Malls are dying. Blame Amazon.
That’s a popular refrain that many people believe, but it’s not actually true.
“Shopping mall foot traffic is nearing pre-pandemic 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.
Instead of malls being a dying business model, there have been some shifts in which shopping centers people visit.
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“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. 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”
That 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 or 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. 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,” Placer.ai reported.
In addition, the covid pandemic did add to debt for many mall-based retailers and one well-known brand appears to be headed for bankruptcy.
Express has been burning cash.
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.’ 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,” the retailer shared on its website.
In its third-quarter earnings report, the company reported a $28.7 million operating loss, That was slightly down from the $29.5 million it lost in the same period last year. Express’s net loss was a little bigger. The company reported a net loss of $36.8 million, or $9.83 per diluted share, compared to net loss of $34.4 million, or $10.09 per
diluted share, in the third quarter of 2022
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 it 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 small 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 did issue the expected comments on its future in the press release on being delisted by the NYSE.
“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,” said CEO Stewart Glendinning. “We remain focused on continuing to serve our customers and positioning our organization for the future.”
