Following government shutdown delays, data for Dec and Jan spending and income collapsed on Friday. This was one of the most significant drops in consumer spending since the financial crash.
As if the situation wasn’t already dire enough, US consumers dialed back their spending in the last several months has put a sizeable dent into sales growth and foot traffic at US malls.
Last month, we noted that the “Retail Apocalypse” Isn’t Over: It Is Only Just Getting Started”.
We were right.
Fox 5 NY is reporting that major chains such as Gap, JCPenney, Victoria’s Secret and Foot Locker have all announced massive closures, totaling more than 465 stores in the last 48 hours.
All four companies reported its fourth-quarter results last week for the holiday period, with three of them (Gap, JCPenney and Victoria’s Secret) reporting a sizeable decline in same-store sales, while Foot Locker had modest growth.
With somewhat decent growth, because apparently, consumers still need to walk, Foot Locker shocked investors Friday with 165 store closures across the country.
That comes less than 24 hours after Gap told investors it would close 230 over the next several years after the company’s same-store sales plunged 7% during the holiday quarter.
If the hemorrhaging wasn’t enough, JCPenney was back on the chopping block with 18 more department store closures through the second half of this year, including three from January.
Bob Phibbs, CEO of New York-based consultancy the Retail Doctor, believes JCPenney will announce another round of stores closures in the second half.
“It is mind boggling that JC Penney still thinks they have time when the clock has run out and there’s no real plan. Closing 18 stores is barely a drop in the bucket of JC Penney’s more than 850 stores. If this was a big, bold effort to reinvigorate the brand, they would have announced they were closing hundreds of stores and investing in an outstanding experience at their other locations,” Phibbs told FOX Business.
That builds on recent store closure announcements by Gymboree, Payless ShoeSource, Charlotte Russe and Ann Taylor, to name a few. Even Tesla last week announced it would be closing most of its US showrooms.
A whopping 4,500 store closures have been announced by retailers so far this year. The number is expected to increase in the coming months, as growth prospects for the US economy are expected to be at near zero for the first quarter.