NEW YORK ( TheStreet) -- There have been all sorts of headline-grabbing surprises in the retail sector this year as companies either had to fight for survival by creatively raising cash or seek to reinvent themselves through acquisition, and next year promises to be equally startling.
Topping the list is a possible new wave of store closures from teen apparel companies.
Here is a look at three potential surprises from the retail sector next year.Must Read: One Way Retailers Are Making Online Holiday Shopping Easier
1. Another Wave of Teen Apparel Store Closures in the United States
Specialty retailers Forever 21 and H&M, with their cheap fashions for broke teens, continue to cause headaches for the old guard in the mall, Abercrombie & Fitch (ANF) , Aeropostale (ARO) and American Eagle Outfitters (AEO) . One of those headaches is the need to close stores to lower costs and reinvest the savings in getting more affordable, trendier clothing to teens faster.
Abercrombie & Fitch expects to close 60 U.S. stores this year.
"We anticipate a similar number of closures in each over the next few years," Abercrombie & Fitch Chief Operating Officer Jonathan Ramsden said during a Dec. 3 earnings call.
Since 2011, the retailer has closed 165 U.S. stores, bringing its count in the states to 834.
Gross profits for the preppy apparel retailer have fallen 9.7% this year.
For Aeropostale, which is in serious financial troublee after racking up $112 million in adjusted losses this year, closing stores quickly is a must. The company will exit 75 stores in Canada and the United States in the fourth-quarter alone, bringing its annual store closing count to 120.
Coming into this year, the retailer only anticipated 40 to 50 store closures.
"In 2015, we are considering potentially closing approximately 50 to 75 additional doors," Aeropostale Chief Financial Officer Marc Miller said during a Dec. 3 earnings call.
The number he shared excludes about 126 mall-based P.S. from Aeropostale stores that will close by the end of January, a brand that was solely dedicated to selling apparel to young children.
As of Nov. 1, Aeropostale had 842 stores open in Canada and the United States, down from 915 in 2011.
American Eagle Outfitters is undergoing a three-year store-closing plan with the goal of exiting 150 locations in the United States by 2017.
"We will close approximately 70 stores [next year], including 20 Aerie standalone stores, and most of the closures will occur upon lease expiration in January of 2016," said American Eagle Outfitters executive vice president and CFO Mary Boland during a Dec. 3 earnings call.
Excluding international franchised locations, American Eagle Outfitters will end the year with 1,066 domestic stores. At the end of 2011, the company had 1,086 stores.
Excluding asset impairment and restructuring charges, American Eagle Outfitters' operating profits in 2014 have plunged by 31% year-over-year.
2. Sears Searches for Cash to Stay in Business
On Nov. 7, Sears said that it was seeking to form a REIT that would include 200 to 300 of its 700-owned domestic Sears and Kmart stores. More cash-raising efforts are likely waiting in the wings due to Sears' weakened financial state.
"Over the next six to nine months, we intend to work with our lenders and others to evaluate our capital structure with a goal of achieving more long-term flexibility, as we have previously stated, and may take action sooner if appropriate," Sears' CFO Robert Schriesheim said during a Dec. 4 earnings call.
Sears amassed a staggering $1.6 billion in losses as of Nov. 1, compared with $969 million a year earlier. That has caused cash and equivalents to drop to a mere $326 million from $1 billion as of Feb. 1, putting the pressure on management to find sources of external cash to operate next year.
3. Target Travels Out of Canada, Sort of
Target's (TGT) Canadian business has been a major failure. Since 2011, the outfit has incurred a whopping $2 billion in earnings before interest and taxes losses.
The need to immediately right the ship at its 133-store Canadian business is not lost on new Target chairman and Chief Executive Brian Cornell.
"We know that to succeed in Canada we will need a major step change in performance," Cornell said during a Nov. 18 earnings call. "The fact is, given where we are performing today, we need to see improved financial performance from every Target store in Canada overtime."
Despite Cornell and his team fixing problems in Canada this holiday season that plagued it last year, such as expensive prices on food and empty shelves, the writing is on the wall for early 2015.
Target is likely to close a good number of its Canadian store base to get its business in the country to a more manageable level. Doing so would allow the retailer to build the business from the ground floor in the best locations.
The financial savings from closed Canadian stores would mean that Target could invest more aggressively in its U.S. online and physical store businesses. It could also lead to the resumption of share repurchases, as for the nine months ended Nov. 1, Target hadn't repurchased a single share of its stock.
Any share repurchases would likely be modest as Target continues to deal with a huge financial unknown: an eventual payout to those people affected by the 2013 data breach.