As many as 25,000 U.S. stores will close in 2020, a surge from 9,821 closures in 2019, retail data specialist Coresight Research predicts.
More than half of the closures, as much as 60%, will be in mall properties, the company noted, with apparel retail and department stores well-represented among the closures.
As of Friday, 4,005 stores have closed permanently this year, including more than 900 Pier 1 Imports, roughly 300 GNC locations and 200 Tuesday Morning shops, according to Coresight.
Though pandemic-related conditions will be the immediate cause of many of this year's permanent closures, it is an acceleration of a trend already underway in recent, non-pandemic years.
"Even before the coronavirus outbreak, many regional malls were being hit by a cycle of reduced shopper traffic and heavy store closures in the core apparel sector," the report states. "The physical retail landscape is seeing store-rationalization trends ... the coronavirus-driven shutdown could represent a turning point for shopping centers."
This year has seen a parade of retail bankruptcies, all of which means closure for some or all of a brand's stores. In May alone, J. Crew Group, J. Hilburn, Neiman Marcus, Stage Stores, JCPenney, Centric Brands and Tuesday Morning all filed for bankruptcy.
The most recent mall-related closure announcement came from JCPenney, which said on Friday that it is closing 154 stores in the near future as part of its bankruptcy restructuring. Altogether, the retailer plans to close about a third of its 846 stores over the next two years.
Ascena Retail Group, which owns mall staples Ann Taylor and Lane Bryant, is also considering filing for bankruptcy, The Street reports. Most of its 2,800 stores are still closed because of the coronavirus pandemic, though some have reopened.
The state of malls is dire enough to pummel REITs that specialize in that property type. CBL & Associates, for example, recently missed an $11.8M interest payment. The company is now at risk of defaulting on much of its debt, which would probably mean bankruptcy, the Motley Fool reports, which is a relatively unusual but not unknown step for a REIT.
The Chattanooga, Tennessee-based CBL, which owns 108 properties mainly in the Southeast, expressed doubt about its future viability in a recent filing with the Securities and Exchange Commission, citing the damage done by the pandemic.
Some retailers not much associated with malls seem glad about that. On the company's latest earnings call, Kohl's CEO Michelle Gass said that having 95% its stores outside of malls is a distinct advantage.
"We believe that this is really an advantage, especially in a kind of COVID or post-COVID environment, where customers are not only looking for the convenience that always offers but also a really safe environment," she said.
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