Costco Sales Get Boost In July

August 7, 2014

Costco saw a boost in net sales and same-store sales during the month of July.

Net sales totaled $8.55 billion for the four weeks ended August 3, an increase of 9% from $7.87 billion during the similar four-week period last year.

Same-store sales increased 5%, while U.S. same-store sales also increased 5% during the period.

For the 48 weeks ended August 3, net sales were $101.43 billion, an increase of 7%.  During the 48 weeks, same-store sales increased 4%.  In the United States, same-store sales rose 5%.  Costco currently operates 660 warehouses, including 466 in the United States and Puerto Rico, 88 in Canada, 33 in Mexico, 25 in the United Kingdom, 20 in Japan, 11 in Korea, 10 in Taiwan, six in Australia and one in Spain.

The company plans to open up to an additional three new warehouses prior to the end of its fiscal year on August 31.

Source: Retailing Today

Builder Confidence In The 55+ Housing Market Shows Positive Signs In The Second Quarter

August 7, 2014

Builder confidence in the single-family 55+ housing market for the second quarter is up year over year, according to the National Association of Home Builders' (NAHB) 55+ Housing Market Index (HMI) released today.  Compared to the second quarter of 2013, the single-family index increased three points to a level of 56, which is the highest second quarter reading since the inception of the index in 2008 and the 11th consecutive quarter of year over year improvements.

"We have seen steady improvement in the 55+ housing sector as buyers and renters are attracted to new homes that offer many of the luxuries and conveniences they desire," said Steve Bomberger, chairman of NAHB's 50+ Housing Council and president of Benchmark Builders Inc. in Wilmington, Delaware.  "55+ buyers are very selective and have high expectations, and new construction can meet their needs and discerning tastes."

There are separate 55+ HMIs for two segments of the 55+ housing market: single-family homes and multifamily condominiums.  Each 55+ HMI measures builder sentiment based on a survey that asks if current sales, prospective buyer traffic and anticipated six-month sales for that market are good, fair or poor (high, average or low for traffic).  An index number below 50 indicates that more builders view conditions as poor than good.

Two of the components of the 55+ single-family HMI posted increases from a year ago: present sales climbed seven points to 61 and expected sales for the next six months rose one point to 61.  Meanwhile, traffic of prospective buyers dropped six points to 42.

Although the 55+ multifamily condo HMI dipped five points to 38, it is still the second highest reading for the second quarter since the inception of the index.  All three components of the index decreased for the second quarter: present sales dropped five points to 39, expected sales for the next six months fell four points to 42 and traffic of prospective buyers dropped three points to 35.

The indices tracking production and demand of 55+ multifamily rentals moved in different directions in the second quarter.  Present production rose three points to 53, expected future production increased one point to 53, while current demand for existing units dropped three points to 59 and future demand fell two points to 61.

"One of the factors contributing to the positive signs in the 55+ housing market is the slow but steady increase in existing home sales in the last three months," said NAHB Chief Economist David Crowe.  "The 55+ market is strongly driven by consumers being able to sell their existing homes at a favorable price in order to buy or rent in a 55+ community.

Source: National Association of Home Builders

Housing Recovery Continues At Slow Pace According To Latest Leading Markets Index

August 7, 2014

Markets in 56 of the approximately 350 metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity, according to the National Association of Home Builders/First American Leading Markets Index (LMI), released today.  This represents a year-over-year net gain of seven markets.

The index's nationwide score moved up slightly to .89, meaning that based on current permit, price and employment data, the nationwide average is running at 89 percent of normal economic and housing activity.  Meanwhile, 78 percent of markets have shown an improvement year-over-year.

"Things are gradually improving," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.  "As the job market grows, we expect to see a steady release of pent up demand of home buyers."

Baton Rouge, Louisiana continues to top the list of major metros on the LMI, with a score of 1.39 - or 39 percent better than its last normal market level.  Other major metros leading the list include Honolulu; Oklahoma City; Houston and Austin, Texas.  Rounding out the top 10 are Los Angeles; San Jose, California; Salt Lake City; Des Moines; and New Orleans.

"With the national tally only reaching 43 percent of normal, single-family housing permits continue to be the lagging component of the index," said NAHB Chief Economist David Crowe.  "The big bright spot is employment, where the number of metro areas having reached or exceeded their norms grew from 26 to 46 in a year."

"In the 22 metros where permits are at or above normal, the overall index indicates that these markets have fully recovered," said Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., which co-sponsors the LMI report.  "This finding shows the impact that an uptick in permits can have on the overall health of markets."

Looking at smaller metros, both Odessa and Midland, Texas, boast LMI scores of 2.0 or better, meaning their markets are now at double their strength prior to the recession.  Also leading the list of smaller metros are Bismarck, North Dakota; Grand Forks, North Dakota; and Casper, Wyoming, respectively.

The LMI shifts the focus from identifying markets that have recently begun to recover, which was the aim of a previous gauge known as the Improving Markets Index, to identifying those areas that are now approaching and exceeding their previous normal levels of economic and housing activity.  More than 350 metro areas are scored by taking their average permit, price and employment levels for the past 12 months and dividing each by their annual average over the last period of normal growth.  For single-family permits and home prices, 2000-2003 is used as the last normal period, and for employment, 2007 is the base comparison.  The three components are then averaged to provide an overall score for each market; a national score is calculated based on national measures of the three metrics.  An index value above one indicates that a market has advanced beyond its previous normal level of economic activity.

Source: National Association of Home Builders 

Labor Markets Mixed Across Advanced Economies

August 7, 2014

Steady Improvement Builds In U.S., Uncertainty Continues In Europe

Labor markets were mixed across the advanced economies, according to unemployment rates and employment growth data compiled and standardized by The Conference Board International Labor Comparisons (ILC) program for June 2014.

Unemployment rates in June fell in three of the nine countries compared and rose in five.  Italy saw the largest decline of 0.3 points - though, at 12.5 percent, Italian joblessness remains near an all-time high.  Unemployment fell 0.2 points in the United States (to 6.1 percent) and the Netherlands (to 6.8 percent).  By contrast, joblessness rose 0.2 points in both Japan and Sweden, to 3.3 percent and 7.9 percent, respectively.  Unemployment in Germany was unchanged at 5.1 percent, lowest by far among the European countries.

"Despite mixed unemployment trends seen across European economies in June, joblessness in the European Union as a whole has been on a downward trend over the last year," said Elizabeth Crofoot, Senior Economist with the International Labor Comparisons program at The Conference Board.  "Italy's apparent return to recession in the second quarter of 2014, however, comes after eleven consecutive quarters of rising unemployment, highlighting the country's inability to gain a foothold in the recovery process."

Employment in June rose in three countries, declined in three, and was unchanged in three.  Employment indexes in the U.S., Australia, and Italy each rose by 0.2 points.  Standing at 100.1, the U.S. employment index now exceeds the level of 2007 (=100) for the first time since the recession.  France saw the sharpest drop in employment - down 0.5 points to 101.3.

Source: The Conference Board

Synergy Savings Keep Climbing At Office Depot

August 5, 2014

Office Depot softened the blow of weak second quarter sales by bumping up the pace of 400 store closings to drive greater than expected operating profit growth and expense savings related to the merger with OfficeMax.

Office Depot merged with Office Max last November and shortly thereafter announced plans to close 400 stores by the end of 2016.  The total number of closings remains intact, but the company now expects to close 165 of the stores this year compared to an earlier forecast of 150 closings in 2014.  The estimate of expense savings related to the closures was increased to $100 million from a $75 million estimate share at the end of the first quarter.

In total, Office Depot estimates the optimization of its North American store portfolio combined with other savings will result in annual run-rate synergies totaling $700 million.  That figure is well above the $400 to $600 million range shared when the deal was announced last year, and the $675 million estimate shared at the end of the first quarter.

Because the expense savings are being realized faster than initially forecast, the company is growing adjusted operating income faster than planned in the absence of any top line growth.

During the second quarter, our team executed exceptionally well, which enabled us to deliver merger synergies more quickly than anticipated," said Roland Smith, chairman and CEO of Office Depot.  "We are very pleased with the integration of legacy Office Depot and OfficeMax as we create a culture focused on achieving our critical prioities in the near and long term.  As planned, we have completed our analysis of the North America retail store optimization strategy and have continued to make progress on the development of our unique selling proposition.  Based on accelerated synergies and improving execution, we have updated our full year 2014 outlook for adjusted operating income to be not less than $200 million, an increase from our prior outlook of not less than $160 million."

Despite progress on the expense front, sales remain challenging for the company's retail, commercial and international divisions.  On a consolidated basis, sales for the second quarter increased to $3.8 billion from $2.4 billion, reflecting the inclusion of OfficeMax results.  However, on a pro-forma basis, looking at results as if both companies existed on a stand-alone basis, sales declined from $3.9 million.

Sales at the company's North American Business Solutions division declined 1% to $1.5 billion, on a pro forma basis while the operating profits ticked up to $59 million from $53 million.  International sales were essentially flat on a pro forma basis with the division's loss declining to $2 million from $6 million.

Source: Retailing Today

Top 2014 Back-To-School And College Trends

Source: National Retail Federation

CVS's Portfolio Of Enterprise Assets Drives 'Strong' Q2 Performance

August 5, 2014

As today's healthcare market continues to evolve, CVS Caremark's portfolio of enterprise assets is enabling the company to provide innovative solutions and products that are delivering results, as evidenced by its "strong" second quarter results released Tuesday morning.

"As the health care environment evolves we are uniquely positioned to address the quality, affordability and accessibility issues in the healthcare system today," president and CEO Larry Merlo told analysts during Tuesday morning's conference call.  "So, we are highly focused on the unique opportunities we see for growth and we will continue to take an active and growing role in shaping the future of healthcare."

Net income for the quarter increased 10.9% to $1.2 billion, compared with approximately $1.1 billion in the year-ago period.

Adjusted earnings per share for the three months ended June 30, 2014 and 2013, was $1.13 and 97 cents, respectively, an increase of 16.5%.  Adjusted EPS in the three months ended June 30, 2014 excludes $133 million and $124 million in 2014 and 2013, respectively, of intangible asset amortization related to acquisition activity, the company stated.

Net revenues for the quarter ended June 30 increased 10.7%, or approximately $3.4 billion, to $34.6 billion compared with the year-ago period.

Revenues in the Pharmacy Services Segment increased 16.2% to $21.8 billion during the quarter, driven by net new business growth in specialty pharmacy including the acquisition of Coram and the impact of its new Specialty Connect, drug inflatin and product mix, partially offset by an increase in generic dispensing.

Specialty Connect integrates the company's mail and retail capabilities, providing members with the choice to bring their specialty prescriptions to any CVS/pharmacy, all prescriptions are filled through the company's specialty mail order pharmacies, so all revenue from this specialty prescription services program is recorded within the Pharmacy Services Segment.  Members then can choose to pick up their medication at their local CVS/pharmacy or have it sent to their home through the mail.

The Specialty Connect offering has been well received by clients and patients, according to the company.  As of July, more than 60,000 specialty patients have transitioned to this model.

"The program is generating high satisfaction scores with patients.  It resonates with clients as a differentiated approach to simplifying the specialty process for members, and physicians appreciate the ease of use in getting patients started on therapy," Merlo told analysts.

In providing a PBM 2015 selling update, the company stated that gross wins for 2015 is currently $5.4 billion.  Net new business is $2.6 billion.  As for renewals, the company has completed nearly $26 billion in business up for renewal with a retention rate of nearly 97%.

"I think our selling season success reflects our track record of generating savings for our clients through our unique suite of capabilities.  Top of mind for clients this selling season is achieving better control of their specialty spend," said Merlo.

Revenues in the Retail Pharmacy Segment increased 4.5% to $16.9 billion.  Same-store sales increased 3.3%, with pharmacy same-store sales up 5% and front-end same-store sales down 0.4%.

Despite a positive impact of approximately 80 basis points from the shift of the Easter holiday, front-end same-store sales were negatively impacted by softer customer traffic, partially offset by an increase in basket size.  In addition, front-end same-store sales are beginning to be impacted by tobacco.  In February, the company announced that it will stop selling cigarettes and other tobacco products at its more than 7,600 CVS/pharmacy stores across the United States by October 1.

"As we plan for exiting the tobacco category this fall, we have begun to see a sales impact," Merlo told analysts, noting that front-end same-store sales would have been approximately 110 basis points higher if tobacco and the estimated associated basket sales were excluded.  "Now, adjusting for this tobacco impact and the Easter shift, front-store comps were roughly flat in the quarter, sequentially improving from Q1.  Front store traffic decreased as customers continued to aggregate their trips and, at the same time, our average basket size continued to increase, reflecting the strength of our Loyalty program and the personalization it enables us to offer."

Pharmacy same-store sales were negatively impacted by approximately 160 basis points from recent generic drug introductions and by approximately 130 basis points from the implementation of Specialty Connect.  The implementation of Specialty Connect had a greater effect on revenues than prescription volumes because of the higher dollar value of specialty products, the company stated.

Commenting on the acquisition of Hispanic-owned pharmacy retailer Navarro Discount Pharmacy, Merlo said the company expects to maintain the current product mix and will share its learnings of Hispanic marketing and merchandising with other CVS markets where it makes sense.

"The Navarro brand is one of the most recognizable in the Hispanic marketplace.  We plan to retain it.  As you recall, we adopted a similar strategy in maintaining the Longs Drug name for our acquired locations in Hawaii and that has been successful," Merlo said.

The Navarro transaction is expected to be completed later this year.

In light of its "strong performance" during the quarter, the company raised and narrowed its earnings guidance range for the full year 2014.  It now expects to deliver adjusted EPS of $4.43 to $4.51, up from $4.36 to $4.50.  GAAP diluted EPS from continuing operations was raised to $4.16 to $4.24, up from $4.09 to $4.23.  It continues to expect to deliver 2014 free cash flow of $5.5 billion to $5.8 billion, while the 2014 cash flow from operations range was raised to $7.2 billion to $7.5 billion, up from $7.0 to $7.3 billion.  The company expects to deliver adjusted EPS of $1.11 to $1.14 and GAAP diluted EPS from continuing operations of $1.04 to $1.07 in the third quarter of 2014.

Source: Retailing Today 

Whole Foods Keeps Growing, Just Not As Fast

July 30, 2014

Same-store sales continue to decelerate at Whole Foods as the nation's leading natural and organic grocer continues to face traffic and ticket pressures caused by upstart rivals and established competitors.

Whole Foods sales in the second quarter ended July 6 increased 10% to nearly $3.4 billion from $3 billion the prior year while same store sales increased 3.9%, including a 60 basis points positive impact related to the timing of Easter.  Profits during the quarter increased 6.3% to $151 million, 41 cents a share, compared to prior year profits of $142 million, or 38 cents a share.

"Our business model is producing industry-leading sales per gross square foot, healthy returns on invested capital and strong operating cash flow," said Walter Robb, co-CEO of Whole Foods Market.  "We are seeing signs of stability in our sales trends and believe our strategic initiatives will help generate further momentum and product increasing returns on invested capital over the long term."

The company noted its stores generate average weekly sales of more than $736,000, or more than $1,000 per sq. ft.  Despite the high level of productivity, increased competition and reduced pricing at Whole Foods has put pressure on the company's margins and top line growth.

Both factors were evident earlier this year when the company reported second quarter results on May 6 and lowered its full year expectations for sales and profit growth.  The diminished view caused shares, which had been trading above $50 for most of the year at that time, to decline sharply.  The release of third quarter results and affirmation of the company's previously lowered outlook only served to send shares lower when the company reported results after the market closed on Wednesday.

Source: Retailing Today

Target Issues Preliminary Q2 Update

August 5, 2014

Just a few days after naming a new CEO, Target issued a preliminary update on its second quarter expenses related, in part, to the December 2013 data breach.

The company's financial results are expected to include gross expenses of $148 million, partially offset by a $38 million insurance receivable, related to the breach.  These expenses include an increase to the accrual for estimated probable losses for what the company believes to be the vast majority of actual and potential breach-related claims, including claims by payment card networks.

"Since the data breach last December, we have been focused on providing clarity on the company's estimated financial exposure to breach-related claims," said John Mulligan, interim president and CEO, CFO.  "With the benefit of additional information, we believe that today is an appropriate time to provide greater clarity on this topic."

The environment in the U.S. and Canada continues to be challenging for Target.  Mulligan added that results aren't yet where they need to be, but was optimistic about the company's progress, particularly in its efforts to drive U.S. traffic and sales, improve its Canadian operations and advance its digital transformation.

"With last week's announcement that the board has chosen Brian Cornell as Target's next chairman and CEO, we are excited to welcome Brian to the team and committed to working together to accelerate Target's transformation and become a leading omnichannel retailer," Mulligan said.

The company now anticipates its second quarter 2014 adjusted earnings per share will be within a range around $0.78 compared with prior guidance of $0.85 to $1.00 per share, reflecting flat comparable sales in its U.S. segment, with lower-than-expected EBITDA margin driven by promotional markdowns, as guests continue to spend cautiously and focus on value in the current environment; as well as softer-than-expected sales in its Canadian segment, combined with the impact of continued investments to clear excess inventory.

The company will provide complete second quarter results August 20.

Source: Retailing Today

July 2014 Manufacturing ISM Report On Business - PMI At 57.1%

August 1, 2014

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

Economic activity in the manufacturing sector expanded in July for the 14th consecutive month, and the overall economy grew for the 62nd consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report on Business.

The report was issued today by Bradley J. Holcomb, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.  "The July PMI registered 57.1 percent, an increase of 1.8 percentage points from June's reading of 55.3 percent, indicating expansion in manufacturing for the 14th consecutive month.  The New Orders Index registered 63.4 percent, an increase of 4.5 percentage points from the 58.9 percent reading in June, indicating growth in new orders for the 14th consecutive month.  The Production Index registered 61.2 percent, 1.2 percentage points above the June reading of 60 percent.  Employment grew for the 13th consecutive month, registering 58.2 percent, an increase of 5.4 percentage points over the June reading of 52.8 percent.  Inventories of raw materials registered 48.5 percent, a decrease of 4.5 percentage points from the June reading of 53 percent, contracting after five months of consecutive growth.  Comments from the panels are generally positive, while some indicate concern over global geopolitical situations."

Manufacturing expanded in July as the PMI registered 57.1 percent, an increase of 1.8 percentage points when compared to June's reading of 55.3 percent.  July's PMI reading of 57.1 is the highest reading since April 2011 when the PMI registered 58.9 percent.  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 July PMI indicates growth for the 62nd consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 14th consecutive month.  Holcomb stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through July (54.4 percent) corresponds to a 3.7 percent increase in real gross domestic product (GDP) on an annualized basis.  In addition, if the PMI for July (57.1 percent) is annualized, it corresponds to a 4.6 percent increase in real GDP annually."

Of the 18 manufacturing industries, 17 are reporting growth in July.

Source:  Institute for Supply Management

Online Labor Demand Edged Down 15,500 In July

July 30, 2014

• Following a strong June increase of 155,900, July showed a small loss
• States were mixed with about half showing small gains

Online advertised vacancies showed a small drop of 15,500 to 5,044,600 in July, according to The Conference Board Help Wanted OnLine Data Services.  The June Supply/Demand rate stands at 1.9 unemployed for each advertised vacancy with a total of 4.4 million more unemployed workers than the number of advertised vacancies.  The number of unemployed was 9.5 million in June.

"Labor demand continues to be at historically high levels with employer demand running at about 5 million ads each month," said Dr. Gad Levanon, Director of Macroeconomics and Labor Markets at The Conference Board.  "While the average monthly increases have become more modest since early 2013, the overall trend has helped lower unemployment levels and reduced the U.S. Supply/Demand rate from a peak of 5.2 in June 2009 to 1.9 in June 2014."

In July, professional occupations showed a small gain in Computer and Math (13,400) and Community and Social Services (3,500) but a drop in Healthcare (-8,300).  The Services/Production occupations showed losses with Office and Administration (-15,700) and Installation and Repair (-9,600).

Regional And State Highlights

• Fifteen of the 20 largest states posted losses in July
• Among the 50 states, 27 experienced gains while 23 declined

July Changes For States

In July, online labor demand was up in 27 states and down in 23 states.  The West and South experienced modest gains while the Northeast and Midwest posted declines.

The West experienced a modest gain of 1,800, with an increase of 1,900 in Arizona to 95,100.  Colorado grew 300, California dropped 1,800 to 546,900, and Washington fell 1,100 to 127,600.  Among the smaller states in the West, Utah gained 2,200, led by an increase in Sales and Related Occupations and Food Preparation and Serving-Related Occupations.  New Mexico rose 700, Hawaii increased by 200, Idaho dropped 1,800, and Oregon fell 600 to 68,200.

The South grew by 1,700 in July.  Out of the larger states in the region, North Carolina rose 1,300 to 128,600.  Florida and Georiga both fell by 2,500 while Texas dropped 1,400.  Maryland and Virginia both decreased by 1,000.  Among the smaller states, South Carolina was up 3,600 to 64,600.  This was the South's largest gain, led by an increase in Education, Training, and Library Occupations and Management Occupations.  Kentucky rose 1,200.  Alabama and West Virginia increased by 1,000 and 900 respectively, while Mississippi fell by 600.

The Northeast fell 11,700, reflecting a loss of 7,100 in New Jersey.  Massachusetts dropped 3,700 to 149,400, and New York decreased by 3,400 to 303,400.  Pennsylvania rose 4,700 to 218,300.  This was the largest gain in any state and was led by an increase in Sales and Related Occupations and Installation, Maintenance, and Repair Occupations.  In the smaller states, Maine gained 800, Vermont rose 500, and New Hampshire increased by 300.  Connecticut and Rhode Island both decreased by 100.

The Midwest dropped 2,300 in July.  The largest drop occurred in Michigan (-6,500).  Illinois fell 2,100 to 201,400.  Ohio and Wisconsin fell by 1,000 and 900 respectively.  Minnesota rose 4,400 to 123,700.  This was the largest gain in the Midwest region.  Minnesota's gain is partially due to the rise in Healthcare Practitioners and Technical Occupations and Office and Administrative Support Occupations.  Missouri fell 200.  Among the smaller states in the region, Kansas had an increase of 2,900 to 46,500, Iowa increased by 900, Indiana gained 600, and North Dakota and South Dakota inched up with gains of 400 and 100 respectively.

Metro Area Highlights

• In July, among the 20 largest metro areas, 4 (San Francisco, Minneapolis, San Jose, and Cleveland) gained and 16 declined
• Of the 52 metro areas for which Help Wanted OnLine provides monthly data, 28 lost advertisements, 21 gained, and 3 (Tucson, Louisville, and Kansas City) remained constant

Occupational Highlights

• In July, 7 of the 10 largest online job categories posted losses

Source: The Conference Board 

A $1,000 Increase In Home Prices Keeps More Than 200,000 Households Out Of The Market

August 4, 2014

Each $1,000 increase in the cost of a new median-priced home price forces 206,000 prospective buyers out of the marketplace, according to a new study by the National Association of Home Builders (NAHB).

The number of households affected varies across states and metro areas and largely depends on their population, income distribution and new home prices.

Among the states, the number of households who would no longer be eligible to qualify for a mortgage based on a $1,000 increase to a median-priced home ranges from a low of 313 in Wyoming to a high of 18,250 in Texas.

"This study highlights the real effects that building regulations have on housing affordability," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.  "Local, state and federal government officials need to know that higher regulatory costs have real consequences for working American families.  Oftentimes, these government regulations end up pushing the price of housing beyond the means of many teachers, police officers, firefighters and other middle class workers."

Based on national mortgage underwriting standards and incorporating the latest income distribution data from the American Community Survey and the U.S. Department of Housing and Urban Development, the report contains detailed results for more than 300 metro areas.

The analysis found that every $833 increase in fees paid during the construction process - such as the price of a construction permit or an impact fee - adds an additional $1,000 to the final price of the home.

Measured by local metro areas, the number of households who would be priced out of the market based on a $1,000 increase range from a low of 19 in Napa, California to a high of 5,742 in the New York-Northern New Jersey-Long Island, New York-New Jersey-Pennsylvania area.

Looking at affordable metro areas, where roughly 50 percent or more of households can afford new homes, the priced out effects are typically large and can often disqualify thousands of new home buyers, as in the case of Houston-Sugar Land-Baytown, Texas (4,234); Atlanta-Sandy Springs-Marietta, Georgia (4,135); and Las Vegas-Paradise, Nevada MSA (2,044).

Source: National Association of Home Builders

The Conference Board Employment Trends Index Increased In July

August 4, 2014

The Conference Board Employment Trends Index (ETI) increased in July.  The index now stands at 120.31, up from 119.92 (an upward revision) in June.  This represents a 6.6 percent gain in the ETI compared to a year ago.

"The six-month growth rate in the Employment Trends Index is the strongest in over two years, suggesting solid job growth is likely to continue in the coming months," said Gad Levanon, Director of Macroeconomic Research at The Conference Board.  "The pickup in economic activity in recent months will likely increase the need and willingness of employers to accelerate hiring."

July's increase in the ETI was driven by positive contributions from five of its eight components.  In order from the largest positive contributor to the smallest, these were: Initial Claims for Unemployment Insurance, Job Openings, Industrial Production, Number of Temporary Employees, and Real Manufacturing and Trade Sales.

The Employment Trends Index aggregates eight labor-market indicators, each of which has proven accurate in its own area.  Aggregating individual indicators into a compopsite index filters out "noise" to show underlying trends more clearly.

The eight labor-market indicators aggregated into the Employment Trends Index iclude:

• 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

Retail Industry Added 27,000 Jobs In July

August 1, 2014

The National Retail Federation calculated retail industry (excluding autos and gasoline) employment increased by 27,000 jobs in July.  NRF calculated that retail gained 232,000 jobs year-over-year.  The healthy and steady increase in retail employment was due to improved economic and seasonal factors in the second quarter and should provide for stronger growth in the second half of the year.

"Pickup in retail employment in July and the upward revisions to June and May are very encouraging," NRF Chief Economist Jack Kleinhenz said.  "The increase was due in part to seasonal hiring as well as improved business and consumer conditions.  No one can guarantee smooth sailing ahead even though overall retail payrolls are encouraging.  Choppy growth will continue."

"Recent data increasingly show that the economy is on better footing, reflecting improved consumer and business confidence.  Although the unemployment rate edged up, more seekers entered the labor force.  The nation's retailers are adding jobs at a healthy pace."

The U.S. Bureau of Labor Statistics Employment Situation Summary showed that total nonfarm payroll emplyment rose by 209,000 in July, slightly below industry expectations.  The unemployment rate ticked up to 6.2 percent and the civilian labor participation rate increased to 62.9 percent.

Source: National Retail Federation 

Strong Job Growth Sustained During The Summer

August 1, 2014

The economy generated a gain of 209,000 jobs in July, very close to the average of more than 200,000 per month over the past year.  This means that the trend in employment growth, which supported stellar second quarter GDP growth and strong consumer and business confidence, is holding up for now.  The unemployment rate has remained almost unchanged at 6.2 percent, still well above the natural rate of unemployment, which is about 5.5 percent.  This implies that the pace of job creation can continue for a few more months beyond the summer.  However, participation isn't increasing rapidly, with baby boomers retiring en masse.  Moreover, labor productivity, which has been low for a long time, may become a more important source of growth.  These forces could also begin to create more upward pressure on wages later this year.

Source: The Conference Board

Fastest Growing Retailers In The U.S.

August 1, 2014

At first glance the list of the nation's fastest growing retailers appears to be more of a hodgepodge of industry sectors than evidence of a single, defined trend.  From grocery conglomerates and discount specialty stores to home furnishing and athletic wear companies, the top players on STORES' Hot 100 Retailers List run the gamut.  The list, published annually in the August issue of STORES Magazine, consists of retail companies that reported the greatest increase in domestic sales between 2012 and 2013.  All public and private companies with more than $300 million in sales were eligible for the list.

"The eclectic quality of the list is an upbeat indicator for retail," said STORES Media Editor Susan Reda.  "While Albertson's grew mainly by acquisition, Wayfair's ascent is 12 years in the making as this online specialist benefits from renewed consumer interest in sprucing up their homes.

"It's becoming a familiar story in our industry - growth stems from new products, innovative thinking and one-of-a-kind customer experiences," Reda said.

Idaho-based grocery Albertsons claims the top spot on the 2014 list, with sales growth of 432.7 percent between 2012 and 2013.  Albertson's growth - to 2013 sales of $19.5 billion - has primarily come from mergers and acquisitions.

Home furnishings companies Wayfair and Conn's made their marks this year, landing at No. 2 and No. 4, respectively.  Boston-based Wayfair saw its sales increase 52.5 percent between 2012 and 2013, while Texas-based Conn's sales grew 39.2 percent during that time frame.  A revitalized housing market has helped the home furnishings sector in recent years as consumers are once again investing in their homes.

Specialty retail company Ascena Retail Group secured the No. 3 spot this year.  Suffem, New York-based Ascena operates more than 3,800 stores throughout the United States and Canada, including the Justice and Dress Barn brands, and recently reported annualized revenues of more than $4.5 billion.  Sales for Ascena Retail Group grew 49.1 percent between 2012 and 2013.

Michael Kors Holdings has had tremendous staying power the past few years in terms of continued company growth, making the top 10 each of the past three years, including No. 6 this year.  The New York-based company's U.S. sales increased 36 percent between 2012 and 2013.

No. 7 Under Armour continues to take the athletic world by storm, landing in the top 10 for the first time on sales growth of 34.8 percent.  The Baltimore-based company reported U.S. sales of $672 million in 2013.

Michigan-based grocer SpartanNash (5), Five Below (9) and Amazon.com (10) also placed in the top 10.

"Hot retailers do things better than their competitors, and they've clearly carved out a proposition for the consumer," said Kantar Retail Chief Knowledge Officer Bryan Gildenberg.  "Part of that success is being at the right place at the right time with the right products, and the other part of it is being smart enough to know the differences in those factors between themselves and their competitors; in a slow growth market like 2013, share gains equal growth."

Hot 100 List names nine companies who have "sustained sizzle"

Talk about staying power: Nine retailers are being recognized for having made the Hot 100 each year since its inception in 2006.  The sustained sizzlers, listed in order of total sales growth (and with 2014 rank):

• Amazon.com - 852% (10)
• Ascena Retail Group - 366% (3)
• O'Reilly Automotive - 225% (53)
• Urban Outfitters - 196% (39)
• J. Crew - 158% (38)
• Tractor Supply Co. - 150% (34)
• Dick's Sporting Goods - 137% (69)
• Dollar Tree - 126% (87)
• Ross Stores - 97% (86)

The Hot 100 Retailers list is the definitive annual ranking of the fastest growing retail chains in the United States.  Rankings are determined by increases in year-over-year domestic sales between 2012 and 2013.

Source: National Retail Federation

Inflation Remains Mixed Across Euro Area, Declines In U.S. And Japan

July 31, 2014

In June 2014, annual inflation as measured by the Harmonized Index of Consumer Prices (HICP) declined in the U.S. and Japan, but was mixed across Euro Area countries compared.

Although inflation remained steady in the Euro Area as a whole, price growth slowed in Belgium (from 0.8 to 0.7 percent), France (from 0.8 to 0.6 percent), Italy (from 0.4 to 0.2 percent) and Spain (from 0.2 to 0.0 percent), while it accelerated in Germany (from 0.6 to 1.0 percent), Austria (from 1.5 to 1.7 percent) and the Netherlands (from 0.1 to 0.3 percent).  Outside the Eurozone, Sweden (0.5 percent), the United Kingdom (1.9 percent), Norway (1.8 percent) and Denmark (0.4 percent) also experienced rising prices.  Switzerland experienced the largest decline in inflation (from 0.2 to -0.1 percent), returning to deflationary territory after two months of positive price growth.

"In June, inflation in the Euro Area as a whole held steady at its lowest level (0.5 percent) since the Great Recession," said Elizabeth Crofoot, Senior Economist with the International Labor Comparisons program at The Conference Board.  "But the broad range of inflation rates among membetr states - from negative or zero to nearly two percent - highlights the difficulty in setting a common monetary policy that will have a common impact on prices.  However in Japan, the slight dip in inflation (from 4.5 to 4.4 percent), the first since January, suggests that the combined impact of recent monetary expansion and an increased sales tax may be easing."

June inflation remains below 1 percent in all Euro Area countries compared, except Austria (1.7 percent) and Germany (1.0 percent).  Inflation is also above 1 percent in Japan (4.4 percent), the U.S. (1.9 percent) and Norway (1.8 percent).  June inflation was lower than price growth a year ago in all countries compared except Japan, the U.S., and Sweden.

Source: The Conference Board

Brian Cornell Named Chairman And CEO At Target

July 31, 2014

Retail and consumer products veteran Brian Cornell was named chairman and CEO at Target to fill two of the three roles previously held by the company's former top executive Gregg Steinhafel.

Cornell will assume his new responsibilities at Target on August 12 after most recently serving as CEO of PepsiCo Americas Foods for two years.  He brings a well-rounded background in retail and CPG to Target.  Prior to PepsiCo, Cornell served as president and CEO of Walmart's Sam's Club division for roughly three years.  He came to Sam's Club after serving as CEO of Michaels Stores and also held the role of chief marketing officer at Safeway.  Earlier in his career, Cornell held general management positions at PepsiCo North America Foodservice.

In a brief statement announcing his appointment, Target said Cornell's top priorities would be to accelerate the company's performance and advance its omnichannel evolution.

"As we seek to aggressively move Target forward and establish the company as a top omnichannel retailer, we focused on identifying an extraordinary leader who could bring vision, focus and a wealth of experience to Target's transformation," said Roxanne S. Austin, the interim non-executive chair of the Target board who led the search for Steinhafel's replacement.  Steinhafel, who also held the title of president, stepped down in early May and his responsibilities were filled on an interim basis by CFO John Mulligan.

"The board is confident that Brian's diverse and broad experience in retail and consumer products as well as his passion for leading high performing teams will propel Target forward."

Cornell said he was honored and humbled to join Target as the first CEO hired from outside the company.

"I am committed to empowering this talented team to realize its full potential, lead change and strengthen the love guests have for this brand," Cornell said.  "As we create the Target of tomorrow, I will focus on our current business performance in both the U.S. and Canada and on how we accelerate our omnichannel transformation."

In exchange for his services, Cornell will receive a lucrative compensation package that includes an annual salary of $1.3 million, a 2014 pro-rated cash incentive equal to 150% of his base sales and stock-based awards with a potential payout of $3.75 million.  In addition, in 2015 Cornell will receive stock-based awards with a potential value of $9 million.  Target is also on the hook to compensate Cornell for incentive awards and grants he forfeits by leaving PepsiCo.  Target said it would provide Cornell with a make-whole equity grant and a make-whole pro-rata annual bonus valued at more than $19 million, minus whatever portion of that amount Cornell is able to retain from his former employer.  Target said it was unable to determine that amount at the time details of his compensation were disclosed in a filing with the Securities and Exchange Commission.

Source: Retailing Today

Q2 GDP: Rebound Exceeds Expectations

July 30, 2014

The U.S. Census Bureau of Economic Analysis today reported 4.0 percent annualized growth in real Gross Domestic Product for the second quarter of 2014.

Some of the past quarter's growth performance reflects a catch-up from the dismal first quarter performance.  But this stellar growth figure also suggests that the economy has gained some momentum and could hold on to this new found dynamism through the second half of 2014.  We find further confirmation in The Conference Board Leading Economic Index for the U.S. as well as the continued strengthening of the Consumer Confidence Index, released yesterday.  Job growth has driven income growth.  And consumers have clearly been spending on some long-delayed purchasing plans.  As a result, business investment is beginning to pick up.  These gains in consumption and investment could be accompanied by better numbers on export trade in the second half of the year, provided the global economy doesn't slow much further.  In short, the economic doldrums of late 2013 and early 2014 are likely to be in the rear view mirror.

Source: The Conference Board

The Conference Board Consumer Confidence Index Improves Again

July 29, 2014

The Conference Board Consumer Confidence Index, which had improved in June, increased in July.  The Index now stands at 90.9, up from 86.4 in June.  The Present Situation Index increased to 88.3 from 86.3, while the Expectations Index rose to 92.7 from 86.4 in June.

Says Lynn Franco, Director of Economic Indicators at The Conference Board: "Consumer confidence increased for the third consecutive month and is now at its highest level since October 2007 (95.2).  Strong job growth helped boost consumers' assessment of current conditions, while brighter short-term outlooks for the economy and jobs, and to a lesser extent personal income, drove the gain in expectations.  Recent improvements in consumer confidence, in particular expectations, suggests the recent strengthening in growth is likely to continue into the second half of this year."

Consumers' assessment of current conditions improved in July.  Those claiming business conditions are "good" edged down to 22.7 percent from 23.4 percent, while those stating business conditions are "bad" was virtually unchanged at 22.7 percent.  Consumers' appraisal of the job market was more favorable.  Those saying jobs are "plentiful" increased to 15.9 percent from 14.6 percent, while those claiming jobs are "hard to get" remained unchanged at 30.7 percent.

Consumers' expectations were more optimistic in July.  The percentage of consumers expecting business conditions to improve over the next six months increased to 20.2 percent from 18.4 percent, while those expecting business conditions to worsen held steady at 11.5 percent.  Consumers were more positive about the outlook for the labor market.  Those anticipating more jobs in the months ahead increased to 19.1 percent from 16.3 percent, while those anticipating fewer jobs declined to 16.4 percent from 18.4 percent.  Slightly more consumers expect their incomes to grow, 17.3 percent in July versus 16.7 percent in June, while those expecting a drop in their incomes declined to 11.0 percent from 11.4 percent.

Source: The Conference Board