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Housing To Temper Retail Growth, Which Could Lag Nation

A weaker housing market is expected to bite into national retail sales in 2007. And, for the first time in years, Orange County could lag the nation.

Locally, retail sales are predicted to rise 4.4%, down from estimated growth of 6.3% in 2006, according to Chapman University’s 2007 economic forecast.

National retail sales are expected to grow 5% this year, compared to 6% in 2006.

For the past couple of years, mortgage refinancing helped fuel sales. Consumers cashed out money from their homes to buy pricey furniture, appliances and autos.

The housing slowdown is expected to lead to weaker job growth, particularly in construction and finance, and home prices that depreciate faster than the national average of 2.2%, according to Chapman.

Still, “The sky isn’t falling,” Chapman said. If a recession does come about, it won’t be anything like 2001, according to the university.

On the upside, the drop in store sales isn’t predicted to be as bad at restaurants, clothing stores or malls.

Furniture, appliances and building materials are seen taking the biggest hits.

Mall operators still expect to outpace the nation.

“We consistently outperform national sales projections,” said Nina Robinson, vice president of marketing for The Irvine Company’s retail properties, which includes Fashion Island and Irvine Spectrum Center. “We anticipate that to continue for” 2007.

South Coast Plaza also expects to outperform 2006, according to Debra Gunn Downing, executive director of marketing for the shopping center.

Major store openings will be Bloomingdale’s and H & M; (opening two stores next year).

The center expects to open 20 to 30 stores altogether, she said.

The county’s strong suit,the luxury sector,should continue to grow.

“Luxury remains strong in our portfolio,” the Irvine Co.’s Robinson said.

Jeans will continue to be big sellers this year, Robinson said. So should trendy, luxury fabrics such as velvet, cashmere, lizard skin and metallics.

Handbags,”the bigger the better”,and more showy with ornaments also should be popular. n


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COMPANY TO WATCH: PACIFIC SUNWEAR OF CALIFORNIA INC.

The hunt will be on for Anaheim-based Pacific Sunwear of California Inc.

The teen clothing retailer, which runs stores selling surfwear and urban styles, has been looking for a permanent chief executive since October and is expected to find someone in 2007.

Former boss Seth Johnson left the company in October amid poor results. Interim chief executive Sally Frame Kasaks took the reins.

Kasaks, a Pacific Sunwear director, has been overhauling stores, talking to clothing makers about what’s hot and not and trying to reverse fashion misses that plagued the retailer for most of the year.

Same-store sales were down 3.8% in November after falling 6.7% in the third quarter.

Expect more changes to come, particularly in sneakers, girls clothing and accessories at the company’s dominant PacSun surfwear chain.

A new shoe merchandiser plans to bring in different styles, particularly slip-on canvas sneakers, for the holidays and spring.

The company toned down expansion plans for next year.

It has 1,200 stores, the bulk of which are PacSun followed by d.e.m.o., which sells hip-hop and urban-style clothes. The company also has nine One Thousand Steps stores, a new shoe and accessories seller still in the testing phase.

The retailer has been getting pressure from competitors, such as Abercrombie & Fitch Co.’s Hollister chain, which do a better job at merchandising and luring shoppers, particularly girls.

This fall, Pacific Sunwear tapped a new leader, Brad Cunningham, for its struggling girls clothing division. Cunningham is a former general merchandise manager for trendy young women’s clothing retailer Charlotte Russe Holding Inc. of San Diego.

He’s begun to revamp the division but the company said most changes won’t play out until next year.

Girls clothing accounted for about 30% of the company’s sales in 2005. The company said it hopes to grow it to 50% alongside men’s.

,Jennifer Bellantonio


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MALL TO WATCH: SOUTH COAST PLAZA

South Coast Plaza is on the move.

The shopping center is in the midst of a makeover in time for its 40th anniversary celebration in 2007.

The center’s $30 million interior and exterior makeover will include more seating, automatic doors, a glass elevator, new lights and landscaping. A large concierge also is being built. There, shoppers can make theater and dinner reservations.

South Coast Plaza has long been a mall that developers want to emulate. John Bucksbaum, a developer and chair of the International Council of Shopping Centers, recently said that his company’s new mall in Massachusetts will “become the South Coast Plaza of the New England region.”

,Sherri Cruz

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