CT retail centers still filling vacancies amid economic stresses

With Bed Bath & Beyond in the process of shuttering multiple stores in Connecticut and Best Buy doing the same in Orange, Foot Locker joined the list of retailers this week warning of a contraction, even as it pivots to a concept that embraces the fusion of “sneaker culture” with music and other elements of pop culture.

Foot Locker is closing 400 stores in the coming four years across both its namesake brand and Champs, which sells athletic apparel and commemorative mementos. The company plans to open newer concept stores in tandem, with the goal of having 2,400 stores by 2026.

Besides Bed Bath & Beyond, retailers declaring default on debt this year include bankrupt Party City, which is closing multiple stores in New York and New Jersey, but having given no indication of plans to do so with any of its eight stores in Connecticut. 

Last week, an M&T Bank executive told investment analysts that retail borrowers in its markets are showing no signs of problems making loan payments, with consumers still spending after a year of runaway inflation. And on Thursday, the Connecticut Department of Labor estimated the state added 5,600 jobs last month, with roughly 97,000 openings still statewide, many of them in retail.

But in an ominous economic development on Wednesday, Indeed served notice it would cut 15 percent of its workforce for a total of 2,200 positions nationally, with the jobs board having corporate offices in Stamford, New York City and Austin, Texas.

And S&P Global Ratings warned this month that retail and entertainment are dominating corporate defaults to date in 2023. Credit defaults are at their highest level since the Great Recession year of 2009, amid what S&P Global Ratings calls an “uneven” recovery from the COVID-19 pandemic, high interest rates, and continuing uncertainty for any economic recession.

As of Thursday, Indeed listed more than 7,000 retail openings in Connecticut, but just 1,700 of those were posted in the past two weeks. Danbury had the highest number on both fronts across its diversified mix of grocery, pharmacy, big box and mall stores.

While Danbury Fair continues to list its Lord & Taylor anchor pad as available, the mall has had success filling in-line stores and larger spaces, with Target and Barnes & Noble among the expected arrivals. 

“It’s got an awful lot going for it, trending in the right direction from an occupancy and absorption standpoint,” said Scott Kingsmore, chief financial officer of Macerich, referencing Danbury Fair during a February conference call.  

Through February, Macerich had firm commitments for 53 percent of space reaching lease expirations at its U.S. malls this year and letters of intent for another 27 percent. That left just 20 percent of space still an open question at that point — a figure that is “virtually unprecedented” at such an early point in the calendar year, in the words of the company’s senior leasing executive.

“Retailers are honoring the leases they signed or opening the leases they signed, and they continue to negotiate the leases that are out,” said Doug Healey, senior vice president of leasing. “So many of the retailers that were suffering pre-pandemic fell during the pandemic, so we’re left with a lot of big, public companies that are long-term in nature and are really being opportunistic.”

But the big boxes that have been vacant from prior years still dent the top line of revenue — and depending on the size of the shopping center, hit hard. As one example, a former Bed Bath & Beyond store at Ridgeway Shopping Center accounted for 15 percent of the venue’s revenue last year, with Ridgeway adding up to 10 percent of the overall revenue for landlord Urstadt Biddle Properties, according to a recent Securities & Exchange Commission filing by the Greenwich-based real estate investment trust.

But Urstadt Biddle indicated it is already in discussions with a “national retailer” for the space without identifying the prospect, and as reported by CNN, there has been what one analyst firm called “good interest” nationally for Bed Bath & Beyond locations. The same report cited Coresight Research data that store openings exceeded closures last year for the first time since 2016.

Foot Locker is thinking expansion even as it readies to shutter locations it has yet to reveal. The company has Foot Locker, Kids Foot Locker or Champs stores at Danbury Fair, Stamford Town Center, the Connecticut Post Mall, the SoNo Collection in Norwalk, Westfield Trumbull, Brass Mill Center in Waterbury, the Meriden Mall, Westfarms in Farmington and the Shoppes at Buckland Hills in Manchester. Foot Locker also has a standalone store on Chapel Street in downtown New Haven.

On a conference call this week, the company’s chief operating officer said it is pivoting to newer concepts to include community stores in downtown locations like in New Haven, “power” stores pegged to pop culture, which it has introduced in malls like the sprawling American Dream in New Jersey; and “House of Play” redesigns for its Kids Foot Locker stores. 

“We’ll be scaling new concepts with bigger footprints to offer more engaging experiences with a broader product assortment,” Tony Aversa, Foot Locker’s chief operating officer, said on a conference call this week. “New formats will surpass 400 locations and represent over 20 percent of our square footage.”

But rivals are looking to do the same. Dick’s Sporting Goods, with its emerging “House of Sport” model, is amping up the pressure on Foot Locker and other competitors, large and small.

“House of Sport will be a significant part of our future growth story,” said Dick’s Sporting Goods CEO Lauren Hobart, speaking earlier this month on a conference call. “Over the next five years, we could have as many as 75 to 100 Houses of Sport across the country.”

Includes prior reporting by Paul Schott and Luther Turmelle.

Alex.Soule@scni.com; @casoulman


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