5 international department stores that are struggling to survive

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Big Box Stores Getting Smaller

Despite the fact that retailers internationally are working hard to adjust to a more digital consumer – by either shutting their under-performing stores or coming up with a new retail strategies – department stores do not seem to be reaping any benefits from their effort.
Back in 2006, there were no clouds on the horizon and department stores expanded like crazy, leading to the U.S. being ‘overstored’. But then the recession hit, and many shoppers traded down to discount chains and went online.
While there are larger issues: like the slow down in economy, that has hurt consumer confidence and apparel spending has turned out to be the most discretionary of discretionary budgets and the environment which played a role in 2015, with warmer weather killing winter sales. Various reports suggests that the rapid growth of the Web is causing a traffic decline at physical stores internationally, forcing retailers to take a harder look at their under-performing boxes.
“The blunt truth is that while stores remain a vital part of the retail mix, they are not quite as relevant as they used to be,” Conlumino CEO, Neil Saunders, was quoted as saying in Business Insider, while answering a question about the reason behind Walmart’s decision to close 269 stores.
“Walmart’s decision is part of a larger shift that will be played out across all parts of the retail sector over the coming year and beyond,” he said.
While these department chains do have their own functional issues, experts feel that they must come out from the weight of  ‘we’ve always done it this way’ and soon understand the impact of how digital shopping has influenced their bricks-and-mortar stores.
Here’s a list of department stores that have either shut shops or are in process of shutting stores and are revisiting their business plans to turn profitable


The 88-year-old British department chain, which sells clothing, food and homeware, has failed to keep pace with traditional rivals such as Marks & Spencer and online giants like Amazon, resulting in a major loss of market share. As per the company’s recent announcement, BHS is all set to down shutters to its 163 stores, cutting almost 11,000 jobs in the process after failing to find a buyer.
Starting in 1928 with a chain in London, BHS has since grown to stand at 163 stores and 74 franchise operations across 18 countries.
Last month, BHS had called in outside help in order to help rescue the struggling firm from potential closure. However, Duff & Phelps was unable to turn around the fortunes of the faltering retail giant.
According to retail consultancy Conlumino, BHS attracted some 13.4 per cent of all British clothing shoppers through its doors fifteen years ago, and had about 2.3-per cent of the clothing market. BHS, last year, pulled in just 8.2 per cent of clothing shoppers, handing it a 1.4-per cent share of the sector, according to Conlumino.


For most of the past two-plus decades, the Menomonee Falls-based department store chain, Kohl’s was one of Wall Street’s biggest retail stars. Since its IPO in 1992, the retailer’s stock has risen more than 3100 per cent compared to a gain of just over 400 per cent for the S&P 500.
Between 1994 and 2009, Kohl’s morphed from a 90-store regional chain into a national retailer with more than 1,000 stores. Cut to 2010, the pace slowed considerably. Over the past five years shares of Kohl’s have badly lagged behind the broader market.
After a string of lackluster quarterly sales reports in 2014, the company launched its so-called ‘Greatness Agenda’, a roadmap to add $2 billion in annual sales by the end of 2017 to a total of $21 billion, in the year 2015. The three year turnaround plan included, among other things, a loyalty program and greater use of tech to bolster its e-commerce and opening smaller stores.
Since the launch of the program, the company has experienced three quarters of comparable sales (sales at stores open at least a year, plus online sales) growth, including a stellar holiday season last year, putting an end to a five-quarter losing streak. But the quarterly growth rates have become successively smaller, including a 0.1 per cent gain in the most recent quarter.
This has raised worries on Wall Street about the durability of Kohl’s comeback, and sent the company’s shares down about 45 per cent from the 52-week high of $79.60 that they hit in April 2015.


A report in the research firm, Green Street Advisors termed J.C. Penney (JCP) as retail’s other ‘problem child’. The report noted that the company would need to close 31 per cent of its locations, or 320 stores, to regain its pre-recession productivity.
The company has closed 100 stores in the last three years, the same amount it had opened between 2006 and 2012. Currently it has roughly 1,020 stores in the U.S., and said that it will shutter seven locations in 2016 in a bid to operate efficiently in an era of digital commerce and dense urban areas.
According to the company, all seven of the stores earmarked for closure will be of the smaller size and they generally exist in older malls where footfall is sparse. This is the smallest number of stores Penney has closed in recent years. It closed 41 stores in 2015 and 33 stores in 2014.
The company hasn’t been consistently profitable since 2011. It did report a small quarterly profit in 2014 before returning to losses. The company ended the third quarter of 2015 with $684 million, down from more than $1 billion at the end of the second quarter.
However, JCPenney CEO Marvin Ellison feels that its stores now play crucial roles in department stores’ e-commerce, allowing not them not only to compete with Amazon but also to serve as additional distribution centers and pick-up spots for online orders. And that is the reason that the company is closing only seven stores this year and has no plans of any large scale shutterings.


As part of the Macy’s restructuring plan to turn around the department store’s slumping sales, it recently announced plans to make several cuts across its stores, offices and a call center, including eliminating an average of three to four positions at each of approximately 770 Macy’s and Bloomingdale’s stores. About 3,000 associates will be affected, but Macy’s said roughly half are expected to be placed in other positions.
Macy’s is also in the midst of closing 36 stores, first announced last year, which will affect another roughly 2,600 employees. The stores will turn out the lights by spring.
The announcement comes as Macy’s suffered a significant sales decline during the holiday season. Sales in November and December at stores open at least a year fell 4.7 per cent from 2014. That loss contrasts with holiday spending overall, which was up 7.9 per cent for the season, according to figures in one early gauge, the MasterCard SpendingPulse.
As per the company statement, Macy’s plans to continue investing, in particular, in online and mobile experiences and connecting those experiences to stores. Online orders appear to be a bright point for their business, increasing about 25 per cent over last year in November and December.


Sears is suffering from the steepest decline in operating performance since 2006 among its rivals, according to a report from research firm Green Street Advisors. Based on the firm’s operating performance index, which measures same-store sales growth by gross margin percentage, Sears has seen a decline of more than 50 per cent, compared with about 10 per cent for Nordstrom and Macy’s.
The department store company has talked a good talk in the last few years about turning itself from a traditional retailer dependent on big box stores into one that is more digitally oriented, focused on a membership model, and needing less physical space.
In order to accelerate its transformation and return to profitability,Sears holdings announced that it will close 68 Kmart and 10 Sears stores this summer. All of the Sears stores and nearly all of the Kmart stores will close in late July; two Kmart stores will close in mid-September.
“The decision to close stores is a difficult but necessary step as we take aggressive actions to strengthen our company, fund our transformation and restore Sears Holdings to profitability,” Chairman and CEO of Sears Holdings, Edward S. Lampert, said in a press statement. “We’re focusing on our best members, our best categories and our best stores as we work to accelerate our transformation.”
Sears Holdings expects the store closures to generate a meaningful level of cash from the liquidation of store inventory and from the sale or sublease of some of the related real estate. Together with the over $1.2 billion in debt financing that Sears Holdings announced it had raised earlier this month to provide capital to execute its transformation and to meet its financial obligations, the company believes it has taken important steps toward its primary 2016 objective to restore profitability.

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