Brick-and-mortar retailing is in deep trouble, with plummeting sales as consumers increasingly favor online merchants. By March, 21 large U.S. retailers already had announced aggregate closures of 3,591 store locations, per analysis by Forbes. In April, Credit Suisse issued a report indicating that over 8,600 U.S. stores are likely to close in 2017, according to CNN Money. In fact, barely a quarter into 2017, announced closures already had eclipsed those of 2008, the worst year on record with 6,163 stores lost, per Credit Suisse, as reported by CNN. If Credit Suisse's projections are right, 147 million square feet of retail space in the U.S. will become vacant in 2017, CNN adds. (For more, see also: Ailing Department Stores Grasp For Solutions.)

Big Names, Big Problems

Among the big department store chains currently in the news regarding major store closures are Macy's Inc. (M), J.C. Penney Co. Inc. (JCP) and Kohl's Corp. (KSS). For the year to date through Wednesday's close, Macy's stock price is off 35% ($35.38 to $23.01), Penney has plummeted 44% ($8.31 to $4.67), and Kohl's is down 24% ($48.72 to $37.09).

Macy's reported adjusted first quarter earnings per share (EPS) of 24 cents, 31% below estimates of 35 cents, per CNBC. Kohl's actual EPS of 39 cents handily beat estimates of 29 cents by 34%, according to another CNBC article. J.C. Penney reported a first quarter loss on a GAAP​ basis of $180 million, or 58 cents per share. (For more, see also: JC Penney (JCP) Tanks After Q1 Earnings, Follows Retail Suit.)

Retrenchment Plans

Last August, Macy's announced that it would close approximately 100 stores. So far, 66 locations actually have been shuttered, and 2 more stores slated for closure later in 2017 have been named by the company, according to Macy's latest press release on the matter.

In March, J.C. Penney identified 138 stores that it is closing, Fortune reports, accounting for less than 5% of the company's sales. Penney has about 600 stores in malls and 400 smaller standalone locations in smaller markets, Fortune says. With annual sales down to $12.6 billion from $19 billion a decade ago, Penney found it hard to keep its number of locations static, even though stores are integral to its e-commerce business, with about 33% of online orders either shipped from or picked up in stores, Fortune indicates. (For more, see also: Retailers Slicing Jobs to Employment Bone.)

Smaller is Better at Kohl's

Kohl's is bucking the trend, at least for now. Last year Kohl's closed 19 stores, the first contraction in its history. Largely an experiment, only 34% of the sales revenue previously generated by the closed locations was recouped at nearby stores, while digital sales fell by 10% in those areas, Fortune says. About 33% of Kohl's online orders during the holiday season used store locations in the fulfillment process.

Based on this experience, Kohl's is not closing any more locations. Instead, it intends to shrink its stores, where warranted, and where feasible. Of its 1,160 stores, already 300 are small, between 35,000 and 55,000 square feet, per Fortune. Meanwhile, its standard-sized stores are 80,000 square feet, 33% less than the typical 120,000 square feet for Macy's, Fortune adds. Among other store-shrinking initiatives, Kohl's is arming staff with handheld devices that will allow them to ring up sales anywhere in the store, dramatically cutting the number of cash registers and the space that they occupy. (For more, see also: Sears Closing More Stores Than It Projected.)

Malls Getting Mauled

In their 2017 Mall Outlook, Green Street Advisors LLC, a firm specializing in real estate and REIT research, estimated that 800 department store locations should be closed to bring sales per square foot back to 2006 levels, CNBC reported in January. In concert with the gloomier figures cited above, Green Street now admits that "the 800 number looks much too light," according to the Wall Street Journal. Increasing vacancy rates are also bad news for malls and for investors in mall REITs, which have taken a beating over the past year, the Journal adds.

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