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3 Retailers That Could Be Pulling a Copperfield (SHLD, ODP, PLCE)

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With every passing day, e-commerce retailers like Amazon.com, Inc. ( AMZN ) put more and more pressure on brick-and-mortar retailers. In fact, the competition is so heated that Sears ( SHLD ), Office Depot ( ODP ) and Childrens Place ( PLCE ) are all closing a large number of stores in an attempt to stay in business.

Will these retailers pull a Copperfield and disappear entirely? Their prognosis certainly doesn't look great.

Sears Holdings (SHLD)

sears logo shld stock

Despite the aggressive efforts, things seem to be going from bad to worse for SHLD. In Q4, the company reported a net loss of $580 million, down from a loss of $159 million in Q4 2014.

Last month , SHLD announced that it will be closing another 10 Sears locations and 68 Kmart locations in 2016. While 78 stores in itself is not a huge number, this is far from the first wave of closings for SHLD. In fact, the retailer has been shedding locations for a decade now. Since 2006, SHLD has closed an incredible 379 Kmart locations and 1,289 Sears locations in the past 10 years.

"The decision to close stores is a difficult but necessary step as we take aggressive actions to strengthen our company, fund our transformation and restore Sears Holdings to profitability," CEO Edward Lampert said of the newest closings.

Shareholders are desperate for the company to find a way to turn the corner. SHLD stock is down 92.5% in the past 10 years.

Office Depot (ODP)

Speaking of desperate, ODP is hoping that it can win its antitrust trial against the Federal Trade Commission and join forces with Staples ( SPLS ) to take on AMZN as a team. ODP and SPLS are the two major remaining national office supply chains, a fact that wouldn't typically bode well in an antitrust defense. However, SPLS attorney Diane Sullivan has pointed a finger squarely at AMZN, claiming that office suppliers like SPLS and ODP are "getting killed" by the e-commerce giant.

In the past three years alone, ODP has closed 400 stores. Over the past decade, ODP's revenue has declined 2.5% and its share price is down 85.5%.

Sullivan says that it could be now or never for SPLS and ODP in terms of long-term survival.

"They need to do something drastic to stay competitive," she said. Shareholders are hoping that a merger would provide cost saving opportunities and additional pricing power that could boost margins.

Childrens Place Inc (PLCE)

PLCE plans on closing 200 stores between 2015 and 2017. While that may seem like a small number compared to SHLD and ODP, PLCE had much fewer total locations in the first place. As of the end of 2015, PLCE had only 1,085 stores remaining.

In the past five years, PLCE's revenue has slumped 4.9%, but its share price has actually spiked 36.3%. Much of the market optimism revolves around the company's recent performance. In Q4 2015, PLCE reported a 4% year-over-year revenue gain.

"Since mid-2014 we have consistently and publicly stated that our multi-pronged, company-wide transformation strategy would begin to deliver in the back half of 2015," CEO Jane Elfers said following the strong Q4.

If PLCE can follow up with more strong earnings in 2016, other retailers may start looking at the company as a blueprint of how to construct a successful retail turnaround…but let's not count our chickens just yet.

Disclosure: As of this writing, Wayne Duggan had no positions in any of the stocks mentioned.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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