The Swiss multinational investment bank UBS recently released more ominous projections for the traditional retail sector. An April report estimated that 75,000 more stores would need to close in the United States if e-commerce penetration grows by 25% by 2026. Clothing stores would be the hardest hit at 21,000 locations, followed by consumer electronics stores at 10,000.
GAP (NYSE:GPS) is a global accessories and apparel retailer which operates under the GAP brand name, as well as Banana Republic, Old Navy, Athleta, and Intermix. Shares have climbed 2.6% in 2019 as of close on April 9.
The stock is still down 14.3% from the prior year. In February Gap announced that it would close roughly 230 of its namesake stores, while also announcing that it would split into two companies; Gap and Old Navy.
Macy’s (NYSE:M) operates hundreds of department stores under the Macy’s and Bloomingdale’s brand, in addition to several specialty stores.
It has ventured aggressively into e-commerce in recent years. The stock fell 2.3% on April 9 and shares are down 13.8% in 2019 so far. Macy’s went forward with several store closures to start this year as part of a plan that was announced two years ago. At the time the company announced 100 store closures.
Both retailers are facing steep challenges as we move into the next decade. The growth of e-commerce is disrupting the industry, but the prospect of slow economic growth should also worry these companies.
