Yesterday we learned that the Lucky’s Market in the Southgate Mall will be closing for good.
The store has 150 employees. It opened less than two years ago.
Now, it’s true that Lucky’s Market is having problems nationally. The chain is pretty much done, as it’s closing 32 of its 39 stores. The beginning of the end.
It’s pretty sad news for Missoula, and the mall, and taxpayers. Remember, taxpayers had to shell-out $8.5 million in 2015 so the Lambros family could update their mall...and then sell it off to an out-of-state firm for $58 million just a few months later.
Reeks of corruption.
Two years ago Lucky’s spent $5 million renovating the former Sears location in the mall for their new spot.
They ran into big problems when they found out people couldn’t shop and drink alcohol at the same time, and the movie theater next door ran into the same problems when they couldn’t get a liquor license.
I think the movie theater will be shutting down in the near future. Just five days ago we learned that the JC Penny store in the mall is closing down.
The mall says it will renovate this space. I think that’s true, but it’s not going to be so the mall can hold a new tenant.
In fact, I believe the mall is going to close for good soon. The 68 acres will then be redeveloped for high-end condos, luxury shops, and boutique eateries. I suspect the fairgrounds will be redeveloped at the same time.
Many stores are closing. I’m hearing that the Verizon in the mall is moving. I hear that the Mustard Seed asian restaurant is looking for a non-mall location. The Cost Cutters is leaving, too. Other stores are also ready to pack-up, probably to head to the strip malls on Reserve (I believe the rents downtown are way too expensive).
The Washington Prime Group bought the mall from the Lambros Family for $58 million in 2018.
Washington Prime Group came into existence in 2014 and has over 100 shopping malls around the country, mostly in the midwest. In 2015, the company bought-out Glimcher Realty Trust for $4.3 trillion.
Money problems set in, mainly with debt. The CEO stepped down in 2016 and in 2017 they sold-off six malls for $340 million. That sale didn’t come from a position of strength.
So is the company a risk?
The company has some problems. One is that they make just $400 per square foot from their malls, where other operators are squeezing out $650 to $850 per square foot. Their malls are in lower-population dense areas than other companies’ malls.
Another is a dividend that’s 30% right now, and that should raise some flags...especially in a retail sector - malls - that’s failing all over the country. The dividend rate is only 25 cents a share, and the company has admitted it didn’t know if it could cover the 2019 dividend payouts. That’s troubling.
Mostly, the stock is shit. It’s sitting at $3.75 a share right now, down from $13.50 back in August 2016.
Missoula residents won’t hear about anymore mall store closures until a few weeks or months before they happen.
More store closures will come. The mall just lost two of their anchor stores - JC Penny and Lucky’s. This is typically a death knell in that industry.
It’ll be interesting to see what happens with this story.
Keep your eye on Washington Prime Group and their stock. That’ll be the biggest indicator of the health of our mall here in Missoula.