New Life in Louisiana
To view Livingston Parish from above is to picture the opportunity that exists on a stretch of Louisiana land sandwiched between Baton Rouge and New Orleans. As developers Creekstone Cos., of Baton Rouge and Houston, and Montgomery, Ala.-based Jim Wilson & Associates launch the massive Juban Crossing project at the intersection of Interstate 12 and Juban Road, it’s not uncommon for I-12 travelers to catch a glimpse of helicopters—holding department store or big-box representatives—hovering over the 471-acre site.
“We have had all the department store groups up in helicopters looking at the site, a lot of the big boxes and many of the mass merchants,” said Will Wilson, president of Jim Wilson & Associates (JWA). “And they all like what they’ve seen.”
What they have seen is evidence that Louisiana is rebuilding after Hurricane Katrina hit in 2005—and rebuilding in a big way. Juban Crossing will be the largest mixed-use development in the state, located in Louisiana’s fastest-growing parish—
Livingston—and encompassing shopping, dining, entertainment, hotel sites, office and medical components, and upscale residences. “Livingston Parish is one of those areas that you have in your book, marked ‘one day,’” said Wilson. “The storm made that day come a lot faster.”
What Katrina did was speed the growth of a parish that was already experiencing a surge. The public schools rank among the top two districts in the state, and Baton Rouge (the state capital and located just 12 miles from the site of the new project) has, since Katrina, experienced traffic-volume increases equivalent to 16 years of growth.
Juban Crossing and Juban Market Place
Location: Denham Springs, La., 12 miles east of Baton Rouge at the Interstate 12 and new Juban Road interchange in Livingston Parish Size: Juban Crossing (the open-air lifestyle component) is 838,000 sq. ft.; Juban Market Place (power center) is 457,000 sq. ft., for 1,295,000 total retail sq. ft.
Developer: Joint venture between Jim Wilson & Associates and Creekstone Cos.
Major tenants: Juban Crossing will include two department store anchors, specialty stores, fine-dining, fast-casual restaurants and a theater; Juban Market Place will feature big-box tenants and eight to 10 mid-sized box stores plus outparcels.
Status: Groundbreaking is slated for summer 2007, opening in phases starting in 2008.
Project highlights: The development will be distinguished by its size and scope alone—including 1.2 million sq. ft. of retail, 385,000 sq. ft. of medical/office space, 625 single-family home sites and 524 homes in multi-family units, as well as hotels, restaurants, a movie theater, amphitheater and plentiful public spaces— but has even greater significance as the Gulf Coast continues to recover from Hurricane Katrina.
“If you look at the demographics of this site,” said Stephen Keller, co-founder of Creekstone Cos., which is co-developing the retail with JWA and is sole developer on the remainder of the project, “within a 10-mile radius there are 290,000 people, and in a 30-mile radius there are close to 850,000 people. This development, with its large lifestyle component, medical and office, as well as the residential, will be the only one of its type and size in the state.”
Tenants are responding to the hype. As Katrina forced relocation of state populations, retailers began taking closer looks at the I-12 corridor, noting its growth and surprising lack of retail—which has made Juban Crossing, with its one-mile-plus of interstate frontage and new interchange, a highly desirable development.
At presstime, no specific tenant names could be released, but at least one major department store has inked its commitment and “the interest from retailers, theaters, restaurants, hospitality, banks—we have six that want in—is so overwhelming because everybody wants to get their foothold in Livingston Parish,” said Keller. “That’s where the growth is.”
Weekly Retail Fix
THE NEWS: SAM’S REALIGNS STORE-LEVEL MANAGEMENT
BENTONVILLE, ARK. Sam’s Club is changing the management structure in its stores. In the realignment, approximately 250 positions will be eliminated, Wal-Mart Stores announced last week. The company said it’s replacing five lower level management positions at each Sam’s Club location with three new higher level and higher paying assistant manager positions. —
“This is not a cost cutting effort. We expect a slight increase in payroll upon completion of this change,” said Sharon Orlopp, senior vp of Sam’s people division.
THE FIX: Differentiation would better help Sam’s
Since Sam’s decided that its refocus on the business customer was too narrow, it has sought to find ways to make its clubs more attractive to primary shoppers, i.e., women. And that’s a pretty tough row to hoe, as Costco has done a pretty good job at satisfying the club customer in general and BJ’s has been going after female shoppers for several years now, with some success.
Having fewer managers with more direct responsibility could create a tighter knit club-level management and shorten lines of responsibility and accountability. Yet, without differentiating the offering, execution isn’t going to overcome all of Sam’s challenges.
That being said, a store-level management realignment might be overlooked at other retailers, but, this being Wal-Mart, everyone has to make a big deal about it. But that’s the price you pay as the big guy on the block.
Weekly Retail Fix
THE NEWS: TOYS ‘R’ US EARNINGS GAIN 40.1%
WAYNE, N.J. Toys “R” Us today posted net earnings of $199 million for its critical fourth quarter, which meant it turned a profit for the fiscal year ended Feb. 3. But special charges and gains had an impact on its numbers. —
Sales for the previous fiscal annum were $142 million, the difference translating into a net earnings increase of 40.1% year over year. For the last fiscal year, Toys “R” Us posted net earnings of $85 million versus a net loss of $384 million for the previous period.
Operating earnings in the fiscal 2006 fourth quarter gained 53.1% to $571 million versus $373 million for the fourth quarter of fiscal 2005. For the last fiscal year, operating earnings were $649 million versus an operating loss of $142 million for the previous period.
THE FIX: Improved shopper experience ups comps
Of course, any observer has to take into consideration special financial circumstances. Fiscal 2006 operating earnings were positively impacted by $96 million from gains on property sales, slightly offset by restructuring and other charges. In fiscal 2005, operating earnings were negatively impacted by $410 million in costs relating to the merger of the company, as well as $58 million of costs and charges relating to contract settlement fees, restructuring and other charges.
Still, sales were trending up at last year’s end. Net sales gained 15.8% to $5.7 billion. In the full fiscal year, net sales advanced to $13 billion, up 15.2%.
Comparable-store sales for the Toys “R” Us’ U.S. division gained 0.6% in fiscal 2006, and that represents the division’s first comps increase in six years. Comps at Babies “R” Us were up 4.8% and those at Toys “R” Us international were up 2.6% for the fiscal year.
Jerry Storch, chairman and ceo of Toys “R” Us, said the company is “pleased with the strides we made in fiscal 2006 to improve at all levels of the organization and reposition the company for profitable growth over the long term.”
He said the company’s new management team has been focusing on executing a strategy that would turn the retailer into a global toy and baby products authority.
“This translated into higher overall sales, positive comparable-store sales, improved gross margins and strong operating earnings growth for the 2006 fiscal year,” Storch asserted. “The key to our strategy has been improving the customer shopping experience in our stores. We are accomplishing this by delivering a more compelling merchandise selection, better service and a cleaner and more comfortable shopping environment.”