Malls are dying. Blame Amazon.
That's a popular refrain, but it's not true.
"Shopping-mall foot traffic is nearing prepandemic levels, but not everything is the same — that’s a main takeaway from a new white paper by foot-traffic-analytics firm Placer.ai, The Comeback of the Mall in 2024.
Malls aren't a dying business model; instead, people are visiting different shopping malls.
Related: Popular shoe brand files for Chapter 11 bankruptcy
"The white paper finds that during 2023, visits at indoor malls were down 5.8% compared to 2019 — a dramatic improvement from being down more than 15% in 2021," Placer.ai reports.
"Similarly, open-air shopping-center foot traffic was down only 1% last year compared to 2019. The white paper notes that visits for the shopping-center industry at large were down 2.3%, and foot traffic may yet pick up again in 2024.”
All this does not mean that some mall retailers have not been hurt. The covid pandemic changed people's needs, especially when it comes to clothes.
Hybrid and work-from-home models require more casual clothes and athleisure wear. In addition, mall foot traffic does not always mean people shopping in stores.
"Experiences are key in driving mall traffic," Placer.ai reported. "Adding entertainment or dining options can help bring crowds in – and keep them there. ... Malls received visit boosts following the additions of new dining and entertainment options like Texas Roadhouse and Main Event, indicating that shoppers are responsive to many kinds of retail."
In addition, the covid pandemic added to debt for many mall-based retailers, and one well-known brand appears to be headed for bankruptcy.
Image source: Express
Express's problems are piling up
In March, Express (EXPR) received a delisting notice from the New York Stock Exchange,
"The company’s common stock will now trade publicly on the OTC Pink Market under the symbol EXPR," the retailer said on its website.
"This transition to the over-the-counter market will not affect the company’s business operations or its U.S. Securities and Exchange Commission reporting obligations, and it does not conflict with or cause an event of default under any of the company’s material debt or other agreements."
In its third-quarter-earnings report, the company reported a $28.7 million operating loss, narrower than the $29.5 million operating loss in the year-earlier period. Express's net loss was a little wider: $36.8 million, or $9.83 a share, against a net loss of $34.4 million, or $10.09 a share, a year earlier. (Almost 10% more shares were outstanding in the current period.)
At the close of the quarter, the retailer had cash and cash equivalents of $34.6 million and $274 million in debt. That was a $40 million increase in debt over a year.
Express exploring Chapter 11 bankruptcy
Express has been talking to lenders about raising the cash it would need for a Chapter 11 bankruptcy, according to a report from Bloomberg. The company could file for bankruptcy as soon as next week, but no final decision has been made.
Despite the company's cash position and debt, Rapid Ratings, which tracks the financial health of public companies, sees Express as being in a relatively good position.
"Express Inc. demonstrates adequate performance in leverage and earnings performance but some weakness in liquidity. Although mixed, this performance is sufficient for the company to be assigned a Low-Risk rating," the website reported.
The rating service did issue a warning.
"This period includes an abnormal item. When the rating for this period is simulated with the abnormal item excluded, the company's health is significantly worse suggesting the line item is having a meaningful effect on the rating for this period," according to the service.
Express leadership issued the expected comments on its future in the news release on being delisted by the NYSE.
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“Over the past several months, we have taken decisive steps to position Express for the long term, including implementing a series of cost-saving initiatives and streamlining our process to enhance operational efficiency,” Chief Executive Stewart Glendinning said.
“We remain focused on continuing to serve our customers and positioning our organization for the future.”
