With retailers still suffering from excessive inventories, the spring cleaning has begun.

Coming off the nightmare of fall’s early and aggressive markdowns, the first spring price cuts are already budding, particularly in the luxury tier and women’s categories where the cadence of deliveries is quicker than menswear. Last week alone, Bergdorf Goodman advertised up to 40 percent off on its contemporary floor, and Yves Saint Laurent sent an email invitation to customers to receive an "exclusive one-time discount" at any boutique in the U.S. and 50 percent off ready-to-wear and 30 percent off accessories Wednesday.

Sample sales are on the rise, too, with stores pushing back goods to vendors. And some retailers are utilizing sales tactics usually reserved for holidays and pre-Christmas. Last week, for example, J.C. Penney Co. Inc. ran two days of doorbusters including dresses, Arizona, and other private-label products, and a buy-one-get-one-for-88 cents deal on a host of items. Neiman Marcus Inc. has offered various incentives this season to members of its InCircle reward program, such as free lunch at restaurants in the store and $50 gift cards. The website has also been promoting free shipping through today. Macy’s Inc. ran a three-day fine jewelry sale with 30 to 50 percent off much of the assortment.

So-called "private" friends and family sales have taken a high profile. Saks Fifth Avenue staged one last week, and promoted it on the homepage of its website.

Nordstrom followed with a friends and family sale of its own, and this week, it’s Bloomingdales’ turn, offering 20 percent off almost all regular- and sale-priced purchases in apparel and home.

"People are going deeper, earlier," said Brendan Hoffman, president and chief executive officer of Lord & Taylor, characterizing the state of markdowns this season so far.

The situation has fueled speculation over when the major spring clearances will break and who will be the first out of the gate. Typically, department stores roll out spring clearances around Memorial Day, while higher-priced specialty chains pull the trigger around mid-May to make space for June’s pre-fall deliveries.

At Nordstrom, which clears a lot of merchandise through its extensive network of Rack outlets, a spokeswoman suggested the inventory situation was under control. "We continue to feel that we are appropriately managing our inventory and are getting ready for the women’s half-yearly sale, which is in May," she said.

Analysts and retailers expect clearances to surface before Mother’s Day, with stores currently grappling with spring orders written last year—before consumers really clamped down on spending—and trying to whittle inventories down in line with demand. "Historically, I would not have considered markdowns before the beginning of June," said Diane Levbarg, executive vice president of Missoni. "However, this year, while it’s still too early, I may reevaluate my strategy based on market conditions."

Aside from the rising unemployment rate and uncertainties about the economy, the late Easter and the late arrival of springlike temperatures to most of the country have contributed to disappointing apparel sales this season. In addition, push backs to vendors have sparked many more sample sales.

However, retailers and analysts contacted Monday emphasized that discounting hasn’t reached clearance proportions yet, and that when the clearances do break, they shouldn’t be anywhere as epic as the fall’s avalanche of price cuts.

"I don’t think that it’s anywhere close to the degree and depth of what was experienced in the fall," observed Arnold Aronson, marketing director of retail strategies for Kurt Salmon Associates. "There’s more of a gradual realignment of inventories to sales levels."

Spring markdowns and clearance tactics will include more retailer-vendor discussions than in the past, Aronson suggested. "There won’t be huge surprises, or unilateral kinds of decisions," he said. "At this point, it’s primarily first markdowns happening earlier than normal. Stores are not into clearance mode yet."

Jeffrey Kalinsky, founder of Jeffrey designer stores in New York and Atlanta, said he hasn’t taken "a single markdown" or run any promotions. Competitors have been taking markdowns since January, he said, adding, "A lot of people do promotions under the guise of ‘friends and family.’ No one has broken sale yet, to my knowledge."

"Normally, in a good year, you wouldn’t even be having this conversation" about markdowns, said one specialty store retailer. "It’s too early. It’s much, much, much too early. Nobody wants to be the first [to break price] because they’re terrified of what happened with Saks [last holiday]. There’s such a backlash because of markdowns taken last November that people don’t want to go on sale. Business is challenging and I’m waiting to see if it gets more challenging.

"Would I love to go on sale now?" asked the retailer. "Yes. Everybody has too much inventory. Nothing’s selling right now." 
Store executives differed on whether a "friends and family" event should be considered a sale. "I don’t see friends and family as a markdown," said a luxury retailer. "Saks’ friends and family offer is for 20 percent off. A sale is 40 percent off. To me, 20 percent is an hors d’oeuvre. It’s maybe an incentive. Everybody’s giving some type of incentive. They’re all doing something out the back door."

"Nobody is experiencing great business," said an owner of a fashion boutique. "What am I going to do if a huge retailer like Saks or Barneys [New York] does a major markdown again? It’s not easy out there. We’re not set up to do anything like promotions."

Stanley Korshak hopes to stick to its same schedule as last year by marking down resort and some spring the first week of May, and the remainder in June.

"If Neiman’s and Saks pull the plug and we are forced into reacting, then we’ll do what we have to do, but we do not have inventory issues," said owner Crawford Brock. "We are barely missing our plan, which is about 30 percent down from last year. But we made money in the first quarter and in February and March, and we did it by cutting expenses—not by selling more."

All things being relative, the best businesses have been contemporary, young designer, bridal, men’s shoes and belts, and private label goods, Brock said. Gowns, handbags, shoes, and denim are weak. "Shoes and bags are tough, and I think it’s a price point issue," said Rose Clark, general merchandise manager. "Louboutin is still our No. 1 vendor, but it’s expensive, as are Jimmy Choo and Valentino."

"The knee-jerk constant promotions that everyone had to deal with last fall were very detrimental, so we made a strong effort not to do that again this year," said Mickey Rosmarin, owner of Tootsies, which has stores in Houston, Dallas, and Atlanta. "We will mark down resort and some spring the last weekend in April."

Rosmarin said Bogner and Ralph Lauren have done well but, in general, sales trends have been inscrutable.

"Gowns are not selling, but prom dresses and other dresses are doing great," he said. "Some Italian sportswear is blowing out and some is dead as a doornail. It’s almost no rhyme or reason."

Due to students on Easter vacations, traffic in malls has recently risen, according to Amy Wilcox Noblin, research analyst at Pali Capital. "This week kicks off new early summer product arrivals in stores and this is a transition period for some retailers in terms of promotions. But overall, retailers have either increased or sustained the heightened level of promotions to capitalize on the traffic," Noblin wrote in a report issued Monday. "Some store associates have theorized that traffic will drop post-spring break and we can detect a sense of nervousness about what the back third of April will bring."

Noblin observed American Eagle Outfitters Inc. is already displaying some early summer goods at full price and, therefore, experienced some slower traffic with fewer promotions. However, the store is running an all-shorts-under-$25 promotion, which is 30 to 40 percent off on average, and the new summer goods reflect "progress" in fashion, Noblin stated.

Tourists and teens off from school flocked to the Abercrombie & Fitch flagship on Fifth Avenue, though A&F branch stores did not show such traffic surges, Noblin wrote. Some early summer product has arrived, "but the majority still lacks enough fashion innovation necessary to entice customers to pay full price."

Pacific Sunwear, on the other hand, saw an uptick in traffic last week that’s been sustained this week. "Significant promotions remain this week," touching up to 75 to 80 percent of the assortment, Noblin noted.

Related Links
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Bargain Hunting at Saks Fifth Avenue

Tags: Economic News, Jobs News, daily career news

Next Wednesday, Barack Obama’s presidency hits one of its first milestone’s—it will have lasted 100 days. Portfolio.com wants to know what you’ve learned about the new president and wants your take on how his presidency is impacting business and culture.

The very idea of a 100-day White House review came into vogue after Franklin D. Roosevelt laid out the foundation for the New Deal when he became president in 1933. Since then, despite efforts of some in a president’s administration to lower expectations, presidents have been judged by what they accomplished.

Obama, one of the youngest men to reach the presidency and the first biracial president, is giving the media and historians much to judge. From a promise to withdraw troops from Iraq, to the first steps in reforming the nation’s health care system, to an overhaul of regulations on financial institutions, Obama has kept Washington busy.

What do you think of what he’s done? Portfolio.com is curious of your take on the questions below. If you want to weigh in with a comment that’s not covered by the questions below, feel free to ad-lib. Submit your answers here (choose “other” from the drop-down list asking for the reason for your comment). Please make sure to include your name, your hometown, and your occupation.

— What did you learn about Obama in the first 100 days that you didn’t already know?

— What’s the biggest impact to business you see thus far in the age of Obama?

The feature marking Obama’s 100 days will run April 29 on Portfolio.com. To have your comments considered for inclusion, please submit your responses here.

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Tags: Business News, Economic News, daily news

The first celebration of Earth Day, on April 22, 1970, was a raucously exuberant affair. In New York, Fifth Avenue was closed to traffic. People picnicked on the sidewalk; dead fish were dragged through midtown; and Governor Nelson Rockefeller rode a bicycle across Prospect Park. Students in Richmond, Virginia, handed out bags of dirt (to represent the "good earth"); demonstrators in Washington poured oil onto the sidewalk in front of the Interior Department (to protest recent oil spills); and in Bloomington, Indiana, women dressed as witches threw birth-control pills into the crowd (no one was quite sure why). All told, some 20 million Americans took part—far more than the man who thought up the occasion, Senator Gaylord Nelson, Democrat of Wisconsin, had expected. "That was the remarkable thing about Earth Day," Nelson later said. "It organized itself."

Among those who seemed unmoved was President Richard Nixon. He avoided the festivities and made no public comment on them. (One of his aides, John Whitaker, later acknowledged that the administration had been "totally unprepared" for the wave of environmental activism "that was about to engulf us.") Nevertheless, even Nixon seems to have got the message. Three months afterward, he created the Environmental Protection Agency and the National Oceanic and Atmospheric Administration, and five months after that he signed the Clean Air Act. The Clean Water Act, the Pesticide Control Act, the Endangered Species Act, and the Safe Drinking Water Act all became law by the end of 1974.

Since the mid-1970s, the nation’s environmental agenda—to the extent that it has had one—has consisted mainly of trying to defend these early achievements. This is all the more notable because of what has happened in the intervening years. At the time of the first Earth Day, the term "global warming" was barely in circulation—the relatively small group of scientists concerned about the consequences of rising CO₂ levels used the phrase "inadvertent climate modification"—and actual warming had yet to be clearly detected.

Today, of course, there are thousands of scientists studying global warming, and new effects are constantly being observed. Just a few weeks ago, researchers reported that Antarctica’s Wilkins Ice Shelf had "begun to collapse because of rapid climate change." The ice shelf was larger than the state of Connecticut; it now seems destined to disappear. "We’ve come to the Wilkins Ice Shelf to see its final death throes," a glaciologist with the British Antarctic Survey, who made a farewell trip there, told Reuters.

To do something meaningful about global warming will require legislation even more far-reaching than the Clean Water Act and the Endangered Species Act, and recently there have been encouraging signs that Congress and the White House understand this. Late last year, Henry Waxman, of California, an outspoken advocate of action on climate change, wrested control of the House’s Energy and Commerce Committee from John Dingell, of Michigan, an outspoken advocate of delay. A few weeks ago, Waxman introduced a comprehensive energy bill, which, while flawed, at least represents a starting point.

President Barack Obama, for his part, has been clear about the urgency of the problem; shortly after taking office, he observed that global warming, "if left unchecked," could result in "irreversible catastrophe." To guide him, he has assembled some of the most knowledgeable and thoughtful people in the nation. What has been called Obama’s "green dream team" includes Energy Secretary Steven Chu, a Nobel Prize winner; the White House science adviser, John Holdren, a physicist on leave from Harvard; and the NOAA administrator, Jane Lubchenco, a highly regarded marine ecologist. In a move that has been widely interpreted as a prod to Congress, the EPA last week designated carbon dioxide and five other greenhouse gases as pollutants. This is an important step forward, which the Bush administration spent two years and millions of dollars of taxpayer money dithering about. The designation initiates the regulation of CO₂ under the Clean Air Act, a process that could eventually affect most major industries in the United States.

Still, there are plenty of reasons to wonder whether serious steps to reduce carbon emissions will be taken this year or, indeed, ever. Regulating CO₂ using existing laws will be a laborious, and potentially litigious, exercise. Meanwhile, the administration has been strangely passive about trying to shape climate legislation—one reason that the Waxman bill is likely to be further watered down. Then there’s the question of whether even an inadequate bill has the votes to pass.

Three and a half decades ago, when the nation’s key environmental laws were approved, politicians were responding to the mood of the country. Today, the situation is largely reversed. Polls show that voters regard the environment in general, and climate change in particular, as, at best, a middling concern. In a recent survey, the Pew Research Center asked Americans about their priorities for Congress and the new president. "Dealing with global warming" ranked at the bottom of a list of 20 choices, far below "strengthening the nation’s economy" and "reducing health-care costs," and even below dealing with unspecified "global trade issues."

The recession seems to have dampened the nation’s enthusiasm for any measure that could affect—or, perhaps just as important, be portrayed as affecting—people’s pocketbooks. Last month, when Gallup asked Americans whether "protection of the environment should be given priority, even at the risk of curbing economic growth," only 42 percent said yes. This was the lowest proportion in the 25 years since the firm started asking the question. Results like these do not make action on climate change any less imperative. But—especially since opponents can be counted on to spend tens of millions of dollars on lobbying—they do make it that much less likely.

This week, when Earth Day turns 39, the New York City Department of Parks and Recreation will plant trees. The Interior Department will host a fair in Washington’s Rawlins Park, and in Bloomington, volunteers will teach sixth-graders about karsts and creeks. As perhaps befits a middle-aged celebration, these are all eminently reasonable activities. But Earth Day has lost its edge and, with that, the sense that a different world is possible. Even more than in 1970, what’s needed now is an outpouring that organizes itself—with millions of people and, for good measure, some stinky dead fish in the streets.

Related Links
Ben Stein Watch: February 22, 2009
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Tags: daily insurance news, daily career news, daily financial news

I’ve been tinkering around with my mortgage. Have you ever wondered how the monthly payment was determined? It’s called amortization. An amortization schedule is a way to make equal payments over a period of time, but have the payments split between principal and interest so that the interest paid over time decreases over time along with the loan amount remaining. It is a balancing act to be fair to both borrower and lender, and you can find a mathematical derivation here.

The most direct way to see where you are on your amortization schedule is to ask your lender to send you a copy. Alternatively, you can generate one yourself by using a mortgage calculator with this feature. Here is the amortization schedule for a $200,000 loan with a fixed interest rate of 5% over 30 years.

As you can see, in the beginning most of your payment goes towards interest, and only a little reduces your principal, or outstanding loan amount. As time goes on, your payment stays the same, but the chunk going towards interest decreases as the principal shrinks.

Mortgage Principal Prepayment
If you want to pay off the loan in less than 30 years, you’ll have to pay more than required. This is known as principal pre-payment. The effect of making such additional payments can be visualized by imagining that it moves you “ahead” in the amortizaton schedule.

Here’s an example using the schedule shown above. Let’s say you’re just getting ready to make your first payment of $1,074. At this rate, you still have 359 out of 360 monthly payments left to go! How much money would it take to shave off one extra payment off the end? To find that, you just have to look at the principal portion of Month #2, which I highlighted orange: $241.

If you pay $241 additional with your first payment now, you’ll won’t have to pay the $1,074 due on Month #360. Why is this? Working backwards, you can confirm that this is pretty much a 5% compounded return on $241 for 30 years, as expected. In addition, you’ll be shifted forward to Month #3 on the schedule. So next month your (still required) payment of $1,074 will have a bit more applied towards principal, and a bit less towards interest.

Making a 30-year Mortgage into a 15-year Mortgage
This actually creates an interesting way to shorten your mortgage. What if you kept paying the next month’s principal payment on top of your required $1,074 each month. You’d add on $241, then $243, then $245, and so on. Every month you’d shave off one month off the end, leaving you with a 15-year mortgage! You can also imagine this as skipping every other payment by just paying the principal and saving the interest.

This can work out nicely because the extra required will start out reasonably low at $241, and increase gradually with time along with your income and/or cashflow.

An alternative is to add $510 to every payment each month to shorten the term to 15 years. Although if you’re sure you want to do that, you might want to just get a 15-year fixed mortgage at a lower interest rate.

Tags: Economic News, Insurance News, Forex News

John Bogle is the founder of the Vanguard Mutual Fund Group, and the creator of the first index fund. Reading his latest book Enough: True Measures of Money, Business, and Life was like listening to one of his many speaking engagements, a distillation of a lifetime of wisdom from a man who changed the way that billions of dollars are invested today.

As Heller famously responded when told by Kurt Vonnegut that a hedge fund manager had made more money in a single day than his classic novel Catch-22 made in its entire history, “Yes, but I have something he will never have… enough.”

Very simply, this book outlines the problem with making how much money we have the way to measure “success”. Such a philosophy affects how individuals invest, how business is conducted, and how lives are led. Bogle warns that this is taking our country down a dangerous road, which may leave our future less bright than the past. As Albert Einstein said: “Not everything that counts can be counted.”

His words about the need for character, accountability, and stewardship definitely ring true. However, I just can’t see the people of Wall Street turning down all this easy money without some “convincing” from the rest of us. Sure, they may feel a tinge of guilt now and then. But as Bogle paraphrases Upton Sinclair: “It’s amazing how difficult it is for a man to understand something if he’s paid a small fortune not to.”

In my opinion, it all ends up falling on us common folk as a whole to vote with our own dollars by not allowing overpaid CEOs as shareholders and consumers, not investing in high-cost complex investments, and not valuing “stuff” so much. We need to change things from the bottom up, not just with top-down rules and regulations.

Finally, my favorite part of this book is how Bogle acknowledges that his success was largely due to a mixture of luck and the assistance of many other people who believed in him. Too many successful people look back and think they did it all themselves. Sure, they may have worked very hard, but every one of us had help. A loving and supporting parent. A teacher who went the extra mile. A mentor who shared their own experience. Knowing that you didn’t do it alone, makes it easier to stop thinking of only yourself, which helps you find the balance of “enough” that includes thinking of others. At least that’s how I see it.

Recap
This is not a book about what kind of stock to buy. If you want Bogle’s view on that, read the more in-depth Common Sense on Mutual Funds or the concise Little Book of Common Sense Investing. I actually like the short one better.

Nor is this a book about frugality or living below your means. Instead, this tends to be more of a “Big Picture” book, about our definition of what “success” is. What should our goals be? What do we value? If you’re looking for some guidance in this area, or feel like there is something missing to this pursuit of money, then this is the book for you.

Tags: Financial News, Forex News, Stock News