FALL IS HERE…WILL ECONOMIC FACTORS RISE?

Economic indicators for August dropped, but 2016 overall is still growing.

Home Sales: Existing-home sales dropped .9% in August, marking the second month in a row of decline. However, year-over-year sales are up .8% over last year. While new home sales have been steadily rising, existing-home sales make up 90% of the home sale market. The National Association of Retailers reports that with the housing market in 2016 being the strongest sector of the economy over the past two years, the market may be a “victim of its own success”. Sales early this summer reached the highest levels since 2007, which has led to an increase in prices and a shortage of inventory. The average home price is $240,200, up 5.1% from 2015. The NAR feels an increase in home building would solve the issue. A Commerce Department report this week indicated building permits for single-family homes, the largest segment of the housing market, increased in August.

Manufacturing: The Conference Board reported its leading economic index, weighing 10 different economic indicators, dropped .2% in August. The decline in attributed to the average workweek of production workers and the amount of new orders. However, in the six-month period ending in August, the index increased .9% to an annual rate of 1.8%, which is in line with slow growth reported in gross domestic products. It is forecasted to grow at a 3% pace.

Retail Sales: US retail sales were up 1.9% in August, which was down from 2.4% in July. Retail sales had shown strong gains in the spring but has slowed through the summer months. Sales at department stores fell .6% and general merchandise store sales were flat. Building and garden equipment store sales dropped 1.4%. Retail sales are expected to be on the rise, with Halloween sales expected to boom and the 2016 holiday outlook expected to be positive, especially in e-commerce sales.

Sources: Wall St. Journal, Market Watch

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

Santa is Shopping with his desktop this year

Consumers are shopping 6% more with their desktops this year versus last year, with desktop spending at $35.36 billion in the first 36 days of the shopping season (Nov 1- Dec 6). This figure sets a new record.

Cyber Monday week saw $9.7 billion in desktop spending, up 7%. Spending reached $1 billion + per day for 5 days straight during Cyber Week. 

Holiday spending appears to be on pace to reach forecasts of 9% annual growth in desktop spending and 14% growth overall for the holiday shopping season.

Source: Chain Store Age

National Retail Federation (NRF) Consumer Research Reports Consumers Plan Holiday Spending to be flat Compared to Last Year; Expect This to be biggest omnichannel holiday ever

An NRF survey of over 7,300 customers indicated that the average spending per person this year will be almost flat with last year, increasing to $806 this year versus $802 last year. This is the highest amount of spending in the survey’s 14 year history, but is still disappointing to retailers.

“We continue to see positive momentum in retail sales growth, giving us reason to believe consumers will show up this holiday season as they look to take advantage of all of retailers’ promotional offerings,” said NRF President and CEO Matthew Shay. “In an effort to attract all shoppers – from the extremely price sensitive to the online millennial, retailers will be offering exclusive incentives, low prices, price-matching, top toys and everyone’s favorite - free shipping and buy online pick up in store offers.”

It is expected to be the most omnichannel holiday ever. Online spending is expected to be 46% of total spending this year. The survey found that 21.4% of shoppers will use their smartphone to purchase holiday merchandise. 37.9% will research products on their smartphones, and 20.3% will use it to look up product availability in stores.

Adding to the complexity of predicting holiday spend is consumer spending behavior. 40% of shoppers surveyed begin their holiday shopping before Halloween. When asked why, shoppers indicated the need to spread out their budget (61%), avoiding crowds (48%) and avoiding stress of last minute shopping (46%).

Source: Retailing Today