Nine Retailers Closing the Most Stores
1. Abercrombie & Fitch
Abercrombie & Fitch first announced its plans to close 180 stores by 2015 more than two years ago. In its most recent quarterly report, the company said it had closed 10 stores by November of last year and would close another 40 stores by the end of its fiscal year. This total does not include the 20 stand-alone Gilly Hicks brand stores, which the company also plans to shutter this year. Abercrombie & Fitch’s stock has struggled, posting one of the largest declines in the S&P 500 during 2013. To improve performance, the retailer is planning to shift marketing for its Abercrombie & Fitch to older shoppers while transforming its Hollister stores to a fast-fashion approach in line with H&M and Zara. A succession plan for CEO Mike Jeffries is also in the works. Last year, shareholders from Engaged Capital publicly campaigned for Jefferies’ dismissal, citing the retailer’s failure to adapt to fast-fashion, and Jeffries’ statements about excluding customers that he thought were too heavy for the brand.
2. Barnes & Noble
Early last year, Barnes & Noble announced plans to shut a third of its stores over the next 10 years. As of this January, the company had already closed some 14 retail locations, dropping its store count to 663 from the 677 it had when the announcement was first made. Particularly painful for many book-lovers, the retailer chose to close its one-time flagship store in New York City this January. While cost-cutting has helped the company post profits, by some measures the company’s prognosis remains bleak. Book retail has increasingly shifted to online and e-books, dominated by Amazon.com. But while Amazon.com has noted strong sales of its Kindle e-reader, Barnes & Noble’s own e-reader, the Nook, has struggled. Revenue of the bookstore’s Nook division, which include hardware and digital sales, fell by more than 50% year-over-year, and the segment remains unprofitable.
Aeropostale is the in the midst of closing 40 to 50 stores in 2014, and plans to shutter some 175 stores in total over the next few years. The teen clothing retailer’s net income dropped to $34.92 million in 2013 from $229.5 million in 2010, and its EBITDA fell to $157.89 million last year from $435.45 million in 2010. Pressure from competitors such as Gap and Abercrombie & Fitch, as well as declining mall sales, has driven the company’s share price from $32.08 in 2010 to $7 as of March 2014. Private equity firm Hirzel acquired 6% of Aeropostale in November 2013. Currently, the company is rumored to be in talks with Barclays Plc. because it is seeking either additional financing or to be acquired. Aeropostale’s fast-fashion shipment model, which it took up last year, has largely been unsuccessful.
4. J.C. Penney
After J.C. Penney’s sales began to steadily decline, the company tasked Ron Johnson, formerly retail head at Apple, with reinventing the retailer’s pricing strategy, only to see sales, earnings, and cash flow fall off a cliff. After years of avoiding closing stores, the company has recently said it would be shuttering several locations. At the start of 2014, J.C. Penney announced 33 store closings, to be completed by May, leading to the loss of about 2,000 jobs. Some investors and pundits believe the company has not been aggressive enough in cutting stores. As of November, the company had 1,095 department stores, down only slightly from past years. Not all news has been bad for the retailer, which reported surprisingly strong earnings in February. Additionally, Standard & Poor’s recently upgraded the retailer’s credit outlook, although it noted changes will still be necessary to improve its credit long-term.