Author: Chad Symens

August 4, 2014

The Conference Board Employment Trends Index (ETI) increased in July.  The index now stands at 120.31, up from 119.92 (an upward revision) in June.  This represents a 6.6 percent gain in the ETI compared to a year ago.

“The six-month growth rate in the Employment Trends Index is the strongest in over two years, suggesting solid job growth is likely to continue in the coming months,” said Gad Levanon, Director of Macroeconomic Research at The Conference Board.  “The pickup in economic activity in recent months will likely increase the need and willingness of employers to accelerate hiring.”

July’s increase in the ETI was driven by positive contributions from five of its eight components.  In order from the largest positive contributor to the smallest, these were: Initial Claims for Unemployment Insurance, Job Openings, Industrial Production, 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 compopsite index filters out “noise” to show underlying trends more clearly.

The eight labor-market indicators aggregated into the Employment Trends Index iclude:

• Percentage of Respondents Who Say They Find “Jobs Hard to Get” (The Conference Board Consumer Confidence Survey)
• Initial Claims for Unemployment Insurance (U.S. Department of Labor)
• Percentage of Firms With Positions Not Able to Fill Right Now (National Federation of Independent Business Research Foundation)
• Number of Employees Hired by the Temporary-Help Industry (U.S. Bureau of Labor Statistics)
• Ratio of Involuntarily Part-time to All Part-time Workers (BLS)
• Job Openings (BLS)
• Industrial Production (Federal Reserve Board)
• Real Manufacturing and Trade Sales (U.S. Bureau of Economic Analysis)

Source: The Conference Board

August 1, 2014

The National Retail Federation calculated retail industry (excluding autos and gasoline) employment increased by 27,000 jobs in July.  NRF calculated that retail gained 232,000 jobs year-over-year.  The healthy and steady increase in retail employment was due to improved economic and seasonal factors in the second quarter and should provide for stronger growth in the second half of the year.

“Pickup in retail employment in July and the upward revisions to June and May are very encouraging,” NRF Chief Economist Jack Kleinhenz said.  “The increase was due in part to seasonal hiring as well as improved business and consumer conditions.  No one can guarantee smooth sailing ahead even though overall retail payrolls are encouraging.  Choppy growth will continue.”

“Recent data increasingly show that the economy is on better footing, reflecting improved consumer and business confidence.  Although the unemployment rate edged up, more seekers entered the labor force.  The nation’s retailers are adding jobs at a healthy pace.”

The U.S. Bureau of Labor Statistics Employment Situation Summary showed that total nonfarm payroll emplyment rose by 209,000 in July, slightly below industry expectations.  The unemployment rate ticked up to 6.2 percent and the civilian labor participation rate increased to 62.9 percent.

Source: National Retail Federation 

August 1, 2014

The economy generated a gain of 209,000 jobs in July, very close to the average of more than 200,000 per month over the past year.  This means that the trend in employment growth, which supported stellar second quarter GDP growth and strong consumer and business confidence, is holding up for now.  The unemployment rate has remained almost unchanged at 6.2 percent, still well above the natural rate of unemployment, which is about 5.5 percent.  This implies that the pace of job creation can continue for a few more months beyond the summer.  However, participation isn’t increasing rapidly, with baby boomers retiring en masse.  Moreover, labor productivity, which has been low for a long time, may become a more important source of growth.  These forces could also begin to create more upward pressure on wages later this year.

Source: The Conference Board

August 1, 2014

At first glance the list of the nation’s fastest growing retailers appears to be more of a hodgepodge of industry sectors than evidence of a single, defined trend.  From grocery conglomerates and discount specialty stores to home furnishing and athletic wear companies, the top players on STORES’ Hot 100 Retailers List run the gamut.  The list, published annually in the August issue of STORES Magazine, consists of retail companies that reported the greatest increase in domestic sales between 2012 and 2013.  All public and private companies with more than $300 million in sales were eligible for the list.

“The eclectic quality of the list is an upbeat indicator for retail,” said STORES Media Editor Susan Reda.  “While Albertson’s grew mainly by acquisition, Wayfair’s ascent is 12 years in the making as this online specialist benefits from renewed consumer interest in sprucing up their homes.

“It’s becoming a familiar story in our industry – growth stems from new products, innovative thinking and one-of-a-kind customer experiences,” Reda said.

Idaho-based grocery Albertsons claims the top spot on the 2014 list, with sales growth of 432.7 percent between 2012 and 2013.  Albertson’s growth – to 2013 sales of $19.5 billion – has primarily come from mergers and acquisitions.

Home furnishings companies Wayfair and Conn’s made their marks this year, landing at No. 2 and No. 4, respectively.  Boston-based Wayfair saw its sales increase 52.5 percent between 2012 and 2013, while Texas-based Conn’s sales grew 39.2 percent during that time frame.  A revitalized housing market has helped the home furnishings sector in recent years as consumers are once again investing in their homes.

Specialty retail company Ascena Retail Group secured the No. 3 spot this year.  Suffem, New York-based Ascena operates more than 3,800 stores throughout the United States and Canada, including the Justice and Dress Barn brands, and recently reported annualized revenues of more than $4.5 billion.  Sales for Ascena Retail Group grew 49.1 percent between 2012 and 2013.

Michael Kors Holdings has had tremendous staying power the past few years in terms of continued company growth, making the top 10 each of the past three years, including No. 6 this year.  The New York-based company’s U.S. sales increased 36 percent between 2012 and 2013.

No. 7 Under Armour continues to take the athletic world by storm, landing in the top 10 for the first time on sales growth of 34.8 percent.  The Baltimore-based company reported U.S. sales of $672 million in 2013.

Michigan-based grocer SpartanNash (5), Five Below (9) and Amazon.com (10) also placed in the top 10.

“Hot retailers do things better than their competitors, and they’ve clearly carved out a proposition for the consumer,” said Kantar Retail Chief Knowledge Officer Bryan Gildenberg.  “Part of that success is being at the right place at the right time with the right products, and the other part of it is being smart enough to know the differences in those factors between themselves and their competitors; in a slow growth market like 2013, share gains equal growth.”

Hot 100 List names nine companies who have “sustained sizzle”

Talk about staying power: Nine retailers are being recognized for having made the Hot 100 each year since its inception in 2006.  The sustained sizzlers, listed in order of total sales growth (and with 2014 rank):

• Amazon.com – 852% (10)
• Ascena Retail Group – 366% (3)
• O’Reilly Automotive – 225% (53)
• Urban Outfitters – 196% (39)
• J. Crew – 158% (38)
• Tractor Supply Co. – 150% (34)
• Dick’s Sporting Goods – 137% (69)
• Dollar Tree – 126% (87)
• Ross Stores – 97% (86)

The Hot 100 Retailers list is the definitive annual ranking of the fastest growing retail chains in the United States.  Rankings are determined by increases in year-over-year domestic sales between 2012 and 2013.

Source: National Retail Federation

July 31, 2014

In June 2014, annual inflation as measured by the Harmonized Index of Consumer Prices (HICP) declined in the U.S. and Japan, but was mixed across Euro Area countries compared.

Although inflation remained steady in the Euro Area as a whole, price growth slowed in Belgium (from 0.8 to 0.7 percent), France (from 0.8 to 0.6 percent), Italy (from 0.4 to 0.2 percent) and Spain (from 0.2 to 0.0 percent), while it accelerated in Germany (from 0.6 to 1.0 percent), Austria (from 1.5 to 1.7 percent) and the Netherlands (from 0.1 to 0.3 percent).  Outside the Eurozone, Sweden (0.5 percent), the United Kingdom (1.9 percent), Norway (1.8 percent) and Denmark (0.4 percent) also experienced rising prices.  Switzerland experienced the largest decline in inflation (from 0.2 to -0.1 percent), returning to deflationary territory after two months of positive price growth.

“In June, inflation in the Euro Area as a whole held steady at its lowest level (0.5 percent) since the Great Recession,” said Elizabeth Crofoot, Senior Economist with the International Labor Comparisons program at The Conference Board.  “But the broad range of inflation rates among membetr states – from negative or zero to nearly two percent – highlights the difficulty in setting a common monetary policy that will have a common impact on prices.  However in Japan, the slight dip in inflation (from 4.5 to 4.4 percent), the first since January, suggests that the combined impact of recent monetary expansion and an increased sales tax may be easing.”

June inflation remains below 1 percent in all Euro Area countries compared, except Austria (1.7 percent) and Germany (1.0 percent).  Inflation is also above 1 percent in Japan (4.4 percent), the U.S. (1.9 percent) and Norway (1.8 percent).  June inflation was lower than price growth a year ago in all countries compared except Japan, the U.S., and Sweden.

Source: The Conference Board

July 31, 2014

Retail and consumer products veteran Brian Cornell was named chairman and CEO at Target to fill two of the three roles previously held by the company’s former top executive Gregg Steinhafel.

Cornell will assume his new responsibilities at Target on August 12 after most recently serving as CEO of PepsiCo Americas Foods for two years.  He brings a well-rounded background in retail and CPG to Target.  Prior to PepsiCo, Cornell served as president and CEO of Walmart’s Sam’s Club division for roughly three years.  He came to Sam’s Club after serving as CEO of Michaels Stores and also held the role of chief marketing officer at Safeway.  Earlier in his career, Cornell held general management positions at PepsiCo North America Foodservice.

In a brief statement announcing his appointment, Target said Cornell’s top priorities would be to accelerate the company’s performance and advance its omnichannel evolution.

“As we seek to aggressively move Target forward and establish the company as a top omnichannel retailer, we focused on identifying an extraordinary leader who could bring vision, focus and a wealth of experience to Target’s transformation,” said Roxanne S. Austin, the interim non-executive chair of the Target board who led the search for Steinhafel’s replacement.  Steinhafel, who also held the title of president, stepped down in early May and his responsibilities were filled on an interim basis by CFO John Mulligan.

“The board is confident that Brian’s diverse and broad experience in retail and consumer products as well as his passion for leading high performing teams will propel Target forward.”

Cornell said he was honored and humbled to join Target as the first CEO hired from outside the company.

“I am committed to empowering this talented team to realize its full potential, lead change and strengthen the love guests have for this brand,” Cornell said.  “As we create the Target of tomorrow, I will focus on our current business performance in both the U.S. and Canada and on how we accelerate our omnichannel transformation.”

In exchange for his services, Cornell will receive a lucrative compensation package that includes an annual salary of $1.3 million, a 2014 pro-rated cash incentive equal to 150% of his base sales and stock-based awards with a potential payout of $3.75 million.  In addition, in 2015 Cornell will receive stock-based awards with a potential value of $9 million.  Target is also on the hook to compensate Cornell for incentive awards and grants he forfeits by leaving PepsiCo.  Target said it would provide Cornell with a make-whole equity grant and a make-whole pro-rata annual bonus valued at more than $19 million, minus whatever portion of that amount Cornell is able to retain from his former employer.  Target said it was unable to determine that amount at the time details of his compensation were disclosed in a filing with the Securities and Exchange Commission.

Source: Retailing Today

July 30, 2014

The U.S. Census Bureau of Economic Analysis today reported 4.0 percent annualized growth in real Gross Domestic Product for the second quarter of 2014.

Some of the past quarter’s growth performance reflects a catch-up from the dismal first quarter performance.  But this stellar growth figure also suggests that the economy has gained some momentum and could hold on to this new found dynamism through the second half of 2014.  We find further confirmation in The Conference Board Leading Economic Index for the U.S. as well as the continued strengthening of the Consumer Confidence Index, released yesterday.  Job growth has driven income growth.  And consumers have clearly been spending on some long-delayed purchasing plans.  As a result, business investment is beginning to pick up.  These gains in consumption and investment could be accompanied by better numbers on export trade in the second half of the year, provided the global economy doesn’t slow much further.  In short, the economic doldrums of late 2013 and early 2014 are likely to be in the rear view mirror.

Source: The Conference Board

July 29, 2014

The Conference Board Consumer Confidence Index, which had improved in June, increased in July.  The Index now stands at 90.9, up from 86.4 in June.  The Present Situation Index increased to 88.3 from 86.3, while the Expectations Index rose to 92.7 from 86.4 in June.

Says Lynn Franco, Director of Economic Indicators at The Conference Board: “Consumer confidence increased for the third consecutive month and is now at its highest level since October 2007 (95.2).  Strong job growth helped boost consumers’ assessment of current conditions, while brighter short-term outlooks for the economy and jobs, and to a lesser extent personal income, drove the gain in expectations.  Recent improvements in consumer confidence, in particular expectations, suggests the recent strengthening in growth is likely to continue into the second half of this year.”

Consumers’ assessment of current conditions improved in July.  Those claiming business conditions are “good” edged down to 22.7 percent from 23.4 percent, while those stating business conditions are “bad” was virtually unchanged at 22.7 percent.  Consumers’ appraisal of the job market was more favorable.  Those saying jobs are “plentiful” increased to 15.9 percent from 14.6 percent, while those claiming jobs are “hard to get” remained unchanged at 30.7 percent.

Consumers’ expectations were more optimistic in July.  The percentage of consumers expecting business conditions to improve over the next six months increased to 20.2 percent from 18.4 percent, while those expecting business conditions to worsen held steady at 11.5 percent.  Consumers were more positive about the outlook for the labor market.  Those anticipating more jobs in the months ahead increased to 19.1 percent from 16.3 percent, while those anticipating fewer jobs declined to 16.4 percent from 18.4 percent.  Slightly more consumers expect their incomes to grow, 17.3 percent in July versus 16.7 percent in June, while those expecting a drop in their incomes declined to 11.0 percent from 11.4 percent.

Source: The Conference Board

July 28, 2014

WTI expects August 2014 temperatures to trend similar to last year for the U.S. as a whole.  Much of the East will trend warmer than last year with the Southeast also trending warmer than normal.  Summer clearance promotions will see the biggest returns during the first three weeks of the retail month in the eastern half of the nation.  A sharp change to colder weather at the end of the month in the North will be more favorable for back-to-school and autumn categories.  Precipitation will be greater than last year across the Plains for the month overall.  Wetter trends in the final week of August will be an additional positive for autumn categories in the East.  Hurricane activity will continue to run below normal; however, should a storm develop and threaten the U.S. mainland, the Texas Gulf Coast will stand the highest risk of impact.

Source: Retailing Today, Weather Trends International

July 22, 2014

Lowe’s plans to build a customer support center in Indianapolis, a move that will create up to 1,000 new jobs by 2016.

The world’s second largest home improvement retailer plans to invest $20.5 million to purchase, renovate and equip a 140,000 sq. ft. office facility at Intech Park 12, 6620 Network Way, on the northwest side of Indianapolis.  The new customer support center will support stores and Internet sales, delivery services and repair services for Lowe’s customers across the United States.  The facility is expected to be operational in the first quarter of 2015 and will complement the company’s existing customer support centers located in Wilkesboro, North Carolina, and Albuquerque, New Mexico.

“Indiana provides national companies like Lowe’s with the perfect building blocks for success,” said Governor Mike Pence.  “We have taken all the parts required – a central location, low taxes and a skilled workforce – and assembled them perfectly here in Indiana.  Indiana is a state that works for business because we have built the business climate companies like Lowe’s need for growth and success.”

Lowe’s, which currently employs nearly 7,900 people in Indiana, plans to begin hiring for positions at the new customer support center immediately.  EmployIndy will offer assistance during the hiring process.  Available positions, beginning with the site director position, will be posted this week with additional positions to follow.  Applications are accepted online at Lowes.com/careers.

“We chose Indianapolis becaus of the talented and experienced workforce who we believe can provide outstanding service to our customers,” said Don Easterling, Lowe’s VP, contact center.  “Indianapolis adds a strategic Midwest location to our network of customer support centers located in North Carolina and New Mexico.  We appreciate the support of both state and local officials that helped make this a win-win project.”

The Indiana Economic Development Corporation offered Lowe’s Home Centers up to $5,500,000 in conditional tax credits and up to $100,000 in training grants based on the company’s job creation plans.  These tax credits are performance-based, meaning until Hoosiers are hired, the company is not eligible to claim incentives.  The City of Indianapolis will consider tax abatement and additional funding for the direct infrastructure associated with the facility at the request of Develop Indy, a business unit of the Indy Chamber.

“Internationally recognized companies, like Lowe’s, are choosing Indy as the place to expand because of our welcoming business climate, central location, and talent pool,” said Mayor Greg Ballard.  “Indy has seen tremendous business growth this year, and as the city’s unemployment rate continues to fall, we look forward to continuing this course.”

With national companies like Lowe’s picking the state for their new operations, Indiana’s workforce growth in June was the largest in the nation.  During the past year, Indiana has added more than 53,000 Hoosiers to its labor force.  The state’s unemployment rate has declined 1.7% over that period, which is the ninth largest decrease in the nation.

Source: Retailing Today