Sunday, January 7, 2018

Department Stores Closing

A retail store can close on any day, but there is a season for retailers to throw in the towel, and that season is right now, days after the after-Christmas sales end. The relatively profitable holiday season is over and a nine-month drought follows for retail, so any store that won’t last long enough to get to next Christmas is probably better off closing as soon as it can. My watch list includes the Toys ‘R’ Us, in bankruptcy and variously rumored to be closing 100 or 200 stores or going into liquidation after a disastrous season. I am casting a worried glance at Barnes & Noble, which reported its worst holiday season in years. The mall apparel shakeout is far from over. The early news, though, is that department stores are faring especially poorly.

This may come as a surprise after reports in December saying that department store traffic was up during the holiday season and that discounts were lower than in previous years. It is not always easy to get accurate information so quickly, and one hint comes from Britain, where Debenhams described mistakes in low-end merchandising and startlingly poor attendance at its after-Christmas sale. Its plans are not known beyond its already announced cost-cutting measures, but there are analysts speculating about much more drastic changes.

In the United States, the biggest store closings announced so far are at department store chains Kmart, Sears, and Macy’s. Sears Holdings has announced 64 Kmart and 39 Sears stores (full list [PDF]) to close in March. A few stores will remain open into April. Most Sears stores have auto service centers that will close sooner.

Macy’s is closing 11 stores, part of a plan that has already closed 120 stores in the last two years. These Macy’s stores are prepared to close in early 2018:

  • Laguna Hills Mall – Laguna Hills, California
  • Westside Pavilion – Los Angeles, California
  • Novato (Furniture) – Novato, California
  • Stonestown Galleria – San Francisco, California
  • The Oaks – Gainesville, Florida
  • Miami (Downtown) – Miami, Florida
  • Magic Valley Mall – Twin Falls, Idaho
  • Honey Creek Mall – Terre Haute, Indiana
  • Birchwood Mall – Fort Gratiot Township, Michigan
  • Fountain Place (Downtown) – Cincinnati, Ohio
  • Burlington Town Center – Burlington, Vermont

Store closings at JCPenney are also widely reported, though I could confirm only one location with a store-closing sale. JCPenney had healthy sales growth this holiday season, but it was not enough to say it has bounced back after four years of turmoil.

Where I live, it is unusually cold this weekend, 3°F as I got up this morning. We have seen bad weather five weekends in a row, and this is from large weather systems that have affected the whole East Coast or most of North America. To have the bad weather fall on weekends again and again is bad luck for retail and could squeeze even well-managed retailers.