In response to a drop in sales and profits, clothing retailer Gap announced 100 store closings. It was not stated which of their brands, which include Banana Republic and Old Navy, would be affected by the closings.
This amount of store closings is not high; Gap actually closed 119 stores in 2008. But the net loss of 50 doors is a contrast to last year's 18-store increase.
Tiffany is closing its Iridesse stores. Iridesse, a specialty boutique dedicated to pearls, had 16 stores. Performance was disappointing at the chain, which opened in 2004.
Multi-brand jeweler Finlay Enterprises is closing 40 stores and exiting its department store businesses to focus on profitable locations. The move affects a wide array of department stores including Bloomingdale's, Macy's, Lord & Taylor, and Dillard's.
Finlay owns specialty jewelry stores Bailey Banks & Biddle, Carlyle & Co. and others. The company did not announce which of these would be affected by the 40 closings.
Virgin Megastore, the large music and media center that anchors large metropolitan areas, is pulling back. Virgin announced the closing of its Union Square stores in both New York and San Francisco this week, not long after deciding to leave Times Square in New York City.
Virgin Entertainment was bought by two real estate companies in 2007, so the moves are not just retail-driven. The rent for incoming Forever 21 in Times Square will be much higher than Virgin has paid since its 1990s opening. Indeed, this was part of the rationale behind the purchase--good for Related and Vornado, the current owners, if not for the Virgin Megastore brand.
The fate of Virgin's three remaining megastores has not been announced.
Sears added 24 stores to its planned closings, more than doubling the amount announced in December. The mass-market department store had previously announced 22 closings. Sears has roughly 900 stores nationwide.
Swimwear retailer Everything but Water filed for bankruptcy in the face of difficult economic conditions. Everything but Water, which sells its products in 70 stores, is being sold by its parent company.
Bankrupt retailer Fortunoff is giving up on an acquisition and beginning liquidation sales today. Liquidators announced the sales would be business as usual and that they would honor outstanding gift cards. Fortunoff closed its flagship store at the start of February and entered into bankruptcy a few days later.
Fortunoff is an interesting bankrupty because of the fond memories people have of its family-owned roots. While its failure is a private-equity and debt-load story, many people remember it as the longtime regional retailer with family roots, making its closure a bit more poignant than other large stores.
National jeweler Zales is closing 115 stores to improve profitability. The company discounted much of its merchandise in recent months and performance suffered accordingly. Zales closed 105 stores in 2008 based on performance. Zales has more than 2,000 locations.
In response to slower foot traffic, two major mall chains are shortening the hours their properties are open. Westfield Group shopping centers are opening half an hour later and closing half an hour earlier on weekdays, and lopping off half an hour on Saturdays; the policy applies to most of their locations nationwide. Last month Simon Group began closing 17 New England malls half an hour early, a policy it is extending to Pittsburgh and elsewhere.
Mall operators note that retailers are encouraging the shorter hours, although anchor tenants (like department stores) and restaurants, which independently set their hours, may not follow suit.
Interesting article in the New York Times this morning discusses how rental car companies are dealing with the downturn. In short: their cars are getting worse. Usage time for a typical car has crept closer to two years and total mileage can pass 30,000.
The reason for this is a bit counterintuitive: rental companies have to sell their old cars to make way for new ones. With the auto market in shambles, they can't move the old inventory profitably, so they can't afford (or make room for) new ones, leaving an aging auto fleet with few options.
Clothing retailer Aeropostale is closing its Jimmy'Z stores to focus on other concepts. Jimmy'Z had 11 locations across the country (and was most trendy, I believe, back in the 1980s).
Aeropostale is one of the few bright spots in the apparel market, with strong sales in recent months despite large declines across much of the industry. Jimmy'Z was losing money for its parent company, which will realize a gain from the closures.
Ritz Camera, the nation's largest camera and imaging chain, filed Chapter 11 bankruptcy due to the recession and digital photography trends. Ritz, which owns Wolf Camera and other sub-brands, had a difficult holiday season and increased pressure from creditors. The company hopes to keep operating during its restructuring.
Regular readers will notice some fine-tuning and cleanup of Timely Demise.
The sidebars (look to the right) have been updated to clean up a few unused items. I've added a blogroll, which I'll be updating as I find more sources and complementary reads; I regularly check and personally recommend the ones listed.
The categories have been fine-tuned, mostly to clean up a few redundancies. The list should be more useful to those looking for specific information. Archive pages and indexes are more consistent as well, providing a more sensible user experience for the permalink crowd.
As an aside, the Timely Demise Twitter stream has started to take shape. TD on Twitter links to interesting articles that complement the site's theme and cross-posts items as they appear here. I debated adding a recent-tweets feed to the site, but it would be somewhat redundant, so I've just linked to it for now.
News hits almost daily about retailers and products. As we collectively battle the changing forces in the economy, Timely Demise will be chronicling those changes. I hope you continue to find this site interesting and informative.
The economic downturn is hitting local stores especially hard. Saddest among those affected are the decades-old establishments, many involved in housing and home goods, suddenly facing bankruptcy or liquidation.
Some recent changes of note:
Furniture retailer Z Galerie is closing one-third of its stores to respond to economic conditions. The company, which has a national presence, is slated to have 52 doors when the closures are complete. The affected locations are already holding going-out-of-business sales.
Florida-based retailer Bealls is closing a dozen outlet stores in Florida, Georgia and Arizona to improve efficiencies. The company says the closings are part of an overall strategy and not just a reflection of the economy. Bealls, which operates 500 stores in 13 states, is not to be confused with the Bealls in Texas.
Swedish carmaker Saab, which is currently owned by General Motors, has applied for creditor protection as a first step toward a sale. Saab is looking for funding that will aid the marque in a sale or a spinoff from GM. Saab, which was founded in 1937, was purchased by GM in 1990. GM, of course, is experiencing extensive fiscal woes and thinks a slimmer brand lineup is part of a key to its survival. It is also considering moves for Hummer and Saturn.
Some good news: discount retailer Dollar General is accelerating store openings following a robust fourth quarter. The company is America's largest discounter in terms of number of doors, with more than 8,300 outlets. Dollar General is planning a robust 450-door expansion plan for 2009 and is remodeling hundreds of existing stores.
In the wake of the Peanut Corporation of America scandal, snack bar manufacturer Forward Foods filed for bankruptcy. Forward, which makes Detour energy bars, is suffering from the extensive peanut recall. The company's private-equity owners have lined up financing to continue operations during the bankruptcy restructuring.
Trump Entertainment filed for bankruptcy this morning to restructure a billion dollars in debt. This is the third bankruptcy filing for the company, whose bondholders are angry and trying to interfere with the movement. Donald Trump has resigned from the board of his company in frustration.
Sirius XM Radio has been rescued by Liberty Media, which is paying hundreds of millions of dollars to keep the satellite broadcaster from defaulting on its loans. The deal gives Liberty Media a non-controlling minority stake in the company. Despite earlier reports of a bankruptcy filing, this last-minute maneuver--loan payments are due today--keeps the company on safe ground.
USA Today has a nice summary of retail closings that gives a bird's-eye view of the crisis. The article includes a sidebar with a full list of store closings (most of which Timely Demise has covered) and a nifty interactive map of empty storefronts.
Not economy-related, but certainly retail-affecting, the Peanut Corporation of America filed for bankruptcy protection on Saturday. The company is under extreme pressure following salmonella outbreaks traced to unclean conditions at more than one of its factories. Sales of peanut-based grocery products are down as much as 28% in the wake of the health scare.
Appliance Direct, a small chain in central Florida, is assuming control of Rex Stores. Rex, also an appliance seller with a presence in Florida, had been struggling and closing stores in recent months. Appliance Direct has taken over roughly half Rex's locations and is negotiating to acquire other stores and much of its inventory. When complete, the buyout will significantly increase Appliance Direct's regional footprint.
Toys 'R' Us has acquired online retailer eToys and its sister websites. The deal ends the bankruptcy filing of eToys' parent company, the, er, Parent Company. Toys 'R' Us also assumes control of Baby Universe and ePregnancy in the deal.
Video game maker Midway filed for bankruptcy to avoid a credit default. Midway is hoping the filing allows continuing operations. In December Midway's principal owner sold 87 percent of the company for $100,000 to help with debt restructuring.
The Wall Street Journal ran an excellent article Monday on the lasting impact of Saks Fifth Avenue's drastic price cuts during the 2008 holiday season. Saks' move was almost unprecedented: a luxury retailer, used to receiving premium payment for premium goods, slashed prices up to 70 percent during the busiest time of the year.
"Saks's risky price-cut strategy was to be one of the first to discount deeply, rather than one of the last," the article noted. By acting quickly, Saks was able to grab mindshare and clear its racks of merchandise rapidly declining in value. This didn't help matters as much as hoped, though: Saks reported a 24% dip in January sales, on par with Neiman Marcus and Nordstrom.
The Saks effect has two potential prongs. One is on the vendor side: luxury companies not wanting to see devaluation of product are going to be wary about selling items into Saks moving forward. Designers may keep certain items for their own stores to create demand and maintain a price floor.
The other, which is already widespread, is the entrenchment of Americans' distaste for paying retail price. Customers have long known of product cycles and eventual sales; Saks' rapid discounting--and the rest of retail,the past few months--has taught people to wait for reductions before buying. Even The Economist reported on the recent rise of haggling among everyday items in consumer shopping. These trends may alter the retail landscape for years to come.
Subscription radio company XM Sirius is preparing a bankruptcy filing amid rumors the company may be sold in full to EchoStar, which is responsible for much of XM Sirius' debt. The satellite radio player has been battling its debt load and a low stock value for many months. Analysts have been angling for an EchoStar buyout to preserve the core business.
(Full disclosure: this author is a longtime XM subscriber and fan.)
Muzak--purveyors of the soothing background music played in stores, medical offices and elevators everywhere--filed for bankruptcy to escape its debt. The company, which has been in business for 75 years, has two million songs playing at a wide variety of retail stores from Macy's to DSW Shoes. Muzak expects to successfully continue operations following the restructuring.
New York Magazine has an expansive article this week titled Freakoutonomics. It's filled with interesting sidebars, including what it takes for a business to survive, how bodega owners see things, and a gallery of quotes from retailers. It's a must-read for anyone tracking this sector.
The article also uses the term "retail anthropology," which is quite nice, and which this author hasn't heard since reading Paco Underhill's Why We Buy.
Another locally trended story is how different shopping hubs are faring in the downturn. The consensus: not well. Recent articles have covered Greenwich, Conn.; Newbury Street in Boston; and New York's Madison Avenue. Myriad additional stories report on closures and traffic patterns at malls around the country.
S&K Famous Brands filed for bankruptcy, citing the usual reasons in this marketplace in its filing. S&K operates 136 stores up and down the eastern seaboard. The company is seeking funding to continue operations while under bankruptcy protection.
In related news, the Massachusetts menswear chain Kaps is closing all its stores due to declining sales. The company has shut one store while the other three hold going-out-of-business sales. Kaps dates its origins to 1885.
Spectrum Brands, a consumer products manufacturer, filed for bankruptcy amid a heavy debt load earlier this week. Spectrum, which manufactures Rayovac batteries, Remington shavers and a variety of household and pet products, is working on efficiencies that will strengthen the company after its filing. Continuing operations are expected.
Retailers selling food, typically among the lowest-margin businesses in the nation, are suffering as much as anyone in the rough economy. Some regional stories of note:
Brinker International, which owns casual dining chains such as Chili's and On the Border, has closed 35 restaurants in response to declining sales. The company, which hopes to have more franchised outlets in the future, also sold its Romano's Macaroni Grill chain. Brinker's official filing did not specify the restaurants affected by the closing.
"Steep declines" marked another tough month in retail in the United States, as most retailers saw declines. While deep discounter Wal-Mart showed a slight gain, sales were slower almost everywhere else, including notable drops of 22.7% at Saks, 19% at Gap, and 15.5% at JC Penney. All price points are being affected.
Not everyone suffered, though. Aeropostale grew 11% and Hot Topic 6% as their surges from the fall season continued.
Home furnishings continue to suffer in the downturn, with local stores hardest hit.
Pier 1 has disclosed plans to cut as many as 125 underperforming stores as a cost-cutting maneuver. The retailer is not yet declaring any store closings (and Timely Demise hesitated posting this news item); instead, it is entering into "negotations for rent reductions" that may lead to the closings. Pier 1, which had been struggling prior to the financial crisis, is making cuts to staff and distribution facilities as well.
Nineteen-door Chernin's Shoe Outlet has filed chapter 7 bankruptcy and will liquidate all stores. The company had a presence in seven states and has been in business since 1907.
In Minnesota, the Snyders Drug chain is becoming "smaller but stronger" with the closing of 19 stores. The regional chain, which dates to 1928 in Minneapolis, operated 47 stores before the announcement. Snyders successfully emerged from a 2003 bankruptcy filing but is suffering from a rapid CVS expansion.
Venerable retailer Fortunoff has closed its flagship store and is discussing liquidation and bankruptcy options. The company, which sells jewelry, silverware and home goods products, has been in business since 1922. Fortunoff entered bankruptcy a year ago and was purchased by the same parent company as Lord & Taylor.
Fortunoff moved its flagship Manhattan store to 57th Street just off Fifth Avenue in autumn 2007, vacating its old Fifth Avenue location at its landlord's request. The lease at West 57th expired last month, suggesting the move was temporary in nature and the closing expected internally. The company's website notes the closed location without further comment. Another 20 stores are reportedly still open for business.
Update: Fortunoff filed for Chapter 11 bankruptcy as expected Thursday Feb. 5. The company hopes to be acquired; if not, the chain will close rather than reorganize.
