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Retailers Expanding in The Face of A Downturn

Due to the real estate downturn, retailers have the upper hand in negotiating deals with landlords, prompting some to expand and open new stores in places that would once have been almost impossible.

Target announced its plans to open a total of 60 new stores in 2009, of which 27 are scheduled to open this weekend.

The news may be surprising to some. The company announced job cuts of 1,500 in January, but now thanks to Target's expansion each store may hire 150 to 225 new positions.

Similarly, Big Lots said it is opening 45 new stores nationwide, including previously pricey places like Florida and California, while closing 40 stores this year. This will be the first time that the company will be opening more stores than closing since 2004.

Big Lots announced earnings on Wednesday which topped expectations. This year, the retailer sits among the top S&P retailers that are up double digits.

“The developers and landlords are under a lot of pressure that they’re conceding a lot to retailers to keep them open because they need that rent coming in,” said Joseph Feldman at Telsey Advisory Group.

“[Therefore] you’re seeing better availability, and better rent concessions,” he said.

Analysts await the monthly retail same-store sales report due Thursday. Those sales, while still expected to be weak, will be somewhat more upbeat than they have been in recent months, analysts said.

Sales from the 35 retailers tracked by Thomson Reuters are expected to be down 1.2 percent, an improvement over January's 1.8 percent decline.

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Retail