Well, it’s another Black Friday and I didn’t go shopping.
That’s my tradition.
Regal Cinemas shut down all of its US theaters this week. The company said the closure is temporary, but it reveals the deeper strain in the retail sector. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey digs deeper into the retail mess and talks about what it is telling us about the broader economy. He also discusses the ongoing stimulus debate and the national debt news that nobody is talking about.
Less than two months after reopening, Regal Theaters will shut down all 536 of its locations on Thursday (Oct. 8).
The company said the closures reflect “an increasingly challenging theatrical landscape” due to the coronavirus pandemic. Regal says the closures are temporary, but the company has not set a date to reopen.
The shutdown reflects broader problems in the retail marketplace that have been exacerbated by COVID-19 and stabs another knife in the narrative of a quick economic recovery.
Macy’s department store has announced plans to close 125 stores and cut around 2,000 corporate employees. Along with the store closures, the company will shutter its Cincinnati headquarters and tech offices in San Francisco.
Even with the cuts, sales projections for the next three years “look abysmal.” According to CNBC, same-store sales, on an owned plus licensed basis, are forecast to be down 1% to flat.
Stocks continued to get pummeled and pundits continue to claim there’s nothing to worry about. They say the economy is fundamentally strong. But is it? Really?
Peter Schiff doesn’t think so.
Well, today is Black Friday.
Since 2005, the day after Thanksgiving has marked the busiest shopping day of the year. I know a lot of people who treat today like a holiday. They even have Black Friday traditions. I actually have some friends who meet at 3 a.m. on Black Friday for breakfast and then hit the sales.
There were more signs of a retail apocalypse in the first quarter of this year.
Defaults by retail companies rated by Moody’s hit an all-time high in Q1. There were a total of nine defaults among Moody’s-rated retail corporates. According to Wolf Street, total corporate defaults in Q1 were up 22% from last year, and the nine retailer defaults accounted for nearly 1/3 of them.
As Wolf Street put it, these are not mom-and-pop stores. These are retailers large enough to be rated by Moody’s – “corporations that make up the core of the Brick-and-Mortar Meltdown.”
Could we be on the verge of a retail apocalypse?
February marked the third straight month of declining retail sales. Analysts had not expected another drop, but they got one nonetheless. Sales fell 0.1% in February. Analysts had expected an uptick of 0.3%.
This is not good news for a retail sector that is already teetering on the brink.
When we reported on the Toys R Us bankruptcy, we argued that it wasn’t just about shifting shopping patterns away from brick and mortar to online companies. A recent article on TechCo complaining that millennials are broke backs up our assertion.