Retail Callouts (4/6): KSS, M, JCP, JWN, DDS, SHLD

Takeaway: 1Q15 Real Estate Summary: Strip Center demand lags Regional Malls, minimal real estate optionality for KSS.

EVENTS TO WATCH

Retail Callouts (4/6): KSS, M, JCP, JWN, DDS, SHLD - 4 6 chart2

COMPANY HIGHLIGHTS

KSS, Department Stores - Strip Center and Regional Mall 1Q15 Vacancy Rates

(http://www.wsj.com/articles/retail-landlords-notch-solid-quarter-1428033661?tesla=y)

Takeaway: Here's a quick summary of what went down on the real estate front in 1Q15. Regional mall vacancies continue to outperform strip/community centers in the US with vacancy rates 220bps below the 7,000+ strip centers which sits at 10.1%. Only marginally off the 11% recession peaks. While rents at regional malls increased 1.8% in 1Q (driven in large part by 'A' properties) while stripe center occupancy rates creeped up by just 0.5%. Those are important data points given the questions we've fielded on KSS over the past few months in regards to the company's real estate optionality. 

KSS operates just 7% of its stores in regional malls, the rest are split between strip centers (67%) and freestanding locations (26%). Besides the fact that the company owns just 36% of its properties outright, it has practically no exposure to the space's beach front property -- the 300 or so 'A' malls in the country. Strip center space is a dime a dozen, though construction has stalled out following the recession there is little demand to fill the vacant space. Plus negative sq. ft. events like the Office Depot/Max/Staples will continue to weigh on this space. Add on the fact that we are massively overstored in the US today, we average 46. sq. ft./capita, compared to #2 on the list the UK at 9 sq. ft./capita. That leaves KSS with very little ability to monetize its real estate assets.

Retail Callouts (4/6): KSS, M, JCP, JWN, DDS, SHLD - 4 6 chart1

OTHER NEWS

Party City files to raise up to $427.7 million in an IPO

(http://www.marketwatch.com/story/party-city-files-to-raise-up-to-4277-million-in-an-ipo-2015-04-06)

BLKIA - Belk confirms it is exploring strategic alternatives, hires Goldman Sachs

(http://www.chainstoreage.com/article/belk-confirms-it-exploring-strategic-alternatives-hires-goldman-sachs)

Changing of the guard at RadioShack; former Dell exec to head chain

(http://www.chainstoreage.com/article/changing-guard-radioshack-former-dell-exec-head-chain)

Saks chief steps down after 15 months

(http://www.retailingtoday.com/article/saks-chief-steps-down-after-15-months)

AMZN - Amazon.com expands Prime Now to Atlanta

(http://www.retailingtoday.com/article/amazoncom-expands-prime-now-atlanta>

TGT - Target, Lilly Pulitzer Collaboration Gets App

(http://wwd.com/retail-news/people/target-lilly-pulitzer-collaboration-gets-app-10107564/)

Everything to Know About Primark

(http://www.racked.com/2015/4/1/8321127/primark-us-openings)

Alibaba eyeing acquisition of Indian e-commerce firms 

(http://economictimes.indiatimes.com/industry/services/retail/alibaba-eyeing-acquisition-of-indian-e-commerce-firms/articleshow/46812243.cms)