Department stores face grim outlook, CEO says
After President Trump delayed some tariffs on Chinese imports until Dec. 15 in order not to affect the Christmas shopping season, some retail giants breathed a sigh of relief.
"I think the president's move was a smart one," former Toys R Us CEO Gerald Storch told FOX Business host Stuart Varney on" "Varney & Co." "They're basically accomplishing what they wanted to accomplish, which is getting companies to work aggressively on moving production out of China. They've accomplished that without adding much pain to the American economy or the American people right now, so that is going to work pretty well."
The president's move was a smart one.
Despite news of the delay, Macy's stock was down sharply Wednesday, so many are wondering why that is. Department stores have been "deeply troubled" for some time, Storch explained.
"Keep in mind the consumer is very happy," he said. "They're very healthy. They have jobs. They have money. They're just shopping elsewhere and for different types of goods, so I would keep away from department stores and apparel because those are areas in decline."
They're just shopping elsewhere and for different types of goods.
Storch reminded "Varney" viewers that online shopping is king right now, and that discount stores are thriving, as well. Macy's had trouble with their storefronts, not their online operation. He's afraid there's more of the same coming for other department stores.
"No matter how good they are, they're fighting trends that are just almost insurmountable," he said.
They're fighting trends that are just almost insurmountable.
As for shopping malls, which are often anchored by department stores, Storch said smart shopping malls are starting to diversify their anchors.
"They're adding some really great restaurants, other forms of entertainment, other reasons to go out and socialize," Storch said. "People still like that. But a lot of malls? They're going to go out of business."
A lot of malls? They're going to go out of business.
Storch thinks we have too much retail square footage than the country needs right now, given the growth of the internet and the decline of the department stores.
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He believes they'll be eventually torn down and replaced with housing.