FINANCE

Deloitte: Consumer spending flat in February

BY Dan Berthiaume

New York — The Deloitte Consumer Spending Index remained flat in February 2014, showing only a marginal change. The Index tracks consumer cash flow as an indicator of future consumer spending.

The Index, which comprises four components, tax burden, initial unemployment claims, real wages and real home prices, ticked down slightly to 3.9 from 4.0 last month. Highlights of the Index include:

Tax Burden: The tax rate stayed at 11.8%, consistent with recent months.

Initial Unemployment Claims: The four-week moving average of initial unemployment claims fell to 332,600, a 7% decrease from the previous month.

Real Wages: Real hourly wages moved up 0.2% to $8.82, and have been gradually increasing over the past year.

Real New Home Prices: New home prices dipped 2.3% to $111,000 from $113,000 the month prior.

"The fundamentals for consumer spending remain stable," said Daniel Bachman, Deloitte’s senior U.S. economist. "While the economy continues to grow at a moderate pace, expect growth to accelerate over the next six to eighteen months, and the outlook for consumer spending to improve along with the economy."

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MARKETING/SOCIAL MEDIA

Report: Nine-in-10 women research before purchase

BY Dan Berthiaume

San Diego – Nine-in-10 (91%) women conduct online research prior to making a purchase, and 92% are willing to pay more for competing products that receive positive online reviews. A new consumer survey from Interactions, “Retail Perceptions – The Power of Persuasion,” also found that 30% of women use a mobile device to conduct research and 37% of mobile users say they conduct research during their shopping trip.

Only 3% of women who shop online say that social media sites are their preferred source for product reviews, while 60% rely on retailers’ websites when deciding whether or not to purchase a product. The report also shows that 80% are influenced to purchase a product after viewing positive reviews, and 67% say they are less likely to purchase a product they were considering after viewing negative online reviews.

"These numbers speak to the impact that mobile is having on the retail industry,” said Giovanni DeMeo, VP of global marketing and analytics for Interactions. “Consumers want information on their terms and their schedules, which means that both retailers and manufacturers need to adapt, if they haven’t already,"

The primary research for “Retail Perceptions – The Power of Persuasion” was conducted in January 2014 by Interactions with a representative sample of women ages 18-60 across all geographies, income levels and ethnicities within the U.S.

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News

FedEx delivers e-commerce growth

BY CSA STAFF

The growth of e-commerce contributed to an 8% increase in average daily FedEx Ground volume, but severe winter weather exacted a heavy toll on the company’s profitability.

FedEx said its ground segment grew revenues by 10% to slightly more than $3 billion as average daily volumes grew by 8% during the company’s third quarter ended Feb. 28. The company delivered more than 300 million packages via ground during the period for average daily volume of roughly 4.8 million packages. Despite the increased volume due to growth in home delivery and business to business services, the ground segment’s profits came under pressure. Operating income grew 2% to $467 million, but operating margins contracted to 15.7% from 17%.

Results for the ground segment benefitted from late Thanksgiving holiday which pushed package volume associated with Cyber Week into the FedEx’s third quarter results during the current fiscal year whereas Cyber Week fell in the second quarter during the company prior fiscal year.

The favorability was significantly offset by an estimated $40 million year-over-year impact on operating income from weather, as well as increased network expansion costs and the negative net impact of fuel.

“Historically severe winter weather significantly affected our third-quarter earnings,” said chairman, president and CEO Fred Smith. “On days when the weather was closer to normal seasonal conditions, our volumes were solid and service levels were high. The FedEx strategy of maintaining separate express and ground networks with multiple hubs proved to be an especially important advantage for our package customers during this quarter’s severe weather and peak shipping.”

Even so, FedEx said third quarter profits totaled $1.23, well below the $1.46 analysts expected, and flat with the prior year’s third quarter profit of $1.23 when adjusted to exclude a one time restructuring charge.

Total company revenues grew 3% to $11.3 billion and operating income increased 9% to $641 million as a stronger profit performance at the company’s larger Express segment offset challenges with the ground division.

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