Macy’s, Sears Closings Hit Mall Stocks

Shares of mall companies fell this week in sympathy with the announcement by Sears Holding Corp. that it would close as many as 150 stores over the next few months.

Bloomberg reported that its index tracking regional mall firms slipped 2.8 percent Thursday, the biggest drop in two months. Breaking down that tally, CBL & Associate shares slid 4 percent, with the biggest mall owner in the country, Simon Property, off a bit more than 3 percent.

The newswire said that the Sears closings show the challenges of luring shoppers into stores, with other department stores acknowledging those issues. Macy’s Inc., for example, said this week that it would cut 6,200 jobs, and Kohl’s cut its earnings forecast, citing worse-than-expected holiday sales. Of the Macy’s stores Macy’s said it would close along with those job cuts, numbering 68 locations, 16 are in malls that are owned by real estate investment trusts (REITs), Bloomberg said, citing analyst reports. Morgan Stanley’s analysis shows that there is what Bloomberg termed “significant overlap” between the Sears and Macy’s portfolios, as 45 percent of REIT-owned malls count both department store chains as tenants.

As for the stock slump, Alexander Goldfarb, a Sandler O’Neill & Partners analyst, said the stock reaction was “knee-jerk” adding that, “I don’t think anybody is surprised that some department store chains are having challenges. Some retailers are having challenges, and others are doing well.”


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