In an article published by the Wall Street Journal, it has been reported that Simon Property Group Inc. has done exceptionally well in 2010. The company, which owns 343 malls in the US, is the largest mall owner in the country. Despite accusations of antitrust actions by the Federal Trade Commission following Simon’s attempt to purchase Prime outlet company and adding 21 outlet locations to the company’s long list of assets. In addition to Prime outlets, Simon was trying to purchase the bankrupt General Growth Company, the second larges mall owner in the US. The company has showed signs of recovery, as it’s third quarter earnings more than doubled to $230.6 million, or 79 cents per share. Revenue increased by 5.9% to $979.3 million in the quarter. Moreover, occupancy rose to 93.6% along with the company’s higher renewed leasing contracts, which rose by an average of 2.8%.
Simon’s success concerns many retailers as the company’s growth increases the growing fear that it might poses to much power. If the company is able to acquire its competitors many retailers will lose their bargaining powers and take an unnecessary hit due to lack of competition. Although I find it wonderful that a company is able to show signs of recovery, it is questionable if such growth is not on the behalf of the many retailing companies that lease spaces in its malls.
Perhaps healthier competition could lead to reduced costs for the struggling retailing businesses, resulting in their own ability to recover from the recession.
Written by Michael Milner
Article source: http://online.wsj.com/article/SB10001424052748704141104575588010926207920.html?mod=WSJ_Retailing_leftHeadlines
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