The onslaught of store closures in the United States continues to accelerate at an unprecedented rate.
According to the most recent data, for the week ended June 21, 2017, 5,321 retail closings have been announced year-to-date. This represents a 218% increase from the previous year and is a massive uptick in the number of retail closings from just six weeks earlier, when store closings were up 97% year-over-year at 3,396.
Department and specialty stores accounted for the majority of the closures. Specifically, RadioShack Corp leads the way with 1,000 store closures to date in 2017.
Rounding out the top 10 closures thus far in 2017 are Payless Inc (NYSE:PSS, 512), The Gymboree Corporation (NASDAQ:GYMB, 450), Rue21, Inc. (NASDAQ:RUE, 400), Ascena Retail Group Inc (NASDAQ:ASNA, 400), L Brands Inc (NYSE:LB, 250), Sears Holdings Corp (NASDAQ:SHLD, 226), hhgregg, Inc. (220), GameStop Corp. (NYSE:GME, 190), and bebe stores, inc. (NASDAQ:BEBE, 180).
The outlook for the remainder of 2017 looks even worse for the U.S. retail industry. By the end of 2017, it is forecast that 9,452 stores will close. In 2008, before the financial crisis and recession, 6,164 stores closed. The forecast for 2017 represents a year-over-year increase of 361%.
The rash of store closures is being driven by the shift in consumer demand for online retail and ongoing retail bankruptcies. The second half of the year is expected to be tough, as struggling retailers continue to shutter their doors and some are even filing for bankruptcy.
Case in point: according to Reuters, Eddie Bauer Holdings (NASDAQ:EBHI) is considering going up for sale. The Bellevue, an outdoor wear retailer controlled by the private equity firm Golden Gate Capital LP, is seeking relief for a $225.0-million term loan that comes due in 2020 and a $200.0-million revolving line of credit line due in 2019.
Neither Eddie Bauer nor Golden Gate Capital are commenting on the rumors. The Bellevue, Washington-based company has about 370 stores in the U.S. and Canada. The firm was acquired out of bankruptcy by Golden Gate Capital in 2009 for $286.0 million.
Even locals are shying away from the company. In January 2017, the company shuttered its downtown Seattle store. In 2016, the company moved is 8,390-square-foot flagship store in Bellevue Square to a space half that size.
Like many in the retail sector, Eddie Bauer’s bottom line has suffered. For the 12-month period ended April 1, 2017, Eddie Bauer has seen revenues and gross margins decline. Moreover, both Standard & Poor’s and Moody’s recently downgraded Eddie Bauer’s debt, noting that the company may need to borrow to fund working capital and interest expenses.
“Weekly Store Openings and Closures Tracker #12,” Fung Global Retail & Technology, June 23, 2017.
“Weekly Store Openings and Closures Tracker #13,” Fung Global Retail & Technology, June 23, 2017.
“Exclusive: Eddie Bauer to explore options including sale – sources,” Reuters, June 23, 2017.