What's in Store for These 5 Shrinking Retail Chains?

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The economy may be showing signs of life, but that doesn't mean that all retailers are thriving. It may be a perfect climate of improving employment trends, with cheap gas putting more money in the pockets of shoppers, but a few chains won't be there to make the most of favorable headwinds.

Now that the holiday shopping season has come and gone, many once-iconic chains are closing down stores. Let's go over a few of the retailers that will shrink in size through 2015.

J.C. Penney (JCP)

The department store chain closed dozens of stores last year, and it's not done yet. J.C. Penney announced last week that it will close down 40 of its 1,060 stores, taking a $38 million charge along the way.

J.C. Penney has started to bounce back from its ill-advised "jcp" makeover three years ago that alienated existing customers and failed to attract new ones. It posted positive comparable-store sales growth during the holidays, but the retailer has a long way to go to get store-level sales back to where they were before the catastrophic redo.

J.C. Penney continues to lose money, and analysts see that continuing for several more years.

Macy's (M)

Another department store chain that will be rolling out some springtime closings this year is Macy's. The retailer managed positive comps during the holidays, but it's also staging a retreat by closing 14 of its 760 namesake stores in the next few months.

The pain won't be limited to just the locations getting shuttered: Macy's could let go as many as 2,200 employees as it shifts two to three associates out of 830 Macy's and Bloomingdale's locations. The company is hoping to find other positions for the displaced employees, but at the end of the day the goal is to achieve $140 million in savings. You don't do that by getting bigger.

Wet Seal

The situation may be thorny at profitless J.C. Penney and puzzling at a restructuring Macy's, but it's outright dire at Wet Seal. The once-trendy clothing store is teetering on the brink of bankruptcy, and earlier this month it stunned most of its employees by shutting down nearly two-thirds of its mall stores.

Closing 338 locations will leave just 173 Wet Seal stores open, and the abrupt closure of the stores found some of the displaced associates putting up signs trashing Wet Seal executives. The remaining stores can't exactly breathe a sigh of relief. It remains to be seen how this plays out with creditors if and when it gets to bankruptcy reorganization.


Another chain on borrowed time is RadioShack. The small-box retailer of mobile products and consumer electronics has already closed hundreds of stores, and it's going to close hundreds more. RadioShack thought wireless customers would flock to its stores offering plans and handsets from the leading carriers, but that plan failed.

RadioShack got a boost on Tuesday when it lined up $500 million in bankruptcy financing, but that will merely pave the way for more closures.

Office Depot (ODP)

It's not easy being an office supply chain these days, and this will be a year that finds both Staples (SPLS) and Office Depot closing stores to offset declining sales as online orders and digital delivery make getting many traditional office basics from neighborhood superstores less necessary.

Office Depot has been closing hundreds of stores since completing its merger with OfficeMax, and now it's just shuttering locations because it doesn't make sense to have so many gargantuan outlets selling paper clips and file cabinets. The company pointed out in November that it expects to shutter 135 stores this year, with another 100 locations come 2016.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of Staples. Try any of our Foolish newsletter services free for 30 days. Want to make 2015 a winning investment year? Check out The Motley Fool's one great stock to buy for 2015 and beyond.