Retailers Are Going Bankrupt At A Record Pace Noticed For Etailiers Going Bankrupt

Jason Mudrick Says Retail Is a Mess, to Say the Least.

As retailers try to cope with the rapid acceleration and growing popularity of online shopping, they are filing for bankruptcy at a record rate, Mudrick says.

Almost topping off the total number that was accounted for in the entire year of 2016, 14 chains have announced they will seek court protection in a little over three months this year, according to an analysis by S&P Global Market Intelligence. And as discount shoe-sellers, outdoor goods shops, and consumer electronics retailers have all found themselves headed for reorganization, there are a very few retail segments that have proven immune to this rising trend.

Meanwhile, as America’s retailers try to shift more business to the web and to eliminate a glut of space, they are closing stores faster than ever. The inability of the retailers to adapt to rising pressure from e-commerce was blamed for their financial struggles by S&P.

On a conference call with analysts last month, just as much was said by Urban Outfitters Chief Executive Officer Richard Hayne. He said that especially those that sell clothing, there are just too many stores.

“This created a bubble, and like housing, that bubble has now burst,” said Hayne. “We are seeing the results: Doors shuttering and rents retreating. This trend will continue for the foreseeable future and may even accelerate.”

First quarter results suggest there’s no quick recovery in sight, wrote Bottom of Form

Jim Elder, S&P Global Market Intelligence’s director of risk services. According to an S&P analysis of public retail companies, the most vulnerable retailers in the coming year are Sears Holdings Corp., Bon-Ton Stores Inc., and Perfumania Holdings Inc. There is “substantial doubt’ about its future, Sears acknowledged in a March filing.

In a study late last year, retail chains including Nine West Holdings, Claire’s Stores, and children’s clothing outlet Gymboree Corp. were named by Fitch. There were no comments made from a spokesman for Nine West. There were also no immediate comments to media queries and requests from representatives from Bon-Ton, Perfumania, and Claire’s.

According to S&P, topping the risk list are department stores, electronics retail, and apparel shops. The safest among the retailers are the food and home improvement segments.

With The Limited, Wet Seal, BCBG Max Azria, and Vanity Shop of Grand Forks each seeking court protection in 2017, apparel retail has been particularly hard hit. It would shutter 400 stores, said the latest victim of this trend, Payless Inc., which filed for bankruptcy April 4.

Rue21 may be next. According to people familiar with the matter, as soon as this month, the embattled teen apparel chain is said to be filing for bankruptcy. Or Gymboree, which Bloomberg News reported is preparing to file for bankruptcy as a June 1 debt payment looms, could perhaps be the next one.

(Adapted from Bloomberg)


Categories: Economy & Finance, Entrepreneurship, Strategy, Sustainability, Uncategorized

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