It’s tough talk but store closures are a simple reality of the retail business today. We highlight the closures, plans for closures and insight into what has made retail so challenging in 2016. The survivors will embrace omni-channel strategies, navigate through the growing cost of technology, evolution of their own e-commerce platforms and looking for innovative ways to reach consumers in every way possible even including partnerships with other retailers. “We’re closed” is now a familiar retail sign across the US.
Retailindustry.about.com keeps a running list of us store closures and that list is getting much longer in 2016 and beyond. The site list is extensive and starts with McDonald’s closing 500 US stores this year followed by Office Depot/Office Max (400), Barnes & Noble (223), Children’s Place (200) and Walgreen (200). Cache, Wet Seal, dELiA*s and Deb Shops are just some of the victims in a report “Out of Fashion: The Trouble With Tweens and Teens“.
Aeropostale is likely to file for bankruptcy, putting 175 stores many jobs at risk. Sears plans 68 Kmart and another 10 Sears store closures to reduce costs. Men’s Wearhouse plans to close 250 stores, including all of its outlet stores, sends its stock soaring. Quartz provides a map of Walmart’s 269 store closing locations, including all of its Walmart Express locations which did not make a profit. Staples 2015 revenue dropped 9% to $9.5 billion as it closed 63 US and 10 Canadian stores in 2015. As we reported earlier Sports Chalet will close all of its 140 stores. After closing 500 of its 17,000 stores, McDonald’s for the first time will have fewer restaurants than the previous year.
US 2016 Store Closings – All Retail Chain Store Locations to be Closed
When Macy’s announced on September 8, 2015 that it has plans to close 35-40 underperforming brick-and-mortar retail stores in the 2016 calendar year, it was not the first of the largest U.S. retail chains to reveal future plans to close physical store locations in the 2016 and beyond. In fact, long-term store closing plans had already been announced by retail chains like Office Depot, Walgreens, Aeropostale, American Eagle Outfitters, and The Gap.
Barnes and Noble has already made its store closing plans public through 2023. Generally large retail chains are reluctant to be publicly transparent about their future store closing plans because of the speculation it triggers with retail industry experts and consumers. Via retailindustry.about.com
Store Closings 2016 Roundup: Macy’s, Gap, Walgreens, Office Depot etc.
This 2016 U.S. Retail Store Closings list is arranged numerically according to the number of store closings. The number in the left column is the total number of stores that have been designated for closing in the calendar year of 2016 and beyond. 2016
Store Closings Roundup List started early, as some of the largest U.S. retail chains like Macy’s, The Gap, Walgreens, Office Depot, and Barnes and Noble made their store closing plans for 2016 and beyond public well before the 2015 calendar year was done.
It’s generally easy for retail chain leaders to know far in advance which brick-and-mortar leases of underperforming stores won’t be renewed. But that doesn’t mean those leaders want to reveal their store closing future to every retail analysts, investor, and consumer on planet earth. Via retailindustry.about.com
Out of Fashion: The Trouble With Tweens and Teens
Apparel retailers targeting tweens and teens are taking a big hit. While we have already seen filings from the likes of Cache, Wet Seal, dELiA*s and Deb Shops, this is likely just the beginning of a larger trend. Amid dwindling sales at many (but not quite all) tween and teen-focused chains, the sector is positioned for further consolidation and additional filings.
In the heyday of the American mall, retailers of this type were major traffic drivers. Why are they so challenged today?
Historically, the mall played a significant role in the daily social lives of American tweens and teens. This was especially true in the 1980s and 1990s, when kids would hang out at the mall for hours on end. But beginning with the release of the iPhone in 2007, social media began to displace the mall in the hearts and minds of America’s youth. Gradually, young people and their parents began visiting malls less frequently. The 2008 economic collapse, which drove even affluent Americans straight into the arms of Target, Walmart and Costco, didn’t do teen-focused specialty retailers any favors, either. Via abladvisor.com
Aeropostale Likely to File for Bankruptcy
The once popular retailer is reportedly preparing to file Chapter 11 bankruptcy—a move which would allow the company to lessen its debut burden and attempt a comeback, Bloomberg first reported Thursday, citing people familiar with the matter.
Aéropostale may also seek a loan to finance the company while it goes through the bankruptcy process—though the company could work out a deal or sell itself as well.
The retail chain, which started in 1973, has been bleeding sales for three straight years as its target demographic, younger consumers, and low-income shoppers turn to other options. Annual sales dropped from $2.29 billion in 2012 to $1.5 billion in 2015. Via fortune.com
Sears to close 78 stores this summer
Sears Holdings Corp. will close another 78 stores —68 Kmart units, and 10 Sears stores — as it looks to restore profitability. That accounts for about 5 percent of its store base, which is nearly 1,700 stores.
The ailing company, based in Hoffman Estates, Illinois, had said in February that it would accelerate the closing of unprofitable stores following a “challenging” holiday season. The move announced Thursday is expected to generate a “meaningful level” of cash from the liquidation of store inventories and from the sale or sublease of some of the related real estate, it said Thursday. Via finance.yahoo.com
Men’s Wearhouse Store-Closing Plan Sends Company’s Stock Soaring
Tailored Brands Inc. jumped the most in more than two years after announcing plans to close hundreds of stores, part of a cost-cutting push for the owner of Men’s Wearhouse and Jos. A. Bank.
The Houston-based company plans to shutter about 250 locations this fiscal year, including all of its outlet stores, according to a statement Wednesday. Tailored Brands also is reducing expenses by about $50 million by slimming down its operations and overhead.
Investors applauded the move, which followed an unprofitable holiday quarter and a slide in sales. The stock rose as much as 16 percent to $18.91 in New York. The shares –traded under the Men’s Wearhouse name until February — were up 11 percent this year through Wednesday’s close.
Tailored Brands, the largest retailer specializing in men’s suits, is scrambling to align its two major divisions. While sales have been growing at Men’s Wearhouse, Jos. A. Bank faces a customer exodus. Last year, management abandoned Jos. A. Bank’s “buy one suit, get three free”-style promotions, irking longtime shoppers. That sent the chain into free fall. Jos. A Bank’s same-store sales plunged 32 percent last quarter, compared with a 4.3 percent gain for Men’s Wearhouse. Via bloomberg.com
List and map of Walmart store closings in the US
Walmart is shutting down 269 stores as the company tries to cut costs and focus on e-commerce. More than half of these stores are in the US.
Included among the closures are all 102 locations of Walmart Express, its smallest stores. Express began in 2011 as an experiment with bodega-like Walmarts in spots, mostly urban and rural areas, where the company couldn’t open the sprawling “Supercenters” for which it is best known. But they weren’t successful.
Walmart hasn’t yet disclosed all of its closures outside the US. Here is a map and list of the store closures in the company’s home country Via qz.com
Staples, Inc. Announces Fourth Quarter and Full Year 2015 Performance
“In 2015, our top priority was to stabilize total company sales and earnings after a few years of heavy investment to transform Staples,” said Ron Sargent, Staples’ chairman and chief executive officer. “While our Q4 results came in at the lower end of our expectations, we continued to make good progress on many of our key initiatives, and we have a solid plan to get back to earnings growth in 2016.”
Total company non-GAAP operating income rate declined 1 basis point to 5.06 percent from an operating income rate of 5.07 percent achieved during the fourth quarter of 2014. This reflects the negative impact of fixed costs on lower sales offset by improved product margin rate in North American Stores and Online and aggressive cost management.
Comparable store sales decreased five percent, reflecting a four percent decline in average order size and a two percent decline in traffic versus the prior year. Staples.com sales declined two percent in U.S. dollars and grew one percent on a local currency basis during the fourth quarter of 2015. Operating income rate increased 14 basis points to 5.1 percent compared to the fourth quarter of 2014. This increase primarily reflects improved product margin rate and lower incentive compensation expense versus the prior year. This was partially offset by increased delivery expense, increased marketing expense as a percentage of sales, and the negative impact of lower sales on fixed expenses.
For the full year 2015, North American Stores and Online achieved sales of $9.5 billion, a decrease of nine percent compared to 2014. Sales growth was negatively impacted by approximately three percent due to store closures during the past year. Sales growth was also negatively impacted by three percent due to changes in foreign exchange rates versus the prior year. Full year 2015 operating income rate declined 3 basis points to 4.5 percent versus 2014. In 2015, the company closed 63 stores in the U.S. and closed 10 stores in Canada, ending the year with 1,607 stores in North America. Via staples.newshq.businesswire.com
Sport Chalet to shutter all stores
Vestis first acquired EMS and Sport Chalet in July 2014 and has since faced operational challenges to the point of considering bankruptcy. The company announced that although its businesses are improving performance overall, Vestis is still plagued by the pressures of the sporting goods industry.
“As a result, EMS and Bob’s are now delivering solid performance but have been burdened by limited financial flexibility due, in part, to the unique competitive pressures facing Sport Chalet,” said Vestis CEO Mark Walsh. “After reviewing a variety of strategic alternatives, we determined that the best path forward is to separate the businesses and confront the challenges that have been hindering our overall progress. We are confident EMS and Bob’s will be well-positioned to thrive at the conclusion of the process.” Via fierceretail.com
McDonald’s set to have fewer locations next year for first time ever
In April, McDonald’s said it would close about 700 underperforming locations around the world this year, including in the U.S. CEO Steve Easterbrook, who stepped into the role on March 1, also later laid out plans to restructure the company to remove layers of bureaucracy and move more nimbly.
In any given year, some underperforming McDonald’s restaurants will close. But previously, the number of closings has been outweighed by new restaurants that open.
The U.S. store closings will be a mix of franchised and company-owned locations, Hary said. She noted that the closings are part of a strategic review intended to set the stage for the future growth. The company did not provide a list of locations expected to close. Via cbc.ca
Retail Reality Check
Of course these are challenging times for retailers. Watch for an upcoming profile of the bright side – those retailers who are also doing well and even thriving in the new retail reality. Want weekday morning News highlights in your inbox for free? Subscribe at the top of the page. Enjoy your weekend and we’ll see you Monday morning.