By Garrick Brown, Vice President of Retail Research, Americas
Closure season rumbles on and so we heard more bad news this past week. Sports Authority filed for bankruptcy and will be closing roughly 140 of their 463 stores and two distribution centers (Chicago and Denver). Dick’s is reportedly buying the lease of at least a few of these locations, but the Sports Authority bankruptcy will almost certainly result in a considerable amount of space being returned to the marketplace. Though the size had been trending downward slightly in recent years, the average footprint for Sports Authority locations comes in at just under 40,000 square feet. That’s 4.0 million square feet of space with 100 locations and 5.6 million square feet of space across 140 storefronts. I don’t see all 140 of those locations going dark. Sports Authority does have some good real estate in its portfolio and junior boxes remain in demand. So I think there is a strong possibility a bunch of those leases get sold off in the bankruptcy process to new tenants. So the damage isn’t going to be as bad as it seems at first glance, but the market is still going to take a bit of a hit nonetheless. Fortune is ranking this one as the seventh largest retailer bankruptcy of the past decade, ranking it right below Borders and above Sbarro.
And let’s not forget it’s been a lousy week for HomeTown Buffet and a few other affiliated chains owned by Ovation Brands. The chain, which includes HomeTown, Old Country Buffet, Tahoe Joe’s, Ryan’s and Fire Mountain, declared bankruptcy for the third time in eight years yesterday. Ovation Brands closed 74 stores last month as part of a restructuring program, but it was obviously too little and too late. The chain currently operates 328 restaurants in 35 states. It is still unclear how many closures are coming, but if this were a bet in Las Vegas I would advise you to take the over.
As bad as this all sounds, in the past week new data emerged showing that retail employment was up in the United States. Meanwhile, recently released sales numbers from the Commerce Department demonstrate a resilient retail marketplace in January. Overall sales were up by 0.5%. Of course, consumer confidence went the other way… but that is nothing new. The two have a loose relationship at best.
Though the number of retailers reporting monthly same-store sales continues to dwindle, new figures came out late last week for February. You can check out detailed retailer-by-retailer data by clicking here. By the way, these come to us by way of our good friend Mike Palenchar of the MR Group. In addition to putting together this free monthly report that he shares with the industry (you can get on his mailing list by dropping him a line at email@example.com). Mike is also one of the top retail talent recruiters in the business. He’s been active in the industry since 1999 and he specializes in identifying top talent for mid to upper level positions in the retail and building industries nationally. He’s helped a lot of people I know land some great positions and he is a good friend to the Newsline.
I’m in Monterey the next couple of days attending the ICSC Idea Exchange there. If you’re attending, come by the Cushman & Wakefield booth and say hello—I’d love to meet you if we haven’t had the opportunity yet.
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 firstname.lastname@example.org.
Garrick 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.