A Fool Looks Back

If we're in an economic recovery, why are so many consumer-facing companies closing stores? We saw more prolific retailers scaling back this week.

Casual-dining laggard Ruby Tuesday (NYSE: RT  ) announced plans to close 30 of its restaurants in the next few months. Macy's (NYSE: M  ) announced that it will let 2,500 employees go as it initiates cost-cutting moves that will also include shuttering five of its department stores.

Ruby Tuesday's a mess. The chain tried to drum up hungry patrons by introducing pretzel-bread burgers and flatbread pizzas at price points between $5.99 and $9.99 this past summer, but that couldn't save the company from another quarter of dreadful quarterly comps. Macy's is in a much better place. It posted positive comps over the holidays, and it's proving that the five closures are normal by also revealing plans to open even more new stores. However, it wouldn't be streamlining its operations to trim $100 million a year from its operating overhead if it was optimistic about the near-term prospects for retail.

This is going to be an interesting year as we weigh the economy's recovery at a time when interest rates and the costs to run a business are inching higher. Let's see if we can avoid too many more of those "everything must go" clearance-sale signs.

Briefly in the news
And now let's take a quick look at some of the other stories that shaped our week.

  • Micron Technology (NASDAQ: MU  ) was the second biggest winner in the S&P 500 last year, and it's kicking off 2014 on another strong note. The DRAM bellwether moved higher after posting better-than-expected quarterly results.
  • Baidu (NASDAQ: BIDU  ) shares soared 77% in 2013, but a JPMorgan Chase analyst thinks China's leading search engine will continue to move higher in 2014. He's slapping a $210 year-end price target on the shares, encouraged by its gains in mobile.
  • Netflix (NASDAQ: NFLX  ) moved lower after Morgan Stanley downgraded shares of the leading video service, lowering its price target from $330 to $310. Then again, the same analyst had downgraded the stock four months earlier and it's trading 15% higher now. Not every downgrade is fatal.

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