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Retail Newsline: Overall Numbers Not Bad, Individual Numbers Not so Much…

By Garrick Brown, Vice President of Retail Research, Americas
Row of new stores in outdoor mall.

Here come the holiday numbers and the post-holiday closures. On the whole it looks like retail had a pretty good Christmas, but this doesn’t seem to be the case at all when you look at individually reported same store comparables. The reason is that most of these publicly traded behemoths are where some of the greatest weaknesses in the sector are today… especially the apparel and department store categories.  And, yes, eCommerce does play into it… both in terms of the fact that eCommerce sales are helping to drive those overall totals upward (estimates vary, but I think it is not outside the realm of possibility that eCommerce drove 20% of all holiday sales this year).  And also it is critical to remember that we don’t have a lot of same store comps from the little guys (certainly not the privately held retailers out there) who I think right now have a huge advantage over their gargantuan iconic competitors. The reasons are simple… they are smaller, more nimble and they don’t get thrown to the wolves if their sales are down 2.1%.  They can take chances and thus more quickly right their ships and stay connected to consumers.  And this is a big problem for the big guys.  How bad is it?  Well… earlier this week when Kohl’s reported a decline of 2.1%, their stock fell 19%.  When Sears said their sales over the holiday season were done between 12% and 13%…. NORDSTROM stock dropped 7%.  Yeah, that is not a typo… Nordstrom, which will probably be releasing their numbers in the next day or two took a hit. That’s how on edge investors are about retail and the news is going to get worse.

Sadly, I doubt Wall Street investors will have the patience or the intelligence to not get swept up in the black cloud of closure panic that is likely to come over the next couple of months.  You saw the notes this week… Sears/Kmart closing down about 150 units… Macy’s releasing a partial list of the 100 stores they earmarked for closure in the middle of last year and the weekend midnight move of The Limited to shut all their stores (we all kinda saw it coming if you were reading between the lines the last two months).  And more are coming.  Macy’s, which is actually getting ahead of this thing with their aggressive moves, is almost certainly going to close more units in the next year.  The current closures took them down about 15% in terms of total units.  Wall Street wants them down by 30%.  That said, they are doing the right thing by investing their cost savings (an estimated $500 million +) in their online platform.

Sears closure news comes at the same time as their selling off of the Craftsman Tool brand for $900 million.  That and another $500 million loan (this one secured by real estate holdings) will ensure they are likely not going BK in the first half of 2017.  But rumor on the street was the price tag for Craftsman was originally $2 billion and that a number of buyers walked away with the idea they could potentially get it at auction if they didn’t throw the struggling retailer a lifeline.  Kenmore was similarly said to be valued at $2 billion.  Is it possible that Kenmore and/or DieHard might be on the table for bargain basement prices now?  Maybe, maybe not.  But at the end of the day it is hard to shake the fact that last quarter they hemorrhaged $750 million in cash.  And so until Sears can turn those declining sales around very quickly, they are just buying time and that clock is running fast.  Tons of material this week so enough of my rambling…  Here are my random retail notes for the week…..

According to Conlumino, total retail sales over the holiday season grew by 3.8% and online spending increased by 17.1%. FristData says total sales grew by 3.6% and online sales increased 12.0%. Adobe says that eCommerce totals hit $91.7 billion, reflecting an increase of 11% year-over-year. That is historic according to them, though clearly not an apples to apples comparison with what Conlumino says and neither of these guys have final Commerce Department numbers yet so these are based on their own methodologies, forecasts and estimates. Those Commerce Department eCommerce figures probably won’t be out there until mid-February and those are what I trust most.  That said, I’m guessing that those show gains in the 18% range, if not more.  But remember not to jumble these—pick one and stick with it because the methodologies are different.

Selected Holiday Shopping Season Same Store Sales Comps

-9.1%                Barnes & Noble

2.0%                 Barnes & Noble eCommerce

1,2%                 DSG (Hudson’s Bay, Lord & Taylor and Home Outfitters)

-1.7%                The Gap (all banners)

11.0%               Genesco eCommerce

-2.0%                Genesco (all banners)

-0.8%                JC Penney

-5.2%                HBC Off Price (Saks OFF Fifth and Gilt)

-0.6%                HBC Europe (GALRERIA Krauthof, Galeria INNO and Sportarena)

14.7%               Hudson Bay (all banners globally) eCommerce

-1.0%                Johnston & Murphy

-6.0%                Journeys

-2.1%                Kohl’s

8.0%                 Lids

-2.1%                Kohl’s

-2.1%                Macy’s

-0.5%                Saks Fifth Avenue

1.0%                 Schuh Group

-12% to -13%    Sears

-4.8%                Stein Mart

A number of retailers released figures for the month of December only.

3.0%                 Bath & Body Works

-15.5%              Buckle

-12.0%              Cato

3.0%                 Costco

-5.0%                Fast Retailing

-3.4%                Fred’s

-1.0%                L Brands (all banners)

3.4%                 Price Smart

4.4%                 Reitman’s

3.0%                 Tandy Leather

4.0%                 Victoria’s Secret

3.4%                 Zumiez

More notes…

Canadian activewear brand Gildan has purchased American Apparel’s brand and certain assets out of bankruptcy auction for $88 million but the deal did not include any of their remaining stores.  Writing on the wall? Expect more American Apparel locations to go dark.

Over the past year, Beall’s has closed 20 Outlets and one Beall’s Department Store while opening 16 Outlets and three new Bunulu specialty stores. Their store count decreased by one to 489. In 2017 the chain plans on opening 22 new Outlet stores. No information on closures has been released, though we would be surprised if there weren’t a few.

As of the end of October, Express operated approximately 650 stores (about 100 of which were outlets). They had planned to close 50 stores over 2015/2016 and, so far, have shuttered 43 of those locations. We anticipate at least seven closures in 2017, probably more.  However, Express does also continue to strategically open anywhere from two to four new units annually with at least half of those typically in the form of factory outlet stores.

Montreal-based Le Chateau has closed 24 stores over the past year and now has roughly 190 units (about 60 of which are outlets).  The chain has said it will continue to close stores at a brisk pace, however, liquidity is a major concern (at least one credit agency has downgraded them to their lowest rating) and bankruptcy in the immediate future may be a real possibility.

Nebraska Book Holdings (which emerged from bankruptcy four years ago) had their credit downgraded by at least one major credit agency and may be at risk of bankruptcy in the immediate future.

Dollar General is planning 1,000 new stores in 2017. That breaks down to a new store opening about once every 8.75 hours.

Whole Foods has cancelled plans to open new grocery stores in Calgary and Edmonton but will open two Canadian stores in 2017: North Vancouver and Toronto. Fresh Thyme will add two west Omaha locations next month and plans to go from 48 stores to 70 by the end of 2017. Sprouts Farmer’s Markets will open 35 stores in 2017.

Denny’s grew by 50 units (14 international locations) in 2016 to a current unit count of 1,733. The Spartanburg, South Carolina-based chain posted same store comps gains of 0.9% for the year, below what was hoped for. We expect them to remain in modest growth mode this year but anticipate fewer U.S. openings.

Ruby Tuesday released statistics for their quarter ending 11/29/16. Net loss was $38 million; the chain recorded a 4.1% decline in same store comps. As of the end of the quarter, they operated 613 restaurants (67 of which are franchises). Over the previous year they had closed 120 locations.

Smoothie King opened 100 stores in 2016 and plans a similar rate of growth in 2017, virtually all of which will be through franchise efforts.

The roughly 200-unit Mediterranean/healthy/fresh themed chain Zoe’s Kitchen opened 36 new stores in Q3 and is planning on ramping up growth in 2017. The Plano, Texas-based fast casual concept is looking to double its store count yo 400 by the end of 2020.

I will be back with a lot more next week. Here is a new resource our Chief Economist, Kevin Thorpe, released just a few days ago. It is our new U.S. Macro Economic Forecast.  You can check it out by clicking here.

Additionally, a couple of weeks ago we released a new retail report, Food Halls of America, as well as the first episode in an accompanying series of videos: Cool Streets: Food Halls of America Manhattan edition. If you would like to check out that report and video please just click here.

You can watch our webinar Clicks vs. Bricks: Why Cyber Monday is taking over Black Friday by clicking here.

Our Main Streets Across the World Report tracks high street retail around the world and breaks out the globe’s premier shopping districts by continent and average asking rent. It is an invaluable resource and you can access it by clicking here.

And for those of you still trying to figure out what the U.S. Presidential Election really means in terms of the potential impact, our Chief Economist Kevin Thorpe released a report recently on that very topic. If you would like to check out the report, Trump: Impact on the U.S. Economy and the Property Markets, just click here.

By the way, here are a few other links that you might also find useful as well:

For the latest US shopping center statistics you can check out the National Shopping Center MarketBeat for Q3 2016 by clicking here. We will have a new report covering Q4 2016 next week.

You can access the 2016 North American Retailer and Restaurant Expansion Guide by clicking here.

Additionally, you can check out the Cool Streets of North America Report and accompanying video series by clicking here.

This post is commentary from the latest weekly edition of our Cushman & Wakefield Retail Newsline, which you can subscribe to for free by e-mailing garrick.brown@cushwake.com.

garrick-brownGarrick serves as Vice President of Retail Research for the Americas. He speaks frequently at industry events and has been a keynote speaker at symposiums, conferences and market forecasting events for groups like the Appraisal Institute, Urban Land Institute, CREW, ICSC and PRSM. He is also a member of Lambda Alpha International, an invitation-only land use society for those who are involved in the ownership, management, regulation and conservation of land, but also those who are involved in its development, redevelopment and preservation.

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