In a statement, interim president and CEO Robert Fisher said the process of spinning off Old Navy shone a “bright light on operational inefficiencies and areas for improvement,” ultimately contributing to the reversal.
On Thursday, Gap Inc. announced it no longer planned to pursue spinning off Old Navy into a standalone company, citing the “cost and complexity” of splitting the brand from its parent company.
“The plan to separate was rooted in our commitment to value creation from our portfolio of iconic brands,” Robert Fisher, Gap Inc. interim president and CEO, said in a statement. “While the objectives of the separation remain relevant, our board of directors has concluded that the cost and complexity of splitting into two companies, combined with softer business performance, limited our ability to create appropriate value from separation.”
The company also shared that Neil Fiske, president and CEO of the Gap brand, will leave the company. Fiske’s departure is just the latest in an ongoing executive shakeup at Gap Inc., which included the resignation of CEO Art Peck in November, who stepped down after 15 years with the company.
Gap first shared its plan to separate Old Navy, the company’s top performing brand, in February 2019. However, Old Navy had joined its sister brands in showing signs of struggle in recent quarters — in the third quarter of 2019, Gap reported a 4% year-over-year drop in comparable sales at Old Navy, as well as a 4% decline across the entire portfolio.
In the statement, Fisher said the process of splitting the companies shone a “bright light on operational inefficiencies and areas for improvement” for the Old Navy brand, ultimately contributing to the decision reversal.
“We have learned a lot and intend to operate Gap Inc. in a more rigorous and transformational manner that empowers our growth brands, Old Navy and Athleta, and appropriately focuses on profitability for Banana Republic and Gap brand,” Fisher said in a statement.
Fed Chair Jerome Powell signalled the United States central bank would consider speeding up its withdrawal of bond purchases as inflation risks increase. That further upset markets already battered by the looming threat of the Omicron COVID-19 variant.
Wall Street’s main indexes closed lower on Tuesday after Federal Reserve Chair Jerome Powell signalled that the United States central bank would consider speeding up its withdrawal of bond purchases as inflation risks increase, piling pressure onto a market already nervous about the latest COVID-19 variant.
In testimony before the Senate Banking Committee, Powell indicated that he no longer considers high inflation as “transitory” and that the Fed would revisit the timeline for scaling back its bond-buying programme at its next meeting in two weeks.
The S&P 500 – a proxy for the health of retirement and college savings accounts – lost 88.27 points, or 1.9 percent, to end at 4,567 points, while the tech-heavy Nasdaq Composite Index lost 245.14 points, or 1.55 percent, to 15,537.69. The Dow Jones Industrial Average fell 652.11 points, or 1.86 percent, to 34,483.72.
“Powell’s comments threw a monkey in the wrench in market thinking in terms of potential taper timing. You’re seeing as a result of that, risk-off across the board,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
“You also have to factor in the Omicron variant concerns. You can argue whether they’re more headline risk or reality risk but regardless, it’s having a significant impact on oil, and everything that’s tied to economic growth.”
Powell’s comments also prompted speculation among some investors about a potential acceleration in interest rate hikes.
“The principal contributor to the decline in stock prices today is the Powell commentary, regarding the upcoming Fed meeting, about accelerating the tapering of their bond-buying programme, which obviously leads to the prospect that rate hikes come sooner next year,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
“That somewhat hawkish shift in tone caught the market flat-footed,” Luschini said.
Meanwhile, the market was also left waiting for information about how dangerous the Omicron variant might be, the degree to which current coronavirus vaccinations could offer protection and the additional restrictions governments might have to impose that could hurt the economy, Luschini said.
Tuesday’s declines were broad-based, with all the 11 major S&P sectors down. Communication services was the lead decliner by late afternoon. As oil prices tumbled, energy was also under pressure throughout the session.
Monday’s rally saw stocks regain some of the ground they had lost on Friday when the market first sold off on news of the virus variant.
While the US Food and Drug Administration said it hopes to have information about the effectiveness of current COVID-19 vaccines against Omicron, vaccine companies appeared divided.
BioNTech’s chief executive said the BioNTech and Pfizer COVID-19 vaccine will likely offer strong protection against severe disease from the variant, while Moderna Inc’s CEO told the Financial Times that COVID-19 shots are unlikely to be as effective against the new variant as they have been previously.
Moderna shares fell while those of Regeneron Pharmaceuticals Inc were also under pressure after it said its COVID-19 antibody treatment and other similar drugs could be less effective against Omicron.
Travel and leisure stocks slumped, with S&P 1500 Airlines and the S&P 1500 Hotels, Restaurant and Leisure indexes both declining on concerns of more border restrictions.
The virus uncertainty has triggered fresh alarm at a time when supply chain logjams are weighing on economic recovery and central banks globally are contemplating a return to pre-pandemic monetary policy to tackle a surge in inflation.
Canada’s maple syrup industry has become an international focus in recent days, with headlines shouting that the country has been forced to tap into its strategic reserve to make up for shortages.
Quebec produces about 73 per cent of the all maple syrup in the world. And the Quebec Maple Syrup Producers (QMSP), an organization that governs the province’s maple syrup producers, has said it will release about 22.7 million kilograms of maple syrup from its strategic reserve into the market by February.
For some, the headlines may have been an eye-opener that Canada even has a stockpile of maple syrup. CBC Explains the purpose of this reserve, why it had to be tapped into, and explores whether there was ever a shortage of maple syrup.
What is the strategic reserve?
Quebec’s maple syrup industry is subject to a supply-management system, meaning it employs a quota system run by the QMSP which dictates market volume. The QMSP also controls the Global Strategic Maple Syrup Reserve, which can hold more than 45 million kilograms of maple syrup.
The reserve was created in 2000 to keep syrup in stock and ensure a constant supply for national and international markets, regardless of the size of the harvest, Hélène Normandin, a spokeswoman for QMSP told CBC’s As It Happens.
One site, the Laurierville Plant and Warehouse, in the Centre-du-Québec region, covers an area of 24,805 square metres – the equivalent of five football fields. That site alone can store 25 million kilograms of maple syrup, or 94,000 barrels.
When properly stored in barrels, maple syrup can last for many years, said Michael Farrell, the former director of Cornell University’s Uihlein Forest, a maple syrup research and extension field station in Lake Placid, N.Y.
In years when the yield is good, and more syrup is produced than needed, the extra can be sold to the QMSP and stored “so that when there’s bad years, you have enough to keep people stocked up with syrup on their pancakes,” Farrell said.
“Without this in reserve [this year], there would be much less syrup up on store shelves, and the price would be much higher.”
Why did they have to tap into the reserve this year?
In 2021, there was about 60 million kilograms of maple syrup produced, an average amount when compared to past years but down 18 million kilograms compared to 2020.
“It was an average season, not bad, but not as big as the two last seasons — 2019 and 2020 were just amazing, wonderful years of production,” Normandin said.
However, worldwide demand has increased by more than 20 per cent — a spike industry experts believe was partly fuelled by more people cooking at home during the pandemic — and that has strained the supply
How did the weather affect the yield?
Not every year is a perfect year for every agricultural harvest. And this was one of those years which was not ideal in terms of maple syrup production, said Abby van den Berg, a research associate professor at the University of Vermont’s Proctor Maple Research Center in Underhill, Vt.
Many places didn’t have good weather for sap flow until later in the production season, she said.
In order for sap to flow, there has to be freezing temperatures, followed by above-freezing temperatures, she said.
“There just weren’t that many sap flow days,” Van den Berg said.
Was there really a ‘shortage’ of syrup.
‘Canada tapping reserve maple syrup supply amid shortage’
‘Facing shortages, Canada taps its strategic reserve of maple syrup’
It was headlines like those that made Van den Berg bristle, she said.
“We had a year where the harvest was not super. It actually wasn’t terrible. It wasn’t as good as it had been in past years, and the reserve was there to perform its function,” she said. “And there was no disruption in supply. There is no shortage.”
“All of the headlines said ‘maple syrup shortage,'” she said. “And literally, there is no shortage because of the reserve.”
Philippe Charest-Beudry, the owner of Ste-Anne-de-la-Rochelle, Que.-based Brien Maple Sweets, which packages and sells bottles of maple syrup, said his company has been able to fill every contract so far this year.
“I’ve not heard in the industry other players that we’re not able to meet contracts,” he said.
Has the reserve ever run into trouble with its stock?
Between 2011 and and 2012 around 3,000 tonnes were stolen from a storage facility in Quebec. But it was a few years earlier than that when the strategic reserve actually did run dry.
“People probably don’t remember, but in 2008, after two or three years in a row of bad production, just bad weather, [they] ran out of syrup in the reserve,” said Mike Farrell
“There was nothing there and there wasn’t enough syrup to go around. Prices spiked. We lost a lot of markets for pure maple syrup,”he said.
Ray Bonenberg, former president of the International Maple Syrup Institute and a maple syrup producer near Pembroke, Ont., said 2008 was an “awful year in production.”
“It was abnormally cold until April 1st and then it got really warm, and I know my season was like eight days so it was disastrous,” he said. “The reserve was right down to the bottom, and has been building it up.”
What does this mean for next year?
Farrell said the 22.7 million kilograms of maple syrup represents a “significant amount to take out the reserve this year.” But what does that mean for the near future of the reserve?
There are currently around 50 million maple syrup taps in Quebec. In July, the QMSP approved the issuance of seven million new ones to meet the demand.
“From our perspective, we believe it should solve the issue on the short term basis,” said Charest-Beudry, “I don’t see a season next year where there’s no more maple syrup in the grocery store.”
Royal Bank of Canada announced a dividend hike and plans to repurchase tens of millions of its shares on Wednesday despite also reporting quarterly profit that trailed expectations.
In a release, RBC said it will raise its quarterly dividend 11 per cent to $1.20 per share. The bank said it’s also seeking approval from the Office of the Superintendent of Financial Institutions (OSFI) to buy back up to 45 million of its common shares.
It’s the second such move this week, after Bank of Nova Scotia similarly announced plans for a buyback and dividend hike on Tuesday. Both banks are doing so after OSFI recently lifted its pandemic-era prohibition on share repurchases and buybacks.
RBC also said on Wednesday its 2021 fiscal year profit climbed 40 per cent year-over-year to $16.1 billion. In the fiscal fourth quarter, which ended Oct. 31, the bank’s net income rose 20 per cent to $3.89 billion. That bottom-line performance was helped in part by a release of $227 million from funds that were previously set aside for loans that could go bad. It’s the third consecutive quarter that RBC moved cash out of its provisions for credit losses and funneled that money into its profit stream.
On an adjusted basis, the quarterly profit worked out to $2.71 per share. Analysts, on average, were expecting $2.81.
“Our overall performance in 2021 reflected strong earnings, premium shareholder performance, and highlighted our ability to successfully navigate a complex operating environment while continuing to invest in talent and innovations to support future growth,” said Dave McKay, RBC’s president and chief executive, in a release.
RBC’s bread-and-butter personal and commercial banking unit was the primary profit driver in the latest quarter, as net income in that division rose 35 per cent year-over-year to $2.03 billion, in part thanks to the release of $208 million that was previously provisioned for potentially sour loans.
Royal Bank’s domestic banking business also benefitted from double-digit growth in its mortgage book. Indeed, in a supplemental release Wednesday, RBC said it had an average Canadian mortgage balance of $329.5 billion in the fourth quarter; that represents year-over-year growth of almost 13 per cent compared to the balance of $293 billion in the fiscal fourth quarter of 2020.
Fourth-quarter profit from the bank’s capital markets unit rose 10 per cent to $920 million, with RBC attributing some of that to a rise in mergers and acquisitions activity.
Meanwhile, earnings from RBC’s wealth management business inched up two per cent year-over-year to $558 million.
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