Archive for August 12th, 2008
by David Bodamer August 12th, 2008
Inditex, Zara’s parent company, recorded a 9% increase in sales to €2.218bn (£1.7bn) in the first quarter of its financial year. It also benefited from the strength of the euro to edge slightly ahead of Gap which saw its revenues fall by 10% and recorded sales of €2.169bn in the same period.
The difference may be tiny, but Inditex claims it is significant: for the first time the Spanish group has inched past its American rival.
The group, whose high street store Zara has led the charge, hopes to consolidate its lead over rivals later in the year as it continues to expand overseas in spite of the economic downturn.
It is three years since Inditex overtook H&M, to become the biggest clothing retailer in Europe. But the rapid growth is nothing new to a company which first started in 1963 in the bedroom of chairman Amancio Ortega’s home in Galicia, northwest Spain, making bathrobes.
Link.
Related Topics: News, Retail |
by David Bodamer August 12th, 2008
CMBS Spreads are at their widest point since March. And analysts are blaming the retail sector this time.
Yields on commercial real estate securities relative to benchmark rates rose to the highest since March on concern that retailers won’t be able to repay debt as consumers cut spending.
Spreads on AAA rated commercial mortgage-backed bonds widened 10 basis points during the week ended yesterday to 250.5 basis points more than 10-year swap rates, according to data from Bank of America Corp. A basis point is 0.01 percentage point.
Demand for commercial real estate securities is waning as retailers are forced into bankruptcy during the economic slowdown. Mervyn’s LLC, Linens ‘n Things Inc., Boscov’s Inc. and Steve & Barry’s LLC have all filed for bankruptcy protection during the past six months.
Related Topics: Finance, News, Retail, Retail Real Estate, Trends |
by David Bodamer August 12th, 2008
Business Week has an excellent analysis up of how the bankruptcy rules put in place in 2003 will affect the current round of retail bankruptcies.
But the final nail in the coffin for Sharper Image came three years earlier, when U.S. bankruptcy law was revised to add cash payments to utilities and other suppliers, and place a 210-day cap on the amount of time bankrupt companies have to decide whether to keep a lease.
The rapid dissolution of Sharper Image took many in the bankruptcy industry by surprise. But that chain isn’t alone. Several retailers that have filed for Chapter 11 protection since the economy started swooning have unraveled just as quickly: Wickes Furniture closed down its 36 stores. Friedman’s is in the process of selling off jewelry and is closing its 377 stores, while Whitehall Jewelers is liquidating its 300 stores. All these companies filed for bankruptcy reorganization in 2008. And in December 2007, Bombay Co. and Levitz closed all their stores.
The new provisions in the bankruptcy law—pushed primarily by mall owners, suppliers, and utility companies, and signed by President George W. Bush in 2005—were intended to shorten the time that a company stays under court supervision. The point was to protect creditors, who sometimes had to wait years for payments while lawyers racked up hefty fees and managers collected big pay packages. “There was a pattern in some bankruptcy courts of granting extensions for as long as the debtor wanted, and that had to be stopped,” says Lynn LoPucki, a professor at the University of California at Los Angeles School of Law and author of Courting Failure: How Competition for Big Cases Is Corrupting the Bankruptcy Courts.
Related Topics: News, Retail, Retail Real Estate, Trends |
by David Bodamer August 12th, 2008
Retail Traffic has written a couple of times about Canadians taking advantage of a favorable exchange rate and shopping in the U.S.
A similar dynamic is at play at the U.S./Mexico border. There, however, it’s not so much about the exchange rate as it is by the fact that the Mexican school year starts earlier. Therefore, Texas retailers are getting a bump from some added back-to-school sales.
Janie Ortiz, a clothing store manager at Cielo Vista Mall in El Paso, estimates that as many as 85 percent of shoppers in her store these days are from nearby Ciudad Juárez or the city of Chihuahua, a three-hour drive south from the Texas border.
“They’re very, very important because we’re so slow,” said Ms. Ortiz.
Sales started to pick up last weekend when Mexican students prepared to return to classes. As summer vacation ends in Mexico, families are busy shopping for last-minute items.
Related Topics: International, News, Retail |
by David Bodamer August 12th, 2008
Amid the pile of downbeat sales reports for July from retailers, there was a sliver of hope: Second-quarter profits may not be as bad as expected when merchants such as Wal-Mart Stores Inc., Macy’s Inc. and J.C. Penney Co. post their results starting this week.
Several companies, from Gap Inc. and Penney to teen retailer Hot Topic Inc., raised their outlooks last week — with help from strict inventory controls and slashing expenses — even as they reported sales declines in July at established stores.
Still, retailers overall are expected to report a fifth consecutive drop in quarterly earnings, according to Ken Perkins, president of research company RetailMetrics LLC. Worries abound about how merchants will stem the erosion of their profits as they confront what could be a deeper spending funk in the critical months ahead.
Link.
Related Topics: News, Retail |
by David Bodamer August 12th, 2008
Last week the Wall Street Journal took a look at General Growth Properties’ debt situation. This week, the Las Vegas Review-Journal adds some further analysis.
“They have much too much debt for their cash flow. And quite a few of their properties are underwater,” said Reggie Middleton, a Brooklyn, N.Y., investor who has published in-depth analyses of General Growth Properties on his Web site, Boombustblog.com. “If they do pay it off by some act of God, they still have 2009, 2010 and 2011.”
General Growth officials rejected multiple interview requests.
Financing shortfalls are an unfamiliar scenario for General Growth, a company that used the economic boom of recent years to leverage its way to become the second-largest real estate investment trust in the country.
The buying binge culminated in 2004 when General Growth bought the Rouse Co., for about $14 billion, which gave it control of Fashion Show and the Summerlin Centre project. The Rouse deal also included Boston’s Faneuil Hall Marketplace, South Street Seaport in Lower Manhattan and Baltimore’s Inner Harbor.
Related Topics: Development, Finance, News, REITs, Retail Real Estate |
In Defense of Shopping Centers
by David Bodamer August 12th, 2008
On Friday, I linked to a screed about the future of shopping centers. A blog called The Sledgehammer has written a response entitled In Defense of the Traditional Shopping Mall. The post is labeled “Part 1″ so I’ll keep an eye out for any future addenda to Lutz’s post.
No Comments Related Topics: Architecture & Design, Commentary, Development, Mixed-Use, News, Retail Real Estate |