Author: Helen Thomas

The Wall Street Journal recently reported that while apartment construction has been a bright spot in the recovery of the nation’s housing market over the last six years, economists say the tide might be turning away from apartments and toward single-family homes.

For the past six years, the construction of apartments and condos has grown at a faster rate than that of single-family homes. Last year U.S. builders began construction on 396,000 units in buildings with two units or more, the most in a year since 1988.  In contrast, single family home construction has remained below the historical 20-year average of about 1.05 million homes. Last year builders started just 714,600 homes.

But 2016 could be the year the trends reverse. Both the National Association of Home Builders and housing-research firm Metrostudy are forecasting significant growth in single family home starts this year. Their predictions of 19% growth and 14.6% growth respectively outpace their single-digit growth predictions for multi-family construction.

Six years of rapidly rising rents across the U.S. have driven prices to a point that is out of reach for many, far outpacing income growth. Chief economist at Metrostudy, Brad Hunter pointed out that “after six years of strong performance, the apartment market is poised for a breather. We’ve reached a point where we can’t continue to grow that sector.”

The NAHB made a similar prediction last year when they forecasted 26% growth for single-family construction and only 2% for multi-family. The two sectors grew at similar rates with single-family seeing 10.3% growth compared to 11.6% for multi-family in 2015.

Consumer spending grew in January, showing an improvement in retail sales and home purchases. On Friday, the Commerce Department reported personal spending rose 0.5% in January from the prior month. Americans’ pretax earnings from salaries and investments increased at about the same pace. US consumer confidence dropped slightly in January but recovered slightly in February, a sign of slower but steady economic growth.

Reports Friday also revealed that gross domestic product advanced at 1%, higher than the estimate of 0.7%. Inflation still runs below the Federal Reserve’s 2% inflation target.

Improvement in overall economic growth for the quarter ending January 30 was mainly due to the fact that companies pulled back on inventory less than originally expected. Economists have cautioned that first quarter growth may be slow as companies take longer to work through their well-replenished stock.

Source: The Wall St. Journal

For the period ending January 30, 2016, Macy’s total sales declined 5.2% to $8.87 billion. Same-store sales fell 4.3%, slightly less than the 4.7% decrease analysts were expecting. Macy’s did announce it had another year of double-digit growth in its online business, attributed to high increases in mobile traffic and conversions.  In looking back on the year, chairman and CEO, Terry J. Lundgren, pointed out many expansion initiatives. “We expanded our online capacity with a new state-of-the-art fulfillment center in Tulsa, Oklahoma,” he said. “We announced licensed department arrangements with companies including LensCrafters, Men’s Wearhouse and Best Buy to add new categories to the Macy’s store assortment. We completed the acquisition of Bluemercury, which added capabilities to our signature beauty business. We developed and launched Macy’s Backstage, which will be piloted as an in-store concept this spring. And we began initial testing of online selling in China in a new joint venture with a Hong Kong-based partner.” Macy’s has $400 million of planned cost savings and will have more conservative inventory planning in 2016 to improve its operating margins. It does expect to see a 1% comp-stores decline in 2016.

Source: Chain Store Age

Dillard’s announced a 35.6% drop in fourth quarter profit. For the period ending January 30, revenue was $2.07 billion for the fourth quarter, down from $2.1 billion a year ago. Same store sales declined 2%. In 2015, Dillard’s opened three new stores in Murray, UT, Slidell, LA and Cincinnati, OH. They also closed two clearance stores. The Southern retailer also announced the upcoming closure of their Aiken, SC location in Q1 of this year. As of now, Dillard’s operated 273 stores and 24 clearance centers over 29 states.

“The fourth quarter was difficult. As sales came in less than planned, we worked hard to control our inventory during an unusually competitive environment,” said Dillard’s CEO William T. Dillard II. “Sales were particularly weak on the Southern border and in the energy producing regions. Higher markdowns affected gross margin, but we did the right thing as we move on to 2016.”

Source: Retailing Today

The Home Depot’s fourth-quarter sales included an 8.9% sales increase in US stores that have been open for at least one year. This is despite the challenges facing the rest of the retail industry. Sales were strong the entire quarter, but warm weather in December brought in a sales spike – Home Depot attributes $100 million in sales growth to the milder weather. High sales were seen for power washers and pressure-treated lumber by homeowners building decks.

Home prices also rose in December, showing the strongest gains since July 2014. The Home Price Index showed a rise of 5.2% in the 12 months ending in December, versus a 5.2% in November. The national median sale price for a home in December was $213,800, 8.2% from the previous year. There is a limited inventory of homes for sale, and demand for new homes is likely to drive more new construction and help keep a ceiling on the rising home prices, although January 2016 was a slow start for new home construction for the year.

Accelerated Analytics helps Home Depot vendors, such as WM Barr, Hillman Group, Alexandria Molding, and CPG Building Products to manage their sales and inventory data to drive results. Our vendors use our analytical measures, such as sell through, inventory shortages, out of stocks, weeks of supply and consumer purchasing trends, to take quick actions to ensure they are optimizing inventory and growing sales.

Source: Wall St. Journal

Big changes are being announced at Amazon.com. Based on shipping price increases imposed by UPS and FedEx late last year, Amazon announced its threshold for free shipping is increasing by 40%, to $49 in orders. However, Amazon is not raising the threshold with an interest in shipping revenue, but instead to incent more customers to become members of Amazon Prime.

Amazon Prime members always receive free shipping on all orders, but membership costs $99 per year. These customer spend on average double what Amazon’s other customers spend, and absorbing shipping costs will be nothing to them compared to the billions of dollars in sales the company may gain.

Amazon is also hiring heavily to staff up its Amazon Fashion Private Label unit, which could take on fast-fashion chains to sellers of basic apparel. An analyst at Women’s Wear Daily estimates Amazon could launch a private label apparel brand by early 2017. Amazon can undercut prices that other fashion retailers have at brick and mortar stores, and its ability to collect customer data can help them to give customers exactly what they want.

Many Accelerated Analytics’ vendors utilize our POS reporting and analysis tools to manage their Amazon sales and inventory. These vendors sell online with the retail giant in addition to selling at department store brick and mortar stores and online sites. Being able to compare sales trends between them is a key tool to help them win at retail and ensure customers are able to access the products they want to buy regardless of which retailer they are shopping with.

Sources: Wall St. Journal, New York Business Journal

Retailers have depended on American’s using their IRS tax refund checks to boost February and March sales. However, according to a survey conducted by the National Retail Federation (NRF), more than half of those expecting a refund are planning to save their money instead of spend it. This is the highest level since the NRF has begun conducting the survey.

Millennials, ages 18 to 24, show 57.3% planning to save and 27.4% planning to spend their refunds on everyday purchases like gas or groceries. In the 25 to 34 year old bracket, 52.3% plan to save and 45% plan to repay debt.

In addition to saving, 22.4% of Americans will save their refunds while 11.4% will plan a vacation. “Consumers are building their spending power and boosting their confidence as they set aside their checks from Uncle Sam,” NRF president and CEO Matthew Shay said. “Americans this year see refund season as a time to improve their financial health by using their refunds to get ahead on savings goals and plan for bigger purchases in the future. Money saved is money waiting to be spent.”

As refund checks start to get into Amercan’s hands, it will remain to be seen if this holds true for future retail spending and whether they will actually save the money or decide to shop instead.

Source: Chain Store Age

At Accelerated Analytics, we work extensively with The Home Depot, Lowe’s, and Wal-Mart data and we know how to integrate your item catalog, shipping data, plan o gram, and other key files for a comprehensive reporting solution.  With our services, you’ll have more timely reporting in a consistent format available to any user with an internet connection, iPad, or iPhone.  Your analysts will be able to focus on the business instead of making spreadsheets. Plus you will have store / SKU level reporting.  Talk about powerful!

Showing the lowest rate since October, new housing starts fell 3.8% in January from a month earlier. U.S. home builders are reporting a positive outlook as spring approaches, citing solid fundamentals for housing demand, such as job gains and low mortgage rates. Demand for housing has been strong over the past year but growth has been slow, with housing starts just 1.8% higher than January 2015.

Home builders are reporting shortages of land and labor, leading to project delays and higher construction prices, which lowers demand for new homes. However, new home sales in December were up 9.9% from a year earlier. “The weak showing in construction activity is broadly consistent with the recent souring in home builders’ sentiment, and when combined with the downdrift in permit approvals it suggests some slowdown in the months ahead,” said Millan Mulraine, economist at TD Securities USA, in a note to clients.

The Home Depot performed very well in 2015, giving investors better returns than competitor Lowe’s. The Home Depot opened 2016 with a large pullback due to fears about the general economy and the housing market in particular. An anticipated rise in mortgage rates has not happened and Home Depot is gearing up for spring, its busiest period of the year. The company will hire more than 80,000 workers for its 2,000 stores and 75 distribution facilities. The Home Depot’s domestic business has kept it in the lead, but with Lowe’s announcement of its acquisition of Canadian home-improvement chain Rona, international expansion could be important to future growth.

Source: WSJ