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.
This is particularly true of publicly traded retail companies that don't want to create uncertainty with retail investors and analysts. While store closings are sometimes viewed favorably in the investment community, just as often store closing announcements cause investors, analysts, consumers, and news reporters to lose confidence in a retail company's relevance and ability to compete in a quickly changing and ultra competitive retail environment.
It's important for anyone interested enough to pay attention to store closings to remember that store closings in an omnichannel world don't have nearly as much significance as they did when a physical store was the only sales outlet.
For most retailers with Internet and mobile presence, store closings represent not much more than a shift in focus. And that focus is, for the most part, being directed by consumers, not the people sitting in the leather boardroom seats.
This was reported by the CNBC.
And already under pressure from an activist investor who wants the department store to unlock value from its real estate, is preparing to close 36 more stores in early 2016 as it tries to jump-start its comparable sales results, which slid 4.7 percent in the November to December period.
At HYPERLINK "http://data.cnbc.com/quotes/ARO" \t "_blank" Aeropostale , for example, 84 locations were shuttered in a year's span. But same-store sales continued to tumble during the third quarter, dropping 10 percent. And though trends at J.C. Penney continue to improve, analysts said its comparable-sales growth should be more robust, particularly after it closed 40 stores in 2015.
In addition to these names, the Gap brand, which has shuttered roughly 40 of its North America stores over the past 12 months, plans to close a total of 175 here over the next few years. And last week, Finish Line said that it would close 150 stores by 2020 in an effort to boost its profitability.
Analysts expect more retailers to announce store closings throughout the first few months of the year, as they digest the results from their holiday and fourth-quarter sales. That's due, in part, to the fact that activist investors and others on Wall Street are growing increasingly impatient with retailers' reluctance to close unprofitable stores.
For one thing, it can be extremely costly for retailers to break a lease early. In 2014, teen retailer Apostrophe acknowledged it took an after-tax charge of $5.5 million, or 7 cents per diluted share, over net lease costs. Similarly, Sears said in the third quarter that it took charges of $6 million related to store closures.
Meanwhile, although under performing stores may be operating at a loss, they're still contributing millions of dollars in sales each year. Macy's, for example, said the 40 stores it has closed or are on the chopping block account for roughly $375 million in annual sales. And at Finish Line, the stores it plans to close generate roughly $1 million in average annual sales.
While both retailers are optimistic that some of these revenues will be picked up by nearby locations or online, Burden said in actuality, it never ends up translating dollar to dollar. What's more, retailers who close a location lose a chance to market their brand among that consumer base, and give up a point of distribution.
It is expected that retailers will start to close larger locations and move into smaller spaces. Along those lines, Target has been shuttering its big-box locations in favor of its smaller-format stores in places like New York City and Chicago. Likewise, Kohl's plans to test five to 10 smaller-format stores this year.
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.
This is particularly true of publicly traded retail companies that don't want to create uncertainty with retail investors and analysts. While store closings are sometimes viewed favorably in the investment community, just as often store closing announcements cause investors, analysts, consumers, and news reporters to lose confidence in a retail company's relevance and ability to compete in a quickly changing and ultra competitive retail environment.
It's important for anyone interested enough to pay attention to store closings to remember that store closings in an omnichannel world don't have nearly as much significance as they did when a physical store was the only sales outlet.
For most retailers with Internet and mobile presence, store closings represent not much more than a shift in focus. And that focus is, for the most part, being directed by consumers, not the people sitting in the leather boardroom seats.
This was reported by the CNBC.
And already under pressure from an activist investor who wants the department store to unlock value from its real estate, is preparing to close 36 more stores in early 2016 as it tries to jump-start its comparable sales results, which slid 4.7 percent in the November to December period.
At HYPERLINK "http://data.cnbc.com/quotes/ARO" \t "_blank" Aeropostale , for example, 84 locations were shuttered in a year's span. But same-store sales continued to tumble during the third quarter, dropping 10 percent. And though trends at J.C. Penney continue to improve, analysts said its comparable-sales growth should be more robust, particularly after it closed 40 stores in 2015.
In addition to these names, the Gap brand, which has shuttered roughly 40 of its North America stores over the past 12 months, plans to close a total of 175 here over the next few years. And last week, Finish Line said that it would close 150 stores by 2020 in an effort to boost its profitability.
Analysts expect more retailers to announce store closings throughout the first few months of the year, as they digest the results from their holiday and fourth-quarter sales. That's due, in part, to the fact that activist investors and others on Wall Street are growing increasingly impatient with retailers' reluctance to close unprofitable stores.
For one thing, it can be extremely costly for retailers to break a lease early. In 2014, teen retailer Apostrophe acknowledged it took an after-tax charge of $5.5 million, or 7 cents per diluted share, over net lease costs. Similarly, Sears said in the third quarter that it took charges of $6 million related to store closures.
Meanwhile, although under performing stores may be operating at a loss, they're still contributing millions of dollars in sales each year. Macy's, for example, said the 40 stores it has closed or are on the chopping block account for roughly $375 million in annual sales. And at Finish Line, the stores it plans to close generate roughly $1 million in average annual sales.
While both retailers are optimistic that some of these revenues will be picked up by nearby locations or online, Burden said in actuality, it never ends up translating dollar to dollar. What's more, retailers who close a location lose a chance to market their brand among that consumer base, and give up a point of distribution.
It is expected that retailers will start to close larger locations and move into smaller spaces. Along those lines, Target has been shuttering its big-box locations in favor of its smaller-format stores in places like New York City and Chicago. Likewise, Kohl's plans to test five to 10 smaller-format stores this year.
Source:
http://retailindustry.about.com/od/USRetailStoreClosingInfoFAQs/fl/US-2016-Store-Closings-All-Retail-Chain-Store-Locations-To-Be-Closed.htm
Post a Comment