Retail Grinds to a Halt as 47,000 Stores Close

Mish

As stores shutter and business grinds to a halt, what are the store owners supposed to do?

Bloomberg reports 47,000 U.S. Stores Closed in About a Week Over Coronavirus.

In a little over a week, American retail ground to a near-total halt.

More than 47,000 chain stores across the U.S. temporarily shut their doors in 10 days as retailers took extreme measures to help slow the spread of the coronavirus pandemic that has rattled all sectors of the global economy, according to data compiled by Bloomberg. At least 90 nationwide retailers, ranging from Macy’s Inc. to GameStop Corp. to Michael Kors have temporarily gone dark.

Most have pledged to remain closed to the public for at least two weeks, but they may stay closed for much longer. In the same period, small retail businesses throughout the U.S. also hit pause on their physical locations but are not included in this list.

Timeline of Closures

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The bulk of those stores expect to open by the end of the month.

Will they?

Even if they do, when will shoppers return?

How many hours will be cut?

Meanwhile ...

U.S. Retailers Plan to Stop Paying Rent to Offset Virus

Please note U.S. Retailers Plan to Stop Paying Rent to Offset Virus

Major U.S. retail and restaurant chains, including Mattress Firm and Subway, are telling landlords they will withhold or slash rent in the coming months after closing stores to slow the coronavirus, according to people familiar with the situation.

In a brewing fight, chains are calling for rent reductions through lease amendments and other measures starting in April, said the people, who asked not to be named because the discussions are private.

Mattress Firm, with about 2,400 stores, sent landlords a letter last week saying it would cut rent in exchange for longer leases and offering two options to do so. This week, it sent a more urgent note revoking its earlier offer.

Retail real estate investment trusts may need to provide leeway on rent, Bank of America said this week after downgrading several REITs. The bank sees store closings lasting through May and the possibility of some locations going away as more fragile retailers are forced into bankruptcy.

The court system is just going to get flooded with a million of these disputes between tenants and landlords,” said Vince Tibone, an analyst at Green Street Advisors. “If the government doesn’t step in in any form or fashion, it could get ugly. They need to respond quickly.”

We have a major problem brewing that the rescue package did not cover.

Mike "Mish" Shedlock

Comments (50)
No. 1-15
DBG8489
DBG8489

My ex wife and I started a business before we were divorced. We train and coach athletes who compete on a national level all over the nation.

This past June we opened a 30k square foot training facility for which we pay greater than $1 per square foot in monthly rent. Our utilities bill averages a combined $13 to $15K.

With the facility shuttered, I have disabled all the air handlers, lights, drink machines, ice makers...etc. So our utilities bills will be close to zero.

However, that has no effect on the rent.

Our ability to pay the rent depends on out customers continuing to pay us their monthly fees even though we aren't currently training.

Should enough of them stop paying, we will have no choice but to stop paying.

I am guessing we have about 60 days before that happens.

abend237-04
abend237-04

How do you not write down an asset after a few weeks of this? Kitchen sink quarter dead ahead.
Every bean counter in America is stretching payables, squeezing receivables and calling their lawyer.

wootendw
wootendw

Trump is right. The cure will be worse than the disease. And, it's not libertarian to order businesses shut down. I am staying away voluntarily. Those who don't want to catch the virus should do the same. More people may end up with the virus this way, but at least they weren't forced into it.

Many are hoping for a vaccine (which will be forced on us). Most vaccines work by utilizing the body's immune system to produce antibodies to the pathogen. You can also get those antibodies by catching the pathogen but, if you get too much, you're toast. I am not using gloves or a hand sanitizer so, when I get the virus, my hands will be the likely pathway. Hopefully, I won't get too much.

Rbm
Rbm

Humm a bunch of wealthy people with connections and good health care telling everyone to get back to work.
Humm i wonder what the cost to the economy of up to 2 million people dead that may have contributed to the economy for say 10 more years. Will cost.
Humm wonder what the cost of chaos is. If we just let this run its coarse money wise and future social unrest.
Humm Whats the effect of 2 t added to the debt.
Humm what about social upheaval and the next global war.

Lots of humms.

abend237-04
abend237-04

I'm beginning to become extremely suspicious of Google's studiously ignoring the Jewish doctor's experimental results using Zinc and antivirals in a Hasidic community he serves north of New York City. If the doctor is being truthful, he is absolutely saving lives with his approach. Using death stats from Wuhan, Italy, Spain and France, he should be seeing a growing number of Covid-19 deaths daily. He reports none. He is treating symptomatic patients needing help with Zinc, Hydroxychloroquine and Azithromycin and monitoring all others.
The road north out of the city should be filled with reporters hell-bent on confirming or disproving this guy.
What's happening, Google, CNBC, CNN, CBS, etc.? Are you all afflicted with TDS, anti-semitism...or both?

PecuniaNonOlet
PecuniaNonOlet

Trump is missing Mish’s key observation. Who in their right mind is going to risk their life or that of friends and family to go shopping for a new pair of pants? Eating out? As it is now, I primarily buy everything through Amazon and have it delivered so what incentive do people have to go risk their lives instead of doing Amazon? If it doesnt fit or you dont like the color, send it back!
If you think the virus is low risk or a hoax then by all means go out and take your chances but I think most sensible people will stay home until a vaccine or verified treatment works (e.g. people walking around with pills to keep you from dying).
All of this assumes the virus doesnt get as crazy everywhere as it is in NY at the moment.

Carl_R
Carl_R

The other side of the coin is that most landlords are leveraged. If the rent isn't coming in, they can't pay their notes.

abend237-04
abend237-04

@Carl_R
"...they can't pay their notes."

There's the rub. And whatever you're carrying the asset on the books for better be defensible in a courtroom on some future date as a legal slick asks, "Isn't it true that you were deliberately misleading the investing public when you decided to list these obviously worthless properties at $xxx.00 and not $yyy.00 in your 10Q?

RayLopez
RayLopez

Listening to Trump now on Bloomberg Live, and it strikes me he thinks he has power to declare lockdowns over, when in fact it's up to the states. Trump could withhold aid to states and force them to shut under wartime powers, but to force them to open would require a lawsuit (interstate commerce clause) probably.

numike
numike

I dare any of you to enter a dark cold dirty sticky to the touch movie theater I know who would enter one at any time in that condition but especially now. Or how about that princess cruise right about now or anytime in the near future?

CzarChasm-Reigns
CzarChasm-Reigns

Sure, some BUSINESSES may not adapt/survive...
but the FOCUS should be on preventing the death of many, many PEOPLE.
AND flattening the curve so that our hospitals are NOT overwhelmed.

No NATIONAL response to this GLOBAL pandemic, other than throwing $...
STATE (Texas) punts to COUNTIES...

DALLAS County Judge Clay Jenkins orders shelter-in-place. He had an excellent presentation of facts and clearly stated "lives are more important than livelihoods".

COLLIN County (where I live, just a bit north, same sprawling metropolis) proclaims that ALL BUSINESSES ARE ESSENTIAL.

So HERE, it is up to THE EMPLOYER whether or not it is "business as usual".

Mine is taking precautions. May you all be blessed likewise.

P.S. I get it: for 4 out of 5, it won't be a big deal. But the health system does not have the capacity to handle 20% of the population all at once. Flatten the curve.

Freebees2me
Freebees2me

Dear All:

Mish is totally right.... The future is GOLD so you have something of value to sell, but...

These things last longer than people expect. Start accumulating GOLD now. Look for value in the Gov't's BUY EVERYTHING including your bad debts.

Accumulate GOLD over time. The end is 'nearer' than it was but it's not tomorrow.....

Quatloo
Quatloo

The idea that in a few weeks or months everyone in America will just wake up one day and our economy will go back to the way it was in February is fantasy.

We are doing permanent damage to our economy every day with these lockdowns. Retail will never again return to where it was.

crazyworld
crazyworld

MONEY SUPPLY SHRINKING POSSIBILITY

. Basically inflated assets prices implosion is one cause of deflation, but a minor one as the bubbles are re-inflated quite quickly (and apparently easily in the past events) by the NMT adepts (FED, Treasury working in favor of the billionaires stock holders)..)

The main important cause of deflation we should have here because of the covid-19 is the FAILURE OF FURTHER MONEY SUPPLY EXPANSION (speculative and commercial) . Indeed with most activities in a country almost stopped nobody ask for new credits (house, car, speculation..) so the rate of new deposits creation is going to a halt.
However the fed know all that, that is the reason why NOW they lend (or almost give) printed money to every financial commercial entity (not only the primary dealers) allowing them to get new deposits out of their garbage papers (junk-bonds, credit card debts, student loan debt, car loans CDs, ETF…) Such life-saving deposits allow then these commercial entities to buy stock and ETF garbage from the individuals who want to sell but find no buyers. Will this compensate the shrinking loans demand and the consequent bank deposits shrinking?
As long as deflation win, the dollar will trend up.


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