The Retail Bubble

After reporting disappointing numbers this week, Urban Outfitters’ shares fell nearly 8% and its CEO, Richard Hayne noted that “[t]he U.S. market is oversaturated with retail space and far too much of that space is occupied by stores selling apparel. Retail square feet per capita in the United States is more than six times that of Europe or Japan. And this doesn’t count digital commerce. This created a bubble, and like housing, that bubble has now burst. We are seeing the results: Doors shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate.” Which is precisely why short sellers have their sights set on mall REITs - and not just the REITs with more class B and C malls, as we’ve long predicted. As the WSJ reported, short interest on Simon Property Group and GGP Inc. has jumped to near a record high. Apropos, we took a look at the rejection motions filed in Radio Shack 22.0 and noted that 6.4% of the locations slated for rejection are from the two aforementioned behemoths. Note, also, that both have been appointed to the official committee of unsecured creditors in BCBG. Allegedly, all of this destruction has landlords looking for alternative clientele for anchor slots including, it seems, grocers like Wegman’s and Aldi. Note: the previously-linked Fox Business/WSJ piece states as fact that “[g]rocers present an advantage for landlords because they are more resistant than traditional retailers to internet competition.” Really? We’ll ponder that as we munch on our fourth delicious Hello Fresh meal of the week. 

A Call to Action

Last week we complained about a dearth of bankruptcy filings. This week we got a handful of cases: two retail, one healthcare, one oil-and-gas servicer, and two "tech" companies. Because this week's case summaries (see below) are longer than usual, we'll rest on those laurels in lieu of a substantive feature (you can find the summaries here: Answers Holdings Inc., California Proton Treatment Center, Vanity Shop of Grand Forks Inc., BCBG Max Azaria Global Holdings LLC, EMAS Chiyoda Subsea Limited, Lily Robotics Inc.). Gotta keep things tight, time-wise, you know? Trying to keep the time you're billing clients to read our kicka$$ newsletter down to 0.1 hours. 

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