Author: Chad Symens

January 23, 2014

The Conference Board Leading Economic Index for the U.S. increased 0.1 percent in December to 99.4, following a 1.0 percent increase in November, and a 0.1 percent increase in October.

“Despite month-to-month volatility in the final quarter of 2013, the U.S. LEI continues to point to gradually strengthening economic conditions through early 2014,” said Ataman Ozyildirim, Economist at The Conference Board.  “The LEI was lifted by its financial components in December, but consumer expectations for business conditions and residential construction continue to pose risks.”

“This latest report suggests steady growth this spring, but some uncertainties remain,” said Ken Goldstein, Economist at The Conference Board.  “Business caution and concern about unresolved federal budget battles persist, but the better-than-expected holiday season might point to sustained stronger demand and could put the U.S. on a faster growth track for 2014.”

The Conference Board Coincident Economic Index for the U.S. increased 0.2 percent in December to 108.1, following a 0.4 percent increase in November, and a 0.1 prcent increase in October.

The Conference Board Lagging Economic Index for the U.S. increased 0.3 percent in December to 121.2, following no change in November, and a 0.3 percent rise in October.

Source: The Conference Board

January 22, 2014

Hudson’s Bay Company’s CFO Michael Culhane is reportedly taking a leave of absence from the company.  Assuming the CFO role will be Donald Watros, who on February 1 will be stepping into his new role as president of the company.

HBC did not provide further details on Culhane or the CFO position.

Culhane has been CFO of Hudson’s Bay Comapny since February 2009.  He is responsible for financial planning, profit improvement, accounting, treasury, income taxes, audit, legal and credit/loyalty marketing.  He also served as CFO and EVP of Lord & Taylor from 2004 to 2009 and held other executive financial positions with the May Department Stores Comapny from 1997 to 2004.

The company has been restructuring its leadership so it can focus on managing and growing HBC’s presence in North America, as well as its expanding portfolio of brands.

Source: Retailing Today

The National Retail Federation recapped Holiday 2013 in a PR… and sales were pretty good.  It remains to be seen however how profits fair due to heavy discounting.  The next quarterly filings by retailers will tell that tale. 

Holiday Retail Sales Come in at NRF Expectations
Sales Increased 3.8% to $601.8 Billion; NRF Projected 3.9% to $602 Billion

NEW YORK, January 14, 2014 – Severe winter weather did not dampen December retail sales as shoppers took advantage of heavy promotions and last-minute deals. According to the National Retail Federation – the world’s largest retail trade association – December retail sales, which exclude automobiles, gas stations and restaurants, increased 0.4 percent seasonally adjusted month-to-month, and 4.6 percent unadjusted year-over-year.

Total holiday retail sales, which include November and December sales, increased 3.8 percent to $601.8 billion, which was in line with NRF’s projected forecast of 3.9 percent and $602.1 billion. In addition, non-store holiday sales, which is an indicator of online and e-commerce sales, grew 9.3 percent to $95.7 billion.

“Despite facing a truncated holiday season, severe weather, and shaky consumer confidence, retailers rose to the challenge and executed their strategies with proven success,” NRF President and CEO Matthew Shay said. “Today’s holiday sales numbers are a testament to a resilient industry that knows what their customers want, when they want it and how they want to get it. Considering that retail sales are an important barometer when measuring the overall health of our national economy, this report provides a level of true optimism that the recovery is picking up steam, and once again, retail leads the way.”

December retail sales, released today by the U.S. Census Bureau, which include categories such as automobiles, gasoline stations, and restaurants, increased 0.2 percent seasonally adjusted month-to-month, and 4.1 percent adjusted year-over-year.

“Retail sales have been volatile all year and the holiday shopping season was no exception,” NRF Chief Economist Jack Kleinhenz said. “Solid job growth in the months of October and November led to a more-confident consumer and healthy holiday shopping season for many retailers. While economic and policy uncertainties remain, the economy seems set for steady growth in the New Year.”

“Undoubtedly, some of the increase came at the expense of margin. Retailers are still stressed and a long-term promotional environment may actually hurt the bottom line,” said Kleinhenz.  “As consumer confidence grows, there will be less need for retailers to heavily promote and discount their offerings.”

Other findings from the December retail sales report include:

• Building material and garden equipment and supplies dealers stores’ sales decreased 0.4 percent seasonally-adjusted month-to-month yet increased 4.2 percent unadjusted year-over-year. 
• Clothing and clothing accessories stores’ sales increased 1.8 percent seasonally-adjusted month-to-month and 4.7 percent unadjusted year-over-year. 
• Electronics and appliance stores’ sales decreased 2.5 percent seasonally-adjusted month-to-month and 1.5 percent unadjusted year-over-year. 
• Furniture and home furnishing stores’ sales decreased 0.4 percent seasonally-adjusted month-to-month yet increased 5.0 percent unadjusted year-over-year. 
• General merchandise stores’ sales were flat seasonally-adjusted month-to-month and flat unadjusted year-over-year. 
• Health and personal care stores’ sales increased 0.6 seasonally-adjusted month-to-month and 5.9 percent unadjusted year-over-year. 
• Nonstore retailers’ sales increased 1.4 percent seasonally-adjusted month-to-month and 14 percent unadjusted year-over-year. 
• Sporting goods, hobby, book and music stores’ sales decreased 0.6 percent seasonally-adjusted month-to-month yet increased 5.8 percent unadjusted year-over-year.

NRF is the world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries. Retail is the nation’s largest private sector employer, supporting one in four U.S. jobs – 42 million working Americans. Contributing $2.5 trillion to annual GDP, retail is a daily barometer for the nation’s economy. NRF’s This is Retail campaign highlights the industry’s opportunities for life-long careers, how retailers strengthen communities, and the critical role that retail plays in driving innovation. www.nrf.com 

January 2, 2014

Economic activity in the manufacturing sector expanded in December for the seventh consecutive month, and the overall economy grew for the 55th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report on Business.

The PMI registered 57 percent, the second highest reading for the year, just 0.3 percentage point below November’s reading of 57.3 percent.  The New Orders Index increased in December by 0.6 percentage point to 64.2 percent, which is its highest reading since April 2010 when it registered 65.1 percent.  The Employment Index registered 56.9 percent, an increase of 0.4 percentage point compared to November’s reading of 56.5 percent.  December’s employment reading is the highest since June 2011 when the Employment Index registered 59 percent.  Comments from the panel generally reflect a solid final month of the year, capping off the second half of 2013, which was characterized by continuous growth and momentum in manufacturing.

*A PMI in excess of 42.2 percent, over a period of time, generally indicates an expansion of the overall economy.  Therefore, the December PMI indicates growth for the 55th consecutive month in the overall economy, and indicates expansion in the manufacturing sector for the seventh consecutive month.  The past relationship between the PMI and the overall economy indicates that the average PMI for January through December (53.9 percent) corresponds to a 3.7 percent increase in real gross domestic product (GDP) on an annualized basis.  In addition, if the PMI for December (57 percent) is annualized, it corresponds to a 4.6 percent increase in real GDP annually.

Source: Institute For Supply Management

The growth of e-commerce and the omni-channel retail strategy appears to be having a significant impact on retail store foot traffic according to ShopperTrak.   An article in today’s WSJ highlights the issue  “Retailers got only about half the holiday traffic in 2013 as they did just three years earlier, according to ShopperTrak, which uses a network of 60,000 shopper-counting devices to track visits at malls and large retailers across the country. The data firm tracked declines of 28.2% in 2011, 16.3% in 2012 and 14.6% in 2013.”  Urban Outfitters Inc. CFO Frank Conforti commented on an investor conference call “The reality is, we just don’t see that changing.”

These changes in store foot traffic may explain part of the reason retailers like Home Depot Inc, Gap, and Sears Holdings are closing stores or cutting back new store openings.  As fewer consumers show up to walk the isles retailers do not need as much retail space.  Only 44 million square feet of retail space opened in the 54 largest U.S. markets last year, down 87% from 325 million in 2006, according to CoStar Group, Inc., a real-estate research firm.

Bon-Ton Stores Inc. (BONT) slashed its expectations for the year and the retailer warned poor winter weather in the majority of its markets led to lower traffic and hampered promotional events tied to the Christmas holiday.

The retailer, which operates 273 department stores with locations in the Northeast, Midwest and upper Great Plains states, said the disappointing results could be blamed on bad weather.

“We are disappointed with the deceleration in sales during December, particularly given the strong start to the holiday season beginning with Black Friday and extending through the early part of the month,” President and Chief Executive Brendan Hoffman said.

Bon-Ton said promotional events on key weekend days leading up to and continuing after Christmas were affected by the poor weather.

The company now expects same-store sales for the fiscal year to fall about 3.5%, worse that the November estimate of growth between 1.5% to 2.5%.

As a result, Bon-Ton warned per-share results for the year could range between a 15-cent profit to a 30-cent loss, down from the prior estimate of earnings between 15 cents to 75 cents. As recently as May, Bon-Ton had guided for full-year profit as high as $1 a share.

Shares, inactive in after-hours trading, closed down 2% to $15.50 on Friday.

source: WSJ, John Kell

Sears Holdings Corp announced sales at comp stores at Sears stores were down 9.2% in the nine weeks that ended January 6 and down 5.7% percent at Kmart stores. 

Sales at the company have been falling since 2005, when billionaire hedge fund manager Edward Lampert merged the two U.S. chains in an $11 billion deal.

“The results that we posted are not nearly what we want them to be,” Lampert, Sears Holdings’ chief executive officer and top shareholder, wrote in a blog post.

The company has made a big bet that its strategy to make targeted offers through digital and social means to members of its “Shop Your Way” rewards program, which generated about 69 percent of holiday sales, can fix the company.

In his blog, Lampert lamented that the holiday results “overshadow” the progress Sears had made with the program.

Lampert told Reuters in November he saw room for further store closings in 2014.

December 19, 2013

The Conference Board Leading Economic Index for the U.S. increased 0.8 percent in November to 98.3, following a 0.1 percent increase in October, and a 1.0 percent increase in September.

“The LEI continues on a broad-based upward trend, suggesting gradually strengthening economic conditions through early 2014,” said Ataman Ozyildirim, Economist at The Conference Board.  “Improving labor markets and new orders in manufacturing, combined with strong financial indicators, drove November’s gain.  However, consumers’ outlook for the economy and the drop in housing permits continue to pose risks in 2014.”

“November data reflect a U.S. economy that is expanding modestly, discounting some renewal in activity after the government shutdown,” said Ken Goldstein, Economist at The Conference Board.  “The coincident economic index shows the economy expanding at a relatively slow pace.  The trend in the leading economic index is stronger, signaling for some time that the economy is developing forward momentum, and will continue to strengthen through early 2014.”

The Conference Board Coincident Economic Index for the U.S. increased 0.4 percent in November to 107.2, following a 0.1 percent increase in October, and a 0.3 percent increase in September.

The Conference Board Lagging Economic Index was unchanged in November, remaining at 119.9, following a 0.3 percent increase in October and a 0.6 percent increase in September.

Source: The Conference Board

January 9, 2014

The search is on for a new president and COO at Family Dollar following the resignation of Michael Bloom amid deteriorating financial results and a 3% same store sales decline in December.

Bloom, who recently donned a disguise to appear in an episode of the CBS show “Undercover Boss,” spent two years as Family Dollar’s president and COO and joined the company from CVS.  In conjunction with his departure, Family Dollar elevated Jason Reiser to the role of EVP and Chief Merchandising Officer and he will report directly to Family Dollar chairman and CEO Howard Levine.  Reiser joined Family Dollar in July 2013 as SVP of merchandising after a 17 year career with Sam’s Club and by October of last year he had already been promoted to the role of SVP/Lead Merchandising Officer.

The senior leadership moves were announced in conjunction with dismal sales results for the company’s first quarter ended November 30 and a 3% decline in December same store sales, which prompted the company to forecast further top line weakness and lower its profit forecast.  Family Dollar said sales for its first quarter, ended November 30, increased a meager 3.2% to $2.5 billion, due to the addition of new stores.  Same store sales declined 2.8% as fewer people shopped its stores and those who did spent less money.

Reversing those trends now falls to new head merchant Reiser who will have responsibility for the company’s merchandising, global sourcing, marketing, replenishment and financial planning teams.

“Continuing to refine our assortment to meet the needs of our customer is critical to being a compelling place to shop,” said Levine.  “Jason’s proven leadership, merchandising experience and deep understanding of our customer position him well to ensure that we grow both customer trips and market share.”

Improvement is not expected to be immediate, however, as Levine noted a challenged consumer and intensified promotional environment continue to affect the company’s business.  That was the case in December when Levine said the company was forced to react to softness in discretionary categories by becoming more promotional.

“Reflecting our December results, our expectations that the macroeconomic trends will continue, and the impact of investments we plan to make to strenghten our value proposition, we have lowered our earnings expectations for the second quarter of fiscal 2014 and the full year,” Levine said.  “While we have made meaningful progress to improve our execution, our financial performance has not met our expectations.  We have a great business model and ample growth opportunity, and I know we can do better.”

The immediate focus for Family Dollar, according to Levine, is to execute the basics of reatil; re-accelerate customer traffic, strengthen the value proposition and enhance the relevancy of its assortment.

“We also intend to maintain our focus on reducing costs while also selectively investing in new stores, our renovation program and supply chain improvements to position our long-term growth,” Levine said.

Source: Retailing Today

CINCINNATI–(BUSINESS WIRE)–Jan. 8, 2014– Macy’s, Inc. (NYSE:M) today announced that its comparable sales, together with comparable sales from departments licensed to third parties, rose by 4.3 percent in the 2013 holiday shopping season – the months of November and December combined – compared with the same period last year. November/December 2013 comparable sales were up 3.6 percent.

 “The 2013 holiday season was successful for Macy’s and Bloomingdale’s as we offered fresh and distinctive merchandise, delivered great value to the customer and provided a robust omnichannel shopping experience which served our customers whenever, however and wherever they chose to shop and to buy,” said Terry J. Lundgren, Macy’s chairman, president and chief executive officer. “Even in a questionable macroeconomic environment with challenging weather in multiple states, the positive response from our customers during the holiday season is yet another vote of confidence that our well-established strategies continue to work for us.”

CINCINNATI–(BUSINESS WIRE)–Jan. 8, 2014– Macy’s, Inc. (NYSE:M) today announced it will implement focused cost reductions, including organizational changes, as it prepares to sustain profitable sales growth in the years ahead.

 “Our company has significantly increased sales and profitability over the past four years, and we have created a culture of growth at Macy’s, Inc. We began five years ago with a set of business strategies that were largely untested by a national retailer of our size and scope. As the success of these strategies has unfolded, we have identified some specific areas where we can improve our efficiency without compromising our effectiveness in serving the evolving needs of our customers,” said Terry J. Lundgren, Macy’s, Inc. chairman, president and chief executive officer.

“The actions being announced today reinforce our focus on continuous improvement in our M.O.M. strategies (My Macy’s localization, Omnichannel integration and Magic Selling customer engagement) and will help us to maximize the impact of the exceptional talent we enjoy at every level of our organization,” Lundgren said.