Let's just say it: we don't need as many stores as we have and in particular we don't need as many stores of particular chains, chains like The Gap (GPS), where same-store sales remain atrocious. Last night Gap said its flagship brand fell 4%, (on top of a 7% drop last year) and Banana Republic got clipped for a 15% decline, versus a 2% drop last year -- but at least we saw a 2% rise at Old Navy.
When I saw the numbers, part of the endless spiral from this chain, I thought to myself, do we really need Gap? Do we really need Banana Republic? Are some concepts, at this point, just plain returnable? Isn't it possible that nobody can turn this dog around? That there is just too much choice and not enough customers? What exactly is the relevance of this chain?
We have long known that there is no relevance whatsoever to Sears (SHLD) or Kmart, and that Kmart should have been closed years ago -- like Bradlees or Builders Square or Caldor or Jamesway. They had no reason for being, and they failed as a result.
Gap has too much money to fail. But it doesn't offer anything special, anything that drives you to the stores. It's not alone. Kohl's (KSS), right now, has nothing that seems to grab you. Nothing that makes you go there over anywhere else. Urban Outfitters (URBN) feels the same. What's the point? Express (EXPR) can be hit or miss. But, again, how relevant is it? Chico's FAS (CHS)? Don't need it. Ascena (ASNA)? Any reason for Ascena? Not that I can tell. All of these are just companies where, if you own them, you hope Sycamore Partners takes a run at them.
It's discouraging, but true.
Now I know that retail is being squeezed by Amazon (AMZN). I know that it's being hurt by the weather. But just as there are too many restaurants of all shapes and sizes, there are simply too many retailers out there. Until we start seeing more of them close, as we did during that renaissance period when Circuit City and Linen & Things folded, expect more of the same of what you are seeing: crummy numbers that don't inspire anyone to do any buying.