2021 is starting with more bad news for malls as Godiva announces its plan to close 128 stores across North America, including 11 stores in Canada, by March 2021. The company decided to shut their doors after seeing sales rapidly decline as shopping habits shifted from in-store shopping to online after the start of the pandemic.
This bad news comes after several other large mall tenants, like Francesca's Holdings Corp. (NASDAQ: FRAN), Macy's (NYSE: M), H&M (OTC: HNNMY), Cheesecake Factory (NASDAQ: CAKE), Forever 21, J.C. Penney (OTC: JCPN.Q) and California Pizza Kitchen, among many others, have either filed bankruptcy or announced their plans to close several hundred stores in malls across the nation.
Mall retailers have a long road ahead
Continued concern over the safety of shopping in malls has pushed revenues and share prices down dramatically since March 2020. This means mall real estate investment trusts (REITs) are feeling tremendous pressure, resulting in certain mall REITs already having filed bankruptcy. And the future isn't looking too bright.
Godiva's announcement is one of the first for 2021, but it surely won't be the last. Many investors hope the newly released vaccine will help bring business back to struggling retailers, including malls, as early as spring or summer of 2021. But challenges with distribution and now new variant strains of the virus means this could be the start for another long, rocky year for mall REITs.
There are some large mall REITs, like Simon Property Group (NYSE: SPG), that have enough liquidity to purchase struggling tenants and competitors as a long-term tactic to help save the mall space. But I think the current crisis is just getting started, and mall retailers have a long way to go before they're in the clear.