March 04--Office supply chain Staples joined Sports Authority in announcing cuts to its roster of stores this week.
Staples plans to close about 50 North American stores this year after already shuttering 242 locations since 2014, the company said Friday.
Retail sales in North American stores fell about 5 percent in the fourth quarter, excluding outlets that had newly opened or closed, as customers spent less per order and fewer people visited stores, Staples said.
The company also said it extended a merger agreement with competitor Office Depot as a Federal Trade Commission lawsuit seeking to block the planned merger continues. The FTC said combining the companies would reduce competition in the market for office supplies sold to large business customers.
Sports Authority said it intended to close or sell about 140 stores -- about 30 percent of its retail outlets -- after its Chapter 11 bankruptcy filing Wednesday.
Among them are 11 Illinois locations, including stores at Chicago's Water Tower Place and in Northbrook, Matteson, Calumet City, Lake Zurich, Lombard, Geneva, Orland Hills and Schaumburg, according to the Colorado-based sporting goods chain's court filings.
A bankruptcy court judge on Thursday gave Sports Authority permission to begin liquidating stores and said the company could use up to $275 million of its $595 bankruptcy loan.
Clearance sales hadn't started as of noon on Friday, an employee at the Water Tower Place store said, but signs at checkout warned customers the store would not accept returns on items purchased after Friday.
Liquidation sales will start at most stores marked for closure on Friday and will likely last several weeks, said Sports Authority spokesman Steven Goldberg.
An increase in online shopping meant the chain didn't need as many brick-and-mortar stores, Sports Authority said earlier this week.
Many retailers are coming to the same conclusion, which could make it tough to find buyers to fill empty Sports Authority and Staples storefronts, said Neil Stern, senior partner at Chicago-based McMillanDoolittle.
"The problem is, there just aren't that many retailers who are growing," he said.
In addition to shuttering stores, some retailers are trying to cut spending on costly real estate by downsizing large locations.
Macy's said last month it had begun looking for partnerships and joint ventures involving the company's flagship and mall properties and has previously announced plans to close 40 stores.
Sports Authority's stores average 40,000 square feet and Staples' are about 15,000 to 20,000 square feet, Stern said.
"The stores retailers have are tending to be too large," he said. "As some categories move online, you just don't need as much physical space."
Joe Parrott, senior vice president with real estate firm CBRE, said discount retailers like Ross Dress for Less and T.J. Maxx have been filling some empty big-box stores. They've also drawn interest from fitness clubs and entertainment options like indoor trampoline park company Sky Zone, Parrott said.
Even though some retailers have been moving away from the bigger stores, rents for large retail spaces have been increasing in areas that see a lot of shopper traffic because top-tier locations are in short supply, Parrott said.
The lack of major big-box retail bankruptcies prior to Sports Authority's announcement meant most closed stores had been underperforming and were often found in lower-quality sites, he said.
"When there are closings around a bankruptcy, even good locations become available," Parrott said.
Sports Authority has also said it plans to close or sell two distribution centers, including one in Romeoville, in the next few months. The company reported 66 job cuts would take place April 29 at the Romeoville center, according to a monthly state report on mass layoffs.
lzumbach@tribpub.com
