RCS Perspectives Newsletter 27

No Signs of Stopping

At the end of 2015 I commented on how the trends I was seeing indicated that 2016 could end up being as difficult for retailers as 2008. It turns out 2016 was indeed a lot like 2008. There were numerous large bankruptcies and many retailers struggled with misaligned occupancy costs as a result of lower sales.

Last year I commented that we had seen this movie before. With more of the same that we saw in 2016, 2017 was looking to be very much like 2009. Well it turns out I was off in my prediction – 2017 ended up worse than I expected. By my estimation, retail stress was more than 20% worse in 2017 than it was in 2016.

Unless there is a miraculous turnaround in mall-based retail sales, we expect more of the same in 2018 and for the foreseeable future thereafter.

The death of brick and mortar is highly overrated, we feel there will always be a strong need for it. However, that need will lessen. Most of the major retail companies we analyzed have a 15-25% excess in their number of stores. Therefore, we expect the “retail apocalypse” to continue for the next few years.

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RCS Real Estate Advisors congratulates our client Payless ShoeSource for being among the few to successfully complete the legal restructuring process among the many companies that sought bankruptcy protection since the start of 2016.

Payless emerged from bankruptcy court protection after shedding more than $435 million in debt and closing approximately 673 stores.

“We have accomplished our goals of strengthening our balance sheet and restructuring our debt load, positioning Payless to create substantial value for our stakeholders and achieve long-term success,” CEO, Paul Jones said in a formal statement.

RCS is pleased to have operated as real estate advisor to Payless ShoeSource and to have been a key part of their successful efforts to restructure.

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RCS Announces New Clients

We are Proud to Announce the Addition of Several
New Clients, Including:

Hats off to the RCS team for completing the restructuring of over 1,500 leases for our client Payless, who entered and exited bankruptcy in 4 months. This included an analysis of the portfolio, setting goals, negotiating deals, and obtaining fully executed documentation for this portfolio of primarily one-off landlords.

Plus, RCS is unique in our ability to have accomplished this solely with our own full-time employees. No third-party, outsourced “consultants” were retained.

If this sounds like the kind of bandwidth that can help you, give us a call.

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