The International Council of Shopping Centers and Goldman Sachs reported its chain-store sales index for the week ending on March 19, 2011 fell 0.1% compared to the prior week, with sales rising 3% from same period year earlier. ICSC is forecasting an increase of between 3% and 3.5% in same-store sales at leading US retail chains in 2011.
March 24, 2011
February Retail Sales Climb
The US Commerce Department reported February 2011 retail sales rose 1% from a year ago, the largest gain since October 2010 and the eighth straight monthly advance, due to strong job gains and more seasonable weather. The Department also revised January 2011 sales upward to a 0.7% increase (from 0.3% increase). Retail sales excluding autos rose 0.7% in February after a 0.6% gain in January. The downside is that gas prices rose 3.7% for the month, which tends to suppress retail sales as consumers shift dollars to their gas tanks.
January Inventories
The US Commerce Department, in its advance report reported that US manufacturers and trade inventories increased to $1.453 trillion in January 2011, up 0.9% from December and 9.1% from January 2010. It also noted total December 2010 business sales, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1.179 trillion, up 2% from December and 10.8% from January 2010.
Retail Sales Forecast For 2011
The National Retail Federation said it expects U.S. retail sales (which excludes exclude online sales, cars, gasoline, and restaurants) will rise 4% in 2011, but warned that reluctance of small businesses to add employees and higher gasoline prices could yet slow consumer spending. NRF noted US retail sales were up 5.7% during the 2010 holiday period, better than the 3.3% it had predicted.
February 2011 Employment Trends
The Conference Board Employment Trends Index increased in February for the fifth consecutive month. The index now stands at 101.7, up from January’s revised figure of 100.1. The index is up over 8% from a year ago. The Employment Trends Index aggregates eight labor-market indicators, each of which has proven accurate in its own area, into a single number. ETI usually leads employment before every peak and before most troughs. Thus, an increase in ETI usually portends an increase in employment and visa-versa.
Home Improvement Improves
According to Harvard University’s Joint Center for Housing Studies, spending on home remodeling in the first quarter will jump to $125.1 billion, up 9.2% from $114.6 billion last year earlier, with a 13% percent increase forecast for April through June 2011 — if so, the largest jump in five years. This is far brighter than the six-year low of $112 billion in 2009. The study noted that spending on renovations may increase 3.5% per year through 2015.
The National Association of the Remodeling Industry noted that the 65-year-old baby boomers will drive the growth as they seek better lighting, less barriers, and more things in convenient locations.
That’s good news for a variety of small contractors and also for Home Depot, the largest US home-improvement retailer, which forecast earnings per share (excluding some items) will jump up to 9.5% in 2011. The average Home Depot purchase jumped 2.6% in the fourth quarter, the most in more than four years, though cautious consumers still favor small improvements rather than major renovations.
March 3, 2011
Retail Sales Climbing
The International Council of Shopping Centers and Goldman Sachs reported its chain-store sales index for the week ending on February 26, 2011 fell 0.5% compared to last week, but rose 3.3% from year-earlier period, its strongest pace since early January. ICSC is forecasting an increase of between 3% and 3.5% in same-store sales at leading US retail chains in 2011.
Gas Prices Going Higher
The Energy Department announced that for the week ending February 28, 2011, the average price of U.S. gasoline rose to $3.383 a gallon, up from $3.189 per gallon a week earlier. Analysts expect regular-grade motor gasoline retail prices to average $3.22 per gallon in April through September with a a 25% probability that the national average retail price for regular gasoline could exceed $3.50 per gallon in the June through September period and an 8% to 10% probability that it could exceed $4 per gallon in August and September.
Diesel prices rose to an average $3.57 per gallon, up from last week’s $3.53 per gallon.
Retail Sales Up
For the week ended February 26, 2011, ShopperTrak’s National Retail Sales Estimate was $89.593 billion, up 0.1% from last week’s $84.483 billion, and up 11.4% from same week in February 2010. Shoppers finished off their President’s Day shopping early in the week. this large (and expected) gain was caused by a calendar effect. President’s Day in 2011 moved to the last week of February 2011 from the third week of February 2010. Another piece of good news for the week is that the month to date year over year comparison moved positive this week from a slight negative. The extra President’s Day shopping pushed this measure into the black. Expect that March 2011 will be a tougher retail month than in 2010. Easter falls in late April, thus, no Easter shopping will be done in March.
February 2011 Consumer Confidence Rises
The Conference Board announced Consumer Confidence increased slightly in February 2011 to 70.4, up from 64.8 in January 2011, a three-year high. Analysts noted consumers are more positive about the economy and their income prospects, but feel somewhat mixed about employment conditions.
Retail Sales Climb
The US Commerce Department reported January 2011 retail sales rose 0.3% from a year ago, the seventh straight month of increases. Bad weather across the US was blamed for slow growth, but overall sales strength indicated a growing economy.
The Department also announced that retail trade sales were up 0.5% from December 2010, and 8.3% above last year. Auto and other motor vehicle dealers sales were up 16.7% from January 2010 and non-store retailers sales were up 13.5% from last year.
More Private Label Credit Cards
MasterCard, Inc President of US Markets Chris McWilton noted chain stores are once again negotiating private-label credit card deals, although higher gas prices could dampen consumer spending, Reuters reported.
March 2, 2011
The Small Biz Cash Crunch Continues
by Keith Mabe
As the economy slowly recovers, large companies continue to shore up their cash flow constraints by delaying payments to small business suppliers. At the same time, vendors to these same small businesses continue to demand faster payment. The result is putting small businesses out of business.
This strong-arm tactic by larger companies is squeezing the small supplier’s cash flow. Since small businesses have little bargaining power when dealing with their larger customers, they are often forced to accept more lengthy terms. This problem comes on the heels of another: Vendors (many in a cash-crunch themselves) are demanding prompt if not faster payments. This is creating a vicious cash-flow crunch cycle from customer to supplier to vendor, pushing many small businesses to the breaking point.
Making matters worse, in a credit clampdown that went too far, bank lending to small and mid-sized businesses has continued to dwindle. The SBA’s own data states that from June 2009 to June 2010, the value of outstanding loans to U.S. small businesses plunged $43 billion, a drop of more than 6 percent. This lack of lending has had a devastating impact on small businesses that were already strapped for cash, putting many of them out of business.
As business owners are continuing to struggle with cash flow during this economic recovery, financial relief seems to be scarce. However, Accounts Receivable Factoring is an often overlooked choice to help businesses manage their cash flow. This form of financing (also known as Invoice Factoring) is a financial tool that allows businesses to capitalize on the power of their outstanding Accounts Receivable. Factoring is a valuable mechanism to turn a business’ invoices into immediate cash, enabling them to fund business operations.
Although not widely understood, a factoring firm provides funds to a business based upon its Accounts Receivable. Most invoices billed to credit worthy customers can qualify. Banks, on the other hand, must consider increasingly stringent criteria before qualifying a borrower for any type of funding. In most cases, when considering assisting a business based strictly upon its accounts receivable, factoring companies can provide funds when a commercial bank cannot.
The reason many businesses employ factoring is to ensure the continuous flow of cash to the business without sacrificing equity or incurring debt. Essentially, businesses that use factoring are focusing on having most of the money now rather than all of it later. It can take time to collect an invoice, but when companies factor their accounts receivable, they get their money faster and easily are able to avoid the cash-crunch.