Expect to see improvements for retailers and restaurant operators next year, but don’t expect them to come easy.
Orange County taxable sales are expected to grow 5.4% next year, according to Chapman University’s A. Gary Anderson Center for Economic Research.
Chapman’s report warned of potential “headwinds” from possible tax increases and cuts in federal spending.
Others also take a cautious view.
“The outlook for apparel and business in general for 2013 is somewhat uncertain,” said Jess Meyers, project manager at Newport Beach-based Lyndon Group. “The overall economy is still in the process of working out of the great recession, and there are many unresolved questions with respect to the impact of the looming fiscal cliff.”
Meyers said that many of his clients project only modest revenue gains, and he foresees conservative outlooks from companies in 2013.
Anaheim-based Pacific Sunwear of California Inc. and Foothill Ranch-based Wet Seal Inc. bear watching, as the two retailers continue to press on with turnarounds now several years in the making.
Pacific Sunwear, which outperformed expectations in its most recent quarter, sent its shares plunging last month with disappointing financial guidance for the January quarter.
Wet Seal has narrowed its declines in monthly same-store sales of late by reversing course on a turnaround strategy to a focus again on fast-fashion. It’s conducting a search for a new chief executive following the exit of Susan McGalla.
The prognosis for restaurants isn’t too far off from expectations for retail generally in 2013.
“We expect the market to continue to improve but at a very slow pace,” said Darren Tristano, executive vice president at Chicago-based industry research and consulting company Technomic Inc.
Fast-food and fast-casual chains, which include operators such as Chipotle Mexican Grill and Panera Bread, are expected to continue to see growth next year.
The better-burger category—which includes Habit Restaurants LLC and In-N-Out Burgers Inc., both based in Irvine—should continue to see new restaurant openings and more competition from smaller competitors. But the industry segment is expected to begin to show signs of saturation.
PERSON TO WATCH: PAUL NAUDE
Paul Naude turned heads when he stepped aside last month as Australia-based Billabong International Ltd.’s Americas President and board member to explore a possible purchase of the company.
Now it’s time to see if the Irvine-based surf industry veteran can cobble together the financing needed to make an offer on the company he joined 14 years ago.
This year has been marked with a number of changes for the action sports apparel and retail company, which removed its chief executive, sold off a portion of one of its brands and saw two buyout offers for the company that were later pulled.
Naude is largely credited with helping rebuild the Billabong brand when he joined the company in 1998, following the loss of its U.S. licensee and through later brand and retail acquisitions.
Speculation has Naude talking to New York-based Trilantic Capital Partners LLC, which bought a 48.5% stake in Billabong’s Encinitas-based watch and accessories company Nixon Inc. this year. And some say a Naude proposal for the company could include Billabong founder and major shareholder Gordon Merchant, who has a 14.5% stake in the company.
—Kari Hamanaka
COMPANY TO WATCH: MIMI’S CAFE
There was speculation for several months that Mimi’s Cafe parent Bob Evans Farms Inc. was exploring a sale of the French-inspired casual dining chain
But it wasn’t until last month the Columbus, Ohio-based restaurant operator confirmed it is looking into a possible sale of the struggling Irvine chain, which hasn’t seen annual same-store sales growth since 2007.
“It makes sense for both Mimi’s and Bob Evans to part ways and creates an opportunity for a brand like Mimi’s, depending on who invests in that business, to create a more singular focus on the growth and success of that brand,” said Darren Tristano, executive vice president at Technomic Inc. “And at this point, I think that might be what Mimi’s needs.”
Industry watchers are now tuned in to see whether it’s private equity or another restaurant operator that might step up to acquire the chain.
Improvement in the business may be farther off for Mimi’s. “It will likely be 2014 before anything significant happens in terms of change of direction or more aggressive growth,” Tristano said.
—Kari Hamanaka
