U.S. retailers’ chief financial officers appear to have put the rough-and-tumble holiday season behind them and are expecting their firms’ sales to gain 5.1 percent in 2014.
On average, they expect the gain in net sales to be accompanied by a 4.8 percent increase in comparable sales, according to BDO USA’s annual survey of retail cfo’s. Nearly two-thirds — 63 percent — include online sales in their comp projections.
The sales expectations are the strongest since the inception of the survey in 2007, and many of the headwinds cited have persisted throughout the life of the poll.
While a majority — 56 percent — expect consumer confidence to increase during the course of the year, they continue to view the outlook for jobs as the biggest single impediment to increased confidence. Nearly four in 10 respondents, 39 percent, cited unemployment as the top obstacle, followed by personal credit availability and debt levels, a distant second at 18 percent.
Only 12 percent expect government action on taxes to hurt confidence, well below last year’s level.
“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,” said Doug Hart, partner in BDO’s retail and consumer products practice. “Retailers are hoping that those factors will help boost consumer confidence in the coming year.”
The survey, conducted by telephone, included responses from 100 cfo’s and was administered last month.
The 3.8 percent increase in holiday sales reported by the National Retail Federation matched the BDO estimate made last fall in its survey of chief marketing officers.
Cfo’s identified free shipping and e-mail and social media promotions as their most effective means of drumming up holiday business, with extended hours and price matching the least successful tactics. Price matching might have helped preserve market share but was seen as having a corrosive effect on margins and contributing to the large number of downward revisions in earnings guidance since the start of 2014.
While financial executives are mindful of the effect that the persistently uncertain job market has had on their target customers, a majority of 55 percent expect their companies’ head counts to remain about the same as in 2013, although 40 percent expect increases. Many of the new positions are expected to come from activities related to e-commerce, such as online customer support and fulfillment positions, BDO said.
Fifty-four percent expect average compensation per employee to stay about the same while 46 percent expect it to increase.