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Also yesterday, upscale department store Neiman Marcus said its cutting 375 positions. It's not just upscale stores. Mid-market, down-market, you name it, all retailers are suffering from the consumer slowdown. Yesterday the government just reported the sixth straight month of declining retail sales. Stores aren't just cutting jobs. Some are filing for bankruptcy. And it's all bad news for malls. The nation's second biggest mall operator now looks like it's on the financial rocks. We have more from NPR's Wendy Kaufman in Seattle.
WENDY KAUFMAN: Westlake Mall in downtown Seattle is one of roughly 200 malls nationwide that's owned or operated by General Growth Properties. Inside its malls there are more than 20,000 retail stores and restaurants. Many, if not most, are hurting financially, and some have gone out of business.
Ms. PATTY EDWARDS(ph) (Retail Analyst, Storehouse Partners): Well, right across from us we have two out of three or four stores that are actually closed and empty. Aand this is a fairly well-trafficked area.
KAUFMAN: Patty Edwards, a retail analyst at Storehouse Partners, joined us at Westlake. She says this mall isn't unique. Across the country, retailers are closing stores and curbing expansion plans. Other companies are seeking bankruptcy protection or going out of business. Just yesterday, Neiman Marcus disclosed layoffs. Gottschalks, a California-based department store, filed for bankruptcy. And Circuit City was auctioning itself after reporting it may have to liquidate if it can't find a buyer by tomorrow. As analyst Edwards explains, when mall retailers close and their spaces go empty, mall operators see their revenues shrink.
Ms. EDWARDS: They not only get rent, but they also, in a lot of cases, get a percentage of the sales that go through that store. You can imagine that if sales are down the way they are across the nation, not only do you have some of these openings coming up so you're not getting rent, but then you have lower sales on top of that, and it really can compound the problems.
KAUFMAN: For General Growth Partners, the immediate problem is paying off a sizeable debt, says Michael Niemira, the chief economist of the International Council of Shopping Centers.
Mr. MICHAEL NIEMIRA (Chief Economist, International Council of Shopping Centers): It's a very big problem for them to the extent that they've taken on over the last number of years a lot of debt for their growth and now they need to refinance some of that, and there really isn't an opportunity to go to any one source for that.
KAUFMAN: If the company can't pay off its debt or negotiate new loan terms by next month, it could be forced into bankruptcy. General Growth Partners has said it's working with advisers to develop a comprehensive plan to generate capital. In addition to the weak economy and tight credit, mall operators face yet another problem. Too many stores and too many malls, says California-based retail analyst George Whalin.
Mr. GEORGE WHALIN (Retail Analyst): We've been over-retailing for quite a while. We've been adding millions of square feet of retail space every year. You know, everything that goes up has to come down at some point. Realistic is what we're trying to get to at this point, a realistic balance between what the consumer really wants and needs and what the marketplace could give them.
KAUFMAN: Whalin says some malls, perhaps a lot of malls, will be closing down. But for most consumers, including 19-year-old Shawn Oborn(ph), shopping choices will remain abundant, and shopping malls as a fixture of American life are clearly here to stay.
Mr. SHAWN OBORN: I think it's a place to go to see a lot of different, new faces and have a really good shopping experience, because there's a variety of stores to choose from. Whatever I need, I can find it.
KAUFMAN: And at the moment, at least, he may well find it on sale, as retailers try to weather the economic storm. Wendy Kaufman, NPR News, Seattle.