Companies that bet on Florida's boom now blame it for bust

Charlotte ObserverJuly 13, 2009 

Amid the bad earnings, bankruptcies and other bleak financial news from Carolinas companies, executives are increasingly blaming some of the gloom on the Sunshine State.

From Fortune 500 corporations to family-owned businesses, many area companies invested in Florida in recent years to capture a piece of the state's population boom. Now that the housing market has collapsed, growth has stalled, tourism has ebbed and consumer spending is down, a chill has fallen on the state's once-sizzling economy.

"They all rode the wave, and the wave came crashing down," said economist Sean Snaith, director of the University of Central Florida's Institute for Economic Competitiveness in Orlando.

In the Carolinas, Charlotte's emergence as a headquarters for national corporations, plus Florida's proximity & mdash; attractive to regional companies — have combined to make the state a sore spot with a range of businesses:

In June, the parent company of Boyles Distinctive Furniture, which has stores in Pineville and Hickory, filed for Chapter 11 bankruptcy protection, citing losses related to failed stores in Florida. The parent company, Conover-based Hendricks Furniture Group, had boosted its Florida presence in recent years, opening a dozen stores just as the housing market began to collapse. By early this year, all of its Florida stores were closed.

Also last month, prolific Charlotte-based developer Crescent Resources filed for bankruptcy protection, with its worst losses coming in Florida. The developer has asked for a bankruptcy judge's permission to abandon two Florida real estate projects, with a combined 3,236 acres, as it reorganizes.

In May, the chairman and chief executive of Mooresville-based Lowe's said stores in the South Florida region saw sales drop by double digits in the first quarter from a year earlier. Of its 1,675 home improvement stores, Lowe's has 116 in Florida, second-most among states.

Another local Fortune 500 company, Sonic Automotive, regularly labels Florida a weak spot in earnings calls. The dealership chain has 13 locations in Florida, which accounted for 6.4 percent of its 2008 revenue.

To be sure, other states have punished area companies' profits. Lowe's officials said eight other regions, of 23 total, saw double-digit sales declines in the first quarter. Bank of America has lumped Florida in with the western states of California, Arizona and Nevada as difficult markets in the recession. And as bad as they are for area companies, woes in Florida alone haven't brought the entire Carolinas economy to its knees.

Most economists expect the recession to end nationally this year, with a modest recovery starting in 2010. A recent forecast on Florida, however, said it “faces an even more difficult road to recovery."

"The Sunshine State went into recession a full nine months ahead of the nation," Wachovia senior economist Mark Vitner wrote in June, "and excesses in housing and commercial real estate are considerably worse than the nation as a whole."


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