Williams-Sonoma Seeks Store Closures in Large Markets
Specialty retailer Williams-Sonoma intends to shutter an undisclosed number of stores in large, multi-store markets. According to the Wall Street Journal, Williams-Sonoma CFO Sharon McCollam told attendees of an investor conference the retailer’s goal is optimizing cost per square foot rather than simply reducing store footprint.
During the next three years, 25% of Williams-Sonoma’s leases, including its Pottery Barn home goods and Williams-Sonoma home and kitchen banners, will expire. Williams-Sonoma intends to take advantage of expiring leases in order to renegotiate them or move or close the stores.
McCollam
About 30% of Williams-Sonoma’s stores are located in densely populated urban markets where it operates multiple stores. This has resulted in those stores losing about half their historical sales.
Abercrombie also Takes Advantage of Lease Expirations
Specialty youth apparel retailer Abercrombie & Fitch is also following a strategy of closing stores with expiring leases. Abercrombie & Fitch has identified more than 200 underperforming stores. According to the Wall Street Journal, about half of those stores will have a lease expire in the next three years, at which point Abercrombie will vacate them. The retailer intends to reduce store footprint, refocus the brand and improve its premium image through the closures.
Pier 1 Cuts Back Store Closings
Specialty retailer Pier 1 Imports, Inc. is cutting back its planned store closings for fiscal 2010 from 125 to 50, a 67% reduction. Last fall, Pier 1 cited shrinking quarterly losses and SG&A expenses, as well as favorable lease renegotiations, as prompting the decision. Pier 1’s real estate decision was also bolstered by achieving rental reduction agreements in principle on approximately 30% of its 1,061 stores. Pier 1 estimates these agreements will create total rental savings of about $11 million in cash during fiscal 2010 and cumulatively create total rental savings of about $37 million, with more than 75% of cash savings to be realized during the next three years. The retailer closed 31 stores during fiscal 2009.
Williams-Sonoma operates more than 250 stores nationwide.