This year is proving to be another tough one for brick-and-mortar stores, with Dressbarn, CVS, Party City and Pier 1 Imports being just a few of the retailers announcing closures. According to Coresight Research, more than 7,150 store closures have been announced by U.S. retailers so far this year, compared to the 5,524 store closures for all of 2018. That was down more than 30 percent from an all-time record of 8,139 closures announced in 2017.
As for store openings, Coresight reported that there have only been 2,726 this year so far. One of the key factors in the retail struggle is the trade war between the U.S. and China, which saw the Trump administration raise existing tariffs on $200 billion worth of Chinese goods from 10 percent to 25 percent, which caused China to come back with its own levies on U.S. imports.
“The market is not realizing how much brick-and-mortar retail is incrementally struggling, and how new 25 percent tariffs could force widespread store closures. … We think potential 25 percent tariffs on Chinese imports could accelerate pressure on these [companies’] profit margins to the point where major store closures become a real possibility,” said UBS Analyst Jay Sole, according to CNBC.
Earlier this month, Dressbarn announced that it is going out of business, and its 650 stores across the country are expected to close. In addition, Topshop is closing all 11 of its stores in the U.S. after its London-based parent company, Arcadia Group, filed for bankruptcy protection. Party City revealed plans to close about 45 stores in the U.S. this year — an increase from the usual 10 to 15 it has shuttered annually. Pier 1 Imports is planning to shut down at least 45 stores in 2019, CVS is closing 46 of its “underperforming” locations in the U.S. this year and Gap will be closing 230 of its stores over the next two years.
Date: May 30, 2019