The so-called “retail apocalypse” is well underway in 2019.
Thanks to rapidly changing consumer trends and mounting pressure from e-commerce players, traditional brick-and-mortar retailers and brands have been closing doors at a tremendously high rate. In fact, retail and technology advisor Coresight Research estimates that U.S. retailers announced 5,399 store closures in the first 12 weeks of 2019. Sound high? It is. That approaches the number of store closures (5,726) for all of 2018.
While some closures are the result of bankruptcy proceedings, as it is for Payless and Gymboree, others are restructuring as they seek to lower costs and prioritize better-performing stores and channels in order to survive and possibly even thrive in today’s challenging selling environment.
Here is a list of major firms that are shuttering stores this year.
Nearly a quarter of the remaining 425 Sears and Kmart stores have closed or are in the process of closing, with liquidation sales having already begun at the start of the fall season. After a prolonged battle, Sears chairman Eddie Lampert’s hedge fund, ESL Investments Inc., prevailed in convincing a bankruptcy court in February to accept its plan to keep the lights on at the company. In his proposal, Lampert intended to keep those 425 stores in operation (representing roughly 45,000 jobs), a significant drop from the 1,700 stores that it had last fall prior to its Chapter 11 filing.
After weeks of speculation, Forever 21 Inc. filed for bankruptcy on Sept. 29. The fast-fashion retailer announced plans to close up to 178 outposts across the U.S. as well as exit from most locations in Asia and Europe. Meanwhile, it will continue operations in Mexico and Latin America. To help in restructuring efforts, the retailer received $275 million in financing from existing lenders JPMorgan Chase Bank and $75 million in new capital from TPG Sixth Street Partners. It expects to continue business as usual, honoring customers’ gift cards, returns, exchanges and sale purchases as it rights the size of its fleet of stores.
In July, Charming Charlie Holdings Inc. filed for Chapter 11 protection in the U.S. Bankruptcy Court in the District of Delaware. It revealed plans to shutter its remaining 261 stores across the country and halt online sales as the retailer undergoes its second bankruptcy in less than two years. (It filed for bankruptcy in 2017 and exited last year.) As part of the move, Charming Charlie will hold going-out-of-business sales, which are expected to be completed by the end of next month. The apparel and accessories company wrote in its filing that it had “faced significant headwinds given the continued decline of the brick-and-mortar retail industry.”
In May, J.Crew Group said it is moving forward with plans to close about 20 J.Crew and factory stores in 2019, adding to the net closure of 34 stores last year. “We will continue to opportunistically rationalize our J.Crew and factory store fleet,” said CFO Vincent Zanna on an earnings call. The company is focused on fueling growth at its more successful Madewell brand, which it is considering spinning off into a separate publicly traded entity, the company said last month.
A decade after launching in New York’s trendy SoHo neighborhood, Topshop is shutting its doors. The fast-fashion retailer and its men’s counterpart, Topman, will be closing all of U.S. stores — a total of 11 — as part of parent company Arcadia Group’s rescue deal aimed at staving off administration. The multinational firm will also close 23 locations in the United Kingdom and Ireland, including those of its Dorothy Perkins, Miss Selfridge, Burton, Evans, Outfit and Wallis brands.
Dressbarn is closing shop after more than 50 years in business. On May 21, parent company Ascena Retail Group Inc., which also owns Ann Taylor and Loft, announced that it would shut down all of the women’s clothing retailer’s 650 stores across the U.S., which would affect about 6,800 employees. As the company winds down operations, Dressbarn stores and its e-commerce platform will remain open for customers.
Roberto Cavalli’s U.S. subsidiary, which operates under the name ArtFashion Corp., filed for Chapter 7 bankruptcy protection in late March at the same time that the board of Roberto Cavalli SpA filed a restructuring plan with the Court of Milan. As part of the filing, the brand’s U.S. stores ceased operations on March 29 and are to be liquidated. Its portfolio included eight retail stores and four outlets in the U.S.
Dollar Tree Inc. declared in March that it would shutter about 390 Family Dollar outposts as it seeks to evolve its business strategy. During the firm’s Q4 conference call, Dollar Tree president and CEO Gary Philbin said age, layout, location, unfavorable lease terms and other factors contributed to the decision to shutter — and not renovate — the underperforming stores.
When Charlotte Russe initially filed for Chapter 11 protection in early February, its plan called for closing about 94 of its 500 store locations. But the teen-fashion retailer failed to secure a buyer for the business, and a month later it announced that all stores would shut down and its website would go dark. Chief restructuring officer Brian Cashman said the company was unable to keep pace with today’s “rapidly evolving fashion trends.”
In February, JCPenney confirmed that it would close a total of 27 stores this year, including 18 full-line stores (three of which were identified in January) plus nine ancillary home and furniture outposts. The Plano, Texas-based department store said the closures were intended to help align “its brick-and-mortar presence with its omnichannel network” after the firm saw a 7% decline in sales in 2018 to $11.7 billion.
After one failed bankruptcy in 2017, Payless ShoeSource in February announced a second Chapter 11 filing, and this one would be decisive. The discount retailer said it was ceasing operations in North America and would shutter all 2,500 of its stores here. However, Payless will continue to exist internationally, operating 420 stores across 20 countries in Latin America, the U.S. Virgin Islands, Guam and Saipan, as well as 370 franchise doors in 16 countries across the Middle East, India, Indonesia, Indochina, the Philippines and Africa.
Saks Off 5th
While Saks Fifth Avenue is back on solid footing, its offshoot chain, Saks Off 5th, continues to post declining sales. As a result, parent company Hudson’s Bay Co. announced in February it is reviewing the discounter’s 133 stores and expects to close at least 20 locations in the United States. At the same time, the firm said it is shutting down its Home Outfitters business in Canada this year.
Formerly a staple in U.S. malls, Gap Inc. shared plans in February to close more than 200 of its Gap locations to instead focus on online sales. (Nearly 40 percent of its revenue comes from the web right now.) At the same time, the firm announced it will split into two publicly traded companies, spinning off Old Navy as its own entity. The Gap Inc. umbrella now includes Gap, Athleta, Banana Republic, Intermix and Hill City.
L Brands, the parent company of Victoria’s Secret, told investors in late February that it will close 53 stores in North America this year, up from 30 closures in 2018. According to WWD, those 53 locations make up about 4% of Victoria’s Secret’s 1,170 stores. Executives at the struggling lingerie brand said they are working to finetune all aspects of the business, including marketing and merchandise.
Gymboree Group Inc. — parent of the Gymboree and Crazy 8 stores — said in a Chapter 11 filing in January that it would liquidate all of its roughly 800 stores and close down its websites. As part of the bankruptcy auction, Gap Inc. acquired its Janie & Jack children’s label, while retail rival The Children’s Place snapped up the rights to the Crazy 8 and Gymboree brands.
Foot Locker Inc. said in early March that it will close 165 stores globally in 2019 despite a blockbuster Q4 earnings report. It also plans to open 80 new locations, but it has reduced its total store count every year since 2014. “The store closures will be across our geographies, with the greatest concentration in Foot Locker and Lady Foot Locker in the U.S., Six:02, Foot Locker and Runners Point in Europe,” CFO Lauren Peters told investors.
FN will continue to add to this list as more news arises about store closures.
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