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UPDATE: 2008 Store Closings Among Major Retailers Up More Than 40% Over 2007

CoStar Updates Major Retailer Store Opening / Closing List
January 6, 2009
The slower-than-expected holiday sales, combined with the tight credit market and recession, has several retail real estate industry experts warning to expect more store closings and retailer bankruptcies in the first half of 2009.

"The boom years of late saved companies that normally might have failed," noted Greg Apter, principal and president of Hilco Real Estate in a recent American Bankruptcy Institute teleconference. He added that "significant amount of debt coming due in danger of violation in a limited credit and available capital scenario" will cause many more companies to fail in 2009. He pointed out that most large, high-profile retail bankruptcies of late have resulted in massive store liquidations with some companies not emerging from chapter 11.

As a leader of a firm that handles the disposition of retailers' leases associated with closed stores or bankruptcy liquidation, Apter said that he is seeing less and less interested parties show up at bankruptcy auctions for leases. "This is without a doubt the quietest period we've seen regarding interest," he said. And among those that do participate, "there is the assumption that there will be no competition for those that do step up," added Apter.

The most recent example of this trend is Circuit City. The electronics retailer cancelled the auction of 154 leases associated with the 155 stores it has announced it is closing. Instead, the retailer opted to reject each of the leases, essentially turning the spaces back over to landlords. A Circuit City spokesman told Business Week the retailer made the decision to reject because it received so few bids on the store leases.

"Existing vacancies and additional significant bankruptcies expected in the next several months have created property-level debt service issues," Apter explained. "There will be several lenders receiving keys back, and there will be the question of whether lenders will even accept the keys."

The effect may not be as drastic, however, as landlords have begun cooperating more, said Apter, "In the last week alone, there have been extraordinary attempts to keep people out of bankruptcy. Our approach now is to work out a corporate structure with landlords to avoid bankruptcy auction."

Such cooperation becomes even more essential in the coming months, insisted Apter, because, "I certainly have some pretty significant fears that if we don't get sales back to a manageable level, there could be a pretty large glut of bankruptcy - it could be significant. Retailers are only in the second or third inning. It's just going to get worse. The perfect storm is in the beginning stages."

Who is in danger in 2009? Britt Beemer, president of Americas Research Group, identified the following retailers as the "biggest losers" of 2008's holiday shopping season: CVS, American Eagle, Macy's, Belk, Walgreens, Dillard's and The Sports Authority. "A number of major names, such as Macy's, are in trouble over the long run, and we will undoubtedly see more retail bankruptcies in the New Year," Beemer wrote.

Store closings aren't the only significant news, however. To measure the true impact on retail real estate, It's important to look at the retailer landscape as a whole, weighing store openings against store closings. We have done just that in the following "Major Retailer U.S. Store Opening / Closing List". First published in early October 2008, this report is back by popular demand, courtesy of the CoStar News department.

CoStar Advisor compiled the following table from researching the most recent quarterly reports, transcripts and SEC filings of the top retailers in most major U.S. retailing categories, from department and apparel stores, to jewelry and pet stores, and more. Key metrics including the current size of the chain, typical square footage of stores, as well as the number of store openings and closings in 2007 - 2010 are provided. Most figures stated are based on retailers' fiscal year schedules.

In aggregate, the retailers listed in this chart opened nearly 5,600 stores in 2007, and expect to have opened about 13% less stores in 2008 -- nearly 4,850 stores by the end of this fiscal year (which for most ends in January 2009). In stark contrast, the same retailers have so far announced only about 2,000 store openings in 2009.

With nearly 5,100 store closings (up 43% over total store closings in 2007) already identified by these retailers for this fiscal year(and more expected to trickle in as fourth quarter reports surface), there will be an aggregate net loss in retail stores at these retail chains. This is a worrying statistic when we consider that, according to CoStar Property, at least 98.6 million square feet of retail space 15,000 sq. ft. or larger was added to the national retail landscape this year.

According to our calculation, the categories with the largest amount of net store closings (mapped against total store openings) in 2008 are home accessories/furniture, with a net loss of 1,085 stores; electronics with a net loss of 715 stores; and jewelry, with a net loss of 400 stores.

*This table was compiled by the CoStar Group News Department from 12/19/08 to 1/6/09; from sources deemed to be reliable, including retailer quarterly and annual reports, quarterly conference call transcripts provided by, and SEC filings. CoStar does not certify the accuracy contained therein. Information contained in this report may be updated without notice.
**Any further publication of this report or a portion of this report in any way, shape, or form, is not authorized without the express consent of CoStar Group. Please email the editor, Sasha Pardy at to request such permission.

If you would like access to the full excel spreadsheet of data, which includes a breakdown of data for each retailer included in each category from 2007-2010 (if shared), please follow this link to download the store opening / closing file. If you would like to be notified when this list is updated in the future, please request to be added to CoStar's weekly Retail News Roundup column by emailing the editor, Sasha Pardy at

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