Retail Roundup

Macy's is listed as one of the most likely to declare bankruptcy of ANY RETAILER in the United States by a third party auditor. Closures of any number, let alone half - all of their stores would cause a chain reaction of store closures in other categories through hundreds of malls across the country. When the anchors leave, other tenants have escape clauses built into their leases.

Ink Stop/Movie Gallery - expect other "destination" and "specialty" retailers to be turning out the lights very soon.

Rite Aid going under is no surprise and will simply be absorbed by both Walgreens and CVS.

If other industries are going through a deep recession or depression, retail is going through an extinction.

CLOSINGS/CUTBACKS/BANKRUPTCIES/DEFAULTS

Movie Gallery Closing 200 Game Crazy Stores
The country's second largest movie rental retailer, Movie Gallery, is closing 200 of its 680 Game Crazy stores. The stores, which sell new and used video games and accessories, are located adjacent to Hollywood Video locations across the country. The inventory liquidation process at the 200 stores has already begun and the locations will shutter by the end of this month -- their adjacent Hollywood Video stores are expected to remain open.

In a statement, Movie Gallery described the affected stores as "underperforming" and said the "unprecedented consumer/retail environment" has been challenging.

While the company is not sharing an official list of stores being closed, an unofficial list can be found here. According to CoStar Tenant, the typical Game Crazy store is 500 square feet, but select locations run as large as 7,000 square feet.

This closure announcement follows Blockbuster's recent plan to close 960 stores through 2010. Meanwhile, the world's largest video game retailer, GameStop, has opened at least 776 net new stores over the past year, to now operate 6,333 stores in 17 countries.

InkStop Abruptly Closes All 152 Stores
Warrensville Heights, OH-based printer ink and toner chain, InkStop, sent a letter to its employees last week that read, "The company has elected to temporarily close all stores at the close of business today, October 1, to focus on a restructuring plan... All employees are laid off until further notice." The company cited cash flow problem among its key issues.

After closing six stores early this year, the chain reported in an April Crain's article that it had 155 stores in 14 states from Ohio to Texas, which according to various reports, was down to 152 stores by the time the Oct. 1 closure letter was issued.

The latest action by this ink retailer is in stark contrast to the April Crain's article. At that time, company co-founder, Dirk Kettlewell said that InkStop was benefiting from "not being involved in the banking thing," as its growth was fueled by more than $80 million in private equity funding from 150 investors worldwide that expected InkStop to grow into a large chain of 2,000 to 3,000 stores. According to Crain's, Kettlewell said he expected InkStop to become profitable later in 2009 for the first time ever.

According to CoStar Tenant, the average InkStop is about 1,500 square feet.

Audit Integrity Identifies Five Retail Companies with High Probability for Bankruptcy
Los Angeles-based Audit Integrity, an independent research firm that rates more than 12,000 public companies based on their "corporate integrity", recently released the results of a corporation bankruptcy study designed to identify the companies (with a market capitalization of $1 billion or more) most likely to declare bankruptcy.

Of the 20 companies Audit Integrity identified as having the "highest probably of declaring bankruptcy", five firms with a significant amount of retail stores were listed: Macy's, Oshkosh, Rite Aid, Sprint Nextel and Goodyear Tire & Rubber.

"According to the U.S. Bankruptcy Courts, the number of business bankruptcy filings during the first six months of the year rose 64 percent over the first half results in 2008," said Audit Integrity in its report, warning that "bankruptcy filings tend to lag after an economic downturn."