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The Recession is Over: Department Stores Expand Again

In the depths of the recession, it seemed that department stores were going the way of the dodo. But then, slowly, customers returned. Comparable-store sales began to rise, even at previously struggling luxury-end department stores such as Neiman Marcus. Earlier this month, both Macy's (M) and JCPenney (JCP) turned in sales higher than their estimates.

Now, the once-unthinkable is occurring -- chain after chain is announcing plans for new stores. It appears America isn't done with shopping these old-time department-store brands. The evidence:

  • Target Corp. (TGT) opened 10 new stores Oct. 10. Five were even in economically hard-hit California. The chain is expanding its newer format that features more fresh produce.
  • JCPenney plans two new stores in suburbs of San Francisco and Washington, D.C., next year. The company plans to grow sales by $1 billion over the next five years through expansion, and is remodeling 76 stores to add upscale boutiques from LVMH Moeh Hennessy Louis Vuitton (MC.FR) and Sephora.
  • Kohl's (KSS), which took less of a recession hit than most of its competitors, announced plans to open 21 new stores in 15 states, and is remodeling 85 other stores.
  • Last spring, a former Gottschalks executive announced the launch of a new department-store chain, Gottschalk by Joe Levy, with the planned opening of a first store next month in Clovis, Calif.
Of course, all is not rosy yet in department-store land. Saks is still closing stores, announcing earlier this month it will shutter a store each in New York and Nevada and California. Those follow four closures earlier this year in markets around the country.

Still, it's a big net gain for department stores, and no one's seen that in a while. The Kohl's openings alone will create 3,000 new jobs, not to mention the ripple effect of increased sales other mall stores may see with a new anchor in place. When big retailers place big bets on new stores, it's usually based on a lot of market research that indicates where the economy is turning around. Smaller merchants can ride along on their coattails, skip the research costs, and still reap the rewards.

Photo via Flickr user ginat3

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