You might call today’s post in the Cashback Industry News the “Store Closing” edition. While it’s not necessarily positive news, it’s a reality for today’s retailers trying to maximize reach and sales, minimize costs and build new omnichannels in order to reach consumers more effectively and more profitably. So here’s a roundup of which retailers are closing where and when and what their prospects are in the new retail reality.
USA Today highlights top retailers planning to close a total of more than 1,000 US stores. Macy’s announced plans to shut 100 of its 675 US stores – 15% of its operations. Coach plans to close 250 of its stores or stores within a store across the US in an effort to restore position as a luxury brand. Sears said it will close another 10 stores and an additional 78 Kmart stores in the US.
Office Depot prepares for the closure of 350 US stores in the next three years, following 400 store closures in the first 6 months of 2016. 95 Ruby Tuesday restaurants will be closed following 4th quarter losses of $27.6 million. Ben Moss Jewellers will close all 54 of its Canadian stores. Best Buy continues to close underperforming stores as leases come up for renewal. Lest you think store closures are only happening in the US and Canada, Woolworths in Australia announced plans to close 27 stores and eliminate 500 jobs.
NinthDecimal used it’s mobile foot traffic application to predict the failure of Sports Authority and looks at ways to use Big Data for better analysis of retail operations. Using its app, the company also predicts Big 5 and Walmart will benefit the most by getting customers due to the Sports Authority closure. Finally, research by CoStar Group shows leases are growing again from emerging new US retailers despite closures and bankruptcies of other retailers.
Top retailers that are closing stores in 2016
Retailers continue to face a challenging environment in 2016, with Macy’s becoming only the latest top name to announce a wave of store closings this year.
Macy’s (M) said it will close 100 of its 675 full-line locations amid falling profitability. The department-store chain is only one in a list that ranges widely from specialty apparel to sporting goods.
Among the top retailers closing stores in 2016 so far: Sports Authority (460), Walmart (269), Aeropostale (154), Kmart (78), Ralph Lauren (50), Sears (10) Via usatoday.com
Macy’s to close 100 stores
Macy’s (NYSE:M) is closing stores and reallocating resources as the retailer attempts to stave off deteriorating sales and better position the chain as mall traffic declines.
The plan is to close roughly 100 locations, or 15 percent of its store base, in early 2017. Most locations are currently cash flow positive, but have seen declining volume and profitability in recent years, said Jeff Gennette, Macy’s president, who has been designated to succeed Terry Lundgren as CEO in 2017.
The real estate value of some locations exceeds the value of the store itself. The locations have not been identified. The 100 stores have combined annual sales of roughly $1 billion, which is expected to be captured by nearby stores and online. Via fierceretail.com
Coach closing 250 department store locations
CEO Victor Luis said the company is rationalizing its department store exposure and will close 250 locations, a 25 percent reduction of this format. The goal is to reduce the availability of discounted merchandise and markdown allowances.
“While we understand that consumers may use department stores for trial and shopping across brands, the high level of promotional impressions created negatively impact our long-term brand health, while generating confusion across channels,” he said on a conference call.
Management is focused on elevating the brand and its status. Coach’s cachet has been hurt by years of discounted merchandise and heavy presence in outlet malls. The goal is to reposition it as a luxury brand. Via fierceretail.com
List of Sears, Kmart stores closing
Sears and Kmart just closed nearly 80 stores — see if your local store is on the list
The chain said in April that it would accelerate the closing of 78 stores, including 10 Sears stores and 68 Kmart stores. All but two were expected to close in late July.
Sears has been struggling. In the most recent quarter, Sears’ sales dropped 8.3% to $5.39 billion. Same-store sales dropped 7.1% at the company’s namesake stores and fell 5% at Kmart stores. Via businessinsider.com
Office Depot Closing 300 More Stores
Office Depot, which scrapped a plan to merge with larger rival Staples in May on antitrust concerns, said it would close about 300 more stores in the next three years to help cut annual costs by $250 million by the end of 2018.
The company’s shares were up about 1.2% at $3.33 in pre-market trading on Wednesday.
Office Depot, which closed 400 U.S. stores by the end of the second quarter, said its sales fell 6.5% to $3.22 billion in the quarter ended June 25, roughly in line with the average analyst estimate, according to Thomson Reuters I/B/E/S. Via time.com
Ruby Tuesday shares sink after earnings miss, 95 restaurant closures announced
Ruby Tuesday Inc. RT, -2.61% shares sank 10.2% in Thursday after-hours trading after the restaurant chain reported quarterly losses and said it would close about 95 underperforming restaurants by next month.
Ruby Tuesday reported a fourth-quarter net loss of $27.6 million, or 46 cents per share, compared with net income of $4.3 million, or 7 cents per share, for the same period last year. Adjusted earnings totaled 10 cents per share, missing the 11 cents-per-share FactSet estimate. Revenue totaled $279.3 million, down from $296.8 million last year and below the $285 million FactSet consensus. Via marketwatch.com
Ben Moss closing all stores in Canada
The company said in May it was restructuring after being hit by a weak Canadian dollar and soft economy in regions where it operates. At that time, 11 stores were scheduled to close.
“After considering all of our restructuring options, including selling all or part of the business as a going concern, we have determined that this is the best course based on the challenges we are facing,” said Naveed Manzoor, chief restructuring officer. Via fierceretail.com
Best Buy Store Closures – The Dominoes Fall?
Looking back through news and announcements we see that this may be a trend as more consumers shop online for electronics through retailers like Amazon.com (NASDAQ:AMZN) and superstores like Costco Wholesale (NASDAQ:COST) and Wal-Mart (NYSE:WMT). Via seekingalpha.com
Woolworths to close stores, cut 500 jobs
It follows a $3.2 billion write-down by the retailer in February when it announced plans to sell its Masters and Home Timber and Hardware businesses.
Woolworths chief executive Brad Banducci is implementing an almost $1 billion restructure slashing 500 jobs and closing 27 underperforming stores in Australia and New Zealand
The company has also separated its Big W department store chain from online retailer Ezibuy, ramping up speculation it is preparing for a quick sale of both entities. The retailer’s shares were up more than 7 per cent on the news. Via smh.com.au
Mobile-location data predicted Sports Authority’s demise and reveals the retailers that may benefit from it
Location history and foot traffic data are increasingly being used for audience identification and offline attribution. However, there are numerous other non-advertising uses for the information — among them, predicting who’s going to benefit when a retail competitor goes out of business.
That’s the scenario NinthDecimal exposes with a new infographic built on extensive analysis of consumer foot traffic data in the sporting goods retail category. Starting in May, when Sports Authority announced it was closing its doors, NinthDecimal analyzed “trillions of data points” representing the shopping and foot traffic patterns of more than 130 million mobile consumers in the US.
The company discovered that, among a range of retailers, Big 5 Sporting Goods and Walmart are in the strongest position to pick up new business when Sports Authority closes. They saw the most foot traffic from Sports Authority shoppers among a set of competing retailers. Via marketingland.com
Retail Market Remains Rife with Contradictions: Lower Vacancy, Little New Construction but Weak Rent Growth
No where have the economic forces of creative destruction been harder at work than in the U.S. retail market. Lately the sector has been a case study in contradictions, marked by the growing demand from an emerging set of new retailers that have added hundreds of new stores across the country, even as many established chains in the old order scale back, close stores or go bankrupt.
Looking at the national retail occupancy numbers, one would consider the recovery in the retail property sector to be complete. Retail vacancy rates across the country are well below those of the previous cycle and continue to trend lower. Shopping centers and malls absorbed another 25 million square feet in the second quarter, more than twice the amount of new retail space added to the market during the same period, according to CoStar’s Midyear/Second Quarter 2016 Retail Market Review and Forecast.
And yet on the other hand, the tepid rate of rent growth, which has held stubbornly at about 2.8% annual growth since 2014, has kept retail bottled up as the last CRE property sector still shy of its pre-recession rent peak. Via costar.com
New retail concepts ahead
Thanks to the impact of e-commerce and changing consumer buying patterns, we expect to see continued disruption of the traditional marketplace. We’ll also see new concepts appear faster, like pop-up stores, retail hybrids and other new concepts not even on the drawing board yet. It’s an exciting time for retail and despite many store closures, there are some winners among the smartest operators and new startups. We’ll keep you current and don’t forget to get news you can use in your inbox every M – W – F morning by signing up at the top of this page. Enjoy your weekend and we’ll be back Monday with fresh industry Insights.