Retail Consulting - National Retail Bulletin - J.c. Williams Group - February 2009

U.S. Data

Advance February 2009 Retail Sales i Released March 12, 2009

Gloomy February reflects monthly sales drop

are offering gift cards to consumers who recycle certain, old electronic products.

Considered the most depressing month of the year, the consumer confidence reflected the sentiment by falling -13 points from last month, to settle at 25 points for February. The positive aspect here is that typically, February claims the lowest sales volume during the year.

General Merchandise Stores also saw a slowdown this month as sales dropped -1.3%. Walmart, soaring above its competition, reported same-store sales up 5.0%.

All Stores sales were down -12.3% for the month and -10.3% year-to-date; excluding Motor Vehicle and Parts Dealers and Gasoline Stations, All Stores retail sales were down -4.7%. While consumers have been focused on job retention, debt reduction and lifestyle maintenance, the consequence is a slow down in sales of even seemingly immune categories. Food and Beverage Stores were down -2.9% and Health and Personal Care Stores were down -0.4%. As consumers continue to trade down, all retailers will be looking for ways to provide increased value. Double-digit deceleration in growth was seen for categories linked to the housing market. Building Material and Garden Equipment Stores were down -14.9%; Sales at Furniture and Home Furnishing Stores fell by -14.8%. Electronics and Appliance Stores also fell by -4.9%. Despite the gloom and doom, retailers like Best Buy are turning the economic downturn into investment opportunities for their brand; jumping on the eco-band wagon with eco-perks, they

Department Stores fell by -8.7%. J.C. Penney and Macy’s comparable samestore sales for February were down -8.8% and -10.9% respectively. As consumers opted to spend less, gain more and essentially trade down, some retailers noticed the signal. Nordstrom plans to open 13 new locations, 10 of which will be their discount store, The Rack. Growth of Clothing and Accessories Stores continued to slide as they fell -6.5%. Gap reported a sales reduction of -12% for its February same-store sales. During a month where the fear and reality of unemployment, dismal news and weather all have a profound impact on consumer mindsets, merchants will need to get back to retailing basics. Outlined in the next section, are our ‘words of wisdom,’ to help retailers strengthen their game.

Release Date of the Next National Retail Bulletin: April 14, 2009

Retailing sanity – top tips John Williams, senior partner and founder of the J.C. Williams Group provides the following important tips for retailers. These tips have stayed true through time, pulling retailers out from the bottom and bringing some to the top. 1. Manage your inventory aggressively on a day to day basis to keep your cash position healthy 2. Ensure that merchandise basics are always in stock 3. Don’t cut back on store presentation. Shopping is as much about emotion as necessity. 4. Keep appropriate quantities of fresh, new and innovative products to keep on the leading edge of change 5. Ensure staffing service levels are balanced to the in-store traffic flow 6. Follow the 80/20 rule: pay attention to your best customers 7. Re-examine the role of your private label in order to build it up, both in the short and long term 8. Retailing is a multichannel experience; multichannel retailers are reaping the rewards. Get in on the game

Please note: The J.C. Williams Group National Retail Bulletin compares the latest monthly release of “raw” (i.e., unadjusted for seasonality, holiday, and trading day) retail sales figures to those in the same calendar month of the previous year. The U.S. Census Bureau also reports seasonally adjusted sales that are compared to the previous month within the current calendar year to measure change in Gross Domestic Product (GDP). Although other sources use seasonally adjusted figures, J.C. Williams Group believes that using raw figures and making comparisons to the previous year’s performance more accurately reflects the seasonality of the retail industry, and therefore, are more useful in analysis. Definitions can be found on the U.S. Census Website: www.census.gov.

350 West Hubbard St. Ste. 240, Chicago, Il. 60654 Tel: (312) 673-1254 Fax: (312) 822-9162 Website: www.jcwg.com For more information, please contact Jim Okamura at (312) 673-1254, John Archer (416) 921-4181, or e-mail [email protected]

NATIONAL RETAIL BULLETIN

Release Date: 3/12/09

Retail Sales by Store Category Sales for the Month of February All Stores Motor Vehicle and Parts Dealers Gasoline Stations Food and Beverage Stores Grocery Stores Health and Personal Care Stores Building Material and Garden Equipment Stores General Merchandise Stores Department Stores (excluding leased departments) Clothing and Accessories Stores Furniture, Home Furnishings, Electronics and Appliance Stores Furniture and Home Furnishing Stores Electronics and Appliance Stores Sporting Goods, Hobby, Book and Music Stores Miscellaneous Store Retailers Nonstore Retailers Food Services and Drinking Places

Year to Date Sales Ending February All Stores Motor Vehicle and Parts Dealers Gasoline Stations Food and Beverage Stores Grocery Stores Health and Personal Care Stores Building Material and Garden Equipment Stores General Merchandise Stores Department Stores (excluding leased departments) Clothing and Accessories Stores Furniture, Home Furnishings, Electronics and Appliance Stores Furniture and Home Furnishing Stores Electronics and Appliance Stores Sporting Goods, Hobby, Book and Music Stores Miscellaneous Store Retailers Nonstore Retailers Food Services and Drinking Places

2009

2008

2009/2008

305,943 51,520 23,934 44,034 39,582 20,004 18,547 43,622 13,228 15,078 15,945 7,520 8,425 5,733 8,253 24,245 35,028

348,876 70,240 36,789 45,351 40,970 20,078 21,783 44,205 14,490 16,128 17,679 8,822 8,857 6,024 9,025 25,942 35,632

-12.3% -26.7% -34.9% -2.9% -3.4% -0.4% -14.9% -1.3% -8.7% -6.5% -9.8% -14.8% -4.9% -4.8% -8.6% -6.5% -1.7%

2009

2008

2009/2008

624,162 104,011 48,865 92,752 83,808 40,907 37,576 87,006 25,929 28,953 32,269 15,241 17,028 12,863 16,728 50,449 71,783

695,827 137,080 74,703 92,332 83,813 40,297 43,689 86,257 27,902 30,587 35,369 17,680 17,689 13,073 18,278 53,599 70,563

-10.3% -24.1% -34.6% 0.5% 0.0% 1.5% -14.0% 0.9% -7.1% -5.3% -8.8% -13.8% -3.7% -1.6% -8.5% -5.9% 1.7%

Source: US Census Bureau. All Values are expressed in millions of US dollars and are not seasonally adjusted 350 West Hubbard St. Ste 240, Chicago, Il. 60610 Tel: (312) 673-1254 Fax: (312) 822-9162 Website: www.jcwg.com For more info, please contact Jim Okamura at (312) 673-1254, John Archer at (416) 921-4181, or e-mail [email protected]

Release Date: 3/12/09

NATIONAL RETAIL BULLETIN

U.S. Consumer Confidence Index 120 110 100 90 80 70 60 50 40 30 Feb-09

Nov-08

Aug-08

May-08

Feb-08

Nov-07

Aug-07

May-07

Feb-07

Nov-06

Aug-06

May-06

Feb-06

Nov-05

Aug-05

May-05

Feb-05

Nov-04

Aug-04

May-04

Feb-04

20

Source: U.S. Conference Board

U.S. Monthly Retail Sales by Major Category Percentage Change from Same Month, Previous Year Auto

15%

Food & Drug

GAFO

10% 5% 0% -5% -10% -15% -20% -25% Jan-09

Dec-08

Nov-08

Oct-08

Sep-08

Aug-08

Jul-08

Jun-08

May-08

Apr-08

Mar-08

Feb-08

Jan-08

Dec-07

Nov-07

Oct-07

Sep-07

Aug-07

Jul-07

Jun-07

May-07

Apr-07

Mar-07

Feb-07

-30%

Source: U.S. Census Bureau 350 West Hubbard St. Ste 240, Chicago, Il. 60610 Tel: (312) 673-1254 Fax: (312) 822-9162 Website: www.jcwg.com For more info, please contact Jim Okamura at (312) 673-1254, John Archer at (416) 921-4181, or e-mail [email protected]