Outlets Crash The Luxury Party

To follow up on the May 25, 2011 VCF Retail Bulletin posting about the luxury retailing market, You Can Never Be Too Rich Or Too Patriotic, if the luxury market is going like gangbusters, why are the luxury department stores opening outlet stores?

According to a Reuters article, Saks plans to open three to five Off Fifth outlet stores annually in the coming years, but not one Saks Fifth Avenue department store. Nordstrom is closing a full service store in Indianapolis but will open a Rack outlet nearby. Bloomingdale's will open four more outlets this year. And all the executives at said stores noted the only impediment to a faster roll-out of outlets is a lack of suitable malls. They don't want to put the outlets too near their flagships stores.

They also dismissed the notion that outlets drain shoppers and sales from their full-service offerings. According to Nieman Marcus, customer overlap between its full-service stores and outlets was only 15%.

Outlet malls, once the province of rejects, seconds, and ordering snafus, are now generating their own created-just-for-outlets lines of products. But noone should be surprised at this trend. Luxury retailers are also adept at taking advantage of the consumer idea that 'outlet' stands for items at massive discounts.

Borders Group Files Objection

Borders Group's official committee of unsecured creditors filed with the US Bankruptcy Court an objection to the Debtors' motion to extend the exclusive period during which the Company can file and solicit acceptances for a Chapter 11 plan.

A & P Seeks Store Closing Approval

Great Atlantic & Pacific Tea Company filed a motion in the US Bankruptcy Court seeking permission to commence store closings at certain Superfresh Banner stores ('Southern Stores') and to sell associated assets. A&P expected the sales to generate more than $40 million.

Station Casinos Regulatory Approval Granted

The Nevada Gaming Control Board and Nevada Gaming Commission voted unanimously to approve Station Casinos' restructuring, clearing all hurdles for the company's emergence from Chapter 11 protection. Frank and Lorenzo Fertitta will become the company's largest shareholders with a 45% stake. The Fertittas and the existing management team will remain the manager and operator of all of the properties, tribal partnerships, and land holdings. As part of the plan of restructuring, Frank and Lorenzo Fertitta personally reinvested nearly $200 million of new capital into the Station Casinos

Kohlberg Acquires Academy Sports

Kohlberg Kravis Roberts & Co L.P. agreed to acquire sporting goods and outdoor retailer Academy Sports + Outdoors for undisclosed terms. The Gochman family will retain a minority ownership stake. Academy has 131 locations throughout 11 states in the Southeast US with approximately 16,000 associates and generated more than $2.7 billion in revenue in 2010.

Delia's Secures New Credit

Delia's, Inc. entered into a new, five year, $25 million revolving credit facility with GE Capital, Corporate Retail Finance. The new facility includes a $15 million letter of credit sublimit and an accordion feature that, under certain circumstances, allows for increases in borrowing capacity. The new facility does not include a restricted cash collateral requirement and replaces the Company’s prior $10 million letter of credit agreement with Wells Fargo.

Top 10 Factors Fueling Retailer Paranoia

According to BDO USA's 2011 RiskFactor Report for Retail Businesses, which examines the risk factors listed by the largest 100 public US retailers in their most recent SEC 10-K filings, retailers are more concerned with shifting customer loyalty than getting them out to shop in the first place. BDO noted consumer balance sheets are stronger, and retailers see a critical opportunity to sharpen inventory and offer a breadth of merchandise. Still, concerns persist over potential increases in taxes and regulation, and, whether consumers will continue to withstand price increases this summer and the upcoming back-to-school season.

The top concern remained, as it had in the report the last two years, general economic conditions, but vaulting to the number two spot was 'US and Foreign Supplier/Vendor Concerns.' This category covered a variety of issues, the most important being pricing pressures due to rising commodity costs, followed by loss of exclusive and proprietary brands -- a considerable differentiator between stores.

Tied for second place was 'Competition and Consolidation in Retail Sector,' which should be considered more on the 'competition' side than the 'consolidation' side. The competition grabbing customers remained more a threat that being bought out by them. Actual 'Mergers & Acquisitions, Joint Ventures' was far down in 18th place despite a revitalized mergermania hitting the industry thanks to the recovery of both consumer spending and corporate bond markets that fueled a recent spate of retail acquisitions by private equity firms.

In the fourth spot -- climbing significantly from 2010 -- was 'Federal, State and/or Local Regulations.' For retailers, rising healthcare costs and deficit gap contributed to this category, in addition to mounting worries about the new lease accounting standards, among other regulations.

As for generating customer loyalty, an Inc. magazine article offered seven suggestions: Create Enlightening In-Store Experiences, When You Do Something Wrong Make it Right, Reward Customers With Games, Quantify Customers' Love: Solicit Their Opinions, Make a Loyalty Card App for Customers, Offer Tangible Rewards and not Just Discounts, and Build a Relationship with Access to Personalized Customer Support.

Whether the idea of turning the shopping experience into an outtake of Sesame Street is appealing or not, the idea of building strong customer ties by listening and offering up some benefit remains the gold standard of retailing customer support. As happy customers are not only repeat customers, that should help with your competitive concerns.

Here's BDO's Top 10 list:
1. General Economic Conditions 97%
2. US and Foreign Supplier/Vendor Concerns 95%
2. Competition and Consolidation in Retail Sector 95%
4. Federal, State and/or Local Regulations 92%
5. Dependency on Consumer Trends 87%
6. Credit Markets/Availability of Financing and Company Indebtedness 86%
7. Labor (health coverage, union concerns, staffing) 84%
7. Legal Proceedings 84%
9. Terrorism, Natural Disasters and Geo-political events 83%
10. Failure to Properly Execute Business Strategy 80%

Labelux Buys Jimmy Choo

Germany's Labelux GmbH announced plans to buy fashion shoe company Jimmy Choo for an undisclosed price, although recent estimates valued Choo at $650 million to $900 million. Labelux said it plans to increase the brand's presence in China, as well as in men's shoes and handbags.

Beales Buys Westgate

British-based Beales bought 19 Westgate outlets from Anglia Regional Co-operative Society for 7.5 million pounds ($12.21 million), making Beales one of the biggest department store chains in the country.

Target Selects Initial Zellers Leases, Vast Majority to Become Target Stores

MINNEAPOLIS, May 26, 2011 -Target Corporation announced the selection of its initial group of Zellers sites, representing 105 locations in all 10 provinces across Canada. The vast majority of these stores will become Target stores after securing the necessary construction approval for extensive renovation and will open beginning in 2013.

In accordance with its real estate transaction to acquire up to 220 leaseholds from Zellers Inc. announced earlier this year, Target has the right to select up to 110 sites in conjunction with the first payment and will continue to select additional leases in advance of the second payment this fall.

Syms Looking For a Buyer?

Syms Corp Initiates Process to Explore and Evaluate Various Potential Strategic Alternatives

Syms Corp announced today that its Board of Directors has initiated a process to explore and evaluate various potential strategic alternatives, which may include a possible sale of the company. The company has retained Rothschild Inc. as its exclusive financial advisor to assist the company in connection with the strategic review process.

There is no defined timeline for this strategic review and there can be no assurance that the review of strategic alternatives will result in any specific action or transaction. Syms does not intend to comment further regarding the evaluation of strategic alternatives, unless a specific transaction is approved or review process is concluded, or it otherwise deems further disclosure is appropriate or required by law.

GE Whiz, Wal-Mart Tries Again

Wal-Mart Stores, Inc. opened a special 'Appliance Market at Walmart' section to sell General Electric Co appliances in its stores. Wal-Mart's initial rollout would hit 20 Texas stores in Dallas/Fort Worth and Houston areas by June in a new bid to compete with Sears, Home Depot, Lowes and other retailers. The special section will display 50 to 80 GE models of all price ranges (supported by catalog sales offering up to 1000 models) and be staffed by employees of Flexi Compras, a lease-to-own company. Wal-Mart will evaluate the effectiveness of this pilot program and decide whether to continue at existing stores, expand the program to all its stores, and add other manufacturers. Wal-Mart last tried to sell appliances in 2000.

Disney Expands Its Expansion

Walt Disney Co. announced plans to open 40 new Disney Stores, up from its previously announced 25 stores, across the globe in 2011. Mostly, stores will open in A and B malls, although the company is looking into various street locations. If past practice is a guide, the new stores will be about 4500 square feet, near the wings of malls, and near the food court or other kid-magnet stores such as Gymboree Corp. Although same-store sales remain secret, Disney noted shopper traffic is up in double digits.

Fashion Bug Up For Sale?

According to a report in Bloomberg, Charming Shoppes, Inc. is seeking to sell its 740-store Fashion Bug chain in order to concentrate on its 850 more profitable Lane Bryant stores catering to plus-size women. Charming also operates about 475 Catherines stores, aimed at women aged 45 and up.

Chinese Financial Invasion

According to The Reformed Broker, the real threat from China is not from its expanding military, but from its expanding 'reverse mergers,' which occurs when a publicly traded American-based shell company, often designed for this very purpose, issues a larger number of shares to purchase a Chinese company. The Chinese company then becomes the majority shareholder and essentially assumes the public listing of its American parent. Companies exaggerate earnings, take the money, restate their earnings, fire their auditors, and the money disappears into China, leaving US investors holding the bag. Forbes' Walter Pavlo put together a list of 24 such deals in the last two months, including China Electric Motor, China Natural Gas, Duoyuan Printing, China MediaExpress Holdings, China Agitech, China Sky One Medical, and Orient Paper.  

Chicken Glut

Chicken farmers are saying the sky is falling on them due to doubling of feed costs from year ago, soft demand since Easter, and a glut of production, according to an article in the Wall Street Journal. US chicken production during the first quarter 2011 rose 6.4% to 9.29 billion pounds from year ago -- that's about 9 billion chickens per year. The devastating tornadoes that hit the South last month killed millions of chickens, but on a macro-economic scale, that's hardly enough to make a dent in supply or inventory. Prices fell from 82.2 cents a pound last year the current 77.9 cents a pound.

A glimmer of good news came from the US Department for Agriculture, which predicts record corn production for 2011/2012 of 13.5 billion bushels, up 1.1 billion bushels (up about 9%) from year ago, thanks in part to an extra 4 million acres being planted. Corn yield is projected at 158.7 bushels per acre, third highest on record. Likewise, corn supplies are expected to be 14.8 billion bushels, up 75 million bushels from last year.

That may be optimistic. Exceptionally rainy weather delayed corn plantings in Ohio, Indiana, and South Dakota. AgResource predicted corn planting will be about 2% lower than government's expected 92.2 million acres. Late-planted corn tends to offer reduced harvests.

The USDA expects corn use in 2011/2012 to be down 1% from last year, even though corn for ethanol is expected to rise by 50 million bushels. Still, it predicts season-average farm price at a record $5.50 to $6.50 per bushel compared with the 2010/11 forecast of $5.10 to $5.40 per bushel.

That may be optimistic, too. Current prices are in the $7 to $7.25 per bushel range for May corn futures. Add in a more bad weather -- flooding in Louisiana, ongoing drought in Kansas, sweeping rains in Ohio, and so on -- and that bushel price might be the kernel that breaks the chicken's back, not to mention the producer's bottom line and the shopper's wallet in the grocery store.

Sbarro Agreement Terminated

Sbarro announced that it has consensually terminated its pre-petition plan support agreement and equity commitment agreement with Ares and MidOcean in order to explore other strategic alternatives, including discussions with a qualified bidder who has expressed preliminary interest in acquiring the company. In addition, Sbarro continues to negotiate with its pre-petition creditors to pursue a standalone plan of reorganization. Sbarro noted key stakeholders of the company, including Ares, MidOcean, and the first lien steering committee all support the company's decision to pursue multiple avenues to maximize value and not to file a plan of reorganization or seek approval of the equity commitment agreement at this juncture.

Harry & David Holdings Plan Filed

Harry & David Holdings filed with the US Bankruptcy Court on May 23 a Joint Plan of Reorganization (the "Plan") and Disclosure Statement, which has the support of the Official Committee of Unsecured Creditors and the holders of approximately 81% of the company’s public notes. With this filing, the company intends to exit bankruptcy in late Summer 2011. The proposed plan will allow the company to convert all of its approximately $200 million of outstanding public notes into equity of the reorganized company. The Plan also includes an equity capital raise that will generate $55 million in equity financing upon the company's emergence from chapter 11. A group of the company's existing note holders have agreed to backstop the equity capital raise. Harry & David will use proceeds from the equity capital raise to satisfy obligations arising from its $55 million post-petition term loan. Additionally, the company has a $100 million revolving loan commitment to finance its operations after the company exits chapter 11 which will replace its current $100 million post-petition revolving loan facility. The Court scheduled a June 24, 2011 hearing to consider this Disclosure Statement.

ECONOMY WATCH

Gas Prices Drop

The Energy Department announced that for week ending May 23, 2011, the average price of US gasoline fell to $3.849 a gallon, down from $3.960 per gallon week earlier.

Diesel prices fell to an average $4.06 per gallon, down from $4.10 last week.

Mortgage Rates Drop Again

Bankrate.com reported that the average conforming 30-year fixed mortgage rate fell to 4.77%, down from last week's 4.82%, according to its weekly national survey ending May 18, 2011. It also reported that the average 15-year fixed mortgage rate was 3.95%, down from 4.00% last week.

Housing Hiccup

The US Commerce Department reported that privately-owned housing units authorized by building permits in April 2011 were at a seasonally adjusted annual rate of 551,000. This is 4.0% below the revised March rate of 574,000 and 12.8% below the revised April 2010 estimate of 632,000. Single-family authorizations in April were at a rate of 385,000, 1.8% below the revised March figure of 392,000. Privately-owned housing starts in April were at a seasonally adjusted annual rate of 523,000, a drop of 10.6% from the revised March estimate of 585,000 and is 23.9% below the revised April 2010 rate of 687,000. Single-family housing starts in April were at a rate of 394,000, a 5.1% decline from the revised March figure of 415,000. Privately-owned housing completions in April were at a seasonally adjusted annual rate of 554,000, up 4.1% from the revised March estimate of 532,000, but 25.5% below the revised April 2010 rate of 744,000. Single-family housing completions in April were at a rate of 420,000. This is up 14.4% from the revised March figure of 367,000.

A housing forecast by the National Association of Home Builders echoes this dismal news. It expects 597,000 total housing starts for all of 2011, a slight increase from 2010, but far below the 1.8 million housing starts in the glory days of 2006. For 2012, it expects a modest bump up to 800,000 housing starts. According to NAHB, there's about a nine month supply of homes (including condos and townhouses) available on the market in April 2011, up about a month from March 2011 and up about a month from April 2010.

Employment Hiccup?

As the US unemployment rate inched upwards to 9% in April, the Conference Board Employment Trends Index declined 0.6% in April 2011 to 100.5, down from the revised figure of 101.1 in March. The Federal Reserve lowered its forecast for the unemployment rate to between 8.4% and 8.7% at end of 2011, but did not change its estimate for 6.8% to 7.2% unemployment rate by late 2013. Most analysts predict slow and steady employment growth through the year.

Manufacturing Optimism

Manufacturers are optimistic about 2011, according to the Institute for Supply Management's Spring 2011 Semiannual Economic Forecast, as they break free of the economic doldrums. The ISM survey found that 68% expect revenues to increase 13.2% in 2011 over 2010, yielding an increase in net revenues of 7.5%. Purchasing and supply managers reported their companies currently operate at 83.2% of normal capacity, up from 80.2% in December 2010 and 72.8% in April 2010, and the highest since 84.5% peak in December 2006. Survey respondents expected a 17.9% increase in capital expenditures in 2011, with overall production capacity increasing by 8.1% for 2011. They also expected to hire 2.9% more workers in the coming months.

As for those 2011 commodity and other raw material increases, the survey found 83% expected the prices they pay to increase by 9.1% compared to the end of 2010, but expected to pass along an average of 34% of those prices to their customers. Two industries -- Primary Metals and Plastics & Rubber Products -- indicated they would be able to pass along more than 75% of the increases received. Put in other words, suppliers are expecting to eat some of the costs, but retailers and ultimately consumers should brace for more price hikes as the year rolls on.

Station Casinos Objections and Counter Objections

The official committee of Green Valley Ranch Gaming's unsecured creditors filed with the US Bankruptcy Court a preliminary objection to the Prepackaged Joint Chapter 11 Plan of Reorganization for Station Casinos subsidiary Debtors, Aliante Debtors and Green Valley Ranch (GVR) Gaming and related Disclosure Statement, dated March 22, 2011, asking for more time for discovery. The group also filed a Second Supplement to this Plan covering intellectual property transfer agreements between Debtor Station Casinos, Inc. and NP IP Holdings LLC and NP Opco LLC (including Schedules and Exhibits).

Station Casinos' subsidiary Debtor Green Valley Ranch filed an objection to the creditors' objection, saying enough time has passed for all discovery to have been completed. The steering committee of first lien term lenders filed a joinder to Station Casinos' objection.

Take This Job And Love It

A new study by the Conference Board found that US workers are working longer and retiring later since the mid 1990s, but the recent recession put even greater pressure on workers to stay on the job. Not only did the downturn slice away at retirement funds, but the decline in housing prices encouraged workers to stay put. Workers in states where home prices suffered especially large slumps (such as California, Michigan, Florida, Arizona) were more likely to delay retirement than those in states with lessened effects on home prices. The delayed retirement also affected the demographic distribution within the US. With fewer individuals retiring, the net migration to popular retirement states like Florida and Arizona declined.

The study also found that mature workers in high-paying occupations were much more likely to delay retirement than workers in low-paying ones. Those in higher-paying jobs tended to hold higher financial expectations for their retirement years. Also, high-paying occupations tended to have limited physical requirements, making it easier to continue working. For companies seeking to reduce headcount, slash labor costs, hire new workers, or promote younger workers, delayed retirement could be viewed as an impediment. However, delayed retirement also means less turnover and more workers loving their job, not leaving it, and thus providing relief for several more years in industries that will ordinarily suffer significant 'brain drain' from retiring baby boomers.

Office Supply Woes

Oppenheimer & Co. reduced its rating on Staples, Inc. and OfficeMax, Inc. from 'outperform' to 'perform' -- joining Office Depot, Inc. -- on news of soft sales and expectations that soft white collar jobs growth and ongoing dislocations in the credit markets will tamp down demand for office products through the end of 2011.

You Can Never Be Too Rich Or Too Patriotic

If there's a bright spot in retailing, it's the luxury market, right?

After all, many luxury retailers reported double digit sales increases in the first quarter 2011. For example, Nordstrom, Inc. Executive VP Erik Nordstrom noted that the more expensive merchandise outperformed the rest of the store in the first quarter, increasing the company’s average price point. Saks, Inc. announced moves to rebalance its merchandise towards its most expensive goods, betting that higher income shoppers will pay full price. And Bain & Co. predicted an 8% rise in overall luxury sales in 2011 to a record $274 billion, with growth to between $317 billion and $328 billion in three years.

According to Unity Marketing, Inc., its Luxury Consumption Index (LCI) rose from 76.1 in the fourth quarter 2010 to 82.8 in the first quarter 2011, its highest rate of growth in a year, although still below its first quarter 2010 peak of 86.9. The LCI survey of 1,200 affluent consumer households, with two-thirds earning between $100,000 and $249,999 and one third earning $250,000 and above, covers 22 major categories of luxury goods and services, including clothing, fashion accessories, home luxuries, travel, dining, and jewelry.

Unity's number crunching revealed the nearly rich -- those earning from $100,000 to $249,999 per year -- purchased an average of $14,241 worth of luxury goods in the first quarter while the rich -- those earning $250,000 plus per year -- spent an average of $56,534 on luxury goods. That's good news. The bad news is that the numbers are virtually flat from the previous quarter.

The nearly rich feel constrained by falling home prices, income gains that lag behind inflation, 9% unemployment, and a reluctance to dip into savings after the recession. They are, however, insulated from rising food and fuel prices by gains in their financial portfolios.

In a separate Unity survey conducted April 6-13, 2011, almost 70% of 1,321 luxury consumers aged 45 years old with an average income of $287,200 and a median net wealth of $897,000 said the place of manufacture is important when considering a new purchase. Most associate countries like the US, Italy, France, and Germany with better quality luxury goods and 63% said that manufacturing luxury goods in less costly places like China is bad for luxury consumers.

So how will the luxury market play out? According to Unity, much of the pent up demand for luxury goods that built during the worst of the recession has already been released. Spending on luxury is likely to flatten out over the coming quarters unless there is dramatic improvement in the overall economy.

Retail Sales Drop

ICSC
The International Council of Shopping Centers and Goldman Sachs reported its chain-store sales index for the week ending on May 21, 2011 dropped 1% from the prior week.

Shoppertrak
For the week ended May 21, 2011, ShopperTrak's National Retail Sales Estimate was $94.377 billion, down 0.3% from last week's $94.703 billion, but up 7.7% from same week last year. Expect sales to perk up as Memorial Day sales start to appear.

Unilever Shampoo Deal

Unilever paid $3.7 billion in cash to acquire beauty and personal care company the Alberto Culver Co., making Unilever the world’s leading company in hair conditioning products, the second largest in shampoo, and the third largest in styling products.

JCI Bids Adieu

Johnson Controls, Inc. filed to dissolve a five-year-old joint venture with French battery maker Saft Group SA, which opposes the dissolution even though it lost $24 million from its 49% stake in the joint venture that manufactured lithium ion batteries for the automotive industry. Johnson claimed fundamental disagreements with Saft over future direction of joint venture, but noted that ending the joint venture will not affect existing contracts.

Macy's Scores a Credit Boost

Standard and Poors boosted Macy's credit rating to BBB minus due to better performance and more moderate fiscal policy.

Big Lots, Small Price

Big Lots, Inc. took itself off the market after failing to generate a high enough price. Interest from potential bidders stalled over a share price in low 30s while the company's stock traded above $40 per share -- but news of failed talks dropped the company's stock down to about $33 per share.

Billion Dollar Barnes

Liberty Media Corp., John Malone's media empire that includes QVC, offered to buy bookseller Barnes & Noble, Inc. for $17 per share, or about $1 billion. Barnes & Noble, currently the largest operator of traditional bookstores in the US with 705 stores across 50 states, is evaluating the offer, which is contingent on further participation of B&N chairman Leonard Riggio. Share price shot up to about $17, although negotiations may push it higher.

The Nook e-reader became B & N's ace-in-the-hole for avoiding bankruptcy like Borders, capturing 25% of the digital book market since and selling 1.5 million magazine subscriptions and single copy sales since debuting in October 2009. The latest version came out Tuesday.

According to Forrester Research, 16 million e-readers were sold over the last two years, with total e-book sales of $300 million in 2009 and $966 million in 2010. E-book sales are expected to total $1.3 billion by the end of 2011 and about $3 billion by 2015. That's Malone's bet: the B & N Nook will continue to grab a bigger share of an e-reader and e-book market where electrons are far, far cheaper to ship and sell than paper.

It's a good bet. Amazon.com, which produces the e-reader Kindle, noted that it sold more electronic copies of books than printed versions for the first time ever. Since April 1, Amazon sold 105 copies of e-books for every 100 copies of printed books. That trend is also likely to continue.

Groceries: 50% Private Label By 2025

What's in a name? Plenty.
According to a new global research report, Private label vs. Brands from Rabobank’s Food and Agri Research division, the global market share of private/own label food products will double from the current 25% to 50% by 2025. Name brands are expected to retain their importance for retailers to anchor categories’ price levels and give consumers choice and familiarity. Smaller secondary brands (B-brands) will have to strategically reposition to avoid being squeezed out of the market by either investing in quality and targeting the premium market, or specializing in private label. A consolidation spree among private label specialists seems inevitable in order to achieve economies of scale and reduce the cost base.

This should come as no surprise. Groceries are just following department stores, which long used exclusive clothing designers to draw in customers and have moved quickly into other exclusive offerings. For example, JCPenney stated that 50% of its sales came from exclusive merchandise, Macy's exlusive sales numbers increased to 42%, and Kohl's was up to 48% last year. Wal-Mart, Target, Toys R Us and others ramped up exclusive deals with various Hollywood studios, such as Wal-Mart creating Easter basket creation stations using candy and toys tied to the cartoon movie Hop, and, Warner Brothers providing exclusive toys and action figures to Toys R Us around the release of the movie Green Lantern.

In many ways, groceries are like fashion -- you love some, you hate some. With this profusion of private label products, the remaining brand winners -- or maybe call them survivors -- may result more from stores' appetite for vendor promotion allowances than mass media marketing.

VCF CONFERENCE: REGISTER TODAY
Retail Private Label: Driving the Perfect Order
Navigating the Complexities of the 12,000 Mile Global Supply Chain

This program was designed exclusively for Retailers and Major Brands expanding upon our Perfect Order theory, to encompass the Retail Private Label 12,000 Mile Supply Chain taking a deep dive for those who devise, engage and execute a private label supply chain plan.

Topics being explored include:

• Understanding cultural differences and language barriers - learn from in international expert how miscommunications can defeat a valued relationship
• Key steps for entering into a successful relationship with your foreign trading partner
• The role of Quality Assurance in protecting your brand
• Optimizing the use/management of Asian Consolidation Centers
• Factory Labor & Social Compliance Management
• Meeting Tag & Label data requirements
• Chain of Custody and international documentation best practices
• Customs and Border Patrol addressing current compliance requirements including Q&A
• National & State regulatory "Product Safety" rules and initiatives explored
• Attendee Open Forum & Round Tables
• Networking Events

This is a "must attend" for those whose job responsibilities include:

• Sourcing
• Customs
• Import Logistics
• Global Compliance Executives
• Quality Assurance
• Operations
• and more…

Tuesday, September 20, 2011 through Wednesday, September 21, 2011
Manhattan Beach Marriott
1400 Parkview Avenue
Manhattan Beach, CA 90266
P: (310) 546-7511

Agenda Overview Available Now

Retail Bulletin: Target's Canadian Bullseye, Top 10 E-Tailers...

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COMPANIES IN THE NEWS:---------------           ----------------------------

Target's Canadian Bullseye

Target is setting up three distribution sites (Toronto, Calgary, and Vancouver) to supply up to 150 stores in Canada by 2013, ultimately expanding their reach to 200 stores generating an estimated C$6 billion (Canadian) in sales by 2017. Target will also sell fresh food at some locations, aiming to make a dent in Canada's C$112 billion grocery market. The company is still determining which Zellers stores will be converted into Targets and once the decision is made, will commit C$1 billion to renovations.

Chinese Cheap: Going, Going...

Inflation is a dirty word in China -- authorities recently fined Unilever $308,000 for even mentioning the possibility of raising prices by 5% to 15%, which caused a run on the company's paper products as shoppers stocked up. Officially, China declared inflation will be 4% for 2011, even though the World Bank predicted 5% and food prices alone rose 11.7% in March. Oil and labor prices were up even more. For 2011, minimum wage rates for Shanghai, Guangdong, Eastern Shandong, Shenzhen, Beijing, Tianjin, and Jiangsu rose between 14% and 21% as part of Premier Wen Jiabao's pledge to raise salaries of low-income groups and minimum living allowances. Credit Suisse noted that the pay of migrant laborers in China would continue to climb 20% to 30% over the next three years.

China is trying to keep economic growth to 7% in 2011, down from 2010's 10.3% pace, which means credit is being made all the dearer. In Oct 2010, one-year corporate lending rates were about 5.3%. Six months later in April 2011, they were 6.3%. With April bank loans unexpectedly up to $112 billion and a larger than expected trade surplus of $11.4 billion, there's a lot of extra cash floating around the country to push inflation along. To stem the tide, starting May 18, China's new bank reserve ratio lifted to 21%, up a half a point and the eighth such increase since Nov 2010. Whether the eighth time is a charm remains to be seen, but analysts noted smaller companies are being squeezed in a credit crunch.

According to an article in The Economist, the so-called "Wenzhou rate" private loan rates rose to between 6% to 8% per month, up from 1.5% in 2008. Worse, Chinese suppliers are inserting provisions that if the yuan appreciates a certain amount, the contracted price is voided and surcharges of up to 40% apply -- a change from the usual terms that prices were good for three months.

But wait...there's more.

Transportation costs are about to take a hike, according to shipping research firm Alphaliner, because of a looming cargo container shortage. The company predicts the box-inventory-to-vessel capacity ratio will drop from 2.03 in 2010 to 1.99 by the end of the year, the lowest ratio on record and about a third less than the capacity ratio of 2.99 boxes per slot in 2000. Although some shrinkage over the past decade resulted from better traffic management, the 2009 recession cut shipments, which forced manufacturers to cut production. As the global economy recovered, manufacturing and repositioning of empty containers lagged.

Alphaliner noted that 5,977 ships are currently active on liner trades, for a 15.34 million TEU (Twenty-foot Equivalent Unit, a measure used for capacity in container transportation). For comparison, the largest shipping line, APM-Maersk, can haul about 2.30 million TEU and the second larges, Mediterranean Shipping Co., can haul about 1.98 million TEU. The coming shortage prompted Maersk to start manufacturing new containers and re-activate laid up vessels to reposition empty boxes. In 2010, shipping companies imposed peak season surcharges of up to $750 per 20-foot container. For 2011, for example, Cosco Container Lines already announced June 1 peak season surcharge of $200 per TEU on westbound trades from the Far East (including Japan) and the Indian subcontinent to northern and western Europe and the Mediterranean.

Carry these supply cost increases downstream to the retail level and the situation develops into retail prices playing chicken with customer willingness to pay. Raise prices too little and watch margins shrink. Raise them too much and watch sales shrink. Somewhere in the middle shares the pain and keeps the US economy growing, but finding that sweet spot may be more art than science.

Debit Card Fee Shuffle

According to a USA Today article, the Federal Reserve's proposed rule to cap debit card usage fees for retailers at 12 cents per transaction -- from an average 44 cents -- means good news to retailers working on tight margins, but bad news for banking institutions which stand to lose billions in fees. Most consumers do not expect retailers to pass along the savings, and retailers are mum about whether they will.

But if the rule goes into effect on July 21, 2011 as planned, expect considerable behind-the-scenes tinkering with a wide variety of card rewards programs and other banking fees -- banks are determined to extract the same or more fees from debit card users, one way or another. For example, 67% of credit unions belonging to the National Association of Federal Credit Unions are considering imposing an annual or monthly fee for debit card users.

Why the scramble, not to mention the vicious lobbying of Congress for a two-year delay? It's big money. The National Retail Federation reported that debit swipe fees cost merchants and their customers nearly $20 billion a year. According to Javelin Strategy and Research, debit card use surpassed credit card use back in 2009 and shows no sign of retreating.

Note that the new Fed rule does not cover credit cards, so those transactions will not be affected, and financial institutions with assets under $10 billion are exempt from lowered debit card fees.

Great Atlantic & Pacific Tea Company M.O.R. Filed

Great Atlantic & Pacific Tea Company filed with the US Bankruptcy Court a monthly operating report for the month ending February 26, 2011. For the period, the company reported a net loss of $9.46 million on sales of $577.25 million.

Publix Calls In Sick

Publix Super Markets terminated all 40 of the in-store Little Clinics mini-medical clinics after a five-year run. The company intends to use the space to focus on core food and pharmacy business. Although drugstore chains keep adding such mini-clinics with success, results are mixed for grocery and department store chains.

Top 10 E-Tailers

According to the 2011 Foresee Results annual survey, the top performer by sales volume is Amazon.com, followed by Staples.com, Store.Apple.com, Dell.com, OfficeDepot.com, Walmart.com, Sears.com, OfficeMax.com, BestBuy.com, and at number 10: CDW.com.

Text Alert Shopping

According to a Placecast, Inc. survey about the effectiveness of marketing via texting, up to 35% of the people who elected to receive texted adverts from retailers went and visited stores, and up to 34% of those shoppers bought something. The key to the survey -- done by a company that sells texting advertising services -- is the phrase 'up to.'

Texting is still relatively new as an advertising medium, much the way banner ads on web sites were new in the 1990s. Back then, web surfers clicked on banner ads because they were new. Clickthrough rates of 2% to 3% were average, with claims for rates up to 5% and even 10% usual. However, as banners became ubiquitous and consumers grew annoyed with ever more -- and slow loading -- banners, clickthrough rates dropped. According to MediaMind Technologies, Inc., by 2010, banner clickthrough rates averaged 0.09% -- that's about 1 in 1000. And as for Facebook ads, Webtrends reported a 2010 clickthrough rate of about that same initial rate, but within two days, the rate dropped by half to 0.051%.

The solution that makes advertiser and customer happy might well be highly targeted adverts, but that means collecting considerable marketing and geographic information about each smartphone user -- and the current imbroglio against location stalking via cellphone shows what most customers think about companies tracking their movements and habits.

Pain In The Gas

When economists report inflation, they offer two measures: one excluding food and oil prices (called core inflation) and one including these volatile prices (which shock consumer spending). According to the US Labor Department, the consumer price index rose 0.4% in April after increasing 0.5% in March. Strip out the food and gas increases, and overall prices rose only 0.2% in April. Apparently, supermodels who walk to work are the only ones winning the inflation battle. The rest of us deal with $4 a gallon gas and $4 a gallon milk...or more.

Modest price increases should not harm the overall US economic recovery as long as companies continue to hire -- payroll increased by 244,000 in April, the seventh straight monthly gain -- but the unemployment rate in April held at 9.0%. Part of the stubborn 9% barrier came from discouraged workers re-entering the labor market. That's the good news. More hiring means more people headed back into the market to look for work. However, the Labor Department also reported that real average hourly earnings fell 0.3% in April and decreased 1.2% from April 2010. That's the bad news. It's still a slow recovery.

On the supplier side of the spending equation, the Labor Department reported producer prices rose 0.8% in April (after a 0.7% increase in March). Take out energy and food prices and that dropped to 0.3%. That may not seem like much, but producer prices are up 6.8% from last year.

Retailers are hesitating to raise prices for fear of driving away sales, but if suppliers raise their prices to cover higher raw material, production, and transportation costs, retailers can only absorb so much. And even if they do raise prices, they are only playing catch-up with costs they already absorbed.

According to the Commerce Department, retail sales rose 0.5% in April to $389.4 billion. Which sector had the biggest increase? Gas stations, with sales up 2.7%. Number two? Groceries, up 1.5%. Electronics, sporting goods, health and personal care, and furniture sales suffered decreased sales.

Yet luxury goods sales rose. Why? According to a Wall Street Journal article, the top 20% of Americans by income account for about 50% of discretionary spending. Since US Federal Reserve tabulations show that 46% of an individual's net worth is based on stocks, mutual funds, and pension assets, stock market gains outweigh pain at the pump or produce section.

Oil prices do not need an excuse to rise, but every little hiccup sent the price per barrel higher and quickly raised the retail price per gallon. Yet recent lower oil prices only gradually lowered retail prices. For example, the Energy Department reported average US price for gasoline on May 2, 2011 was $3.963 per gallon, went to $3.965 on May 7, and dropped to $3.960 on May 16. During the same period, the Energy Department reported the price per barrel for crude oil futures on April 29 was $113, dropped to $98.17 on May 6, and rose to $99.65 on May 13. Hence, crude oil dropped 11.5% in the last two weeks while gas prices remained flat.

That's where the hurt came in -- especially if your wages are falling or if that new job comes with minimum wage. More money in the tank means less money for food, and that means even less money for everything else. Every week that gas prices do *not* rise seems like a boon for the US economy, but $4 a gallon retail still acts as a restraint.

US gasoline consumption of 9 million barrels a day (about half the total US consumption of oil) is almost as big as the entire Chinese market. If US drivers cut back, world consumption notices no matter what the emerging markets do.

US gasoline demand in early May is near a two-year low, according to the Energy Department. Americans curtailed their driving habits as gas prices rose. Even with events such as Mississippi River flooding, which can disrupt barge traffic and potentially close refineries, a long-term rise in the price of gas remains a remote chance. The Energy Department is predicting gas prices at $3.80 to $4.10 per gallon in June 2011.

For all their complaints about gas prices, consumers remain optimistic. The Thomson Reuters/University of Michigan preliminary consumer sentiment index increased from 69.8 in April to 72.4 in May, a three-month high. Expectations remain that the slow but steady recovery of consumer spending, which accounts for almost 70% of all US economic activity, will continue in the months ahead. If gas prices remain at least stable and at best drop by 10% or more, suppliers and retailers should gain more leeway to fine tune costs and prices to help the bottom line.

Where's The Off Switch?

We have not quite gotten to the point of the 1979 Boomtown Rats song 'I Don't Like Mondays' with the line 'the silicon chip inside her head gets switched to overload', but are we ever coming close. According to the Magnify.net Digital Lifestyle Information Survey 2011, 48.5% of its respondents said they are connected to the Web 'from the moment I wake up until the moment I go to bed.' The survey also found 50.3% said 'my clients expect to be able to contact me at all times,' 57.4% 'never turn off the phone,' and a whopping 76.7% said 'I read emails and respond on evenings and weekends.'

If you're thinking, 'get a life,' maybe that has become our life. The survey commented that people have reached their capacity to manage data -- impacting family, friends, productivity, and even sleep. Algorithmic solutions (better spam filters, smarter search, and more connected devices) will in fact expand the problem, creating more undifferentiated data. As Google Chairman Eric Schmidt stated, we are now creating five exabytes of data every three days.

What's an exabyte? Good question. Wikipedia defines an exabyte as a unit of computer storage equal to one quintillion bytes. Megabyte (million). Gigabyte (billion). Terabyte (trillion). Petabyte (quadrillion). Exabyte (quintillion). That's a lot of bytes out of our time, which still remains constant at 24 hours per day. And for your ever-increasing information, next up is zettabyte (sextillion) and then yottabyte (septillion).

The bad news: sifting through all those yowsa-bytes comes down to a single number: one (that's you). As 76.8% noted, 'My job requires me to be available online.'

Apparently, it's hard to ever be offline. If scientists do manage to implant chips in our heads and turn us into cyborgs, maybe the song will be updated to 'I Don't Like Mondays Through Sundays.'

COMP STORE SALES

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ECONOMY WATCH:-------------------------------------------------           　

Retail Sales Drop

The International Council of Shopping Centers and Goldman Sachs reported its chain-store sales index for the week ending on May 14, 2011 dropped 2% from the prior week, but posted a 3.2% increase over prior year.

Gas Prices Dip

The Energy Department announced that for week ending May 2, 2011, the average price of U.S. gasoline fell to $3.960 a gallon, down from $3.965 per gallon week earlier.

Diesel prices fell to an average $4.10 per gallon, down from $4.12 last week.

ShopperTrak Drop

For the week ended May 14, 2011, ShopperTrak's National Retail Sales Estimate was $94.876 billion, down 6.8% from last week's $103.910 billion, but up 8.3% from the same week last year. As expected, the post-Mother's Day decline occurred and for once, the weather cooperated across the US. Even though gasoline prices remain high compared to last year, consumers are finding ways to deal with the increase in gasoline while spending for items they need. Nevertheless, expect sales to slide over the next few weeks.

Mortgage Rates Dip

Bankrate.com reported that the average conforming 30-year fixed mortgage rate fell to 4.82%, down from last week's 4.88%, according to its weekly national survey ending May 11, 2011. It also reported that the average 15-year fixed mortgage rate was 4.00%, down from 4.05% last week.

Store Closings Slow Down

According to a joint report of ICSC Research and PNC Real Estate Research, US store closing announcements in the first quarter 2011 fell to 1,791 locations, down 36% from 2,806 a year earlier. Borders Group Inc. (BGPIQ), Charming Shoppes Inc., and BCBG Max Azria Group Inc.'s Max Rave represented 666 stores -- just over one-third of all closings. Of note, Big Lots Inc. plans to close 45 stores in 2011, but open 90 for a net gain of 45 locations.

Housewares Challenge

According to an International Housewares Assn. survey, the biggest challenge housewares manufacturers are anticipating was variable costs of transportation, materials, and supplies (42%). Next was new product development, production, and distribution (19%); supplier disruptions and shortages (15%); retail customer order commitments (13%); obtaining adequare credit and financing (6%); and fixed costs of rent, utilities, and labor (4%).

Sheer Luxury

Bain & Co. is predicting luxury sales will rise 8% in 2011 to record $274 billion and that the market will reach a total of between $317 billion and $328 billion within three years. The company predicted Chinese consumers will increase their spending on luxury goods by 25%, year over year, and may finally surpass Japan as the world’s top luxury market. Shoppers in the Middle East, Russia, and Brazil will also increase their spending.

Bankruptcies Down in 1st Quarter

According to the Administrative Office of the US Courts, 12,376 businesses filed for bankruptcy in the 1st quarter 2011 ended March 31, down 15% from the 13,030 total business bankruptcies filed in the 4th quarter 2010. On a year-over-year basis, 54,212 business filed for bankruptcy during the 12-month period ending March 31, 2011, down 11% from the 61,148 business bankruptcies filed in the 12-month period ending March 31, 2010. With a recovering economy, the American Bankruptcy Institute anticipates a further drop in bankruptcies and expects filings for all of 2011 to drop below 1.5 million.

RETAIL BULLETIN: Wal-Mart's Massmart Woes, Drugstore.com Merger

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COMPANIES IN THE NEWS:---------------           ----------------------------

Wal-Mart's Massmart Woes

The $2.4 billion deal by Wal-Mart Stores, Inc. to acquire South African retailer Massmart Holdings Ltd could lead to 4,000 lost jobs says a report by South Africa's Economic Development and Agricultural departments, according to a Wall Street Journal article. Although stopping short of giving a thumbs up or down on the acquisition, the report was delivered to the Competitive Tribunal of South Africa, which can approve or reject the deal. The International Monetary Fund predicts the collective sub-Saharan African economy with a growing middle class will grow 5.5% in 2011 and 6% in 2012.
  

GSI Merger
GSI Commerce, Inc. announced the expiration of the 40 day 'go-shop' period for the proposed merger, announced March 27, 2011, among GSI, eBay, Inc., and eBay subsidiary Gibraltar Acquisition Corp. GSI received notice from the Federal Trade Commission granting early termination of the mandatory waiting period under the Hart-Scott Rodino Antitrust Improvements Act, allowing the merger to proceed. The parties currently expect to complete the merger as early as the end of the second quarter of 2011, subject to customary closing conditions, including receipt of stockholder approval.
 

Drugstore.com Merger
Drugstore.com, Inc. announced the expiration of the 40 day 'go-shop' period for the proposed acquisition, announced March 24, 2011, of the company by Walgreen Co. The parties continue to expect the transaction to close in June 2011.
 

Sun Capital Sells Big 10 Tires to Pep Boys
Sun Capital Partners, Inc. sold Big 10 Tires chain to Pep Boys for an undisclosed amount. Big 10 operates 85 stores throughout the Southeast US.
 

CVS Caremark 1st Quarter
CVS Caremark Corp. reported net earnings for the fiscal first quarter ended March 31, 2011 of $713 million, down from net earnings of $771 million for the same quarter year earlier, on net sales of $25.88 billion, up from $23.76 billion year earlier. Comparable store sales increased 2.6% for the quarter. On April 29, 2011, CVS Caremark acquired the Medicare prescription drug business of Universal American Corp. for $1.25 billion plus $185 million (the amount of excess capital that resided in the entities that operate the UAM Medicare Part D Business), less $110 million (the amount of Universal American Corp.'s outstanding trust preferred securities which are being assumed by the Company).
 

During the three months ended March 31, 2011, CVS Caremark opened 57 new retail drugstores, one new retail specialty pharmacy store and closed 13 retail drugstores. In addition, the company relocated 49 retail drugstores. As of March 31, 2011, the company operated 7,314 locations, included in which were 7,226 retail drugstores, 66 specialty pharmacy stores, 18 specialty mail order pharmacies and four mail order pharmacies in 44 states, the District of Columbia and Puerto Rico. As previously announced, the Company expects adjusted earnings per share from continuing operations to be in the range of $2.72 - $2.82 and GAAP earnings per share from continuing operations to be in the range of $2.52 – $2.62.
 

Blockbuster Canada Enters Bankruptcy
A variety of Hollywood studios that supply movies to Blockbuster Canada called in $67 million debt and forced the video rental chain into bankruptcy. Blockbuster Canada was offered as collateral to the movie studios to ensure a steady supply of new releases, and the studios are looking to recoup losses from US Blockbuster's bankruptcy.
 

Station Casinos Adjournment Motion
On May 11, 2011, Station Casinos' Green Valley Ranch Debtor's official committee of unsecured creditors filed with the US Bankruptcy Court a motion to adjourn the confirmation hearing regarding Green Valley Ranch Gaming for at least one month.
 

Limited Brands April Sales
Limited Brands, Inc. reported a comparable store sales increase of 20% for the four weeks ended April 30, 2011, compared to the four weeks ended May 1, 2010. The company reported net sales of $683.2 million for the four weeks ended April 30, 2011, compared to net sales of $584.6 million last year. The company now expects to report adjusted first quarter earnings per share of $0.37 to $0.39 versus its previous guidance of $0.26 to $0.31 per share, which represents a 48% to 56% increase over last year's adjusted $0.25 per share result. The company completed its $500 million share repurchase program announced March 22 and authorized an additional $500 million share repurchase program. The company operates 2,635 specialty stores in the United States and its brands are sold in more than 800 company-operated and franchised additional locations world-wide.
 

Gilt Groupe $138 Million Filing
Online flash sale website Gilt Groupe filed for $138 million offering of just under five million shares of "Series E Preferred Stock" at $27.68 per share -- a steep share price gain over the Series D round a year ago, which valued shares at $14 each. The company had raised $83 million in venture funding over the past three years.
 

Timberland 1st Quarter
Timberland Co. reported net income for the fiscal first quarter ended April 1, 2011 of $17.791 million, down 30.2% from net income of $25.747 million for the same quarter year earlier, on revenue of $349.0 million, up 10.1% from $317.0 million year earlier. The company ended the quarter with $265.3 million in cash and no debt. Accounts receivable increased 13.2% to $178.5 million compared to the prior year period, driven by revenue growth and the timing of sales. Inventory at quarter end was $186.9 million, an increase of 36.5% over a low level in the prior year quarter, driven by the outlook for the remainder of the year, higher product costs, and strategic purchases of core product.
 

Lifetime Brands 1st Quarter
Lifetime Brands, Inc. reported net loss for the fiscal first quarter ended March 31, 2011 of $949,000, worse than net income of $729,000 for the same quarter year earlier, on revenue of $91.773 million, up from $88.736 million year earlier. On March 4, 2011, the Board of Directors declared a quarterly dividend of $0.025 per share payable on May 16, 2011, to shareholders of record on May 2, 2011.
 

Aeropostale 1st Quarter
Aeropostale reported net sales for the first quarter of fiscal 2011 increased 1% to $469.2 million from $463.6 million in the year ago period. Same store sales for the first quarter decreased 7%.
 

Build-A-Bear 1st Quarter
Build-A-Bear Workshop, Inc. reported a net loss for the fiscal first quarter ended April 2, 2011 of $2.251 million, worse than net income of $1.679 million for the same quarter year earlier, on revenues of $95.991 million, down from $101.436 million year earlier. Comparable store sales declined 8.5% for the quarter from year ago. The company expects capital expenditures of approximately $12 to $15 million in 2011, compared to capital spending of $15 million. During fiscal 2011 first quarter, Build-A-Bear repurchased approximately 375,000 shares of its common stock at a total cost of $2.5 million. At quarter end, the company had $21.2 million of availability under the current stock repurchase program. The company currently operates more than 400 Build-A-Bear Workshop stores worldwide.
 

Ascena Retail 3rd Quarter
Ascena Retail Group, Inc. reported net sales for the fiscal third quarter ended April 30, 2011 of $722.8 million, up 9% from $665.5 million year earlier. Comparable store sales increased 6% for the quarter.
 

Steve Madden 1st Quarter and Stock Split
Steve Madden reported net earnings for the fiscal first quarter ended March 31, 2011 of $17.852 million, up from net earnings of $15.385 million for the same quarter year earlier, on net sales of $165.765 million, up from $131.608 million year earlier. Comparable store sales increased 12.0% for the quarter.
 

The company declared a three-for-two stock split, in the form of a stock dividend, of the company's outstanding shares of common stock. The stock split will entitle all stockholders of record at the close of business on May 20, 2011 to receive one additional share of Steve Madden common stock for every two shares of common stock held on that date. The additional shares are expected to be distributed to stockholders on or about May 31, 2011 by the company's transfer agent. As a result of the stock split, the number of outstanding shares of the company's common stock will increase to approximately 42.5 million shares from approximately 28.2 million shares outstanding prior to the split. For fiscal 2011, the Company continues to expect net sales to increase 20% – 22%. Diluted EPS is now expected to be in the range of $2.03 – $2.10, compared to previous guidance of diluted EPS in the range of $2.00 – $2.07 on an adjusted basis to address the 3-for-2 stock split.
 

Ruddick 2nd Quarter
Ruddick Corp. reported net earnings for the fiscal second quarter ended April 3, 2011 of $29.906 million, up from net earnings of $27.479 million for the same quarter year earlier, on net sales of $1.133 billion, up from $1.071 billion year earlier. Consolidated capital expenditures for the company during fiscal 2011 are planned to total approximately $173 million, consisting of $165 million for Harris Teeter and $8 million for A&E. Such capital investment is expected to be financed by internally generated funds, liquid assets or borrowings under the company’s revolving line of credit. Management believes that the Company’s revolving line of credit provides sufficient liquidity for what management expects the company will require through the expiration of the line of credit in December 2012.
 

DSW Merger With Retail Ventures
DSW Inc. updated the election deadline to 5:00pm, New York time, on May 19, 2011 for the proposed merger between Retail Ventures, Inc.and a wholly owned subsidiary of DSW. The merger is anticipated to close on May 26, 2011. Retail Ventures shareholders who want to receive only DSW class A common shares in the merger need not complete or return an election form. The holders of DSW class A common shares and DSW class B common shares have identical rights except that holders of DSW class A common shares are entitled to one vote per share on all matters to be voted on by the DSW shareholders, while holders of DSW class B common shares are entitled to eight votes per share on all matters to be voted on by the DSW shareholders. The DSW class A common shares are registered under the Exchange Act and are listed on the NYSE, but the DSW class B common shares are not.
 

Bebe 3rd Quarter
Bebe Stores, Inc. reported net loss for the fiscal third quarter ended April 2, 2011 of $2.635 million, better than net loss of $5.471 million for the same quarter year earlier, on net sales of $109.49 million, up from $108.79 million year earlier.
 

Andersons 1st Quarter
The Andersons, Inc. reported net earnings for the first fiscal quarter ended March 31, 2011 of $17.266 million, up from net earnings of $12.265 million for the same quarter year earlier, on net sales of $1.002 billion, up from $921.998 million year earlier. During the quarter, the company re-evaluated its reportable segments. As a result, the Grain & Ethanol Group was separated into two reportable segments, specifically the Grain Division and the Ethanol Division. The company's investment in Lansing Trade Group is included in the Grain Division.
 

Sally Beauty 2nd Quarter
Sally Beauty Holdings, Inc. reported net earnings for the fiscal second quarter ended March 31, 2011 of $49.278 million, up from net earnings of $34.560 million for the same quarter year earlier, on net sales of $801.805 million, up from $720.467 million year earlier. Comparable store sales increased 6% for the quarter.
 

Bluefly 1st Quarter
Bluefly, Inc.reported a net loss for the fiscal first quarter ended March 31, 2011 of $1.3 million, better than net loss of $1.5 million for the same quarter year earlier, on net sales of $21.7 million, up from $20.2 million year earlier.
 

Pantry 2nd Quarter
Pantry, Inc. reported net loss for the fiscal second quarter ended March 31, 2011 of $0.27 million, much better than net loss of $166.08 million for the same quarter year earlier, on net sales of $1.896 billion, up from $1.677 billion year earlier. Comparable store sales increased 2% for the quarter.
 

AC Moore 1st Quarter
AC Moore Arts & Crafts, Inc. reported net loss for the fiscal second quarter ended April 2, 2011 of $7.4 million, better than net loss of $7.6 million for the same quarter year earlier, on net sales of $102.7 million, down from $105.4 million year earlier. Comparable store sales decreased 2.6% for the quarter.
 

Dover Saddlery 1st Quarter
Dover Saddlery, Inc. reported a net income for the fiscal first quarter ended March 31, 2011 of $125,000, better than net loss of $193,000 for the same quarter year earlier, on net revenues of $17.285 million, up from $16.226 million year earlier. The company has refinanced its subordinated debt by replacing it with a 7-year term note from RBS Citizens Bank. The amortization schedule is interest only for the first two years and level amortization thereafter. The lower interest rate will save approximately $350,000 per year.

Weekly Ratings Alert: Target, JCPenney, Metropark USA

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COMPANIES IN THE NEWS:---------------           ------
Target Sues Target

US retailing giant Target, Inc. filed suit against Canadian retailer Fairweather Ltd. for using the name Target Apparel for its 15 stores. US Target seeks exclusive rights to the name Target and a preliminary injunction against Fairweather. This is the latest legal skirmish in a decade-long battle and also includes a complaint against Target Apparel's use of an allegedly too-similar bullseye logo. Fairweather countersued for exclusive rights to the name and $250 million in damages.

JCPenney $1.25 Billion Credit

JCPenney Company, Inc. completed a new five-year $1.25 billion bank credit facility maturing in April 2016, replacing a $750 million credit facility that was scheduled to mature in April 2012. The new facility may be used for general corporate purposes and is secured by the Company's inventory, which can be released upon attainment of certain credit rating levels.

Metropark USA Files for Bankruptcy

Retail chain Metropark USA, Inc. filed for Chapter 11 bankruptcy on May 2, 2011 with the goal of finding a buyer. The company, with 69 stores in 21 states, listed $10 million in assets and $50 million in debts.

7-11 Buys Wilson Farms Chain

7-Eleven, Inc. acquired Wilson Farms, a convenience store chain based in Buffalo, NY with 188 stores, from WFI Group, Inc. for undisclosed terms. The move will strengthen 7-Eleven presence in western New York state. 7-Eleven currently operates, franchises or licenses in more than 8,400 7-Eleven stores in North America. Globally, there are more than 40,500 7-Eleven stores in 16 countries. The deal is expected to be completed in the second quarter 2011.

Publix 1st Quarter

Publix reported net earnings for the first fiscal quarter ended March 31, 2011 of $398.2 million, up from net earnings of $364.4 million for the same quarter year earlier, on net sales of $6.8 billion, up from $6.5 billion a year earlier. Effective May 1, 2011, Publix’s stock price increased from $20.90 per share to $21.65 per share. Publix stock is not publicly traded and is made available for sale only to current Publix associates and members of its board of directors.

EBay 1st Quarter

EBay, Inc. reported net income for the first quarter ended March 31, 2011 of $475.865 million, up from net income of $397.653 million for the same quarter a year earlier, on net revenues of $2.546 billion, up from $2.196 billion year earlier. EBay expects net revenues for the second quarter 2011 to be in the range of $2.550 to $2.650 billion with GAAP earnings per diluted share in the range of $0.36 to $0.37 and non-GAAP earnings per diluted share in the range of $0.45 to $0.46. For the full year 2011, the company expects net revenues in the range of $10.60 to $10.90 billion with GAAP earnings per diluted share in the range of $1.53 to $1.58 and non-GAAP earnings per diluted share in the range of $1.93 to $1.97.

OfficeMax 1st Quarter

OfficeMax, Inc. reported net income for the first quarter ended March 26, 2011 of $11.366 million, down from net income of $24.779 million for the same quarter year earlier, on sales of $1.863 billion, down from $1.917 billion year earlier. Comparable store sales decreased 1.2% for the quarter. OfficeMax ended the first quarter of 2011 with a total of 991 retail stores, consisting of 912 retail stores in the US and 79 retail stores in Mexico. During the first quarter of 2011, OfficeMax closed six retail stores in the US.

VF 1st Quarter

VF Corp. reported net income for the first fiscal quarter ended March 31, 2011 of $200.703 million, up from net income of $163.516 million for the same quarter a year earlier, on net sales of $1.937 billion, up from $1.730 billion a year earlier. The company increased its 2011 guidance with revenues now expected to rise approximately 10% in 2011, up from previous guidance for an increase of 8% to 9%, due largely to the impact of a weaker dollar in translating foreign currencies, as well as broad-based strength across its businesses. Earnings per share are now anticipated to increase to $7.25, up from their previous guidance of $7.00 to $7.10 per share. The new guidance includes the $.11 in special items reported in the first quarter, as well as an increase of $.10 per share from foreign currency translation. Cash flow is expected to again reach $1 billion in 2011.

Sears Holdings 1st Quarter Outlook

Sears Holdings Corp. reported combined comparable store sales for the first fiscal quarter ended April 30, 2011 for its Kmart and Sears stores fell 3.6%, primarily due to drop in sales of appliances, apparel, and consumer electronics. Sears Canada expects to report a comparable store sales decline of 9.2% for the quarter. Sears expects a net loss attributable to Holdings' shareholders for the first quarter ended April 30, 2011 of between $145 million and $195 million, or between $1.35 and $1.81 per diluted share. In the first quarter of fiscal 2010, we reported net income attributable to Holdings' shareholders of $16 million, or $0.14 per diluted share. Beginning with the first quarter of 2011, Sears included internet sales from sears.com and kmart.com shipped direct to customers in comparable store sales.

During the first quarter, Sears repurchased 1.2 million common shares at a total cost of $101 million, an average price of $81.61 per share, under its share repurchase program. As of April 30, 2011, the company had $86 million of remaining authorization under its common share repurchase program. It also approved the repurchase of up to an additional $500 million of the company's common shares, which is in addition to the $86 million worth of remaining authorization.

GSI Commerce 1st Quarter

GSI Commerce, Inc. reported net loss for the first quarter ended April 2, 2011 of $13.6 million, worse than the net loss of $8.1 million for the same quarter a year earlier, on net revenues of $323.5 million, up from $272.6 million year earlier.

Overstock.com 1st Quarter

Overstock.com, Inc. reported net loss for the first quarter ended March 31, 2011 of $454,000, worse than the net income of $3.716 million for the same quarter a year earlier, on net revenue of $265.470 million, up slightly from $264.330 million a year earlier.

Drugstore.com 1st Quarter

Drugstore.com, Inc. reported a net loss for the first quarter ended April 3, 2011 of $3.183 million, worse than the net loss of $2.616 million for the same quarter a year earlier, on net sales of $128.44 million, up from $110.93 million year earlier.

Cabela's 1st Quarter

Cabela's, Inc. reported net income for the first quarter ended April 2, 2011 of $17.785 million, more than double its net income of $8.091 million for the same quarter a year earlier, on sales of $586.711 million, up from $559.610 million a year earlier. Comparable store sales increased 8.9% for the quarter.

Ideeli.com Lands $41 Million

Ideeli.com raised $41 million in venture capital financing from a number of investors, including Constellation Growth Capital, Cue Ball Capital, Next World Capital, Kodiak Venture Partners and StarVest Partners, according to Reuters. Ideeli.com is a flash sale website that offers designer goods, including overstock and samples from Calvin Klein, Tommy Hilfiger, and Nicole Miller at heavily discounted prices in private sales that typically last only a day or two. Annual sales are expected to be $150 million.

Gymboree 4th Quarter and Year

Gymboree Corp. reported net loss of $47.3 million for the fourth quarter ended January 29, 2011, worse than net income of $33.2 million for same quarter last year, on net sales of $318.0 million, up 6.2% from $299.6 million a year ago. Comparable store sales decreased 2% for the quarter. For the year ended January 29, 2011, the company reported net income of $28.52 million, down from net income of $101.92 million from a year ago, on net sales of $1.074 billion, up 5.9% from $1.015 billion a year earlier. Comparable store sales also decreased 2% for the year.  As of April 2, 2011, the Company operated a total of 1,074 retail stores.

Liz Claiborne 1st Quarter

Liz Claiborne, Inc. reported net loss for the first quarter ended April 2, 2011 of $96.345 million, worse than net loss of $72.038 million for the same quarter year earlier, on net sales of $513.24 million, down from $584.16 million a year earlier.

Nash Finch 1st Quarter

Nash Finch Co. reported net earnings for the first quarter ended March 26, 2011 of $7.481 million, down from net earnings of $7.941 million for the same quarter year earlier, on sales of $1.10 billion, down from $1.18 billion year earlier. Total debt at the end of the first quarter of 2011 increased by $23.3 million to $337.7 million since the end of fiscal 2010. The company continues to focus on effectively managing its balance sheet and is currently in compliance with all of its debt covenants. The debt leverage ratio as of the end of the first quarter 2011 was 2.43x. Availability on the company’s revolving credit facility at the end of the quarter was $151.6 million.

Carter’s 1st Quarter

Carter’s, Inc. reported net income for the first quarter ended April 2, 2011 of $32.123 million, down from net income of $42.825 million for the same quarter a year earlier, on sales of $469 million, up from $409 million year earlier. The company expects net sales for the second quarter of fiscal 2011 to be up approximately 16% to 19%, and diluted earnings per share to be approximately $0.10 to $0.14 compared to $0.32 in the second quarter of last year.

Revlon 1st Quarter

Revlon, Inc. reported net income for the first quarter ended March 31, 2011 of $10.4 million, up from net income of $2.2 million for the same quarter ayear earlier, on net sales of $333.2 million, up from $305.5 million year earlier. On March 17, 2011, the company acquired certain assets, including trademarks, other intellectual property, inventory, certain receivables, and manufacturing equipment related to Sinful Colors cosmetics, as well as other brands, which products are sold principally in the US mass retail channel.

Elizabeth Arden 3rd Quarter

Elizabeth Arden, Inc. reported net loss for the fiscal third quarter 2011 ended March 31, 2011 of $3.251 million, better than net loss of $3.856 million for the same quarter a year earlier, on net sales of $231.296 million, up from $217.026 million a year earlier. During the third fiscal quarter, the company refinanced its long-term bonds and amended and extended its bank credit facility. Through this refinancing, the company extended the maturity of its debt structure and added additional long-term capital with minimal impact to the company's borrowing costs. Elizabeth Arden incurred a pre-tax charge of $6.5 million during the quarter related to this refinancing. The company affirms its prior annual net sales and earnings guidance for fiscal 2011 and anticipates a net sales increase of 5.0% to 6.0%, as compared to the prior fiscal year, and earnings to be in the range of $1.40 to $1.50 per diluted share.

Jean Coutu 4th Quarter and Year

Jean Coutu Group, Inc. reported net earnings of C$46.4 million (Canadian) for the fourth quarter ended February 26, 2011, up from net earnings of C$42.8 million for same quarter last year, on revenues of C$655.6 million, up from C$637.0 million year ago. For the year ended February 26, 2011, the company reported net earnings of C$179.1 million, up from net earnings of C$162.7 million from year ago, on revenues of C$2.598 billion, up from C$2.543 billion year earlier. The Board of the Jean Coutu Group declared a quarterly dividend of $0.06 per share, an increase of 9.1% compared with the previous quarter. This dividend will be paid on May 28, 2011 to all holders of Class A subordinate voting shares and holders of Class B shares listed in the corporation's shareholder ledger as of May 14, 2011. This quarterly dividend represents $0.24 per share on an annual basis.

West Marine 1st Quarter

West Marine, Inc. reported net loss for the first quarter ended April 2, 2011 of $12.345 million, worse than net loss of $9.532 million for the same quarter a year earlier, on net revenues of $113.8 million, up from $109.6 million a year earlier. Comparable store sales increased 2.7% for the quarter. CEO Geoff Eisenberg noted the main boating season may be stronger than originally anticipated, and thus the company raised its 2011 sales guidance for full-year 2011 net revenues to range from $634 million to $640 million, compared to $623 million in actual net revenues last year.

Barnes & Noble Credit Amendment

Barnes & Noble, Inc. entered into an amendment that extends its $1 billion revolving credit agreement's previous maturity date from September 29, 2013 to April 29, 2016 and lowers interest costs, provides greater financial flexibility, and increases overall borrowing capacity throughout the year. As a result of the amendment, the company will write-off $6.4 million in deferred financing fees from the previous facility in fiscal 2011. Beginning in fiscal 2012, the company expects lower interest costs and reduced amortization of deferred financing fees to reduce interest expense by $10.6 million annually. The company ended fiscal year 2011 on April 30, 2011 with $313 million of outstanding borrowings under the facility.

Jones Group Credit

The Jones Group Inc. completed an amendment and extension of its $650 million senior credit facility that provides for a decrease in fees and interest rates to current market rates and an extension of the maturity date to April 28, 2016. In addition, the agreement expands the credit facility's international commitment to allow for the inclusion of European borrowers which can draw under the credit facility. The credit facility is primarily used as backing for the issuance of trade letters of credit and other supply chain purposes, but also may be used for working capital and general corporate purposes. Currently, no cash borrowings are outstanding under the existing facility.

Station Casinos Ballot Summary Filed

Station Casinos filed with the US Bankruptcy Court on April 29, 2011 a ballot summary and declaration in support of confirmation of the Company's Joint Plan. According to documents filed with the Court, 100% of those voting in Classes CVH.1 (land loan lenders' claims) and SCI Opco (pre-petition Opco secured lenders' allowed secured claims) and 99.82% of CVRG.2 (GVR first lien claims) voted to accept the Plan. The Court is scheduled to consider the Plan on May 25, 2011.

Ultimate Electronics Conversion Sought

Ultimate Acquisition Partners, aka Ultimate Electronics, filed with the US Bankruptcy Court on April 29, 2011 a motion to convert the Chapter 11 reorganization case to Chapter 7 liquidation status.

Ingles Markets 2nd Quarter

Ingles Markets, Inc. reported net income for the second fiscal quarter ended March 26, 2011 of $7.722 million, up from net income of $5.595 million for the same quarter a year earlier, on net sales of $870.371 million, up from $837.005 million year earlier. Comparable store sales (excluding gasoline) increased 1.9% for the quarter. For the six months ended March 26, 2011, the company reported net income of $15.374 million, up from net income of $11.612 million for the same half year ago, on net sales of $1.743 billion, up from $1.678 billion year earlier.

MarineMax 2nd Quarter

MarineMax, Inc. reported a net loss for the second fiscal quarter ended March 31, 2011 of $4.487 million, better than net loss of $6.338 million for the same quarter year earlier, on net sales of $115.756 million, up from $110.116 million year earlier. Comparable store sales increased 5% for the quarter. For the six months ended March 31, 2011, the company reported net loss of $9.189 million, worse than net income of $3.815 million for the same half year ago, on net sales of $207.946 million, down slightly from $210.565 billion year earlier. Comparable store sales decreased 1% for the quarter.

Avon 1st Quarter

Avon Products, Inc. reported net loss for the first quarter ended April 2, 2011 of $143.6 million, much worse than net income of $42.5 million for the same quarter year earlier, on net revenues of $2.592 billion, up from $2.417 billion year earlier. Total units sold declined 1%, while price/mix rose 5% during the quarter. Active representatives declined 1% in the quarter.

RadioShack Credit

RadioShack Corp. completed the issuance of $325 million aggregate principal amount of its 6.750% Senior Notes due 2019 in a private placement. The notes will pay interest semi-annually at a rate of 6.750% per annum and are unsecured obligations of RadioShack. Interest expense associated with the notes is expected to total approximately $15.2 million ($9.3 million after tax or $0.09 per diluted share) in 2011. In March, the company redeemed its $307 million, 7.375% notes that would have matured on May 15, 2011.

Walgreens April

Walgreens Co. reported April sales of $5.99 billion, an increase of 5.5% from $5.68 billion for the same month in 2010. Comparable store front-end sales increased 6.5% in April, benefiting from this year’s later Easter holiday. Customer traffic in comparable stores increased 2.3%, while basket size increased 4.2%. As of April 30, Walgreens operated 8,169 locations in all 50 states, the District of Columbia, Puerto Rico and Guam.

HSN 1st Quarter

HSN, Inc. reported net income for the first quarter ended March 31, 2011 of $20.281 million, up from net income of $17.653 million for the same quarter year earlier, on net sales of $723.982 million, up from $683.213 million year earlier.

Bon Chance, Pierre

According to a Wall Street Journal article, Pierre Cardin wants to sell his fashion design and licensing business for a cool 1 billion euros ($1.46 billion). How did he come up with the E1 billion figure? He said E10 million per product times 1000 products times 100 countries equals E1 billion. He previously offered it for E500 million with no takers, but bankers guess it is worth only about E200 million. However, that is only a guess because of a lack of hard financial information, and bankers contend due diligence may prove to be a nightmare. Still, with 400 licensed products plus fashion, the current climate of offering exclusive products at retail may prove irresistible to a retailer with deep pockets, even if the price produces hesitation.

Stop and Scan

Stop & Shop became one of the first major companies to deploy a custom version of Modiv Media's iPhone app called Scan It, according to MIT Technical Review, with a version for Android phones in the works.

Scan It allows shoppers to use their smartphones to scan the bar codes of items to keep a running tally. Customers bag their items while shopping and present the smartphone total at checkout, thus avoiding having to empty their cart and then bag their groceries. In addition, the app uses data from the loyalty card to present offers based on the user's past purchases and current location in the store. It works in addition to the existing loyalty program, offering savings on top of the deals already advertised on store shelves.

Modiv claims customers save time and get personalized deals while retailers can entice customers with more effective offers and can employ fewer cashiers. Stop & Shop is deploying the app as a pilot program in certain stores. So far, the retailer uses an honor system to make sure every item in the cart was actually scanned.

Modiv initially launched a portable hand scanner version of Scan It in 2007 with limited success, but found in 2009 that customers using the handset spent an average of $7 more per trip and visited handset-equipped stores 10% more often than they did previously.

COMP STORE SALES

March sales were strong. Will the trend continue? Find out by reading the nationally recognized. Bernard Sands General Merchandise Comp Store Sales Analysis. Keep track of comparable and total sales growth in our detailed, easy-to-read format. Learn more about subscribing.

CREDIT AND ECONOMY WATCH:----------------------------------

Retail Sales Fall

The International Council of Shopping Centers and Goldman Sachs reported its chain-store sales index for the week ending on April 30, 2011 fell 0.8% compared to the prior week. Sales during the final fiscal week of April were negatively impacted by tornadoes across six states--and power outages and store closures--and bouts of heavy rainfall extending up through New York--which curbed the consumers’ ability to shop in some regions while rising gasoline prices affected the consumers’ ability to spend.

Gas Prices Rise...Again

The Energy Department announced that for week ending May 2, 2011, the average price of U.S. gasoline rose to $3.963 a gallon, up from $3.879 per gallon week earlier. Besides yet another weekly rise, the average also blew past earlier projections of averaging $3.86 per gallon during the 2011 driving season and peaking at about $3.91 per gallon by mid summer.

Diesel prices fell to an average $4.10 per gallon, down from $4.11 last week. Like gasoline prices, diesel fuel prices exceeded earlier projections to average $4.09 per gallon this summer.

Retail Sales Plummet

For the week ended April 30, 2011, ShopperTrak's National Retail Sales Estimate was $83.808 billion, down 16.9% from last week's $101.231 billion, and off 6.1% from same week in April 2010. As expected, it was a quiet week prior to the ramp up for the week before Mother's Day, exacerbated by killer tornadoes in the SouthEast US and rising gas prices.

Mortgage Rates Dip

Bankrate.com reported that the average conforming 30-year fixed mortgage rate fell to 4.95%, down from last week's 4.96%, according to its weekly national survey ending April 27, 2011. It also reported that the average conforming 15-year fixed mortgage rate was 4.14%, down from 4.16% last week.

April 2011 Help Wanted

The Conference Board Employment Help Wanted Online Index decreased in April, with online advertised vacancies falling by 123,800 to 4.322 million, after a strong gain of 763,100 in the first quarter of 2011. Labor demand in April is in line with levels last seen four years ago before the start of the recession, although approximately 13.5 million people remain unemployed in the US.

March 2011 Employment Trends

The Conference Board Employment Trends Index increased in March for the sixth consecutive month. The index now stands at 100.9, up from February’s revised figure of 100.3. The index is up over 8% from a year ago.

April Consumer Confidence Gains

The Conference Board announced Consumer Confidence increased in April 2011 to 65.4, up from 63.4 in March 2011, a three-year high. Analysts noted consumers' short-term outlook improved, although rising inflation causes some concern.

March Inventories

The US Commerce Department reported inventories of manufactured durable goods in March 2011, up fifteen consecutive months, increased $4.5 billion or 1.4% to $334.3 billion, revised from the previously published 1.3% increase. This followed a 1.3% February increase. Inventories of manufactured nondurable goods, up seven consecutive months, increased $1.8 billion or 0.8% to $238.1 billion. This followed a 0.6% February increase. New orders for manufactured goods in March, up five consecutive months, increased $13.5 billion or 3.0% to $462.9 billion, which followed a 0.7% February increase.

March Construction

The US Commerce Department reported construction spending during March 2011 was estimated at a seasonally adjusted annual rate of $768.9 billion, 1.4% above the revised February 2011 estimate of $758.6 billion, but 6.78% below the March 2010 estimate of $824.0 billion. During the first 3 months of this year, construction spending amounted to $161.2 billion, 7.8% below the $174.8 billion for the same period in 2010.

March Retail Sales

The US Commerce Department reported that March 2011 retail sales increased 0.4%, the ninth consecutive gain, although the rise was only 0.1% if gasoline sales were excluded. The biggest loser, auto sales, fell 1.7%, the largest drop since February 2010. On the positive side, furniture store sales rose 3.6% from February. More jobs and a payroll tax cut are expected to continue the spending rebound.

February Home Prices Drop

The Standard & Poor's/Case-Shiller composite index of 20 metropolitan areas decreased 3.3% in February 2011 from the month before. Analysts noted little good news in housing, with prices falling and new sales and construction disappointing. Atlanta, Cleveland and Las Vegas join Detroit as cities with home prices below 2000 levels, with Phoenix barely above its January 2000 pricing level. Washington DC is the only bright spot as home prices rose 2.7% in February over January.

March Home Sales Increase

According to the National Association of Realtors, existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 3.7% to a seasonally adjusted annual rate of 5.10 million units in March 2011 from an upwardly revised 4.92 million units in February. Although good news, the numbers are still 6.3% below the 5.44 million unit pace in March 2010.

According to the US Census Bureau and US Department of Housing and Urban Development, sales of new single-family houses in March 2011 were at a seasonally adjusted annual rate of 300,000, up 11.1% above the revised February rate of 270,000, but 21.9% below the March 2010 estimate of 384,000. The median sales price of new houses sold in March 2011 was $213,800, and the average sales price was $246,800. The seasonally adjusted estimate of new houses for sale at the end of March was 183,000, representing a supply of 7.3 months at the current sales rate.

Pending Home Sales

The National Association of Realtors' Pending Home Sales Index, a forward-looking indicator, rose 5.1% to 94.1, based on contracts signed in March, from 89.5 in February. That is the good news. The bad news is that the index is 11.4% below 106.2 recorded in March 2010, so there is considerable room for recovery. The data reflects contracts and not closings, which normally occur with a lag time of one or two months. NAR analysts predict modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards.

Consumer Spending Up In March

According to the US Commerce Department Bureau of Economic Analysis, personal consumption expenditures increased $60.7 billion, or 0.6%, in March 2011. Personal income increased $67.0 billion, or 0.5%, and disposable personal income rose $64.4 billion, or 0.6%.

Private wage and salary disbursements increased $18.0 billion in March. Goods-producing industries' payrolls increased $6.2 billion. Manufacturing payrolls increased $5.1 billion. Services-producing industries' payrolls increased $11.8 billion. Government wage and salary disbursements increased $1.2 billion.

Personal saving was $651.2 billion in March, compared with $647.5 billion in February, with personal saving as a percentage of disposable personal income remaining steady at 5.5%. In general, more people went back to work, boosting spending.

Retail Sales Forecast For 2011

The National Retail Federation said it expects U.S. retail sales (which excludes online sales, cars, gasoline, and restaurants) will rise 4% in 2011, but warned that reluctance of small businesses to add employees and higher gasoline prices could yet slow consumer spending. NRF noted US retail sales were up 5.7% during the 2010 holiday period, better than the 3.3% it had predicted.

Spend It On Mom

According to the NRF’s 2011 Mother’s Day Consumer Intentions and Actions survey, conducted by BIGresearch, the average person celebrating Mother's Day is expected to spend $140.73 on gifts, up from $126.90 last year, and a return to 2008 spending levels. Total spending in the US is expected to reach $16.3 billion.

But what to get? Jewelry will be a popular gift option, with 31.2% planning to buy mom silver, gold, or diamonds (up 19% from last year), with total spending on jewelry expected to reach $3.0 billion. And 31.8% will buy mom clothing or accessories ($1.3 billion total), 54.7% will treat mom to a nice dinner or brunch ($3.1 billion), and 64.9% will buy mom flowers ($1.9 billion).

BANKRUPTCIES:---------------------------------------------------------

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Below are some of the major retailers that have sought bankruptcy protection over the past year:

Metropark USA: Filed for Chapter 11 bankruptcy on May 2, 2011. The company, with 69 stores in 21 states, listed $10 million in assets and $50 million in debts.

Sbarro: Filed for Chapter 11 April 4, 2011. Sbarro reached an agreement with all of its second-lien secured lenders and approximately 70% of its senior noteholders on the terms of a reorganization plan that will eliminate approximately $200 million of debt. The company is seeking Court approval to enter into a $35 million debtor-in-possession financing agreement it has secured with certain of its existing first-lien lenders. Sbarro's first lien lenders are not parties to the restructuring agreement, and the company is in ongoing discussions with these lenders regarding the terms of proposed exit financing. MidOcean Partners III LP and Ares Corporate Opportunities Fund II LP have agreed to backstop a $30 million rights offering, the proceeds of which will be used to repay the DIP and provide the reorganized business with additional equity capital and liquidity. Sbarro filed motions with the Court on April 19 to retain Epiq Bankruptcy Solutions (Contact: Jason D. Horwitz) as administrative agent at hourly rates ranging from $34 to $250; PricewaterhouseCoopers (Contact: Perry Mandarino) as bankruptcy consultant, independent auditor, tax consultant and international tax advisor at the following hourly rates: partner at $800, director at $550, manager at $450, senior associate at $350, associate at $250 and paraprofessional at $200; Curtis, Mallet-Prevost, Colt & Mosle (Contact: Steven J. Reisman) as conflicts counsel at the following hourly rates: partner at $730 to $830, counsel at $510 to $625, associate at $300 to $59, paraprofessional at $190 to $230, managing clerk at $450 and other support personnel at $55 to $325; and Cadwalader, Wickersham & Taft (Contact: Dennis J. Block) as counsel to the restructuring committee at hourly rates of ranging from $35 to $995.

Harry & David Holdings, Inc.: Filed for Chapter 11 on March 28, 2011. US Bankruptcy Court approved Harry & David Holdings' 'first day' motions allowing the company to continue day-to-day operations, including approval to access its $100 million first-lien debtor-in-possession revolving credit facility provided by the company's secured lenders, and a $55 million second-lien DIP term loan provided by holders of the Company's senior notes. The company also received approval to continue to pay employees' salaries, wages and benefits in the ordinary course, and the Court confirmed the company's ability to pay vendors for post-petition goods and services. In addition, the company received approval to allow all customer programs to continue uninterrupted, including its Fruit-of-the-Month Club and gift cards. The US Trustee also filed a motion appointing a seven-member unsecured creditors committee. The committee members are: Craig Yamaoka of Pension Benefit Guaranty Corp., David R. Wiedwald of Convergys Customer Management Group Inc., Dan Pevonka of RR Donnelley, Peter DeRosa of American List Counsel Inc., Ronald M. Tucker of Simon Property Group, Inc., Robert E. Bernosky of Marich Confectionery Assoc. and James Lewis, representing indenture trustee Wells Fargo. Harry & David Holdings' official committee of unsecured creditors filed an objection to the Debtors' motions for orders approving and assuming a backstop stock purchase agreement and authorizing the Debtors to distribute an accredited investor questionnaire to their unsecured creditors. The creditors also objected to approving procedures related thereto and setting the rights offering record date.

No Fear Retail Stores, Inc.: Filed for bankruptcy protection on February 24, 2011.

Dumoulin: Filed for bankruptcy on February 23, 2011. Owns 15 corporate stores and 89 stores owned by franchisees. Seeks to close its US business affiliate and six corporate stores. Its 89 franchise stores are not going into bankruptcy.

Borders Group Inc.: Filed for Chapter 11 bankruptcy on February 16, 2011. On March 17, 2011, the US Bankruptcy Court signed a final order authorizing Borders Group to obtain DIP financing from GE Capital, Restructuring Finance. As previously reported, the financing consists of a $410 million revolver, a $55 million term loan B, and two $20 million letter of credit facilities. The funds will be used, among other things, to pay vendors, publishers and other suppliers for post-petition goods and services and to operate its day-to-day business. Also, Borders increased the number of store closing from 200 to 228. The US Trustee assigned to the Borders Group case filed with the US Bankruptcy Court an objection to the Debtors' motion for approval to implement a Key Employee Incentive Program and pay $8 million in bonuses to 17 executives, 25 director-level employees, and additional 'key' employees. The Trustee contended the measure was premature, given the closing of 228 stores and loss of jobs to thousands of employees. The Court allowed bankrupt Borders Group Inc to pay $6.6 million in executive bonuses if the company is sold.

Ultimate Acquisition Partners LP and CC Retail LLC: Filed for Chapter 11 bankruptcy protection on January 26, 2011. Ultimate Acquisition filed with the US Bankruptcy Court on April 29, 2011 a motion to convert the Chapter 11 reorganization case to Chapter 7 liquidation status.

Rugged Bear Co: Filed for Chapter 11 on January 25, 2011. All intellectual property assets bought by TRB Acquisitions LLC on April 12, 2011.

Appleseed's Intermediate Holdings LLC: and its domestic subsidiaries, which do business in US as Orchard Brands: Filed for Chapter 11 on January 19, 2011. US Bankruptcy Court confirmed the company's Plan and Orchard Brands exited bankruptcy on April 25, 2011.

Anchor Blue, Inc. and it's parent Anchor Blue Holding Corp.: filed for Chapter 11 on January 11, 2011 in Delaware. The company is liquidating. Perry Ellis International, Inc. completed the purchase of all intellectual property assets of Anchor Blue, Inc. for $500,000. The company acquired the Anchor Blue and Miller’s Outpost trademarks, and all other intellectual property holdings associated with Anchor Blue, Inc.

Great Atlantic & Pacific Tea Co.: Filed for Chapter 11 on December 12, 2010. Filed motion on February 16, 2011 to close 32 stores as part of reorganization. Filed motion seeking approval to extend the periods during which the Debtors have the exclusive right to file a Chapter 11 Plan and solicit acceptances thereof until December 31, 2011 and February 29, 2012, respectively. Group of creditors filed a motion seeking appointment of an official committee of direct store delivery and trade creditors. A&P filed a motion on April 13, 2011 seeking Bankruptcy Court approval of bidding procedures to market and sell 25 Superfresh stores in Maryland, Delaware, and the District of Columbia to be completed by mid-June. The Company continues to operate 395 stores.

Rosa's Home Stores: Filed for Chapter 11 bankruptcy on December 9th, 2010.

Boutique Jacob Inc.: Filed for protection under the Companies' Creditors Arrangement Act in the Quebec Superior Court November 18, 2010.

Lacks Stores, Incorporated: Filed Chapter 11 at the U. S. Bankruptcy Court for the Southern District of Texas on November 16, 2010 and is currently liquidating its inventory. The company hired a Realty Co to dispose of its stores and warehouse facilities.

Loehmann's: Filed Chapter 11 in the US Bankruptcy Court at the Southern District of New York on November 15, 2010. Emerged from bankruptcy on March 1, 2011. It secured $45 million in exit financing from Wells Fargo Bank, N.A. and Whippoorwill Associates, Inc. As part of the Plan, the Company received a $25 million capital infusion through a rights offering to its Class A Noteholders that was backstopped by Istithmar World and Whippoorwill Associates, Inc. The restructuring eliminated all $110 million of the Company's long-term bond debt, $14 million in related annual interest, $23 million in other cost reductions, and recapitalized the balance sheet through the exchange of notes for common stock. Loehmann's also announced that CEO Jerald Politzer has chosen to leave the company, replaced by COO and CFO Joe Melvin as Interim CEO.

Blockbuster: Filed Chapter 11 on September 23, 2010. Creditors won approval to investigate the liens of senior noteholders and former board member Carl Icahn on November 23, 2010. Blockbuster filed with the US Bankruptcy Court a motion seeking to extend for the second time the exclusive period that the company can file a Chapter 11 Plan and solicit acceptances thereof through and including August 19, 2011 and October 18, 2011, respectively. Blockbuster requested more time to formulate a Chapter 11 plan following the implementation of the bid procedures and the consummation of its $290 million asset sale to Cobalt Video Holdco LLC (a limited liability company formed by funds managed by Monarch Alternative Capital LP, Owl Creek Asset Management LP, Stonehill Capital Management LLC and Varde Partners, Inc.). The Court scheduled an April 21, 2011 hearing on the matter then subsequently signed a bridge order extending the exclusive period to the date that the Court enters an order determining the motion. Blockbuster sold at auction on April 5, 2011 for about $320 million to Dish Network Corp. The Court approved the deal on April 7, 2011. The Court approved Blockbuster's motion to extend the exclusive period during which the Company can file a Chapter 11 plan and solicit acceptances thereof through and including August 19, 2011 and October 18, 2011. In its motion, the Company told the Court it needed this exclusivity extension '...to provide an opportunity for them to formulate a chapter 11 plan following the implementation of the Bid Procedures and the consummation of the Sale.'

Oriental Trading Company: Filed Chapter 11 on August 25, 2010 in Wilmington, DE. Completed its reorganization efforts and exited from bankruptcy on Feb 14, 2011 with a significantly improved capital structure and strong liquidity, having reduced its debt by nearly 70%.

Gracious Home: Filed Chapter 11 on August 13, 2010 in Manhattan, NY and was sold to American Retail Flagship Fund, LLC, effective December 3, 2010.

Jennifer Convertibles Inc.: Filed Chapter 11 on July 18, 2010 in Manhattan, NY. Emerged from bankruptcy on February 23, 2011.

Controladora Comercial Mexicana, S.A.B. de C.V.: Filed Chapter 15 on July 16, 2010 in the Southern District of New York and a Mexican Judge accepted their insolvency petition. They hope to finishing restructuring by the end of 2010.

Riviera Holdings Corporation: Filed Chapter 11 on July 12, 2010 in Las Vegas, NV. Filed its reorganization plan and emerged from bankruptcy on November 17, 2010.

Rock & Republic: Filed Chapter 11 on April 1, 2010 in New York, NY. It plans to reorganize.

Movie Gallery, Inc.: Filed Chapter 11 in Virginia on February 2, 2010. It liquidated all of its stores.

Station Casino's: Filed Chapter 11 on July 28, 2009 in Las Vegas, Nevada and is reorganizing.

Bashas' Inc.: Filed Chapter 11 on July 12, 2009 in the US Bankruptcy Court in Phoenix, AZ and emerged from bankruptcy on August 28, 2010.

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