Retail container traffic to rise 2.6% in October
A report released Tuesday by the National Retail Federation and Hackett Associates said that import cargo volume at the nation’s major retail container ports is expected to increase 2.6% in October over the same month last year and should reach its highest level of the year as retailers stock up for the holiday season.
“After a summer of trying to compare apples to oranges, retail cargo is back to normal,” said Jonathan Gold, NRF VP supply chain and customs policy. “October is the historic peak of the shipping cycle each year, and retailers are bringing merchandise into the country on their usual schedule and at normal levels again instead of being forced to move cargo early. Retailers are poised to succeed in maintaining the careful balance between inventory and sales that keeps customers happy while keeping retailers profitable.”
U.S. ports followed by Global Port Tracker handled 1.32 million Twenty-Foot Equivalent Units in August, the latest month for which after-the-fact numbers are available. That was the same as July, but down 7% from August 2010. One TEU is one 20-ft. cargo container or its equivalent.
The August figures followed year-over-year declines of 5% in June and 4% in July, but the statistics were skewed because of higher-than-normal numbers in 2010, when fears of shortages in shipping capacity caused many retailers to bring holiday merchandise into the country earlier than usual. Global Port Tracker counts only the number of cargo containers imported, not the value of their contents, so cargo volume does not directly correlate with retail sales.
Year-over-year cargo growth resumed but was weak in September, which was estimated at 1.37 million TEU, up 2.7% from last year. October is forecast at 1.39 million TEU, up 2.6% from last year, and is expected to regain its historical position as the busiest month of the year after last year’s usual patterns shifted the peak to August. November is forecast at 1.28 million TEU, up 4%, and December is forecast at 1.18 million TEU, up 2.7%. January 2012 is forecast at 1.16 million TEU, down 3.6% from January 2011; and February, traditionally the slowest month of the year, is forecast at 1.1 million TEU, down 3.8%.
The total for 2011 is forecast at 15 million TEU, up 1.8% from 2010. Imports during 2010 totaled 14.7 million TEU, a 16% increase over unusually low numbers in 2009.
At HIRI summit, the focus is on numbers and growth
Chicago — The unofficial quote of the day came from J. Walker Smith, executive chairman of The Futures Co.: "Screw the economy; you can still be successful in your business."
With that shot over the bow of negativism, the Home Improvement Research Institute’s 30th anniversary event, the HIRI Home Improvement Industry Summit, kicked off Wednesday morning with a full slate of presentations. The event brought about 150 research and marketing experts and countless graphs, charts and PowerPoint slides to a conference room on the banks of the Chicago River.
A few minutes after the Commerce Department released a positive housing starts report early Wednesday morning, Josh Rosenbaum, director of the Global Industrial Group, sized up the numbers from the podium at the summit. The 15% increase in starts was countered by a 5% decline in permits, he said. "The housing starts numbers were good. Whether it’s real — we’ll find out next month," Rosenbaum said. "Some of it might be a release of pent-up demand."
Mixed macroeconomic signals lurked behind many of the charts. But charismatic presenter Walker Smith stressed that the fault lies in ourselves, not the economy. He pointed to several companies outside the home improvement industry that have shown amazing growth — Apple, Hyundai and Zappos, for instance. "These companies have shown unprecedented success during the third worst downturn in U.S. economic history," Smith said.
He encouraged attendees not to be intimidated by the macroeconomic trends and he described innovation as the best antidote for sustained down markets.
Relative optimism for the home improvement market continued from an unlikely source: Zelman & Associates, a firm made famous by bearish and accurate outlooks on home builders before the downturn.
"Just like we were early on the bust, the data supported the bust," said Dennis McGill, director of research for Zelman & Associates. "And we feel the data today supports something more optimistic."
The demographics and household growth support a "snap back," he said. Homes are cheap and people know it. New housing stock is going to be required for a growing population, regardless of the type of financing — rent or own, he said.
"At some point, we have to get up to 1.3 million [starts]," McGill said.
Sales rise at Stanley Black & Decker
Stanley Black & Decker, the New Britain, Conn.-based manufacturer of tools, security hardware and other products for the home, reported revenues of $2.6 billion for the third quarter of 2011, an 11% rise from sales of $2.3 billion in the same quarter a year ago. The company attributed the gains to 4% organic growth, 3% from currency and 4% from acquisitions.
Net earnings reported for the quarter were $155 million, compared with $123 million in the third quarter of 2010.
In a prepared statement, Stanley Black & Decker’s president and CEO, John Lundgren, commented: "We are encouraged with the results our businesses continue to achieve in the midst of the current macroeconomic backdrop. With little to no market growth in many of the industries and developed regions where we have a presence, it is successful new product introductions and ongoing value propositions that have resulted in the market share gains crucial to our company’s success. Our revenues within the emerging markets continue to grow at a high rate, and with operating margins above line average, are providing a solid contribution to the company’s bottom line as well.”
In the CDIY segment, double-digit unit volume growth in Latin America and Asia and sales growth greater than 20% for professional power tools drove organic growth for the quarter. Volumes in Europe, while still modestly soft, improved sequentially. Organic sales for the entire segment, excluding divestitures and Pfister, grew 5%. Within hand tools, fasteners and storage, the successful DeWalt hand tool launch coupled with strong growth in Latin America was not enough to offset softer-than expected demand in the North American retail and independent channels.
The professional power tools business grew more than 20% due to the launch of the 20V Max lithium-ion line, while the power tool accessories business grew at a high single-digit rate. The consumer power tool business was flat on an organic basis during the quarter. Sales for the Pfister business fell 22% due to the ongoing impact of the 2011 first-quarter loss of SKUs at a major customer.
For the entire CDIY segment, including Pfister and certain minor product line divestitures, net sales increased 6% versus the third quarter of 2010, due to unit volumes, currency and divestitures, while price was flat. Excluding M&A-related charges, overall segment profit was up 20 basis points versus the third quarter of 2010, as cost synergies and favorable mix more than offset inflation. Price was flat as successfully implemented price increases in response to commodity inflation were offset by higher promotional discounts on Ni-Cad and other older-generation products.
Executive VP and COO James Loree commented: "Our ability to drive above market organic growth was clear again during the quarter. Professional power tools grew over 20% during the quarter in a market that was subdued, due to the successful launches of our 12V and 20V DeWalt lithium-ion line (third quarter of 2010 and third quarter of 2011, respectively). Engineered fastening grew 14% organically, almost three times as much as global light vehicle production, as new products and increased platform penetration across the globe drove volumes. Within security, the North American-focused Kwikset security hardware grew 10%, with no help from residential and commercial construction markets. Separately, the integration of Niscayah, which commenced during the quarter, has proceeded as planned during the first four weeks, and we continue to feel confident in our ability to deliver the previously communicated $80 million in cost synergies by 2013.”