A coalition of 82 organizations signed a letter sent to the U.S. Justice Department on Thursday (July 24) opposing the antitrust process of Tyson Foods’ planned take over of Hillshire Brands.

In the letter, the coalition asked the Justice Department to take more time to carefully consider the complicated merger that would “substantially lessen competition or tend to create a monopoly.” The group includes the National Farmers Organization, R-Calf USA, National Farmers Union, Poultry grower associations in Virginia and Alabama, Missouri Beef Cooperative and Food and Water Watch who together ask the Justice Department to extend the review timeline from 14 days to 30 days.

The coalition claims that the deal would increase Tyson’s power over hog farmers, likely raise prices, reduce consumer choices and undermine competition.

"Tyson's takeover of Hillshire certainly warrants further investigation by the Department of Justice and should be stopped," President of the National Farmers Union Roger Johnson noted in a statement. "It's time for the Justice Department to enforce our anti-trust laws."


The Justice Department declined to comment on the letter.


Higher prices for consumers is the major concern voiced by Food & Water watch research director Patrick Woodall.


“Having the largest meat company buy another one of the largest meat companies gives Tyson a much stronger grip on the entire food chain,” Woodall said. The merger would make it possible for “Tyson to undermine Hillshire’s sausage and lunchmeat rivals by disrupting their access to pork supplies” and hampering competition.

First National Bank of Rogers announces it is rebranding its name to First National Bank of NWA. A new logo is also being introduced to reflect the new name. This name change is effective Aug. 1 with signage being changed in the coming months.

“The name and logo change represent our commitment to our community and our customers throughout northwest Arkansas,” said Rob Husong, regional president of First National Bank of NWA.

In the next year, Husong confirmed that the company has plans to create new job opportunities and more customer convenience with additional locations.

First National Bank of NWA is a division of the First National Bank of Fort Smith, which was chartered in 1872. The company provides its Northwest Arkansas customers with four branches, including Rogers (Pinnacle), Rogers (Dixieland), Lowell and Centerton, with additional bank locations added over the next year.

Many of the nation’s industrial sectors saw major declines in the first quarter of 2014 as 16 of 22 industry groups contributed to the 2.9% decrease in U.S. economic activity, according to a quarterly report from the U.S. Bureau of Economic Analysis (BEA).

The bellwether industry data from the U.S. Department of Commerce is derived from last month’s GDP report showing the U.S. economy fell nearly three points in the first quarter of 2014, following an increase of 2.6% in the fourth quarter of 2013.

Overall, both private services- and goods-producing industries contributed to the decrease, while the government sector increased slightly. Durable-goods manufacturing; wholesale trade; and agriculture, forestry, fishing, and hunting, all key contributors to the Arkansas economy, were major factors in the GDP decline.

The new report from the U.S. Department of Commerce’s statistical arm could also put a damper on last month’s news that Arkansas’ economy grew 2.4% in 2013. At the time, John Shelnutt, head of the Arkansas Department of Finance and Administration’s Economic Analysis and Tax Research division, called the sources of growth in Arkansas “a little unusual.”

He said the state experienced robust gains in the service and agriculture sectors, but saw contraction in construction and manufacturing. But the most unusual source of growth came in the mining sector, which saw a huge decline in 2012 as natural gas prices and low rig counts buffeted the Fayetteville Shale.

“That is a little odd because it is a volatile sector where (growth) doesn’t persist year after year, or multiple years,” Shelnutt said. “It could be seen as a one-time contribution. It is a rebound from the negative year in 2012, but goes beyond a simple recovery.”

Other recent signs of a downturn in Arkansas came in a June 24 report from the U.S. Commerce Department indicating that personal income fell 0.2% in the first quarter as earnings for state workers failed to keep pace with inflation and Arkansas farms lost more than $1 billion.

And to add fuel to the fire, the first quarter downturn across the U.S. was not limited. Overall, 19 out of 22 industry groups contributed to the 5.5 percentage points downturn in real GDP; the leading contributors to the downturn were wholesale trade; professional, scientific, and technical services; and durable-goods manufacturing.

Here are some other highlights of the BEA report:
• Growth in real value added slowed for nondurable-goods manufacturing in the first quarter; however, the industry group contributed the largest positive offset to the decrease in real GDP in the first quarter. Nondurable-goods manufacturing, which includes petroleum and coal product manufacturing, increased 15.1% in the first quarter of 2014, after an increase of 18.6% in the fourth quarter;

• Professional, scientific, and technical services turned down in the first quarter, decreasing 6.5% after increasing 5.9% in the fourth quarter. Professional, scientific, and technical services includes industries such as legal services, engineering, and administrative management and management consulting services; and

• Federal government turned up 3.2% in the first quarter—its first increase since the second quarter of 2011.

Economists are split on the direction the economy is heading. There is a school of thought that blames the rough first quarter numbers on harsh winter weather that crippled the U.S. economy for weeks. Other economists predict the financial markets will lose steam and are awaiting other indicators of second quarter performance.

This is only the second time that the BEA has published quarterly GDP by industry statistics. The first release was on April 25, 2014, spanning the period 2005 through the fourth quarter of 2013. Previously, BEA published these statistics only on an annual basis, so businesses and policymakers had a much longer wait for such information.

Generally, GDP statistics are monitored closely by businesses to help them make decisions about whether to boost hiring and to expand capital spending. Real gross domestic product, or GDP, is the output of goods and services produced by U.S. workers.

The University of Arkansas Bookstore, its shops at the Garland Center and all of its Razorback Shops will observe the Arkansas “sales tax holiday” on Saturday, Aug. 2, and Sunday, Aug. 3. State and local sales tax will not be collected during this 48-hour period on the following items:

• School supplies,
• School art supplies,
• School instructional materials,
• Clothing and footwear priced under $100 per item,
• Clothing accessories and equipment priced under $50 per item, or
• Cosmetics

The University of Arkansas Bookstore Shops in the Garland Center, as well as the Bookstore’s Razorback Shops in the Northwest Arkansas Mall, Pinnacle Hills Promenade and Arkansas Student Union will all be open and fully stocked for the event.

Sales Tax DataLINK of Bentonville received a new patent for sales tax software that is titled: “System and Method for Tax Filing, Data Processing, Data Verification and Reconciliation.”

“Sales tax compliance becomes more sophisticated and complex every day, so businesses need new technologies to stay ahead of these challenges.” said Noel Hamm, CEO of Sales Tax DataLINK. “The patent has been awarded on the basis of innovative technology that gives companies the ability to evaluate the health of their sales tax systems and to make educated corrections resulting in more accurate tax filing each month.”

The new Sales Tax DataLINK software automates the validation steps providing business intelligence, resulting in fewer errors and better tax filing.

States are beginning to use technology to connect internal data sources to identify issues with indirect tax compliance. States are using this technology to identify and schedule taxable audits, so businesses must take a more granular approach in their review process, the release states.

Tyson Foods announced late Friday (July 25) plans to shutter three of its processing facilities as it streamlines its prepared foods segment ahead of the anticipated merger with Hillshire Brands.

The meat giant said a total of 950 jobs will be impacted with these closures by mid next year:
• 450 jobs Cherokee, Iowa, plant to be shuttered Sept. 27;
• 
300 jobs Buffalo, N.Y., plant closing by mid 2015; and

• 200 jobs Santa Teresa, N.M., plant closing by mid 2015.

Tyson said in a press release that the closings will enable the meat giant to use more of the available production capacity at some of its other prepared foods plants. 

“This is a very difficult decision since it affects the lives of our team members and their families,” said Donnie King, president, prepared foods, customer and consumer solutions for Tyson Foods. “However, these plants have been struggling financially. After long and careful consideration, we’ve concluded it no longer makes business sense to keep them open.”

The planned closures are due to a combination of factors including changing product needs, the age of the Cherokee facility and prohibitive cost of its renovation and the distance of the Buffalo and Santa Teresa plants from their raw material supply base in the Midwest. In addition, the closings will allow the company to shift some of the production and equipment to other, more cost-efficient Tyson Foods locations, according to the release.

All three plants have been part of Tyson Foods since 2001, when the company acquired IBP Inc.

The Cherokee plant, which Tyson Foods leases, has produced processed meats since 1965. It makes deli meats, hams, Canadian bacon and hot dogs.

The Buffalo facility produces hot dogs, sausage and hams. It first opened in 1969 and operated as Russer Foods until 1999, when it was acquired by IBP.

Santa Teresa makes a variety of cooked products including dinner meats, diced ham and roast beef. The facility was built by John’s Brothers and opened in the spring of 1982. It became part of IBP in 1994.

In the past year, Tyson Foods has expanded its deli meat capacity in the Houston, Texas plant. That was on top of the Hillshire Brands operations for deli meats and hotdog facilities in Kansas City, Mo.; St. Joseph, Mo.; Zeeland, Mich.; New London, Wisc.; and Claryville, Ky. Hillshire also operates sausage processing plants in Tennessee and Alabama. In total, Hillshire operates 11 separate meat processing plants on top of four non-meat facilities.

Tyson CEO Donnie Smith estimates that when the merger is complete, the companies will see $300 million in synergies in the first three years, which would be primarily gained from operational and supply chain efficiencies. Tyson has agreed to pay $63 per share for Hillshire Brands, a deal worth $8.55 billion.

Tyson management will answer questions about the pending merger and plant closures Monday morning during the company’s third quarter earnings call with analysts.

The meat giant noted in its release that affected workers will be encouraged to apply for openings within the company and also will be invited to job fairs Tyson Foods plans to host. In addition, the company intends to work with state officials to ensure employees are informed about unemployment benefits and any potential re-training opportunities.

A new five-year strategic plan is in the works at NorthWest Arkansas Community College and it is specifically geared to measure against how it helps students succeed.

The NWACC Board of Trustees met for its semi-annual board retreat, which is a brainstorming and planning meeting where consensus can be reached but no binding votes are taken. The retreat, held Saturday (July 26) at the college, was followed by an official board meeting where the board members approved researching plans to expand the college’s culinary arts program.


NWACC has had a five-year plan but in the process of reviewing and revising it for the next five years, NWACC President Evelyn Jorgenson said.

“Everything we do needs to be for the benefit of the students.”

The trustees got the first look at the plan draft and after their comments the proposed plan will be presented to various stakeholders including faculty. The final 5-year strategic plan would then be approved in January. 
The strategic plan is divided into eight areas with key goals and corresponding action plans described within each area. The staff and board members focused on goals they are trying to accomplish for the 2014-2015 school year. 
There are eight key areas for the five-year strategic plan and the goals for this school year, if approved by all stakeholders and the college board.

INCREASE ENROLLMENT
The college will institute direct marketing plans that target specific audiences including high school students and other key markets for growth. College officials will also develop an internal marketing plan for employees so they better understand and can promote the college’s student-centered focus and assist in recruitment and retention.


Another aspect of increasing student enrollment will be to identify and address barriers that potential students face during the enrollment process and to create strategies that remove those barriers. Action plans to achieve this goal include investigating lowering out-of-state and online tuition; development pathways to move adult education (GED, ESL) students into credit and non-credit programs (a low percentage of these students enroll in NWACC after completing their initial program); increasing opportunities for veterans to earn more credit for military training; identify enrollment and registration processes that need improvement; and identify which population groups are facing unique challenges and what it would take to remove those challenges. 


The college will also focus on increasing enrollment of students who come from under-represented populations through increasing funding for various programs and identifying new ways to appeal to these students, especially various types of non-traditional students. 
Increasing early college experience program participation rates is an ongoing goal but no specific changes to the processes were outlined for this school year.  


INCREASE STUDENT SUCCESS
Increasing the fall-to-fall semester retention rates is a big task for the college staff this school year, which they hope to accomplish through analyzing retention data trends and targeting improvement areas; developing professional development opportunities for faculty and staff to improve the learning experience; determining and overcoming potential barriers for under-served student groups; and re-inventing the first-year experience for new, first-time, full-time students.


Two other goals within increasing student success are to identify key campus improvements that will enhance the overall student experience – such as increased security and a security smartphone app, and partnering with the IT department to create a better experience for students. 


PROGRAMMING IMPROVEMENTS
A major component of attracting and keeping students is having quality programming and assessment programs. This ensures that the programs and ultimately the students are meeting state, federal and personal goals. The college plans to improve its procedures for program review, but also meet with employers and business leaders to determine where new programs might be needed. 


New programs must also be taught well so the college will work to improve its teaching and learning processes by creating more orientation and faculty development opportunities for part-time faculty. 


The college also wants to create cost-effective strategies for ending current major grants and sustaining those programs that continue to be valuable. This will be achieved through making several improvements and enhancements to the grant processes within the college. 


FINANCIAL STABILITY
College officials have worked in recent years to create a more financially stable environment for the college and were recently able to stabilize tuition rates. A major focus this year will be to balance enrollment with revenue and potential expenses with specific strategies such as making sure NWACC has an affordable and comprehensive insurance portfolio; making changes in the treasurer’s office so that students are counseled more on their financial decisions regarding their academic future; implementing specific technology; improving finance workflow processes and enhancing usage and communication of available surplus assets across the entire college.

Another goal is to “further develop and improve budgeting process that supports the college strategic plan and processes.” The actions planned to achieve this financial goal include creating a balanced budget; building an annual operational contingency; reducing costs with various measures such as energy efficiency and automation; and increasing monthly financial reporting. 


The college also hopes to diversify its state appropriation funding by pursuing different types of funding for programs such as workforce development, capital request projects, and other state-funded programs that are outside the standard state appropriation. 


While state and grant funding are vital for success, the college has a history of not being adequately funded by the state, according to school officials. The NWACC Foundation helps with scholarships, some capital projects and other programs that enhance the overall learning experience at NWACC. The college plans to pursue specific means of increasing Foundation revenue, according to the plan. Another goal is to increase corporate and learning programs, which meet community needs but also increases income for the college. 


COMMUNITY OUTREACH
The fifth area set out in the proposed strategic plan addresses how the college will further engage the community and create opportunities for its students to be a part of the community. This includes goals such as offering community education programs and supporting student and employee involvement in community non-profit events, such as developing a team to participate in a fundraiser event. 


OPERATIONAL SUPPORT
Many programs and initiatives in the strategic plan will be noticeable and public to the students but some are behind-the-scenes, all with the intent of improving student experience. A part of this initiative is to increase technology alignment with all of the strategic goals through actions such as creating plans that increase communication, streamline software upgrades and create easier remote access to applications and services for students. 


Another aspect of operations is the employees and how they are managed. A goal for this year is to increase employee satisfaction rates through promoting work/life balance, providing consulting for individual employee growth and development , and streamlining human resources processes using technology. The college also wants to make improvements in its finance area to improve the employee experience in that department. Other action plans include evaluating and improving new employee orientation, investigating retirement planning services for employees and investigating alternative health plans. 


FACILITIES EXPANSION
Maintaining facilities and establishing new locations are major goals for NWACC this school year. Several renovations and repairs are expected for existing facilities and officials hope to complete the purchase of land in Springdale near Arvest Ballpark by the end of September. During the official board meeting after the retreat, the board authorized college staff to research the possibility of expanding its culinary arts program to a building on Southeast 8th Street in Bentonville. 


Part of maintaining a campus is working with other businesses and government agencies. The college hopes to complete the purchase of land where railroad tracks run through the campus, and will continue talks with the City of Bentonville regarding the expansion of 8th Street and Water Tower Road. 


Another goal is to “maximize facilities and support educational programs,” which will be achieved through activities including evaluating space in the National Child Protection and Training Center, identifying renovations necessary to move adult education programs to the main campus and creating an inventory of classroom needs in Burns Hall. 


The Northwest Arkansas community has strong support for a community college-level sports program, a room full of area sports program advocates told the NorthWest Arkansas Community College Board of Trustees on Saturday (July 26). 


The board met for its semi-annual board retreat, which is where the board member discuss ideas and provide general direction for staff but no binding votes are taken. 

Board member Todd Schwartz broached the subject of the college offering organized sports for the first time in its nearly 25-year history. It offers club sports, which has nearly 80 participants. Schwartz said he recently attended a conference where the idea of community colleges having competitive sports teams was discussed. 


“NWACC has always supported its students through organizations,” he said. “A sanctioned sports program seems to be another way.”


It was standing room only with a large group of people advocating for the program including coaches and local businessmen such as Cameron Smith. Former Razorback baseball coach Norm DeBriyn was also a part of the group and he enthusiastically supported the idea, saying it would draw students, enhance the NWACC brand and encourage more money to come into the college. 


All of the advocates speaking at the retreat said the program could be funded entirely through private dollars. Cameron Smith said he has five years teaching experience with fast-pitch girls’ softball and knows how to build a program from the ground up. 


“I know how to build this from square one and will not let it affect the college’s finances,” he said. 


Through the discussion, several concerns and potential issues were raised including the fact that NWACC’s average student age is 26 and many of those students are full-time workers who might not fit the type who wants to play college sports. Several supporters said that they believe NWA has many talented young people who don’t qualify for Division 1 sports but who still want to play. 


“There’s a lot of kids out there in our communities that get a lot out of athletics,” board member Joe Spivey said. “It gives them purpose. Both young men and young women.” 


Another potential concern is the idea of recruiting students from out of state because the state of Arkansas does not allow community colleges to have residence halls. 
Spivey said that if such a program came to the college he would not be interested in recruiting outside the state because he wants to give Northwest Arkansas student athletes more opportunities.

Schwartz agreed that most the talent would come from the region but that it didn’t mean that a quality program wouldn’t be a draw for those outside the area. 


Other concerns that were raised included the potential misconception of the college starting a sports program while it’s trying to solve financial problems and purchase land. 

“Would it be a stigma?,” board member Scott Grigsby said. 


Meredith Brunen, executive director of development, said that with the NWACC Foundation’s current fundraising activities it would be difficult to add on raising money for that size of a project. 


In the end, the board authorized a committee to research the potential costs and funding sources for a baseball (men) and softball (women) program for the college.

P.A.M. Transportation Services Inc. posted record quarter earnings behind 8.5% more loads hauled and a roughly 1.4% rise revenue per mile, before fuel surcharges. 

The Tontitown-based trucking firm reported net income of $4.945 million, or diluted earnings per share of 62 cents for the quarter ended June 30. These results compare to net income of $2.682 million, or diluted earnings per share of 31 cents a year ago.

Wall Street consensus for the quarter was 34 cents, on revenue of $105 million. Actual revenue for the second quarter totaled $104.34 million, including fuel surcharges. Revenue slid 5% from $104.40 million reported in the year-ago period.

For the first six months of 2014, P.A.M reported income of $6.3 million on revenue of $202.16 million, compared to $2.225 million on revenue of $204.38 million in the same period of 2013.

The solid earnings failed to impress investors as shares of P.A.M. Transportation (NASDAQ: PTSI) were trading at $34, down about 1% on the day. For the past 52 weeks the share price has ranged from a high of $34.90 to a low $11.26. The share price has already risen 65% this year from $20.75.

"We are very pleased to announce another quarter of improved results. The earnings per share results attained so far this year represent a 200% increase as compared to the same period last year. ... Also, considering that we are only halfway through the year and have already exceeded the net income posted for the entirety of last year, we are further satisfied that our strategic plans are maturing,” CEO Daniel Cushman noted in the release.

Cushman said the company continues to diversify some of its business away from the auto industry. 

“Our Automotive, Mexico, Expedited, and Dedicated divisions all continue to grow and improve financially. We continue to seek opportunities that we believe are driver friendly and as a result, we have increased our driver count despite the difficulties in the driver market,” Cushman added.

He said the automotive freight is generally very consistent and we are able to recruit and maintain drivers in this division. 

“Our Expedited Division continues to grow, and now comprises approximately 20% of our overall revenue. This division is very diverse and very service sensitive. By the nature of the business, we keep drivers moving and they get the miles they desire. We've focused on loading the expedited loads where they land, and as a result, we are experiencing positive trends in reducing deadhead,” Cushman said.

The company’s Mexico division is also growing because the lanes generally represent a long length of haul that drivers like, he said.  

"We have always had a lot of automotive dedicated business. In the past, we have had limited success in securing dedicated business outside of the automotive area, but within the last nine months we have been more successful in the diversification of our dedicated customer base. Again, this is freight that typically appeals to drivers,” Cushman said.

He said the company continued to move assets to its better performing divisions and away from the random freight business which is its lowest performing division.

"The majority of the growth in our more profitable divisions has come primarily at the expense of our random fleet. The resulting decrease in our random fleet has made it difficult to support our customer base that only has one way business. We are working hard to find ways to bring this type of customer more solutions. Our brokerage division is obviously one way that we can support our customers. We are making progress but this continues to be a great opportunity,” Cushman added.

P.A.M.’s brokerage and logistics segment produced revenue of $5.229 million in the recent quarter, down 12% from the prior-year period.

The company trucks logged 53.67 million miles in the quarter, down 7.5% from a year ago. There were 73,268 loads transported, up 8.5% from the second quarter of 2013. P.A.M. averaged 1,437 company-owned trucks and utilized 341 owner-operated trucks in the quarter.  Company-owned fleet numbers are down from 1,471 and owner-operated trucks rose from 321 in the year-ago quarter.

The Jones Center is offering free dental services for those with no private health insurance starting on Monday, July 28 as part of the Ronald McDonald Care Mobile Dental Outreach program and Arkansas Children’s Hospital.

The mobile unit services will be available to children needing examinations, cleanings, x-rays and extractions.

The Care Mobile Unit treats children who fit the following qualifications:
• 18 years and younger;
• no dental treatment in the past year; and
• no private insurance.

The mobile unit will be at the Jones Center from July 28 through July 30 and again from Aug. 4 to Aug. 7. The hours of operation range from 7:30 a.m. to 3:30 p.m.

Wal-Mart’s decision to promote Greg Foran to CEO of Walmart U.S. was a surprising move to analysts given Foran does not have the U.S. retail experience that other execs within the company possess.

The retail giant passed over Duncan Mac Naughton, who has overseen U.S. merchandising for Walmart since 2010 and has more than three decades of experience in U.S. retail. Rosalind Brewer, CEO of Sam’s Club, also has U.S. retail experience dating back to 2006.

When a company chooses a successor for a top job, those who were deemed in the tournament running are apt to leave the company soon after a decision is made, according to Alan Ellstrand, professor at the University of Arkansas. Ellstrand’s expertise is in top management teams and corporate governance.

His comment was made last week following the resignation of Bill Simon as CEO of Walmart U.S., noting that Simon was passed over for the top CEO job going to Doug McMillon. Other Wal-Mart watchers and insiders now predict this could soon be the case for Mac Naughton.

BYPASSING LIEUTENANTS
"In our view, this choice presents a substantial learning curve and showcases a clear change in direction of the division, for him to successfully bypass all of Bill's lieutenants such as Chief Merchandising Officer, Duncan Mac Naughton,” Deutsche Bank analyst Paul Trussell wrote in a research note.

Given that Foran was just promoted to head of Asia less than three months ago, Faye Landes, analyst with Cowen & Co., said this implies that the most recent move was not in the works at that point.

“We will probably never know the backstory on this —  it seems likely that the company knew or at least strongly suspected that Simon would leave, but maybe they originally had someone else in mind as head of U.S," Landes added.

Ellstrand said when Jack Welch stepped down from General Electric in 2001 there were a number of well-qualified people in the running for the position. But soon after Jeffery Immelt was chosen, the others exited the company.

“It’s usually better for both parties, when this happens because that person passed over can’t help but feel that the company is going in a different direction,” Ellstrand said.

Not everyone believes there will be more changes at Wal-Mart under the direction of Foran. Budd Bugatch, analyst with Raymond James & Associates, notes that Wal-Mart’s mission under Doug McMillon’s leadership has been to right the ship.

“Wal-Mart’s prescription is pretty much the same across the world with their everyday low cost, low price policy. They really live that, and I think that’s one reason why they feel comfortable bringing Foran in to run the U.S. business,” Bugatch said.

WAL-MART TALENT POOL
Carol Spieckerman, CEO of NewMarketBuilders, said Wal-Mart is not the first U.S.-based retailer to tap a global executive to run its business.

“One of the more high-profile examples of a global executive taking the helm of a U.S.-based retailer is Hubert Joly, who at this point appears to be executing quite an impressive turnaround at Best Buy,” Spieckerman said.

She also notes that it hasn’t been that long ago that Wal-Mart was considered an end-of-career move, but more recently the retail giant has emerged as a talent incubator.

“I can’t remember when Walmart has had such a well-rounded stable of executive talent among its ranks and, although it’s a nice problem to have in retail, not all of those executives can count on enjoying a continual upward career trajectory within Walmart. Even those who may be in line for ongoing taps may get itchy, particularly given the number of high-visibility openings that exist in retail right now,” Spieckerman said.

Competitors Target and Dollar General are each in the market for a new CEO.

“Duncan Mac Naughton and others have a real shot at boosting their careers elsewhere and no doubt Walmart has anticipated a degree of executive attrition,” Spieckerman said.

The race to win the frugal, cash-strapped consumer got a little more heated on Monday (July 28) with Dollar Tree’s $8.5 billion blockbuster offer to acquire struggling discounter Family Dollar Stores.

The pro forma company will create a network of 13,000 stores with combined annual sales of $18 billion and present a bigger threat to Dollar General and Wal-Mart – a company in the midst of a small store expansion of its own.

Wal-Mart has planned to build 400 stores in fiscal 2015, giving it about 4,700 stores in various formats within its U.S. operations. Dollar General, the odd man out in the dollar area, has roughly 11,000 stores.

Jim Cramer, a contributor with CNBC, said Dollar Tree is the best operator in the small discount dollar channel and is buying the worst of the three. Though Dollar Tree’s business model is quite different from Family Dollar, Cramer believes the merger is a positive move

The company plans to maintain each brand. Dollar Tree CEO Bob Sasser, who will lead the combined entity, said the two chains have little overlap. Executives said they don't plan to close stores but may turn some Family Dollar stores into Dollar Trees, or vice versa, where the existing stores are underperforming.

"Industry trends and outlook are positive for the combined businesses with low and middle income customers continuing to look for ways to balance their budgets and stretch their dollars," Sasser said.

Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors, recently said: “Wal-Mart is in for big trouble for staying true to its insular corporate culture (one where it believes it's doing everything correctly) and failing to pay a premium to acquire instant square footage and name reorganization inherent to Family Dollar.”

Sozzi said as soon as the Dollar Tree/Family Dollar deal closes in early 2015, Wal-Mart will find the clock start for a competitive firestorm. He cautioned that a monster dollar store will have been formed that is closer to the economically-sensitive customers in rural and urban markets that view a trip to Walmart as expensive.

Sozzi also said a monster dollar store will also create synergies, an estimated $300 million to start.

“I expect more as the Dollar Tree cleans up the operational mess that is Family Dollar) to price its merchandise more competitively (especially doing the holidays), counteracting Walmart's ongoing efforts to reduce prices for food and consumable products. Here come the weekend circular price wars,” Sozzi said.

Gene Urcan, managing director of the Capello Group, said the dollar store merger could force Wal-Mart to be more aggressive in its rollout of small stores. For Dollar General he see the deal as a net negative.

Dollar General previously vetted the deal, but chose to grow its footprint organically, so the announcement that Dollar Tree made the offer was surprising to Jason Long, CEO of Shift Marketing Group.

“With 2,000 more stores than Dollar General suddenly there’s a new gorilla in the room. I don’t think any of this has much of an impact on Wal-Mart who has already put their own small store plan in motion,” Long said.

He believes the Wal-Mart could benefit from Dollar store closings that result from the deal, adding that there will likely be fewer closings than if Dollar General was the suitor.

Carol Spieckerman, CEO of NewMarketBuilders, was not surprised to hear that Dollar Tree made the offer.

“I can’t think of a better owner than Dollar Tree. Of the big three dollar stores, Dollar Tree stands out on a couple of important fronts. It operates multiple formats and understands how to flex format attributes for specific markets and customer segments and it’s the only dollar chain that is taking digital seriously,” Spieckerman said.

She adds that the multiple formats should make the assimilation of Family Dollar’s locations relatively seamless but it’s digital awareness that presents the most promise, and the biggest threat to Dollar General and Wal-Mart.

“For example, if Dollar Tree were to follow Walmart, Staples and others by building out an online marketplace filled with items from third-party sellers, its thousands of stores could potentially serve as pick-up locations for those items, greatly increasing the productivity of its fleet and generating additional income from its marketplace sellers,” Spieckerman said.

Walmart U.S. CEO BIll Simon was recently asked about the retailer’s appetite for acquiring a competitor in the dollar discount space. He said Wal-Mart Express with site-to-store, ship-to-store, full grocery, gas and pharmacy can drive the same sales as three to five Dollar Stores. He said the hybrid Neighborhood Market can drive the sales of 10 Dollar Stores, and both models make better use of capital given their reduced building costs.

Shares of Wal-Mart Stores and Dollar General dipped lower on the news. Wal-Mart stock (NYSE: WMT) closed at $75.71, down 26 cents rallying back from the $75.36 intraday low. For the past 52 weeks Wal-Mart share price has ranged from $81.37 to $71.51. Shares are down 3.73% since the first of the year.

Dollar General shares (NYSE: DG) closed at $55.56, down a nickel on the day. Shares rallied back from a intraday low of $53.78 following the Dollar Tree announcement. For the past the 52 weeks the share price of Dollar General stock has ranged from $65.99 to down to $52.40. Year-to-date shares are down 9.13%.

The biggest winners of the day were Family Dollar investors as shares rose nearly 25% to $75.74 per share. The deal made by Dollar Tree is $74.50 per share, a 23% premium over the Family Dollar’s share price on Friday (July 25).

Shares of Dollar Tree rose 1.2% on the news closing Monday at $54.87.

Little Rock-based Windstream Corp. will spin off certain assets of the telecom and broadband company and form a new, real estate investment trust (REIT).

The company announced on Tuesday (July 29) that it would form an independent, publicly traded REIT that will own Windstream’s existing fiber and copper network and other fixed assets. In turn, Windstream will lease the network and those assets from the new company — which has yet to be named — for $650 million annually.

The move is expected to reduce Windstream’s debt, increase its cash flow, and potentially position the company for acquisitions. Windstream said it anticipates that the spinoff would occur in the first quarter of 2015.

“This transaction will make Windstream a more nimble competitor in today’s increasingly dynamic communications marketplace and accelerate our deployment of advanced communications services,” said Jeff Gardner, president and CEO of Windstream. “Additionally, the REIT will have geographically diverse, high-quality assets and sustainable cash flows with the ability to grow and diversify over time.”

A REIT is a company that owns and/or operates income-producing real estate. They are often used in commercial real estate transactions and timberland holdings, but can be used in other ways. In 2011, Little Rock department store chain Dillard’s spun off a portion of its real estate assets into a REIT.

LEADERSHIP

Windstream CFO Tony Thomas will serve as CEO of the REIT, which will have approximately 25 employees. Francis “Skip” Frantz, a Windstream director, will serve as chairman of the REIT’s board and will leave Windstream’s board of directors at the conclusion of the transaction.

“Tony has served Windstream well, and I would like to personally offer my gratitude for his many contributions over the last eight years,” Gardner said. “I am confident that his experience and expertise will benefit the REIT while also providing important continuity and fostering a close working relationship between the two companies.”

Thomas was appointed CFO in 2009. He previously served as controller for Windstream. He will continue to serve in his current role with Windstream while the company conducts a search for his successor.

Frantz has been a director of Windstream since 2006 and was chairman of the board from July 2006 to February 2010. He is a former chairman of the United States Telecom Association and was previously executive vice president of external affairs, general counsel and secretary of Alltel Corp.

DETAILS
Under the transaction, Windstream will spin off certain assets, including its fiber and copper networks and other real estate, as a REIT, which will lease use of the assets to Windstream through a long-term triple-net exclusive lease with an initial estimated rent payment of $650 million per year.

Company officials said they engaged an accounting firm to perform an independent valuation of its real estate assets to be transferred to establish a fair market price for rental of the assets.

Windstream will still operate and maintain the assets and deliver services to consumers and businesses. The company said customers will see no change in their rates, scope or terms of service as a result of the transaction. It also said it will continue to have sole responsibility for meeting its existing regulatory obligations following the creation of the REIT. The REIT will focus on expanding and diversifying its assets and tenants through future acquisitions.

The spinoff is expected to be tax-free. Windstream has received a private letter ruling from the IRS related to certain tax matters regarding the tax-free nature of the spinoff and has qualified for the status.

Windstream anticipates that the REIT will raise approximately $3.5 billion in new debt, which will be used to repay existing Windstream debt to effect the transaction. Windstream said it expects to retire approximately $3.2 billion of debt as part of the transaction, resulting in the company deleveraging to 3.3 times debt to adjusted operating income before depreciation and amortization immediately at closing.

“The company’s enhanced leverage profile and improved discretionary free cash flow will enable Windstream to invest more capital in strategic initiatives, better positioning Windstream for long-term growth,” the company said in a statement.

SHAREHOLDERS AND DIVIDENDS
Windstream, known for its high-paying and consistent dividends, said the transaction will benefit shareholders. Windstream shareholders will retain their existing shares and receive shares in the REIT commensurate with their Windstream ownership. Windstream said it plans to maintain its dividend practice through the close of the transaction.

“Following the spinoff, the expected annual dividend per share in the aggregate for the two companies will be $0.70 per current Windstream share, with Windstream expected to pay an annual dividend of $0.10, while the REIT will have an annual dividend equivalent to $0.60,” the company said.

Shares of Windstream (NASDAQ: WIN) were up in pre-market trading activity. The company’s stock closed at $10.46 per share on Monday. It has traded between $7.18 and $10.57 during the last year.

U.S. consumer confidence increased four index points in the second quarter of 2014 to a score of 104. This marks an upward trend that began in the first quarter of 2013. While confidence has climbed 11 points since then, spending levels at retail are still below where they were before the 2008 recession.


“In the U.S., positive news for the job, housing and equity markets appears to have buoyed the spirits of Americans,” said James Russo, senior vice president, Global Consumer Insights, Nielsen. “The retail environment for non-durable goods, however, is still catching up. Retail dollar sales of fast-moving consumer goods are up 1.3% in latest six months ending June. Consumers are moving ahead slowly, and marketers need to adjust to a new consumer mindset of restraint, which will take time to reverse.”


Americans are thinking positively, however. Nearly half of Americans (49%) believed now is a good/excellent time to spend. This is the highest level reported since 2006 and up 6% from the first quarter of 2014.


Optimism about job prospects and personal finances rose in the second quarter as well. While the outlook for jobs (46%) was still below pre-recession levels (63%), the sentiment represents a significant improvement from 2009, when it was at 20%. Almost two-thirds of U.S. respondents (64%) said their personal finances were in good order, marking a rise of 5% from the first quarter.

Wall Street analysts at Goldman Sachs took a long look at big-box discounters this week and downgraded Wal-Mart Stores to neutral from buy, while upgrading competitor Costco to a buy.

Goldman analyst Matthew Fassler said Costco is on the “right side of the emerging divide in discount retailing.” He notes that membership-only clubs are stealing market share from super-stores like Wal-Mart and Target, and are seeing stronger traffic growth and customer renewal rates in the U.S. and overseas.

For Costco, Fassler points out that 30% to 40% of revenue growth is coming from the international arena.

Goldman also notes that the rise of e-commerce has prompted customers to see less value in general merchandise stores with large product assortments. Shoppers now prefer a combination of value and convenience, which analysts said they have found in narrow-assortment retailers like dollar stores, drug stores and warehouse clubs.

Goldman said Wal-Mart has become more focused on investing in online and small stores. But Fassler said these are understandable decisions but the time when the company is executing against them is not necessarily the most rewarding to own the stock.

Wal-Mart Stores shares closed Tuesday (July 29) at $75,44, down 27 cents. Wal-Mart shares are down 4% year-to-date.

WalmartLabs announced Tuesday (July 29) the acquisition of Luvocracy, a social marketplace startup based in Silicon Valley. The retailer notes that this is primarily a talent acquisition as it plans to shutter the Luvocracy website that has been compared as a Pinterest-like experience where friends can recommend products to others.

Terms of the deal were not disclosed, but the startup raised $11 million in funding from the investors such as Kleiner Perkins, Google Venture, Marissa Mayer, Tony Robbins and Ali Pincus. This is Wal-Mart’s 14th startup acquisition since 2011.

CEO Nathan Stoll is among the 16 Luvocracy employees moving to WalmartLabs San Bruno offices. Stoll founded the online business in 2011 after selling his social search company Aardvark to Google in 2010.

Walmart bloggers note that the retail business thrives on finding products they think customers will love and then introducing them to each other. Whether in pages, pixels, or aisles, facilitating such moments is at the very core of what retailers like Wal-Mart are wanting to do.

At Walmart, the Luvocracy team will be tasked with working on projects at a larger scale. Specifically, the team will work to innovate on “design, product and discovery shopping,” the retailer says.

“There’s no bigger stage in commerce than Walmart, and the opportunity to take our vision of social discovery and decision-making in commerce to their audience of hundreds of millions across the world was incredibly attractive,” Stoll said. “I am super excited about the opportunity to work with the very talented team they’ve been building. Right now, their organization for global e-commerce is about the same size Google was when I joined in 2002 — with the opportunity for huge growth to come as they have so much untapped potential.”


The economy may be improving for Wall Street firms furnishing cheap capital to  corporate America at large, but a recent poll compiled by Sam’s Club and Gallup indicated two-thirds of new microbusiness owners rely on non-retirement, personal savings as the lead source of funding for their businesses.

Of the small, upstart business owners surveyed, 43% use credit cards and one in five use money from friends and family. The Sam’s Club/Gallup Microbusiness Tracker also found that despite new and alternate funding sources for small businesses, less than 3% of microbusiness owners use government loans, 2.4% have used small business loans and another 1.9% used crowd-funding to support their business venture.

The quarterly survey of 1,004 U.S. firms with five or fewer workers also found U.S. microbusinesses started in the past year are 30% more likely to use personal savings to maintain their business than a mature company owner. Microbusiness owners reported that in the past 12 months, two in five microbusiness owners (40.4%) have had to dip into personal or retirement savings to improve their bottom line, while 42% have increased the price of their goods and services, according the Sam’s Club/ Gallup poll conducted in May. 

MIXED CONFIDENCE
The Sam’s Club survey also explored the emotional and economic concerns of the country’s smallest businesses that employ one out of every 10 Americans. The survey reveals that more than half (54.9%) expect the economy to worsen, yet 70% are energized by their work and 65.2% are confident they have the talent to grow their company in the future. Confidence is also reflected in their perception of the future and their impact on the community.

As a group, 71% are confident in their company’s future and 67% feel they have a positive impact on their community.

“Despite concerns over worsening economic conditions, U.S. microbusiness owners are confident in nearly every dimension of work and life. This vital segment of the U.S. economy is passionate about their choice to pursue a small business venture and unwavering in their commitment to serving consumers with an intense focus on quality no matter how many other factors or challenges they may face,” Rosalind Brewer, president and CEO of Sam’s Club, noted in the survey report.

RETIREMENT ANXIETY
One of the few areas of emerging anxiety for microbusiness owners is a concern about long-term investments with 43% indicating they are worried about retirement.

The survey revealed other surprising findings about putting money away for the future.
The more you make the more you worry, according to the survey. Nearly half of microbusiness owners generating $50,000 or more in revenue (44%) are anxious about saving for retirement, compared to those making less than $10,000 (42%).

Having a nest egg weighs more heavily on female microbusiness owners, with 47% of women, compared to 41% of men, concerned about retirement savings.

Geographically, business owners near the East Coast are the most nervous about the saving for the future (49%) while Midwest microbusiness owners are the least apprehensive (39%).

One day after news of the $8.5 billion Dollar Tree bid to acquire Family Dollar, officials with Family Dollar confirm plans to shutter seven underperforming stores across the Natural State – a move resulting in up to 70 lost jobs.

Three of those Family Dollar locations are located in Northwest Arkansas and one is in the Fort Smith metro area, according to Bryn Winburn spokeswoman with Family Dollar.

Winburn said Family Dollar is taking decisive action to position the company to be more successful in an adverse operating environment. She said after a full assessment, 370 of the retailer’s 8,246 stores were tagged as underperforming.

“We currently operate 115 stores in Arkansas. Over the next several weeks, we plan to close 7 underperforming stores. Each of our stores employs between 8-10 team members, and we will do everything we can to reassign impacted team members to nearby stores,” Winburn said.

The following stores are slated for closure by August 31.
• 1328 North College Ave. in Fayetteville
•  514 W. Centerton Blvd. in Centerton
• 113 East Pridemore Drive in Lincoln
• 230 Cloverlead Plaza in Van Buren

During a conference call Monday (July 28) Dollar Tree CEO Bob Sasser said the two dollar store chains had been in merger talks for several months. He expects the deal to close early next year, pending approval by Family Dollar shareholders and regulatory scrutiny.

Sasser told analysts during the call that the banners would remain in operation with the exception of underperforming stores. He said in some cases Dollar Tree locations could become Family Dollar and vice versa. The pro forma company will have more than 13,000 locations with a growing footprint in Canada as well.

The two chains operate with very different models, Family Dollar is mostly located in rural areas and offers a wide variety of discounted merchandise at low opening price points. Dollar Tree operates in strip centers within urban areas and sells all merchandise at $1. CNBC contributor Jim Cramer said the two banners are like an apples and oranges comparison. 

“I am a huge Dollar Tree fan, they operate clean, well-run stores and are a great venue for purchasing seasonal merchandise. Family Dollar can benefit from Dollar Tree management. Together they will also be able to create synergies and help to negotiate better pricing on logistics and supplier pricing given their combined scale,” Cramer said.

Some analysts believe Wal-Mart might pick up some of the slack in the rural areas where Family Dollar stores are closing, given the retail giant is in the midst of rolling out more Express Store formats this year and next.

Decatur, a town of about 2,000 residents, has been earmarked for a new Walmart Express, the third small format built along Arkansas 59 by the retail giant. With the closing of the Family Dollar in Lincoln, Wal-Mart might see another opportunity fir ab Express Store or a Neighborhood Market.

Wal-Mart recently opened a Neighborhood Market in Centerton and will soon open a supercenter there, also.

Superior Industries announced early Wednesday (July 30) that it would close its Rogers wheel manufacturing plant as “part of an initiative to reduce costs and enhance its global competitive position.” The closure will result in the loss of 500 jobs, with the plant expected to end operations by the end of the year.

The company’s plant in Fayetteville will remain open, with some of the work from Rogers being shifted there and to operations in Chihuahua, Mexico. Company officials said the move would result in a $15 million per year labor cost savings. Average local wages at Superior Industries range from $55,000 to $80,000 annually, according Glassdoor.

“This action follows a comprehensive review of the company’s cost position in what continues to be an intensely competitive environment,” Don Stebbins, who joined Superior in May 2014 as its president and CEO and member of the Board of Directors, said in the statement. “Our board and management team remain focused on building an efficient, operationally stronger organization that can compete effectively with manufacturers around the globe. We appreciate the contributions of our team members at Rogers and will be providing assistance to them during the transition process”

Superior noted in June of 2013 that its U.S. facilities were unable to keep pace with the demand out of Detroit. Management said the plants in Rogers and Fayetteville faced capacity restraints and ran far less efficiently than their sister facilities in Mexico.

Kerry Shiba, chief financial officer for Superior Industries, said in June 2013, the challenges in the local plants related to their older age, equipment reliability and they are less adaptable to the “increasingly challenging product mix” in orders it gets from its two largest customers Ford and General Motors.

Despite retooling the Rogers plant in 2013, and a hefty $18 million capital investment last year in the two local plants, the company said it continued to lose some marketshare because it could not keep pace with demand. The company said most of the $18 million was earmarked for the larger Fayetteville plant, perhaps another hint that the Rogers facility’s days were numbered.

In 2013, the company said it squeezed 800,000 extras wheels from the two plants but that was not enough. Soon after, the company broke ground on its fourth facility in Mexico hoping to recapture some additional market share.

At $125 million, the new plant in Mexico will produce up 2.5 million wheels a year, giving the company 20% more capacity.

The closure is a huge blow to the Northwest Arkansas employment sector that continues to lose higher paying manufacturing jobs, despite a few recent announcements related to Wal-Mart’s U.S. manufacturing jobs initiative. Manufacturing employment in Northwest Arkansas was an estimated 26,300 in June, down from 26,500 in June 2013, and well below the 33,300 in June 2004 – a more than 21% drop in the 10-year period.

Wall Street analysts said Tuesday that they are concerned about the increasing capacity in the auto industry over the past few years. Adam Jonas, auto analyst with Morgan Stanley, said that the auto market's five year run of expanding production and profits is peaking.

"We're pulling forward from the future and it's worrisome" Jonas said.

The industry has added back 120% to 130% of the capacity lost during the recession, according to Jonas. 

“The current boom in auto production in Mexico is an example of the new surge in supply heading to U.S. showrooms,” he said.

Auto dealerships across the country report brisk sales that have them worried there won’t be enough automobiles coming to keep pace with the average 16.5 million units sold annually. 

In the first quarter of 2014, Superior reported lackluster earnings as its biggest customers, Ford, General Motors, Chrysler and Toyota worked through unsold inventories. The company reported net income of $4.8 million for the first quarter, flat with the year-ago period.

Net sales for the 2014 first quarter decreased 11% to $183.4 million from $206.4 million in the comparable period a year ago. However, the company’s gross profit improved to $15.6 million for the 2014 first quarter from $13.5 million in 2013, while the 2014 first quarter gross profit margin improved to 8.5% of net sales from 6.5% last year.

The gross profit margin improvements were attributed to lower labor costs and improved operational efficiencies.

Superior Industries will report its second quarter earnings on Thursday (July 31.)

Zilkha Biomass Energy, a producer of biomass solutions to electric utility customers, today announced Wednesday (July 30) its plan to build a $90 million pellet production plant in Monticello, Ark., that will employ 52.

Houston-based Zilkha Biomass Energy LLC provides biomass products to electric utility customers, including conversions of fossil fuel stations, and the supply of a baseload, renewable fuel in the form of the Zilkha Black Pellet. The company says the black pellet is the first advanced pellet in the industry that is commercially available.
zilkha.com/
 
“Power companies across the globe are looking for renewable energy alternatives and biomass wood pellets stand as one of the most practical and cost-effective solutions,” Jack Holmes, CEO of Zilkha Biomass Energy, said in a statement released by the Arkansas Economic Development Commission. “This plant in Monticello will be one of Zilkha’s largest and will help us capture more of the growing biomass energy market. Our Black Pellets have a set of beneficial qualities, such as water-resistance, that make it a more attractive option than traditional wood pellets.”

Made from a variety of feedstock, such as mill residuals and other low-grade wood, wood pellets are used in the energy industry as an alternative fuel source. Zilkha Black Pellets may be used with coal-fired plants to create cleaner emissions, allowing plants to more easily comply with clean air regulations, and energy companies to build fewer new power plants. The pellets are water resistant, which allows them to be transported and stored outside like coal.
 
“Wood pellets are gaining popularity in the U.S. as we look for sustainable fuel sources that are cleaner and cheaper to burn,” Gov. Mike Beebe said in the statement. “South Arkansas has the renewable forests that this kind of enterprise requires to succeed.  We are excited that Zilkha has chosen Monticello for their innovative work in the energy sector.”
 
Woody biomass is abundant and is considered to be one of the best available sources of biomass on Earth. Forests cover more than 18.8 million acres in Arkansas – more than half of the state – making the state an ideal location for biomass production.