RETAIL
NEW YORK — Retailers could be sweating it out this summer.
Shoppers, worried about jobs and the economy, pulled back on spending in June, slowing down sales for many retailers. And that could leave merchants on edge in the coming week, wondering if Americans will spend more once the back-to-school season starts in late July.
“The consumer is in a watch-and-wait mode,” said Arnold Aronson, managing director of retail strategies at consulting firm Kurt Salmon. “She has to be seduced by value.”
The June results, based on revenue at stores opened at least a year, are considered an indicator of a retailer’s health. Only a small group of chain stores report monthly sales figures. But the results offer a snapshot of consumer spending, which accounts for 70 percent of all economic activity. The figures have shown an uneven recovery. Discounters and high-end stores, for example, notched stronger growth last month.
But for most, sales were disappointing. Big chains such as Costco, Kohl’s and Macy’s, as well as teen retailer Wet Seal, were among stores with results that fell short of Wall Street expectations.
MORTGAGE
Fixed rates fall to new record lows
Fixed U.S. mortgage rates fell again to new record lows, providing prospective buyers with more incentive to brave a modestly recovering housing market.
Mortgage buyer Freddie Mac said Thursday that the average on the 30-year loan dropped to 3.62 percent. That’s down from 3.66 percent last week and the lowest since long-term mortgages began in the 1950s.
The average rate on the 15-year mortgage, a popular refinancing option, slipped to 2.89 percent, below last week’s previous record of 2.94 percent.
The rate on the 30-year loan has fallen to or matched record low levels in 10 of the past 11 weeks. And it’s been below 4 percent since December.
Cheap mortgages have provided a lift to the long-suffering housing market. Sales of new and previously occupied homes are up from the same time last year. Home prices are rising in most markets. And homebuilders are starting more projects and spending at a faster pace.
EUROPE
European Central Bank cuts rates to new low
FRANKFURT, GERMANY — The European Central Bank cut its key interest rate by a quarter percentage point Thursday to a record low 0.75 percent to try to help ease Europe’s financial crisis and boost its sagging economy.
The action, which was widely expected, is meant to make it cheaper for businesses and consumers to borrow and spend money. But experts said that fear over the economy was so high in Europe that the cut might only have limited effect.
In a more surprising move, the ECB cut the interest rate it pays banks on overnight deposits by a quarter percentage point - to zero. This pushes banks to lend the money, rather than sock it away with the ECB.
ECB President Mario Draghi said the eurozone economy would recover only gradually. Some of the risks foreseen from the debt crisis had already materialized, pushing the bank to act, he said.
Analysts warned the rate cut might do little to jolt the eurozone economy back to life, however. Borrowing rates are already low, but businesses and households are not spending money because they are afraid of the economic outlook.
COURTS
GlaxoSmithKline pleads guilty to health fraud
BOSTON — A federal judge in Boston has signed off an agreement by British drugmaker GlaxoSmithKline to pay $3 billion for criminal and civil violations involving 10 drugs that are taken by millions of people.
The company pleaded guilty Thursday in U.S. District Court to promoting popular antidepressants Paxil and Wellbutrin for unapproved uses.
The company also pleaded guilty to failing to report to the government some safety problems with Avandia. The diabetes drug was restricted in the U.S. and banned in Europe after it was found in 2007 to sharply increase the risks of heart attacks and congestive heart failure.
It is the largest health care fraud settlement in U.S. history.
ACQUISITION
Walgreen plans new acquisition
Walgreen Co. took another step Thursday in its push to grow through acquisitions when it announced the $438 million purchase of a regional chain that operates USA Drug, Super D and May’s drugstores.
The Deerfield, Ill., company also said monthly sales fell once again in June, as a split with pharmacy benefits manager Express Scripts Holding Co. continued to hurt business.
Walgreen plans to buy 144 stores in a chain focused on the mid-South from the privately held Stephen L. LaFrance Holdings Inc., which is based in Little Rock, Ark.
Its stores are located in Arkansas, Kansas, Mississippi and Missouri, among other states.
• From wire dispatches and staff reports
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