Toys R Us filed for bankruptcy and plans to close underperforming stores and transform others. Perfumania also filed for bankruptcy and will close some stores. Several retailers have credit ratings below satisfactory and future closures may be imminent. More than 5,300 store closures are expected by the end of 2017, with apparel and electronics stores making up almost half. While many stores are closing, some retailers like Lidl and Aldi are expanding aggressively.
2. What’s new in closures?
• Toys R Us has filed for bankruptcy protection.
Toys R Us filed for Chapter 11 this week, and plans
to use its bankruptcy filing as a way to reemerge
on the cutting edge of the retail world, closing
underperforming stores and transforming others
into "interactive spaces“.
• Perfumania files for bankruptcy protection.
Mall-based retailer chain Perfumania has sought
chapter 11 protection with plans to reorganize
around its better-performing stores. The company
plans to close 64 of its 226 stores during the
bankruptcy process.
TBD closures
+64 closures
3. Retailers to watch for closures
Source: Credit Intell
Retailer
Credit Intell
Rating
Retailer
Credit Intell
Rating
Academy Sports + Outdoors D1 Bon-Ton Stores E2
Boot Barn D1 Claire's Stores E2
J.C. Penney Company D1 Toys R Us E2
Jo-Ann Stores D1 99 Centers Only Stores F1
Tailored Brands D1 bebe stores F1
Staples D1 hhgregg F1
Christopher & Banks D2 Sears Holdings F2
Conn’s D2 Le Chateau F2
Destination Maternity D2 Gordmans Stores DIP
Lands' End D2 Sports Authority DIP
Stage Stores D2 Gander Mountain DIP
Rent-a-Center E1 Gymboree Corp DIP
Hudson's Bay Company E1 rue21, inc DIP
Stein Mart E1 Aeropostale DIP
Fred's E1 American Apparel DIP
J. Crew Group E1 Michigan Sporting Goods DIP
Neiman Marcus Group E1 Wet Seal DIP
Rite Aid Corp E1
Credit Intell Rating Definitions
CI rating
Equivalent
S&P rating
Credit quality
D1 B Below satisfactory
D2 B- Below satisfactory
E1 CCC+/CCC Poor
E2 CC Poor
F1 C Critical
F2 D Critical
DIP - Filed for bankruptcy
• These retailers all have credit ratings below satisfactory. Future closures may be
imminent.
4. What’s new in openings?
• Lidl is expanding. By the end of September, the
grocer will have opened 37 locations in five states on
the Eastern seaboard: North Carolina (13), South
Carolina (8), Virginia (14), Delaware (1) and Georgia
(1). Lidl plans to open as many as 100 stores in the
next year.
• Aldi targets 2,500 stores by 2022. The grocer
recently announced a $3.4 billion investment to
boost its U.S. presence by nearly 50% to 2,500
stores by the end of 2022. This puts the company on
a pace to become America’s third-biggest grocery
retailer by locations behind Wal-Mart and Kroger.
Source: PNC
+100 new stores
+800 new stores
(by 2022)
16. Midwest states have the most department store closures
Source: Credit Intel, JLL
31
14
18
1416
15
12
11
11
22
Top 10 announced
department store closures
#
Number of announced
department store
closures
21. Despite headlines, retail openings still trounce closures
MOVE-OUTS
MOVE-INS
25.0 MILLION S.F.
Mall square footage opened or closed over the last 12 months
15.4 MILLION S.F.
Source: CoStar, JLL Research
22. 0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Q1
Millions
Mall SF vacated Mall SF absorbed
Mall space absorbed outweighs space vacated
Source: CoStar, JLL Research