A little over two weeks after the shills in the mainstream media proclaimed retail recovery, the Retail Apocalypse is back with a vengeance. News stories indicate that the brick and mortar Armageddon sweeping America’s shopping centers is worse than ever.
Highlights of the latest wave of carnage include:
- The closing of 63 Sam’s Club stores, very quickly and suddenly. The media reported the closures on 11 January, doors are expected to be locked at most of the stores by the second week of February, USA Today reported. Fifty of the Walmart-owned membership clubs will be totally shut down, and 10 will be converted into distribution centers for same-day delivery.
- Sears Holdings (NASDAQ: SHLD) plans to close 39 Sears and 64 Kmart locations in March and April, CNBC reported. That means Sears will close 103 stores in just two months.
- “Comparable store sales at Sears and Kmart for the first two months of the fourth quarter of 2017 have declined in the range of 16%-17%,” a Sears spokesperson admitted to Michigan Live.
- Sears’ sales are so bad that Seritage Growth Properties (NYSE: SRG); the REIT[i] owned by Sears Holdings CEO Eddie Lampert, is evicting 19 unprofitable Sears stores. That means Sears was unable to pay its rent.
- Macy’s (NYSE: M) plans to close around 12 stores in January 2018, and up to 81 this year, CNBC reported. The closures will kill around 5,000 jobs.
- Kohl’s (NYSE: KSS) is planning to cut the size of 300 of its stores and rent the empty space out to grocers and convenience stores, CNBC reported. Kohl’s cannot make money with department stores, so it has to rent the space out. No deals have been announced but they are sure to come. Likely candidates for renting Kohl’s space include Trader Joes, the Kroger partnered organic grocer Lucky’s Market, Amazon’s Whole Foods 360, Kroger (NYSE: KR), Sprouts Farmer’s Market (NASDAQ: SFM), Walmart, Seven 11, Walgreens (NASDAQ: WBA), Starbucks (NASDAQ: SBUX), FedEx Office, the UPS Store, and German discount grocers Aldi and Lidl.
- The Hudson’s Bay Company (TSE: HBC) is planning to lease office space in some of its Lord & Taylor stores through WeWork.
Here’s why the Retail Apocalypse is worse and better than You Think
These stories reveal that the retail apocalypse is worse and better than people think.
What’s truly frightening is that Walmart (NYSE: WMT); Sam’s Club’s parent, has been performing well lately. Walmart reported revenues of $495.01 billion on October 31, 2017. The retail goliath reported a revenue growth rate of 4.23% and $123.179 billion in revenues for 3rd Quarter 2017.
That gave the company a gross profit of $31.632 billion, operating expenses of $26.868 billion, an operating income of $4.764 billion, earnings before taxes of $2.724 billion, and a net income of $1.749 billion. Walmart is actually doing very well.
Walmart actually made enough money to raise hourly wages for established to $11 an hour, and give them a $1,000 bonus, CNBC reported. Disgustingly, CNBC attributed the increase, which has been planned for quite some time, to the recent Republican tax cuts. That is nonsense because it is too early for the cuts to kick in.
Is CNBC lying about Walmart Wage Increase?
The real source of that money is probably the closing of those Sam’s Clubs, which proves why the Retail Apocalypse can be good. The carnage it creates can lead to smaller more efficient retailers capable of paying higher wages.
It remains to be seen if the $1,000 bonus and wage hike will have any effect on Main Street. Giving average families an extra $1,000 to pay off $1,000 of their credit card debt, might not do much for the economy. The average U.S. household now owes $15,654 in credit-card debt, Nerdwallet estimated.
Giving Walmart workers an extra $8 or $9 a day might have little or no impact on the economy. Walmart clerks can now afford to buy lunch at In-N-Out Burger; rather than at McDonald’s, how does that benefit the wider economy? Much higher wages will be needed for a real economic stimulus.
Fewer Retail Jobs which will Pay More
Some other retailers like Target (NYSE: TGT) plan even higher wages, Target wants to pay an average wage of $15 by 2020, matching Costco Wholesale’s (NASDAQ: COST). That means Target might soon be planning its own round of store closings.
The higher wages might not help the economy, but one thing is certain the Retail Apocalypse will get worse. The Apocalypse is being partially driven by higher labor costs; which will mean more consolidation, automation, and job losses in the retail sector. In the future, there will be fewer retail jobs but they will pay more.
Big Media Cheerleading for Trump
CNBC’s reporting casts doubt on the hypothesis that the mainstream media is anti-Trump. If the Big Media was anti-Trump it would not be doing PR work for the Republican Party and the President.
Disturbingly, CNBC’s cheerleading for Trump comes at the same time The New York Times alleged that big media outlets including Disney (NYSE: DIS) owned ABC refused to outbid Trump and his allies for stories on a porn star and a personal trainer that claimed to have affairs with Trump. The Times even claimed that the porn star slept with the Donald while Melania was pregnant with son Barron.
Perhaps it is time for the so-called “resistance” to go after Media Moguls like Bob Iger and journalists and demand they do they do their jobs. Didn’t voters have a right to know about Donald’s questionable sex life before the election?
[i] Real Estate Investment Trust