Author: Chad Symens

October 1, 2014

• September posts a decline, following strong August gain.
• The STEM related categories continue to gain while other occupational groups show losses.

Online advertised vacancies declined 137,200 to 5,072,000 in September, according to The Conference Board Help Wanted OnLine (HWOL) Data Series released today.  The August Supply/Demand rate stands at 1.84 unemployed for each advertised vacancy with a total of 4.4 million more workers than the number of advertised vacancies.  The number of unemployed was 9.6 million in August.

“The September loss offsets most of August’s gain, resulting in only modest overall growth for 2014,” said Gad Levanon, Director of Macroeconomics and Labor Markets at The Conference Board.  “Following a strong second quarter, the third quarter has ended basically flat.”

In September, the STEM-related occupations showed strength in Computer and Math (9,600), Architecture and Engineering (3,400), and Healthcare Practitioners (12,200), while other categories showed losses, including Office and Administrative (-40,600), Sales (-32,500), and Transportation (-22,900).

Regional And State Highlights

• All 20 of the largest states posted declines in September.
• Among the 50 states, 45 experienced losses while 5 (Iowa, Utah, Maine, Alaska and Nebraska) gained.

Metro Area Highlights

• In September, among the 20 largest metro areas, 2 (San Jose and San Francisco) gained and 18 declined.
• Of the 52 metro areas for which Help Wanted OnLine provides monthly data, 8 gained advertisements, 43 lost, and 1 (Rochester) remained constant.

Occupational Highlights

• In September, of the 10 largest online job categories, 3 posted gains and 7 posted declines.

Source: The Conference Board

September 30, 2014

Walgreens posted fourth quarter sales of $19.1 billion, representing an increase of 6.2% compared to the year-ago period, while sales for the fiscal 2014 ended August 31 increased 5.8% to a record $76.4 billion.

Front-end comparable store sales increased 1.3% in the fourth quarter compared with last year’s fourth quarter.  Customer traffic in comparable stores decreased 2.2% and basket size increased 3.5%, while total sales in comparable stores increased 5.4%.  Walgreens Balance Rewards loyalty program reached 82 million active members at the end of this year’s fourth quarter.

Prescription sales, which accounted for 65.7% of sales in the quarter, increased 9.3% compared with last year’s quarter, while prescription sales in comparable stores increased 7.8%.  The company filled 211 million prescriptions in the quarter, an increase of 4.2% over last year’s fourth quarter.  Prescriptions filled in comparable stores increased 3.9% in the quarter.

In fiscal 2014, Walgreens filled a record 856 million prescriptions.  The company continued to see strong growth in prescriptions filled for Medicare Part D patients, which increased 9.2% in the fourth quarter compared with last year’s quarter.  Since the beginning of fiscal 2013, Walgreens Medicare Part D prescription market share has grown more than twice as fast as its overall retail prescription market share, the company stated.

“Our fourth quarter performance was in line with our expectation, recognizing we have much more to do.  We closed the fiscal year by exercising the option for the second step of our strategic transaction with Alliance Boots, completing the transition of our pharmaceutical distribution to AmerisourceBergen and driving continued improvement in our daily living business that resulted in our largest year-over-year quarterly and fiscal-year sales increases in three years,” stated Walgreens president and CEO Greg Wasson.  “While continuing to work through pharmacy margin pressure, we were able to achieve improved top-line pharmacy growth as our retail pharmacy market share for the fiscal year increased 30 basis points to 19%.  Finally, we maintained solid expense control in the fourth quarter and are moving forward with the implementation of our previously announced cost-reduction initiative to achieve $1 billion in savings by the end of fiscal 2017.”

Walgreens realized a net loss determined in accordance with generally accepted accounting principles for the fiscal 2014 fourth quarter of $239 million, compared with net earnings of $657 million in the same quarter a year ago.  Net loss per share for the quarter was 25 cents, compared with earnings of 69 cents per diluted share in the year-ago quarter.  This year’s quarter was negatively impacted by an $866 million, or 90 cents per diluted share, non-cash loss on the amendment and exercise during the quarter of the company’s Alliance Boots call option.

Adjusted fiscal 2014 fourth quarter net earnings were $714 million, a 1.7% increase.  Adjusted net earnings per diluted share for the quarter increased 1.4% to 74 cents, compared with 73 cents per diluted share in the year-ago quarter.  This year’s fourth quarter earnings adjustments had a net positive impact of $953 million or 99 cents per diluted share.

The combined synergies for Walgreens and its strategic partner, Alliance Boots, in fiscal 2014 were $491 million.  The joint synergy program is estimated to deliver fiscal 2015 combined synergies of approximately $650 million.  Alliance Boots contributed 6 cents per diluted share to Walgreens fourth quarter 2014 adjusted net earnings.  The company estimates that the accretion from Alliance Boots in the first quarter of fiscal 2015 will be an adjusted 10 to 11 cents per diluted share, including a 2-cent benefit related to Alliance Boots’ acquisition of its partner’s interest in a joint venture.  This estimate does not include amortization expense, the impact of AmerisourceBergen warrants or one-time transaction costs.

During fiscal 2014, the company generated operating cash flow of $3.9 billion and free cash flow of $2.8 billion.  Walgreens also increased its quarterly dividend rate declared in August by 7.1% to 33.75 cents per share, consistent with the company’s goal of returning cash to shareholders.  This marked the 39th consecutive year in which Walgreens increased its shareholder dividend.

GAAP total gross profit dollars increased $136 million, or 2.6%, compared with the year-ago fourth quarter, with gross profit margins decreasing 90 basis points versus the year-ago quarter to 28 as a percentage of sales.  Adjusted gross profit dollars increased $133 million, or 2.6%, compared with the year-ago fourth quarter.

Pharmacy gross profit dollars were negatively impacted by lower third-party reimbursement and generic drug price inflation, which were partially offset by an increase in the brand-to-generic drug conversions compared with the year-ago quarter.  Both pharmacy and front-end margins benefitted from purchasing synergies from the company’s joint venture with Alliance Boots.

The company opened or acquired 46 new drug stores in the fourth quarter compared with 33 in the year-ago quarter.  In fiscal 2014, Walgreens added a net gain of 21 new drug stores in addition to 70 net new drug stores through acquisitions.

At August 31, Walgreens operated 8,309 locations with a presence in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.  The company has 8,207 drug stores nationwide, a net gain of 91 compared with a year ago.  Walgreens also operates infusion and respiratory services facilities, specialty pharmacies and mail service facilities, and manages more than 400 Healthcare Clinic and provider practice locations around the country.  Walgreens digital Business includes Walgreens.com, drugstore.com, Beauty.com, SkinStore.com and VisionDirect.com

Source: Retailing Today 

10/1/2014

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

Economic activity in the manufacturing sector expanded in September for the 16th consecutive month, and the overall economy grew for the 64th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.  “The September PMI registered 56.6 percent, a decrease of 2.4 percentage points from August’s reading of 59 percent, indicating continued expansion in manufacturing.  The New Orders Index registered 60 percent, a decrease of 6.7 percentage points from the 66.7 percent reading in August, indicating growth in new orders for the 16th consecutive month.  The Production Index registered 64.6 percent, 0.1 percentage point above the August reading of 64.5 percent.  The Employment Index grew for the 15th consecutive month, registering 54.6 percent, a decrease of 3.5 percentage points below the August reading of 58.1 percent.  Inventories of raw materials registered 51.5 percent, a decrease of 0.5 percentage point from the August reading of 52 percent, indicating growth in inventories for the second consecutive month.  Comments from the panel reflect a generally positive business outlook, while noting some labor shortages and continuing concern over geopolitical unrest.”

Manufacturing expanded in September as the PMI registered 56.6 percent, a decrease of 2.4 percentage points when compared to August’s reading of 59 percent.  A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI in excess of 43.2 percent, over a period of time, generally indicates an expansion of the overall economy.  Therefore, the September PMI indicates growth for the 64th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the 16th consecutive month.  Holcomb stated, “The past relationship between the PMI and the overall economy indicates that the average PMI for January through September (55.2 percent) corresponds to a 4.0 percent increase in real gross domestic product (GDP) on an annualized basis.  In addition, if the PMI for September (56.6 percent) corresponds is annualized, it corresponds to a 4.4 percent increase in real GDP annually.”

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

Source: Institute for Supply Management 

September 30, 2014

The Conference Board Consumer Confidence Index, which had increased in August, declined in September.  The Index now stands at 86.0, down from 93.4 in August.  The Present Situation Index decreased to 89.4 from 93.9, while the Expectations Index dropped to 83.7 from 93.1 in August.

Says Lynn Franco, Director of Economic Indicators at The Conference Board: “Consumer confidence retreated in September after four consecutive months of improvement.  A less positive assessment of the current job market, most likely due to the recent softening in growth, was the sole reason for the decline in consumers’ assessment of present-day conditions.  Looking ahead, consumers were less confident about the short-term outlook for the economy and labor market, and somewhat mixed regarding their future earnings potential.  All told, consumers expect economic growth to ease in the months ahead.”

Consumers assessed current conditions less favorably in September compared to a month ago.  Their view of business conditions was virtually unchanged: those saying conditions are “good” fell minutely, from 23.5 to 23.4 percent, while those claiming business conditions are “bad” held constant at 21.3 percent.  Consumers’ appraisal of the job market declined more appreciably, with the proportion stating jobs are “plentiful” falling from 17.6 percent to 15.1 percent.  Those claiming jobs are “hard to get” was barely changed, at 30.1 percent versus 30.0 percent in August.

Consumers’ optimism about the short-term outlook declined considerably in September.  The percentage of consumers expecting business conditions to improve over the next six months fell from 20.8 percent to 18.6 percent, while those expecting business conditions to worsen rose from 9.9 percent to 12.0 percent.  Consumers’ outlook for the labor market likewise took a downturn.  Those anticipating more jobs in the months ahead fell from 17.8 percent to 15.2 percent, while those anticipating fewer jobs rose from 15.2 percent to 17.8 percent.  The proportion of consumers expecting growth in their incomes rose in September to 16.8 percent, compared to 15.5 percent in August.  However, the proportion expecting a drop in income also rose – to 13.4 percent versus 11.6 percent a month ago.

Source: The Conference Board

September 29, 2014

For the U.S. as a whole, temperatures will trend similar to last year and below normal, but there will be a split in trends across the nation with warmer temperatures in the West and cooler temperatures in the more densely populated East.  The month will begin with warm weather across much of the nation and that will continue into the Columbus Day weekend in the East befor turning cooler.  The Northwest region will trend wetter than last year, but it still remains drier than normal, while the Southwest will be wetter than last year and normal.  Most of the East will trend drier than normal, but we’ll have to keep an eye out for any tropical disturbances, especially in Florida, although tropical activity overall will still be low.  Cooler temperature trends in the East will help to offset warmer trends in the western half of the nation.  Demand for fall apparel, furnace filters, and comfort foods should be stronger in the East compared to last year.

Source: Retailing Today, Weather Trends International

September 24, 2014

According to Deloitte’s annual retail holiday sales forecast, steadily improving economic fundamentals should moderately boost holiday sales in stores and online this year.

“Income, wage and job growth are positive indicators heading into the holiday season,” said Daniel Bachman, Deloitte’s senior U.S. economist.  “Debt levels remain at historical lows, and stock market gains coupled with increasing home prices have a wealth effect on consumers, which may encourage increased spending compared with prior years.  Although consumers are watching tensions unfold in the Middle East and Ukraine, the improvement in their economic situation should more than offset the foreign conflicts’ impact on consumer confidence and retail sales.  Despite recent events in energy-producing areas of the world, gas prices have held steady, which may also sustain consumers’ spending power.”

Deloitte’s retail and distribution practice expects total holiday sales to climb to between $981 and $986 billion, representing a 4 to 4.5% increase in November through January holiday sales (excluding motor vehicles and gasoline) over last season.  This growth rate is a moderate improvement over last year’s 2.8% gain.  Additionally, Deloitte forecasts a 13.5 to 14% increase in non-store sales in the online and mail order channels during the 2014 holiday season.

“While online sales continue to climb, digital customer interactions through both virtual and physical store channels present greater sales opportunities than online or mobile commerce alone,” said Alison Paul, vice chairman, Deloitte LLP and retail and distribution sector leader.  “Our research indicates that 84 percent of shoppers use digital tools before and during their trip to a store.  Additionally, those shoppers convert, or make a purchase, at a 40 percent higher rate than those who do not use such devices during their shopping journey.”

Deloitte forecasts that digital interactions will influence 50%, or $345 billion, of retail sales this holiday season.  This figure reflects the extent to which consumers’ use of desktop and laptop computers, tablets and smartphones influence brick-and-mortar store sales.

“Retailers should focus on the right functionality, rather than more functionality, when creating digital experiences this holiday season.  Rather than offer their full e-commerce site on a mobile device, for example, retailers may be more effective by helping consumers compare prices, scan through local assortments, and navigate the store.  Retailers that better understand how consumers make purchasing decisions, then deliver tools that support that process in a way that is consistent and complementary across online, mobile and store channels – may have the advantage this holiday season,” Paul said.

Source: Retailing Today

September 24, 2014

Sales of newly built, single-family homes increased 18 percent in August to a seasonally adjusted annual rate of 504,400 units in August, the highest level in six years, according to newly released data by the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.

“This jump in sales activity is in line with our latest surveys, which indicate builders are seeing increased traffic and more serious buyers in the market for single-family homes,” said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.

“This robust level of new home sales activity is a good sign that the housing recovery is moving towards higher ground,” said NAHB Chief Economist David Crowe.  “Historically low mortgage rates, attractive home prices and firming job and economic growth should keep the housing market moving forward in 2014.”

Regionally, new home sales rose 50 percent in the West, 29.2 percent in the Northeast and 7.8 percent in the South.  Sales were unchanged in the Midwest.

The inventory of new homes for sale edged up to 203,000 in August, which is a slim 4.8 month supply at the current sales pace.

Source: National Association of Home Builders

September 24, 2014

More costumes than ever will be flying off the shelves as Americans gear up to celebrate the spookiest holiday of the year, according to NRF’s Halloween Consumer Spending Survey.  More than two-thirds (67.4%) of celebrants will buy Halloween costumes for the holiday, the most in the survey’s 11 year history.  The average person will spend $77.52 this Halloween, compared to $75.03 last year.  Total spending on Halloween this year will reach $7.4 billion.

“As one of the fastest-growing consumer holidays, Halloween has retailers of all shapes and sizes preparing their stores and websites for the busy fall shopping season,” said NRF President and CEO Matthew Shay.  “There’s no question that the variety of adult, child and even pet costumes now available has driven the demand and popularity of Halloween among consumers of all ages.  And, with the holiday falling on a Friday this year, we fully expect there will be a record number of consumers taking to the streets, visiting haunted houses and throwing unforgettable celebrations.”

Party-goers will splurge on spooky and fun garb to wear this year as $2.8 billion will be spent on costumes overall.  Specifically, celebrants will shell out $1.1 billion on children’s costumes, and $1.4 billion on adult costumes.  It is clear Fido and Fluffy will not be forgotten:  Americans will spend $350 million on costumes for their furry friends.

Candy and greeting cards alike will be popular items this season, as consumers will spend $2.2 billion on candy this year and 35.9 percent of people will be sending Halloween greeting cards.  With Americans planning to spend $2 billion on decorations for the frightful holiday, life-size ghosts, pumpkins and festive decor will be aplenty on lawns and doorsteps throughout the country.

Consumers will celebrate the holiday in many different ways, but topping the list of planned activities is handing out candy (71.1%), while others will decorate their homes and yards (46.7%), and dress in costume (45.8%).  One-third of Americans will throw or attend a party (33.4%), which is up from last year (30.9%).

Much like last year, consumers will hit the stores and the Internet early to get the first pick of costumes and candy.  According to the survey, nearly one-third of celebrants (32.1%) say they will start their Halloween shopping before the first of October.  And, while 43.3 percent of celebrants kick off their shopping in the first two weeks of October, one-quarter (24.6%) will wait until the last minute and shop the last two weeks of October.

While the bulk of Americans will look for costume inspiration online (34.2%) or in a retail store or costume shop (33%), Pinterest is a growing source of inspiration this year.  The survey found 11.4 percent of Americans will turn to Pinterest for costume ideas, up from 9.3 percent last year.  Young adults will drive the most Pinterest traffic:  21.2 percent of 18-24 year olds will turn to the popular site for ideas, as will 21.0 percent of 25-34 year olds.

“Social media is a great tool for consumers to find inspiration for all of their Halloween activities, including finding tips for decorating their homes and yards, looking for personal and even family costume ideas, and even finding the best deals from retailers,” said Analyst Pam Goodfellow.  “As the popularity of Halloween continues to grow to unseen levels, there is no doubt that Americans this year will find ways to get in the spirit, looking for affordable, fun ways to celebrate with their families.”

For some consumers, the U.S. economy is still top-of-mind.  According to the survey, 18.8 percent say the state of the U.S. economy will impact their Halloween spending plans.  Specifically, nearly two in five (19.7%) of those impacted will utilize their creative skills and make their own costumes rather than buying a new one this Halloween.

Source: National Retail Federation

September 23, 2014

Following fourth quarter results that missed Wall Street expectations, Ascena Retail is looking ahead to fiscal 2015, which CEO David Jaffe said will see the continuation of a critical, multi-year investment to build the company’s omnichannel platform.

The company reported net earnings of $15.7 million, compared with $29.8 million in the year-ago period.

Revenues for the quarter were $1.18 billion, compared with $1.20 billion in the prior year.  The company attributed the decrease challenging tween market comditions at Justice and inventory-related issues at Lane Bryant.  Results were partially offset by positive comp growth at Maurices and Catherines and new strong growth at Maurices.  Total same-store sales decreased by 2%.

“Despite mixed results across our portfolio and continuing soft traffic patterns, fourth quarter EPS was in line with our expectations.  We have yet to see sustained evidence of market improvement, and as a result, are maintaining focus on inventory levels and expense management, developing an integrated ecommerce platform for our customers, and driving efficiency improvements throgh our strategic investments.  Our final brand is in the process of moving into our retail distribution center in Ohio, and we remain on track to have all our brands operating out of our new ecommerce fulfillment center by spring of calendar 2015.  We continue to create a business model that will drive sustainable long term value for shareholders.”

Source: Retailing Today

September 19, 2012

The Conference Board Leading Economic Index (LEI) for the U.S. increased 0.2 percent in August to 103.8, following a 1.1 percent increase in July, and a 0.7 percent increase in June.

“The LEI continued to rise in August, although at a slower rate than in July,” said Ataman Ozyildirim, Economist at The Conference Board.  “The LEI’s six-month growth trend has been held back slightly by lackluster contributions from housing permits and new orders for nondefense capital orders.  Despite concerns about investment picking up, the economy should continue expanding at a moderate pace for the remainder of the year.”

“The leading indicators point to an economy that is continuing to gain traction, but most likely won’t repeat its stellar second quarter performance in the second half,” said Ken Goldstein, Economist at The Conference Board.  “Meanwhile, the CEI, a measure of current economic activity, continued to expand through August, amid improving personal income, employment and retail sales.  However, industrial production registered a slight decrease for the first time in seven months.”

The Conference Board Coincident Economic Index (CEI) for the U.S. increased 0.2 percent in August to 109.7, following a 0.1 percent increase in July, and a 0.3 percent increase in June.

The Conference Board Lagging Economic Index (LAG) for the U.S. increased 0.3 percent in August to 125.1, following a 0.3 percent increase in July, and a 0.4 percent increase in June.

Source: The Conference Board