As per the Morgan Stanley analysts, department stores registered the worst result since the 2008 financial recession. In the wake of the disappointing holiday season, Macy’s and Sears are collectively closing more than 200 stores, and analysts also suggest that JC Penney could shut down as many as 300 stores within the next couple years.
Department stores were hit due to their primary reliance on in-store sales. Target’s same-store sales fell 3 per cent, for example, in the months of November and December while online sales soared more than 30 per cent. National Retail Federation stated that there was 4 per cent rise in overall holiday spending in the US to US $ 658.3 billion, compared to last year. However, that number includes US $ 122.9 billion in online sales, which jumped 12.6 per cent over last year.
As per the NRF report, the months of November and December account for as much as 30 per cent of retailers’ annual sales. Consequently, many retailers are closing down their stores to cut further losses on unprofitable stores and started investing more in growing their ecommerce businesses.
Also Read – Brick-and-mortar department stores are leading the way
Morgan Stanley analysts wrote in a recent note, “Department store fundamentals continue to materially erode, especially apparel retailers like Gap and Abercrombie & Fitch are also in trouble.”
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