Out And About

Between the hours of 2 pm and 4 pm on any given Saturday or Sunday, you can find 11.6 percent of Americans out shopping, according to data compiled by Simmons Market Research Bureau. The second highest amount of traffic occurs during the weekend lunch rush from noon to 2 pm More shoppers are likely to stay out late shopping on week-nights, though, with 2.3 percent making purchases between 8 p.m. and 10 p.m. Monday through Thursday.

Percent of Americans who are out shopping during indicated times of the day Percent of Americans who are out shopping during indicated times of the day
Weekends Weekdays
6- 8 am > 0.5% 0.5%
8-10 am 2.9% 1.6%
10- Noon 7.7% 5.2%
Noon- 2pm 11.2% 6.2%
2- 4pm 11.6% 6.1%
4-6pm 7.3% 4.7%
6- 8pm 4.6% 4.1%
8- 10pm 1.9% 2.3%
10- Midnight > 0.5% 0.5%
Midnight -2am > 0.5% > 0.5%
2- 4am > 0.5% > 0.5%
4- 6am > 0.5% > 0.5%

Too Much Inventory

Retailers run into trouble when they order more merchandise than they can sell. Inventories-to-sales ratios, or ISRs, are important metrics in gauging a retailer's future success. In the first quarter of 2003, retailers' aggressive ordering on top of weak sales caused the A.G. Edwards ISR monitor to rise 1.5 percent, the largest increase since first quarter 1995. The ISR ratio is calculated by dividing a retailer's average previous four quarters' inventories by its previous four quarters' sales. The higher a retailer's ISR, the more the discrepency between what it has on its shelves and what it is selling. Home improvement is the merchandise category with the highest increase, while teen retailer Too Inc. has the highest ISR increase among publicly traded retail companies.

Private Pies

Public REITs have plenty of ripe acquisition prospects, though not in the glamorous megamall sector. According to McDonald Investments Inc. research, the majority of properties still in private hands are less than 500,000 square feet.

Squeezing Each Square Foot

Williams-Sonoma leads the pack when it comes to profitability in specialty housewares. The upscale homegoods retailer had the highest profit per square foot of selling space in 2002 for its category, and is expected by researchers at SG Cowen to maintain its healthy lead over competitors through 2004.

Gross Profit Per Selling Square Foot
Retailer 2001 2002 2003E 2004E
Bed Bath & Beyond $89.70 $95 $96.60 $101.60
Cost Plus $88.20 $92.70 $94.40 $92.90
Linens N Things $88.70 $89 $87.40 $89.40
Pier 1 Imports $99.20 $122 $116.20 $101.00
Williams-Sonoma $249.60 $263.40 $259.90 $268.60
Source: Company reports & SG Cowen

Rising Vacancies Ahead

As three consecutive years of slow sales sets in, retailer's lease renewals will inevitably fall off. Some could even declare bankruptcy and announce mass store closings. The latest data from REIS Online indicates that vacancy levels will creep toward the sky in coming years, even approaching the record levels of the early 1990s.