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VOL. 6 | NO. 24 | Saturday, June 8, 2013

Daily Digest

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Fred’s Key Revenue Metric Falls 0.5 Percent for May

Discount retailer Fred’s Inc. said Thursday its May revenue at stores open at least a year fell 0.5 percent, as unusually cool weather continued to reduce demand for summer items.

The drop was smaller than Wall Street expected.

Analysts polled by Thomson Reuters expected a revenue decrease of 0.8 percent.

The metric is a key measure of a retailer’s health, because it excludes revenue at stores that recently opened or closed.

Total sales for the four-week period ended June 1 increased 0.2 percent to $152.4 million from $152.1 million a year ago.

CEO Bruce Efird said unseasonal cool and wet weather in May continued to reduce sales of lawn and garden items, summer toys and other seasonal merchandise.

Sales at the Memphis-based company’s pharmacy department also were hurt by the continued shift toward generic drugs, he said.

For the first four months of the year, revenue at stores open at least a year fell 1.1 percent, while total sales increased 0.2 percent to $653.9 million.

Fred’s operates 715 stores, including 21 franchised stores, in the southeastern U.S.

County Pension Fund Hits Another Record High

The value of the pension fund that pays benefits to Shelby County retirees is back up to a high not seen since 2007.

The portfolio size of the county’s retirement defined benefit plan stood at $1.02 billion in April. The last time the value was higher than that was in December 2007.

Also, the fund for each of the first four months of 2013 has surpassed the monthly values for each of the first four months of 2012.

A retirement fund official said the recent highs in the stock market partly explain the fund’s recent performance.

Mud Island Apartments Sell for $43.6 Million

A large apartment community on Mud Island has sold for $43.6 million. Riverset, a 500-unit apartment community constructed in 1988 and 1990, sold on May 31 for $43.6 million, or $87,200 per unit.

Blake Pera and Tommy Bronson III with CB Richard Ellis’ Memphis multifamily division represented the seller, Auction Street Associates LP, in the sale to TMF II Riverset LLC.

The property offers a wide range of amenities, including five pools, three tennis courts, a putting green and a racquetball court.

“Opportunities to acquire quality product downtown are rare, and Riverset was very well received by buyers recognizing the property’s truly special location and available upside,” said Pera, executive vice president with CBRE.

School Board to Meet on Cell Phones, Punishment

The countywide school board meets in special session Tuesday, June 11, to consider another slate of policies for the consolidated school district.

The slate includes recommendations from a board committee on the policies for cell phones and corporal punishment.

The committee this week recommended the school system go with a cell phone policy that permits students to have cell phones on campus as long as they are off and stored in lockers or other places approved by school administrators. The policy closely resembles Shelby County Schools policy. Memphis City Schools policy banned the phones from campuses whether they were on or off.

The committee recommendation on corporal punishment mirrors the outright ban on the punishment that Memphis City Schools adopted more than a decade ago.

US Unemployment Benefit Applications Fall to 346,000

The number of Americans seeking unemployment benefits fell 11,000 last week to a seasonally adjusted 346,000, a level consistent with steady job growth.

The Labor Department said Thursday that applications dropped from 357,000 the previous week, which was revised up from an initially reported 354,000. The less volatile four-week average rose 4,500 to 352,500.

Weekly applications are a proxy for layoffs. They have fallen 7 percent in the past six months and hit a five-year low of 338,000 in early May.

Still, layoffs are only half of an improving jobs picture. The other is hiring, and companies have been reluctant to rapidly create many more jobs.

On Friday, the government reports on May employment. Economists expect it will show that employers added 170,000 jobs last month. The unemployment rate is expected to remain a four-year low of 7.5 percent.

Economists were encouraged by the figures, which come after several tepid economic reports earlier this week.

More than 4.6 million Americans received unemployment benefits in the week ended May 18, the latest data available. That’s about 68,000 more than the previous week. The number of people receiving benefits briefly topped 11 million in 2010, the highest on record.

Council Mulls Exempting City Autos From Inspections

The Memphis City Council approved on the first of three readings Tuesday, June 4, an ordinance proposed by council member Lee Harris that would exempt Memphis vehicle owners from auto inspections when city funding for the emissions testing runs out at the start of the new fiscal year.

And the council approved on third and final reading another ordinance by Harris that updates a set of 20 regulations affecting bicyclists and pedestrians. It raises the fine for parking or driving a car on a sidewalk to $50.

A day after the Shelby County Commission transferred 9.5 acres of land in Cordova for Penny’s Fastbreak Courts, a children’s basketball complex bearing the name of former NBA and University of Memphis basketball star Penny Hardaway, the council transferred and appropriated $150,000 for architect engineering of the complex that had already been budgeted by the city. The $14 million complex is halfway to its goal of raising private funds that are the rest of the funding.

The council also delayed for a month action on a set of three ordinances sponsored by council member Kemp Conrad that bans pension double dipping and make other civil service reforms. Conrad is awaiting legal opinions from City Council attorney Allan Wade before he moves the items to third and final reading.

And the council approved its $3 million share of the $9 million replacement of the Raleigh-Millington Road Bridge over the Loosahatchie River. Another $5 million comes from state funding.

SunTrust Contributes $1 Million to Operation HOPE

SunTrust Banks Inc. is adding Operation HOPE financial counselors to select branches in Atlanta and Memphis as part of its ongoing efforts to promote financial well-being.

The company also will make a $1 million cash and in-kind contribution to fund the HOPE Inside program, beginning this fall with a pilot branch in each city.

Since its inception in 1992, Operation HOPE, a global nonprofit focused on financial dignity, has empowered more than 2 million individuals and directed more than $1.5 billion in private capital to low-wealth communities in the U.S.

227 Take BancorpSouth’s Early Retirement Offer

Of 418 employees who were eligible to participate in BancorpSouth Inc.’s voluntary early retirement program, which was offered to some employees as a part of the bank’s efforts to improve efficiency and operating performance, 227 have accepted the offer.

The bank announced the results Tuesday, June 4.

Once it’s fully phased in, the early retirement program will result in pre-tax savings of about $9 million for the bank.

Urban Land Institute to Host ‘Shifting Suburbs’

The Urban Land Institute will host a “Shifting Suburbs” program in Memphis.

The program, which is one of two national ULI events held in Memphis, will explore suburban infrastructure opportunities and challenges.

The June 13 event begins at 8:30 a.m. at Ducks Unlimited National Headquarters.

The event will spotlight how public and private sector stakeholders are working together to build and retrofit suburban place, and how infrastructure can be transformed and leveraged to support compact development. It will also tackle how local governments and regional coalitions can position themselves for compact growth. In addition, speakers and attendees will discuss what funding, financing and regulatory sources and tools are being used or are needed.

US Productivity Grew at Modest Annual Rate

U.S. worker productivity grew a modest amount from January through March after having declined in the previous quarter. Weak productivity growth could boost hiring if consumers and businesses spend more.

Productivity rose at a seasonally adjusted annual rate of 0.5 percent in the first quarter, following a 1.7 percent decline in the October to December period, the Labor Department said Wednesday.

The first quarter performance was revised down slightly from an initial estimate of a 0.7 percent first quarter increase. The revision reflected the fact that the government lowered its estimate of overall economic output in the first quarter from a rate of 2.5 percent down to 2.4 percent. Productivity is the amount of output per hour of work.

Labor costs actually fell in the January to March quarter, dropping at an annual rate of 4.3 percent after having surged at an 11.8 percent rate in the fourth quarter.

The trend in productivity has been fairly weak in recent years. For all of 2012, productivity rose just 0.7 percent, after an even smaller 0.6 percent rise in 2011.

Survey: US Service Firms Grow at Faster Pace

U.S. service firms grew at a faster pace in May, driven by a jump in new orders. But a measure of hiring showed companies added fewer jobs.

The Institute for Supply Management said Wednesday that its index of service-sector growth rose to 53.7 from 53.1 in April. Any reading above 50 indicates expansion. Last month’s figure is below the 12-month average of 54.4.

A measure of employment fell to 50.1 from 52, the lowest since last July. Service firms have been the main source of job gains in the past several months. Manufacturers have cut back sharply on hiring this year.

The new orders index rose last month, and a gauge of sales also increased.

Pierre Ellis, an economist at Decision Economics, said the slowdown in hiring could mean that “managers are not too confident that the business improvement will last.” Still, hiring may rebound if sales and orders remain healthy, Ellis added.

The survey measures growth at businesses that employ about 90 percent of the U.S. workforce, ranging from construction companies and health care firms to retail businesses and restaurants.

US Home Prices Jumped in April by Most in 7 Years

U.S. home prices soared 12.1 percent in April from a year earlier, the biggest gain since February 2006, as more buyers competed for fewer homes.

Real estate data provider CoreLogic says prices rose in April from the previous April in 48 states. Prices also rose 3.2 percent in April from March, much better than the previous month-to-month gain of 1.9 percent.

Prices in Nevada jumped 24.6 percent from a year earlier, the most among the states. California’s gain was next at 19.4 percent, followed by Arizona’s 17.3 percent, Hawaii’s 17 percent and Oregon’s 15.5 percent.

More people are looking to purchase homes. But the number of homes for sale is 14 percent lower than it was a year ago. The supply shortage has contributed to the price increases.

Rising home prices can help sustain the housing recovery. They encourage more homeowners to sell. And they spur would-be homeowners to buy before prices increase further.

Smith Joins Doug Carpenter Firm as Workflow Manager

Sandy Smith has joined Doug Carpenter & Associates, an advertising, PR and consulting firm.

She’s in the newly created position of workflow manager. As such, she’ll be responsible for the internal flow of work throughout the agency and will help the account management director in the day-to-day management of accounts.

Smith most recently was a senior specialist of brand management at St. Jude Children’s Research Hospital.

Commission OKs Sale for Penny Hardaway Courts

Shelby County Commissioners approved Monday, June 3, the transfer of nearly 10 acres of land in Cordova on the west side of Herbert Road at Fischer Steel Road to Gameday Health Kids Foundation as the location of “Penny’s Fast Break Courts Sports Facility” – the children’s basketball site named for NBA and University of Memphis basketball star Anfernee “Penny” Hardaway.

In other action, the commission approved $5.9 million in state transportation grant money to go toward the $9 million replacement of the Raleigh-Millington Road Bridge over the Loosahatchie River in North Shelby County.

The bridge replacement contract with Ford Construction Co. includes $2.9 million in city of Memphis funding the Memphis City Council was to vote on Tuesday in addition to $559,929 in county capital funding.

The commission also approved second reading of a set of three ordinances that would delay the start date of new seismic requirements for residential and existing buildings form July 1 to the end of 2013.

Several members of the West Tennessee Structural Engineers group spoke against a delay while Greater Memphis Chamber leaders urged the commission to approve the later effective date because of its expected impact on construction projects.

And the commission approved new memorandums of understanding with the cities of Millington and Arlington for Shelby County to provide emergency dispatching services for them.

Porter-Leath, whose mission is to help struggling children and families, is extending its reach into the community by opening a satellite location at Hickory Ridge Mall Towne Centre Community Services Plaza.

Porter-Leath will host an open house at the new location Wednesday, June 5, from 10:30 a.m. to 2 p.m.

“This partnership will allow Porter-Leath to reach underserved individual in a community that is seeing a vast increase in number of youth and senior citizens,” said Sean Lee, president of Porter-Leath.

A representative from Porter-Leath will be on hand varying days Monday through Saturday.

State Office Space Deadline Extended

Tennessee has pushed back the deadline for submitting proposals for leasing 100,000 square feet of office space to the state to July 2. The original deadline for proposals was May 16, which was then moved to June 3 and finally to July 2.

The state announced the change in dates on the fifth amendment for requests for proposals for the office space. The newest request for proposals says the state would post notice of winning bidders Aug. 19.

The state, following a local consultant’s recommendation, said it would vacate the Hill Building in Civic Center Plaza. Tennessee Gov. Bill Haslam said the roughly 900 workers there would be relocated Downtown.

The state’s search for 100,000 square feet of space is happening just as Pinnacle Airlines is vacating roughly 170,000 square feet at One Commerce Square.

Report: US Hasn’t Seen Expected ‘Great Recovery’

An economic forecast says the country’s expected “Great Recovery” hasn’t materialized and the economy’s fallen short of even normal growth.

The Los Angeles Times reports the gloomy picture appears in the quarterly UCLA Anderson Forecast released Wednesday.

It says that real gross domestic product growth – the inflation-adjusted value of goods and services produced – is well below the 3 percent growth trend of past recoveries. The forecast says the country isn’t creating enough good jobs.

However, the forecast also says a housing market recovery should boost the GDP over the next two years and bring down unemployment, falling to 6.9 percent next year.

Orion Federal Credit Union Taps General Counsel

Orion Federal Credit Union has named Stuart Harrington as its new general counsel.

Harrington, who was hired in 2010 to manage the credit union’s increased regulatory needs, is responsible for ensuring that Orion’s compliance program adheres to applicable procedures, laws, and regulations.

He is also responsible for researching federal and state lending regulations and assisting outside audits and examinations. In addition to compliance and legal matters, Harrington will oversee the human resources, fraud prevention, vendor management/strategic projects and facilities departments.

Tenn. 385/I-269 Corridor Meeting Set for June 13

The final public meeting in an economic development and environmental study of the proposed Tennessee 385/Interstate 269 corridor is scheduled for June 13 at 5:30 p.m. at Baker Community Center, 7942 Church Street, in Millington.

The hearing by the Memphis and Shelby County Office of Sustainability is to identify economic development opportunities and environmental issues specifically along a one-mile offset of the corridor that is in the Millington-North Shelby County area. At the hearing, there will be a presentation on both the opportunities and the issues.

Three Memphis Startups Chosen for Conference

Three startups from Memphis will have a presence at Southland, Launch Tennessee’s new conference highlighting Southern culture and technology that will be held in Nashville June 12-13.

The three are Kufikia, Screwpulp and Everly. Screwpulp is a book publishing startup, while Everly makes drink flavor packets and Kufikia is a code school for programmers.

Companies participating in the conference will vie for a $10,000 prize and the opportunity to be recognized as “Southland’s Most Innovative Startup.” Companies attending the event also will get to network with top venture capitalists and angel investors from Silicon Valley, the East Coast and the South.

US Construction Spending Up 0.4 Percent in April

Spending on U.S. construction projects rose in April despite weakness in residential projects and government spending. Construction spending rose 0.4 percent in April, compared with March, when spending fell a revised 0.8 percent, the Commerce Department reported Monday.

Construction activity has been volatile in recent months, falling by a record 4 percent in January, but rising in February only to drop in March.

Construction spending stood at a seasonally adjusted annual rate of $860.8 billion in April, 4.3 percent higher than a year ago.

In April, private residential construction edged down a slight 0.1 percent, reflecting a drop in renovation. Spending on both new single-family homes and apartments increased.

Nonresidential projects rose 2.2 percent in April but spending on government projects fell 1.2 percent.

The small dip in private residential activity was likely to be temporary given all the indications of a strong rebound in housing over the past year. The April level of residential activity at annual rate of $301.9 billion represented an 18.8 percent increase from a year ago, the biggest gain of any major category.

New Clothing Stores Open in Cooper-Young

Three new clothing stores are opening simultaneously in the Cooper-Young neighborhood: Addison, Wish and Langford Market. A grand opening ceremony was scheduled for Saturday, June 1.

Langford Market, at 2155 Central Ave., offers “carefully chosen, classically feminine clothing, accessories and gifts.” Wish, at 2157 Central Ave., describes itself as providing “whimsical and eclectic looks” for “style-savvy, price-conscious shoppers.” And Addison, at 2153 Central Ave., provides a wide range of clothing and artisan handmade jewelry to “mature and sophisticated” shoppers.

US Manufacturing Gauge Sinks to June 2009 Level

A measure of U.S. manufacturing fell in May to its lowest level since June 2009 as slumping overseas economies and weak business spending reduced new orders and production.

The Institute for Supply Management said Monday that its index of manufacturing activity fell to 49 last month from 50.7 in April. That’s the lowest level in nearly four years and the first time the index has dipped below 50 since November. A reading under 50 indicates contraction.

The ISM index had sunk during the recession to a low of 33.1 in December 2008. Since the recession ended in June 2009, it peaked at 59.6 in February 2011.

Monday’s report showed that a gauge of new orders fell to 48.8, the lowest in nearly a year. Production dropped to its lowest point since May 2009, and employment dipped.

Manufacturing has struggled this year as weak economies abroad have slowed U.S. exports. U.S. businesses have also reduced their pace of investment in areas such as equipment and computer software. At the same time, consumers are holding back on spending more for factory-made goods, possibly a result of higher Social Security taxes.

ArtsMemphis Honored With National Book Award

Wild Abundance Publishing, the publishing division of ArtsMemphis, was awarded a silver medal from the Independent Publisher Book Awards for its most recent book, “A Million Wings.”

The collection of essays and photographs features a dozen private duck clubs along the Mississippi Flyway in a coffee table-sized book format.

The award was presented Wednesday, May 29, during the Independent Publisher Book Awards banquet in New York. More than 5,200 publications were nominated for national IPPY Awards.

“A Million Wings” author Susan Schadt, who also is president and CEO of ArtsMemphis, says the publishing arm of the nonprofit organization helps fund “our city’s wonderful and ever-growing arts community.”

Evolve Adds Specialty Coffee to Customer Service

Evolve Bank & Trust has added a new product to its list of offerings for customers – coffee.

The bank has partnered with J. Brooks Coffee Roasters, a local company with a top-notch roast master. “We started this partnership,” the bank tells shareholders in its latest update letter, “because everything about Evolve – our people, our products, our branches – is about the experience. We will be serving the coffee in our local branches and making it available to our offices nationwide.”

The idea has been brewing, no pun intended, for a few years. The bank explains more on a dedicated website for the initiative, www.getevolved.com/coffee, saying that if there’s one thing bankers know besides finances, it’s coffee.

“For most of us, we’ve spent our entire careers drinking cups of mediocre office coffee while we knew something better was out there,” the bank writes on the website. “Then it hit us, why couldn’t that ‘better’ be brought inside?”

In other Evolve news, the bank’s first quarter income before taxes was nearly $1.3 million, up 163.8 percent from the same period in 2012. The bank also increased loan loss reserve by 86.2 percent.

Consumer Confidence Hits Six-Year High

A measure of U.S. consumer confidence jumped to its highest level in almost six years in May, lifted by rising home prices and record stock market gains. Greater confidence could help revive spending in coming months.

The University of Michigan said Friday, May 31, that its consumer sentiment index rose to 84.5 in May, up from 76.4 in April and the highest since July 2007.

A better job market contributed to the rise in consumer optimism. And for the first time in five years, more consumers said their finances had improved rather than worsened.

Households with income above $80,000 reported the biggest gain in confidence. That’s likely due to the disproportionate benefit upper-income households receive from stock price gains. But confidence improved for all groups.

PROPERTY SALES 50 389 12,758
MORTGAGES 21 248 8,003
BUILDING PERMITS 295 813 29,934
BANKRUPTCIES 35 164 6,064