I was actually in a $JCP the other day, perusing around. It was absolutely dreadful. I don’t know how these stores stay open.
The company released earnings this morning and announced they were going to close 14% of their stores, or about 140 and do so immediately. They’re retiring 6,000 workers and will save $225m in cost savings.
Recently, Macy’s announced similar plans, store closures, as well as Sears and Kohls. Which begs the question: what will the shopping mall look like in ten years?
Anyone ever notice how much square footage these mega stores take up? How on earth can these mall operators stay in business when the mega stores go?
I suppose it’s like investing half of your portfolio in one stock. If that stock was Amazon, you’d be considered a genius. But for the mall operators, the REITs like $SPG, $GGP, $CBL, $PEI and $WCG, their investments were literally $M, $SHLD and $JCP.
Thus far, analysts don’t think it’s an issue.
Source: Morgan Stanley
Of the 269 malls owned by REITs with Sears, 79% have < $500 sales/square foot (ssf)… Our analysis shows significant overlap between Macy’s and Sears with 45% of REIT malls having both as a tenant. We do not envision a material impact to earnings, and some REITs could also be opportunistic, but it could lead to continued pressure on multiples as SS-NOI (same-store net operating income) decelerates.
Sounds a bit delusional to me. The trend isn’t grim for just the big box stores, but just about every single store in these malls — restaurants included.
I remember like it was yesterday, pre financial crisis, when retail was the darling of Wall Street — the single most important place to invest.
Now it’s in ruins.
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Sears closed the top floor of their mall store years ago. The last time I was in a Jacque Penay was about 3 years ago and their inventory was minimal to say the least.
The plaid Towncraft sport coat I got about 50 years ago may be worth something some day. When I was a kid it was my go to wedding,funeral,bar mitzvah outfit.
As the population ages they consume less of everything, except pills.
Maybe a bunch of Blues Brothers tribute bands can tour the country and drive through every one of these shuttered stores.
Our biggest mall being torn asunder… http://www.delcotimes.com/article/DC/20160413/NEWS/160419855
A what they plan to do…
http://www.philly.com/philly/business/retail/Granite-Run-Mall-Gets-New-Lease-on-Life.html
I’m still in awe about how much space Best Buy dedicates to DVDs and, in the past CDs. Occasionally, I’ll walk into one and ask one of the clerks where I can VHS tapes.. it doesn’t seem to amuse them as much as me
Many uses. Paint ball colosseums, grow ops for marijuana industry, urban condos, zombie holding pens, FEMA camps … etc /sarc
I was thinking tear down for modern condos – definitely like your grow op idea better.
Not sure why you need to go to these places when you can go to Target or Walmart.
or online. most retailers now offer free shipping to and from, or drop off at store, with online discounts. can’t remember last time I was at the mall
The malls are part of a bygone era. Cities are being developed with transportation moving away from cars. City centers and hubs around transportation will be OK but the big boxes are the last hurrah imo.
I don’t know how they would expect anything different after alienating most of their traditional customer base by advocating for the gay left.
Since no one is going to Paris anymore, let’s go to the mall!