Shawn Massey, CCIM, SCLS

Weekly CRE and Retail Article Roundup – August 26, 2012

I hope you enjoy this week’s artcles.  In addition, whenever possible I will be sharing along with the weekly articles thecolumns from Garrick Brown aka the retailwizard and Al Taff.  Both do an excellent job of recapping what is happening on the retail CRE landscape.  Some of you may already subscribe to their services.  Please let me know if you find this useful.

Terranomics Retail NewslineWeek Ending August 19, 2012  
So while most of the retail news this week was good, the undercurrent of contradictory economic indicators remains firmly in place. According to the latest figures from the Commerce Department, retail sales increased 0.8% in July. This followed four consecutive months of declines including a 0.7% drop in June. Economists participating in Bloomberg’s monthly survey had anticipated a 0.3% rise.

Better yet was the news that spending had increased across all 13 major retail categories included in the Commerce Department’s statistics. The 0.6% jump was the largest increase that the department store sector has seen since September of last year. Even electronics and appliance stores saw a 0.6% jump—great news for Best Buy, which has seen its stock fall from about $27 per share in March to roughly $19 per share today thanks to continued speculation over both the health of the consumer electronics sector and the possibility of a takeover.

But once again, there are conflicting signs. Mastercard Advisors and Wells Fargo reported in their most recent SpendingPulse report that spending at small retailers slowed to a year-over-year growth rate of 6% in July. This is the lowest rate recorded over the past year and compares to 8% in June. Smaller retailers had been outperforming total U.S. retail, but with last month’s figures it appears that the larger chains are taking some of that momentum. This piece of news, in and of itself, is not necessarily one to worry about.

Meanwhile, a trend that all of us in retail real estate have been aware of for quite some time was finally picked up by CNBC this week, who reported that shopping malls have a growing appetite for restaurants. This is true, but this article almost puts the cart before the horse… almost. Yes, many malls are launching a reinvention effort in order to fight sluggish consumer spending, the rise of e-commerce and… slower retail store growth. But slower retail store growth is the real issue here. The problem is that restaurants are one of the few retail sectors where growth has remained constant.

Who is growing nowadays? Restaurants easily lead the way, with fast food and fast casual concepts being the most active. Drug stores are continuing to expand, but tend to need between 10,000 and 20,000 square feet of space. Discount, upscale, ethnic and small format groceries are also growing… but these are also larger space users. The same goes for most off-price apparel chains, sporting goods retailers and pet supply stores (all of which are growing aggressively but mainly taking down Class A or B junior box space). Automotive retailers are on the move, but also are typically looking for larger footprints. Health clubs are growing, but most of these concepts are above the 15,000 square foot threshold. Dollar stores are on fire, but some of the fastest growing chains only look at space in the 5,000 to 10,000 square foot range.

The fact is that landlords of malls with vacancies of 3,000 square feet or less are currently looking at a limited number of possibilities. Sure, there are some categories that are always churning and burning… hair salons, spa concepts, etc. But there simply is not a lot out there right now in expansion mode outside of food concepts. Convenience stores are growing, but do not exactly fit into most mall profiles. Cellular/wireless stores are growing but are already saturated in most malls and are approaching saturation in nearly every primary and secondary market in the nation. There are a number of smaller format thrift and dollar stores in growth mode, but these also don’t fit well in most regional malls.

Sure, malls are increasingly looking to restaurants to plug vacancies, but so is every other shopping center type. Of course, there is an additional trend within malls to shift increasingly towards entertainment themed retailers. Restaurants play into this nicely, but make no mistake about it. The trend of landlords beefing up the dining options at their shopping centers is one that has come about out of necessity.

Considering how dependent that landlords have become on restaurant chains for growth, one piece of news this week comes as a bit disconcerting. Nation’s Restaurant News ran a column by commodities analyst John Barone on the impact of the drought on restaurants. Look for sharp pricing increases next year. Considering that most of the growth that we are seeing has come from fast food and fast casual chains with low price points, this could be a problem. How will consumers react to dinner checks that will likely run at least 5%, but maybe as much as 10% to 15% more next year? In a frugal marketplace, the ability to continue to deliver cheap, quality food will be critical to restaurant success and so it could be a bumpy road ahead. But that being said, the piece of news I found most worrisome this week was the fact that gas prices are surging once again.

The most recent Lundberg Survey reports that the average cost of a gallon of gas is now $3.69 nationally. While this is still $0.28 below the peak April pricing, it represents a jump of $0.18 in just the past two weeks—the largest increase recorded so far this year. Yes, much of this has been blamed on a recent fire at Chevron’s Northern California refinery. The drought and its impact on corn-based ethanol products has also been blamed. But with economic indicators such as employment suddenly showing modest improvement, one has to wonder if the increases will continue. The summer driving months will soon be over and with it will be the more stringent anti-polluting mandates that the EPA keeps in place over the summertime. This should translate into cheaper winter fuel, but will it? While I don’t anticipate a prolonged period of gas pricing increases, I do expect at least another month or so of bumps. Will pricing fall just as quickly once the leaves start to fall? Well, if you believe that fuel pricing is just about the pressures of the marketplace and that pricing is ultimately a reflection of supply and demand… and not “because we can,” then, of course.

Good luck with that…

– Garrick H. Brown

 http://kwcommercialsa.com/blog/?p=6548&goback=%2Egde_1825737_member_146087720

All That Stuff: Chattels and Fixtures Explained

http://www.costar.com/News/Article/Are-Clicks-Cannibalizing-Bricks-/140714

Are Clicks Cannibalizing Bricks?

http://realtybiznews.com/ten-ways-to-increase-the-value-of-commercial-real-estate/98714703/

Ten Ways to Increase the Value of Commercial Real Estate

http://online.wsj.com/article/SB10000872396390444375104577591082105666766.html

Not a Barber Shop: A Salon for Men

http://gigaom.com/2012/08/16/dunkin-donuts-gets-into-the-mobile-payment-game/

Dunkin Donuts gets into the mobile payment game

http://www.canada.com/life/Virtual+storefronts+retailers+combine+online+traditional+shopping/7095013/story.html

Virtual storefronts: retailers try to combine online and traditional shopping

http://retailtrafficmag.com/news/walmart_express_needs_time_to_evolve_08162012/?NL=RET-01&Issue=RET-01_20120816_RET-01_236&YM_RID=shawnm@theshoppingcentergroup.com&YM_MID=1331875

 Wal-Mart’s Express Format Needs Time to Evolve, But Can the Retailer Afford to Wait?

http://retailtrafficmag.com/news/retail_cap_rates_hit_four_year_low_08162012/?NL=RET-01&Issue=RET-01_20120816_RET-01_236&YM_RID=shawnm@theshoppingcentergroup.com&YM_MID=1331875

Retail Cap Rates Hit Four-Year Low

http://bettercities.net/news-opinion/blogs/howard-blackson/18780/fronts-backs-and-everything-between

Fronts, backs, and everything In between

http://www.rsrresearch.com/2012/06/12/omni-channel-2012-cross-channel-comes-of-age/

Omni-Channel 2012: Cross-Channel Comes of Age

http://www.cnbc.com/id/48648656

Shopping Malls Grow Appetite For Restaurants

http://www.bizjournals.com/philadelphia/print-edition/2012/08/17/suburban-retailers-go-urban.html

Suburban retailers go urban

Planned store closures surged in second quarter
Retailers and restaurateurs announced plans to close some 1,100 establishments in total in the second quarter, according to a report from ICSC Research and PNC Real Estate Research. This is more than double the number of such announcements made in second-quarter 2011 and amounts to a reduction of some 10.3 million square feet.

GAFO-type (general merchandise, apparel, furniture and other) store-closure announcements increased by 149.3 percent in unit terms in the second quarter. In square-footage terms, this space represents 0.06 percent of total U.S. retail space inventory and is up 72.6 percent from the second quarter of 2011.

Apparel retailers announced 803 store closings in the second quarter, 70 percent of all announced store closings. The sector was rocked by a series of intended store closures, including the quarter’s biggest: Ascena Retail Group’s plan to shut down the 601-store Fashion Bug brand acquired through the purchase of Charming Shoppes. Fashion Bug represented 75 percent of the total tally of apparel stores marked for closure.

The second-largest store-closing news came from Ritz Camera & Image, a family-owned chain that filed for bankruptcy in late June for the third time and which says it will close 128 of its 265 stores over the next two months.

New York City will be most affected by these announcements, according to the report. Bankruptcy-related closing announcements from Strauss Discount Auto and Betsey Johnson will contribute significantly to the projected 622,875 square feet to be given back within New York City, Long Island and Northern New Jersey starting this quarter.

Small retailer sales beating big chains: Report
Independent U.S. retailers’ sales are outperforming those of their larger peers, according to Mastercard and Wells Fargo. July spending at small U.S. retailers was up 6 percent year over year, according to a report the firms conducted jointly. The report defines “small” retailers as those generating less than $35 million in annual sales and which employ fewer than 200 workers.

Overall U.S. retail sales rose 3.3 percent year on year in July. These results marked the 10th consecutive month in which small retailers outperformed larger ones. Most of the small retailers in the survey are independent, local merchants with less than $10 million in annual sales. The firms say these businesses collectively account for over $100 billion in retail sales (excluding automobiles) per month.

The economy stymied sales growth for all types of retailers in July. In fact, July’s small-retailer growth rate of 6 percent was lower than June’s — when it was 8 percent — and the lowest monthly rate of the past 12 months. “While this is a notable slowdown in the [small retailer] category’s year-over-year growth, from prior months and from the first quarter’s very robust 9.1 percent growth, we’re still seeing small retailers outperforming total U.S. retail,” said Michael McNamara, global solutions leader at MasterCard SpendingPulse, in a press release. Rising gas prices are one factor contributing to the success of local retailers, he said, as are community initiatives that encourage consumers to shop locally.

Target’s first small-format stores a success, CEO says
Target’s first CityTarget stores are performing well, and the chain could eventually be operating several hundred of these scaled-down, limited-assortment urban stores, executives said on an earnings call. Target opened its first three CityTarget stores in late July in the dense urban centers of Chicago, Los Angeles and Seattle. These stores measure about 60,000 to 100,000 square feet, while the full-line Target stores measure about 128,000 to 135,000 square feet.

“We’ve been extremely pleased with the reception we’ve received from our new guests in neighborhoods around these first three stores, and we expect to apply what we learned to our operations throughout the U.S. and Canada over time,” said Gregg Steinhafel, the company’s chairman, president and CEO. “We’re seeing very strong levels of sales in apparel and home, and that’s Target’s signature strength. That’s really resonating in these urban markets, so we’re excited about that.”

The company has plans to open two more CityTargets in October — one in Los Angeles and the other in San Francisco. “As a result of a unique real estate opportunity in San Francisco, we plan to open a stand-alone store — C9 Active Apparel — next to the new CityTarget location,” said Kathryn Tesija, executive vice president of merchandising. “This small space gives us an opportunity to highlight this exclusive brand in a unique way that complements San Francisco’s active lifestyle.”

Target could end up operating as many as several hundred CityTargets in total, or as few as 75, depending on the return on investment it realizes from this first batch of stores, Steinhafel says. “There are a lot of urban locations where we can’t put the full prototypical store due to the real estate constraints,” he said. “And more importantly, this is about adapting our format to the geography where we have the right kind of demographics.”
Target said its U.S. sales rose 3.5 percent year on year in the second quarter, to $16.5 billion, in part reflecting a 3.1 percent increase in same-store sales.

http://www.retailrealestatelaw.com/2012/08/how-do-you-enforce-your-lease-or-other-contract-remedies-part-2/?goback=.gde_126357_member_148915881

How Do You Enforce Your Lease Or Other Contract? (Remedies – Part 2)

http://www.bizjournals.com/memphis/blog/2012/08/off-to-the-races-highwoods-hosts.html?page=all

 Off to the races: Highwoods hosts Cruzin Cooler Drag Series for Memphis real estate brokers

http://www.commercialappeal.com/news/2012/aug/19/founding-partners-commit-to-lease-most-of-sears/

‘Founding partners’ commit to lease most of Memphis’ Sears Crosstown Building

 http://www.rrstar.com/news/x1782330874/Retail-rents-on-the-decline-in-struggling-economy

Retail rents on the decline in area’s struggling economy

http://blog.metcapital.com/2011/12/21/bad-grammar-will-affect-commercial-real-estate/

How Gypsies, Mobile Phones and Bad Grammar will Affect Commercial Real Estate

http://m.memphisflyer.com/memphis/squaring-off/Content?oid=3247411

Squaring Off

Two restaurants – one local, one chain – set to open in Overton Square

http://www.google.com/url?sa=X&q=http://www.globest.com/news/12_418/chicago/retail/Q2-Retail-Sector-Remains-Stable-Shows-Moderate-Growth-324367.html&ct=ga&cad=CAcQAhgAIAAoATAAOABAlO2-gQVIAVAAWABiBWVuLVVT&cd=X0RPi2yGFpo&usg=AFQjCNHRMo7MN7RJmxJhTHwokYU68N5itg

Q2 Retail Sector Remains Stable, Shows Moderate Growth

http://www.washingtonpost.com/business/where-has-the-retail-investor-gone/2012/08/17/9a915eee-e7cf-11e1-936a-b801f1abab19_story.html

Where has the retail investor gone?

http://www.pe.com/business/business-headlines/20120817-retail-back-to-school-spending-up-14-percent.ece

RETAIL: Back-to-school spending up 14 percent

http://www.memphisflyer.com/blogs/HungryMemphis/

Aldo’s Pizza Pies

http://www.jpm-digital.org/jpm/20120708?pg=50&pm=2&u1=texterity&linkImageSrc=/jpm/20120708/data/imgpages/tn/0050_bfgmap.gif/&goback=%2Egde_4257721_member_149677707#pg50

Victory Over Vacancy

http://www.bizjournals.com/twincities/news/2012/08/19/best-buy-says-schulze-turned-down-offer.html?ana=e_abd

As Best Buy hires new CEO, it continues to joust with Schulze over his takeover bid

http://www.qsrweb.com/article/198997/QSRs-upgrading-to-keep-pace-with-fast-casual-growth?utm_source=NetWorld%20Alliance&utm_medium=email&utm_campaign=EMNAPMC08162012%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20%20

  • QSRs upgrading to keep pace with fast casual growth

http://nrn.com/article/worsening-crop-conditions-take-long-term-toll-restaurants?ad=news

Worsening crop conditions to take long-term toll on restaurants

http://nrn.com/article/restaurant-operator-outlook-sales-margins-clouded?ad=news

Restaurant operator outlook on sales, margins is clouded

Read more: http://nrn.com/article/restaurant-operator-outlook-sales-margins-clouded?ad=news#ixzz24BRtboHz

Retailers try on new concept – shoe salons

Read more: http://www.sfgate.com/business/article/Retailers-try-on-new-concept-shoe-salons-3797121.php#ixzz24BS7ZkgH

Spanx to launch first brick-and-mortar stores

http://www.chainstoreage.com/article/spanx-launch-first-brick-and-mortar-stores?ad=news

AutoZone achieves major milestone

http://www.retailingtoday.com/article/autozone-achieves-major-milestone?ad=news

Wal-Mart’s new grocery markets spark local leasing

http://www.bizjournals.com/portland/morning_call/2012/08/wal-marts-new-grocery-markets-spark.html

Market Entrance

Panda Express launches Memphis presence with Cordova locale

http://www.memphisdailynews.com/news/2012/aug/16/market-entrance/

Abuelo’s Mexican Restaurant plans new fast-casual spinoff

http://nrn.com/article/abuelos-mexican-restaurant-plans-fast-casual-spinoff?NL=NRN-03&Issue=NRN-03_20120815_NRN-03_369&YM_RID=&utm_source=MagnetMail&utm_medium=email&utm_term=CARLEY.THRUSH@SHOPPINGC

ENTERDATABASE.COM&utm_content=NRN-News-NRNam-08-15-12%60ema

http://brokerpulse.com/2012/03/28/commercial-real-estate-professionals-seeing-a-rise-in-twitter-use/

Commercial Real Estate Professionals Seeing a Rise in Twitter Use

http://www.star-telegram.com/2012/08/25/4204818/thinking-outside-the-box-big-retailers.html

Retail chains thinking outside the box

http://pryanorourke.com/2012/08/21/real-estate-advice-for-nonprofits/?goback=%2Egde_2174219_member_152106186

Real Estate Advice for Nonprofits

http://retailtrafficmag.com/news/grocery_chains_buy_shopping_centers_08232012/?NL=NREI-11&Issue=NREI-11_20120825_NREI-11_904&YM_RID=shawnm@theshoppingcentergroup.com&YM_MID=1335511

Grocery Chains Buy Up Shopping Centers in a Defensive Play

http://retailtrafficmag.com/news/store_opening_plans_reach_four_year_high_08212012/?NL=NREI-11&Issue=NREI-11_20120825_NREI-11_904&YM_RID=shawnm@theshoppingcentergroup.com&YM_MID=1335511

Store Opening Plans Reach Four-Year High, Report Claims

http://www.bizjournals.com/memphis/print-edition/2012/08/24/industrial-memphis-bright-spot.html

INDUSTRIAL: Memphis’ bright spot

http://www.bizjournals.com/memphis/print-edition/2012/08/24/office-retail-sales-may-follow.html

Office, retail sales may follow multifamily transactions

http://www.commercialappeal.com/news/2012/aug/23/key-commercial-corner-in-midtown-memphis-will-be/

Key commercial corner in Midtown Memphis will be sold

http://www.globest.com/commentary/netlease/How-To-Win-In-Net-Lease-Investments-324540.html?goback=%2Egde_2500015_member_151689544

How To Win In Net Lease Investments

http://bettercities.net/article/why-stapleton-residents-fear-their-streets-18632

Why Stapleton residents fear their streets

http://www.commercialappeal.com/news/2012/aug/23/master-plan-for-memphis-new-airport-city-is-in/

Master plan for Memphis’ new Airport City is being tackled in bite sizes

http://www.ipinglobal.com/ipin-live/406568/positive-outlook-for-us-retail-real-estate

Things are looking up for retail real estate assets in the US

http://kwcommercialsa.com/blog/?p=6631&goback=%2Egde_1928590_member_150002852

Commercial Lease Checklist: Important Action Items After The Lease Has Been Signed

http://www.dukelong.com/trends/motionloft-real-world-traffic-analytics-for-commercial-real-estate?goback=%2Egde_2141955_member_149384024

Motionloft. Real World Traffic Analytics For Commercial Real Estate.

http://feedproxy.google.com/~r/CREOutsider/~3/VwekKI6IX9I/?utm_source=feedburner&utm_medium=email

What Should CRE Do About Mobile?

http://www.commercialappeal.com/news/2012/aug/20/memphis-area-commercial-brokers-like-the-latest/

Memphis area commercial brokers like the latest plans for Sears

http://www.naplesnews.com/news/2012/aug/21/top-5-trends-in-commercial-real-estate-7987/

Top 5 Trends in Commercial Real Estate

The following recap below is published by

Al Taf
Vice President Investments
Director, National Retail GroupDirector, National Net Lease Group
  Marcus & Millichap1100 Abernathy Road, N.E.Bldg. 500, Suite 600Atlanta, GA 30328License: GA: 233619 (678) 808-2700 ext. 2776(678) 808-2710 fax(678) 462-4442 mobileal.taf@marcusmillichap.com

 

 

TOP RETAIL NEWS

 

 

Washington area attracts new retail developments

August 19,  2012, The Washington area had the lowest shopping center vacancy rate among large metropolitan areas at the end of the second quarter of 2012.

 

The overall vacancy rate for all types of shopping centers is 5.3 percent in the Washington area, down from 5.6 percent one year ago, and far lower than the national rate of 9.2 percent in June. There were nine major grocery-anchored shopping centers, totaling 2.2 million square feet, under construction or renovation in the region in July.

 

Apparel Stores

 

Pacific Sunwear narrows loss in Q2

AUGUST 23, 2012 Anaheim, Calif. — Pacific Sunwear of California Inc. reported Wednesday a loss of $17.5 million for the second quarter, narrowed from a loss of $19.3 million in the year-ago period.

 

Results were boosted by a 5% sales in the quarter ended July 28 – to $210.3 million, from $200.9 million last year. Wall Street expected $203.1 million in revenue.

 

Report: Dutch apparel brand Scotch & Soda to open eight U.S. stores by yearend

AUGUST 22, 2012, New York — Dutch brand apparel brand Scotch & Soda plans to open eight additional stores in the United States by the end of the year, Women’s Wear Daily reported. The company was acquired by Sun Capital Partners Inc. in 2011.

 

Stores are planed for New York, Los Angeles, Las Vegas, Boston and San Francisco, according to the report. Unlike the existing Scotch & Soda locations in Miami and New York, the new units will be company-owned.

 

American Eagle Outfitters raises full-year outlook

AUGUST 22, 2012, Pittsburgh — American Eagle Outfitters Inc. said that its net income fell 4% in the second quarter as the retailer dealt with charges related to the closing of its children’s division, 77kids, which included 22 stores and the online business. But its adjusted results met analysts’ estimates, and the company raised its full-year outlook.

 

For the second quarter that ended July 28, American Eagle earned $19.03 million, compared with $19.7 million last year. Sales rose 11% to $739.7 million. Same-store sales, including AE Direct, increased 9%. Online sales for AEO Direct, which includes ae.com and aerie.com, rose 28%.

 

Express Q2 income up 25%; to open flagships in Times Square and San Francisco

AUGUST 22, 2012, Columbus, Ohio — Express Inc. reported a 25% increase in net income for the second quarter. But the retailer slashed its profit outlook for the year and said that same-store sales barely rose last quarter and that it expects about the same for the rest of the year.

 

Express earned $15.8 million for the quarter ended July 28, better than analysts expected, compared with $12.6 million in the year-ago period. Revenue increased 2% to $454.9 million, short of the $467 million analysts had expected. Same-store sales inched up 1%.

 

Collective Brands shareholders approve sale of company

AUGUST 21, 2012, Topeka, Kan. — Collective Brands stockholders voted at a special meeting on Tuesday to approve the sale of the company for about $1.32 billion. Collective, which owns the Payless and Stride Rite shoe store banners, had announced in May that it accepted a purchase offer from a group that includes Wolverine Worldwide Inc., Blum Capital Partners and Golden Gate Capital.

 

The transaction will split Payless and Collective’s brand development and licensing arm into separate companies. Wolverine, which owns Hush Puppy, will acquire the Performance + Lifestyle Group, which includes Sperry Top-Sider, Saucony, Stride Rite and Keds.

 

Mark Shale files for Chapter 11 bankruptcy protection

AUGUST 21, 2012, Chicago — Chicago high-end fashion retailer Mark Shale said Tuesday it has filed for reorganization bankruptcy.

 

The 83-year-old company is seeking strategic alternatives, including a partner to fortify the business, according to president Rich Myers. The three existing stores – all in Chicago – will continue to operate during the reorganization process.

 

Urban Outfitters Q2 profit up 8%; tops Street

AUGUST 20, 2012, Philadelphia — Urban Outfitters Inc.’s profit for the second quarter rose 8% to $61.3 million from $56.7 million in the year-ago period, helped by strong sales as its namesake stores.

 

Total company net sales for the quarter, ended July 31, rose by 11% over the same quarter last year to $676 million. Same-store net sales, which include the direct-to-consumer channel, increased 4% for the quarter, while comparable store net sales decreased 1%.

 

Ann Inc. profit rises 24% in Q2; on track to open 65 stores

AUGUST 17, 2012, New York — Ann Inc. reported Friday that profit for the second quarter rose 24% to $30.7 million, compared with $24.8 million in the year-ago period.

 

Same-store sales companywide increase 4.7%; by brand, Ann Taylor store comps increased 3.2% and Loft comps rose 4.1%.

 

Casual Male net income slides; to speed rollout of DestinationXL

AUGUST 17, 2012, Canton, Mass. — Casual Male Retail Group said Friday that second-quarter profit dropped to $1.2 million, from $6.6 million in the year-ago period. Total sales were flat at $100.5 million, and same-store sales edged up 2%.

 

However, continuing strength from the DestinationXL stores vs. the Casual Male XL locations is prompting the company to focus on growing the former.

 

Gap Q2 profit climbs 29%; raises guidance

August 17, 2012, SAN FRANCISCO — Gap Inc. reported that net income for the quarter ended July 28 surged 29% to $243 million, prompting the retailer to raise its guidance for full-year 2012.

 

Sales increased 6% to $3.58 billion, compared with $3.39 billion for the second quarter last year. Same-store sales rose 4%.

 

Department Stores

 

Ross Stores profit jumps 23%; outlines succession plan

AUGUST 17, 2012, Pleasanton, Calif. — Ross Stores Inc. reported Thursday that net income for the quarter ended July 28 jumped 23% to $182 million, from $148.3 million in the year-ago period. Results met Wall Street expectations, but the company issued profit predictions for the current quarter and full year that were below average forecasts. Same-store sales rose 7% in the quarter.

 

Late Wednesday, Ross announced its succession plan that calls for current vice chairman and CEO Michael Balmuth to remain in place through June 1, 2014, when he will move to the job of executive chairman.

 

Discount Stores

 

Fred’s profit rises in Q2

AUGUST 23, 2012 Memphis — Fred’s reported Thursday that net income for the quarter ended July 28 rose 19% to $6.1 million, compared with $5.1 million in the year-ago period.

 

Sales rose 4% to $470.8 million from $452.7 million, and same-store sales dipped 1%.

 

Electronics Stores

 

More bad news for Best Buy

August 21, 2012, MINNEAPOLIS — Best Buy reported dismal second quarter results Tuesday morning, missing analysts’ estimates by a wide margin one day after the company raised eyebrows by selecting a CEO with no retail experience to engineer a turnaround.

 

Best Buy said it earned $12 million, or 4 cents per share, during the second quarter ended Aug. 4, compared with $150 million, 39 cents a share, the prior year. Excluding previously announced restructuring charges, net earnings from continuing operates were $68 million, or 20 cents a share, well below the 31 cents a share analysts forecast. And if that weren’t bad enough, the company suspended guidance.

 

Grocery Stores

 

Ahold Posts Profit Gains in U.S.

Aug. 23, 2012  AMSTERDAM — Ahold here said profits improved in its U.S. operations in the second quarter, but the company’s stock fell in the wake of a margin squeeze in Ahold’s Netherlands division.

 

Ahold USA, which includes the Stop & Shop, Giant-Landover and Giant-Carlisle chains, reported underlying operating income of $261 million for the second quarter, up 10.6% over year-ago levels. As previously reported, U.S. sales in the quarter were up 3.4%, to $6 billion, including an identical-store sales gain of 2.2%. The operating margin in the U.S. was 4.3%, vs. 4.1% in the year-ago quarter. The company attributed the gain to “cost improvements, ongoing operational efficiencies and lower health and welfare costs.”

 

Grocery Chains Buy Up Shopping Centers in a Defensive Play

Aug 23, 2012, As more grocery-anchored center owners decide to put their properties on the market to take advantage of strong investor demand, grocery chains are stepping in and claiming the centers they anchor to avoid risking the uncertainty of a new owner.

 

The biggest grocery chains in the U.S. have invested nearly $450 million in grocery-anchored center purchases during the past 24 months, according to Real Capital Analytics (RCA), a New York City-based research firm. Lakeland, Fla.-based Publix, which operates 1,058 stores in five southeastern states, has been the most active buyer during this period. The chain spent $187.2 million to gain control of 17 grocery-anchored centers, making it one of the 10 most active buyers of this asset class. It owns roughly 170 of its stores overall in addition to some of shopping centers in which they’re located. Dutch conglomerate Ahold, which operates the Stop & Shop and Giant chains, during the same time also purchased 17 properties for $118.4 million.

 

Food Lion Investments Pressure Delhaize’s Profits

AUGUST 22, 2012, BRUSSELS — Price and service investments at the Food Lion banner continued to pressure profits for Delhaize Group during the fiscal second quarter, the retailer here said Wednesday.

 

Overall U.S. sales decreased by 3.1% to $4.7 billion, although sales were up by 0.3% excluding the 126 Food Lion stores closed in February. Comparable-store sales decreased by 0.6%. Operating profits were down by 24.5%, and operating margin as a percent of sales decreased a full percent to 3.3% of sales, as a result of continued price investments and brand repositioning at Food Lion.

 

Sprouts Expands in Arizona

AUGUST 21, 2012, PHOENIX — Sprouts Farmers Market is scheduled to open the first store in five years in its home state on Wednesday. The last Arizona stores it opened — on the same date in 2007 — were located in Gilbert and Chandler. Two more Arizona stores are scheduled to open next year — one here in March and one in Flagstaff, in Northern Arizona, next summer.

The chain is celebrating its 10th anniversary this year; it opened its first store in nearby Chandler on July 11, 2002.

 

Kings Food Markets expands into Connecticut with acquisition

AUGUST 20, 2012, Parsippany, N.J. — Kings Food Markets announced that the company has expanded into Connecticut with the acquisition of a Porricelli’s Market location in Old Greenwich.

 

Kings, with 24 stores in New Jersey and New York, recently completed a brand relaunch that included grand reopenings of its Bedminster and Livingston, N.J., stores, with additional reopenings slated to take place throughout 2012 and 2013.

 

Home Improvement & Office Products

 

Ikea proposes store in Miami-Dade

AUGUST 23, 2012 Conshohocken, Pa. — Ikea said Thursday it is submitting plans for a Miami-Dade store in the City of Sweetwater, Fla., as the second South Florida Ikea store and fourth in the state.

 

According to the Swedish home furnishings retailer, construction could launch as early as spring 2013 on the new store, with an opening tentatively slated for fall 2014.

 

Michaels Stores’ Q2 income up 30%

AUGUST 23, 2012 Irving, Texas — Michaels Stores Inc. reported that its net income rose 30% to $13 million for the quarter ended July 28, from $10 million in the year-ago period. The retailer said an increase in total transactions and custom framing helped boost second-quarter earnings for the arts and crafts retailer.

 

Total sales for the quarter ending July 28 rose 4.1% to  $892 million. Same-store sales increased 2.9%.

 

Report: Rona dealers critical of Lowe’s offer

AUGUST 22, 2012, New York — A group of Rona Inc.’s dealers on Wednesday released an open letter on Wednesday that criticized the proposed takeover of the Canadian home-improvement retailer and distributor by Lowe’s Cos., Reuters reported.

 

The letter, which was addressed to Lowe’s CEO Robert Niblock, was signed by merchants that operate 164 affiliate or franchise Rona stores. “We want to reinforce your view that it may not be a good idea for you to buy Rona, after you appeared to state your doubts about the deal on Monday, while you were announcing your financial results,” the letter stated.

 

Tuesday Morning loss widens in Q4; records flat sales

AUGUST 21, 2012, Dallas — Tuesday Morning Corp. said Monday that it lost $2 million in the quarter ended June 30, widened from a loss of $1.4 million in the same period last year. The retailer cited costs associated with terminating its CEO for the weakened showing.

 

Sales were nearly flat at $196.4 million, and same-store sales inched up a slight 0.2%. For the full year, the company recorded net income of $3.9 million, compared with $9.6 million in the prior year. Sales slipped 1% to $812.8 million.

 

Kirkland’s Q2 loss widens, cuts 2012 guidance

AUGUST 17, 2012, Nashville, Tenn. — Kirkland reported Friday a loss of $2 million in the second quarter, widened from a loss of $480,000 in the year-ago period. Revenue edged up 1% to $91 million, missing Wall Street’s expected $94.4 million in revenue.

 

Same-store sales declined 3.6%. The retailer has cut its earnings and revenue outlooks for the year.

 

Restaurant

 

New fast casual chain brings Madrid to America
August 22, 2012,
The Madrid-based fast casual restaurant chain, 100 Montaditos, which has more than 300 stores in Europe and Latin America, is now invading America. Its already opened eight stores in Florida will launch six franchises in New York, Washington D.C., and other key markets along the East Coast by early 2013, according to company press release.

The restaurant is named for its signature item, the montadito, a crunchy roll baked to order and packed with traditional Spanish meats, cheeses, sauces and other toppings. Along with montaditos, the restaurant also serves ham and cheese platters; patatas bravas, fried potatoes accompanied by a spicy red sauce; and assorted salads with an Iberian twist. Traditional drinks include cava, a sparkling white wine similar to champagne; tinto de verano, a blend of Spanish red wine and lemon-lime soda; sangria, wine mixed with chopped fruit; and clara, a blend of Spanish draft beer and lemon-lime soda.

 

Habit Burger Grill To Open Four More Restaurants In OC
IRVINE, Calif., Aug. 22, 2012–
Habit Restaurants, LLC,  an Irvine-based restaurant company whose char-grilled burger concept began in Santa Barbara in 1969, has announced plans to open four additional restaurants in Orange County by the end of the year. There are currently 60 Habit Burger Grill locations throughout California and Arizona and the organization will add a total of 16 restaurants to its expanding empire in 2012. The Habit Burger Grill distinguishes itself in the fast casual burger segment with its signature, flame-grilled Charburger, menu variety and value. 

 

Diversified Restaurant Holdings to Purchase Eight Buffalo Wild Wings Restaurants in Indiana and Illinois 
August 22 2012, Southfield, MI,
  Diversified Restaurant Holdings, Inc. (OTCQB:DFRH) (“DRH” or the “Company”), the owner, operator, and franchisor of the unique, full-service, ultra-casual restaurant and bar Bagger Dave’s Legendary Burgers Tavern® (“Bagger Dave’s”) and a leading franchisee for Buffalo Wild Wings® (“BWW”), announced today it executed an agreement to acquire eight BWW restaurants located in Indiana and Illinois for $14.7 million. Terms of the transaction include an additional franchise agreement for a future location in Indiana.

 

Bennigan’s and Brixmor Property Group in partnership to add 30 locations

AUGUST 20, 2012, Dallas — Bennigan’s Franchising Co. and Brixmor Property Group announced a strategic partnership to add Bennigan’s restaurants nationwide into Brixmor’s portfolio of shopping centers.

 

The partnership will include positioning Bennigan’s signs at select existing buildings and pad site locations within the Brixmor portfolio of shopping centers, promoting pre-approved restaurant space and franchise opportunities within the company’s targeted growth markets.

 

Caribou Coffee Expands with Chicago Grocery Chain

August 20, 2012, Caribou Coffee Company, the second-largest company-operated premium coffeehouse retailer in the United States, announced it will be expanding its retail and commercial footprint in the Chicago area by teaming up with Jewel-Osco, the city’s market-leading grocery chain.

 

To kick-off this partnership, Caribou Coffee opened its first retail location within Jewel-Osco’s Barrington store last week, with plans to introduce two additional coffeehouses in the grocery’s Hoffman Estates and Countryside locations in the near future, as well as five additional coffeehouses within Jewel-Osco in 2013.

 

Restaurant traffic drops, but consumers resist trading down

August 21, 2012, Consumers visited restaurants less often during the second quarter, but they don’t appear to be trading down from casual dining to limited-service concepts, according to a consumer survey by research firm Dectiva.

 

In its quarterly Restaurant Industry Tracking Survey, which asks 2,500 consumers where they spend their dining dollars across the chain restaurant landscape, Dectiva found that the number of respondents who said they dined out a few times a month or more declined across all segments for April, May and June. The survey was conducted in early July.

 

Dollar Stores, Warehouse Club & Other Retailers

 

New Research Shows Convenience Store Visits Remain Stable
Aug. 22 2012, HOUSTON
— While the economy as a whole struggles with a wobbly economic recovery, things are looking steady for the convenience store market. During the second calendar quarter of 2012, c-store visits remained stable and total channel sales were up compared to one year ago, according to data from The NPD Group.

C-stores saw 2.2 billion visits during Q2 2012, approximately the same as Q2 2011, with aggregate channel sales rising 5.9 percent over the same time period. Specifically, visits to small and other c-store chains rose 2 percent, but visits to major c-store chains dropped by the same amount, according to NPD’s Convenience Store Monitor.

 

Guess posts lower profit, lowers outlook

AUGUST 22, 2012, Los Angeles — Guess Inc. on Wednesday reported that its second-quarter profit fell to $42.9 million, from $60.7 million a year ago. The company also lowered its full-year earnings outlook.

 

Total net revenue for the quarter ended July 28 fell 6.2% to $635.4 million, from $677.2 million. The company’s retail stores in North America generated revenue of $253.0 million in the second quarter, down 3.1% from $261.1 million in the same period a year ago. Same-store sales fell 8.5%.

 

Cabela’s to enter Virginia and Delaware in 2014

AUGUST 22, 2012, Sidney, Neb. — Cabela’s Inc. announced today plans for two new stores, including its first-ever locations in Virginia and Delaware. Construction is expected to begin on the new locations in 2013, with the stores expected to open in 2014.

 

Cabela’s said it will build an 85,000-sq.-ft. store in The Falls, a new retail development in Bristol, Va., that will accommodate about 1.5 million sq. ft. of retail space. In Delaware, the company will open a 100,000-sq.-ft. store adjacent to Christiana Mall, in Christiana.
Store Opening Plans Reach Four-Year High, Report Claims
Aug 21, 2012,
U.S. retailers’ store opening plans hit a four-year high in July, setting off hope that a resurgence in new development projects might be just around the corner, according to the August edition of National Retailer Demand Monthly report from RBC Capital Markets and Retail Lease Trac.

RBC estimates that over the next two years the retailers in its database plan to open a total of 78,325 stores, an 11 percent increase over the number of store openings projected at year-end 2011 and a 0.6 percent increase over plans announced in June. Dollar stores, including Dollar General and Family Dollar, have some of the most ambitious expansion plans in the retail universe right now, as do restaurant chains such as Subway, KFC and Five Guys Famous Burgers and Fries.

 

Reebok Fit Hub makes U.S. debut

AUGUST 21, 2012, New York — Reebok has opened its first Reebok Fit Hub in the United States, on Fifth Avenue at 37th Street in Manhattan.

 

The 2,500-sq.-ft. store is located on the top of a Reebok CrossFit Box gym, which is on the street level. It sells a wide range of fitness apparel and footwear for men and women. Customers can also get fitness advice from in-store experts.

 

DSW Q2 sales beat Street; on track to open 27 stores in second half

AUGUST 21, 2012, Columbus, Ohio — DSW Inc. reported Tuesday that adjusted net income for the quarter ended July 28 dipped to $30.1 million, from $33.7 million last year. Revenue rose 7.5% to $512.2 million, beating the $510.9 million expected by Wall Street.

 

Same-store sales increased 4.2% in the quarter, compared with a 12.3% increase in the same period last year.

 

Barnes & Noble narrows loss in Q1

AUGUST 21, 2012, New York — Barnes & Noble reported Tuesday that it lost $41 million in the first quarter, compared with a loss of $56.6 million in the same period last year.

 

Results were bolstered by sales of e-books and other digital content, said CEO William Lynch. Overall revenue rose 2% to $1.45 billion, and same-store sales climbed 4.6%. Sales in the retail segment also rose 2% — to $1.1 billion.

 

7-Eleven acquires 74 West Virginia-area locations from its licensee

AUGUST 20, 2012, Dallas — 7-Eleven announced today that it has closed a deal to acquire 74 operating convenience stores and two land parcels from Prima Marketing LLC, a 7-Eleven licensee with stores in West Virginia, Ohio, Pennsylvania and Kentucky. The bulk of the stores being purchased are in West Virginia.

 

Terms of the deal were not disclosed.

 

Hibbett profit rises 33% in Q2; on track to open 55-60 stores in fiscal 2013

AUGUST 17, 2012, Birmingham, Ala. — Hibbett Sports reported Friday that net income for the quarter ended July 28 surged 32.9% to $7.9 million from $5.9 million in the comparable-year period.

 

The retailer reported a net sales increase of 8% to $165.4 million compared with $153.1 million for the same period last year. Same-store sales increased 4.8%.

 

Foot Locker profit and sales rise in Q2

AUGUST 17, 2012, New York — Foot Locker reported Friday that net income for the quarter ended July 28 rose to $59 million, from $37 million last year.

 

Sales increased 7.2% to $1.37 billion this year, compared with $1.27 billion in the prior year. Same-store sales increased nearly 10%.

 

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Cheers,

Shawn

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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