Author: Chad Symens

January 27, 2014

Sales of newly built, single-family homes fell 7 percent to a seasonally adjusted annual rate of 414,000 units in December, according to newly released figures from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.  Despite the monthly drop, home sales in 2013 were up 16.4 percent over the previous year.

“December’s decline in new-home sales follows elevated levels in the previous two months and means the fourth quarter was still much stronger than the third,” said Rick Judson, chairman of the National Association of Home Builders and a home builder from Charlotte, N.C.  “While we expect sales to gain strength in 2014, builders still face considerable constraints, including tight credit conditions for home buyers, and a limited supply of labor and buildable lots.”

“Consumers are getting used to more realistic mortgage rates, which still remain favorable on a historical basis, said NAHB Chief Economist David Crowe.  “As household formations and pent-up demand continue to emerge, we anticipate that 2014 will be a strong year for housing.”

Regionally, new-home sales activity fell 36.4 percent in the weather-battered Northeast, 7.3 percent in the South and 8.8 percent in the West.  The Midwest posted a gain of 17.6 percent.

The inventory of new homes fell to 171,000 units in February, which is a five-month supply at the current sales pace.  Although this is an increase over the previous month, it is due to the slower pace in December.

Source: National Association of Home Builders

January 27, 2014

Revelations of job cuts at leading retailers, the latest involving Sam’s Club, are a reminder that pro-active expense control remains retailers’ best friend when it comes to ensuring profitability when faced with a murky outlook for consumer spending.

Sam’s Club on Friday became the latest retailer to disclose plans to eliminate 2,300 hourly and middle management positions.  The move was characterized as a rebalancing of resources, according to Sam’s Club spokesman Bill Durling.  Other retailers such as Macy’s and Target also recently announced job cuts.

“In order to position ourselves for future growth, Sam’s Club has made the difficult decision to implement a job reduction in our field organization impacting approximately 2,300 associates, or approximately 2% of associate population,” Durling said.  We’re doing this to rebalance our resources more effectively across our clubs to align our structure more closely to the current and future revenue of each club.  We are eliminating certain hourly positions, in some cases reducing the number of assistant managers, and in some cases creating new, more senior level positions.”

Sam’s operates roughly 630 clubs throughout the U.S., so the cuts equate to about four people per club.  However, in all likelihood few people will be left without work or a paycheck.  Sam’s is giving affected employees their regular salary for two months and the opportunity to apply for other positions at Sam’s or Walmart.  Those unable to secure a new position will be given an undisclosed severance package.

The net effect on Sam’s overall workforce is likely to be minimal as well since the warehouse club operator has fairly ambitious growth plans in place for 2014 that will result in new hires.  The day before the job cut announcement, Sam’s opened two new clubs in Warwick, R.I. and Moorsesville, N.C., which resulted in the hiring of roughly 300 employees.  During the new fiscal year which begins February 1, Sam’s plans to open between 17 to 22 new clubs, inclusive of relocations and expansions, which could result in the hiring of between 2,000 and 3,000 employees based of similar staffing levels.

The job cut announcement by Sam’s Club and other retailers tended to garner some sensational headlines, but in reality retailers tend to focus on right-sizing their field and store level operating structures early in the year based on sales expectations and customer service priorities for the coming year.  In fact, it is somewhat surprising given the emphasis on efficiency that prevails in the warehouse club environment that Sam’s had not already taken action to more closely align labor with sales.

As for Macy’s, the 2,500 job cuts it announced several weeks earlier also will have a minimal impact since many of those affected will be able to secure positions elsewhere in the company.  Overall, Macy’s doesn’t expect the cuts to reduce its total workforce because of gains elsewhere.

A similar situation exists at Target where plans to cut 475 jobs at its home office and leave another 700 positions unfilled are likely to prove temporary.  Putting aside the nightmare the company is facing regarding its data breadh, Target continues to have ambitious growth plans that it will eventually require adequate staffing levels to execute.

Source: Retailing Today

January 28, 2014

The Conference Board Consumer Confidence Index, which had rebounded in December, increased again in January.  The Index now stands at 80.7, up from 77.5 in December.  The Present Situation Index increased to 79.1 from 75.3.  The Expectations Index increased to 81.8 from 79.0 last month.

“Consumer confidence advanced in January for the second consecutive month,” said Lynn Franco, Director of Economic Indicators at The Conference Board.  “Consumers’ assessment of the present situation continues to improve, with both business conditions and the job market rated more favorably.  Looking ahead six months, consumers expect the economy and their earnings to improve, but were somewhat mixed regarding the outlook for jobs.  All in all, confidence appears to be back on track and rising expectations suggest the economy may pick up some momentum in the months ahead.”

Consumers’ assessment of overall present-day conditions continues to improve.  Those claiming business conditions are “good” increased to 21.5 percent from 20.2 percent, while those claiming business conditions are “bad” edged down to 22.8 percent from 23.2 percent.  Consumers’ appraisal of the labor market was also more positive.  Those saying jobs are “plentiful” ticked up to 12.7 percent from 11.9 percent, while those saying jobs are “hard to get” decreased slightly to 32.6 percent from 32.9 percent.

Consumers’ expectations, which had improved sharply in December, increased again in January.  Those expecting business conditions to improve over the next six months remained unchanged at 17.4 percent, while those anticipating business conditions to worsen decreased to 12.1 percent from 13.9 percent.  Consumers’ outlook for the labor market was mixed.  Those expecting more jobs in the months ahead declined to 15.4 percent from 17.1 percent.  However, those anticipating fewer jobs decreased to 18.3 percent from 19.4 percent.  The proportion of consumers expecting their incomes to increase rose to 15.8 percent from 13.9 percent, while those anticipating a decrease in their incomes declined to 13.6 percent from 14.3 percent.

Source: The Conference Board

January 23, 2014

U.S. retailers are getting 2014 off to a heavily promotional start, building on last year’s deep-discounting trends, according to Morgan Stanley Analyst Kimberly Greenberger.  The 26 retailers she covers are about 40% more promotional than they were during the same month last year, she wrote in a research note.  “Our data indicates not only are promotions more widespread this year, but also discounts are deeper.”

The pain retailers felt at the end of 2013 isn’t showing signs of relief in the new year.  Following the worst holiday season since 2008 – one that was underscored by dramatically reduced prices and lower margins – the heavily promotional environment has persisted into January.

“The ‘Polar Vortex’ likely hindered week one, but our mall visit indicated week two was only marginally better, despite temperatures essentially in-line with last year.”

Of the 26 retailers that Greenberer tracks, only Urban Outfitters’ Anthropologie was “unequivocally less promotional” than last January.  Abercrombie & Fitch and Gap’s Banana Republic were among stores that had a higher percentage of inventory on promotion, as did Macy’s, which outperformed most of the sector in the November to December period.

Management at Lululemon and Express made statements earlier this month that traffic in January has continued to be weak, with Express saying it expects to remain promotional during the month.  On Thursday, the women’s clothing retailer offered shoppers 40 percent off every item, a deal that was prevalent in its pre-holiday rush.

Although January tends to be big on discounts, as retailers make room for spring products, news of heavier-than-typical promotions does not bode well for the sector, which saw its margins crushed by widespread, deep price cuts at the end of 2013.  Experts had warned that retailers needed to wean consumers off of these discounts in the new year to protect their profits. 

Mainly as a result of these discounts, Thomson Reuters said Tuesday that 74 retailers so far have trimmed earnings per share estimates for the fourth quarter, compared with only 15 who had positive things to say about the quarter.

Retail Metrics’ Ken Perkins sent out his preliminary same-store sales estimates for January, saying he predicts comparable sales for the month will increase a tepid 2.7 percent, versus last January’s 5.1 percent gain.

Among those expected to report on February 6, Perkins predicts Gap – which posted a relatively strong 1 percent comp in the November to December period – will post its first monthly decline since September.  Perennially strong L Brands – parent of Victoria’s Secret – is also expected to follow up its disappointing holiday sales with a slight 0.8 percent gain in January.

“The coal looks to keep coming in January,” Perkins said.

Source: SmartBrief, CNBC

January 24, 2014

The Home Depot has acquired Blinds.com, the Houston-based online window coverings retailer.  In explaining the appeal of the partnership, Home Depot cited Blinds.com’s integrated user experience, on-demand staff and knowledge base.

“We’re delighted to welcome the Blinds.com team into The Home Depot family,” said Home Depot chairman and CEO Frank Blake.  “The acquisition of Blinds.com positions us well for expansion in the quickly growing online window coverings market.  In addition, their unique sales and service model is one we hope to learn from as we continue to create even better interconnected retail experiences for our customers.”

“We’re joining forces with The Home Depot because there is a huge opportunity to utilize each other’s strengths, take additional share in this category and move even faster toward our vision of making the design, purchase and installation of quality window coverings as easy and affordable as possible,” said Blinds.com founder and CEO Jay Stanfield.

The Blinds.com management structure and staff will remain in place at its Houston headquarters.  Specific terms of the deal were not disclosed.

Source: Retailing Today

January 21, 2014

Nordstrom plans to open its third fulfillment center at Conewago Industrial Park in Elizabethtown, PA, in summer 2015.  The approximately 672,000 sq. ft. building, with an additional 470,000 sq. ft. mezzanine, will enable faster delivery for Nordstrom.com, Nordstrom mobile app and Nordstrom catalog orders.

In its first three years, the new fulfillment center will offer nearly 400 full-time positions and additional opportunities for part-time and seasonal roles.  In the future, Nordstrom expects to increase hiring – up to 700 full-time roles or more – as business continues to grow.

The new facility joins the company’s existing fulfillment centers in Cedar Rapids, IA and San Bernadino, CA.  Nordstrom.com currently serves customers in 98 countries and offers everyday free shipping and free returns within the U.S.  Since 2009, Nordstrom has operated with an integrated inventory platform between its stores and online, as well as the ability to fulfill online orders from any of its 117 full-line stores across the country.

“Speed of delivery is simply just part of our customers’ expectations of what good service means today,” said Jamie Nordstrom, president of Nordstrom Direct.  “This is an ideal location to add to our fulfillment capabilities and improve the delivery experience for our customers.  E-commerce is the fastest growing area of our business and this is another example of how we’re investing in people and capabilities to help us support this growth and responding to our customers’ changing definition of service.”

“Today’s announcement continues Pennsylvania’s steady economic progress with another company expanding and more jobs for our citizens,” said Governor Tom Corbett.  “It’s a testament to why Pennsylvania is built to advance – our keystone location, our talented and hardworking people – all contributed to Nordstrom bringing hundreds of new jobs to Lancaster County.”

The fulfillment center is located at Conewago Industrial Park, which is owned by Martin and William Murray, and will be built by H&M company.  Jones Lang LaSalle served as the broker for Nordstrom.  Construction on the project began early this week.

Source: Retailing Today

January 23, 2014

Hudson’s Bay Company plans to launch a new mobile shopping application for both Hudson’s Bay and Lord & Taylor.  HBC is partnering with Pounce, a consumer-facing mobile app, to integrate traditional media with m-commerce, providing customers the opportunity to purchase merchandise displayed in print media using tablets and smartphones.  According to Pounce, it is the only Hudson’s Bay and Lord & Taylor approved mobile app that allows customers to instantly buy products seen in print by simply scanning an image.

The app launched in Canada today, just ahead of this year’s Olympic Winter Games.  Hudson’s Bay is the official apparel sponsor of the Canadian Olympic and Paralympic Teams for the Sochi 2014 Olympic and Paralympic Winter Games, and the upcoming ads for HBC Olympic apparel will be the first to display the Pounce mobile app opportunity for customers.  The app also launched in the United States for Lord & Taylor.

“Our goal with this initiative is to complement traditional media with popular mobile technology, and Pounce creates the opportunity to combine offline and online channels in a seamless way,” said Michael Crotty, chief marketing officer for HBC. “Pounce’s unique capability is a natural fit as we roll-out and grow our omnichannel strategy for HBC.”

“Traditional media is a successful marketing channel, but consumers also want the power of instant purchasing,” said Avital Yachin, CEO of Pounce.  Our technology turns static print into digital storefronts, satisfying the instant purchasing needs of consumers.”

Hudson’s Bay customers can download Pounce free on iOS devices via the Apple App Store.

Source: Retailing Today

January 15, 2014

In an effort to expand its service capabilities, Lowe’s has partnered with Porch.com, a home improvement network that connects homeowners with over 1.5 million professionals.  The partnership aims to connect customers with home improvement pros for nearly any project outside of what Lowe’s currently offers as part of its installation services. 

“Working with Porch is another great example of how Lowe’s supports our customers throughout every step of the home improvement journey,” said Jay Rebello, VP new business development and corporate innovation at Lowe’s.  “By partnering with Porch, Lowe’s can help our customers achieve their home improvement dreams by providing them with the confidence of knowing who their neighbors have used successfully, and benefit our professional customers by providing them greater opportunities to grow their business.”

“For millions of people, the home is the biggest investment of their lives.  Home improvement projects are an essential part of owning or renting a home – finding the right professionals should be easy, delightful, and connected,” said Matt Ehrlichman, CEO of Porch.  “Now, Lowe’s customers can not only buy high-quality products to make their home improvement projects a reality, they can connect directly with local professionals their neighbors have used.”

To be introduced at Lowe’s stores, the partnership will make its first touchdown in 139 stores in the Carolinas and the Seattle metro area.

Source: Retailing Today

January 24, 2014

Dillard’s, Inc. announced today that it will make a significant contribution of more than $1 million to local chapters of Ronald McDonald House Charities.  This donation was made possible through the sale of Dillard’s exclusive Southern Living Christmas Cookbook.

For the sixth time, Dillard’s offered a special custom edition of the Southern Living Christmas Cookbook to benefit RMHC.  This Exclusive, 288-page hardbound cookbook is filled with fabulous holiday recipes, color photos, menus, decorting tips and entertaining ideas.

With this year’s contribution, Dillard’s has donated more than $11.4 million to local RMHC chapters to support the Ronald McDonald House program since 1994.  “Over the past 20 years, Dillard’s has developed a strong and lasting bond with our local RMHC chapters,” said Denise Mahaffy, Vice President.  “The work they do every day to bring comfort to children and families inspires us and makes the sale of the cookbooks an enormous source of pride and satisfaction.”

Every night, Ronald McDonald Houses offer comfort, care, hope and healing to more than 8,000 families of seriously ill children.  And after a long day at the hospital, there is nothing more comforting than for these families to be welcomed with a home-cooked meal prepared by loving volunteers.

“The Dillard’s Southern Living Christmas Cookbook and the funds raised highlight how a good meal can provide sustenance and strength to families caring for a hospitalized child,” said J.C. Gonzalez-Mendez, president and CEO, RMHC.  “We are immensely grateful for the ongoing generosity of Dillard’s and its customers.  Together, we are able to give sick children the best medidine of all – their famillies.”

For more information, visit www.rmhc.org and www.dillards.com.

January 23, 2014

February 2014 is projected to be the coldest in four years and drier than last year for the U.S. as a whole.  Much colder year-on-year trends will be widespread at the start of the month, especially across the Central U.S.  The axis of colder temperatures shifts to the Northern Tier of the U.S. by the second week of the month.  Much colder trends early in the month will help to clear remaining winter merchandise.  A taste of spring arrives in the Deep South in retail week three, making this a favorable time for categories such as sun care, apparel and cold beverages.  After a very dry January along the West Coast, the ridge of high pressure in the West will finally break down allowing for rain and snow to return to the West.  The first two weeks of February will yeild the greatest risk of snow in the Mid-Atlantic and Ohio and Tennessee River Valleys; weeks one, two and four will be the highest risk for the Northwest.

Source: Retailing Today, Weather Trends International