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VOL. 123 | NO. 233 | Friday, November 28, 2008

Daily Digest

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Car Smart Memphis Files Permit for Lot

Car Smart Memphis LLC has bought a 2-acre parcel at 2095 Covington Way in Raleigh and filed a building permit for a new sales office and car lot on the site.

The parcel is Lot 1 of the 5-acre Covington Pike Business Center Subdivision. That subdivision formerly was part of the 17.29-acre Covington Way Distribution Center before it was subdivided.

Car Smart Memphis filed a $334,500 permit application with the city-county Office of Construction Code Enforcement to build a sales office and car lot on the property, which it bought in October for $224,770 from Covington Way LP and Property Associates LLC.

The company then filed a $436,000 construction loan through First Alliance Bank for the project. Greg Pilcher Construction Co. is listed as the contractor of record for the project.

Car Smart Memphis principal Stacey Day was not available for comment by press time.

Source: The Daily News Online & Chandler Reports

Fred’s Q3 Profit Rises 32 Percent on Cut Expenses

Memphis-based discount retailer and pharmacy chain Fred’s Inc. reported Wednesday its third-quarter profit rose 32 percent, as the company cut its expenses.

The company earned $6.1 million, or 15 cents per share, in the three months ended Nov. 1, compared to profit of $4.6 million, or 12 cents per share, in the year-ago period. Sales fell less than 1 percent to $418 million from $419.9 million.

Analysts polled by Thomson Reuters expected profit of 15 cents per share on $418.7 million in revenue.

Same-store sales rose 1.4 percent in the quarter. Same-store sales, or sales at stores open at least a year, is an important retail performance indicator because it measures sales at existing stores rather than newly opened ones.

In the quarter, Fred’s opened one store and one pharmacy. The company operates 658 discount general merchandise stores.

Buckeye Technologies To Lower Output

Specialty fibers maker Buckeye Technologies Inc. reported Wednesday it will reduce production at two cotton specialty fiber facilities because of softening demand.

Buckeye officials said the company will take downtime at its Americana Cotton Specialty Fibers facility in Brazil and reduce output by one shift at its Memphis Cotton Specialty Fibers facility.

The key markets for these two facilities are experiencing weak demand for nitrates, plastics, paper and the thin films used in liquid crystal displays.

The Americana facility will be idle for all of December and the Memphis facility will operate at about two-thirds capacity.

“Both facilities have been running below capacity due to raw material constraints for the past two years, but the December downtime and shift reduction is due to reduced demand and the economic slowdown,” Buckeye officials said in a report.

The company forecast earnings per share for its fiscal 2009 second quarter, which ends in December, of 12 cents to 15 cents.

Cohen Recognized As Influential Jewish-American

U.S. Rep. Steve Cohen, D-Memphis, has been recognized as one the 50 most influential Jewish-Americans in the “Forward 50” special edition of Jewish newspaper The Forward.

Among the other notables are President-Elect Barack Obama’s new chief of staff, Rahm Emanuel; the Obama campaign’s national finance officer, Penny Pritzker; comedians Jon Stewart and Sarah Silverman; actor Adam Sandler; U.S. Rep. Barney Frank, D-Mass.; and U.S. Sen. Joe Lieberman, I-Conn.

New Jobless Claims Drop From 16-Year High

New jobless claims fell more than expected last week from a 16-year high, the government reported Wednesday, though they remain at elevated levels due to the slowing economy.

The Labor Department reported that initial requests for unemployment benefits fell to a seasonally adjusted 529,000 from the previous week’s upwardly revised figure of 543,000. That is lower than analysts’ expectations of 537,000.

Despite the improved number, initial claims remain at recessionary levels. The four-week average, which smooths out fluctuations, rose to 518,000, its highest level since January 1983, when the economy was emerging from a steep recession.

The number of people continuing to claim unemployment insurance also dropped unexpectedly to 3.96 million, down from the previous week’s 4.02 million, which was the highest level in 25 years. The labor market has grown by about half since 1983.

Economists consider jobless claims a timely, if volatile, sign of how fast companies are laying off workers. Employees who quit or are fired for cause are not eligible for benefits.

The economy has been hit hard in recent months by the housing slump and the broader financial crisis, which have led consumers and businesses to cut back on spending.

The Commerce Department reported Wednesday that consumer spending plunged by 1 percent in October, even worse than the 0.9 percent decline that had been expected. Consumer spending accounts for two-thirds of total economic activity.

Orders to U.S. factories for big-ticket manufactured goods also plunged last month by the largest amount in two years. Orders for durable goods dropped by 6.2 percent, more than double the decline economists expected. The Commerce Department report showed widespread declines throughout manufacturing led by decreases in autos and airplanes.

Demand for autos fell by 4.5 percent last month, reflecting the hard times facing U.S. automakers. Orders for commercial aircraft fell by 4.7 percent.

The nation’s unemployment rate, meanwhile, is 6.5 percent, a 14-year high, and is expected to climb. Employers have cut payrolls every month so far this year. The total number of unemployed in October was just over 10 million, the most in 25 years.

Jim Kyle Elected Democratic Minority Leader

Members of the state Senate Democratic Caucus have elected Jim Kyle of Memphis to be their minority leader.

Also earlier this week, Sen. Roy Herron of Dresden was elected caucus chairman, Sen. Doug Jackson of Dickson was re-elected as vice chairman, and Sen. Andy Berke of Chattanooga was chosen to fill the positions of secretary and treasurer.

Republicans hold a 19-14 majority in the Senate.

Higher Ed Officials Undecided on Tuition Hike

Higher education officials facing a massive state budget shortfall said they will seek areas to make cuts before proposing a tuition increase.

The heads of the Tennessee Board of Regents, the Tennessee Higher Education Commission and the University of Tennessee met with Gov. Phil Bredesen earlier this week as he concluded his budget hearings.

Bredesen, who earlier this year requested 3 percent cuts from all state departments, is asking each department for reductions of as much as 15 percent to take care of a shortfall that could potentially reach $800 million this year.

The governor told the higher education officials he’d like to have a plan of implementation from them as early as next month because there won’t be any new money available to them July 1. Higher education accounts for about $1.2 billion of the state budget, and Bredesen anticipates cutting roughly $150 million from it.

“I think they have some work to do to come to grips with what it is they’re going to have to do here,” the governor said. “I just tried to use the hearings to hear them out politely, but also push them and say ‘I think you’ve got to think outside the box’” when making cuts.

The officials say making the cuts will be tough, but they don’t want to burden students with an enormous tuition hike. They say it’s too early to give a proposed figure on what any tuition increases might be.

“We don’t know the magnitude of what we’re going to see,” said UT president John Petersen.

Bredesen also said he doesn’t want students to suffer.

“I know tuition is going to have to be a part of this, but you don’t need to be riding on the backs of these students,” he said. “Let’s make some hard decisions internally.”

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