Labor Markets Improve Across Most Advanced Economies

July 10, 2014

Labor markets improved overall 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 May 2014.

Unemployment rates in May fell in four of the nine countries compared, and were unchanged in the remaining five.  Sweden saw the greatest improvement, with joblessness falling 0.3 points to 7.7 percent.  Unemployment fell 0.2 points in the Netherlands (to 7.0 percent) and 0.1 points each in Japan (to 3.1 percent) and Germany (to 5.1 percent).

"In May, despite a continued high unemployment rate for the European Union as a whole, employment picked up in several European economies, including France, Italy, and the Netherlands," said Elizabeth Crofoot, Senior Economist with the International Labor Comparisons program at The Conference Board.  "Yet Germany's slight dip in employment, the first in over two years, underscores the continued fragility of Europe's labor market recovery going forward."

Employment in May increased in all economies compared except Germany and Australia.  Japan and Sweden saw the largest increases, rising 0.5 points to 99.6 and 105.5, respectively.  Despite an improvement of 0.3 points, Italy continues to have the lowest employment index (96.9), while Australia retains the highest (112.6) despite May's 0.1-point decline.  With a gain of 0.1 points to 99.9, the U.S. inched even closer to reaching the employment index level of 2007 (=100) for the first time since the recession.

Source: The Conference Board

June Sales Get Some Help From Promotions

July 10, 2014

Retail sales generally improved in June, helped by good weather and big discounts as retailers look to clear inventory for the back-to-school season.

Costco Wholesale Corp. reported a 6% increase in June same-store sales, helped by higher fuel prices.  Its results topped Wall Street estimates.

Excluding the impact of foreign exchange rates and gasoline prices, Costco's same-store sales increased 6% for the five-week period ended July 6.  The metric rose 5% in the United States and 7% overseas.

Net sales rose 10% to $10.89 billion.

While the retailers that still report same-store sales were in line or slightly better than had been expected, there were exceptions.  L Brands reported a 2% increase in June same-store sales, below estimates for a 3.1% increase.  Growth was led by a 3% increase in sales for the company's Victoria's Secret brand.

In other June results:

• Zumiez reported a 3.1% rise in same-store sales.  Net sales for June rose 11.1% to $65.3 million, from $58.8 million in the year-ago period.
• Stein Mart's same-store sales increased 2.6%.  Total revenue for the five weeks ended July 5 rose 4% to $113.2 million.
• The Buckle posted a 0.7% increase in same-store sales.  Net sales for the period increased 2.8% to $84.8 million, from $82.5 million last year.
• Fred's same-store sales fell 0.6%.  Total sales for the month increased 2% to $191.2 million, from $187.3 million last year.

Source: Retailing Today

Better Job Growth Heading Into The Second Half

July 3, 2014

The labor market remains surprisingly and resiliently strong as evidenced by the gain of 288,000 new jobs created in June.  This is not just catch up after a bad winter.  It also reflects some gathering strength in the economy.  More consumer demand could drive more investment in capital (to give workers the tools to get the job done) and more investment in human capital.  One big question is whether there will be enough upside to continue to drive up wage gains.  Business, faced with a lack of pricing power and weak productivity growth, are in a difficult bind.  Separately, sustained and possibly rising job growth could result in a pickup in the participation rate as more discouraged workers restart a job search.  While that could hold back upward pressures on wages and salaries, it is still a marker for how much potential improvement there is in economic conditions and prospects.

Source: The Conference Board

Walgreens And Rite Aid Looking Good In June

July 3, 2014

June was a good month for two of the nation's largest drugstore operators.  Walgreens reported sales of $6.3 billion for the month, an increase of 8.9% as compared to the same month in fiscal 2013, while Rite Aid realized a 3.9% same-store sales increase for the four weeks ended June 28.

Total front-end sales at Walgreens increased 1.6% in June compared with the same month in fiscal 2013, while comparable store front-end sales increased 1.3%.  Customer traffic in comparable stores decreased 2% while basket size increased 3.3%.

Prescriptions filled at comparable stores increased by 7.3% in June and increased 4.7% on a calendar day-shift adjusted basis.  June 2014 had one additional Monday and one fewer Saturday compared with June 2013.  These calendar shifts positively impacted prescriptions filled at comparable stores by 260 basis points.

June pharmacy sales increased by 13.4%.  Comparable store pharmacy sales increased 11.3% and increased by a calendar day-shift adjusted 6.7%.  Calendar day-shift adjusted comparable store pharmacy sales were negatively impacted by 140 basis points due to generic drug introductions in the last 12 months.  Pharmacy sales accounted for 65.2% of total sales for the month.

Sales in comparable stores increased by 7.5% in June.  Calendar day shifts positively impacted total comparable sales by 170 basis points.  Generic drug introductions in the last 12 months negatively impacted total comparable sales by 90 basis points.

Calendar 2014 year-to-date sales for the first six months were $38.1 billion, an increase of 5.9%.  Fiscal 2014 year-to-date sales for the first 10 months were $63.7 billion, an increase of 6%.

Walgreens opened 15 stores during June, including three relocations and closed 13.  Nearly all of the June store closings were part of the company's previously announced efforts to optimize its asset base by closing a total of 76 drug stores.

Meanwhile, Rite Aid saw June front-end same-store sales increase 0.9%.  Pharmacy same-store sales, which included an approximate 169 basis points negative impact from new generic introductions, increased 5.4%.  Prescription count at comparable stores increased 3.5% over the prior-year period.

Total drug store sales for the four-week period increased 3.5% to $2 billion.  Prescription sales accounted for 68.4% of drug store sales, and third party prescription sales represented 97.5% of pharmacy sales.

Same-store sales for the 17-week period ended June 28 increased 3.3% over the prior-year period.  Front-end same store sales increased 0.2% while pharmacy same store sales increased 4.6%.  Prescripion count at comparable stores increased 2.6% over the prior-year period. 

Total drug store sales for the 17 weeks ended June 28, 2014 increased 2.8% with sales of $8.4 billion.  Prescription sales represented 68.4% of total drug store sales and third party prescription sales represented 97.4% of pharmacy sales.

Source: Retailing Today 

Home Depot Launches Connected Home Initiative

July 7, 2014

Nearly 2,000 Home Depot stores in the U.S. began offering a wide range of connected home devices that run the Wink platform on July 7.

The Wink platform unites close to 60 devices, creating the broadest set of connected home products in one ecosystem, with fifteen leading manufacturers of home products ranging from light bulbs and locks to window shades, irrigation systems and water heaters, according to Wink and Home Depot.

"When looking for new products and services, we believe it is critical The Home Depot provide our customers the connected home options and convenience they desire - one that is easy, affordable and gives them the choice in products they need," said Jeff Epstein, vp of home automation merchandising at Home Depot.  "With Wink, we've found a partner that supports the industry leading brands we already carry on our shelves and online."

Wink vp Brett Worthington said Home Depot's nearly 2,000 U.S. stores offer customers the broadest network of connected products.  "Together we are offering the simplest way to connect to products in the home from trusted brands like Leviton, Honeywell, Rheem, Lutron and Schlage."  There are close to 60 Wink-enabled products covering a variety of products from garage door openers and dimmers to ovens and air conditioners.  Manufacturer partners include Bali, Chamberlain, Dropcam, GE, Honeywell, Kidde, Kwikset, Leviton, Lutron, Philips, Quirky, Rachio, Rheem, Schlage and TCP.

All Wink-enabled products are operated through the free Wink app.  The Wink app lets consumers personalize their experience to what works best for their home.  For example, a consumer can operate just one light bulb or all of the light bulbs in a particular room, or they can group the light bulbs with other products in a particular area of their home.  According to Wink, its app makes consumers' lives easier by letting them adjust the thermostat or turn lights off after leaving the house, or control energy savings by shutting off the air conditioner when leaving and turning it back on right before getting home.

Source: Retailing Today 

The Conference Board Employment Trends Index Increased In June

July 7, 2014

The Conference Board Employment Trends Index (ETI) increased in June.  The index now stands at 119.62, up from 119.03 (an upward revision) in May.  This represents a 6.3 percent gain in the ETI compared to a year ago.

"The rapid increase in the Employment Trends Index in recent months suggests that strong job growth is likely to continue through the summer," said Gad Levanon, Director of Macroeconomic Research at The Conference Board.  "While the strong labor market signals an improvement in economic growth, the key factor is that the average productivity of workers will need to rise as well."

June's increase in the ETI was driven by positive contributions from seven of its eight components.  In order from the largest positive contributor to the smallest, these were:  Percentage of Firms With Positions Not Able to Fill Right Now, Real Manufacturing and Trade Sales, Industrial Production, Number of Temporary Employees, Percentage of Respondents Who Say They Find "Jobs Hard to Get," Job Openings, and Ratio of Involuntarily Part-time to All Part-time Workers.

The Employment Trends Index 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

Grilling Up Good Times On The Fourth Of July

June 26, 2014

With winter's polar vortex a distant memory, summer's warm temperatures have consumers celebrating in front of the grill.

According to NRF's Independence Day Survey, more than 153 million consumers - nearly two-thirds of those celebrating - are set to observe the Fourth of July holiday with a cookout, barbeque or picnic, spending an estimated $6.2 billion ($68.16 per household) on burgers, snacks and other food items for the occasion.  This is the first year NRF asked celebrants about their spending plans on food items.

While the majority will spend the day around a picnic table, many will also attend a fireworks display or community celebration (105 million) or a parade (27 million).  Plans for each of those activities declined from last year, but an increasing number of celebrants are taking advantage of the three-day holiday weekend: 13.7 percent (32 million) plan to take a vacation, the highest in the survey's history.  This figure rises to nearly one in five among Millennials.

Although gas prices continue to creep upward, holiday travelers seem relatively undaunted.  More than 70 percent indicate their spending for the Fourth of July will not be impacted by prices at the pump, up from nearly 65 percent a year ago.

Source: National Retail Federation

Weather Trends: July 2014

June 27, 2014

WTI expects July 2014 to trend similar to last year for the U.S. as a whole.  The East will trend near normal or cooler than normal, while warmer than normal temperatures will be confined to the West.  Overall, the peak of the summer is shaping up to be very similar to 2013 but with a few major timing differences.  Unlike 2013, the hotter weather in 2014 will be back-end loaded in the month just as back-to-school shopping begins, which is a negative for early fall apparel, but favorable for clearing out summer inventory.  A cooler Fourth of July week in the Northeast and West will drag on sun care and beverage sales, but a spell of warmer weather later in the month will help to recover some earlier holiday losses.  Tropical activity will continue to be subdued, especially during the first half of the month, but there may be a slight pick up later in July with the highest risk areas being south Florida and Texas.

Source: Retailing Today, Weather Trends International

Walgreens' Profits Miss Street Expectations

Walgreens reported a 16% year-over-year jump in third quarter profit, but was forced to withdraw its previously issued fiscal 2016 guidance because it missed Wall Street estimates.

The company's net earnings for the quarter were $722 million compared to $624 million in the prior-year period.  Net sales increased 6% to $19.4 billion from $18.3 billion, while same-store sales increased 4.8%.

Lower taxes also boosted the company's profits, but pressure on pharmacy gross profit margins and a 0.7% decrease in same-store traffic kept them from hitting Wall Street's expectations.

Despite withdrawing its guidance for fiscal 2016, Walgreens confirmed that it plans to move forward with its purchase of U.K. drugstore retailer Alliance Boots, which it currently holds a 45% stake in, by the end of 2015.  The company will issue an update on the acquisition as well as its revised guidance in July or August.

"We continued to see improving top-line growth in the third quarter driven by increased daily living sales and strong increases in both prescriptions filled and our pharmacy market share," said Walgreens president and CEO Greg Wasson.  "At the same time, we are experiencing increased pressure on pharmacy gross profit margins.  We maintained solid expense control in the third quarter to offset some of this pressure while understanding that there is more to be done.  We will be accelerating our optimization efforts, including taking additional steps to lower expenses companywide.  In addition, our joint venture with Alliance Boots continues to generate significant benefits."

Source: Retailing Today

New Home Sales Up 18.6 Percent In May

June 24, 2014

Sales of newly built, single-family homes rose 18.6 percent to a seasonally adjusted annual rate of 504,000 units in May, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.  This is the highest rate since May 2008.

"These numbers are in line with our recent builder surveys, which indicate that more consumers are getting off the fence and coming back into the marketplace," said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.

"This increase is a welcome sign after a slow start to 2014," said NAHB Chief Economist David Crowe.  "As job creation continues, we can expect further release of pent-up demand and continued gradual growth in the housing recovery."

Regionally, new home sales were up across the board.  Sales rose 54.5 percent in the Northeast, 34 percent in the West, 14.2 percent in the South and 1.4 percent in the Midwest.

The inventory of new homes for sale held steady at 189,000 units in May.  This is a 4.5 month supply at the current sales pace.

Source: National Association of Home Builders

The Conference Board Consumer Confidence Index Continues To Improve

June 24, 2014

Index at Highest Level Since January 2008

The Conference Board Consumer Confidence Index, which had increased in May, improved again in June.  The Index now stands at 85.2, up from 82.2 in May.  The Present Situation Index increased to 85.1 from 80.3, while the Expectations Index rose to 85.2 from 83.5 in May.

Says Lynn Franco, Director of Economic Indicators at The Conference Board: "Consumer confidence continues to advance and the index is now at its highest level since January 2008 (87.3).  June's increase was driven primarily by improving current conditions, particularly consumers' assessment of business conditions.  Expectations regarding the short-term outlook for the economy and jobs were moderately more favorable, while income expectations were a bit mixed.  Still, the momentum going forward remains quite positive."

Consumers' appraisal of current conditions improved in June.  Those claiming business conditions are "good" increased to 23.0 percent from 21.1 percent, while those stating business conditions are "bad" decreased to 22.8 percent from 24.6 percent.  Consumers' assessment of the job market was also more favorable.  Those stating jobs are "plentiful" edged up to 14.7 percent from 14.2 percent, while those claiming jobs are "hard to get" declined to 31.8 percent from 32.2 percent.

Consumers' expectations were generally more positive in June.  The percentage of consumers expecting business conditions to improve over the next six months increased to 18.8 percent from 17.7 percent.  However, those expecting business conditions to worsen increased to 11.4 percent from 10.7 percent.

Consumers were more positive about the outlook for the labor market.  Those anticipating more jobs in the months ahead increased to 16.3 percent from 15.2 percent, while those anticipating fewer jobs edged down to 18.7 percent from 18.9 percent.  Fewer consumers expect their incomes to grow, 15.9 percent versus 18.0 percent, but those expecting a drop in their incomes also declined, to 12.1 percent from 14.5 percent.

Source: The Conference Board

The Conference Board Leading Economic Index For The U.S. Increased In May

June 19, 2014

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.5 percent in May to 101.7, following a 0.3 percent increase in April, and a 1.0 percent increase in March.

"May's increase in the LEI, the fourth consecutive one, was broad based," said Ataman Ozyildirim, Economist at The Conference Board.  "Housing permits held the index back slightly but the LEI still points to an expanding economy and its pace may even pick up in the second half of the year."

"Recent data suggest the economy is finally moving up from a 2 percent growth trend to a more robust expansion," said Ken Goldstein, Economist at The Conference Board.  "The CEI shows the pace of economic activity continued to gain traction in May, while the trend in the LEI remains positive.  Going forward, the biggest challenge is to sustain the rise in income growth which will drive consumption."

The Conference Board Coincident Economic Index (CEI) for the U.S. increased 0.3 percent in May to 109.0, following a 0.2 percent increase in April, and a 0.4 percent increase in March.

The Conference Board Lagging Economic Index (LAG) for the U.S. increased 0.4 percent in May to 123.8, following a 0.3 percent increase in April, and a 0.6 percent increase in March.

Dads Enjoy Better-Than-Expected Father's Day

June 18, 2014

The National Retail Federation (NRF) had forecast that Father's Day spending would shrink this year, reaching just $12.5 billion.  But it looks like the smallest of gift-giving holidays fared better than expected.

Overall U.S. retail online sales for the week leading up to Father's Day - June 9-15 - climbed more than 14% compared to the same period last year.

Some of the key drivers were mobile traffic, which accounted for more than 38% of all online traffic, up more than 26% compared to the same period last year.  Mobile sales saw strong growth as well, up more than 37%, reaching nearly 19% of all online sales.

Smartphones drove 24.8% of all online traffic compared to tablets at 12.85, making it the browsing device of choice.  When it came to making the sale, tablets drove 12.2% of all online sales while smartphones accounted for nearly half of that at 6.4%.  Tablet users also averaged $106.71 per order, versus smartphone users, who averaged $89.55 per order.

As a percentage of total online sales, iOS was almost four and a half times higher than Android, driving 15.2% versus 3.4% for Android.  On average, iOS users spent $103.85 per order compared to $73.08 for Android users, a difference of 42%.  iOS also led as a component of overall traffic with 25.6% versus 12.3% for Android.

Shoppers referred from Facebook averaged $99.43 per order, versus Pinterest referrals, which drove $142.75 per order.  However, Facebook referrals converted sales at a rate more than four times that of Pinterest referrals.

Supporting these overall trends, real-time trends across three of the most popular retail categories for Father's Day purchases were reported:

• Department stores: Father's Day total online sales grew by 30.5% over the same period last year, with mobile sales growing by 29% year over year.
• Home goods: Father's Day total online sales grew by 21.4% over the same period last year, with mobile sales growing by 25% year over year.
• Apparel: Father's Day total online sales grew by 13.5% over the same period last year, with mobile sales growing by more than 42% year over year.

Source: Retailing Today

U.S. Workers More Satisfied? Just Barely.

June 18, 2014

Americans have the highest job satisfaction levels since the beginning of the Great Recession, according to a report released today by The Conference Board.  The majority, however, continue to be unhappy at work.

The report, based on a Fall 2013 survey of 5,000 U.S. households conducted for The Conference Board by The Nielsen Company, finds 47.7 percent of Americans are satisfied with their jobs.  Though a slight improvement from 2012 and 2010 - when the figure stood at 47.3 and 42.6 percent (an all-time low), respectively - job satisfaction remains historically low, extending a trend seen since the turn of the century.  While job satisfaction in the 1980s and '90s routinely neared 60 percent or higher, 2005 was the last year in which a majority of Americans was satisfied at work (52.1 percent).

"The U.S. economy is growing at a disappointing rate, and this sluggish recovery is mirrored in American workers' tepid job satisfaction," said Rebecca Ray, Executive Vice President, Knowledge Organization at The Conference Board and a co-author of the report.  "That said, as the direct effects of the recession wear off, workers are also seizing new opportunities in a tightening labor market - a fact reflected in rising quit rates.  Employers able to improve job satisfaction could thus gain a significant competitive advantage in attracting and retaining capable employees."

Identifying the Key Drivers of (Dis)satisfaction

The survey broke down satisfaction to its component elements.  Respondents were asked their level of satisfaction on different aspects of their jobs - and which aspects were most important to them.

• Despite stalled overall satisfaction and downward historical trend, satisfaction in some areas - notable, compensation, recognition, and career development - are near ten-year highs.
• In general, employees are most satisfied with their work environment and related elements: colleagues, interest in work, commute to work, physical environment, and supervisor are all rated highly.
• Workers are least satisfied with promotion policy, bonus plan, training programs, performance review, and recognition.
• In terms of importance, communication channels, interest in work, recognition, and workload are ranked as most critical to overall satisfaction.  Low priority is given to commute to work, health plan, retirement plan, sick day policy, and vacation policy.
• Employers would be wise to concentrate on those components considered highly important with low current levels of satisfaction.  These include growth potential, communication channels, recognition, performance review, and wages.
• Of all components, only pension/retirement, job security, workload, and commute to work remain below 2008 satisfaction levels.

"Based on macro trends - including a significantly tighter labor market, slowing productivity growth, and more business investment - worker satisfaction should be on the rise," said Gad Levanon, Director of Macroeconomic Research at The Conference Board and a co-author of the report.  "But job dissatisfaction may remain entrenched until we see improvements in worker compensation, which has grown abysmally in recent years despite historically high corporate profits."

The Rich Keep Getting (Relatively) Happier - and Other Demographic Trends

As in previous editions of the survey, significant disparities were found across various populations.  Among the key findings:

• High-income earners are more satisfied than lower-paid workers - and the gap has been widening in recent years.  The survey found 64.1 percent satisfaction among those making $125,000 and over.  At 57.6 percent, workers making $75,000 to $100,000 are also significantly more satisfied than two years ago.  Meanwhile, just 24.4 percent of those making under $15,000 and 32.0 percent making between $15,000 and $25,000 are satisfied.
• Men and women have broadly similar satisfaction levels, but diverge sharply in their priorities.  Men place higher importance on compensation and interest in their work, while women value flexibility, workload, advancement, and people at work.
• Workers aged 25 to 34 are the most satisfied, at 50.5 percent.  Workers over 65 are also relatively satisfied (49.4 percent), suggesting those delaying retirement are reasonably content with working later in life.  At 37.8 percent, satisfaction is lowest among workers under 25 - down significantly from the 2012 survey.
• Only 44.0 percent of workers are satisfied in the East South Central region - Alabama, Kentucky, Mississippi, and Tennessee - the lowest in the nation.  At 54.3 percent satisfaction, New Englanders are the most satisfied workers.

Source: The Conference Board

Housing Production Falls 6.5 Percent In May

June 17, 2014

Declines in both single and multifamily starts pushed nationwide housing production down 6.5 percent in May to a seasonally adjusted annual rate of just over 1 million units, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.  However, single-family permits, which can be an indicator of future building activity, rose 3.7 percent.

"The dip in single-family production shows builders continue to move carefully in adding inventory," said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.  "They are also facing supply chain issues, such as access to lots and labor."

Single-family housing starts were down 5.9 percent to a seasonally adjusted annual rate of 625,000 units in May.  Meanwhile, multifamily production fell 7.6 percent to a seasonally adjusted annual rate of 376,000 units.

"The encouraging news is that single-family permits are up by almost 4 percent," said NAHB Chief Economist David Crowe.  "The modest increase is evidence that builders expect continued release of pent-up demand and a gradual expansion of the housing market.  We are still forecasting a 12 percent increase in total housing starts for the year."

Regionally in May, combined single and multifamily housing production fell in the Northeast, the Midwest and the West, with respective losses of 25.2 percent, 16.5 percent and 16.3 percent.  Meanwhile, the South posted a 7.3 percent gain.

Issuance of building permits registered a 6.4 percent decline to a seasonally adjusted annual rate of 991,000 units in May.  This was due entirely to a decrease in the multifamily sector, where permits registered a 19.5 percent loss to 372,000 units.  Single-family permits increased to 619,000 units.

The Northeast and Midwest registered overall permit gains of 3.5 percent and 3.8 percent, respectively, while the South and West posted respective losses of 7.3 percent and 15.2 percent.

Source: National Association of Home Builders

Builder Confidence Rises Four Points In June

June 16, 2014

Builder confidence in the market for newly built, single-family homes rose four points in June to reach a level of 49 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today.  It remains one point shy of the threshold for what is considered good building conditions.

"After several months of little fluctuation, a four-point uptick in builder sentiment is a welcome sign and shows some renewed confidence in the industry," said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.  "However, builders are facing strong headwinds, including the limited availability of labor."

"Consumers are still hesitant, and are waiting for clear signals of full-fledged economic recovery before making a home purchase," said NAHB Chief Economist David Crowe.  "Builders are reacting accordingly, and are moving cautiously in adding inventory."

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 for 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 index components posted gains in June.  Most notable, the component gauging current sales conditions increased six points to 54.  The component gauging sales expectations in the next six months rose three points to 59 and the component measuring buyer traffic increased by three to 36.

Looking at the three month moving averages for regional HMI scores, the South and Northeast each edged up one point to 49 and 34, respectively, while the West held steady at 47.  The Midwest fell a single point to 46.

Source: National Association of Home Builders

Unseasonably Cold Weather Delivers Challenging Q1 To Sears Hometown

June 6, 2014

Sears Hometown and Outlet Stores CEO and president Bruce Johnson cited weather and promotions as factors affecting the retailer's first quarter results.

Net sales in the quarter decreased 1.9% to $589.9 million from $601.1 million in the first quarter of 2013, driven primarily by a 6.2% decrease in same-store sales.  Lower initial franchise revenues and lower liquidation revenues on end-of-season mark-out apparel merchandise received from Sears Holdings also negatively impacted net sales.

"First quarter results were affected by three main factors: weather," said Johnson.  "For the second year in a row, lawn and garden sales were negatively impacted by an unseasonably cold spring in many of our trade areas that dampened sales in March and April, following a very cold February that reduced overall store traffic and sales; continued lower margins in Outlet due to insufficient quantities of higher-margin, 'as-is' appliances; and a heavily promotional appliance retail environment where appliance retailers layered free delivery on top of discounted pricing."

Repeat visits decreased 1% year-over-year but bounced back from a low in April.  Analysis indicates this rebound is another positive sign for sales.  The best day of the month was Thursday, May 29, with outperformance across all metrics.  The worst day of the month was Sunday, May 4, which saw significant underperformance in traffic.  In addition, fewer than expected repeat shoppers were seen on this day.

Source: Retailing Today

Fred's Optimistic About New Marketing Program

June 5, 2014

Although comparable-store sales at Fred's declined slightly in May, the company said sales strengthened in the last week of the month thanks to the first ad in its new marketing and branding program, designed to increase traffic and heighten customer awareness of category diversity.

The company's total sales for the month stayed flat at $151.9 million, compared with $152.3 million in May last year.  Comparable-store sales for the month declined 0.4% compared with a 0.5% decrease in the same period last year.

Fred's total sales for the first four months of fiscal 2014 decreased 0.6% to $650.2 million compared with $653.8 million for the same period last year.  On a comparable store basis, year-to-date sales declined 1.5% versus a 1.1% decrease for the year-earlier period.

"The initial results (of the marketing and branding program) were encouraging," said CEO Bruce A. Efird, "and we think this new program will be effective in driving traffic and sales growth as we work toward full implementation of the marketing program by mid-July.  Together with the updating of our store layout to emphasize the convenience advantages of our 15,000 sq. ft. store, it will better position Fred's to serve more of the need-based categories and provide customers with faster and easier shopping experiences."

Fred's operates 704 discount general merchandise stores, including 21 franchised Fred's stores, in the southeastern United States.

Source: Retailing Today

U.S. Retail Sales In May Climb 5%

June 6, 2014

U.S. retailers reported 5% year-over-year growth in general merchandise, apparel, furniture and other (GAFO) retail sales.  Shoppers made fewer trips to the store than expected, but were very engaged and showed a lot of intent to buy.

Retailers also reported 7% growth year-over-year in clothing and apparel sales and 2% growth year-over-year in general merchandise sales.  Shopper traffic declined 11% compared to the same month last year, as travel plans appeared to cannibalize leisure time.

Storefront conversion was up slightly as this May remained more promotional the same month in the proir year, especially leading up to Mother's Day.  Average duration increased 6% from the previous year due to a rebounding interest in more exploratory shopping, following the muted winter months.  The increase in visit duration was the most significant driver of positive sales performance in May.

Source: Retailing Today

Ascena Retail Group's Profit Climbs Despite Challenging Q3

June 4, 2014

Ascena Retail Group president and CEO David Jaffe said sales in the third quarter were challenging, and despite comparable sales declines at Justice and Dressbarn, new store growth at Justice and Maurices, along with higher comparable sales at Lane Bryant, Maurices and Catherines bolstered the company's overall results.

The company's third quarter profit rose to $33.2 million, from $31.2 million in the year ago period.  Revenue inched up 0.3% to $1.145 billion, compared to $1.142 billion a year earlier.  Total same store sales rose 1%.

"Q3 sales were challenging, and that trend continued into the start of Q4," said Jaffe.  "As a result, we are implementing promotional strategies and receipt flow adjustments to ensure our inventories are conservatively positioned for the fall season."

Source: Retailing Today