FINANCE

Modest May for retailers

BY Marianne Wilson

New York — Same-stores sales increased 3.2% in May, edging up from a 3% gain in April, according to a preliminary tally of 12 retailers by the International Council of Shopping Centers.

The number of retailers reporting same-store sales has dropped dramatically over the past two years, with major department store companies and discounters no longer reporting. Many specialty fashion chains are also following suit. Some experts caution that the results are now so limited they are not representative of the industry at large.

One of the strongest performers was Gap Inc., whose May same-store sales increased a better-than-expected 7%, helped by strong results at its namesake and Old Navy chains. The metric rose 8% at Gap, was flat at Banana Republic and was up 9% at Old Navy stores.

At Costco Wholesale Corp., same-store sales rose 5% in May, missing analyst estimates, due to a relatively stronger dollar and weak gasoline prices.

In other same-store sales results for May:

  • The Buckle topped expectations, with a 4.1% increase.
  • At L Brands Inc. (formerly known as Limited Brands), sales were up 3%, slightly below expectations. Its Victoria’s Secret division reported a 4% rise in same-store sales, above expectations for a 2.8% increase.
  • Cato Corp.’s sales fell 2%.
  • At Stein Mart’s, sales increased 8.2%.
  • Fred’s reported a 0.5% drop, less than what was expected.
  • Zumiez posted a 1.1% increase, missing estimates.
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REAL ESTATE

JLL Report: Retail going borderless

BY Michael Fickes

Atlanta — A just-released report by Jones Lang LaSalle Retail found that three trends — in retail investing, retail expansion and e-commerce — are making national borders increasingly irrelevant to the retail industry. According to Jones Lang LaSalle’s “Global Capital Flows,” retail investment captured 25% of the total global market share of real estate investment in first quarter 2013. Investors continue to press ahead in traditional mature markets such as the United States, Western Europe, Australia, Japan, Hong Kong and Singapore to emerging markets such as China, Brazil, Russia and Turkey, the report found.

With regard to expansion, markets welcoming globalized retailers include China, India, Brazil and Russia. South Africa has recently begun to grow in popularity with expansion-minded retailers. Challenges include adapting stores to other cultures and localities, said JLL, and globalizing retailers to watch include Tommy Bahama and Ralph Lauren as well as Uniqlo and Zara.

And, finally, the report analyzed e-commerce clicks around the world and suggested that online activity will continue to erode brick-and-mortar sales. JLL cited a recent Deloitte study that forecast brick-and-mortar retail sales would decline from 91% to 63%, as clicks make up ground on bricks. A recent PwC report, according to JLL, indicated that Chinese consumers shop online more than consumers in any other country. About 40% of retail logistics activity in China involves e-commerce. Observers note growing e-commerce trends in London and Australia, as more and more shoppers buy online and pick up at the store.

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REAL ESTATE

Report: Retail rent growth set to return

BY Michael Fickes

Atlanta — Jones Lang LaSalle Retail Group said that vacancy rates should fall far enough to enable some landlords in every U.S. market to demand slightly higher rents — at some point over the next six months.

“We’re not quite there yet, but by the end of this year virtually all markets should see rent growth,” said Greg Maloney, president and CEO of Jones Lang LaSalle Retail Group. “Quite a few markets are already posting year-over-year growth, including Miami, Fort Lauderdale, Dallas, New York, Tampa, San Francisco, Hawaii, Los Angeles and Boston.”

Most of the rent-growth metros are also enjoying robust local economies, according to JLL.

While national averages show rents still declining year over year, rents overall rose 0.3% in the second quarter of this year compared to the first quarter.

Strip and neighborhood shopping centers have the highest vacancy rate among property types at 10.4%. However that number represents an 11% year-over-year decline, the first since 2009.

Power centers posted the largest vacancy decline, falling 60 basis points year-over-year to 5.9%.

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