News Roundup

N.O. Poised to Reverse Retail Slump

New Orleans City Business
By Jaime Guillet
May 4, 2007

NEW ORLEANS — Thanks to new and returning businesses opening in 2006, retail sales tax collections in Orleans Parish are emerging from a steep post-Katrina decline.

Sales tax collections in Orleans Parish made big gains in January and February compared with the same period in 2006, while revenues for that period declined in Jefferson and St. Tammany parishes.

Comparing January and February to the same period in 2005, Jefferson and St. Tammany experienced more revenue growth than Orleans.

That’s because 2006, the first fiscal year after Hurricane Katrina, was an unusual year for retail, officials say.

Jefferson Parish Finance Director Gwen Bolotte said the parish budgeted only a 5 percent increase in sales tax revenue this fiscal year because 2006 was so irregular officials didn’t know what to expect. Jefferson Parish retail sales rose significantly because so many stores in Orleans Parish were closed while people went on buying sprees to replace lost possessions, she said.

“It’s going to be hard for us to surpass 2006’s growth,” Bolotte said. “That’s why our budget wasn’t based on 2006. There’s no way it could surpass 2006. As long as (collections) stay above 5 percent, we’re OK.”

In 2004 and 2005, Jefferson Parish’s January-to-July sales tax collections averaged $26 million monthly, said Bolotte. For that same period in 2006, monthly collections averaged $37 million.

St. Tammany’s January sales tax collections totaled $15.7 million, nearly an 18 percent drop over $19.1 million in 2006. February sales decreased 26 percent from $18.8 million in 2006 to $14 million in February.

“These decreases are by no means surprises,” said Shawn McManus, director of the St. Tammany Parish Sheriff Office’s tax and civil department. “There was no way to sustain last year’s numbers. The total collections for last fiscal year’s numbers, $221 million, that’s just unheard of. It’s just astronomical.”

Collections start to drop when comparing year-over-year to October 2005’s collections, he said.

“Each government looks at it their own way,” McManus said. “You’d be remiss to use hurricane numbers to base the budget on. That’s why I’m suggesting comparing to two years ago.”

When comparing St. Tammany’s 2005 revenues in January and February with the same months in 2007, collections actually increased 31 percent to $12 million and 18 percent to $11.9 million, respectively.

Growth in Orleans

In Orleans Parish, retail sales tax collections increased 63 percent from $6.5 million in January 2006 to $10.6 million for the same month this year. February sales increased 33 percent from $6.9 million to $9.2 million.

When comparing Orleans’ 2005 revenues in January and February to same two months this year, revenues have dropped 12 percent from $12 million and 6 percent from $9.8 million, respectively.

Orleans calculates tax collections differently from Jefferson and St. Tammany parishes. January sales represent December transaction, said Jerome Lomba, chief economist for Orleans Parish. Collections in December and January were very good due to the Sugar Bowl and more stores reopening, such as Saks Fifth Avenue on Canal Street, he said.

“We did very well. The collections reflect the activity in December and the biggest player was general sales tax,” Lomba said. “I can’t tell you exactly which types of businesses are doing well. Hopefully we’ll be able to do that in the (next two months).”

Suited for success

One thriving Orleans Parish retailer is Rubenstein’s on Canal Street. The high-end clothing store is following through with pre-Katrina plans for a more than $2-million expansion to increase floor space 2,500 square feet to 10,000 total.

Allison Marshal, Rubenstein’s marketing director, said sales in January and February increased 23 percent over the same period in 2006. That followed 17 percent sales growth in 2006. Marshal would not disclose sales figures.

She attributes the growth to more tourists, more residents returning to town, convention business, local loyalty and the reopening of the Ritz-Carlton hotel and Saks.

“When Saks reopened it took away some business, but it brought a lot more people downtown and on Canal Street,” Marshal said.

Rubenstein’s renovations include expanding the women’s section, shoes and handbags on the top floor and expanding the men’s section on the bottom floor. Renovation will be complete by Christmas.

“We’d been planning this renovation for three years,” said Marshal. “But once the storm happened, we weren’t sure would happen. Business has been great since the storm and the (sales) increase confirmed a lot of growth.”