Malls feel the hangover as retail retrenches

0 Comments | Oakland Tribune, Mar 11, 2008 | by Anne D'Innocenzio

The industry pullback follows several years of rapid expansion and experimentation with a range of new store formats as retailers enjoyed robust consumer spending fueled by rising home values. But the sharp spending drop has made stores rethink how to expand their businesses.

Jewelry retailer Zale Corp. announced more closings last month, meaning it now plans to shutter almost 5 percent of its stores by the end of July. In January, Pacific Sunwear said it will close all 154 remaining Demo stores, which sell urban fashions. AnnTaylor is shutting down 13 percent of its stores and delaying a new store concept aimed at women boomers, while Talbots is closing its 78 children's and men's apparel stores to focus on its core middle- aged female customer. Macy's also has said it will close nine stores.

And Wilsons The Leather Expert is closing a majority of its 260 mall locations.

Analysts say they're watching to see if Circuit City closes any stores after posting a third-quarter loss and cutting its full-year profit outlook.

Analysts also expect more store cutbacks at Sears Holdings Corp., which operates Kmart and Sears stores.

Some shoppers are not going to miss the casualties.

"They have nice clothes, nice urban wear, but their prices (are) a little high," said Tasha Burts, 35, of Demo at the Dolphin Mall west of downtown Miami. She walked out empty-handed.

Mall operators Taubman Centers Inc. and Simon Property Group say their top tenants -- the department stores and other big chains that anchor most shopping centers -- are in good financial shape.

Bill Taubman, chief operating officer of Taubman Centers, predicts more store closings and bankruptcies than last year, but doesn't think they will reach historic highs.

That will still mean a more limited selection for consumers, who until a few months ago had a plethora of choices, particularly when it came to furniture.

Recent home furnishings casualties included Bombay and Levitz Furniture, which filed for bankruptcy in November and has been liquidating its inventory. Clothing stores, in a malaise since consumers see fashion spending as discretionary, could see widespread closures this year.

While the industry overall is experimenting less with new formats, Janet Hoffman, managing partner of the North American retail division of Accenture, expects the mood to be temporary.

"There is this undying belief in the retail industry that they have an idea that will work," Hoffman said, citing Abercrombie & Fitch Co.'s new lingerie chain Gilly Hicks. "A year or 18 months from now you will see new ones at play."

Associated Press Writers David Twiddy in Kansas City, Mo., Terry Tang in Phoenix and Laura Wides-Munoz in Miami contributed to this report.