10 Big Retailers Closing Stores
Consumers just aren't shopping the way they used to. Even Wal-Mart Stores (WMT), which typically fares well during tough economic times, is worried. "The slow economic recovery will continue to affect our customers, and we expect they will remain cautious about spending," said president and CEO Mike Duke in a statement that was released during the company's second quarter earnings report.
With the prospects for economic recovery iffy at best and consumer spending still moving at a snail's pace, it's little wonder that retailers are sussing out their weakest stores and closing them in order to protect profits. Retailers say they are positioning themselves to play where they can be strongest and avoid burning resources in places that won't produce the results they want. Here are some of the biggest store closings of late.
No. of Stores Closing: 5
The lux department store company plans to close two Saks Fifth Avenue stores in Plano, Texas, and Mission Viejo, Calif. That's in addition to stores in San Diego, Portland, Ore., and Charleston, S.C., that Saks closed a month earlier. CEO Steve Sadove said there may be more store closings to come this year.
Meanwhile, Saks is opening more of its discount Off 5th outlets in suburban Portland, Ore., Cypress, Texas, and Mebane, N.C. Sadove told analysts in a conference call that after two years on the defensive, the company has begun making investments in areas that will have the biggest impact on the bottom line.
No. of Stores Closing: 17
The clothing company with the edgy "FCUK" ads closed all but six of its U.S. stores as part of a reorganization. It says it will focus on selling its clothes at department stores. It also closed all 21 of its stores in Japan and sold its Nicole Farhi apparel line. After a very difficult 2009, the restructuring plan was necessary in order for the company to return to profitability, CEO Steve Marks told investors.
No. of Stores Closing: 25
The Great Atlantic & Pacific Tea Co. (GAP) said it will close 25 grocery stores across five states by the end of the third quarter as part of a turnaround strategy. The stores were chosen based on their performance, proximity to other company stores and issues with cost or real estate.
New CEO Sam Martin, who joined in July, said the company would try to place displaced employees in other positions, if possible. The company operates stores in eight U.S. states under the following retail names: A&P, Waldbaum's, The Food Emporium, Super Fresh, Pathmark and Food Basics.
American Eagle Outfitters
No. of Stores Closing: 28
American Eagle Outfitters (AEO) followed Abercrombie & Fitch into the adult market with its Martin + Osa chain, but just like Abercrombie's Ruehl, it didn't work out. American Eagle announced in the spring that the 28 M+O stores and the online business would shut down. The parent company said it is going to focus on its more youthful brands aimed at the under-25 crowd, including its American Eagle, Aerie and 77kids chains.
No. of Stores Closing: 30
Great Atlantic A&P isn't the only supermarket chain reducing its store count. Winn-Dixie Stores (WINN) announced in late July that it will close 30 older and under-performing stores by Sept. 22. The stores are located across five southern states, but more than half are in the company's home state of Florida. Management of the supermarket chain said it expects sales to deteriorate in the fourth quarter, but it's moving forward with plans to renovate other stores.
No. of Stores Closing: 48
Having Kim Kardashian as fashion muse didn't help lift sales at PH8, a sportswear offshoot of Bebe Stores (BEBE), which had hired the reality star as a designer. The women's apparel chain announced in July that it would shutter all 48 PH8 stores after a year of flagging sales. Bebe plans to focus on its flagship Bebe brand and on expanding 2b Bebe, its discount chain. The company said it may convert some of the PH8 locations to 2b Bebe stores.
No. of Stores Closing: 50-60
The men's apparel chain is faced with cannibalizing its own customer base. After Men's Wearhouse (MW) acquired the After Hours chain three years ago, it has been expanding its formal wear offerings at its mainline stores, as well as launching Men's Wearhouse and Tux stores. CEO George Zimmer told analysts that the company now plans to close 50 to 60 of the Tux stores this year in an effort to recapture most of the traffic at the company's other stores. In an earlier call with analysts, Zimmer had said the company could close over 100 of the tuxedo stores because the customers were already shopping at nearby Men's Wearhouse locations.
Abercrombie & Fitch
No. of Stores Closing: Up to 110
CEO Mike Jeffries told analysts that he feels comfortable with the look and merchandise at the company's stores, but the performance in some domestic locations is still falling short. Abercrombie & Fitch will close nearly 60 under-performing stores in 2010, most of them towards the end of the year. In a recent conference call, CFO Jonathan Ramsden said another 50 stores could close in 2011. The company already closed 11 stores during the first half of the year, mainly at its flagship Abercrombie & Fitch and Abercrombie stores.
But the company isn't cutting back on everything. It has been focusing on expanding its Hollister locations domestically and launching its flagship brand in markets overseas.
No. of Stores Closing: 100 to 120
Charming Shoppes (CHRS), the parent of apparel stores Lane Bryant and Fashion Bug, plans to close 100 to 120 stores this fiscal year. After announcing a rough end to 2009, management said it planned to reduce its real estate costs by renegotiating with its landlords. As part of those initiatives, CFO Eric Specter said the company has begun reviewing its lineup of stores, looking for locations that are under-performing and will close those where it can't get better lease terms.
No. of Stores Closing: 500-545
Under assault by video-on-demand and online video rentals, Blockbuster (BLOKA) announced earlier this year that it plans to close 500 to 545 stores in 2010. That's in addition to the 374 it closed last year.