FINANCE

Deloitte Consumer Spending Index falls

BY Katherine Boccaccio

New York City — The Deloitte Consumer Spending Index, released Thursday, continued downward in January and consumer spending will face additional economic headwinds in 2012, according to Deloitte. The Index tracks consumer cash flow as an indicator of future consumer spending.

"A sharp fall in real home prices primarily contributed to the decline in the Index," explained Carl Steidtmann, Deloitte’s chief economist and author of the monthly Index. "While initial unemployment claims ticked lower, real wages and the tax burden showed no improvement leaving little to offset the housing market’s negative effect on the Index."

Deloitte’s analysis of U.S. Commerce Department data indicates that the weakness across economic fundamentals over the past several months may continue and further crimp consumer spending in 2012.

Real incomes declined on a year-over-year basis for the fifth month in a row. While a social security tax cut boosted incomes in January 2011, incomes are set to continue falling without an additional cut this year.

New and existing home sales remain weak, and prices continue to decelerate. Current government proposals to improve the situation, even if approved, will take time to develop, implement and affect the housing market.

Tax increases at the state and local level are raising the overall level of taxation and reducing consumer purchasing power.

The Index, which comprises four components — tax burden, initial unemployment claims, real wages and real home prices — fell to 1.73 from a revised reading of 1.90 the previous month.

"The likelihood that consumer spending power will be further stretched this year puts a brighter spotlight on one area of retail — pricing," said Alison Paul, vice chairman and Deloitte’s retail & distribution sector leader. "While consumers may be price conscious, retailers need to pursue strategies that drive profitability, not just traffic and sales volume, while also taking into account broader economic events that affect their entire operation.”

A cross-functional approach that includes technology, store operations, inventory management, merchandising and marketing, said Paul, is necessary to develop an effective pricing strategy for a retailer’s multiple sales channels.

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FINANCE

Urban Outfitters reports record sales

BY Katherine Boccaccio

Philadelphia — Urban Outfitters reported Thursday that sales for the fourth quarter, ended Jan. 31, rose 9% to $731 million.

Comparable retail segment net sales, which include the direct-to-consumer channels, increased 2% for the quarter, while comparable store net sales decreased 1% for the quarter. Direct-to-consumer comparable net sales increased 14% and wholesale segment net sales rose 3% for the quarter.

For the year ended January 31, 2012, total net sales increased to $2.5 billion.

“While each brand reported record sales for the fourth quarter, we are most pleased with the progress the teams made on reducing overall inventory levels. Promotional activity was significantly higher than planned but ending inventories were clean, and on a comparable store basis, lower than the prior year," said Richard Hayne, CEO. "The direct-to-consumer channel remains a highlight with each brand experiencing strong growth during the quarter. We remain especially excited about the opportunities surrounding this channel."

During the year, the company opened 57 new stores, including 21 Urban Outfitters, 15 Anthropologie stores, 20 Free People stores and 1 BHLDN store.

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Whole Foods profit rises 33%; 69 new stores in development

BY Katherine Boccaccio

Austin, Texas — Whole Foods Market Inc. reported Wednesday that profit for the first quarter rose a better-than-expected 33% to $118.3 million amid increased customer visits and higher prices on select items. On a follow-up conference call with analysts, the chain revealed it has 69 new stores in development, or 2.4 million square feet, in development.

The natural and organic grocer generated revenue of $3.39 billion in the quarter ended Jan. 15, almost a 13% increase over the prior year and beating analysts’ expected $3.38 billion in revenue. Same-store sales rose 8.7%.

The grocer has raised its full-year outlook, now projecting a 13.5% to 15% revenue increase, up from its previously projected 13% to 15% gain.

"There are some positive things happening on the economic front which we are hopeful will continue," Whole Foods co-CEO Walter Robb said on a conference call with analysts. "We have tremendous sales momentum as well as the capital and expense disciplines in place to leverage that momentum to the bottom line."

Part of Whole Foods’ expansion strategy in 2012 will be a continuing focus on smaller footprints and building in economical neighborhoods to lower capex investments.

“Compared to last year’s class of new stores, this year’s class was 17% smaller in size, averaging 38,000 sq. ft. and produced average weekly sales per store of $561,000, translating to 29% higher sales per square foot of $776,” Robb said on the call.

Robb said the chain has signed 34 new leases over the last 12 months and is on track to open between 24 and 27 new stores in fiscal 2012 and 28 to 32 new stores in fiscal 2013.

“We currently have 69 stores or 2.4 million sq. ft. in development equal to 20% of our 12 million sq. ft. in operation,” he said.

Whole Foods recently signed eight new leases averaging 33,000 sq. ft. in size in Frisco, Colorado; Miami, Florida; Orland Park, Illinois; South Bend, Indiana; Minneapolis, Minnesota; Jackson, Mississippi; Port Chester, New York; and Cleveland, Ohio. Frisco, South Bend and Jackson are markets for the chain.

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