Business and Finance

Bill Montgomery has a substantial lead on Rick Romley in the Republican race for Maricopa County Attorney.

As of 9 p.m. Montgomery led Romley 50 percent to 38 percent. By 10 p.m. the Associated Press called the race for Montgomery.

Sheriff Joe Arpaio is backing Montgomery and has run ads critical of Romley quick guaranteed personal loans. Montgomery's win is also seen as a victory for Arpaio.

Source

Apply for our overnight online cash advance loans from $100 to $2500, deposited instantly in your bank account.

U.S. Global Investors’ concluded Friday with a slight increase in the investment company’s stock price.

U.S. Global (NASDAQ: GROW) posted a 1.86 percent increase in its stock price to close at $5.49. The company was the only local stock to post an increase.

Eight San Antonio stocks recorded decreases in their prices on July 2, compared to the previous trading day.

Seven local stocks did not register any significant percentage increase or decrease over the previous trading day.

The Dow Jones Industrial Average fell 46 points to close at 9,686.

Friday’s closing tally:

• Abraxas Petroleum Corp.’s (NASDAQ: AXAS) — $2.72, down 1 percent.

• Alamo Group Inc.’s (NYSE: ALG) — $20.97, unchanged.

• CC Media Holdings’ (Pink Sheets: CCMO) — $6.65, unchanged.

• Cullen/Frost Bankers Inc.’s (NYSE: CFR) — $50.68, unchanged.

• GlobalSCAPE Inc.’s (AMEX: GSB) — $2.44, down 1.2 percent.

• Harte-Hanks Inc.’s (NYSE: HHS) — $10 check cash advance.72, down 4.54 percent.

• Kinetic Concepts Inc.’s (NYSE: KCI) — $35.92, unchanged.

• NuStar Energy LP’s (NYSE: NS) — $56.04, unchanged.

• NuStar GP Holdings LLC’s (NYSE: NSH) — $30.48, unchanged.

• Pioneer Drilling Co.’s (AMEX: PDC) — $5.74, unchanged.

• Rackspace Hosting’s (NYSE: RAX) — $17.15, down 5.35 percent.

• Rush Enterprises’ (NASDAQ: RUSHA) — Class A stock closed at $13.17, down 2.15 percent.

• Rush Enterprises’ (NASDAQ: RUSHB) — Class B stock closed at $11.24, down 2.35 percent.

• Tesoro Corp.’s (NYSE: TSO) — $10.75, down 2.8 percent.

• U.S. Global Investors’ (NASDAQ: GROW) — $5.49, up 1.86 percent.

• Valero Energy Corp.’s (NYSE: VLO) — $16.90, down 2 percent.

Source

Under no fax paydayloans, an applicant can apply for any amount between $100 and $1500, considering the importance of the ends.

Stocks erased gains by the close Wednesday, with the Dow ending below 10,000 for the first time in three months, as worries about global growth and a slide in the euro overshadowed upbeat economic news.

The Dow Jones industrial average (INDU) lost nearly 70 points, or 0.7%, ending at the lowest point since Feb. 8. The S&P 500 (SPX) index lost 6 points, or 0.6%, and the Nasdaq (COMP) lost 15 points, or 0.7%.

A global market rally and a strong housing market report gave stocks a boost in the morning, but trading was choppy through the rest of the session as the euro weakened. Stocks slipped in the last hour of trading.

Stocks have tumbled in May, with the three major indexes all losing more than 10% each, falling into "correction" mode as investors have worried that Europe’s growing debt crisis is going to cut into U.S. and global economic growth.

A $1 trillion aid package announced by European leaders helped temper, but not eliminate, worries about the threat of so-called contagion stemming from problems with debt-plagued nations.

Greece got the ball rolling, but concerns remain about the other so-called PIIGS — Portugal, Italy, Ireland and most recently, Spain. News that Spain’s central bank had to take over one of the nation’s oldest savings banks over the weekend ushered in the latest wave of European-crisis driven worries. Reports of heightened tensions between North and South Korea added to jitters Tuesday.

Whether the stock correction - a decline of more than 10% off the highs - becomes a bear market - a drop of 20% to 30% off the highs - remains to be seen.

"A lot of indicators I watch suggest there is a turnaround coming, but the problem is the pullback has been pretty dramatic," said Randy Frederick, director of trading and derivatives at Charles Schwab.

He said that a lot of investors who were skeptical of the huge rally off the March 2009 lows have been waiting for the ideal pullback to get back in, after several smaller pullbacks failed to cross the 10% threshold.

"That pullback is here," he said. "The question is whether they have enough nerve to come back in or will they look at it as evidence that the runup was a false rally."

Euro: The European currency has seesawed since falling to a four-year low of $1.2146 last week.

On Wednesday, the euro fell 1.4% versus the dollar but remained above that four-year low. The dollar lost 0.3% against the yen.

Volatility: The CBOE Volatility index, or the VIX (VIX), Wall Street’s fear factor, ended modestly higher after having fallen through most of the session. The VIX had dropped as much as 13% as the market initially rallied, but turned higher when stocks fell.

Economy: New home sales jumped 15% in April, thanks to still-low mortgage rates and a homebuyer tax credit that expired at the end of last month. Sales rose to a seasonally adjusted rate of 504,000 from a revised 439,000 in the previous month. Economists surveyed by Briefing.com expected sales of 425,000.

Another report released before the start of trading showed that durable goods orders rose 2.9% in April, versus forecasts for a gain of 1.5%. Goods orders were flat in March, a revision on an earlier reading that showed a drop in orders.

However, orders excluding transportation fell 1% after rising 4.8% in the previous month. Economists thought orders excluding transportation would rise 0.7%.

World markets: Stocks around the world rebounded. Markets in Europe gained in late trading. Britain’s FTSE 100 rose 2%, Germany’s DAX gained 1.6% and France’s CAC 40 climbed 2.3%.

Asian markets also bounced back following a steep sell-off Tuesday on increased tension between North and South Korea. Japan’s Nikkei gained 0.7% and Hong Kong’s Hang Seng rose 1.1%. China’s Shanghai Composite ended just above unchanged.

Commodities: U.S. light crude oil for July delivery rose $2.76 to settle at $71.51 a barrel on the New York Mercantile Exchange, a gain of over 4%.

COMEX gold for June delivery rose $15.40 to settle at $1,213.40 an ounce.

Bonds: Treasury prices tumbled, raising the yield on the 10-year note to 3.24% from 3.16% late Tuesday. Treasury prices and yields move in opposite directions.

Trading volume: Market breadth was positive. On the New York Stock Exchange, winners beat losers three to two on volume of 1.94 billion shares. On the Nasdaq, advancers topped decliners seven to six on volume of 3.08 billion shares. 

Source

Those baggage fees really add up: The airline industry raked in nearly $8 billion from fees last year, according to a government report.

The revenue from so-called ancillary fees totaled $7.8 billion in 2009, according to U.S. Department of Transportation’s Bureau of Transportation Statistics. That’s a 40% increase from 2008, when the revenue from ancillary fees totaled $5.5 billion, the bureau said.

The tally does not include air fares. It’s made up of the plethora of extra fees that airlines have tacked on over the last few years, including fees to transport checked bags, pets, and musical instruments.

The fees are also applied to other services, such as curbside check-in or ordering tickets over the phone. The fees vary from airline to airline.

In 2009, the airlines collected $2.7 billion in baggage fees, $2.4 billion from reservation change fees and $2.7 billion from an assortment of other ancillary fees, such as frequent flyer award program mileage sales.

Delta Air Lines (DAL, Fortune 500) was the leading collector of ancillary fee revenue, bringing in more than $1.6 billion in 2009.

But the carrier that relies the most on extra charges is Spirit Airlines. In the fourth quarter of 2009, 21% of the airline’s operating revenue came from ancillary fees, a larger percentage than any of its rivals.

In April, Spirit Airlines began charging extra fees for carry-on bags. Because that that measure was imposed in 2010, it’s not included in the 2009 numbers. 

Source

If you haven’t heard, big changes are soon coming for the credit card business.

The CARD Act, which was signed into law last May, will finally go into effect Monday, meaning big changes for the millions of card-carrying Americans across the country.

Among other things, it will eliminate some of the more egregious practices of the past like so-called "double-cycle billing", arbitrary rate increases and hefty fees for exceeding your credit limit.

But while the new law also promises consumers more transparency about their credit card bill, cardholders still need to watch out for a whole new series of traps and tricks.

Higher fees: For starters, consumers could suddenly find themselves socked with a variety of new fees and charges.

Banks and other card issuers have already been aggressively implementing new fees or raising existing ones to help make up for any potential revenue lost as a result of the CARD Act.

Last May, for example, Discover Financial Services (DFS, Fortune 500) announced it would start charging a 2% fee on all purchases made outside the United States.

And whereas 3% was once the standard charge for rolling over a balance from one credit card to another, issuers like JPMorgan Chase (JPM, Fortune 500) are now assessing customers a 5% fee, according to Bill Hardekopf, CEO of the card rating site LowCards.com.

But with the new law setting no restrictions on the types of fees issuers can implement, consumers should pay particularly close attention to the "Terms and Conditions" section of their statement so they know exactly what they are being charged for, warn experts.

"Fees are the one source of revenue that will become more and more important," said Hardekopf.

Tougher to get a card: As Congress moved closer to passing the law last spring, banking industry advocates cautioned that shaking up the status quo would mean that credit would be more difficult to come by for consumers.

So far, that seems to be playing out as predicted.

The amount of credit made available to consumers by credit card companies plunged by $252 billion, or 7%, between March and September of last year, according to IRA Bank Monitor.

Credit is poised to tighten even further. As part of the CARD Act, credit card companies will be severely restricted in how they market cards to college students, potentially shrinking an important part of their business.

But issuers are also expected to implement much more severe underwriting practices. Some may demand, for example, details on an applicant’s income or proof of other savings.

Consumers with poor or even a mediocre credit history, as a result, may find it much more difficult to get a card or have their credit limit extended after the new law takes effect on Feb. 22, said Joseph Ridout of the advocacy group Consumer Action.

"I think it is fair to assume that credit card companies are going to scrutinize their potential customers a lot more closely than they did in the past," he said.

Fewer rewards: Consumers may also be increasingly unable to enjoy the fruits of their spending as a result of the new law.

It wasn’t that long ago where a cardholder could easily earn credit towards a free airline ticket or cash back for every dollar spent. But issuers are now quietly becoming more stingy with their rewards in an effort to save money.

American Express (AXP, Fortune 500), for example, recently told its co-branded card customers they would not be able to accrue reward points on their purchases if they were late with a payment. Only by paying a $29 fee could they recoup those points.

To avoid missing out, experts suggest that consumers carefully read any notices they get from their credit card company about changes to their loyalty or rewards program.

"Rewards can be another way of penalizing people too," notes Nick Bourke, manager of the Pew Safe Credit Cards Project.

Rising rates: One of the biggest victories for consumers in the new law are a series of limits on how and when credit card companies can set interest rates.

Whereas in the past, banks could raise your annual percentage rate just for missing a payment on your cell phone bill or without giving a consumer much advance notice, such practices will soon be outlawed. Issuers now have to alert you at least 45 days in advance before raising your rate under the CARD Act.

The new law won’t shield consumers from rate hikes altogether, though.

In recent months, banks have moved consumers over to so-called variable rate cards, whose rates fluctuate based on the direction of the prime rate. And with that rate at historic lows, experts said consumers should be prepared for at least a moderate increase in their APR at some point.

The new law also does not include any sort of interest rate cap banks and issuers can charge customers that are late on their payment by two months or more.

Credit card companies may remain reluctant to impose any usurious rates ahead of a review of penalty rates and fees by the Federal Reserve scheduled for later this year and given the public discontent for banks these days.

But that doesn’t mean the days of big rate hikes are gone for good, Bourke said — especially for consumers who are overwhelmed by debt. So experts suggest consumers should take extra care to stay current on their bills.

"The [CARD] Act doesn’t absolve anyone from having to pay back their bills or take people out of harm’s way if they run into trouble," said Bourke.

Talkback: Are you college student or under 21 and concerned or pleased about the tougher standards that will make it more difficult for some young adults to get a credit card? E-mail your story to jennifer.liberto@turner.com and you could be part of an upcoming article. For the CNNMoney.com Comment Policy, click here. 

Source

Four decades ago Stewart Brand opened The Whole Earth Catalog with a rollicking mission statement: "We are as gods, and might as well get good at it."

It was an apt mantra for the eco-friendly, do-it-yourself lifestyle guide, which was so clever it won a National Book Award. Now a futurist, author, and business consultant, Brand opens his latest book, Whole Earth Discipline: An Ecopragmatist Manifesto, with an urgent update of his youthful declaration: "We are as gods and HAVE to get good at it."

The cause for urgency is climate change. Until 2003, Brand writes, "I had only the usual concerns" about the seemingly "dire but distant" issue. Then he saw studies of Greenland ice cores revealing that, in the past, the climate has tipped into a radically different state, such as an ice age, in less than a decade.

Runaway positive feedback is the likely cause. Here’s an example: As human greenhouse emissions mount, global warming causes mirror-like polar ice to give way to dark ocean. That makes the Arctic absorb more solar heat, which melts more ice, leading to yet more heat absorption. This and other positive feedbacks are likely driving the ominously fast melting of Arctic ice, which was half gone by the summer of 2007, three to four decades earlier than predicted — the great melt is unfolding with tipping-point-like speed.

Channeling climate scientists, Brand predicts that fresh water and other resources will be in desperately short supply in many areas of a climate-changed world. A global state of constant war over dwindling resources might well ensue, killing billions.

Too dire? Consider: Tibetan Plateau glaciers, which feed shared rivers of China, India, Pakistan, and other Asian countries, are now melting away to expose a drought-prone tinderbox filled with vying nuclear powers, as well as "feral zones" controlled by Al Qaeda and its allies. If increasingly plausible worst-case scenarios play out, Brand tersely observes, "we’re ants on a burning log."

His scary analysis is the setup for a hopeful, though controversial, message: All may still be well if we get really good at using tools many Greens love to hate cash advance payday loans. To wit: urbanization (which enables efficiencies of scale and lower per-capita use of resources), nuclear power (to displace coal’s heavy greenhouse emissions), biotech (to engender, among other things, biofuel-producing microbes and drought-resistant crops), and geoengineering (such as lofting megatons of smoky particulates into the stratosphere to block sunlight and cool the climate).

Brand’s case for parting ways with environmentalism’s old guard rests largely on surprising developments that, he freely acknowledges, have shown some of his former views were wrong. Who knew that the rise of developing-world megacities, with their sprawling slums, would defuse the population bomb? (In rural villages, Brand notes, "every additional child is an asset, but in the slum, every additional child is a liability, so the newly liberated women in town focus on education and opportunity — on fewer, higher-quality children.")

That the expected number of excess cancers from the Chernobyl nuclear disaster would now be less than 1% of initial projections, and that the Chernobyl area would be a uniquely biodiverse wildlife sanctuary teeming with rare species? That the widespread cultivation of bioengineered corn, once thought to kill monarch butterflies, appears to be greatly benefiting them?

Not surprisingly, Brand’s iconoclasm has heated up the blogosphere, and some deep-dyed Greens apparently feel the trailblazer whose whole-earth visions seeded the first Earth Day in 1970 is doing a Lieberman.

Wrong.

Brand has always been an Obama-like, big-picture pragmatist — his famous catalog’s supreme virtue was its usefulness. And while some of his positions cry out for debate — I’m not sure I’d trust a real god to attempt geoengineering, much less us fumbling, self-taught ones — no one has brought more breadth, clarity, and cogency to bear on the biggest issue of our time. At 70, environmentalism’s pithiest polemicist has outdone himself, giving us one of the most important green tracts since Silent Spring. Read it. 

Source

GMAC Inc., the auto and home lender bailed out twice by the U.S. government, received a third rescue package valued at $3.79 billion that gives taxpayers a majority stake in the Detroit-based company.

The infusion will bolster lending at GMAC as it absorbs $3.8 billion in new pretax charges and decides what to do with its loss-plagued home mortgage unit, according to statements from the agency and the company yesterday. The aid comes on top of about $13.5 billion previously earmarked for GMAC, which regulators have said is crucial to the U.S. auto industry.

Chief Executive Officer Michael Carpenter is struggling to return the lender to profitability amid losses at the Residential Capital mortgage unit, known as ResCap, which GMAC may close or sell. GMAC is the primary lender to General Motors Co. and Chrysler Group LLC, the automakers that went into bankruptcy during the recession.

“We needed the capital in this order of magnitude; we weren’t arguing for less,” Carpenter said in a phone interview. “As the business becomes proportionally more and more of an auto-finance business, one of the lowest-risk businesses there is, my hope is that the capital ratios we need will get relaxed over time.”

The rescue package calls for the Treasury to buy $2.54 billion of trust preferred securities that pay 8 percent, and $1.25 billion of mandatory convertible preferred stock, known as MCP, at 9 percent, according to the statements. The government also received warrants to buy more securities.

‘They Need GMAC’

“The Obama administration has decided to keep GM alive one way or the other and they need GMAC to do it,” said David Olson, president of mortgage research firm Wholesale Access in Columbia, Maryland. The firm counts GMAC as a client. “To bail out the car companies you need to bail out the finance companies.”

The Treasury’s current holding of non-convertible preferred stock will be swapped for $5.25 billion of the new MCP, and $3 billion of Treasury’s existing MCP will be converted into common, GMAC said.

The conversion of preferred into common “somewhat deleveraged” the company, Carpenter said. When coupled with improved conditions at the mortgage operations, it “will improve access to the capital markets in the near term” and lead to a quicker repayment of government funds, he said.

GMAC Stakeholders

The U.S. stake will rise to 56.3 percent from 35.4 percent. The U.S. also controls General Motors, GMAC’s former parent, whose stake shrinks to 6.7 percent. The stake held by Cerberus Capital Management LP, the New York-based investment firm, falls to 14.9 percent from 22 percent. An independent trust for the benefit of GM holds about 9.9 percent, GMAC said. GMAC doesn’t have publicly traded shares.

“In May, the Treasury Department made a commitment to all institutions that engaged in the stress tests that we would ensure their capital needs are met,” Treasury Department spokesman Andrew Williams said in an interview. “We are making good on that promise.”

GMAC was the only company of 19 that underwent stress tests that wasn’t able to raise capital in the private sector, Williams said. Still, the Treasury said the aid was less than originally planned because restructurings at GM and Chrysler caused less disruption at GMAC than regulators expected. Tim Price, a partner at Cerberus, didn’t return a call for comment.

ResCap’s Fate

GMAC affirmed that it’s looking at “strategic alternatives” for ResCap, ranked among the nation’s 10 biggest home lenders and once one of the largest marketers of subprime mortgages. The parent company wrote down $2 billion in ResCap mortgage assets in preparation for selling them and set up a $500 million reserve tied to the servicing unit that does billing and record-keeping for home loans.

“There will be individual asset sales in the near future but whether some larger concept evolves is a matter of time,” Carpenter said. “We think ResCap and the mortgage business is stable and that we don’t have to do anything crazy. We have no urgency.”

GMAC is being approached “every day with interesting ideas” for the unit, Carpenter said. The shoring up of ResCap allows the government to keep a stake in a company making home loans, said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management, which owns GMAC bonds.

GMAC contributed $2.7 billion of capital to ResCap in the form of mortgage loans acquired from the Ally Bank unit, debt forgiveness and cash, according to the company statement. GMAC “does not expect to incur additional substantial losses from ResCap,” the company said.

Mortgage Assets

At the Ally unit, GMAC bought “certain higher-risk mortgage assets” at fair value of $1.4 billion, which triggered an estimated $1.3 billion pretax charge. Those assets were contributed to ResCap. GMAC also gave $1.3 billion of cash to Ally to maintain its capital, the statement said.

The infusion is the final dose of capital needed to close a shortfall found by Federal Reserve stress tests in May. GMAC asked the Treasury Department to delay providing the cash when Carpenter was named CEO, replacing Alvaro de Molina on Nov. 16. The deadline for meeting the requirements had been Nov. 9.

GMAC got $12.5 billion in two previous government bailouts and another almost $1 billion that was funneled through GM, which used it to invest in GMAC. The U.S. will name two additional board members in conjunction with its increased stake, according to the statements.

The latest capital infusion and restructuring weren’t enough to stabilize ResCap and assure a return to profitability, according to Moody’s Investors Service.

While the changes were positive, ResCap “has been unprofitable on a quarterly basis for three years, its liquidity position is tenuous, capital insufficient and franchise impaired,” Moody’s said in a statement. GMAC didn’t guarantee continued support for ResCap, and without such help, “we believe ResCap would eventually default,” Moody’s said.

Source

WASHINGTON–Home resales surged in the United States last month to the highest level in nearly three years, reflecting an extraordinary level of federal support that has pulled the housing market back from the worst downturn since the Great Depression.

Buyers were racing to complete their sales before the original expiration date of a tax credit for first-time buyers that was scheduled to expire Nov. 30. Last month, Congress extended the credit to ensure the market could sustain its recovery.

"Things are stabilizing," said Pete Flint, chief executive of real estate website trulia.com. "There is a significant amount of buyer interest out there.”

About two million homebuyers have taken advantage of the credit so far, the National Association of Realtors said. The group forecasts that another 2.4 million will use it by the middle of next year. First-time buyers made up about half of all transactions last month, driving sales up 44 per cent above last year’s levels, a record jump.

November’s sales rose 7.4 per cent to a seasonally adjusted annual rate of 6.54 million, from a downwardly revised pace of 6.09 million in October, the realtors group said. It was the highest level since February 2007. Sales had been expected to rise to an annual pace of 6.25 million, according to economists surveyed by Thomson Reuters.

Sales are now up 46 per cent from the bottom in January, but down 10 per cent from the peak more than four years ago. The inventory of unsold homes fell about 1 per cent to 3.5 million. That’s a healthy 6.5 month supply, the lowest level in three years.

The median sales price was $172,600 (U.S.), down 4.3 per cent from a year earlier, and up 0.2 per cent from October. Analysts said the new tax credit deadline means sales will drop during the winter months and recover in the spring.

Associated Press

Source

Dubai World’s debt problems are a wake-up call that the economic recovery is still fragile and that there are still risks, OECD Secretary General Angel Gurria told Reuters.

Gurria said the incident had reminded markets of growing debt concerns, something that should prompt governments to be cautious in withdrawing from large stimulus measures to boost growth after the worst global recession in decades.

Dubai spooked financial markets last week when it said two flagship firms, Dubai World and its Nakheel unit, planned to delay repaying billions of dollars in debts.

Dubai World “is a reminder of the fragility of the recovery process and that fact that it is still in its infancy and that there are still downside risks,” Gurria told Reuters during a summit of Ibero-American leaders in Portugal. “It’s a property development gone bad, but a big one.”

He said governments should “keep their guard up,” and err on the side of caution when deciding to cut stimulus packages.

“It’s better to stay a little longer than to withdraw too early,” Gurria said. “There is now also this parallel concern that debt is accumulating at a very fast speed and that obviously is a problem because markets are also getting very tense about that.”

Dubai has alerted markets to those risks in recent days as have growing budget deficits in some countries, such as Greece which saw a widening of its bond spreads last week.

Gurria said the downturn was taking its toll on balance sheets.

“So you are having a lot of pressure on many balance sheets because of market related portfolios, that are not subprime, they weren’t wrong in the beginning, but they are getting sour because of the economic situation in general,” he said.

Gurria also warned of the growing risks of the so-called carry trade, whereby investors borrow funds in a currency with low interest rates or countries such as the United States to finance investments in countries with higher-yielding assets like China, driving prices higher.

“There is a danger of creating a bubble, because if you have a very large flow into a relatively stable number of assets you create inflation in the prices that is not consistent with the real change in value of the assets,” he said.

He said assets such as Chinese stocks had risen much more than many other markets because of this process.

“You can create artificially high prices which can then with one piece of bad news or one movement in the exchange rate or interest rates suddenly burst, and that is when you have a disorderly adjustment,” Gurria said.

Read more

On an overcast English morning, two women from middle England are out shopping. They duck first into the Gucci boutique, fingering discounted handbags and rifling through racks of last season’s fashion lineup. Dolce & Gabbana is next, followed by Armani.

The outlet boutiques — among 136 clustered along a cobblestone outdoor shopping center called Bicester (BIS-ter) Village about an hour’s drive from London — are mobbed with bargain-seekers even at an early hour.

"You get value for money here," says Ann Prentice, who pauses to chat only briefly before her friend hustles her off to Valentino. "My husband is in business, so it’s hard for us just now, but I don’t mind paying more for quality."

Luxury outlet malls are the one bright spot of brisk trade going into the holiday shopping season. In recent weeks, retailers have reported small but still rather anemic signs of recovery. Yet sales numbers show that consumers have been flocking to discount outlets all year long, despite the recession.

Value Retail, the London-based company that owns the largest string of luxury outlets in Europe, including Bicester Village, has seen sales rise 20% to just over 1 billion euro ($1.5 billion) in the first three quarters of this year compared with 2008. (Sales totals are for the nine cities where its Chic Outlet Shopping outlets are located, including Milan, Paris, Dublin, Munich, and Madrid.) Foot traffic also rose 10% in the third quarter to 6.5 million shoppers.

When sales are tabulated for the fourth quarter, the growth is expected to be off the charts given the almost complete retail freeze of the fourth quarter of 2008. That compares with predictions of flat or at most a 2% increase in spending across the retail sector over the holiday shopping period.

Value Retail, whose major investor also owns part of the sprawling Woodbury Common outlet mall outside of New York City, has seen its growth this year double the average over the past 14 years, when sales increased at a rate of about 10% annually, according to Scott Malkin, Value Retail’s chairman.

"It’s human nature to indulge," Malkin says. "I think we’ve gone away from ‘I need more for the sake of more and more,’ to people being more discerning in what they purchase."

That sentiment has benefited luxury outlets in a year when full-priced luxury sales have been forecast to fall as much as 10%, according to Bain & Co. consultants.

Rather than view outlet shopping as cannibalizing from their High Street or Madison Avenue sales, luxury retailers in fact have welcomed the opportunity to sell excess merchandise in a slow time, while reaching a separate segment of customers to whom they wouldn’t normally be able to sell.

"We’re a service to the brand," says Desirée Bollier, the CEO of Value Retail Management low rates payday advance. "The brands have a lot more stock they want to dispose of, elegantly. We’re a platform for them that is quality, with a customer that is aspirational."

These so-called "aspirational" customers — those who may not be as wealthy as the typical elite luxury buyer, but will still purchase a few high-end pieces — now make up 60% of luxury buyers overall, according to Bernstein Research, an arm of AllianceBernstein.

"Before the recession, we were nice to have," says Bollier, referring to luxury outlets. "With the recession we’re a must. Our customers are not your fashionistas. She’s not going to buy the ‘It’ bag, but she recognizes the quality of a timeless piece."

Still, some fashion-forward heavy hitters are among the recent shoppers at these outlet malls: Stars Elizabeth Hurley and Victoria Beckham have been spotted in Bicester Village recently. Over the summer, a Saudi princess arrived with a retinue of 70 people. Tipped off in advance, says Malkin, the luxury brands sent out the Arabic speakers from their stores in London for the day to accommodate the entourage.

Most of Value Retail’s shoppers make the outlets a day-trip destination from the cities they’re visiting, or if they’re local residents, they may drive an average of two to three hours to reach an outlet mall. Some of these customers feel too intimidated to walk into a full-priced luxury boutique for the first time, so buying an item at a discount outlet can build confidence and allow shoppers to trade up. Rather than look for a dress to wear for an upcoming Saturday night, for example, they’re shopping for more enduring or signature items — at discounts of up to 60%.

"We use the expression, ‘guilt-free shopping,’" Malkin says, a particularly important sentiment in a recession. "What we’ve seen in the last 18 months is that women will buy something at full price in the center of Paris or London or Madrid and tell people that they bought the item at one of our villages. It’s a ways of avoiding conflict, of not wanting to seem better off than their friends and create discomfort and guilt."

The hope, of course, is that aspirational customers will be so satisfied with the items they purchase that they will eventually trade up into becoming luxury customers themselves, paying full price.

"People nine months ago said luxury is finished," says Malkin. "That’s nonsense. There will always be luxury, just that the nature of it will always be evolving." 

Source