Europe's Fashion Brands Expand in U.S. Even as American Stores Close Doors
11 May 2017 - 7:59PM
Dow Jones News
By Saabira Chaudhuri
LONDON -- European retailers hungry for growth are pushing
deeper into the U.S., with some using the overexpansion of their
American counterparts as a chance to pick up consumers and prime
locations.
"We're not in all the malls we want to be in yet," said Nils
Vinge, head of investor relations for Swedish fast-fashion retailer
Hennes & Mauritz AB. "There is still opportunity for physical
stores."
H&M opened a net 16 new stores in the three months to Feb.
28, bringing its total number of U.S. stores to 484. Competitor
Zara, the Inditex SA-owned fast-fashion chain, also continued to
grow its American presence, opening a net 10 stores through 2016,
bringing its U.S. total to 78 as of Jan. 31.
The expansion comes as American retailers, pressured by online
shopping and cut-throat competition, are closing stores at a record
pace.
Credit Suisse estimates retailers will close more than 8,600
locations around the U.S. this year, which would surpass the number
of closings during the 2008 financial crisis. Already this year 19
retailers including Payless Inc. and RadioShack Corp. have filed
for bankruptcy protection, compared with 18 in all of 2016,
according to S&P Global Market Intelligence.
Despite this, the $274 billion U.S. apparel market -- the
world's largest, according to Euromonitor -- remains an attractive
next step for European retailers looking to expand.
"A lot of peers are closing down and leaving their stores, which
of course opens up opportunities," Mr. Vinge said on a March
investor call.
After Eastern Outfitters LLC filed for bankruptcy, Sports Direct
International PLC last month swooped in to buy the Meriden,
Conn.-based company's 50 Bob's Stores and Eastern Mountain Sports
for $101 million. Sports Direct, the U.K.'s largest sports clothing
and equipment chain, said the move would give it "a footprint in
U.S. bricks-and-mortar retail."
As recognition of newer European retailers has grown in the
U.S., so has their foothold. Discount clothing retailer Primark
brought its brand of cheap chic to the U.S. in 2015, opening a
store on the former site of Filene's Basement in Boston's Downtown
Crossing. The Dublin-founded retailer, which will open its eighth
U.S. store in June in Braintree, Mass., recently expanded its first
U.S. store by 20% to about 93,000 square feet, saying awareness of
the Primark brand had grown.
"Some international retailers see this as a great opportunity to
get into markets they couldn't afford or [to] accelerate
expansion," said Brandon Famous, a senior managing director focused
on retail in the Americas for real estate services company CBRE
Group Inc. But, he added, many smaller international brands are
unlikely to be helped by rising store closures since they tend to
look for prime locations such as top-tier malls, where business
remains strong.
Amsterdam-based Scotch & Soda has opened three to four new
outlets every year since its first U.S. store appeared in New York
City in August 2010. The hip, midrange label now has 25 stores in
cities including Miami, Chicago, San Francisco and Los Angeles.
"Based on our positive business performance in the U.S.A., we are
currently considering ramping up the rollout pace," a spokesman
said.
Reiss Ltd., a favorite of Kate Middleton, took a more cautious
approach as it entered the U.S. market, opening just eight
stand-alone locations in cities like New York and Boston since
2005. But the family-owned British retailer has been bolder
recently: Reiss opened two stores in New York last year and earlier
this year opened one store in Miami. Superdry, which has 20 stores
in the U.S., is also accelerating its expansion. The British casual
clothing brand plans to open five stores over the summer and five
more in the fall.
Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
(END) Dow Jones Newswires
May 11, 2017 05:44 ET (09:44 GMT)
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