Amazon on hunt for location to build a second North American headquarters
The search is on for Amazon.
The e-commerce giant is currently evaluating where it will open its second company headquarters in North America. The new office, referred to as "HQ2," will be a complete headquarters — not a satellite office. It also could have a similar layout to Amazon's Seattle campus, which employs 40,000 people, and encompasses 8.1 million sq. ft. with 33 buildings, including 24 restaurants.
Amazon expects to invest over $5 billion in HQ2’s construction, and the office will include as many as 50,000 high-paying jobs, the company said. Amazon is also giving executives the option to choose where to base their teams — in HQ2, Seattle, or split between both locations.
“We expect HQ2 to be a full equal to our Seattle headquarters,” said Jeff Bezos, Amazon founder and CEO. “Amazon HQ2 will bring billions of dollars in up-front and ongoing investments, and tens of thousands of high-paying jobs. We’re excited to find a second home.”
To choose the ideal location, Amazon does have some pre-requisites, including a metropolitan area with more than one million people, and a “stable and business-friendly environment” that can attract and retain technical talent. Amazon is open to building its campus in either an urban or suburban location, but is focused on communities that “think big and creatively” regarding real estate options.
The online giant is also considering a development-prepped site. “We want to encourage states and communities to think creatively for viable real estate options, while not negatively affecting our preferred timeline,” the company stated.
In addition to Amazon’s direct hiring and investment, construction and ongoing operation of Amazon HQ2 is expected to create “tens of thousands of additional jobs” and “tens of billions of dollars” in additional investment in the surrounding community. Based on its investments in Seattle from 2010 through 2016, the company contributed an additional $38 billion to the city’s economy, according to the company.
Amazon is accepting proposals through October 19. The company will announce its decision next year, according to the company's request for proposal (RFP).
The addition of HQ2 comes on the heels of another Amazon hub. In May, the company announced plans to open a new 60,000 sq. ft. development center in the Cambridge region of the United Kingdom this fall. The new technology hub will focus on innovations from artificial intelligence to machine learning.
NRF revises 2017 sales growth forecast
The National Retail Federation on Wednesday has lowered its annual retail sales forecast, citing government data revisions.
Retail sales for 2017 are now expected to increase between 3.2% and 3.8%, down from the 3.7% – 4.2% growth the NRF predicted earlier this year. The revision comes after the Census Bureau lowered its retail sales figures, and the Bureau of Economic Analysis downgraded its personal income and consumption figures.
“While weaker-than-expected spending in the first quarter along with decelerating inflation has also contributed to the revision, NRF anticipates stronger sales heading into the fall and holiday seasons," said NRF chief economist Jack Kleinhenz.
Kleinhenz noted that total retail sales have grown year-over-year every month since November 2009, and retail sales as calculated by NRF — which excludes automobiles, gasoline stations and restaurants — have increased year-over-year in all but one month since the beginning of 2010.
Toys ‘R’ Us hires firm to help it explore options
Toys "R" Us' debt may have finally caught up with it.
With $400 million in debt coming due in 2018, Toys "R" Us is bringing in advisors to help the retailer weigh its options, which could include filing for bankruptcy protection. The nation's largest specialty toy retailer has hired Kirkland & Ellis, a law firm that specializes in corporate restructurings.
"As we previously discussed on our company's first quarter earnings call, Toys "R" Us is evaluating a range of alternatives to address our 2018 debt maturities, which may include the possibility of obtaining additional financing," Toys "R" Us spokeswoman Amy von Walter said in a statement
Toys "R" Us has been burdened with a heavy debt load since 2005, when it was purchased by private equity investors KKR, Bain Capital, and Vornado Realty Trust in a $7.5 billion buyout. The chain previously announced it is working with Lazard to help address its debt load, and it successfully refinanced some of its debt last year.
"While the decision of Toys R Us to appoint restructuring advisors is not necessarily a sign that bankruptcy is imminent, it is an indication that the company is in a very uncomfortable financial position," commented Neil Saunders, managing director of GlobalData Retail. "For a robust retailer, debt payments can be challenging. For a retailer struggling to generate sales growth while, at the same time, trying to invest to remain relevant — it can be the difference between success and failure."
Saunders noted that Toys "R" Us is challenged on many fronts, including that it suffers competition from online and physical "generalists" who discount toys to drive customer traffic, and that its large stores are "increasingly unsuited to what consumers want and expect."
"Against this backdrop, Toys “R” Us has to contend with the debt it accumulated as part of the leveraged buyout," Saunders said. "In our view, this is an example of private equity damaging retailers by not running them as commercial trading entities but as ATMs."
in June, Toys "R" Us posted a net loss of $164 million for its first quarter, up from a loss of $126 million a year earlier. Same-store sales fell 4.1%.
Toys "R" Us will report its second quarter earnings on Sept. 26.