(NEW YORK) — Foot Locker plans to close 400 stores in North America by 2026 as it rebrands part of its business, the company announced Monday.
The company plans to close many underperforming stores in shopping malls while focusing on strengthening its standalone stores with new concepts, Foot Locker said during its Investor Day presentation.
“We are entering 2023 with a focus on resetting the business — simplifying our operations and investing in our core banners and capabilities to position the company for growth in 2024 and beyond,” Foot Locker president and CEO Mary Dillon said in a news release on the company’s website.
One of its announced plans is called “Lace Up,” which aims to target consumers and focus on “all things sneakers,” the company announced in its presentation.
“We are incredibly excited to introduce our ‘Lace Up’ plan with a new set of strategic imperatives and financial objectives that are designed to set us up for success for the next 50 years,” Dillon said.
Next year Foot Locker celebrates its 50th anniversary.
Despite the plan to close hundreds of stores in North America within the next three years, the company plans to expand its footprint by opening 280 stores that focus on its community, power store and house of play concepts.
The sports apparel company also announced the closing of 125 of its Champ Sports stores in 2023 and resetting the brand to focus heavily on people who are more active in sports and fitness.
As of January, the company operates over 2,700 stores in 29 countries in North America, Europe, Asia, Australia and New Zealand.
Sales decreased by 0.3% during the company’s fourth quarter compared to the same quarter in 2021.
According to the company, Foot Locker plans to decrease its overall real estate footprint by 10% in 2026, leaving it with 2,400 stores.
(WASHINGTON) — Federal Reserve Chair Jerome Powell on Wednesday called the U.S. banking system “strong and resilient,” voicing confidence in the nation’s financial system and the safety of bank deposits less than two weeks after the failure of Silicon Valley Bank, the second-biggest bank collapse in U.S. history.
“All depositors’ savings in the banking system are safe,” Powell added in remarks made at a press conference in Washington, D.C.
While characterizing recent financial problems as limited to a small part of the banking sector, Powell defended the swift and extraordinary actions undertaken by the Fed and other federal agencies to protect the financial system.
“In the past two weeks serious difficulties at a small number of banks have emerged,” Powell said. “History has shown that isolated banking problems, if left unaddressed, can undermine confidence in healthy banks and threaten the ability of the banking system as a whole to play its vital role in supporting the savings and credit needs of households and businesses.”
The remarks from Powell came minutes after the Fed announced a 0.25% increase of its benchmark interest rate, intensifying the central bank’s fight against inflation despite concern that previous rate increases helped trigger the nation’s banking crisis.
Inflation has fallen significantly from a summer peak, though it remains more than triple the Fed’s target of 2%.
“Inflation remains too high,” Powell said. “We remain strongly committed to bringing inflation back down to our 2% goal.”
The rapid rise in interest rates, however, tanked the value of bonds held by Silicon Valley Bank, precipitating its failure and cascading damage for the financial sector, including the collapse of New York-based Signature Bank.
Fearing wider spread of the crisis, the Federal Deposit Insurance Corporation, the Treasury Department and the Fed took a major step, telling depositors in Silicon Valley Bank and Signature Bank that the FDIC would protect all of their funds, including those that exceed the $250,000 limit.
Some members of Congress have criticized Powell for allegedly lax bank oversight at the Federal Reserve, as well as an aggressive series of interest rate hikes, which they say led to the collapse of Silicon Valley Bank.
On Wednesday, Sen. Elizabeth Warren, D-Mass., and Sen. Rick Scott, R-Fla., proposed legislation that would establish an independent inspector general to oversee the Federal Reserve.
Speaking on Wednesday, Powell said the Federal Reserve is watching developments in the financial sector and remains open to taking further action.
“We will continue to closely monitor conditions in the banking system and are prepared to use all of our tools as needed to keep it safe and sound,” Powell said.
He went on, “We’re committed to learning the lessons from this episode and to work to prevent events like this from happening again.”
(WASHINGTON) — The Federal Reserve on Wednesday raised its short-term borrowing rate another 0.25%, intensifying the central bank’s fight against inflation despite concern that previous rate increases helped trigger the nation’s banking crisis.
The Fed’s benchmark interest rate has contributed to the financial emergency facing U.S. banks.
Inflation has fallen significantly from a summer peak, though it remains more than triple the Fed’s target of 2%.
The rapid rise in interest rates, however, tanked the value of bonds held by Silicon Valley Bank, precipitating its failure and cascading damage for the financial sector.
In a statement, the Fed rejected concerns about the financial system. “The U.S. banking system is sound and resilient,” the central bank said.
The Fed left the door open for further rate increases, noting that “additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.”
Nearly 190 banks are at risk of collapse amid high interest rates and declining asset values, according to a study released by a team of university researchers earlier this month.
A continuation of rate hikes risks further intensifying the banking crisis, nudging additional financial institutions toward the brink of collapse.
A pause on rate increases, however, could have undermined the Fed’s fight against inflation, allowing high prices to persist and eat away at household budgets, economists previously told ABC News.
A survey by Bloomberg last week found that most economists expected the Fed to raise interest rates by 0.25% on Wednesday, matching the increase that the central bank imposed at its most recent meeting last month.
Over the last year, the Fed has raised its benchmark interest rate by 4.5%, the fastest pace since the 1980s.
The Fed has put forward a string of borrowing cost increases as it tries to slash price hikes by slowing the economy and choking off demand. The approach risks tipping the U.S. economy into a recession and putting millions out of work.
Persistent rate hikes also threaten the stability of the banking system.
Still, the Fed could avoid facing a choice between slowing price increases and preserving financial stability, since tighter lending practices taken up by private sector banks in response to the financial distress may cool the economy on its own accord, allowing the Fed to forego raising rates while still bringing down inflation.
“No matter what the Fed does later this month, financial conditions are tightening,” Julia Pollak, chief economist at Zip Recruiter, said last week.
(WASHINGTON) — Policymakers and investors will closely watch a decision from the Federal Reserve on Wednesday about whether to raise interest rates as the U.S. economy weathers two pressing challenges: a banking crisis and persistent inflation.
The precarious moment poses a dilemma for the Fed because its strongest tool, the benchmark interest rate, is a key cause of the financial emergency but the primary solution for high prices.
The central bank has aggressively raised interest rates over the past year, bringing inflation down significantly from a summer peak, though it remains more than triple the Fed’s target of 2%.
The rapid rise in interest rates, however, tanked the value of bonds held by Silicon Valley Bank, precipitating its failure and cascading damage for the financial sector.
Nearly 190 banks are at risk of collapse amid high interest rates and declining asset values, according to a study released by a team of university researchers earlier this month.
A continuation of rate hikes risks further intensifying the banking crisis, putting additional financial institutions at risk of collapse. However, a pause on rate increases could undermine the Federal Reserve’s fight against inflation, allowing high prices to persist and eat away at household budgets, economists previously told ABC News.
A survey by Bloomberg last week found that most economists expect the Fed to raise interest rates by 0.25% on Wednesday, matching the increase that the central bank imposed at its most recent meeting last month.
In recent days, some forecasters have predicted the Fed will forego an interest rate hike as it monitors the continuing fallout from the Silicon Valley Bank failure.
Goldman Sachs, for instance, told investors on Monday that it expects the Fed “to pause at its March meeting this week because of stress in the banking system.”
Over the last year, the Federal Reserve raised its benchmark interest rate by 4.5%, the fastest pace since the 1980s.
The Fed has put forward a string of borrowing cost increases as it tries to slash price hikes by slowing the economy and choking off demand. The approach, however, risks tipping the U.S. economy into a recession and putting millions out of work.
Persistent rate hikes also threaten the stability of the banking system.
Still, the Fed could avoid facing a choice between slowing price increases and preserving financial stability, since tighter lending practices taken up by private sector banks in response to the financial distress may cool the economy on its own accord, allowing the Fed to forego raising rates while still bringing down inflation.
“No matter what the Fed does later this month, financial conditions are tightening,” Julia Pollak, chief economist at Zip Recruiter, said last week.
(NEW YORK) — TikTok is facing growing scrutiny from government officials over cybersecurity fears about Americans’ data. U.S. officials are reportedly demanding that Chinese owners sell its stake in the app or risk a nationwide ban.
Later this week, TikTok CEO Shou Zi Chew is set to face questions from congressional lawmakers about the platforms’ data security practices and relationship with the Chinese government. Meanwhile, a proposed bill with bipartisan support and backed by President Joe Biden would empower the executive branch to ban TikTok and other apps owned by Chinese companies.
Former Under Secretary of State Keith Krach, who worked to crack down on TikTok under the Trump administration, joined “GMA3” hosts DeMarco Morgan and Eva Pilgrim to discuss why he views the app as a major cybersecurity threat.
PILGRIM: You believe TikTok is a national security threat. What concerns you the most?
KRACH: Well, I think the biggest thing is that TikTok can track keystrokes. Here’s what that means. That means that they have access to your passwords, all your data. They have access to your health records, your bank records. They have access to your geopolitical information or your geospatial information. That means that they can track where you are, where you’ve been and where you’re going. But I think one of the things that’s worse is that it’s not just about you. It’s about the people you digitally interact with. So look at it as a digital virus, because it can infect the people around you. And the only vaccine for this is a total ban.
MORGAN: Well, Keith, experts have called a potential TikTok ban unchartered territory. They’ve been talking about this for quite some time and a huge undertaking. And experts say a nationwide ban may not stop the app from collecting Americans’ data. How exactly would one work? And how concerned are you that Americans would be able to get around a ban?
KRACH: You know, it’s actually not unprecedented. We did the same thing with Huawei and 5G. And if you look at Huawei and 5G, that’s the backbone for the surveillance state, and TikTok is one of those key appendages that comes off of that. So right now in Congress, Sen. Warner, Sen. Thune, have a bill, the Restrict Act, that actually gives the Secretary of Commerce, Gina Raimondo, the authority to ban applications, technology from our adversaries.
PILGRIM: A bipartisan bill to give the president power to ban the app is gaining support in the Senate. You’ve discussed TikTok concerns with members of Congress and the Biden administration. But how real of a possibility is this? What are you hearing from them?
KRACH: Oh, this is certainly real. You know, I can tell you, as undersecretary, I had a lot of closed-door sessions with Congress. I couldn’t tell the difference between a Democrat and Republican when it came to Chinese technology. You know, this is our biggest national security threat. And I can tell you, if they can weaponize a balloon, they can certainly weaponize 150 million American TikTok users at their mercy.
MORGAN: So with that said, what’s your response to critics of this ban, including the ACLU, who argue it would limit free speech and violate the First Amendment?
KRACH: Look, I’m all for free speech. A big advocate for that. But the fact is, TikTok limits free speech. If you don’t believe me, just try to post something on Tiananmen Square or post something on Taiwan, and you’ll see what happens. You know, the other thing, too, is that TikTok has been used to limit freedom of the press. I was just talking to a reporter yesterday from the Financial Times, and she shared with me how TikTok, they actually use TikTok to track down one of their journalists and try to intimidate him writing an unflattering story about China.
PILGRIM: One of the thing a lot of parents talk about when it comes to TikTok and social media. According to recent CDC data, nearly one in three high school girls considered attempting suicide in 2021, up nearly 60% from a decade before. And now schools across the country are suing social media companies for allegedly contributing to the youth mental health crisis. TikTok says they prioritize safety and wellbeing of teens with age-restricted features, screen time limits and parental controls. But my question to you, what can Silicon Valley do to better protect our kids?
KRACH: Yeah. You know, Eva, I’ve got 11-year-old twins, a boy and a girl. So obviously, this is a big issue. You know, there’s social media and then there’s TikTok. TikTok is programed to be addictive. It preys actually on children. It’s kind of disguised as candy, but it’s actually cocaine. And this is one of the big things. If you look at how TikTok is actually being used inside of China– I’m not talking outside of China– they use it as an educational app for STEM, for science, technology, engineering and math. So there’s two big differences there. And TikTok is by far the worst.
(WASHINGTON) — Treasury Secretary Janet Yellen said Tuesday that “the situation is stabilizing and the U.S. banking system remains sound,” after regional bank failures have shaken the U.S. banking system.
“The Fed’s facility and discount window lending are working as intended to provide liquidity to the banking system,” she said during a speech at a meeting of the American Bankers Association in Washington. “Aggregate deposit outflows from regional banks have stabilized.”
She said the government’s intervention in the failures of Silicon Valley Bank and Signature Bank were “necessary” — and said “similar actions could be warranted” to protect smaller banks.
“The steps we took were not focused on aiding specific banks or classes of banks,” she said. “Our intervention was necessary to protect the broader U.S. banking system, and similar actions could be warranted if smaller institutions suffered deposit runs that pose the risk of contagion.”
She argued that the existence of smaller banks was important.
“Large banks play an important role in our economy, but so do small- and mid-sized banks,” she said. “These banks are heavily engaged in traditional banking services that provide vital credit and financial support to families and small businesses. They also increase competition in the banking sector, and often have specialized knowledge and expertise in the communities they invest in.
“Large banks play an important role in our economy, but so does small and mid-sized banks,” she said. “These banks are heavily engaged in traditional banking services that provide vital credit and financial support to families and small businesses. They also increase competition in the banking sector and often have specialized knowledge and expertise in the communities they invest in. Indeed, many of these banks have played an important role in supporting our economic recovery in the depths of the pandemic.”
“The Treasury is committed to ensuring the ongoing health and competitiveness of our vibrant community and regional banking institution,” she said.
(NEW YORK) — As fallout continues from the Silicon Valley Bank collapse — the second-biggest bank failure in U.S. history — people across the country are simultaneously feeling the impact of inflation in their pocketbooks.
The Federal Reserve will meet Wednesday to decide whether to raise or pause interest rates after continuously raising them over the past year in order to help curb inflation.
The Fed’s decision will have an impact on everything from individual credit card bills to the costs of everyday items to the banking crisis, experts say.
To help explain it all, ABC News chief economics correspondent Rebecca Jarvis and Good Morning America consumer correspondent Becky Worley answered viewers’ questions on topics including credit card payments, home buying and more.
1. What would a change in interest rates mean for people’s credit card payments?
Jarvis said that if the Fed decides to pause interest rates, as some experts predict will happen, it would have a “significant impact” on credit card payments.
“This will mean that some of those rates that have been climbing won’t climb as much in the near future,” Jarvis said, citing mortgage rates and higher interest rates on credit cards.
Jarvis added that even if the Fed takes a pause on raising interest rates this week, the rates could “still climb going forward.” Because of that, she said the most important step people should take is to continue paying off their credit card debt.
“If you have that credit card bill, you want to keep making those payments,” she said.
2. Is housing sitting on a bubble, like in 2007?
Jarvis said that fortunately today, we are in a “very different world” than the housing crisis of 2007, when interest rates went up and people were unable to repay their mortgage, leading to foreclosures and bankruptcies.
“First of all, the jobs market is as strong, historically, as it’s ever been,” Jarvis said. “Second of all … 85% of people who own homes have mortgages below 5%. What that means is if you were going to go out and buy a new house right now, you’d have to take out a far more expensive mortgage, so people don’t want to sell because they already have the best deal sitting in their own home.”
Jarvis said because people aren’t selling their homes, there is less inventory, which is leading to higher home prices.
“We don’t see the foreclosure we saw last time [in 2007], which is what makes this a much more sound market and housing,” she explained.
3. If I’m looking to buy a home, should I expect mortgage rates to improve?
According to Jarvis, one upside to the current banking crisis, combined with the potential for the Fed to pause interest rates, is that mortgage rates have decreased slightly, going from 7.15% to 7% over the past week.
“It’s tiny but that incremental difference can make a difference in what you pay,” Jarvis said.
When it comes to deciding whether or not now is the right time to buy a home, Jarvis said people should consider whether they will stay in the home for at least five years and whether they are staying within their budget with the purchase.
“Those are the most important questions that anyone should be asking if they’re thinking about buying a home, not just ‘Can I time this market properly?'” Jarvis said, adding that “renting is always an option, and there are great calculators at Bankrate.com and Realtor.com [to] check the whole thing out.”
4. Is now a good time to buy a car?
According to Worley, many people are paying the equivalent of a monthly mortgage or rent payment for their car.
The average car payment at the end of 2022 was $716 for a new car and $526 for a used car, according to Experian, a financial data analysis company.
Worley said that unfortunately for people either in the market for a car or who are currently making high car payments, it is now a “waiting game.”
“We’re waiting for those interest rates to stabilize or for them to go down,” she said.
Worley said one step people can take in the meantime, is to work on improving their credit score.
“If you have a higher credit score, you’ll get a lower interest rate when you can finally, hopefully, get into a lower rate and refinance or renegotiate,” Worley said. “But that’s really all we can do right now if you’re already locked into a high payment.”
5. Are cars still in short supply?
Yes, according to Worley.
“The supply chain is still a little bit messy,” Worley said. “And then dealers are, on many high-demand cars, putting a markup on top of the sticker price, and then you have high interest rates, so it is painful out there.”
Worley said her advice is to keep driving your current car for as long as you can, saying, “If you can eat 5,000 or 10,000 miles out of the old car, you should do it until those rates come down, if those rates come down.”
(WASHINGTON) — Treasury Secretary Janet Yellen plans to say during a speech on Tuesday that “the situation is stabilizing and the U.S. banking system remains sound,” according to excerpts of her prepared remarks provided by the Treasury Department.
“The Fed facility and discount window lending are working as intended to provide liquidity to the banking system,” she plans to say during a speech at the American Bankers Association’s summit in Washington. “Aggregate deposit outflows from regional banks have stabilized.”
She also plans to argue that the existence of smaller banks was important.
“Large banks play an important role in our economy, but so do small- and mid-sized banks,” she plans to say. “These banks are heavily engaged in traditional banking services that provide vital credit and financial support to families and small businesses. They also increase competition in the banking sector, and often have specialized knowledge and expertise in the communities they invest in.”
“Treasury is committed to ensuring the ongoing health and competitiveness of our vibrant community and regional banking institutions,” she’ll say.
(NEW YORK) — The collapse of Silicon Valley Bank, the second-biggest bank failure in U.S. history, has thrust the financial system into distress, pulling attention away from a separate problem: sky-high inflation.
The twin economic challenges pose a dilemma for the Federal Reserve because its strongest tool, the benchmark interest rate, is a key cause of the financial emergency but the primary solution for high prices.
The central bank has aggressively raised interest rates over the past year, bringing inflation down significantly from a summer peak, though it remains more than triple the Fed’s target of 2%.
The rapid rise in interest rates, however, tanked the value of bonds held by Silicon Valley Bank, precipitating its failure.
A continuation of the rate hikes risks further intensifying the banking crisis, putting additional financial institutions at risk of collapse. However, a pause on rate increases could undermine the Federal Reserve’s fight against inflation, allowing high prices to persist and eat away at household budgets, economists said.
“It’s a very delicate balance,” Andrew Levin, an economics professor at Dartmouth College and a former Fed economist, told ABC News. “If we’re in a situation where the Fed can’t make sure prices are stable because it’s too worried about the stability of the banking system, that would be a very unfortunate situation.”
Still, the Fed could avoid facing a choice between the two objectives, since tighter lending practices taken up by private sector banks in response to the financial distress may cool the economy on its own accord, allowing the Fed to forego raising rates while still bringing down inflation, economists said.
“It does seem as though financial instability could take care of inflation anyway,” Julia Pollak, chief economist at Zip Recruiter, told ABC News.
Over the last year, the Federal Reserve raised its benchmark interest rate 4.5%, the fastest pace since the 1980s.
The Fed has put forward a string of borrowing cost increases as it tries to slash price hikes by slowing the economy and choking off demand. The approach, however, risks tipping the U.S. economy into a recession and putting millions out of work.
So far, however, the economy has proven fairly resilient, Levin said, citing the robust job market.
“If the economy continues to be strong, inflation might well stay far above the Fed’s target,” Levin said. “Interest rates may need to go substantially higher to bring inflation down.”
In early March, Fed Chair Jerome Powell told Congress that inflation “has a long way to go and is likely to be bumpy,” saying the central bank expects “ongoing increases” to its benchmark interest rate.
But persistent rate hikes also threaten the stability of the banking system.
The rapid spike in interest rates over the past year dropped the value of Silicon Valley Bank’s treasury bonds and mortgage bonds, punching a hole in its balance sheet and scaring away some depositors, who triggered a devastating 48-hour bank run.
While Silicon Valley Bank faced uniquely acute exposure, it’s hardly the only vulnerable bank.
At the end of last year, U.S. banks were sitting on $620 billion in unrealized losses, or holdings that have fallen in price but have yet to be sold, the Federal Deposit Insurance Corporation found.
Swiss banking giant UBS bought ailing rival Credit Suisse on Monday for $3.2 billion, as Swiss banking regulators helped put together a rescue.
The largest financial institutions in the U.S. took action on Friday in an effort to stabilize the financial sector, placing $30 billion in First Republic bank, one of the embattled regional lenders.
Bank of America, Citi, JPMorgan Chase, Wells Fargo and Goldman Sachs were among a slew of big banks that participated in the effort. The bank’s shares have continued to plummet, however, dropping 47% on Monday.
While troubling for many, such financial disarray is a possible outcome one can expect from rapid interest rate hikes, Pollak said. Rather than undermine the fight against inflation, the banking crisis is part and parcel of it, she added.
“Typically the Fed raises rates until something breaks,” Pollak said. “That break unleashes panic and brings tightening lending standards to banks.”
“The immediate effect of tighter credit is households buying fewer houses and businesses investing less, and that affects the demand for goods,” she added, bringing prices down. “That cycle perpetuates itself.”
In turn, some forecasters predict that the Fed will forego an additional rate hike at its meeting on Wednesday, citing the fragility of the financial system.
In a research note, Goldman Sachs told investors on Monday that it expects the Fed “to pause at its March meeting this week because of stress in the banking system.”
Levin, of Dartmouth, said he thinks the Fed should take that cautious approach on rates this week.
“It should try to reassure the market that it’s on top of this and monitoring carefully,” he said.
If the financial stress continues, prices could fall anyway, he added.
“People won’t go out and buy that refrigerator,” he said. “The upward pressure on inflation could subside really quickly.”
(WASHINGTON) — The Federal Reserve was aware of risks to Silicon Valley Bank more than a year before its collapse, ABC News confirmed on Monday following a New York Times report.
Even more, ABC News has confirmed a Wall Street Journal report that the Fed cited risks to Silicon Valley Bank’s management as early as 2019 — four years before the bank’s collapse.
In all, the Fed cautioned the bank about its concerns on several occasions, ABC News confirmed.
In a 2021 review, the Fed identified significant vulnerabilities in the bank’s containment of risk, but the bank did not rectify the weaknesses.
The Federal Reserve of San Francisco, a regional entity that supervised Silicon Valley Bank, slapped the bank with six citations, including a note on the bank’s failure to retain enough accessible cash for a potential downturn, according to the Times and confirmed by ABC News.
The following year, in July 2022, Silicon Valley Bank received a closer look known as a full supervisory review, which rated the bank deficient for governance and controls.
Last fall, employees at the Federal Reserve of San Francisco met with top officials at the bank to address the lack of accessible cash and the potential risks posed by rising interest rates. Former Silicon Valley Bank CEO Greg Becker sat on the board of directors at the Federal Reserve Bank of San Francisco from January 2019 until the day of the bank’s collapse on March 10.
Details about the Fed’s conduct toward Silicon Valley Bank over the past two years were first reported by the New York Times and confirmed by ABC News. Silicon Valley Bank did not immediately respond to ABC News’ request for comment.
The Fed’s warnings proved prescient earlier this month, when the collapse of Silicon Valley Bank marked the second-biggest bank failure in U.S. history.
The bank’s deposit base, which draws heavily from startup firms in the technology industry, tripled in size during the pandemic-era tech boom between 2020 and 2022.
Rather than invest all of the deposits into other startups or venture firms, the bank placed a sizable share of the funds into long-term Treasury bonds and mortgage bonds, which typically deliver small but reliable returns amid low interest rates.
In short order, however, the low-interest rate environment evaporated. Over the last year, the Federal Reserve raised its benchmark interest rate 4.5%, the fastest pace since the 1980s.
The sudden spike in interest rates dropped the value of Silicon Valley Bank’s Treasury bonds and mortgage bonds, punching a hole in its balance sheet.
Two weeks ago, when Silicon Valley Bank announced it had lost $1.8 billion on the sale of those distressed bonds, major depositors withdrew their funds, prompting others to follow in quick succession.
The bank failed to generate enough cash to meet the demand of depositors seeking funds — a spiral downward that shuttered the bank in less than 48 hours.
The Fed is currently conducting an internal review of how it supervised and regulated Silicon Valley Bank, officials said. Those findings will be publicly released May 1.
