Tuesday, December 17, 2013

December Review: The Year in KeyPoints

Every month in KeyPoints we do our best to bring you timely industry news, as well as lively, informed commentary.  It’s time for a look back at our observations and pronouncements from 2013:

January: Missing the Bull’s Eye: Holiday Sales Forecasts
Bob Sheehan wrote about the questionable usefulness of holiday sales forecasts, especially when based on Black Friday sales:
“The Black Friday phenomenon has thrown sales forecasts for the holiday season way out of whack. Every year we hear reports of sales from the Black Friday weekend, supposedly an insightful gauge by which to measure the pulse of the holiday shopper and the strength of the holiday retail season. HOGWASH! With gross margins slashed to the hilt and shoppers jockeying for position outside stores, Black Friday sales figures don’t necessarily mean good things for a retailer’s holiday performance or bottom line.”

February: Dealing With the 900 Lb. Gorilla
Bob commented on the downsizing trend by big-box retailers as a strategy for responding to the growth of e-commerce:
“The current inclination of larger retailers is to develop smaller prototypes; simply put, big stores are getting smaller. There are several reasons for this - higher unemployment, the economy in general, changing technology - but the biggest factor is the large, menacing creature mentioned in the title, the gargantuan presence known as e-commerce. With an aging population and the propensity of boomers to spend more online purely for convenience, retailers need to take direct aim at the 900 Lb. Gorilla.”

March: Are You Buying What Best Buy Is Selling?
Bob wrote about Best Buys’ attempts at a turnaround under new CEO Hubert Joly:
“If Best Buy is going to compete, it has to be more than a showroom. Joly recently announced that Best Buy would put more focus on appliances, a category that had been relegated to the back of the store. Joly wants appliances front and center now, a shrewd tactical move in light of the housing recovery and the potential demand that should ensue. From a strategic perspective these recent moves should be applauded; but the big question now is, will it translate to the bottom line, and regain for Best Buy a little of the glory it once enjoyed?”

April: The Burgers of Burlington, MA
Chris Cardoni addressed the rise of “better burger” restaurants by conducting a taste test at nearby locations of growing burger chains:
“The lowly burger is enjoying a renaissance with the rapid rise and widespread expansion of so-called better burger restaurants, a category that now includes at least 50 chains, and which, between 2011 and 2012, grew by 21% and rang up sales of over $2 billion. We present an informal, unscientific rating of the offerings of each nearby chain, conducted by a panel of volunteer tasters [the winner: Bobby Flay’s Bobby’s Burger Palace].”

May: Eastern Massachusetts KeyPoint Report Preview
This issue featured highlights from the 203 KeyPoint Report on Eastern Massachusetts/Greater Boston:
“After suffering through the most dreadful economy in more than half a century, the Eastern Massachusetts retail climate is finally showing some giddy-up. Earlier this year the retail vacancy rate fell below 8.0% for the first time since 2008. The rate currently stands at 7.8%, the largest percentage drop in more than a decade.”

Note: the July issue featured a preview of our KeyPoint Report for Southern New Hampshire, and in September we highlighted the KeyPoint Report for Greater Hartford, Connecticut. This year’s reports, besides featuring an updated layout, included a 10-year historical section. All of our reports are based on quality data from our GRIIDTM, a powerful source of market knowledge that maintains detailed information on virtually every retail property in key New England markets. The 2013 reports are available on our website: click here.

June: The Case of the Shrinking Sales Index
Chris Cardoni on the shift away from monthly comp-store sales reports by retailers:
“In the 90s, over 100 retailers reported sales on a monthly basis, with the number dropping to around 75 by the early part of the last decade. We’ve always included a detailed list of sales results for retailers in a variety of categories. When I started working on this publication, in 2001, that list consisted of 73 retailers, all of whom reported monthly sales. Our current list reports sales for 40 retailers, and only five report monthly.”

August: Supermarket Square Footage: Winner & Still Champ
Bob Sheehan created a ten-year history of market share of traditional grocery chains in our region:
“There has been no substantial change in the relative market positions of The Big Three between 2004 and 2013. Stop & Shop, Shaw’s, and Market Basket remain at the top of the “food chain”(pun intended). Of course, we’d be remiss if we didn’t mention the grocery competitors taking a piece of the food expenditure pie: wholesale clubs, dollar stores, Walmart, and Target are grabbing significant shares of the grocery market. It would be compelling to analyze the growth of these non-traditionals against overall growth by traditional grocers.”

October: The 10th Anniversary Halloween Issue
Chris Cardoni’s semi-annual Halloween spending article looked at changes over the past decade:
“Halloween is about embracing fears. In the midst of a federal shutdown and yet another looming financial abyss, we embrace our economic fear:  over 86% of people who will celebrate Halloween say they’re cutting back on overall spending because of the economy. But that’s not to say the October spending spree won’t still be robust: in 2003, when the NRF first began tracking Halloween spending, the total was $3 billion; this year they expect it to be nearly $7 billion.”

November: Too Big To Fail?
Last month, Bob Sheehan questioned the fate of certain perennial (and perennially troubled) retail dinosaurs:
“Rite Aid, Best Buy, JCPenney, Sears: do they have anything in common? Are they too big to fail? There probably isn’t a retailer out there that is truly too big to fail, but there are reasons why some hang on longer than others, and some hang on just long enough to ultimately survive. Why? Maybe sheer magnitude is as good a reason as any.”

All of which brings us to our current issue, and the close of another action-packed retail year. We thank you for reading, and hope you’ll continue to do so.

Happy Holidays and a peaceful, profitable New Year.


Mark Becker, Partner/CFO

Bob Sheehan, VP of Research

Chris Cardoni, Marketing Manager

Company News



New Business: Property Management has added six properties to its portfolio. The assignments consist of retail, office, and industrial space totaling more than 1,390,000 s/f, and include: Springfield Plaza, a 400,000 s/f retail center in Springfield, MA; 978-980 Worcester Road, a 23,300 s/f office/retail property in Wellesley, MA; 140-142 Worcester Road, a 5,900 s/f retail property in Framingham, MA; two industrial/warehouse properties of 443,000 s/f and 277,000 s/f respectively, in South Hadley and Deerfield, MA; and the 242,000-s/f first phase of One Loudoun, a retail//entertainment/office/residential development in Ashburn, Virginia.

National News

November comparable-store sales posted a year-over-year gain of 2.1%, based on the ICSC’s final tally of 12 retail chains. A comparison with the 2012 effects of Hurricane Sandy helped sales comps for some retailers. L Brands (Limited) was up 8.0%, Gap was down 3.0%, Rite Aid was up 2.1%, Walgreen’s rose 5.8%, and Costco gained 3.0%. See our sales report below.

Accelerating News

Safeway Inc. will sell 11 of its metro-Chicago Dominick's stores to Roundy's, Inc. Roundy's will begin operating the stores over the next two months. Safeway previously announced the sale of four stores in the greater Chicago area to New Albertsons, Inc., which operates Jewel-Osco grocery stores...Westfield Group will invest $800 million to take full control of the retail space at New York’s World Trade Center. The company agreed to buy Port Authority of New York and New Jersey’s 50% stake in the retail part of the site, bringing its investment in the property to more than $1.4 billion. Westfield first acquired a 99-year lease interest in the retail concourse at the original trade center six weeks before it was destroyed in 2001, and sold it back to the Port Authority in December 2003. The group agreed in July 2011 to pay $612.5 million to take a half stake in a joint venture with the Port Authority to develop the center. The retail complex is scheduled to open in 2015. The project will encompass about 365,000 s/f of retail space, with another 90,000 s/f to be added in future...Dollar General plans to open approximately 700 stores in fiscal 2014 and remodel or relocate approximately 525 locations. The company operated 11,061 stores as of Nov. 1...Simon Property Group announced a plan to spin off all of its strip center business and smaller enclosed malls into an independent, publicly traded REIT, SpinCo. SpinCo's mission will be to own stable, quality strip centers and malls that effectively serve the communities in which they are located. SpinCo will operate one of the largest, most diversified portfolios of strip centers and malls in the U.S., having 53 million total square feet in 23 states...RadioShack will open its newest concept store in Fairfax, VA, the first such store in the area. All concept stores in the company's portfolio feature an upgraded shopping experience, which showcases the company's new look, and incorporates interactive areas designed to help shoppers improve their technology profile. RadioShack is opening a select number of these experiential stores in neighborhoods throughout the nation. The Fairfax location is one of more than a dozen concept stores to open since the company began converting to such stores. By the end of 2013, RadioShack will have more than 100 concept and brand statement stores open and will have made improvements to nearly all 4,300 stores throughout the nation.

Decelerating News

Sears Holdings Corp. will spin off its Lands' End business as a separate company by distributing stock to shareholders. Sears said in October that it was considering separating the Lands' End and Sears Auto Center businesses from the rest of the company. Lands' End, which sells clothing and home goods on the Internet and through catalogs, began in 1963 as a sailboat hardware and equipment catalog, but morphed into a clothing company by 1977. Sears bought the company in 2002... J.P. Morgan Chase & Co. plans to close its banks at 49 of the 52 Dominick's stores in which it operates branches, and TCF National Bank will close 37 of its 155 branches in Jewel-Osco stores.

New England News

Paul, a fast-casual French bakery, will open its flagship Boston café at the former Four Green Fields restaurant space at One Boston Place on Boston’s Washington Street. The two-level, 6,000 s/f space is slated to open next summer. One Boston Place is the first of four boutique bakeries scheduled to open locally in 2014, with up to seven additional locations slated to open in the next few years in Natick, Burlington, Somerville, and a second Boston location.  Boston is Paul’s second US market. It has opened five DC area locations since 2011...French fashion house Chanel opened a 10,000 s/f, two-story boutique on Newbury Street, one of the company’s largest behind New York and Waikiki. The store design was inspired by late designer Coco Chanel’s Paris apartment...New England’s first Smashburger opened this month in Natick’s Sherwood Plaza, on Route 9. 11 other Smashburgers will open in Middlesex County over the next several years, although no leases are signed yet. Consumer Capital Partners, a Denver private equity firm, started Smashburger in 2007. The chain has since grown to about 245 locations...After 54 years, the Howard Johnson’s Hotel on Boylston Street is being sold to make way for development in the Fenway area. The sale is expected to close at the end of the year, and developers Steve Samuels and Adam Weiner will take over the property as part of their plan to build new apartments, stores, and restaurants in the area...Kas Sharma has finalized the purchase of the Henry Bear’s Park toy stores from founder Sally Lesser. Sharma hopes to preserve what Lesser has done with the three stores in Arlington, Brookline and Cambridge by maintaining the same staff, the same locations of the stores, and the same operating philosophy. Founded in 1976, the Henry Bear’s Park stores were named for David McPahil’s children’s book of the same name...Regency Centers Corp. has agreed to buy an 80% interest in a portfolio of three properties: Fairfield Center, The Brick Walk, and Black Rock Shopping Center totaling approximately 315,000 s/f all located in in Fairfield, CT currently controlled by Kleban Properties. Terms were not announced and the deal remains subject to customary conditions as well as loan assumption consent. The properties feature national and regional retailers including Banana Republic, The Gap, Old Navy, Victoria’s Secret and Fidelity. Regency is real estate investment trust, focusing on grocery-anchored and community shopping centers. As of Sept. 30, the company owned or co-owned 333 retail properties totaling 43.6 million square feet...The Hasty Pudding Clubhouse is moving to the 4,700 s/f former Irish pub Tommy Doyle’s space in Cambridge’s Harvard Square. Following nearly a decade at 2 Garden St., also in Cambridge, Hasty Pudding said it will continue its traditions with the move. Tommy Doyle’s, the Irish pub plans to shutter on Dec. 22.

November Retail Sales Report




Notes: figures gathered from individual company websites, press releases, and Federal filings.  Not all companies report all figures; results not reported will be marked “n/r”. Quarterly results will be updated when available; quarterly figures are shown in italics. Figures from companies not calculated to one decimal point automatically received an ending digit of 0. 

Commerce Department Monthly Sales

The Commerce Department said retail sales rose 0.7% in November, the biggest gain in five months. The gain followed a 0.6 % advance in October that was larger than first reported.

Source: U.S. Department of Commerce - commerce.gov

Treasury Yields






Treasury Yield Sources:  federalreserve.gov; ustreas.gov

Consumer Confidence Index

The Conference Board Consumer Confidence Index®, which had decreased sharply in October, declined again in November. The Index now stands at 70.4 (1985=100), down from 72.4 in October. The Present Situation Index edged down to 72.0 from 72.6. The Expectations Index declined to 69.3 from 72.2 last month.

Source: The Conference Board - www.conference-board.org

Purchasing Managers Index

Manufacturing expanded in November as the PMI™ registered 57.3 percent, an increase of 0.9 percentage point when compared to October's reading of 56.4 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Source: Institute for Supply Management - Manufacturing Report on Business - www.ism.ws

Wednesday, November 20, 2013

Too Big To Fail?

Rite Aid, Best Buy, JCPenney, Sears: do they have anything in common? Are they too big to fail?

There probably isn’t a retailer out there that is truly too big to fail, but there are reasons why some hang on longer than others, and some hang on just long enough to ultimately survive. Why? Maybe sheer magnitude is as good a reason as any.

Among those listed above, Rite Aid may have already turned the corner. I used to say that the retail expenditure pie was ultimately only large enough for two players in any one merchandise category to financially thrive. I still stand by that viewpoint, generally - but there are exceptions to every rule.

With CVS and Walgreens battling it out for pharmacy supremacy over the years, Rite Aid was left to dig out of a hole many thought was too deep. Broken inventory and poor store presentation led to declining sales during a period when it was saddled with tremendous debt following the Brooks/Eckerd acquisition in 2007. But in 2012, the chain showed signs of life, with increasing script business and hints of turning a profit. In 2013, the company is expected to net its first profit in years. With an aging US population, increased life expectancy, and the Affordable Care Act, which is expected to provide health care coverage to an additional 27 million people in 2014, Rite Aid may be on the road to recovery.

If Rite Aid has turned the corner, Best Buy may not be far behind. Just a little over a year ago it seemed as if Best Buy was on the verge of succumbing to Amazon, Walmart, and a slew of other online electronics purveyors. Then, about the same time, along came a man named Hubert Joly to take the reins and inject new life into this wounded retail behemoth.  Joly arrived with an effective turnaround plan, including a price-matching policy, reallocation of retail floor space, and retraining of employees. He approached the threat of online competition as an opportunity to strengthen Best Buy’s own online sales performance and become a viable multi-channel retailer. In fiscal 2013, Best Buy reported a second quarter profit of $266 million, a colossal jump from a mere $12 million in the second quarter last year. Online sales showed the most improvement, gaining 10.5%. Chain-wide comp sales declined by a modest 0.6%, but are still much improved from a 3.3% decline last year. While no one should declare that “Best Buy is back” just yet, if stock performance is any indicator, it appears to be well on its way: Best Buy stock has gained 270% thus far this year, making it the best performing stock in the S&P 500.

JCPenney has for the moment lifted itself from the depths of despair (and a potential Chapter 11 filing) and may well be back on the road to mediocrity. Following the disastrous Ron Johnson era, and under the leadership of Myron Ullman, who returns to his former CEO post, that’s probably a best case scenario. The company saw a 0.9% comp store sales gain in October, the first since December 2011. At the same time, online sales grew by 37.6% (don’t get too excited, though - September comps were down 4%). The sales improvement came in part from Penney getting back to its roots and restoring inventory levels of key private label merchandise, something Ron Johnson discarded virtually the minute he arrived.

What is it they say: “You can put lipstick on a pig, but it’s still a pig!”? That’s why I say JCPenney is headed back only as far as mediocrity. Part of the reason is competition, and part of the reason is an aging customer base. Penney’s time has passed, and when a company has 100 years of history behind it, it’s tough to change its image.  I think we’ll know a lot more about Penneys’ potential recovery once we get past the 2013 holiday season.

Which leads us to Sears: I could simply say that “I wouldn’t touch this one with a ten foot pole” - but I won’t. It’s inconceivable, however, that a publicly traded retail chain can have 26 consecutive quarters of declining sales and still be around to talk about it. On the heels of the Orchard Supply spin-off in 2011, and still desperate for cash even after receiving $446.5 million from the Sears Hometown and Outlet Store businesses last year, Sears Holdings announced that  it is now considering a similar move regarding the separation of its Lands’ End and Sears Auto Center businesses. In addition, Sears is off-loading Canadian real estate, including selling a  50% stake in eight Canadian properties for $300 million, ending the leases on four Sears Canada stores, and closing its flagship store in Toronto, a move the netted another $400 million. The question now is how much more Eddie Lampert can slice off before there is nothing left on the bones.  It seems that it’s just a matter of time, but is Sears just hanging on or is it too big to fail?

Are any of these perennial (and perennially troubled) retail dinosaurs  - Rite Aid, Best Buy, JCPenney, Sears - truly too big to fail?

Bob Sheehan, Vice President of Research
BSheehan@KeyPointPartners.com

Company News

New Employee: Ryan Traynor joined the Burlington, MA office as an Assistant Property Manager. Ryan’s previous property management experience was at The Dolben Company Inc.

National News

October comparable-store sales posted a year-over-year gain of 4.1% based on the International Council of Shopping Center’s tally of 12 retail chains. L Brands (Limited) was up 8.0%, Gap was down 3.0%, Rite Aid was up 2.1%, Walgreen’s rose 5.8%, and Costco gained 3.0%. See our sales report below...American Realty Capital Properties and Cole Real Estate Investments, two of the largest commercial property owners in the country, agreed to a $7.2 billion deal in which American Realty will buy Cole with a mix of cash and stock. The combined company will be one of the largest commercial landlords in the country.

Accelerating News

Vitamin Shoppe will open about 60 new stores in fiscal 2014. The company’s total store count was 640 as of September...Advance Auto Parts will acquire General Parts International, a privately held parts maker. General Parts, which owns the Carquest brand, has 1,246 company operated stores in North America and operates 1,418 independently owned Carquest locations in the US and Canada. The transaction will create the largest automotive aftermarket parts provider in North America. The transaction is subject to approvals and is expected to close by late 2013 or early 2014...Dick's Sporting Goods will spend $10 million converting a former Walmart in Big Flats, south of Syracuse, into a Field & Stream location. Dick’s plans to open 55 Field & Stream locations...Italian eyewear giant Luxottica will invest $250 million in its North American business units over the next three years. Luxottica is one of the world’s largest eyeglass companies, operating as Lenscrafters, Pearle Vision, Sears Optical and Sunglass Hut in the US. Its in-house brands include Ray-Ban, Oakley, Vogue and Oliver Peoples. It also sells premium-priced eyewear through licensing deals with companies like Tiffany, Chanel, Versace, Coach and Prada. Luxottica plans to open hundreds of new Lenscrafters stores, triple the size of Luxottica’s Target Optical retail business and upgrade its Sunglass Hut offerings inside Macy’s stores and shopping malls. The Milan-based company has about 4,800 stores in North America...Keds is launching its first US retail shops in nearly two decades. The company opened its first 150-square-foot Keds Shop at the Natick (MA) Mall this month, which features 45 of its sneaker styles. Keds plans to open five to seven more stores in regional malls this year...Yum! Brands announced the opening of its 40,000th restaurant, a flagship KFC store in India. Yum brands include KFC, Pizza Hut and Taco Bell...Starbucks opened the first ever Teavana tea bar in New York City. A Seattle Teavana will open just before Thanksgiving. Starbucks will add tea bars to its 300 or so existing Teavana stores, and eventually plans 1,000 tea bars...Peet’s Coffee & Tea opened four store locations in the Pittsburgh, PA area. This ushers in the next phase of the company’s biggest retail expansion in its 47-year history which began with 18 store openings in Ohio. Peet’s will open three stores in Pittsburgh and one store in Brentwood...Lands' End will open its first standalone mall store. in the Yorktown Center Mall, Lombard, IL...Cabela’s is opening three new stores, in British Columbia, North Carolina, and Wisconsin. Cabela’s Canada will transform a former Canadian Tire building into a 50,000 s/f store for a fall 2014 opening; construction on a 100,000 s/f store, Cabela’s first in North Carolina, is scheduled to begin next summer, to open in the spring 2015, and construction is scheduled to begin next year for a spring 2015 opening of an 86,000 s/f store, Cabela’s fourth store in Wisconsin. Currently, Cabela’s operates 48 stores across North America with plans to open an additional 19 over the next two years...TJX announced that it aims to open 3,200 stores by the end of fiscal 2014, 50% higher than the current store count of the company...Apple plans to build over 30 new stores in fiscal 2014, with 2/3 of those stores located outside of the US. Apple also plans to remodel 20 stores over the course of the year.

Decelerating News

Build-A-Bear Workshop expects to close an additional 10 to 25 stores in fiscal 2013 and 2014...Blockbuster will shutter its domestic operations, including approximately 300 stores and all distribution centers. Blockbuster franchised and licensed stores in the US will stay open...Edwin Watts Golf Shops filed for Chapter 11 bankruptcy protection in Delaware, with the intention of selling the operating assets of the business.  Edwin Watts operates 90 stores across 15 states.

New England News

Boston-based Gemvara, an online jewelry retailer, opened its first retail store at 129 Newbury St...Market Basket will be coming to The Point, a new development under construction at the intersection of Routes 110 and 119 in Littleton, MA. Other newly confirmed tenants include a Tavern in the Square restaurant and a Hilton Homewood Suites Hotel...Merlin Entertainments Group has commenced construction of a $2.8 million, 44,000 s/f indoor Legoland Discovery Center at the Assembly Row development in Somerville, the first Legoland in New England and the sixth in the US...A 146,000 s/f Walmart store opened last month in St. Albans, VT, marking the final chapter in a lengthy permitting fight to bring the retailer to rural Vermont's northwest corner. Another Walmart is in the works for Derby, VT, but no start date for construction has been set... RadioShack has opened its first Boston area new concept store in Porter Square, Cambridge. RadioShack is opening a select number of these high-touch stores throughout the US. The Cambridge location is the sixth concept store to open since the company began converting to the new format this summer. Other stores are located in New York City, New Jersey and Texas...Harvard Square restaurant UpStairs on the Square will close after 31 years. Originally located on Holyoke Street above the Hasty Pudding theater club, the restaurant moved 11 years ago to 91 Winthrop St. The landlord has decided to sell the building...Stop & Shop Supermarket Co. recently closed on the 152-acre CanalSide Commons in Bourne, MA. The parcel is permitted for 300 homes and 85,000 s/f of retail. Stop & Shop is closing its store at 800 South Franklin St. in Holbrook, MA in December...Kimco Realty Corp. will acquire a 24-property retail portfolio in New England for $270 million.With the addition of this 1.4-million-square-foot, 96% -occupied portfolio, Kimco will gain 17 properties in the Boston metropolitan market with anchor tenants including Whole Foods, Trader Joe’s, Lowes, Kohl’s, Petco, Pier 1 Imports, Aldi Supermarket, CVS and Walgreens. This portfolio represents a significant expansion of the company’s existing portfolio in this area. In addition, the portfolio includes four other Massachusetts shopping centers, two Kings Supermarket-anchored centers in New Jersey, and one Walmart-anchored center in Danbury, CT. Kimco expects this transaction to close during the first quarter of 2014...The former Visitors Information Center at 1200 Hall of Fame Ave. in Springfield, MA, just up the block from the Basketball Hall of Fame, is being remodeled as a make-your-own burger Luxe Burger restaurant. The original Providence Luxe Burger is in the middle of Providence's WaterFire...After nearly 50 years, discount retailer Building #19 Inc. filed for Chapter 11 bankruptcy, seeking court permission to begin liquidation sales. The company was started in 1964 by Jerry Ellis and the late Harry Andler, and named after the Hingham shipyard building where it was founded. Building #19's success at selling items other companies discarded and its cartoonish newspaper ads made it an institution among New Englanders. The company currently has stores in Weymouth, Burlington, Norwood, Natick, Haverhill, New Bedford, Hanover, MA; Pawtucket and Cranston RI; and Manchester, NH...Whole Foods has signed a lease to open 35,000 s/f store at North Shore Commons Shopping Center in Beverly, MA by 2016...Barnes & Noble will close its Chestnut Hill, MA store at the end of this year. Barnes & Noble operates 820 US stores...Cumberland Farms opened a new concept store in the Roxbury neighborhood of Boston, the brand’s first urban location since 1981. The  store offers a range of hot food items, and touch screen kiosks where customers can customize their meals. The company has 600 stores in 11 states.

October Retail Sales Report


























Notes: figures gathered from individual company websites, press releases, and Federal filings.  Not all companies report all figures; results not reported will be marked “n/r”. Quarterly results will be updated when available; quarterly figures are shown in italics. Figures from companies not calculated to one decimal point automatically received an ending digit of 0. 

Commerce Department Monthly Sales

Consumers shrugged off the partial government shutdown and spent more on autos, clothing and furniture in October, boosting US retail sales by the most in four months. Retail sales rose 0.4%, up from a flat reading in September. Excluding sales at gas stations, retail spending rose 0.5%.

Source: U.S. Department of Commerce - commerce.gov

Treasury Yields

















Treasury Yield Sources:  federalreserve.gov; ustreas.gov

Consumer Confidence Index

The Conference Board Consumer Confidence Index®, which had declined moderately in September, decreased sharply in October. The Index now stands at 71.2 (1985=100), down from 80.2 in September. The Present Situation Index decreased to 70.7 from 73.5. The Expectations Index fell to 71.5 from 84.7 last month.

Source: The Conference Board - www.conference-board.org

Purchasing Managers Index

Manufacturing expanded in October as the PMI™ registered 56.4 percent, an increase of 0.2 percentage point when compared to September's reading of 56.2 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Source: Institute for Supply Management - Manufacturing Report on Business - www.ism.ws

Thursday, October 17, 2013

The 10th Anniversary Halloween Issue

We’ve been taking a ten-year look back recently – our latest KeyPoint Reports contain ten-year historical sections. Along those lines, it’s been ten years since I put together the first Halloween retail spending piece for these pages, based on the National Retail Federation’s Halloween Consumer Intentions and Actions Survey (now called the Halloween Consumer Spending Survey) – which was first released in 2003. Back then I began this way: “I was born on Halloween (insert joke here), and when I was four or five, I had a vague idea that the holiday festivities had some-thing to do with my birthday. But back then, in the early 60's (insert age joke here), Halloween wasn't as big a deal as it is today. What would my five-year-old self make of the major event that Halloween has become: one of the major retail shopping periods in the calendar, second only to Christmas in dollars spent on decorating and celebrating?”

A decade later, our fascination with Halloween continues. Halloween is about embracing fears. We’re frightened by people who are badly flawed, or simply bad (or breaking bad). We follow the walking dead, we’re puzzled by child-stars-turned-sex-symbols, and we seek to understand lone shooters and ruthless bombers. And so we slip on a mask or costume, light a candle in a pumpkin, and bring some light to the autumn dark.

In the midst of a federal shutdown and yet another looming financial abyss, we also embrace our economic fear:  over 86% of people who will celebrate Halloween say they’re cutting back on overall spending because of the economy. But that’s not to say the October spending spree won’t still be robust: in 2003, when the NRF first began tracking Halloween spending, the total was $3 billion; this year they expect it to be nearly $7 billion. Below, more projected facts and figures for Halloween 2013 - and since, as we all know, Halloween is merely a precursor for the Holiday selling season, a couple of early predictions for Holiday retail sales.

Happy Halloween + Happy Holidays = Happy Retailers.
Chris Cardoni, Marketing Manager
CCardoni@KeyPointPartners.com


















Ghouls and Ghosts Galore, 158 Million People to Celebrate Halloween This Year, According to NRF - National Retail Federation: nrf.com






Company News

New Employees: Debra Sheehan joined the Accounting Department in the Burlington, MA office as an A/P Data Entry Clerk. Debra's previous position was at Central Bank in Somerville, MA. John Whalen joined the Burlington, MA office as a Property Manager. John worked previously at Edens. John Matyjas joined the Burlington, MA office as a Property Accountant. John's most recent experience was at The Hamilton Company in Boston, MA. Denisse Hernandez joined the Boston office as an Assistant Property Manager. Denisse has prior property management experience at Tishman Speyer Properties...Promotions: Maryann Atherton has been promoted to Property Accountant in the Burlington, MA office. Maryann began her KPP career in the Research Department, and has been working as an Accounts Payable Data Entry Clerk. Jackie Fabi has been promoted to Senior Property Manager. Jackie had been a Property Manager, and has been at KPP for four years...New Business: The Leasing Team is now leasing 1819-1829 Centre Street, a property in West Roxbury, MA with 2,985 square feet of available, subdividable space. VP of Leasing Don Mace is handling the assignment. The Leasing Team is also leasing Eastway Plaza on Centre Street in Brockton, MA and CVS Plaza at 790 Chief Justice Highway in Cohasset, MA. Michael Branton is handling these assignments.

National Retail News

September comparable-store sales posted a year-over-year gain of 4.5% based on the International Council of Shopping Center’s tally of 12 retail chains. Apparel demand was exceedingly weak in September—sales declined by 1.8%, which was the largest sector decline since August 2009. L Brands (Limited) was up 1.0%, Gap was down 3.0%, Rite Aid was up 1.9%, Walgreen’s rose 7.4%, and Costco gained 4.0%. See our sales report below.

Accelerating Retail News

WS Development paid $45 million for Hyde Park Village, a retail complex in Tampa, FL from Vornado. Last year, WS Development expanded beyond New England when it acquired Highland Village in Jackson, MS and Hilldale Shopping Center in Madison, WI...The Container Store filed with the Securities and Exchange Commission for an initial public stock offering. The retailer, which operates 62 stores in 22 states, sees potential for as many as 300 US locations...Ascena Retail Group plans to open approximately 180 to 190 stores and close 115 to 125 stores, ending the fiscal year with approximately 3,925 Justice, Lane Bryant, maurices, dressbarn and Catherines stores in operation....Topshop plans to open more than 150 new franchise stores around the world over the next year, including 28 Topshop stores in Nordstrom stores in the US. The expansion will take Topshop clothing to major US cities such as San Diego, Houston and Washington, DC for the first time. Topshop is also in talks about opening up to five more wholly-owned stores in the US. It currently has flagship stores in New York, Chicago, Las Vegas and Los Angeles...Year-to-date, ULTA Beauty has opened six new stores in malls, and is scheduled to open an additional six stores prior to year-end, bringing Ulta's total mall store count to 43. ULTA operates 609 retail stores across 46 states...Roy Rogers Restaurants has struck a strategic alliance with Franchise Dynamics to fuel a 100-unit franchise increase over the next 5 years. Roy Rogers operates 21 corporate and 29 franchise locations in the Mid-Atlantic region...Saks Inc. will open seven new Saks Fifth Avenue Off 5th stores in 2014. The stores will range from 25,000 to 28,000 s/f. and will be modeled in Saks Fifth Avenue Off 5th luxury-in-a-loft store design. Saks currently operates 70 Saks Off 5th stores...Dick’s Sporting Goods plans to grow its store base to over 800 namesake stores by the end of fiscal 2017, an increase of approximately 300 stores from the 518 stores it operated at the end of fiscal 2012. The chain will also continue to remodel existing stores, and will grow its new Field & Stream concept to approximately 55 locations by the end of fiscal 2017...Kohl's Department Stores opened three new locations, bringing the company's store count to 1,158 US stores. New stores include Hyannis, MA, Keene, NH, and Michigan City, IN. With these locations, Kohl's has opened 12 new stores in 2013...Yogurtland announced the opening of its 250th location, in Encinitas, CA.  Earlier this year, Yogurtland expanded into New York and Boston, and has locations in the US, Australia, Guam, Mexico, and Venezuela with more than 100 locations scheduled to open over the next six months...J.C. Penney launched Disney branded shops inside 565 Penney stores this month. The shops offer toys, collectibles and children's apparel showcasing various Disney characters. Shops ranges in size from 800 to 1,100 s/f...Dollar General Corp. has opened its 11,000 store, making it the retailer with the most US stores. Dollar General anticipates opening 650 new stores in 2013...Jamba Inc. plans domestic and international openings of 60 to 80 new Jamba Juice stores, and up to 1,000 new JambaGo installations.  

Decelerating Retail News

The Bollard Group, a Boston venture capital firm, is selling its strip mall portfolios in Massachusetts and New Jersey. MA centers include the Micro Center mall on Memorial Drive in Cambridge which also has a Starbucks and Sleepy’s, Vinnin Square in Swampscott which is anchored by Marshalls, Meadow Plaza in Westborough, home to Mill Stores, and the National Wholesale Liquidators strip center on Morrissey Boulevard in Dorchester. Real estate sources say the deal could fetch as much as $200 million as the company seeks to cash in on their retail real estate holdings...Fresh & Easy Neighborhood Market has filed for bankruptcy protection in US Bankruptcy Court. It plans to sell itself through the bankruptcy auction process to Los Angeles-based Yucaipa Cos. Fresh & Easy, a division of England-based Tesco, previously said it would sell about 150 of its 200 locations to Yucapia, and loan Yucapia about $120 million as part of its agreement to exit the US.

New England Retail News

Texas bar-and-restaurant chain Bar Louie will open a restaurant inside a Marriott Residence Inn under construction in the Fenway neighborhood of Boston. The chain already operates a restaurant inside Patriot Place at Gillette Stadium in Foxboro, MA. Bar Louie has more than 70 US locations...Whole Foods Market Inc. opened a new store in Arlington, MA. With the opening of the Arlington store, Whole Foods will have converted all six former Johnnie’s Foodmaster locations into Whole Foods stores. The other five are in Brookline, South Weymouth, Melrose, Charlestown, and Somerville. Arlington will be the 28th Whole Foods Market store in MA...Keurig will open a store at Burlington (MA) Mall in November, the brand’s first retail venture. Keurig’s parent is Green Mountain Coffee Roasters Inc. Although based in Vermont, the company has major research and development centers located a short distance from Burlington Mall. Shoppers will be able to interact with Keurig brewers and beverages from Keurig K-Cup, KeurigVue, and Keurig Rivo systems...City Sports, which recently opened a store in Boston’s Financial District, not far from an existing store, plans a new store in the Fenway area, as well as two new stores in Manhattan, one in Brooklyn, and one in Rockville, Md...Kohl’s opened a new 54,800 s/f store in Hyannis, MA , the 25th Kohl’s in Massachusetts. Kohl’s has 1,160 stores in 49 states....Tractor Supply Co. opened a store in Morrisville, VT, the company's seventh VT store.Tractor Supply operates 1,234 stores across the country...Weylu’s, the long-closed, palatial hilltop restaurant on Route 1 in Saugus, has been sold for $4 million, less than half of the asking price. The Rocco DiNanno Group got the 9-acre site for 63% off the list price of $10.7 million. The Weylu’s parcel is assessed at $3.37 million. The sprawling, three-story, 60,000 s/f restaurant ran into trouble when the recession hit in the early 1990s. Weylu’s was shuttered in 1998, after a bankruptcy court ordered its liquidation...Joe’s American Bar and Grill and Papa Razzi in Hanover, the last two MA locations in the restaurant empire built by Sarkis Restaurant Group – formerly Back Bay Restaurant Group –will close this month...iParty's 28 stores in Massachusetts have officially transitioned to the Party City brand name and will offer a larger selection of party supplies, decorations and costumes...Trader Joe’s opened a new a 12,000 s/f store in the Hingham Shipyard complex in Hingham, MA...Foxwoods Resort Casino is reportedly building a 300,000 s/f retail center in partnership with Tanger Factory Outlet Centers Inc. that will feature more than 80 retailers, including American Eagle Outfitters, Ann Taylor, Banana Republic, Calvin Klein and Nike.The retail center is expected to open in late 2014 or early 2015, depending on weather...Hardee's plans to open 200 restaurants in the Northeast region in the next five years – the first for the fast-food burger chain since Hardee's shut down and retreated from the region in the 1990s. Restaurants are expected to open in New Jersey and New York within the next 12 to 18 months, followed by Connecticut and Massachusetts...North End restaurant Piccolo Venezia has shut its doors after 32 years...The Purple Shamrock, the Faneuil Hall pub that closed its doors last September after more than 30 years in business, is set to become a Panera Bread. Meanwhile, the Purple Shamrock has reportedly been looking for a new place to open...Drybar, the blow-dry salon chain, is opening stores in Boston’s Back Bay and in Chestnut Hill. Drybar’s move to Boston was motivated by inquiries from Boston fans of the stores through social media.

September Retail Sales Report








































Notes: figures gathered from individual company websites, press releases, and Federal filings.  Not all companies report all figures; results not reported will be marked “n/r”. Quarterly results will be updated when available; quarterly figures are shown in italics. Figures from companies not calculated to one decimal point automatically received an ending digit of 0. 

Commerce Department Monthly Sales

Due to the shutdown of the Federal Government, Commerce Department retail sales information is not currently available.

Source: U.S. Department of Commerce - commerce.gov

Treasury Yields
















Treasury Yield Sources:  federalreserve.gov; ustreas.gov

Consumer Confidence Index

The Conference Board Consumer Confidence Index®, which had increased slightly in August, decreased in September. The Index now stands at 79.7 (1985=100), down from 81.8 in August. The Present Situation Index grew to 73.2 from 70.9. The Expectations Index fell to 84.1 from 89.0 last month.

Source: The Conference Board - www.conference-board.org

Purchasing Managers Index

Manufacturing expanded in September as the PMI™ registered 56.2 percent, an increase of 0.5 percentage point when compared to August's reading of 55.7 percent. September's reading reflects the highest overall PMI™ reading in 2013. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Source: Institute for Supply Management - Manufacturing Report on Business - www.ism.ws

Monday, September 16, 2013

Greater Hartford, CT KeyPoint Report Preview

With the releases of The KeyPoint Reports on Eastern Massachusetts/Greater Boston and Southern New Hampshire behind us, it’s time to move onto the report for Greater Hartford, Connecticut. As with the other reports, our modus operandi is to share some of the regional highlights while the complete version is still “baking”:

In Greater Hartford, a return to stability may be in sight.

Vacancy:  Total retail space in Greater Hartford totaled 37.1 million square feet at the end of the study, a small decrease from the 37.2 million square feet reported last year. Some spaces converted to non-retail uses or were demolished, contributing to the negligible decline in inventory. The most salient point regarding total inventory in the region is that there was virtually no net change.

New retail construction continued to move at a snail’s pace as most developers remained on the sidelines. Existing conditions in the market may be playing a large part in their decision. The better news is that following a few up-and-down years, the vacancy rate in Greater Hartford fell to 11.3%, its lowest level since 2009, a significant drop from the 12.0% vacancy rate in 2012. This equates to a reduction in the level of vacant space of 282,300 square feet. Still, occupancy levels need to improve substantially before we declare a healthy retail climate in the region.

Size Classifications:  While vacancy showed improvement in 2013, it was not all good news. Only in the 50,000 square feet and higher categories do vacancy rates fall below double digits. Most troubling is the Under 2,500 square foot classification, in which vacancy inched up from 18.9% to 19.1% during the year.

Greater Hartford did show marked improvement in the store size ranges from 2,500 to 9,999 square feet, but trended higher in the 10,000-24,999 square foot range. Among the more prominent names closing stores in this size range were Rite Aid (2), Planet Fitness, Petco, Restoration Hardware, and Nike. In some cases, tenants relocated to smaller units.

Greater Hartford, CT study area
Town Rankings:  The top ten among Greater Hartford retail markets (based on square feet of retail space) remain the same in 2013, with only one change within the rankings: West Hartford jumped over Enfield to take second place this year - a distant second behind Manchester, which continues to dominate all communities with 5.4 million square feet of retail space. West Hartford ended the year at 2.9 million square feet.

Among towns with the highest vacancy rates, East Hartford and Berlin again have the dubious honor of ranking firts and second, finishing at 23.8% and 23.1%, respectively. It’s disconcerting that both rates are somewhat higher than last year. New Britain and East Windsor also ended the year above 20%. Hartford ranked fifth at 16.3%, declining 220 basis points. Among towns with the lowest vacancy rate, Wethersfield leaped from fourth to first, coming in at 4.2% in 2013. The abutting town of Rocky Hill finished second at 5.3%, inching ahead of Enfield, which ended at 5.4%.

Retailer Activity:  Walmart Neighborhood Market, with its first entry into Greater Hartford, a 59,700 square foot store in West Hartford, took the top spot for incremental space in the region. Kohl’s ended in second place with the addition of its new 58,966 square foot store in Berlin, its first smaller prototype in the region.

LA Fitness opened a 35,100 square foot health club in Farmington, good enough to rank third. Sleepy’s and Subway tied for the lead in the number of new stores in Greater Hartford with six apiece. Boost Mobile and Chipotle each added four stores. Gold’s Gym closed two Enfield locations, reducing its retail space by 37,200 square feet, the highest level in the region. TJ Maxx and Sears Hardware were the only other retailers to decline by more than 25,000 square feet. Better Bedding exited the region by vacating four stores which were acquired by Sleepy’s. Midas Muffler and Liberty Tax Service each closed three stores while several retailers closed two units.

The full report contains much more detailed information on these categories and more. Stay tuned!
Bob Sheehan, Vice President of Research
BSheehan@KeyPointPartners.com

The KeyPoint Report examines the retail real estate marketplace for Greater Hartford, Connecticut, with a focus on changes between June 1, 2012 and July 31, 2013, a 14-month span. This report provides an analysis of changes in the region's retail activity and examines supply, vacancy and absorption, retailer activity, and market composition by store size and retail categories. The Greater Hartford market includes 26 cities and towns and represents more than 835 square miles and approximately 812,200 persons, equating to 22.6% of the Connecticut total population. The KeyPoint Report for Eastern Massachusetts/Greater Boston and TheKeyPoint Report for Southern New Hampshire have been released, and are available at KeyPointPartners.com.

Company News

Chris Scharff will become a Property Manager in the Burlington Office. Chris has been an Assistant Property Manager in the Boston office.

Industry News: National

August-store comparable-store sales posted a year-over-year gain of 3.6% based on the International Council of Shopping Center’s tally of 12 retail chains. In July, overall industry sales—based on this limited sample of monthly-reporting firms—grew by 4.2%. August sales were slightly softer in the apparel segment, but steady otherwise. The back-to-school apparel demand has been uneven and late, according to the ICSC, but August spending was stronger in the earlier part of the fiscal month. L Brands (Limited) was up 3.0%, Gap rose 2.0%, Costco gained 4.0%, Rite Aid was up 1.1%, and Walgreen’s rose 2.2%.  See our sales report below.

Industry News: Accelerating

Nordstrom will pay $102.5 million to own the site of its future Manhattan flagship store at 225 W. 57th St., which will anchor one of the tallest buildings in the world.The store will occupy the first seven floors of an 88-story residential condominium tower that will stretch 1,550 feet...Modell’s Sporting Goods opened two Long Island, NY locations last month, giving it a total of 155 storefronts...DSW Inc. plans to test a store format that is roughly half the size of standard DSW stores. The test stores will be around 10,000 s/f. The company expects to open 30 stores in 2013, including two small shops. The chain runs 377 US stores and manages shoe departments for 351 department stores...H&M will open its largest location to date, a 63,000 s/f flagship in New York City’s Herald Square. H&M is also on track to open a 42,500 s/f store at 4 Times Square by the end of this year in a space which was previously occupied by ESPN Zone...Uniqlo will open 10 US mall stores in October and November, giving it a total of 17 US locations. Uniqlo will open four stores in California, three in New York, two in New Jersey and one in Connecticut...Corner Bakery Cafe plans to open nearly 50 new franchised units across the country including nine cafes in San Diego, seven in Oklahoma, 10 in Northeast Florida and 21 throughout the Boston area. The company has franchise agreements for a total of 300 cafes in the next 3 to 4 years...Zumiez plans to open 58 new stores in fiscal 2013...Five Below has opened 32 new stores in 2013, and is on track to open 24 stores during the third quarter and reach its goal of 60 new stores in fiscal 2013...Ares Management and the Canada Pension Plan Investment Board have reached an agreement to purchase Neiman Marcus for $6 billion from a group of investors led by TPG Capital and Warburg Pincus. The transaction is expected to close in the fourth quarter of 2013 subject to regulatory approvals and other conditions...Walgreen Co. and Kerr Drug have entered into a definitive agreement under which Walgreens would acquire certain assets of Kerr Drug’s retail drugstores and specialty pharmacy business. Financial terms of the agreement were not disclosed. The acquisition is structured as an asset transaction and includes Kerr Drug’s 76 retail drugstores and its specialty pharmacy business as well as a distribution center. Kerr Drug will retain ownership of its long-term care pharmacy business. The transaction is subject to satisfaction of regulatory requirements and other conditions and is expected to close sometime this year. Kerr Drug will continue to operate separately...Fresh casual restaurant Newk’s Eatery has entered a renewed growth mode, with 12 new restaurants planned to open before year end 2013. Newk’s currently operates and franchises 59 units in 11 states...Papyrus North America announced the opening of the a Niquead.D flagship store in New York City, the brand’s second location to date. The new, 900 s/f store features women’s jewelry and accessories, clothing, scents, home décor, and paper and gift products...Pearle Vision will unveil its new store design this month which includes a new brand logo and signage, modernized displays, and a completely transformed floor plan. Current Pearle Vision licensees will have the opportunity to incorporate all or some of the new elements into existing centers...Jersey Mike’s Subs has signed a development agreement with Paradigm Investment Group to open 10 units in New York, and Connecticut.  Additionally, Paradigm will oversee growth throughout the state of Connecticut, Western Massachusetts, and Southern New York state...Aldi will open its second Bergen County store next month, the 29th Aldi in New Jersey. Aldi expects to add six to eight stores per year in New Jersey and eastern Pennsylvania. The company has over 9,000 stores, including more than 1,200 in this country...In separate announcements, Bi-Lo Holdings and Harris Teeter announced plans to acquire select Piggly Wiggly stores. Bi-Lo will acquire 22 Piggly Wiggly stores in South Carolina and coastal Georgia. Harris Teeter Supermarkets will purchase six Piggly Wiggly stores and one future store location in the Charleston, SC, area...Von Maur Department Stores will open its first location in the Northeast, at Eastview Mall in Victor, NY. Von Maur has 27 stores.

Industry News: Decelerating

Aeropostale plans to shut down 30 to 40 locations this fiscal year. Previously, it had stated its plans to close 15 to 20 stores...Tesco LLC has sold grocery chain Fresh & Easy to private equity firm The Yucaipa Cos., following months of uncertainty about the 200+-unit chain’s future. Some stores will be closing, but specific stores have not been identified, and terms weren’t disclosed.

Industry News: New England

Frozenyo frozen yogurt opened in a 1,200 s/f storefront at the corner of School and Washington streets in Boston’s Downtown Crossing. Frozenyo is based in Washington, and all of its 15 other stores are in the DC metro area, although the chain is seeking franchisees to expand...New Balance Athletic Shoe Inc. of Boston opened a new format 1,994 s/f store at the Burlington (MA) Mall. The format is called the New Balance Life Store, and features such company brands as Aravon and Cobb Hill for women, Dunham for men, and New Balance for both men and women...Athenahealth has revealed plans for the 760,000 s/f Arsenal on the Charles office complex it bought last December for $168.5 million from Harvard University, which call for: 150,000 s/f of new office space; a glass-enclosed atrium for the New Repertory Theatre; a beer garden/restaurant space; an Arsenal museum; outdoor meeting space; parks with pedestrian and bike paths to the Charles River; an accelerator space for health information startups. Athenahealth's plan will likely require zoning changes and state approval to alter historic structures...C. Talanian Realty Co. has sold a three-story, 4,800 s/f Newbury Street building for $6 million. The property includes two retail spaces, two luxury residential units and three parking spaces...Linear Retail Properties has bought the retail condominium located at 145 Charles St. in Boston’s Beacon Hill for $1.65 million. The 3,000 s/f of space is occupied by the King & I Thai Restaurant. Linear Retail now owns 14 retail properties in the City of Boston, including two on Charles Street, and a total of 69 properties throughout Eastern Massachusetts, Southern New Hampshire, and Rhode Island...City Sports opened its new store in Boston’s Financial District. The 8,000 s/f store at 225 Franklin St. was the site of a bank vault for State Street Corp. City Sports has 21 stores in the Boston area, New York, Pennsylvania, Maryland, and Washington, D.C...Bon-Ton Stores Inc. opened this month at the Maine Mall in South Portland, filling the site vacated by Filene’s in 2006. It will join Macy’s, Sears and J.C. Penney as the mall’s anchor tenants...Big Y Foods Inc. and F.L. Roberts & Co. Inc. have announced a partnership to develop convenience stores under the name Big Y Express. The first will open this fall in Lee, MA...Tavern in the Square is working to open four new MA locations: a 40-seat restaurant and bar at South Station; a 5,600 s/f restaurant next to North Station ; an 8,000 s/f Tavern in Northborough; and a 7,000 s/f spot at The Point, a new shopping center under construction in Littleton, The first Tavern opened in 2004 in Cambridge's Central Square. In the past decade, partners opened additional locations in Porter Square, Salem, Burlington and Allston, and acquired the Union Street restaurant in Newton.

August Retail Sales Report

























Notes: figures gathered from individual company websites, press releases, and Federal filings.  Not all companies report all figures; results not reported will be marked “n/r”. Quarterly results will be updated when available; quarterly figures are shown in italics. Figures from companies not calculated to one decimal point automatically received an ending digit of 0.

Commerce Department Monthly Sales

The Commerce Department said retail sales increased 0.2% last month as Americans bought automobiles, furniture and electronics and appliances.

Source: U.S. Department of Commerce - commerce.gov

Treasury Yields















Treasury Yield Sources:  federalreserve.gov; ustreas.gov

Consumer Confidence Index

The Conference Board Consumer Confidence Index®, which had declined in July, increased slightly in August. The Index now stands at 81.5 (1985=100), up from 81.0 in July. The Present Situation Index decreased to 70.7 from 73.6. The Expectations Index increased to 88.7 from 86.0 last month.

Source: The Conference Board - www.conference-board.org

Purchasing Managers Index

Manufacturing expanded in August as the PMI™ registered 55.7 percent, an increase of 0.3 percentage point when compared to July's reading of 55.4 percent. August's reading reflects the highest overall PMI™ reading in 2013. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Source: Institute for Supply Management - Manufacturing Report on Business - www.ism.ws

Friday, August 23, 2013

Supermarket Square Footage: Winner and Still Champ

With so many dramatic changes in the grocery industry during the past decade, and armed with fresh data from the new 10-year historical section of our recently-released KeyPoint Report on Eastern Massachusetts & Greater Boston, it's a good time to check on the market share of traditional grocery chains in terms of historical store growth.

I’ll spare you the suspense: there has been no substantial change in the relative market positions of The Big Three regional grocery chains between 2004 and 2013. Stop & Shop, Shaw’s, and Market Basket remain at the top of the “food chain” (pun intended) with respect to regional market share within this industry sector. I’ll let the charts below speak for themselves, but there are a few items worth noting:

Although Stop & Shop remains the dominant grocer in Eastern Massachusetts, it was nosed out by Market Basket for the highest square footage gain, 768,900 square feet to 756,700 square feet, largely due to super-sized store additions such as the 132,100 square foot Chelsea store and the 100,400 square foot Burlington unit.

Hannaford scored the highest in percentage gain of incremental space in the 2004-2013 timeframe at 301%, but it couldn’t have done it without the 2004 acquisition of nineteen Victory Supermarkets (some of which were outside the Eastern Massachusetts region).

Other than Victory, Save-A-Lot was the only chain to slip out of the top eight. These two have been replaced by Trader Joe’s and value grocer Price Rite.

The biggest loser, which should come as no surprise, is Shaw’s. This troubled grocer was the only chain among the market leaders to show a decline in retail space. Retail space among all other chains, and independents that fall into the “Other” category, declined a substantial 861,100 square feet, or 31%, dropping from 2.8 million to 1.9 million square feet. In 2004, “Other” represented 18% of the space and now represents only 11%. The fallout includes such chains as Johnnie’s Foodmaster, AJ Seabra, Hi Lo, and RoJack’s, as well as a slew of smaller chains. Highly-touted recent entrants into the region (and therefore outside the purview of the historical data) include Wegmans, Aldi, and Fresh Market.

Of course we’d be remiss if we didn’t mention the other grocery competitors taking a piece of the food expenditure pie: wholesale clubs, dollar stores, Walmart Supercenters, and Targets are all grabbing significant shares of the grocery market. It would be compelling to analyze the growth of these non-traditionals against the 10% overall growth experienced by the traditional grocery sector during the 2004-2013 period to better grasp their impact on the industry  - but that’s a subject for another day.

Bob Sheehan, Vice President of Research
BSheehan@KeyPointPartners.com

Industry News: National

July retail sales missed estimates forecast by the International Council of Shopping Centers. The ICSC’s tally of retailers’ comparable store sales showed an increase of 4.2% over the previous year. The ICSC had estimated that July sales would climb 5 to 6%. The tally was based on 13 retailers. L Brands (Limited) was up 3.0%, Gap rose 1.0%, Costco gained 4.0%, Rite Aid was up 1.3%, and Walgreen’s rose 2.3%.  See our sales report below.

Industry News: Accelerating

Cabela’s Inc. will open four new stores in 2014, two in Georgia and one each in Montana and Ontario, Canada. Cabela’s currently operates 45 stores across North America with plans to open an additional 19 over the next two years...Luxury retailer Saks is being purchased by Hudson's Bay Co., parent of Lord & Taylor, for approximately $2.4 billion. Saks will continue to run as a separate company under Hudson's Bay and will have its own merchandising, marketing and store operations employees. Key management personnel are expected to remain with the company. Saks had 42 Saks Fifth Avenue stores and 66 Saks Fifth Avenue Off 5th stores at the first quarter's end. Hudson's Bay was founded in 1670 as a trading firm for furs and other goods. It is considered the oldest company in operation in North America...Whole Foods Market has signed 50 new leases over the last 12 months, according to its CEO. The company sees potential for 1,000 US stores. It currently operates 355 US locations...Candy emporium Sweet! Hollywood opened its flagship location in Hollywood, CA, featuring more than 300 types of chocolate bars, more than 200 types of gummy candies, 140 flavors of chewing gum, and 250 types of lollipops. Guests can create custom candy bars and sample exotic sweets from across the globe. Sweet! Hollywood plans to expand internationally...rue21, inc. opened their first rueGuy stores in New York, Texas, and Ohio. The approximately 6,000 s/f stores are the first of seven slated to open across the US in August. The Company is on target to open about 20 rueGuy stores by the end of the year. rue21 currently operates 959 stores in 47 states...AT&T unveiled its newest store design in LaGrange, Ill. The store is built around the customer experience, with a goal of providing a glimpse of what the future of retail will look like. The new design will be rolled out at new and redesigned store locations across the country, and continuing into 2014...Fashion/accessory retailer Rabeanco opened its first US storefront, in Arcadia, CA, the first of three US locations the company plans to open in 2013...American Apparel has acquired New York City based independent fashion boutique Oak. Oak will operate as a separate division under the guidance of its founders and current top executives. The news was a surprise to many as American Apparel has been facing serious financial struggles, weighted by a significant debt, which has put it in the red since 2009. Terms of the deal were not disclosed...Macy’s has reached an agreement with Lids Sports Group to offer licensed departments called Locker Room by Lids to sell Lids merchandise both in Macy’s stores and on the retailer’s website. Lids Sports Group will operate the departments, which will be the exclusive source of Macy’s in-store team sportswear. Plans call for the departments to be piloted in approximately 25 Macy’s stores and on macys.com in fall 2013, and an additional 175 in-store departments out in spring 2014 as part of the initial phase. Macy’s will be the exclusive US department store with Locker Room by Lids locations...Smashburger has added five new franchise partners, totaling a combined commitment for 19 new US franchise units. This brings Smashburger’s total active franchise pipeline to approximately 300 locations, which are expected to open over the next several years...Fashion retailer Marc Jacobs will open his first store dedicated to cosmetics and beauty items, a 500 s/f store in Manhattan...Lowe’s Inc. is the sole bidder for Orchard Supply Hardware, and will acquire 72 of the bankrupt retailer’s stores for $205 million. The move will boost Lowe’s store count in California, where the home improvement retailer currently operates 110 stores. Orchard Supply will operate as a separate division of Lowe’s, retaining the company’s current management. Lowe’s will present the acquisition plan to a bankruptcy court judge on Aug. 20 for approval and hopes to complete the acquisition by the end of the month. Orchard Supply operates smaller stores than Lowe’s. Its stores average 36,000 s/f, compared with Lowe’s at 110,000 s/f. Orchard Supply’s stores are clustered around California’s big cities, including Los Angeles, San Francisco and San Jose. Orchard Supply operates 91 stores. Lowe’s will acquire the 72 that best fit its strategy, and plans to open more Orchard Supply stores in the future...Field & Stream, the newest specialty retail prototype from Dick's Sporting Goods will be open this month in southwestern Pennsylvania, in a 50,000 s/f converted Dick's store...Toys "R" Us Inc. will open more than 100 stores globally this year. The openings include new locations,  relocation and conversion of 14 stores to the Side-by-Side format, and 22 new licensed stores. The new stores are located throughout 21 of the 36 countries in which Toys "R" Us currently has a presence. In the US Toys "R" Us will open 19 new, converted or relocated stores, including nine new outlet stores bringing the total number of U.S. outlet locations to 25. The retailer operates more than 870 Toys "R" Us and Babies "R" Us locations in the US and Puerto Rico as well as hundreds of stores abroad.

Industry News: Decelerating

Blockbuster LLC plans to shutter 100 US stores during the current third quarter, leaving it with 350 locations in operation. At its peak in 2004, Blockbuster operated 9,000 stores in 17 countries and employed 60,000 people.

Industry News: New England

The Crossings, Newington, NH is hosting a farmers market in the Trader Joe's parking lot. Seacoast Growers Association, which runs farmers markets in Durham, Dover, Exeter and Portsmouth, will operate the market, which will be open Tuesdays for an eight-week trial run, and if it goes well, will be extended through the rest of the season. KeyPoint Partners manages and leases The Crossings...Shaw's Supermarkets is closing six New Hampshire locations by Sept. 2, with Manchester, Keene, Seabrook, Goffstown, Tilton and West Lebanon each scheduled to lose a store. The company launched several initiatives recently to regain customer share from competitors like Market Basket and Hannaford, but could not forestall the closures. In related NH supermarket news, Stop & Shop will close six New Hampshire supermarkets and gas stations on Sept. 21, and will no longer have a presence in New Hampshire. The locations include Bedford, Hudson, Exeter, Milford, and two in Manchester. The stores range in size from 55,000 square feet to 65,000 square feet, although the one in Manchester is about 80,000 square feet...Boylston Properties and the Wilder Cos. paid $70.5 million for the Arsenal Mall and adjacent Harvard Vanguard Medical Associates building on Arsenal Street in Watertown, MA. The firms also acquired the Golfsmith building, an adjacent property located between the Arsenal Mall and The Home Depot. Arsenal Mall, previously owned by Simon Property Group, is home to Sports Authority, Old Navy, Marshalls, Gap Outlet, Forever 21, Chipotle, Bath & Body Works, Ann Taylor Factory Store, and Victoria’s Secret...The Patrick administration selected a developer to build a hotel and retail complex on Boston’s Rose Fitzgerald Kennedy Greenway. Normandy Real Estate Partners will add several new restaurants, a pavilion for the Boston Harbor Islands, public art installations, and a carousel that will open Labor Day weekend. Normandy’s building, to reach up to 10 stories, will anchor a district of food businesses that will center around the Haymarket pushcart vendors and include an indoor farmers market above the Haymarket MBTA station, as well as several restaurants and specialty food stores. The firm is partnering on the project with the real estate firm Jones Lang LaSalle...Nespresso announced the opening of its redesigned 2,400 s/f flagship store in Boston's Back Bay. The redesign is the latest indication of the brand’s commitment to expanding its US presence.

July Retail Sales Report







































Notes: figures gathered from individual company websites, press releases, and Federal filings.  Not all companies report all figures; results not reported will be marked “n/r”. Quarterly results will be updated when available; quarterly figures are shown in italics. Figures from companies not calculated to one decimal point automatically received an ending digit of 0. 

Commerce Department Monthly Sales

Retail sales rose 0.2% in July from June, according to the Commerce Department. Excluding motor vehicles and parts, retail sales rose 0.5% in July vs. the 0.4% consensus estimate and were 4% above July 2012 figures.

Source: U.S. Department of Commerce - commerce.gov

Treasury Yields
















Treasury Yield Sources:  federalreserve.gov; ustreas.gov

Consumer Confidence Index

The Conference Board Consumer Confidence Index®, which had improved in June, pulled back slightly in July. The Index now stands at 80.3 (1985=100), down from 82.1 in June. The Present Situation Index increased to 73.6 from 68.7. The Expectations Index decreased to 84.7 from 91.1 last month.

Source: The Conference Board - www.conference-board.org

Purchasing Managers Index

Manufacturing expanded in July as the PMI™ registered 55.4 percent, an increase of 4.5 percentage points when compared to June's reading of 50.9 percent. July's reading of 55.4 percent reflects the sixth month of growth, and the highest overall PMI™ reading, in the first seven months of 2013. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

Source: Institute for Supply Management - Manufacturing Report on Business - www.ism.ws

Thursday, July 25, 2013

Southern New Hampshire Report Preview

The annual KeyPoint Report for Southern New Hampshire, based on our GRIID, isn’t quite ready for public consumption yet, but  we are able to share some of the key findings with you:

In Southern New Hampshire, in 2013, things are moving clearly in the right direction.

Vacancy: For starters, retail inventory in the region is up nearly 800,000 square feet from a year ago, a substantial 2.7% increase,  thanks in large part to the 410,000-square-foot Merrimack Premium Outlets coming on line in mid-2012. Better yet, retail vacancy in the region has been reduced by approximately 220,000 square feet, a 7.2% drop from the vacancy level last year. The number of vacant storefronts is down 8.1%, and the vacancy rate has declined from 10.6% in 2012 to a current level of 9.6%. As a result, there has been more than 1.0 million square feet of net absorption in the region.

Size Classifications: In assessing vacancy rates by store size, it was encouraging to see that - although rates are still much too high -  vacancy in smaller store sizes showed considerable improvement.  These smaller store vacancies have been the most troubling in recent years, with vacancy rates soaring into the mid to upper teens.  The most improvement occurred in the 2,500-4,999 square foot bracket where the vacancy rate declined by 300 basis points to a level of 11.4%. Among stores less than 2,500 square feet, vacancy dropped 200 basis points, resulting in a current rate of 15.0%. However, much of this vacancy is confined to the urban cores of the larger cities in Southern New Hampshire, particularly Manchester.

Somewhat surprising was the jump in vacancy in the 50,000-99,999 square foot classification. The increase can be explained entirely by two locations: A 117,800-square-foot Walmart store was only partially replaced by a 46,500 square foot Ocean State Job Lot in Derry, creating a 71,300 square foot vacancy.  In Nashua, Market Basket vacated a 52,400 square foot store. The Walmart and Market Basket vacancies were both the result of relocation to larger units.

Towns in the Study Area:

Town Rankings: There has been no change in the top ten largest regional markets.  Nashua continues to rank first with 6.2 million square feet of inventory. Manchester follows at 5.4 million square feet and Salem is a distant third at 3.9 million square feet. These are the only cities or towns in excess of 2.0 million square feet.

Towns with the highest vacancy rates in Southern New Hampshire also remain the same as last year. Manchester leads the pack while Londonderry moved into second place. In third place Derry, replaces Seabrook in the top five, all of which have double digit vacancy. The five healthiest markets in the region are the same as last year. With a 4.1% vacancy rate, Bedford is the top performer, followed again by Amherst, Salem, North Hampton and Milford.

Retailer Activity: Market Basket is the largest contributor to new retail inventory in Southern New Hampshire, adding 95,800 square feet. New stores in Bedford and Nashua, as well as the Seabrook expansion, were more than enough to offset two smaller store closings in Nashua. Ocean State job Lot entered Southern New Hampshire with its acquisition of the traditional Walmart store in Derry, partially occupying the building with a 46,500 square foot unit. Tractor Supply also was a growing retailer in the region, adding two stores in Plaistow and Brentwood, and an additional 38,200 square feet. The only retailers to add more than two new locations were Subway and Sleepy’s. Both added three stores.

A number of retailers no longer operate stores in the region. Most notably, Fashion Bug closed stores in Nashua, Derry, and Hudson, part of its companywide liquidation. H&M closed its only store in Southern New Hampshire, a 28,000 square foot unit in Salem. Mattress Giant is another retailer that vacated the region during the year; its three stores in Manchester, Nashua, and North Hampton were acquired by Sleepy’s.

The complete report contains much more detailed information on these categories and more, and features an updated, easy-to-read design. It will be available soon at KeyPointpartners.com. The KeyPoint Report for Eastern Massachusetts/Greater Boston is available now, and the KeyPoint Report for Greater Hartford, CT will follow a little later this year.


Bob Sheehan, Vice President of Research
BSheehan@KeyPointPartners.com

This report examines the retail real estate marketplace for Southern New Hampshire, with a focus on changes between May 2012 and June 2013. This report provides an analysis of changes in the region's retail activity and examines supply, vacancy, absorption, retailer activity, and market composition by store size and retail categories. The Southern New Hampshire market includes 39 cities and towns representing more than 835 square miles and approximately 553,900 permanent residents (42.0% of the state population).

Company News

New Team Members: Anastasia Magnitskaia joined the Brookline, MA office as an Assistant Property Manager. Anastasia has prior property management experience at Barkan Management Co. Jacob Noble joined the Boston office as an Assistant Parking Manager. Jacob has extensive accounting and property management experience, most recently at Lincoln Property Company. Buffy Berthiaume joined the Burlington, MA office as an Assistant Property Manager. Buffy’s most recent property management experience was at The Hamilton Company.

Industry News: National

According to the International Council of Shopping Centers Chain Store Sales Trends, June final year-over-year comparables store sales rose by 4.1% , the strongest showing since January’s 4.5%. The tally was based on 13 retailers. L Brands (Limited) was flat, Gap rose 7.0%, Costco gained 5.0%, Rite Aid was up 0.7%, and Walgreen’s rose 2.5%.  See our sales report on Page 4...Taco Bell has become the first national fast food chain to drop kid's meals, saying it will discontinue the toy and food combos at some locations this month and across the brand by next year. Taco Bell is owned by Yum Brands, which also owns KFC and Pizza Hut.

Industry News: Accelerating

Nordstrom Inc.  plans to have over 230 Nordstrom Rack stores in operation by 2016. There are currently 127 Racks, with plans to open 24 this year and another 30 in 2014...Ulta Salon, Cosmetics & Fragrance Inc., after increasing to 576 stores across 46 states last year, is planning another 125 net new stores this year. The company targets an eventual 1200-store count...Lululemon Athletica Inc. will start opening stand-alone men’s stores by 2016...Lowe's agreed to pay $205 million for 60 Orchard Supply Hardware stores in California after Orchard filed for bankruptcy relief. The acquisition will provide the retailer with a smaller store format and give it access to a new customer base in California, where it already operates 110 outlets...The HoneyBaked Ham Co. plans to open 30 more franchise locations across the Northeast over the next five years. With 20 locations in New York, New Jersey, Connecticut, Massachusetts, and New Hampshire, the company thinks the area is ripe for expansion, along with Vermont, Maine, and Rhode Island. The company has more than 400 locations...Lumber Liquidators has opened its 300th store, in Las Vegas, Nevada. The Company operates stores in 46 states and Canada...Johnny Rockets has been acquired by an affiliate of private-equity group Sun Capital Partners Inc. Terms of the deal were not disclosed. Johnny Rockets was sold by RedZone Capital Management Co. Johnny Rockets operates and franchises about 300 restaurants in 30 states and 16 countries, and has about 220 US locations...Urban Outfitters has signed a lease for 56,730 s/f on three levels at 1333 Broadway in Manhattan, where the retailer will create a new “lifestyle center” concept. UO will take occupancy in September...RadioShack has unveiled a new logo after opening its first concept store which highlights a new direction for the retailer. The New York store includes new displays that showcase top brands and applications that help customers understand more about products. RadioShack is planning several different prototypes in New York, New Jersey and Texas in coming weeks which will eventually lead to the remodeling of its 4,300 stores...Kroger has agreed to acquire Harris Teeter Supermarkets for about $2.5 billion. Harris Teeter operates 212 supermarkets, primarily in the Carolinas, where Kroger does not have a significant presence...Saks Fifth Avenue Off 5th will open a new 28,000 s/f store in Atlanta, Georgia this month in the Outlet Shoppes at Atlanta at Woodstock, the third Off 5th in metropolitan Atlanta...International clothing retailer UNIQLO will open 10 stores this fall: 3 in New York, 2 in New Jersey, 1 in Connecticut, and 4 in California, expanding the brand's presence to a total of 17 US stores...West Elm is opening its first location in Missouri at the St. Louis Galleria. The 8,385 s/f store will open in July...Men’s Wearhouse agreed to buy the Joseph Abboud clothing brand for $97.5 million in cash as the chain seeks to offer exclusive brands. The purchase gives the retailer an exclusive label to sell through its more than 1,100 stores...Wal-Mart opened 24 new locations across the country this month, including 12 Neighborhood Market stores and 12 new, relocated or expanded supercenters...Regional shopping center company Crosland Southeast has acquired 24 former Blockbuster stores from Blockbuster Corporate. Blockbuster vacated all stores at closing, and Crosland Southeast has already sold 11 of the 24. Nearly all of the 13 stores retained in Crosland Southeast’s portfolio are pre-leased to other retail and medical tenants...An affiliate of private equity firm Roark Capital Group has acquired 65 unit Miller's Ale House from Jack Miller and SKM Equity Fund III, L.P...Wendy’s is selling 425 restaurants to franchisees in a move to help boost profit margins. The sale of the restaurants will help expand adoption of the company’s new restaurant designs.