Eeyore's News and a View

Experts Warn: Thousands of Stores to Disappear in '09
Experts say disastrous holiday sales will force many more merchants into bankruptcy - and ultimately into liquidation.
NEW YORK (CNNMoney.com) -- The ugly sales year that was 2008 will haunt U.S. retailers in 2009, with industry experts warning that disastrous holiday sales will spark a domino effect of store closures and bankruptcy filings.
And, with thousands of fewer stores, the "shop-'til-you-drop" mentality that has characterized American consumerism could be coming to an end.
"There's going to be a massive sea change in the retail landscape," said Nina Kampler, executive vice president with Hilco Real Estate, which advises retailers on their property management.
She said many strip shopping centers already have multiple big-box vacancies after several large stores filed for bankruptcy in 2008. Some eventually went out of business.
When that happens, the smaller stores in the strip centers can't attract the requisite customer traffic to stay productive and profitable.
Michael Burden, principal with industry adviser Excess Space Retail Services, expects as many as 14,000 stores will close in 2009. "We could see among the highest ever number of closures," he said.
He said states such as Nevada, California and Florida will be especially hard hit.
The International Council of Shopping Centers estimates that chain store closings could exceed 3,100 in just the first half of the year.
Burden's firm, whose 450 U.S. retail clients include Wal-Mart (WMT, Fortune 500), Home Depot (HD, Fortune 500), J.C. Penney (JCP, Fortune 500) and Sears (SHLD, Fortune 500), helps retailers in the disposition of their surplus real estate.
He said most merchants will be in a "bunker" mentality.
"It's about survivability," he said. "Retailers have to really fight to live another day and do what they can to get through to 2010."
Burden said that means closing underperforming stores, shedding stores under bankruptcy restructuring, and even "right-sizing" stores - shrinking the store size or moving to a smaller location.
"We'll see a lot of shaking out of the industry," he said, adding that no sector will be spared. "Apparel, home furnishings, home improvement, electronics, luxury sellers will all close stores."
Consumer impact
For consumers, it will mean both fewer stores to shop and possibly less brand variety on shelves.
"Retailers across the board from top-end luxury to mom-and-pop stores on Main Street are feeling a gigantic consumer [spending] choke from people's perceived and actual loss of wealth," said Kampler.
"At the end of the day, people are buying far less stuff. They are buying what they need as opposed to what they want," she said.
This spending slump, which started in early 2008, has already claimed a number of retail casualties. Prominent national chains such as Linens 'n Things, Steve & Barry's, KB Toys, Whitehall Jewelers and Shoe Pavilion have gone out of business.
Still others such as No. 2 electronics seller Circuit City are barely surviving, hoping to find a lifeline while in bankruptcy protection.
But after suffering one of the worst year-end shopping seasons in decades - November and December combined can account for half of merchants' annual profits and sales - experts predict that many more chains will disappear.
Kampler said she personally knows of "dozens" of retailers who are taking a very hard look at their entire business. She declined to identify them due to confidentiality agreements.
"They are considering closing entire divisions or restructuring parts of their business that they want to keep," she said
As retailers' sales continue to tumble and mall traffic evaporates, one of the biggest challenges for sellers is their rent occupancy costs.
Kampler explained that the amount of rent a retailer can comfortably pay for a given store location is proportionately related to the volume of sales generated at that location.
Ideally, she said a retailer's occupancy cost should be equal to 10% of its sales. But a long stretch of slumping sales and rising mall vacancies can dramatically push up the occupancy costs.
"Once rent and occupancy costs hit the 20% to 25% of sales threshold, you are treading water," she said. "You can't run a viable business with those numbers".
Also, once a retailer faces a cash shortage, the likely next step is to file for bankruptcy protection. To that end, Kampler predicts that retail bankruptcy filings will " be huge" in January.
But given the implosive impact of the overall economy on the retail sector, Kampler said filing for bankruptcy could be the death knoll for those merchants.
"It used to be that when [a company] filed for bankruptcy, it was to restructure its debt and realign its operations in order to emerge alive," she said.
"Now it's almost impossible to restructure," she said, pointing out that a significant number of retailers that did file for Chapter 11 bankruptcy protection this year have eventually gone into liquidation.
Burden agreed with Kampler.
"Companies in bankruptcy aren't getting debtor-in-possession financing," he said. "This will continue in 2009."
Burden said his firm historically advised retailers to always re-evaluate the bottom 10% to 15% of their store base, or the poorest-performing stores in their portfolio, for closures.
But given the level of anxiety in the industry about a severe spending freeze, he said many retailers are already looking at closing up to 25% to 30% of their store base.
"Obviously fewer stores means less choice for consumers," he said.
"I think the whole consumer economy is being recalibrated," said Kampler. "It's something that's not been done in decades. I think it will be a three-year recalibration of consumer behavior and expectations."
While it's something that she believes is "unavoidable" and will hit the economy in terms of more job losses, she hopes it will also change the consumers' buy-at-all-cost shopping mentality.
"Consumers are used to thinking about buying 50 T-shirts, 10 pairs of jeans and 6 sneakers," she said. "Do we really need all this stuff? Ultimately we will all be buying less." To top of page
First Published: December 31, 2008: 1:37 PM ET
http://money.cnn.com/2008/12/31/news...ion=2008123113

Many illegal immigrants live in public housing
Untold thousands of illegal immigrants live in public housing at a time when hundreds of thousands of citizens and legal residents are stuck waiting years for a spot.
Illegal immigrants make up a tiny portion of the 7.1 million people in federal housing, according to government statistics. But authorities may be unaware of thousands more, and critics say no illegal immigrant should get housing benefits.
The issue made headlines in November with news that Zeituni Onyango, an aunt of President-elect Barack Obama, was living in Boston public housing while in the country illegally.
The federal government, which funds the lion's share of the nation's public housing, requires only that illegal immigrants share a home with at least one family member who is in the country legally and pay their share of the rent.
While there are no hard numbers on illegal immigrants in public housing, the U.S. Department of Housing and Urban Development reports that 29,570 people — 0.4% of all those in federally funded housing — are "ineligible noncitizens." Some may be on temporary visas, such as highly educated workers or college students, but many are believed to be illegal immigrants.
Frank Bean, director of the University of California, Irvine's Center for Research on Immigration, Population and Public Policy, estimates at least half of ineligible noncitizens — or about 15,000 — are illegal immigrants with U.S.-born children. Anyone born on U.S. soil is automatically a citizen, making their families eligible for federal housing.
The HUD tally does not offer a full picture of how many illegal immigrants are in public housing.
It doesn't include housing funded by state and local governments, where eligibility requirements vary. Massachusetts, where Obama's aunt occupied one of about 50,000 state-funded units, doesn't ask immigration status under a 1977 federal consent decree in a class-action lawsuit that prohibits the state from denying the benefit to illegal immigrants.
Other illegal immigrants may live in public housing without notifying authorities.
"It seems that the larger concern would be those who we don't know about that may be in the U.S. illegally and living in federal housing, yet never risk presenting themselves to HUD," said Jonathan Graffeo, a spokesman for Sen. Richard Shelby, R-Ala.
Some prospective tenants and advocates of immigration restrictions are angry about U.S. citizens waiting for housing aid that some number of illegal immigrants are enjoying.
New York City has about 260,000 people in line for housing aid. Chicago recently opened its waiting list for the first time in about 10 years and collected 259,000 names in four weeks for 40,000 slots.
"As long as that waiting list includes American citizens or legal immigrants, there's no reason an illegal alien should occupy any of that housing," said Rosemary Jenks, director of government relations for NumbersUSA, a group that supports curbs on immigration.
In San Diego, applicants are told they can expect to wait five to seven years.
"I don't think we should take a second seat to anyone," said Daryl Ford, who applied for housing aid last year and lives in a San Diego homeless shelter. "We send money to everyone else in the world but we're struggling here."
Some say the costs of illegal immigration in public housing are overstated.
Tanya Broder, an attorney with the National Immigration Law Center, said illegal immigrants are reluctant to seek government benefits because they keep low profiles. Even some legal immigrants shun public housing, fearing reprisals against them or their families, she said.
Illegal immigrants get free public education through high school and emergency medical care, but are denied many other services, like food stamps and broad Medicaid coverage.
Elliotte Skinner, 48, applied for public housing in San Diego in 2000 and lives in a cramped studio with a shared shower. He says focusing on illegal immigrants misses the point.
"There's too much blame on illegals for the country's problems," he said. "Their numbers are so small (in federally funded housing) they don't even make a difference. The real problem is we don't have enough affordable housing."
Elena Salmon, 45, lives at a San Diego home where about 30 women share four bathrooms while she waits for public housing, but she said it would be inhumane to deny housing to illegal immigrants.
"That's not what America is about," she said. "Why should we kick them out, even if they are taking up some space?"
HUD declined to break down the number of ineligible noncitizens by city or state.
The New York City Housing Authority reports 2,471 families with at least one ineligible noncitizen, or 0.9% of the 289,000 households on vouchers or in housing developments.
The San Diego Housing Commission reports 658 of the 37,120 people on federal housing vouchers are ineligible noncitizens, or 1.8%. The San Francisco Housing Authority has 148 ineligible noncitizens among its 28,611 people in federal housing, or 0.5%.
Housing agencies in Miami-Dade County and Chicago each reported serving less than 50 ineligible noncitizens. The Boston Housing Authority reports 288 of its 45,100 families on federal housing assistance are ineligible noncitizens, or 0.6%.
Onyango, the half-sister of Obama's late father, applied for public housing in 2002 while she was in the country legally seeking asylum from her native Kenya, said Lydia Agro, spokeswoman for the Boston Housing Authority, which has a waiting list of nearly 20,000 people.
Onyango moved into federally funded housing in 2003 and stayed there after 2004, when, The Associated Press learned, an immigration judge denied her asylum application and ordered her to leave the country.
Onyango transferred to an apartment funded only by the state, which cannot ask about immigration status under the court order. In November, her attorney said she was staying with relatives in Cleveland and would fight her deportation order.
http://www.usatoday.com/news/world/2009-01-01-public-housing_N.htm

Suspicious Driver Arrested Near White House
WASHINGTON - Authorities near the White House arrested a man after he drove up to a security checkpoint in his car and drew the attention of wary police dogs, police said.
The car approached a checkpoint at an intersection near Lafayette Park, just north of the White House, soon after 6 p.m. Wednesday, and police dogs grew suspicious of the car, according to police accounts. Several fire trucks, police cars and other emergency vehicles reported to the area after the driver was taken into custody.
The driver was questioned before being arrested for possession of unregistered ammunition (shotgun shells) and having an unregistered vehicle, said Ed Donovan, a spokesman for the Secret Service. The car was found to be safe about two hours later, he said
Donovan identified the man as Andrew Martin, 20. Martin was from Delaware, Donovan said, though the agency spokesman did not know what city.
http://www.wjla.com/news/stories/1208/581762.html

Report: Toyota developing solar powered green car
TOKYO (AP) - Toyota Motor Corp. (TM) is secretly developing a vehicle that will be powered solely by solar energy in an effort to turn around its struggling business with a futuristic ecological car, a top business daily reported Thursday.
The Nikkei newspaper, however, said it will be years before the planned vehicle will be available on the market. Toyota's offices were closed Thursday and officials were not immediately available for comment.
According to The Nikkei, Toyota is working on an electric vehicle that will get some of its power from solar cells equipped on the vehicle, and that can be recharged with electricity generated from solar panels on the roofs of homes. The automaker later hopes to develop a model totally powered by solar cells on the vehicle, the newspaper said without citing sources.
The solar car is part of efforts by Japan's top automaker to grow during hard times, The Nikkei said.
In December, Toyota stunned the nation by announcing it will slip into its first operating loss in 70 years, as it gets battered by a global slump, especially in the key U.S. market. The surging yen has also hurt the earnings of Japanese automakers.
Still, Toyota is a leader in green technology and executives have stressed they won't cut back on environmental research despite its troubles.
Toyota, the manufacturer of the Lexus luxury car and Camry sedan, has already begun using solar panels at its Tsutsumi plant in central Japan to produce some of its own electricity.
The solar panels on the roofs add up in size to the equivalent of 60 tennis courts and produce enough electricity to power 500 homes, according to Toyota. That reduces 740 tons a year of carbon dioxide emissions and is equal to using 1,500 barrels of crude oil.
Toyota is also likely to indirectly gain expertise in solar energy when its partner in developing and producing hybrid batteries, Panasonic Corp. (PC), takes over Japanese rival Sanyo Electric Co., a leader in solar energy, early next year.
http://apnews.myway.com/article/20090101/D95EDCU80.html

Times Square bash left about 40 tons of trash
NEW YORK – One million revelers packed into Times Square plus a ton of confetti and countless noisemakers equals a whole lot of garbage — about 40 tons, according to the city Department of Sanitation.
Cleanup crews hit the streets shortly after midnight Thursday following the 2009 ball drop. Sanitation spokesman Keith Mellis said 163 people worked until 8 a.m. to sweep up the party trash, and a new shift started at 11 a.m. to tidy the area.
Because of the wind — nearly 25 mph gusts throughout the city — the department wasn't quite sure how much trash was strewn about, but Mellis expected a little more than last year's 40 tons. The Times Square Alliance, which puts on the event, said about 1 million people attended.
The biggest cleanup challenge is shooing away the massive crowd so crews can being work, Sanitation Commissioner John J. Doherty said.
"It takes a while," he said. "Last night was a windy night. There's probably confetti as far as the East River."
Mayor Michael Bloomberg was out early Thursday praising the department's work and expressing optimism about 2009 despite the economic gloom of 2008.
"There were an awful lot of good things that took place in 2008," he said. "Fewer people went to bed hungry, fewer people slept without a roof over their head, democracy continues to work in this country."
On The Net:
http://www.timessquarenyc.org/nye/nye.html
http://news.yahoo.com/s/ap/20090101/ap_on_re_us/new_year_rdp_38