$35M TIF Furthers $260 MXD Project
The ratings service also affirmed the company's "A-2" short-term and commercial paper ratings. The outlook is stable.
"The rating reflects AutoZone's leading position in the stable but highly competitive retail automobile parts aftermarket along with its consistent operating performance and strong profitability measures," Jerry Phelan, an S&P credit analyst, said in a statement.
But the rating also reflects AutoZone's tendency toward aggressive share repurchase activity and expectations for continued flat-to-negative same-store sales resulting from a weak economy, S&P said.
Same-store sales, or sales in stores open at least a year, is an important measure of retail health because it measures growth at existing stores, rather than growth from expansion.
Source: Yahoo News
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The mall owner, in a proposal filed yesterday with City Hall, details plans for nearly 800,000 square feet of new residential and Retail space at the corner of Dartmouth and Stuart streets.
Along with 280 high-rise condos, Simon is also banking on a significant expansion of Copley Place.
The proposal calls for adding 54,000 square feet to the existing 115,000-square-foot Neiman Marcus store, which would be renovated as well. Another 60,000 square feet of retail would be added beyond that, including space for a restaurant and a winter garden.
The condo tower will include a health club, luxury day spa, library and concierge service.
“The project will enhance the urban fabric of the neighborhood and be a striking addition to the city’s skyline,” said Carl Dieterle, executive vice president for urban development at Simon, in a statement.
But state Rep. Marty Walz (D-Back Bay) said there are still significant concerns about the shadows the new tower will cast across nearby Copley Square and the Commonwealth Mall.
“A building of that height will cast significant shadows on those two green spaces,” Walz said.
Rick Stockwood, a spokesman for the project, said the tower has been specifically designed to minimize the impact of any shadows it will cast. The impact itself, which he described as limited, is laid out in a report included in the project plans submitted yesterday to the Boston Redevelopment Authority.
The shadows that cross Copley Square, for example, are confined to the late fall and winter months, Stockwood said.
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As one of the country's fastest-growing store chains, Steve & Barry's LLC was billed as the future of discount retailing. It boasted of massive expansion plans, built on the back of fire-sale prices of clothes and shoes promoted by the likes of actress Sarah Jessica Parker and professional basketball player Stephon Marbury.
That future now looks bleak.
The closely held retailer is racing to find rescue financing of about $30 million. If it is unable to secure backing, it could seek protection from creditors sometime in the next month, say several creditors, bankruptcy lawyers and retail experts familiar with the matter. Steve & Barry's has hired Goldman Sachs Group Inc. to seek out financing and hired a bankruptcy lawyer to advise it on a restructuring, say these people.
A spokesman for Steve & Barry's declined to comment. Its attorney, New York-based retail-bankruptcy veteran Paul Traub, also declined to comment when reached Thursday.
The cash crunch comes even as Steve & Barry's expands across the country, with stores already in 40 states hawking exclusive fashion lines endorsed by tennis player Venus Williams and actress Amanda Bynes. Since May 15, it has opened nine stores, from upstate New York to Kokomo, Ind., and San Jose, Calif.
Steve & Barry's is just the latest retail player hurt by the economic downturn, and its demise would be a big blow to struggling mall owners. An ailing economy and $4-a-gallon gasoline have wreaked havoc upon the retail landscape, pushing the likes of Sharper Image Corp. and Linens n' Things Inc. into bankruptcy protection.
With fashionable clothes priced below $10, Steve & Barry's deep-discount model was built to thrive in such an environment. In a 2006 interview with The Wall Street Journal1, co-founder Barry Prevor said the U.S. market could support 5,000 stores. Its founders have dubbed their effort the "Google of retailing."
The company currently has 270 stores and projected 2008 revenue approaching $1 billion, with earnings before interest, taxes, depreciation and amortization of roughly $20 million, said two people familiar with its finances.
But some of the forces pushing Steve & Barry's growth were not tied to end-consumer demand, but the needs of mall owners in a softening commercial-real-estate market. Much of the company's earnings came in the form of one-time, up-front payments from mall owners. Those payments were designed to lure the retailer to take over vacated sites, say several people familiar with the company.
Without these payments, the stores are barely profitable, if at all, people familiar with the company's finances say. In recent weeks, the retailer has been seeking at least $30 million to fund operations through 2008. It has approached a number of financing sources, say these people.
Without additional capital, the company's fate will largely be determined by the commercial-lending unit of General Electric Co. It provided the company with a roughly $200 million credit facility in March, and the company is already in default on that loan, said three people familiar with the matter.
Steve & Barry's closing would be another blow for owners of malls and shopping centers, who have struggled to cope with the 6,500 store closures predicted for this year by the International Council of Shopping Centers.
Steve & Barry's eagerly snapped up big-box sites vacated by consolidating chains like Macy's Inc. At a shopping-center conference in May, several mall owners said Steve & Barry's was one of the answers to the industry's problems filling vacant space.
"They should be able to see through this," said Anthony Cafaro Jr., a vice president at Cafaro Co., a large Youngstown, Ohio-based mall developer that leases 10 sites to the company. "They still have that sensational 'wow' factor in terms of their prices—it's a great concept."
Part of the chain's attraction has been its low prices. Everything from sweatpants to jeans to down jackets cost less than $10. The chain has a miniscule advertising budget. Mr. Prevor is also considered a master "tariff arbitrager," carrying an encyclopedic knowledge of tariff codes so the business can reduce costs by manufacturing products in such far-flung locales as Lesotho and Malawi.
Steve & Barry's has received much attention for its celebrity-branded products. In 2006, it signed National Basketball Association star Mr. Marbury to endorse a line of $14 sneakers called Starbury, which were hailed as an antidote to the prices for Nike and other basketball shoes. It also made a splash with a line of clothing designed by Ms. Parker, who named the line Bitten because she was "bitten by the Steve & Barry bug," she has said.
Last year, Ms. Parker and Mr. Marbury appeared on the Oprah Winfrey Show to promote their lines and the trend toward "cheap chic."
Mr. Prevor and Steven Shore were childhood friends from Long Island, N.Y., and opened their first store in 1985 in Philadelphia, selling discount University of Pennsylvania apparel and undercutting the campus bookstore. They slowly opened outlets in college towns across the country before transforming Steve & Barry's into a big-box-mall retailer.
In 2005, the International Council of Shopping Centers honored the chain with its "Hot Retailer Award," given each year to stores considered by mall managers as the best at generating buzz and bringing more shoppers to the shopping centers they occupy.
Later that year, the duo fueled those ambitions with investment capital obtained during the credit boom. Private-equity firm TA Associates Inc. paid $320 million for roughly half of the company. About half of that went into the company, with the balance -- about $170 million -- being paid to Messrs. Prevor and Shore.
Source: Wall Street Journal
Labels: Steve + Barry's
VinCo Properties Inc. announced Thursday it has signed six tenants for its 10,000 square feet of retail space in Foxborough, Mass.
Supercuts, Sharon Credit Union, Tanorama, Reliable Dry Cleaners, Foxy Nails, and Mamouzellos Pizza have signed leases for space ranging from 1,000 square feet to 2,400 square feet at Chestnut Green, a mixed-use 93-acre campus.
The new tenants join Walgreen's, The Learning Experience, Waxy O'Connor's Irish Pub and Restaurant, and Babel's Paint & Decorating Store. American Commercial Real Estate, which is managing the retail portion of Chestnut Green, brokered the deals.
The retail and commercial office will be complete in the fall of this year.
Boston-based VinCo announced in March it had closed on a $21 million financing package with Wells Fargo that allows for the final phase of office and retail construction at Chestnut Green.
Source: Boston Business Journal
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The discount retailer said that for its fiscal year ending Jan. 31, 2009, it now expects capital expenditures to be in the range of $13.0 billion to $14.0 billion, down from its previous view of $13.5 billion to $15.2 billion.
At its analyst meeting in October, Wal-Mart cut its capital expenditure forecast and scaled back on planned supercenters -- or locations that combine a full grocery store with a discount store -- as it faced slowing sales in a saturated U.S. market.
The world's largest retailer said the pullback would allow it to concentrate on boosting sales at its existing stores by remodeling older locations and improving its merchandise assortment.
In recent months, Wal-Mart's sales at stores open at least a year, or same-store sales, have been outpacing those of competitors as cash-strapped U.S. shoppers look to buy basics like food and medicine at discounted prices.
In May, Wal-Mart's U.S. same-store sales rose a stronger-than-expected 3.9 percent while smaller rival Target Corp (TGT.N: Quote, Profile, Research, Stock Buzz) reported a same-store sales decline of 0.7 percent.
Speaking at a William Blair & Co conference, which was broadcast over the Internet, Wal-Mart Chief Financial Officer Tom Schoewe said the retailer's May sales were boosted in part by inflation and tax rebates, which are currently making their way into the hands of consumers.
He said the real question remains how much of a benefit it will continue to see once all the checks make their way into the hands of consumers by mid July.
Interestingly, it appears that Wal-Mart may be deviating from its usual script with its new small format Marketside concept. The new stores are being built around a "premium" positioning rather than focusing the consumer on low-prices, according to a Financial Times report.
Wal-Mart's tact is curious considering the low price approach that Tesco has taken with its entry into the U.S. market under the company's Fresh & Easy Neighborhood Market banner. It would appear that the Marketside concept will be more like Safeway's Market by Von's small store format.
Tim Mason, chief executive of Tesco US, told the Financial Times that he doesn't see the new Safeway format as being directly competitive with Fresh & Easy. "It is very expensive and it has got an awful lot of service counters in it - so it has a meats counter, a bakery counter, a fish counter - which take an awful lot of service in a small store, so it is doing a slightly different thing," he said.
Wal-Mart has indicated that Marketside will focus on delivering "meal solutions" for consumers. The company's recruitment ads describe the store as offering "unique solutions for time-starved consumers in a premium fresh/convenience oriented format."
The Financial Times speculates that Wal-Mart may be developing a separate private label line for Marketside rather than import its existing store brands into the new environment.
Labels: Retail Trends
An Essex shopping center is slated for a makeover, nearly six years after it lost its major anchor tenants and most of the smaller businesses that depended on them.
Pikesville developer Carl Verstandig has a contract to buy for the 29-acre Diamond Point Plaza for $15 million. Another six acres will cost about $3 million. He plans to spend another $12 million to redevelop the Eastern Avenue site, replace find new merchants to take the place of the former Sam's Club and Ames department store, and fill up the dozen vacant storefronts lining the center.
With the ink not yet dried on the deal, which is expected to close in the next 60 days, ShopRite Supermarkets and Food Lion have each signed letters of intent to take space in the 65,000-square-foot former Ames store. Lowe's Home Improvement and BJ's Wholesale Club also have said they are interested in moving into the 162,000-square-foot former Sam's building, but those discussions are not as far along, Verstandig said.
With those deals in place, Diamond Point could also attract a handful of smaller businesses. Among them, Verstandig said, a bank, drug store chain and an auto parts store have each said they are considering opening branches on a trio of 2-acre pad sites Verstandig bought adjacent to Diamond Point.
Breathing new life into the property has been on the mind of Baltimore County economic development officials, who view Diamond Point as an untapped resource.
Developed in 1988, the center is passed by a large number of motorists who commute along Maryland Route 150 between Middle River and Baltimore City, said Chris McCollum, a commercial revitalization specialist with Baltimore County's economic development department.
Giving those drivers a reason to stop off and shop, McCollum said, could be a great economic driver for the community.
The center lost its two major anchor stores, a Sam's Club and an Ames department store, in 2002, and one by one, most of its smaller tenants closed up shop as well. Now only two stores remain: a Chuck E. Cheese and a Sally Beauty Supply.
McCollum said the project could be eligible for commercial revitalization tax credits that would freeze property taxes at their current rate for up to 10 years. But that will depend on the extent of Verstandig's plans.
"The right plans could turn that center into a gem," McCollum said. "It has a ton of different options that would be exciting to us. The status quo is not exciting to us, and a low end retail is not exciting to us."
The redevelopment would come after a prolonged legal battle sparked when Diamond Point Plaza LP, which owned and operated the center, defaulted on its mortgage in 2002. Diamond Point later sold the center to ORIX Capital Markets LLC of Dallas in March 2006 for $10.3 million.
According to court documents, Wells Fargo Bank N.A. claimed Diamond Point failed to disclose Sam's Club was going to close its store when it refinanced a $16 million mortgage on the property in June 2000.
The loan, through Pinnacle Capital Group LP, was assigned to Paine Webber, and then to Wells Fargo. The Maryland Court of Appeals ruled against Diamond Point and awarded Wells Fargo $22.8 million in principal and interest from Diamond Point and its partners.
Source: Baltimore Business Journal
For example, American Girl Place stores include a café with special booster seats for the chain's 18-inch dolls, an on-site theater featuring young actresses as characters from the company's books, and a salon where girls get their dolls' hairdos made over. Other retailers known for experiential strategies include Apple stores, Build-A-Bear Workshops, FAO Schwarz, Niketown, and outdoor retailers such as REI and Bass Pro Shops.
Among the new crop of experiential retailers, according to Retail Traffic, is Gilly Hicks, an intimate apparel spin-off from Abercrombie & Fitch. The 10,000 square foot concept is built around the fictional story of Gilly Hicks, an English teen who moves to Australia with her family in the 1920s and opens a lingerie store. It resembles a beach house but is designed as a colonial-style manor house with rooms featuring fireplaces, chandeliers, plush sofas and antique-styled cabinets. "Gilly's" portrait hangs in the "living room" of the store, between the foyer and the "bra library" where hundreds of bras are displayed on dark cherry wood shelves.
Other examples of newer experiential concepts:
"You can't just put merchandise in a store nowadays," Mike Tesler, partner and principal with Retail Concepts, told Retail Traffic. "You have to put action into it."
Labels: Retail Trends
The 1,984-square-foot store, which opened Thursday, is located at 119 Newbury St. It will carry the True Religion collection for men, women and kids, as well as a full range of licensed products, such as footwear, swimwear, headwear and handbags.
True Religion (Nasdaq: TRLG) is based in California; its core product is designer jeans and apparel.
Source: Boston Business Journal
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Retail REITs Say ICSC Was Strong, Leasing Getting Tougher, Distressed Opportunities Arising
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NEW YORK (AP) -- Gap Inc. plans to use its existing real estate to create smaller-scale stores and does not plan to open new stores in the near term, Chief Executive Glenn Murphy said at a conference on Tuesday.
Murphy's comments, made at the PiperJaffray (PJC) consumer conference in New York, were webcast.
In May, the company said first-quarter profit rose 40%, helped by managing inventory and cutting costs, but sales fell 5% to $3.38 billion. Sales at stores open for at least a year dropped 11% - the company's worst erosion yet during a downturn that has lasted nearly four years. Gap's same-store sales have now declined in 15 consecutive quarters.
"None of us feel good about minus five in sales," Murphy said. "We want to drive bottom-line earnings growth through running a healthier margin business."
One way to do this is by retooling the company's 40 million square feet of real estate, Murphy said.
"We always viewed this as a cost, but it is an asset," Murphy said. "We need to monetize it and maximize it."
Murphy said San Francisco-based Gap has too many stores that are 12,500 square feet, which he deemed too large other than for flagship and signature locations.
"We got carried away," he said. "Stores are larger than we need."
Instead, he said the target size of stores should be 6,000 square feet to 10,000 square feet.
In addition, the company plans to combine previously separate concept stores. Some Gap body, adult, maternity, baby and kids stores will be combined in one, rather than in separate spaces as they have been previously.
Most of the changes will be evident beginning in 2009, Murphy said.
"We will think through whether our 3,100 stores will be repositioned, relocated, remodeled or right-sized," he said.
Meanwhile, company plans to reduce the number of 20,000-square-foot Old Navy stores it has, and focus on stores that are around 14,000 square feet to 15,000 square feet.
It will take about three to five years to get the right amount of stores into that "sweet spot," at Old Navy, Murphy said.
Other initiatives the company is working on include opening outlets in Canada. It also recently launched an online platform where consumers can shop across all four of its brands: Gap, Old Navy, Banana Republic and online shoe retailer Piperlime.
West 57th Street is to its easterly counterpart what a deer-hunting, RV-driving homeowner is to his McMansion-owning neighbor—an embarrassment.
“There’s no question there’s a disconnect between the retail value on 57th Street east of Fifth Avenue, which is some of the highest in the city, and that which is west of Fifth Avenue, which is not even in the same area code,” said Richard LeFrak, chairman, president and CEO of the LeFrak Organization.
But not for long.
It’s a “historic inevitability” that, within the next few years, West 57th Street will become home to luxury retail tenants more consistent with East 57th Street, said Robert Freedman, president and CEO of GVA Williams.
Mr. Freedman is basing his predictions on the recent maneuvers of Mr. LeFrak, Vornado Realty Trust, and Sheldon Solow, who, over the past few years, have snapped up and consolidated a number of addresses along West 57th.
“I own 30, 40, 50, 29, 31, 33 and, I think, 49,” Mr. LeFrak said.
Mr. LeFrak co-owns 29-33, 49 and 50 with Vornado Realty Trust, a partnership that arose from something of a nonaggression pact.
“We were competing for the same properties, and I’m very friendly with them,” Mr. LeFrak said. “I think we both accepted that if there’s something on the street [we both want], we’ll talk to each other about it.”
Why purchase all these buildings, aside from that insatiable lust that afflicts all big-time New York developers?
“Some of the purchases I made were to protect [40 West 57th Street]—I have a 700,000-square-foot building there,” Mr. LeFrak said. Not only that, but Mr. LeFrak’s offices are there, he’s spent $30 million rehabbing it, and he has brought Nobu 57 and a high-end chemist (could a chemist be anything but?) to the ground floor.
Once the leases on many of his shlockier tenants along the avenue expire within the next five years or so, Mr. LeFrak said we can expect to see more of the same.
“I think you’ll start seeing some of the tenants on 57th Street that really shouldn’t be here go,” he said. “You’ve seen it already. There was a McDonald’s on the north side of the street that was removed. I don’t want to single out anybody, but I bet you could use your imagination.”
We don’t want to single anyone out, either. (It’s not like we can afford a $1,295 Bridle Check Tote from Burberry, at 9 East 57th Street.)
But a recent walk down 57th Street, from east to west, underscored a vast gulf between the two. The thoroughfare between Madison and Fifth avenues boasted, in addition to Burberry, gilded storefronts by Tourneau, Dior and Yves Saint Laurent. The glitz continued between Fifth and Sixth avenues, with Bulgari and Smythson at the foot of the Crown Building, and Club Monaco across from Bergdorf Goodman.
But then, things began to get, shall we say, less extravagant, with cell-phone outlets, hokey jewelry shops, a Strawberry, a Daffy’s, and some decidedly mid-brow eateries. In short, shops better suited for the diamond district or some lesser retail corridor, like, say, 42nd Street.
That, dear friends, won’t last for long.
“You have to consolidate the owners, so you have a fully integrated retail strategy, and it takes time,” Mr. Freedman said. “It’s marinating now.”
Jeffrey Roseman, executive vice president and principal at Newmark Knight Frank, agreed: “I don’t know if it will replace Madison Avenue for luxury, but it’s definitely changing, and for the positive.”
Source: New York Observer
Labels: Retail Trends
While 45 states allow such sales, New Jersey limits supermarket chains to two total liquor licenses. It also mandates that the liquor be sold separately from groceries, usually in an adjoining store.
Major supermarket chains are working to change that, but smaller liquor store owners fear the change would drive them out of business.
"The big guys are going to wipe out the little guys," Jeffrey Warsh, executive director of the New Jersey Wine and Spirits Wholesalers Association, told lawmakers in a December hearing.
Legislators took no action during last year's hearing, but Sen. Raymond Lesniak, the bill's sponsor, expects a vote Monday by the Senate Economic Growth committee. He predicted the bill will pass.
The measure is backed by a coalition that includes QuickChek, Stop & Shop, SuperValu, Wegmans, Pathmark, Whole Foods Market and Albertsons, which owns Acme.
Otto Leuschel, chairman of the Retailers for Responsible Liquor Licensing coalition, said consumers would be assured more convenience and choice with one-stop shopping.
"With the many burdens that New Jersey residents currently face, such as the economic downturn and the rise in gas prices, consumers are looking for ways to improve their hectic days," he said.
The New Jersey law was adopted in 1962 to prevent price fixing and monopolization and to address organized crime.
Fred Leighton, owner of Bayway World of Liquor in Elizabeth, has doubted a need for the bill."Do we really need or want more convenience in the sale of alcohol in this state?" Leighton asked. "Do we need it? I mean, we're not in Texas where you have to drive a hundred miles. New Jersey is a dense state -- if you need alcohol, there's plenty of opportunity to find it."
Labels: Retail Trends
U.S. Sen. Charles E. Schumer is calling for tougher regulations for the rent-to-own industry and better disclosure for customers about prices and fees.
But a national trade association representing the industry said Schumer is misinformed and painting an "extreme" picture of the business.
Schumer this week said the rent-to-own industry is targeting upstate New York consumers who lack the disposable income and access to credit cards to buy basic household goods at competitive retail prices.
Rent-to-own customers typically have poor or no credit ratings, he said.
Schumer said those customers pay "astronomical" prices for items such as furniture, televisions, refrigerators, washers and dryers that are in some cases nearly 300 percent higher than their recommended retail prices.
Schumer is urging federal legislation that would require:
•All rent-to-own outlets to disclose the cash price of an item, services offered and the price of each service, among other details.
•Fees assigned to rent-to-own transactions to be considered interest, not leasing charges. In New York, that would limit interest to 30 percent a year.
•A standard cash price of items sold in rent-to-own stores so consumers would know if baseline retail prices are being artificially inflated.
•Early termination fees of no more than 5 percent of the contract price.
Richard May, spokesman of the Association of Progressive Rental Organizations, said less than 25 percent of customers actually rent-to-own the product, choosing instead to only rent the item.
"The customer is in full control of the transaction," choosing payment plans that can be changed at any time without penalty, he said.
Rent-A-Center, the largest rent-to-own operator in the nation, said on its Web site that it provides an "easy, affordable way for people to furnish their homes without incurring a continuing obligation and without needed access to credit."
Industrywide, rent-to-own customers typically lease items on a weekly or monthly basis until they have fulfilled their contract and own the item.
A TV with a market value of about $850 typically costs about $3,327 when the lease is over -- a 291 percent markup, Schumer's office said.
Source: Star Gazette
A.C. Moore, which operates 139 stores from Maine to Florida, did not reveal where the targeted units are located. A statement from the company said only that they are located in "certain markets where [they] cannot achieve operating efficiencies." The company had closed a total of just three stores over the past two years.
"Store closings are extremely difficult decisions because of the effect on our organization, our associates and our customers," says Rick Lepley, A.C. Moore’s CEO, in a prepared statement. "However, we believe that these changes are necessary for the long-term prosperity of our company.
"Improving our overall level of execution at the store and corporate level, installing state-of-the-art systems and optimizing our 'Nevada Class' store prototype are paramount at this time," Lepley says. "In addition to our real estate strategy, we are confident that continuing these initiatives will provide a solid foundation for future store count growth."
As far as new store openings for 2008, company officials also revealed yesterday that the number would be fewer than originally anticipated. Earlier this year, the intention had been to open 14 new stores this year, but that number has been reduced to "between eight and 12," according to a company statement.
Related to the closings, company officials say they expect pre-tax expenses to be between $7 million to $9 million, with about $4 million to $5 million of that related to lease liabilities and the rest tied to general liquidation costs, fixture relocation, severance and non-cash fixed asset impairment. The company is also continuing to analyze long-lived store assets under Financial Accounting Standards No. 144 to determine whether the carrying value of assets may not be recoverable.
In an unrelated matter, company officials indicated yesterday that they were rethinking their warehouse and distribution expansion plans. "The company is…currently working with state and local authorities regarding a proposed expansion of the…distribution center facility located in Berlin, New Jersey," reads a statement. "If the proposed expansion is finalized, the company intends to forego, in the near term, construction of a second distribution center." Company officials declined further comment.
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RETAIL CONCEPTS TO WATCH
According to Taubman executives, Victoria's Secret, Apple and Abercrombie & Fitch are the three most desired U.S. specialty chains in overseas markets. Internationally, Inditex and its Zara chain and Hennes & Mauritz are the best poised for further expansion.
At home, developers said they're closely watching the expansion of Japanese fashion retailer Uniqlo, which opened its first U.S. store in November 2006. Safeway's new concept, called The Market, a 20,000-square-foot box for produce and prepared food and a service deli, is also on the radar, as is Gilly Hicks, the intimate apparel chain launched by Abercrombie & Fitch last winter.
Other retail nameplates of keen interest are Metro Park; Forever 21, which is looking to open larger footprint stores (for more details, see page 16); J. Crew and its two-year-old Madewell division, as well as the even newer VSX, a shop selling activewear and yogawear that was launched by Victoria's Secret in a single site in Easton, Ohio, last year.
Another newcomer from the West Coast, called Love Culture, is gathering steam. The chain has seven stores operating, five under construction, 15 set for next year and another 20 seen for 2010. It's privately owned and sells women's moderate-to-better-priced fashion.
Two chains that have been around for awhile, but continue to impress developers are Puma and Apple.
At ICSC's "hot retail" session, in the food category, Five Guys Burgers and Fries, Pinkberry, Pollo Campero and Stir Crazy took the honors, and women's fashion retailer Apricot Lane, board sports chain Billabong, Tesco's grocery concept Fresh & Easy, L.L. Bean and toy car retailer Ridemakerz were also honored as the best.
"We've seen a lot of innovation in new retail, even with the apparel retailers, which is not easy to do," said ICSC president and ceo Michael Kercheval. "It's great to see, but more importantly, it's imperative in order to keep shopping centers new and interesting."
At other sessions, developers at the conference cited Costco, Wal-Mart and Target as highly desirable tenants in a down economy, largely because of their pricing and their grocery offerings, which have fared well, and the new view that they can be neighbors to upscale stores in the same centers. Westfield Group, for example, will house Target as well as Neiman Marcus as anchors this year in its Topanga center near Los Angeles' San Fernando Valley. DDR has a Costco anchor in its Christown Spectrum Mall in Phoenix, and in the fall, Macerich will open its first in a former Macy's at Lakewood Center, one of the largest enclosed malls in the Los Angeles area. Other mall-based Costcos are in Simon Property Group's Potomac Mills in Prince William, Va.; General Growth Properties' Cumberland Mall in Atlanta, and the Cafaro Co.'s Spotsylvania Towne Centre in Fredericksburg, Va.
ON THE ECONOMY, RETAIL PERFORMANCE AND CONSUMERS
While concerned about the state of the economy, developers are positive regarding the long term.
"The whole point is you've got to look at things down the road," said Taubman of Taubman Centers, which saw a 3 percent comparable-store gain last quarter. "The country is not technically in a recession. I believe we are in a period of slower growth. It's important the Fed do the things it's done to loosen monetary policy. Things will improve. The economy will continue to have slow growth, but should not worsen.
"You can't ignore the huge engines that are out there," he added, citing emerging economies including China and India, and sovereign funds with huge pools of capital from oil interests that must be invested.
"A quarterly event is really irrelevant. Our thinking is really 10 to 15 years out," said Arthur Coppola, president and ceo of Macerich. However, he added, Macerich "will not build before a market is ready for the project. "In the old days, it was location, location, location. Now it's location, location, location and timing, timing, timing. We will not build before the market is right."
Coppola believes retailers need to "constantly look for ways to keep their brands fresh and to look for brand extensions that drive repeat visits and grow their customer base. But at the end of the day, Americans love to shop, and we're in a position to capitalize on these new brand extensions, delivering prime real estate that can be a platform for retailers."
According to Ullman of Penney's: "Consumers are either buying the lowest possible price — door-busters — or something innovative or new."
"There is no question the Gen-X women's business is not good," said William Taubman, chief operating officer of Taubman Centers. "There is a changing fashion profile toward more contemporary silhouettes and some retail concepts have just not adjusted. Women don't want to feel old or tired."
On the development front, "money is tight. Fewer projects are being announced. People are making sure they're leasing what they've got," said Taubman.
GGP's Bucksbaum said comparable-store sales at his centers were down 1 to 2 percent during the first quarter of this year, and occupancy rates were down 20 basis points. He foresees sales relatively flat for the year overall and occupancy down 50 to 100 basis points by yearend relative to the fourth quarter.
"What's happening is that developers are moving at 80 miles an hour, retailers are doing 60 miles an hour and lenders are going 25 or 30 miles an hour," said David Solomon, president and ceo of NAI Global's ReStore unit. "For most, it doesn't look pretty right now and it will get worse before it gets better."
The average vacancy rate could reach 10 percent by the end of the year, and there likely will be more retail bankruptcies to come, Solomon predicted, before the market settles down.
Some projects have stalled or been called off: Two of Related Cos.' projects have experienced financing holdups. Downtown Los Angeles' Grand Avenue, a $3 billion project to include a shopping center, a supermarket, other stores, high-rise condos and a hotel, had been scheduled to break ground in fall 2007, but the date has been moved to February, with completion in 2012. The second phase of the company's CityNorth project with Thomas J. Klutznick Co. in Arizona has been delayed because potential lenders want to wait until the economy improves. The first phase of the $1.2 billion project is expected to open in October.
"Developers have become very introspective and defensive," said Gary Mozer, managing director and principal at George Smith Partners, a financial intermediary that raises debt equity and mezzanine financing for commercial real estate. "They're trying to find how to deal with the marketplace in the most productive ways. There are more face-to-face meetings between [developer principals] and tenants, bankers, equity sources, city leaders and contractors. Nowadays, senior guys are cutting deals with senior guys. There is a lot more stress on the business and people are reacting to that."
How else are deals different these days? "There is a lot more equity required up front in transactions. The projects are more about urban infill rather than growth markets, and developers are getting squeezed because of increased construction costs and stagnant retail growth," Mozer said. Asphalt, which is oil-based; steel, and PVC are getting more expensive.
However, overall, he believes, developers are "doing OK right now. They're not going off the cliff."
"Over the last eight months, the deal cycle has lengthened from 60 days to 90 to 120 days," observed John Bemis, executive vice president and director of leasing and development for Jones Lang LaSalle. "Retailers and developers are negotiating leases harder. Lots of retailers are looking for options," such as five-year leases with options to renew.
"Nobody is really panicking. I thought the mood would have been worse," said Vincent Ottomanelli, president of Ferragamo USA, who was spotted walking the leasing floor of the Las Vegas Convention Center. "This is not a garage sale, but traffic is lighter" than a year ago.
The event was busy, but not as robust as in recent years, executives said. However, many sought to present a positive front by unveiling plans for new projects and beefing up existing facilities with an eye on the long term. They see retailers cutting their openings for next year by half of what they might have originally considered and getting back on track by 2010 with more aggressive expansions.
At the malls themselves, "my perception is traffic is off significantly, but we still have a full schedule with people looking to do business," said R. Webber Hudson, executive vice president of Related Urban. "If you buy into the notion that there's been economic turmoil for at least six months, and that typically you see an 18-month downturn, then it's easy to see 2010 as a safe bet for a strong recovery."
According to an ICSC media official, registration at just less than 50,000 was around the same as last year's, though the final tally will be released later this month.
GGP's Bucksbaum said his company has many initiatives to help the environment, some noticeable to the general public, others not so. The company has a program to install waterless urinals, for example, which will be obvious. "Ultimately, we will have them at every location," Bucksbaum said. "We have saved 6 million gallons of water this year."
He also said there has been a dramatic reduction in kilowatt usage through the GGP portfolio by using energy-efficient heating and cooling management systems. The company also is testing or introducing alternative sources of energy in certain markets, and as roofs come up for replacement, GGP is making them white to reduce the heat in the malls and cooling requirements.
"Rather than lowering quality of design or budgets, something we have noticed is an inclination of retail developers to explore more green design and new materials," said Kimberly Sheppard, design partner at Gabellini Sheppard Associates. "This is especially the case with some of our larger luxury retail projects like Westfield London, and in Las Vegas, City Center and Echelon."
Some shopping center operators said they were exploring Leadership in Energy and Environmental Design certification for projects in development to achieve long-term cost savings and attract an eco-minded consumer. While retailers picked up a lot of steam on the green front, it generally seems to be more of a catch-up for developers.
"The retailers are really getting into the green movement, and are trying to push that agenda more and more," said Justin Doak of the U.S. Green Building Council. "For big developers, it's easier to take an eco-friendly approach before things are built. Afterward, you typically see resistance, at least until we reach a critical mass of retailers that push for it."
Source: Women's Wear Daily
The Bonwit Teller name is coming back. River West Brands Inc. (Chicago) said it will likely open a flagship store in New York by the end of 2009 and a door in Los Angeles after that.
Ultimately, said Andrei Najjar, the interim ceo hired to relaunch the venerable name, the chain could expand to about 20 stores in the U.S.
Bonwit Teller was founded in 1895 and became one of the country’s leading fashion retailers, with a flagship store on New York’s Fifth Avenue and sites on all the prominent shopping streets and in all the upscale malls. It went out of business in 1990.
Najjar is the co-founder and ceo of Social Atelier Brands (Los Angeles), a designer of premium fashion lines aimed at promoting awareness of social issues. He previously held top positions with Abercrombie & Fitch, Hollister, Target, Banana Republic and the Gap.
“Andrei’s unique expertise as an award-winning designer, business leader and entrepreneur makes him exceptionally qualified to bring new life to Bonwit Teller,” said River West ceo Mark Thomann. “A crucial component of our business model is to assemble world-class management teams to incubate and relaunch well-known brands. Andrei’s vision for leading the rebirth of this beloved American classic complements our model and matches our long-term objectives.”
“Bonwit Teller set the standard for the high-end shopping experience for a century,” said Najjar. “I am excited to revitalize Bonwit’s heritage for today’s marketplace. Bonwit once outfitted fashion icons such as Jackie Kennedy and Grace Kelly – the new Bonwit will evoke that sense of glamour, with a modern twist.”
Labels: Bonwit Teller
Labels: Home Depot
Victoria's Secret hasn't been afraid of discounting its merchandise with coupons or deals at its stores, but the lingerie retailer has hesitated to take the last clearance step - the outlet store.
That has changed. The division of Columbus-based Limited Brands Inc. opened clearance stores in the last eight months in New Jersey, Michigan, Texas and Florida, with plans for a fifth store by year-end.
"Today, there are more upscale outlet centers where we are comfortable that our stores would do well, while maintaining the integrity of the Victoria's Secret brand," Jamie Bersani, Limited Brands' executive vice president of retail real estate, said in an e-mail response to questions from Columbus Business First.
Bersani said Victoria's Secret uses its discount stores to clear discontinued and out-of-season products.
The company also has eight regular stores in outlet and shopping centers run by Mills Corp., a division of Indianapolis-based Simon Property Group Inc. It plans to open five more of those in the coming months.
The combination of a slumping economy and improved outlet malls are making discount stores more attractive for brands that never considered them before.
Same-store sales at Victoria's Secret were down 7 percent in the first quarter of this year and 8 percent last year.
Linda Humphers, editor-in-chief of Value Retail News, said Limited Brands CEO Leslie Wexner was long known as opposed to outlet mall stores, his concern being that deeply discounted products reflected poorly on the brand.
He wasn't alone. Humphers said that attitude was common among some higher brands that viewed outlet malls as a place for lesser products. In their defense, she said, outlet malls had been dominated by such lower brands since their rise in the 1970s, but times have changed.
"There was a huge amount of sensitivity about it," she said. "In the last five to seven years, we've seen more designer tenants. I think the message caught on. This is not just a liquidation channel. It's a profit center."
Howard Davidowitz, head of Davidowitz & Associates Inc., a retail consulting firm in New York, cited Coach Inc. as an outlet success story, noting the chain's 101 factory stores generate better sales than its 287 full-price shops.
"Price is important," Davidowitz said. "Consumers are negative. It seems to me that they're looking for deals and that's where outlets come in."
Not surprisingly, the success of outlet malls runs counter to general retail sales, Humphers said. When the economy struggles, sales at outlet malls rise.
"People don't want to cut quality, but they do want to cut price," she said, noting the average discount at an outlet mall store is 37 percent.
The industry is growing, according to the International Council of Shopping Centers. Outlet store square footage grew an average of 11 percent over the last four years, it said. The number of outlet centers rose to 222 last year from 217, it said, with 35 openings and 18 expansions planned by 2010.
Humphers said some retailers have never given much thought to clearance stores, but that is changing.
"It enables you to tap some different customers. If you're doing the Internet, you might as well do outlets," she said.
Labels: Victoria's Secret
“We believe that the combination of Pier 1 Imports and Cost Plus is extremely compelling and would create significant value for the stakeholders of both companies,” said Alex Smith, president and ceo. “Given our similar customer bases and broadly similar business models, but distinct market positions, we believe Cost Plus is an excellent fit with Pier 1 Imports. We are confident that combining our two companies would create a stronger and more competitive company that is better positioned for future growth. Furthermore, we believe the combination will result in improvements in Cost Plus’s operating margins and significant synergies, anticipated to come from organizational efficiencies in the supply chain management, shared services, store operations and other general administrative costs. Cost Plus shareholders will enjoy significant benefits from the combination, including improved operational liquidity of the combined company as well as a more active trading market for their shares.
In response to Pier 1's proposal, Cost Plus said it would review the offer, and noted that its shareholders do not need to take any action with regards to this proposal.
Peter J. Solomon Company is acting as financial advisor to Cost Plus and Skadden, Arps, Slate, Meagher & Flom LLP and Wilson, Sonsini, Goodrich & Rosati LLP are acting as legal advisors.
Source: Retailing Today
Accommodating the sellers, Linear/Principal has agreed to delay closing on the assets until early 2009, prompting the two sides to strike a master-lease arrangement until the deal is consummated. "We effectively have full control of the properties," explains Linear President William Beckeman, whose $300-million fund is focused on convenience-oriented retail throughout New England. The latest purchases brings the number of assets acquired since the fund was launched in 2003 to 48, an assemblage valued at $220 million.
Besides a free-standing Walgreens, the Stoughton plaza houses a 2,200-sf Eastern Bank branch, plus a Hertz Car Rental, pizza shop and Starbucks. Linear/Principal will pay $9.1 million for that center, which Linear partner Aubrey Cannuscio terms "a prototypical Linear Retail" investment. "The property offers a strong pharmacy anchor at a key intersection and some additional shop space that, together, offer bullet-proof cash flow and long-term upside," he says.
The fund is paying $3.25 million for 870 Providence Highway, which is located at the junction of Enterprise Dr., the prime entrance to Gateway Center, a 650,000-sf entertainment/retail complex that broke ground this spring. Cannuscio calls the latter asset a "strategic buy" for other reasons, including his firm’s previous purchase of an abutting complex, leased to a bridal shop, guitar store and Mattress Giant branch. "Together, these properties offer operational efficiencies as well as long-term redevelopment potential on a very prominent retail center," he says.
Unmotivated sellers and the lingering credit crunch have made it challenging to find opportunities this year versus last, says Beckeman. But while terming the first quarter as "dead," he notes that Linear/Principal has five buildings under contract to date in 2008, the same number secured at this time in 2007. As the mid-year point approaches, Beckeman says more properties are finally making their way to market. "It seems to be freeing up a little bit," he reports.
In the meantime, the fund’s managers have proactively pursued properties such as the Dedham and Stoughton centers. Seller John DeMatteo says the owners "were not eager" to harvest their assets, but says "Linear Retail countered our reluctance by offering a good price and a deferred closing that allowed the timing of a transaction to work for us." The deal was brokered by Kevin Shaughnessy of Collaborative Retail Strategies of Charlestown. Linear also says KeyPoint Partners of Burlington will provide property management services for both assets.
While reporting on real estate the last few years, I've been surprised by how often I've heard house-hunters and real estate investors alike talk about the presence or expansion of certain retail chains as a surefire indicator that a neighborhood's home values were set to spike. One real estate pro told me the perfect place to buy a rental property is a town where Home Depot has just constructed a store and Starbucks is about to move in. Blogger Sarah Gilbert offers similar advice, which she calls "the smartest real estate strategy ever." "Buy, immediately, in a neighborhood where a Starbucks is planned," writes Gilbert, who says her own home value doubled shortly after an outlet of the ubiquitous coffeehouse opened nearby. (Of course, since she wrote that in 2006, it's hard to say how much of her home's appreciation exists today.)
People who believe in this logic say that growth-oriented chains like Starbucks and Home Depot do tons of economic and demographic research before moving into a new town, and that their decision to locate a store indicates a big vote of confidence in the area's economy.
Adam Epstein of Site Analytics, a New York-based firm that helps chains analyze data to choose new locations, says he does sometimes observe a "snowball effect," in which the creation of a subdivision gives a particular retailer the confidence to site a store nearby, which in turn boosts demand for houses, which draws in more retailers, etc. Epstein also says that as some retailers (including Starbucks) have begun promoting future locations on their Web sites, more real estate investors seem to be making use of the data. "Among homebuyers, [Starbucks] is seen as the ultimate validation," Epstein says.
This would seem a strange time to talk about Starbucks and Home Depot as leading indicators for local real estate purchases, since both chains have been struggling of late. In April, Starbucks founder Howard Schultzacknowledged that his company is "experiencing some difficulties as a result of some tough operating conditions in the U.S.," and last month Home Depot announced plans to close 15 existing stores and take 50 planned stores off the drawing board as its earnings shrink due to the ongoing housing crisis. Indeed, if Americans have learned anything as a result of the ongoing housing meltdown, one would hope it would be to buy a house because it's a good place to live and not based on the hope that its price will double or triple. Still, despite the current troubles, most buyers can't help looking for a home that seems likely to appreciate, and some buyers still view these companies' site decisions as a leading indicator of sorts.
Consider George Vaughan, an advertising salesman in Portland, Ore., who first heard about the concept he calls "the Home Depot Magic Rule" from his accountant a few years ago. The accountant had another client who'd been buying investment property in towns where Home Depot planned to build new stores. This client had bought a bunch of houses in such a town in Oregon; over eight years they appreciated from $120,000 to $400,000 apiece. Vaughan, whose accountant was urging him to buy some rental properties to improve his tax situation, zeroed in on an Oregon town called Hermiston, about three hours east of Portland, and ultimately bought two homes there.
Following introductory remarks from Steven Wechsler, president & CEO of NAREIT, Martin Stein Jr., chairman and CEO of Regency Centers Corp. and NAREIT chair moderated the "CEO Marketplace-Consumed by Retail," luncheon panel, which included remarks from top retail CEOs about the impact of the economy on the retail sector. Robert Taubman, chairman, president and CEO of Bloomfield Hills, MI-based Taubman Centers Inc. said that although May was a good month, consumer confidence is down. "We are in a slowdown, but not yet a recession."
CEO Marketplace Panel
Cooper continued that "you have to be prepared in these cycles for a temporary blip," but he expressed an optimistic view on the long term. "You have to be patient," he said.
John Bucksbaum, chairman & CEO of Chicago-based General Growth Properties Inc., said that things are not as bleak as previously predicted, but they are challenging. "We are in for a long and difficult environment," he said, however he is optimistic for the most part. "May sales were encouraging, but that doesn't mean all is well."
Peter van Rossum, CFO of Paris-based Unibail-Rodamco, agreed with Cooper in that he is beginning to notice some issues with home improvement stores in Spain. "In Europe, there is a lot of talk about consumer confidence going down, but time will tell how that takes affect." He noted that "our business is to rent space to tenants and there isn't a lot of change in that market, yet…" except that retailers are starting to become more selective on location.
As far as how rising gas prices are impacting retail, Cooper said that in the '70s when there were higher gas prices, "people found value in the one-stop-shop, which led to increased foot traffic," which he said was a lesson for today's gas increase. However, he said that nonetheless, when you take cash out of someone's pocket, the "modest shopper" is less excited about going out and spending money.
Rossum said that there are some differences in European malls versus US malls. "In Europe, you find that there are more food anchors than department store anchors." Also, he said, "most malls we own are intercity malls." Rossum also noted that access to public transportation is incredibly important in Europe when looking at assets. His last point of difference was that "when you want to expand of build new properties, permits take quite a long time, and zoning is very difficult."
Bucksbaum said that the "choices are narrowed, and the game has changed dramatically" in reference to capital markets. "We have had some success as we have raised $825 million of equity, but we would have preferred never to have sold that equity. It would have been nice to not have to go about things in that way." He added that financing is there, but the windows of opportunity are smaller. "Lenders are reluctant in regards to real estate."
Rossum said that money is available in the market. "I'm not saying it is easy, but you can do it."
As far as looking globally for investment, Taubman said that each company has to find its own way and take what it has learned domestically and take it elsewhere. Taubman Centers' focus is in Asia, he said. "Abroad, we are investing in iconic projects, are being selective, and are interested in creating a platform." He noted that Taubman spend a year analyzing what it wanted to do, and has been in Asia for four years. "In another five or six years, we hope to have five projects there. We are looking at long-term commitment."
Bucksbaum agreed with Taubman in that "we want to be in places we can create a platform." He noted that "the world has become a much smaller place and retail has become a global business."
Cooper says that the most important thing for his firm is expanding through local partners, citing Peru, Brazil and Chile as example locations. "Our motto is to be sure that we feel comfortable with a local partner that knows the market. We wouldn't do it on our own."
Labels: Retail Trends
"We see that we execute our business better than the competition," Stack said after the Findlay-based sports equipment seller held its annual meeting Wednesday at the Hyatt Regency at Pittsburgh International Airport.
"We feel the way we are positioned in this industry gives us the ability to gain market share," he said. "I think we will continue to open stores at a faster rate than our competitors will. A number of our competitors have indicated they've slowed their development programs. We continue to open stores."
Dick's Sporting Goods Inc., in fact, remains on track to be operating 800 stores within seven to eight years, Stack said.
Golf Galaxy will continue growing, especially in the South, where golfers head to courses nearly year-round, Stack said. The 15 Chick's stores in California are to be converted to the Dick's name through late 2009. In all, 44 Dick's and 10 Golf Galaxy stores should open in 2008.
Dick's is coming off a strong year, when profit grew by 38 percent to $155 million on sales of $3.9 billion, and earnings per share increased 30 percent to $1.33.
Comparable store sales in the first three months of this year dropped 3.8 percent from a year ago. They're projected to be down 4 to 7 percent in second quarter, compared to a 5.8 percent increase a year ago.
Dick's shares closed yesterday at $22.51, down 29 cents.
Source: Pittsburgh Tribune Review
Labels: Dick's Sporting Goods
Labels: Retail Trends
Labels: Neiman Marcus
Saks Fifth Avenue Inc. (New York) announced it will open a 15,000-square-foot men’s store at The Walk at the Jumeirah Beach Residences in Dubai, U.A.E. The new store will join an existing 80,000 square-foot full-line store that opened in Dubai in 2004.
It will be the fifth overseas store in the Saks chain, joining an existing one in Riyadh, Saudi Arabia, and a new one in Mexico City.
Speaking at the Saks annual stockholders meeting, chairman and ceo Stephen Sadove said the company also plans to open a Saks Fifth Avenue store in Jeddah, Saudi Arabia, in November, and is looking at further opportunities in the Middle East, Shanghai and other markets. (For full coverage of the Mexico City store, see the July 2008 issue of VMSD.)
Saks told shareholders that it’s projecting flat operating margins, mid-single digit comparable store growth, and a modest gross margin rate decrease in fiscal 2008. “This is a difficult environment and the luxury consumer has been cutting back,” Sadove said. “You’re seeing more sales on promotion than full price. The luxury consumer is more affected by stock markets and their net worth than rising gas prices.”
The company ended 2007 with an 11.7 percent same-store sales increase, much better than rivals Neiman Marcus (5.7 percent) and Nordstrom (3.9 percent). In the first quarter of 2008, Saks enjoyed an 8.4 percent gain while Neiman’s and Nordstrom both saw same-store sales decline. “It was a year of great progress for Saks,” he said. “Saks wasn’t making money three years ago. Also, the average Saks Fifth Avenue store does about one-third less in productivity than the average Neiman Marcus store. But, as we increase that to Neiman Marcus’ productivity level, we’ll be closing the profitability level between the two.”
The company will open a total of 51 new units this year across nearly all its brands, while closing 24 stores. No new Williams-Sonoma Home stores will be opened this year. The openings come even as comp-store sales declined 9%. Net revenues decreased 4.2% to $781.8 million. However, e-commerce sales have risen 8.7%, attributed to the natural growth of e-commerce and shoppers migrating from phone sales, not from stores.
“We’re continuing to monitor very closely what happens with customers who come from the web and migrate to retail stores, and retail customers who might migrate to the web,” said Howard Lester, chairman and CEO. “We’ve seen very little shift to the extent that it would affect our ability to pen retail stores. At this time, I don’t see any material change in our long-term strategy.”
Williams-Sonoma operates 603 stores under the Williams-Sonoma, Pottery Barn, Pottery Barn Kids, PBteen, West Elm and Williams-Sonoma Home banners.
Consumers stepped up their shopping in May after tax rebate checks hit mailboxes, giving many of the nation's retailers stronger than expected sales for the month. Still, there were signs that many people are still focusing on necessities such as food and gas.
Discount and lower-priced stores such as Costco Wholesale Corp. and Wal-Mart Stores Inc. were again among the strongest performers.
Analysts had predicted a gloomy May, with consumers contending with a rising cost of living, declining home values and tightening credit. However, according to a preliminary report from Thomson Financial, of 27 retailers reporting, 13 beat expectations, 3 met expectations and 7 missed.
The tally is based on same-store sales, or sales in stores open at least a year; they are considered a key indicator of a retailer's strength.
"It certainly looks as though gas tanks didn't siphon off all of the rebate stimulus," said Ken Perkins, president of RetailMetrics LLC, a research company in Swampscott, Mass. "Consumers were able to spend in May."
Wal-Mart said same-store sales rose 3.9 percent, while analysts surveyed by Thomson Financial predicted a 1.6 percent rise. Including fuel sales, same-store sales rose 4.4 percent.
The world's largest retailer said it likely saw a benefit from rebate checks. Sales in its food and health categories were strongest, it also had strong sales of entertainment items such as flat-screen TVs and reported the first same-store sales increase in the home category in two years.
Perkins said those results could point to "staycations" this summer, as consumers stay home and purchase electronics or work on home-improvement products instead of taking pricier trips.
Rival Target Corp., which has a somewhat more upscale clientele, said same-store sales fell 0.7 percent, while analysts expected an 0.2 percent drop.
Costco said same-store sales rose 9 percent, ahead of the 6.9 percent analysts were expecting. Results were boosted by food and gas sales, along with the benefit of the weaker dollar, mainly in Canada.
TJX Cos., which operates discount apparel and home furnishing stores including T.J. Maxx and Marshalls, said same-store sales rose 2 percent, edging higher than the 1.8 percent analysts expected.
Mall-based stores such as The Children's Place Retail Stores Inc. also reported results above expectations.
The Children's Place same-store sales rose 10 percent, ahead of the 4.3 percent forecast.
But Limited Brands Inc. said same-store sales fell 6 percent, missing the 5.5 percent drop analysts expected. The company's stores include Victoria's Secret and Bath & Body Works.
Source: Associated Press
Labels: Retail Sales
Wal-Mart Stores Inc. said Thursday total U.S. same-store sales during the four-week period ending May 30 rose 4.4 percent due to strong sales of grocery, health and wellness and entertainment products.
Same-store sales, or sales at stores open at least a year, is a key measure of retailer performance, because it measures growth at existing stores rather than from newly opened ones.
Analysts polled by Thomson Financial, on average, forecast a 1.6 percent increase in same-store sales.
Excluding fuel sales, same-store sales for the month rose 3.9 percent.
Analysts anticipated same-stores sales growth at Wal-Mart stores to rise 1.7 percent and Sam's Club sales to rise 2.6 percent.
"Our comparable-store sales continue to increase because of our price leadership, merchandising initiatives and operational improvements," Eduardo Castro-Wright, Wal-Mart U.S. president and chief executive officer, said in a statement. "We also believe we're seeing some benefits from the stimulus checks."
At Wal-Mart Stores, entertainment products such as flat-panel televisions and computers helped bolster sales as well as health and wellness products as the retailer expanded its $4 prescription program to over-the-counter medications.
At Sam's Club stores, sales of fresh foods, dry grocery and consumables were strong, the company said.
For the four weeks ended May 30, total sales, which includes Wal-Mart Stores, Sam's Club and international sales, increased 9.8 percent to $31.04 billion from $28.26 billion, a year earlier.
Wal-Mart estimates same-store sales during the five-week June period will rise between 2 percent and 4 percent, excluding fuel sales. The period runs from May 31 through July 4.
The 3,600 square foot deal at 394 West Broadway included obtaining the early termination of the Smith & Hawken garden furniture shop. The asking rent was $250 a foot.
The jeans maker also leased space for a smaller store of 2,500 feet, plus 1,000 feet in the basement, at 73 Fifth Ave.
Robin Abrams and Howard Dolch of The Lansco Corp., along with 7's national consultant, Dallimore & Co., found the sites for 7.
Lansco's Yair Staav and Christine Emery worked for the owners in SoHo, while David LaPierre of CB Richard Ellis represented owners of the Fifth Avenue location.
Source: NY Post
Labels: 7 For ALl Mankind
The announcement came on the heels of a Wall Street Journal report that the unit of billionaire John Kluge's privately held Metromedia Co was in talks with GE Capital Solutions and that the restaurant owner had prepared a bankruptcy filing in the event it was needed.
"Metromedia Restaurant Group is currently in the process of formulating a proposal to present to its lenders to restructure its indebtedness," the company said in a statement, which underscored that the company "has neither filed for bankruptcy nor prepared a bankruptcy filing."
The Journal report cited three people familiar with the matter and said the restaurant group had violated several terms of its lending agreement earlier this year, prompting GE Capital to declare a default and accelerate payments.
Metromedia hired California bankruptcy lawyer Jeff Reisner a few months ago, the Journal said, citing two people familiar with the matter. Reisner did not immediately return a call for comment.
The newspaper said Metromedia Restaurants' chief executive Clay Dover left abruptly last week, citing differences with ownership.
Casual dining chains have suffered because of the U.S. economic slowdown.
Some struggling operators, including Village Inn and Bakers Square owner privately held VICORP Restaurants Inc, have already filed for bankruptcy protection.
Source: Business Week
The city of Boston is considering the creation of a year-round, indoor-outdoor public food market district to rival Seattle’s Pike Place or Reading Terminal Market in Philadelphia.
The Boston Redevelopment Authority is commissioning a study to determine the physical and economic feasibility of locating the new district near the North End parks along the Rose Fitzgerald Kennedy Greenway.
The district would be dedicated to vendors selling locally grown and produced foods, including fruit, vegetables, fish, meats and artisan products such as bread and cheese, seven days a week.
“Boston is a great city, and it deserves to have a public market,” BRA director John Palmieri said. “I’m new to the city, but I can remember back in the ’70s that Quincy Market provided that kind of service to citizens. They had all kinds of locally operated vendors.”
The BRA envisions the market district encompassing the existing Haymarket pushcart vendors who operate on Hanover, Blackstone and North streets, in addition to new vendor areas on Cross Street, Salem Street and the stretch of Hanover Street between the parks.
Indoor vendor space is being eyed for Central Artery Parcel 7 and vendor facilities for Parcel 9.
Parcel 7 is between Congress and Blackstone streets by the Haymarket MBTA station. The Massachusetts Highway Department and Turnpike Authority have developed the parcel, which contains tunnel ventilation shafts and is wrapped with a parking garage and office space on the upper floors. But 29,400 square feet of first-floor retail space must be used for “marketplace” uses under an agreement with the BRA.
Parcel 9 is a vacant 56,500-square-foot parcel owned by the Highway Department and Turnpike Authority. The BRA will develop use guidelines for the parcel this summer, including market-related uses for the ground floor that could include vendor facilities for trash compacting, recycling, cleanup and sanitation.
The BRA’s plans call for maintaining existing farmers markets in other areas of the city, including those at Copley Square and on City Hall Plaza. The BRA will consult with the Boston Public Market Association, founded in 2001 with a goal of creating a year-round Boston food market, as it proceeds.
Source: Boston Herald
Labels: Retail Trends
Labels: Retail Trends
An article on the Stores magazine website, Five Things You Don't Know About Baby Boomers, suggests that retail marketers need to take a new open-eyed look and approach to communicating with this important consumer demographic.
The first change marketers need to make when it comes to understanding boomers is to recognize there are vast differences between an individual born in 1946 (the start of the boom) and 1964 (the end of it). While consumers in the front half of the generation are now thinking about traveling and gardening, those on the backend are still involved in raising kids. Interestingly, both younger and older boomers rate Wal-Mart as their preferred shopping destination.
While the majority of boomers are married, 34 percent are currently single. Of these 17 percent are divorced or separated, 14 percent have never been married and three percent are widows/widowers. Married boomers are more affluent, earning an average of $73,380 annually compared to $41,872 for their single counterparts. Single boomers represent a potential swing group for retailers since they are less likely to cite a preference for a favorite store than those who are married.
Boomers are big consumers of media. Ninety-five percent watch television, 87 percent use the internet (93 percent of those use it to do research), 76 percent listen to the radio, 68 percent read a weekly community newspaper and 57 percent read a daily.
While it's reasonable to think of boomers as the current grandparent generation, these nanas and pops do not fit the stereotype. The average age for a boomer grandparent is 53.4 years of age, according to Stores, and their lifestyle has them on the move. Thirty-five percent say they exercise at least three times a week while nearly 11 percent are planning to renovate their home in the next six months. They also plan to spend on their grandkids with toys for younger children and gift cards for older ones.
Finally, there are those people McKinsey researchers described as "U-Boomers." This group, all 24 million of them, is said to be unprepared for their retirement years and perhaps that's because they keep spending. Almost 25 percent of total U.S. consumption by 2015 is expected to come from these shoppers.
An article in Forbes described the U-Boomer challenge and opportunity. "As the economic clout of the cash-constrained, highly discriminating U-Boomers grows, companies will need to rethink how they deliver services while keeping prices down. Web-based tools that lower delivery costs while retaining a sense of personalization and high-end service are part of the solution. One of the fastest-growing usage segments for Skype's Internet videoconferencing is grandparents talking to their grandchildren."RetailWire
Labels: Retail Trends
Labels: Retail Trends
The prototypical Crème de la Crème property totals three acres, costs $7 million to develop, takes seven months to build and is anchored by a 21,000-sf building with an elaborate build-out that resembles a Victorian village. Inside the building are a computer lab, arts and music studios, library, dance studio, gymnasium and a mock television studio. Outside, there are reduced size tennis and basketball courts, a custom designed mini water park and numerous play areas containing an assortment of toys and playground equipment. Children move to a new area every 30 minutes that is staffed by a specialist in addition to their regular teacher.
“It’s a state-of-the-art, educationally engineered facility that others have said looks like Disneyland inside,” he says. Crème de la Crème Ivy League pre-schools have found a home in upscale suburban lifestyle centers and mixed-use districts situated close to upscale residential communities and major transportation routes. Developers of such centers like the chain because it attracts their kind of demographic and also because it can take spaces toward the back of a center that traditional retailers have shied away from, and also are closed on weekends, when the center is the busiest.
Other developers are treating them more like an anchor tenant. One developer, in North Chicago, put them out front of his center following a front page story about the company in the Chicago Tribune, Karpas says. Another, in a suburb of Dallas, redesigned its center to provide a view corridor from the street to the school, named the center after the school and flanked it with a maternity store and a spa, Karpas says.
Crème de la Crème either self-develops its pre-schools with a subsequent sale-leaseback transaction upon completion--in order to recycle the capital for a new location--or enters into build-to-suit-to-lease deals with the developer.
Karpas says the next five locations in the next 12 months, including two more in Chicago, another near Washington, DC, another outside of Cleveland and the first in Arizona in Scottsdale. Five more are expected to open before the end of 2009, including a second school in the Denver area. There are no schools on the West Coast yet because the cost of land has been prohibitive, Karpas says. “That $7-million development cost per store includes the cost of land; if land in a certain market is $1 million an acre, that’s $3 million on just the land,” which doesn’t pencil out, he says.
That having been said, Karpas hopes the current market opens up some new opportunities to break into the West Coast market. “I’m hoping in this current economic environment to see a little bit of a price break,” he says. “We haven’t seen it yet but we are hoping because other retailers are somewhat slowing down.”
The first Crème de la Crème was opened in 1980 in the Houston area. Crème de la Crème Inc. became a licensee in 1997 and opened its first store in 1998 in Plano, TX, with money from family and friends. In 2004, Crème de la Crème Inc. acquired the Atlanta schools and, last spring acquired the ownership rights to the Crème de la Crème Inc. name. Karpas declined to discuss the acquisition cost but did say Crème de la Crème Inc.’s current ownership includes institutional investors.
Karpas says the company’s growth has been funded internally since 2000. To help keep costs down with regard to new development, Karpas says the company is moving away from ground-up development and more toward build-to-suit-to-lease deals, where the developer spends the money to build the facility with a long-term lease commitment from Crème de la Crème. Kimco and Duke as well as smaller developers have built facilities for Crème de la Crème under both models, Karpas says.
As for competition, Crème de la Crème believes it has separated itself from the independent pre-schools and the big national chains like Kindercare and Learning Care by having a higher-end facility, one that costs a few hundred dollars more per month than the national chains. The average tuition for a two-year-old attending the school five days a week for 12 hours a day is $1,200- to $1,400 per month. In addition, the schools offer after-school program for six- to 12-year-olds, and also offer private music and sports lessons.
“We are raising the image, we believe, of any lifestyle center we go into,” Karpas says.
Labels: Creme de la Creme
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Labels: Retail Trends
Fueled by an $11.2 million loan from KeyBank, Samuels affiliate Fenway Ventures Point Properties LLC purchased 186-200 Brookline Ave. and the adjoining 1395-1399 Boylston St. The Brookline Avenue asset is home to D’Angelo’s Sandwich Shop, and fronts a major intersection at Park Drive leading into the Longwood Medical Area and onto the Jamaicaway. The acquired properties are across from the former Sears warehouse, a hulking art-deco building that now features a Best Buy and other shops, plus 450,000 sf of office space.
The seller of the Fenway buildings is Riverside Properties Inc. of Wellesley, whose faded sign on Brookline Avenue still advertises available space for lease in the low-slung structures. Riverside President Mark Levy did not return a phone call by press deadline. Levy’s firm paid $955,000 for the assets in June 1994.
Some observers predict Samuels will pursue a redevelopment play on the block. "Things are definitely going to change," opines one broker familiar with the new owner, and a spokeswoman for Samuels acknowledges as much, telling GlobeSt.com that the firm aims to "continue the spirit of Trilogy" on the parcel, although she says the vision remains undefined. "At this point, we have no specific plans and no timeframe for when we might submit something to the Boston Redevelopment Authority," the spokeswoman relays.
The $200 million Trilogy was the company’s first major undertaking in the Fenway, as Samuels acquired the site for $8 million in 1999 and constructed 581 high-end residential units in three towers of 12, 15 and 17 stories. Samuels sold 171 of the units to Harvard University for graduate students. The company is now putting the finishing touches on 1330 Boylston St., another mixed-use high-rise mere blocks from Trilogy and the newly acquired properties. The leasing office for units at 1330 Boylston St. is in the rear portion of the block now fully owned by Samuels. The firm purchased those buildings at 1383 Boylston St. and 176-184 Brookline Ave. in 2003 for $2.4 million.
The latest acquisitions by Samuels also follow the recent purchase of a Goodyear Tire operation at 1345 Boylston St on the opposite side of Trilogy. That $10 million deal was reported by GlobeSt.com.
Labels: Linens N Things
Four decades later, she's ascended as well as the store morphed to a national chain whose products are contemporary home staples.
The 64-year-old president of the privately held retailer became chief executive this month, replacing founder Gordon Segal, who had held the post since he and his wife opened their first store in Chicago's Old Town neighborhood in 1962.
Turf's new role comes as the Northbrook-based company, now owned by Germany's Otto GmbH, tries to weather an economic and housing downturn that's sending the housewares sector into a tailspin while causing some other retailers to file for bankruptcy protection, close stores or scale back operations.
Howard Davidowitz, chairman of the retail consulting firm Davidowitz & Associates, said Crate & Barrel's product development, attractive merchandise and affordable prices mean it's among the best-positioned chains to ride out the turmoil.
"This company's in the worst segment of retailing, where almost no one is doing well," he said. "(But) I think they are positioned to succeed. I think they're among the best out there, but it's just very hard right now."
The company, which operates 170 Crate & Barrel, CB2 and Land of Nod stores, had sales climb more than 10 percent to $1.31 billion last year and expects those figures to hold steady while it opens eight new locations this year.
In an interview with The Associated Press, Turf acknowledged the effects of the worsening economy on the closely held company's financial results, but said she's confident Crate & Barrel's conservative strategy will help it thrive while rivals stumble.
Q: Can you walk me through what some of your goals are for the company under your leadership?
A: Well, I think there are certain areas of the company that are non-profitable that we need to focus on and pay attention to -- whether it's repositioning a store or repositioning operational issues that can make it more profitable. (We're looking at) growing the business beyond the traditional ways. That means you don't have to put a store in every mall as much as you have to look at how the Internet has changed retail bricks and mortar. ... I think the catalog has to be addressed with the green environment. ... Beyond North America's borders, we're trying Canada right now for September.
Q: With the catalog, do you think you'd ever phase that out?
A: First of all, our direct marketing business is critical. We're not going to ever phase out of the catalog. That's too important. And it means too much the customer. But does it have to be so big? That's what I'm talking about.
Q: What's the status of a possible store in Dubai?
A: We're still exploring it under due diligence, like lots of other retailers are, to see if it makes sense.
Q: Are there other markets that you're examining?
A: We're going to put an international committee together with our partners in Germany to start to look at globalization. Does it make sense to go into China? Does it make sense to go into India someday? What about Europe? We just have to do a whole lot more homework, but I think it's an opportunity for Crate & Barrel along with other retailers to look at borders beyond the United States.
Q: How is the company weathering the economic downturn?
A: Certain pockets are definitely suffering. I'm actually pleased that we're holding as strong as we are. I think the economy is such a challenge right now. Maybe there's just too many stores or too many weak sisters in the playing field and that's what happened to them. Maybe there was too much growth too quickly. We've always been such a conservative growth company in the sense of being able to capitalize and not just do growth for the sake of growth, but to grow more methodically.
Q: Do you expect sales this year to increase?
A: We expect it to be very tough. And I think that's why we need to focus on profitability as well. You're not going to see increased sales jumps like we've been used to for the last 10 years with home furnishing.
Q: Do you believe your company's history of conservative growth insulates you?
A: I don't think anybody's insulated. I think we have a solid financial sheet and I think we're going ahead with plans as usual and hoping for the best. But I think you can't retract yet until you see what's really going to happen.
Q: Do you think that there's going to be more bankruptcies within the home furnishings market?
A: Yes, I do. I do think there was too much growth in the last 10 years with some weak competition. And I think a lot grew too fast.
Q: You don't anticipate Crate & Barrel being among them?
A: No! I really don't.
Q: How do you keep shoppers coming into stores?
A: It's a challenge. I've had so many people describe the joy of being in the store. And I think sometimes, even when you're a little bit depressed about your economic status, if you go in and buy four yellow placemats at $3.95, that's going make you feel better. So I guess I feel we're still a fun place to be.
Q: Do you think that you're going to slow down your (expansion) pace to deal with the economy?
A: I think that will be under discussion depending upon how things go. I just think we have to be very careful about where we put our bricks and mortar in the next couple of years. Because of the Internet, we really have to think about making that more synergistic with the store and making it easier and more seamless for the customer to shop both channels.
Q: How do you think Crate & Barrel will be different in the future?
A: We have always been a company that has evolved and we will continue to evolve, reflecting the American lifestyle -- whether it's healthy eating, or it's storage, or being more environmental. Whatever is addressing America, we will try to reflect that.
Q: The green living and green products seem to be in right now. Is that just a fad?
A: No, that's not a trend. It's here to stay. I think everyone with education really realizes that the planet is definitely in trouble and we need to worry about it more. And I think it's coming down the mainstream.
Q: Are customers willing to pay more for a product that's green?
A: I would absolutely say yes. I think people will be committed to it.
Q: How long do you think you're going to stay on as CEO?A) My legacy will be to the put the next generation in place. Because both Gordon and I are committed to keeping this company going for the next 20 years. And I certainly won't be around when I'm 80. I definitely feel my commitment is to put the next leadership generation in place.
Labels: Crate and Barrel
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The group, which purchased the gadget retailer's assets in a bankruptcy auction Thursday for $49 million, said it has developed a licensing strategy for wholesale, retail, direct-to-retail, e-commerce, and catalog businesses.
The Sharper Image filed for Chapter 11 bankruptcy protection in February, with plans to shut about half of its 184 stores and reorganize. The San Francisco-based company said it had lost more than $135 million since early 2005. The company put itself up for sale in April.
Labels: Sharper Image
The Charlotte-based retailer expects the strategy will boost sales even as the economy slows.
"Our plans for this year are to accelerate It's Fashion store openings primarily through the development of our It's Fashion Metro concept," said Chief Executive John Cato last week at the company's annual shareholder meeting.
The Cato division of the company has been the primary focus of growth, but that focus is shifting to It's Fashion and It's Fashion Metro. Last fall, Cato opened the first two It's Fashion Metro stores, one in Charlotte and another in Natchitoches, La. Since then, it has opened 11 more locations. By the end of the year, it plans to open 30 It's Fashion Metro stores in the Southeast.
The It's Fashion Metro concept is an expanded version of the It's Fashion store that offers urban-inspired, nationally recognized brands for the entire family. It's Fashion Metro stores average about 12,000 square feet while the traditional It's Fashion stores are about 3,000 square feet.
"The It's Fashion Metro stores are a focus and the primary growth vehicle in the It's Fashion division because of the opportunity we see for its growth," Cato says. "We believe it is a customer base and a market that we know well."
While Cato is expanding in the Southeast, it's pulling back in the Midwest and Northeast because stores aren't performing as well as it had hoped. Cato says it will continue to test and evaluate locations there to improve sales.
Part of that testing involves using a new site-selection tool. Over the last 10 to 15 years, Cato has focused on strip-shopping centers anchored by a national discounter or large grocer. Cato is testing stores in larger shopping centers anchored by two or more big-box chains that generate more traffic. The site-selection tool helps gather demographic information to identify potential store locations.
"It should ultimately help us open more stores in more profitable locations," Cato says. "And we will continue our standard practice of closing underperforming stores."
During the first quarter ended May 3, Cato opened 19 stores and closed 11. The company's first-quarter net income fell to $16.9 million, or 58 cents per diluted share, from $18.7 million, or 59 cents per diluted share. Revenue rose 1% to $225.8 million from $224.1 million, while sales at stores in operation for at least a year decreased 2%.
The company expects earnings of 80 cents to 95 cents per diluted share for the full year, up from a prior estimate of 72 cents to 93 cents. Cato earned $1.03 per diluted share in fiscal 2007.
"Cato remains in good shape financially," wrote Patrick McKeever, an MKM Partners analyst, in a recent research report. "The company's financial performance was significantly better than it could have been had management not taken an aggressive approach to managing inventories down and reducing markdown exposure."
At the end of the quarter, Cato had no debt and $127.2 million in cash and short-term investments.
The retailer thinks the economic stimulus rebate checks will boost sales. "We certainly hope our customers will spend some of their stimulus checks with us," Cato says. "We have heard anecdotal information from our stores that they are seeing some stimulus money being spent."
Source: Charlotte Business Journal
Overall, the chain will increase its store count by 13% worldwide, opening about 24 new stores, including six in the Americas. “While we’ve always said that Tiffany’s business is not recession-proof, the global nature of our business is showing the mitigation effect it can have,” for regional weakness, said Mark L. Aaron, vice president of investor relations.
Traditional stores also will open in Pittsburgh and Columbus, and a holiday store at the Mohegan Sun casino in Uncasville, CT, will be converted to a permanent unit. Growth will also occur in Asia and Europe, which has seen stronger sales. Units will open in Madrid, Brussels and Dublin this year, Aaron said.
Worldwide net sales increased 12% from last year to $668.1 million. Comparable-store sales rose 8% and 3%, respectively. Net earnings from continuing operations rose 20% from last year to $64.4 million. Comps in the United States were flat, while they rose 4% in the Asia-Pacific region and 12% in Europe.
Tiffany operates 192 stores and boutiques worldwide.