Retail store closures will peak in the first half of 2010, in addition to the 69 million square feet lost from retail bankruptcies and liquidations that began in 2008, according to CreditSights retail analyst James Goldstein.
Speaking last week at a CreditSights conference at the Sheraton New York Hotel and Towers, Goldstein also said the square footage in retail space lost to closures is the “equivalent of Macy’s shuttering half of its stores.”
He told attendees that “expectations for the holiday season have been set fairly low.” He cited one survey, from Ipsos/Reuters, conducted in the spring in which 73 percent of consumers said they’d cut back on luxury purchases and 66 percent would cut back on apparel.
He expects Nordstrom Inc. to be among the first of the luxury retailers to recover, noting the Seattle-based company had the best balance sheet going into the downturn. Luxury outlet concepts such as Saks’ Off 5th and Neiman’s Rack have seen more growth in store openings than their full-price nameplate cousins, the analyst added. Macy’s was pressured earlier in the year, but has since “stabilized,” although it will face fierce midtier competition from J.C. Penney Co. Inc. and Kohl’s Corp., he concluded.
Analyst Craig Guttenplan, who spoke on “How REITs Can Benefit from the Turmoil in Commercial Real Estate,” said, “The commercial real estate market is a ticking time bomb for anyone who bought with great leverage at the height of the market.”
Guttenplan noted that commercial property prices are already back to 2004 levels.
He said public REITs are in a better position to weather the storm than private real estate firms due largely to access to the public equity markets and existing long-term banking relationships. Moreover, many REITs are in a better financial position due to covenant requirements in existing finance agreements.
In addition, the firm’s two credit specialists believe speculation about the end of the recession may be overstated.
Chief strategist Louise Purtle, who spoke on “The X Factor Files: The Risk Is Out There,” warned that, while economic conditions are improving, numerous perils, including an equity or currency crisis, could be ahead.
With global economies remaining challenged, the idea the recession could have run its course between its December 2007 start and its presumed end during the second quarter of this year defies logic, she said.
Purtle noted the U.S. market has shifted to one now having an appetite for risk. However, while some economists believe the recession ended in the second quarter, she noted others who insist the recession cannot end until there’s improvement in the employment picture.
Speaking of the risk of an equity crisis down the road, Simon Ballard, head of European credit strategy, pointed out that earnings have been mostly about cost cutting. “Without the emergence of any underlying consumer growth, that’s not sustainable,” he concluded.
As for global currency risks and the potential impact on the U.S. dollar, Purtle said changes in hedging strategies will depend on whether there’s a “lack of comfort with some of the central banks’ monitoring policies.”
She noted that if there’s increased volatility or a double-dip recession, there will be more competitive moves by the central banks around the world to protect their own markets. That scenario will portend a greater risk toward a new reserve currency, she concluded.
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)
@Pharrell and his wife Helen Lasichanh were among the stars that came out to celebrate @rimowa’s first pop-up concept shop. The space, which is located on Rodeo Drive in Beverly Hills, draws inspiration from airport luggage carousels and lounge areas – and features the company’s luggage and accessories. If the pop-up is successful it could pave the way for addition temporary shops throughout the world. #wwdfashion (📷: Owen Kolasinski/BFA)
@carineroitfeld celebrated @crfashionbook’s first calendar last night with a dinner party at Spring Place in Manhattan. Photographed by @stevenkleinstudio, the calendar takes on a fitness theme and features @joansmalls, @gigihadid, @danielle_herrington_ – pictured here – and more. “[Carine Roitfeld] wanted me to feel sexy and she wanted me to be myself and feel it out on my own and do what I felt was right,” said Herrington, aka Miss October. #wwdeye
@saintrecords and @virgilabloh last night at @americanexpress’ “A Night With Success Makers” event. “I always bring it back to community because without that I wouldn’t have the courage,” said Knowles when asked how she has gotten where she is now. Read more highlights from their conversation on WWD.com. #wwdeye (📷: @lizdoupnik)
This Just In: Industry sources have told WWD that Anastasia Soare is rumored to be considering selling her beauty business, @anastasiabeverlyhills. According to those sources, Soare has tapped investment bank Imperial Capital to explore sale options for her eponymous beauty brand –– and with at least $340 million in net sales, this would be a big deal. Put in context of other recent transactions for makeup companies, Soare’s price tag could be in the billions if she were to sell the whole thing. #wwdnews #wwdbeauty (📷: @clint_spaulding)
@assouline’s latest book, “The Spirit of Bentley: Be Extraordinary” captures the adventurous attitudes and opulent lifestyles of @bentleymotors’ most creative owners and enthusiasts throughout the U.K. The 292-page hardcover has a section dedicated to showing its team of skilled artisans and photos of its most colorful owners, from George Bamford to designer @alicetemperley, pictured here by Aline Coquelle. #wwdeye
@google released its report on the most popular search terms this year. For fashion brands, the list was led by @gucci, the luxury brand that stunned the market last October when it pledged to stop using fur. Runner ups were @supremenewyork and @fashionnova, along with more established brands like @louisvuitton, @chanelofficial and @ysl. #wwdfashion (📷: @aitorrosasphoto)
In yet another fashion show shuffle, @elleryland is moving its show in sync with the Paris couture calendar — though the brand is still keeping one foot on the city’s ready-to-wear schedule. Their runway show in January will coincide with the launch of a new strategy: designing two main collections each year instead of four, which will then be released in four drops. “As we all know, the system needs to change. We need to show sooner to give time back to artisans and designers to do what they do best — create,” said founder Kym Ellery. #wwdnews #wwdfashion (📷: @kukukuba)
@maxmara’s classic 101801 coat was the cornerstone of its pre-fall 2018 collection. The design team expanded the traditional double-breasted, kimono-sleeved style into a trapeze coat, lean belted styles and a peacoat and presented them in monochromatic looks – like the camel one pictured here. #wwdfashion #prefall18 (📷: George Chinsee)