The rise of online shopping is slowly but surely causing the demise of the shopping mall. Unfortunately, the trouble is starting to spread to other retailers as well. We’ve seen so many stores close recently. And, sadly, it’s not over yet. With that said here are ten retailers that might see their demise in 2019.
10. Rite Aid
You may remember that we told you a while back that Walgreens, as part of its $4.4 billion deal to buy more than 1,900 Rite Aid stores and three distribution centers, announced plans last October to close 600 stores starting Spring 2018 and continuing over 18 months. Well, now Rite Aid could end up closing its stores as well. According to an article published by MSN, Rite Aid stock has steadily dwindled since regulators blocked its acquisition by Walgreens in 2017. In fact, the drugstore chain was forced to do a reverse split in April to stay in compliance with the New York Stock Exchange. And, that’s not all. The company’s first-quarter report showed an expected net loss of $170-$220 million for the current fiscal year. Plus, the drugstore chain currently has $3.6 billion in debt.
9. Stage Stores
Stage Stores, the parent company of Peebles, Bealls, Palais Royal, Goody’s and Gordmans, got a delisting warning from the New York Stock Exchange earlier this year. According to BizJournals.com, the Houston-based company is no longer in compliance with the continued listing standard because its 30-day average closing price dipped under $1 per share. Stage Stores’ stock dipped down to 73 cents per share in January and made its way back up to 95.82 cents per share in February. While it’s uncertain what, if anything, Stage Stores has done to address the noncompliance issue, it should be noted that the store’s stock closed above $1 per share almost every day from mid-February to early June. Unfortunately, it has been steadily inching down and closed at 73 cents per share on July 22.
8. Payless ShoeSource
Ok, so not that long ago we told you Payless announced early last year that it would restructure by eliminating some of the layers between its retail locations and corporate headquarters, i.e. close some of its stores. Well, their restructuring plan didn’t turn out so well, and in February, management said it would close all of its stores by the end of June.
Once the nation’s largest footwear chain, the store, like many other mall stores, has suffered due to unsustainable debt and declining mall traffic.
FYI, you can still shop for Payless shoes online. “In February 2019, our company made the difficult decision to shut down our stores and e-commerece operations… Going forward, we will continue to offer your favorite Payless products through Amazon,” the company said on its website.
7. Pier 1 Imports
We recently told you that the problem with Pier 1 Imports is that it just wasn’t giving customers a reason to come in and shop. And, as a result, its stock imploded and comparable sales fell by 11 percent last year. In its most recent quarter, comparable sales dove another 13.5 percent, resulting in a net loss of $81.7 million. Meanwhile, Pier 1 Imports has had to do a reverse split to stay in compliance with the New York Stock Exchange.
Ascena Retail Group, the parent company of Dressbarn, announced in May that it would be closing all (approximately 650) Dressbarn stores. According to NPR, Dressbarn CFO Steven Taylor said in a statement that “this decision was difficult, but necessary, as the Dressbarn chain has not been operating at an acceptable level of profitability in today’s retail environment.” A final closure date has not been announced, and stores will remain open with no changes to return, refund or gift card policies.
5. J. Crew
This company was already $1.7 billion dollars in debt the middle of last year, and now, in its most recent quarter, its sales fell 4 percent and comparable sales fell 1 percent. The company also posted a net loss of $16.3 million.
Earlier this year, the company, for the second time in as many years, turned to restructuring lawyers to tackle its burdening debt — which is coming due in two years. According to CNBC, however, sources say that a bankruptcy filing is not currently on the horizon. It very well could be, though, if the company does not get the debt relief it needs.
Gymboree announced in January that it would close all of its stores (more than 800) and file for Chapter 11 bankruptcy. The company has been saddled with debt and previously filed for bankruptcy in 2017. Meanwhile, the store decided to sell its intellectual property to The Children’s Place and Gap Inc.
But, wait. All may not be lost for this children’s apparel retailer. If you take a look at the company’s website, you’ll see that they plan to return Spring 2020. “The Children’s Place purchased rights to the Gymboree brand, but not the physical store locations that were closed by the prior owner as part of its bankruptcy filing. We’re excited to announce that we’ll be relaunching the Gymboree brand at over 200 select Children’s Place locations in early 2020,” the company said. “We expect to launch the Gymboree brand online in early 2020” as well, they added.
3. Lord & Taylor
After 104 years in business, Lord & Taylor closed (and sold) its flaship store in Midtown Manhattan earlier this year. Forty-five additional Lord & Taylor stores remained open at the time, and some of their branded merchandise can be purchased online via Walmart.com.
According to an article published by MSN, Lord & Taylor has been struggling for years. The company has seen its comparable sales fall 5 percent or worse for each of the last eight quarters, and in the first quarter of this year, the store saw its comparable sales fall 17.1 percent. So, just what exactly happened to cause Lord & Taylor to sell its flagship store to the WeWork space-leasing company for more than $850 million? The same thing that has happened to several other brick-and-mortar stores: the rise of online shopping.
2. Neiman Marcus
Neiman Marcus’ six consecutive quarters with positive comparable sales came to screeching halt as comp sales fell 1.5 percent in its most recent quarter. Not to mention that the company has more than $5 billion in debt. As a result, Aurelius Capital Management, one of the company’s bondholders, pushed Neiman Marcus “to add language to its bond documents that would make it easier to profit on bets against the retailer, especially if the company defaults or files for bankruptcy, according to people familiar with the matter,” The Wall Street Journal reported earlier this year.
1. Francesca’s Holdings
In its most recent quarter, Francesca’s Holdings‘ comparable sales fell 13 percent. As a result, the company announced on June 28 that its Board of Directors approved a reverse stock split of the company’s common stock at a ratio of 12-to-1. Earlier that day at the company’s 2019 annual stockholders meeting, the stockholders approved a reverse stock split of the company’s common stock at a ratio not less than 5-to-1 and not greater than 35-to-1. Meanwhile, Francesca’s Holdings’ CFO resigned abruptly — which is not a good thing in terms of the company’s long-term health.
So, why has the company been struggling? The main reason is due to overexpansion: the company aggressively added news stores, even though its comparable sales had fallen for at least nine straight quarters. Plus, many of the added stores were brick-and-mortar locations in malls, and as you know, mall traffic has been on a steady decline over the years.
Check out these articles for additional information on retail store closings:10 American Brands That Might be in Trouble 14 Stores That Might be Heading for Bankruptcy