Here’s another addition to the growing list of mall retailers that are shuttering stores this year…
Guess stores that can’t renegotiate their rents are likely to shut down
It’s been a brutal year for retailers and we’re only three months into 2017 so far!
Following JCPenney’s expected confirmation of 138 stores they’re closing, here comes another one: Guess is planning to pull the plug on 60 of its stores this year.
CEO Victor Herrero told analysts of the decision during a Q4 earnings call on March 15. It’s expected that most of the closures will be among the flagship Guess brand stores and Marciano locations.
Guess brands operate 945 retail stores in the Americas, Europe and Asia. Some 400 of those stores are in the United States.
For the past two years, Guess has seen a steady drumbeat of closures. Ten stores were shuttered last quarter alone. But now the pace of closures is going to quicken.
Herrero expects Guess to improve its operating income by $16 million annually through the new round of closures once they are complete later this year. In addition, he says another ‘another more than 100 stores or 120’ stores could be on the chopping block in 2018.
But the picture isn’t entirely bleak for the brand. Both their Guess Factory and G by Guess retail concepts are performing well and only a very limited amount of closures are expected among those names.
In addition, the brand overall is doing well in Asia. Guess opened 13 stores across Asia last quarter alone, including in highly desirable retail locations like Shanghai and Beijing.
While there’s no word yet on the exact locations that are flagged for shutdown this time around, Herrero did reveal how the company will make the decision.
‘Half of our stores will have a kick-out close or a lease expiration over the next three years,’ the CEO told analysts. ‘The process on this rent renegotiation or closing the stores will be basically we’ll approach landlord, we’ll try to renegotiate, and if we are not happy with our rent renegotiation, we will close the store.’
Clark.com has reached out to Guess media relations to see if any of the names and locations of any of the stores slated for closure can be released. We will update this story when that info becomes available.
The retail landscape going forward…
In the meantime, retail continues to suffer as more and more customers go online for their shopping and foot traffic declines in shopping malls.
That’s left retailers of all kinds having to be very ‘promotional,’ which is industry lingo for having sales. All the deep discounting in turn puts the squeeze on profits.
If a retailer is overleveraged with too much debt on its balance sheet, that could spell a rash of store closures or even bankruptcy. In the latter case, a company can try to restructure its operations to right the ship with protection from its creditors.
We’ll keep you up to date with the latest info on store closures and bankruptcies right here on Clark.com!
Read more: Confirmed: These JCPenney stores are closing
Clark’s take on Macy’s and Sears closings