Saturday, January 31, 2009

Fashioning an exit

With rents up, sales down, many shops quitting Boston's Newbury St.

They waited years to score coveted digs on Newbury Street. Now they are disappearing literally overnight.

Faced with a decline in sales and a rise in already exorbitant rents, boutiques, galleries, and even chain stores are shuttering shops up and down what is considered Boston's most desired retail address. The exodus of exclusive merchants from the shopping district has proceeded in a steady drumbeat of sudden departures.

Employees at clothier Tess & Carlos, at 141A Newbury St., carried out boxes late one night earlier this month and never returned. A few days ago, shoe seller Rockport at 83 Newbury St. closed its doors.

Kidder Smith Gallery, at 131 Newbury St., posted a letter dated Jan. 23 on its now empty store: "Unfortunately, we were unable to come to terms with the new owners on a mutually acceptable agreement on our gallery, so we are officially in transition."

Comptoir de Famille, a vintage French home furnishings boutique at 127 Newbury St., will close today, blaming it on a new landlord who raised the monthly rent from $7,000 to $12,000. Next door neighbor Maha Barsom, a blouse designer, is likely to leave next month for the same reason. "People just disappear," said Ella Akinci, a manager at Comptoir de Famille. "It's scary.". . . more

Friday, January 30, 2009

Centro Sells Power Center to Acadia for $78M; 40% Discount

$122 PSF Gets Acadia 640,000-SF Westchester County Power Center

New York-based retail REIT, Acadia Realty Trust (NYSE:AKR) today announced it has purchased Cortlandt Towne Center for $78 million from Centro Properties Group.

Cortlandt Towne Center is a
640,000-square-foot regional shopping center located on E. Main St (Rte. 6) near the corner of Lexington Ave. in Cortlandt, Westchester County, NY. Built in 1973 and renovated in 1999, the center is anchored by Wal-Mart, A&P Food Market, Marshalls, Barnes & Noble, Regal Cinema, and Best Buy. . . . more

H&M opening 225 stores in 2009

Swedish clothing store H&M has said it plans to create between 6,000 and 7,000 new jobs in 2009.

The company intends to open 225 new stores around the world in the new financial year.

Fourth-quarter profits at H&M beat analysts' expectations. However a fall in consumer spending affected December's figures. Sales were up 3%, behind forecasts of a rise of 8.6%. . . . more

Chico's cuts 180 jobs, may close 25 stores

Clothing company Chico's FAS said Thursday it is eliminating 180 positions and may close up to 25 stores to cope with the economy's toll on retailers.

Chico's, which operates its namesake retail stores, White HouseBlack Market and Soma Intimates brands, has suffered from weak sales as consumers cut their spending back amid the recession. . . . more

Harris Teeter to cut store openings

Harris Teeter is cutting the number of store openings and renovations planned for 2009 and beyond because of the weak economy, the Matthews-based grocer's parent company said in a filing Thursday.

Charlotte-based Ruddick Corp. said in a filing last summer that it planned to spend about $245 million in 2009 to build 19 new stores and complete eight major remodeling projects. By the fall, those numbers had declined to $241 million to open 17 new stores and finish four major remodeling projects. . . . more

Whole Foods case pauses for talks

WASHINGTON, Jan 29 (Reuters) - The U.S. Federal Trade Commission on Thursday agreed to a request by Whole Foods Market Inc (WFMI.O) to temporarily suspend an agency case against the upscale grocery chain for settlement talks.

The FTC, which enforces antitrust law, has challenged Whole Foods' 2007 acquisition of rival Wild Oats. Last week, a federal appeals court rejected Whole Foods' request to delay an FTC administrative trial scheduled to begin on April 6.. . . more

Retailers That Survive Can Expect A $20 Billion-Plus Boost In Sales

NEW YORK -(Dow Jones)- The retail industry's sweeping retrenchment is creating upward of $20 billion in sales opportunities for retailers that will survive the recession, a report released Thursday said.

Wal-Mart Stores Inc. (WMT), Target Corp. (TGT), Kohl's Corp. (KSS), Macy's Inc. (M) and J.C. Penney Co. (JCP) will be among the major beneficiaries, said the report by Deutsche Bank.

Best Buy Inc. (BBY), Bed, Bath & Beyond Inc. (BBBY) and Staples Inc. (SPLS) will also see gains because of softness in their respective categories, Deutsche Bank said.. . . more

U.S. GDP: Less Ugly Than Feared

The economy shrank by 3.8%, less than the 5.4% experts had anticipated, but swollen inventories may make the figure deceptive.

The U.S. gross domestic product took a nasty tumble in the fourth quarter of 2008, diminishing by 3.8%, but it was better than the 5.4% annualized contraction Wall Street had been predicting for the last three months of 2008.

Nonetheless, Friday's reading was the worst since the 6.4% drop in recorded the first quarter of 1982, when the country was suffering a severe recession. This time around, the U.S. economy has been sucked into a housing, credit and financial conflagration that led to widespread job losses and a massive pullback in spending. . . . more

Bon-Ton to Cut 1,150 Jobs, Bonuses

Bon-Ton Stores Inc. said Thursday that it will eliminate about 1,150 jobs, get rid of 2008 senior executive bonuses and cut 2009 merit-based raises as it tries to slash costs to contend with the ongoing recession.

The department store operator anticipates the moves will result in annual savings of $70 million.
Bon-Ton said its actions will also include suspending company contributions to the 401(k) program, adjusting inventory levels and lowering capital spending to $40 million.


The moves, which will occur in fiscal 2009, will result in one-time costs of approximately $3 million.. . . more

Thursday, January 29, 2009

Analysts say malls will be competing in challenging economy

(Jan 29, 2009): When Hampshire Mall opened in Hadley, Mass., stores moved out of nearby Mountain Farms Mall, leaving the aging shopping center so deserted that locals dubbed it the "dead mall."

Nearly 30 years later, Mountain Farms Mall finally is experiencing a comeback, rebuilt as a strip mall of big box stores and renovated movie theaters.

That gloomy scenario could be repeated in southern Maine, analysts say, if Westbrook developer Jason Snyder moves forward with plans for a regional mall that is larger and has more amenities than the state’s biggest and busiest shopping center: the 40-year-old Maine Mall in South Portland.. . . more

Best Buy CEO eyes bankrupt retailer locations

DAVOS, Switzerland (Reuters) - U.S. electronics retailer Best Buy Co could take advantage of bankruptcies in the sector by snapping up vacant store locations, but remains cautious as consumer spending continues to slide.

"We are looking at some of those (stores), but our first priority is to stay cash strong," Chief Executive Brad Anderson told Reuters on Thursday, on the sidelines of the World Economic Forum in Davos, Switzerland."

We would be more cautious than we would (be) in most environments and take advantage of less of that than we would have a year or two ago," Anderson, who plans to retire in June, said.. . . more

Mall expansion delayed indefinitely

SOUTH PORTLAND (Jan 29, 2009): Development of Maine Mall Commons – a proposed $8 million retail complex with restaurants and an anchor store – will be delayed indefinitely because of the weakened economy, the property owner announced this week.

The abrupt decision by General Growth Properties to indefinitely postpone construction of the 90,000-square-foot development comes a month after the South Portland Planning Board approved it, with assurances by mall representatives that the project would be built.

"We and our retail partners have placed the project on hold while we await more favorable market conditions," said Jim Graham, spokesman for General Growth of Chicago, which also owns the Maine Mall.. . . more

Starbucks closing an additional 300 stores

NEW YORK - Starbucks Corp. said nearly 7,000 employees may lose their jobs due to a new round of store closures and cost cuts as it reported Wednesday that its profit dropped 69 percent in its fiscal first quarter.

The company plans to close 300 underperforming stores around the world by the end of the fiscal year in addition to the 600 it already planned to close in the U.S. The company has already closed 384 of those stores.

The additional closures could result in the loss of 6,000 in-store jobs. Starbucks also plans to lay off about 700 non-store employees.

It also has reduced the number of new stores it plans to open. . . . more

LI Shopping Center Changes Hands for $36M

CARLE PLACE, NY-Voice Road Plaza, a 131,850-square-foot shopping center here, has sold for $36.2 million, slightly more than the seller paid for it two years ago. In a release, Sperry Van Ness’ Joseph French calls the transaction "the most difficult sale our team has ever completed."
Challenges the SVN team faced in selling the 8.3-acre property at 260 Voice Rd. included a declining economy, disappearing liquidity and diminishing consumer confidence. The owner, reportedly a hedge fund managed by Stillwater Capital, "needed an exit strategy" and listed the center in the beginning of the recession.

"The major obstacle was the existing mortgage, which required an assumption," says French, SVN’s national director of retail, in a release. "Due to its low LTV, a significant amount of capital was required to complete this transaction, which drastically limited the pool of potential buyers." SVN marketed the property for 10 months and distributed more than 175 sale packages. . . . more

Wednesday, January 28, 2009

Westfield flags $3bn hit to shopping center assets

Westfield Group Ltd shares were down more than six per cent after the retail property investor flagged that its shopping centre assets would depreciate by $3 billion in its full year results for calendar 2008 because of an increase in capitalisation rates.

But by the close of trading, Westfield stocks had recovered substantially to be 0.99 per cent down for the session, against a broader gain of 1.49 per cent on the benchmark index.

The group, which announced the devaluations after the market close yesterday, also said its distribution for the year to December 2008 would be in line with its forecast of 106.5 cents per share. . . . more

Macquarie to sell 30 US shopping centers to Inland

Shopping centre investor Macquarie CountryWide Trust has entered agreements to sell 30 US shopping centre assets for about $US427 ($A647.46) million.

Macquarie CountryWide said the sale to Inland Real Estate Acquisitions Inc includes all but five of the assets that were part of the first two Regency joint ventures established with the Trust - the dissolution of both were announced earlier this week.

Proceeds from the sale will be used to reduce debt and position the Trust to meet its refinancing obligations in the second half of 2009, Macquarie CountryWide said in a statement to the Australian Stock Exchange.. . . more

NRF Sees Stimulus Boosting Retail Sales

WASHINGTON — National Retail Federation here yesterday said it projected a 0.5% decline in retail sales for 2009, factoring in improvements in the second half of the year that could result from increased consumer spending as a result of a massive, government-sponsored economic stimulus program.

“This downward cycle will not be easy to break,” said Rosalind Wells, the chief economist for NRF. It is the first time NRF has ever projected a decline in retail sales, which it has been estimating annually since 1995. . . . more

Discounters lose their edge

Bargain hunters may soon forsake TJ Maxx for Saks.

(Fortune Magazine) -- Like a lot of Americans, I spent the weekend after Christmas scouring stores for bargains. A cute raspberry-colored blazer at Loehmann's caught my eye, not so much for the design but because I had seen the same jacket in Bloomingdale's for roughly the same price ($19.99) just days before.

The jacket was an example of a rare, possibly even never-before-seen phenomenon happening in retail right now: As department stores radically slash prices, they have become discounters in their own right, competing heavily with "off-price" stores such as Loehmann's, TJ Maxx and Filene's Basement.. . . more

After too few take buyout, Best Buy layoffs ahead

CHICAGO (AP) - A spokeswoman for Best Buy Co. Inc. said the consumer electronics chain will lay off workers in its corporate headquarters because not enough employees opted to take a voluntary buyout.

The Richfield, Minn.-based company didn't say how many corporate jobs will be affected by the layoffs but said workers would be notified Feb. 19th. . . . more

The wealthy turn stealthy as economy weakens

BEVERLY HILLS, Calif. -- Throwing your money around is so pre-recession.

As the economy weakens, the wealthy and the businesses that cater to them say it's more common _ even chic _ to scale back extravagant spending and play down affluence. Retailing experts call it luxury shame, or stealth wealth.
From Rodeo Drive to Fifth Avenue, that means one thing: Hide the labels.

Some shoppers are asking cashiers at high-end stores to put their purchases in plain white paper bags. Others want their expensive clothes and jewelry shipped home so they can walk out of the store without any bags at all.. . . more

Walmart and Kmart testing pickup locations


The residents of Joliet, a small city on the outskirts of Chicago, already have a drive-through McDonald's, a drive-through bank and a drive-through Starbucks. Later this year they should have a drive-through Kmart store as well, as the third-largest US discount retailer begins a radical experiment in serving its online shoppers.

Kmart, part of Sears Holdings, istransforming its old 85,000 sq ft store in Joliet into a drive-through location - under the name My Gofer - with four-fifths of the store area devoted to warehousing space. Sears told the city council that the new store would be a "marriage between online shopping and bricks and mortar", allowing online shoppers to pick up merchandise without leaving their cars.

Meanwhile
, Wal-Mart, the largest US retailer, is working on its own new generation of e-commerce enabled stores. Eduardo Castro Wright, head of Wal-Mart USA, said last year that the smaller, "high-efficiency" stores the retailer is developing will include a "very large" commitment to its pick-up service and is expected to include a drive-through area for online orders.. . . more

Target to Cut 9% of Headquarters Jobs, Shut Distribution Center

Jan. 27 (Bloomberg) -- Target Corp., the second-biggest U.S. discount retailer, plans to eliminate 9 percent of the jobs at its headquarters and close a distribution center to reduce costs in the shrinking economy.

The company will slash 600 existing jobs and 400 open positions, mainly in its hometown of Minneapolis. It will also close its Little Rock, Arkansas, distribution center, which employs 500, later this year, Target said today in a statement. . . . more

Tuesday, January 27, 2009

Crosspoint Associates Develops New Hannaford Shopping Center

MEREDITH, N.H.--Natick, Mass.-based Crosspoint Associates has completed construction on the new Meredith Bay Shops, a 70,000 square foot shopping center anchored by Hannaford Supermarket in Meredith, New Hampshire.

The total investment to the shopping center was well over $10,000,000.00 and created approximately 300 construction jobs and approximately 100 new permanent full- and part-time jobs in the community.

Olympia Sports also opened a new 4,200 square foot store on November 15, 2008 at the center. . . . more

Costco sees an upside to down economy

Costco Wholesale customers are gravitating toward basics like food, jeans and T-shirts, but they also like to spot the occasional deal on high-end Tumi luggage and Coach handbags, says CEO Jim Sinegal.

The stagnant economy has Costco Wholesale customers gravitating toward basics like food, jeans and T-shirts.

But they also like the occasional deal on high-end Tumi luggage and Coach handbags, Costco CEO Jim Sinegal said Friday to a group of retail buyers and wholesalers at Pacific Market Center's Winter Gift & Home Accessories Show.
. . . more

More consumers buying generics, drugs at Wal-Mart-like stores

ROCHESTER, N.Y. (Jan. 26) How and where people by prescription drugs and what drugs they buy have changed substantially over the past two years, according to the Harris Poll.

The poll, released Monday, found that between October 2006 and December 2008, the proportion of adults who would choose generic drugs over branded drugs increased from 68% to 81%, and the number who would choose branded drugs decreased from 32% to 19%.

Mass merchandisers have also gotten more customers at their pharmacies. Purchases of drugs at stores like Wal-Mart and Target increased from 13% to 17%, while purchases through mail-order and online pharmacies increased from 11% to 15%. . . . more

NRF Forecasts 0.5% Decline in Retail Sales for 2009

NRF Forecasts 0.5% Decline in Retail Sales for 2009 -Deep Recession Should Finally Give Way to Second Half Growth-

Washington, January 27, 2009 – The National Retail Federation released its 2009 economic forecast today, projecting retail industry sales (which exclude automobiles, gas stations, and restaurants) will decrease 0.5% from last year. According to its quarterly Retail Sales Outlook report, NRF sees more challenges ahead as consumers continue to shift their spending priorities.

“Most of the consumer behavior we saw in 2008 will continue well into this year,” said NRF Chief Economist Rosalind Wells. “Shoppers will be seeking value and trading down to discount and off-price retailers in order to stretch their purchasing power.”

The first half of the year will see a continuation of the weakness that was felt in most of 2008. First half sales are expected to decline 2.5 percent. There will be some improvement in the third quarter with sales decreasing 1.1 percent. In the fourth quarter, sales are expected to improve 3.6 percent due to easy comparisons to last year as well as a strengthening economy. . . . more

Harris Teeter Plans $101M Warehouse to Feed Growth

Word of new development plans is uncommon in the industrial sector these days, as it is for most commercial property types. Nevertheless, the supermarket chain Harris Teeter Inc. is bucking the trend. Making one of the largest commitments to an industrial facility so far this year, Harris Teeter intends to build a $101 million distribution center in King George County, Va.

Virginia edged out North Carolina and Maryland in its bid for the distribution center, which will serve stores in Maryland and Delaware as well as in Virginia. The project’s size and construction schedule were not disclosed in the announcement last Thursday by the office of Gov. Tim Kaine that Virginia had prevailed. However, Harris Teeter vice president of distribution Larry Cooper said in the statement that location, work force and highway access helped tip the balance toward King George County. . . . more

McDonald's To Open 1,000 Units

OAK BROOK, IL-With sales boosted by a struggling economy and looking to expansion oversease, McDonald’s Corp. will open 1,000 new units globally, executives said at the company’s fourth-quarter conference call.

Plans call for opening 165 units in the United States, 245 in Europe and 475 in the Asia/Pacific/Middle East/Africa sector, including 175 in China. The result will be 650 net new stores worldwide. In addition, a good portion of the company’s planned $2.1 billion in capital expenditures will be dedicated to refurbishing existing units, including adding McCaffe gourmet coffee shops. . . . more

Forever 21 Inks 27,000 SF in Former Woodies

WASHINGTON, DC-Two retailers have taken space in the city’s East End for an aggregate 32,000-square-feet. Forever 21 is leasing 27,000 square feet in the former Woodward & Lothrop department store building at 11th and F streets, owned by Norman Jemal of Douglas Development. This will be the first Forever 21 store in the District. The second retailer, Guess, will occupy 5,000 square feet at 1155 F St., a class A building close to the Forever 21 site that is also owned by Douglas Development.

Madison Retail Group principals Michael Pratt and Eric Rubin brokered the leases with Forever 21 and Guess. They represented both sides in the Forever 21 transaction; Rubin brokered the Guess deal with the company’s national consultant Carol Rosenfeld. . . . more

Monday, January 26, 2009

Hilco to Acquire Linens 'N Things Brand

With a deal slated to close this week, divisions of retail liquidators Hilco Organization and Gordon Brothers Group LLC are paying about $1 million for the Linens 'N Things brand, according to Reportonbusiness.com. The companies will license out the name to other retailers. The move paves the way for the retailers to set up in-store boutiques offering bath mats, duvets and picture frames. The new owners also will sell the goods online. During the past two years, the two firms have spent about $250 million acquiring brands, mainly through court proceedings. Hilco and Gordon Brothers picked up Sharper Image and Bombay in 2008 after liquidating and closing almost all their stores following their collapse. Hilco Consumer Capital, the Toronto-based private-equity arm of Hilco, bought struggling fashion labels Ellen Tracy and Halston and golf specialists Tommy Armour and Ram. Since spending $49 million on Sharper Image last June, Hilco and Gordon Brothers poured about $5 million into assessing new products and pitching the brand to retailers and manufacturers. Macy's and Bed Bath & Beyond are among the chains that now carry the label's line. James Salter, CEO of Hilco Consumer Capital, projects annual retail sales of $1 billion during the next five years for each of Linens 'N Things and Sharper Image.

Bose: No Store Closings Despite Layoffs

Framingham, Mass. — Bose said it doesn’t plan to close any of its more than 175 company-owned stores despite plans to cut its workforce by about 10 percent, or roughly 1,000 employees, a spokeswoman told TWICE.

The audio company, however, declined to say anything more beyond a prepared statement in which it said it is “restructuring its operations in response to the decline of the global economy and its impact on consumer spending.” Employee cuts will occur in “select areas, including manufacturing,” the statement added.. . . more

OfficeMax Launches 'C-Store'-Style Concept

Seattle area is test market for Ink Paper Scissors 'mini marts'


NAPERVILLE, Ill. -- OfficeMax Inc. has launched a new store concept that is designed to emulate a convenience store for office supplies and copies. The company has targeted the greater Seattle area for its new "Ink Paper Scissors by OfficeMax" stores. The new stores are located in Mukilteo, Bothell and Tacoma. While most shopping trips to traditional office supply stores are planned rather than spontaneous, the new 1,500 to 2,000-ft. stores are located in areas convenient for small businesses and home office customers so they can stop in while they are on the go.. . . more

Mall of America revises its plans for expansion

The Bloomington megamall says it's still determined to get bigger, but it may need to do so in phases. The first could come in 2013.

Jan. 26--After failing three times to get the public financing it wanted to pay for part of a $2 billion expansion, the Mall of America won't be making another pitch to the Legislature this year.

Instead, it's considering building the 5.6-million-square-foot project in phases, with a first phase of about 3 million square feet that could be done by 2013. The rest would be delayed indefinitely. . . . more

Darden Restaurants slims down growth plans


Jan. 23--Darden Restaurants plans to open even fewer restaurants in 2010 than its scaled-back number this fiscal year, company executives said at their annual meeting with analysts Thursday.

This fiscal year, Darden plans to open 68 to 72 new restaurants -- a number that the Orlando-based company had previously decreased from original plans calling for between 75 and 80.
In 2010, the number of new restaurants is expected to drop to between 53 and 65, executives said. Darden spokesman Rich Jeffers called the numbers "very preliminary."

LongHorn Steakhouse and Red Lobster are expected to open fewer new restaurants in 2010, while net new units for Olive Garden, Capital Grille and Bahama Breeze openings will stay about the same as this year. Seasons 52 will likely have more openings -- two or three, compared with one planned this year. . . . more

Home Depot to close Expo

CHICAGO (MarketWatch) -- In another sign of the worsening economic downturn, Home Depot Inc. said Monday that it is throwing in the sponge on its Expo design and d├ęcor business, closing stores and laying off thousands of employees.

Before the opening bell, Home Depot said that Expo has "not performed well financially and is not expected to anytime soon. Even during the recent housing boom, it was not a strong business."

And, it has "weakened significantly as the demand for big-ticket design and decor projects has declined in the current economic environment." . . . more

Citibank closing 10 branches in Connecticut

WATERBURY, Conn.—Citigroup Inc. is confirming plans to close 10 Connecticut Citibank branches beginning in July, trimming the number of branches it has in the state by a third.

A Citigroup spokesman says the branch closings could cause between 100 and 120 Citibank employees to lose their jobs. But he says workers at the 10 branches are being given a chance at other jobs within the organization.

Citibank will close branches in Avon, Bristol, Glastonbury, Hartford, Newington, North Haven, Orange, South Windsor and Waterbury at some point during the third quarter of the fiscal year.. . . more

Sunday, January 25, 2009

Stores Open Quietly Amidst Major U.S. Retail Store Closings and Going Out of Business Sales

The list of 2009 U.S. retail industry store closings in 2009 got longer this week with the addition of retailers like American Greetings and Phillips-Van Heusen. It was the job cuts at Williams-Sonoma, however, and the continuation of the nationwide Circuit City going out of business sales that filled the retail headlines. While major U.S. downsizings are stealing focus, some other retailers are stealing market share by quietly opening stores and establishing a strong foothold in a shifting retail landscape.

There will be 175 fewer places to purchase ties and 60 fewer places to purchase greeting cards before Christmas rolls around again after Philips-Van Heusen and American Greetings complete the store closings they announced this week. However, there will be 35 more places where you can get payday loans and 70 more places to eat and drink your troubles away after EZ Money and Darden expand their U.S. chains this year. . . . more

Friday, January 23, 2009

Economy in Bottoming-Out Phase

NEW YORK CITY-Although titled "Preparing for the Recovery," the cross-sector panel convened here Thursday morning made it clear that the timetable for an economic upturn was open-ended. "The next few years are going to feel tough," warned Bruce McCain of Key Private Bank.

In some ways, the climate in the post-Wall Street meltdown marks the end of an era, said McCain, chief investment strategist at the Cleveland-based bank. It also follows the typical pattern of any economic cycle, which includes a topping-out, decline, bottoming-out and, eventually, a rally. The bottoming-out phase, he said, "seems to be where we are right now." The question is how long it will take to "wash out the excesses and prepare for the next rally." . . . more

Rite Aid gets loan to help with financing changes

CHICAGO, Jan 23 (Reuters) - Rite Aid Corp (RAD.N) said on Friday it renewed an existing financing agreement through next January, though the amount of its borrowing availability was reduced, leading the drugstore chain to get another loan for up to $200 million.

The new terms come as Rite Aid works to fully absorb the Brooks and Eckerd chains it bought from Canada's Jean Coutu (PJCa.TO) in 2007. It is trying to remain competitive in a drugstore industry pressured by Wal-Mart's (WMT.N) late 2006 introduction of $4 monthly prescriptions on many generic drugs and consumers choosing cheaper alternatives, such as mail-order prescriptions, as they try to curb spending in the recession.. . . more

Few white knights emerge for bankrupt retailers

NEW YORK, Jan 22 (Reuters) - Faced with declining consumer spending, hamstrung credit markets and the worst holiday season in years, troubled U.S. retailers are desperately searching for white knights to rescue them.

But after a long-rumored suitor abandoned a deal for bankrupt electronics chain Circuit City Stores Inc (CCTYQ.PK) this month, retailers are facing the harsh reality that they are unlikely to find buyers for their companies -- even in bankruptcy court.

"For retailers, bankruptcy is like a roach motel -- they can go in, but they won't come out," said Evan Flaschen, chair of the Financial Restructuring Group at Bracewell & Giuliani LLP. "There are very few people buying these businesses in order to reorganize them. The people who want to buy them now are the ones most realistic about the liquidation value," Flaschen said.. . . more

A Syms set on sales

Real Estate that is

Off-price clothing retailer Syms has quietly moved to sell or rent some of its real estate to other businesses, The Post has learned.

The Secaucus, NJ-based chain is looking to sell or lease properties it owns in Long Island, New Jersey and Florida, real-estate listings show. That, in turn, has prompted speculation that the company is either looking to raise cash amid a brutal retail climate or pursue a new strategy to unlock the value of its land holdings.

Esopus Creek Advisors, a New York hedge fund that owns Syms shares, last summer accused the retailer of understating the value
of its real estate by at least 33 percent. . . . more

Barneys goes on the block

Barneys New York may be up for grabs, yet again. Not even two years after purchasing the luxury retailer, Dubai-based investment fund Istithmar World is rumored to be looking to sell, according to reports on Bloomberg News.

The asking price for the posh department store is not a penny less than the $942.3 million Istithmar paid when it bought Barneys from Jones Apparel Group in September, 2007, the Bloomberg article said. That amount was more than three times as much as Jones originally paid for the retailer three years earlier. But experts say such a sum is laughable in this market.

“They’d be hard-pressed to get that, given today’s economy,” said Michael Londrigan, chair of fashion at Laboratory Institute of Merchandising. “They would have to discount that at least 20% to come up with some sort of realistic figure.” . . . more

Sephora to Open Times Square Flagship

NEW YORK CITY-Beauty products retailer Sephora has signed on for 12,000 square feet at 5 Times Square to open what will be the chain’s first flagship store. Cory Zelnik, who represented landlord AVR Realty Co., tells GlobeSt.com the annual asking rent for the space was $4.2 million.

The three-level store, with ground level at the base of the 1.1-million-square-foot office tower, is scheduled to open sometime this summer, says Zelnik, president of Zelnik & Co. Taking advantage of the location’s visibility, Sephora plans to incorporate an undulating sign with animations. . . . more

Thursday, January 22, 2009

Brown Shoe to Close 30 to 35 Famous Footwear Stores

Footwear retailer Brown Shoe Company is cutting jobs and closing stores as part of plans to cut costs. Brown Shoe runs Famous Footwear stores and the shoes.com website. Reuters says Brown Shoe plans to close 30 to 35 of its Famous Footwear stores this year.

The seller of shoe brands such as Naturalizer, LifeStride and Via Spiga has been hurt by shoppers reining in spending to concentrate on essentials such as food as they combat falling home values and tighter lending conditions. . . . more

Phillips-Van Heusen lays off 400, shuts 175 stores

NEW YORK - Phillips-Van Heusen Corp., which owns the Calvin Klein, Izod and Van Heusen clothing brands, said Wednesday it will close 175 stores and lay off 400 employees due to the recession.

About 250 of the layoffs will come from the company's salaried division, reducing that unit's work force by about 10 percent. The remaining 150 layoffs will come from the neckwear manufacturing division.

The company will also stop domestic production of machine-made neckwear, reduce its warehouse capacity and cut travel, marketing and administrative expenses. . . . more

Fresh Market coming to Connecticut

The space previously occupied by Shaw's Supermarket in Westport's Village Center will soon be home to upscale grocery store The Fresh Market.

The Kowalsky family in Westport, which built the shopping center for Grand Union in 1969, did not renew the lease because Shaw's, which bought Grand Union in 2001, failed to upgrade the 22,775-square-foot store, according to Brett Sherman, senior vice president of Fairfield-based Angel Commercial LLC, which represents Roseville Estates, a Kowalsky family entity.

"Very limited rehabilitation was taken into the store after repeated requests, so they thought a new tenant would be better," he said, adding that other grocers, including Stop & Shop, were considered for the location. . . more

Grocers, Vendors Tussle On Pricing, Promotions

NEW YORK (Dow Jones)--There is a food fight brewing in grocery store aisles, with supermarket chains turning up the heat on suppliers to lower wholesale prices and food companies digging in to hold on to their recent price hikes.

Chief executives from Supervalu Inc. (SVU) and A&P operator Great Atlantic & Pacific Tea Co. (GAP) both recently predicted a tense first-half to 2009 as they engage their suppliers in negotiations about lowering prices, which the retailers hope will give their own sales a lift. . . . more

Bargain retailers reach for market share as consumers hold back

Retailers hyping their discount bins, offering more coupons and touting additional savings are tapping into what penny-pinching shoppers have known all along: There ain't no shame in that game.

Though discounters -- Wal-Mart aside -- did not weather the holiday shopping season as strongly as analysts predicted, merchants in Metro Detroit and across the country are attracting shoppers by appealing to a shifting consumer mindset that prizes value and price above all else.

As frugality and thrift become buzzwords
for customers "trading down" to bargain-oriented retailers, the ability to cater to these shoppers will determine whether discount stores retain them -- and their dollars -- when the economy picks up again. . . . more

Wednesday, January 21, 2009

Fitch Expects More Large CMBS Loan Delinquencies in 2009

Delinquencies on commercial mortgage-backed securities (CMBS) tracked by Fitch Ratings increased to 0.88% for December, up from 0.64% for November, largely because of defaults on bigger loans.

Two loans with principal balances greater than $100 million each contributed to the rise in the delinquency level, according to the New York-based credit rating agency. Fitch expects that more delinquencies on larger loans will arise in 2009, pushing delinquencies up to about 2% by the end of the year.

“What began as weakness in the performance of smaller properties located in tertiary markets now includes larger collateral in secondary and primary markets,” says Susan Merrick, a Fitch managing director and head of Fitch’s U.S. CMBS group. “Highly levered loans on transitional assets that were originated at the height of the market are proving particularly susceptible to performance default, as the deepening recession continues to make stabilization according to schedule increasingly unlikely.”. . . more

28 Illuminations stores, one Yankee Candle to close

Yankee Holding Corp. today said it will cut 330 jobs as part of a restructuring plan that includes closing its 28 Illuminations stores.

Yankee is also discontinuing its Illuminations consumer direct business and closing one underperforming store at its Yankee Candle Co.

The job cuts include about 310 store employees and field personnel at Illuminations, about 10 store employees at the Yankee Candle store, and about 12 corporate and administrative personnel at corporate headquarters in South Deerfield.. . . more

Retail: The quiet crisis

The industry shed more than a half-million jobs in 2008. But that doesn't get a lot of attention in Washington.

NEW YORK (CNNMoney.com) -- There's a major American industry that lost 522,000 jobs last year and is on one of the longest sales losing streaks in its history.

But the retail industry's crisis isn't getting the kind of government attention being showered on the nation's automakers.

Monthly store sales have declined for six straight months. In the midst of the longest recession in decades, the industry has lost more than three times the 163,000 manufacturing jobs shed by the auto industry last year. . . . more

Coach to cut store openings as profit drops 14%

NEW YORK (MarketWatch) -- Hurt by the economic downturn that has affected retailers across the board, upscale leather-goods seller Coach Inc. said Wednesday that its second-quarter profit fell 14% and pared back its U.S. store-opening plans.

Net income in the quarter ended Dec. 27 declined to $216.9 million, or 67 cents a share, from $252.3 million, or 69 cents a share, in the year-earlier period. Sales fell 1.8% to $960.3 million. . . . more

Circuit City collapse could hit real estate investors

NEW YORK (Reuters) - The collapse of electronics retailer Circuit City (CCTYQ.PK) could drive down shopping and strip mall rents, and deal another blow to commercial mortgage-backed securities' (CMBS) investors who have already seen their bond prices slide.

After a dismal holiday shopping season and several failed attempts to sell itself, Circuit City -- having filed for Chapter 11 bankruptcy protection in November -- last week said it would close all its 567 U.S. stores and liquidate its assets.

The move left 30,000 employees of the Woodland Hills, California-based company without work, and creditors -- including landlords -- lining up to get whatever they can after the company sells its inventory.

"Now those landlords are in line like the rest of their creditors -- and probably in the back of the line to get paid," said Suzanne Mulvee, Property & Portfolio Research real estate strategist.. . . more

Retailers cut inventory to address shift in consumer spending

Stores are reducing inventory and offering fewer pricey items as strapped customers slash their spending.

New York -- For years, retailers could afford to be sloppy about running their businesses because customers kept buying.

No more.

Stung by the worry that shoppers -- who cut spending by the most dramatic amount in at least 39 years this holiday season -- may not start spending again for a long time, stores are making drastic changes. They are cutting out marginal suppliers, hiring outside experts to keep inventory lean, holding special events for those who are still buying and making extraordinary efforts to gauge customer satisfaction.

The new discipline will be mostly good news for shoppers, who will find stores less cluttered and see an array of products at lower prices, including groceries and jeans from brands they could once only aspire to.. . . more

Gottschalks needs buyer soon or else

Jan. 21--Gottschalks Inc. intends to find a buyer by mid-March or it might proceed with a complete liquidation of its assets, according to court papers filed by the bankrupt department store operator.

The retailer, whose operations include department stores in Antioch, Stockton, Tracy, Santa Rosa and Capitola, said it hopes to complete an auction by March 17 that would lead to a sale of the company. Fresno-based Gottschalks operates primarily in malls located in suburban and rural markets in California, Washington, Oregon, Nevada, Idaho and Alaska.

Absent a buyer, Gottschalks would move toward a liquidation during the spring, company filings with the U.S. Bankruptcy Court in Delaware shows. . . . more

Zoup turns 10, looks to double franchises

Jan. 21--Zoup Fresh Soup Co. of Southfield celebrated 10 years in business by doubling its franchises.

The company, founded in 1998, now owns and operates six stores and has 15 franchises in Michigan, Ohio and Pennsylvania. Zoup CEO and cofounder Eric Ersher said Zoup awarded 29 franchises in 2008 and many are opening this year. That will extend the brand to Connecticut, New Jersey and Indiana.

And while the recession has pinched a number of restaurants, Ersher says sales rose 7% last year to $9.1 million after increasing 25% a year for the previous two years.

The fast-casual restaurant chains like Zoup, which are between a sit-down restaurant and fast food, outperformed the restaurant industry as a whole, according to a report from Technomic, a consultant.. . . more

J.C. Penney to have $2B cash on hand

NEW YORK – Seeking to quell worries over its financial position, Plano-based J.C. Penney Co. said Tuesday it expects to have more than $2 billion in cash on its balance sheet as of Jan. 31 and has no debt maturing during 2009.

Penney shares fell almost 10 percent to $17.42 Tuesday after comments by an analyst at J.P. Morgan.

The company said it was providing the clarification about its revolving credit facility "to mitigate unfounded concerns."

Those concerns were tied to a research note issued by J.P. Morgan's Charles Grom earlier in the day, Penney spokeswoman Darcie Brossart said. . . . more

Filene's Basement closing 11 stores

BOSTON—Filene's Basement, the chain known for its bridal gown sale, reportedly is closing about a third of its 36 stores.

A spokeswoman for the chain's parent company tells The Boston Globe it has been unable to negotiate rent reductions for 11 locations and plans to close them by the end of February.

Julie Davis, general counsel of Retail Ventures Inc., told the Globe: "We're still hoping there are some landlord negotiations that might help us keep stores." Stores to be closed are in Framingham, Mass.; three in Maryland, two in Illinois, two in Pennsylvania, and one each in New Jersey, New York, and Virginia.

Davis declined to comment whether there would be cuts at the chain's Burlington headquarters.

A message left at Retail Ventures corporate offices after business hours Tuesday was not immediately returned. The Burlington offices of Filene's Basement were closed for the day.

Tuesday, January 20, 2009

Filene's Basement shuttering 3 Greater Baltimore stores

Three Baltimore-area Filene’s Basement stores will close, the latest sign of how the economy is crushing even discount retailers.

Managers at the Filene’s in Columbia, Hunt Valley and Towson confirmed the store closures. They were not given an exact date, but the managers at the Towson and Columbia locations said the stores could close by the end of next month. The Filene’s Basement in downtown Baltimore will remain open, the managers said.

The managers deferred additional questions to Filene’s corporate spokeswoman, Pat Boudrot, who could not be reached for comment. Its corporate office was closed Monday for the Martin Luther King Jr. holiday.

Store executives reportedly had been trying to renegotiate leases at its area stores to contain costs.. . . more

Sears to Open Warehouse-Style Concept

Hoffman Estates, Ill.-based Sears Holdings Corp. plans to open a warehouse-style concept store in Joliet, Ill., called MyGofer. The store will allow shoppers to order online and pick up their purchases in the store or at a drive-through portal. The prototype, slated to open by this summer, is expected to fill a niche between Wal-Mart and Amazon.com, and could provide a model for the retail chain to eventually operate with fewer stores and lower overhead. . . . more

Giant to Open Convenience Stores

Giant Food Stores Inc. plans to open convenience stores with fueling stations in the Lancaster, Pa., area. Customers will also be able to apply points from their gas awards card toward discounts.

The company said the convenience stores would act as a natural extension of Giant's success selling gas. The company has two convenience stores planned in the Lancaster, Pa.-area. The first, which will be located in Manheim Township, is slated to open early this year.

Retailers overhaul business as consumers pull back

NEW YORK (AP) -- For years, retailers could afford to be sloppy about running their businesses because customers kept buying.

No more.

Stung by the worry that shoppers - who cut spending by the most dramatic amount in at least 39 years this the holiday season - may not start spending again for a long time, stores are making drastic changes. They are cutting out marginal suppliers, hiring outside experts to keep inventory lean, holding special events for those who are still buying and making extraordinary efforts to gauge customer satisfaction.

The new discipline will be mostly good news for shoppers, who will find stores less cluttered and see an array of products at lower prices, from ordinary groceries to jeans from brands they could once only aspire to.. . . more

Britain owns 70% of Citizens' parent after 2d bank bailout

LONDON - Britain disclosed a second rescue plan for the country's ailing banks yesterday, hoping to thaw frozen lending by offering to insure banks against large-scale losses on bad assets they already hold.

Investors, however, were spooked by fears that the second bank-rescue plan in three months was a step toward full nationalization of one or more banks. Fears focused on the Royal Bank of Scotland, which said it is likely to report a record full-year loss.

RBS, the parent company of Providence-based Citizens Bank, said its losses for the full year could be $41.3 billion, which would be the biggest ever by a British corporation.

"There is a great deal of uncer tainty. There seems to be some concern doing the rounds that the group will be totally nationalized sometime in the near future," said Keith Bowman, analyst at Hargreaves Lansdown stockbrokers. . . . more

Citi Splits Itself in Two

NEW YORK CITY-Having already sold a 51% stake in its Smith Barney brokerage unit to Morgan Stanley earlier this week, Citi on Friday announced it will reorganize into two operating units--Citicorp and Citi Holdings. The intent is to focus on its core businesses, including corporate and investment banking, while winding down some of the less profitable ones.

The new structure was announced on the same day that Citi reported a net loss of $8.3 billion for Q4 2008, the banking company’s fifth consecutive quarterly loss. The company also announced definitive agreements with the federal government on the $301-billion TARP bailout first reported by GlobeSt.com last November.

Citi Holdings will manage the illiquid assets in this pool, the company’s 49% stake in Morgan Stanley Smith Barney and other businesses that may eventually be combined or sold. How quickly these businesses will find buyers is an open question in the current environment. . . . more

Friday, January 16, 2009

Circuit City to shut down

Court filing shows bankrupt electronics retailer seeks approval to sell merchandise in its remaining 567 stores.

NEW YORK (CNNMoney.com) -- Bankrupt electronics retailer Circuit City Inc. said Friday it has asked for court approval to close its remaining 567 stores and sell all its merchandise.

The company said it has 30,000 employees.

In a filing with the U.S.
Bankruptcy Court for the Eastern District of Virginia, Circuit City - the No. 2 electronics retailer after Best Buy - said it had reached an agreement with four companies to start the liquidation process.. . . more

Gottschalks Bankrupts, Goody’s to Liquidate

Gottschalks announced on Wednesday that it has filed a voluntary petition for reorganization relief under Chapter 11 of the United States Bankruptcy Code. In related news, Goody’s, which exited Chapter 11 in Oct. 2008, said it will liquidate all 282 stores. Both retailers are the latest casualties of the economic downturn.

Gottschalks said it will file a variety of first-day motions with the court that, with court approval, will allow the company to continue to conduct business as usual without interruption. In collaboration with its advisors, Gottschalks is considering a sale of its business or other transaction with a third-party investor through a process to be approved by the court in order to attain the highest and best offer from interested parties.. . . more

Malls Cause Malaise Without Unique Offerings

As if struggling retailers, financially terrified consumers and a frozen credit market weren’t trouble enough, shopping centers must also contend with boring their shoppers, according to a new survey on the mall shopper experience conducted by the Verde Group and the Wharton School.

Malls today lack “discovery,” instead boasting a sameness that is driving shoppers away, says the consumer study discussed at the National Retail Federation’s 99th Annual Conference, which concluded yesterday here at the Javits Center.

“Discovery is the key,” said Paula Courtney, CEO of the Verde Group, based in Toronto and Atlanta. “The range and uniqueness of stores and restaurants are the key to keeping that shopper, and keeping them coming back.”

Verde conducted 917 telephone interviews with randomly selected US consumers, approximately two-thirds of them female, from Oct. 29 to Nov. 9. The good news is that shoppers are inherently loyal: The average shopper drove nearly 25 miles to their chosen mall, visiting five stores per trip. One of three will spend over two hours at the mall, visiting eight stores. Nine of 10 shoppers will make a purchase, spending an average of $155.. . . more

Forever 21 to Replace Virgin Megastore in Times Square

Forever 21 plans to open its largest location to date, a 91,000-sq.-ft. flagship in Manhattan’s Times Square. The store will be housed in the space currently occupied by Virgin Megastore. . . . more

Whole Foods: Too Pricey to Thrive in a Recession?

The country may be in a recession, but standing in the middle of the Whole Foods (WFMI: 12.26*, -0.11, -0.88%) flagship store in Austin, Texas, you’d hardly know it. From the small stream that runs through the patio at the entrance to the half-dozen kinds of grind-your-own nut butter in the bulk foods section to the chocolate fountain at the candy counter, the store is an 80,000-square-foot monument to abundance. As a nod to tightening belts, small signs promote “Whole Deals”—in other words, cheaper items—yet there’s still plenty to bust the budget.

But three stories up, in Whole Foods’ corporate offices, CEO and founder John Mackey can’t ignore the economic crisis. For the first time in the chain’s history, same-store sales are dropping and the stock has lost about 75 percent of its value last year. In the middle of 2008 the company suspended its dividend and announced it would still open new stores, though not as many as originally planned. And in early November, the company sold a $425 million stake to Leonard Green Partners, shoring up the balance sheet yet diluting the holdings of existing shareholders. . . . more

Publix Opens 1,000th Store

Publix's 1000th store will open on Thursday, Feb. 5, at 8 a.m., Shoppes at Murabella, St. John's County, Fla. This 54,000 square foot store location will include Publix pharmacy, bakery, deli, floral and fresh seafood. The store will employ approximately 115 associates. . . . more

Retail May Pick Up By Year’s End

The first half of 2009 will continue the misery of 2008, with sales declines. However, the second half will see a pickup, making 2009 a transitional year, according to the International Council of Shopping Centers.

Total retail sales and food services will decline 5.3% in the first half and rise 2.7% in the second half for a 1.3% full-year decline, while shopping center-inclined sales (from retailers likely to be located in shopping centers) will increase 1.1% in the first half and 3.5% in the second half of the year for a 2.3% total increase.

“There certainly is a lot of pessimism for the potential 2009,” said Michael Niemira, ICSC chief economist and director of research in a media conference call. “But that may be too broad-based. The first half of the year is where the pessimism is rightly placed. We think 2009 is a transition year to stronger economic activity.” . . . more

Lord & Taylor gets $60M to stay afloat

While a stormy shopping climate rocks retailers, Lord & Taylor is getting a lifeline.

The upscale department store has received a $60 million cash injection from owner NRDC Equity Partners, an investment firm run by New York real-estate mogul Richard Baker, The Post has learned.

The funds come as a disappointing holiday season and tightening credit had spurred worries among some industry insiders that Lord & Taylor's business might be disrupted this spring, sources said.

Lord & Taylor may have an advantage over competitors, given the deep pockets of its owner. NRDC, which also recently acquired the Canada-based Hudson's Bay department-store chain, has recently paid down $280 million in debt for Lord & Taylor, according to a source familiar with the matter. . . . more