Retail Lost 11,100 Jobs in August, Hurt by Bankruptcies

Retail employment fell in August amid the backdrop of a cooling U.S. jobs market.

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According to data from the U.S. Bureau of Labor Statistics, the retail trade sector lost 11,100 jobs in August, higher than both the preliminary estimate of 3,400 jobs lost in July and the 5,600 jobs lost in August 2023.

Overall, the U.S. jobs market is deemed in OK shape, reflecting an orderly slowdown, but no major weakness that would suggest a downturn is on the way. For August, employers added 142,000 jobs, just below consensus expectations of an increase of 162,000 jobs.

“Today’s jobs report demonstrates that this summer’s Great Waiting Game has continued, with both employers and employees holding out for proof of improvement versus speculation of forecasts,” said Becky Frankiewicz, president of ManpowerGroup North America and chief commercial officer. “Our real-time data showed an August pick-up in job postings following a slower July, but year-over-year stability.”

She also noted that job gains could be ahead as employers shore up their Fall needs with the hiring of seasonal workers. As retailers look ahead to the upcoming holiday season, they tend to begin disclosing hiring needs later this month . Temporary workers give retailers a chance to test out the pool of available workers, with many part-time jobs often turning into full-time positions after the holiday season is over.

The unemployment rate slipped to 4.2 percent in August from 4.3 percent, a reflection that “labor market conditions are not deteriorating in a non-linear way,” economists at Wells Fargo concluded in a research note Friday. They have been projecting a 50-basis-point interest rate cut the Fed’s September meeting, but said a 25-basis-point cut wouldn’t be a surprise. “Regardless of what shakes out in September, we are confident that a series of rate cuts are coming in the months ahead,” they concluded.

Rate cuts would help ease the impact of borrowing costs that businesses have had to deal with over the past few years due to higher interest rates. Consumers could also benefit if those cuts continue, freeing up some dollars to give them more discretionary funds to put to use for purchases such as apparel.

Separately, first-time filers for jobless claims for the week ended Aug. 31 fell by 5,000 to 227,000, the Labor Department said on Thursday. That’s less than the 230,000 consensus estimate among analysts and represented a two-month low.

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For the retail sector, the increase in lost jobs shouldn’t be a surprise, given the Chapter 11 bankruptcies and other liquidity pressures.

Rue21 entered its third tour of bankruptcy on May 2 to effect an orderly wind-down of operations and shutting more than 540 stores across strip malls, regional malls and outlet centers. Many of those stores were in the final stages of closing over the last month. In July, Mountain Sports LLC also entered its third tour of bankruptcy proceedings. Twenty-one Bob’s Stores began going-out-business sales in preparation for a shut-down. Eastern Mountain Sports (EMS) secured a buyer for certain assets, including the continued operation of seven core profitable stores, but that still left about 17 EMS stores set for closure.

The distressed home sector continued to see more upheaval, with Conn’s in July adding its nameplate to the retail graveyard after deciding to shut down its operationa, as well as that of W.S. Badcock, which it acquired in December. At least 244 company-owned doors would close, resulting in the loss of 3,800 jobs across 15 states. That’s into including the impact on jobs at dealer-operated locations, which number in the hundreds. The wind-down of operations is expected to be completed by the end of October.

LL Flooring, the former Lumber Liquidators, filed for Chapter 11 bankruptcy court protection last month. It failed to find a buyer and now will close 442 stores across 47 states. Store closures are expected to be complete by the end of November, resulting in the loss of about 2,000 jobs.

Closeout home retailer Big Lots on Friday postponed its second-quarter earnings release. Originally slated for Sept 6, the company will now post results on Sept. 12. The distressed retailer said in July that it expects to close nearly 150 store locations across 28 states, or roughly four times more than the 35 to 40 doors it had planned to close in 2024. Last month, that store closure count rose to up to 315 locations, according to a regulatory filing. How dire is Big Lots’ problem? A regulatory filing from June included a warning raising “substantial doubt” regarding its ability to continue as a going concern due to liquidity pressures.

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