Monday, June 29, 2020

A Look Back

Bob Sheehan, the primary author of this column for the last sixteen years, is moving on.  I asked him to think back to some of the trends affecting retail during the last 16 years and share them with me.

As I listened to Bob, I couldn’t help but think of a heavyweight boxer from the 1970’s, Chuck Wepner. Fighting with a ton of heart, he was the inspiration for Sylvester Stallone’s first Rocky screenplay. Mr. Wepner would take punch after punch, earning himself the nickname, The Bayonne Bleeder, but seemingly recover and fight another round.

As Bob tells it: “When I started at KeyPoint Partners, we were starting to see cracks in the viability of regional malls. In fact, the last traditional enclosed mall, as we know them today, opened in 2006. Lifestyle centers had taken a toll on the mall concept and had become the preferred mode of growth for specialty retailers.

I guess I have to tip my cap to those prognosticators who warned us about the de-malling of America. When the Great Recession struck in 2008, it pounded away at large format retailers such as Circuit City, Borders, Linens ‘N Things, Comp USA, and Office Max. At about the same time, we were nearing the end of the pure lifestyle center life cycle, as affluent market opportunities for those projects ran dry and developers realized the need to shift gears to a hybrid concept, mixing some big boxes with a smattering of lifestyle retailers in order to target a broader base of shoppers.

But lurking in the background all this time, a monsoon was brewing in the form of Amazon. Back in the late 90s and early 2000s, there was a measurable level of online purchasing but it was targeted to only a few merchandise categories. Books and music stores were the first to be impacted. Electronics stores closely followed. But overall the online retail segment contributed minimally to total retail sales at the time. The perception was that there wasn’t much to worry about and that, for the most part, online sales had little effect on apparel retailing. In the aftermath of the Great Recession, however, everything changed. Let’s face it; we never really saw the potential impact coming until it was too late for many.

This all leads us to 2020, the year of Covid-19 and unprecedented upheaval in the industry. We are faced with so many questions and so few answers. No one can say with any degree of confidence how all this plays out. We’ve been living in a world of double digit vacancy for more than a decade - and then lightning struck. How much unoccupied space will be left in its aftermath?”

Like Chuck Wepner, retail has fought on, at times bloodied and a bit bruised. But it’s important to remember that retail is evolutionary. After the rise of lifestyle centers and category killers, malls and power centers, and even smaller centers, all found ways to co-exist and vacancy rates eventually recovered. Also, after the recession of 2008, which left lasting impacts on the industry, we saw the rise of new entrepreneurs entering retail and the expansion of franchise businesses.

With stores just starting to open after our Covid-19 experience, it is too soon to know the lasting impact on retail. Certainly the Decelerating section of this newletter far exceeds the Accelerating section at the moment but we’re beginning to see some signs of opportunistic investment (see our Accelerating News section for a few names). Companies such as Ingka Centres, the mall arm of IKEA, which has 45 centers around the world, is looking to open another 45 in several large cities across existing markets and the United States, some near its IKEA stores. The company is in talks to buy properties such as old post offices, department stores, or existing malls to convert. We also see some of our clients accumulating cash should they see value opportunities in the near future. This is a pinch of confidence in the future of retail.

We wish Bob Sheehan all the best as he moves forward. As we all move forward through COVID recovery and onward, we’ll continue to observe the evolution of retail, and to share our observations with you in these pages. Thanks for your continued readership and support.

Mark Becker, Partner/CFO

KeyPoint Partners Company News

Tenant Representation: VP of Leasing Don Mace negotiated a lease on behalf of Apple Cinemas in Hartford, CT. Apple Cinemas will lease a 60,098 s/f space on New Park Avenue in Hartford, just off of Route 84.

National Retail News/COVID-19 Updates

US retail sales jumped by a record 17.7% from April to May, with spending rebounding after the coronavirus flattened the economy during the previous two months. The Commerce Department reported that retail sales have somewhat recovered after record-setting month-to-month plunges of 8.3% and 14.7% in March and April as businesses have reopened. Still, the pandemic’s damage remains severe, with purchases still down 6.1% from a year ago. Sales at non-store retailers, which include companies like Amazon and eBay, rose 9% in May after posting growth of 9.5% in April. Building materials stores enjoyed a monthly gain of 10.9%. Grocers posted a 14.4% annual sales increase, reflecting fewer people eating out. Other sectors in retail posted spectacular growth in May yet still face an uncertain future given the blows they absorbed in March and April. Clothiers achieved a 188% monthly gain but still remain down 63% over the past 12 months. Furniture store sales surged 90% last month, but they’re still down more than 21% on the year. The same holds for restaurants, electronics stores, department stores, and auto dealers. See sales reports on Page 4...Simon Property Group has terminated its merger agreement with Taubman Centers Inc. and has filed suit against Taubman. In the suit, Simon alleges that the COVID-19 pandemic had a “uniquely material and disproportionate effect on Taubman”.  It also alleges that Taubman breached its obligations related to the operation of its business. Taubman owns, manages or leases  26 premium shopping malls in the US and Asia.

TJX Cos., parent of T.J. Maxx, Marshalls and HomeGoods, has started reopening stores worldwide, and anticipates that most stores could be open by the end of June. Since May 2, TJX has reopened 1,600 stores worldwide, roughly 36% of the company’s 4,500 stores. In the US, TJX has fully or partially reopened in 25 states…Bed Bath & Beyond Inc. is reopening 600 stores, including about 500 Bed Bath & Beyond locations across North America, along with 50 Christmas Tree Shop stores and 50 Cost Plus World Market stores in the US. The openings mean that around 50% of the company’s total store fleet of 1,500 locations is expected to be open this month...Apple reopened about 100 US stores this month, with an emphasis on curbside pick-up. Apple has about 270 US locations.... Dick’s Sporting Goods has reopened 80% of its stores; Five Below has reopened 75%...Best Buy is dropping the shop-by-appointment model it put in place in its first wave of store reopenings. More than 800 Best Buy locations across the country will begin allowing a limited number of people inside.

Accelerating Retail News

Lidl opened its 100th US location last month in Suwanee, GA...Dollar General opened 250 stores during the first quarter, despite the pandemic. Dollar General operates 16,500 stores... Five Below has opened 40 new stores so far this year and expects to open 100 to 120 new stores in 2020. Five Below has reopened more than 75% of its 900-plus stores as pandemic restrictions ease...Tire Discounters is planning 5 new locations for the TN, AL, IN markets. The company has 132 stores and has added 25 stores within the last 2 years…Club Pilates is set to open 21 new locations in June. This brings the company to 615 US studios...Ahold Delhaize USA’s Food Lion plans to acquire 62 Bi-Lo and Harveys Supermarket stores and a distribution center from Southeastern Grocers. Plans call for the 46 Bi-Lo and 16 Harveys locations in NC, SC and GA to remain open under those banners until the transaction is finalized in the first half of 2021, and then be converted to Food Lion stores...Chicken Salad Chick will open its first-ever location in Indiana this month. Chicken Salad Chick has more than 155 restaurants in 17 states... Dick’s Sporting Goods has added 2 outlet and clearance store banners to its portfolio: Overtime by Dick’s Sporting Goods and Dick’s Sporting Goods Warehouse. Overtime offers apparel, footwear, and equipment from brands such as Nike, Adidas and Under Armour  at up to 75% off regular prices. 3 Overtime stores opened this month. The company opened 5 Dick’ Sporting Goods Warehouse locations, which offer footwear and apparel at up to 90% off. With the new openings, Dick’s will have 11 outlet and clearance centers in 9 9 states. As of May, Dick’s operates 726 US stores... Tire Pros has added 10 locations in 8 states. There are more than 600 US Tire Pros locations in 45 states...Wawa Inc. opened its 900th convenience store this month in Springfield, NJ. Pennsylvania-based Wawa operates 900 convenience stores in 7 states...American Eagle Outfitters opened a new store format, called Unsubscribed, in East Hampton, NY

Decelerating Retail News

L Brands plans to close approximately 250 Victoria’s Secret stores and 50 Bath & Body Works stores in the US and Canada in 2020...Albertsons Cos. plans to sell a more than 17% stake in the company to private equity firm Apollo Global Management. As of its 2019 fiscal year-end, Albertsons had 2,252 stores in 35 states under Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Jewel-Osco, Acme, Shaw’s, Star Market, United Supermarkets, Market Street and Haggen. .. Car-rental company Hertz Global Holdings Inc. filed for bankruptcy last month citing the collapse in air travel amid the pandemic...Off-price retailer Tuesday Morning filed for Chapter 11 bankruptcy protection with plans to close about 230 of its 687 stores this summer...G-III Apparel Group Ltd. announced the permanent closures of all 110 Wilsons Leather and 89 G.H. Bass stores as it restructures its retail operations segment. The liquidations are set to begin immediately or as soon as locations reopen amid the pandemic. Following the restructuring, the retail operations segment will retain 14 DKNY and 13 Karl Lagerfeld Paris stores... Signet Jewelers won’t reopen 230 stores it closed due to COVID-19 and plans to close another 150 stores this year. The stores that won’t reopen include 150 stores in North America. Currently, Signet operates 3,200 stores globally under the brands Kay Jewelers, Zales, Jared, H.Samuel, Ernest Jones, Peoples, and Piercing Pagoda...Stop & Shop parent Ahold Delhaize USA has decided to terminate the long-pending acquisition of Long Island, NY, grocer King Kullen because of “significant, unforeseen changes in the marketplace,” mainly triggered by the COVID-19 outbreak. The acquisition was announced in early January 2019, after the agreement was signed in the previous month. Financial terms weren’t disclosed…Children’s Place Inc. plans to close an additional 300 stores by the end of 2021, with 200 closures planned for this year and another 100 planned for 2021. As of May 2, Children’s Place had 920 stores in the US and Canada…Starbucks Corp. will  transform its US stores and shutter up to 400 locations as it focuses on digital integration and convenience. During the next 18 months, the coffee giant plans to accelerate the expansion of convenience-led store formats such as drive-thru, mobile order only, counter pickup and curbside pickup. It also plans to relocate stores from low-traffic malls to new locations that combine the store experience with drive-thrus... 24 Hour Fitness has filed for bankruptcy after the coronavirus pandemic forced its facilities shut for months. The chain has permanently closed 100 US locations in 14 states with roughly 300 clubs remaining... Party City  plans to permanently close 21 stores this year. The company said it is part of a “store optimization” plan that began in 2019 with 55 store closures. The statement also said 12 new stores will open by the end of 2021…AT&T plans to permanently shutter 250 AT&T Mobility and Cricket Wireless stores. There are currently more than 16,000 US AT&T retail locations, including authorized retailers and company-owned stores and kiosks...PizzaRev has permanently closed more than half its units and currently has just 13 US stores, down from 32 restaurants in 2019…GNC Holdings Inc. filed for bankruptcy protection with the aim of selling itself and closing stores. GNC plans scenario where it will restructure through a standalone plan or sale of the company. GNC will seek to close  800 to 1,200 stores. It has about 5,200 US locations... CEC Entertainment, parent company of Chuck E. Cheese, has filed for Chapter 11 bankruptcy protection, citing the COVID-19 pandemic. The company will continue operations through the process and reopen locations that were shuttered during the pandemic. Chuck E. Cheese has 555 company-owned locations.

New England News

After nearly three months, Simon reopened 9 malls and shopping centers in and around Boston, including Copley Place and Wrentham Village Premium Outlets Simon’s retail properties have been closed since March 19.

Mall News

Namdar Realty Group acquired Westfield Meriden, CT from Unibail Rodamco Westfield for an undisclosed price. It’s the 7th mall deal closed this year by Namdar, which owns 55 US malls in the Northeast, Midwest, and South, as well as 70 outdoor retail centers and mixed-use, office, and residential properties.


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.


US retail sales jumped 17.7% in May, the Commerce Department reported. All categories posted gains in May, with the largest gain of 188% in clothing and accessories. Despite the rebound, total spending remains 6.1% down on a year-over-year basis.

Source: U.S. Department of Commerce -


Treasury Yield Sources:;


 The Conference Board Consumer Confidence Index® held steady in May, following a sharp decline in April. The Index now stands at 86.6 (1985=100), up from 85.7 in April. The Present Situation Index – based on consumers’ assessment of current business and labor market conditions – declined from 73.0 to 71.1

Source: The Conference Board -


Manufacturing contracted in May, as the PMI® registered 43.1 percent, 1.6 percentage points higher than the April reading of 41.5 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 -