JCP J C Penney Company Inc

By Paul Page 

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New figures show the U.S. economy firing on all cylinders even as clouds may be forming on the horizon. The economy completed one of the best years of a near-decadelong expansion, the WSJ's Harriet Torry reports, growing at a modest 2.6% pace in the fourth quarter despite slowdowns elsewhere in the world, turbulent financial markets and uncertainties over trade. The expansion was built on stronger consumer spending and business investment that economists say could set the groundwork for continued growth. Some of that investment may not push new business through the shipping economy, however, since the largest share was in software while investment in physical structures fell back for the second straight quarter. Inventories also expanded again after strong growth in the third quarter. Some economists believe companies could pull back inventory plans after that surge, and early figures from seaports suggest inbound flows are already slowing.

Holiday sales are no longer enough to prop up some of America's big retail chains. J.C. Penney Co. and Victoria's Secret parent L Brands Inc. both are closing stores after the chains reported declining sales in the holiday quarter, the WSJ's Suzanne Kapner and Khadeeja Safdar report, signaling the U.S. retail landscape is still resetting even amid strong consumer sales. The mall stalwarts are joining a parade of brands that are shrinking their footprints while giants like Amazon.com Inc. and Walmart Inc. grab a growing share of consumer spending. The latest reports display a stark gap between winners and losers in the business. Both Amazon and Walmart posted strong sales, along with electronics chain Best Buy Co. and discount apparel seller TJX Cos. Sales at Macy's Inc. barely expanded last quarter, however, and the department store is cutting staff as it invests more in its supply chain.

Tesla Inc.'s next step is to become an e-commerce company. The Silicon Valley auto maker is eliminating most of its storefronts and shifting all its global sales online, the WSJ's Tim Higgins reports, as it begins taking orders for the long-awaited $35,000 version of its Model 3 compact car. The big change comes as the company is trying to trim costs while building up momentum in its supply chain in an effort to become a mainstream auto maker. Tesla will keep some of its stores open so customers can see the vehicles, but purchases will be pushed online in a sharp change after it upended the auto industry's franchise dealership model with its own sales sites. The company has been able to ramp up production of its new sedans, but cutting the prices at the same time has hit Tesla's finances and strained relations with some suppliers.

SUPPLY CHAIN STRATEGIES

A big-name supplier is stepping back a bit from the frenzied aerospace manufacturing market. Rolls-Royce Holdings PLC says it won't compete to provide engines for Boeing Co.'s new midsized aircraft, the WSJ's Carlo Martuscelli reports, saying it couldn't commit to an ambitious timetable the jet maker is setting for the plane. The decision effectively leaves Pratt & Whitney and the CFM International joint venture of General Electric Co. and Safran SA in the running for the lucrative business, and it marks a high-profile withdrawal from aviation supply chains that have been under heavy stress as the jet makers press suppliers to keep up with growing demand. Rolls-Royce is facing its own pressures after losing $3.92 billion in its most recent quarter. After costly problems with its newest engine, the engine supplier isn't willing to gamble future revenues on a likely risky proposition.

QUOTABLE

IN OTHER NEWS

Brazil's economy grew a disappointing 1.1% in the fourth quarter and over the full year in 2018. (WSJ)

India's economy expanded 6.6% in the fourth quarter. (WSJ)

A measure of manufacturing activity in the U.S. Midwest rose last month at the fastest pace in two years. (MarketWatch)

Companies face growing shareholder pressure to disclose their exposure to climate-change risks. (WSJ)

Gap Inc. is separating the discount apparel Old Navy retailer from the rest of the business. (WSJ)

Anheuser-Busch InBev SA's North American volumes fell 0.4% last quarter in an ongoing consumer move away from mass-market beers. (WSJ)

German pharmaceutical and chemical company Merck KGaA wants to buy Versum Materials Inc. for more than $5 billion. (WSJ)

South Korean exports contracted for a third straight month in February. (Reuters)

A study says Chinese retaliatory tariffs are costing U.S. exporters $40 billion worth of annual trade. (Bloomberg)

Ford Motor Co. is cutting 2,000 jobs from its main China joint venture after sales there fell nearly 40%. (Nikkei Asian Review)

AlixPartners says container lines' ability will need to recover $10 billion in additional costs of meeting new anti-sulfur regulations. (Shipping Watch)

European regional carrier MPC Container Ships more than doubled its fourth-quarter loss to $5.1 million. (TradeWinds)

Air Transport Services Group Inc.'s adjusted fourth-quarter earnings rose 23% to $24.1 million. (The Loadstar)

Freight forwarder Panalpina's consolidated profit rose 32% last year to $75.8 million despite weaker results in ocean freight business. (Lloyd's Loading List)

United Parcel Service Inc. wants to place a distribution center at a former Boeing manufacturing site in Long Beach, Calif. (Los Angeles Business Journal)

ABOUT US

Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the WSJ Logistics Report team on Twitter: @CostasParis, @jensmithWSJ and @WSJLogistics.

Write to Paul Page at paul.page@wsj.com

(END) Dow Jones Newswires

March 01, 2019 10:29 ET (15:29 GMT)

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