According to Coresight Research, US store closures fell 44.1% to 3,321 in the first half of the year, while retail bankruptcies declined from 32 to 10. Yet the 3,215 store openings recorded during the same period marked the lowest first-half total since 2020. Discount retailers led with 1,046 openings, while apparel, department stores and electronics continued to contract.
Cato separately announced that it would close approximately 70 additional underperforming stores in the third and fourth quarters, bringing its fiscal 2026 total to roughly 120. Their leases are expiring, eliminating rent obligations beyond 2026, and the company expects the closures to improve operating results from 2027 onward.
The real issue is this: fewer closures do not necessarily indicate recovery, just as more locations do not necessarily indicate growth. A unit should be judged by its contribution after capital and operating costs—not by the revenue it adds. For a hypothetical $10 million retail chain, two stores losing $25,000 per month destroy $600,000 annually: 6% of total revenue. Closing them is not contraction; it is the recovery of growth capacity.
This week’s Marginal Unit Equation examines that distinction systematically.
Of all the units you count when claiming growth today, how many have genuinely earned their place?