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Jared Hunt column: It’s a tough season for retailers

Coldwater Creek, which operates a 960,000 square foot distribution center in Wood County, filed for bankruptcy last Friday as part of an orderly wind down of its operations.

The company hopes to begin inventory liquidation sales in May, followed by closures of its stores.

Coldwater hasn’t turned an annual profit since 2007. The company tried to implement cost-cutting measures last year, but a 17-percent drop in sales weighed on its performance.

“While we are extremely disappointed with this outcome, the company’s declining liquidity position and the challenging retail environment, together with the fact that we have exhausted all other possibilities, requires that we take this action.” President and CEO Jill Dean said in a press release Friday.

Coldwater Creek isn’t the only retailer this year to make tough decisions in light of the “challenging retail environment.”

Heck, it wasn’t even the only one to do so last week.

Discount retailer Family Dollar announced plans to close about 370 stores later this year.

Family Dollar CEO Howard Levine blamed a lackluster holiday season and harsh winter weather for poor sales in recent months.

“The 2013 holiday season was challenged by a more promotional competitive environment and a more financially constrained consumer,” Levine said in a press release. “In addition, like many retailers, our second quarter results were significantly impacted by severe winter weather, which resulted in numerous store closings, disrupted merchandise deliveries and higher than expected utility and store maintenance expenses.”

Family Dollar saw sales drop 6.1 percent during the recent quarter. Company spokesman Bryn Winburn said the decision to close underperforming stores followed a comprehensive review of company operations.

“Family Dollar is taking decisive action to better position the Company to succeed in an adverse operating environment,” Winburn said.

The company has several stores in West Virginia. Winburn couldn’t say if any of those stores would be affected as the company hasn’t finalized the list of stores to be closed.

While Family Dollar plans to close hundreds of stores, Radio Shack is planning to close more than 1,100 this year as part of its restructuring.

Radio Shack announced the effort to close nearly one-fourth of its stores earlier this year, also blaming weak holiday sales.

The spate of recent store closures has likely come as no surprise to Belus Capital Advisors retail analyst Brian Sozzi, who told CNBC in January the retail industry would face a “tsunami of store closures across the U.S.”

Sozzi said the poor holiday performance combined with consumers’ increased use of online and mobile shopping is pushing retailers to rethink how they structure their business. According to retail analysis firm ShopperTrak, online shopping contributed to a nearly 15 percent decline in retail foot traffic last year.

“Stores are making a long-term bet on technology,” Sozzi said. “It simply doesn’t make strategic sense to enter a new 15-year lease as consumers are likely to continue curtailing physical visits to the mall.”


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