Weekly Store Openings and Closures Tracker #9: RadioShack and Payless lead closings spree Deborah Weinswig Managing Director, Fung Global Retail & Technology deborahweinswig@fung1937.com US: 917.655.6790 HK: 852.6119.1779 CN: 86.186.1420.3016 Fung Global Retail & Technology tracks store openings and closures for a select group of US retailers. 1) This week, RadioShack closed another 1,000 stores, with a large Memorial Day sale of everything in the store, including the store fixtures. 2) Payless will go through a second round of store closures: 112 initially, with the possibility of 296 more stores shuttered if negotiations with landlords fail. 3) Michael Kors and lululemon athletica also announced store closures: the affordable luxury brand will close between and 125 stores, while lululemon is refocusing its ivivva brand online in a move that will see 40 ivivva doors close. 4) Year-to-date 2017, the number of store closure announcements has increased 282% year over year, bringing the number of stores to be closed to 4,723, with more to surely follow. 5) Dollar General revised its forecast to open 1,290 stores in FY17, instead of the previously expected 1,000, and Five Below opened 31 stores this past quarter, and is on track to reach openings for FY17. 1
2017 Store Openings and Closures What is happening this week? This week s store closure announcements added 1,252 stores to our closings list, with the number likely to increase to 1,573 if Michael Kors and Payless go ahead and close 125 (instead of only ) and 408 (instead of only 112) stores, respectively. We expect the trend of store closures to continue in full force over the next six months, as the retail revolution in US retail shows no signs of abating. Against this backdrop, discount keeps proving it is a winning proposition, with both Five Below and Dollar General continuing to expand their retail locations. RadioShack Closes 1,000 Stores This week, RadioShack closed another 1,000 stores, with a large Memorial Day sale of all inventory, including the store fixtures. Undergoing restructuring through Chapter 11, the retailer will continue to operate 70 stores, while RadioShack franchisees will continue to run 425 stores. Payless on its Way to Close 800 Stores After announcing that it will close about 400 stores as part of a restructuring plan in April, the bankrupt retailer is seeking court permission to close an additional 112 stores in the US and Puerto Rico. Payless is negotiating the terms of an additional 296 stores, and if these negotiations are unsuccessful, the stores will be closed as well. Source: Twitter Michael Kors Announces it Will Close 125 stores Michael Kors reported earnings this past week, with comps declining by 14.1%, 13.6% on a constant currency basis. As a result of the challenges it faces, the company announced plans to improve the profitability of its store fleet by closing 125 full-price retail stores over the next two years, which should realize ongoing annual cost savings of $60 million. Lululemon Athletica Takes ivivva Online, Closing 40 Retail Locations Lululemon athletica announced plans to operate ivivva, its activewear brand for girls, as a primarily e- commerce focused business, with a select number of stores in key communities across North America. The company will close approximately 40 of its 55 ivivva stores as a result, and convert approximately half of the remaining stores to lululemon-branded stores. Dollar General and Five Below Expand Retail Footprint Dollar General and Five Below announced earnings this past week, both beating sales and EPS expectations. Dollar General revised its forecast to open 1,290 stores in FY17, instead of the previously expected 1,000. Five Below opened 31 stores this past quarter, and is on track to reach openings for FY17. 2
Year-to-Date 2017 Major US Store Closure Announcements RadioShack Payless Inc****** Rue 21 Gymboree* The Limited hhgregg GameStop Bebe Stores Inc Wet Seal Crocs Inc. Sears and Kmart** JCPenney BCBG American Apparel Gordmans Stores Inc. Michael Kors Staples CVS Macy s*** MC Sports Guess Chico s Lucy Aclvewear lululemon athlelca Eastern Oujikers Gander Mountain**** Ralph Lauren***** 250 220 190 180 171 160 160 138 120 110 101 70 70 68 68 60 50 44 40 36 32 23 400 350 512 1,000 Total: 4,723 announced store closures 282% year over year 0 200 400 600 800 0 1200 * Reported by the Wall Street Journal on May 4, 2017, with no official comment. ** Closing 115 Kmart and 45 Sears stores. *** Part of -store closure announcement made in 2016. **** The number of store closures could reach 80 based on the recent management announcement. ***** Closing remaining stores included in the 50-store closure plan announced in June 2016. ****** Payless will close an additional 296 stores if negotiations with landlords are unsuccessful. 3
Year-to-Date 2017 Major US Store Opening Announcements Dollar General 1,290 Dollar Tree 650 Aldi* 400 TJX** Five Below Ulta Lidl Ross Stores Sephora H&M* Hobby Lobby Walmart*** Dick s Sporlng Goods, Inc. **** Target***** Costco****** Bonobos Macy's Backstage******* Nordstrom Forever 21 (Riley Rose) 111 90 70 60 60 59 52 30 24 20 19 17 10 Total: 3,262 announced store openings 53% year over year 0 200 400 600 800 1,000 1,200 1,400 * By the end of 2018. ** Net store openings. *** Includes new, expanded and relocated stores. **** 43 Dick s Sporting Goods stores and 9 Golf Galaxy stores. ***** All new openings are small-format stores. ****** Adjusted to calendar year from fiscal year reporting. ******* Will be opened within existing full-line Macy s Macy's stores. 4
2016 Store Openings and Closures 2016 Major US Store Closures Sports Authority 463 Sears and Kmart* Men s Warehouse/Jos A. Bank 233 243 Walgreens 200 Walmart 154 Office Depot 123 Gap 71 Staples 48 Chico s FAS The Children s Place American Eagle Kohl s Finish Line 34 34 26 18 18 Total: 1,674 announced store closures JCPenney 9 0 50 150 200 250 300 350 400 450 500 * Closing 206 Kmart and 37 Sears stores. 2016 Major US Store Openings Dollar General 900 Dollar Tree 584 TJX 146 Ulta Ross Stores Dick s Sporlng Goods Sephora* H&M Aldi Costco** Under Armour*** Target Zara 104 93 79 72 53 45 19 19 15 10 Total: 2,139 announced store openings 0 200 300 400 500 600 700 800 900 1,000 * Net store number between December 2015 and March 2017. Includes 55 new stores in JCPenney and 17 standalone Sephora stores. ** Adjusted from fiscal year figures. *** Net number of stores in North America. 5
Deborah Weinswig, CPA Managing Director Fung Global Retail & Technology New York: 917.655.6790 Hong Kong: 852.6119.1779 China: 86.186.1420.3016 deborahweinswig@fung1937.com Kiril Popov Senior Analyst Esme Pau Analyst Matthew Lee Research Assistant Hong Kong: 8th Floor, LiFung Tower 888 Cheung Sha Wan Road, Kowloon Hong Kong Tel: 852 2300 4406 London: 242-246 Marylebone Road London, NW1 6JQ United Kingdom Tel: 44 (0)20 7616 8988 New York: 1359 Broadway, 9th Floor New York, NY 18 Tel: 646 839 7017 FungGlobalRetailTech.com 6