Welcome to the Nov. 6 Monday Business Briefing, your private business intelligence digest from Insider Louisville.
Consumers prefer stores to close on Thanksgiving, but they want restaurants and theaters open
For years, Black Friday reigned as the official beginning of the holiday shopping season, with stores opening in the wee hours of the morning, but competition for coveted holiday spending shoved the Black Friday sales into the early evening of Thanksgiving Day.
The past few years, retailers have begun reeling their enthusiasm in with many including Burlington Coat Factory, DSW and Home Depot heralding that they will wait until the Friday after Thanksgiving to kick off their Black Friday sales as a goodwill gesture to their employees. While goodwill may have something to do with it, consumer backlash likely drove the reversal, retail analysts say.
According to Stephanie Cegielski, vice president of public relations for International Council of Shopping Centers, 77 percent of consumers surveyed indicated that they preferred retail stores to be closed on Thanksgiving.
“That doesn’t mean they aren’t going to shop, but they think it’s nice,” she said.
After all, Susie and Johnny really want this year’s popular new toy. Remember the Furby?
Containing Black Friday to Friday, “kind of keeps that longstanding tradition of Black Friday alive,” Cegielski said.
Notably, people don’t feel the same about restaurants and movie theaters, she said. People want those to remain open so they can enjoy Thanksgiving dinner out or catch a movie after the family festivities wrap up.
JLL recently released a report stating that 30 percent of consumers will start their holiday shopping prior to Thanksgiving, and more than 30 percent will start during the five-day period from Thanksgiving to Cyber Monday.
Consumers are expected to spend more than $700 on presents this year. —Caitlin Bowling
Old website continues to depress CafePress sales
CafePress continues to struggle with its aging website, as third-quarter revenue fell 22 percent. The Louisville-based e-commerce company said it recorded a quarterly loss of $3.6 million, which was 7 percent worse than a year ago.
“Challenges persist on CafePress.com that we believe are related to changes in search engine algorithms that have adversely affected our search visibility and traffic on the current site,” CEO Fred Durham said in a report to investors.
“While a significant portion of the new website will not be completed until 2018, we are working to mitigate the short-term pressure by making improvements to the current site in parallel with developing the new, modern CafePress.com,” he said.
Revenue on CafePress.com, at $10.9 million, fell 32 percent, while revenue from retail partners, at $4.4 million, improved 26 percent. Total orders, at 512,000, fell 18 percent, while the total average order size, at $29.99, fell 5 percent.
UofL hires new CFO from North Carolina
The University of Louisville named Kentucky native Jonathan Pruitt its new chief financial officer on Friday. Once approved by the UofL board of trustees, Pruitt is scheduled to join the administration on Jan. 16.
Pruitt — a native of Pikeville and graduate of Centre College and the University of Kentucky — has been the CFO for the University of North Carolina system, which is comprised of 16 public, four-year institutions and has a combined operating budget of $10 billion. Previous to his 11 years with UNC, he worked as a finance associate for the Kentucky Council on Postsecondary Education and a budget analyst in the governor’s Office for Policy and Management.
“The University of Louisville is a remarkable institution, and I am honored, humbled, and excited to assume this role,” stated Pruitt in the press release announcing his hiring. “As the higher education landscape becomes increasingly competitive, successful public institutions must be able to demonstrate their value proposition to students, families and taxpayers. UofL is well-positioned to enhance the social and economic mobility of the state and I look forward to joining President Postel and his team in the work ahead.”
Pruitt’s hiring fills one of the many top administrative positions that have been held on an interim basis over the past year. Previous CFO Harland Sands left UofL in January, with Susan Howarth serving as the interim CFO since that time. Among the current positions held on an interim basis at UofL are its president, provost, chief operating officer, vice president for health affairs, athletics director, vice presidents for university advancement and human resources, and the dean of the Speed School of Engineering. The number of high-level interim positions has been a concern of UofL’s accrediting agency, which placed the university on probation last year and will review its status again in December.
“We are thrilled to be able to bring someone with Mr. Pruitt’s credentials to the university,” stated interim President Greg Postel in the press release. “His expertise will be vital as we continue to streamline our financial processes and ensure we are accountable to our campus community and the citizens of Kentucky.” —Joe Sonka
The Diaper Fairy Cottage owner closing by Nov. 17
Emily McCay, owner of The Diaper Fairy Cottage, announced in a lengthy Facebook message that she planned to close the baby and children’s store by Nov. 17.
She and employees will start preparing to close the business, located at 1811 Bardstown Road, on Nov. 7.
“If you weren’t aware, I have recently survived leukemia. My treatments took me to a hospital in another city and out of the picture for over six of the past eleven months,” McCay wrote. “I was unable to lead because I was fully, and justifiably, trying to save my life with weeks of inpatient chemo followed by a bone marrow transplant through a gift of my brother’s stem cells. The amazing news is that it worked!”
Because of her illness, she has not been able to take as much of a hands-on role in the business for fear of coming in contact with a sick child.
“This summer and fall, I have truly enjoyed giving the business renewed life and order, and restoring the vibrancy of the Cottage and Service to its former days,” she said. “However, ultimately, I’ve recognized that this business needs more than I can and should give.”
While the illness was a major driver behind the closure, McCay also noted that the retail industry continues to change in ways that can make it difficult for brick-and-mortar stores to compete with online retailers.
F-Series propels Ford sales
Buoyed by strong demand for its F-Series truck, Ford Motor Co. sold 200,436 vehicles in October, up 6.2 percent from a year ago.
The automaker said it sold nearly 76,000 F-Series trucks last month, the best October since 2004.
Car sales remained flat year-over-year, at about 41,000, while truck sales, at 93,000, improved 11.4 percent. SUV sales rose 4.6 percent, to nearly 58,000.
Mark LaNeve, vice president for U.S. marketing, sales and service, said in a press release that the customers continued to favor high-end models of the Super Duty truck, which boosted the average transaction price for vehicle to $55,200, up $1,600 compared to a year ago. The Super Duty is made exclusively at Kentucky Truck Plant.
Sales for the Louisville-made Escape in October fell to 23,064, down 1.9 percent from a year earlier.
Louisville event company opens Cincinnati office
Event planner Lauren Chitwood has brought her two companies, wedding planning business Lauren Chitwood Events and corporate event planning businesses Olio Event Group, to Ohio.
The companies now have a presence in downtown Cincinnati at 652 Main St.
“Over the last several years, I’ve found myself in the Cincinnati region more and more as the area’s event business has taken off. In order to meet demand for both wedding and corporate clients, I feel that it’s the right time to open an office in the city’s center,” Chitwood said in a release.
She recently moved her businesses into new Louisville offices as well in the Germantown Mill Lofts development. —Caitlin Bowling
Louisville City FC to host national championship
An already great year for Louisville’s pro soccer club got even better this weekend: Louisville City FC advanced to the national championship match — and it will get to host it at its home venue, Slugger Field.
The third-year United Soccer League club on Saturday took the Eastern Conference crown by defeating defending USL champion New York Red Bulls II after overtime and a penalty shootout before just over 10,000 spectators.
LouCity will host the national championship at Slugger on Nov. 13.
The club had finished the regular season in first place in the Eastern Conference and around the same time got government support for its plan to build a $50 million soccer-specific stadium in Butchertown. —Boris Ladwig
Penalty for missing $130 million soccer stadium investment guarantee as little as $0
Speaking of the soccer club: To persuade the metro council to help the club purchase land for its stadium, club owners have guaranteed private investments of $130 million on the property — but the penalty they have to pay if they don’t meet that guarantee is no more than about $10 million, and could be as small as $0.
Late last month, the metro council approved issuing $30 million in bonds to purchase about 37 acres of land in Butchertown for $24 million, and spend to up $5 million for infrastructure, such as roads. In a lease-to-own deal, LouCity FC plans to acquire the land for $14.5 million over 20 years. Club owners plan to raise private funds for the construction of a $50 million, 10,000-seat stadium, to be completed in time for the 2020 season.
To convince some fiscally conservative council members to support the land purchase arrangement, the club owners just hours before the vote agreed to an additional provision that guarantees private investments on the site of at least $130 million, including the stadium.
However, if the property does not see at least $130 million in private investments, the club, after 20 years, may owe the city the difference between the city’s purchase price ($24 million) minus the club’s lease/purchase amount ($14.5 million) and the amount of local incremental taxes generated by the activity on the property.
Some possible scenarios:
- The property sees no developments at all. That would mean the club’s owners would owe the city $24 million over 20 years. This would mean a significant loss for the city, as it would pay $42 million for the property, including interest, but would have sold it for $24 million to the club’s owners.
- The property sees a $50 million stadium developed, but nothing else. That would mean the club’s owners would owe the city $24 million minus the amount of incremental taxes generated by the stadium development.
- The property sees $130 million in developments. The club’s owners owe the city the original lease/purchase price of $14.5 million, but no penalty because they fulfilled their obligations.
One wrinkle: The agreement contains a provision that allows the club to owe no penalty if it pays off the $14.5 million lease/purchase payment within 10 years — regardless of the value of investment made on the property. That means, as a worst case scenario for the city, the club’s owners could make a payment of $14.5 million 10 years from now and escape any penalty even if nothing is developed on the property — in which case they would spent $14.5 million to acquire a property assessed at $24 million, thanks to the city spending $42 million. —Boris Ladwig
KentuckyOne Health announced on Friday that Bruce Tassin would be the new CEO of the company, while continuing his role as the president of Saint Joseph Hospital. Tassin will lead KentuckyOne’s efforts to shift its emphasis on the central and eastern parts of the state, as it transitions away from UofL Hospital and Jewish Hospital in the Louisville market. While Tassin focuses on the future organization, officials said Chuck Neumann would continue his role as interim president and chief executive, overseeing the divestiture of entities primarily in Louisville, including Jewish.