Retail CFOs expect 3% increase in total 2011 sales
CHICAGO — Amid economic uncertainty and low consumer confidence levels, retail CFOs are expecting a 3% increase in total 2011 sales, according to a recent survey by BDO USA.
While the number reflects the study’s most optimistic sales forecast since 2007, it is down from the 4.7% sales increase reported by the Commerce Department in 2010.
The vast majority of CFOs surveyed in the fifth annual BDO Retail Compass Survey of CFOs expect to see a continuation of stagnant economic conditions. Just 11% expect to see an economic turnaround in the next year, up slightly from 2010 (9%). Thirty-eight percent of CFOs said improved consumer confidence will be most important factor for economic recovery, and another 36% cited lower unemployment as the linchpin.
“Retailers may not anticipate a full recovery in the near future, but we’re not seeing gloom and doom in sales expectations,” said Doug Hart, partner in the retail and consumer product practice at BDO USA. “Despite low confidence levels, macroeconomic conditions are not weighing on the consumer’s wallet as much as expected, and CFOs anticipate moderate spending levels to continue through the holiday season.”
In other survey findings:
Retailers are moderately optimistic for sales in the second half of 2011. A majority (51%) expect sales to increase during this period, up from 44% in 2010. Overall, retailers project a 3.5% increase in comparable-store sales for the second half of 2011. For all of 2011, retail CFOs forecast a 2.3% increase in comparable-store sales;
The appetite for M&A deals is on the rise. Nearly all (96%) of retail CFOs expect such activity to increase or remain steady in the next year. Most CFOs (66%) expect M&A activity to take place primarily in the United States, followed by the Asia-Pacific region (18%) and Europe (16%). However, the CFOs in the Top 100 largest retailers who were included in the sample have greater expectations for the international market. Seventy-five percent of CFOs in the Top 100 expect Europe to see the majority of M&A activity; and
Although private equity deals have dominated acquisition activity, CFOs are predicting an increase in strategic buyouts this year. The CFOs are split on whether upcoming M&A activity will be primarily driven by strategic buyers (52%) or financial buyers (48%). On average, CFOs said they would expect to see an EBITDA (earnings before income and tax, depreciation and amortization) multiple of 6.5 for an acquisition in the retail and consumer product space.
The BDO survey examined the opinions of 100 CFOs at leading retailers located throughout the country. The retailers were among the largest in the country, including 10% of the top 100 based on annual sales revenue. The survey was conducted in August and September 2011.
Walgreens sets its sights on sustainability
DEERFIELD, Ill. — Officially celebrating its 100th solar power system installation in Mason, Ohio, on Friday, Walgreens said that it is on track to tout more solar installations than any other U.S. retailer.
Walgreens president of community management and operations Mark Wagner said the installation was an "important milestone" for the company "[as it continues] to explore ways to expand our use of environmentally-friendly technology to reduce our energy consumption."
"Our use of solar power across Ohio is a great example of how businesses, state officials and developers of green technologies can work together to help make a difference in our communities and for the planet," Wagner said.
As reported earlier this week by Drug Store News, the drug store chain selected SoCore Energy to provide 90 solar installations for the Ohio-based stores. In addition to stores in the state, Walgreens has expanded its plans to include stores and distribution centers in Connecticut, New Jersey, California, and Oregon — since its first solar installation in 2007 — for a total of more than 130 installations nationwide by the end of the year.
"Solar energy solutions cut costs and promote emerging clean energy jobs and markets in communities across America," said White House Council on Environmental Quality chair Nancy Sutley, who was on hand at the event Friday. "It is leadership from private sector companies like Walgreens and the commitment of this Administration to building a cleaner, greener economy that will help to ensure America is second to none."
Kroger recognized for spending with Hispanic suppliers
CINCINNATI — Kroger announced that it has become a member of the U.S. Hispanic Chamber of Commerce Million Dollar Club.
According to Kroger, membership into the USHCC Million Dollar Club, is awarded to corporations who have spent between $25 million to more than $500 million with Hispanic suppliers, in the previous year.
This is Kroger’s second consecutive year of qualifying for membership. The company was inducted in the $250 to $500 million annual expenditure category.
"The success of our business is linked to our efforts to encourage diversity throughout Kroger," Kroger’s chief diversity officer Reuben Shaffer said. "We are honored to receive this recognition and value our membership in the U.S. Hispanic Chamber’s Million Dollar Club, which reflects our ongoing commitment to supplier diversity. We look forward to continuing our strong partnerships with Hispanic-owned businesses and their help carrying out our customer first strategy."