Retailers typically begin revealing store closures in January as they get ready to close out their year-end reports, and while they will close stores, the expectation seems to be there would be fewer store closures compared with 2017 levels.
In a J.P. Morgan Chase survey, analyst Matthew Boss said 45 percent of respondents foresee fewer store closures in 2018 relative to 2017’s 6,000-plus closures. While 34 percent said there could be more closures year-over-year, another 21 percent said they expect a similar level to 2017.
Moody’s projected department stores to shrink their square footage the most, down 3.6 percent for the year, although that’s lower than the 6.2 percent decline in 2017. Specialty stores are forecast to cut their square footage in 2018 by 0.9 percent, compared with a growth rate of 1 percent for 2017. The decline in retail space is offset by square footage growth of 3.7 percent by off-price retailers, but that, too, is down from the 4.2 percent growth in 2017.
Moreover, Moody’s said it expects mall square footage to fall by 3.7 percent as off-mall square footage growth increases by 0.8 percent.
Last year also saw a high number of retail bankruptcies, which contributed to the large volume of store closures.
According to a report from Fung Global Retail Technology at the end of December, the number of store closures in the U.S. rose 229 percent year-over-year, bringing the number of stores shuttered to at least 6,985. RadioShack led FGRT’s list at 1,400 stores when it ceased operations, followed by Payless Inc. at 700 stores and Rue21 at 400 stores to round out the top three. Among the top 10 were: Ascena Retail, closing 400 stores; Sears and Kmart, 358; Gymboree, 330; the Limited, 250, and Bebe Stores Inc., 180.
So far, two retailers on Thursday unveiled store closures. Macy’s Inc. said it would shutter 11 locations as part of its plan in 2016 to close 100 stores. Sears Holdings Corp. said it would close 103 — 64 Kmart stores and 39 Sears locations — between March and April, with liquidation sales beginning as early at Jan. 12. That’s on top of the “at least 40 stores” that The Bon-Ton Stores said in November it plans to close this year.
Retailers start to review their store operations at the beginning of the fourth quarter, and for those locations that are on the margin, wait until after the holiday selling season to make their determinations. They also typically disclose store closure plans in January so they can take whatever charges they can when they close out the fourth quarter and year-end at the end of the month.