HOME DEPOT SEES BIG GAINS IN 3RD QUARTER GOING INTO HOLIDAY SALES

The Home Depot posted one of the biggest retail jumps post-Halloween among US retailers, seeing online visits increase 17.4% and daily visits to HomeDepot.com over 20 million in the first week of November. The Home Depot is also poised to increase mobile traffic to 53% over the 2015 holiday season.

Online sales increased 17% during the third quarter and US same-store comps grew 5.9%. Significantly, over 40% of online orders placed were items picked up in the store, driving their omnichannel success.

For the first 9 months of the year, sales were $72.39 billion, up 7.2% from last year. The Home Depot attributes the growth to an increase in the number of people who made purchases in its stores and the amount of spend per customer transaction. The company expects its 2016 year to end with increases of 6.3%.

One thing to watch as the holiday season continues – last year Q4 numbers were very high due to prolonged warm weather, up 8.9% over 2014, making it harder for Home Depot to beat same store sales this year.

Sources: Internet Retailer, CNBC

Mixed Bag of Holiday Results Released

Twelve major retailers released holiday results last week confirming what was arguably one of the most unusual holiday shopping seasons in recent history. A combination of economic factors, evolving consumer behaviors and an increasingly competitive marketplace provided a challenging and unpredictable backdrop for holiday sales this year. The following are some of the most notable results.

Ascena Retail Group: A total company decline of 4% during the six-week period ending January 3 was largely due to a 15% same store sales decline of 15% at the company’s Justice brand stores during the holiday season. However, performance at other brands such as Ann Taylor, Dressbarn, Lane Bryant and Maurices was much better and allowed the company to affirm its full year profit forecast.
Build-A-Bear Workshop: CEO Sharon Price John expects “fiscal 2015 to deliver our third consecutive year of positive consolidated comparable sales and our third consecutive year of improved profit performance,” despite fourth quarter expectations that same-store sales would decline 5.5%.
Genesco: Same store sales increased 5% for the quarter ending January 2^nd for the parent company of Journeys, Lids and Johnston & Murphy. “We are especially pleased with the strong performance at Journeys, which delivered another exceptional holiday season,” said chairman, president and CEO Robert Dennis.
Lululemon Athletica: CEO Laurent Potdevin said “Sales for the fourth quarter are exceeding expectations.” The retailer announced a successful holiday season with fourth quarter same store sales increasing in the mid single digits.
Ollie’s Bargain Outlet: A 5.6% same-store sales increase during the 9 weeks that ended on January 2 led chairman, president and CEO Mark Butler to comment that he is “Thrilled,” with the discount retailer’s holiday sales. The retailer had only predicted 4% growth and now expects total annual sales of $760 million in 2016.

Source: Chain Store Age

Cupid To Shower Americans With Jewelry, Candy This Valentine's Day

January 26, 2015

Cupid has some tricks up his sleeve this year with plans to shower Americans with jewelry, candy and a special night out.  According to the National Federation's Valentine's Day Consumer Spending Survey, the average person celebrating Valentine's Day will spend $142.31 on candy, flowers, apparel and more, up from $133.91 last year.  Total spending is expected to reach $18.9 billion, a survey high.

"It's encouraging to see consumers show interest in spending on gifts and Valentine's Day related merchandise - a good sign for consumer sentiment as we head into 2015," said NRF President and CEO Matthew Shay.  "Hoping to draw in eager shoppers, retailers will offer unique promotions on gifts, meal options at restaurants and even experiences."

While most (53.2%) plan to buy candy for the sweet holiday, spending a total of $1.7 billion, one in five (21.1%) plans to buy jewelry for a total of $4.8 billion, the highest amount seen since NRF began tracking spending on Valentine's gifts in 2010.

Additionally, 37.8 percent will buy flowers, spending a total of $2.1 billion, and more than one-third (35.1%) will spend on plans for a special night out, indlucing movies and restaurants, totaling $3.6 billion.  Celebrants will also spend nearly $2 billion on clothing and $1.5 billion on the gift that keeps on giving: gift cards.

The survey found nine in 10 (91%) plan to treat their significant others/spouses to something special for the consumer holiday, with plans to spend an average of $87.94 on them, up from $78.09 last year.  Additionally, 58.7 percent will spend an average of $26.26 on other family members and $6.30 on average - which equates to a whopping $703 million on pint-sized gifts of all varieties.

"It's great to see consumers coming out of their shell this year, looking to spend discretionary budgets on those they love once again, though I fully expect many to continue to look for ways to cut costs where they can.  While many will splurge, some will still look for simple and affordable ways to show their appreciation for friends and family and celebrate in a way they are most comfortable with."

Discount (35.2%) and department stores (36.5%) will be among the most visited locations for those looking for the perfect Valentine's Day gift, as will specialty stores (19.4%) and florists (18.7%).  One-quarter (25.1%) say they will shop online and 13.3 percent will shop at a local or small business to find something unique for their loved one.

It seems women are in for the biggest treat this Valentine's Day.  Men will spend nearly double what women plan to spend ($190.53 versus $96.58 on average, respectively.)  Additionally, adults 25 to 34 will outspend other age groups at an average of $213.04; 35 to 44 year olds will spend an average of $176.21 and 18 to 24 year olds will spend an average of $168.95.

Source: National Retail Federation

Shoppers Push Holiday Sales Up 4%

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

J.C. Penney Stock Soars 20% with High Year-End Sales Growth

Although analysts had projected retail growth in December to average 2.7%, J.C. Penney reports that sales rose 3.7% for the last 9 weeks leading up to the end of December. That compares to 3.1% growth for the same time period last year.

Last year at this time, Penney did not disclose sales results, which drove the stock down and raised investors’ concerns about the company’s turnaround efforts after failed changes in sales strategy. This included removing discounts and popular house brands.

“Our highest priority over the last year has been to restore profitable sales growth at J.C. Penney,” Chief Executive Myron E. Ullman said. “This holiday season was instrumental in that effort.”

The National Retail Federation (NRF) projects this holiday season to boast the strongest sales growth since 2011. J.C. Penney is the first large retailer to report holiday season sales.

Retail Sales Increase 0.6 Percent In November; In Line With NRF Holiday Forecast

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

Lower Gas Prices Won't Ensure Happy Holiday

October 30, 2014

Retailers are in for a "humbling holiday" with a 3.4% overall increase in sales and a deceleration in e-commerce growth, according to a new forecast from retail industry consulting and research firm Customer Growth Partners.

In the 14th annual holiday forecast, the 3.4% increase in sales is well below projections of others, most notably the National Retail Federation, which has holiday sales advancing 4.1%.  E-commerce/direct-to-consumer sales will continue to decelerate, after two decades of robust double-digit growth, to just under 7% for holiday 2014.  Craig Johnson, president, said his pessimism is due to a difference of opinion over the biggest drivers of sales.

"Contrary to much conventional wisdom the single best predictor of retail sales is neither gasoline prices, the unemployment rate or consumer confidence, but growth in disposable income," Johnson said.  "And the fact is that real median incomes have flatlined, if not declined, for many years now."

If the 3.4% growth rate proves accurate, Johnson said it will be the third straight year of dismal retail spending following a 5% pace of growth in 2010 and 2011.  Overall retail sales for the November through December holiday period will reach $590 billion.  While that is a new record, the anemic 3.4% growth rate only marginally exceeds 2013's 2.9% pace, and reflects declining median incomes for all but the top 10% of households, according to Johnson.

In addition to the impact of lagging income growth on spending, Johnson believes the declining share of the population with full-time jobs will also have an impact.  Only 48% of the working age population now holds a full-time job, the lowest in decades, and down from 54% as recently as 2006, according to Johnson.

"The shift to a 'part-time economy' has caused spending to rotate from discretionary goods to non-discretionary goods.  Consumers with full-time jobs spend against both needs and wants, but those with part-time jobs spend only against needs."

Another headwind this year relates to a sharp price increase for food which accounts for some 15% of spending for moderate and lower income households.  Food price increases far outweigh this fall's savings on gasoline costs, which comprises barely 4% of household budgets, according to Johnson.

Lastly, recurring monthly obligations, from cellphone and cable bills to record-high student loans are commanding a growing portion of disposable income, curbing potential gift giving.

Among merchandise categories, health and personal care stores will outpace other sectors with strong 6.3% growth while apparel sales will lag the already sluggish overall growth pace, with growth of only 2.4%.  Department stores will struggle again this year, both with the weak apparel sales and softening demand for the once white-hot handbag category, and will see essentially zero growth while consumer electronics will rebound strongly, with growth exceeding 4%, according to Johnson's forecast.

"Holiday shoppers in 2014 remain very cautious in their spending, and will be relentless in seeking out value," Johnson said.  "But retailers dependent on healthy discretionary spending will find this another challenging holiday, particularly those who placed holiday orders last May, when sales were still healthy.  Holiday 2014 will be a marginal improvement from last year, but until real income growth resumes, Santa will be hard-pressed to fill the Christmas stockings for either consumers or retailers."

Source: Retailing Today 

Unwrapping The NRF Holiday Sales Forecast

October 29, 2014

The all-important holiday shopping season is upon us.  NRF's 2014 holiday forecast calls for a retail sales increase of 4.1 percent to a total of $616.9 billion.  "Holiday sales" are defined as those happening from November 1 through December 31.

Overall, we expect holiday spending to reflect recent economic momentum.  The economy is expanding and there doesn't appear to be any distinct shift away from the moderate pace of growth.  Growth is expected to continue to be slow and steady following the unusually high degree of volatility we saw in the first half of the year.

Economic growth for the balance of 2014 is forecast to be in the range of 3 percent over the same time last year.  Employment, income and consumer confidence are all improving.

Employment

Labor market indicators point to continued growth.  There have been gains of 200,000 or more jobs every month, except two this year.  Since the end of 2013, more than 2 million jobs have been created.  The unemployment rate - a key psychological indicator for the public - stood at 5.9 percent in September, down more than a full percentage point since the same time in 2013, and at its lowest level since July 2008.  Jobless claims have been below 300,000 for more than a month, which is rare in historical terms.

Income

With more jobs on the books, there is more aggregate income for more spending.  For August and the two prior months, personal income grew 4.1 percent compared with 2013.  As the season nears, we will be keeping a close eye on disposable income to gauge economic activity.

Consumer Confidence

Consumer confidence has reached post-recession highs over the past year.  The University of Michigan Consumer Confidence Index, for example, increased 1.8 points in October to 86.4, its best reading in more than seven years.

Nonetheless, confidence continues to be erratic and difficult to interpret.  With gas prices and unemployment low and smaller debt burdens, consumers should feel a bit better about their circumstances but they remain cautious.  Their mood may still be impacted by the lingering effects of the Great Recession.

Yet there is a lot of psychology at work, including volatile financial markets, European weakness, a slowdown in China, rising Middle East tensions and now Ebola.  All could still send a chill into consumer confidence, much like last year's ploar vortex.

Consumer Credit

Credit conditions are improving.  Consumers continue to choose and use credit very strategically.  Revolving credit, though uneven over the past year, has risen recently.  If employment and consumer confidence continue to improve as we expect, revolving credit may continue its healthy pace and help spur retail spending.

Consumers should benefit from easing price pressures.  Summer weather was quite mild this year and gasoline prices have recently dropped, leaving households to spend less on air conditioning and gas, freeing up more disposable income.

Additional Factors

As we observed last year, holiday retail sales can be severely impacted by any transitory factor from higher personal taxes and the debt ceiling debacle to a federal government shutdown and severe winter weather.

This year, it's too soon to predict the weather but at least Congress has kept the government open and there is no immediate talk of tax increases (at least not federally).

And The Forecast Is...

We look at employment, income, consumer confidence and consumer credit, incorporate a few wild cards such as gas prices, the whims of Congress and the outbreak of epidemics, then come up with an educated and informed figure.  It's part science, part art.

In the grand scheme of things, consumers appear to be in a much better position this year than last, with a bit more confidence and spending power.  These factors should translate into a solid holiday sales season for retailers and merchants alike.  Nevertheless, shoppers will remain cautious and stick to their budgets this year - just in case we're wrong.

Source: National Retail Federation 

Shop.org Forecasts Online Sales To Grow Between 8-11% This Holiday Season

October 7, 2014

Shop.org today released its 2014 online holiday sales forecast, expecting sales in November and December to grow between 8-11 percent over last holiday season to as much as $105 billion.

Shop.org forecasts sales based on government data including consumer credit, disposable personal income, and previous monthly retail sales releases.  Holiday non-store sales in 2013 grew 8.6 percent.

Source: National Retail Federation

Optimism Shines As NRF Forecasts Holiday Sales To Increase 4.1%

October 7, 2014

Holiday sales are projected to grow at their fastest level in years, rising 4.1% to nearly $617 billion after a 3.1% increase last year.

The bullish seasonal spending forecast follows an uneven sales performance at the beginning of the year and a 3.1% increase during the 2013 season.  Online holiday sales are expected to increase between 8% and 11% to as much as $105 billion.  Holiday sales on average have grown 2.9% over the past 10 years, including 2014's estimates, and are expected to represent approximately 19.2% of the retail industry's annual sales of $3.2 trillion.  This would marke the first time since 2011 that holiday sales would increase more than 4 percent.

"Retailers could see a welcome boost in holiday shopping, giving some companies the shot in the arm they need after a volatile first half of the year and an uneventful summer," said NRF President and CEO Matthew Shay.  "While expectations for sales growth are upbeat, it goes without saying there still remains some uneasiness and anxiety among consumers when it comes to their purchase decisions.  The lagging economic recovery, though improving, is still top of mind for many Americans."

"Recognizing the need to keep household budgets in line, we expect shoppers will be extremely price sensitive as they have been for quite some time.  Retailers will respond by differentiating themselves and touting price, value and exclusivity," continued Shay.

While consumer confidence has been unstable much of the year, improvements over the past few months in key economic indicators will give way to increased spending power among holiday shoppers.  Retail sales, jobs and housing data all point to healthy gains.

"Though we have only seen consumer income and spending moderately - and erratically - accelerate this year, we believe there is still room for optimism this holiday season," said NRF Chief Economist Jack Kleinhenz.  "In the grand scheme of things, consumers are in a much better place than they were this time last year, and the extra spending power could very well translate into solid holiday sales growth for retailers; however, shoppers will still be deliberate with their purchases, while hunting for hard-to-pass-up bargains."

Sources: Retailing Today, National Retail Federation