Tuesday Morning Becomes Latest US Retailer to Close Stores

A man wearing a protective face mask walks past a closed store in New York on March 17, 2021. (Chung I Ho/The Epoch Times)

Tuesday Morning, the beleaguered discount home goods retailer, will shutter more than half of its stores nationwide after filing for Chapter 11 bankruptcy protection on Feb. 14.

The Dallas-based company confirmed that it will shutter 263 stores that are situated mainly in “low-traffic regions.” Tuesday Morning operates 487 stores with approximately 1,600 full-time and 4,700 part-time employees.

“The company believes this targeted approach to winding down unprofitable and underperforming stores will position Tuesday Morning to emerge from bankruptcy with a profitable, cash-generating store fleet that serves its most engaged and loyal customers,” Tuesday Morning said in a statement.

In May 2020, Tuesday Morning filed for Chapter 11 and closed roughly 200 stores amid the COVID-19 pandemic.

Is this the beginning of a broader shakeup trend in the U.S. retail sector, or is the industry trimming the fat to survive a slowing national economy?

Hundreds of Store Closures This year

In the early days of 2023, about a dozen major retailers announced plans to shut down hundreds of stores nationwide in the coming months.

Bed Bath & Beyond is at the top of the list, with plans (pdf) to close 416 locations in Arizona, California, Florida, Illinois, New York, and other states. This will also include its sister buybuy BABY outlets. The company aims to finish the year with fewer than 500 U.S. stores across both brands.

Shopping carts at a Bed Bath & Beyond store in Manhattan on June 29, 2022. (Andrew Kelly/Reuters)

The struggling retailer is also ending its insolvent Canadian operations. Bed Bath & Beyond operates 54 locations and 11 buybuy BABY stores north of the border.

“We are optimizing our store fleet and supply chain and continuing to invest in our omni-always capabilities,” Sue Gove, president and CEO of Bed Bath & Beyond Inc., said in a statement. “This will enable us to better serve our customers, and grow profitably, by directing merchandise where and how they want to shop with us.”

Apparel retailer Gap revealed in 2020 that it would close about 350 Gap and Banana Republic stores by the end of 2023, roughly one-third of its stores.

By the year’s end, the retailer wants to accomplish its goal of having a “smaller and healthier fleet of stores.”

Party City, which filed for Chapter 11 bankruptcy in January, plans to close about 22 underperforming stores, according to court documents filed on Feb. 16 (pdf). Real Estate Partners will auction off 12 locations, and the remaining 10 will shutter later this month.

It also requested that the court release it from 28 store leases in 13 states. The retailer noted that these outlets were performing so poorly that it shut down and vacated those premises before filing for bankruptcy.

“Our work on our lease portfolio is moving very quickly, with a plan for us to exit locations that do not meet the key financial metrics required for our go-forward fleet,” Marc Ehle, Party City’s executive vice president of enterprise operations, said in a statement.

Party City, which sells balloons, costumes, decorations, and other celebration items, has cited a considerable drop in consumer spending for its lackluster performance.

Walmart, in recent years, has begun closing several underperforming stores in various states every year.

In 2023, the big-box retailer is closing five stores in four states and winding down its nine-year experiment with two pick-up-only locations in Arkansas and Illinois, the retail juggernaut confirmed to KRQE in Albuquerque, New Mexico.

Speaking in an interview with CNBC in December 2022, Walmart CEO Doug McMillon said the company could consider store closures and price hikes amid a wave of shoplifting.

“If that’s not corrected over time, prices will be higher, and/or stores will close,” McMillon said.

And Macy’s, as part of an effort to close 125 underperforming stores over three years, will be closing stores in four states in 2023: California, Colorado, Hawaii, and Maryland.

“The changes we are making are deep and impact every area of the business, but they are necessary. I know we will come out of this transition stronger, more agile, and better fit to compete in today’s retail environment,” said Jeff Gennette, chairman and CEO of Macy’s.

In addition to the widespread store closures, the retail sector is also reducing payrolls. Last month, retailers announced 13,000 job cuts, the second most of any industry, according to the latest Challenger data.

Neiman Marcus Group announced on Feb. 14 plans to terminate 5 percent of its workforce, or about 500 employees.

The RealReal, a digital and brick-and-mortar luxury consignment store, cut 7 percent of its staff, totaling 230 workers, according to a Securities and Exchange Commission filing. It’s also shuttering four stores and two consignment offices.

A Retail Apocalypse in 2023?

Will 2023 repeat the significant number of 9,000 store closures in 2019? It may depend on the plethora of challenges presently facing the industry, from price inflation to sustainability.

The present environment might not be the retail apocalypse that many have prognosticated dating back to before the COVID-19 pandemic. Last year, store openings outpaced closures, Coresight Research reported.

A climate of rising interest rates and a slowing economic landscape is more likely to weigh on retailers that had already been facing unsustainable debt and declining sales, according to Ben Johnston, Chief Operating Officer of small- and medium-sized business lender Kapitus.

At the same time, retail stores in highly trafficked areas are expected to perform well this year if unemployment remains low and consumer spending holds steady, Johnston said.

“This is especially true for retailers that serve the everyday or immediate needs of customers, such as coffee shops, bakeries, and drugstores. Many big-box retailers will continue to struggle as online competitors leverage supply chain efficiencies and a more diverse selection to attract customers while declining home sales will mute a key driver of retail purchases,” he told The Epoch Times.

“While the economy is unlikely to bail out struggling retailers this year, we do not expect a dramatically worse environment than we saw in 2022.”

In recent years, industry experts have also sounded the alarm about retail square feet per capita in the United States (56 square feet per capita) typically being more extensive than in Europe or Japan. Essentially, this trend produced an overstore problem nationwide, and many retailers are bearing the brunt.

However, according to a 2021 U.S. Real Estate Market Outlook report from CBRE Investment Management, this figure will decrease by 20 percent by 2025.

For stores that remain open, their future is about adapting to the new generation of shoppers, according to Jeanel Alvarado, a retail expert and CEO of RetailBoss.

“We can expect to see these retailers carry out new strategic plans when it comes to retail expansion, either in completely new geographical locations or opening new store concepts in the same regions,” Alvarado told The Epoch Times.

“It’s all about adapting to the new consumer and how they like to shop. For the retailers whose stores remain open, they are remodeling and redesigning the store layouts to better cater and attract the Gen Z and Millennial shoppers who will continue to grow in their discretionary spending.”

But consumers’ financial health may play a role in the immediate future of retail, be it more online establishments or brick-and-mortar stores.

Retail sales surged at a better-than-expected pace of 3 percent in January, with department stores posting a 17.5 percent gain in sales. But experts note that this could have been driven mainly by price inflation (shoppers paying more for less) and rampant credit card usage.

The consumer price index rose by 0.5 percent month-over-month in January.

The Federal Reserve Bank of New York reported that consumer debt soared to an all-time high of $16.9 trillion in the fourth quarter of last year, as credit card debt rose by $61 billion to $986 billion.

“Even though it represents only 6 percent of total debt, credit card debt is the most dangerous because the interest rates are much higher than what most loans charge, and they’re only getting higher with each Fed rate hike,” Jill Gonzalez, a WalletHub analyst, said in a report.

The average credit card interest rate is about 23 percent.