Author: Helen Thomas

Sears Holdings Corp announced sales at comp stores at Sears stores were down 9.2% in the nine weeks that ended January 6 and down 5.7% percent at Kmart stores. 

Sales at the company have been falling since 2005, when billionaire hedge fund manager Edward Lampert merged the two U.S. chains in an $11 billion deal.

“The results that we posted are not nearly what we want them to be,” Lampert, Sears Holdings’ chief executive officer and top shareholder, wrote in a blog post.

The company has made a big bet that its strategy to make targeted offers through digital and social means to members of its “Shop Your Way” rewards program, which generated about 69 percent of holiday sales, can fix the company.

In his blog, Lampert lamented that the holiday results “overshadow” the progress Sears had made with the program.

Lampert told Reuters in November he saw room for further store closings in 2014.

December 19, 2013

The Conference Board Leading Economic Index for the U.S. increased 0.8 percent in November to 98.3, following a 0.1 percent increase in October, and a 1.0 percent increase in September.

“The LEI continues on a broad-based upward trend, suggesting gradually strengthening economic conditions through early 2014,” said Ataman Ozyildirim, Economist at The Conference Board.  “Improving labor markets and new orders in manufacturing, combined with strong financial indicators, drove November’s gain.  However, consumers’ outlook for the economy and the drop in housing permits continue to pose risks in 2014.”

“November data reflect a U.S. economy that is expanding modestly, discounting some renewal in activity after the government shutdown,” said Ken Goldstein, Economist at The Conference Board.  “The coincident economic index shows the economy expanding at a relatively slow pace.  The trend in the leading economic index is stronger, signaling for some time that the economy is developing forward momentum, and will continue to strengthen through early 2014.”

The Conference Board Coincident Economic Index for the U.S. increased 0.4 percent in November to 107.2, following a 0.1 percent increase in October, and a 0.3 percent increase in September.

The Conference Board Lagging Economic Index was unchanged in November, remaining at 119.9, following a 0.3 percent increase in October and a 0.6 percent increase in September.

Source: The Conference Board

January 9, 2014

The search is on for a new president and COO at Family Dollar following the resignation of Michael Bloom amid deteriorating financial results and a 3% same store sales decline in December.

Bloom, who recently donned a disguise to appear in an episode of the CBS show “Undercover Boss,” spent two years as Family Dollar’s president and COO and joined the company from CVS.  In conjunction with his departure, Family Dollar elevated Jason Reiser to the role of EVP and Chief Merchandising Officer and he will report directly to Family Dollar chairman and CEO Howard Levine.  Reiser joined Family Dollar in July 2013 as SVP of merchandising after a 17 year career with Sam’s Club and by October of last year he had already been promoted to the role of SVP/Lead Merchandising Officer.

The senior leadership moves were announced in conjunction with dismal sales results for the company’s first quarter ended November 30 and a 3% decline in December same store sales, which prompted the company to forecast further top line weakness and lower its profit forecast.  Family Dollar said sales for its first quarter, ended November 30, increased a meager 3.2% to $2.5 billion, due to the addition of new stores.  Same store sales declined 2.8% as fewer people shopped its stores and those who did spent less money.

Reversing those trends now falls to new head merchant Reiser who will have responsibility for the company’s merchandising, global sourcing, marketing, replenishment and financial planning teams.

“Continuing to refine our assortment to meet the needs of our customer is critical to being a compelling place to shop,” said Levine.  “Jason’s proven leadership, merchandising experience and deep understanding of our customer position him well to ensure that we grow both customer trips and market share.”

Improvement is not expected to be immediate, however, as Levine noted a challenged consumer and intensified promotional environment continue to affect the company’s business.  That was the case in December when Levine said the company was forced to react to softness in discretionary categories by becoming more promotional.

“Reflecting our December results, our expectations that the macroeconomic trends will continue, and the impact of investments we plan to make to strenghten our value proposition, we have lowered our earnings expectations for the second quarter of fiscal 2014 and the full year,” Levine said.  “While we have made meaningful progress to improve our execution, our financial performance has not met our expectations.  We have a great business model and ample growth opportunity, and I know we can do better.”

The immediate focus for Family Dollar, according to Levine, is to execute the basics of reatil; re-accelerate customer traffic, strengthen the value proposition and enhance the relevancy of its assortment.

“We also intend to maintain our focus on reducing costs while also selectively investing in new stores, our renovation program and supply chain improvements to position our long-term growth,” Levine said.

Source: Retailing Today

CINCINNATI–(BUSINESS WIRE)–Jan. 8, 2014– Macy’s, Inc. (NYSE:M) today announced that its comparable sales, together with comparable sales from departments licensed to third parties, rose by 4.3 percent in the 2013 holiday shopping season – the months of November and December combined – compared with the same period last year. November/December 2013 comparable sales were up 3.6 percent.

 “The 2013 holiday season was successful for Macy’s and Bloomingdale’s as we offered fresh and distinctive merchandise, delivered great value to the customer and provided a robust omnichannel shopping experience which served our customers whenever, however and wherever they chose to shop and to buy,” said Terry J. Lundgren, Macy’s chairman, president and chief executive officer. “Even in a questionable macroeconomic environment with challenging weather in multiple states, the positive response from our customers during the holiday season is yet another vote of confidence that our well-established strategies continue to work for us.”

CINCINNATI–(BUSINESS WIRE)–Jan. 8, 2014– Macy’s, Inc. (NYSE:M) today announced it will implement focused cost reductions, including organizational changes, as it prepares to sustain profitable sales growth in the years ahead.

 “Our company has significantly increased sales and profitability over the past four years, and we have created a culture of growth at Macy’s, Inc. We began five years ago with a set of business strategies that were largely untested by a national retailer of our size and scope. As the success of these strategies has unfolded, we have identified some specific areas where we can improve our efficiency without compromising our effectiveness in serving the evolving needs of our customers,” said Terry J. Lundgren, Macy’s, Inc. chairman, president and chief executive officer.

“The actions being announced today reinforce our focus on continuous improvement in our M.O.M. strategies (My Macy’s localization, Omnichannel integration and Magic Selling customer engagement) and will help us to maximize the impact of the exceptional talent we enjoy at every level of our organization,” Lundgren said.

The Conference Board Consumer Confidence Index, which had decreased in November, rebounded in December.  The Index now stands at 78.1, up from 72.0 in November.  The Present Situation Index increased to 76.2 from 73.5.  The Expectations INdex increased to 79.4 from 71.1 last month.

“Consumer confidence rebounded in December and is now close to pre-government shutdown levels (September 2013, 80.2).  Sentiment regarding current conditions increased to a 5 1/2 year high (April 2008, 81.9), with consumers attributing the improvement to more favorable economic and labor market conditions.  Looking ahead, consumers expressed a greater degree of confidence in future economic and job prospects, but were moderately pessimistic about their earning prospects.  Despite the many challenges throughout 2013, consumers are in better spirits today than when the year began”, says Lynn Franco, Director of Economic Indicators at The Conference Board.

Consumers’ appraisal of overall current conditions improved.  Those claiming business conditions are “good” edged down to 19.6 percent from 20.4 percent.  Consumers’ appraisal of the job market was also more upbeat.  Those saying jobs are “plentiful” ticked up to 12.2 percent from 12.0 percent, while those saying jobs are “hard to get” decreased to 32.5 percent from 34.1 percent.

Consumers’ expectations, which had decreased in November, improved in December.  The percentage of consumers expecting business conditions to improve over the next six months increased to 17.2 percent from 16.7 percent, and those expecting business conditions to worsen decreased to 14.0 percent from 16.1 percent.

Consumers’ outlook for the labor market was considerably more optimistic.  Those anticipating more jobs in the months ahead increased sharply to 17.1 percent from 13.1 percent, while those anticipating fewer jobs decreased to 19.0 percent from 21.4 percent.  The proportion of consumers expecting their incomes to increase declined to 13.9 percent from 15.3 percent, while those expecting a decrease in their incomes declined to 14.0 percent from 15.5 percent.

Source: December 2013 Consumer Confidence Survey, The Conference Board

WSJ, WASHINGTON—U.S. industrial output in November surpassed its prerecession peak for the first time, the latest sign of momentum for the economic recovery.

Industrial production, which measures the output of U.S. manufacturers, utilities and mines, surged a seasonally adjusted 1.1% from the prior month, the Federal Reserve said Monday. That was the biggest jump in a year.

The ascent in part reflects big gains for volatile mining and utilities components, though underlying figures point to steadily rising demand for an array of industrial goods. “It does look like there is a little momentum building here,” said J.P. Morgan economist Daniel Silver. “We’re getting a little more optimistic as we get these numbers.”

Manufacturing, the largest component of industrial production, remains below its prerecession peak. But the sector expanded 0.6% in November, the fourth straight month of gains. Overall factory output is up 2.9% from a year earlier.

Source: WSJ, Jeffrey Sparshott

Retailers saw sales decrease the week ending December 7 of 1.6% versus Thanksgiving week. However, Cyber Monday sales of online shopping reached $1.7 billion, an increase of 18% over 2012. This is recorded as the “heaviest online spending day” by comScore. Cyber Monday was the second day this holiday season to exceed $1 billion – Black Friday reached $1.2 billion in sales.

For the week of December 1-7, sales were weak across the board in retail, with a notable exception of department stores such as Dillard’s, Macy’s and Kohl’s.

Consumers surveyed reported a lower number of buyers completing their holiday shopping, implying that the pace of shopping before the Christmas holiday will ramp up.

Cyber Monday sales this year fall into the December reporting period while it was in November in 2012. This should lift December sales results.

Economic activity in the manufacturing sector expanded in November for the sixth consecutive month, and the overall economy grew for the 54th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report on Business.

The PMI* registered 57.3 percent, an increase of 0.9 percentage point from October’s reading of 56.4 percent. The PMI has increased progressively each month since June, with November’s reading reflecting the highest PMI in 2013.  The New Orders Index increased in November by 3 percentage points to 63.6 percent, and the Production Index increased by 2 percentage points to 62.8 percent.  The Employment Index registered 56.5 percent.  With 15 of 18 manufacturing industries reporting growth in November relative to October, the positive growth trend characterizing the second half of 2013 is continuing. 

*A PMI in excess of 42.2 percent, over a period of time, generally indicates an expansion of the overall economy.  Therefore, the November PMI indicates growth for the 54th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the sixth consecutive month.  The past relationship between the PMI and the overall economy indicates that the average PMI for January through November (53.7 percent) corresponds to a 3.6 percent increase in real gross domestic product (GDP) on an annualized basis.  In addition, if the PMI for November (57.3 percent) is annualized, it corresponds to a 4.7 percent increase in real GDP annually.

Source: ISM Report on Business

Visa provided some details on holiday transaction volumes and they are very encouraging.

• Nov 28 – $0.99 billion spent (up 30% from LY), 14 million transactions (up 29% from LY)
• Nov 29 – $1.7 billion spent (up 24% from LY), 21 million transactions (up 24% from LY)
• Nov 30 – $1.3 billion spent (up 37% from LY), 19 million transactions (up 33% from LY)
• Dec 1 – $1.2 billion spent (up 45% from LY), 18 million transactions (up 41% from LY)
• Dec 2 – $2.6 billion spent (up 28% from LY), 28 million transactions (up 29% from LY)
• 5 day total – $7.8 billion spent (up 30% from LY), 100 million transactions (up 28% from LY)
• Average transaction size $77.82

Even before its final round of deals kicked in at Walmart on Friday morning, the retailer announced that sales had exceeded last year’s record-breaking results with 10 million transactions completed between 6 p.m. and 10 p.m. on Thanksgiving.

“Our Black Friday events were bigger, better, faster, cheaper and safer than ever.  More customers chose us, we had the prices and products they were looking for, and we’re not finished yet,” said Walmart U.S. president and CEO Bill Simon.

Last year, Walmart said it served 22 million customers on Thanksgiving day.  This year, the company said even more customers shopped its stores, but stopped short of saying how many more.  It did say that more than one million customers took advantage of its one hour in-stock guarantee program, which was extended to cover 21 items this year compared to just three when it was introduced last year.

Traffic to Walmart’s website was strong with nearly 400 million page views on Thanksgiving day, including customers who used mobile devices and tablets.  The company is looking for the online momentum to continue with 200 Cyber Week deals that started on November 30 and will extend until December 6.

Source: Retailing Today