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Penney forms new division, sets online ventures

NEW YORK (Reuters) – J.C. Penney Co is forming a unit to focus on specialty brands, expanding beyond its namesake department stores.

The move comes as the retailer continues to lose share to rivals such as Macy's Inc and faces pressure to seek new avenues of growth.

The Growth Brands division, aimed at boosting sourcing and marketing of exclusive or niche products, will start work in 2011 with the Clad online menswear store and an e-commerce site for gift-givers called Gifting Grace.

The online ventures, launched under a marketing partnership with Hearst Magazines, should help the retailer in reaching out to more customers, but analysts worry Penney's ventures might be too little, too late.

"It's a logical strategic step but it also feels a little bit like grasping at straws," Morningstar analyst Paul Swinand said.

"It's a good idea, (but) you are not early to the party," Swinand said, adding that the retailer already faces cut-throat competition online from Macy's and Kohl's.

Many U.S. retailers that offer exclusive yet affordable merchandise stood out from the pack in October, hinting at a key to success for the all-important upcoming holiday shopping season.

A dearth of must-have goods and compelling price tags has been driving investors away from mid-price department stores such as J.C. Penney and Dillard's.

Analysts have particularly raised concerns about Penney's merchandise and presentation.

"I continue to walk through (Penney) stores and shake my head," Patty Edwards, chief investment officer of Trutina Financial, told Reuters last month. "I think that Kohl's is going to end up eating J.C. Penney's lunch."

Kohl's has better management, merchandise and pricing, Edwards added.

Kohl's now intends to open 40 new stores next year, Chief Financial Officer Wes McDonald told analysts on a conference call. The company had originally planned to open 30 new stores.

Penney shares were down 0.8 percent or 27 cents at $32.40 in late morning trading.

(Reporting by Dhanya Skariachan and Phil Wahba; Editing by Lisa Von Ahn and Matthew Lewis)

Israel's Netanyahu unveils U.S. plan for new talks

JERUSALEM (Reuters) – Prime Minister Benjamin Netanyahu showed senior ministers a U.S. plan for resuming peace talks with Palestinians, including a 90-day settlement freeze, a diplomatic source told reporters Saturday.

The plan also includes a pledge not to seek any extension to the settlement freeze after the 90-day period, a vow to veto any attempts at the United Nations to force a unilateral peace deal and an agreement on supplying Israel with more war planes.

Israeli-Palestinian peace talks, renewed under Washington's sponsorship on September 2, broke down a few weeks later when Israel balked at renewing a settlement moratorium.

Netanyahu met his top "Forum of Seven" ministers a day after returning from a week-long U.S. tour that included talks on Thursday with Secretary of State Hillary Clinton at which she unveiled the plan he showed his cabinet, the source said.

Netanyahu hopes he may win approval for the plan from his pro-settler cabinet later this week, political sources said.

Among the pledges offered to Israel by Washington, was a guarantee to veto any resolutions brought to the United Nations Security Council that seek "to impose a political settlement on Israel," the source said, speaking on condition of anonymity.

Palestinian President Mahmoud Abbas had no immediate comment. Officials speaking on condition of anonymity said the Palestinian leader was likely to wait to see whether Israel approved the ideas before issuing any comment.

AN ADDITIONAL FREEZE

Under the plan Israel would "declare an additional suspension of construction" in the West Bank, land it captured from Jordan in a 1967 war, for 90 days. Building begun since a moratorium ended in September, would be halted, the source said.

The proposed construction freeze would not include East Jerusalem, an area Israel has annexed as part of its capital in a move never recognized internationally and which Palestinians want as capital of any future state.

Washington would also undertake to veto resolutions deemed anti-Israel in the U.N. Security Council and other international organizations, the source said, a pledge that could make Israel less vulnerable to threats made by some Palestinians to declare statehood unilaterally in the event that peace talks fail.

The Obama Administration would also ask Congress to approve the supply of $3 billion worth of warplanes to Israel "to maintain its qualitative edge" in the region, the source said.

The United States would further sign a more comprehensive deal to enhance its substantial security aid to Israel as part of any agreement concluded with the Palestinians.

Israeli officials said Netanyahu, who faces a tough political sell within his own coalition on the settlement issue, had pushed Clinton for the broad understandings.

"The chances of reaching a peace agreement will be improved significantly by achieving comprehensive security understandings between Israel and the United States," Netanyahu said in New York before his talks with Clinton began.

(Additional reporting by Ali Sawafta in Ramallah; Writing by Allyn Fisher-Ilan; Editing by Louise Ireland)

Oil-rich but candlelit Nigeria seeks power upgrade

LAGOS, Nigeria – When the sun sets in Nigeria, candle flames dance against the darkness, flashlights bob down empty streets and thousands of diesel generators cough to life.

This nation has more than enough oil and natural gas to satisfy its energy needs, but its power grid is a wreck, reaching less than half the population even on a good day. To frustrated Nigerians, the initials of the state-run electricity provider, the Power Holding Company of Nigeria — stand more aptly for "Please Have Candles Nearby."

Nigerian President Goodluck Jonathan vowed Thursday to set things right by expanding, repairing and privatizing the system — a hugely important issue for the nation of 150 million, with presidential elections scheduled for early next year. He made the announcement in a luxury Lagos hotel powered around the clock by diesel generators.

The effort will require enormous investment. In a report released Thursday, Nigerian officials suggested that $100 billion "would represent a conservative estimate" to build new power plants and transmission lines over the next decade.

There haven't been improvements in Nigeria's electrical grid since the 1970s, and its population has almost tripled since then. Former President Olusegun Obasanjo, who governed from 1999-2007 and is a mentor to Jonathan, purportedly spent as much as $16 billion to revamp the power grid — to no visible effect.

Nigerians' cynicism about the situation is as dark as the streets are at night. A survey of businesses conducted by the nation's anti-graft agency found executives rated the national power company less trustworthy than even Nigeria's trigger-happy and bribe-prone federal police. Many of thos surveyed said they feel obliged to bribe workers to repair power lines or provide electricity.

Employees of the state-run power company went on strike Wednesday over their salaries but returned to work Thursday. But even when workers man their stations, most of the country remains without power.

Some Nigerians steal what little electricity there is. Power poles look like tangled black yarn with illegally spliced lines running in every direction. Workers cut electricity during hard rain, over fears of transformers blowing or poles falling to the ground, their live wires killing passers-by. One such incident left at least 20 dead in February.

Many in Africa's most populous country remain skeptical of ever seeing steady electricity.

"Every day I pray to God ... to give us light," said Cecilia Akpan, a 55-year-old widow who sells cassava at night by candlelight in the capital.

Those who can afford it get by with diesel generators. Those powering office buildings can be the size of boxcars. In humble market stalls and homes, small generators provide enough electricity for a few light bulbs and a fan during humid nights.

In Lagos, a city of 14 million, the growling engines create a monotonous soundtrack, their diesel fumes a noxious perfume. The central bank estimates Nigerians spend $13 billion a year to fuel generators, which together provide more than twice as much electricity as the national power company.

Jonathan's plan calls for privatizing the 11 electrical distribution companies that fall under the power company. Private investment would build new, natural-gas power plants that would rely on Nigeria's ample gas reserves. The government would create a new power grid to carry the additional electricity while contracting a private firm to manage it.

"We need a revolution in the power sector," Jonathan said.

At Lagos' Oshodi Market, a maze of concrete store stalls specializing in electronics, salesmen scamper to their rooftops to pour more oil mixed with fuel into their small generators, which provide just enough power for lights. Only one stall — the generator store — had enough juice to run a flat-screen television, which blared music videos.

Fueling a small generator costs about $10 a day in country where most earn less than $1 in the same time, noted Anthony Okeke, the market's vice chairman.

"We use the profit to buy the fuel," Okeke said.

Those at the market have relative comfort compared to most Nigerians. In rural pasturelands, fires light the night in homes, just like in ancient times. In the city, street hawkers like Akpan sell their wares by candlelight, their faces illuminated only by passing headlights.

Less than a mile away from the market, meanwhile, generators at compounds owned by the country's political and business elite chug into the night, powering security lights on empty parking lots.

"Poor people, we are suffering in Nigeria," Akpan said. "It is only the rich people who are enjoying Nigeria."

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Online:

Nigeria power reform:

Congress sets new hearing on huge J&J recalls

NEW YORK (Reuters) – A U.S. congressional committee probing massive recalls of Tylenol and other Johnson & Johnson consumer medicines said it will hold another hearing on the matter after receiving "extremely troubling" new information about circumstances surrounding the recalls.

The House Committee on Oversight and Government Reform, during a hearing on May 27, blasted J&J manufacturing lapses that led to the string of recalls over the past year and said they could lead to civil or criminal charges.

The panel said on Thursday it will hold a second hearing on September 30 to examine J&J's recall of over 135 million bottles of infant and children's medicines produced by J&J's McNeil Consumer Healthcare unit -- including Tylenol, painkiller Motrin and allergy treatment Benadryl.

"This is about the safety of trusted medication that our children and grandchildren use," committee chairman Edolphus Towns said in a release on Thursday. "The evidence we have uncovered since our first hearing is extremely troubling."

The new hearing will also examine what the panel described as a "phantom recall" of Motrin, details of which became public as a result of the May hearing.

During that hearing, Towns cited a document it received from the U.S. Food and Drug Administration and said it showed that "rather than issue a public recall, McNeil allegedly sent contractors out to stores to buy the product back and told the stores 'not to mention' a recall."

J&J spokeswoman Bonnie Jacobs in June disputed allegations McNeil had executed a phantom recall, saying the company sought to remove the Motrin "from a unique channel -- mainly convenience stores and gas stations -- "with as little disruption and consumer confusion as possible."

Colleen Goggins, worldwide chairman of the McNeil unit, appeared at the committee's May hearing, where she said J&J had not lived up to its reputation, but was taking drastic steps to clean up its manufacturing process and shake up management. But Goggins, who has headed McNeil for almost a decade and sits on J&J's executive committee, remains in charge of the consumer unit.

The House panel, in separate letters issued on Thursday, invited Goggins and J&J Chief Executive William Weldon to attend the upcoming meeting. Weldon did not testify at the earlier meeting, saying he was recovering from back surgery.

(Reporting by Ransdell Pierson; editing by Andre Grenon)

OpinionCynthia TuckerD.C. SCHOOLS CONTROVERSY SHOWS IT'S HARD TO SHAKE THINGS UP

WASHINGTON -- Here in the nation's capital city, something remarkable has happened: Students in the public schools, long regarded as among the nation's worst, have shown dramatic improvement on standardized tests over the last few years. Here's something even more remarkable: Local voters seem indifferent, if not outright hostile, to the reforms that have produced those academic gains.

If anything points to the difficulty of bringing permanent change to the nation's underperforming classrooms, the controversy surrounding schools chancellor Michelle Rhee does. While officials here have been working for several years to improve the schools, the impressive gains of the past two years are largely the result of her efforts.

But voters haven't warmed to Rhee; according to The Washington Post, her approval rating hovers around 44 percent. And her unpopularity may help to end the tenure of Mayor Adrian Fenty, who has encountered rough sledding in his re-election campaign.

Fenty, who was elected mayor in 2007, made a daring proposal to put the city's troubled schools under his purview. When he won that authority, he selected Rhee to run the school system.

Tough but visionary, she has wrestled with the teachers' union to fire bad teachers, hire good principals, close underused schools and streamline a top-heavy administrative bureaucracy. She chides teachers who talk about the burdens of teaching students from dysfunctional homes. An alumna of Teach for America, she champions merit pay.

Rhee has been criticized as arrogant, out of touch and elitist. She has certainly committed her share of political mistakes, making some enemies needlessly and failing to clearly explain some of her more controversial decisions.

But she gets results. And if she leaves, it's unlikely her data-driven reforms, which emphasize classroom accountability, would continue. Her successor would learn one lesson from her departure: Don't shake things up.

Already, Vincent Gray, Fenty's opponent in the Democratic primary (scheduled for Sept. 14) has called for slowing down the pace of change in the schools. That seems unwise since, as Rhee readily acknowledges, the district's schools still don't measure up to the national average.

One of the more striking features of the controversy over school reform is Rhee's alienation from black voters, who account for more than 60 percent of the local electorate. Fifty-four percent of black voters say they are less likely to support Fenty's re-election bid because he chose Rhee for the chancellor's post, according to The Washington Post.

You'd think that, instead, black voters would be building monuments to Rhee. Nearly 85 percent of students in local public schools are black, so black kids benefit disproportionately from the academic gains.

But, as other would-be school reformers have learned, there is a price to be paid for tangling with schoolteachers. Though it has barely begun, President Obama's Race to the Top program, which emphasizes weeding out poorly performing educators, has already frayed traditional alliances between teachers' unions and Democrats.

Schoolteachers exert outsized influence here because, along with civil servants, they are the backbone of the black middle class. While the civil rights movement has given black college graduates far more professional opportunities, teachers are still linchpins of churches, clubs and other social networks.

And those networks are roiling over Rhee's firings of more than 200 teachers and several principals for poor performance. She also negotiated a new contract with the teachers' union that weakens job protections, making it easier to fire bad teachers in the future.

Those are just the changes necessary to eliminate the lazy, the incompetent and the ill-equipped -- teachers whose presence in the classroom is especially detrimental to impoverished children who start school behind. It's too bad those kids don't have a vote.

(Cynthia Tucker can be reached at http://blogs.ajc.com/cynthia-tucker.)