To Grow or Not to Grow
In 1960, Colorado Springs, Colo., was the size of Lincoln, Neb. That the Colorado community once shared identical population stats to a Nebraska town is significant, because it’s no longer true. But that was according to plan.
At just 143,000 people in 1960, Colorado Springs was a smallish mountain town. Over the next 40 years, under an economic plan that opened the city to rapid and substantial growth, the Springs swelled to nearly 525,000 people, well above the national growth rate. But 550 miles east there was a different plan in place. Determined to control its growth, Lincoln’s economic-development leaders implemented aggressive zoning and development laws. In 1960, the population was 145,000. Today, it’s less than 240,000.
Growth has its perks. But so does non-growth. While the city of Colorado Springs faces infrastructure and quality-of-life issues, Lincoln has become a model for smart growth. In November, after an online search listed Lincoln as “one of the most well-managed smart-growth cities in the country,” a contingent of 15 Louisiana officials traveled north from Lafayette and were reportedly impressed with what they saw. “On their bus tour, they were amazed by the way Lincoln’s bustling city streets, dense with development, almost instantly give way to serene countryside and farmland once they crossed city limits,” reported The Independent Weekly, a southern Louisiana publication.
Smart growth is an economic-development strategy that comes with a price. While the positive press talks about how smart-growth cities deliver better-quality services for each tax dollar, what it doesn’t discuss is how many developers are stymied, how many redevelopment projects don’t happen, and how many amenities—e.g. retail, restaurants and entertainment—residents are denied.
I talked recently with Adam Ifshin, president of DLC Management, the Tarrytown, N.Y.-based shopping center developer that has generated plenty of acquisition headlines of late, purchasing 19 centers in 2006 alone. The 19th acquisition of the year, in November, made DLC the proud owner of East Park Plaza in Lincoln. By acquiring a local center, Ifshin became intimately acquainted with my city’s aggressive zoning. “We encountered some interesting restrictions that impact whether you can have another movie theater ever in this part of town,” he said. One source of conflict between residents and lawmakers is Lincoln’s 24-year-old ordinance that allows movie theaters with more than six screens only in the downtown area—and nowhere else. “That’s pretty unique,” said Ifshin, “and given the level of due diligence we do, we were able to figure out that we could get pretty comfortable with the theater operator at East Park [a six-screen cinema] because basically, he can be there forever.” DLC’s plans for East Park Plaza include significant demo work over the next three months and the installation of “a tier-one, quality, big-box tenant.” If it’s a new-to-market tenant, that would be considered real progress by Lincolnites, who respond positively to the arrival of major developers such as DLC, and their national retail contacts. Because while Colorado Springs has Macy’s, Lincoln has Southern tourists who appreciate the serene countryside and farmland.
Home Depot Projects Lower Profit in 2007
Atlanta, The Home Depot Inc. said Wednesday it will pump $2.2 billion into improving its business this year even as it expects lower earnings and slim sales growth. Home Depot said that for fiscal 2007 it expects sales growth in the range of flat to an increase of 2%, a decline in comp-store sales in the middle single digit percentages and an earnings per share decline of 4% to 9%.
Including the effect of a 53rd week in its fiscal year, consolidated sales are expected to increase by 1% to 2%, and earnings per share are expected to decline by 3% to 8%, Home Depot said.
CEO Frank Blake told investors at Wednesday’s conference that like last year, “2007 also will be a difficult year.” But he said it will be a year of focus on Home Depot’s priorities and a year with “hopefully less noise.”
The “noise” was apparently a reference to the investor furor over former CEO Bob Nardelli’s hefty compensation in light of the company’s lagging stock price. Nardelli resigned in early January after six years at the helm of the company. He took with him a severance package valued at $210 million.
To improve its business, Home Depot said it will invest $2.2 billion this fiscal year in key priorities, including the opening of 115 stores. The investment includes $1.6 billion in capital spending and $600 million in expense.
Home Depot said it will recruit master trade specialists, simplify its staffing model, use more technology to aid customer service, and redesign employee compensation and reward plans. It also will invest in new merchandise and review its pricing strategies. Additionally, the chain will spend money on customer loyalty programs, direct-ship programs, credit programs and other specialty sales initiatives.
Federated Plans Name Change
New York City, Federated Department Stores on Tuesday said it would ask shareholders to approve changing the company’s corporate name to Macy’s Group Inc. A vote to amend the corporation’s charter to accommodate the new name will be held in conjunction with Federated’s annual meeting on May 18. If approved, the company will be known as Macy’s Group Inc., effective June 1. The move comes on the heels of the company changing most of its store nameplates to Macy’s.
“Macy’s Group is the appropriate name for our company, given that about 90% of our sales involve the Macy’s brand. That said, Bloomingdale’s is—and will remain—a very important part of our company,” said Terry J. Lundgren, Federated’s chief executive. Federated Department Stores also said stronger sales at established stores and lower costs drove a 5% rise in fourth-quarter earnings. For the quarter ended Feb. 3, net income rose to $733 million from $699 million the prior-year period. Sales fell 4% to $9.16 billion from $9.57 billion, as the company shuttered 80 “duplicative” store locations. Comp-store sales rose 6.1% in the quarter.
During the quarter, Federated lowered its selling, general and administrative costs 11% to $2.31 billion.
The company also announced a $4 billion increase to its stock buyback program and said it will immediately repurchase 45 million shares for $2 billion under the plan.