Seven hundred more retail doors are set to go dark.
That’s the latest tally from retailers on Wednesday, which included Chico’s FAS Inc.’s planned closure of up to 250 doors over the next three years, Dollar Tree at up to 390 Family Dollar stores, and Abercrombie & Fitch, which is closing up to 40 locations at its core Abercrombie and Hollister nameplates. And American Eagle Outfitters Inc. said Wednesday afternoon when it reported fourth quarter earnings results that it would close between 10 to 15 American Eagle doors and five to 10 Aerie stand-alone stores.
Add to that door count the 165 stores Foot Locker said on Friday it would shutter and the unspecified number of stores bankrupt Diesel USA said on Tuesday that it plans to close. Upcoming are the locations that specialty retailers and brands might announce when they report earnings results over the next week or two. Then there are still the regional nameplates that have yet to report, but are known in the credit community to be struggling, likeStein Mart and Stage Stores. Add it all up and the number for the apparel sector could be closer to 1,000 for March. And that’s not even including any retailer that could surprise with a bankruptcy filing over the next few weeks.
So far the tally including announcements from January and February bring the total to more than 5,500 planned retail door closures for the apparel sector.
Door closures at Chico’s comprise 100 Chico’s stores, 90 White House Black Market and 60 Soma locations. About 60 to 80 are expected for 2019, with most doors closing in the second half of the year.
It’s no surprise that Chico’s would be closing stores given that the women’s chain has been struggling for the past year. The company reported fourth quarter results on Wednesday, ending the period in the red with a net loss of $16.6 million, or 14 cents a diluted share, against net income of $28 million, or 22 cents, a year ago. Net sales fell 10.7 percent to $524.7 million from $587.8 million. On an adjusted basis, the loss was 7 cents a share, better than Wall Street’s estimate of a loss of 9 cents a share on sales of $516.4 million.
And while Shelley Broader, chief executive officer and president of Chico’s, said the company saw sequential improvement in comparable sales in all three brands for the quarter, the only brand that actually posted positive quarterly comps was its intimates brand Soma. Soma’s comps gained 6.2 percent, but comps fell 7.9 percent at the core Chico’s brand, and was down 2.9 percent at its White House Black Market brand.
Janine Stichter, equity analyst at Jefferies, has a “Hold” on shares of Chico’s stock. Noting the appointment of Karen McKibbin as the new brand president for the Chico’s brand, Stichter said her background in “merchandising, operations and retail experience should be additive to changes ahead.” But even with Broader’s point that the brands were seeing sequential comps improvement, Stichter said the core Chico’s brand is still in flux and it won’t be until the company’s namesake brand finds its footing with merchandise that resonates with the customer that there’ll be any change in the firm’s financial picture.
Over at Dollar Tree, the company posted a fourth-quarter loss of $2.31 billion, or $9.66 a diluted share, against last year’s profit of $1.04 billion, or $4.37. The loss was mostly due to a $2.73 billion goodwill impairment charge for the Family Dollar business. The dollar-store retailer in 2015 acquired competitor Family Dollar Stores in a cash and stock deal valued at nearly $9 billion. Some analysts believe the business has been dragging down the company’s overall performance, and were hoping for some positive turnaround news at Family Dollar operation.
Dollar Tree’s Gary Philbin, who serves as president and CEO, said 200 Family Dollar stores will be “re-bannered to Dollar Tree, and we plan to close as many as 390 Family Dollar stores this year.” He also said there’s been progress at the Family Dollar operation, which in the quarter “delivered its strongest quarterly same-store sales growth of the year.” The new model for renovated Family Dollar stores, dubbed H2, will include sections branded as Dollar Tree $1.00 merchandise throughout the store. About 1,000 Family Dollar stores are slated for the remodel this year.
Family Dollar offers apparel options for men’s, women’s and children’s. And while the discount apparel categories at Family Dollar’s website are currently showcasing fleece options for sleepwear and slippers, it also has women’s LEI branded denim jeggings as an item that could be found in its stores. The website noted Hanes and Gildan as brands that are a part of its apparel merchandise mix. At Dollar Tree, the selections are mostly apparel-related items, like baseball caps and socks, as well as inexpensive accessories like sunglasses.
Moody’s Investors Service retail analyst Mickey Chadha said the plan to “rationalize and optimize the Family Dollar store base through store closures, rebranding and remodeling is a positive and will improve performance further in 2019,” adding that the dollar store sector will “remain one of the bright spots in retail as it is one of the least vulnerable to e-commerce encroachment and provides a compelling value for shoppers.”
Abercrombie & Fitch
Earlier Wednesday morning, Abercrombie & Fitch Co. said it would close up to 40 stores this year. In the fourth quarter, the company shuttered 24 locations comprised of 9 Hollister stores and 15 Abercrombie doors. The specialty chain over the past year or two has been looking at its store base with an eye on closing some stores when leases come do if they choose not to renew.
Fran Horowitz, chief executive officer of Abercrombie & Fitch, told Sourcing Journal that the company has flexibility with many of its store leases, whether to close, remodel or downsize the space.
For fiscal 2019, the company plans for 85 new store experiences based on 40 new doors, 25 remodels and 20 “right-sizes.” In fiscal 2018, the company delivered 67 new store experiences through a combinations of new store prototypes, remodeled stores and right-sizes. It also closed 29 stores in the U.S.
Separately, Amazon.com Inc. on Wednesday confirmed in a Wall Street Journal report that it would close all 87 of its pop-up stores. The cashierless Amazon Go stores will stay open. Amazon Go is a model that the marketplace firm has said could have as many as 3,000 locations by 2021, according to a Bloomberg report last fall. The Amazon pop-up stores–some in its Whole Food stores and at Kohl’s–let customers test its electronic products and services before they buy. All 87 sites in the U.S. will close next month.