Join us on LinkedIn Follow us on Twitter Like us on Facebook Follow us on Instagram
 
  OCTOBER RESEARCH STORE Already a subscriber? LOG IN
AddControlToContainer_DynamicNavigation4

Appraiser News

Valuation execs say retail inventory surprisingly healthy

Email A Friend Printer Friendly Version
0 comments
Appraiser News
Wednesday, July 15, 2020

Retail inventory valuations bounced back quickly in May and June as large numbers of Americans responded to retail re-openings by hunting for bargains at liquidation sales, said executives from Tiger Capital Group in a webinar with analysts from Goldman Sachs, according to a press release.

“Nobody anticipated just how strong some of these closeout sales would be when stores and shopping centers opened up again,” Tiger Group co-founder and managing member Dan Kane said in a press release, commenting on the webinar discussion. “Maybe it was as simple as pent-up demand — people wanting to get out of their homes — but at Tiger we have been pleasantly surprised at how well these closing sales have performed so far.”

Focused on retail liquidations and closeouts, the June 24 call also featured Tiger Group Chief Operating Officer Michael McGrail along with Goldman Sachs analysts Chandni Luthra, Kate McShane and Alexandra E. Walvis. The veteran asset appraisal and disposition executives were quizzed on the overall state of the retail landscape, the performance and prospects of different retail categories, dynamics in the closeout space and plausible scenarios for retail’s future.

In the early weeks of the pandemic, McGrail noted retail inventory valuations were highly uncertain — so much so that Tiger advised clients to hold off on appraisals until more transaction data was available. Store-closure sales, some of which had been interrupted by the lockdowns, provided precisely such data once malls and shopping centers began to reopen.

“All indications are that appraisals are now pretty close to pre-COVID-19 numbers, depending on the category and the region you’re in,” McGrail said. “You can argue about whether that pent-up demand is sustainable. If there were another shutdown — some sort of drastic setback — that could certainly affect values.”

Parts of the United States now are recording record numbers of COVID-19 cases, with governors in some states once again restricting bars and dine-in restaurants. Nonetheless, results from those initial store-closure sales appear to be good news for both retailers and asset-based lenders.

“Let’s say you have a two- or three-month interruption,” McGrail said. “When things open back up, all signs indicate that we can liquidate that inventory and it will maintain its appraised value, again depending on the category and other factors.”

Kane and McGrail underscored that the U.S. retail landscape is contracting rapidly, with thousands of stores already set to close and new consumer habits likely to further reduce demand for brick-and-mortar space.

"Because of COVID-19, people didn't have a choice but to learn how to order more and more merchandise online," Kane said. "Those behaviors are going to be sticky."

McGrail told the analysts: "The United States is over-retailed to begin with," he told the analysts. "Moreover, retail is built on a financing structure that leads directly to too many stores, malls and, ultimately, auctions. The retailer buys its inventory, uses it for collateral, gets an asset-based loan and ramps up its square footage to build that pyramid."

While it might sound counterintuitive, Kane added, cheap money has also worked against the health of U.S. retail in general. And when retailers have easy access to loans (or are acquired and kept open by mall landlords seeking to stave off vacancy), they may need to slash prices to raise cash.

"That starts hurting healthier retailers at that mall," Kane explained. "Now they have to lower their prices in turn."

That's precisely why, in response to a question from a Goldman Sachs analyst, McGrail cautioned against full-price retailers jumping into the closeout business as a response to a sudden glut of inventory.

"That transition could be disastrous, because the customer could then be conditioned to pay less for that merchandise, and margins could erode," he said. "When the retailer tries to go back to full price after COVID-19 is over, the customer balks and says, 'I'm already accustomed to you being a discounter.'"

 

Today's other top stories
Trainee says ‘opportunity to grow’ fueled his drive to be an appraiser
ServiceLink senior VP speaks to modernizing valuation solutions
Veteran appraiser shares his thoughts on the UAD
Quantarium appoints chief strategy officer
AI addresses restaurant appraisals


COMMENT BOX DISCLAIMER:
October Research is not responsible for the comments posted on its websites by readers. We will do our best to remove comments that include profanity or personal attacks or other inappropriate comments.
Comments:

Be the first to leave a comment.

Leave your comment
Please enter a comment.
CAPTCHA Validation
CAPTCHA
Code:
Please enter the word displayed in the image above. Please enter the word displayed in the image above.
: 
Please enter your name.
: 
Please enter your email address.
This field must contain a valid email address.
Your Email is for reporting purposes only. It will NOT be displayed.
Popularity:
This article has been viewed 1271 times.

Print Edition - June 23, 2025

News by Topic   In-depth Reports   Events   Subscribe
Conference Coverage
Appraiser News
Commercial Corner
Legal News
Market Watch
Technology Corner
 
 
Expanding Your Appraisal Business
2025 State of the Industry
2024 Voice of the Appraiser
2024 Appraisal Technology
Marketing Your Business
Appraisal Bias
Archives
 
National Settlement Services Summit (NS3)
Women's Leadership Summit (WLS)
Webinars
 
Subscriptions
Free Email Updates
Try a Free Edition
News by Edition   About   Other Publications    
May 26, 2025
June 9, 2025
June 23, 2025
Archives
 
Valuation Review
Contact / Editors
Social Media
Advertise
Request a Media Kit
Are You An Expert?
Subscriber Agreement
 
Dodd Frank Update
RESPA News
The Title Report
The Legal Description
   
Copyright © 2002-2025 Valuation Review
An October Research, LLC publication
3046 Brecksville Road, Suite D, Richfield, OH 44286
(330) 659-6101, All Rights Reserved
www.valuationreview.com | Privacy Policy
VISIT OUR OTHER WEBSITES
> Dodd Frank Update
> RESPA News
> The Title Report
> The Legal Description
> NS3 The Summit
> Women's Leadership Summit
> October Research, LLC
> The October Store
Loading... Loading...
Featuring:
  • Delivery 3X a week plus breaking news as it happens
  • Comprehensive title insurance industry news
  • Recent acquisitions, mergers, real estate stats
  • Exclusive in-depth coverage of the industry's hottest stories
Featuring:
  • Delivery 2X a week plus breaking news as it happens
  • Comprehensive Dodd-Frank coverage
  • The latest information from the CFPB
  • Full coverage of Congressional hearings
  • Updates on all agency actions
  • Analysis of controversial provisions
  • Release of newest studies and reports
Sign up today and...
  • Be one of the first to know where NS3 is being held
  • Learn about NS3 speakers and sessions
  • Save on registration with Super-Early Bird rates
  • Discover the networking opportunities NS3 offers
  • Find out if CE credits will be offered for your area
  • And much more
Featuring:
  • Delivery 2X a week plus breaking news as it happens
  • Preview the latest RESPAnews.com Top Story
  • RESPA related headline news
  • Quote of the Week
Featuring:
  • Delivery 2X a week plus breaking news as it happens
  • Legal, regulatory and legislative information impacting the settlement services industry
  • News from HUD, Congress, state legislatures and other regulatory agencies
  • Follow the lobbying efforts of all the major national real estate services organizations.
Featuring:
  • Delivery 2X a week plus breaking news as it happens
  • The industry's only full-time newsroom
  • Relevant, up-to-date appraisal industry news
  • Covering the hottest stories and industry trends
NEWS BY TOPIC
NEWS BY EDITION
IN-DEPTH REPORTS
EVENTS
RESOURCES
FREE EMAIL UPDATES
ABOUT
SUBSCRIBE
Conference Coverage
Appraiser News
Commercial Corner
Legal News
Market Watch
Technology Corner
Sponsored Content
Current Edition
June 9, 2025
May 26, 2025
May 12, 2025
April 28, 2025
Archives
Expanding Your Appraisal Business
2024 Voice of the Appraiser
2025 State of the Industry
2024 Appraisal Technology
Marketing Your Business
Real Estate Compliance Outlook
Appraisal Bias
Finding & Training the Next Gen
Archives
National Settlement
Services Summit (NS3)
Women's Leadership
Summit (WLS)
Webinars
2025 Economic Outlook Series
New Appraisal Reports
Compliance Series
Technology Series
Manufactured Housing
CFPB's Shake-Up & Its Impact
Appraising Office Space Today
Eminent Domain
Securing Your Cyber Network
Keys For Operational Efficiency
Drones Do's and Don'ts
How to be an Expert Witness
Webinar Archives
Keys to Real Estate Podcast
Blog - Tuesdays with Mary
Executive Interview Series
Social Media
Valuation Review
Contact Us
Advertise
Request a Media Kit
Are You An Expert
Subscriber Agreement