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

U.S. Data

March is the Cruelest Month Some say that March is the cruelest month. Just when you think Spring is around the corner you get whacked back into winter. That sentiment could easily describe March 2009. With a string of positive news coming out since early March, the latest retail sales growth figures reminds everyone that retailers are still struggling. Since early March, the stock markets have been gaining steam. In addition, reports of improved corporate profitability have lifted spirits that a turn around is coming. Some consumers have been able to take advantage of mortgage refinancing options thereby freeing up some spending dollars. In addition, the Consumer Confidence Index has stabilized, albeit at a low point. However, the continued job losses, the fear of job losses, and the association with people who have lost their jobs continued to drag down consumer buying sentiment. All Stores fell by -10.6% in March. Excluding automotive produced a better result but All Stores Less Motor Vehicles, Parts Dealers, and Gasoline Stations fell by -3.0%. Consumers spent over $40 billion less in March and approximately $110 billion less in the first quarter of 2009. Some of the disappointing retail sales growth numbers are partially due to a later

Advance March 2009 Retail Sales i Released April 14, 2009 Easter and the fact that there were five weekends in March 2008 compared to 2009. This may explain the negative growth in Grocery Stores (-2.1%). However, we must also take into consideration that March 2008 was a relatively disappointing sales growth month compared to 2007, leading to low comparables. Almost all retail store categories’ growth numbers were lower in March 2009 compared to their year-to-date counterparts. Notable exceptions being Health and Personal Care Stores, which maintained positive growth of 3.5% vs. 2.2% year-to-date. In addition, Building Material and Garden Equipment Stores fell by only -7.6% vs. -11.6% year-todate. While still in the negative growth area of the chart, it perhaps indicates a change in sales activity. The same may be said for Non-store Retailers as on-line sales pick up. Furniture and Home Furnishings Stores dropped the most in March losing -13.0%. Surprisingly, Electronics and Appliance Stores also witnessed double-digit

declines of -10.0%. For the year-to-date, the latter category was down by only 5.5%. This may be explained by the closure of Circuit City outlets. Department Stores were just able to tread above the double-digit loss threshold by falling -9.6%. March is critical to Spring and summer fashions and slow sales at both Department Stores and Clothing and Accessories Stores (-8.7%) mean that retailers’ profits are going to be squeezed further as they will have to discount again in order to move merchandise. While March retail sales growth ended up being more disappointing than other economic news, looking forward into April and the second quarter, we will be looking closely for more rays of sunshine and hope. The trends are pointing to positive effects and increasing consumer sentiment that translates into cash registers ringing that old familiar tune. Release Date of the Next National Retail Bulletin: May 13, 2009

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: 4/14/09

Retail Sales by Store Category Sales for the Month of March 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 March 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

338,716 60,099 27,115 47,673 42,888 21,504 23,741 46,841 14,407 16,541 15,747 7,951 7,796 6,449 8,972 25,060 38,974

378,755 78,183 41,281 48,557 43,824 20,779 25,703 47,929 15,938 18,119 17,795 9,136 8,659 6,649 9,224 26,017 38,519

-10.6% -23.1% -34.3% -1.8% -2.1% 3.5% -7.6% -2.3% -9.6% -8.7% -11.5% -13.0% -10.0% -3.0% -2.7% -3.7% 1.2%

2009

2008

2009/2008

966,116 165,215 76,454 140,814 127,060 62,399 61,313 133,847 40,277 45,569 47,989 23,094 24,895 19,367 26,010 75,848 111,291

1,074,582 215,263 115,984 140,889 127,637 61,076 69,392 134,186 43,840 48,706 53,164 26,816 26,348 19,722 27,502 79,616 109,082

-10.1% -23.2% -34.1% -0.1% -0.5% 2.2% -11.6% -0.3% -8.1% -6.4% -9.7% -13.9% -5.5% -1.8% -5.4% -4.7% 2.0%

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: 4/14/09

NATIONAL RETAIL BULLETIN

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

Dec-08

Sep-08

Jun-08

Mar-08

Dec-07

Sep-07

Jun-07

Mar-07

Dec-06

Sep-06

Jun-06

Mar-06

Dec-05

Sep-05

Jun-05

Mar-05

Dec-04

Sep-04

Jun-04

Mar-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% -30% Feb-09

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

-35%

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]