Shhhh, don't wake buyers of XRT, rumor has it retail doubts persist

Retail Stocks Launched in 2010 and

Continued Their Gains into 2011.

Shhhh, don't wake the buyers of XRT,

they are dreaming of holiday-like sales

through April. Shhhh, just let them sleep.

The Wall Street Journal
By Kris Hudson
More Kris Hudson Articles
1/5/2011

U.S. malls and shopping centers continued their slow, fitful recovery from the recession in the fourth quarter, holding relatively steady in both vacancies and lease rates.

The second half of 2010 brought relief to retail landlords by ending the rising vacancies and falling lease rates of recent years. But the slow recovery, despite stronger retail sales, indicates that retailers generally remain hesitant about leasing new space.

"The sector appears to be meandering around," said Ryan Severino, an economist at real-estate research company Reis Inc., which tallies the vacancy and lease-rate data in the 80 largest U.S. markets.

"Without clear signs of a strong economic and labor-market recovery," he said, "we expect this trend to persist over the next couple of quarters until there is more clarity in the direction of the economy."

Malls in the fourth quarter posted a decline in vacancy of one-tenth of a percentage point to 8.7%, marking the second consecutive quarter of such declines for malls, according to Reis. However, those improvements came after the industry posted its highest vacancy rate of the past decade: 9% in last year's second quarter. The recent vacancy declines were the first for malls since the third quarter of 2007.

Meanwhile, lease rates at malls rose by two tenths of a percentage point to $38.79 per square foot per year. The slight gain was the first for malls since the third quarter of 2008.

The situation is similar for shopping centers, which are smaller centers typically anchored by a grocery store or big-box retailer with several small stores facing a common parking lot. Shopping centers tend to include more local, mom-and-pop tenants that are less financially stable than the national chains that populate malls.

Shopping-center vacancy held steady at 10.9% in the fourth quarter, unchanged for the third consecutive quarter, Reis said. That vacancy rate remains at the highest that Reis has tracked since 1991. What is more, net absorption for U.S. shopping centers in the quarter—the net amount of new space leased—amounted to just 92,000 square feet after a gain in the previous quarter of 474,000 square feet.

Lease rates at shopping centers remained relatively unchanged in the fourth quarter, declining to $16.56 per square foot per year from $16.58.

The slight recovery comes as recent gains in retail sales have spurred cautious optimism among retail landlords.

Retail-sales consultant Retail Metrics Inc. predicts that the 30 national retailers it tracks will this week post a 3.4% gain in sales for December at stores open for at least a year. That is atop a 3% gain for December 2009.

Overall, the National Retail Federation trade group forecasts that retail sales in November and December increased by 3.3% this year to $451 billion.

Drew Alexander, president and chief executive of Houston-based Weingarten Realty Investors, which owns 378 U.S. shopping centers, said his centers are losing fewer tenants than in previous years and adding more "frugal fashion" sellers like Ross Stores Inc. and TJX Cos. Inc.'s Marshalls. Other expanding retail categories include fast-casual eateries like Five Guys Burgers and Fries and self-pampering outposts like Massage Envy spas, he said,

"Things aren't perfect," Mr. Alexander said, "but they're clearly better."

However, Weingarten continues to scout for replacements for Blockbuster Inc. stores that are closing. It lost seven Blockbusters in the fourth quarter, leaving it with 29. Mr. Alexander expects to lose another eight to 10 this year. And many landlords still are filling spaces vacated by defunct retailers Circuit City Stores Inc., Linens 'N Things Inc., Mervyn's LLC and Steve & Barry's LLC.

California mall developer Rick Caruso posits that top-quality malls continue to outpace their more budget-focused peers. His Caruso Affiliated Inc. announced in December that it intends to expand its upscale, 500,000-square-foot Americana at Brand mall in Glendale, Calif., by up to 130,000 square feet this year.

Mr. Caruso said expanding retailers include fashion stores such as Forever 21 Inc. and Limited Brands Inc.'s Victoria's Secret as well as high-end electronics stores like Apple Inc. and Microsoft Corp. stores. Meanwhile, he expects store closures from the leading bookstore chains.

"If you have a good location with solid performance, you have great leasing opportunities," Mr. Caruso said.

40 square feet of retail space for every person in America

U.S. has 40 square feet of retail space for

every person in America...

MOST IN THE WORLD

By: Ann Zimmerman, Justin Lakhart and
Rachel Dodes
Wall Street Journal
12/28/10

American shoppers expanded their year-end purchases this holiday season by the biggest margin since the boom year of 2005, but retailers still face daunting challenges in the new year, from rising gasoline and cotton prices to an overabundance of stores.

U.S. retail sales, excluding automobiles, rose 5.5% between Nov. 5 and Dec. 24 compared with a year ago, according to MasterCard SpendingPulse, a unit of MasterCard Advisors that tracks sales by all types of payment.

Last year, sales rose 4.1% during the 50 day period, but those results were easy comparisons against the recession in 2008, when sales fell 6.1%.

"To sum up, the holiday season is a joyous one," said Sherif Mityas, a partner in the retail practice of A.T. Kearney, a global management consulting firm. "Consumers are looking to spend again. They are more confident than they had been."

The numbers were not reflective of a late December storm, which did not hit most of the East Coast until Christmas Day or later. The day after Christmas is traditionally one of the season's biggest shopping days but retailers are expecting that shoppers will simply delay their purchases, not abandon them.

Just how long retailers' confidence will last for shoppers and stores alike is the big question.

Couple of interesting Factoids

Over the past four quarters, consumer spending accounted for 68.6% of demand in the economy, up from 66.5% in 2007. The reason: With housing contributing less to the economy than at any time since World War II, and with businesses spending also down sharply, consumer spending is taking a larger piece of the overall pie.

Even if shoppers continue to loosen purse strings in the year ahead, the retail landscape is still littered with too many stores for all to prosper. The U.S. now has some 40 square feet of retail space for each person—the most per person in the world. Read on Garth

ShopperTrak: Retail sales down 4.1% (because of calendar shift, blizzard and Father's Day)

No Mention of potential foot traffic increases

in other parts of the country that

incurred sunshine.

CHICAGO – December 29, 2010 – ShopperTrak’s National Retail Sales Estimate (NRSE) today reported that total GAFO retail sales for Christmas week (week ending Dec. 25) slipped 4.1 percent compared to last year, while the company’s retail traffic index (SRTI) reported a strong 6.8 percent total U.S. foot traffic decline for the same period.

Although retail levels slowed last week, the 2010 calendar shift that placed Dec. 26 on a Sunday as opposed to a Saturday last year had the greatest impact on overall performance. By falling on a Sunday this year, Dec. 26 is not counted in the Christmas week performance, eliminating a day that finished third in sales and second in traffic in 2009 which was included in last year’s Christmas week data. This year ShopperTrak anticipates Dec. 26 will finish 10th in both sales and traffic.

“It seems the calendar was a bit unkind to retailers this year as the 2009 comparison week is particularly strong and a critical day in the season fell on a Sunday which created some unique challenges,” said Bill Martin, founder of ShopperTrak. “In some locations retailers didn’t have the ability to extend store hours on a Sunday due to various regulations, so there was a shorter window to move merchandise that day. Additionally, the beginning of some inclement weather in the Midwest, Northeast and South regions last week most likely influenced retailer’s levels as well.”

Because the 2010 calendar shift also provided a full week between Super Saturday and Christmas, Dec. 23 – a day ShopperTrak deems Father’s Day because of procrastinating male shoppers – saw strong returns and finished second behind Black Friday with $7.857 billion spent. Black Friday and Super Saturday accounted for $10.69 and $7.58 billion respectively. By comparison consumers spent $7.547 billion on Dec. 23, 2009, a day which also finished second behind Black Friday and ahead of Super Saturday.

Switching gears, ShopperTrak also measured the impact of the blizzard which crippled the Northeast particularly on Dec. 26 and 27 strongly impacted retail traffic in the region and across the country. The company’s analysis shows because of the blizzard:

• On Dec. 26 total U.S. foot traffic was 11.2% below what it would have been expected if the blizzard had not hit the Northeast
• Northeast region foot traffic fell 6.1 percent on Dec. 26 while the other three regions (Midwest, South, West) had an average gain of 38.6 percent versus last year.
• On Dec. 27 total U.S. foot traffic was 13.9 percent below expectations had the blizzard not hit the Northeast.
• Northeast region foot traffic fell 42.9 percent on Dec. 27 compared to 2009, while the other regions averaged a 13.0 percent gain.
• Preliminary GAFO retail sales estimates for Dec. 26 and 27 combined are roughly $10 billion. Assuming a conservative 10 percent sales impact nationally for the blizzard, roughly $1 billion of retail spending was postponed during the two day period.

ShopperTrak Complete Press Release

Weekly "Seasonally Adjusted" Retail Sales (Int'l Council of Shopping Centers)

Dec 28 (Reuters) - The International Council of Shopping Centers and Goldman Sachs on Tuesday released the following seasonally adjusted weekly data on U.S. chain store retail sales.

Week Ending Index 1977 = 100

Week       Index      Year/Year    Weekly Change
Ending                      Change


Dec 25    513.4           4.8%            1.0
Dec 18    508.4           4.2               1.7
Dec 11    499.9           3.1               0.8
Dec 4      495.9           2.6              -2.1
Nov 27    506.6            3.5               0.5
Nov 20    503.9            2.8              -0.6
Nov 13    507.0            3.4              -0.1

National Retail Federation Raises Shopping Forecast to Up 3.3% versus 2.3%

Washington, December 14, 2010 – After a solid start to the holiday season, the National Retail Federation announced today that it is revising its forecast to 3.3* percent, up from 2.3 percent. The upward revision is due to improvement in a variety of economic indicators including stock market gains, recent income growth, savings built up during the recession - all giving consumers the capacity to spend.

According to the National Retail Federation, November retail industry sales (which exclude automobiles, gas stations, and restaurants) increased 0.8 percent seasonally adjusted over October and 6.8 percent unadjusted over last year.

“The start to the holiday season has surpassed all expectations,” said NRF President and CEO Matthew Shay. “While employment data is still a concern, we are starting to see improvement in other economic indicators that support an increase to our forecast. In order to sustain this momentum for retailers and the U.S. economy, there must be a renewed focus on jobs as we enter the new year.”

November retail sales released today by the U.S. Commerce Department show total retail sales (which include non-general merchandise categories such as autos, gasoline stations and restaurants) increased 0.8 percent seasonally adjusted over October and 9.2 percent unadjusted year-over-year.

“Consumers have not been suffering from a lack of spending power, they’ve just been missing the confidence to use it,” said NRF Chief Economist Jack Kleinhenz. “With noticeable improvement in key economic indicators combined with great deals on merchandise, consumers have certainly shown they shouldn’t be counted out this holiday season.”

Solid gains across the board indicate some pent up demand as consumers stocked up on items such as apparel, accessories and books and music. Sales at clothing and clothing accessory stores increased 2.7 percent seasonally adjusted over last month and a strong 9.6 percent unadjusted year-over-year. Sporting goods, hobby, book and music stores sales increased 2.3 percent seasonally adjusted month-to-month and 15.5 percent unadjusted year-over-year.

Health and personal care stores sales increased 0.9 seasonally adjusted over last October and 7.3 percent unadjusted over last year. General merchandise stores sales increased 1.3 percent seasonally adjusted over last month and 4.2 percent unadjusted year-over-year. NRF Report

MI Sentiment just plain ugly for retailers

Nearly twice as many consumers reported

that their finances had worsened rather

than improved during the past year

(CNBC's Interpretation of MI Sentiment- 

Stronger than expected...naturally, as CNBC has yet

to see data that can't be twisted into a positive)

Reuters/University of Michigan Surveys of Consumers
12/10/10

The economic news heard by consumers about jobs grew significantly more favorable in November. Unfortunately, the favorable job news only had a small impact on how consumers expected the overall unemploy-ment rate to change in the year ahead. The majority of consumers anticipated the jobless rate to remain stuck at its current high level throughout the year ahead.

Given these expectations, it should be no surprise that half of consumers expected the slow pace of economic growth to remain largely unchanged during the year ahead. Importantly, the balance of consumers twice as frequently ex-pected some additional improvement rather than a worsening pace of economic growth during the year ahead.

Personal Finances Remain Dismal

The personal finances of consumers remained quite bleak in November. Nearly twice as many consumers reported that their finances had worsened rather than improved during the past year, with one-in-three reporting declines in household income. There has been some small improvement since the cyclical low point. Income gains were reported twice as frequently this November compared with a year ago, although the frequency of in-come gains have remained unchanged for the past 4 months.

The larger problem was that just 25% of all house-holds expected their finances to improve during the year ahead, down from 29% last November. The majority of households expected no income increase during the year ahead in November, for the 23rd consecutive month, an all-time record. Households with incomes above $75,000 held the same dismal outlook for their finances, showing no improvement in their financial expectations for the year ahead. Holiday sales will be based, more than ever, on the availability of discounts as consumers continue to cope with their dismal financial circumstances.

Surveys of Consumers chief economist, Richard Curtin

It is clearly too early to declare the November uptick in consumer confidence a turning point. It marks the third time that the Sentiment Index has reached this level since the cyclical low was recorded two years ago. In each of the prior rebounds, the gains as well as subsequent losses were mostly based on changing prospects for the economy.

Unfortunately, there has been no improvement in consumers’ financial prospect in the past two years. While consumers clearly believe that the recovery has gained some traction, most still think that the eco-nomic gains will be too small to improve their own job and income position anytime soon.”Complete report and prior reports

Grandpa predicts a retail stock reality check in January given the launch to 52+ week highs on many of these stocks and what could prove to be a major wake up call on the retail ETF-XRT. But hey, I am just a grandpa however I did not just fall off the turnip truck...“

U.S. Chain Store Sales fall 2.1% week ending 12/4/10 (oh...oh...Grinch Sighting)

Retail stocks have been on a tear in 2010 with many publically traded retailers up 30 to 60% YTD. The media and naturally CNBC have been giddy with the Black Friday Results as they would have you believe it is a clear indication of increased consumer confidence.

Grandpa maintains those buying retailer stocks in December could very well be in for a rude awakening. When the retail community commences with Black Friday prior to Halloween and offers significant discounts 1 1/2 months prior to Christmas, I believe a measurable amount of the traditional December shopping volume was completed prior to December 1st. Time will tell however it will be "telling" sooner than late,r given 2.5 weeks until Christmas.

Not only were the week ending 12/4/10 chain store sales down 2.1% from week ending 11/27/10, the weekly change was negative 3 of the prior 4 reporting weeks. No, CNBC will not dig too deeply on this as Erin Burnett must keep the glass 1/2 full no matter the outcome to your portfolio. Just be careful out there.....XRT (retail ETF) is at all time highs since June 2006???...but hey, I am just the grandpa dude.

Dec 7 (Reuters) - The International Council of Shopping Centers and Goldman Sachs on Tuesday released the following seasonally adjusted weekly data on U.S. chain store retail sales.

Week Ending Index 1977 = 100 
Week Ending      Index             Year/Year Change          Weekly Change
Dec 4                  495.9                     2.6%                                -2.1%
Nov 27                 506.6                     3.5%                                 0.5
Nov 20                 503.9                     2.8%                                -0.6
Nov 13                 507.0                     3.4%                                -0.1

ICSC Research expects same-store sales for December to increase by 3.0 to 3.5 percent.The ICSC weekly U.S. retail chain store sales index is a joint publication between ICSC and Goldman Sachs Group Inc. It measures nominal same-store sales, excluding restaurant and vehicle demand, and represents about 75 retail chain stores. Link to ICSC

Kudo's to Kohl's for closing on Thanksgiving

"I think our associates, and frankly our customers,

deserve time with their families and that's

what Thanksgiving is about."

(Kohl's)

By Ann Zimmerman

The Wall Street Journal
11/21/10

Thanksgiving Day was long considered a commercial-free zone.

By tradition, it was a time for counting blessings, enjoying family and friends and scouring newspaper circulars for the best predawn retail deals available the following day, known as Black Friday.

It was very simple. Eat 'til you burst on Thursday; shop 'til you drop on Friday.

But an increasing number of stores are getting a jump on the Friday shopping hordes by opening on Thanksgiving. Some retailers say they are offering a convenience for shoppers who want to beat the madding crowds.

Retail experts say it's an attempt for stores struggling to boost sales in the stubbornly slow economic recovery to grab market share. Retail sales are expected to rise 2.3% in November and December, slightly lower than the 10-year average increase of 2.5%, according to the National Retail Federation, a trade group for retailers.

"Retailers in this environment need any advantage they can get," says Craig R. Johnson, president of Customer Growth Partners, a retail consulting group.

For the first time, Sears is opening on Thursday, from 7 a.m. until noon, finally joining the long tradition of Sears Holdings Corp.'s Kmart division, which has opened on Thanksgiving for 19 years. This year, Kmart is allowing shoppers to buy online and pick up their purchases at stores on Thanksgiving. Kmart's hours are longer, from 6 a.m. until 9 p.m. Both stores plan to offer discount deals on Thursday and Black Friday.

Sears says it decided to open on Thanksgiving to give consumers an additional day to shop. Retail analyst Brian Sozzi of Wall Street Strategies sees it as a "desperate" move on the part of a retailer struggling with declining sales and profits.Sears could definitely use a boost. Last Thursday Sears reported its third-quarter loss tripled from the year-ago period. Sales at Sears stores open at least a year slid 8%; sales were down less than 1% at Kmart.

"Who is going to be at Sears on Thanksgiving?" asks a skeptical Mr. Sozzi.

Sears spokesman Chris Brathwaite says, "Kmart has been open for 19 years on Thanksgiving and at Sears, our decision to stay open on Thanksgiving Day was based on our customers' response and desire to have an extra day to shop. We are always listening to our customers to make their shopping experience easier, and now, by being open on Thanksgiving, they can start their shopping early or pick up last minute items needed for their Thanksgiving celebration."

Gap Inc. opened about three-quarters of its Old Navy stores last Thanksgiving and the response was so "tremendous," says a spokesman, that it is opening about 90% of them this year. A handful of Gap and Banana Republic stores will be open again this year. Old Navy is open from 9 a.m. to 8 p.m., but the hours at Gap and Banana Republic vary by location.

"Employees volunteer to work on Thanksgiving and they get food," says Gap spokesman Bill Chandler.

The growing popularity of e-commerce where stores never close may have made it more acceptable for stores to open on Thanksgiving. Last year, 18 million people shopped in stores on Thanksgiving, according to the National Retail Federation, which had never asked the question before. About 17% of those who shopped were 18- to 34-year-olds, the highest of all age groups. "It's definitely a new trend and we think it is a really added convenience for shoppers who want the great deals and don't want the crowds," says Kathy Grannis, an NRF spokeswoman.

Several stores, including Sports Authority Inc. and Big Lots Inc., have been open on Thanksgiving for several years. Simon Group Inc.'s Premium Outlet malls in tourist locations such as Las Vegas, Hawaii and Orlando also have opened on Thanksgiving.

Still, some retailers say they will resist the call to open on Turkey Day.

"Somebody else is chasing a dollar? Let 'em do it," says Kevin Mansell, chief executive of Kohl's Corp. "I think our associates, and frankly our customers, deserve time with their families and that's what Thanksgiving is about."

He added, however, that Kohl's does plan aggressive deals on its website on Thanksgiving Day.

Thanksgiving

Vigilant Grandpa's Favorite Holiday of the Year

BE THANKFUL

Be thankful that you don't already have everything you desire.

If you did, what would there be to look forward to?

Be thankful when you don't know something,

for it gives you the opportunity to learn.

Be thankful for the difficult times.

During those times you grow.

Be thankful for your limitations,

because they give you opportunities for improvement.

Be thankful for each new challenge,

because it will build your strength and character.

Be thankful for your mistakes.

They will teach you valuable lessons.

Be thankful when you're tired and weary,

because it means you've made a difference.

It's easy to be thankful for the good things.

A life of rich fulfillment comes to those who

are also thankful for the setbacks.

Gratitude can turn a negative into a positive.

Find a way to be thankful for your troubles,

and they can become your blessings.

~~Author Unknown.~~