Barely one month into 2018 and already there are 352 store locations slated for closure in 2018.
On Wednesday Toys ‘R’ Us said it would close 182 stores, including some Babies ‘R’ Us locations, as it tries to right its ship so the company can exit bankruptcy court proceedings. Wal-Mart is also slated to shutter 63 Sam’s Club locations. Earlier this month, Sears Holdings Corp. said it would close 64 Kmart stores and 39 Sears domestic store locations. And J.C. Penney reportedly is closing four locations.
That’s on top of the 1,052 known planned store closings in 2018 that were disclosed by companies last year.
Walgreens said last year it would shutter 600 stores, mostly under the Rite Aid nameplate, this spring. That’s in connection with its $4.38 billion acquisition of Rite Aid. And Ascena Retail Group is slated to close at least 250 stores over the next two years, with the possibility of up to 400 more sites if the company can’t renegotiate favorable terms with landlords. Macy’s earlier this month said it would shutter 11 locations, although those sites are part of its plan revealed in 2016 to close 100 stores.
Bankrupt Charming Charlie said it would close 100 stores when it filed for bankruptcy court protection in December, but that the stores would close after the holiday selling season.
The Bon-Ton Stores Inc. in November said it would close “at least 40 locations in 2018.” And Michael Kors said last year it would close between 100 to 125 stores over a two-year period.
Many retailers end their fiscal year on the weekend that is closest to Jan. 31. That’s why retailers in January typically begin disclosing their store closure plans as they get ready to close out their year-end reports. Meanwhile, the change in consumer shopping habits has shifted how some retailers think about operations as they try to keep lean and mean to remain competitive. What used to be an annual analysis of which stores to keep has become an ongoing review process throughout the year. And that means there could be announcements of more store closures on a regular basis as 2018 progresses.
Last year saw an unprecedented number of store closures — nearly 7,000 — although many were due to a high number of retailers electing to shut down operations, either prior to a bankruptcy or as part of the winding-down process. In a recent J.P. Morgan Chase survey, retail analyst Matthew Boss said 45 percent of respondents are foreseeing fewer store closures this year.
In a report Monday from credit ratings agency Moody’s Investors Service, senior analyst Christine Boni said store closures would likely remain concentrated among the weaker players.
Boni also said: “We do not expect that department stores will accelerate the rate of store closures in 2018, primarily because leading operators will be focused on learning from their recent initiatives and gaining a better understanding of the store presence required to drive online sales in a given market.”
The Moody’s report noted that the department store sector is beginning to show signs of traction, given the acceleration of sales during the 2017 holiday season following two years of “dismal performance.” The ratings agency expects the retail subsector to post a 6 percent decline, compared with a prior forecast of a 9 percent drop, in operating income for fiscal 2017. Boosting the subsector’s sales results was a leaner inventory position entering the holiday selling season, which in turn helped to boost margins.