Wal-Mart to eliminate health insurance coverage for some of its part-time employees, Yum Brands cuts its profit outlook, and "Aunt Jemima" heirs sue Quaker Oats for a $2 billion stack. Read about these and other of the morning's top business news stories.
Wal-Mart to Eliminate Health Insurance Coverage for 5 Percent of Workforce
Wal-Mart Stores Inc., the world’s largest private employer, plans to eliminate health insurance coverage for its part-time U.S. employees who work less than an average of 30 hours a week. The move, which affects 30,000 employees, goes into effect Jan. 1, 2015. Target and Home Depot are among others that completely eliminated health insurance benefits for part-time employees. Wal-Mart plans to use a third-party organization to help part-time workers find insurance alternatives: Wal-Mart employs about 1.4 million full- and part-time U.S. workers. It is among the last of its peers to cut health insurance for some part-time workers, the Associated Press reports.
Credit Card Borrowing Down in August
U.S. consumers increased their borrowing in August in the category that covers auto loans and student loans but cut back on their credit card borrowing, the Federal Reserve reported Tuesday. Overall borrowing rose $13.5 billion in August, pushing total consumer debt to a record level of $3.25 trillion. The category that includes auto loans and student loans increased $13.7 billion in August while the category that covers credit card debt declined by $208 million, the first drop in this area in six months. Analysts view rising levels of consumer borrowing coupled with strong employment growth as a good sign that consumers are more confident about taking on debt to finance purchases. Consumer spending accounts for 70 percent of economic activity.
Yum Cuts Profit Outlook
Yum Brands, which owns KFC, Pizza Hut and Taco Bell, cut its profit outlook for the year on Tuesday, citing the latest food scare in China that pummeled sales at its flagship KFC chain.The Louisville-based company expects earnings per share to rise between 6 and 10 percent from a year ago, instead of the growth of at least 20 percent it previously forecast. During the quarter, KFC’s sales fell 14 percent at established locations in China, while Pizza Hut’s sales dropped 11 percent in the wake of a TV report last summer that showed one of its suppliers using expired meat. In the U.S., Taco Bell, which introduced a breakfast menu, saw sales rise 3 percent at established locations, while KFC posted a 2 percent rise in sales. Pizza Hut sales fell 2 percent. Yum said it earned $404 million for the quarter.
Goldman Sachs Ordered to Pay LIA Legal Costs
A London High Court has ordered Goldman Sachs to pay the Libyan Investment Authority (LIA) $321,820 in legal costs as part of a lawsuit brought by the fund over $1 billion in trades that ended up worthless, Reuters reports. The LIA filed the suit against Goldman in January, alleging the Wall Street investment bank exploited a position of trust by encouraging the fund to invest in a series of equity derivatives trades that expired as worthless in 2011. Goldman intends to contest the suit. This week marked the first meeting in court between the two parties to discuss costs incurred in relation to the abandoned application, among other issues. The LIA had originally sought $1 million in costs and had asked for 50 percent of that sum to be paid within 14 days. The judge awarded an interim payment of 200,000 pounds to be paid within two weeks. The lawsuit will now proceed to trial in 2016.
Aunt Jemima Heirs Seek $2 Billion Stack in Lawsuit
Nancy Green, born a slave in Kentucky in 1834, became the first face of Aunt Jemima in 1980. More than a century later, a lawsuit claims that Green’s heirs as well as the descendants of other black women who appeared as Aunt Jemima deserve $2 billion and a share of future revenue from the popular pancake brand, USA TODAY reports. Two great-grandsons of Anna Short Harrington claim that she and Green were key in formulating the recipe for the nation’s first self-rising pancake mix. Quaker Oats, the current owner of the brand, counters that Aunt Jemima is an image never meant to depict a particular person. Harrington’s descendants claim that contracts exist between the models and the company, but none have been located.
Forecast: Milder Heating Bills This Winter
The Energy Department’s annual prediction of winter heating costs forecasts lower heating bills because last year’s severe and prolonged conditions are unlikely to reoccur. Persistently low temperatures across the Midwest, South and East forced people to crank up the heat, which in turn jacked up the price of some fuels, especially propane. This year, milder temperatures should reduce homeowners' fuel use and propane and heating oil prices should be lower. Some customers could see savings of nearly $800 on their heating bills, according to the Energy Information Administration. Gasoline prices are expected to soon drop below $3 per gallon on average in up to 30 states.