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By Jason Stipp | 02-18-2010 01:36 PM

Malls on the Mend, Soup Psychic and Greenwashing

Morningstar markets editor Jeremy Glaser on Campbell's mind reading, Simon's shopping trip and shades of green in SEC filings.

Jason Stipp: I'm Jason Stipp for Morningstar, and welcome to the Friday Five. This is our look back at five notable headlines for investors. Joining me, as always, with the Friday Five is Morningstar markets editor Jeremy Glaser. Jeremy, thanks for being here.

Jeremy Glaser: My pleasure, Jason.

Stipp: So what do you have for the Five this week?

Glaser: Mall M&A action picks up. Abercrombie begins to turn the corner. We'll have our footnote of the week, our favorite Tax Relief Week tidbit, and finally, we'll take a look at the cutting edge in soup science.

Stipp: Well, I always like to go to the mall, so let's start there.

Glaser: This week, Simon Properties made an offer for General Growth Properties, which is a bankrupt mall REIT, for about $9 a share, around $10 billion. This is not a surprising bid, necessarily, but it shows that there's some strength in the mall sector.

Most surprising, in some respects, is that General Growth summarily rejected the offer and said that they wanted to go around and look for better offers. The market seems to agree, as shares are trading well above the $9 offer price.

So the fact that there is a pretty big market for a bankrupt mall REIT at the moment, with decent properties, shows that there's some resilience in the commercial real-estate market and that investors haven't completely written the sector off yet.

Stipp: So while we're at the mall, A&F, a popular store, at least among the younger set, had some tough times recently, but they might be turning the corner?

Glaser: I'm not sure if they've turned the corner yet, but they're definitely looking at the corner. They had a really tough time during the recession, you're absolutely right. Their same-store sales were falling 20%, 30%, month after month after month, as people just eschewed these high-priced flip-flops and cargo shorts. Not really where the style was. Not really where the price point was.

But Abercrombie didn't want to lose their premium price point and their premium positioning and refused to discount like a lot of their peers did. This really had some trouble, but now that people are willing to spend a little bit more, you see people going into the mall, willing to maybe open the wallet, and the teenagers opening their wallets a little bit more than they did before.

I think an interesting thing about the company is their opportunity to expand, both in Europe and Asia. One of our colleagues from Europe was in town last week, and he mentioned that the thing his daughter really wanted was some Abercrombie and Fitch clothing from the United States. Hard to get in Europe. I think, as they expand into those other markets, they have some room for growth. Shares aren't incredibly cheap right now, but it is rated four stars, and if it sells off a little bit, it could be an interesting opportunity for investors.

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