business news in context, analysis with attitude

With brief, occasional, italicized and sometimes gratuitous commentary…

•  From the Washington Post:

"A federal judge on Tuesday blocked JetBlue Airways’ effort to merge with low-cost rival Spirit Airlines, handing the Biden administration a significant victory in its effort to preserve competition in a key industry that critics say has grown too concentrated.

"In his 113-page decision, U.S. District Court Judge William G. Young wrote that while a combined JetBlue-Spirit could put pressure on the four big airlines that dominate the industry, it would hurt consumers that rely on Spirit’s low fares.

"'If JetBlue were permitted to gobble up Spirit — at least as proposed — it would eliminate one of the airline industry’s few primary competitors that provides unique innovation and price discipline,' Young wrote. '… Worse yet, the merger would likely incentivize JetBlue further to abandon its roots as a maverick, low-cost carrier.'

"JetBlue and Spirit said in a joint statement that they disagreed with the ruling and were considering their next steps."

Y'think rulings like these cause a ripple of consternation among the proponents of Kroger's proposed $24.6 billion acquisition of Albertsons?  I know it is not apples to apples, but rulings like these suggest a tougher environment for these deals, in which regulators are defining competition within a more expansive framework.  

•  From the Wall Street Journal:

"National chains are accelerating their exit from malls for other types of retail locations, signaling more trouble for malls as consumers show a growing preference for shorter, more convenient shopping experiences.

"Jewelers, shoe stores and other specialty retailers are among the operators making the shift, indicating they will continue opening at outdoor, non-mall locations such as grocery-anchored shopping centers and strip malls after finding that they perform better and typically save on costs."

Examples cited in the piece:  "Bath & Body Works, which for years sold scented soaps and body creams to mall goers, is on track to open about 95 new locations for the fiscal year ending in February, while closing about 50, primarily in struggling malls. More than half of its 1,840 stores in the U.S. and Canada are now located outside of enclosed shopping centers … Foot Locker said it is aiming to operate half of its North American square footage outside enclosed shopping centers by 2026, up from 36% in the third quarter.

"Signet Jewelers, which owns brands such as Kay Jewelers, Zales and Jared, is closing up to 150 locations in the U.S. and U.K. by mid-2024, nearly all in traditional malls."

Expect one byproduct of this trend to be malls trying to lure supermarkets into opening in malls.  I continue to believe that this can be a good idea - as long as the malls agree not to charge any rent for five years, and afterwards operate on some sort of profit-sharing arrangement.  Because let's be clear - except in a dwindling number of cases, the malls need supermarkets a lot more than the supermarkets need the malls.