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financial
financial

In the Wake of Katrina: Big Easy's Big Struggle To Get Back to Business

The obstacles are formidable for New Orleans merchants that were spared major water and wind damage and are trying to get back to work.

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financial/news
Yvonne La Fleur at her store

Yvonne La Fleur at her store.

Photo By Sharon Donovan

Roz Weinstein and partner Bonnie Wilson with a national guardsman in front of their boutique Weinsteins
The Roman Candy cart on St Charles Avenue
Saks Fifth Avenues damaged store

Saks Fifth Avenue's damaged store.

Photo By Sharon Donovan

NEW ORLEANS — Yvonne La Fleur sat alone in her dimly lit namesake women's specialty store here, a fixture in the affluent Uptown neighborhood of shops, cafes and residences dating to the late 18th century.

Pen in one hand, telephone in the other, La Fleur was trying to connect with her customers, part of New Orleans' diaspora in the aftermath of the city's great trial, Hurricane Katrina.

The storm and flooding destroyed or damaged communities representing about 80 percent of the metropolitan region and displaced hundreds of thousands of residents and businesses. But La Fleur and other merchants who were spared major water and wind damage are trying to get back to work. The obstacles are formidable.

Her husband, Jimmy Walsh, and accountant, Gordon Dumont, weigh in often with the same suggestion: "'Yvonne, this is the perfect time to retire,'" she said mimicking their tone. "But I stick to my slogan — ‘if you rest, you rust.' Or maybe in this environment, you mold."

There is a desperate need for housing and workers. Municipal services are fragile, at best. There is no functioning public school system and the city has laid off almost half of its workforce of 6,000, leaving only the police, fire and emergency medical services intact. Tourists, who were the economic blood of the city, are gone. The tax base has been decimated.

And bigger and more basic issues must be resolved. Foremost is establishing a clear vision of how and where to rebuild the city and restore the system of levees, floodwalls and environmental barriers to protect New Orleans from the most severe category 5 hurricanes.

Just four of the city's seven shopping malls are back in business, and major retailers such as Macy's and Saks will stay shut for months. A curfew remains in effect and New Orleans will be vulnerable to even tropical storms for a long time. Many merchants have set up temporarily in Baton Rouge, La., and other cities, others indicate they won't return or will close.

The effort to re-create a semblance of retail life will depend on all of those factors, among others.

La Fleur does not expect any of her seven workers to return, although she has offered to house them in her home. "Some say they're afraid to come back, others want more time to think about what they're going to do," she said.
Still, La Fleur — like others — appears determined not to let these challenges derail her plan to carry on with the retail shop she started 36 years ago on Hampson Street, within view of the levee where the Mississippi River makes a hairpin turn. Her business occupies the entire 10,000-square-foot building.

"I'll keep going as long as I can," La Fleur said. "I'm into the last weeks of the year and my goal is to be able to pay the property tax [on the building she owns] with what Christmas sales pull in."

Her attitude resonates in New Orleans. There are nascent indications that the city is awakening. "Help Wanted" signs are posted on open stores as the restoration of utilities and city services offer a glimmer of normality. The National Guard, once 12,000 soldiers strong, is now barely visible with 2,000.

City officials estimate that 100,000 to 150,000 people have returned to their homes, some for only day-long visits to assess damage. Once salvageable homes are reoccupied, the most optimistic officials predict the population might grow to 250,000 within 18 months, slightly more than half of the pre-Katrina population of 462,000. Mayor C. Ray Nagin has said that New Orleans — "if rebuilt stronger and better" — might eventually be home to as many as 600,000 people.

In the shadow of current conditions, however, those days seem distant. Still, people celebrate what outsiders might consider token indicators of resurgence. The reappearance of the rickety iconic Roman Candy cart selling sticks of pastel colored taffy on St. Charles Avenue was front-page news.

Customers jam the few open restaurants and bars in the French Quarter, where the curfew has been pushed to 2 a.m. from 6 p.m., and in Uptown and the historic Garden District. To deal with the lack of kitchen and wait staff, some midpriced bistros are serving their entrees on paper plates with plastic tableware. Famed restaurants such as Antoine's, Brennan's, Arnaud's and Galatoire's may open by Jan. 1.

Most stores close by 5 p.m. The once 24-hour-a-day Café de Monde is selling its signature coffee and beignets — puffy pockets of fried dough topped with powdered sugar — from 6 a.m. to 8 p.m.
Across Chartres Street, a trombonist plays native son Louis Armstrong's tune, "Do You Know What It Is to Miss New Orleans" on a sidewalk facing an almost vacant Jackson Square, where President Bush made a televised promise that New Orleans and the Gulf Coast would be rebuilt.

Along once vibrant Magazine Street with its 120 boutiques, art galleries, antiques shops, and cafes, only 20 percent are back in business, said retailers Bonnie Wilson and Roz Weinstein, whose 1,500-square-foot store, Weinstein's, is a high-end shopping destination.

The shop was among the first to open more than two months ago — along with Belladonna Day Spa, whose owner Kim Dudek pared down the offerings to a handful of "restoration" services, including massages and facials. "I felt it absolutely critical to be available to the few people who were venturing back," she said.

When faced with few customers, Weinstein and Wilson, printed 800 postcards to mail to their scattered customer base. Hundreds of phone calls and e-mails to friends and friends of friends finally netted temporary addresses.

"We just wanted to let them know we were back in town — and by inference, they should come back, too," Weinstein said.

As a few customers return, they are not interested in couture, she said. Even though many have lost their entire wardrobes, they are shopping for T-shirts and black pants, at $30 to $90 and $300 price points, respectively.

"There is just no precedent for this kind of business climate," Weinstein said. "We are playing it day-to-day, trying to figure out if we have too much inventory or not enough."

Getting a handle on the market is a bit like shooting at a moving target. When in doubt, some take the creative route. While she was in exile for two months in Mississippi, Maine and South Carolina, jewelry designer Mignon Faget turned her anxiety to creating a tiny fleur de lis lapel pin. Attached to a royal blue ribbon, the Rebirth Ribbon, was introduced in her shops on Oct. 28 in sterling silver and bronze d'ore, for $25 and $12, respectively.

More than 500 have been sold and orders for 1,000 are stacking up, she said.
While some small specialty retailers are climbing back into business mode, the city's shopping centers have a long road to travel because of extensive wind and rain damage, including the 115,000-square-foot Saks Fifth Avenue, the anchor of Canal Place, a 230,000-square-foot luxury shopping center. While some of Canal Place's 40 tenants may open in the spring, Saks is undergoing a $20 million reconstruction and will be the centerpiece of the center's reopening in the fall, said co-owner Darryl Berger.

When the restoration of Saks is complete, Berger expects the rest of the stores — including Brooks Bros., Ann Taylor, BCBG and Betsey Johnson — to reopen, too.

In addition, he said, other high-end fashion retailers are being signed — a strategy that will enhance Canal Place's focus as a regional fashion destination, Berger said, declining to elaborate on specifics.

Unlike Canal Place, the 550,000-square-foot New Orleans Centre, also in the Central Business District and owned and operated by the Hertz Investment Group, has no timetable to resume operations because it was so badly damaged, said Gary Horwitz, chief operating officer and chief financial officer.

Sandwiched between two devastated properties — the Hyatt Hotel and the Superdome — New Orleans Centre's anchor was Macy's and tenants included Ann Taylor, Limited and Express.

In similar limbo is General Growth Properties' Oakwood Mall in the city's West Bank. But GCP's Riverwalk, a former Rouse Marketplace straddling the Mississippi River near the New Orleans Convention Center, opened on Monday with 25 percent of the stores operating. Riverwalk's sales no doubt will be affected by the lack of tourist and convention traffic, while Oakwood Mall was said to have suffered considerable losses from fire and looting. Mervyn's, Dillard's, J.C. Penney and Sears were anchors, along with tenants such as Victoria's Secret, Limited and Express.

In the relatively unscathed suburbs on the west and southwest fringes of New Orleans, Wal-Mart stores and shopping centers did not incur as much damage. Of Wal-Mart's 14 stores (including Sam's, Supercenters and general merchandise stores) in the greater New Orleans area, only six are still closed, company officials said. Both Target stores, including one that anchors Clearview Mall in Metairie, are open.
Clearview and other suburban centers are posting record sales as they draw residents from now shuttered malls. The 750,000-square-foot Clearview, where Sears is also an anchor, is averaging low-double-digit sales increases in the weeks since it opened in mid-October.

Lakeside Mall, also in Metairie, opened Oct. 28 with only half of its 120 tenants doing business, but posted a 600 percent increase in sales compared with the same weekend a year ago.

"The retail stores that are open are booming, they are packed," said Ed Wilson, Lakeside's general manager.

The sounds of buzz saws and hammering behind the brown-papered storefront windows are clues to the eventual return of shops such as J. Crew and Banana Republic. "We need the majors back," said Jeffery Feil, ceo of the New York-based Feil Organization, which owns and operates the center.

Anchors Dillard's and J.C. Penney opened in mid-November. Among the throng at Lakeside Mall on opening day were Carl and Pam Hubbert, whose home in Metairie escaped damage. They strolled with their children Jonathan, 2, and Kaitlyn, 5, but were not shopping for any specific item.

"We're just searching for a sense of normalcy," Carl Hubbert said. "This is our first real outing in two months — and we just wanted to do what we used to do."

Esplanade Mall, a 900,000-square-foot center in Kenner, about 20 miles west of New Orleans, has posted double-digit sales increase since it opened in mid-October with Mervyn's and Dillard's anchoring its 130 tenants. Only Macy's is yet to open.

"We think the higher sales are due to a pent-up demand and a whole new group of customers who are either moving or temporarily settling here," said Anne Mialaret, marketing director.

In a city dependent on tourism and convention trade, hotel occupancy is also a recovery barometer. Of Marriott International's 12 New Orleans area properties, only three remain closed, including the Ritz-Carlton. About 13,000 to 14,000 hotel rooms are available. By Jan. 1, Steven Perry, executive director of the New Orleans Convention and Visitors Bureau, expects that 20,000-22,000 hotel rooms to be available. And at Mardi Gras in late February, as many as 29,000 hotel rooms — or almost 90 percent of the inventory — will be usable.
Mardi Gras, many city officials agree, will be a benchmark of the recovery

"It's going to be the 150th anniversary of Mardi Gras and it will serve as a true symbol of the city's official reopening," Perry said, acknowledging that the normally 20-day carnival season may be pared to six days. Other events synonymous with New Orleans in the spring —Jazz Fest, the French Quarter Festival and the New Orleans/Tennessee Literary Festival — are on track.

Canceled conventions for the fourth quarter of this year and the first two quarters of 2006 are a $5 billion to $8 billion loss for the city's economy, Perry said. While small groups might still convene in the spring, the city won't host its first major convention until June — the 20,000-member American Library Association.

"That will be our official bell-ringing for the return of the convention business," Perry said. "And, in a very real sense, the 3.2-million-square-foot Convention Center will be the newest and freshest it's been since it opened."

And merchants like La Fleur, whose shop features a dozen merchandise categories ranging from ready-to-wear and accessories to lingerie, footwear and millinery, work the phones and persevere. She shipped 60 brides their gowns in time for their fall weddings.

Each time the phone rings, La Fleur answers with an upbeat greeting. "A friendly phone call can ring the register," she said, smiling. "It is going to take that kind of direct marketing to get through the year."