Housing Production Falls 1.6 Percent In November

December 16, 2014

Following an upwardly revised rate last month, housing starts in November slipped 1.6 percent to a seasonally adjusted annual rate of 1.028 million units, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.  Three-month moving averages for total and single-family production were at their highest levels since the Great Recession.

"These numbers are in line with our latest surveys, which show that single-family builders are confident that the market is gradually recovering," said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.

"Over the course of the year, the number of houses under construction has been on an upward trajectory, signaling that housing is moving forward," said NAHB Chief Economist David Crowe.  "With strong demand, affordable home prices and favorable interest rates, we should see housing production continue to grow into 2015."

Single-family housing starts were down 5.4 percent to a seasonally adjusted annual rate of 677,000 units in November, while multifamily production rose 6.7 percent to 351,000 units.

Regionally in November, combined housing production increased in the Northeast, Midwest and West, with respective gains of 8.7 percent, 14.4 percent and 28.1 percent.  Total production dropped in the South by 19.5 percent.

Issuance of building permits registered a 5.2 percent loss to a seasonally adjusted annual rate of 1.035 million units in November.  Multifamily permits dropped 11 percent to 396,000 units while single-family permits slipped 1.2 percent to 639,000.

Regionally, the Northeast posted an overall permit gain of 27.4 percent.  The Midwest, South and West registered respective losses of 7.3 percent, 10 percent and 5.6 percent.

Source: National Association of Home Builders

Slow Compensation Growth Boosts Competitiveness Of U.S. Manufacturing

December 17, 2014

Anemic growth in worker compensation since the start of the decade has substantially strengthened the cost advantages of U.S. manufacturing against other mature economies, according to data on 34 countries released today by the International Labor Comparisons (ILC) progrm of The Conference Board.  In 2013 (the last year for which data is available), hourly compensation costs for American manufacturers averaged $36.34, up just $1.59 from 2010.  This represents slower growth than even the crisis years of 2007-2010, over which hourly costs grew $2.71.

"Despite a rapidly shrinking unemployment rate, U.S. manufacturing saw exceptionally low worker costs growth in recent years, especially compared to European countries with often weaker recoveries but more rigid labor markets," said Elizabeth Crofoot, Senior Economist with the ILC program.  "Our dollar-denominated data reveal a broad spectrum among advanced economies: At one end, countries where labor costs are relatively low and still declining - notably Japan and Greece.  At the other end, countries - led by Switzerland, Sweden, Australia, Norway, and Germany - where already high pay and benefits continue to rise at relatively rapid rates."

"Looking ahead, the dollar's recent return to appreciation may somewhat shrink the cost advantage built by U.S. manufacturing in 2010-2013 over other mature economies," said Bart van Ark, Chief Economist at The Conference Board.  "And while emerging markets in Asia, Latin America and Eastern Europe will maintain large cost advantages over the U.S. for the foreseeable future, depreciation of their currencies could significantly narrow the gap and put more pressure on productivity gains to avoid further erosion of those countries' competitiveness."

In dollar terms, only Greece, Japan, and Ireland among countries compared saw slower manufacturing compensation growth than the U.S. between 2010 and 2013.  Hourly labor costs in Japan ($29.13) and the U.K. ($31.00) were below American levels in 2013; compensation was higher in most other large mature economies.  Taking a longer view, local costs in manufacturing as a percentage of U.S. costs rose between 1997 and 2013 in all economies compared except Japan, Brazil, and Taiwan.

Source: The Conference Board

Early Holiday Promotions Help Put Shoppers Ahead On Their Shopping Lists

December 17, 2014

Half of Consumers Polled Will Wrap Up Christmas Shopping Online

For millions of Americans the rush to find the perfect gift started early this year, and according to the National Retail Federation's latest Holiday Consumer Spending Survey, the average holiday shopper has completed 52.9 percent of their shopping as of December 10, up from 49.9 percent last year.

"This year we witnessed 'a tale of two holiday shoppers' with many jumping on retailers' early, hard-to-pass-up in-store promotions, and others waiting until the last minute to wrap up their lists," said NRF President and CEO Matthew Shay.  "In the final stretch, retailers will continue to look for creative ways to attract those with shopping left to do by offering exclusive Super Saturday promotions, extending their in-store holiday hours and promoting deals on expedited shipping.  We are optimistic the holiday season will end on a high note for retailers."

For the first time, NRF asked those who had completed less than half (50%) of their shopping why they have chosen to wait until December to wrap up their shopping.  The survey found that nearly half (46.8%) said they waited this year because they were still trying to decide what to buy, nearly three in 10 (28.4%) said they are waiting for input from their family and friends, and another 28.4 percent said they are waiting for the best deals on holiday merchandise.

When it comes to where people will do the remainder of their shopping, the survey found nearly half (49.1%) of holiday shoppers will shop online; two in five (44.3%) will shop at department stores, 30.1 percent will head to discount stores, 22 percent will visit clothing stores and 19.3 percent will shop at electronics stores.

NRF also asked holiday shoppers about their use of price matching this holiday season.  According to the survey, 15.6 percent said they have requested a price match from a retailer.  However, broken out by age it is clear that young adults have taken advantage of this service: nearly three in 10 (27.9%) 18-24 year olds say they have requested a price match from a retailer this holiday season; one in five (21.8%) 25-34 year olds and 18 percent of 35-44 year olds have also asked for a price match.

Christmas Day activities run the gamut for holiday celebrants, however, most say they will spend the day visiting with family and friends (66.2%).  Another 59.6 percent say they will open gifts on Christmas Day, and 48.8 percent will cook a holiday meal.  When not opening gifts or visiting with friends and family, one in five (22.2%) will browse the web and just 7.4 percent plan to actually shop online on Christmas Day.

While there's plently of shopping left to do, nearly one-third (32.8%) plan to buy their last holiday gift before Thursday, December 18; 14.5 percent will look to Super Saturday (Saturday, December 20) to purchase their last gift, and 9.1% will wait until the very last minute and buy their last gift on Christmas Eve.  Additionally, more men than women will wait until Christmas Eve to purchase the last gift (10.5% versus 7.9% respectively).

"Though millions of eager consumers jumped on early holiday promotions, there is still plenty of shopping left to do.  Hurried last-minute shoppers will look for gift cards, clothing items, toys and other popular gifts from a variety of retailers, likely even hoping to win big with expedited shipping deals and extremely low prices online and in stores."

Source: National Retail Federation

Lowe's CEO: Our Transformation Is Gaining Momentum

December 11, 2014

Lowe's CEO Robert Niblock cited the recovering U.S. economy as among the reasons why the company plans to focus more on market differentiation and omnichannel retailing.

The company said it will outline these and other strategic priorities in a meeting with investors on December 11 in North Carolina.

"We're at a great point in our company's evolution.  The housing market and broader economy are recovering just as our transformation is gaining momentum," Niblock said.  "We're building on our past success and finding new ways to serve and connect with customers."

Although the company shared few specifics, the company announced that it plans to increase its focus on:

• Enhancing its relevance to customers through omnichannel retailing
• Differentiating itself through better customer experiences
• Adapting to a changing home improvement landscape
• And delivering long-term profitable growth and substantial returns for shareholders

"We continue to generate solid cash flow and have exciting opportunities ahead of us," said Robert F. Hull, Jr., Lowe's CRO.  "Return on invested capital is expected to reach approximately 19 percent by 2017, an increase of almost 500 basis points over the next three years."

Lowe's also reiterated its sales and earnings guidance for the 2014 fiscal year:

• Total sales are expected to increase 4.5% to 5%.
• Same store sales are expected to increase 3.5% to 4%.
• The company expects to open six home improvement and four hardware stores.
• Diluted earnings per share of approximately $2.68 are expected for the fiscal year ending January 30.
• Lowe's currently operates more than 1,835 home improvement and hardware stores and has more than 260,000 employees.

Source: Retailing Today

Costco Off To Great Start With Q1 Beat

December 10, 2014

The holiday season started strong at Costco where U.S. same store sales advanced 7 percent during the company's first quarter ended November 23.

Total company sales during the period increased 7 percent to nearly $26.3 billion from $24.5 billion.  Membership income grew slightly slower, advancing 6 percent to $582 million.  Same store sales excluding the effects of the strengthening U.S. dollar and fuel price deflation were 7 percent at U.S. and international locations.

Profits during the period increased to $496 million, or $1.12 per share, three cents better than analysts' consensus forecast, compared to $425 million, or 96 cents a share the prior year.

Costco ended the quarter with a total of 671 warehouses, including 474 in the United States and Puerto Rico, 88 in Canada, 34 in Mexico, 26 in the United Kingdom, 20 in Japan, 11 in Korea, 10 in Taiwan, seven in Australia and one in Spain.

Source: Retailing Today

Builder Confidence Drops One Point In December

December 15, 2014

Following a four-point uptick last month, builder confidence in the maket for newly built single-family homes fell one point in December to a level of 57 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today.

"Members in many markets across the country have seen their businesses improve over the course of the year, and we expect builders to remain confident in 2015," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.

"After a sluggish start to 2014, the HMI has stabilized in the mid-to-high 50s index level trend for the past six months, which is consistent with our assessment that we are in a slow march back to normal," said NAHB Chief Economist David Crowe.  "As we head into 2015, the housing market should continue to recover at a steady, gradual pace."

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor."  The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low."  Scores from each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

Two of the three HMI componenets posted slight losses in December.  The index gauging current sales conditions fell one point to 61, while the index measuring expectations for future sales dropped a single point to 65 and the index gauging traffic of prospective buyers held steady at 45.

Looking at the three-month moving averages for regional HMI scores, the West rose by four points to 62 and the Northeast edged up one point to 45, while the Midwest registered a three-point loss to 54 and the South dropped two points to 60.

Source: National Association of Home Builders

Customer Less Satisfied In Q3

December 9, 2014

The national level of customer satisfaction fell 0.7% in the third quarter of 2014 to 75.6 on a 100 point scale, according to the American Customer Satisfaction Index (ACSI), pointing to weak spending growth for the fourth quarter.  This is the third consecutive quarterly decline in customer satisfaction for the country as a whole, which is at its lowest level since early 2011.

While most predictions for the Thanksgiving period projected strong growth, retail sales actually fell relative to the previous year.  The suggestion that weak income growth is to blame is inconsistent with the data.  Income growth has indeed been weak, but not worse than it was in 2013.  In fact, American households are marginally better off now.  Unemployment is down, and a major factor boosting consumers' ability to buy, gas price, is at its lowest level in years, much lower than it was in 2013.

Based on income, gas price, and even consumer confidence, ACSI says an increase in consumer spending would be expected, but not if customer satisfaction is used as a predictor.  There are two major factors that determine spending: expected satisfaction and ability to spend.  The latter has improved somewhat, but the former has gotten worse, and continues to deteriorate.  Accordingly, the ACSI prediction for the fourth quarter is weak spending growth of 1.8 to 2%, a pace behind the overall pace of the economy.

"The US economy needs more consumer demand to shake off these seemingly persistent doldrums," said Claes Fornell, ACSI chairman and founder.  "Low interest rates, some inflation and wage growth would all help, but consumers also need a reason to buy.  Their satisfaction matters not only to them as individuals, but for the economy as a whole."

Source: Retailing Today

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

Saks Boosts Profits At Hudson's Bay Co. In Q3

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

Kroger Extends Comp Streak With 5.6% Gain

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

The Conference Board Employment Trends Index Increased In November

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

Online Labor Demand Rose 170,200 In November

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 

Feuding Continues In The Family Dollar Affair

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 

Retailers Add 37,000 Jobs In November

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

Job Growth And Wage Gains Excel In November

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

Weather Trends: December 2014

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

Dollar General Reveals 2015 Growth Strategy As Q4 Comps To Grow 5%

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

November 2014 Manufacturing ISM Report On Business - PMI At 58.7%

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

Dollar Tree Q3 Sales Lift Holiday Outlook

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

Sales, Traffic Decline Thanksgiving Weekend

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