More Specialty Shops to Close After Lackluster Holiday Season
After a disappointing holiday sales season, specialty retail chains are expected to close an increasing number of outlets around the San Fernando Valley over the next few months.
At several Valley malls, “Store Closing” signs popped up just days before and after Christmas.
The Panorama Mall in Panorama City, for instance, is losing its Oaktree and Dejaiz clothing stores. Both are owned by companies in bankruptcy proceedings. Also, a FootAction shoe store at the mall closed on Christmas Eve, a victim of an internal reorganization by its parent, Melville Corp.
And Magic Style closed its last store--it had five originally--at the Panorama Mall two days before Christmas, after it sold “everything inside the store, right down to the fixtures,” said mall manager Louise Marquez.
“The competition with mass merchandisers has become so fierce” it is difficult for small chains to survive, Marquez said.
For specialty retailers, the Christmas season means “profits and survival,” said Richard Giss, partner in the retail services group at the accounting firm Deloitte & Touche in Los Angeles.
But even relatively stable retailers are expected to cinch their belts. “Chains are always cultivating their gardens,” Giss said. “What you’re seeing is quicker cultivation. No one is waiting around to see a store become viable.”
Many closures will be in chains that have already announced cutbacks. The most visible to date is Edison Bros. Stores Inc., a big apparel retailer that filed for Chapter 11 bankruptcy protection in November.
Edison operates the Leeds, 5-7-9, Zeidler & Zeidler, Oaktree and Wild Pair chains, and plans to close nearly 500 stores. Many Valley-area malls, including Media City Center in Burbank, the Panorama Mall, Sherman Oaks Galleria and Valencia Town Center, have Edison-owned stores.
Other chains that have filed for bankruptcy protection recently include Merry-Go-Round Enterprises, operator of Chess King and Dejaiz men’s clothing stores; Petrie Retail Inc., and Clothestime Inc.
Some industry insiders say that specialty chains are now undergoing the kind of shakeout department stores went through the past few years. Robinsons-May was created by a merger of two big department store chains in 1993; most recently, Federated Department Stores in November completed its acquisition of the Broadway chain and is converting most of its Broadway and Bullock’s stores to Macy’s and Bloomingdale’s.
Not that the fallout of the department store restructurings is over. The good news for the Valley is that it will be getting its first Bloomingdale’s, at Sherman Oaks Fashion Square. The Broadway store there will be converted by fall, making it one of three Southern California malls to have the upscale store, Federated said last week.
In the same announcement, however, Federated said it had not yet decided the fate of the Broadway store in the Northridge Fashion Center. Federated has already said it is closing its Panorama City Broadway. The Broadway at Topanga Plaza in Canoga Park is being sold to Sears, Roebuck & Co.
Despite Broadway’s troubles, however, industry insiders say department stores generally are staging a comeback.
“Several years ago, everyone was trumpeting the death of the department stores,” said Dan Millman, general manager of Media City Center. “Five years ago the specialty stores were stealing their thunder. Now the department stores are fighting back. I’d say the department stores have been the big success story.”
Now it’s the specialty retailers--particularly mall-based apparel chains--that are under the most pressure. Analysts say that’s because there are too many of them offering much the same merchandise to an underwhelmed public.
Those retailers were looking to this Christmas to help turn things around. But sales--although slightly better in Southern California than elsewhere in the country--were lackluster. Bargain-minded shoppers delayed purchasing until the last minute, forcing retailers to slash prices deeper than they had expected and cut into their profits. And with sales soft, financing sources have dried up, putting further pressure on weak retailers.
As a result, more store closures are expected in 1996.
The Valencia Town Center already knows it is losing an Edison-owned clothing store, J. Riggings. In addition, said Tracy Taitt, the mall’s general manager, “We do anticipate that we’ll be seeing a couple of stores close in early ’96.”
At the Antelope Valley Mall, a Casual Corner women’s apparel shop closed a few days before Christmas, and a Dejaiz is scheduled to shut its doors for good in January.
Mall stores aren’t the only ones being targeted. Clothestime plans to close its store in Reseda and another in Oxnard. A company spokeswoman said no other closures are planned, but it will continue to evaluate the performance of each location.
How Valley-area stores will fare in the continuing consolidation remains to be seen. “We’re probably more over-stored than the rest of the country, so there’s probably more shaking out to do,” said Ira Kalish, senior economist at Management Horizons, the retail consulting division of Price Waterhouse.
But Southern California’s economy has been continuing to recover while other areas appear to be slowing down. “So that might save us to some degree,” Kalish said.
One bit of bright news might come from an unusual place, analysts say--independent retailers, who are typically the most vulnerable. With the specialty chains cutting back, there might be room for niche players to move in, they say. And while small shops and boutiques can’t compete on price, they can offer customers the personalized service and unique merchandise chains may lack.
One such retailer is Country Works in the Northridge Fashion Center, which sells original artwork, crafts and furniture. The shop reopened last summer after the mall’s earthquake repairs were completed, and owner Shirley Cowen considered this holiday season to be critical to its survival.
“It turned out to be an OK season,” Cowen said. “It gave us a little renewed faith.”
