Thursday, April 30, 2020

More than half of mall-based department stores could close in two years

Retail Dive
Green Street Advisors now expects "about a little more than half of all mall-based department stores to close by the end of 2021," according to Vince Tibone, a retail specialist at the property research group.

Losing those anchors would have a "knockdown" effect as in-line mall tenants would be allowed to lower rents, he said during an April 29 webinar. In two years, traditional malls overall are likely to see a 20% decline in cash flow compared to 2019, which will "accelerate the demise of many malls," he said.. . . more

Saks Owner Missed April Payments on Commercial Mortgage Debt

NREI
Hudson’s Bay Co. missed April payments on two commercial mortgage-backed securities, signaling the retail industry’s woes are spreading to debt markets.

The securities, part of $696 million in financing for Saks Fifth Avenue and other stores, were current until this month when the company missed interest-only debt payments totaling $3.2 million, according to data compiled by Bloomberg and a person familiar with the matter. . . . more

Macy’s says it plans to have all of its stores reopened in 6 weeks

CNBC
Macy’s is planning to reopen 68 department stores Monday, in states including South Carolina and Georgia, where local governments are loosening lockdown restrictions during the coronavirus pandemic.

It expects to have all of its roughly 775 stores reopened in six weeks, should Covid-19 infection rates taper off, and local governments allow retailers to proceed, a spokeswoman confirmed to CNBC. . . . more

Wednesday, April 29, 2020

Mall Owner Pyramid Sees 6 CMBS Loans Slip Into Special Servicing

bisnow.com
Retail owner Pyramid Cos. now has had six CMBS loans transferred to special servicing, with two more added this week.

All of the properties associated with the loans have been shuttered because of the coronavirus pandemic, which has put intense pressure on loans tied to retail properties as mall revenue dries up. . . . more

The Victoria’s Secret Contract That Anticipated a Pandemic

New York Times
It’s no wonder the buyout firm Sycamore Partners is trying to back out of its $525 million deal to buy a majority of Victoria’s Secret from struggling L Brands.

Until now, the private equity firm has generated impressive returns for its investors and huge paydays for its executives even as its core retail businesses have been in precipitous decline. . . . more

Monday, April 27, 2020

Reuters
An investor group that comprises investment firm Mudrick Capital Management LP and Daniel Loeb’s hedge fund Third Point LLC plans to challenge a $600 million financing package that Neiman Marcus Group has lined up for its looming bankruptcy, and will push the U.S. department store operator to sell itself, people familiar with the matter said on Sunday.

Neiman Marcus is preparing to seek bankruptcy protection in a Dallas federal court as soon as Monday, the sources said. The debt-laden company’s sales all but evaporated after the coronavirus outbreak forced it to temporarily shut all 43 of its Neiman Marcus locations, roughly two dozen Last Call stores and its two Bergdorf Goodman stores in New York.. . . more

Friday, April 24, 2020

Victoria’s Secret Sale at Risk as Buyer Blames Virus Response

New York Times
A private equity firm acknowledged the “international tragedy and health emergency,” but said it didn’t excuse actions taken by the lingerie chain’s parent company, including closing stores.

The plan to sell Victoria’s Secret to a private equity investor appears to be in trouble, with the buyer saying on Wednesday it wanted to terminate the deal because of the retail chain’s response to the coronavirus pandemic.. . . more

Thursday, April 23, 2020

Gap warns of cash shortage, suspends rent payments

Reuters
Gap Inc warned on Thursday it may not survive the next 12 months intact and would need to borrow more funds in the face of widespread coronavirus shutdowns that have crippled the business of clothing retailers globally.

The apparel retailer also said it had suspended rent payments for shuttered stores, and was in talks with landlords to defer payments, change lease agreements, or in some cases terminate the leases and permanently close some stores. . . . more

Sycamore Seeks to Terminate Deal to Acquire Victoria’s Secret

NREI
Sycamore Partners wants to terminate its deal to acquire a controlling stake in lingerie brand Victoria’s Secret from L Brands Inc., according to a court filing Wednesday.

Shares of L Brands fell as much as 26% in New York trading to as low as $8.92 apiece. Sycamore Partners agreed in February to buy 55% of the lingerie chain and take it private, leaving L Brands with a minority stake.

The private equity firm said in the Delaware Chancery Court complaint that L Brands has breached covenants under the agreement. It claimed that the Covid-19 outbreak, which has forced the retailer to shutter stores, “provides no relief” under the deal terms. . . . more

The death of the department store: ‘Very few are likely to survive’

Boston Business Journal
American department stores, once all-powerful shopping meccas that anchored malls and Main Streets across the country, have been dealt blow after blow in the past decade. J.C. Penney and Sears were upended by hedge funds. Macy’s has been closing stores and cutting corporate staff. Barneys New York filed for bankruptcy last year.

But nothing compares to the shock the weakened industry has taken from the coronavirus pandemic. The sales of clothing and accessories fell by more than half in March, a trend that is expected to only get worse in April. . . . more

Wednesday, April 22, 2020

Houston malls may re-open for curbside pickup orders

Chain Store Age
Texas Governor Greg Abbott has issued a “retail to-go” plan that may allow malls in the state to take orders and deliver them curbside on their properties and several Houston malls are eager to take advantage of the offer, according to click2houston.com.

“We’re anxious to get back to full operation as soon as possible,” said Harry Hadland, VP of property management at Metro National Corporation, which owns Houston’s Memorial City Mall.
. . . more

Macy’s weighs raising as much as $5 billion in debt to weather coronavirus crisis

CNBC
Macy’s is taking extreme measures to avoid dire outcomes like bankruptcy, and will try to raise billions in debt to weather the pandemic crisis, according to people familiar with the matter.

The country’s largest department store is looking at raising as much as $5 billion in debt, the people said. It will seek to use its inventory as collateral to raise $3 billion and real estate to raise $1 billion to $2 billion, they said. . . . more

Tuesday, April 21, 2020

Lord & Taylor mulls bankruptcy

Retail Dive
Lord & Taylor is exploring a bankruptcy filing, Reuters reports, citing unnamed sources.

"The company is working through various options at this time and is declining to comment," a spokesperson from parent company Le Tote said in a statement emailed to Retail Dive.. . . more

Pandemic deals a blow to one of the nation’s largest malls

Chain Store Age
The 2.2 million-sq.-ft. Palisades Center in West Nyack, N.Y., may have a tough time coming back following the coronavirus shutdown.

The property’s $388 million debt has been transferred to a commercial mortgage-backed securities special servicing unit because of “imminent monetary default,” according to a report in the Rockland County Business Journal.. . . more

Express adopts poison pill

Chain Store Age
Express Inc. is adopting a shareholder rights plan amid a slump in the company’s share price during the COVID-19 pandemic.

The apparel retailer said the plan, also referred to as a poison pill, is intended to reduce the likelihood that any person or group would gain control of Express through open market accumulations during the current market volatility. It noted that the plan has not been adopted in response in response to any specific takeover bid or other proposal.. . . more

Monday, April 20, 2020

Neiman Marcus to file for bankruptcy as soon as this week

Reuters
Neiman Marcus Group is preparing to seek bankruptcy protection as soon as this week, becoming the first major U.S. department store operator to succumb to the economic fallout from the coronavirus outbreak, people familiar with the matter said.

The debt-laden Dallas-based company has been left with few options after the pandemic forced it to temporarily shut all 43 of its Neiman Marcus locations, roughly two dozen Last Call stores and its two Bergdorf Goodman stores in New York.. . . more

The coronavirus pandemic will likely leave a lasting legacy on retail: Fewer department stores

CNBC
America’s department stores are on a sinking ship, racing for a lifeboat that might not be big enough for all of them.

For J.C. Penney, the bankruptcy clock is ticking after it skipped a mid-April interest payment. Its turnaround plans have been sidelined by the coronavirus pandemic, which has forced the closure of all of its stores. Macy’s, with liquidity drying up, has tapped advisors at investment bank Lazard and law firm Kirkland & Ellis to explore options that include new financing. . . . more

Thursday, April 16, 2020

ICSC: 60% of Americans will feel comfortable going to malls after this happens

Chain Store Age
Cornonavirus-cornered Americans expect to be busting out in June, or at least soon after.

The International Council of Shopping Centers (ICSC) polled 1,004 Americans this week about their expectations of the pandemic’s demise and found them eager to be back at their usual haunts before summer.

Seventy-seven percent of those surveyed said they would feel comfortable going to stores to buy non-essential items within or sooner following the lifting of the National Emergency. . . . more

Wednesday, April 15, 2020

J.C. Penney weighs bankruptcy in move to refinance debt

Chain Store Age
J.C. Penney is reported to be considering filing for bankruptcy protection as fallout from the the COVID-19 pandemic puts added pressure on the long-struggling department store retailer.

Reuters reported that Penney is considering the bankruptcy filing to "rework its unsustainable finances and save money on looming debt payments, which include significant annual interest expenses" in hopes of continuing operations. The 118-year old company is burdened with nearly $4 billion of long-term debt.. . . more

Tuesday, April 14, 2020

True Religion seeks shelter from pandemic (and rent) in Ch. 11

Retail Dive
Denim brand and retailer True Religion filed for Chapter 11 on Monday, its second bankruptcy since 2017.

The company had been racking up losses and struggled with liquidity all last year, according to True Religion interim CFO Richard Lynch​. The COVID-19 pandemic forced it to close its doors and wiped out 80% of its sales, resulting in even deeper liquidity woes and making bankruptcy "unavoidable," Lynch said in court documents.. . . more

J.C. Penney Is Said to Hire AlixPartners as Revenue Dwindles

Yahoo Finance
J.C. Penney Co. has tapped the consulting firm AlixPartners LLP for advice as the retail chain mulls options for managing its approximately $4 billion debt load amid shrinking revenue, according to people with knowledge of the matter.

J.C. Penney has been in conversations with its banks in recent weeks about their liquidity needs, and has been in on-and-off negotiations with lenders about a possible debt deal, said the people, who are not authorized to speak publicly and asked not to be named discussing private information. . . . more

Monday, April 13, 2020

Department stores are most at risk of default, S&P says

Retail Dive
Department stores as a sector have a 42.1% median probability of defaulting on their debt within a year, according to emailed research from S&P Global Market Intelligence.

The sector's default risk, as of April 7, is the highest among consumer companies. Retailers of food and household goods carry some of the lowest default risk, according to S&P. Calculations are based on fluctuations in the company's share price and other industry-related risks.. . . more

CRE's Potential Winners and Losers in a Virus-Hit World

NREI
It may not be fair, but even pandemics tend to benefit some people and segments of society while devastating others. The Black Death, for example, led to higher wages for suddenly scarce laborers and a vast expansion of Western Europe’s middle class. COVID-19 will also likely leave both the world, and the commercial real estate industry, looking different than they did before.

Here’s how the current pandemic could play out for various segments of the U.S. real estate industry. . . . more

Friday, April 10, 2020

US shopping mall owners face financial reckoning

Boston Business Journal
Some of America’s biggest mall owners are facing a financial reckoning as retailers from Urban Outfitters to Calvin Klein stop paying rent in the coronavirus shutdown.

Capital markets are signalling that some retail landlords are heading for debt restructurings as their properties remain closed for weeks while they grapple with multibillion-dollar liabilities.

Corporate bonds in both CBL & Associates and Washington Prime, which alone have interests in a combined 125m sq ft of retail and mall space, are trading at distressed levels, having sold off heavily in recent weeks. A smaller mall owner, Pennsylvania Reit, said it was applying for relief funds under Washington’s coronavirus support package.. . . more

Thursday, April 9, 2020

Nordstrom warns financial situation could become distressed because of coronavirus-related store closures

CNBC
Nordstrom said its financial situation could become distressed if its stores stay dark for much longer because of COVID-19.

The retailer’s assessment of this crisis is one that many are likely dealing with, as businesses that sell nonessential goods such as apparel, shoes and luggage have reached an almost complete standstill. . . . more

Coronavirus Has Shut Stores, and Retailers Are Running Out of Time

The Wall Street Journal
Retailers have furloughed hundreds of thousands of workers, cut executive pay and stopped paying rent, all to conserve cash. For the most indebted retailers, particularly those already struggling before the crisis began, those measures may not be enough.

Neiman Marcus Group Inc. and J.C. Penney Co., both of which have looming debt payments, have been reaching out to creditors in the hopes of buying more time, according to people familiar with the situation. Representatives for Neiman Marcus and Penney declined to comment.. . . more

Wednesday, April 8, 2020

AMC Theatres Bankruptcy Rumors Grow, But That Move Wouldn’t Be The End Of The Chain Or The Biz

Deadline
In the wake of a S&P Global report that forecasted AMC Entertainment’s depletion of cash by mid-summer and its potential inability to re-open by June, media reports have already written the chain’s obituary.

While distribution and rival exhibition sources wouldn’t be shocked if AMC files Chapter 11 in the near future, that’s not necessarily a scarlet letter for the biggest theater chain in the world. Rather it’s the best thing that could happen for AMC which is saddled with $4.9 billion debt and currently valued at $327.3M. Last Wednesday, the Wall Street Journal reported that lenders for the Leawood, KS-based chain have hired law firm Gibson, Dunn & Crutcher LLP for advice on expected restructuring negotiations. . . . more

Tuesday, April 7, 2020

Stalled by coronavirus pandemic, American Dream rethinks its future and retail becomes an afterthought

CNBC
It is becoming even harder to call American Dream a megamall.

Instead, the roughly 3 million-square-foot development that sits alongside a bustling highway in East Rutherford, New Jersey, is morphing into more of an ultimate amusement park. More like Disneyland if it fit under one roof. With shifts in strategy over time, retail is becoming even more of an afterthought, while entertainment takes center stage.

Prior to the coronavirus pandemic hitting the U.S., American Dream was slated to be a mix of 55% entertainment-related tenants and 45% retailers, when it was completely finished. Now, the project will be roughly 70% entertainment and 30% retail, according to its developer, Triple Five Group. . . . more

Monday, April 6, 2020

To pay or not to pay: Retailers are making tough decisions on rent and other bills

Retail Dive
Last week, Urban Outfitters said publicly what many retailers are discussing in private: that it won't be paying rent. In the middle of a list of financial measures Urban said it was taking while its stores are closed, the apparel seller included the suspension of rent payments.​

The retailer followed the Cheesecake Factory in doing so. The restaurant chain said in a regulatory filing that it would not be paying rent on its leases for the month of April.. . . more

Chico's takes a ‘poison pill’ amid COVID-19 outbreak

Chain Store Age
Chicos’s FAS Inc. is the second retailer in recent days to adopt a limited duration shareholders rights plan after disruptions due to COVID-19 pandemic.

The women’s apparel retailer adopted the plan, the so-called "poison pill,” saying it was in the best interest of all its shareholders. The plan aims to guard against any individual or group gaining control of the company in the open market without paying a premium. . . . more

Friday, April 3, 2020

Neiman Marcus advances bankruptcy preparations

Reuters
Neiman Marcus Group is stepping up preparations to seek bankruptcy protection, after the coronavirus pandemic forced the debt-laden U.S. luxury department store chain to close its stores, people familiar with the matter said on Thursday.

Neiman began holding confidential discussions this week with bondholders about possible financing that would help the company continue operating while under bankruptcy protection, the sources said. The company has also started similar discussions in recent days with its lenders, one of the sources said.

Up until this week, Neiman had received inquiries from creditors about its next moves but had not commenced discussions about a possible bankruptcy, some of the sources said. . . . more

Thursday, April 2, 2020

What do department stores do now?

Retail Dive
Every department store in America, from the low end to the high, has tried some way to drag the retail concept into the 21st century. It's a monumental task, considering the model was born in the 1800s, and enjoyed its last heyday in the 1950s. The effort has had mixed results. Now COVID-19 has introduced new urgency, and possibly new goals.

J.C. Penney partnered with Sephora, and later added, then dumped, appliance sales. Macy's and Nordstrom have each invested in retail's cutting edge, with varying degrees of success. Nordstrom and Neiman Marcus both saw potential in New York City, the turf of Saks Fifth Avenue, whose flagship has had a multi-million dollar renovation with a gleaming new escalator. Lord & Taylor agreed to ownership by an apparel rental company. Kohl's decided to take Amazon's returns to get new customers through the door. Several have embarked on turnarounds and even rebooted turnarounds (sometimes multiple times). . . . more

Wednesday, April 1, 2020

Urban Outfitters says it won't pay rent

Retail Dive
Urban Outfitters on Tuesday said it won’t pay rent for an undisclosed amount of time and is delaying the opening of new stores, while existing stores remain "temporarily closed until further notice due to the continued spread of COVID-19."​

The company, whose brands include Anthropologie, Free People and Urban Outfitters, also said that beginning Wednesday "a substantial number of store, wholesale and home office employees" will be furloughed for 60 days, but will continue to get benefits.. . . more

J.C. Penney furloughs store and corporate staff as closures extend indefinitely

Retail Dive
J.C. Penney plans to furlough "the majority" of its hourly store associates beginning Thursday and a "significant portion" of its corporate staff beginning on April 5, the company said in a press release.

The retailer is also extending its temporary store closures, without a stated re-opening date. "The Company will continue to follow guidance from local, state, and federal officials as it anticipates gradually reopening stores and offices in markets when it is safe to do so," Penney said.. . . more

Macy's to drop from S&P 500 to small-cap index

Reuters
Macy's Inc will be removed from the benchmark S&P 500 stock index, the S&P Dow Jones Indices said on Tuesday, as coronavirus-induced store closures compound the retail sector's struggles with a shift to online shopping.

The company’s shares have plunged more than 70% so far this year, leaving Macy’s with a market value of $1.52 billion as of Tuesday’s close, according to Refinitiv IBES data. . . . more