RALD FRIDAY, FEBRUARY 4,2005 3C WWW.HERALD.COM RETAIL Shoppers boost sales, good times predicted BUSINESS BRIEFS From Herald Wire Services Consumers lured by clearance sales and a fresh assortment of spring clothes gave many of the nation's retailers solid sales in January and hopes for even stronger business in the months ahead. Late-month snowstorms in the Midwest and Northeast depressed results for some merchants, but didn't hurt the industry's overall performance. As merchants released their results Thursday, a diverse group of retailers had sales that beat Wall Street expectations, including clothing stores Abercrombie Fitch and Talbots, department store chain J.C. Penney Co. and discounter Target.
Luxury stores such as Neiman Marcus Group again reported sales that surpassed Wall Street estimates. The month provided some encouraging trends stores including Penney and Talbots had strong sales of regularpriced spring merchandise, a sign that consumers are more upbeat about spending. COSMETICS ELIZABETH ARDEN EARNINGS UP Elizabeth Arden (RDEN) said earnings in the latest quarter rose 50 percent from the previous year, despite a hefty increase in advertising and promotional expenditures, as Britney Spears' Curious fragrance led sales at U.S. department stores. The Miami Lakes company Thursday said it earned $31.7 million, or $1.06 a share, on revenue of $323 million in the fiscal second quarter ended Dec.
31. Analysts were expecting earnings of $1.03 a share, according to Thomson First Call. In the same quarter a year ago, it earned $21.2 million, or 9 cents a share, on revenue of $296.3 million. Elizabeth Arden expects third-quarter earnings of 17 cents to 19 cents a share, which is below Wall Street's estimate of 21 cents a share. RETAIL CINEMAS COMING TO SOUTHLAND MALL Southland Mall is getting rid of the former Dillard's department store to make way for a new 16- screen Regal Cinema.
The demolition began on Wednesday, as the former Cutler Ridge Mall continues its efforts to meet the needs of the growing South Dade population. The Regal Cinema will have the capacity for about 3,500 patrons with stadium seating when it opens in early 2006. DSW Shoe Warehouse will be the latest new tenant in Southland's continued, revitalization. The shoe store will open on Feb. 25, with room for more than 63,000 pairs of shoes.
BABY FOOD COUPLE INDICTED IN FORMULA SCANDAL A Lighthouse Point couple was charged this week with distributing unapproved and expired baby formula. A federal grand jury on Tuesday returned a 75-count indictment against Brian and Patricia Bishop. They are accused of introducing misbranded food into interstate commerce, wire fraud and securities fraud. The couple's company, Baby's Best Laboratories, allegedly stated in stock-offering materials that the baby formula was suitable for consumption, according to the indictment. The company sold about $1.14 million in stock, the court document added.
HEALTH PRODUCTS GILLETTE SALES RAISE PROFITS Gillette (G) said Thursday that solid sales of its shaving, dental care and battery products lifted fourthquarter profits by 13 percent, slightly below Wall Street expectations, as the consumer goods company prepares to be acquired by Procter Gamble (PG). Gillette reported net income for the October to December period of $415 million, or 41 cents per share, compared with $368 million, or 36 cents per share in 2003. ACQUISITIONS HOLLY ADE AVE PHOTOGRAPHER HERE UNSCRIPTED RESIGNATION: A Hollywood Video store, left, is shown next to a Blockbuster. Hollywood Entertainment CEO Mark Wattles stepped down this week. Hollywood CEO quits while rental giants bid Hollywood Entertainment Chief Executive Mark Wattles resigned from the company he founded, just as a bidding war heats up with Blockbuster and Movie Gallery.
BY WILLIAM McCALL Associated Press PORTLAND As a bidding war raged Thursday for Hollywood Entertainment, the founder and chief executive of the nation's No. 2 movie rental chain abruptly resigned. Hollywood Chairman and CEO Mark Wattles had agreed last summer to take the company private with the help of Los Angeles buyout firm Leonard Green Partners. But the Hollywood board responded to shareholder pressure to take other bids. Wattles did not comment on his departure and calls were referred to a New York merger consulting firm, MacKenzie Partners, which did not have any immediate comment.
His resignation left Hollywood the target of a takeover fight between Texas-based Blockbuster, the largest movie rental chain in the nation, and No. 3 Movie Gallery, based in Dothan, Ala. On Wednesday, Blockbuster said it would pay nearly $1 billion in cash and stock for Hollywood Enter- SHANE LEAVING: Hollywood Video CEO Mark Wattles resigned this week. tainment, which has already agreed to a $900 million cash buyout offer from Movie Gal- lery. All three chains face growing competition from online movie-order services, including Netflix, as well as from retailers like Wal-Mart stores.
Blockbuster, founded in 1985 in Dallas, expanded rapidly under the management of trash-hauling magnate H. Wayne Huizenga of Fort Lauderdale before it was purchased in 1994 by entertainment conglomerate Viacom, which in turn separated from Blockbuster last year. Wattles founded Hollywood in 1987 in Portland and modeled his first store directly after Blockbuster stores. He was successful at scouting and beating Blockbuster to prime locations in many cities. In a statement released Thursday, Movie Gallery noted that most of Hollywood's stores compete directly with Blockbuster stores, with more than 80 percent in the same local market, raising antitrust concerns about the Blockbuster bid.
"By contrast, relatively few Movie Gallery stores are located close to a Hollywood store," the Alabama-based company said. Movie Gallery has focused on rural markets to expand rather than the urban and suburban market shared by Blockbuster and Hollywood. Movie Gallery and Hollywood announced early in January they had agreed to a merger that would pay $13.25 in cash per Hollywood share. Both suitors would assume $350 million in Hollywood debt. Blockbuster officials in Dallas were not immediately available to comment on the Movie Gallery statement.
Hollywood officials said a special committee was considering the offer from Blockbuster and would advise its shareholders of its recommendation by Feb. 17. Blockbuster's hostile tender offer would begin today and run through March 11. Hollywood named F. Bruce Giesbrecht, the company's president and chief operating officer, as chief executive.
PROPERTY House affordability slides to lowest rates in 4 years Housing affordability fell to a four-year low last year across the country. In South Florida, the gap between incomes and home prices widened dramatically. BY KATHLEEN M. HOWLEY Bloomberg News The affordability of U.S. homes fell to a four-year low in 2004 as a surge in prices offset lower mortgage rates, the National Association of Realtors said Thursday.
The average household had 132.6 percent of the income needed to purchase a property at the median home price of $184,100, NAR's Housing Affordability Index showed. In the previous year, a household had 138.4 percent of the income needed for a median-priced $170,000 home, the Washington trade group reported. Prices for existing singlefamily houses gained 8.3 percent in 2004, a 24-year high, outpacing income growth. Prices are rising even faster in South Florida: The December median price in Fort Lauderdale was $302,800, up 26 percent from a year earlier and Miami's median price was $297,900, a 22 percent increase. Home sales and prices have soared as mortgage rates fell to the lowest levels since the 1960s.
Affordability may become even more elusive. "We're likely to see a further decline this year as mortgage rates rise," said Lawrence Yun, an economist with the industry's largest trade group. A reading of 100 percent means a household with the national median income makes exactly enough to pay for a median-priced home. A higher reading indicates more affordability. The index was the lowest since 2000's 129.2 percent, NAR data showed.
In 1982, when the average rate for a 30-year fixed mortgage reached 15.4 percent, the affordability index measured 69.5 percent. In 2004, the average rate for a 30-year fixed mortgage fell to 5.72 percent, as measured by the Federal Housing Finance Board. It was the lowest since the agency started keeping records in 1970. This year, the rate likely will rise to 6.5 percent as economic growth accelerates, Yun said in a telephone interview. The median income of a household was $54,527 in 2004, a rise of 3.5 percent, he said.
The average mortgage payment as a percentage of income rose to 18.9 percent from 18.1 percent, according to Yun. The Herald's business staff contributed to this report. DILBERT SCOTT ADAMS CATBERT: EVIL DIRECTOR TO "WORKPLACE 'San WHEN THINGS DON WOO OF HUMAN RESOURCES SERVICES. WHA- SOUND EVIL ENOUGH Aq ON THEIR OWN. I LIKE I MIGHT CHANGE MY TO TOSS IN A BUDEPARTMENT'S NAME puI HA-HA-HA.
www.dilbert.com REAL ESTATE Winton sells Miami office building nada most the nanfrom cane bers anes on in Septhe ssion the nada, illed asteings. nada se in cent a 75 ruise veen ne of over ravel orist ates, er of nged just rious perand rried the a 6 itors nber, same the ower the cordirism lobal reent and reak, the ent in AVIATION FLIGHT DELAYS INCREASE IN 2004 Congested skies and bad weather last year resulted in more flight delays, more mishandled baggage and more complaints about airline service than in 2003, the government announced Thursday. Arriving at least 15 minutes late last year were 21.9 percent of flights for the biggest airlines, which carry the vast majority of passengers. That represents a 22 percent increase in late arrivals over 2003, the Bureau of Transportation Statistics says in a report. The lowest fares since 1988 have drawn more passengers than ever onto commercial airlines, according to the Air Transport Association, which represents major airlines.
FLORIDA CONTRACTOR ACCUSED OF CHEATING ELDERLY Florida Attorney General Charlie Crist filed a civil complaint alleging that an unlicensed contractor sold contracts to elderly South Florida consumers promising hurricane preparedness services but then failed to deliver the services during the 2004 hurricane season. Crist sued Zuchora Construction and its president, Ronald Zuchora, for violations of the Florida Deceptive and Unfair Trade Practices Act. The complaint alleges that Zuchora Construction didn't deliver on $250-a-year service contracts to Palm Beach County consumers most of whom were elderly promising to install hurricane shutters whenever a hurricane warning was issued for their area. But the services were not provided as promised during the recent hurricane season. Lighthouse Point resident Zuchora sent a letter of apology to its customers and refunded some funds but most consumers have not received the promised refunds, the attorney general's office said.
The suit seeks to bar Zuchora Construction and Ronald Zuchora from contracting for hurricane- or shutter-related services, general contracting work, or any services involving the collection of an advance payment or deposit. The complaint also seeks full restitution to customers and penalties. CABLE TV COMCAST PROFITS RISE 10.4 PERCENT Comcast (CMCSA), the nation's biggest cable TV system operator, said Thursday its profit rose 10.4 percent in the fourth quarter, beating Wall Street estimates. Philadelphia-based Comcast reported net income of $423 million, or 19 cents per share, for the quarter ending Dec. 31.
That compares with $383 million, or 17 cents per share, in the final three months of 2003. The cable operator reported revenues of $5.24 billion on the quarter, up from $4.74 billion a year ago. BY MATTHEW HAGGMAN One of downtown Miami's biggest promoters is cashing in on the city's real estate boom. Miami City Commissioner Johnny L. Winton is selling the Washington Mutual Bank office building in Miami's central business district for $18.4 million.
Fleetwood Capital in Washington, D.C., has signed a contract on the 14-floor property and is set to close within the next two months, Winton said. Fleetwood did not return calls for comment. John Bell of Trammell Crow in Miami, who brokered the sale of the property, did not return calls for comment. The outspoken Winton, a 20-year real estate veteran, has been one of downtown Miami's leading supporters of development. He is chairman of Miami's Downtown Development Authority and enthusiastically encouraged developers to build in a downtown business district that for years has been a shambles dotted with vacant lots and derelict buildings and usually silent after dark.
Downtown is now going through a building boom that, if the proposed towers are completed, will remake Miami's central core. The new construction is nearly all residential condominium development. Winton, a general partner with a controlling stake in the building, declined to say how much he will pocket from the sale: "You'll see it in my tax returns when I file it." Designed by Miami Beach architect Morris Lapidus and built in 1967, the Washington Mutual Bank Building has 124,000 square feet of office space. Its tenants include GMAC Commercial Financial Services, MCI and the Collins Center for Public Policy. The building is 80 percent leased, Winton said.
In 1988 Hartford Investors bought the building for $10 million. Winton, who has been in the real estate business for two decades, was Hartford's broker in the deal. He took over property management of the building and invested in the property in 1995, gaining a controlling stake. PROMOTIONS Jorge A. Ortega has been named president of The Jeffrey Group, a marketing, communications and public relations agency based in Miami Beach.
He succeeds Jeffrey Sharlach who founded the agency in 1993 and will now assume ORTEGA the post of ORTEGA chairman Ortega managing Marsteller more than ing and sulting ington, Chicago and chief executive. was most recently director at BursonMiami and has 20 years of marketpublic relations conexperience in WashD.C., New York, and Mexico City. Lourdes Carbajal Vicente has been promoted to president of Shape Lovers. She was operations manager for American Express Financial Advisors in the Datran location. Shape Lovers is a lowcalorie gourmet catering service that delivers healthy, portion-controlled cantinas to homes or offices.
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