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Black Friday bonanza could lead to a festive hangover for retail

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Black Friday bonanza could lead to a festive hangover for retail

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Last week, while most of my family was watching American football in a turkey-induced stupor, I got bored. So I pulled out my smartphone and ordered a new camera lens to boost the quality of my holiday snapshots.

Turns out I wasn’t the only one. US online shoppers have busted through forecasts, shelling out a record $38bn for the post-Thanksgiving period. The $12.4bn spent on what is known as Cyber Monday made it the biggest US digital shopping day of all time, according to Adobe, which tracks online spending.

This spree — up nearly 8 per cent on last year — has raised hopes of a bumper festive season. It was accompanied by a bigger surge in visits to indoor malls and department stores than in 2022, as well as somewhat more modest year on year increases in overall credit card spending, according to Placer.ai and Mastercard.

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Though recent economic sentiment surveys have been negative, the resilience of American consumers has surprised forecasters all year. Retail spending helped to drive explosive 4.9 per cent gross domestic product growth in the third quarter.

But the economic picture remains murky heading in to Christmas. Labour markets are slowing, mortgage rates remain high and the resumption of student loan payments after a pandemic pause could crimp spending. Then again, cooling inflation and falling gas prices might also translate into shoppers with a bit more money to splash.

That puts the onus on companies to be cautious about reading too much into a few days of record spending, particularly when it is fuelled by Black Friday promotions.

Many were caught out last year when a pandemic-fuelled surge in goods spending ebbed and customers shifted back to buying services. E-commerce groups that rolled up companies that sell through Amazon are struggling, and Amazon itself was left with extra staff and warehouses after mistaking a one-time bump for a long-term change.

That means executives must probe the source of last weekend’s online spending bonanza carefully.

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Some of the jump is due to the rapid spread of shopping apps and websites optimised for mobile use. Customers who once had to go to a store or fire up a desktop can now shop while watching TV. Mobile devices accounted for more than half of November sales for the first time this year.

Another boost stems from the rapid growth of buy now, pay later programmes that let shoppers defer their payments across several months. BNPL spending was up 17 per cent year on year to $8.3bn for November to the end of Monday. Personal finance experts worry that the ease of use encourages customers to spend beyond their means.

But the biggest driver of the holiday binge by far was promotional discounting that averaged as much as 30 per cent in some categories, such as toys and electronics, Adobe’s data shows.

As anyone who has ever handed over their contact details can attest, retailers and ecommerce sites have gone hog wild this year with promotional texts, emails and app driven alerts. Such sales pump up holiday weekend revenue but can damage bottom lines if they absorb customer spending that would otherwise have gone to higher margin goods at another time.

Executives at Walmart, the electronics chain Best Buy, and Dicks, which sells sporting equipment, have all warned in recent weeks about the growing reliance on price cuts and promotions to sell goods. Best Buy CEO Corie Barry in particular warned that promotions “are up versus last year, and in many cases, up compared to where they were pre-pandemic”. 

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Last year, customers who had been burnt by Covid-related shortages and shipping woes started making their holiday purchases in late October. This year, shoppers stayed on the sidelines much longer and waited for the holiday promotions to start.

“We saw growth weaken very significantly in October and November,” Adobe’s Vivek Pandya said. “Customers are very price sensitive and they know they are going to get good deals . . . on the marquee days.”

Having conditioned people to respond to special offers, online retailers now run a risk that their bricks and mortar counterparts know only too well: jaded customers who refuse to pay full price. In the physical store context, that has previously meant shoppers who held their nerve in December could score deep discounts right before Christmas.

If the same sentiment spreads to ecommerce, companies could be in for a heck of a holiday hangover.

brooke.masters@ft.com

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Trial begins for Vietnamese property tycoon accused of $12bn fraud

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Trial begins for Vietnamese property tycoon accused of $12bn fraud

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The fraud trial of a Vietnamese real estate tycoon who allegedly misappropriated $12bn started on Tuesday, as part of the country’s largest corruption case that has also ensnared officials from the central bank and government.

Truong My Lan faces a death sentence or imprisonment if found guilty in the graft case, which has rocked the property and corporate bond markets of one of the world’s fastest-growing economies.

The graft case is part of a corruption crackdown launched by Vietnam’s Communist party that has resulted in the arrests of hundreds of senior government officials, including cabinet ministers. Lan, developer Van Thinh Phat Group’s chair, is the most prominent businessperson to face graft allegations.

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Vietnam has been one of the biggest beneficiaries of manufacturers seeking to diversify their supply chains beyond China as geopolitical tensions between Washington and Beijing rise. However, the Vietnamese economy grew 5.05 per cent in 2023, missing the government’s official target, as overseas demand slowed.

The anti-corruption campaign has slowed down project approvals by the government, and more state scrutiny of private businesses could hurt investor confidence, analysts said.

Lan, 67, comes from one of Vietnam’s richest families who made their fortune in property. She has been charged with bribery, embezzlement, abuse of power and “lack of responsibility causing serious consequences”, according to state media.

She has denied wrongdoing, state media reported. Lawyers for Lan, who was arrested in 2022, did not respond to a request for comment.

Lan is accused by Vietnamese authorities of using Saigon Joint Stock Commercial Bank (SCB), in which she owns a controlling stake of about 90 per cent, to funnel 304tn dong ($12.3bn) to her real estate company Van Thinh Phat.

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Loans worth more than $44bn were given by SCB to Van Thinh Phat and related companies between 2012 and 2022, accounting for 93 per cent of the total loans disbursed by the bank.

Authorities also said Van Thinh Phat used allegedly fake companies to sell corporate bonds through SCB to the bank’s depositors.

In addition to Lan, 85 people — including 15 officials from Vietnam’s central bank — are charged in connection with the case. The central bank officials are accused of receiving bribes from Lan to cover up the alleged fraud.

“The trial is important in terms of scale and because it signals that the [Communist] party is willing to expand its anti-corruption campaign to the private sector despite potential risks that it might have on the economy,” said Nguyen Khac Giang, a visiting fellow at Singapore’s Iseas-Yusof Ishak Institute.

He said Lan’s corruption case had dented the confidence of some private businesses in Vietnam worried about the risks of operating in the country and the state companies they work with.

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The anti-corruption campaign has also made government officials hesitant to approve projects, he added, out of fear that they could be implicated in graft.

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FAA audit faults Boeing for 'multiple instances' of quality control shortcomings

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FAA audit faults Boeing for 'multiple instances' of quality control shortcomings

Boeing workers at the Renton Municipal Airport in Washington finalize assembly of an Alaska Airlines Boeing 737 Max jet on Feb. 27. An FAA audit faulted Boeing for “multiple instances” of quality control shortcomings.

Jovelle Tamayo for NPR


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Jovelle Tamayo for NPR


Boeing workers at the Renton Municipal Airport in Washington finalize assembly of an Alaska Airlines Boeing 737 Max jet on Feb. 27. An FAA audit faulted Boeing for “multiple instances” of quality control shortcomings.

Jovelle Tamayo for NPR

WASHINGTON — After a six-week audit of Boeing, federal regulators say they found quality control problems at Boeing and Spirit AeroSystems, one of its top suppliers.

The Federal Aviation Administration says it found “multiple instances” of Boeing and Spirit failing to “comply with manufacturing quality control requirements.”

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The FAA launched the audit of Boeing and Spirit AeroSystems, which builds the fuselage for the Boeing 737 Max, after a door plug panel blew out in midair during an Alaska Airlines flight on Jan. 5.

No one was seriously hurt when the plug came off as the new jet climbed through 14,000 feet after departing Portland, Ore. It returned to make an emergency landing as winds whipped through a hole in the fuselage.

A preliminary investigation by the National Transportation Safety Board determined that four key bolts that were supposed to hold the door plug in place were missing when the plane left Boeing’s factory.

The audit found problems in “Boeing’s manufacturing process control, parts handling and storage, and product control,” the FAA said in a statement.

The agency says FAA administrator Mike Whitaker discussed the findings with Boeing CEO Dave Calhoun last week, when the agency gave Boeing 90 days to come up with a plan of action to address its quality control problems.

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The FAA says it provided both companies with a summary of the audit findings. But the agency declined to share those details with NPR, citing its ongoing investigation.

Auditors visited Boeing’s factory in Renton, Wash., and Spirit’s plant in Wichita, Kan.

Boeing confirmed Friday that it is in talks to buy Spirit AeroSystems.

“We believe that the reintegration of Boeing and Spirit AeroSystems’ manufacturing operations would further strengthen aviation safety, improve quality and serve the interests of our customers, employees, and shareholders,” said Jessica Kowal, Boeing’s director of media relations, in a statement.

That would be a change of strategy for Boeing, which nearly two decades ago sold off the assets that are now part of Spirit.

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But the supplier has had several costly and embarrassing problems with quality control in recent years as it pushed to keep up with Boeing’s ambitious production schedule.

NPR’s Joel Rose reported from Washington, D.C., and Russell Lewis from Birmingham, Ala.

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Read the Decision in the Trump Colorado Ballot Case

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Read the Decision in the Trump Colorado Ballot Case

Cite as: 601 U. S.

Per Curiam

(2024)

5

a wide array of offices-rather than by granting rights to all. It is therefore necessary, as Chief Justice Chase concluded and the Colorado Supreme Court itself recognized, to “ascertain[] what particular individuals are embraced”” by the provision. App. to Pet. for Cert. 53a (quoting Griffin’s Case, 11 F. Cas. 7, 26 (No. 5,815) (CC Va. 1869) (Chase, Circuit Justice)). Chase went on to explain that “[t]o accomplish this ascertainment and ensure effective results, proceedings, evidence, decisions, and enforcements of decisions, more or less formal, are indispensable.” Id., at 26. For its part, the Colorado Supreme Court also concluded that there must be some kind of “determination” that Section 3 applies to a particular person “before the disqualification holds meaning.” App. to Pet. for Cert. 53a.

The Constitution empowers Congress to prescribe how those determinations should be made. The relevant provision is Section 5, which enables Congress, subject of course to judicial review, to pass “appropriate legislation” to “enforce” the Fourteenth Amendment. See City of Boerne v. Flores, 521 U. S. 507, 536 (1997). Or as Senator Howard put it at the time the Amendment was framed, Section 5 “casts upon Congress the responsibility of seeing to it, for the future, that all the sections of the amendment are carried out in good faith.” Cong. Globe, 39th Cong., 1st Sess., at 2768.

Congress’s Section 5 power is critical when it comes to Section 3. Indeed, during a debate on enforcement legislation less than a year after ratification, Sen. Trumbull noted that “notwithstanding [Section 3] … hundreds of men [were] holding office” in violation of its terms. Cong. Globe, 41st Cong., 1st Sess., at 626. The Constitution, Trumbull noted, “provide[d] no means for enforcing” the disqualification, necessitating a “bill to give effect to the fundamental law embraced in the Constitution.” Ibid. The enforcement mechanism Trumbull championed was later enacted as part of the Enforcement Act of 1870, “pursuant to the power

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