Wednesday, June 27, 2018

Special Section Preview: Eastern Massachusetts Malls

KeyPoint Partners

The 2018 KeyPoint Report on the retail real estate market in Eastern Massachusetts/Greater Boston is in production, and will be released very soon. This year’s report includes a special section on the status of traditional enclosed malls in the region. Have malls fared as badly as the business media would have us believe? It appears that, at least in this region, they’re actually holding their own. Here’s a brief excerpt from our special section:

The volume of noise that’s been heard in the media regarding a retail apocalypse is directed at enclosed regional shopping centers as much as any other segment of retail. For malls in Eastern Massachusetts, however, conditions are not so dire. . . more

Friday, June 22, 2018

J.Crew, mired in debt, is trying to turn around its business

The Washington Post
J.Crew sales have been tumbling for more than three years, amid changing consumer habits and increased competition. It is in the process of closing 70 stores, after which about 250 will remain. Add to that nearly $2 billion in debt, much of it from a 2011 leveraged buyout, and analysts say the company’s problems cast a shadow on recent turnaround efforts.

“There are so many issues here, but the biggest one is a crippling debt load — we’re talking $30 million a quarter just in interest payments,” said Neil Saunders, managing director of GlobalData Retail. “It’s an eye-watering number and it makes a turnaround just about impossible.” . . . more

Westfield Plans To Build 670 Apartments At Montgomery Mall After Sears Closes
The Sears at the Westfield Montgomery Mall is expected to close next year, and the mall owner is looking to launch a major mixed-use development on its piece of the property.

 Westfield presented plans to the community Wednesday to build 670 apartments and 300K SF of new retail and hotel space on the 28-acre site now occupied by the Sears and the surrounding parking lot, Bethesda Magazine reports. . . . more

Thursday, June 21, 2018

Williams-Sonoma CEO: Even Amazon sees the benefits of having physical stores

As Williams-Sonoma's business shifted from selling via catalogs to selling online, the furniture and kitchenware retailer remained consistently adamant about one thing: its stores.

"Even Amazon believes that they should have some real spaces," Laura Alber, the company's president and CEO, told CNBC on Wednesday. "When you go in a store and it's wonderful, it helps you make the purchase.". . . more

Debt Extension Isn’t Likely to Save Sears, Experts Say

Sears Holding Corp. continues to gasp for air. However, the struggling company just got some breathing room from creditors after receiving more time to refinance its debt.

In a June 4 Securities and Exchange Commission filing, Sears says it has two additional years to pay back its lenders, including Sears CEO Eddie Lampert. The company consolidated three loans, including two real estate loans, totaling $593 million, which were due next month. The new consolidated loan’s due date has been pushed out to July 20, 2020. . . . more

Wednesday, June 20, 2018

Sears Is Closing More Stores -- and This Mall Operator Is Happy About It

The Motley Fool
At the end of 2018's first quarter, once-thriving retailer Sears was operating 381 fewer stores than it was a year ago. And the company's footprint is continuing to shrink. Sears announced more closures recently, and it looks like a total of 275 Sears and Kmart stores could close during 2018.

As a result, many malls across the U.S. are about to be left with massive amounts of vacant square footage, and as a result, many mall operators are getting hammered.. . . more

Can't choose between Sears and Kmart? Now you can get two-in-one

USA Today
The Sears department store chain, which has been shrinking, is experimenting with doubling up with its corporate sibling, sister chain Kmart.

A Sears store in New York City now sports a Kmart section.

The retailer opened a Kmart convenience store inside a Sears store in Brooklyn over the weekend in a move to woo shoppers not only looking to make bigger purchases, but those loading up on smaller items like paper towels or detergent. . . . more

Two of Ascena’s fashion-outlet brands going online

Chain Store Age
Apparel giant Ascena Retail Group is expanding its premium outlet fashion business to the online world.

Loft Outlet launched its e-commerce site on June 19, while Ann Taylor will enter digital retail on June 26. The online sites will offer the same products that are sold in the brands’ brick-and-mortar stores stores, along with special launch offers.. . . more

Tuesday, June 19, 2018

Florida Officials Approve Plan to Build Largest U.S. Mall

The Wall Street Journal
At a time when store closures are accelerating and struggling malls pockmark the country, county commissioners in Florida have approved a plan to build what would be the largest mall in the U.S.

American Dream Miami would also be the most expensive mall ever built, according to Canadian developer Triple Five Worldwide Group of Cos. The 6.2-million-square-foot retail and entertainment complex would cost an estimated $4 billion, Triple Five says. . . . more

Sears, Kmart stores ailing as CEO Eddie Lampert's hedge fund gets hundreds of millions

USA Today
When he became CEO of Sears Holdings, Eddie Lampert declared he was on a mission to restore the iconic retailer to its former glory. Since then he's extended billions of dollars in loans from his hedge fund to Sears and Kmart.

But the difference between what Sears has invested in its stores — and therefore what customers experience when they shop — is stark compared with many of its peers, a USA TODAY review of public filings and analyst research shows. And if the chain ever sinks into bankruptcy, the records show Lampert's hedge fund will be positioned at the front of the line when loans are repaid. . . . more

Monday, June 18, 2018

GameStop in talks with buyout firms after drawing interest

Video game and electronics retailer GameStop Corp is holding talks with private equity firms about a potential transaction after receiving buyout interest, people familiar with the matter said on Monday.

Like most brick-and-mortar retailers, GameStop has suffered from heightened competition from online companies including Amazon Inc. Games retailers have also had to cope with a decline in physical video game sales, although GameStop has partly weathered these declines by expanding into used video games and devices as well as digital products.. . . more

Fast-casual concept look to Northeast expansion

Chain Store Age
An eatery that began as a walk-up counter in Midtown Manhattan in 2011 is looking to expand with a new prototype.

Melt Shop has opened a new location at The Westchester, a Simon Mall in downtown White Plains, New York. The sleek, modern format will serve as the prototype the company plans to use for all its mall locations moving forward.. . . more

Friday, June 15, 2018

Cirque du Soleil heading to the mall

Chain Store Age
An entertainment giant is looking to expand its brand with a new concept specifically designed for retail locations.

Cirque du Soleil Entertainment Group will open its first “family entertainment centre” in September 2019, in Toronto, in partnership with real estate firm IvanhoĆ© Cambridge. Cirque du Soleil said it is in discussions with the Montreal-based developer for additional locations in Canada. It is also in talks with other partners to open outside of Canada.

The new concept, called Creactive, will offer a range of acrobatic, artistic and other Cirque du Soleil-inspired recreational activities, such as bungee jumping, wire and trampolines, mask design, juggling, circus track activities, dance and more. The space will average 24,000 sq. ft. . . . more

Canadian retailer Roots' first Boston store is a sensory shopping experience

Boston Business Journal
Canadian sportswear brand Roots is opening the first of three new stores in Greater Boston on Newbury Street Friday, and plans to open additional locations in Natick and Lynnfield by the end of the month.

The company, which sells apparel, footwear, leather goods and accessories, is introducing Boston to its brand with a sensory shopping experience. Customers can walk through a tunnel made of the fabrics used in Roots sweatpants, personalize a leather item in the "leather customization workshop," and follow a timeline of the company’s history through different rooms. . . . more

Thursday, June 14, 2018

Gap's namesake brand picks a new CEO as it tries for a comeback

LA Times
Gap Inc. has named Neil Fiske as president and chief executive of its namesake brand as the clothing retailer looks for a comeback amid declining mall traffic, operational missteps and disappointing growth.

The search for a new top executive for the brand began in February, when the San Francisco company announced Jeff Kirwan would leave the post after just over three years. The Gap brand has been the company’s most troubled division, with a slew of management changes and shifts in strategy. The parent company has been working to fix issues at the brand, which have included late deliveries that resulted in excess inventory that it had to discount in order to sell.. . . more

Wednesday, June 13, 2018

Macy’s takes stake in tech retailer

Chain Store Age
Macy’s has taken a minority stake in a company that helps emerging brands build out brick-and-mortar stores with minimal effort.

The department store giant announced it is partnering with b8ta, and will leverage the tech retailer’s software platform to expand The Market @ Macy’s, pop-up shop marketplace concept currently in place in 10 Macy’s stores. As part of the deal, Macy’s has also acquired a minority equity stake in b8ta.. . . more

Zara Boosts Profit Margin, Bucking an Industry Trend

The Wall Street Journal
Zara’s parent company said same-store sales growth slowed in the latest quarter, though profit margins improved, as the world’s largest fashion retailer attempts to navigate an industrywide shakeout driven by competition from online retail.

Inditex SA said on Wednesday that sales in stores that have been open for at least one year rose in all its markets in its fiscal first quarter. Analysts estimated that what are known as like-for-like sale rose around 5% in the three months ending April 30 compared with a year earlier. That is a slight slowdown from the company’s previous fiscal quarter, when like-for-like sales rose around 6% year-over-year.. . . more

Lands' End Exits More Sears Stores, Calming Investors

Lands’ End Inc. investors may be warming back up to the retailer as it further breaks free from former parent Sears Holdings Corp. by shuttering more in-store shops in favor of smaller standalone locations.

The one-time Sears unit has been phasing out its sites situated inside the struggling chain, halving its number of in-Sears shops since the 2014 split. It’s planning to drop that number to about 100 by the end of the year from about 159 at the end of the first quarter.. . . more

Owners of fading malls 'on their knees' as buyer pool evaporates

Financial Post
Landlords have malls they’d like to unload. But who’d want to buy them?

As they battle the rise of e-commerce, U.S. mall owners are trying to clear their books of fading centres so they can focus on the most-profitable ones. That’s proving difficult, with just a shallow pool of investors who are willing to take on a declining mall and even fewer who would pay what the landlords want. Only about US$3 billion of retail real estate changed hands in April, a 27 per cent drop from a year earlier and the lowest monthly tally since February 2013, according to the latest data from Real Capital Analytics Inc.. . . more

Tuesday, June 12, 2018

Sears expands Auto Center partnership with Amazon to more stores

Sears Holdings said Tuesday it's expanding its partnership with Amazon across the U.S.

The department store chain last month announced it would be working with the e-commerce giant to install car tires, from any brand including its own DieHard, ordered on The retailer has been using its Auto Centers, where customers can opt to have their tires shipped there and then installed by Sears' employees for a small fee.

This was initially available at 47 Sears Auto Centers. On Tuesday, Sears said it has added an additional 71 shops to the program, bringing the total to 118. . . . more

Retail Center Owners Look to Hotels to Bring New Life to Vacant Big-Box Spaces

Owners and operators of hotels and retail centers are increasingly partnering up in an effort to help drive traffic to retail properties and create more pedestrian-friendly developments.

It’s a trend that has arisen amid continuing headwinds facing retail real estate, a sector that has long seen challenges from the growth of e-commerce and changing consumer behaviors. . . . more

Monday, June 11, 2018

Commercial Real Estate Pricing Growth Stagnant As Retail Prices Offset Industrial Gains
Green Street Advisors released its Commercial Property Price Index on Friday, finding that commercial prices across the country rose 1% over the past 12 months, with three- and one-month splits at 0% and 1%, respectively. Within the flatness are two sectors pulling in opposite directions.

In the past year, mall prices dropped 12% and strip retail dropped 3%, the only two sectors to see declines over that period. Industrial real estate, which includes distribution centers, rose 15% and is easily one of the hottest sectors in the market. The disparity between retail and industrial values reflects the changing way consumers spend their money.. . . more

Friday, June 8, 2018

Winners in Traditional Retailing Are Also Winning Online

The Wall Street Journal
When investors were betting that Amazon would crush every traditional retailer, it didn’t matter how their online sales were doing. Now, a clear gap has emerged between stores with solid e-commerce operations and those without.

At the far ends of each group are Macy’s , which continues to beat analyst expectations, and Sears , whose tailspin appears to be accelerating.. . . more

Eddie Bauer and Pacific Sunwear combined under new umbrella

Chain Store Age
Golden Gate Capital has established a new operating company for two of its portfolio companies that it acquired out of bankruptcy.

The new PSEB Group is composed of Eddie Bauer and Pacific Sunwear of California, both of which will maintain their distinct brand opportunities. It will have a retail footprint of more than 700 stores and is on track for approximately $1.5 billion in combined total sales in 2018, including $400 million in ecommerce sales. Although earlier reports suggested that Golden Gate might merge the companies in an effort to consolidate stores, there was no talk of store closings in the announcement.. . . more

Thursday, June 7, 2018

J.C. Penney looks to score with new in-store shop initiative

Chain Store Age
J.C. Penney is going all in with Fanatics, the online seller of officially licensed sports merchandise.

The department store retailer has rolled out in-store Fanatics shops in 325 Penney stores, with plans to add approximately 325 additional Fanatics destinations by the back‐to‐school season. (Penney has had a partnership with Fanatics since 2014, via its online Sports Fan Shop, but this is the first time the relationship has expanded to brick-and-mortar.). . . more

Property Investors Vote on Future of Retail With Their Dollars

Investors in real estate are sending a strong signal about the future of retail.

Values for U.S. industrial buildings, including the warehouses that serve as distribution hubs for Inc. and others that sell goods online, have been wildly outperforming retail-property values for some time. A new report from Green Street Advisors LLC shows that industrial values have climbed 15 percent over the past year, the most of the 10 types of commercial real estate the research firm tracks. Over the same period, prices for malls, the worst performer, fell 12 percent.. . . more

Online Retailers Continue to Grow Their Physical Footprints

Amidst a tumultuous environment for brick-and-mortar retailers, online brands continue to flip the script and open physical stores. Many landlords are welcoming them, hoping they will help draw shoppers.

While some are start-ups testing the waters and figuring out their brick-and-mortar strategy, others have a proven formula and are expanding. They already know their customer base and which markets they want to be in, and they’re targeting tech-savvy consumers, particularly millennials, which landlords want to attract.. . . more

Neiman Marcus’ ‘strategy is working,’ increasing revenue, sales in Q3

Chain Store Age
Neiman Marcus Group is on a roll with three consecutive quarters of year-over-year sales growth, an indication that the company’s focus on innovations across the customer experience is paying off.

Same-store sales increased 6%. Meanwhile, online sales increased 17.1% to $416 million, a segment that represents more than 35% of overall sales. . . . more

Wednesday, June 6, 2018

The Retail Strategy Switches
Arguably, nowhere is the overworked phrase “retail experience” more evident than in malls and shopping centers. As Crystal Allen, Transwestern’s SVP of retail services, indicates, the old shopping magnets have switched.

“Over the past five to 10 years,” she tells, “the mix has changed dramatically.” As enticements to stay longer, landlords are starting to lead with the former minority players—the restaurants and entertainment. “Traditionally, 75% of the mix was soft goods,” says Allen. “Now restaurants and entertainment can take up as much as 50%.” . . . more

16 Ways Malls Are Filling Space Besides Stores

The Motley Fool
With retail chains closing at a record pace, empty spaces are piling up at some malls. With Toys R Us and Bon-Ton going out of business entirely while perennial anchor tenants Macy's has closed hundreds of locations and Sears appears to be at risk of closing entirely, mall owners are finding themselves looking for clever ways to fill openings. Add in the fact that interior mall retailers including Claire's, Gymboree, Rue 21, Payless, and countless others have declared bankruptcy, and you have a crisis for mall owners that's not going to be solved by more retailers coming along.

Instead, if malls want to remain viable, their owners have to turn to something other than stores to fill open spaces. That has started to happen and the result is a transformation for some malls from shopping centers to something new entirely. . . . more

Tuesday, June 5, 2018

Lanesborough gives Berkshire Mall owner June 18 deadline to pay nearly $1M in back taxes

The Berkshire Eagle
The owner of the Berkshire Mall has two weeks to pay nearly $1 million in back taxes or the town will seize control of the county's largest shopping complex.

Michael Kohan, principal of Berkshire Mall Realty Holdings LLC, has vowed not to lose control of the 720,000-square-foot building on the 89-acre site.. . . more

Stew Leonard's supermarket is a step closer to finally opening in Jersey
Stew Leonard's is one step closer to bringing their farm-style supermarket to the Garden State.

A store in being planned for the Paramus Park Mall where Sears shuttered its anchor position earlier this year. . . . more

Hudson's Bay to close up to 10 Lord & Taylor stores, including Fifth Avenue in New York

USA Today
Hudson's Bay Co. will close up to 10 Lord & Taylor stores, including the Fifth Avenue location in New York City, as department stores grasp for stability amid retail upheaval.

The decision to close the Lord & Taylor store on Fifth Avenue comes after the company recently decided to sell the property to co-working real estate firm WeWork.. . . more

Troubled Sears gets more time to pay back its loans

Sears Holdings says in a Securities and Exchange Commission filing it has been given two extra years to repay lenders, including its CEO and hedge fund owner Eddie Lampert.

In its filing Monday night, the troubled department store chain said it has consolidated three loans, including two real estate loans totaling roughly $320 million and due in July. The new consolidated loan is due in July 2020.

Sears said it has about $779 million due in 2020, which is secured by 69 Sears-owned real estate assets. . . . more

Monday, June 4, 2018

Recent Court Rulings Demonstrate Value of Operating Covenants

Many retail leases contain operating covenants included in a long list of boilerplate provisions.

Tenants agree to operate their stores for a minimum number of years during the lease term, but also agree to how many hours they will keep their doors open each week—usually conforming to the normal business hours for other tenants in the shopping center.

These provisions have not typically been heavily negotiated, and retail landlords have not had much success in enforcing them. When a tenant announces that they are closing their doors, the landlord’s best option tends to be a negotiated termination deal.. . . more

Abercrombie turnaround holds steady in Q1

Chain Store Age
Abercrombie & Fitch exceeded Wall Street forecasts and cut its loss in the first quarter amid strong demand for Hollister and an upturn in its namesake brand.

Total same-store sales rose 5%. By brand, same-store sales 6% at Hollister and 3% at Abercrombie.. . . more

Friday, June 1, 2018

Lululemon 1st-qtr profit beats expectations

Canadian athletic apparel maker Lululemon Athletica posted first-quarter profit that beat expectations on Thursday as total same-store sales rose 20 percent, and the company’s shares jumped 4.2 percent in after-hours trade.

Revenue increased to $649.7 million, up from $520.3 million a year ago. Analysts had expected $617.7 million. . . . more

E-Commerce Furniture Brands Find Physical Stores A Must-Have Omnichannel Accessory
Web-based furniture companies that open physical stores are finding a particularly welcome reception, as market fundamentals are tipped in their favor for a clicks-to-bricks, omnichannel experience.

Ballard Designs is a home furnishing brand born nearly 35 years ago as a mail order catalog company. While online sales have eclipsed those from the catalog in the years since, Ballard has also been adding physical stores, averaging between 12K and 15K SF, including one at the Natick Mall outside Boston. . . . more