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August 1, 2014

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Forever 21 is showing its faith in Las Vegas with big store

It’s the type of announcement that makes you do a double take.

A retailer with 4,934 square feet of space at Fashion Show mall planned to increase its footprint. Doubling or tripling the space would be significant, but when Forever 21 announced it was taking over 126,000 square feet of long-vacated space (with the elimination of a second Macy’s) in the mall, it generated attention as to why a retailer would so aggressively expand during the ongoing recession in Southern Nevada.

The store opens July 24 and its success should be watched closely by the industry.

Forever 21 is a Los Angeles-based specialty retailer of clothing and accessories and has nearly 500 stores in the United States and abroad.

The Fashion Show store will be its largest in the world and contrasts sharply with its typical model of smaller stores in malls. Its stores traditionally have averaged about 5,000 square feet. Since 2006, it has added stores in the 15,000 to 20,000 square foot range.

Forever 21 has 6,239 square feet at Boulevard mall, 16,957 square feet at Meadows and 7,953 square feet at the Galleria at Sunset.

Recently, Forever 21 acquired several Mervyns across the country and is in the process of remodeling them, said Larry Meyer, executive vice president. It recently opened a 91,000-square-foot store in New York City’s Soho district.

Meyer said it’s a great time to expand into a fashion department store because of the availability of real estate. That fits into the vision of its founders, South Koreans Dong-Won Chang and his wife, Jin Sook.

Meyer said the company believes in Las Vegas because of the growth on the Strip and because tourists continue to come to the city even though numbers are down from the past, he said. The Fashion Show mall has held its own in the tough economy, and Meyer said Forever 21 is happy to make it one of its flagships, he said.

“As bad or good as Las Vegas is or is not, the Fashion Show mall is a great mall,” Meyer said. “This is a great location and the right place to do something. It seems to be a mall for everyone.”

Forever 21 is known as a value retailer — a concept that is doing well in the recession, especially in Las Vegas where high-end retail has been the focus, but has been struggling compared with its past.

The Fashion Show, which caters to high-end and midlevel customers, and the Miracle Mile Shops at Planet Hollywood have fared well this year.

“I think value is always important regardless of the economy,” Meyer said. “Everyone wants to feel they are getting appropriate value. We have always been everyday low. And we have prided ourselves and have a reputation for great fashion.”

At Forever 21 cosmetics sell for less than $2 and dresses sell from $12 to as high as $40.

Forever 21 has its own designers and features its own brands. By expanding at Fashion Show, it will introduce new brands to Nevada, such as a greater assortment of cosmetics, jewelry, shoes and scarves, Meyer said.

John Restrepo, principal of Restrepo Consulting Group, said the expansion of Forever 21 at Fashion Show is an indicator that the value retailer sees a growing demand for its product line from tourists. This type of retailer has done well in the recession, he said.

“As we have seen, relative to spending on lodging, tourists are looking more and more to midpriced alternatives because of their reduced spending, especially for discretionary products and services,” Restrepo said. “You can then combine with this Forever 21 probably getting a lease at the center that matches its property line — a lease per square foot that’s probably been reduced because of the impact of the recession on the mall.”

Restrepo said the retailer could have chosen a suburban location, but preferred to be on the Strip because it could draw from tourists, especially because they have more spending power these days than locals.

Forever 21 employs 55 people at the existing Fashion Show store that will close when the bigger one opens. That store will employ 650 people.

Pulte executive retires

A longtime homebuilding executive well known in Nevada is retiring.

PulteGroup Inc., based in Bloomfield Hills, Mich., said that, effective Aug. 14, Steven Petruska, executive vice president and chief operating officer, will retire in conjunction with the company’s new organizational structure.

Richard Dugas Jr., chairman, president and CEO, will assume responsibilities for its homebuilding operations as the COO position is eliminated under the new structure.

“Since joining the company in 1984, I have had an amazing journey with PulteGroup as we have grown from a regional builder to a national homebuilding company. Given that we are ahead of schedule with many of our merger activities and our key business initiatives are on track, this is the right time for me to retire and move on to the next chapter of my life,” Petruska said in a statement.

He joined Pulte Homes in 1984 as the vice president of finance for the South Texas Division. During his 26-year Pulte career, Petruska has held numerous management positions of increasing responsibilities. Before being named to his current role as COO in 2004, he was area president for Pulte Homes’ Arizona and Nevada operations, and has served as president of the company’s Las Vegas Division and as president of the Southwest Region.

Pulte builds under the Pulte, Del Webb and Centex brands.

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