Results 1 to 2 of 2

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

  1. #1
    Senior Member AirborneSapper7's Avatar
    Join Date
    May 2007
    Location
    South West Florida (Behind friendly lines but still in Occupied Territory)
    Posts
    117,696

    What Recovery? Sears And J.C. Penney Are DYING

    What Recovery? Sears And J.C. Penney Are DYING

    By Michael Snyder, on January 16th, 2014

    Two of the largest retailers in America are steamrolling toward bankruptcy. Sears and J.C. Penney are both losing hundreds of millions of dollars each quarter, and both of them appear to be caught in the grip of a death spiral from which it will be impossible to escape. Once upon a time, Sears was actually the largest retailer in the United States, and even today Sears and J.C. Penney are "anchor stores" in malls all over the country. When I was growing up, my mother would take me to the mall when it was time to go clothes shopping, and there were usually just two options: Sears or J.C. Penney. When I got older, I actually worked for Sears for a little while. At the time, nobody would have ever imagined that Sears or J.C. Penney could go out of business someday. But that is precisely what is happening. They are both shutting down unprofitable stores and laying off employees in a desperate attempt to avoid bankruptcy, but everyone knows that they are just delaying the inevitable. These two great retail giants are dying, and they certainly won't be the last to fall. This is just the beginning.
    The Death Of Sears
    Sales have declined at Sears for 27 quarters in a row, and the legendary retailer has been closing hundreds of stores and selling off property in a frantic attempt to turn things around.
    Unfortunately for Sears, it is not working. In fact, Sears has announced that it expects to lose "between $250 million to $360 million" for the quarter that will end on February 1st.
    Things have gotten so bad that Sears is even making commercials that openly acknowledge how badly it is struggling. For example, consider the following bit of dialogue from a recent Sears television commercial featuring two young women...
    "Wait, the movie theater is on the other side," the passenger says.
    "But Sears always has parking!" the driver responds.
    Sears always has parking???
    Of course the unspoken admission is that Sears always has parking because nobody shops there anymore.
    I have posted video of the commercial below...

    A couple of months ago I walked into a Sears store in the middle of the week and it was like a ghost town. A few associates were milling around here and there having private discussions among themselves, but other than that it was eerily quiet.
    You can find 18 incredibly depressing photographs which do a great job of illustrating why Sears is steadily dying right here. This was once one of America's greatest companies, but soon it will be dead.
    The Death Of J.C. Penney
    J.C. Penny has been a dead man walking for a long time. In some ways, it is in even worse shape than Sears.
    If you can believe it, J.C. Penney actually lost 586 million dollars during the second quarter of 2013 alone.
    How in the world do you lose 586 million dollars in three months?
    Are they paying employees to flush giant piles of cash down the toilets?
    This week J.C. Penney announced that it is eliminating 2,000 jobs and closing 33 stores. The following is a list of the store closings that was released to the public...
    Selma, Ala. -- Selma Mall
    Rancho Cucamonga, Calif. -- Arrow Plaza
    Colorado Springs -- Chapel Hills Mall
    Meriden, Conn. -- Meriden Square
    Leesburg, Fla. -- Lake Square Mall
    Port Richey, Fla. -- Gulf View Square
    Muscatine, Iowa -- Muscatine Mall
    Bloomingdale, Ill. -- Stratford Square Mall
    Forsyth, Ill. -- Hickory Point Mall
    Marion, Ind. -- Five Points Mall
    Warsaw, Ind. -- Marketplace Shopping Center
    Salisbury, Md. -- The Centre at Salisbury
    Marquette, Mich. -- Westwood Plaza
    Worthington, Minn. -- Northland Mall
    Gautier, Miss. -- Singing River Mall
    Natchez, Miss. -- Natchez Mall
    Butte, Mont. -- Butte Plaza Shopping Center
    Cut Bank, Mont.
    Kinston, N.C. -- Vernon Park Mall
    Burlington, N.J. -- Burlington Center
    Phillipsburg, N.J. -- Phillipsburg Mall
    Wooster, Ohio -- Wayne Towne Plaza
    Exton, Pa. -- Exton Square Mall
    Hazleton, Pa. -- LaurelMall
    Washington, Pa. -- Washington Mall
    Chattanooga -- Northgate Mall
    Bristol, Va. -- Bristol Mall
    Norfolk, Va. -- Military Circle Mall
    Fond du Lac, Wis., Forest Mall
    Janesville, Wis. -- Janesville Mall
    Rhinelander, Wis. -- Lincoln Plaza Center
    Rice Lake, Wis. -- Cedar Mall
    Wausau, Wis. -- Wausau Mall

    The CEO of J.C. Penney says that these closures were necessary for the future of the company...
    "As we continue to progress toward long-term profitable growth, it is necessary to reexamine the financial performance of our store portfolio and adjust our national footprint accordingly," CEO Myron Ullman said in a news release.
    Actually, his statement would be a lot more accurate if he replaced "continue to progress toward long-term profitable growth" with " prepare for bankruptcy".
    It would be hard to overstate how much of a disaster 2013 was for J.C. Penney. The following is an excerpt from a recent CNN article...
    It's been a brutal year for J.C. Penney, its stock falling over 60% in the past 12 months. The company has been losing hundreds of millions of dollars per quarter, and is in the midst of another turnaround effort after ousting former Apple executive Ron Johnson last year.
    Overall, shares of J.C. Penney have fallen by an astounding 84 percentsince February 2012. And keep in mind that this decline has happened during one of the greatest stock market rallies of all-time.
    For now, J.C. Penney will continue to try to desperately raise more cash from investors that are foolish enough to give it to them, but all that is really accomplishing is just delaying the inevitable.
    If you would like to see some photos that graphically illustrate why J.C. Penney is falling apart, you can find some right here.
    And of course Sears and J.C. Penney are not the only large retailers that have fallen on hard times. This week the CEO of Best Buy admitted that sales declined at his chain during the holiday season...
    Best Buy shares skid on Thursday after the retailer said total revenue and sales at its established U.S stores fell in the all-important holiday season due to intense discounting by rivals, supply constraints for key products and weak traffic in December.
    In the immediate aftermath of that announcement, Best Buy stock was down more than 30 percent in pre-market trading.
    And Macy's just announced that it is laying off 2,500 employees in an attempt to move in a more profitable direction.
    So why is all of this happening?
    Aren't we supposed to be in the midst of an "economic recovery"?
    That is what the Obama administration and the mainstream media keep telling us, but it is simply not true.
    In fact, a new Gallup survey has found that the number of Americans that are "financially worse off" than a year ago is significantly higher than the number of Americans that say that they are "financially better off" than a year ago...
    More Americans, 42%, say they are financially worse off now than they were a year ago, reversing the lower levels found over the past two years. Just more than a third of Americans say their financial situation has improved from a year ago.
    That is why these stores are dying.
    Things continue to get even worse for the middle class.
    But a lot of people out there will continue to deny what is happening right in front of their eyes. They are kind of like that woman over in California who was conned out of half a million dollars by a Nigerian online dating scam. They will never admit the truth until it is far too late to do anything about it.
    So have you been to a Sears or a J.C. Penney lately?
    Do you believe that they will survive?
    Please feel free to share what you think by posting a comment below...

    http://theeconomiccollapseblog.com/a...nney-are-dying


    Join our efforts to Secure America's Borders and End Illegal Immigration by Joining ALIPAC's E-Mail Alerts network (CLICK HERE)

  2. #2
    Senior Member AirborneSapper7's Avatar
    Join Date
    May 2007
    Location
    South West Florida (Behind friendly lines but still in Occupied Territory)
    Posts
    117,696
    A 'tsunami' of store closings expected to hit retail

    Published: Wednesday, 22 Jan 2014 | 12:58 PM ET
    By: Krystina Gustafson | Content Editor

    Play Video


    Big retailers to close stores: Pro
    Wednesday, 22 Jan 2014 | 10:06 AM ET

    John Kernan, Cowen & Co. vice president, discusses if turning retailers like Sears and J.C. Penney into a REIT-like entity is an alternative.

    Get ready for the next era in retail—one that will be characterized by far fewer shops and smaller stores.

    On Tuesday, Sears said that it will shutter its flagship store in downtown Chicago in April. It's the latest of about 300 store closures in the U.S. that Sears has made since 2010. The news follows announcements earlier this month of multiple store closings from major department stores J.C. Penney and Macy's.

    Further signs of cuts in the industry came Wednesday, when Target said that it will eliminate 475 jobs worldwide, including some at its Minnesota headquarters, and not fill 700 empty positions.

    Experts said these headlines are only the tip of the iceberg for the industry, which is set to undergo a multiyear period of shuttering stores and trimming square footage.

    Shoppers will likely see an average decrease in overall retail square footage of between one-third and one-half within the next five to 10 years, as a shift to e-commerce brings with it fewer mall visits and a lesser need to keep inventory stocked in-store, said Michael Burden, a principal with Excess Space Retail Services.

    Getty Images

    "I believe we're going to hear a lot more announcements in the coming months," Burden said. It's "an indication that there is a shift in the retail environment and it's one that will continue."

    (Read more: 5 problems retailers must fix in 2014)

    January is typically a busy month for retailers to announce store closings. According to the International Council of Shopping Centers, 44 percent of annual store closings announced since 2010 have occurred in the first quarter. But this year's closings are likely indicative of a new trend, sparked by more and more shoppers turning to the Web, experts said.

    This holiday, online spending increased by 10 percent on desktop devices—a number that will likely grow another 2 percentage points when factoring in the role of mobile devices, according to data tracker comScore. Paired with a compressed holiday shopping calendar and a spate of freezing weather across much of the U.S., online shopping contributed to a nearly 15 percent decline in foot traffic this past holiday season, according to ShopperTrak.

    "Stores are making a long-term bet on technology," said Belus Capital Advisors analyst Brian Sozzi. "It simply doesn't make strategic sense to enter a new 15-year lease as consumers are likely to continue curtailing physical visits to the mall."

    Play Video

    Future of American malls

    Rick Caruso, Caruso Affiliated founder and CEO, discusses the future of American malls and explains what shopping malls need to do to become relevant again. "Retail brick and mortar has a great future," Caruso says.

    Sozzi said that after a profitable but below-expectations holiday season, the retail industry will face its second "tsunami of store closures across the U.S.," only a few years after what he called the "fire sale holiday season of 2008."

    During the recession, the number of shopping center vacancies rose by 5.5 percentage points to 11 percent, according to ICSC data, and has since recovered only 2.1 percentage points.

    In addition to J.C. Penney—which announced last week that it will close 33 stores—there are about a dozen retailers that still have too many stores, Sozzi said. Among them: American Eagle, which needs to move some of its aerie lingerie locations into its main stores; Aéropostale, which is on track to close 175 stores over the next few years; and Wal-Mart, which has about 100 stores in the U.S. producing same-store sales declines deeper than 3 percent, Sozzi said.

    (Read more: JC Penney closing 33 stores, slashing 2,000 jobs)
    As for Penney's, Wells Fargo analyst Paul Lejuez said that its store closures are a step in the right direction, but they barely scratch the surface of how many are needed.

    "With mall traffic trends very challenging and J.C. Penney facing its own significant company-specific issues, we do not believe a 1,000-plus store fleet is appropriate," Lejuez said in a research note. "In our view, the company needs to close several hundred stores to operate more efficiently, but that is not easy to accomplish overnight."

    Retailers need a new approach
    That's not to say there aren't a number of young retailers who still have plenty of room to build their store base, Lejuez said. Among them: Lululemon and the fashion-forward Michael Kors and Vince brands, which both recently went public. Kors, which increased its store base by nearly 100 stores last year, is on track to open 50 U.S. stores in 2014.

    In a separate note, Lejuez said that the ideal way for young brands to build a retail business today is very different than it was 20 years ago. These days, he said, it makes more sense for a retailer to have half the number of stores they once thought appropriate, and instead concentrate on a small store network and e-commerce business. This will take time to accomplish, however, as the vast majority of store locations are leased and not owned, making them harder to unload, he said.

    "There is often a mismatch between the number of stores retailers operate today compared to how many they would choose to operate if they had to do it all over again," Lejuez said.

    (Read more: Without rebirth, malls face extinction: Developer)
    But it's not just the number of stores that are shrinking—it's also their size, said David Birnbrey, chairman of retail real estate advisory group The Shopping Center Group. As fewer shoppers buy items at the physical store, retailers don't require the same inventory levels to be kept in an attached storage room.

    Play Video

    Buy retailers with strong e-commerce: Trader

    CNBC's Courtney Reagan dissects the latest action in the retail sector, saying retailers need to ensure a strong online presence. FMHR trader Pete Najarian agrees the best names in e-commerce are buys.

    By placing more of their stock in fulfillment centers, they can shrink their stores to cut back on commercial real estate expenses, Birnbrey said. Although retail rents are still well below where they were prior to the recession, they have begun to stabilize, and are expected to show a slight uptick in 2014, according to CB Richard Ellis.
    "I think stores are typically downsizing right now, and I think they're doing it because they had unsustainable inventory levels," Birnbrey said.

    Steering clear of traditional malls
    One big shift in store closings has come from retailers shying away from indoor malls, instead favoring outlet centers, outdoor malls or stand-alone stores. Although new retail construction completions are at an all-time low, according to CB Richard Ellis, the supply of new outlet centers has picked up in recent quarters.

    "There's no question that mall stores are closing quicker than open air, as far as the department stores," Birnbrey said.

    (Read more: Showrooming left in the dust as shoppers go online)
    Rick Caruso, founder and CEO of Caruso Affiliated, said at the recent National Retail Federation convention that without a major reinvention, traditional malls will soon go extinct, adding that he is unaware of an indoor mall being built since 2006.

    "Any time you stop building a product, that's usually the best indication that the customer doesn't want it anymore," he said.
    But retailers aren't throwing in the towel just yet. Turning brick-and-mortar shopping into a retail experience was one of the main topics discussed at the NRF convention this month, with retailers brainstorming ways to integrate targeted mobile couponing and high-tech gadgets to entice shoppers who may have been lost to the Web.
    "They're not giving up at all," Birnbrey said.

    —By CNBC's Krystina Gustafson. Follow her on Twitter

    UPDATE: This story was updated to include a comment from Target.

    http://www.cnbc.com/id/101353168
    Join our efforts to Secure America's Borders and End Illegal Immigration by Joining ALIPAC's E-Mail Alerts network (CLICK HERE)

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •