Author: Helen Thomas

December 1, 2014

New Orders, Employment and Production Growing; Inventories Growing; Supplier Deliveries Slowing

Economic activity in the manufacturing sector expanded in November for the 18th consecutive month, and the overall economy grew for the 66th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.

The report was issued today by Bradley J. Holcob, CPSM, CPSD, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.  “The November PMI registered 58.7 percent, a decrease of 0.3 percentage point from October’s reading of 59 percent, indicating continued expansion in manufacturing.  The New Orders Index registered 66 percent, an increase of 0.2 percentage point from the reading of 65.8 percent in October.  The Production Index registered 64.4 percent, 0.4 percentage point below the October reading of 64.8 percent.  The Employment Index grew for the 17th consecutive month, registering 54.9 percent, a decrease of 0.6 percentage point below the October reading of 55.5 percent.  Inventories of raw materials registered 51.5 percent, a decrease of 1 percentage point from the October reading of 52.5 percent.  The Prices Index registered 44.5 percent, down 9 percentage points from the October reading of 53.5 percent, indicating lower raw materials prices in November relative to October.  Comments from the panel are upbeat about strong demand and new orders, with some expressing concerns about West Coast port slowdowns and the threat of a potential dock strike.”

Manufacturing expanded in November as the PMI registered 58.7 percent, a decrease of 0.3 percentage point when compared to October’s reading of 59 percent, indicating growth in manufacturing for the 18th consecutive month.  A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI in excess of 43.2 percent, over a period of time, generally indicates an expansion of the overall economy.  Therefore, the November PMI indicates growth for the 66th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 18th consecutive month.  Holcomb stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through November (55.8 percent) corresponds to a 4.2 percent increase in real gross domestic product (GDP) on an annualized basis.  In addition, if the PMI for November (58.7 percent) is annualized, it corresponds to a 5.1 percent increase in real GDP annually.”

Of the 18 manufacturing industries, 14 are reporting growth in November.

Source: Institute for Supply Management

November 20, 2014

As Dollar Tree moves forward with its acquisition of Family Dollar, the company reported an increase in same-store sales and expressed a favorable holiday outlook.

Dollar Tree’s earnings per share increased 19% to $0.69 and its revenue increased 11.2% to $2.1 billion compared to the third quarter of fiscal 2013; these results were driven by comparable store sales increasing 5.9% during the quarter compared to an increase of 3.1% in the prior-year period.

“These results validate our value enhancement initiatives targeted to attract new, and retain current, customers.  Our store teams are well-prepared and our shelves are well-stocked with incredible values for the upcoming holiday season,” said Bob Sasser, Dollar Tree CEO.

Dollar Tree opened 117 net new stores during the quarter, bringing its total store count to 5,282.  The company has opened 291 net new stores year-to-date, putting it on pace to reach its goal of opening 375 net new stores in fiscal 2014.

Dollar Tree has agreed to buy Family Dollar Inc. but the deal is facing a challenge from Dollar General Corporation over antitrust concerns.

Dollar Tree, which like other discounters is facing competition from small-format stores opened by big retailers such as Walmart, will become the largest dollar store chain if it pulls off its deal with Family Dollar.

In its outlook statement, Dollar Tree estimated fourth-quarter sales in the range of $2.39 billion to $2.46 billion and EPS in the range of $1.07 to $1.14.  Consensus estimates call for EPS of $1.13 on revenues of $2.45 billion.

Source: Retailing Today

December 1, 2014

Fewer Americans shopped and they spent less money during the Thanksgiving weekend, according to new estimates from the National Retail Federation.

Early holiday promotions, the continued growth of online shopping, and an improving economy changed the way millions of people approached the biggest shopping weekend of the year, according to NRF’s Thanksgiving Weekend Spending Survey.  More than half of Americans shopped in stores or online (55.1 percent) but that was less than the prior year when 58.7 percent of Americans shopped.  Overall shopper traffic from Thanksgiving Day through Sunday, November 30 declined 5.2 percent to 133.7 million unique holiday shoppers versus 141.1 million in 2013.  Total shopping, including multiple trips by the same shopper, declined to 233.3 million trips versus 248.6 million.

“A strengthening economy that changes consumers’ reliance on deep discounts, a highly competitive environment, early promotions and the ability to shop 24/7 online all contributed to the shift witnessed this weekend,” said NRF President and CEO Matthew Shay.  “We are excited to be witnessing an evolutionary change in holiday shopping by both consumers and retailers, and expect this trend to continue in the years ahead.”

According to the survey, the average person who shopped or will shop the holiday weekend spent $380.95, down 6.4 percent from $407.02 last year.  Total spending is expected to reach $50.9 billion, down from last year’s estimated $57.4 billion.

Though the overall number of shoppers dropped this year, it remains clear that Black Friday still draws the biggest crowds of the weekend.  According to the survey 86.9 million shoppers were in stores and online on Black Friday while 43.1 million shopped on Thanksgiving Day.  Online shopping appears to have eroded store traffic, but also declined.  According to the survey the average person who shopped over the weekend spent $159.55 online, approximately 41.9 percent of their total average budget, down 10.2 percent from $177.67 last year.  Most shoppers say they shopped online on Black Friday (46.7%), though 36.3 percent say they shopped online on Saturday.  Additionally more than one-quarter (26.2%) of holiday shoppers were online on Thanksgiving Day.

“Though much shopping has been done by this point, it’s important to remember that there are still many weeks left in the holiday season, and savvy shoppers will continue to look for exclusive prices to purchase holiday gifts.  As competition for customer dollars heats up, consumers will be the ultimate winners in the end.  Shoppers this year have made it clear that they no longer only value deep discounts on Thanksgiving and Black Friday, they want the entire package from beginning to end – free shipping, early promotions, convenient ways to use their mobile devices, and, of course, hard-to-beat online deals.”

Source: Retailing Today 

November 25, 2014

The Conference Board Consumer Confidence Index, which had rebounded in October, declined in November.  The index now stands at 88.7, down from 94.1 in October.  The Present Situation Index declined from 94.4 to 91.3, while the Expectations Index decreased sharply to 87.0 from 93.8 in October.

Says Lynn Franco, Director of Economic Indicators at The Conference Board: “Consumer confidence retreated in November, primarily due to reduced optimism in the short-term outlook.  Consumers were somewhat less positive about current conditions and the present state of the job market; moreover, their optimism in the short-term outlook in both areas has waned.  However, income expectations were virtually unchanged and gas prices remain low, which should help boost holiday sales.”

Consumers’ assessment of present-day conditions was moderately less favorable in November than in October.  The proportion saying business conditions are “good” decreased from 24.7 percent to 24.0 percent, while those claiming business conditions are “bad” increased from 21.3 percent to 22.4 percent.  Consumers’ assessment of the job market was slightly less favorable, with the proportion stating jobs are “plentiful” falling from 16.5 percent to 16.0 percent, and those claiming jobs are “hard to get” increasing marginally from 29.0 percent to 29.2 percent.

Consumers’ optimism, which had improved in October, retreated in November.  The percentage of consumers expecting business conditions to improve over the next six months decreased from 19.4 percent to 17.6 percent, while those expecting business conditions to worsen rose from 8.9 percent to 10.7 percent.  Consumers’ outlook for the labor market was also less optimistic.  Those anticipating more jobs in the months ahead decreased from 16.0 percent to 15.0 percent, while those anticipating fewer jobs rose from 14.1 percent to 16.4 percent.  The proportion of consumers expecting growth in their incomes edged down from 16.7 percent to 16.3 percent, while the proportion expecting a drop in income was virtually unchanged at 11.4 percent compared to 11.3 percent in October.

Source: The Conference Board 

November 20, 2014

The Multifamily Production Index (MPI), released today by the National Association of Home Builders (NAHB), reached 54 in the third quarter, four points below the previous quarter’s reading.  This is the 11th quarter with a reading of 50 or above.

The MPI measures builder and developer sentiment about current conditions in the apartment and condominium market on a scale of 0 to 100.  The index and all of its components are scaled so that any number over 50 indicates that more respondents report conditions are improving than report conditions are getting worse.

The MPI provides a composite measure of three key elements of the multifamily housing market: construction of low-rent units, market-rate rental units and “for-sale” units, or condominiums.  Although all three components fell from 2014 peaks in the second quarter, all remain at 50 or above.  The MPI component tracking low-rent units dipped one point to 51, market-rate rental units fell four points to 64 and for-sale units dropped six points to 50.

“Despite the slight drop in the index, multifamily developers remain positive about where the market is headed,” said W. Dean Henry, CEO of Legacy Partners Residential in Foster City, California, and chairman of NAHB’s Multifamily Leadership Board.  “Current growth in employment is strong enough to fuel demand for multifamily housing.”

The Multifamily Vacancy Index (MVI), which measures the multifamily housing industry’s perception of vacancies, rost three points to 41, with higher numbers indicating higher vacancies.  After peaking at 70 in the second quarter of 2009, the MVI improved consistently through 2010 and has been fairly stable since 2011.

“We are seeing the MPI return to the mid-50s level where it has been for much of the past three years,” said NAHB Chief Economist David Crowe.  “The moderation in multifamily builder sentiment aligns with a leveling off in production at a historically high level sufficient to keep up with rental demand.”

Historically, the MPI and MVI have performed well as leading indicators of U.S. Census figures for multifamily starts and vacancy rates, providing invormation on likely movement in the Census figures one to three quarters in advance.

Source: National Association of Home Builders 

November, 2014

The biggest shopping weekend of the year is only days away and retailers are gearing up for another Thanksgiving weekend of holiday shopping and promotions.

Since the recession, retailers competing for shopping dollars and market share have had to rethink tried-and-true holiday marketing strategies.  Good prices, great value, unique product assortment and convenience are just a few of the aspects that contribute to happy holiday shopping experiences.

Some companies are generating buzz and responding to consumer demands by opening on Thanksgiving Day, while others look to promote their brand by resisting early openings on Thursday.

Here’s a look at key numbers from Thanksgiving Day and Black Friday in 2013:

• 44.8 million: Consumers who shopped on Thanksgiving Day, up 27 percent from 2012.
• 92.1 million: Consumers who shopped on Black Friday in 2013.
• $407: Average amount spent by holiday shoppers from Thanksgiving Day to Sunday, down 4 percent from 2012.
• 248.7 million: Number of shoppers who were in stores and online over Thanksgiving weekend in 2013, up 0.5 percent over the previous year.
• 4.9 percent: Portion of holiday shopprs who were at stores by 5pm on Thanksgiving Day.
• 37 percent: Portion of holiday shoppers who were at stores by 12:01am on Black Friday, up from 28 percent in 2012.
• 64 percent: Portion of holiday shoppers who went out on Thanksgiving Day or visited stores by 10am on Black Friday.
• 45 percent: The amount of holiday shopping the average consumer had completed by the Sunday after Thanksgiving, up from 42 percent in 2012.

With more than $50 billion in sales on the line for just a single weekend during retail’s most competitive season, retailers will be looking for ways to wow their customers.  It’s too soon to say if the Thanksgiving Day shopping trend will fade or if the buzz will build in 2015, but this year, we’re betting on another strong turnout.

Source: National Retail Federation

November 19, 2014

Single family housing production in October reached its highest level since November 2013 while the more volatile multifamily sector brought combined nationwide starts activity down 2.8 percent to a seasonally adjusted annual rate of 1.009 million units, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

“The rise in single-family starts is more proof that the economy is firming and consumer confidence is growing,” said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.  “We expect continued upward momentum into next year.”

“The increase in single-family starts shows that the housing market continues to recover at a steady, gradual pace,” said NAHB Chief Economist David Crowe.  “On the multifamily side, production is stabilizing above historic levels as demand for rental housing increases.”

The 2.8 percent decline in overall starts in October was due primarily to a 15.4 percent decline on the multifamily side, which brought that sector’s annual production pace to 313,000 units on a seasonally adjusted annual basis.  Meanwhile, single-family starts posted a 4.6 percent gain to 696,000 units.

Regionally in October, combined housing production dropped in the Northeast, Midwest and West, with respective losses of 16.4 percent, 18.5 percent and 10.9 percent.  Total production rose in the South by 10.1 percent.

Issuance of building permits registered a 4.8 percent gain to a seasonally adjusted annual rate of 1.08 million units in October.  Multifamily permits rose 10 percent to 440,000 units while single-family permits increased 1.4 percent to 640,000 units.

Regionally, the Northeast and Midwest registered overall permit losses of 21.5 percent and 11.4 percent, respectively.  The South and West posted respective gains of 8.8 percent and 21.6 percent.

Source: National Association of Home Builders 

November 20, 2014

The Conference Board Leading Economic Index for the U.S. increased 0.9 percent in October to 105.2, following a 0.7 percent increase in September, and no change in August.

“The LEI rose sharply in October, with all components gaining over the previous six months,” said Ataman Ozyildirim, Economist at The Conference Board.  “Despite a negative contribution from stock prices in October, and minimal contributions from new orders for consumer goods and average workweek in manufacturing, the LEI suggests the U.S. expansion continues to be strong.”

“The upward trend in the LEI points to continued economic growth through the holiday season and into early 2015,” said Ken Goldstein, Economist at The Conference Board.  “This is consistent with our outlook for relatively good, but not great, consumer demand over the near term.  Going forward, there are continued concerns about slow business investment and lackluster income growth.”

The Conference Board Coincident Economic Index for the U.S. increased 0.1 percent in October to 110.2, following a 0.3 percent increase in September, and a 0.1 percent increase in August.

The Conference Board Lagging Economic Index for the U.S. declined 0.1 percent in October to 124.9, following a 0.1 percent increase in September, and a 0.5 percent increase in August.

Source: The Conference Board

November 20, 2014

Americans are readying for the upcoming Thanksgiving weekend by making sure they have a menu for their family gathering and a complete shopping list for their weekend shopping activities.  According to NRF’s Thanksgiving Weekend Expectations survey, which provides a preliminary look at shopping expectations over Thanksgiving weekend, six in 10 (61.1%) say they will or may shop either Thursday, Friday, Saturday or Sunday, which equates to more than 140.1 million unique shoppers.  Expectations are similar to last year’s preliminary survey results of 140.3 million.

Specifically, 67.6 million holiday shoppers (29.5%) say they will shop, down slightly from 69.4 million who planned to do so last year, and 72.5 million (31.6%) say they will wait and see if the deals are worth it before they decide, up 2 percent over last year’s 71 million “maybe” shoppers.

“Consumers today want more than just the discounts they’ve been showered with since the start of the recession; they want exclusive offerings and a good reason to spend their discretionary budgets,” said NRF President and CEO Matthew Shay.  “We could witness a see change this holiday season as consumers’ reliance on extremely deep discounts over the biggest shopping weekend of the year shifts to more of a ‘wait-and-see’ mentality around what retailers will be offering on Thanksgiving Day and Black Friday.  We are positive retailers have a few tricks up their sleeve that will draw their customers to their stores and websites, deciding the deals are worth it after all.”

When it comes to preliminary expectations for when people will shop, of the 61.1 percent who will or may shop in stores and online over the weekend, 18.3 percent (25.6 million) say they will check out retailers’ Thanksgiving Day deals and shop Thursday, down from the preliminary 23.5 percent last year; 74 percent of those who plan to shop on Thanksgiving Day say they shopped on Thanksgiving Day last year.

Additionally, more than two-thirds (68.2%) will shop on Black Friday (95.5 million), two in five (42.9%) will shop on Saturday (60 million) and one in five (21.6%) will shop on Sunday (30.3 million).

For the first time NRF asked shoppers about their intentions to shop on Small Business Saturday.  The survey found of those shopping on Saturday, nearly three-quarters (72.7%) say they will or may specifically shop for Small Business Saturday.

“More than just a shopping day, Small Business Saturday highlights the millions of entrepreneurs and visionaries who help make retail the dynamic and community-focused industry that it is,” continued Shay.

Much talk has surfaced in the last few years over the number of young adults who shop on Thanksgiving, and this year millennials are indicating they are once again anxious to take advantage of what retailers have to offer.  According to the survey nearly eight in 10 (79.6%) 18-24 year olds will or may shop over the weekend, the highest of any age group.  Specifically, nearly one-quarter (22.6%) will shop on Thanksgiving Day, down slightly from 27.8 percent last year and 79.9 percent will shop on Black Friday, up from 71.5 percent who planned to do so last year.  Nearly three-quarters (73.2%) of 18-24 year olds say they shopped on Thanksgiving last year.

“For younger shoppers, shopping on Thanksgiving and Black Friday is as much a social experience as it is a buying mission.  While these shoppers may not have the biggest holiday budgets or the longest shopping lists, they still enjoy the ‘tradition’ of heading out with friends and family on two of retail’s most exciting shopping days.”

Source: National Retail Federation 

November 14, 2014

New stores, 3.9% same store sales growth and increased loyalty propelled Nordstrom to record third quarter sales.

The company’s total sales increased 8.9% to $3 billion thanks to the addition of new stores and a 3.9% same store sales increase that was driven by online growth.  Profits increased 3.6% to $142 million compared to $137 million while earnings per share increased 5.8% to 73 cents from 69 cents.

The company said sales at full line stores increased 0.5%, reflecting the addition of three new stores during the quarter and flat same store sales.  Nordstrom Rack sales increased 15% thanks to the opening of 16 stores and a 1.7% comp increase.  The greatest growth came from the company’s direct business which increased 22% as assortments were expanded.

The Nordstrom Rewards loyalty program continues to contribute to the company’s overall results as well.  Members shopped more frequently and spent more on average than non-members.  The company opened approximately 275,000 new accounts in the third quarter, an increase of 18% compared with the prior year.  With 4.2 million active members, sales from members increased 13% in the third quarter and represented 38% of sales compared to 37% the prior year.

The company ended the quarter with 118 full line stores and 167 Rack stores.

Source: Retailing Today.