IHL Forecast: 2015 retail IT spend to surpass $190 billion
Franklin, Tenn. — The retail and hospitality market is entering a time of unprecedented IT growth for 2015, with overall spending expected to increase 5% over 2014 and surpass $190 billion worldwide, according to a new report by IHL, a global research and advisory firm specializing in technologies for the retail and hospitality industries.
IHL’s “WorldView IT Spend Forecast” reveals that for the first time in several years, IT growth will be greater in North America than even in emerging BRIC countries, increasing over $5 billion in new spending in 2015 over 2014 levels.
The report predicts overall IT spending growth of 5.7% in North America, driven by huge investments retailers in payment systems, data security, omnichannel integration and mobile proliferation and engagement. Spending around payment systems in North America (encryption, tokenization and EMV) alone should surpass $4.5 billion for the year as retailers rush to meet the deadlines in place for EMV introduction to the U.S. market.
The report features forecasts on over 300 categories of hardware, software, SaaS, services, and labor/overhead, as well as forecasts and growth rate for cloud solutions as well as sizing for mobile, EMV, omnichannel, big data tools and traditional retail technology components. Each includes a three year forecast as well as the current year.
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Increased promotional activity takes a bite out of Chico’s Q2 results
Price cuts made to clear seasonal merchandise were a primary driver of Chico’s lower net income for the second quarter ended Aug. 2.
The company posted net income of $30.1 million for the quarter, a drop of 31% from $43.6 million in the year-ago period. Net sales for the quarter were $671.1 million, an increase of 3.3% from $649.5 million in the previous year, but driven primarily by sales at 98 net new stores. Same-store sales inched up by 0.3%.
The company’s gross margin for the quarter was $351.5 million compared to $356.1 million in last year's second quarter. Gross margin was 52.4% of net sales, a 240 basis point decrease from last year's second quarter, primarily reflecting increased promotional activity in fiscal 2014 to sell through seasonal merchandise.
As of Aug. 2, the company operated 1,525 stores in the US and Canada and sold merchandise through franchise locations in Mexico.
Tiffany thrives as CPG retailers strive
While food and consumable retailers are struggling to pass along price increases and grow same stores sales, luxury retailer Tiffany is having little difficulty with either metric.
The company was able to increase prices, further expand its already huge gross margins and grow same store sales in the Americas by 8% during its second quarter ended July 31. Tiffany said worldwide sales increased 7% to $993 million and same store sales increased 3%. Gross margins increased to 59.9% of sales from 57.5% the prior year. Profits increased 16% to $124 million, or 96 cents and share, compared to $107 million, or 83 cents a share.
“These healthy second quarter results reflected solid sales growth in our stores, particularly in the Americas and Asia-Pacific regions,” said Tiffany chairman and CEO Michael Kowalski. “In addition, an improved gross margin was an important contributor to the earnings growth. We were also pleased with solid performance across most product categories, ranging from the success of perennial classics in fine, statement and engagement jewelry to our newest Atlas collection, and we are excited about the current debut of our new Tiffany T jewelry collection.”
The company experience strength in the Americas where total sales increased 9% in the second quarter to $484 million. The company’s second largest geographic area, Asia-Pacific, saw sales on a constant currency basis increase 13% to $237 million.
The better than expected performance prompted the company to increase is full year profit plan by five cents to a range of $4.20 to $4.30 from earlier guidance of $4.15 to $4.25.
Tiffany ended the quarter with a 293 stores worldwide consisting of 122 units in the Americas, 72 in Asia-Pacific, 55 in Japan, 38 in Europe, five in the United Arab Emirates and one location in Russia.