M Macys Inc

By Heather Haddon, Sarah Nassauer and Esther Fung 

As some states lurch toward restarting their economies after coronavirus closures, many big companies remain hesitant to open their doors.

Macy's Inc., Gap Inc. and TGI Fridays Inc. are among the big national chains saying they will sit out the early phase of reopening in states such as Georgia and South Carolina, citing health concerns and uncertain customer demand. Other businesses, including Best Buy Co. and Starbucks Corp., will also continue in lockdown mode, keeping stores closed to shoppers and fulfilling online orders or curbside pickup.

Big chains say their phased reopening plans will rely on state and local guidelines, along with infection rates, their own market analysis and consumer surveys. Many large retail locations aren't profitable if the number of shoppers who can safely enter is restricted to just a handful of people, consultants say.

Retailers that have opened are working to reassure shoppers. Dick's Sporting Goods Inc. opened some stores this week in South Carolina, Iowa, Nebraska, Oklahoma and Virginia, after moving to curbside pickup and online orders last month. "We want to assure you that we are taking preventative measures to keep our stores clean and safe," said the company's website for those local stores on Thursday. The company told analysts Thursday that it is working to figure out the right staffing and operating model as stores open and has canceled some product orders to adapt.

Georgia is allowing some businesses, including hair salons and bowling alleys, to open Friday, with restaurants and theaters to open next week. South Carolina's governor allowed retail stores to resume operations this week at 20% of normal capacity, or five people per 1,000 square feet, but said local authorities could choose to keep restrictions in place -- a patchwork that some executives find vexing.

"Governor says one thing and a mayor says something else. There is a lot of conversation and it's not necessarily congruent," said Ray Blanchette, chief executive of TGI Fridays.

Mr. Blanchette said the 840-unit chain wouldn't be the first to open its doors given the potential virus exposure for customers and workers. "We don't want to be on the leading edge here," he said.

Major U.S. theater chains such as AMC Entertainment Holding Inc. and Cinemark Holdings Inc. are unlikely to open locations in some states before others, according to people familiar with the matter. With Hollywood holding back on major film releases, the overhead required to reopen doesn't make fiscal sense, the people said.

"While some states and localities are beginning to authorize the opening of movie theaters under certain conditions, the movie theater industry is also a national one," the National Association of Theatre Owners said Wednesday. "Until the majority of markets in the U.S. are open, and major markets in particular, new wide release movies are unlikely to be available."

Retailers are likely to reopen gradually to avoid financial strain, considering some shoppers will be uneasy going into physical stores for some time, said Jean-Emmanuel Biondi, retail consultant at Deloitte. The firm is using cellphone location and credit-card data to advise clients which areas are likely to see store traffic return first.

McDonald's executives will discuss reopening dine-in service with franchisees, who own 95% of the chain's U.S. restaurants, said McDonald's U.S. President Joe Erlinger and Vicki Chancellor, an Atlanta-based franchisee and chair of the company's national advertising committee.

Georgia franchisees will review the governor's reopening guidance and decide on where it can do so while keeping customers and workers safe, Ms. Chancellor said.

Many chains have furloughed workers and skipped April rents to preserve cash. Retailers continue to handle online orders, but have lost most of their sales. Gap, for example, has some staff using inventory from stores to fill online orders. But on Thursday the company warned it was burning through its savings and needed to raise additional funds this year.

Best Buy Co. stores across the country have sold products online and allowed customers to pick up curbside since shutting stores. "While we're still reviewing the orders in full, for now we will continue operating solely with contactless curbside service across the country, including in South Carolina and Georgia," a Best Buy spokeswoman said.

Reopening would require national retailers to rehire thousands of workers and add cleaning costs, even though it could be weeks before shoppers return in large numbers. The coronavirus stimulus bill gives unemployed Americans an extra $600 in weekly benefits until July 31, which means some hourly staff would take home less if they returned to the job before then.

Kohl's Corp. plans a phased reopening based on state and local guidelines, health data and the installation of protective equipment, a spokesman said. When the lights come back on, the department-store chain may add safety measures including removing beauty-counter testers and signage reminding shoppers to keep a safe distance.

Anderson Mall in Anderson, S.C., will reopen Friday, one of the few malls in the state opting to do so after restrictions were lifted on retailers there this week. Shoppers will be encouraged to wear masks, and frequent cleaning and sanitization will be the norm.

Still, Lou Conforti, CEO of mall owner Washington Prime Group Inc., doesn't expect crowds for now. "I don't think there will be a threshold issue for the first week," he said, adding that smaller, local tenants are more likely than big chains to roll up their shutters this week.

Hibbett Sports, Trends, White Willow Boutique, Chick-fil-A, Books-A-Million and Philly Cheesesteak Express are among mall tenants expected to open Friday, the landlord said.

Orders requiring malls to close in Tennessee and Georgia haven't been lifted yet. Saks Fifth Avenue plans to open for curbside pickup at its Houston and San Antonio locations Friday, part of Texas Gov. Greg Abbott's "retail-to-go" plan to get the economy moving. Saks hasn't set a date for opening stores to shoppers.

Landlords of open-air shopping centers say tenants generally decide whether to reopen, though property owners are considering how to manage popular restaurants, such as Chick-fil-A, that may have lines out the door.

"We think there is a lot of pent-up demand out there," said John Kite, chairman and chief executive officer at Indianapolis-based shopping center owner Kite Realty Group. Two of Kite's centers in South Carolina could see some tenants reopening this weekend, he said.

Making customers feel comfortable in stores and restaurants will be both an art and a science. TGI Fridays will remove seating and install plexiglass before diners return, and employees will have to wear masks. But Mr. Blanchette, the company's CEO, said he wants to equip servers with colorful, branded masks to enliven the atmosphere. "We don't want it to look like an operating room when you are at a restaurant," he said.

--Suzanne Kapner and R.T. Watson contributed to this article.

Write to Heather Haddon at heather.haddon@wsj.com, Sarah Nassauer at sarah.nassauer@wsj.com and Esther Fung at esther.fung@wsj.com

(END) Dow Jones Newswires

April 24, 2020 09:17 ET (13:17 GMT)

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