Redstone sees a new market niche in live venue

In her black leather jacket with "Patriot Place" stitched in red and blue on the front, National Amusements president Shari Redstone linked arms yesterday with her new partners Robert and Jonathan Kraft at a glitzy press conference to launch Showcase Live.

In August, the new state-of-the-art live entertainment venue will open at the Krafts' shopping extravaganza, Patriot Place, next to Gillette Stadium. The new venue will have 500 seats, dinner service, and acts from Chaka Khan to Dave Brubeck to Boyz II Men. Redstone, 54, has focused on reinventing the Dedham movie business and quieting family clashes that spilled into the public after a critical letter by her media mogul father Sumner Redstone was posted to Forbes's website. In the letter, Sumner Redstone lashed out against his daughter over issues of succession and the future of the cinema chain. Shari Redstone spoke with the Globe at yesterday's event.

Q. There are tons of music and entertainment venues around New England. How does Showcase Live fill a niche?
A. It's going to be a much more sophisticated, intimate, and luxurious environment than exists anywhere else. The experience is going to be at a much higher VIP level. VIP packages will include concierge services and reserved tables for events.

Q.Why is live entertainment necessary for National Amusements?
A. There isn't any movie theater business out there today that doesn't have to re invent itself. We've been successful in what we've done in the theaters by bringing alternative programming and by bringing live entertainment. The feedback we've gotten from live entertainment is that people really love it, and that was where we came up with this idea for a live music-comedy venue.

Q. Why Patriot Place?
A. We spent a lot of time looking at what would be the ideal first location to launch the project, and of course, there's nothing more well-known and more prominent and more accessible in the area than Patriot Place in Foxborough.

Q. Cinema chains like National Amusements make most of their money from concessions. Will the Showcase Live business model be the same?
A. A lot of revenue will come from concessions, and that's why it's really important to us to provide great food, to have signature cocktails, and to really make it a place people will want to go to all the time, not just to see the great talent but to have a wonderful dining experience.

Q. How does Showcase Live fit in with the overall long-term vision of the cinema business?
A. I'm looking at creating entertainment destinations within our theaters right now and this would be a wonderful adjunct to that business. We will be looking at it as a stand-alone business and you might see Showcase Live where you don't see one of our Cinema De Lux theaters. And I look at expanding not only domestically but around the world. This would be a great concept for Russia and South America where people love entertainment, they love to go out in the evenings. We look at this as our flagship, but also an opportunity to learn and figure out where we could take it next.

Q. Would you consider converting cinemas into Showcase Live venues?
A. It would really be hard to re-create this merely by retrofitting an existing auditorium. That doesn't mean that we wouldn't add a new facility to a place where we have an existing theater. But to do this right, we really need to build it from scratch.

Q. Your father has long expressed doubts over the long-term viability of the movie business. What does he think about this new venture?
A. I'm sure that he'd be really proud of what we're doing here today. We're reinventing the business and doing everything that we can to not only ensure the success in what we do, but getting involved in new concepts and building new businesses and continuing the success of the company that was started by my grandfather.

Q. How do you feel about your father's critical letter that was posted to Forbes's website last summer?
A. I'm not going to comment on any personal relationship issues.

Q. Is your father still trying to negotiate a buyout of your 20 percent stake in National Amusements?
A. I'm not going to comment on any personal business issues.

Q. When was the last time you saw your father?
A. You don't want to keep asking me questions that I'm not going to answer.

Q. The popular video game Grand Theft Auto IV is being unveiled this week and could be the most lucrative launch in entertainment history, beating out any movie debut. How does that make you feel, being in the movie business?
A. I used to say when I first came into this business that I was competing with other movie theaters. Then I realized I was competing with all out-of-home entertainment. Then I realized I was competing with out-of-home entertainment and in-home entertainment. And now I'm competing for people's time. The video game business is something that's strong and certainly something our patrons are very interested in. But that is why we are focused on giving our patrons a compelling reason to go to the movie theaters. That is why we provide a VIP experience, why we have luxe level service, so people can have martinis and food in the auditoriums. That is why we have Showcase Live. We know we have a lot of competition out there and we don't stay there with our head in the sand.

Source: Boston.com

Simon Focusing On Mall Redevelopments

INDIANAPOLIS-With credit tight and the economy slow, Simon Property Group will focus on redeveloping its premier US projects and developing and expanding its outlet centers both domestically and internationally, executives said at the company’s first quarter conference call.

Three new developments, in Noblesville, IN; Panama City Beach, FL; and Tinton Falls, NJ; will open this year, and the company has not backed off any projects in 2009 or 2010. Expansions planned for 2008 and 2009 are: Fashion Mall at Keystone in Indianapolis; Northshore Mall in Peabody (Boston), MA; Orlando (FL) Premium Outlets The Promenade at Camarillo (CA); and Ross Park Mall in Pittsburgh. The company also is close to announcing an outlet center that will be delivered in 2009.

“Capital is a precious resource,” said David Simon, chairman and CEO. “We will make sure we use it on projects that fulfill our requirements.”

New international development projects under construction include centers in Naples, Italy; Sicily, Italy; the Sendai (Japan) Izumi Premium Outlets; and five Wal-Mart-anchored centers in China. Additional development opportunities include projects in South Korea and Japan.

Major international growth by acquisition isn’t likely, though the company is looking at one potential purchase with Canadian mall owner Ivanhoe Cambridge.

“We’ve looked at a few deals. I’m still of the belief that the US economy will have an effect on the global economy, and that hasn’t permeated yet,” said David Simon, chairman and CEO.

For the quarter, funds from operations (FFO) increased 7.1% from the previous year to $420.1 million. Net income available to common stockholders for the quarter decreased 10.7% to $87.9 million from $98.4 million in the first quarter of 2007. Comparable sales per square foot rose 0.8% to $491 at regional malls, with outlets seeing a 5.4% increase to $511.

Regional mall occupancy was 91.7%, down from 91.8% the previous year. Outlet center occupancy declined 120 basis points to 97.9%, and community/lifestyle center occupancy rose 20 basis points to 93.3%.

Source: GlobeSt.

Luxury Retailers Pin Hopes on Outlets

Bracing for a prolonged economic downturn, luxury retailers are lavishing new attention on their lower-end factory-outlet stores.

The efforts reflect a new reality for retailers that are being squeezed by one of the worst consumer spending slumps in years. Sales at outlet stores are growing faster than those at full-priced stores at many chains.

Saks Inc. is renaming its Off Fifth outlets "Saks Fifth Avenue Off Fifth" -- in hopes that a closer association with the luxury department store will be a bigger draw. The 48 outlets also began using the Saks label and selling more merchandise that is tailored for them, as opposed to goods that aren't selling at higher-end stores.

Nike Inc.'s Cole Haan unit is renovating and opening 40 total outlet stores resembling beach houses in the next two years, in a bid to capture luxury customers who might be shopping for bargains. And Liz Claiborne Inc. is changing the format of its outlets, devoting less space to its flagship Liz Claiborne brand and carving out off-price standalone stores for its Juicy Couture, Lucky Brand Jeans and Kate Spade labels.

The trend is evident at Simon Property Group Inc., the nation's largest mall operator. The company reported Tuesday that comparable sales per square foot at its Chelsea Premium Outlets division rose 5.4% to $511 as of March 31, compared with a year ago. That's far better than the anemic 0.8% increase to $491 per square foot at its regional malls.

The pattern is far more pronounced for some retailers. At Coach Inc., same-store sales at factory outlets rose a healthy 17.7% in the quarter ended Dec. 29, while sales at full-priced stores fell 1.1%; Coach no longer breaks out retail and factory-store results. Nordstrom Inc.'s sales at its high-end department stores, meanwhile, have fallen four consecutive months, most recently by 11.4% in March, while sales at its Nordstrom Rack clearance stores have continued to grow, rising 1.7% last month.

Howard Weinberg, a retiree in Framingham, Mass., who says he generally has been spending less, noticed that several stores at one local outlet mall he shopped at recently were "packed with people," although "some of the stuff there looks like it's a castoff."

The resurgence of outlets entails new risks for retailers. For one thing, shifting sales to what is by definition a discount format can put pressure on profit margins. Coach, for instance, says it sweetened its discounts of handbags at its 101 outlet stores last quarter by 10% to 12%, contributing to a decline in gross margin for the company. "We've had to be more promotional" to take advantage of the higher traffic at outlet malls, says Coach CEO Lew Frankfort.

What's more, outlets are facing greater competition from the so-called off-price retailers, such as Ross Stores Inc. and T.J. Maxx, a unit of TJX Cos., which can buy more discount designer merchandise than before -- a typical byproduct of the economic slowdown that is hurting sales at full-price stores. "The current environment is favorable in terms of availability of product," says Katie Loughnot, a Ross Stores vice president for investor relations.

There's also a chance that outlet operators might cannibalize sales at their own full-priced stores, particularly as new outlets open closer to suburban and urban malls. "The key is to not proliferate the outlets too much, and to be choosy about location," says William McComb, chief executive officer of Liz Claiborne. So far, it has closed or renovated a third of its old Liz Claiborne outlets, which he describes as "relics."

That's one reason jeans maker VF Corp., which plans to open 75 to 100 stores in the next few years, isn't planning a push into outlet malls. "We wouldn't want to drag our brands down with too many outlet stores," says Michael T. Gannaway, vice president of the VF Direct division. The company's brands include Wrangler, Lee and 7 for All Mankind jeans, Vans and John Varvatos.

To avoid hurting full-priced sales, most of the outlet divisions of retailers intentionally don't sell online. One exception is Neiman Marcus Group Inc., which has a Last Call clearance feature on its Web site.

Many retailers, including Neiman Marcus, don't break out the performance of their outlet stores. Saks Chief Executive Officer Steve Sadove said at a conference Tuesday that its Off Fifth business has the potential to deliver "outsized growth" in monthly same-store sales. Saks expects its overall same-store sales, including outlets, to grow by the low- to mid-single digits in the first half of this year.

At Simon's Chelsea outlet malls, "we are still on a positive track" with "no meaningful weakness in tenant demand or in the shopper," says Leslie T. Chao, chief executive officer of Chelsea Property Group.

Outlet centers in New York, Las Vegas, Texas and Seattle have seen "sizable gains" in sales, thanks to the weaker U.S. dollar and an influx of foreign tourists, he notes. But even in other markets "we are holding our own" -- with outlet malls sales flat or slightly up so far, he says.

Even Talbots Inc., which plans to close its 78 children's and men's apparel stores by September, said this month it will open as many as 40 upscale factory stores in premium outlet malls in the next three years. Talbots currently has 25 clearance centers -- locations that Linda Humphers, editor-in-chief of Value Retail News, an outlet-industry magazine, describes as "totally dismal." The new upscale outlet stores will carry merchandise specifically made for them, Talbots says.

Source: Wall Street Journal

Lord & Taylor Considers Stores Outside U.S

Lord & Taylor, the quintessentially American department store, is thinking about opening stores outside the country, possibly in Mexico and Canada, its chairman said Tuesday.

The chairman, Richard A. Baker, the head of the private equity firm that owns Lord & Taylor, NRDC Equity Partners, said the 47-store chain might thrive in foreign countries given its focus on American designers like Joseph Abboud and Charles Nolan.

Department stores have ventured beyond American borders before, but most, like Saks Fifth Avenue, do so by promoting a stable of largely European designers.

Lord & Taylor, however, will cast itself as a destination for the best in American fashion, a specialty that the store has emphasized for more than 180 years.

The United States is losing a bit of its luster for many department stores. The American market is crowded — with names like Kohl’s, J. C. Penney, Macy’s and Dillard’s — and apparel sales are growing at anemic rates.

But appetites for clothes are growing at a faster pace abroad, especially in historically poor countries where consumers are developing a taste for designer clothing. (Saks, for example, is opening a store in China.)

“We are thinking about growth outside the U.S.,” Mr. Baker said on Tuesday at a conference held by Emanuel Weintraub Associates, a retail consulting firm. Besides Canada and Mexico, he identified Asia as the most likely market.

Mr. Baker said that no foreign store openings were imminent, but that he had recently been traveling to Mexico and Canada.

NRDC bought Lord & Taylor in 2006 and has since purchased Fortunoff, the home furnishings chain, turning Mr. Baker, 42, into a major player in the retail world.

A foreign venture would be the latest chapter in Lord & Taylor’s remarkable turnaround over the last decade. Once regarded as irrelevant and financially troubled, the retailer has rebounded by recruiting upscale designers and fixing up its once-dowdy stores.

Source: NY Times

Centro Wins One-Week Reprieve on Aus$5.6 Billion Debt

April 30 (Bloomberg) -- Centro Properties Group, the Australian owner of more than 650 U.S. malls, persuaded banks to give the company another week for talks to refinance A$5.6 billion ($5.2 billion) of debt as it works to sell assets.

Australian lenders and U.S. noteholders owed A$2.8 billion agreed to extend today's deadline to May 7, Melbourne-based Centro said in a statement. The shares fell 4.2 percent to 45.5 Australian cents on the Australian Stock Exchange.

Centro has been trying for more than four months to sell stakes in its funds, pay debt and persuade investors and lenders it should retain a collection of malls that stretches from Australia's west coast to the U.S.'s eastern shore. About 62 percent of Centro's assets are in the U.S., where its properties lost 8.8 percent of their value amid slowing retail sales, according to the company's first-half earnings report.

"If the lenders need an extra week to sort this out, after such a long time anyway, there are some fairly serious negotiations happening and maybe additional deal-makings,'' said Mark Wist, a director at Property Investment Research Ltd. in Melbourne. "It clearly shows there is disharmony among those that have lent Centro money.''

U.S. and European banks in February gave Centro until the end of September to refinance A$2.8 billion in loans owed them, provided Australian banks and the noteholders granted an extension at least as long.

Lenders

Centro's lenders include Commonwealth Bank of Australia, Australia & New Zealand Banking Group Ltd., National Australia Bank Ltd., JPMorgan Chase & Co., Royal Bank of Scotland Group Plc and BNP Paribas.

Centro stock has plunged 92 percent since the company said Dec. 17 it was struggling to repay debt amid the global credit squeeze. The mall owner's market value has shrunk to A$384 million from a peak of A$8.5 billion in May.

The company posted a record A$1.1 billion net loss for the six months to Dec. 31, compared with net income of A$157.3 million a year earlier. Centro wrote down A$578 million on U.S.- based New Plan Excel Realty Trust, purchased last year for $5.2 billion in the biggest U.S. acquisition by an Australian real estate investment trust.

Asset Sales

More than A$4 billion was wiped from Centro's value in December after debt markets shut, including the U.S. commercial mortgage-backed bond market, leaving the company was unable to raise funds. Centro has debt of A$17.5 billion, equal to 75.2 percent of combined debt and equity, it said in February.

"The lenders will be concerned about the likelihood that Centro's better assets will be the ones that sell, so while the capital position will be better the value of the underlying portfolio will be weaker because they will be left with more ordinary assets,'' Wist said.

Centro gained many of its U.S. malls when it paid cash and assumed debt for New Plan Excel Realty. Glenn Rufrano, who took over as Centro's chief executive officer in December, was head of New Plan at the time of the sale.

Former Chief Executive Officer Andrew Scott borrowed to buy $9 billion of malls over two years then spun off the centers into 34 syndicates, three wholesale funds, two unlisted property funds and one listed property fund, which Centro then managed for a fee.

Source: Bloomberg

Investment Sales Crater After Record 2007

BOSTON-After starting with a bang, the 2008 investment sales pace in Greater Boston fizzled, dramatically, and is limping along heading towards midyear, according to a report from Colliers Meredith & Grew. Even when not including the $4.2-billion purchase of Equity Office Properties assets by Blackstone in early 2007, Q1 transaction volume paled in comparison to the start of last year, particularly for super-sized trades.

"It was harder to finance the bigger deals," says CMG research director and SVP Mary Sullivan Kelly, whose firm estimates total sales at $1.16 billion for all property types, including industrial, multifamily, office and retail. That is $450 million below the 2007 Q1 results when discounting the Blackstone/EOP activity. Particularly in the suburbs, transactions were generally under $20 million, Kelly tells GlobeSt.com.

The $477-million purchase of a 49% interest in 53 and 75 State St. from RREEF by majority owner Brookfield Financial Partners made up the lion’s share of Boston office building sales in Q1, relays CMG. Brookfield, in a deal first reported by GlobeSt.com, took full control of the two office towers in January after Rreef’s share was shopped to other investors for much of 2007. Five other office building sales pushed the total to just $507 million for Boston, well below the $850 million traded in Q1 2007, minus Blackstone/EOP. Among the early 2008 sales was the acquisition of 4 Liberty Sq. to locally-based Synergy and 285 Summer St. to New York City-based Aegean Capital.

The pace was even slower in Cambridge, where a $24.5-million sale/leaseback involving New Boston Fund, as the buyer, was the only quarterly completion compared to $140 million in Q1 2007. Suburban volume plunged from $800 million to $177 million. Among the largest deals was the sale of Rivertech Park in Billerica for $45 million, this time with New Boston Fund on the seller side, as reported by GlobeSt.com.

A flight to quality has been one result of the disrupted marketplace, says CMG, with investors targeting core communities and higher-end assets, partly from lenders aiming to “cherry pick” deals. The dearth of commercial mortgage backed securities money has severely curtailed debt availability, and CMG says banks and insurance companies are being rigid in their underwriting assumptions. According to sources, several promising deals have been slowed, or quashed completely, in recent weeks, some of which reportedly collapsed due to lender intransigence.

Most experts had anticipated a torpid beginning for investment sales, says Kelly, and she concurs that the immediate future remains cloudy. On the bright side, however, Kelly notes that CMBS spreads have started to drop, possibly signaling that the capital freeze may be thawing. "We’ll take any good news we can get," Kelly says, adding that real estate denizens can be comforted, realizing that an 8.7% vacancy rate and average rents back into the $50 per sf range are impressive fundamentals for Boston, particularly with only limited new inventory underway. "It shows that when the market gets its footing back, we are going to be in a good place."

Source: GlobeSt.

Massachusetts spared from national, regional jumps in unemployment rates

New England's unemployment rate rose in March, although Massachusetts' saw no change on a month-over-month basis.

The region's unemployment rate for the month rose .2 percentage points to 4.8 percent, compared to February's rate of 4.6 percent, according to a report by The Bureau of Labor Statistics, a division of the U.S. Department of Labor.

In Massachusetts, the March unemployment was 4.4 percent -- unchanged from February. The national rate was 5.1 percent in March, compared to 4.8 percent in February.

New Hampshire led the region with the lowest unemployment rate of 3.9 percent for March, while Rhode Island reported the highest unemployment rate of 6.1 percent.

Source: Boston Business Journal

Circuit City Gets Pressure From Big Investor for a Deal

Circuit City Stores Inc.'s largest shareholder called on the consumer-electronics retailer to put itself up for sale, tacitly endorsed an unsolicited bid by Blockbuster Inc. and raised the prospect of financing the acquisition.

The move by HBK Investments LP increases the pressure on Circuit City's board to begin negotiations with Blockbuster. The Dallas hedge fund holds 15.4 million shares, or about 9.1%, of Circuit City, of Richmond, Va., and is the third-largest Blockbuster shareholder, with an 8.5% stake. HBK Managing Director David Haley declined to comment via a spokesman.

"We are very optimistic about the future prospects of a combined company," HBK wrote in a letter to Circuit City Chairman and Chief Executive Philip J. Schoonover. The investment firm said that a majority of Circuit shareholders would favor the company's sale "at a meaningful premium." It also raised the prospect of filing a lawsuit against the board for refusing to provide information to Blockbuster.

A Circuit City spokesman said directors plan to review HBK's requests "and will respond when appropriate." A Blockbuster spokeswoman said, "We agree with the overall assessment in the letter... ."

HBK called on Circuit City's board to "immediately" provide information and begin negotiations, saying "we see little downside to Circuit City's business by allowing Blockbuster to conduct full due diligence." It also called on the board to set up a "competitive bidding process" that could result in a sale of the company "at a substantial premium" to its trading price.

In its letter, HBK said it believed that Blockbuster could finance "a significant portion" of its offer by tapping Circuit City's own balance sheet. The retailer has about $300 million in cash on its balance sheet, $80 million in a pending tax refund and is trying to sell its Canadian operations. HBK added it "might also be prepared to provide financing" for a transaction.

HBK is the second big investor to call on the company to open its books. Last week, Wattles Capital Management, which owns 6.5% of Circuit City shares, also called on the company to allow due diligence. Wattles Capital has nominated a slate of four directors to the Circuit City board and has sought through a proxy submission to have the existing directors replaced at the company's June 24 annual meeting.

Circuit City has refused to provide Blockbuster financial information, saying it didn't believe the video-rental company could "consummate the proposed transaction in light of the difficult current financing environment."

Blockbuster has threatened to abandon its unsolicited offer unless Circuit City makes available nonpublic financial statements. Activist investor Carl Icahn, a large Blockbuster shareholder, has endorsed the deal.

Source: The Wall Street Journal

Wal-Mart to cash tax rebate checks for free

NEW YORK (Reuters) - Wal-Mart Stores Inc on Tuesday unveiled its plans to entice U.S. shoppers to spend their tax rebates in its discount stores, offering to cash the checks for free and saying it has cut prices on key items such as cereal and lunch meat.

The world's biggest retailer said no purchase will be necessary to cash the checks at its customer service desks or in its MoneyCenters -- financial services centers it operates in its stores.

The retailer has cut prices on key grocery and other items like shampoo, juice and sports drinks, to coincide with the distribution of the rebates.

Tax rebates began arriving in U.S. consumers' bank accounts on Monday. They are part of Washington's $152 billion 2008 economic stimulus package, and payments totaling more than $100 billion should be in most Americans' pockets by the end of June.

Retailers are eyeing the rebates as a means to boost business amid a slowdown in consumer spending, and many have unveiled plans to get shoppers to spend the cash in their stores.

Sears Holdings Corp is offering a 10 percent bonus if customers convert their entire stimulus check into a Sears or Kmart gift card. For instance, if the check is $600, Sears will give consumers gift cards totaling $660.

Retail food chains Kroger and Supervalu Inc will allow customers to exchange their check for a store gift card loaded with extra money.

Wal-Mart also said it will refund the purchase fee on its Wal-Mart MoneyCard when any portion of the stimulus check is loaded onto the card.

The Wal-Mart MoneyCard is a reloadable prepaid Visa that the retailer launched nationally last year.

Wal-Mart shares were up 18 cents, or 0.31 percent, at $57.53 on the New York Stock Exchange in morning trading.

Source: Reuters

Big-box retailers undaunted by slow economy

LOS ANGELES (MarketWatch) -- Can big-box retailers keep growing briskly, given the current downturn in the economy? For the most part, yes, but it depends on what's inside the box.

While a select few retailing giants -- namely home-improvement retailers -- have had to curtail expansion plans, others are continuing as if recession talk is nothing more than idle chatter.

Companies like Target Corp. , Costco Wholesale Corp. and Best Buy Co. are carrying on with expansion plans at virtually the same pace as in years past.

"We continue to look at a standard of 100 net new stores a year," Target spokeswoman Anna Goeppinger said. In fact, Target's rate of expansion has quickened, as it built 118 new stores last year and is on pace for 116 this year. In 2005 and 2006, the company added 86 and 88 new stores, respectively.

For the most part, today's retail giants don't suffer in the same way that most retailers do when gasoline prices climb and pocketbooks get pinched. While they may make adjustments, they're big enough to absorb the shock, according to industry experts.

"They really are looking through the economic time because their stores will open after the bad economic times have passed," said Jim McComb, president of retail consultancy McComb Group based in Minneapolis, home to Best Buy and Target headquarters.

The biggest box of all, Wal-Mart Stores Inc. , is curtailing its expansion efforts, although company executives insist that it's not recession-related. The world's biggest retailer is beginning to saturate the North American market, so now it's looking to grow more quickly overseas.

Wal-Mart said as recently as October that it plans to completely phase out new construction of its conventional outlets by fiscal 2009 in favor of its grocery/discount-goods supercenter stores. Development of all new Wal-Mart outlets, including Sam's Club and its group of neighborhood markets, will eventually be cut to 190 by fiscal 2010, down from the 340 new locations that were opened last year.

The subsiding-expansion plans were formulated several years ago and there are no plans to alter them, said Wal-Mart spokesman Phillip Keene, even though economic conditions have worsened since they were outlined six months ago. In fact, the company is stepping up its international expansion efforts at a fairly brisk clip. "There's been no change from this outline," Keene added.

Home-improvement blues

That hasn't been the case with two major big-box home improvement retailers. Home Depot Inc. and Lowe's Cos. are feeling the pinch as the real-estate market drops and new-home building subsides.

Last month, Home Depot scrapped plans to put its first-ever store in San Francisco despite wrangling with reluctant city officials for nearly a decade. In 2005, the city's Board of Supervisors had approved the construction of a Home Depot, but the company backed off in light of rough economic conditions.

"We evaluated the deal and found that it no longer worked for us," said Home Depot spokeswoman Sarah Molinari.

Home Depot has curtailed much of its new-store building throughout North America, cutting back to 55 new stores this year from 100 last year. Capital-expenditure spending will be down 32% from a year ago, to $2.3 billion.

The company is looking to spruce up its existing stores and find ways to improve service, as well as invest in its supply chain, according to Molinari. She also said that much of the curtailing in Home Depot's expansion activity is that like Wal-Mart, the company is reaching market saturation.

At one point, Home Depot was building 200 new stores a year, Molinari elaborated.

That kind of pulse-quickening expansion is unlikely to return, it appears. "I just don't think we're at that point in our business. I think we're past that point," she added.

Lowe's, on the other hand, still is growing rapidly, though it has delayed the opening of 20 new outlets this year in markets where the housing crunch is acute, said spokeswoman Chris Ahearn. Most of the delays are in California and Florida markets.

The company still plans to open 120 other stores, she noted. Lowe's would not reveal precisely where it is holding off on construction. "Again, they're delays. We're not canceling stores," Ahearn said. "We still have an aggressive expansion plan."

Markets that didn't experience a massive housing bubble, such as Texas and Oklahoma, are still ripe for new properties. Lowe's has 1,525 outlets in all.

Urban problem

Home Depot's San Francisco experience exemplifies the dilemma now faced by home-improvement centers. Buying or leasing land in pricey urban areas will cut deeply into their return on investment, said Craig Johnson, president of Customer Growth Partners, a retail consultant.

When economic conditions weaken, that takes a lot of steam out of a Home Depot or Lowe's that is looking to venture outside its comfort zone of suburban strip malls.

"Even in good times, it's a reach," Johnson added.

Companies that seem to be clinging to good times are Best Buy, Costco and Target. Best Buy said that it could stand to build another 500 stores in its various markets, so it plans to open 130 to 160 of them over the next fiscal year. That's about the same pace at which Best Buy has grown over the past several years, according to company spokeswoman Sue Busch.

Best Buy is hoping to use the current economic situation to its advantage and to expand its market share as some of its rivals retreat. "Right now, this is where the focus is," Busch said.

Its main competitor, Circuit City Stores Inc., has seen its stock price tumble, and it has become a takeover target for Blockbuster Inc.

"Smart retailers will use down markets as the most cost-effective time to build market share," Johnson commented. "I think Best Buy is doing a very good job of this."

The same goes for Costco, Johnson said. The membership-warehouse retailer may be seeing its nonfood sales drop, but its food and low-price gasoline have grown more attractive to consumers.

The company plans to open 30 to 35 new units this year and to relocate 10 more stores, spokesman Bob Nelson said.

Costco should continue on that pace in the foreseeable future. "We have no plans to curtail next year," he added. "We're cautiously optimistic that things are going to get better."

Source: MarketWatch.com

Australia's Centro says seeking bids for 25 malls

SYDNEY, April 28 (Reuters) - Australia's debt-laden Centro Properties Group (CNP.AX: Quote, Profile, Research) said it is seeking bids for 25 of its shopping centres, but hopes to retain at least 50 percent ownership in them to retain management and leasing control.

The group, which borrowed heavily last year to fund a rapid U.S. expansion, must refinance A$5.4 billion ($5 billion) of debt by Wednesday. It is under pressure to sell assets to raise cash after being caught in the global credit crunch.

Centro, owner of 700 U.S. malls, said refinancing talks were continuing and there would be no update to the market prior to Wednesday's deadline. Banks are expected to grant a five-month extension.

"I imagine it would be Wednesday before we say anything. These things tend to go to the last minute," said Centro spokesman Mitchell Brown.

"We're still working towards it. The banks are still supportive, it just takes a while to get the documentation done," he said.

About two-thirds of Centro's shopping centres are in the United States, with the remainder in Australia and New Zealand. It holds the assets through a complex network of managed funds.
The company is selling part of its Centro Australia Wholesale Fund, which contains 28 shopping centres, 25 of which are wholly owned. Brown said buyers had expressed interest in smaller chunks but Centro hoped to avoid selling off individual centres.

"That's possible but it's not what we're pursuing as the primary objective. You may see a few here or there but we'd prefer not to," Brown said.

"Let's say you put four centres together and someone wanted to take a 50 percent interest in those four centres -- that's the kind of thing that would be ideal in our mind because we'd still then be managing, and marketing and leasing the shopping centres," he said.

The group has previously said its adviser, Lazard Carnegie Wylie, reported extensive interest from potential investors and it expected a number of parties to start due diligence soon. The Sydney Morning Herald on Monday listed potential buyers as GPT Group (GPT.AX: Quote, Profile, Research), Stockland (SGP.AX: Quote, Profile, Research), Westfield Group (WDC.AX: Quote, Profile, Research), Mirvac Group (MGR.AX: Quote, Profile, Research) and CFS Retail Property Trust CFX.AX, although they may face competition issues.

Industry Superannuation Property Trust, family groups and individual property investors may also be interested, the newspaper said.

"(Equity) interest in some or all of those assets is very likely to be sold. Twenty-five of them are not in joint ventures with external partners so there are 25 that are able to be sold pretty quickly," Brown said.

Centro plans to review indicative bids and then grant access to detailed due diligence. Formal documents had not yet been signed.

Centro shares were up 2.3 percent at 45 cents at 0345 GMT in a broader market up 0.5 percent . The shares had traded above A$10 last May.

Centro recently rejected offers to buy stakes in the company reported by newspapers to be up to around A$0.90 a share.

"We have received a number of offers. The board has not taken any of those. We're not going to do anything that takes too big a discount for shareholders," Brown said.

Source: Reuters

Charming Shoppes seeks alternatives for non-core assets

BANGALORE, April 25 (Reuters) - Women's plus-size apparel retailer Charming Shoppes Inc (CHRS.O: Quote, Profile, Research) said it is exploring strategic alternatives for its non-core apparel catalogs to focus on core brands, and cut its planned spending for fiscal 2009.

The company's intention is to raise money by selling its assets, which is an appropriate decision given the current challenging consumer environment, Janney Montgomery Scott LLC analyst Holly Guthrie said.

The company, whose core brands include Lane Bryant, Catherines and Fashion Bug, said it retained Banc of America Securities and Lehman Brothers as its financial advisers.

"We have received a number of inquiries from qualified third parties and are evaluating several alternatives for our non-core apparel catalog titles...," Chief Executive Dorrit Bern said in a statement.

The company, which had earlier this year cut jobs and planned to close stores, said it expects to reduce capital expenditures by an additional $20 million for fiscal 2009, bringing the total planned cuts to $63 million for the year.

Standard & Poor's Equity Research analyst Pearly Wang upgraded the stock to "sell" from "strong sell," saying the company's plans to enhance shareholder value and focus on core brands were encouraging.

Shares of the Bensalem, Pennsylvania-based company, which operated 2,409 retail stores in 48 U.S. states at Feb. 2, were up 3 percent at $4.99 in noon trade on Nasdaq. (Editing by Deepak Kannan)

Source: Reuters

Recession Diet Just One Way to Tighten Belt

Stung by rising gasoline and food prices, Americans are finding creative ways to cut costs on routine items like groceries and clothing, forcing retailers, restaurants and manufacturers to decode the tastes of a suddenly thrifty public.

Spending data and interviews around the country show that middle- and working-class consumers are starting to switch from name brands to cheaper alternatives, to eat in instead of dining out and to fly at unusual hours to shave dollars off airfares.

Though seemingly small, the daily trade-offs they are making — more pasta and less red meat, more video rentals and fewer movie tickets — amount to an important shift in consumer behavior.

In Ohio, Holly Levitsky is replacing the Lucky Charms cereal in her kitchen with Millville Marshmallows and Stars, a less expensive store brand. In New Hampshire, George Goulet is no longer booking hotel rooms at the Hilton, favoring the lower-cost Hampton Inn. And in Michigan, Jennifer Olden is buying Gain laundry detergent instead of the full-price Tide.

Behind the belt-tightening — and brand-swapping — is the collision of several economic forces that are pinching people’s budgets or, at least, leaving them in little mood to splurge.

The price of household necessities has surged, with milk topping $4 a gallon in many stores and regular gasoline closing in on $3.60 a gallon nationwide.

Home prices are sliding, wages are stagnant, job losses are growing and the Standard & Poor’s 500-stock index, a broad measure of stock performance, is down 6 percent in the last year. So consumers are going on a recession diet.

Burt Flickinger, a longtime retail consultant, said the last time he saw such significant changes in consumer buying patterns was the late 1970s, when runaway inflation prompted Americans to “switch from red meat to pork to poultry to pasta — then to peanut butter and jelly.”

“It hasn’t gotten to human food mixed with pet food yet,” he said, “but it is certainly headed in that direction.”

Retail sales figures and consumer surveys confirm that Americans are strategically cutting corners, whether it is at the coffee house or the airport. (In: brewing coffee at home and flying coach. Out: Starbucks and first class.)

In March, Americans spent less on women’s clothing (down 4.9 percent), furniture (3.1 percent), luxury goods (1.3 percent) and airline tickets (1.1 percent) compared with a year ago, according to MasterCard SpendingPulse, a service of the credit card company that measures spending on 300 million of its cards and estimates purchases with other cards, cash and checks.

Wal-Mart Stores reports stronger-than-usual sales of peanut butter and spaghetti, while restaurants like Domino’s Pizza and Ruby Tuesday have suffered a falloff in orders, suggesting that many Americans are sticking to low-cost home-cooked meals.

Over the last year, purchases of brand name cookies and crackers have fallen, according to Information Resources, which tracks retail sales.

Sales of Nabisco graham crackers have dropped 7.5 percent, and Keebler Fudge Shoppe cookies have slipped by 12.3 percent. Not even beer is immune. Sales of inexpensive domestic beers, like Keystone Light, are up; sales of higher-price imports, like Corona Extra, are down, the firm said.

Some are skipping drinks altogether. The number of people ordering an alcoholic drink fell to 31 percent last month from 42 percent last summer, according to a survey of 2,500 people conducted by Technomic, a restaurant industry consulting firm.

“People have started to shift spending as if we were in a recession,” said Michael McNamara, vice president for research and analysis at MasterCard.
Such trade-offs were on vivid display last week in Ohio, where layoffs have been rampant. At Save-A-Lot, a discount grocery store in Cleveland, Teresa Rutherford, 51, chided her sister-in-law, Donna Dunaway, 44, for picking up a package of Sara Lee honey ham (eight ounces for $2.49).

“We can’t afford that!” she said. “Get the cheap stuff.” They settled on a 16-ounce package of Deli Pleasures ham for $3.29, or 34 percent less an ounce.

The women said that soaring prices for food and fuel had changed what they buy and where they buy it. “We used to eat out at Bob Evans or Denny’s once a month,” said Ms. Rutherford, who works in an auto-parts factory. “Now we don’t go out at all. We eat in all the time.”

Ms. Dunaway, a homemaker, used to splurge on the ingredients for homemade lasagna, her husband’s favorite, before food prices began to surge this year.

“Now he’s lucky to get a 99-cent lasagna TV dinner, or maybe some Manwich out of a can,” she said. “I just can’t afford to be buying all that good meat and cheese like I used to.”

By no means has the economic downturn been bad for all product categories. For instance, sales of big-ticket electronics, like $1,000 flat-panel televisions and $300 video game systems, are on the rise, according to retailers and research firms.

Falling prices for such devices and a looming government deadline to convert to digital television have helped. So has the view, sensible or not, that the technology is a good investment. At a Best Buy in Southfield, Mich., James Szekely, 28, a mechanical engineer, was shopping for a big high-definition TV that he expected would cost at least $2,000, an expense he rationalized because “at least we can watch movies at home.”

(In a survey conducted this month by the NPD Group, a research firm, consumers suggested that they would sooner cut spending on clothing, furniture and eating out than on video games.)

At Home Depot, sinks and faucets are selling briskly. Managers at the chain suspect that consumers, loath to spend money on a splashy kitchen renovation or new roof, are settling for a cheaper bathroom “refresh.”

Another top seller at home improvement stores: programmable thermostats and insulation, which can cut fuel bills.

Many retailers are struggling to adjust to the new needs. Clothing sales have started to sink at department stores like Macy’s, Kohl’s and J. C. Penney. So have furniture sales at companies like Bombay and Domain, both of which have filed for bankruptcy protection.

Consumers are spurning small indulgences. Starbucks is warning of a drop-off in purchases, and sales have dipped at higher-end restaurant chains, including the steakhouses Ruth’s Chris and Morton’s.

To drum up business, Domino’s is offering a new deal: three 10-inch pizzas for $4 each. “We are not recession-proof,” said the chain’s president, J. Patrick Doyle.

But chains that emphasize low prices, like TJ Maxx and Wal-Mart, are thriving. And cut-rate supermarkets, like Save-A-Lot, are swamped.

“People are not not spending, but they are changing how they spend,” said Marshal Cohen, chief analyst at the NPD Group.

And they are often willing to sacrifice convenience or swallow their pride.

George Goulet, 52, the business traveler switching from the Hilton to the Hampton Inn, now books flights that depart in the afternoon rather than the early morning. “It’s a lot cheaper,” he said. “I can really see the difference.”

Mary Gregory, 55, a telephone company operator in Cleveland, used to eat red meat at least once a week. Now it is hardly ever on her menu. “I usually buy turkey instead,” she said. “Any recipe that calls for meat, like chili or spaghetti, I try to substitute turkey.”

Hall, a retired construction worker in Detroit, wants to buy a fence for his backyard. But he decided not to buy a finished product at Lowe’s, the home improvement chain where he was shopping recently. With money tight, “I am looking to put it together myself,” he said, adding that he hoped to save $200.

As the compromises mount, people are even coming up with clever schemes to hide their cost-cutting.

Holly Levitsky, a 56-year-old supermarket cashier in Cleveland, buys a brand of steak sauce called Briargate for 85 cents and surreptitiously pours it into an A1 steak sauce bottle she keeps at home.

“My husband can’t even tell the difference,” she said.

Source: The New York Times

Stein Mart Opens in Westboro, MA

WESTBORO — Stein Mart Inc., an off-price retailer of clothing and home goods with more than 280 stores in 30 states, will open its first New England store April 24 at the Bay State Commons shopping center.

The company, based in Jacksonville, Fla., expects to find shoppers in New England who know the chain through travels to other states.

“We’re finding there are people who want to shop at Stein Mart year-round, not just when they’re in Florida” or other locations, said Stein Mart spokeswoman Kathy Schwartz Lussier.

Stein Mart’s Westboro store will cover 31,000 square feet and include men and women’s clothing, shoes, accessories, gifts and linens. Most Stein Mart stores employ about 50 full- and part-time workers. Nilza Ortega will be the store’s manager.

In addition to selling national and designer brands at discounted prices, Stein Mart carries its own brands, including Peck & Peck clothing for women and T.Harris-London menswear. The company also aims to create a department-store atmosphere in its stores. The “Boutique” department in Stein Mart stores offers free personal shopping services and special merchandise and displays.

Stein Mart posted $1.46 billion in sales and a loss of $4.5 million, or 11 cents per diluted share, during the fiscal year ended Feb. 2. The company cited a drop in business late in 2007 that caused it to mark down merchandise, and it said it would moderate the pace of new store openings. Stein Mart has reported it will open six new stores this year, including the Westboro store, relocate one store and close six stores.

Stein Mart has scheduled a pre-opening fundraiser from 6 to 8 p.m. April 22 at the store at 1500 Union St. to benefit the Westboro Women’s Club projects and scholarships. Tickets to the event are $10 and will give participants a chance to shop at the store before it opens to the public. Tickets are available at Plant Bazaar, 50 East Main St., and will be sold at the door.

Source: Worcester telegram & Gazette

Golf sales soaring, even if economy is not

QUINCY —
Times are tough all over. Unless, that is, you sell golf equipment.

“We entered this year with some anxiety because of the election and the economy. But actually our numbers are up some from last year,” said Michael Stough, a manager at Edwin Watts Golf in Hanover. “We’re pretty excited about ‘08.” It’s the same rosy picture at Golfers’ Warehouse in Braintree. “We’ve been doing very well,” said assistant manager David Singletary, who was already tied up with a customer 19 minutes after the store’s 10 a.m. opening on a weekday morning last week. “We haven’t seen a drop at all (in sales).”

Golf tugs at the wallet perhaps more than any other sport. Individual clubs can sell for hundreds of dollars, and pricey golf vacation packages beckon from the pages of magazines. But if golfers are economizing, retailers aren’t seeing much evidence of it. In fact, both Stough and Singletary said their stores are selling more big-ticket merchandise than they did at this time last year.
Singletary chalks that up to some new, “must-have” innovations, including Callaway Golf’s I-Mix system, which allows golfers to mix and match the heads and shafts of their drivers to add flexibility to their games.

“The major brands are doing a good job of anticipating issues with sales,” he said, “and they’re really combating it with new products that the golfers just can’t say no to.”

Don Neville, a 38-year-old math teacher at West Roxbury High School, estimates that he spent about $2,000 on his game last year. Although he said “financially, it’s hard times,” he was at Golfers’ Warehouse, trying out different drivers in the club-testing area while his 6-year-old son played with some $25 club head covers.

“It’s one of those mindsets that you figure that if you get the best equipment, it’s going to help your game in some way,” Neville said.

Tom Murphy, a 38-year-old from Marshfield, said he isn’t surprised that golf gear is flying off the shelves. “It’s everybody’s getaway,” he said of the game, “everybody’s release, so to speak.”

Source: Patriot Ledger

Alpha Omega closes two stores

The Alpha Omega jewelry store in Harvard Square closed Monday, and the Natick Collection locale shut earlier this month. The luxury jewelers are at the end of its court-authorized liquidation sale. The remaining inventory has been consolidated to the Burlington Mall and Prudential Center store locations, where the sale is scheduled to end Sunday, April 27.
Lexington Jewelers Exchange Inc., the Cambridge, Mass.-based company that operates the Alpha Omega chain, filed for Chapter 11 bankruptcy Jan. 2.

Cranston, R.I.-based Ross-Simons Jewelers will take over the Natick Collection and Prudential Center locations and re-open them as Ross-Simons stores in the near future. Alpha Omega's some 80 employees will be considered for employment with Ross-Simons stores, sources say.
Alpha Omega's debt totaled $34.1 million, according to court documents filed Jan. 18. Its largest creditors include the Boston Globe ($1.2 million), Boston Magazine ($176,654) and the Boston Celtics ($207,500). Its assets at the time of the filing were $20.6 million, including $19 million in inventory.

The Alpha Omega bankruptcy comes in the midst of a national hardship for jewelers, according to Michael McGrail, managing director of Boston-based Tiger Capital Group LLC, one of the firms that bought the troubled jewelers out of bankruptcy in January.
"I think Boston has weathered the storm," said McGrail. "But there's going to be a longer-term storm so it's tough to predict right now."

The consortium that bought Alpha Omega includes Tiger Capital Group, The Gordon Co., which is based in Florida, and SB Capital Group of New York.

Source: BBJ

Safeway Continues Store Expansion

PLEASANTON, CA-Despite belief that 2008 will remain soft, Safeway is continuing to expand, executives said at the company’s first quarter conference call. For the year, the company expects to spend $1.7 billion to $1.75 billion in capital expenditures, opening 20 to 25 new Lifestyle stores and completing 250 to 255 Lifestyle remodels. Yet rising food prices are affecting the consumer, as shoppers pursue value.

“It doesn’t matter whether you make $30,000 a year or $150,000 a year, when prices go up, demand dampens,” said Steve Burd, chairman, president and CEO. Remodels likely will slow between 2010 and 2012, as the company has compressed its normal 10-year renovation cycle into six to move to the Lifestyle concept. After that, the next set of remodels will be less extensive, Burd said.

For the quarter, the company reported total sales of $10 billion, up 7.3% from the first quarter of 2007. Identical-store sales increased 4.5%, boosted by the shift of Easter from the second quarter to the first. Excluding the Easter shift, identical-store sales rose 2%. Net income was $193.4 million, compared to net income of $174.4 million for the same quarter in 2007. The company opened one new Lifestyle store, completed 22 Lifestyle remodels and closed four units. Safeway operates 1,740 stores in the US and Canada.

Source: GlobeSt.com

Boston: Samuels & Associates Completes $10M Purchase

BOSTON-An automotive service center, that has been a fixture in the city’s Fenway District since the 1970s, has been sold to an affiliate of local developer Samuels & Associates. The buyer paid just under $10 million for 1345 Boylston St. to its owner/operator, Goodyear Tire & Rubber Co., which signed a short-term leaseback of the property.

The purchase of the Fenway building, apparently, has been in the works for some time, with Samuels & Associates forming 1345 Boylston St. LLC, more than two years ago, before then changing the name to Fenway Enterprises 1345 Boylston St. LLC, in late 2007, which acquired the asset. Calls to Goodyear in Akron, OH, and to Samuels & Associates principal Steven Samuels at his Newbury St. headquarters in Boston were not returned by press deadline.

The $9.9 million paid for 1345 Boylston St. was more than twice what the $4.4 million that Goodyear’s 30,000-sf property is valued at by the Boston Assessing Department. If history is any guide, Samuels is likely eyeing the parcel for development, having already undertaken two major commercial projects in the immediate vicinity. Samuels and partner Boylston Properties built the 576-unit Trilogy Apartments mere blocks from 1345 Boylston St., and Samuels is constructing another high-rise across the street at 1330 Boylston St. That project includes 450,000 sf of space that combines office, residential and retail with three levels of underground parking.

All of the activity is within a few blocks of Fenway Park, home to the Boston Red Sox for close to 100 years. After a concept to erect another ballpark next door fizzled when the team’s new ownership opted to preserve the revered stadium, a revitalization of the area slated for demolition has been underway for much of the decade. The Fenway now features a growing strip of restaurants and retail, a multiplex cinema and the two apartment developments. Meanwhile, Trilogy Partners' partner, Boylston Properties, is building a six-story life sciences facility to take advantage of the Fenway’s location next to the Longwood Medical Area. Boylston Properties paid $8.7 million for the site at 121 Brookline Ave. where the building will be constructed, as reported by GlobeSt.com.

Retailers To Customers: Stimulate Us!

With credit tight and the economy creaky, big retail chains are getting more aggressive than ever in capturing the tax rebate checks trickling in to customers now and the stimulus checks due later in the year. One strategy: paying you to hand them over.

Sears Holdings, expected by Wall Street analysts to show a 3% decline in sales in the April quarter from a year ago, is peddling a 10% bonus to those who turn their stimulus checks into company gift cards. Getting $300 from the government? You can have $330 in merchandise credit if you give it to Sears or K-Mart.

Big supermarket chain Kroger offers the same deal, hoping customers will figure tax rebate (or stimulus check) time is a good time to think about saving on groceries. The company will add 10% to its gift cards for anyone who purchases one with a tax refund.

Home Depot takes a slightly different tack. Instead of adding bonus dollars to gift cards, the company is marketing home improvement projects that can expect to cost $300, $600 or $1,200--the dollar amounts people will receive from the government stimulus package.

Marketing around tax-rebate season is nothing new for retailers, but it's tough to recall a time when there was more desperation in the air. In the current economic climate, convincing a customer to turn over his entire stimulus check to one retailer is a tough sell. Industry analysts, naturally, are skeptical, even though some think the gimmick may add an extra trickle to second-quarter sales numbers.

"I’m not sure the Sears or Kroger programs will work; 10% may not be enough of a discount for some people," says Joel Naroff, chief economist of Naroff Economic Advisors.

A recent survey by American Century Investments revealed that only one in four Americans plans to spend any of their stimulus checks when they arrive--most say they plan to pay off debt or add to their savings. In other words, most people will be cashing non-stimulus checks.

Experts say there's little doubt other retailers will hop on board the rebate promotion bandwagon, given the struggle to convince consumers to spend over the next few months. If that happens, the likely result will be a few more dollars in sales, but no real competitive advantage, says Retail Technology Group analyst Mark Lilien.

"The idea is so obvious that it's easy to copy," Lilien says."And when retailers copy each other, they are not gaining any equity."

The idea makes especially little sense at Sears, he thinks, given that retailers selling apparel and furniture routinely offer sales of 40% and 50% off. A 10% giveback, unless it's for a large appliance like a refrigerator, won't bring many people in the door.

Source: Forbes

Is Real Estate Sentenced to Hard LIBOR?

A spike in a common benchmark interest rate for commercial real estate lending will increase debt service on many floating-rate loans but isn’t cause for alarm, according to industry observers. Even so, “for some subset of existing borrowers the recent increases are likely to be painful,” says Robert Bach, chief economist at broker Grubb & Ellis in Chicago.

Alarm bells sounded last week when the three-month London interbank offered rate, or LIBOR, shot up nearly 20 basis points in two days to close at 2.91% on Friday, April 18. Many analysts consider the jump to be a correction triggered by the British Bankers’ Association, which is reviewing its method for setting the rate. Three-month LIBOR hit 2.92% this week but fell back to 2.91% on Thursday.

The British Bankers Association sets LIBOR based on the interest that 16 banking institutions charge one another on loans. Earlier this month, analysts suggested some of those banks could be underreporting the interest they charge to downplay increases in their own costs, and those suspicions appear to have triggered last week’s correction.

Most of the commercial real estate industry’s construction loans and other short-term debts are pegged to LIBOR, so the rate spike could affect a wide swath of borrowers. Construction loans outstanding for commercial real estate at the end of 2007, including apartments and condominiums, totaled $358.7 billion, reports Oakland, Calif.-based Foresight Analytics.

The recent increase in LIBOR doesn’t directly present a problem for commercial real estate lenders but is occurring at a difficult time in the economic cycle for their customers with floating-rate debt, according to John Cannon, executive vice president at financial intermediary Capmark Finance Inc. “Borrowers by and large right now can’t pass those costs on to their customers, the tenants,” he says. “The industry has a lot of LIBOR borrowers, so this [rate spike] has a real material impact.”

That impact is even greater than it might have been a year ago, Cannon says, because borrowers are holding onto construction loans and other floating-rate debt longer while they seek permanent financing. Why? Because a lack of liquidity in the market for commercial mortgage-backed securities (CMBS), which was the chief source of permanent financing in recent years, has made fixed-rate loans costlier and more difficult to find and obtain.

If the run-up in LIBOR is sustained over time, borrowers with existing short-term loans may experience difficulty adhering to their budget as debt service increases the demand on the borrower’s cash flow and cash reserves. In the case of a value-add developer using a short-term loan to upgrade an asset, for example, spiking debt service may eat up the budget for some of those improvements. “That has a negative effect on what he can do with other parts of the property,” Cannon says.

In a big-picture sense, however, LIBOR’s 20 basis-point surge isn’t a big deal for the commercial real estate industry, according to Jon Southard, a principal at Boston-based CBRE Torto Wheaton Research. “Certainly not, given that CMBS spreads have moved 100 basis points in a month recently,” Southard says.

Indeed, March 7 spreads on 10-year, AAA-rated CMBS had climbed to 291 basis points over swaps from 93 basis points two months earlier, reaching an all-time high and 10 times spreads a year before. Swap spreads are a premium investors pay when trading floating- for fixed-interest streams, and are added to a long-term interest rate, usually U.S. Treasuries. “On our list of worries, this is pretty far down the list right now given everything else that is happening,” Southard says. “These are crazy times.”

And there is reason to expect LIBOR rates will come down to be closer in line with other short-term rates, such as U.S. Treasuries. A year ago the three-month LIBOR rate was 5.36%, just 52 basis points over the three-month Treasury rate of 4.84%. Today that spread is three times as great at 165 basis points, so a reversion to historical spreads would bring LIBOR down considerably.

“If you take a look at the spreads over a period of time, they’re certainly wider than they traditionally have been,” says Jamie Woodwell, senior director of commercial and multifamily research, Mortgage Bankers Association.

For now, LIBOR remains low enough that floating rate debt is still low and manageable for most commercial real estate borrowers, says Capmark’s Cannon. At 2.91%, today’s three-month LIBOR rate is roughly half the 5.06% it was six months ago. “I don’t think anybody is pushing any panic buttons yet,” he says, “but they’re watching it.”

Source: National Real Estate Investor

Low Expectations for the High End

Amid anemic consumer spending and sinking confidence about the U.S. economy, luxury goods retailers are on a surprising streak.

The latest quarterly results from high-end retailers including Coach (COH), Burberry, and LVMH Group (LVMUY), parent of Louis Vuitton, Christian Dior, and Veuve Cliquot, show sales exceeding expectations both at home and abroad. Gas prices are approaching $4 a gallon, but Burberry is rolling out a new handbag dubbed the Warrior. Its cost: $22,000.

Even with these hopeful sales reports, Wall Street anticipates deep trouble for retailers, including luxury purveyors. Once thought to be immune to the ups and downs of ordinary shoppers, shares of the 13 biggest luxe stocks around the world have lost 29% since last June, according to Savigny Partners, a boutique investment bank focusing on high-end retailers. Shares have sagged most, analysts say, at companies that have reached for middle-class customers who aspire to ritzier goods but are being hit hard by the current slowdown.

Luxury shares could still fall another 25% to 30% to reach the values typically seen in recessions, says Morgan Stanley (MS) retailing analyst Michelle Clark. Apparel sales, which have been weak for two quarters, generally suffer up to two years before recovering, she says.

Merger-and-acquisition activity has helped share prices hold up in past downturns, but little has materialized lately. LVMH Group Managing Director Antonio Belloni told Bloomberg News on Apr. 16 that his company is seeking acquisitions but offered no specifics. Valuations are certainly attractive, as major luxury stocks are trading at less than 10 times their 2008 earnings before interest, taxes, depreciation, and amortization, compared with a ratio of almost 14 times last June.

However, tight credit markets have made it all but impossible to finance a buyout, and many private equity firms are stuck without backing. A leveraged buyout deal for German fashion house Escada crumbled in April, and Italian fashion house Roberto Cavalli has been seeking a buyer since last summer. "People are being very careful," says William Plane, director at Savigny Partners.

The best bets for investors are retailers catering to the ultrarich, whether in the U.S., Europe, Asia, or the Mideast. This includes companies such as LVMH, Gucci owner Pinault-Printemps-Redoute, and Hermès. "There's much more insulation for the ultraluxury brands whose consumers are relatively unaffected by all that's happening," says Fred Crawford, managing director of AlixPartners in New York.

So-called aspirational brands such as Coach and Polo Ralph Lauren (RL) face the biggest challenges and thus make the riskiest investments, analysts say. Customers who were once more than willing to stretch their budget to buy a hot pair of shoes or cashmere scarf are rethinking their priorities, Crawford says. The firm just completed a survey of thousands of consumers about their shopping habits. "Right now, people are trading down," he notes.

Without rising real estate values to fuel consumer spending, some have declared the present era of affordable luxury dead and buried, but most retailing experts see the trend on hold until the economy improves. The fascination with celebrity culture—wearing the same shoes as Mariah Carey or carrying the same handbag as Sarah Jessica Parker—is here to stay, says Dana Telsey, who covered retailing at Bear Stearns and elsewhere and now runs her own consulting firm. "The media has created much greater brand awareness, and that's not going away," Telsey says. "The cycle will come around."

Source: Business Week

NJ: 93,000-SF Center To Get Upgrade

OLD BRIDGE, NJ-The Lightstone Group is getting ready to launch a major renovation of its Browntown Shopping Center, a 93,250-sf strip on Route 516 here. The specific cost hasn't been released, but company officials term it "a multi-million-dollar" project. The center, which dates to the early 1960s, was acquired in 2003 from the estate of Saul Cantor as part of a three-center portfolio for $20 million.

"This reflects our continued reinvestment in our existing portfolio," says Jeffrey Dash, VP of retail leasing and management for the Lakewood, NJ-based Lightstone Group. The renovation will include a general building facelift and enhanced lighting, parking and landscaping, according to Dash.

Long-time major tenants New York Sports Club, Drug Fair and Wendy's remain in place as the property's anchors. Browntown Shopping Center is currently listed on Lightstone's website with a total availability of approximately 6,100 sf.

"We plan to also remodel the interior and exterior of our store as well," says Timothy LaBeau, president and CEO of Drug Fair, a regional Somerset, NJ-based chain with 40 stores in New Jersey. The other two centers acquired from Cantor in 2003, Millburn Mall in Vauxhall, NJ, and Newbridge Shopping Center in Bergenfield, have both also subsequently undergone major renovations.

Source: GlobeSt.

NJ: Despite Economy, Vacancies Stay Low

The current market conditions have changed considerably since just six months ago. Retailers are now showing considerable caution in securing new sites due to the economic slowdown. The sub-prime mortgage crisis as well as gasoline prices have had an impact on retail sales, as would be expected. Family disposable income has been re-allocated and, as a result, the buying power of the 15 – 25-year-olds has considerably diminished.

Fortunately, in the State of New Jersey, our economy appears to be stronger than in other parts of the country. The Goldstein Group, which monitors retail vacancies throughout New Jersey twice a year, currently shows a retail vacancy in New Jersey of approximately 5%. This figure is low compared to other retail markets in the United States, such as Atlanta, Miami, Chicago and Dallas, who are experiencing a much higher vacancy rate, in the 10-15% range. Fortunately for New Jersey, this lower vacancy rate has meant that our economy is holding up better than those being experienced nationally.

Although it is obvious that we will be experiencing some rougher times ahead, we don’t anticipate a huge increase in retail vacancies, and we anticipate that New Jersey will bounce back quickly when the economy regains its strength.

Source: GlobeSt.

Supermarkets Could Pick Up $2 Billion From Stimulus Spending

NEW YORK — Goldman Sachs here estimated that supermarkets could pick up 7% of the stimulus checks the government will issue next month, or close to $2 billion during the second and third quarters.

"Although $2 billion is only about 0.3% of overall supermarket consumption, it could bolster comps at a time when food inflation is dampening demand," according to a Goldman Sachs research report entitled Independent Insights, which asked 2,500 U.S. consumers how they plan to spend their rebates. The report said the amount spent at supermarkets could be higher than the $2 billion projected if cost pressures on essentials like food and gas drive a higher proportion of spending into non-discretionary outlets," or if the percentage of tax check dollars spent is greater than expected."

Goldman said it believes Kroger will be a big beneficiary of the spending because the amount of tax checks will be greater in the Southeast and Midwest, which are Kroger strongholds, and because Kroger is offering a 10% bonus if shoppers cash the checks at its stores and put the money into a Kroger gift card, a program Supervalu is also offering.

Source: SuperMarket News

Balt: Restaurateur defies sluggish economy, plans expansions

The owner of the Bicycle -- one of Baltimore's most popular restaurants -- plans to start a casual Italian restaurant about six blocks away from his Federal Hill eatery.

And Timothy Dean, of Timothy Dean Bistro, is spending $2.5 million on a 280-seat jazz lounge and restaurant at Prince George's County waterfront development National Harbor.

The moves underscore how some established restaurant operators are expanding even though consumers are watching their pennies. You can still lure diners by offering the right concept and good prices, restaurant owners say.

Timothy Dean will open Timothy Dean Bistro Jazz Club in August because he wants to grow his brand. Financing will come from two bank loans and business partner Peter Mallios of Mallios Realty in Washington, D.C. Plans to open a restaurant in Las Vegas have been put on hold for now while Dean expands to the retail and resort development.

Meanwhile, the Bicycle's Nicholas Batey will buy the building at 554 E. Fort Ave. to open Ullswater, named after an English lake. The building was formerly occupied by the defunct Soigné and more recently, the Sly Fox Pub.

Batey said he hopes to open the 100-seat eatery by October. Batey declined to say how much he will pay for the property but state tax records assess the value at $300,000. Funding for the new restaurant will come from a U.S. Small Business Administration loan and friends, he said.

Batey said he has noticed consumers are spending less. Some weekdays this winter have been slow at the 65-seat Bicycle, he said.

But Batey said he thinks he can draw customers with a lower-priced, casual restaurant. Diners at Ullswater will be able to order an entrée, appetizer and a glass of wine for $30. Federal Hill's the Bicycle sells contemporary international cuisine, with entrées such as New Zealand bass with red lentil dhal for $28.

Opening an Italian restaurant was always one of Batey's ambitions.

"The opportunity for the building and everything came at the right time," Batey said. "I just had to move forward and do this concept."

Source: Washington Business Journal

DC: Kettler secures $217M for Leesburg project

Kettler will get a hand from Sovereign Bank as it proceeds with a major mixed-use project in Leesburg.

Kettler and its development partners, Dallas-based Cypress Equities and District-based The Carlyle Group, secured the loan for the Village at Leesburg development. The project will have 1.2 million square feet of residential, retail, restaurant and office space when complete.

Sovereign Bank is the administrative agent for several national and local financial institutions that are providing the loan to Kettler.

An open-air shopping market at the Village at Leesburg will be anchored by a Wegmans supermarket.

As part of the project, McLean-based Kettler and Cypress are building a new $31 million interchange on Route 7 that is expected to be finished by July 2009. The development is located at the juncture of Route 7 and Crosstrail Boulevard.

Aside from the commercial space, the 150-acre Village at Leesburg will include 335 luxury apartments.

Source: Washington Business Journal

Developer picked for 16 acres at Fort Point

Postal Service moves plan to redevelop annex site forward

The Postal Service has named the big real estate firm Jones Lang LaSalle to develop the annex site it will vacate, 16 acres on Fort Point Channel in a rapidly developing section of downtown near South Station.

Jones Lang LaSalle beat out a team made up of the Beal Cos. of Boston and the Related Cos. of New York, as well as three other companies in earlier bidding, for the right to turn the property into a bustling mixed-use urban development.

Last year, the Postal Service said it would sell the site and move farther down Summer Street, next to the Reserved Channel on the South Boston Waterfront.

The selection of a developer begins a long process. Permitting for the annex's redevelopment and construction of a new Postal Service facility could take five years or more, officials said.
"Our piece of property seems to hold the key to the renovation of the whole waterfront," said Bob Cannon, public affairs manager for the Postal Service in Boston. "That simply can't happen while we stay here."

Jones Lang LaSalle executives said they will meet with abutters, neighbors, and city officials before deciding what to propose to build there.
The site is currently zoned to accommodate about 6.2 million square feet - or roughly the same amount tentatively planned for the 23-acre Seaport Square project on the South Boston Waterfront.

The Postal Service site is subject to the stringent limitations and requirements of the state's Chapter 91 law, which governs waterfront property, as well the city's exhaustive permitting process. In the end, the development could be smaller than current zoning al lows, in part because of the extensive amount of open space that could be required.

"Our plan will focus on the public realm and public access," said Daniel J. St. Clair, managing director at Jones Lang LaSalle.

The developers will have to coordinate their project with the planned expansion of rail lines at South Station, which could include as many as six new tracks to accommodate increased commuter-rail traffic from the south and Amtrak trains.

The Postal Service will now begin negotiating a purchase-and-sale agreement with Jones Lang LaSalle. It could be completed this year, and under the current plan the sale of the site would not be completed until all city and state permits are in place, and a project of a specific size is proposed.

The price of the property would be determined by how much the developer is permitted to build.
Vivien Li, executive director of the Boston Harbor Association, noted the area has several other major developments in planning, including an office tower behind South Station, plus great access to transportation, all of which will result in an exciting new neighborhood.

But, she cautioned, it will take time.

"It's a very complicated site," she said. "It will just help to bring even more people down to the waterfront, but the planning itself is going to take many, many months."

Jones Lang LaSalle has experience in that. The firm, or Boston-based Spaulding & Slye, which it bought in 2005, previously managed the complex permitting for large development sites, including Fan Pier on the South Boston Waterfront, NorthPoint, a 45-acre mixed-use project in East Cambridge, and the redevelopment of historic Russia Wharf.

"We've master-planned 10 million square feet in 10 years," a happy Kyle B. Warwick, managing director for investment development of Jones Lang LaSalle, said yesterday. "That has been our expertise."

Jones Lang LaSalle is the managing partner in a joint venture on the Postal Service site with Walton Street Capital, a real estate investment firm it has had business relationships with before. The development team includes CBT Architects of Boston and urban planner Ken Greenberg of Toronto.

None of the three big sites Jones Lang LaSalle moved forward is finished, but all are under construction. NorthPoint is being sold but is stalled as its current owners, including Jones Lang LaSalle, resolve a lawsuit with their partner.

The Beal-Related team, which is building The Clarendon, a residential project in the Back Bay, expressed disappointment that it wasn't selected "to work with the USPS to develop what we believe will be a new front door to downtown Boston."

Source: The Boston Globe

FTC continues to battle Whole Foods' acquisition of Wild Oats

The ink is long dry on the $565 million deal, but federal regulators aren't giving up their challenge to Whole Foods Market Inc.'s acquisition of rival Wild Oats Markets.

Last year the Federal Trade Commission attempted to stop Austin-based Whole Foods (Nasdaq: WFMI) from purchasing its smaller Boulder, Colo.-based competitor, citing antitrust concerns. A federal judge ruled against the government, paving the way for the deal to close last August.

But the FTC is not giving up. Oral arguments are being heard today in a Washington circuit court of appeals. The government argues that Whole Foods has not completed the merger of the two companies and therefore time remains to stop the combination in its tracks.

In its first quarter earnings, Whole Foods said it had already sold 35 Wild Oats (Nasdaq: Oats) stores and closed 12. That leaves 62 Wild Oats in operation.

"We believe the district court drew the correct conclusion: the combination of Whole Foods Market and Wild Oats Markets would have no negative effect on consumers," says Whole Foods spokeswoman Kate Lowery. "The evidence before the district court on this point was overwhelming and we look forward to reviewing that evidence with the court of appeals. In fact, our customers have enjoyed nothing but benefits since two companies have joined together."

Whole Foods saw a rocky first quarter, with profits down by 27 percent to $39.1 million. The company's stock was trading at around $32.73 early Wednesday, toward the lower end of the 52-week range of $29.99 to $53.56.

Whole Foods moved into the Nashville market with the opening of a store in Green Hills in late 2007. The company also now owns a Wild Oats store in Cool Springs.

Source: Nashville Business Journal

RadioShack, Dell in talks?

Some Wall Street traders are betting on an unusual combination: Dell and RadioShack.

On Tuesday, for the second straight day, an unusually high number of options on RadioShack stock -- contracts to buy in the future -- were traded, apparently fueled by unsubstantiated rumors that Dell might be interested in acquiring the Fort Worth-based retail chain.

On Monday, 24,000 contracts were sold. And although Tuesday's number dropped to about 10,000, it remained above the 1,100 calls sold on average in a 30-day period, said Jon Najarian, co-founder of OptionMONSTER, a Web site that tracks the options market from Chicago. Each option is for 100 shares.

Contracts to buy RadioShack stock in May and June fetched $15 and $17.50 on speculation that the shares would be worth $18 to $22 -- "if a takeover transpires," Najarian said.

Stock traders were unfazed by all the options interest Tuesday. RadioShack shares (ticker: RSH) closed down 56 cents, or 3.4 percent, to finish at $16.11, during a down day on the New York Stock Exchange. The stock is trading a few dollars above its 52-week low of $13.31, and far below its $35 high, perhaps suggesting to speculators that RadioShack is ripe for acquisition.

RadioShack spokesman Charles Hodges declined to comment, saying the home-electronics retailer does not address rumors or speculation.

And the idea of a Dell takeover of RadioShack -- first suggested in a BusinessWeek column a year ago -- had some analysts scratching their heads.

"Personally, I just don't see it," said Mike McCoy, an analyst for Columbus, Ohio-based Retail Forward, who follows the consumer-electronics industry. "The only [thing] Dell would get is locations, and somehow they would have to acquire the retail expertise."

RadioShack has been fighting a steady decline in sales in recent years as shoppers have gravitated to Best Buy, Wal-Mart and other competitors for electronics products. Under Julian Day's leadership, the company has boosted its profits through aggressive cost-cutting even as sales have fallen. But some analysts have questioned whether the new executive team has a merchandising plan that will reverse the sales slide.

Dell has faced its own problems. Losing market share to rivals such as Hewlett-Packard, the Austin-based computer maker decided to stray from its direct-sales model. It found good tie-ups with Best Buy and Wal-Mart in the United States, and chains like the Hypermart retailer Carrefour in Europe, McCoy said. "RadioShack has really struggled these last several years to find a niche -- searching for something to get shoppers into the stores," he said. "Today, there's really no compelling reason for them to go there when you have stores like Best Buy and Circuit City."

He said Dell's mall kiosks don't give the company much retail savvy, but its products are being sold by people who have that expertise in Best Buy.

Najarian said it's too early to determine if the rather dramatic options trading signals any indication of Dell-RadioShack negotiations. "I believe it's just pure speculation," he said. "I would [like] to see a couple more days [of heavy trading] to reinforce the idea that something is going on."

Options traders typically watch for any development toward the end of the week, such as board members of the respective companies suddenly sequestered for a meeting, Najarian said. And it's not unusual for hedge funds to dispatch people to watch for such activity, he said.

Source: Star Telegram

NJ: Chelsea Starts 435,000-SF Outlet Mall

TINTON FALLS, NJ-Legal challenges had tied the project up for a couple of years, putting it behind schedule, but Chelsea Property Group’s Jersey Shore Premium Outlets is now on target for a November opening. As reported by GlobeSt.com, the legal delays were related to traffic patterns, construction of an overpass and stormwater management regulations.

As GlobeSt.com previously reported, the 435,000-sf shopping complex finally passed muster in late 2007, and a subsequent groundbreaking kicked off the project’s current construction. "We are well under way, and are on schedule for a November opening," confirms Michele Rothstein, SVP of the Roseland, NJ-based Chelsea, a division of Simon Property Group. As reported in the Simon 2007 annual report, the estimated gross cost of the project is $157 million.

Premium Outlets' construction

The shopping center is rising on 60 acres at Route 66 East and Essex Road along this community’s border with Neptune Twp., and will have a total of 120 stores with a fashion-oriented, upscale tenant mix. That tenant mix will also include a food court.

The single-level, village-style center will be Chelsea’s third in New Jersey bearing the company’s Premium Outlet brand, joining properties Flemington and Jackson. The site is also directly off an exit of the Garden State Parkway.

As far as tenants, "we have yet to announce stores’ names, but will do so to coincide with a large job fair several months before the opening," Rothstein tells GlobeSt.com. Retail names that had earlier surfaced during the approval process included Saks Fifth Avenue, Brooks Brothers, Armani and Nordstrom. And Ann Taylor Loft has posted a hiring notice on its website relating to a location in this Monmouth County township.

"During construction, the development is creating more than 300 construction jobs," Rothstein says. "Upon opening, the center will provide between 800 and 1,000 permanent and part-time jobs. It is projected to generate more than $170 million annually in retail sales, and annual real estate property tax revenues of more than $1.2 million."

Source: GlobeSt.

After Misstep, Wal-Mart Revisits Fashion

After its venture into more upscale apparel turned into a spectacular fashion flop last year, Wal-Mart Stores Inc. is attempting to get all dressed up again.

Despite the discount retailer's assurances that it had returned to its roots of selling the most basic clothing -- T-shirts, tank tops and tube socks -- it has been striking deals to bring in new brand-name designers and apparel. Among them: the once red-hot Norma Kamali, known for jersey-draped dresses, sleeping-bag coats and ensembles made from gray sweat-shirt material, who is creating a clothing line for Wal-Mart that will debut in the fall.

Some items from the Op apparel line that Wal-Mart will sell at select stores and online
Wal-Mart also has signed deals with California surfer brand Op and Jones Apparel Group's junior jeans line l.e.i. As part of its new fashion push, Wal-Mart restructured its apparel division in February, transplanting a big chunk of the operation to New York. The move led to layoffs at its Bentonville headquarters.

The world's largest retailer has tried for years to muscle into the cutting-edge fashion business. Two years ago, it showcased new offerings in conjunction with New York's fashion week, took out elaborate advertising spreads in Vogue magazine, and opened an office in New York City so staffers could stay on top of trends.

But its big dive into more fashionable, higher-price apparel alienated Wal-Mart's loyal core customers. The George Collection's tailored tweed skirts and knit sweaters -- designed by Mark Eisen -- were priced in the high $30s and out of reach for most of the stores' shoppers. And when Wal-Mart expanded its trendy new clothing line Metro 7 into 1,500 stores from its initial 500, customers didn't rush to snap up skinny-legged jeans and leopard-print tops. Sales sagged and overstocked inventories drained earnings last spring, and longtime apparel chief Claire Watts resigned.

Now Wal-Mart is wading back into the fashion arena, learning from its mistakes in order to restyle its strategy with an emphasis on both fashion and quality at a low price. It's a tricky time to try, with the weak economy slowing sales of discretionary items like fashion apparel.

Rival Target Corp., which pioneered low-cost designer clothing, recently announced it was ending its longstanding partnership with designer Isaac Mizrahi, who was named creative director at Liz Claiborne. The designer's clothing and accessories account for about 3% of Target's apparel revenue, but analysts blame part of an overall slowdown in sales on brands that have lost their individual identity.

An ad for Wal-Mart's Op line, which will appear in magazines including Rolling Stone, Lucky and Cosmopolitan.

Apparel remains attractive to Wal-Mart for a number of reasons. As the company builds fewer stores, it needs to propel sales and earnings growth by wringing more profitable sales out of its existing stores. Higher fashion apparel and bedding have higher profit margins than other merchandise -- about 31%, a full 10 percentage points higher than almost every other category the discounter sells, according to estimates from Sanford C. Bernstein & Co.

Wal-Mart isn't ready to discuss details of its new apparel strategy, saying it is still a work in progress. It's particularly worried about overpromising and underdelivering to shareholders, as it did previously, a person close to Wal-Mart says.

But the heart of the discounter's new strategy appears to be an effort to return to its roots, with a strong focus on selling more everyday apparel. The program is the brainchild of new apparel chief Dottie Mattison, who, before heading merchandise at Walmart.com in 2006, was an executive at Gap Inc. She has brought along many of her Gap colleagues to staff Wal-Mart's new apparel office in New York.

At the company's annual meeting with analysts this fall, executives labeled the back-to-basics program 10-10-10. The concept: Stock a basic apparel item in 10 sharp colors, with at least 10 each in stock, selling for less than $10. The system debuted in stores in October and already is racking up double-digit sales increases.

More fashion-forward styles are relegated to the juniors section, which is now in the more visible areas of the store once filled with Metro 7 and George. And all lines seem to have a fair share of basics -- T-shirts and solid tops with cardigans -- that emphasize the product's low price and quality.

"They are finally embracing who they are," says Adrianne Shapira, retail analyst at Goldman Sachs. "Not everyone can beat [Target] at their own game."

Wal-Mart is bulking up on brands, too, such as Hannah Montana merchandise and baby apparel by Garanimals. For the back-to-school season -- the next big selling season for retailers -- Op, the casual-wear brand that was popular as Ocean Pacific in the 1970s and '80s, is relaunching exclusively at Wal-Mart. The line, which will feature clothing, footwear and accessories in the juniors and young men's categories, hits stores in August, but the label is beginning its big marketing push now. For the relaunch, Iconix Brand Group Inc., which owns Op, has created the label's most star-studded ad campaign so far. The ads will appear in magazines such as Rolling Stone, Lucky and Cosmopolitan beginning in May. In these ads, stars such as Kristin Cavallari and musician Pete Wentz are shown engaging in everyday activities -- riding bikes or romping in the surf -- to play up the casual accessibility of the clothes.

"The relaunch is about making a classic American brand accessible to as many people as possible," says Dari Marder, chief marketing officer at Iconix, explaining the decision to launch at Wal-Mart and also use mainstream TV or pop stars.

Wal-Mart is also trying to make its apparel departments more appealing, improving signage and reducing clutter. "You used to need a machete to get through the aisles," Ms. Shapira says.

Analysts say they believe Wal-Mart will join other discount retailers in using Hong Kong-based apparel manufacturer Li & Fung to make at least some of its private label or licensed apparel brands, as many other discounters do. While they may lose some margin by employing a middleman, an expert in this area can help avoid costly mistakes and will take back product that doesn't sell.

In a recent interview, Wal-Mart Chief Executive Lee Scott said that while Wal-Mart wouldn't outsource all of its apparel to the manufacturer, "There is a place at Wal-Mart for Li & Fung."
One of the biggest risks Wal-Mart is taking is the partnership with Ms. Kamali, whose line of women's wear will debut in about 350 Wal-Mart stores this fall. She has a long-term contract through apparel licensing agent and manufacturer Cherokee Inc. and plans to branch into children's clothing, accessories, footwear and home furnishings.

Her high-end line sells at stores ranging from Nordstrom to Bloomingdale's, as well as her own boutique in Manhattan, where she also plans to sell items she designs for Wal-Mart. But some of her other recent attempts to broaden her clothing's appeal have been short-lived. She designed a collection for the Spiegel Catalog, called Norma Kamali Timeless, and a contemporary collection for Jacque Moret Inc.'s Everlast division. Both have been phased out, the latter after three years.

Source: The Wall Street Journal

Wendy's accepts buyout offer

No. 3 hamburger chain agrees to an all-stock deal with Nelson Peltz's Triarc Companies.

DUBLIN, Ohio (AP) -- Triarc says it is buying Wendy's in an all-stock deal that comes after the burger chain's board rejected at least two earlier offers by the company.

Wendy's shareholders will receive 4.25 shares of Triarc Class A stock for each share of Wendy's stock they own.

Atlanta-based Triarc Companies Inc. (TRY) says its shareholders will have to approve a charter amendment in which each share of its Class B stock will be converted into Class A stock.

Triarc is owned by billionaire investor Nelson Peltz. The company operates the Arby's chain.

The Wendy's board has been studying strategic alternatives since early last year. Sales have slid despite a struggling economy that should benefit the chain.

Wendy's International Inc. (WEN) is the nation's No. 3 hamburger chain.

Source: CNNMoney.com

Stop & Shop to Open Maine In-Store Bank Branches

QUINCY, Mass. — The Stop & Shop Supermarket Co. here, part of Ahold USA, said yesterday it has made an agreement with People’s United Bank, Bridgeport, Conn., for in-store bank branches in its stores in Maine.

Stop & Shop now has one store in Kennebunk, which opened last year, and the bank branch will open in June. People’s recently acquired Chittendon Corp. in Maine, which operates three banks: Maine Bank & Trust, Merrill Bank and Ocean Bank. The Kennebunk branch will be an Ocean Bank.

“Today, 75 of our 162 Connecticut branches are located in Super Stop & Shop stores, providing our customers with superior convenience and helping us deliver an unparalleled customer experience,” said Robert R. D’Amore, senior executive vice president, Retail and Small Business Banking, People’s United Bank.

“Jointly, People’s United, one of our first in-store partners, and Stop & Shop have identified the synergies of convenience and volume that exist for our customers who may shop and bank in the same trip,” said John Hernon, vice president of leasing and asset management for Stop & Shop. The retailer hasn’t announced plans for future Maine stores.

Source: SuperMarket News

SuperMarket News Top 75 North American Food Retailers

Boosted by acquisitions, new-store development, inflation and same-store sales growth, 2008’s SN Top 75 posted $830.19 billion in sales, up about 4.26% over the year-ago total of $796.29 billion.

---

Here's a list of the top 25. See the original article for the entire list.

1. Wal-Mart Stores
2. Kroger Co
3. Costco Wholesale Corp
4. Supervalu
5. Safeway
6. Loblaw Cos
7. Publix Super Markets
8. Ahold USA
9. C&S Wholesale Grocers
10. Delhaize America
11. 7-Eleven
12. Sobeys
13. Meijer
14. H.E. Butt Grocery Co.
15. Metro
16. Wakefern Food Corp
17. A&P
18. Dollar General Corp
19. BJ's Wholesale Club
20. Winn-Dixie Stores
21. Giant Eagle
22. Whole Foods Market
23. Trader Joe's Market
24. Albertsons LLC
25. Aldi

Baltimore: Cross Keys owner seeks sale, partner

General Growth Properties Inc., owner of the Village of Cross Keys, is pursuing an equity partner or sale of the upscale North Baltimore shopping center as it seeks to decrease debt.

Retail experts said they were not surprised to hear the Chicago firm is weighing a sale of a property that does not fit into its portfolio. Though Cross Keys includes some chain tenants such as Williams-Sonoma, Ann Taylor and Talbots, it is known largely for its collection of eclectic local boutiques. Several store owners said they were hopeful the mall owner would sell to a Baltimore-area owner that could provide more local expertise.

Cross Keys' owner is "exploring financing options" that could include bringing on an equity partner to acquire a stake in the center, General Manager Christopher McCoy said.

McCoy would not provide additional details, such as why General Growth is looking at financing, when it would do so, or which companies have expressed interest. McCoy referred additional questions to General Growth spokesman David Keating, who said in an e-mail he had no information on Cross Keys.

Store owners were told at an April 1 merchants' meeting that the center was on the market, said Betty Cooke, of the Store Ltd., a Cross Keys shop.

"It might be a good thing," said Florence Sokol, owner of women's clothing store Jones & Jones, of a possible sale.

Company executives are seeking joint-venture partners and considering mortgaging some shopping malls to pay $19 billion in debt, according to an April 16 Wall Street Journal report. The second-largest mall owner in the U.S., General Growth also is trying to boost its net operating income by actively managing properties, the company states in its annual report.

Featuring residences and offices, Cross Keys does not fit into General Growth's portfolio that mostly includes enclosed malls with 1 million square feet or more, said Mark Millman, president of Millman Search Group Inc. in Owings Mills. General Growth malls are typically anchored by national department stores like Neiman Marcus or Macy's. Cross Keys' retail space totals 75,000 square feet.

Millman said the center could fetch between $15 million and $25 million.

Retail rents cost between $30 and $60 per square foot at Cross Keys, average for that part of the city but less than half the amount charged in rent for a downtown mall. Cross Keys pulls in $400 in sales per square foot, McCoy said. That is higher than the average mall sales of $350 per square foot.

General Growth bought Cross Keys with the purchase of former properties owned by Columbia's Rouse Co. in 2004. Its other malls include Towson Town Center, White Marsh Mall, Mondawmin Mall and the Mall in Columbia. The mall owner shed Rouse's office and industrial properties the year following the sale. General Growth pulled in $3.2 billion in revenue last year and employs 4,200.

Shopping malls nationally have been hit by a wave of bankruptcies or store closings impacting their tenants. Talbots Inc., for instance, is ending its Talbots Kids business and closing its stores at Cross Keys and the Mall in Columbia.

A national owner does not put in the day-to-day care to ensure the mall houses the right mix of local tenants and serves the community, Cross Keys retailers say.

"In a large corporation like General Growth, Cross Keys gets overlooked because it needs special care and attention," said Ray Mitchener, owner of designer boutique Ruth Shaw. "The center is one of the most vibrant places in the city."

A center like Cross Keys that features local merchants needs hands-on management to maximize its profitability, said Thomas H. Maddux, president of Towson retail firm KLNB LLC.

General Growth owns or operates 200 shopping malls in 45 states.

Source: Baltimore Business Journal

Sharper Image to sell itself

Sharper Image Corp. put itself up for sale today, just over two months after filing for Chapter 11 bankruptcy protection.

The retailer of high-end gadgets and appliances said a sale was the best route, in light of the weak U.S. economy and credit crunch.

"Given the present retail climate and specialty nature of the company, as well as the limited financing available to the company, a sale of its business and assets at this time will preserve values and yield the best recovery to the company," said Robert Conway, Sharper Image's chief executive.

The company said it wants to complete the sale by the end of May and will prepare for an auction of its business as soon as possible.

Earlier this month, Jerry Levin, the chairman of Sharper Image's board, resigned and said he was interested in partnering with other investors to buy some or all of the company.

At that time, Conway said the San Francisco-based chain would fully consider any proposal.

Sharper Image struggled through three years of losses and litigation involving its Ionic Breeze air purifiers. Its shares closed Wednesday at 23 cents.

Morgan Stanley Fund Gets Additional $2.5B

NEW YORK CITY-Morgan Stanley Real Estate revealed that it has successfully completed the closing of the third offering for its Special Situations Fund III, raising an additional $2.5 billion of equity commitments, 63% of which came from investors located outside of the US. With this closing, Morgan Stanley Real Estate has raised a total of $5.9 billion for Special Situations from institutional investors, High Net Worth individual investors and Morgan Stanley, with the latter representing 23% of total commitments.

Special Situations, structured as an open-ended fund, primarily seeks to make non-controlling investments in an array of real estate securities in growth/emerging, developed and distressed markets around the world. As of the end of 2007, Special Situations committed approximately $4.8 billion of equity, with 62 closed investments in China, Australia, India, Russia, Poland, Brazil, Mexico, the US, Japan and Western Europe, among other areas. The Fund's investment professionals form a core group with extensive collaborative experience, maintaining a team presence in each of the regions where it has invested.

Willem de Geus, managing director and global portfolio manager of Special Situations, says that investors continue to be attracted to the global opportunistic real estate strategy of the fund despite recent turbulence in the global capital markets. "The heavy emphasis on the high growth emerging economies--China, India, Russia, Poland, Mexico and Brazil--the flexibility to invest across the capital structure of real estate companies, and the ability to invest in developments and recurring income-producing assets in all real estate sectors is what makes this fund attractive in the marketplace."

John Carrafiell, joint global head of Morgan Stanley Real Estate Investing and president of Special Situations says that "this substantial additional capital raise for Special Situations is significant, particularly given the current challenging fundraising environment. It demonstrates strong investor support for the Fund's strategy, underscoring the global breadth of Morgan Stanley Real Estate's platform and the team's ability to source attractive opportunities in a volatile market."

Tim Morris, managing director and CIO of Special Situations says that "with the completion of this successful follow-on equity raise, Special Situations is in an enhanced position with ample liquidity to continue to pursue its flexible mandate and will access investment opportunities now available due to the significant deleveraging occurring globally. Special Situations will continue to provide dynamic real estate companies in the emerging markets with pre-IPO capital, as well as increase its allocation to distressed opportunities, focusing on the debt markets particularly in the developed economies."

Special Situations Fund III, which had an initial closing in August 2006, is the third in a series of successful real estate funds. Special Situations Fund I, which is fully liquidated, launched in 1997 and invested primarily in the US and Asia. Special Situations Fund II launched in 2000 and invested solely in Europe.

Source: GlobeSt.

Cash Handy for Assets Reduced for Sale

A handful of investors, over the past several weeks, have grabbed their wallets and gone shopping for retail real estate in the U.S., ready to pump billions of dollars into the parched market … if the price is right.

Last Friday, a pair of Dutch financial firms, United Investment Company and SNS REAAL, formed a $1 billion fund to finance the development of small-scale retail projects in the U.S. with tenants such as Starbucks, banks and gas stations. A week ago, Beverly Hills, Calif.-based Canyon-Johnson Urban Fund closed the $1 billion Canyon-Johnson Urban Fund II, to invest in new urban developments in 40 metro markets across the United States.

In addition, as recently as Apr. 1, financial services provider TIAA-CREF Asset Management launched U.S. Real Estate Fund I, LP, which will seek at least $300 million in commitments for high-quality commercial real estate opportunities in the domestic arena and New York City-based private equity firm the Blackstone Group closed a $10.9 billion fund focused on global investments called Blackstone Real Estate Partners VI.

With commercial real estate owners in the U.S. struggling to hold on to their properties in the midst of a credit crunch, cash-flush private equity players, pension funds and foreign firms seem poised to take over the market. It is an opportune time for those with ready cash and a long-term strategy to acquire assets on the cheap, notes David J. Lynn, managing director of research and strategy with ING Clarion Partners, a New York-based U.S. investment management arm of ING Real Estate.

"It's a good time to buy," says Lynn. "A lot of people recognize that it won't last forever, so they are taking advantage of it."

In just the past month these private and foreign investors have established pools of cash for the purpose of snapping up high-quality assets at reduced prices. The funds' creation comes at a point when many domestic players have either shied away from commercial real estate or been relegated to the sidelines as a result of the increasing difficulty in securing financing.

In the fourth quarter of 2007, construction loan delinquencies in the U.S. commercial sector reached 2.2 percent, according to Foresight Analytics, LLC, an Oakland, Calif.-based provider of real estate market consulting services. The number represents an increase of 120 basis points from the fourth quarter of 2006, when delinquencies in the commercial sector stood at just 1 percent.

"The ability for developers to obtain financing is so difficult, this is a real opportunity for investment companies that have dry powder," says David M. Jacobstein, chief advisor to the real estate group at Deloitte, a New York-based professional services firm. "And if a private equity fund is not happy with the quality of the developer, they can partner with a REIT and take over the entire project."

U.S. commercial real estate property fundamentals are still stable enough to attract foreign money, both in the form of direct acquisitions and funds given over for investment to U.S.-based asset managers, says Jacobstein. Over the past few years, asset management firms would have used those monies to purchase real estate companies wholesale through leveraged buyouts.

However, with credit no longer available, they are forced to concentrate on pools of assets.
Meanwhile, as the year progresses, those owners who have held off on selling their properties might be forced to do so at a discount, says Suzanne Mulvee, senior real estate economist with Property & Portfolio Research, a Boston-based independent real estate research and portfolio strategy firm. She noted that time is running out for those who can't secure refinancing loans.

"It's not that we think there will be a flood of distressed properties, but we think that the wide disparity between buyers and sellers will start to narrow and the concessions will be made mostly by the sellers," Mulvee says. "Given the lack of volume, those sellers that have to sell will have to make concessions on the price."

Source: Retail Traffic

Ahold says vigilant on economy, food prices

AMSTERDAM, April 23 (Reuters) - Dutch supermarket group Ahold (AHLN.AS: Quote, Profile, Research) said on Wednesday it would keep a close watch on economic developments and rising food prices, and it expected its U.S. operations to improve in the later part of 2008.

"We will remain vigilant on the changing economic situation and rising food prices," Ahold Chief Executive John Rishton told shareholders at a meeting.

Ahold, the world's seventh largest retailer by sales, makes more than half its revenue in the United States, and the rest in Europe. The U.S. share has declined in recent years after the sale of some assets, but the company is trying to boost its U.S. operations.

By 1255 GMT shares traded down 1.6 percent, underperforming the DJ Stoxx European retailers' index , which traded down 1.0 percent.

In 2006, Ahold began a two-year overhaul of its two main U.S. chains, Stop & Shop and Giant-Landover, cutting prices and offering more own-brand products and greater variety. It also sold its catering supplies unit U.S. Foodservice.

Half of Ahold's operating profit comes from Dutch grocery chain Albert Heijn. It is also present in the Czech Republic and Slovakia and has joint ventures in Portugal and Sweden.
Rishton said he expected to sell Ahold's 49 percent stake in Portugal's Jeronimo Martins Retail (JMR) this year.

"We are confident we will sell JMR Holdings this year," he said at the shareholders meeting.
Scandinavian joint venture ICA, in which Ahold holds 60 percent, will continue to be part of the group, Rishton said, as it has a very strong market position. (Reporting by Foo Yun Chee; Writing by Harro ten Wolde; Editing by Quentin Bryar)

Source: Reuters

Inland Gets ‘New’ Chairman, CEO

Management changes at Inland Real Estate Corp. have given the REIT a new chairman and a new CEO, though both men are company veterans and no one is leaving, at least not immediately.

Thomas D’Arcy has been appointed the non-executive chairman of the board of directors, replacing Daniel Goodwin, who had been chairman since 2001 and will continue as a director. D’Arcy has served as an independent director and member of the audit committee since 2005.

D’Arcy is a principal in Bayside Realty Partners, a private company operating primarily in New England, and has more than 20 years in commercial and residential real estate. He previously served as chairman, president & CEO of Bradley Real Estate Inc., a retail REIT focusing on the Midwest, until Bradley was acquired by Heritage Property Investment Trust in 2000.

In addition, Mark Zalatoris (pictured), previously executive vice president, COO & treasurer, has been promoted to president & CEO. He succeeds Robert Parks, who has chosen not to stand for re-election to the board, but will remain on the board through the date of the 2008 annual shareholders meeting. Parks will also reportedly remain “a significant shareholder.”

A CPA, Zalatoris has been with Inland since 2000, originally as senior vice president & CFO before becoming executive vice president & COO in 2004. Before joining the REIT, he was a vice president at Inland Real Estate Investment Corp., where he was responsible for asset management and due diligence.

In an exclusive interview with CPN, Zalatoris downplayed the significance of the shuffle, describing the changes as primarily allowing him and the others involved to focus their responsibilities more, and as giving Inland Real Estate Corp. “a full-time CEO.”

He said that no change is envisioned in the company’s focus on “open-air, necessity-based shopping centers,” typically anchored by grocery or drug stores and primarily in the Chicago and Minneapolis metro areas. Inland likes these two cities, Zalatoris said, because of their diversified economies and resistance to economic downturns.

“We’re going to continue with that plan,” he said. “It is by its nature not exciting,” though such stability helps enable Inland to continue its practice of paying dividends monthly, not quarterly.

And in the current climate especially, lenders too like stability. Zalatoris told CPN that yesterday Inland renewed a three-year, $150 million line of credit, now grown to $155 million, through a group of five banks: KeyBank, Bank of America, Wachovia, Wells Fargo and Bank of Montreal. Further, Inland had not previously had such a relationship with the latter two lenders.

Moving forward, Zalatoris said, “I think maybe we’ve hit the bottom” in the current downturn, with commodities prices as perhaps the only remaining bubble yet to burst. Beyond that, he expects to see a slight but noticeable upturn starting within 12 months.

More specifically on the retail front, he sees opportunities for retail expansion, especially since many markets have not seen the overbuilding in retail that other product types have experienced. “Retailers are very anxious to fulfill a retail demand that’s not being met right now” in urban infill sites, especially in blue-collar communities, Zalatoris said. “That’s an opportunity for us.”

Two weeks ago, CPN reported that Inland Real Estate Acquisitions Inc. had closed on the final portion of a $361 million sale-leaseback with SunTrust Bank. The purchase involved 215 triple-net lease properties totaling about 1.1 million square feet, which SunTrust will lease back for 10 years, with renewal options.

Established in 1994, Inland Real Estate Corp. owns interests in 152 neighborhood, community, power and lifestyle centers and single-tenant retail properties, primarily in the Midwest. The Inland Real Estate Group was its sponsor and continues to hold a minority share. In 2007, CPN ranked Inland Real Estate as the no. 6 buyer of commercial real estate in the United States, and in 2006, Shopping Centers Today magazine ranked it as the fifth-largest shopping center owner in North America. The company has more than 100 milllon square feet under management.

Source: Commercial Property News

Nordstrom Rack to Open in White Plains

Nordstrom Inc., which has a store in downtown White Plains at The Westchester, plans to open a 35,000-square-foot Nordstrom Rack at the City Center Shopping Center this fall.

Nordstrom Rack is the company's discount division. The company touts its Nordstrom Rack stores as offering savings of 30 to 75 percent on clothing and accessories.

The City Center store will be the second Nordstrom Rack in New York. There's also one in Hempstead on Long Island.

The City Center complex, owned by developer Louis R. Cappelli, features a Target, a Barnes & Noble bookstore and a Circuit City.

Cappelli said he believes Nordstrom Rack will fit nicely with the stores already in City Center.

"City Center plays an important role in the overall retail success of downtown White Plains," he said in a statement released by Seattle-based Nordstrom. "Having Nordstrom Rack join our tenant roster brings even greater strength to our center and the city as a whole."

Source: LoHud.com

Mother's Day spending to slip - Survey

Consumers will spend less to mark the occasion this year, according to the National Retail Federation.

NEW YORK (CNNMoney.com) -- Remember, mom, it's the thought that counts.

Consumers facing economic tailwinds like higher gas prices will spend less to celebrate Mother's Day this year - an average of $138.63 compared to $139.14 last year, the National Retail Federation reported on Tuesday.

Total spending on Mother's Day is expected to be $15.8 billion, the group said. Last year, that figure was $15.7 billion.

"Consumers will be cutting back on larger items for Mom and investing in smaller more meaningful items or one large gift," says Kathy Grannis, spokeswoman for NRF.

An NRF survey found that 84% of consumers will recognize Mother's Day by purchasing jewelry, meals, books, CD's, gift certificates, house wares, gardening tools, cards and flowers.

NRF started polling consumers about Mother's Day in 2003. This year marks the first time that average consumer spending has decreased. In 2003, consumers spent an average of $97.37 on Mother's Day.

The study was conducted by BIGresearch for NRF and polled 8,180 consumers from April 1-8.
While overall spending will decline, it will rise in some areas, according to NRF. For instance, consumers are expecting to spend less on flowers, clothing and personal services like a day at the spa. But they will spend more on jewelry and consumer electronics in 2008 compared to 2007.

"Consumers are spending their discretionary money on one nice item," says Grannis.

Mother's Day ranks third behind the winter holidays and Valentine's Day in terms of total dollars spent by consumers, according to the NRF.

Source: CNNMoney.com

Economic woes hits teens, too

Fewer jobs, rising prices force some to cut back, shop secondhand

NEW YORK - The souring job market and rising costs of the usual teenage indulgences - a slice of pizza, a drive to the mall, the hottest new jeans - are causing teens to do something they rarely do: be thrifty.

It's a far cry from the freewheeling spending of recent years, when teens splurged on $100 Coach wristlet handbags, $60 Juicy Couture T-shirts, and $80 skinny jeans from Abercrombie & Fitch.

Now jobs for teens are less plentiful, and parents who supply allowances are feeling the economic pinch.

Stalwart retailers of teen apparel, such as Abercrombie and American Eagle Outfitters Inc., are reporting sluggish sales, defying the myth that teen spending is recession-proof.
It's even becoming cool to be frugal.

Last week, Ellegirl.com, the teen offshoot of Elle magazine, launched a video fixture called Self-Made Girl, which shows teens how to make clothes and accessories. The first video offers tips on how to create a prom clutch.

"It's a little tacky in the economic unrest to tote a big logo bag," said Holly Siegel, the site's senior editor. She said it's no longer about teens "one-upping each other," but rather where they can get it cheap.

Victoria Bradley, 16, from Springfield, Mo., says the $80 she earns each month from baby-sitting is being eaten up by more expensive school lunches, late-night snacks with friends, and stylish clothes.

"I used to be able to buy a T-shirt and jeans every couple of months," Victoria said, adding some of her friends are even "making their own clothes or altering their old ones to fit or look better."
The job market for teens isn't what it used to be, either: Nathan Reeser, 15, of Cincinnati, lost his job making pizza and has had to cut back on spending. He's shopping more at Target and less at Abercrombie & Fitch's Hollister stores.

Teen hiring has slumped 5 percent since March 2007, with many mom-and-pop stores, which typically hire younger workers, laying off employees. Hiring in the overall job market fell just 0.1 percent during the period.

Last month, teen retailers suffered an 8 percent drop in sales at established stores. The good news is that the under-20 crew is still spending on tech gadgets like iPods, cellphones, and headsets, analysts say.

Sales at teen retailers open at least a year averaged a 0.5 percent decline last year, compared to a 3.3 percent increase in 2006 and a 12.1 percent gain in 2005, according to UBS-International Council of Shopping Centers.

Among the few bright spots is Aeropostale Inc., whose jeans are about 30 percent cheaper than Abercrombie & Fitch. Urban Outfitters Inc., which operates its namesake stores and the Anthropologie brand, has held up well. Trend experts believe that's because it has a thrift-store feel.

Secondhand clothing chains have seen business surge this year as teens buy popular brands like Gap, Banana Republic, and Juicy Couture at a fraction of the regular price.

Kerstin Block, president and cofounder of Buffalo Exchange, a Tucson-based chain that sells second-hand clothing, said Gap jeans there run $9 to $20. A new pair runs $50 to $60. Block noted that buying second-hand is also appealing to a growing eco-friendly sentiment among teenagers.

Source: The Boston Globe

NY: The Region’s Strength Holds Up

Even as two major industry associations are reporting declines in March same-store sales, the New York region’s retail sector is holding up well, CB Richard Ellis’ Richard Hodos tells Real Estate New York.

“Once again, New York is running counter to the rest of the country,” says Hodos, EVP with CBRE's New York tri-state region retail services group. “Manhattan stores are holding their own, and in some cases they’re up, largely due to the dollar situation with the euro and the pound and the extent of tourism. I think we have more tourists now than we’ve ever had. That has kept Manhattan very buoyant and very steady in terms of retail sales.”

Particularly on the avenues and major thoroughfares, “there has been no softening whatsoever,” Hodos says. “I think we might be in a plateau in terms of rents, but they certainly aren’t falling. There’s not vacancy, and particularly in Manhattan, we need vacancy for an extended period of time before rents actually fall. There is some more negotiability on side streets—secondary or tertiary locations—and they’re being repriced a bit. But on the major thoroughfares and avenues, rents are as high as they’ve ever been.”

Any vacancies that do occur don’t last long on those prime thoroughfares. “When a space is available, sometimes there are offers even before it’s on the market,” says Hodos. “In those kinds of locations, where the space is priced properly, they go very quickly.”

From a national perspective, both the International Council of Shopping Centers and the National Retail Federation earlier this month reported declines in March same-store sales. Specialty apparel chains such as the Gap were particularly hard-hit, according to ICSC. Hodos comments, “There are parts of the country that are truly hurting. It largely relates to where there are lots of foreclosures. The state of Ohio is hurting, and there are areas of southern California that are hurt pretty badly. Arizona is another example, although the better malls there, like Scottsdale Fashion Square, are doing extremely well. So it’s a bifurcation: people at the high end don’t seem to care; they haven’t stopped spending. It’s the people in the middle that are getting squeezed.”

With that said, he adds, “There are some bright spots throughout the country. Along the Canadian border, there are lots of Canadians crossing into states like Michigan and Wisconsin and shopping in American malls. Victoria’s Secret has had exceptional comp-store sales growth in all of its US stores that are near the Canadian border.”

Hodos says the future of retail performance in the region “largely depends on what happens with the financial services sector in Manhattan. It extends to employment, Wall Street bonuses and those kinds of things.”

One factor that has bulked up Manhattan retail rents has been the proliferation of bank branches—and that same factor could also be a catalyst for softening rents if more banks merge. “There’s a bank branch on every corner; the banks came in and if the asking rent was $200 per sf, they paid $300 per sf,” says Hodos. “They paid to get locations and build market share. If some of those bank branches come up for sublease and a lot of them come on at the same time, that could affect the market.”

Notwithstanding these scenarios, Hodos says he can’t predict what’s going to happen. “There are doom-sayers out there who will tell you the sky is falling, and yet I don’t see it today.”

Source: GlobeSt.

Wilsons Leather raises possibility of bankruptcy

Staring into a hole of continued losses and lingering negative cash flow, Wilsons the Leather Experts Inc. on Monday raised the specter of bankruptcy.

The company's independent accounting firm said it has "substantial doubt" about the company's ability to stay in business, Wilsons said in its annual report filed with the Securities and Exchange Commission.

The Brooklyn Park-based retail chain recorded a net loss of $77.5 million in 2007, widening a $33 million deficit from the prior year. Wilsons had $7.4 million cash on hand as of Feb. 2, compared with $19 million a year earlier.

Wilsons already is closing and liquidating half of its mall-based stores, and it's laying off about 1,000 employees. The company plans to turn the remaining stores into accessory boutiques called Studio.

The annual report also said that as part of revised credit terms, Wilsons will not be able to borrow from its revolving line of credit until it provides an acceptable business plan and projections to its lender.

Wilsons also was warned a second time that it faces Nasdaq delisting. Shareholder equity has fallen to $5 million, according to an April 15 letter, below the $10 million minimum. The company was told in March that its stock was trading below the $1 minimum. Shares closed Monday at 17 cents.

The retailer said it plans to respond to Nasdaq by the April 30 deadline.

Centro CEO Is Hopeful For Later Debt Deadline

The chief executive of Centro Properties Group, which owns nearly 700 shopping centers in the U.S., expressed optimism that the company's lenders will extend its April 30 deadline for paying off $4.9 billion in short-term debt to Sept. 30.

But if the Australian retail-property company fails to land the extension, Glenn Rufrano said in an interview that Centro would need to file for the Australian equivalent of bankruptcy. The Australian bankruptcy system usually results in liquidation of assets rather than reorganization as an ongoing company. Mr. Rufrano said it was unlikely that Centro wouldn't be granted an extension.

Centro, based in Melbourne, twice has persuaded its lenders to grant it extensions, first to Feb. 15 and then to April 30. The company, which owns 128 retail properties in Australia, got into a liquidity squeeze late last year when it couldn't refinance billions of dollars in short-term loans that it used to buy New York real-estate investment trust New Plan Excel Realty Trust.
In a scramble to repay the debt, Centro has solicited bids for two of its investment funds -- one that holds 25 Australian properties and one with 30 U.S. properties. The company also has tried to find suitors willing to provide it capital in exchange for equity.

Bids collected earlier this month averaged one Australian dollar (94 U.S. cents) per share for that equity infusion, according to people familiar with the process. That was far below Centro's expectations for a stock that traded near A$10 per share last year before Centro's collapse. Bids for the funds also were deemed insufficient.

Centro's plan, contingent on the banks' approval, is to extend the deadline by five months to give the economy time to recover, perhaps yielding higher bids. "We are working on a schedule that will not put the company in a position where it has to take large discounts (in property sales) or equity that we believe doesn't justify the value of the company," Mr. Rufrano said. "The reason we can do this is because we've been given good support from our banks to not force us to make a deal" to sell properties or equity at detrimental prices.

But if Centro cannot persuade its banks to grant the reprieve, "The company would go into administration, which is pretty drastic here in Australia," Mr. Rufrano said.

Source: The Wall Street Journal

Reversing Field, Macy's Goes Local

The sprawling Macy's on State Street building here was once the home to the premier name in Chicago retailing, Marshall Field's. But about a year and a half ago, Macy's forged one chain with one name and one much-ballyhooed national strategy out of Marshall Field's, Robinsons-May, Kaufmann's and other local icons it owned across the country.

Now, after Macy Inc.'s same-store sales dropped 1.3% in 2007 from the previous year, Chief Executive Officer Terry Lundgren is changing course. He is ditching the nationwide cookie-cutter approach in favor of tailoring merchandise at the world's largest department-store chain by sales to local tastes.

"What the consumer wants in the Galleria of St. Louis is different from what the consumer wants in State Street Chicago, or what the consumer wants in Portland, Oregon," Mr. Lundgren says. He now wants 15% of the merchandise in stores to reflect local preferences.

Manager Linda Piepho, left, wants to tailor her Chicago Macy's makeup inventory to local patrons' tastes.

Over the next several months, Macy's on State Street will begin stocking more brightly colored clothes and men's all-white suits that store manager Linda Piepho noticed were favored by her store's urban clientele. In cosmetics, she's also planning to add greater variety of makeup shades to attract trendier shoppers, while adding larger 3.4-oz. bottles of perfume to go after the thriftier ones.

The localization strategy, called "My Macy's," is a dramatic reversal for Macy's and Mr. Lundgren, who set out to end the decades-long slide of department-store retailers by creating a huge national chain that had more clout with vendors and stronger marketing, with fewer expensive local TV and print ads and more national ones. After purchasing rival May Department Stores in 2005 for $11.5 billion, Mr. Lundgren dropped 11 venerable names to create a cohesive national identity of more than 800 stores under the Macy's nameplate.

In some ways the plan worked -- Macy's was able to woo lifestyle maven Martha Stewart to create a line of products exclusively for the chain because of its immense reach -- but pressures on Mr. Lundgren are growing as the economic slowdown worsens. In his annual shareholder letter, sent Thursday, he said 2007 results were "softer than we had originally anticipated" due to a weaker economy but added that Macy's "outperformed most of its primary competitors in the crucial fourth quarter." Last year, Mr. Lundgren received $1.49 million in salary as part of his $8.67 million in total compensation, but no bonus because Macy's didn't meet the bonus plan's performance thresholds.

The company's $9 billion debt rose by about $1.2 billion in 2007 -- partly because it borrowed heavily to finance $3.3 billion in share repurchases. Last week, Fitch Ratings downgraded the credit rating of Macy's Inc. to a notch above junk status, noting that the reorganization at Macy's follows previous investments in its stores acquired from May Co. and merchandising that hasn't resulted in meaningful sales growth.

In going local, Macy's is adopting an approach that big chains like Best Buy Co. and Ross Stores Inc. have come to view as imperative today. Retail giants like Wal-Mart Stores Inc. and Gap Inc. once prospered by opening identical stores around the country, but consumers are demanding more individualized selections. With almost everything now available on the Internet, retailers need to give shoppers a reason to make the trip.

Best Buy began customizing the format, selection and service at its 600 U.S. stores four years ago, rather than pushing a uniform mix of merchandise. The electronics chain, which has since grown to 935 U.S. stores, began by identifying four customer types, such as upscale suburban mom or urban trendsetter. Best Buy then determined store by store which customers were most important. Ross, a discount-apparel chain, intends to begin tailoring 15% of the merchandise categories in each of its more than 900 stores, starting this fall.

Department stores like Macy's also face increasing competition from fast-fashion retailers, such as Swedish clothier Hennes & Mauritz AB, known as H&M, and Inditex SA's Zara in the U.S., which track precisely what is selling in each store, down to the size, and stock them accordingly.
A localization strategy can boost sales at stores open at least a year by 1 to 3 percentage points -- and just 10% to 15% of inventory needs to be customized to get as much as 90% of the benefit, says Darrell Rigby, a Bain & Co. partner.

But Macy's sheer size will undoubtedly complicate its effort. Mr. Lundgren himself acknowledges that it's far easier for a chain of 40 stores, like Macy's own sister division, Bloomingdale's, to understand and respond to local tastes than it is for one the size of Macy's. While Bloomingdale's executives at headquarters "have a clear understanding of what is going on in each store," he says the Macy's empire is so large that management needed "to make sure we were in tune to what it was that the consumer was expecting of us -- the product category, the size or the color."

Still, Mr. Lundgren's plan calls for customizing inventory over the next year at only about a third of the chain's 813 Macy's stores -- including all the former Marshall Field's and many other former May Co. stores. Locations in markets such as Seattle, Minneapolis, Chicago, Portland and Salt Lake City will be among the first to get a makeover.

Most department stores, of course, have always localized a bit -- shipping spring merchandise earlier to stores in the South, for example. But the overhaul Mr. Lundgren is planning will be much more far-reaching. A single Macy's store, depending on its size, stocks 1.5 million to 4 million different items, meaning hundreds of thousands of items in each store will be affected when the new inventory begins going on display as soon as this summer.

The idea is "to allow us to listen to what the customer says about a local product in a local store," says Mr. Lundgren, once the CEO of Neiman Marcus Group Inc. Management behind the scenes will also be revamped to have 13 executives oversee the merchandise assortments at 10 stores each, instead of 7 executives overseeing assortments in up to 23 stores.

One risk for Macy's is that store managers may misread cues about local sales patterns or make poor decisions about how to display and market merchandise, says Sherif Mityas, partner at consulting firm A.T. Kearney.

And some say Mr. Lundgren erred, alienating loyal customers he may never be able to get back, by getting rid of the local names in the first place. "What you have now is a Macy's whose brand doesn't mean much to people in Pittsburgh, or on State Street in Chicago," says Craig Johnson, president of Customer Growth Partners, a New Canaan, Conn., retail-consulting firm.

But Mr. Lundgren says those stores were performing poorly for years under their old names, and he still believes that converting them to Macy's, one of the most powerful brands in the U.S., will result in higher overall sales for Macy's Inc.

Susan D. Kronick, a Macy's vice chair who is responsible for its department-store divisions, sees a big advantage in having managers spend more time on the sales floor. "If you live on the sales floor, you know" the opportunities "because you are talking to customers and you are talking to the sales associates," she says.

One of the best cues, she adds, is the markdown rack: In some stores there are lots of small sizes on the rack, while in others there are lots of large sizes. For example, Ms. Piepho, the manager of the State Street store, wants to add more small sizes in contemporary women's lines, as well as young men's wear. She says that's because many of the city dwellers her store caters to are physically fit -- an observation backed up by the sales figures that show slimmer sizes in those categories sell best there.

"Chicagoans want newness and Chicago brands," she adds.

Macy's has already invested heavily in this location, where angry locals protested the disappearance of the iconic Marshall Field's name. In an effort to lure Chicago shoppers, it now sells local designers, such as Kirsten Goede who makes crystal jewelry and Greg Shugar who makes extra-long ties. Last fall, it even designated three mannequins, which it calls "The Girls," to appear dressed in trendy outfits at local museums and other spots around town, as well as in local newspaper ads.

A spokesman for Macy's declined to comment on the store's performance, though he noted that those changes, as well as the recent addition of valet parking there, "have been well-received by customers."

Source: The Wall Street Journal

Blockbuster weighing options to fund Circuit City bid

Blockbuster Inc (BBI.N) is studying options like using Circuit City's (CC.N) own balance sheet to fund its buyout offer, even as the electronics retailer is asking Blockbuster to prove it can handle an all-cash bid, the Wall Street Journal reported on Monday citing people familiar with the matter.

Blockbuster is also considering using its existing debt facility, possible asset sales and cost savings for the deal, the report said citing the same sources.

Last week, the Dallas-based video rental company offered up to $1.3 billion to buy Circuit City. But the offer has drawn doubts from Wall Street, investors and Circuit City itself over how Blockbuster will fund the bid.

While investors fear that Blockbuster may need to raise new debt or renegotiate its current debt to finance the offer, Blockbuster is hopeful that it has alternative funds to sidestep that possibility, the Journal said, citing people familiar with the situation.

Still, Blockbuster will not go ahead with the offer if it does not like what it sees in Circuit City's financial books, the Journal said in a separate report, citing an interview with Blockbuster Chief Executive Jim Keyes.

Circuit City has not allowed Blockbuster to see its books.

Representatives for both companies were not immediately available for comments.

Source: Reuters

Furniture industry facing changes, new challenges

Both foreign and domestic pressures have caused massive ripples in an already tenuous retail furniture industry—which has recently seen area stalwarts like Wickes and Levitz file for bankruptcy.

“The whole industry is unsure about what’s going to happen,” said Joseph Carroll, a furniture industry expert and publisher of “Furniture Today,” the weekly business newspaper of the furniture industry.

Levitz furniture filed its third bankruptcy in the past 10 years on Nov. 8 of last year, while Wickes Furniture filed for chapter 11 this past February. In court papers, 37-year-old Wickes listed its debt between $50 million and $100 million. It began liquidating nearly all of its stores in early March.

Other traditional retail chains—such as Bombay Co., Sharper Image, Lillian Vernon, and Cabala’s—are also reportedly closing their doors. In addition, the National Retail Federation reports that February retail sales fell 0.6 percent seasonally adjusted from January, and many economists believe March numbers could be even worse.

Wickes officials blame rising fuel costs and woes in the housing and sub-prime lending markets as the straw that broke the camel’s back, but industry experts agree that many other factors are affecting the traditional furniture stores.

“It’s a lack of excitement,” Carroll said. “People don’t shop for furniture just for the fun of it. They only go to the stores when they need it.”

Statistics show that the average person only goes furniture shopping once every four to five years, which leaves traditional furniture merchants scrambling for ways to drive people to their stores. In fact, Wal-Mart sells the most furniture of any store chain in the United States because of their ability to bring consumers into its buildings.

Interestingly though, store closings present a false image of a failing industry, when in fact, furniture sales are rising $1.5 billion to $2 billion annually. The most successful independent sellers grew just 2 percent in 2006, while larger channels of distribution, like Wal-Mart, Costco, Crate & Barrel and Pottery Barn, grew 5.5 percent.

“I’ve been keeping a list of channels of distribution since 1990,” said Carroll. “In 1990, I could identify 18 channels. Today, we have 77 channels of distribution. The proliferation of places you can buy furniture is growing by leaps and bounds.”

With furniture growth averaging close to $2 billion a year, the industry pie as a whole is getting bigger but with so many different distributors, the slices are getting substantially smaller.

Still other factors are affecting the independent furniture industry.

“The baby boomers that used to drive a lot of the retail furniture sales are not buying as much,” said Ray Allegrezza, editor in chief of “Business Today.”

“They’re being supplanted by the 20 to 30-year-old group who have different tastes. Our industry, for years, has continued to churn out the lion’s share of what we make in very traditional styles that the younger people, who are actually buying more of the furniture, are not that thrilled with.”

One solution for furniture stores is to turn to niche products, like those sold by IKEA and Dania.

“We have more European, clean lines,” said Oscar Moncau, sales manager for Dania in Lombard. “Instead of having a sofa with pocket pillows and high backs, kind of a Lazy-Boy look, we have low backs and clean lines. It’s not ultra-modern but transitional.”

Moncau reports sales at the Dania Lombard stores are up 2 percent already this year because of its niche merchandise.

While an oversaturated market and antiquated products have had an immediate affect on the industry, recent developments in China, where 55-60 percent of all wood furniture imports to the U.S. are manufactured, will have major long-term effects.

As a result of a slowly growing middle-class that is comparable in number to the U.S. middle-class, China has developed labor laws that have already caused alarming price hikes for its furniture exports, with rising prices in steel and foam to soon cause larger jumps.

“It’s inevitable that they would have to start raising prices,” said Carroll, citing recent funding cuts for furniture manufacturers by the Chinese government. “In the last month, we’ve seen 30-40 percent price increases. Americans are balking and the Chinese are saying they’re now prepared to walk.

“This is throwing an interesting curve in the United States furniture industry.”

American manufacturers are now looking for alternate manufacturing locations, which includes factories here in the U.S.

“I think with the dollar being what it is and the values in real estate, we’ll see an uptick in domestic manufacturing,” Allegrezza said.

For the time being, though, American furniture distributors will be forced to absorb China’s price increases, a cost that will eventually filter down to the consumer.

“The cost of furniture by the end of this year will be a lot higher than it is right now,” said Carroll. “Now is the ideal time to buy furniture.

“The irony is, with everybody so worried about the economy, people are not very thrilled to go out and buy furniture, which is still considered a deferrable purchase.”

The furniture industry is also becoming more eco-friendly, yet Allegrezza warns that certain factors must be taken into consideration if environmentally conscious purchases are to become more trend than fad.

“To the consumer’s benefit, (distributors) really have to do their homework and really understand (eco-friendliness),” he said. “We have to be careful not to green-wash. Tell the consumer what it is and how it will help them and the environment.

“The industry has a great opportunity and they don’t want to kill the golden egg by being premature through over-promising and under-delivering.”

Source: The Business Ledger

Stores await consumers' tax rebates

Retailers encourage shopping sprees

Sony wants to turn your tax rebate into a high-definition television. Home Depot has other plans for your check from Uncle Sam: help the Earth by spending it on energy-efficient appliances. And Sears is offering a gift card to customers for the amount of their rebate checks, plus a 10 percent bonus.

Merchants struggling with the slowdown in spending are stepping up promotions to court consumers who are expecting a cash infusion from federal rebate checks. Retailers are already planning major sales and big advertising campaigns in the fierce fight for dollars - even though the government won't start mailing out the checks until May. For merchants worried about a bleak year, this is like Christmas in spring.

Store owners have good reason to expect a shopping spree. People plan to spend 40.6 percent, or about $42.9 billion, of the $105.7 billion the government is distributing in tax rebates, according to a survey conducted in February by the National Retail Federation, a Washington, D.C., trade group. Consumers, besieged by soaring cost of gas and groceries and declining home values, plan to use about $30 billion to pay down debt and about $20 billion to put in savings, the survey found.

The tax rebate, part of a federal effort to boost the economy, will put $600 in the pocket of most individual filers, $1,200 for couples who file jointly, and an extra $300 per child for families. Only the wealthiest taxpayers will be excluded. The rebates are separate from tax refunds, which many filers have already received.

Retailers also hope the timing of the rebates, which will coincide with the summer selling session, will jump-start the economy, said Jon B. Hurst, president of the Retailers Association of Massachusetts. The beginning of any season is important because that's when the majority of consumers shop and when the margins are best for retailers because merchandise is not marked down, Hurst said.

"There is a lot of hope that the rebates, as well as the usual refunds, will spark increased consumer spending," Hurst said. "With two-thirds of the economy being represented by the consumer, and with confidence at low levels locally and nationally, this stimulus will be a shot in the arm for the industry."

Toni Williams, 47, of Mission Hill, has debated whether to use her expected $600 rebate for a vacation, a replacement washer and dryer, or a computer upgrade. For now, she's settled on a new laptop.

"I have an ancient desktop computer (circa 2000) and am looking forward to purchasing a laptop with my rebate and additional funds which I have saved," Williams said. "I wish I could take a nice vacation to visit friends in the southern part of the country instead, but the airline industry's tardiness and dysfunction leave me wary."

Home Depot, meanwhile, is hoping to tap into the green frenzy to fuel consumer spending. For Earth Day next week, the company, which has suffered from the weak housing market, will launch an advertising blitz to encourage consumers to spend their rebate on environmentally friendly products. The Atlanta-based chain plans a direct mail campaign, radio spots, and website promotions around the tax rebate and ecofriendly items, such as compact light bulbs and 10 percent off a $1,000 Bahama Blue LG washer.

"The effort will help turn a short-term stimulus into a long-term investment by saving consumers money over time through reduced electric bills and energy costs," said Home Depot spokeswoman Jen King.

On Sunday, Staples will debut on its website the "Staples Economic Stimulus Center" to provide tips for small-business customers to find savings. Through June, the Framingham office supply retailer will offer weekly promotions, no interest and no payments for six months on any purchase of $499 and up (excluding computers), $50 off a $500 purchase (excluding computers), and a sweepstakes for chances to win office supply products.

Sony got a head start on the rebate bandwagon, partnering with Turbo Tax, to package promotions for consumers' regular tax refunds with the rebate and counting on consumers to spend before either arrive. Sony's campaign, which ran ads recently in print, radio, and online, urged consumers to "Turn your 1040 into a Sony 1080p" for the 1080p HD-TV and offered $400 discounts on its high-definition Bravia TVs through April.

Some retailers are willing to spend money to get consumers into the door. This week, Sears unveiled plans to allow customers to bring their stimulus checks to a Sears or Kmart cash register and convert the check into gift cards, plus receive a bonus gift card worth an additional 10 percent.

H. Brandt Jewelers in Natick, meanwhile, is adding 20 percent to the face value of rebate checks toward any purchase over the amount of the check. In other words, if a customer agrees to spend their entire $1,200 rebate in the store, they will get a credit of $240 to spend on merchandise.

"We're hoping to grab some of the Mother's Day business with this," said Stew Brandt, owner of the store. "My bread-and-butter clients have had to shift their funds into fuel, groceries, and college tuition. People are hurting."

Retail analysts expect a short-term boost from the rebates, but they remain cautious about consumer spending over the long term. Marshal Cohen, chief retail analyst for the NPD Group, a market research firm in Port Washington, N.Y., said he has seen a shift over the past month in consumer attitudes toward the tax rebate.

More Americans, Cohen said, now say they are thinking of "rewarding themselves for enduring the tough winter they went through, especially now that the heating bills are going away."
Andrea Maffeo, who used her $2,300 tax refund to pay bills, said she feels more comfortable now putting the $1,800 rebate she anticipates toward a family vacation.

Yet others, like Erin Willett, see no joy in the rebate. The Lunenburg resident is expecting about $2,100, but is planning to pay off heating bills. She and her husband will use leftover money on gas.

"My husband and I are really annoyed that the government thinks this tax rebate will help people because with outrageous oil prices, it's just going to go right back into our living expenses," Willett said. "There will be no money left over for vacations or other fun stuff."

Source: The Boston Globe

Demolition Moves $189M Mixed-Use Project Forward in Virginia

The Aquia Towne Center in Stafford County, Va., is about to be reduced to rubble in order to pave the way for the continued redevelopment of the shopping center into a 725,000-square-foot mixed-use destination. Ramco-Gershenson Properties Trust will spend $189 million on the redevelopment effort.

Located about 25 miles from Washington, D.C., and five miles from the Marine Corps Base at Quantico, Aquia will feature 350,000 square feet of premier office space, 250,000 square feet of retail space, 125,000 square feet of entertainment offerings and 287 residential units. The architectural firm of Brown/Craig/Turner is overseeing the design of the new live-work-play site that will replace the 240,000-square-foot, 19-year-old strip mall that Ramco-Gershenson acquired for $22 million 10 years ago.

Ramco-Gershenson has already completed one facet of the project, having delivered in January a 100,000-square-foot office and retail structure that is predominantly occupied by Northrop-Grumman. Aquia, in its entirety, is on schedule to emerge from its massive makeover in 2011. The completion date is quite apropos, as Stafford County and surrounding Northern Virginia communities will grow by leaps and bounds due in great part to the 3,000 workers that will relocate to the Quantico area by 2011 as a result of the U.S. Department of Defense's 2005 Base Realignment and Closure process.

Ramco-Gershenson has already completed one facet of the project, having delivered in January an office structure that is 66 percent occupied by Northrop-Grumman.

Headquartered in Farmington Hills, Mich., Ramco-Gershenson is a fully integrated public REIT that owns, develops and manages community shopping centers, regional malls and single-tenant retail properties across the country.

Source: Commercial Property News

Korean Chain Plans Eight New U.S. Stores

LYNDHURST, N.J. — H Mart, a South Korean-owned chain of high-end Asian supermarkets here, is pursuing an aggressive expansion plan this year, with eight stores scheduled to open across the United States. The chain, which currently operates 24 U.S. stores, plans to open single units this year in New York, California, Virginia, Texas, Nevada and Massachusetts, and two units in Georgia. “We want to open more stores in areas where there are a lot of Asian people or people who love Asian food,” Jimmy King, marketing manager, told SN. H Mart stores range from 15,000 to 90,000 square feet, with most locations in the 50,000-square-foot range, King said. Depending on size, stores carry between 20,000 and 40,000 SKUs, he added. See Page 1 of the April 14 print edition of SN for more.

HMart is planning to open it's first New England store shortly in Burlington, MA.

Supervalu Sees Shoppers Adjusting to Economy

MINNEAPOLIS — Supervalu here said yesterday that shoppers seem to be seeking out more promotions, buying more store brands and using more coupons as a result of the soft economy and rising food prices. In a conference call with analysts discussing its fourth-quarter earnings, Jeff Noddle, Supervalu’s chairman and chief executive officer, also said food retailers have been more aggressively promotional in the current environment but have continued to pass cost increases along to consumers in the form of higher retail prices.

“We don’t see anybody really using inflation or not passing through inflation as a competitive strategic marketing tool,” he said. “It’s been pretty orderly.”

Supervalu also said it would begin rolling out its new “Simply Good Meals” meal-solution program, located in the deli department, which consists of a self-service island with “restaurant-quality, easy-to-assemble meals.” For the fourth quarter, which ended Feb. 23, Supervalu reported $156 million in net income, up 30% over year-ago results, on a slight sales gain, to $10.4 billion. For the full year — the first full year to include a full 52 weeks of Albertsons results — net income was up 31.2%, to $593 million, on a 17.8% gain in sales, to about $44 billion. Retail sales for the fourth quarter were down slightly, to $8.1 billion, primarily due to store closures. Identical-store sales were flat.

Source: Supermarket News

Abercrombie Kids' Heads to 5th Ave.

NEW YORK — The kids division of Abercrombie & Fitch Co., abercrombie, plans to move into the Fifth Avenue space Brooks Brothers is vacating.

Sources close to the situation said Brooks Bros. will exit 666 Fifth Avenue, on the southwest corner of 53rd Street, around February 2009, and abercrombie will build a prototype 22,000-square-foot flagship to open in 2010.

For Abercrombie & Fitch, the project reflects a strategy of placing flagships at high-profile venues in the U.S. and abroad. Abercrombie’s Hollister division is launching a prototype at 600 Broadway in SoHo in the first half of 2009. The two-and-half-year-old Abercrombie & Fitch flagship on Fifth Avenue and 56th Street generates in excess of $100 million in annual sales.

Brooks Bros.’ decision to create a second Manhattan flagship on Fifth Avenue about eight years ago raised eyebrows because of the proximity of the 93-year-old Brooks Bros. store on Madison Avenue and 44th Street. The Fifth Avenue unit, essentially a big glass box, failed to capture the Brooks Bros. aura, which is personified by the dark-wood-paneled Madison Avenue venue that oozes tradition.

“The Fifth Avenue location has not been representative of the brand,” said Claudio Del Vecchio, chairman and chief executive officer of Brooks Bros. “The other reason for leaving is I don’t believe in a two-flagship strategy within nine blocks of each.

“We have full intention to rebuild the Madison Avenue flagship, which will celebrate its 100th anniversary on Madison Avenue in 2015,” he said. “We want to make sure that Madison Avenue is the real ambassador.”

The company bought the 120,000-square-foot building last year for that purpose. About half the space is for selling and half for the company’s headquarters.

“Both stores are doing very well, but I am sure they’ve been cannibalizing each other,” Del Vecchio said. “We really want to refurbish the Madison Avenue store to represent the brand. We realized it was a better opportunity to invest there, and a better business opportunity than signing a new long-term lease” on Fifth Avenue.

Del Vecchio stressed that Brooks Bros. wants to increase its presence in Manhattan, aiming to open four or five stores comparable to the 9,300-square-foot unit on Broadway at 65th Street near Lincoln Center for the Performing Arts. Brooks Bros.’ fourth Manhattan store is at One Liberty Plaza in lower Manhattan.

The Fifth Avenue location is comprised of ground, second floor and lower-level space, with a double-height glass storefront and 28-foot ceilings, according to the Cushman & Wakefield marketing brochure. The site also has 192 feet of frontage wrapping around the corner.

Also at 666 Fifth Avenue, additional space is being created to accommodate another retail tenant that has yet to be determined. Rents on Fifth Avenue around 53rd Street are said to be about $1,500 a square foot.

Source: Women's Wear Daily

Supervalu 4Q profit up on lower interest expense

MINNEAPOLIS - Supervalu, one of the nation's largest grocers, said fourth-quarter profits jumped 30 percent as it paid down debt and cut administrative expenses.

Earnings rose to $156 million, or 73 cents per share, from $120 million, or 57 cents per share in the year-ago quarter, Supervalu Inc. (nyse: SVU - news - people ) reported. The company said it earned 77 cents per share excluding acquisition costs.

Revenue climbed less than 1 percent to $10.39 billion, from $10.3 billion.

Analysts expected 71 cents per share on revenue of $10.17 billion, according to a poll by Thomson Financial.

Supervalu shares rose 5 percent, or $1.45, to $30.50 at the open of trade.

Retail sales declined slightly to $8.1 billion because of store closures. Sales at stores open at least a year were flat.

Fourth quarter retail net sales were $8.1 billion compared with $8.2 billion last year, primarily reflecting the impact of store closures in the acquired operations combined with flat identical store sales.

Supervalu is also a food distributor, and operating earnings in that business rose $20 million, to reach $75 million. Retail operating earnings rose by $11 million to $374 million.

Eden Prairie-based Supervalu has been paying down debt since buying most of Albertson's stores in 2006. Chairman and CEO Jeff Noddle said the company beat its own goal of paying off $400 million by June. Its bill for interest dropped to $157 million for the quarter, compared with $173 million a year ago. Noddle said Supervalu would try to pay off another $400 million in the upcoming year.

In fiscal 2009, Supervalu forecast earnings of $3.10 to $3.25 per share excluding costs. Analysts had been anticipating $3.07 per share. The company expects same-store sales to grow 1 percent to 2 percent not counting fuel.

For the full year, Supervalu earned $593 million, or $2.76 per share, up from $452 million, or $2.32 per share during the prior year. Revenue rose to $44.05 billion, from $37.41 billion a year ago.

Source: Forbes

Small Food Stores are Big with Busy Consumers, TNS Retail Forward Reports

COLUMBUS, April 17, 2008—The future retail landscape will be filled with an increasing number of small-store food concepts as retailers strive to capture the attention of busy consumers, TNS Retail Forward reports. Recently released TNS Retail Forward ShopperScape™ survey results indicate that shoppers are ready and willing to shop the new breed of small food concepts.

“The combination of small size and a fresh, prepared foods emphasis is a compelling offer for the time-pressed shopper,” comments Jennifer Halterman, Senior Consultant with TNS Retail Forward and author of the recently published Retail Perspectives report entitled Small Stores, Big Trend. “The small-store trend, which more players are beginning to explore, is part of an ongoing evolution in the retail food sector and we expect more players to throw their hats into the ring,” she continued.

U.K.-based Tesco is establishing a small-store presence with its Fresh & Easy rollout in the United States. Not surprisingly, large U.S. food retailers such as Wal-Mart and Safeway are reportedly planning to open small-scale grocery concepts of their own in their quest to take advantage of the demand for convenience, attract the aging Baby Boomer, search for new growth vehicles and round out their store portfolios.

The small-store food concept attracts shoppers in various shopping modes from fill-in/quick replenishment and immediate consumption to grab-and-go. “The jury is still out on whether small-format food stores will meet shopper expectations and company return on investment objectives going forward,” Halterman notes.

“Food retailers considering a small-store strategy must monitor and analyze shopper needs, attitudes and expectations well in advance of launch. They should also seek input from consumer goods manufacturer partners and pay close attention to local area demographics and cultural differences,” Halterman concludes.

Source: TNS Retail Forward

Retailers Get Stingy With data

This NY Times article is another take on retailers declining to share sales data. You may recall that Bob Sheehan recently wrote about this subject in KeyPoints, our monthly newsletter.

J. C. Penney says the tumultuous economy is making it impossible to predict earnings over the next year. Macy’s asserts that providing monthly sales information is too distracting and confusing. And Starbucks argues that annual profit estimates are unnecessary.

In American retailing, less is suddenly more — at least when it comes to giving investors the sort of financial information they have long expected from companies.

Faced with an economic slump, a growing number of national retailers are abandoning the longstanding tradition of reporting monthly store sales and forecasting annual profits.

The stores say that they are eliminating outdated practices that encourage short-term decision-making and can confuse investors.

But many Wall Street analysts and investors, who rely on these numbers to gauge a company’s health and the mood of the American consumer, are crying foul. The motive for providing less financial insight, they suspect, is to avoid issuing embarrassing numbers in the middle of a recession, numbers that can drive down a company’s stock price.

So far this year, Starbucks, Macy’s, CVS Caremark and Jos. A. Bank have ditched one or both of the financial reporting practices that were once standard in retailing.

And on Wednesday, J. C. Penney joined the list, saying it would stop offering annual profit estimates, known in the industry as guidance, at least for now. (It will still provide monthly sales and quarterly profit estimates.)

Myron E. Ullman, the chief executive of J. C. Penney, said that with the housing market in turmoil and gas prices surging, “there is not enough visibility to give something meaningful.”

The analysts who track J. C. Penney and the rest of the retail business can barely contain their frustration with all the lip zipping. “Withholding information is not what investors want,” said Bill Dreher, a longtime retail analyst at Deutsche Bank Securities. “They want clarity.”

A tough economy, Mr. Dreher added, “is a time to be more communicative, not a time to deprive us of guidance or clamp down on information.”

Though they have no legal obligation to do so, most publicly traded retail companies divulge their monthly sales performance and offer an estimate of their annual profits, with the figures becoming guideposts for Wall Street, economists and investors.

The profit forecasts allow stores to set reasonable expectations for investors, and minimize the chances for surprises, which Wall Street tends to dislike.

The monthly sales figures from retailers are especially valuable to economists, because they provide a regular snapshot of consumer finances and confidence. The first Thursday of every month, dozens of chains disclose how much sales rose or fell at stores open at least one year, a figure known as same-store sales. “It’s a barometer of the economy and a benchmark for the industry,” said Michael P. Niemira, chief economist at the International Council of Shopping Centers, a trade group.

But monthly sales have become controversial within retailing. Stores say they encourage employees to make decisions that bolster sales within a given month, even if they may hurt the company over time.

And some retailers argue that frequent quirks in the calendar can skew the numbers from one month to the next, creating a false impression of strong or weak performance.

That is what happened at chains like Macy’s during the 2007 holiday season. Because Thanksgiving occurred a week earlier than normal last year, one week of holiday shopping shifted from December to November. As a result, reported sales surged in November and plunged in December. Macy’s sales, for example, rose 13.4 percent in November 2007, but fell 7.9 percent in December. When the latter figure came out, Macy’s stock fell more than 6 percent in two days.

Despite warnings about the calendar shift, many investors were surprised by the December numbers. Executives at Macy’s found this agonizing — and said it contributed to their decision to stop reporting monthly store sales after January 2008.

“The numbers are increasingly confusing because of the calendar shifts,” said Jim Sluzewski, a spokesman for Macy’s. He added that the monthly numbers encourage “a short-term orientation, which is not the way to run a business.”

But analysts suspect another motivation for Macy’s: weak performance. The department store chain, which has experienced ups and downs since its merger with May Department Stores in 2005, reported sales declined in seven out of the last nine months that it provided such figures.

It was not until Starbucks ran into business problems, in January, that it stopped offering annual profit forecasts and same-store sales for its coffee shops.

With the chain experimenting with a variety of changes, like closing stores and dropping warm breakfast sandwiches, the chief executive, Howard Schultz, said monthly sales “will not be an effective indicator of our performance.”

Mr. Schultz said he would consider offering a quarterly same-store sales figure, but no decision has been made so far.

“The less said the better,” said Mr. Niemira, of the shopping council, summing up the new prevailing wisdom.

But clamming up can backfire for companies. In mid-2006, as the housing market began to slip, Home Depot said it would no longer disclose same-store sales, which it issued every quarter alongside its earnings.

The company said the figure was becoming less relevant, since Home Depot was branching out into new businesses, like a supply division focused on lumber and cement.

But investors balked. Soon, Home Depot reversed itself and began offering same-store sales figures.

So far, there is no sign that Macy’s, Starbucks or J. C. Penney will face similar revolts. But analysts are making their displeasure known.

“Small investors will be hurt because they will not have as much information,” said Walter Loeb, president of Loeb Associates, a retail consulting firm.

Source: NY Times

KMart Making Push for Women’s Apparel

Financier Edward Lampert appears to be investing in Kmart at last — and women's apparel could be the first to show the effects.

Lampert has come under increasing fire in the last few months for his apparent lack of a strategy for the discount chain and its sister retailer Sears, which combined to form Sears Holdings Corp. Now the investor is beefing up the team at Kmart to jump-start lagging profits and sales. Former Tommy Hilfiger executive Stephen Donnelly joined Kmart Holding Corp. on March 24 as vice president and general merchandise manager overseeing women's apparel. Kim McClaren, senior vice president of Kmart apparel, previously worked at Forth & Towne and before that, Gap Inc. Theresa Strickland, who held management positions at Pottery Barn and Williams-Sonoma, is leading a new team for the home area of Kmart and Sears. They aren't the only ones to come from a major specialty chain. Lisa Schultz joined Kmart four years ago as executive vice president of apparel design at Sears Holdings. A 14-year veteran of the Gap, where her last position was executive vice president of product development and design, Schultz was charged with improving the apparel offerings at the mass merchant. She has had her work cut out for her.

"Women's apparel at Kmart looked like a big bazaar," Schultz recalled, noting buyers sourced products from many vendors with little attention paid to duplication. "We didn't think of them as individual brands."

And while Lampert has been slashing capital spending at Sears Holdings and cutting marketing budgets, Schultz insists that Lampert, who bought Kmart stock when the retailer was in bankruptcy, is "investing money in the stores." Kmart emerged from bankruptcy in 2003. Two years later, Lampert merged Kmart and Sears into Sears Holdings.

The company is even spending on advertising again — and fashion is a focus. A print ad campaign carrying the tag line, "Kmart. Smart style, revealed. New for spring," with the image of a matte jersey dress from the Attention line, ran in April in In Style, Glamour, O, The Oprah Magazine and People, and for the Spanish language market, in People En Español, Latina and Cosmopolitan.

Kmart on March 9 launched the "Style Showoff Contest," a national search for the customer with the best fashion sense. The winner will be crowned Kmart's "fashion ambassador" and appear in an ad campaign. Footage of contestants trying on Kmart clothing, although it's not identified as such, and their reactions can be seen on the retailer's Web site. Contestants said they thought the apparel came from stores such as Barneys New York, Forever 21, Banana Republic and Hennes & Mauritz, among others.

"The purpose of [Style Showoff] has been to jolt people into thinking about Kmart as a place for apparel," Schultz said. "It's to prove the point that you can go to Kmart and put really cool looks together and feel smart that you didn't spend a lot of money. It's interesting to see how people mix it up. We could find some great stylists."

The retailer hopes the "Style Showoff Contest" will help revive women's clothing sales, the falloff in which was largely responsible for an overall drop of 5.2 percent in Kmart's sales for the fourth quarter of 2007.

Fourth-quarter profits fell 47.5 percent at Sears Holdings due to an oversupply of inventory in apparel and price reductions in the face of slowing sales. For the three months ended Feb. 2, net income dropped to $426 million, or $3.17 a diluted share, from $811 million, or $5.27, in the same period last year. Sales slid 6.8 percent to $15.1 billion from $16.2 billion and same-store sales decreased 4.5 percent.

Apparel could help reverse the slide. Christine Augustine, senior retail analyst at Bear Stearns & Co., said in a research note: "When there's newness [in apparel], consumers will buy. The challenge for Kmart is going to be that they don't have the natural traffic to the store that competitors like Wal-Mart and Target do." The grocery sector encourages repeat shopping, but Kmart's is not as developed as those of other discounters.

"They have this great marketing," said Kelly Tackett, senior consultant, TNS Retail Forward, referring to "Style Showoff." "Kmart's whole style ambassador is very slick, very appealing. But some of the Piper & Blue [junior line] merchandise seems pretty undifferentiated from Route 66 looks. It still looks like the bulk of the assortment at Kmart is Basic Additions. Yet with people looking to trade down for value, this could be the time for Kmart to get back into apparel."

Schultz believes that once consumers see the offerings, they'll be pleasantly surprised. Kmart recently launched three brands — Piper & Blue; Wckd, edgy apparel for men and women, and Limon & Sal, a men's label. A Piper & Blue plaid smocked baby-doll top is $16.99 and a football jersey with rhinestones is $14.99. A Wckd side ruched V-neck T-shirt is $14.99, a cropped hoodie is $26.99 and side-strip pants are $21.99.

"When I got here, there were racks and racks of duster housecoats, but they looked like rags," Schultz said. "We still have them, but they have pretty lace trims and nice buttons. My 20-year-old daughter bought some and cut them short and wore them as dresses."

The housecoats are an example of Schultz's approach to retooling Kmart's apparel business. A throwback to the Fifties, housecoats serve a dwindling demographic, but Schultz said they fill a need and she wants to make them as nice as possible.

"I'm interested in elevating the design and quality," she said. "We're working on the fit and we're pushing that. There's the design and quality and sourcing. Fabric is a big initiative for us. Kmart wants to be like everybody else, not lagging behind. It's up to us to be as current as we can be. We're going after much more on-trend apparel. We shop the stores, we understand the competition and go all over Europe and Japan."

Attention, a three-year-old modern, contemporary brand, is designed in-house. "We've had a lot of recognition for the fit of our washable suit," she said. "Attention has great knits and wrap dresses. We're raising the bar all the time on our quality and getting more innovative. We're getting more contemporary and really pushing trends. We're even adjusting our lead times so our cycle is more timely. With shorter lead times, we can make better decisions."

Kmart is also enhancing its mix by acquiring brands. "We're spending a lot of time thinking about denim and where a national brand could help us in the mix," Schultz said. Jaclyn Smith and Route 66 are two of the retailer's core brands. "We will absolutely acquire other [apparel] brands," Schultz said.

So far, only one Kmart unit is selling Lands' End, a Sears brand, but there's an opportunity to introduce Lands' End into other Kmart stores. "[Sears Holdings] is looking at rolling it out," said Schultz. "It's a very good brand. They've put Lands' End in over 150 [Sears] stores. Sears is introducing lots of new brands into the stores."

Kmart is also testing concept shops, Schultz said.

Prior to her arrival, Kmart's fashion was too safe and repetitive, Schultz said. "It was really about the basics when I got here," she said. "The process was wrong. They were relying on the market too much. This year we were maybe a little over assorted. We'll be successful when we really differentiate."

June Beckstead, divisional vice president of design at Sears Holdings, said Attention is the best example of Kmart's upgraded quality and style. "We developed a stretch suit and this spring we did a Bermuda short in it," she added. "It's like a suit from Club Monaco or Banana Republic. Our wrap dress expanded to more silhouettes and we're using directional prints. We're branching out with fabric in different textures. We introduced dressed-up denim in Attention and we're doing more fashion jackets."

The retailer is paying attention to small details such as buttons, the trim on the inside of a waistband and yarns with great feel and stretch qualities. "There are unexpected discoveries" when you wear the clothes, Beckstead said.

"We do have a story to tell," Schultz said. "We're making a lot of changes. But we're not done by any means."

Source: Women's Wear Daily

Bid/Ask Gap Brings Investment Sales to a Halt

Real estate brokers had hoped the steep decline in investment sales of retail properties in the last quarter of 2007 was a temporary setback. Now it's well into the second quarter of 2008 and little has changed.

In February, the volume of investment sales in the retail sector was a paltry $1.1 billion, according to data recently released by Real Capital Analytics, an 88 percent drop from a year ago. The figure was also down from January 2008, by 55 percent. At the same time, the ratio of new listings to closings rose, to 4-to-1 in February, from 2-to-1 the previous month. And as there were few deals under contract in March, the figures aren't likely to improve.

The credit crunch caused the initial drop-off. Highly leveraged buyers that previously dominated the market can no longer get financing and have exited the scene.

But there's more at work. A rift has emerged between buyers and sellers. Sellers have moderated their expectations to some degree, as evidenced by rising cap rates, especially on class-B and class-C assets. The problem, industry observers note, is that not enough of them have done so. Special services firms and institutional sellers understand that they might have to accept discounts. But almost every private investor with a property on offer has to be counseled about the changes that have taken place in the market since last summer, says Stephannie Mower, executive vice president and managing director of investment services with PM Realty Group, a Houston-based real estate services firm.

A lack of clarity on appropriate pricing levels might be partly to blame. Real Capital Analytics reports that from June of 2007 to March 2008, average cap rates on retail properties moved by 30 basis points, to 6.9 percent. But the firm's managing director Dan Fasulo has told our sister publication the National Real Estate Investor the numbers are skewed because they are limited to price increases on the best assets, the only kind that has been trading hands in the past few months.

Faced with a lack of reliable statistics, sellers still expect to see cap rates in the 5 percent and low 6 percent on freestanding single-tenant properties, says Jim Koury, managing director of retail investment sales with Jones Lang LaSalle, a Chicago-based commercial real estate services firm, while buyers tend to look closer to 6.5 percent and 7 percent. With multi-tenant shopping centers, sellers tend to be as much as 50 basis points off the average 7 percent cap rate.

That has affected transaction volume. When private investors find out they'll have to accept a discount, in about 20 percent of cases, they decide not to go through with the sale, according to Mower. "Many of them bought these assets in the past five years and still expect to get an unbelievable return on their investment," she says.

Stonemar Properties, a New York City-based real estate investment firm that plans to buy up to $150 million worth of centers this year, is under contract for only one acquisition so far, a 180,000-square-foot property in Northeastern United States that features a $29.5 million price tag and a cap rate in the mid-7 percent. The slow start to the year has been due both to the difficulty of finding appropriately priced assets and the reluctance on the part of many sellers to bring their properties to market during a down period, says Jonathan Gould, CEO of Stonemar.

"I think sellers' expectations have lowered, but they have not lowered enough," Gould notes. "But there is a lot less wheeling and dealing going on in general. The number of properties available for sale is down substantially compared to last year."

Meanwhile, with so few deals in progress, even experienced brokers can find themselves at a loss how to value new offerings. In more than 20 percent of transactions, the listing price is lowered by an average of 5 percent, says Mower.

In one listing handled by brokerage firm Sperry Van Ness, a Wal-Mart-anchored shopping center in a tertiary market in the Midwest remained on offer for almost 60 days without getting much interest, recalls Joseph French, national director of retail properties with the firm. With cap rates for similar properties averaging 7 percent in the past six months, the firm's brokers figured a 9 percent rate would guarantee a flood of bidders. Sperry Van Ness ended up having to raise the rate to 10 percent to generate offers.

"In a different market, we would have sold that very quickly and probably at a different cap rate," French says. "But what's happened is buyers have more options and they are more cautious. If they don't get one property, they just go to the next."

Sellers should expect cap rates to climb another 25 basis points to 50 basis points before the market hits bottom, according to Koury. Mower predicts that prices will drop another 5 percent to 10 percent.

Source: Retail Traffic

Borders Signs Lease to Open New Concept Store in Wareham, Mass.

ANN ARBOR, Mich., April 16 /PRNewswire/ -- Borders, Inc. announced today that it will open a store in Wareham, Mass. in June, when the retailer will debut a new 25,401-square-foot store at Wareham Crossing, located at Highway 28 and Interstate 495. The store will be one of 14 concept stores that Borders will open this year nationwide. The concept store is a retail breakthrough that represents a significant enhancement over existing Borders stores. Borders concept stores bring together digital and Internet options with a fresh new look, a host of enriching in-store services, and a number of exciting features that help fulfill Borders' mission to be a headquarters for knowledge and entertainment.

"We're delighted to have signed on to open a concept store at Wareham Crossing," said Vince Vizza, vice president of real estate for Borders Group. "Wareham is only one of 14 cities in the entire nation to get a Borders concept store in 2008. With its many avid book, music and movie lovers - together with its vibrant culture and rich history - Wareham is a wonderful community for a concept store, and we are anxious for customers to start enjoying all that the store will offer."

The store will provide customers with a unique and engaging shopping experience, the new Borders concept store will offer what customers have always loved about Borders - deep and intelligent selection, knowledgeable staff, and a comfortable, welcoming atmosphere - plus an exciting interactive dimension that includes enriching Web-based services accessible right in the store.

Highlights of the store include:

• A Digital Center where customers can do everything from mix and make their own CDs and download books and music to publish their own books, explore their family history, and create photo books. Importantly, trained, dedicated specialists are ready to assist customers of all technical levels with any of the Digital Center's services and products.
• Special Destinations for Cooking, Wellness, Travel, Graphic Novels and Children's that feature books, DVDs and related merchandise as well as topical programming shown via 32" LCD screens. Some destinations also include computer kiosks where customers can take advantage of a number of digital and Internet options to maximize their in-Destination experiences.
• A fresh new interior with dazzling graphics that both guide customers to the Destinations as well as inspire them to shop the entire store's diverse and relevant assortment of up to 170,000 book, music and movie titles. A warm, neutral color scheme and plenty of cozy seating suggest comfort and an invitation for customers to stay as long as they like.
• Enriching and enjoyable community events featuring appearances by authors and performers as well as free activities for children that may include storytime events, summer camps, author signings and other kid-focused store events.
• A Seattle's Best Coffee(R) cafe that will serve its full line of premium coffee and non-coffee beverages, including lattes, mochas and blended beverages, and a fresh food menu, featuring pastries and sandwiches.
• A Paperchase shop with a wide selection of fashionable notebooks, journals, wrapping paper, greeting cards and other gifts and stationery items from U.K.-based Paperchase(R) Products Limited.
• Internet access available storewide. Through an alliance with T-Mobile(R), Borders stores are T-Mobile HotSpots(R), allowing customers using Wi-Fi enabled laptops or PDAs with a T-Mobile account the ability to comfortably surf the Web, access email, connect to their corporate network, or download large files all while connected to the nation's largest, carrier-owned Wi-Fi network.
• Multiple self-serve Borders Search stations offering customers the opportunity to check the availability of a particular title and where it is located within the store. After Borders' proprietary e-commerce site, Borders.com, launches this year, customers will be able to order books, music and movies right at the kiosk and have their order shipped directly to their house or to the store of their choice for pick up at a later time. In addition, the stations in each store's music department will give customers the chance to listen to a CD before purchasing it.
• "Borders Recommends" titles and reviews displayed throughout the store. In addition, knowledgeable booksellers are happy to suggest titles suited to each customer.
• The Borders Original Voices program, now in its 12th year, highlights the work of new and emerging authors and artists and helps Borders share its passion for books, music, and movies with customers from one enthusiast to another. Over the course of a year, more than 200 new works are featured in Borders stores.

Customers who shop at this store - and at any Borders, Waldenbooks or Borders Express store - are eligible to become Borders Rewards(R) members. Borders Rewards is the company's free loyalty program where all purchases count toward earning Borders Bucks that can be used on future purchases. Members also enjoy exclusive Borders Rewards Bonus Events and receive members-only coupons and savings opportunities throughout the year. Customers can also participate in the Borders Group Savings and Services Program, which offers discounts, deferred billing, complimentary price quotes as well as specialized customer service to businesses, schools, libraries and non-profit groups. Membership in this program is also free.

The opening of this new concept store is expected to create approximately 45 jobs in the local community. Employment opportunities at Borders in Wareham will be posted online and available in May. To apply, please visit Borders at www.borders.jobs .


Source: Borders, Inc.

JCPenney Introduces Linden Street

Expansive New Neo-Traditional Brand Bolsters Company's Home Assortment; Offers Customers All the Comforts of Home with Its Casual, Inviting and Functional Style

PLANO, Texas--(BUSINESS WIRE)--Leveraging its competency in developing, designing and marketing powerful private brands, J. C. Penney Company, Inc. (NYSE: JCP - News) today announced the launch of a new private brand of home furnishings and accessories called Linden Street. The launch of Linden Street signifies JCPenney’s continuing commitment to deliver style and quality at a smart price through brands that create an emotional connection across its customers’ lifestyles. The most comprehensive Home brand launch in Company history, Linden Street will be available in-stores, online on jcp.com and via catalog beginning in July.

Offering all the comforts of home, Linden Street is a neo-traditional brand that includes contemporary interpretations of classic design, providing a casual, comfortable and inviting style with today’s young families in mind. Built on standard pieces that can be personalized and updated throughout the seasons and years, Linden Street’s décor provides a lived-in, relaxed look, transforming homes into a cozy retreat. The collection balances both masculine and feminine attributes and is perfect for entertaining friends and family without formality.

Additionally, features built into the furniture such as hidden storage, electrical outlets and charging strips – for PDAs, iPods and more – add functionality to the collection – an aspect that is increasingly sought after by today’s consumers.

“There’s no better way to make an emotional connection with our customers than to help them create a home that truly reflects their personal style. Linden Street blends the best of traditional and contemporary designs with eclectic components, offering customers a lifestyle assortment that will evolve with their home throughout the years,” said Jeff Allison, executive vice president of home for JCPenney. “Never before has an initial brand launch in Home included such a holistic approach to serving our neo-traditional customers’ lifestyle preference – it’s a testament that we believe this exciting new lifestyle brand will truly resonate with our customers.”

Designed, developed and sourced in-house, Linden Street joins JCPenney’s array of good/better/best priced lifestyle offerings in Home including: The JCPenney Home Collection for the conservative and traditional lifestyle customer; Chris Madden; Chris Madden Hotel; and the exclusive brand, American Living, for the traditional lifestyle customer; and Studio for the modern lifestyle customer. With its harmonic blend of traditional and contemporary styles offering a classic, timeless design, Linden Street will fill a neo-traditional lifestyle niche within JCPenney’s Home assortment.

“With 45 percent of our annual revenue coming from our private brands, Linden Street is yet another exciting addition to our robust portfolio of private brands, which continue to address our customers’ diverse lifestyle needs and deliver above average gross margin to the business,” said Ken Hicks, president and chief merchandising officer for JCPenney. “This expansive new brand delivers on an important – and currently underserved – customer segment while broadening our Home offering, allowing us to expand our appeal and relevancy to customers with various needs, tastes, aspirations and budgets.”

Added Hicks, “During this challenging economic environment, our objective is to continue to innovate, ensuring that when customers are buying for their homes, they do it at JCPenney.”

Linden Street will feature a complete line of bedding, bath, window coverings, area rugs, lighting and decorative accessories, along with furniture for all the rooms of the house. All colors, fabrics and textures coordinate to create a unique and personalized style, while furniture features both pine and cherry finishes. Linden Street will fall into JCPenney’s good and better pricing categories with retail prices ranging from $40-$400 for bedding; $40-$50 for window drapery; $100-$380 for lighting; $30-$400 for area rugs; $14 for bath towels; $19.99-$300 for decorative accessories; $7.99-$199.99 for tabletop; and $1,399-$1,959 for furniture.

Source: J. C. Penney Company, Inc.

Penney moderates 2008 growth plans

NEW YORK -- J.C. Penney Co. officials are expected to offer investors more details Wednesday about how the department store operator will balance a moderated store growth strategy with an accelerated push for more exciting merchandise to attract frugal shoppers.

Chairman and Chief Executive Myron "Mike" Ullman III said late Tuesday that the company is stretching out its five-year store growth strategy because of the economic downturn, with plans to open 36 new stores this year instead of the 50 it had projected. It also aims to renovate 20 units this year, instead of the planned 65.

But Ullman also told analysts that the company plans to accelerate its merchandising innovation. Penney this week announced several new lines for teens, along with the launch of a new store brand of home furnishings and accessories called Linden Street.

Ullman's address, which kicked off a two-day analyst meeting, came as Penney and other retailers have stumbled in the face of a consumer spending slowdown amid higher gasoline prices, slumping home prices and a drop in consumer confidence. Penney slashed its first-quarter profit outlook last month, and last week the retailer reported a larger-than-expected 12.3 percent drop in same-store sales, or sales at stores open at least a year, for March.

Ullman told analysts that Penney is taking "a hard look" at 2009 and will figure out its store growth plans for next year in July.

The cautious mood at the analyst meeting was different from the investor session only a year ago, when the company said it planned to open 250 new stores over the next five years and predicted its earnings per share would grow at a 16 percent compound annual rate from 2008 to 2011. Penney executives are slated to offer a financial update Wednesday.

Ullman told investors that what's most challenging about this economic downturn compared with other past slowdowns is that it has been so "unpredictable." Consumers, he said, are faced with much uncertainty in the housing market. Meanwhile, shoppers are confronted with a lot of volatility in the financial market.

Ullman also pointed to how the overall economic slowdown is hurting some markets more than others. For example, Phoenix, Las Vegas and Tampa, Fla., have been among the hardest hit, while markets like Texas and Manhattan have seen stability, he said.

"We think it's going to take awhile before it gets predictable," Ullman said.

Amid such economic uncertainty, Ullman believes that Penney is stealing some market share away from other rivals. He said its American Living collection - a partnership with Polo Ralph Lauren that marks the biggest launch in the store's history - has been well received, though some merchandising categories are doing better than others.

Source: Miami Post

Jos. A. Bank defends high inventory level

Jos. A. Bank, which has been criticized for what some analysts and others consider high inventory levels, said yesterday that it believes the practice of stocking up on menswear in its stores could assist the company during slow economic times.

The Hampstead-based men's clothier had $207 million in inventory at the end of last year, 12.7 percent higher than the $184 million in inventory in 2006, David Ullman, Bank chief financial officer told analysts in a conference call yesterday.

"While others are cutting inventory, we will continue to have a strong inventory position," said Chief Executive Officer Robert N. Wildrick. "We will have products when others may be out of stock."

Wildrick also said that the company was able to buy goods before prices in other countries increased.

"We have a significant amount of inventory, which we purchased at lower prices, so this should help us as the pipeline prices continue to go up," he said.

Wildrick believes the inventory issue will enable Bank to lure customers, even as consumers pull back on spending. He hopes the increased inventory will convince customers to choose Bank over other competitors during the downturn.

Jos. A. Bank is defending itself against a class action lawsuit in Baltimore federal court that deals in part with inventory levels and earnings.

The case claims Bank said it increased inventory and sales and was experiencing higher profit, when the opposite was true. During a June 2006 conference call about weak first-quarter earnings, analysts asked company executives if the large fall in inventory levels was intentional and had forced the retailer to cut prices.

Wildrick has said those earnings were an aberration.

A second suit filed in Delaware Chancery Court by the Norfolk County Retirement System, a Massachusetts pension fund, claims an inventory surplus led to a 16 percent profit decline in the first quarter of fiscal year 2006.

The company has not commented on that case.

Wildrick's comments yesterday were made as he discussed Bank's fiscal 2007 earnings, which were released last week. Those earnings were up 16 percent for a net income of $50.2 million.

Wildrick said yesterday that it is going to be a tough year for Bank and other retailers as consumers trim spending. He said Bank will continue to spend on advertising even as competitors are scaling back.

Wildrick also addressed criticism the company has received for not answering questions from analysts during conference calls, saying the retailer prefers to address those issues in Securities and Exchange Commission documents so that its answers are not "misconstrued."

Shares of the company, which has 426 stores in 42 states and the District of Columbia, rose more than 5 percent to close at $25.54 yesterday.

Source: Baltimore Sun

NJ: Gottesman Buys 52,000-SF MXD Old Mill Plaza

SEA GIRT, NJ-Gottesman Real Estate Partners has acquired Old Mill Plaza, a 52,000-sf retail and professional office complex at 2100 Route 35 here for an undisclosed price. That location is at the signalized intersection of Ocean Road and Route 35 in eastern Monmouth County.

The seller was the New York-based Sitt Asset Management, and the deal was brokered by Bill Lenaz of R.J. Brunelli & Co. of Old Bridge, NJ and Greg Nowell and Chris Santoro of the Sitar Co., Iselin, NJ. Gottesman has hired CB Richard Ellis to manage the property.

“This acquisition is ripe for the kind of improvement that comes with a hands-on, long-term approach,” says Joel Brudner, EVP of the Livingston-based Gottesman. “We intend to reposition the center to match its triple-A location,” he says, noting that upgrades will focus on aesthetics and building systems.

Old Mill Plaza is currently 77% occupied, including a stand-alone office building at its rear that houses the headquarters of the engineering firm Birdsall Services Group. Other tenants include Century 21 Real Estate, Shore Spine & Sport, Ralph’s Ices, Wings Gym, Weight Watchers and Old Mill Travel, among others.

The acquisition is the third for Gottesman Real Estate Partners since the firm was founded this past August by Andy Gottesman, son of a co-founder of the Gottesman real estate empire in New Jersey and New York. In October, the firm bought the 204,000-sf flex building at 2 Cranberry Rd. in Parsippany and in March added the two-building, 100,000-sf office complex at 19 Roszel Rd. in Princeton.

Source: GlobeSt.

Banks Cut Talbots Credit

A pair of lenders has notified Talbots Inc. they will no longer provide credit totaling $265 million to the financially troubled women's clothing retailer, even as Talbots negotiated an extension of a smaller $18 million line of credit with a third lender, according to a company filing with the Securities and Exchange Commission yesterday.

The disclosure, coming as borrowing difficulties and a slowdown in consumer spending have squeezed other US retailers, raised questions about the ability of Talbots to continue borrowing money, purchasing inventory, and paying vendors. Officials at the Hingham company couldn't be reached for comment late yesterday.

Talbots last month posted a $171 million first-quarter loss on a sales decline of nearly 8 percent, as it scrambled to close stores it has opened for men and children and wrote down the value of goodwill associated with its $518 million acquisition of J. Jill Group in 2006.

Many retailers across the country have been struggling as the economy has slowed. Eight midsize retail chains, including the Levitz furniture stores and the Sharper Image electronics seller, have sought protection under Chapter 11 of the US Bankruptcy Code over the past six months, while others have been shutting stores. The victims in Massachusetts have included Norwood furniture chain Domain Home, which filed for bankruptcy Jan. 18 after lenders pared its credit line.

"You're starting to see the banks trying to limit their risk because of the credit crisis and because retail doesn't look like a good place to extend credit right now," said Crystal Lanigan Kallik, specialty retail analyst for D.A. Davidson & Co. in Lake Oswego, Ore.

In its SEC filing yesterday, Talbots said it was notified on April 9 that the Hongkong and Shanghai Banking Corp. would gradually be cutting off a $135 million line of credit used to import merchandise. The bank reduced Talbots' credit limit to $50 million, effective last week, and advised the retailer it would further scale it back to $45 million on May 8, $30 million on June 9, and $15 million on July 8. The filing said Talbots was told the bank would cancel the credit line entirely on Aug. 8.

Talbots also said in the filing that a $130 million credit line from Bank of America Corp. expired on Feb. 23, and the retailer was told on April 7 that no new credit would be provided. At the same time, Talbots said the Mizuho Corporate Bank had extended a credit line on April 11 providing for up to $18 million in borrowing over the coming year.

The filing said Talbots had renegotiated payment terms with unspecified vendors from which it purchased the bulk of its merchandise and was seeking similar agreements with other vendors. It also said the Hingham retailer was actively pursuing other sources of lending.

"If the company is unable to secure new letter of credit agreements, the company intends to purchase inventory without utilization of letters of credit, subject to the availability of cash on hand," Talbots said in the filing.

Source: Boston Globe

LNT in Talks with Lenders - Defers Interest Payment

NEW YORK — Linens ‘n Things said Tuesday it is in talks with creditors on a capital restructuring that could bail out the ailing retailer and help it avoid bankruptcy.

The seller of textiles, housewares and other home goods also said it has delayed a $16.1-million (U.S.) interest payment while talks continue, and its lenders have agreed to delay exercising their right to stop making loans to the company.

Linens ‘n Things, bought by affiliates of billionaire investor Leon Black's firm Apollo Global Management in 2006 for $1.3-billion, said it is in talks with a committee of its debt holders about altering its capital structure.

The Wall Street Journal reported last week that Linens ‘n Things could file for Chapter 11 bankruptcy protection as early as Tuesday. A source told Reuters on Friday that bankruptcy was one option being considered, but not the only option.

A bankruptcy by Linens ‘n Things would be among the biggest failures by a business acquired during the recent private equity boom and a stark example of how the subprime mortgage debacle and resulting credit crunch have spread to other parts of the economy.

Linens ‘n Things Chief Executive Robert DiNicola blamed the company's financial woes on the triple punch of the credit crunch, the housing downturn and the slowdown in consumer spending.

“The increasing deterioration of the credit markets and the residential real estate meltdown ... and the resulting downturn in consumer spending, especially in the home sector, have combined to create additional and acute financial challenges for the company and the retail sector as a whole,” Mr. DiNicola said.

Linens ‘n Things posted a net loss of $242.1-million in 2007 on net sales of $2.79-billion. Comparable-store sales fell 3.4 per cent for the year, while its ratio of earnings to fixed charges was 0.4.

Mr. DiNicola said the company's operating results, along with “the rapidly increasing financial storm outside the company,” have caused its vendors to impose on it significantly more restrictive payment terms, which in turn has “had a dramatic effect on our liquidity outlook for the remainder of the year.”

The housing downturn and slowdown in consumer spending have hurt all providers of home goods, including Bed Bath & Beyond Inc., Pier 1 Imports Inc. and Williams-Sonoma Inc.

But like rivals Tuesday Morning Corp. and Kirkland's Inc., Linens ‘n Things has had an especially hard time competing at the low end with discounters like Wal-Mart Stores Inc. and Target Corp. and at the high end with chains like Pottery Barn and Crate and Barrel.

As Linens ‘n Things explores options to strengthen its balance sheet and improve its access to funding, it will defer a $16.1-million quarterly interest payment due on April 15 to some of its debt holders. The company has a 30-day grace period before the nonpayment becomes a default.

Linens ‘n Things said it has until May 13 before its creditors, which include units of General Electric Co, can exercise their rights to withhold loans and other credit extensions.

A spokesman for private equity firm Apollo, which is planning an initial public offering, declined to comment.

Linens ‘n Things, which had 589 North American stores at the end of 2007, said it was working with turnaround firm Conway Del Genio Gries & Co. It said the committee of debt holders is being advised financially by Houlihan Lokey Howard & Zukin Capital Inc. and legally by Kasowitz, Benson, Torres & Friedman LLP.

Source: ReportOnBusiness.com

Office Depot Credit Rating Cut

SAN FRANCISCO (Thomson Financial) - Standard & Poor's Ratings Services on Tuesday lowered its corporate credit rating on Office Depot Inc. to 'BB+' from 'BBB-'.

The outlook is negative.

The agency also removed all of the company's debt ratings from creditwatch with negative implications.

'The ratings downgrade is based on the decline in operating performance in both the North America retail and business solutions segments, and expectations that challenging economic trends will continue to pressure performance in fiscal 2008,' said S&P credit analyst Mark Salierno in a statement.

Shares of Delray Beach, Fla.-based Office Depot fell a penny to $10.91.

Source: Forbes

Pershing Square's Borders stake could rise to 28.8%

April 15 (Reuters) - Borders Group's (BGP.N: Quote, Profile, Research) largest shareholder, Pershing Square Capital Management, could see its stake in the No. 2 specialty bookseller rise to 28.8 percent if the hedge fund exercises warrants to acquire about 9.55 million shares, according to a regulatory filing.

Activist investor William Ackman's Pershing Square Capital said its ownership stake was calculated based on 60.5 million shares outstanding as of April 4, 2008.

In an earlier filing, Pershing Square had reported an 18 percent stake in Borders, calculated on the basis of 58.8 million shares outstanding as of Nov. 29, 2007.

Borders and Pershing Square recently revised a financing agreement to give the retailer more time to implement new strategies.

The new agreement offers Borders a lower interest rate of 9.8 percent on a $42.5 million loan from Pershing Square, down from 12.5 percent before.

The new deal also raises the price of a backstop purchase offer from Pershing Square for Borders' international subsidiaries to $135 million from $125 million.

Under the agreement, Borders has the right but not the obligation until Jan. 15, 2009, to sell the units in Australia, New Zealand, Singapore and Britain to Pershing Square, if Borders does not get a better offer before then.

Borders has said the international units are worth substantially more than $135 million and it is looking at strategic alternatives other than the Pershing Square deal.

The new financing commitment also gives Pershing Square warrants to buy 9.55 million shares of Borders at $7 apiece, down from 14.7 million shares in a previous agreement.

Shares of the company were down almost 4 percent at $6.30 in afternoon trade on the New York Stock Exchange.

Borders, which has been considering selling itself, has been under pressure like many other booksellers as rising gasoline and food prices take more of consumers' discretionary income.

Source: Reuters

Burberry's sales jump 18%

Luxury group Burberry posted an 18% sales increase in its second half, revealing double digit growth in its retail and wholesale divisions.

Retail sales, which accounted for over 50% of total revenue in the second half, increased 17% on an underlying basis. Non-apparel continued to outperform driven by sales of handbags, footwear and accessories. In apparel, growth was driven by outerwear, knitwear and dresses. Nine stores and around 40 concessions were opened during the period.

Wholesale, which accounted for 40% of total sales, soared 25% on an underlying basis. As with retail, non-apparel and outerwear were the best performing categories. Based on orders received to date, Burberry expects wholesale revenue to jump around 10%, on an underlying basis, in the six months to September.

However, licensing revenue remained flat, as expected.

Burberry chief executive Angela Ahrendts said: "Burberry had a good finish to the year, against the background of an increasingly challenging external environment. Looking forward, we are thrilled with the momentum of our brand as our core luxury, retail and non-apparel strategies continue to gain traction, while our seasoned management team focuses on improving the operational aspects of our business."

This year, the group expects to open around 15 stores, and increase retail space by up to 13% year-on-year.

Source: DrapersOnline

Linear Straight Out on Retail Buying Spree

READING, MA-A multi-tenanted shopping plaza fronting busy Route 28 has been purchased by Linear Retail Properties. The 20,000-sf asset at 345 Main St. and a separate center acquired in Warwick, RI, brings to 46 the number of New England retail assets Linear has secured for a $300-million investment fund backed by Principal Financial Group.

Linear hopes to deploy $80 million in 2008, according to principal Aubrey Cannuscio. Despite the credit crunch that has slowed property sales dramatically in the region, $16 million has been spent year-to-date, including $3.9 million for the Reading property and $1.6 million for 1138 Post Rd. in Warwick. Negotiations are underway on another two deals, Cannuscio confirms while declining to identify those properties.

The fund gives Burlington-based Linear the ability to make far larger purchases than the latest two. There are several substantial assets already in the $225 million spent since the campaign began five years ago, but Cannuscio says the latest buys are strategically important for the fund, calling them “straight-forward investments” that allow a cash flow and potential upside via a planned retrofit of 345 Main St. The off-market deal was brokered by Frank Normandin of Summit Realty Partners, who correctly sensed the center would be attractive to Linear, says Cannuscio.

A vacant space fronting Route 28 has recently been leased by a successful natural foods store, bringing 345 Main St. to full occupancy. Other tenants include a Sherwin-Williams outlet, another recent arrival. There is also a liquor store whose owners, Busa Liquors, sold 345 Main St. to Linear. The most lasting denizen of the plaza is Café Capri, a popular local pizza shop and restaurant situated at the rear of the property.

“It’s tired today, but I think it’s going to look like a new property in six months,” says Cannuscio. Modern signage, façade improvements and enhanced landscaping will be part of the restoration, relays Cannuscio, whose firm recently completed a similar overhaul at the Burlington Marketplace on Mall Road in nearby Burlington. Strong visibility along the four-lane Route 28 and a local connection aided by Café Capri are among the positives of 345 Main St., reports Cannuscio, who also notes the property’s accessibility to nearby Walkers Brook Drive. That roadway has seen an explosion of retail development in the past two years with more on the way. “We like what’s going on there,” Cannuscio says.

Linear is also enthused about the Rhode Island property, a two-tenant complex located on Route One less than two miles north of T.F. Green Airport. Harold Lavine of Bessette Realty in Lincoln, RI, was the sole broker in that sale. An Aaron’s Furniture Store shares the 10,000-sf plaza with Asian restaurant Lemongrass, similar to Café Capri by being a well-known local eatery. In unveiling the latest purchases, Linear named Colliers Meredith & Grew as property manager for 345 Main St. and Keypoint Partners to manage 1138 Post Rd.

Source: GlobeSt.

Retailing Chains Caught in a Wave of Bankruptcies

The consumer spending slump and tightening credit markets are unleashing a widening wave of bankruptcies in American retailing, prompting thousands of store closings that are expected to remake suburban malls and downtown shopping districts across the country.

Since last fall, eight mostly midsize chains — as diverse as the furniture store Levitz and the electronics seller Sharper Image — have filed for bankruptcy protection as they staggered under mounting debt and declining sales.

But the troubles are quickly spreading to bigger national companies, like Linens ‘n Things, the bedding and furniture retailer with 500 stores in 47 states. It may file for bankruptcy as early as this week, according to people briefed on the matter.

Even retailers that can avoid bankruptcy are shutting down stores to preserve cash through what could be a long economic downturn. Over the next year, Foot Locker said it would close 140 stores, Ann Taylor will start to shutter 117, and the jeweler Zales will close 100.

The surging cost of necessities has led to a national belt-tightening among consumers. Figures released on Monday showed that spending on food and gasoline is crowding out other purchases, leaving people with less to spend on furniture, clothing and electronics. Consequently, chains specializing in those goods are proving vulnerable.

Retailing is a business with big ups and downs during the year, and retailers rely heavily on borrowed money to finance their purchases of merchandise and even to meet payrolls during slow periods. Yet the nation’s banks, struggling with the growing mortgage crisis, have started to balk at extending new loans, effectively cutting up the retail industry’s collective credit cards.

“You have the makings of a wave of significant bankruptcies,” said Al Koch, who helped bring Kmart out of bankruptcy in 2003 as the company’s interim chief financial officer and works at a corporate turnaround firm called AlixPartners.

“For years, no deal was too ugly to finance,” he said. “But now, nobody will throw money at these companies.”

Because retailers rely on a broad network of suppliers, their bankruptcies are rippling across the economy. The cash-short chains are leaving behind tens of millions of dollars in unpaid bills to shipping companies, furniture manufacturers, mall owners and advertising agencies. Many are unlikely to be paid in full, spreading the economic pain.

When it filed for bankruptcy, Sharper Image owed $6.6 million to United Parcel Service. The furniture chain Levitz owed Sealy $1.4 million.

And it is not just large companies that are absorbing the losses. When Domain, the furniture retailer, filed for bankruptcy, it owed On Time Express, a 90-employee transportation and logistics company in Tempe, Ariz., about $30,000.

“We’ll be lucky to see pennies on the dollar, if we see anything,” said Ross Musil, the chief financial officer of On Time Express. “It’s a big loss.”

Most of the ailing companies have filed for reorganization, not liquidation, under the bankruptcy laws, including the furniture chain Wickes, the housewares seller Fortunoff, Harvey Electronics and the catalog retailer Lillian Vernon. But, in a contrast with previous recessions, many are unlikely to emerge from bankruptcy, lawyers and industry experts said.

Changes in the federal bankruptcy code in 2005 significantly tightened deadlines for ailing companies to restructure their businesses, offering them less leeway.

And the changes may force companies to pay suppliers before paying wages or honoring obligations to customers, like redeeming gift cards, said Sally Henry, a partner in the bankruptcy law practice at Skadden, Arps, Slate, Meagher & Flom and the author of several books on bankruptcy.

As a result, she said, “it’s no longer reorganization or even liquidation for these companies. In many cases, it’s evaporation.”

Several of the retailers that filed for Chapter 11 bankruptcy protection over the last eight months, like the furniture sellers Bombay, Levitz and Domain, have begun to wind down — closing stores, laying off workers and liquidating merchandise.

In most cases, the collapses stemmed from a combination of factors: flawed business strategies, a souring economy and banks’ unwillingness to issue cheap loans.

Bombay, a chain with 360 stores, was considered a success in the furniture world, after its sales surged from $393 million in 1999 to $596 million in 2003.

Then the chain decided to move most of its stores out of enclosed malls into open-air shopping centers. It started a children’s furniture business, called BombayKids. And it started carrying bigger items, like beds and upholstered couches, with higher prices than its regular furniture.

Consumers balked at the changes, hurting Bombay’s sales and profits at the same time that its expenses for the ambitious new strategies began to grow. The timing was unenviable: By early 2007, the housing market began to falter, so purchases of furniture slowed to a trickle.

The company was running out of money, but banks refused to lend more. “They did not want to take the chance that we might not repay the loans,” Elaine D. Crowley, the chief financial officer, said in an interview.

In September 2007, Bombay filed for bankruptcy protection. The highest bid for the company came from liquidation firms, who quickly dismembered the 33-year-old chain. Bombay, which once employed 3,608, now has 20 employees left. “It is very difficult and sad,” Ms. Crowley said.

The bankruptcies are putting a spotlight on a little-discussed facet of retailing: heavy debt.

Stores may appear to mint money by paying $2 for a T-shirt and charging $10 for it. But because shopping is based on weather patterns and fashion trends, retailers must pay for merchandise that may sit, unsold, on shelves for long periods.

So chains regularly borrow large sums to cover routine expenses, like wages and electricity bills. When sales are strong, as they typically are during the holiday season, the debts are repaid.

Fortunoff, a jewelry and home furnishing chain in the Northeast, relied on $90 million in loans to help operate its 23 stores, using merchandise as collateral.

But by early 2008, as the housing market struggled, the chain’s profits dropped, meaning its collateral was losing value and the amount it could borrow fell.

In better economic times, the banks might have granted Fortunoff a reprieve. But with a recession looming, they refused, forcing it to file for bankruptcy in February. In filings, the chain said it was “facing a liquidity crisis.” (Fortunoff was later sold to the owner of Lord & Taylor.)

Plenty of retailers remain on strong footing. Arnold H. Aronson, the former chief executive of Saks Fifth Avenue and a managing director at Kurt Salmon Associates, a retail consulting firm, said the credit tightness and consumer spending slowdown have only wiped out the “bottom tier” companies in retailing.

“This recession dealt the final blow to these chains,” he said. But several big-name chains are looking vulnerable. Linens ’n Things, which is owned by Apollo Management, a private equity firm, is considering a bankruptcy filing after years of poor performance and mounting debts, though it has additional options, people involved in the discussions said Monday.

Whether more chains file for bankruptcy or not, it will be hard to miss the impact of the industry’s troubles in the nation’s malls.

J. C. Penney, Lowe’s and Office Depot are scaling back or delaying expansion. Office Depot had planned to open 150 stores this year; now it will open 75.

The International Council of Shopping Centers, a trade group, estimates there will be 5,770 store closings in 2008, up 25 percent from 2007, when there were 4,603.

Charming Shoppes, which owns the women’s clothing retailers Lane Bryant and Fashion Bug, is closing at least 150 stores. Wilsons the Leather Experts will close 158. And Pacific Sunwear is shutting a 153-store chain called Demo.

Those decisions were made months ago, when it was unclear how long the downturn in consumer spending might last. If March was any indication, it is nowhere near over. Sales at stores open at least a year fell 0.5 percent, the worst performance in 13 years, according to the shopping council.

Source: NY Times

JC Penney focused on winning sales from teens

NEW YORK (Reuters) - J.C. Penney Co Inc (JCP.N: Quote, Profile, Research) is adding new brands and updating the look of its junior's and young men's departments as the mid-tier department store operator tries to win sales from teenagers during the upcoming back-to-school shopping season.

Penney said on Monday it will launch a new private brand, called Decree, for teenage girls and young women, while it will introduce two new brands, American Living for Young Men and Whitetag, in its young men's department.

"Teens have always been a cornerstone of our business, and they are emerging as today's key influencers of purchase decisions made by their family," Ken Hicks, president and chief merchandising officer, said in a statement.

Given the increasing importance of this segment, he said Penney was adding the brands to meet teenagers' diverse tastes.

The announcement comes one day before Penney is scheduled to hold its annual meeting with Wall Street analysts and provide an update on its business, which is faltering as shoppers reduce spending in the wake of the economic slowdown.

Penney's sales at stores open at least a year, a key retail gauge known as same-store sales, have fallen in every month since November, when it posted a gain of 2.6 percent. It has forecast another decline for April same-store sales.

The back-to-school shopping season could be a crucial one as struggling U.S. retailers looking to boost sales, and attract shoppers with extra cash in their hands from tax rebate checks.

Penney said the Decree brand will offer "sophisticated apparel, accessories and footwear," with a heavy emphasis on denim. The items will range from $18 for a tank top to $38 for a pair of 5-pocket jeans to $85 for outerwear.

American Living for Young Men is a brand developed exclusively for Penney by Polo Ralph Lauren Corp's (RL.N: Quote, Profile, Research) Global Brand Concepts division. It will feature denim, polo shirts, and T-shirts, while Whitetag, a national brand, is described as an "urban rock" inspired collection.

Penney also said it is adding new fixtures and graphic images to its juniors and young men's departments.

It said that in its new, "off-mall" stores, or stores being built away from malls, there will be newly designed dressing rooms with flat screen televisions and sitting areas.

Source: Reuters

Tween Brands Needs Growth Spurt

Tween Brands thinks the retail environment is pretty lame.

Tween Brands stock slumped to $18.10 Thursday, the lowest since 2004, after the company reduced its first-quarter earnings guidance to between 12 cents and 17 cents from its previous estimate of between 35 cents and 40 cents.

In 2007, the company posted first-quarter earnings of 39 cents a share and analysts polled by Thomson Financial expect earnings of 37 cents a share. Shares closed down $5.27, or 22.7%, at $17.91, during Thursday's trading session.

Tween Brands operates retail brands Limited Too and Justice, which sell apparel, footwear and accessories for girls in the so-called "tween" segment, or ages 7-to-14. While their customers may fall between "child" and "teen" retail categories, one thing is certain: they're not between jobs, which may be what's hampering the brands. Unlike teens, tweens are too young to make extra spending money, making them dependent on their parents' discretionary income--which has dwindled as food and energy prices increase.

"We believe customers are trading down in their apparel shopping, opting to lower price items for sale items and buying fewer than them. We've seen a much lower average transaction value in the first-quarter to-date versus last year," said Chairman Mike Rayden, commenting on the difficult retail environment.

Rayden blamed his fickle customers, who snubbed the company's spring sportwear line.

The company attributed its slashed estimate to a greater-than-expected decrease in its projected first-quarter same-store sales, which are now expected to be between 7% and 9%. The outlook was also reduced on account of a 4 cents a share cost related to executive severance that wasn't included in previous guidance.

Teen retailer Hot Topic saw shares jump nearly 10.0% Thursday after the company said March same-store sales didn't fall as much as expected. The stock closed ahead by 42 cents, or 9.6%, at $4.82.
Source: Forbes

Pier 1 Slows Closings, Expects Break-Even

FORT WORTH-After reporting a comp-store increase and halving losses, Pier 1 Imports is finished with mass store closings, executives said at the company’s fourth quarter conference call recently. The company will open “a few” new units this year, and close 25 stores, said Charles H. Turner, EVP and CFO.

Last year, the company closed a net 79 stores as it launched a major turnaround effort. By 2010, openings and closings likely will be equal. “Our big store closings are done,” Turner said. “We are looking for opportunities to relocate stores, open new locations and exit underperforming markets.”

Total sales for the fourth quarter declined 7.8% from the previous year to $436.7 million. Comparable store sales increased 2.5%. For the quarter, net income was $13.7 million, versus a net loss of $58.7 million a year ago.

For the fiscal year, total sales declined 6.9% from 2007 to $1.5 billion. The company reported a net loss from continuing operations of $96 million, compared with a loss of $227.2 million the previous year. The retailer operates more than 1,100 stores in 49 US states, Canada, Puerto Rico and Mexico.

Source: GlobeSt.

Retailers Fined for Digital TV Offenses

Federal regulators on Thursday fined Wal-Mart Stores Inc., Best Buy Co., and other retailers $3.9 million combined for failing to properly label that analog-only televisions will need to be retrofitted after the switch to digital TV next year.

The Federal Communications Commission also handed down $2.7 million in fines to other companies for violating other digital TV rules that involve shipping analog equipment and blocking technologies such as the V-chip.

An FCC rule, adopted last May, requires retailers to display or affix "consumer alert" labels to analog-only TV equipment - including TVs, DVDs, videocassette recorders and digital video recorders - that says it will not receive signals after the nationwide digital transition without a special converter box.

The rule is to keep consumers from buying TV equipment that will not work after the digital switch by Feb. 17, 2009. After that, if the TV doesn't get cable or satellite service or isn't hooked up to the converter box that translates over-the-air digital broadcasts, it won't work.

The FCC, which conducted numerous inspections last June, said it initially issued warnings to companies, whose stores and Web sites across the country were in violation of the rule. The agency said it gave each company "a reasonable opportunity" to respond.

Sears Holdings Corp., which operates Sears and Kmart retail stores, was fined nearly $1.1 million for the labeling violation, while Wal-Mart was given a $992,000 fine and Circuit City Stores Inc. was handed a $712,000 fine. Target Corp., Best Buy, Fry's Electronics Inc. and CompUSA Inc., which has since been acquired by Systemax Inc., were assessed fines between $168,000 to $384,000.

Sears - fined for 15 of its stores, its Web site and 20 Kmart stores - said in an e-mail statement that it was "surprised" by the FCC's action and had eliminated analog inventory from its stores last fall and will soon offer converter boxes.

The company said it hasn't decided whether to appeal or pay the fine.
Best Buy, which was fined for 18 stores selling various models of analog-only equipment, said it was "extremely disappointed" by the FCC's action to what it called a "relatively small number of instances."

"Best Buy voluntarily pulled all analog-only tuner products from our stores on Oct. 1, 2007, in a proactive effort to prevent confusion and to help jump start consumer awareness," the company said in an e-mailed statement.

The company said it did not believe it violated the FCC rule "in any willful or repeated manner."
Wal-Mart spokeswoman E.R. Anderson said in a statement that all the products sold by the company comply with FCC regulations. Wal-Mart has "voluntarily invested millions of dollars in new technology, training, new product and consumer education" for the transition, she said.
The FCC says that after inspecting 2,272 retail stores and 36 Web sites, it issued 349 citations, or warnings, to retailers for failing to comply with the labeling requirement.

The FCC also fined two companies - Syntax-Brillian Corp. and Precor Inc. - a combined $1.6 million for violating another digital TV rule for manufacturing, importing or shipping any device that only contains an analog tuner. The agency mandated that all new TVs must include digital tuners as of March 1, 2007.

Additionally, the agency fined Polaroid Corp. and Proview Technology Inc. nearly $1.1 million combined for failing to ensure their equipment with a V-chip technology can "respond to changes in the content advisory rating system." All the companies have 30 days to appeal the fines.

The Consumer Electronics Association, a trade group whose members include Circuit City and Best Buy, said late last year that more than 50 percent of U.S. households now own a digital TV and expect nearly 32 million digital TVs will be shipped this year.

The federal government this year launched a $1.5 billion coupon program to help defray cost of converter boxes for viewers of analog sets that rely on antennas to watch TV. Each U.S. household is entitled to get two $40 coupons.

As of April 7, the government has accepted more than 5.2 million household requests for nearly 9.9 million coupons. So far, more than 280,000 coupons have been used to purchase converter boxes.

Source: Plain Vanilla Shell

Pep Boys Joins the Sale-Leaseback Party

PHILADELPHIA--(BUSINESS WIRE)--The Pep Boys - Manny, Moe & Jack (NYSE: "PBY"), the nation's leading automotive aftermarket retail and service chain, announced that it has closed on the sale of 23 properties for an aggregate purchase price of $74.3 million. The Company expects to utilize the sale proceeds to repay indebtedness.

Coincident with such sales transaction, the Company entered into agreements to lease such properties back to be operated as Pep Boys stores for a lease term of 15 years with four five-year options.

Chief Financial Officer Harry Yanowitz said, “We are pleased to announce this transaction, the third such transaction designed to monetize our real estate assets and reduce debt. We continue to be pleased with the terms on which we have been able to execute these transactions and the values embedded in our owned properties.”

About Pep Boys

Pep Boys has over 560 stores and approximately 6,000 service bays in 35 states and Puerto Rico. Along with its vehicle repair and maintenance capabilities, the company also serves the commercial auto parts delivery market and is one of the leading sellers of replacement tires in the United States. Customers can find the nearest location by calling 1-800-PEP-BOYS or by visiting pepboys.com.

Source: BusinessWire

DC: Costco site in Pentagon City gets long-awaited redo

As condominium complexes and other high-rise structures rose around it through the years, the Costco site in Pentagon City became affectionately known as the hole in the neighborhood's doughnut.

The filling could finally be on the way.

New York-based Kimco Realty Corp. and DRA Advisors LLC plan to start site work later this year on a pair of office projects -- a 20-story building and a companion of eight stories -- on what is now the parking lot of Costco's big-box discount warehouse on South Fern Street.

The smaller building, with 125,000 square feet, would come first. Construction won't begin on the larger building, expected to be 333,000 square feet, without a substantial pre-lease agreement, but the project's backers do not think they will have trouble finding eager parties to fill the space.

The site is across the street from the Pentagon City Metro station, retail complex Pentagon Row and a mall, the Fashion Centre at Pentagon City.

"This is truly an underutilized site," said Bill Brown, Kimco's senior vice president of redevelopment.

"When you look at the amenities and the proximity to Metro, the regional mall and the Pentagon, it's all there."

Kimco and DRA control the Costco property and a neighboring retail complex that houses Best Buy, Marshall's, Linens 'n Things and Borders. Those stores will not disappear as part of the project, but the long-term plan for the site could involve the redevelopment of the buildings into a 250-room hotel and up to 800 residential units.

An application winding its way through Arlington County would keep those proposals in place for the time when the retailers decide to end their leases. Costco could stay for an additional 40 years, and the other retailers have lease options to remain on the site for 20 more years, Brown said.

The residential and hotel "part of the project is a long way off," he said, "but if this gets approved now, it won't inhibit the long-range plan. The county wants to make sure it is not nearsighted on the development of the rest of the site."

Arlington's development plan for Pentagon City was laid out in the mid-1970s. Most of the properties surrounding the Costco site have since shed an old industrial zoning classification for a mix of commercial, retail and residential uses.

Across from the Kimco property, for example, McLean-based Kettler is in the midst of a $1.2 billion project that will eventually bring 3,200 residential units to a block that once held a row of warehouses.

The Costco site wasn't developed until 1994 and, despite its low-rise stature, hasn't diminished in value. The property is assessed by the county at $110.9 million.

"There's no more commercial density available in Pentagon City, period," said Tom Newman, director of the real estate development group at Arlington Economic Development. "That's why this project is exciting for us."

Both of the Kimco and DRA office buildings would have ground-floor retail space. The developers hope to snare one or two large users for the smaller office building and several tenants to take multiple floors at the 20-story building, Brown said.

Initial construction and site-development costs should top $100 million, Brown said.

The Costco site's redevelopment application has another review April 21 by a county site-plan review committee. The project could get a vote by Arlington's planning commission in June and a final vote by the Arlington County Board in July.

If all approvals are obtained, Kimco and DRA would start site work in the third quarter, Brown said.

The smaller office building could be completed in about two years. The larger structure's construction timetable will be determined by pre-leasing activity.

Source: Washington Business Journal

Blockbuster offers $1 billion-plus for Circuit City

NEW YORK (Reuters) - Blockbuster Inc , the No. 1 U.S. movie rental chain, said on Monday it has offered to buy electronics retailer Circuit City Stores Inc for about $1 billion to $1.3 billion in cash.

Blockbuster said it made the unsolicited approach in February, offering $6 to $8 per share. That represents a premium of 54 to 105 percent over Circuit City's closing share price of $3.90 last week, although the troubled retailer's stock traded above $21 last year.

Blockbuster Chief Executive and Chairman Jim Keyes, a former 7-Eleven CEO hired last year with a mandate to turn around Blockbuster, made the offer in a February 17 letter to Circuit City Chief Executive Philip Schoonover, but Blockbuster said Circuit City had so far failed to provide due diligence.

Keyes in the letter said the "new" Blockbuster would be "the most convenient source for media entertainment." Keyes has shifted Blockbuster from a heavy emphasis on online DVD rental to enticing customers through a variety of in-store and electronic offerings, including more emphasis on DVD sales.

Blockbuster said it made the proposal public, "because it believes the shareholders of Circuit City should have the opportunity to participate in determining the destiny of the company."

The combination would result in an $18 billion global retail company that would be "uniquely positioned to capitalize on the growing convergence of media content and electronic devices," the company said in its statement.

"We believe the combination will result in a compelling consumer proposition that will drive significant revenue and margin enhancements as well as costs synergies," Keyes said.

Circuit City was already talked of as a takeover target. Its shares have crashed to multiyear lows in the past year, as it has posted losses.

It has made store changes, including replacing more than 3,000 workers with lower-paid employees -- a move that disrupted its business and upset sales.

Circuit City had an average of 166.5 million shares in its most recent quarter. Its shares closed at $3.90 on the New York Stock Exchange on Friday.

Circuit City and Blockbuster were not available immediately for comment.

Source: GlobeInvestor.com

VA: Prime Outlets - Williamsburgh to Expand

WILLIAMSBURG, Va., April 11 /PRNewswire/ -- Prime Retail, one of the largest developers of outlet centers in the country, will unveil a 115,000 square foot, $55 million expansion, to include 25 new top designer and brand- name stores and a 300-seat food court, at Prime Outlets - Williamsburg on Friday, April 18 at 11:00 a.m. With a total gross leasable area of 456,922 square feet, the region's largest outlet shopping destination will now offer shoppers 120 stores.

Located on Richmond Road, four miles from I-64, Prime Outlets - Williamsburg serves the Williamsburg, Richmond and Norfolk metro markets. The shopping center will celebrate the public grand opening of its newly expanded property with local officials and its construction partners at a ribbon cutting and tree planting ceremony beginning at 11:00 a.m.

Adidas Factory Outlet, American Eagle Outfitters, Burberry, COACH Factory, kate spade, Kenneth Cole, Juicy Couture, Lucky Brand Jeans, PUMA, Skechers, Tommy Bahama and True Religion Brand Jeans will join leading brands such as BCBG MAX AZRIA Factory Store, Calvin Klein, Michael Kors, Nike, Polo Ralph Lauren and Under Armour at Prime Outlets - Williamsburg.

According to Prime Retail's Senior Vice President of Marketing Karen Fluharty, the expansion project at Prime Outlets - Williamsburg represents the company's commitment to create large, well-tenanted outlet centers throughout its portfolio.

"We are enhancing the shopping experience for both regional shoppers and tourists alike at Prime Outlets - Williamsburg. Our goal is to offer a large and compelling mix of leading designer and brand name stores that offer shoppers everyday savings of up to 65 percent off regular retail
prices in major markets throughout the U.S."

In addition, the expansion at Prime Outlets - Williamsburg was designed to comply with federal requirements for "green building." Construction elements including the largest pervious concrete paving project in the U.S., eco-conscious storm water management, rain water recycling irrigation and reduced water consumption will qualify the property for LEED certification (Leadership in Energy and Environmental Design).

Prime Outlets - Williamsburg's public grand opening weekend schedule of events include:



-- A complimentary, limited-edition Prime Outlets - Williamsburg "Green is Gorgeous" canvas tote bag for the first 500 shoppers visiting Guest Services located in the food court on Friday, April 18.
-- Special merchant discounts and offers during extended grand opening weekend shopping hours from Friday, April 18 through Sunday, April 20.
-- The chance to win Prime Outlets - Williamsburg's Ultimate Shop and Stay Sweepstakes worth $1,000.

Source: PRNews

Wash DC: Saul Centers adds to portfolio

Real estate investment trust Saul Centers Inc., which owns dozens of neighborhood shopping centers, mostly in the Washington and Baltimore areas, is adding properties in Great Falls, Alexandria and Bethany Beach, Del., to its portfolio.

The Bethesda-based company has acquired the 89,000-square-foot Great Falls Center, anchored by a Safeway and a CVS, a 115,000-square-foot BJ's Wholesale Club in Alexandria, and the 22,000-square-foot Marketplace at Sea Colony in Bethany Beach.

Saul said it paid a total of $60.6 million for the three properties, including the assumption of $10.3 million in mortgage debt.

Saul (NYSE: BFS) had $150.1 million in 2007 revenue, up 9 percent from the previous year. The company now owns 51 community and neighborhood shopping centers with 8.1 million square feet of leasable space.

Source: BizJournals

Regis Clips Up

When you're heading into hard economic times, you may want someone with a gleaming pair of scissors and a sharp razor on your side.

Discount hair chopper Regis (NYSE: RGS) is bucking the retail malaise this morning, posting respectable store-level improvement during its fiscal third quarter. Revenue inched just 4% higher to $680 million for the company behind concepts like Supercuts, MasterCuts, and its own namesake salons, but even that improvement wouldn't have been possible if comps hadn't improved during the period.

Same-store sales clocked in 1.4% higher than they did during the same March-ended quarter a year ago. More importantly, the service side that makes up the lion's share of Regis' revenue mix rose by 3.3% during the quarter, the best performance at the company in eight years.

Product sales weighed that down, but that has to be expected. When you're worried about losing your job or about the high price of the gas it took to get your car to the salon, the last thing you're going to fall for is a last-minute pitch for pricey hair care products.

The important stat here is that Regis has never looked this good at the hair-snipping level, and that makes sense. Hair doesn't grow any slower just because the economy is slowing. Some of the harried and hairy may take a chance with a Flowbee or cave in to an enterprising coworker styling on the side, but most people will still go to a salon. With the tricky economy sending the pampered yet unkempt to cheaper alternatives than boutiques with European names and flamboyant designers, Regis is there to collect the masses with open arms and open scissors.

It doesn't always work that way. Target (NYSE: TGT) and Family Dollar (NYSE: FDO) each posted a 4.4% decline for March. However, it's different on the retail services side, especially with something as rudimentary and necessary as haircuts. Even though many of the hair and beauty care product specialists like Ulta Salon (Nasdaq: ULTA) and Helen of Troy (Nasdaq: HELE) are trading closer to their 52-week lows than their highs -- and Regis' own shortcomings on the merchandise upselling front bear that out -- it's apparently a good time to be cutting hair for $10 to $20 a mop.

Just keep on moving, Regis. Just make sure you don't run with those scissors.

Source: Fool.com

Circuit City Opening More Stores Despite Loss

RICHMOND,VA-Circuit City Stores is opening 45 to 55 new stores this year, up from the 43 it opened during 2007, despite a $320-million loss during its last fiscal year. Additionally, management does not foresee the near-term closure of any underperforming stores, they said during their fourth-quarter conference call.

Most of the new stores are in the company’s “City” concept format, which average 20,000 sf and focus less on appliances than its other superstores. Of its nearly 700 domestic units 22 are currently City locations.

Same-store sales slid 10.4% year over year during the fourth quarter, which ended Feb. 29. Net sale dropped 7.7%, to just over $3.6 billion.

For the coming year, executives predict at same-stores sales decline in the mid-single digits. The company, which expects to post a first-quarter loss between $180 million and $195 million will not show financial improvement until the back half of the year, said Philip Schoonover, Circuit City’s chairman, president and chief executive officer.

“We remain confident we are on the right track,” he said. The company will focus on improving margins, differentiating its stores from other chains an improving the overall shopping experience for customers, management said.

Source: GlobeSt.

Westport firm completes purchase of Norwalk strip mall for $16.8M

NORWALK - A Westport-based real estate development firm finalized a $16.8 million deal yesterday to purchase a third piece of property on Westport Avenue.

Timpany Norwalk Real Estate LLC, a subsidiary of Paragon Realty Group of Westport, bought the 2.4-acre parcel at 420-444 Westport Ave. from SH Realty, also of Westport. The property is occupied by a nearly 52,000-square-foot shopping plaza housing Staples, Blockbuster video, Hollywood Tans, Payless Shoe Source, GNC vitamin store and a nail salon.

No plans have been announced for the parcel, but the acquisition brings together three pieces of land on the busy road. In October, Paragon purchased properties at 508 and 490 Westport Ave. occupied by the 45,000-square-foot Ski Market and Total Tennis and Fitness stores and a 10,600-square-foot office building.

Paragon representatives were not available last night. But they said in October that the Route 1 corridor is an attractive location.

"It's very accessible, and we have parking. We really like the Westport Avenue corridor," Paragon chief executive John Nelson said.

The sale provides a boon to the city, which collected nearly $84,000 on the sale in conveyance taxes at a time when home sales are slumping.

Conveyance taxes are levied on real estate transactions, assessed as a percentage of sale price at closing. Norwalk charges 0.5 percent, or $5 per $1,000, of a sale price in conveyance taxes, twice the amount most other municipalities are allowed to charge.

Before 2003, cities and towns collected $1.10 on every $1,000 of a home or business sale. But with state aid dwindling, the General Assembly raised that to $2.50 and allowed 18 communities with enterprise zones, including Norwalk and Stamford, to raise the tax to as much as $5 per $1,000.

Norwalk residents pay the maximum, and Stamford charges $3.50 per $1,000. The increases were supposed to have expired, but lawmakers have repeatedly extended them.

Last month, a state legislative committee voted to prolong the tax for two more years with the potential of exempting financially strapped homeowners.

Norwalk budgeted about $5.8 million in revenue from the tax in the current year but could receive $5.1 million to $5.4 million, City Finance Director Thomas Hamilton said.

In the process to draft the next fiscal year's budget, Hamilton adjusted his original $5.25 million conveyance tax revenue projection downward by $275,000 to $4.975 million to account for the housing slump.

"This past quarter is probably the slowest I've seen in the past seven years I've been here," Town Clerk Andrew Garfunkel said of the number of land sales filed.

But a string of commercial sales over the past fiscal year have compensated for a downturn in conveyance taxes and land record filing fees tied to the housing market slump, he said.

In other recent commercial transactions, Stamford-based F.D. Rich and Co.'s February purchase of 28 addresses along Washington and South Main streets for $24.6 million in South Norwalk brought in $111,820 to the city, coming close to the No. 3 spot for the highest conveyance tax payments over the past fiscal year.

Source: The Stamford Advocate

Citizens extends in-store deal with Stop & Shop

PROVIDENCE – The in-store partnership between Citizens Financial Group Inc. and Stop & Shop Supermarket Co. LLC has proven so successful, the companies have agreed to extend it for another nine years. Financial terms were not disclosed.

“They’ve been a great partner for us,” Robert Keane, a spokesperson for Quincy, Mass.-based Stop & Shop, told Providence Business News today. “We think of them not so much as a tenant in our stores [but] as a business partner … and we look forward to continuing that relationship.”

The deal “extends our partnership with Stop & Shop through 2017, with an option to extend it for another five years,” Mike Jones, New England region spokesman for Citizens, told PBN in a telephone interview today.

“It’s really an affirmation of the great partnership we have with Stop & Shop, and it’s an affirmation of our belief that our in-store model provides value to our customers,” he said. “Obviously, there’s a tremendous convenience … our in-store branches are open seven days a week and offer extended weekday hours.”

“We have 540 in-store locations throughout our footprint and 23 in-stores in Rhode Island,” with Stop & Shop and other retail partners, Jones said.

Those locations have proven a big source of new accounts for Citizens.

Overall, “we generate 30 percent more new checking-account customers in-store,” he said. “Your traditional branches, we have maybe 5,000 customers per week, most of whom are repeat customers. In any given Stop & Shop store, we have 15,000 to 20,000 customers in our lobby, most of whom are potential new customers,” Jones said.

“It’s also a great platform for us to offer value-added promotions,” he said.

“We kicked off a new promotion yesterday that involves us giving away $135,000 in free groceries,” through Stop & Shop and other supermarket partners, Jones said. Any customer who opens a new checking account at one of Citizens’ in-store branches will be entered in a drawing, in mid-May, for a $250 prize. With one prize per location, that amounts to $5,750 in Rhode Island alone.

“We’re also offering a cash-back program, Extra Green,” starting this quarter and continuing indefinitely, Jones said. “Every time a customer who is enrolled in the program – and it’s free of charge … every time they spend $50 or more at Stop & Shop, they automatically receive into their Citizens’ account a certain percentage.” Extra Green participants who have “our premiere account,” Circle Gold Checking with interest, get back 3 percent of their grocery purchase; those with regular Circle Checking get 2 percent; and those with the basic Green Checking get 1 percent, he said. “And that’s Citizens Bank’s money, that’s not customer money.”

Source: Providence Business News

NJ: Sav-A-Lot Opens 18,000-SF Store

EWING, NJ-Sav-A-Lot has opened a 17,584-sf supermarket at Capitol Plaza, a 284,000-sf shopping center at Route 206 and N. Olden Ave. The opening completes a lease transaction signed with the owner, a local group, earlier this year.

In that transaction, Sav-A-Lot, a St. Louis-based subsidiary of Supervalu Inc., was represented by Mike Murray of Metro Commercial Real Estate’s Mt. Laurel, NJ office. Metro has now orchestrated some 70,000 sf of leases for Sav-A-Lot in the region. The ownership was represented by Dale Mulartrick of Levin Management Corp., North Plainfield, NJ. Terms were not released.

"Sav-A-Lot is emerging as one of the country’s top value-added grocery chains," Murray says. “The store’s latest lease will better enable the chain to meet its expected level of growth.”

The opening brings a grocery element back to the repositioned Capitol Plaza, lacking since Super G closed its 70,000-sf store in 2005. That space has been subdivided by Levin, with Sav-A-Lot joining the recently opened Harbor Freight Tools, among others, in that vacant space. Other tenants include Forman Mills, Ashley Stewart, American Furniture, AJ Wright, Kicks USA and K&G Superstore.

"The Sav-A-Lot lease restores the center’s grocery component, but with a smaller space requirement," says Mulartrick. "This enabled us to further diversify Capitol Plaza’s tenant mix."

Source: GlobeSt.

Council OKs Chelsea Outlet Mall Deal

Published: Friday, April 11, 2008

By KAREN LOVETT, Telegraph Staff

MERRIMACK, NH – The town council propelled a proposed outlet mall through its next step Thursday but not without some reservations about the project.

A majority of councilors authorized the execution of a development agreement with Chelsea Property Group, which is vying to build an outlet mall off Exit 10 on the F.E. Everett Turnpike.

The agreement was put together by the planning board, town staff, consultants, attorneys and Chelsea’s representatives. The 16-page document represents a baseline of requirements that Chelsea must comply with and holds the company to earlier promises.

Though Chelsea has mostly dealt with the planning board, the town council was brought on board to sign off on the development agreement in part because of financial impacts to fire, police and emergency services.

However, some were not pleased about signing an agreement that they had no part in negotiating.

Councilor Mike Malzone said it felt like “signing somebody else’s homework.”

“Believe me, the planning board did do the best they can,” Chairwoman Betty Spence said. “My expectation of it was different, and I didn’t realize that I would be sitting here today with an agreement in front of me, that I had no say in negotiating, that I was being asked to execute.”

Councilor Tom Mahon, liaison to the planning board, and others who worked on the agreement described it as simply part of the permitting process. Most concerns raised about the agreement, they said, would be addressed in a much stricter site plan review by the planning board.

Still, some residents and councilors were concerned about what they called general vague language and unanswered questions.

Concerned Citizens of Merrimack Alliance members Mike Mills said the document was “poorly written and incomplete,” and Jamie McFarland added, “I looked at this development agreement as very much a cookie-cutter agreement.”

Mills presented a laundry list of issues, including: enlarging the area qualifying people for property surveys before rock blasting; excluding holidays from blasting operations; and undefined police patrols.

Councilor Tim Tenhave echoed their worries, saying he wasn’t convinced traffic had been fully addressed or that Chelsea’s pledged $650,000 for the fire department would be adequate to cover its needs.

Councilor Dave McCray said he couldn’t “write a letter long enough to capture everything he’s uncomfortable with,” but that he trusts the planning board and Chelsea to work through it.

“We have been put in a very tenuous position, a lousy position,” McCray said. “My feeling is this has been going on three years . . . to me it is about faith.”

On the measure to execute the agreement, including a letter outlining council concerns, Mahon, McCray and Finlay Rothhaus supported, Spence opposed and Malzone and Tim Tenhave abstained. Councilor Nancy Harrington dismissed herself from the discussion because she is a neighbor and has been a vocal opponent of the project.

Source: Nashua Telegraph

Mass. AG proposes changes to Brownfields regulations

Changes to the state's Brownfields regulations have been proposed by Attorney General Martha Coakley to encourage more redevelopment of abandoned or contaminated properties by making the state's application process more user-friendly, less complicated and more predictable, it was announced Thursday.

The Brownfields Covenant Program, which began in 1999, encourages the cleanup and development of old industrial sites by providing state liability protection to individuals or companies that undertake redevelopment projects.

"Brownfields redevelopment is an important part of our economic development; it allows us to make our communities cleaner and safer, and contribute to smart growth in the already-developed areas of the state," said Coakley in a statement. "By making the process for acquiring Brownfield Covenants more timely and predictable for developers, we are offering more incentives for this kind of development."

The amendments Coakley has proposed include reducing the public comment period from 90 to 30 days for applicants who did not cause the contamination; clarify procedures such as public comment deadlines and the rights of affected third parties; eliminate some procedures on particularly difficult cleanups; and create a more streamlined and predictable process for those applying to undertake Brownfields projects.

The attorney general's office also is releasing the findings of a public review of the program that took place last year, when developers, communities and environmental specialists suggested revisions to the Brownfields covenants. The report is available at www.mass.gov/ago.

Since it was approved a decade ago, the Brownfields Covenant Program has allowed more than 30 properties statewide to be redeveloped into affordable and market-rate housing, commercial and industrial buildings, and parks. The revitalization of once-blighted areas has led to new jobs and tax revenue, restored buildings and infrastructure, provided and clean open space for neighborhoods.

"We would like to acknowledge Senator Harriette Chandler, who has been examining how to build on the successes of the 1998 Brownfields Act, and all who participated in our program review process," said Coakley. "These conversations will help our program to continue to respond to the needs of developers, communities and the environment."

Three public hearings on the proposed regulations are planned: 2 p.m. May 2 at Worcester City Hall, noon May 5 at Lynn City Hall and 10:30 a.m. May 7 at the Attorney General's office, 1 Ashburton Place in Boston.

Source: Boston Business Journal

Boston: Filene's Basement on track to move back to old digs in '09

Filene's Basement will move into One Franklin -- the redeveloped home of the original Filene's basement -- March 2009, confirmed John B. Hynes III, president and CEO of Gale International LLC, one of the owners and the developer of the building.

The legendary mark-down retailer will occupy its original yet renovated three basement floors, said Hynes.

"It's that simple," he said.

The building, which is currently under demolition, is being redeveloped as a mixed-use complex comprised of 1.2 million total square feet, which includes 500,000 square feet of Class A office space, five floors of retail, 140 residences, a hotel, 299 below-grade parking spaces and a health club and spa. Demolition is slated to end June 1, said Hynes.

The Filene's building at 426 Washington St. is owned by Vornado Realty Trust (NYSE: VNO) of New York and New Jersey-based Gale International LLC, who jointly acquired the Landmark building and surrounding property in the fall of 2006 for approximately $100 million to $150 million from Federated Department Stores Inc.

Additional retailing space of between 2,000 square feet and 20,000 square feet will be leased. Target, long rumored to be one of the retailers to occupy space, is not an option given its need for a larger footprint, said Hynes. Other retailers will be able to move into the newly constructed building in 2011.

Source: Boston Business Journal

Despite Bad Economy, New Mall Planned

Legacy Place To Feature Restaurants, Shops

BOSTON -- Groundbreaking began Thursday in Dedham on the construction of a 675,000-square-foot open-air shopping center that will house dozens of restaurants and shops.

National Amusements and WS Development said that Legacy Place will feature a contemporary blend of more than 60 of the nation’s leading fashion, restaurant and entertainment tenants. Located at the intersection of Route 1 and Interstate 95, the center will house a Whole Foods Market, L.L.Bean, Borders and Kings -- a restaurant offering billiards and bowling. The center will also be home to the new world headquarters for National Amusements.

Legacy Place will also have a Showcase Cinema de Lux -- National Amusements’ high-end entertainment concept. The 15-screen theatre will include a new premium, reserved-seating concept called Lux Level, which features in-seat dining and a lounge.

Legal Sea Foods, P.F. Chang’s China Bistro, Yardhouse, Aquitaine, Ruth’s Chris Steak House, and Daily Grill will blend with more than 60 specialty stores. These include: Anthropologie, Victoria’s Secret/Pink, Lucy, Glee, b.good, Banana Republic, National Jean Company, Gap, Bath and Body Works, Levi’s, Finale, Clarks, Lucky Brand Jeans, nau, Company C, Green Tangerine Day Spa and Salon, Urban Outfitters, Stil Hus, Stride Rite, Free People, Au Bon Pain and lululemon athletica.

"We're thrilled to work with National Amusements and begin construction on this phenomenal project,” said Jeremy Sclar, president of WS Development. "We’ve spent years thinking, planning, designing, and redesigning to achieve the right architecture, the best tenants, and the most enjoyable experience for the visitor. When it opens, we believe Legacy Place will not only be one of the best shopping and entertainment destinations in New England, but in the entire country."

Legacy Place is scheduled to open in the summer of 2009.

Source: TheBostonChannel.com

Retail Sales Cool at Many Chains

Monthly same-store sales declined at many of the nation's chain stores in March, as continuing worries about the economy kept a lid on consumer spending.

The timing of Easter, which led many stores to shut down for the holiday, also factored in, a number of retailers said.

Even so, not all the news was dour. In particular, Wal-Mart (WMT - Cramer's Take - Stockpickr), the world's biggest retailer, raised its first-quarter continuing operations profit forecast to a range of 74 cents to 76 cents a share from its prior outlook of 70 cents to 74 cents.

Wal-Mart said same-store sales rose 1.1% last month, including fuel sales, or 0.7% without fuel sales. Total revenue in March climbed 7.9% to $36.97 billion from $34.26 billion a year earlier. For April, U.S. comp sales, without fuel, should rise between 1% and 3%, Wal-Mart said. Shares edged up 0.4% to $54.34.

Costco (COST - Cramer's Take - Stockpickr) had one of the better reports, as same-store sales were up 7% last month, while total sales rose 11% to $6.57 billion.

Gap (GPS - Cramer's Take - Stockpickr) wasn't as fortunate, and its shares slid 4.1% to $18.12 after the clothing seller said March comps slumped 18% year over year. Total revenue was $1.37 billion for the month, a 12% drop.

Even though the company reiterated its fiscal-year earnings guidance of $1.20 to $1.27 a share, investors weren't impressed.

Kohl's (KSS - Cramer's Take - Stockpickr) was hit hard, with same-store sales sliding 15.5% for the month and total sales down 7.9%. The company also said it expects first-quarter earnings of 40 cents to 42 cents a share, falling short of the 49-cent consensus estimate.

Among other chains, discounter Target (TGT - Cramer's Take - Stockpickr) said March same-store sales fell 4.4%, while overall sales advanced 1.5% to $5.68 billion. Aeropostale's (ARO - Cramer's Take - Stockpickr) same-store sales rose 2.5%, and total revenue jumped 13.6%.

Meanwhile, American Eagle (AEO - Cramer's Take - Stockpickr) was down 2.5% to $16.50 after it cut its first-quarter earnings projection and said comp sales declined by 12% last month. Total sales in March fell 2% to $267.3 million.

Profits for the first quarter, the apparel seller said, will likely be 18 cents to 20 cents a share, falling short of the earlier outlook of 25 cents to 27 cents.

Comps for March at Limited (LTD - Cramer's Take - Stockpickr) and Pacific Sunwear (PSUN - Cramer's Take - Stockpickr) decreased 8%.

Source: TheStreet.com

Grocery Anchored Centers Get Squeezed

Owners and operators of neighborhood and community centers are unexpectedly bearing the brunt of escalating energy and food prices.

The shopping center sector, typically anchored by supermarkets, drug stores and discount stores, has long been touted as recession-proof, because its tenants sell life's essentials. However, that thesis is being severely tested today.

Asking rents at shopping centers rose just 0.4 percent during this quarter, the smallest increase in seven years, according to Reis Inc. And effective rents grew just 0.1 percent. That's a marked slowdown from a year ago when asking rents grew 0.9 percent and effective rents rose 0.8 percent during the first quarter. Meanwhile, the national vacancy rate continued to march upward, rising 20 basis points during the first quarter up to 7.7 percent, its highest rate in more than a decade.

Compounding the pressure on landlords are tenants who are demanding rent reductions, even in primary markets. A year ago, they would take any space they could find. Today, national chains are requesting as much as $2 per square foot off asking rents and delaying openings until next year, or even 2010, says Steve Ewing, vice president with Staubach Retail, an Addison, Texas-based commercial real estate advisory firm. Other concessions include increased tenant improvement allowances and periods of free rent.

Still, there's no consensus in the market as to what makes a fair deal. Landlords have been pushing back against concessions. As a result, negotiations can take twice as long, up to four months or longer for a lease, says John Bemis, executive vice president and director of leasing and development with Jones Lang LaSalle, an Atlanta-based third party retail management firm.

In particular, in smaller suburban areas, "for rent" signs are hanging in store windows for months without attracting much interest, says J. Scott Fawcett, principal with Marinita Development Co., Inc., a Newport Beach, Calif.-based developer and property manager. And, with the slow leasing market, developers have postponed opening dates for new shopping centers and scaled-back the size of their projects.

"Leasing for the mom-and-pops has virtually dried up," says Fawcett. "I ask the brokers whether they get any phone calls [on the smaller spaces] and they say very, very few." On the other hand, Fawcett says, "national tenants are still doing transactions, but it's taking longer and longer for them to get approvals."

Things may stay like this for a while. Robert Bach, chief economist with Santa Ana, Calif.-based commercial real estate services firm Grubb & Ellis, thinks it will take 10 to 12 months before the economy begins to recover. As a result, demand for space will remain low.

"If we are in a recession, shopping centers will not be immune from the downturn," Bach says. "We have rising gas prices, slumping housing prices and consumers can't take equity out of their homes anymore. The labor market has been one of the main props holding up the retail market, but it got seriously wobbly in the first quarter; so recent numbers don't surprise me."

Another problem is that there is 125 million square feet of new retail construction scheduled to come online this year, according to national brokerage firm Marcus & Millichap Real Estate Investment Service. That glut of space will put more downward pressure on rents.

Bemis and Bach project the national vacancy rate and rental rate will stay flat through the end of 2008. But Bemis admits the leasing environment has changed in the past year.

"The message that I've been preaching to our leasing people is in the past, we've always gotten our fair share of deals," he says. "In 2008, we can't be satisfied with that anymore--we have to get more than our fair share."

Source: Retail Traffic

Linens 'n Things expected to file bankruptcy

Struggling Clifton-based housewares retailer Linens 'n Things is expected to file for bankruptcy within days, according to industry analysts and observers.

Industry insiders expect Linens to negotiate deals with creditors before declaring bankruptcy.

Concerns about the company's cash flow and strained relationships with vendors caused Fitch Ratings, an international credit rating agency, to lower three of Linens' credit ratings Wednesday afternoon.

"Given that their credit profile is deteriorating, we're also worried about the vendor relationships and their liquidity position," said Tiffany Co, director of Fitch Ratings.

Linens was saddled with $650 million in long-term debt as a result of a $1.3 billion leveraged buyout in late 2006 by a consortium headed by private-equity firm Apollo Management LP, a major investor in retailers. Linens has been struggling over the past year as sales slumped because of the housing slowdown and the daunting task of competing with stronger rival Bed Bath & Beyond Inc.

Warren Shoulberg, editor of Home Furnishings News, said the expectation among industry experts at this week's home-furnishings trade show in High Point, N.C., is that Linens will soon file for what is called a prepackaged bankruptcy.

In a prepackaged bankruptcy, the bankrupt company has already negotiated settlement deals with creditors before filing for bankruptcy.

A prepackaged bankruptcy, Shoulberg said, "would allow them to close some of their weaker stores" and "come out of it smaller but stronger."

Linens on Wednesday did not respond to a telephone request for comment.

The debt Linens incurred when it was taken private made it unable to weather the sales slowdown, Shoulberg said.

"Even when it was publicly owned, they did not generate tons of cash, so paying off all this debt, in a weakened retail situation, is absolutely a huge problem for them," he said.

Linens also has the misfortune "to compete against probably one of the two or three best retailers in the country, which is Bed Bath & Beyond," he said.

Several analysts who cover publicly traded Bed Bath & Beyond, which is based in Union, have been predicting for more than a month that a Linens bankruptcy is likely and could have a positive impact on Bed Bath & Beyond's market share.

Source: The Record online

Costco March same-store sales up 7%, total up 11%

Costco Wholesale Corp., the largest U.S. warehouse retailer, reported that its March same-store sales rose 7%, helped by higher gasoline prices and favorable currency translations.

A survey of analysts by Thomson Financial produced a consensus estimate of a rise of 5.9% for the month.

Costco of Issaquah, Wash. reported that same-store sales, those from outlets open at least a year to eliminate the effect of acquisitions and divestitures, rose 5% in the U.S. and 17% elsewhere.

The average sales price per gallon of gasoline jumped 20% in March from a year earlier, Costco said. Stripping out gasoline-price inflation, U.S. comparable sales climbed 3%.

"In addition, foreign-exchange rates, primarily in Canada," helped international comparable sales, Costco said. On a local-currency basis, international comparable sales increased 6% in March.

Total sales for the March period reached $6.57 billion, up 11% from $5.93 billion in the year-earlier period.

Source: Marketwatch

Moody's May Downgrade Macy's Ratings

Moody's Investors Service said Friday it may downgrade the investment-grade ratings on department store operator Macy's Inc. because of weak credit metrics.

The ratings under review include the senior unsecured debt rating of "Baa2." A "Baa2" rating is two notches above junk status.

If a downgrade were to occur, Moody's said it would likely be limited to one notch.

The review will focus on the Cincinnati-based company's prospective operating performance, liquidity and ability to improve its credit metrics, Moody's said. The ratings service is concerned that a slowdown in consumer spending could prevent Macy's from maintaining credit metrics consistent with its current ratings.

Source: Portfolio.com