We knew it was going to happen. Just glance out your car window as you pass your local strip malls. Try to walk 25 yards through your local mall without seeing boarded up stores. The 2009 holiday sales period was one of the worst on record. That, coupled with very little change in the nation’s economic situation and the growth of e-commerce revenues, made it quite obvious that our retail industry would have to adjust to consistently poor performance. The looming question at this point is “who’s next?”
“24/7 Wall Street,” a Delaware corporation set up to run a financial news and opinion operation over the Internet, looked at a number of large retail companies to see which had the largest fall-offs in same-store sales in 2009.
The list below includes the eight store chains most likely to close a significant number of locations this year and an estimate of the number of outlets they will have to shutter.
Zale fired its CEO and the two senior retail executives who work for him. Zale has 1,930 outlets operating under the names Zales Jewelers, Zales Outlet, Gordon’s Jewelers, Peoples Jewellers, Mappins Jewellers and Piercing Pagoda. Zale will have to close its 200 worst-performing stores before the year is over.
Abercrombie & Fitch posted the worst same-store sales results of any large retailer in America during 2009. Caris & Co, the research firm, recently expressed strong doubt about how it might recover. The firm operates a number of brands including Abercrombie & Fitch, abercrombie, Hollister, and RUEHL. The company has 1,129 outlets and will have to retreat to its early 2007 store count of 950.
GameStop, the massive video-game retailer, said its holiday 2009 results were a disappointment.The entire video game industry is in trouble. GameStop has 6,200 stores worldwide and 24/7 Wall Street expects that at least 400 of those will be closed.
Barnes & Noble, the largest book store company in the U.S., is up against a rapid increase in book sales over the internet which is dominated by Amazon and includes large retailers such as Wal-Mart. The rise of the e-reader and e-books is also in the process of undermining “bricks-and-mortar” book buying traffic. Its peer Borders recently closed 200 of its Waldenbooks outlets and fired 1,500 people. Barnes & Noble has 775 outlets and 636 college bookstore. Barnes & Noble will have to push online sales, marketing of its Nook e-reader, and close at least 100 stores.
Hot Topic shares were recently downgraded as the firm posted awful results last year. The company operated 681 Hot Topic stores in all 50 states and Puerto Rico and 156 Torrid stores. Hot Topic says the” idea behind the Hot Topic concept essentially began in the 1960s with bootleggers selling tee shirts at concert venues.” It had better go back to the original model. The company is in such bad shape it will have to close 200 stores this year.
Dillard’s has 315 stores in 29 states. It will end up closing at least 25 to stay in good shape.
JCPenney is still profitable, and its only real problem is that it is spread too thin. The firm has just over 1,100 stores and needs to “right size” itself to the economy by cutting 75.
Retail experts are predicting things will get worse before they get better. Only the strong will survive and even those retailers will have to make drastic changes to do so. Those who sit and wait for things to get better will soon disappear from the scene. This reality is sad but true and has already proven to be true.