Real Estate’s Road Map
“At a time when rents are up, construction costs continue to rise, financial restatements are on the increase and Starbucks has announced it will grow its store count from 10,000 to 40,000 units, real estate project management is more important than ever before,” said Mark Friedman, CEO of Santa Monica, Calif.-based Accruent.
Friedman addressed some 300 attendees of Accruent Insights ’07, the company’s user group conference held April 10-13, in Santa Monica. On hand were real estate executives from Target, The Home Depot, Panera Bread, Regal Entertainment and Chico’s, to name a few.
Friedman described the current state of the retail real estate industry as “seismically shifting. Besides the escalating rents and construction costs and the regulatory scrutiny, hyper-growth companies such as Starbucks are exerting additional pressures to perform as they become high-test competitors for your locations.” Companies are responding to the seismic shifts, Friedman said, with real estate performance management (RPM).
Retailers typically use RPM to grow revenue by executing rollout faster and more efficiently, reducing expense through elimination of overcharges and inefficiencies, and achieving compliance by instituting controls and accountability. Leading the charge in RPM is a host of new and upgraded solutions designed to reduce time and expense, and increase profit.
Linking strategy to execution: The session, “Linking Strategy to Execution,” co-presented by Bart Waldeck, VP of product strategy and product marketing for Accruent, and Mark Zygmontowicz, managing director of predictive analytics for MapInfo, drove home the point that profitable retail real estate is more dependent on technology than ever before.
“Today’s technology solutions have expanded from point of sale, merchandising and supply chain to real estate life cycle,” said Waldeck. The new technology is a response to clamoring retail demand.
“We are experiencing a true race for space,” he said. “And this is led by accelerated expansion by hyper-growth retailers.” Which means, if you’re going to find locations, there’s not a moment to spare. That’s where technology comes in (see sidebar).
“Linking strategy to execution means optimizing the portfolio, for one,” said Zygmontowicz. “It also entails picking the best locations—rapidly comparing sites and analyzing a large number of potential locations—as well as opening stores at a faster rate.
“What we’re talking about is reducing the time spent doing all of the above,” said Zygmontowicz. “Because in the race for space, speeding the time from evaluation to implementation makes a difference.”
Sears comps hurt by energy costs
HOFFMAN ESTATES, Ill. Sears Holdings today reported net income of $216 million, or $1.40 per diluted share, for the first quarter ended May 5, compared with net income of $180 million, or $1.14 per diluted share, for the first quarter ended April 29, 2006.
“In part, our domestic operating results reflect the impact of some of the same challenges being faced by our customers, such as rising energy costs and a slower housing market,” said Aylwin Lewis, Sears Holdings’ ceo and president. “However, as an organization, we need to overcome these factors by better controlling costs and developing innovative solutions that better meet our customers’ needs and allow us to generate a more reasonable level of profitability even in the face of such challenges.”
Domestic comparable-store sales declined 3.9% during the first quarter of fiscal 2007. Sears domestic comparable-store sales declined 3.4% for the quarter, while Kmart comparable-store sales declined 4.4%. We believe these declines reflect both increased competition and the impact of external factors such as rising energy costs, a slower housing market and poor weather conditions during the latter part of the first quarter of fiscal 2007. Kmart experienced lower transaction volumes across most merchandise categories, most notably within home goods, health and beauty products, and food and consumables. Similarly, Sears domestic recorded comparable-store sales declines across most merchandise categories and formats, with a notable decline in home appliance sales, which we believe reflects both a slower U.S. housing market and the impact of increased competition.
Big Lots 1Q net sales up 3.4%
COLUMBUS, Ohio Big Lots today reported first quarter fiscal 2007 income from continuing operations of $29 million, or 26 cents per diluted share, compared to income from continuing operations of $14.5 million, or 13 cents per diluted share, in the first quarter of fiscal 2006. Including the impact of discontinued operations, first quarter fiscal 2007 net income totaled $28.8 million, or 26 cents per diluted share, compared to $13.7 million, or 12 cents per diluted share, in the prior year.
Net sales for the first quarter ended May 5, increased 3.4% to $1.13 billion, compared to $1.1 billion for the same period in fiscal 2006. Comparable-store sales for stores open at least two years at the beginning of the fiscal year increased 4.9% for the quarter.
For the second quarter 2007, the company expects income from continuing operations of 7 cents to 10 cents per share versus income from continuing operations of 4 cents per share last year. Comparable-store sales are expected to increase 2% to 4%, compared to a 5.2% comparable-store sales increase recorded last year.
For fiscal 2007, the company expects income from continuing operations of $1.25 to $1.30 per share versus income from continuing operations of $1.01 per share last year.