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REAL ESTATE

Quarterly reports paint a vibrant picture for physical retail

BY CSA STAFF

Current media reporting on the state of physical retail is mostly doom and gloom. But analysts at real estate research company CoStar listened in on the latest wave of Q1 earnings calls and discovered a generally bullish attitude for brick-and-mortar retail among developers.

“I just think the [negative] narrative is a way ahead of itself,” a CoStar report quoted Simon Properties CEO David Simon as saying.

Simon reported 95.6% occupancy at Simon properties along with strong consumer traffic that had its mall and outlet center retailers averaging sales of $615 per square foot.

General Growth Properties CEO Sandeep Lakhmi Mathrani asserted that there was “a wide discount between public and private markets,” and that the sum value of GGP’s properties was far greater than its current stock price.

Acadia Realty Trust CEO Ken Bernstein attributed the current round of retailer downsizings in part to once-strong chains that have lost their edge and others that have over-extended themselves or under-delivered.

“There has been a flood of [unfavorable] news about retailing and retail real estate, and while there is reason for legitimate concern, there is too much over-generalization going on,” Bernstein said.

“The good news,” he added, “is that over time, the pricing subsidies in e-commerce will likely moderate and traditional retailers will have competitive omnichannel capabilities that complement their bricks and mortar locations.”

Simon concluded that “we’ve all got to have a better experience for the consumer because they’re a tough nut to crack. We’re frustrated only by the narrative, but not by what’s happening in our business.”

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News

NRF: Retail jobs on the increase in April

BY Marianne Wilson

The retail industry had some good news on the job front in April.

Retail industry employment increased by 2,500 jobs in April from March, the National Retail Federation said Friday. (The numbers exclude automobile dealers, gasoline stations and restaurants.) The NRF report, which does not detail job cuts, comes the day after a report from outplacement consultancy Challenger, Gray & Christmas that said retail industry experienced 11,669 job cuts in April, the highest total among all industries.

“This rebound in April employment mitigates the weakness in recent months,” NRF chief economist Jack Kleinhenz said. “It’s important to remember that job growth and other key economic indicators for any single month or short period can be highly variable. A month or two up or down might be the opposite of the months before or after. It’s long-term trends that tell us the most.”

Average hourly earnings remained strong, up a solid 2.5% higher than the same time a year ago. On a three-month moving average on a seasonally adjusted basis, retail employment shows a decline of 20,600 jobs.

“We will be watching the mid-month retail sales numbers to understand how recent employment shifts relate to consumer spending,” Kleinhenz said.

According to the Bureau of Labor Statistics data, the retail industry currently has over 541,000 job openings, more than twice as many as it did during the recession.

The overall economy gained 211,000 jobs in April, the Labor Department said. April unemployment fell to 4.4%, down slightly from 4.5% in March.

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FINANCE

Merger talks between luxury department store companies hit a snag

BY CSA STAFF

Is Neiman Marcus about to be involved in a lawsuit as opposed to a merger?

Merger discussions between Neiman Marcus and Saks Fifth Avenue have hit a roadblock as Neiman Marcus faces a possible lawsuit from its term loan lenders and bondholders, reported The New York Post. The lawsuit involves Neiman Marcus’ decision to move three of its stores into a subsidiary that protects them from creditors in the event of a bankruptcy, according to the report. The stores in question are located in San Antonio and Longview, Texas, and McLean, Virginia.

“Neiman Marcus made moves that they thought were legal, but the lenders could seek a court ruling finding that Neiman breached its contract,” said Jude Gorman, general counsel at Reorg Research, which focuses on distressed debt, in the Post report.

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