New Rules on Third Street Are Rotten for Apple's Retail Plans

Retail
by Deborah Belgum

Apple Computer Inc. is forbidden fruit on the Westside at least for now. Santa Monica's one-year moratorium on converting ground-floor restaurants into retail spaces at Third Street Promenade has kept the company from opening one of its new concept stores there.

Apple had wanted to take over the spaces now occupied by The Reel Inn and Fatburger, but the move was nixed because it would alter by more than 5 percent the amount of restaurant space on that particular block. That's against the city's current regulations.

It would be the first Apple Computer store on the Westside. The only other ones in the L.A. area are in Northridge and Glendale.

"I can't talk about it," building owner David Goldstein said. He added that he hopes something can be worked out.

Goldstein is one of several building owners displeased with the one-year moratorium passed on Jan. 8 by the Santa Monica City Council. The moratorium was imposed because many of the restaurants cannot afford the higher rents being paid by large retail chain operations and are being displaced.

Council members, who will revisit this issue later this year after forming a task force to study a long-range solution, believe that if retail stores go unchecked, the Third Street Promenade will turn into a run-of-the mill shopping mall.

"When we get to the point where we have been hemorrhaging restaurants for several years, it is time for the city to step in before we regret it," said Mayor Michael Feinstein.

Skechers Europe

Skechers USA Inc., which has been busy ramping up its sales in the international market, is taking over distribution of its casual footwear products from Broadway Sport in France all thanks to the Euro.

This month, the $960-million Manhattan Beach company opened a Paris showroom and office to increase its visibility in that country. Skechers, based in Manhattan Beach, wants to grow its international sales from 10 percent of the company's business to 25 to 30 percent of total revenues in the next three to five years. It has also taken over its own distribution of its shoes in Germany and Britain.

"Europe right now, because of the single currency Euro, is changing its way of doing business," said David Weinberg, Skechers' chief financial officer. "We always thought Europe was a big market which we wanted to attack ourselves in view of product and advertising."

Exploring Retail

Los Angeles County is about to get its first North Face store, which is opening on March 1 in, of all places, non-outdoorsy Beverly Hills.

Located at 423 N. Beverly Dr., it's the first store that North Face has opened since North Carolina-based VF Corp., known for such labels as Lee, Wrangler, Jantzen and JanSport, acquired the outdoor gear and apparel retailer in 1999. VF Corp. has been undergoing some challenges of its own as it has seen its earnings steadily decline over the last three years. VF Corp. reported net income of $137.8 million last year, down from $260 million a year earlier.

"It is such a high-profile location. For us it is a national and international brand location that will get seen by a lot of people. Also there is no other outdoor retailer in that area," said Sandy Wait, vice president of retail for The North Face, based in San Leandro, Calif.

The 7,500-square-foot Beverly Hills store is the first outlet to incorporate the company's new store prototype. Customers will be greeted by a wall of cascading water as they enter through Indonesian doors. The store will have design items from around the world.



Staff reporter Deborah Belgum can be reached at (323) 549-5225 ext. 228 or at dbelgum@labusinessjournal.com.

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