August 15, 2008
Wal-Mart to Invest $1.1B in Expansion
Bentonville, Ark. (August 14, 2008) Wal-Mart plans to invest up to 1.8 billion reais ($1.1 billion) in Brazil to open 80 to 90 stores in 2009, the company said in a statement on Wednesday.
Wal-Mart is spending 1.2 billion reais to open 36 new stores in Brazil's fast-growing market in 2008, the statement said.
Netflix Suffers Shipment Issues
Los Angeles (August 14, 2008) DVD rental service Netflix Inc. said on Thursday the most severe system outage in its history was preventing shipments of discs to about a third of its 8.4 million customers. The company said it shipped no DVDs on Tuesday, some on Wednesday and none so far on Thursday.
Netflix spokesman Steve Swasey said the company would provide credits to affected customers and was working "feverishly" to determine the cause of the outage and fix the problem.
Fresh & Easy Sees More Than 10,000 Job Applications in July
El Segundo, Calif. (August 14, 2008) In response to opening six new stores in July, Fresh & Easy Neighborhood Market announced that it received more than 10,000 applications for jobs in the last month.
The number of people applying to work at Fresh & Easy has nearly quadrupled since May.
J.C. Penney Launches Solar- and Wind-Power Projects
Plano, Texas (August 14, 2008) J. C. Penney Co. announced plans for solar- and wind-power projects that will supply electricity to 10 stores and one distribution center. J.C. Penney also aims to obtain ENERGY STAR certification for at least 200 stores, the company said.
J.C. Penney has engaged SunPower to install solar-power systems at 10 J.C. Penney stores in California and New Jersey. According to the company, the solar systems will be financed, owned and operated by a third-party financier, from which J.C. Penney will purchase the solar-generated electricity under a SunPower Access power-purchase agreement. The rooftop installations are expected to be finished in November.
Urban Outfitters 2Q Profit Jumps 79%
Philadelphia (August 14, 2008) Urban Outfitters Inc. posted a 79% jump in quarterly profit, driven by strong same-store sales across all its branded stores and fewer markdowns that boosted gross-profit margins.
The specialty retailer reported net income of $57.0 million for the second quarter ended July 31, compared with $31.9 million a year earlier.
Wal-Mart 2Q Profit Up 17%
New York City (August 14, 2008) Wal-Mart Stores Inc. posted a 17% increase in its second-quarter profit Thursday, helped by cost cuts and a renewed focus on low prices to lure penny-pinching consumers.
However, Wal-Mart predicted slower sales growth at its established stores for the current quarter, saying it is seeing some volatility as customers find it difficult to stretch their paycheck to the next payday.
Kroger Reaches Tentative Deal With Union
Columbus, Ohio (August 13, 2008) The Kroger Co. said Wednesday it reached a tentative deal with the United Foods & Commercial Workers Union Local 1059 in Columbus, Ohio.
The agreement has not yet been ratified by union members.
Vornado, Reliance Form Retail Venture in India
Paramus, N.J. (August 13, 2008) Vornado Realty Trust said Wednesday it has formed a joint venture with India's Reliance Industries Ltd. to invest in shopping centers in India.
Vornado, a Paramus, N.J.-based real estate investment trust, and Reliance will each commit up to $250 million to the 50/50 venture to acquire, develop and operate shopping centers in key Indian cities.
Report: Retail Sales Rise 4.0% in July
Chicago (August 13, 2008) ShopperTrak RCT Corp.'s National Retail Sales Estimate reported Wednesday that July retail sales rose a steady 4.0%, while the company's Retail Traffic Index (SRTI) reported that total U.S. foot traffic slipped 2.2% for the same time period.
Both sales and traffic were slower in the beginning of July before the back-to-school shopping season picked up toward the end of the month.
Best Buy Becomes First Independent iPhone Retailer
Minneapolis (August 13, 2008) Best Buy Co. will start selling the iPhone on Sept. 7, becoming first U.S. chain to do so outside of Apple Inc.'s and AT&T Inc.'s own stores, according to a Reuters report.
The announcement expands the availability of Apple's phone to 970 full-size stores and 16 smaller Best Buy Mobile stores. It's also a coup for Best Buy, which has been upgrading its cell-phone departments.
Tween Brands Shifting to Low-Price Strategy
Chicago (August 13, 2008) In a move to drive growth and profitability, Tween Brands Inc. said Tuesday it will convert approximately 560 Limited Too stores to its lower-priced Justice brand and close 26 others. Both brands are targeted at 7-14 year-old girls, with Justice priced an average of 20% to 25% less than the more fashion-forward Limited Too.
Once the change over is complete, the company will no longer operate any Limited Too stores. It will, however, continue to sell Limited Too product in Justice stores.
China Retail Sales Up 23.3% in July
Beijing (August 13, 2008) China's retail sales rose by 23.3% in July from a year ago to 862.9 billion yuan ($126 billion), the government said Wednesday.
In the first seven months of the year, retail sales climbed 21.7% to 5.97 trillion yuan, the National Bureau of Statistics said in a statement.
CVS Buying Longs Drug for $2.7B
Woonsocket, R.I. (August 13, 2008) CVS Caremark Corp. said Tuesday that it is buying Longs Drug Stores Corp. in a deal valued at $2.7 billion. The $71.50 per-share cash offer, announced after the end of trading Tuesday, was a 32% premium over Walnut Creek, Calif.-based Longs' closing price of $54.04.
Longs operates 521 drug stores, mostly in California, and also has sites in Hawaii, Nevada and Arizona. Executives at CVS said the acquisition will give the chain a significant presence in fast-growing West Coast markets where property is often unavailable or expensive to acquire.
Linens 'n Things Sales Fall in 2Q
Clifton, N.J. (August 12, 2008) Linens Holding Co. said Tuesday its sales dropped 21% in its second quarter. The company, which filed for Chapter 11 bankruptcy protection in May, reported total sales of $504 million for the quarter and retail sales of $468.1 million.
Linens Holding said the retail sales figure does not include $35.9 million in liquidation sales related to the closing of 120 stores.
Circuit City Launches Fantasy Football Channel on YouTube
San Bruno, Calif. (August 12, 2008) Circuit City has launched a fantasy-football channel on YouTube. The YouTube FANalyst Channel, located at http://www.youtube.com/fanalysts, provides consumers with the latest analysis, tips and season predictions, the company said.
In addition to the channel, Circuit City is sponsoring the "Join The Squad Contest," which calls out fantasy-football fanatics all over the world to submit their own FANalyst video showcasing their football knowledge along with their player and team season predictions.
Report: Montgomery Ward May Bring Back Catalog
Milwaukee (August 12, 2008) Montgomery Ward may give its catalog business another shot, starting as soon as January, according to the Milwaukee Journal Sentinel.
Last week, Swiss Colony's Midwest Catalog Brands division bought the rights to the Montgomery Ward catalog and online business from Chicago-based Direct Marketing Services Inc. for $15.5 million, the report said. The price includes two other businesses: Charles Keath, a home-furnishings catalog and Internet business, and online retailer HomeVisions.
Ann Taylor Names New President
New York City (August 12, 2008) AnnTaylor Stores Corp. has appointed Christine M. Beauchamp to the position of president, Ann Taylor Stores, effective immediately. Beauchamp, who has been a strategic consultant to the company since earlier this year, succeeds Adrienne Lazarus, who is leaving the company.
Beauchamp was previously with Limited Brands, most recently as president and CEO of Victoria's Secret Beauty.
TJX Cos. Profit Jumps in 2Q
Framingham, Mass. (August 12, 2008) TJX Cos. Inc. posted a higher quarterly profit on Tuesday as shoppers headed to its stores for deals on clothes.
The company also is raising its profit outlook as it benefits from shoppers looking for cheaper alternatives.
Target Spent $870K Lobbying in 2Q
Minneapolis (August 12, 2008) Target Corp. spent $870,000 lobbying on consumer product safety standards and other issues in the second quarter, according to a recent disclosure report.
The company also lobbied on banking matters, crime enforcement and labor issues in the April-June period, according to the form filed July 21 with the House clerk's office.
Tesco to Expand in India
London (August 12, 2008) Tesco announced on Tuesday plans to open wholesale grocery stores in India that will supply goods to hypermarkets owned by Indian conglomerate Tata Group.
"This is another exciting development for Tesco," the group's chief executive Terry Leahy said in a statement. "It complements our entries into China and the United States, giving us access to another of the most important economies in the world. Our wholesale cash-and-carry format will bring improved value, range and service to thousands of Indian businesses."
Circuit City Stops Work on New DC
Richmond, Va. (August 11, 2008) Circuit City has halted construction of a new distribution center it was building in Pennsylvania. The $45 million facility in Covington Township, Pa., was due to open by the end of the year and replace two existing centers in Pennsylvania and Maryland.
Circuit City did not give a specific reason for the hold on construction, though a spokesman said the retailer has decided to "step back and take a look at it."
Tiffany Appeals eBay Internet Ruling
New York City (August 11, 2008) Tiffany & Co. on Monday appealed a federal ruling that largely absolved eBay Inc. of policing its auction site for counterfeit items, saying the judge was wrong to leave the primary burden to the jewelry maker. Tiffany filed the appeal with the United States Court of Appeals for the Second Circuit, the company said in a statement.
The jeweler sued eBay in 2004, alleging it turned a blind eye to the sale of fake Tiffany jewelry on its Web site. But in July, all of its trademark infringement claims were rejected, and a federal judge held that brand owners are ultimately responsible for protecting their own trademarks.
Nine West in RFID Pilot
New York City (August 11, 2008) Jones Apparel Group Monday announced that it has initiated a program to evaluate radio frequency identification (RFID) technology in select Nine West retail locations. The goal of the pilot program is to study the benefits that item-level RFID provides in the areas of enhanced productivity, customer service and inventory accuracy.
"RFID has interested us for some time, and we believe it has reached the point where launching a pilot program of this nature makes sense," said Norm Veit, executive VP, MIS at Jones.
E Com Changes Name to Perfumania
Sunrise, Fla. (August 11, 2008) E Com Ventures Inc., which owns Perfumania perfume shops, said Friday it is changing its name to Perfumania Holdings Inc.
The company's ticker symbol will be "PERF" starting at the opening of trading Monday, it said in a news release.
Canada's Supreme Court to Hear Wal-Mart Case
New York City (August 11, 2008) The Supreme Court of Canada has agreed to hear two cases stemming from Wal-Mart's controversial closing of a unionized store in Quebec.
The store, located in Jonquiere, closed in 2005 after workers had agreed to be represented by the United Food and Commercial Workers and were negotiating their first contract. Wal-Mart said the store was not profitable. The court agreed to hear the case after a Quebec court sided with Wal-Mart, according to reports.
Best Buy Launches Automated Kiosks in Airports
Minneapolis (August 11, 2008) Best Buy Co. Inc. plans to add a dozen automated vending kiosks inside major airports across the country as part of a new pilot program called "Best Buy Express," company executives said.
The retailer is partnering with ZoomSystems, a San Francisco-based vending-machine company, for the project that will install the small automated stores at eight airports.
Publix Spends $500M for Albertson's Florida Stores
Orlando, Fla. (August 8, 2008) The price tag for the 49 Albertson's LLC store locations in Florida being bought by Publix Super Markets is about $500 million, according to a filing with the Securities and Exchange Commission.
The deal, which is expected to finalize in September, includes stores owned by Albertson's and stores subject to ground leases and traditional leases, the filing said. Publix said it would finance the purchase with internally generated funds or liquid assets.
IKEA to Invest in Green Companies
New York City (August 8, 2008) IKEA plans to invest $77 million in start-up companies producing eco-friendly products with an eye to eventually adding solar panels and other green goods to its inventory.
The news was reported by Cleantech Group, which said Ikea plans to focus on five areas: solar panels, alternative light sources, product materials, energy efficiency, and water saving and purification. The investments will be made in companies that offer commercial prospects within a four-to-five year horizon, according to Cleantech.
Sears Holdings Cuts Jobs at Support Center
Dallas (August 8, 2008) Sears Holdings Corp. announced that it plans to cut approximately 50 jobs at its National Claims and National Support Center in Dallas, according to a report in the Dallas Business Journal. The company issued a letter stating the layoffs would involve primarily administrative positions and would begin next month. It noted that the entire service facility is not closing. The service center is one of six nationwide.
In other news, West Virginia Attorney General Darrell McGraw said yesterday that Sears Holdings subsidiaries agreed to improve customer-service operations in the state as a response to claims that the retailer failed to comply with consumer-protection laws, according to an Associated Press report.
Report: Wal-Mart Eyes $10 Billion in Sales for Marketside
New York City (August 8, 2008) Wal-Mart Stores Inc. said its new small-format Marketside grocery-store concept could expand to a chain of more than 1,000 stores with more than $10 billion in annual sales, the Financial Times reported on its Web site.
The retailer plans to open 10 stores initially, with four slated to open in the Phoenix area this fall.
Spartan Stores Names CEO
New York City (August 8, 2008) Spartan Stores Inc. said Thursday its board of directors has appointed current president and COO Dennis Eidson to serve as CEO, effective Oct. 15. Eidson will continue in his roles until then and retain the president title.
Publix to Increase Recycling Efforts
Pompano Beach, Fla. (August 8, 2008) Publix has partnered with Organic Recovery to increase its recycling rate by 25% to 30% in 33 stores. By the end of summer 2008, Organic Recovery said it aims to serve all 84 Publix stores in Broward County, Fla.
"Organic Recovery presents an opportunity in fulfilling our mission to be intolerant of waste by diverting food waste that would typically be sent to local landfills, thus reducing the greenhouse-gas emissions," said Publix VP of facility services, Dave Duncan. "We are pleased with the short-term results and look forward to long-term resolutions."
I saw a presentation using CBRE Capital Markets, Real Capital Analytics, and Commercial Mortgage Alert data. Here are the highlights:
- Retail US debt issuance: Q1 2007 $2.7 B, Q1 2008, down 77.8% to $0.6 B
- Overall (office, retail, industrial, multi family, hotels) US debt issuance: Q1 2007 $6.2 B, Q1 2008, down 59.7% to $2.5 B
- Multifamily and industrial are getting more of the shrinking pie. The big losers are office and retail. With the single family residential market issues, this makes sense.
- LTVs are back to 65% - 75% range, no more 90% - 95% deals
- Recourse is back, non-recourse is out. However, this is probably a by-product of the conduit market collapse.
- Lenders looking at trailing 12 Cash Flow, less at Pro-forma Cash Flow
Posted by: Richard
Check out http://capitalmarkets.cbre.com/ for all the latest real estate capital markets news. This is from the latest eNews.
• Amid stress in the capital markets, Fannie Mae raised $7.4 billion of additional capital in May, for a total of more than $14 billion in new capital since November of 2007. Fannie Mae announced end of last week that its capital level is substantially above both their statutory minimum capital and the OFHEO-required 15 percent surplus over minimum capital. Representatives at Fannie Mae stated, “In fact, we have more core capital, and a higher surplus over our regulatory requirement, than at any time in this company's history. As we work through this tough housing market, we are maintaining a strong capital base, building reserves for our credit losses, and generating solid revenues as our business continues to serve the market.”
• The SEC will begin a review of fair-value accounting rules that are causing chaos for some real estate investors. Those rules have forced certain lenders and investment managers to take sharp writedowns against the value of some of their debt investments, including CMBS. The roundtable of accountants, bankers, insurers and investors is expected to focus part of the discussion on FAS 157, a financial accounting standard that took effect late last year. It requires asset-backed securities, including CMBS, mortgages and other debt investments, to be marked to market or valued at the price they would fetch if sold today versus their capitalization rates or values if they were held for their full investment time frames.
• Despite declining origination volume, loan quality has improved. The percentage of amortizing loans in the 2008 vintage has risen to near 35%, up significantly from 2006 and 2007 and underwritten debt-service-coverage ratios have leveled off from their five year decline, reports JP Morgan.
• The MBA reports, across all mortgage loan types (prime, nontraditional, and subprime) lenders are reporting tighter underwriting standards. The greatest relative increase can be seen in the prime sector. Respondents reporting tighter underwriting standards have increased to 62% (Q2 2008) from 15% (Q2 2007).
Posted by: Richard
Tom Kloza of OPIS recently posted his thoughts on oil prices. While he does not go into the reasons, this is a good read.
Posted by: Richard
Retailers Post Mixed June Sales Results
New York City (July 10, 2008) Shoppers, enticed by heavy discounts and armed with rebate checks, spent more freely in June, helping to lift many retailers' sales, according to the Associated Press.
As the nation's retailers reported June sales figures on Thursday, discounters and wholesale club operators including Wal-Mart Stores Inc., BJ's Wholesale Club Inc. and Costco Wholesale Corp. reported better-than-expected figures as consumers limited purchases mainly to groceries and other necessities.
Advance Auto to Grow Minn. Operations
Roanake, Va. (July 10, 2008) Advance Auto Parts Inc. is growing its Minnesota operations, according to a report in The Roanoke Times.
The company plans to transfer 40 jobs from its headquarters to the Twin Cities.
Office Depot Opens First Green Store
Delray Beach, Fla. (July 10, 2008) Office Depot is opening in Austin, Texas its first "Green" store on Thursday.
Office Depot's "Green" store, which is pre-certified to Leadership in Energy and Environmental Design (LEED) standards by the U.S. Green Building Council, will use less energy and water in its daily operations, increase recycling and leave a much smaller overall environmental footprint than the typical store of its size.
Linens 'n Things to Shutter More Locations
Clifton, N.J. (July 10, 2008) Bankrupt retailer Linens 'n Things Inc. has asked a judge for permission to close 87 more stores, according to The Record.
The report said Linens 'n Things referenced "the decline in the housing market and the tightening of the credit markets which have led, respectively, to a decline in consumer discretionary spending," in court papers filed July 3.
Best Buy Looks to New Categories to Drive Sales
Atlanta (July 9, 2008) Best Buy Co. is looking to new product categories and business models to help it double annual sales to $80 billion over the next five years, according to a Reuters report.
Mike Vitelli, executive VP for customer operating groups, reported at an Oppenheimer Consumer Growth Conference that while Best Buy will add stores and boost its market share in mainstay categories such as computers and cell phones to drive growth, it plans to move into product areas that are outside traditional consumer electronics.
Payless ShoeSource Names President, CEO
Topeka, Kan. (July 9, 2008) Collective Brands Inc. said Wednesday that it has named retail veteran LuAnn Via as president and CEO for the Payless ShoeSource chain.
Via replaces Matt Rubel, who will continue as chairman and CEO of Topeka-based parent company Collective Brands.
Blockbuster Names Marketing Head
Dallas (July 9, 2008) Blockbuster Inc. has named Rebeca "Becky" Johnson as chief marketing officer. Johnson brings almost three decades of experience in retail marketing, branding, consumer strategies and marketing communications to her new role.
Johnson previously served Brinker International, the parent company of casual dining restaurants, as CMO and global branding officer.
Back-to-School Spending Expected Rise 5%
New York City (July 9, 2008) Consumers said they plan to spend an average of $590 on back-to-school clothes and supplies this year, according to a survey conducted by Brand Keys, a New York City-based brand and customer loyalty research consultancy.
"It appears that the current economic situation has dampened back-to-school share-of-wallet," said Robert Passikoff, president, Brand Keys. "We can only expect a 5% increase in spending this year."
Liz Claiborne Inc. Names Senior VP, CIO
New York City (July 9, 2008) Liz Claiborne announced that Evon L. Jones will join the company as senior VP and CIO, effective July 14.
Jones joins Liz Claiborne Inc. from Bausch & Lomb in Rochester, N.Y., where he was corporate VP and CIO.
Charming Shoppes CEO Resigns
Bensalem, Pa. (July 9, 2008) Charming Shoppes Inc. said Wednesday its president and CEO, Dorrit J. Bern, is resigning, effective immediately, and that it will take a charge in the second quarter related to her employment contract.
The company said its chairman, Alan Rosskamm, will serve as CEO on an interim basis. Rosskamm was formerly the chairman and CEO of Jo-Ann Stores Inc.
Wilsons Sells Outlet Stores for $22M
Minneapolis (June 9, 2008) Wilsons The Leather Experts Inc. on Tuesday said it sold its outlet stores and online retail assets to a subsidiary of sportswear and outerwear maker G-III Apparel Group Ltd. for about $22.3 million in cash, according to the Associated Press.
AM Apparel Group Inc., a unit of G-III, bought 116 outlet store locations, $18.5 million in inventory, distribution center operations, the Wilsons name and other related trademarks and trade names.
Report: Steve & Barry's May Face Bankruptcy
Port Washington, N.Y. (July 9, 2008) Steve & Barry's is expected to file for Chapter 11 bankruptcy as early as this week, according to a Wall Street Journal report.
The report, which cited people familiar with the matter, said the retail chain had been unable to raise rescue financing.
Amazon.com Offers Billing Option
Seattle (July 8, 2008) Beginning Tuesday, Amazon.com shoppers have the option to pay via the "Bill Me Later" service rather than with a credit card. In December 2007, Amazon.com announced it would make an investment in the Bill Me Later company and subsequently begin to offer the service to its customers.
The Bill Me Later network provides technologies that enable online retailers to provide payment options for shoppers who prefer not to use credit cards.
Golf Galaxy Closing Headquarters
Eden Prairie, Minn. (July 8, 2008) Specialty retailer Golf Galaxy, a subsidiary of Dick's Sporting Goods, announced it will close the Golf Galaxy corporate headquarters in Eden Prairie and relocate corporate functions to the Dick's Sporting Goods headquarters in Findlay Township, Penn.
According to the company's SEC filing, Randy Zanatta, co-founder and chief executive of Golf Galaxy, will resign his duties effective July 18.
Coldwater Creek and DSW Announce Strategic Moves
Boston (July 8, 2008) Addressing the Oppenheimer & Co. Consumer Growth Conference on Tuesday, Coldwater Creek chief executive and president Daniel Griesemer outlined a strategic path to profitability that included improved product offerings, improved operation efficiencies and a more prudent, managed approach to growth.
In addition to focusing on opportunistic leases and store openings in selective locations, Coldwater Creek will re-focus its merchandising strategy on pant-and-jacket ensembles, which account for an estimated 50% of sales.
Wal-Mart May Boost Canadian Expansion
Toronto (July 8, 2008) A Monday Bloomberg report suggested that Wal-Mart Stores Inc. may up the number of Canadian supercenters it opens in 2008.
According to a BMO Capital Markets analyst cited in the report, Wal-Mart may expand with 40 or 50 Canadian stores, with half being new supercenters and one-third from conversions of other sites to the larger format, by the end of January.
Stater Bros. to Offer $4 Generics
San Bernardino, Calif. (July 8, 2008) Grocery retailer Stater Bros. announced Tuesday that it will begin offering a 30-day supply of the most commonly prescribed drugs for $4, starting Wednesday. The company will offer a 90-day supply of those generics for $10.
Earlier this year, similar programs were announced by Kroger Co. and Safeway. On Tuesday, St. Louis-based Dierbergs Markets rolled out similar pricing on more than 350 generic medications.
Office Depot 2Q Same-Store Sales Drop 10%
Delray Beach, Fla. (July 8, 2008) Office Depot announced Tuesday that the slowing economy has driven second-quarter same-store sales down 10%.
The company also said that weakening business conditions have pushed total company sales down slightly in the second quarter.
DSW Opens Store in El Centro, Calif.
Columbus, Ohio (July 7, 2008) DSW said it will be opening a new store at the Plaza Imperial Valley in El Centro, Calif. on Thursday. The store will be the first DSW location in the Yuma/El Centro area.
The 20,000-sq.-ft. location features hardwood floors, brick walls, and accent walls marked with DSW-signature phrases. The company said modern fixtures, sleek merchandise displays and comfortable seating create a remarkable shopping experience.
RadioShack Launches Facebook Photo Application
Fort Worth, Texas (July 7, 2008) RadioShack has launched a new Facebook application called "RadioShack's MyMosaic," which allows members to create mosaics using their online photos.
RadioShack's MyMosaic creates a digital mosaic from a selected image. The image is made up of many smaller photos, forming one picture. Users can click on the mosaic and go deeper and deeper into additional image layers of the mosaic made up of their friends' profile photos.
Dierbergs Unveils Cheaper Generic Drugs
St. Louis (July 7, 2008) Dierbergs Markets plans to roll out new pricing on Tuesday for more than 350 generic medications.
Beginning Tuesday, Dierbergs customers will be able to buy 30-day prescriptions for $4 and 90-day prescriptions for $10 from a list of commonly prescribed generic drugs. Greg Dierberg, president of the 23-store chain, said the current economic climate created the right time to introduce the program, which the company began planning late last year.
Kroger Inks Deals with Ala., Tenn. Unions
Cincinnati (July 7, 2008) United Food & Commercial Workers Union members at Alabama and Tennessee Kroger stores have signed a new labor agreement with the grocery chain.
The agreement covers more than 8,500 Kroger Co. workers at more than 90 stores in Nashville and Knoxville, Tenn., and Huntsville, Ala.
Report: Strip-Mall Vacancies Hit 30-Year High
New York City (July 7, 2008) U.S. store closings and cutbacks turned the second quarter into the worst for strip-mall owners in 30 years, as consumers flocked to low-cost warehouse-style grocery centers, according to the Associated Press, citing a recent report by real estate research firm Reis.
Strip malls saw average vacancies spike 0.5% points to 8.2%, a level unseen since 1995, according to the report released on Monday.
Study: 10% of Consumers are 'Multichannel' Shoppers
New York City (July 7, 2008) A study by Experian Consumer Research found that nearly 10% of the U.S. population could be considered multichannel shoppers.
According to Experian, multichannel shoppers are those people who regularly participate in more than one method of shopping, including online, in-store, catalog, and phone order.
Ashley Judd Designs Plus-Size Clothing Line for Goody's
Knoxville, Tenn. (July 7, 2008) Goody's Family Clothing, Inc. announced that Goody's will launch a new line of clothing designed by Ashley Judd for plus-sized women. The "Ashley Judd Plus" line will be available in 150 Goody's stores beginning in August 2008.
The news follows the strong performance of Ashley Judd's current collection, which has been sold exclusively at Goody's since September 2007.
Jewel-Osco Sells 1 Million Reusable Shopping Bags
Melrose Park, Ill. (July 7, 2008) Jewel-Osco announced that it has surpassed the sale of 1 million green reusable shopping bags.
"We are seeing more and more people buying and using recyclable shopping bags," said Keith Nielsen, president of Jewel-Osco. "This is likely due to the heightened awareness about the environment and the impact of plastic bags in landfills."
Circuit City Director Resigns from Board
Richmond, Va. (July 7, 2008) Circuit City announced that its lead outside director Mikael Salovaara resigned from its board, according to the Wall Street Journal.
Salovaara, who was chairman of the nominating and governance committee in addition to lead director, resigned just one day after Blockbuster Inc. said it was withdrawing its proposal to buy Circuit City Stores Inc.
We reviewed over 1,500 retail transactions totaling $17.6 billion from 2003 to June 2008 maintained in the CBRE Valuation & Advisory Services (VAS) database. Average retail capitalization rates in Southern California are up since last year.
So far in 2008, the average cap rate was 6.11%, while the 2007 average was 5.95%, a modest increase of 16 b.p. The chart below contains the results from 2003 through Q2 2008.
The picture becomes rather murky when we examine the quarterly trend. Rates hovered below 6% through Q1 2007, then spiked over 6% in 2007 Q2, only to revert below 6% again through 2008 Q1. Due to this volatility, it makes more sense to put more weight on the longer term average. The chart below summarizes the data.
| SOUTHERN CALIFORNIA RETAIL | ||||||||
| 2006 Q3 | 2006 Q4 | 2007 Q1 | 2007 Q2 | 2007 Q3 | 2007 Q4 | 2008 Q1 | 2008 Q2 | |
| Rate | 5.95 | 5.96 | 5.90 | 6.11 | 5.93 | 5.77 | 5.99 | 6.28 |
| Chg. | 0.01 | -0.06 | 0.21 | -0.17 | -0.16 | 0.22 | 0.29 | |
| Source: CBRE | ||||||||
We won't go into the reasons here, but sales volume is down as well. Based on our records, Southern California Retail sales transactions in Q1 2008 were down nearly 70% compared to Q1 2007. We estimate that Q4 2007 volume is down over 50% compared to Q4 2006. 2008 Q2 is too early to call, but early indications are at most 60% from Q2 2007.
We are considering making this a regular publication. If this is useful to you, please let us know.
Posted by: Richard