NEW YORK • It’s starting to look a lot like the Great Recession again for retailers.
More than twice as many stores have closed this year than at the same point last year. Bankruptcies are far outpacing last year’s rate. Retailers slashed jobs at the sharpest pace in seven years this spring. And retailers collectively could report the biggest drop in first-quarter profits since 2009.
This time, the culprit’s not the economy but shoppers whose habits have changed profoundly and permanently, as they shop online more and look for deals. The results this week from department stores like Macy’s, Kohl’s and J.C. Penney are expected to illustrate the latest damage by the spending shift and the dominance of Amazon.
“The first-quarter reports will show how difficult the mountain retailers will have to climb,” said Ken Perkins, president of research firm Retail Metrics LLC. “Things are far better from an economic perspective than before when the sky was falling.” But he says people are increasingly spending on experiences and shopping on phones and tablets, “and stores are facing pressure from off-price stores and Amazon.com.”
Perkins estimates that the 114 retailers he tracks will see an average drop of more than 5 percent in first-quarter earnings, marking the second straight quarter of declines and third in the last six quarters. But he thinks there’s even a chance they could surpass a 7.1 percent drop in the fourth quarter of 2013 that would make it the worst quarter since 2009. Moreover, 22 percent are expected to post losses, the highest percentage since the second quarter of 2009. And he forecasts that nearly half of the retailers will see total sales revenue fall, nearing the level of the last downturn.
The bad news for retail has been relentless of late: The Limited closed all its remaining 250 stores. Payless ShoeSource is shuttering nearly 400 stores as part of its bankruptcy reorganization. Others chains that have shuttered all their stores or retrenched include Abercrombie & Fitch, BCBG and Wet Seal. Mall anchors like Macy’s and J.C. Penney are closing locations. And Sears Holdings Corp. has said there’s “substantial doubt” about its future, though it has insisted that its actions to turn around its business should help reduce that risk.
Perkins believes the rash of store closings and job cuts will be a minor burden on the economy. The vast majority of retail workers are paid less than the hourly average earnings per hour of $25, so…