Business briefs for May 28, 2004

Friday, May 28, 2004 | 10:52 a.m.

Chairman Agnelli dies at 69 of cancer

TURIN, Italy -- Fiat SpA Chairman Umberto Agnelli, whoonce favored selling the car company founded by his grandfather in 1899, died today of lymphatic cancer at his family home near Turin, Italy. He was 69.

He became chairman in February 2003 after the death of his older brother. Umberto Agnelli designed a turnaround plan for Italy's biggest manufacturer, which had lost more than 6 billion euros ($7.4 billion) between 2001 and 2003 as its Fiat cars lost market share to competitors such as PSA Peugeot Citroen.

He focused on selling profitable units outside the main auto business and hired Giuseppe Morchio as chief executive. The three- year plan to return the automaker to profit by 2005 is already showing results. Fiat's first-quarter loss narrowed to 194 million euros as new models such as the Fiat Panda and Lancia Ypsilon boosted demand.

"Agnelli accepted the competition of global markets and put in place an independent and international management," said Carlo Alberto Carnevale-Maffe, professor of business strategy at Milan's Bocconi University.

Lawsuit against Abbott dropped

HARTFORD, Conn. -- Aetna is dropping its lawsuit accusing Abbott Laboratories Inc. of seeking a monopoly on AIDS drugs by raising the price of its popular drug Norvir by 400 percent.

The Hartford-based health insurer, which filed the lawsuit in U.S. District Court for the Northern District of California in San Francisco on Tuesday, said in a statement Thursday it "intends to discuss with Abbott the basis for its repricing action."

An Aetna spokesman on Friday would not comment.

Abbott Laboratories, which is based in Abbott Park, Ill., said Aetna notified the company of its decision Thursday afternoon.

"We maintain our re-pricing decision was appropriate and lawful," spokeswoman Jennifer Smoter said.

Poultry processor finds bird flu

PITTSBURG, Texas -- Pilgrim's Pride Corp., the second- biggest U.S. poultry processor, said it destroyed a flock of 24,000 chickens to prevent the spread of an avian flu infection found on a contract grower's farm in northeast Texas.

Blood tests indicated the infection in a 52-week-old flock of chickens that lay eggs for hatching, the Pittsburg, Texas-based company said in a statement. The Texas Animal Health commission said there is little evidence of clinical signs of the disease in the birds, indicating it may be low-pathogenic.

Pilgrim's Pride shares fell 95 cents, or 3.4 percent, to $26.92 at 9:48 a.m. in New York Stock Exchange composite trading.

Train contracts lead to loss

MONTREAL -- Bombardier Inc., the world's biggest maker of train cars, had a first-quarter loss because of cost overruns on rail contracts and expenses to cut jobs and offer incentives to sell aircraft. The stock fell as much as 13 percent.

The net loss in the period ended April 30 was $174 million, or 10 cents a share, compared with net income of $54 million, or 3 cents, a year earlier, Montreal-based Bombardier said. Sales rose 5.9 percent to $3.53 billion, helped by higher jet deliveries.

Chief Executive Paul Tellier, hired more than a year ago to turn around the company, asked investors today to "be patient" as he fixes the unprofitable rail unit by closing plants and improving contract performance. The unit recorded $200 million of contract losses in the quarter because of unforeseen costs and lower-than-expected revenue.

Bombardier and its construction partner face potential liabilities for construction delay fines of $85,000 a day for the Las Vegas Monorail until the system is completed, for a total of more than $9 million and rising as of May 10.

Profit rises on sales to garages

MEMPHIS, Tenn. -- AutoZone Inc., the largest U.S. retailer of auto parts, said fiscal third-quarter net income rose 14 percent, boosted by sales to professional mechanics.

Net income increased to $143.4 million, or $1.68 a share, in the period ended May 8 from $126 million, or $1.30, a year earlier. Sales rose 5.6 percent to $1.36 billion from $1.29 billion, the company said in a statement.

Food maker boosts international sales

PITTSBURGH -- H.J. Heinz Co. reported sharply higher profits for its fourth fiscal quarter as a weak dollar aided sales internationally.

The food maker said it earned $196.5 million, or 55 cents per share, in the three months ended April 30 compared with $102.6 million, or 29 cents per share, in the same period last year.

Excluding one-time charges, earnings per share were 58 cents per share, matching the forecast of analysts polled by Thomson First Call.

Revenue was up more than 6 percent to $2.33 billion for the quarter from $2.19 billion a year earlier as the dollar's weakness continues to boost the impact of overseas sales.

Personal spending rises 0.3 percent

WASHINGTON -- U.S. personal spending rose 0.3 percent in April, more than expected, as a rise in incomes matched the biggest gain in more than three years, a government report showed today.

The increase in spending follows a revised 0.5 percent gain in March, the Commerce Department reported in Washington. The 0.6 percent increase in April incomes follows an unrevised 0.4 percent rise the previous month. Personal consumption spending, excluding volatile food and energy prices, rose 0.1 percent.

Economists expect increased hiring and rising incomes to help limit a slowdown in consumer spending during the second half. Incomes rose 6 percent in the first three months of the year, the biggest quarterly advance since the third quarter of 2000.

Economists had estimated personal spending rose 0.2 percent in April, according to the median of 70 estimates in a Bloomberg News survey. They had also expected a 0.5 percent gain in April incomes after a 0.4 percent rise reported for the month before.

Cost cuts drive profit growth

SAN FRANCISCO -- Williams-Sonoma Inc. said profit for its latest quarter jumped 60 percent, helped by strong sales at the retailer's Pottery Barn, Pottery Barn Kids, and Williams-Sonoma stores as well as cost-cutting measures.

The San Francisco-based company said it earned $21.4 million, or 18 cents a share, for its first quarter ended May 2, compared with $13.4 million, or 11 cents a share, in the same quarter a year ago.

Revenue rose 19 percent to $640.9 million from $536.8 million.

Sales at stores open at least a year, also known as same-store sales, increased 6.8 percent in the period.

Full-price sales up at clothing chain

SAN FRANCISCO -- Gap Inc., the biggest U.S. clothing chain, said first-quarter earnings climbed 54 percent as shoppers bought more apparel such as women's Capri pants and men's wrinkle-resistant khakis at full price.

Net income rose to $312 million, or 32 cents a share, from $202 million, or 22 cents, a year earlier, the San Francisco-based retailer said in a statement. Sales in the three months ended May 1 increased 9.4 percent to $3.67 billion.

Chief Executive Paul Pressler, 47, is using more market data on customers and input from managers of its Gap, Banana Republic and Old Navy stores to keep inventory tight and avoid profit-eroding discounts. That helped boost gross margin last quarter by 5 percentage points. Sales at stores open at least a year have risen every month since Pressler took over in September 2002.

Profit more than doubles

SEATTLE -- Nordstrom Inc., an upscale department-store chain, said first-quarter earnings more than doubled, the biggest increase in at least a year, after sales surged.

Net income jumped to $68.7 million, or 48 cents a share, from $27.2 million, or 20 cents, a year earlier. Sales in the three months ended May 1 climbed 15 percent to $1.54 billion, the Seattle-based company said in a statement. Sales at stores open at least a year rose 13 percent, the biggest gain in more than a decade.

Nordstrom has benefited as wealthier shoppers splurge on such items as shoes, handbags and designer dresses, said analysts including Linda Kristiansen at UBS. President Blake Nordstrom has trimmed inventory and tracked sales using new systems so store orders can be modified to meet shifting demand.

Earnings flat

COLUMBUS, Ohio -- Limited Brands said its first-quarter earnings were flat with a year ago when the retailer sold half its interest in a company that provides services for retailers and other companies.

The operator of such chains as Victoria's Secret and Bath and Body Works said it made $96.6 million, or 19 cents a share, for the quarter that ended May 1 compared with profits of $97.5 million, or 19 cents a share, a year ago.

Revenue increased 7 percent to $2 billion from $1.8 billion a year ago. Sales at stores opened at least a year, considered the best indicator of a retailer's strength, were up 8 percent for the quarter.

archive