GLG News by Mr. Kenneth Leonard, Principal
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
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How To Increase Your Stock Price And Ruin Your Company
November 20, 2009
Sears shelling out---for own stock | www.chicagotribune.com
Mr. Lampert, for the fifth straight year, has again gained the record for spending far less on his store's improvement and maintenance needs than any of his 13 major competitors, while at the same time, spending far more on buying back his own company stockthan any other retailer.
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Is This Mr. Lampert's 8th or 9th Life?
November 19, 2009
Sears Narrows Loss, Beats Estimates but Stock Falls | www.chicagobusiness.com
A flurry of articles have come out in recent days seemingly to diffuse the continuing failures of Mr. Lampert's prize holding. This article deals with the "surprise" caused by the losses being slightly less than expected. The others deal with the various new ventures Mr. Lampert has announced in his continuing efforts to slow SHLD's decline into oblivion.
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So The Sky Isn't Falling Quite Yet
October 15, 2009
Store Closings Likely To Peak in First Half of 2010 | www.printthis.clickability.com
Year-to-date , the U.S. retail industry saw 3.408 store closings, according to the ICSC. The number of closings is far short of the 10,000 to 12,000 closings many experts projected in late 2008. However this article indicates that 2010 may yet turn out to be even worse.
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If Borders Can't Make It Here, They Can't Make It Anywhere
October 14, 2009
Borders Renews Lease At 830 North Michigan Ave. | www.chicagorealestatedaily.com
Borders flagship Chicago store has long been rumored to be in trouble and not likely to exercise its' renewal option. It now has renewed but only for one year.
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The Jury Is Still Out On General Growth
October 8, 2009
General Growth's Cap RatesEstimates Are Getting Interesting | seekingalpha.com
As a result of a Goldman Sachs presentation in late September which featured a close comparison to Simon Properties implies cap rate of 7%, the author is stronglyugly suggesting that GGP is starting to look like a bargain.
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A Blight On the Taubman REIT's Glamorous Image
September 30, 2009
Taubman May Turn Over Atlantic City Mall To Lender | blog.retailtrafficmag.com
Taubman Co. is generally considered to be among the "best and brightest" of Mall REITS. If they are acknowledging serious problems with some of their properties, what must this portend for other REITs that have been assembled with far less dominant locations and/or retailers?
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September 24, 2009
Savvy Retailers Snatch Leases Out Of Other Chains Bankruptcies | www.printthis.clickability.com
This article presents a common industry practice as being newsworthy and in the process, gets it all wrong. The practice of retailers taking over other failed retailer's locations has been going on since time immemorial. I guess it was a slow news day.
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September 19, 2009
Buyout Fund Contemplates a REIT Turn | online.wsj.com
Mr. Baker, CEO of NRDC, (the company who showed such bargain hunting skills when they paid top dollar for the now defunct Linen'n Things and the rapidly declining Lord & TTaylor) plans to start a new REIT. Does anyone think he can really do a better job of buying distressed shopping centers than the pros like The Weingarten Co. or DDR?
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September 18, 2009
Blockbuster To Shutter 40% Of Stores | online.wsj.com
Only two days ago I reported that Blockbuster announced it was closing 1000 stores. It has now revised that number to 1500 or 40% of their total. What does this sudden increase say about their chances for survival?
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Is Blockbuster Going the Way of Hollywood Video?
September 16, 2009
Blockbuster Closing Up to 960 Stores by End of 2010 | blog.retailtrafficmag.com
Blockbuster just announced an increase in store closing from 685, ( the number announced on September 15th, 2009 ) to 960. While this is not a fatal blow, it certainly is a leading indicator of some serious problems that the GLG reader should be aware of.
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September 10, 2009
New frugality is the new normal, by necessity | www.wtop.com
Bob Kanter's careful analysis of this article did not mention the huge backlog of previously announced department store closings which will undoubtedly have a "domino" effect on the FFO of all major mall REITs.
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August 25, 2009
Washed Out | online.barrons.com
Mr. Laing, the Barron's reporter who has previously been a major Eddie Lampert fan, (he estimated the "breakup value" of SHLD @ $300.00 per share in 10/22/07) has finally had the courage to provide a detailed account of why King Eddie has no clothes. Although he is correct in most respects, in the areas of real estate collateral values which is my area of expertise, he continues to be in denial.
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Supervalu May Not Be Such A Super Value
July 9, 2009
Supervalu Says President,COO & EVP to Retire | www.nytimes.com
Until recently Supervalu has been a very good grocery wholesaler. All grocery wholesalers have been struggling to survive the onslaught from Wal Mart Superstores, Target Superstores, Costco, Sam's Club, etc. In a bold move several years ago Supervalu decided to transform itself into a retail grocery chain through a series of expensive acquisitions. It now appears that that strategy is unraveling.
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Distortion Wrapped in Misrepresentation Encased in a Lazy Reporter's Bad Writing
July 9, 2009
As Owner Struggles, Landmark Mall Languishes | www.washingtonpost.com
I could not help but bring this article to the attention of the GLG News readers because it is an excellent example of the silliness that surrounds every sick or dying mall. If the reader strips away the inaccuracies this article is not newsworthy or even worth reading. More importantly, it fosters and increases the myth of "the death of the mall".
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June 24, 2009
National Retailer Risk Tracking | blog.retailtrafficmag.com
I just wanted to share this work with my GLG News readers. Although it is not perfect, my friends at Madison Marquette went to a lot of trouble to gather all the recent public comments about many of the leading mall retailers and present a list of those they think are most at risk of going under.
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An ugly secret the REITs don't want you to know about
June 12, 2009
Retail landlords need a "reality check" | www.reuters.com
This is the first article I have seen by an industry insider, that blows the whistle on the pending crisis in REIT profits. The implications are significant in that the reporter only talks about the smaller and/or independent retailers that are struggling to survive in shopping centers across America. The reporter pains a bleak picture of what is happening on a daily basis and what is likely to happen by next January after a deluge of retailers call it quits after lasting through the Christmas season and then closing their doors. If the reporter were to investigate the even more dangerous pending crisis brought on by the rapid departure of anchors, REIT stocks would be revealed to all be in serious danger.
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June 4, 2009
Shopping Centers Anchored by Groceries Hold Drawing Power | online.wsj.com
This package of three "urban" strip centers is rather unique in that these centers are very old but successful and well insulated from nearby competition from the Target and Wal Mart super stores. However they can still provide a good indication of value of high quality grocery anchored strips to guide the GLG reader trying to stay current on the market value of strip center REIT's portfolios.
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A Perfect "Comparable" for Determining Value
June 3, 2009
Filene's Warns of Store Closings, Job Losses | www.chicagorealestatedaily.com
Since I was responsible for the selection of locations and the negotiation of leases for the first five Filene's Basement stores, I have naturally followed the fortunes of this troubled retailer very closely. Therefore I feel qualified to opine on the underlying message contained in this recent announcement about the future value of Filene's real estate portfolio. This value is of critical importance to the creditors and bankruptcy judge to help determine the total asset value of the company. I think I can safely assume that because of the previously announced pending sale of the two downtown Chicago stores, a substantial value has been allocated to the leasehold value of their other leased stores. Now that the prospective buyers have walked away from this sale, whatever value has been given to the rest of their leases is in serious doubt and the intelligent investor in Filene's bonds or creditor's paper, needs to immediately downgrade the prevailing asset value numbers.
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I'll Bet Mr. Welsh Would Not Have Approved
June 2, 2009
G.E. Capital Makes Big Loan to Sears | www.chicagobusiness.com
Although $400 million is rather small in the scheme of things, the last time GE got involved with a major retailer, it proved to be one of the most costly mistakes of Mr. Welsh's career. When Mr. Welsh approved GE's purchase of Montgomery Ward there was a move afoot in financial circles to diversify and a belief that GE was so smart and so rich that they could easily fix the ailing retailer. It turned out that after a few years and several cash infusions, GE and Mr. Welsh quietly shut down the entire company at a reported loss of approximately $3 billion.
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June 1, 2009
Sears' MyGofer Lies Low For Now | www.chicagotribune.com
Having spent several hours analyzing Mr. Lampert's newest attempt to demonstrate his retailing acumen in Joliet, Illinois, I can safely say that the Tribune's retail analyst very negative review was far too complementary. The Trib and TheStreet.com characterized Mr. Lampert's feeble effort to "revolutionize retailing" as a poorly conceived attempt to marry Amazon.com with Dairy Barn. TheStreet.com also awarded Eddie's new store concept with its' "Five Dumbest Things On Wall Street" award. In my humble opinion I think both the Trib and TheStreet were being far too complementary. Although I realize that Mr. Lampert may not have familiarized himself with very many of the prior bad retailing ideas in history, but even the barest minimum of research would have revealed the terrible flaws that caused the demise of such well conceived and well accepted earlier "catalog showroom concepts" as Service Merchandize, Best Products, Ellman's, Sterling Jewelry or Brendel's!
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