Retail had one heck of a year last year with at least 14 major U.S. retailers closing 100 or more stores.
But if that seems like a lot, hold on to your hats in 2017 as more stores get ready to bite the dust!
18 stores on the brink of bankruptcy
Predicting which retailer is the next house of cards to fall has become something of a game, like the brick-and-mortar equivalent of Newspaper Death Watch for the newspaper industry.
The latest shoe to drop is Gymboree, which filed for Chapter 11 bankruptcy on June 11. While business will continue as normal during the restructuring, management does expect to close an undetermined number of stores at some point.
“The majority of our stores will remain open and run just as they do today,” the company notes on a website dedicated to its restructuring. “However, we are planning to right-size our retail footprint by closing certain stores as part of the restructuring process in order to focus our resources on the locations with the greatest potential. At this point, we are still evaluating stores and cannot say with certainty which stores will close or when.”
As previously reported, Gymboree was one of 19 stores that respected bond credit rating business Moody’s sounded the alarm about back in March because of the likelihood of impending bankruptcy.
Now that they’ve filed, the list is down to 18 remaining stores that could be at risk of defaulting on their loans for a number of reasons.
The at-risk companies now include:
- Sears Holdings
- Claire’s Stores
- True Religion Apparel
- Nine West Holdings
- 99 Cents Only Stores
- NYDJ Apparel
- Bon Ton department stores
- David’s Bridal
- TOMS Shoes
- Charming Charlie
- Evergreen Saver’s (thrift store chain)
- J Crew
All the stores on this list face factors such as declining store traffic, liquidity issues, management challenges, weakened competitive positions, ailing credit ratings, exposure to unfavorable borrowing terms, highly promotional pricing that cuts into margins and supply chain interruptions.
That final factor is particularly distressing for those stores that are fast-fashion retailers because they live and die by being able to get the hottest trends into stores as quickly as possible.