Last week, the US experienced a large crash in retail spending in December in the form of MoM Real Personal Consumption Expenditures.
Then we have this gut-wrenching report on retail stores.
In the last 48 hours alone, several shopping-center staples unveiled plans to trim their footprints across the U.S. Gap Inc. said it would slash the store count of its struggling namesake brand by 230 locations over the next two years, just hours after J.C. Penney Co. confirmed it would shutter18 department stores. That news came on the heels of L Brands Inc.’s decision to close 53 Victoria’s Secrets in North America this year. And it’s not just apparel: Tesla Inc., whose galleries are often inside shopping centers, just said it’s moving all its sales online.
These moves come on top of all of the chains that have already announced they’re closing down or reducing their footprints due to bankruptcy. This includes Payless Inc., which is abandoning 2,500 stores, Things Remembered, which is closing most of its 400 stores and selling the rest, while mall favorite Brookstone Inc. slims down operations and Sears continues to shutter locations. Taken as a whole, many of today’s shopping centers are becoming little more than an assemblage of fast-fashion retailers, Apple stores and food courts.
As an example of how retail Real Estate Investment Trusts (REITs) have been hurt by changing consumer shopping habits, take Washington Prime REIT (formerly Glimcher REIT) from Columbus Ohio. With Amazon’s rise since 2014, Washington Prime has dived from over $20 per share to its current share price of $5.14.
Also, Columbus, Ohio-based Limited Brands (aka, L Brands) was trading at over $100 per share in 2015, but is now trading at $27.50. The Limited empire once included The Limited, Limited Too, Limited Express,. Galyans, Henri Bendel, Abercrombie and Fitch, Lane Bryant., Lerner, Victoria’s Secret, Bath and Body Works and Pink. Only the last three still have a mall footprint with The Limited going solely on-line. How the mighty have fallen.
Of course, empty space can be repurposed with gyms (Planet Fitness), churches, physician’s offices, more bad chain restaurants and … day care facilities.
But it isn’t just retail. Check out the crashing price per square foot of suburban office space for Northern Virginia where office conversions are all the rage.
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