WSJ – April 22, 2017: Years of overbuilding and the rise of online shopping have come to a head; malls as ‘energy suckers’. And American retailers are closing stores at a record pace this year as they feel the fallout from decades of overbuilding and the rise of online shopping.
“There is no reason to believe that this will abate at any point in the foreseeable future,” said Mark Cohen, the director of retail studies for Columbia Business School and a former executive at Sears Canada Inc. and other department stores.
Through April 6, 2017, closings have been announced for 2,880 retail locations this year, including hundreds of locations being shut by national chains such as Payless ShoeSource Inc. and RadioShack Corp. That is more than twice as many closings as announced during the same period last year, according to Credit Suisse.
The seeds of the industry’s current turmoil date back nearly three decades, when retailers, in the throes of a consumer-buying spree and flush with easy money, rushed to open new stores. “Thousands of new doors opened and rents soared,” Richard Hayne, chief executive of Urban Outfitters Inc., told analysts last month. “This created a bubble, and like housing, that bubble has now burst.”
Chains such as Wal-Mart have stepped up their game. In a bid to better compete with Amazon.com , the giant retailer has been scooping up e-commerce startups, including Jet.com and ModCloth.
WSJ / BATTLE FOR WORLD – October 11, 2018: The article highlights that the troubled retailer, Sears, working with boutique firm M-III Partners and could file for court protection ahead of Monday (October 8) debt payment, according to people familiar with the situation, as the cash-strapped company that once dominated American retailing faces a debt payment deadline.
Sears, which has been losing money for years, has $134 million in debt due on Monday. Edward Lampert, the hedge-fund manager who is Sears’s chairman, chief executive, largest shareholder and biggest creditor, could rescue the company, as he has done in the past by making the payment.
Also, Sears has more than $11 billion in cumulative losses since 2011, and its annual sales have dropped nearly 60% in that period to $16.7 billion. Analysts say it needs to raise more than $1 billion a year to stay afloat.
And investment bank Lazard Ltd., as he tried to keep the company afloat and restructure out of bankruptcy court, the people said.
Department store apocalypse is taking toll on New York City
NEW YORK POST – July 15, 2018: The article highlights that online retailing and changing tastes are driving out the city’s charming department stores.
The shutdown is one of up to 10 Lord & Taylor closures of a total 50 stores planned by chain owner, Hudson’s Bay Company. It comes amidst a nationwide department store apocalypse. Hudson’s Bay, which owns 488 stores including Saks Fifth Avenue, is battling high debt, declining sales and falling stock prices.
Another industry giant, Macy’s Inc., which also owns Bloomingdale’s, has closed 14 percent of its stores since 2014, and J.C. Penney closed 138 locations, that’s 14 percent of its stores, last year 2017.
Most main floors of department store are turning over to cosmetics, and if a woman wants to buy fragrance yhey can go into Sephora, Ulta or Blue Mercury and get the same stuff cheaper and be out in 10 minutes.
Barneys’ Madison Avenue flagship might not survive an arbitrator’s upcoming possible decision to bless the landlord’s demand for a fourfold rent increase that the store says it can’t afford. And even Saks’ great Fifth Avenue flagship is potentially at risk.
America’s Malls Rotting Away
CNN MONEY – December 12, 2017: The worst is yet to come for American shopping malls according to some economists. As Macy’s, JCPenney, Sears and other major department stores close their doors around the United States, the malls that housed those stores are facing a serious crisis.
That’s because when so-called anchor tenants leave a mall, it opens the door for other stores to break their leases or negotiate much cheaper rent.
As one big store closes, it can take several smaller stores along with it like a house of cards. Experts predict that a quarter of American malls will close in five years — around 300 out of 1,100 that currently exist.
“When anchor stores close, it causes big problems for mall owners and other retailers in the mall,” says Howard Davidowitz, chairman of New York-based retail consulting and investment banking firm Davidowitz & Associates. “And I’d say this problem is only in its second inning.”