SAFEGUARD CONSULTATIONS: The U.S. and China were scheduled to hold consultations over safeguard quotas via video conference Thursday night, according to a spokesman for the U.S. Trade Representative. Reacting to a surge in Chinese imports, the Bush administration applied safeguard quotas to $1.31 billion worth of goods last month, limiting growth in seven categories of apparel and textiles to a 7.5 percent increase for the rest of the year. The safeguards can be renewed through 2008. The European Union also triggered the safeguard clause China agreed to when it joined the World Trade Organization, but managed to hammer out a deal allowing for 8 percent to 12.5 percent growth on 10 categories of goods until 2007. There was no indication whether the U.S. and China would enter into a similar deal.
SEARS GETS BOOST: Shares of Sears Holdings Corp. got a positive jolt on Thursday from a research note by Bear, Stearns & Co. analyst Christine Augustine. The new company, the result of the Sears Roebuck-Kmart merger “is an intriguing story in that it is a mix of different businesses and parts thrown together, instead of one cohesive business … We believe the most likely scenario for Sears Holdings is to improve operating margins through a reduction in costs, increase cash flow through a decrease in capital expenditures and possibly sell certain assets such as real estate, Sears Canada or Lands’ End.” Shares went up $3.90, or 2.64 percent, to close at $151.35 in Nasdaq trading. Augustine wrote that the merger gives Sears an opportunity to accelerate its off-mall strategy. She expects capital expenditures to decline and stores to receive minimal investments unless going through conversions. The analyst initiated coverage with an “outperform” rating, and has the year-end 2005 target price at $169.
This story first appeared in the June 17, 2005 issue of WWD. Subscribe Today.