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VOL. 6 | NO. 46 | Saturday, November 09, 2013

Daily Digest

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Fred’s Key Sales Metric Edges Higher for October

Discount store operator Fred’s Inc. said Thursday that sales at stores open at least a year rose 0.8 percent in October.

The company also lowered the high end of its third-quarter earnings forecast, citing its October sales performance.

Total revenue for the four weeks ended Nov. 2 climbed 2 percent from last year, to $143.4 million.

CEO Bruce Efird said in a statement that bad weather near Halloween hurt sales and shoppers clamped down on their spending during the recent federal government shutdown. He noted that while general merchandise sales were sluggish, pharmacy sales were strong. The company also had solid performances from reconfigured departments such as auto & hardware.

For the third quarter, Fred’s sales at stores open at least a year rose 1.4 percent, while total revenue increased 2 percent to $460.5 million. Wall Street, on average, was expecting sales for the quarter of $458 million, according to FactSet.

Year-to-date sales at stores open at least a year climbed 1.1 percent. Total revenue rose 2 percent to $1.44 billion.

Fred’s now expects third-quarter earnings to be up 5 percent to 10 percent from a year earlier. Based on the prior-year period’s earnings of 18 cents per share, that implies about 19 cents to 20 cents per share. Its prior guidance was for 19 cents to 23 cents per share.

Analysts, on average, forecast earnings of 22 cents per share.

VESTA Home Show Begins Saturday

This West Tennessee Home Builders Association is launching the VESTA Home Show Saturday, Nov. 9.

This year’s home show, which runs through Dec. 1, features six homes, built by Bryce Homes, Ruch Builders, The Dave Moore Cos., D&D Custom Homes, David Clark Construction LLC and Darin K. Halford.

The show will be located at St. James Place, a subdivision on Forest Hill-Irene Road in Germantown that was also the site of last year’s show.

The West Tennessee Home Builders Association has partnered with Neighborhood Christian Centers of Memphis for this year’s show.

General admission tickets are $12. Tickets for individuals who are 60 and older cost $10, while tickets for ages 7 to 14 are $5.

For more information, visit www.mahba.com/vesta or call 756-4500.

Visible Music College Expands Leadership

Visible Music College has a new vice president of academics.

Corey Latta will oversee all aspects of academics for the college, including hiring faculty and advancing academic programs. Latta also will teach courses in English and theology.

Latta holds a Bachelor of Arts in biblical studies from Crichton College, a Master of Arts in New Testament studies from Harding School of Theology, a second Master of Arts in English from the University of Memphis and a doctorate from the University of Southern Mississippi, according to Visible Music College.

Martin Institute Screens Education Documentary

The Martin Institute for Teaching Excellence will present a free screening Saturday, Nov. 9, of the film “The Hobart Shakespeareans.”

The documentary, to be shown at the Malco Paradiso theater at 10 a.m., chronicles how teacher Rafe Esquith introduced Shakespeare to students at a Los Angeles school in a low-income neighborhood where English is a second language for many students, and the impact it had on their achievement.

The film also includes the reaction to the students’ work from Shakespearean actors.

Registration at martininstitute.org is required to reserve a seat.

Tennessee Leads Nation in Academic Growth

A new report shows Tennessee students are leading the nation in academic growth.

Commonly known as “The Nation’s Report Card,” the National Assessment of Educational Progress assesses students in fourth- and eighth-grade reading and math. The report released Thursday shows Tennessee students had the largest growth of any state from 2011 to 2013, with a 22-point growth across all subject areas. The next closest state in growth was Indiana with 15.

For fourth-grade students, Tennessee went from 46th to 37th in math and from 41st to 31st in reading.

State officials say the improvement is partially due to education reforms over the last few years including a tougher teacher evaluation process.

30-Year Mortgage Rate Averages 4.16 Percent

Average U.S. rates on fixed mortgages rose slightly last week but remained near historically low levels.

Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year loan increased to 4.16 percent from 4.10 percent last week, which was the lowest level in four months. The average on the 15-year fixed mortgage rose to 3.27 percent from 3.20 percent.

Rates have been falling since September when the Federal Reserve surprised investors by continuing to buy $85 billion a month in bonds. The purchases are intended to keep long-term interest rates low.

Slower hiring in recent months has many analysts predicting that the Fed will maintain the current pace of the bond purchases into early next year, which should keep mortgage rates low for the time being.

The recent drop in mortgage rates could help boost home sales, which slowed in September after rates reached their highest averages in two years.

Economy Expands in Third Quarter

The U.S. economy expanded at a 2.8 percent annual rate from July through September, a surprising acceleration ahead of the 16-day partial government shutdown. But much of the strength came from a buildup in company stockpiling.

Home construction also rose, and state and local governments spent at their fastest pace in four years. But businesses spent less on equipment, federal spending fell and consumers spent at a slower pace. All are cautionary signs for the final three months of the year.

Overall, growth increased in the third quarter from a 2.5 percent annual rate in the April-June period to the fastest pace in a year, the Commerce Department said Thursday.

The third-quarter growth was nearly a full percentage point stronger than most economists had predicted. Analysts noted that much of the unforeseen strength came from a buildup in company inventories. That suggests that businesses overestimated consumer demand.

Restocking contributed 0.8 percentage point to growth – double its contribution in the second quarter.

Consumer spending weakened to a 1.5 percent annual growth rate from a 1.8 percent rate in the previous quarter. It was slowed by flat spending on services. This category includes everything outside manufacturing and makes up about two-thirds of all purchases. One reason was a steep drop in utility spending, possibly because of an unseasonably cool summer.

Diamond Merging with Roberts Truck Center

The Diamond Cos., already one of Memphis’ biggest privately owned companies, is about to get bigger.

Diamond, a holding company for International Truck and IC Bus dealerships in Arkansas, Kansas, Missouri and Tennessee, will merge Jan. 1 with Roberts Truck Center LLC, a holding company for truck and bus dealerships in Kansas, New Mexico, Oklahoma and Texas.

The new company will have revenues approaching $1 billion, which officials said would provide “a greater potential for improved financial strength” through economies of scale.

Once the merger of the two family-owned firms is complete, the company will employ 1,300 people at 29 locations in 26 markets. The new enterprise, which will be named and branded before the Jan. 1 effective date, will be a privately held company. Key principals from each firm will remain in their leadership positions, and corporate functions of the new entity will be directed from several locations.

Principals of the new firm are Richard Sweebe, president and CEO of the Diamond Cos.; Blaine Roberts, president of Roberts Truck Center; and Blair Roberts, vice president of Roberts Truck Center.

County Pension Fund Value Keeps Growing

The value of the pension fund that pays benefits to Shelby County retirees is as high as it’s been in six years, new figures show.

The fund’s value climbed to nearly $1.06 billion in September, up from $1.02 billion in August. The last time the fund was higher than September’s total was in October 2007, when the fund topped $1.08 billion.

Domestic equity gains, attributable to a robust stock market, are part of the reason why. The domestic equity component of the portfolio is up 23.3 percent year to date.

Council Approves Wastewater Fix Funding

The Memphis City Council approved $24.8 million in funding Tuesday, Nov. 5, to rehabilitate the city’s wastewater collection system to meet terms of a consent decree with the U.S. Environmental Protection Agency.

The decree settles claims of pollution on the Mississippi River the federal agency filed against the city. The funding is financed through a state revolving loan fund and is to be paid back from the city’s sewer fund.

In planning and zoning items, the council approved the Overton Square North planned development at North Cooper Street and Court Avenue, with conditions that any retail business operating there will close by 9 p.m.

The council also approved a funeral home at Knight Arnold and Mendenhall roads. And it approved a daycare center at 1135 Winchester Road at Twinkletown Road but restricted it to no more than 30 children. A council vote was delayed for two weeks on a commercial retail development by Crosstown Arts LLC at 495 Watkins St. at Autumn Road.

Orion Recognized for Marketing Efforts

Memphis-based Orion Federal Credit Union has been recognized as among the best in credit union marketing worldwide by the Credit Union Executives Society.

The recognition was via the society’s annual Golden Mirror Awards competition.

Out of 426 entries, Orion was awarded the GMA Golden Shoestring, one of four top honors, for a successful marketing piece within the constraints of a shoestring budget.

Gauge of Economic Health Rises 0.7 Percent

A gauge of the U.S. economy’s future health rose solidly in September, suggesting the economy was making gains before the government shut down for 16 days.

The Conference Board said Wednesday its index of leading indicators rose 0.7 percent in September to a reading of 97.1. That follows a similar gain in August and marked the fifth increase in six months.

The index is designed to signal economic conditions over the next three to six months. It is composed of 10 indicators, most of which have already been released individually.

In September, the index rose largely because unemployment benefits fell, credit conditions improved, manufacturing orders rose and the gap between short- and long-term interest rates widened sharply.

Michael Englund, an economist at Action Economics, said that nothing in the leading index altered his view that overall economic growth is stuck at a modest annual rate of around 2 percent through the rest of this year.

Still, Conference Board economist Ken Goldstein said the September performance was an indication that the economy was expanding modestly and possibly gaining momentum before the shutdown.

Agency Warns Mississippi About Bond Rating

The Fitch credit rating agency has downgraded Mississippi’s bond rating outlook from stable to negative.

The state’s bond rating remains AA+, only one notch below the highest AAA level, but the agency warns the rating could be lowered unless officials take steps to shore up finances. A lower bond rating would make it more expensive for state government to borrow money.

The agency says the revised outlook reflects Mississippi’s slow recovery from the recession and continued use of one-time money to cover recurring government expenses. It says poverty and low education levels hurt Mississippi.

Fitch is one of the three leading U.S. credit rating agencies, along with Standard & Poor’s and Moody’s Investors Service.

Derwin Appointed Terminix President

Bill Derwin, vice president of the Otis Elevator division of United Technologies Corp., is the new president of the Terminix division of Memphis-based ServiceMaster Co.

ServiceMaster CEO Robert Gillette announced the hiring of Derwin Monday, Nov. 4.

Derwin starts Monday, Nov. 11, at Terminix, where Larry Pruitt has been interim president of the pest control provider since March. Pruitt becomes chief operating officer at Terminix in the transition, which is the latest change among the residential and commercial services offered by ServiceMaster since Gillette became ServiceMaster CEO this past June.

Memphis Indie Holiday Market Slated for Nov. 16

The first Memphis Indie Holiday Market is happening next week.

Anna Avant of Hoot-Louise and Brit McDaniel of Paper & Clay announced the new event, which will be held Nov. 16 from 10 a.m. to 2 p.m. in the lot behind Hoot-Louise’s Downtown Memphis store, 109 G.E. Patterson Ave.

Vendors at the market will include Muddy’s Bake Shop, Amelia Presents, The End of All Music, Memphis Mean Time, Paper & Clay and Question The Answer.

Gift wrapping will be available for a donation to Evergreen Montessori.

Bartlett, Collierville Named Good Places for Business

Bartlett and Collierville recently ranked high on a list of cities for jobseekers in Tennessee.

Bartlett was named the best town in the state for jobseekers, while Collierville came in third place, according to a survey from the NerdWallet website. NerdWallet developed the list by measuring the growth in each city’s working-age population, median household income and cost of unemployment.

According to NerdWallet, Bartlett saw a 13.9 percent increase in the working-age population between 2009 and 2011, while the median household income was $75,988. Collierville witnessed a 9.1 percent spike in the working-age population, and median household income weighed in at $102,298.

View the full report at www.nerdwallet.com/blog/2013/best-places-tennessee-job-seekers.

 

Marston Group Moves to East Memphis

The Marston Group PLC accounting firm has relocated to 1661 International Drive in East Memphis from 6055 Primacy Parkway.

The firm’s new digs are in The Colonnade, an 89,000-square-foot, four-story building, where the firm will be on the second floor.

The Marston Group was founded in 1985.

US Home Prices Rise Slightly in September

A measure of U.S. home prices rose only slightly in September from August, a sign that prices are leveling off after big gains earlier this year.

Real estate provider CoreLogic said Tuesday that home prices increased 0.2 percent in September from the previous month. That’s sharply lower than the 0.9 percent month-over-month gain in August and well below the 1.8 percent increase in July.

Prices still rose 12 percent in September compared with a year ago.

Higher mortgage rates and steady price increases began to slow home sales in September. As a result, price gains have cooled off.

Mortgage rates are still very low. And the average rate on a 30-year fixed loan has fallen to 4.1 percent in the past month, down from a two-year high of nearly 4.6 percent over the summer.

Many economists expect the housing recovery to continue, though with slower gains in sales. Still, the spike in rates over the summer has weighed on the market. A measure of signed contracts to buy homes fell 5.6 percent in September to the lowest level in nine months.

There is generally a one- to two-month lag between a signed contract and a completed sale. The sharp drop in September suggests final sales will decline in the coming months.

Kinard Elected President of State Attorneys Association

Christy Kinard, governmental affairs and professional standards director for the Memphis Area Association of Realtors, has been elected president of the Tennessee County Attorneys Association.

Kinard, who joined MAAR last January, is the first woman to hold the position since the TCAA’s creation in 1985.

Previously, Kinard served as the assistant county attorney for Shelby County. She worked 12 years for Shelby County government, serving as assistant county attorney since 2006. From 2008 to 2011, Kinard was an attorney and parliamentarian for the Shelby County Commission.

Kinard also volunteers with Memphis Area Legal Services and is a candidate for the Memphis Bar Association board of directors.

Hudson Sets MATA Retirement Date

William Hudson Jr., president and general manager of the Memphis Area Transit Authority for 20 years, will retire in January.

Hudson announced his long-anticipated retirement date at last week’s meeting of the transit authority board.

When A C Wharton Jr. was elected Memphis mayor in 2009, Hudson had indicated he wanted to serve two more years at the head of the city bus system and then retire. Since then, the MATA board has passed a series of resolutions extending Hudson’s contract for six months at a time.

Hudson began his career with the transit authority 49 years ago as a bus driver.

Iberiabank Expands Local ATM Presence

Iberiabank now has seven branded ATMs in Rite Aid pharmacies in Memphis through its partnership with Payment Alliance International, a leader in retail ATM solutions.

PAI owns and operates the ATM placements, and Iberiabank cardholders can now make transactions at those ATMs without incurring surcharges.

Greg Smithers, Iberiabank’s Memphis market president, said the newly branded ATMs are one piece in a larger growth strategy to serve the Memphis market by providing clients with greater access to banking services in a variety of convenient locations.

The ATMs are at 4642 Quince Road, 7570 Farmington Ave. in Germantown, 3500 Ramill Road, 2670 Frayser Blvd., 4212 Elvis Presley Blvd., 1810 Union Ave. and 1780 Germantown Parkway.

Lawmakers to Review Textbook Selection Process

Tennessee lawmakers are holding hearings this week to review the state’s textbook selection process.

The Senate Education Committee and the Senate Government Operations Committee will hold the hearings jointly on Monday and Tuesday.

Lawmakers say the hearings are intended to seek clarity regarding the structure and function of the Tennessee Textbook Commission.

The commission recently came under fire by a group of parents for having adopted textbooks containing alleged inappropriate language and a controversial interpretation of historical facts.

The panel is composed of 10 members whose responsibility is to recommend an official list of textbooks for approval by the State Board of Education.

Local school systems choose which textbooks to adopt from the list for a six-year period.

Report: Arkansas Revenue Remains Up in October

Arkansas’ October tax revenues beat expectations and those of the same month last year, although they may not reflect yet the impact of last month’s partial federal government shutdown on state coffers, finance officials said Monday.

The state Department of Finance and Administration reported that Arkansas’ net available revenue for October totaled $372.8 million, which was $17.2 million more than October 2012 and $8.1 above forecast. Arkansas’ revenue for the fiscal year that began July 1 total $1.6 billion, which is $37.8 million ahead of forecast.

“There’s nothing out there that’s really dramatic going up or down,” DFA Director Richard Weiss told reporters.

The department said October’s figures were boosted by gains in income tax collections that offset a shortfall in revenue from sales tax collections. Individual income tax collections totaled $226.4 million for the month, which was $8.3 million more than in October 2012 and $3.2 million above forecast. Corporate income tax collections totaled $25.6 million, an increase of $3.3 million above last year and $2.6 million above forecast.

Sales tax collections totaled $171.8 million for the month, which was $600,000 more than the previous October but $6.8 million below forecast.

US Factory Orders Rise 1.7 Percent in September

Orders to U.S. factories rose in September on a big jump in commercial aircraft demand. But businesses cut back sharply on machinery and other goods that signal their confidence to expand, signs of slower economic growth.

The Commerce Department said Monday that factory orders increased 1.7 percent in September from August. That followed a 0.1 percent decline in August and a 2.8 percent plunge in July.

The September gain was driven by a 57.7 percent jump in demand for aircraft.

But so-called core capital goods, which include machinery and electronics, fell 1.3 percent in September. And demand for machinery plummeted 23.6 percent, with big declines in construction machinery, electric turbines and generators.

The decline suggests businesses may have been worried about the economy before the 16-day partial government shutdown, which began on Oct. 1.

Economists pay close attention to core capital goods.

They are viewed as a better gauge of companies’ plans to invest because they exclude more volatile orders for aircraft and defense equipment. The decline was the second in three months and points to weaker activity at factories in the July-September quarter.

Manufacturing Expands at Best Pace in 2.5 Years

U.S. factory activity expanded in October at the fastest pace in 2.5 years, suggesting that the 16-day partial shutdown of the government had little effect on manufacturers.

Instead, overseas demand and healthy U.S. auto sales appear to be supporting factory output. The housing recovery is also lifting the furniture and wood products industry despite a recent slowing in home sales.

“We’ve become accustomed to the way Washington operates in the past couple of years and assume that it will get resolved eventually, however painfully,” said Bradley Holcomb, head of the survey committee of the Institute for Supply Management, a trade group of purchasing managers that on Friday reported a solid manufacturing figure for October.

The ISM’s manufacturing index rose to 56.4 from 56.2 in September. A reading above 50 indicates growth.

Factories also expanded in Europe this month, though at a slightly slower pace, according to surveys in that region. Manufacturing indexes have all picked up in China, Japan, and South Korea.

The overseas strength is boosting demand for U.S. factories. A measure of export orders jumped to its highest level in nearly a year and a half in October, the ISM report said.

“The outlook for manufacturing looks far more constructive now than it did over the past several months, in light of the improving global backdrop,” said Michael Dolega, an economist at TD Economics.

U.S. factory activity has now risen at an increasingly fast pace for five straight months, according to the ISM’s index.

Report Lauds Tennessee for Child Screenings

A recent report shows Tennessee is leading most states when it comes to screening low-income children for developmental issues.

The Tennessee Commission on Children and Youth released the report by the Annie E. Casey Foundation on Monday.

According to the report, only four states are screening more low-income children for such issues.

It says addressing problems earlier costs less and provides the opportunity to intervene before those problems escalate.

The report stresses providing children with the services and support they need for cognitive, social and emotional development during the first eight years of their lives.

It calls that time period foundational for assuring success in school and life.

Wal-Mart Kicks Off Holiday Shopping Online

Wal-Mart Stores Inc. is upping the ante on holiday shopping.

The world’s largest retailer is pulling forward by nearly a month seven big deals on items such as TVs and tablets that were originally reserved for the day after Thanksgiving and so-called Cyber Monday.

Shoppers were able to purchase the items online starting shortly after midnight Friday. At the same time, Walmart.com began pushing another 300 holiday deals on its website, from toys to home decor.

The seven deals include a 42- inch JVC LED TV for $299, a savings of 36 percent, and a 10-inch XELIO tablet for $49, a 51 percent discount. Last year, Wal-Mart offered about 100 holiday deals online right after Halloween, but the offerings were focused on home decor.

The move comes as Wal-Mart, like others, have seen customers scale back purchases heading into the holiday season, which accounts for anywhere from 20 percent to 40 percent of retailers’ annual revenue. While the job and housing markets are recovering, the improvements haven’t been enough to sustain increased spending among shoppers.

Automakers Post Big October Gains

Chrysler, Ford, General Motors, Nissan and Toyota all posted October sales increases as the U.S. auto industry rebounded from a lackluster September.The gains signal that automakers made it through the 16-day partial government shutdown relatively unscathed. All automakers reported October sales on Friday.

Ford Motor Co.’s U.S. sales jumped 14 percent last month on strong demand for the F-Series pickup and the Fusion sedan. F-Series sales were up 13 percent to 63,803, its sixth-straight month of sales above 60,000. Sales of the Fusion midsize car jumped 71 percent over last October, when the old model was being phased out.

At General Motors Co., sales rose 16 percent as its full-size pickup trucks rebounded from a poor showing in September. The Chevy Silverado, GM’s top-selling vehicle, posted a 10 percent increase to nearly 43,000, while the GMC Sierra pickup saw sales rise 13 percent to just over 16,500.

Nissan Motor Co. sales rose 14.2 percent to more than 91,000, an October record for the company. Nissan Division sales were up just over 15 percent, while the company’s Infiniti luxury brand posted a 4.5 percent increase from a year ago. Toyota sales rose nearly 9 percent last month to nearly 167,000 vehicles despite headwinds from the government shutdown, the company said.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 81 217 5,290
MORTGAGES 94 276 6,985
FORECLOSURE NOTICES 0 50 1,606
BUILDING PERMITS 384 712 12,691
BANKRUPTCIES 66 241 5,541
BUSINESS LICENSES 27 85 2,146
UTILITY CONNECTIONS 52 234 7,292
MARRIAGE LICENSES 10 53 1,511

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