Retail industry slightly better in 2007
Figures from the Puerto Rico Trade Company confirmed 2007 retail industry sales exceeded $35.17 billion, a modest 1.3% increase compared with the previous year. Although difficult, industry executives agree 2007 was slightly better than the previous year largely because consumer uncertainty created by the introduction of the new Sales & Use Tax (IVU, by its Spanish acronym) had worn off, more realistic inventories and price wars helped maintain stores’ foot traffic. Economic Development Secretary Ricardo A. Rivera Cardona resigned and Bartolomé Gamundi, former president of the Puerto Rico Chamber of Commerce, was appointed to the post.
A hectic year
The year included the not surprising Pueblo bankruptcy filing followed by the surprising acquisition of the chain by Holsum’s Ramón Calderón. The on-again, off-again battle between beer importers and the locally protected Medalla Light beer shook things up and promised to bring an already heated battle to the boiling point
Shopping centers became front and center with the announcement of entrepreneur Tati Ferrer’s acquisition of the Belz Outlets, and Plaza Las Américas’ list of new retailers including Hugo Boss, Nine West, Pottery Barn, Build-A-Bear and west elm, to name a few. Meanwhile, retail operations at the Luis Muñoz Marín International Airport are putting Puerto Rico on the international retail travel map with Switzerland-based Dufry’s acquisition of Bared’s airport duty-free stores for $157 million and finishing off with Empresas Santana’s negotiations to sell its airport concessions to Dufry’s parent Advent International.
Massachusetts-based CVS pharmacies’ strong intent to establish local operations is making industry players—large and small—brace for a tough competitive new year.
Meanwhile, locally owned El Amal firmly denied sale rumors of the possible sale of its operations and reconfirmed it will move forward with its growth and expansion plans.
Food industry’s bumpy ride
Prior to filing bankruptcy, former Pueblo owners Venezuelan Grupo Cisneros sold some of its stores piecemeal to other local supermarket companies including Econo, Supermercados Grande, Mr. Special and SuperMax. By the third quarter, Pueblo had declared $102 million in bankruptcy.
In September 2007, in a move that many still deem a “major upset,” Ramón Calderón, owner of Holsum, outbid all qualified participants to acquire the entire Pueblo operation with the exception of the De Diego store in Condado. But it wasn’t until November that Calderón took over Pueblo to reopen its 21 stores and hire back 2,300 in record time before yearend. Westernbank financed the Pueblo transaction to the tune of $137 million. This is the first time the chain is owned by Puerto Rican entrepreneurs.
Supermercado Conchita, with several locations in the San Juan metro area, filed an $11 million reorganization under Chapter 11 in U.S. Bankruptcy Court. Prior to announcing the company’s reorganization, Conchita’s owner Manuel González Azcuy resigned from his post at MIDA and Benjamín Negrón, president of Benso Corp., a local consumer products distributor, was appointed MIDA president.
An extended menu
Puerto Rico’s $1.8 billion restaurant industry got hit in 2007 with lower sales as more and more people cut back on dining out. Two local restaurant traditions, Dunbar’s and Coaches, closed operations after a combined 40-year run leaving the young professional crowd looking for options. Meanwhile, Oof! Restaurants, owned by Emilio Figueroa and Gigi Zafero Figueroa, continued its winning streak, with its latest venture taking on the restaurant operation at Galaxy Lanes in Plaza Las Américas.
Madrid’s famed Restaurante Botín began operations in Old San Juan’s Recinto Sur Street. With a $2 million investment, the 7,000-square-foot, three-story restaurant was transformed into a near-exact replica of Madrid’s original Botín.
New Drums restaurant opened its doors in Isla Verde combining casual dining and entertainment with a Latin flair, while Caña, a rum-themed restaurant, began operations at El Convento Hotel in Old San Juan.
Going shopping
Plaza Las Américas, the island’s leading shopping center, scored big among local consumers by announcing the arrival of many new renowned retailers and the opening of a two-year Ponce Museum of Art venue on the mall’s third floor.
Entrepreneur Eduardo ‘Tati’ Ferrer, president of Empresas Ferrer, signed a definite agreement, the first part of a two-part deal, to acquire 16 cuerdas adjacent to the Belz Outlets mall in Canóvanas from its current owner Tony Tirri of Caribbean Airport Facilities. Ferrer plans to develop a 300,000-square-foot retail facility as well as acquire the remaining 64 cuerdas for a total investment of $250 million.
A $40 million investment will double Barceloneta’s Prime Outlets in size by adding 160,000 square feet and 55 new outlet stores. The open-air shopping center, owned by the Lightstone Group, has some 55 tenants and 176,000 square feet. Plaza Carolina, the island’s second-largest shopping center with 1.1 million square feet, became more fashionable with the addition of such exclusive stores as G by Guess and World Footlocker. Diversified Retail Realty (DDR), the island’s largest shopping center owner with five million square feet of retail space spread around its 15 shopping centers, launched the Isla Gift Card.
Top retailers on top of things
Sears celebrated 70 years of local operations; Nicaraguan-born Humberto J. Collado returned to Puerto Rico as J.C. Penney’s new district manager; Wal-Mart launched a $10 million environmental and sustainability program for Puerto Rico, and Ashley Furniture, the largest furniture retailer in the U.S., will invest $12.5 million to make Puerto Rico its new home away from home.
CompUSA announced its closing after 23 years of operations. The Gordon Brothers Group LLC, a stateside restructuring company, acquired the electronics retailer to liquidate the chain’s 103 stores including those in Puerto Rico. Subsequently, New York-based Systemax acquired most of the defunct chain locations and the CompUSA brand.
Another important development for the shopping center and retail industries was the launch of the island’s first diversified Real Estate Investment Trust (REIT) which, among other hospitality and warehouse properties, included Galería Paseos shopping center in Cupey. This is the first retail property included in a local REIT, a new investment vehicle opportunity for local investors.
