Shawn Massey, CCIM, SCLS

Weekly CRE and Retail Article Round-Up – November 30th, 2012

I hope you enjoy this weeks articles!

Should Tax Be Charged on Online Sales?

From the ICSC

Holiday season off to robust start
The holiday shopping season got off to an early start on Thanksgiving Day, with many shoppers bolting from the dining room table and racing for the stores or logging onto their computers to find deals. Macy’s, Sears, Target, Toys ‘R’ Us and Walmart all opened their doors earlier than ever this year, in a quest to please the bargain hunters. Total spending for the four days that ended Sunday hit $59.1 billion, up nearly 13 percent over last year’s holiday period, according to the National Retail Federation.

Foot traffic at shopping centers grew 8.2 percent year on year for the four-day weekend that commenced on Thanksgiving Day, according to ShopperTrak. “Traffic on Black Friday weekend sets the tone for the entire season,” said David Keating, vice president of corporate communications at General Growth Properties. “If this Black Friday is any indication, we anticipate a successful holiday season. Indications point to an increase in traffic this year over last.” Most of General Growth’s 143 malls opened at midnight on Thanksgiving, and the parking spaces filled up within two hours, according to Keating. “The trend of full parking lots continued throughout the weekend,” he said.

Walmart reported its best sales ever for Black Friday, on the response to its one-hour guaranteed prices on key electronics items. “During the highest traffic period (8 p.m.-midnight) we processed nearly 10 million transactions and almost 5,000 items per second,” noted one tweet on Walmart’s website. About 1.3 million employees served some 22 million customers at Walmart stores on Black Friday, according to the retailer.

Not all the activity took place at brick-and-mortar stores, though. Online sales grew 17.4 percent year over year on Thanksgiving Day, and 20.7 percent on Black Friday, according to IBM, which analyzes transactions from 500 retailers. Consumers unwilling to endure the crowds turned instead to their smartphones and tablets, with 24 percent of Americans using a mobile device to visit a retail website on Black Friday, up from 14.3 percent last year. Mobile sales exceeded 16 percent of total online sales on Black Friday, up from 9.8 percent in 2011, according to IBM.

The online action continued into Cyber Monday, the day retailers ramp up online deals to entice consumers who are back at the office in front of their computers after the days off. Cyber Monday online traffic rose 11 percent over last year’s comparable day, as the top 500 retail sites received some 207 million U.S. visits, according to Experian Marketing Services. was the top visited site on Thanksgiving Day, Black Friday and Cyber Monday, the firm reports. Walmart came in second on those days.

And the shopping is not over yet. Only about 31.6 percent of Americans say they have completed their holiday shopping list, versus 31.9 percent a year ago, according to the ICSC–Goldman Sachs Consumer Tracking Survey. “All in all, it was a strong start to a long holiday-shopping season, and consumers clearly have a lot of gift buying still to do,” said Michael P. Niemira, ICSC’s chief economist and director of research. ICSC expects sales for November and December will increase 3 percent over last year’s season.

Landlords learn to flaunt sustainability at conference
Shoppers have gained sustainability smarts and usually know a phony, “greenwash” effort when they see one, experts say. But these same folks are apt to respond enthusiastically to holistic “social marketing” efforts — things that engage their inner “green” while also promoting additional positives, such as fair trade or sustainably sourced products. And thus the retail world must perform a balancing act in trying to market sustainability, says Michael Greeby, executive vice president of The Greeby Cos., a Lake Bluff, Ill.–based commercial real estate consulting firm. Greeby, co-chairman of this week’s ICSC RetailGreen Conference, in Phoenix, sees a shift to a more pragmatic, features-and-benefits marketing approach, rather than the in-your-face efforts of a few years back.

Often there is a gap between customer perceptions of sustainability and actual green projects, Greeby says. “Unfortunately, the most-sustainable initiatives in lighting, HVAC, water and energy projects aren’t visible signs of a sustainable shopping center,” Greeby said. Replacing metal halide lights with florescent ones can cut a fixture’s energy use by half, he says, but that will not be apparent to guests. But if a developer puts up visible solar panels and wind turbines and uses renewable materials and recycling bins, it is more likely that shoppers will view the center as sustainable. “It is our job to better educate and highlight such projects to customers,” he said.

The most-effective strategies are those that invite “customer engagement,” according to Dustin Watson, director of sustainability at Baltimore-based DDG, a planning and design firm of which he is a partner. “Centers that encourage social cohesion and inclusion, use resources effectively and enhance the environment are more sustainable.” This is the ethic apparently in force at Forest City Enterprises’ Silver-LEED-certified Northfield Stapleton, in Denver, a brownfield redevelopment of the airport. The shopping center uses signage to highlight and explain its energy-saving methods and also furnishes related walking-tour materials, says Paulette Caputo, Forest City’s vice president of retail marketing. The shopping center’s sustainability promotions on Twitter and Facebook facilitate the exchange of green-practices information among shoppers, she says.

An “e-waste” recycling drive at Forest City’s Mall at Robinson, in Pittsburgh, has gathered some 87 tons of old computers and peripherals over the past five years, Caputo says. Earth Day events there and at other Forest City shopping centers engage shoppers too, while media blitzes that promote the firm’s car-charging stations have generated publicity, she says. “Customers are pleased to see companies take a responsible role,” said Caputo. “While it’s difficult to link sales related to sustainable efforts, we have reaped the rewards of these loyal shoppers for years because of our efforts.”

Latin America keeps architects busy: CenterBuild
Latin America’s populations are gaining upward mobility and consumer savvy, resulting in a new generation of passionate shoppers and new demand for retail centers. This is creating opportunity for architects eager to display retail-design skills that have been largely dormant in the U.S. over the past five years, according to panelists at the CenterBuild Conference, in Phoenix.

“Latin America went through a baby boom much like in the U.S., and it is now passing into its most productive phase, with more and more people buying more washing machines, computers, refrigerators, cars and the like,” said Jordan Malugen, director of Mexico City–based Prudential Real Estate Investors. “We are also seeing an accumulation of family assets and more available consumer credit, giving both new and established consumers increasing purchasing power.” Latin Americans are demanding higher-quality goods and retail formats, he said. “Whereas 20 years ago you could put up something with cinder-block construction and people would go, now the bar has been raised.” Malugen says it is easier to build in most parts of Latin America than in growth spots elsewhere in the world. “There are fewer [state-imposed] capital controls than India and China and more convertibility in currency.”

In Brazil dozens of malls, including conventional ones and factory outlets, have been completed in recent years or are planned, said Malugen, whose firm is helping fund projects in that country and in Mexico. “Brazilians have traveled to the U.S. and are familiar with U.S. brands and want those in their country,” he said. “A lot of these developers are using U.S. architects.”

RTKL, a Baltimore-based architecture firm, has forged partnerships with Brazilian architects who help tailor its plans in accordance with local tastes, mores and requirements, said Jeffrey Gunning, an RTKL senior vice president. Global architecture firm TVSDesign designed Plaza Engaña, an upscale mall set to open by Christmas in Santiago, Chile, and is also designing an upscale expansion to Mall Plaza Antofagasta, in that country’s port city of Antofagasta.

Of course, there are not only opportunities, but challenges as well. “Zoning issues in Brazil can be pretty complicated, if not Byzantine, and there are no guarantees a project is going to get approved,” said Gunning. Moreover, Brazil levies a hefty 25 percent tax on out-of-country payments for architectural and other professional services. “We realized we needed to establish a Brazilian office in order to alleviate some of the tax burden,” Dunning said. Brazil’s government also maintains strict oversight of the shopping center planning process. Two centers in São Paulo that are not RTKL clients were flagged and delayed by the city for not conforming to relatively minor requirements. “There is a whole new level of scrutiny,” Gunning said, “to make sure [designs] comply.”

Weingarten uses social media to help tenants succeed
Weingarten Realty Investors is counting on social media to help its smaller tenants succeed. As part of its ShopCentric initiative to help mom-and-pops, Weingarten is teaming up with two new social-media platforms: MeNetwork and Gobza.

By adding these platforms to its tenants’ marketing and advertising resources, Weingarten says it hopes to offer another way for smaller retailers to build sales, awareness and mobile capability. “There are so many social-media tools out there today, and everyone is trying to figure out what’s the right resource,” said Bill Goeke, Weingarten’s vice president of property management. “These are two new, very fresh ideas that we believe are going to be successful for our retailers.”

MeNetwork is a mobile marketing platform that enables retailers to push custom offers, events and announcements to anyone carrying a mobile phone or tablet with the MeNetwork app installed. “This is a way for retailers to push savings opportunities directly to customers,” said Goeke. “It also gives retailers the real-time ability to see where the shoppers are at and to track their buying habits.” Weingarten is offering complimentary one-year MeNetwork subscriptions to certain retailers, starting with its higher-end properties in the Houston area, the firm’s home base.

Gobza, available free to any business or shopper, is a search engine that allows retailers to advertise sales and deals. Users search for specific deals based on what they already know they want to purchase, rather than having random promotions sent daily. A Gobza shopper will then pay about 10 percent of the face value of that offer. “Gobza is a way to help the small-shop retailer to manage costs, while still being able to offer discounts,” said Goeke.

Weingarten is rolling out Gobza across its Texas properties first, with plans to expand the program nationally. The firm’s portfolio contains some 300 neighborhood and community shopping centers and other properties, comprising some 59 million square feet across 22 states.

Winstanley Enterprises and Surrey Equities bought the 450,000-square-foot Rhode Island Mall, in Warwick, R.I., from GLL Real Estate Partners for $38 million. Kohl’s, Sears and Walmart anchor the mall.

• Oak Brook, Ill.–based Inland Diversified Real Estate Trust acquired The Corner, an 80,000-square-foot shopping center in Tucson, Ariz., for $29.5 million from an undisclosed seller. Tenants include Nordstrom Rack and Five Guys Burgers and Fries.

• A Midwest-based private developer bought a 12,500-square-foot Trader Joe’s store in Brookfield, Wis., from a California private investment firm for $4.7 million. The building is an outparcel at a Target-anchored center called Underwood Crossing.

• A private investor based outside the U.S. bought the 4,200-square-foot 20301 Hawthorne Boulevard, in Los Angeles, for $4.6 million from a private investor based in Torrance, Calif. Tenants include 7-Eleven and The Coffee Bean & Tea Leaf.

• A last-minute Black Friday surge could not offset the impact of Hurricane Sandy on U.S. chain-store sales for November, which grew by a weak 1.7 percent year on year, excluding drugstores, according to ICSC’s index. A late-month surge in online shopping, which will be booked to December’s figures as soon as merchandise ships, is also a factor. Many consumers also used layaway programs to buy holiday merchandise in November, pushing those sales into December, as retailers do not count them until the final payment is made.

American Eagle Outfitters said third-quarter net sales grew 11 percent year on year, to $910 million, driven by a 10 percent increase in same-store sales. American Eagle posted a $32 million loss during the quarter, owing to the shutting down of its 77kids chain.

Ann Inc. posted net sales for the quarter of $612.5 million, versus $564 million a year ago. Same-store sales companywide grew 5.5 percent. AnnTaylor same-store sales increased 4.3 percent year on year, while the Loft division’s same-store sales grew 6.2 percent. Ann Inc. earned $66.9 million during the quarter, up from $54.7 million a year ago. “During the quarter, we also made our entry into Canada, opening our first store in Toronto in September, followed by two additional stores in November,” said CEO Kay Krill, speaking to investors. “The response has been outstanding, and we are very excited about the opportunities in this market.”

J.Crew signed a lease for its first store outside North America, a former Burberry space on Regent Street in London that will open next year.

Kroger Co., the largest U.S. grocery chain, reported a third-quarter net income gain to $316.5 million from $195.9 million a year ago, while total sales grew 6 percent to $21.81 billion, and same-store sales grew 3.2 percent.

• Simon Property Group and Tanger Factory Outlet Centers plan to open two factory outlet centers in 2014 — one in Charlotte, N.C., and the other in Columbus, Ohio. The 350,000-square-foot Charlotte property will be branded with Simon’s Premium Outlet banner, and the 350,000-square-foot Columbus property will carry the Tanger Outlets banner. Simon Property will manage and market the Charlotte center, and Tanger will manage and market the one in Columbus. They will share leasing duties. The firms opened Tanger Outlets, in Texas City, Texas, last month.

Many of those consumers who visit a store and then make their purchase online are not motivated by price alone, but also by an unsatisfying in-store experience, according to a holiday shopping report from the Kellogg School of Management at Northwestern University. Some 59 percent of the shoppers sampled rated the service they had received as “poor” or “average.” Among those who engaged in this “showrooming,” roughly 40 percent said that they had not intended to buy online, but that they were driven to do so after experiencing poor customer service in a store.

It seems Houston has a Texas-size appetite for mobile shopping. The city ranked first in the Interactive Advertising Bureau’s annual survey of the most mobile-shopping-savvy U.S. cities. Seattle, San Francisco, Los Angeles, New York City, Atlanta, Chicago, Dallas, Boston and Philadelphia rounded out the top 10, in that order. The rankings were determined through mobile-usage patterns, including completion of purchases by phone or a tablet and the use of such a device to research or shop for items later bought in a physical store or online.

Millions of Americans “shopped small” on Small Business Saturday and made a big impact on local communities during the annual event. According to the National Federation of Independent Business, consumer awareness of Small Business Saturday jumped to 67 percent from 34 percent just two weeks ago. Of those, nearly half went shopping on that day. The new awareness translated into increased spending. In the aggregate, those who knew about the day spent some $5.5 billion at independent merchants. Preholiday surveys projected that consumers would spend about $5.3 billion. Separately, American Express reported that Small Business Saturday card-member transactions at small merchants rose 21 percent year on year.

Retail Round-Up: Aeropostale, Guess, rue21 All Report Earnings

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From the Desk of Al Taf


Fiscal cliff could hit retailers hard, White House report predicts

November 26, 2012, WASHINGTON — Consumer spending could drop by almost $200 billion next year while depressing real consumer-spending growth by 1.7% if middle-class taxes rise in response to the fiscal cliff, according to a report released Monday by a White House economic team.

The report, “The Middle-Class Tax Cuts’ Impact on Consumer Spending & Retailers,” by the President’s Council of Economic Advisers, found that the reduction in consumer spending would be about four times the total amount spent by $226 million on Black Friday last year and would likely spread across all areas of consumer spending.

Fitch: Reallocation of market share remains key retail ratings driver in 2013

November 26, 2012, New York — Market share defensibility remains a key challenge for many traditional U.S. retailers, against a backdrop of minimal growth and heavy competition, according to a Fitch Ratings report.

While Fitch’s overall credit outlook for the U.S. retail industry is generally stable for 2013, there will continue to be a modest negative tilt to rating activity. Fitch expects 3% to 4% total retail sales growth in 2013, similar to 2012 levels, driven mainly by 2% to 3% in same-store sales and modest square-foot expansion. Fitch expects slow improvement in employment levels and flat to lower wages, which could be further affected by food inflation next year, will translate into uneven comps performance among retailers

Retail foot traffic edges up on Black Friday, but sales decline slightly

November 26, 2012, CHICAGO — Retailers saw increased foot traffic this Black Friday, but that didn’t generate higher sales, according to ShopperTrak, the world’s largest counter of retail foot traffic.

According to ShopperTrak’s analysis, when compared to Black Friday 2011, retail foot traffic rose 3.5%, to more than 307.67 million store visits. However, retail sales decreased 1.8%, with shoppers spending an estimated $11.2 billion on Friday, compared to $11.4 billion last year.

 comScore forecasts 17% rise in holiday spending, to $43.4 billion

November 26, 2012 Reston, Va. — Online retail spending for the November – December period will reach $43.4 billion, a 17% gain versus year ago, according to comScore. The increase represents an improvement compared with last season’s 15% rise, and is also far ahead of the retail industry’s expectation for a 4.1% increase in consumers’ overall spending this holiday season.

 Survey finds Hurricane Sandy has moderate impact on retail supply chain

November 19, 2012 New York — Importers and manufacturers who sell to America’s major retailers continue to be optimistic regarding a strong fourth quarter and holiday shopping season, according to Capital Business Credit, a non-bank lender that services the retail sector.

According to CBC’s quarterly Global Retail Manufactures and Importers Survey, 74% of importers of retail goods believe the winter/holiday season will be the same or stronger than last year. Of those who believe it will be stronger, the majority estimate that sales will increase by more than three percent compared with last year. Respondents indicated that Black Friday will continue to be the busiest shopping day of the season with Cyber Monday and the day after Christmas tied at a distant second.

Deloitte Consumer Spending Index rose sharply in October

November 16, 2012 New York — Deloitte reported Friday that its Consumer Spending Index rose sharply in October, primarily due to the significant increase in new home prices.

The Index tracks consumer cash flow as an indicator of future consumer spending. The Index, which comprises four components — tax burden, initial unemployment claims, real wages and real home prices — rose sharply to 4.02 from a reading of 3.54 the previous month.

Apparel Stores

Urban Outfitters Q3 profit misses; to open 49 stores next year

November 20, 2012 Philadelphia — Urban Outfitters reported Monday that net income in the third quarter rose 17.4% to $59.5 million, compared with $50.7 million in the prior-year period but missing Wall Street estimates.

Sales rose 13.6% to $692.9 million, narrowly missing analysts’ expected $692.5 million in revenue. Same-store sales dipped 1%.

Chico’s profit soars in Q3

November 20, 2012 Fort Myers, Fla. — Chico’s FAS reported Tuesday that net income for the quarter ended Oct. 27 surged 57.4% to $41.7 million, compared with $26.5 million in last year’s third quarter.

Sales increased 18.2% to $636.7 million, and same-store sales grew 9.9%.

Casual Male Retail Group repeats loss in Q3; speeds up opening of DXL stores

November 16, 2012 Canton, Mass. — Casual Male Retail Group reported Friday a loss of $1.6 million in the third quarter, flat with the prior year’s third quarter.

Sales dipped slightly to $88.7 million from $89 million, and same-store sales inched up 1.5%. However, same-store sales for Destination XL rose 13.8% in the quarter.

Discount Stores

Fred’s Q3 income falls 27%

November 20, 2012 Memphis, Tenn. — Fred’s on Tuesday said third-quarter net income dropped 27% amid rising costs and declining same-store sales, as sales in its established stores dropped and its costs rose.

The company reported Tuesday that it earned $6.6 million in the three months through Oct. 27, compared with $9 million a year earlier.

Electronics Stores

Report: Best Buy open to considering lower bid

November 19, 2012 New York — Best Buy is open to considering a lowered bid from founder Richard Schulze, according to the New York Post.

The report, citing sources close to the company, suggested the chain is now open to a bid of around $20 per share.

Home Improvement & Office Products

Kirkland’s reports Q3 loss

November 20, 2012 Nashville, Tenn. — Kirkland’s Inc. lost $416,000 for the period ended Oct. 27, compared with a profit of $1.2 million a year earlier. Analysts had predicted a bigger loss.

Revenue inched down to $96.7 million from $97.1 million. Same-store sales were down 4.7%.

Dollar Stores, Warehouse Club & Other Retailers

Dollar General to Join S&P 500, Replacing Cooper Industries

November 26, 2012, Standard & Poor’s said it will add discount chain Dollar General Corp. (DG) to its S&P 500 index, replacing Cooper Industries PLC (CBE), after Eaton Corp. (ETN) completes its acquisition of the electrical products maker.

Shares of Dollar General, which is set to join the S&P 500 after the close of trading on Friday, jumped 3.4% to $51 after hours. The shares of companies joining the S&P 500 often rise because many portfolio managers try to track the index. To do that, they must buy shares of the companies that become part of the index.

L’Oréal to acquire cosmetics brand Urban Decay

November 26, 2012, NEWTON, Mass. — L’Oréal has signed an agreement with Castanea Partners to acquire the fashion-forward, edgy beauty brand Urban Decay.

Terms of the deal, which is expected to close by the end of the year, were not disclosed. In the fiscal year ended in June 2012, Urban Decay, which is sold in such beauty retailers as Ulta and Sephora, recorded net sales of $130 million.

Zale Q1 loss bigger than expected

November 21, 2012 Dallas — Zale Corp. reported a bigger-than-expected first-quarter loss on Tuesday, but said it is on track to turn a profit again.

The jewelry retailer lost $28.3 million for the quarter that ended Oct. 31, compared to a year-ago loss of $31.9 million. Revenue rose 1.8% to $357.5 million. Same store sales rose 3.9%. It was the chain’s eighth consecutive quarter of positive same-store sales.

DSW reports profit drop in Q3; to open up to 30 stores in 2013

November 20, 2012 New York — DSW Inc. reported Tuesday that net income fell 6.6% to $50.1 million, compared with $53.7 million in the same period last year.

Sales increased 11.7% to $592.7 million, compared with last year’s third quarter sales of $530.7 million and beating Wall Street’s expected $548.1 million in revenue.

Hibbett profit, sales rise in Q3; to open 60 stores in 2013

November 16, 2012 Birmingham, Ala. — Hibbett Sports reported Friday that net income for the quarter ended Oct. 27 climbed 18.8% to $19 million, compared with $16 million in the year-ago period.

Sales rose 9.6% to $202.9 million, and same-store sales increased 6.4%. The sporting goods retailer said it is on track to open 57 to 60 new stores in fiscal 2013, expand approximately 17 high-performing stores, and close up to 18 stores.

Foot Locker Q3 profit surges 61% on strong sales

November 16, 2012 New York — Foot Locker Inc. reported Friday that net income for the quarter ended Oct. 27 surged 61% to $106 million, compared with $66 million in the year-ago period. The recent quarter’s results, which surpassed Wall Street expectations, included a $9 million tax benefit stemming from the settlement of a foreign tax audit.

Revenue rose 9.3% to $1.52 billion from $1.39 billion, beating analysts’ expected $1.47 billion in revenue. Same-store sales climbed 10.2%.

Dollar Tree Cites Sales Pressure in Q3

November 16, 2012 CHESAPEAKE, Va. — Dollar Tree here said adjusted earnings improved by 12.2% in the third quarter while the company saw comparable-store sales improve by 1.6%.

Bob Sasser, president and chief executive officer, said sales were pressured as a result of consumer anxiety, a calendar that pushed some Halloween sales to the fourth quarter and by tough comparisons to results in the same period a year ago.

Lease Review – What should you focus on outside of the major lease terms?

From The Desk of Garrick Brown

Terranomics Top Five

Black Friday creeps into Thanksgiving permanently 11.24

Holiday Shopper Sentiment Report: Black Friday and Cyber Monday Consumer Face-Off
Retailing Today 11.21

NRF Applauds Health Care Rules
Supermarket News 11.20

Bernanke backs Fed’s move to economic thresholds
Reuters 11.20

Bernanke Sees Bright Spots on GDP Horizon
Globe Street 11.20

The Big Picture

Walmart Protests In Chicago: Union Groups Target Retail Chain On Black Friday
Huffington Post 11.24

Holiday retail sales have Post Office testing same-day shipping 11.22

Franchise sector experiences modest growth
Pizza Marketplace 11.21

Technomic makes 2013 restaurant trend predictions
Pizza Marketplace 11.20

Holiday forecasts prove a mixed bag
Crain’s Chicago Business 11.19

Chase has finger on the holiday pulse
Retailing Today 11.19

Shop On Thanksgiving? Hell Yeah, Say Consumers
MediaPost Communications/Marketing Daily 11.19

Discount shopping turns 50 11.18

Apple Tops List of Nine Most Profitable Retail Stores in the U.S.
USA Today 11.18

ICSC: Fiscal cliff resolution could boost holiday spending
The Journal Times 11.17

Retailer Roundup
Urban Outfitters Q3 profit misses; to open 49 stores next year
Chain Store Age 11.20

DSW reports profit drop in Q3; to open up to 30 stores in 2013
Chain Store Age 11.20

Fred’s looks to grow through Diplomat Specialty partnership and Drug and Dollar concept pharmacy
Drug Store News 11.20

Sears Holdings moves toward member-based business model
Drug Store News 11.19

The Restaurant Review

Papa John’s Will Sign 200 Franchise Agreements in North America This Year
Restaurant News 11.20

Regional News and Development Notes

Levin: Sturdy Retailer Optimism Going Into Holidays
Globe Street 11.21

Hostess Mediation Fails, Back to Liquidation
Supermarket News 11.21

M&A Mania

Bob Evans acknowledges it’s looking to unload Mimi’s Cafe
Business First 11.20

Report: Best Buy open to considering lower bid
Chain Store Age 11.19

Largest Papa John’s franchisee acquires 26 more units
Pizza Marketplace 11.16

RET/Investment Outlook

Buyer Pays Premium for Walgreens Triple-Net, an all-cash basis at a market-low cap rate of 5.25%
Globe Street 11.20

J.C. Penney CEO tries to change the way we shop

Why So Much Confusion About Holdover Tenants?

The Past And Future Of America’s Biggest Retailers

Franchise industry provides opportunities for thousands of veterans

From the Desk of Al Taf


Moody’s: Retailers that opened early on Thanksgiving night gained advantage

NOVEMBER 29, 2012, Atlanta — Year-over-year retail dollar volume growth on Thanksgiving and Black Friday was healthy at 5.6% as many retailers started the holiday shopping season earlier this year and consumers welcomed the opportunity to find bargains, according to a study by First Data Corp.’s First Data SpendTrend analysis for Black Friday 2012 compared with Black Friday 2011.

Retail category performance varied considerably with building material, garden equipment and supply dealers, and clothing and clothing accessories stores being the top performers. Average ticket growth at retailers swung from negative (-0.9%) in 2011 to positive (+1.9%) in 2012 over the Thanksgiving to Black Friday period. Shoppers boosted their overall spend and retailers shifted discounting strategies. The rise in average tickets reflect the strengthening position of retail as some merchants may have less of an incentive to drive sales at the expense of profits.

ShopperTrak: Foot traffic up 8.2% during ‘Black Weekend’

NOVEMBER 27, 2012 Chicago — ShopperTrak reported Tuesday that it estimates retail foot traffic over the Black Weekend shopping period rose 8.2% year-over-year. That equates to more than 594 million store visits between Thursday and Monday.

Retail sales increased 2.7%, with shoppers spending about $22 billion across the weekend’s four days. Thursday’s “door-buster” deals drove sales and traffic earlier in the weekend.

US consumer confidence at highest in 4 1/2 years

NOVEMBER 27, 2012 WASHINGTON—U.S. consumer confidence rose this month to its highest level in almost five years, helped by a better outlook for hiring over the next six months.

The Conference Board said Tuesday that its consumer confidence index rose to 73.7 in November from 73.1 in October. Both are the best readings since February 2008. The index is still below the level of 90 that is consistent with a healthy economy. It last reached that point in December 2007, the first month of the Great Recession. But the index has increased from the all-time low of 25.3 touched in February 2009.

Apparel Stores

Discount apparel remains in style

November 29, 2012, TJX Companies reported a 3% comp increase on top of a prior year gain of 4% while Ross Stores said posted a comp increase of 2% compared to last November’s 5% comp increase.

Total sales at TJX increased 7% to $2.2 billion during the November reporting period and so far this year sales at the company have advanced 10% to $20.3 billion. Total sales for November at Ross increased 6% to $813 million and so far this year are up 11% to nearly $7.8 billion.

J. Crew profit surges 54% in Q3

NOVEMBER 29, 2012, New York — J. Crew Group reported Thursday that net income for the third quarter rose 54% to $33.2 million, from $21.6 million in the prior year. The retailer also has signed a lease for its first store abroad, on London’s Regent Street, Women’s Wear Daily reported.

J. Crew’s revenues for the quarter increased 16% to $555.8 million. Same-store sales increased 10%.

Guess Inc. profit plummets 44.7% in Q3

NOVEMBER 29, 2012, Los Angeles — Guess Inc. reported Wednesday a profit of $36.6 million for the third quarter, down 44.7% from net earnings of $66.3 million in the same period last year.

Revenue fell 2.2% to $628.8 million, from $642.8 million in the prior-year quarter, but beating analysts’ expected $624.8 million in revenue. Retail sales in North America dipped 1.3% to $262.1 million. Same-store sales overall dropped 6%.

Aeropostale net income edges up in Q3

NOVEMBER 29, 2012 , New York — Aeropostale reported Thursday that profit for the third quarter rose to $24.9 million, from $24.1 million last year.

Sales increased 2% to $605.9 million, beating Wall Street’s expected $601.2 million. Same-store sales dipped 2%.

American Eagle raises view after strong third quarter

NOVEMBER 28, 2012 Pittsburgh — American Eagle Outfitters Inc. on Wednesday reported a higher-than-expected third-quarter profit, helped by strong same-store sales. The chain also raised its full-year earnings prompting it to raise its full-year forecast for the second time this year.

Net income for the quarter ended Oct. 27 rose to $78.6 million, from $52.4 million a year ago. Sales rose 11% to $910 million. Same-store sales jumped 10%.

Ann Inc. Q3 same-store sales up 5.5%; raises full-year outlook

NOVEMBER 28, 2012 New York — Ann Inc. on Wednesday reported net income was $40.7 million in the third quarter of 2012, versus $32.3 million in third quarter 2011. The company also increased its outlook for the full year of fiscal 2012.

Total net sales for quarter were $612.5 million, compared $564.0 million in the year-ago period. By brand, net sales across all channels of the Ann Taylor brand totaled $244.6 million compared with net sales of $229.7 last year At the Loft brand, net sales across all channels were $368.0 million, compared with $334.3 million last year.

Express Q3 same-store sales down 5%

NOVEMBER 28, 2012  Columbus, Ohio — Express Inc. reported that its net income for the quarter ended Oct. 27 fell to $17.4 million, from $32.7 million a year earlier, amid a fall in same-store sales.

Net sales fell 4% to $468.5 million. Same-store sales declined 5%.

Department Stores

Things looking up for Macy’s, successfully completes debt tender offer

NOVEMBER 28, 2012 CINCINNATI — Good news for Macy’s, which has closed the cash tender offer by its wholly owned subsidiary, Macy’s Retail Holdings, Inc., to purchase up to $700 million in aggregate principal amount of its outstanding debt securities.

Macy’s expects to record additional interest expense relating to the tender offer of approximately $133 million ($83 million after income taxes) prior to Feb. 2, 2013. By completing the tender offer and related financing, Macy’s interest expense is anticipated to be reduced on a full year basis by $30 million.

Neiman Marcus Q1 sales, profit rise

NOVEMBER 27, 2012 Dallas — Neiman Marcus Group reported Tuesday that earnings for the first quarter rose to $127.8 million, compared with $122.8 million in the year-ago period.

Sales rose to $1.07 billion for the quarter, from $1.00 billion last year. Same-store sales climbed 5.4%.

Discount Stores

Comps take a tumble at Target

November 29, 2012, A worse than expected 1% decline in November same store sales indicates the holiday season is off to a slow start at Target.

The 1% decline was substantially worse than the low single digit increase the company forecast at the start of the month when it reported a 2.4% increase for October that was toward the low end of guidance. The November weakness suggest traffic trends may be deteriorating at Target as the company said blamed the decline on a decrease in comparable store transactions following that metric’s flat performance in October.

Grocery Stores

Comp momentum intact at Kroger

November 29, 2012, Kroger extended its same store sales winning streak to 36 consecutive quarters and reported better than expected profits Thursday.

The grocer reported a third quarter adjusted profit of 46 cents a share that exceeded analysts’ consensus estimate by three cents and said its identical store sales grew by 3.2%. Total sales, including fuel, increased 5.9% to $21.8 billion.

ALCO Stores reports favorable quarterly results

November 29, 2012, ABILENE, Kan. — Broad-line retailer ALCO Stores asserted that it is off to a favorable start this holiday season, after reporting a 2.7% in sales from continuing operations for the quarterly period ending November 25.

ALCO reported a profit for the fiscal four-month period ending November 25, showing an increase of $42.4 million from $41.3 million during the same period last year. Its same-store sales dipped 1.7% from a year earlier. Year-to-date figures also increased 1.8% to $383 million from $376.2 million during the same period last year. Year-to-date same-store sales dipped 1.3% from last year.

 The Fresh Market Profit Lags Sales

NOVEMBER 28, 2012 GREENSBORO, N.C. — Shares of The Fresh Market here tumbled Wednesday after the company reported weaker than expected third-quarter earnings.

The fast-growing chain reported net income growth of 19%, to $10.9 million, on sales gains of 22.1%, to $321.5 million, compared with the third quarter of a year ago. Income per share was 23 cents, vs. analyst expectations of 26 cents. For the 39-week, year-to-date span, net income was up 31.2%, to $43.5 million, on sales of $959.3 million, a 21.8% increase.

The Fresh Market Keeps Growing
Nov. 27, 2012,
The Fresh Market is continuing to grow its specialty grocery store chain with new locations in Fishers, Ind., and Laguna Hills, Calif. The Indiana store will be the Greensboro, N.C.-based company’s fifth in the state, while the California location is its fourth signed lease there.

“From bountiful produce and a full-service meat counter, to convenient prepared foods and an in-store bakery, customers will discover that our stores are committed to variety, freshness and value as well as superior customer service,” noted Craig Carlock, The Fresh Market’s president and CEO.


New Development Agreements Push Twin Peaks Past 100 Restaurants Nationwide

Nov 29, 2012, Twin Peaks Restaurants has reached the milestone of 100 restaurant commitments to be opened nationwide in the next several years.

The agreements include 39 restaurants with new franchisees and 50 to be developed by existing franchisees. With 10 new restaurants that opened in 2012 and an estimated 20+ new restaurants scheduled to open in 2013, Twin Peaks expects to have up to 50 restaurants open in more than 15 states by the end of next year.

 Buffalo Wild Wings readies for biggest-ever opening

NOVEMBER 27, 2012 A Buffalo Wild Wings restaurant opening soon in Detroit will be the chain’s biggest yet, and among the most expensive.

Michigan Live reports that the restaurant, set to open by the end of the year in the renovated Temple of Odd Fellows Building in downtown Detroit, will be 20,000 square feet in size. The typical Buffalo Wild Wings is less than a third of that.

Restaurants look further for international growth opportunities
Nov. 26, 2012
, As more restaurant brands look for international expansion opportunities, a handful of new geographical regions outside the usual suspects of China and India are appearing on the radar.

U.S. brands are already well-established in the BRIC region — Brazil, Russia, India and China — and the next frontier has become the countries of MIST — Mexico, Indonesia, South Korea and Turkey.

Dollar Stores, Warehouse Club & Other Retailers

Barnes & Noble swings to profit in Q3

NOVEMBER 29, 2012, New York — Barnes & Noble reported Thursday net income of $2.2 million for the quarter ended Oct. 27, compared with a loss of $6.6 million in the year-ago period.

Revenue was nearly flat at $1.88 billion, missing Wall Street’s expected $1.91 billion in revenue.

Tiffany Q3 misses Street; cuts outlook

NOVEMBER 29, 2012, New York — Tiffany & Co. reported Thursday that net income for the quarter ended Oct. 31 plummeted 30% to $63.2 million from $89.7 million, hurt by higher costs and tax rates as well as continued economic softness.

Revenue climbed 4% to $852.7 million, missing Wall Street’s expected $858.8 million in sales. By region, sales rose 6% in Europe and 3% in the Americas.

Inaugural Building Memphis puts spotlight on local development projects

From Desk of Al Taf


Retail Sales in U.S. Decrease for First Time in 4 Months

NOVEMBER 14, 2012, Retail sales fell in October as American consumers pulled back after a three-month shopping spree and superstorm Sandy slammed into the East Coast, shutting malls and auto showrooms.

The 0.3 percent drop followed a 1.3 percent increase in September that was larger than previously reported, Commerce Department figures showed today in Washington. While it was able to collect information from the affected area, the agency said it couldn’t quantify the impact of the biggest Atlantic storm.

Retail imports to increase 5.9% in November despite superstorm

NOVEMBER 14, 2012 Washington, D.C. — A report released Tuesday by the National Retail Federation and Hackett Associates said that import cargo volume at the nation’s major retail container ports is expected to increase 5.9% in November despite the temporary closure of some ports by superstorm Sandy.

According to the monthly Global Port Tracker report, U.S. ports followed by Global Port Tracker handled 1.42 million Twenty-Foot Equivalent Units in September, the latest month for which after-the-fact numbers are available. That was the same as August but up 3.3% from September 2011. One TEU is one 20-ft. cargo container or its equivalent.

Apparel Stores

Hot Topic Q3 profit leaps 38%

NOVEMBER 15, 2012 City of Industry, Calif. — Hot Topic Inc. reported Wednesday that profit for the third quarter jumped 38% to $4.3 million, from $3.1 million in the year-ago quarter.

Revenue edged up 2% to $179.4 million from $175.8 million, missing Wall Street’s expected $182.9 million in revenue. Same-store sales rose a slight 0.2%.

Limited’s Q3 profit dips, but beats view

NOVEMBER 15, 2012 Columbus, Ohio — Limited Brands Inc. reported Thursday that net income for the quarter ended Oct. 27 dropped to $73.4 million from $94.3 million in the same quarter last year. Results still managed to beat Wall Street expectations.

Limited, which also owns Victoria’s Secret and Bath & Body Works, saw sales slip 5.7% to $2.05 billion from $2.17 billion, but results matched analysts’ forecasts. Same-store sales climbed 5%.

Gap ups outlook on strong Q3

NOVEMBER 15, 2012 San Francisco — Gap Inc. raised its outlook for the year after reporting better-than-expected net income for the third quarter on growing sales. It was the latest sign that the long beleaguered chain may be finally entering a turnaround.

For the three months ended Oct. 27, the company said it earned $308 million, compared with $193 million in the year. For the quarter, net sales rose about 8%, to $3.86 billion, the company. Same-store sales rose 6% in North America. The metric increased 7% at Gap, 6% for Banana Republic and 9% for Old Navy.

Abercrombie and Fitch profit surges in Q3, raises outlook

NOVEMBER 14, 2012 Columbus, Ohio — Abercrombie and Fitch reported Wednesday net income of $71.5 million for the third quarter, compared with $50.9 million in the year-ago period and beating Wall Street expectations. The retailer is forecasting annual earnings above analysts’ estimates.

Revenue rose 9% to $1.17 billion, boosted by a 37% rise in international sales. Same-store sales dipped 3%.

Saks reports double-digit Q3 profit growth, beats Street

NOVEMBER 13, 2012 New York — Saks Inc. reported Tuesday that net income for the third quarter climbed 27.2% to $22.6 million, compared with $17.8 million in the same period last year. Results surpassed analysts’ expectations.

Revenue edged up 3% to $713.2 million, widely missing Wall Street’s expected $762.6 million in revenue. Same-store sales rose 3.3%.

TJX Q3 profit rises, forecasts falls short

NOVEMBER 13, 2012 Framingham, Mass. — TJX Cos. reported Tuesday that net income for the quarter ended Oct. 27 rose to $461.5 million, from $406.5 million last year.

Sales rose 10.7% to $6.41 billion; same-store sales climbed 7%. The parent to T.J. Maxx and Marshalls said it expects same-store sales during the holiday quarter to be flat to up 2%.

Aeropostale Acquires Online Fashion Footwear and Apparel Retailer

NEW YORK, NOVEMBER 13, 2012,  Aeropostale, Inc. a mall-based specialty retailer of casual and active apparel for young women and men, today announced that it has acquired online women’s fashion footwear and apparel retailer (“GoJane”).

Based in Ontario, California, GoJane is a rapidly growing women’s fashion retailer, with an extensive footwear assortment and a select offering of fashion apparel and accessories. The Company was founded in 1998 by Tony Pang and Kurt Kimura, and generated approximately $19.0 million in revenue in Fiscal 2011.

Department Stores

Ross Stores profit rises 11% in Q3, sales miss

NOVEMBER 15, 2012 Pleasanton, Calif. — Ross Stores Inc. reported Thursday that net income rose 10.8% to $159.5 million in the third quarter, compared with $144 million a year earlier.

Revenue rose 10.6% to $2.26 billion, missing Wall Street’s expected $2.34 billion in revenue. Same-store sales climbed 5%. The retailer has reaffirmed its guidance for the fourth quarter.

Sears loss widens

NOVEMBER 15, 2012 Hoffman Estates,Ill. — Sears Holdings Corp.’s third-quarter loss widened amid declining sales and higher tax expenses.

For the quarter ended Oct. 27, Sears reported a loss of $498 million, compared with a year-earlier loss of $421 million. Revenue slipped 5.8%, to $8.86 billion, primarily due to the effect of having fewer Kmart and Sears stores in operation and lower domestic comparable store sales for the quarter.

Dillard’s sales jump in Q3

NOVEMBER 12, 2012 New York — Dillard’s third quarter merchandise sales for the quarter ended Oct. 27 increased 4% to more than $1.4 billion, same-store sales increased 5% and operating profits increased 84% to nearly $73 million. Gross margins expanded 40 basis points to 37.1% and same-store inventory levels were down 1%.

J.C. Penney posts huge Q3 loss

NOVEMBER 9, 2012 Dallas — J.C. Penney Co. Inc. on Friday reported a 26.1% decline in third-quarter same-store sales, more than the 17.9% that Wall Street analysts were expecting.

Overall sales fell 26.6% to $2.93 billion. Internet sales fell 37.3% to $214 million. The company said that its net loss narrowed to $123 million in the third quarter ended Oct. 27, from $143 million a year earlier. The loss was wider than analysts had expected.

Electronic Stores

GameStop to close 200 stores

NOVEMBER 15, 2012 New York — GameStop plans to close 200 stores by next year, Bloomberg reported.

The closings were announced on a conference call, shortly after the chain reported better-than expected third-quarter results, excluding an impairment charge. For the third quarter ended Oct. 27, GameStop posted a net loss of $624.3 million after impairment and goodwill costs of $678.8 million, mostly tied to international operations. That’s compared with net income of $53.9 million a year earlier.

Grocery Stores

Safeway to hire at least 1,000 military veterans in 2013

NOVEMBER 9, 2012 Pleasanton, Calif. — Safeway Inc. announced it will expand its support of America’s military veterans by hiring at least 1,000 military veterans in 2013 to add to the 1,300 hired to date in 2012.

The company has created a Junior Military Officer and Non-Commissioned Officer program to train and place veterans in top store and backstage leadership positions. The 41-week intensive training program includes a combination of on-the-job training, mentoring, classroom seminars, job shadowing and independent study, as well as participating in numerous department and key leadership strategy sessions. At the end of the program, participants are qualified to hold a number of leadership positions, including Store Manager and Warehouse Superintendent.

Home Improvement & Office Products

Staples swings to loss in Q3, beats estimates

NOVEMBER 14, 2012 Framingham, Mass. — Staples Inc. reported Wednesday a loss of $596.3 million for the third quarter, compared with a profit of $326.4 million a year earlier. Without restructuring costs, the office supply retailer generated a profit that just edged Wall Street expectations.

Sales for the quarter dropped 2% to $6.35 billion, missing analysts’ expected $6.45 billion in sales.

Home Depot Q3 profit tops estimates

NOVEMBER 13, 2012 Atlanta — An improved housing market boosted Home Depot in its latest quarter, as the home-improvement retailer reported Tuesday that net income for the third quarter rose to $947 million from $934 million in the year-ago period.

Revenue climbed 4% to $18.13 billion, edging Wall Street’s estimated $17.92 billion in revenue. Same-store sales rose 4.3% in the U.S. and 4.2% overall.

Home Depot opens 100th location in Mexico

NOVEMBER 12, 2012  Home Depot has opened its 100th location in Mexico, according to an article in El Financiero. The Atlanta-based retailer now operates 95 stores in 60 cities in Mexico, where it generates annual revenues of $1 billion, the newspaper said.

In the final quarter of 2012, Home Depot will open stores in the towns of Coahuila, Sonora, Veracruz, Michoacán and Nuevo León.


Checkers opens restaurant in Walmart as part of resurgence in growth

NOVEMBER 14, 2012, he Tampa-based burgers and fries chain this week opened a location inside the Walmart Supercenter at 3801 Tampa Road in Oldsmar. It’s the first nationwide and part of Checkers’ resurgence after years of sluggish sales. Another is planned for a Walmart store in Haymarket, Va.

“We’ve had a really strong run in the last 2 ½ years,” said Taylor Warner, vice president of real estate, construction and company development. “We were once known as a double drive-through concept. Now we have a full portfolio of designs that have translated into a lot of interest.”

Papa John’s hit with $250M class-action lawsuit

NOVEMBER 13, 2012,  A U.S. District Court judge in Seattle has certified a class-action lawsuit against Papa John’s International Inc., calling for as much as $250 million in damages for the alleged transmission of 500,000 text messages to consumers who claim they did not consent to receive such texts.

Three named Papa John’s customers and potentially many more are suing the Louisville, Ky.-based operator or franchisor of 4,000 Papa John’s Pizza restaurants for allegedly violating the Telephone Consumer Protection Act.

Dollar Stores, Warehouse Club & Other Retailers

Buckle Q3 profit rises 9%

NOVEMBER 15, 2012 Kearney, Neb. — The Buckle reported Thursday that net income for the quarter ended Oct. 27 rose 9% to $41.9 million, boosted by online strength and higher same-store sales.

Overall revenue rose 4% to $284.1 million, beating Wall Street’s predicted $282.8 million. Same-store sales climbed 2.4%.

Dick’s Sporting Goods Q3 profit jumps 21%

NOVEMBER 13, 2012 Pittsburgh — Dick’s Sporting Goods reported Tuesday that net income for the quarter ended Oct. 27 surged 21% to $50.1 million, compared with $41.5 million in the same period last year. The retailer cited strong online sales for the improved performance.

Revenue rose 11% to $1.31 billion, just edging Wall Street’s expected $1.3 billion, and same-store sales rose 5.1%. Online sales soared 46.7% in the quarter, comprised of a 3.9% jump at namesake stores and a 2.3% increase at Golf Galaxy.
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 I hope you will check out future weekly commentary at   If you enjoy the commentary please subscribe online.



Shawn Massey, CCIM, SCLS is a partner with The Shopping Center Group a 3rd party retail real estate advisory firm in their Memphis office, an adjunct professor in the graduate real estate program at The University of Memphis and a co-founder and Chairman of the Board for the Memphis Business Academy charter schools (K-12th grade) in the Frayser area of Memphis.  

For all your retail real estate needs (tenant representation, landlord representation and property, investment & land sales) I hope that you will choose The Shopping Center Group and me to represent you and your business.  We understand that representation is a privilege and that you have a choice!

The opinions expressed in this post are entirely my own.  They should not be considered the opinion of The Shopping Center Group, LLC in which I am associated.




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