ICSC: Chain stores saw gains in April
Bargain-hunting shoppers ruled the market in April, according to sales figures released this week. The International Council of Shopping Centers (ICSC) said U.S. chain store sales rose by 3.6 percent on a year-over-year, same-store basis, and discount retailers beat earlier estimates.
“Although the economic headwinds remain brisk, April year-over-year retail chain store sales got a lift of 200 to 250 basis points due to the shifting Easter date, which resulted in an extra Sunday of sales in April 2008 versus April 2007,” said Michael P. Niemira, ICSC’s chief economist and director of research.
“In addition, there was some modest pent-up demand with more seasonable weather early in the month, along with some increased promotional activity, which helped to explain the strongest monthly performance in more than a year.”
Wal-Mart reported that same-store sales rose 3.2 percent, beating an earlier forecast. Same-store sales rose 3.1 percent at Target and a healthy 8 percent at warehouse club retailer Costco.
“We are of course benefiting from some inflation on the food side,” Costco said in a statement, “as a result of the recent run-up in the cost of commodities and the continued run-up in the price of oil and gasoline.”
Remodeling activity was steady in the first quarter
Remodeling activity remained steady during the first quarter of 2008, according to the National Association of Home Builders’ Remodeling Market Index (RMI).
The group’s market conditions indicator rose slightly, to 41.8 from 40.9 in the previous quarter. An index measuring future expectations remained unchanged at 37.9.
The Remodeling Market Index measures remodelers’ perceptions of market demand for current and future residential projects. Any number over 50 indicates that the majority of remodelers view the market conditions as improving. The NAHB noted that the index has been running below 50 since the final quarter of 2005.
“The remodeling market continues to show weakness, following the downturn in the overall housing market,” said NAHB chief economist David Seiders. “We expect there to be some further erosion in 2008, with a gradual recovery in 2009.”
Nationally, the RMI components for major additions and alterations during the first quarter increased to 44.15 from 42.28. Minor additions and alterations decreased to 41.57 from 41.76. Maintenance and repair remodeling work increased to 39.68 in the first quarter, from 38.11. The amount of work committed for the next three months decreased to 29.63 from 33.15 in the fourth quarter, “demonstrating a decline in the backlog of remodeling jobs,” the group said.
“Many remodelers are seeing smaller jobs and have a shorter backlog, but we expect activity to increase because necessary home repairs cannot be postponed for a long time,” said NAHB Remodelers chairman Lonny Rutherford.
Regionally, current market expectations dropped in the first quarter in the Northeast to 36.4 from 38.6, and in the South to 42.2 from 45.0. The Midwest, however, increased to 44.1 from 41.1, and the West was up slightly to 42.9 from 42.2.
The RMI is based on a quarterly survey of professional remodelers, whose answers to a series of questions were assigned numerical values to calculate the two separate indexes. Additionally, a variety of “special questions” are also asked at the end of the survey to help pinpoint market trends.
Earnings rise at Trex
Earnings at composite decking manufacturer Trex more than tripled in the first quarter to $8.9 million from $2.73 million in the same period last year. Net sales were up 3.1 percent, to $119.5 million from $115.9 million last year.
The company credited expanding distribution for the earnings increase, as well as brand strength, which “enabled us to increase sales revenue despite the weakening economy and continued softness in the building materials industry,” said CEO Ronald Kaplan.
“In addition, our improved gross margin reflects our successful focus on productivity and cost containment initiatives,” he said. “The measures we took in the first quarter — including rightsizing the company, recruiting new management, controlling costs and enhancing operating and financial controls — have established a solid foundation for delivering improved financial results.”
Still, recent poor weather has delayed many outdoor building projects, according to the company. Additionally, building material dealers are “choosing to operate with depressed inventory levels,” and the economic outlook in the United States is still uncertain, Kaplan said. For those reasons, the company is projecting lower revenue in the second quarter, expected to be down 23 percent to 33 percent compared with last year’s second quarter.
Based in Winchester, Va., Trex is a manufacturer of composite decking, railing and fencing products.