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Inside Retail (May 3rd, 2017)

United Parcel Services Inc. (UPS) is imposing penalties on retailers that reserve services during peak times but do not use them. Delivery services like UPS and FedEx are seeing a surge in demand as consumers increasingly turn to online shopping. But while they welcome the business, they also face increased costs as one-by-one residential deliveries are more expensive than bulk deliveries to corporate locations. UPS said its new pricing is not meant as a punishment to retailers, but a way to have them help foot the bill for space and workers that aren’t used. FedEx recently raised rates by 3.9 to 4.9 percent on its various delivery services and dropped those retailers that would not agree to the increases. – WSJ

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CVS Health Corp. (CVS) reported mixed first-quarter quarter results, including revenue that fell short of expectations while profit beat. Same-store sales fell 4.9 percent from a year prior, in part due to an influx of generic options, while revenue in the convenience store’s pharmacy services business rose 8.5 percent to $31.2 billion. “While we are pleased with our financial performance versus our expectations, we won’t be satisfied until the company returns to sustainable, healthy earnings growth,” said CEO Larry Merlo in a statement. CVS is planning to close 70 stores this year and already closed 60 of them in the first quarter. – REUTERS

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One of Urban Outfitters’ main shareholders, CtW Investment Group, said the retailer has a board that is not experienced enough in the industry. CtW, in a letter to shareholders, urged voters to oppose the re-election of established board members Robert H. Strouse and Harry S. Cherken Jr. CtW said Urban Outfitters’ board is “largely composed of individuals with a law and finance background, rather than individuals with outside retail experience.” For its part, Urban Outfitters said it has tried to diversify its board. Urban Outfitters announced last month it's investing $8 million in revamping leadership. – RETAIL DIVE

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J. Crew Group Inc. may be able to stave off bankruptcy a bit longer now that GSO Capital Partners is acquiring more of the company’s debt. GSO, Blackstone’s credit arm, is eyeing J. Crew’s $567 million in unsecured bonds due in 2019, which J. Crew said it will exchange for bonds backed by a new company that will hold its intellectual property. J. Crew has about $2.1 billion in debt. GSO, which already owns some of J. Crew’s bonds, is also buying chunks of a $1.53 billion loan. With GSO’s involvement, the bonds will become due in 2021. – REUTERS  

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Macy’s is selling a portion of its Loop flagship store in Chicago in a deal that could fetch as much as $130 million. The department store chain has been vigorously cutting costs by closing stores across the U.S. amid sliding sales. It’s selling the eighth through the 14th floor of the building, a total of about 700,000 square feet. “Macy’s is continuing to execute on our real estate strategy that is focused on creating value through monetization and, in some cases, redevelopment of our assets,” said spokeswoman Andrea Schwartz. – CHICAGO TRIBUNE

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Hugo Boss reported first-quarter net profit that rose 25 percent from a year ago as it said it was on track to regain financial footing in a transition year. Hugo Boss’ net profit increased to $52.4 million. Revenue increased 1 percent, boosted by sales in Asia and Europe as sales in the U.S were weak in comparison. The German premium clothing retailer managed to cut costs more than its stagnant sales gains. Now, Hugo Boss is refocusing its efforts on suits, its core business, as it restructures under new CEO Mark Langer. – MARKETWATCH

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