Author: Chad Symens

June 18, 2014

Americans have the highest job satisfaction levels since the beginning of the Great Recession, according to a report released today by The Conference Board.  The majority, however, continue to be unhappy at work.

The report, based on a Fall 2013 survey of 5,000 U.S. households conducted for The Conference Board by The Nielsen Company, finds 47.7 percent of Americans are satisfied with their jobs.  Though a slight improvement from 2012 and 2010 – when the figure stood at 47.3 and 42.6 percent (an all-time low), respectively – job satisfaction remains historically low, extending a trend seen since the turn of the century.  While job satisfaction in the 1980s and ’90s routinely neared 60 percent or higher, 2005 was the last year in which a majority of Americans was satisfied at work (52.1 percent).

“The U.S. economy is growing at a disappointing rate, and this sluggish recovery is mirrored in American workers’ tepid job satisfaction,” said Rebecca Ray, Executive Vice President, Knowledge Organization at The Conference Board and a co-author of the report.  “That said, as the direct effects of the recession wear off, workers are also seizing new opportunities in a tightening labor market – a fact reflected in rising quit rates.  Employers able to improve job satisfaction could thus gain a significant competitive advantage in attracting and retaining capable employees.”

Identifying the Key Drivers of (Dis)satisfaction

The survey broke down satisfaction to its component elements.  Respondents were asked their level of satisfaction on different aspects of their jobs – and which aspects were most important to them.

• Despite stalled overall satisfaction and downward historical trend, satisfaction in some areas – notable, compensation, recognition, and career development – are near ten-year highs.
• In general, employees are most satisfied with their work environment and related elements: colleagues, interest in work, commute to work, physical environment, and supervisor are all rated highly.
• Workers are least satisfied with promotion policy, bonus plan, training programs, performance review, and recognition.
• In terms of importance, communication channels, interest in work, recognition, and workload are ranked as most critical to overall satisfaction.  Low priority is given to commute to work, health plan, retirement plan, sick day policy, and vacation policy.
• Employers would be wise to concentrate on those components considered highly important with low current levels of satisfaction.  These include growth potential, communication channels, recognition, performance review, and wages.
• Of all components, only pension/retirement, job security, workload, and commute to work remain below 2008 satisfaction levels.

“Based on macro trends – including a significantly tighter labor market, slowing productivity growth, and more business investment – worker satisfaction should be on the rise,” said Gad Levanon, Director of Macroeconomic Research at The Conference Board and a co-author of the report.  “But job dissatisfaction may remain entrenched until we see improvements in worker compensation, which has grown abysmally in recent years despite historically high corporate profits.”

The Rich Keep Getting (Relatively) Happier – and Other Demographic Trends

As in previous editions of the survey, significant disparities were found across various populations.  Among the key findings:

• High-income earners are more satisfied than lower-paid workers – and the gap has been widening in recent years.  The survey found 64.1 percent satisfaction among those making $125,000 and over.  At 57.6 percent, workers making $75,000 to $100,000 are also significantly more satisfied than two years ago.  Meanwhile, just 24.4 percent of those making under $15,000 and 32.0 percent making between $15,000 and $25,000 are satisfied.
• Men and women have broadly similar satisfaction levels, but diverge sharply in their priorities.  Men place higher importance on compensation and interest in their work, while women value flexibility, workload, advancement, and people at work.
• Workers aged 25 to 34 are the most satisfied, at 50.5 percent.  Workers over 65 are also relatively satisfied (49.4 percent), suggesting those delaying retirement are reasonably content with working later in life.  At 37.8 percent, satisfaction is lowest among workers under 25 – down significantly from the 2012 survey.
• Only 44.0 percent of workers are satisfied in the East South Central region – Alabama, Kentucky, Mississippi, and Tennessee – the lowest in the nation.  At 54.3 percent satisfaction, New Englanders are the most satisfied workers.

Source: The Conference Board

June 17, 2014

Declines in both single and multifamily starts pushed nationwide housing production down 6.5 percent in May to a seasonally adjusted annual rate of just over 1 million units, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.  However, single-family permits, which can be an indicator of future building activity, rose 3.7 percent.

“The dip in single-family production shows builders continue to move carefully in adding inventory,” said Kevin Kelly, chairman of the National Association of Home Builders (NAHB) and a home builder and developer from Wilmington, Delaware.  “They are also facing supply chain issues, such as access to lots and labor.”

Single-family housing starts were down 5.9 percent to a seasonally adjusted annual rate of 625,000 units in May.  Meanwhile, multifamily production fell 7.6 percent to a seasonally adjusted annual rate of 376,000 units.

“The encouraging news is that single-family permits are up by almost 4 percent,” said NAHB Chief Economist David Crowe.  “The modest increase is evidence that builders expect continued release of pent-up demand and a gradual expansion of the housing market.  We are still forecasting a 12 percent increase in total housing starts for the year.”

Regionally in May, combined single and multifamily housing production fell in the Northeast, the Midwest and the West, with respective losses of 25.2 percent, 16.5 percent and 16.3 percent.  Meanwhile, the South posted a 7.3 percent gain.

Issuance of building permits registered a 6.4 percent decline to a seasonally adjusted annual rate of 991,000 units in May.  This was due entirely to a decrease in the multifamily sector, where permits registered a 19.5 percent loss to 372,000 units.  Single-family permits increased to 619,000 units.

The Northeast and Midwest registered overall permit gains of 3.5 percent and 3.8 percent, respectively, while the South and West posted respective losses of 7.3 percent and 15.2 percent.

Source: National Association of Home Builders

June 16, 2014

Builder confidence in the market for newly built, single-family homes rose four points in June to reach a level of 49 on the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released today.  It remains one point shy of the threshold for what is considered good building conditions.

“After several months of little fluctuation, a four-point uptick in builder sentiment is a welcome sign and shows some renewed confidence in the industry,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.  “However, builders are facing strong headwinds, including the limited availability of labor.”

“Consumers are still hesitant, and are waiting for clear signals of full-fledged economic recovery before making a home purchase,” said NAHB Chief Economist David Crowe.  “Builders are reacting accordingly, and are moving cautiously in adding inventory.”

Derived from a monthly survey that NAHB has been conducting for 30 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.”  The survey also asks builders to rate traffic of prospective buyers as “high to very high,” average” or “low to very low.”  Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three index components posted gains in June.  Most notable, the component gauging current sales conditions increased six points to 54.  The component gauging sales expectations in the next six months rose three points to 59 and the component measuring buyer traffic increased by three to 36.

Looking at the three month moving averages for regional HMI scores, the South and Northeast each edged up one point to 49 and 34, respectively, while the West held steady at 47.  The Midwest fell a single point to 46.

Source: National Association of Home Builders

June 6, 2014

Sears Hometown and Outlet Stores CEO and president Bruce Johnson cited weather and promotions as factors affecting the retailer’s first quarter results.

Net sales in the quarter decreased 1.9% to $589.9 million from $601.1 million in the first quarter of 2013, driven primarily by a 6.2% decrease in same-store sales.  Lower initial franchise revenues and lower liquidation revenues on end-of-season mark-out apparel merchandise received from Sears Holdings also negatively impacted net sales.

“First quarter results were affected by three main factors: weather,” said Johnson.  “For the second year in a row, lawn and garden sales were negatively impacted by an unseasonably cold spring in many of our trade areas that dampened sales in March and April, following a very cold February that reduced overall store traffic and sales; continued lower margins in Outlet due to insufficient quantities of higher-margin, ‘as-is’ appliances; and a heavily promotional appliance retail environment where appliance retailers layered free delivery on top of discounted pricing.”

Repeat visits decreased 1% year-over-year but bounced back from a low in April.  Analysis indicates this rebound is another positive sign for sales.  The best day of the month was Thursday, May 29, with outperformance across all metrics.  The worst day of the month was Sunday, May 4, which saw significant underperformance in traffic.  In addition, fewer than expected repeat shoppers were seen on this day.

Source: Retailing Today

June 5, 2014

Although comparable-store sales at Fred’s declined slightly in May, the company said sales strengthened in the last week of the month thanks to the first ad in its new marketing and branding program, designed to increase traffic and heighten customer awareness of category diversity.

The company’s total sales for the month stayed flat at $151.9 million, compared with $152.3 million in May last year.  Comparable-store sales for the month declined 0.4% compared with a 0.5% decrease in the same period last year.

Fred’s total sales for the first four months of fiscal 2014 decreased 0.6% to $650.2 million compared with $653.8 million for the same period last year.  On a comparable store basis, year-to-date sales declined 1.5% versus a 1.1% decrease for the year-earlier period.

“The initial results (of the marketing and branding program) were encouraging,” said CEO Bruce A. Efird, “and we think this new program will be effective in driving traffic and sales growth as we work toward full implementation of the marketing program by mid-July.  Together with the updating of our store layout to emphasize the convenience advantages of our 15,000 sq. ft. store, it will better position Fred’s to serve more of the need-based categories and provide customers with faster and easier shopping experiences.”

Fred’s operates 704 discount general merchandise stores, including 21 franchised Fred’s stores, in the southeastern United States.

Source: Retailing Today

June 6, 2014

U.S. retailers reported 5% year-over-year growth in general merchandise, apparel, furniture and other (GAFO) retail sales.  Shoppers made fewer trips to the store than expected, but were very engaged and showed a lot of intent to buy.

Retailers also reported 7% growth year-over-year in clothing and apparel sales and 2% growth year-over-year in general merchandise sales.  Shopper traffic declined 11% compared to the same month last year, as travel plans appeared to cannibalize leisure time.

Storefront conversion was up slightly as this May remained more promotional the same month in the proir year, especially leading up to Mother’s Day.  Average duration increased 6% from the previous year due to a rebounding interest in more exploratory shopping, following the muted winter months.  The increase in visit duration was the most significant driver of positive sales performance in May.

Source: Retailing Today

June 4, 2014

Ascena Retail Group president and CEO David Jaffe said sales in the third quarter were challenging, and despite comparable sales declines at Justice and Dressbarn, new store growth at Justice and Maurices, along with higher comparable sales at Lane Bryant, Maurices and Catherines bolstered the company’s overall results.

The company’s third quarter profit rose to $33.2 million, from $31.2 million in the year ago period.  Revenue inched up 0.3% to $1.145 billion, compared to $1.142 billion a year earlier.  Total same store sales rose 1%.

“Q3 sales were challenging, and that trend continued into the start of Q4,” said Jaffe.  “As a result, we are implementing promotional strategies and receipt flow adjustments to ensure our inventories are conservatively positioned for the fall season.”

Source: Retailing Today

June 3, 2014

Hudson’s Bay Company more than doubled sales in the first quarter driven primarily by its acquisition of Saks last year.

Retail sales were $1.9 billion, an increase of $971 million from $884 million for the prior year.  Consolidated same-store sales increased by 2.8%, with increases of 2.5% at DSG, 2.6% at Saks Fifth Avenue and 15.1% at Off 5th.  Digital commerce sales totaled $207 million, reflecting both the inclusion of Hudson’s Bay and Lord & Taylor (which together are referred to as “Department Store Group” or DSG) and Saks.

Sales growth at DSG was driven by menswear and beauty.  Sales growth at Saks Fifth Avenue was driven by menswear and accessories.  Sales growth at Off 5th was strong across all categories.

Two Off 5th stores opened in Palm Beach, Florida, and Milwaukee, Wisconsin, and two Saks Fifth Avenue locations closed in Orlando, Florida, and Stamford, Connecticut.

HBC also completed the sale and leaseback of its Queen Street flagship store and Simpson Tower office complex in Toronto for a purchase price of $650 million.

“Overall first quarter performance was in the range of our expectations,” said governor and CEO Richard Baker.  “We are encouraged by the business trends witnessed through the quarter, which bode well for the balance of this year.  Furthermore, we are pleased by the progress of our integration of Saks, which is on-track to achieve approximately $50 million in HBC synergies targeted for this year.  As a result, we ar reaffirming our outlook for fiscal 2014 as provided in April.”

Baker said that his confidence in HBC’s future is based upon its core sales growth strategies: driving digital sales across all its banners, growing Off 5th through a modified and more productive format as well as new stores in the U.S. and Canada, bringing Saks Fifth Avenue to Canada and driving outsized growth at the top doors of each of its banners.

Hudson’s Bay will also have a new financial chief step into that role June 9.  Paul Beesley most recently served in a number of executive roles with Empire Company Limited, a corporation with annual sales in excess of $19 billion and operations in retailing and related real estate, from 2000 to 2014, including as chief corporate development officer of it Sobeys unit and as CFO of Empire.  While at Empire, Beesley developed strategies resulting in the acquisitions of Canada Safeway and the remaining stake in Sobeys, led the creation of an Empire-related REIT and facilitated numerous financing transactions.

Source: Retailing Today

May 30, 2014

Exiting Canada may have taken a bite out of Big Lots’ profits in the first quarter, but the company still saw net and comparable store sales increase.

Net sales for the quarter increased 1.1% to $1.28 billion, compared to net sales from continuing U.S. operations of $1.26 billion for the same period last year.  Comparable-store sales for stores open at least 15 months increased 0.9% for the quarter.

Net loss from discontinued Canadian operations for the quarter totaled $25.2 million, or $0.44 per diluted share, compared to the company’s guidance of a net loss of $37 to $41 million, or $0.64 to $0.71 per diluted share.  The lower-than-expected loss resulted from incremental deferred tax benefits and favorable settlements on lease terminations associated with store and distribution center operating leases.

Looking ahead to the second quarter, the company estimates that income from continuing operations will be in the range of $0.24 to $0.30 per diluted share, compared to adjusted income from continuing U.S. operations of $0.37 per diluted share the second quarter last year.  This guidance is based on an estimated comparable-store sales increase of between 1% and 3%.

Big Lots operates 1,496 Big Lots stores in 48 states.

Source: Retailing Today 

June 5, 2014

Of the approximately 350 metro markets nationwide, 56 returned to or exceeded their last normal levels of economic and housing activity, according to the National Association of Home Builders/First American Leading Markets Index (LMI), released today.  This represents a net gain of nine metros year over year.

The index’s nationwide score of .88 held steady from the previous month.  This means that based on current permit, price and employment data, the nationwide average is running at 88 percent of normal economic and housing activity.  Meanwhile, 30 percent of metro areas saw their score rise this month and 83 percent have shown an improvement over the past year.

“Markets are gradually returning to normal levels of housing and economic activity,” said NAHB Chairman Kevin Kelly, a home builder and developer from Wilmington, Delaware.  “When we see more sustainable levels of job growth, this will unleash pent-up demand and bring more buyers into the marketplace.”

Baton Rouge, Louisiana, continues to top the list of major metros on the LMI, with a score of 1.4 – or 40 percent better than its last normal market level.  Other major metros at the top of the list include Honolulu; Oklahoma City; Austin, Texas and Houston.  Rounding out the top 10 are Los Angeles; San Jose, California; Harrisburg, Pennsylvania; Pittsburgh and Salt Lake City – all of whose LMI scores indicate that their market activity now equals or exceeds previous norms.

“Of the three components in the LMI, the one lagging is single-family housing permits, which is only 43 percent of the way back to normal while home prices are 26 percent above their last normal level and employment is at 95 percent of its previous norm,” said NAHB Chief Economist David Crowe.  “In the 22 metros where permits are at or above normal, the overall index indicates that these markets have fully recovered.”

“Well over one-third of all markets are operating at a level of at least 90 percent of previous norms, and this bodes well for a continuing housing recovery in the year ahead,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Co., which co-sponsors the LMI report.

Looking at smaller metros, both Odessa and Midland, Texas, boast LMI scores of 2.0 or better, meaning their markets are now at double their strength prior to the recession.  Also at the top of the list of smaller metros are Bismarck, North Dakota; Casper, Wyoming; and Grand Forks, North Dakota, respectively.

The LMI shifts the focus from identifying markets that have recently begun to recover, which was the aim of a previous gauge known as the Improving Markets Index, to identifying those areas that are now approaching and exceeding their previous normal levels of economic and housing activity.  More than 350 metro areas are scored by taking their average permit, price and employment levels for the past 12 months and dividing each by their annual average over the last period of normal growth.  For single-family permits and home prices, 2000-2003 is used as the last normal period, and for employment, 2007 is the base comparison.  The three components are then averaged to provide an overall score for each market; a national score is calculated based on national measures of the three metrics.  An index value above one indicates that a market has advanced beyond its previous normal of economic activity.

Source: National Association of Home Builders