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Retail Watch: Target To Open 21 New Stores in 2011

Also This Week: BJ's Going Down but Not Out in Atlanta, South Florida and Charlotte; Tasty Baking's Liquidity Drying Up; Landlord Defers Rent for One Month; CBL To Take Loss on Sale of Three Centers; Saks Closing in Denver; hhgregg Looks To Open Up to 45 Stores in Three Regions; Five Below Heats Up in Chicagoland; and Sunoco Lands Another Highway Retail Assignment
January 11, 2011
Target plans to open 21 stores this year in 12 states, including five stores in California, a third store in Hawaii and a SuperTarget in Minnesota.

Target stores will open in the following communities in 2011:

March 6
Oakland-Emeryville, CA
Lakewood, CO
Woodbury, MN
Madison, WI
Newport, KY
Marlborough, MA

July 24
Hilo, HI
San Luis Obispo, CA
Oxnard, CA
Chandler, AZ
Moore, OK
Kenner, LA
Swansea, MA
Hanover, Pa.
Pittsburgh, PA

Oct. 9
San Clemente, CA
Dublin, CA
Blue Ash, OH
Gastonia, NC
Morrisville, NC
Warwick Township, PA

At about 135,000 square feet, the stores will offer basic fresh produce, fresh packaged meat and baked goods, and employ 100 to 250 team members.

The new SuperTarget, opening in Woodbury, MN, will feature a full-line, full-service supermarket, including a bakery and deli and certified organic produce. At about 174,000 square feet, it will also feature all the amenities of a general merchandise store and employ 200 to 300 team members.

BJ's Going Down but Not Out in Atlanta, South Florida and Charlotte

BJ's Wholesale Club Inc. plans to close five underperforming clubs (three in the Atlanta market, one in Sunrise, FL, and one in Charlotte, NC,) by the end of the month.

"Our management team has been working for several months on a strategic plan to optimize our performance and build for the future, thereby enhancing shareholder value," said Laura J. Sen, CEO of BJ's Wholesale Club. "The five clubs to be closed have historically underperformed and, after careful consideration, we concluded that improvement of their operating results was unlikely. We remain committed to the Atlanta, Charlotte and South Florida markets and will look to expand in those markets if compelling opportunities present themselves."

The company anticipates that pre-tax expenses associated with the club closures will be $44 to $46 million, consisting of $43 million of lease termination and facility closure related costs, and $2 million in severance costs.

Tasty Baking's Liquidity Drying Up; Landlord Defers Rent for One Month

Tasty Baking Co. in Philadelphia reported that preliminary financial data available for its fourth quarter ended Dec. 25, 2010, indicates that as a result of certain production difficulties during the optimization of its new Philadelphia bakery the company did not achieve the expected operational cash savings from this bakery during the fourth quarter.

Further, due to the lower than expected cost savings and other factors, including the impact of the recent bankruptcy filing by The Great Atlantic & Pacific Tea Company Inc. (A&P) and the sharp rise in commodity costs, the company is currently experiencing extremely tight liquidity.

"As of Nov. 1, 2010, our expectation was that a run rate of $13 million in annualized pre-tax cash savings, net of facility leases but before debt service, would be achieved by the end of the fourth quarter of 2010," said Charles P. Pizzi, president and CEO of the snack food company. "Due to unanticipated operational challenges, the run-rate savings at the end of the fourth quarter of 2010 is now expected to be $10 million."

In response to these circumstances, the company is actively pursuing two parallel processes.

First, the company has entered into discussions with its bank group led by Citizens Bank to explore various alternatives to address its current liquidity needs, including increasing the amount of funds available under the company's bank line of credit, as well as addressing the current and future covenant requirements under the company's credit agreement.

While discussions are ongoing, the bank group has agreed to defer until the end of this week all principal payments and credit facility reductions. In addition, the lenders for the company's loans from the PIDC Local Development Corp. and the Machinery and Equipment Loan Fund of the Department of Community and Economic Development of Pennsylvania, along with the landlords for the company's leases at the new bakery and its office headquarters in Philadelphia, have also agreed to defer until Jan. 31, 2011, certain payments due under their loans and leases.

Second, the company has retained Janney Montgomery Scott LLC as its financial advisor to assist the company in its evaluation of various possible financial and strategic options including refinancing the company's long-term debt due in September 2012, raising additional capital, a potential combination with another company as part of the consolidation occurring in the baked goods industry or a potential sale of the company.

At this time, there can be no assurance that the bank group will increase the line of credit or make any changes to current or future covenant requirements or that any transactions will occur or, if undertaken, their terms or timing.

During the process, the company will continue to operate its two bakeries and produce, distribute and sell Tastykake products to its customers and consumers.

"While this has been a challenging period for us operationally, we remain focused on growing the business," Pizzi said. "To that end we continue to partner with new grocery and convenience store customers within our core markets, increase penetration with key customers, and launch new products into the marketplace. Finally, despite the challenges we have faced, we have continued to outpace the category and grow our overall market share."

CBL To Take Loss on Sale of Three Centers

CBL & Associates Properties Inc. sold its 112,038-square foot Milford Marketplace in Milford, CT, its 207,420-square-foot Lakeview Pointe in Stillwater, OK, and conveyed its ownership interest in Phase I of 401,509-square-foot Settlers Ridge in Pittsburgh, PA. Total consideration received by CBL was $132.8 million.

The company expects to record losses on the sales in the range of $12 million to $13 million.

CBL retired $90.7 million of related property specific construction loans with the remaining cash proceeds of $42.1 million used to reduce outstanding balances on the company's lines of credit.

"These transactions were executed at favorable cap rates averaging in the 6.5% to 7% range and are consistent with our priority of improving our balance sheet by reducing debt," said John N. Foy, vice-chairman and CFO. "We are continuing to explore opportunities to generate additional liquidity through dispositions of non-core properties and joint ventures."

As part of that, CBL continues to negotiate a transaction related to its 138,673-square-foot Oak Hollow Mall in High Point, NC. At the successful closing of the transaction, the company anticipates recording a gain on the extinguishment of debt; however, the timing is uncertain.

Saks Closing in Denver

Saks Inc. plans to close its 87,000-square-foot Saks Fifth Avenue store in the Cherry Creek Mall in Denver, CO, on March 19.

With the closing of the Denver store, the company will have closed seven Saks Fifth Avenue stores since July 2010. The company closed its Saks Fifth Avenue stores in Mission Viejo and San Diego, CA; Southampton, NY; Portland, OR; Charleston, SC; and Plano, TX, in 2010.

"We routinely assess the productivity, profitability, and potential for each store in our portfolio and may conclude a closing is appropriate from time to time," said Steve Sadove, chairman and CEO of Saks. "Our strategy is to deploy our resources in our most productive stores and to close underperforming stores, when feasible."

Approximately 100 associates are employed in the Denver Saks Fifth Avenue store.

Saks now operates 47 Saks Fifth Avenue stores, 57 Saks Fifth Avenue OFF 5TH stores, and

hhgregg Looks To Open Up to 45 Stores in Three Regions

Indianapolis-based appliance and electronics retailer, hhgregg Inc. continues to develop its pipeline for new stores for fiscal year 2012.

The company expects to open between 35 and 45 new stores in fiscal year 2012. The majority of these openings are expected to be in the following markets: Chicago, IL; Miami, FL; and Western Pennsylvania, including Pittsburgh and in the Boardman area of Youngstown OH.

"We continue to be pleased with our new store performance despite challenging economy and current industry headwinds," said Dennis May, president and CEO of hhgregg. "Our new store productivity remains strong and we continue to identify and secure exciting new locations which continue to move us another step closer towards our goal of becoming a national retailer."

Five Below Heats Up in Chicagoland

Five Below, a Philadelphia-based retailer of extreme-value merchandise for teens and pre-teens, plans to expand into Chicago with the signing of 12 store leases. The new stores, which are planned to open in spring 2011, are the first of up to 20 new stores that will open in the Chicago market this year.

Over the next three to five years, Five Below anticipates expanding its foothold in Chicagoland and increasing the number of stores in the region to as many as 60 locations.

"Chicago is the gateway to the Midwest as Five Below continues its expansion," said Tom Vellios, CEO and co-founder of Five Below. "As one of the largest markets in the nation, it holds huge potential for us. We're excited to bring our offering of brand-name, trend-right merchandise at the affordable $1 to $5 price point to teens, pre-teens, and shoppers of all ages in the region."

The new stores are in:
Bloomingdale Court, Bloomingdale
Bradley Commons, Bradley
The Brickyard, Chicago
Bohl Farm, Crystal Lake
Countryside Plaza, Countryside
Fabyan Crossing, Geneva
Forest Plaza, Rockford
Hawthorn Hills Square, Vernon Hills
Joliet Commons, Joliet
Orland Towne Center, Orland Hills
Woodfield Village Green, Schaumburg and
Merrillville Plaza, Merrillville, IN

Five Below was attracted to these shopping centers for their high-traffic volume, strong co-tenants, and presence within value-minded communities. The new stores average 8,000 square feet in size.

"As we've grown, we've found that shoppers aren't the only ones looking for us to expand our presence into new regions," says David Schlessinger, co-founder and executive chairman. "Landlords are eager for us to enter their centers as well, recognizing that we have a highly developed formula for driving traffic from a large and loyal customer base, particularly among the pre-teen, teen, and family demographics."

With these new stores, Five Below will operate in 15 states from New Hampshire to North Carolina along the East Coast and now in the Midwest. The company plans to open 50 new stores in 2011, bringing its total number of locations to 200.

Sunoco Lands Another Highway Retail Assignment

Sunoco Inc. reached an agreement with the New Jersey Turnpike Authority and Getty Petroleum Marketing Inc. to begin operating the nine fuel stations at service plazas along the Garden State Parkway, one of the most heavily traveled roads in the nation.

The new six-year agreement begins January 2011 and runs through December 2016. Sunoco also announced an extension on the two fuel stations along the Palisades Parkway, also in New Jersey, through December 2015.

These developments come less than a month after Sunoco announced that it would sell fuel on the Ohio Turnpike beginning in 2012 and acquired 25 retail sites in upstate New York.

"These latest additions to our retail portfolio strengthen our position in the Northeast, a region where we enjoy solid brand recognition and customer loyalty," said Lynn L. Elsenhans, Sunoco's chairman and CEO.

In addition to the recently announced Garden State Parkway and Ohio Turnpike agreements, Sunoco currently provides fuel along several other major toll roads, including the Atlantic City Expressway, Delaware Turnpike, Maryland Turnpike, New Jersey Turnpike, New York Thruway, Palisades Parkway, and Pennsylvania Turnpike.

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