Staff Staff -- Furniture Today, September 23, 2002
U.S. housing starts decline
Suffering a third straight monthly setback, U.S. housing starts fell in August by 2.2 percent, the Commerce Department reported.
The broad housing market has helped to cushion the U.S. economy and still remains at historically high levels, but it is starting to show signs of running out of steam after a long period of robust growth. The last time starts fell over three consecutive months was between May and July of 2000.
Ground-breaking for new homes declined to a seasonally adjusted annual rate of 1.609 million units in August from a July figure that had been revised downward to 1.645 million units. Building permits, a key indicator of builder confidence, also slipped, falling by 2.5 percent to a seasonally adjusted level of 1.669 million units, down from 1.712 million units the prior month.
Hardest hit was single-family housing starts, which fell by 4.4 percent, to a seasonally adjusted annual rate of 1.252 million units. But the market remained strong for multi-family housing, and starts there shot up by 8.2 percent.
Breaking results out on a regional basis, starts remained strong in the Northeast, climbing by 9.4 percent, and the South, rising by 3.1 percent. But most of the damage done during the month was recorded in the Midwest, where starts skidded down by 18.7 percent. Starts in the West fell by 1.6 percent.
U.S. firms betting on rebound
With Wall Street stuck in a funk and stocks trading at deep discounts, U.S. companies are buying back their own stock at an accelerated clip, according to data tracker Dealogic LLP, betting on their own companies' performance and counting on a stock market rebound.
So far this quarter, U.S. companies have launched stock buyback programs worth more than $60.2 billion, the most in terms of dollar volume in two-and-a-half years.
In a sign that company performance may be improving, and the stock market may be getting ready to stage a comeback, the buybacks are taking place against a backdrop of a recent slowdown in insider selling.
While the dollar volume involved in the buybacks is climbing, the number of companies repurchasing their stock remains subdued. During the second quarter, 147 companies launched buybacks, about half the average during the late 1990s.
Among the biggest buyers of their own stock is pharmaceutical powerhouse Merck, which approved a $10 billion repurchase, Dell Computer, a $6.7 billion buyback, and Pepsi, as much as $5 billion in an upcoming buyback.
Dealogic said buybacks typically cheer investors and boost the stock price of the companies involved. A Dealogic study of shares in all companies that announced share repurchases since January 2000 showed that, on average, shares rose by 2.6 percent in the month before a company put out the news and by another 2.6 percent the following month.
Factory 2-U extends credit facility
Factory 2-U Stores Inc., a San Diego-based off-price retailer, said it has completed a fourth amendment to its financing pact with CIT Business Credit.
The new agreement extends the retailer's $50 million revolving credit facility with CIT Business Credit to March 3, 2006. The financing facility is secured by inventory, receivables and related proceeds.
Factory 2-U operates 258 off-price retail stores that sell branded casual apparel for the family as well as home textiles and household products. The company operates 33 stores in Arizona, three in Arkansas, 64 in Southern California, 62 in northern California, one in Idaho, five in Louisiana, three in Missouri, eight in Nevada, nine in New Mexico, two in Oklahoma, 14 in Oregon, two in Tennessee, 36 in Texas and 16 in Washington.
Furniture Today's Ray Allegrezza Speaks with Stephen Bogart about Fine Furniture's New Bogart Line