Kimco 3Q15 Earnings Call Notes

Kimco Realty’s (KIM) CEO David Henry on Q3 2015 Results

Amazon has validated omni-channel

“E-commerce has been effectively incorporated into brick and mortar store operations as show rooms, last mile delivery and brand awareness become more and more critical to successful retail businesses. I do hope everyone took note of Amazon’s announcement on Tuesday that they have opened their first full brick and mortar store in Seattle. Amazon has now formally recognized that the omnichannel concept is very successful and that physical stores are important components of growth, even for e-commerce retailers.”

Retail real estate is defensive in a downturn especially with off price tenants and food

“During my lifetime I’ve seen many cycles and I’ve always felt that you had to prepare for the downturns. So at this point I’ve examined our portfolio in light of a possible future downturn and I feel confident that on a relative basis we’re in the sweet spot of retail real estate ownership. Retail real estate is defensive and with any downturn, but with great opportunity during the up cycles. In tough times all price retailers should do well. Our portfolio contains many off price retailers including TJX, Ross Stores, Burlington Coat and Nordstrom Rack in over 200 locations. There is a food component in the 71.4% of our centers.”

Competition is increasing in off price as department stores chase growth

“If you look at the department store model, it’s completely changed. The off price concept has been a vehicle for growth. So a perfect example is Nordstrom. Nordstrom is one where the department store is still doing quite well but the vehicle for growth has always been the Nordstrom Rack and they continue to try to add store count and up their expansion plans. I think Macy’s and others are actually taking a page out of their playbook.”

Really only a short list of retailers is having trouble

“It’s really, the softness I think circled around a few tenants we’ve been watching for many, many years and we think that the watch list we have continues to be one of the shortest we’ve ever had in our history so with the new retailer concepts coming out as well as the opportunity for us to reposition some of these assets, we still feel confident.”

Walmart is still a dominant force in retail

“Walmart is clearly still a dominant force from the retail world today. Their neighborhood market stores have been positively. Their supercenter is still a dominant force that they’re looking to expand.”

Walmart is working hard to try to be proactive

“They’re really working hard to do the right thing and be proactive. They’re big. A lot of these other retailers will do nothing and they’re in bankruptcy in five years because they haven’t done it. They’re trying to be proactive to see what the customer wants. They’re willing to take a little short-term pain to get there.”