Went down 42nd Street yesterday, It was like being transported to New York City circa 1979, where you pretty much figured you would be mugged at night. You would look both ways coming out of Grand Central Terminal, not for cars, but for the possibility of an attack, they were that numerous.
Of course, the decimation of so many stores comes from the virus. You see so many vacant or boarded up store fronts and you recognize the names: the independents, the ones intrinsic to the city. The survivors? The pointless banks that are open only during the week and therefore make the 42 Street gauntlet that much more difficult on the weekend and, of course, the international clothing chains like Zara and H&M. How long before the well-situated, at least at one time, Loft, owned by the now bankrupt Ascena, closes?
The one good thing? There's no Lord& Taylor or Men's Wearhouse in sight, the two outfits that filed Chapter 11 this weekend.
In truth, like so many other retailers these had been zombie-afide long before the pandemic. Men's Wearhouse was a casualty of casual work attire. Now it's been decimated by the work at home movement. If you don't go anywhere who needs a suit even of the cheap variety. Of course I was born in a suit and would wear one on the weekend if anyone else would and I am roundly mocked for my Saturday night French cuffs.
Lord & Taylor got bought by an outfit called Le Tote for $100 million from Hudson's Bay Company back in September. You could say that it was the dumbest acquisition ever by a start-up or the smartest sale by a stalwart or both. The oldest retailer, though, had been triaged a long time ago. I didn't know the place I bought my first overcoat was still alive. It's a casualty of so many trends: the more up-to-date specialty stores, the dying mall, and the ease with which you can now buy what Lord & Taylor sells on-line. Of course, again, you don't need more formal clothes these days. Lululemon (LULU) will do.
I think that the owner of Lord & Taylor, which hoped to develop Lord & Taylor's e-commerce site, might have thought it might have had a mass Wayback machine like the one used in a Rocky & Bullwinkle episode or perhaps The Time Machine by H.G. Wells.
In the end, though, the department store may be going away. We know that Neiman Marcus, the much higher end retailer, had too much debt and deserved bankruptcy even as I used to like to shop there. I say that because department stores have been cyclical beings forever and who the hell thought they wouldn't be? The company went private 15 years ago and is owned by Ares Management. Ill-advised.
Forty-second Street tended to have plenty of little boutiques, junk shops related to tourism and, of course, tons of small, pretty darned good restaurants and sandwich shops. The rent had gotten too high in New York a long time ago. Any downturn would have crushed some of these stores. But social distancing is deadly for these kinds of small businesses. The pathetic setting of a handful of tables on the sidewalk by Darden (DRI) -owned Capitol Grille seems like some sort of weird outpost, like Zinderneuf in Beau Geste. At least its open.
A vaccine could cure 42nd Street but who knows how many people will not take the train in from Grand Central because work at home turns out to be a pretty good deal for both company and associate. An anti-viral might make you want to brave a store.
But the main takeaway as always is that the real casualties are those enterprises that aren't public. Will Macy's (M) and Nordstrom (JWN) with huge presence in New York be the beneficiaries of the retail closures, or are the Lord & Taylors and Men's Wearhouses harbingers of things to come? It all depends on shutting down Covid-19 and right now we are way behind all other countries save Brazil in that effort. So Darwin reigns until then.
