Business news in brief

QUOTE OF THE DAY

“Manufacturing is on firmer footing. We’ll see less fiscal drag in 2014. Increasing final demand will translate into more orders for durable goods.” Ryan Sweet, Moody’s Analytics Inc. senior economist Article, 1D

Cracker Barrel shareholder studies bid

Cracker Barrel’s largest shareholder said Tuesday that he is considering a bid for the restaurant chain as part of his efforts to change the company.

Sardar Biglari, through his investment firm Biglari Holdings, owns nearly 20 percent of Cracker Barrel Old Country Store Inc.’s shares. He has tried and failed to win a seat on the board. Shareholders also recently rejected his proposal for a $20-per-share special dividend.

Biglari said in a letter Tuesday that the company’s earnings power is “far too low” under current management and urged Cracker Barrel to consider selling itself.

He said he could lead the process by submitting a bid and was talking with an investment bank about funding.

He said he would need to change Tennessee state law to make a successful bid for the company.

Alternatively, he suggested that the company repurchase its shares. Buying back stock can help support a company’s earnings per share.

Lebanon, Tenn.-based Cracker Barrel did not immediately respond to a request for comment.

Cracker Barrel shares rose $1.92, or 1.7 percent, to close Tuesday at $112.31.

Consumer confidence hits 5-month high

WASHINGTON - Consumer confidence in the U.S. rose to a five-month high in December, indicating Americans will keep spending early next year.

The Thomson Reuters/University of Michigan final index of consumer sentiment climbed to 82.5 from 75.1 in November. Economists in a Bloomberg survey called for 83, according to the median projection. The preliminary December reading was 82.5.

A pickup in employment, higher property values and stock-market gains are bolstering household wealth and underpinning sentiment. Another report this week showed the improvement is translating into more consumer purchases, which account for almost 70 percent of the economy.

JPMorgan eases card limits after breach

JPMorgan Chase & Co., the biggest U.S. bank, increased spending and withdrawal limits it imposed on 2 million customers who used debit cards at Target during the retailer’s data breach.

Cash withdrawals of as much as $250 per day and purchases of $1,000 are allowed for most affected account holders, the New York-based bank said on its website. Previous limits of $100 in cash and $300 in purchases were set after Target said last week that 40 million customers may have had data stolen.

JPMorgan, the third-biggest U.S. debit-card issuer by purchases, after Bank of America Corp. and Wells Fargo & Co., is alone among the largest U.S. banks in announcing usage limits. Precautions to prevent fraud-related losses may have frustrated bank customers facing spending caps while Christmas shopping or traveling, said Bert Ely, an independent banking consultant in Alexandria, Va.

Clients whose account data were compromised still won’t be able to use debit cards at ATMs outside the U.S., a restriction imposed after the breach, JPMorgan said.

  • Bloomberg News

American Express settles U.S. claim

WASHINGTON - American Express agreed to pay $75.7 million to settle claims that it used deceptive marketing practices to sell protection services to credit-card customers.

The company must pay $59.5 million in restitution to more than 335,000 harmed customers, according to the deals announced Tuesday by the Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau. The biggest credit-card issuer by customer purchases violated the law when it misrepresented the costs and benefits of its add on products, the agencies said.

“We first warned companies last year about using deceptive marketing to sell credit card add-on products, and everyone should be on notice of this issue,” Richard Cordray, director of the consumer bureau, said in a statement.

The agencies assessed New York-based American Express $16.2 million in penalties for misleading customers from 2000 to 2012 and also billing them for services they never received, according to the regulators’ orders.

  • The Associated Press

Shops see 21% drop in week’s traffic

Fewer Americans hit the malls the last week before Christmas even as retailers such as Macy’s and Michael Kors Holdings poured on the discounts.

U.S. store visits plummeted 21 percent and retail sales dropped 3.1 percent in the week through Sunday compared with 2012, signaling a lackluster finish for stores’ most important selling season, Chicago-based researcher ShopperTrak said Monday.

Falling store traffic in recent weeks and uneven demand, especially for apparel, spurred chains to risk earnings by piling on the discounts to generate sales. Retailers including Neiman Marcus Group LLC were offering as much as 75 percent off, and some, including Macy’s and Kohl’s Corp., were keeping stores open around the clock starting Friday. At the same time, Americans are increasingly shopping online.

Holiday purchases increased 2 percent from Nov. 1 to Sunday, ShopperTrak said. Sales will rise 2.4 percent for the whole season, the smallest gain since 2009, Martin said.

  • The Associated Press

Hyundai, Kia to pay in fuel-rating suits

LOS ANGELES - Hyundai Motor and Kia Motors, affiliated South Korean automakers, have agreed to spend as much as $395 million to settle lawsuits brought by customers claiming the companies overstated fuel-economy ratings.

Hyundai’s U.S. unit said in a statement Monday that it will make payments totaling as much as $210 million to people who bought 2011-13 model-year vehicles affected by the ratings. Customers have the choice of a lump-sum payment from Seoul-based Hyundai or to remain in a fuel-reimbursement program for as long as they own their vehicle. Kia Motors said in a separate statement that its payments to owners of about 300,000 vehicles will total as much as $185 million.

  • Bloomberg News

Business, Pages 28 on 12/25/2013

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