The New York Times this morning has a story about the continuing problems facing American malls…
"At a time when retailers should be putting in orders for the all-important holiday shopping season, stores are furloughing tens of thousands of corporate and store employees, hoarding cash and desperately planning how to survive this crisis. The specter of mass default is being discussed not just behind closed doors but in analysts’ future models. Whether that happens, no one doubts that the upheaval caused by the pandemic will permanently alter both the retail landscape and the relationships of brands with the stores that sell them.
"At the very least, there is expected to be an enormous reduction in the amount of stores in each chain, which once sprawled across the American continent like a pack of many-headed hydras.
"Department store chains account for about 30% of the total mall square footage in the United States, with 10% of that coming from Sears and J.C. Penney, according to a January report from Green Street Advisors, a real estate research firm. Even before the pandemic, the firm expected about half of mall-based department stores to close in the next five years."
Among the steps being taken by retailers: "Le Tote, a subscription clothing company that acquired Lord & Taylor last year from Hudson’s Bay, said in a memo on April 2 that the chain’s entire executive team, including the chief executive, would be let go immediately. It also suspended payments of goods to vendors for at least 90 days, citing 'immense pressure on our liquidity position.'
"Macy’s, which also owns Bloomingdale’s, extended payment for goods and services to 120 days from 60 days and, according to Reuters, has hired bankers from Lazard to explore new financing."
- KC's View:
It was happening anyway. Now, the mall business is just on fast-forward … with the added problem that a severe recession may even cripple the A-level malls that many thought were safer.