Mall Stocks Hammered As Even Cheap Make-Up Fails To Lure Customers

This morning's announcement of Abercrombie's failed sale process served as a startling reminder of just how toxic mall-based retailers have become to investors in the post-Amazon era.  News that not a single suitor was willing to touch the once high-flying, teenage-catering, cologne-infused, mall-based wonderland has wreaked havoc, yet again, today on retail apparel chains, with Abercrombie down over 20% and several others plunging to new all-time lows.


Of course, it's not just the specialty apparel stores that are getting crushed.  As we've noted several times in the past, the beloved anchor tenants of mall REITs have been among the hardest hit as a new generation shoppers have shunned over-priced department store products.

As the Wall Street Journal points out today, department stores like Macy's, Sak's and Lord & Taylor are even being forced to discount their last bastion of hope in order to lure customers into their dying stores: cosmetics.

Desperate to get shoppers in the door, department stores are discounting the one item they had long been able to sell at full price: cosmetics.


Last month, Lord & Taylor offered 15% off almost all cosmetics and fragrances. Bloomingdale’s gave members of its loyalty program a $25 reward card for every $100 beauty purchase. The moves followed a decision by Macy’s to offer 15% off cosmetics, which it touted in nationally televised advertisements this spring.


“We’ve seen our competitors start to discount items like cosmetics, and I’m sure they’re saying we’re doing it,” said Jerry Storch, the chief executive of Saks Fifth Avenue and Lord & Taylor parent Hudson’s Bay, on a conference call last month. “Once you get into that kind of a situation, everyone is fighting for every inch.”


A decade ago, shoppers would have been hard-pressed to find any Estée Lauder lipsticks, Bobbi Brown mascara or Shiseido blush on sale. These “prestige” brands are sold mainly at department and specialty stores and tend to be pricier than the so-called mass cosmetics sold at drugstores.


Meanwhile, today's move isn't really a new trend for the department stores...


Of course, as the former CEO of Bloomingdale's notes, discounting the one product where you still make margin is just a "short-term" fix that will inevitbly speed up the 'race to the bottom' for mall-based retailers...

Some department-store industry executives say discounting is a short-term fix. While promotions initially encourage shoppers to buy, they can damage brands over the long term. And because shoppers soon become numb to the deals, retailers are forced to offer ever-deeper price cuts.


“Department stores shoot themselves in the foot when they do this,” said Michael Gould, a former CEO of Bloomingdale’s, who ran the upscale department store chain for 23 years until his retirement in 2014. “It’s like they’re putting themselves on drugs.” it fails to address the underlying issue which is shifting consumer habits.

Sales of prestige makeup in the U.S. are growing, totaling $8 billion in the 12 months to May, an 11% increase over the same period a year ago, according to market-research firm NPD Group Inc.


But department stores’ share of the market fell to 19% in North America last year from 23% a decade ago, according to Euromonitor International data analyzed by Bernstein Research. Over the same period, specialty beauty retailers increased their share to 20% from 14%.

Make up


But perhaps nothing sums up why the mall-based retailers are doomed than the following comment from a former Lord & Taylor executive:

“It’s a disease that retailers have to discount more to make the sales numbers,” said Barbara Zinn Moore, who was Lord & Taylor’s vice president of cosmetics and fragrance from 2001 until last month. “But how else do you get the sales growth?”

Last we checked, profit per square foot is what generates returns for shareholders...not revenue per square foot...


froze25 (not verified) Sonny Brakes Mon, 07/10/2017 - 14:41 Permalink

Our malls are populated by Dindues that just chill and "Hold it down" they don't spend and more often then not are just trying to pick-up underage girls or ask people "Hey, gotta dollar?" No one goes anymore, why would you subject yourself when Amazon, or another online retailer can just ship it to your door?

In reply to by Sonny Brakes

NoDebt BaBaBouy Mon, 07/10/2017 - 15:19 Permalink

No argument from me, BBB.  The Ds have only one place left to go: full-on avowed socialism.  A Bernie Sanders/Liz Warren type candidate.  I listen to guys like Rush Limbaugh talking about how the Ds need to tack back towards the center and throw off the left wing extremists and I just laugh.  Not a snowball's chance in hell of that happening.  They're gonna go for broke (literally).  They can't go back now.$15,000 per year for every person in the country is only like $4 TRILLION dollars a year.  We could float that NO PROBLEM.  NO PROBLEM.   

In reply to by BaBaBouy

techpriest NoDebt Mon, 07/10/2017 - 15:40 Permalink

Closer to $5 trillion. If they really wanted to do that, it should be more like a negative income tax to eliminate the "welfare cliff," so every dollar earned actually increases your income.

Still, unless they are planning to eliminate Social Security and Medicare as part of the plan, then financially the whole thing is DOA. It would pass anyway, but its still going to be DOA, and people are going to starve like every other case where communism was tried.

In reply to by NoDebt

SDShack techpriest Mon, 07/10/2017 - 16:06 Permalink

Of course it's coming. MyRA was a trial balloon. When TPTB have nothing left, they will implode this thing deliberately and launch the mother of all scare tactics. Bonds and Stocks will fail. Money Markets will fail. 401k/IRA's will fail. Healthcare (medicare/medicaid) will fail. Pensions will fail. Social Security will fail. The sheeple will demand bailouts so massive that there will be bi-partisan support for a new system regardless of debt or currency destruction. The re-order of the chaos will be the biggest govt socialized system ever. It will roll up healthcare and retirement into one giant program that everyone will be taxed to death on. It will be a requirement for all people in the USSA, and the 0zer0care tax ruling will be used to justify it. This has to be done to end the USA as a republic so the globalists can continue their march to the New Feudal World Order.

In reply to by techpriest

Twee Surgeon Miffed Microbi… Mon, 07/10/2017 - 16:16 Permalink

Make-up, like fake boobies and a nose job is really a form of fraud. As a card carrying member of the Dude Union, I can assure you that many a man has been fooled into thinking he has become engaged to a superbly delicious babe, only to find out later that she has been losing weight on the Methamphetamine plan, Been to Beverly Hills for a Skull re-shaping by a famous plastic surgeon and had her legs extended.Then the kids come out looking like Halfwit jelly beans with legs. There should be a law against it. Truly Beautiful women wear very little make up, in my humble opinion.

In reply to by Miffed Microbi…

True Blue Twee Surgeon Mon, 07/10/2017 - 17:06 Permalink

Really; who wants to date, much less marry the Bride of Frankenstein?But -it does serve to highlight the genetic defects in their mind which (prior to the silicone era) didn't usually manifest themselves so obviously. Makes the outside reflect the deeply troubled inside. A savvy investor uses negative indicators just as often as positive ones, no? 

In reply to by Twee Surgeon

Lore Miffed Microbi… Mon, 07/10/2017 - 17:56 Permalink

I haven't been inside an Abercrombie & Fitch store in ages, but remember that they used to be beautiful, with upscale collegiate apparel, absurdly overpriced. Didn't they go all pro-sodomite a while ago?  Yeah.  So the decline might be interpreted as a measure of pop-culture rejection?  Maybe, but all specialty retail is hurting.  Everybody's drowning in debt, not just queers.I'm with Miffed re: make-up.  Women with heavy make-up are like men with heavy facial growth: trying to hide or compensate for something.  In HR, it's a red flag.I do miss hairstyles, though.  I'm old enough to remember when women styled their hair routinely.  But it's EXPENSIVE.  Still, there's much to be said for the woman with long hair who spends 2 minutes with a brush and a curling iron. People should take reasonable pride in their appearance. You feel better about yourself and interact more positively with the world.  I think a lot of people are very unhappy with their lives nowadays, and it shows. They just give up.  When enough people do the same, the de facto standard becomes no standard at all. 

In reply to by Miffed Microbi…

garcam123 Lore Mon, 07/10/2017 - 18:58 Permalink

My lovely daughter scooped up $ 600.00 worth of T-shits and tank tops in 20 minutes., mighta been 7 or 8 $600.00, but she was worth it......I guess........the little bitch, then she wrecked my car...the cute little know how it is....I'm sure!

In reply to by Lore

froze25 (not verified) Anon2017 Mon, 07/10/2017 - 14:51 Permalink

We used to have a nice outlet center but it was adjacent to a shit neighborhood. At first it was crowded at first but then the Dindues made it their chill out spot. The crowds left, the stores all closed. The other half of it is on the other side of a Hwy, they are still opened and doing ok.

In reply to by Anon2017

83_vf_1100_c froze25 (not verified) Mon, 07/10/2017 - 16:04 Permalink

Dindoos was my 1st thought. Just one brick in the wall but safety and a pleasant experience are foundation bricks.I can grab a couple friends for backup, pack a .45 and run the gauntlet or a couple clicks on Amazon.Women are the core of mall biz, guys only go there to meet women and buy tools at Sears. Craftsman line is now no better than Harbor Freight. The women are afraid. Women tend to work now so too tired to run the mall gauntlet. Malls are toast.

In reply to by froze25 (not verified)

garcam123 83_vf_1100_c Mon, 07/10/2017 - 19:13 Permalink

Americans are down to Rent, Credit Card payments as possible, utilities, transport and fuel payments, toilet paper, dog food, processed crap to eat, internet...............end of fucking paycheck.....and you want me to fly to Iceland for $ 99.00? What?  Are you fucking nuts?  Economy?  Yea I'll take a 12 pac of the economic toilet paper so I can still wipe my ass when I run out of "paycheck".Thanks Motherfuckers for such a fullfilling fuckin life.  You sorry fuckers have filled the whole WORLD"S FUCKING LIFE WITH DEATH AND MISERY.Yea YOU AMERICAN CRIMINAL ENTERPRISE CALLED are scum and shit and I pray I see you gets yours before I die.

In reply to by 83_vf_1100_c

swmnguy Cursive Mon, 07/10/2017 - 14:58 Permalink

I'm aging, and I have two adolescent kids; one who drives and one who will be driving soon.  Yikes.  I've had to force my kids to learn how to drive.  We live in the city and the kids are not only transit-savvy, they ride bicycles everywhere.  It's a lot cheaper, and in the inner city more convenient, to not use a car.I haven't been to an actuall mall yet this year.  They simply don't have anything I want to buy.  Merchandising has gotten high off their own vapors.  Just try to find a pair of jeans made with actual heavy-duty denim.  You have to go to a place like Fleet Farm or a work-clothes specialty shop to find jeans that aren't made of flimsy fabric with spandex in it.  If that doesn't frustrate you enough, shop for the standard button-collar cotton men's Oxford button-down shirt.  Almost impossible. That shirt has been the standard for 100 years, but all the retailers want to sell faddish variations of collar, cuffs, etc.Since the malls don't seem to want to sell me anything, I'm happy to oblige.  My wife and kids agree.One of the things that told me my wife was "The One" happened early in our relationship, around 1992.  She went out shopping and came back with a huge pile of clothes.  Several pairs of slacks, some jeans, half a dozen shirts, a couple of dresses.  She was lamenting that she'd gone wild and spent more money than she'd intended.  She had spent $30.  Having grown up poor (as I did too), she shops thrift stores only.  She just can't justify the cost for such low quality.  Our kids are cheapskates with an eye for value, durability and style that will last.None of this is good for malls and the kinds of stores, with the kinds of strategies prevalent in retail right now, found in malls.

In reply to by Cursive

CheapBastard swmnguy Mon, 07/10/2017 - 15:04 Permalink

higher taxes, higher insurnace costs for cars,e tc and the Obamacare killer tax pulled me out of consumer market for two years now. I feel I don't need anything anymore. If someone at work ever comments that I'm wearing the same shirt again, I tell them they can thank Obama, Pelois and Reid for my fashion look.

In reply to by swmnguy

ElTerco swmnguy Mon, 07/10/2017 - 15:55 Permalink

The quality of fabric is appalling now. High quality fabric is only pennies more expensive per square foot to produce. The buyers at major clothing chains are complete idiots. They could get $35 per shirt with good fabric, vs nothing for a shitty shirt that is not purchased.

In reply to by swmnguy

LyLo hedgeless_horseman Mon, 07/10/2017 - 15:16 Permalink

Death of the middle class.  Wish I could feel hope on this one, but I've actually watched it happen first hand among the women I know and it doesn't seem to be some high-minded activism.The rich all shop at Sephora now.  Malls decided that they didn't need to hire real makeup counter people, and instead expect a blue-haired teenager glancing up from a cellphone with disdain to somehow make the hard sell necessary to hock a $75 tube of lipstick.  Most women that are willing to drop hundreds of dollars in one visit on makeup expect service just a bit more personalized and attentive than the local McDonald's.  Whocouldaknowed?The poorz (my term for the old middle class) buy makeup at the Dollar General or wherever or not at all.  Malls decided that they, unlike any other retail space over the past few decades, did not have to lower prices or renovate to meet the needs of a new generation: they could just keep the same layouts and premiums they'd always enjoyed and just pray the plumbing holds out while they collected the cheque.  The problem is, the vast majority of Americans do not have huge blocks of time nor large sums of money to spend on much of anything, let alone for something as dumb as retail shopping. (Now, what happened in the intervening years to change the shopping habits so drastically that the average American woman no longer has a whole day to spend a week shopping is a whole different discussion, and one employers and retailers should perhaps ponder with a bit more self awareness than usual as entire industries go down the fucking tubes...)

In reply to by hedgeless_horseman