Today, we’ve got a roundup of retailers who are struggling. Despite the small uptick in holiday sales for some, other retailers are in trouble and we take a look at some of those who are in a struggle for survival.
First, to set the scene, CB insights provides an in-depth overview of the disruptors and disruption in retail, evident by where venture capital money is going and where corporate buyers are investing in online businesses. Retail job cuts are down by 12% compared to 2015 according to report from Challenger, Gray & Christmas. Forbes looks at the “Uberization” of retail and the trends ahead for 2017.
The Limited was one of the latest to declare serious problems and may close its headquarters as well as many of its US stores if a buyer can’t be found. Sears Holdings insists Kmart is still viable following a brand relaunch although some industry watchers are skeptical. Sears itself is also struggling, with a 14% Q3 drop in sales. American Apparel served layoff notices to more than 3,500 California employees following its November 2016 Chapter 11 filing, its second this year.
Eddie Bauer launched a national TV campaign as it works to restore its retail sales. After A&P’s 90-store bankruptcy, more than 5,000 former employees have found work with buyers of its bankrupt assets. Eastern Mountain Sports and Bob’s Stores restructured and now are trying to capitalize on the renewal in the sporting goods market..
The Changing State of Retail in 8 Charts
Even as investors are pulling back on e-commerce, retail corporates are making big acquisitions.
From increased investment to in-store tech startups, to the development of next-gen distribution methods, to trends among retail corporates, we look at the most important developments shaping retail. Via cbinsights.com
Retail-Sector Job Losses Offset by Holiday Hiring
Job cuts around the holidays always present a public relations risk, Challenger said. Especially on social media, “where the sharing of news is often paired with biting commentary that can have serious consequences for an employer’s image and brand reputation.”
Overall, retail job cuts are down 12 percent from one year ago, according to the latest job cuts report from Challenger, Gray & Christmas. Through November, these employers have announced plans to shed 57,969 workers, compared to 65,609 job cuts recorded during the same period in 2015.
Even with the decline, year-to-date retail job cuts rank third among all industries, behind energy job cuts (105,041) and computer-sector cuts (66,188). Via shrm.org
The Uberization of Retail Plus 7 Other Industry Trends to Watch in 2017
2016 is fast coming to its close. Most retailers are realistic about what the run-up to the year-end will be: a holiday season that will produce modest gains over last year’s but no more, capped by the steep discounts and generous promotions required to get consumers to spend.
What’s more relevant? Understanding the landscape and outlook for 2017 – and planning for it.
Here’s why 2017 will be an interesting year for retail. Via forbes.com
Report: The Limited may shutter headquarters, close stores permanently
Limited Stores LLC has notified the Ohio Department of Job and Family Services that it may lay off as many as all 248 employees, including its entire headquarters staff, and close down that Columbus, OH-area office as it struggles with plummeting sales, Columbus Business First reports.
The company’s letter to the state suggested that, while details weren’t final, “this mass layoff is expected to be permanent,” according to Columbus Business First. The company says it’s entertaining bids, but it may cease operations if a buyer can’t be found.
The retailer had hired Guggenheim Partners as financial adviser to explore a possible sale or restructuring, with rival retailers or private equity firms as potential suitors, The Wall Street Journal reported last month. Via retaildive.com
Why No One Cares About Kmart Anymore
It’s difficult to remember when Kmart wasn’t known for its drain-circling tendencies. At one time in the discount store’s history, parking lots were full, business was booming, and people, you know, actually wanted to shop there. However, by most accounts those days are a distant memory for the chain. Sales have consistently dropped, each new year brings about additional store closures, and it’s hard to see how the brand could revive itself. What happened to make people care so little about a store that was once the largest discount retailer in the country?
It’s a well-known fact that in their heyday, Kmart stores were the envy of Walmart founder Sam Walton. But while Walmart still reigns with its promise of “always low prices,” Kmart has slipped further into oblivion. The company originally filed for bankruptcy in 2002, making it the largest bankruptcy of a retailer in history. At the time, it trailed only behind Walmart and Target, but still was unable to keep afloat. The company later became a unit of the Sears Holdings Corporation, an outfit that has had its own shares of trouble in recent years.
At the end of last year, sales in Kmart stores fell 7.2% in the fourth quarter of 2015 — a time when even struggling companies tend to get a boost from holiday sales. Following that (and similar declines in the Sears brand), Sears Holdings announced in February 2016 that it would close several under-performing storefronts, adding up to about 30 Kmart stores by April 2016. Then in April, the corporation announced another round of store closures for the summer months, totaling another 68 Kmart closures across the country. With the summer closings, there will be fewer than 900 stores nationwide, according to data from Fortune. Via cheatsheet.com
Sears problems loom large
Things aren’t looking good for Sears. The company is shutting down dozens of Kmart stores this month and two of its highest-ranking executives left this week in the midst of the key holiday shopping season.
This comes following speculation among Sears and Kmart employees, suppliers, and several banks that the retailer will soon go bankrupt — something Sears has repeatedly dismissed.
Jeff Balagna, formerly Sears’ executive vice president, left the company Wednesday, “in order to focus on his other business interests and pursue other career opportunities,” Sears said in an SEC filing dated November 23. Via businessinsider.com
Sears’ Losses Deepen Amid Sales Declines
Sears Holdings said lower sales and a host of ledger expenses led to wider losses in its fiscal third quarter. Net loss was $748 million for the three months, ended Oct. 29, compared with a year-ago loss of $454 million.
Revenues fell 14 percent to $5 billion due largely to store closings, while comp sales declined 7.4 percent, accounting for over 40 percent of the revenue drop.
Broken out by store group, Kmart comps decreased 4.4 percent on weakness in CE, offset by gains in outdoor, while Sears comps decreased 10 percent. Via twice.com
American Apparel Notifies 3,500 Workers of Possible Layoffs
American Apparel LLC has notified nearly 3,500 of its California-based manufacturing and wholesale employees that they may lose their jobs in connection with its bankruptcy.
Employees at American Apparel’s Garden Grove, Los Angeles, South Gate and La Mirada locations could lose their jobs by January, according to the notice that the company filed last month with a state employment agency, a copy of which The Wall Street Journal has viewed.
Tuesday, an American Apparel spokeswoman said the federally required layoff notices “were purely a legal precaution and layoffs are not certain.” American Apparel sought chapter 11 protection in November, its second filing in a little over a year. The company has a $66 million bid for its brand name in hand from Gildan Activewear Inc., which it is putting to the test at a Jan. 9 auction. Via wsj.com
Eddie Bauer faces tough climb to reclaim former heights
Eddie Bauer recently launched a national marketing campaign featuring its first TV ad in years and emphasizing the company’s roots and transformation into an “active outdoor lifestyle brand.”
If that sounds familiar, well, it is. The company, which has been in a recurring search for its niche as it went through ownership changes and Chapter 11 bankruptcy, said pretty much the same things back in 2002 and around 2009.
Eddie Bauer executives say the difference this time is in execution, with a greatly pared-down product line displayed in redesigned, downsized stores. The effort comes as the market for active outdoor apparel is growing — but also growing more competitive. Via azdailysun.com
What happened to bankrupt A&P’s 90 stores in New Jersey?
It’s been more than a year since the Great Atlantic & Pacific Tea Company filed for bankruptcy. The demise of the supermarket chain in July 2015 dealt a blow to its 7,000 union workers in New Jersey and New York and the landlords of the 90 stores it operated in the state.
But 15 months later, many of the workers have recovered, and a mix of ethnic and independent groceries have filled the vacuum left by A&P.
The United Food and Commercial Workers Local 464A represented 7,000 A&P workers, said John T. Niccollai, president of the local. Many–about 5,000–found new jobs after Acme purchased about 50 A&P stores in the local’s jurisdiction. Via nj.com
Eastern Mountain Sports & Bob’s Stores Become Eastern Outfitters
Two months after parent company Vestis Retail Group LLC filed bankruptcy, sporting goods retailers Eastern Mountain Sports and Bob’s Stores have completed the restructuring and recapitalization process.
EMS and Bob’s will now operate as business units of Eastern Outfitters LLC, a new holding company with $400 million-plus in annual multichannel revenue headquartered in Meriden, Conn., the retailers announced Tuesday.
“We move forward with a focused strategy and strengthened capital structure that will enable EMS and Bob’s to prosper,” Walsh said in a release. “The management team and I would like to thank our trade and service partners for their unwavering support and for recognizing the value of our brands and their confidence in our strategic plan.” Via footwearnews.com
Who’s succeeding in retail?
Before the end of the year, we’ll highlight the retailers with a successful holiday sales season, as well as a good year, despite the retail challenges. Meanwhile, get your holiday shopping lists ready.