Wednesday, October 14, 2015

Happy Hallow-days!

In my family we have a yearly joke about having to start Christmas shopping in August, because it’s almost “The Embers” (you know: September, Oct...ember, November, December), and The Embers go by very quickly. It’s become a cliché to note how fast one retail season rolls into another, and here we are again in the usual Halloween-to-Christmas retail whirlwind. Walk into any Michael’s store or CVS seasonal aisle and you’ll see the orange and black right next to the red and green. In that spirit, we offer you a few seasonal statistics and forecasts:


Halloween: Halloween falls on a Saturday this year, which quite likely means an increase in day-before and day-of Halloween parties. More than 157 million Americans plan to celebrate Halloween this year, according to the National Retail Federation’s Halloween Consumer Spending Survey conducted by Prosper Insights & Analytics. The average person celebrating will spend $74.34, compared with $77.52 last year. Total spending on Halloween is expected to reach $6.9 billion, compared to $7.4 billion last year. According to the International Council of Shopping Centers Halloween Consumer Spending Survey, 8 in 10 households expect to make Halloween-related purchases this holiday season, and they plan to make those purchases mainly in brick-and-mortar stores: nearly 99% plan to make an in-store purchase this year, while just over 36 % plan to have an online purchase shipped to their home, and 22% say they will buy online and pick up in-store.

Among this year’s “buzzworthy” costumes: Sexy Donald Trump (really?!); The Internet Dress (what color(s) are/is it?); Pizza Rat; Caitlyn Jenner; Lion-Hunter Dentist; Minions of all sizes; and Left-Shark, breakout star of last year’s Superbowl half-time show. Another Halloween economic note: this year’s pumpkin crop is significantly decreased due to heavy floods, causing a nationwide shortage. Libby's, the canned-food company known for its pumpkin-pie filling, reports that supplies are down by a third this year.

The Holidays: Not everyone objects to the “ever-earlier holiday push”, according to CNBC: “a slew of consumers having already started, and in rare cases, already finished, purchasing their holiday gifts. [A] study conducted by CreditCards.com over Labor Day weekend found that roughly one in seven, or 32 million Americans, have already begun buying for the holidays. The study also found that 2% of all consumers - about 4.6 million people - have already crossed everything off their list.”  For those of us who have yet to even think about making a list, that’s impressive.

In general, industry forecasters are looking for only modest increases in holiday retail sales. AlixPartners predicts holiday sales will rise between 2.8 and 3.4%, compared to 4.4% growth last year. Deloitte's holiday forecast calls for a sales increase of between 3.5 and 4%, below last year's 5.2% gain. ShopperTrak expects sales to rise 2.4%. Last year, ShopperTrak said holiday sales increased 4.6%, topping its forecast for 3.8% growth and representing the biggest gain since 2005, when sales registered 5.2% growth. The National Retail Federation projects that total holiday sales will increase 3.7%, and that holiday online sales will increase between 6% and 8%.

CNBC points to “ a tightening labor market, rising home values and seasonal gas prices that have hit an 11-year low. On the other end is an uncertain stock market, slowing global growth, and a consumer base that is shelling out more on rent. The end result... is a holiday season that shouldn't cause retailers to hit the panic button - but also doesn't signal robust growth”

Stay tuned to these pages to see how accurate these prognostications turn out to be. In the meantime, we wish you and all our friends in the retail world HappyMerryHallowHolidays.

Chris Cardoni, Marketing Manager
CCardoni@KeyPointPartners.com

KeyPoint Partners Company News

New Leasing Business: 2371 Cranberry Highway, a ~1.8 acre site in West Wareham, MA. VP of Leasing Rob Grady is handling; 16 Post Road, a big-box site in Westerly, RI and 470 Pawtucket Ave., Pawtucket, RI, handled by Senior Associate Michael Branton. The Investment Sales team closed four transaction in two weeks, including two single tenant properties - a Petco in Roslindale, MA and a CVS in Torrington, CT - and two multi-tenant properties - Wintonbury Mall in Bloomfield, CT and Midway Plaza in Uncasville, CT... New Employee: Nick Schaejbe joined the Burlington, MA office as an Assistant Property Manager. Nick is a graduate of the Entrepreneurship Real Estate program at Suffolk University, and has prior experience at BayState Property Management. Former team member Kris Dalen has returned to the Burlington, MA office as a Property Manager.

National Retail News

September retail sales rose a modest 0.1% on a year-over-year basis, according to the Commerce Department. Among retailers reporting monthly comp-store sales, L Brands was up 9%, Gap was down 1.0%, Rite Aid was up 1.5%, and Costco was up 3%. See our sales reports below...Whole Foods Market will cut 1,500 jobs from its workforce over the next two months. The layoffs will affect 1.6% of the chain's employees. Whole Foods said the layoffs will allow the company to "invest in technology upgrades" and keep its prices in check...Only a fraction of US payment card issuers have sent chip-embedded cards to customers, and only a fraction of merchants have installed chip-enabled payment systems as of the October 1st deadline, after which liability for in-store fraud shifts to card issuers and merchants. The EMV Migration Forum (Europay, MasterCard and Visa, the three companies that created the chip card standard) estimates 200 million-plus chip-enabled cards have been issued out of 1.2 billion cards in the marketplace. For US merchants, only about 40% of payment terminals have been upgraded to accept the cards, according to the National Retail Federation.

Accelerating Retail News

The Running Group, a division of The Finish Line, operates 76 specialty running stores under some 15 individual banners, including JackRabbit, The Running Company, Run On!, Blue Mile, and Boulder Running Company. The company will rebrand all the stores as JackRabbit...With the opening of a 50,000 s/f store in Augusta, its first in Georgia, and a 46,000 s/f store near Denver, its 7th in Colorado, Conn’s will have 100 stores next month...Ross Stores Inc. is continuing an aggressive growth strategy for its Ross Dress for Less and DD’s Discount banners. The new store openings are part of the retailer’s 2015 expansion program, totaling approximately 70 new locations during the year. Ross Dress for Less will open four new stores and DD’s Discounts will open two new stores this month. Together, Ross Dress for Less and DD’s Discounts currently operate more than 1,400 off-price apparel and home fashion stores...La Colombe is adding multiple locations. The Philadelphia coffee-roasting company plans cafés in Washington, D.C., New York, Florida, Massachusetts and California...Smart & Final, operator of 266 warehouse style stores, has plans to open 100 new stores in the Western US during the next four years...Wingstop Inc. opened its 800th restaurant this month in Hillsborough, NJ. Wingstop plans to add 120 to 130 new franchise stores in 2015...Microsoft will open its Manhattan flagship this month on Fifth Avenue and 53rd Street. The five-floor, 22,269 s/f store will showcase its latest technology...The Macerich Co. has formed joint ventures to which the company will contribute interests in 8 regionals malls totaling roughly $2.3 billion. GIC will have a 40% interest in five of the assets, and Heitman will have a 49% interest in the remaining 3 assets. The transactions are expected to close in phases starting in October 2015 and concluding in the first quarter of 2016. The assets are in Arizona, California, Texas, Oregon, Colorado, and New Jersey...Fallas will open its newest location this month in NC, the third in that state. Fallas is part of National Stores Inc., a family-owned discount retailer that operates more than 300 retail stores nationwide under the names Fallas, Fallas Discount, Fallas Paredes, Factory 2-U, Conway, CW Price and FALAS in Puerto Rico. The company is aggressively expanding its footprint into the eastern US. It is in the process of opening 8 new stores in the Carolinas, recently opened 5 stores in Atlanta, and is opening another 9 in Florida...In the next 12 months, Costco will build 32 new stores, 13 outside the US, including its first store in France and a second in Spain. Costco expects to have more than 100 stores in Canada in the next several years, up from over 80 currently...Toys "R" Us will open a three-story, 55,000 s/f store at the American Dream project under construction in the Meadowlands, NJ. American Dream has begun announcing confirmed tenants for the project, including anchors Saks Fifth Avenue and Lord & Taylor. The project also will have more than 300 retail stores, 21 restaurants, 45 specialty food tenants, 20 food court tenants, an amusement park, a water park, an indoor ski slope, a 300-foot-tall Ferris wheel and other entertainment properties...GrandVision NV, the largest global operator in optical retail, will enter the US market via the acquisition of the For Eyes Optical chain. For Eyes Optical operates 116 stores. GrandVision has over 5,800 stores in 43 countries...CVS Health is opening Hearing Centers in 7 CVS/pharmacy stores in the Dallas and Cleveland markets and will be providing optical services at CVS/pharmacy in 5 store locations around the Baltimore/Washington, D.C. market...Tanger Factory Outlet Centers Inc. has closed on the sale of 5 outlet centers to an undisclosed buyer for a total cash sales price of $150.7 million in two separate transactions. The properties are located in Barstow, CA.; Kittery, ME (two properties); Tuscola, IL; and West Branch, MI. Tanger is a publicly traded REIT that operates or has an ownership interest in a portfolio of 42 outlet centers in 21 states and Canada...Sprouts Farmers Market Inc. will open 12 new locations across the US  in 2016.

Decelerating Retail News

Great Atlantic & Pacific Tea Co. is selling 11 A&P, Pathmark and Waldbaums stores in NY and PA and one A&P store in CT to Wakefern Food Corp. for $40 million, subject to higher bids at auction...A Delaware bankruptcy judge said he will give final approval to the reorganization plan of electronics retailer RadioShack, which sought bankruptcy protection in February, having struggled for years and been unable to turn a profit since 2011. The reorganization plan is centered around acquisition of more than 1,740 RadioShack stores by General Wireless, which also bought RadioShack's intellectual property, including trademarks and customer data...Dunkin' Donuts franchisee Speedway, a gas station and convenience store chain, plans to close 100 Dunkin' Donuts locations in its US stores...American Apparel has filed for bankruptcy. As part of a prearranged Chapter 11 restructuring, more than $200 million of bonds will be exchanged for stock in the reorganized company and the clothing retailer will have access to financing after its restructuring. At the end of March, American Apparel had 249 stores in 20 countries.

New England News

Free People opened its first Boston-area large-format store in Chestnut Hill Square. The 5,090 s/f store is the company’s largest store in the state since Free People opened its first retail location in The Shops at Prudential Center 10 years ago...CarMax, Inc. has new stores opening in Norwood and Danvers in December. These two stores will be the first in the Boston area, with a third scheduled to open in Westborough during summer 2016. The first CarMax in Massachusetts opened in 2011 in North Attleboro...Roche Bros.’ lease for its Sudbury Farms store in Randolph, MA, has expired and the company will close the location in January. The closing will leave Randolph with a single major supermarket, Shaw’s. Following the closing, Roche Bros. will have 18 stores, including two other Sudbury Farms locations...The third Boston-area Wahlburgers opened this month at 132 Brookline Avenue, just three blocks away from Fenway Park. The Fenway restaurant joins Wahlburgers in Hingham and Lynnfield, with another scheduled to open later this year in Terminal C at Logan Airport...City Sports filed for Chapter 11 bankruptcy and plans to shutter 8 of its 26 locations before selling or liquidating the rest. City Sports, which opened its first store on Massachusetts Avenue in Boston in 1983, has yet to announce which stores will be eliminated and when those closures will take place...Saks Fifth Avenue signed a lease for its 3rd location in Greenwich, CT adding an additional 14,000 s/f of space. The new lease is directly across from the store’s original Greenwich location....Japanese retailer Uniqlo opened its new 12,000 s/f, two-level flagship Boston store at Faneuil Hall Marketplace, the 5th in Massachusetts. Uniqlo opened its first MA stores in Natick and Chestnut Hill last year, and will open a second Boston store, on Newbury Street, in late 2016.

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

Consumers tempered purchases at retailers in September. Commerce Department figures showed a 0.1% gain. Seven of 13 major categories showed declines, led by a 3.2% plunge at service stations as fuel costs retreated.

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 in August, improved moderately in September. The Index now stands at 103.0 (1985=100), up from 101.3 in August.

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

Purchasing Managers Index

Manufacturing expanded in September as the PMI® registered 50.2%, a decrease of 0.9 percentage point from the August reading of 51.1%, indicating growth in manufacturing for the 33rd consecutive month. The September PMI is the lowest reading since May 2013 when the PMI registered 50.1%. A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

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