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February 5, 1997: 4:16 p.m. ET
Retailers shut down stores to maximize profits this year
From Correspondent Rhonda Schaffler
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NEW YORK (CNNfn) -- Across the nation, retailers are going through the annual process of deciding what areas will get new stores and what area will lose stores.
Despite the mediocre holiday season, 1996 turned out to be a pretty good year for retailers, and to maximize profits even more, companies are shutting down underperforming stores. More than 13,000 retail outlets closed last year and more are expected.
"Typically, what happens its that most companies look at their 1997 store plans and analyze which stores are profitable, which aren't and how many of those unprofitable stores are hurting their earnings base," Dana Telsey, retail analyst at Bear Stearns, said. "As a result, we typically have store closings after year end."
Among the big chains that have announced closings include discounter McCrory, shutting down 300 stores; Limited, closing 200; Hit or Miss, removing 104, Egghead, eliminating 77; and Oshman's Sporting Goods, closing 50 outlets.
Many closings are blamed on oversaturation. Retail space has grown 20 percent in the last five years, outpacing profit growth.
That's a problem facing chains like music retailer Sam Goody. Analysts predict the company will shut down 200 of its Musicland stores this year.
PaineWebber analyst Craig Bibb said there are simply too many music stores for customers to support. (121K WAV) or (121K AIFF)
Analysts also predict more closing of electronics outlet because of weak computer sales.
But one bright spot in the retail sector is an anticipated reduction in bankruptcy filings this year. Fifty-five retail chains filed for bankruptcy protection last year, and analysts predict a sharp drop in 1997. 
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