J.C.Penney, Sears, Best Buy top retail store closings in 2013

The U.S. economy is not “in recovery.” That’s a media fiction.
And here’s one more sign why, instead of improving, the economy is getting worse.

USA Today reports, Feb. 3, 2013, that based on their lackluster performances, some of America’s largest retailers are in trouble and expected to close some of their stores this year. Among them are big names like J.C.Penney, Sears, and Best Buy.
A review of retailers’ Christmas holiday season sales figures and their annual sales tells us a great deal about how most of the companies will do in the coming year. And while successful retailers in 2012 may add stores this year, those that have struggled may have to cut locations in 2013 to improve margins or reverse losses.
For many retailers, the sales situation is so bad that it is not a question of whether they will cut stores, but when and how many.
24/7 Wall St. reviewed the weakest large U.S. retailers and picked those that likely will not be profitable next year if they keep their current location counts. 24/7 analyzed the retailers’ store counts, recent financial data, online presence, prospects against direct competitors and precedents set by other large retailers that have downsized by shutting locations. On the basis of that data, 24/7 forecasts how many stores each retailer will have to close this year to sharply increase its prospects financially, even if some of those closings do not occur for several years. These forecasts were based on drops in same-store sales, drops in revenue, a review of direct competitors, Internet sales and the size of cuts at retailers in the same sector, if those were available.
These are the eight retailers that will close the most stores in 2013.
1. Best Buy

  • Forecast store closings: 200 to 250
  • Number of U.S. stores: 1,056
  • One-year stock performance: -36.8%

The holiday season was rough for Best Buy. Same-store sales declined 1.4% year-over-year, with international stores posting a 6.4% decline while U.S. same-store sales were flat. Companywide, the electronics retailer reported that holiday revenue had declined to $12.8 billion from $12.9 billion the year before. In the most recent completed quarter, during which same-store sales declined 4.3%, the company reported a loss of $0.04 per share. Best Buy has been plagued by customers “showrooming” — looking at products in the store and then purchasing them online — in recent years.
2. Sears Holding Corp.

  • Forecast store closings: Kmart 175 to 225, Sears 100 to 125
  • Number of U.S. stores: 2,118
  • One-year stock performance: 8.8%

Both Sears and Kmart have been struggling for a long-time, steadily losing their middle-income shoppers to retailers such as Wal-Mart Stores and Target. Sears Holdings same-store sales have declined for six years. In the most recent year, same-store sales at the namesake franchise fell 1.6% and at Kmart by 3.7%, compared to the year-ago period. The company is already in the process of downsizing its brick-and-mortar presence. In 2012, Sears announced it was shutting 172 stores. CEO Lou D’Ambrosio is leaving in February, to be replaced by chairman and hedge-fund manager Edward Lampert. Lampert has minimal operating experience in retail management. (See also my post of July 21, 2012, “Sears ‘family’ store goes the bestiality route.”)
3. J.C. Penney

  • Forecast store closings: 300 to 350
  • Number of U.S. stores: 1,100
  • One-year stock performance: -53.6%

In the most recent quarter, same-store sales fell 26.1% compared with the year-ago period. Even Internet sales, which are increasing significantly across the retail sector, have taken a turn for the worse, falling 37.3% in the third quarter, compared with the prior year. J.C. Penney sales have taken a turn since former Apple retail chief Ron Johnson took the helm. (See my posts: “Something is rotten at J C Penney,” June 2, 2012; and “JCPenney tanks from new pro-gay policy,” July 12, 2012.)
4. Office Depot

  • Forecast store closings: 125 to 150
  • Number of U.S. stores: 1,114
  • One-year stock performance: 50.7%

Office Depot’s troubles date back to years of competition against OfficeMax and Staples, as well as big-box retailers like Walmart. All three stores were dealt a blow from reduced business activity during the recession, as well as increased popularity of online retailers such as Amazon. The company’s North American division reported an operating loss of $21 million in the third quarter 2012. Office Depot plans to relocate or downsize as many as 500 locations and close at least 20 stores. In the third quarter 2012, the company closed four stores in the United States, and same-store sales were down 4% year-over-year.
5. Barnes & Noble

  • Forecast store closings: 190 to 240, per company comments
  • Number of U.S. stores: 689
  • One-year stock performance: 8.95%

The move away from print books toward digital books has hurt Barnes & Noble. Same-store sales during the nine-week holiday season fell 8.2% year-over-year. The bookseller has tried to offset the declines in physical book sales with its Nook e-book reader device, but sales of that device fell 13% compared with the previous year. The company already has begun cutting the number of stores in the past several years. In a recent interview with the Wall Street Journal, the head of the retail group at Barnes & Noble said he expected the company to have just 450 to 500 retail stores in 10 years.
6. Gamestop

  • Forecast store closings: 500 to 600
  • Number of U.S. stores: 4,471
  • One-year stock performance: -2.2%

In November, just as the holiday season was in full swing, GameStop announced it would close 200 stores in 2013. The video game retailer, hurt by growth in mobile gaming at the expense of console gaming platforms, had a 4.6% year-over-year drop in revenue, as well as a 4.4% decline in comparable-store sales over the nine-week holiday period. For the third quarter of 2012, the most recent quarterly release, gross profit fell in GameStop’s three core product segments: new hardware, new software and used products.
7. OfficeMax

  • Forecast store closings: 150 to 175
  • Number of U.S. stores: 872
  • One-year stock performance: 80.8%

OfficeMax, like rival office-supply stores such as Staples and Office Depot, has been hit hard by both online competition and lower sales for technology products such as personal computers. In the third quarter of 2012, OfficeMax said same-store sales in the U.S. fell 2.6%. Midway through the fourth-quarter of 2011, the company announced that it would close 15 to 20 stores every year for the next five years. In addition, the company has been in the process of downsizing its square-footage by moving into smaller locations.
8. RadioShack

  • Forecast store closings: 450 to 550
  • Number of U.S. stores: 4,412
  • One-year stock performance: -68.1%

Earlier this month, RadioShack’s long-term prospects took another hit when its partnership with Target ended after neither side could come up with a mutually beneficial deal. The company had operated mobile kiosks at 1,500 Target locations across the country. Shares of the consumer electronics company are down roughly 68% over the past year. The company recorded an operating loss of nearly $60 million in the third quarter of 2012. Same-store sales in the quarter dropped 1.6% year-over-year. Revenue in the quarter fell 3.8% year-over-year. Between 2010 and 2011, the company closed 2.2% of its locations — more than 120 in all.
Store closings can bring a retailer some relief and may not always portend its demise. For example, Gap announced in 2011 it would shutter 21% of its U.S. store base. It has since transformed itself into a much more successful clothing retailer. As the retailer completes the process of downsizing, its store operations likely will become even more efficient and its margins greater.
That being said, the anticipated store closings of the above 8 large retailers will mean many more being added to America’s unemployed. No paychecks also mean less tax revenue for state and federal governments.
H/t California Political News & Views

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7 years ago

That “fundamental transformation” of America… of course, doesn’t somebody have to make money so it can be taxed and given to folk getting gov’t benefits so they can spend it?

7 years ago

Anonymous, I love your sarcasm! Thank you Dr. Eowyn for this factual and well-documented post. But please, Dr. Eowyn, keep the facts to yourself, as the Obama regime wants everybody to believe that the economy is alive and well. As you have heard before, “Don’t give me the facts!” In any event, some of these stores were boycotted for their support of homosexual activities and lifestyles wherein they were anti-marriage and family, and some of the stores were boycotted for their anti-Christmas policies. Looks like the public response pays off!

7 years ago

I do understand where you guys are coming from and agree. Unfortunately I am thinking of many more people that will be unemployed once the store closes. Sigh….. this is sad for sooo many reasons.
May I at least propose things made in the USA? Start with the maple syrup from New York. It is divine! If purchased tell Mr. Lipscomb Lisa in TX says: heyyyyyyyy!!!
Todd Lipscomb

7 years ago

This is just really sad for all of us.

7 years ago

Penney’s=queer agenda and people have walked with their vanishing dollars to shop elsewhere. Guess this makes me homophobic. So be it and i am so sick of this being forced upon the good, moral people of AMERICA, not AmeriKa.
Economy is still very ill in POORegon.

7 years ago

Reblogged this on cedarridge2007.

7 years ago

Doesn’t surprise me. Most people don’t have extra disposable incomes with taxes & lower wages. Any extra money I’ve got goes to buying ammo 🙂
And I don’t feel bad for JCP one bit!

7 years ago

Penny’s is tanking because of their insistence on prompting homosexualality through their advertising – both representatives and content. And the best they can do is keep rearranging the deck chairs on their sinking ship. A good deal of religious people are staying away. Look for Target to be next. Sears and by extension K-Mart have been circling the drain because of their brain dead decision to meet racial quotas in their hiring instead of hiring competent people. (Not that all people of color aren’t or can’t be competent. They’re just hiring numbers.) Result; ignorant salespeople that don’t know the meaning… Read more »

Rick Moss
Rick Moss
7 years ago

“Death by Technology” – It’s over people! Dan Thomas was right about technology killing our economies all over the world. Join the Revolution. Read “Common Sense 3.1”

Jim Douglas
Jim Douglas
6 years ago

I’ve bought basics like swim suits and gym shoes at Penny’s for years, but could not this year. ALL the mens swim suits in stock were twice the length of a normal suit, and the rugged looking shoes I normally bought were replaced with one that had a “ballet” look to them. Last winter they had no winter coats in the store, just summer. I had no problem finding the items I wanted in other stores. They are loosing many longtime loyal customers due to insane decisions made by buyers.

6 years ago
Reply to  Jim Douglas

Jim, I’ve been having problems with lots of stores. I bought some pants from Target online that were labeled 34 waist, but when I tried them on they were too small. I pulled out a tape measure and turns out they are 31 1/2 waist. Bought shoes at Payless, supposd to be 8 wide. Wore them today and my feet were killing me. When I got home I held them next to a pair of 8 wides I bought three years ago and they are an inch smaller. I used to read USA Today. But they changed the print, making… Read more »