Weather Trends: August 2014

July 28, 2014

WTI expects August 2014 temperatures to trend similar to last year for the U.S. as a whole.  Much of the East will trend warmer than last year with the Southeast also trending warmer than normal.  Summer clearance promotions will see the biggest returns during the first three weeks of the retail month in the eastern half of the nation.  A sharp change to colder weather at the end of the month in the North will be more favorable for back-to-school and autumn categories.  Precipitation will be greater than last year across the Plains for the month overall.  Wetter trends in the final week of August will be an additional positive for autumn categories in the East.  Hurricane activity will continue to run below normal; however, should a storm develop and threaten the U.S. mainland, the Texas Gulf Coast will stand the highest risk of impact.

Source: Retailing Today, Weather Trends International

Lowe's To Build Customer Support Center In Indy

July 22, 2014

Lowe's plans to build a customer support center in Indianapolis, a move that will create up to 1,000 new jobs by 2016.

The world's second largest home improvement retailer plans to invest $20.5 million to purchase, renovate and equip a 140,000 sq. ft. office facility at Intech Park 12, 6620 Network Way, on the northwest side of Indianapolis.  The new customer support center will support stores and Internet sales, delivery services and repair services for Lowe's customers across the United States.  The facility is expected to be operational in the first quarter of 2015 and will complement the company's existing customer support centers located in Wilkesboro, North Carolina, and Albuquerque, New Mexico.

"Indiana provides national companies like Lowe's with the perfect building blocks for success," said Governor Mike Pence.  "We have taken all the parts required - a central location, low taxes and a skilled workforce - and assembled them perfectly here in Indiana.  Indiana is a state that works for business because we have built the business climate companies like Lowe's need for growth and success."

Lowe's, which currently employs nearly 7,900 people in Indiana, plans to begin hiring for positions at the new customer support center immediately.  EmployIndy will offer assistance during the hiring process.  Available positions, beginning with the site director position, will be posted this week with additional positions to follow.  Applications are accepted online at Lowes.com/careers.

"We chose Indianapolis becaus of the talented and experienced workforce who we believe can provide outstanding service to our customers," said Don Easterling, Lowe's VP, contact center.  "Indianapolis adds a strategic Midwest location to our network of customer support centers located in North Carolina and New Mexico.  We appreciate the support of both state and local officials that helped make this a win-win project."

The Indiana Economic Development Corporation offered Lowe's Home Centers up to $5,500,000 in conditional tax credits and up to $100,000 in training grants based on the company's job creation plans.  These tax credits are performance-based, meaning until Hoosiers are hired, the company is not eligible to claim incentives.  The City of Indianapolis will consider tax abatement and additional funding for the direct infrastructure associated with the facility at the request of Develop Indy, a business unit of the Indy Chamber.

"Internationally recognized companies, like Lowe's, are choosing Indy as the place to expand because of our welcoming business climate, central location, and talent pool," said Mayor Greg Ballard.  "Indy has seen tremendous business growth this year, and as the city's unemployment rate continues to fall, we look forward to continuing this course."

With national companies like Lowe's picking the state for their new operations, Indiana's workforce growth in June was the largest in the nation.  During the past year, Indiana has added more than 53,000 Hoosiers to its labor force.  The state's unemployment rate has declined 1.7% over that period, which is the ninth largest decrease in the nation.

Source: Retailing Today  

Remodeler Confidence Regains Momentum

July 24, 2014

The National Association of Home Builders (NAHB) Remodeling Market Index (RMI) rose three points to 56 in the second quarter of 2014, regaining the momentum built in 2013.  This is the fifth consecutive quarter for an RMI reading above 50.

An RMI above 50 indicates that more remodelers report market activity is higher (compared to the prior quarter) than report it is lower.  The overall RMI averages ratings of current remodeling activity with indicators of future remodeling activity.

"With many home owners on better financial footing, home remodeling has become more popular," said NAHB Remodelers Chair Paul Sullivan, CAPS, CGR, CGP, of Waterville Valley, New Hampshire.  "The completion of postponed work has helped remodelers in all regions regain confidence in the remodeling market."

The RMI's future market conditions index rose to 56 from 52 in the previous quarter, under the strength of an increase in all four of its subcomponents: calls for bids, amount of work committed for the next three months, backlog of jobs and appointments for proposals.

The current market conditions component of the RMI increased three points to 56 this quarter.  Remodeling jobs valued at $25,000 or more rebounded to 54, the same level as the end of 2013.  Smaller remodeling jobs and maintenance and repair components performed well this quarter with readings of 56 and 58, respectively.

"The recent improvement in the job market has helped restore remodelers' confidence after a dip in the first quarter that was probably in part weather-related.  As homeowners feel more secure about their economic situation, they become more willing to undertake remodeling projects - especially larger, discretionary projects," said NAHB Chief Economist David Crowe.  "In addition, fewer new home builders are looking to remodeling as a way to supplement their revenue, and this has somewhat reduced competition for remodeling projects."

Source: National Association of Home Builders 

Dollar Tree To Acquire Family Dollar

July 28, 2014

Dollar Tree said it would acquire Family Dollar in a transformational cash and stock deal valued at $8.5 billion to create a company with more than 13,000 stores and annual sales of $18 billion.

The deal was unanimously approved by the boards of both companys and involves Dollar Tree paying Family Dollar shareholders $59.60 in cash and $14.90 in equivalent Dollar Tree shares.

"We will continue to operate under the Dollar Tree, Deals, and Dollar Tree Canada brands, and when this transaction is complete, we will operate under the Family Dollar brand as well," said Dollar Tree CEO Bob Sasser.  "Throughout our history, we have strived continuously to evolve and improve our business.  This acquisition, which enhances our footprint and diversifies our company, will enable us to build on that progression, and importantly, positions Dollar Tree for accelerated growth.  By offering both fixed-price and multi-price point formats and an even broader, more compelling merchandise assortment, we will be able to provide even greater value and choice to a wider array of customers."

Sasser said the deal would extend the company's reach to lower-income customers and strengthen and diversify its store footprint while also delivering significant synergies by leveraging best practices of the organizations.  Dollar Tree anticipates that the transaction will result in $300 million of annual run-rate synergies to be fully realized by the end of the third year after closing.

Plans call for Family Dollar CEO Howard Levine to remain with the combined company, reporting to Sasser, and serve as a member of the board.

"For more than 54 years, Family Dollar has provided value and convenience to customers.  Dollar Tree also has a rich history of providing great value to customers, and together, as one company, we can provide more customers with even greater value and convenience," Levine said.

The deal is a culmination of a process that began last winter and included discussions of potential combinations with other partners, Levine said.  The comprehensive review process ultimately determined the combination with Dollar Tree was in the best interest of shareholders.

"This combination will enable Family Dollar to accelerate efforts to improve the business and will benefit our dedicated team members who will now be part of a larger, more diverse organization," Levine said.  "I am excited about our future with Dollar Tree, and I look forward to working with the Dollar Tree team to complete the combination as quickly as possible to realize the compelling benefits for all our stakeholders."

Source: Retailing Today

'Solid' Start In Fiscal 2015 For Supervalu

July 24, 2014

Supervalu posted $5.23 billion in net sales for the first quarter, a decrease of 0.1% from $5.24 billion last year; but president and CEO Sam Duncan expressed confidence in the company's performance, saying it is off to a solid start across business segments.

"Our first quarter results reflect the investments we are making this year to position the company for future success and I am pleased with our operating performance," said Duncan.

Save-A-Lot's net sales for the quarter were $1.35 billion, a 6.5% increase frm $1.27 billion last year, driven by a network identical store sales increase of 5.6%.  Identical store sales for corporate stores within the Save-A-Lot network were up 7.2%.

The company's Independent Business net sales for the quarter were $2.4 billion, a decrease of 2.6% from $2.46 billion last year, primarily due to lost accounts including lower sales to one New Albertson's banner that completed the transition to self-distribution and lower military sales, partially offset by net new business.

Retail Food net sales for the quarter remained flat compared to last year's $1.43 billion.  Identical store sales were up 0.6%.

On March 21, 2013, the company completed the sale of five retail grocery banners - Albertson's Acme, Jewel-Osco, Shaw's and Star Market.

Supervalu operates 3,320 stores, which include 1,805 independent stores serviced primarily by the company's food distribution business, 1,325 Save-A-Lot stores, of which 931 are operated by licensee owners; and 190 traditional retail grocery stores.

Source: Retailing Today

Gross Domestic Product By Industry: First Quarter 2014

July 25, 2014

Real gross domestic product (GDP) decreased at an annual rate of 2.9 percent in the first quarter of 2014 after increasing 2.6 percent in the fourth quarter of 2013.  Both private services and goods-producing industries contributed to the decrease, while the government sector increased slightly.  Durable-goods manufacturing; wholesale trade; and agriculture, forestry, fishing, and hunting were the leading contributors to the decrease in GDP.  Overall, 16 of 22 industry groups contributed to the 2.9 percent decrease in U.S. economic activity.

• Durable-goods manufacturing real value added - a measure of an industry's contribution to GDP - decreased 8.4 percent after an increase of 3.5 percent in the fourth quarter of 2013.
• Wholesale trade decreased 8.7 percent after an increase of 6.9 percent in the fourth quarter.
• Agriculture, forestry, fishing, and hunting decreased 31 percent after a decrease of 7.0 percent in the fourth quarter.

The downturn in the first quarter of 2014 was widespread.  Overall, 19 out of 22 industry groups contributed to the 5.5 percentage points downturn in real GDP; the leading contributors to the downturn were wholesale trade; professional, scientific, and technical services; and durable-goods manufacturing.

Other highlights:

• Growth in real value added slowed for nondurable-goods manufacturing in the first quarter, however, the industry group contributed the largest positive offset to the decrease in real GDP in the first quarter.  Nondurable-goods manufacturing, which includes petroleum and coal product manufacturing, increased 15.1 percent in the first quarter of 2014, after an increase of 18.6 percent in the fourth quarter.
• Professional, scientific, and technical services turned down in the first quarter, decreasing 6.5 percent after increasing 5.9 percent in the fourth quarter.  Professional, scientific, and technical services includes industries such as legal services, engineering, and administrative management and management consulting services.
• Federal government turned up 3.2 percent in the first quarter - its first increase since the second quarter of 2011.

Source: Bureau of Economic Analysis

New Home Sales Down 8.1 Percent In June

July 24, 2014

Sales of newly built, single-family homes fell 8.1 percent to a seasonally adjusted annual rate of 406,000 units in June, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.  Sales numbers for May were revised downward to 442,000.

"The numbers are a little disappointing, but May was unusually high and some pull back isn't completely unexpected," said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.  "Our surveys show that builders are confident about the future and we are still seeing a gradual upward trajectory in housing demand."

"With continued job creation and economic growth, we are cautiously optimistic about the home building industry in the second half of 2014," said NAHB Chief Economist David Crowe.  "The increase in existing home sales also bodes well for builders, as it is a signal that trade-up buyers can move up to new construction."

Regionally, new home sales were down across the board.  Sales fell 20 percent in the Northeast, 9.5 percent in the South, 8.2 percent in the Midwest and 1.9 percent in the West.

The inventory of new homes for sale held steady at 197,000 units in June.  This is a 5.8 month supply at the current sales pace.

Source:  National Association of Home Builders

Strong Remodeling Spending To Slow Pace Heading Into 2015

July 24, 2014

Growth in home improvement activity is expected to peak during the second half of 2014 and then begin to ease heading into next year, according to the Leading Indicator of Remodeling Activity (LIRA) released today by the Remodeling Futures Program of Harvard University.  Revised estimates from the U.S. Census Bureau show the home improvement market grew 5.6% in 2013.  For 2014, the LIRA projects annual gains in home improvement spending of 9.9% with annual growth slowing to 7.0% in the first quarter of 2015.

"With the economy improving slower than expected and home sales struggling to keep up with last year's pace, the recent strong gains in remodeling spending will likely moderate later this year," says Chris Herbert, Research Director at the Joint Center.  "Although this presents a challenge for the remodeling industry, the LIRA continues to project significant growth going into 2015."

"Despite some headwinds, there continue to be promising signs for remodeling," says Kermit Baker, director of the Remodeling Futures Program at the Joint Center.  "Remodeling contractor sentiment remains positive and house prices continue to rise in most areas of the country."

Source: Joint Center For Housing Studies at Harvard University 

Greg Foran New CEO At Walmart U.S. As Bill Simon Departs

July 24, 2014

Walmart named Greg Foran president and CEO of its U.S. stores division to replace Bill Simon, who is leaving the company after an eight-year run.

Foran is a relative newcomer at Walmart, who joined the company in October 2011 and by March of 2012 had been elevated to the role of president and CEO of Walmart China.  In that capacity, he reported to current Wal-Mart Stores president and CEO Doug McMillon, who at the time served as president and CEO of Walmart International.  McMillon assumed his new role earlier this year prompting speculation that Simon would leave the company if he were passed over for the top job.

"Greg is one of the most talented retailers I've ever met.  His depth of knowledge and global experience will bring a fresh perspective to our business," said McMillon.  "His passion for fresh food, experience in general merchandise and commitment to e-commerce will help us serve our customers even more effectively for years to come."

Although he only briefly oversaw Walmart's China operations, the team made significant progress with its assortment, pricing, store operations and compliance as Foran led strategic investments in the supply chain and improved the store portfolio, according to a Walmart statement.  Foran was elevated to the role of president and CEO of Walmart Asia earlier this year to oversee the retailers business in Japan and India as well as China. 

McMillon spoke highly of Simon who will transition out of the company in the next six months.

"During Bill's eight years of service to Walmart, his passion for our mission, dedication to our associates and our customers, and innovative thinking pushed us forward," McMillon said.  "From the very beginning, his vision led us to lower the cost of health care through our $4 prescription offering.  And, most recently, he put us on a path to future growth with small formats and efforts that integrate digital and physical retail."

Foran will assume his new responsibilities on August 9.  Prior to joining Walmart three years ago, Foran held a number of roles with Woolworths, the leading retailer in Australia and New Zealand.  He served as the managing director of supermarkets, liquor and petrol with responsibility for more than $40 billion in sales at that time.  Under Foran's leadership, the business grew sales and market share in a strong competitive market.  Earlier in his career, Foran served as general manager of Big W, Woolworth's industry leading discount store business and as general manager of Dick Smith Electronics.

"I've worked closely with Greg for the past few years and I've seen firsthand his passion for retail.  I'm confident that Greg's strong leadership skills and alignment with our culture will serve our customers and associates well," McMillon said.  "I'm excited what he will bring to this important part of our business."

"Being asked to lead the Walmart U.S. business is a privilege that I don't take lightly," said Foran.  "I am excited to get started.  The needs of our customers are changing dramatically and we have an enormous opportunity to serve them in new and different ways.  We must be fierce advocates for our customers, work meticulously to exceed their expectations and earn their trust every day."

Simon said it had been an honor to work for Walmart for the past eight years, adding, "this felt like the right time to move on and focus on my next opportunity.  I look forward to helping the company as much as I can in the next six months."

Walmart said it would name Foran's successor as president and CEO of Walmart Asia at a later date.

Source: Retailing Today

NRF Revises Annual Economic Forecast, Expects Stronger Second Half Of Year

July 23, 2014

The National Retail Federation today lowered its retail sales forecast for 2014 because of slow growth recorded during the first half of the year, but said sales are expected to grow significantly faster over the next five months.  NRF forecasted in January that retail sales would grow 4.1 percent in 2014 over 2013, but today's revision lowers the forecast to 3.6 percent.

NRF calculated that sales grew 2.9 percent during the first half of the year and are expected to grow at least 3.9 percent during the second half.  The numbers include general retail sales and non-store sales, and exclude automobiles, gasoline stations, and restaurants.

No retailer was immune to the doldrums witnessed during the first quarter, and as a result, the year's growth trajectory was impacted," said NRF President and CEO Matthew Shay.  "That said, there is plenty of evidence that the second half of the year will be better for the industry as consumers begin to feel more optimistic about their spending decisions.

"And though we maintain realistic expectations of retail sales growth in 2014, we are optimistic that the chances for a stronger economy still exist," continued Shay.

"The severe weather and other factors we experienced earlier this year have taken their toll on retail, but most of those problems are behind us," said NRF Chief Economist Jack Kleinhenz.  "A second look at our forecast shifted our expectations slightly, but it's important to note that the outlook is positive.  Sales are growing and we expect them to continue at a moderate pace."

In this month's Monthly Economic Review, Kleinhenz noted,"...one of the worst winters in recent memory kept shoppers home during the first quarter, and weak numbers for real estate, inventories and exports continued to hamper the economy through the second quarter.  However, employment has grown at its strongest pace since 2005, business and consumer confidence have edged higher, manufacturing activity has expanded and inflation pressures remain tame, improving expectations for the second and third quarters."

Source: National Retail Federation

Back-To-School/College Spending Shows Slight Year-Over-Year Improvement

July 17, 2014

Families this summer will spend slightly more on back-to-school items than they did in 2013.  According to NRF's 2014 Back-to-School Survey, the average family with children in grades K-12 will spend $669.28 on apparel, shoes, supplies and electronics, up 5% from $634.78 in 2013.

NRF broke out spending by grade, and according to the survey, families with high school students will spend the most.  The survey found the average family shopping for high school students will spend $682.99, while spending on middle school/junior high comes in a close second at $682.13.  Parents with elementary school-age children will spend an average of $580.94.

Total spending on back to school will drop slightly to $26.5 billion as the survey found there are slightly fewer students in households this summer.

Overall, every category will see an increase in spending, including healthy increases in average spend on supplies and electronics.  According to the survey, back-to-school shoppers will spend an average $212.35 on electronic items, up 7% from $199.05 in 2013, with total spend expected to reach $8.4 billion.  High school students and their families specifically will spend an average $229.88 on electronic items.

Perhaps due to school districts' growing requests for classroom supply contributions, spending on school supplies will increase 12% to an average of $101.18, compared to $90.49 in 2013.  In addition, shoppers will spend an average of $231.30 on clothes, up from $230.85, and $124.46 on shoes, up from $114.39 in 2013.

The survey found 53.8% of back-to-school shoppers will shop a clothing store, up from 51.5% last year and a survey high; 27.5% will shop at electronics stores, up from 25.9% last year and another survey high.  Six-in-10 (64.4%) will visit discount stores, 59.1% will shop at their favorite department store, 42% will shop at office supply stores, 38.2% will shop online, and 20.5% will shop at drug stores.

The survey also found 36.7% of smartphone owners shopping for school items will research products using their mobile device, up from 34.7% last year and the highest since NRF started asking in 2011; one-in-five (21.8%) will make a purchase via their smartphone, up from 18.2% last year and another survey high.  And while many will simply shop online directly through their smartphone, one-quarter (25.1%) will use their device to find information about a physical store.

School shoppers that own tablets will also use their device more to shop this summer; 31.4% will purchase school items via their tablet, up from 29.9% last year, and 45% will research products, up from 41.8% last year.

In addition, NRF's 2014 Back-to-College Survey found the average college student and their family will spend $916.48 on dorm furniture, school supplies, electronics and more, up 10% from $836.83 in 2013.  Total college spending is expected to reach $48.4 billion.  Combined college and school spending is expected to reach $74.9 billion.

When it comes to mobile usage, nearly six-in-10 (57.8%) will use their smartphone in some fashion as they shop for college items.  Of those with smartphones, the survey found one-third (33.8%) will research products, the highest since NRF added mobile shopping questions to its survey in 2011.  Additionally, one-in-five (22.4%) will purchase items, up from 19.1% last year and another survey high, and 29.8% will look up retailer information, up from 20.9% in 2013.  More than half (54.5%) of tablet owners will use their tablet to shop for college items.  Specifically, 37.4% will research products, and 27% will use their tablet to purchase items.

Source: Retailing Today 

July Busy Month For Sam's Club

July 17, 2014

Sam's Club opened three new locations this month including locations near Chicago, Fort Worth and Wichita, Kansas, that pushed its club count to 630 units.

The Wichita location at 3084 N. Maize Road opened on July 17 and provided Sam's with an opportunity to remind current and prospective members of its value proposition.  For example, Sam's noted that it recently became the first U.S. retailer to actively implement chip-enabled credit card reader technology in its clubs and also recently introduced a new credit card which has an embedded chip designed to protect cardholders from fraud.  The new card also features a cash back program giving members the opportunity to earn cash back on all purchases, up to $5,000 per year.

The Wichita location featured Sam's now familiar trio of health services that includes a pharmacy, optical and hearing aid centers.  To expose residents to those services, Sam's provided a wide range of free screenings on opening day and the weekend of July 18-19.

Earlier in the month, Sam's Club opened locations in Montgomery, Illinois, a far western suburb of Chicago and Burleson, Texas, a half hour due south of Fort Worth.  The location in Montgomery, at 1050 Ogden Avenue, also featured health care screenings, and a bit of grand pening novelty.  The club offered members the opportunity to experience Marvel 3D printing and create miniature versions of themselves with their faces on the bodies of Marvel superheroes.

The 3D capability brought a bit of "wow" factor to the opening as did some big name Chicago sports stores.  Former Bears defensive tackles Dan Hampton and Anthony Adams were on hand along with former Blackhawks coach Denis Savard.

The location near Fort Worth in Burleson at 600 N. Burleson Boulevard also featured the Marvel 3D experience and former Dallas Cowboys great Charles Haley was on hand for autograph signings.

Source: Retailing Today

The Conference Board Leading Economic Index For The U.S. Increases

July 18, 2014

The Conference Board Leading Economic Index for the U.S. increased 0.3 percent in June to 102.2, following a 0.7 percent increase in May, and a 0.3 percent increase in April.

"Broad-based increases in the LEI over the last six months signal an economy that is expanding in the near term and may even somewhat accelerate in the second half," said Ataman Ozyildrim, Economist at The Conference Board.  "Housing permits, the weakest indicator during this period, reflects some risk to this improving outlook.  But favorable financial conditions, generally positive trends in the labor markets and the outlook for new orders in manufacturing have offset the housing market weakness over the past six months."

"The CEI shows the pace of economic activity continued to expand moderately through June," said Ken Goldstein, Economist at The Conference Board.  "Stronger consumer demand driven by sustained job gains and improving confidence remains the main source of improvement for the U.S. economy.  In addition to a stronger market, more business investment could also provide an upside to the overall economy."

The Conference Board Coincident Economic Index (CEI) for the U.S. increased 0.2 percent in June to 109.2, following a 0.3 percent increase in May, and a 0.2 percent increase in April.

The Conference Board Lagging Economic Index (LAG) for the U.S. increased 0.5 percent in June to 124.4, following a 0.3 percent increase in May, and a 0.4 percent increase in April.

Source: The Conference Board

South Pushes Nationwide Housing Starts Down 9.3 Percent In June

July 17, 2014

Nationwide housing production fell 9.3 percent to a seasonally adjusted annual rate of 893,000 units in June, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.  The drop was due primarily to a nearly 30 percent decline in the South.  All other regions posted monthly gains.

"A modest 2.6 percent increase in single-family permits falls in line with the general optimism that we are hearing from our builders," said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.

Single-family housing starts were down 9 percent to a seasonally adjusted annual rate of 575,000 units in June, while multifamily production fell 9.9 prcent to 318,000 units.

Regionally in June, combined single and multifamily housing production rose in the Northeast, the Midwest and the West, with respective gains of 14.1 percent, 28.1 percent and 2.6 percent.  Total production fell by 29.6 percent in the South, the nation's largest region.

"Take away the South and the nationwide housing starts would have been in positive territory this month," said NAHB Chief Economist David Crowe.  "This sharp regional decline could be due in part to lots and labor shortages, which are particularly acute in that part of the country.  However, the general direction of housing production is trending upward, and we expect 2014 to be a positive year."

Issuance of building permits registered a 4.2 percent decline to a seasonally adjusted annual rate of 963,000 units in June.  Multifamily permits dropped 14.9 percent to 332,000 units while single-family permits increased 2.6 percent to 631,000 units.

The Northeast, South and West registered overall permit losses of 15.5 percent, 6.3 percent and 1.8 percent, respectively, while the Midwest posted a 6.6 percent gain.

Source: National Association of Home Builders 

NRF: Electronics, School Supplies Drive Increased Back-To-School/College Spending This Year

July 17, 2014

Driven by increased demand for electronic items and parent's need to restock their children's school supplies from last year, families this summer will spend slightly more on back-to-school items than last year.  According to NRF's 2014 Back-to-School Survey, the average family with children in grades K-12 will spend $669.28 on apparel, shoes, supplies and electronics, up 5 percent from $634.78 last year.  Total spending on back to school will drop slightly to $26.5 billion as the survey found there are slightly fewer students in households this summer.

Combined spending for back to school and college is expected to reach $74.9 billion.

"Slow improvements in the economy may have contributed to the growth in confidence among back-to-school shoppers, and while we are encouraged by the overall tone of the results and expect to see continued improvement in consumer spending through the year, we know Americans are still grappling with their purchase decisions every day," said NRF President and CEO Matthew Shay.  "Throughout the history of this survey, spending has fluctuated based on family needs each year, and this summer, we expect parents to continue to use caution, but also make smart decisions for their family budget that is a good balance between what their children 'want' and what they actually need."

NRF this year broke out spending by grade, and according to the survey, families with high school students will spend the most.  The survey found the average family shopping for high school students will spend $682.99, while spending on middle school/junior high comes in a close second at $682.13.  Parents with elementary school-age children will spend an average of $580.94.

Source: National Retail Federation 

CVS Acquires Navarro In South Florida

July 14, 2014

It is one of the smaller acquisitions CVS Caremark has done, but the purchase of the 33-unit Miami-based Navarro Discount Pharmacy could have big implications.

CVS Caremark late Monday said it reached an agreement with Navarro, the largest Hispanic owned drugstore chain in the U.S., to acquire 33 stores and Navarro Health Services, a specialty pharmacy serving patients with complex or chronic diseases.  CVS Caremark operates more than 7,600 stores, but said it will continue operating the acquired units under the Navarro banner.

"The acquisition of Navarro wil strengthen CVS pharmacy's position in the Hispanic marketplace, the fastest growing demographic in the U.S., and we are excited to be adding the Navarro Discount Pharmacy brand to the CVS pharmacy family," said Helena Foulkes, president of CVS/pharmacy.

"Like CVS pharmacy, Navarro is committed to improving patient health and providing individualized attention," said Juan Ortiz, Navarro's CEO.  "The combination of our stores will continue our tradition of excellent pharmacy care and high quality products."

Navarro caters to South Florida's heavily Hispanic and ethnic marketplaces and further differentiates itself by offering many products and services that are less prevalent in traditional drugstores such as wireless phones and designer fragrances.

Source: Retailing Today

Builder Confidence Surpasses Key Benchmark In July

July 16, 2014

Builder confidence in the market for newly built single-family homes reached an important milestone in July, rising four points to a reading of 53 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today.  Any reading over 50 indicates that more builders view sales conditions as good than poor.

"This is the first time that builder confidence has been above 50 since January and an important sign that it is strengthening as pent-up demand brings more buyers into the marketplace," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.

"An improving job market ges hand-in-hand with a rise in builder confidence," said NAHB Chief Economist David Crowe.  "As employment increases and those with jobs feel more secure about their own economic situation, they are more likely to feel comfortable about buying a home."

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 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.

All three HMI components posted gains in July.  The index gauging current sales conditions increased four points to 57, while the index measuring expectations for future sales rose six points to 64 and the index gauging traffic of prospective buyers increased three points to 39.

The HMI three month moving average was up in all four regions, with the Northeast and Midwest posting a one-point and two-point gain to 35 and 48, respectively.  The West registered a five-point gain to 52 while the South rose two points to 51.

Source: National Association of Home Builders

Family Dollar Stays Positive Following Q3 Results

July 20, 2014

Just a month after activist investor Carl Icahn became Family Dollar's largest shareholder prompting concerns of a hostile takeover, the company reported its third straight quarterly decline in same-store sales.

Same-store sales for the third quarter ended May 31 decreased 1.8% because of fewer customer transactions, partially offset by an increase in the average customer transaction value.  Sales in the third quarter of fiscal 2014 were strongest in the consumables category, driven primarily by strong growth in refrigerated/frozen food and tobacco.

Meanwhile, net sales increased 3.3% to $2.66 billion from $2.57 billion in the prior-year quarter.

"We are executing our previously announced restructuring initiatives to improve our performance," said chairman and CEO Howard R. Levine.  "Our recent investment to permanently lower prices is resonating with customers; we are seeing savings from our workforce optimization efforts; and we are on track to close approximately 370 underperforming stores by the end of the fiscal year.  We remain confident that these steps will position the company to improve our financial performance and deliver higher long-term shareholder returns."

Levine said that the company's results reflected not only economic challenges facing its core customers but also an intense competitive environment.  But he's remaining positive because although same-store sales did drop for the quarter, they actually improved in all four merchandise categories compared to its second-quarter results - a sign of improving trends.

Gross profit for the quarter was $910.9 million or 34.3% of net sales.  During the quarter, the company implemented a series of restructuring initiatives, including plans to close approximately 370 underperforming stores across the chain by the end of fiscal 2014.  As a result, the company incurred a $1.5 million inventory write-down in an effort to sell through merchandise at stores scheduled to close.

Excluding the inventory write-down, adjusted third quarter gross profit increased 2.2% to $912.3 million, or 34.3% of net sales, compared to $892.5 million, or 34.7% of net sales, in the third quarter of fiscal 2013.  As a percentage of sales, the impact on gross profit of stronger sales of lower-margin consumables, lower markups and higher markdowns was partially offset by lower inventory shrinkage.

During the quarter, the company opened 111 new stores, closed 3 stores and renovated, relocated or expanded 266 stores.

As part of its ongoing business review, the company lowered prices on nearly 1,000 basic items, investing more than $50 million, on an annualized basis, to deliver more compelling values to customers.  It has also made plans to slow new store growth beginning in fiscal 2015.  The company now expects to open 350-400 new stores in fiscal 2015, down from approximately 525 new stores in fiscal 2014.

In an effort to drive more profitable growth, the company is also investing in longer-term initiatives, which include further expanding its cooler program beginning in fiscal 2015 and expanding traffic-driving categories with a multi-year rollout of beer and wine likewise beginning in fiscal 2015.

Looking ahead to the fourth quarter, the company expects that comparable store sales will be approximately flat and that earnings per diluted share will be between $0.75 and $0.85, excluding approximately $0.37 related to restructuring charges.  Including the restructuring charges, the company expects earnings per diluted share will be between $0.38 and $0.48.

Source: Retailing Today 

Spending Growth Solid In June

July 14, 2014

Solid June spending growth was reported for May 31, 2014 through June 30, 2014, compared to June 1, 2013 through July 1, 2013.

A slowly improving economy and growing job market have helped drive consumer spending.  Spending growth in June slowed slightly from May but remained positive on a year-over-year basis with a growth of 3%.

While spending in travel and hotel slowed from the previous month, growth was still strong in these sectors, with a year-over-year increase of 4.9% and 7.1%, respectively.  Food and beverage stores spending was up 4.7% versus May's 4.2% growth, a trend reflecting an increase in food costs.

Retail spending growth retreated slightly in June compared to May but remained positive with 1.2% growth.  5.7% growth in building and gardening materials and 1.5% growth in furniture and home furnishings reflect continued improvement in the housing market.  However, a slowly declining unemployment rate caused consumers to remain hesitant and kept overall retail spending growth moderate.

Average ticket growth also decreased slightly from May but remained positive at 0.9% growth on a year-over-year basis, reflecting increased food and gas prices.  Food and drinking places and food and beverage stores saw a growth of 2.5% and 1.5% respectively, as rising food costs impacted the average ticket in these categories for consumers.

Finally, credit spending continued to be the preferred spending method this month with a 5.3% increase in transaction growth and a 3.9% dollar volume growth.  The increase in transaction volume was supported by year-over-year growth in categories such as hotel and travel, where consumers tend to utilize this payment method most.

Source: Retailing Today

June 2014 Manufacturing ISM Report On Business - PMI At 55.3%

July 1, 2014

Economic activity in the manufacturing sector expanded in June for the 13th consecutive month, and the overall economy grew for the 61st 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, CPSM, CPSD, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.  "The June PMI registered 55.3 percent, a decrease of 0.1 percentage point from May's reading of 55.4 percent, indicating expansion in manufacturing for the 13th consecutive month.  The New Orders Index registered 58.9 percent, an increase of 2 percentage points form the 56.9 percent reading in May, indicating growth in new orders for the 13th consecutive month.  The Production Index registered 60 percent, 1 percentage point below the May reading of 61 percent.  Employment grew for the 12th consecutive month, registering 52.8 percent, the same level of growth as reported in May.  Inventories of raw materials remained at 53 percent, the same reading as reported in both May and April.  The price of raw materials grew at a slower rate in June, registering 58 percent, down 2 percentage points from May."

Manufacturing expanded in June as the PMI registered 55.3 percent, a slight decrease of 0.1 percentage point when compared to May's reading of 55.4 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 June PMI indicates growth for the 61st consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 13th consecutive month.  Holcomb stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through June (54.0 percent) corresponds to a 3.6 percent increase in real gross domestic product (GDP) on an annualized basis.  In addition, if the PMI for June (55.3 percent) is annualized, it corresponds to a 4.0 percent increase in real GDP annually."

Of the 18 manufacturing industries, 15 are reporting growth in June.

Source: Institute For Supply Management