A new president for McDonald's USA, a turnaround for Chrysler, and a record criminal fine for BP top our roundup of the day's top business stories
Do You Want a Job With That?
Jan Fields, President of McDonald’s USA President may deserve a break today after McDonalds replaced her with current global chief restaurant officer Jeff Stratton after a series of marketing and sales setbacks. In October, McDonald’s posted its second consecutive quarterly decline in profits. Last week, the company posted its first drop in monthly same-store sales in nine years. Ms. Fields, 57, is credited with expanding the company's beverage lineup, updating restaurants and pushing for nutrition initiatives such as the addition of apple slices to Happy Meals and the move to voluntarily post calorie information on menu boards, The Wall Street Journal reports. But the company’s new pub burger was a bust as were a spicy version of the more popular non-spicy Chicken McBites.
Postal Service Fails to Deliver
The Postal Service more than tripled last year’s losses with a record $15.9 billion net loss for the fiscal year that ended Sept. 30, bringing the financially troubled agency another step closer to insolvency, The New York Times reports. Despite its financial woes, officials said it would continue to operate as usual and that employees and suppliers would be paid on time. The unprecedented loss included $11.1 billion in accounting expenses related to two payments the agency was supposed to make into its future retiree health benefits fund, but were forced to default. Nearly $5 billion was due to a decline in mailing operations revenue. Mail volume continues to decline as Americans have increasingly turned to electronic forms of communication. Total mail volume was 159.9 billion pieces, down 5 percent from 168.3 billion pieces a last year. Operating revenue was $65.2 billion, down from $65.7 billion over the same period, the NYT said
BP Makes $4.5 Billion Plea Deal
BP agreed to plead guilty to felony misconduct in the April, 2010 Deepwater Horizon disaster in which 11 workers died and that caused the worst offshore oil spill in the country’s history. It will pay a record $4.5 billion criminal penalty, which exceeds Pfizer Inc.’s 1.3 billion fine in 2009 for marketing fraud. The company, which replaced its chief executive following the disaster, still faces economic and environmental damage claims sought by four Gulf Coast states and other private plaintiffs, The Chicago Tribune reports.
Target Beats Wal-Mart in Uncertain Economy
Diverging fourth-quarter forecasts sent shares of Target Corp. up 1.7 percent to $62.44 and those of rival Wal-Mart Stores Inc., down 3.6 percent to $68.72 in trading Thursday, Bloomberg News reports. Wal-Mart beat third-quarter profit estimates, but earnings estimates for the fourth quarter trailed expectations, according to Bloomberg. Target, which attracts a higher-income consumer, met earnings projections. The sluggish economy continues to put greater pressure on Wal-Mart customers, while Target customers appear to have more confidence in their personal finances, according to Bloomberg reports. Same-store sales rose 2.9 percent at Target in the third quarter, compared to a 1.5 percent gain at Wal-Mart’s U.S. stores.
Chrysler Continues Turnaround with 1,250 New Jobs
Chrysler yesterday announced plans to add 1,250 new jobs at three plants in Michigan and invest $238 million in the facilities, CNN Money reports. Since its Chapter 11 bankruptcy proceedings in 2009, the company has invested nearly $4.75 billion in its facilities and added roughly 6,000 jobs. The new jobs will be created at plants in Detroit, Trenton and Warren, according to CNN Money. United Auto Workers Vice President General Holiefield described the news as “monumental” and likened Chrysler to a “phoenix” rising up from the ashes.
Federal Reserve Calls for Bank Stress Test
Can the nation’s 30 largest banks withstand a severe recession in the U.S. and other major economies? The Federal Reserve is calling for stress tests to determine whether the banks could weather a 6.1 percent decline in U.S. gross domestic product in the first quarter of 2013 and unemployment rising as high as 12.1 percent in the second quarter of 2014, according to Bloomberg News. The test would also consider five consecutive quarters of declines in real disposable income and a 21 percent drop in home prices from the third quarter of 2012 to the first quarter of 2015. The 19 largest banks, including Citigroup Inc., JP Morgan Chase & Co. and Bank of America Corp. will be tested by the Fed, and the remaining 11 firms will submit their test results to the central bank. The scenario is not a forecast, but is designed to test the strength and resilience of financial institutions.