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Armstrong Flooring Inc., a publicly traded manufacturer founded in 1860, has filed for bankruptcy, saying it couldn’t raise prices enough to counter supply-chain disruptions and higher costs for materials and transportation, WSJ Pro Bankruptcy reported. The Lancaster, Pa.-based company, along with subsidiaries AFI Licensing LLC, Armstrong Flooring Latin America Inc. and Armstrong Flooring Canada Ltd., filed for chapter 11 protection Sunday in the U.S. Bankruptcy Court in Wilmington, Del. In November, Armstrong warned about whether it could continue as a going concern long-term, and earlier this month said it was seeking a buyer and would likely seek bankruptcy protection. Chief Executive Officer Michel Vermette said in court papers Armstrong last year sought to raise prices by up to 10% for residential products and 15% for commercial products. But profit margins were still narrowed by product and transportation cost increases of $85 million in 2021 alone, he said. Armstrong was cash flow negative last year and expects to continue to be cash flow negative this year, Mr. Vermette said. Remaining liquidity under an asset-based lending credit facility would be exhausted by 2023, he added. Armstrong’s customers include specialty retailers and wholesale flooring distributors that resell its products, including vinyl tiles, to retailers, builders, contractors, installers and others. The company last year posted sales of roughly $650 million.

CVS Health Corp., Walgreens Boots Alliance Inc. and Walmart Inc. today begin a first-of-its-kind trial to determine what the pharmacy chains owe for their role in the opioid epidemic in two Ohio counties, which are seeking $878 million, Reuters reported. A federal jury decided in November that the companies helped create a public nuisance with an alleged flood of addictive pain pills that wound up on the black market, in the first trial the companies faced over the crisis. The jury did not decide how much the companies should pay to help alleviate the health crisis, which will now be determined by U.S. District Judge Dan Polster, marking the first trial to separately determine what the pharmacy chains owe after having been found liable. Ohio's Lake and Trumbull Counties want the pharmacy chains to fund a $878 million five-year plan that includes treatment for addiction and overdoses, resources for law enforcement and healthcare providers, and employment training for addicts. Walgreens, CVS and Walmart countered with an offer of a one-year program to buy back unused prescription opioid drugs in the two counties. They argue that Ohio's public nuisance law only requires them to stop the nuisance identified by the jury — an oversupply of prescription drugs — and not to address all of its negative effects. CVS, Walgreens and Walmart have denied the counties’ allegations and said they would appeal the November verdict. The companies argued that if they must do more than buy drugs back, they should not be forced to cover costs related to illegal drug use. They also said the counties have overstated the costs of their five-year plan. The U.S. opioid epidemic has caused more than 500,000 overdose deaths over two decades, according to government data. More than 3,300 opioid lawsuits have been filed nationally against drugmakers, distributors and pharmacy chains, leading to a wave of proposed settlements.

Peloton Interactive Inc. today reported falling sales and mounting losses as the stationary-bike maker struggles with weaker demand as Americans return to their prepandemic lifestyles, the Wall Street Journal reported. The maker of connected-fitness equipment said it secured $750 million in financing from banks to help pay for a turnaround as the company runs low on cash. Peloton posted a $757.1 million loss in the quarter ended March 31, which the company attributed to weak demand and the cost of carrying inventory of unsold bikes and treadmills. The company’s quarterly loss a year ago was $8.6 million. Revenue fell 24% in the quarter, Peloton’s first year-over-year decline since becoming a publicly traded company in 2019. Subscriber growth, which grew more than fourfold amid the pandemic, was 6% and the company said that it saw a modest number of cancellations following its move to increase the subscription fee. Peloton last month said it would cut prices of its stationary bikes and treadmills and raise monthly subscriptions for online workout classes starting June 1.

Supply-chain problems are a bear, but they are better than the alternative of waning demand. The worry for some manufacturers has to be that the latter might become a live concern in the months ahead, the Wall Street Journal reported. The Institute for Supply Management on Monday said that its index of manufacturing activity slipped to 55.4 in April from March’s 57.1. That is still solidly above 50 — the dividing line between growth and contraction — but marked the lowest level since July 2020. Moreover, the index got a boost in April from a slowdown in supplier deliveries, which is usually a positive sign for manufacturing, but in the context of ongoing supply-chain issues counts a negative. It was at an elevated 67.2 versus 65.4 in March. Manufacturing growth could further moderate in the months ahead, in response to shifts in demand. The easing of the pandemic has led to a shift away from spending on many types of manufactured goods toward services. Commerce Department figures released last week showed that, adjusted for inflation, consumer spending on furnishings, appliances and other household equipment in the first quarter was 5.1% below its year-earlier level. Spending on restaurants, bars and other food services was up 19.5% over the same period, while spending on hotels and motels was up 49%.

Creditors of bankrupt Sears Holdings Corp. have run out of money to continue litigating billion-dollar claims against former chairman Eddie Lampert and a host of other defendants who they say stripped the company of valuable brands and real estate assets as the retailer spiraled into insolvency, Reuters reported. The Sears bankruptcy plan called for the estate to set aside $25 million to pursue the claims, but that money is gone, along with another $7.1 million owed to Akin Gump Strauss Hauer & Feld, lead counsel for the liquidating trust. Billions in claims and no money to litigate? That’s what litigation finance is for, according to an April 21 motion by the Sears creditors committee. The motion asks U.S. Bankruptcy Court Judge Robert Drain of White Plains, New York, to approve an agreement between Sears, the creditors’ committee and the litigation funder Bench Walk Advisors LLC for up to $35 million in financing to continue prosecuting two adversarial proceedings, one against Lampert and his alleged allies, the other against 139 former Sears shareholders. The deal would put Bench Walk first in line to collect from any recovery from the cases but limits the litigation funder’s initial entitlement to its principal plus 15% annualized interest. Bench Walk will only receive additional returns on its investment if the recovery is enough to pay off administrative, priority and secured claims against the Sears estate.

Consumers spent more in March, showing American households are absorbing high inflation and are positioned to propel the economy heading into the spring and summer, the Wall Street Journal reported. Personal-consumption expenditures increased a seasonally adjusted 1.1% in March from the prior month, the Commerce Department said Friday. Adjusting for inflation, consumer spending rose 0.2% last month, driven by higher services spending. Household spending also rose at a faster rate than inflation from a year earlier. Consumers stepped up spending on services like travel and dining, as well as on goods like gasoline and food. Spending on durable goods declined for the second month in a row, led by lower spending on vehicles. Personal income, a measure that includes wages and government assistance, climbed 0.5% from the prior month. That was a slower rise than overall inflation, which increased 0.9% on the month in March, according to the Commerce Department. Some Americans tapped their savings to offset cost increases. The savings rate fell to 6.2% in March, the lowest in nine years.

About 40% of U.S. small businesses intend to raise selling prices by 10% or more amid decades-high inflation, according to a survey from the National Federation of Independent Business, Bloomberg News reported. Overall, more than two-thirds of the respondents plan to increase prices in the next three months, according to the survey, conducted between April 14 and April 17 among 540 business owners. Almost half of the small firms are planning increases of 4% to 9%. The report suggests that many businesses are planning increases that are above the current rate of national inflation — the consumer-price index rose 8.5% in March, the most since 1981. Nearly nine in ten employers in the NFIB survey said they’ve had to raise prices to absorb some of the costs.

The owners of JCPenney have made an offer to acquire archrival Kohl’s in a deal that could value the department-store chain at upwards of $8.6 billion, the New York Post has learned. Under the proposal, shopping-mall giant Simon Property and Canada-based Brookfield Asset Management — which together scooped JCPenney out of bankruptcy in December 2020 — have offered to acquired Kohl’s for $68 a share. Sources say that the plan is for JCPenney’s corporate parents to continue to maintain two separate brands while streamlining operations and cutting costs. The bidders’ plan for Kohl’s is to slash costs by $1 billion over the next three years, according to the source. Kohl’s, based in Wisconsin, put itself up for sale earlier this year at the urging of activist investors Macellum and Engine Capital, who were unhappy with the direction of the company. Private equity giants Sycamore Partners and Leonard Green & Partners as well as Saks Fifth Avenue’s Canada-based parent company Hudson’s Bay are reportedly interested in acquiring Kohl’s.

The rule that allows American tourists to bring back souvenirs from overseas duty-free is now being used by companies to avoid billions of dollars in tariffs — and it’s perfectly legal, the Wall Street Journal reported. Known as the de minimis rule, the exemption has been around for decades, deriving its name from the Latin term for something too small to fuss with. For many years, it was just that — accounting for such a sliver of imports that U.S. Customs and Border Protection didn’t even bother to keep track of them. It’s a sliver no more. The known value of de minimis imports soared to over $67 billion in 2020 from an estimated $40 million in 2012, according to previously unreported U.S. Customs data. The rise of e-commerce in recent years accustomed shoppers to order just a few items at a time — which easily falls under the de minimis rules — and led to steady growth in such shipments. Then a sharp jump came in the wake of higher tariffs imposed by the Trump administration on Chinese imports, according to the Customs data and logistics industry executives, who say the new levies led importers to devise ways to dodge paying them. As a result, more than a tenth of Chinese imports by value now arrive as de minimis shipments, the Customs data indicate, up from well under 1% a decade ago. The increase was also fueled by a 2016 decision by Congress to raise the maximum value of de minimis imports to $800, up from $200. The law allows U.S. retailers who sell Chinese imports — along with Chinese companies that sell directly to U.S. consumers — to avoid tariffs on goods as long as they are packaged and addressed to individual buyers and fall below the $800 cap.

Texas Gov. Greg Abbott (R) said on Friday that there were no longer any secondary inspections of trucks crossing into his state from Mexico, announcing the end of a policy that had created multi-mile backlogs and that critics alleged had cost them millions of dollars in losses because key trade routes had ground to a halt. The announcement came after Abbott said he had reached agreements with a number of Mexican officials to improve border security. The new Texas-led inspections went into place in the last week, but they were decried by White House officials, who said the trucks were already inspected by federal officials and that inspecting the same trucks again by state officials created huge traffic jams. The traffic jams were expected to soon lead to food shortages and price spikes, among other things. Abbott claimed that he was lifting the requirement because Mexican officials had agreed to new security measures. He was under tremendous pressure from business groups to back down because of major delays in deliveries, particularly as fruit and vegetable produce sat at risk of spoiling. It is unclear how long it will take for the backlog to clear and traffic to normalize along the border.