Office argued recently that the Senate bill would so "substantially reduce flexibility in terms of the types, prices, and number of private sellers of health insurance" that companies like WellPoint might need to "be considered part of the federal budget."

With so large a chunk of the economy and medical practice itself in Washington's hands, quality will decline. Ultimately, "our capacity to innovate and develop new therapies would suffer most of all," as Harvard Medical School Dean Jeffrey Flier recently wrote in our pages. Take the $2 billion annual tax—rising to $3 billion in 2018—that will be leveled against medical device makers, among the most innovative U.S. industries. Democrats believe that more advanced health technologies like MRI machines and drug-coated stents are driving costs too high, though patients and their physicians might disagree.

"The Senate isn't hearing those of us who are closest to the patient and work in the system every day," Brent Eastman, the chairman of the American College of Surgeons, said in a statement for his organization and 18 other speciality societies opposing ObamaCare. For no other reason than ideological animus, doctor-owned hospitals will face harsh new limits on their growth and who they're allowed to treat. Physician Hospitals of America says that ObamaCare will "destroy over 200 of America's best and safest hospitals."

• Blowing up the federal fisc. Even though Medicare's unfunded liabilities are already about 2.6 times larger than the entire U.S. economy in 2008, Democrats are crowing that ObamaCare will cost "only" $871 billion over the next decade while fantastically reducing the deficit by $132 billion, according to CBO.

Yet some 98% of the total cost comes after 2014—remind us why there must absolutely be a vote this week—and most of the taxes start in 2010. That includes the payroll tax increase for individuals earning more than $200,000 that rose to 0.9 from 0.5 percentage points in Mr. Reid's final machinations. Job creation, here we come.

Other deceptions include a new entitlement for long-term care that starts collecting premiums tomorrow but doesn't start paying benefits until late in the decade. But the worst is not accounting for a formula that automatically slashes Medicare payments to doctors by 21.5% next year and deeper after that. Everyone knows the payment cuts won't happen but they remain in the bill to make the cost look lower. The American Medical Association's priority was eliminating this "sustainable growth rate" but all they got in return for their year of ObamaCare cheerleading was a two-month patch snuck into the defense bill that passed over the weekend.

The truth is that no one really knows how much ObamaCare will cost because its assumptions on paper are so unrealistic. To hide the cost increases created by other parts of the bill and transfer them onto the federal balance sheet, the Senate sets up government-run "exchanges" that will subsidize insurance for those earning up to 400% of the poverty level, or $96,000 for a family of four in 2016. Supposedly they would only be offered to those whose employers don't provide insurance or work for small businesses.

As Eugene Steuerle of the left-leaning Urban Institute points out, this system would treat two workers with the same total compensation—whatever the mix of cash wages and benefits—very differently. Under the Senate bill, someone who earned $42,000 would get $5,749 from the current tax exclusion for employer-sponsored coverage but $12,750 in the exchange. A worker making $60,000 would get $8,310 in the exchanges but only $3,758 in the current system.

For this reason Mr. Steuerle concludes that the Senate bill is not just a new health system but also "a new welfare and tax system" that will warp the labor market. Given the incentives of these two-tier subsidies, employers with large numbers of lower-wage workers like Wal-Mart may well convert them into "contractors" or do more outsourcing. As more and more people flood into "free" health care, taxpayer costs will explode.

• Political intimidation. The experts who have pointed out such complications have been ignored or dismissed as "ideologues" by the White House. Those parts of the health-care industry that couldn't be bribed outright, like Big Pharma, were coerced into acceding to this agenda. The White House was able to, er, persuade the likes of the AMA and the hospital lobbies because the federal government will control 55% of total U.S. health spending under ObamaCare, according to the Administration's own Medicare actuaries.

Others got hush money, namely Nebraska's Ben Nelson. Even liberal Governors have been howling for months about ObamaCare's unfunded spending mandates: Other budget priorities like education will be crowded out when about 21% of the U.S. population is on Medicaid, the joint state-federal program intended for the poor. Nebraska Governor Dave Heineman calculates that ObamaCare will result in $2.5 billion in new costs for his state that "will be passed on to citizens through direct or indirect taxes and fees," as he put it in a letter to his state's junior Senator.

So in addition to abortion restrictions, Mr. Nelson won the concession that Congress will pay for 100% of Nebraska Medicaid expansions into perpetuity. His capitulation ought to cost him his political career, but more to the point, what about the other states that don't have a Senator who's the 60th vote for ObamaCare?

"After a nearly century-long struggle we are on the cusp of making health-care reform a reality in the United States of America," Mr. Obama said on Saturday. He's forced to claim the mandate of "history" because he can't claim the mandate of voters. Some 51% of the public is now opposed, according to National Journal's composite of all health polling. The more people know about ObamaCare, the more unpopular it becomes.

The tragedy is that Mr. Obama inherited a consensus that the health-care status quo needs serious reform, and a popular President might have crafted a durable compromise that blended the best ideas from both parties. A more honest and more thoughtful approach might have even done some good. But as Mr. Obama suggested, the Democratic old guard sees this plan as the culmination of 20th-century liberalism.

So instead we have this vast expansion of federal control. Never in our memory has so unpopular a bill been on the verge of passing Congress, never has social and economic legislation of this magnitude been forced through on a purely partisan vote, and never has a party exhibited more sheer political willfulness that is reckless even for Washington or had more warning about the consequences of its actions.

These 60 Democrats are creating a future of epic increases in spending, taxes and command-and-control regulation, in which bureaucracy trumps innovation and transfer payments are more important than private investment and individual decisions. In short, the Obama Democrats have chosen change nobody believes in—outside of themselves—and when it passes America will be paying for it for decades to come.

A Sampling of Policies on Accepting Returns
New York Times
December 19, 2009

What follows is a sampling of retailers’ return policies. Some retailers make it easier than others.

L.L. Bean No time limit on returns. Receipts aren’t required but they’re encouraged. Customers can choose to receive a refund in their original form of payment, make an exchange or receive store credit. Merchandise purchased online or through the catalog can be returned to any of its retail stores or outlets.

LANDS’ END No time limit on returns. Customers can receive a refund in their original form of payment if they have a receipt; otherwise, they receive a store credit. Merchandise can be returned at Sears, even if the product wasn’t purchased there. No time limits or fees on gift cards, and they do not decline in value over time.

J. CREW Allows 60 days for refunds with an original receipt; refunds will be made in original form of payment (you need a government-issued ID to get cash back with a receipt). If you don’t have a receipt, you’ll also need ID, and can make an exchange or receive merchandise credit based on the current selling price. Gift receipts are good for merchandise credit or exchanges. After 60 days, you can still make an exchange or receive a credit for the price at the time of sale if you have the original receipt, or for the current selling price if you don’t have the original receipt. Merchandise purchased online can be returned to stores.

GAP, BANANA REPUBLIC, OLD NAVY Banana Republic and Gap shoppers have 30 days to return goods. But Banana shoppers who purchased items from Oct. 30 through Dec. 15 can make returns through Jan. 15. At the Gap, items bought Nov. 2 through Dec. 31 can be returned through Jan. 31. All online purchases can be returned at any of the stores within 45 days of your order date. (That goes for their online-only store Piperlime as well, though its Athleta brand allows returns with no restrictions). Old Navy shoppers have 90 days to return merchandise all year round. Gift receipts will get a store credit. (At Banana, you can get a gift card that can be used at any of Gap’s properties, online or off.) Refunds in the original form of payment are available at all stores with original receipt.

BEST BUY Purchases made from Nov. 1 through Dec. 24 can be returned through Jan. 31, except for certain electronics. Returns of computers, monitors, projectors, camcorders, digital cameras and radar detectors are allowed for 14 days (if purchased online, 14 days from date you received products), and a 15 percent restocking fee applies if the products were opened. All other products can be returned within 30 days. Refunds will generally be in the same form as the original purchase, but checks will be mailed within 10 days of a return on items worth more than $250 and paid for with cash, debit cards or a check. Some products, like opened computer software, are not refundable but can be exchanged for an identical item. A restocking fee of 25 percent is applied to special orders like appliances, and 10 percent on Apple iPhones. All online purchases can be returned to stores. Gift receipts can be used for exchanges and merchandise credit.

Nice Gift, but Ask if You Can Return It
By Tara Siegel Bernard - New York Times
December 19, 2009

So you think you’ve picked out the perfect gift for your loved one. But there’s one more thing you should consider: how hard will it be to return it?

Before you take out your credit card, take the time to closely read the fine print of the store’s return policy, or ask about it, because there is a huge gulf between the most generous and the most restrictive. And do not assume that the stores you shopped in last year have the same return policies this season. About 17 percent of retailers have tightened their holiday policies this year, according to the National Retail Federation.

Many of the retailers that have changed their rules have good reason: the industry will lose an estimated $2.7 billion during the holidays because of return fraud and about $9.6 billion for the year, according to the federation, a retail trade group. Scam artists produce fake receipts, or they take advantage of stores with lenient policies, steal large quantities of merchandise and then return them without a receipt.

“Generally speaking, a store can set up any return policy it wants,” said Edgar Dworsky, a consumer lawyer and founder of ConsumerWorld.org, a consumer resource guide. But the policy does have to be clearly disclosed.

There are a handful of stores whose liberal return policies are renowned, Nordstrom and Lands’ End among them. Lands’ End likes to point to the old-fashioned London taxi featured on its 1984 catalog cover, which it sold for $19,000 that year. More than two decades later, the customer asked for a refund, and Lands’ End returned the whole $19,000. The black cab lives in Lands’ End’s warehouse today, as a testament to its lenient policy.

At the opposite end of the spectrum are electronics retailers that allow only a couple of weeks to return items like computers and may charge a 15 percent restocking fee. Equally frustrating are companies whose brick-and-mortar stores refuse to make exchanges for merchandise bought online.

Plenty of retailers, however, try to make life easier during the holidays and loosen their rules. Many stores, for instance, will allow items purchased in November and December to be returned through January. But policies can vary widely, even among retailers within the same retailing empire, like Gap. The following tips will help you navigate the various rules of return, both online and off.

DON’T ASSUME If you purchased something online, it does not necessarily mean you can return it to the retailer’s physical location. Many big stores, like J. Crew, will take back anything purchased online, but others, including Sports Authority, American Apparel and Home Depot, will not (but come February, Home Depot will reverse its policy). So you, or the person you gave a gift to, will have to make a trip to the post office and pay for return shipping (though some online-only retailers like Zappos and Piperlime offer free shipping both ways).

DO YOUR HOMEWORK Whether you’re shopping online or in a store, be sure to check the various return policies on the retailer’s Web site or at the cash register. Online store policies may differ, though some retailers provide a little more wiggle room for online purchases — 45 days for online returns versus 30 days for store-bought merchandise. Retailers may also have different return policies for different types of merchandise. Most stores continue to “slice and dice their return policies, creating complicated rules for different categories of items,” Mr. Dworsky said, noting that Amazon.com has about 30 product categories with varying policies. “Electronic items are typically subject to stricter rules than, say, clothing.”

Computers, digital cameras and opened goods may be subject to limited return rights, restocking fees, shortened return periods or no refunds at all, Mr. Dworsky said. These policies were put into place, at least in part, to discourage buyers from “renting” goods for the weekend, and to help retailers thwart fraud, he added. Fancy dresses cannot be rented either. Macy’s, for instance, affixes a special tag to some formal dresses; returns must be unworn, with original tags in place.

Other companies’ policies are so lenient that no formal policy exists. “We evaluate each situation on a case-by-case basis, with the ultimate objective of taking care of the customer,” said Colin Johnson, a Nordstrom spokesman. Nordstrom does not impose time limits on returns, he said, and receipts and original tags are helpful, but not necessary.

KNOW THE RESTRICTIONS It’s often impossible to get cash back, especially if you’re returning a gift. Many retailers will provide refunds only to the person who originally made the purchase, while gift recipients — even if you have a gift receipt — can only make exchanges for merchandise, or receive a store credit or gift card.

If you’re the original purchaser, you’re typically entitled to the tender you originally paid with. But you will need the original receipt, and the credit or debit card used to make the purchase. If you paid cash, you may also need a driver’s license to get your money back at some retailers.

Other companies are more lenient. Target will give customers refunds in their original form of payment for up to 90 days with an original receipt (or will issue a Target gift card for consumers who have a gift receipt). If you do not have the receipt, you can still return up to $70 worth of goods every 12 months without one. If you exceed that amount, you can still make exchanges for items in the same department.

And some stores simply never issue refunds. American Apparel and Brooklyn Industries provide refunds only if the merchandise is defective (though both retailers will provide refunds for items purchased online).

CHECK YOUR CARD’S POLICY Several credit cards offer little-known but highly useful benefits that allow you to secure a refund when a retailer will not grant one, as long as you made the purchase with that card. Some MasterCard and Visa cardholders can receive refunds for up to $250 per item — there is a $1,000 annual limit — within 60 or 90 days of purchase. American Express, meanwhile, will cover up to $300 per item, excluding shipping and handling, for 90 days, up to $1,000 per account each year. And the Chase Sapphire cards covers up to $500 per item, for a maximum of $1,000 annually. There are some restrictions, of course. You cannot exchange animals, for instance, unless they are of the Zhu Zhu variety. Call the number on the back of your card to see what exactly your card covers.

KEEP RECEIPTS This is obvious. Get a folder, toss all your receipts inside and keep them, even long after you’ve handed out your holiday gifts. If you or the gift recipient end up dissatisfied with an item and the retailer refuses to take it back, you may need the receipt to apply for a refund from your credit card company.

Before you go that route, always ask to speak with a store manager, whether you’re at the store or on the retailer’s customer service phone line. “If a satisfactory resolution is not obtained, then a complaint can be filed with the state attorney general’s office or local consumer agency,” Mr. Dworsky said.

Stop Juggling Your Retirement Investments
By Dan Caplinger - Motley Fooll.com
December 16, 2009

It's bad enough that investors saving for retirement have had to deal with the worst bear market in decades. For most people, the real challenge is still ahead -- and no matter which way the market goes, it's only going to get worse. But there is one solution you can use to make it a little bit better.

The big retirement savings mess At first glance, you might think that saving for retirement is relatively simple. Breaking it down, you have to find money to save, invest it to generate as good a return as possible, and then spend it wisely after you retire. Easy, right?

It turns out, though, that figuring out the best retirement saving strategy is a lot more complicated than that. Not only do you have to figure out how to find great investments, but you also have to learn about the specific choices that are unique to retirement saving. In particular:

Anyone can contribute to a traditional IRA, which lets you save on a tax-deferred basis and gives many taxpayers immediate tax savings by allowing them to deduct the amount of their contributions. Roth IRAs have come into the spotlight lately, as the coming expiration of the income limits on Roth conversions give everyone the opportunity to bite the tax bullet now in favor of moving their money into these tax-free accounts. You also need to weigh additional options if you have access to an employer-sponsored retirement plan at work, such as a 401(k). At least on that last point, it appears that things are starting to change. Many companies, including Honeywell (NYSE: HON), Hewlett-Packard (NYSE: HPQ), and Sears Holdings (Nasdaq: SHLD), reduced or suspended employer matching contributions in response to the recession.

Now, though, an increasing number of employers are demonstrating their commitment to helping employees retire well. Some of the companies that previously cut their matching have started to reinstate matches. So far, Ford Motor (NYSE: F), Eastman Kodak, and FedEx (NYSE: FDX) are among those who've made such announcements recently.

Unfortunately, there's no assurance that things will continue to improve. Given the ever-changing tax laws and the unpredictable economic environment, it's tough to make any sort of long-lasting plan for your retirement savings.

Of course, you could simply choose to treat retirement saving like any other financial goal you have and use the same investment accounts you use for your non-retirement money. But by doing so, you'll miss out on all the tax benefits that retirement accounts offer.

Keeping it simple Instead, the smart way to make retirement saving manageable is to cut down the number of different accounts you have to a bare minimum. If you have a good 401(k) at your current job and you still have retirement accounts with previous employers, then the smart move is to roll all those old plans over into your current 401(k). That may leave you with just a single account to track and manage -- and if your investment options are good enough, that may be just about all you need.

Unfortunately, most people don't have a 401(k) they're that happy with. If you're in that boat, then at the very least, you can move your old 401(k)s from past jobs into a rollover IRA. That gives you the investment flexibility that most 401(k)s lack -- and while it means that you'll have at least two different accounts, it's still an improvement over having to coordinate a bunch of equally bad 401(k)s.

Wrangling with the Roth decision If the Roth IRA is right for you, then it's worth looking into whether converting existing traditional IRAs makes sense. In addition to all the other advantages, converting could also help you consolidate formerly separate traditional and Roth IRAs into a single account, making it much easier to manage. Moreover, you can look into whether your employer offers a Roth 401(k) at work -- an increasing number of employers do, including IBM (NYSE: IBM) and Google (Nasdaq: GOOG).

Managing your retirement savings can seem like an impossible task, given all the different types of accounts out there. But rather than juggling many different accounts at once, you should take steps to simplify your financial life. Doing so will make it a lot easier to save for all your financial goals.

Sears OKs stock repurchase of up to $500M
By Sandra M. Jones - staff reporter - Chicago Tribune
December 17, 2009

Sears Holdings Corp. is doing some shopping of its own this holiday season.

The owner of Sears and Kmart stores said its board of directors increased the size of the retail company's stock buyback plan by $500 million. An additional $82 million worth of shares are available for repurchase under the company's existing plan.

Most retailers have suspended stock buyback programs to conserve resources and cope with cash-strapped consumers who are shopping less and expecting bigger discounts. But the economic downturn hasn't stopped Sears from pursuing this favorite maneuver of Edward Lampert, the company's chairman and largest stakeholder.

Since September 2005, shortly after Lampert gained control of Hoffman Estates-based Sears, the company has spent almost $6 billion on stock buybacks. That figure includes $423 million Sears already spent this year.

Lampert has received criticism for pouring more money into buying Sears stock than investing in its stores. In 2008, Sears spent $497 million on capital expenditures and $678 million to buy back shares. In 2007, Sears spent $570 million on capital expenditures and $2.9 billion on share buybacks.

Even as rival retailers cut back on capital improvements this year in response to the recession, Sears still ranks the lowest among 13 national chains, investing about 1 percent of sales annually since 2005, according to a Credit Suisse analysis.

By contrast, even the reduced capital spending figures for 2009 at other retailers leave Sears looking stingy: Lowe's is at 5.1 percent, Kohl's at 4.7 percent, Target at 3.5 percent, J.C. Penney at 3.4 percent and Wal-Mart at 3.2 percent, according to Credit Suisse.

Joining Sears in the frugal aisle: Bon-Ton Stores, owner of Carson Pirie Scott, at 1.3 percent of sales, down from 2.6 percent in 2008. Also among the laggards is Best Buy at 1.4 percent of sales, down from 2.9 percent in 2008.

"As same-store sales continue to plunge, margins contract and earnings drop, Sears struggles to find its way while shedding little light on its strategy and results for its investors," wrote Carol Levenson, analyst at Chicago-based bond research firm Gimme Credit. "Stock buybacks appear to be the only idea to bolster performance, but financial engineering alone can't turn around a retailer."

Sears' stock price under Lampert's aegis has seesawed from a high of $193 in April 2007 to a low of $34 this past February. Shares rose 0.2 percent to $75.87 in late afternoon trading Thursday. The stock hit a 52-week high of $79.75 on Nov. 16.

Lampert, through his hedge fund RBS Partners, owns 57 percent of Sears.

"At Sears Holdings, our investment principle is guided by the belief that capital invested in any area of our business deserves a reasonable return on that investment," said Sears spokesman Chris Brathwaite. "As a public company our ultimate goal is to create shareholder value."

Sears Plans Buy Back of Another $500 Million
Dow Jones Newswires
(December 17, 2009)

Sears Holdings Corp.'s (SHLD) board of directors has approved the buyback of another $500 million of stock, adding to the $82 million which still can be purchased under prior authorization.

The retailer has consistently plowed money back into stock buybacks since Edward Lambert gained control of the company earlier this decade through Kmart's acquisition of Sears. This fiscal year, Sears has spent $423 million to repurchase 7.1 million; there are about 114.7 million outstanding.

Meanwhile, resumption of, or increases to, stock-buyback efforts have picked up across the spectrum in recent weeks as companies feel less in need of having to hoard cash as the economy appears to be improving.

Last month, Sears said its third-quarter loss narrowed more than expected amid inventory cuts and cost reductions, but the company continued to see sales slide at its namesake stores.

Shares of Sears closed Wednesday at $75.53 and were inactive premarket. The stock has nearly doubled this year.

Sears board raises stock buyback plan by $500 million
(December 17, 2009)

NEW YORK (Reuters) - Sears Holdings Corp <SHLD.O> said on Thursday that its board had increased the size of the department store chain's stock buyback plan by $500 million.

Sears, led by hedge fund manager Edward Lampert, said that the new authorization came on top of about $82 million worth of shares still available under the current buyback plan.

The retailer said that through Wednesday, it had bought back 7.1 million shares for about $423 million this year. As of Wednesday, Sears had 114.7 million common shares outstanding.

(Reporting by Phil Wahba; Editing by Lisa Von Ahn)

4 Stocks Enjoying Their Last Christmas?
By Rich Duprey - The Motley Fool
December 15, 2009

To celebrate the holidays, we here at the Fool are devoting extra virtual ink to all things consumer-focused in a special section called "The 12 Days of Christmas." Over the coming week, we'll have our "12 Days of Content" surrounding consumer-focused names that look set to profit or perish from the holiday cheer.

Some stocks are like roasted chestnuts bought on a snowy streetcorner at Christmastime: You want to get 'em while they're hot.

Over the next decade, toymaker Hasbro will be one of those companies, transforming its portfolio of games and action-figure heroes into movies, TV shows, and other entertainment opportunities. The Motley Fool Stock Advisor recommendation is potentially a huge, multimedia powerhouse.

Others companies, not so much. We'll be lucky if they're still hanging around by next Christmas.

A lump of coal Even with the tight economy, discount retailer Sears Holdings (Nasdaq: SHLD) couldn't maintain a grip on cash-strapped customers, who fled in droves to Wal-Mart Stores (NYSE: WMT) and Target.

Chairman Eddie Lampert favored the financial sleight of hand commonly used at hedge funds to generate cash instead of investing in his stores. Total return swaps, share buybacks at astronomical prices, and Lampert's apparent disdain for remodeling the retailer's aging buildings led many to conclude that he was more interested in the land they sat on than salvaging the company's portfolio of still-iconic brands.

The once-venerable retailer has paid the price of neglect, achieving not one single quarter of positive same-store sales since the combined company emerged from bankruptcy. Unfortunately, investors have bought into the argument that Sears' land will ultimately unlock shareholder value, but a weakening commercial real estate market doesn't bode well for that scenario. As customers continue to avoid its stores, a less robust cash hoard will leave Sears with less room to maneuver.

Enough to make you cry The news parody site The Onion once ran an imaginative interview with RadioShack (NYSE: RSH) CEO Julian Day: "There must be some sort of business model that enables this company to make money, but I'll be damned if I know what it is. You wouldn't think that people still buy enough strobe lights and extension cords to support an entire nationwide chain, but I guess they must, or I wouldn't have this desk to sit behind all day."

Satire, yes, but it also hits pretty close to home. Unless you're looking for some obscure doodad, many people just go to Best Buy (NYSE: BBY) or another big-box electronics store to buy their laptops, large-screen TVs, and other gizmos, rather than the Shack.

Although sales have been on a multiyear downtrend, the company has still managed to earn $192 million in the last four quarters.

However, not even rebranding the company as "The Shack" can offset its own dwindling consumer base. Last quarter, RadioShack was reduced to blaming lower sales of batteries and GPS devices, among other reasons, for its failure to report revenue growth. Coupled with a reliance on stand-alone GPS devices that have themselves been gutted by wireless telecoms incorporating the technology into their phones, the Shack's business model seems even less relevant to today's electronics customer.

A busted business Blockbuster (NYSE: BBI) must also realize that the shelf life of its bricks-and-mortar movie-rental model is reaching the end. While Netflix continues to thrive with its mail-delivery model, and Redbox is a kiosk movie star, Blockbuster grasps at whatever seems currently hot. Total Access -- a supposedly seamless store, mail, and online rental-and-return solution -- was never able to save the chain, and we don't hear much about it anymore. Blockbuster's alleged new saving grace is its own line of branded kiosks, which are now being rolled out. But this seems more an act of desperation than a carefully scripted plot for success.

Blockbuster has become a horrorshow of its own, with a growing debt profile and plummeting sales, making its next starring role likely similar to Circuit City's final performance.

Burn this book Investors will be able to also turn the page on Borders Group (NYSE: BGP), which has lost millions of readers to Amazon.com (Nasdaq: AMZN) and will likely lose millions more as e-books becomes even more popular. It's hard to ignore that one of the most popular iPhone apps is the Barnes & Noble eReader application. While e-readers such as the Kindle and Nook are unlikely to replace a physical book anytime soon, Borders has shown itself incapable of competing effectively in either form.

Wal-Mart, Target, and Amazon are all vying for a larger share of the reading public's dollar by cutting prices on best-sellers to $10. With the company's margins already under pressure, it will have a harder time matching those discounts, which could make this Borders' final chapter.

A wreath of mourning There's no Christmas cheer in pointing out the companies that face chilly prospects in 2010, but these retailers all look like ghosts of Yuletides past. A weakened economy means that some of them -- maybe all of them -- won't be around to welcome in the New Year in 2011.

Do you agree that Sears won't be hoisting a warm cup of wassail next year? Is Blockbuster a burnt-out bulb? Are Radio Shack and Borders ready to be tossed onto the Yule log? Then go caroling in the comments section below, and let us know which company you think is enjoying its last Christmas.

The 'Cost Control' Bill of Goods
How Peter Orszag and the White House
sold a health-care illusion.
Review & Outlook - The Wall Street Journal
December 14, 2009

ObamaCare's core promise—better quality care for everyone at lower costs—is being exposed as an illusion as it degenerates into the raw exercise of political power. Naturally, the White House and its media booster club are working furiously to prop up this fiasco, especially on cost control.

As Obama budget director Peter Orszag put it at a revealing media breakfast earlier this month, the Senate bill does everything the experts recommend to "get at the underlying drivers of health-care costs." While he admitted that "we don't know enough" to produce results right away, the key is to encourage "continuous improvement" through pilot programs and demonstration projects. Cost containment will actually take "years to decades," Mr. Orszag conceded.

The torch was then passed to Ron Brownstein of the Atlantic Monthly, David Leonhardt of the New York Times and editorial writers for the New England Journal of Medicine, among others. Last week the New Yorker ran a 5,000-word apologia from Atul Gawande, who likewise owned up to the fact that there is "no master plan for dealing with the problem of soaring medical costs," only "a battery of small scale experiments." Keep in mind, this is an argument in favor of ObamaCare.

They might have piped up earlier: What they're finally admitting is that all the grandiose talk about "bending the curve" used for months to sell ObamaCare really comes down to their hope that bureaucratic improvisation will make a difference over the long term. Yet the liabilities of the greatest social spending program in American history will be added to the budget almost immediately, and what happens if Mr. Orszag's technocratic revolution doesn't work as promised? Or rather, when it doesn't?

Forgotten in ObamaCare's march-to-the-sea campaign is that during the transition and early on, the White House was divided on whether to pursue health reform at all. Opponents included Larry Summers, worried about the economy and deficits, and David Axelrod, worried about the politics. Another faction led by Tom Daschle preached from the conventional social-equity church of liberalism.

Mr. Orszag proposed another option, citing academic research observing that as much as 30% of health spending is "waste" that doesn't affect outcomes. He argued the country could save $700 billion a year without harming quality—more than enough to pay for universal coverage.

Thus cost control migrated from Orszag theory to free political lunch. Mr. Gawande wrote an influential New Yorker essay on the topic in June, and the theme shaped both the case for a new entitlement and especially the appeal to potential opponents in business.

But then Congressional Budget Office director Douglas Elmendorf testified in July that "the curve is being raised," given that ObamaCare lacks "the sort of fundamental changes" necessary to tamp down costs. Meanwhile, it became clear that Mr. Orszag's favored research was always more nuanced and qualified than his pose of papal infallibility. One of his main gurus, Jonathan Skinner, mused recently that "the key lesson" from a new study challenging some of his findings "is how little we know about the science of health-care delivery."

Well, sure. A field as dynamic and innovative as U.S. medicine, in which costs are largely driven by new technologies and better ways of caring for patients, is rife with complexities and uncertainties. But no one bothered to strike that note of caution when Washington was hopped up on a cost-control gambit that was too painless to be true.

The new cost-control apologists concede that there isn't any actual plan for controlling costs: Throw enough speculative policies against the wall, they say, and some breakthrough will stick. Yet Mr. Orszag's no-less-confident predecessors spent decades trying to pull down Medicare spending with little to no success. Technocracy rarely if ever works as intended. Mr. Gawande points to the case study of U.S. farm policy, and if politically sacrosanct agriculture subsidies and rural price-supports are the best to hope for, then what's the worst?

More relevant examples include Medicare's "relative value" payment scale, which was designed in 1985 by the Harvard economist William Hsiao to encourage more primary care. That's this year's rallying cry too. "Diagnosis-related groups" were introduced into Medicare in 1983 to alleviate hospital cost growth, and what a monumental success that turned out to be. With only brief periods of relatively slower growth, nominal Medicare spending has risen on average at an annual rate of 9.6% since 1980. Over the same period total Medicare spending has grown 13-fold, climbing from 1.2% of the economy to 3.2% today.

Congress lacks the stomach for serious cost control in any case. One policy Mr. Orszag favors—Medicare penalties for hospitals that re-admit certain patients—is limited to only three conditions in the Senate bill, and the penalties are trivial.

Another—a putatively independent commission that is supposed to enforce cost cutting—is barred from going after costs incurred by doctors and hospitals, which leaves out more than half of Medicare spending. Earlier this year Mr. Orszag got into a heated debate with Henry Waxman over such a commission at a dinner party hosted by Connecticut Rep. Rosa DeLauro, precisely because the House baron enjoys the political power that flows from controlling health spending.

Even if Mr. Orszag's Princeton and Yale Ph.D.s really do cook up some hope-and-a-prayer savings plan, it will invariably offend one constituency or another and Congress will block it. Thereupon the political class will do what it always does when costs run over: Tighten price controls across the board, before moving on to denying patient access to costly treatments that will be defined as "wasteful." That is, ration care.

"Basically everything that has been put forward in health policy discussions for a decade is in this bill," Mr. Orszag said on a conference call shortly before Thanksgiving. He then asked critics pointedly: "What specifically else would you do?"

Hmmm. One liberal sage noted in a 2007 paper that "four decades of empirical research" have shown that insulating people through third-party insurance coverage "from the full cost of health care has been responsible for anywhere from 10% to 50% of the large increase in health expenditures." Ultimately, he concluded, increasing cost-sharing would give individuals a direct stake in more prudent purchasing, as opposed to today's invisible health dollars that vanish as more expensive premiums, foregone wages and higher taxes.

Those are the words of Jason Furman, now the White House deputy economic director who seems to have been put into witness protection. Every serious health economist in the country recommends reforming the tax exclusion for employer-sponsored insurance, perhaps by converting it to a deduction or credit. Cost control will never stick unless it is extricated from politics and transferred to individuals to make their own trade-offs.

Such reforms were ruled out by union opposition, so the Senate gestures at them with a 40% excise tax on high-cost insurance plans, on the theory that two wrongs will make a right. But this untargeted tax will simply raise the cost of coverage for all workers in a given pool—it's too clever by 40%—while doing nothing to stem the distortions from first-dollar, third-party insurance.

No doubt there are efficiencies to be had in health care, and maybe Mr. Orszag has even identified some of them. But all of his bright ideas could be taken for a whirl without adding trillions of new liabilities to the federal balance sheet. And the bad faith of the White House and its acolytes is breathtaking.

The White House hawked a permanent entitlement expansion on flimsy and speculative theories that its own partisans now admit—albeit when it is nearly too late—aren't more substantive than the triumph of hope over experience, while simultaneously writing off the one policy that has been effective in the real world. The cost control mantra of ObamaCare was always a political bill of goods, and its result will be the opposite of its claims: poorer quality care at higher costs.

1 Retail Winner We Can All Agree On
By Rich Smith - The Motley Fool
December 14, 2009

In spring, Lord Tennyson tells us, a "young man's fancy lightly turns to thoughts of love." Presumably, the poet knew whereof he wrote. But one thing I'm sure of: When winter rolls around, Fools of all ages turn to thoughts of retail stocks.

Black Friday sales figures. Cyber Monday. 20 lbs. of Christmas circulars arriving with every Sunday paper. For us, 'tis the season to start picking winners and losers in the retail sphere.

Here at the Fool, we aim to steer you right in this paperchase, to help you find the winners and avoid the losers. So in this first installment of our "12 Days of Christmas" saga, I want to make sure you get off to the best possible start -- with the absolute best retail idea out there: Amazon.com (Nasdaq: AMZN).

Forget the rest ... How do I know that Amazon's "the best" retail stock in the world? Well, there was Goldman Sachs' (NYSE: GS) say-so last month of course. But really, that only confirmed my own thinking about Amazon. Every investor takes his own approach to stockpicking, you see. In picking Amazon today, I follow the advice of another famous Briton: "When you have eliminated the impossible, whatever remains, however improbable, must be the truth."

When I surveyed the retail field recently, it began to dawn on me that there's something ... different ... about Amazon. Something that sets it apart from the multiple other investments available to us in this field:

Wal-Mart Stores (NYSE: WMT) The undisputed king of efficient bricks-and-mortar retailing, it's hard to argue with Walmart's success as a business -- but it's even harder to argue in favor of the company, period. Seems every time you turn around, someone's criticizing Wal-Mart for some new supposed offense against humanity. If the company's not mooching off the U.S. taxpayer, it's laying waste the local hardware store. One day it's union-busting; the next it's poisoning babies. The claims may be exaggerated, but the fact remains: With so much negative publicity swirling around, it's awfully hard to love Wal-Mart, Warren Buffett's purchases of the behemoth notwithstanding.

Sears Holding (Nasdaq: SHLD) And then there's Sears. It may not attract as much criticism as Wal-Mart -- but that's only because in the world of retailing, Sears has become an afterthought. Turns out, the "softer side of Sears" refers to its sales figures. And with economies of scale on the wane, Sears continues to post negative profit margins. Long story short, Sears is on the cutting edge of retailing acumen ... for 1950 -- and overmatched today.

Costco (Nasdaq: COST) In contrast to Sears, Costco has figured out a 21st-century way to make big-box retailing work. Selling in bulk, Costco's low prices attract customers by the droves, while it really profits off the annual membership fees it charges 'em for the privilege of visiting its stores. Yet there are concerns over the firm's exposure to the hemorrhaging economy of California and less-than-stellar sales and earnings growth over the last three years (sales up an average 5% per year; earnings off 0.5%).

Overstock.com (Nasdaq: OSTK) Writers take potshots at Patrick Byrne at their own risk -- but recent reports that the Overstock CEO is compiling an electronic "hit-list" of journalists deemed unfriendly to the company are truly frightening (and some have suggested, legally questionable). While the company has done a reasonable job of maintaining sales and generating free cash flow in the middle of the Great Recession, investors would be foolish (small "f") to discount the risks of investing in a company ... run by a madman.

Starbucks (Nasdaq: SBUX) Has the company that brought great coffee to the masses lost its mojo? Starbucks bulls point to cost cutting and a renewed focus on generating free cash flow as factors in its favor. But bears reply that Starbucks sells little more than McCafe ... without the benefit of being ironic.

Just buy the best In short, everywhere you look, there's knocks against these retailers. For every investor who loves 'em, there's another with an axe to grind. But Amazon? Who could hate Amazon?

Oh, I know that some investors worry about the stock's valuation, and yes, that 77 P/E does come a-shocker at first glance. But as I argued back in October, Amazon is "debt-free, and boasting prodigious free cash flow and a rip-roaring growth rate." All of these factors tell me that Amazon's price tag isn't quite as high as it seems.

Simply put, free cash flow concerns are a thing of the past. Sales are going gangbusters as customers flock to the Kindle, and Amazon locks 'em into loyalty plans with its bargain priced "Amazon Prime" deal. And just how genius was it for Jeff Bezos to come up with the idea of shipping every cardboard package ... with a smile emblazoned on the side? It's just not possible to hate a company like this.

Foolish takeaway After eliminating the other possibilities, I'm left with the firm conclusion: Amazon's the best.

Executives Enjoy 'Sure Thing' Retirement Plans
By Elllen E. Schultz and Tom McGinty - Dow Jones Newswires
December 14, 2009

Jacqueline D'Andrea last year lost more than 60% of the 401(k) savings she built over a decade as a Wal-Mart Stores Inc. manager. The 1.2 million employees in the retailer's 401(k) retirement plan lost 18% as the market plunged, corporate filings show.

Top executives at Wal-Mart didn't face such risks. Thanks to a guaranteed 7.4% return, Chief Executive Officer H. Lee Scott Jr. had gains of $2.3 million in a supplemental retirement-savings plan, bringing its total savings to $46.7 million. The company confirms the figures but declines to comment.

One-quarter of top executives at major U.S. companies had gains in their supplemental executive retirement-savings plans in 2008, even as employees had sizable losses in the companies' retirement accounts, according to a Wall Street Journal analysis. The gains in executive retirement accounts often stemmed from guaranteed fixed returns on executive-savings plans.

The disparity underscores a fact of life in America's corporate-pay scene. It's not just bigger paychecks that have led to a growing wage gap—it's the different levels of risk that executives and rank-and-file employees face in their retirement plans. That difference rarely has been more evident than the past year, when 50 million employees lost a total of at least $1 trillion in their 401(k) plans, according to the Center on Retirement Research at Boston College.

Though the stock market has rallied in 2009, most employees still have a long way to go to recoup their losses. The S&P 500 is still down 29% from its October 2007 peak.

Companies say generally that compensation committees determine the returns executives receive on their savings, and in some cases do so to offset the risk executives face by receiving a chunk of their pay in company shares. Nearly all the executives with positive returns on their deferred-compensation plans worked at companies whose share prices were down in 2008.

Comparing executive and employee retirement returns is possible because in 2007 companies were required to begin disclosing earnings on their top officers' deferred-compensation plans. The Journal analyzed filings of Standard & Poor's-500 companies compiled by research firm Capital IQ for fiscal 2008. The latest fiscal year for the analysis ended May 31, 2009. The Journal then extracted investment performance of 401(k) plans at individual companies from their corporate filings.

The Internal Revenue Service limits the amount employees can contribute to a 401(k) plan— $16,500 in 2009—so companies set up supplemental plans to enable higher-paid employees to set aside more money for retirement.

These deferred-compensation plans generally provide notional investment elections that mirror the returns on mutual funds available in the employee 401(k) plan. Because of this, many managers and executives who participate in these supplemental plans also had large investment losses in 2008. But top executives typically also participate in more elite deferred-compensation plans, which can face less risk, largely thanks to guaranteed returns.

Comcast Corp., the cable operator, provides top executives with 12% interest on their supplemental savings. This provided Executive Vice President Stephen Burke with gains of $7.4 million in his deferred-compensation account, helping to boost his total retirement savings to $71 million, according to corporate filings.

The retirement funds of more than 70,000 workers in the Comcast 401(k) plan lost $649 million, a decline of 28%, filings show. Their average account size by year-end was $24,000. The company, which confirmed the calculations, declined to comment.

In their deferred-compensation plans, some executives have access to investment options that aren't available to other employees. For example, top executives at Bank of New York Mellon could invest their savings in a fixed-income fund that had a 6.6% return in 2008; thanks to electing this fund, Steven Elliott, senior vice chairman, had earnings of $1.3 million on his account, according to filings.

The fixed-income fund isn't available in the bank's 401(k) plan. The investments in the employees' retirement accounts fell 30%, filings show. A spokesman confirmed the information.

Top executives at Cummins Inc. could choose among three options: the return on the S&P 500 Index, "the Lehman Bond Index, or 10 year Treasury Bill + 2%," according to filings. The executives at the engine maker had a total of $1.4 million in gains on their accounts, suggesting that none of them elected the stock index, which plummeted last year. By contrast, the employees of the Indiana-based engine maker lost 29% on their 401(k) retirement accounts. A spokesman says the company doesn't disclose which option the executives chose, but says: "These are more senior people who can be expected to make more conservative investment choices than a 25-year-old in the 401(k)."

Some companies note that while fixed returns on executive deferred-compensation plans protect them from losses, they also limit their upside.

Executives at Illinois Tool Works Inc., a maker of fasteners and adhesives, received returns of 6.1% to 8.4% in 2008, while investments in the employees' 401(k) lost 25%. A spokeswoman says so far this year, the average return of employees' 401 (k) plans has been 23%, while the interest credited to the executives' deferred-compensation plan is just 5.6%.

Based on those figures, the average employee's account at Illinois Tool Works would have declined 7.8% from the beginning of 2008; the executive accounts would have gained between 12% and 14.5% in that time.

With the S&P 500 down a third from its October 2007 peak, some employees never will recover their losses. Ms. D'Andrea, the Wal-Mart manager, says her retirement kitty bounced back up to $8,000—about the average size of employee accounts in Wal-Mart's 401(k) plan—from a low of $6,000 earlier this year.

But the 48-year-old Henderson, Nev., resident lost her job in May and cashed out her account. Now, she vows to never join a retirement plan again. "It's too risky," she says

The Lure of Store Credit Cards, and the Hook
By  Tara Siegel Bernard - New York Times
December 12, 2009

You may be tempted this season to give in to the plea from that persistent sales clerk at one of the big retailers — “Are you sure you don’t want to save 15 percent today?” — and open up a couple of store-brand credit cards. After all, a 15 percent discount, or no interest payments for 18 months, sounds enticing when you are buying gifts by the armful.

But before you start filling out the application, there are some things you need to know. If you carry a balance on store-brand cards, known in the industry as private-label cards, or if you miss a payment on your no-interest purchase, you can end up wiping out those initial savings, and then some. And when you open a new credit card, your credit score can suffer, too.

As one expert put it, if you strip away the store discounts and brand names that come with these cards, many are essentially the same products marketed to subprime borrowers, or individuals with tarnished or fairly new credit histories. Would you really chose a card with an interest rate of say, 25 percent, or about 9 percentage points higher on average than many other credit cards?

“You are typically not getting the card because it has a lower interest rate or the financing is attractive,” said John Grund, a partner at First Annapolis, an advisory firm focused on the payments industry. “The first-purchase discount or, in the case of big-ticket items, promotional financing, is attractive to consumers. Then, it’s a function of ongoing benefits.”

Congress was aware of the lure of easy credit, so the credit card legislation it passed this year asked regulators to come up with a way to evaluate consumers’ ability to pay their credit card bills before they get the cards. Indeed, the Federal Reserve’s proposed new rules, set to take effect in February, require consumers to list more information on their card applications, like their income and assets.

But while that sounds like the new rules will make it tougher to get that store credit card, don’t bet on it. Retailers are not required to verify that information, and they have told the Fed that the quick check of credit scores they now do is adequate. Besides, they said, customers standing at the checkout may not be comfortable giving clerks sensitive information like a pay stub.

Chi Chi Wu, a staff lawyer at the National Consumer Law Center, said the proposed rules did not go far enough. “The Fed explicitly cited the fact that it didn’t want to hinder retailers from being able to instantly open credit card accounts at point of sale as the reason for not requiring verification,” she said. “We think that is not a good reason, since the current financial crisis was caused in part by the failure of lenders to ensure consumers could afford the loans they are given.”

In all the bustle of holiday shopping, the retailers will be counting on you to focus on all the benefits of these cards — and the benefits can be valuable, if you know how to use them. But you should also be considering the card’s terms along with the possible effect on your credit score. If you are looking to refinance your home, buy a new one or take out an auto loan, you may need every last point to buoy your score.

“If it costs you 5 or 10 points and it drops your score to 790, it’s a nonissue,” John Ulzheimer, president of consumer education at Credit.com, said. “But if takes your score from 700 to 690, that is a problem.”

There are several reasons opening one or more cards may drag down your credit score. First, the credit-scoring companies do not look fondly on new applications for credit. Inquiries stay on your credit report for two years, though they only count toward your score for the first 12 months.

Once you get the new card, the new account itself also weighs on your credit standing for several months, in part because it reduces the average age of your credit history, which accounts for about 15 percent of your score.

Of course, if you have a pristine credit history and thousands of dollars in available credit on general-purpose cards (the type issued by MasterCard, Visa or American Express), you don’t have to be overly concerned about opening a store-only card, which tends to carry much lower credit lines. You are also more likely to qualify for what is known as a co-branded card, where a retailer like Toys “R” Us partners with a bank that issues a MasterCard, which can be used anywhere and carries somewhat lower interest rates.

“If I am someone who has the optimum mix of six or seven cards, it’s probably not terribly material as opposed to someone who is new to credit or who has a lower score,” said Shon Dellinger, vice president of myFico.com, which provides consumer information and credit products. “But if you’re shopping around and open up four cards to save 20 percent on each, that’s really not the right mind-set.”

In fact, people with less-than-perfect credit can be more harmed by opening a private-label card and carrying a balance than if they opened a general-purpose card. That’s because the credit limits are typically much lower — say, around $500 — than those of a traditional credit card. “So what happens is even modest purchases, a suit or some boots, can cause that card to be highly utilized because of the fact that it has a low limit,” Mr. Ulzheimer said. “The purchase might be negligible on a regular MasterCard or Visa.”

And your so-called credit utilization rate factors into your credit standing. When computing your FICO score, Fair Isaac, the company that developed the score, considers how maxed out each of your individual cards is, as well as your total amount of debt — and how that compares with your total available credit.

There are other reasons to read the fine print before getting these cards. Some retailers offer promotions where you do not pay interest for a certain period, as long as you pay off the balance by the time the promotional period ends. But if you do not pay off the balance, you will owe interest on your average balance during the promotional period — but interest will accrue starting on the date you bought the item. So if you bought a $1,000 television and you have paid off $800 by the end of the promotional period, you will still owe interest on your average balance, dating back to the day you bought the TV.

Sears and Best Buy are now running no-interest promotions. But if you participate in one of these plans, you need to pay attention to the date the promotion ends. At Sears, promotions begin on the date you make your purchase, said Chris Brathwaite, a Sears spokesman. That means if you bought the TV on Dec. 12, 2009, the bill must be paid off by the same date a year later — even if your statement happens to arrive on the 14th of each month, Mr. Brathwaite said.

Since most store cards have higher rates than most general-purpose cards, you do not want to fall behind. And if you do, you can do major damage to your credit score. Those with a FICO score of 780 — the scale ranges from 300 to 850 — who are 30 days or more overdue can lose 90 to 100 points from their scores, Mr. Dellinger said.

“Only get credit if you need it, and if you do get it, make sure you aren’t overextending yourself so you can do some of the basics like paying your bills on time,” he added.

Sears is a dinosaur that may go extinct
Transworld News
December 11, 2009

It's not clear why Sears still exists. Financially Sears has been on the losing end of retail sales for quite some time, between layoffs and store closings and a decline in revenues one can only wonder why its stock is still trading, let alone at over $70.00 a share. Even its reputation for Craftsman tools, DieHard batteries and Kenmore appliances haven’t generated sufficient sales to put, let alone to keep, Sears in the Black.

Sears has an old time appearance dating to the beginning of the last century. While its competitors are modern, new and fresh, Sears appears as the long beard and top hat in comparison. Sears is a dinosaur and like all dinosaurs may go extinct.

The problem with Sears, over the years, it had mostly bad management, which has been part of their ongoing problems and portrayed their bad image. During the 90’s Sears was fined 45 million dollars by the bankruptcy court for consumer fraud. They were strong arming debtors, by deception, to make payments that were already charged off through the court, their fraud was so severe that the court fined them and made them an example. Then there was, for instance during the 60’s the discrimination factor that alienated minorities and the insurance factor that alienated customers. Today it is simply the new and fresh face of competition.

Sears and Kmart, the other retailing dinosaur inside Sears Holdings (SHLD, news, msgs) haven't done much to impress investors or consumers.

Shoppers clearly favor up-to-date competitors such as Wal-Mart Stores (WMT, news, msgs), BJ's Wholesale Club (BJ, news, msgs), Costco Wholesale (COST, news, msgs) and Target (TGT, news, msgs).

Many analysis, don't believe Sears is viable any longer. Sears and Kmart stores (part of Sears Holdings) have experienced large sales declines, which may be attributed to poor merchandising, coupled with poor management and a lack of reinvestment interest.

Sales at Sears Holdings have declined all this year and in 2008 they fell 7.8%. Since the merger of Kmart and Sears in 2005, sales have declined an average of 3.5% annually. Since analysis, believe the trend is not likely to improve, and since Sears does sit on some valuable real estate, it could be ripe for an acquisiition and liquidation.

2009 sales are 44.08 billion but the income was a minus 5 billion, with sales growth in the red 7.80%, its income growth was up 13% and its net profit was down 0.01% this does not appear to be a company with any redemption.

William Ackman Is Big on Sears,
Not Retail-Sales Figures
By Ian Ritter - bnet.com
December 10, 2009

William Ackman and his hedge fund Pershing Square Capital Management are big on the retail industry despite problems that companies are facing in the recession and what looks to be a tough holiday sales season. In fact, at a recent shopping center conference, Ackman said that retailers’ sales aren’t all that important.

“Wall Street’s been too focused on sales,” he said at the International Council of Shopping Centers conference in New York City earlier this week. “You’re going to see a massive increase in retailer profitability.”

That might explain Ackman’s affinity for Sears Holdings (SHLD), a company that continually reports dismal sales figures. The retailer’s two chains, Sears and Kmart, recorded a third-quarter same-store sales decrease of 2.3 percent and total revenues fell $470 million from the same period a year ago. The low sales didn’t help it’s bottom line, though, as the company reported a $106-million operating loss.

Nevertheless, Ackman believes in Sears as a viable operator and said nice things about its often-criticized chairman Edward Lampert. “He’s underestimated,” Ackman told the audience of shopping-center owners and real estate brokers. “He’s going to be running a little mall within your mall.”

Ackman is also a fan of formerly bankrupt mall owner General Growth Properties (GGWPQ), of which he sits on the board of directors. Pershing Square saw promise early on in the firm, buying a major stake in the company when it was trading at less than a dollar per share. GGP is now valued at over $10.

Despite its recently restructed debt load, totaled at $9.7 billion, GGP’s fundamental operations are intact. Occupany at its over 200 malls remains solid at 91.3 percent in the third quarter, up from 91 percent in the second quarter. However, tenant sales slipped to $409 per square foot, down from $455 during the same year-ago period.

Part of the reason Ackman said he is not worried about lagging sales is because retailers really haven’t shut that many stores. “We think store-closure fears were overblown,” he said. Even though Circuit City and Linens ‘n Things went out of business, many big chains actually are ramping up their expansion plans. Chains like Staples are expanding. 7-Eleven is opening plenty of stores. And Sears didn’t curve back its store count in any major way since the economy took a turn for the worst.

Many believe that poor retail sales equal a consumer not willing to spend. But Ackman could be on to something. If store counts aren’t decreasing dramatically, then things might prove better than some industry observors previously thought. But lets see how the holiday season shakes out first and the potential for more retail bankruptcies after the new year before honoring anyone’s crystal ball.

Ian Ritter is the national online editor of commercial real estate news site GlobeSt.com and author of its Counter Culture retail blog.

Senators Strike Health Deal
The Wall Street Journal
December 9, 2009

WASHINGTON -- Senior Senate Democrats reached tentative agreement Tuesday night to abandon the government-run insurance plan in their health-overhaul bill and to expand Medicare coverage to some people ages 55 to 64, clearing the most significant hurdle so far in getting a bill that can pass Congress.

Liberals dropped the public insurance plan that was a central plank of the Democrats' health bill in favor of a more limited alternative, following intense pressure from a small group of Democrats who had insisted for months that it was a deal-breaker. While disputes over abortion coverage and other issues remain, Democrats appeared a whisker away from having enough votes to overcome Republican opposition and pass a sweeping health overhaul in the Senate.

The Senate bill -- including the lack of a public plan -- is likely to form the core of any final legislation, though it will have to be reconciled with a health bill passed by the House last month.

The agreement capped several days of high-stakes negotiations by a group of 10 Democratic senators -- five moderates and five liberals. Senate Majority Leader Harry Reid (D., Nev.) had advanced a bill that would have had the government directly operate a health-insurance plan, while giving states the right to opt out.

In place of that, the senators embraced a more limited proposal that would empower the government's Office of Personnel Management to put in place a new low-cost national health plan, congressional aides said. The office already administers plans offered to federal employees and members of Congress. The new national plan would be run by nonprofit entities set up by the private sector, and would be available to the public on the new insurance exchanges that would be created under the bill.

If no private insurers sign up with the Office of Personnel Management to offer a national plan, the office would be authorized to implement a direct government-run plan, an unlikely prospect, aides said.

The plan must still be analyzed by the nonpartisan Congressional Budget Office and vetted by the full Democratic caucus. But the proposal is aimed at reconciling divisions among Democrats and ensuring that Mr. Reid has 60 votes needed for final passage.

"I believe this moves us way down the road," Mr. Reid said in announcing what he called a "broad agreement."

The arrangement is attractive to Democratic centrists who worry about the government's growing footprint in the private market.

In a nod to Democratic liberals still intent on expanding coverage, the group agreed to a proposal that would open Medicare, the health-insurance program for the elderly, to Americans ages 55 to 64. The proposal would benefit an estimated two million to three million Americans who have difficulty obtaining coverage elsewhere, including those who have lost their jobs. People in the 55-to-64 group who already get health insurance through their employers would continue to do so under the proposal.

Those eligible under the expanded Medicare program would be allowed to buy into it at subsidized rates, but would likely pay more than retirees age 65 and over.

Democrats are now talking about dropping their first idea of a public option. Instead, they are exploring allowing the same agency that oversees health care for federal workers to expand to cover millions of Americans.

Although the public option generated significant dissension among Democrats, the CBO projected that a relatively small number of Americans would use it. It said total enrollment after a decade would be only three million to four million people, in part because the CBO predicted the public option would attract less-healthy employees and charge higher premiums.

Republicans criticized the Democratic negotiations. "What's becoming abundantly clear is that the majority will make any deal, agree to any terms, sign any dotted line that brings them closer to final passage of this terrible bill," said Senate Minority Leader Mitch McConnell (R., Ky.).

Sen. John Barrasso (R., Wyo.) said expanding Medicare "is putting more people in a boat that's already sinking."

The American Medical Association said it opposes expanding Medicare because doctors face steep pay cuts under the program and many Medicare patients are struggling to find a doctor. Hospitals also said expanding Medicare and Medicaid is a bad idea. (Read more on opposition to the Medicare move in the Health Blog.)

"We want coverage -- in the worst way -- expanded, but both of these means are problematic for hospitals and physicians," said Chip Kahn, president of the Federation of American Hospitals, which lobbies on behalf of for-profit hospitals. "It's going to make it difficult to make it work."

After more than a week of debate on the Senate floor, Mr. Reid was working hard to unify his 60-member caucus, which includes 58 Democrats and two independents. A handful of moderate Democrats as well as Sen. Joseph Lieberman, the Connecticut independent, signaled concerns with the government-run plan, threatening to derail the broader bill.

Mr. Reid's decision to tap 10 Democrats from both wings of the party to negotiate a deal on the issue was a gambit that the group could bridge the differences.

Mr. Lieberman sent aides to join the senators' talks. He was among the most vocal in opposing the public option, and on Tuesday he praised the proposal to empower the Office of Personnel Management to work with private insurers to implement a new national plan. "That's an interesting idea," he said. The senator also said he was willing to consider supporting the Medicare expansion, saying the proposal is designed to help those who "have a tough time getting affordable insurance."

He added, "These are trade-offs, not compromises."

The legislation is designed to extend insurance coverage to tens of millions of Americans. It would create new tax subsidies to help low- and middle-income people comply with a mandate to purchase coverage.

It would also bar insurers from engaging in a range of practices, such as denying coverage because of pre-existing conditions, and Senate Democrats were considering adding to those restrictions.

Under discussion among Senate Democrats was a proposal that would require insurance companies to spend no less than 90% of the insurance premiums they take in on health services, effectively limiting how much they can reap in profit. The health bill the House passed last month contains a similar provision, though it sets the minimum at 85%

Also, a proposal to expand eligibility for Medicaid beyond the increase already in the bill was dropped Tuesday, said people familiar with the negotiations. Instead, the Democratic negotiators agreed to a proposal that would extend the Children's Health Insurance Program, a popular federal-state initiative that provides insurance to more than seven million children in low-income families. The current program is funded through 2013 and would be extended to 2015, these people said.

Aides cautioned that the accord reached Tuesday could be reopened if the CBO identifies major problems. Moreover, other issues, such as proposals to control the rapid growth of health costs, may still need to be negotiated over the next few days.

But if Mr. Reid has his way, he could begin the process of shutting off debate late this week. That would set the stage for another test on the Senate floor early next week that will demonstrate whether he has 60 votes for the bill. Final passage could come late next week.

The deal was announced a few hours after the Senate, voting 54-45, rejected a proposal to tighten abortion limits in its health-overhaul legislation.

Supporters said the amendment, offered by Sen. Ben Nelson (D., Neb.), was needed to ensure no federal funds would be used to help women get abortions. Seven Democrats voted for the amendment, while two Republicans voted against it. Mr. Reid, arguing that expanding health care was "also a question of morality," urged that the issue not be brought into the bill. "This is a health-care bill, not an abortion bill," said Mr. Reid, himself an abortion opponent. "We can't afford to miss the big picture."

Democratic leaders have suggested the issue could still be revisited by tightening the limits, though not as far as Mr. Nelson wanted. Mr. Nelson proposed to bar any woman receiving a government tax credit from buying insurance that covers abortion.

With the need for Democratic unity at a premium, Mr. Nelson suggested he's open to further discussion on the issue. "I don't want to be stubborn or closed-minded," he said.

 

CEOs and ObamaCare
An internal revolt at the Business Roundtable over support for ObamaCare
Review & Outlook - The Wall Street Journal
December 6, 2009

One lesson that Democrats learned from the failure of HillaryCare in 1994 is that they had to buy the silence, if not the outright support, of the business class. They've done this brilliantly by peddling the illusion that ObamaCare will "lower costs" for employers.

But slowly as the legislative details become clear, it is dawning on executives of businesses large and small that reform is boiling down to a huge tax increase to finance a gigantic new entitlement. The cost and quality of care are afterthoughts that will both suffer, as a growing roll of medical experts have been writing on these pages.

The tragedy is that ObamaCare is not inevitable and far better reforms are still possible—but only if the current version is defeated and Democrats are forced back to the drawing board. With only a few exceptions, drug makers and health-care providers have shown that their priority is rent-seeking from government, which means that any last-minute push back will have to come from the other six-sevenths of the economy.

The Chamber of Commerce and National Federation of Independent Business have finally figured out they were being taken for a ride. And now even the Business Roundtable, the association of CEOs from the largest companies, is engaged in a furious internal debate about the way forward. The Roundtable has been vaguely supportive but restive. But last week Roundtable president John Castellani was informed in a contentious conference call that many of his members will quit if the organization isn't more assertive against ObamaCare.

What the executives leading the revolt understand is that the current reforms bear no resemblance to the more rational system the Roundtable favors. As Ivan Seidenberg of Verizon accurately put it in September, "The problem with the health-care market in this country is that it doesn't really function as a market—leaving major consumer needs unmet, costs unchecked by competition, and basic practices untouched by the productivity revolution that has transformed every other sector of the economy."

Yet in Congress the market-based policies that could encourage such changes have been ignored, dumped or converted into timid pilot programs. Instead of increasing the competition and consumer choice that would result in better value and reduce the annual double-digit cost increases in health spending, ObamaCare will simply expand the status quo and make it more expensive.

Roundtable companies sponsor health insurance for some 35 million employees. Not only would their wages continue to be depressed as costs continue to accelerate, but large and unpredictable costs would remain on corporate balance sheets.

Most Roundtable members also self-insure under the 1974 law known as Erisa that allows large corporations to offer national insurance largely free of regulatory interference. This flexibility will be undermined with mandated benefit packages and limits on employer ability to innovate with consumer-directed health plans. The most powerful Democrats simply have no appreciation for—or interest in—how a decentralized approach like Erisa could make health care more affordable and result in the coverage expansions that corporate America generally favors.

The larger issue for business is the productivity and competitiveness of the U.S. economy. Democrats are about to pass the largest entitlement expansion in more than four decades when federal spending is already at unprecedented levels. The "pay or play" tax on employers and the hike in payroll taxes on top earners in the House and Senate bills are merely teaser rates. The long-term pressures created on the federal fisc would require enormous tax hikes that would depress capital investment and economic growth, to say nothing of the Roundtable's priority of reducing U.S. corporate tax rates that are among the world's highest.

The tendency among business groups is usually to conciliate and speak the language of consensus—especially with Democrats running all of Washington and able to do great harm to anyone who doesn't cooperate. And no doubt the Roundtable is hearing from the CEOs of companies like Pfizer, Wal-Mart and General Electric that are deeply invested in more government control of the economy. Other members favor making marginal improvements to a faulty bill, on the theory that it's a fait accompli anyway.

Yet if the Roundtable in particular and business in general would invest their advertising dollars, lobbying expertise and prestige into a concerted campaign, there is still a chance to move public opinion enough to stop this destructive bill. That would force the Democrats on the left who are driving this process to work with moderates in both parties to focus on meaningful cost control and better value.

Democrats have defined success as dragging any bill into law as quickly as possible, no matter how damaging, while leaving the mess it creates to be cleaned up in the future once the entitlement is entrenched and higher taxes are inevitable. The only way to prevent that outcome is to force them to start over.

The choice isn't between the status quo with all its flaws and ObamaCare. It's between ObamaCare, and a better reform alternative.

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

Blue Cross Blue Patients
Another study predicts higher insurance prices.
Wall Street Journal - Review & Outlook
December 5, 2009

Another day, another study confirming that ObamaCare will increase the price of health insurance. The Blue Cross Blue Shield Association has found that premiums in the individual market will rise on average by 54% over the status quo, which translates into an extra $3,341 a year for families and $1,576 for singles. The White House denounced the report as a "sham" before it was even released, which shows how seriously it takes such concerns.

The Congressional Budget Office also found this week that ObamaCare will boost premiums in the individual market by as much as 13%. But the White House called that a triumph because the higher costs will be offset by taxpayer subsidies that will be transferred to the federal balance sheet.

The Blue Cross study is in fact more precise than CBO's because it is based on real market data, rather than modeling assumptions. The association mined the actuarial data from its six million individual or small-business policies, nearly one-eighth of those sold in the U.S.

Lo and behold, Blue Cross found costs will rise if Democrats force insurers to cover anyone who applies and then limit how much insurers are allowed to charge based on age or health condition. Economists call this adverse selection; people will wait until they're sick to buy coverage, and the Democratic rules make it perfectly rational for them to do so.

"And you can bet as we continue to make progress," communications director Dan Pfeiffer wrote on the White House blog, "the insurance industry will continue to try and distract and misinform because they know their very profitable status quo is in grave danger." He must be referring to the industry's overall profit margin of 2.2% in 2008.

The reality is that all health-care costs are ultimately borne by consumers, whether through more expensive premiums, lower wages or higher taxes. The regulatory schemes favored by Democrats can't change that law of economics but they will ensure that insurance is even more costly than it is today.

When that day comes, the political class will of course blame the insurance companies, and all of the current White House denials will fall down the memory hole.
Printed in The Wall Street Journal, page A20

Holidays Start Slowly at Retailers;
Deeper Price Cuts Loom
Deeper discounts are likely to follow lackluster November sales; apparel and electronics markdowns lure shoppers
By Ann Zimmerman - Wall Street Journal
December 4, 2009

Many retailers are likely to start offering broader discounts and promotions before the end of the holiday shopping season in response to generally lackluster sales the stores reported for November, retailing experts said Thursday.

Overall, sales at stores open at least a year edged up less than 1% last month compared with a year earlier, according to data collected by Retail Metrics Inc., which catalogs sales at 30 retail chains. Wall Street analysts had been expecting a 2.2% increase.

Since discounts appear to be attracting shoppers, retailers are expected to continue and broaden them—though no one expects a return to the extremes of last year's inventory markdowns.

Once again, discounters such as TJX Cos., owner of the T.J. Maxx and Marshall chains, fared relatively well, as did moderately priced department store Kohl's Corp. and midlevel-luxury emporium Nordstrom Inc. But other department stores and many specialty apparel chains took a big sales hit.

The results don't include sales from Best Buy Co. and Wal-Mart Stores Inc., which don't report monthly. But Wal-Mart has indicated holiday sales will be less than robust, estimating fourth-quarter sales to be basically unchanged from a year earlier.

November "was ugly," said Ken Perkins, president of Retail Metrics, which is based in Swampscott, Mass. "This doesn't bode well for the next three weeks," he added. "I think we will see more promotions than planned. Shoppers are focused on deals and necessities and retailers are going to have to make it worth their while" to hit the stores. Economists and analysts are closely watching holiday sales to gauge how consumers are faring in the fragile economic recovery. Last year, November same-store sales plummeted 7.3% as the financial crisis and swooning stock market evaporated Americans' savings and led to tightened credit.

This year, an unemployment rate of 10.2% is weighing heavily on shoppers' minds. About four million more people are out of work than a year ago, and a slowing pace of job losses seems to be of little comfort. Retailers expected the season to be challenging, with estimates for overall November and December sales to be down 1%. But unlike last year, when the sudden drop in consumer spending caught retailers off guard, merchants planned conservatively this year, slicing inventories as much as 25% and paring sales staff. "Sales won't be great this year for retailers, but they will be much more profitable, because they won't have to resort to as many desperation markdowns," said Stephen Hoch, professor of marketing at the University of Pennsylvania's Wharton School.

Off-price retailers, which sell other stores' and manufacturers' excess inventory, were the big winners in November. TJX and Ross Stores Inc. continued their recent strength, both reporting 8% increases in same-store sales, though TJX's gain was less than forecast by analysts. "The close-out stores have a better pick of inventory and are better places to shop than they used to be," Prof. Hoch said.

But sales at traditional discounters softened. Costco Wholesale Corp. experienced weakness in November after two months of solid growth. The warehouse club's same-store sales were flat in the U.S., excluding gasoline sales.

Target Corp. reported a bigger-than-expected 1.5% sales drop. But Chairman and Chief Executive Gregg Steinhafel said weakness during the first three weeks of November was "substantially offset" by better-than-expected results during the company's two-day sale after Thanksgiving.

Among department stores, Kohl's said same-store sales rose 3.3%, topping expectations, while Macy's Inc. and J.C. Penney Co. reported bigger drops than analysts projected, falling 6.1% and 5.9%, respectively.

Nordstrom posted a sales increase of 2.2%. In contrast, Neiman Marcus Inc.'s sales at its Bergdorf Goodman and Neiman Marcus chains slid 13%. Saks Inc., which last year goosed its November sales with big price cuts, reported a 26% sales drop this year.

Limited Inc., parent of Victoria's Secret and Bath & Body Works, surprised analysts by notching same-store sales growth of 3% after a 12% slump last year. The company said sales were buoyed by record results on the Friday after Thanksgiving.

—Kevin Kingsbury contributed to this article.

Big Investors Are Fleeing Stocks. Should You?
By Dan Caplinger - The Motley Fool
December 4, 2009

Many believe that the stock market's rally over the past nine months has brought valuations to far too expensive levels. Now, some institutional investors are putting their money where their mouths are and making some dramatic moves involving their huge pension accounts -- and the results could have a big impact on millions of workers.

Moving pension money
Bloomberg recently reported that a number of companies, including J.C. Penney (NYSE: JCP), Goodrich (NYSE:GR), and General Motors, have been increasing their allocations to corporate bonds within their pension plans. In a particularly extreme move, J.C. Penney plans to boost its bond allocation all the way to 75% by 2014 to 2017, with an increasing amount of that money invested in corporate bonds. That's up from its current level of around 20%.

Pension funds are still reeling from their losses during last year's bear market. The financial crisis left pensions with a $400 billion shortfall as of the end of 2008, according to a Mercer Consulting study. Many companies, including DuPont (NYSE: DD), Lockheed Martin (NYSE: LMT), and Caterpillar (NYSE: CAT), anticipated escalating pension costs earlier this year as a result of those losses. According to one report back in March,Sears Holdings (Nasdaq: SHLD) believed that it might have to triple its pension contributions in 2010 if the markets hadn't recovered.

Selling high
Now, of course, the stock market has recovered significantly, rewarding those pension funds that didn't panic and instead stuck with their stock allocations throughout the crisis and ensuing rally. Yet it's only natural that companies that narrowly dodged the pension bullet might want to take steps to reduce risk in their pension fund portfolios.

In many ways, pension plans face the same challenges that individual investors do. They have to make decisions about how much money to set aside in their pensions and predict when and how much money they'll need to generate from their portfolio to pay benefits. Even if stocks may have a better long-term return, the constant cash-flow needs that active pension plans have makes a mixed investment approach far more prudent in order to avoid the problems that a sustained downturn like last year's bear market can produce.

Out of the frying pan, into the fire
Yet the question that pension funds have to ask themselves is whether trading stocks for corporate bonds really makes sense right now.

Although stocks have definitely risen sharply from their lows, corporate bonds have also put in a stellar performance recently. Although junk bonds have experienced perhaps the greatest returns, even high-quality corporate bond funds like the iShares iBoxx Investment Grade Corporate Bond ETF (LQD) have jumped by double-digit percentages so far in 2009. That's a far cry from the huge losses that long-term Treasury bonds have seen this year.

High-quality bonds have the advantage of giving companies more certainty about returns and cash-flow timing. Pensions often invest in dividend-paying stocks, but recent cuts in payouts have exposed the uncertainty of dividends in comparison to the steadier payouts from a bond. Incorporating more bonds in pension funds will likely smooth returns, reducing volatility and likely making it easier to predict what impact required pension contributions will have on a company's financials from year to year.

The trade-off, though, is that if bonds have lower returns than stocks, then companies have to set aside more money to fund their pension obligations. That will divert profits from a company's bottom line, potentially hurting shareholders that might otherwise see stronger growth in earnings -- albeit with some attendant volatility.

Watch out
From an investing standpoint, these recent moves highlight just how important it is for you to understand how significant pension obligations are to the companies whose stocks you own. Obviously, a company like Ford Motor (NYSE: F) with a huge labor force and long history is more sensitive to the fluctuations of pension balances than newer companies that rely on 401(k) plans and other retirement plan solutions that don't rely on corporate funding. Beware of stocks that aren't taking steps to manage their future pension obligations responsibly.

Just because pension plans are jumping out of the stock market doesn't mean you should, though. Companies typically have the financial resources to cover pension liabilities without a high-risk investment portfolio, but the same isn't true for you trying to save for long-term goals like retirement. Despite the risk, the higher returns that stocks offer will do a better job of helping you reach your goals over the long run.

Your retirement is more uncertain than ever. Find out why John Rosevear thinks the recession might last 20 years and what you can do about it.

Medicare Part D 'Reforms' Will Harm Seniors
An ObamaCare change will cost taxpayers a bundle and lead to poorer drug coverage.
By Tom Scully - Wall Street Journal
December 4, 2009

There is a little-noticed provision buried deep in both the House and Senate health-care reform bills that is intended to save billions of dollars—but instead will hurt millions of seniors, impose new costs on taxpayers, and charge employers millions in new taxes.

As part of the Medicare Modernization Act in 2003, Congress created a new drug benefit—called Medicare Part D—for retirees at a cost of about $1,900 per recipient per year. Many private employers already provided drug coverage for their retirees, and the administration and Congress did not want to tempt employers into dropping their coverage. Actuaries calculated that if the government provided a subsidy of at least $800, employers would not stop covering retirees.

The legislation created a $600 tax-free benefit (the equivalent of $800 cash for employers), and it worked. Employers continued to cover about seven million retirees who might have otherwise been dumped into Medicare Part D.

It was a good arrangement for all involved. An $800 subsidy is cheaper than the $1,900 cost of providing drug coverage. And millions of seniors got to keep a drug benefit they were comfortable with and that in many cases was better than the benefit offered by the government.

But now that subsidy is coming in to be clipped. This fall congressional staff, looking for a new revenue source to pay for health reform, proposed eliminating the tax deductibility of the subsidy to employers.

The supposed savings were estimated by congressional staff to be as much as $5 billion over the next decade.

It sounds smart—except that nobody asked how many employers will drop retiree drug coverage. Clearly, many will. The result is that, instead of saving money, the proposed revenue raiser will force Medicare Part D costs to skyrocket as employers drop retirees into the program.

The careful calculation that was made in 2003 to minimize federal spending and maximize private coverage will go out the window if this provision becomes law. Any short-term cost savings that Congress gets by changing the tax provision will be overwhelmed by higher costs in the long run.

Some members in the House want to mitigate the cost of this provision by mandating that employers maintain existing levels of retiree coverage despite the reduced subsidy. But it's not that simple. A mandate would increase costs on businesses, which in turn would make it harder for those businesses to hire new employees. The mandate would effectively be a tax on employers that provide retiree benefits; this in turn will simply induce some unknown number of employers to terminate their retiree drug programs before the mandate kicks in.

In short, if the changes that are proposed for employer subsidies in the current Medicare Part D program are enacted, everyone will lose.

Unions will lose as employers seek ways to drop retiree drug coverage. Seniors will lose as employers drop them into Medicare Part D. Medicare and taxpayers will lose as they face higher costs. And employers will lose as they find it harder to provide benefits.

To make matters worse, accounting rules for post-retirement benefits will require companies that keep their retiree benefits to record the entire accrued present value of the new tax the day the provision is signed into law. This would cause many employers to immediately post billions in losses, which could significantly impact our financial markets.

There are many reasons to pass health-care reform. There is no reason to hurt seniors, employers and taxpayers in the process. Businesses are struggling, and the Medicare trust funds have plenty of problems as it is. It makes no sense to make these problems worse.

Mr. Scully was the administrator of the Centers for Medicare and Medicaid Services from 2001-04 and was one of the designers of the Medicare Part D benefit.

ObamaCare at Any Cost
A bill that raises prices but lower costs,
and other miracles
The Wall Street Journal Review & Outlook
December 2, 2009

We have now reached the stage of the health-care debate when all that matters is getting a bill passed, so all news is good news, more subsidies mean lower deficits, and more expensive insurance is really cheaper insurance. The nonpolitical mind reels.

Consider how Washington received the Congressional Budget Office's study Monday of how Harry Reid's Senate bill will affect insurance costs, which by any rational measure ought to have been a disaster for the bill. CBO found that premiums in the individual market will rise by 10% to 13% more than if Congress did nothing. Family policies under the status quo are projected to cost $13,100 on average, but under ObamaCare will jump to $15,200.

Fabulous news!

"No Big Cost Rise in U.S. Premiums Is Seen in Study," said the New York Times, while the Washington Post declared, "Senate Health Bill Gets a Boost." The White House crowed that the CBO report was "more good news about what reform will mean for families struggling to keep up with skyrocketing premiums under the broken status quo."

Finance Chairman Max Baucus chimed in from the Senate floor that "Health-care reform is fundamentally about lowering health-care costs. Lowering costs is what health-care reform is designed to do, lowering costs; and it will achieve this objective."

Except it won't. CBO says it expects employer-sponsored insurance costs to remain roughly in line with the status quo, yet even this is a failure by Mr. Baucus's and the White House's own standards. Meanwhile, fixing the individual market—which is expensive and unstable largely because it does not enjoy the favorable tax treatment given to job-based coverage—was supposed to be the whole purpose of "reform."

Instead, CBO is confirming that new coverage mandates will drive premiums higher. But Democrats are declaring victory, claiming that these higher insurance prices don't count because they will be offset by new government subsidies. About 57% of the people who buy insurance through the bill's new "exchanges" that will supplant today's individual market will qualify for subsidies that cover about two-thirds of the total premium.

So the bill will increase costs but it will then disguise those costs by transferring them to taxpayers from individuals. Higher costs can be conjured away because they're suddenly on the government balance sheet. The Reid bill's $371.9 billion in new health taxes are also apparently not a new cost because they can be passed along to consumers, or perhaps will be hidden in lost wages.

This is the paleoliberal school of brute-force wealth redistribution, and a very long way from the repeated White House claims that reform is all about "bending the cost curve." The only thing being bent here is the budget truth.

Moreover, CBO is almost certainly underestimating the cost increases. Based on its county-by-county actuarial data, the insurer WellPoint has calculated that Mr. Baucus's bill would cause some premiums to triple in the individual market. The Blue Cross Blue Shield Association came to similar conclusions.

One reason is community rating, which forces insurers to charge nearly uniform rates regardless of customer health status or habits. CBO doesn't think this will have much of an effect, but costs inevitably rise when insurers aren't allowed to price based on risk. This is why today some 35 states impose no limits on premium variation and six allow wide differences among consumers.

The White House decided to shoot messengers like WellPoint to avoid rebutting their message. But Amanda Kowalski of MIT, William Congdon of the Brookings Institution and Mark Showalter of Brigham Young have found similar results. In a 2008 paper in the peer-reviewed Forum for Health Economics and Policy, these economists found that state community rating laws raise premiums in the individual market by 20.9% to 33.1% for families and 10.2% to 17.1% for singles. In New Jersey, which also requires insurers to accept all comers (so-called guaranteed issue), premiums increased by as much as 227%.

The political tragedy is that there are plenty of reform alternatives that really would reduce the cost of insurance. According to CBO, the relatively modest House GOP bill would actually reduce premiums by 5% to 8% in the individual market in 2016, and by 7% to 10% for small businesses. The GOP reforms would also do so without imposing huge new taxes.

But Democrats don't care because their bill isn't really about "lowering costs." It's about putting Washington in charge of health insurance, at any cost.

Copyright 2009 Dow Jones & Company, Inc. All Rights Reserved

A glimpse at a way of life: 1902 Sears catalog
Blue Ridge Now - Hendersonville, NC
November 29, 2009

It's uncanny the way things turn up long after they'd been set aside and forgotten. I wouldn't even hazard a guess as to how long a certain drawer had gone unopened, not to when it became a storage place for items of no use whatsoever yet hung onto anyway. But that's where I found a copy of the 1902 Sears, Roebuck catalogue that had been reprinted 40 years ago and had sold for 50 cents. Imagine -- 1,162 pages of temptation for a mere half dollar. With the current business deal the company is involved in, naturally a look back through the catalogue was intriguing, but not as much so for the available items and their prices as for an insight into the customers themselves and the way the company dealt with them.

Richard Warren Sears offered more than items. He shared a wealth of knowledge not only about the items, but about careers involving the use of them. Take telegraphy, for example, a new field with much promise for young people. He urged them to consider going into it, advising them that the value of the American dollar having decreased so markedly, the basic salary of $35 a month that could be expected from a position in telegraphy was very desirable.

WISH BOOKS

The catalogue offered everything from liver pills to "a handsome piano guaranteed for 25 years for the sum of $98.50." A solid oak home organ was even more affordable at $28. And a woman could have her very own sewing machine for $10.45. No wonder 600,000 Sears, Roebuck catalogues -- "wish books," the ladies called them -- were distributed in the spring of 1902 and sales skyrocketed. There was a charge of $.50 for the catalogue, though, and people objected so strenuously that subsequent catalogues were free and remained so for many years.

Prices of the items listed matched the lowest Chicago wholesale prices. When orders were sent to the company certain requirements had to be met. C.O.D. orders were discontinued and the customers were obliged to send full payment along with the order so clerical expense could be eliminated. And customers could send no order amounting to less than $.50, otherwise all profit would be taken up by the expense involved in handling.

SHIPPING CHARGES

Prospective customers were advised that orders amounting to between $2 and $5 were more profitable to the customer than smaller amounts. This was due to the reduction in express or freight charges according to the weight on the parcel. People were advised through the catalogue,

"Even if you have to get some friend or neighbor to join with you, make up an order of from $2 to $5 or more and include enough heavy goods to make a profitable freight shipment of 50 to 200 pounds. In this way you reduce the transportation charges which your storekeeper must pay for the goods he sells." It should be noted that the cost of first class freight per 100 pounds was $1.40.

The trust and confidence existing between the company and the customer is clearly shown in a dialogue quoted in the catalogue. In reference to an order, the company asked, "If any of the above goods are out of stock, may we substitute?"

The answer was "Yes."

Then, from the company, "If so, kindly mention second and third choices."

And from the customer, "Use your best judgment."

Items offered by the 1902 catalogue belong to history. But the presentation of them reflects a lifestyle of 100 years ago.

Look Who's Stalking Wal-Mart
By Michelle Conlin - Business Week - Cover Article
December 7, 2009

Target is increasingly going downmarket to get through the consumer recession. But can it ape its rival and retain its cachet?

At a Target store, the visual sizzle usually comes from the photos of all the fabulous-looking people wearing fabulous clothes and doing fabulous things. Of late, though, there's an entirely new vibe—supersize signs screaming dirt-cheap prices. Past the cashiers is something else unmistakably novel: a sleek Euro-style mart carrying fresh cuts of sirloin, cheery piles of fruit, and hormone-free dairy.

The lowest prices on the planet! Plus a grocery store. Wait. Doesn't that sound an awful lot like Wal-Mart (WMT)?

Target reinvented American retailing. By democratizing design, it rescued the family budgeter from the aesthetic provinces of dinette sets and acid-washed jeans. Target was one of the first to use famous fashion designers to cast a halo over its brand and draw people into its stores. Before long hipsters had dubbed the retailer "Tarzhay," and everyone from J.C. Penney (JCP) to Wal-Mart was ripping off Target's cheap-chic playbook.

Now the charge is that Target is copying its archrival, and its executives are bristling. They insist they provide a superior store experience. Nor have they any plans to abandon their 15-year-old slogan: "Expect more, pay less." "We're not trying to be anyone else," says Chief Executive Gregg W. Steinhafel. "We're working hard to convey both sides of our brand."

All the same, a kind of role reversal is under way in Retail Land. Wal-Mart has long borrowed from Target. Now Target is stalking Wal-Mart. Target's magic has always been about pushing its low-cost business model relentlessly upmarket. But to get itself through the Great Recession, it appears to be going downmarket. Some critics say the strategy smacks of desperation. Others, pointing to a rebounding stock price and better-than-expected earnings last quarter, believe the strategy may be working. The challenge for Steinhafel is to compete on price without losing the Target twist.

Steinhafel's ascension as CEO in May 2008 represented mostly a change in style rather than substance. His predecessor, Bob Ulrich, the press-allergic, cowboy-booted visionary who made Target a retailing juggernaut and cultural phenomenon, was known as an authoritarian. Meeting with him, says one executive, was "a sphincter-tightening experience." (Ulrich was unavailable for comment.) Steinhafel, by contrast, is a leader people can rally behind. During nine years as president, he became known as Target's nice dad. So while he was expected to change the tone at Target, he wasn't considered likely to deviate much from his predecessor's modus operandi. After all, it was working.

Until it wasn't. The economy imploded, Americans stopped shopping, and Steinhafel found himself confronting a different world. "This was a wake-up call," he says. "We had to do a lot of soul-searching." It didn't help that as the news flashed pictures of Lehman Brothers employees carrying boxes out of their offices in September last year, Target was rolling out pop-up stores selling 22 new things from 22 new designers.

The pop-ups, which came and went in four days, were in the works long before the crash and did well. But for the first time, Target seemed out of touch. Wal-Mart, with its megajugs of cheap contact lens solution, seemed prescient by contrast.

EXTREME MESSAGE MAKEOVER
At Target's Minneapolis headquarters, Steinhafel turned his airy offices on the 26th floor into a war room. The data pouring in were shocking: Sales at stores open more than a year were falling 3%, then 5%, then 10%. As the stock slid and slid, says Jefferies (JEF) managing partner Daniel Binder, people were asking: "Is there something wrong here with Target that has changed structurally?"

Target had long emphasized the first part of the "Expect More, Pay Less" equation. Research showed consumers perceived Target as pricier than Wal-Mart, when in fact they were only a few cents apart on most items. Given the state of the economy, stressing "Pay Less" seemed eminently rational. Yet Steinhafel hesitated. If he pushed too hard on price, would he lose what made Target "Tarzhay," upending a strategy Ulrich spent 20 years perfecting? Would Target—God forbid—start to look like Wal-Mart? "That's why they were reluctant to do it at first," says Telsey Research chief Joe Feldman. "They don't want to be Wal-Mart."
|
Steinhafel, however, soon saw that American consumers might never return to their free-spending ways. It was time to start making a big deal about low prices.

With sales in free fall, Steinhafel needed to move fast. Fortunately, Target is a quick executor. In big-box retail circles, the company is legendary for its ability to tear down and rebuild stores in less than nine months. Inside Target, the store rehab process is called Phoenix. Steinhafel needed to pull a Phoenix on marketing. His partner in this extreme message makeover was Michael Francis, the natty chief marketing officer. Francis draws his marketing philosophy from the 1952 book about retailer Marshall Field, Give the Lady What She Wants! "It's all about making sure we know who the lady is and making sure we know what she wants," says Francis.

hat "lady" is a working mother in her 40s. And over the years Target has spent tens of millions of marketing dollars appealing to her. In TV and print ads, it has long cast her as the hip hero in her own life. (Even her own kids think she's cool.) But as Francis scoured his charts and graphs late last year, he could see that the Target fashionista was turning into a frugalista. "She wasn't seeing herself in the shiny, happy people advertising," he recalls. "It was no longer aligned with what she was dealing with in her life." The trick was to focus on low prices without making Target's target customer feel cheap.

Francis and his team hit on a marketing strategy in which Target essentially plays the empathetic personal shopper. In highly produced two-minute Webisodes on Target's site,Marie Claire fashion director Nina Garcia mentors frayed, broke moms on how they may feel poor but can still look rich. In the show, a riff on TLC channel's What Not To Wear, Garcia teaches shoppers such as "Katie" how to be "frugalista fabulous." We see Katie—who has no winter coat—looking fierce in a double-breasted topcoat ($59.99), a classic peacoat in red ($40), and a motorcycle jacket ($29.99). "Ooo la la," says Katie as she twirls in a Lanvinesque gray cape ($44.99).

For years, Target has focused on the aspirational image of the designers behind its apparel. Now, Francis decided, the company would highlight the notion that good value can be chic, too. This fall, for example, Target introduced designer Anna Sui's collection, starting at $19.99, based on her favorite television show, Gossip Girl. The ads show a grainy, cinema verité New York City with waifs sashaying down the runway in Bohemian glam. Then Sui's voice over: "Anna Sui. Prices to gossip about."

FILLING THE PANTRY
Steinhafel's decision to move more aggressively into groceries represents an even tougher challenge. Wal-Mart has been selling food for years, using groceries to boost store traffic. But selling food is a difficult, low-margin business, and Target has refrained from pushing as hard into groceries as its rival. So while Target has long sold food at its 252 SuperTargets, its regular stores have carried mostly dry goods, cans of soup, and jars of peanut butter. Yet the retailer was desperate for traffic. And Steinhafel couldn't ignore two facts. Target's working-mom customer was obsessing not about thigh-high boots but about the price of milk. Plus, industry and in-house research showed she was popping into the grocery store twice a week but visiting Target only three times a month.

Last fall, Steinhafel began testing a prototype grocery that sold fresh food, which typically commands higher margins than packaged groceries. The company commandeered part of an existing store and quickly turned the space into a sleek, rock-bottom-price grocery with everything one could possibly need to fill the family pantry. The rollout was done stealthily, with almost no publicity. Before long, the food marts were lifting sales at test stores an average 5% to 10%.

When retail chains launch a concept, they usually back it up with a national advertising campaign. But often the items are available only at "select stores." With this effort, Target is going hyperlocal. Instead of a gradual rollout across the U.S., it focused on one market, Philadelphia. In September it began putting food marts in all 30 urban Philly stores.

Once they were ready to go online in October, Target carpet-bombed the city with its message of "Fresh food for less green" and "Quality cuts, lean prices." The blitz was everywhere: e-mail, radio, newspaper circulars, TV, and what seemed like nearly every billboard in town. "If you don't know about it and you live in Philly, you have to be living under a rock," says Citigroup (C) retail analyst Deborah Weinswig. By testing in a single market, Target was able to measure immediately the efficacy of the marketing. The results have been promising, with sales exceeding expectations. Steinhafel plans to roll out the concept to 350 more stores in 2010.

As Target's CEO and his executives take stock and look back on the past year or so, they regret not moving faster. "We may have been a bit slower than we should have been due to how rapidly the economy shifted and to our own advance planning processes," says Francis.

Still, the course correction seems to have helped stop the bleeding. On Nov. 17, Target said net earnings rose 18.4% during its third quarter, the first positive result in eight quarters. It also reported that its gross margins, excluding its credit-card division, rose to 30.8%, from 30.6% in the third quarter of 2008. Meanwhile, Target says its research shows consumers are starting to believe it is indeed competitive with Wal-Mart on price. "Based on our price checks, the price gap between Wal-Mart and Target is the narrowest it has ever been," says Weinswig. "They are now at price parity. But Target does it with a better customer experience." While Target did cut prices on some merchandise, its marketing onslaught is mostly responsible for changing consumers' perception.

Target usually doesn't hammer the price message during the crucial holiday shopping season. Now it does. The company is devoting 75% of its advertising budget to price, vs. 25% last year. Target is making a big bet this holiday season that people will be shopping for key must-have items and solution-oriented products. Door busters include a 32-inch flat-panel TV for $246, electronic hamsters for $7.99, and a $3 coffeemaker.

In truth, Target's focus on price and groceries looks less like strategy than a tactic to buy time. "They have to reinvent themselves," says Nigel Hollis, of the branding shop Millward Brown. "The 'pay less' strategy may not be the one, but at least they can hold their ground until they figure out the next big thing." The trick will be executing a me-too strategy without turning into You Know Who. As marketing chief Francis says: "The world doesn't need a second Wal-Mart."

Sears launches interactive holiday Wish Book
By Frank Washkuch - DM News
November 25, 2009

Sears Holdings launched an e-commerce version of its holiday Wish Book, traditionally one of the most notable yearly catalogs, on November 24.

The interactive portal allows users to “turn pages” on-site from one list of offerings to the next, as well as to download a PDF copy of the whole catalog or sections of it. The Web site also allows consumers to share the site with others and to check off items to create a wish list.

The portal has full e-commerce capabilities, and customers can buy directly from the company via the site. It also features a “top gift list” of items for shoppers on a budget and photos of products from 1933 to the present day.

Sears has considerably expanded its online offerings this year, launching online layaway programs for its Sears and Kmart stores in October, and debuting a home maintenance marketplace in February.

Sears also began testing MyGofer, an online shopping feature that allows consumers to buy items online and pick them up in person. The company introducedthe Sears and Kmart Christmas Club gift card in August.

A representative from Sears could not immediately be reached for comment.

 

Miami man gets 13-year sentence for Sears Tower plot
Reuters
November 20, 2009

* Ringleader's co-conspirators get lighter sentences
* Men accused of conspiracy to wage war against U.S.

MIAMI, Nov 20 (Reuters) - The ringleader of a group of Miami men convicted of plotting to blow up Chicago's Sears Tower and government offices was sentenced to 13-1/2 years in prison on Friday.

The sentence for Narseal Batiste was handed down by a federal court judge in Miami, who earlier this week announced lighter prison terms ranging from five to eight years for Batiste's four co-conspirators.

The case was touted as a major blow against terrorism and a victory in government efforts to dismantle domestic "sleeper cells" when federal agents arrested the men in Miami's poor and predominantly black Liberty City neighborhood in June 2006.

But the men, accused of conspiring with al Qaeda to wage holy war, insisted on their innocence and two mistrials were declared before a jury finally found them guilty in May.

Defense lawyers said the alleged plot was concocted by the government and overzealous prosecutors with the help of informants who posed as Middle Eastern contacts.

Batiste, who had faced a maximum of 70 years in prison, got 35 years probation along with his 162-month prison sentence. He was convicted of conspiring to provide material support to al Qaeda, conspiring to provide material support to an act of terrorism, conspiring to destroy a building and conspiring to wage war against the United States.

Authorities conceded at the time of the arrests that the Liberty City men posed no real threat because they had neither contacts with Islamic militant groups nor the means of carrying out attacks.

But Batiste was accused of targeting the Sears Tower, America's tallest skyscraper, for one potential attack and other possible targets of the plot included Miami's FBI headquarters and a courthouse.

The Sears Tower was renamed the Willis Tower earlier this year after Willis Group Holdings, a London-based insurance broker, consolidated its regional offices there. (Reporting by Tom Brown; editing by Anthony Boadle)

Sears Tower plot: 4 of the accused get lenient terms
By Curt Anderson - Associated Press - Chicago Tribune
November 20, 2009

MIAMI--Four men described as soldiers in a terrorism plot to destroy Chicago's Sears Tower, now known as Willis Tower, and bomb FBI offices have each been sentenced to less than a decade behind bars, far less than prosecutors sought.

U.S. District Judge Joan Lenard, in sentencing hearings Wednesday and Thursday, said the four participated much less than ringleader Narseal Batiste in discussions about possible attacks. The conversations were recorded by the FBI using an informant posing as an al-Qaida operative.

The plot never got past the discussion stage, which has led defense attorneys and terrorism experts to describe the case as overblown since the "Liberty City Seven" were arrested in June 2006. Lenard appeared to share that sentiment, at least for the four men who were sentenced.

"As I see this case, these young men were looking for something. I don't know, maybe it was their naivete and youth that made them fall under the influence of a man with a need to control, and they became his followers," Lenard said.

Federal prosecutors sought between 30 and 50 years in prison for each of the four. Batiste, a former FedEx deliveryman from Chicago, is facing a maximum of 70 years when he is sentenced Friday. They were convicted in May in the third trial of the case following two mistrials. Two of the original suspects were acquitted.

Lenard sentenced Batiste's self-described "No. 1 soldier," Patrick Abraham, 30, to a little more than nine years Thursday. Stanley Phanor, 34, got eight years, and two other men were sentenced to less time Wednesday. Lenard said a terrorism enhancement that applies in each case would result in an unreasonably harsh sentence, so she opted for leniency.

Abraham, a Haitian native who has been jailed since 2006, apologized but said he never sought to be a terrorist.

"I am not nobody's enemy," he said. "I am not the government's enemy."

Batiste, 35, testified at the trials that he faked being a terrorist in hopes of scamming the FBI informant out of $50,000 for his struggling construction business. A key piece of evidence was a ceremony led by the informant, and taped by the FBI, in which each man pledged loyalty to al-Qaida.

Sears shuns spending money on stores but shells out to buy its own stock
3rd-quarter losses narrow;
capital spending trend concerns analysts
By Sandra M. Jones - Chicago Tribune
November 20, 2009

If Sears Holdings Corp. Chairman Edward Lampert were making out his Christmas wish list, you can bet that more Sears stock would be at the top of the page.

When the retailer reported Thursday that its fiscal third-quarter loss narrowed as $101 million in overhead cost cuts helped to offset falling sales, it also disclosed a willingness to spend -- on itself.

Most retailers have suspended stock buyback programs as they conserve resources to cope with cash-strapped consumers who are shopping less and expecting bigger discounts.

Not Sears. It is spending more on its stock than on its stores.

Sears cut capital expenditures, or investment in fixing up its stores, by 44 percent for the fiscal year through Oct. 31. And it trimmed inventory spending 5 percent going into the holiday season.

Amid this frugality, the owner of Sears and Kmart stores spent $224 million to buy back about 3.5 million shares at an average price of $64.30 a share in the third quarter, which is more than it invested in capital expenditures in the first nine months of the fiscal year.

Morgan Stanley analyst Gregory Melich called the move a "questionable practice given the state of the store base," in a report Thursday. He estimates Sears' capital spending at $325 million for 2009 and said it should be "at least $1.6 billion."

Even as rival retailers reduced capital spending this year in response to the recession, Sears still ranks as the cheapest among 13 competitors, according to a Nov. 9 Credit Suisse report.

Since 2005, when Lampert took control of Sears and combined it with Kmart, capital spending as a percentage of sales has hovered around 1 percent annually, according to Credit Suisse.

"We are aware and have read numerous times the letters from Mr. Lampert that ... spending for spending sake is not justified," said Credit Suisse analyst Gary Balter in the report. "We agree up to a point, however, maintenance spending is necessary to keep stores looking fresh (and) to bring customers in."

If the stores look dreary or dirty, shoppers go elsewhere, Balter said. It is a lesson retail outsiders often fail to grasp.

Yet, it is also a market reality that when firms buy back their own stock, the stock price goes up because there are fewer outstanding shares. Lampert, through his exclusive hedge fund RBS Partners, owns 56 percent of Sears. It is the fund's biggest equity investment.

Sears' stock price under Lampert has seesawed from as high as $193 in April 2007 to as low as $34 this past February. Shares fell $2.82, or 3.7 percent, to close Thursday at $72.95, putting Sears' market value at $8.7 billion.

Sears officials declined to comment beyond the earnings release.

Sears is investing in its online business and free-standing home appliance stores, a test concept that has had some promising early results. Some analysts interpret these steps to mean Lampert is biding his time until he can get rid of Sears' real estate and move most business to the Web.

For the quarter ended Oct. 31, Sears reported a loss of $127 million, or $1.09 a share, compared with a loss of $146 million, or $1.16, a year earlier.

Revenue fell 4.4 percent, to $10.19 billion. Sales at stores open at least a year, a key retail metric, fell 4.6 percent at Sears' U.S. stores and rose 0.5 percent at Kmart.

Sears Reports Narrower Loss
By Joan E. Solsman - Dow Jones Newswires
November 19, 2009

Sears Holdings Corp.'s fiscal third-quarter loss narrowed more than expected on higher margins and cost cuts, and posted same-store sales growth at Kmart.

Interim Chief Executive W. Bruce Johnson said Thursday that in addition to the increase in Kmart's same-store sales, the rate of decline at Sears abated from previous quarters. He also credited the strong performance on an adjusted $101 million reduction in overhead costs.

Both chains' continuing reputation for weak customer service and poor store upkeep have diverted discount shoppers toward competitors like Wal-Mart Stores Inc., while department stores in general have been reporting slumping results for some time.

For its part, Sears is seeking to branch away from staple of affordable home goods by exclusively selling a line of luxury kitchen appliances from Whirlpool Corp.'s Jenn-Air, betting they will entice holiday shoppers. But the move comes just as customers have significantly reduced their purchases of appliances during the recession.

For the quarter ended Oct. 31, the company posted a loss of $127 million, or $1.09 a share, compared with a year-earlier loss of $146 million, or $1.16 a share. Excluding items such as store-closing costs and write-downs, the loss narrowed to 81 cents from 90 cents. Revenue decreased 4.4% to $10.19 billion.

Analysts surveyed by Thomson Reuters predicted a $1.09 loss on $9.93 billion in revenue.

Same-store sales fell 2.3% -- down 4.6% at Sears but up 0.5% at Kmart. Gross margin rose to 27.2% from 26.8%.

Merchandise inventories were $10.8 billion at Oct. 31, down from $11.36 billion.

In Pursuit of the Right Medicare Plan
By Jane Zhang and Avery Johnson - Retirement Planning - Wall Street Journal
November 19, 2009

In past years, most older people just stuck with their existing Medicare drug plan or Medicare Advantage plan during open enrollment, avoiding the dizzying experience of choosing a new one. In the latest annual enrollment period, which began this week, they might want to think again.

Many people with Medicare Advantage plans may have no choice but to seek out a new option. That's because insurers including UnitedHealth Group Inc. and WellCare Health PlansInc. are eliminating a number of their plans in response to government cutbacks and new requirements. If the 667,000 enrollees affected by the cancellations don't select a new plan by Dec. 31, they will be placed automatically in traditional Medicare. They also have until Jan. 31 to select a drug plan, or risk losing drug coverage in 2010.

Changes also are in store for Medicare Part D prescription-drug plans. The average monthly premium will rise 12% next year to $38.91, according to an analysis of Medicare data by consulting firm Avalere Health LLC. Many insurers also are raising the amount beneficiaries must pay for generic drugs—up an average of 16% to $6.72 for most plans. And a number of plans are requiring patients to pay a percentage of other drug costs, known as a co-insurance payment, instead of making a flat copayment for these medications.

"Consumers should be aware that the markets are changing," says Dan Mendelson, Avalere's president. "They should know that there are often less expensive plans in the area. They need to shop again."

Bruce Clarke, 69, from Plymouth, Mass., has no choice but to shop for a new plan after Blue Cross Blue Shield of Massachusetts Inc. dropped his $40-a-month Blue Medicare plan. The plan came with a discounted gym membership and free preventive dental care, he says. A similar plan offered by another insurer charges a $70-a-month premium and higher copayments for physician visits. "I was very surprised and disappointed because we really liked that plan," says Mr. Clarke, a retired insurance executive.

Medicare Advantage plans, unlike traditional Medicare, are subsidized by the federal government and offered by insurance companies. They wrap together coverage for doctor and hospital visits, and often include a prescription-drug plan. Fewer Advantage Plans Like Mr. Clarke's former plan, many of the Medicare Advantage plans being eliminated are in a category known as private fee for service, which generally allows beneficiaries to see any doctor of their choosing.

But a 2008 law that requires such plans to establish provider networks left many insurers balking. In total, the number of Medicare Advantage plans will drop about 18% next year to 2,314 from 2,830 in 2009, according to Kaiser Family Foundation, which focuses on health-care research.

Also hitting Advantage plans are cuts of as much as 4.5% in the amount the federal government reimburses the plans for treatment next year. The government says the subsidized plans cost it an average of 14% more per beneficiary than traditional Medicare, and expects additional cuts in the future.

A spokeswoman for Blue Cross Blue Shield of Massachusetts says it canceled the private fee-for-service plan after analyzing the government's new reimbursement rules for 2010.

Some Advantage plans are dropping benefits such as gym membership and dental and vision coverage. On average, premiums for Advantage plans will increase 25% next year, according to Medicare. Looking just at Advantage plans with drug coverage, premiums will rise 32% to an average of $48 a month, Kaiser Family Foundation says.

In Salt Lake City, Edwin Svikhart, 79, and his wife, Joann, plan to remain with Regence Blue Cross Blue Shield's Medicare Advantage plan, even though copays are rising and the extras Advantage plans are often known for—eye care, wellness programs and dental—are being scaled back. Still, Mr. Svikhart says his plan offers good service and all doctors take it. He says he also expects all other plans are raising prices.

A Regence spokeswoman says the changes were "not easy choices to make."

To be sure, some Advantage plans are adding perks. Universal American Corp., for instance, added a wellness program to its HMO in Houston. In Kentucky, New York and Ohio, WellPointInc. is selling new plans with no premium and no copayments for generic drugs and primary-care doctor visits.

Still, other insurers are cutting back. UnitedHealth, the largest Medicare Advantage player, raised its monthly premiums for about 15% of its plans, mostly by $10 or less, and canceled private fee-for-service plans in some markets, affecting about 98,000 consumers, a company spokesman said. Next year, 70% of UnitedHealth's plans won't charge a premium, down from 85% this year. But the company is beefing up services in some locations, including Dallas.

Humana Inc., the second-largest player in Medicare Advantage, says premiums for its plans next year will rise $8 a month on average, or about 30%.

Some seniors like Dennis Feagles, 68, have already crunched the numbers. Mr. Feagles who lives in Scottsdale, Ariz., with his wife, Patricia, has a Medicare Advantage plan through Health Net Inc., and for the first time will pay premiums, amounting to $36 a month. Also new is a $10 copay for seeing his primary-care doctor and getting lab tests, and his cost sharing for an ambulance trip will increase to $300 from $200. Paying More for Lipitor Mr. Feagles's prescription-drug costs are also rising. Generic medicines will cost him $6, up from $4, and copays for Liptor, a medicine both he and his wife take to lower cholesterol, will rise to $43 from $39.

"The bottom line is, some are a little better and some are a little worse, but it's not worth changing" plans, says Mr. Feagles.

A Health Net spokeswoman blamed the price increases on rising medical costs and the government rate cut.

About 29 million seniors and other beneficiaries are signed up for the Medicare drug benefit, which began in 2006 to provide subsidized coverage of prescription drugs through private insurers. There will be 1,576 stand-alone drug plans available next year, down almost 7% from 1,689 in 2009.

Seniors have until Dec. 31 to choose a drug plan, unless their insurer is canceling their current drug plan, in which case they have until Jan. 31. The Centers for Medicare and Medicaid Services, which runs Medicare, has an online tool to help seniors compare plans at www.mymedicare.gov. Information also is available at 1-800-MEDICARE or from State Health Insurance Counseling and Assistance Programs.

Sears narrows loss, beats estimates but stock falls
Chicago Business
 November 19, 2009

(AP) — Shoppers increased their spending at Kmart stores for the first time in at least seven years this fall, picking up less expensive toys, shoes and items for their homes.

The boost in sales at Kmart stores open at least a year was tiny — less than 1 percent. But it helped its parent company, Sears Holdings Inc., post a smaller quarterly loss and was a milestone, marking the first time since at least January 2002 that the important measure climbed at the discount store.

It was also a minor victory for the retailer, owned by Sears Holdings Corp. and led by financier Edward Lampert, which has seen the long-deteriorating Kmart business begin to show signs of life during the recession.

Sales at stores open at least a year are a key indicator of a retailer's performance because it measures growth at existing stores rather than newly opened ones.

Still, experts say the boost will almost certainly be fleeting as the economy recovers and the discount chain continues to fall victim to its larger rivals that offer more products, at better prices and in spiffier locations.

"They're certainly not out of the woods yet," said Morningstar analyst Kim Picciola. "I think there are still serious competitive threats out there from Walmart and Target. They have a long way to go to make up the ground they've lost in recent years."

Before it was the also-ran of discount department stores, lagging behind Walmart's low prices and Target's cheap-chic products, Kmart was a force to be reckoned with. From its inception as a Detroit five-and-dime to its growth as the nation's first discount department store under the Kmart brand in 1962, the chain created the low-price shopping emporiums Americans have come to crave.

Now, though, Kmart and its 1,400 U.S. stores are dwarfed by bigger competitors. Data from the market research firm Euromonitor International shows the chain has only 3.7 percent of the U.S. market share among department stores and mass merchants. That compares with 13 percent at Target, which has about 1,700 stores, and almost 23 percent at Walmart, which has roughly 4,000 U.S. locations.

"Once you're labeled a loser, it's hard to come back from that," said Laura Ries, president of Ries & Ries, marketing strategy firm in Atlanta. "And once consumers deem you the place not to go, it's very difficult to get them back."

That isn't stopping Kmart and its sister chain, Sears, from trying. Together the two brands have launched ambitious campaigns in recent months to win over holiday shoppers — with measures like its new Christmas Club cash savings card good at Sears and Kmart stores — and capitalize on last year's successful holiday layaway program.

"As we approach this important selling season, we are focused on executing our holiday strategy and meeting our customers' needs," interim CEO and President W. Bruce Johnson said in a statement Thursday when the company released its third-quarter results.

Sears also owns Lands' End stores, but the company doesn't provide financial information about the clothing chain, which has a strong following from customers and has been praised by Lampert in the past.

Winning back shoppers will likely be even tougher this year as retailers slash prices for the holidays.

Sears stores fared worse than Kmart during the three months that ended in late October. There, sales in locations open at least a year sank 4.6 percent as fewer shoppers bought home appliances, lawn and garden products, tools and home electronics.

Overall, Sears Holdings lost $127 million during the quarter, or $1.09 per share — its second consecutive deficit and its second-largest loss since Lampert acquired Kmart out of bankruptcy in 2003 and added Sears, Roebuck and Co. in 2005.

Excluding store closing costs and other items, Sears said its loss amounted to 81 cents per share.

But Thursday's figures were better than last year's third quarter, when Sears lost $146 million. They also topped analyst forecasts for a loss of $1.09 per share.

Third-quarter revenue fell 4 percent to $10.19 billion. That also topped Wall Street's estimate for $9.92 billion in revenue. Shares of Sears fell $2.82, or nearly 4 percent, to close Thursday at $72.95.

Sears 3Q Posts Better-Than-Expected Loss; Kmart Strong
Dow Jones Newswires
November 19, 2009

Sears Holdings Corp.'s (SHLD) fiscal third-quarter loss narrowed more than expected on higher margins and cost cuts, as the owner of the Sears department stores posted same-store sales growth at Kmart.

Interim Chief Executive W. Bruce Johnson said Thursday that in addition to the increase in same-store sales at Kmart, the rate of decline at Sears abated from previous quarters. He also credited the strong performance on an adjusted $101 million reduction in overhead costs.

The results still raised questions coming into the important holiday season. Sears' rate of revenue decline was greater than its was in the second quarter, a trend the retailer has been seeing since 2006. Sears also posted soft electronic sales while other major retailers including Wal-Mart Stores Inc. (WMT), BJ's Wholesale Club Inc. (BJ) and Costco Wholesale Corp (COST) were flat or slightly up in the third quarter in that segment.

Sears also has continued to cut inventory. "But this is not giving them the gross margin boost that you are seeing pretty much across the board with other retailers," said Brian Sozzi, a retail analyst at Wall Street Strategies.

This suggests that the products Sears has in stores aren't moving as well, Sozzi said.

While most other retailers have suspended their stock buyback programs, Sears continues to buy shares instead of putting the money into store revitalizations that could help bring customers in, Sozzi said.

Both Sears and Kmart stores' continuing reputation for weak customer service and poor store upkeep have diverted discount shoppers toward competitors like Wal-Mart, while department stores in general have been reporting slumping results for some time.

For its part, Sears is seeking to branch away from staple of affordable home goods by exclusively selling a line of luxury kitchen appliances from Whirlpool Corp.'s (WHR) Jenn-Air, betting they will entice holiday shoppers. But the move comes just as customers have significantly reduced their purchases of appliances during the recession.

For the quarter ended Oct. 31, the company posted a loss of $127 million, or $1.09 a share, compared with a year-earlier loss of $146 million, or $1.16 a share. Excluding items such as store-closing costs and write-downs, the loss narrowed to 81 cents from 90 cents.
Revenue decreased 4.4% to $10.19 billion.

Analysts surveyed by Thomson Reuters predicted a loss of $1.09 a share on $9.93 billion in revenue.

Same-store sales fell 2.3%--down 4.6% at Sears but up 0.5% at Kmart. Gross margin rose to 27.2% from 26.8%.

Merchandise inventories were $10.8 billion at Oct. 31, down from $11.36 billion.

Sears shares were up 3.38% at $78.33 in premarket trading. The stock has nearly doubled in 2009.

Sears Holdings Reports Third Quarter Results
Sears Holdings News Release
November 19, 2009

HOFFMAN ESTATES, Ill., Nov. 19 /PRNewswire-FirstCall/ -- Sears Holdings Corporation ("Holdings," "we," "us," "our" or the "Company") (Nasdaq: SHLD) today reported its results for the third quarter of 2009. In summary, we reported:

• A net loss attributable to Holdings’ shareholders for the quarter of $127 million ($1.09 per diluted share) as compared to a net loss attributable to Holdings’ shareholders of $146 million ($1.16 per diluted share) in the third quarter of 2008;

• Excluding significant items, a net loss attributable to Holdings’ shareholders for the quarter of $0.81 per diluted share as compared to a net loss attributable to Holdings’ shareholders of $0.90 per diluted share in the third quarter of 2008;

• Improvement in domestic Adjusted EBITDA of $14 million for the third quarter of 2009 and $128 million for the first nine months of 2009 as compared to the prior year periods;

• An increase in comparable store sales at Kmart of 0.5% as compared to the same quarter in 2008;

• An increase in our gross margin rate of 40 basis points to 27.2% for the third quarter of 2009 as compared to the same quarter in 2008;

• A $101 million reduction in selling and administrative expenses, adjusted for significant items discussed below, during the third quarter of fiscal 2009 as compared to the same quarter in 2008;

• Continued progress in improving our balance sheet, as cash balances increased to $1.5 billion from $1.2 billion last year, while our total debt was reduced by $678 million (to $3.8 billion) and domestic letters of credit were reduced by $194 million (to $803 million) from prior year levels; and

• A reduction in usage of our revolving line of credit by $837 million as compared to November 1, 2008, resulting in total unused borrowing capacity of $2 billion at October 31, 2009.
"We saw some encouraging signs of progress in the third quarter. Comparable store sales increased at Kmart and the decline in sales at Sears moderated during the quarter. Additionally, we increased margin rates and reduced selling and administrative expenses by $101 million," said W. Bruce Johnson, Sears Holdings’ interim chief executive officer and president. "As we approach this important selling season, we are focused on executing our holiday strategy and meeting our customers’ needs."

Third Quarter Revenues and Comparable Store Sales
Total revenues decreased $470 million to $10.2 billion for the 13 weeks ended October 31, 2009, as compared to total revenues of $10.7 billion for the 13 weeks ended November 1, 2008. The decrease was primarily due to lower comparable store sales and 56 fewer Kmart and Sears full-line stores, partially offset by an increase of $42 million due to the impact of foreign currency exchange rates.

Domestic comparable store sales declined 2.3% in the aggregate for the quarter, and included an increase at Kmart of 0.5%, offset by a decline at Sears Domestic of 4.6%. The Kmart quarterly increase in comparable store sales was primarily driven by the toys and home categories, as well as the impact of assuming the operations of its footwear business from a third party effective January 2009. Declines in sales for the quarter at Sears Domestic include decreases in the home appliance, lawn & garden, tools and home electronics categories, although sales in the home appliance category declined to a lesser degree as compared to previous quarters this year.

Operating Loss
Holdings’ operating loss was $106 million for the 13 weeks ended October 31, 2009, as compared to an operating loss of $202 million for the 13 weeks ended November 1, 2008. Our operating loss for the third quarter of 2009 includes expenses of $54 million related to domestic pension plans and store closings and severance. Our operating loss for the third quarter of 2008 included a charge of $101 million related to costs associated with store closings and severance, as well as asset impairments, of which $76 million were non-cash items. Excluding these items, our operating loss decreased $49 million and was primarily the result of reductions in selling and administrative expenses, partially offset by lower gross margin dollars given lower overall sales.

For the quarter, we generated $2.8 billion in gross margin as compared to $2.9 billion in the third quarter last year. The total decline in gross margin dollars of $88 million (adjusted for $5 million and $10 million of markdowns recorded in connection with store closings in the third quarters of 2009 and 2008, respectively) was mitigated by an increase of $14 million related to the impact of foreign currency exchange rates on gross margin at Sears Canada. While gross margin dollars declined, we increased our gross margin rate to 27.2% in the third quarter of 2009 as compared to the third quarter of 2008. The increase in our gross margin rate was a result of an increase in gross margin rate of 50 basis points at both Sears Domestic and Kmart, as well as an increase of 30 basis points at Sears Canada. Increases in our gross margin rate are mainly due to improved inventory management, which resulted in lower markdowns taken on spring and summer apparel and home merchandise, as well as improvement in margins for home appliances.

The improvement in our operating results was mainly a result of reductions in selling and administrative expenses of $101 million (adjusted for significant items). Selling and administrative expenses include an increase of $10 million related to the impact of foreign currency exchange rates at Sears Canada and declined mainly as a result of a $31 million reduction in payroll and benefits expense, a $24 million reduction in insurance expense, as well as reductions in various other expense categories.

Significant Items
A number of significant items affected our third quarter results in fiscal 2009 and 2008. Excluding these items, the net loss attributable to Holdings’ shareholders for the third quarter of fiscal 2009 would have been $94 million ($0.81 loss per diluted share) as compared to a net loss attributable to Holdings’ shareholders of $114 million ($0.90 loss per diluted share) in the third quarter of 2008. Our fiscal 2009 and 2008 third quarter per-share results were impacted by the effects of our share repurchase program (as discussed below), as well as other significant items, including:

• charges for costs associated with store closings and severance of $10 million ($6 million after tax or $0.05 per diluted share) in the third quarter of 2009 and $25 million ($15 million after tax or $0.12 per diluted share) in the third quarter of 2008;

• domestic pension plan expense in the third quarter of 2009 of $44 million ($28 million after tax or $0.24 per diluted share);

• mark-to-market gains on Sears Canada hedge transactions of $2 million ($1 million after tax and noncontrolling interest or $0.01 per diluted share) in the third quarter of 2009 and $67 million ($29 million after tax and noncontrolling interest or $0.23 per diluted share) in the third quarter of 2008; and

• a charge of $76 million ($46 million after tax or $0.37 per diluted share) related to costs associated with asset impairments recorded in the third quarter of 2008.

Costs incurred for store closings and severance include charges related to our third quarter 2009 decision to close seven underperforming stores and our third quarter 2008 decision to close 14 underperforming stores. We expect to record an additional charge of approximately $5 million during the fourth quarter of 2009 as the stores we decided to close in the second quarter of 2009 complete operations. Similar to our previous store closings, we expect that these will be additive to earnings given that the closure of these stores eliminates negative cash flows incurred from their operations, and will generate cash from the liquidation of inventory and from other proceeds. The list of stores closed can be found at www.searsmedia.com. We continue to evaluate our business in an effort to improve the operating results of the Company.

As we noted in our first quarter 2009 earnings release, the Company has a legacy pension obligation for past service performed by Kmart and Sears, Roebuck and Co. associates. The annual pension expense included in our financial statements related to these legacy domestic pension plans was relatively minimal in recent years. However, due to the severe decline in the capital markets that occurred in the latter part of 2008 our domestic pension expense will increase by approximately $170 million for the fiscal year 2009. As a result, we present pension expense as a significant item affecting earnings and as a separate line item in our Adjusted EBITDA reconciliation to promote operating performance comparability. We expect domestic pension plan expense in the fourth quarter of 2009 to remain consistent with the first three quarters.

Financial Position
We had cash balances of $1.5 billion at October 31, 2009 (of which $505 million was domestic and $1 billion was at Sears Canada) as compared to $1.2 billion at November 1, 2008 and $1.3 billion at January 31, 2009. The October 31, 2009, November 1, 2008 and January 31, 2009 cash balances excluded $12 million, $94 million and $38 million, respectively, on deposit with The Reserve Primary Fund, a money market fund that has temporarily suspended withdrawals while it liquidates its holdings to generate cash to distribute. Such amounts have been reclassified to the prepaid expenses and other current assets line within our Condensed Consolidated Balance Sheets. Significant uses of our cash during the first three quarters of 2009 include $358 million for share repurchases, contributions to our pension and post-retirement benefit plans of $167 million, capital expenditures of $221 million and debt issuance costs of $81 million. These amounts were offset by short-term borrowings.

Merchandise inventories were $10.8 billion at October 31, 2009 as compared to $11.4 billion at November 1, 2008. Domestic inventory levels declined from $10.5 billion at November 1, 2008 to $9.9 billion at October 31, 2009 due to improved inventory management. Inventory levels at Sears Canada decreased $28 million ($140 million on a Canadian dollar basis), primarily due to improved inventory management.

Total debt (consisting of short-term borrowings, long-term debt and capital lease obligations) at October 31, 2009 was $3.8 billion, as compared to $4.5 billion at November 1, 2008. The decrease in outstanding debt includes a reduction in domestic long-term debt and capital lease obligations of $381 million. Long-term debt of the parent (which excludes the debt of our Sears Canada ($279 million) and Orchard Supply Hardware ($296 million) subsidiaries, which is non-recourse to the parent) is less than $1 billion, with no significant required repayments until 2011.

Total short-term borrowings at October 31, 2009 of $1.6 billion were $322 million lower than our level of borrowings at November 1, 2008 of $1.9 billion. As we enter the holiday selling season, our short-term borrowings reflect amounts borrowed to support increased levels of inventory at the end of the third quarter. In addition to decreasing our total amount of short-term borrowings in the third quarter of 2009, we also altered the mix of our funding to include more borrowings in the commercial paper market. "During the third quarter, we saw heightened interest in our commercial paper, leading us to increase our outstanding commercial paper balance to $337 million," said Mike Collins, senior vice-president and chief financial officer. "The increased level of commercial paper not only reduced our borrowing costs, but also contributed to a greater amount of availability under our revolving line of credit. Overall, our liquidity initiatives enabled us to reduce usage under our revolver by $837 million as compared to the third quarter of 2008."

Share Repurchase
During the 13- and 39- week periods ended October 31, 2009, we repurchased approximately 3.5 million and 6.2 million common shares at a total cost of $224 million and $358 million, respectively, under our share repurchase program. Our repurchases for the 13- and 39- week periods ended October 31, 2009 were made at average prices of $64.30 and $58.05 per share, respectively. As of October 31, 2009, we had remaining authorization to repurchase $147 million of common shares under the share repurchase program. The share repurchases may be implemented using a variety of methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated share repurchase transactions, the purchase of call options, the sale of put options or otherwise, or by any combination of such methods. Timing will be dependent on prevailing market conditions, alternative uses of capital and other factors.

Earnings Preview: Sears Holdings Corp.
By Ashley M. Heher
(November 18, 2009)

CHICAGO (AP) - Sears Holdings Corp. reports its results for the third quarter on Thursday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: Sears Holdings has struggled for years as customers slip away from its Sears and Kmart stores. And it is expected to report that it lost only slightly less than it did a year earlier as its sales sagged further, despite efforts to drum up new business during the quarter, which ended Oct. 31.

Led by financier Edward Lampert, the company has launched a major campaign to win over holiday shoppers — with measures like its new Christmas Club cash savings card good at Sears and Kmart stores — and capitalize on last year's successful holiday layaway program. And it has indicated it's trying to compete with heavyweights Wal-Mart Stores Inc. and Target Corp.

During the third quarter, Sears announced a plan to allow outside retailers to sell products on its Web site. The move, similar to one recently made by Wal-Mart Stores Inc., allows the chains to provide a greater assortment of products to its online shoppers. In August, Sears beefed up its in-store offerings — adding toy shops to 20 locations and more than a dozen beauty and cosmetic departments. And the chain became the only retailer to sell Jenn-Air's newest line of high-end kitchen appliances.

Also during the quarter, William C. Kunkler, 52, executive vice president of the private equity firm CC Industries Inc., joined the retailer's board of directors.

Lampert acquired Kmart out of bankruptcy in 2003 and added Sears, Roebuck and Co. in 2005 to create Sears Holdings, which is based in the Chicago suburb of Hoffman Estates.

BY THE NUMBERS: Analysts polled by Thomson Reuters predict a loss of $1.09 per share on revenue of $9.92 billion for the quarter. Last year the retailer lost $149 million, or $1.16 per share. Revenue fell 8 percent in the third quarter last year to $10.66 billion.

ANALYST TAKE: Deutsche Bank analyst Bill Dreher Jr. told investors that the sales declines at Sears and Kmart likely will continue into next fiscal year. And both probably will continue ceding customers to rivals, even though Sears could remain an important player in the holiday shopping scene this year.

WHAT'S AHEAD: Sears Holdings hasn't had a permanent chief executive for nearly two years, since Aylwin Lewis abruptly departed in early 2008. Interim CEO W. Bruce Johnson has held the post since then, and analysts will want to know whether his appointment will become permanent or a new CEO will be hired.

STOCK PERFORMANCE: During the quarter, shares rose about 2 percent to end the period at $67.86. They closed Tuesday at $76.32 near the high end of their 52-week range from $26.80 to $79.75.

Sears Canada profit tumbles on consumer caution
By Hollie Shaw, Financial Post - Canada.com
November 18, 2009

Profit tumbled 21% at Sears Canada in the third quarter due to consumer caution about the economy, according to the department store retailer.

Sears said Wednesday it earned $47.1-million, or 44 cents a share, in the third quarter ended Oct. 31, down from $59.3-million (55 cents), a year ago.

Revenue fell 9.2% to $1.3-billion compared with $1.4-billion and same-store sales, a leading indicator of health in the retailing sector, sank 6.3%.

“The recession is continuing with increasing unemployment resulting in retracted consumer spending,” said Dene Rogers, president and CEO of Sears Canada, which is owned in majority by Sears Holdings Corp.

“The economic uncertainty continued to affect consumer confidence during the third quarter especially as it relates to future employment.” Sears will market aggressively in the crucial fourth-quarter holiday period, with a focus on driving customer traffic and profit, he said.

Operating earnings before interest, taxes, depreciation and amortization was $103.7-million for the quarter compared to $115.5-million last year, a decrease of 10.2%.

For the 39 weeks ended Oct. 31, 2009, same-store sales were down 8.8%. The retailer reduced total expenses by 9.7%.

Financial Post

J.C. Penney is turning last page on its Big Book
By Maria Halkias - The Dallas Morning News
November 17, 2009

The J.C. Penney Co. Big Book is dead – a victim of shoppers' growing reliance on the Internet.

Plano-based Penney confirmed that its fall/winter 2009 catalog is its last semiannual, telephone-book-size volume.

The Internet has made the 1,000-page shopping venue obsolete, and printing and transportation costs have been rising annually. The move also improves Penney's environmental footprint, reducing its catalog paper use by 30 percent next year.

Smaller, more frequent mailings of specialty catalogs targeting customers' shopping habits make more sense today, said Mike Boylson, Penney's chief marketing officer.

"It became a very ineffective way to communicate to our customers," he said. "It forced us to bring product in too early and locked in pricing. It was an outdated way of shopping and the last big book in America."
Penney has catalogs supporting its large home-goods business, including its private label Cooks kitchen catalog and Rooms Babies Love. Along with several women's and men's apparel catalogs, the company determined that shoppers increasingly use catalogs as "look books" and inspiration for their store and online purchases.

In the last two years, Penney consolidated its buying and marketing teams, which previously operated separately for stores, catalog and Internet sales.

"We had two buyers of everything, like Noah's Ark," he said. "The biggest, more important store items weren't even in the catalog."

Big Book sales have been on a decline since 2000 as more shoppers turn to jcp.com. Penney's online sales hit $1 billion a year in 2006. "It has an aging customer. Younger customers don't shop the Big Book," Boylson said.

Once 1,500 pages, Penney's Big Book dropped to well below 900 pages a few years ago. Since 2003, Penney has been shrinking its catalog operation, closing fulfillment centers and telemarketing operations. By 2004, about 40 percent of Penney's catalog shoppers were placing orders on jcp.com, instead of calling an 800 number.

Sales peaked in 1999 at about $4 billion. Penney stopped breaking out its catalog and Internet sales a few years ago. Penney's Big Book circulation topped out at 14 million. It printed 9 million copies of the final volume.

Catalog history
Penney got into the catalog business in 1963 after it bought a Milwaukee company.

The retailer promoted the catalog with a message similar to the words that it and other retailers use today about their online stores.

On the cover of that fall and winter issue, Penney said, "It's so new ... this new and bigger array of Penney selections ... the new convenient way to shop at Penneys ... the newest of all Penney 'stores' – this catalog."

It showed two sides of a golden seal. The front said, "Serving the American family/1902" and on the back, "A nationwide institution. Growing with the nation."

In 1993, Penney's profit surged on expanding catalog sales as it aggressively pursued Sears' catalog customers by getting its Sears Discover cardholder list and accepting the card as payment.

In January of that year, Sears Roebuck & Co. discontinued its 106-year-old catalog, known to generations as the original "big book." Sears' catalog went to 14 million households, but it had been losing money for years.

Christmas wish lists
The arrival of a big book from Sears, Penney, Montgomery Ward or Spiegel were big events, especially the fall and winter books because they were studied long and hard to come up with Christmas wish lists.

Former Rolling Stone writer Jancee Dunn, whose father and grandfather were J.C. Penney store managers, looks at the Penney catalog from a hilarious perspective in her latest autobiographical book, Why is My Mother Getting a Tattoo? The catalog also was integral in her 2006 book, But Enough About Me.

The catalogs were yearbooks of American life.

In her retrospectives on family life in the 1970s and '80s, Dunn recalled pieces sold through the catalog, such as "the Vidal Sassoon Hard Bonnet Hair Dryer, the Standard Toilet Lid Cover in Dusty Rose or Bronze Gold, the Cozy Recliner in Fashion Colors."

By the numbers: Cataloging sales

$4 billion:    Penney's peak catalog sales year in 1999
14 million:   The Big Book's highest circulation total
9 million:     Number of copies printed of final Big Book volume
40%:           Percentage of catalog shoppers using the Internet by 2004 to place orders
30%:           Reduction in Penney's catalog paper use by eliminating the Big Book

Allstate takes another step in remaking executive suite
By: Steve Daniels - Chicago Business
November 16, 2009

(Crain’s) — Allstate Corp. has named a 40-year-old executive from rival Travelers Cos. Inc. to run its key property and casualty insurance unit — the Northbrook-based giant’s third hiring of an outsider to take over a key executive function in the last six weeks.

Joseph Lacher Jr. will start Nov. 30 as president of Allstate Protection, the unit for the insurer’s core auto and home operations. He succeeds George Ruebenson, a 40-year veteran of Allstate who late last month announced he would retire at the end of the year.

In recent weeks, Allstate has hired a veteran of General Motors Corp., Mark LaNeve, as chief marketing officer and a former executive at American International Group Inc., Matthew Winter, as president of its life insurance unit.

With the moves, Allstate CEO Thomas Wilson has effectively made over much of the Northbrook-based insurance giant’s executive suite.

"In today’s very competitive environment, success comes down to leadership and high performance,” Mr. Wilson said in a release. “Our goal is to have the strongest possible leadership team with the optimal mix of talent, expertise and experience.”

Mr. Lacher takes over Allstate’s main insurance unit at a point when it’s raising rates to boost profitability in its lagging homeowners insurance business and is struggling to grow its profitable auto insurance business in the face of tough competition from online rivals Progressive Corp. and Geico.

Mr. Lacher has spent virtually his entire career with Travelers and for the past seven years ran the insurer’s personal insurance unit, which competes with Allstate.

“Having competed against Allstate for my entire career, I know just how phenomenal the Allstate brand, distribution network and organization really are,” Mr. Lacher said in the release.

Lampert Cuts Financial, Housing Exposure in 3Q
By Brendan Conway - Dow Jones Newswires
November 16, 2009

NEW YORK (Dow Jones)--Hedge fund billionaire Edward Lampert trimmed his holdings in housing and financial stocks in the last quarter, a Friday regulatory filing shows.

Lampert-affiliated RBS Partners reported no stake in bankrupt lender CIT Group Inc. (CIT), mortgage giant Fannie Mae (FNM), retailer Home Depot Inc. (HD), Hartford Financial Services Group Inc. (HIG) or mortgage company PHH Corp. (PHH) as of Sept. 30. The firm held stakes in all five as of the previous quarter, including 22.2 million shares in Fannie Mae and 9.9 million in Home Depot.

Lampert, who is the chairman of Sears Holding Corp. (SHLD), also cut his holdings in Genworth Financial Inc. (GNW) nearly in half to 8.8 million, and trimmed his Citigroup Inc. (C) holdings to 18.8 million shares from 19 million. In addition, his Capital One Financial (COF) holdings shrunk to 9.8 million shares from 10 million.

Lampert also reported fewer shares in AutoZone Inc. (AZo), trimming his holdings by about 600,000 to 20.2 million.

Lampert left his shares in Sears, of which he owns more than half, unchanged.

Four times a year, major money managers are required to disclose holdings of most types of securities within 45 days of the end of a given quarter. The filings give the public its freshest possible look inside the portfolios of well-known investors.

The third quarter's deadline was Monday.

Time seniors must decide on Medicare
By Terry Savage - Chicago Sun-Times
November 16, 2009

Every year seniors are faced with the tough task of making decisions about their Medicare coverage -- both for their basic healthcare coverage and for the Part D prescription program.

Now it's time to start the process again. Now through Dec. 31 is the "open enrollment" period that lets seniors once again choose the type of coverage that is least expensive, given their personal situation.

Even seniors who are very happy with their current plans must go through this process. That's because the providers can change the coverage they offer for various services and drugs -- and they can change the prices they charge for those drugs.

Here are the basic choices:

Traditional Medicare

Traditional Medicare is available at age 65, even if you don't qualify for Social Security until age 67, but you must enroll to gain coverage.

Traditional Medicare comes in two parts:

Part A covers hospitalizations, and some skilled nursing care at an in-patient facility. While there is no cost for Part A, there is still a 20 percent co-payment required for most services.

Part B of Medicare helps pay for doctors, outpatient hospital care, ambulance transportation, and a variety of other tests and services. Part B pays 80 percent of most covered services, leaving you responsible for the balance. The premium for Part B depends on your income in the previous year -- and can be as high as $300 per month.

Since both Part A and Part B require you to pay a significant deductible, most people also purchase a Medicare supplement to cover those costs. That could add another few hundred dollars a month to your senior health insurance costs!

Medicare HMO

But there is another choice. You can enroll in a Medicare HMO, which covers all charges in one monthly fee -- including prescription drugs. The catch is that you must use physicians and hospitals in the network, which may preclude you from seeking care from a specialist of your choice. Still, these programs typically cost less than the traditional Medicare, so you should investigate the options. Depending on your situation, coverage may start around $275 a month, but be far more expensive if you are older or in poor health.

There is a link on the home page at www.Medicare.gov that allows you to compare Medicare HMO health plans in your area.

Part D: prescription drugs

Unless you are enrolled in a Medicare HMO, or still have prescription drug coverage from your employer's health plan, or are a veteran and use only drugs covered by the VA (a limited list), you must enroll in Medicare Part D -- the prescription drug program.

Important: Even if you enrolled last year and are perfectly happy with your coverage, you have to START OVER now! That's because many plans are changing their costs, eliminating coverage for some drugs, raising prices on others, and restructuring so they do not offer coverage for the "donut hole" period in which seniors must pay all drug costs.

According to the Medicare Rights Center, an advocacy group:

• Average premiums will rise from $35 to nearly $39 per month.
• More plans will charge a deductible in 2010.
• Fewer plans will offer coverage in the "donut hole."
• Plans that do offer coverage in this gap period often charge more for generic drugs during this time period.
• Low-income seniors especially need to review their coverage or they may face an additional $10 premium next year.

Finding the best Part D

Fortunately, the government has created a "plan-finder" tool at Medicare.gov. Or you can contact them by phone at 1-800-MEDICARE. But you must be prepared to go through this process. At www.Medicare .gov you'll see a blue box in the center of the page, with the headline Health and Drug Plans. Click on the second option: Compare Drug Plans.

Then click on "personalized search" -- which will require you to input your Medicare number. That will let you find the plan that offers the least expensive coverage for your meds.

Line up all your prescription drug bottles in front of you. Make sure the label lists both the name and the dosage.

Once you get started the process is pretty easy, since the computer does all the work for you. Just go through the program step-by-step. Be very careful to insert the correct names and dosages of all drugs you are taking.

You'll have a chance to choose a convenient pharmacy or mail order coverage. Then you'll be presented with a list of plans, starting with the lowest cost. Only the computer can do the complicated calculations because the insurers had to provide their costs for each covered medicine as well as their deductibles.

You can click on a few plans to compare -- and even click a direct link to the plans so you can get the enrollment information you need. If you need additional medicines during the year and they are not covered by your plan, it is possible for you and your physician to request coverage.

Yes, this is complicated. I hope you now have more respect for Grandma who can't text but sure can figure out the Medicare Part D drug program! And even if you're not a senior, you must know someone who needs the information in this article. Please pass it along, or offer to help. With any luck, you'll be a senior someday. And that's The Savage Truth!

Terry Savage is a registered investment adviser.

Wal-Mart Posts Higher Net Despite Weak Sales
By Joan E. Solsman and Kevin Kingsbury - Dow Jones Newswires
November 12, 2009

Wal-Mart Stores Inc. fiscal third-quarter earnings rose 3.2% as profit for the world's largest retailer topped expectations despite a 0.1% drop in U.S. same-store sales.

President and Chief Executive Mike Duke attributed the profit growth to improved productivity and inventory management. He added, "We are encouraged by both our traffic and market share gains across the company. Few companies have the momentum or opportunity that Walmart has around the world."

The company again boosted its earnings target for the year, this time to $3.57 to $3.61 a share from August's view of $3.50 to $3.60. It also sees a fourth-quarter profit of $1.08 to $1.23. The mean estimate of analysts surveyed by Thomson Reuters was $1.12.

Shares fell 0.9% premarket to $52.50. Through Wednesday, the stock was down 5.5% this year.

Wal-Mart has been faring better than most nondiscount retailers because its low prices appeal to recession-weary consumers. And though increasing signs of stabilization could boost buyers' spending and diminish the company's pricing advantage, consumer sentiment won't rise freely until the unemployment rate--up to 10.2% in October--abates.

For the quarter ended Oct. 31, Wal-Mart posted a profit of $3.25 billion, or 84 cents a share, up from $3.14 billion, or 80 cents a share, a year earlier. There were 2.1% fewer shares outstanding and the prior year included 3 cents of earnings from an asset sale. In August, the company projected earnings of 78 cents to 82 cents.

Net sales increased 1.1% to $98.67 billion and would have risen 3.8% excluding currency changes. Analysts surveyed by Thomson Reuters predicted $99.88 billion.

Excluding fuel sales, U.S. same-store sales fell 0.4%, down 0.5% at namesake stores and rising 0.1% at the Sam's Club warehouse chain. Gross margin rose to 25.2% from 24.6%.

International sales rose 1.6% and profit dropped 5.3%. Meanwhile, earnings at Wal-Mart U.S. stores grew 6.9% and Sam's Club's reported 5.6% growth.

Wal-Mart stopped reporting monthly sales data in May, leaving analysts and market-watchers with a less clear picture of how it's doing.

Guru for Sears, Kmart offers West Coast perspective
By Melissa Harris - Chicago Tribune
November 11, 2009

John Goodman, the new executive in charge of Sears and Kmart's apparel and home goods divisions, has held just about every job in the industry, from buyer at Bloomingdale's to launcher of Banana Republic, Gap and Old Navy outlet stores.

On his second day in his newly created post and in his first interview, Goodman, 45, said his mission is to "improve profitability and sales performance" rather than remake the brand, or, in his words, "turn over the apple cart."

Resume: From 2003 to 2005, he was in charge of apparel and home goods at Kmart, which in 2004 bought Sears. Most recently, Goodman was CEO of retailer Charlotte Russe, where he faced a failed takeover bid, proxy fight and the company's sale to a private equity firm.

Challenges: Goodman is taking over one of the weakest portions of Sears' and Kmart's business. He said he wants to "really redefine" these areas and find synergies between the two brands, in terms of talent and information-sharing. "I really want this to have an entrepreneurial spirit, and think a little less traditional."

His story: Goodman started as the only male sales clerk in a Limited store in downtown Baltimore. It was a summer job, where he "got the retail bug."

How he got this job: Goodman kept a strong relationship with Sears Holdings chairman Edward Lampert. "I continued to have conversations periodically with Eddie. We talked, and this opportunity was presented."

Why he's in San Francisco and not Chicago: He owns a home in San Francisco, where he lives with his wife, two daughters and a stepdaughter. Goodman declined to answer whether he accepted the job on the condition that he wouldn't move. Sears says he'll be starting an office there to attract new talent, but it will not be a design center like the Manhattan office.

Hobby: No surprise here, shopping. Every day, he wears Levi's jeans and a blazer to work. The blazer he wore Tuesday was made by Italian luxury designer Ermenegildo Zegna (and obviously not purchased at Sears).

Wal-Mart to keep stores open to ease Black Friday
Associated Press
November 11, 2009

BENTONVILLE, Ark. -- Wal-Mart Stores says it will keep its stores open 24 hours and take new crowd-control measures Thanksgiving weekend after a temporary employee was trampled to death in a Black Friday rush last year.

The world's largest retailer says day-after-Thanksgiving sales will begin at 5 a.m. Nov. 27, but most U.S. stores will be open 24 hours to prevent a mad dash. The announcement doesn't affect most of Wal-Mart ( WMT - news - people )'s Supercenters, which are already open 24 hours. Federal safety regulators cited Wal-Mart for inadequate crowd management after the Nov. 28, 2008, death of a temporary employee at a Long Island, N.Y., store. A crowd of shoppers broke down the store's doors, trapping the employee, who died of asphyxiation.

Calming the Black Friday Crowds
By Stephanie Rosenbloom - New York Times
November 11, 2009

A year after an unruly crowd trampled a worker to death at a Wal-Mart store, the nation’s retailers are preparing for another Black Friday, the blockbuster shopping day after Thanksgiving. Along with offering $300 laptops and $99 navigation devices, stores are planning new safety measures to make sure the festive day does not take another deadly turn.

Last year, frenzied shoppers at a Wal-Mart in Valley Stream, N.Y., trampled Jdimytai Damour, a temporary store worker who died soon afterward. To prevent any repeat, Wal-Mart has sharply changed how it intends to manage the crowds.

That new plan, developed by experts who have wrangled throngs at events like theSuper Bowl and the Olympics, will affect how customers approach and enter the stores, shop, check out and exit. Each store will have its own customized plan. The hope is for an orderly Black Friday, a seemingly incongruous notion.

The most significant change at Wal-Mart is that the majority of its discount stores (as opposed to its Supercenters) will open Thanksgiving morning at 6 a.m. and stay open through Friday evening. Last year, those stores closed Thanksgiving evening and reopened early Friday morning. By keeping the stores open for 24 hours, Wal-Mart is hoping for a steady flow of shoppers instead of mammoth crowds swelling outside its stores in the wee hours of Friday.

In another new twist this year, shoppers at Wal-Mart will not have to sprint toward a pile of flat-screen televisions and scuffle with one another to get one. Rather, customers will be able to enter the store at any time and line up at merchandise displays for the must-have items on their lists. When the products go on sale Friday at 5 a.m., workers will supervise the lines, giving shoppers the merchandise in the order in which they joined the line — until the goods are out of stock.

(Only a small percentage of stores will not be open 24 hours; most Wal-Mart Supercenters are already open 24 hours.)

Another problem in the past was the bottleneck at store entrances. Like many big-box retailers, Wal-Mart does not have multiple entrances and exits to spread around customer traffic. So this year the chain will put workers in front of its stores to direct customers and keep them moving.

“We are committed to looking for ways to make our stores even safer for our customers and associates this holiday season,” said David Tovar, a spokesman for Wal-Mart, adding that the retailer was “confident our customers can look forward to a safe and enjoyable shopping experience at Wal-Mart.”

Aggressive shoppers are common the day after Thanksgiving. So crowd control plans, which vary by retailer, are critical. And they are especially important now, given the economy. Newly frugal consumers want more for less, and stores plan to drum up sales with stunning deals.

This year, for the first time, the National Retail Federation created a comprehensive set of guidelines for crowd control at stores. The guidelines note that special markdowns and historically low discounts have led to larger crowds.

“Retailers are very much trying to make themselves stand out in an environment like this,” Ellen Davis, a spokeswoman for the industry group, said in a conference call this week. But she added that “retailers need to understand that many of these sales and promotional periods might draw customers who are more insistent about getting a good deal.”

The federation said retailers were performing dress rehearsals with their employees. Some stores plan to serve drinks to shoppers, or offer entertainment while they are in line, to maintain calm. Also, the stores say that creating a rapport with customers makes news of sellouts and long lines more palatable.

Indeed, Peter Conway, general manager of a Best Buy in Westbury, N.Y., has made a habit of arriving at his store at 7 p.m. Thanksgiving night to chat with shoppers lined up outside.

“I’m outside talking with my customers, just getting to know them, seeing what they’re there for,” he said. “I’m very clear with them: ‘There’s not going to be any running.’ ”

For years, Best Buy has controlled crowds by sending teams of workers into the parking lots to dole out tickets for its so-called door-busters — hot items like digital cameras and laptops at exceedingly low prices. Tickets are given out about 3 a.m. and each customer is allowed one ticket for each door-buster item they intend to buy.

“They know if they have a ticket, they’re guaranteed they have that product,” Mr. Conway said. “It creates ease of mind.”

To keep shoppers from running aimlessly around its stores, Best Buy employees hand out maps, and they mark popular items with colored balloons that can be seen from anywhere in the store.

Many retailers, including Kohl’s and Toys “R” Us, said they were not changing their crowd management plans because they had not had problems.

After the death of Mr. Damour, Wal-Mart settled a case with the district attorney of Nassau County in New York. Wal-Mart agreed to create a $400,000 compensation fund, give $1.5 million to social service programs, and offer 50 jobs to area high school students each year for three years.

Rhett Asher, the National Retail Federation’s senior asset protection adviser, said during a conference call that big box stores and mall stores had different security issues. Malls are more bustling, public places with multiple entrances — so there tend to be fewer problems. Indeed, crowd control is not as much of an issue for Macy’s as it is for big-box stores, a spokesman said, because multiple entrances serve to disperse crowds.

Still, retailers of all sorts are making preparations. In just the last month, crowds of deal-hungry shoppers have created problems. In one instance, Dwight Howard of the Orlando Magic said on Twitter that he would give away copies of his NBA Live 2010 basketball video game to the first five people who showed up at a particular GameStopstore.

Chaos ensued. Also last month, a woman at a Burlington Coat Factory store in Ohio said she had won the lottery and would treat her fellow shoppers to new clothes. When it turned out she was lying, a riot broke out.

“No matter how seamless and airtight you think this is,” Ms. Davis said of retailers’ plans, “the unexpected can happen.”

What the Pelosi Health-Care Bill Really Says
Here are some important passages in the 2,000 page legislation.
By Betsy McGaughey - The Wall Street Journal
November 7, 2009

The health bill that House Speaker Nancy Pelosi is bringing to a vote (H.R. 3962) is 1,990 pages. Here are some of the details you need to know.

What the government will require you to do:

• Sec. 202 (p. 91-92) of the bill requires you to enroll in a "qualified plan." If you get your insurance at work, your employer will have a "grace period" to switch you to a "qualified plan," meaning a plan designed by the Secretary of Health and Human Services. If you buy your own insurance, there's no grace period. You'll have to enroll in a qualified plan as soon as any term in your contract changes, such as the co-pay, deductible or benefit.

• Sec. 224 (p. 118) provides that 18 months after the bill becomes law, the Secretary of Health and Human Services will decide what a "qualified plan" covers and how much you'll be legally required to pay for it. That's like a banker telling you to sign the loan agreement now, then filling in the interest rate and repayment terms 18 months later.

On Nov. 2, the Congressional Budget Office estimated what the plans will likely cost. An individual earning $44,000 before taxes who purchases his own insurance will have to pay a $5,300 premium and an estimated $2,000 in out-of-pocket expenses, for a total of $7,300 a year, which is 17% of his pre-tax income. A family earning $102,100 a year before taxes will have to pay a $15,000 premium plus an estimated $5,300 out-of-pocket, for a $20,300 total, or 20% of its pre-tax income. Individuals and families earning less than these amounts will be eligible for subsidies paid directly to their insurer.

• Sec. 303 (pp. 167-168) makes it clear that, although the "qualified plan" is not yet designed, it will be of the "one size fits all" variety. The bill claims to offer choice—basic, enhanced and premium levels—but the benefits are the same. Only the co-pays and deductibles differ. You will have to enroll in the same plan, whether the government is paying for it or you and your employer are footing the bill.

• Sec. 59b (pp. 297-299) says that when you file your taxes, you must include proof that you are in a qualified plan. If not, you will be fined thousands of dollars. Illegal immigrants are exempt from this requirement.

• Sec. 412 (p. 272) says that employers must provide a "qualified plan" for their employees and pay 72.5% of the cost, and a smaller share of family coverage, or incur an 8% payroll tax. Small businesses, with payrolls from $500,000 to $750,000, are fined less.

Eviscerating Medicare:

In addition to reducing future Medicare funding by an estimated $500 billion, the bill fundamentally changes how Medicare pays doctors and hospitals, permitting the government to dictate treatment decisions.

• Sec. 1302 (pp. 672-692) moves Medicare from a fee-for-service payment system, in which patients choose which doctors to see and doctors are paid for each service they provide, toward what's called a "medical home."

The medical home is this decade's version of HMO-restrictions on care. A primary-care provider manages access to costly specialists and diagnostic tests for a flat monthly fee. The bill specifies that patients may have to settle for a nurse practitioner rather than a physician as the primary-care provider. Medical homes begin with demonstration projects, but the HHS secretary is authorized to "disseminate this approach rapidly on a national basis."

A December 2008 Congressional Budget Office report noted that "medical homes" were likely to resemble the unpopular gatekeepers of 20 years ago if cost control was a priority.

• Sec. 1114 (pp. 391-393) replaces physicians with physician assistants in overseeing care for hospice patients.

• Secs. 1158-1160 (pp. 499-520) initiates programs to reduce payments for patient care to what it costs in the lowest cost regions of the country. This will reduce payments for care (and by implication the standard of care) for hospital patients in higher cost areas such as New York and Florida.

• Sec. 1161 (pp. 520-545) cuts payments to Medicare Advantage plans (used by 20% of seniors). Advantage plans have warned this will result in reductions in optional benefits such as vision and dental care.

• Sec. 1402 (p. 756) says that the results of comparative effectiveness research conducted by the government will be delivered to doctors electronically to guide their use of "medical items and services."

Questionable Priorities:

While the bill will slash Medicare funding, it will also direct billions of dollars to numerous inner-city social work and diversity programs with vague standards of accountability.

• Sec. 399V (p. 1422) provides for grants to community "entities" with no required qualifications except having "documented community activity and experience with community healthcare workers" to "educate, guide, and provide experiential learning opportunities" aimed at drug abuse, poor nutrition, smoking and obesity. "Each community health worker program receiving funds under the grant will provide services in the cultural context most appropriate for the individual served by the program."

These programs will "enhance the capacity of individuals to utilize health services and health related social services under Federal, State and local programs by assisting individuals in establishing eligibility . . . and in receiving services and other benefits" including transportation and translation services.

• Sec. 222 (p. 617) provides reimbursement for culturally and linguistically appropriate services. This program will train health-care workers to inform Medicare beneficiaries of their "right" to have an interpreter at all times and with no co-pays for language services.

• Secs. 2521 and 2533 (pp. 1379 and 1437) establishes racial and ethnic preferences in awarding grants for training nurses and creating secondary-school health science programs. For example, grants for nursing schools should "give preference to programs that provide for improving the diversity of new nurse graduates to reflect changes in the demographics of the patient population." And secondary-school grants should go to schools "graduating students from disadvantaged backgrounds including racial and ethnic minorities."

• Sec. 305 (p. 189) Provides for automatic Medicaid enrollment of newborns who do not otherwise have insurance.

For the text of the bill with page numbers, see www.defendyourhealthcare.us.

Ms. McCaughey is chairman of the Committee to Reduce Infection Deaths and a former Lt. Governor of New York state.

Jail for No Insurance Under Pelosi Bill
Reprinted from DickMorris.com
November 9, 2009

The nonpartisan Joint Committee on Taxation reported that the House version of the health care bill specifies that those who don't buy health insurance and do not pay the fine of about 2.5% of their income for failing to do so can face a penalty of up to five years in prison!

The bill describes the penalties as follows:

* Section 7203 - misdemeanor willful failure to pay is punishable by a fine of up to $25,000 and/or imprisonment of up to one year.

* Section 7201 - felony willful evasion is punishable by a fine of up to $250,000 and/or imprisonment of up to five years." [page 3]

That anyone should face prison for not buying health insurance is simply incredible.And how much will the stay-out-of-jail insurance cost? The Joint Committee noted that "according to a recent analysis by the Congressional Budget Office, the lowest-cost family non-group plan under HR 3862 (the Pelosi bill) would cost $15,000 by 2016."

Obama's bill only provides subsidies to help pay this enormous sum after families making about $45,000 have paid 8% of their income for insurance and after those earning a household income of about $65,000 have kicked in 12%.

The Joint Committee on Taxation noted that while the Senate Finance Committee version of the bill did not include criminal penalties, "The House Democrats' bill, however, contains no similar language protecting American citizens from civil and criminal tax penalties that could include a $250,000 fine and five years in jail."

Remember that simply buying catastrophic insurance, which may be all the young uninsured family needs, does not constitute having adequate insurance under the Obama bill. It has to be total, all inclusive insurance for one to avoid the penalties in the legislation.

That is because Obama wants to use these premiums from the currently uninsured to subsidize his program. So Ms. Pelosi is requiring Americans to pay these steep premiums, or a fine of 2.5% of their income for not doing so, or, potentially, go to prison!

Anyone who is familiar with the U.S. prison system can attest to the large number of people incarcerated for similar white collar offenses. That the House bill would treat failure to carry health insurance or pay the fine as tax evasion or willful nonpayment is amazing!

And where is the constitutional basis for requiring everyone to buy insurance? It is OK for a state to make drivers pay for automobile insurance. Driving is not a right, it is a privilege, and the state may regulate it by demanding insurance. Banks can require homeowners to buy insurance as a condition of their lending. But how does the federal government get the right to require a family to buy health insurance or face a civil penalty and, failing that, to face either a criminal fine or jail?

The tough penalties in the House bill are designed to keep insurance companies from opposing the bill. It was the relaxation of these penalties in the Senate Finance Committee version of the legislation that led the companies to reverse field and come out in opposition to the legislation.

The insurance companies want to see their coffers swell when tens of millions of new customers are required to buy insurance. The more draconian the penalties for failing to pay them large sums of money to pad their bottom lines, the better.

The more you read this bill, the worse it gets. Help us to kill this bill.

Sears Holdings Names Leader of Key Businesses
CNN MONEY
November 9, 2009

John D. Goodman Returns to the Company
to Lead Apparel and Home Efforts

HOFFMAN ESTATES, Ill., Nov. 9 /PRNewswire-FirstCall/ -- Sears Holdings (Nasdaq: SHLD) announced today that John D. Goodman will join the company as EVP - Apparel and Home. He will be responsible for the oversight and leadership of Sears Holdings’ Apparel and Home businesses, both in-store and online.

Goodman will also serve as president - Kmart Apparel until a permanent leader for that business unit is identified. He will serve as a member of the internal holding company business unit board of directors as well.

In order to greatly enhance the company’s ability to attract talent, Sears Holdings will establish a San Francisco office - one of the country’s centers of excellence for the apparel industry - where Goodman will be based. Three years ago the company successfully opened a design office in Lower Manhattan in New York City for similar reasons.

Goodman, who previously served as chief apparel and home officer until 2005 for Kmart, was most recently chief executive officer for apparel retailer Charlotte Russe. In his more than 20 year career in the retail industry, Goodman has also served as the president and CEO of Mervyn’s department stores, as president of the Dockers® brand at Levi Strauss and Co., and held a variety of leadership positions at Gap, Inc., where he played a key role in the launch of the Banana Republic and Old Navy outlet formats. He started his career with Bloomingdale’s in its executive training program. Goodman earned a bachelor’s degree from the University of Maryland.

"We’re extremely pleased to welcome John back to Sears Holdings and we’re excited to be able to add a leader with his strengths and wealth of apparel experience to our team," said Bruce Johnson, interim CEO and president of Sears Holdings. "We are confident that John will help us attract additional talent to our company and we’re looking forward to opening an office in San Francisco. We believe his leadership will enable our Apparel and Home businesses to better compete and enhance our relationships with customers."

Lampert's Web test
By Monée Fields-White - Chicago Business
November 9, 2009

Edward Lampert is picking a holiday-season fight with Internet heavyweight Amazon.com.

The Sears Holdings Corp. chairman hopes online retailing will yield the sales growth that has eluded the Hoffman Estates-based department store chain since he took control 4½ years ago. This year's holiday shopping season will show how well Sears stacks up with Web retailers like Amazon.

With nearly $20 billion in annual sales, Amazon dominates online merchandise sales the way Wal-Mart Stores Inc. does traditional brick-and-mortar retailing. It's a troubling parallel for Sears, the company that Arkansas-based Wal-Mart dethroned as the country's largest general merchandise chain.

Mr. Lampert has broadened Sears' online presence over the past couple of years. Online sales rose 4% to almost $3 billion in 2008, according to an estimate from Internet Retailer, a Chicago-based trade publication. Sears executives say the latest Web site changes have produced double-digit online sales growth this year, declining to provide actual sales figures.

That's a fraction of Seattle-based Amazon's sales, which jumped 30% to $19.2 billion last year and continue to climb. Pricing power, inventory depth and distribution capabilities give it big advantages over smaller rivals like Sears.

"Amazon is definitely several laps ahead of everybody," says Scot Wingo, chief executive of North Carolina-based ChannelAdvisor Corp., which helps retailers such as Crate & Barrel sell merchandise online. Sears, he says, "is an older company and less nimble, and, logistically, it's hard to have an old system that's built around distribution centers that are store-bound as opposed to consumer-bound."

Mr. Wingo acknowledges Sears' strides online. Since late 2007, it has added everything from movies and music to major appliances. This year it introduced a home-improvement site called ServiceLive.com and the ShopYourWay program, which allows shoppers to buy items anywhere, online or through their cell phones, as well as pick up items at a store.

"While we closely watch our competition, we're successful in online because we're focused on the customer's needs," says Imran Jooma, Sears' senior vice-president of e-commerce. "This leads us to do things differently and not just follow the pack."

Sears emulates some aspects of Amazon's strategy. In September Sears unveiled a Web-based marketplace to sell items from outside vendors, something Amazon began in 2006. Wal-Mart made a similar announcement in August. Sears also offers free delivery through its $79-a-year ShipVantage club.

Sears even jumped into the heated price battle on books, offering customers a credit of up to $9 toward a future purchase if they buy an eligible book from Sears.com or on the Web site of its rivals. Amazon, Wal-Mart and even Target.com just slashed the price of highly anticipated hardcover books coming this month to $9 and below.

Pricing represents the biggest hurdle for Sears in competing with Amazon. One of Amazon's pricing advantages is that it doesn't have to collect sales tax in states where it doesn't have a location. But its greatest advantage comes from the fact that it sells such a large volume of merchandise, in more than three dozen categories.

"Anyone who tries to compete with Amazon on (price) is going to have their work cut out for them," says Nick McCoy, senior consultant at Columbus, Ohio-based industry research firm Retail Forward.

Revenue jumped 28% to $5.5 billion at Amazon in the third quarter. Sears doesn't disclose online sales figures separately, but it reported that overall sales dropped 10% to $10.6 billion in its second quarter, ended Aug. 1.

"Sears is smart to improve their online experience," says Jack Plunkett, CEO of Houston-based industry research Plunkett Research Ltd. "But I'm not optimistic that this is going to greatly improve their overall competitive position."

Sears adds range to appliances
By Sandra M. Jones - Staff Reporter Chicago Tribune
November 5, 2009

In push for high-end kitchen clients, chain gets deal for Jenn-Air

In a move aimed at grabbing market share back from such big box rivals as Home Depot and Lowe's, Sears Holdings Corp. said it will become the exclusive national chain supplier of Whirlpool Corp.'s Jenn-Air appliances.

The first step in the arrangement begins later this month as Sears -- the nation's largest seller of appliances -- moves more aggressively into high-end kitchen appliances.

A new Jenn-Air line of luxury cooktops, ovens, dishwashers and built-in refrigerators is slated to arrive in 225 of Sears' biggest stores by Nov. 15, said Ann Fandozzi, vice president of sales and marketing for Sears at the product unveiling at Sears headquarters in Hoffman Estates on Wednesday. Jenn-Air will no longer supply appliances to Home Depot and Lowe's by Jan. 1, she said.

The steps are intended to give Sears appliance sales a boost by competing "not just on price," said Doug Moore, president of Sears' appliance division.

"If Depot and Lowe's are not on the grid anymore, that replacement business will gravitate to Sears," said Moore.

In the past year, Sears has looked to broaden its appeal by expanding into toys, books and cosmetics. The appliance business, particularly its in-house Kenmore brand, remains at the heart of the retailer's business.

The home appliance business accounted for about 15 percent, or $7 billion, of Sears Holdings' fiscal 2008 revenue of $46.77 billion.

Whirlpool acquired Jenn-Air as part of its 2006 purchase of Maytag.

Jenn-Air plans to fly 255 Sears sales associates—one from each Sears store carrying the luxury line—to its training facility in Atlanta by the end of the year to school them on how to sell the high-end machines.

Sears is reviewing its commission structure to determine if it needs to be changed to accompany the more time-involved sale. Among some of the "wow" features that sales clerks will have at their fingertips: A wall oven, priced about $3,000 to $5,000, has a touch screen that displays photos of recipes and adjusts the temperature based on such details as the size of the roasting pan.

The Sears stores will have 17 of the new Jenn-Air appliances on display, under terms of the agreement.

Sears To Carry Whirlpool's Jenn-Air Appliances
By Bob Tita - Dow Jones Newswires
November 4, 2009

CHICAGO (Dow Jones)--Sears Holdings Corp. (SHLD) stores will become the exclusive national retailer for Whirlpool Corp.'s (WHR) Jenn-Air brand of kitchen appliances, the companies said Wednesday. Jenn-Air cooktops, ranges, dishwashers, built-in refrigerators and other appliances will be featured in about 255 of Sears' largest stores beginning later in this month.

Whirlpool, the world's largest producer of household appliances by sales, acquired the premium-priced Jenn-Air line as part of its purchase of appliance maker Maytag in 2006.

Jenn-Air products have been sold through independent appliance retailers. Whirlpool said Jenn-Air appliances will continue to be offered through those outlets. Prices for Jenn-Air refrigerators range from $7,200 to $9,900; for dishwashers, from $1,000 to $1,500; and for wall ovens, from $1,899 to $4,900.

For Sears, the largest appliance retailer in the U.S., the addition of the Jenn-Air line will expand its offerings of high-end appliances at a time when the retailer is trying to attract customers who have significantly reduced their purchases of appliances during the recession.

"Sears continues to listen to our customers who have voiced their desire for a super-premium line," said Doug Moore, senior vice president and president of home appliances for Hoffman Estates, Ill.,-based Sears Holdings.

Benton Harbor, Mich.-based Whirlpool, which also manufactures several models of Sears' Kenmore appliances, already sells its Whirlpool, Kitchen-Aid and Maytag appliances through Sears stores.

Whirlpool shares ended the regular session Wednesday down 3.3% at $71.91 a share, while Sears ended up 0.04% at $68.12 a share.

 

A Canadian Conundrum for Sears
By John Jannarone - Heard on the Street - Wall Street Journal
November 3, 2009

Is there a stronger side to Sears Holdings' battered balance sheet?

As the holidays approach, the retailer's $4.1 billion credit line should be sufficient to stock its shelves, given that it needed roughly $3 billion last year. But come March, the facility will shrink to just $2.4 billion. That could mean a dicey winter in 2010 if the economy remains tough.

In that case, Sears Holdings may want to extract cash from its Canadian business. Sears Canada is one of the largest retailers in the country and continues to build cash on its balance sheet. Of the parent's $1.292 billion in gross cash, $824 million belongs to Sears Canada, its 73% subsidiary.

Unfortunately, Sears Holdings can't touch the Canadian cash unless it buys the entire company. It tried a deal in 2006 but was blocked by Pershing Square Capital, which owns more than half of the 27% minority stake.

Since the standoff, Sears Canada has paid no dividends and let its cash sit idle. Locked in a strategic standstill, Sears Canada's shares have been depressed, trading at 12 times earnings for the year ending January 2011, according to brokerage Desjardins Securities in Toronto. Sears Holdings, meanwhile, has a multiple of 48 times consensus earnings.

Sears Holdings probably can't afford to attempt another squeeze out. Sears Canada has about $500 million in net cash, but the market value of the shares that Sears Holdings doesn't own is about $600 million. Paying any premium to satisfy Pershing would leave Sears Holdings with less cash.

More likely, Sears Holdings will need to shed the Canadian business.

The question for investors is how long they are willing to wait.

Wal-Mart Wins Final Approval of Workers’ Wage Suit Settlement
By Margaret Cronin Fisk - Bloomberg
November 3, 2009

Wal-Mart Stores Inc., the world’s largest retailer, won final approval of a settlement paying as much as $85 million to hourly workers who sued over allegations of unpaid wages.

U.S. District Judge Philip M. Pro in Las Vegas approved the settlement yesterday and awarded one-third of the recovery in fees to the workers’ lawyers, up to about $28 million depending on the claims made. Walmart is to pay at least $65 million and as much as $85 million.

The workers claimed that Bentonville, Arkansas-based Walmart violated wage-and-hour laws by denying them rest breaks and manipulating time cards to reduce their pay. The accord is part of a global $640 million resolution of wage-and-hour claims reached in December between Walmart and workers.

“We’re going to seem some real money distributed to people,” said workers’ attorney Carolyn Beasley Burton. “Hundreds of thousands of people will get a check in the next few months of $150 to $1,000. It’s a nice little stimulus package.”

Walmart will also pay $5 million to the retirement plans of its workers in these states, she said. This is beyond the $85 million allotted for the class actions, she said.

The settlement covers more than 30 lawsuits in federal courts brought by workers and combined before the judge. Walmart also faced lawsuits by workers in multiple state courts, most of which were resolved by the global settlement. Pro said only 14 objections were made by Walmart workers out of more than 3 million class members.

Good for Company

“Resolving this litigation is in the best interest of our company, our shareholders and our associates,” Tom Mars, Walmart general counsel, said in December when announcing the global settlement. “Many of these lawsuits were filed years ago and the allegations are not representative of the company we are today.”

Daphne Moore, a company spokeswoman, declined to comment yesterday beyond the December statement.

The retailer lost a $78 million jury verdict in Pennsylvania in 2006 over rest breaks and unpaid work and a $172 million verdict in California in 2005 over meal breaks. Walmart is appealing the Pennsylvania judgment.

The company announced in a regulatory filing in September that it settled the California lawsuit, agreeing to pay at least $77 million and as much as $152 million, depending on the number and amount of claims.

Minnesota Case Settled

A Minnesota judge in 2008 ordered the company to pay hourly workers there $6.5 million, finding the company broke labor laws more than 2 million times.

The ruling left Walmart vulnerable to a possible $2 billion judgment. Walmart settled the case for $54 million, before the global resolution.

The federal settlement approved yesterday is “fair, adequate and reasonable to those it affects, and resulted from vigorously contested litigation,” the judge said. “This case was incredibly risky from inception and the result exceptionally favorable to the class.”

The benefits of settling the federal cases “far outweigh” the probable outcome of a trial, Pro said at an Oct. 19 hearing. “The parties were prudent in their decision to resolve this.” Under the agreement, Pro said at the hearing, Walmart will provide better measurements to assure that hourly employees are paid for all hours worked. This was the “most important” part of the settlement, he said.

Class-Action Suits

The suits before Pro were filed as class-action, or group, lawsuits on behalf of all hourly workers in individual states including Alabama, Michigan, Maryland, Oregon and Texas. In 2008, Pro ruled out class actions for lawsuits brought by workers in four states, finding the plaintiffs failed prove common issues predominated, a standard for such treatment. The decision would have been applied to the other suits, workers’ lawyers said at the time.

This denial “made the chance for the class members to obtain any redress slim” Pro said yesterday.

“Class counsel have achieved an exceptionally favorable result for the members of the settlement class by diligently pursuing this complex litigation for years despite the substantial risk of no recovery,” Pro said in granting the attorneys’ fee request.

The cases are combined in In Re Wal-Mart Wage and Hour Employment Practices Litigation, MDL 1735, U.S. District Court, District of Nevada (Las Vegas).

The Worst Bill Ever
Wall Street Journal
November 2, 2009

Epic new spending and taxes, pricier insurance, rationed care, dishonest accounting: The Pelosi health bill has it all. Speaker Nancy Pelosi has reportedly told fellow Democrats that she's prepared to lose seats in 2010 if that's what it takes to pass ObamaCare, and little wonder. The health bill she unwrapped last Thursday, which President Obama hailed as a "critical milestone," may well be the worst piece of post-New Deal legislation ever introduced.

In a rational political world, this 1,990-page runaway train would have been derailed months ago. With spending and debt already at record peacetime levels, the bill creates a new and probably unrepealable middle-class entitlement that is designed to expand over time. Taxes will need to rise precipitously, even as ObamaCare so dramatically expands government control of health care that eventually all medicine will be rationed via politics.

Yet at this point, Democrats have dumped any pretense of genuine bipartisan "reform" and moved into the realm of pure power politics as they race against the unpopularity of their own agenda. The goal is to ram through whatever income-redistribution scheme they can claim to be "universal coverage." The result will be destructive on every level—for the health-care system, for the country's fiscal condition, and ultimately for American freedom and prosperity.

•The spending surge. The Congressional Budget Office figures the House program will cost $1.055 trillion over a decade, which while far above the $829 billion net cost that Mrs. Pelosi fed to credulous reporters is still a low-ball estimate. Most of the money goes into government-run "exchanges" where people earning between 150% and 400% of the poverty level—that is, up to about $96,000 for a family of four in 2016—could buy coverage at heavily subsidized rates, tied to income. The government would pay for 93% of insurance costs for a family making $42,000, 72% for another making $78,000, and so forth.

At least at first, these benefits would be offered only to those whose employers don't provide insurance or work for small businesses with 100 or fewer workers. The taxpayer costs would be far higher if not for this "firewall"—which is sure to cave in when people see the deal their neighbors are getting on "free" health care. Mrs. Pelosi knows this, like everyone else in Washington.

Even so, the House disguises hundreds of billions of dollars in additional costs with budget gimmicks. It "pays for" about six years of program with a decade of revenue, with the heaviest costs concentrated in the second five years. The House also pretends Medicare payments to doctors will be cut by 21.5% next year and deeper after that, "saving" about $250 billion. ObamaCare will be lucky to cost under $2 trillion over 10 years; it will grow more after that.

• Expanding Medicaid, gutting private Medicare. All this is particularly reckless given the unfunded liabilities of Medicare—now north of $37 trillion over 75 years. Mrs. Pelosi wants to steal $426 billion from future Medicare spending to "pay for" universal coverage. While Medicare's price controls on doctors and hospitals are certain to be tightened, the only cut that is a sure thing in practice is gutting Medicare Advantage to the tune of $170 billion. Democrats loathe this program because it gives one of out five seniors private insurance options.

As for Medicaid, the House will expand eligibility to everyone below 150% of the poverty level, meaning that some 15 million new people will be added to the rolls as private insurance gets crowded out at a cost of $425 billion. A decade from now more than a quarter of the population will be on a program originally intended for poor women, children and the disabled.

Even though the House will assume 91% of the "matching rate" for this joint state-federal program—up from today's 57%—governors would still be forced to take on $34 billion in new burdens when budgets from Albany to Sacramento are in fiscal collapse. Washington's budget will collapse too, if anything like the House bill passes.

• European levels of taxation. All told, the House favors $572 billion in new taxes, mostly by imposing a 5.4-percentage-point "surcharge" on joint filers earning over $1 million, $500,000 for singles. This tax will raise the top marginal rate to 45% in 2011 from 39.6% when the Bush tax cuts expire—not counting state income taxes and the phase-out of certain deductions and exemptions. The burden will mostly fall on the small businesses that have organized as Subchapter S or limited liability corporations, since the truly wealthy won't have any difficulty sheltering their incomes.

This surtax could hit ever more earners because, like the alternative minimum tax, it isn't indexed for inflation. Yet it still won't be nearly enough. Even if Congress had confiscated 100% of the taxable income of people earning over $500,000 in the boom year of 2006, it would have only raised $1.3 trillion. When Democrats end up soaking the middle class, perhaps via the European-style value-added tax that Mrs. Pelosi has endorsed, they'll claim the deficits that they created made them do it.

Under another new tax, businesses would have to surrender 8% of their payroll to government if they don't offer insurance or pay at least 72.5% of their workers' premiums, which eat into wages. Such "play or pay" taxes always become "pay or pay" and will rise over time, with severe consequences for hiring, job creation and ultimately growth. While the U.S. already has one of the highest corporate income tax rates in the world, Democrats are on the way to creating a high structural unemployment rate, much as Europe has done by expanding its welfare states.

Meanwhile, a tax equal to 2.5% of adjusted gross income will also be imposed on some 18 million people who CBO expects still won't buy insurance in 2019. Democrats could make this penalty even higher, but that is politically unacceptable, or they could make the subsidies even higher, but that would expose the (already ludicrous) illusion that ObamaCare will reduce the deficit.

• The insurance takeover. A new "health choices commissioner" will decide what counts as "essential benefits," which all insurers will have to offer as first-dollar coverage. Private insurers will also be told how much they are allowed to charge even as they will have to offer coverage at virtually the same price to anyone who applies, regardless of health status or medical history.

The cost of insurance, naturally, will skyrocket. The insurer WellPoint estimates based on its own market data that some premiums in the individual market will triple under these new burdens. The same is likely to prove true for the employer-sponsored plans that provide private coverage to about 177 million people today. Over time, the new mandates will apply to all contracts, including for the large businesses currently given a safe harbor from bureaucratic tampering under a 1974 law called Erisa.

The political incentive will always be for government to expand benefits and reduce cost-sharing, trampling any chance of giving individuals financial incentives to economize on care. Essentially, all insurers will become government contractors, in the business of fulfilling political demands: There will be no such thing as "private" health insurance.

*** All of this is intentional, even if it isn't explicitly acknowledged. The overriding liberal ambition is to finish the work began decades ago as the Great Society of converting health care into a government responsibility. Mr. Obama's own Medicare actuaries estimate that the federal share of U.S. health dollars will quickly climb beyond 60% from 46% today. One reason Mrs. Pelosi has fought so ferociously against her own Blue Dog colleagues to include at least a scaled-back "public option" entitlement program is so that the architecture is in place for future Congresses to expand this share even further.

As Congress's balance sheet drowns in trillions of dollars in new obligations, the political system will have no choice but to start making cost-minded decisions about which treatments patients are allowed to receive. Democrats can't regulate their way out of the reality that we live in a world of finite resources and infinite wants. Once health care is nationalized, or mostly nationalized, medical rationing is inevitable—especially for the innovative high-cost technologies and drugs that are the future of medicine.

Mr. Obama rode into office on a wave of "change," but we doubt most voters realized that the change Democrats had in mind was making health care even more expensive and rigid than the status quo. Critics will say we are exaggerating, but we believe it is no stretch to say that Mrs. Pelosi's handiwork ranks with the Smoot-Hawley tariff and FDR's National Industrial Recovery Act as among the worst bills Congress has ever seriously contemplated.

Sears Holdings to Announce Earnings
November 2, 2009

HOFFMAN ESTATES, Ill., Nov. 2 /PRNewswire--- Sears Holdings Corporation (Nasdaq: SHLD) today announced the company currently plans to release financial results for its fiscal 2009 third quarter on Nov. 19, 2009, before the market opens.

In addition, the company plans to file with the SEC its Quarterly Report on Form 10-Q for its fiscal 2009 third quarter on or before December 10, 2009.

Sears boosts credit card features,
allows access to credit score
Home Textiles Today
October 29, 2009

Hoffman Estates, Ill. – Sears is adding new features to its credit card and launching a new platinum card.

The Sears card will offer cardholders to see their credit score for free at any time. A “credit score simulator” tool will show them how to improve their score.

Sears is also inaugurating monthly sales for cardholders only featuring extra discounts, deferring interest financing offers and special coupons.

The new Sears Platinum MasterCard will offer a rewards program that gives cardholders one point for every $1 they spend. All current Sears Gold MasterCard holders will have access to platinum card benefits.

"The recent changes in the credit card industry are making their way across all retail credit programs, which includes Sears and those of our competitors as well," said Susan Ehrlich, president, Sears Financial Services, a division of Sears Holdings. "As a retailer, we also want to do everything we can to give cardholders more retail value."

Basic Medicare Premium to Rise 15% Next Year
By Robert Pear - New York Times
October 20, 2009

WASHINGTON — The basic Medicare premium will shoot up next year by 15 percent, to $110.50 a month, federal officials said Monday.

The increase means that monthly premiums would top $100 for the first time, a stark indication of the rise in medical costs that is driving the debate in Congress about a broad overhaul of the health care system.

About 12 million people, or 27 percent of Medicare beneficiaries, will have to pay higher premiums or have the additional amounts paid on their behalf. The other 73 percent will be shielded from the increase because, under federal law, their Medicare premiums cannot go up more than the increase in their Social Securitybenefits, and Social Security officials announced last week that there would be no increase in benefits in 2010 because inflation had been extremely low.

Kathleen Sebelius, the secretary of health and human services, urged the Senate to approve a bill, already passed by the House, to block the scheduled increase in Medicare premiums.

“We are in tremendously difficult economic times, and seniors are being hit particularly hard,” Ms. Sebelius said. “The last thing seniors need right now is a substantial increase in their Medicare premiums, and many seniors will see such an increase if no action is taken.”

Among those who face higher premiums next year are new Medicare beneficiaries, high-income people and those whose Medicare premiums are paid by Medicaid. Premiums can be as high as $353.60 a month, or more than $4,200 a year, for Medicare beneficiaries who file tax returns with adjusted gross income greater than $214,000 for an individual or $428,000 for a couple.

The higher premiums will impose “an additional and significant burden” on states, which help pay Medicaid costs, along with the federal government.

The House bill was passed, 406 to 18, on Sept. 24. Among those who voted against it was the Democratic leader, RepresentativeSteny H. Hoyer of Maryland, who said he saw no need to help multimillionaires at a time when the nation was struggling to rein in entitlement programs.

While lawmakers considered whether to freeze Medicare premiums, a handful of senators met behind closed doors on Monday to work out a compromise health care bill to cover the uninsured.

One participant, Senator Max Baucus, Democrat of Montana and chairman of the Finance Committee, said senators were considering new ideas to finesse disagreements over whether the government should offer its own health insurance plan, in competition with private insurers.

Under one proposal, he said, the government would create a public plan, but states could “opt out” if they wanted to devise and operate their own insurance programs.

The meeting, convened by the Senate majority leader, Harry Reid, Democrat of Nevada, included Mr. Baucus and Senator Christopher J. Dodd, Democrat of Connecticut, who presided over the health committee when it approved a sweeping health care bill in July.

Mr. Reid said he hoped to take a compromise bill to the Senate floor early next month. But that assumes rapid progress in negotiations and a quick analysis by the Congressional Budget Office, to confirm whether the 10-year cost of the bill is under the $900 billion ceiling set by President Obama.

The Finance Committee approved a detailed outline of a sweeping health care bill last week. Mr. Baucus formally introduced the bill, a 1,502-page document, on Monday.

The Senate is debating a separate bill to prevent deep cuts in Medicare payments to doctors. The bill would not offset any of the costs, estimated at $247 billion over the next 10 years.

Senator Lamar Alexander of Tennessee, the No. 3 Republican in the Senate, said: “Of course, we need to fix doctors’ reimbursement. But it needs to be paid for. We can’t just add a quarter-trillion dollars to the national debt.”

Democrats said the bill simply recognized political reality. In recent years, they said, Congress has repeatedly stepped in to prevent cuts in Medicare payments to doctors, and it is likely to do so in the future.

Test-Driving Retirement Plans
By Anne Tergesen - Wall Street Journal
October 17, 2009
More companies are rolling out detailed and affordable services to help get your finances in shape. We tell you what's good about them—and what's not so good.

Can I afford to retire?
In the wake of the financial crisis, this question and its obvious follow-up—How can I better prepare?—are weighing on many people.

If you're among them, help is at hand. Financial-services companies, eager to tap the baby-boomer market, are rolling out programs that offer, at little or no cost, a detailed assessment of whether you're in danger of outliving your savings. Along the way, you'll also receive advice on what to do if your savings are deemed insufficient and how best to tap your nest egg, or what's left of it.

The Journal Report
See the complete Encore report.
What's the catch? First, there's work involved; the programs can take hours to complete. Second, each company typically pairs you with a financial planner, who—not surprisingly—is likely to try to interest you in that company's products. Finally, the programs focus on saving and investing; if you need guidance on other matters, such as estate or tax planning, you may be better off elsewhere.

That said, these services, for the most part, are a good mix of analysis, one-on-one advice and modest costs. As such, they can help you start or enhance your retirement planning.
Many American households, wealthy or not, don't need enough hand-holding "to justify spending more than a few hundred dollars on financial planning," says Chip Roame, managing principal at Tiburon Strategic Advisors, a Tiburon, Calif., consulting company that specializes in the financial-services industry. For many people, he adds, these programs "are a good fit."

To help you sort through the options in this fast-growing area, we tested services, new and established, offered by four companies.

We asked each to provide a financial plan for Jack and Rose Ryan, a fictional couple we endowed with about $1.2 million in savings, plus a $600,000 home in Evanston, Ill. Concerned about job security, Jack—a 60-year-old executive at a newspaper company—wants to know whether he can afford to retire at 63. His wife, a 58-year-old public-school teacher with a generous pension, wants to retire around the same time.

The results? For the most part, the advice fell within conventional retirement-planning wisdom. Most of the firms, for instance, advised the Ryans to take the same basic steps, such as paring expenses and diversifying their stock holdings.

Still, there were important differences among the firms. Some caught possible problems others overlooked. Some mainly recommended their own products, while others were more eclectic in approach. More generally, some were considerably more optimistic than others about how long the Ryans' savings would last.

Here's what we found:

FIDELITY RETIREMENT INCOME PLANNER

COST: Free of charge, and suited to those within five years of retirement.

WHAT'S INVOLVED: As with the other programs we tested, this one starts with a questionnaire that asks for estimates of retirement income and expenses. You will also have to disclose the contents of your brokerage, tax-deferred and other savings accounts. Of the questionnaires we completed, this was the most detailed and time-consuming. It took us about 90 minutes. There's a shorter version for those who already have a budget worked out.

HAND-HOLDING: We took a stab at completing the survey ourselves on Fidelity Investments' Web site. But we felt more comfortable relying on a Fidelity adviser—David Olsen, a regional planning consultant—for help with navigating some of the software's more sophisticated features, such as a tool that allows users to vary expense estimates from year to year. We spoke to Mr. Olsen by phone, but we could have opted to work instead with an adviser in one of the firm's 132 retail offices. Typically, advisers and clients have two or three meetings.

We also gauged the company's thinking on a critical issue: How much do the Ryans need to budget for medical expenses? Using projections from government and academic sources, the software gave us an estimate of almost $13,000 annually at the outset of retirement—an expense Fidelity assumes will rise by 7% annually, a much faster rate than the 2.3% for overall inflation.

ADVICE: After looking at 250 simulations of possible future market returns, Fidelity concluded that the Ryans are at significant risk of running out of money by their early 90s. (All the programs assume you'll live at least that long.)

To create a bigger safety net, Fidelity told us to put $370,000, or about 30% of the couple's $1.193 million nest egg, into a fixed immediate annuity, which would generate about $22,500 in annual income. (Fidelity offers various other firms' annuities.) Together, the Ryans' Social Security, pension and annuity income would cover their essential expenses, such as food and housing—at least at the outset of retirement, since the annuity payment does not increase over time.

Mr. Olsen also suggested the Ryans consider trimming their $10,000 annual travel budget or downsizing by selling their $600,000 home. Alternatively, he said, they could work longer or pick up some part-time work in retirement. He advised them to consider budgeting for big-ticket items, such as new car purchases and the costs of long-term care. He suggested they might consider funding some of this with the $3,600 they now spend annually on life insurance.

PORTFOLIO CONSTRUCTION: Like the other services we tested, this one fits clients into one of a preset menu of model portfolios. In Fidelity's case, there are six. Because the Ryans face a potential shortfall, Fidelity recommended they reduce their exposure to equities—to 20% of their portfolio from 40%—and better preserve what they have. (If the couple were to get their finances into better shape, Mr. Olsen says, he'd recommend they ultimately increase their stock exposure to about 50% of the portfolio.)

As with the other services, Fidelity advised the Ryans to sell some of the IBM stock that accounts for 13% of their holdings. Once a single stock makes up more than 10% of a portfolio, it raises "a red flag," Mr. Olsen said.

PLAN MONITORING: Fidelity told us about its myPlan Monitor & Alerts service. Available online, it lets investors track investments held both at Fidelity and elsewhere. If what they have in stocks and bonds differs from what their financial plan says they should have, Fidelity will send an email alert.

VANGUARD FINANCIAL PLAN
COST: What you'll pay depends on how much money you have at Vanguard Group Inc. The program is free for people who have at least $500,000 with Vanguard. It's also free for those who move $100,000 or more to Vanguard. The cost is $250 for people with existing balances of $100,000 to $500,000, or $1,000 for those with less.

WHAT'S INVOLVED: The process at Vanguard was relatively efficient. A couple of days after filling out a questionnaire that took us approximately 30 minutes to complete, we received a draft of the Ryans' financial plan via email. On the phone, we discussed ways to improve the Ryans' prospects with our planner, Mark Yakupcin. Later that evening, Mr. Yakupcin sent us a revised plan.

HAND-HOLDING: Each client typically receives one 45- to 60-minute telephone consultation. Most clients "wouldn't need another," Mr. Yakupcin said. (He gave us some extra time.)
When we asked Mr. Yakupcin how much the Ryans ought to set aside for medical expenses, he referred us to Web sites, includingmedicare.gov and aarp.org, that would help us come up with an amount. Karin Risi, principal of advice services at Vanguard, said that with real clients, Vanguard financial planners "lead clients through a robust discussion about the variables that will impact their medical spending needs."

ADVICE: After running more than 80 simulations of stock-market returns, Vanguard delivered bad news: The Ryans' odds of having enough money to last until age 95 were far below the 85% Vanguard considers acceptable. Mr. Yakupcin suggested Jack and Rose work until ages 66 and 64, respectively—or pare expenses dramatically.

PORTFOLIO CONSTRUCTION: Mr. Yakupcin urged the Ryans to increase their exposure to stocks to 50% from 40%. Such a portfolio—one of nine Vanguard offers—is consistent with the Ryans' time horizon and risk tolerance.

When it comes to selecting new investments, Vanguard recommends only its own mutual funds. However, if you want to hold onto other companies' products, Vanguard will plan around that. The company, in fact, builds two portfolios for each client. The first starts with current holdings you want to keep and adds Vanguard funds that can enhance diversification. The second assumes you'll move most or all of your assets over to Vanguard products—a move that typically reduces annual expenses, the company says.

In both cases, Vanguard advised us to dump more than half of the Ryans' $151,000 of IBM stock and plow the proceeds into two Vanguard funds: Vanguard Total Stock Market Index and Vanguard Value Index.

PLAN MONITORING: Those with $500,000 or more at Vanguard can reassess their plan every year and revise it if necessary. Otherwise, you must pay for another analysis.

NATIONWIDE RETIRESENSE

COST: Launched in February, this service—aimed at those ages 55 to 70—is free. However, you may pay commissions if you buy or sell investments.

WHAT'S INVOLVED: We filled out a one-page questionnaire. Nationwide also has a three-page budget worksheet.

HAND-HOLDING: The program, offered by Nationwide Financial Services Inc., is available to clients of brokers at several major independent brokerage firms, including Raymond James Financial Services Inc. and LPL Financial. So, prospective customers can turn to their brokers for help if needed.

ADVICE: According to RetireSense, the Ryans are in good shape to retire as planned in three years. The tool estimated that their nest egg has a 95% chance of supporting them over 30 years.

But we were skeptical—in part because company disclosures reveal that the program does not account for taxes. Instead, said Brad Davis, vice president of retirement income solutions at Nationwide, investment advisers should include taxes in their estimates of clients' retirement spending. "We let the investment advisers handle that," he said. "RetireSense is not a comprehensive, stem-to-stern financial-planning tool. We designed it to focus on retirement income."

PORTFOLIO CONSTRUCTION: Nationwide seeks to ensure that clients cover such essentials as food and housing with guaranteed sources of income, including Social Security and pensions. For those facing a shortfall, it recommends using annuities to bridge the gap. In the Ryans' case, Nationwide suggested committing $263,000 to an immediate variable annuity—a type of annuity that pays a preset level of income that rises if the investment performs well.

The company figures the Ryans' $1.2 million nest egg will grow to $1.46 million by the time they retire. The plan divided what they would have left after the annuity purchase into five "buckets." Each was intended to cover the Ryans' nonessential expenses, such as travel, for five years—or more, in the case of the final bucket.

Nationwide called for the Ryans to invest each of these pots of money, which range considerably in size, in a different way. "Assets you need for income today should be invested differently than the assets you'll need for income years down the road," says Paul Morganski, who leads Nationwide's Income Planning Desk, which assists brokers with the program.

For instance, Nationwide figured the Ryans will need $165,000 in their first five years of retirement. The company recommended parking that amount in cash. But it advised putting the $407,942 reserved for their final bucket into investments likely to earn a higher return—a mutual fund with 80% in stocks. (The company uses six model portfolios. It placed the Ryans into one of the more conservative options.)

A big chunk of the Ryans' assets—some $334,000—would end up in another insurance product: a deferred variable annuity with a "living benefit." This investment, which represents the third bucket, will pay the Ryans a minimum of $40,000 a year, Mr. Morganski calculated. Moreover, the couple's heirs would inherit the account's value. But there's a catch: The Ryans have to hold this investment for 10 years before the payments begin—and if they raid the principal, the $40,000 payout is no longer guaranteed.

PLAN MONITORING:

Nationwide provides free tools advisers can use to help their clients keep their finances on track.

SCHWAB REAL LIFE RETIREMENT SERVICES

COST: This service, available since January, is free to those with brokerage or 401(k) accounts at Charles Schwab Corp. Advisers receive bonuses for providing portfolio consultations.

WHAT'S INVOLVED: We answered an optional nine-question survey, and a Schwab financial consultant —Michael Garner in Peachtree City, Ga.—gathered additional information about the Ryans' finances over the phone. Soon after, we received a five-page report that, among other things, showed us how much more the Ryans would need to save to support their lifestyle through age 90.

HAND-HOLDING: Most clients work with an adviser, on the phone or in one of Schwab's more than 300 branches. Do-it-yourselfers can use a less sophisticated online calculator to get a sense of whether their retirement finances are on track. Most clients receive one consultation that typically lasts an hour "with some follow-up as needed," said Stacy Hammond, director of Schwab's Real Life Retirement Services.
We asked Mr. Garner for help calculating the Ryans' annual out-of-pocket medical expenses. His estimate: about $11,000—an expense Schwab's software assumes will grow by 2.6% a year.

ADVICE: According to Mr. Garner, the Ryans are likely to deplete their $1.2 million nest egg around age 80—about a decade shy of the age Schwab says clients ought to plan for. He recommended that Jack and Rose work longer—to ages 66 and 64, respectively—and make modest cuts to their retirement budget.

Mr. Garner touched on a few areas some of the other planners had overlooked. He suggested the Ryans consider using the $3,600 they currently spend annually on life-insurance premiums for Jack on a long-term-care insurance policy. Alternatively, he said, the couple could also look into purchasing life insurance on Rose. Such a move would provide Jack with extra income if she were to die first—triggering a steep reduction in her pension check.

PORTFOLIO CONSTRUCTION: Mr. Garner gave the couple's current allocation—40% in stocks and 60% in bonds—high marks; in fact, it lines up with one of five model portfolios Schwab recommends. Mr. Garner explained that this allocation offers the Ryans a significant amount of downside protection.

\Mr. Garner would have the couple pare their IBM holdings gradually, from 13% to about 5% of their portfolio. Before selling their shares, he'd look for ways to offset the taxable gains with losses on other investments.

As with the other companies, Schwab recommended the Ryans spend the assets in their taxable accounts first. Why? When money is withdrawn, the profits are subject to the lower capital-gains tax rate, which is currently 15% for their tax bracket. With tax-deferred accounts, in contrast, withdrawals are taxed at ordinary income-tax rates of as much as 35%.
PLAN MONITORING: Schwab sends clients quarterly reports that track whether investments held at the firm are allocated according to plan.

Mr. Garner said he typically checks in with clients at least once a year to update their financial plans and once every couple of months to discuss matters including portfolio allocations.

Martha Stewart clarifies Kmart comments after jab
By Robert MacMillan - Reuters
October 16, 2009

NEW YORK (Reuters) - U.S. home decorating expert Martha Stewart issued a statement on Friday expressing her appreciation for long-time retail partner Kmart, one month after saying the quality of her company's merchandise had been diminished at their stores. Discount retailer Kmart, and its parent Sears Holding Corp, are controlled by billionaire investor Edward Lampert. Stewart's long-standing relationship with the store chain is coming to an end just as she is set to begin one with home improvement chain Home Depot Inc in 2010.

"Both Martha Stewart Living Omnimedia and I appreciate the long and productive relationship we have enjoyed with Kmart and Sears Holdings," the company's founder said in the statement.

"Although we were not able to agree on terms that would have allowed us to continue working together, we wish our friends at Kmart and Sears Holdings all the best.

"To the extent my recent comments were taken by anyone to be inconsistent with this sentiment, that was not my intent."

A spokesman for Sears declined to comment.

In September, Stewart had harsh words for Kmart during an appearance on U.S. cable business news channel CNBC.

"The new ownership really has let our line deteriorate. It's been kind of ripped off, I would say, and really diminished, and the quality is really not what I am proud of," she said. "Have you been into a Kmart lately? It's not the nicest place to shop.

"The stores are not what they were. The shopping experience is not what it was. The products are not there that people go in for. And it's not a good situation. And as a designer-supplier, I have been extremely disappointed."

According to regulatory filings, the sales of products she licensed to Kmart fell 25 percent in 2008.

While licensing agreements with other retailers such as Macy's Inc are providing added revenue for Martha Stewart, it has not made up for the slumping sales at Kmart.

The discount chain provided 10 percent of Martha Stewart's overall revenues in 2008 and 43 percent of the merchandising business, which includes products such as sheets, cookware and candles.

For Sears' chairman Lampert, Stewart's unguarded comments added to a string of bad press that overshadowed company's few successes, such as the popularity of layaway payment plans.

Second-quarter earnings were dismal and fueled critics of the leadership, including the financial weekly Barron's.

The magazine said the company's stock could tumble as extreme cost-cutting weakened Sears' ability to compete, which prompted a letter from Lampert who called the article misleading.

Lampert declined to comment.

Martha Stewart Can’t Reach Terms With Sears’s Kmart
By Allison Abell Schwartz - Bloomberg
 October 16, 2009

Martha Stewart Living Omnimedia Inc. said it was unable to agree to terms with Sears Holdings Corp.’s Kmart that would have allowed their partnership to continue.

Martha Stewart, the New York-based company’s founder, told CNBC last month that Kmart let her line of home-goods products “deteriorate.” The partnership with Kmart ends in January.

“We wish our friends at Kmart and Sears Holdings all the best,” Stewart, 68, said today in a statement. “To the extent my recent comments were taken by anyone to be inconsistent with this sentiment that was not my intent.”

Sales from “Martha Stewart Everyday” products at Kmart totaled 43 percent of the company’s merchandising revenue and 10 percent of total revenue in 2008, according to an annual filing. Kmart’s contribution to Martha Stewart Living’s revenue decreased materially from 2007 to 2008 because of a decrease in annual minimum royalties due from Kmart, the filing said.

Chris Brathwaite, a spokesman for Sears Holdings, declined to comment on the statement. “Martha Stewart Everyday Colors,” a line of interior latex paint, debuted at Kmart stores in May 1997. “Martha Stewart Everyday” bedding and bath products began selling at Kmart in September that year.

Martha Stewart Living fell 19 cents, or 3.1 percent, to $6 at 4:15 p.m. in New York Stock Exchange composite trading.. The shares have more than doubled this year. Hoffman Estates, Illinois-based Sears Holdings, the biggest U.S. department-store company declined $1.33 to $70.08 on the Nasdaq Stock Market.

Some Seniors May See Rise In Premiums
By Jane Zhang - Wall Street Journal
October 15, 2009

Premiums that seniors pay for Medicare Advantage plans will increase an average of 25% next year, largely because insurers, in response to new federal requirements, are canceling many plans that carry no premiums, a top Medicare official said Wednesday.

The average premium will increase to $39 a month for all Medicare private plans from about $32 this year, said Timothy Hill, deputy director for the Center for Drug and Health Plan Choice at the federal agency that manages Medicare. Medicare Advantage, unlike traditional Medicare, is subsidized by the federal government and offered by insurance companies.

Insurance companies had signaled there would be an increase in premiums, citing the government's decision to cut payments to Medicare Advantage by 4.5%. The insurance companies' trade association, America's Health Insurance Plans, has been calling for Medicare officials to increase payments if Congress reverses scheduled payment cuts to physicians next year.

But Mr. Hill said the payment cuts are less of a factor than a 2008 law that requires a category of Medicare Advantage plans, known as Private Fee for Service plans, to establish provider networks. Rather than undertake that task, insurers are ditching many of those plans. In total, more than 667,000 seniors will be affected, most of them enrollees of PFFS plans. "It's more that than the payment changes," Mr. Hill said at a briefing sponsored by Avalere Health LLC, a consulting firm in Washington.

Medicare Advantage has become a thorny issue. Democratic lawmakers and President Barack Obama have said the private plans are overpaid and have proposed more than $100 billion in cuts to Medicare Advantage to help expand coverage to uninsured Americans. But insurers and Republicans have attacked the proposal, saying it unfairly targets the 10 million seniors in Medicare Advantage plans.

Obama calls for $250 payments to seniors
Associated Press
October 15, 2009

WASHINGTON (AP) - President Barack Obama called on Congress Wednesday to approve $250 payments to more than 50 million seniors to make up for no increase in Social Security next year. The Social Security Administration is scheduled to announce Thursday that there will be no cost of living increase next year. By law, increases are pegged to inflation, which has been negative this year.

It would mark the first year without an increase in Social Security payments since automatic adjustments were adopted in 1975.

"Even as we seek to bring about recovery, we must act on behalf of those hardest hit by this recession," Obama said in a statement. "This additional assistance will be especially important in the coming months, as countless seniors and others have seen their retirement accounts and home values decline as a result of this economic crisis."

Obama's proposal is similar to several bills in Congress. The $250 payments would also go to those receiving veterans benefits, disability benefits, railroad retirees and retired public employees who don't receive Social Security. Recipients would be limited to one payment, even if they qualified for more.

The White House put the cost at $13 billion. Obama said he would not allow the payments to come out of the Social Security trust funds, further eroding the finances of the retirement program. Social Security already is projected to pay out more in benefits than it collects in taxes in each of the next two years.

However, Obama did not offer any alternatives to finance the payments. A senior administration official said Obama was open to borrowing the money, increasing the federal budget deficit. The official, who requested anonymity, was not authorized to speak on the record.

Obama also announced Wednesday that the IRS would soon issue tax guidance preventing reductions in contribution limits for certain retirement funds, including 401(k) plans and Individual Retirement Accounts. There has been concern among some in the financial industry that federal law could require the limits to be reduced because inflation will be negative this year.

The $250 payments would match the ones issued to seniors earlier this year as part of the massive economic recovery package enacted in February. Several key members of Congress have said they are open to providing relief to seniors to make up for no increase in Social Security payments.

"We're looking at a way to address it," said Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, which oversees Social Security. "I'm not sure what the exact answer is yet, but we're looking at ways to address that."

Senate Majority Leader Harry Reid, D-Nev., said he supports the $250 payments, as did Rep. Charles Rangel, D-N.Y., chairman of the Ways and Means Committee, which has jurisdiction over Social Security in the House.

Sen. Bernie Sanders, an independent from Vermont, has introduced a bill calling for similar payments.

"I think that the Obama administration and many members of Congress understand that we simply can't turn our backs on senior citizens," Sanders said.
Other lawmakers said seniors shouldn't get the extra payments because the formula doesn't call for it.

"I think it would be inappropriate," said Sen. Judd Gregg, R-N.H. "The reason we set up this process was to have the Social Security reimbursement reflect the cost of living."
Social Security payments increased by 5.8 percent in January, the largest increase since 1982. The big increase was largely because of a spike in energy costs in 2008.

Inflation has been negative this year largely because energy prices have fallen. Gasoline prices have dropped 30 percent over the past year while overall energy costs have dropped 23 percent, according to the Bureau of Labor Statistics.

Social Security payments, however, cannot go down. The average monthly Social Security payment for retirees is $1,160.

Advocacy groups said the payment will be welcomed by seniors hit hard by falling home values and shrinking investment portfolios.

"The likelihood of losing an average annual COLA increase of about $200 to $300 in 2010 may sound like no big deal to some, but for millions of seniors who've already seen a third of their Social Security eaten up by health care costs, this proposed COLA relief could truly make the difference" said Barbara B. Kennelly, a former Democratic member of Congress from Connecticut who now heads the National Committee to Preserve Social Security and Medicare.

AARP CEO A. Barry Rand said, "For nearly 35 years, millions of Americans have counted on an annual increase in their monthly Social Security checks to make ends meet."

Big Jump Seen in Health Costs for Employees
Open Enrollment Brings Steep Rise in Premiums; Paying More for the Kids
By Anna Wilde Mathews - Wall Street Journal
October 14, 2009

As companies begin unveiling their workplace benefits for next year, many employees are learning they will have to dig even deeper into their pockets for health coverage.

Such price increases have become a fact of life during open-enrollment season, when workers sign up for their health plans. But the jump is expected to be steeper in 2010 than this year, as employers struggle with the impact of the recession and continually rising insurance costs.

Employees will pay $4,023 on average in premiums and out-of-pocket charges next year, up 10% from 2009, according to a projection from Hewitt Associates, a benefits-consulting firm. In dollar terms, it's the biggest boost since the firm started keeping track of the data a decade ago.

For workers, that will mean larger payroll deductions, as well as spending more on co-payments and other fees tied to care. Companies also are expected to prod more employees into cheaper coverage by getting them to sign up for high-deductible health plans. And many employers are trying to rein in the expense of covering workers' families, sometimes by making insurance for kids and spouses pricier.

As a sweetener, some companies are offering new benefits, such as life insurance and long-term-care insurance, that employees can opt to buy for themselves. But workers need to look closely at such offers, because some people may be able to purchase these benefits more cheaply on their own.

Workers like Katha Rogers are already feeling the pinch. Ms. Rogers, 46, is a customer-service representative for Burton Metal Finishing Inc., a small family-owned company in Columbus, Ohio. She and other employees started paying sharply increased premium contributions this July. The firm had to ask them to chip in more because its health-insurance costs have been going up 10% to 20% a year, while the economic downturn hit its revenues, says co-owner Victoria Burton.

Ms. Rogers and her husband, who also works at Burton Metal Finishing, now pay $120 a month combined, up from nothing two years ago. They also face bigger co-payments and deductibles. Partly because of that, the family is trying to save money, including not taking any vacation trips. They've also canceled some doctor visits to avoid the new $50 co-pay. "You have to decide where you're going to cut next," says Ms. Rogers. Still, she says, she's grateful to have coverage in this difficult economy.

No matter where you work, you will almost certainly be paying more for your coverage. But you may be able to choose between plans that boost your payout in different ways—mainly through higher paycheck withdrawals, or mostly in the form of increased deductibles, co-payments and co-insurance. Some companies are also offering reduced premiums in exchange for certain wellness activities, like taking a health-risk assessment.

You should take a close look at the options and not just focus on the premiums. Make sure you understand all the charges in the plans, including the maximum you could be responsible for paying out of pocket in a year. Check the details of the drug benefit, since employers are expected to get even more aggressive in cracking down on pricey brand-name medications. Simulating a Claim One helpful exercise is to think about a procedure or type of care you may need and try to pencil out how much it would cost you under each plan, says Sally McCarty, a former state insurance regulator who now consults with patient groups. Employees may even be able to get simulated claims scenarios processed by an insurer.

Eric Fein, 34, a Web developer who works for Affinity Federal Credit Union in Basking Ridge, N.J., this year got to choose between two plans, one with higher premiums and lower co-pays and deductible, and the other with lower premiums but more out-of-pocket charges. Mr. Fein says he opted for the bigger premiums, because the monthly costs weren't much higher, and he didn't want to find himself facing big bills if a back problem he had before cropped up again. "That way, I know I'm covered fully," he says. Related Links The best source of information about your workplace health benefits is your employer. Many are now offering online resources, including simulated claims processing. But here are some other online resources.
• A web site from insurer Aetna with open-enrollment tips:http://www.planforyourhealth.com/openenrollment/
• Sites with general information about health insurance:http://www.healthcarecoach.com/ ;http://www.healthinsurance.org/glossary/#P
• Sites with information about HSAs:http://www.treas.gov/offices/public-affairs/hsa/faq_basics.shtml;http://www.hsainsider.com/; http://www.hsafinder.com/
• Sites with basic background about long-term care, life and disability insurance. http://www.cahealthadvocates.org/long-term/index.html;http://www.ins.state.ny.us/clife.htm ;http://www.nahu.org/consumer/DIInsuranceguide.cfm

 Paying for Basico Care For Michele Butler of New York, any extra premium payment seemed like a waste. Ms. Butler, who is in her 40s, says she never sees a doctor beyond basic checkups like an annual mammogram. Her employer, the U.S. unit of London advertising agency Dewynters Ltd., decided this year to offer a choice of plans through HealthPass, a nonprofit insurance exchange. The company would pay the full premiums on one of the basic options, but workers could add their own money if they wanted a more expensive plan. That seemed like "an unnecessary extra expense," says Ms. Butler, a manager at the firm.

Around 60% of employers are expected to offer some form of high-deductible plan paired with a health-savings account or health-reimbursement arrangement, according to a survey by consulting firm Towers Perrin Forster & Crosby Inc.

Some companies that already had these plans are making changes that may merit another look by employees who rejected the options before.3M Co., for instance, will make its high-deductible plan more attractive by trimming employee premium charges, while slightly raising premiums on its standard plan, says Jack Arland, director of benefits. 3M will also make its full contribution to employees' HSAs early in 2010, instead of parceling it out monthly, giving workers quicker access to the money.

If your family is on your plan, you should watch for changes that will affect their coverage. Benefitfocus Inc., which provides benefits software to more than 300,000 employers, says around a third of them are trying to trim spending on dependents.

The most common tactic is an audit to root out dependents who don't qualify for the plan. More employers are expected to do such audits this year, according to Mercer, a consulting unit of Marsh & McLennan Cos.

If your employer hasn't done this before, you may want to check you're complying with its rules. Be ready to produce documentation such as marriage certificates and birth certificates.

Some companies, like engineering and planning firm Kimley-Horn and Associates Inc., are adding a monthly surcharge for workers enrolling a spouse who could get coverage from another employer. The Cary, N.C., firm, which has more than 1,600 employees, also is boosting workers' costs for family coverage by a bigger percentage than for individual plans.

The company's rich benefits were luring family members who had other options, adding to Kimley-Horn's costs, says Chief Executive Mark Wilson: "We're subsidizing, in effect, other companies."

Hits Against Families

If your employer is spending less for your children and spouse this year, it may make sense to rethink how you divide up your family's coverage. Two-career couples should carefully evaluate both employers' health plans.

A few employees, like Elaine Williams, an orchestra teacher in Lawrence, Kan., choose the individual insurance market. The 54 year old purchased coverage this September for her 20-year-old son, instead of including him on her workplace insurance. The school district pays the full premium for her plan, but she would have had to spend around $360 a month to add her son. His new plan cost about $100 less a month for more generous health benefits, she says. "What I was looking mostly at was the bottom line."

That strategy won't always work. Some family members with pre-existing health conditions will find it tough to buy their own plans. And employer-sponsored insurance often offers better value than plans purchased individually because of favorable tax breaks and richer coverage.

Big insurers Assurant Inc., MetLife Inc. and Unum Group all say they're seeing employers offering more insurance benefits that employees can choose to pay for themselves. A new employer survey conducted by the International Foundation of Employee Benefit Plans found 84% were providing such so-called voluntary benefits—most commonly life, vision, long-term care and long-term disability. Benefits That Cost You Brookdale Senior Living Inc. of Nashville, Tenn., has previously offered its 35,000 employees a range of voluntary benefits. Mark Mielenz, the company's senior director of benefits, says a new option will allow workers to purchase policies to provide extra help if they get serious conditions such as cancer. He says the added coverage could help offset increases in recent years in out-of-pocket charges in the workers' health plan.

Employees should take a close look before buying any new benefits. Check whether pretax dollars can be used to pay the premiums, which is possible with certain benefits but not all, according to MetLife. And ask if the plan is portable if you change employers. Shopping around is worthwhile, since some people may find cheaper or more customized choices if they buy their own plans.

ATTENTION MEDICARE PATIENTS!
“Let Me Be Clear”
Be Aware of Health Team Obama!!

The following editorial appeared in the Tuesday, October 6, 2009 edition of The Wall Street Journal. As the review states, “Democrats are systematically attacking specific medical fields like cardiology and oncology…they’re trying to engineer a ‘cheaper’ system so that government can afford to buy health care for all—even if the price is fewer and less innovative ways of extending and improving lives.’

“The War on Specialists"
“ObamaCare punishes cardiology and oncology to finance GPs".

“In President Obama's Washington, medical specialists are slightly more popular than the H1N1 virus. Compared to bread-and-butter primary care doctors, specialists cost more to train and make more use of expensive procedures and technology—and therefore cost the government more money. Even so, the quiet war Democrats are waging on specialists is astonishing.

“From Senate Finance Chairman Max Baucus's health-care bill to changes the Administration is pushing in Medicare, Democrats are systematically attacking specific medical fields like cardiology and oncology. With almost no scrutiny, they're trying to engineer a "cheaper" system so that government can afford to buy health care for all—even if the price is fewer and less innovative ways of extending and improving lives.

“Take a provision in the Baucus bill that would punish any physician whose ‘resource use’ is considered too high. Beginning in 2015, Medicare would rank doctors against their peers based on how much they cost the program—and then automatically cut all payments by 5% to anyone who falls into the 90th percentile or above. In practice, this rule will only apply to specialists.

“Since there will always be a missing chair when the music stops, every year one of 10 physicians will be punished if he orders too many tests, performs too many procedures or prescribes too many drugs—whether or not the treatments result in better patient outcomes. The 5% fine is substantial given that Medicare's price controls already pay only 83 cents on the private dollar.

“In Medicare, meanwhile, the Administration is using regulation to change how doctors are paid to benefit general practitioners, internists and family physicians. In next year's fee schedule, they'll see higher payments on the order of 6% to 8%. The loose consensus is that the U.S. does have too few primary care doctors—less than 5% of medical students are entering the field—in part because they're underpaid.

“Fair enough. But this boost for GPs comes at the expense of certain specialties. The 2010 rules, which will be finalized next month, visit an 11% overall cut on cardiology and 19% on radiation oncology. They're targets only because of cost: Two-thirds of morbidity or mortality among Medicare patients owes to cancer or heart disease.

“The way Medicare works is that Congress decides each year how much it wants to spend on doctors, period. If one area of medicine receives a larger slice of this pie, another must accept a smaller one. The portion sizes are determined using a formula known as Relative Value Units, or RVUs. Medicare assigns an RVU to each of 7,500 billable services—in 2008, a colonoscopy earned 5.64 of these units, a hip replacement 37.66. Then it multiplies a doctor's total RVUs by some dollar factor, currently about $36, and cuts a check.

“The chunks Team Obama took out of cardiology RVUs are especially drastic. The basic tools of heart specialists—echocardiograms (stress tests) and catheterizations—are slashed by 42% and 24%, respectively. Jack Lewin, who heads the American College of Cardiology, said in an interview that the crackdown will cause ‘a horrible disruption’ that will force many community and independent practices to close their doors, lay off staff or make senior patients wait days or weeks for tests and services.

“Cancer doctors get hit because the Administration believes specialists order too many MRIs and CT scans. Certain kinds of diagnostic imaging lose 24% under new assumptions that machines are in use 90% of the time, up from 50%. There isn't a radiologist in America running an MRI 10.8 hours out of 12, unless he's lining up patients on a conveyor belt.

“But claiming scanners are used far more often than they really are lets the Administration ‘score’ spending cuts.

“And this change is applied to all expensive equipment, not just MRIs and CTs, so payments for antitumor radiation therapy will fall by up to 44%. The American Society for Radiation Oncology says it ‘will have a devastating effect on cancer patients' access to care.’

“One priority of the Baucus bill is to require the executive branch to wreak this kind of devastation every year, not just when a Democrat is President. It directs the Secretary of Health and Human Services to search out ‘potentially misvalued’ RVUs, meaning those ‘for which there has been the fastest growth’ or ‘that have experienced substantial changes in practice expenses.’ In other words, any specialty that grows too much must be targeted.

“It's important to understand that these are ‘cuts’ that don't actually cut any spending; the RVUs merely redistribute it from one medical bucket to another. In this case, Team Obama is sending a message to the medical community about its political priorities. The fee schedule is designed to avoid wild year-over-year payment swings, but HHS justified its decision with a flimsy survey whose data it won't release and whose results can't be replicated. Dr. Lewin told us that both HHS Secretary Kathleen Sebelius and budget director Peter Orszag refuse to meet with him to discuss the topic.

“We have nothing against primary care physicians, and clearly the country could use more of them. But then, it could probably use a lot more doctors, including specialists, as the boomers age and the prevalence of obesity, diabetes and other chronic diseases rises. The increase in specialists has tracked advances over 50 years in medical science and technology. Democrats look at these advancements and see only the costs, not the benefits.

“Markets are supposed to determine the composition of the workforce, not a command medical economy run out of Washington. It is perfectly insane to support one type of doctor by punishing others on a flawed theory about cost-control. The press passes all this off as routine when it bothers to notice, but we suspect our media colleagues would show more interest if Messrs. Obama and Baucus were deciding how much journalists should be paid and what they should cover.

“If Democrats are going to stomp on specialists, they should at least be open about it. Then again, all Americans might take a different view of health-care ‘reform’ if they understood that it means snuffing out the best medicine.”

WHAT CAN WE DO?

Whether you are a Medicare patient or have other insurance coverage if these proposals pass, we will all be dramatically impacted:   

• Access to medical services and physician visits will be limited.
• Wait time for appointments, tests, and results will increase.
   This will mean more frustration and anxiety for you.
• The level of quality physicians and other healthcare providers strive
   so hard to deliver will be jeopardized.

Patients who choose to obtain their cardiology services from local hospitals will face higher out-of-pocket co-pays and even longer wait times for appointments, tests and results.

Advancements in cardiology during the past 20 years have reduced heart related deaths and the severity of illness by more than 26 percent.

If you are worried about your continued access to cardiac care, please contact your senators and representatives to let them know of your concerns. The following website makes it easy for you to email your elected officials. All you need is your home and email address:

GuardingHeartsAlliance.org

If you prefer to send a letter to your legislator about cardiovascular care, below is a sample you may use. But it is absolutely critical that you send the letter or contact your elected officials NOW!

“Dear

I am contacting you as my elected official to express my concerns about my ability to continue to receive the cardiovascular care I need given the drastic Medicare payment cuts proposed for cardiologists next year.

As a patient under the care of a cardiologist, I am concerned that my physician may no longer be able to treat me or other Medicare patients as a result of these and other cuts. Already, many practices across the country are being forced to consider drastic options, whether it’s laying off key support staff or limiting new Medicare patients.

I cannot afford to find a new doctor, nor can I afford higher co-payments or extra trips to the hospital for procedures like medical imaging. As you consider Medicare legislation over the next few months, I urge you to consider the impacts of the reimbursement cuts not only on physicians, but also on patients like me.

Please help stop the cuts and help ensure cardiologists and other specialists are able to provide the best possible care.

Sincerely”

Using one of Obama’s favorite phrases, “let me be clear,” time is of the essence so please let your elected officials know how you feel TODAY.

Ed Craig, Sears senior executive, dies at 86
Atlanta Journal-Constitution
October 13, 2009

Edward Myles Craig, longtime administrative assistant to Sears vice president of the South, died Sunday, October 11, in Atlanta.

A native of Rocky Mount, N.C., he joined the Army Air Corps as an aviation cadet in 1943 while attending Wake Forest College. After receiving his commission as a second lieutenant, he was designated as a co-pilot of a B-17 heavy bomber which was shot down on a mission to Dresden, Germany and became a prisoner of war.

When the war ended he continued his education at the University of North Carolina, then began his business career with Sears, Roebuck and Co. After several assignments he was transferred to Atlanta and in 1958 was promoted to personnel director of the 13 southern states. Several years later he was named administrative assistant to the Vice President-South. He retired in 1984 after 36 years with Sears.

Mr. Craig and his wife, the former Margaret Renegar Arnott, had two children, a daughter Connie and son Myles; and three grandchildren.

Funeral services will be held at 11 a.m. Thursday at Mt. Vernon Presbyterian Church in Atlanta, where he served as an Elder, treasurer and several other capacities. Interment will follow in Arlington Memorial Park, Sandy Springs, Ga.

Allstate names chief marketing officer
Chicago Business
October 12, 2009

(AP) — Allstate Corp. on Monday named a former General Motors Co. executive to its chief marketing officer position. Mark LaNeve, 50, will join the Northbrook, Ill.-based company on Oct. 26. LaNeve will oversee all marketing initiatives including marketing, advertising, corporate identity, customer loyalty and field marketing. He will become a member of the senior management team and report to CEO Thomas J. Wilson.

William J. Bolger, Veteran Sears Buyer, Dies at 78
Chicago Tribune
October 11, 2009

William J. Bolger, 78, of Glen Ellyn, beloved husband of Jane (nee Grove); loving father of Bill (Sarah), Cathy, Pat (Tracy), Bridget (Frank) O'Connor, Ellie (David) Disser, Grove, (Kerry) and Meg (Jody) Brown; dear grandfather of 19; fond brother of the late Joe (Kathleen) Bolger; uncle of many nieces and nephews.

Mr. Bolger was Sears retail sales manager of floor coverings in the 1960s and later served for many years as the buyer of window shades and blinds.

Retired from Sears-Roebuck and member of Georgetown Hall of Fame and All-Century Basketball Team. Visitation Sunday from 2 to 7 p.m. at Williams-Kampp Funeral Home, 430 E. Roosevelt Rd. (1 blk. east of Naperville Rd.), Wheaton. Funeral Mass Monday 10 a.m. at St. Daniel the Prophet Church, 101 W. Loop Dr., Wheaton. Interment private.

In lieu of flowers, contributions to Xavier High School or Giant Steps Illinois, Inc., appreciated.

Allstate names AIG vet to lead life insurance unit
By Steve Daniels - Chicago Business
October 6, 2009

(Crain’s) — Allstate Corp. has named a veteran of American International Group Inc. to run its beleaguered life insurance unit.

Matthew Winter, 52, will start Oct. 26 as president and CEO of Allstate Financial, Allstate announced Tuesday. He will lead the Northbrook-based auto and home insurer’s longstanding, frustrating effort to sell life insurance and retirement products to its more than 17 million customers.

Mr. Winter, who most recently was a vice-chairman at AIG and previously ran the insurance giant’s life insurance unit, succeeds James Hohmann, who left Allstate in early January amid comments from CEO Thomas Wilson that the unit needed new direction. Allstate subsequently announced it would lay off 1,000 Allstate Financial employees, 26% of the unit’s workforce or 3% of Allstate’s total workforce.

Mr. Winter “has the intellectual capacity, creativity and enthusiasm to drive our vision of reinventing protection and retirement,” Mr. Wilson said in a release.

The search for a new Allstate Financial president has lagged, with Mr. Wilson expressing frustration at times at how long it was taking. Life insurers have been under tremendous strain over the past year as their investment portfolios sank with the markets.

That’s prompted a number of Wall Street analysts to call on Allstate to ditch or sell its small life unit, which has generated low returns over many years and was primarily responsible for investment losses that led Allstate to a big loss last year. Some of those losses have reversed this year as the markets have improved, restoring some of the company’s book value lost in the market meltdown.

Mr. Wilson has said Allstate won’t exit the life-insurance and retirement business, an area the insurer has long targeted for growth.

“Middle-income Americans are overlooked and underserved when it comes to financial services,” Mr. Winter said in the release. “Allstate’s strong brand and network of Allstate agents across the country give Allstate Financial a unique opportunity to help these hard-working consumers protect their families and prepare for retirement.”

Before joining AIG in 2006, Mr. Winter was executive vice-president at MassMutual Financial Group.

Wal-Mart Sharpens Its Pricing Pincers
By John Jannarone - Wall Street Journal
October 5, 2009

Investors hoping for a big retail performance next year should beware the Wal-Mart effect.

In a way, the recession has been a break for the world's biggest retailer, directing more traffic to its stores at the expense of pricier rivals. And while many retailers reduced spending and slashed prices, Wal-Mart Stores has actually spent more and avoided aggressive price cuts.

But with comparable-store sales barely growing, Wal-Mart appears ready for an offensive that could hobble rivals' hopes for a sharp profit rebound. Following unusually high gross-margin growth in recent quarters, Wal-Mart Chief Executive Mike Duke told The Wall Street Journal Thursday he expects gross margins to be more stable. That could mean the company will cut prices faster and put more cheap products on its shelves.

That could put Wal-Mart's smaller rivals further on the defensive. Take grocery stores. J.P. Morgan's Charles Grom says prices of identical baskets of 31 products have fallen 14.4% between January and September at Kroger, while Safeway has seen a 9.7% decline. Wal-Mart, meanwhile, has only lowered prices by 2.6%.

Even so, Wal-Mart is still cheaper. Its basket costs $92.77, compared with $100.98 at Kroger and $113.03 at Safeway. If Wal-Mart gets more aggressive in using its scale, rival grocers will likely have to cut prices further, translating into gross-margin declines.

Other rivals such as Best Buy could also suffer if Wal-Mart offers better deals on consumer electronics. Best Buy already saw its U.S. gross margins decline 0.6 percentage point last quarter as it competed with Wal-Mart and Amazon.com. While the economy will probably be better for retailers next year, investors should remember how fiercely Wal-Mart can compete.

Kmart Offers Discount to Unemployed Across U.S.
By Francine Knowles - Chicago Sun-Times
October 1, 2009

Kmart will give unemployed workers across the country a 20 percent discount off more than 1,500 of its regularly priced private-label grocery and drugstore products for up to six months.

Customers will have to register online (www. kmart.com/ smartassist) for the program and will receive a Kmart Smart Assist Savings card.

At checkout, cardholders will need to show the card, valid state-issued unemployment verification and a state-issued ID.