|Retail Eclipses Expectations
Retail sales were moonstruck in July, recording their biggest increase in seven months. It came as consumers boosted purchases of motor vehicles as well as discretionary spending, suggesting the economy continued to gain momentum early in the third quarter ahead of today’s lunar eclipse.The Commerce Department said retail sales jumped 0.6 percent last month. That was the largest gain since December 2016 and followed June’s upwardly revised 0.3 percent rise.
May’s retail sales were also revised up to show no change instead of the previously reported 0.1 percent dip. Retail sales increased 4.2 percent in July on a year-on-year basis.
Home Depot reported quarterly profit and comparable sales beat estimates as homeowners continued to invest in their homes that are appreciating in value.
The home improvement chain raised its full-year sales and profit forecasts. The company says it now expects full-year sales to grow 5.3 percent, comparable sales to rise 5.5 percent and earnings of $7.29 per share for the year ending January.
“This latest report is very encouraging, and again we advise that retail real estate is not on the dark side of the moon – it’s catching its breath and adapting to a rapid pace of change,” says Situs RERC Director Dane Anderson. “Retail property owners are pivoting toward a stronger fusion of leisure and traditional retail space. It is worth noting this is not just an e-commerce-driven change; there is a socioeconomic factor as well. The millennial generation is more interested in paying for an experience than consuming a good.”
Economists polled by Reuters had forecast retail sales increasing 0.4 percent in July after a previously reported 0.2 percent decline.
Excluding automobiles, gasoline, building materials and food services, retail sales surged 0.6 percent last month after an upwardly revised 0.1 percent gain in June. These so-called core retail sales, which correspond most closely with the consumer spending component of gross domestic product, were previously reported to have dipped 0.1 percent in June.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 2.8 percent annualized rate in the second quarter. That boosted GDP growth to a 2.6 percent rate in the April-June period.
Getting People Back to the Mall and the Movies
The Hollywood box office is certainly in need of a driver to get audiences in to cinemas and multiplexes.
Movie theater subscription service MoviePass is tearing a page right out of Netflix Inc.’s book in hopes of providing that much-needed jolt.
Mitch Lowe, a former founding executive at Netflix, president at Red Box and now MoviePass chief executive, said on Tuesday the company will lower the price of its subscription service to $10 a month from its previous $30 and up.
With MoviePass, moviegoers can see a movie a day for $10 a month (excluding on Imax and 3-D screens), and MoviePass will pay theaters the full price of the ticket. In 2016 the average ticket price in the U.S. was $8.65, and nearly double that in some major U.S. cities.
“Movie theaters have been very slow to innovate in the pricing model, but if you can build a subscription to do the same thing for theaters that Netflix did for independent films, that’s great,” Lowe told MarketWatch.
The MoviePass app that accompanies the service uses location data to show available theaters and what’s playing and pulls in ratings from Rotten Tomatoes.
Of course, subsidizing customers to see as many as 30 movies a month won’t be cheap. Lowe, who took over his role in June of last year, said MoviePass has been testing different offerings and price points to learn what will fit. The company has also sold a majority stake to data and analytics firm Helios and Matheson Analytics Inc.
Lowe declined to disclose financial terms of the deal, but said it pumped a lot of cash into the bank account that he plans to use to build out staff and to fund acquisitions. MoviePass plans to build up a subscription base in the millions, and then go public in March 2018, although Lowe said the company has a long way to go.
The ultimate goal is to be a partner to the pillars of the movie industry. The MoviePass app can help studios with marketing films and create an Uber-like experience for cinemas where customers can do everything from the app and don’t have to reach for a wallet, making it easier to pay for things like concessions.
Stocks of cinema chains have taken a beating in 2017, especially during the summer months, as returns at the box office have slumped.
In the year to date, shares of AMC Entertainment Inc. have fallen nearly 61%, while Imax Corp. shares have declined more than 41%, Regal Entertainment Group and Marcus Corp. shares are both down nearly 19% and shares of Cinemark Holdings Inc. are down 5% in the year to date. The S&P 500 index is up more than 10% in the year.
The fear, which analysts and studio executives say is overblown, is that with the advent of streaming services like Netflix and Amazon.com Inc. and other entertainment options, audiences are not interested in going to the movies like they used to.
Theater admissions were down last year compared with 2015, and though the box office saw a record year in revenue for the second year in a row, admissions haven’t been able to reach the record levels set in 2002, according to data from the National Association of Theatre Owners.
Lowe said MoviePass has data that suggests that audiences want to go to the movies — they just aren’t willing to pay upward of $16 for a ticket.
Attendance among the coveted 18-to-35-year-old demographic is slumping, but Lowe said that’s not because they don’t want to go to theaters, but rather that they see the value in the subscription model and don’t like being nickel-and-dimed.
“[MoviePass] isn’t the solution,” Lowe said, “but I think for the first time in a while we’ve found a way to increase ticket sales.”
read more: MarketWatch
Dick’s Sporting Goods warns sales are expected to fall despite its plans to increase discounts, compounding concerns about its emphasis on stores at a time when more customers are shopping online.
Sales of hunting goods, licensed products and athletic apparel undermined Dick’s during the period, offsetting growth in footwear, golf and online sales. As other sporting goods chains have gone out of business, Dick’s had been hoping to benefit from the industry consolidation.
The sporting goods sector’s largest retailer fell short of expectations for second-quarter sales, triggering a selloff in the company’s stock.
Sales at stores open at least a year were up only 0.1%, despite the company’s projected growth of 2% to 3%.
Dick’s shares had plunged 23.04% to $26.86 when trading ended for the day.
“Pricing in the marketplace has become unpredictable and at times irrational,” CEO Edward Stack said in a call with investors. “The retail market is currently influx. The environment is highly competitive and dynamic.”
But investors seemed to be concerned that disruption could sweep through Dick’s, as well.
Ominously, the company warned that third-quarter same-store sales would fall “in the low single-digits,” after having increased 5.2% in the third quarter of 2016.
read more: USA Today
Builders Report Labor Shortages
Labor and subcontractor shortages have become even more widespread in July of 2017 than they were the previous year, according to the NAHB/Wells Fargo Housing Market Index (HMI) survey.
Shortages were at least fairly widespread for each of the 15 occupations, ranging from a low of 43 percent for building maintenance managers to a high of around 75 percent for the three categories of carpenters.
The NAHB survey results are consistent with the latest numbers in the Job Opening and Labor Turnover Survey (JOLTS) release from the Bureau of Labor Statistics. After a decline in May that now appears anomalous, the latest JOLTS shows the number of unfilled jobs in the construction industry rose significantly in June.
Windy City Has Wind at Its Back
In Chicago’s trendy Fulton Market district, a once gritty area known only for Oprah Winfrey’s Harpo Studios, construction crews have started facade work on a new headquarters for McDonald’s Corp., which is returning to the city after more than four decades in the suburbs.
McDonald’s, now building at the former Harpo site, isn’t alone in making that move. Conagra Brands Inc., Hickory Farms Inc. and other traditional American heartland companies have shifted major operations to Chicago in recent years as well.
Like many other major U.S. cities, Chicago is enjoying a boom as big employers opt for downtowns over suburban office parks that are being shunned by young workers. More than $20 billion worth of residential, office, cultural and retail projects are in development or on the drawing board, according to the city Planning and Development Department.
But Chicago’s growth engine is different from those benefiting booming cities on this country’s East and West Coasts. Unlike cities such as San Francisco and Boston, where the technology sector is fueling economic development, Chicago lately has been relying heavily on growth of food and consumer-products companies.
While most of these companies are decades old, they also are recognizing the need to attract a young and urban workforce as they add new products, technology and services in response to shifting consumer preferences. McDonald’s executive workforce, for example, has launched a mobile app, added self-order kiosks and added healthier items to its menu.
Hickory Farms, a food retailer founded in Toledo, Ohio, in the early 1950s, moved its headquarters to Chicago earlier this year to tap the city’s talent pool in e-commerce and marketing. “We often refer to ourselves as a 66-year-old startup,” said Chief Executive Diane Pearse.
Officials in the administration of Mayor Rahm Emanuel, who was first elected in 2011, say the longer the list of relocations, the more other companies are considering Chicago moves.
“It has become an easier sell,” said David Reifman, commissioner of the Chicago Planning and Development Department.
At the same time, Chicago’s growth pace also has been threatened by problems unique to many older Midwestern cities. Once dominated by manufacturing, the city still has hundreds of acres of underused industrial land, some of it prime riverfront real estate.
read more: WSJ
Sears Canada Exec Quits to Assemble Purchase Bid
Someone actually wants to buy Sears — Sears Canada, that is.
The chief executive of the 190-store chain, Brandon Stranzl, stepped down in order to put together a bid to buy the company, which is under court-protected reorganization.
The retailer announced the move in a memo to employees ahead of the Aug. 31 deadline for first-round bids.
The Canadian company, which operates separately from struggling Sears Holdings, the US parent of Sears and Kmart, said in June that laying off almost 3,000 employees and closing 59 stores by October would help to put its house back in order.
read more: New York Post
Big Boys Don’t Cry, they Pay Big for Houses
((Listen to our favorite Four Seasons Song Here, While You Read Along)
The Four Seasons frontman Frankie Valli couldn’t take his eyes off of this California spec home in the San Fernando Valley — snapping up the house outside of Los Angeles for $4.3 million, Mansion Global has learned.
Mr. Valli, 83, closed on the newly built six-bedroom home on Monday, listing records show. Born and bred in Newark, New Jersey, the 1960s icon who still performs nightly and has more than 100 million record sales under his belt, has lived in Los Angeles for years.
He bought his new digs from developers who paid $1.6 million for the property in 2014 and built up a 6,700-square-foot white, traditional-style house on about one-third of an acre, property records show. The home has an office, a spacious loft, media room and oversized family room, according to the listing with Dennis Chernov of Keller Williams Realty. Trulia first reported the sale.
The home has seven bathrooms, a gated entry with a circular driveway and double front door. The modern interior includes built-in shelving, coffered ceilings and hardwood floors throughout.
Outside, Mr. Valli has his pick of lounge spaces. He can relax in his new pool and spa or warm up by an outdoor fireplace. There’s also a covered patio off the back of the main house and a pergola for dining al fresco.
read more: Mansion Global
Have a prosperous day and week ahead and keep the tears to a minimum.
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