Executives Show Signs of Optimism Despite Sliding Sales
- Sep 18, 2008
The outlook of consumers and shopping center executives alike continues to be mixed at best. In widely reported results released on Friday, consumer sales dropped 0.3 percent from July to August for a nationwide total of $381.2 billion, according to U.S. Census Bureau estimates. Overall, the retail picture continues to suffer by comparison with last year. In the most recent monthly survey of shopping center executives conducted by the International Council of Shopping Centers, about 68 percent of executives reported that the number of cars in their parking lots had declined compared to August 2007. Sales, customer sales and occupancy rates have also declined since August 2007, the ICSC survey found. On a scale of 1 to 100, the study’s index for overall retail business conditions ticked up slightly from 36.9 in July to 39 in August. But despite that improvement, the number reflected the fourth-lowest result in the five-year history of the survey. One bright spot, however, was a slight improvement in executive expectations. For example, the sales expectation index rose from 37.2 in July to 39.4 last month, the highest since April. And at 43.3, customer traffic registered the best result since November 2007.On another front, Walgreens upped the ante for one of the year’s biggest retail buyouts last Friday when it offered to buy Longs Drug Stores Corp. for about $3 billion, or $75 per share. Walgreens’ non-binding proposal would edge out the $2.7 billion proposal announced by CVS Caremark in August, which translates to about $71.50 per share. At stake are 521 locations in California, Hawaii, Arizona and Nevada. In response to the challenge from Walgreens, CVS/Caremark chairman Tom Ryan issued a statement on Sunday saying that the company was extending the deadline for its tender offer until Oct. 15 but that it was standing by its offer. In announcing the deal last month, CVS Caremark said that it intended to monetize a substantial portion of the 200-plus sites owned by Longs. It remains to be seen whether Walgreens would carry out the same plan. Walgreens’ entry into the Longs sweepstakes reflects the drugstore category’s standout status. According to research released this month by McGraw-Hill Construction and ICSC, drugstores have added 18.5 percent gross leaseable area so far this year. That growth appears to be no fluke; by this time last year, GLA had increased 14.8 percent.