Pan American World Airways; Standard Oil; Montgomery Ward; F.W. Woolworth; and Circuit City were all once giants of American business. Today these companies exist only in people’s memories. Changing consumer tastes, evolving technology, and bad business decisions meant the end for these once iconic brands.
Complacency is also a factor in big business failures. According to Julian Birkinshaw, a professor of strategic and international management at London Business School, “Occasionally, a genuinely ‘disruptive’ technology, such as digital imaging, comes along and wipes out an entire industry. But usually the sources of failure are more prosaic and avoidable — a failure to implement technologies that have already been developed, an arrogant disregard for changing customer demands, a complacent attitude toward new competitors.”
To the casual observer, the collapse of quintessential companies may seem to come out of nowhere, but usually there are glaring signs things are amiss. Plummeting revenue, leadership changes, panicked shifts in strategy, and sudden layoffs and store closings can all land a company on the corporate deathwatch list.
Of course, predictions of corporate demise don’t always come true, and some companies are able to step back from the ledge. Not long ago, electronics retailer RadioShack was in dire straits, having filed for bankruptcy, which resulted in the closure of thousands of its locations. But the chain revamped its remaining stores and is mounting a comeback, aiming to turn itself into the go-to store for DIYers looking for parts for their electronics projects. Apple and IBM both made impressive corporate turnarounds, despite being written off as irrelevant.
Yet for every success story, there are also those companies that will never be able to get off life support. They might linger in zombie form for a while, but eventually, these doomed companies will fail. Here are 15 companies that are among the walking dead. Do you shop at any of them?
1. American Apparel
In the late 1990s, American Apparel took over teenage closets with its made-in-America T-shirts and other basics. The chain expanded quickly, gaining as much attention for its racy ads as its manufacturing practices. The company was once valued at $1 billion in 2007, but the twin problems of the 2008 economic crisis and a series of sexual harassment allegations against founder Dov Charney put it into a death spiral, ABC News reported. The company hadn’t turned a profit since 2009 and filed for bankruptcy twice in the past few years. Finally, Gildan Activewear, a Canadian company, stepped up and bought American Apparel’s intellectual property and some of its manufacturing equipment in early 2017, but not its remaining 110 stores. The brand name may live on in some form, but the company as most knew it is gone.
Sears was once one of the biggest names in American retail. Today it’s barely hanging on. Stores have been closing and sales are falling as shoppers have abandoned the chain. (Sears Holdings also owns Kmart, which has big problems of its own.) Some think the retailer may be dead in the next year or two. “A liquidity event is a matter of when, not if,” Greg Melich, an analyst with Evercore ISI said in a February 2016 report, according to Bloomberg. It’s also been selling off assets like the Craftsman brand to stay afloat. But shutting down the company won’t be easy, as Bloomberg columnist Shelly Banjo recently pointed out, since it still operates 1,500 Sears and Kmart stores, which mall owners are eager to keep open. “Make no mistake: Sears as we know it is certainly on its deathbed. But it could take years for the life support to run out,” she wrote.
Twitter might be the current President’s preferred communication tool, but that’s not really helping the company. The former tech darling has struggled as of late as newer social media platforms like Snapchat and Instagram capture people’s attention. Trump’s constant tweeting may make news, but it’s not helping the company grow its user base, Bloomberg reports, which in turn makes it hard to make money. The company tried to sell itself in 2016, but potential partners backed off. What’s next for Twitter is anyone’s guess. In February, Twitter reported its slowest quarterly revenue growth since going public, sending shares more than 10% lower in just one day.
4. Old Country Buffet
Missing the Old Country Buffet at your local mall? So are many other hungry diners who recently headed out to enjoy an all-you-can-eat dining experience only to find that their local restaurant had abruptly closed. Ovation Brands — which owns Old Country Buffet, Hometown Buffet, and other all-you-can-eat restaurants — shuttered dozens of its locations without warning in March 2016. More locations closed without notice in June, Consumerist reports.
Ovation Brands has filed for bankruptcy three times since 2008. It’s also been ordered to pay more than $11 million to a Nebraska man, who came down with salmonella after dining at one of the chain’s restaurants. The end of the all-you-can-eat steak, potatoes, and ice cream buffet may be nigh.
When Elizabeth Holmes claimed to have invented a new blood testing device that could use a single drop of blood to screen for hundreds of conditions, the media went gaga. The technology offered by her company, Theranos, was “mind-blowing” and would give people “an unprecedented window on their own health,” Wired gushed in a 2014 article. That year, Theranos was valued at $9 billion.
Everything was rosy for Theranos, until a 2015 investigation by the Wall Street Journal revealed its testing technology didn’t work. The company is currently being investigated by federal prosecutors, and Holmes, who once topped Forbes’ list of the richest self-made women, saw the magazine’s estimate of her net worth fall to $0. Legal problems are mounting as well. The company is being sued by the state of Arizona for consumer fraud, as well as by Walgreens, one of its hedge fund investors, Vanity Fair reports.
A little more than a decade ago, Quiznos was the fastest-growing restaurant chain in the country. Now you’d be hard-pressed to find a place to buy one of its signature toasted sandwiches. The chain was down to a mere 690 stores in the United States by the end of 2015, from a peak of 5,000 in 2007, according to Buzzfeed. CEO Doug Pendergast, who was brought in last year to turn things around, stepped down in June 2016. Competition with other sandwich chains like Jimmy John’s and Firehouse Subs is partly to blame for the company’s fall, along with conflicts with its franchisees, according to Forbes.
Blackberry introduced many people to the smartphone, but these days it’s rare to spot someone with one of the once ubiquitous devices. By mid-2016, the company’s share of the global smartphone market was less than 1%. What went wrong? The company failed to evolve with the times, and sales of its phones plummeted as a result. In September 2016, the company finally announced it was getting out of the business of making phones, the Wall Street Journal reports. Instead, it will focus on developing software. Whether that will be enough for a comeback remains to be seen.
Teen-focused clothing chain Aeropostale filed for Chapter 11 bankruptcy in May 2016, simultaneously announcing that it would close 154 underperforming stores. Competition from fast-fashion retailers like Forever 21 and H&M has caused problems for the once-popular store, along with similar chains like Abercrombie & Fitch and American Eagle. Aeropostale was the weakest of the “three As,” according to analysts.
Aeropostale may still have some life left in it, though. Mall operator Simon Property Group didn’t want the chain to go under, since that would mean vacancies at its properties. In September, Simon and its partner, General Growth Properties, stepped in to rescue the chain, which was in the process of being liquidated. In 2017, more than 500 stores reopened, proving that there may yet be life in this company.
9. The Limited
If you were a teenage girl in the 1980s or 1990s, you probably remember browsing the racks at The Limited at your local mall. But if you want to relive that experience, you’re out of luck. Early in 2017, The Limited announced it was shuttering all of its remaining 250 stores and cutting 4,000 jobs. Shortly after, it filed for Chapter 11 bankruptcy protection. None of that sounds good, but the brand may still have a future, according to a report in the Columbus Dispatch. A private equity firm has bought the company’s intellectual property, and it might continue to operate the stores online.
Macy’s doesn’t seem to have been able to do anything right lately. The venerable department store chain has been closing stores and cutting jobs right and left, with 68 locations already set to go dark in 2017. We’ve discussed the chain’s problems at length in the past, but it boils down to three things: stiff competition from other retailers (including online stores), changing consumers habits (many people don’t want to shop at big department stores anymore), and the high cost of labor. Now it’s facing a rumored takeover attempt by Hudson’s Bay, a Canadian company that owns Saks Fifth Avenue and Lord & Taylor.
11. Tiffany & Co.
Saying Tiffany & Co. is on the brink of death might be a bit dramatic, but the iconic jewelry store is definitely struggling. The abrupt departure of CEO Frederic Cumenal in February 2017 sunk share prices, even in the wake of a splashy Superbowl ad featuring Lady Gaga. The chain is struggling to attract younger shoppers to replace aging baby boomers, and its designs aren’t capturing the attention of trendsetters, Bloomberg reports. The company may also have focused too much attention on attracting gift buyers (primarily men purchasing for their wives and girlfriends) rather than reaching out to the “self-purchasing women,” who make up an ever-growing share of jewelry sales, Racked reports.
We don’t have any data backing this up, but we’d guess if you surveyed American women, most would say they got their ears pierced at a Claire’s store. But today’s tweens might soon have to go elsewhere for that formative experience. The mall jewelry chain, which was purchased by a private equity firm in 2007, recently cancelled its IPO and is struggling to turn a profit. Claire’s is one of several stores that Fitch Ratings predicts will end up going bankrupt in 2017, Bloomberg reports.
13. Nine West
Nine West also made an appearance on Fitch Ratings’s list of possible retail bankruptcies. The shoe company has “weak operating performance and very high debt and leverage burden,” Moody’s notes, which has downgraded Nine West’s credit rating to negative. “[T]he company’s capital structure is unsustainable and its probability of default … is high,” Moody’s adds, noting that the company’s retail business has been sliding for years and isn’t showing any signs of a turnaround.
Budget-friendly shoe chain Payless isn’t immune from the problems plaguing the retail industry. The Kansas-based company recently laid off 110 people at its Topeka headquarters and dozens more at other locations, according to the Topeka Capital-Journal. It also plans to close hundreds of its 4,400 stores, leading to pink slips for 700 employees. Worse, the company has supposedly fallen months behind on paying its bills, trade publication Footwear News reports, and might be considering bankruptcy.
15. Relativity Media
Upstart studio Relativity Media brought movies like 3:10 to Yuma and Limitless to the big screen, but those early successes haven’t translated into financial stability. The company emerged from a bankruptcy proceeding 2016, but it still hasn’t found its footing. A couple of big-time flops, including Masterminds, starring Zach Galifianakis and Kristen Wiig, hurt the small studio, which has also sued Netflix for supposedly trying to force it out of business, the Los Angeles Times reports. Employees have been furloughed, the CEO and founder has stepped down, and the company owes nearly half-a-million dollars in back rent on its Beverly Hills office and is facing eviction. Hollywood may love a comeback story, but the chances of a sequel for this company seem slim.