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When large national retailers started announcing temporary store closings early last week because of the coronavirus spreading, many seemed to think two weeks would do the trick.
That expectation is proving to have been wildly optimistic.
Coach, Abercrombie & Fitch, and Men’s Wearhouse are among the chains on Thursday to extend store closings as it’s becoming clear a return to normal is still a way off in the United States and Western Europe.
Coach parent Tapestry, which also owns Kate Spade, now hopes to re-open stores April 10 instead of March 27, while Men’s Wearhouse, anticipating that few men will be needing to buy a new suit anytime soon, has set May 4 as a return day. Its parent company Tailored Brands, which also owns Jos. A Bank, has furloughed all store staff until then. Nordstrom now plans to re-open a week later than planned, on April 5. As for Abercrombie, like Apple, it had initially set a specific date but now only says its stores are closed “until further notice.”
The closings are plunging the retail sector into one of its biggest crises ever. Research firm GlobalData Retail has been tracking the closings and by Thursday morning estimated that 40.9% of retail square footage in the U.S. is currently closed. The firm now expects retail sales to be down 12.4% this month, 11.6% in April, and 6.1% in May when the crisis should start easing.
Some of the hoped-for return-to-business dates come before Easter, the date by which President Trump has said he wants to “re-open” the economy. With many states and cities shutting down to slow the virus’ spread and its peak not expected for weeks, even April 12 seems unrealistic.
Wall Street also seems to think the closures won’t end any time soon. In a research note titled “Closeageddon,” Jefferies analysts warned that “stores could be closed longer than we think.” What’s more, the firm warned, e-commerce won’t come near making up the shortfall. And digital sales are much less profitable anyway, especially shipped orders; the option to have a shopper pickup an online order at a store cuts costs enormously.
It’s clear that retailers, even those open for business and doing well in this environment, are growing anxious. Despite stellar results in March so far thanks to stock-up trips, Target this week withdrew its financial forecasts for 2020, citing economic uncertainty.
Others that sell non-essential items are more challenged. Abercrombie, Tapestry, and Nordstrom were the latest to tap credit lines this week to have access to cash at a time they are still incurring costs but dealing with a drastic drop in revenue. Best Buy, Ulta Beauty, and Kohl’s are among the many other chains to have taken steps to shore up their access to cash in the last week.
More tough decisions are coming: Macy’s, Gap Inc, Under Armour, and J.C. Penney, as well as major mall developers are among the many companies to have planned to re-open in the next week but will likely have to reconsider those dates.
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