The Season to Be Jolly? Maybe Not for Sears, J. Crew, Penney's

The last two months of the calendar year are make-or-break time for most brick-and-mortar retailers. For some, a successful year means just keeping the lights on during the first ten months of the year in order to get well during the holiday season.

But there are some retailers for which getting well might not be possible. Through the end of last week, U.S. retailers have announced the closure of 6,765 stores in 2017, according to a report from Fung Global Retail and Tech. That’s up 235% year over year.

Radio Shack, Payless, and rue21 all filed for bankruptcy protection and combined account for 2,570 of announced year-to-date store closures. Ascena Retail Group Inc. (NASDAQ: ASNA) has announced that it will close 400 stores and Sears Holding Corp. (NASDAQ: SHLD) plans to close 358. By Fung Global’s count, these are the five retailers that have announced the most store closures to date this year.

Sears has lost more than $10 billion in recent years, according to a report at Bloomberg, and the firm warned in March that it may not be able to continue as a “going concern.” The store has a lot riding on this holiday season, but its difficulties have increased as suppliers demand quicker payments or withhold products altogether. So far CEO Eddie Lampert has been able to lend the company enough cash and that’s about the only thing keeping the company afloat.

Ascena is the parent company of Lane Bryant and ANN stores, among others. The company’s stock has dropped 82% in the past 2 years.

J. Crew, owned by private equity firms TPG Capital and Leonard Green & Partners, reported on Tuesday that third-quarter same-store sales dropped 9% year over year, including a drop of 12% at its namesake J. Crew stores, and said it will close 50 stores in fiscal year 2017, including 39 in the fourth quarter. It’s reasonable to expect those closures to be done in January.

J.C. Penney Co. Inc. (NYSE: JCP) may not be in quite as bad a position as the others, but it’s not a stretch to say that this year’s holiday season is critical for the company’s future. Fung Global notes that the company plans to close 138 stores and by some counts that is not nearly enough. The company under-promised and over-delivered on third-quarter results, but that does not indicate that a turnaround has taken hold.

While all these stores have e-commerce websites, they are heavily laden with brick-and-mortar stores. Online sales are growing fast at most stores, but that’s from a very low starting point. Physical store sales are falling and very likely will never fully recover. Shutting more stores may be all that keeps traditional retailers alive.

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