Store Closings: Retail Closures Could Reach 12,000 by Year’s End

In the US, year-to-date announced closures have already exceeded the total we recorded for the full year 2018. Coresight Research estimates announced US store closures could reach 12,000 by the end of 2019.

U.S. announced store closures have already exceeded the total closures for 2018. What’s worse, if they continue at this pace store closures could reach 12,000 by the end of 2019.

That’s according to Coresight Research, which says so far this year, U.S. retailers have announced 7,426 store closures, which compares to 5,864 closures for the full year 2018.  However, U.S. retailers have also announced 3,039 store openings, which compares to 3,258 openings for the full year 2018.

So far this month, discount chain Fred’s announced it would shutter another 129 retail stores and Charming Charlie filed for bankruptcy for the second time in less than two years with plans to close all of its 261 stores. Dressbarn also just announced that its wind down continues to progress as it has commenced store closing/inventory clearance sales at 53 stores that will close by the end of August. 

Fred’s said it will close the stores, its fourth round of closings, and hold clearance sales across all locations in an effort to refocus its product mix, simplify its store portfolio and repay debt. The chain has closed some 300 stores during the past few months. When completed, Fred's will have approximately 80 retail stores remaining, centered primarily around the company's distribution center in Dublin, GA.

“While it is never easy to make decisions that impact our valued employees and customers, this initiative represents another necessary step in our continued efforts to stabilize our business by simplifying our store portfolio and product assortment,” said Fred’s CEO Joseph Anto. “We are pleased to present our loyal customers the unique and compelling opportunity to purchase heavily discounted items for a limited time. We encourage shoppers to take advantage of these unmatched deals, and stock up on items that may be permanently removed from Fred's shelves, come August."

Fred's also noted it may evaluate re-launching certain closed stores in the future under a new operating model, with an updated assortment. The company expects the proceeds from the inventory clearance sales will be used to repay outstanding indebtedness under its revolving credit agreement. 

Going-out-of-business sales are already underway in many Charming Charlie locations, with all stores expected to close by the end of August. The retailer’s e-commerce site has already stopped taking orders.

In the court filing, the retailer reported it faced “unsustainable operating expenses, including onerous leases.”

The retailer previously filed for bankruptcy protection in December 2017, and subsequently closed about 100 stores. It emerged in April 2018 with new owners. In its most recent bankruptcy filing, Charming Charlie said that its previous effort at restructuring its operations and debt “were simply not sufficient to stabilize the debtors’ businesses and ensure long-term profitability.”

It has been reported that more than 3,000 Charming Charlie full- and part-time employees could lose their jobs.

Ikea also announced this July it is closing its only production facility in the U.S.

The Swedish home furnishings giant will end production this December at its manufacturing plant in Danville, VA, and move the operations to Europe. The facility opened in 2008 and employs about 300 people. Ikea cited costs for the decision.

Retail continues to lead all sectors in for job cuts in 2019, with 53,248 cuts, 7,187 of which occurred in the second quarter, according to Challenger, Gray & Christmas. However, that is 27% fewer cuts than the 73,066 announced in the first half of 2018.