How Spirit Halloween Stores Work

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How Spirit Halloween Stores Work

Spirit Halloween’s ability to appear and fade away each fall has inspired countless memes online and even a recent “Saturday Night Live” skit. But the company’s strategy to fill more than 1,500 storefronts and hire about 50,000 seasonal workers across North America is no small feat.

“We’re only physically here for three months. The other nine months, a tremendous amount of planning, preparation and groundwork goes on,” said Steven Silverstein, CEO of Spirit Halloween.

A key part of the strategy is convincing landlords to agree to short-term leases. This model has proven lucrative for the specialty retailer.

Spirit Halloween was acquired by longtime retailer Spencer’s in 1999. As of 2015, Spirit Halloween generated approximately $400 million in revenue, according to Moody’s Ratings. The company estimates the combined businesses, known as Spencer Spirit Holdings, will bring in $1.86 billion in 2023. Moody’s vice president of corporate finance Michael Tellis said Spirit Halloween represents a larger share of the company’s revenue than Spencer’s.

“Their store numbers have increased as well. But…it’s not a huge number. They’ve really been able to drive additional traffic into the store,” Tellis said.

Permanent retailers generally don’t want to miss the holiday season, and because they need more time to set up than a pop-up, they won’t sign a contract once summer arrives. Those are the cases the company likes to capitalize on, Silverstein said.

Larry Link, president of New York real estate firm Level Group, said a New York City pop-up store typically pays a 20 to 30 percent premium to use space under a short-term contract . Lease continuances and property damage are two of the biggest concerns for landlords who lease to a temporary retailer, but he said Spirit Halloween is a special case.

“They’ve basically taken all the risks out of a standard pop-up with their track record, so I’m sure they’re using that fact to aggressively strike a deal with landlords sitting on empty space,” Link said.

Commercial real estate lease prices in New York vary, but the asking price for Spirit Halloween’s Chelsea location in southwest Manhattan is $100 per square foot for the ground floor of 21,300 square feet for a permanent tenant. The space also has an additional lower cost 13,600 square feet of lower floor space. It’s unclear how much Spirit Halloween is paying for its short-term contract.

A former Rite Aid store, reopened as Spirit Halloween, in the Queens borough of New York, United States, on Monday, October 16, 2023.

Bing Guan | Bloomberg | Getty Images

In rural areas it is significantly lower. CNBC reviewed a lease proposal from Spirit Halloween in Redding, California. This space typically rents for around $27,000 per month, according to the listing. The proposal says Spirit is offering $30,000 for a four-and-a-half month contract in April.

“We don’t think about rent per square foot,” Silverstein said. “We have a lot of experience in terms of anticipating the revenue we’re going to generate, which will translate into the rent we’re worth.”

Among the storefronts the company currently occupies, the top five previous tenants were Rite Aid, Tuesday Morning, Bed Bath & Beyond, Sears and CVS, according to an analysis by the University of Virginia’s School of Data Science. All of these retailers, except CVS, have filed for bankruptcy at some point.

Earlier this month, the company announced that it would roll out a test concept of 10 Spirit Christmas stores. Eight of these stores will be located in existing Spirit Halloween locations.

Silverstein said the company is in the process of planning for the 2025 season and even “conceptualizing” its operations for 2026.

“You have to put those seeds in the ground and you will definitely be influenced by what comes out of our Halloween experience this year,” Silverstein said.

Watch the video to learn learn more about Spirit Halloween activities.

— CNBC’s Gabrielle Fonrouge contributed to this story

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