retailers

Will the $10 Billion Business Tax Refund in Unemployment Bill Help Save Retail Jobs

With the passage of the $10 billion business tax refund bill help retailers leading up to the holiday season? One entity thinks so. The National Retail Federation welcomed the passage of legislation that will bring recession-plagued retailers and other businesses more than $10 billion in badly needed cash by lengthening the period during which they can “carry back” current losses to claim a tax refund from previous years when they made a profit.

“This legislation will provide retailers with an important source of capital to finance their operations and keep employees on the payroll,” NRF Vice President and Tax Counsel Rachelle Bernstein said. “Because retail sales have fallen so dramatically over the past year and access to capital has been so limited, retailers are experiencing severe challenges in finding the cash they need to operate their businesses as the economy moves toward recovery.”

“Today’s vote comes at a crucial time because most retailers see between a quarter and half of their annual sales during the final quarter of the year as consumers buy gifts for the holidays,” Bernstein said. “If retailers can’t find a way finance inventories for the 2009 holiday season, many could be forced to close stores, lay off workers or even go out of business. This will help keep that from happening.”

The House voted 403-12 today to approve Senate amendments to H.R. 3548, the Unemployment Compensation Extension Act of 2009, and sent the measure to President Obama for his signature. The bill extends unemployment insurance benefits but also includes a provision added in the Senate that will expand businesses’ ability to “carry back” net operating losses suffered during the current recession in order to claim a refund from taxes paid in previous years.

Existing law allows companies to carry back a loss for up to two years. Economic stimulus legislation enacted in February expanded the period to five years for companies with up to $15 million in annual gross receipts, but larger businesses were still restricted to two years. The provision included in the unemployment bill will expand the five-year period to include all businesses that suffer a loss regardless of size, and will give companies the choice of using the carryback for losses from either 2008 or 2009 rather than just 2008 as provided in the stimulus bill. In the fifth year, the carryback will be limited to 50 percent of a company’s taxable income for that year, but any loss not utilized can be “carried forward.” Small companies that took a five-year carryback under the stimulus bill will be able to carry back 2009 losses as well. The proposal is estimated to provide $10.4 billion in tax relief over 10 years.

The provision was added to the bill by Senate Majority Leader Harry Reid, D-Nev., and Senate Finance Committee Chairman Max Baucus, D-Mont., but was based on legislation sponsored in the Senate by Baucus and fellow Finance Committee member Senator Olympia Snowe, R-Maine, and in the House by Select Revenue Measures Subcommittee Chairman Richard Neal, D-Mass., and Ranking Member Patrick Tiberi, R-Ohio.

“The sponsors of these bills have been telling their fellow members of Congress for months that this is about saving and creating jobs, and if it wasn’t enacted soon more jobs would be lost,” Bernstein said. “That message has been heard, and the work that has been done is going to help tens of thousands of retail workers keep their jobs at a time when jobs are hard to find.”

retailers

Retailers Brace for Cold Sales and Hiring this Holiday Season

According to a recent survey by Hay Group, 72 percent of retailers predict holiday sales will be about the same or lower than last year. As a result, 57 percent of retailers are reducing staffing levels for the 2009 holiday season — a dramatic shift compared to only 29 percent that decreased staffing levels last year.

Hay Group’s survey, in its third year, analyzed responses from 25 top U.S. retailers including American Eagle Outfitters, Best Buy, Saks Fifth Avenue and Target in September 2009 to understand retailers’ plans for the 2009 holiday season.

According to the survey, 62 percent of retailers are seeing more seasonal applicants this year, however, 40 percent are hiring fewer seasonal workers, and 64 percent already have lower than normal staffing levels.

“With sales numbers down and consumers spending less, planning holiday staffing needs has been difficult for retailers this year,” said Craig Rowley, Vice President and Global Practice Leader for Hay Group’s Retail practice. “Retailers are doing what they can to survive the season, but more importantly, if the consumer decides to go on a spending spree this season, they are poised to respond fast with merchandise and staff.”

Among the highlights from the September 2009 Hay Group retail survey:

• Seasonal Worker Staffing Levels: Compared to last year, 48 percent of respondents are planning to hire the same amount of seasonal workers for the holiday season, and 40 percent are planning to hire five percent to 25 percent fewer workers. The majority of respondents (60 percent) indicate that the ratio of permanent to seasonal store employees is about the same as last year; however, 32 percent indicate that they plan to hire fewer seasonal workers and more permanent staff.
• Sales Expectations: Retail sales expectations are lower for this holiday season – 36 percent of respondents expect sales to be about the same as last year, and 34 percent expect sales to decrease by five percent to 25 percent. Some retailers (28 percent) remain optimistic this year and expect an increase in sales, however this is a drastic drop from the 60 percent of retailers that expected an increase in sales this time last year.
• Store Promotions: Retailers have changed their promotion strategy in response to current economic conditions, with 43 percent of respondents indicating that they will be running more promotions and/or deeper discounts this year. Stores have also shifted their focus from running the most store promotions on Black Friday (35 percent, compared to 45 percent last year), and will instead run consistent store promotions from now until New Year’s Day (43 percent of respondents). In addition, 13 percent of respondents indicate they will run the most promotions in mid December leading up to Christmas, and nine percent will run the most promotions on the day after Christmas.

“Retailers are planning for a challenging Christmas season, and to avoid the massive markdowns they had to take last year, they have reduced inventory and staffing levels to control costs,” added Rowley. “That said, retailers have their fingers crossed that they are wrong.”

retailers

60% of Major Retailers Boost Profits by Going Green

Today Prenova announced the results of a survey revealing that large retail operations are choosing to decrease energy consumption because they see significant quarterly savings as a result. Performed in conjunction with Chain Store Age, the leading publication serving retail headquarters management, the results of the survey are unequivocal. 50 percent of retailers with 500 to 999 stores, and over 60 percent of retailers with 1,000 stores or more, indicated that sustainable energy initiatives help them save money on energy every quarter. Complete survey results and analysis are available on Prenova’s website, http://www.prenova.com.

“It is clear that industry leaders are focused on improving their financial performance, and they’re doing it in part by reducing their environmental impact,” says Michael Nark, CEO of Prenova. “Every large retailer who responded had a formal sustainability strategy in place, and steps designed to control costs by reducing energy consumption were critical to their plans.”

Survey results reveal which practices companies are adopting to save the most money. Over 73 percent of respondents are replacing outdated lighting with more energy efficient systems. Approximately 65 percent are evaluating energy management technologies, including smart meters, and 47 percent are conducting onsite energy audits. Moreover, 52 percent of leading companies regularly audit their utility bills to make sure they aren’t being overcharged.

The results of the survey also reveal how large retailers take pride in their sustainability efforts, revealing that 65 percent of retailers with more than 1,000 stores feel they are better than their competitors at implementing sustainable business goals. By contrast, only 44 percent of smaller retailers feel the same.