While the Economy Was Crumbling…

store-closing.jpg

I didn’t live through the Great Depression, but none of the seniors who did told me we’d be losing all of our chain stores! Sheesh…

We already know about Mervyn’s and Linens N Things, but I dropped the ball on reporting on a few others, such as:

Value City:

The ailing Value City Department Stores chain has filed for bankruptcy protection as it prepares to shutter its stores.

The company filed the Chapter 11 application Sunday in U.S. Bankruptcy Court’s Southern District of New York, asking the court to approve an agreement with liquidation firm Tiger Capital Group LLC to conduct closing sales at “substantially all” of its stores.

National Wholesale Liquidators:

National Wholesale Liquidators Inc., a family-owned discount retailer, sought bankruptcy protection from creditors without giving a reason…

The company, founded in 1984, carries more than 120,000 items including brand-name closeouts. Its more than 50 stores are located in suburban shopping plazas in 10 states including New York, New Jersey and Pennsylvania. The retailer forgoes “fancy” store fixtures to keep prices low, according to its Web site.

Circuit City (We called this one):

Circuit City Stores, the nation’s second-largest consumer electronics retailer, said yesterday that tightened credit and rapidly declining consumer spending have forced it to file for bankruptcy protection, underscoring the perils facing retailers as they head into the crucial holiday season during the worst economic crisis in a generation.

The season generally accounts for about 20 percent of all retail sales, providing the cash that stores use to pay for merchandise ordered on credit earlier in the year. But as Circuit City’s troubles mounted, its suppliers feared that it would not be able to pay its bills.

Perhaps most dramatically, General Growth Properties–one of the nation’s largest mall operators–is facing default:

General Growth Properties Inc. shares plummeted Tuesday after the mall owner warned it faces solvency trouble and may be forced to file for bankruptcy if it can’t refinance or extend nearly $1 billion in debt due next month.

The real estate investment trust, which is the nation’s second-largest mall owner whose big-name holdings include Chicago’s Water Tower Place and Fashion Show in Las Vegas, also disclosed in a regulatory filing late Monday that it may default on certain debt obligations.

And although it’s not yet bankrupt, there was this sad dispatch from Boscov’s, longtime a favorite here at Labelscar:

Al Boscov admits his bid to regain control of the department store chain named after his family is the final hope for the bankrupt retailer’s survival.

“We have to sort of pull off a little bit of a miracle,” Mr. Boscov said Wednesday. “If I can’t raise all the money, the only thing you would have is liquidation.”

Given that this retail bloodbath is coming just before the Christmas season, I am really terrified to see who will follow these companies into the abyss after the holidays are over. That’s typically when most struggling companies throw in the towel, since they hope that the Christmas sales will put them back on track. Remember when companies like Bradlees, Montgomery Ward, Apex, and Ann & Hope all shut at the same time in early 2001? We may see even worse this time around.

I’m running out of obvious guesses for impacted large-format retailers, but I think we may see at least one office chain run into trouble (Office Max seems the weakest), and I think more of the smaller remaining regional chains (Gottschalks, you frumpy old mess, I’m lookin’ at you!) will run into serious trouble. Other chains that long ago lost a strong value proposition (Dillard’s) may find themselves in a fair amount of trouble, and verticals with several comparable strong players (a la L’N’T and Bed, Bath, & Beyond) may wind up shedding some chains (PetSmart or Petco? Borders or Barnes & Noble?). And of course, there’s always Kmart/Sears, but if there’s one that would spell catastrophe for our nation’s malls, it’s that one.

118 Responses to “While the Economy Was Crumbling…”

  1. Here’s the article on National Hole sale Liquidators from the New York post.

    LI RETAIL CHAIN IS FINISHED

    By JAMES COVERTFor more Business, visit NYPOST.COM

    November 12, 2008

    Add another casualty to this year’s list of bankrupt retail chains – this time on Long Island.

    National Wholesale Liquidators – a West Hempstead, LI-based discount chain with 55 stores across the Northeast – has filed for Chapter 11 bankruptcy protection.

    The filing came despite the fact that the retailer specializes in deeply discounted closeout merchandise.

    In recent communications with its suppliers, National Wholesale Liquidators blamed a sharp reduction in credit by General Electric, which it said has cut credit for deliveries in recent weeks by $15 million.

    Meanwhile, National Wholesale Liquidator’s shoppers are facing pressure from rising unemployment and the tightening credit crunch, said Larry Franzen, a bankruptcy lawyer at Bryan Cave.

    Dare I ask what’s next?

    [Reply]

  2. Next: Circuit City. They are absolutely not going to be able to recover, and they shouldn’t even try. I hope Boscov’s stays though, they know how to do Dept. Stores. I can’t think of one Boscov’s I’ve been in that I didn’t like.

    Also hahaha, looks like National Wholesale Liqudators is gonna have to liqiudate their liqudation :v

    [Reply]

  3. Oh man, this is getting ugly if GGP is having problems.

    Anyone know how southern staple and Parisian-eater Belk is doing?

    [Reply]

  4. EPIC FAIL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    [Reply]

  5. I do believe I was one to mention Circuit City’s looming failure, and if it does happen, I still think Dillard’s will be pulling out as well.

    As for GGP, I will be devastated if they fail. Is there a possibility that Simon / Westfield or another company take over? Or would it be private under same name? (I am referring to a situation similar to The Mills failure, in which Simon took over most of it’s assets.)

    [Reply]

  6. I wouldn’t hope for a Simon or Westfield takeover. They’re two of the most un-inspired mall-owners of the century. Do we really want another round of Westfield Shoppingtowns? The only hope for GGP in the northeast is if a few malls are taken over by PREIT, and I would love to see Boscov’s absorbed by The Bon Ton as a regional brand, rather than disappearing totally.

    [Reply]

  7. I think February 09 will be the roughest month for retail failures, slow month every year , probally this time it will be to slow for some.. I hope Sears don’t fail, KMart wouldnt care, too bad they are one now! Support your favorite chain this season, it may help!

    [Reply]

  8. If Sears dies, I hope J.C. Penney will store-divide like Macy’s and its victims have done in the past. Or else, vaccancies galore!

    [Reply]

  9. Not to pull the old politics debate in, but why do chains die at the end of a President’s term?

    I’m sure that we’ll survive. It’s all those cookie-cutter strip malls. Me? I’m hoping for a rise in regional chains…

    [Reply]

  10. Regional chains are what filled many enclosed malls in the first decade or two, be them specialty stores or major anchors.

    If things go back to that mindset, could the cycle begin again? Who knows.

    This is quite a scary time right now, economically, though I can’t wait to see the end result when the dust settles and people are able to make a go of things once again.

    It will be interesting, to say the least.

    [Reply]

  11. I hope so. I’m pretty tired of every mall being the same…Hot Topic, Victoria’s Secret, Bath & Body Works, Abercrombie & Fitch, Old Navy, Hollister Co., The Gap, GNC…yawn. Regional chains often had the interesting names.

    Similarly, I expect retail turnover to be pretty high. None of this lazy occasional openings.

    [Reply]

  12. Sorry for the stupid question, but what does “retail turnover” mean?

    [Reply]

  13. PREIT taking over GGP would be a good idea. PREIT seems to be pretty aggressive about renovating the properties they have, and it would be nice to see a company like them fixing up some of GGP’s less-desirable properties like Bay City Mall.

    [Reply]

  14. Sorry for the double post. Danroman: You know what turnover is, in the non-food sense, right? Just put two and two together.

    [Reply]

  15. Simon , Macerich & Westfield are three REITs that have the resources to buy a company of GGP’s size in whole or in part. However PREIT, Taubman & DDR could pick up a few malls in targeted markets.

    Example,

    1. Tysons Galleria to Taubman or Macerich
    2. Mall in Columbia to Simon
    3. Maine Mall to DDR being more of a mid size market
    4. Woodbridge to Simon
    5. Willowbrook in Wayne NJ to Westfield

    [Reply]

  16. I can’t see DDR picking up any major malls. They don’t usually own major malls except Tri County in Cincy. Most of DDR’s malls are small deals with 20-40 stores, serving towns of about 10 to 15K people. I could, however, see something like Maine Mall going to Macerich or Simon. Or maybe Pyramid, they love malls with 47 anchors.

    And let’s not leave CBL out of this either. They tend to have a lot of mid-market malls that do just fine.

    [Reply]

  17. Aww man, I really hope GGP can pull it together! Park City Mall in Lancaster, PA is my favorite mall. = ( I also hope Boscov’s pulls it together as well. Glad to see that it will be going back in the hands of the family.

    [Reply]

  18. @Bobby: CBL isn’t doing so hot either, though they’ve got a good track record.

    That said, Westfield announced it was ‘open’ to acquiring ‘troubled mall owners’ yesterday. My guess is they’ll pick up Fashion Show in Las Vegas pretty quickly and make an offer for GGP while Taubman, Simon, and Macerich will likely cherry pick a few properties.

    [Reply]

  19. Sean, screw that, just let Macerich take over everything. They’re directly on par if not better then GGP.

    [Reply]

  20. Don’t CBL malls tend to be in the south? Otherwise, I don’t see mall ownership mattering too much since the succesful malls are the boring ones, and the ones left with a little bit of charm are dying or dead sad as it is.

    I mean I’d prefer almost anything to Simon or Westfield, mainly because (especially Simon) would have several malls in relatively close proximity, and therefore probably let the slightly smaller ones wither and die (like Neshaminy compared to Oxford Valley).

    [Reply]

  21. AceJay,

    Macerich in the past few years has trimmed it’s lower performing malls. I think they are getting ready to bight on a few of GGp’s malls, but not in Las Vegas right now. The Vegas assets I believe will go to one of three companies.

    1. Westfield
    2. Simon, do to the forum Shops
    3. Tripple 5 Group, owners of MOA have a large Presence in Vegas including Boca Park center. A 750,000 Square Foot strip mall on Rampart Boulevard in Summerlin.
    4. Taubman, who will run the retail portion of City Center on the strip.

    Ideas?

    [Reply]

  22. I think Taubman could show interest in Fox River Mall in Appleton, Wisconsin, since they also own afew malls in Milwaukee. Other firms that might show interest in buying this mall include Macerich, DDR, or CBL.

    [Reply]

  23. I think Taubman could show interest in Fox River Mall in Appleton, Wisconsin, since they also own a few malls in Milwaukee. Other firms that might show interest in buying this mall include Macerich, DDR, or CBL.

    [Reply]

  24. @Ryan CBL Malls are pretty much everywhere now, though they’re mostly focused in circumference to Chattanooga (and a high amount in the Carolinas) , but I know they have property as far North as Michigan.

    Westfield I dread the most because of their gag-inducing naming scheme and incessant plastering of their ugly logo over everything. Westie the kangaroo beat the Simon Kidgits, but not by much. Also, “bully retail companies” might as well become another stereotype.

    Simon really tends to suck the life out of their malls (look at how bland the now-failing Knoxville center mall is or how boring Mall of Georgia is) , but to their credit, at times they tend to be tasteful with their renovations (see Haywood Mall.)

    GGP was always the best in terms of keeping their malls interesting- mostly because GGP absorbed most of the more interesting mall owners. I think Mall St. Matthews in Louisville is a good example.

    [Reply]

  25. Taubman hasn’t owned, much less developed any malls in Wisconsin since Northridge and Southridge in the Milwaukee area. They (Taubman) got out of Wisconsin in the late 1980s when giving up those two malls to other REITs.

    I’ll admit, it would look rather odd to see Fox River Mall amongst the other names in their portfolio. I’m thinking of the fact that FRM has a food court (sort of a rarity in Taubman malls…the first thing the new owners of North and Southridge did once Taubman let go of the two malls was to remodel them top to bottom and give them both food courts), and the overall roster of tenants, anchors included. Target, at a Taubman-owned mall? Unheard of.

    I could be wrong though. It’s been a few years since I visited that company’s website and glanced over every mall they own.

    CBL took over the five Jacobs (Jacobs, Visconsi, Jacobs, aka Richard E Jacobs Group) malls here, and have since, or are in the process of (in the case of Brookfield Square in Brookfield WI) renovations having been done to all of them, and retenanting their inline space. For the record, their other malls here were East and West Towne (Of which East is profiled here @ Labelscar), Janesville Mall (also profiled here) and Wausau Center, Northcentral Wisconsin’s most popular mall.

    [Reply]

  26. I could see CBL taking a lot of GGP malls in the southeast, since they are based in the south in Chattanooga. Especially mid size malls in Louisiana, Florida and Georgia,

    GGP has done a wonderful job with the 11 year old Mall of Louisiana in Baton Rouge. They purchased the property in 2004 from Jim Wilson and Associates, the company that originally built the mall.. They have shuffled stores around, expanding the size of some, and adding new stores to the mall that are new to the market. They have also successfully added the outdoor addition called “The Boulevard” that has new stores to the city like Apple, Borders and Pottery Barn. They definitely know how to do malls. So much so that the old 32 year old Cortana Mall has hired The Daniel Group of Baltimore to do the same kind of thing there.

    [Reply]

  27. GGP has done some great work, such as RiverTown Crossings in Grand Rapids. However, they still have a lot of clinkers in Michigan. Lansing Mall seems to be slowly turning into a strip mall, having lost nearly 1/3 of its mall space to big box (Old Navy and B&N in 2000 to plug up the dying Wards wing before Younkers finally took the old Wards, then Dunham’s 3 years later because the Wards wing was STILL dying, and finally TJ Maxx in center court in 2006ish to wipe out the vacancies left behind by Express and a bunch of other stores I can’t remember). They did a similar thing to Lakeview Square in Battle Creek, wiping out a whole wing for Barnes & Noble, adding an Old Navy which closed and is now Steve & Barry’s, and after that, wiping out MORE of the same wing for a Dunham’s. This mall even lost an American Eagle for crying out loud. And finally, regardless of the fact that Kalamazoo didn’t already have a Burlington Coat, I’m surprised that they were picked as Mervyn’s successor at the A-level Crossroads in Kalamazoo.

    [Reply]

  28. CBL would be a good canidate to pick up a couple of GGP properties. They already own most of the former Westfield mall in St. Louis area along with St Clair Square, which is quite healthy. They also own my local mall, Eastland Mall. The only cluncker that CBL has around here is Hickory Point Mall outside of Decatur. That may have more to due with Decatur’s crappy economy (and unexplained love affair with Wal-Mart) than CBL’s management.

    [Reply]

  29. Here’s my synopsis of why GGP is in trouble. GGP basically owns a bunch of shoddy old malls that instead of throwing in the towel on and demolishing or selling, they instead dumped a tremendous amount of cash into fixing them. The overhaul of Cumberland Mall in Atlanta rates as a boondoggle for them…an attempt to try to make a silk purse out of a pig’s ear. The mall was dying, getting more ghetto by the day and what do they do? They tear down two anchors, throw up a massive lifestyle wing in the front with trendy restaurants and completely transform the mall itself to the point it’s not even recognizable. Even at the time I said it would never work, and that doing it was just a band-aid.

    This doesn’t change the fact that crime continues to rise at the mall, and the mall has basically bled out most of the national chain tenants. When you scratch the surface, it is still just a glorified clearance mall. The mall is basically smack in the center of a rapidly deteriorating inner ring suburb that peaked about 1985 or so and basically cannot compete in the slightest with its ritzier counterpart a few miles east on I-285. What’s the point of trying to upscale a mall that is close to very rough ghetto, anchored only by a creepy 70’s modern Macy’s (former Rich’s) and Sears (screw Costco, that’s not an anchor) and basically has been snubbed by those with real cash since the mid-80’s? They even replaced the skylights with a dropped ceiling and completely redid center court (even roof). If they took this approach with Century Plaza in Birmingham (another much more dire mall that they own), it would NOT surprise me to see them hurting.

    Add to this down the road…North Point Mall, also GGP. This has to be the most poorly managed mall around. This is one of the wealthiest areas in the country, less than five miles from multi-million dollar homes and is within easy access to a major freeway (GA-400). With all that money, the mall made no effort to attract an upscale tenant to fill the shoes of Lord & Taylor when they left. Instead, they have a vacant Parisian and a Belk in the Lord & Taylor. What actually helps this mall is the fact it was well designed to start with including unusually bright and beautiful skylights, because otherwise the investment in the center has been quite minimal. The Belk end of the mall has many vacancies, and the mall basically fits a more middle class mold than the area around it. The only reason it has remained successful is that the crashing market has so far stalled efforts to build an upscale mall less than 5 miles up the road, announced as early as 2002. What’s worse is that it, too, is having ghetto creeping up to it from the south as once ritzy Roswell is really showing its age.

    You put this together: add a tanking economy, shaky mall tenants and people spending less and less money-especially at your not-so-well managed centers and what do you get?

    [Reply]

  30. I just can’t see Simon taking over all of GGP’s malls, they already own over 300 malls in the country and it would be astronomical in value to take over all of GGP’s assets. I can see them cherry picking malls however which fall in line with their upscale demographics. CBL would likely acquire some middle-market malls here and there since they are mainly concentrated in that field. Westfield will probably try to stick to bigger markets, while Taubman and Macerich will likely acquire some of GGP’s most upscale malls.

    GGP can probably survive as a smaller company, if they take the time to evaluate all their malls and consider dumping the underperforming ones and holding on to their more successful properties. I think they also need to sell off their other non-mall assets, such as the planned communities that they bought off of Rouse several years back.

    [Reply]

  31. GGp can be compared to a Las Vegas buffet with a little of everything under the sun. Each of the companies from CBL to Simon & westfield will end up putting something on there plate. Now some have bigger appitites then others, but there’s plenty to go around plus dessert.

    [Reply]

  32. I’m honestly surprised that Simon almost never touched Michigan considering it’s only one state over from their home base of Indiana. For a while they owned Orchards Mall in Benton Harbor, and they’ve owned Briarwood in Ann Arbor ever since taking it from Mills, who took it from Taubman. Why are so many chains and REITs afraid to touch Michigan anyway?

    [Reply]

  33. There are 2 answers to that question. the first is the shaky economy throughout MI.

    the second is politics. When Simon tried to buy Taubman it got personal to the point where Taubman used influence to pass an anti-corporate raiding law to prevent any hostal takeovers origionating out of state. It was specifficly designed to hit Simon in a similar way as the Wright amendment hits Southwest Airlines against American Airlines in Dallas. In other words, prevent Simon from opperating on the same playingfield as Taubman.

    This was a state issue while the Right amendment is on the federal level, but between them there are protectionisticsimmilarities.

    [Reply]

  34. If a chain like NWL is going under, this country is in worse shape than anyone’s admitting

    [Reply]

  35. NWL, what’s that?

    [Reply]

  36. NWL = Natl’ wholesale liquidators

    [Reply]

  37. By the way, Steve and Barry’s is now going out of business.

    [Reply]

  38. Check out this poll on black Friday predictions. I personally think it’s a load of BS, but read it anyway & put your comments below.

    Will Black Friday Be the Start of a ‘Blue Christmas’ for Retailers?-Maritz(R) Poll reveals Black Friday predictions, differences in holiday spending among segments, shoppers’ plan for offsetting costs, most popular retailers

    November 18, 2008

    ST. LOUIS, Nov 18, 2008 /PRNewswire via COMTEX/ — In less than three weeks, all eyes will be on retailers to determine just how much the poor economy will impact this year’s holiday shopping season. According to a recent Maritz(R) Poll, 41 percent of respondents will shop on Black Friday, slightly higher than the 37 percent that said they were going to shop on the same day in the 2007 Maritz Holiday Shopping Poll. Roughly the same number of people (42 percent) said they would not shop on the day after Thanksgiving and 17 percent were undecided. The average Black Friday shopper plans to spend 45 percent of their total holiday budget on the day after Thanksgiving. Clothes (23 percent) and electronics (17 percent) are by far the most shopped for categories on Black Friday.

    “It appears retailers can expect roughly the same number of shoppers as last year on the day after Thanksgiving,” said Tom Krause, director of strategic consulting for Maritz Research Retail Group. “However, they will definitely be spending less and will be more deal sensitive than ever. In order to capture as much of that spend as possible, retailers need to help their shoppers feel savvy by having the product available, easy to find and at the deep discount shoppers are desperately seeking on Black Friday.”

    Kraus adds, “Given consumers’ sour mood this year, the in-store experience will need to be as hassle-free as possible.”

    According to the survey, shoppers plan an average total spend of $546 this year, which is a 14 percent decline compared to $637 from the 2007 Maritz survey.

    Who’s taking more of a cue from Scrooge?

    Results from the poll revealed significant differences among gender, generations and income levels.

    Men plan to spend an average of $518 this year — a 19 percent decline from the $642 spent in 2007. They are also spending an average of $50 less than women this year, a significant change from last year when both said they would spend the same amount.

    “Retailers, who tend to attract males during the holiday season, such as electronics stores and jewelers, may be more vulnerable to the effects of the economy, said Krause. “We’re anticipating a decline in the amount of money men are willing to spend this year, and those retailers will have to fight harder to capture the attention and the wallets of their customers. Also, marketing will be critical this year because even men will be open to communication about where the best deals are.”

    Gen X shoppers say they will spend the most this year ($607), and the Silent Generation shoppers anticipate spending the least ($489). Based on the poll findings, all generations plan to spend less than last year, except for Gen Y shoppers, who say they will spend the same as last year ($550)

    But who’s truly changing their holiday shopping habits the most in this declining economy? According to respondents, those with an income between $75,000 and $100,000 are reporting the biggest change in spending compared to the 2007 survey. This year, they’re averaging a 41 percent decrease in spending ($678 compared to $1,152 in 2007). Last year, those in the same income bracket planned to spend as much as those with a household income of $100,000 or more.

    “This is an important category for retailers and their belt tightening is driving some upscale stores, who historically have not had a discount strategy around the holidays, to get more aggressive with pricing,” said Krause.

    Santa’s List Just Got Smaller

    Given the nature of the economy, consumers have been taking steps to offset their holiday shopping costs. When asked about activities that respondents have engaged in or plan to engage in:

    — Four out of five (80 percent) respondents indicated that they are

    buying items only when they find a sale.

    — Nearly three out of four (74 percent) cited doing pre-shopping research

    to score the best deals.

    — Seven out of ten (70 percent) purchased gifts prior to the season.

    — 65 percent of respondents admitted to cutting back on the number of

    gifts per person.

    In addition to the 65 percent of respondents, who admitted to cutting back on the number of gifts per person, nearly 60 percent of all respondents also admitted to cutting back on the number of people on their holiday shopping list, and two-thirds of those cutting back say that someone in their extended family will be left off the list this year. Of those cutting back, 67 percent will eliminate extended family (including aunts, uncles and cousins) and 55 percent will eliminate friends.

    Not as gaga for gift cards?

    Retailers may expect to move less inventory this holiday season, but does the same hold true for gift cards? According to the poll, 55 percent of respondents still plan to purchase gift cards this year (compared to 56 percent in 2007 and 54 percent in 2006). The number of gift cards purchased will also remain the same as last year (with a median of four gift cards each year). But the true difference is in the amount spent on each gift card. The average spend on gift cards dropped to $161 from $273 in 2007. Based on the projected overall spend this holiday season, approximately 29 percent of gift giving will involve gift cards, compared to 43 percent last year.

    “Despite the planned decrease in spend on gift cards, retailers should keep a good supply of gift cards in stock. Because many retailers are scaling back on their inventories this year, gift cards can act as a good option for customers who don’t want to drive elsewhere,” said Krause. “Train your employees to offer gift cards to those customers who can’t find the item they want. These small steps can improve the customer experience and allow retailers to remain competitive in this tough market.”

    Value-based retailers may be merrier

    Among a list of more than 15 stores to choose from, the consumer research study revealed the top choices among the generations (listed in descending order of popularity):

    Retailer Percentage 2008 Approximate 2007 Approximate

    That Spend* Spend*

    Will Shop

    Wal-Mart 62 percent $170 $165

    Target 54 percent $120 $120

    Best Buy 39 percent $124 $139

    Toys R Us 29 percent $125 n/a

    K-Mart 27 percent $124 $125

    Kohl’s 27 percent $118 $159

    Sears 21 percent $114 $138

    Macy’s 19 percent $152 $142

    Circuit City 18 percent $128 $102

    Victoria’s

    Secret 18 percent $91 $103

    Apple Store

    iTunes 9 percent $155 n/a

    *Among those shopping at the store.

    “By far, people are going to spend the majority of their budget at big-box retailers. Big-box retailers have a distinct advantage because they typically offer competitive prices and one-stop shopping,” explained Krause. “Shoppers are going to be choosier than ever, and other categories need to identify ways to provide the most value through discounts, value-added benefits such as free shipping or an added level of convenience, in order to capture their share of holiday dollars.”

    For reference:

    For this poll/release Gen Y (1978 to 1989) comprises ages 18-29; Gen X (1965 to 1977) comprises ages 30-42; Boomers (1946 to 1964) comprises ages 43- 61; and the Silent Generation (1900 to 1945) comprises ages 62 and over.

    This online Maritz Poll, which was conducted Oct. 14-24, 2008, featured responses from 1,525 randomly selected adults from an Internet panel survey on topics related to holiday shopping, buying behaviors and gift-giving trends. Respondents for this market research poll were split evenly between males and females, and results were weighted to match census demographics (on age, income, race, education and children in household). Margin of error for the overall poll is +/- 3 percent.

    [Reply]

  39. Now with Steve & Barry’s rumored to be closing, there will be even more anchor vacancies in malls across the country, without much hope for suitable replacements. I’m worried which stores will be the next to go under – it seems like every day another retailer is announcing Chapter 11 Bankruptcy, a kiss of death in this economy.

    [Reply]

  40. Regional Mall REITs Hang On During Third Quarter

    November 19, 2008

    Regional mall REITs turned in a solid performance in the third quarter of 2008, amid increasingly grim same-store sales results and reports of crimped consumer spending. Of the seven REITs, three missed analysts consensus estimates while the majority beat estimates.

    Simon Property Group, Taubman Centers, Inc., CBL & Associates Properties Trust and Glimcher Realty Trust, exceeded estimates by as much as $0.04 per share for the three months ended Sept. 30. Macerich Co., PREIT and General Growth Properties missed analysts consensus estimates during the period by $0.03 per share to $0.12 per share.

    “It’s a very tough environment, but I think most of the management teams are making some pretty good efforts,” says Rich Moore, an analyst with RBC Capital Markets. “From a guidance standpoint, malls were in the middle of the pack,” when compared to the rest of the REIT universe.

    Simon Property Group beat consensus estimates by $ 0.04 per share, with FFO growth of 10.3 percent to $1.61 per share compared to the third quarter of 2007. The Indianapolis-based REIT posted same-store NOI growth of 1.9 percent for its regional mall properties and 7.7 percent for its outlet centers. However, occupancy at Simon’s 242-million-square-foot portfolio declined 20 basis points at its regional malls to 92.5 percent; and 80 basis points to 98.8 percent at its outlet centers.

    “While we believe Simon is a leader in its peer group, we do not believe it is exempt from the current economic environment,” wrote Carol L. Kemple, an analyst at Hilliard Lyons.

    Both CBL & Associates Properties and Glimcher Realty Trust beat consensus analyst estimates by $0.02 per share during the third quarter.

    Glimcher posted FFO per share of $0.46, down 8.0 percent compared to the same period in 2007, and an NOI decrease of 1.0 percent. Occupancy at Glimcher’s 22.1-million- square-foot portfolio dropped 90 basis points, to 92.6 percent, a moderate adjustment, cited Hilliard Lyons analyst John Roberts.

    Chattanooga, Tenn.-based CBL & Associates of 7.9 percent to $0.82 per share. CBL’s same-store NOI declined 1.6 percent and its occupancy rate remained flat, at 92.4 percent. The company operates a 79.7-million-square-foot portfolio.

    Taubman Centers beat estimates by $0.01 per share, with FFO growth of 8.8 percent, to $0.74 per share. Occupancy at the Bloomfield Hills, Mich.-based REIT’s 24.5-million-square-foot portfolio went up 40 basis points, to 90.6 percent. Its same-store NOI rose 5.7 percent.

    PREIT, a Philadelphia-based REIT with a 26.1-million-square-foot portfolio, missed analyst estimates by $0.05 per share. PREIT posted FFO per share of $0.77, representing a decrease of 33.6 percent from the third quarter of 2007. The company’s same-store NOI fell 1.4 percent.

    Macerich Company, based in Santa Monica, Calif., missed consensus estimates by $0.03 per share. Its FFO per share grew approximately 1 percent during the quarter, to $1.16 per share. Occupancy at Macerich’s 81-million-square-foot portfolio slipped 70 basis points, to 92.8 percent.

    Beleaguered General Growth Properties missed consensus estimates by $0.12 per share. It posted an FFO decrease of approximately 5.9 percent, to $0.64 per share. The Chicago-based company’s NOI declined 1.8 percent and occupancy within its 180-million-square-foot portfolio dropped 50 basis points, to 92.7 percent.

    –Elaine Misonzhnik

    [Reply]

  41. I can discribe this article as, WELL DUH! We all saw this one comeing.

    Steve & Barry’s to begin liquidating stores

    By MAE ANDERSON (AP Retail Writer)

    November 20, 2008

    NEW YORK – Steve & Barry stores and its parent company have abandoned plans to keep stores open during bankruptcy protection and will liquidate them over the next few months, according to a bankruptcy court filing.

    The retailer had filed for Chapter 11 bankruptcy protection in July after its growth plans were hurt as consumers cut back on spending. The investment firms that bought Steve & Barry in August said they planned to close some stores and keep operating with a smaller base.

    But the retailer and its owner, affiliates of Bay Harbour Management and York Capital Management, said in the filing Wednesday that they have joined with liquidator Great American Group LLC to liquidate all inventory in remaining stores by the end of this year or early next year.

    “For various reasons, including the general health of the American economy and the state of the retail market in particular, sales at all stores have been disappointing,” the documents filed with the Bankruptcy Court in the Southern District of New York stated.

    Steve & Barry’s legal counsel Christopher Fugarino said the company had no immediate comment.

    The company is the latest casualty of the weak retail sector, as consumers cut discretionary spending amid a shaky job market, tight credit and prolonged housing slump.

    While some stores that have declared bankruptcy, such as electronics retailer Circuit City Stores Inc., still plan to keep stores open, others, including specialty retailer Linens ‘N Things and department-store chain Mervyns LLC, have begun to liquidate all of their stores.

    Steve & Barry’s LLC, based in Port Washington, N.Y., had 240 locations when it was bought and the new owners had planned to cut that down to 173 stores. The company also named a new chief executive, Harold Kahn, last month. But the drop-off in consumer spending made that impossible, according to the filing.

    The company is not in compliance with some of its loan agreements and has no prospects for continued financing, according to the filing.

    “The appropriate course of action to maximize value for the benefit of all of their stakeholders is an orderly liquidation in Chapter 11,” the filing said.

    [Reply]

  42. Retailers facing Black Friday bloodbath

    By JAMES COVERTFor more Business, visit NYPOST.COM

    November 24, 2008

    This coming Friday, red will be the new black for retailers.

    Black Friday – the annual post-Thanksgiving shopping ritual – got its name originally from the profits retailers rack up as consumers load up on big-screen TVs, toys and clothing to kick off the crucial holiday season.

    But with a historic financial crisis in full swing, Wall Street now expects that the books of a few major chains – including Saks, Borders and Pier 1 Imports – will be in the red this year, as they take losses on mounds of unsold goods.

    “Retailers have had to slash prices to a point where margins are so slim, going into the black is going to be pretty difficult,” said Kit Yarrow, a business professor at Golden Gate University in San Francisco.

    For many chains – especially department stores and luxury shops – business hit a wall in October as the Wall Street crisis peaked and sent the stock market tumbling. Since then, some industry insiders have begun referring to this month as “Black November,” as stores like Saks Fifth Avenue, Macy’s and Neiman Marcus have staged lengthy, storewide clearances on fall merchandise, with markdowns as deep as 40 percent to 60 percent.

    “The problem is, it didn’t work,” as skittish shoppers have continued to delay spending, Yarrow said.

    On Friday, retailers hope business will finally turn a corner. The weekend after Thanksgiving typically accounts for 10 percent of holiday sales, and could exceed that figure this year, according to the International Council of Shopping Centers.

    “There’s definitely going to be a big turnout,” said Erin Hershkowitz, a spokeswoman for the trade group. “But we don’t know how it’s going to translate into sales.”

    The key question, she said, is whether the deals will impress consumers enough to pull the trigger, rather than wait for still-deeper markdowns in December.

    Already, reports are surfacing of 24-inch plasma TVs for under $500, while no-frills laptops are expected to be available for $300 each.

    Only time will tell.

    [Reply]

  43. From TIME Magazine,

    For Retailers, ‘Tis the Season to Be Nervous
    By Kristina Dell Tuesday, Nov. 25, 2008

    Be careful whose gift cards you buy this season. As retailers struggle with recession, debt-laden consumers, unfriendly bankers and declining property values, fewer of them will be around next year. “By the end of 2009, the number of retail players will be down by at least 25% and could be down by as much as 40%,” says Britt Beemer, chairman of America’s Research Group, a consumer-research and marketing firm based in Charleston, S.C. “I expect the number of bankruptcies next year to be more than we’ve seen in the last five years combined.”

    Related
    Special Report

    10 Things to Do With Your Money Right Now
    Stories
    Looking Ahead: A Bad Recession or Something Worse?
    Black Friday Is Looking Blue
    More Related
    Retail Stars of the Recession
    A Gray Friday At the Mall?
    A Blue Christmas Ahead as Consumers Turn Cautious
    Already, some 20 retailers have sought bankruptcy protection this year, with such household names as Circuit City, Steve & Barry’s, Linens ‘n Things and Mervyns going under. Of those four, only Circuit City is attempting to restructure its business, closing 155 stores by the end of the year in an effort to emerge as a leaner operation. The other three plan to liquidate altogether, a trend that is on the rise as a result of the lack of potential buyers for troubled assets and a tightening of credit offerings by banks. “The days of restructuring are gone,” says Howard Davidowitz, chairman of Davidowitz & Associates Inc., a national retail-consulting and investment-banking firm. “No one will give you the financing.” (See pictures of the global financial crisis.)

    For store owners big and small, ’tis the season of sweating brows. U.S. retail sales dropped a record 2.8% last month, just the latest in a string of bad months. By the end of 2008, 148,000 retail establishments will have closed, the largest number since 2001, according to the International Council of Shopping Centers. A rough holiday season will produce an additional 73,000 store closings in the first half of 2009, the council predicts. “In the first six months of next year there will be a lot more retail museums than retail stores,” says Beemer.

    Regional department-store chains in smaller to midsize cities are already under pressure, but some have an extra heap of woe. Women’s retailer Bon-Ton faces a double challenge: softening sales and a mountain of debt resulting from its $1 billion buyout of 142 stores from Saks two years ago. Even powerhouse Dillard’s, with stores spread across 29 states, is raising anxiety owing to weakening sales, down 10% for the quarter. In early November, Standard & Poor’s lowered its corporate credit rating of Dillard’s to B+ from BB-, citing the “deepening spending pull-back by consumers.” Adding to the drama, hedge-fund investors Barington Capital Group LP and Clinton Group Inc. called for William Dillard II, the chain’s CEO, to step down amid declining revenue and a stock price that has lost more than 70% of its value. The good news: “They aren’t leveraged like other stores are,” says Beemer. “But if you look at mall-based apparel stores, any of them could be in trouble except for Victoria’s Secret, which has a good customer base.” (See 10 things to do with your money.)

    Hopes for upscale retailers are fading fast. The high-end customer is cutting back spending 9 percentage points more than the overall consumer, according to America’s Research Group. One victim of the trend: Saks Fifth Avenue, which saw a devastating 16.6% sales plunge in October, coming on the heels of a 10.9% drop in September.

    Other specialty merchants in troubled waters include Talbots, the conservative women’s clothing boutique, whose same-store sales plunged 14% in the third quarter. “In their case it might be an overexpansion problem as they got into men’s and children’s clothing and then made the acquisition of J.Jill, which wasn’t smart,” says Neil Stern, senior partner at McMillan Doolittle, a Chicago-based retail-consulting firm. That half-billion-dollar acquisition is currently up for sale, but no one is biting. Meanwhile, outdoor-apparel shop Eddie Bauer emerged from bankruptcy in June 2005 with a $450 million bank loan, which left it highly leveraged and low on cash. “While their same-store sales are down only 1.1% and they’re performing pretty well compared to the rest of apparel retailers, it’s difficult to do a turnaround in a bad market,” says Stern.

    Still, there are a few bright spots this Christmas season. Urban Outfitters Inc. has distinguished itself with stylish merchandise that stands out, while teen retailers Aéropostale and Buckle have posted positive same-store comparisons by offering good value. Says Davidowitz: “You have to be either really cheap or really different and really right to do well in this market.”

    What are your observations on what’s going on vs the so called news reports.

    [Reply]

  44. GGP is pretty awesome in the fact that it has full lease plans for everything. Personally, I hope/predict what will happen is tenant turnover will be very high: stores will open, close, and move around. There will be stores that will vanish after a few months. (a 1990s FoxTrot comic had the line: “Paige, this is a mall. In a few weeks, this store won’t even be here.”)

    And GGP? I predict that Simon will attempt a buyout, but the government forces a breakup. A part of Simon and much of GGP will merge, creating a new corporation. Something like that.

    [Reply]

  45. I think you are right Jonah, infact I’ll take it one step further. Simon & GGP will each have to divest most of the weakest assets from there portfolios plus certain markets with overlapping properties, such as The Forum Shops & Fashon Show in Las Vegas before a murger is granted by the DOJ.

    If in the case of two malls that are in the same market but serve different income brackets such as Woodbridge & Menlo Park, I don’t think you’ll have a problem there. There are enough malls that can be divested to create a new company that could be equil in size to a Merged Simon/GGP when all is said & done.

    [Reply]

  46. Macy*s haters, you may get pleasure from this.

    Retail downturn rains on Macy’s parade

    By RACHEL DODES (The Wall Street Journal)

    November 26, 2008

    When Macy’s Inc. paid $11.5 billion to acquire rival May Co. in 2005, investors asked whether consolidation could save the department store, or just prolong its decline.

    So far it looks more like the latter. The company lost $30 million in the first nine month this year on a 4.3 percent decline in sales. A brutal drop in consumer spending is expected to make the holiday season – which begins with Macy’s Thanksgiving Day Parade on Thursday – the bleakest in nearly two decades, and already has sent smaller competitors into bankruptcy.

    Macy’s Chief Executive Terry Lundgren says the greater size is helping the 856-store chain weather the downturn. “I would hate to be in a position where I only had a bunch of regional department stores to compete in this environment,” the 56-year-old executive said during a recent interview in his office at the company’s landmark 34th Street store in New York City.

    Because of the recent economic turmoil “the merger couldn’t reach its full flower as soon as it was hoped,” says Arnold Aronson, a managing director at retail consultant Kurt Salmon Associates.

    Craig Johnson, president of Customer Growth Partners, a retail research firm, says Macy’s has been “holding its own” against mid-tier department stores. But like most traditional department stores, it is “bleeding share” in the apparel market as customers trade down to discounters such as TJ Maxx and Target Corp., he says.

    One looming question is whether Macy’s will be able to refinance $950 million in debt coming due next year. Although analysts say the company doesn’t face near-term liquidity problems, it will likely have to dip into a $2 billion revolving credit facility to pay at least part of the $350 million in debt coming due in April and $600 million due in July if the credit markets don’t improve by then.

    Macy’s Chief Financial Officer Karen Hoguet said she hopes the credit markets “would open up for us” and Macy’s would be able to refinance the debt.

    If Macy’s debt, just a notch above junk status, were to be downgraded, interest expense would rise. Ms. Hoguet said on a call with investors earlier this month that Macy’s is “going to do what we need to do to maintain the investment-grade rating.”

    At the end of the third quarter, Macy’s had $300 million in cash and cash equivalents. It won’t project cash flows for the fourth quarter. Credit rating agency Moody’s Corp. estimates that Macy’s generated about 87 percent of its $2.24 billion in fiscal 2007 cash flow from operations in that year’s fourth quarter.

    Moody’s and Standard & Poor’s changed their outlooks to “negative” in October after Macy’s cut its earnings forecast for the year. Macy’s forecasts a 1 percent to 6 percent same-store sales drop for the fourth quarter. “We have to see how this holiday season plays out,” says Moody’s analyst Ed Henderson.

    As sales deteriorated in recent months, Mr. Lundgren trimmed Macy’s holiday hiring plans and cut its fiscal 2009 marketing budget. To conserve cash, he slashed its 2009 capital budget by almost 50 percent, to $550 million to $600 million, mostly by postponing store renovations.

    “I have gone through every single line item to make sure that the things we are eliminating or postponing are the right issues,” Mr. Lundgren says.

    He insists the merger was the right move despite a bumpy start that included the closing of nine underperforming former May stores. The combined company’s size has helped the chain outperform direct competitors, he says.

    Macy’s same-store sales, off 6 percent last quarter, have held up better than its rivals. In contrast, the decline was 10.1 percent at Bon-Ton Stores Inc., which operates in the Northeast and Midwest, and 13.4 percent at Gottschalks Inc. in California. Dillard’s Inc. posted monthly declines of 7 percent, 12 percent and 8 percent in the period.

    By managing inventory and cutting costs, the company known before the merger as Federated Department Stores Inc. boosted gross margins in the latest quarter by 0.2 percentage point, compared to a 3.4 percentage point drop at rival Nordstrom Inc.

    Macy’s has been able to leverage its heft with a national ad campaign and exclusive deals with brands such as Tommy Hilfiger, Martha Stewart and Donald Trump, while adding new categories, such as toys by leasing space to retailers such as FAO Schwarz. In a test last year in Chicago, the added toy boutique improved sales in the adjacent kids’ clothing department.

    Such deals have helped distinguish Macy’s from its competitors and improve its image. YouGovPolimetrix, which polls Americans on brand perception, found that over the past 18 months, Macy’s reputation has improved more than any department store.

    The company’s holiday advertising campaign, has been thus far the most liked and the most recalled television spot of the season, says Nielsen IAG.

    Other initiatives are paying off, too. A new program called My Macy’s that tailors a portion of merchandise to regional tastes has shown encouraging results. In Utah and Western Pennsylvania, the addition of more modest dresses with sleeves turned the dress business from a drag on margins into a positive performer.

    And when a regional store director in Flushing, Queens, an area with a large Asian population, traded his men’s large shoe sizes for another store’s smaller sizes, they sold out in three days, Mr. Lundgren says.

    In October, Macy’s began allowing suppliers to track retail sales in real time. The system is helping suppliers adjust their holiday shipments, boost sales by location, and is helping Macy’s control inventory to preserve margins.

    The downturn hasn’t helped. “We just need a little wind at our back for a change. And I look forward to that day,” Mr. Lundgren says.

    [Reply]

  47. I have my doubts about GGP survival.

    General Growth Properties gets loan reprieve

    By ALAN ZIBEL (AP Real Estate Writer)

    December 1, 2008

    WASHINGTON – Troubled shopping mall owner General Growth Properties Inc. is getting a two-week extension on $900 million in debt that had been scheduled to come due last week as the company works to stave off bankruptcy and negotiate longer-term extensions with lenders.

    The mortgages cover two malls, Fashion Show and Palazzo, located in Las Vegas, the company said late Sunday. Shares fell 12 cents, or 8.7 percent, to $1.26 in morning trading.

    Chicago-based General Growth Properties, the nation’s second-largest shopping mall owner, has been hit hard by the deteriorating U.S. economy and problems at struggling U.S. retailers. Analysts are unsure whether new managers, installed in late October, will be able to solve the company’s problems.

    The company last month hired law firm Sidley Austin as an adviser as it struggles to refinance its staggering debt. The company said in a Securities and Exchange Commission filing last month that it faces nearly $3.1 billion in maturing debt next year, and warned that inability to refinance that debt “raises substantial doubts as to our ability to continue as a going concern.”

    Deutsche Bank analysts Lou Taylor and Vin Chao predicted Monday that the company will likely receive a longer-term loan extension, rather than default, allowing General Growth to sell off assets or obtain new corporate-level financing.

    “Given the financial markets, it’s impossible to determine when this will occur and at what price,” they wrote.

    General Growth has a stake in more than 200 shopping malls in 44 states. It is trying to sell its Las Vegas locations.

    Shares of General Growth have lost 91 percent of their value since the end of September, amid concerns about the real estate investment trust’s ability to sell debt, and turmoil in General Growth’s executive ranks.

    Last month, the company reported disappointing third-quarter results and cut its year-end forecast, weeks after the mall owner’s board removed its chief executive, president and chief financial officer. Their ouster came after the company disclosed that former CEO John Bucksbaum’s family trust provided $90 million in personal loans to cover margin debt for the former chief financial officer and president.

    General Growth’s struggles come amid growing concern about the debt tied to commercial properties. About $20 billion will be due next year, covering everything from office and condo complexes to hotels and malls.

    The retail outlook is particularly bad. Circuit City Stores Inc. and Linens ‘n Things have sought bankruptcy protection. Home Depot Inc., Sears, Ann Taylor and Foot Locker are closing stores.

    California, New York, Texas and Florida – states with a high concentration of commercial mortgages in the securities market, according to Fitch Ratings – are particularly vulnerable. Texas and Florida are already seeing increased delinquencies and defaults, as are Michigan, Tennessee and Georgia.

    [Reply]

  48. From the Washington Post.

    Retailers Report a Crisis in All Aisles

    December 5, 2008

    Retailers posted the worst November sales in more than 30 years yesterday, as holiday shopping not only failed to lift the economy but showed that the financial crisis is further distressing everyday consumers.

    About 30 major companies — including Macy’s, Abercrombie & Fitch and Target — posted sales declines at established stores. Overall, retail sales in November fell 2.7 percent compared with the same month last year, marking the second consecutive negative month, according to the International Council of Shopping Centers, a trade group.

    And American consumers, whose spending accounts for the bulk of the economy and who have powered the nation out of previous recessions, are turning away from their most potent tool: credit cards. The recent tightening of consumer credit has shoppers leaving their plastic at home — and sending retailers into a tailspin.

    According to an analysis by Citi Investment Research, the constriction in lending that began earlier this year points to at least a 5 percent decline in consumer spending on goods during the heart of the holiday season. A Consumer Reports survey showed more than half of shoppers intend to rely less on credit this Christmas. One retailer, Circuit City, has already blamed the meltdown in credit for sending it into bankruptcy protection last month.

    “If you’re a retailer right now, you see the contraction in consumer debt as a problem,” said Jerry Welch, former chief executive of FAO Schwarz and now head of prepaid card service nFinanse. “There’s no way you can be a retailer and look out and see people being maxed out on their credit cards and think it’s good for you.”

    Credit card charges enjoyed annual double-digit growth from 2004 to 2006, according to the Nilson Report, which tracks consumer payment systems. But last year, annual growth slowed to 8 percent. This year, credit purchases are expected to rise only 3.3 percent as the recession lashes shoppers.

    Consumers say they are putting away the plastic for several reasons. Some are buried under debt — delinquencies have reached record highs. Or they have been hit by recent increases in interest rates and reduced limits, eroding their spending power. Many who have access to credit are afraid to use it, spooked by the rising unemployment rate and falling home values. Those scenarios have broad implications for retailers who have relied on consumers’ easy access to credit to finance sales, particularly of high-priced discretionary items such as flat-panel TVs or stainless steel appliances.

    Circuit City blamed tightened credit for decimating sales when it filed for bankruptcy protection in November. The nation’s second-largest electronics retailer, which is based in Richmond, said 75 percent of its transactions are typically made on credit cards. As people scaled back on credit card purchases, sales plummeted.

    That set off a vicious cycle that begins and ends with consumers: Declining sales made vendors wonder whether the company would have enough cash to make inventory payments. They in turn tightened lending to Circuit City, limiting its ability to buy merchandise to stock its shelves. Poor inventory turned off even more shoppers, further hurting sales. The New York Stock Exchange notified the Securities and Exchange Commission yesterday it planned to stop listing Circuit City’s shares as of Dec. 15. The company’s stock has fallen to 19 cents.

    Circuit City is not the only retailer in pain. Lowe’s, the home improvement chain, said that cash, check and debit transactions grew during its third quarter. Meanwhile, use of its branded credit card dropped 1 percent, with a similar reduction in all credit card use. The shift is affecting how its customers shop and what they buy.

    The average purchase is down 2 percent, the company said. Shoppers are still spending on inexpensive do-it-yourself projects — paint sales, for example, have remained strong — but big-ticket purchases that generally require financing, such as kitchen cabinets, have dropped off.

    At Target, shoppers are trading down from steak to chicken or buying part of a bedding set rather than the whole package. Executives said credit card transactions in stores began to decrease for the first time in many years during the second quarter.

    “I expect that trend to continue for a while,” chief financial officer Douglas Scovanner said recently.

    Retailers issuing their own credit cards have their own problems. Lowe’s, which issues its branded card through GE Capital, said it has had to reduce limits and increase the cut-off credit score on new applications to guard against rising default rates. When it does so, it is also limiting its customers’ ability to buy.

    Earnings at Target’s beleaguered credit card division fell by $167 million during the third quarter, dragging down the company’s profit with it.

    One way retailers have responded to the credit crunch is to discount and promote items earlier than in previous years, hoping it would encourage shoppers to spread their purchases over a longer time, retail experts said. At Sears, the department store chain reinstituted a layaway program after a 20-year hiatus. Best Buy’s recent streamlining of its financing programs helped boost sales during the first half of the year as customers saw credit from other sources dry up, the company said.

    The Federal Reserve has announced steps that it hopes will alleviate the pain. It will create a program to buy as much as $200 billion in securities backed by student, auto and credit card loans to help jump-start those markets. The program is not expected to begin until February, too late to help retailers facing a Grinch of a Christmas.

    Perhaps the larger problem for retailers is that even those who have access to credit are not using it.

    “The bottom line is that consumers are genuinely concerned about their personal financial health and they are cutting back voluntarily,” said Kimberly Greenberger, an economist at Citi Investment Research.

    A recent survey by Consumer Reports said about 21 percent of shoppers this holiday season plan to use cash, and more than half said they will rely less on credit. The trend is particularly evident in people ages 18 to 34, who have been among the heaviest users of credit.

    Consumer advocates say the credit crunch could be a good thing if consumers learn to spend within their means and retailers adjust to that new reality. The average revolving credit card debt per household has spiked 138 percent over the past 20 years to $6,528 from $2,739, adjusted for inflation, according to consulting firm Innovest Strategic Value Advisors. The shift to cash is forcing many shoppers to take a hard look at their budgets.

    “Cash and debit are self-regulatory and self-control methods,” said Adam Levin, cofounder of Credit.com and former consumer affairs director for New Jersey. “It’s tougher to hand over $100 than it is to just hand over your credit card.”

    Author and blogger Devra Renner, 41, of Centreville instituted a “credit card exorcism” in her household after her bank cut back the home-equity line of credit for her kitchen remodel this spring. The family is still paying off the appliances. The last personal charge on her MasterCard was $3.69 at Starbucks nearly two months ago.

    She has talked to her 8- and 12-year-old children about the sacrifices the family will make as they celebrate Hanukkah. Renner is thinking about getting a few presents for the entire family, rather than something for everyone on each of the holiday’s eight nights.

    Renner said she figured now was as good a time as any to begin living without credit cards. Her husband, who is in the military, hopes to retire soon, which will be another hit to their budget.

    “When will we welcome them back into our lives?” she said. “You know, I don’t even know if we will.”

    Staff writer Joel Achenbach contributed to this report.

    Meanwhile on monday it was reported that black Friday sales were looking up & maybe things weren’t as bad as they semed. I thaught lets look beyond black Friday toward Christmas & draw conclusions based on that, not 3 days in a vacume.

    [Reply]

  49. Retailers see sales drop in dreary November
    Thursday December 4, 4:38 pm ET
    By Anne D’Innocenzio, AP Retail Writer
    Retailers report miserable November; face lull until final days before Christmas

    NEW YORK (AP) — Retailers who suffered through a miserable November — despite a surge in sales the day after Thanksgiving — are worried that the usual lull between the holiday weekend and the final days before Christmas could be dangerously quiet this year.

    With financially squeezed shoppers holding out for even better deals or are simply already done, retailers who are already offering deep discounts will likely be forced to be even more aggressive as they lurch through a season looking to be the weakest in at least 30 years.

    Worries about the holiday season increased Thursday after many retailers — with Wal-Mart the notable exception — reported November sales so dismal it was the industry’s worst month since at least 1969. The malaise cut across all sectors as shoppers worried about layoffs and shrinking retirement funds and focused on necessities.

    “It’s an awful beginning to the holiday season,” said Michael P. Niemira, chief economist at the International Council of Shopping Centers. “This is going to be a difficult holiday season for most retailers. There are going to be more bankruptcies.” He predicted that the retrenchment in spending will linger for at least another six months.

    Based on conversations with stores, this week’s sales have been slower than expected, said Janet Hoffman, managing partner of the North American retail practice of Accenture. And with five fewer days between Thanksgiving and Christmas this year, retailers are under more pressure to make every day count.

    Karen MacDonald, a spokeswoman at mall operator Taubman Centers Inc., said that stores are being more aggressive with discounting for this coming weekend compared with a year ago.

    In recent years, shoppers have been increasingly delaying their holiday shopping to the final days before Christmas for better bargains, but analysts say they believe this year people just can’t afford to spend more. C. Britt Beemer, chairman of America’s Research Group, notes a higher percentage of shoppers he’s surveyed had completed their holiday buying on Friday compared with a year ago.

    “If retailers are not super aggressive with discounts, stores will be retail museums,” said Beemer, who expects the lull will be more pronounced this year.

    Worries about the economy have helped Wal-Mart, which reported a 3.4 percent gain in same-store sales, surpassing the 2.1 percent increase that analysts surveyed by Thomson Reuters expected. The results excluded sales from fuel.

    Wal-Mart added that business is starting to benefit from falling gas prices, noting that shopping trips increased and “customers had more discretionary income to spend.” It expects same-store sales growth for December to be at the high end of its range of 1 to 3 percent.

    However, Costco Wholesale Corp., usually a strong performer, reported a bigger-than expected 5 percent drop in same-store sales. Target Corp., which has been stumbling as its merchandise focuses more on nonessentials like trendy clothes, reported a 10.4 percent drop. And most mall-based chains and department stores fared even worse, with Abercrombie & Fitch Co., Nordstrom Inc., and Kohl’s Corp. reporting percentage declines exceeding 15 percent.

    Same-store sales are sales at stores open at least a year and are considered a key indicator of a retailer’s health.

    According to the Goldman Sachs-International Council of Shopping Centers index, same-store sales dropped 2.7 percent for November, making it the worst month since at least 1969 when the index began. November’s results were even more miserable than the 1 percent drop that Niemira anticipated. Excluding Wal-Mart, the index declined 7.7 percent, indicating a widening gap between the world’s largest retailer and the rest of the merchants.

    Niemira is slashing his holiday same-store sales forecast for the combined November and December periods to be down as much as 1 percent. The only holiday period that was almost as weak was 2002, which posted a meager 0.5 percent same-store sales gain.

    Sales data from Thanksgiving weekend showed a buying binge on Friday, but shoppers retreated the rest of the weekend. And even at stores on Friday, people focused on bargains and on small-ticket purchases as they slash their holiday budgets.

    “Shopping was incredibly functional,” said Wendy Liebmann, president of WSL Strategic Retail, retail consulting company. “There was no pleasure or joy.”

    Web retailers, which have seen their sales slow in the deteriorating economy, posted a 15 percent sales gain for the Monday after Thanksgiving — the unofficial start for cyber shopping, according to comScore Inc., an Internet research company. But that gain was fueled by a 22 percent increase in the number of buyers, who spent on average 5 percent less compared with a year ago.

    Many stores blamed their weak November figures in part to the quirk in the calendar of the late Thanksgiving. Niemira estimated that factor depressed November figures — and will benefit December — by 1.5 percentage points to 2.0 percentage points.

    [Reply]

  50. Store closing updates:

    Secaucus, N.J.-based B. Moss Clothing Co. Ltd. recently filed for bankruptcy protection and said it plans to liquidate, citing a downturn in consumer spending, according to a Reuters report. The women’s clothing retailer is seeking court permission to begin going-out-of business sales at all of its stores this month and close most stores by the end of the year, according to court papers filed in the U.S. Bankruptcy Court of New Jersey. The family-run retailer, which was founded in 1939, operates 70 stores throughout the United States and employs more than 700 people, according to court papers. Company executives recently tried to sell B. Moss, but a potential buyer told the company in November it was unable to get financing to complete the deal due to a lack of credit availability, according to court documents. The company also said it suffered from sales declines and a failed attempt to diversify its merchandise. It listed $13 million in assets and $10.3 million in debt.

    In addition, apparel retailers Steve & Barry’s and BTWW, which runs Western Warehouse and Boot Town stores, have sought bankruptcy protection and are closing all of their stores.

    [Reply]

  51. DUH!

    December US retail chain store sales outlook dims

    By Staff Reporter

    December 9, 2008

    December sales at U.S. retail chains will be weaker than expected as consumers await bigger discounts closer to Christmas to finish their holiday shopping, according to data released on Tuesday.

    In the week after the U.S. Thanksgiving holiday, sales at chain stores open at least a year, or same-store sales, fell 0.8 percent according to the International Council of Shopping Centers and Goldman Sachs weekly sales index.

    On a year-over-year basis, retail sales rose by 0.4 percent for the week ended Dec 6.

    With lackluster shopper demand expected to prompt heavy discounting by retailers, the ICSC now expects December same-store sales to be flat to up 1 percent, compared with its previous forecast for sales to rise 1 percent.

    “By having that range, we’re sending that signal that the bias is weaker,” said ICSC chief economist Michael Niemira of the updated December sales expectation.

    Retailers are facing what could be the weakest holiday sales in nearly two decades as shoppers pull back on spending amid a year-long recession.

    To entice shoppers to spend, retailers like Wal-Mart Stores Inc, Kohl’s Corp and Macy’s Inc rolled out a plethora of deals and discounts over the Thanksgiving weekend, which marks the start of the holiday shopping season.

    But once the weekend’s limited-time-only deals ended, shoppers retreated, and the ICSC said that over the last week, the “completion rate” of holiday gift-buying fell behind last year.

    Shoppers are now expected to wait for even steeper price cuts closer to Christmas to finish holiday shopping, pressuring retailers’ already-thin profit margins.

    (Reporting by Nicole Maestri, editing by Matthew Lewis) See http://blogs.reuters.com/category/themes/shop-talk/ for “Shop Talk” — Reuters’ retail and consumer blog. Keywords: USA RETAILSALES/ICSC

    (nicole.maestri@thomsonreuters.com, + 1 646 223-6173; Reuters Messaging: nicole.maestri.reuters.com@reuters.net;)

    [Reply]

  52. Dark days for mall dynasty built on debt

    By ROBERT FRANK

    December 9, 2008

    Two board members of General Growth Properties Inc. marched into CEO John Bucksbaum’s office to deliver a blunt message: It was time for him to resign.

    An internal investigation showed that Mr. Bucksbaum’s family trust had violated company policy by making private loans to two company officers and failing to inform the board. The departure of Mr. Bucksbaum – whose father and uncle founded the giant mall owner 54 years ago – would mark an end to the family’s management control of the company.

    “I accept the decision,” Mr. Bucksbaum said, according to people briefed on the Oct. 24 meeting. “I’ll do what’s in the best interest of the company and its shareholders.”

    Yet the harm to the legacy and the fortune of the Bucksbaum family – one of the richest and oldest real-estate dynasties in America – had already been done. Aside from the loans, made to prevent a massive stock selloff by executives, Mr. Bucksbaum and his deputies in recent years loaded the company with debts totaling more than $27 billion. General Growth’s stock has plunged more than 97 percent in the past year, dragging down the Bucksbaum family fortunes with it. The Bucksbaums’ 25 percent ownership stake, worth $3.2 billion just six months ago, is now worth $116 million.

    The family could lose General Growth altogether, along with three generations of hard work that began with a grocery store in Iowa. If the company can’t negotiate new terms with lenders by midnight Friday, and those banks declare the company in default, General Growth has told investors it could file for Chapter 11 – creating one of the largest bankruptcies ever in real estate.

    The Bucksbaum’s losses show how the 2008 financial crisis is hitting not just risk-loving Wall Street firms and leveraged upstarts but also long-established, family-run companies with histories of conservative growth. The crisis has sparked the most rapid and severe destruction of wealth in recent history, rivaled only by the Great Depression, when the number of millionaires plunged by an estimated 75 percent.

    The fallen fortunes span the globe, from Sheldon Adelson, the Las Vegas casino king whose paper fortune has dropped by more than $25 billion in the past year, to Germany’s old-money Merckle family and Indian steel magnate Lakshmi Mittal. Even Bill Gates and Warren Buffett, the dynamic duo at the top of the global billionaire ranks, have seen the value of their corporate shares shrink by $12 billion and $15 billion, respectively.

    Many got caught in an unavoidable downdraft. But others have themselves to blame for making things worse. The crisis has been particularly hard on executives who gambled badly with their business – they got into the wrong industry at the wrong time, took on risky investments, piled too much debt on their companies, or leveraged their own finances to a catastrophic degree.

    The decline of General Growth is as much a matter of pride as it is money, since the Bucksbaums are still wealthy by any standard. They’ve collected roughly $590 million in dividends from the company since 1997. Martin and Matthew Bucksbaum, the company’s founding brothers, were astute financial investors who also made more than $1 billion from early investments with hedge-funder Edward Lampert, investor Jack Nash and Goldman Sachs, according to two financial advisers to the family. And the company’s malls are still among the strongest in the U.S., with an overall occupancy rate of about 93 percent.

    Matthew Bucksbaum declined to be interviewed regarding his personal finances or General Growth’s struggles. John Bucksbaum says he remains “actively involved” in the company as chairman of the board, adding, “We have great assets, great employees. Our issues are not with the operations of these properties, it’s with the balance sheet. We’ll be able to restore the value that these properties hold.”

    Short of cash and unable to make debt payments, General Growth is struggling to sell off some of its prized malls and properties, including three on the Las Vegas Strip. It has $900 million in loans due on Friday, another $3.1 billion due next year and, in a leftover from its acquisition of competitor Rouse Co. in 2004, the company could owe up to $1 billion to the heirs of legendary tycoon Howard Hughes. The company has hired law firm Sidley Austin LLP to advise it in the event of a bankruptcy filing.

    “This family worked so hard for so long to get where they are,” says Morris Mark, president of Mark Asset Management and a former board member and friend of the family’s. “It’s sad to see the company in such difficulty.”

    The Bucksbaums, rooted in the mom-and-pop grocery business of Iowa, are a tightknit, driven and intensely private family. Martin and Matthew Bucksbaum started in 1954 with a small shopping center in Cedar Rapids, which they built to house one of the family’s grocery stores. They installed trampolines in the parking lot on opening day for visiting children and opened a Kinney Shoes and a Woolworth.

    The project’s success led them to open more shopping centers. As America’s suburbs started to boom, they started building large indoor malls, a strategy known among mall builders as “following the rooftops.”

    Martin, known as the more commanding of the two brothers, was obsessed with financial details, spending late nights in the office poring over leasing statements or depreciation schedules, and rarely taking vacations. He was a strategic visionary, credited by some urban planners – and blamed by others – for the early malling of America. He had few hobbies and died in his sleep from a heart attack in 1995.

    “What was Martin’s hobby? Work,” says Leon Cooperman, the billionaire hedge-fund investor and longtime friend of the Bucksbaum family.

    Matthew, now 82 and retired, is more shy and has more outside interests than his brother. He and his wife, Kay, are avid art collectors and music supporters. Their condo on the 70th floor of a luxury high-rise in downtown Chicago is filled with modern art and hand-crafted furniture. At their stone-and-timber vacation compound in Aspen, Colo., on Red Mountain and assessed by county officials at $20 million, the Bucksbaums frequently host dinners for famous musicians like cellist Yo-Yo Ma and violinist Joshua Bell. Their annual New Year’s party has become one of Aspen’s most coveted invites, attracting Madeleine Albright and other dignitaries.

    General Growth’s debt troubles date back to the mid-1990s, when Martin’s health began to weaken. The family had been conservative managers, building the dominant shopping venues in secondary and tertiary towns like Bettendorf, Iowa, Hutchinson, Kan., and Fayetteville, Ark.

    But after emerging in 1993 for a second stint as a public company, the Bucksbaums decided to grow through acquisitions.

    In 1994, General Growth bought a 40 percent stake in CenterMark Properties, which owned 16 regional malls in major cities such as Los Angeles and Washington. A year later, it nearly doubled its size, teaming with four investment partners to buy Sears, Roebuck & Co.’s Homart development division to take over 40 malls. Martin Bucksbaum died, at 74, as the Homart deal was being completed.

    Matthew, president at the time, was then named CEO and chairman. There were no other candidates considered for the job, since he and Martin were such a close team, board members say. Matthew moved the company headquarters to Chicago.

    He also groomed his son, John Bucksbaum, to take the company’s helm. Reserved, solitary and competitive in and out of the office, John Bucksbaum, now 52, is a dedicated mogul skier and cyclist. He logs thousands of miles each year on his bike, sometimes riding with Lance Armstrong. In 1999, Matthew and the board named John as CEO and, once again, there were no competing candidates.

    “John was extremely well-trained by both his father and uncle,” says Mr. Mark, who was a board member during the transition. “It was a natural evolution for a family-controlled business.”

    Yet John proved to be a different kind of manager than his late uncle. Like his father, he focused more on General Growth’s internal operations, leaving many aspects of finance and acquisitions mostly to his lieutenants, primarily chief financial officer Bernie Freibaum. It was a role that for decades had been played by Martin.

    A lawyer and CPA known for his hardball negotiating tactics, Mr. Freibaum, now 56, became the company’s finance architect. His tenure coincided with a broader shift in the way some real-estate companies were financing their operations. Rather than apply for bank loans, General Growth began taking out short-term mortgages on its malls. As the mortgages came due, the company would replace them with even larger mortgages to provide cash for additional acquisitions.

    The strategy picked up steam with the emergence of new debt-trading markets. In the mid-1990s, lenders started slicing up commercial mortgages and selling them to multiple investors as bonds. The boom in trading made mortgage-backed debt much cheaper and more plentiful – as long as investors were willing to buy.

    General Growth was soon at the forefront of this market. And because the company was borrowing mostly against its individual properties, lenders didn’t place restrictions on its overall debt load, allowing it to accumulate more and more debt.

    General Growth’s ratio of its debt as a percentage of its asset value has soared to 83 percent, compared to 63 percent for mall owner Macerich Co., 54 percent for Simon Property and 48 percent for Taubman Centers, according to Green Street Advisors.

    “We never had any more leverage than we thought was necessary,” Mr. Freibaum said in an interview last March. “It just so happens that the biggest names in the mall sector had a different strategy.”

    Mr. Freibaum declined to comment for this article.

    In August 2004, General Growth made its biggest acquisition to date: $12 billion for Rouse Co. Rouse owned three dozen upscale malls in the Midwest and Northeast, including Chicago’s Water Tower Place, Boston’s Faneuil Hall and Washington, D.C.’s Columbia Town Center. The deal instantly transformed General Growth from a small-town, industry stalwart to one of the leading lights of marquee retailing.

    It also marked a turning point in General Growth’s fortunes, more than doubling its debt load to $20 billion. Most of the borrowing was backed through mortgages rather than more traditional corporate borrowings.

    The company inherited an unusual obligation from Rouse. In buying thousands of acres outside of Las Vegas from the Howard Hughes estate in 1994, Rouse had negotiated to pay half the appraised value of the land in early 2010. With that bill soon coming due, General Growth as Rouse’s successor faces paying several dozen Hughes heirs, scattered around the country, up to $1 billion in cash or stock. Even if the appraised value of the land falls, the company could still owe millions, according to analysts’ estimates.

    After the Rouse deal, John Bucksbaum and Mr. Freibaum made other acquisitions, including buying out General Growth’s partners in the Homart malls for $2 billion last year, pushing the company’s debt load to more than $27 billion.

    That didn’t appear to be a problem until August 2007, when the credit markets froze on concerns about subprime mortgages. The commercial-mortgage market that General Growth relied on essentially vanished. Unable to refinance mortgages, Mr. Freibaum spoke publicly about selling stakes in several malls, but he didn’t strike a deal. By September 2008, the stock was down 60 percent from its 2007 high of $67 a share.

    The stock plunge set off a second crisis: Top executives had to dump millions of their General Growth shares to cover margin calls. Many executives had borrowed heavily to buy General Growth stock. Mr. Freibaum bought 7.6 million shares – more than 3 percent of General Growth’s total – mostly on margin.

    The Bucksbaum family’s trust loaned Mr. Freibaum $90 million and President and Chief Operating Officer Bob Michaels $10 million to meet the margin requirements without dumping stock. Any executive sale of stocks would have had to be publicly disclosed, which could have spooked investors and led to more selloffs. The board said it had no knowledge of the loans.

    Yet by August and September, the stock had fallen so far that General Growth executives couldn’t avoid selling roughly 8.5 million shares to cover margin calls. By early October, the board’s patience with Mr. Freibaum had run out, and it voted to dismiss him.

    It wasn’t until later that month that the board heard rumors about the Bucksbaum trust’s loans and confronted John Bucksbaum, who acknowledged the loans, according to people familiar with the matter. While not illegal, the loans violated company policy, since they could pose a conflict of interest. Mr. Bucksbaum, for instance, might be less likely to discipline or fire Mr. Freibaum or Mr. Michaels because of their financial ties.

    Following a weeklong investigation by Chicago law firm Winston & Strawn LLP, board members Adam Metz and Thomas Nolan, both commercial-real-estate veterans, went to Mr. Bucksbaum’s office and told him the board would seek his resignation.

    Mr. Bucksbaum remains chairman, but Mr. Metz now serves as interim CEO, the first nonfamily member to hold the post. Mr. Nolan became president, replacing Mr. Michaels, who remains operations chief. Mr. Michaels, who repaid his loan, didn’t return calls seeking comment.

    During the board talks, Mr. Bucksbaum said there was no ill intent by the family trust in making the loans. But he said he had made an error in judgment in not informing the board, according to people familiar with the matter.

    In an interview, John Bucksbaum said he remains “very involved” at General Growth and his removal as CEO was a mutual decision.

    The Bucksbaums, meanwhile, have seen their personal fortunes fall with the company’s. According to friends, Matthew and Kay have decided to cancel their annual holiday

    [Reply]

  53. I was just reading my local paper today and I see they are closing the great indooors here in woodbridge nj I found that store to be a overpriced ikea maybe ikea will go in its spot maybe

    [Reply]

  54. If IKEA were ever to go into Woodbride Crossing, the interior of that store probably would have to be refitted and also, parking added. While there are currently two levels of parking, that is by far, not enough when you compare it to the Paramus store. Sounds very interesting though.

    [Reply]

  55. You can Office Depot to the watch list. Just announced the closing of 112 stores. Staples execs must be smiling knowing their two main rivals an having problems. Another site had Bon-ton, Dillards, Talbolts and Pier 1 as retailers that may not see the end of next year. Looks like Wal-mart will be the only place to shop soon

    [Reply]

  56. Here’s the article from the AP.

    Office Depot cutting 112 stores, 2,200 jobs

    By ASHLEY M. HEHER (AP Retail Writer)

    December 10, 2008

    CHICAGO – Office Depot Inc. will close about 9 percent of its North American stores and cut 2,200 jobs over the next three months while planning to open fewer locations next year in an effort to cut costs.

    Shares of the office supply chain rose more than 12 percent after Wednesday’s announcement.

    The plan to shutter 112 stores will reduce the chain’s base to 1,163. It plans to close 45 stores in the Central U.S., 40 in the Northeast and Canada, 19 in the West and eight in the South.

    Office Depot, which began the year with about 49,000 workers, also will close six of its 33 North American distribution facilities.

    Meanwhile, the Delray Beach, Fla.-based company said it plans to shut another 14 stores next year while opening just 20 new sites, half of what it planned.

    Analysts said the move was needed and will likely give the company a much-needed short-term financial boost. But they said they doubted the effort would be enough to fix the company’s financial condition.

    “It’s not enough to really close the gap and make a meaningful impact compared to Staples and the mass merchant competitors,” said Morningstar analyst R.J. Hottovy. “But it’s probably a Band-Aid on a flesh wound.”

    Goldman Sachs analyst Matthew Fassler said Wednesday’s announcement – while widely anticipated after the company announced it was starting a strategic review in late October – involves more locations that many expected.

    “We view this program favorably,” he told investors in a research note. “… We expect (Office Depot) shares to benefit from this announcement, though it does not significantly counteract the tough reality of low underlining profitability, and obviously does not remedy cyclical challenges.”

    Office Depot will take related charges of $270 million to $300 million in 2008 and 2009.

    The company plans to work with Gordon Brothers Retail Partners LLC to liquidate the material in the stores, a process it hopes to be completed by late March, according to a regulatory filing.

    The struggling retailer reported a third-quarter loss due to slumping sales as consumers and small businesses cut back spending in October.

    Office Depot shares, which have tumbled more than 82 percent since the beginning of the year, climbed 30 cents, or 12.4 percent, to $2.73 in midday trading.

    [Reply]

  57. KB TOYS IS CLOSING ALL STORES!!!!!

    [Reply]

  58. It doesn’t surprise me that KB is going belly up. They had been in trouble since before the recession. I didn’t know office depot was in trouble as well.

    [Reply]

  59. Makes me wonder if Staples is in trouble too.

    KB Toys going to the big mall in the sky (….consider all that chains that died in the 1980s, 1990s and now this decade….that place has to be getting insanely huge)…not surprising, but still, another slice of my childhood gone.

    I remember when they were in nearly every mall too that I visited when I was younger.

    Not to sound all doom-and-gloom, but this economy’s doing in everything, except Walmart, who also can be blamed for taking away so many retail chains.

    [Reply]

  60. From Newsday

    After filing, KB Toys will launch sales

    Keiko Morris

    December 12, 2008

    Dec. 12–KB Toys Inc., which filed for bankruptcy protection yesterday, said it plans to begin going-out-of-business sales at all of its 431 retail stores immediately to take advantage of the remaining holiday season, court documents said.

    The 86-year-old toy retailer, which has 17 Long Island locations, noted a “sudden and sharp decline in consumer sales” due to the larger global economic crisis, court filings said. Between Feb. 3 and Oct. 4, sales at stores open for a year or more had increased 0.36 percent from the previous year. But between Oct. 5 and Dec. 8, those sales dropped by about 19.77 percent from last year, court documents said.

    KB Toys said the value of its total assets amounts to about $241 million and its liabilities total about $362 million. The company employs about 4,400 workers for the first three quarters of the fiscal year and then adds about 6,515 seasonal employees for the holiday season.

    Prentice Capital Management, a Manhattan-based investment firm that acquired KB Toys in 2005, did not return an e-mail request for information yesterday. KB Toys did not return calls for comment.

    Although KB Toys had emerged from its 2004 bankruptcy protection filing, retail experts said yesterday’s action seemed inevitable. The company, which mostly sold closeout or heavily discounted items, had been struggling against fierce and growing competition from not only Toys R Us but also Wal-Mart, Target and Kohl’s.

    KB Toys was located primarily in malls and held expensive leases that might have worked in good times, said Jonathan Samet, publisher of The Toy Insider, a consumer toy guide.

    [Reply]

  61. Looks like not all of the news is tragic, well for Kohl’s & Forever 21 at least.

    Macerich Announces New Anchors for Mervyns Sites and Completes a $250 Million Refinancing of Washington Square

    December 12, 2008

    SANTA MONICA, Calif., Dec 12, 2008 /PRNewswire-FirstCall via COMTEX/ — Macerich(R) (NYSE: MAC), one of the nation’s largest owners, operators and developers of regional shopping centers, today announced that 22 of 41 Macerich-owned Mervyns sites acquired in December 2007 and first Quarter 2008 will go to retailers Forever 21 or Kohl’s, pending approval by the court overseeing Mervyns bankruptcy proceedings. Forever 21 will be taking 12 of the spaces and Kohl’s will be taking 10.

    Macerich also announced today that it closed on a seven-year, $250 million loan on Washington Square Mall in Portland, Oregon. The loan has a fixed interest rate of 6.00%. The transaction generated proceeds to Macerich above the prior loan of approximately $63 million. The completion of the Washington Square financing brings the financing activity completed by Macerich in 2008 to 13 transactions with its pro rata share of those loans totaling nearly $1.3 billion. The remaining 2009 maturities, excluding extensions and loan commitments, are only $525 million.

    Forever 21 and Kohl’s prevailed in the auction of Mervyns leaseholds held Dec. 10, a preliminary step leading to final court approval of new lessees for Macerich-0wned Mervyns sites, which is expected within the month. Of the 22 locations, eight are in Macerich-owned shopping centers.

    Both Forever 21 and Kohl’s are pursuing aggressive schedules, with space build out beginning as early as January; the new stores are expected to open throughout 2009. Macerich expects to gain control of the remaining Mervyns locations by second quarter 2009.

    “The strong interest in these locations from popular and well-positioned retailers Forever 21 and Kohl’s underscores the inherent value of this retail real estate,” said Tony Grossi, Senior Executive Vice President and COO of Macerich. “As we gain control of the remaining sites we will pursue the strong retailer interest we have received since acquiring the real estate in December 2007. Our company has an excellent track record of recycling anchor spaces, as we did successfully with the Federated locations we acquired in 2006. We’ve added appreciable value every time.”

    Macerich purchased 39 Mervyns sites in December 2007 and two sites in first Quarter 2008 to gain long-term control of well-positioned retail real estate — both in its own centers and in other properties.

    Forever 21 is taking space at the following Macerich centers: Arrowhead Towne Center in Glendale, AZ; Lakewood Center Mall in Lakewood, CA; Los Cerritos Center in Cerritos, CA; Montebello Town Center in Montebello, CA; South Towne Center in Sandy, UT; and The Mall of Victor Valley in Victorville, CA. Locations not in Macerich-owned centers are: Cottonwood Mall in Albuquerque, NM; Mall Del Norte in Laredo, TX; Santa Fe Place in Santa Fe, NM; Tucson Mall in Tucson, AZ; Crossroads Plaza in Calexico, CA; and Valle Vista Mall in Harlingen, TX.

    Kohl’s is taking space at the following Macerich centers: Northgate in San Rafael, CA, and Stonewood Center in Downey, CA. Locations not in Macerich-owned centers are: Bayshore Mall in Eureka, CA; Brickyard Plaza in Salt Lake City, UT; Huntington Oaks Shopping Center in Monrovia, CA; Southland Mall in Hayward, CA; The Galleria at South Bay in Redondo Beach, CA; the Galleria at Sunset in Henderson, NV; Whittwood Town Center in Whittier, CA; and Zinfandel Square in Rancho Cordova, CA.

    Additionally, two Mervyns locations located at Macerich centers but not owned by Macerich, will gain Mervyns replacements — Kohl’s at Capitola Mall in Capitola, CA, and Forever 21 at Northridge Mall in Salinas, CA.

    [Reply]

  62. General Growth says still in debt talks

    December 12, 2008

    CHICAGO – Troubled mall owner General Growth Properties, trying to stave off bankruptcy, says it is still trying to negotiate an extension on $900 million in debt that is due to be repaid Friday, but warns there can be “no assurance” it will get a reprieve.

    The mortgages cover two Las Vegas malls, Fashion Show and Palazzo. Earlier this month, Chicago-based General Growth received a two-week extension on the loans.

    General Growth Properties Inc. also says it refinanced a separate $896 million worth of loans, retiring a $58 million bond that matured Thursday and $814 million of debt scheduled to mature next year.

    [Reply]

  63. From CNN.com

    The dead mall problem

    Experts say Atlanta, Las Vegas, and retail hubs in California and Florida are at real economic risk if thousands of more stores shutter in 2009.

    NEW YORK (CNNMoney.com) — As the recession leaves more retail casualties in its wake, rising store bankruptcies and mall closures could have devastating economic consequences.

    As more stores exit malls, vacancies in regional malls could rise past 7% by year-end, a level not hit since the first quarter of 2001, according to real estate research firm Reis.

    Major cities across America will be affected, said David Birnbrey, Chairman and co-CEO of Atlanta-based The Shopping Center Group, a retail real estate services firm.

    Both Birnbrey and Susan Wachter, professor with University of Pennsylvania’s Wharton Real Estate Department, warn the social and economic impact of empty stores can be devastating.

    “One of the biggest consequences [of store and mall closings] is the loss of a sense of community,” Birnbrey said. “I am a big believer that malls are an essential part of Americana. A mall is a place where people gather and socialize.”

    In addition, many municipalities are heavily dependent on retailers for the tax revenue and jobs that they generate.

    For example, Montgomery County, Pa., gets as much as 50% of its tax revenue from the local King of Prussia mall, said Wachter.

    The impact will be felt on local police service, schools and roads, said Birnbrey.

    The village of North Randall in Cuyahoga County, Ohio, is on the verge of extinction after a challenging economic and competitive climate has crippled business at the Randall Park Mall.

    The shopping center, once the largest enclosed mall in the greater Cleveland area, is closing after 32 years. [Read story]

    The pain could be far reaching. “The Midwest, California, Florida, Atlanta and Arizona are very vulnerable to a retail recession,” said Wachter.

    Forecasts look bleak
    The International Council of Shopping Centers (ICSC), in its most recent forecast, expects that 6,100 chain stores will shutter this year, the highest level since 2004 “as the U.S. recession continues to take its toll on the retail sector and its job market.”

    In 2009, the ICSC estimates that store closings could exceed 3,100 in just the first half of the year. However, the number of potential closings rises exponentially when the firm takes into account both public and private sector businesses.

    The ICSC projects that about 148,000 retail establishments – both public and private – will go out of business this year and another 73,000 stores will close in the first half of 2009.

    The ICSC projects that about 625,000 retail jobs will be eliminated this year “with little change in the pace for early 2009.”

    Fewer retailers means less competition and fewer places to shop. “Right now everyone is euphoric over the big sales,” Birnbrey said. “Once the holiday season is over then we could get this monopolistic situation where the [retail] survivors realize that they don’t need to be as competitive on prices.”

    Is America too ‘overstored’?
    But not everyone sees a dead mall as a negative development.

    “Our country has six times more retail space per capita than any other county,” said Ellen Dunham-Jones, director of the architecture program at Georgia Institute of Technology.

    “We’re just cannibalizing our existing stores by building more stores even when sales aren’t increasing,” she said. “We were long due for a retail correction and we’re going through it now.”

    Dunham-Jones said big-box enclosed malls have become a dying breed as more shoppers prefer going to shop at strip malls or “lifestyle” open-air malls.

    “The good news is that this isn’t the first time we’ll see dead malls,” she said. In an upcoming book, “Reftrofitting Suburbia,” co-authored by Dunham Jones, she’s included case studies of more than 100 places across North America that have turned dead malls or big-box stores into thriving community centers.

    What’s needed, she said, is for the public and private sector to be opportunistic and develop the 100 acres of prime mall space for mixed community use like schools, libraries and new housing.

    John Norquist, a former mayor of Milwaukee who now lectures on urban planning, agreed with Dunham-Jones.

    “There’s no disgrace in a dead mall,” Norquist said. “In Milwaukee, we had one department store, Boston Store, in the downtown area. When that went away and the rest of retailing went into the suburbs, we focused in developing the empty space into housing and I gave fast permits.”

    Norquist rationalized that more housing would eventually attract more retailing. “Milwaukee opened up for [retail] business in 2001 and it’s continued to grow,” he said.

    But Wharton’s Wachter remained unconvinced. She said any talk of redevelopment in this environment is “unrealistic.”

    “Everything that has been suggested needs funding. There’s no money for these adaptive reuses [of retail space] for communities,” she said.

    Birnbrey’s criticism was somewhat harsher. “It’s human nature to put a positive light on a bad situation,” he said. “It’s just a case of hope springs eternal.”

    [Reply]

  64. The GGP saga continues:

    General Growth gets extension for $900M loan

    December 18, 2008

    CHICAGO – Shopping-mall owner General Growth Properties Inc. said Wednesday it received another extension on $900 million in loans for two Las Vegas properties.

    Lenders agreed to place the loans in forbearance until Feb. 12 as the Chicago company looks to sell some of its assets or raise fresh capital to help pay upcoming debt maturities. The mortgages cover two Las Vegas malls, Fashion Show and Palazzo. The company is also trying to sell its Las Vegas locations. It had received a two-week extension on the loans for the Las Vegas properties earlier this month.

    The country’s second-largest mall owner is saddled with a huge debt it acquired during the real-estate market’s boom years when it aggressively bought up assets. Refinancing that debt has proven difficult amid a global credit crunch. Analysts are unsure whether new managers, installed in late October, will be able to keep the company afloat as the recession drags on and U.S. retailers struggle. The company last month ousted its chief executive, president and chief financial officer and hired law firm Sidley Austin as an adviser.

    Lenders for a separate senior credit agreement inked in 2006 agreed to extend that deal until Jan. 30.

    General Growth has a stake in more than 200 shopping malls in 44 states.

    The company’s shares have lost about 96 percent of their value in the past six months. Its shares gained 77 cents, or 48.7 percent, to $2.35 in premarket trading Thursday morning.

    [Reply]

  65. KB Toys gets approval for store liquidations

    By RANDALL CHASE (AP Business Writer)

    December 18, 2008

    WILMINGTON, Del. – A Delaware bankruptcy judge on Thursday authorized KB Toys to begin going-out-of-business sales.

    Judge Kevin Carey granted the company’s request after attorneys said they had resolved several concerns of landlords and creditors about rent and other issues.

    The Pittsfield, Mass.-based company plans to start liquidation sales Friday, with a targeted end date of Feb. 9.

    “I can see no better, other alternative,” the judge said. “We’re at a time of year where unless the going-out-of-business sales go forward now, there’s hardly any sense in doing it.”

    Joseph McLeish of Gordon Brothers Retail Partners, which is working with KB Toys on the liquidation plan, told the court that the remaining shopping days between now and Christmas will be critical.

    “We have a very finite period to liquidate this inventory… The amount of business done between now and December 24th is absolutely critical to the success of the sale,” McLeish said.

    KB Toys, the nation’s largest mall-based toy retailer filed for Chapter 11 bankruptcy protection last week. The Chapter 11 filing allows the company to retain more control of its assets during the going-out-of-business sales than it would have under a typical Chapter 7 liquidation.

    While approving the sales and accompanying advertising and signage plans, the judge denied authorization for KB Toys to hang a banner outside the exterior entrance of a mall store in San Diego, saying there was no evidence that that the banner could actually be seen from the road. Attorneys for the mall landlord and Gordon Brothers later agreed that the banner could be hung if they determined it would help draw traffic to the store.

    The judge also approved KB Toys’ request to pay store-closing bonuses of up to $1,500 to store managers and assistant managers to ensure that the liquidation sales proceed smoothly.

    McLeish said that without the bonuses, the company likely would see a “mass exodus” of critical employees and a corresponding negative effect on store operations.

    “The employee is not to going to stay because they like KB Toys; … they’re going to stay if they have a financial reason,” McLeish said.

    Joel Waite, an attorney for KB Toys, said last week that the company tried to find a way to plug a looming liquidity problem, but that the credit crisis and broad decline in consumer spending had a devastating effect on the company.

    The company’s seven-member committee of unsecured creditors is led by Hong Kong-based toy manufacturer Li & Fung, which is owed about $27.2 million, and El Segundo, Calif.-based Mattel Toys, with claims totaling $1.3 million.

    Attorneys for the newly formed committee filed an initial motion challenging the Chapter 11 filing and the liquidation sales, but they later withdrew a motion to convert the case to Chapter 7. Waite said after Thursday’s hearing that the concerns of the creditors committee had been resolved.

    KB Toys, which emerged from an initial bankruptcy filing in 2005 as a subsidiary of investment firm Prentice Capital Management, has about $480 million in annual sales and roughly 10,800 employees, more than half of whom are temporary seasonal workers. It operates 277 mall-based stores, 114 outlet stores, 40 KB Toy Works stores, mainly in strip malls, and 30 temporary holiday stores.

    [Reply]

  66. General Growth to sell retail centers in 3 cities

    December 19, 2008

    BALTIMORE – Chicago-based General Growth Properties says it is putting retail centers in three major cities up for sale.

    New York brokerage DTZ Rockwood LLC said on its Web site Thursday it has been retained to market the Festival Marketplace portfolio, which includes Baltimore’s Harborplace & The Gallery, New York’s South Street Seaport and Boston’s Faneuil Hall.

    The Baltimore properties were developed by Rouse Co. General Growth took over all of Rouse’s assets as part of a $7.2 billion acquisition in 2004.

    GGP spokesman David Keating said in an e-mailed statement the sale is part of the company’s effort to reduce debt.

    Wednesday, GGP said lenders had agreed to a two-month extension on $900 million of debt service.

    [Reply]

  67. Big news…thanks, Sean. So I guess that means three very strong properties (White Marsh, Mall in Columbia, Towson Town Center) and one mediocre property (Owings Mills) are up for grabs. Something tells me Westfield is going to jump at this and expand their holdings in MD.

    [Reply]

  68. I’m not sure on Owings Mills, then again Westfield will surprise me from time to time.

    What comes to mind was there sudden departure from metro Saint Louis all together. I mean you own almost all the malls around a metro area with over 2 million people & you just say goodbye because of an outlet mall? OK, it’s a mills mall, but you don’t try to defend your turf?

    That is worse than the 2008 Detroit Lions. LOL

    [Reply]

  69. Perhaps Simon will yet again make a new division in their portfolio to acquire the Festival Marketplace properties, just like it did with the Mills centers. As for the other Baltimore malls, I don’t necessarily see Westfield picking up all of them. I beliveve one likely candidate would be Macerich, which already owns Tysons Corner Center in the Virginia suburbs of Washington DC. The Mall in Columbia and Towson Town Center could possibly fall within their portfolio, both being premiere shopping malls in the Baltimore area. White Marsh Mall may be acquired by Simon, or even Macerich, depending on if they want to acquire all the Baltimore malls from GGP. Owings Mills is a challenging subject, however. It’s missing a couple anchor stores and likely needs to be redeveloped in the future.

    [Reply]

  70. OY VEY! Here comes another bailout.

    Commercial Real Estate Industry Seeks U.S. Aid

    December 23, 2008

    Some of the country’s biggest commercial real estate players are asking the government for help, as their $6 trillion industry of hotels, office buildings and shopping malls faces a record amount of debt coming due in the next few years.

    Trade association executives said that in the last few weeks they have met with members of President-elect Barack Obama’s transition team, Congressional leaders, and officials at the Treasury Department and Federal Reserve to make their case for assistance.

    In the next three years, they pointed out, an estimated $530 billion of commercial mortgages will come due for refinancing — with about $160 billion due next year, according to Foresight Analytics, based in Oakland, Calif. But with the credit markets virtually collapsed, thousands of those properties could go into foreclosure or bankruptcy if owners are unable to get new loans.

    “If you can’t get a loan and you owe the bank the money, you have to find the cash to pay the loan back or you default on the property,” said Steven A. Wechsler, who has been lobbying as president and chief executive of the National Association of Real Estate Investment Trusts, a D.C. association with 3,000 members. “Banks’ jobs are to make loans, not own real estate. That’s something we’d like to avoid. It could be a downward spiral that’s driven by a compromised system of credit delivery. Some constructive step by federal policymakers would be wise and appropriate to be able to free up the market.”

    The real estate industry is going to the government for help because “they can,” said Jim Sullivan, a managing director at Green Street, a real estate research firm in Newport Beach, Calif.

    “They see what everybody else has gotten,” he said. “Real estate is a capital-intensive business and there is no capital. They’ll take cheap money from whoever is giving it out, and now there’s only one source — the government.”

    The trade associations are asking that their members be included in a $200 billion lending facility that was created by the government to support the market for consumer debt such as car loans, student loans and credit cards. In a recent letter to Treasury Secretary Henry M. Paulson Jr., industry leaders from a dozen groups described the troubled situation. “The paralysis of credit, which began in the short-term market, has coursed through the system and it now severely affects longer-term credit, especially secured and unsecured commercial real estate loans,” they wrote.

    When Paulson announced the $200 billion initiative, he noted that it could possibly be expanded to aid the commercial real estate market.

    The real estate groups say they aren’t asking for direct bailouts for their members, but rather for credit market support. “This is the same thing they’re doing for car loans and student loans. We’re asking them to help restart the credit markets for commercial real estate mortgages,” said Jeffrey D. DeBoer, president and chief executive of the Real Estate Roundtable, a major industry trade group.

    “Banks can’t possibly absorb, manage and turn around properties at this scale if they come back to the lenders,” he said.

    The commercial real estate market boomed in the last few years, fed by easy credit. But starting in mid-2007, the credit crisis essentially froze the securities market.

    The amount of new commercial mortgage-backed securities — loans that are sliced, packaged and sold as bonds — fell from $200 billion in 2007 to only $12 billion in the first six months of the year, Wechsler said. “We’ve gone from 55 miles per hour to zero,” he said.

    When money was flowing, investors drove up the prices of real estate, betting that rents and occupancy rates would keep going up. But cash from properties is falling as more space becomes available and rents drop, making it harder for owners to repay their debts.

    While delinquency rates are low, they increased by one-third in November to 0.96 percent and could rise to more than 3 percent by the end of next year, according to figures from Deutsche Bank. Atlanta, Detroit, New York and Tampa are among the markets showing signs of rising defaults. In the Washington region, defaults are below the national average.

    “It won’t help the economy if commercial real estate continues to fall like residential,” said Lisa Pendergast, managing director of commercial real estate finance at RBS Greenwich Capital Markets. “Then ultimately it will cause the recession to lengthen and deepen.”

    Staff writer David Cho contributed to this report.

    [Reply]

  71. We need to stop this bailout giveaway since everyone is going to be asking for it now. I thought it was bad with the automakers, but real estate developers? Seriously, they kept building and expanding even when the markets that they were in couldn’t support it in the first place.

    [Reply]

  72. This article is 50% mind boggling & 50% , WELL DUH!

    Closings Would Roil Real Estate Market

    DONNA GOODISON By DONNA GOODISON

    December 29, 2008

    The current spate of retailer bankruptcies and those expected in the new year – along with still-healthy companies limiting or stopping their expansions – could have a ripple effect on the commercial real estate market.

    Burt P. Flickinger, managing director of New York consulting firm Strategic Resource Group, expects 2,000 to 3,000 U.S. malls and shopping centers to close in March and April.

    General Growth Properties Inc., the nation’s second-largest shopping mall owner, already is in trouble. The cash-strapped Chicago company, which owns the Natick Collection and manages Boston’s Faneuil Hall Marketplace under a lease with the city, in mid-November warned of a possible bankruptcy filing it if couldn’t refinance $900 million in debt. It’s now trying to sell its management rights for Faneuil Hall management rights along with two properties in New York and Baltimore.

    “The easiest way of looking at which shopping centers or (real estate investment trusts) are real cause for concern for potential reorganization would be any whose stock has declined 80 or 90 percent or whose stock is trading in the $1 to $5 range,” Flickinger said.

    Normally, the large banks and financing companies would have adequate funds to “backstop” the REITs and other retail center owners. But so many retailers and property owners are either “retracting or collapsing” at the same time that there’s insufficient credit to save every one, according to Flickinger.

    “It’s a natural falling out,” he said.

    The United States had twice as much retail selling space than any other industrialized nation at the end of the 1990s. And since then, it’s added 50 percent more selling space to an already over-stored situation. Led by Wal-Mart, the nation’s top eight retailers alone built more than a billion square feet of selling space in the last decade.

    The commercial real estate market could take as hard a hit as the residential real estate market did under the mortgage crisis, according to Michael Tesler, founder of Retail Concepts, a Norwell- based retail consultancy.

    “Landlords are going to face a difficult reality,” Tesler said. “They’re going to have to adjust their rents, and they’re going to have a real tough time filling vacancies going forward.”

    If most large retail chains like Walmart had half the number of stores then currently in opperation, this problem wouldn’t exist dispite the ecconemy.

    [Reply]

  73. OOPS! I forgot about this one, from USA Today.

    More retail closings in the cards for next year

    December 30, 2008

    Retailers will close tens of thousands of stores in 2009, and several more will file for Chapter 11 bankruptcy protection as the effects of the worst holiday retail season in 40 years sink in.

    “Every retailer is looking to reduce their footprint,” says Michael Dart, principal at Kurt Salmon Associates, a retail industry analyst firm.

    The fallout started before Christmas and has continued immediately after: The Parent Co., operator of eToys.com, announced Sunday that it had filed for Chapter 11, while KB Toys, Ann Taylor, Sears, Talbots and Circuit City previously announced the closures of some stores.

    “Retailers will assess every location, and if it doesn’t make a profit, it’s gone,” says Marshal Cohen, chief industry analyst at NPD Group.

    The International Council of Shopping Centers projected in October that 148,000 stores would close in 2008, the largest number since 2001. It said an additional 73,000 stores would close in the first half of 2009.

    That number could grow. December sales will be reported on Jan. 14, but early surveys indicate spending is almost completely frozen. MasterCard’s annual SpendingPulse report released late last week showed retail sales fell 2% to 4% for the holiday season. Sales of electronics and appliances fell 27%. Women’s clothing fell 23%.

    “We see a sustained, protracted and prolonged shift in consumer behavior through 2009 and 2010,” Dart says. “This is not just one bad holiday season.”

    For the first time, holiday online shopping declined this year. Spending was down 2% from Nov. 1 to Dec. 21, says market researcher ComScore.”This is bad, considering that online holiday sales, year-over-year, have been up about 20% every year,” says Don Davis, editor of Internet Retailer, a trade magazine.

    Exceptions were Amazon.com, Apple.com and Walmart.com, which saw 6% to 10% surges in traffic. Amazon.com said Friday that it recorded its “best ever” holiday season with a 17% increase in orders on Dec. 15, its peak day.

    Online sales could have been worse. Strong promotional efforts by online retailers, such as discounts and free shipping, persuaded many consumers to shop, says Andrew Lipsman, director of industry analysis at ComScore.

    At least one market researcher says this year’s online holiday season wasn’t that bad. EMarketer predicts spending will rise 4% to $30.3 billion, though that’s about one-fifth the growth rate of the past few years.

    Is anybody shocked?

    [Reply]

  74. The worse in 40 years? I’m not terribly surprised, though 40 years is a bit of shock. However, I feel the retail industry will bounce back. Interestingly, I’m listening to a song on iTunes right now that has the lines “All the money’s gone, nowhere to go”

    Right now, I’m hoping that with some vacancies, there will be some creative retail concepts that will catch people’s eyes. For example, Apple had an online store for four years before launching as a brick-and-mortar store. Will we see Amazon.com do the same?

    So right now (I hope) there will be some amazing new concepts both by old and new companies. The MyGofer concept sounds interesting. The Epicenter Collection failed before launch, so it might be interesting. An article on MyGofer is here:
    http://www.suburbanchicagonews.com/heraldnews/news/1332887,4_1_JO16_COUNCIL_S1.article

    “MyGofer might remind some of the old concept of Service Merchandise, the defunct retail chain.”

    But are catalog showrooms dead and useless? Look at IKEA. Does writing down product numbers for later pickup sound familiar?

    Sean, some advice. Quit being a “prophet of doom” and try to predict how they’ll pull out of this one.

    [Reply]

  75. The first wave of closing seems to be chains that never have customers and/or have had financial problems for years:Linens & Things, KB Toys, etc.
    Steve & Barry were running a quasi-Ponzie scheme and their demise was a matter of time. But even these will hurt marginal malls. There’s been too much development of retail for decades–it’s outpaced population and economic growth and this has been driven by national chains which could pay higher rents. I suspect one reason that Atlanta is mentioned as a trouble spot is because it is seriously overmalled and filled with a surprising number of poorly performing malls and strips. The savior of strip malls in Atlanta has been restaurants, which are a business that has a high mortality rate in good times and likely will die quickly w/o replacement in bad times.

    I don’t think this is necessarily a bad thing. There’s way too much retail, with way too little imagination and a lot of retail space could be better used for something else..

    [Reply]

  76. Jonah,

    If you want to call anybody “profits of doom,” that title goes to the news organisations like AP & Tribune.

    I post articles so “constructive” diolog can take place, plus we can have an archive on companies once they are long gone like many malls profiled here.

    Don’t shoot the mesenger.

    [Reply]

  77. One of the issues that malls face right now can be described in TWO words SUBURBAN SPRAWL. If you look at Las Vegas, Atlanta, Dallas, Detroit & beyond you’ll find sprawling subdivisions everywhere. As a result new malls, lifestyle centers & big box centers keep getting built while the older sites become blighted. As Susan pouder use to say “stop the insanity!” Yes, the diet infomercial queen who went broke.

    The question is just how to stop the insanity, the answer is redevelop urban sites with mixed use projects that include 1. housing condos, apartments & townhouses 2. retail of all types such as restaurants, grocery stores & non chain retailers 3. office space including medical offices 4. transit stations 5. green spaces including parks & plazas 6. limiting the use of surface parking for other uses like parkes7. most importently it must be comfortable to walk in all kinds of weather.

    Easton town Center is a development that comes close to that discription, this will require a new way of thinking with zoning laws. Codes need to be form based instead of prescripted.

    [Reply]

  78. WOW! This cracked me up.

    Retailers Take a Gamble on Desperation Tactics Ads Plug 90% Discounts And 3-for-1 Deals

    Jack Healy The New York Times Media Group

    January 5, 2009

    At a dealership on the outskirts of Miami, people who agree to buy one Dodge Ram truck can get a second truck or car – free. In 415 supermarkets across the Eastern United States, customers who bring in a prescription can walk out with free antibiotics. And one clothing chain, not to be outdone, has started offering three suits for the price of one.

    An era of desperation marketing is at hand in the United States, with stores and automobile dealerships adopting virtually any tactic that might grab the attention of frightened consumers.

    After one of the worst holiday seasons in decades, businesses are doing whatever they can to clear their shelves and make way for spring merchandise. Sales of 50 percent off stopped capturing the attention of customers weeks ago, so stores are layering discounts on top of discounts, and trying to lure shoppers with promises of giveaways, bulk bargains and other gimmicks.

    “Retailers are trying everything in the book,” said Britt Beemer, chairman of America’s Research Group, a consumer research firm. “You’re seeing things like, ‘Buy one, get two free.’ That’s just unheard of, and the item you’re buying isn’t even full price.

    “When you’re advertising those sorts of price points, you’re just trading trash for cash. There’s no strategy. You’re just trying to get rid of it.”

    For stores, offers like free antibiotics, three-for-one sweaters and 90-percent-off Sony PlayStations are usually “loss leaders,” a retailing term for sweet deals meant to drive traffic. The stores hope not only to clear out merchandise that is not moving, but also to draw in customers who will spend money on other items.

    With sales of clothing, electronics, luxury goods and more down by double digits in the dismal economy, these loss leaders are more important than ever, analysts said. Stores began discounting long before the holiday season and cut prices even more as Christmas approached, but the sales alone were not enough to clear away winter inventory.

    “Fear is very high right now,” said Dan de Grandpre, editor of the Web site DealNews. “What you’re going to see is retailers do as much as they can to be as creative as possible. You’re going to see more of this aggressive and sometimes panicky discounting from apparel stores and electronics stores.”

    At the Samsonite outlet in Castle Rock, Colorado, two free pairs of boots come with the purchase of one pair; similarly, at Domestications, a home furnishings catalogue store, three throw rugs go for the price of one. Toys “R” Us had three-for-one Crayola products, and there were three-for-one cashmere sweaters at Off Fifth, the Saks Fifth Avenue outlet chain, according to news reports.

    “They had so many freebies,” said Carrie Koors, who lives in Cincinnati and writes a blog about bargain-hunting. “It was really a great holiday season to shop and get stuff for next season.”

    Of course, selling items at two or three for the price of one is effectively just a fat discount on each item.

    But Dan Ariely, a professor of behavioral economics at Duke University, said the word “free” can work psychological magic on reluctant consumers.

    “When you offer something for free it’s more exciting,” said Ariely, the author of “Predictably Irrational.”

    “We don’t think of it in the same way,” he said. “We just get tempted, because we think of it as only having pluses and no negatives. Free is like a whole new category.”

    And so the deals keep multiplying. The clothing company PacSun is offering a $10 discount coupon that allows customers to buy $9.99 T- shirts and slippers for only the cost of shipping. A Ford dealership in San Mateo, California, is offering a free scooter with the purchase of every 2009 Ford F-150. And shoppers at Jos. A. Bank can buy three suits for the price of one, while customers at Stop & Shop and Giant Food can get free antibiotics to treat their winter ailments – with a doctor’s prescription, of course.

    “We’re going to take a leadership role in the industry, and we’re going to be different,” said Faith Weiner, Stop & Shop’s director of public affairs.

    In Davie, Florida, University Dodge dreamed up a “Buy 1 … Get 2!” deal to attract the attention of potential customers and whittle excess inventory, which had spilled onto the lot next door. So far, the dealership has sold 40 vehicles under the promotion, which promises customers a free Dodge Ram, Dodge Caliber or PT Cruiser if they buy a 2008 Ram.

    “Most people think we’re crazy,” said Ali Ahmed, the sales manager. “More than anything, it’s a way to catch the customer’s interest than to just offer a percentage or dollar amount off. They’ve heard that before.”

    The dealership has advertised its two-for-one car sale online and in newspapers, Ahmed said, and customers have been calling and showing up to see whether the sale is a gag. But it is no joke from Ahmed’s point of view: An estimated 900 auto dealerships out of 20,770 in the United States went out of business in 2008, according to industry estimates, and Ahmed said he did not want to join the thousands likely to close this year.

    “It’s a tough environment,” he said. “Of the dealers around you now, you know some of them aren’t going to be on the map next year. If you can steal a little bit of market share now, you’re not going to be one of those.”

    [Reply]

  79. Really?! Where are these deals in Wisconsin? Certainly not in the Milwaukee Metro market. I walked into Jos. Banks, looking for the suit deal mentioned above, and they looked at me like I was from Mars. And LCD televisions can be had online for a lot less than our local vendors, even the larger national chains like Best Buy and flailing Circuit City are offering. And the best Sears will do is “match” (not beat) a price on an IN-STOCK item. How ridiculuous. If I could find the item for less somewhere else and it is in-stock, why would I altruistically shuffle over to Sears to hand them my wallet. Piss off, Sears. This stuff with “the deals”… A lot of media B.S. if you ask me.

    [Reply]

  80. CoryTJ,

    I cant believe you braught up the LCD TV issue . You must have been reading my mind. I went to both CC & BBY websites & they raised the price on the set I was looking for, I guess they weren’t so Terri Hatcher after all.

    Maybe Nicolette Shariton? LOL

    That’s why I thaught that article was so funny.

    [Reply]

  81. I came across an interesting article in the Washington Post.

    Big Box & Beyond
    Today’s Temples of Consumption Don’t Have To Be Tomorrow’s Ruins. What’s in Store?

    By Joel Garreau
    Washington Post Staff Writer
    Sunday, November 16, 2008; M01

    For the purposes of this morning’s discussion, the amazing thing about the Spam Museum — as in the meat product — is not that it exists. It’s that it was created out of an abandoned Kmart. “The renovation of the Kmart building into what you see here today has the drama of a great epic,” says Julie Craven, publicity representative for Spam in Austin, Minn. “We are going to be in this building for a long, long time. . . . We love it here.”

    This report comes to you courtesy of Julia Christensen, a 32-year-old artist whose book, “Big Box Reuse,” is being published this month by MIT Press. Its news is that those who gaze at the big-box stores of Rockville Pike or Manassas and fail to see future cathedrals, museums or artists’ communities have no sense of history. Or imagination.

    This lesson looms because we’re going to have to figure out what to do with a whole lot of big boxes, and soon. There are thousands of them — vast prairies of Targets and Bed Bath & Beyonds and Costcos and Home Depots. Wal-Mart alone has 4,224 in the United States, more than half of them Supercenters into which, on average, you could comfortably fit four NFL football fields.

    The supply is growing, according to the International Council of Shopping Centers. “Big-box space” continues to capture “the largest share of new additions to U.S. retail space,” according to its April report.

    Yet consumer tastes are fickle, gas prices unpredictable, and some chains like Circuit City are on the ropes. Will people want more walkable village-like shopping experiences? Will they prefer to have their goods delivered via the Internet? No real estate trend is forever. Which is why it is beyond time to start thinking creatively about what to do with all the big-box stores in our burbs that become unsuited to their original function long before they physically wear out.

    This inspired The Washington Post to assemble a small team of artists, architects, engineers and developers to think creatively about what to do with these, our most common, underrated and increasingly available major buildings. Let your imagination soar. So what if big boxes seem at first glance like bridesmaids’ dresses — big, ugly and not a whole lot you can use them for. At second glance, with some alterations they can be made to seem so promising.

    As the celebrated novelist John Cheever wrote about his beloved suburbia: “For these are not as they might seem to be, the ruins of our civilization, but are the temporary encampments and outposts of the civilization that we — you and I — shall build.”

    Big Boxes Packed With Possibilities

    People have been turning stables into apartments, warehouses into offices and palaces into churches since the dawn of fixed settlement. Even our nursery rhymes celebrate adaptive reuse — “There was an old woman who lived in a shoe.”

    We hardly remember how loathed and reviled were some ancient buildings before they were reprogrammed. We no longer pause to wonder which genius first looked at those “dark satanic mills” of New England’s evil textile past and thought, “Hey, those would make great yuppie condos.”

    Neither do we marvel at the unrecorded hero who first looked at those dangerous, aptly named sweatshops south of Greenwich Village and said, “Hey, those would make great artists’ lofts.” Which ultimately would be transformed into the pricey, trendy neighborhood called SoHo.

    In the burbs, however, adaptive reuse of humble, workaday structures still rattles our brains. The problem there is the history of this built environment. There is little — at least until recently.

    In “Big Box Reuse,” Christensen looks at the astonishingly imaginative people looking at obsolete Kmarts and Wal-Marts and saying, “Hey, those would make a great church.” Or a go-cart race course. (Really!) Or the site for a courthouse. (“Law-Mart.”)

    Christensen has seen the future.

    “In the background is this very large problem that is being thrust upon our landscape. The big-box buildings themselves were not necessarily wanted in the first place. These corporations are not held accountable for the fact that they are building hundreds and hundreds of buildings that will be abandoned in the future. Luckily, our communities are incredibly resourceful, finding amazing things to do with these buildings. That’s key. That’s the balance of this project, the thrust of the message.”

    Some big-box stores become available because their parent corporations have trouble competing — like Kmart. In Prince George’s County, just north of FedEx Field, there is a shopping center where the county is thinking of putting an emergency medical facility. It features an abandoned C-Mart — the closeout retailer.

    More typical, however, is the situation at Walmartrealty.com. At last count there were 189 Wal-Marts for sale, and not because business is bad. A typical available Wal-Mart might be a 40,000-square-foot store (about the size of a football field) that was replaced by a 80,000-square-foot store that was so successful it has been replaced with a 200,000-square-foot store just down the road — which is precisely what happened in Christensen’s home town of Bardstown, Ky., where now you find the repurposed courthouse.

    Of course, Wal-Marts are late arrivals to dense, expensive metropolitan areas such as Washington. But it’s only a matter of time before the ones here join the ranks of the reused like the Calvary Chapel of Pinellas Park, Fla., that Christensen writes about. Or the RPM Indoor Raceway of Round Rock, Tex. Or the senior center of Wisconsin Rapids, Wis. Or the charter schools of Buffalo, Charlotte or Laramie.

    “Big boxes are effectively paid off in seven, eight, nine years,” at which point the owners can do just about anything they want with them, notes Christopher B. Leinberger, a developer, fellow at the Brookings Institution and author of “The Option of Urbanism: Investing in a New American Dream.”

    “If you keep the roof from leaking they can last 30 or 40 years.”

    Where the Boxes Are

    Just how creative can you get?

    First, of course, comes the horsing-around stage. When The Post asked designers to address the big-box reuse challenge, one said, “Turn it upside down and make it a litter box for a 10-story-tall intergalactic pussycat.”

    “Make it into homeless shelters for people who can no longer afford their tract mansions,” said another.

    Suggestions included a cemetery or crematorium. And a shooting range. Or even an ammo dump.

    But when you get down to it, one of Christensen’s contributions is her relentless pragmatism, demonstrating that the idea of reusing a big box is not nuts. She gets into the financing and what people did about it, and leaky roofs and what they did about it, the plumbing, the leasing, the whole deal.

    Okay, so what is the definition of a “big box”? Does an old supermarket count? How about an old furniture store?

    Christensen rules them out. Big boxes are not only one-story, one-room places originally created for retail sales. They are of breathtaking size — some of them as much as 280,000 square feet or six football fields. They are marked by dazzlingly tall ceilings — 18 feet or more — that beg to have additional levels, balconies and cantilevers added to them. And they offer world-class heating, ventilation and air-conditioning.

    “It’s just a big tent — like a circus tent,” says William Reeder, dean of the College of Visual and Performing Arts at George Mason University.

    The Post big-box boosters wound up focusing on a Best Buy off Route 1 in Alexandria between Crystal City and Old Town. It is a bustling 51,639 square feet — you could comfortably fit a football field in it. It is part of Potomac Yard Center — almost 600,000 square feet of big boxes anchored by a Target. (Which raises the issue of whether, if you were a mile and a half from the Pentagon, you would paint a bull’s-eye on your roof, as they have, but that’s a question for another time.)

    This place sparks the imagination for several reasons. First, it’s already a reuse. Before it became big-box heaven, it was part of one of the biggest rail yards on the East Coast, so full of spilled diesel fuel and Lord only knows what else that it became a Superfund site.

    Today, however, its location is hardly Dogpatch. Alexandria planners are already thinking about adding a Metro station nearby. The trendy Del Ray neighborhood is across Route 1. Just up the road is Arena Stage’s temporary digs. Indeed, there is no doubt that Potomac Yard Center’s use will change as its occupants’ leases run out in the next few years. “It is fair to say that when the project was developed it was developed with the thought in mind of redeveloping it,” says Juan Cameron, vice president of McCaffery Interests, the developer and manager.

    Nonetheless, big boxes are nothing if not generic. So possibilities that can be imagined here can work elsewhere.

    The assignment we gave our team was to come up with ideas that were creative, credible, local, of the moment, the now.

    What do you think could be done with the flood of big boxes comeing on to the market in the near future.

    [Reply]

  82. News Headlines from PVL.

    Macy’s to Shutter 11 Stores

    New York & Co. to Cut Jobs, Close Some Stores

    Chapter 11 for Hip-hop Retail Chain

    [Reply]

  83. List of locations that Macy’s is closing:
    — Ernst & Young Plaza (Citicorp Plaza), Los Angeles, CA
    — The Citadel, Colorado Springs, CO
    — Westminster Mall, Westminster, CO
    — Palm Beach Mall, West Palm Beach, FL
    — Mauna Lani Bay Hotel, Island of Hawaii, HI
    — Lafayette Square, Indianapolis, IN
    — Brookdale Center, Brooklyn Center, MN
    — Crestwood Mall, St. Louis, MO
    — Natrona Heights Plaza, Natrona Heights, PA
    — Century III Furniture and Clearance, West Mifflin, PA
    — Bellevue Center, Nashville, TN

    [Reply]

  84. Circuit City Stores, Inc. Provides Update

    January 9, 2009

    RICHMOND, Va., Jan 09, 2009 /PRNewswire-FirstCall via COMTEX/ — Circuit City Stores, Inc. today provided an update on developments in its United States Bankruptcy Court proceedings, its restructuring activities and its operations.

    On January 5, 2009, the company filed a motion with the Bankruptcy Court that seeks approval of procedures that would formally put the company up for sale, as a going concern, as separate business units or as individual assets – including the sale of inventory.

    Presently, the company is engaged in significant discussions, meetings and negotiations with two highly motivated and interested parties concerning the terms of a going concern transaction. These interested parties are considering providing additional financing to allow the company to sustain operations and move forward with a subsequent restructuring through a stand-alone plan and/or purchasing the company or all or substantially all of the company’s assets. The parties have substantially completed due diligence and now are in negotiations with the company and the company’s major stakeholders in order to finalize such a transaction. While the company is optimistic that a transaction can be successfully finalized, no assurance can be given that this will occur.

    The motion was originally filed under seal and is being “unsealed,” or made public, by the Bankruptcy Court today in order to conduct a hearing on the motion on Friday, January 9, 2009. The company was required to file the motion pursuant to an amendment to the company’s debtor-in-possession (DIP) credit agreement, which was approved under seal by the Bankruptcy Court on December 23, 2008. The motion currently provides that an auction of the company and its assets would commence on January 13, 2009, and a sale hearing would occur on January 16, 2009.

    The company’s discussions with the interested parties could result in a sale agreement, or the company and the lenders could further amend the DIP credit agreement prior to the January 16, 2009, sale hearing. If no agreement is approved with a party interested in a going concern transaction by January 16, 2009, and the auction does not result in a sale of the company’s assets, the motion provides that the company may enter into a transaction that will result in an asset liquidation process commencing soon after the sale hearing scheduled for January 16, 2009, absent any further amendment to the DIP credit agreement deadlines.

    Restructuring and Operations Update

    The company has continued to operate its business without interruption, and management is focused on developing and executing a comprehensive corporate restructuring plan. Initial successes toward restructuring the company’s business and operations include the following:

    — As planned, in the months of November and December, the company

    completed liquidation sales in and subsequently closed 155 domestic

    stores that were underperforming or were no longer a strategic fit for

    the company.

    — The company has achieved significant selling, general and administrative

    expense reductions as it restructures it business to align operations

    with its smaller national store base and has implemented more stringent

    expense controls.

    — The company has retained DJM Realty Services, Inc. to negotiate reduced

    rent for leased properties and to sell owned properties.

    — The company’s sales trends improved significantly during the last

    two weeks of December, and the combination of the improvement in sales

    and focus on gross margin has enabled the company to continue to operate

    well within the operating budget required by the amended DIP credit

    [Reply]

  85. LOL

    Experts: Retailers must be creative, more involved

    By ANNE D’INNOCENZIO and MAE ANDERSON (AP Retail Writers)

    January 12, 2009

    NEW YORK – Retailers need to offer customers more services to make themselves indispensable and work with the government to help solve economic and social woes even as they deal with seismic changes in consumer behavior, industry leaders said Monday.

    Departing Wal-Mart CEO Lee Scott told retailers they need to get involved in broader issues such as health care, immigration, energy independence and environmental sustainability, and said that doing so would resonate with shoppers and improve the bottom line.

    “We need to tackle the hard issues,” Scott said at the annual National Retail Federation convention, noting that retailers in particular are close to what consumers are thinking. “As businesses we have a responsibility to society. We also have an extraordinary opportunity.”

    Retailers have just come off the worst holiday season in four decades, as people watch their spending because of worries about job security, their retirement funds and the value of their home. That’s already meant falling sales and profit warnings at many retailers and could mean more bankruptcies to come.

    Over the past year, the retail industry has been in the midst of a “great transformation” as consumer spending dropped and credit tightened, said Carl Steidtmann, the chief economist of consumer business at Deloitte Research.

    Following an “orgy of debt” in the early part of the decade, “the consumer is no longer in a position to spend,” he said. “Retailers are in a ‘no-growth’ environment.”

    The consumer-spending slowdown will likely be long-lasting, Steidtmann said, particularly as baby boomers who have been typically big spenders move into their 60s and 70s, spend less and downsize their homes.

    While a new economic stimulus package from the government will have “some impact” on the economy such as more credit availability, Scott said, he doesn’t expect a quick rebound since “fundamental changes” in consumer behavior – an increased focus on saving and less buying – will likely linger.

    Scott, who was making his last public speech as CEO and president of the world’s largest retailer, predicted that the first half of the year will be “extremely challenging” and said he hopes the second half would be a little easier. But he believes fundamental changes in consumer behavior will linger even as credit loosens up.

    Retailers need to understand that, even though some consumers still have money, they are being very choosy about their spending. Scott noted robust sales of flat-panel TVs at Wal-Mart as an example. He also cited strong frozen food sales as its customers have cut back on going out to dining out and want ready-to-eat meals.

    Steidtmann, too, said retailers are going to have to toughen up as their competitors declare bankruptcy and liquidate – and as retail space contracts as malls shutter and banks continue limiting their lending.

    Retailers reported dismal sales results for December last week, and a rash of stores have closed or filed for bankruptcy, and the trend is expected to continue. ShopperTrak RCT Corp., which tracks sales and customer foot traffic at more than 50,000 stores, said Monday that it expects traffic to drop 16.4 percent and sales to fall 4 percent in the first quarter.

    One way retailers can combat the weak economy is through innovation, said Stacy Janiak, vice chairman and U.S. retail leader for Deloitte.
    She cited online retailer Zappos Inc.’s policy of offering new emp
    loyees cash to leave as an example. After a training period, the company offers employees $2,000 to go – and feels those who stay are more likely to be dedicated employees.

    “Standing still is not an option,” she said. Retailers must make sure they structure business around the customer, for example, offering not just products but services as well, such as a store installing an on-site clinic or a grocery store offering a family meal-planning tool, she said.

    Scott expanded that idea beyond retail, urging businesses to take on even broader societal issues. Doing so can coexist with building shareholder value, he said, citing in particular the success Wal-Mart has had with its $4 prescription drug program.

    While such changes are tough for retailers, he said, it may be healthy for society in general.

    “I think right now (shoppers’) appetite is more toward living a little more differently,” he said.

    Wal-Mart had often faced criticism from union-backed groups over issues from environmental concerns to wages and health care. But under Scott’s recent leadership, the company has been outspoken in its larger role it wants to play in such issues as health care, which has helped rehabilitate its corporate image.

    It embraced more environmentally sound practices, such as focusing its efforts on selling compact fluorescent light bulbs and forcing suppliers to reduce excess packaging. It says its discount prescription drug program has cut costs for consumers.

    Scott, who became president and CEO of Wal-Mart in 2000, is stepping down as chief executive on Feb. 1. He will be succeeded by Mike Duke, vice chairman of its international division.

    Even Wal-Mart – which has benefited as shoppers switch to cheaper stores and focus on necessities – has felt the pressures of the weakening economy. The discounter reported a smaller sales gain at established stores in December than Wall Street expected and slashed its earnings forecast.

    “We all had a tough Christmas,” Scott told the audience Monday.

    The fallout from the bleak holiday season began quickly. Discount clothing chain Goody’s Family Clothing announced last week that it was liquidating. And Bebe Stores Inc., which suffered a 20 percent drop in same-store sales in December and cut its fiscal second-quarter outlook, said Monday that its chief executive has resigned.

    This article totally reaks of spin, It took 2 people to wright that? Come on AP, you can do better than that!

    [Reply]

  86. New York & Company announced this week that they will be closing 50 locations through 2010, many of them leases that are ending for store locations that are underperforming.

    Also, Gottschalks announced today that it filed for Chapter 11 Bankruptcy Protection, joining other department stores Mervyn’s and Boscov’s. While Boscov’s has been rescued, Mervyn’s did not have the same fate. Does this signal the inevitable death of the local department store?

    [Reply]

  87. Tricky Nicky,

    New York & Co. to cut jobs, close some stores

    January 8, 2009

    NEW YORK – Specialty apparel retailer New York & Co. said Thursday it will cut 310 mostly managerial positions and close up to 50 stores over the next five years in an effort to counter declining consumer spending.

    The moves are expected to save the company about $175 million over that span, but will result in approximately $25 million in fiscal fourth-quarter restructuring charges.

    New York & Co.’s stock price has tumbled nearly 60 percent in the past year as its financial results worsened. Women’s apparel retailers, including New York & Co., have been among the hardest hit as consumers cut back spending due to the deteriorating economy, mounting job losses and a prolonged housing slump.

    Of the $175 million in savings predicted over the next five years, about $30 million is anticipated for fiscal 2009.

    The job cuts, which are expected to save about $12 million a year starting in fiscal 2009, include 12 percent of field management positions and about 10 percent of corporate office workers. New York & Co. anticipates a fiscal fourth-quarter charge of approximately $3 million related to the staff reductions.

    The company said its store-closing efforts will include shutting underperforming locations when their leases are up or when exit provisions can be used, which will help avoid large lease-exit costs. The move is anticipated to result in a fourth-quarter charge of about $22 million, but is expected to save New York & Co. between $4 million and $6 million a year starting in fiscal 2009.

    The company plans to close 10 to 15 stores in fiscal 2009, with the rest shut down between fiscal 2010 and 2013.

    New York & Co.’s restructuring efforts also include lowering costs across all segments and limiting new store openings over the next year. Its cost control efforts are anticipated to save approximately $14 million to $17 million a year. The reduced store openings are expected to bring capital expenditures down to about $15 million compared with its projected $50 million fiscal 2008 total.

    New York & Co. also reported that its fourth quarter-to-date same-store sales are off 10.1 percent, which will likely result in a 10 percent fourth-quarter same-store sales decline.

    Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.

    In addition, the company warned that it anticipates its fourth-quarter results will come in at the low end of its previously announced forecast for a loss between 5 cents per share and a loss of 20 cents per share. The outlook excludes charges expected related to its restructuring efforts and a one-time $1.5 million charge to settle two lawsuits.

    Analysts surveyed by Thomson Reuters predict a loss of 14 cents per share. Analysts’ estimates typically exclude one-time items.

    New York & Co. is scheduled to report fourth-quarter results on March 19.

    [Reply]

  88. As GGP turns,

    Providence Place mall is for sale, owner confirms

    Providence Journal

    Paul Grimaldi, Th

    January 13, 2009

    Jan. 13–Financially strapped General Growth Properties Inc. wants to sell the Providence Place mall to help cut its $27-billion debt, a company spokesman told The Providence Journal.

    General Growth (GGP:NYSE) put the mall up for sale amid last month’s Christmas rush, confirmed David Keating, senior director of corporate communications for Chicago-based General Growth. He did not disclose an offering price on the mall. The offering is being handled by Savills Granite LLC, a New York brokerage.

    A sale of Providence Place would not affect the prospects of the retailers who rent space there. The nation’s retailers have their own issues as they deal with a sharp downturn in consumer spending.

    Should the mall be sold, visitors would be hard-pressed to notice the change anywhere but in the small print on some signs inside the mall.

    The decision to try to sell Providence Place followed closely on General Growth’s decision to put up for sale the historic Faneuil Hall Marketplace, in Boston; South Street Seaport, in Manhattan, and Harborplace & the Gallery, in Baltimore.

    General Growth snatched up those, and other, marquee properties during years of debt-fueled growth. It now owns or manages more than 200 malls in 44 states.

    The company had $24.8 billion of mortgages, notes and loans as of Sept. 30.

    Last month, lenders agreed to extend a deadline to pay or rework $900 million in loans on two Las Vegas properties the company has put up for sale. The loans, for the Fashion Show Mall and the Shoppes at the Palazzo, are now due Feb. 12.

    The company still faces the prospect of defaulting on the loans, and has said that if it can’t refinance debt it may have to file for bankruptcy protection.

    While its parent company is suffering from that buying binge, Providence Place apparently stands on firmer footing. Real-estate analyst Jeff Green, of Jeff Green Partners, in San Francisco, estimated the annual mall sales at $525 per square foot.

    “Providence Place performs darn well,” Green said. “[The offering] means there’s a lot of value in it and they’re trying to sell it to pay off other debts.”

    General Growth took control of the mall in August 2004 when it bought the Rouse Co. for $12.6 billion. Rouse had owned the mall for only a few months, having purchased the property for $510 million from the mall’s original owners.

    The mall cost $460 million to build.

    General Growth and Rouse were willing to pay a high price for the mall because stores there generate millions in sales.

    In 2007, stores in Providence Place generated a record $13,981,625 in sales taxes for the state. Full-year numbers for 2008 won’t be available until next month.

    Green graded the property an A- or B+ in terms of sales.

    So why sell?

    Tight credit markets make it nearly impossible to sell a poor-performing property, said another analyst.

    “The only thing you can sell is a property that is doing well,” said Joel Bloomer, a senior equity analyst at investment research firm Morningstar.

    The dearth of financing means the mall is unlikely to change hands quickly, Bloomer said. Buyers with enough cash may wait to pick up Providence Place in a bankruptcy sale.

    “That’s part of the problem right now, there aren’t a lot of large buyers out there,” Bloomer said.

    [Reply]

  89. Gottschalks files for Chapter 11 protection

    January 14, 2009

    SAN FRANCISCO – Retailer Gottschalks Inc. says it put itself up for sale and has filed to reorganize in a Chapter 11 bankruptcy.

    The regional department store chain has negotiated a $125 million debtor-in-possession financing from a group of lenders led by GE Capital, it said in a statement Wednesday. The financing, if approved in bankruptcy court, will fund its employee wages and benefits, some vendor payments and other operating expenses while it reorganizes.

    “Persistent challenges in the economy and recent unexpected reductions to our borrowing capacity as a result of tightening credit markets have left us with no other recourse,” said Jim Famalette, chairman and chief executive, in a statement.

    Gottschalks operates 58 department stores and three specialty clothing stores in California, Washington, Alaska, Oregon, Nevada and Idaho. Its largest market is California, where it has 38 stores.

    Calls to the company, as well as the law firms representing it in bankruptcy court, its financial consultant and its public relations firm were not immediately returned.

    [Reply]

  90. Hay Jonah!

    Here’s an article for you from the Chicago Tribune.

    Sears tries new take on online shopping: Concept will allow shoppers to pick up purchases in store or at drive-through

    Sandra M. Jones

    January 16, 2009

    Jan. 16–If Sears can’t make it as a traditional department store, how about as a drive-through?

    Sears Holdings Corp. plans to open a warehouse-style concept store in Joliet called MyGofer that 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 giant retail chain to eventually operate with fewer stores and lower overhead.

    Sears and Kmart, both owned by Sears Holdings, have been foundering for decades as younger and more nimble rivals like Wal-Mart and Amazon have eaten away at their market share.

    Billionaire investor Edward Lampert, who engineered the combination of Sears and Kmart in 2005, has been dabbling in a string of new concepts to bring the company back to life, but he has avoided a substantial investment in any of them until he is certain of getting a return on his investment. The Internet, however, has captured his attention and investment dollars.

    Sears officials declined to discuss MyGofer, beyond confirming a presentation to the Joliet City Council last month that described the test store as a “marriage between online shopping and bricks and mortar,” according to minutes of the meeting.

    The goal is to attract online shoppers to a store where they can pick up merchandise without leaving their cars, Steve Sunderland, the Sears executive in charge of new store initiatives, told city officials, according to the minutes.

    Sears plans to shutter an existing 85,000-square-foot Joliet Kmart on Feb. 15 and then begin work in March to turn the building into MyGofer. About 80 percent of the store will be devoted to storing merchandise. The remaining 20 percent will house a showroom in what one Joliet official described as a 21st Century version of Service Merchandise, the catalog showroom store popular in the 1970s and 1980s where stock was kept in a warehouse and shoppers picked up their purchases with a claim ticket.

    “It’s a big, big opportunity to restructure the company,” said Love Goel, chief executive of Minneapolis-based Growth Ventures Group, a private-equity firm that invests in online retail. “You can get a lot more inventory in the store, and it’s much cheaper to operate because you don’t need as much lighting and staff. It’s a much more productive use of real estate.”

    Last year Sears quietly began adding tens of thousands of new products to its Sears.com site, including music, video games and auto parts. Some analysts see MyGofer as more evidence that Sears is looking at returning to its roots as a general catalog merchandiser by skimping on the mall stores and building its online portal.

    Separate from the Joliet experiment, the Hoffman Estates-based retailer is testing a concierge service called MyGofer.com at a Kmart store in Rockford. That service allows shoppers to order goods available at Kmart, such as groceries and prescriptions, ahead of time, either online or through a catalog, and pick them up in the store or have them delivered.

    The two concepts, while sharing the MyGofer name, are unrelated projects, said Sears spokeswoman Kimberly Freely. The type of merchandise the Joliet store will carry has yet to be disclosed. Sears officials told the Joliet City Council of at least one category under consideration: pharmacy prescriptions.

    The Joliet store is projected to cost between $4 million and $5 million to rebuild and will generate higher sales volume than the existing Kmart, Sears’ Sunderland told the City Council.

    Sunderland also told council members at the December meeting that he is looking for a second test site in the Chicago area.

    smjones@tribune.com

    I thaught you braught this up several posts back. If successful this could revive the Kmart Brand & do the same for Sears.

    [Reply]

  91. Horror of horrors! GGP no longer offers lease plans on their website.

    [Reply]

  92. ‘Diamonds in the rough': Cities, schools make use of big-box stores

    Ryan Holeywell

    January 24, 2009

    City leaders are hoping that when a new library opens here in two years, nobody will notice it used to be a Wal-Mart.

    Elected officials and city staff planning the project have emphasized that — above all else — they don’t want the site to look or feel like a retail store.

    “That’s the challenge,” said Deputy City Manager Brent Branham, “to make it not just look like a Wal-Mart with a new faAade on it.”

    That goal isn’t far-fetched. At least a half-dozen government-owned buildings in the Rio Grande Valley are formerly “big-box” stores that have been transformed into schools, offices and even a City Hall.

    The move is part of a nationwide trend that has emerged in the last few years, as Wal-Mart has vacated hundreds of buildings across the country during its transition to larger, more up-scale Supercenters.

    As the retail sector ails, and stores like Circuit City, Mervyn’s and Linens ‘N Things shut their doors, leaders expect a bevy of big boxes to go empty.

    Communities will have to decide what to do with buildings in the retailers’ absence. While not all can be filled with city projects, experts say their vacancies might pose some opportunities for some municipalities.

    “We are just at the beginning of the big box crisis,” said artist and Oberlin College professor Julia Christensen, who wrote the book Big Box Reuse, published last year. “We’re going to see a lot of structures abandoned.”

    Diamonds in the rough

    From 2000 to 2006, Wal-Mart opened 1,259 Supercenter stores, and it left its dowdier discount stores at almost the same clip, according to Christensen’s book.

    That’s because it’s cheaper for Wal-Mart and other big box retailers to build anew rather than interrupt business with expansion of an existing store. It also helps the store increase its real estate holdings.

    But the trend has left a plethora of empty stores across the country that became blights in their communities. Wal-Mart’s realty wing lists nearly 200 stores available for sale or rent — and that figure excludes buildings that have already ended up in the hands of other developers and are still for sale.

    Now, municipalities across the country are picking up the properties on the cheap, realizing that their utilitarian, bare-bones design lends itself to renovations.

    “They’re the diamonds in the rough,” said Raul Garza, executive director of the Pharr Economic Development Corp.

    In 2000, his organization bought a Wal-Mart on Business 83 that now functions as a school for students at-risk of dropping from the Pharr-San Juan-Alamo district.

    The EDC bought the building as call centers began moving to Pharr, and the businesses needed a place for potential employees to get education and training. The building provided a large enough space to serve the volume of workers the centers needed.

    Today, in addition to housing the school, it also houses offices of the Hidalgo County Elections Department, Texas Workforce Solutions and the Texas Education Agency’s Region One.

    The site became available when Wal-Mart closed its doors and opened a Supercenter just a few miles away at the Las Tiendas shopping center.

    City governments across the country have found innovative uses for big box buildings, transforming them into museums, libraries, and schools. Private developers have been able to get even more creative, turning a Wal-Mart in Florida into a chapel and a Round Rock Wal-Mart into a go-kart track.

    Price

    For municipalities, renovating the buildings makes economic sense.

    The Pharr EDC bought its site for $3 million and renovated for just $300,000.

    “You can’t put up a building of that size at a reasonable price,” Garza said. “A building of that size is $7 or $8 million, if not more.”

    And when Weslaco leaders considered expanding their old City Hall, they realized they could double their office space for the same price if they renovated an old Albertsons grocery store instead. They moved into their new digs in 2005.

    McAllen bought the Wal-Mart near 23rd and Nolana in January 2007, with plans to convert it into the country’s largest single-story library.

    If cost estimates hold, the city could save about $4 million.

    The building cost $5 million, and the renovation will likely cost more than $21 million, said Branham, the deputy city manager. A new building could have cost the city $30 million, he said.

    McAllen leaders say the benefits of reusing big boxes extend beyond dollars and cents.

    Branham highlighted the environmental benefits of recycling a building instead of building a new one. And City Commissioner Marcus Barrera said it’s important for the city to help with revitalization.

    Christensen said that across the country, she’s seen people unite to try to transform the vacant big boxes in their community.

    “They’ve really sort of banded together and taken on this white elephant of a concrete structure,” Christensen said.

    Location

    The same factors that make big boxes attractive shopping destinations — convenient locations and abundant parking — also make them desirable for governments.

    The San Benito school district moved into their administration building, formerly a H.E.B., in 1996, and the Harlingen school district moved its offices into a renovated Kroger grocery store in the center of the city at the intersection of two highways in 2007.

    “To find that much land in the city of Harlingen would be difficult,” said Ramiro Flores, Harlingen’s assistant superintendent for district operations. “We would have had to have gone to the outskirts.”

    Flores said Harlingen’s new building helped consolidate some district staff that had previously been scattered in offices throughout the city. And the site’s parking lot is also helping to alleviate parking problems at the district’s stadium next door.

    In McAllen, city leaders hope the library, at the busy 23rd Street and Nolana intersection, will get many visitors due to its proximity to the heavily-trafficked Wal-Mart Supercenter down the street.

    Design

    Part of what makes the big box route so desirable to cities is that buildings are easily customized.

    “The structures are sound, but it’s a shell,” Flores said. “You can do quite a bit to (build) it the way you need easily.”

    In Weslaco, the conversion from grocery store to City Hall was so thorough that the building now has no apparent hints of its Albertsons past.

    “What was the store is now City Hall,” said Weslaco City Commissioner John Cuellar. “You no longer think about what this once was. Dry goods? Poultry? You don’t look at it that way.”

    Donna City Manager Oscar Cuellar — who led the Pharr EDC when it bought the Wal-Mart — said the organization made a conscious choice not to spend much money on the exterior.

    The building looks like a store from the outside, but it was more important to focus on the inside, he said.

    But for others, like McAllen and Weslaco, appearances are important.

    “They didn’t want it to be referred to as the former Albertsons,” said Ed Alcocer, a partner with the architectural firm that designed Weslaco’s City Hall. “I think it’s been erased from people’s minds when they look at the facility.”

    [Reply]

  93. Big boxes go empty. Will they be reborn?

    Tim Logan

    February 1, 2009

    Feb. 1–They rise out of the asphalt like monuments. Our “temples of consumption,” as writer Joel Garreau calls them. The places we go to buy all the stuff.

    Big boxes. Everywhere, but unloved.

    But we’re not buying stuff like we used to. Many of the temples are going dark. And that raises a tricky question: What happens to the shells left behind?

    It’s a question with greater urgency in this season of retail woe, as ailing chains go under and the strong ones put off expansion.

    Since October, every Value City Department Store has closed. All the Linens ‘n Things, too. Circuit City is on deck. That’s a thousand stores from just three chains. In all, 148,000 stores of all sizes closed last year, according to the International Council of Shopping Centers. It predicts 73,000 more by July. With that, plus the usual churn of stores, it’s not hard to envision a glut of empty boxes piling up all over the country.

    The situation is aggravated by the weak economy, and the tendency of retailers to relocate to newer digs and more shoppers. But such moves leave trouble in their wake: empty stores. Less foot traffic for smaller shops next door. Declining sales tax revenue.

    The problem is, there just aren’t that many uses for these old stores. Who wants a football-field-sized former CompUSA? What do you do with an old Home Depot, a box so big you can measure its floor space in acres?

    That’s the challenge facing Jim Rosen. He’s a vice president at Pace Properties in Brentwood, and the listing agent on a soon-to-be-empty Wal-Mart on Manchester Road in Town and Country. It’s his job to find a new tenant.

    Even in the best of times, the list of likely candidates for a 155,000-square-foot box is pretty short, limited to the biggest retailers in America. And if those chains want to be on that bustling stretch of road in west St. Louis County, they probably already are.

    Home Depot is right next door. There’s a Sam’s Club a mile up the street and a Costco being built a mile the other way. Wal-Mart often won’t give up a lease to a Target or Kmart. As for IKEA or Bass Pro Shops, the space is too small. It’s too big for much else.

    “It’s difficult,” Rosen said. “A space that size has some challenges.”

    It’s also difficult because the business model of the retailers is to treat the stores as essentially disposable, said Ellen Dunham-Jones, an architecture professor at Georgia Tech. That Town and Country Wal-Mart, for instance, is just 15 years old. In the mid-’90s it replaced an older Wal-Mart down the street, and later this year will close because of a Super Wal-Mart going up a mile west in Manchester Highlands, a new shopping plaza Pace is building right by Highway 141.

    “A typical Wal-Mart is only expected to last five years. After that, they expect to do a ‘consolidation,’ which is really closing the store,” Dunham-Jones said. “Planned obsolescence is built into the model.”

    Sometimes, those stores get scooped up by another retailer, someone new to the area, or lower on the food chain. Other times they become what Dunham-Jones calls “ghost boxes,” massive and empty.

    She’s one of a growing number of architects and planners studying ways to reuse such spaces, often in nonretail ways.

    Creative reuse, of course, is not a new idea. Cities have been doing it for centuries. Warehouses are now loft condos. Factories become restaurants. Hundred-year-old brick homes get carved up into apartments, and then reassembled as grand homes a generation later.

    But, too often, the auto-centric world of suburban retail has been seen differently, Dunham-Jones said.

    “Culturally, we have expected our suburbs to remain frozen in whatever form they were birthed in,” she said. “The reality is the suburbs, too, are changing. Nothing really ever does stay the same.”

    Artist Julia Christensen spent seven years traveling the country, studying those changes. Particularly, she visited old Wal-Marts and Kmarts that have been put to new use, often by nonprofit organizations and community groups that wanted lots of cheap space and good road access.

    Christensen found schools, libraries and health clinics. And churches, lots of them. Wal-Mart has said at least 16 of its stores have been turned into churches since 2002. “Temples of consumption” turned into, well, temples.

    That’s what happened in south St. Louis County in 2003, when Christ Memorial Lutheran Church bought an empty Target on South Lindbergh Boulevard. Today the church has services there, plus a fitness center and a day care. A 20-foot-tall cross rises over the vast parking lot.

    They rent space out, too — 60,000 square feet next door to a ’50s-themed buffet restaurant/kids’ party palace called America’s Incredible Pizza Company, which also has a place in an old Burlington Coat Factory in St. Peters.

    “We gutted the place and started over,” said marketing director Tricia Wisbrock. It’s even got an indoor go-kart track.

    There are other reuses around, too. A former Kmart in Belleville is now a factory. Another in Fenton became a Gold’s Gym. While some old shopping plazas, particularly in north St. Louis County, have been torn down and built anew, a few have become almost entirely repurposed.

    Such is the case of St. Louis Marketplace, a massive strip mall near the western edge of the city of St. Louis. Save a Kmart and a Dollar General, most of the retail is long gone. But the parking lot fills up at least a bit every day with the cars of people who work there.

    Today, St. Louis Marketplace has a Charter Communications field office, a library branch, a children’s nonprofit group and two health clinics. The former Sam’s Club is now occupied by a dance equipment-maker that employs hundreds of people. And the old Phar-Mor has been converted into the sleek, colorful confines of Switch, an advertising agency.

    Three years ago, the agency was looking for a new home, and checked out this long-empty box. It worked, said chief executive Michael O’Neill, and today they have a spacious, open-floor-plan office, along with a big storage room for old videotape, a shop to make stage props for trade shows and conventions, and a garage to modify vans for event marketing. About 90 people work there.

    “It’s a little weird telling clients that we’re the next door down from the Kmart,” said president John Nickel. “But once they’re inside, they get it.”

    About 10 miles west on Manchester Road, another shopping center just might soon face a similar adjustment, if the economy doesn’t turn around. It’s called Manchester Meadows, home to the Wal-Mart where Rosen is trying to find a new tenant. It also has an empty Linens ‘n Things and a vacant PetSmart, which moved out in November, leaving just the stencil of its logo on the building’s sandstone facade. A few smaller storefronts sit empty, too.

    There’s still life in Manchester Meadows: a Home Depot, a Sports Authority, an OfficeMax, a busy post office and a string of smaller storefronts. But on a sunny afternoon last week, most of the cars in the Meadows’ vast plain of parking lot were in front of the Wal-Mart, and when it goes, they likely will, too.

    “Losing a single store might not be so devastating,” Dunham-Jones said. “But when the anchor goes dead, it’s just a matter of time.”

    Despite the challenges, Rosen is optimistic that he’ll find someone for the Wal-Mart. “We’re looking for a needle in a haystack, but we’ll do it,” he said, noting they may break the big box into a few smaller ones.

    A Wal-Mart spokesman said its former sites are often broken into pieces. He also noted that 87 percent of the space in nine Missouri stores it leases, but doesn’t occupy, is rented to another tenant. A spokesman for Inland Western Retail Real Estate Trust Inc., the Chicago-based shopping center giant that owns Manchester Meadows, says it “continues to actively market” the plaza’s other spaces.

    But if that doesn’t work, Christensen said, it might be an opportunity for more creative uses for the space. And maybe, she said, it’s time to think about the wisdom of building box after box after box for new stores, each with their own massive parking and infrastructure and a relatively short life span.

    “All of this means something for the future,” she said. “We need to think about how we use these buildings. Like, forever.”

    tlogan@post-dispatch.com — 314-340-8291

    —–

    To see more of the St. Louis Post-Dispatch, or to subscribe to the newspaper, go to http://www.stltoday.com.

    Copyright (c) 2009, St. Louis Post-Dispatch

    Distributed by McClatchy-Tribune Information Services.

    For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

    NYSE:CC, NYSE:HD, NYSE:WMT, NYSE:TGT, NASDAQ-NMS:SHLD, NASDAQ-NMS:CHTR, OTC-PINK:PMORQ, NASDAQ-NMS:PETM, NYSE:TSA, NYSE:OMX,

    [Reply]

  94. I’m guessing, that if GGP goes under, that the Fox River Mall in Grand Chute, WI, would be sold to Simon, but if that were to happen, then they would be directing their attention from two other Simon-owned and operated shopping malls in our area, Bay Park Square in Ashwaubenon, and Forest Mall in Fond du Lac, unless they make it so that all three malls coexist under Simon’s ownership.

    [Reply]

  95. From Newsday

    Fortunoff shutters NYC store, stoking bankruptcy rumors

    Zachary R. Dowdy and Keiko Morris

    February 4, 2009

    Feb. 4–The Manhattan location of Fortunoff, a beloved Long Island retailer and anchor for The Source mall in Westbury, is closing, fueling speculation that the Westbury-based store is headed for bankruptcy — again.

    Fortunoff officials announced that the store at 57th Street and Fifth Avenue has closed its doors, just days after its lease expired.

    And Fortunoff’s parent company, NRDC Equity Partners, is backing off plans to move the jewelry business into its many Lord & Taylor stores, and will now either sell the subsidiary or file for bankruptcy protection, observers said.

    “It was planned to close in January because we were planning on going into Lord & Taylor,” Arlene Putterman, a Fortunoff spokeswoman, said yesterday.

    The move has now been stopped “because of … NRDC’s decision to sell us,” she said.

    NRDC spokeswoman Lori Rhodes declined to comment yesterday.

    NRDC, based in Purchase, bought Fortunoff last February after it filed for bankruptcy protection, with NRDC saying it planned to spend $100 million refurbishing Fortunoff stores and pledging to open more.

    NRDC has purchased several retailers in the past few years, including Lord & Taylor in 2006 and Canadian retail giant Hudson’s Bay Co. last year.

    But only a year after NRDC acquired Fortunoff, analysts such as Howard Davidowitz of Davidowitz & Associates, a national retail consulting and investment banking firm in Manhattan, are not sure where the company is headed, but several indicators point to bankruptcy as a likely option.

    “If you go into Fortunoff now, there are holes in the inventory,” Davidowitz said yesterday. “That means the trade is not supporting them.”

    He said a bankruptcy filing and liquidation of the iconic Long Island chain would not surprise him, adding that Fortunoff carries merchandise in two of the worst performing sectors of retail: jewelry and furniture.

    “No one is going to do what [NRDC owner Richard] Baker did,” Davidowitz said. “He bought the Titanic. It was going down.”

    If there are potential buyers, Davidowitz noted that obtaining the financing to close the deal would be difficult in this environment.

    In addition to its Westbury location, Fortunoff’s Long Island presence includes outdoor furnishings and accessory stores in Melville and Smithtown, and a furniture clearance store in Garden City.

    [Reply]

  96. From Yahoo! news

    15 Companies That Might Not Survive 2009
    Rick Newman
    Friday February 6, 2009, 11:53 am EST

    Who’s next?

    With consumers shutting their wallets and corporate revenues plunging, the business landscape may start to resemble a graveyard in 2009. Household names like Circuit City and Linens ‘n Things have already perished. And chances are, those bankruptcies were just an early warning sign of a much broader epidemic.

    Moody’s Investors Service, for instance, predicts that the default rate on corporate bonds – which foretells bankruptcies – will be three times higher in 2009 than in 2008, and 15 times higher than in 2007. That could equate to 25 significant bankruptcies per month.

    We examined ratings from Moody’s and data from other sources to develop a short list of potential victims that ought to be familiar to most consumers. Many of these firms are in industries directly hit by the slowdown in consumer spending, such as retail, automotive, housing and entertainment.

    But there are other common threads. Most of these firms have limited cash for a rainy day, and a lot of debt, with large interest payments due over the next year. In ordinary times, it might not be so hard to refinance loans, or get new ones, to help keep the cash flowing. But in an acute credit crunch it’s a different story, and at companies where sales are down and going lower, skittish lenders may refuse to grant any more credit. It’s a terrible time to be cash-poor.

    That’s why Moody’s assigns most of these firms its lowest rating for short-term liquidity. And all the firms on this list have long-term debt that Moody’s rates Caa or lower, which means the borrower is considered at least a “very high” credit risk.

    Once a company defaults on its debt, or fails to make a payment, the next step is usually a Chapter 11 bankruptcy filing. Some firms continue to operate while in Chapter 11, retaining many of their employees. Those firms often shed debt, restructure, and emerge from bankruptcy as healthier companies.

    But it takes fresh financing to do that, and with money scarce, more bankrupt firms than usual are likely to liquidate – like Circuit City. That’s why corporate failures are likely to be a major drag on the economy in 2009: In a liquidation, the entire workforce often gets axed, with little or no severance. That will only add to unemployment, which could hit 9 or even 10 percent by the end of the year.

    It’s possible that none of the firms on this list will liquidate, or even declare Chapter 11. Some may come up with unexpected revenue or creative financing that helps avert bankruptcy, while others could be purchased in whole or in part by creditors or other investors. But one way or another, the following 15 firms will probably look a lot different a year from now than they do today:

    Rite Aid. (Ticker symbol: RAD; about 100,000 employees; 1-year stock-price decline: 92%). This drugstore chain tried to boost its performance by acquiring competitors Brooks and Eckerd in 2007. But there have been some nasty side effects, like a huge debt load that makes it the most leveraged drugstore chain in the U.S., according to Zacks Equity Research. That big retail investment came just as megadiscounter Wal-Mart was starting to sell prescription drugs, and consumers were starting to cut bank on spending. Management has twice lowered its outlook for 2009. Prognosis: Mounting losses, with no turnaround in sight.

    Claire’s Stores. (Privately owned; about 18,000 employees.) Leon Black’s once-renowned private-equity firm, the Apollo Group, paid $3.1 billion for this trendy teen-focused accessory store in 2007, when buyout funds were bulging. But cash flow has been negative for much of the past year and analysts believe Claire’s is close to defaulting on its debt. A horrible retail outlook for 2009 offers no relief, suggesting Claire’s could follow Linens ‘n Things – another Apollo purchase – and declare Chapter 11, possibly shuttering all of its 3,000-plus stores.

    Chrysler. (Privately owned; about 55,000 employees). It’s never a good sign when management insists the company is not going out of business, which is what CEO Bob Nardelli has been doing lately. Of the three Detroit automakers, Chrysler is the most endangered, with a product portfolio that’s overreliant on gas-guzzling trucks and SUVs and almost totally devoid of compelling small cars. A recent deal with Fiat seems dubious, since the Italian automaker doesn’t have to pony up any money, and Chrysler desperately needs cash. The company is quickly burning through $4 billion in government bailout money, and with car sales down 40 percent from recent peaks, Chrysler may be the weakling that can’t cut it in tough times.

    Dollar Thrifty Automotive Group. (DTG; about 7,000 employees; stock down 95%). This car-rental company is a small player compared to Enterprise, Hertz, and Avis Budget. It’s also more reliant on leisure travelers, and therefore more susceptible to a downturn as consumers cut spending. Dollar Thrifty is also closely tied to Chrysler, which supplies 80 percent of its fleet. Moody’s predicts that if Chrysler declares Chapter 11, Dollar Thrifty would suffer deeply as well.

    Realogy Corp. (Privately owned; about 13,000 employees). It’s the biggest real-estate brokerage firm in the country, but that’s a bad thing when there are double-digit declines in both sales and prices, as there were in 2009. Realogy, which includes the Coldwell Banker, ERA, and Sotheby’s franchises, also carries a high debt load, dating to its purchase by the Apollo Group in 2007 – the very moment when the housing market was starting to invert from a soaring ride into a sickening nosedive. Realogy has been trying to refinance much of its debt, prompting lawsuits. One deal was denied by a judge in December, reducing the firm’s already tight wiggle room.

    Station Casinos. (Privately owned, about 14,000 employees). Las Vegas has already been creamed by a biblical real-estate bust, and now it may face the loss of its home-grown gambling joints, too. Station – which runs 15 casinos off the strip that cater to locals – recently failed to make a key interest payment, which is often one of the last steps before a Chapter 11 filing. For once, the house seems likely to lose.

    Loehmann’s Capital Corp. (Privately owned; about 1,500 employees). This clothing chain has the right formula for lean times, offering women’s clothing at discount prices. But the consumer pullback is hitting just about every retailer, and Loehmann’s has a lot less cash to ride out a drought than competitors like Nordstrom Rack and TJ Maxx. If Loehmann’s doesn’t get additional financing in 2009 – a dicey proposition, given skyrocketing unemployment and plunging spending – the chain could run out of cash.

    Sbarro. (Privately owned; about 5,500 employees). It’s not the pizza that’s the problem. Many of this chain’s 1,100 storefronts are in malls, which is a double whammy: Traffic is down, since consumers have put away their wallets. Sbarro can’t really boost revenue by adding a breakfast or late-night menu, like other chains have done. And competitors like Domino’s and Pizza Hut have less debt and stronger cash flow, which could intensify pressure on Sbarro as key debt payments come due in 2009.

    Six Flags. (SIX; about 30,000 employees; stock down 84%). This theme-park operator has been losing money for several years, and selling off properties to try to pay down debt and get back into the black. But the ride may end prematurely. Moody’s expects cash flow to be negative in 2009, and if consumers aren’t spending during the peak summer season, that could imperil the company’s ability to pay debts coming due later this year and in 2010.

    Blockbuster. (BBI; about 60,000 employees; stock down 57%). The video-rental chain has burned cash while trying to figure out how to maximize fees without alienating customers. Its operating income has started to improve just as consumers are cutting back, even on movies. Video stores in general are under pressure as they compete with cable and Internet operators offering the same titles. A key test of Blockbuster’s viability will come when two credit lines expire in August. One possible outcome, according to Valueline, is that investors take the company private and then go public again when market conditions are better.

    Krispy Kreme. (KKD; about 4,000 employees; stock down 50%). The donuts might be good, but Krispy Kreme overestimated Americans’ appetite – and that’s saying something. This chain overexpanded during the donut heyday of the 1990s – taking on a lot of debt – and now requires high volumes to meet expenses and interest payments. The company has cut costs and closed underperforming stores, but still hasn’t earned an operating profit in three years. And now that consumers are cutting back on everything, such improvements may fail to offset top-line declines, leading Krispy Kreme to seek some kind of relief from lenders over the next year.

    Landry’s Restaurants. (LNY; about 17,000 employees; stock down 66%). This restaurant chain, which operates Chart House, Rainforest Café, and other eateries, needs $400 million in new financing to finalize a buyout deal dating to last June. If lenders come through, the company should have enough cash to ride out the recession. But at least two banks have already balked, leading to downgrades of the company’s debt and the prospect of a cash-flow crunch.

    Sirius Satellite Radio. (SIRI – parent company; about 1,000 employees; stock down 96%). The music rocks, but satellite radio has yet to be profitable, and huge contracts for performers like Howard Stern are looking unsustainable. Sirius is one of two satellite-radio services owned by parent company Sirius XM, which was formed when Sirius and XM merged last year. So far, the merger hasn’t generated the savings needed to make the company profitable, and Moody’s thinks there’s a “high likelihood” that Sirius will fail to repay or refinance its debt in 2009. One outcome could be a takeover, at distressed prices, by other firms active in the satellite business.

    Trump Entertainment Resorts Holdings. (TRMP; about 9,500 employees; stock down 94%). The casino company made famous by The Donald has received several extensions on interest payments, while it tries to sell at least one of its Atlantic City properties and pay down a stack of debt. But with casino buyers scarce, competition circling, and gamblers nursing their losses from the recession, Trump Entertainment may face long odds of skirting bankruptcy.

    BearingPoint. (BGPT; about 16,000 employees; stock down 21%). This Virginia-based consulting firm, spun out of KPMG in 2001, is struggling to solve its own operating problems. The firm has consistently lost money, revenue has been falling, and management stopped issuing earnings guidance in 2008. Stable government contracts generate about 30 percent of the firm’s business, but the firm may sell other divisions to help pay off debt. With a key interest payment due in April, management needs to hustle – or devise its own exit strategy.

    – With Carol Hook, Danielle Burton and Stephanie Salmon

    [Reply]

  97. I read that article yesterday.

    Claires (Who also owns stores under ‘The Icing’ name) is a bit of a suprise, but then again, I’m not in their target, being a guy. Thus I don’t pay as much attention.

    Blockbuster and Krispy Kreme though, those are not suprises at all. Blockbuster is being socked by the likes of Netflix, and Krispy Kreme is a case of ‘too much expansion’ during the early ’00s, that has pretty much left the remainder of the chain in an irreversible spiral to death. The whole ‘hot fresh glazed donuts’ novelty is worn out, and with people having less disposable income nowadays, stuff like this gets cut first.

    We don’t have Rite Aid stores here in WI, but it’s easy to see why they’re in trouble. Walgreens and CVS have the lion’s share of the market, and both chains have, over the years, built out new clean stores. Unlike Rite Aid, who seemed to just acquire smaller chains, never building out newer stores, and have never had a uniform prototype like Walgreens does. Their prescription setup is also rather antiquated, compared ot the likes of Walgreens, CVS, and even regional WI-based player ShopKo, with their pharmacies within their discount stores.

    [Reply]

  98. There is obviously a lot to know about this. I think you made some good points in Features also.

    [Reply]

  99. You have sparked some of my interest and I am going to do some additional research. Feel free to check out some my blog in the near future… thanks

    [Reply]

  100. Retail Traffic

    Regional Mall REITs Muddle Through Fourth Quarter

    February 17, 2009

    Despite the challenging marketplace, regional mall REITs posted a respectable performance in the fourth quarter of 2008. With more than half of the seven REITs reporting so far, two beat analysts?? consensus estimates and two missed; primarily due to impairment charges on suspended projects. Those halted developments will likely bode well for the companies?? long-term health, say analysts.

    Simon Property Group and Macerich Co. exceeded analysts?? consensus estimates for the quarter ended Dec. 31, 2008, by $0.09 per share and $0.15 per share respectively. CBL & Associates Properties and Taubman Centers, Inc. fell short of estimates by $0.17 per share and $1.36 per share respectively. Three of the seven regional mall REITs that have yet to report results are: Glimcher Realty Trust, which will report on Feb. 18; General Growth Properties, which will report on Feb. 23, and PREIT, which will report on Feb. 25.

    “Given a weak economy, obviously we are seeing decreases in occupancy levels,” says Robert McMillan, industry analyst with New York City-based Standard & Poor??s Equity Research Services. “Nothing catastrophic, but we expect [this trend] will pick up. That??s offset by the fact that rent growth is still continuing.”

    Simon??s occupancy levels decreased by 110 basis points at its regional mall portfolio, to 92.4 percent, and by 80 basis points at its outlet center portfolio, to 98.9 percent. It reported an increase in FFO per share of 5.7 percent in the fourth quarter to $1.86 from $1.76 per share in the same period of 2007. The figure reflects a $21 million impairment charge incurred by Simon for having abandoned several projects in the pre-development stage.

    Average rents posted by Simon showed increases in the fourth quarter-rents rose 6.5 percent at regional malls, to $39.49 per square foot, and by 7.7 percent at outlet centers, to $27.65 per square foot. Analysts say that performance will be difficult to maintain in 2009 as retailer bankruptcies increase and remaining tenants gain more leverage to negotiate down, says Michael Magerman, senior vice president responsible for the REIT sector with Real Point LLC, a Horsham, Pa.-based research firm. (Read story here).

    “Nothing is going down at an alarming rate, but there are signs that things are slipping,” Magerman says. “There??s clearly a noticeable difference from recent years when retail REITs had been showing consistent same-store NOI increases of 4 percent and 5 percent. Now we are approaching zero.”

    Macerich reported its NOI fell 2.4 percent, due to a decrease in rents and an increase in bad debt, said Tom O??Hern, senior executive vice president and CFO of Macerich, during last week??s earnings call. Its FFO grew 30 percent to $2.08 per share for the quarter compared with $1.45 for the same period a year earlier. Macerich??s occupancy decreased 80 basis points in the quarter to 92.3 percent from 93.1 percent the year prior.

    Missing analysts?? consensus estimates, Taubman Centers reported earnings of $1.36 per share in the quarter, due to a $116 million impairment charge related to a reversal of a previous court decision that it would not have to submit an environmental impact statement for its Oyster Bay project on Long Island, N.Y., which was handed down last year. As a result, Taubman reported a decline in FFO growth of $0.55 per share, compared with an increase of $0.87 per share in the fourth quarter of 2007. Occupancy at Taubman??s malls decreased 90 basis points during the period, to 90.3 percent from 91.2 percent from the year prior, but average rents registered an increase of 4.0 percent to $45.12 per square foot.

    CBL & Associates Properties missed estimates, by $0.17 per share. It reported a 3.6 percent decline in FFO per share in the fourth quarter to $0.80 per share from $0.83 per share a year ago. The company incurred an $8 million impairment charge on its abandoned projects. CBL??s same-store NOI declined 4.0 percent for the quarter while its occupancy fell 90 basis points to 92.3 percent from 93.2 percent in the same quarter of 2007.

    “While CBL??s portfolio was resilient in the fourth quarer times are ahead,” David Wigginton, analyst at Macquarie Research, wrote on Feb. 6. “We don??t believe the fourth quarter felt the full impact of the bankrupt tenants and we expect that to weigh on operating metrics in the first quarter of 2009. In general, we expect property fundamentals to decline through the first half of 2009 for all mall owners.”

    –Elaine Misonzhnik

    [Reply]

  101. From the Washington Post

    Mall Owner Posts Gains, Warns About Debt

    February 24, 2009

    General Growth Properties said last night that its fourth-quarter funds from operations rose on a series of one-time gains, but the shopping mall owner reiterated warnings that it may be forced to seek bankruptcy protection if it cannot rework the terms of billions of dollars in loans coming due this year.

    The Chicago company said that funds from operations — a key measure of performance for real estate investment trusts — rose 17 percent, to $222.2 million from $190.4 million in the fourth quarter a year earlier.

    Excluding one-time items, core funds from operations fell 14.8 percent, to $231 million, or 72 cents per share. Analysts polled by Thomson Reuters had projected core funds from operations of 85 cents per share.

    General Growth said it was continuing discussions with its lenders and that it was “considering all strategic alternatives.” Yesterday’s earnings release came after a two-week delay, and company executives said they would not hold a conference call this quarter. General Growth also said it would not provide earnings forecasts for upcoming quarters.

    General Growth is one of the biggest mall owners in the country. It owns and manages more than 200 regional shopping malls in 44 states. It owns Fashion Show in Las Vegas, Water Tower Place in Chicago, Faneuil Hall in Boston and Ala Moana Center in Honolulu, plus Landmark Mall in Alexandria, Tysons Galleria in McLean and Laurel Commons in Laurel.

    The 50-year-old company was started by the Bucksbaum brothers, who were in the grocery store business. In the real estate market’s boom years, General Growth used debt to aggressively buy up properties. Its biggest acquisition came in 2004, when it paid nearly $13 billion for the Rouse Co., known for creating Columbia and building Baltimore’s Inner Harbor.

    General Growth now has about $27 billion in debt and has struggled over the last few months to get loan extensions. The company said last night that it has $1.18 billion in past-due debt and $4.09 billion in loans that could be called in by creditors. Last week, it said it was in default on two Las Vegas properties. It is trying to raise cash by selling off some of its malls. The Harborplace mall in the Inner Harbor is among the properties up for sale.

    Its stock price had plunged by 99 percent, from a 52-week high of $44.23 in May to a low of 24 cents in November. It closed yesterday at 36 cents.

    The company has reduced its workforce by 20 percent, replaced its chief financial officer and suspended its dividend. Fitch and other ratings services have downgraded its credit ratings.

    Some retail analysts have said the company could be close to filing for bankruptcy protection. If it seeks court protection from its creditors, analysts said, the move would be among the largest real estate downfalls in history.

    The company said revenue fell 3 percent, to $900.9 million, as the economic downturn reduced rental income.

    For the full year, General Growth said its funds from operations fell 22 percent, to $858.9 million from $1.1 billion. Excluding one-time items, funds from operations rose 1.2 percent, to $891.8 million.

    [Reply]

  102. FLASH!

    Ritz Camera files for protection

    February 24, 2009

    BELTSVILLE, Md., Feb 24, 2009 (UPI via COMTEX) — Retail giant Ritz Camera, dragged down by a recession and slumping sales, has filed for bankruptcy protection in Delaware, court records show.

    The retail group grew from an Atlantic City, N.J., portrait studio, begun in 1918, to a chain with 800 stores in 40 states. A consumer switch from film to digital cameras — with decreased revenue from film processing — and a severe economic downturn has hurt the company, The Washington Post reported Tuesday.

    The company didn’t respond to requests for information on possible layoffs or store closings, the newspaper said.

    In the age of digital cameras, the photography business “is very competitive with bigger retailers like Best Buy and Wal-Mart offering better prices,” Mark Millman, president of Millman Search Group, told the Post.

    [Reply]

  103. more huge losses, this time from Saks. will it ever end?

    http://www.bloomberg.com/apps/news?pid=20601205&sid=aDnrm.TxyI0Y&refer=industries

    [Reply]

  104. Add one more

    Final sales at Fortunoff begins ThursdayBY ELLEN YAN AND EMI ENDO
    February 25, 2009
    Final sales at Fortunoff will begin tomorrow under plans from a group of well-known liquidators, whose bid to buy the bankrupt retailer got final court approval yesterday.

    “Going-out-of-business sales will commence, and we’ll continue until everything is sold,” said Scott Bernstein, principal of SB Capital in Great Neck, an asset and liquidation specialist in the winning group.

    The one-time retail giant, which is based in Westbury, went for more than $85 million, or 88.8 percent of its value, in the winning auction bid late Monday by Great American Group, Hudson Capital, SB Capital, Tiger Capital, Kimco Realty Services and jewelry liquidators Bobby Wilkerson Inc. and The Gordon Co. – some of the firms overseeing the closures of bankrupt chains Circuit City and Linens ‘n Things.

    Bernstein said salespeople who were laid off are being called back to help with Fortunoff’s closure. The merchandise, mostly home goods and jewelry, is expected to go within two months, with the usual increase in discounts as the weeks go on, he said.

    Last week, Fortunoff said it would stop accepting customers’ gift cards, but the liquidators said yesterday they would be honored for a certain period of time. Details of the liquidation are expected to be ironed out today.

    The obituary for Fortunoff comes after 87 years. The business was started in Brooklyn by Max and Clara Fortunoff.

    With the economy sinking and sales slipping, Fortunoff was sold last March to NRDC Equity Partners, which is based in Purchase.

    Fortunoff filed for Chapter 11 bankruptcy protection again on Feb. 5, its second filing in a year. The retailer had said it was seeking a buyer to possibly continue operations, but no potential new owners surfaced. As the auction neared, the company laid off about 300 workers in its corporate offices.

    Before its recent layoffs, the retailer employed 900 people on Long Island. It has 19 locations in New York, Connecticut, New Jersey and Pennsylvania.

    “I’m really very sorry to see an icon like Fortunoff disappear,” said Thomas Pabst, chief operating officer of the Great American Group, one of the asset and liquidation specialists that won the auction. “I’m disappointed to see people losing their jobs, but we’re going to do our best to offer the New York-New Jersey area some incredible values over the next few months over the time of this liquidation sale.”

    A team of two other well-known liquidators, Hilco Merchant Resources and Gordon Brothers Retail Partners, also bid for the company.

    “There’s no one bidding to sustain the company,” said retail analyst Howard Davidowitz of Manhattan. “Fortunoff ends up the same with any of these groups.”

    CLEARANCE

    Fortunoff will join a growing list of national retailers with Long Island stores that have succumbed in the past year to the recession:

    Bombay & Co.

    Circuit City

    Expo Design Center

    KB Toys

    Linens ‘n Things

    National Wholesale Liquidators

    Steve and Barry’s

    [Reply]

  105. Aeropostale is killing off JimmyZ. And another one bites the dust

    [Reply]

  106. Wouldn’t this be the second time Jimmy’z went under? I recall their first being around in the 80s. Too bad; they could be a bit pricey but IMO their clothes were much better.

    I’m surprised to read that Claire’s is on the deathwatch. You would think that preteen girls are a recession-proof market.

    [Reply]

  107. Bear economy won’t slow retail’s bulls
    By Curt Hazlett

    Royce Pullam got a sense of the retail industry’s growing problems last May at RECon. “We could see a definite slowdown,” said Pulliam, CEO of Lexington, Ky.–based Global Fitness Holdings, which operates a chain of 32 Urban Active Fitness health clubs. He also saw “the possibility of a lot of backfills of big boxes.”

    The slowdown has since become a meltdown, and Urban Active finds itself in an enviable position. With plans to add seven clubs this year and eight next year, Urban Active has more suitors and fewer competitors when it comes to choice locations. “We’ve had a lot of contacts from developers and REITs about potentially backfilling spaces if they became available,” said Pulliam. Meanwhile, profits are up despite the economy. “People are still joining health clubs,” Pulliam said. “It’s a release for them.”

    Retailers themselves are finding little release these days. Michael P. Niemira, chief economist and head of research at ICSC, predicts that some 73,000 stores may close in the first half of this year, on top of an estimated 148,000 that shut down last year. Big names like Circuit City and Linens ’n Things are among those that filed for bankruptcy protection, and many others may follow in the wake of grim holiday sales. “I would not be at all surprised to see a dozen or more chains file bankruptcy in the next few months,” said C. Britt Beemer, chairman of America’s Research Group, a consulting firm based in Charleston, S.C.

    But the suffering is not universal. Amid the sick and wounded are companies focused on growth, ranging in size from Wal-Mart and German discount grocer Aldi down to Urban Active and Noodles & Company. For these, the industry’s troubles bring a respite from the overheated real estate market of recent years and a chance to flex some muscle in negotiations.

    “There aren’t that many retailers out there interested in expansion,” said Beemer, “but anybody who wants to open up a store right now is going to get a rock-bottom lease, probably 20 or 30 percent under the market values of two years ago. The value is incredible.”

    Whether a retailer is shutting or opening stores at this time depends on many factors, but Jim Kovacs, managing director of retail services at Colliers Arnold, in Tampa, Fla., says one determinant is the skill with which a company has navigated the red-hot real estate market of the past few years. “Those that were smart and didn’t overdo it during the high times and don’t have a hangover today are the ones who can really focus on looking for the best centers, the best co-tenancies and the best markets,” said Kovacs. “The retailers that had a good real estate model going into the downturn are the ones that are continuing expansion. Those that expanded for the sake of expansion when the times were wild are the ones in trouble.”

    What kinds of chains are expected to grow this year? According to a list compiled for Colliers International by brokers at its affiliate firms, they include household names like Costco, Panera Bread Company and TJX, as well as significantly less known names like Party City, a seller of party supplies, and Smart & Final, a nonmembership grocery warehouse chain with 282 stores in the West.

    Kovacs cites Panera and TJX — the parent of HomeGoods, Marshalls and T.J. Maxx — as retailers with effective real estate models. Panera “has always paid attention to the bottom line and how real estate affects it, and when real estate leasing in power centers and lifestyle centers got out of hand, Panera was fairly quiet,” he said. “Now that real estate is becoming more in line, we’re starting to see more action.” Similarly, TJX “wouldn’t break its model just for the sake of expansion. Now they are in terrific shape.”

    With consumers struggling to make ends meet, discount retailers are more likely these days to have the means and desire to expand. Aldi says it plans to open 75 stores in the U.S. this year — fewer than the 100 it opened last year, but a substantial investment nonetheless. Most of those are to open in the Midwest and the East, where Aldi already has a presence.
    Wal-Mart says it will continue its aggressive expansion, though its capital expenditures for the current fiscal year will be lower than last year. Wal-Mart plans to open 125 to 140 Supercenters, 17 grocery-format stores and about 20 Sam’s Clubs.

    The demise of one retail chain — Mervyns — is providing an opportunity for two other retailers — Kohl’s and Forever 21 — to speed their growth plans. In December Kohl’s and Forever 21 submitted the winning joint bid for Mervyns leaseholds, paying $6.25 million to acquire the leases of 46 Mervyns stores; Kohl’s will assume 31 of these. A month later Kohl’s announced plans to pay nearly $36 million for five Mervyns stores in California and Nevada owned by Macquarie DDR Trust, a joint venture of Developers Diversified Realty Corp. and Australia’s Macquarie Group.

    Discounters are not the only ones capable of growth in a down market. In some cases, small chains with fresh concepts are finding the circumstances right for expansion. Broomfield, Colo.–based Noodles & Company has opened 204 restaurants across 18 states on the strength of its eclectic menu, a variety of ethnic takes on noodles. The company plans to open up to 35 stores this year, most of which will be company-owned and in the Denver, Minneapolis and Washington areas. “Certainly, we are still cautious about the economy, and we are certainly being prudent,” said Tim Mosbacher, Noodles’ vice president of real estate. “But we have, to date, weathered the storm fairly well with our comparable sales, and we still believe our brand has opportunities for additional growth.”

    Mosbacher says he is getting more calls from property owners. “We have risen to the top of some people’s lists,” he said. “We probably would have been on their radar screens anyway, but given that so many retail tenants have pulled back, that’s helped our cause.”
    That popularity has translated into a bargaining advantage. “Developers are willing to make better deals to fill space,” Mosbacher said. “I don’t think there have been wholesale discounts, but we are striking some very favorable deals for our company. We’ve been able to get a few things that historically we have not been able to acquire.”

    Pulliam has also found it easier to make good deals. “It’s loosening up a little bit,” Pulliam said. “We don’t have 20 other retailers fighting for the dirt we want. We’re not in competition on as many pieces of property as we were before.” P&P Development, the chain’s development arm, is building most of its new stores, but Pulliam says he is also open to converting existing big-box spaces to Urban Active’s need. The chain is doing just that with a vacant Circuit City in Lexington.

    Pulliam says he sees no reason the trend should fade, but he does see a reason to look forward to RECon, in just two more months. “We feel we’ll be courted quite heavily by developers across the country,” Pulliam said. “There are a lot of big-box vacancies.”

    Hmmmmm, true in some respects but I wonder how many of these chains are getting ready to catch nifes in a little while if conditions don’t improve quickly. Remember this time around even the landlords are choking on leveraged debt. Will companies have a place to go if the REITS go into receivership like GGP? Just trying to read between the lines here.

    [Reply]

  108. GENERAL GROWTH RECEIVES MALL BIDS

    BloombergFor more Business, visit NYPOST.COM

    March 4, 2009

    General Growth Properties, the mall owner at risk of bankruptcy, received offers of almost $400 million for properties including Boston’s Faneuil Hall and New York’s South Street Seaport, according to a person familiar with the matter.

    The properties – including Harborplace & the Gallery in Baltimore – were put on the block in December. More than 10 offers were received, including offers for the entire portfolio and for individual properties, said the person, who asked not to be identified because the sales process isn’t public.

    General Growth is negotiating with lenders and selling real estate to remain solvent. The company last week said it has $1.18 billion in past-due debt, and warned again it may be forced into bankruptcy.

    The person familiar with the sale wouldn’t identify the bidders, which include private groups, buyers from overseas and real-estate developers. The highest bids for each property total almost $400 million, the person said.

    General Growth spokesman Tim Goebel declined to comment.

    [Reply]

  109. Good news!

    Buckle shines in a tough retail environment

    John Keenan

    March 12, 2009

    Mar. 12–The Buckle is still shining.

    The Kearney, Neb.-based retail clothing chain announced that net income for the fourth quarter ending Jan. 31, 2009, increased 18 percent. Income for all of 2008 increased 39 percent.

    “We are pleased with our results for both the quarter and for the fiscal year, and feel that both our people and our product have us well positioned for continued success in 2009,” Dennis Nelson, president and chief executive, said during a conference call Wednesday.

    The higher quarterly earnings came on a 22 percent increase in sales. For the year, sales were up 28 percent, to a record $792 million.

    Fourth-quarter profit rose to $34.3 million, 74 cents a share, compared with $29.1 million the previous year. For the year, income increased to $104.4 million, compared with $75.2 million for fiscal 2007.

    Denim continued to be the fabric of success for the Buckle, accounting for approximately 43.5 percent of sales for the quarter and 41.5 percent of sales for the year.

    Fourth-quarter sales of men’s merchandise increased approximately 14 percent, with denim, woven and knit shirts and outerwear being highlights for the stores, according to Nelson. For the fiscal year, sales of menswear increased approximately 26 percent.

    Fourth-quarter women’s merchandise sales were up approximately 28 percent, with denim, knit tops, outerwear, accessories and footwear being highlights. For the year, sales of women’s merchandise were up about 30 percent, Nelson said.

    The chain plans to continue its steady growth.

    During the fourth quarter, the chain opened four new stores and completed three “substantial” remodels, Nelson said.

    “We anticipate opening 21 new stores during fiscal 2009,” he said.

    A store opened in Buffalo, N.Y., last month, and a store scheduled to open in Mays Landing, N.J., later this year will put the chain in 41 states.

    The Buckle now has 391 stores in 40 states.

    [Reply]

  110. General Growth extends forbearance request

    By ALEX VEIGA (AP Real Estate Writer)

    March 17, 2009

    LOS ANGELES – Troubled shopping mall owner General Growth Properties Inc. said lenders have waived default on a $2.58 billion credit agreement until the end of the year, allowing the company some time to regain its financial footing.

    But its Rouse Company unit extended the expiration date on a request for forbearance on another more than $2 billion worth of debt, after it failed to convince enough of its bondholders to give it more breathing room.

    General Growth said it has received enough consents from lenders under its 2006 corporate credit agreement, which includes a $1.99 billion term loan and $590 million revolving credit facility, to extend a forbearance agreement currently in place through the end of 2009.

    But the Chicago-based real estate investment trust, struggling to stave off a Chapter 11 bankruptcy filing, also had asked holders of $2.25 billion worth of bonds last week to put off calling in payments until the end of this year while it tries to refinance its debt load.

    That consent solicitation, launched by Rouse, was set to expire at 5 p.m. EDT on Monday, but the company said it has extended the offer until 5 p.m. Friday because it only received enough consents from holders of its 7.20 percent notes due 2012 and 6.75 percent notes due 2013.

    General Growth needed 90 percent of holders of its 3.625 percent and 8 percent notes due this year to agree to not demand payment of principal and interest on the debt for the rest of 2009. Interest on the bonds would still accrue. It also required 75 percent of holders of its 7.20 percent notes due in 2012 and 5.375 percent and 6.75 percent notes due in 2013 to agree, in order for the forbearance agreement to take effect.

    But by Monday’s deadline, only about 42 percent of the holders of its 3.625 percent notes and just 59 percent of its 8 percent noteholders had agreed to the terms. It nearly cleared the hurdle with holders of its 5.375 percent notes, coming up just 6 percent short.

    Meanwhile, a total of $395 million in unsecured bonds issued by the unit came due Sunday. It’s unclear whether or not those lenders will call in the debt, which could force General Growth into bankruptcy, given its lean cash reserves. Another $200 million is set to come due on April 30.

    Calls to spokesman Tim Goebel were not immediately returned Monday.

    General Growth, which has a stake in more than 200 malls across 44 states, has seen its fortunes sour as the U.S. economy worsened.

    The company has suspended its dividend, halted or slowed nearly all development projects and cut its work force by more than 20 percent. Its stock has been pummeled, dropping from above $44 a share to well under $1 in the past 12 months.

    But the main problem has been a scarcity of credit for refinancing the billions in debt it took on during an aggressive expansion effort that included the $7 billion purchase of a competitor in 2004.

    In recent months, the company has sought to get lenders to rework its debt terms but warned last fall it might have to seek bankruptcy protection.

    General Growth has said it has $1.18 billion of past due debt and about $4.09 billion worth of debt that could be called in. It also has an additional $1.44 billion worth of consolidated mortgage debt and about $595 million of unsecured bonds scheduled to mature during 2009 that remains to be refinanced, repaid or extended.

    [Reply]

  111. Delaware judge agrees to Gottschalks liquidation

    April 1, 2009

    WILMINGTON, Del. – A Delaware bankruptcy judge has agreed to the liquidation of Fresno, Calif.-based Gottschalks, which operates 55 department stores and three specialty apparel stores in six states.

    Judge Kevin Carey was to sign the liquidation order Wednesday afternoon, and going-out-of-business sales could start as early as Thursday.

    A Gottschalks attorney said two groups bid for 12 hours on Tuesday for the right to conduct the liquidation. The winner guaranteed a 98 percent return on the cost of inventory, valued at about $106 million, and more than $3 million for fixtures and equipment.

    Under the sale order, Estee Lauder cosmetics will be included in store closing sales for six weeks. After that, Estee Lauder will be allowed to buy back inventory at 74 percent of retail cost.

    [Reply]

  112. Informative and entertaining. I’ve added your blog to my “reading material.” Keep me updated!

    [Reply]

  113. According to Plain Vanilla Shell, Sears is adding a Toy Department to their stores, or at least beta testing the concept in key locations. I’m glad to see this. It reminds me of the approach used by Gimbels, a beloved department store chain that had something for everyone. Hopefully, Sears expands that strategy to emulate a broader offering. BUT, on the same note, hopefully they will be able to edit and control SKU’s like Gimbels did to allow for “breadth” but not “depth” to their inventory levels. For those unfamiliar with Gimbels, a woman could go into Gimbels for a formal, expensive designer dress for example, or a garment in an inexpense or mid-price point.

    [Reply]

    Jonah Norason (Pseudo3D) Reply:

    While Sears adding a toy department is a cool idea, let’s not forget Gimbels, beloved as it was, went out of business…

    [Reply]

  114. Jonah,

    It went out of business as a result of British-owned BATUS absorbing it. They consolidated it with another one of their holdings, Marshall Field’s, and then sold Field’s to Dayton-Hudson (now Target Corp.), who the sold it to defunct May Company, who then sold it to Macy’s, who converted Field’s to the Macy’s nameplate. Macy’s is still up and running. So, Gimbels wasn’t a “failure” in the traditional retail sense. It didn’t close because of deteriorating sales. BATUS’ move to shutter the chain was mysterious to many.

    If Sears can pull it together, they can make this concept work for them. They definitely need something to set themselves apart from other retailers, as their appliance sales have suffered declines and have eroded over the past decade. Similarly, their Craftsman brand has to be hurting from big box retailers like Home Depot capturing dollars from the DIY’ers.

    [Reply]

  115. Looks like Bachrachs is going under. The mens clothing store is closing at least two more stores, included a recently remodeled store in Bloomington. I have seen empty Bachrach shells in other malls in Illinois.

    [Reply]

  116. Chip,
    Here in Wisconsin, they went out in Grand Avenue first (along with every other retailier), then Northridge before the mall went under, and then Southridge (a viable mall) a few years ago. The Bachrach’s shell is still intact, housing a long list of temporary cheesy tenants.

    This is a prime example of what I mentioned before about retailers not responding to demand. They haven’t edited their merchandise mix in decades. It is the same today as it was in 2000, and 1990, and 1980. Their formula is the same: viscose sweaters (including their signature shimmery metallic, mustardy fall and pastel spring color palettes), synthetic fiber suits, italian “look” shoes with the pointy toes that have since gone out of vogue, an array of $55 silk ties, and $48.50 belts with ornate accoutrements.

    Wake up Bachrachs. We appreciate that you “know your customer”, but even a niche retailer needs to mix things up a bit and adjust their assortment to meet the changing styles of the demographic to which it caters.

    Anyone else agree with the above assessment?

    [Reply]

  117. It went out of business as a result of British-owned BATUS absorbing it. They consolidated it with another one of their holdings, Marshall Field’s, and then sold Field’s to Dayton-Hudson (now Target Corp.), who the sold it to defunct May Company, who then sold it to Macy’s, who converted Field’s to the Macy’s nameplate. Macy’s is still up and running. So, Gimbels wasn’t a “failure” in the traditional retail sense. It didn’t close because of deteriorating sales. BATUS’ move to shutter the chain was mysterious to many…………..

    onlineuniversalwork

    [Reply]

Leave a Reply


× 4 = twelve