By Tonya Garcia, MarketWatch
Many retailers have shuttered their stores amid the COVID-19 outbreak. UBS analysts think a lot of stores will remain shuttered for good over the coming years.
Analysts forecast 100,000 stores will close by fiscal 2025, with apparel retailers the hardest hit at 24,000 closures.
Most categories will be impacted, with consumer electronics expected to see 12,000 closures, and home furnishings and grocery retailers at 11,000 closures each.
The most insulated names are the ones that have fared best during the coronavirus pandemic, including Walmart Inc. /zigman2/quotes/207374728/composite WMT -0.70% , Target Corp. /zigman2/quotes/207799045/composite TGT -2.89% and Costco Wholesale Corp. /zigman2/quotes/201191698/composite COST -0.37% .
Home Depot Inc. /zigman2/quotes/208081807/composite HD -3.17% and Lowe’s Cos. /zigman2/quotes/205563664/composite LOW -4.42% , dollar stores like Dollar General Inc. /zigman2/quotes/200691429/composite DG -1.85% , and off-price retailers like Ross Stores Inc. /zigman2/quotes/202639496/composite ROST -2.77% and TJ Maxx parent TJX Cos. /zigman2/quotes/203136811/composite TJX -2.49% are also well-positioned, UBS said.
Overall, e-commerce will be the biggest beneficiary, with penetration forecast to reach 25% by calendar year 2025 versus 15% currently. Experts say the convenience of e-commerce as well as a desire to continue with contactless transactions into the future is driving accelerated adoption of digital shopping.
With e-commerce expected to thrive, UBS says Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN -1.00% and its 193-million-plus square feet of fulfillment space are poised to benefit.
Wayfair Inc. /zigman2/quotes/201071690/composite W -1.58% has also added considerable fulfillment space, increasing to 15.5 million square feet in 2019 from about 795,000 square feet around 2015.
Moody’s analysts say the fittest will survive.
“The coronavirus pandemic has raised significant credit concerns about whether U.S. retailers have enough liquidity to survive the coming weeks and months,” analysts wrote.
Media reports say luxury department store Neiman Marcus is preparing for a bankruptcy filing this week.
“Many of the distressed retail companies are private-equity owned and are unlikely to receive a substantial amount of government cash to stem their liquidity needs,” Moody’s wrote.
Neiman Marcus was acquired by Ares Management Corp. /zigman2/quotes/202624618/composite ARES -1.83% and the Canada Pension Plan Investment Board in 2013