>Gift cards have become very important to retailers business. Card sales are a key way for stores to drive traffic in the first quarter, a typically slow time of the year, and consumers typically spend more than the card’s value. But the recession has been difficult for the gift card business for three reasons

  • Reduced consumer spending has extended to cards
  • Frugal shoppers are buying discounted gifts so they can stretch their budgets
  • Card recipients will likely focus on deeply discounted items when they redeem them

To add to retailers problems, more shoppers are giving cash this season, because they couldn’t get to the stores or they also want to be even more practical. It’s estimated that about 75 percent of those dollars go towards paying bills or to restaurants rather than to stores.

Despite these headwinds, according to a consumer survey conducted for the National Retail Federation, gift cards still remain the most requested holiday item.

“Gift cards’ popularity hasn’t died, but the recession has changed the way that people give gifts,” said Craig R. Johnson, president of Customer Growth Partners and Chair of Roulston Research’s Consumer community.

Best Buy reported that gift card sales rose 40 percent in November, following a big drop last year as consumers cut their spending as the financial crisis escalated. Wal-Mart is extending holiday deals such as a selection of top Blu-ray movies for under $20. It’s also offering a $50 gift card with an Xbox 360 purchase.


>Craig Johnson president of Consumer Growth Partners and Roulston Research’s Consumer Chair, says “The effect of the storm is neutral, not negative.” He also believes that while many stores in the mid-Atlantic region, particularly Virginia and Washington, D.C., closed halfway through Saturday, the storm shifted trips among weekend days but did not halt shopping.

Check out a video of his comments

Despite this activity it seems that most retail analysts still expect sales industry-wide to be relatively flat this holiday but profits to climb on increasing margins.

>Bart Perkins, Roulston Research’s Technology Chair shared his thoughts on Oracle’s 2010 – 2011 outlook:

“I check with several of my consulting colleagues regarding Oracle ERP installations. None of my colleagues’ clients (mostly F500) are planning big ERP installations over the next few years.

The government situation is different. I am on the Board of a DC based company that installs Federal Financial Systems. At the board meeting last Wed, we discussed the outlook for Oracle in the Federal government. To remain compliant with current regulations, agencies have to move to Oracle R12. Assuming the agency is paying Oracle maintenance, there are no additional licensing fees to Oracle. However, Oracle has made Hyperion, Projects, and Budgeting complaint with Federal accounting. A number of agencies will install these as part of the R12 migration resulting in some additional revenue for Oracle.

Bottom line – Even with the additional Federal revenue, I don’t see a lot of growth in Oracle’s ERP business.”

>Craig Johnson of Customer Growth Partners and the Roulston Research Consumer Chair breaks down the latest corporate earnings from Fedex and General Mills on Fox Business. Watch it here.


>CMTL: Attractively Priced

December 18, 2009

>Our Boston presenter continues to be bullish on Comtech’s prospects (Nasdaq:CMTL, $34.12). Last week the company raised its earnings and revenue guidance for fiscal 2010. Comtech is seeing solid demand from the US government and international customers. Management anticipates sizable increases in government orders for its MTS and Blue Force Tracking Systems in the near term. The stock has gained 3% since the presentation in early October. Based on the current valuation, the presenter believes the company is a likely acquisition target for major defense players.

>Tatum/Roulston Report

December 15, 2009

>We mentioned last month that we were seeing signs in the Tatum Survey and in our corporate conversations that were concerning to us in regard to the corporate outlook for 2010. Issues ranging from carbon emission standards to health care reform to taxation not to mention the whole regulatory environment and access to capital are weighing heavily on corporate decision making. Rarely have businesses had so much uncertainty in their outlook. It has labored companies coming out of the credit squeeze as to how to allocate their assets. This month the survey reflected an unusual and sudden downturn in the outlook for capital access, capital spending, backlogs and the strength of the dollar. Employment although maintaining current stability seems to be stable due to current conditions. There is little in the corporate outlook to reflect confidence or predictability.

It is hard during the Christmas season to side with the bears. But with a strong market recovery after the fall 2008 credit meltdown, reality is starting to be influenced by an activist government policy that is clearly causing concern in the corporate outlook for 2010. It is our belief at Roulston that we continue to be in an ā€œLā€ curve with very little visibility and credit access. Without those features we find any significant economic upside to be very dependent on relatively new economic factors from foreign demand to government stimulus to see growth beyond 1-2%. These factors will contribute to some growth no doubt. But it still means strong headwinds for the economy over the next 12 months.

To read the full survey click here.

>Craig Johnson, our Consumer Chair and President of Customer Growth Partners, was on Bloomberg TV Friday morning with his opinion of the propsects of Non-Mall, Value Retailers. Check it out here.