News

New Life, New Style

BY Katherine Boccaccio

Lifestyle centers have captured the attention—and the imagination—of not only shoppers and retailers, but of the news media as well. Chain Store Age has been reporting regularly on this trend away from traditional enclosed malls and toward cozier, upscale, open-air formats, but now the consumer press has followed the way of trades and begun to count the lifestyle venue as worthy of general news. And no wonder—because the lifestyle-center concept has legs.

CNN/Money called lifestyle centers “cute little villages.” USA Today described them as “cozier Main Street shopping districts.” And Business Week coined them “the shopping centers of the 21st century.” Heady stuff, to be sure, and not that far off the mark. Although we’re just now beginning to feel the stirs of regional mall re-awakenings, the lifestyle center still has firmly planted its roots in modern-day retail—and will continue to grow and flourish as consumers respond to the magnetism of riotous flowers and tree-lined lanes, pop-jet fountains and warming fire pits. And, of course, to the draw of high-end retail.

In this, our third lifestyle-center real estate supplement, Chain Store Age has focused its attention on this powerfully performing shopping format—and highlighted nearly a score of not only premier lifestyle developers, but also the centers they gave us, from a petite-but-powerful 76,000 sq. ft. all the way up to more than 1 million sq. ft. of lifestyle punch.

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FINANCE

Home Depot Projects Lower Profit in 2007

BY CSA STAFF

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.

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FINANCE

Federated Plans Name Change

BY CSA STAFF

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.

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