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IN BRIEF

Gap Inc. bullish despite slump

Gap Inc.’s much-anticipated second-quarter turnaround failed to materialize, but landlords are still bullish on the company. Despite new TV ads and revamped merchandise, same-store sales slid 6 percent at the flagship Gap chain. Further, same-store sales fell 1 percent at Banana Republic, 5 percent at Old Navy North America and 11 percent at Gap International. Overall same-store sales were down 5 percent, while net sales were flat at $3.72 billion. Nevertheless, the chain is proceeding with a $750 million share buyback. “Gap management is moving ahead with all systems go,” said David E. Simon, CEO of Simon Property Group, on a second-quarter earnings call. The chain remains in good graces with Simon and other landlords thanks to its healthy financials. “Gap has had modest sales performance,” said Richard S. Sokolov, Simon’s president and COO, “but they’ve never missed a penny of rent, because they’re a good credit.”

Loehmann’s trades hands

85-year-old Loehmann’s Holdings is passing from one private equity fund owner to another. Arcapita, a Bahrain-based private fund whose investments adhere to Islamic laws, sold the 60-unit retailer to Istithmar, a private fund based in the United Arab Emirates, for about $300 million. Arcapita paid about $177 million for the chain two years ago. “We took the company private in 2004 and have worked with Loehmann’s management to execute its growth strategy, which comprised opening new stores and establishing a footwear franchise,” said Charles H. Ogburn, Arcapita’s executive director and head of corporate investment, in a press release. Loehmanns’ new owner plans to add 40 stores over the next five years, including a flagship on New York City’s Upper West Side.

Wal-Mart to pull out of Germany

Wal-Mart Stores will sell its assets in Germany to German rival Metro, ending a nearly decadelong effort there. “It has become increasingly clear that in Germany’s business environment, it would be difficult for us to obtain the scale and results we desire,” said Michael Duke, the company’s vice chairman. “This sale positions us to increase our focus on the markets where we can achieve our objectives.” Wal-Mart faced competition from Lidl, Aldi Einkauf and other German discount chains. The terms, under which Wal-Mart will sell 85 stores to Metro, were not released. But Wal-Mart says it expects to incur a related pretax loss of $1 billion for the 2007 fiscal second quarter. Wal-Mart also pulled out of South Korea this year, as did France’s Carrefour. Even so, Wal-Mart is growing elsewhere. The company, which operates 2,700 stores in 14 countries outside the U.S., became a majority owner of Japan’s Seiyu, bought Sonae in Brazil and entered Costa Rica, Guatemala, Honduras, Nicaragua, El Salvador and Northern Ireland.

Petco sells for $1.8 billion

Private equity firms Texas Pacific Group and Leonard Green & Partners agreed to buy pet supply retailer Petco for about $1.8 billion. They expect to close the deal in the fourth quarter. Petco’s new owners “have deep experience investing in the retail sector, and we look forward to working closely with them,” said Petco CEO James M. Myers in a press release. Leonard Green recently acquired the Sports Authority chain, and Texas Pacific bought Neiman Marcus Group. Petco, which operates 800 stores in the U.S., plans to open 75 new stores and remodel 35 existing ones this year. The San Diego-based retailer posted net sales of $521 million for the first quarter, with net earnings of $11 million. Same-store sales, meanwhile, were up 2.2 percent.

Home decor for Paris landmark

VMH says it will convert its 322,917-square-foot La Samaritaine department store in Paris into a home decor concept containing a 107,639-square-foot space for selling home goods and surrounded by a collection of specialty retailers offering furniture and other interior merchandise. The landmark store, on Boulevard Haussmann, was closed last July because of safety issues. LVMH plans to reopen the store in 2011.

Dell experiments with stores

Personal computer manufacturer Dell opened its first “store,” at NorthPark Center, in Dallas. The 3,000-square-foot unit does not actually stock merchandise as such, but rather allows shoppers to test the company’s computers, TVs and peripheral equipment for purchase online. A second unit will open in West Nyack, N.Y., later this year. The Round Rock, Texas-based company has been operating some 160 kiosks in malls over the past few years. Dell will be examining the extent to which the Dallas and West Nyack stores cannibalize sales from those kiosks before it launches a full-scale rollout.

Cheesecake adds Nutmeg State

The Calabasas Hills, Calif.-based Cheesecake Factory is setting up shop in West Hartford, Conn., in 2007, its first restaurant in that state. The 9,500-square-foot restaurant will be an anchor at Blue Back Square, a mixed-use center developed by West Hartford-based JDA Development, Atlanta-based Ronus Properties and White Plains, N.Y.-based Street-Works. The menu will offer over 200 selections, including some 50 desserts.

Tower begins to wobble

At least three major record companies ceased supplying Tower Records with CDs, after the troubled retailer stopped paying its bills, according to press reports. The cutoff deprives the 89-store music chain of virtually all its product, and some observers are predicting this will bring matters to a head, resulting in Tower’s liquidation. The record companies are EMI Group, Universal Music Group, Warner Music Group and, according to the Los Angeles Times, Sony BMG Music Entertainment. Tower has looked for a buyer on and off since 2001.

Starbucks caffeinates Brazil

Starbucks says it will open its first cafés in Brazil next year, in a joint venture with Brazilian company Cafés Sereia do Brasil Participacoes. The two formed Starbucks Brasil Comercio de Cafés, and Mexico’s Alsea S.A. de CV is an equity holder. The stakes were not disclosed. The first Starbucks Brazil will open in São Paulo. Maria Luisa and Peter Rodenbeck, who introduced McDonald’s, Outback Steakhouse and other international retail brands to Brazil, head Cafés Sereia. Alsea operates Starbucks and other names in Mexico.

Italy’s Napapijri goes global

Italian sportswear brand Napapijri opened its first U.S. store, in New York City’s trendy SoHo neighborhood. The company expects the 2,000-square-foot store to post about $1,000 in sales per square foot its first year. The upscale retailer sells polo shirts for $125 and linen cargo shorts for $130. Apparel conglomerate VF Corp. bought the brand two years ago and plans to expand its store count from 17 today to 55 worldwide by 2010, of which 10 will be in the U.S. A second U.S. store is slated to open in Miami’s South Beach this month. Napapijri (pronounced napa-piri) is a Finnish word meaning “arctic circle.”

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