Author: Helen Thomas

January 21, 2015

The multifamily market has had strong demand in recent years and is set to remain that way in 2015 despite certain headwinds that could affect the industry, said panelists during a press conference at the National Association of Home Builders (NAHB) International Builders’ Show (IBS) in Las Vegas.

The number of multifamily apartments forecast to be built is likely to reach a sustainable level that is higher than the levels of production in the past.  As the industry reaches that new plateau, the pace of construction is likely to level off in 2015 and into 2016.

“The multifamily industry is strong and producing more units than in previous cycles,” said NAHB Chief Economist David Crowe.  “The industry has shown dramatic increases in construction since the recession, but the level of increase will moderate as we approach equilibrium.  We are forecasting that 358,000 units will be developed in 2015 and 361,000 units in 2016.  One of the indicators for our forecast is NAHB’s Multifamily Production Index, which is a survey of our members’ attitudes toward the market.  They have been telling us that the market is very strong and is expected to stay that way for the forseeable future.”

Although Dr. Crowe and other panelists are optimistic about the future of the multifamily housing market, there are still challenges that face the industry such as increasing costs and availability of labor.  But demand for apartments is strong enough for developers to proceed in most markets, the panelists noted.

One of the markets in particular within the multifamily industry that has strong demand is affordable rental housing.  “There are many families in America that have a great need for affordable housing, said Mike Costa, president and CEO of Highridge Costa Housing Partners LLC in Gardena, California.  “We have a long waiting list for our apartments at all of our communities.  There is a need for us to be building more.”

Source: National Association of Home Builders

January 20, 2015

Builder confidence in the market for newly built single-family homes declined one point to 57, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index released today.  This marks the third straight month that the index has hovered in the upper 50s range.

“After seven months above the key 50 benchmark, builder sentiment is reflecting the gradual improvement that is occuring in many markets throughout the nation,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.

“January’s HMI reading is in line with our forecast as we head into the new year,” said NAHB Chief Economist David Crowe.  “Steady economic growth, rising consumer confidence and a growing labor market will help the housing market continue to move forward in 2015.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.”  The survey also asks builders to rate traffic of prospective buyers as “high to very high,” average” or “low to very low.”  Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

The HMI component gauging current sales conditions remained unchanged at 62 in January while the index measuring expectations for future sales dropped four points to 60 and the component gauging traffic of prospective buyers fell two points to 44.

Looking at the three-month averages for regional HMI scores, the West rose by four points to 66, the Midwest registered a three-point gain to 57 and the Northeast was up two points to 47.  The South dropped two points to 58.

Source: National Association of Home Builders

Lowe’s has announced plans to hire 30,000 employees in its US stores for Spring 2015. These seasonal jobs will be focused on customer service, and most employees will work 20 or more hours per week. The company is hiring and training new employees on a market-by-market basis. Hiring has already begun in the warmer climate states of Florida, California, Texas and Arizona.

 “As spring arrives, our stores are stocked with products homeowners use for their indoor and outdoor projects. To help make shopping and selection easier, we want our stores staffed with knowledgeable employees who’ll provide exceptional service for customers,” said Scott Purvis, Lowe’s vice president of human resources operations.

 Home Depot hired 80,000 seasonal workers in winter/spring 2014, and analysts predict to see Home Depot follow Lowe’s with its own hiring uptick this year.

 Lowe’s has more than 1,800 home improvement stores.

Resource: Retailing Today

January 22, 2015

After months of delay and a failed bid by Dollar General, Family Dololar shareholders agreed to be acquired by Dollar Tree in a deal that creates a combined company with more than 14,000 locations, estimated annual sales of $19 billion and compelling growth opportunities.

Approval of the deal creates a new competitive dynamic in the world of extreme value retailing with the combination of Dollar Tree and Family Dollar making for a more formidable competitor to Dollar General and its nearly 12,000 stores.

Family Dollar operated 8,101 stores, which averaged about 7,200 square feet and were supported by 11 distribution centers at the end of the company’s first quarter on November 29, 2014.  More than three-fourths of the company’s sales are derived from food and consumable categories.  By comparison, Dollar Tree operated 5,077 stores, including 205 locations in Canada, which averaged about 9,000 square feet and were supported by 10 distribution centers at the end of the company’s third quarter on November 1, 2014.  About half of Dollar Tree’s sales come from food and consumable categories and the company also operates a format called “Deal$,” where it sells merchandise for more than $1.

The deal is expected to close in March.  About 74% of the shares were voted in favor of the deal.

“Today’s vote of approval by Family Dollar shareholders represents a crucial step toward combining Dollar Tree, North America’s leading fixed price point discount retailer, with Family Dollar, a leading multi-price point retailer with a 50 plus year history of serving low and middle income customers,” said Bob Sasser, Dollar Tree’s CEO.  “By adding Family Dollar to our portfolio of brands, Dollar Tree will soon operate more than 13,000 stores in 48 states and five Canadian provinces with annual sales exceeding $18 billion.  This merger enhances our geographic footprint and diversifies our business model.  We intend to operate and grow both banners.”

Family Dollar chairman and CEO Howard Levine said he was pleased with the outcome of the vote.

“The Family Dollar Board of Directors and management team have worked diligently to advance the best interests of all of the company’s stockholders, and we are grateful for the support we received for the merger proposal,” Levine said.  “We are also very appreciative of Family Dollar’s talented and committed team members, who have remained focused on serving our customers throughout this process.  We look forward to completing the transaction with Dollar Tree and remain excited about the opportunity that this combination will create for our stockholders, team members, customers and other stakeholders.”

Dollar General emerged as a bidder for Family Dollar after Family Dollar and Dollar Tree announced their acquisition deal on July 27, 2014.  Dollar General’s all-cash offer for $80 a share appeared superior on the surface to Dollar Tree’s cash and stock offer valued at $76.85 a share, but concerns quickly emerged about the number of store divestitures that would be required to secure regulatory approval because of the extensive overlap between the Dollar General and Family Dollar footprint.  Family Dollar indicated that between 3,500 and 4,000 stores were “problematic” based on Federal Trade Commission feedback while Dollar General indicated regulatory approval could be secured with the divestiture of no more than 1,500 stores.

In the end, Family Dollar shareholders voted for the certainty of the tie-up with Dollar Tree over the richer but potentially problematic offer from Dollar General.

Source: Retailing Today 

January 20, 2015

Residential remodeling is set for modest growth in 2015, according to experts at a press conference hosted by the National Association of Home Builders (NAHB) Remodelers at the International Builders’ Show (IBS) in Las Vegas.  Remodelers appearing on the panel agreed with the forecast, citing home owners’ changing demographics and increased financial security.

NAHB projects that residential remodeling spending on owner-occupied single-family homes will increase a modest 3 percent in 2015 over 2014, and another 1.5 percent in 2016.

“Remodelers are responding to calls from home owners on steadier financial footing than recent years,” said NAHB Remodelers Chairman Robert Criner, GMR, GMB, CAPS, CGP, a remodeler from Newport News, Virginia.  “From major kitchen remodels and bath facelifts to room additions, the members of NAHB Remodelers look forward to providing professional remodeling services in 2015.”

“Among our clientele, a demographic shift towards remodeling urban homes is taking place,” said Mike Nagel, CGR, CAPS, a remodeler from Chicago.  “Our recent jobs tend to be in the city and the projects have increased in size.”

“Existing homes sales and house prices both hit soft spots in 2014 that dealt a glancing blow to residential remodeling businesses,” said Paul Emrath, NAHB’s vice president for survey and housing policy research.  “We expect those drags are behind us in 2015, an outlook consistent with the optimism expressed by remodeler members in our recent Remodeling Market Index (RMI) survey.”

Source: National Association of Home Builders

January 15, 2015

As the broader housing market continues its sluggish recovery, growth in home improvement spending is also expected to soften throughout the coming year, according to the Leading Indicator of Remodeling Activity (LIRA) released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.  The LIRA projects annual growth in home improvement spending will decelerate from 6.3% in the first quarter of 2015 to 1.6% by the third quarter.

“Due in part to weakening home sales last year, growth in remodeling spending is expected to deflate somewhat in 2015,” says Chris Herbert, Managing Director of the Joint Center.  “Homeownership rates continue to slide as lending remains tight and first-time homebuyers are not yet returning to the market.”

“Although contractor sentiment has cooled in recent quarters, it remains favorable overall,” says Abbe Will, a research analyst in the Remodeling Futures Program at the Joint Center.  “House price gains are moderating but still strong and home sales appear to be turning a corner now, all of which bodes well for continued, if more moderate, home improvement gains for 2015.”

Source: Joint Center for Housing Studies

January 15, 2015

The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) posted a record high result of 60 in the final quarter of 2014.  A reading of 60 indicates remodelers’ confidence in the quarter-over-quarter improvement in the remodeling market.

An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower.  The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity.

“The recent pace and volume of business has been a boon to our remodeler members’ confidence in the recovery of the housing market,” said NAHB Remodelers Chair Paul Sillivan, CAPS, CGR, CGP, of Waterville Valley, New Hampshire.  “The upward trajectory of the RMI results over the past year has shown that home owners are ready, willing and deciding to remodel.”

The RMI’s future market conditions index rose to 60 from 58 in the previous quarter.  All four of its subcomponents – calls for bids, amount of work committed for the next three months, backlog of jobs and appointments for proposals – increased from the previous quarter’s reading.

The current market conditions component of the RMI also increased to 60 from 57 in the previous quarter.  The readings for all subcomponents, including large additions and small remodels as well as maintenance and repair, also saw increases.

“Even with some weakness in existing homes sales and house prices earlier in the year, remodelers are upbeat as 2014 closes,” said NAHB Chief Economist David Crowe.  “The consistent improvement in RMI results throughout 2014 are a sign of the gradual recovery of the remodeling market.”

Source: National Association of Home Builders

January 15, 2015

Just six months after being named chairman and CEO of Target, Brian Cornell is pulling the plug on the retailer’s 133 unit Canadian operation and will incur a $5.4 billion pre-tax loss in the fourth quarter to do so.

Target said it plans to discontinue operating stores in Canada through its indirect wholly-owned subsidiary, Target Canada Co. and that it had filed an application for protection under the Companie’s Creditors Arrangement Act (CCAA) with the Ontario Superior of Justice in Toronto.

“After a thorough review of our Canadian performance and careful consideration of the implcations of all options, we were unable to find a realistic scenario that would get Target Canada to profitability until at least 2021,” Cornell said.  “Personally, this was a very difficult decision, but it was the right decision for our company.  With the full support of Target Corporation’s Board of Directors, we have determined that it is in the best interest of our business and our shareholders to exit the Canadian market and focus on driving growth and building further momentum in our U.S. business.”

Target currently operates 133 stores and employs 17,600 people throughout Canada.  The company is seeking court approval to make a voluntary $59 million cash contribution into an employee trust that would allow employees to receive a minimum of 16 weeks compensation.

“The Target Canada team has worked tirelessly to improve the fundamentals, fix operations and build a deeper relationship with our guests.  We hoped that these efforts in Canada would lead to a successful holiday season, but we did not see the required step-change in our holiday performance,” said Cornell.  “There is no doubt that the next several weeks will be difficult, but we will make every effort to handle our exit in an appropriate and orderly way.”

Source: Retailing Today

Many retailers have followed up their holiday 2014 sales results with announcements of store closings. Analysts believe these announcements are just the beginning of a “retail earthquake hitting America”. “Because of the changes in buying habits of U.S. consumers, as a result of the continuing hesitancy to spend, the 2014 holiday season was not sufficiently successful for many retailers that have either over expanded, fell out of favor or had insufficient capital and merchandise.”, said bankruptcy expert Chuck Tatelbaum. Online sales account for 13% of all retail sales.

J.C. Penney is closing 39 of its stores, laying off 2,250 workers. Macy’s is closing 14 of its 790 stores across the country. “Our business is rapidly evolving in response to changes in the way customers are shopping across stores, desktops, tablets and smartphones,” explained Terry Lundren, Macy’s chief executive officer. “We must continue to invest in our business to focus on where the customer is headed – to prepare for what’s next.”

Sears Holdings, which has over 1,830 Sears and Kmart stores, closed 200 stores in 2014 and will close 235 underperforming stores, explaining that they “expect to migrate the shopping activity of highly engaged members who previously shopped closed stores to alternative channels”.

• Wet Seal closing 338 retail sotres, laying off 3,700 employees.
•  Aeropostale closed 175 stores in 2014 and have asked investors to apporove closing 1,100 stores in 2015.
• RadioShack closed175 stores in 2014 and have asked investors to apporve closing 1,100 stores in 2015.

Source: WND.com

January 14, 2015

Confident consumers stocked up on gifts and other merchandise over the 2014 holiday season, helping boost overall holiday retail sales to their highest level since 2011.

According to the National Retail Federation, December retail sales, which exclude automobiles, gas stations and restaurants, decreased 0.9% seasonally adjusted month-to-month, and 4.6% unadjusted year-over-year.  The significant drop in gasoline prices in the month of December brought down much of the month-to-month growth.

Total holiday retail sales, which include November and December sales, increased 4% to $616.1 billion, which was in line with NRF’s projected forecast of 4.1% growth.  In addition, non-store holiday sales, which is an indicator of online and e-commerce sales, grew 6.8% to $101.9 billion.

The U.S. Commerce Department, which does include gasoline, said that December retail sales decreased 0.9% seasonally adjusted month-to-month and 3.2 percent unadjusted year-over-year. 

“Today’s holiday retail sales results are welcome news for our industry and for our economy.  There is every reason to believe that we have moved well beyond the days of consumer pessimism and that the trajectory for retailers continues to point up,” said NRF President and CEO Matthew Shay.  “We are fortunate to represent a resilient industry with business leaders who are committed to providing the best value to their customers.  A successful holiday for retail sales is extremely important, but the work to build upon and grow that success never ends.”

“Preliminary holiday results affirm our initial belief that consumers going into the holiday season had the spending power necessary to give retail the shot in the arm it needed,” said NRF Chief Economist Jack Kleinhenz.  “While December’s figures are disappointing, holiday sales in 2014 are the best we’ve seen since 2011.  We remain positive about the future and expect to see consumers continue to benefit from the extra income gained from an improved job market and the dramatic fall in gas prices.  It is important to recognize that December is a very difficult month to adjust for seasonal forces because of holiday spending and this could explain in part this month’s volatility.”

Source: Retailing Today