Retail Dominoes Steadily Topple

The bleeding has not been stopped in the retail side of commercial real estate. With rising unemployment, skyrocketing food prices and the slow squeeze of consumer credit it only gets worse from here.

French Connection Slashes U.S. Stores in Shakeup

Men's Wearhouse Identifies 145 Stores for Probable Closure

By Sasha M Pardy
March 12, 2010

During 2009, Men's apparel retail chain, Men's Wearhouse, opened 6 new, but closed 41 stores. Due to geographic overlap caused by its 2006 acquisition of the AfterHours Formalwear chain, the company has identified 145 stores that it would likely close.

In a conference call with analysts on March 10th, George Zimmer, Chairman & CEO said, "what we have been experiencing since the acquisition over three years ago, is that customers would rather shop in a regular Men's Wearhouse store than a Men's Wearhouse and Tux store. So there are hundreds of these stores that are very close to each other, and there are about 145 stores that we have right now that we think should probably close when their leases expire or before. We have already closed 35 tuxedo rental stores in 2009. So it is reasonable to assume that we will be closing well over 100 tuxedo rental stores. However, this is going to strengthen our business as opposed to weaken it, because we have such a high rate of recapture. Most of those customers are just going to the nearest Men's Wearhouse store."

The combination Men's Wearhouse and Tux stores typically range between 1,000 and 4,000 square feet and are primarily located in regional malls and lifestyle centers.

American Eagle Shuttering 28 Martin + OSA Stores

By Sasha M Pardy
March 11, 2010

Pittsburgh, PA-based specialty apparel retailer, American Eagle Outfitters (NYSE:AEO), is shuttering its MARTIN + OSA banner, including its 28 stores and online business. The company expects to conclude the liquidation of the MARTIN + OSA stores, which are typically 6,500 to 7,500 square feet, by the end of this July.

In a statement, management said the concept performed better in fiscal 2009 than it did in 2008; however, MARTIN + OSA still generated an after-tax loss of $44 million in 2009, so the company deemed the brand as "not achieving performance levels that warrant further investment."

"Closing MARTIN+OSA was a difficult decision, particularly in light of the progress that was made over the past year. Creating new brands is never an easy endeavor. The valuable lessons and experiences we gained will serve us well, as we continue to develop and launch new lifestyle brands," said Jim O'Donnell, chief executive officer. The company opened the first MARTIN + OSA stores, which carried sportswear and casual apparel for men and women age 25 to 40, in fall 2006.

American Eagle said it would turn its efforts and resources to its other brands -- American Eagle, aerie, and 77kids. It currently operates 939 American Eagle stores and 137 aerie stores. Its 77kids brand, a moderately-priced concept targeted at children ages 2 to 10, was launched online during 2008.

During 2009, American Eagle closed 16 net American Eagle stores, but also opened 21 new aerie stores. This year, American Eagle is planning to open 14 new, but close between 15 to 25 American Eagle stores; as well as open 20 new aerie stores and five stand-alone 77kids stores. The average new aerie store is 4,200 square feet, while the company has been opening new and remodeling existing AE stores to 7,000 square feet.