2018 ended on an optimistic note for retailers with strong consumer spending “data” and what was widely considered to be an unexpected comeback for many brick and mortar stores. While that may have been fun while it lasted, the carnage and pressure on the retail sector has once again been ramped backed up, resulting in a breakneck pace for store closings to start 2019.
In a start to the year that can only be described as absolutely demoralizing for the industry, 5,994 stores have closed in the US so far this year, which is already more than last year‘s total of 5,864, according to Real Deal and WSJ. And retail sales have begun falling again recently, down 0.2% in February from a month earlier, after being up 0.7% in January. Retail sales fell 1.2% in December.
Mall vacancy rates ticked up in the first quarter to 9.3% from 9% in the fourth quarter of 2018.
Ana Lai, an analyst at S&P Global Ratings said: “I don’t think malls are out of the woods yet.”
S&P still has a negative outlook on the United States retail sector overall and predicts that roughly 12 of the 136 retailers that it rates will wind up defaulting this year. This is an astonishing four times the average annual rate.
And as retailers continue to struggle, mall owners are also facing financial difficulties. Some malls have even pushed back their opening dates. For instance, the opening of the American Dream retail and entertainment center in the Meadowlands in New Jersey, which was originally supposed to open in the spring, has already been pushed back to late summer. The Empire Outlets shopping center on Staten Island is now scheduled to open in May, after it was initially planned to open last fall.
Finally, one of the country’s largest malls, Destiny USA in Syracuse, recently saw its mortgage taken over by a special servicer. And even though the mall owner, Pyramid Management Group, says that it is trying to discuss an extension, the servicer is expecting a default from the owner in June.
A Pyramid spokesperson said:
“Destiny USA has experienced tenant closures, just as other properties across the country have on the brick and mortar front. We have and will continue to fill those spaces with new and exciting uses as we work to ensure the health, vibrancy and longevity of the center.”
Just four months into 2019, we have already seen bankruptcies or store closings from companies like Payless Shoesource, Gymboree and Charlotte Russe.
UBS has estimated that another 75,000 stores will have to close by 2026 if online retail continues to rise from its current 16% market penetration to its expected 25%.
We documented in early March when major chains such as Gap, JCPenney, Victoria’s Secret and Foot Locker all announced massive closures, totaling more than 465 stores over the course of just 48 hours. Back in February, we noted that default rates on retail junk bonds had risen to 10.2% as of December, according to Fitch Ratings, more than double the level from the same period in 2017.
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There are several malls in Detroit area where the mall owner has defaulted on bonds/financing and they remain open. How is that for easy financing!
Signs Amerika and its British Friends May Have Overstayed Their Welcome on this Planet:
https://www.youtube.com/watch?v=XpQQpIOCp_A
Who ever it is that’s closing all these stores has obviously not been listening to the tunes Donald and the Presstitutes have been playing
annuit coeptis novus ordo seclorum- it’s all going as planned
I prefer sitting in my underwear and shopping online. I don’t have to get dressed, I don’t have to drive to the stores to stagger around looking for something that isn’t there and having to deal with people that I would rather avoid whenever possible.
Look at the collapse of the twin Towers . It happens slowly at first then suddenly. That is what we are watching in the retail business . It will ripple through the whole economy and it will not be pretty.
Look around in your area at the empty retail real estate. I live in one of the wealthiest counties in Missouri and the empty spaces would shock you. That is the Quinn Recession indicator.
If Henry Ford was alive today he would be laughing his ass off. He said something to the effect that to sell stuff to customers they first had to have some money. Most of our manufacturing jobs are gone and now people don’t have the spare money to buy the cheap, commoditized, and low quality Chinese shit they hawk in all of these big box stores. First very many stores will close and then those that are left will have problems stocking their shelves. I will laugh when it gets so bad that people will have to buy sewing machines and learn again how to make clothing.
BREAKING NEWS: Unfazed by Record High Store Closings, American Entrepreneurs Turn to New Solutions
Yeah, but they’re going to be competing with unemployed journalists who haven’t learned to code, in that space.
When it’s down to oral sex I think most of the journalists are waaay ahead compared to the entrepreneurs.
Do blowjobs require training or is it something that comes naturally? Asking for a friend.
Can any of you tell me exactly what it is that an “employed” journalist does?
Looks like a political campaign button.
Obama was so last term though.
There needs to be a jackass portrayed on the background of that button to make it a real and accepted political campaign button. Half of the country would probably buy one right now.
I think with closure and bankruptcy numbers like that it might more accurately be labelled Shoppageddon.