10 Leading Retailers Close Stores; Exodus of Small Retailers Amidst Signs of "Free Rent"; 700,000 Drop Cable TV Subscriptions
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Signs of weak consumer discretionary spending are popping up in multiple places. For example Subscriber growth suddenly stops for cable TV industry
According to data gathered by market research firm SNL Kagan, cable companies saw a noticeable drop in the total number of subscribers during the second quarter of 2010, a first for an industry that has thus far seen nothing but growth.Exodus of Small Retailers Amidst Signs of "Free Rent"
The number of cable subscribers dropped by 711,000, according to SNL Kagan, with six out of eight cable providers reporting their worst quarterly subscriber losses to date. Other parts of the industry were able to add just enough subscribers to make the net loss more like 216,000. Cable's share of the pay-TV market dropped slightly too, from 63.6 percent to just 61 percent during the quarter.
The Toledo Blade comments 'Free rent' signs of trouble
Commercial real estate agent Joe Belinske never thought retail life could be like it is today on Monroe Street near Westfield Franklin Park mall. "Monroe Street used to rent itself. People never put out 'For Lease' sign. You didn't have to market it," said Mr. Belinske of CB Richard Ellis/Reichle Klein, a Toledo commercial real estate firm.10 Leading Retailers Close Stores
But these days all along the Monroe Street-Talmadge Avenue corridor - the Toledo area's crown jewel of commercial real estate - times are tough. "For Lease" signs have proliferated on Monroe from Sylvania Avenue past Talmadge to the Target shopping plaza. Some of the signs feature a shocking indicator of hard times: "Free rent."
Area rents have fallen significantly, and what was the price for hidden space in strip malls that looked away from the road, is the going price for better sites that look straight out onto Monroe.
Several large signature properties - the closed Circuit City store and former Lone Star Steakhouse on Monroe, and the Smokey Bones Barbeque and Grill on Talmadge - have remained closed for more than 18 months.
Also worrisome, commercial real estate experts say, is it seems like more small retailers have left the retail corridor than have arrived in the last few years.
Daily Finance reports 10 Big Retailers Closing Stores
Both Saks (SKS) and Abercrombie & Fitch (ANF) said they were closing stores in several parts of the country. Meanwhile, other stores like the struggling Blockbuster video rental chain, continue to slash stores by the dozens. American Apparel (APP), which is close to defaulting on its loans, just may be next.Retail Closing Scorecard
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.
Saks 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.
French Connection 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.
A&P 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.
American Eagle Outfitters 28: American Eagle Outfitters 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.
Winn-Dixie Stores 30: Winn-Dixie Stores (WINN) announced in late July that it will close 30 older and under-performing stores by Sept. 22.
Bebe Stores 48: The women's apparel chain announced in July that it would shutter all 48 PH8 stores after a year of flagging sales.
Men's Wearhouse 50-60: CEO George Zimmer told analysts that the company now plans to close 50 to 60 Tux stores this year.
Abercrombie & Fitch 110: 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.
Charming Shoppes 100-120: 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.
Blockbuster 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.
There are more details in the article.
Retail Sales Numbers
Please keep those store closings in mind when retail sales numbers are reported.
The numbers are typically reported as percentage increases and decreases of "same store sales". If retailers all close weak stores, reported "same store sales" go up. However, total aggregate sales don't.
Moreover, one also needs to factor in store closings. From the Toledo article "Several large signature properties - the closed Circuit City store and former Lone Star Steakhouse on Monroe, and the Smokey Bones Barbeque and Grill on Talmadge - have remained closed for more than 18 months."
Some of those sales vanished into thin air, some of it went to other stores exaggerating "same store sales".
This is the reason one must analyze sales tax revenue instead of relying on "same store sales" for consumer spending estimates.
Finally, think of the number of people that will be laid off when those stores are closed, and also think what those store closings will do to lease prices.
Mike "Mish" Shedlock
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