Nordstrom's Q1 Profits Hurt By Promotions, Shipping; Misses Street

Nordstrom Inc's profit for the first quarter edged up just 2.7% to $149 million, compared with $145 million in the same period last year. Results, which were negatively impacted by free shipping offers and promotional initiatives, met internal expectations, but missed Wall Street estimates.

Sales soared 13.7% to $2.53 billion, but still missed analysts’ forecast of $2.55 billion. Same-store sales rose 8.5%.

Nordstrom has seen strong performance of late, as the luxury category has continued to gain strength, but investments into customer experience initiatives, such as free shipping on all online purchases with no minimum purchase requirement, have squeezed profit margins. The initiatives, however, have had a positive impact on Nordstrom’s e-commerce business, as online sales rose 44.2% in the quarter ended April 28.

Source:  retailingtoday.com

Dillard's Profits Rise In Q1

Dillard’s net income for the quarter ended April 28 rose to $95 million, from $76.7 million in the year-ago period, setting a company record for profit increases.

Sales rose to $1.55 billion, from $1.47 billion. Same-store sales climbed 5%, the department store retailer’s seventh consecutive quarter of comp increases.

Dillard’s said it saw its greatest strength in the first quarter from the central region of the United States, followed by the eastern and the western regions.
 
Dillard's CEO, William Dillard, II, stated, "We are happy to report a very strong start to 2012 with our seventh consecutive quarter of increased same-store sales, as well as record setting earnings and earnings per share performances."

As of April 28, the company operated 287 Dillard's locations and 17 clearance centers spanning 29 states and an Internet store at www.dillards.com. Total square footage at April 28 was 52.5 million.

Source:  retailingtoday.com

Online sales give Macy's a big boost in Q1

CINCINNATI — Macy's Inc. reported a significant increase in sales for the first quarter, thanks to a strong performance in its online business. The company reported that total sales for the quarter increased 4.3% to $6.1 billion. Online sales for the quarter increased 33.7% and contributed 1.5 percentage points to the company's same-store sales increase of 4.4% for the period.

Macy's Inc. reported an earnings increase of 43% to 43 cents per diluted share, compared with 30 cents per diluted share in the same period last year.

In the first quarter of 2012, Macy's opened new stores in Salt Lake City, Utah, and Greendale, Wis.

"The momentum in our business at Macy's and Bloomingdale's continued to build in the first quarter, with sales and earnings that exceeded our expectations going into the year. The quarterly data clearly demonstrates the strength of our results as we continue to implement our key strategies - My Macy's merchandise localization; omnichannel integration of stores, online and mobile; and MAGIC Selling for enhanced customer engagement," said Terry Lundgren, Macy's Inc. chairman, president and CEO.

Macy's Inc. is now expecting same-store sales for fiscal 2012 to increase by approximately 3.7%, slightly higher than previous guidance for a same-stores sales increase of approximately 3.5% in fiscal 2012. The company reiterates its guidance for earnings per diluted share in fiscal 2012 of $3.25 to $3.30.

Kohl's earnings slip, comps up in Q1

Despite dropping from the previous year, Kohl's said its net income for the first quarter ended April 28 was in line with its expectations. The company reported net income of $154 million (63 cents per diluted share) compared with $201 million ($0.69 per diluted share) a year ago. Net sales were $4.2 billion, an increase of 1.9% for the quarter. Comparable-store sales for the quarter increased 0.2 percent.

Kevin Mansell, Kohl’s chairman, president and CEO, said, “Our first quarter results reflect the implementation of our strategy to initiate lower pricing in order to provide greater value to our customers. This planned action led to significantly lower gross margins for the quarter. Strong management of expenses allowed us to achieve our earnings goal for the quarter. We have accelerated new receipts into second quarter to ensure we are well-positioned from an inventory perspective for the back-to-school season. The combination of these two actions should allow us to greatly improve our sales for the fall season.”

Kohl's ended the quarter with 1,134 stores in 49 states, compared with 1,097 stores at the same time last year. The company opened nine new stores, including one relocated store, and closed one store during the quarter.  Plans are to open approximately 10 more stores in the fall season and to remodel approximately 50 stores in 2012.

For the second quarter, Kohl's expects earnings to range from 96 cents to $1.02 per diluted share. The guidance is based on total sales growth of 2% to 3% and comparable-store sales growth of flat to 1% and includes expected second quarter share repurchases of $250 million. The company maintains its previously announced fiscal 2012 guidance of $4.75 per diluted share.

Source: retailingtoday.com

Target.com falls just shy of 'superior' on customer satisfaction list

Though 79 is just one point shy of what ForeSee considers a superior score on its annual top 100 online retailers for customer satisfaction list, Target should still be concerned, as it was three points behind rival Walmart, and three points does make a difference.  With the lowest score on the list being 69 and the highest being 89, achieved by Amazon.com, most retailers on the list had a score in the 70s, while 36 on the list earned the distinction of scoring 80 or higher. The scores are based on a 100-point scale.

“We’re measuring the biggest players in the game, and they just keep getting better and better. Because customer satisfaction, as we measure it, is predictive, that’s a good sign not only for the consumer experience, but for the bottom line of internet retailers as well,” said study author Larry Freed, president and CEO of ForeSee. “If there’s a negative spin to these positive trends, it is that this puts even more pressure on all other e-retailers to keep up or catch up.”

Target.com's score of 79 was one-point better than what it achieved in 2011. Though small, the increase is significant considering how much flack Target got over the issues surrounding the launch of its Missoni line. Last fall, the retailer failed to anticipate demand for the product, and many online orders ended up delayed or canceled.

Meanwhile, Walmart.com's score jumped from 79 to 82, showing that the company's investments in online and social media are paying off.

However, no online retailer seems to come close to Amazon.com, which climbed three points to 89 to top the list, and is four points higher than the second highest scoring websites, Apple.com (85) and QVC.com (85).

“Amazon continues to set the standard for e-retailers. The truth is that every consumer who has visited Amazon knowingly or unknowingly benchmarks all other experiences against it, and why wouldn’t they? They do everything and they do it well,” said Freed.

Measuring customer satisfication is subjective, so to achieve its list, ForeSee uses individual satisfaction scores for the top 100 e-retailers by revenue as measured by Internet Retailer, quantifies the likely future behaviors of website visitors, including their likelihood to purchase online or offline and proxies for loyalty such as likelihood to return to the site or recommend. When compared to dissatisfied customers, highly satisfied website visitors—those who score their experience 80 or higher—report being 72% more likely to purchase from that retailer’s website and 56% more likely to make the purchase through another channel.

“Highly satisfied website visitors are nearly 70% more likely to recommend the website to others than dissatisfied customers. In the modern world of Facebook, Twitter, and other social media, it is even more imperative to provide the best experience possible to your customers because any experience has huge potential to be amplified, for better or for worse,” said Freed.

Source:  retailingtoday.com

Walmart first-ever retailer to launch online ‘pay with cash’ option

Walmart has launched a “Pay with Cash” service that offers cash payment options for online orders at Walmart.com in the United States.

Walmart is the first major retailer to offer online purchases without the need for banking services or a credit, debit or prepaid card.

The retailer said that the majority of its in-store transactions are paid in cash or cash equivalent, including debit cards, with just 15% of transactions paid in credit. The “Pay with Cash” program will allow the same payment options online, which is expected to appeal to the retailer’s customer base.

To use the option, a shopper places an order on walmart.com and, during checkout, selects the "Cash" option and a shipping preference. The customer immediately receives an order number on the order confirmation page and an email receipt with the order number. The item is reserved in the system.

The customer has 48 hours to take the printed order form to any cash register of any Walmart store or Neighborhood Market.  Once cash payment is completed in the store and received, shipping then occurs via Site to Store or to a preferred address.

Source: retailingtoday.com

Consumer Confidence Index Virtually Unchanged

The Conference Board Consumer Confidence Index^®, which had declined slightly in March, was virtually unchanged in April. The Index now stands at 69.2 (1985=100), down slightly from 69.5 in March. The Expectations Index declined to 81.1 from 82.5, while the Present Situation Index improved to 51.4 from 49.9 last month.

Says Lynn Franco, Director of The Conference Board Consumer Research Center: “Consumer Confidence was virtually unchanged in April, following a modest decline in March. As was the case last month, the slight dip was prompted by a moderation in consumers’ short-term outlook, while their assessment of current conditions continued to improve. Overall, consumers are more upbeat about the state of the economy, but they remain cautiously optimistic.”

Consumers’ assessment of current conditions improved in April. Those claiming business conditions are “good” increased to 15.3 percent from 14.3 percent.  However, those claiming business conditions are “bad” edged up to 33.5 percent from 33.2 percent. Consumers’ appraisal of the job market remained mixed. Those stating jobs are “hard to get” declined to 37.5 percent from 40.7 percent, while those stating jobs are “plentiful” decreased to 8.4 percent from 9.0 percent.

Consumers were, once again, slightly less optimistic about the short-term outlook. Those expecting business conditions to improve over the next six months decreased to 18.8 percent from 19.3 percent, while those anticipating business conditions will worsen increased to 14.2 percent from 13.7 percent.

Consumers’ outlook for the labor market was less upbeat. Those anticipating more jobs in the months ahead decreased to 16.9 percent from 17.4 percent, however, those anticipating fewer jobs decreased to 18.0 percent from 18.5 percent. The proportion of consumers expecting an increase in their incomes declined to 14.0 percent from 15.5 percent.

Source: The Conference Board

Consumer Comfort Index rises to match four-year high

A report released by Bloomberg showed that household confidence improved last week to match the highest level in four years. 

The Bloomberg Consumer Comfort Index improved in the week ended April 15 to match the highest level in four years as more Americans said their finances were in better shape.  The Bloomberg Consumer Comfort Index measures Americans' perceptions on three important variables: the state of the economy, personal finances and whether it's a good time to buy needed goods or services. The Bloomberg Consumer Comfort Index was minus 31.4 in the period ended April 15, compared with minus 32.8 over the previous seven days. The reading equaled that from two weeks earlier as the best since March 2008.

Despite the strong showing, the monthly expectations measure fell from a one-year high, showing ongoing concerns that too many Americans are still unemployed.

“The uneven nature of the recovery will likely continue to restrain the type of improvement in consumer sentiment that one would traditionally observe at this point in the expansionary cycle,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York.

Jobless applications fell by 2,000 to 386,000 in the week ended April 14 from a revised 388,000 the prior period that was higher than initially estimated, Labor Department figures showed Thursday in Washington. The median forecast of 47 economists surveyed by Bloomberg News called for a drop to 370,000.

The positive news comes on the heels of this week’s announcements that retail sales rose a better-than-expected 0.8% in March. The gain was almost three times as large as projected by the median forecast of economists surveyed by Bloomberg and followed a 1% advance in February.

Source:  retailingtoday.com, bloomberg.com

Lowe's improves customer focus with newly created exec roles

Lowe's has created two new executive positions, with the goal of streamlining its operations to better serve its customers. The new positions are chief customer officer and chief operating officer, and they will be filled by current EVP business development, Gregory Bridgeford, and Rick Damron, EVP store operations, respectively. The promotions are effective May 5, and both executives will report to Robert Niblock, chairman, president and CEO.

“As we continue to transform Lowe’s to a leaner, more nimble, multi-channel company, we took a hard look at our organizational structure and opted to make changes to support our efforts to deliver outstanding customer experiences,” said Niblock. “Lowe’s is fortunate to have a deep and talented bench of executives like Greg and Rick, with experience across home improvement disciplines. I am confident these leaders can deliver on our goals to serve customers whenever and however they choose to engage with Lowe’s.”

In his role as chief customer officer, Bridgeford will be responsible for creating experiences that will best serve customers and differentiate Lowe’s from its competitors. The CCO’s functional areas will include customer experience design, merchandising, marketing and communications, digital interfaces, and pricing and promotion. Bridgeford has more than 30 years of experience in home improvement, having served in business development and strategic planning roles since 1999. He joined the company in 1982 and has served in a variety of increasingly responsible roles, including SVP merchandising and SVP marketing.

Damron's responsibility as COO will be to deliver the customer experience. He will oversee stores operations, sales and service fulfillment, product fulfillment, real estate and facilities, and loss prevention and safety. Damron joined Lowe’s in 1981 and has worked in every aspect of the company’s store operations, and has also served as SVP of logistics. He has served as EVP store operations since 2011, with responsibility for all of Lowe’s stores as well as the company’s specialty sales businesses.

Source:  retailingtoday.com

ADVANCE MONTHLY SALES FOR RETAIL AND FOOD SERVICES MARCH 2012

The U.S. Census Bureau announced that advance estimates of U.S. retail and food services sales for March, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $411.1 billion, an increase of 0.8 percent (±0.5%) from the previous month and 6.5 percent (±0.7%) above March 2011.  Total sales for the January through March 2012 period were up 6.4 percent (±0.5%) from the same period a year ago.  The January to February 2012 percent change was revised from 1.1 percent (±0.5) to 1.0 percent (±0.2%). 

Retail trade sales were up 0.8 percent (±0.5%) from February 2012 and 6.5 percent (±0.7%) above last year.  Building material and garden equipment and supplies dealers sales were up 14.1 percent (±2.6%) from March 2011 and nonstore retailers were up 9.3 percent (±3.0%) from last year.

Source:  census.gov

Retail POS Reporting - Getting the ROI

Numerous research studies demonstrate that retail point of sale reporting (POS reporting) provides vendors with a critical advantage in sales and inventory management.  But we often find a disconnect between the POS report and a hard ROI.  Why is that?

Many vendors that create retail POS reporting systems are managing what we call “rear view” metrics.   A rear view metric tells you what happened yesterday or last week, but it is not very helpful in making actionable plans for the future.  For example, a POS report which shows units and dollars sold for the last 4 weeks is a rear view report.  It’s helpful to know what occurred, but without additional analysis, it does not indicate to you what actions should be taken.  What you should be looking to understand is the trend that sales are likely to follow in the upcoming 4 weeks.  Is the trend positive or negative?  That is the key information you need to put action plans in place.   An inventory weeks of supply is another very strong future looking POS reporting metric.  By understanding your lead time to put product on the shelf, and then comparing it against current weeks of supply inventory, you can quickly identify potential stock outs, which kill your vendor performance scorecard and your sales. 

Many vendors do not connect the dots between the POS reporting at corporate headquarters and the store.  I have personally sat in many meetings reviewing POS reports with a vendor and asked what actions they have taken to address low inventory levels seen on a POS report, only to hear, “Well, there’s not much we can do.”  Although I know many vendors feel that is the case, I know from practical experience it is not true.  The retail buyer or replenishment manager will listen to a well thought out and well documented business case on modifying inventory allocations.  Just make sure you are prepared for that conversation with accurate POS reports and make sure your fill level is not contributing to the problem.   Buyers have sales and profitability goals to hit just like you do, and to do that they need to have the right amount of inventory on the shelf.  A word of advice – focus your pitch on a small set of test stores where you want to change the inventory handling and have a test scorecard report ready to show the buyer so they know exactly how you will track the results. 

In order to get the hard ROI out of retail POS reporting, you have to design the reports the right way.   The tips above are a good start and there are many more good ideas on our blog, so stay a while and dig around.  You can also jump over to the contact us page and ask specific questions.

Warm weather gives apparel retailers and department stores a boost in March

The warmest March in North America in more than 50 years resulted in many apparel retailers and department stores registering solid gains in March, as an early spring brought out shoppers looking for seasonal merchandise earlier than they typically would. 

Macy’s, Kohl’s Corp., Limited Brands and Gap Inc. were among the retailers who topped analyst estimates.

Macy's said that its same-store sales climbed 7.3%, outpacing the 4.8% increase predicted by the Street. The company also raised its forecast for the key revenue metric for the combined March and April period, citing its strong March results.

Macy's, which includes online sales in its calculation of the key monthly revenue figure, said that it benefited from an earlier Easter and moving a cosmetics event to March from April last year. Total revenue for the five weeks ended March 31 increased 6.9% to $2.36 billion.

Limited, parent of Victoria's Secret and Bath and Body Works, said its same-store sales in March rose 8%, topping Wall Street expectations.

Gap Inc. reported a 10% increase in same-store sales in March, benefitting from customer response to its new merchandise. By brand, Gap North America’s sales rose 9%,  Banana Republic North America’s sales were up 5% and Old Navy North America saw its sales climb 11%. International sales were up 2%.

“We delivered solid sales performance in March and are pleased with customer response to product across all brands,” said Glenn Murphy, chairman and CEO of Gap.

Kohl’s credited warmer weather and an earlier Easter with helping to boost its same-store sales in March by 3.6%. Analysts had expected an increase of 2.1%.

Saks Inc. said its same-store sales rose 6.3% in March on strong demand for contemporary apparel, accessories and other items. The results matched average Wall Street predictions.

At The Buckle, same-store sales in March rose 6.4%, less than Wall Street had expected.

In other apparel same-store sales results for March,  Zumiez same-store sales rose 14.1%; The Wet Seal reported a 7.8% decline; and Cato Corp.’s sales increased 7%.

Source: retailingtoday.com

Consumer Confidence Down In March

The Consumer Confidence Index from the Conference Board fell slightly in March to 70.2 from 71.6 in February. 

"Consumer Confidence pulled back slightly in March, after rising sharply in February,” said Lynn Franco, director of The Conference Board Consumer Research Center. “The moderate decline was due solely to a less favorable short-term outlook, while consumers’ assessment of current conditions, on the other hand, continued to improve.”

The Present Situation Index increased to 51.0 from 46.4, its highest level in three and a half years. The results, Franco said, suggest that despite this month's dip in confidence, consumers feel the economy is not losing momentum.

The Expectations Index declined to 83.0 from 88.4 in February as consumers became less optimistic about the short-term outlook. The proportion of consumers expecting business conditions to improve over the next six months increased to 19.2% from 18.9%. However, those anticipating business conditions will worsen also rose, to 13.5% from 11.8%.

Source: retailingtoday.com

Dollar General Opens 10,00th Store

Nothing seems to be able to slow down the discount store channel right now as Dollar General opens it's 10,000th store.  

“Opening the doors of our 10,000th store is a meaningful day for all of us at Dollar General, and we are excited to celebrate the occasion in California,” said Rick Dreiling, Dollar General’s chairman and CEO. “This milestone reiterates our commitment to bringing unmatched convenience and value to customers across the nation.”

The need for detailed POS analytics with 10,000 stores is hard to understate but the quantity of data produced from a chain of 10,000 stores is pretty massive.  Even with a small number of SKU's a vendor supplying to Dollar General has a large amount of data to analyze which makes exception reports critical. Working with our vendors we create inventory and sales exception reports to sort through the data quickly and make sense of it.  For example, an inventory report at a store/SKU grain which identifies any out of stock or low weeks of supply is a fantastic tool for staying on top of inventory.  We also use a sales exception report to identify any SKU/store with a large percentage change in sales over a rolling four week period.  

Exception reports are the key to managing large amounts of data quickly.  What exceptions are you monitoring?

2012 National Hardware Show

The Accelerated Analytics team will be attending The National Hardware Show® May 1-3, 2012 in Las Vegas again this year.  We have attended the show the past several years and find it is a very good opportunity to connect with our customers and network with retail buyers and vendors.    If you have not attended the show, or if you have not attended in a few years, it would be worth considering.  The National Hardware Show® has become huge in the last few years with products across categories like hardware and tools, homewares, lawn and garden, storage, plumbing and much more.  It takes several days to just walk the entire floor and check out all the booths. 

If you are planning to attend the show what are your objectives?  Find new products, new distribution for your current products, network with industry peers?

Dollar General Profits Up 33%

Dollar General reported quarterly profits were up 33% to a record $299 million for the quarter.  Total sales and same store sales were also up significantly.  

The value Dollar General offers to cost aware consumers is clearly paying off for them.  Our teams provide reporting and analytics on Dollar General EDI 852 and we have noticed strong sales as well.   When you are a vendor to a retailer like Dollar General with 9,800+ stores, using EDI 852 to closely monitor sales and inventory is critical.  Imagine if you have just 5 SKU's at every Dollar General store - you would have about 50,000 SKU/store combinations to manage and keep an eye on.   Dollar General offers both a daily and weekly EDI 852 feed so you can get visibility into store sales performance and help partner to grow the business.

Spring Apparel, Candy to Send Easter Sales Past $16 Billion, According to NRF

Spring Apparel, Candy to Send Easter Sales Past $16 Billion, According to NRF

It seems even high prices at the pump can’t keep the Easter Bunny away this year.  According to NRF’s Easter spending survey, conducted by BIGinsight, Americans will shell out an average of $145.28 on everything from apparel and candy to food and decorations this year, up 11 percent from $131.04 last year. Total spending is expected to reach $16.8 billion.*

“Though the price of gas is on everyone’s mind, Easter is one of the few holidays some consumers are willing to stretch their budgets, especially because many children look forward to treats and new outfits on Easter morning,” said NRF President and CEO Matthew Shay. “Retailers will make sure to offer plenty of promotions on candy, apparel, food and decorations in the coming weeks for eager holiday shoppers.”

Read the entire article on NRF's website

Improving EDI 852 On Hand Data for Useful Inventory Reporting

Nearly all EDI 852 files report activity of SKUs or UPC's.  While this probably seems like an obvious statement, it does create some work to create a data set which is suitable for good inventory on hand reporting.  EDI 852 activity based reporting means that a SKU which is on hand, but which did not have a sale or return in a given week, will not be reported in the EDI 852 file because there is no 'activity' to report.  Without some work on the data this creates null on hand records which impact the ability to do good out of stock and inventory exception reporting.  For example, a SKU might have 100 units on hand but not sell for a two week period and so the current week on hand will be null.  To improve upon the data one must carry forward the last known on hand value that was reported in the EDI 852 so that each SKU has an on hand. 

The downside to this approach is that your database will grow in volume over time, and so it is also necessary to put one or more rules in place to decide when on hand for an item will no longer be carried forward.  This can be accomplished using the SKU status - for example do not carry forward the on hand for an item when it changes from 'active' to 'inactive'; or you can create a rule to discontinue the on hand carry forward automatically after some number of weeks with no activity reported in the EDI 852.

Our team has implemented these types of rules to improve upon the EDI 852 for Home Depot, Macy's and a number of other retailers and it has greatly improved our ability to produce accurate and useful inventory out of stock and exceptions reports.

February Retail Sales Increase 8.6 Percent Over Last Year

February Retail Sales Increase 8.6 Percent Over Last Year, Marking 20 Consecutive Months of Growth

With a spring in their step, retailers marked 20 consecutive months of sustained year-over-year retail sales growth in February as unseasonably warm temperatures and comparisons with weak sales in 2011 resulted in stronger-than-expected increases. According to the National Retail Federation, the world’s largest retail trade association, February retail industry sales (excluding automobiles, gas stations and restaurants) increased 0.5 percent seasonally adjusted from January, and 8.6 percent unadjusted year-over-year.

 “Though February is typically a month for consumers to stay home and wait for spring, shoppers this year took advantage of mild weather to get a head start on outdoor projects and warm-weather apparel,” NRF President and CEO Matthew R. Shay said. “While February sales certainly present continued reason for optimism, retailers are paying close attention to rising gasoline prices, which are forcing millions of our customers to spend a significant portion of disposable income filling their gas tanks.”

February retail sales, released today by the U.S. Department of Commerce, showed total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 1.1 percent adjusted month-to-month and 10.3 percent unadjusted year-over-year. NRF continues to forecast retail industry sales will rise 3.4 percent in 2012 to $2.53 trillion.

“Pent-up demand is turning desires into needs, which is one reason why consumers have begun opening up their wallets,” NRF Chief Economist Jack Kleinhenz said. “There is no doubt that the economy is on the upswing, certainly compared to six months ago. Stronger-than-expected February sales and an improving labor market paint a bright picture of the U.S. economy, although the impact rising gas prices will have on the economy’s momentum remains unclear.”

Other findings from February retail sales numbers include:
•    Pleasant weather lifted retail sales at sporting goods, hobby, book and music stores 1.0 percent seasonally-adjusted month-to-month and 7.4 percent unadjusted year-over-year.
•    Homeowners used the mild winter to work outdoors, which helped sales at building material, garden equipment and supplies dealers increase 1.4 percent seasonally-adjusted month-to-month and 18.2 percent unadjusted year-over-year.
•    Department stores saw increased retail sales of 1.5 percent seasonally-adjusted month-to-month and 4.8 percent unadjusted year-over-year.
•    New spring and summer fashions helped lure shoppers to clothing and clothing accessories stores, which saw retail sales increase by 1.8 percent seasonally-adjusted month-to-month and 11.6 percent unadjusted year-over-year.

For Immediate Release, NRF
Stephen E. Schatz (202) 626-8119
SchatzS@NRF.com

U.S. retail sales rose 1.1 percent in February

MARTIN CRUTSINGER

Published: Associated Press 3/13/12

February retail sales rose 1.1 percent, biggest gain in 5 months, with autos showing strength. (AP Photo/Pat Wellenbach) WASHINGTON (AP) - Americans stepped up spending on retail goods in February, evidence that a stronger job market is boosting the economy.

Consumers bought more autos, clothes and appliances. They also paid higher prices for gas.

Retail sales increased 1.1 percent last month, the Commerce Department said Tuesday. It was the biggest gain since September. The government also revised up the previous two months.

Some economists noted that the February increase and the revisions could lead to faster economic growth. It could also put pressure on Chairman Ben Bernanke and the Federal Reserve to rethink its plan to hold interest rates at record lows until at least late 2014.

The Fed is holding a one-day policy meeting Tuesday.

"We believe that the consumer is in better shape than recent downbeat commentary from Fed Chairman Bernanke," said John Ryding and Conrad DeQuadros, analysts with RDQ Economics, in a note to clients.

A separate Commerce report showed U.S. companies restocked at a faster pace in January, a sign that businesses expect stronger job growth to fuel more sales. Business stockpiles rose 0.7 percent in January, while sales increased 0.4 percent.

One factor driving the retail sales increase was a 3.3 percent rise in gasoline sales last month. It was the biggest increase in nearly a year and reflected a surge in gas prices.

Still, retail sales increased a solid 0.8 percent after excluding gas station sales.

Auto sales rose 1.6 percent. Department stores increased 1.5 percent, the largest gain since November 2010. And sales at appliance and electronics stores climbed 1 percent.

The February gain pushed total sales to a record $407.8 billion. That's 20.1 percent higher than the recession low hit in March 2009.

The increase comes after the best three months of hiring in two years. The economy has gained 734,000 jobs since December. That's lowered the unemployment rate to 8.3 percent.

"Retail sales picked up considerably in January and February," said Joshua Shapiro, chief U.S. economist at MFR Inc.

The government report reflected private data released earlier in the month. U.S. automakers reported having the best annual sales pace in four years in February, despite the surge in gas prices.

Retail merchants reported a 6.7 percent increase in sales in February compared with the same month a year ago, according to the International Council of Shopping Center's tally of 21 retailers.

An unusually mild winter had depressed sales of cold weather items during the holiday season. But that turned out to be beneficial in February because it helped to lift spending on spring merchandise.

Economists are concerned that consumers could limit spending this year if their wages continue to lag inflation. And rising gas prices could put further strains on household budgets.

The average price for a gallon of gas was $3.80 ($1 a liter) Monday. That's 30 cents more than consumers paid one month ago.

The overall economy grew at an annual rate of 3 percent in the final three months of last year. But part of that growth came from businesses rebuilding their inventories. That is expected to slow in the current January-March quarter and many economists expect slower growth from the fourth quarter pace.

For all of 2012, analysts at JPMorgan Chase forecast growth of 2.2 percent, an improvement from the 1.7 percent growth seen in 2011.

© 2012 The Associated Press. All Rights Reserved.