Nothing like a little reality on a Wednesday afternoon. Below is a list of the worst of the worst retailers in the U.S. Hysterically, there are multiple articles about JC Penney this morning and the surge in their stock price yesterday because their dumbass CEO has announced a major change in strategy. Drum roll please. He is going back to having fake sales. The idiots who call themselves financial analysts immediately expounded upon the brilliance of this move. After losing $1 billion of business in one year, this will surely turn the ship back on course.
So solly. The list below, along with the three other failed retailers – Gamestop, Office Max and Radio Shack will be closing thousands of stores in the near future. Just think of all the benefits this will provide. More ghost malls across America. It will do wonders for the Space Available sign manufacturers. Maybe some new retail concepts can gain a foothold – Soup Kitchens R Us, Used Body Parts Thrift Store, or a cafe catering to senior citizens with your choice of cat or dog food.
It should really test the accounting fraud skills of mall owners, property developers, and our friendly Wall Street bankers as rental income dries up and loan payments on vacant malls become a little challenging. I’m sure Bernanke can convince the FASB to let the banks convert all commercial loans to balloon payment loans with a 50 year term. Therefore, all will be well. No need for cashflow or tenants. I should work for the government.
There should be some great going out of business sales. I’m looking forward to it.
Retailers That Will Close the Most Stores
By Douglas A. McIntyre, Samuel Weigley, Alexander E.M. Hess and Michael B. Sauter, 24/7 Wall St.
It is the time of year again, when America’s largest retailers release those critical holiday season figures and disclose their annual sales. A review of these numbers tells us a great deal about how most of the companies will do in the upcoming year. And while successful retailers in 2012 may add stores this year, those that have performed very poorly may have to cut locations during 2013 to improve margins or reverse losses.
For many retailers, the sales situation is so bad that it is not a question of whether they will cut stores, but when and how many. Most recently, Barnes & Noble Inc. (NYSE: BKS) decided it had too many stores to maintain profits. Its CEO recently said he plans to close as many as a third of the company’s locations.
Several of America’s largest retailers have been battered for years. Most have been undermined by a combination of e-commerce competition, often from Amazon.com Inc. (NASDAQ: AMZN) and more successful retailers in the same areas. Borders and Circuit City are two of the best examples of retailers that were destroyed by larger bricks-and-mortar competition and consumers transitioning to online shopping. These large, badly damaged retailers could not possibly keep their stores open.
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24/7 Wall St. reviewed the weakest large U.S. retailers and picked those that likely will not be profitable next year if they keep their current location counts. 24/7 analyzed the retailers’ store counts, recent financial data, online presences, prospects against direct competitors and precedents set by other large retailers that have downsized by shuttering locations. We then forecast how many stores each retailer will have to close this year to sharply increase its prospects financially, even if some of those location closings do not occur for several years. These forecasts were based on drops in same-store sales, drops in revenue, a review of direct competitors, Internet sales and the size of cuts at retailers in the same sector, if those were available.
5. Barnes & Noble
> Forecast store closings: 190 to 240, per company comments
> Number of U.S. stores: 689
> One-year stock performance: 8.95%
The move by customers away from print books toward digital books has hurt Barnes & Noble Inc. (NYSE: BKS). Same-store sales during the nine-week holiday season fell by 8.2% year-over-year. The bookseller has tried to offset the declines in physical book sales with its Nook e-book reader device, but sales of that device fell 13% compared to the previous year. The company already has begun cutting down the number of its stores in the past several years. In a recent interview with the Wall Street Journal, the head of the retail group at Barnes & Noble said he expected the company to have just 450 to 500 retail stores in 10 years.
4. Office Depot
> Forecast store closings: 125 to 150
> Number of U.S. stores: 1,114
> One-year stock performance: 50.7%
Office Depot Inc.’s (NYSE: ODP) troubles date back to years of competition against OfficeMax Inc. (NYSE: OMX) and Staples Inc. (NASDAQ: SPLS), as well as big-box retailers like Walmart. All three stores were dealt a blow from reduced business activity during the recession, as well as increased popularity of online retailers such as Amazon. The company’s North American division reported an operating loss of $21 million in the third quarter of 2012. Office Depot plans to relocate or downsize as many as 500 locations and close at least 20 stores. In the third quarter of 2012, the company closed four stores in the United States, and same-store sales were down by 4% year-over-year.
3. J.C. Penney
> Forecast store closings: 300 to 350
> Number of U.S. stores: 1,100
> One-year stock performance: -53.6%
J.C. Penney has gone through a rough stretch recently. In the most recent quarter, same-store sales fell by 26.1% compared to the year-ago period. Even Internet sales, which are increasing significantly across the retail sector, have taken a turn for the worst, falling 37.3% in the third quarter, compared to the prior year. J.C. Penney sales have taken a turn for the worst since former Apple Inc. (NASDAQ: AAPL) retail chief Ron Johnson took the helm at the company. Johnson’s plan, among others, has been to wean customers off of heavy discounting and simply give customers low prices. However, retail strategists and analysts have argued that Johnson’s plans have created confusion among customers and has been a further setback to any potential turnaround.
2. Sears Holding Corp.
> Forecast store closings: Kmart 175 to 225, Sears 100 to 125
> Number of U.S. stores: 2,118
> One-year stock performance: 8.8%
Both Sears and Kmart have been going down the tubes for a long-time, steadily losing their middle-income shoppers to retailers such as Wal-Mart Stores Inc. (NYSE: WMT) and Target Corp. (NYSE: TGT). Sears Holdings Corp.’s (NASDAQ: SHLD) same-store sales have declined for six years. In the most recent year, same-store sales at the namesake franchise fell by 1.6% and at Kmart by 3.7%, compared to the year-ago period. The company is already in the process of downsizing its brick-and-mortar presence. In 2012, Sears announced it was shutting 172 stores. CEO Lou D’Ambrosio is leaving the company in February, to be replaced by chairman and hedge-fund manager Edward Lampert. Lampert has minimal operating experience in retail management.
1. Best Buy
> Forecast store closings: 200 to 250
> Number of U.S. stores:1,056
> One-year stock performance: -36.8%
To see the full list, visit 24/7 Wall St.