Author: Chad Symens

December 3, 2014

•  November posts large gain following flat October
• California, Florida and Texas show strong gains along with MSAs New York, Los Angeles and Seattle

Online advertised vacancies rose 170,200 to 5,253,900 in November, according to The Conference Board Help Wanted OnLine (HWOL) Data Series.  The October Supply/Demand rate stands at 1.77 unemployed for each advertised vacancy with a total of 3.9 million more unemployed workers than the number of advertised vacancies.  The number of unemployed was 9.0 million in October.

“November labor demand shows renewed strength, helping to boost a slow-growth second half of the year,” said Gad Levanon, Managing Director, Economic Outlook & Labor Markets at The Conference Board.  “Gains were widespread across states and MSAs with continued positive trend growth across much of the U.S.”

In November, the Professional category saw strong gains in Management (17,100), Business and Finance (15,400) and Computer (12,800) with a loss in Healthcare (-11,400).  The Services/Production category saw gains in Office/Admin (43,100), Food (20,100) and Transportation (16,900) with a small drop in Sales (-8,800).  Supply/Demand rates continue to improve, providing better opportunities for job seekers.

Regional And State Highlights

• Most states and all regions posted gains in November

Metro Area Highlights

• In November, 50 metro areas posted gains, one fell, and one remained constant

Occupational Highlights

• In November, of the 10 largest online job categories, two posted declines (healthcare practitioners and technical occupations and sales and related occupations)

Source: The Conference Board 

December 5, 2014

As the acquisition of Family Dollar Moves closer to resolution, would-be acquirers Dollar Tree and Dollar General maintain widely differing views on the superiority of their respective offers and the opinion of federal regulators.

The latest developments in the ongoing Family Dollar affair occurred December 5 when Dollar Tree and Dollar General took shots at each other in sharply worded press releases that offered differing views on competition, competitive overlap and store divestiture scenarios.  Both companies said they have been actively involved in conversations with the Federal Trade Commission as a December 23 vote on the deal with Dollar Tree looms for Family Dollar shareholders.

“We believe that the FTC staff appreciates that Dollar Tree and Family Dollar are different retailers with complementary business models,” according to a statement by Dollar Tree indicating a small number of stores would need to be divested to secure regulatory approval.  Conversely, Dollar Tree contends the FTC may require Dollar General to divest far in excess of the 1,500 stores Dollar General offered to divest in its tender offer for Family Dollar.

“Dollar Tree stores sell everything for $1 or less.  Our product mix is constantly changing and includes a balance of things the consumer needs and things the consumer wants such as seasonal items, party goods, and other discretionary products,” Dollar Tree said in a statement.  “Our shopping experience is fun, fast, and friendly with surprising products engendering a thrill of the hunt atmosphere.  Family Dollar sells primarily branded consumable products at multiple price points up to $20 or more.  Their customers expect Family Dollar to carry the same assortment of products week in and week out.”

Based on the view that Dollar Tree and Family Dollar are distinct competitors and therefore only a small number of divestures would be required, according to Dollar Tree, which said it would be in a position to complete the deal by February 2015.

Not so fast was the response from Dollar General shortly after Dollar Tree issued its statement.  Dollar General looks past its similarities with the Family Dollar business model to assert its chief rival is Walmart.

“Dollar General’s documents and data tell a very different story from that contained in the press release issued today by Dollar Tree,” the company said.  “Walmart, not Family Dollar, is the primary driver regarding Dollar General’s strategic pricing decisions, and more than 90% of Dollar General’s SKUs are nationally priced.  Dollar General is confident that its approach to strategic and pricing decisions is both correct and superior to that of Family Dollar and Dollar General has no intention of adopting a flawed strategy – either now or after an acquisition of Family Dollar – that it believes would impair its ability to compete with Walmart and lead to inferior financial performance.”

The coming weeks promise even more drama in the merger saga.  Dollar General said it will continue to work with the FTC and expects to provide an update in sufficient time to allow Family Dollar shareholders to review information prior to the meeting scheduled for December 23.

Meanwhile, Dollar Tree continues to portray its rival’s offer as a risky and uncertain proposal due to overlap issues.  As a result, Dollar General may spend many months advocating and negotiating with the FTC with significant uncertainty as to the outcome and its bid may ultimately fail because the scope of an unprecedented FTC-required divestiture would lead to an unacceptable loss of value, according to Dollar Tree.

Source: Retailing Today 

December 5, 2014

Retail industry employment increased by 37,000 jobs in November, the National Retail Federation said today.  Consistent with seasonal hiring patterns, employment gains were seen in most retail categories, including a marked increase of 11,300 jobs in clothing and clothing accessories stores.  NRF does not include automobile dealerships, gasoline stations or restaurants in its calculations.

“Today’s robust jobs report shows a broadening improvement in the labor market and confirms expectations of a strengthening and expanding economy,” NRF Chief Economist Jack Kleinhenz said.  “Solid seasonal demand, reduced prices at the pump and improving – though erratic – levels of business and consumer confidence have all supported job gains.”

“We remain optimistic that we are gaining ground and traction toward a more normal and stable labor market in the near future,” Kleinhenz said.  “The real nugget in this report was the gain in average hourly earnings.  Improving wages and salaries will create much-needed pressure in the market and help lift demand.”

“The report is consistent with our holiday sales and employment forecast, which concluded that retailers will hire between 730,000 and 790,000 seasonal workers this season,” Kleinhenz said.  “Many of those seasonal positions will ultimately turn into full-time jobs next year.”

Source: National Retail Federation

December 5, 2014

The economy generated 321,000 new jobs in November, much faster than the average six month change in recent months at 258,000 jobs.  This job report is an especially strong one because it combines with an increase in hourly earnings at 9 cents, which is consistent with the acceleration in wages in the Employment Cost Index, reported last month.  As the labor market continues to tighten in the coming year, we expect to see further improvement in wage growth.  The unemployment rate paused at 5.8 percent but it doesn’t change our view that we are only a few months away from reaching the natural rate of 5.5 percent.  Even with low inflation numbers, labor market conditions are pressuring the Fed to raise rates in the first half of 2015.

Source: The Conference Board

November 26, 2014

Temperatures are forecast to trend warmer than last year for the U.S. as a whole.  However, the Southeast may see some cooler trends compared to last year.  There is high confidence that the Great Lakes, New England, and South Central states will trend warmer than last year.  Onshore flow in the West will bring milder and wetter weather to the region.  A more pronounced flow of mositure will bring more snow to the West Coast mountain ranges.  At least one storm will eject out of the southern Rocky Mountains spreading a swath of snow from New Mexico to the Great Lakes and New England.  Following a very cold December last year, demand for winter categories will be much lower this year.  Items like sweaters, coats, heaters, and snow removal categories will see softer demand compared to last year.  The Southeast may be the only region of the country to see a year-on-year lift in seasonal category demand.  On the positive side, there should be less store traffic disruptions in the East this year as snowfall will trend less than last year. 

Source: Retailing Today, Weather Trends International

December 4, 2014

Even if Dollar General is unsuccessful in acquiring Family Dollar, the company plans to get bigger faster in 2015 by opening two stores every day and enhancing the productivity of an already expansive footprint.

Dollar General said Thursday it will open 730 new stores in 2015 and enter new states such as Maine, Rhode Island and Oregon.  Combined with the remodel or relocation of another 875 stores, the investment in physical stores will see Dollar General expand selling space by 6 percent on top of its existing store base of 11,715 locations.  The 2015 growth targets compare to this year’s expansion program which will see the company open roughly 700 stores and relocate or remodel another 900 locations by the time its fiscal year ends in January.

The update on growth was made in conjunction with the release of solid third quarter results in which the company tempered fourth quarter profits expectations and reaffirmed its commitment to acquiring Family Dollar, a company which has already reached a merger agreement with Dollar Tree.

“Our affordability-focused initiatives continued to gain traction with our customers in the third quarter, and our same-store sales growth of 2.8 percent reflected increases in both customer traffic and average ticket for the 27th consecutive quarter,” said Rick Dreiling, Dollar General’s chairman and CEO.  “We continued to grow our market share in consumables, and we are very pleased with the performance of our home and apparel categories.  Importantly, we are seeing a significant step up as we start the holiday season, and we expect to achieve same-store sales growth of approximately 5 percent for the fourth quarter.”

The top line sales growth is expected to help the company achieve the middle of a previously provided full year profits forecast which calls for earnings per share of $3.45 to $3.55.

“We have continued confidence that we are well-positioned for sustainable growth and creation of shareholder value,” Dreiling said.  “Finally, we remain committed to acquiring Family Dollar.  We expect to provide an update on our offer in time for Family Dollar shareholders to review such information prior to the Family Dollar shareholders’ meeting scheduled for December 23, 2014.”

Source: Retailing Today

December 1, 2014

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

Economic activity in the manufacturing sector expanded in November for the 18th consecutive month, and the overall economy grew for the 66th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.

The report was issued today by Bradley J. Holcob, CPSM, CPSD, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.  “The November PMI registered 58.7 percent, a decrease of 0.3 percentage point from October’s reading of 59 percent, indicating continued expansion in manufacturing.  The New Orders Index registered 66 percent, an increase of 0.2 percentage point from the reading of 65.8 percent in October.  The Production Index registered 64.4 percent, 0.4 percentage point below the October reading of 64.8 percent.  The Employment Index grew for the 17th consecutive month, registering 54.9 percent, a decrease of 0.6 percentage point below the October reading of 55.5 percent.  Inventories of raw materials registered 51.5 percent, a decrease of 1 percentage point from the October reading of 52.5 percent.  The Prices Index registered 44.5 percent, down 9 percentage points from the October reading of 53.5 percent, indicating lower raw materials prices in November relative to October.  Comments from the panel are upbeat about strong demand and new orders, with some expressing concerns about West Coast port slowdowns and the threat of a potential dock strike.”

Manufacturing expanded in November as the PMI registered 58.7 percent, a decrease of 0.3 percentage point when compared to October’s reading of 59 percent, indicating growth in manufacturing for the 18th consecutive month.  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 November PMI indicates growth for the 66th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 18th consecutive month.  Holcomb stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through November (55.8 percent) corresponds to a 4.2 percent increase in real gross domestic product (GDP) on an annualized basis.  In addition, if the PMI for November (58.7 percent) is annualized, it corresponds to a 5.1 percent increase in real GDP annually.”

Of the 18 manufacturing industries, 14 are reporting growth in November.

Source: Institute for Supply Management

November 20, 2014

As Dollar Tree moves forward with its acquisition of Family Dollar, the company reported an increase in same-store sales and expressed a favorable holiday outlook.

Dollar Tree’s earnings per share increased 19% to $0.69 and its revenue increased 11.2% to $2.1 billion compared to the third quarter of fiscal 2013; these results were driven by comparable store sales increasing 5.9% during the quarter compared to an increase of 3.1% in the prior-year period.

“These results validate our value enhancement initiatives targeted to attract new, and retain current, customers.  Our store teams are well-prepared and our shelves are well-stocked with incredible values for the upcoming holiday season,” said Bob Sasser, Dollar Tree CEO.

Dollar Tree opened 117 net new stores during the quarter, bringing its total store count to 5,282.  The company has opened 291 net new stores year-to-date, putting it on pace to reach its goal of opening 375 net new stores in fiscal 2014.

Dollar Tree has agreed to buy Family Dollar Inc. but the deal is facing a challenge from Dollar General Corporation over antitrust concerns.

Dollar Tree, which like other discounters is facing competition from small-format stores opened by big retailers such as Walmart, will become the largest dollar store chain if it pulls off its deal with Family Dollar.

In its outlook statement, Dollar Tree estimated fourth-quarter sales in the range of $2.39 billion to $2.46 billion and EPS in the range of $1.07 to $1.14.  Consensus estimates call for EPS of $1.13 on revenues of $2.45 billion.

Source: Retailing Today

December 1, 2014

Fewer Americans shopped and they spent less money during the Thanksgiving weekend, according to new estimates from the National Retail Federation.

Early holiday promotions, the continued growth of online shopping, and an improving economy changed the way millions of people approached the biggest shopping weekend of the year, according to NRF’s Thanksgiving Weekend Spending Survey.  More than half of Americans shopped in stores or online (55.1 percent) but that was less than the prior year when 58.7 percent of Americans shopped.  Overall shopper traffic from Thanksgiving Day through Sunday, November 30 declined 5.2 percent to 133.7 million unique holiday shoppers versus 141.1 million in 2013.  Total shopping, including multiple trips by the same shopper, declined to 233.3 million trips versus 248.6 million.

“A strengthening economy that changes consumers’ reliance on deep discounts, a highly competitive environment, early promotions and the ability to shop 24/7 online all contributed to the shift witnessed this weekend,” said NRF President and CEO Matthew Shay.  “We are excited to be witnessing an evolutionary change in holiday shopping by both consumers and retailers, and expect this trend to continue in the years ahead.”

According to the survey, the average person who shopped or will shop the holiday weekend spent $380.95, down 6.4 percent from $407.02 last year.  Total spending is expected to reach $50.9 billion, down from last year’s estimated $57.4 billion.

Though the overall number of shoppers dropped this year, it remains clear that Black Friday still draws the biggest crowds of the weekend.  According to the survey 86.9 million shoppers were in stores and online on Black Friday while 43.1 million shopped on Thanksgiving Day.  Online shopping appears to have eroded store traffic, but also declined.  According to the survey the average person who shopped over the weekend spent $159.55 online, approximately 41.9 percent of their total average budget, down 10.2 percent from $177.67 last year.  Most shoppers say they shopped online on Black Friday (46.7%), though 36.3 percent say they shopped online on Saturday.  Additionally more than one-quarter (26.2%) of holiday shoppers were online on Thanksgiving Day.

“Though much shopping has been done by this point, it’s important to remember that there are still many weeks left in the holiday season, and savvy shoppers will continue to look for exclusive prices to purchase holiday gifts.  As competition for customer dollars heats up, consumers will be the ultimate winners in the end.  Shoppers this year have made it clear that they no longer only value deep discounts on Thanksgiving and Black Friday, they want the entire package from beginning to end – free shipping, early promotions, convenient ways to use their mobile devices, and, of course, hard-to-beat online deals.”

Source: Retailing Today 

November 25, 2014

The Conference Board Consumer Confidence Index, which had rebounded in October, declined in November.  The index now stands at 88.7, down from 94.1 in October.  The Present Situation Index declined from 94.4 to 91.3, while the Expectations Index decreased sharply to 87.0 from 93.8 in October.

Says Lynn Franco, Director of Economic Indicators at The Conference Board: “Consumer confidence retreated in November, primarily due to reduced optimism in the short-term outlook.  Consumers were somewhat less positive about current conditions and the present state of the job market; moreover, their optimism in the short-term outlook in both areas has waned.  However, income expectations were virtually unchanged and gas prices remain low, which should help boost holiday sales.”

Consumers’ assessment of present-day conditions was moderately less favorable in November than in October.  The proportion saying business conditions are “good” decreased from 24.7 percent to 24.0 percent, while those claiming business conditions are “bad” increased from 21.3 percent to 22.4 percent.  Consumers’ assessment of the job market was slightly less favorable, with the proportion stating jobs are “plentiful” falling from 16.5 percent to 16.0 percent, and those claiming jobs are “hard to get” increasing marginally from 29.0 percent to 29.2 percent.

Consumers’ optimism, which had improved in October, retreated in November.  The percentage of consumers expecting business conditions to improve over the next six months decreased from 19.4 percent to 17.6 percent, while those expecting business conditions to worsen rose from 8.9 percent to 10.7 percent.  Consumers’ outlook for the labor market was also less optimistic.  Those anticipating more jobs in the months ahead decreased from 16.0 percent to 15.0 percent, while those anticipating fewer jobs rose from 14.1 percent to 16.4 percent.  The proportion of consumers expecting growth in their incomes edged down from 16.7 percent to 16.3 percent, while the proportion expecting a drop in income was virtually unchanged at 11.4 percent compared to 11.3 percent in October.

Source: The Conference Board