IBM forecast: Q1 sales poised to rise
Armonk, N.Y. — An analysis released Thursday by IBM projected that retail sales are positioned for increases across a broad spectrum of categories.
According to the study, the surge will be led by a projected 8.2% rise in men’s apparel sales.
“The forecast of men’s apparel sales reflects a growing trend: men are definitely developing a taste for fashion – especially in business attire,” said Jill Puleri, global retail leader for IBM Global Business Services.
For men’s apparel, 2011 is shaping up to be the best year on record in terms of total sales; final Census figures are expected in February, said IBM.
In other categories, footwear sales are projected to be up 3% over 2010. Attractive promotions and changing weather patterns may account for the jump in sales in the fall 2011 run up to the holiday shopping season, according to the analysis.
For women’s apparel, 2011 sales are projected to be up 1.96% over 2010.
According to IBM, all indications are that personal disposable income continues to rise, while savings as a percent of personal disposable income continue to decline – meaning that people are saving slightly less. There has also been a recent increase in consumer confidence. These three factors combine to provide a good “tailwind,” indicating conditions that may lead to better future sales for the industry.
Deloitte Consumer Spending Index falls
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.
Urban Outfitters reports record sales
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.