In a possible one-two punch for Peachtree Mall, the Texas-based home furnishings and decor superstore At Home has reversed its decision earlier this year to open inside the former Parisian space this fall.
At the same time, an investment research report indicates the Macy’s department store at the Columbus mall may be among 28 locations that are “most at risk” for closure by its parent company. Macy’s Inc. has said 100 of its 728 stores will be eliminated in the coming months.
“At Home will not have a presence at Peachtree Mall in Columbus, Ga., in the foreseeable future. As with any retailer, our real estate plans shift from time to time,” Stacey Sullivan, At Home’s director of public relations and corporate communications, said in an email to the Ledger-Enquirer.
Sullivan did not go into specifics as to why At Home, which is in expansion mode, pulled the plug on Peachtree Mall. Its debut at the 809,563-square-foot shopping center would have given Peachtree four anchor stores, including Dillard’s, JCPenney and Macy’s. Some residents have expressed safety concerns following recent shooting incidents at the mall, including a homicide there in March.
“If we receive an update from our real estate team with timing for At Home to enter the market, we will update you and our valued customers as soon as possible,” Sullivan said.
Peachtree Mall general manager Onassis Burress, on vacation this week, apparently was unaware of Plano, Texas-based At Home’s spurning of his property. He said via email Tuesday that the superstore “is scheduled to come to Peachtree Mall with an opening date still to be determined.”
Sullivan had confirmed in early June that At Home was bound for the Columbus mall this fall, with a likely opening in October. Yet no construction work has been visible at the projected site within the mall. That would be the 86,000-square-foot space vacated after the closure of the Parisian department store in February 2006.
Charlotte, N.C.-based retailer Belk, which bought the Parisian chain, decided to close the Columbus store, which then was quickly bought by Little Rock, Ark.-based Dillard’s for $4.4 million. The space was kept empty until General Growth Properties, the mall’s owner, purchased it last November for $2 million.
Burress said Tuesday a May 31 building permit valued at just under $1.9 million “is associated with At Home.” However, the Columbus Codes and Inspection office confirmed there has been no apparent activity connected to the permit, which is valid for six months unless an extension is sought and granted. The city typically inspects property periodically when it is under construction, which has not happened yet with the May permit.
If the local Macy’s is, indeed, headed for closure, it would be a major blow for Peachtree Mall, the city’s only remaining indoor shopping center, which was constructed in 1975 and has roughly 100 tenants. Columbus Square Mall, the city’s first enclosed center, was shuttered in 2002 and torn down to make way for a library, citizen services center and school system headquarters.
Burress said he isn’t aware of any plans by Macy’s locally. But a report issued recently by Morningstar Credit Ratings lists the Macy’s store at Peachtree Mall among 28 stores across the United States that are “most at risk” of being closed due to lower than preferred sales per square foot. The ratings company is a subsidiary of investment research and management firm Morningstar Inc.
Specifically, the report says the “at risk” stores, located primarily in malls across the United States, have “below-average tenant sales” that could have an impact on $3.64 billion in commercial mortgage-backed securities used for loans by Macy’s. In the case of Peachtree Mall, it lists sales per square foot of $139 at the Macy’s department store.
“We analyzed the most recent available store-level sales in post-crisis deals and identified 28 locations backing $3.64 billion in loans that have an elevated risk of being closed because the property’s sales fell below Macy’s average sales of $169 per square foot in 2014,” Morningstar said in the Aug. 17 report.
Muscogee County tax assessor records show the Macy’s department store space is 138,938 square feet on just over 11 acres. The market value of the property, which also has been home through the years to Rich’s and Montgomery Ward department stores, is about $6.5 million.
Morningstar, in its report, warned of the effects that the loss of a major anchor can have on a shopping center.
“If a mall is hit by two or more anchor closures, that’s typically the beginning of a downward spiral,” the report said. “Further dampening cash flow and increasing losses, it’s common for non-anchor tenants at anchored or shadow-anchored retail centers to have the right to terminate their leases or reduce rent if an anchor or shadow tenant vacates.”
The only other Macy’s location in Georgia on the “most at risk” list from Morningstar is located inside Oglethorpe Mall in Savannah, which has sales per square foot of $145.
Melissa Goff, a vice president with Macy’s south region, called the Morningstar list “speculation” and insisted the retailer has not yet determined which 100 of the 728 stores it now operates will be closed. Since 2010, the company has already eliminated 90 Macy’s stores, while opening 13 new ones.
“We’re still evaluating the properties,” Goff said. “The majority of (impacted stores) will be announced by the end of fiscal 2016 and the other remaining stores will be announced a little bit later on in 2017” as their leases and other contract requirements expire.
The retailer’s fiscal year concludes at the end of January, following the Christmas holidays, which is vital to every business that relies on shoppers to maintain a positive cash flow throughout the year.
Even while releasing such a dire research report, Morningstar senior equity analyst Bridget Weishaar, in a note released Aug. 11 after Macy’s downsizing announcement, said strategic store closures are “necessary and positive.” She said Macy’s needs to transition from its historic bricks-and-mortar store base — which is “in a sector experiencing secular decline” — to one that focuses much more on modern-day e-commerce.
As for malls in which the Macy’s stores do ultimately close, the Morningstar report said some may become “vulnerable” financially amid a shifting retail environment in which they face mounting competition from strip shopping centers, outlets, big-box retailers and neighborhood retail centers. That’s obviously on top of challenges from online commerce.
“Once anchors shut down, mall owners can have a difficult time finding retailers large enough to replace them,” the report said.
In his firm’s Aug. 11 announcement, Macy’s Inc. Chairman and Chief Executive Officer Terry Lundgren said all of the stores that will be closed are “cash flow positive today, but their volume and profitability in most cases have been declining steadily in recent years.”
Thus, the retailer plans to invest in the surviving Macy’s stores in an effort to offer an improved and “energized shopping experience.” The company said store employees will be informed of any closings prior to a public announcement. Those who are laid off may be offered jobs elsewhere, with those eligible receiving severance benefits.