SUPPLY CHAIN

Retail container traffic to be Up 16% in July, but big increases could be coming to end

BY CSA STAFF

Washington Import cargo volume at the nation’s major retail container ports is expected to be up 16% in July, compared with the same month a year ago. But the double-digit increases seen in recent months should taper off this fall as retailers cautiously manage their inventories, according to the monthly Global Port Tracker report released by the National Retail Federation and Hackett Associates.

“We are still seeing increases in imports, partly because last year’s volumes made for easy comparisons and partly because of real improvements in the economy and consumer spending,” NRF VP for supply chain and customs policy Jonathan Gold said. “But retailers are being cautious as they look at numbers for employment, housing and the availability of credit.”

According to Gold, retailers will have to manage their inventories more carefully as the year progresses.

“We’re still going to see increases in container volume, but not as large as what we’ve seen so far,” he said. “As retailers head into the peak shipping season, they will also to need to address challenges they are currently facing with lack of vessel capacity and with labor and congestion issues at some of the ports.”

“The latest economic indicators are starting to look bleak, including consumer confidence, industrial production and employment numbers. “Sales will be slower in July and August; that much is certain. Inventories will rise, resulting in some sharp seasonal volume reductions,” said Ben Hackett, founder, Hackett Associates, which produces Global Port Tracker for NRF.

The report covers the U.S. ports of Long Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Hampton Roads, Charleston and Savannah on the East Coast, and Houston on the Gulf Coast.

Hackett said some of the current surge in container volume reflects the fact that shipping companies have recently restored some of the services that were cut back during the recession of the past two years.

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FINANCE

Most discounters report sales increases, but miss forecasts

BY CSA STAFF

New York Target Corp. said Thursday that sales were “relatively soft” in June as same-store sales rose 1.7%, short of analyst expectations. The retailer’s total revenue for the five weeks ended July 4 rose 4% to $5.92 billion.

Clothing, food, health care and beauty products were strong sellers. But electronics, video games, music and movies were weaker. CEO Gregg Steinhafel said that while sales were “relatively soft” for the second month in the quarter, its mix of products, cost cuts and improvements in its credit-card segment helped profitability in the month.

TJX Cos. on Thursday said that its June same-store rose 3%. Analysts, on average, had expected same-store sales to rise 4.2%. The company raised its outlook for the second quarter and its estimate for the full year.

Total sales for the five weeks ended July 4 rose 7% to $2 billion.

Carol Meyrowitz, president and CEO of The TJX Companies Inc., stated, “Consolidated comparable-store sales were solidly within our estimated range and The Marmaxx Group reported a comp sales increase at the high end of our forecast. It is important to note that these comp sales increases were achieved on top of our strong increases last year when many other retailers had sharp comp sales declines. Further, business continued to be driven by increases in customer traffic which led to the sustained strength that our June sales represent.”

Costco Wholesale Corp. saw June same-store sales rise 4%, marginally missing market expectations. The fact that Memorial Day fell in the June reporting period, unlike the previous year, hurt sales by about 2% , the company said. This year’s five-week period included 33 trading days in the United States versus 34 last year.

For the five weeks ended July 4, Costco’s net sales rose 7%  to $7.33 billion from the previous year.

In other same-store sales results for June:

• Ross Stores’ sales climbed 5%, just short of analysts expectations, as customers bought more items for their homes along with dresses and shoes. Overall revenue from the month rose 9% to $725 million from $666 million. The discounter boosted its second-quarter guidance. •At  BJ’s Wholesale Club Inc., sales increased 3.8%  in the five-week period ending July 3, not as much as analysts had expected. Excluding revenue from gasoline sales, the measure climbed 3.2%, missing the 4.4%  jump on that basis that analysts had expected. • Fred’s Inc. said its sales rose 1.2%, short of analysts expectations.

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FINANCE

ShopperTrak: Sales, traffic to grow in Q3

BY CSA STAFF

Chicago ShopperTrak said on Thursday that both retail sales and traffic for the third quarter is expected be relatively positive, compared with the same three-month period last year.

According to the company’s Retail Traffic Index (SRTI), total U.S. foot traffic is expected to decline 1% for the quarter, while the company’s National Retail Sales Estimate (NRSE) is forecasting a 2.6% retail sales rise.

ShopperTrak reported back-to-school shopping — a retail period second only to the Nov./Dec. holiday season — will once be the star of the show in the third quarter, driving retail spending throughout August.

While the company’s data shows retail sales during “back-to-school” 2009 slipped 4.9%, it does not expect a repeat of this dismal performance as value-driven consumers and pent up demand are pointing to relative recovery for retailers in 2010. Pointing to this fact, ShopperTrak’s data shows year-over-year retail sales have increased in 21-of-26 possible weeks so far this year.

Although the retail traffic intelligence provider expects a slight uptick in third-quarter sales, Bill Martin, co-founder of ShopperTrak, warned that several economic conditions could drive both retail sales and traffic downward over the next three months.

“As with several sectors, continued slow growth in the job market could have an adverse effect on retailers over the next three months,” Martin said. “This added to the possibility of even higher gasoline prices could mean fewer shopping trips to the malls, which could also negatively impact retail performance.”

Martin continued, “That being said, consumers have proven willing to spend this year and pent up demand should materialize during back-to-school season as old wardrobes and other necessary items must be replaced.”

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