For weeks, it’s been the billion-dollar question in retail: How long will fashion and footwear players have to keep their stores closed?
As the coronavirus health crisis intensifies across the country — with scientists and administration officials warning that this week could be the toughest yet — several companies and industry analysts are publicly acknowledging that the store shutdown is set to continue for about two more months.
Susquehanna Financial Group analyst Sam Poser, who covers Nike, Lululemon, Crocs, Steve Madden and a slew of other big names, noted in a research report issued yesterday that his firm is assuming that businesses in North America and Europe remain closed through May with “a slow return to normal.”
That would mean that many locations would be dark for two of the three months in the second quarter, adding up to tremendous losses across the board. The retail sector has already furloughed hundreds of thousands of workers in the past week alone, and those moves are continuing today.
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Capri Holdings, parent to Jimmy Choo, Michael Kors and Versace, announced this morning that it will furlough 7,000 workers, beginning on April 11, due to extended closures. The company initially planned to reopen stores on Friday, but now it expects stores won’t reopen until June 1. Locations in North America and Europe have been shuttered since March 18.
Genesco also said today that it is temporarily reducing its workforce by 90% as 1,500 stores in North America and the U.K. remain closed; it did not give a target date for units to reopen.
A number of big retailers, including Macy’s and Kohl’s, also have removed reopening dates from their websites altogether — or have put out statements saying stores will be closed “indefinitely” or until “further notice.” On March 26, Nike said that its locations would remain temporarily closed in multiple countries around the world. Like most other major athletic players, it has not updated its plan since then. Stores in select locations are open based on guidance from health and government authorities.
Other key players, such as Nordstrom and Tapestry, had targeted this week to open their doors again, but they are expected to announce further extensions.
While the entire country is virtually locked down until the end of April — there are some exceptions in a small number of states — retailers will get clearance to operate in specific markets at different times. When they do, cleanliness and employee safety will be critical issues. And there’s no guarantee that consumers will be ready to enter stores again — or will be eager to buy.
Looking ahead, the third quarter will likely be critical for recovery efforts, but some cash-strapped retailers are likely to shutter locations permanently as liquidity pressures accelerate.
According to a report released last week by Coresight Research, there could be more than 15,000 gross store closures in the U.S. this year, up from a record-high 9,548 closures in 2019.