Contrary to the popular narrative that the American mall is dead and the retail apocalypse is absolute, industry data paint a startlingly different picture: a massive visitor gap between tiers and a brutal real estate squeeze.
While traditional indoor malls are bleeding legacy retailers, neighborhood open-air strip malls are seeing historically low vacancy rates, turning localized plazas into premium commodities.
According to recent 2026 data from Cushman & Wakefield, national vacancy across open-air shopping centers, strip malls, and community plazas is sitting at a tight 5.9%, up a minor 10 basis points quarter over quarter, but remaining safely below its long-term historical average of 7.4%.
Because demand for these suburban hubs is heavily driven by expanding grocery stores, medical clinics, and wellness chains, landlords hold immense pricing power. They no longer need to discount rent to keep underperforming apparel tenants.
Although the public is accustomed to hearing about indoor mall staples including Macy’s, JC Penney, and Forever 21 downsizing their massive footprints, a different kind of quiet retreat is happening in strip malls.
The Cato Corporation closed 246 stores since 2022, plans more in 2026
Value-priced women’s fashion giant The Cato Corporation recently reported first-quarter 2026 results revealing a net income of $9.3 million, or $0.47 per diluted share, which compares to a net income of $3.3 million or $0.17 per diluted share in the same period of 2025.
The retailer disclosed that same-store sales increased by a healthy 3%, and gross margins rose from 35.1% up to 37.2%, according to its 8-K filing with the Securities and Exchange Commission (SEC). However, these strong results significantly benefited from the $5.7 million refund claim of IEEPA (International Emergency Economic Powers Act) tariffs in the quarter.
When accounting for the refund, the results reveal a quarter that was solid rather than powerful for the company.
During the quarter, The Cato Corporation closed six stores and opened two. As of May 2, 2026, the retailer operated 1,065 stores in 31 states, compared to 1,109 as of May, 2025.
After analyzing the company’s previous financial filings, I discovered that it has been closing about 60 stores on average per year since 2022. As of Jan. 29, 2022, The Cato Corporation operated 1,311 stores in 32 states, according to the official report. This suggests that its total store count decreased by 246 locations over the last four years.
In its fourth-quarter and full year 2025 report, the fashion giant revealed that in 2025 it closed a total of 58 stores. In 2026 it also plans to open 10 new stores and close 40 underperforming locations as leases expire.
Why Cato has been closing stores and what it means for consumers
In its first-quarter earnings report, The Cato Corporation’s CEO issued a dire economic warning in the company’s official outlook.
“Our sales trend softened as the quarter continued in part due to higher fuel prices pressuring our customers’ discretionary income. For the foreseeable future we expect our sales to be negatively impacted by rising inflation, especially fuel and food prices, which will reduce our customers’ discretionary income,” Cato stated.
Industry data confirm Cato’s predictions about consumer discretionary spending. According to a multi-category consumer tracking study by McKinsey & Company, American families are reporting an immediate intention to “pull back spending across most discretionary categories,” noting that even higher-income consumers are beginning to aggressively “cut back on ‘nice to haves.’”
Because food and transportation are essential expenses, increases in those costs can reduce the amount consumers have available for discretionary purchases such as clothing.
As consumers tighten their spending, retailers are forced to optimize their strategies and often downsize. This could reduce access to nearby value-oriented retail options in some communities, suggesting a harsher impact than typical high-end luxury store closings.
For shoppers who rely on nearby value-focused retailers such as The Cato Corporation, losing access to close-to-home options, could lead to even higher gas expenses.
Deloitte’s 2026 Retail Industry Global Outlook recently revealed that value-seeking consumers are a persistent trend.
“Nearly seven in 10 retail executives surveyed agree that behaviors such as trading down, shopping value channels, or swapping convenience for savings represent a structural change, not a temporary response to inflation,” reads the report.
An 80-year-old legacy
The Cato Corporation was founded in 1946 by Wayland Cato Sr., Wayland Cato Jr., and Edgar Thomas in Charlotte, North Carolina. Launching with five main-street stores, the family built the business on value-priced women’s fashion, specifically targeting secondary and small-town markets using low-overhead strip malls.
The Cato Corporation key milestones
- 1968:Completed its Initial Public Offering (IPO) to fund multi-state expansion across the Southeast.
- 1987: Launched the It’s Fashion brand to capture younger, trend-led demographics.
- 2001: Milestone expansion crossed 1,000 active store locations nationwide.
- 2011: Diversified into lifestyle shopping centers by launching the Versona boutique accessory and apparel concept.
- Modern Era: Shifted to a 100% private-label model to protect gross margins, integrated omni-channel e-commerce platforms, and navigated economic cycles with zero long-term debt.
Source: MatrixBCG
Cato’s brand portfolio
The 80-year-old fashion retailer offers private-label apparel, accessories, and shoes at prices below traditional department stores while maintaining a strong trend-driven appeal. It operates three popular concepts:
- Cato/Cato Fashions: The flagship brand offering value-priced junior, misses, and plus-size fashion apparel, shoes, and accessories.
- Versona: The higher-margin, boutique-style concept focuses on jewelry, handbags, shoes, and premium fashion apparel.
- It’s Fashion: It specializes in trendy, budget-friendly apparel, footwear, and accessories for the entire family.
Source: Cato Corporation
The company also offers exclusive merchandise found in its Cato stores at www.catofashions.com.
The new reality of the strip mall footprint
April 2026 data from Placer.ai reveal that traffic was up year over year across all mall formats, including indoor malls, open-air shopping centers, and outlet malls. “This performance is particularly notable given the strong April baseline last year, when traffic rose between 3.7% and 4.3% across formats compared to April 2024,” reads the report.
Open-air centers led the category, extending a trend in place since December 2025, with visits increasing 3.5% year over year, the report added. Indoor malls followed with a 2.2% increase, while outlet malls lagged behind with a modest 0.5% year over year growth, “potentially reflecting greater sensitivity to elevated gas prices in recent weeks.”
While consumers are curbing their spending as gas prices continue to pressure them, data from the CoStar Group 2026 US Retail Real Estate Forecast explain why suburban real estate is stuck in a permanent supply squeeze.
Due to high post-inflation construction and labor costs, developers now require a blended rent of $30 to $35 per square foot to break even on building a new neighborhood strip mall. However, the national average market rent that apparel tenants actually pay is hovering in the mid-$20s per square foot.
Because of this, new strip mall construction has ground to a halt. The supply crunch gives landlords massive leverage over existing properties, allowing them to raise rents when leases expire.
Related: Another mall retailer quietly closes 7 stores, plans more
