Urban Outfitters CEO rings the bell: “retail bubble has burst”

Urban Outfitters Chief Executive Officer Richard Hayne is said to have ‘shocked’ analysts in his 4th quarter earnings call last week, when he admitted that the holiday season was disappointing even with heavy discounting, and that the broader problem is that there are just way, way too many stores.  Urban Outfitters CEO says retail bubble has burst:

“The U.S. market is oversaturated with retail space and far too much of that space is occupied by stores selling apparel,” he said. “Retail square feet per capita in the United States is more than six times that of Europe or Japan. And this doesn’t count digital commerce.”

Too much square footage was added in the 1990s and early 2000s, with thousands of stores opening.

“This created a bubble, and like housing, that bubble has now burst…We are seeing the results: Doors shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate.”

Years of Quantitative Easing enabled public companies to raise round after round of cheap financing, and extend the illusion of viability in the retail sector.  But it was never sustainable.  Now the world is awash in consumer goods amid an aging and heavily indebted population that wants less debt, more savings, better health and less things.

When retail executives are finally admitting the truth about this cycle, we should know that even extreme financial engineering can no longer paper over the holes here.  The trick now is to figure out smart ways to recycle and re-purpose superfluous goods and buildings into productive activities like green energy and food farming, maybe some roller rinks for fun and fitness?  Maybe we can regrow some of that green space we plundered to build all this wasteful nonsense.  Time to get creative and resourceful.

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