Photographer: Joe Raedle/Bloomberg

Valentine’s Day Is Love Litmus Test for U.S. Consumer Confidence

There’s a lot riding on Valentine’s Day for romantics trying to woo their sweethearts -- and for the U.S. economy, too.

Amid the backdrop of a robust job market and low interest rates, Americans could feel more amorous on Feb. 14, said Diane Garnick, chief executive officer of New York-based Clear Alternatives LLC.

“This will be the love litmus test of consumer confidence, particularly after weak retail-sales reports for December and January,” she said.

While shoppers tend to work within a stricter budget for Christmas gifts, the “complete opposite is true” for Valentine’s Day, Garnick said. The Saturday holiday on a three-day weekend for many U.S. workers also helps set the stage for “very strong” activity.

Valentine’s Day purchases could total $18.9 billion, up 9.2 percent from $17.3 billion in 2014, according to a forecast from the National Retail Federation and Prosper Insights & Analytics in Worthington, Ohio. The Washington-based federation estimates American consumers will spend an average of $142.31 on gifts, said Kathy Grannis, a spokeswoman for the trade group. That compares with $134 last year.

Retail sales for the month, excluding automobiles and gasoline, will rise 0.5 percent, which suggests robust Valentine’s sales and an annualized gain of as much as 4.8 percent, estimated Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh.

Spending Money

“Nothing says, ‘I love you, Valentine,’ like having money to spend when you leave the gas station,” he said.

The average price of a gallon of regular unleaded gasoline, at $2.231, is down from $3.338 on Feb. 14, 2014. Lower costs “definitely have an impact on consumers’ budgets” and should enhance holiday-related spending, Grannis said.

Other tailwinds include consumer sentiment, with confidence close to the highest since 2007, and continued recovery in the labor market. U.S. employers added an average of 336,300 workers in November-January, the highest three-month gains since 1997, based on data from the Department of Labor.

One encouraging sign is a “nice jump” in the number of people who plan to buy jewelry, Grannis said, citing data from a survey Prosper Insights conducted. About 21 percent of respondents said they’ll be giving these items, the highest since at least 2007. Spending will total $4.8 billion, the most since the National Retail Federation began tracking the data in 2010.

Tiffany, 1-800-Flowers

Tiffany & Co., Signet Jewelers Ltd., 1-800-Flowers.com Inc. and L Brands Inc., owner of Victoria’s Secret, are among publicly traded businesses that cater to the holiday. L Brands is forecasting a low single-digit increase in comparable companywide sales this month, according to figures released Feb. 5. That compares with a 2 percent gain for the month ended March 1, 2014, based on data from the Columbus, Ohio-based retailer.

Other less obvious companies also are poised to benefit. With the exception of greeting cards, many gifts will be purchased online, providing a “tremendous benefit” for Amazon.com Inc. and Groupon Inc., Garnick said. Swatch Group AG’s recent acquisition of the Harry Winston brand could drive its sales, while the President’s Day holiday on Feb. 16 may make for a “fairly robust” weekend at Club Mediterranee SA’s resorts.

Popular Option

For couples staying home, movies probably will be a popular option, with the R-rated “Fifty Shades of Grey” opening today. Pre-sale tickets have been setting records, and the erotic drama also could set a record for President’s Day weekend, surpassing the 2010 debut of romantic comedy “Valentine’s Day,” said Paul Dergarabedian, senior media analyst at Rentrak Corp. in Portland, Oregon.

Overlap with the holiday weekend -- along with the opening of other films including “Kingsman: The Secret Service” -- “amps up the potential for box-office sales,” he said, estimating that total receipts so far this year are 10.5 percent higher than the same period in 2014.

Some stores may not see much celebrating. 1-800-Flowers.com is bracing for a holiday season that will be down “low-double-digits” from 2014, William Shea, chief financial officer, said on a Feb. 2 conference call.

The Carle Place, New York-based company lost some Valentine’s Day-related packaging and inventory in a November fire, so it had to repurchase items at higher prices. He still projects profitability will be “at or above last year” for the holiday.

Robust Hiring

Any tailwind from lower gas prices or more robust hiring also can’t relieve some holiday-related anxiety. Valentine’s Day brings “pressurized situations” to the six New York-based restaurants owned by Happy Cooking Hospitality, said Luke Dirks, a managing partner. These include first dates or couples in early stages of their relationships, he said.

To infuse some fun into the night, the Fedora restaurant has added beef heart carpaccio to its menu, while Joseph Leonard will offer a whole pheasant for two, Dirks said, adding that meals at these locations will cost between $40 and $75 a person.

A weekday holiday could’ve been “a boon” for restaurant business on an otherwise slow night, Grannis said. While the Saturday timing makes the impact “less significant,” Dirks said his company did open reservations in January and they filled up about two weeks ago at Perla, Montmartre and Fedora -- the three restaurants in the group that accept them.

Buoyed by access to “cheap and easy money” from low interest rates, the more stable labor market and the long weekend, Valentine’s Day “could be a very big spending event this year,” Garnick said.

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