HdL Sales Tax Report for CY2018 Q4 SalesSales Tax Update
In Brief
Top 25 producers
In AlphAbetIcAl Order
www.hdlcompanies.com | 888.861.0220
Q42018
Encinitas
Encinitas’s receipts from Octo-
ber through December were 0.5%
above the fourth sales period in
2017. However, retroactive pay-
ments from a gas station vendor
exaggerated the results. Excluding
reporting aberrations, actual sales
were down 1.4%.W eak holiday shopping results
and the closeout of a merchant
pulled the City’s largest category,
general consumer goods, lower
than last year. Restaurant returns
were also negatively impacted by
closures and a softening in the
fine dining sector.After experiencing solid receipts
in the previous quarter, the au-
to-transportation group struggled
to match the gains from a year ago
as overall demand appears to be
flattening.In contrast, steady price increases
at the pump, mostly related to the
global cost of crude oil and imple-
mentation of SB-1 locally, pushed
gas station receipts higher. While
increased capital and online pur-
chases of items shipped into the
region lifted allocations from the
countywide use tax pool.Net of aberrations, taxable sales
for all of San Diego County were flat
over the comparable time period;
the Southern California region was
up 2.6%.
City of Encinitas
First Quarter Receipts for Fourth Quarter Sales (October - December 2018)
Published by HdL Companies in Spring 2019
7 Eleven
76
Best Buy
BevMo
BMW of Encinitas
Cab West/Volvo Leasing
Chevron
Dick’s Sporting Goods
Encinitas Ford
Financial Services Vehicle Trust
Hansen Surfboards
Herman Cook Volkswagen
Home Depot
Home Goods
Pacific Coast Grill
Quick Shine Car Wash
REI
Ross
Shell Car Wash At Encinitas Ranch
Target
TJ Maxx
USA Gasoline
Valero
Vons
Walmart Supercenter
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
SALES TAX BY MAJOR BUSINESS GROUP
4th Quarter 2017
4th Quarter 2018
General
Consumer
Goods
Restaurants
and
Hotels
County
and State
Pools
Autos
and
Transportation
Fuel and
Service
Stations
Food
and
Drugs
Building
and
Construction
Business
and
Industry
$7,950,765 $6,983,392
3,493 3,236
1,044,275 906,605
$6,902,996 $6,073,551
2018-192017-18
Point-of-Sale
County Pool
State Pool
Gross Receipts
REVENUE COMPARISON
Two Quarters – Fiscal Year To Date (Q3 to Q4)
NOTESSales Tax UpdateQ4 2018 City of Encinitas
$0
$2,000
$4,000
$6,000
$8,000
SALES PER CAPITA
Encinitas
Q4
15
Q4
18
Q4
16
Q4
17
County California
28%
Cons.Goods
16%
Restaurants
13%
Pools
13%
Autos/Trans.
11%
Fuel
7%
Food/DrugBuilding
7%
Bus./Ind
4%.
Encinitas This QuarterREVENUE BY BUSINESS GROUP
Q4 '18*
Encinitas
ENCINITAS TOP 15 BUSINESS TYPES
Business Type Change Change Change
County HdL State*In thousands of dollars
11.1%-11.4%-4.2% 97.0 Auto Lease — CONFIDENTIAL —
-2.9%5.5%4.5% 186.8 Building Materials — CONFIDENTIAL —
5.5%2.5%5.0% 304.0 Casual Dining
2.3%2.8%10.3% 75.8 Convenience Stores/Liquor
-6.6%3.9%4.9% 242.1 Discount Dept Stores — CONFIDENTIAL —
-24.3%-1.6%-5.2% 92.4 Electronics/Appliance Stores
13.7%0.5%1.7% 108.8 Family Apparel
-25.2%4.4%4.0% 72.5 Fast-Casual Restaurants
-17.5%-11.7%-15.6% 146.8 Grocery Stores
-0.5%0.8%0.4% 129.7 Home Furnishings
-4.4%5.8%3.0% 279.8 New Motor Vehicle Dealers — CONFIDENTIAL —
0.6%6.6%6.8% 165.6 Quick-Service Restaurants
31.4%28.4%16.7% 397.8 Service Stations
18.4%-10.7%-5.2% 85.3 Specialty Stores
-10.3%-2.3%-2.0% 141.4 Sporting Goods/Bike Stores
7.0%2.8%0.3%
1.9%
0.5%
3,140.0
480.1
3,620.2
Total All Accounts
County & State Pool Allocation
Gross Receipts
4.4%8.6%
3.0%7.2%
Statewide Results
The local one cent share of sales and
use tax from October through Decem-
ber sales was 2.8% higher than 2017’s
holiday quarter after factoring for state
reporting aberrations.
The overall increase came primarily from
a solid quarter for contractor materials
and equipment, expanded production
by an auto manufacturer and rising fuel
prices. Online fulfillment centers, new
technology investment and cannabis
start-ups also produced significant gains.
Receipts in the six county Sacramento
region grew 7.9% over last year while the
remainder of the state was generally flat
or exhibited only minor growth.
Notable was the 0.09% rise in tax re-
ceipts from brick and mortar retailers
which is the lowest holiday gain for that
sector since 2009. A 9.6% increase in
receipts from online shopping which is
allocated to central order desks or coun-
ty pools was part of the reason. Other
factors include lower prices, gift cards
which move purchases to future quar-
ters and greater gifting of non-taxable
experiences and services.
The Retail Evolution Continues
A recent survey identified U.S. closures
of 102 million sq. ft. of retail space in
2017 and an additional 155 million sq.
ft. in 2018. Similar losses are expect-
ed in 2019 with 5,300 closures already
announced. Payless Shoes, Gymboree,
Performance Bicycle and Charlotte
Russe are going out of business while
chains including Sears, Kmart, Macy’s,
JCPenney, Kohl’s, Nordstrom, Dollar
Tree, Victoria’s Secret, Chico’s, Foot
Locker and Lowe’s have announced
plans for further cuts in oversaturated
markets and downsizing of stores.
Retailers are not planning the end of
physical stores which continue to be
important for personalized experiences
and shopping entertainment. However,
the shifting trends encourage reduced
square footage with less overhead to bet-
ter compete on prices and provide more
intimate shopping encounters.
With smartphones allowing purchase
and delivery of almost anything at
any time of the day without leaving
home, big box retailers are responding
by downsizing stores and subleasing
excess space to compatible businesses
to help draw traffic. Locations where
people congregate for entertainment,
food and services have become part of
the evolving strategy as has integrating
retail with more convenient spots for
pick-up and delivery of online orders.
Barry Foster of HdL’s EconSolutions,
notes that “shifting shopping habits pres-
ent challenges but also opportunities.”
“Smaller footprints enable expanding
into smaller niche markets while mixed
use projects and 18-hour environments
are chances to rebuild downtowns and
reinvigorate shopping centers.”
With more companies using the inter-
net to sell directly to customers from
their warehouses, the trend also provides
jurisdictions whose populations aren’t
adequate in size to support large scale
retail to focus on industrial development
for sales tax as well as jobs.