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December 15, 2008

Maybe They Get It-They Finally Get It-That Not Everyone is Wild About the Neiman Marcus Project



The Walnut Creek City Council prepares to vote tonight on whether to repeal an earlier decision to allow a planned Neiman Marcus project to be built in Broadway Plaza. With that fateful decision on the agenda tonight, I thought I’d share some of the letter that The Macerich Company, the owner of Broadway Plaza, wrote to the City Council, saying it was willing to go back to the drawing board in the face of mounting public opposition over the project’s proposed size and failure to provide additional parking.


It’s amazing that neither Macerich nor the City Council saw this opposition coming, given that a number of people spoke out against the proposal at public hearings. The opposition includes a lawsuit that could halt the project and a referendum petition that puts the matter of this upscale department store coming to Walnut Creek up to voters.

The City Council rushed to approve the project, wanting to add yet another high-end retailer to its downtown portfolio. The city believes that the additional sales tax revenues that Neiman Marcus would generate would help support a variety of programs, including transportation, lanscaping, parks, etc. As I’ve said before, I don’t care whether Neiman Marcus ultimately comes to Walnut Creek, unlike some other residents, who worry about locals who can no longer afford to shop in downtown Walnut Creek and who don’t want to deal with the hassle of increased traffic and parking. I just am wary of how the City Council fast-tracked what turned out to be a flawed proposal.

Given that we’re in the midst of what some economists have termed the worst global financial crisis since the Great Depression, you have to wonder if Neiman Marcus would be the gold-laying goose that Walnut Creek is hoping for. Neiman Marcus posted an 84 percent drop in profit during its fiscal first quarter that ended November 1 as its affluent shoppers cut spending, according to this Reuters report. In fact, the same article says that, while the company is not planning to close stores in the face of these financial losses, it has decided to put major and minor remodel plans on hold.

Hmm. Could Neiman Marcus's financial woes be the real reason that Macerich is willing to re-think this project right now? John Genovese, Macerich’s executive vice president, says, in his letter to the Walnut Creek City Council, that rethinking the project has to do with Macerich wanting to do a better job "to understand more about local sentiments concerning the project.” If that's the case, it's about time, don't you think?

He goes on to say: "Our recent polling, conducted in mid-November, demonstrated both local support for the Neiman Marcus addition as well as some understandable community concerns. The results highlighted specific opportunties to rethink our Neiman Marcus plan so that it makes greater sense for us, and, particularly, for Walnut Creek residents." 

Genovese says Neiman Marcus works hard to be "in synch with our communities ... Moving forward, Macerich plans to bring forward an improved and modified proposal that we believe will better meet the expectations of Walnut Creek residents."



2 comments:

Anonymous said...

I wonder what part of "don't alter the general plan for one store" didn't the Council and Macerich get? Did they really need to do a poll to find out how the residents of Walnut Creek felt? Someone or many someones were not listening to the citizens...those who testified at pubic hearings, wrote letters and then flocked to sign a petition against the development as approved. The Council in it's haste to capture more tax dollars because they have overspent and can't afford the current capitol projects (library, flood zone repairs, swimming pool repairs, golf course repairs, etc.)got greedy, closed their ears and proceeded to totally ignore the cries of the very people they were elected to represent. Walnut Creek is a wonderful city and will remain so with or without Neiman Marcus so let us hope that the Council will proceed with a more level headed approach to future downtown growth.

Soccer Mom said...

Dear Anonymous and Other Readers:
I confess that I was writing this post rather hastily early this morning, and, in the parlance of news world, I might have "buried the lede."

I wonder if the real reason that this project is being re-worked is that Neiman Marcus is struggling due to the recession, plummeting profits, and a drop in consumer spending on luxury goods.

I wonder if the whole thing about Macerich finally seeking residents' opinions on this project is just a smokescreen for the fact that this project isn't looking as profitable as it once was.

I'm not a business writer, so maybe someone else out there might have some input.

I quoted this Reuters report in the story:

NEW YORK (Reuters) - Upscale department store Neiman Marcus posted an 84 percent drop in quarterly profit on Wednesday as its affluent shoppers cut spending in the face of sharp declines in the financial markets.

The results from Neiman, which also reported a 14.5 percent fall in quarterly same-store sales, came as a worrying reminder that shoppers across the board were guarding their wallets amid mounting job losses, tighter credit and the housing slump.

But Neiman's isn't the only one hurting. So is Tiffany and Co.:

From the Wall Street Journla: Saks Inc. swung to a fiscal third-quarter net loss on weak sales and margins, and jewelry retailer Tiffany & Co. is offering voluntary retirement packages to 800 U.S. employees after profit slumped 57% in its latest quarter.