US retailers feel mall bubble pinch
The battered American retail industry took a few more knocks last week, with chain stores at both ends of the price spectrum preparing to close doors.
At the bottom, Payless shoe chain filed for bankruptcy and announced plans to shutter hundreds of locations. Ralph Lauren Corp said it will close its flagship Fifth Avenue Polo store.
And the teen-apparel retailer Rue21 Inc could be the next casualty. The chain, which has about 1 000 stores, is preparing to file for bankruptcy this month, sources say. Just a few years ago, it was sold to private equity firm Apax Partners for about a billion dollars.
“It’s an industry that’s in search for answers,” said Noel Hebert, an analyst at Bloomberg Intelligence. “I don’t know how many malls can reinvent themselves.”
The rapid descent of so many retailers has left shopping malls with hundreds of slots to fill, and the pain could be just beginning. More than 10% of US retail space, or nearly 1 billion square feet, may need to be closed, converted to other uses or renegotiated for lower rent in coming years, according to CoStar Group data.
Labour Department figures say retailers cut about 30 000 positions in March, as in February, and marked the worst two-month showing since 2009.
Urban Outfitters chief executive officer Richard Hayne sized up the situation last month: “Malls added way too many stores in recent years – and way too many of them sell the same thing: apparel.” – Bloomberg