22 retailers on bankruptcy watch for 2018 and 2019

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Right now is a critical time in the retail calendar. The back-to-school shopping season is often a bellwether for holiday shopping. And weak holiday sales at certain chains could prompt store closings in the new year.

Meanwhile, weak sales and store closures could be seen as a symptom of imminent bankruptcy.

So, as the retail industry continues struggling — with more shoppers looking for deals online and shopping at off-price chains — we’re still on bankruptcy watch.

RELATED: 2018 store closure list

22 stores on the brink of bankruptcy

Mall retailer Brookstone announced on August 2 that it has filed for bankruptcy protection amid sagging sales.

The seller of massage chairs, neck massagers and other travel knick-knacks said it would close 102 of its mall stores. Meanwhile, an additional 35 airport-based locations will be put up for sale because they continue to meet revenue goals.

Brookstone joins a list of other retailers that have filed for bankruptcy this year, including struggling department store Bon-Ton, which began liquidation in April, and teen retailer Claire’s, which entered bankruptcy in March with the hopes of restructuring and emerging as a stronger company.

Looking ahead, bankruptcy is still a fate that may await other retailers in 2018 and early 2019.

Here’s a look at who may turn up in bankruptcy court as this year goes on and the next year begins.

2018 bankruptcy contenders

S&P Global Market Intelligence says the following stores could bite the dust in 2018:

STORE PROBABILITY OF DEFAULT IN 2018
Sun Pacific Holding Corp. (formerly EXOlifestyle) 44.38%
Sears Holding Corp. (Sears and Kmart) 25.37%
Razer Inc. 22.86%
Vince Holding Corp. 17.94%
Bebe Stores Inc. 10.17%
Destination Maternity Corp.  9.34%
Destination XL Group Inc. (big and tall men’s apparel)  8.78%
Stein Mart Inc.  8.24%
Christopher & Banks Corp.  8.04%
Sears Hometown and Outlet Stores Inc. (Sears Outlet)  7.23%
DGSE Cos Inc. (Dallas Gold and Silver Exchange)  6.50%
Burlington Stores Inc.  5.96%
Tailored Brands Inc. (Men’s Wearhouse, Joseph A. Bank)  5.69%
Clarus Corp. (formerly known as Black Diamond)  5.36%

Some names on this list like Sears Holding Corp. and Bebe Stores announced store closures in 2017 and 2018.

Other names — such as Sun Pacific, Razer and Clarus — are manufacturers first and have a small retail footprint that’s almost an afterthought.

2019 bankruptcy contenders

In addition, CreditRiskMonitor, a company that tracks the likelihood of publicly traded companies going bankrupt, has come up with broad statistical measures that suggest another eight retailers are likely to end up in bankruptcy court over the next year.

STORE PROBABILITY OF DEFAULT IN 2019
J. Crew 9.99% to 50%
Neiman Marcus 9.99% to 50%
J.C. Penney 9.99% to 50%
GNC 9.99% to 50%
99 Cents Only Stores 9.99% to 50%
Pier 1 4% to 9.99%
Fred’s Pharmacy 4% to 9.99%
Office Depot 4% to 9.99%

CreditRiskMonitor bases it estimations on various financial ratios, bond ratings, traditional credit analysis and proprietary data from its audience of credit professionals and major corporations.

But no matter which source’s numbers you believe, this much is indisputable: All these retailers face the same core problems.

Those troubles include 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. Such retailers live and die by being able to get the hottest trends into stores as quickly as possible.

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