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Retail had another rough week.
Luxury handbag maker Michael Kors announced more than 100 store closures, apparel retailer Express posted a double-digit sales decline at its established stores, Payless ShoeSource said it would shutter even more locations than it planned and a Gymboree bankruptcy is seen as imminent — these, among other events — have painted a much bleaker picture of the industry.
The sector was already on pace for a record number of bankruptcies, and now it appears children's clothing company Gymboree will be joining the list. The company missed a June 1 interest payment on its outstanding notes due in 2018, according to a filing with the Securities and Exchange Commission. Gymboree now has a 30-day grace period to make a belated payment, the Thursday SEC filing said.
Even when the news is brighter, it isn't all good. Lululemon shares surged after the seller of athletic apparel outpaced Wall Street's earnings expectations, but it also unveiled plans to restructure its
Ivivva, the company's activewear brand for girls, will become a primarily online-only business, and all Ivivva-branded showrooms will be shut down, Lululemon said.
"While there is some demand for athleticwear for younger girls, the
This has likely become a bigger issue over the past 12 months, Saunders said, "as generalists have piled into the market — affording price sensitive and brand disloyal younger consumers more opportunity to shop around."
It's true, the market is becoming more and more competitive by the week, especially with making moves and being rewarded. Jeff Bezos' behemoth is now rolling out physical book stores and grocery pick-up locations — really keeping retailers on their toes.
Amid the new round of store closures and mounting retail job losses, Credit Suisse made a gloomy forecast, which predicts that some 20 to 25 percent of all malls over the next five years will close their doors for good as square footage losses mount and are expected to continue growing.
E-commerce sales are now responsible for much of the retail sector's remaining growth, the firm said.
With brick-and-mortar locations underperforming across many brands, digital players are gaining market share, Credit Suisse analyst Christian Buss explained in a note describing retail's "tumultuous 12 months."
Same-store sales — a metric closely watched by Wall Street for retail stocks — are up just 16 basis points in the first quarter, based on reports from 92 retailers thus far this year, Retail Metrics' Ken Perkins said in a note Thursday.
This marks a tie for the worst quarter of
And second-quarter comparable sales expectations don't look much better, he said. Excluding big-box retailer , the Street has forecast second-quarter comps to grow a minimal 20 basis points, according to Retail Metrics' survey. These numbers are far from healthy.
Source: Retail Metrics
Employment in retail is another glaring issue.
On Friday, the Labor Department announced retailers shed 6,100 jobs in May. The majority of those cuts came from department stores and "other general merchandise" stores, but food-and-beverage stores also saw a large drop-off, data from the Bureau of Labor Statistics show.
A recent study by investment advisory firm Cornerstone Capital Group found that a significant portion of retail jobs "likely will be automated" in the coming years, which could leave many more individuals in the retail workforce unemployed.
About 16 million people, or 1 in 10 American workers, are employed in the retail industry.
"Taken together, store closures and automation technology have the potential to accelerate job losses in retail," Cornerstone Capital said.
"Retailers are facing structural price and cost issues that impact profitability and create meaningful long-term uncertainty. These headwinds will likely increase the industry's propensity to automate, which would have significant impacts on existing labor."
As the first-quarter earnings season comes to a close, analysts and investors are keeping their eyes peeled for more news of store closures, bankruptcies, layoffs and slipping sales.
"Department stores established a somber outlook out of the gate in early May, but a number of retailers, including Wal-Mart, Costco, Wayfair, Five Below, Dollar General and Williams-Sonoma reminded us that retail still has a pulse despite today's ongoing pressure from Amazon, " said Charles Grom, an analyst at Gordon Haskett, in a research note.
And some retailers, like Lidl, are even opening new stores. The German grocer plans to open its first in the U.S. this month.
Watch: Retailers may have more debt than investors realize