Author: Chad Symens

January 20, 2015

Residential remodeling is set for modest growth in 2015, according to experts at a press conference hosted by the National Association of Home Builders (NAHB) Remodelers at the International Builders’ Show (IBS) in Las Vegas.  Remodelers appearing on the panel agreed with the forecast, citing home owners’ changing demographics and increased financial security.

NAHB projects that residential remodeling spending on owner-occupied single-family homes will increase a modest 3 percent in 2015 over 2014, and another 1.5 percent in 2016.

“Remodelers are responding to calls from home owners on steadier financial footing than recent years,” said NAHB Remodelers Chairman Robert Criner, GMR, GMB, CAPS, CGP, a remodeler from Newport News, Virginia.  “From major kitchen remodels and bath facelifts to room additions, the members of NAHB Remodelers look forward to providing professional remodeling services in 2015.”

“Among our clientele, a demographic shift towards remodeling urban homes is taking place,” said Mike Nagel, CGR, CAPS, a remodeler from Chicago.  “Our recent jobs tend to be in the city and the projects have increased in size.”

“Existing homes sales and house prices both hit soft spots in 2014 that dealt a glancing blow to residential remodeling businesses,” said Paul Emrath, NAHB’s vice president for survey and housing policy research.  “We expect those drags are behind us in 2015, an outlook consistent with the optimism expressed by remodeler members in our recent Remodeling Market Index (RMI) survey.”

Source: National Association of Home Builders

January 15, 2015

As the broader housing market continues its sluggish recovery, growth in home improvement spending is also expected to soften throughout the coming year, according to the Leading Indicator of Remodeling Activity (LIRA) released by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.  The LIRA projects annual growth in home improvement spending will decelerate from 6.3% in the first quarter of 2015 to 1.6% by the third quarter.

“Due in part to weakening home sales last year, growth in remodeling spending is expected to deflate somewhat in 2015,” says Chris Herbert, Managing Director of the Joint Center.  “Homeownership rates continue to slide as lending remains tight and first-time homebuyers are not yet returning to the market.”

“Although contractor sentiment has cooled in recent quarters, it remains favorable overall,” says Abbe Will, a research analyst in the Remodeling Futures Program at the Joint Center.  “House price gains are moderating but still strong and home sales appear to be turning a corner now, all of which bodes well for continued, if more moderate, home improvement gains for 2015.”

Source: Joint Center for Housing Studies

January 15, 2015

The National Association of Home Builders’ (NAHB) Remodeling Market Index (RMI) posted a record high result of 60 in the final quarter of 2014.  A reading of 60 indicates remodelers’ confidence in the quarter-over-quarter improvement in the remodeling market.

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.

“The recent pace and volume of business has been a boon to our remodeler members’ confidence in the recovery of the housing market,” said NAHB Remodelers Chair Paul Sillivan, CAPS, CGR, CGP, of Waterville Valley, New Hampshire.  “The upward trajectory of the RMI results over the past year has shown that home owners are ready, willing and deciding to remodel.”

The RMI’s future market conditions index rose to 60 from 58 in the previous quarter.  All four of its subcomponents – calls for bids, amount of work committed for the next three months, backlog of jobs and appointments for proposals – increased from the previous quarter’s reading.

The current market conditions component of the RMI also increased to 60 from 57 in the previous quarter.  The readings for all subcomponents, including large additions and small remodels as well as maintenance and repair, also saw increases.

“Even with some weakness in existing homes sales and house prices earlier in the year, remodelers are upbeat as 2014 closes,” said NAHB Chief Economist David Crowe.  “The consistent improvement in RMI results throughout 2014 are a sign of the gradual recovery of the remodeling market.”

Source: National Association of Home Builders

January 15, 2015

Just six months after being named chairman and CEO of Target, Brian Cornell is pulling the plug on the retailer’s 133 unit Canadian operation and will incur a $5.4 billion pre-tax loss in the fourth quarter to do so.

Target said it plans to discontinue operating stores in Canada through its indirect wholly-owned subsidiary, Target Canada Co. and that it had filed an application for protection under the Companie’s Creditors Arrangement Act (CCAA) with the Ontario Superior of Justice in Toronto.

“After a thorough review of our Canadian performance and careful consideration of the implcations of all options, we were unable to find a realistic scenario that would get Target Canada to profitability until at least 2021,” Cornell said.  “Personally, this was a very difficult decision, but it was the right decision for our company.  With the full support of Target Corporation’s Board of Directors, we have determined that it is in the best interest of our business and our shareholders to exit the Canadian market and focus on driving growth and building further momentum in our U.S. business.”

Target currently operates 133 stores and employs 17,600 people throughout Canada.  The company is seeking court approval to make a voluntary $59 million cash contribution into an employee trust that would allow employees to receive a minimum of 16 weeks compensation.

“The Target Canada team has worked tirelessly to improve the fundamentals, fix operations and build a deeper relationship with our guests.  We hoped that these efforts in Canada would lead to a successful holiday season, but we did not see the required step-change in our holiday performance,” said Cornell.  “There is no doubt that the next several weeks will be difficult, but we will make every effort to handle our exit in an appropriate and orderly way.”

Source: Retailing Today

Many retailers have followed up their holiday 2014 sales results with announcements of store closings. Analysts believe these announcements are just the beginning of a “retail earthquake hitting America”. “Because of the changes in buying habits of U.S. consumers, as a result of the continuing hesitancy to spend, the 2014 holiday season was not sufficiently successful for many retailers that have either over expanded, fell out of favor or had insufficient capital and merchandise.”, said bankruptcy expert Chuck Tatelbaum. Online sales account for 13% of all retail sales.

J.C. Penney is closing 39 of its stores, laying off 2,250 workers. Macy’s is closing 14 of its 790 stores across the country. “Our business is rapidly evolving in response to changes in the way customers are shopping across stores, desktops, tablets and smartphones,” explained Terry Lundren, Macy’s chief executive officer. “We must continue to invest in our business to focus on where the customer is headed – to prepare for what’s next.”

Sears Holdings, which has over 1,830 Sears and Kmart stores, closed 200 stores in 2014 and will close 235 underperforming stores, explaining that they “expect to migrate the shopping activity of highly engaged members who previously shopped closed stores to alternative channels”.

• Wet Seal closing 338 retail sotres, laying off 3,700 employees.
•  Aeropostale closed 175 stores in 2014 and have asked investors to apporove closing 1,100 stores in 2015.
• RadioShack closed175 stores in 2014 and have asked investors to apporve closing 1,100 stores in 2015.

Source: WND.com

January 14, 2015

Confident consumers stocked up on gifts and other merchandise over the 2014 holiday season, helping boost overall holiday retail sales to their highest level since 2011.

According to the National Retail Federation, December retail sales, which exclude automobiles, gas stations and restaurants, decreased 0.9% seasonally adjusted month-to-month, and 4.6% unadjusted year-over-year.  The significant drop in gasoline prices in the month of December brought down much of the month-to-month growth.

Total holiday retail sales, which include November and December sales, increased 4% to $616.1 billion, which was in line with NRF’s projected forecast of 4.1% growth.  In addition, non-store holiday sales, which is an indicator of online and e-commerce sales, grew 6.8% to $101.9 billion.

The U.S. Commerce Department, which does include gasoline, said that December retail sales decreased 0.9% seasonally adjusted month-to-month and 3.2 percent unadjusted year-over-year. 

“Today’s holiday retail sales results are welcome news for our industry and for our economy.  There is every reason to believe that we have moved well beyond the days of consumer pessimism and that the trajectory for retailers continues to point up,” said NRF President and CEO Matthew Shay.  “We are fortunate to represent a resilient industry with business leaders who are committed to providing the best value to their customers.  A successful holiday for retail sales is extremely important, but the work to build upon and grow that success never ends.”

“Preliminary holiday results affirm our initial belief that consumers going into the holiday season had the spending power necessary to give retail the shot in the arm it needed,” said NRF Chief Economist Jack Kleinhenz.  “While December’s figures are disappointing, holiday sales in 2014 are the best we’ve seen since 2011.  We remain positive about the future and expect to see consumers continue to benefit from the extra income gained from an improved job market and the dramatic fall in gas prices.  It is important to recognize that December is a very difficult month to adjust for seasonal forces because of holiday spending and this could explain in part this month’s volatility.”

Source: Retailing Today

Stage Stores, who operate under store banners such a Beall’s, Goody’s, Palais Royal, Peebles and Stage, offers moderately priced brand name apparel, accessories, cosmetics and footwear. They are reporting a strong holiday sales season for 2014. Official fourth quarter and full year 2014 results will be reported March 3, but Stage is reporting same store sales for the nine week period ending January 3, 2015 at an increase of 6.5%.

“We are very pleased with our holiday sales and margin performance. Footwear, women’s and cosmetics categories were especially strong. Our customers responded well to our holiday assortment, marketing, promotions and strategic initiatives in store and in our direct-to-consumer business, “ said Michael Glazer, President and CEO at Stage Stores, Inc.

Source: Retailing Today

January 9, 2015

Retail industry employment increased by 2,000 jobs in December as healthy hiring gains in general merchandise and sporting goods stores were offset by declines in clothing and furniture stores, the National Retail Federation said today.  Retail employment for 2014 climbed by 176,000 jobs over the year before, according to NRF’s calculations, which do not include automobile dealerships, gasoline stations or restaurants.

“Once again, today’s jobs report was very strong and shows that the labor market is maturing and the economy is performing soundly,” NRF Chief Economist Jack Kleinhenz said.  “It is the largest annual increase in overall employment since 1999.  While retail employment witnessed large swings in December, it was wholly consistent with seasonal patterns.”

“However, data on average hourly earnings was very disappointing,” Kleinhenz said.  “While the labor market has recovered from recessionary lows, it’s still not strong enough to generate or pressure wage increases.”

“While labor slack is diminishing, the recent and notable drop in energy prices combined with anemic wage growth may provide the Federal Reserve more leeway to lift short-term interest rates,” Kleinhenz said.  “We continue to expect further revisions into the New Year.”

Source: National Retail Federation

January 12, 2015

The Conference Board Employment Trends Index (ETI) increased in December.  The index now stands at 128.43, up from 127.83 in November.  This represents a 7.5 percent gain in the ETI compared to a year ago.

“The Employment Trends Index increased in every single month of 2014, capping the year off with strong growth, 2.3 percent, in the final quarter,” said Gad Levanon, Managing Director of Macroeconomic and Labor Market Research at The Conference Board.  “The strengthening in the ETI suggests that rapid job growth is likely to continue throughout the first half of 2015.  And as the labor market tightens further, acceleration in wage growth is soon to follow.”

December’s increase in the ETI was driven by positive contributions from six of the eight components.  In order from the largest positive contributor to the smallest, these were: Percentage of Respondents Who Say They Find “Jobs Hard to Get”, Initial Claims for Unemployment Insurance, Industrial Production, Percentage of Firms with Positions Not Able to Fill Right Now, Number of Temporary Employees, and Real Manufacturing and Trade Sales.

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

• 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)
• 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)
• Statistical imputation for the recent month
• Statistical imputation for two recent months

Source: The Conference Board

January 8, 2015

Costco showed again in December why it’s the cream of the crop among warehouse club stores.

The Washington based retailer reported an increase of 8% in same store sales in the United States, excluding gasoline sales and foreign exchange.  Same-store sales at international stores rose by 1%.

Net sales for the retailer rose 5% to $12.2 billion in December from $11.53 billion a year earlier.

For the 18 weeks ended January 4, sales at stores open at least a year rose 4%.  They climbed 6% in the United States, but were flat overseas.  Total revenue for the 18-week period climbed 7 percent to $40.85 billion.

Costco Wholesale Corp., based in Issaquah, Washington, runs 671 warehouses, including 474 in the U.S. and Puerto Rico, 88 in Canada, 34 in Mexico, 26 in the U.K., 20 in Japan, 11 in Korea, 10 in Taiwan, seven in Australia and one in Spain.

Source: Retailing Today