Economic Update — A Few Retailers Look for Growth in ’09

Who’s still opening retail locations in this difficult economy? Once again following Apple’s example, Microsoft Corp., for one, has decided to open a chain of retail locations.Interestingly, the software behemoth has hired an exec from Wal-Mart, the retail behemoth, David Porter, to oversee its entrance into the retail biz. How will the Microsoft stores be different? Details are few so far, but instead of genius bars, there will be guru zones (or something) in the store. Instead of an Apple logo and ultra-stylish decor, there will be… a pomegranate and cinder blocks? Time will tell. Buffalo Wild Wings is also planning expansion in 2009, a rarity in the chain-restaurant world these days. Last year, the company opened 67 restaurants, bringing the total to 567 in 39 states. During 2009, the company is planning on increasing its number of restaurants by about 15 percent, or maybe about 85 locations. In the fourth quarter of 2008, the company’s same-store sales increased 4.5 percent at company-owned restaurants and 2.5 percent at franchise locations, compared with the same period a year earlier. Moreover, the company has $44 million in cash on hand, and no debt. What’s the secret of Buffalo Wild Wings being able to tack against some very adverse winds for restaurants? For one thing, it isn’t an expensive night out, but it is a cut or two above fast food. But there’s probably more to it than that. During last week’s conference call, company president and CEO Sally Smith said that “… our brand offers a unique and appealing experience that is more than just going out to eat. Buffalo Wild Wings is a haven where people go to relax and connect with friends and family…” On its menu, Buffalo Wild Wings stresses meat and tangy sauces. In its atmosphere, it stresses sports and more sports. In other words, comfort food in a comfort setting — just the thing for forgetting about hard times. Stimulus? Done. Next, foreclosures. President Obama’s whirlwind of activity now promises to focus on slowing down the rate of residential foreclosures. In the meantime, the commercial real estate industry is waiting for details about the latest spoon of alphabet soup, TALF: the Term Asset-Backed Securities Loan Facility, whose introduction was previously reported by CPN.The program, being developed by the Federal Reserve, allows investors to swap AAA-rated securities for U.S. Treasuries, which could then be used as collateral for new financing. The devil, as usual, will be in the details. TALF isn’t getting a lot of attention from the mainstream media, but in an industry that’s going to need credit and need it soon, all eyes are on Treasury Secretary Timothy Geithner to provide details on how TALF will work. On the whole, the markets were unexcited about the TARP II, or TALF, or the stimulus–or much of anything last week. Bank stocks especially dragged things down. On Friday, the Dow Jones Industrial Average ended down 82.35 points, or 1.04 percent, while the S&P 500 was down exactly 1 percent and the Nasdaq lost 0.48 percent.