Profit down, cash flow up for owner of Henderson mall

Thursday, Sept. 12, 2002 | 10:53 a.m.

Forest City Enterprises Inc. of Cleveland, owner of the expanding Galleria at Sunset mall in Southern Nevada, reported a profit for the second quarter ending July 31 of $12.7 million or 25 cents per share, down from $15.5 million or 34 cents in the year-ago quarter.

Forest City said a more consistent cash flow indicator of year-to-year performance, EBDT (earnings before depreciation, amortization and deferred taxes), for the second quarter was $43.6 million, or 87 cents per share, an 8.7 percent increase on a per-share basis over last year's second-quarter.

"We are enjoying the benefits of the acquisitions and openings over the last 18 months, which favorably impacted our EBDT during the quarter," said Chief Executive Charles Ratner. "Our portfolio of properties is strong and growing, as we focus on target markets with high barriers-to-entry where we enjoy distinct competitive advantages. This results in high growth potential for our shareholders."

Second-quarter revenues increased 4.2 percent to $239.9 million.

The growth in EBDT and revenue resulted primarily from 12 openings in fiscal 2001, as well as 14 portfolio additions around the nation. In addition, several important milestones were reached at major development projects in Denver, Boston, Pittsburgh and New York.

At Forest City's Galleria at Sunset in Henderson, work is almost complete on a $20 million, 121,000-square-foot expansion to accommodate 13 new stores.

Several stores will make their debut in the area when the expansion opens Oct. 11. Galyan's, an Indiana-based sporting-goods retailer, will open its first store in the state, as will Hollister Co., a clothing store and sister company of Ohio-based Abercrombie & Fitch.

Abercrombie & Fitch will also open its first store outside the Las Vegas Strip at the Galleria expansion.

Other retailers leasing expanded space at Galleria include PacSun, a California clothing, accessories and show store aimed at teens and young adults, and Agaci Too, a Texas fashion retailer targeted to women between 15 and 29. No Fear also gears its clothing toward teenagers, and will be in the new lineup. Other tenants include Robert Wayne Footwear and T-Mobile.

New marketing approaches at the mall are accompanying the stores.

Marketing Director Vicki Duncan said Galleria at Sunset is assembling a database it will use to launch an "e-club" when the stores open. The service will initially target about 2,000 core customers with mall news, special incentives and sale opportunities.

It is the first of two additions Forest City plans at Galleria at Sunset. Duncan said the second expansion is on the drawing boards now. She said it will likely be similar in size to the current expansion, and the company is looking at starting construction in 2003 for a 2004 opening.