Rocky Mountain Kor's?

KORS - Michael Kor's luxury retailer shutting 125 stores. Q4 swung from net profit to loss, revenue down 11%; stock clubbed 10%.

Retail bankruptcies over the last 12 months are near recession levels, said RBC Capital Markets retail analyst Brian Tunick. These include BCBG, Payless, PacSun and department store closures (45 Macy's, 140 JC Penneys and 150 Kmart/Sears stores in fiscal 2017).

  

We warned friends on May 12th: "When PG (tampons and toothpaste) which are essential non discretionary start heading down, anything that requires discretionary spending is going to get its head lopped off in short order.  Just sayin, I've seen this movie too and out."

I've recently been to some outlet centers in both Europe and the US, albeit during mid week daytime, that looked like ghost malls.  The bored employees were more than glad to share that although the weekend sees some traffic, business has been off for the last year plus, and their ranks had been thinned. 

Lacking my Woolworth's lunch counter for a BLT with mushroom soup, the experience was an old school outdoor mall, with lower overhead.  However, the prices being asked for "discounted" snob appeal discretionary name brands, were not cheap.  

In fact, on two of those trips, I bought nothing.  For a moment, I thought it might be the end of the world because something that had never happened before occurred.  I did not have to dry out the normal flood of tears which would stream from my wallet due to spousal molestation.

Upon a hasty exit, I checked my empty handed wife's forehead for a fever and asked everything alright? She quipped, I've never seen such expensive crap being touted as discount, I don't know what they are smoking, but I'd like to have some.

Look at SKT Tanger Outlet Malls -  they lost 30% in what might be panic selling and $25 seems "low", so value shoppers jump in.  Moving forward if the brick and mortar secular decline is not a temporary malaise, and or the economy continues to dwindle, then rents for discretionary retailers and brands, which constitute SKT's core tenants, might flatline or get softer.  

Not good for a leveraged REIT especially when combined with rising cost of loan funds. Funds from operations could take a rapid hit and a "value" could become a falling knife. TBD, BVD and Out.