California Apparel News

Despite a less-than-stellar holiday season, chief financial officers at retail organizations across the United States were upbeat about 2014, predicting a 5.1 percent increase in to­tal sales and a 4.8 percent increase in same-store sales.

Some 100 CFOs from leading retailers around the country were surveyed by profes­sional-services firm BDO USA LLC, show­ing that the federal government's guidance on the budget and increased debt limit had eliminated one concern for the year. Only 12 percent said that tax increases will be the top influencer of consumer confidence, a 50 per­cent decrease from 2013.

Still, CFOs are concerned that not enough jobs are being created to boost consumer pur­chasing power. Job creation across various sectors continues to be sluggish. As a result, 39 percent of retail CFOs list unemployment as the top factor influencing consumer confi­dence in 2014. The U.S. unemployment rate dropped from 7.9 percent in January 2013 to 6.6 percent last January, but many of the long-term unemployed have given up look­ing for jobs.

"With consumer confidence gaining mo­mentum, retail CFOs are relatively bullish about 2014 retail sales," said Doug Hart, a part­ner in the retail and consumer products practice at BDO. "While concerns remain about unem­ployment and financial-market volatility due to the Fed's pullback, they appear to be offset by the housing-market recovery and less concern over Washington gridlock. Retailers are hoping that those factors will boost consumer confi­dence in the coming year."

Among the CFOs, 18 percent said they were concerned that limits on personal credit availability and debt levels continue to put pressure on consumers.

Other major findings in the survey showed that 55 percent of retail CFOs said the num­ber of employees in their organization would remain the same, but 40 percent said they will increase staffing levels despite reports of staff layoffs and reduction in stores maintained by retailers. Retailers may not be hir­ing to support in-store staff but to keep up with e-commerce growth.

When it comes to pay hikes, 46 percent of those surveyed said salaries will rise while 54 percent indicated they will remain even with last year.

One of the top concerns among retailers is the slew of federal, state and local regulations that will hit companies this year. Thirty-sev­en percent said they are monitoring debates about minimum wage and implementation of the Affordable Care Act while trying to create an employee base to support their growth. In California, the current minimum wage of $8 an hour jumps to $9 an hour on July 1.

When asked about their holiday promotion­al strategies last year, financial officers said online promotions that added convenience for shoppers were the top performers. Twenty-eight percent said free shipping worked well, and 24 percent said email and social-media promotions were quite successful.

Among the least-successful strategies were extended hours and price matching. For some retailers, price-matching might have helped drive holiday sales, but it also cut into gross margins and reduced earnings expectations.—Deborah Belgum