KeyPoint Partners Retail Roundup

KeyPoint Partners Retail RoundUp has moved

2008-10-02T06:38:00.001-04:00

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Could General Growth Be Sold?

2008-10-01T17:01:00.002-04:00

As the credit crisis drags on, debt-ladened General Growth Properties, the nation’s second largest regional mall REIT, may have no other choice than to sell the company. That move, according to some observers, could even happen before the end of the year.

Last week, the Chicago-based firm announced it was exploring financial and strategic alternatives, including possible sale of the company, as it races to retire all of its 2008 loan maturities, which total $2.8 billion. Beyond that, as of Aug. 29, the company had a total long-term debt load of about $27 billion, according to Columbia Capital Services, Inc. Its long-term debt to capitalization ratio is at 72 percent, according to a report from Wachovia Capital Markets.
On Monday, Standard & Poor’s downgraded General Growth’s corporate credit rating to BB from BB+ and put the company on the watch list for further downgrades.

General Growth has already adopted several extraordinary measures as it tries to work with debtors and calm investors. On Sept. 2, it added seven of its properties to the collateral pool to repay $391 million in near term mortgage maturities. On Sept. 17, it increased the initial repayment guarantee to 50 percent of its outstanding $1.5 billion credit facility. On Sept. 20, two days after the company’s stock plummeted to a 52-week low of $19.50, General Growth was added to the short sell ban list by the Securities and Exchange Commission (SEC). It has also doubled its recourse levels with lenders to 50 percent. . . . more

REIT history bodes well for outlook in current volatile market

2008-10-01T12:44:00.002-04:00

Prices said to dip and climb before those of commercial property

Even though commercial- property values are decreasing, equity real estate investment trust prices will likely rise if historical trading trends are an indication, some industry observers predict.

"There's a tendency for people to think that if property values are going down and they own REIT stocks, then that means their REIT stocks will go down — and that, historically speaking, is not the case, because REITs lead the rest of the market," said Brad Case, an economist and vice president of research at the National Association of Real Estate Investment Trusts in Washington. "Returns to REITs lead the returns to real properties."

Equity REIT share prices have tended to decline, trough and rebound a year or two ahead of commercial-property prices shown on the NCREIF Property Index, from the National Council of Real Estate Investment Fiduciaries in Chicago.

If this trend holds up during this cycle, equity REITs, which were up about 2% in the first eight months of 2008, should continue ticking up even though commercial-real-estate values will likely be falling, Mr. Case said. . . . more

Kohl's Makes Grab for Market Share

2008-10-01T11:51:00.001-04:00

As Holiday Season Nears, Retailer Opens More Stores And Plans Aggressive Discount Pricing

Kohl's Corp. is opening 46 stores Wednesday as part of an aggressive effort to take market share from competitors just as the holiday season gets under way and U.S. consumer spending is stagnating.

"We've been in a period now for over a year where the customer is shopping less," says Kevin Mansell, who became chief executive of the Menomonee Falls, Wis., retailer in August. "You'd better start figuring out how you're going to take more from the other guy."

The middle-market chain, which competes head-on with J.C. Penney Co. plans to open a total of 75 new stores in 2008, Mr. Mansell says. After the new openings this fall, which include one more in November, the total Kohl's store count will be 1,004, or just shy of J.C. Penney's 1,083. . . . more

Food Lion's Bottom Dollar Scales Down with New Prototype

2008-10-01T11:37:00.001-04:00

Food Lion is "right-sizing" its Bottom Dollar Food discount concept with a new prototype unit opening today in Mooresville, N.C., about 40 minutes from Charlotte. The new 20,000 square foot store incorporates significant research and experience into the banner's redesign, Paul LaCroix, vp of Bottom Dollar Food told Progressive Grocer on Tuesday.

"When we approached this project, we first wanted to right-size the store with our variety," LaCroix said. "That meant smaller. We were able to eliminate non-sales floor space and allow for efficient assortment based on the square footage. We carry an efficient variety of branded and store brand products that customers purchase most often. The smaller space also allows for a reduction of energy expense.". . . more

Baltimore: Owner says Columbia Town Center project still on tap

2008-10-01T11:33:00.003-04:00

Debt-laden mall owner General Growth Properties Inc. plans to follow through with its proposed Columbia Town Center redevelopment, despite recently announced plans to shore up its finances and refinance its debt by selling off some of its properties.

Greg Hamm, general manager of the Columbia project for General Growth, said the company hopes to submit documents to Howard County outlining its plans for the project.

“We have every intention of moving forward,” Hamm said. “It’s a wild world out there, but we’re very excited about the project.”

Bill Mackey, project manager for Howard County’s planning and zoning department, said General Growth has said it will provide the county with the plans next month. . . . more

Ciena Capital Declares Bankruptcy

2008-10-01T11:03:00.001-04:00

NEW YORK CITY-Ciena Capital, a local provider of commercial real estate financing and factoring services, has filed for chapter 11 relief in the US Bankruptcy Court for the Southern District of New York, according to a statement by its major investor, Washington, DC-based Allied Capital. Although it will continue to operate its servicing business and, shielded by bankruptcy will be able to dispose of its assets in an orderly fashion when the markets improve, Ciena Capital joins the growing credit-market-freeze body count--and by extension, Allied Capital will be feeling some heat as well. Ciena did not return a call to GlobeSt.com in time for publication. Allied Capital declined to comment beyond its press release.

Allied Capital’s "unconditional guaranty of the obligations outstanding under Ciena's revolving credit facility may become due," it said in the release. The company intends to pay approximately $320 million to the lenders in connection with Ciena's revolving credit facility and will continue to guarantee a remaining balance of approximately $10 million. To fund the payment, Allied Capital will tap some $150 million it has in cash and may borrow an additional $170 million on its unsecured revolving line of credit. In essence, Allied Capital will become a senior secured lender to Ciena. . . . more

True Religion Opens New Branded Retail Store on Walnut Street in Philadelphia, PA

2008-09-30T14:11:00.002-04:00

True Religion Apparel, Inc. (Nasdaq: TRLG) today announced the opening of a new branded retail store in the Center City district of Philadelphia, Pennsylvania. Located at 1604 Walnut Street, the 1,600 square-foot branded store will offer shoppers the entire True Religion collection for men, women and kids, including its signature jean styles, its expanding denim and sportswear collection, and a full range of licensed product, such as footwear, swimwear, headwear and handbags.

Located in the heart of Philadelphia, Center City is the downtown and Central Business District of Philadelphia, Pennsylvania. Encompassing a population of approximately 90,000, Center City is the third most populous downtown in the United States. Additionally, the area is largely recognized as one of Philadelphia’s premiere tourist and shopping destinations and attracts an estimated 5 million visitors annually. Walnut Street in particular, offers a mix of national and local luxury businesses, including Polo, Tiffany & Co., MAC Cosmetics, Diesel, Coach, Cole Haan and Burberry. . . . more

Vacancies On Rise In Small Commercial Spaces

2008-09-30T12:20:00.003-04:00

When the mortgage company in the storefront next to Michel Moran's framing shop in Cromwell went out of business, she thought there would be a new tenant in a month or two.It's now going on six months, there's still no new neighbor and Moran is starting to feel some ill effects.

Customers are no longer going in for mortgage business, noticing her shop and maybe coming back when they have a picture or mirror they need framed."That counts for something," Moran said.Over the past 20 months, there has been a rise in vacancies at small retail spaces in Greater Hartford, especially those of 10,000 square feet or less. That points to how the slowing economy is affecting "mom and pop" stores. Smaller locations like that account for nearly half of the region's retail space.

The trend has emerged even as the overall retail real estate market in the region remains relatively healthy when compared with other areas of the country.

According to a new report from KeyPoint Partners, a commercial real estate services firm, the biggest increase in vacancies over the past 20 months occurred in spaces of 5,000 to 10,000 square feet, which rose nearly two percentage points, to 9.7 percent. The report also found that vacancies among the smallest spaces — 2,500 square feet or less — rose nearly a full percentage point, to 10.7 percent.. . . more

Circuit City hires restructuring firm -- is bankruptcy on the horizon?

2008-09-30T12:14:00.002-04:00

More bad news for Circuit City (NASDAQ: CC). After the resignation of its CEO followed by disappointing quarterly results and the company's decision to withdraw its guidance, the company has hired turnaround specialist FTI Consulting Inc. as an adviser on restructuring. Stifel Nicolaus & Co. analyst David Schick wrote that "The risks of bankruptcy are very real [...] Vendors will have to decide how they plan to do business at Circuit City.

''Reports of a company hiring a restructuring specialist are almost never good for shareholders, but it may be a sign that Circuit City is finally being realistic about just how dire its situation is. To date, the company has explored a bizarre strategy of opening new stores in the face of devastating sales declines as it loses traffic to better competitors like Best Buy (NASDAQ: BBY) and Wal-Mart (NYSE: WMT).. . . more

Boston Home Prices May Have Bottomed

2008-09-30T12:04:00.000-04:00

NEW YORK (Reuters) - Prices of U.S. single-family homes plunged a record 16.3 percent in July from a year earlier, extending declines that have plagued the housing market for two years, according to the Standard & Poor's/Case-Shiller Home Price Indexes.

The S&P/Case Shiller composite index of 20 metropolitan areas fell 0.9 percent in July from June, S&P said in a statement on Tuesday. Since the peak of the housing boom in July 2006, the index has dropped 19.5 percent, it said.

S&P said its composite index of 10 metropolitan areas declined 1.1 percent in July for a 17.5 percent year-over-year drop. From two years ago, the index is down 21.1 percent.

The pace of home price declines since May has slowed to about a third of the rate of the two previous three-month periods, however, S&P said.. . . more

Kohl's opens 1,000th store(s): Sizing up the shopper

2008-09-30T10:24:00.002-04:00

Kohl's Corp. has opened its 1,000th store this week in Burlington. And in Manitowoc, and at 44 other locations around the country. You can take your pick. Like a good parent, Kohl's is refusing to play favorites by designating any one of the 46 stores to open as the official 1,000th in the Menomonee Falls-based chain.

Though the stores opened without fanfare Sunday, grand opening ceremonies are scheduled for Wednesday at all 46 stores. The new locations will put the company at 1,003 stores in 48 states. Another store will open in November.

"One thousand stores is generally kind of a marker for us," said chief executive officer Kevin Mansell. "What it says is that we have a concept that works."

. . . more

Saladworks Reaches Milestone with Mount Laurel Opening on October 1

2008-09-30T10:10:00.002-04:00

Twenty-two years after openingits first store in the Cherry Hill Mall, Saladworks will open its 100thlocation on October 1, just over seven miles away in Mount Laurel.

To celebrate their major milestone, Saladworks will offer $1 salads at theMount Laurel location throughout the day with 100 percent of the proceedsgoing to benefit Alex's Lemonade Stand Foundation. This also marks the firstlocation with Saladworks' "fanatic'ly fresh" new store design.

The store is located in the newly-named Bank of America Plaza on Route 38and Larchmont Road in Mount Laurel.

"This is a landmark day in the history of Saladworks," said founder andCEO John Scardapane. "The formula has been a mix of fanatical customerexperience along with a remarkably fresh product. Saladworks will soon be ahousehold name across the country as we continue our turbo-charged growth to1,000 stores by 2012, but we'll always be true to our South Jersey roots." . . . more

Franchisers Sweeten Pot to Woo Buyers

2008-09-30T10:03:00.002-04:00

Franchise companies, facing what many say is the toughest economic environment they've seen, are offering two-for-one deals, reduced fees and financing help to woo new buyers. They are also paying existing franchisees to help spread the word.

The economy has made many would-be franchisees wary of taking big financial risks, while others simply can't get the necessary loans. Meanwhile, competition among franchisers is growing, giving investors a lot more choices. There are now about 3,000 different franchise concepts, according to the International Franchise Association.

Emerald City Smoothie gives franchise buyers a kiosk in addition to a store.

In a survey released last week of some 150 franchise companies, respondents said their franchise sales were about 72% below their 2008 goals, with inquiries from prospective franchisees down about 48%, according to Franchise Update Media Group, San Jose, Calif.

But even as "closing deals is becoming more of a challenge," says Harold Kestenbaum, a franchise attorney in Uniondale, N.Y., franchise companies have to be careful not to alienate existing franchisees when they offer discounts and other incentives to new buyers. "How does it look for the guys who pay the higher price when they see the price is getting lowered?" he asks. Making the situation more sensitive, existing franchisees, especially in the retail and home-service sectors, are being hit by cutbacks in consumer spending. . . . more

Circuit City Halts 2010 Store Openings

2008-09-30T09:15:00.002-04:00

RICHMOND, VA-Circuit City Stores plans zero growth beyond existing commitments for fiscal 2010 and is examining store openings for the second half of this year (fiscal 2009) as it looks to improve the performance of its current business, the company said at its second quarter conference call.

The company current plans between 45 and 55 domestic store openings in the current fiscal year, of which 24 have already opened.

“Our current store base doesn’t support the customer or associate experience we want to deliver," said James A. Marcum, vice chairman and acting president/CEO. "We expect to dramatically reduce our store openings, other than those fulfilling existing commitments, which are limited."

Previously, the company had announced a review of strategic alternatives. But the current market has made it prudent to focus on improving the existing business, Marcum said. . . . more

During an uncertain time, thrift stores doing brisk business

2008-09-29T12:57:00.000-04:00

With the economy running on fumes, there is at least one industry reporting that business is thriving: thrift stores. Shoppers looking for bargains are shunning retail stores and heading to shops run by the Salvation Army and Goodwill Industries, store managers said.

“We’ve got a lot of customers coming in," said John Everett, manager of the Salvation Army store in Cambridge. "They can’t go to the stores and get the stuff they really wanted, and they come here and it’s cheaper.”

At the Salvation Army store in Hudson, manager Elaine Schwartz has seen a 20 percent increase in sales in the last few months.
. . . more

Foot Locker to buy Delias brand for $102 mln

2008-09-29T10:27:00.001-04:00

NEW YORK, Sept 29 (Reuters) - Athletic shoe and clothing chain Foot Locker Inc (FL.N: Quote, Profile, Research, Stock Buzz) said on Monday it plans to buy Delias Inc's (DLIA.O: Quote, Profile, Research, Stock Buzz) CCS business for $102 million, as it seeks to boost its appeal with teenage skateboarders.

Delias also said its core brands, dELiA*s and Alloy, should generate positive earnings before interest, depreciation and amortization in the fourth quarter of fiscal 2008 and fiscal 2009, helping to send its shares up 25 percent.

The all-cash deal for CCS is expected to close within 60 days.

CCS is a direct-to-consumer business that sells skateboard shoes, clothes and accessories through catalogs and the Internet. It is expected to have revenue of $80 million in 2009 and add to Foot Locker's earnings in the first full year of operation, the company said.

Barclays Capital advised Foot Locker while Financo advised Delias on the deal.

Delias, whose main customers are teenagers, said it will not decide how to use the proceeds from the sale until after the end of its fiscal year, in 2009.

Delias shares were up 63 cents, or 25 percent, at $3.13 on Nasdaq.

Source: Reuters

Personal income tops forecasts

2008-09-29T10:06:00.001-04:00

Government report shows American incomes rose 0.5% last month, but personal spending weakened.

NEW YORK (CNNMoney.com) -- Personal income rose unexpectedly in August after a sharp decline in the previous month, while personal spending was sluggish, according to government figures released Monday.

The Commerce Department reported that personal income increased by 0.5% in August after a revised 0.6% decline in July. Economists surveyed by Briefing.com were expecting income to have grown by 0.2% last month.

After adjusting for taxes and certain price changes, however, real disposable income contracted 0.9%, according to the report.

Personal spending, meanwhile, was virtually unchanged in August. Economists had forecast a 0.2% increase in personal spending. Spending has not been this weak since February when it was also flat. . . . more

What's In The Bailout Deal

2008-09-29T10:05:00.004-04:00

Key U.S. legislators released the compromise draft of the $700 billion bailout proposal early Sunday evening ahead of the opening of markets in Asia, and now have one final hurdle to clear: convincing the rank-and-file of their parties to support the legislation when it comes to a vote, likely on Monday.

In a press conference before meeting with House Democrats, Speaker of the House Nancy Pelosi, D-Calif., said the bill was a bipartisan piece of legislation. "If we don't pass it we shouldn't be a Congress," said Sen. Judd Gregg, R-N.H., who told reporters that he was confident the bill would pass without a further round of changes.

Under the legislation Treasury will be granted $700 billion in phases to acquire bad mortgage assets from financial institutions at a price it determines or through auction with a market price. If the Treasury decides to take the first option it will have some authority to determine the executive compensation structure of the firm.

If firms sell more than $300 million in assets in the auction, they will lose the ability to deduct the salaries of their top five individuals that have exceeded $500,000. For participating firms there will also be a surtax of 20% on retirement packages of top executives who are involuntarily terminated from their firms, or lose their jobs as a result of the firm's failure. . . . more

AutoZone buying back $500M in common stock

2008-09-29T09:59:00.001-04:00

AutoZone Inc. is buying back $500 million of its common stock, the company announced Sept. 24.

The repurchase is part of an aggressive repurchase program by the Memphis-based auto parts retailer that now totals $6.9 billion in share repurchases since 1998.

Repurchasing stock is a common strategy for well-capitalized companies and is a way to boost the company’s earnings per share by reducing the number of outstanding shares.

The company also announced the election of Luis P. Nieto to the company’s board of directors. Nieto is president of consumer foods for ConAgra Foods Inc., one of the largest packaged foods companies in North America.

Also, board members N. Gerry House and Charles M. Elson have said they will not stand for re-election at the company's annual stockholders meeting on Dec. 17.

Source: Aftermarket Business

Circuit City loss widens; company reviews business

2008-09-29T09:18:00.001-04:00

NEW YORK (MarketWatch) -- Electronics retailer Circuit City Stores Inc. said Monday that its quarterly loss widened, hurt by charges to write down the value of its fixed assets and a significant decline in traffic that led to worse than expected sales.

The company withdrew its previous fiscal 2009 outlook as it said it's reviewing all aspects of the business ahead of the holiday season, its biggest selling period.

Circuit City shares fell 11% in pre-market trading.

Net loss widened to $239.2 million, or $1.45 a share, from $62.8 million, or 38 cents, a year earlier. Sales in the quarter ended Aug. 31 fell 9.6% to $2.39 billion from $2.64 billion, the Richmond, Va.-based company said in statement. The decline was worse than expected by analysts. Same-store sales dropped 13%, led by a drop in the U.S. . . . more

TJX, Costco best positioned to buy competitors

2008-09-26T13:03:00.001-04:00

NEW YORK (Reuters) - Discount retailers, including TJX Companies Inc (TJX.N: Quote, Profile, Research, Stock Buzz), are best positioned to buy distressed competitors, assume leases or expand into new concepts as the weakening economy takes its toll on several troubled retail companies, said Hilco's Nina Kampler on Wednesday.

"TJX is great, Burlington Coat is great, Costco Wholesale Corp (COST.O: Quote, Profile, Research, Stock Buzz)is great," said Kampler, an executive vice president in liquidator Hilco's real estate division. "These retailers that I'm naming are an example of the value retailers who are in a position to assume some of these more distressed, troubled retailers and perhaps they become part of their different concepts.". . . more

Toys'R'Us Announces 2008 Hot Toy List for the Holiday Season

2008-09-26T11:55:00.003-04:00

The Toy Authority Reveals 36 New Toys Guaranteed to Top Christmas Wish Lists and Selects the "Fabulous 15" Representing the Best of the Season

WAYNE, N.J., Sept. 25 /PRNewswire/ -- With the official start of the holiday shopping season only weeks away, today Toys"R"Us announced its 2008 Hot Toy list, representing the definitive selection of toys that will top kids' wish lists this holiday season. The company's predicted list of the biggest holiday "must-haves" features 36 new toys that are sure to delight and excite kids across the country when they open their Christmas presents. Carefully selected after a comprehensive review process, items on the list are organized by age from "Baby's First Christmas" to "Big Kids" and serve as a starting point to help parents, friends and family find the perfect gift for any child. From the overall list, the "Fabulous 15" were selected to represent the very best toys of the season. All items featured on the list are available at Toys"R"Us stores nationwide and at www.Toysrus.com/HotToys

"After a thorough evaluation of all new toy introductions throughout the year, and consultations with our global merchandising team in 34 countries, Toys"R"Us has the unique ability to provide our guests with THE ultimate list of items certain to bring big smiles to kids' faces - the Toys"R"Us Hot Toy list," said Karen Dodge, Senior Vice President, Chief Merchandising Officer, Toys"R"Us, U.S. "With new toy shipments arriving in our stores daily, customers will have a better chance of finding the hottest toys, in stock, at Toys"R"Us than anywhere else." . . . more

Rite Aid 2Q loss doubles on Eckerd struggles

2008-09-26T11:51:00.001-04:00

Drugstore operator Rite Aid shook up its management ranks Thursday after posting a higher second-quarter loss because of disappointing results at stores acquired from Brooks Eckerd and heavy promotional spending.

The company hired two former Pathmark Stores Inc. executives, including rehiring John T. Standley as president and chief operating officer, and three top Rite Aid executives left the company.

The company also cut its expectations for full-year results.
Rite Aid, the third-largest U.S. drugstore chain, said its loss swelled to $222 million, or 27 cents per share, compared with $78.2 million, or 10 cents per share, a year ago. Revenue slipped 1 percent to $6.5 billion from $6.57 billion.. . . more

Memo To Retail Execs: Load Up On Tums

2008-09-26T11:48:00.000-04:00

Times are tough for CFOs everywhere, but those in the retail industry are really suffering. A new survey from BDO Seidman reports that they are worried about how everything will affect holiday sales this year.

Some 57% of the executives at leading retailers included in the survey say that while high fuel costs have done the most to hurt consumer confidence so far this year, going forward they see the main threats to consumer spending in the critical months ahead as being gas prices (47%), the housing market (28%), the pending Presidential election (13%) and inflation (11%).

The poll, which included executives at chains with sales greater than $100 million, found balance sheets are in bad shape: Only 36% say sales increased when comparing the first halves of 2008 to 2007, which is down from the 56% who cited an increase last year. And 44% say comparable-store sales in that period declined.

"Overall, the CFOs estimate that the average comparable-store sales growth for 2008 will be virtually flat, averaging 0.72% growth," it says in its analysis of the poll results. "Retailers may remain wary for the rest of the year." . . . more