Chico’s FAS, a Fort Myers-based women’s retail company, has announced plans to close at least 250 stores as well as to expand its operations review. The company stated that the strategic initiatives were designed to build on its omnichannel platform and provide it with the agility, customer service, and speed required for long-term success within a competitive retail environment. Chico’s announced that it will close at least 250 U.S. stores over the next three-years as part of its decision “rebalance” between its physical and digital stores. The company stated that it would be able take advantage of expired leases while increasing profitability and return on capital.
Total Retail’s View: 2019 has not been the strong start that many retailers expected. Macy’s, Kohl’s and J.C. Penney announced it would close three stores and that more could be closed due to its weaker than expected holiday sales. Chico’s FAS (which includes Chico’s nameake Chico’s as well as White House Black Market, Soma and Soma), will continue to focus on serving today’s Omnichannel Customer, even though it has fewer stores. Amazon’s marketplace is a potential growth area for Chico’s FAS CEO Shelley Broader, who noted that it not only drives ecommerce revenue but also draws foot traffic to Chico’s retail locations. Chico’s has taken steps to bring the business back to profitability, despite traditional brick-and mortar retailers being challenged to reinvent their businesses in an ever-changing retail environment.
Yellen: Some Retailers Are Concerned by Economic Uncertainty
Janet Yellen, former chair of the Federal Reserve System’s board of governors, said that some retailers are worried about the uncertain economy heading into 2019. Yellen spoke to a packed audience of retailers today at the Big Show in New York City.
Yellen stated that while the global economy was firing at all cylinders in 2018, “almost all economists focus on a slowdown just a little over 2 percent” in 2019. “We will get a fiscal boost but not as much.”
Yellen stated that trade tensions, which include the ongoing trade war between China, the U.S. and China, are the most concerning for retail businesses.
“We are hearing anecdotal stories about businesses starting to put investment plans on hold due to the uncertainty they’re facing around supply chains, trade,” Yellen said to Steve Liesman of CNBC. He moderated the session.
Yellen was not negative about her outlook for 2019, however. Based on 2018 data, she said that the economic outlook for 2019 is generally positive for both consumers and businesses.
Yellen stated that “all of the hard data we can gather on economic activity suggests that things are in good health.” “We probably had a Year with 3 percent overall growth. Inflation-adjusted consumer spending showed a 3 percent increase in the year.
Yellen said that the fundamentals of consumer spending are also excellent. “We had more than 200,000 jobs per month in the year. That is 2.6million for the entire year. The wages are increasing by about 3 percent. Add tax cuts and the fact that gas prices have fallen, and everything looks great.
Total Retail’s View: 2018 is over, and the momentum that retailers had in 2018 has started to fade. Yellen’s cautionary words echo that sentiment. Last year’s news reported focused on record low unemployment rates and consumers who were happy to spend their money. This year, however, may see a slowdown. Yellen’s remarks come after a few major retailers like Macy’s or Kohl’s reported disappointing holiday sales last week. Investors and analysts had expected retailers to report better holiday sales last week, given the high levels of consumer confidence in the U.S.
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