Author: Helen Thomas

December 11, 2014

Discounting throughout the month shifted consumer spending behavior

Holiday shoppers took advantage of deep discounting and early sales to lift retail spending in November, the National Retail Federation said today.  Not including automobiles, gasoline stations or restaurants, retail sales increased 0.6 percent seasonally-adjusted over October and 3.2 percent unadjusted over November 2013.  Gains were consistent with NRF’s holiday sales forecast, which anticipates an increase of 4.1 percent over last year.

“As we’ve said all along, retailers are optimistic that they will see healthy holiday sales gains this year,” NRF President and CEO Matthew Shay said.  “November sales results confirm that optimism, and we are steadfast in our belief that we are on track to reach the 4.1 percent growth in holiday sales that NRF forecasted in October.”

“Consumer trends show that the shopping experience continues to evolve for both retailers and consumers,” Shay said.  “Shoppers this holiday season are seizing opportunities to take advantage of early promotions and showing signs they may wait until the end of the season when promotions are even greater.”

“It is important to remember that for most retailers, the holiday season is a marathon, not a sprint, and there are plenty of important holiday shopping days ahead of us, including the week leading up to Super Saturday – the day many expect will be the biggest shopping day of the season,” Shay said.

“Increasing wages combined with lower gas prices are providing retailers with an early holiday present this year,” NRF Chief Economist Jack Kleinhenz said.  “Every economic indicator is pointing toward a strong holiday season.  Healthy November sales should provide momentum for an even stronger December as customers continue to seek out deals all the way to Christmas.”

All retail categories witnessed a monthly increase in sales, including clothing and clothing accessories stores, electronics and appliance stores and nonstore retailers.

Additional findings from NRF’s analysis found that:

•  Building material and garden equipment and supplies dealers:
  • +1.4% month-to-month
  • +4.7% year-over-year
• Clothing and clothing accessories stores:
  • +1.2% month-to-month
  • +2.5% year-over-year
• Electronics and appliance stores:
  • +0.9% month-to-month
  • +6.1% year-over-year
• Furniture and home furnishing stores:
  • +0.5% month-to-month
  • -0.4% year-over-year
• General merchandise stores:
  • +0.5% month-to-month
  • +2.3% year-over-year
• Health and personal care stores:
  • +0.8% month-to-month
  • +4.6% year-over-year
• Online and other nonstore retailers:
  • +1.0% month-to-month
  • +6.3% year-over-year
• Sporting goods, hobby, book & music stores:
  • +0.3% month-to-month
  • +1.3% year-over-year

Source: National Retail Federation

December 9, 2014

Higher same store sales and its purchase of Saks Inc. last year helped Hudson’s Bay Co. post a smaller quarterly loss in the third quarter.

The company had a $13 million net loss and profits of $116 million, both improvements from the same time last year.  Same-store sales rose 1.7% in the third quarter.

“We are pleased with our third quarter financial performance,” stated Richard Baker, HBC’s governor and CEO.  “We remain on track with our integration of Saks and continue to gain traction on our strategic growth initiatives, especially at HBC Digital where we experienced substantial sales growth.  We are well-positioned for the holiday shopping season with a value proposition underpinned by differentiated merchandising and superior customer service initiatives across all our banners.  We remain confident in achieving our financial performance targets for fiscal 2014.”

Total sales at HBC nearly doubled to $1.913 billion, from $984 million a year earlier.  The increased sales was mostly a result of the Saks Fifth Avenue acquisition, although e-commerce sales also grew.  Hudson’s Bay said it is on track to meet its 2014 guidance, which calls for sales of between $7.8 billion and $8.1 billion and normalized earnings of between $580 million and $620 million.

The company also announced it has appointed Ian Putnam to the position of EVP-chief corporate development officer.  Putnam has advised HBC since 2008 and has acted on the company’s behalf in all of its major  corporate transactions since that time.  Last month the company outlined a $1.25 billion refinancing plan to reduce interest payments on debt it took on after buying Saks.  Hudson’s Bay bought Saks for $2.4 billion and assumed $500 million of the U.S. company’s debt.

“We continue to progress on the five core strategies of our long-term plan to grow our sales.  We remain committed to driving digital sales across all our banners, growing OFF 5th, bringing Saks Fifth Avenue and OFF 5th to Canada, driving outsized growth at our top doors and driving synergies and efficiencies across our business.  In addition, our recently completed US $1.25 billion, 20-year mortgage on the ground portion of our Saks Fifth Avenue flagship in New York City has strengthened our financial position by providing long-term, fixed-rate capital on highly attractive terms,” Baker said.

Hudson’s Bay Co. operates 170 Lord & Taylor, Saks Fifth Avenue and Saks Fifth Avenue OFF 5th stores in the United States.

Source: Retailing Today

December 4, 2014

Momentum continues to build at Kroger where the company elevated expectations for its fourth quarter performance after a better than expected showing in the third quarter.

The company reported a 5.6 percent increase in identical store sales, extending to 44 the number of quarters in which it has posted a positive number.  It also said fourth quarter identical stores sales would increase from 4 percent to 5 percent and shared favorable 2015 preliminary guidance that implies the trend of improved productivity at existing stores isn’t about to end.  Based on the better than expected third quarter performance, Kroger raised and narrowed its current full year adjusted earnings per share guidance to a range of $3.32 to $3.36 from $3.22 to $3.28.

“Kroger continues to deliver consistently remarkable results.  We expect to exceed our long-term earnings per share growth rate for fiscal 2014,” said Kroger CEO Rodney McMullen.  “Our associates shine brightest during the holiday season and we intend to continue our positive momentum through the fourth quarter.”

In the third quarter period ended November 8, total sales increased 11.2 percent to $25 billion compared to $22.5 billion for the same period last year.  Total sales, excluding fuel, increased 13.7%.

Profits during the period totaled $362 million, or 73 cents a share, compared to $229 million, or 57 cents a share, the prior year.

Source: Retailing Today

December 8, 2014

The Conference Board Employment Trends Index (ETI) increased in November.  The index now stands at 123.24, up from 122.8 (a downward revision) in October.  This represents a 6.1 percent gain in the ETI compared to a year ago.

“The Employment Trends Index increased for the 11th straight month in November, and recent solid improvements suggest that strong job growth is likely to continue into early next year,” said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board.  “We will probably reach the natural rate of unemployment, 5.5 percent, within a few months, and these tighter labor market conditions should lead to acceleration in wage growth.”

November’s increase in the ETI was driven by positive contributions from five of the eight components.  In order from the largest positive contributor to the smallest, these were: Industrial Production, Ratio of Involuntarily Part-time to All Part-time Workers, Number of Temporary Employees, Real Manufacturing and Trade Sales, and Job Openings.

The Employment Trends Inedex aggregates eight labor-market indicators, each of which has proven accurate in its own area.  Aggregating individual indicators into a composite index filters out “noise” to show underlying trends more clearly.

The eight labor-market indicators aggregated into the Employment Trends Index include:

• Percentage of Respondents Who Say They Find “Jobs Hard to Get” (The Conference Board Consumer Confidence Survey)
• Initial Claims for Unemployment Insurance (U.S. Department of Labor)
• Percentage of Firms With Positions Not Able to Fill Right Now (National Federation of Independent Business Research Foundation)
• Number of Employees Hired by the Temporary-Help Industry (U.S. Bureau of Labor Statistics)
• Ratio of Involuntarily Part-time to All Part-time Workers (BLS)
• Job Openings (BLS)
• Industrial Production (Federal Reserve Board)
• Real Manufacturing and Trade Sales (U.S. Bureau of Economic Analysis)

Source: The Conference Board

December 3, 2014

•  November posts large gain following flat October
• California, Florida and Texas show strong gains along with MSAs New York, Los Angeles and Seattle

Online advertised vacancies rose 170,200 to 5,253,900 in November, according to The Conference Board Help Wanted OnLine (HWOL) Data Series.  The October Supply/Demand rate stands at 1.77 unemployed for each advertised vacancy with a total of 3.9 million more unemployed workers than the number of advertised vacancies.  The number of unemployed was 9.0 million in October.

“November labor demand shows renewed strength, helping to boost a slow-growth second half of the year,” said Gad Levanon, Managing Director, Economic Outlook & Labor Markets at The Conference Board.  “Gains were widespread across states and MSAs with continued positive trend growth across much of the U.S.”

In November, the Professional category saw strong gains in Management (17,100), Business and Finance (15,400) and Computer (12,800) with a loss in Healthcare (-11,400).  The Services/Production category saw gains in Office/Admin (43,100), Food (20,100) and Transportation (16,900) with a small drop in Sales (-8,800).  Supply/Demand rates continue to improve, providing better opportunities for job seekers.

Regional And State Highlights

• Most states and all regions posted gains in November

Metro Area Highlights

• In November, 50 metro areas posted gains, one fell, and one remained constant

Occupational Highlights

• In November, of the 10 largest online job categories, two posted declines (healthcare practitioners and technical occupations and sales and related occupations)

Source: The Conference Board 

December 5, 2014

As the acquisition of Family Dollar Moves closer to resolution, would-be acquirers Dollar Tree and Dollar General maintain widely differing views on the superiority of their respective offers and the opinion of federal regulators.

The latest developments in the ongoing Family Dollar affair occurred December 5 when Dollar Tree and Dollar General took shots at each other in sharply worded press releases that offered differing views on competition, competitive overlap and store divestiture scenarios.  Both companies said they have been actively involved in conversations with the Federal Trade Commission as a December 23 vote on the deal with Dollar Tree looms for Family Dollar shareholders.

“We believe that the FTC staff appreciates that Dollar Tree and Family Dollar are different retailers with complementary business models,” according to a statement by Dollar Tree indicating a small number of stores would need to be divested to secure regulatory approval.  Conversely, Dollar Tree contends the FTC may require Dollar General to divest far in excess of the 1,500 stores Dollar General offered to divest in its tender offer for Family Dollar.

“Dollar Tree stores sell everything for $1 or less.  Our product mix is constantly changing and includes a balance of things the consumer needs and things the consumer wants such as seasonal items, party goods, and other discretionary products,” Dollar Tree said in a statement.  “Our shopping experience is fun, fast, and friendly with surprising products engendering a thrill of the hunt atmosphere.  Family Dollar sells primarily branded consumable products at multiple price points up to $20 or more.  Their customers expect Family Dollar to carry the same assortment of products week in and week out.”

Based on the view that Dollar Tree and Family Dollar are distinct competitors and therefore only a small number of divestures would be required, according to Dollar Tree, which said it would be in a position to complete the deal by February 2015.

Not so fast was the response from Dollar General shortly after Dollar Tree issued its statement.  Dollar General looks past its similarities with the Family Dollar business model to assert its chief rival is Walmart.

“Dollar General’s documents and data tell a very different story from that contained in the press release issued today by Dollar Tree,” the company said.  “Walmart, not Family Dollar, is the primary driver regarding Dollar General’s strategic pricing decisions, and more than 90% of Dollar General’s SKUs are nationally priced.  Dollar General is confident that its approach to strategic and pricing decisions is both correct and superior to that of Family Dollar and Dollar General has no intention of adopting a flawed strategy – either now or after an acquisition of Family Dollar – that it believes would impair its ability to compete with Walmart and lead to inferior financial performance.”

The coming weeks promise even more drama in the merger saga.  Dollar General said it will continue to work with the FTC and expects to provide an update in sufficient time to allow Family Dollar shareholders to review information prior to the meeting scheduled for December 23.

Meanwhile, Dollar Tree continues to portray its rival’s offer as a risky and uncertain proposal due to overlap issues.  As a result, Dollar General may spend many months advocating and negotiating with the FTC with significant uncertainty as to the outcome and its bid may ultimately fail because the scope of an unprecedented FTC-required divestiture would lead to an unacceptable loss of value, according to Dollar Tree.

Source: Retailing Today 

December 5, 2014

Retail industry employment increased by 37,000 jobs in November, the National Retail Federation said today.  Consistent with seasonal hiring patterns, employment gains were seen in most retail categories, including a marked increase of 11,300 jobs in clothing and clothing accessories stores.  NRF does not include automobile dealerships, gasoline stations or restaurants in its calculations.

“Today’s robust jobs report shows a broadening improvement in the labor market and confirms expectations of a strengthening and expanding economy,” NRF Chief Economist Jack Kleinhenz said.  “Solid seasonal demand, reduced prices at the pump and improving – though erratic – levels of business and consumer confidence have all supported job gains.”

“We remain optimistic that we are gaining ground and traction toward a more normal and stable labor market in the near future,” Kleinhenz said.  “The real nugget in this report was the gain in average hourly earnings.  Improving wages and salaries will create much-needed pressure in the market and help lift demand.”

“The report is consistent with our holiday sales and employment forecast, which concluded that retailers will hire between 730,000 and 790,000 seasonal workers this season,” Kleinhenz said.  “Many of those seasonal positions will ultimately turn into full-time jobs next year.”

Source: National Retail Federation

December 5, 2014

The economy generated 321,000 new jobs in November, much faster than the average six month change in recent months at 258,000 jobs.  This job report is an especially strong one because it combines with an increase in hourly earnings at 9 cents, which is consistent with the acceleration in wages in the Employment Cost Index, reported last month.  As the labor market continues to tighten in the coming year, we expect to see further improvement in wage growth.  The unemployment rate paused at 5.8 percent but it doesn’t change our view that we are only a few months away from reaching the natural rate of 5.5 percent.  Even with low inflation numbers, labor market conditions are pressuring the Fed to raise rates in the first half of 2015.

Source: The Conference Board

November 26, 2014

Temperatures are forecast to trend warmer than last year for the U.S. as a whole.  However, the Southeast may see some cooler trends compared to last year.  There is high confidence that the Great Lakes, New England, and South Central states will trend warmer than last year.  Onshore flow in the West will bring milder and wetter weather to the region.  A more pronounced flow of mositure will bring more snow to the West Coast mountain ranges.  At least one storm will eject out of the southern Rocky Mountains spreading a swath of snow from New Mexico to the Great Lakes and New England.  Following a very cold December last year, demand for winter categories will be much lower this year.  Items like sweaters, coats, heaters, and snow removal categories will see softer demand compared to last year.  The Southeast may be the only region of the country to see a year-on-year lift in seasonal category demand.  On the positive side, there should be less store traffic disruptions in the East this year as snowfall will trend less than last year. 

Source: Retailing Today, Weather Trends International

December 4, 2014

Even if Dollar General is unsuccessful in acquiring Family Dollar, the company plans to get bigger faster in 2015 by opening two stores every day and enhancing the productivity of an already expansive footprint.

Dollar General said Thursday it will open 730 new stores in 2015 and enter new states such as Maine, Rhode Island and Oregon.  Combined with the remodel or relocation of another 875 stores, the investment in physical stores will see Dollar General expand selling space by 6 percent on top of its existing store base of 11,715 locations.  The 2015 growth targets compare to this year’s expansion program which will see the company open roughly 700 stores and relocate or remodel another 900 locations by the time its fiscal year ends in January.

The update on growth was made in conjunction with the release of solid third quarter results in which the company tempered fourth quarter profits expectations and reaffirmed its commitment to acquiring Family Dollar, a company which has already reached a merger agreement with Dollar Tree.

“Our affordability-focused initiatives continued to gain traction with our customers in the third quarter, and our same-store sales growth of 2.8 percent reflected increases in both customer traffic and average ticket for the 27th consecutive quarter,” said Rick Dreiling, Dollar General’s chairman and CEO.  “We continued to grow our market share in consumables, and we are very pleased with the performance of our home and apparel categories.  Importantly, we are seeing a significant step up as we start the holiday season, and we expect to achieve same-store sales growth of approximately 5 percent for the fourth quarter.”

The top line sales growth is expected to help the company achieve the middle of a previously provided full year profits forecast which calls for earnings per share of $3.45 to $3.55.

“We have continued confidence that we are well-positioned for sustainable growth and creation of shareholder value,” Dreiling said.  “Finally, we remain committed to acquiring Family Dollar.  We expect to provide an update on our offer in time for Family Dollar shareholders to review such information prior to the Family Dollar shareholders’ meeting scheduled for December 23, 2014.”

Source: Retailing Today