6. EDSR 10-13-2008 - Laserfiche WebLink

Home Browse Search

~~~~ ~ News: National " i Real Estate Irforrrwtiun September 10, 2008 Written by Sasha M Pardy (spardy@costar.com) Retailers Say Developers Share Blame for PullBack in New Store Openings Retailers at Goldman Sachs' Conference Talk About Scaling Back New Store Pipelines, Leveraging Their Real Estate Position, and Taking Advantage of Opportunities Several major retailers shared their strategies and commented on recent trends in presentations at the 15th Annual Goldman Sachs Global Retailing Conference held last week in New York City. Among the presenters were some of the nation's top retailers representing many segments, including Home Depot (NYSE: HD), Tiffany & Co (NYSE: TIE), PetSmart (NASDAQ: PETM), Barnes & Noble (NYSE: BKS), Dick's Sporting Goods (NYSE: DKS), Dollar Tree (NASDAQ: DLTR), Wal-Mart (NYSE: WMT), Walgreens (NYSE: WAG), and Kohl's (NYSE: KSS). As has been widely reported, retailers have pulled back on opening new stores originally scheduled for 2008-2010. However, many retailers said some the blame for the fall-off in projected store openings can be placed on developers and landlords who postponed or cancelled development plans, not entirely on falling demand from shoppers reacting to the current economy. Barnes & Noble, which has taken its new store opening guidance for 2009 down from 30-35 stores to 20- 25 stores, attributed some of that fall-off in new store openings to the unavailability of product. "The development pipeline is drying up," noted Joe Lombardi, CFO of the book retailer. "We see less available locations and projects getting cancelled. So, the development of new retail space is shrinking. We are seeing locations that we thought would happen falling off." Lombardi went on to explain that, because Barnes & Noble only goes after the "best spots," the company would not opt to open a store in a less-than -desirable location just for the sake of fulfilling guidance given on a new store-opening goal. Dick's Sporting Goods has grown its store network 19% over the last five years and expects to open 43 Dick's and 10 of its Golf Galaxy stores this year, to bring its network to just under 400 stores at the close of this year. The sporting goods chain estimates its U.S. capacity at 800 stores. Ed Stack, Dick's CEO, chairman and president said, "There's less shopping centers coming online than there used to be. We have the opportunity to take a look first at all of these shopping centers, as a developer is looking to tenant his or her shopping center with the best in each category -books, sporting goods, electronics, discount, home improvement, etc. But we're not going to rollout the number of stores we've indicated if they're not the right stores." Last year at the Goldman Sachs conference, Kohl's said it planned to have 1,400 stores by 2012. This year, the company said it still has that target, but it won't necessarily be achieved in 2012. At the end of 2007, Kohl's said it would open 70-75 stores in 2008, instead of the 90 previously planned. And in 2009, Kohl's is scaling back plans to open only 50 new stores (still a lot compared to its competitors) and is shifting significant capital into store remodels. Larry Montgomery, chairman and CEO of Kohl's said, "We're starting to see opportunities surface where other retailers are backing off of deals." Home Depot dealt a blow to developers earlier this year when it said it was taking the financial hit on backing out of 50 new stores in its pipeline, and it appears the home improvement retailer will open only a few new stores in the near future. At the conference, Frank Blake, CEO said, "We're rationalizing our new store opening process. We wrote off a number of stores that were in the pipeline to develop. We see a dramatically lower capital allocation on new stores going forward. We've gone from 5%+ square footage growth to 1% to 1.5% going forward. We look at our capital allocation now as principally going towards our existing assets." Copyright (c) 2008 Costar Realty Information, Inc. All rights reserved.