Retail Automotive MELTDOWN has begun

Retail Automotive MELTDOWN has begun

Nation Hal Turner 20 November 2023 Hits: 413

I received a message from a Reader/Listener who is in the Automotive Retail industry.  His information is shocking!

What I received, verbatim:

The sales side (or variable operations) in the Retail Automotive sector is car-shing. Service (fixed ops) isn't fairing much better. I'm very glad I sold my store a few yrs ago.

I consult for several OEMs, and they are beginning to panic. At several, ROS, or Return on Sales (a closely watched metric) is down by 70% (+,-), over the last 45 days. They thought it was a blip at first, when ROS was down 25% and it just kept going. I will not name specific OEMs and risk violating my NDA.

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Retail Apocalypse Worsens: Some Major Stores Are On “DEATHWATCH”

Mac Slavo
March 6th, 2019
SHTFplan.com

Just two months into 2019, many more retail stores have announced their closures amid a slowing in consumer spending. The retail apocalypse is worsening and there are some major stores on “deathwatch;” which would mean going out of business forever.
According to Money.com, in a single 24-hour period last week, Gap, J.C. Penney, and Victoria’s Secret announced they would be closing more than 300 stores combined. These announced store closures come soon after retail companies made the difficult decisions to shut down all Payless ShoeSource and Gymboree stores throughout the U.S., and in the middle of Sears’ dramatic struggle to survive. (Sears closed out 2018 by filing for bankruptcy and closing roughly 140 Sears and Kmart stores. The company owns both retailers).
Some of these companies are restructuring debt and refiguring their business models in order to fight to stay alive in today’s fast-moving ultra-competitive retail world. They must be able to stay competitive and every store must offer a compelling alternative to Amazon in order to win over shoppers. Other retailers have already lost the battle, are hosting liquidation sales right now, and will soon disappear entirely, like Toys “R” Us and Bon-Ton before them.

Video: 

https://www.youtube.com/watch?v=NsEPBh1XIig

Sears is still alive and kicking, but barely.  There are only 425 Sears and Kmart stores remaining compared to 2000 just five years ago.  Remaining employees are skeptical about their future with the company and rightfully so. Victoria’s Secret, JC Penny, and Payless are all closing several stores. Gymboree, GAP, and Ann Taylor are also on “deathwatch.”
Ascena, the company that owns retailer brands like Ann Taylor, Loft, and Lane Bryant, has been on death watch for at least a year, reported Money.com. It is in the middle of the process that began back in 2017 to close about 250 stores. Ascena said it operated about 5,000 stores as of 2016, and it was down to 4,600 stores at the end of 2018. Ascena’s stock price has also taken a beating. It plummeted over this time period when stores were closing, dropping from over $10 per share in 2016 to around $2.25 in early 2019.
The retail apocalypse is happening right before our eyes, as brick and mortar stores are going away quickly.

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The Death Of Retail Real Estate Continues: 77MM Sq.Ft Of Shopping Space Closed In 2018 Already

by Tyler Durden

Tue, 04/17/2018 - 22:55

 

Retail real estate carnage is going to continue this year with no signs of slowing up, as Bloomberg reported this morning that over 77 million square feet of retail real estate has closed this year and that 2018 will easily pass 2017's record of 105 million square feet closed. The latest example was the fall of the once massive Toys 'R' Us name:

The fall of the Toys “R” Us chain, with more than 700 U.S. stores, shows how much retail real estate has changed in just the last decade. When KKR & Co., Bain Capital, and Vornado Realty Trust took over the company in 2005, the buyers justified the $7.5 billion price, in part, because of the supposedly valuable properties that came with the deal.

If there was ever to be any silver lining to the complete carnage in the retail real estate space, it was the argument that has been perpetuated over the last decade or so: despite retail stores closing, the real estate would eventually be worth something.

This argument was made by real estate investment trusts as well as activist investors and analysts who tried to put a positive spin on the death of brick and mortar retail. Now, with more space freeing up, the bid under former retail property is at ask of falling off as supply is starting to get far ahead of demand:

 

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Gerald Celente - Trends In The News

"Retail Sales Down, Worst Yet To Come?"

 

 (5/12/16)  

 

 

Macy's Massacre: Thousands Fired; Guidance Slashed (Again); Weather Blamed

Submitted by Tyler Durden on 01/06/2016 19:22 -0500

It was less than two months ago when we brought to you the "Macy's Massacre": on November 11, the stock of the iconic retailer crashed 13% and its CDS soared after Macy's announced a trifecta of weak data, reporting a miss on Q3 sales which came at $5.87 billion below the $6.1 billion expected, down from the $6.2 billion, as well as a plunge in comparable store sales which tumbled by 3.9%, far worse than the expected drop of -0.4%, and nearly three times as bad as the 1.4% drop a year ago.
Cash flow plunged: cash provided by operating activities was $278 million in the first three quarters of 2015, compared with $841 million in the first three quarters of 2014.
Finally, M also slashed its full year same store guidance down from flat to -1.8% to -2.2% with sales projected to drop -2.7% to -3.1%, compared to a previous guidance of -1%, as contrary to the propaganda, the discretionary spending of the US consumer is bad and getting worse by the day.
Fast forward to today when the massacre is back with a vengeance, after the company not only reported yet another cut in its guidance, but also announced it would be laying off another boatload of retailers, demonstrating just how strong the "service" economy truly is.
First, Macy’s said that its comparable sales on an owned plus licensed basis declined by 4.7% percent in the months of November and December 2015 combined, compared with the same period last year. This compares to previous, already poor guidance, of -2% to -3%. The weather was, of course, blamed.

“The holiday selling season was challenging, as experienced throughout 2015 by much of the retailing industry. In the November/December period, we were particularly disadvantaged by the historically warm weather in northern climate zones where both Macy’s and Bloomingdale’s are especially well-represented. About 80 percent of our company’s year-over-year declines in comparable sales can be attributed to shortfalls in cold-weather goods such as coats, sweaters, boots, hats, gloves and scarves. We also continued to feel the impact of lower spending by international tourists as the value of the dollar remained strong,” said Terry J. Lundgren, Macy’s, Inc. chairman and chief executive officer.

Compare this to Macy's 8-K from precisely two years ago, and try not to laugh too hard:

"poor January sales were due to the unusually harsh winter weather across much of the country. Once warm spring weather arrives and our full assortment of fresh spring merchandise is in place, we believe customers will return to a more normalized pattern of shopping."

So much for the comedy, now back to the tragedy for shareholders, as the company admits not even "harsh cold weather" can save it as it slashes earnings guidance...

Macy’s, Inc. is not expecting a major change in sales trend in January and expects a comparable sales decline on an owned plus licensed basis in the fourth quarter of 2015 to approximate the 4.7 percent decline in November/December (from previous guidance of down between 2 percent and 3 percent for the fourth quarter). This calculates to guidance for comparable sales on an owned plus licensed basis in the full-year 2015 to decline by approximately 2.7 percent (from previous guidance of down 1.8 percent to 2.2 percent).

Earnings per diluted share for the full-year 2015 now are expected in the range of $3.85 to $3.90, excluding expenses related to cost efficiencies announced today and asset impairment charges associated primarily with spring 2016 store closings. This compares with previous guidance in the range of $4.20 to $4.30. Updated annual guidance calculates to guidance for fourth quarter earnings of $2.18 to $2.23 per diluted share, excluding charges associated with cost efficiencies and store closings. This compares with previous guidance for earnings per diluted share of $2.54 to $2.64 in the fourth quarter. Earnings guidance for 2015 includes an expected $250 million gain on the sale of real estate in downtown Brooklyn.

... and a tragedy for its employees, many of whom are about to be fired.

Macy’s, Inc. today announced a series of cost-efficiency and process improvement measures to be implemented beginning in early 2016 that will reduce SG&A expense by approximately $400 million while still investing in growth strategies, particularly in omnichannel capabilities at Macy’s and Bloomingdale’s. The actions represent progress toward the company’s previously stated goal of re-attaining over time an EBITDA rate as a percent of sales of 14 percent.
To address the need for greater efficiency and productivity, among the changes being implemented by Macy’s, Inc. in early 2016 are:

• Adjusting staffing levels at each Macy’s and Bloomingdale’s store in line with current sales volume to increase productivity and improve efficiency. An average of three to four positions will be affected in each of Macy’s and Bloomingdale’s approximately 770 going-forward stores (out of an average workforce of approximately 150 associates in each store), for a total of about 3,000 affected associates nationwide. Roughly 50 percent of affected store associates are expected to be placed in other positions.
• Implementing a voluntary separation opportunity for about 165 senior executives in Macy’s and Bloomingdale’s central stores, office and support functions who meet certain age and service requirements and chose to leave the company beginning in spring 2016. Approximately 35 percent of these executive positions will not be replaced.
• Reducing an additional 600 positions in back-office organizations by eliminating tasks, simplifying processes and combining positions, with about 150 of these associates reassigned to other positions.

Luckily, the US service economy is so very strong as Macy's results confirm, or otherwise someone might get the idea that the "manufacturing recession is not contained."

Average:

Macy’s Announces More Closings As Sales Continue To Free Fall

(Phil Wahba)  Macy’s M -13.99% cold streak just keeps getting colder.
The department store reported Wednesday that comparable sales fell 3.9% last quarter for their third consecutive drop. Overall revenue totaled $5.87 billion for the period ended Oct. 31, well below Wall Street forecasts. Investors punished the stock, sending it down 5% in premarket trading. The company also said it would extend an already announced schedule of store closings.
Macy’s, the largest U.S. department store company by sales, has been trying to navigate a consumer shift away from apparel—a category that makes up the bulk of its sales—to items like cars, electronics, and home repairs, which are areas where Macy’s is virtually absent. Meanwhile U.S. malls, many of which are anchored by Macy’s stores, continue to be hit by falling shopper traffic.
Compounding the retailer’s challenges even further: Tourism in the U.S. is way down, hurting its stores in Manhattan, San Francisco, and Miami, its highest grossing locations. Macy’s gets 5% of sales from international tourists. The company also owns the Bloomingdale’s chain.
“We are disappointed that the pace of sales did not improve in the third quarter,” Macy’s CEO Terry Lundgren said in a statement. “Spending by domestic customers remained tepid, especially in key apparel and accessory categories. Simultaneously, the slowdown in buying by international visitors continued to significantly impact Macy’s and Bloomingdale’s.”
Earlier this year, shortly after reporting poor results, Macy’s announced it would close up to 40 stores. On Wednesday, the retailer said it expected more closings beyond the current round, which are slated to happen by the end of January. About 800 Macy’s and Bloomingdales stores are currently open in the U.S.
The company also announced it would not spin off its stores into a real estate investment trust, something activists investors were pushing it to do to unlock the value of its real estate, which notably includes Macy’s Manhattan flagship, a store that could be worth $5 billion on its own. Lundgren said a REIT did not have an upside, but he did leave the option on the table. (This week, McDonald’s alsosaid it had opted not to create a REIT.)
Macy’s has been trying to diversify its business. It is opening a store in the United Arab Emirates in a few years and has launched T.J. Maxx-like rival chain called Backstage.
But within its own department stores, Macy’s is looking to branch out of apparel a bit more and is focusing on its 150 best stores to improve merchandise presentation. Those stores will see more assortments in key destination departments such as jewelry and watches.
For now though, the results are worrisome coming just ahead of the key holiday shopping season.