Special issue: Poised for Recovery?
By: George Frey
Many large stores are predicting a good year ahead and the area’s newest mall landlord is thinking positively.
The Hamilton Marketplace, with its complex of mega-stores off Route 130 near Crosswicks-Hamilton Square Road in Hamilton, recently opened and recently changed hands, too. Developers Diversified Realty of Cleveland acquired the sprawling center on 280 acres from its developer, Atlanta-based JDN Realty, on March 13.
Asked if vacancies that remain in the center would be filled soon, given the current economic climate, representatives of the new landlord were confident.
"Absolutely we can fill the center," said Scott Schroeder, the corporate marketing director. "We have projects under development in all climates. We have an occupancy of 96 percent, portfolio-wide. I think this will be a great opportunity. From what I can see, it’s a huge center with great tenants and demographics. There is a lot of discretionary income in the area. It should do very well."
The center is anchored by a number of large retailers, including WalMart, Kohl’s, Ross Dress for Less, Modell’s and Lowe’s.
Lowe’s, a home-improvement retailer based in Wilkesboro, N.C., said it had a record year in 2002 and will continue to expand. For the current quarter, it expects to open 20 stores and to increase sales by 15 percent. For the year, the company is expecting to open a total of 130 stores, and to increase sales by about 16 or 17 percent.
BJ’s Wholesale Club of Natick, Mass., a leading operator of warehouse shopping clubs, also has a Hamilton Marketplace location. The company will continue to expand in the coming year and does not foresee any shortfalls due to the economy.
"We’re starting to fill in the gaps in our business in the Northeast," said spokeswoman Kim Borst. "We’re very prevalent in the Northeast, and in the Southeast. We hope to also expand to take advantage of more efficiencies in advertising, distribution and management," Ms. Borst said.
She said BJ’s hopes to open 13 new clubs in fiscal year 2003 at the rate of about three to four a quarter. The two stores poised to open in New Jersey are in Voorhees and Vineland, Ms. Borst said.
Other national chains and department stores experienced some lower sales but have a positive outlook for their stores for 2003.
While The Home Depot saw a 2-percent decline from the fourth quarter of 2001 in 2002, the company reaffirmed expectations of 9 to 12 percent sales growth and earnings growth of 9 to 14 percent. The company hopes to add about 200 new stores this year and to add 40,000 new associates.
Cincinnati-based Federated Department Stores, which owns Macy’s and Bloomingdale’s, says its department stores saw a near 7-percent drop in sales in the four weeks ended March 1, something the company attributes mostly to the weather. For the entire fourth quarter of 2002, it saw a decline of about 2 percent, and for the 2002 fiscal year the company was down less than 1½ percent. "In terms of earnings, we exceeded expectations," said spokeswoman Carol Sanger.
While Federated said it will open 12 stores in the coming year, one in New York and the rest in the South and Midwest, Ms. Sanger noted that activity won’t actually represent growth as Federated will be closing stores at the same time, leaving its total number of locations about the same.
"We expect earnings and sales to be somewhat difficult in this economy, and then strengthening in the latter part of the year," Ms. Sanger said.
Analysts say it will be interesting to see what April will do with spring goods on the store shelves, and with Easter being much later than usual pushing sales further into next month.
"In February, sales were down for a lot of different reasons," said Patrice Duker, a spokeswoman for the International Council of Shopping Centers in New York. "The weather on the East Coast was full of storms. Right now people are being more conservative with their shopping. The Commerce Department reported a 1.6 percent drop in consumer spending for the month of February compared to January, but February is also historically one of the slowest months for the retail industry."
The Mitsubishi Tokyo Bank of North America also follows retail sales trends and releases an analysis every week, says Kazuto Uchida, a senior vice president and chief economist at the bank’s New York research office.
Mr. Uchida said the analysis covers 80 nationwide companies, including discount, department, specialty apparel and drug stores. He said the week ended March 18 saw sales at retail stores up .6 percent compared to last year, but that most retailers were below prime. He said a late Easter was weakening demand for spring apparel and total retail sales would be flat for the month of March.