Dan's Papers - April 10, 2009 -Corporate America: On Main Street and Wall Street

With the Dow Jones Industrial Average down to 12-year lows, the economy in a recession and an ugly outlook, we decided to take a look down at our local towns to see how Main Street America is doing.

Times have changed for the Hamptons however, and Main Street East Hampton looks a bit different than it used to. The mom and pops are certainly in the minority: it's all about corporate power. Few companies are more a symbol of the changes that have taken place over the years than the Starbucks, which stands out front and center in East Hampton, mocking the powers that be who tried everything to stop large corporations from doing business in East Hampton.

Ironically, these large businesses have never been able to justify the high rents they pay, which have dramatically driven up the high rents of mom and pops, driving them out of business. Being able to say, "We have a store on Main Street in 'The Hamptons,'" was worth having the store operate in the red because of the powerful advertising it afforded the company. Stephen Spielberg, after all, might walk by and think, "Hey, I'll put that company in my next movie."

Or perhaps Alec Baldwin will be caught in front of the store and a paparazzi will take his picture and the photo will get published in a national gossip magazine and before you know, whammy! International advertising exposure, all for a simple store in the Hamptons.

Beyond knight in shining armor fantasies and delusions of grandeur, a presence in the Hamptons may represent how Main Street is doing. I walked into Starbucks to see what the owner had to say but alas, could only meet a shift manager who said, "Things have slowed down, but its tough to tell."

"Where is the owner?"

"Owner? Ha! Starbucks is a huge corporation silly."

So I decided to talk to the owner of Starbucks the way everybody else does. I hit the Wall Street Journal and quite quickly learned how Starbucks was doing. I don't know about the Main Street store, but Starbucks on Wall Street has been doing unbelievably ugly awful. In the last year, the company has lost more than half its value in terms of stock price. That means if you invested $50K in Starbucks stock a year ago, you would today have less than $25K today. So, I guess if Starbucks were a mom and pop, they would say something like, "Business is a bit slow."

What about the local yockel jewelry store? Tiffany's on Main Street is also being sharply affected by the stock market down turn. One year ago, Tiffany's stock was trading around $45. Today, it's trading around $21. Ouch. Almost the exact same percentage drop as Starbucks. Walk into the gorgeous Tiffany store on Main Street and you would not be able to tell that things are different. The store still has employees and it's business as usual for the local staff.

As a local, sometimes I'm just really in the mood to buy a $500 Coach bag and what better place to go get one than Coach, which had an outlet store on Main Street. That was replaced by the full price version. Now that's gone, but a new Coach will open on Newtown Lane in May. How has the economy affected this stock? Ewww.

It's so bad that it was hard to look it up. Coach's stock is down well over 50%, trading at around 12 bucks. A year ago, they were trading at 35 bucks. Now keep in mind, the Dow has lost half of its value, so Main Street is consistent - in terms of big corporations and stock market - with the over all economy. But Coach in particular is pretty bad. A $50K investment a year ago would have left you with about $16K today. That's like being able to buy 100 Coach bags one day and then a year later, only being able to buy 32.

J. Crew, the CEO notorious for purchasing one of the most expensive pieces of real estate in Montauk, known to host Victoria's Secret Models, Andy Warhol and The Rolling Stones to name a few, is also known for his little lease on Main Street East Hampton for a cool million dollars. How has that business weathered the storm? You wouldn't be a happy camper if you owned J. Crew stock in the last year. The stock has seen an ugly decline from about $50 a share to about $12 bucks. More than half lost, oye.

Could this mean that future rents on Main Street in East Hampton will see decreases? We'll have to wait and see, but one thing is for sure, Wall Street certainly affects Main Street, and in East Hampton, Wall Street and Main Street live in the same neighborhood.