October 2nd 2006

In This Issue

Back from the Boundary Waters Canoe Area - Fabulous Trip!

Economic Notes:

This Weeks Leads



Net Sales Tax Distributions – FY 2006

  • State-wide March increases were 14.4%
  • The top gainers include:
    1. Apple Valley +1431.6%
    2. Mona +96.1%
    3. Herriman +64.0%
    4. Saratoga Springs +60.3%
    5. Myton +59.1%
    6. Scipio +50.7%
    7. Cedar Hills +46.8%
  • The “bottom losers” include:
    1. Lyman - 84.8%
    2. Vineyard -38.7%
    3. Cedar Fort -33.3%
    4. Milford -23.0%

Net Sales Tax Distributions – FY 2006

RankCommunity FY 2006 (000)FY05-FY06 % Change
1Salt Lake City$41,5029.0%
2West Valley$18,74612.9%
3Sandy $17,35210.6%
4Orem $17,01312.2%
5Provo $14,85512.9%
6St George$14,30820.8%
7West Jordan$13,53310.6%
8Murray $13,3237.3%
9Ogden $12,7806.4%
10South Salt Lake$12,17013.4%
10South Salt Lake$12,17013.4%
11Layton $11,0437.7%
12Logan $7,4039.1%
13Taylorsville$7,013 8.1%
14Bountiful $5,4139.6%
15Midvale $5,3558.3%
16Draper $5,25718.0%
17Riverdale $4,9408.3%
18American Fork$4,81013.8%
19Cedar City$4,57719.0%
20South Jordan$4,53727.2%
21Park City$4,2679.6%
22Tooele $4,14116.2%
23Vernal $4,10029.6%
24Cottonwood Heights$3,894NA
25Roy$3,734 7.7%

Global Competitiveness – Top 10 2006

Rank 2006CountryRank 2005
9Netherlands 11

Switzerland takes top spot in competitiveness league

The US has been knocked off the top spot in a closely watched annual ranking of competitiveness, falling to sixth place while being overtaken by Switzerland, three Nordic countries and Singapore.

Growing economic imbalances and a relative lack of efficiency and transparency in US public institutions marked the country down in this year’s league table by the World Economic Forum. Also falling fast in the table was France, which declined from 12th spot to 18th, on the back of relatively weak scores for its macroeconomy, its institutions and the efficiency of its markets.

The WEF’s ranking is one of the more significant measurements of countries’ economic potential since it aggregates an extensive number of different indicators to arrive at its overall score.

The ranking had been heavily revised for 2006- 07, the WEF said, incorporating many new indicators of competitiveness and improving its accuracy as a guide to the medium and long-term economic performance of different countries.

But small changes in the position in the league, such as Britain’s decline from ninth to 10th, do not reflect a serious worsening of competitiveness, since the difference in countries ranked close to each other is minor.

They are extremely sensitive to the weight given to different criteria by the Swiss-based think-tank.

Augusto Lopez-Claros, the lead author of the WEF’s competitiveness index, said the rankings were most useful in spotting big changes in countries’ overall scores and identifying trends over time.

Even though Swiss economic performance has been far from stellar in recent years, with some of the lowest growth rates in Europe, the WEF justified the country’s ranking at the top of the table as reflecting “a combination of a world class capacity for innovation and a highly sophisticated business culture”.

Source: The Financial Times Limited 2006

UK Giant Tesco Moves on Former Albertson Stores

When U.K. supermarket operator Tesco PLC announced in February that it would invest $472 million a year to establish a beachhead in the U.S., it tried to allay fears that it would further complicate the Darwinian struggle in the supermarket business. Instead, company officials said, their U.S. efforts would center on Express stores, which average between 2,000 and 3,000 square feet in size.

But when the notoriously secretive company signed its first U.S. lease last week it turned out to be a supermarket site--a 32,500-square-foot former Albertsons in Glassell Park, Calif. And, California brokers say, it is in the market for more.

The Glassell park space is in line with Tesco’s standard supermarket format, which has floor plates greater than 30,000 square feet and offers both groceries and a selection of non-food goods, such as health and beauty products, electronics, clothing, stationary, furniture and seasonal items like barbecue grills. Tesco officials declined to comment on their U.S. strategy, saying that they wanted their customers to be the first to learn about their stores.

“We have two or three clients who are negotiating with them right now and they are very aggressive,” MacLellan says. “I’ve been told that the spaces they are looking at are 15,000 square feet to 30,000 square feet and there are a number of former Albertson’s locations in the market, so I think Tesco is going directly to a lot of those owners.”

Another sign of Tesco’s growing ambitions: The company is building an 88.4-acre warehouse/distribution center at Meridian Business Park on Highway 86 in TK, Calif. that is expected to open by mid-2007.

“This is a highly desirable property; one of the more advantageous things about it is that you do not have a lot of retail availability in that market,” Heslin says. “And the community is ethnically diverse, with middle- to upper-middle income. It’s a very stable and desirable market, with very minimal population growth – less than one percent a year.”

Tesco is the fourth largest retailer in the world and operates more than 2,500 stores in 13 countries, but this is the fist time in its 97-year history that it has attempted to penetrate the U.S. market. CEO Terry Leahy told British papers earlier this year that Tesco did not previously have enough insight into the habits of American consumers to take such a big risk.

According to the London Times, last year, to prepare itself for entry into the U.S., Tesco dispatched 50 senior directors and researchers to live with California families for two weeks and study their eating and shopping habits. The families, recruited by a market research firm, were not aware of their guests’ true identity. The company also tested the market’s waters with a dummy store at a warehouse property in Santa Monica, Calif., allowing more than 200 focus groups to sample its products and provide feedback on what would sell in the U.S.

Source: Retail Traffic


Retail Sales Tax Distributions - 2006

Switzerland kocks US off top spot for competitiveness!

UK Giant Tesco Moves on Former Albertson Stores

  • Back from the Boundary Waters Canoe Area - Fabulous Trip!
  • Economic Notes:
    • Chain Store Sales

    • Chain store sales fell 0.6% in the week ending September 23, its third consecutive decline, according to the ICSC. Year-over-year growth retreated to 4.2%, but it was still only the second time growth topped 4% since June.
    • MBA Mortgage Applications Survey

    • Mortgage demand decreased 4.9% in the week ending September 22. Purchase applications decreased 5.5%, while refinance applications decreased 4.1%.
    • Agricultural Prices

    • The all farm products index of prices received by farmers fell 1.7% in September from last month. The crop index fell 5.6%. This decline was partly offset by a 0.9% increase in the livestock index. Lower prices were received for lettuce, potatoes, hogs and broccoli, while cattle, milk, tomatoes and turkeys fetched higher prices. The index of prices paid by farmers finally exhibited a month-over-month decline in September, falling 0.7% from August, but is 3.5% higher than a year ago. Farmers paid higher prices for feeder cattle, feeder pigs, hay and mixed fertilizers. Lower prices were paid for gasoline, nitrogen fertilizers and feed concentrates.
    • GDP

    • Annualized real GDP growth in the second quarter saw a downward revision, to 2.6%, from the preliminary estimate of 2.9% last month; this was a larger downward revision than expected. The downward revision resulted from a downward revision to inventories, an upward revision to service imports and a downward revision to investment in housing; offsetting this was slightly higher consumer spending on services. Growth is seeing a definite slowing, with housing leading the way. Profits from current production increased $22.7 billion at an annualized rate from the first quarter; profit growth was revised down by more than 50% compared to last month’s estimate.
    • New Home Sales (C25)

    • Sales of new homes posted an unexpected rebound in August, rising by 4.1% from July. This uptick, however, results from Census revising downward the July sales data. At 1.05 million annualized units in August, the pace of sales is about on par with expectations. On a year-ago basis, sales are still down substantially. The months of supply eased back a bit.
    • Existing Home Sales

    • Existing home sales data for August point to further weakening. Sales of existing homes continue to decline with the pace of sales down to 6.30 million units in August, a drop of 0.5%. House-price appreciation is down on a year-ago basis, and the months of inventory is up to 7.5, the highest since April 1993.
    • Personal Income

    • U.S. personal income growth slowed to 1.7% in the second quarter from 2.2% in the first and fourth quarters. Income slowed in all regions of the country except for the Great Lakes region where growth held steady at 1.8%. Earnings growth slowed substantially from 2.7% in the first quarter to 1.7% in the second. Slower construction industry earnings were to blame for the bulk of the slowdown as the cooling housing market is taking its toll on earnings.
    • Oil and Gas Inventories

    • Crude oil inventories inched lower by 0.1 million barrels for the week ending September 22, according to the Energy Information Administration, significantly better than expectations of a 1.7 million barrel drop. Gasoline inventories soared 6.3 million barrels for the week, far above expected, and distillates posted a strong 2.6 million barrel build, slightly above expected. This is another exceptionally bearish report, and will send prices lower this week.
    • Durable Goods (Advance)

    • New orders for durable goods fell 0.5% in August following a downwardly revised 2.7% drop in July. Ex. transportation orders were down 2% and core capital goods orders fell 0.3%. Shipments, unfilled orders and inventories were all up over the month, including core capital goods shipments. The report is much weaker than expected, with orders down throughout most component categories, portending weaker manufacturing activity in the second half of the year.

  • This Weeks Leads
    • Island Carousel
    • Island Carousel, Inc. trades as Island Carousel at 31 locations nationwide.
    • The company, which operates carousel rides in the common areas of malls, occupies spaces of 465 sq.ft. to 980 sq.ft.
    • Plans call for six openings nationwide during the coming 18 months. Typical leases run one to five years.
    • Preferred cotenants include children’s stores.
    • For more information, contact
      • William Christ,
      • Island Carousel, Inc.,
      • 1377 North Collier Boulevard,
      • Marco Island, FL 34145;
      • 239- 389-0945,
      • Fax 239-389-0944;
      • Email: islandcarousel@earthlink.net.
    • Talbots
    • Talbots, a 1,000-unit chain operates locations nationwide, and in Canada and internationally.
    • The stores, selling accessories, clothes and shoes, occupy spaces of 4,000 sq.ft. in freestanding locations, malls, strip centers and downtown areas.
    • Growth opportunities are sought nationwide, and in Canada and internationally.
    • For details, contact:
      • Dick O’Connell
      • Talbots
      • 211 South Ridge Street, Suite 100
      • Rye Brook, NY 10573
      • 914-934-8877, Fax 914-934-9136
      • Website: www.talbots.com
    • Merle Norman Cosmetic Studios
    • Merle Norman Cosmetics, Inc. trades as Merle Norman Cosmetic Studios.
    • The 2,000-unit chain operates locations nationwide and in Canada.
    • The cosmetics stores occupy spaces of 400 sq.ft. to 1,000 sq.ft. in freestanding locations, malls and mixed-use, power, specialty and strip centers.
    • Plans call for 140 openings throughout the existing markets during the coming 18 months. Typical leases run five years with options.
    • A vanilla shell is required. Preferred cotenants include department stores, women’s fashion stores and hair salons.
    • Preferred demographics include a population of 20,000 within three miles earning $40,000 as the average household income.
    • Competition is cited as Ulta, Mac, Sephora and department stores. The company is franchising.
    • For details, contact:
      • Alice Okamoto
      • Merle Norman Cosmetics
      • 9130 Bellanca Avenue
      • Los Angeles, CA 90045
      • 310-337-2321, Fax 310-337-2370
      • Email: aokamoto@merlnorman.com
      • Web site: www.merlenorman.com
    • Origins Natural Resources
    • Estee Lauder trades as Origins Natural Resources.
    • The 120-unit chain operates locations nationwide.
    • The cosmetics stores occupy spaces of 600 sq.ft. to 1,100 sq.ft. in freestanding locations, malls and lifestyle and power centers.
    • Plans call for two to three openings nationwide during the coming 18 months. Typical leases run 10 years.
    • For details, contact:
      • Bob Hayes
      • Estee Lauder
      • 65 Bleeker Street
      • New York, NY 10012
      • 646-602-7550, Fax 646-602-7511
      • Web site: www.origins.com
    • Family Entertainment Centers
    • Family Entertainment Centers, Inc. trades as Family Entertainment Centers at one location in KY.
    • The entertainment center, which offers family and league bowling, birthday parties, food, billiards and arcade games, occupies spaces of 41,250 sq.ft. in malls and entertainment and strip centers.
    • Plans call for six openings throughout KY, NC, SC, TN and VA during the coming 18 months. Typical leases run 10 years. Specific improvements are required.
    • Preferred demographics include a population of 100,000 within 10 miles earning $55,000 as the average household income.
    • Preferred cotenants include Target, Wal*Mart, movie theaters and office buildings.
    • For more information, contact:
      • David Beauregard
      • Family Entertainment Centers, Inc.
      • 4925 Opal Ridge Land, Suite 103
      • Indianapolis, IN 46237
      • 317-783-1357, Fax 317-783-1145
      • Email: davebeauregard1@earthlink.net
      • Web site: www.beaumargroup.com.
    • H&M
    • Hennes & Mauritz LLP trades as H&M at 70 locations throughout CT, IL, MA, MD, NH, NJ, NY, PA, RI, VA and Washington, DC.
    • The apparel stores, which offer a broad selection of clothing for women, men, teens and children, occupy spaces of 7,000 sq.ft. to 30,000 sq.ft. in malls and urban/downtown areas.
    • Growth opportunities are sought throughout Los Angeles and San Francisco, CA, Chicago, IL, Boston, MA, MD, NY, Cincinnati, Columbus and Cleveland, OH, Philadelphia, PA, VA and Washington, DC during the coming 18 months.
    • For more information, contact:
      • Michael Oliverio
      • Hennes & Mauritz LLP
      • 47 West 34th Street, Third Floor
      • New York, NY 10001
      • 212-564-9922, Fax 201-325-2104
      • Web site: www.hm.com.
    • Cusp
    • The Neiman Marcus Group is making a strong attempt to capture more business from existing young shoppers with the launching of a new concept called Cusp, a smaller store format catering to a youthful clientele.
    • Four Cusp stores are scheduled to open within the next nine months, the first being a 9,500 sq.ft. location at Tyson’s Corner in McLean, VA. The most recent opening is an 8,000 sq.ft. unit in Century City in Los Angeles, CA. Scheduled to make its February 2007 debut is an 11,000 sq.ft. store in Georgetown, Washington, DC, while the fourth location has not yet been determined.
    • The innovative stores will open in a specialty mall, an outdoor fashion mall and an outdoor streetscape. The company sees a greater potential to open Cusp in more markets than the company’s 37 full-line department stores. The new concept has been in the works for two years.
    • Details for the Tyson’s Corner store include custom-cast metal branches for the door pulls, along with ottomans covered in vintage automotive upholstery from the Seventies and a wall of petrified wood behind the cash register. To make the ambience even more inviting, every dressing room will have its own theme. Neiman Marcus department stores offer high fashion, high- quality women's and men's apparel, accessories, fine jewelry, china, crystal and silver.
    • The Neiman Marcus Group operates 35 Neiman Marcus stores throughout approximately 20 states and Washington, DC, as well as two Bergdorf Goodman stores in New York, NY and 17 Last-Call clearance centers that sell marked-down items. Texas Pacific Group and Warburg Pincus acquired Neiman Marcus last year in a $5.1 billion public-to-private buyout.
    • For more information regarding Cusp, contact
      • Ginger Reeder,
      • The Neiman Marcus Group,
      • 5950 Colwell Boulevard, Irving, TX 75039;
      • 972- 969-3213;
      • ginger_reeder@neimanmarcus.com;
      • Web site: www.neimanmarcusgroup.com.

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