Greg Roach's Berkshires Blog
Monday, February 25, 2008
  Cinderella's Bubble
Over the past year, or so, I've refrained from saying much on the deal that is supposed to bring a Lowe's to Curran Highway. Truth be told, I've got mixed feelings. Competition is the American way, but huge multi-national corporations competing with much smaller regional and local operations leaves a bad taste in my mouth. I moved away from urban/suburban mega-store sprawl and I much prefer the small town version of retail.

But this post isn't about my thoughts on unbridled corpratization. No, it is about something I wrote in some blog's comments when the North Adams deal was announced last year. I can't find the original comment right now, but I wrote something to the effect of
'I'll believe the store is opening only after the ribbon is cut simply because the housing market is getting ready to crash and Lowe's depends on contractor business.'

And today I read via Atrios:
This morning, Lowe's reported same-store sales declined 7.6% for the quarter.

But sequentially sales are even worse.

From the Lowe's conference call:

Same Store sales fell 4% in November (YoY)

Same store sales fell 9% in December

Same store sales fell 11% in January

CEO Niblock said he was "a bit surprised" by the weakness.
I am not saying that Lowe's is going to pull the plug on opening new stores, but it is straight out of Business 201 that if your existing operations are contracting, one of the first rounds of belt tightening tends to be preserving capital. In plain language, if your income goes down, you start watching your bank account a lot more closely and pinching pennies.

I suspect that getting the North Adams store built and open will be race against the clock. Too many bad quarters for Lowe's and a weak commercial real estate market for the developer, combined with global credit crunch for both, might just turn the carriage back into a pumpkin.
Chain stores don't save a city.

Just saying.
Sometimes spending capital on new ventures actually adds to the bottom line, ie: You get to take tax breaks that you otherwise wouldn't get, adding monies to the plus side. Doesn't mean you have to stay open long, just long enough to take another tax break for doing lousy! This can be found under Reaganonomics page 7, how to use the tax code to your advantage and screw the system.
If the company is dumb enough to put a store in NA, surrounded by home improvements chains a 20 min drive in any direction, they will probably continue to throw good money after bad on this location.

Your comment was probably on my old blog because I have been vehemently opposed to this idea from the first day it was announced.

I say the Mayor should throw the bums out and use the existing vacant building for the new MCLA science center and build into the mix a graduate program and research facility for alternate energy - wind, PV solar, bio diesel, methane, and of course hydrogen.

Keep the gravel bank for the city's use - don't like the looks, build a wall like the one that runs along I-91 in CT by the airport.

The idea that this area can support Greenbergs, Aubuchon, Stanley's, Central Radio, and all the mom and pop's is just plain foolish. As is the idea that people will travel to NA just to shop at Lowe's.

Just a thought, but if this Lowe's is going to draw traffic away from Bennington, Greenfield, Pittsfield and Albany - maybe Lowe's should pay for the local street improvements that are going to be needed. People complain about the site of the gravel bank yet are perfectly willing to allow all this traffic to travel over the bridge that spans the RR tracks by the Freight Yard Pub? Make Lowe's fix it up!
Don't you just know that Lowe's is going to put in that store, drive Greenberg's out of business, and only then will Lowe's declare Chapter 11 and close half their stores, including this one?

Then someone will hold sad weekly flea markets in the defunct shell of that new building for two or three years, before Home Depot picks up the structure in the next hot market.
Dave- Funny, but all too possible.

If I understand this particular deal, Nigro Development is responsible for the real estate development while Lowe's is just a tenant. I'd be watching Nigro's finances as closely as Lowe's. If either hits too rough a patch.....?
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