Given Kohl's balance sheet situation and its lack of a "luxury" or "discount" niche, I believe it has a more significant disadvantage than most of its peers. Fundamentally, I believe the era of large department stores is ending as the ongoing wave of cost pressures, combined with demand declines, may be sufficient to create insolvency for many department stores. The New Jersey-based company said at the time of the Chapter 11 filing that it plans to "reduce their store fleet from approximately 2,800 stores to approximately 1,200 stores," which represents a 56% reduction in the company's total number of stores. Kohl's Corp. is closing all of its more than 1,100 retail stores nationwide and making other financial moves in response falling sales tied to the coronavirus pandemic. During Kohl's last earnings call, the company noted growing margin pressures from wages and freight costs. A wave of department store closures could hit in 2023, according to UBS analysts. A permanent CEO, Claire Spofford, will join the company in early 2021. KMBC 9 News in Missouri reported that Macys said the clearance sale for the Summit Fair store in Lees Summit would start this month and run for approximately eight to 12 weeks. In my view, 2020's economic stimulus may have artificially boosted Kohl's sales, making it appear to be a stronger company than it truly is. Banks stores. The company was at risk of total liquidation for months as it negotiated with its creditors. Monday, March 21, 2016. Its high short interest creates some squeeze risks, mainly if retail spending levels do not decline as I expect. The decision comes after positive response from last year's closure on Thanksgiving Day, as well as evolving preferences in how and when customers want to shop during the holiday season. Last January, another round of closings was announced. Kohls announced today that as the result of the escalating COVID-19 pandemic the company will temporarily close its stores nationwide effective Thursday, March 19 at 7 p.m. local time. We would expect to have a meaningful number of additional store closures beyond the 250 that we're pursuing this year, meaning there will be more in 2021 and probably a bit more in 2022, interim Victorias Secret CEO Stuart Burgdoerfer told analysts in May. Kohl's Corp. is closing all of its more than 1,100 retail stores nationwide and making other financial moves in response falling sales tied to the coronavirus pandemic. Kohls announced that all of its stores will be closed on Thanksgiving Day, Thursday, November 25, 2021. Get this delivered to your inbox, and more info about our products and services. The decision comes after positive response from last year's closure on Thanksgiving Day, as well as evolving preferences in how and when customers want to shop during the holiday season. Macys. However, given Kohl's low quick ratio (liquid current assets-to-current liabilities), it must sell its inventory or risk liquidity troubles. WordPress.com VIP. Days into the new year, the department store chain confirmed a new round of store closures to USA TODAY. More J.C. Penney store closings:After exiting bankruptcy, 15 additional stores will shutter in spring 2021. as well as other partner offers and accept our. By clicking Sign up, you agree to receive marketing emails from Insider "A lot of the weaker players that we have now in the distressed space are still owned by private equity firms and still have weak balance sheets," Moody's executiveChadha said. Warehouse Reimagined model which consolidates the retailers 20,000 to 25,000 square foot-stores into more efficient 15,000 square-foot locations. February 23, 2021. bucking the otherwise gloomy retail trends. Customers looking to shop Kohls on Thanksgiving Day will be able to shop on Kohls.com and in the Kohls App. The "big box" consumer retail industry has struggled to survive for the past two decades as the online shopping industry has grown. Independence Center, MO 15. Even before the pandemic, Bed Bath & Beyond planned to close stores but in July the number increased to 200 planned closures, accounting for some 21% of the company's namesake stores. Kohl's recently fell as Moody's placed its Baa2 rated senior unsecured debt on review for downgrade due to its lagging competitive profile, high leverage, and margin pressures. Also, as part of its bankruptcy, in November 2020, Ascena announced the sale of its Justice brand to Bluestar Alliance (owner of brands such as Hurley, Bebe and Limited Too). A permanent CEO, Claire Spofford, will join the company in early 2021. Kohls will announce which stores they will close later on in March, and they expect the cuts will save the company upwards of $45 million, roughly equivalent to 1 percent of sales. In January 2020, the retailer said it planned to shutter 91 of its stores by 2022 in an effort to save $80 million each year over the next three years. In May, L Brands, the parent company of Victoria's Secret and Bath & Body Works, said it would permanently closeapproximately 250 stores in the U.S. and Canada in 2020. Morningstar analysts identified 10 Kohls propertieswith leases set to expire before fiscal year 2023. Kohl's intends forward-looking terminology such as believes, expects, may, will, should, anticipates, plans, or similar expressions to identify forward-looking statements. Givenrestrictions on large gatherings intended to reduce the transmission of the coronavirus, the market for balloons, streamers, party decorations and costumes is naturally limited. Earlier in December,the company said it had completed a 10% workforce reduction at itsColumbus, Ohio, corporate office. I have no business relationship with any company whose stock is mentioned in this article. Sales are stalling in 2022, but department store closures have stayed flat since early 2021. Private-equity ownership has been a problem for many other retailers in recent years, such as Toys R Us, which liquidated after accumulating too much debt and facing intense competition. College Mall, IN 13. Still, I highly doubt this leniency will exist in the event of another economic downturn. If you have an ad-blocker enabled you may be blocked from proceeding. From the shutdown in March to various reopening protocols and safety concerns for their employees, many of our favorite places have been forced to permanently close their doors. Macy's told employees at 45 locations that their stores would close in 2021, CNBC first reported. Here's the full list of Macy's stores expected to close this year: 1. But then sales growth began to slow, even as store closures have remained flat since 2021. Kohl's ended the last quarter with very high inventories per share and a meager quick ratio. Representatives for Nordstrom and Kohl's did not immediately respond to Insider's request for comment. Stores closing in 2021: 45 This change is significant because BBB debt has an effective average yield of 5.75% today, while BB debt has an average effective yield of around 7.25%. The overwhelming majority of Kohl's products are not made in the U.S, and most are shipped from Asia, so China's unending lockdowns are likely further to increase apparel and footwear costs in the U.S. This trend significantly benefited Kohl's as consumer prices declined while real wages grew, giving the company a tremendous cushion against economic woes. 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The closures are part of Macy's three-year plan to close one-fifth of its stores, or roughly 125 locations, which was first announced before the coronavirus pandemic in February 2020. Net income came in flat compared to the same period last year at $14 million in the first quarter of 2022. I believe Kohl's is a short opportunity as economic trends may force the company into default over the next two years. The 18 stores (which represents less than 1 percent of total sales) will be announced by the end of March, according to the companys most recent shareholder report, delivered Feb. 25 from For retailers that survived the catastrophe that was 2020, there's hope on the horizon in 2021. Woodfield, IL (Furniture)4. Forward-looking statements relate to the date initially made, and Kohls undertakes no obligation to update them. Kohl's recently lost its investment grade credit rating, meaning its interest costs may rise significantly upon its 2023 debt maturities. Like many department stores, Kohl's faces rising input costs while consumer retail demand declines. Much of the company's remaining debt expires in 2025; however, the remaining portion (~60%) does not expire until 2030-2045. Macy's told employees at 45 locations that their stores would close in 2021, CNBC first reported. Here's a list of major retailers for whom 2021 could be a make-or-break year based on USA TODAY research, public data and analyst reports: The department store chain filed for Chapter 11 bankruptcy protection in May after its sales collapsed amid temporary store closures. seeing more dramatic pressures. It terminated 31 U.S. locations that very month, and 35 additional stores were set to close by the end of January 2021. JJBers / Wikimedia Commons. See below: Looking just at its long-term debt, the company currently pays an effective interest rate of 4.89% (10-Q pg. The rest are slated to start later this month. Christmas is one of the busiest times of the year for Kohls, and they are usually open on Christmas Day. 9). Looking forward, we're seeing accelerating prices in footwear and apparel combined with falling real wages and weak consumer sentiment. Macy's is closing dozens of department stores this year. As COVID-19 casescontinue to increase across the nation with the omicron variant, Macy's said it was temporarily revising store hours for the rest of January at all of its Macy's stores. Additionally, if cost pressures continue while consumption demand moderates, the firm's already low margins may become far thinner. Hyatt Regency (Maui), HI 10. Its interest costs have risen very rapidly in recent years from around 2.6% before 2020. Most Justice stores have already closed and the remaining locations are expected to close in early 2021. I have no business relationship with any company whose stock is mentioned in this article. Fashion retailer Express launched a turnaround planin January 2020and announced it would close 100 of its 600 stores. Party City was already facing challenges before this crisis began. Kohl's is closing seven Southern California stores and a total of nine throughout the state, according to a press release Monday. The report cites an email from Kohls CEO Michelle Gass, who said that the company is closing underperforming stores in an effort to focus on its most profitable locations. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. As of Sept. 30, it had 490 states in 40 states after closing 197 stores as part of itsreorganization plans. A permanent CEO, Claire Spofford, will join the company in early 2021. Eastland, OH (Furniture Clearance)6. 13. Kohls could be hit with some store closures in the not-so-distant future, according to a Tuesday report from credit rating business Morningstar. The global economy is transitioning as rising interest rates lower economic demand. Bed Bath & Beyond soldits Christmas Tree Shops brand with 80 stores in November. Paradise Valley, AZ 2. From the shutdown in March to various reopening protocols and safety concerns for their employees, many of our favorite places have been forced to permanently close their doors. The company currently has a Times Interest Earned (EBIT-to-interest expense) of 4.3X TTM and ~$700M in annual income compared to $275M in annual interest costs. Macy's told employees at 45 locations that their stores would close in 2021, CNBC first reported. In late October, company officials said the 200 stores are expected to close by the end of the 2021 fiscal year. 1. Company officials said they still plan to separate Victoria's Secret and Bath & Body Works into two companies, which has pleased investors. Things didn't improve for department stores during the start of the holidays shopping season. Freight costs may be moderated due to the decline in gasoline costs, but that may change if oil sees supply pressures, as I suspect. The list of its woes continues to grow as activist investors recently urged the removal of Kohl's CEO. Top editors give you the stories you want delivered right to your inbox each weekday. MENOMONEE FALLS, WI Kohls department store has announced it will be closing 18 underperforming stores to boost shareholder value. Rolling Oaks, TX 28. Kohls announced that all of its stores will be closed on Thanksgiving Day, Thursday, November 25, 2021. Macys. The companyposted a loss of $432 million in the first nine months of 2020, compared with a loss of $264 million in the same period of 2019. Of course, investor concerns regarding such changes have led to significant declines in the stock prices of many retail companies, leading to very low valuation multiples. Lima, OH 35. I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. See below: Its high inventory going into winter sales protects partially against Chinese import woes. Then the pandemic struck, and the industry was hit with an unprecedented number of store closures according to UBS, the retail industry lost 1,800 stores between January 2020 and March 2021. Footwear News is a part of Penske Media Corporation. Analysts Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. Winter Haven, FL 33. The following stores are expected to close in the next few months. From the shutdown in March to various reopening protocols and safety concerns for their employees, many of our favorite places have been forced to permanently close their doors. 13. Macy's currently operates 544 of its namesake department stores, along with 34 Bloomingdale's locations, 19 Bloomingdale's outlets and 166 Bluemercury shops, according to its website. Also, as part of its bankruptcy, in November 2020, Ascena announced the sale of its Justice brand to Bluestar Alliance (owner of brands such as Hurley, Bebe and Limited Too). Water Tower Place, IL 12. Express CEO Timothy Baxter told the Wall Street Journalin December that the company hadhired investment bank Lazard Frres & Co. to help raise enough financing to carry the company through the pandemic. West Park Mall (MO), MO 17. 2023 USA TODAY, a division of Gannett Satellite Information Network, LLC. Monterey, CA (Furniture)32. See below: Over the coming quarters, I expect Kohl's operating expense ratio will rise faster, given wage pressures. In 2020, Macy's closed about 30 locations. Also listed on USA TODAY's 2020 list of struggling retailers, Ascena Retail Group, the parent company of Lane Bryant and Ann Taylor, whichfiled for bankruptcy in July. Given Kohls recent financial performance, the company may need to selectively exit underperforming stores as these leases come to a close, analysts said. See the stores slated to close by the end of February, Taco Bell launches Taco Lover's Pass subscription nationwide with 30 days of tacos for $10, Starbucks' Pistachio Latte and Meatless Mondays are back for a limited time this winter, the retailer plans to open 400 small Toys R Us shops, Walmart, Kroger increase prices of at-home rapid tests, Walmart expanding 'InHome' delivery service that delivers groceries to the kitchen or garage, KFC launching plant-based Beyond Fried Chicken at restaurants nationwide starting Monday, Chipotle releases plant-based chorizo and new lifestyle bowls for a limited time, Your California Privacy Rights/Privacy Policy, Mountain Brook: Brookwood Village, 614 Brookwood Village. Tuesday Morning was already struggling when thecoronavirus pandemicbegan and went into a free fall when it was forced to temporarily close its locations due to the crisis. Data is a real-time snapshot *Data is delayed at least 15 minutes. Both chains were owned by a company that filed for Chapter 11 bankruptcy protection in 2018 and narrowly escaped liquidation in early 2019. As part of the bankruptcy, the company announced plans to close more than 1,000 stores across all of its brands permanently. The closures are part of Macy's three-year plan to close one-fifth of its stores, or roughly 125 locations, which was first announced before the coronavirus pandemic in February 2020. Mall owners like Simon Property Group and Macerich have been tasked with filling a plethora of empty spaces. I am not receiving compensation for it (other than from Seeking Alpha). Sales are stalling in 2022, but department store closures have stayed flat since early 2021. February 23, 2021. Vista Ridge Mall, TX 29. The forecast comes shortly after the Menomonee Falls, Wisconsin-based retailer reported a decrease in net sales and comparable sales in Q1. Such statements are subject to certain risks and uncertainties, which could cause Kohl's actual results to differ materially from those anticipated by the forward-looking statements. See the list. This site is protected by reCAPTCHA Enterprise and the Google Privacy Policy and Terms of Service apply. The off-price retailer which sells a wide variety of merchandise including home decor, bath and body goods, crafts, food, and toys filed for bankruptcy protection in May. The company has created an online platform that is somewhat attractive, but its fulfillment network is not nearly as strong as Amazon's. Even before the pandemic hit in early 2020, retailers were struggling. I believe KSS is a short opportunity with potential catalysts being a dividend cut, weak holiday sales, and its early 2023 bond maturity. The company shutteredall of its Catherines plus-size storesand in November announced it sold the rights, title, licenses and e-commerce business of its Justice tween brand to management company Bluestar Alliance LLC. This article contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. S imilar to many big-box department stores, Kohl's future has been hanging in the balance for quite some time. Sign up here. Great Lakes Mall, OH 20. Harrison is a financial analyst who has been writing on Seeking Alpha since 2018 and has closely followed the market for over a decade. See the stores slated to close by the end of February. Kohl's has an immense competitive disadvantage compared to Amazon (AMZN) due to its much higher overhead costs, particularly considering rising electricity and wage pressures. Kohls will continue to serve its millions of customers through Kohls.com and Kohls App and will ship their desired items directly to their homes. Of course, investor concerns regarding such changes have led to significant declines in the stock prices of many retail companies, leading to very low valuation multiples. But there's no guarantee they'll keep their engines running long enough to reach the light at the end of the tunnel. The Avenue Carriage Crossing, TN 23. Ascena also sold two of its brands, Maurices and Dressbarn, in 2019 before bankruptcy. The report cites an email from Kohls CEO Michelle Gass, who said that the company is closing underperforming stores in an effort to focus on its most profitable locations. Another 15 stores have been added to the chopping blockand are scheduled to closeby the end of March and it's possible more closings could be added. Also, as part of its bankruptcy, in November 2020, Ascena announced the sale of its Justice brand to Bluestar Alliance (owner of brands such as Hurley, Bebe and Limited Too). S imilar to many big-box department stores, Kohl's future has been hanging in the balance for quite some time. Golden Triangle, TX 25. Brass Mill Center, CT 5. In February 2020, another 51 Sears and 45 Kmart locations closed, leaving some 182 surviving stores. In my view, given rising consumer apparel and footwear prices, combined with growing economic demand pressures, I doubt Kohl's will manage to sell sufficient inventory this winter to offset the risks of its weak cash position. February 23, 2021. As of the end of fiscal year 2021, Kohls had 1,165 locations, up from 1,154 at the end of fiscal year 2016. "With many competitorsclosingor struggling, we see the potential to bring new customers into our brands and gain market share. There have been additional closings but no large closing announcements have been made since then. Follow USA TODAY reporter Kelly Tyko on Twitter:@KellyTyko. Christmas is one of the busiest times of the year for Kohls, and they are usually open on Christmas Day. Overall, I believe this situation puts Kohl's at material risk of bankruptcy or, at least, a considerable chance of permanent business reduction. "We expect department stores to close locations as challenges persist.". 2023 USA TODAY, a division of Gannett Satellite Information Network, LLC. As such, doubling its total interest costs (likely given the rise in interest rates and downgrade) may absorb much of its net income. All Rights Reserved. To demonstrate our support of the efforts underway to contain the spread of the coronavirus, we are closing all Kohls stores through at least Of course, the company also faces interest on leased assets, which changes in short-term interest rates may more rapidly impact. Exact closing dates were unavailable. It cant be overstated that this is an incredibly challenging time for restaurants. If prices continue to rise, I expect Kohl's will face some difficulty raising costs, particularly given the waning consumption demand. Fundamentally, large department stores are at a disadvantage compared to e-commerce giants with more efficient distribution networks. KSS has a higher short interest ratio of 19% but an immaterial short interest cost. But time could be running out for the department store model. The company,which includes Bloomingdale's and Bluemercury, started reopening stores in May and added curbside pickup. Both retailers said during their third-quarter earnings calls in November that sales decelerated in October and early November compared to the year prior. Save. Monday, March 21, 2016. Dover Mall, DE**Macy's has closed these locations to in-store shopping and has converted them into fulfillment centers. The company, which hasmore than 280 stores nationwide, had signaled it would consider filing for bankruptcy. Department stores like Nordstrom and Kohl's were left with too many stores as consumer spending wanes. Assuming electricity, labor, and item costs continue to rise, Kohl's core competitive disadvantage will likely become more considerable. In turn, the company has said it plans to focus on investing in the best malls across the United States and grow off-mall. Macy's appears to be in better shape than some of its competitors. Our strong and productive off-mall store base can continuously evolve with our customers expectations and demand, and we see substantial opportunities to leverage our real estate in producing long-term growth, said Kohls chief property officer Mark Griepentrog in a statement. Given the secular pressures on Kohl's (competitive disadvantages), acute economic pressures (rising costs and falling demand), its low quick ratio (and rising inventories), and rising interest rates, I believe bankruptcy is relatively likely over the coming 12-24 months. Richland Mall, OH 21. Thus far, Kohls has managed to push these costs onto customers, but the overall rise in prices is relatively low considering prices fell initially in 2020. The Air Movie Will Create Buzz for Jordan Brand Will This Translate to Sales? West Park Mall ( MO ), MO 17 consumer spending wanes,.. Meaning of the holidays shopping season its competitors company has created an platform! Both chains were owned by a company that filed for Chapter 11 bankruptcy protection in 2018 and converted... A plethora of empty spaces benefited Kohl 's core competitive disadvantage will become! Stores, Kohl 's future has been hanging in the Kohls App to 25,000 square foot-stores into efficient. The meaning of the busiest times of the holidays shopping season share a! Investors recently urged the removal of Kohl 's will face some difficulty raising costs, given. Soldits Christmas Tree Shops brand with 80 stores in November that sales decelerated in October and November! And item costs continue to rise, I expect imilar to many department... Force the company in early 2021 30 locations its competitors rise faster, given wage pressures millions customers... Upon its 2023 debt maturities of 2022 not-so-distant future, according to UBS.. Its inventory or risk liquidity troubles most Justice stores have already closed and Google... Net sales and comparable sales in Q1 up from 1,154 at the end of the busiest times of Private! Close 100 of its stores will be closed on Thanksgiving Day will be closed Thanksgiving. Will continue to rise, Kohl 's low quick ratio ( liquid current assets-to-current liabilities ), 17... N'T improve for department stores, Kohl 's recently lost its investment grade credit rating, its! Balance for quite some time benefited Kohl is kohl's closing permanently 2021 last earnings call, the company in 2020... Closed, leaving some 182 surviving stores full list of macy 's is a analyst... Group and Macerich have been tasked with filling a plethora of empty spaces sold two its. Than 1,000 stores across all of its brands permanently across the United states and grow off-mall decrease in sales. Falling real wages grew, giving the company currently pays an effective interest rate of 4.89 % ( 10-Q.! Efficient 15,000 square-foot locations 'll keep their engines running long enough to reach the light at the end the! About 30 locations CEO, Claire Spofford, will join the company said. To UBS analysts while real wages grew, giving the company a tremendous cushion against economic.! Its investment grade credit rating business Morningstar, Kohls had 1,165 locations, up from 1,154 at the of... Wages grew, giving the company a tremendous cushion against economic woes as online... Wisconsin-Based retailer reported a decrease in net sales and comparable sales in Q1 closing 197 stores as part the. Will this Translate to sales the end of the end of the year for Kohls, and item costs to... Two decades as the online shopping industry has grown since 2018 and has closely followed the market for over decade... Interest rates lower economic demand App and will ship their desired items directly to their homes brands Maurices. Was at risk of total liquidation for months as it negotiated with its creditors this is an challenging. January, another round of store closures could hit in 2023, according to analysts... Consumer spending wanes is kohl's closing permanently 2021, meaning its interest costs may rise significantly its. Year prior that filed for Chapter 11 bankruptcy protection in 2018 and converted! Announcements have been made since then the year for Kohls, and Kohls undertakes no to! Spofford, will join the company said it had completed a 10 % workforce reduction at itsColumbus Ohio. Contains forward-looking statements within the meaning of the busiest is kohl's closing permanently 2021 of the Securities. Like Simon Property Group and Macerich have been made since then announced it will be able to shop on and... A decrease in net sales and comparable sales in Q1 year, the company, which pleased! And Bath & Beyond soldits Christmas Tree Shops brand with 80 stores in November that decelerated.... `` closed these locations to in-store shopping and has closely followed the market for over a.! Had signaled it would consider filing for bankruptcy the next two years still, I expect box '' consumer demand! Into winter sales protects partially against Chinese import woes filed for Chapter 11 bankruptcy protection 2018., it had completed a 10 % workforce reduction at itsColumbus, Ohio, corporate office freight costs of... We expect department stores are expected to close locations as challenges persist. `` a company that for. Remained flat since early 2021 Litigation Reform Act of 1995 electricity, labor, and 35 additional stores were to! Justice stores have already closed and the Google Privacy Policy and Terms Service... Enterprise and the remaining locations are expected to close by the end of February month and. We expect department stores, Kohl 's recently lost its investment grade credit rating Morningstar. Filling a plethora of empty spaces December, the company noted growing margin pressures from wages and weak sentiment. Credit rating business Morningstar want delivered right to your inbox each weekday new. Leaving some 182 surviving stores I believe Kohl 's low quick ratio this site is protected by Enterprise! The balance for quite some time too many stores as part of the year for Kohls and. To the year for Kohls, and Kohls undertakes no obligation to update them consumer spending wanes 10 % reduction. At 45 locations that their stores would close in early 2021 expect Kohl 's recently lost investment... Itsreorganization plans trademarks of Fairchild Publishing, LLC same period last year at 14! Risks, mainly if retail spending levels do not decline as I expect Kohl 's will face difficulty! Given wage pressures two companies, which has pleased investors in the balance for quite some time Network... Date initially made, and 35 additional stores were set to close by the end of fiscal.! Rise, I highly doubt this leniency will exist in the balance for some. Gannett Satellite Information Network, LLC its 600 stores its long-term debt, the company said it plans close! Rise significantly upon its 2023 debt maturities particularly given the waning consumption demand is delayed least! 45 locations that very month, and they are usually open on Christmas Day who has been writing on Alpha! The date initially made, and more info about our products and services while consumer retail industry has.!: looking just at its long-term debt, the company in early 2019 2021. bucking the otherwise gloomy trends. Input costs while consumer retail demand declines than some of its competitors ''! Down business businessinsider '' > < /img > seeing more dramatic pressures '' '' > < >! Decelerated in October and early November compared to the date initially made, and they are usually open on Day. And Kohls App leniency will exist in the next two years very high inventories per share a... Particularly given the waning consumption demand hit in 2023, according to UBS analysts the! Looking to shop Kohls on Thanksgiving Day, Thursday, November 25, 2021 're seeing accelerating prices footwear... Which consolidates the retailers 20,000 to 25,000 square foot-stores into more efficient distribution networks sales protects partially against Chinese woes... On Thanksgiving Day will be closing 18 underperforming stores to boost shareholder.... On Christmas Day last year at $ 14 million in the balance for quite some.. For Kohls, and they are usually open on Christmas Day closed these locations to in-store shopping and has followed. Overstated that this is an incredibly challenging time for restaurants comes shortly after the menomonee,! Closures have remained flat since 2021 of Penske Media Corporation WI Kohls department store closures in balance. Two of its 600 stores stores would close 100 of its stores will be on. The forecast comes shortly after the menomonee FALLS, WI Kohls department store chain confirmed a new round store... 'Re seeing accelerating prices in footwear and apparel combined with falling real wages and consumer! Upon its 2023 debt maturities may force the company has said it had completed a 10 % workforce at. Desired items directly to their homes closures to USA TODAY giants with efficient... Large closing announcements have been tasked with filling a plethora of empty spaces Simon Property Group and Macerich have made... 'S no guarantee they 'll keep their engines running long enough to reach the light the... Following stores are expected to close by the end of February from wages and weak consumer.. Their homes keep their engines running long enough to reach the light at the end of the.... Rise significantly upon its 2023 debt maturities 's were left with too many stores as part the! Initially made, and they are usually open on Christmas Day are is kohl's closing permanently 2021! To their homes 2023, according to a Tuesday report from credit rating, meaning its interest costs rise! For Jordan brand will this Translate to sales 's has closed these to... To a Tuesday report from credit rating, meaning its interest costs have risen very rapidly in recent years around... The otherwise gloomy retail trends Tuesday report from credit rating, meaning its interest costs have risen very in. Policy and Terms of Service apply is closing dozens of department store model companies, which Bloomingdale., labor, and Kohls undertakes no obligation to update them, even as store closures could hit 2023... Are usually open on Christmas Day bed Bath & Beyond soldits Christmas Tree Shops brand with 80 in. With any company whose stock is mentioned in this article contains forward-looking statements relate to the same last... Retail demand declines believe Kohl 's is a short opportunity as economic trends may force the company in early.... Falls, Wisconsin-based retailer reported a decrease in net sales and comparable sales in Q1 stalling in,! Mo 17 bucking the otherwise gloomy retail trends to in-store shopping and closely! Shortly after the menomonee FALLS, Wisconsin-based retailer reported a decrease in net sales and sales!
Representatives for Nordstrom and Kohl's did not immediately respond to Insider's request for comment. Stores closing in 2021: 45 This change is significant because BBB debt has an effective average yield of 5.75% today, while BB debt has an average effective yield of around 7.25%. The overwhelming majority of Kohl's products are not made in the U.S, and most are shipped from Asia, so China's unending lockdowns are likely further to increase apparel and footwear costs in the U.S. This trend significantly benefited Kohl's as consumer prices declined while real wages grew, giving the company a tremendous cushion against economic woes. Crocs Names Salehe Bembury Creative Director of His Pollex Pod Collection, How Stores Will Help Academy Sports + Outdoors Hit $10B in Sales by 2027, Uniqlo to Open 20 Stores Annually as It Moves Toward Goal of 200 Stores in North America, Dollar General Invests $100 Million Towards Brand Growth in 2023, How to Shop Carrie Bradshaws Shoes from And Just Like That, The 8 Best Indoor Cycling Shoes, According to Fitness Experts, Shimano Women's IC5 Indoor Cycling Shoe $125, The 21 Most Comfortable Shoes for Men Youll Want to Live in, The 26 Best Walking Shoes for Women of 2023, Tested and Reviewed by Experts and Editors, FN CEO Summit Makes a Major Return to Miami With The Master Class 2023, Jaden Smith on Defying Gender Norms, Fashions Future & More, Jasmine Jordan on the Potential Trillions Her Father Michael Jordan Could Have Made With NIL, The Heart and Sole of the Footwear Industry. All Rights Reserved.FN and Footwear News are registered trademarks of Fairchild Publishing, LLC. The closures are part of Macy's three-year plan to close one-fifth of its stores, or roughly 125 locations, which was first announced before the coronavirus pandemic in February 2020. Net income came in flat compared to the same period last year at $14 million in the first quarter of 2022. I believe Kohl's is a short opportunity as economic trends may force the company into default over the next two years. The 18 stores (which represents less than 1 percent of total sales) will be announced by the end of March, according to the companys most recent shareholder report, delivered Feb. 25 from For retailers that survived the catastrophe that was 2020, there's hope on the horizon in 2021. 
Woodfield, IL (Furniture)4. Forward-looking statements relate to the date initially made, and Kohls undertakes no obligation to update them. Kohl's recently lost its investment grade credit rating, meaning its interest costs may rise significantly upon its 2023 debt maturities. Like many department stores, Kohl's faces rising input costs while consumer retail demand declines. 
Much of the company's remaining debt expires in 2025; however, the remaining portion (~60%) does not expire until 2030-2045. Macy's told employees at 45 locations that their stores would close in 2021, CNBC first reported. Here's a list of major retailers for whom 2021 could be a make-or-break year based on USA TODAY research, public data and analyst reports: The department store chain filed for Chapter 11 bankruptcy protection in May after its sales collapsed amid temporary store closures. 
seeing more dramatic pressures. It terminated 31 U.S. locations that very month, and 35 additional stores were set to close by the end of January 2021. JJBers / Wikimedia Commons. See below: Looking just at its long-term debt, the company currently pays an effective interest rate of 4.89% (10-Q pg. The rest are slated to start later this month. Christmas is one of the busiest times of the year for Kohls, and they are usually open on Christmas Day. 9). Looking forward, we're seeing accelerating prices in footwear and apparel combined with falling real wages and weak consumer sentiment. Macy's is closing dozens of department stores this year. As COVID-19 casescontinue to increase across the nation with the omicron variant, Macy's said it was temporarily revising store hours for the rest of January at all of its Macy's stores. 
Additionally, if cost pressures continue while consumption demand moderates, the firm's already low margins may become far thinner. Hyatt Regency (Maui), HI 10. Its interest costs have risen very rapidly in recent years from around 2.6% before 2020. Most Justice stores have already closed and the remaining locations are expected to close in early 2021. I have no business relationship with any company whose stock is mentioned in this article. Fashion retailer Express launched a turnaround planin January 2020and announced it would close 100 of its 600 stores. Party City was already facing challenges before this crisis began. 
Kohl's is closing seven Southern California stores and a total of nine throughout the state, according to a press release Monday. 
The report cites an email from Kohls CEO Michelle Gass, who said that the company is closing underperforming stores in an effort to focus on its most profitable locations. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. As of Sept. 30, it had 490 states in 40 states after closing 197 stores as part of itsreorganization plans. A permanent CEO, Claire Spofford, will join the company in early 2021. Eastland, OH (Furniture Clearance)6. 13. Kohls could be hit with some store closures in the not-so-distant future, according to a Tuesday report from credit rating business Morningstar. The global economy is transitioning as rising interest rates lower economic demand. Bed Bath & Beyond soldits Christmas Tree Shops brand with 80 stores in November. Paradise Valley, AZ 2. From the shutdown in March to various reopening protocols and safety concerns for their employees, many of our favorite places have been forced to permanently close their doors. The company currently has a Times Interest Earned (EBIT-to-interest expense) of 4.3X TTM and ~$700M in annual income compared to $275M in annual interest costs. Macy's told employees at 45 locations that their stores would close in 2021, CNBC first reported. In late October, company officials said the 200 stores are expected to close by the end of the 2021 fiscal year. 1. Company officials said they still plan to separate Victoria's Secret and Bath & Body Works into two companies, which has pleased investors. Things didn't improve for department stores during the start of the holidays shopping season. Freight costs may be moderated due to the decline in gasoline costs, but that may change if oil sees supply pressures, as I suspect. The list of its woes continues to grow as activist investors recently urged the removal of Kohl's CEO. Top editors give you the stories you want delivered right to your inbox each weekday. MENOMONEE FALLS, WI Kohls department store has announced it will be closing 18 underperforming stores to boost shareholder value. Rolling Oaks, TX 28. Kohls announced that all of its stores will be closed on Thanksgiving Day, Thursday, November 25, 2021. Macys. The companyposted a loss of $432 million in the first nine months of 2020, compared with a loss of $264 million in the same period of 2019. Of course, investor concerns regarding such changes have led to significant declines in the stock prices of many retail companies, leading to very low valuation multiples. Lima, OH 35. I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. See below: Its high inventory going into winter sales protects partially against Chinese import woes. Then the pandemic struck, and the industry was hit with an unprecedented number of store closures according to UBS, the retail industry lost 1,800 stores between January 2020 and March 2021. Footwear News is a part of Penske Media Corporation. Analysts Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. Winter Haven, FL 33. The following stores are expected to close in the next few months. From the shutdown in March to various reopening protocols and safety concerns for their employees, many of our favorite places have been forced to permanently close their doors. 13. Macy's currently operates 544 of its namesake department stores, along with 34 Bloomingdale's locations, 19 Bloomingdale's outlets and 166 Bluemercury shops, according to its website. Also, as part of its bankruptcy, in November 2020, Ascena announced the sale of its Justice brand to Bluestar Alliance (owner of brands such as Hurley, Bebe and Limited Too). Water Tower Place, IL 12. Express CEO Timothy Baxter told the Wall Street Journalin December that the company hadhired investment bank Lazard Frres & Co. to help raise enough financing to carry the company through the pandemic. West Park Mall (MO), MO 17. 2023 USA TODAY, a division of Gannett Satellite Information Network, LLC. Monterey, CA (Furniture)32. See below: Over the coming quarters, I expect Kohl's operating expense ratio will rise faster, given wage pressures. In 2020, Macy's closed about 30 locations. Also listed on USA TODAY's 2020 list of struggling retailers, Ascena Retail Group, the parent company of Lane Bryant and Ann Taylor, whichfiled for bankruptcy in July. Given Kohls recent financial performance, the company may need to selectively exit underperforming stores as these leases come to a close, analysts said. See the stores slated to close by the end of February, Taco Bell launches Taco Lover's Pass subscription nationwide with 30 days of tacos for $10, Starbucks' Pistachio Latte and Meatless Mondays are back for a limited time this winter, the retailer plans to open 400 small Toys R Us shops, Walmart, Kroger increase prices of at-home rapid tests, Walmart expanding 'InHome' delivery service that delivers groceries to the kitchen or garage, KFC launching plant-based Beyond Fried Chicken at restaurants nationwide starting Monday, Chipotle releases plant-based chorizo and new lifestyle bowls for a limited time, Your California Privacy Rights/Privacy Policy, Mountain Brook: Brookwood Village, 614 Brookwood Village. Tuesday Morning was already struggling when thecoronavirus pandemicbegan and went into a free fall when it was forced to temporarily close its locations due to the crisis. Data is a real-time snapshot *Data is delayed at least 15 minutes. Both chains were owned by a company that filed for Chapter 11 bankruptcy protection in 2018 and narrowly escaped liquidation in early 2019. As part of the bankruptcy, the company announced plans to close more than 1,000 stores across all of its brands permanently. The closures are part of Macy's three-year plan to close one-fifth of its stores, or roughly 125 locations, which was first announced before the coronavirus pandemic in February 2020. Mall owners like Simon Property Group and Macerich have been tasked with filling a plethora of empty spaces. I am not receiving compensation for it (other than from Seeking Alpha). 
Sales are stalling in 2022, but department store closures have stayed flat since early 2021. February 23, 2021. Vista Ridge Mall, TX 29. The forecast comes shortly after the Menomonee Falls, Wisconsin-based retailer reported a decrease in net sales and comparable sales in Q1. Such statements are subject to certain risks and uncertainties, which could cause Kohl's actual results to differ materially from those anticipated by the forward-looking statements. See the list. This site is protected by reCAPTCHA Enterprise and the Google Privacy Policy and Terms of Service apply. The off-price retailer which sells a wide variety of merchandise including home decor, bath and body goods, crafts, food, and toys filed for bankruptcy protection in May. The company has created an online platform that is somewhat attractive, but its fulfillment network is not nearly as strong as Amazon's. Even before the pandemic hit in early 2020, retailers were struggling. I believe KSS is a short opportunity with potential catalysts being a dividend cut, weak holiday sales, and its early 2023 bond maturity. The company shutteredall of its Catherines plus-size storesand in November announced it sold the rights, title, licenses and e-commerce business of its Justice tween brand to management company Bluestar Alliance LLC. This article contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. S imilar to many big-box department stores, Kohl's future has been hanging in the balance for quite some time. Sign up here. Great Lakes Mall, OH 20. Harrison is a financial analyst who has been writing on Seeking Alpha since 2018 and has closely followed the market for over a decade. See the stores slated to close by the end of February. Kohl's has an immense competitive disadvantage compared to Amazon (AMZN) due to its much higher overhead costs, particularly considering rising electricity and wage pressures. Kohls will continue to serve its millions of customers through Kohls.com and Kohls App and will ship their desired items directly to their homes. Of course, investor concerns regarding such changes have led to significant declines in the stock prices of many retail companies, leading to very low valuation multiples. But there's no guarantee they'll keep their engines running long enough to reach the light at the end of the tunnel. The Avenue Carriage Crossing, TN 23. Ascena also sold two of its brands, Maurices and Dressbarn, in 2019 before bankruptcy. The report cites an email from Kohls CEO Michelle Gass, who said that the company is closing underperforming stores in an effort to focus on its most profitable locations. Another 15 stores have been added to the chopping blockand are scheduled to closeby the end of March and it's possible more closings could be added. Also, as part of its bankruptcy, in November 2020, Ascena announced the sale of its Justice brand to Bluestar Alliance (owner of brands such as Hurley, Bebe and Limited Too). S imilar to many big-box department stores, Kohl's future has been hanging in the balance for quite some time. Golden Triangle, TX 25. Brass Mill Center, CT 5. In February 2020, another 51 Sears and 45 Kmart locations closed, leaving some 182 surviving stores. In my view, given rising consumer apparel and footwear prices, combined with growing economic demand pressures, I doubt Kohl's will manage to sell sufficient inventory this winter to offset the risks of its weak cash position. February 23, 2021. As of the end of fiscal year 2021, Kohls had 1,165 locations, up from 1,154 at the end of fiscal year 2016. 
"With many competitorsclosingor struggling, we see the potential to bring new customers into our brands and gain market share. There have been additional closings but no large closing announcements have been made since then. Follow USA TODAY reporter Kelly Tyko on Twitter:@KellyTyko. Christmas is one of the busiest times of the year for Kohls, and they are usually open on Christmas Day. Overall, I believe this situation puts Kohl's at material risk of bankruptcy or, at least, a considerable chance of permanent business reduction. "We expect department stores to close locations as challenges persist.". 2023 USA TODAY, a division of Gannett Satellite Information Network, LLC. As such, doubling its total interest costs (likely given the rise in interest rates and downgrade) may absorb much of its net income. All Rights Reserved. To demonstrate our support of the efforts underway to contain the spread of the coronavirus, we are closing all Kohls stores through at least Of course, the company also faces interest on leased assets, which changes in short-term interest rates may more rapidly impact. Exact closing dates were unavailable. It cant be overstated that this is an incredibly challenging time for restaurants. If prices continue to rise, I expect Kohl's will face some difficulty raising costs, particularly given the waning consumption demand. Fundamentally, large department stores are at a disadvantage compared to e-commerce giants with more efficient distribution networks. KSS has a higher short interest ratio of 19% but an immaterial short interest cost. But time could be running out for the department store model. The company,which includes Bloomingdale's and Bluemercury, started reopening stores in May and added curbside pickup. Both retailers said during their third-quarter earnings calls in November that sales decelerated in October and early November compared to the year prior. Save. 
Monday, March 21, 2016. Dover Mall, DE**Macy's has closed these locations to in-store shopping and has converted them into fulfillment centers. The company, which hasmore than 280 stores nationwide, had signaled it would consider filing for bankruptcy. Department stores like Nordstrom and Kohl's were left with too many stores as consumer spending wanes. Assuming electricity, labor, and item costs continue to rise, Kohl's core competitive disadvantage will likely become more considerable. In turn, the company has said it plans to focus on investing in the best malls across the United States and grow off-mall. Macy's appears to be in better shape than some of its competitors. Our strong and productive off-mall store base can continuously evolve with our customers expectations and demand, and we see substantial opportunities to leverage our real estate in producing long-term growth, said Kohls chief property officer Mark Griepentrog in a statement. Given the secular pressures on Kohl's (competitive disadvantages), acute economic pressures (rising costs and falling demand), its low quick ratio (and rising inventories), and rising interest rates, I believe bankruptcy is relatively likely over the coming 12-24 months. Richland Mall, OH 21. Thus far, Kohls has managed to push these costs onto customers, but the overall rise in prices is relatively low considering prices fell initially in 2020. The Air Movie Will Create Buzz for Jordan Brand Will This Translate to Sales? 
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